Change agents can introduce characteristics to create a culture of innovation and creativity. Innovation, a specialized kind of change, is applied to initiating or improving a product, process, or service, in other words, a better solution. Innovations can range from incremental improvements to radical breakthroughs. Structural variables are one potential source of innovation. A comprehensive review of the structure–innovation relationship leads to the following conclusions.

Organic structures positively influence innovation. Because they’re lower in vertical differentiation, formalization, and centralization, they facilitate the flexibility, adaptation, and cross-fertilization that make the adoption of innovations easier. Innovation-contingent rewards positively influence innovation. When creativity is rewarded, firms tend to become more innovative—especially when employees are given feedback on their performance and autonomy in doing their jobs. Innovation is nurtured when there are slack resources. Having an abundance of resources allows an organization to afford to purchase or develop innovations, bear the cost of instituting them, and absorb failures.

Interunit communication is high in innovative organizations. These organizations are heavy users of committees, task forces, cross-functional teams, and other mechanisms that facilitate interaction across departmental lines. Innovative organizations tend to share a common vision as well as underlying goals. They have a shared sense of purpose. They encourage experimentation and reward both successes and failures. They celebrate mistakes. Innovative organizations also tend to be cohesive, mutually supportive, and encouraging of innovation.