Functional Specialism: the Dead Hand of Adam Smith

In his seminal book “Mastering the Dynamics of Innovation”, James Utterback described the seemingly inevitable process by which young, thrusting innovative organisations become sclerotic.  In particular, they are typified by:

  • Mechanistic, functional hierarchical organisation
  • Low level of innovation
  • Low interaction with market place
  • Not customer focused
  • Fragmented processes (following Adam Smith and functional specialisation)

By happy coincidence, whilst reading Utterback, I was also reading  Hammer & Champy, “Reengineering the Corporation”, which describes the consultants approach to taking these sclerotic old companies, and revitalising them and getting them fit for the 1990’s…  The new pattern was a mix of process-orientation, supported by coaching from centres of competence.

As we now know with hindsight, this model is itself flawed, but it did offer a solution to the dead-hand of Adam Smith, and functional specialism, killing off innovation.

Here is the chart I drew for myself when I was originally puzzling through this conundrum…Charting a New Course for Growth

Of course, the next question is (with 10 years hindsight), what should be the shape of organisations for the 21st and 22nd century?

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