Organization Design and Effectiveness over the Innovation Life Cycle

Differing bases of competition in early and later stages of an innovation’s life cycle call for differing organization designs. Designs that fit early strategic contingencies tend to misfit later ones. Over time, innovating units must either minimize the negative effects of misfit, or make difficult changes in design. Using four paired case studies, we examine how firms address conflicts in strategic contingencies, how managers adjust to misfits, and how organizations adapt their designs. We find that firms use one of three adaptation modes, none of which is fully autonomous nor fully integrated, and all of which change over time. Each mode optimizes for one contingency while suboptimally attempting to address the other. The study suggests practical insights for researchers and managers.