An Analysis of Innovation and Leadership in Organizational Structures

This essay analyzes the impact of functional and divisional organizational structures on innovation and leadership. It begins by defining the characteristics, advantages, and disadvantages of both functional and divisional structures, highlighting aspects such as specialization, communication gaps, an...Read More

Running head: INNOVATION AND LEADERSHIP
INNOVATION AND LEADERSHIP
Name of the Student:
Name of the University:
Author Note:

1INNOVATION AND LEADERSHIP
Introduction:
Every organization has a specific structure of its own so that it can function in the most
efficient manner and effectively in the market. An organization can be functional or divisional.
The following essay deals with the advantages and the disadvantages of the functional
organizational structure compared to the divisional organizational structure and also how these
both structures impact the innovation strategies of the organization.
Discussion:
As per the discussion of Albers, Wohlgezogen & Zajac (2016), the functional
organizational structure involves the organizational employees to be organized and segregated
into specific groups depending upon their individual skills and talents. The functional
organizational structure has several advantages which include specialization. This implies that
the employees can function at the different departmental levels in their area of specialization,
providing better competition for the organization. Also the operational speed increases because
the specialized groups can solve the problems faster since they have better experience. The
organizational responsibility would be segregated and this would help the employees to waste
less time and produce the best quality work. On the other hand, it also has disadvantages such as
the organizational purpose segregates and this weakens the employee morale to a great extent.
According to Lee, Hallak & Sardeshmukh (2016), they feel isolated as they remain segregated.
Moreover, there can also be a communication gap and lack of coordination between the groups.
The different groups can also involve in disputes which might not be easy to handle and solve
since one common purpose lacks in such an organizational structure. In most of the cases, the

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managers would not pay any heed to the problems of different departments because they would
feel that the problem that the departments face are not a common problem. Every institution or
organization performs on the basis of communication and integration. The functional
organizational structure prevents the organizational groups from communicating with one
another which can hamper the overall production of the organization. Ahmady, Mehrpour &
Nikooravesh (2016) also discusses that this is because there would be an increase in the
compartmentalization and every groups would be concentrating on their own problems and not
on the common problem. For example, the HR department, the Technical department or even the
Finance department of organizations would work on their own, and not collectively.
According to Lee, Kozlenkova & Palmatier (2015), the divisional organizational structure
is the structure of an organization where there are different teams that work together side by side
but on a common purpose and on a common idea. This is most common in the large
organizations, where the different divide groups have different executives but they all work for
one single product. This kind of organizational structure has several benefits which involve
better focus. The divisions or the groups can work separately but together and focus on the
products with specific strategies of their own. The several teams have individual leadership and
this helps the organization to work in a collective manner with improved efficiency. Moreover,
as per the discussion of Mangla (2015), the divisional organizational structure helps to build one
common culture, that becomes the culture of the organization. In accordance to this, the people
working in different divisions have an increased morale and they remain encouraged to provide
their best performances. One such example of an organization can be the Microsoft software
company, where the individual workers provide their best to work for one single product. On the
other hand, according to Dubey & Singhal (2016), the divisional organizational structure’s

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disadvantages include the increase of the office politics. There could be disparity in the division
of resources and this is a major weakness of this structure. Moreover there could be a constant
tendency to undermine the other groups. Also it can be said that the divisional organizational
structure increases compartmentalization which is not at all beneficial for a company, since they
are not divided on the basis of their skills or talents. Taking the example of Microsoft’s business,
it can be seen that the Microsoft SharePoint was unable to be integrated into the business, until
there had been an integration with LinkedIn (Zhu, 2015).
According to the discussion of Gos (2015), the innovative strategies get benefitted as well
as hampered to a great extent by the functional and the divisional organizational structure. Since
there are several departments working individually in the functional structure, there can be a
disparity in the innovative strategies of the organizations. The several departments and the
compartments would have suggestions regarding various innovations and this could help the
organization negatively in their decision making abilities. However on the other hand, as per the
argument of Steiger , Hammou & Galib(2014), the multidivisional structure of the organizations
such as the companies like Johnson & Johnson, have separate divisions, but they work together
as a single unit and for a single product and service. This structure benefits the innovation
strategies because a collective decision is taken and the innovative strategies which are beneficial
are adopted by the entire organization. Also as per the discussion of Stress et.al. (2016), a
divisional structure of an organization also hampers the innovative strategies on one hand
because the functional structure helps in having a lot of ideas which can be different and can help
in the future of the organization.

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Conclusion:
Thus from the above discussion it can be concluded that every organization has its own
structure, be it functional or divisional and they have their individual advantages and
disadvantages. It can be said that the functional organizational structure with different groups
working as different units would have an advantage of improved organizational performance but
a disadvantage of communication gap. On the other hand, the divisional organizational structure
is advantageous since all the divisions are seen working together for a collective product and
service.

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Reference:
Ahmady, G. A., Mehrpour, M., & Nikooravesh, A. (2016). Organizational structure. Procedia-
Social and Behavioral Sciences, 230, 455-462.
Albers, S., Wohlgezogen, F., & Zajac, E. J. (2016). Strategic alliance structures: An organization
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Dubey, A., & Singhal, A. K. (2016). Role of organisational structure in empolyee's
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Goś, K. (2015). The Key Advantages and Disadvantages of Matrix Organizational
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Lee, C., Hallak, R., & Sardeshmukh, S. R. (2016). Innovation, entrepreneurship, and restaurant
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Mangla, P. (2015). Role of divisional management styles in the suitability and success of
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