Institutions don’t innovate, people do. So, start communicating!

Improving leadership, lifting organisational productivity, fostering cross-sectoral collaborations and value-driven innovation are trumpeted as actions that firms must embrace to make an economy competitive.

If we accept the proposition that co-creating value is the dominant paradigm of how businesses and customers interact; respond to business challenges; transact and create value; surely firm-level behaviour should reflect practices that align.

What we actually find (despite the incentivising of firms to embrace new practices) is largely the internal inertia driven by firm characteristics such as poor communication, limited empowerment, lack of collaboration, top-down approaches, limited appetite for risk and failure that do not facilitate innovation, collaboration or support the co-creation of value.

Our research study of 215 small and medium enterprises (SME) firms across Singapore’s manufacturing sector reveals key insights. Let me focus on two of these insights today particularly around the less than optimum firm-level communication.

• A large proportion of firms’ leaders (67.4%) indicated that they regularly undertake group considerations and involve employees in problem oriented discussions related to quality, production processes and service delivery.
• Outside of this problem-based approach, less than two-thirds of firms leaders (58%) indicated that they always encourage employees to develop new ways of working or develop innovative products and services.

• On average, about 50% of the firms’ leaders also agreed that in-person communication through open door schemes (50%), meeting with line managers (55%) or senior managers (44%) were practiced (let’s call this the primary mode of communication).

• Other modes of secondary communication were seldom used. For instance, 91% firms seldom used attitude surveys, 80% seldom used suggestion schemes, 72% hardly used newsletters or emails, 79% seldom used the company intranet and 70% seldom used employee handbooks.

So, while firms are supportive of employee level involvement on a problem-basis there is limited empowerment to take the initiative and come up with innovative solutions from a process or product/service perspective.

With the low level of primary mode of communication that exists between employees and management and the poor use of secondary communication channels it is plain to see why the current standard of communication within firms is a concern.

And, although leaders say employees are encouraged to innovate, the modes of such communication do not reflect this approach and restrict the firm's ability to create an innovation culture.

None of this is difficult to understand and yet commonsense is not common practice.

 Dr Christopher Vas is the Academic Director at Murdoch University.

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