FREE ESSAY ON "TOWARDS INNOVATION"

"TOWARDS INNOVATION"

The world today is experiencing the most rapid pace of change in its history. The purpose
of this essay is to discuss what organizational structure is suitable in the business
circumstances of today. This essay will argue that 'the environment of the 21st century
is such, that to be effective, organizations are tending towards less formalized
structures than used in the past'. To support this argument, firstly organizations will
be defined, and then the properties that make an organization effective will be
identified. Next organizational structure will be appraised, and what constitutes
business environment will be established. Finally the influences globalisation and
technology have had on the will be addressed in relation to changes in organizational
structure.
Robbins et al. define an organization as 'a deliberate arrangement of people to
accomplish some specific purpose' (2000: 5). While Wood et al. consider organizations as
'collections of people working together in divisions of labour to achieve a common
purpose' (1998: 15). These definitions fits a wide variety of groups such as sporting
clubs, religious bodies, voluntary associations etcetera however for this essay will
concentrate on business organizations. A Business organizations' purpose is to deliver
and product or service in such a way that a benefit is gained for the organization,
profit or goodwill for example. 
The Macquarie dictionary is defines effective as 'producing the intended or expected
result and producing a striking impression' (1990). Thus an effective organization is an
arrangement of people that successfully achieved their purpose, ie. a large profit of
fine product, and have done so in a noteworthy, exemplary, commendable method or fashion.
It is understood that to be effective an organization must be efficient. Efficiency is
defined as 'the relationship between inputs and outputs, the goal of which is to minimize
resource cost' (Robbins et al., 2000: 8). Usually a business organizations' success is
primarily measured in financial profit, though this is not the only benchmark.
Organizational structure is defined as 'the organization's formal framework by which job
tasks are divided, grouped and coordinated' (Robbins et al., 2000: 351). Generally an
organizations' structure is considered to be the managerial framework that directs the
non-managerial employees. Traditionally western organizational structure can be argued to
have developed from the feudal system of government where a strict pyramidal power and
class structure existed. Termed as mechanistic organizations they are described by
Robbins et al. as being 'characterized by high specialization, extensive
departmentalization, narrow spans of control, high formalization, a limited information
network, and little participation in decision making by low-level employees' (2000:
361).
Organic structures on the other hand developed as alternatives to mechanistic structures.
The underlying philosophy of the organic model is to provide the "space" for all people
to contribute ideas and effort towards the well being of the organization. Organic
organizations are characterized by Robbins et al. as 'highly adaptive and flexible with
little work specialization, minimal formalization and little direct supervision of
employees' (2000: 362). Examples of organic structures include 'team based structures,
matrix organizations, project structures, boundaryless organizations and learning
organizations' (Robbins et al., 2000: 370-377). Organic organizations usually provide
employees with more autonomy than those with mechanistic structure.
Business organizations are classed as open systems, that is, they 'dynamically interact
with their environment' (Robbins et al., 2000: 18). Robbins et el. define environment to
be "outside institutions or forces that potentially affect an organizations performance"
(2000: 101). Wong et al. list elements of the environment to include competition;
economic conditions; physical environment; political and legal atmosphere; socio-economic
characteristics; sociocultural elements; population distribution; infrastructure;
technological conditions; workforce composition and education of the population (1998:
4). Once an organization could essentially ignore environmental forces but Wood et al.
states now 'an effective organizational design reflects the powerful external forces'
(1998: 417).
'Organizations need to "know" their environment in order to recognize and take advantage
of the opportunities it offers, to recognize the constraints it imposes and to seek to
turn the constraints into opportunities' (Dawson, 1992: 80). To "Know" their environment
organizations must engage in environmental scanning, described by Robbins et al. as 'the
screening of much information to detect emerging trends and create scenarios' (2000:
311). Robbins et al. argues that organizations have to pay special attention to 'the part
of the environment that is directly relevant to the achievement of an organization's
goals', defined as the specific environment (2000: 102).
In "Images of Organizations" Morgan states 'as we move into the 21st century we find
ourselves living through a period of unprecedented change' (1997: 375). Environmental
uncertainty, defined by Robbins et al. as 'the degree of change and complexity in an
organization's environment', (2000: 103) must be having an effect on organizations.
Theodore Levitt (in Wong et al., 1998: 239) stated his article in the May-June 1983
edition of the "Harvard Business Review" that 'two vectors shape the world - technology
and globalisation'. Since Levitt published his article, the development of technology and
the growth of globalisation have increased at such astonishing rates that free-thinkers
such as Levitt wouldn't have imagined the world as it is today.
Globalisation is defined by Ryan et al. as 'a process occurring in the economic,
political, and social realms which is a result of the dismantling of fixed boundaries
around nations, cultures and economies. It implies an unprecedented level of nations'
economic activities' (1999: 226). While there is much debate over benefits and detriments
globalisation will have on the world, it is accepted that globalisation has, and is,
taking place. Globalisation has countless affects on business organizations, including
increasing the extent of competition as trade barriers are abolished; and generally
widening the specific environment of an organization, from commonly being local
organizations and events to possibly being worldwide influences.
The exponential growth of technology as we enter the 21st century is indubitable. In the
ten years clock speeds in personal computers have increased thirty- fold, 33 megahertz to
1000 megahertz. The increase in technology has inequitably changed the world. The average
white-collar worker has a computer on his or her desk, and does not write anymore, rather
types. Typing pools are things of the past. Large labour needs in manufacturing is also a
things of the past, as tasks become automated. 60 people staff the 20,000 square foot
factory that manufactures Lexus automobiles. Technology advances are constantly changing
organizations.
As organizations are open systems they have to adapt changes in the environment. This is
done by 'the developing or changing of a organization's structure' referred by Robbins et
al. as organizational design (2000: 351). Globalisation has had many influences on
organizational design. For example changes to base labour intense manufacturing processes
in countries such as Mexico and China leaves nations like Australia with a more educated
workforce. Often a university-educated person is in a job that twenty years ago, was
filled by a worker with minimal formal education, who trained on the job. Thus the
organization needs a less formalized structure to better utilize the knowledge of such
people in the decision making process. 
The pace of technology change is often requiring organizations to constantly be changing
to keep up. Robbins et al. view communication's technology as having particular influence
on organizational design. 'Communication and the exchange of information among
organizational members is no longer constrained by geography or time. And elimination of
these physical and time constraints means that organizations no longer need to be
structured solely to facilitate information flows and work activities' (2000: 380). Thus
organizational design can move away formalized structures designs that once where needed
to have efficient information, flows to less formalized structures that facilitate
innovation.
Kilmann et al. state in order to be effective 'in fast-changing environments, design
needs to be either more frequent or more revolutionary in the magnitude of its proposed'
(1976: 7). Ideally an organization striving to stay effective should be constantly
evolving structure to find form that best suits its environment. A structure termed by
Robbins et al. as a learning organization fulfils this. Robbins et al define a learning
organization as 'an organization that has developed the continuous capacity to adapt and
change because all members take an active role in identifying and resolving work-related
issues' (2000: 376).
This essay has only touched on two aspects of the changing environment an the effects
they have on organizational structure however it is clear that organizations can not
remain static and hope to remain effective. Effective organizations are defined as being
noteworthy, or in other words more innovative than other organizations. The only way to
be innovative in organizational structure is to move forward into designs that take
advantage of environmental changes and forces of the 21st century. These are generally
less formalized than traditional structures as they are adaptive to the rapid pace of
change.
To conclude, the pace of change in the environment dictates that organizational structure
must be constantly evolved to suit the current circumstances. Technology advancement has
made it possible to shift from concentrating organizational design on maximizing
communication and information exchange efficiently. Education quality of organization
members is such that ideal structures need to ensure that all members of the organization
can contribute ideas. As an effective organization is innovative in successfully
achieving it's goals, and innovative structures are generally less formalized, 'the
environment of the 21st century is such, that to be effective, organizations are tending
towards less formalized structures than used in the past'.
Bibliography
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Kilmann, R., Pondy, L. and Slevin, D. (1976) The Management of Organizational Design:
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Minkes, A. and Nuttall, C. (1985) Business Behaviour and Management Structure, Beckenham:
Croom Helm Ltd.
Morgan, G. (1997) Images of Organization, California: SAGE Publications, Inc.
Robbins, S., Bergman, R., Stagg, I. and Coulter, M. (2000) Management, 2nd edition,
Sydney: Prentice Hall.
Ryan, N., Parker, R. and Hutchings, K. (1999) Government Business and Society, Sydney:
Prentice Hall.
Wong, S., Cronk, T., Kitching, B., Carroll, P., Ridings, S. and Chittick, G. (1998)
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