Organizational structure needed to initiate an innovation

Reading this article titled “Meeting the challenge of disruptive change” by Clayton Christensen and Michael Overdorf, I learned more about not least what kind of organizational structure is needed to initiative an innovation. Here are a few extracts that I found valuable:

“The reason that innovation often seems to be so difficult for established companies is that they employ highly capable people and then set them to work within organizational structures whose processes and values weren’t designed for the task at hand.”

“Hewlett-Packard’s laser-printer division in Boise, Idaho, was hugely successful, enjoying high margins and a reputation for superior product quality. Unfortunately, its ink-jet project, which represented a disruptive innovation, languished inside the mainstream HP printer business. Although the processes for developing the two types of printers were basically the same, there was a difference in values. To thrive in the ink-jet market, HP needed to be comfortable with lower gross margins and a smaller market than its laser printers commanded, and it needed to be willing to embrace relatively lower performance standards. It was not until HP’s managers decided to transfer the unit to a separate division in Vancouver, British Columbia, with the goal of competing head-to-head with its own laser business, that the ink-jet business finally became successful.”

Below, you’ll find an image from the brilliant article. The matrix, which is helpful when you work on understanding what kind of team should work on a particular project and what organizational structure that team needs to work within. The vertical axis asks the manager to measure the extent to which the organization’s existing processes are suited to getting the new job done effectively. The horizontal axis asks managers to assess whether the organization’s values will permit the company to allocate the resources the new initiative needs.

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