Money or mentality? Activating multiple types of slack for innovation in municipalities

It is increasingly argued that organizational slack is a vital catalyst for innovation. In times of austerity, however, slack is commonly identified as a painless first way to reduce costs. The likelihood that organizations... [ view full abstract ]

It is increasingly argued that organizational slack is a vital catalyst for innovation. In times of austerity, however, slack is commonly identified as a painless first way to reduce costs. The likelihood that organizations embrace slack at that moment is quite small. This paper analyzes whether and how organizational slack can be enhanced and activated, in the midst of crisis. More specifically, it examines how city managers understand slack and how they have activated the ‘right’ slack to foster an innovation climate in the wake of the GFC. Informed by individual and group interviews with twelve seasoned city managers of big municipalities in the Netherlands, we find that meaningful slack for innovation is not so much about the availability of budgets or people, but about ‘mental leeway’ of the managers and coworkers. Instead of stressing the importance of financial slack or HR slack, city managers’ experiences show the necessity of ‘psychological slack’ for innovation. We find that the strategies to enhance psychological slack, and the extent to which it is improved, vary from city to city. Nevertheless, a comparison of cases shows us that these strategies resemble the five key components of ‘positive psychology’: emotions (i.e. recognize and celebrate positive matters), engagement (i.e. encourage that the work of individuals fits with their personal motivations), relationships (i.e. create a climate of respect and mutual trust), meaning (i.e. ensure that individuals are involved in meaningful work), and accomplishment (i.e. appreciate creativity and failures). We conclude that managers can improve an innovation climate by ‘managing’ the inner agility of coworkers. Our insights can be helpful to activate the psychological aspects of organizational slack. Instead of money, mentality counts.