Managing Change and Innovation

Chapter 11
 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

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

2
 Managing Change Topics
and Innovation Chapter 11

 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


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

3
 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
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
4
 Organizational Change

 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

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

5
 Model of Change
Sequence of Events
Environmental
Forces
Monitor global
competition, and other Need for Initiate Implement
factors change change change
Evaluate problems Facilitate search, Use force field
Internal and opportunities, creativity, idea analysis, tactics for
Forces define needed champions, venture overcoming
changes in teams, skunk works resistance
Consider plans, technology and idea incubators
goals, company products,
problems, and structure, and
needs culture

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

6
 Forces for Change

 Environmental Forces
– Customers
– Competitors
– Technology
– Economic
– International arena
 Internal Forces – activities and decisions

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

7
 Need for Change
Based on external or internal forces

 Performance gap = disparity between

existing and desired performance levels.

● Current procedures are not up to standard

● New idea or technology could improve current
performance

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

8
 Initiating Change
Critical phase of change management

 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
Experiential Exercise: Is Your Company Creative?

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

9
 Characteristics of Creative People

 Conceptual fluency
 Open-minded
 Originality
 Less authority
 Independence Self-confidence
 Playfulness
 Undisciplined exploration
 Curiosity
 Persistence
 Commitment - Focused approach
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
10
 Idea Champion
Change does not occur by itself

A person who sees the need for and

Champions productive change within
the organization

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

11
 Four Roles in Organizational Change
Championing an idea successfully requires roles in organizations

Inventor Champion Sponsor Critic

· Develops and · Believes in idea ·High-level · Provides reality
understands · Visualizes benefits manager test
technical aspects · Confronts who removes · Looks for short-
of ideas organization organizational comings
· Does not know realities of cost, barriers · Defines hard-
how benefits ·Approves and nosed
to win support for · Obtains financial & protects idea criteria that idea
the idea or make a political support within must pass
business of it · Overcomes organization
obstacles
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.

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

12
 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

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

13
 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
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
14
 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

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

15
 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.
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
16
 Force-Field Analysis Kurt Lewin

 The process of determining which forces

drive and which resist a proposed change

Driving Forces Restraining Forces (Barriers)

•Thought of as •Lack of resources
problems or •Resistance from middle
opportunities that managers
provide motivation for
change •Inadequate employee skills
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
17
 Traditional to Just-In-Time
Inventory Systems

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

18
 Tactics for Overcoming
Resistance to Change
Approach When to Use
 Communication  Change is technical;
 education users need accurate
information & analysis
 Users need to feel
 Participation involved; design
requires information
from others; have
power to resist

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

19
 Tactics for Overcoming
Resistance to Change
Approach When to use
 Negotiation  Group has power over
implementation; will
lose out in the change
 Crisis exists; initiators
 Coercion clearly have power;
other techniques have
failed
 Top management
support  Involves multiple
departments or
reallocation of
resources; users doubt
legitimacy of change
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
20
 Types of Organizational Change
Structure

Technology Strategy Products

Culture/People
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.

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

21
 Organizational Change

 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
Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
22
 Horizontal Linkage Model
For New Product Innovation

Organization
Manufacturing
Department

Customers
New Research Marketing
Market
Technology Department Department
Conditions

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

23
 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

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

24
 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

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

25
 Organization Development
Problems OD Can Address

Mergers/acquisitions Decline/revitalization Conflict management

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

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

26
 OD Activities

Team building

Survey feedback

Large group
intervention

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

27
 OD Approaches to Culture Change
Traditional Organizational Large-Group
Development Model Intervention Model
Focus for action: Specific problem or group Entire system
Information
Source: Organization Organization & environment
Distribution: Limited Widely shared
Time frame: Gradual Fast
Learning: Individual, small group Whole organization

Change Process: Incremental Change Rapid transformation

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.

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

28
 Three Stages for Achieving
Behavioral and Attitudinal Change

 Unfreezing
 Changing
 Refreezing

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

29