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Rinnakkaistallenteet Yhteiskuntatieteiden ja kauppatieteiden tiedekunta
2021
Barriers of Employee-driven Innovation in a Small Retail Store
Hiltunen, Esa
Bloomsbury India
Artikkelit tieteellisissä kokoomateoksissa
© BIMTECH, 2021 All rights reserved
https://www.bloomsbury.com/uk/sustainable-entrepreneurship-9789354350559/
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Barriers of Employee-driven Innovation in a Small Retail Store
Esa Hiltunen* and Teemu Laitinen
*Corresponding author
Abstract: The purpose of this research is to study barriers that limit employee-driven innovation (EDI) in a small retail store from the employees’ perspective. In recent years, research on EDI has gained more attention, but the existing literature is still relatively limited. By focusing on EDI barriers, this study supports organisations in identifying their obstacles and improving their innovation practices. Understanding the barriers that limit innovativeness is not only important for the store itself, but also for its employees, as the findings can help them become more innovative, resulting in improved customer and employee satisfaction as well as better support for innovativeness from managers in organisations. This qualitative study was conducted in K-Market Neulamuikku, a small retail store in Kuopio, Finland. The interviews were analyzed using qualitative content analysis to outline barriers from the gathered data.
Dilemma: As the main dilemma, we ask: How employees can contribute to innovation in a small retail store and what the company and management can do to ensure that there are as few barriers as possible so that new innovations can take place?
Theory: Theoretical framework of the case base on innovation management, innovation in the service context and employee-driven innovation
Basis of the Case: Phenomenon
Type of the case: Applied Problem Solving Protagonist: Present
Findings: The study shows that barriers are linked to support for innovation, possibilities for innovation, social issues and external factors. The importance of EDI is not always concretised in practice on the shop floor at the employee level. Thus, fostering EDI requires reassessing current procedures and mindsets, and ensuring that innovation is prioritised and supported. However, there are also opportunities to develop an environment that supports employee-driven innovation.
Discussion: The study contributes to previous research by filling a gap in the existing literature of employee-driven innovation in the retail sector. There have been very few studies regarding barriers of EDI in small-scale retail contexts. At the heart of EDI, is the idea that all employees have the capabilities for innovation. The customers are a crucial part of any service organization and customer-centricity is brought up numerous times in existing service/retail literature. This study discusses the idea that too much emphasis on fulfilling customers’ wishes, combined with limited physical space might limit employee-driven innovation. This study didn’t find any implication that costs would be a barrier for EDI even some previous research discussion has found that retailers see innovation costs as a major obstacle for innovation.
Keywords: Case study, employee-driven innovation, innovation management, qualitative study, retail
*Esa Hiltunen, Senior Lecturer, Innovation Management. The University of Eastern Finland, Business School, Kuopio, Finland.
Email: esa.hiltunen@uef.fi
Teemu Laitinen, Financial Secretary. The University of Eastern Finland, Kuopio, Finland.
Email: teemu.e.laitinen@uef.fi
Introduction
The purpose of this research is to study innovation in a small retail store from the employees’
perspective and explore barriers that hinder innovations. Employees have valuable knowledge at the shop floor level regarding successful interventions and possibilities for improvement, and they may be able to offer reasonable suggestions or innovative ideas about how certain aspects could be improved.
It is important to ensure that as few barriers as possible exist so that new innovations can be implemented.
Employee-driven innovation (EDI) is a rather new concept in the innovation management research stream, and thus, the literature on this topic is still relatively limited. Barriers of EDI require additional research. Aaltonen and Hytti (2014) stress that innovation barriers have been mostly ignored in the existing literature. They also emphasise the importance of studying smaller organisations instead of focusing on larger enterprises alone (Aaltonen & Hytti, 2014, p. 167).
Understanding the barriers that limit innovativeness is important for the organisation itself, as it may help managers to support innovation activities and improve employees’ innovativeness, thereby resulting in improved customer and employee satisfaction.
The study is structured as follows. First, innovation in retail and EDI will be discussed in the section titled Theoretical framework. After introducing the qualitative research methodology used in this study, the results of the content analysis of innovation barriers from the employees’ perspective will be presented in the section titled Findings. The sections Discussion and Conclusion present the key
contributions of this work, recommendations, limitations of this study and avenues for future studies on EDI.
Theoretical Framework
Innovation and retail
As in many other industries, innovation has become a crucial part of an organisation’s success in the retail sector as well. However, as Hristov and Reynolds (2015) point out, retail organisations tend to score poorly on traditional innovation measures. Pantano (2014) suggests that retailers are innovation adopters to a greater extent than developers and that their innovations tend to be more focused on technology. According to Hristov and Reynolds (2015), research innovation in retail is more continuous rather than radical, a finding that is consistent with those of previous service innovation studies.
Employee-driven innovation
At the heart of EDI is the idea that every employee has the potential for innovation regardless of their background (Aaltonen & Hytti, 2014). However, Hoyrup (2010) states that “Employee-driven innovation is a new form of innovation and one that tends to be overlooked”. Most previous innovation-related studies focus on specialised innovation in research and development (R&D).
Furthermore, decisions about innovations still tend to be the domain of managers or a few chosen individuals (Kesting & Parm Ulhøi, 2010). This valuable information is easily lost in centralised R&D innovation, as most front-line employees do not have the opportunity to participate in laboratories and R&D meetings. Recognising that every employee is unique is highly important to establish and maintain an innovation culture (Uzkurt et al. 2013, p. 111).
The major difference between innovation in its traditional sense and EDI is that the latter is usually a bottom-up process whereas innovation does not require a dedicated physical space; instead, innovation occurs naturally as part of a normal working day (Hoyrup, 2010). Indeed, surprisingly, EDI may be “simple, low-cost, easy-to-enact and seemingly common-sense developments” (Smith 2017, p. 119).
Barriers to innovation and EDI in retail
Reynolds and Hristov (2009) point out that retailers do not necessarily think about their work from the innovation perspective. Moreover, retailers may not readily recognise the benefits of innovation, since they are more difficult to measure than other “hard” figures, such as profits or inventory turnover (Reynolds & Hristov, 2009).
On a broader scale, the major barriers to retail innovation seem to be the costs and risks related to it.
From the retailers’ perspective, the costs of innovation are too high compared to its benefits.
According to Reynolds and Hristov (2009), availability of finance, cost of finance and direct innovation costs are among the biggest barriers to innovation. Lack of qualified personnel is also regarded as important a barrier as these cost-related factors. However, it should be noted that although all the above-mentioned issues are genuine, Reynolds and Hristov’s (2009) study was conducted from the retailers’ perspective.
Innovation is also associated with risks. As so many new innovations are visible to customers, they become public knowledge, making them vulnerable to duplication. As competitors can copy others’
innovations very easily, retailers may feel discouraged from investing valuable time, money and other resources into creating new innovations (Reynolds & Hristov, 2009).
EDI barriers may be related to freedom, time, trust, physical spaces, organisation culture or managerial support, among other factors (Aaltonen & Hytti, 2014). Although EDI is quite resource- friendly, it does not occur by itself, and careful consideration of these issues is needed to discover barriers that might limit innovation. In addition, previous research suggests that the variations in
employees’ job descriptions due to their educational backgrounds exert a positive effect on their motivation to innovate (Aaltonen & Hytti, 2014).
Methodology
Case company and research methodology
This research was conducted at K-Market Neulamuikku, which is part of a larger retail chain called Kesko Plc. The store has 12 employees and is located in a small suburban area in Kuopio, Finland. K- Markets present themselves as personalised, local and modern stores with superior customer service.
K-market Neulamuikku is run independently by a shop owner, with a store manager overseeing the day-to-day operations.
The empirical data were gathered using five semi-structured interviews. The interview schedule was decided with the store manager. At the shop owner’s request, the interviews were limited to 30 minutes due to the busy nature of the sales work. The interviews took place in the break room of the store; while the location was not ideal due to the heavy sounds of machinery at times, it was a comfortable and familiar space for the interviewees. After the interviews were complete, each interview was transcribed into the written format. The interviews were analysed by qualitative content analysis to identify themes around EDI barriers. We ensured that our study followed all the relevant ethical guidelines. Accordingly, the data collection and analysis were presented in a manner that protected the study participants’ anonymity. However, the real name of the case company is presented
with the study participants’ permission.
Findings
Barriers of employee-driven innovation
Innovation on demand. “Innovation on demand” means that very often, innovation seems to take place only when and where necessary. It relates to all aspects of the store in question, including how the employees and managers think, how the work is organised, how people perceive their working environment and what is expected of them in their jobs. No permanent structures are built for innovation; instead, innovation and creativity only come to the fore when something needs to be improved and new ideas are required. One of the interviewees touched upon this issue as follows:
There have been attempts, for example, when we are planning something, to encourage each of the workers to come up with a couple of ideas on how to improve, but there really haven't been that many [new ideas].
This is an example of a situation where workers have a chance to exercise their innovativeness and creativity. However, a prerequisite for this situation is that some element needs to be awry or someone needs to realise that the current procedures are insufficient or defective. Thus, instead of employees being given an opportunity to practice innovativeness as part of their jobs, they tend to think reactively.
Although EDI can be a natural component of everyday work on the job, it does not necessarily occur by itself without any support from the company. The interviewees were often unable to provide examples of innovation in their work.
Interviewer: In your opinion, how does innovativeness show in your daily work?
Respondent: I'm not sure if it shows that much on a daily basis.
Interviewer: Well, not necessarily every day, but also considering a longer time span?
Respondent: Well yeah...I don’t know if I’m able to answer that one….
If the employees do not realise how they can innovate and influence their daily working environment, their participation in innovation development activities will be limited.
Motivation and rewards. Lack of motivation and reward systems for EDI were mentioned as barriers to innovation by each participant. Motivation relates to existing work assignments. However, the interviews revealed that the employees received little or no motivation. In other words, they were not encouraged to innovate as part of their daily work activities.
No, there is really no motivation when it comes to creating new ideas, but there is motivation relating to other work-related stuff.
Another issue related to motivation was rewards. Rewards may not increase employees’ intrinsic motivation, and if overdone, they might even affect motivation negatively. However, a total lack of rewards is likely to decrease employees’ desire for innovation. Rewards do not have to be monetary;
they could simply take the form of an acknowledgement for a job done well.
Work environment and nature of the work. The importance and value of EDI were understood among the interviewees. Each one of the participants considered the creation and development of new ideas for the store as important. However, the interviews also revealed the prevailing perception that performing daily tasks is much more important than developing new ways of doing things.
First, the hectic nature of the work was a major concern raised in all the interviews.
Employees used expressions such as “rush”, “no time” or “tight schedule”. Even on the
quieter days, the retail work environment in the case company is hectic, and it is not uncommon for the workers to have more work than they can handle during a shift. The constant rush means that employees may not have enough free time, which are major stimulators for creativity.
In the case of K-Market Neulamuikku, one to three employees (most often two) work on the same shift simultaneously. One employee stated:
In my opinion, the biggest barrier (for the birth of new ideas and their development)…is that we have more work for two people than any other store that I have seen...Yeah, I would say that we simply don't have the time or personnel to do new things in addition.
As only two employees are required to complete all the store work, the only time they might have to think about creative ideas is while working or during their personal breaks. Thus, this does not leave much room for innovation activities.
The multitude of different work assignments in this busy work environment poses another issue. One of Kesko’s competitive strategies is to provide versatile service to their customers, which in turn creates additional tasks for its employees.
Physical environment. Physical spaces were mentioned either directly or indirectly as an innovation
barrier. Physical spaces or insufficient tools can be major limitations that directly affect the possibilities for innovation. Customer feedback criticising the placement of one of the fruit/vegetable scales is one example of how physical spaces can limit the use of new ideas offered by customers or employees. After considering an alternative, the employees came to the conclusion that the scale could not be relocated due to limited space.
At K-Market Neulamuikku, additional services such as the salad bar and postal services limit the already small store space. Limited room space is often mentioned in customer feedback, and this aspect affects the store’s layout by limiting shelf arrangement. Instead of asking “How should I do this?”, the employees must often ask themselves “How can I do this?” It requires creativity to work within the existing resources, and the possible solutions are always limited by the amount of space available.
Mindset. Another common issue involves employees thinking that they cannot possibly influence certain problems.
Placing the line and cigarette sales to one side only slows down the cash queue. But there isn't really much we can do about that.
Employees may take certain problems for granted. They do not consider alternative solutions and do not actively think about new ideas to complete tasks even if they consider innovation important on a subconscious level. For example, when asked how the store could encourage customers to offer suggestions for store development, one of the interviewees commented as follows:
It is difficult to say; I have never thought about it, to be honest (laughing).
Although the employees considered EDI important, they still thought that it is not part of their job and that managers are responsible for innovation and development. Thus, they expected guidance on these issues. The following conversation from one of the interviews raises interesting thoughts regarding this issue.
Interviewer: Do you have some sort of development plan that you follow here in this store?
Respondent: I guess that the store owner and managers have one. I’m not sure; I think they have some sort of plan, but it hasn’t been brought to our attention.
Interviewer: How do you think it should be?
Respondent: There should be one [a plan], and I think there is a plan that they follow, according to which we work. However, it should be common knowledge for everyone, so that the rest of us could act according to it, and avoid mistakes or misunderstandings.
If a development plan does exist, it is not known to every worker, which might indeed be a limiting factor for innovation, as the employees are unaware about what is expected of them and the desired direction to be taken for the company’s development. They expect that the management is in charge of such development and setting this direction. The employees only need to follow that plan, work
accordingly and avoid mistakes. When asked the same question (about the existence of a development plan), another employee answered
I think I’m the wrong person to tell you about that (laughing).
This is another example of how the notion of development might seem very distant to the employees, causing them to feel disconnected with the store’s improvement.
Communication and openness. Regarding communication, all the interviewees mentioned the importance of WhatsApp. This application is advantageous as it is a fast and efficient way to spread the word to everybody at the same time. From an innovation perspective, however, ideas can be very easily lost among too much information, and it is very difficult to present complex ideas in a constructive manner via short messages. One of the interviewees noted that
You don’t necessarily see the store owner, as she’s working the morning shift and when you come in the evening, she has already left. That’s why WhatsApp is good.
WhatsApp is a useful tool for supporting the firm’s communication, but it cannot replace face-to-face meetings from the standpoints of innovation and development. Moreover, it was pointed out that when using WhatsApp, it is quite common to concentrate on negative matters (such as mistakes someone on a previous shift has made) instead of using the tool as an open forum for creative ideas.
One employee felt that more open communication would improve job motivation. When asked how employee motivation could be improved, the respondent answered
I would say it’s perhaps through openness. We shouldn’t withhold any information, whether it is irrelevant or not. It would increase the sense of belonging and importance to the group.
Small steps towards more open communication might cause the employees to become more personally involved with the store and care about developing an environment that they are already a part of.
Atmosphere, equality and work-life quality. Although all of the interviewees rated their workplace
atmosphere as “very good” in general, they did point out some issues that affect the sense of equality.
One of the interviewees shared the following comment on this topic:
There is more communication with the morning shift and department
managers…maybe less with the evening shift because it’s, after all, pretty basic sales and customer service.
This is an example of a situation where employees might feel that they are put in an unequal position.
Another interviewee commented:
I feel like my opinion is not always listened to equally. I don’t necessarily bring myself forth that much nowadays since it doesn’t seem to be OK for everyone.
In this manner, the feeling of inequality might become a barrier to EDI. It is important that everyone’s opinions are taken into account, and even if the ideas are not immediately implementable or worthwhile, an attempt should be made to develop them or the reasons for the inability to implement the idea should be rationalised. Such feelings of inequality will lead to a deteriorating work atmosphere which will, in turn, cause the employees to become more withdrawn from others and communicate less. The store will miss out on innovative ideas because its employees were never allowed to even voice them.
Customers. Providing more resources for customer service has both pros and cons. On the one hand, outstanding customer service is one of the most important aspects of any service provider, but it might also have some drawbacks if prioritised excessively above other matters.
At Neulamuikku, customers are highly valued and play a big part in the creation of new ideas.
According to the interviewees, the store listens to the customers and considers almost all their ideas.
As customer-generated ideas are always taken seriously, the employees strive to fulfil all customer wishes or at least those for which the resources exist. Since all customer-generated ideas are highly prioritised, the employees’ own innovations are sometimes overlooked. A mindset and actions overly centred on the customers divert resources from EDI, and this is not beneficial for the overall
performance of the store. The customers are often limited to seeing their own perspectives alone because they do not have all the necessary data to make informed decisions or choices.
Discussion
EDI intends that every employee uses their potential for innovation regardless of their background (Aaltonen & Hytti, 2014). The participation of every employee in innovation and development is very important, as employees possess innovativeness that companies could utilise.
However, in this study, the employees’ contribution to the store’s development was desirable, but the interviewees were often unable to provide examples of how innovation is linked to their jobs.
Aaltonen and Hytti (2014) state that employee participation in development is considered important;
yet, without support from the management, their contribution to innovation may often be limited to very small changes that have a direct effect on their immediate work environment.
Our study shows that EDI needs support in various forms: time, space, processes and communication.
Observations at the studied small retail store made it evident that performing the required tasks and keeping the store running are a higher priority than innovation. According to Birkinshaw and Duke (2013), managing innovations may be difficult, because workers are assigned certain responsibilities, and managers are obliged to ensure that the job gets done. Many employees mentioned that the nature of the store work is so hectic that there is simply no time left for aspects beyond the “scheduled”
activities. In such a set-up, namely a small grocery store, every employee – including the manager – is expected to be able to implement all kinds of tasks. The multitude of tasks consumes all the resources that should ideally be devoted to EDI.
Regarding the issue of importance, innovation is also often very demand-based, and the related information is often communicated on a need-to-know basis. The formal processes for continuous EDI are lacking. Instead of actively providing employees with tools for continuous innovation, new ideas are needed when something needs to be fixed or improved. Furthermore, many innovation and
development issues are still handled at the managerial level, and the employees are informed about them only when needed and if the aspect directly affects their jobs. This finding corroborates with the results of Kesting and Parm Ulhøi (2010), namely that EDI is still hindered due to the major decisions being the sole purview of the store and department managers.
Regarding the possibilities for innovation, the lack of physical space was often perceived as an obstacle. This finding is in line with the results of Aaltonen and Hytti (2014). However, unlike their research, the employees of K-Market Neulamuikku share the same working space and have a common breakroom. Accordingly, the problem arose not because the employees were unable to see each other during the workday, but because the size of the store premises limits the implementation of potential innovative solutions. In many cases, the employees have to “manage” between the growing number of products and services and limited physical space. Therefore, sometimes, they cannot implement choices in layouts or product placements and are forced to arrange items in one specific way to make everything fit.
From the social/communication perspective, the barriers regarding communication were related to the choice of other communication channels, communication participants and the nature of the communication. Quick information-sharing among all the employees via an instant messenger application such as WhatsApp seems efficient, but in reality, it is insufficient for more complex discussions involving development.
The idea at the heart of EDI is that all employees are capable of innovation (Aaltonen & Hytti, 2014).
This study indicated that the responsibility for EDI was not distributed equally among all workers. For example, some employees observed that development ideas were mainly discussed with the morning shift, since the evening shifts are perceived as having routine work for the most part. The people in charge of running their departments typically work in the morning shift, and thus, they also enjoy a stronger role in innovation based on their status. Innovation, however, should not be divided according to employees’ titles; instead, each worker should be considered unique and as an originator of innovation (Uzkurt et al., 2013)
The prevailing mindset limits the utilisation of EDI to a certain degree. This issue concerns ground- level employees and managers alike. The managers would like the employees to contribute new ideas for the store’s development; yet, their resources are often stretched thin to manage with the daily tasks alone, and innovation is actively discussed only with department managers. On the other hand, while the lower-rung employees wish to bring their ideas to the table, they expect the management to have an implementation plan at hand and take charge of the development. Practically, it is recommended that some of these contradictions be fixed with more open communication, imparting more responsibility regarding development to employees and considering them equally, regardless of their status at the store.
The external factors affecting EDI included barriers relating to customers, competition and adoption of existing ideas. Customers are a crucial part of any service organisation, and customer-centricity has been mentioned numerous times in the existing service/retail literature (Alexander et al., 2009;
Hristov & Reynolds, 2015). However, too much emphasis on fulfilling customers’ wishes and limited physical space hampered EDI at the studied store.
Many other elements are typically considered as barriers for EDI but were absent in the studied organisation. For instance, work routines were not seen as obstacles to innovation and development of actions in the retail store. The previous literature highlights competition as one of the most important enablers of innovation (Amabile, 1988; Birkinshaw & Duke, 2013). Yet, the competition was not considered as important in the studied organisation (or it was non-existent), both among the employees and against other stores. In addition, Reynolds and Hristov (2009) observe that retailers view costs as a major obstacle for innovation. This study, however, did not find any implication of costs being a barrier for EDI, as costs related to innovation were not recognised as barriers by a single interviewee, including employees and their store manager. This difference can be explained by the different perspectives considered by the studies. Whereas Reynolds and Hristov (2009) considered the perspective of retailers, this study was conducted from the employees’ perspective. Retailers perceive the costs of innovation as a threat to their financial performance and security, whereas employees regard innovation as a possibility to participate in development. This difference in viewpoints is an
interesting observation in itself, and EDI, being a less costly way of innovating, could be worth analysing from the retailers’ viewpoint as well.
Despite these barriers, this study also uncovered some possibilities for EDI. The employees of the studied retail store noted that the workplace atmosphere was generally good and that they were interested in becoming involved in the store’s development. Our study shows that there is potential to develop a workplace that fosters EDI in the case company. However, accomplishing this would require reassessing current procedures and changing mindsets about how innovation could be prioritised and supported. Currently, the employees are interested but not really involved in innovation to their full potential. Due to the barriers discussed previously, employees’ decisions are often restricted to very micro-level choices (e.g. how to complete the assigned task most efficiently with the available resources). In most cases, EDI exists only at the micro-level. With proper assistance, these micro innovations could be stacked and expanded into major developments in the long run.
Conclusion
This study discovered barriers to EDI at a small retail store and analysed how employees view themselves in relation to innovation and development in their workplace environment. None of the past work has investigated barriers of EDI in the small-scale retail context. Thus, this case study contributes to the literature by filling in this gap.
The case study showed that the importance of EDI is not always concretised in practice on the shop floor at the employees’ level. Innovation and development at all levels are considered as important, but concrete support and possibilities of implementation are often insufficient from the employees’
perspective. However, the study also highlights that many opportunities exist to develop an environment that supports EDI in the studied small retail store.
The study also suffered from some limitations. The empirical data for the study were collected from one store only. As the environment of each store and work responsibilities are
quite unique, the practical applications of the study’s results are limited. In order to create a
more generic theory, additional research in similar environments is needed. In other words, this study can be used as a basis to build future research on, but the results cannot be transferred to other cases without considering their individual characteristics.
This study can also be used by future researchers willing to study the subject further as well as by stores that share similarities with the studied organisation. Future research should focus on finding more stores with a similar background and developing an extensive knowledge base for EDI-related barriers in the retail context. Alternatively, it would be interesting to approach the same subject from the shop owners’ or middle managers’ perspective. Finally, this study focused mainly on identifying barriers to EDI. Future works could focus on positive examples of EDI and the opportunities provided by it, for example by identifying organisations that have successfully incorporated EDI in their work environments.
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