Organizational Frameworks of

Innovation
Kármen KOVÁCS
Associate Professor
kovacs.karmen@ktk.pte.hu
Barriers of Innovation

• Resistant culture

• Financing gap

• Employee problems

• Process immaturity

• Lack of availability to data and information

Influencing Power of Organizational Culture

• Involvement of employees

• Respect for knowledge and knowledge development

• Considering different viewpoints

• Managing errors

• Constructive criticism
Department of HRM and R&D
• Different methodology – different activity
• Uncertain, great changes
• Long-term thinking
• Different principles, norms and views

• They have major role

• Interesting and important tasks
• Providing time and resources
• The ability to build strong external relationships with
customers and the scientific community
• Performance appraisal, remuneration and encouragement
• Avoiding „punishment”
Encouragement of Internal Communication

• Internal communication supports

• Purpose defining
• Planning
• The exchange of information
• Avoiding misunderstandings

• Innovation activities require strong and effective internal

communication; it should be supported by
• Working together
• Rotation
• Applying information technology
• Regular inter-functional meetings
Social Networks and External Relations

• They provide access to the information needed to identify

innovation opportunities

• Improve the outcome of decision making

• It can provide a time advantage

• It helps network development

Developing Incentives

• Risk, stress, failure chance

• Fix + bonus → low motivation
• Performance appraisal and remuneration should be linked
to innovation
• Share vs. bonus
• Disadvantage: focusing on this even if other things were
more important or the chance of success are low
Supporting Creativity

• Depends on individual characteristics (motivation,

knowledge etc.) and working environment

• Creativity can be inspired by

• Flexible environment
• Adding extra to the system
• Making group(s) from people of different backgrounds

• Disadvantage: efficiency is often more important than

creativity
Essential Organizational Forms

The three fundamental features of the organizational

structure affect innovation

1. Degree of centralization

2. Is it organic or mechanical?

3. Availability of resource surplus

Centralization vs. Decentralization

• There is a professional debate in the literature which one

is more appropriate and advantageous to innovation

• Especially since information technology has changed the

nature of communication within the organization
Advantages of Decentralization

Decentralization enhances innovation as

1. It helps to access information
2. The number of participants in the innovation process
increases
3. R&D activity will be more market-oriented
4. Innovation investments can be diversified
5. It is easier to gain access to government support
6. It also encourages innovation activities for non-key
areas
Advantages of Centralization

Centralization enhances innovation because

1. It reduces coordination costs
2. It provides operational freedom
3. It encourages investment in radical innovation
4. It motivates great innovations
5. It facilitates the strategic management of innovation
Mechanical vs. Organic Structures

• Organic structures are more favourable to innovation than

mechanical ones, as they allow:

• Greater organizational flexibility

• Cooperation between various departments
• Less regulated

• At the same time, these benefits are associated with lower

organizational efficiency
Routine vs. Innovative Organization

Aspect Routine Innovative

Processes Communication Information
Bureaucratization Reformation
Sharing financial Brainstorming
resources Realizing the need for
Sharing tasks cooperation
Working and finding
solutions together
Structure Stability Flexibility
Sharing work Defining roles
Defining individual Common working
responsibility
Authority principle Competency principle
Routine vs. Innovative Organization

Aspect Routine Innovative

Personal Selection To be selected
Adaptation Specialization
Conformity Non-conformity
Progression Feeling success
Interest Indirect Direct
Certainty Uncertainty
For an individual For a group
Efficiency and Resource Surplus

• To conduct innovative activities resource surplus is

required

• Companies that reduce their R&D spending, at the

expense of long-term innovation activities, experience
short-term efficiency gains
Functional vs. Cross-Functional Groups

• For functional groups

• Clear control and responsibility
• Greater specialization
• Lower coordination costs

• Advantages of cross-functional groups

• Integrated problem solving capabilities
• Balance between customer needs and technical options
Types of Groups

Constructive group
•Open, flexible
•Work with many external experts
•Inspired for creative work
•A team designed to produce mature ideas

Developing group
•It examines the possibilities of achieving clearly defined
goals
•It is a methodically controlled, relatively closed movement
•It has the right to dispose of resources
•It has to comply with budget and time limits
•It produces technical and economic documents
Types of Groups

Introducing & evaluating group

• Developing brand for a promising product
• Applying marketing assets
• Striving for market success
• Small number of staff
• Group evaluated based on economic results
Features of the Innovative
Organization
Shared vision, leadership and the will to innovate

• Clearly articulated and shared sense of purpose – clarifying

the new vision
• Top management commitment is required
• long-term commitment to major projects
• rather than expecting a return on the short term
• focusing on growth potential and possible future strategic benefits
• accepting the risk in the innovation project

• It has to be taken into account that innovation is basically

• Learning and changing

• It often requires a destructive, risky and significant

investment
Approporiate Organizational Structure

• There are both advantages and disadvantages in case of

every forms

• Organization structure which enables creativity, learning and

interaction during innovation project

• Key issue is finding appropriate balance between ‘organic

and mechanistic‘ options for particular contingencies

• The more uncertain and complex the environment is, the

greater the need for flexible structure and processes
• In the fast-changing, expanding sectors (e.g. biotechnology) there
are more organic organizational forms
Key Individuals

• Not only professional knowledge (e.g. technological) is

relevant in the innovation project, but also inspiration and
organizational skills

• Researchers, developers
• Project managers
• „Business innovator”

• „Negative” promoter
 High Involvement in Innovation
Five-Stage HII (high-involvement innovation) (Tidd and Bessant, 2014)
1. ’Natural’/background HII
• Low and unconscious HII activity
• Occasional, random
• Problem-solving
• No formal efforts on innovation
• Short-term benefits, no strategic impact
2. Structured HII
• Formal attempts to create and sustain HII
• Use of a formal problem-solving process
• Motivation and support of participation
3. Goal-oriented HII
• Innovation based on strategic goals
• Monitoring and measurement of HII against the goals
High Involvement in Innovation

4. Proactive/empowered HII
• Internally directed rather than externally directed HII
• ’empowerment’ of individuals and groups to experiment and
innovate on their own initiative

5. Full HII capability (the learning organization)

• Active learning organization
• Everyone actively involved in innovation process
• Incremental and radical innovation
Effective Team Work

• Clearly defined goals and tasks

• Competent team members
• Unified commitment
• Cooperation, collaborative climate
• Effective conflict resolution mechanisms within the group
• External support
• Leadership
• Participation in decision-making
• Team spirit
Creative Climate

• Positive approach to creative ideas

• Applying motivation system that supports creative ideas

• Risk taking
Focusing on External Environment

• Determinant group of customers

• Sources of technological developments
• Suppliers, business partners, competitors etc.
• Regional development agency
 Source and Suggested Reading

Tidd, J. – Bessant, J. (2014): Managing innovation: integrating

technological, market and organizational change. 5., reprinted ed.
Chichester: Wiley. ISBN 978 1 118 36063 7
Chapter 3 Building the Innovative Organization
Thank you for your kind attention