Corporate Entrepreneurship

and Innovation

Chapter 5
Structure in the entrepreneurial organization

1
CEI
 Organizational architecture

Organizational architecture

Leadership &
Culture Structure Strategies
Management
Influencing organizational architecture

Environment
Culture

Leadership Organizational Strategy

architecture

Structure

Environment
Hierarchy vs self-organisation

Simple hierarchy Self-organizing team

5 people: 4 interactions 5 people: 10 interactions
 
Organizational hierarchy

Departments

Functions within departments

Individuals within functions

 Organizational matrix

Geographic or product reporting lines

Functional
reporting
lines
 Organic structures
within organic structure
Organic multi-functional project teams

CEO

Departments or divisions
Functions within
departments or divisions

Individuals within functions

Project team
Mixed organic / hierarchical structure

CEO

Hierarchical divisions
Organic division

Departments
 1

Organic head office with subsidiaries,

divisions & departments
CEO

Holding company
Organic structure

Subsidiaries

Divisions
Organic structure

Departments
Organic structure

Organizational design
 1

Structure,
Greater
task & environment
autonomy

Hierarchical structure Organic structure

Matrix sub-structures Autonomous sub-
Complex Adherence to structures
established protocols Considerable freedom

Task

Machine bureaucracy Hierarchical structure

Simple Hierarchical structure Matrix sub-structures
Tight controls Considerable
discretion
Greater
autonomy
Greater Stable Changing
control
Environment
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Motivation

Motivation, where high-level cognitive

skills are needed, comes primarily from:
1. Purpose
2. Autonomy
3. Mastery
(but make sure money is taken off the table)

Pink
 1

Control vs autonomy
Autonomy
(chaos)

Too little Too much Too few Too little

Direction Space or slack Boundaries Support

Too much Too little Too Too much

many

Control
(constraint)

Balance
 1

CASE
insight
Enron

Do you agree with

Birkinshaw’s
analysis of Enron?

Explanation
 1

Network structures

 Crowdsourcing & open innovation

 Down-scoping & outsourcing
 Partnerships
 Strategic alliances
 Joint ventures
 1

CASE
insight
Tesla Motors
1. Why do these structures make Tesla
able to innovate quicker and better
than other companies?
2. Are there any drawbacks of structures
for Tesla now and in the future?

How Tesla is built

 1

CASE
insight
GVC & MGM Resorts

1. What different attributes do the two partners

bring to a joint venture?
2. Why are they moving so quickly after the
ruling by the US Supreme Court?

GVC
 1

Franchisor
Advantages Disadvantages
 Way of expanding British Franchise Association
business quickly rules take time and money to
 Financing costs comply with
shared with Loss of some control to
franchisees franchisees
 Franchisees usually  Franchisees can influence
highly motivated since the business
their livelihood Failure of franchisee can
depends on success reflect on franchise
 May be obligations to
franchisee in the legal
agreement

Origins
 1

Franchisee
Advantages Disadvantages
 Format proved; less  Not really your own idea
risk of failure  Lack of real independence
 Easier to finance than  Franchisor makes the rules
own start-up  Can be expensive to buy-in
 Established format;  Royalties can be high
quicker to start-up
 Goodwill you build up
 Training & support dependent upon continuing
from franchisor franchise agreement; may be
 National branding problems if you wish to sell
should help sales  Franchisor can damage
 Economies of scale brand
may apply
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Entrepreneurial structure
 Structure depends on many things - nature of the organization, its
strategies, the tasks undertaken, the culture it wishes to encourage, its
size & its environment
 Entrepreneurial organizations typically face a high degree of
environmental turbulence. If tasks are complex, they are best served
with an organic structure that may change in different situations
 A large multi-business is likely to have a hybrid structure with relatively
autonomous operating divisions or subsidiaries reflecting different
needs, some having more traditional internal structures, linked to head
office through an organic structure with entrepreneurial architecture
 Control in the organic structure will be loose (or at least balanced)
giving people autonomy but holding them accountable. It will have a
strong organizational culture & will have a wide range of external
partnerships
 There will be structures to provide resources for new venture activity &
spin-offs will not be uncommon
 2

CASE
insight
Alphabet (1)

1. Why has Alphabet adopted

this organization structure?
What are the advantages &
disadvantages?
2. Why is ATAP a subsidiary of
Google when other research-
based activities are
subsidiaries of Alphabet?
 2

CASE
insight
Alphabet (1)

Alphabet

Google Chronicle X Development GV

Loon Dandelion Calico CapitalG

Waymo DeepMind Sidewalk Labs

Verily Google Fiber Jigsaw

 2

Activities
1. Give specific examples of an industry where a hierarchical,
bureaucratic structure should be the ‘best’ way to organize.
Select a company in the industry & investigate their structure.
Explain why their structure conforms (or not) to your
expectations, taking into account its relative commercial success
2. List the type of organizations & market sectors that face high
degrees of competition and turbulence. Select a particularly
turbulent sector & research how the firms within it are structured
& their relative success
3. Describe the different ways large organizations break themselves
down into smaller sub-organizations & explain their reasons for
doing this
4. Select a large company that has been broken up into at least two
parts & explain the reasons for this
5. Select a strategic alliance or joint venture.
Analyze & explain the reasons behind it.