INTRODUCTION

In this chapter we look at how to organise for innovation and how to innovate organisation.

In a review of the existing literature on organisational innovation, Lam (2005) notes that “(t)here is no single coherent conceptual framework for understanding the phenomenon of ‘organisational innovation’. This is partly due to the great conceptual ambiguity and confusion surrounding the term organisational innovation.” To begin with, there is no consensus definition of the term organisational innovation. Lam holds that this conceptual indeterminacy may reflect the fact that organisational innovation embraces a very wide range of phenomena. She notes that “at present, research on organizational change and adaptation is fragmented: the different levels of analysis are disconnected and often rooted in different theoretical paradigms that use different research methods.” She finds that “many innovation studies continue to be dominated by an economic approach that allows little room for the analysis of creative change and innovation within the organization itself”, and argues that “treating the organization as an interpretation and learning system directs our attention to the important role of internal organizational dynamics, actor cognition, and behaviour in shaping the external environment and outcomes of organizational change.”

As discussed in chapter 3, a fundamental problem of innovation processes is the combination and relation between exploration – i.e., the development of new ways of doing things (also referred to as second order learning) – and exploitation, i.e., improving on existing ways of doing things (also referred to as first order learning). The first is necessary for companies in order to survive in the short term, the second for their survival on a longer term. The challenge is to do both. That is not simple, because they raise different and sometimes contradictory demands. For exploitation, meanings have to be clear and stable norms, divisions of labour, and know-how are all necessary. For exploration, it is necessary to cut across existing denotations, norms, and divisions of tasks. This leads to tensions between control and flexibility, with consequences for the motivation and coordination of labour and the measurement of performance.