Structuring the organization in such a way as to reduce uncertainty while taking advantage of this uncertainty to innovate: this is the dilemma that the company must face today.
This description allows us to observe that there is a relationship between modes of organization and innovation.
First, we will explain the nature of this relationship based on the logic of organization and that of innovation. Then, in a second step, we will reveal the phenomena that make programming innovation within the organization difficult.
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Table of Contents
The nature of the relationship between innovation and organization
Stability used to be the primary characteristic of Taylorian and bureaucratic-type organizations. Today, it is more often mobility and uncertainty that characterize the organization of the majority of companies. Taking the example of the evolution of the automotive sector, technical systems as well as work structures are constantly evolving.
Thus, the analysis of how businesses function cannot be reduced to their organizational capacity, the one that involves programming, standardizing, and coordinating tasks. It must also take into account their capacity for innovation, which involves developing new combinations among the various resources the company possesses to respond to new constraints or opportunities.
These two logics are highly complementary: a company must both know how to organize and innovate.
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The logic of organization
The history of the evolution of organizational models seems to be essentially a search for ways to reduce the areas of uncertainty in the choices made by actors.
Organization involves defining procedures, steps, and coordination methods. So, its objective is to program, plan, and standardize activities and processes within the organization. This organization of activities and procedures reduces the freedom based on the hierarchical positioning of each actor, their contribution, and their power, and consequently the creativity of these actors.
All forms of organization aim to reduce uncertainty through programming. They seek to find the modalities of production and coordination that, in advance, allow for the definition of individuals’ activities within the company.
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The logic of innovation
Innovation enables companies to strengthen their competitive position in the markets.
Indeed, innovation allows companies to increase their productivity, improve the quality of their products or services, and develop key competencies. Porter emphasizes that innovation is the key to companies’ competitiveness because it determines their ability to maintain sustainable competitive advantages in evolving markets.
The logic of innovation, therefore, is based on controlling uncertainties related to technology, products, organization, and the market.
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Innovation develops in areas of the business or market that have not yet been programmed. Therefore, innovating reduces uncertainty in the organization. In fact, the existence of this uncertainty is the primary source of all innovation. The company seeks to capitalize on market uncertainties to promote product or process innovations.
The relationship between innovation and organization
Analyzing the logic of innovation and that of organization based on uncertainty has led to a contradictory relationship. Indeed, organization aims to reduce uncertainties in activities and processes to ensure work planning and task standardization, often reducing the autonomy and freedom of actors and their capacity to drive innovation.
While innovation seeks to take advantage of uncertainties to develop new combinations among the company’s various resources and, on the other hand, the existence of freedom.
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If every organization’s ultimate goal is to predict and optimize its resources by developing a “rational program,” innovation doesn’t fit into this framework. It develops in areas that have not yet been programmed in the business or its market. These two logics can be schematized as follows:
Organization Innovation Definition of Uncertainty Risk Resource Operating Rules Formalization Adjustment Time Frame Planning Responsiveness* Definition of Tasks Operating Procedures** Missions Economic Purpose Efficiency Efficiency
Organization and Innovation: Two Contradictory and Associated Logics
- The ability of a living structure to respond to any change through a reaction, generally favorable to its survival and development.
** It is a series, typically standardized, of operations described textually and/or visually.
The analysis of an innovation process is always based on the analysis of an organizational process. These two logics are, of course, contradictory because they have different purposes. However, they represent a structural tension within the company that must continuously reconcile these two logics.
In other words, the company seeks to reduce its organizational rigidities and design organizations that provide a certain degree of order adapted to technical and competitive conditions that promote innovation.
Indeed, according to N. Alter, “the more a structure is formalized, the more its internal rigidities limit its innovation capacity.” In this context, certain North American management trends aim to minimize organizational rigidities by engaging external specialists who are paid based on the results of their actions.
Programming Innovation within the Organization
In innovative companies, there is no direct capacity to program innovation, but there is a capacity to integrate it into organizational patterns.
Indeed, the uncertainty and complexity of innovation, as well as the reactions of certain actors, lead innovative companies to develop innovation in an informal and independent framework from the control of its creators and subsequently make decisions to reintegrate the innovators’ practices into a formalized and organized framework.
The Uncertainty and Complexity of Programming Innovation
Innovation appears as a process, not as a simple action or the result of a single action.
Innovation corresponds to an economic phenomenon that we necessarily act on at least partially “blindly.” At the beginning of this process, the company does not have the information for a rational decision and a definitive choice, showing a high level of uncertainty at this stage.
But as the process progresses, the company can act on the actions in a way that reduces the uncertainty rate.
According to Alter: “We do not initially have all the information to make a definitive choice, let alone a rational one… innovation can only be well designed once it is realized.”
Innovative companies face various pressures, both from within and from their environment (complexity, uncertainty at the beginning of a project, lack of cohesion among staff, and market-related uncertainty).
Innovation thus appears at the intersection of uncertainty and complexity, involving diverse elements that are difficult to untangle. It develops in situations where problems encountered have no predetermined solutions and knowledge is imperfect.
According to Alter, innovation cannot be programmed because the action’s modalities are only discovered by walking and advancing in a project to discover the human supports associated with it and make it effective in the end.
Other research based on the cultural and collective analysis of innovation and its organization, as well as the organization, highlights that uncertainty characterizes operation and leaves a significant space for actors’ interactions.
Actors’ Reactions and Programming Innovation
Every organization is the result of “social construction,” a meeting of wills of actors who are at least partially contradictory and therefore conflicting. This is what “Michel Crozier and Erhard Friedberg” demonstrated through their strategic analysis.
Furthermore, sociological research, in the case of innovation implementation, places particular emphasis on actor relationships. They observe that these relationships are often conflicting due to partially conflicting individual goals.
In the case of innovation implementation, Alter (1990,1995) shows that these conflicts exist but evolve over time.
According to him, the representations of actors and their behavior change during the action. Alter proposes a structuring of innovation processes involving three groups of actors: “management,” which encourages innovation, the “innovators” who take on the effective implementation of innovation because they find it advantageous, and the “legalists” who embody the rules and strive to respect the established order.
Conflictual relationships form between these groups of actors and create disorder. The innovation process occurs in three stages:
Incentivizing innovation: it generally comes from management and encounters resistance from “innovators” who do not see the advantages at this point, and “legalists.”
Appropriating innovation by the group of innovators who discover the benefits of innovation; they then distort innovation according to their own conceptions and attempt to develop alliances, while legalists resist and management lets it happen. This is because the development of innovations relies on an informal network of relationships; it does not follow a hierarchical decision structure.
Finally, in a third stage, institutionalization, management regains control of the action by defining, with the help of legalists, new rules, thereby reducing the autonomy developed by innovators during the second phase.
Alter thus shows that the result of innovation is not entirely predictable, and it is institutionalization that, by defining rules – evolving ones – ex post, “reduces the uncertainties of their exercise framework to make it sustainable and predictable.”
This institutionalization corresponds, according to the author, to a form of learning.
Alter emphasizes the duality between organization, which aims to reduce uncertainty (by defining procedures, planning, standardizing), and innovation, which, far from being “programmable,” means taking advantage of uncertainties and requires the ability to transgress established rules and identify new unlisted action programs by the company.
Conclusion
The emergence of new variables and the requirement for innovation push companies to go beyond the classic forms of organization by integrating the concept of uncertainty into the organizational dimension.
However, this integration reveals a contradictory relationship between organization and innovation. Each addresses uncertainty in its contexts.
For an innovative company, the goal is to provide actors with a free, unprogrammed space where they can drive innovation in an uncertain environment. At this stage, actors play the role of either an engine or a brake in an agreement regarding changes in the organization following innovation in the organizational process.
After addressing the nature of the relationship between organization and innovation and the complexity of programming, a relevant question arises: “how can a company implement an innovation strategy?”.”