Creating Innovating Organisations

Volume 17, Number 3 Article by Abhoy K Ojha September, 2005

Creating Innovating Organisations: The Experience of the IT Industry in India :

In a classic paper, J R Galbraith contrasted the structures and processes that are required for innovating organisations with those required for operating organisations. Since then, several organisational thinkers have built upon Galbraith's framework. Based on a study of four captive Offshore Development Centres (ODC) of multinational companies, and three units of India-based companies that offer services and also earn revenues through the development of products, Abhoy Ojha argues that structures and processes for organisations involved in the development of new products and components need to have the characteristics of an innovating organisation, while units providing software product services must have those of an operating organisation. An organisation that participates in both needs to keep a `distance' between the two types of businesses.

Beginning with the process of innovation in an organisation, Prof Ojha traces how the nature of innovation and the innovation processes change over a technology life cycle. After a literature survey of the subject, he details the structures and the transition, funding, reward and idea generation processes of the organisations in his sample. He concludes that if there is a desire to support more innovative activity, the management will have to do more to separate the innovating organisation from the pressures of operating organisations. There must be a readiness to fund radical ideas, create credible rewarding mechanisms, have more adaptable transition processes, and encourage idea generation through greater exposure to target markets. Teams working on innovations need to include people from diverse backgrounds and not just the technically proficient.

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