6.8.2 Dynamic, changing organisation

The radical innovation needs a more dynamic product development organisation, which can change with the, often unpredicted, changes in the project. Some organisational methods are: matrix, subsidiary/divisional, entrepreneurial/ venture, corporate structures.

Matrix organisation is where the product development team member is also a member of a functional department. An individual staff member who is contributing to a product development project will be responsible to the project manager for the daily work on the project but will remain responsible to the departmental head on the standard of work and career direction. This can bring a wide variety of knowledge and skills into the product development project as needed, but can cause uncertainty, hesitation and strife between the two managers.

Subsidiary/divisional is where the product development projects are divided among subsidiary companies, or product divisions, in large companies, and they may be supported by corporate groups in R&D, market research, strategic planning and intellectual property. This means that there is a small product development group embedded in the functions of the subsidiary with specific knowledge, supported by strong groups in the central research. This would appear to be the optimum system for large multinational food companies, developing incremental products in the subsidiary and the radical innovations in the corporate research. But it can build communication problems, which can cause lower technology in the incremental products, and difficulties in technology transfer for radical innovations coming from the corporate research. To keep them as a combined product development structure needs more than the occasional visits between corporate and subsidiary; it needs combined knowledge building by moving staff between groups and joint workshops. Another problem is that the subsidiary may identify a radical innovation, but is not allowed to develop it and so becomes frustrated.

Venture/entrepreneurial seeks to introduce some of the attributes of the small entrepreneurial company into the large, multinational food company. The basic philosophy is to provide maximum responsibility to the venture manager/ project leader who is able to recruit the members of the team, free to use the resources as long as the budget is kept, and organise the activities within the overall aims of efficiency and effectiveness. The team creates the ideas and develops the product through to the launch and, if successful, the team may be allowed to form a company. This gives the opportunity for creative people with management and general business abilities to build a new product area for the company. The company not only has a new product platform but also has someone who has the abilities and the experience to develop new products in the future. If the idea is not developed to full commercialisation, and the project leader returns to their own area, the company has an employee experienced in product development. Venture/entrepreneurial is for introduction of radical innovations and not incremental products.

Corporate structures include new product committee, corporate new product task force or a group of directors on the Board. All of these report to the Board or at least the Chief Executive, and are formed from the senior people in the company. This is bringing innovation into the company at Board level, and is more likely to occur in the new enterprise, rather than the large, long- established company. These groups will set the product strategy for the company, coordinate the projects in the product development programme, monitor the progress of the projects and provide the critical decisions and the resources. A task force may be formed for a major project with high capital costs and risks. With these structures, top management has taken responsibility for product development in the company, and has taken control of it.

In conclusion one cannot say that any one structure is the way to manage product development, but that there are right and wrong ways to manage specific types of product development in specific companies.

Incremental product development can have a semi-permanent, slowly changing structure which not only creates knowledge but stores the knowledge either in explicit data sources or in the tacit knowledge in the heads of people who have been in product development over time. Collaboration between people who have the multifaceted knowledge needed for a project is built up over the years. They work closely and develop an extensive shared knowledge. The company becomes a product development team, which splits into small teams for the projects but always feels connected together through the projects. This is very much easier to do in the small company, but the larger companies need to have large teams in different product areas or in different geographical areas, or in different markets.

Radical innovations need a much looser, more temporary structure, because they are working in areas of not easily predictable change. Their organisation needs to give the dynamism to drive the project forward to completion.

In all product development organisations, there are some key ingredients:

     A corporate commitment to product development, starting at the top of
        the company. Product development is a major part of the company culture.

     One person takes responsibility for a project, no matter how large or small.

     The project leader or the product champion, if the project is too small
        for a team, should have direct access to personnel and their
        knowledge needed in the project.

     The project leader manages the people working in the project,
        makes decisions and is accountable for the project.

     Critical decision making is by top management, but all other decisions
        involve people responsible for the project.

As food enterprises grow from the small company with a few entrepreneurial individuals running or indeed comprising it, the need for more elaborate organisation grows and with that comes the need for explicit frameworks to maintain and expand the activity. Systems will be tried, become accepted and are used often, and then have to be adapted as the company grows. Product development changes a company, and the system for product development needs to change. It must not become a rigid, bureaucratic system, but retain the dynamism needed for successful product development.