Innovation in Large Companies: Approaches and Organizational Architecture

This chapter provides an overview of the overall approaches and organizational architecture for innovation in large corporations. An overall typology for how companies approach innovation is indicated in figure 1. On the ordinate is the focus of the innovation effort – which may be internal or external. Internal innovation effort refers to the development of products or services which grow the current businesses. External innovation is used to imply innovation efforts which are occurring in other companies and because of their synergy become prime candidates for acquisitions, mergers, alliances and co-development. The term is also used in the context of a product or service innovation developed for a new business external to the corporation. An example of this would be the development of a “spin-off” company, such as Face2Face, which has unique applications in facial analysis and animation built on technologies developed by Lucent – but which does not fit with any of Lucent’s current businesses. On the abscissa is the funding – whether it is from a Strategic Business Unit (SBU) or corporate. Organizational structures for new product development will be explored in 3 of the areas. Mergers and acquisitions, joint alliances and co-development activities (top left hand box) are not discussed in this chapter.