One such issue is the degree to which organizational functions are differentiated. It has been demonstrated, at least among scientists, that persons whose tasks are highly specialized are less innovative than those who perform in, and are responsible for, a number of task areas. It would seem to follow that an organization that demands as little specialization as possible maximizes the probability of innovation.
A closely related idea is that rates of executive succession are correlated with innovation. The hypothesis here is that a deliberate increase in executive turnover will increase innovation. It is based on the idea that new executives infuse new ideas into existing group structures. The difficulty with this notion is that the technique used to increase the flow of ideas also decreases job security and perhaps personal security as well—factors that, at the individual level, are linked to less innovative behavior.
Scarcity versus slack
Organizational slack—unused and uncommitted resources—can exist at the administrative and technological levels, or simply in the form of money and facilities. The question of whether innovation was a function of a lack of slack or of an abundance of it was difficult to resolve. As many case studies could be produced in support of the necessity-is-the-mother-of-invention view as could be produced favoring the argument that for the most part only successful firms can afford to innovate.
The argument of slack versus necessity as a spur to innovation was resolved by a political scientist. He equated the politics of scarcity with repressive law, with law indistinguishable from custom, with redistribution of existing resources, and with suppression, as techniques of conflict resolution. The politics of abundance he equated with restitutive law, with variability between law and custom, and with the resolution of conflict by increasing the resources of competing groups.
“Abundance,” he said, “permits social choice to replace central decision making,” so that “scarcity is associated with centralization, abundance with decentralization.”
Extrapolating from these statements, we find that firms near failure, if they innovate administratively, would tend to centralize and cut costs by firing people, dropping unprofitable lines, etc. These changes almost always occur in the area I call process innovation. They are introduced into the organization from the top down.
A successful firm, perhaps decentralized, permits decision making at hierarchic levels below the top so that innovations can be introduced at many levels, including those in close contact with the environment. This increases the probability of marketing innovations as well as product and process innovations.
Outside the organization: Environment
In what kind of environment is an innovative organization most likely to flourish? The most obvious location is one where a pool of innovative people may be found, some of whom the organization can employ. For the constant stimulation of new ideas, there should be other organizations nearby that encourage innovation and employ innovators. Such conditions are met in areas that include universities and large numbers of independent research and development laboratories; in these areas there is likely to be considerable interchange of ideas among innovative people.
Information may be more rapidly metabolized if the organization is located near others that have the same or similar personnel requirements. This increases individual job mobility, and the individuals bring new ideas with them as they change from one organization to another. However, this has possible drawbacks. Creativity and innovation have been related to conflict, the resolution of which often requires innovation. Locating an organization near others similar in nature reduces the probability that conflicting ideas will penetrate the organization; and this, in fact, is what frequently happens.
Thus it appears that the organization must be located near similar ones to increase worker mobility, and near dissimilar ones to induce conflict and its subsequent resolution. The environment that provides both, as well as access to large numbers of innovative individuals, is that of an urban complex.
The innovative bureaucracy
What, then, would an innovative organization look like? Every variable we examined so far seemed to apply equally well to product, process, or marketing innovations, except one: decision-making criteria. Here we found that decision making based on abstract criteria would stimulate greater innovation in the product and marketing areas compared with the process area. The reason is that decisions about actual production of a product generally involve concrete phenomena. If we classify all organizational decisions into two kinds—those based only on concrete criteria and those based possibly on abstract ones—we find that at the same time we have separated decisions made under certainty from those made under uncertainty.
Almost all the marketing and product-oriented decisions fall into the uncertain category, as do the personnel, financial, legal, and (some) administrative decisions from the process area. Only actual production decisions are made under certainty.
A semibureaucratic organization
Organize all the functions that develop from decisions under certainty into a monocratic bureaucracy and all the others into one almost-structureless unit without hierarchy.
The monocratic bureaucracy should be highly centralized so that product innovations or innovations in the process of production—innovations that arise in the structureless unit—can be installed quickly and efficiently. As a rule, the centralized bureaucracy will be concerned only with the actual process of manufacture. This is an arrangement with which we are familiar, but what about the other unit?
The structureless unit should be the organizational superior to the top of the already-established monocratic bureaucracy. Within this unit, teams are assembled around problems, with each executive a member of three or four different problem teams. No one heads more than one problem team at a time, but when head of a team she has responsibility for the final decision. The head also rates each team member for search and innovativeness and for effective use of abstract criteria. All members in the unit receive bonus payments according to their ratings. Problem teams are dissolved as soon as a decision is reached. New teams and heads are assembled as problems arise. Everyone in the unit simultaneously is head of one team and a member of some others.
The ‘farm system’
By eliminating status we increase personal security, but job security is a more difficult matter. Perhaps the answer is for the organization to buy another organization and maintain it in a more traditional fashion. Then the latter organization could be used to guarantee jobs for anyone who wishes to be moved—or who should be moved—out of the statusless unit. The innovative organization would then maintain the manufacturing version of a bush league system, and positions in the “farm” organization could be guaranteed for everyone in the statusless unit. This would not be detrimental to the farm organization, for certainly everyone selected for the innovative unit already would have demonstrated competence more than sufficient for success in the farm organization. As a further benefit, those in the farm organization who exhibit unusual ability and the desire to participate in the work of the innovative organization could be moved up to it.
Executive exchange program
To infuse new ideas into the organization, rather than require an artificially high turnover rate, the organization could establish an exchange program with other organizations in similar activities, as well as with those in very different ones. Each person in the structureless unit would get leave, to be spent working in one of the cooperating organizations, which would send someone as a replacement. In this way the first unit would get the benefit of the visitor’s experience, and when the original member returned he would bring fresh ideas from his contacts in the second.
The exchange plan achieves the same things as enforced rates of executive turnover, and does so while maintaining stability in the system. In addition, it artificially solves the environmental problem of locating near and interacting with both similar and nonsimilar organizations.
Perhaps the remaining issue to be dealt with in the present context concerns the necessity for such an organization. Remember that the Weberian bureaucracy is still the most efficient form of organization for dealing with a stable environment. It is up to each organization to determine the characteristics of its present and future environment. Each organization must determine how much of a return it can expect from reliability, and also the rate at which reliability leads to obsolescence.
The resolution of these questions requires, of course, an innovative approach!
Selwyn W. Becker is professor emeritus of psychology and quality management at Chicago Booth, where he has served on the faculty since 1959.