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by Professor Dr. Rozhan Othman (25th April 2016)

   One of the issues that organizations have to address is the extent of creativity that it needs. Good organizations recognize this and are able to decide on the form of creativity they need, the requisite conditions to generate it and how to translate creative input into innovation. Less well run organizations, however, tend to preach about creativity more because it is considered sexy and a fad. Their internal capabilities, however, can be anti-creativity.

   Benner and Tushman’s work on this issue highlight the fact that organizations sometime make decisions that builds certain dominant capabilities that makes it difficult to incorporate other attributes. This is especially the case with innovation. One form of innovation is generated through exploitation. This involves process innovation that focuses on enhancing current capabilities based on current technologies. Another form of innovation is generated through exploration. This is done through product innovation that focuses on discovering new opportunities, market and technologies. Sometime, this involves the ability to switch technologies.

   Exploitation is developed through variation minimization. A typical approach is through standardization, documentation and making better use of existing templates.  Exploration is attained through variation maximization. It requires greater use of creativity and the willingness to question assumptions.

   A paradox that often arises is when organizations preach creativity and innovation and yet demand conformity. The standards movement, typified by initiatives such as ISO and various other standards that rely on uniformity and documentation, very much breeds a variation minimization mindset. It is not uncommon to hear someone say, “Oh, we cannot change this because it is the ISO standard”.  In reality, ISO standards are non-prescriptive models and involves mainly documentation requirements but do not insists on a practice or process. Users decide on the process and standards they want to set. Unfortunately, once a standard is set, some people hide behind ISO to defend their standards, especially the rotten ones.

   The variation minimization approach to managing has a number of problems. First, it is predicated on the assumption that the only way to create and deliver value is through extensive standardization and documentation. A study by Eisenhardt and Sull as well as the work of Benner and Tushman shows that in some situations less is more. Reducing variation minimization standards can develop more organizational agility and unleash energy and creativity. Second, the people who tend to get involved with standard setting and enforcement tend to usually be the control oriented ones. They seek more control by developing elaborate procedures and documentation requirements. Normally, assignments to this task is not considered a prized assignment and given to those who are not good at anything else. Third, those who have to comply with these requirements are so consumed with conforming to all these standards and doing all the paperwork that by the time they have completed their work they are just exhausted. Fourth, once these standards are in place, they tend to become sacred and difficult to change even when there is no evidence of their efficacy.  This problem is usually more profound in bureaucratic organizations. Past research on IT implementation shows that centralized organizations tend to use IT to centralize further and decentralized organizations tend to use IT to decentralize further. The same is true in the use of standards. Suffocating bureaucracies tend to use standards to suffocate further. Once the suffocation is complete, they are difficult to change and improve. Anyone who has ever tried to change any of these standards and rules will know what a daunting task it is. Fifth, the variation minimization resulting from these standards create a culture of its own. It creates people who are conformist, risk averse and develop a follower mentality. The bureaucrats enforcing these standards are often boring characters who enjoy picking on little mistakes such as the font size of the heading of document, indentation of paragraphs and layout of course outlines but rarely on substantive issues. For heaven’s sake, students don’t get A or D because of the format of course outlines.

   As a consequence, the bureaucracies created to enforce variation minimization create rigidities. And those who have to conform to these standards are so overwhelmed that they have no more energy to think of other creative ideas and forms of innovation. Take any organization that is dominated by variation minimizing standards and we will see a low creativity organization.

   Variation minimization can make an organization do better in its current activities. This is an asset in a stable and slow changing market. But it becomes a liability in a high velocity environment. In other words, variation minimization tends to drive out creativity and responsiveness to changing conditions. It is the anti-thesis to exploration and variation maximization. Look around us. Industries that are known for highly creative output such as production of movies, advertising and music do not rely on standardization and variation minimization. Likewise, the first secondary school that received ISO certification in Malaysia still has not risen up the ranking of schools. The first university in Malaysia to achieve ISO certification still cannot claim to be the best or even the top 5 university in this country.  One public university spent RM500,000 per faculty to get ISO certifications. Yet, the so and so faculties in the university continue to remain where they were in spite of ISO certifications. A study of Malaysian manufacturing firms by Jabnoun and Kanapathy show that getting ISO certification does not differentiate between more and less profitable companies.

    When a leader preaches creativity and extolls the virtues of innovation, it is wise for him to begin by assessing whether the internal processes and capabilities of his organization is oriented towards variation minimization or variation maximization. It makes little sense to preach creativity while institutionalizing conformity. This is true in business, public sector organizations, and educational institutions as well as health services. For businesses, if the market demands highly innovative product and agility, variation minimization will strangulate the organization to death. Just look at what happened to Kodak.