5. The Organizational Structure: The Innovative Enterprise

We have now achieved the state of all those enterprises that permit themselves the luxury of an autonomous research center. Our discussion so far explains why such research centers often deliver excellent results, i.e. because they are places where an NT culture is free to develop. On the other hand, we also have an explanation for the difficulties that the remainder of the enterprises have when it comes to the commercial exploitation of these excellent results, i.e. on account of the known communication problem between the two cultures. There are naturally further significant reasons that prevent the enterprise from commercially exploiting the results of exploration. One of the most important reasons is that it is often difficult to bring innovation projects into alignment with existing business models. This is the problem of “white spaces” that Mark Johnson describes in his important book Seizing the White Space (cf. Johnson 2010).

Reductions in the volume of orders for early-warning and exploration activities are so damaging because they usually go hand in hand with workforce downsizing. Such staff cuts lastingly undermine the motivation of NT employees, which can lead to a serious decline in an enterprise’s capacity for innovation.

We addressed this topic for the first time in our book Innovation Factory (Mock et al. 2013). We review the topic at the present juncture to secure a cohesive presentation of our argumentation.

The term “product” in our present discussion essentially refers to anything that an enterprise winds up selling, and naturally includes services of all kinds.

The current practice of ceremoniously announcing the imminent arrival on the market of products can lead to overblown expectations and unnecessary pressure that could undermine the resilience of a product still in need of nurturing.

Note: Daniel Huber introduced the term “early warning system” in the context of his enterprise work and discovered that its meaning was intuitive and that its use was well-accepted by both managers and employees alike.

An intuitive description of the same effect is also available in Chesbrough (2003, p. 32 f).

Oliver Gassmann and Philipp Sutter break down the innovation process similarly into two fundamentally different phases. What is referred to in the present book as “preparation” is referred to by Gassmann and Sutter as the “cloud phase.” Moreover, they refer to our “implementation phase” as the “building-block phase.” Gassmann and Sutter do not, however, describe a distinct transfer phase. They identify the various related activities using different terms and assign them in a different manner to their process elements (Gassmann and Sutter 2008).

The subject of the present book is not a particular enterprise, but enterprises in general. For this reason, we wish to focus only on general market developments and their consequences. We will then be in a position to derive basic organizational principles from the results of our general analyses. When attempting to apply these principles to a specific enterprise, it may naturally be necessary to take account of the enterprise’s specific context.

It is clear that one could write entire books about such trends alone. For our purposes, however, it will suffice to consider a few basic developments. The primary trends mentioned in the present context offer an explanation for the accelerating rate and the increasing extent of the changes in the markets. And it’s these aspects that are crucial for innovation (They also, by the way, can be used to explain diminishing solidarity in our societies).

This has led to a decline in the significance of monetary assets compared to earnings. After all, sufficient earnings will enable one to easily obtain capital. (This represents a striking contrast to the situation in the Middle Ages when the assets of the nobility represented the critical parameter and earnings were relatively less significant.) This constitutes a fundamental change that weakens established enterprises and strengthens new enterprises. The competition thereby becomes stiffer and the rate of change increases.

Today, this also encompasses branding, public image, positioning (high-end/standard/low-end), as well as the implicit values such as community feeling, prestige and street credibility.

CRM = customer relationship management.

This corresponds to the two important levels of “Renewal” and “Optimization” in the St. Gall enterprise model. Please refer in this regard to Rüegg-Stürm (2003) and the Dual Strategy by Derek Abell (1993).

Innovation in medium-sized enterprises is currently often not secured via a certain organizational unit, but by the natural and more intensive interaction medium-sized enterprises maintain with their customers and suppliers in the daily conduct of business.