There are different opinions considering the structure of the organization and the likelihood of innovation, the level of creativity and experimentation. Some researchers support the view that the bigger the firm, the better the chance for innovation, because they could accumulate more money for R&D. It also helps with developing competences and wide range of innovation projects to choose from. In the same time - big firms have bigger bureaucratic system, thus hindering flexibility and entrepreneurship.
Centralization was the best managerial method long time ago, but still some organizations are happy with this kind of set up. Recently, most organizations are transforming from centralized organization going through a multi-divisional set up to reach a loosely-coupled network form (Scott, 2003). The change brought by knowledge economy and information systems changes the organizations and their views toward innovation. New terms such as virtual organizations, network organizations, modular organizations are used more and more.
And what does it take to organize for innovation?
Ø imagination
Ø thinking outside the box
Ø willingness to take significant risk
Ø accept failures
Ø openness to the new and untried
Ø slack resources to generate and develop ideas
But there is something new more and more leading companies embrace: open innovation. Henry Chesbrough says that “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”
There are many examples from a variety of industries, including:
TELECOM: BT (formerly British Telecom) – link
CONSUMER ELECTRONICS: Philips – link
CONSUMER PRODUCTS: P&G – link
PHARMACEUTICALS: Novartis – link
CHEMICALS: Air Products – link
IT HARDWARE: Sun Microsystems – link
FOOD AND BEVERAGE: Starbucks – link
COMPUTERS: DELL – link
US GOVERNMENT – link
In an interesting article on how Procter & Gamble is using “open innovation” to develop new products and drive growth, Stefan Lindegaard gets in to specifics on how the giant soap company puts ideas in to action. This is good, because a lot of the talk about innovation can be overly abstract.
- They seek out ideas in 85 different networks and over 120 universities, and 75 percent of the searches result in “viable leads”
- They have a website in five languages to encourage unsolicited submissions
- More than half of their innovation is sourced externally
Elsewhere, Lindegaard writes of how P&G sees the future of open innovation. They also see the wisdom of crowds playing a part where consumers and communities will be tapped for ideas. He says: "There will be a tremendous amount of innovation in and from developing regions which is driven by population as well as capability growth in countries such as India, China and Brazil."
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