The Innovative Organization - New Age Organizational Forms


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The Innovative Organization - New-age Organizational Forms
Over the past several centuries, the hierarchical form of organization had served us well. However, the world has changed rapidly in the past few decades. Change continues to accelerate. Linear organizations tend to struggle in a non-linear environment. New forms of organizations, much more well suited to today's complex and connected world and its needs, have emrged. These are broadly classified into ambidextrous organizations, collaborative organizations, learning organizations and emergent organizations. High innovation performance requires innovative structures. Innovation is unlikely to be driven top-down in an organization in the years to come. In the increasingly decentralized emergent form of organization innovation behavior will be like DNA - all-pervasive, scale agnostic, self-repeating and evolving. This requires new topologies. Elements of social network analysis, systems thinking and chaos theory provide pointers.

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The Innovative Organization - New Age Organizational Forms

  1. 1. The Innovative Organization New Age Organizational Forms Karthikeyan Iyer Co-crafter, Founder Director, Crafitti Consulting Pvt. Ltd.
  2. 2. Form defines Function Structure defines Behavior 14-06-2010 Crafitti Consulting Pvt. Ltd. 2
  3. 3. Why is structure required? Speed Flexibility Adaptability Evolution Scalability Stability Rigidity Strength Productivity Efficiency 14-06-2010 Crafitti Consulting Pvt. Ltd. 3
  4. 4. Hierarchical Enterprise Fast output Efficient output Predictable output Structured Inputs Known Inputs Not many surprises 14-06-2010 Crafitti Consulting Pvt. Ltd. 4
  5. 5. A few ideas Hierarchical Enterprise’s answer to make it innovation flow A typically “linear” funnel and stage gate model Many get stuck midway And most lose steam very early Ideas The filtration The stage gate (from various funnel process channels) (based on (with evaluation and decisions at various various stages) criteria) © Crafitti Consulting Private June 14, 2010 5 Ltd.
  6. 6. The world is changing rapidly and so are the world’s businesses! Information gets Old economy New economy Information travels fast collected locally, (Weight) (Speed) and wide access is restricted First mover’s advantage is a small window Growth and expansion is slower You can lose your intellectual advantage First mover’s very quickly! advantage lasts longer 14-06-2010 6 Crafitti Consulting Pvt. Ltd.
  7. 7. Scale changes everything • Can’t become too big without losing strength and stability • Takes too long for information to circulate, percolate 14-06-2010 Crafitti Consulting Pvt. Ltd. 7
  8. 8. A Weakening of Hierarchies • Information abundance permits INDIVIDUALS to by- pass hierarchies that have – deliberately or inadvertently – controlled or limited information • Alternative human organization forms – based mainly on the Network have proved more effective and efficient for transacting information than hierarchies. In Information intensive enterprises, hierarchical organizations may not be competitive with networks. IN ATHENA’s CAMP – Preparing for conflict in the Information Age, (Ed) Arquilla J. and Ronfeldt D, RAND, 1997 14-06-2010 Crafitti Consulting Pvt. Ltd. 8
  9. 9. Forces that modern organizations face • Disorder Hyper Competition • Stress (D’Avini 1994) • Unpredictability Shift in economic • Post-war economy growth cycles (Sparrow • New economy based on technological drivers of & Cooper 2003) information, communication and technology • Driven by discontinuity (No longer driven by Drivers continuation and stability) • Social factors 14-06-2010 Crafitti Consulting Pvt. Ltd. 9
  10. 10. New Challenges in the new world • Organizations are much more dependent on the Interdependence fortunes and actions of others • Organizations cannot be sure that they will Disembodiment perform better just by owning important assets • The speed, at which organizations have to Velocity function effectively, has accelerated. • Power in organizations now resides in the location Power of knowledge. D’Avini, Hypercompetition 14-06-2010 Crafitti Consulting Pvt. Ltd. 10
  11. 11. Our Needs from structure have changed Flexibility, The old world’s needs from Adaptability, structure Ability to evolve, change Stability, Rigidity, What the new world needs Strength, Productivity, 14-06-2010 Efficiency Consulting Pvt. Ltd. Crafitti 11
  12. 12. New Organizational Forms proposed in literature • Post-bureaucratic and post-modern organization • Re-engineered corporation • Virtual organization • Boundary-less company • Network Organizations • Modular Organizations • Fractal and modular factories • Atomized organization • High-performance or high-commitment work system • Knowledge-creating company • The Ambidextrous Organization • Distributed knowledge system • Learning Organization • Collaborative Organization 14-06-2010 Crafitti Consulting Pvt. Ltd. 12
  13. 13. In contrast with hierarchy Hierarchical New organizational forms Goal setting Top-down Decentralized Power Concentrated Distributed Size of units Large Small Leadership function Control, monitoring Guidance, conflict management Vision Dictated Emergent Structure Formal hierarchy Team and work-group structures Primary unit of analysis Firm Network Boundaries Durable, clearly set Permeable, fuzzy Objective Reliability, replicability Flexibility Regulation Vertical Horizontal Assets Linked to particular units Independent of unit, shared Role Definition Specialized, clear Fuzzy, General Uncertainty Try to absorb Try to adapt Rights and duties Permanent Impermanent Integrity Rule-based Relationship-based Motivation Efficiency Innovation 14-06-2010 Crafitti Consulting Pvt. Ltd. 13
  14. 14. Innovative Organizations – New Types 14-06-2010 14 Crafitti Consulting Pvt. Ltd.
  15. 15. Ambidextrous Organization Explore Exploit Top Incremental • Small improvements in existing Management Innovations products or operations Explore Exploit Architectural • Technology or process changes to fundamentally change a component or innovations element of business Structural, cultural independence Discontinuous • Radical advances that may significantly alter the basis for competition in an innovations industry 14-06-2010 Crafitti Consulting Pvt. Ltd. 15
  16. 16. The Ambidextrous Organization Alignment of: Exploitative Exploratory Business Business Strategic intent Cost, profit Innovation, growth Critical tasks Operations, Adaptability, new efficiency, products, incremental breakthrough innovation innovation Competencies Operational Entrepreneurial Structure Formal, Adaptive, loose mechanistic Controls, rewards Margins, Milestones, productivity growth Culture Efficiency, low risk, Risk-taking, speed, quality, customers flexibility, The Ambidextrous experimentation Organization, HBR, O’Reilly Leadership Role Authoritative, top- Visionary, involved and Tushman down 14-06-2010 Crafitti Consulting Pvt. Ltd. 16
  17. 17. Traditional Teams Collaborative Organizations Team-based - Levels organizations Collaborative Organizations Beyerlein et al. 2002 14-06-2010 Crafitti Consulting Pvt. Ltd. 17
  18. 18. The Collaborative Organization - Levels Traditional Teams Team-Based Organizations Collaborative Organizations Characteristics of the work Concrete interdependencies Abstract work that requires Fluid set of interdependencies that can be broken down into significant levels of planning and that may exist inside and outside smaller (team size) units decision making; significant the interdependencies across teams organization; moving target; and at business unit levels varying levels of complexity Primary focus of collaboration Team Project Varies Organizational Type Traditional Matrix Varies Purpose of Redesign Cohesion, commitment, Coordination, resource Responsiveness, better use of management, responsiveness, coordination, expertise at all levels better use of entrepreneurship of the organization expertise Primary Intervention Point Relationship System Culture/ context Framework for Decision Making Consensus within self managing Consensus and voting Varies; decisions made teams; star within teams; hierarchical and at all levels of the model; teams and managers lateral set of governing and organization; clear and negotiate coordinating systems; communicated set of over goals, schedules, teams managing priorities and tradeoff and so on teams; expertise/ criteria; highly disciplined decision accountability primary making; expertise, accountability, source of influence and relationship sources of influence Beyerlein et al. 2002 14-06-2010 Crafitti Consulting Pvt. Ltd. 18
  19. 19. The Learning Organization These organizations focus on experimentation and learning as the key goals to be pursued. There is a clear orientation towards the pursuit of perfection at all levels (Garvin et al. 2008). Knowledge (and thereby change) is expected to be continuously created. Ikujiro Nonaka from his HBR article, The Knowledge Creating Company, “To create new knowledge means quite literally to re-create the company and everyone in it in a nonstop process of personal and organizational self-renewal. In the knowledge-creating company, inventing new knowledge is not a specialized activity – the province of the R&D department or marketing or strategic planning. It is a way of behaving, indeed a way of being, in which everyone is a knowledge worker – that is to say, an entrepreneur.” 14-06-2010 Crafitti Consulting Pvt. Ltd. 19
  20. 20. Learning Organization Long-term strategy for Building blocks to Means to Competitive sustained growth and institutionalize Excellence (Senge innovation (Nonaka learning (Liker 2004): 1994). 1991). A supportive learning environment Transparently share Concrete learning Systematic problem learning and processes and Solving knowledge with the practices environment Leadership behavior that reinforces learning 14-06-2010 Crafitti Consulting Pvt. Ltd. 20
  21. 21. Typical Evolution of Learning Processes Reduction in perceived complexity due to Standardized greater understanding Simple, repeatable, deterministic Facilitated Ad-Hoc Complex, probabilistic or chaotic, needs active intelligence The benefit of multi- disciplinary learning and state-of-the art thinking Self-learning on innovation © Copyright 2008 Wipro Ltd
  22. 22. Emergent Structures Water crystals on glass Sand dunes Termite Mound In Nature, complexity is countered and embraced by emergent structures. These structures do not have sharp lines, they are scale- agnostic (similar but not exactly same) 14-06-2010 Crafitti Consulting Pvt. Ltd. 22
  23. 23. Emergent Organization Extraordinary Decentralization Adapting to change and creating change Boundary-less organizations Leader-less organizations Simple micro-structure and micro-behavior Swarm Behavior of Ants 14-06-2010 Crafitti Consulting Pvt. Ltd. 23
  24. 24. Key Differences between Organizational Forms Organization Form  Hierarchical Ambidextrous Collaborative Learning Emergent Key function Efficient Balance growth Information Continuous Evolution allocation of and efficiency flow, 1+1 > 2 improvement resources Flow Uni-directional, Conditional Multi-directional, Cyclic, Directed Natural, not top-down peer-to-peer towards ideality consciously directed Evolution Standard Tree The banyan tree Cross-Pollination Continuous Living system hierarchy model improvement, pursuit principles of perfection Knowledge Assumed to be Some knowledge Potential to be Knowledge to be Created as needed codified, known codified, some to be maximized through improved and obtained sharing increased continuously Interdependence Clear, closed Modular Fuzzy boundaries Clear but open Boundary-less boundaries architecture, Clear, boundaries closed boundaries Iyer, K. 2009, ‘Fueling Innovation Through New Organizational Forms’, Real Innovation 14-06-2010 Crafitti Consulting Pvt. Ltd. 24
  25. 25. New Age Organization Structures are Fundamentally “Networks” The Internet Inter-disciplinary Capillary network collaborations High School Complex system design Friendships diagram 14-06-2010 25 Crafitti Consulting Pvt. Ltd.
  26. 26. You must have noticed . . . • are never linear (even though we report mean Attrition patterns attrition rates) – they ebb and flow, much like population densities of animals in a natural reserve. • in reality, never actually follows linear patterns – Sales some teams at some particular times seem to be more “lucky” New • happen in clusters, without any obvious reason and breakthroughs in completely unconnected with the flows of R&D investment R&D 14-06-2010 Crafitti Consulting Pvt. Ltd. 26
  27. 27. Enterprise Social Networks • How your networks are structured will determine how your enterprise responds to external stimuli • Are you trying to fight non-linearity with linear structures? • Is your enterprise finding it difficult to innovate despite the best intentions? Form will define behavior . . . Innovative organizations will design their structures to maximize benefits from network effects. 14-06-2010 Crafitti Consulting Pvt. Ltd. 27
  28. 28. CONCEPTUAL SOLUTION: GLOBAL ENTERPRISE AS A SOCIAL SYSTEM The Tipping Point that refers to the moment when something unusual becomes common. The book seeks to explain "social epidemics", or sudden and often chaotic changes from one state to another. (Wikipedia)
  29. 29. Three types of people create Idea Tipping Points Connectors are those with wide social circles. Mavens are knowledgeable people. Salesmen are charismatic people with powerful negotiation skills. They exert "soft" influence rather than forceful power. The PROCESS of TIPPING POINTS The Law of the Few: Find out Connectors, Mavens and Salesmen – a few of these is what one idea needs to become an epidemic Stickiness: Ideas or products found attractive or interesting by others will grow exponentially for some time. The Power of Context: Human behavior is strongly influenced by external variables of context. 14-06-2010 29 Crafitti Consulting Pvt. Ltd.
  30. 30. Competent Jerks and Lovable Fools Competent Lovable Star Jerks Increasing competence Incompetent Lovable Fool Jerk Increasing Likability Source: Casciaro & Lobo, HBR 14-06-2010 30 Crafitti Consulting Pvt. Ltd.
  31. 31. Granovetter’s – Strength of Weak Ties • Despite being clustered in our own links, we connect with other such clusters through random, long-range, infrequent, and weak ties. The sociologist Mark Granovetter in his now classic paper of 1973 titled Strength of Weak Ties showed that effective social coordination happens through the presence of occasional weak ties between individuals and not through densely interlocking strong ties. In Figure 1, dotted lines indicate the weak ties. 14-06-2010 31 Crafitti Consulting Pvt. Ltd.
  32. 32. Net Promoter Score How Likely is it that you would recommend [brand or company X] to a friend or colleague? Not at all likely Extremely Neutral Likely 0 5 10 Promoter 9-10 Simple micro-metrics to Passively 7-8 capture the essence of Satisfied complex macro-behavior Detractor 0-6 14-06-2010 32 Crafitti Consulting Pvt. Ltd.
  33. 33. Transitioning Learning Customized Response Open Swarm Customized Response Customized Response Socio-centric Open Hierarchical Hub-Swarm Request-based Routine Response Routine Response Ego-centric Ego-centric Customized Response Centralized Centralized Open Request-based Emergent Modular Response Modular Response Socio-centric Socio-centric Customized Response Customized Response Request-based Request-based Open Socio-centric Swarm Hub-Swarm Customized Response Socio-centric Hub-Swarm Ambidextrous Customized Response Open Customized Response Swarm Socio-centric Bhushan, N & Iyer, K. 2008, ‘Organizational forms Hub-Swarm Customized Response and Social Network types – A framework for Open analysis’, International Conference on Social Request-based Network Analysis, TISS Mumbai Collaborative 14-06-2010 Crafitti Consulting Pvt. Ltd. 33
  34. 34. Crafitti helps craft innovation in multiple contexts. Karthikeyan Iyer Co-crafter, Founder Director Crafitti Consulting Pvt. Ltd. © Crafitti Consulting Private 6/14/2010 34 Ltd.