This document contains all the information regarding the course "Organisation of Innovation". Thus all the materials you need to prepare as well as insights gained during class.
ORGANISATION OF INNOVATION
MODULE 1 – ORGANIZING THE COMPANY FOR INNOVATION
READING - the principles of scientific management (pages 1 - 16) (1911)
The first object of any good system must be that of developing first-class men: and under systematic
management, the best man rises to the top more certainty and more rapidly than ever before
The principal object of management should be to secure the maximum prosperity for the employer,
coupled with the maximum prosperity for each employee
Maximum prosperity (employer) = not only large dividends for the company/owner, but the
development of every branch of the business to its highest state of excellence, so that the
prosperity may be permanent
Maximum prosperity (employees) = not only higher wages that are usually received by men
of his class, but also means the development of each man to his state of maximum efficiency,
so that he may be able to do the highest grade of work for which his natural abilities fit him
--> prosperity for the employer cannot exist in the long-term unless it is accompanied by
prosperity for the employee
--> the greatest prosperity can exist only when that individual has reached his highest state of
efficiency/maximum productivity
It is clear that a man will work to his very best advantage and at his best speed, accompanied
by the intimate cooperation with the management would result on the average in nearly
doubling the output of each man and each machine
Why is it, that despite knowing about the benefits or working towards someone's maximum
prosperity, the great majority of our men are deliberately doing just the opposite, and that
despite their best intentions, their work is very inefficient? There are three causes for this
condition
1. The fallacy = a material increase in the output of each man/machine would result in the end
in throwing a large number of men out of work
o however, it has been shown that each improvement usually makes work for more
men rather than throwing men out, since it cheapens the cost and increases demand
for any article
2. The defective systems of management = makes it necessary for each workman to work
slowly in order that he may protect his own best interests
o (natural soldiering and systematic soldiering = the tendency to "take it easy" --> why
should I work hard when that lazy fellow gets the same pay that I do and does only
half as much work?")
o Soldiering involves a deliberate attempt to mislead and deceive his employer and
thus workmen are compelled to become more or less hypocritical
o It is difficult for management unless they know how long one specific job takes
3. The inefficient rule-of-thumb methods = workmen waste a large part of their effort
o Workman have been taught the details of their work by observation of those
immediately around them, however, there are many different ways in common use
for doing the same thing --> among these various methods, there will always be one
method which is quicker and better than any of the rest
o This one best method can only be discovered through a scientific sutidy and analysis
of all the methods and implements in use
, Underlying philosophy of all the old systems of management in common use makes it
imperative that each workman shall be left with the final responsibility for doing his job
practically as the thinks best, with little help and advice from management
--> because of this isolation, it is in most cases impossible for the men working to do their work
in accordance with the rules
General principle suggested by this article = the workman who is best suited to actually doing
the work is incapable of fully understanding this science, without the guidance and help of
those who are working with him, either through lack of education or through insufficient
mental capacity
--> to support the workman, management must take over and perform much of the work
which is now left to the men
--> a cooperation should exist between management and the workforce
READING - building ambidexterity into an organization (2004)
Adaptability = the ability to move quickly towards new opportunities, to adjust to volatile
markets and to avoid complacency
Alignment = a clear sense of how value is being created in the short term and how activities
should be coordinated and streamlined to deliver that value
For a company to succeed over the long-term, it needs to master both adaptability and
alignment - an attribute that is sometimes referred to as ambidexterity
Two forms of ambidexterity
1. Structural ambidexterity = create separate structures for different types of activities.
Structural separation is necessary, because the two sets of activities are so dramatically
different that they cannot effectively co-exist
Example: the core business units are given responsibility for creating alignment with
the existing products and the R&D department is given the job of developing new
technologies, etc.
Separation can lead to isolation, which can lead to the failure of ideas being accepted
because of their lack of linkages to the core business
2. Contextual ambidexterity = individual employees have to make choices between alignment-
oriented and adaption-oriented activities in the context of their day-to-day work
The systems and structures are more flexible, allowing employees to use their own
judgment as to how they divide their time between adaptation-oriented and
alignment-oriented activities
To foster this sort of ambidexterity on an individual level, a much greater level of
attention has to be paid to the human side of the organization
Structural ambidexterity and contextual ambidexterity differ in great ways, however, they are
seen as great complementary approaches. The differences are shown in the table below.
How is ambidexterity Alignment-focused and Individual employees divide
achieved? adaptability-focused activities their time between alignment-
are done in separate teams or focused and adaptability-
units focused activities
, Where are decisions made At the top of the organization On the front-line, by sales-
about the split between people, plant supervisors, office
alignment and adaptability? workers
Role of top management To define the structure, to To develop the organizational
make trade-offs between context in which individuals act
alignment and adaptability
Nature of roles Relatively clearly defined Relatively flexible
Skills of employees More specialists More generalists
Contextual ambidexterity : Four ambidextrous behaviors in individuals
1. Ambidextrous individuals take the initiative and are alert to opportunities beyond the
confines of their own jobs
2. Ambidextrous individuals are cooperative and seek out opportunities to combine their
efforts with others
3. Ambidextrous individuals are brokers, always looking to build internal linkages
4. Ambidextrous individuals are multitaskers who are comfortable wearing more than one hat
These four attributes have several important commonalities
They constitute acting outside the narrow confines of one's job and taking actions in the
broader interests of the organization
They describe individuals who are sufficiently motivated and informed to act spontaneously,
without seeking permission or support from their superiors
They encourage action that involves adaptation to new opportunities but is clearly aligned
with the overall strategy of the business
--> an individual's ability to exhibit ambidexterity is facilitated/constrained by the
organizational context in which he/she operates, so contextual ambidexterity can also be
understood as a higher-order organizational capability
At the organizational level, contextual ambidexterity can be defined = the collective orientation
of the employees toward the simultaneous pursuit of alignment and adaptability
--> is analogous to the well-established concept of market orientation = a collective
orientation of people throughout a business towards the gathering, interpretation and
dissemination of market knowledge
Building contextual ambidexterity into your organization
Context = an invisible set of stimuli and pressures that motivate people to act a certain way
Top managers shape organizational context through the systems, incentives and controls
they put in place and through daily actions --> it is then reinforced through the behaviors and
attitudes of people throughout the organization
4 sets of attributes act to define an organization's context.
1. Stretch
2. Discipline
3. Support
4. Trust
, In combination, these attributes create two dimensions of organizational context
1. Performance management (combination of stretch and discipline) = is concerned with
stimulating people to deliver high-quality results and making them accountable for their
actions
2. Social support (combination of support and trust) = concerned with providing people with
the security and latitude they need to perform
--> performance management and social support are equally important and mutually
reinforcing
The strong presence of each will create a high-performance organizational context that gives
rise to a truly ambidextrous organization
If there is an imbalance, a less than optimal organizational context will exist
See picture below for the perfect balance
Creating a high-performance organizational
context
While performance management and social
support factors do not directly create high
performance, they do shape the individual and
collective behaviors that over time enable
ambidexterity, which does lead to superior
performance
Three critical points
1. There is no single pathway to ambidexterity
2. There is no single leadership model for an
ambidextrous organization
3. It is important to exhibit a clear and simple
set of priorities
Pathways to ambidexterity
1. Diagnose your organizational context
2. Focus on a few levers and employ them consistently
3. Build understanding at all levels of the company
4. View contextual ambidexterity and structural ambidexterity as complements
5. View contextual ambidexterity initiatives as driving leadership, not as being leadership-
driven
READING - beyond the holacracy hype (2016)
Holacracy = a form of self-management that confers decision power on fluid teams or "circles"
and roles rather than individuals
Leaders need reliability and adaptability most from their organizations
1. Reliability = means many things, such as generating predictable returns for shareholders,
adhering to regulations, maintaining stable employment levels and fulfilling customers'
expectations
2. Adaptability = the ability to move quickly towards new opportunities, to adjust to volatile
markets and to avoid complacency
--> it is important to find a good balance between reliability and adaptability within an
organization
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