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Jos Mendes Pereira Neto 2288052 Organizing and Implementing Innovation Strategy Summary Lecture 4 Organizing for Innovation:

n: [1]Schilling, M.A. Strategic Management of Technological Innovation Chapter 10 [2]Siggelkow, N., and D. Levinthal, Temporarily divide to conquer: centralized, decentralized, and reintegrated organizational approaches to exploration and adaptation. Organization Science 14 (2003), pp. 65069. [3]West, J., Institutions, information processing, and organization structure in research development: Evidence from the semiconductor industry, Research Policy 29 (2000), pp. 34973. [1] Chapter 10 Chapter 10 reviews how the structure of an organization can influence innovation. Size and Structural Dimensions of the firm: Bigger size: More financing for R&D, Global reach, Better complementary activities, economies of scale also apply, might take more risky projects;; Loss of managerial control, less responsive to change, inflexibility. Small firms also usually choose their projects better since they must be careful as not to waste their resources. Big Companies can disaggregate in subunits in order to feel small

Structural Dimensions: Formalization: The degree to which firms uses rules and procedures to structure the behavior of individuals or groups, might make the firm too rigid to innovate but also increases efficiency Standardization: The degree to which activities are in a uniform matter, might limit creativity and innovation Centralization: The degree to which decision-making authority is kept at top levels of management. Might maximize economies of scale but doesnt take the advantage of the diversity of knowledge.

Mechanistic x Organic Organic structures (lower levels of formalization and standardization) are considered better for innovation and dynamic environments, since it arises from improvisation and experimenting. However, they are less efficient compared to mechanistic companies.

Methods to balance efficiency and flexibility: Ambidextrous Organization: The ability to behave as two different kinds at once, by use of multiple divisions with different cultures and patterns of operations, such as Google.IT aids integration through information sharing. Modularity: Adopt standardized manufacturing platforms that can be mixed and matched in a modular production system. This provides a wider range of end configuration to be achieved from a set of inputs. Loosely Couple Organizational Structures: Development and production activities are not tightly integrated; coordination is achieved by adherence to shared objectives. Innovation by multinational firms: Need to tap the knowledge and resources of local markets while also achieving coherence across the corporation and ensure that technological advances are diffused and leveraged through the company. Strategies: Center-for-global: All innovations conducted at a central hub: Better control but less responsive Local-for-local: Each division has its own R&D; Good for different markets; Redundancy risks; hard to diffuse innovation Locally leveraged: Same as above but company tries to leverage resulting innovations; better consistency Globally Linked: Innovation activities decentralized but also centrally coordinated for the global need of the corporation. Divisions are not as independent as in the latter strategy.

Transactional approach: Resources and capabilities can be leveraged and deployed to exploit any opportunity that arises in any geographic market. This might be achieved by encouraging reciprocal interdependence among the divisions, integrations mechanism (such as rotating personnel) and balancing the organizations identity between national brands and its global image. [2] Siggelkow, N., and D. Levinthal The authors study the efficacy of different organizational structures for discovering good activity configurations using an agent-based simulation model, using three different firms: Centralized, decentralized and a temporarily decentralized firm that later reintegrates. They find out that long-term good performance might be achieved by ignoring interdependencies (if possible to bear the cost) or creating temporary interdependencies. Also, companies might change their organizational structure after

environmental changes, returning to a centralized structure after experimenting during some time. Their model also regards the timing of the modularization of the system, in order to allow each subsystem to develop by itself. However, they must be independent, else it becomes a very unstable system with low performance. [3] Jonathan West Focused or distributed groups for R&D? Focused: Tightening control of information increasing its flow to a single location where it can be processed and results communicated to other units for action, and design of the organizations tasks so that they can be undertaken in such focused fashion. Distributed: wider distribution of information and the deliberate design of tasks so that they may be approached semi-autonomously. The author uses the semiconductor industry to examine the arguments developed. The parameters of choice between focused or distributed seem to be established by organizational demands posed by complexity and uncertainty in information-processing.

Institutional context might also influence choice between forms of organization.

In the US, the ready availability of highly skilled personnel and the ability to source new technologies from universities combined with difficulties of inter-functional coordination lead their organization to a more focused approach. In Japan, companies relied on strong problem-solving capabilities distributed within their organizations (more fully integrated technical and shop-floor workers, investing in their skills and investing on permanent employees), which naturally lead to a distributed approach, regarding organizational structure.

Note: Authors argue that the study might be limited to the semiconductor industry, but note that the outcomes of the research in the US industry were strong (did precipitate information-processing problems).