[Based on A Multi-Dimensional Framework of Organizational Innovation: A Systematic Review of the Literature by Mary M. Crossan, Marina Apaydin; Organizing for Innovation by M. Schilling; Open and Closed Innovation by P. Herzog, J. Leker]
This is an overview of organizational structure and culture that has been shown to be conducive to producing innovation. Structurally there are organic and mechanistic cultures. Culturally there are elements such as tolerance for failure, openness, freedom, entrepreneurial mindset.
Structurally, an organization can be defined as organic or mechanistic depending on its level of formalization, standardization and centralization. Mechanistic being high in all three; organic being low in all three, which is more conducive to better innovative performance. Note that organization size does not seem to be a factor. Essentially, having strict rules, procedures and processes doesn’t allow for the fluidity necessary for increased innovative performance. In an organic structure, employees have more control over their job and have freedom to experiment. From a leadership perspective, this is empowering employees to be leaders of their role. A person, let’s call her Sally, would perform well at her job in a mechanistic structure but she would be limited by what the structure allows her to do. (Mechanistic structures exist for efficiency; it’s a high control structure.) However, in an organic structure Sally would be able to experiment and take more ownership over what she does. This allows her to take more risks and feel more personally invested in her work – to have autonomy.
Organic and mechanistic structures may seem at odds but they can both exist in an organization, this is called ambidexterity. For example, the product team may have an organic structure while the legal team a mechanistic structure. This structural separation ensures that innovation focused parts of the organization can perform best while the rest of the organization can run efficiently. Ambidexterity can also exist temporally, where first the structure is organic and then moves to formalization, alternating over time. Ambidexterity could even exist in the same domain, where organic and mechanistic structures happen at the same time in the same business. The important part with all these is balance. Sally is not stuck with either mechanistic or organic.
Finally, culture. Typical elements of an innovative culture include: risk-taking, openness and flexibility toward new ideas, tolerance for failure, entrepreneurial mind-set, willingness to cannibalize, foster learning and creativity and foster constructive dissent. These cultural elements typically only exist in an organic or ambidextrous structure. Once again, this is about allowing Sally to realize her potential and have ownership over what she does while feeling supported along the way. Changing a culture is essentially creating new norms for ‘the way things are done around here.’ This may also include new artifacts such a rituals and language.