Strategies for designing new venture units in complex contexts

Large, mature organizations are often capable of exploiting existing products efficiently, but are typically less effective in being innovative. Financial systems and bureaucratic procedures adopted to control processes in large organizations tend to be hostile towards innovative ideas, proposals and initiatives. One of the solutions to this problem is to structurally separate exploitation tasks and innovative exploration activities, the latter, for example, in a new venture unit. On the other hand, such a structurally separate unit still needs to have some degree of integration with the parent organization, which forms the lifeline for new ventures in terms of resources and reputation. As such, the new venture unit acts as an ‘ incubation’ semi-structure that mediates organizational rigidities and supports organizational renewal by means of entrepreneurship. Previous studies have provided detailed assessments of the layout of such a new venture unit and its simultaneous integration with and separation from the host organization (e.g. Jansen et al. 2009). However, how these units are established in the first place has largely remained unaddressed. In this respect, our understanding of the process of designing such units is still in its infancy, and studies considering how designers use knowledge to deal with the complex contexts of this design process are rare. Here, this study contributes to the innovation and corporate and academic entrepreneurship literature by studying the interaction between the design processes of new venture units and diverse complex design contexts. The way designers use and process knowledge can be conceptualized in terms of three design strategies (Gavetti et al. 2008): off-line reasoning and planning, feedback-driven learning and associative reasoning. Research on designing new venture units implies that in many organizations this design process is especially driven by experimentation (i.e. feedback-driven learning) or by copying designs (i.e. associative reasoning) from other organizations (Hill and Birkinshaw 2008). An important question then is how specific contexts enable or hamper particular design strategies.