Final Project Part Three

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Final Project Part Three: Organizational Structure and Culture Report Stacia Benton Southern New Hampshire University MBA 580 Innov/Strat High-Perform Orgs February 11, 2024

2 Final Project Part Three Current Organizational Structure The current structure of the organization consists of a common form of hierarchy within most organizations. Specifically, the company has a matrixed structure design consisting of centers of excellence or expertise (COEs) with functional vice presidents and project managers within each COE. Overall, this type of organizational structure allows for increased control and process efficiencies, which in turn reduce waste in resources and duplication of efforts ( MBA 580 Organization Overview , n.d.). Decisions are made at the top and is often slow. The downside to this type of organizational structure is that with COEs, there can be a lack of connectedness and cross-functional coordination. While the structure of having COEs within the organization and process efficiencies within the organization, this can also lead to rigidness and inflexibility. This type of environment is not always conducive to innovation. There are cases where the COE have their own unique goals and objectives rather than focusing on enterprise-wide initiatives. While innovation may take place within the COEs, it is not always the best use of resources for the organization as a whole due to lack of communication among the cross-functional teams. There also appears to be a lack of consideration within our organization for employee ideas related to innovation. Again, the organization focuses on enterprise-wide initiatives, leaving little time or resources to dedicate to innovation at the employee level. The organization’s current structure is also slow to respond when it comes to changes in market demand. The tall matrixed structure design leaves decision making to high level managers who are “often those farthest from the customer” ( MBA 580 Organization Overview , n.d.). Furthermore, the design of pulling specialists from functional areas to work on specific projects or designs also makes it slower to react and respond to changes in the market demand due to the lack of connectedness to the customer and product teams are not region-specific. This

3 Final Project Part Three makes a difference because market demand may differ from one region to another. According to Accept Mission, innovation is “performed best when collaboration is practiced” (Accept Mission, 2021). While collaboration is practiced within our organization, there can be some confusion as to who is making the decisions as specialists may report to two different supervisors at one time and may also be working on multiple projects simultaneously as well. Not only slows down innovation but also slows down how the company responds to changes in market demand due to lack of structure and communication. Recommendations for Changes to Organizational Structure Our current organizational structure is more traditional and centralized, with most decisions being made at the top of the hierarchy. What we have now come to realize that this type of organizational structure is not always conducive to innovation or does it always encourage a climate of creativity at the frontline employee level. To streamline the innovation process and address the issue of creativity, I would recommend introducing a more hybrid structure to our organization that combines both functional and divisional structures, nearly similar to what we have now. The hybrid model is most successful and suitable when “divisions have differing needs but central coordination is needed” (Toma, 2021). The difference would be that this type of structure would allow for the company to be “more flexible in distributing and assigning roles” and “helps to maintain a healthy relationship across all departments” (Toma, 2021). The hybrid organizational model has its pros and cons, however. Beginning with the cons, having functional and divisional business units can lead to inconsistencies in work and duplication of tasks. Furthermore, the business units may all have different ideas as to what innovation actually looks like for the company or for a specific project or objective. This is

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4 Final Project Part Three something that the organization is experiencing now. The hybrid model is, on the other hand, more adaptable and better aligns the business units in terms of innovation strategy, as long as top leaders are effective in communicating what the organization’s goals are. Examples of successful companies that use the hybrid structure include Starbucks, GAP Inc, and even Google (Toma, 2021). Within the hybrid model, I would recommend having the same functional divisions that we currently have, but I would also recommend the additional of a central innovation unit with each functional business unit having its own innovation “lab” so to speak. The specialists within each of the functional business unit would work directly with the central innovation unit. This type of structure would allow each business unit to also innovate within with the governance of the central innovation unit. One of the main reasons why innovation fails within an organization is due to lack of internal communication. The hybrid structure along with central and functional innovation teams supports internal communication from the bottom to the top and vice versa. Employees are given the opportunity to explore innovation but are also given clear direction from the top as to what direction the company is going in. For organizations that use the hybrid model, management still determines the strategic domains and employees can contribute ideas, so these ideas are better aligned with organizational strategy (Accept Mission, 2021) If we move forward with the recommended structure changes, we will become more responsive to market demand. The business units will be able to focus on innovation at each level while still getting direction from the top as far as strategy is concerned. Innovation at the business unit level should be spearheaded by employees who are much closer to the customers and more in tune to customer preferences and demands, therefore making the structure more responsive to the market demand. Overall, hybrid organizational structures “offer greater

5 Final Project Part Three adaptability, allowing organizations to respond to changing market conditions, customer demands, and internal dynamics” (Cuofano, 2023). Now more than ever, given the rate of how fast the business environment changes, it is important for organizations to be flexible in terms of collaboration among cross-functional teams, communication, and customizing the use of resources. This makes more room for innovation at every level. Specific to our own organization, Toyota, one of our competitors, uses a hybrid organizational structure. Toyota has been able to excel not only in innovation but also in continuous improvement through its structure of functional divisions and a project-based approach. Organizational Culture According to Forbes, “ failure to support innovation most often stems from an organization’s culture rather than some true operational or resource constraint” (Cancialosi, 2017). Our organization’s centralized and standardized approach to decision making and innovation has a stifling effect on creativity and culture. If decisions are made at the top of the hierarchy, it does not give employees much of a voice. If fact, the culture that we have created within the organization works against innovation. Overall, it is the lack of clear communication and direction along with the slowness that comes from inefficient cross functional teamwork that hurts the organizations culture of innovation. Furthermore, the lack of connectedness we have identified has most of the negative effect on the organizational culture. When the COEs become too independent, there is an opportunity for lack of shared vision among the teams and throughout the organization. Our organization needs to find the balance between the work environment, talent (including training and development) and process efficiency in order to build an organizational culture conducive to innovation. The hybrid organizational is a better option for our organization

6 Final Project Part Three to not only build a more innovative environment but to also build our organizational culture that empowers and engages employees to share their innovative ideas and prepare our leaders to listen and take action to support these innovative ideas. This should begin with a culture of respect. For years, we have operated under the traditional system of high-level leaders being the decision makers for our organization. This has made us less agile than some of our competitors. We need to find the balance between tasks and challenges, which begins with our employees. True enough, we need rules and processes in place, but we also need new approaches and strategic options from our front-line employees. Our employees will be the first people to tell us what is working, what is not working, what problems they are experiencing and what solutions may be available to solve these problems. The hybrid approach focuses on leadership alliance, experimental projects, communication, support, and leadership buy-in (Etventure, 2023). The 2016 Gartner Financial Services Innovation Survey suggests that “the biggest threat to innovation is internal politics and an organizational culture which doesn’t accept failure, doesn’t accept ideas from outside, and/or cannot change” (Cancialosi, 2017). This means that our organizations leadership must also be willing to accept that mistakes will be made along the way to innovation and that there is a talent pool available to us within our employees that can help us get to the next level in creating a strong organizational culture that supports innovation. A hybrid structure that also takes into consideration that learning through both failures and performance creates a creative climate that supports innovation. It is up to the leadership to understand and commucate the difference between product and unproductive failures and that failure that result in learning should also be celebrated, same as success. Overall, a hybrid structure is still a

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7 Final Project Part Three disciplined structure, it also gives way for experimentation and fluidity from the bottom of the organization to the top, creating a better organizational culture that supports innovation.

8 Final Project Part Three References Accept Mission. (2021, July 22). How organizational structure may affect innovation . Accept Mission | Idea & Innovation Software. https://www.acceptmission.com/blog/organizational-structure-innovation/ Cancialosi, C. (2017, February 7). Why culture is the heart of organizational innovation. Forbes . https://www.forbes.com/sites/chriscancialosi/2017/02/07/why-culture-is-the-heart-of- organizational-innovation/?sh=5a4aca4e3f4d Cuofano, W. I. G. (2023, December 14). Hybrid organizational structure . FourWeekMBA. https://fourweekmba.com/hybrid-organizational-structure/ Etventure. (2023, October 31). Striking a balance between tradition and innovation: The rise of hybrid organizational models . https://www.linkedin.com/pulse/striking-balance-between- tradition-innovation-rise-hybrid-organizational-v27me MBA 580 Comparative Growth Data . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Comparative%20Growth %20Data.xlsx?ou=1445143 MBA 580 Comparative Operating Statistics . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Comparative%20Operating %20Statistics.xlsx?ou=1445143 MBA 580 Organization Overview. (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD-

9 Final Project Part Three GR.23TW2/Course%20Documents/MBA%20580%20Organization%20Overview.pdf? ou=1445143 MBA 580 Sales Forecast . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Sales%20Forecast.xlsx? ou=1445143 Toma, D. (2021, December 7). Three ways to structure innovation - the corporate startup - medium. Medium . https://medium.com/the-corporate-startup/three-ways-to-structure- innovation-82dbc7fb5b24

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