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40 MANAGING KNOWLEDGE WORK AND INNOVATION

professional management in an attempt to manage basic requirements such
as efficiency improvements.
As discussed earlier in the chapter, this shift in structure and organizing
may however be counterproductive where innovation is the basis on which
the firm competes. Research conducted by Lowendahl (1997) demonstrated
that a strategy of growth can be counterproductive, particularly for those
firms that compete on the basis of their ability to solve complex problems
for clients. A compromise, however, might be achieved by creating new,
autonomous business units as soon as the firm reaches a particular size or
introducing internal markets around a project based form of organizing.
These new business units should ideally be led by those who recognize the
need for an enabling context and the importance and significance of low
levels of formalization and decentralized decision-making for knowledge
work processes. A number of high-tech firms operating in Cambridgeshire
in the United Kingdom (often referred to as ‘Silicon Fen’) have adopted this
strategy. ‘Spinning out’ new firms as opposed to organizational growth is the
approach these firms have adopted in order to manage the exploitation of
new innovations developed in-house. These firms are therefore consciously
attempting to continue to operate as adhocracies-stimulating innovation but
avoiding organizational growth.

>> CULTURAL CONDITIONS IN SUPPORT OF
KNOWLEDGE WORK
Many knowledge-intensive firms do attempt to structure and organize
along the lines of an adhocracy, recognizing that this approach provides an
enabling context for knowledge work. However, as discussed in the previous
section, this highly informal approach to organizing can often be problem-
atic to sustain in the long run. In order for an organization to survive in
the long term, it must be able to achieve and sustain a competitive level of
profitability. When firms organize predominantly around self-formed and
self-managed knowledge-based teams, it can be very difficult for the leaders
of such firms to both develop and manage efficiency criteria even when the
firm remains small.
The nature of much of the work that is carried out can be both ambigu-
ous and intangible and is therefore difficult to measure, control or even
quantify. For example, advertising agencies develop ‘ideas’ for clients and
specialist consultancy firms develop bespoke solutions to client problems. In
these cases, it is extremely difficult for managers or even knowledge work-
ers themselves to estimate the resources required in terms of time, expertise
and skills to successfully complete client projects. In addition successful out-
comes cannot always be guaranteed as innovation is an inherently uncertain
process. In many instances successful outcomes can only be measured by the
degree to which the client is satisfied with the outcome. Rational, qualified

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