Structural separation: creating new businesses
Structural separation occurred frequently in the organizations we observed when they launched new businesses to generate revenue streams outside stagnating core businesses. These new ventures involved fundamentally different activities from the companies’ existing businesses, both in terms of products and target clients. The newly established units enjoyed high degrees of autonomy, and were externally focused in order to gain fresh ideas and capabilities that might be lacking within the firm. At the same time, however, existing skills and assets were transferred to nurture the new activities. Overall, this design option was characterized by a supply and demand-side exploration logic in the new businesses, while the core businesses remained unchanged, continuing to exploit the firms’ existing capabilities.
