Pot, F. (2018). Complementing technological innovation with workplace innovation. In: Leijten, J. (Ed.).What would Walter say? 50 years of innovation politics (151 – 161). 6 Countries Programme.
Complementing technological innovation with workplace innovation
Reindustrialization in the 1980s
In the 1980s Walter Zegveld was one of the important contributors to the debates on industrial policy. Opposing the idea of ‘post-industrial society’ Rothwell and Zegveld (1985) advocated reindustrialization by technological innovation. They investigate, discuss and emphasize the importance of policies for technological innovation. In their description of the process of technological innovation in firms little attention is paid to “the creation of an environment within the firm in which entrepreneurship can flourish and innovations occur (p. 78).” They refer briefly to older studies in which participative and informal leadership, interdisciplinary teams and information flows downwards as well as upwards appeared to be among the factors determining success in innovation (pp. 75 – 79). The concept of ‘social innovation’ was used to describe “the provision of services outside the formal economy (in the home)” (p.1). In the same period Bolwijn et al. (1986) emphasized that flexible manufacturing would imply the integration of technological and social innovation. Their concept of social innovation covers all non-technical innovation directed at the competition factors quality, flexibility and innovation capacity among which work organization and human resource management. For these authors the main characteristics of the innovative firm are participation and democratization. The theoretical foundation of such an approach was provided by De Sitter in his sociotechnical systems design theory (De Sitter, 1981; De Sitter et al., 1996; Mohr and Van Amelsvoort, 2016). Researchers and consultants were responsible for the development and dissemination of these ideas. Policies would follow to some extent but later.
Industrial renaissance in the 2010s
In the 2010s Europe had to recover from the financial and economic crises. Again industrial policy was at the fore front and again the focus was on technological innovation. However more or less from the beginning of this recovery, formal policy attention was paid to ‘workplace innovation’. This concept replaced ‘social innovation (of work and employment)’ because ‘social innovation’ had become applicable to all spheres of life and society. Workplace innovation and innovative workplaces were recommended in an Opinion of the European Economic and Social Committee (EESC, 2011). The European Commission (DG Enterprise and Industry) adopted workplace innovation as part of its industrial and innovation policy in October 2012 and launched the European Workplace Innovation Network. It was also used by the European Parliament (2013: 24) and IndustriAll European Trade Union (2014: 8, 9, 15) in their programmes for an industrial renaissance as well as in national initiatives in Ireland and the UK and in the translations of national programmes in Finland, Netherlands, Germany, Flanders/Belgium and Basque Country/Spain (Alasoini et al., 2017).
Definition and measurements
The European Workplace Innovation Network (EUWIN), that started in 2013, describes workplace innovation as follows: “Workplace innovations designate new and combined interventions in work organization, human resource management, labour relations and supportive technologies. It is important to recognize both process and outcomes. The term workplace innovation describes the participatory and inclusive nature of innovations that embed workplace practices grounded in continuing reflection, learning and improvements in the way in which organizations manage their employees, organize work and deploy technologies. It champions workplace cultures and processes in which productive reflection is a part of everyday working life. It builds bridges between the strategic knowledge of the leadership, the professional and tacit knowledge of frontline employees and the organizational design knowledge of experts. It seeks to engage all stakeholders in dialogue in which the force of the better argument prevails. It works towards ‘win-win’ outcomes in which a creative convergence (rather than a trade-off) is forged between enhanced organizational performance and enhanced quality of working life” (Dhondt, 2012: 2). TNO Work and Employment was commissioned to coordinate EUWIN. More or less familiar concepts are innovative workplaces, high performance/involvement workplaces, employee-driven innovation (Norway and Denmark), non-technical innovation, organizational innovation.
The measurement of innovations in the EU is based on a commonly agreed definition in the Oslo Manual of 2005, implemented by the Community Innovation Survey (CIS), including non-technical aspects as service innovations (new or significantly improved services) and organizational and marketing innovations (new or significantly improved knowledge management systems, organization of work, relations with other firms/institutions, design or packaging, sales or distribution methods).
On 16 -17 October 2007 the Six Countries Programme organized a workshop ‘Non-technical Innovations – Definition, Measurement & Policy Implications’ in Karlsruhe to discuss conceptual and measurement issues. Despite the interesting contributions, the researchers and policy makers had to admit that a lot of work (conceptually, methodologically and politically) still had to be done. But at the same time the support for integrating technological and organizational innovation had grown because results of the European Manufacturing Survey – presented in the workshop – showed that Organizational Process Innovation only had positive main effects as well as only positive alignment effects in combination with Process Technology Innovation. Technological process innovation, product innovation and innovation of product related services as well other combinations showed a worse score (Ligthart et al., 2007).
An important contribution to the debate on measurement, indicators and policy came from Armbruster et al. (2008). They describe and compare how organizational innovations have been measured through existing surveys in Europe. Using the German Manufacturing Survey (1450 companies) in 2003, they show how these different approaches lead to significantly different results regarding the organizational innovativeness of companies within one and the same sample. The authors conclude on four main implications for measuring organizational innovation in more detail than what was common practice in the surveys of that time:
(1) Complexity of organizational innovation
(2) Life-cycle of organizational innovation
(3) Extent of use of organizational innovations
(4) Quality of organizational innovation.
Later attempts to add more and better indicators on non-technical innovations to the CIS have not been successful either. The latest try is reflected in the report of Kesselring et al. (2014), based on a seminar with experts. The struggle is not only conceptual, but political as well. Policy makers did not succeed in admitting the proposed measurements to the CIS.
A kind of indirect measurement can be found in the European Working Conditions Survey of Eurofound, in particular the indicators for the cognitive dimension of work, decision latitude and organizational participation which are supposed to contribute to innovative work behaviour (Eurofound, 2016:80). The same holds for organizational participation as measured in the European Company Survey and the case studies based on this survey (Oeij et al., 2015).
Where does workplace innovation come from?
How can this emergence of interest in workplace innovation, this new élan, be understood? The broader context is that in the early 1990s a significant shift in Europe’s economy and businesses could be observed fuelled by information technology. This shift reversed the historical pattern where tangible capital was considered to be the main asset in companies. Around 1990 investments in intangible capital (in percentage of adjusted GNP), such as patents, R&D, marketing, organizational competences became higher than investments in tangible capital (Corrado and Hulten, 2010). Regarding innovation the conviction grew in Europa that ‘social innovation’ (work organization, competence development, employee participation, etc.) is probably more important than
‘technological innovation’ to explain the company’s performance. DG Research and DG Employment facilitated a number of networks and research projects on innovative work organization (Pot et al., 2016) such as the European Work & Technology Consortium (1998) and the European Work Organization Network (EWON, Totterdill, 2002). Business models changed from products (Philips: light bulbs) to services (Philips: city lighting). This context explains the need to develop and utilize the skills and competences of the present and potential workforce to increase added value as part of a competitive and knowledge-based global economy (European Commission, 2014). One more reason for ‘workplace innovation’ is that private and public organizations can only fully benefit from technological innovation if it is embedded in workplace innovation (making technology work by means of proper organization). Finally, there is a need to enhance labour productivity to maintain our level of welfare and social security in the near future with fewer people in the workforce due to the ageing population.
The proportional shift from tangible to intangible investments meant a lot for styles of management. As ‘hard’ technological innovations do not seem to explain persistent productivity differentials, Bloom and Van Reenen (2010) present evidence on another possible explanation for persistent differences in productivity at the firm and the national level – namely, that such differences largely reflect variations in management practices. They stand in the tradition of the resource-based view of the organization as the framework of research into the conditions for acquiring and maintaining competitive advantage. The focus is not only on the competitiveness of products and services but on
internal resources for competitive advantage as well, such as management skills, work organization, knowledge and competences. Competitive advantage can be achieved when these resources improve efficiency and efficacy and when they are rare or difficult to copy. The dynamic resource-based view of today, taking into account necessary adaptations to changes in the environment is directed at dynamic capabilities (Eisenhardt and Martin, 2000). The OECD calls it ‘knowledge-based capital’ (KBC) (OECD, 2012) and fosters innovative workplaces (OECD, 2010a and 2010b). So, this is not only about management capabilities but about innovation capacity on organizational level as well. One of these management capabilities is ‘managing human resources’, how to stimulate ‘employee voice’ or develop ‘employee capabilities’.
According to DG GROW workplace innovation improves motivation and working conditions for employees, which leads to increased labour productivity, innovation capacity, market resilience, and overall business competitiveness. All enterprises, no matter their size, can benefit from workplace innovation. It improves performance and working lives, and encourages creativity of employees through positive organizational changes, combines leadership with hands-on, practical knowledge of frontline employees and engages all stakeholders in the process of change. The main objectives of the DG GROW initiative are to foster the uptake of workplace innovation across European businesses and raise policy maker awareness, at all levels, of the benefits of these innovations. This policy is also part of the ‘Advanced Manufacturing Programme’: (ADMA). It is said that “Workplace innovation has to provide advanced solutions for manufacturing industry, based on the newest technologies. Virtual reality and side laboratories, where employees can perform extra research and experimentation, not connected with their daily tasks, are examples of combining advanced manufacturing technologies and advanced workplaces. Furthermore, workplace innovation can help companies to enhance competitiveness by using the innovativeness and creativity of all employees. (…) The Commission has included workplace innovation aspects in the R&D&I programs for
advanced manufacturing. Explicitly including R&D on human-centred manufacturing could enhance the active and innovative role of people in factories and could contribute to design the workplaces of the future” (European Commission, 2014: 27 – 28).
In 2015, DG EMPL published ‘Employment and social developments in Europe 2014’. Chapter 3 is about “the future of work in Europe: job quality and work organization for a smart, sustainable and inclusive growth”. One of the paragraph titles is “Complementing technological innovation with workplace innovation” (p. 164). Presenting much empirical evidence – among which are Eurofound’s European Working Conditions Surveys – its conclusion is that better jobs and work organization yield a more productive workforce. Having better jobs and work organization reduces the risk of
stress, enhances wellbeing and leads to a lower tendency to quit the job. Better work organization implies in particular a balance between job demands (job intensity) and job control (job autonomy), wholeness of tasks and more open access to decision-making processes. This helps to maintain good physical and mental health, while at the same time improving productivity and innovation capacity These are a few of the indicators which, the report suggests, should inform EU policy making.
Policies of work organization and workplace innovation have never resulted into legislation or regulations on EU-level. Mentioning the issues in Employment Guidelines did not seem to help much nor did national legislation in a few countries. Probably workplace innovation is not suitable for a legislative approach. Implementation depends very much on the social dialogue at European, national, sectoral and organization level. But EU- and national-authorities can stimulate that dialogue and develop campaigns for knowledge dissemination and capacity building. Some of them do, but unfortunately for a short period of time. Germany and Finland are the exceptions with programs that have been renewed several times over the past decades.
Digitalization and robotization
Germany has the longest tradition of accompanying technological innovation programmes with humanization of work programmes. In recent years the awareness has grown that sociotechnical work organization and job design can contribute to innovation. The present ‘high tech programmes’ go together with ‘future of work programmes’. Finland has been running ‘workplace development programmes’ for about 20 years now (Alasoini, 2016). The current one is called: ‘Business, productivity and joy at work’ (2012 – 2018). Belgium started the ‘Flanders Synergy’ programme on workplace innovation in 2009. The Netherlands had a national programme from 2006 to 2012 and recently complemented the Smart Industry strategy with a Fieldlab Social Innovation. Workplace innovation seems to be the adequate ‘tool’ to benefit the most of the newest technologies and to make sure that quality jobs are being maintained and developed.
Many public and private organizations have experienced automation disasters. A major shortcoming was that digitalization and automation were implemented before optimizing processes and work
organization. End users were not involved sufficiently. In their book ‘The second machine age’ Brynjolfsson and McAfee (2014) of MIT observe that in big companies with big ICT projects it takes five to seven years before the organization has been redesigned and consequently before full benefits can be taken from the new technology. They say “Creativity and organizational redesign is crucial to investments in digital technologies” (p.138). Their concept is ‘co-invention of organization and technology’. This co-invention requires the creativity and collaboration on the part of the
entrepreneurs, managers and workers.
In my own words: There can be no effective and sustainable returns on automation and digitalization without workplace innovation. I hope and expect that Walter would say: “Yes, I agree”.
Frank Pot (sociologist) is emeritus professor of Social Innovation of Work and Employment, Radboud University Nijmegen and chair of the advisory board of the European Workplace Innovation Network of the European Commission. He was director of the institute TNO Work and Employment and had a special appointment as professor of Work and Technology at Leiden University in the 1990s.
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