Effects of Visual Management on Efficiency and Innovation in Product Development

Abstract: The business environment has during the last decades gone through major dramatic changes. Rapid and radical technological development and continuous change in both business practices and behaviours of the population, to name a few, have complicated and put pressure on organizations’ new product development (NPD) processes. Having an effective and efficient NPD process while succeeding in innovation in today’s business environment is a big challenge. Organizations face multiple organizational and process type barriers to innovation and have difficulties in finding suitable successful and efficient tools and methods. The overall purpose of this paper is to investigate how organizations dealing with product development can increase their innovation and efficiency performance, i.e. organizational performance, with the use of Visual management (VM). The aim of VM is to improve organizational performance by connecting and aligning organizational vision, core values, norms, and goals with other management systems, work processes and workplace elements. The individual elements of VM can affect how encouraged the employees are to perform in the workplace, hence having an effect on organizational performance. However, there are still many questions to be answered and new knowledge to be gained regarding how to best utilize VM, such as the understanding of what factors mediate the impact VM has on performance. The overall purpose is further concretized in a research model with five related hypotheses. A hypothesis-testing is performed in a comparative study with four large organizations. The empirical data is primarily collected through surveys with employees utilizing VM, with a total of 144 respondents. In addition, semi-structured interviews are performed with each department utilizing the visual tool; the interviewees being knowledgeable in the design and process of utilized VM. VM appears to have a substantial effect on innovation and efficiency performance. However, it has no direct effect, rather it exhibits indirect effects. VM’s positive effect on efficiency IV performance is mediated by efficient behaviour, and VM’s positive effect on innovation performance is mediated by an increased cognitive ability. This paper contributes to the understanding of VM’s impact on organizational performance. By statistical analysis it highlights previous research stating that managerial tools and processes indirectly has an effect on organizational outcomes. Proposed framework is a beginning of visualizing the complex relationship existing between VM and organizational performance in a product development setting. Practical implications are that depending on desired outcome in the use of VM, the framework can act as a guidance in the procedure of VM meetings, by highlighting certain activities. For managerial, it highlights that the goal should not be to develop the most advanced or novel visual tool; rather focus on improving the employee’s cognitive ability and efficient behaviour.