Innovation vs. Invention Creation of something new Innovation Both creation/adoption and implementation

Organization and Innovation Organic Encourage bottom-up innovation process May not be the best structure for production Mechanistic Emphasis on rules and regulations Very good structure for producing routine products Ambidextrous Organic for innovation, mechanistic for production

Sequence of Elements for Successful Change Environment Internal Creativity and Inventions Suppliers Professional Associations Consultants Research literature Organization 1. Ideas 3. Adoption 4.Implementation 2. Needs Customers Competition Legislation Regulation Labor force 5. Resources Perceived Problems or Opportunities

Techniques for Encouraging Technology Change Switching Structures Creative Departments Venture Teams Corporate Entrepreneurship

Probability of New Product Success Technical completion (technical objectives achieved) .57 Commercialization (full-scale marketing) .31 Market Success (earns economic returns) .12 Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee, S. Wagner, and M. Hamburger, Research and Innovation in Modern Corporations (New York: Norton, 1971), 57.

Components for Innovation Success Specialization Boundary Spanning Horizontal Linkages These components are called the Horizontal Linkages Model.

Horizontal Linkages Model Environment Organization Environment General Manager Technical Developments Customer Needs Linkage R&D Department Linkage Marketing Department Linkage Linkage Linkage Production Department

The Need for Speed The ability to rapidly develop new products is a strategic weapon in today’s marketplace. Time-based competition

Separate boundary roles Geographical dispersion Structural Characteristics of Service Organizations vs. Product Organizations Service Product Structure: Separate boundary roles Few Many Geographical dispersion Much Little Decision making Decentralized Centralized Formalization Lower Higher Human Resources: Employee skill level Skill emphasis Interpersonal Technical

Relationship of Department Technology to Structural and Management Characteristics Low Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Analyzability Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING High Low High Variety

Craft Department Technologies Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Craft Low analyzability Low variety Requires extensive training and experience Technology has significantly reduced number of craft organizations Examples Performing arts Trades Fine goods manufacturing Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING

Non Routine Department Technologies Low analyzability High variety Great deal of effort devoted to analyzing problems and activities Experience and technical knowledge used to solve problems and perform work Examples Strategic planning Social science research Applied research Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING

Routine Department Technologies Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Routine High analyzability Low variety Broad applications for standard work instructions Significant use of objective and computational procedures Examples Sales Clerical Drafting Auditing Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING

Engineering Department Technologies High analyzability High variety Activities handled on basis of established formulas, procedures, and techniques Refer to well-established bodies of knowledge in performing tasks Examples Legal Tax accounting General accounting Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING

Sociotechnical Systems Model The Social System Individual and team behaviors Organizational/team culture Management practices Leadership style Degree of communication and openness Individual needs and desires The Technical System Type of production technology (small batch, mass production, FMS, etc.) Level of interdependence (pooled, sequential, reciprocal) Physical work setting Complexity of production process (variety and analyzability) Nature of raw materials Time pressure Design for Joint Optimization Work roles, tasks, workflow Goals and values Skills and abilities

Coercive vs. Enabling Organizations Are all bureaucracies the same? Are all organic organizations the same? High Bureaucracy Low Coercive Enabling Organic Coercive Bureaucracy Enabling Bureaucracy Empowered employees Minimum rules & procedures Little hierarchy Rules & procedures as enabling tools Hierarchy supports organizational learning Autocratic Rigid rule enforcement Extensive written rules & procedures Hierarchy controls Top down control Minimum written rules & procedures Technical Structure Social Structure Source: Adapted from P.S. Adler, “Building Better Bureaucracies,” Academy of Management Executive, 13:4, November, 1999, 36-47.

Coercive vs. Enabling Organizations Coercive Systems and Procedures Enabling Systems and Procedures Systems focus on performance standards so as to highlight poor performance. Focus on best practice methods:information on performance standards is not much use without information on best practices for achieving them. Standardize the systems to minimize gameplaying and monitoring costs. Systems should allow customization to different levels of skill/experience and should guide flexible improvisation. Systems should be designed so as to keep employees out of the control loop. Systems should help people control their own work: help them form mental models of the system by “glass box” design. Systems are instructions to be followed, not challenged. Systems are best practice templates to be improved. Source: P.S. Adler, “Building Better Bureaucracies,” Academy of Management Executive, 13:4, November, 1999, 36-47.

Two Models of Design Iterative Model synthesize analyze modify Convergent Model 3

Point-Based Serial Engineering styling marketing body chassis manufacturing etc.      Point-Based Concurrent Engineering: Styling Example marketing body Design Solution Analyze & Critique chassis Modify manufacturing Styling 4

Set-Based Concurrent Engineering Subsystem 1 Subsystem 2 Manufacturing System Designs converge in parallel 5

? A Simple Example Set up a meeting using the point-based model. B: No, 3:00 is bad. 9:00? A: My best time is 10:00. Can you make it? ? A: Uh, already booked. Can you meet at 3:00? B: No, I can’t. How about 2:00? 6

A Set-Based Approach Now set up the meeting by communicating about sets. A: I can meet 10:00 - 1:00 or 3:00 - 5:00. Can you make any of these times? B: Let’s meet 12:00 - 1:00. 7

Exercise: Technology Comparison McDonald’s Subway Family Restaurant Organization Goals Authority Structure Mechanistic vs. Organic Teamwork vs. Individual Interdependence Routine vs. Non-routine tasks Task Specialization Task Standardization Technical vs. Social Expertise Centralized vs. Decentralized

For Review Questions How does the framework we choose impact our decision making as engineering managers? Can we truly be engineering managers if innovation is not part of our framework? Why or why not?