The right Organization structure to drive Innovation

Anyone who has worked in a company will know the organizational structure, incentives and performance measurement structure are key to the success of any initiative. Here Professor Christensen uses his RPV (Resource, Process, Values) framework that he used for evaluating acquisitions in his earlier book to identify right organizational structure for the team driving the innovation.

Resources are basically money, people, Intellectual property, infrastructure that a company has. Processes are the approach a company takes to plan, sell, make decisions, execute projects etc. Values are what the company prioritizes - whether it is higher margins or larger value sale or brand reputation. For a sustaining innovation typically the processes and values for the innovation will align with the original organization. So you don't need a new organization. However for a disruptive innovation, the processes and values will be different. So one needs to create a new organization with appropriate processes and values and infuse the necessary resources from the main organization.

 If values are misaligned, then one definitely needs to create an autonomous organization so that the new business is not killed by the demands of the main organization such as higher margins or bigger customers. If processes are misaligned but values match, then you need a heavy inter functional team who create and manage new processes for this new product or solution. 

Similarly on people front, executives who have been successful managing large stable businesses may not be equally successful in managing a new business. The skills are totally different. One either has to hire people who have developed a new business from outside or give exposure to people in developing new businesses within the company before they can be successful.

I was thinking about how you would apply this ideas to creation of a new business around blockchain and extended reality solutions for a regular technology implementation and strategy consulting company. As a first step, I would separate the identification and evaluation of use cases from the development of offerings. So a dedicated team would evaluate potential use cases with these new technologies and decide if it is sustaining or disruptive innovation. Sustaining innovation would be managed by a lean team that coordinates with the teams selling and delivering existing solutions for improved performance. Disruptive innovation would be given to an autonomous team outside the confines of regular organizational metric to develop and sell to clients who are currently not being served by the main company's solutions.  The disruptive innovation team would be led by leaders with experience launching disruptive new businesses. The team would create the business and through sustaining innovation continue to grow the solutions till they become big enough to be a mainstream business when they would have to be inducted back into the main organization while the disruptive innovation team would continue to develop newer disruptive innovations, sell and deliver on their own without leveraging the main organization's sales or delivery as they would be functioning under a different set of processes and values. Main organization would infuse resources into the disruptive innovation team and they in turn would incubate new businesses to induct into the main organization. 


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