Delays in getting approvals for innovation
One of the first ways that bureaucracies can impact company innovation is by delaying technological developments. If new advancements require multiple rounds of review before they are approved, this can substantially impact a company’s ability to timely launch a new product or service. At each stage of review, the development is likely held up by several months, resulting in long delays to a company’s ability to move into new areas.
This is in comparison to a flat organization, where there aren’t multiple rounds of reviews. New areas for development can be quickly pursued because those individuals that are passionate about a particular development are able to gain managerial support without the need for multiple stage reviews.
Customer needs never reach decision makers
Another limitation of bureaucracies is that they can mean customer insight never reaches upper management. While sales staff may be close to the customers, and in turn able to understand customer needs, this information may be filtered substantially between their conversations and reaching upper management. Multiple stages of reviews can make it very difficult for the most senior management to truly see what is going on at the frontline of an organization.
Politics dominate decision making
Something else that can impact the innovativeness of a company is politics within an organization. Multiple stages of reviews can result in a large proportion of effort being developed to secure the necessary ‘votes’ to see a particular direction being prioritized. Rather than ideas being judged on their merit alone, bureaucracies can mean that it is the ideas where managers are best placed in the political structure of the organization that receive the approvals for development.
A particular concern is that innovations that go against the predominant power structures in firms have a hard time receiving support. Powerful divisions can shoot down ideas that conflict with their division – possibly preventing new ways of operating from getting developed.
Employees learn that it is futile to push innovations
A final danger of bureaucratic organizational structures is that employees ‘learn’ that it is futile to push developments. If most ideas never receive acceptance, then employees may be discouraged from making further suggestions. The lack of motivation to make improvements by employees because they do not think it is likely that they will receive approval in a bureaucratic structure can quickly destroy the innovative culture of a firm.