chapter 11 managing change and innovation

Managing Change and Innovation

Chapte

r 11

Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.

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Turbulent Times The Changing Work Place

Today’s organizations need to continuously adapt to

new situations if they are to survive and prosper

One of the most dramatic elements is the shift to a

technology- driven workplace

Ideas, information, and relationships are becoming

critically important

Manager’s Challenge: Cowley manufacturing plant


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Managing Change and Innovation

How organizations respond to the environment through internal change and development

● Basic forces for Organizational Change

● How managers facilitate two change requirements

● Four major types of change

● How organizations can be designed to facilitate each

Topics

Chapter 11


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Organizational Change

The adoption of a new idea of behavior by an

organization

New trends require profound changes in the

organization

– E-business

– Supply chain integration

– Knowledge management


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Today’s successful organizations

simultaneously embrace two types of

planned change

● Incremental change = efforts to gradually improve

basic operational and work processes in different

parts of the company

● Transformational change = redesigning and

renewing the entire organization


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Model of Change Sequence of Events

Environmental

Forces

Internal

Forces

Need for

changeInitiate

changeImplement

change

Monitor global

competition, and other

factors

Consider plans,

goals, company

problems, and

needs

Evaluate problems

and opportunities,

define needed

changes in

technology

products,

structure, and

culture

Facilitate search,

creativity, idea

champions, venture

teams, skunk works

and idea incubators

Use force field

analysis, tactics for

overcoming

resistance


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Forces for Change

Environmental Forces

– Customers

– Competitors

– Technology

– Economic

– International arena

Internal Forces – activities and decisions


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Need for Change

Performance gap = disparity between

existing and desired performance levels.

● Current procedures are not up to standard

● New idea or technology could improve current

performance

Based on external or internal forces


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Initiating Change

Stage where the ideas that solve perceived

needs are developed

Search = process of learning about current

developments inside or outside the organization that

can be used to meet the perceived need for change

Creativity = generation of novel ideas that might

meet perceived needs or offer opportunities for the

organization

Critical phase of change management

Experiential Exercise: Is Your Company Creative?


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Characteristics of Creative People

Conceptual fluency Open-minded

Originality

Less authority

Independence Self-confidence

Playfulness

Undisciplined exploration

Curiosity

Persistence

Commitment - Focused approach


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Idea Champion

A person who sees the need for and

Champions productive change within

the organization

Change does not occur by itself


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Four Roles in Organizational Change

Inventor

· Develops and

understands

technical aspects

of ideas

· Does not know

how

to win support for

the idea or make a

business of it

Sponsor

·High-level

manager

who removes

organizational

barriers

·Approves and

protects idea

within

organization

Critic

· Provides reality

test

· Looks for short-

comings

· Defines hard-

nosed

criteria that idea

must pass

Sources: Based on Harold L. Angle and Andrew H. Van de Ven, “Suggestions for Managing the Innovation Journey,” in Research in the Management of Innovation: The Minnesota

Studies, ed. A. H. Van de Ven, H. L. Angle, and Marshall Scott Poole (Cambridge, Mass.: Ballinger/Harper & Row, 1989); and Jay R. Galgraith, “Designing the Innovating

Organization,” Organizational Dynamics (winter 1982) 5-25.

Champion

· Believes in idea

· Visualizes benefits

· Confronts

organization

realities of cost,

benefits

· Obtains financial &

political support

· Overcomes

obstacles

Championing an idea successfully requires roles in organizations


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New Venture Teams

New Venture Team = Unit separate from the

mainstream of the organization that is

responsible for developing and initiating

innovations

Skunkworks = separate small, informal,

highly autonomous, and often secretive

group that focuses on breakthrough ideas for

the business


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New Venture Fund

Fund providing resources from which individuals and groups can draw to develop new ideas, products, or businesses

Idea Incubator = in-house program that provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics


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Open Innovation

Extending the search for and commercialization of

new ideas beyond the boundaries of the organization

The boundaries between an organization and its

environment are becoming porous so that ideas flow

back and forth among different companies that

engage in partnerships, joint ventures, licensing

agreements, and other alliances


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Resistance to Change

Self-Interest: fear of personal loss is perhaps the

biggest obstacle to organizational change

Lack of Understanding and Trust: do not

understand the intended purpose of a change or

distrust the intentions

Uncertainty: lack of information about future events

Different Assessments and Goals: people who will

be affected by innovation may assess the situation

differently.


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Force-Field Analysis

The process of determining which forces

drive and which resist a proposed change

Restraining Forces (Barriers)

•Lack of resources

•Resistance from middle

managers

•Inadequate employee skills

Driving Forces

•Thought of as

problems or

opportunities that

provide motivation for

change

Kurt Lewin


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Traditional to Just-In-Time Inventory Systems


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Tactics for Overcoming Resistance to Change

Communication

education

Participation

Change is technical;

users need accurate

information & analysis

Users need to feel

involved; design

requires information

from others; have

power to resist

Approach When to Use


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Tactics for Overcoming Resistance to Change

Negotiation

Coercion

Top management support

Group has power over implementation; will lose out in the change

Crisis exists; initiators clearly have power; other techniques have failed

Involves multiple departments or reallocation of resources; users doubt legitimacy of change

Approach When to use


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Types of Organizational Change

Culture/People

Strategy

Structure

Technology Products

SOURCE: Based on Harold J. Leavitt, “Applied Organizational Change in Industry: Structural, Technical, and Human

Approaches,” In New Perspectives in Organization Research, ed.W.W. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley,

1964), 55-74.


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Technology: General rule = change is bottom up

New product:

· Horizontal linkage model emphasizes shared development of

innovations among several departments

· Time-based competition is based on the ability to deliver products

and services faster than competitors

Structure: Successful change = through a top-down approach

Culture/people:

· Training is the most frequently used tool for changing the

organization’s mind-set


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Horizontal Linkage Model

For New Product Innovation

Research

Department

Marketing

Department

Manufacturing

Department

New

Technology

Customers

Market

Conditions

Organization


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Structural Changes

Any change in the way in which the

organization is designed and managed

● Hierarchy of authority

● Goals

● Structural characteristics

● Administrative procedures

● Management systems

Ethical Dilemma: Research for Sale


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Culture-People Changes

Changes in structure, technologies, and

products or services do not happen on their

own

Changes in any of these areas require

changes in people


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Organization Development

Decline/revitalizationMergers/acquisitions Conflict management

Problems OD Can Address

Application of behavioral science techniques to

improve an organization’s health and effectiveness

through its ability to cope with environmental

changes, improve internal relationships, and

increase learning and problem-solving capabilities


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OD Activities

Survey feedback

Team building

Large group

intervention


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OD Approaches to Culture Change

Traditional Organizational

Development Model

Large-Group

Intervention Model

Change Process: Incremental Change Rapid transformation

Focus for action:

Information

Source:

Distribution:

Time frame:

Learning:

Specific problem or group

Organization

Limited

Gradual

Individual, small group

Entire system

Organization & environment

Widely shared

Fast

Whole organization

SOURCE: Adapted from Barbara Benedict Bunker and Billie T. Alban, “Conclusion: What Makes Large Group Interventions Effective,” The Journal of Applied Behavioral Science 28, no 4 (December

1992), 579-591.


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Three Stages for Achieving Behavioral and Attitudinal Change

Unfreezing

Changing

Refreezing

chapter 11 managing change and innovation

Leadership & Management