The Innovative Organization - New-age Organizational Forms Over the past several centuries, the hierarchical form of organization had served us well. However, the world has changed rapidly in the past few decades. Change continues to accelerate. Linear organizations tend to struggle in a non-linear environment. New forms of organizations, much more well suited to today's complex and connected world and its needs, have emrged. These are broadly classified into ambidextrous organizations, collaborative organizations, learning organizations and emergent organizations. High innovation performance requires innovative structures. Innovation is unlikely to be driven top-down in an organization in the years to come. In the increasingly decentralized emergent form of organization innovation behavior will be like DNA - all-pervasive, scale agnostic, self-repeating and evolving. This requires new topologies. Elements of social network analysis, systems thinking and chaos theory provide pointers.

1. The Innovative
Organization
New Age
Organizational
Forms
Karthikeyan Iyer
Co-crafter, Founder Director,
Crafitti Consulting Pvt. Ltd.
Karthikeyan.iyer@crafitti.com

2. Form defines Function
Structure defines Behavior
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3. Why is structure required?
Speed
Flexibility
Adaptability
Evolution
Scalability
Stability
Rigidity
Strength
Productivity
Efficiency
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4. Hierarchical Enterprise
Fast output
Efficient output
Predictable output
Structured Inputs
Known Inputs
Not many surprises
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5. A few ideas
Hierarchical Enterprise’s answer to make it
innovation flow
A typically “linear” funnel and stage
gate model
Many get stuck
midway
And most
lose steam
very early
Ideas The filtration The stage gate
(from various funnel process
channels) (based on (with evaluation
and decisions at
various various stages)
criteria)
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6. The world is changing rapidly and so are
the world’s businesses!
Information gets Old economy New economy Information travels fast
collected locally,
(Weight) (Speed) and wide
access is restricted
First mover’s
advantage is a small
window
Growth and
expansion is slower
You can lose your
intellectual advantage
First mover’s very quickly!
advantage lasts
longer
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7. Scale changes everything
• Can’t become too big without
losing strength and stability
• Takes too long for information
to circulate, percolate
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8. A Weakening of Hierarchies
• Information abundance permits INDIVIDUALS to by-
pass hierarchies that have – deliberately or
inadvertently – controlled or limited information
• Alternative human organization forms – based
mainly on the Network have proved more effective
and efficient for transacting information than
hierarchies. In Information intensive enterprises,
hierarchical organizations may not be competitive
with networks.
IN ATHENA’s CAMP – Preparing for conflict in the Information Age, (Ed)
Arquilla J. and Ronfeldt D, RAND, 1997
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9. Forces that modern organizations face
• Disorder
Hyper Competition
• Stress
(D’Avini 1994)
• Unpredictability
Shift in economic • Post-war economy
growth cycles (Sparrow • New economy based on technological drivers of
& Cooper 2003) information, communication and technology
• Driven by discontinuity (No longer driven by
Drivers continuation and stability)
• Social factors
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10. New Challenges in the new world
• Organizations are much more dependent on the
Interdependence fortunes and actions of others
• Organizations cannot be sure that they will
Disembodiment perform better just by owning important assets
• The speed, at which organizations have to
Velocity function effectively, has accelerated.
• Power in organizations now resides in the location
Power of knowledge.
D’Avini, Hypercompetition
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11. Our Needs from structure have
changed
Flexibility,
The old world’s needs from Adaptability,
structure
Ability to evolve, change
Stability,
Rigidity, What the new world needs
Strength,
Productivity,
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12. New Organizational Forms proposed in
literature
• Post-bureaucratic and post-modern organization
• Re-engineered corporation
• Virtual organization
• Boundary-less company
• Network Organizations
• Modular Organizations
• Fractal and modular factories
• Atomized organization
• High-performance or high-commitment work system
• Knowledge-creating company
• The Ambidextrous Organization
• Distributed knowledge system
• Learning Organization
• Collaborative Organization
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13. In contrast with hierarchy
Hierarchical New organizational forms
Goal setting Top-down Decentralized
Power Concentrated Distributed
Size of units Large Small
Leadership function Control, monitoring Guidance, conflict management
Vision Dictated Emergent
Structure Formal hierarchy Team and work-group structures
Primary unit of analysis Firm Network
Boundaries Durable, clearly set Permeable, fuzzy
Objective Reliability, replicability Flexibility
Regulation Vertical Horizontal
Assets Linked to particular units Independent of unit, shared
Role Definition Specialized, clear Fuzzy, General
Uncertainty Try to absorb Try to adapt
Rights and duties Permanent Impermanent
Integrity Rule-based Relationship-based
Motivation Efficiency Innovation
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14. Innovative Organizations – New Types
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15. Ambidextrous Organization
Explore
Exploit
Top
Incremental • Small improvements in existing
Management Innovations products or operations
Explore Exploit Architectural • Technology or process changes to
fundamentally change a component or
innovations element of business
Structural, cultural
independence Discontinuous • Radical advances that may significantly
alter the basis for competition in an
innovations industry
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16. The Ambidextrous Organization
Alignment of: Exploitative Exploratory
Business Business
Strategic intent Cost, profit Innovation, growth
Critical tasks Operations, Adaptability, new
efficiency, products,
incremental breakthrough
innovation innovation
Competencies Operational Entrepreneurial
Structure Formal, Adaptive, loose
mechanistic
Controls, rewards Margins, Milestones,
productivity growth
Culture Efficiency, low risk,
Risk-taking, speed,
quality, customers flexibility,
The Ambidextrous experimentation
Organization, HBR, O’Reilly Leadership Role Authoritative, top- Visionary, involved
and Tushman down
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17. Traditional
Teams
Collaborative
Organizations Team-based
- Levels organizations
Collaborative
Organizations
Beyerlein et al. 2002
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18. The Collaborative Organization - Levels
Traditional Teams Team-Based Organizations Collaborative Organizations
Characteristics of the work Concrete interdependencies Abstract work that requires Fluid set of interdependencies
that can be broken down into significant levels of planning and that may exist inside and outside
smaller (team size) units decision making; significant the
interdependencies across teams organization; moving target;
and at business unit levels varying levels of complexity
Primary focus of collaboration Team Project Varies
Organizational Type Traditional Matrix Varies
Purpose of Redesign Cohesion, commitment, Coordination, resource Responsiveness,
better use of management, responsiveness, coordination,
expertise at all levels better use of entrepreneurship
of the organization expertise
Primary Intervention Point Relationship System Culture/ context
Framework for Decision Making Consensus within self managing Consensus and voting Varies; decisions made
teams; star within teams; hierarchical and at all levels of the
model; teams and managers lateral set of governing and organization; clear and
negotiate coordinating systems; communicated set of
over goals, schedules, teams managing priorities and tradeoff
and so on teams; expertise/ criteria; highly disciplined decision
accountability primary making; expertise, accountability,
source of influence and relationship sources of
influence
Beyerlein et al. 2002
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19. The Learning Organization
These organizations focus on experimentation and learning as the key
goals to be pursued.
There is a clear orientation towards the pursuit of perfection at all
levels (Garvin et al. 2008).
Knowledge (and thereby change) is expected to be continuously
created.
Ikujiro Nonaka from his HBR article, The Knowledge Creating Company,
“To create new knowledge means quite literally to re-create the company and everyone in it in a
nonstop process of personal and organizational self-renewal. In the knowledge-creating
company, inventing new knowledge is not a specialized activity – the province of the R&D
department or marketing or strategic planning. It is a way of behaving, indeed a way of being, in
which everyone is a knowledge worker – that is to say, an entrepreneur.”
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20. Learning Organization
Long-term strategy for
Building blocks to Means to Competitive
sustained growth and
institutionalize Excellence (Senge
innovation (Nonaka
learning (Liker 2004): 1994).
1991).
A supportive
learning
environment
Transparently share
Concrete learning
Systematic problem learning and
processes and
Solving knowledge with the
practices
environment
Leadership behavior
that reinforces
learning
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21. Typical Evolution of Learning
Processes
Reduction in perceived
complexity due to Standardized
greater understanding
Simple,
repeatable,
deterministic
Facilitated
Ad-Hoc
Complex,
probabilistic or
chaotic, needs
active intelligence
The benefit of multi-
disciplinary learning and
state-of-the art thinking Self-learning
on innovation
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Ltd

22. Emergent Structures
Water crystals on glass Sand dunes
Termite Mound
In Nature, complexity is countered and embraced by
emergent structures.
These structures do not have sharp lines, they are scale-
agnostic (similar but not exactly same)
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23. Emergent Organization
Extraordinary Decentralization
Adapting to change and creating change
Boundary-less organizations
Leader-less organizations
Simple micro-structure and micro-behavior
Swarm Behavior of Ants
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24. Key Differences between Organizational Forms
Organization Form  Hierarchical Ambidextrous Collaborative Learning Emergent
Key function Efficient Balance growth Information Continuous Evolution
allocation of and efficiency flow, 1+1 > 2 improvement
resources
Flow Uni-directional, Conditional Multi-directional, Cyclic, Directed Natural, not
top-down peer-to-peer towards ideality consciously
directed
Evolution Standard Tree The banyan tree Cross-Pollination Continuous Living system
hierarchy model improvement, pursuit principles
of perfection
Knowledge Assumed to be Some knowledge Potential to be Knowledge to be Created as needed
codified, known codified, some to be maximized through improved and
obtained sharing increased
continuously
Interdependence Clear, closed Modular Fuzzy boundaries Clear but open Boundary-less
boundaries architecture, Clear, boundaries
closed boundaries
Iyer, K. 2009, ‘Fueling Innovation Through
New Organizational Forms’, Real Innovation
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25. New Age Organization Structures are
Fundamentally “Networks”
The Internet Inter-disciplinary Capillary network
collaborations
High School Complex system design
Friendships diagram
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26. You must have noticed . . .
• are never linear (even though we report mean
Attrition patterns attrition rates) – they ebb and flow, much like
population densities of animals in a natural reserve.
• in reality, never actually follows linear patterns –
Sales some teams at some particular times seem to be
more “lucky”
New • happen in clusters, without any obvious reason and
breakthroughs in completely unconnected with the flows of R&D
investment
R&D
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27. Enterprise Social Networks
• How your networks are structured will determine how
your enterprise responds to external stimuli
• Are you trying to fight non-linearity with linear
structures?
• Is your enterprise finding it difficult to innovate despite
the best intentions? Form will define behavior . . .
Innovative organizations will design their structures to
maximize benefits from network effects.
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28. CONCEPTUAL SOLUTION:
GLOBAL ENTERPRISE AS A SOCIAL
SYSTEM
The Tipping Point
that refers to the moment when something
unusual becomes common. The book seeks
to explain "social epidemics", or sudden
and often chaotic changes from one state
to another. (Wikipedia)

29. Three types of people create Idea Tipping Points
Connectors are those with wide social circles.
Mavens are knowledgeable people.
Salesmen are charismatic people with powerful negotiation skills. They
exert "soft" influence rather than forceful power.
The PROCESS of TIPPING POINTS
The Law of the Few: Find out Connectors, Mavens and Salesmen – a
few of these is what one idea needs to become an epidemic
Stickiness: Ideas or products found attractive or interesting by others
will grow exponentially for some time.
The Power of Context: Human behavior is strongly influenced by
external variables of context.
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30. Competent Jerks and Lovable Fools
Competent
Lovable Star
Jerks
Increasing
competence
Incompetent
Lovable Fool
Jerk
Increasing Likability
Source: Casciaro & Lobo, HBR
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31. Granovetter’s – Strength of Weak Ties
• Despite being clustered in our own links, we connect with other such clusters
through random, long-range, infrequent, and weak ties. The sociologist Mark
Granovetter in his now classic paper of 1973 titled Strength of Weak Ties
showed that effective social coordination happens through the presence of
occasional weak ties between individuals and not through densely interlocking
strong ties. In Figure 1, dotted lines indicate the weak ties.
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32. Net Promoter Score
How Likely is it that you
would recommend [brand
or company X] to a friend or
colleague?
Not at all likely Extremely
Neutral Likely
0 5 10
Promoter 9-10
Simple micro-metrics to Passively 7-8
capture the essence of Satisfied
complex macro-behavior Detractor 0-6
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33. Transitioning Learning
Customized Response
Open
Swarm
Customized Response Customized Response
Socio-centric Open
Hierarchical Hub-Swarm Request-based
Routine Response Routine Response
Ego-centric Ego-centric Customized Response
Centralized Centralized Open
Request-based
Emergent
Modular Response Modular Response
Socio-centric Socio-centric Customized Response Customized Response
Request-based Request-based Open Socio-centric
Swarm Hub-Swarm
Customized Response
Socio-centric
Hub-Swarm
Ambidextrous Customized Response
Open
Customized Response Swarm
Socio-centric
Bhushan, N & Iyer, K. 2008, ‘Organizational forms Hub-Swarm
Customized Response
and Social Network types – A framework for Open
analysis’, International Conference on Social Request-based
Network Analysis, TISS Mumbai
Collaborative
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34. Crafitti helps craft
innovation in
multiple contexts.
Karthikeyan Iyer
Co-crafter, Founder Director
Crafitti Consulting Pvt. Ltd.
karthikeyan.iyer@crafitti.com
© Crafitti Consulting Private
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Ltd.