Innovate or die! You need to focus on organizational structure for innovation or you’ll become obsolete! You need to embrace change throughout your organization! Business innovation is the lifeblood of the modern business!

The calls to action go on and on. But how? How to innovate?

More importantly, how can you organize your business to encourage and support innovation? It sounds easy. And it certainly is easy to say. But doing it is a whole ‘nother ballgame!

Okay, time to relax. The truth is that most organizations are poorly structured to encourage innovation. However, it isn’t that much of a stretch to recreate the modern organization into an innovation engine. The hard part is getting the people to embrace new ways of doing things.

Fortunately, that’s not the subject of this article.

In this article, I’m going to focus on identifying an organizational structure that encourages innovation. A structure which will help businesses to embrace change and seek out the new.

To do that, we need to first examine four concepts. They are:

1. The historical description of organizations

2. What is innovation?

3. Where do new ideas come from?

4. Innovation and Organizational structure.

Historically organizations have been described as consisting of three groups — strategic, tactical and support. The problem with this definition lies in its origin 200 hundred years ago. The bottom line is that it was based on advice received from the surviving leaders of the Napoleonic wars. And frankly, the nature of warfare at that time ensured that anyone who knew what they were doing was dead! It’s like asking a poor person how to get rich. And for 200 hundred years we’ve bought into a myth that allowed Napoleon (who didn’t agree with the myth) to conquer most of Europe.

So what is the real structure of organizations? And how can a business be structured for innovation?

Innovation is the product of creativity and implementation. In essence, it is the coming together of an idea and activity. Without implementation, there can be no innovation. Without creativity, there can be no innovation. Both are required.

Tradition says that creativity resides in the strategic group. This is a group of senior managers who see all and decide how to react. The reaction is then implemented by the tactical group and innovation happens. Of course, in real world it doesn’t!

In fact, creativity comes from outside. To paraphrase Einstein, think the same, do the same. Yes, you can improve incrementally. But to innovate you need to have ideas come from outside the organization.

So how do you design the organization’s structure for innovation?

First, you must recognize that there are three distinct groups within every business.

The operational group is responsible for day to day running of the business. Their one overriding characteristic is that they don’t want to change. Change is inefficient. Change is disruptive. Think of it as an arrow flying between two points.

The strategic group is responsible for deciding which innovations to take advantage of. In essence, it is the creative group within the organization. The difficult part is that creativity actually comes primarily from both the highest and lowest parts of the organization. These groups interact the most with the outside. Those in the middle tend to be focused internally. The organizational structure must embrace both extremes in order to encourage creativity. A situation that isn’t common in the modern corporation. Nevertheless, this group must decide on the target that the arrow flies to.

The third group is a project and change management group. Its purpose is to adjust the operational group’s processes to meet the strategic group’s plans. Effectively it implements creativity. To do that it applies specialized skills to change the operational group and its processes. In essence, it needs to turn the archer so they point at the new target.

News Reporter