In a previous post I was telling you about engineering an open culture and how tricky this task can be. As research shows, the structures for innovation and open innovation are just as prone to failure, despite sizable investments and the best of intentions. And by structures I mean the physical spaces where innovation takes place and the formal reporting relationships (levels of hierarchy, managers’ span of control, communication patterns) within them.
Consider for a moment the following statements: “It was a creativity lab, not a space for innovation”, “we had a lack of strategic alignment”, “we were missing focus”, “our staff was playing innovation theatre” (by the way, theatres and orchestras can be pretty innovative too!), “we had zero contribution to revenue”. These are just five of the many possible reasons innovation labs get shut down. Feeling guilty? No need to.
The failure of an innovation lab (or similar structure) does not mean the idea itself was flawed. What was missing, however, was the link to strategy. I like Tim Kastelle’s view on this. As he puts it, endless group work, start-up weekends, hackathons, workshops where employees are ideating but not building, or worst, boasting about disruptive solutions (a bit like saying how “iconic” a dress is) are all symptoms of the same condition: what should have been a serious innovation effort is nothing more than a serious game of play pretend.
So when is a structure “adequate” for innovation and open innovation? That’s a tricky one. Most likely when it is aligned to existing goals. But there are also some factors to consider, and to entertain this discussion, I’ve prepared (once again) three perspectives for you.
Each piece of research outlined below will give you an idea about how to assess/ improve existing structures for (open) innovation and the benefits each approach brings.
1. Structural Ambidexterity
If an organization wants to excel in both improving existing products (incremental innovation) and generating new ones (breakthrough innovation), it should consider so-called “structural ambidexterity”. But don’t take that from me. Take that from the scholars and practitioners that are looking into this concept.
We’ve written about ambidexterity before here on the blog, but of a slightly different kind. General, organizational ambidexterity is the ability to pursue two disparate things at the same time (efficiency vs. flexibility, exploitation vs. exploration, stability vs. adaptability etc.). Structural ambidexterity is similar, but refers specifically to“the separation of exploitative and explorative activities into distinct organizational units”. In this way, incremental and radical new product (service, even business model) development receives separate spaces and separate teams even. For example, incremental efforts are handled by a functional team, whereas radical projects are in the hands of a cross-functional team.
The main advantage of this approach is that it eliminates certain tensions in an organization by channelling resources better and increasing coordination. So instead of asking the same team to tackle incremental and radical projects at the same time, ambidexterity allows the work to be split up and hence become more focused.
When contemplating ambidexterity, some of the questions to ask include:
- Do we use functional structures for incrementally new product and service development?
- Do we use cross-functional structures to develop incrementally new products or services?
- Do we use functional structures for radically new product and service development?
- Do we use cross-functional structures to develop radically new products or services?
Further reading: “Structural ambidexterity in NPD processes; A firm-level assessment of the impact of differentiated structures on innovation performance”, by Matthias de Visser, Petronella C. de Weerd-Nederhof, D.L.M. Faems, Michael Song, Michael Song, Bart van Looy, Bart van Looy, and Klaasjan Visscher.
2. On (Mis)Alignment
As mentioned at the onset, misalignment makes structures fail - strategic misalignment. To succeed, organizations must (sincerely) consider the plethora of links and interactions, chiefly between their information technology (IT) component and their core business. Does information travel smoothly and swiftly? Are departments interlinked? Are there idea banks in place? What about inviting external collaborators to prototype? Is there a virtual space to do testing? Also, is there sufficient flexibility to adapt to unforeseen circumstances?
As you can probably tell, a rigid structure hinders collaboration and co-creation. And that is bad news. So when contemplating alignment issues, start with the following questions:
- Are our business and open innovation (OI) strategies aligned?
- Are our IT and OI strategies aligned? (e.g. Do we have the adequate IT infrastructure to innovate?)
- Are we are able to respond to environmental change? (e.g. How do we handle disruption? Do we consider value constellations such as networks and ecosystems as a mean of staying future-proof?)
Further reading: “What does it take to implement open innovation? Towards an integrated capability framework”, by Sabiölla Hosseini, Alexandra Kees, Jonas Manderscheid, Maximilian Röglinger and Michael Rosemann.
3. Structures for Flexibility and Fast Response
Organizational structure (its design) reflects both what is important for an organization as well as its standards of practice. Sometimes, it even hints at the organization’s vision and mission. For example, if an organization has a corporate venturing unit, it’s probably keen on getting ahead of the technology curve with the help of start-ups. Similarly, if a company holacracy, it’s probably a forward-thinking, flexible entity.
Interestingly, structures are also useful in assessing an organization’s maturity with regard to innovation and open innovation. Therefore, it is a useful method of telling organizations apart.
Consider the following items. How many does your organization identify with?
- There is a formal organizational structure: a set of rules, established functions and procedures, everyone knows what they can and should do;
- The institution/organization is outward looking: it works with other organizations and professionals, knowledge and ideas are obtained from outside;
- There is a focus on innovation: new opportunities are sought, creativity is fostered in employees and in learning.
- There is a system of structured, well-defined information that enables what is done in different departments to be known;
As a bonus question, I would add:
- Did we appoint an OI champion?
Appointing an innovation champion is another important component of the innovation structure. Ideally, this role stimulates more effective interactions with innomediaries (open innovation intermediaries) as well as with other collaborators and even competition.