1 Introduction
The terminology of innovation drives the world with endless opportunity for development and wellbeing. The technological revolution plays a major role in crafting the culture of innovation at every stance of an organization. As per the perspectives of (Betz, 2011), innovation in present scenario are predominantly improvisation and certain innovations are breakthrough and revolutionize the flow of business aspirations. As per the recent report by (Ashkenas, 2012) demonstrated that “A planned innovation can be a failure, when there is no coordination among employees, leadership and organizational culture.
The report intends to emphasize the impacts of organizational culture and leadership on within the organization innovation process. The report travels along literatures of innovation to provide evidence on impacts by the two key parameters (Ali, 2014). In order communicate the ideas, the case of Tesla and Facebook is considered. Tesla and Facebook are rated as the pioneers in in-house innovation processes (Bondarouk, 2014). In order to understand the concepts of impacts of leadership and culture, the secondary research methods are employed. The secondary sources of data are used to analyze the case of Tesla and Facebook. The secondary sources are listed as Articles, Magazines, Journal reviews and Books (Ali, 2014).
2 Literature review
2.1 Innovation
Innovation supports the businesses to develop competitive advantage in turbulent market conditions. According to the definition of (Ali, 2014) innovation is termed as the planned application and launch of new products, processes, procedures within a specific role and new to the specific set to benefit the organization and stakeholders. The innovations are adopted and developed in situations, where the firm is puzzled with stiff competition, price wars, product shortage and to reduce cost even. As per the views of (Goodman, 2013), innovation is termed as the organizational change, or in other words adoption of new techniques and diverting from existing practices.
The recent research by (Hemlin, 2014) reveals that innovation in organizational culture enhances the organizational performances in hi-tech companies. A study by (Betz, 2011) termed that, transformational leadership involves in fostering innovation in workplace. However, there is a lack of clarity when and how the transformational leadership affects the innovation within organization (Mann, 2011). The review of literature focuses to identify how organizational culture impacts innovation and how leadership supports innovation (Hemlin, 2014). As per the article of Ron Ashkenas, organizational innovation is inhibited with situations like lack of resource sharing for innovation, lack of responsibility and lack of supporting procedures and processes (Han, 2015).
2.2 Impact of organizational culture on organizational innovation
According to the research findings of (Bossink, 2012), organizational cultures with adhocracy as the style fosters innovation in the organization but, hierarchical structure inhibits innovation. As per the views of (Losane, 2013), organizational culture is defined as the pattern of common values that creates a pattern of organizational functioning. According to the fundamental elements of organizational culture are classified into shared values, organizational beliefs and impacted behaviour from the employees (Goodman, 2013). Organizational culture in an organization supports in identifying the level of innovation implemented in organizations. According to (İşcan, 2014), the socialization processes in organization communicates the shared norms and accepted behaviour to the personnel, and thus the employees come to assumption of the culture is supportive to innovation or it is against (Bossink, 2012).
The organizations with an organizational culture that experiments new ideas, flexible and adaptable to new forms support the growth of innovation within work environment (Kaya, 2012). The ability of the organization in supporting creative risks by the employees will motivate the personnel to act innovatively. For instance, the 20% time offer for personal project to the engineers of Google increased the number of innovations made by the firm (Ali, 2014).
Factors supporting innovation
The study by (Agbim, 2013) revealed that, when an organization has clarity and emphasis on goals with specificity to innovation, the employees are motivated to think out of the box. In other words, how much clarity the firm shows in communicating the methods and procedures for innovation within the firm (Bondarouk, 2014). The organizations are expected to be open in communicating how it values active risk taking, effective information sharing, and debates. This will enhance the affiliation of employees towards innovative and creative behavior (Bondarouk, 2014).
Rewards orientation culture stays as a plausible stimulant of innovation within organization. The acknowledgement given by the organization enhances intrinsic motivation of the employees (Mann, 2011). As per the views of organic organizational culture exhibits more importance for innovation rather than a mechanistic cultured organization. According to the findings of Amabile, the factors like organizational encouragement, supervisory encouragement, freedom, resources and healthy challenges increases the course of innovation within firms (Agbim, 2013).
Factors inhibiting innovation
Lack of organizational support, is termed as a key impediment for innovation within organizations. For instance, if an employee is searching for little more expertise and it is not available within his business unit, he can access the sources from other units if the organization is supportive enough (Lockwood, 2010). But, the lack of support will prevents the employee from searching the expertise. Control, is stated as the key inhibiting factor. According to the perspectives of over emphasis on roles and responsibilities, control points will create less involvement and affiliation. Increased control in decision making, information sharing, flow will stop the personnel from thinking with dedication and innovatively (Betz, 2011).
2.2 Impact of leadership on innovation
The recent report from Mckinsey research stated that, the aspirations and leading power of the executives plays a vital role in developing innovation (Agbim, 2013). The report stated that, though the elimination of geographical barriers and technology enhances the readiness for innovation, the quality of innovation and ability to lead is crucial (Betz, 2011). According to the reports of Capgemini, the disruptive innovations are possible to occur, where top leadership is supportive and leading effectively. According to the study of (İşcan, 2014), the responsibility taken by the CEO’s will motivate the other top managers to take the innovation strategy seriously.
As per the perspectives of (Losane, 2013), top leaders devise the strategy for innovation or the strategy to exploit new opportunity. In case, the leaders are unable to identify new opportunities and the direction for innovation it will hinder innovation (Agbim, 2013). The leadership skills and styles are crucial in the process of innovation development and implementation. At this, stage, leaders need to influence people positively so as to harvest success (Ashkenas, 2012).
Source: (Han, 2015)
Figure 1 Leadership impact on innovation model
Influence of leaders on Innovation
The research article titled “The Influence of Innovation and Transformational Leadership on Organizational Performance” by (Sarminah Samad, 2012) stated that the leadership behaviour has a strong impact on the organizational performance outcome. According to (Betz, 2011), the following contextual factors plays a vital role in moderating the individuals at job level and organizational levels, The identified factors affects at the idea generation stage and implementation stages, they are knowledge diffusion, role mod
elling by inspiring individuals, showing a vision for growth, providing support for innovation (Ashkenas, 2012).
The study by (Carraro, 2014) reported that, the transformational leadership style impacts the innovative outcomes of the employees and organization with idealized knowledge flow. The result stated that, the transformational leadership styles have a positive impact on the innovation systems of an organization (Ali, 2014). The findings from (Seen, 2012) stated that the leader member exchange helps to increase the level of innovation made in the organization. In other words it states that, the knowledge exchange between leaders and members of the organization augments seamless innovation flow (İşcan, 2014). According to the study of (Ali, 2014), emotional leadership styles has direct impact on the organizational innovation. The study revealed that, the skills of self-management impacts the emotional aspect of employees and inspires them to be innovative (Betz, 2011).
Leadership concepts hindering innovation
The traditional top down approach in organizations is said to be the crucial factors that hinder innovation. According to the reports of (Agbim, 2013), the leadership can hinder innovation in organization by allocating resources and time to employees with lack of flexibility. Similarly, the lack of understanding about the required innovation in organization also limits the evident growth of innovation in workplace (Ashkenas, 2012). As per the ideas of (Carraro, 2014), certain leaders ignores the need for training and shaping the knowledge of employees, which will lead to a low key knowledge development and hinders innovation. As per the research outcome of (Hemlin, 2014), 45% of the organizations fails to reach and prosper with innovations due to its short term vision and interest for business results only (Betz, 2011). The lack of focus for career development and the policies regarding growth stops the performances of employees and halts efforts for innovation (Bossink, 2012). The lack of participative style leadership or lack of consultation can lead to overloaded objectives and will cease the quality of work rendered by employees. This change will deliberately cease the climate for innovation in workplace (Lockwood, 2010).
3 Case background
3.1 Decoding the innovation at Tesla
Tesla is an US automotive firm, who specializes in luxury electric cars, power trains and energy sector. The firm’s first product is the Roadster, a luxury sports electric car, followed by it introduced the luxury sedan Model S which has sold around 100000 units across the globe (Ashkenas, 2012). According to the data from the firm, it aims to produce affordable cars within 2017. Presently, Tesla ranks second next to Nissan Leaf in the electric car market. But, here it is worth to note that, Nissan Leaf produces 75 miles with an affordable rate. But, Tesla can produce 256 miles with its Model S (Tesla, 2016).
Currently, the strategy of Tesla is compared to the strategy of Apple and Starbucks. Since the firm aims to produce the premium quality good to the affluent classes of the market, it vests importance for quality (Ali, 2014). Similarly, the firm aims to produce similar quality in affordable ranges in the coming years. The autopilot option, supercharging, super safety options and many other features operates with connectivity facilities. According to the perspectives of Elon Musk the founder of Tesla, the features of Model S and Model X will get smarter and smarter over a period of time, when more drivers use it (Ali, 2014). This clearly reflects the vision of the leader to change the perspectives of customers about a car as a commuting tool only (Hemlin, 2014).
Source: (Carraro, 2014)
Figure 2 Market share of Tesla
3.2 Facebook innovation
Facebook is termed to be the most innovative company of the present times. Though the firm is not the first mover in the social media networking segment it swept the market of players like Orkut, MySpace and others to the corner with constant innovations and improvisations. As per the firm data, the firm has 1.49 billion active users across the globe (Ashkenas, 2012).
Source: (Han, 2015)
Figure 3 Market share of Facebook
The revenue model of the firm is neatly crafted advertising revenues and it is listed in NASDAQ (Ali, 2014). The recent acquisition of Whatsapp by Facebook is communicating a strong lesson for leadership impact on innovation. Addition of new features to the existing services is crucial for a firm like Facebook, and it is well identified by Zuckerberg and it created history with new features every month (Betz, 2011).
According to the HBR article, the organizational culture prevailing in Facebook is open and youthful in nature (Han, 2015). Every employee is encouraged to learn more and they are motivated to move forward. The “contextual sharing” is a key strategy used by the firm to nurture the information sharing culture and to improve the service features. The prevailing culture in Facebook leads its employees to identify ideas from external environment and it is been recognized (Bossink, 2012).
4 Critical evaluation of factors leading to innovation
4.1 Leadership
The case on facebook and Tesla clearly states the support rendered by the leadership in developing innovation. According to the perspectives of (Carraro, 2014), the ability to identify the opportunities available in market is an inevitable leadership characteristic that leads to transformation of the organization. In the case of Tesla, Elon Musk was not sure about the success of the car, but he envisioned the developing need for alternative commuting style to combat the lack of renewable energy resources (Betz, 2011). He identified the market aptly and concentrated on the premium class so as to sustain with quality. At present, the market share of Tesla is 1.3% due to its closed target audience. But, its view to provide similar facility in affordable rates will be a disruptive innovation that will revamp the automotive market of the world (Han, 2015).
In Facebook, we can identify a similar trend, Zuckerberg identified the market growth of Whatsapp and he made the final decision to acquire it (Agbim, 2013). It leads to even more innovations and product improvisation in the firm. This new initiation created the option to link the contacts in Whatsapp and Facebook (Betz, 2011). According to the statement of Zuckerberg, the decision of acquisition was aimed to further innovate and to dominate the mobile advertising space. The decision resulted in 25 million users newly added to the network. The leadership in Tesla and Facebook has exhibited a strong vision for growth and to transform the space they exist with new ideas (Carraro, 2014).
According to the perspectives of (İşcan, 2014), transformational leadership styles has a strong impact on the innovation in organization. He also noted that the inspirational motivation and intellectual stimulation given by the leaders will inspire the workplace to move towards product improvisation (Bondarouk, 2014). In the case of Elon Musk, the founder of Tesla, he motivated, inspired his team with new philosophies and composure post failure of first launch of Model X. The inspirational motivation and intellectual stimulation shown by Musk leaded to the innovation of 256 miles in EV cars (Goodman, 2013).
The reports by () suggested that, the leader member sharing is an key leadership characteristic that enhances the innovation culture in the organizations, In Facebook, the coordination among the leader and members are well constructed (Seen, 2012). The leaders and members actively share in the special networks created for them. For instance, Zuckerberg recognizes every single idea communicated by employees and from the organizational record it can be identified that majority of improvement innovations are the initiatives by employees (Losane, 2013). From the evaluation it can be identified that, the leadership both organizations strongl
y support the innovation culture with transformational leadership styles (Agbim, 2013).
4.2 Organizational culture
According to the ideas of (Bossink, 2012), organizational culture plays a robust role in channelizing the flow of innovation in the organization. The component of organizational culture constitutes the values, beliefs and assumptions about the environment. The study by (Carraro, 2014), emphasize that the involvement and clarity on objectives and goals plays a vital role in infusing innovation. Tesla motor is stated as a most innovative company with multiple innovations. The Autopilot facility in its model s and model X is a remarkable creation which creates a unique value proposition for the firm (Ali, 2014). According to the perspective of Tesla it aims to be more innovative with new products. The corporate culture reflects the innovation culture evidently (Ali, 2014). For instance, in Tesla the recruitment and selection is purely based on how effective a candidate is in solving complex issue rather than previous experience. This evidently proves that, the importances for seniority, hierarchy are excluded and complete innovation is expected from every single employee (Goodman, 2013).
Source: (Hemlin, 2014)
Figure 4 Tesla innovations in pipeline
The perspective of (Ashkenas, 2012) mentioned that rewards are the key stimulator of innovation. Rewards to an employee will morally impact the others to think uniquely to solve unique issues. The reward orientation is said to be open and effective in Tesla (Carraro, 2014).
Most of technology based firms across the globe follows innovative cultures to stimulate innovation as a fruitful outcome. Facebook is stated as the most promising innovative firm in the world by Fast company report (Ali, 2014). In Facebook, the corporate culture is said to be open and very effective. For instance, the employees are offered with space to communicate with top management regarding any issue during the orientation itself (Bondarouk, 2014). This meeting is termed as all hands meeting, where the employees, CEOs top management sit together to support the newbie’s (Agbim, 2013).
This move eliminated the gap between new employees and the existing one (Carraro, 2014). Similarly the recognition for new inventions supported the employees to bring on new ideas each time, this shows that, the value of the organization is to create friendly environment to employees so as to develop a strong culture of sharing (Betz, 2011). In this system, the information sharing was more effective and increased the productivity of employees.
According to (Ali, 2014), a culture with space for communication, information flow can strongly enhance the employee morale and comfort in the organization. Providing a strong supportive culture is the first investment to develop disruptive innovations (Bondarouk, 2014). The critical evaluation shows that, the culture prevailing in both firms are supporting innovation rather than hindering it (Han, 2015).
5 Conclusion
The leadership and organizational culture stimulates innovation in many ways. According to (), innovation is the process of identifying a brand new thing that supports the betterment of society. Tesla and Facebook are said to be the most innovative firms of the time (Agbim, 2013). Facebook has created an effective technological revolution and has increased growth. On the other hand, Tesla is said to be innovative and responsible (Lazzeretti, 2012). The firm is innovative and it is striving to transform the life of individuals with unique ways of commuting. From the analysis it is evident that both firms have well communicated their objective to the workforce. The clarity in goals and objectives provided the necessary direction to move towards innovation. As per the perspectives of (Bossink, 2012), leadership is stated to be key factor that nurtures innovation in business. The leadership of Elon Musk is said to be transformational in nature. Even Though the innovation of Model X failed years back, it is the leadership vision and motivation developed the employees to stand against competition with new innovation of Autopilot. From the critical evaluation it can be stated that, both firms followed transformational leadership and has exhibited tremendous growth in their respective sectors (Ali, 2014).