Thursday, July 9, 2015

How to Fine Tune the Organizational Structure for Breakthrough Innovation

An organizational structure carries inherent capabilities as to what can be achieved within its frame.
Innovation is to transform novel ideas and achieve its business value. However, for most of the organizations, innovation, especially breakthrough innovation, is still serendipity. 

There are many factors to decide innovation success. From an organizational structure perspective, how can you get well organized for managing innovation more effectively?

The right structure is the one that allows the right mentality and culture to bloom: There are both official structure and unofficial structure in the organization. If there is a strong mentality of invention and innovation, will a rigid official structure be just ignored in favor of an unofficial structure? Or shall you strive for an aligned official structure to enable innovation, rather than relying on people establishing unofficial structures? The structure carries inherent capabilities as to what can be achieved within its frame. A misaligned structure can reinforce a non-innovation friendly climate, and though a strong mentality may be able to overcome it, it will certainly require both dedication and effort. Within a well-aligned structure, that dedication and effort may be spent on innovation efforts rather than overcoming organizational hurdles and pushing against structural boundaries.

The official structure and unofficial structure can coexist harmoniously: It’s no surprise that unofficial structures always exist. The question is only whether the official structure and the unofficial structure co-exist antagonistically or harmoniously. A poorly designed official structure can increase the likelihood of antagonism between the two. An unofficial structure may always exist to some degree, and for good reasons, but would not go as far as to say that the question is only about alignment because it would imply that a strong unofficial structure is as desirable as a strong official one. So given the opportunity, establishing a formal and enabling structure in line with your ambition and desired direction, and nurturing a culture within it, is preferable to relying on individuals and groups to overcome the hurdles of existing within a structure that inherently is not designed for the innovation.

The different organizational models have different inherent capabilities: They are as such ease efforts towards certain directions, respective to each model. There is a limit to what an unofficial structure can structurally accomplish. The challenge is that an unofficial structure may spread cynicism in the organization. At the same time, it may be a strong ally in innovation and change. It is necessary to identify the unofficial structures and take them along on the journey of innovation and change. Also establishing some of the more advanced models will certainly require top management awareness, involvement, dedication, and can by no means be unofficial. Because different models carry different capabilities, the choice of model will impact your ability to execute on your defined innovation strategy and direct efforts towards strategically prioritized targets.

Ideally, the unofficial structure that has emerged over time is the formal structure you should have: Change can only happen in a context that takes heed of current culture and unwritten rules and identifying how to change is very much about identifying where you are now. After all, where you presently stand determines the path you have to take to get to where you want to be. As such, present official and unofficial structures are certainly part of a change journey. So organizations should incorporate and leverage what official and unofficial structures one might have into the journey's end-state, but only as long as they are practical to where you want to go. Ideally, the unofficial structure that has emerged over time is the formal structure you should have. But, not all unofficial structures are helpful in this sense, in that they have been formed in response to an incumbent formal structure and strategic context, so they carry the legacy and lack relevance within a new formal structure and context. Going forward, it may well require changing both official and unofficial structures into a hybrid structure that can support an innovation journey in the direction you are heading, rather than where you have been.

A lightweight process allows innovation to turn into value: Innovation is undirected and ineffective without some kind of structure. Invention and thus innovation is based on creativity. Creativity is subversive because it challenges the status quo. Rules are about safeguarding the status quo. Consequently, too rigid rules, will stifle creativity and thus innovation. The innovation challenges the status quo and that is important in a healthy, innovative organization. An organization that has a lightweight process which allows creativity and innovation to flow, get protected, channeled and nurtured will succeed more often than an organization that does not have such a process.

You need to change the mentality, and that is not easy: What needs to worry about is the danger of a company adopting a couple of simple rules without doing the difficult work to change the mentality. Because such an approach won't have any favorable effect. It might even have an adverse effect on feeding cynicism in the company. Resistance to change is then often camouflaged by talking about the experience. The organization has to be open to innovation and rules can't change that. Rules alone will not allow innovation to be productive. A framework is needed for innovation to be successful. Part of putting a framework in place is getting senior leaders to recognize that innovation is important and needs to be supported. Senior leadership support (or, at least, a change champion) is required for innovation to be successful (create value for the organization). This has to include the tolerance of failure, because innovation is a learning process, and in learning, failures occur. These failures are tolerable and even valuable if people learn from them and use what they learned in their next project.

It is really hard to be a consistently innovative company, it requires both well tune the organizational structure and culture (the collective mindset) that nurtures new ideas and is able to profitably execute on those ideas. This is not easy, and companies that strive for innovation must experiment and learn to organize for both breakthrough innovation and continuous improvement and build innovation capability cohesively.


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