Business Cultures Which Foster and Impede Product Development - 3M - Research Paper Example

? Business Cultures Which Foster and Impede Product Development Table of Contents INTRODUCTION 3 Background 3 Objective of the Study 4 Outline of theStudy 4 LITERATURE REVIEW 5 Business or Organizational Culture 5 Culture’s Contribution to Product Innovation 7 Fostering Innovative Culture for Product Development 9 Role of Diverse Workforce 11 Case Study: Innovation is the Culture of 3M 12 IMPLICATIONS FOR MANAGERS 13 CONCLUSION 15 References 16 INTRODUCTION Background The whole process of thinking and developing a new product and launching it in the market is called new product development. Products are nothing but benefits that are tangible and offered in exchange of a price. There are two ways of developing a new product; one is generation of a new idea, designing the idea and the second is market analysis and research. Development of new product is essential for maintenance and growth of market share. New product development takes time and it is also quite risky and costly. The failure rate of new products is really high in the market. This happens due to several factors but the most common factor is lack of market research. The marketers should do a proper market research for their product. If they are successful then, after developing the product, another product research is also necessary. This will not only give a true picture to the market, but also save them from incurring huge losses before developing the idea or concept (Saxena, 2009, p. 266-268). The reason behind developing new products for the company is known and generally discussed aspect in business environment, but the significance of business culture in product development is a rarely discussed issue. However, organization culture plays a very important role in generation of innovative ideas, product designing or developing a whole new product. Ricks (2006), in his book “Blunders in International Business,” suggested that “The failure to understand cultural differences can bear serious consequences.” This means that culture of the company determines how it functions and this directly affects innovation and development of new product in the company or business. Objective of the Study In the highly competitive market it is very important to develop innovative new products and services for getting good responses from the customers. So the objective of this study is to analyze the different facets of business culture which promote and obstruct the development of new products. This would assist in understanding the right culture that organizations should maintain to integrate innovation as the permanent ingredients in the strategic framework of the organization. Outline of the Study The study was designed to evaluate the admittance and barriers of business culture in case of new product development. So the study initiated with a background study on product, development of new products in organization and the importance of such on the profitability of the organization. Then the objective for conducting the research study was ascertained. Next, the study moves on to the discussion of the past literature available, which supports the objective of the study and the argument. So it would focus on topics like organizational culture, contribution of culture in innovation, Encouraging pioneering culture for the development of new products, role of workforce diversity, and a case study which includes the real life example of innovative culture of a company, due to which it is a market leader and a developer of numerous innovative products, called 3M. After this the implications of the product managers in the organization would be also scrutinized and the study would be concluded by analyzing the different aspects included in the study to derive results. LITERATURE REVIEW Business or Organizational Culture The term management means getting things properly done with the help of other people. This theory is considered true all over the world. For achieving this mission, the management of the organization has to know about the people involved and understand them to predict their behavior. It is also important to understand from the background these people belong so as to understand the different cultural background these people belong to. Culture is made up of several elements such values, rituals, symbols, leaders, etc. When these people enter a work culture where different people come with their own different cultural backgrounds, a clash is bound to happen. This is the reason why a uniform business or organization culture is designed within the organization so as to avoid confusion, chaos, and barriers. The major criteria of developing a unified business culture is to assist the employees is working achieving the common goals and missions of the company, rather than wasting time in sorting out individual cultural differences (Cherunilam, 2007, p. 75-78). It has been observed that the large difference in rituals, leadership or symbols is seen, but the values in different organizations have minor changes. This means the core value in pretext to business culture remains almost the same. Six specific cultural dimensions can be presented in this context which describes the business cultures of different organizations. They are stated below: Process oriented culture: In the result oriented culture, the concern is mainly for the outcome; while in case of process oriented cultural approach emphasis is on the way the work is carried out rather than the results. In case of result oriented culture, there is homogeneity in the way every individual works in the organization because the end is similar. However when way becomes more important than result, then difference in perception arises because everyone have a different way to work and perceive things. This in a way weakens the organization. So a result oriented culture is preferable. Job oriented culture: The job oriented culture in company assumes the responsibility of the employees till its job responsibilities only and not more than that, while the employee-oriented culture presumes wider responsibility for the well-being of its employees. So it can be said that employee oriented culture in the business would encourage higher rate of employee participation in idea generation and innovation. Profession oriented culture: The professionals having adequate education and knowledge work in a professional manner. Lack of professionalism in business is a major drawback. The employees working in this culture are goal oriented, hard working, but smart enough to utilize hard work only when required. This means that they utilize the latest technology to get their work done in less time and with accuracy. Strict internal control: Internal control means having structured norms in the organization, which every employee has to follow. In few organizations these norms are very strict and failing to follow them many involve a penalty, while other organizations have less control. Internal control is very important because it also protects the employees in many cases. However, excessive regulations create a negative impact in the minds of the employees and hamper the internal culture. Open system: This includes the behavioral pattern within the organization towards the newcomers. It depends on the existing business culture in the organization, how they treat their newly employed members. Pragmatic Culture: Pragmatic means a rigid culture, while normative is flexible. It goes without saying that innovation and newness cannot be welcomed with rigidity, but some amount of rigidity in terms of company policies should be there, like rigidly following ethical business practices. Apart from that flexibility should be allowed. Creative ideas do not come out in a rigid working environment. Google is the best example of success, while offers a completely flexible work culture to its employees. For Google the employees are its best assets and in return the employees prove to be so. Culture’s Contribution to Product Innovation Organizational transformation or change is always the initial recommendation to infuse the culture of modernism or innovation in the organization. The teaching of Robin Hood demonstrate the change of a culture that obtained a mutual responsiveness capable of flexible argument, the means to tackle challenges, envision of fresh ideas, assembling those ideas, and lastly develop the tangible form to launch them in the market. The legend also includes the function of four major culturally stimulating essentials: (1) leadership motivated by values; (2) social and physical environment; (3) identity and role of ability; and (4) lastly, the adequacy and transparency of processes. Individuals use their responsiveness to confront culturally held hypothesis that lead their enthusiasm, thoughts, and actions. Based on the four essential and the Robin Hood legend, it can be said that the senior executives know that the investments in innovation would lead to generation of higher revenue, and creating the right business culture within the organization would lead to generation new fresh ideas and products (Denham, & Kaberon, 2012, p. 360). According to Hofstede (2001), the most significant difference among cultures can be analyzed by identifying the cultural disparity with respect to the four dimensions such as power distance, individualism/ collectivism, uncertainty avoidance, and masculinity/ femininity. The effect of culture or innovative is being discussed because development of new products begins with the introduction of innovative ideas and based on that products are designed, which becomes an innovation. For example Amazon Kindle was the result of an innovative though of carrying many books in a single device without any difficulty. Business culture plays an important role in allowing free flow of such impossible and exciting ideas in the organization and infusing valuable resources for such ideas. Now, let us discuss the Hofstede model to understand the relationship of culture with innovation (Mohr, Sengupta, & Slater, 2009, p. 83-86). Power distance would reveal the extent to which the hierarchical relations and power which is considered to be essential in the business or organizational culture. Higher power distance depicts that the business decisions in the organization are taken centrally and there are extensive formal rules and regulations, while a low power distance depicts that the commands are not usually followed by the subordinates. On the other hand, high power distance also depicts constrains in information sharing and hindrance in free flow of ideas due to maintenance of hierarchy within the organization, while the culture which reveals less power distance allows free flow of communication and makes it possible for everyone within the organization to connect to creative thoughts and ideas. Taut control and strict instructions make employees inactive reduce their creativity. Uncertainty avoidance analyses extent to which unclear and tense circumstances in the organization are avoided. In organizations rules play significant role and it should be followed carefully. If the degree of uncertainty avoidance is low than the rules are easily violated and breaking them is regarded as adventurous. However, innovation can be associated with uncertainty and change, so the cultures which have high level of uncertainty avoidance are against innovation and less motivate towards creative thoughts. So the ambiguity has to be minimized for encouraging innovative culture in organization. The dimension of individualism or collectivism states that promotion of collective interest in organization establishes a culture of team work and team spirit in the organization. In collective cultures the people are loyal to their groups, they fell united and strong. Creativity flows and several ideas unite to form an excellent business idea. Masculinity or femininity shows that the extent to which the masculine value or the feminine values affect the culture of the organization. The recognition of self-assertiveness and masculine values such as profession, independence, and feminine behavior such tolerance or solidarity. It has been seen that economic creativity is not affected by masculinity. The feminine society mainly focuses on trust, supportive climate and socio-emotional culture, which support the employees to handle the uncertainties associated with generation of new ideas (Woodside, 2010, p. 353-354).). Fostering Innovative Culture for Product Development Steady innovation is the hallmark of unbeaten growth and development of the companies. Leading the market entails creativity at individual, group, and company stages or levels. As companies develop, business competition and demands can enforce them to sustain the custom of continuous innovation. Development also generates requirement for control and structure which would otherwise make the culture of creativity and innovation complex to maintain. As the companies develop and expand, they require individuals or teams who can direct them through the stages of business development. However, these organizations need to evolve in order to meet the evolving external and internal priorities. Due to this reason the corporate culture of the company gets neglected in between two different perspectives; the old employees prefer a stable and less risky working environment, while new and young employees welcome risky, innovative and creative work environment (Cooper, & Edgett, 2009, p. 1-3). In this scenario the company would have to infuse creative thinking as the central corporate value of the organization. The companies require motivating their employees to seek fresh and new opportunities, accept challenges and risks and make commitments towards the organization. The lenders in the companies promote and guide the innovative behavior of the employees for development of new products or services in the organization. Strong culture increases the performance and the probability of generating innovative product idea in two ways. First, it motivates the employees by engaging them in brainstorming session for generating product ideas with the help of values and principles. Second, it boosts the performance by synchronizing and shaping the actions of the employees according to the organizational culture (Pride, Hughes, & Kapoor, 2010, p. 194) When it comes to development of a new product, innovation is the only ingredient that comes to our mind that should be present in the business culture of the organization. However, there are many other traits which are necessary for driving the innovative ideas. These traits include harmony, motivation, gender unbiasness, delegation of authority, diversity, etc. However, sometimes business culture also impedes the development of new products in many ways. Cultural diversity might be a major cause because when the team members from different cultural background try to work together, conflicts are bound to arise. Apart from this gender biasness prevails in many well-known organizations which create glass ceilings for female employees, who otherwise may contribute valuable product ideas. Then maintenance of hierarchy and strict regulations hinders flow of creativity and freedom of the employees to incorporate new product ideas. Role of Diverse Workforce Development of new and innovative products in the organization is the result of the skill and hard work which the employees in the organization put in, along with the resources. The business culture within the organization, about which we have discussed in details already, does not exist without the human resource. Traditionally organizations functioned in their own country and the employees were from the same country. So the culture which consisted of moral values, religious perspectives, ways of thinking, etc were all similar. This was the reason why every mind produced almost similar ideas for new products, services, or business processes. However, the scenario has transformed now because it is difficult to sustain in the market with similar values as before. Companies are expanding their boundaries to spread the business, gain more market share, generate higher revenue, and retain the top position among major players. For this reason, different, fresh and innovative product ideas, and business processes are necessary. Different ideas can be only derived if the employees are recruited from different countries. This would encourage a fusion of different cultures to create a unified business culture within the organization. This is also called diversity at workplace. In the 21st century, when the new products are designed in one country, its spare parts are manufactured in other countries, they are assembled in some different country and finally launched and sold in various other countries, it is very important for the company to maintain a diverse culture and welcome employees from every part of the world. Diversity encourages innovation. As said by the CEO of L’Oreal USA Frederic Roze, Companies nowadays generate best ideas from the employees at every level of the organization and incorporate them in the business practices. Case Study: Innovation is the Culture of 3M Minnesota Mining and Manufacturing Company, popularly known as 3M is the best example of a company producing new products every year by establishing an innovation friendly atmosphere in the organization. The company has 84,000 employees and it produces more than 55,000 products, which ranges from adhesive to optical films. Innovation has always been the trademark of 3M’s development. The performance of the company reflects the culture of collective ideas and usage of advanced technology. The company always tries to deliver ingenious and practical solutions to daily problems around the world. 3M makes generous investments for research and development to stimulate its innovation pipeline. 3M’s business culture fosters growth through the invention of new products that did not exist previously. The company allocates about 6 percent of the yearly revenue to fuel the research and development (Gerybadze & Reger, n. d., p. 24). 3M’s business culture involves recruiting right individual, tolerating their mistakes, and allowing them enough flexibility to think creatively. Due to this culture of 3M, it has the unique ability, to innovate something new every time through the combination of 40 different technologies created by them. For example, 3M has the uncanny capability to may be utilizing the dental technology in car parts and nonwoven technology for the kitchen clean-up tools. So the basic idea in 3M culture is to share ideas, innovate something new through these shared ideas. The company has a diverse work culture because 85,000 employees of 3M belong to 60 different countries (3M, 2012). The company has policies of rewarding those employees who put forward innovative ideas, along with perks and compensation. Innovative business culture is not only utilized to develop new products, but also in case of market analysis. It is also important to assess the market before launching the new product. So 3M regularly evaluate the rate at which new products enter and leave the market, the technology which are mostly preferred and has scopes for growth. The business culture of 3M not only contribute in development of innovative products, but also useful in managing the return on investment. 3M has won the award of being the most innovative companies consecutively for 3 years. The company being 104 years old still juggles innovative products every year. Since 2005, it has committed to spend about $1.24 billion on research and development (Arndt, 2007). The corporate culture of the company is maintained since its inception. The motto is to hire the right people and let them do the work in their own way. The way of working is different, as the employees of 3M spend most of their time with customers to understand the difficulties they face in their daily lives, and find solutions to such problems. 3M believes that innovative is something more than just accidents, and the business culture that prevails in their organization proves this fact (Trott, 2008, p. 542-544). IMPLICATIONS FOR MANAGERS Development of a new product is the act of accomplishing and supervising the investigation, selection, improvement, and commercialization of the new products. The product managers play an important role in the planning and development process. The innovative business culture of the organization motivates every employee in the organization to put forward their innovative ideas, but the major task of selecting the feasible idea among the many, evaluating the availability of resources, developing the plan to give shape to such idea and the other related functions are designed and planned by the product managers and their teams. These product managers are the product engineers, scientists, or planners. They are responsible for taking crucial decisions for the development of new products, which involve their decision to improve the existing product or develop something new. Just launching a new product might not serve the purpose of the company, the product manager in the organization has to make decisions regarding weeding out the unprofitable parts of the product line and integrate new products which would prove to be cash cows in future (Loch, & Kavadias, 2012, p. Conclusion, Managerial implications, and research directions). As already discussed, business culture play an important role in new product development. It can be said that management must provide enough flexibility to the product managers to take the right decision, considering the different aspects in new product development. Development, commercialization and management of new product are the responsibility of the product manager, though many teams are involved in this process under the managers. They are responsible for planning the commercialization strategy of the new products in different countries, time of entry, and right allocation of the resources. Product manager are accountable for scrutinizing the market situation and essential features or purpose of a product. The functions of a product manager range from strategic to deliberate and diverge from company to company (Ettlie, 2012, p. 93) A product manager requires more flexibility in terms of decision-making because the they not only have the responsibility of planning and developing new products, but also managing the product development teams to streamline the resources with the ideas generated for making the idea into a success. In this regard the business culture plays an important role because if the company has a rigid hierarchical structure where the policies percolates from top management to lower levels then the product manager would face difficulty in completing the operational functions required in case of developing innovative products (Gray, n. d.). CONCLUSION The study aims at throwing light on the various facets of business culture which encourages and hinders the development of new product in the organization. The objective was to identify the various internal culture of the organization when motivates the employees to suggest new product ideas in the companies. Innovation being one of the most important cultural traits in modern organization has been analyzed and a case study has also been discussed on the most innovative company of the world, 3M. The common traits of business culture are harmony, hard work, diversity, gender equality, etc are now combined with innovative and technology. This is what boosts the steady growth and development of high-tech products. Diversity of workforce in the organization also play an important role because team members from different cultural background would bring in different creative ideas and a blend of which would assist in creating new products. Organizations which support innovative idea generating from every employee recruit right people, offer absolute flexibility in the workplace, and patiently handle the failures. The case study of 3M was included because 3M is the other name of innovation. The company has over 55,000 products and still counting. This is only due to the innovative culture of the organization. After analyzing the diverse business culture, the role of the product managers in case of development of new products are also discussed because the major responsibility of the new product development and launch would depend mainly on the product manager, so a flexible work culture would allow him to take important decisions according to the convenience and requirements of the company and the product. References 3M. (2012). A culture of innovation. 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