Innovation & Organisation Structure: Development and Test of A Function Model To Study and Diagnose Structures
Slide 11Innovation & Organisation StructureDevelopment and test of a function model tostudy and diagnose structuresL.J. Lekkerkerk (Hans)Sept. 13, 2012 STS-RT-Working Conference, Canterbury, UKStream: Intra-Organizational change
Slide 22PhD-ThesisDoctorate fromRadboud UniversityNijmegenNetherlandsPublic Defense, June 5th, 2012‘neue Kombinationen’+‘organizational LEGO’My Presentation is based on my PhD-thesis I defended last June on my 53rd birthday.The cover of the book (and so my powerpoint design) was inspired by:• Schumpeter, Innovation = neue Kombinationen : LEGO is the symbol of infinitelyrecombining• Mintzberg: he refers to organisationa design as ‘playing organizational LEGO’
Slide 33Contents• Introducing Hans• Innovation performance• Dutch STS-design & innovation?• A new function model• Some results of testWith the contents shown here I hope to keep my presentation within 15 minutes for discussion.Do interupt me if it appears ‘double Dutch’ to you
Slide 44Education & Experience Hans• 1959 – interest: human ingenuity• !977-’85 Delft University of Technology,– BSc Mechanical Engineering - technical– MSc Organising Production - socialBecause of my interest in technology in general I started Mechanical engineering.However the social side of organisations developing and manufacturing products appearedeven more interesting.So I am somehow sociotechnical by training ..
Slide 55Education & Experience HansPre – university:• 1985-’96 Fokker Aircraft Composite Structures– Industrial eng. (process innovations – technical)– Quality eng. (administrative innovations - social)– Bankrupt March 1996• 1996-’97Consultant/trainer– TQM/Project MgtI worked quite a while at Fokker’s Composite Structures DivisionAgain in projects with technical and social aspects,Here my idea to study organisation of innovation orginated,So I’m sociotechnical by experience
Slide 66Education & Experience Hans• 1997-__ Nijmegen School of Management– Operations Management ~ technical– Innovation Management ~ technical/social– Organisation Design = sociotechnical– 80 MSc-projects & a lot more• 1997-’12 PhD-Research project = sociotechnical– Improving innovation succes via structure?I was happy to be hired by one of the two Universities in the Netherlands where Ulbo de Sitterhad a chair in SocioTechnical Organisation DesignBoth my full time teaching and research can be labelled ‘sociotechnical’ again.
Slide 77Organisational Structure & Design• Organisational Structure Design– Task allocation / division of labour– Coordination• Organisation design:– Organisational structure– Hard & soft systemsOrganisation Structure is about the division of labour and make sure there is coordination.It is an old problem: In Exodus 18 Jethro advises Mozes to introduce a hierarchical structure.His method only took span-of-control into account.Organisation Design may be defined in two ways:Limited: just the organisational structureIntegral: including the hard and soft systems that ideally fit the structure (instead of fitting the structureto the existing equipment and ICT.In the Netherlands two broad design methods were developed both inspired by systems theory orcybernetics:1 at Delft University “the Delft school” (where I graduated)2 at Eindhoven university of Tecnology and later at Radboud University “Modern SocioTechnical- design”
Slide 88Innovation performance• Failure rates: 60 – 95%• Fokker bankrupt– too much innovation + Gulf War-crisis• English Mines 1950’s– failed process innovations– (with luckily STS as a ‘spin of’)Redesigning the structure of an organisation improves the performance of the primary process.Now the innovation process is poorly performing compared to that:Sometimes a failed innovation has a positive spin of: STS may be seen that wayhow can you redesign an innovation structure?
Slide 99Performance ‘by Structure’Dutch STS-Design• Developed from early 1980’s (prof. U. de Sitter)• Jointly optimise Quality of– Organization (cost, quality, lead time, flexibility,innovation)– Work (low absenteeism & turnover)– Work Relations• Improves performance of Primary Process
Slide 1010Performance ‘by Structure’Dutch STS-Design• Ashby-based: variety reduction• Simon-based: modular structure (implicit)• Interfaces are sources of trouble: eliminate• Concrete design rules for Primary Process– ‘Production Structure’– ‘Operational layer of Control Structure’• Other ‘control layers’?
Slide 1111D-STS-model: open systemProductionStructureControlStructureINPUT OUTPUTThis basically is the function model of Dutch sociotechnologyInnovation is defined as function of the control structureSo we have to open this black box: …
Slide 1212D-STSD-Control Structure (Ashby)Production StructureINPUT OUTPUTOperational RegulationRegulation by designStrategic RegulationAshby defined three types of regulation:- Strategic- Regulation by design- Operational regulationRegulation by design is aimed at redesigning the systemImplementing a redesign = innovation …
Slide 1313Regulation by design = InnovationDe Sitter, 1994, Synergetisch produceren• Kind of ‘bible’ of Dutch STS-Design• “Just vague design rules for innovationstructure”• “challenge for young business scholars”– On last page 403 …In 1994 De Sitter publishes the results of his work in a bookSynergetisch produceren; Human Resource Mobilisation in productie. Een inleiding in destructuurbouw.Or “Producing synergistically; Human resource mobilisation in production. An introduction tobuilding structures.On the last page he admits that he does not yet have concrete design rules voor innovation, so Itook up (t)his challenge.
Slide 1414Design rules for Innovation Structure?• Develop from Theory?– De Sitter did not succeed• Derive from empirical research?– Tremendous variety in organisations– # of organisations = # of different (innovation) structures– What’s inside ‘Regulation by Design-layer’?– How to compare & contrast?– In a holistic integral way?To develop design rules there appeared two optionsDevelop from theory, however De Sitter, as I see it, failed in his attempt along this lineDerive from empirical research: som innovators are better than others; what is the difference in their structuresOf course there is an enormous variation in organisations and so in structures.Systems theory offers a tool to describe the structure of systems in such a way that you can compare & contrastthem.
Slide 1515Innovation Structure in ModelsSystem theory models as descriptive /prescriptive tools:Author: Innovation structure detail:• De Sitter: 1 layer• Beer (Viable System Model): 3 functions• In ‘t Veld: 5 functionsIt offers already models that might be usable
Slide 1616Model (dis)advantages• De Sitter: 1 layer– Insufficient detail• Beer (Viable System Model): 3 functions– Total 5 functions: ‘necessary & sufficient’– Claim N&S stands for over 30 years– Too abstract for practitioners– Focus on information processing• In ‘t Veld: 5 functions– Face validity for practitioners– Nearly sufficient detailThey were rejected for my study of ‘innovation structures’ because they lacked sufficent detailon this control layer.And had some other disadvantages.So a new model had to be developed …
Slide 1717So develop a new function model1. Systematic & integral description of any organizationalstructure2. Detailed innovation structure (for research)3. Necessary & sufficient functions (viable)4. Levels of recursion5. Technical part of system6. Easily recognisedTo: 1 Do comparative casestudies2 Diagnose structures & redesignsSix design specifications for a new model serving two purposes-Diagnose-Research
Slide 1818Model Innovation- & Organisation Structure“the MIOS”This is how my model looks like in the book …18Model Innovation- & Organisation Structure“the MIOS”
Slide 1919Innovation Structure FunctionsDefinemission-C4Balance-C3Tune-C2Remember-C1Supply-V1product / serviceInnovate-I1SearchfuturenewoptionsI4Searchimpro-ve-mentsV4Proposeinno-vation-I3Proposeimprove-ment-V3Regulatesupply-V2Regulateinnovation-I2“exploitation”“exploration”8 functions inInnovationStructureHere the blue boxes show that there are 8 functions that belong to the innovation structure.The Primary Process of an organisation is bottom right: supply and its operational regulationDefine Mission middle: is equal to the strategic regulation layer of the control structure.To innovate an organisation needs ideas:-incremental, about existing products, services, markets; ‘red ocean’-Radical, new products and processes and business models; ‘blue ocean’Usually there are more opportunities than really promising ideas, so the better ideas aredetailed in a project proposal,There are more proposals than resources (money, people, knowledge) so a balanced choice hasto be made,Criteria for these choices come from strategy.To prevent re-inventing the wheel, an organisation needs a well organised memoryfunction.This model was presented to an academic specialist and to 4 experienced STS-concsultants.And approved, the proof of the pudding is in the eating
Slide 2020Tested in Five Dutch Companies# name MPS, Main product site empl1 Eline EtO, Electrotechnical 3 1202 Amelie EtO, Marine electrotechnical 9 5803 Ezra MtO, Seed improvement 11 3004 Leon AtO, Trailers/modules 1 1305 Rik AtO, Mobile Cranes 1 140So I was happy to find five organisations willing to partcipate.For a test, also according to Yin, the sample me be convenient and varied.
Slide 2121Testquestions1. Systematic description?2. Diagnosis?3. Compare & contrast?4. Efficiency?5. User capabilities?The test had to answer these 5 questions
Slide 22221 Systematic description?• Explain the MIOS to respondents– On paper before interview– At start of interview• To which functions do you contribute?• Are you related to other?– You / your department or group• Discuss all 12 functions
Slide 23232 Diagnosis?• Basic diagnosis per function– Nobody is doing that– Informally done by …– Formally assigned to …• Detailed diagnosis– Of Supply-V1 & Reg. Supply-V2: D-STS-theory– Other functions: innovation mgt literature
Slide 24242 Example of diagnosisEline(table 6.2.6)Not, (in-)formalRemarksSupply-V1 Formal Groups > 20 employeesReg. Supply-V2 Formal Span of control too large,mixed with Reg. Innovate-I2Propose-V3 Informal No format/procedureSearch-V4 Informal Hardly any ideasAt first the description revealsA function is-Not done-Informally done by …-Formal responsibility and done by …With additional theory a little more can be said
Slide 25253 Compare & contrast?• 3 Smaller = less formal outside V1 & V2• 2 EtO different from 2 AtO & 1 MtO– AtO: 10% of employees ‘product engineering’– EtO: some innovation in customer projects (so mixprimary process & innovation process)• Further research: select similar casesAlthough the comparisons showed some interesting factsFor future research it would be better to find more homogeneous sets of casesAnd for each set design rules for the innovation structure may be derived,
Slide 26263 Example of comparisonBecause there is no time for the details I just show a table in Dutch.As you may see, some of the innovation functions are compared here
Slide 27274 Efficiency?• Site visit & introduction– Website, documents, ‘google’• Six interviews (test average)– Depends on # of sites/employees/product groups• Rich case description– After some learning: ~2 weeks/case
Slide 28285 User capabilities?1. Basic knowledge of– System theory must*– Dutch STS-design must*– Innovation management helps2. Experience– In organizations helps– Interviewer/researcher must** My MSc-students can do it.
Slide 2929Innovation example – 1 / 4Search future options-I4:At Ezra / Amelie• Sr. Researchers/Engineers• ‘Scouts’– Formal / informal– Stay leading edge in the field– Develop proposals (I3)formally assigning senior engineers a scouting role for all relevant fields
Slide 3030Innovation example – 2 / 4Propose future options-I3Ezra & Leon use:• A Format for projectproposals– Better exploratory study– All info to decide is specified– Decisionmakers well informedPretty basic idea to use a checklist,But it prevents accepting a project propoasl for a systemfor flood lighting Jesus statues on top of mountainswithout seizing the marketpotential: 1 in Rio? Smome more?
Slide 3131Innovation example – 3 / 4Linking operations to designRik:• Production supervisor must approve design• Formalised way of working• Use experience improves, manufacturability(or serviceability)
Slide 3232Innovation example – 4 / 4Organisational memory-C1Rik:• 23 expertise areas = 23 trio’s– Sr expert– Junior expert– secretary• Allways two experts