Typical organizational structures impede innovation

Organizations typically focus on “component-level” innovations that sustain and optimize the existing products for the existing customer. When a systemic change is needed that requires the group to communicate and work together in new ways, these organizational structures impede innovation.

… organizational structures typically facilitate component-level innovations, because most product development organizations consist of subgroups that correspond to a product’s components. Such systems work very well as long as the product’s fundamental architecture does not require change. But, say the authors, when architectural technology change is required, this type of structure impedes innovations that require people and groups to communicate and work together in new ways.^[1]

Conley’s Law tells us that systems image their design groups. Organizations tend to restructure in order to design and optimize their dominant product, which results in the organizational structure affecting (if not determining) how it can or cannot innovate.

Because an organization’s structure and how its groups work together may have been established to facilitate the design of its dominant product, the direction of causality may ultimately reverse itself: The organization’s structure and the way its groups learn to work together can then affect the way it can and cannot design new products.^[2]

#organizations #management