Structure

Chapter 9 – Power-control
Chapter 10 – Finding an
appropriate structure
 Contents
• Finding an appropriate structure
 Organisational Innovations
Characteristics of modern organisations:
• Specialised in a small number of things
• Emphasis upon teamwork
• Promotion of coordination
• Part of a network of suppliers and
distributors
 Network of suppliers and distributors

Subcontracted Manufacturer

Subcontracted Manufacturer Subcontracted Manufacturer

Headquarters:
R&D
Marketing

Subcontracted Distribution Channel Subcontracted Distribution Channel

Subcontracted Distribution Channel

 Virtual Organisation
• Comprised of a network of smaller
organisations
• Controlled by market forces and legal
forces
• More elasticity of production in times of
economic downturn
 Trends in Organisational
Orientation
Decreased: Increased:
• National focus • International focus
• Internal orientation • External orientation
• Customers & • Vertical integration
suppliers nearby
• Hierarchy • Functional teams
• Hoarding knowledge • Spreading knowledge
• Lifetime employment • Lifetime employability
 Responding to the Environments
• Responding to two different environmental
segments at once often leads to structure
related difficulties

• Choice between focus on product

development or on market demands
E.g. Two possibilities for Shell
Management

Gas Diesel Petrol Bio Fuels Ren. Energy

UK & DE & NL & UK & NL &

US BE FR DE DE &
US

Management

UK US NL DE FR
Gas Diesel Diesel
Diesel Bio Fuels
Petrol Gas Ren. Energy
Ren. Energy Petrol
Petrol
Bio Fuels
 Practical examples of structural
innovations
• A number of firms have adopted a new structure
in order to accelerate innovation and respond to
market changes
• These include: Toyota, Procter & Gamble , GE,
3M, IBM, Google, Microsoft, Sony, Hewlett-
Packard, DuPont, Honeywell, Whirlpool
• All of these firms supply a product directly to the
customer, they therefore try to involve the
customer in the process
 Key actions for structural change
• 1. Delegation of Decisions to Innovation Teams
• 2. Integration of R&D into the Business Units
• 3. Co-Location of Teams and Departments
• 4. Central Innovation Teams
• 5. Central Innovation Funds
• 6. External Interface for Open Innovation
• 7. Merger & Acquisition Department

Source: http://www.the-innovation-machine.com/?p=83
 Results of changes
• These 7 changes clearly show a centralisation of
all parties involved in innovation and R&D
• Co-Location of Teams and Departments results
in more informal communication as well
• An external interface allows the firm to channel
realise its innovation potential and facilitates
introduction to the market much faster
• A clear M&A department allows the firm to
acquire innovations and directly introduce them
to the market-place
 Conclusion
• Centralised innovation teams reporting to
heads of divisions lead to an increase of
communication speed
• Centralised innovation funds results in
ideas being able to be launched much
faster
• Including the customer in the process
leads to quicker responses to market
changes
 Sources
• Organisation Theory – Robbins and
Barnwell (2006)

• http://www.the-innovation-machine.com/?p
=83
– The organizational structure of
innovation - Dr. Rolf-Christian Wentz
(2010)