Organization Structures for Innovation – Stop reorganizing deck chairs on the Titanic

Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization.
Harold S. Greene

Organization. It’s a noun and a verb. It’s a label applied to any collection of individuals pursuing a perceived common purpose, regardless of how organized they may be. It’s an act designed to bring structure out of chaos and meaning out of confusion. It’s a loaded word. So much rests on the shoulders of organization. This is especially the case when innovation is the desired result of organization’s application.

As its members work together, every group will evolve a structure over time, whether by design or not. Many of the performance deficiencies of a group will often be blamed on individuals, in spite of the fact that performance more often arises from the fitness of the organization structure and its cohesion. By paying attention to the structure of an organization and the roles within it, significant advantages may be created that enable increased group efficiency and effectiveness. Perhaps the most vital lesson for an organization that wishes to become more innovation-capable is that it should create a structure that enables it to flex in response to changing environmental conditions, modifications of tasks, and shifting circumstances.

A challenge arises when we acknowledge that organization design needs to be based on the unique strategy and situation of the organization itself. In the absence of a uniform approach to organizing organizations, what considerations are universal?

We don’t know what we don’t know
If you’re not serving the customer, you’d better be serving someone who is.
Karl Albrecht

One of the most immediate concerns is that all aspects of the organization should be “fit for purpose.” Each business unit, department, group, team, and function should be aligned to the strategy of the organization and should have, if necessary a sub-strategy that directly supports and addresses the key attributes of the overarching enterprise strategy. That strategy should have as a primary target the customers the organization is designed to serve and a plan of how it will serve them. Without a clearly defined and universally understood strategy, an organization will grow haphazardly, accommodating distractions that come into view rather than focusing on specific goal completion.

Strategically focused organizations become useful backgrounds against which capability gaps and confused or absent roles may be identified in the context of the other enterprise variables necessary for innovation success. This might be knowledge management systems, business processes or even leadership attributes. If a clear strategy is in place, an organization’s leaders should ask some of the following questions to understand whether the organization should be modified or restructured:

  • What’s the nature and degree of innovation-related interaction among a group’s participants?
  • What is the geographic distribution of an innovation group?
  • Given the innovation objectives and limits, where does autonomy reside for the innovation group (internal, external, adjacent)?
  • How is coordination achieved?
  • What is the best structure for the present?
  • How can we best accommodate structure changes in the future?

The answers to these questions may determine clear next steps, which may include asking additional, deeper questions. This self-examination creates the capacity for an organization to create spaces into which sub-strategies, in support of the overarching strategy, can be embedded.

The critical component in this exploration and the eventual decision-making around organization structure is communication. Communication is critical so that the front line is aligned with the bottom line. Without it, not only might chaos ensue but the effectiveness of the structure may be hampered from the outset. Yet this is one factor that many organization leaders fail to consider, or if they do, they pay it only cursory attention—to their eventual dismay.

Moving deck chairs on the Titanic
We believe we will be able to get the airline back during the reorganization process.
Jerry Murphy

Reorganization is one trigger that’s often pulled, to the least effect. For many organization leaders, reorganization is the one thing they know that they can do and “implement” quickly, giving them both the satisfaction of taking action and the recognition that they are “doing something.” Unfortunately, the hair-trigger reorganization does little to improve an organization’s innovation performance. Instead, many organizations suffer through poorly planned transitions during which the need to “get it done” trumps “well done.”

What these leaders demonstrate are the very worst aspects of impulse control. They desire visible evidence of something (anything) being done, and they want it now. Reorganization is often the first initiative of new leaders, even when it’s not clearly needed. An organization structure should represent a resolution of any number of enduring performance dilemmas, and it should not be tampered with unnecessarily or unthinkingly.

Often in fast-growing or start-up organizations the desire to reorganize arises from the feeling of being out of control. Reorganization may be the most appropriate response in these circumstances. For a larger organization, multiple reorganizations in a short period of time are not only uncalled for, they may be detrimental in the long-term to the organization’s viability. The key is to think through the repercussions before taking action. By asking, “When we do this, what might go wrong?” it may clarify alternatives that won’t require the upheaval (and distraction) that reorganization represents.

Yes, a leader seeking innovation may use a reorganization to challenge comfort zones, but unless they also take time to create organization resilience, they may deliver carnage instead of results. Not pretty.

Impediment or enhancement
It’s about bringing the structured and unstructured information in an organization together, analyzing the information and delivering it to the right people in the organization when they need it.
Michael Schroeck

Organizations should focus on fostering implementation of plans and projects, delivering increased throughput and maintaining quality. Any organization that creates barriers, or blocks and impedes issue resolution, will kill innovation capability. The whole reason for (the verb) organization is to bring order so that information can flow and materials can be transformed into the services and goods necessary to meet customer needs in the cleanest and simplest manner. For innovation to thrive, an organization must also make accommodations for that information and for those materials to be used in unique and different ways. Rather than confining, it should promote expansive actions.

At its most elemental, an organization structure represents a set of pre-made decisions about where, when, and how to deploy resources to greatest benefit. It should create a supporting performance environment that values and recognizes contributions of its members and keeps them focused on the achievement of the strategic intent. If innovation lies at the heart of your strategy, how you decide to organize can be a firm foundation for your future success. Just remember, a given organization structure may resolve present tensions, but it might not be appropriate for all times. Keep monitoring your organization structure—and when it impedes your ability to innovate, then and only then, you should consider change.

Effective restructuring requires both a microscopic view of typical structural problems as well as an overall, topographical sense of structural options.
Lee G. Bolman & Terrence E. Deal

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