Specialist units are the key to innovation

first_img Previous Article Next Article Specialist units are the key to innovationOn 3 Dec 2002 in Personnel Today The news that GlaxoSmithkline (GSK) is restructuring its researchcapabilities is very interesting from an organisational and HR point of view. The decision to arrange its applied research into separate departments, eachfocusing on different therapeutic areas, is a fundamental readjustment. Themove is reminiscent of BP’s decision in the 1990s to break its explorationdivision into about 50 separate business units, each responsible for adifferent field of oil or gas. GSK’s restructure is an effort to create more output and a stronger pipelinefrom its research facilities. The underlying rationale is that the best way todevelop new pharmaceutical products is by fostering specialist skills in small,dedicated units. Each will have clear targets and accountabilities, with theautonomy to decide how best to deliver. For specialist units to thrive, they must either be arranged independently,or at least have sufficient flexibility within the corporate set-up. There isoften a danger of suppressing or damaging activities if they fall outside themainstream corporate culture. Flexing corporate policies and procedures andgiving specialist units certain unique powers offers a degree of protectionagainst this problem. But while separate or autonomous units have the potential to create improvedbusiness results and return on investment, undoubtedly they also presentcertain difficulties for HR in terms of common policies, training anddevelopment, and co-ordination with other sections of the company. The flip-side of specialisation is that synergy and co-ordination benefitscan be lost. The challenge for HR practitioners is to develop policies and activitiesthat can be implemented across the whole organisation – but only if they do notconstrain the separate specialised units. There is nearly always a trade-off between the need for specialisation andco-ordination within the boundaries of a corporation. In the 1980s, IBM successfully established a separate PC division away fromthe main corporate centre. When faced with performance problems in the 1990s,commentators said IBM should split the whole company into separate units, basedon the 1980s solution. But Lou Gerstner recognised IBM’s future lay inproviding integrated customer solutions. Thus a combination of specialisationin product divisions and co-ordination through global sales and services becamethe key to the company’s present success. Companies need a clear framework with which to assess the difficulttrade-offs between specialisation and co-ordination. Sometimes, a more‘boundaryless’ organisation, with closer co-ordination and collaboration isneeded. But often, a more ‘boundary-full’ organisation, with separated unitsprotected from corporate influence – such as GSK’s research function – is theanswer. In either case, there are important implications for HR professionalsconcerning how to implement and communicate changes in policies, procedures andworking practices, and in guiding appropriate relationships between the units. By Michael Goold, Director, Ashridge Strategic Management CentreMicheal Goold is co-author of Designing Effective Organisations (Campbell& Goold. John Wiley & Sons, 2002) Comments are closed. Related posts:No related photos.last_img

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