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Table of contents
Even if we could not rule out the influence of external dynamics e. DemoMark defines itself as a creative firm. We used only about 30 percent of our algorithms, while the other 70 percent are just good ideas. For example, we developed software that captures letters and figures: the potential of this innovation is really high. The relationships among the members of this firm evolved over time.
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In , before the firm was set up, Matteo, Roberto, Sergio, and Ornella met at university. Roberto had a post doc position and was working on some academic projects with Matteo, who was a PhD student. Since Sergio was interested in collaborating in a research project, he started to meet Roberto and Matteo more frequently. When Matteo, Sergio, and Roberto started to talk about setting up an enterprise, they knew little about business planning and administration, so they asked Ornella to help them. She had learned accounting and management in coursework.
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Synthesizes the main elements that have changed over time. Thus, their relationship changed over time: from an acquaintance relationship it became friendship, and today two of the founders are married Ornella and Sergio. High Level of Group Cohesiveness. Operative decisions: made by whoever has the required competencies. Coordination mechanism. Coordination through standardization: weekly meetings defined ex ante three times a week.
Coordination through mutual adjustment: only when necessary. High level of trust: friendship each member knows that the others will make the right decisions. Universities, research institutes, and private businesses. Software tailored for private businesses. Besides having an impact on creative outcome, this shift was accompanied by changes in the decision-making process and the organizational structure.
Three illustrative concepts are described in this section to explore the relationships among cohesiveness, creativity, and innovation: the decision-making process, logo and website design, and pride and ethics.
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Concept 1: The decision-making process. Soon, however, the entrepreneurs faced problems. Then, day by day, trust among us grew, so now, when someone has to make a decision, we all know that he or she will make the right one. Even if I knew the prices of two printers, I could not decide which one to buy. I had to email my colleagues and then wait for their answer before making a decision. This took much too long. The four founders decided to change the internal norms because the increase of the amount of trust needed less control.
The increased trust is shown in the number of weekly meetings: in , they met three times a week for about thirty minutes. A year later, they met twice a week, and now they meet only when necessary. The formal mechanisms of control were complemented with trust so they could face the increasing complexity and number of everyday activities. Today, each member is in charge of activities that are in line with his or her individual knowledge and competencies.
Everyone can make decisions that incur an expense of less than Euros without contacting the others. For strategic decisions, individuals think about solutions without consulting the others, but discuss them together before making the final choice.
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While strategic decisions are made jointly, minor decisions are made by the member who is most competent to do so. For example, in the product development process, after the first contact with the client, they decide together who will be in charge of the project, and that person becomes responsible for it, talking to the clients and proposing initial ideas and possible solutions to all four members to discuss and decide. Decisions about hiring new employees also follow this rule, where one person does a pre-selection and all four members make the final decision.
While the initial decision-making system led to too much information-sharing and chaos, the combination of collegiality and definition of roles helped to generate new ideas. This process of growth leads to a structuration of the business, and the definition of roles and responsibilities. Concept 2: Logo and website design. At the beginning of the venture, when firm members were thinking about a logo, each member proposed images and ideas.
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Since this activity has to do with aesthetics and taste, their continuing discussions eventually became an annoyance, and they ended up using an external designer. All the discussions were a waste of time, because it was a matter of taste.
We would never have found agreement! Only then can the discussion lead to the generation of new ideas of which the members can take advantage. However, under some conditions debate is a waste of time. The problems associated with agreeing on logo and website design show how a low level of group cohesiveness can limit creativity and, consequently, innovation in a small firm where there are not many slack resources. Concept 3: Pride and ethics. When the members decided to begin the enterprise, they decided not to be a university spin-off because they did not want to have academic staff on their board.
They wanted to be completely independent, without owing anything to anyone. Both pride and ethics are important to them. They also decided they would have help research in some branches of biology, such as those that control the intensity of X-rays, in order to avoid having to take responsibility for a possible mistake in the software. They also added in the certificate of incorporation some notes about ethical behaviour and choices. However, after the world financial crisis in , they had to disregard some of their initial agreements even though doing so was contrary to their principles.
For instance, they developed some websites, but their norms and values prevented them from developing some ideas into innovations, although they were aware of the potential applications of their products. Since the firm members know each other well, they discuss possible new applications and products informally. The moral and ethic norms they stated at the beginning are examples of factors that prevent creativity from becoming innovation. In a boarder interpretation, we could say that in some cases, contextual factors sometimes prevent creativity from becoming innovation.
However, this perception need to be further analysed to be consistent. It appears that group processes and context can be either the main drivers of creative outcomes or the main obstacles. By analysing the shifts and events in this particular case study, we explored how the creative and innovative outcome of a small firm, DemoMark, is affected by group cohesiveness and how the organizational structure and the decision-making norms influence the process that generates the new ideas i.
Single elements like group cohesiveness, decision-making processes, information flow, and organizational context can have positive, neutral, or negative effects on creativity over time. These factors also appear to have differing impacts on innovation. When the relationships among the members of the firm seem to shift from a low level to a high level of group cohesiveness, creativity also reaches higher levels. This observation is in accordance with social capital theories that suggest that closed social structures increase trust, ease the development of group norms, and improve information flow, all of which enhance creativity Milliken et al.
This effect is especially evident in the process of new product development Concept 1 , even when one person is responsible for the project, if all the members debate the various solutions, examine the various points of view, and deliberate the final solution with the richness of information matured in this process. This sharing of ideas fosters the creative outcome, but our case shows that cohesive groups can generate new ideas without necessarily implementing them, since implementation may require resources that a small firm cannot afford because of resource constraints or ethical issues Concept 3.
However, according to the brokerage in social capital theory Burt , a low level of group cohesiveness and a large amount of information-sharing should have been the key for creativity. Coming from different information groups, the members should have brought together their differing perspectives, which should have engendered creativity. In this case, we found not only that a low level of group cohesiveness is not sufficient for the generation of new ideas, but that it can also be an obstacle to innovation.
It appears also that the exchange of thoughts in a highly cohesive group that can divide labour efficiently is a valuable resource for social capital and, therefore, for creative and innovative performance.
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Since members discuss new ideas from the beginning and consider how to organize the potential project, there is a sense of group ownership that makes the group more likely to implement the project and reach the innovation stage. Instead of using its own resources, the firm uses its relationships with clients as a source of ideas and money necessary for innovation.
In this case, the number of good ideas is higher than the number of products that are developed, so size is a critical element of the dynamic. Strong shared norms based on personal values and mutual respect could limit the development of innovation e. In fact, the four founders agreed to bypass some of the proscriptions they set when they founded the business, such as the proscription against building websites.
The choice not to build websites was due to pride, so it was easier to overcome than an ethical proscription would have been. Concepts 1, 2, and 3 illustrate how group cohesiveness interacts with group processes and contextual factors to generate creativity and the succeeding innovative outputs.