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Vol. 16, No. 1, Winter 2005
Alison Rieple, Professor, University of Westminster; Adrian Haberberg, Senior Lecturer, University of Westminster; Jonathan Gander, Senior Lecturer, University of Westminster
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Product innovation-a critical source of competitive advantage for industries from computer hardware to car manufacturing. Some of these industries have hit upon the idea of forming alliances; some have cut back to their core areas of expertise and now purchase whatever additional resources they need from specialists. Alison Rieple and Adrian Haberberg, of the University of Westminster in the UK, and Jon Gander, from the University of West London, focus in this paper on the kind of structure one finds when a large, multi-product corporation obtains critical product-development resources, such as design or technological know-how, from an independent firm (usually smaller and more specialized). The relationship may live for only the period of a specific assignment, or it may last for a longer period and span several projects. The authors call this a “hybrid organization.” It is also seen in the cases of such large companies as Sony, which has a number of quasi-autonomous divisions that tend to work on blue-sky projects.
Several issues may be considered in this type of structure. One is the problem of control over resources: intangible resources, such as ideas and knowledge; and tangible resources, such as customized product components and materials. Another is the problem of conflict between what are likely to be two very different organizational types: the large and more-structured corporation, and its smaller, more-entrepreneurial partner.
There are also advantages to the hybrid structure. Hybrids protect the smaller firm from the stifling effects of the larger firm, while allowing its creative knowledge to be exploited. The larger or parent firm has the finances, marketing skills, and promotional means to bring a product innovation to market.
The authors make the interesting point that “there appears to be a straightforward relationship between codification of knowledge and the costs of its transfer; the more a given item of knowledge or experience can be codified, the more economically it can be transferred, and paradoxically, the less valuable it is.” Tacit, implicit, and socially contextualized and embedded knowledge is the most valuable, but the hardest to transfer. This is one reason why hybrids are useful; but it presents a problem in that tight coupling exposes creative staff from the smaller firm to cultural or operational contamination. That's where the role of boundary-spanners is critical.
Boundary-spanners, as Rieple and her colleagues call them, are people from both organizations who are able to move easily between them. These people need to be skilled in a whole range of ways. Individuals, for instance, with little experience of working in a larger company are likely to be unsuitable as boundary-spanners. By the same token, a person who has always worked in a large company is likely to have low tolerance for the chaos of a smaller, more entrepreneurial firm. The best boundary-spanners have experience with both; and similarly, they are able to talk intelligently about, for example, the psychological impact of a new product's color, as well as its return on investment and net present values. They are the real glue in a hybrid organization.
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