Organizational Structure and Culture Report
How the Company’s Organizational Structure Supports Innovation
The current organizational structure is a tall matrixed structure characterized by many hierarchical levels and few individuals reporting to the manager. The matrixes are described as either balanced, weak, or firm. The soft matrix limits a manager’s decision-making power because the manager has to get approval from top management to implement decisions. The top management also dictates the implementation of budget and timeline ideas. A balanced matrix includes an equal distribution of authority between the manager and top management. Employees must also report to both leaders, thus maintaining open communication between everyone in the organization. A strong matrix gives the manager the most decision-making power, thus creating a robust organizational structure. However, the manager is only required to oversee the implementation of ideas and is not mandated to make significant decisions.
The organization’s structure supports innovation by bringing functional experts together to work as a team to meet a shared goal and enhance organizational performance. The system also promotes improvement by encouraging positive communication, effective generation of ideas, and constructive feedback. Management also has more control over the employees and what they do, giving them a better chance to reward employees who generate innovative ideas and support them. According to Arrto et al. (2011), tall matrixed structures emphasize a broader set of fixed organizational arrangements than development groups, including value-based and personalized interactions between the staff and executives, idea management and innovation process, and innovation software frameworks. The structure also clearly distinguishes the role of employees in the functional teams in generating new ideas and groups in charge of selecting and transforming ideas into innovations. Additionally, a tall matrix structure ensures that all units are involved in the organization’s decision-making, evaluation, resourcing, and distribution of information. The organizational structure additionally points out the role of the senior team in equipping the team members with the skills and capabilities to explore and exploit innovative ideas.
Effectiveness of the Current Structure in Addressing Changes in Market Demand
The current structure effectively addresses change in market demand because it actively focuses on solving problems in large-scale projects by creating temporary project structures that co-exist with moderately stable functional organizational structures. It also enables the organization to make changes without affecting other functions because it retains its operational system. The tall matrix structure also facilitates the development of adaptive capability, which effectively responds to changes in business needs by identifying and improving essential resources, abilities, and other processes in the organization.
The structure also promotes the rapid flow of information in the organization, enabling the organization to respond to changes in market demand within the shortest time possible. In addition, a tall matrixed structure ensures that employees follow every directive top management gives without asking any questions, encouraging the faster implementation of ideas that enable the enterprise to respond to changes in market demand. There is also limited resistance to change, thus allowing the enterprise to make significant changes, such as introducing new products and changing operating culture to address changes in market demand.
Changes to the Current Organizational Structure
How the New Structure Supports Innovation
The new divisional structure divides the organization into various subunits based on the markets, products, and consumer needs in different geographical areas. The sub-units operate autonomously under a divisional manager. The manager then reports to the head office and is delegated with decision-making powers for decisions relating to marketing functions and production, thus allowing them to make decisions on specific divisions within the shortest time possible. According to Knott & Turner (2016), the structure supports innovation by allowing the sub-units to concentrate on client needs. It encourages proper regulation and competition among divisions because every sub-unit operates as a single profit center. Competition among the sub-units encourages innovation as every sub-unit focuses on performing better than the other.
The structure also enables management to explain the organization’s objectives, vision, and mission, thus enabling the employees to generate innovative ideas to help the company achieve the specified goals and meet the organization’s vision and mission (Mäkimattila et al., 2014). The divisional structure also allows teams to focus on a single service or product under the leadership of one vice president or president, thus making it easy for the team to receive the resources required to implement innovative ideas. It also allows the team to build a shared culture that contributes to better knowledge distribution and morale, promoting innovation. Each sub-unit result is also assessed differently, thus encouraging the sub-units to be innovative to avoid blame for organizational failure.
How the Recommended Changes Will Make the Enterprise More Responsive
The recommended changes will enable the enterprise to be more responsive to market demand by ensuring that every employee is actively involved in identifying the opportunities in the market and changes in customer needs and preferences. It will also enable the enterprise to create network roles, including brokers, energizers, and central connectors. Brokers can build bridges from one sub-unit to another within the enterprise by sharing information across the sub-units. Brokers have access to a wide range of information; they can access new information early and control the distribution of data, thus giving the organization a better understanding of the changes in their business environment, including changes in market demand. Brokers also increase the enterprise’s responsiveness to market demand by facilitating the discovery process and determining when and how the insights can be introduced to different organizational subunits.
Main connectors maintain the cohesiveness of sub-units, facilitating the organization’s effective implementation of innovative ideas. They also promote the development of trust between the sub-units, thus enabling the sharing of ideas to improve organizational performance and meet market demand. Energizers promote the engagement and interest of others, including clients, allowing the enterprise to understand client needs and preferences and predict changes in market demand. The divisional structure will also make the enterprise more responsive to market demand by selling various products to meet customer needs and preferences (Knott & Turner, 2016). Giving managers autonomy to make decisions within their scope also allows them to rapidly change direction to respond to changes in the business environment. Therefore, the enterprise can give its clients in a specific area what they want by developing marketing approaches and products that are appealing to them.
How Organizational Changes Support a Culture of Innovation
How the Current Culture Works Against Innovation
A tall matrixed structure may create a complex work environment because employees are required to follow the directives given by top management without any objections, thus limiting employee autonomy to implement innovative ideas. According to Gaspary et al. (2020), the work environment plays a vital role in stimulating an organization’s innovative capability because it affects organizational processes that, in turn, influence the well-being and productivity of the employees. The work environment also affects problem-solving, communication, learning, decision-making, and motivation. Employee willingness to innovate relies on the organizational climate and how they interact with top management.
A supportive work environment encourages innovation because employees can get the resources to implement innovative ideas. A supportive environment characterizes employee flexibility, learning, and expressing views that motivate employees to be creative. A tall matrixed structure does not create a supportive environment, thus limiting innovation. For instance, employees must report to two bosses, leaving them stuck in the middle, particularly if they do not agree on the way forward in implementing the innovative ideas and providing the resources required for the innovation. The bosses also play against one another and may limit the success of a project by creating barriers to outsmart one another. The structure also generates difficulties in establishing priorities favoring functional teams and top management, thus delaying implementing of innovative ideas. Approving creative ideas and distributing resources to implement the concepts may also take a lot of time due to slowdowns in how management reacts to events because top management and the functional team leader have to agree on what should be done.
How the New Structure Supports Innovation
Didier (2018) defines a culture of innovation as an environment supporting creative thinking and advancing efforts to extract social and economic value from knowledge, thus generating improved or new products, processes, or services. An ideal culture of innovation expresses a shared set of mutually supporting beliefs and values about the significance of innovation and an integrated pattern of individual conduct supporting innovation and research. It also includes leveraging the existing strengths of a specific invention and research ecosystem.
The new structure encourages centralized decision-making. According to Gaspary et al. (2020), centralization enables better integration and organization of resources and knowledge more effectively, promoting innovative ideas. It also fosters innovation and competence because management can easily monitor employee activities and reward employees who perform well. The structure also gives managers high responsibility and authority, making them more receptive to technological and market opportunities and structuring organizational goals toward taking advantage of others (Knott & Turner, 2016). The structure also supports a culture of innovation by facilitating better cooperation and commitment in job roles and helping distribute ideas in the organization. The organizational system also narrows the communication channel, promoting a faster information flow. Therefore, employees understand what is expected of them and can use the information on changes in the business environment to develop innovative ideas to enhance organizational performance.
The new structure also creates competition within the work environment, encouraging employees to be creative to improve the performance of their sub-units (Knott & Turner, 2016). The structure also involves rewarding employees for good performance, thus enabling them to be innovative. A divisional structure also emphasizes serving a wide range of customers requiring individualized attention. Therefore, employees can understand the specific needs and preferences of the customers they interact with, thus introducing creative ideas to enhance the organization’s capacity to meet them.
References
Artto, K., Kulvik, I., Poskela, J., & Turkulainen, V. (2011). The project management office’s integrative role in the innovation’s front end. International Journal of Project Management, 29(4), 408-421. https://doi.org/10.1016/j.ijproman.2011.01.008
Didier, J. (2018). Technical culture and innovation culture: Reconciling through design. Science, Technology and Innovation Culture, 117-137. https://doi.org/10.1002/9781119549666.ch7
Gaspary, E., De Moura, G. L., & Wegner, D. (2020). How does the organizational structure influence a work environment for innovation? International Journal of Entrepreneurship and Innovation Management, 24(2/3), 132. https://doi.org/10.1504/ijeim.2020.10027220
Knott, A. M., & Turner, S. (2016). Multi-divisional structure and innovation. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2854501
Mäkimattila, M., Saunila, M., & Salminen, J. (2014). Interaction and innovation – Reframing innovation activities for a matrix organization. Interdisciplinary Journal of Information, Knowledge, and Management, 9, 131-152. https://doi.org/10.28945/2023
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Question 
Based on your analysis of the organization and culture, share recommendations for changing its structure and culture to be more conducive to innovation.
Organizational Structure and Culture Report
- Describe the current organizational structure on innovation.
- How does your company’s organizational structure support innovation?
- How effective is the current structure in addressing changes in market demand?
- Recommend changes to the current organizational structure.
- How does the new structure support innovation?
- How will your recommended changes make the enterprise more responsive to market demand?
- Explain how organizational changes support a culture of innovation.
- In what ways does the current culture work against innovation?
- How does the new structure support a culture of innovation?
III. Organizational Structure and Culture Report
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