PowerPoint Presentation by Charlie Cook The University of West Alabama © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

13–2 The Nature of Organization Change Organization ChangeOrganization Change  Any substantive modification to some part of the organization (e.g., work schedules, machinery, employees). Forces for ChangeForces for Change  External forces in the general and task environments can force the organization to alter the way it competes.  Internal forces inside the organization cause it to change its structure and strategy; some internal forces are responses to external pressures.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–3 Nature of Organization Change (cont’d) Planned ChangePlanned Change  Is designed and implemented in an orderly and timely fashion in anticipation of future events. Reactive ChangeReactive Change  Is a piecemeal response to events and circumstances as they develop.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–4 Managing Change in Organizations Steps in the Change Process (Lewin Model)Steps in the Change Process (Lewin Model)  Unfreezing  Individuals must be shown why the change is necessary.  Implementing change  The change itself is implemented  Refreezing  Involves reinforcing and supporting the change so that it becomes a permanent part of the system.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– Steps in the Change Process

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–6 Resistance to Change Threats to self-interests and power and influence. Uncertainty about the extent and effects of change. The Change Process Fear of loss of social networks, power, security, and familiar procedures. Different perceptions of change effects and outcomes

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–7 Resistance to Change (cont’d) Techniques for overcoming resistance:Techniques for overcoming resistance:  Encourage active participation in change process.  Provide education and communication about change process.  Facilitate change process by:  Making only necessary changes  Announcing changes in advance  Allowing time to adapt to change.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– Force-field Analysis for Plant Closing at General Motors Outmoded production facilities Excess capacity Need to cut costs Reasons for Closing Possible future needs Concern about worker welfare Resistance from unions Plant closing Reasons Against Closing

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–9 Management Challenge Local governments typically encounter strong resistance from public employees when they attempt to privatize public services.Local governments typically encounter strong resistance from public employees when they attempt to privatize public services.  What advice could you offer a local government that would help in overcoming its employees’ resistance to change?

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– Areas of Organization Change Organization Structure and Design Technology and Operations People Job design Departmentalization Reporting relationships Authority distribution Coordination mechanisms Line-staff structure Overall design Culture Human resource management Information technology Equipment Work processes Work sequences Control systems Enterprise resource planning (ERP) Abilities and skills Performance Perceptions Expectations Attitudes Values

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–11 Changing Business Processes ReengineeringReengineering  The radical redesign of all aspects of a business to achieve major gains in cost, service, or time. Why Is Reengineering Necessary?Why Is Reengineering Necessary?  Entropy occurs as the maintenance of status quo puts an organization out of synch with its environment, and it starts consuming its own resources.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–12 Reengineering in Organizations Starting with a clean slate to open up the process. Using a blend of top-down and bottom-up involvement. Recognizing need for change and acting on it with a sense of urgency Approaches to Reengineering

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– The Reengineering Process

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–14 Organization Development (OD) Organization DevelopmentOrganization Development  A planned, organization-wide effort, managed from the top, that is intended to increase organizational effectiveness and health through interventions in it’s processes using behavioral science knowledge. OD AssumptionsOD Assumptions  Employees desire to grow and develop.  Employees have a strong need to be accepted.  Individuals will influence the organization and the organization will influence individuals.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–15 Organization Development Techniques Diagnostic ActivitiesDiagnostic Activities Team BuildingTeam Building Survey FeedbackSurvey Feedback EducationEducation Intergroup ActivitiesIntergroup Activities Third-Party PeacemakingThird-Party Peacemaking Technostructural ActivitiesTechnostructural Activities Process ConsultationProcess Consultation Life and Career PlanningLife and Career Planning Coaching and CounselingCoaching and Counseling Planning and Goal SettingPlanning and Goal Setting

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–16 Organizational Innovation InnovationInnovation  The managed effort of an organization to develop new products or services or new uses for existing products or services. Incremental Innovation Managerial Innovation Process Innovation Forms of Innovation Radical Innovation Technical Innovation Product Innovation

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– The Innovation Process Development Evaluate, modify, and improve on a creative idea. Decline Demand for innovation decreases, and substitute innovations are developed and applied. Application Use developed idea in design, manufacturing, or delivery of new products, services, or processes. Launch Introduce new products or services to the marketplace. Growth Demand for new products or services grows. Maturity Most competing organizations have access to the idea.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–18 Forms of Organizational Innovation Radical InnovationRadical Innovation  Fundamentally changes the nature of competition in an industry.  A new product, service, or technology developed by an organization that completely replaces the existing product, service, or technology in an industry. Incremental InnovationIncremental Innovation  Does not significantly affect competition in an industry.  A new product, service, or technology that modifies an existing one.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–19 Forms of Organizational Innovation (cont’d) Technical Versus Managerial InnovationsTechnical Versus Managerial Innovations  Technical innovation  Changing the physical appearance or performance of a product or service, or the physical processes through which a product or service is manufactured.  Managerial innovation  Changing the management processes by which products and services are conceived, built, and delivered to customers.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–20 Forms of Organizational Innovation (cont’d) Product Versus Process InnovationsProduct Versus Process Innovations  Product innovation  A change in the physical characteristics or performance of existing products or service or the creation of brand-new products or services.  Process innovation  A change in the way a product or service is manufactured, created, or distributed.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13– Effects of Product and Process Innovation on Economic Return Innovation Development Application Launch Innovation Application Phases of the Innovation Process Application Growth Effect on Organizational Performance High Return Low Return Innovation Maturity Innovation Decline Product Innovations Process Innovations

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–22 Innovation Reasons for Failing to InnovateReasons for Failing to Innovate  Lack of resources  Failure to recognize opportunities  Resistance to change Promoting Innovation in OrganizationsPromoting Innovation in Organizations  Use a reward system  Have a supportive organizational culture  Encourage intrapreneurship in larger organizations  Inventors  Production champions  Sponsors