From Closed to Open Innovation: The Evolving Nature of Teams and the Use of Information Technology - Information Technology and Product Development - page 127

Table 7.1 Team organization structure

Functional Project based Matrix Virtual

Nature of
the team
organization

Hierarchal-based
structure with
functional
department heads
responsible for
coordination of a
core set of
activities

Project manager
leads a team of
specialists that
work outside
traditional
organizational
boundaries to
complete a
project

Combination of
functional and
project-based
structures in
which managers
report to two
individuals in
order to achieve
project goals

Networked
organization,
highly dependent
on IT to manage
and coordinate
geographically
distributed
project activities

Key
governance
issues

Departments often
work as silos
resulting in less
communication,
coordination, and
cooperation

Suited for
long-term
projects with
manager/VP
coordinating
activities across
departments with
greater focus and
project control
versus functional
or matrix
structures

A manager or team
leader
coordinates
activities with a
set of core
cross-functional
members

Developed to
address changes
emanating from
globalization,
competition, and
technology

(Larson & Gobeli, 1989). In the project-based structure, a project manager manages
a team of specialists that often work outside traditional organizational boundaries
to complete a project. These specialists form the core project team, conduct the
majority of project work internally, and may defer to their functional departments
for information or other resources (Larson & Gobeli, 1989).
In between these two spectrum ends lie different forms of the matrix organi-
zation, in which benefits of both the functional and project structures are sought.
Matrix organizations frequently have two chains of command - one functional
and one project, and participants are often assigned to multiple projects simultane-
ously (Larson & Gobeli, 1989). While team structures tend to mimic organizational
structures, most organizations today embrace more than one team format. “Even a
fundamentally functional organization may create a special project team to handle a
critical project” (Hyväri, 2006).
As a result of the factors discussed above, combined with increasing globaliza-
tion and technological advancements, we have seen an increase in the presence
of virtual structures in many organizations. Advances in IT can enable firms to
work across geographic and organizational boundaries, supporting the “shift toward
more open, collaborative, and network-centered innovation practices” (Dodgson
et al., 2006).
Technology has created new opportunities by increasing communication both
within and between teams, and between teams and suppliers and/or customers
(Hauser, Tellis, & Griffin, 2006). Demand and competition has moved to a global