11

Chapter TenChapter Ten

Innovation and ChangeInnovation and Change

22

Why is there a need to change?Why is there a need to change? What are the major forces What are the major forces

influencing changes in organizations?influencing changes in organizations?

33

Forces Driving the Need for Major Forces Driving the Need for Major Organizational ChangeOrganizational Change

More Large-Scale Change in OrganizationsStructure change Mergers, joint ventures, consortiaStrategic change Horizontal organizing, teams, networksCulture change New technologies, productsKnowledge management, enterprise New business processesResource planning E-commerceQuality programs Learning organizations

More ThreatsMore domestic competitionIncreased SpeedInternational competition

Global Changes, Competition and Markets• Technological Change• International Economic Integration• Maturation of Markets in Developed Countries• Fall of Communist and Socialist Regimes

More OpportunitiesBigger marketsFewer barriersMore international markets

Source: Based on John P. Kotter, The New Rules: How to Succeed in Today’s Post-Corporate World(New York: The Free Press, 1995).

44

Incremental vs. Radical ChangeIncremental vs. Radical Change

Continuousprogression

Paradigm-breakingburst

Through normal structure and management

processes

Transform entireorganization

Affect organizational

part

Create new structureand management

Technologyimprovements

Breakthroughtechnology

Productimprovement

New products,new markets

Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R. Brooks, “Organizations in Disequilibrium: Environmental Jolts and Industry Revolutions,” in George Huber and William H. Glick, eds., Organizational Change and Redesign (New York: Oxford UniversityPress, 1992), 66-111; and Harry S. Dent, Jr., “Growth through New

Product Development,” Small Business Reports (November 1990): 30-40.

Incremental Change Radical Change

55

Four Types of ChangeFour Types of Change TechnologyTechnology

• Changes in production processChanges in production process Products and ServicesProducts and Services

• Changes in outputsChanges in outputs Strategy and StructureStrategy and Structure

• Administrative changesAdministrative changes CultureCulture

• Changes in values, attitudes, behaviorsChanges in values, attitudes, behaviors

66

Elements for Successful ChangeElements for Successful Change

IdeasIdeas NeedNeed AdoptionAdoption ImplementationImplementation ResourcesResources

77

Technology ChangeTechnology Change

•Techniques for encouraging Techniques for encouraging technology changetechnology change

-Switching structuresSwitching structures

-Creative departmentsCreative departments

-Venture teamsVenture teams

-Corporate entrepreneurshipCorporate entrepreneurship

88

Probability of New Product Probability of New Product SuccessSuccess

PROBABILITYPROBABILITY

Technical completionTechnical completion• (technical objectives achieved)(technical objectives achieved) .57.57

CommercializationCommercialization• (full-scale marketing)(full-scale marketing) .31.31

Market SuccessMarket Success• (earns economic returns)(earns economic returns) .12.12

Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee,S. Wagner, and M. Hamburger, Research and Innovation in Modern Corporations (New York: Norton, 1971), 57.

99

Horizontal Linkage Model for New Horizontal Linkage Model for New Product InnovationsProduct Innovations

Environment

TechnicalDevelopments

Environment

CustomerNeeds

Organization

GeneralManager

R&DDepartment

MarketingDepartment

ProductionDepartment

Linkage

Linkage Linka

ge

Linkage Linkage

1010

Dual-Core Approach to Dual-Core Approach to Organization ChangeOrganization Change

Type of Innovation DesiredAdministrative

Structure Technology

Direction of Change: Top-Down Bottom-Up

Examples of Change: Strategy Production Downsizing Techniques Structure WorkflowBest Organizational Design for Change: Mechanistic Organic

AdministrativeCore

TechnicalCore

1111

Culture ChangeCulture Change

Reengineering and Horizontal Reengineering and Horizontal OrganizationOrganization

Total Quality ManagementTotal Quality Management

The Learning OrganizationThe Learning Organization

1212

OD Culture Change OD Culture Change InterventionsInterventions

Large group interventionLarge group intervention

Team buildingTeam building

Interdepartmental activitiesInterdepartmental activities

1313

Stages of Commitment to Stages of Commitment to ChangeChange

PreparationPreparation• Initial contactInitial contact• AwarenessAwareness

AcceptanceAcceptance• UnderstandingUnderstanding• Decision to implementDecision to implement

CommitmentCommitment• InstallationInstallation• InstitutionalizationInstitutionalization

1414

Barriers to ChangeBarriers to Change Excessive focus on costsExcessive focus on costs Failure to perceive benefitsFailure to perceive benefits Lack of coordination and cooperationLack of coordination and cooperation Uncertainty avoidanceUncertainty avoidance Fear of lossFear of loss

1515

Techniques for Change Techniques for Change ImplementationImplementation

Identify a true need for change.Identify a true need for change. Find an idea that fits the need.Find an idea that fits the need. Obtain top management support.Obtain top management support. Design the change for easy Design the change for easy

implementation (in stages/steps).implementation (in stages/steps). Develop plans to overcome resistance.Develop plans to overcome resistance. Create change teams.Create change teams. Foster idea champions.Foster idea champions.