How to organize for cultural innovation

Syddansk Unversitet - University of Southern Denmark

How to organize for cultural innovation Exam paper in the course “Organization of Innovation” – Spring 2014

Author: 30 38 84 (exam number)

Exam paper in Organization of Innovation – Title: How to organize for cultural innovation – Hand-in date: 6/2/2014

Contents

Introduction ................................................................................................................................ 1

Theoretical streams ..................................................................................................................... 2

Introducing an alternative perspective on innovation ...................................................................... 3

The relevance of cultural innovation in organization of innovation.................................................. 5

Synthesis/discussion .................................................................................................................... 7

Absorptive capacity........................................................................................................................... 7

Absorbing cultural knowledge ...................................................................................................... 8

Diversity of minds in the organization is the key to cultural innovation ....................................... 9

The organizational challenge of implementation ........................................................................ 11

Communities of Practice ................................................................................................................. 12

The appeal of communities of practice for cultural innovation .................................................. 13

What it takes to cultivate cultural communities of practice in an organization .......................... 15

Conclusion ................................................................................................................................. 19

Literature .................................................................................................................................. 21


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Introduction During this course we have almost exclusively focused on innovation with regard to products,

the technology of products or the processes of production and R&D. This may be

straightforward when researching a B2B setting. In a B2C setting, where the value of

products and services is deeply interconnected with symbolic meaning, the innovation theory

of today offers almost nothing. There has been a certain focus in organization and innovation

theory, which naturally emphasizes some aspects of innovation at the cost of others.

Specifically, the cost has been knowledge on how to organize for innovation in B2C setting,

which is a place, where it is not exclusively the technological innovations that comprise value

in business. This paper has the following thesis statement and the supplementary research

questions:

Thesis statement

This paper is an attempt to make an outline of a theory of how to organize for innovation in

the B2C market.

- How can we define innovation, which captures the symbolic dimensions?

- What are the implications of introducing a new definition of innovation for the field

organization of innovation?

There are many perspectives on B2C business and innovation. This paper chooses to go with

a consumer culture theory perspective here. Consequently, the paper is not set up as a

traditional paper within a given academic field; a traditional paper would first presents some

theoretical streams from the field, discuss their relevance for its problem thesis. In the

discussion section, it would analyze the pros and cons of these streams, discuss similarities

and differences with other streams, or extend the line of thought of the streams presented.

This paper, however, attempts to introduce a completely new theoretical stream, namely the

consumer culture perspective, rather than use existing theoretical streams from the

organization of innovation field. In the discussion section the paper demonstrates the value of

the new theoretical stream by integrating it into some specific domains of organization of

innovation, namely how to manage knowledge flows in the organization – more specifically

it goes into the concepts of absorptive capacity and communities of practice.

The output of this paper is thus a presentation of some principles and suggestions for

organization of innovation, which relate to companies operating in a B2C business. More


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specifically it explains how to understand and implement the concepts of absorptive capacity

and communities of practice by using the insights into B2C given by the CCT perspective.

Theoretical streams One of the conventional and even orthodox views on innovation on B2C is the blue ocean

strategy. W. Chan Kim and Renée Mauborgne (2005) introduced the idea of rejecting the

conventions of product categories to craft a product or service, which offer totally new value

and has no competition, thus the coinage “blue oceans” - as opposed to competition-ridded

“red oceans”. From this has evolved two dominant views on innovation. One stresses that

commercialization of new technologies, which create more clever ways of enhancing the

functionality of a product, is what drives business. Another sees innovation as the unexpected

mixing and matching of existing features and technologies from different categories, which

leads to a new unique value proposition for the customer. Both views are loyal to the general

notion of “blue oceans”. These conceptualizations of blue oceans, however, does not capture

some of the most creative and impactful innovation in B2C history: “Consumers – the

ultimate arbiters of market innovation efforts – often find offerings to be innovative even

though they seem quite pedestrian from a product-design standpoint. It turns out that

blockbuster new businesses do not necessarily require radically new features that

fundamentally alter the value proposition” (Holt & Douglas, 2010). We seem to be dealing

with a limitation of scope here. There is something about innovation, which the product

design focused perspectives does not capture and this has also created blind spots in the

literature pertaining to organization of innovation.

In most organization theory functional attributes has been the dominant perspective on

product development. These attributes, however, are no more significant than the symbolic

attributes of products – at least in B2C contexts. Consumers do not make rational choices

based upon, which product performs best, although they like to think, they do (Levy, 1959;

Holt, 2002). Rather symbolic differentiation seems to be the differentiating element in a large

part of B2C businesses. Luckily, other fields have been occupied with this fact of reality for

quite some time. However, we then move into a massive field of management and marketing

studies, which contains a variety of perspectives on how to manage these non-physical or

non-product dimensions of business; e.g. consumer psychology, behaviorism, service

dominant logic (SDL) marketing or consumer culture theory (CCT).


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Introducing an alternative perspective on innovation Of the many available perspectives on B2C theory and innovation this paper will go with the

one emphasizing consumer culture and symbols, i.e. consumer culture theory (CCT). Why?

Symbols and the concept of culture capture very effectively most of the non-physical and

non-functional aspects of consumption. Sidney J. Levy was one of the first to acknowledge

this with his seminal article “Symbols for Sale” (1959) in the Harvard Business Review. “The

things people buy are seen to have personal and social meanings in addition to their

functions [by implication, the things are symbols1]. To ignore or decry the symbolism of

consumer goods does not affect the importance of the fact. The only question is whether the

goods are to be symbolized thoughtfully or thoughtlessly.”. This was thought-provoking at

the time for some of the conservative minds in the marketing industry.“This point is worth

some emphasis since many people disapprove of the fact that purchases may be made on

what they consider to be insubstantial grounds.”. Levy here refers to the natural disposition

of especially the Western individual (Weber, 1920) to appear as a rational being with clearly

intentional motivations. That one’s consumption pattern is supposed to be driven by symbols

of social class or caste, sex or by the fulfillment of desires (hedonic experiences) rather than

rational needs goes against such a self-image. Levy represented one of the early perspectives

of the consumer culture theory field, which is a family of perspectives on consumption, such

as anthropology, sociology and other social studies disciplines. These perspectives can be

said to commonly have an interest in “cultural meanings, sociohistorical influences, and

social dynamics that shape consumer experiences and identities” (Arnould & Thompson,

2005) all of which is mediated through the marketplace of today.

As CCT has kept evolving, it has produced a framework on innovation, which challenges

most conventional thinking about innovation. Douglas Holt and Douglas Cameron (2011)

argue in their book “Cultural Strategy” that a lot of innovations are based on a latent demand

for ideology rather than a latent demand of functionality. Thus they identify ideology as that,

which the abovementioned product design focused perspective on innovation could not

capture. As history is written, this brings with it cultural and ideological changes as well. In

many Western countries WW2 brought with it consequent cultural and ideological2 dynamics

1A symbol is something which stands for something else than itself. Because of this they can to a certain extent be defined as mediums of meaning –. The symbol can be regarded as the fundamental unit in cultural and social sciences, much in the way the atom is the fundamental unit in physics. 2This paper does not present the formal definitions of “culture” and “ideology”, since the common

understandings of these is sufficient for any reader to understand the argument put forward throughout the paper.


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in the decades following the war, such as more working women, new wave of consumer

technologies (adaptions of the war machinery) or international solidarity (the UN). Such

historical opportunities are continuously answered with specific cultural content residing in

commercial elements as brands, products or communication. These elements are as much part

of today’s cultures as is a museum or family patterns. Innovation in this framework is defined

not as the invention of functionally better performing technologies, but as the successful

management of products and brands as the vehicles of cultural expressions, they are. A

cultural expression is composed of ideology, myth and cultural codes. Cultural expressions

carry immense innovative potential. For example, Nike’s shoes were not functionally better

performing than all other brands. The brand of Nike however conveyed an ideology of

combative solo willpower. They staged this ideology in the myth of their slogan “Just Do It”,

which suggests overcoming societal discrimination through sport. The myth was in turn

conveyed in advertising and communication by use of specific cultural codes of poor black

youth, chain link hoops and housing projects. The main takeway here is that cultural

expressions create a halo effect affecting perceptions of functionality. Nike conquered the

mass market because consumers of that time strongly identified with the cultural expressions

of Nike. It fit so well with their identity projects, that the consumers readily made strong

inferences about how Nike shoes improved their own performance.

The red ocean in this perspective is the cultural orthodoxy, i.e. taken-for-granted cultural

expressions of brands. For example one could argue that cultural expressions in the luxury

cars industry are worn out – i.e. the myth of a powerful, well-dressed man, who knows what

and who he wants and gets it. However, only an elaborate cultural understanding of the

(potential) buyers of luxury cars (we will return to how such understandings can be achieved)

would clarify whether there is indeed a latent ideological demand with these buyers, which

must be addressed by a particular new cultural expression. The authors refer to social

disruptions in this regard: “the engine of cultural innovation is historical change in society

that is significant enough to destabilize the category’s cultural orthodoxy, creating latent

demand for new cultural expressions”. The social disruption driving Nike’s ideology of solo

combative willpower was the rise of the historic rugged individualism of the USA, which was

a product of the economic downturn of the seventies. The rise of popularity of individual

sports compared to team sports was a manifestation of this new emphasis on rugged

individualism. Nike used this social disruption to symbolize the break with team sport to


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celebrate solo willpower instead, which allowed them to break through to the consumer

masses.

The final fundamental element in this framework is source material, which are the

inspirational elements used in crafting the cultural expressions. These material sources come

in three types: subcultures (e.g. running enthusiasts), media myths (often packaged in popular

culture) and brand assets (e.g. Nike is the goddess of victory).

There are more elaborations on how marketers can apply this framework, but which cannot

be included in this

short introduction of its

main principles. We

can conclude that this

framework makes a

systematic discipline

out of utilizing cultural

expressions. In practice

until now, successful

cultural expressions of

brands have mostly

been the result of the

gut-feelings of entrepreneurs and marketers or something, which came naturally from being

passionate about one’s undertaking and immersed in a particular subculture or industry. The

founders of Ben & Jerry’s were passionate about the counterideological movement to

conservative Reaganism in the 1980s America, which manifested itself through the “free

food” movement and other “back-to-the-land” initiatives. Their brand built on exactly this.

The relevance of cultural innovation in organization of innovation

Holt & Douglas touch only a little upon how a company can organize for cultural innovation.

They present the concept of cultural studios, which are essentially communities of practices,

which consist of the designers of cultural innovation, its strategy and execution. An extended

discussion of this is made in the analysis section. It must be noted that others have also

proposed principles of organization with regard to cultural innovation, such as Grant

McCracken (2010), (2012). Although this would certainly be relevant to include in this paper,

it is not possible, because of the limited number of pages assigned.


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Let us recapitulate the relevance of organization of innovation in all we have talked about

until now; we first addressed above the lack of an organization perspective with regard to

innovation on B2C. The CCT perspective offers a very powerful perspective on B2C in

general. We then showed how CCT has produced a very specific perspective on B2C

innovation. Now, in the analysis section we will take a closer look at how companies can

organize for this new and potentially powerful kind of innovation on B2C. What we are

basically doing is introducing a perspective from the field of CCT to the field of organization

of innovation. CCT brings with it an emphasis on culture, but very rarely goes beyond the

idea and creative stages of business. Organization of innovation, on the other hand, is very

focused on technology and the physical processes of business, but is nevertheless more

practically oriented with an emphasis on management and implementation.


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Synthesis/discussion There are implications of the new definition of innovation. One may first think of the

management knowledge flows, which are the basis for discovering innovation opportunities

and ensuring that the organization is capable of exploiting this. This leads us to another

aspect, which goes a step further with regard to implementation of the new kind of

innovation, namely creating ambidexterity. Ambidexterity is an issue, because a company

must first explore new ideologies and then exploit the ideology in the product and

communication development. Thus, this paper could potentially discuss how to manage

exploring and exploiting at the same time when it comes to non-technological innovation at

the B2C market. One could take out examples of famous B2C innovations, which

demonstrate the significance of the symbolic dimensions (e.g. Nike, Starbucks or Clearwater

pregnancy test – all of which are brands, whose physical product is not unique nor the best

performing) and then show how ambidexterity may be understood in such organizations.

There are other aspects, which would be very relevant from both an organization of

innovation and the CCT viewpoint, such as the exploitation phases of cultural innovations

(the above framework focuses almost exclusively on exploration phases) or open vs. closed

innovation. This paper, however, chooses to focus on how to deal with the abovementioned

knowledge flows. This makes sense, since knowledge flows are the most decisive element of

a cultural innovation. In the following we will bring together our CCT perspective with two

organizational concepts of knowledge flow management; absorptive capacity and

communities of practice. The former provides us with some general organizational principles

with regard to innovation, whereas the latter is a specific example of how a model of

organization of innovation can drive B2C innovation, i.e. cultural innovation.

Absorptive capacity Absorptive capacity is a term, which Cohen & Levinthal (1990) introduced in order to

describe organizational learning and innovation. The idea of absorptive capacity provides

some very powerful notions of how managers can make their organizations more apt to

perceive and utilize knowledge leading to innovations. In the following we will try to use

these powerful notions to suggest organization principles with regard to cultural innovation.

In order to say something about how to manage knowledge flows in our new

conceptualization of innovation, we must first understand the type of knowledge, we are

dealing with. Cultural knowledge.


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Absorbing cultural knowledge

There seems to be two ways of working with cultural knowledge. One can use ethnographic

or sociological analyses to illuminate and unpack the often tacit cultural knowledge. This is

common in corporations, because they have a strong need to know exactly, why and how

their product, brand or communication has an attractive cultural expression. A formal cultural

analysis by an anthropologist meets that need. An alternative option is to rely on the aspect of

embodied knowledge (Bourdieu, 1977) i.e. manage the organization in a way, that obviate

making cultural knowledge formally explicit and external to ourselves as in the first way.

Many successful B2C companies are indeed successful because they have an in-built quality,

which meant that its employees without much thought continuously and selectively collect

relevant information from society and use it in products and branding. Such organizations are

perfectly tuned in with their surrounding culture and thus automatically “absorp” relevant

knowledge to create innovative products. Cultural knowledge works here as an heuristic for

marketing decision making. i.e. the management does not need to specify exactly what

psychological or neuroscientific variables are triggered in a customer from a particular

communication or brand association in order to support a particular decision . This is the

need, for physical and tangible proof, which is common in many organizations. However a

proper mastering of culture can actually show to be more fool-proof than any other

“scientifically” tested communication campaign. One needs not the intellectual framing of

culture by an anthropologist in order to create culturally resonant brands.

One of the thoughts Levinthal and Cohen built their concept on is March and Simon’s

(1958:188) observation that innovation is actually more a result of borrowing than invention.

This notion of innovation is at the core of cultural innovation. Innovation lies not in the

invention of new ideologies or new meanings for your brand. Rather you are part of

something “cultural”, something “ideological” yourself. The innovation lies in how you

utilize this to create a brand, which gives you competitive edge. You borrow existing

ideologies to create myths around your own brand, hence becoming an ideological parasite

and proselytizer at the same time (see Holt (2006) for an analysis of this feature of brands).

Starbucks for example was a proselytizer of the rising ideology of cultural elitism in 1990s

America, which revolved around branded sophistication rather than just expensive stuff (thus

emphasizing cultural capital alongside economical capital for social class distinction). Hence

being a sophisticated coffee drinker was what drinking Starbucks symbolized for a long time.


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The main principle of successful absorptive capacity is that the organization’s expertise (i.e.

prior knowledge of a field) is highly correlated with their ability to identify technological

opportunities. Aspirations and strategy are not driven by potential economic performances

and results, but framed within the possibilities, which they see as a result their knowledge

base. Levinthal and Cohen may have underestimated the scope of this principle. It is not

merely a question of identifying technological opportunities, but also cultural opportunities,

which inspire creativity, which can drive combinations of ideology, myth and cultural codes

into an innovative cultural expression – such as Starbucks’ branded sophistication.

Diversity of minds in the organization is the key to cultural innovation

Within this framework, organizations (and individuals for that matter) possessing a lot and

diverse knowledge will tend to be more proactive, exploiting the technological opportunities

present in their environment, independent of current performance. Alternatively,

organizations having less diverse sources of knowledge tend to be reactive and more

occupied with performance criteria, which are economic rather than technical (such as

profitability, market shares or big data). Again, if we merely change the word “technical”

with “cultural”, we have a very resonant organizational principles to add to our CCT

perspective on innovation. Cohen and Levinthal’s description of the reactive organization is

very alike to the culturally orthodox organization in B2C, which reproduces taken-for-granted

cultural expressions, thus never escaping a red ocean scenario. Red oceans, if we recall, are

characterized by fierce competition driven by incremental innovation, since all follow the

same template for cultural expression in a culturally unreflective attempt to position and

differentiate themselves in the mind of the consumer. This was the case with coffee in

America before Starbucks introduced a new cultural expression for coffee based on cultural

sophistication. The proactive tendency referred to, then captures the organization, which

actively challenge the cultural orthodoxies and make their product or brand a symbol for a

latent ideology that is framed in a resonant myth and conveyed by strong cultural codes,

exactly as Nike, MTV or Levi’s in the 80 and 90s accomplished3.

From the above it seems clear that a diverse range of organization knowledge must come

through a diverse range of employees. It is the current and potential expertise of employees,

3 It is important to note that although most of the examples of cultural innovations on B2C throughout this paper are super-successful global brands, there are also a lot of examples of smaller organizations undertaking cultural innovations on a daily basis. Presenting such small companies, however, requires more elaborate descriptions of their business and of their consequently more particular cultural expression. The amount of pages assigned only allows reference to brands and ideologies, which the reader probably knows and where the link between the cultural innovation and the company success is more straightforward to acknowledge.


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which determines the organization’s prior knowledge of a given field. Cohen and Levinthal

also stress that a diverse range of knowledge alone will not lead to the proactive exploitation

of opportunities; “… an organization's absorptive capacity is not resident in any single

individual but depends on the links across a mosaic of individual capabilities” (p. 133). An

organization only utilizes the expertise of different individuals, if these have an overlapping

knowledge base, which will allow for effective communication and interaction with each

other. There is however a trade-off between the desirable diversity of knowledge and the

practically necessary commonality of knowledge. A culturally innovative organization must

consist of individuals, who can gain access to and handle the source materials for a cultural

expression; Some would have knowledge of or are immersed in a particular subculture (for

example employees in Samsungs TV division, who are part of Hi-Fi enthusiast communities),

some who are constantly aware of media and popular culture myths (Employee awareness of

how flat-screen TVs appear in popular culture) and others would recognize the potential of

existing assets with the organization (ESPN sports channel employees used their informal

low-budget studio in their advertising, which created an authenticity, which drove their

success). All such individuals are the representatives of a diversity of knowledge. A

commonality of knowledge, to ensure easy coordination among employees, must flow from a

general appreciation by organizational employees of the value of cultural expressions of

brands and products. Finally, mangers are also a source of common ground for the diversity

to meet. They must be culturally savvy individuals, who can identify latent ideologies in the

marketplace. As lead coordinators of a cultural innovation, they must know exactly how the

cultural expression works. They are the one, who coordinate a work group, who has access to

potential source materials (this is what Howard Schultz at Starbucks or Darius Bikoff at

Vitaminwater accomplished). Important to stress here, is that what we term “knowledge”

here, is something, which often goes unarticulated and is used in the advertising and product

development on a “gut-feeling” basis (Sunderland and Denny, 2007). This is because we are

dealing with cultural knowledge, which has the property of often being embodied, which

means individuals may not be very conscious of their own cultural skills.

Levinthal and Cohen were very limited to talking about R&D as the organizational unit

responsible for absorping (i.e. discovering and exploiting) relevant knowledge. This clearly

needs not be the case with cultural innovation. More specifically Holt & Cameron suggest


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cultural studios, which were mentioned above, as the real “absorpers” of the organization4.

We will return to this shortly. A central theme in Cohen and Levinthal is for example the

copying of innovation from and of competitors (spillovers and appropriability). With the

cultural innovation these themes become of much less importance, since it is much harder to

legitimately (in the minds of consumers) imitate a cultural innovation than a technological

production process of product. For example, it would be very hard for LG mobiles to get

away with saying that “LG stands for anything, you want it to stand for”, since this would be

an exact same element of the cultural expression, which HTC is promoting of their brand.

The organizational challenge of implementation

“Absorptive capacity is more likely to be developed and maintained as a byproduct of routine activity

when the knowledge domain that the firm wishes to exploit is closely related to its current knowledge

base. When, however, a firm wishes to acquire and use knowledge that is unrelated to its ongoing

activity, then the firm must dedicate effort exclusively to creating absorptive capacity (i.e., absorptive

capacity is not a byproduct). In this case, absorptive capacity may not even occur to the firm as an

investment altemative. Even if it does, due to the intangible nature of absorptive capacity, a firm may

be reluctant to sacrifice current output as well as gains from specialization to pennit its technical

personnel to acquire the requisite breadth of knowledge that would permit absorption of knowledge

from new domains.” (Levinthal and Cohen, 1990, p. 149)

Although the above quote is about technological innovation, the issues put forward resonate

even more strongly with cultural innovation. Cultural innovation often occurs through

individuals of the organization, who are naturally immersed within the surrounding culture

because of personal interest or passion, i.e. their cultural knowledge is the “byproduct of

routine activity”. By-product in this case is of course cultural knowledge, and as mentioned

before, culture has the wonderful property of residing in our very bodies and is therefore

accessed by marketers and businesspeople on a “feel”-basis. They are able to interpret culture

and to see “patterns”, which are relevant for the company brand and product – thus enhancing

the organizations absorptive capacity with regard to cultural innovation. This is the

individuals in the cultural studio or the individuals, who from their passion of some ideology

or culture succeeded in making great businesses (particular examples are Ben & Jerrys, Nike

or Starbucks). But what then, when one does not possess these “gut-feelings” of the fact that

flat-screens for example, are not just about the technical performance, but just as much a

furniture in the home, an aesthetic piece, for which reason wives of hi-fi geeks become key

4 If we ask McCracken (2009) (another perspective on innovation based on CCT), he would identify the absorbing unit as the Chief Cultural Officers.


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decision makers? In such a case, we note that cultural analysis (made by anthropologists, for

instance) unpacks and illuminates specifically such tacit cultural knowledge. In the words of

Levinthal and Cohen such cultural analyses represent a dedicated ”effort exclusively to

creating absorptive capacity [emphasis added]”, as a compensation for the lack of by-

products. We mentioned formal cultural analysis as a way of obtaining cultural knowledge

above. It effectively serves as a compensation for the lack of prior cultural knowledge in

many companies today. Specifically qualitative (and possibly also quantitative) research

often become the tools for building an organization’s absorptive capacity. You conduct

interviews, perform observation, make semiotic analyses or discourse analysis in order to

build the absorptive capacity, which is needed for making innovations based on cultural

knowledge. This indeed is a topic for another paper on B2C innovation; how must one

organize the research efforts and integrate its resulting knowledge into the organization – in

other words, organize a research-driven company? The last point in the above quote,

however, raises an important point; many firms are reluctant to “sacrifice current output as

well as gains from specialization to […] acquire the requisite breadth of knowledge that

would permit absorption of knowledge from new domains” – in our case, we recognize this as

the reluctance to spend money on cultural research. We can ascribe this to the

aforementioned need for more tangible research, such as statistics, neuropsychology and

other positivistic sciences. Even more, marketing is often the first area to get fewer resources

or be cut down on. This also significantly lowers the absorptive capacity with regard to the

symbolically driven innovations, since marketing departments are the often the only ones

acknowledging the value for business of such innovations.

In this section, we have identified some general organizational principles and issues based on

the concept of absorptive capacities. They however are of little practical use as they give no

directions for implementation. We will now move on to a more specific organizational model

with regard to cultural innovation.

Communities of Practice Communities of practice (CoP) is one organizational approach to cultural innovation. There

are of course other organizational approaches or tools, which potentially promote the

commercial utilization of cultural knowledge. Lane and Wenger (1991) were main promoters

of the CoP concept. A slightly reductionist definition of their concept of CoP, which suffices

in this paper, is “groups of people informally bound together by shared expertise for a joint

enterprise” (Wenger & Snyder, 2000).


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The appeal of communities of practice for cultural innovation

We do not have the space for giving an elaborate description of how a CoP works.

Fortunately, we only need to deal with some basic principles of CoP in order to demonstrate

its appeal with regard to cultural innovation. The appeal of CoP lies in the fact that these

communities evolve themselves. It is commitment to a particular element of work, which is

driven entirely by passion and identification with the group’s expertise. Such commitment to

develop particular knowledge, which has potential value for the company, is not even to be

found in informal networks (where it is mutual needs among friends, rather than passion for

knowledge, which is attended to), and certainly not formal work groups and project teams

(Wenger & Snyder, 2000). It is the social dynamics of CoP, which creates access to its

rewarding practice – i.e. the “shared repertoire of communal resources (routines, sensibilities,

artifacts, vocabulary, styles, etc.) that members have developed over time” (Wenger, 1998). It

is exactly this, which makes CoP very adept organizational vehicles of cultural innovation,

because such shared repertoires are a prerequisite for the absorption and exchange of cultural

knowledge, which is so often tacit throughout an entire innovative development. We will

elaborate on this by introducing three organizational concepts.

Power – CoP functions as a sphere protecting from the formal power relations in the

organization (Roberts, 2006)5. Being free of the formal organizational power grid is often

exactly what the culturally minded marketing employees need in order to turn their cultural

knowledge into an innovative campaign. CoP are designed so to give full control of their idea

phases, and subsequent planning and implementation process. A CoP is independent of

superiors, who give little validity and legitimacy to the use of culture and ideology in

marketing work, which are today still quite a lot of people. We often see an amount of

bureaucracy in marketing departments, which ruins the creative process, because everything

must be backed by what they consider “scientific” (Brown, 1996) – often quantitative

approaches are thought to have this quality. This explains why many marketing departments,

without much thought, base their work on statistics of how consumers behave and think as

exemplified by Big Data (which is basically putting numbers on something that essentially

qualitative). As another example, the introduction of neuropsychology in marketing

represents the search for physical proof that people have “buy-buttons”, which can be pressed

5 There are of course limitations to this as well: “Communities of practice may become static in terms of their knowledge base and resistant to change. Knowledge that is aligned with the specific predispositions of a community and supports the identity and current practices of its members is likely to be adopted more readily than knowledge that challenges current identity and practice.” (Roberts, 2006)


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by advertisers. Consequently in a CoP members will not have to explain that a particular

kind of cultural code must be used, because it conveys a myth and an ideology, which will fit

the product into the everyday lives of a group of consumers. The process towards cultural

innovation is more likely to be corrupted along the way within a formal organizational power

grid than within the protective structures of the CoP.

Trust – Another reason why CoP are so appealing an organizational form for managing

cultural knowledge is the trust among its members: “Trust, familiarity and mutual

understanding, developed in their social and cultural contexts, are prerequisites for the

successful transfer of tacit knowledge” (Roberts, 2006). Many of today’ organizational

interpersonal relations are mostly formal and individual security lies in contracts, which

means that social trust is limited. CoP are an exception to this. There is no contract, no

predefined structure or roles. Actually, these are things, which are co-created by the

members. This leads to a interpersonal trust, which can never be achieved in their

conventional organizational roles. Coopey (1998) notes, ‘the ideology and practices that

constitute “management” tend to undermine the foundations on which trust is built, and hence

the processes through which people become committed to an enterprise, and those through

which they learn and innovate.”

Although our perspective in this paper would like a marketing department to work as a CoP,

we must of course have some degree of formal procedures and contract-based security. A

department culture leading to the kind of trust among employees as in a CoP, can be achieved

only by having marketing employees, who apart from their strong “feel” for culture and its

commercialization, must all be able to create relations to each other which go beyond their

formal organizational roles. We will talk more about the importance of people management

below.

Predisposition – Knowledge sharing in a group is dependent upon the predisposition of its

individual members. Thus the knowledge a member is moderated when brought to the table

and pooled with the others’. CoP stand out in this regard with its flexibility of its member

base. Since there are no predefined rules for when or how to join and leave a CoP, there is a

lot more potential for different combinations of people and predispositions, and thus different

combinations of tacit knowledge, which may lead to groundbreaking ideas. There is an

important potential pitfall here though; “Communities of practice may become static in terms

of their knowledge base and resistant to change. Knowledge that is aligned with the specific


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predispositions of a community and supports the identity and current practices of its

members is likely to be adopted more readily than knowledge that challenges current identity

and practices” (Roberts, 2006).

It is no coincidence that the idea of cultural innovation is so suggestive of CoP. The most

successful cultural innovation are actually created by marketing departments, which have the

characteristics of communities of practice. Holt and Douglas saw this and referred to these

cultural CoP as “cultural studios”. Now that we can have demonstrated the appeal of CoP we

will we move on to discussing how to cultivate CoP/cultural studios building on the ideas of

Holt and Cameron themselves and the general CoP literature.

What it takes to cultivate cultural communities of practice in an organization

“The context within which a community of practice is embedded is a major factor

determining its success as a means of creating and transferring knowledge” (Roberts, 2006).

It is important to acknowledge this fact of reality of communities of practice, because the

context, we want a CoP to appear in here is the marketing department. This paper proposes

that the marketing effort be driven by principles of CoP. This specifically requires creating an

environment, in which CoP are the natural way of organizing marketing efforts. This is where

this paper tries to break new ground in organization theory.

It is highly dissatisfying to suggest that “more decentralization” and “more autonomy” -

which is seen in so much of organization and marketing theory alike – leads to employees

forming CoP. As if it is only a question of reorganization to something “more democratic”,

more “free”, more “liberal” (see e.g. Kotler, 1992) and away from the evil “authoritarian”,

“hierarchical” and “bureaucratic” kind. Although this may have a factor to some extent, such

contentions often have more to do with Western cultural ideals of agency and democracy, and

less to do with a practical assessment of business reality. Such contentions seem to forget real

factors of social life and organizations such as trust, power and predisposition, which we

discussed above.

“While cultural studios emerged for reasons that are often ideosyncratic, the properties of

the studio itself were consistent in all of cases” (Holt & Douglas, 2011). It should be no

surprise that the common properties are the result of a certain mindset of those managing and

involved in a CoP/cultural studio. Wenger & Snyder (2000) emphasize that organizing for

innovation through CoP very much relies on successful managers to reap the benefits of CoP.

We noticed above also the requirements of the managers with regard to absorptive capacities.


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We need the managers to be culturally savvy, i.e. identify ideological opportunities and be

the coordinator, evaluator of the creation or maintenance of cultural expressions. The

manager is the one who, help his colleagues see, what they can’t – much like Don Draper6

decides if an idea should be executed or not, but everyone knows he is right. Actually, the

cultural innovations throughout time tell us of invaluable managers, who were neither

creative nor passionate enough to be involved in a CoP. They, however, became unsung

heroes of an innovation by protecting the CoP from bureaucratic powers throughout the

process and giving them resources along with the full responsibility for the success and

failure of their ideas. For example Holt and Douglas (2011) note in this regard: “Selling

cultural innovation to senior management requires a delicate dance … they necessarily lack

the nuanced tacit knowledge that has evolved within the cultural studio [i.e. CoP] […] [but

they] often want to put their mark on the work”. Such executives with the need for control,

but who lack the required knowledge and skills, are often what ruins the success of a CoP

undertaking. A minimum appreciation of the cultural approach is needed for a manager –

regardless of whether he/she is the active or supportive kind - , because one of the drivers of a

potential innovation is something as simple as listening to the stories of the CoP members in

systematic ways. “You can’t just collect certain stories, perhaps the most compelling ones,

because isolated events can be unrepresentative. A systematic effort captures the diversity

and range of activities that communities are involved in” (Wenger & Snyder, 2000). We will

now elaborate on how to listen and how to act on such listening when cultivating CoP with

the intention of raising the probability for cultural innovations.

A key task for the members of a CoP is defining a community’s domain. The virtue of CoP is

that every single member commits themselves fully to the group’s area of expertise (Wenger

and Snyder, 2000). It is up to the manager to ensure that this area of expertise or this domain

is clear throughout an entire process, so every member keeps having a personal dedication

with the CoP. Using the framework developed in this paper, a manager would ensure that the

CoP consists of people, who can frame a product or brand in a latent ideology or myth, others

who have access to source materials for the cultural codes needed (for example a subculture,

design director or journalist on a relevant magazine).

Communities of practice are vulnerable because they lack legitimacy and budgets – thus it is

the job of the manager to create a notion of legitimacy around voluntary activities such as

6 An advertising genius from the TV drama series “Mad Men”


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communities of practice. Managers must seek to “structure spontaneity” because spontaneity

is often what initiates a CoP undertaking. In relation to cultural innovation every employee

must at least understand the embodied nature of cultural knowledge, and thus that cultural

insight can appear at anytime with anyone. This may give them the confidence to trust their

own spontaneousness and seek the value from their ideas through a community. An important

task for the manager is also to use his structural overview to make connections between

different CoP across the marketing department (or even the entire organization), and thus

suggest supplements or inspiration for each CoP.

Managers must be able to have regular interaction with the attempts at CoP in order to help

them with structural or financial problems if he or she sees the potential of a particular CoP’s

work. So in our case of cultural innovations, what does that mean? For one thing one must be

sensitive to trial and error. Be ready to sacrifice resources on something, which may not yield

results until a certain amount of time has passed. Just because you feel you are on to

something and the first campaign or cultural expression doesn’t work, does not mean that

your “feel” for culture was wrong. Maybe it just need some time and corrections. This is very

common with some of the most innovative cultural expressions – such Marlboro, Nike,

Levi’s or Snapple. As a matter of fact cultural knowledge is accumulated iteratively. This

means that a CoP or cultural studio will not initiate because of a specific idea or cultural

expression, which needs a strategic execution. Rather the motive for the immersion in the

CoP will be the enjoyment of continually discovering cultural leads, new minor insights and

nuances from passionate and empathetic immersion with the product and its consumers and

lastly the satisfaction of the CoP’s collaborative improvisation, which pushes an idea forward

iteratively. (Holt and Douglas, 2011)

A realistic assessment would include some critical points about the ideas and suggestions

above. For instance, in order to spend a manager’s time and the organization’s resources on

CoP initiatives, which may or may not carry value, relies heavily on having the employees,

who are actually skilled and passionate enough about the brand, product and the consumers.

Otherwise the organization is moving down a very dark and financially damaging path.

Cultivating and nurturing CoP means investing, and it is not for everybody – only those

with confident, skilled and passionate enough employees. How do we know whether this

is the case? Cultivating and nurturing CoPs is very much dependent upon the HR effort of the

organization in hiring and developing its employees (Roberts, 2006). We mentioned above

that this paper envisioned a marketing department, which is driven by CoP work, because


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B2C innovation depends so much on the symbolic non-technological features of products

rather than the functional and technological ones. Based on our above description of cultural

expressions and of how CoP work, the marketing department must consist a certain kind of

individuals: Firstly, it must be people, who get annoyed by cultural orthodoxies – i.e. worn

out symbolic meanings and cultural expressions - in their respective market (for example

trendsetters have grown tired of the hipster appeal in clothing and many other spheres and

have begun a new cultural expression of normcore; buying clothing in discount stores and

doing everything not to stand out in their appearance, i.e. being as normal as possible7”).

Secondly, it must be individuals, who are passionately immersed in the product or brand of

the company. These people have a much greater incentive to be part of external networks of

artists, journalists, trendsetters or any kind of individuals, who can bring in valuable extern

knowledge into a CoP and thus the organization. The immersion of these people into

networks or relevant subcultures also makes them more likely to identify latent ideologies

and source materials (i.e. subcultures, media and popular myths and prior brand assets)

needed in creating a new cultural expression. A marketing department with individuals, who

fit these characteristics, will have greater success at cultivating CoP, which in return may lead

to new successful cultural expressions boosting sales. Such individuals, will know if and

when to join a cultural CoP. They will be people, who have a great incentive to share and

exchange knowledge and not least enjoy iterative learning and trial-and-error experiences

through a community of likeminded. Such people have internalized their cultural knowledge

and learning specific to the brand and product to a degree that creating innovative marketing

material seems to come naturally to them (Holt and Douglas, 2011). One question comes to

mind here: What is the difference between this and other academic and professional

admonitions about being passionate about your business or being an authentic company etc.

(Schultz & Yang, 1999; Amabile, 1999 or Steve Jobs8) - ? Such admonitions have until now

been good advice because it can lead to great results and personal happiness. Here however

we go into a deeper analysis and suggest that this only becomes a commercial success if the

particular passion and authenticity of the company caters some latent ideology with the

consumers.

7 http://www.information.dk/493515 8 “You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it”, Steve Jobs’ speech to graduating students at the Stanford University in 2005.


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Conclusion The first thing to conclude with regard to this paper is the fact that it is not a traditional

treatise on organization of innovation. As mentioned in the introduction, this paper is rather

an attempt at extending the line of thought within the theoretical field of organization of

innovation by introducing new concepts. The paper started out with an argument, that a lot of

innovation – especially in the B2C market – cannot be accounted for nor explained by the

theory of organization of innovation. Consequently, the paper introduces a perspective from

marketing studies, which may carry the solution to this research gap. In this new theoretical

perspective it is a widely accepted that, commercial ideas break through because of their

symbolic content as much as their functional attributes. Specifically with regard to innovation

we moved on to the cultural strategy framework of Holt & Douglas (2011). The basic idea

here was that cultural expressions resonating with contemporary culture and history of a

society leads to innovative business. A successful cultural expression draws its inspiration

from latent ideologies in a society, from myths relating to the ideology and lastly specific

cultural codes in the advertising and communication, which symbolize this myth.

Having introduced the concept we started integrating it with existing concepts in organization

of innovation, which relate to managing knowledge flows; absorptive capacities and

communities practices. From this we have tried to introduce some principles and advice

relevant for academics and practitioners alike.

From the theory on absorptive capacities, we concluded that employees must reflect a diverse

knowledge base of the organization in order to continuously spark interest for new and

relevant cultural knowledge – for example individuals who know about contemporary

popular culture and media myths, about relevant subcultures and understand the potential of

the existing brand and organization. Managers would then be responsible for the

commonality of knowledge which can allow for effective utilization of the diverse and

random cultural knowledge, which the organization absorbs. We also argued that cultural

research may be a compensation for employees lacking cultural knowledge or skills.

Communities of practice represented a very attractive model of organization with regard to

cultural innovations. The appeal of CoP lies in its “shared repertoire of communal resources

(routines, sensibilities, artifacts, vocabulary, styles, etc.) that members have developed over

time”, which creates attractive power and trust relations. Furthermore its flexible member

base creates a desirable knowledge flow. All this eases the creation and proliferation of


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cultural ideas in the organization – i.e. if there are skilled managers to cultivate, nurture and

legitimize the operation of CoP. Furthermore and just as importantly, CoP yields results only

if comprised by passionate and highly knowledgeable (knowledge of the organization’s

customers and the culture in which these are immersed, the company brand, of the competitor

strategies etc.) individuals within the organization.

We started the synthesis section of this paper by identifying implications of the new

definition of innovation, which the cultural strategy framework provides. This paper has

chosen to limit itself to the domain of knowledge flows, which is indeed very fundamental to

cultural innovation, as this is a relatively very qualitative (with regards to the “fabric” of

work) and untangible idea. In summary of the above, one could make practically relevant

extensions of this framework by including more organizational ideas such as how to

understand ambidexterity in cultural innovation or how to exploit an already well-received

cultural innovation (the theory on cultural strategies are almost exclusively occupied with

how to discover, create and explore relevant cultural knowledge). Lastly since cultural

innovations depend so much on knowledge flows, the theory on open innovation may provide

some helpful organization tools for absorbing relevant cultural knowledge.


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How to organize for cultural innovation

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