Chapter 10 - Organizing for innovation

Question 1

How are organizational structure and innovation related?

Answer 1

• rules, procedures and controls influence an organization’s ability to generate innovation
• small, flexible structures -> best suited to idea generation
• well-developed procedures and standards -> better investment decisions, more efficient implementation

Question 2

Large firms pro and cons in innovation?

Answer 2

• large firms more effective innovators
  
  • easier obtaining financing
  • easier to spread R&D costs
  • greater economies of scale and learning
  • can take large scale or risky project
• however there are some disadvantages
  
  • R&D efficiency might decrease, loss of control
  • more bureaucratic inertia
  • more commitment to current technologies
• strategic commitments to customers and suppliers -> Icarus Paradox
  
  • overconfidence, carelessness and reluctance to question the status quo
• generally make greater use of formalization and standardization

Question 3

Small firms pro and cons in innovation?

Answer 3

• more flexible and entrepreneurial
  
  • less burdened by bureaucracy, large investments and assets
• shorter development cycles
• sharper focus
  
  • limited resource
• large firms can “simulate” smaller firms
  
  • subunits with different culture and controls

Question 4

What other dimensions of structure (other that size) influences a firm capability of innovation?

Answer 4

• degree of formalization
  
  • degree to which the firm utilizes rules and procedures to structure the behavior of employees
  • rigid, can substitute managerial oversight
• degree of standardization
  
  • degree to which activities are performed in a uniform manner
  • reliable outcomes but stifles innovation
• degree of centralization
  
  • degree to which decision-making authority is kept at top levels or activities performed at a central location
  • centralized authority, projects match firm-wide objectives, better at making bold changes
  • centralized activities, avoid redundacy, facilitate firm-wide deployment of innovations
  • might not tap diverse skills and resources, projects may not fit division of markets

Question 5

R&D activities, centralized or decentralized?

Answer 5

• some firms have both

Question 6

Mechanistic Structures

Answer 6

• high formalization and standardization
• operational efficiency, reliability
• minimizes variation, stifles creativity

Question 7

Organic structures

Answer 7

• low formalization and standardization, free flowing
• creativity and inspiration encouraged
• low consistency and reliability

Question 8

Ambidextrous Organization

Answer 8

• mix of large and small firms
• different structures, may vary with time
• some divisions may be small and organic (R&D) other larger and mechanist
  
  • R&D teams may need to be isolated to explore new alternatives, unafected by the rest of the organization

Question 9

Modularity

Answer 9

• degree to which a system’s components may be separated and recombined
  
  • facilitated by standard interfaces
• balance between efficiency and flexibility -> modulartity in product design
• valuable with heterogeneous inputs (possible components or technologies)
  
  • and and heterogeneous demands (mix and match)

Question 10

loosely coupled organizations

Answer 10

• modularity applied to organizational structures
• activities are not tightly integrated
  
  • coordination through shared objectives and standards
  • can be outsourced, network of loosely connected firms
• more flexible configurations
• balance between efficiency and flexibility
• not good if close coordination needed or high risk of conflict

Question 11

Centralization versus decentralization, local and global markets

Answer 11

• foreign markets, different resources and needs
  
  • innovations for local markets may not be successful
  • divisions can be reluctant in sharing innovations
  • “not invented here” syndrome

Question 12

What are the 4 types of strategies innovation in markets?

Answer 12

• Center-for-global
  
  • centralized R&D
  • tight coordination, standardize and implement, avoids redundancy
• Local-for-local
  
  • R&D in each division, local market
  • diverse resources, products customized for local needs
• Locally leveraged
  
  • R&D in each division, best ideas to whole company
  • diverse resources, products customized for local needs, improves diffusion through firm and markets
• Globally linked
  
  • decentralized R&D, each has a different role
  • diverse resources, improves diffusion through firm and markets, core competencies

Question 13

transational approach

Answer 13

• resources and skills anywhere in firm can be leveraged to exploit opportunities in any geographic market
  
  • reciprocal interdependence among divisions
  • integrating mechanisms, personnel rotations,…
  • balance in organizational identity between national brands and global image