Organizational Innovation Examples – How Innovative Enterprises Fight Bureaucracy and Rigid Processes
In traditionally organized companies, ideation, idea generation and business innovation often fails due to structural problems. These challenges can be mastered through organizational innovation.
Although companies invest time and money to establish an idea management and innovation management system, define innovation processes and measure innovation, structural barriers prevent success.
Late Apple founder and longtime CEO Steve Jobs described his greatest fear in this way: “The fear of dinosaurs who build huge empires and act according to antiquated methods.” In this article, you will find examples of how innovation leaders become more agile through organizational innovation.
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Organizational innovation: Examples from Samsung, Apple, McDonalds and Microsoft
Through organizational innovation, the world’s most innovative companies have largely created structures that remove structural barriers. They have established an innovation culture and improved their innovation capability. This is intended to promote both continuous improvement – i.e. process improvement and incremental innovation – as well as disruptive innovation and digitalization. Instead of trying to promote ideas and innovations through traditional structures, they align their structures in such a way that ideas and innovations can prosper. Samsung first had to radically break with the classic South Korean hierarchical thinking before the company could change: From a manufacturer of cheap goods to one of the most innovative companies in the world. And it is no coincidence that Fiat’s success under CEO Sergio Marchionne, who died in 2018, began with the radical break-up of old hierarchies. When it comes to avoiding bureaucracy and hierarchies, organizational innovation is driving innovation leadership.
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Organizational innovation at Microsoft: agility as an overriding principle
Anyone who enters Microsoft with a suit either has an interview or is a consultant. The casual style is the most visible characteristic of flexible hierarchies. Behind this is a simple philosophy: a company without rigid hierarchies is more agile. Microsoft has learnt from its own painful experiences: With Windows Vista, the company had gotten lost in the complexity trap, constant coordination had made development more and more complicated. Microsoft responded with organizational innovation. Already in 1999, the company was radically reorganized. Too much bureaucracy and too much departmental thinking had paralyzed the ability to innovate at that time.
Organizational Innovation at Samsung – Freedom of hierarchy for strategic creative areas
Samsung has a clear strategic goal:
“Good design is the most important way to differentiate us from our competitors,”
said long-time CEO Jong-Yong Yun. On his way from a cheap manufacturer to one of the most innovative companies in the world, he prescribed a kind of creative shock therapy for the company: Instead of continuing to manufacture the cheapest equipment, Yun used organizational innovation and opened design centers around the world. In these new products were developed.
In order to give his creative talents direct access to top management, he established a Chief Design Officer. This made it possible for the first time for employees to have their ideas heard by the Executive Board. What was now still an innovation barrier was the traditional South Korean culture. It is rather hostile to business innovation and organizational change: the culture does not allow employees to freely express their opinions and ideas. In order to overcome these barriers, Samsung has implemented a special type of organizational innovation in the Design Centers: Managers were trained in innovation leadership. This style is different from the one at headquarters. There is no dress code in the Design Centers. Every employee is encouraged to speak his mind and contradict superiors without fear of violating cultural rules. Freedom of hierarchy in strategically important areas of innovation. The culture of operating units at the company headquarters continues to be traditionally South Korean.
Organizational innovation at McDonalds – “Noodle Team” instead of rigid hierarchies
Rigid structures and hierarchies are unfamiliar to McDonald’s. When it comes to developing new ideas, everybody is involved as far as possible: partners who supply the raw material, employees from various areas and hierarchical levels, customers. As a method of organizational innovation, McDonalds has created its own test kitchens and so-called “noodle teams” in which employees at all levels of the hierarchy develop new ideas and try them out. The hierarchies are flat. Anyone can contact anyone, discuss new ideas with anyone. For former CEO Jim Skinner, this is one of the company’s competitive advantages: “The result is a wealth of ideas that flow through the organization. They come from all directions.”
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