A case based study of the relationship between innovation and organizational structure and architecture.

Author:Misra, Ram B.

    In today's world, organizations face continuous pressure to innovate and come up with new products and services in order to maintain their market position and profitability due to intense competition (Chatterjee et. al, 2008). Innovation is the key ingredient for success as organizations continuously need to change themselves to capture the opportunities provided by the continuously changing environment. The increasing importance attached to innovation is the rationale behind our study. This study tries to identify qualitatively what kind of organisational structure contributes to innovation and allows certain firms to come up with innovative products time after time.


    The current organizational structure and product literature (Ulrich and Eppinger, 2008) makes the following connection between the types of products and the effective organizational structure.

    Project (Organizational) Product Type Structure Led By Generic (Market Pull Products) Functional Specialists (Marketing) Technology Push Products Functional Specialists (R&D, Mfg.) Platform Products Functional Specialists (Mfg.) Process Intensive Products Functional Specialists (Mfg.) Custom Products Matrix Structure (Marketing & Mfg.) High Risk Products Functional Specialists (R&D) (Technology First) Quick Build Products Functional Specialists (Require Simultaneous (Design, Mfg, Mkt., Engg. And proximity of all) Purchasing) Complex Systems Matrix Structure Previous work indicates that defenders generally have a hierarchical structure divided along functional domains with centralised control and long looped vertical information system. Similarly, prospectors have a tendency towards product structure and decentralised control with short looped horizontal information systems. Analysers on the other hand have loose matrix structure combining both functional divisions and product groups (Miles, Snow, Myer and Coleman, 1978). However, there is no study that helps to identify the key elements of the organization structure of innovators as defined by (Miller and Roth , 1994) that helps in sustaining continuous innovation. In this context we have also tried to find out who holds the decision power, generalists or specialists.

    It has been observed that maintaining ambidexterity is the biggest challenge for innovative organizations (Raisch, Birkinshaw, Probst, and Tushman , 2009). Various studies have emphasized the role of differentiation or integration as a means to balance the process of exploration and exploitation (Raisch, Birkinshaw, Probst, and Tushman, 2009). This study attempts to address this conundrum. Further we look into the impact of physical space on overcoming the strains imposed by organization structure by having exploration and exploitation at the same location helping teams to coordinate and exchange ideas with each other on a frequent basis (Allen and Henn, 2006)


    3.1 Hypothesis 1: Innovators have lightweight project organization structure.

    In order to maintain ambidexterity, innovators have organization structure comprising of project teams to maintain focus and increase coordination. The organization is a variant of matrix structure called lightweight project organization in contrast to another matrix variant called heavyweight project organization (Hayes et. al, 1988). A lightweight project organization contains weaker project links and relatively stronger functional links, and the project manager is more of a coordinator and administrator. He/she updates schedules, arranges meetings and facilitates coordination but has no real authority or control in the project organization (Ulrich and Eppinger, 2008).

    3.2 Hypothesis 2 Innovators have semi permanent and flexible structures over the permanent ones. Since innovators frequently come up with new products or services, cooperation and flow of information is an important dimension to achieve success of the same. The idea of having semi permanent and flexible structures over the permanent ones is to break the constraints imposed by the organization structure leading to better flow of...

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