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Plato, for Witzel again, was the first European to reconcile all the various aspects of knowledge. Truth, goodness and beauty, for Europeans, are what freedom is for Americans, or harmony for Asians. For our research group, the following re-configuration of truth, goodness and beauty emerged (Figure 12.1).

Reconfiguring Truth, Goodness and Beauty

Figure 12.1 Reconfiguring Truth, Goodness and Beauty

Knowledge can be newly created, or existing knowledge can simply be made more widely available. Knowledge, in either case, becomes valuable when ideas can be related. While such knowledge is the key ingredient of innovation, place and time are also critical ingredients. Different cultures, then, have different concepts of knowledge and learning. Time refers to the corporate lifecycle, that is creation, elaboration and orientation.


Invention and Innovation – Individual and Collective

Innovation, colloquially speaking, is the generation and application of new knowledge. To many innovation is synonymous with technological advancement, but there are, for our integral purposes here, many varieties of innovation. Ideas are often inter-disciplinary or cross-functional in nature. Creative people tend to be cosmopolitan and boundary-crossing. Unlike invention, which is often an individual effort, such integral innovation results from collective effort, and can be aesthetically (beauty), technologically (truth) and managerially (goodness) inspired. It is interesting that, for our largely continental European group of social scientists, management was identified with "goodness" rather than "utility".

Types of Innovation – Technological, Managerial, Aesthetic

All innovations, following Plato, can be roughly divided into three types: those which seek excellence through alternately aesthetic appeal, managerial innovations, or – most commonly recognized – scientific discovery or technological advancement (see Figure 12.2).

Towards Integral Innovation

Figure 12.2 Towards Integral Innovation

Innovation and Time – Creation, Elaboration, Orientation

In the first creation stage, often associated with start-ups, enterprises, whether social or economic, public, private or civic, are concerned with the immediate exploitation of good ideas. Often this idea has been the genesis of the firm itself. The second stage, elaboration, is more complex. Now the enterprise needs to defend itself against the competition while simultaneously developing a new tranche of innovations. By this stage it is assumed that the form has copied and even improved on the original innovation. Finally, orientation is the stage where the enterprise contemplates the future and plans how it will use its innovative capabilities to meet challenges and create social, economic or cultural opportunities. This is the visionary stage, which needs a special kind of leadership.

We then turned, specifically, to examples of innovative commercial and co-operative enterprises from America, Japan, and most especially Europe.

The Character of Successful Innovative Enterprises


Selecting and developing talent

We've always had the most aggressive approach of any software company in finding people with top IQs – we're in the intellectual capital business.

Creating an intensely competitive atmosphere

Microsoft has tried to retain the feel of a small firm, with an informal style but intensely competitive atmosphere – critical and achievement oriented. Every business unit is focused on its competition.

Establishing personal responsibility

Microsoft's compensation policy has continually emphasized employee participation in the company's fortunes. Revenues and costs are fed into a single consolidated ledger, focusing on a particular business unit, marketing channel or area.


Fostering innovation

A good computer product can encompass thousands of potential applications.

Aggressive teamwork

We maintain a strong intellectual environment. David Potter remains the outstanding individual in the company but he can only be effective if he carries consensus.

Freedom and order

We balance freedom (through play and creativity) with order (through planning and organization). Planning is not inconsistent with creativity.


Culturally embedded

Trumpf, a leading German machine tool maker, is deeply embedded in its own regional culture in south-west Germany – pietistic values of unselfishness, devotion and diligence

Focus on rationality

Respect for authority and technical competence, unremitting diligence and infinite politeness are a central feature of Trumpf culture

Competence and technik

Firstly employees are required to have an excellent education in a relevant area of science and technology; secondly they are expected to have internalized the values of unpretentiousness, a sense of duty, and a strong performance orientation


A philosophy of wisdom

Yoshia Maruta, a visionary and philosopher, established a corporate philosophy based on: (1) serving the customer, (2) absolute equality of all people, and (3) the search for truth and the unity of wisdom (origin-oriented research).

Building upon knowledge grounds

To maintain its ideal of “cleanliness, health and beauty", Kao has located its knowledge grounds in fat and oil science, surface science, polymer science, biological science and applied physics.

Becoming bio-functional

We look at the organization as a single living organism in which all members know what the others are doing and can join hands and work together. The integral combination of marketing and R&D creates a “bio-functional organization".


Classless society

Father Arizmendiarrieta developed a vision of a classless society in the Spanish Basque country, where education would be promoted through work, inspired by the Christian tenet of the dignity of man.

Continuous education and development

A polytechnic, a management school and a research centre were developed, together with other institutes devoted to technical training, as well as one focused on the management of the cooperative enterprises making up the Mondragon Group

Co-operative banking

Crucial to the success of these enterprises is the co-operative bank, which helps to launch new enterprises, and the group pension fund

Fostering independence and interdependence

Ten cultural features stand out: democratic control, employee stockholding, collectively owned capital, group entrepreneurship, narrow differentials (6-1), access to skill and expertise, access to capital, community support, mutual interdependence.

We then turned from such specific enterprises to what we termed universal principles of innovation, whether socially or technologically based.

Universal Principles of Innovation – Knowledge, Vision and Commerce Based

Knowledge based

Information Sharing – Impersonal and Interpersonal

Adopting an organization structure that encourages responsibility in small units is useful, but runs the risk of fragmentation:

• Kao uses flexible project teams, personnel rotation, information sharing systems.

• Mondragon is a transparent organization with information access at all levels.

• Nearly all Microsoft's employees are located at the firm's central campus.

• Trumpf has a company newspaper, holds management conferences quarterly, holds conferences of plant, quality and service managers, and strategy week-ends.

Linked Basic Competencies – Differing Configurations

Basic competencies need to be related in such a way that they can be combined in differing configurations so that innovations can be spawned. Internal R&D tends to be focused on carefully selected areas that were considered to be in the company's most differentiating domain; medium- to long-term relationships were then established with other companies able to contribute to these core areas:

• Trumpf engages in co-operative arrangements with technical universities.

• Mondragon has many alliances with European and Japanese companies.

Vision based

Leadership – Personifying the Spirit of Innovation

Successful innovations are those which begin in the mind of someone who has the power to fulfil them. In most cases studied it was the founder or the CEO, who acts as a personification of the spirit of innovation within the firm. Bill Gates at Microsoft, David Potter at Psion and Dr Leibinger at Trumpf are cases in point. Where top managers are not themselves directly responsible for innovation they nevertheless set the pace for it. Overall then:

• innovation function is located close to the HQ in the region where the firm was born;

• there is a deliberate strategy of creating a peculiar, distinctive way to innovate;

• there is special prestige for those directly involved in the process;

• European business leaders prefer to be perceived by society as successful innovators than as successful businessmen and women.

Commitment – Everybody must Innovate

Beyond specific mechanisms a common feature in many innovative firms was a broad and deep commitment to innovation by all members of the firm. At Banco de Santander innovation became a culture and a challenge; everybody must innovate; innovation became a critical element of the dynamics of the bank.

Strategy – Planning and Creativity

Innovative firms emphasized stable employment and promotion from within, underpinned by a long-term orientation. Employees were more inclined to promote change if they didn't feel threatened by it.

• For Psion planning is not inconsistent with creativity and play.

• The Trumpf Optimization Programme in the 1990s was designed to build upon the competence, knowledge and ideas of all employees.

• Bill Gates spends half his time managing new product development.

• Kao has developed a hypertext organization to promote knowledge creation.

Regeneration – A Top Management Obsession

Breakthrough – as opposed to incremental – innovation is a top management obsession:

• 80 per cent of Trumpf products are younger than three years.

• The French ski producer Salomon focuses on developing cult products.

• Kao frames its vision in terms of surface science – leading to floppy disks.


• New products in Europe tend to be conceived at a distance from the market, out of a conceptual exercise, and then tested in the market.

• Flattening of the organizational hierarchy is commonplace.

• Top management turns vision into reality by committing substantial resources to R&D – Trumpf spends 8 per cent, Salomon 7 per cent of turnover.

• People are selected, trained, evaluated and promoted for innovation.

Subjective to Objective Innovation

Figure 12.3 Subjective to Objective Innovation

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