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bureaucratic approaches have been the traditional dominant management paradigm,
there is common agreement that new organizational forms are needed in order
to respond to the increasing complexity of production, communications, and
technology (Gann & Salter, 2000).
In a recent study, CEOs placed internal R&D labs eighth out of nine important
sources of innovation, far behind the general employee population, business part-
ners and customers (Koch, 2007). Despite this fact, only half of respondents felt
their organizations were collaborating beyond a moderate level. R&D still plays a
role, but on a global basis more CEOs now believe that competitive advantage will
be achieved through new business models (54%) compared to new products and
services (46%) (Rowell, 2006). The traditional organization often cannot respond
to new technologies, fast-changing consumers, and globalization, all of which now
require companies to react by transforming the way they innovate (Chesbrough,
2003a; Dodgson, Gann, & Salter, 2006; Margulius, 2006). The team is at the helm
of innovation, and therefore its importance cannot be overlooked.
7.2.1 Team Structure
What we refer to as a “traditional NPD team,” in this chapter, is not automatically
synonymous with the origin of the work team concept. The bureaucratic-hierarchical
pattern that characterizes almost all organizations today was developed in the indus-
trial age of the nineteenth century. The Industrial Era called for a stronger form of
organization and new forms of bureaucracies emerged (Lipnack & Stamps, 1999).
The earliest NPD teams were functional and hierarchically based, originating from
the bureaucratic and hierarchical organization. This is not necessarily the team we
refer to when we discuss the traditional NPD team.
In the mid-1980s, bureaucratic structures were deemed stagnant by many
organizational theorists, unable to adapt to international competition and demo-
graphic pressures (Ashkenas, Ulrich, Jick, & Kerr, 1995; Fukuyama, 1999; Fulk
& Desanctis, 1995). The resulting network-like alternative, sometimes known as
the “virtual organization,” was derived from the application of IT, which facili-
tated greater interaction, agility, and flexibility (Byrne, 1993; Metes, Gundry, &
Bradish, 1998; Palmer, 1998). This was also the time when we first began to hear
the cross-functionalism buzz. Both researchers and practitioners agreed - cross-
functional teams were the wave of the future. Best practices research confirmed this
fact and firms moved to multidisciplinary teams - using them for projects regard-
less of the level of innovation involved (Page, 1993; Griffin, 1997). While not all
companies immediately responded to this trend, the multidisciplinary team became
acknowledged as a standard practice.
Teams are generally representative of their organizational structure, which can
be viewed along a continuum from the classic pure functional organization to the
project-based organization (Galbraith, 1971) (see Table 7.1). The pure functional
organization divides a development project into segments by relevant functional
group, with the head of each functional group responsible for that specific segment
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