Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Organizing for Innovation

Presented by Group 9

2011/11/2 1 Fall 2011 BAA Management of Technology

Chapter 10

B97701203 周家毅

B97701205 江承軒

B97701228 金正庭

B97607036 余奕霆

Course Lecturer: Prof. J. T. Chiang

Teaching Assistant: Hsuan-Yi Wu (Jen)

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Size and Structural Dimension of the Firm

• Size

• Structural Dimension

Formalization

Standardization

centralization

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Size and Structural Dimension of the Firm

• The likelihood of innovation

• The effectiveness of innovation projects

• The speed of new product development

processes

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Size

Is bigger better?

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Joseph Schumpeter

• Large firms have more money for R&D

projects

• Large firms can gather more information

and resources

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Advantages of Size

• Scale effect (Economies of scale)

• Learning effect

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Advantages of Size

• Grow competencies in the new product

development process

• Better research equipment and personnel

• Better selections of projects fitting the

firms capabilities

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Advantages of Size

• More willing to step in risky innovation projects – Boeing 747

– Large pharmaceutical companies

• Large firms outperform in industries that have large development scale

• Collaboration of small firms?

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Disadvantages of Size

• Loss of managerial control while growing bigger

• More difficult for individuals to identify the returns of their efforts

• Harder to make innovative changes

– Xerox in 1980s

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Disadvantages of Size

• Communication & coordination become

more difficult

• Stick to existing large fixed-asset bases

• Icarus paradox

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 11

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Break Large Firms into Small Parts

• Encourage an entrepreneurial culture

• High-speed technological change

industries

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 13

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Structural dimensions of the firms

• Formalization : The degree to which the firm utilizes rules, procedures , and written documentation to structure the behavior of individuals or groups within the organizations.

• Standardization: The degree to which activities are performed in a uniform manner

• Centralization/Decentralization: Centralization is the degree to which decision-making authority is pushed down to lower levels of the firm

2011/11/2 Fall 2011 BAA Management of Technology 14

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Centralized and Decentralized R&D Activities

2011/11/2 Fall 2011 BAA Management of Technology 15

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Mechanistic vs. Organic Structures

Mechanistic : An organization structure characterized by a

high degree of formalization and standardization , causing

operations to be almost automatic or mechanical

Organic : An organization structure characterized by a low

degree of formalization and standardization . Employees may

not have well-defined job responsibilities and operations may

be characterized by a high degree of variation

Size versus Structure

2011/11/2 Fall 2011 BAA Management of Technology 16

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

The Ambidextrous Organization :

The Best of Both Worlds?

Ambidextrous organization : The ability of an

organization to behave almost as two different kinds of

companies at once. Different divisions of the firm may

have different structures and control systems , enabling

them to have different cultures and patterns of

operations

2011/11/2 Fall 2011 BAA Management of Technology 17

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Modularity 模組化

2011/11/2 Fall 2011 BAA Management of Technology 18

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 19

IKEA

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 20

Economies of scale Heterogeneous demand

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 21

Loosely Coupled Organizational Structures

鬆散連結組織結構

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 22

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 23

Help focus on competitive advantages Lower overhead and administrative cost

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 24

Can’t frequently knowledge exchanging

less mechanism for resolving conflicts

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 25

跨國企業如何創新？

Center-for-global strategy

Globally Linked strategy

Locally leveraged strategy

Local-for-local strategy

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

2011/11/2 Fall 2011 BAA Management of Technology 26

Q & A

Department of Business Administration College of Management

Strategic Management of Technological Innovation

Melissa A. Schilling, New York University

Discussion Question

• In 2003, Boeing 787 commercial jets were

manufactured from carbon fiber

composites, several partners cooperated

with Boeing with loosely coupled

organized way, and the proportion of

outsourcing of the entire production was

pretty high, the result is not as good as

expected.

2011/11/2 Fall 2011 BAA Management of Technology 27