CINE Course-2006
Article Review: Designing the innovative organization, Jay R. Galbraith
Submitted by: Ananda Chakraborty, PGP-ABM II
In the present cut-throat competitive world, innovation is the key to success. No
matter what the size of the organizations are, however long they might have been in
the business, everybody is looking to develop innovative business ideas to get an edge
in the market. In this context, this article is very interesting and can extremely useful.
The arguments presented in this article are simple, logical and most importantly very
practical.
The author starts with the popular notion that new ideas are for new start ups and the
older firms should go with their time tested business models and products. He also
points out that the disruptive innovations are often made by accident. Then he points
out the demerits of this notions and digs deeper and argues that this notion is because
of the fact that most old companies are operative organizations and they are designed
to prevent error and minimize disruption, while innovation is a disruptive process. So,
he theorizes that in order to be successful, a company should be a combination of two
organizations, of which one will be the operative one to run daily business and the
second one an innovative organization to fuel the future growth.
Then to clear the backdrop of his arguments, the author categorizes the innovations
from very disruptive like new business models, disruptive new technologies to
incremental innovations like product improvement, change of style etc. Now, the
point is that operative organizations are good in incremental innovations, but it takes
radical innovations to really corner the market. The rest of the paper focuses on the
way to make an organization capable of making radical innovations.
To take the arguments further, he narrates a story of a so-called accidental innovation.
The story is about a group of maverick engineers who designed a new product, a text
editor, and broke up from HP to form a new company. In short while, their product
was challenged by a microprocessor based word editor, and the new company had to
innovate again to be market leaders. As against the popular notion that beaurocratic
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struggles are typical of old companies, this new organization also got into troubles
while designing new product.
In such a dire situation, the president receives a call from a sales manager that a field
engineer under him has done something with the product to make it perform as good
as the word processors. The president visits the engineer and finds out that this is the
thing they were looking for. But when he brings the engineer back to head-office to
implement his idea, the product design team do not agrees to the new idea. Later the
engineer is send to France to test his idea, it works successfully and then the product
is changed.
With this story, the author again goes back to his idea of two organizations. In the
rest of the papers, the creation of this innovative organization and its functioning is
discussed in greater detail. The main goal of this innovative organization is to create
scope for more innovative ideas being generated and implemented. The first important
aspect is the roles. Three key roles are identified; the champion who generates the
idea, a sponsor who takes the idea forward and provide funding and a leader who
takes the responsibility to match all potential ideas with a good sponsor and sees
through its implementation. In the above story, the examples will be the engineer, the
field manager and the president respectively for the abovementioned roles.
Once the roles have been identified the next aspect is the separation between the
operative and innovative organizations. As mentioned the need for separation arises
from the fact that the very goal of their existing is conflicting, and if they coexist, a
friction is inevitable. Here the author bring in a new concept, “the antibody concept.”
The operative organization has systems in place to minimize disruption, so whenever
a new disruptive innovation comes into this system, the operative organization creates
antibodies to eliminate this threat, just like any other immune system. The separation
can be exercised through several options like physical separation, structural
separation, separate sources of funds, and different control systems as their goals and
considerations are completely different.
Next issue is the dilemma of whether to bring the new ideas back into the main stream
or let it run as a separate business unit. The best way to transfer ideas back into the
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mainstream is by following a three step process. Then the question comes is how
much separation does the innovative organization need from its operative counterpart.
There are six factors like the nature of business, the extent of rigid structures present
in the organization etc., which the author describes in details.
After the structure, the author nest talks about the processes in the innovative
processes. The first process is funding where it is highlighted that innovation is not a
hierarchical process. So the champion of idea not just needs “seed money” to carry
forward, but he also needs access to multiple sponsors so that his idea is not trapped
in the hierarchy of the organization. The next part is the process of acquiring and
blending ideas i.e. to tap the source of ideas more efficiently. Here the events like
internal trade fair of 3M is discussed and it is also said that at times a sponsor can also
be the source by combining two or more ideas he gets from other champions. The
third important process is the reward system, the author points out both the merits and
demerits of keeping a reward system. On one hand a reward system promotes
generation of new ideas and on the other hand it increases the resistance from other
teams and also unrecognized members of the same team. Finally, the natures of the
people who can serve these three roles are discussed. The innovator need not always
be a maverick or a misfit to the present structure, while previous champions with
some credibility in the organization could be good sponsors.
The language of the article is lucid, simple and straight forward. But the best feature
is the illustrations that are in plenty to embellish the article and chosen very carefully
to explain the concept and the story which is analyzed with each new concept. The
nice logical flow of article makes it very interesting to read.
There are however a few questions that comes to mind after reading the article. The
first is that while talking about people, the article is silent about the typical character
of a good leader for the innovative organization. The second concern is that today
there are quite a few large companies, even MNCs, who are looking towards
innovative ideas and many ideas come from the grass root level workers as also
acknowledged in the article. Forming such a separate innovative organization may
place them far apart from the lowest level of the operating organization. So, is there
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any other way promote innovativeness within the operative organizations itself so that
the ideas generated at grass root level are better captured.
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