Chapter Ten Organizational Change & Innovation

B10-1 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Two Types of Change: Reactive versus Proactive  Reactive: making changes in response to problems or opportunities as they arise.  Proactive: involves making carefully thought- out changes in anticipation of possible or expected problems or opportunities.

B10-2 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Forces of Change 1)Demographic characteristics 2)Market changes 3)Technological advancements 4)Social & behavioral pressures

B10-3 Panel 10.1 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Forces for Change Outside and Inside the Organization Outside Forces Demographic characteristics Market changes Technological advancements Social & political pressures Inside Forces Employee problems Manager’s behavior The Need for Change

B10-4 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Areas Where Change is Needed: People Changes  Perceptions  Attitudes  Performance  Skills

B10-5 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Areas Where Change is Needed Cont.  Technology  Changing Structure  Changing Strategy

B10-6 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. The Degree to Which Employees Fear Change: From Least to Most Threatening  Adaptive Change  Innovative Change  Radically Innovative Change

B10-7 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Lewin’s Change Model  Unfreezing  Changing  Refreezing

B10-8 Panel 10.2 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Eight Steps for Leading Organizational Change  Anchor new approaches in the culture  Consolidate gains and produce more change  Generate short-term wins  Empower broad-based action  Communicate the change vision  Develop a vision & strategy  Create the guiding coalition  Establish a sense of urgency

B10-9 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Organizational Development (OD)  Organization Development (OD) a set of techniques for implementing planned change to make people and organizations more effective.  OD is put into practice by a Change Agent a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways.

B10-10 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. What Can OD Be Used For? 1)Managing conflict 2)Revitalizing organizations 3)Adapting to mergers

B10-11 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Characteristics of OD 1)OD aims for fundamental change 2)OD is process-oriented, not content- oriented 3)OD is value-loaded

B10-12 Panel 10.3 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. The OD Process 1. Diagnosis2. Intervention3. Evaluation

B10-13 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Types of Innovation: Product or Process  Product Innovation: is a change in the appearance or the performance of a product or a service or the creation of a new one.  Process innovation: is a change in the way a product or service is conceived, manufactured, or disseminated.

B10-14 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Types of Innovation: Incremental and Radical  Incremental innovation: the creation of products, services, or technologies that modify existing ones.  Radical innovations: the creation of products, services, or technologies that replace existing ones.

B10-15 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Four Characteristics of Innovation  Innovation is an uncertain business  People closest to the innovation know the most about it, at least initially  Innovation may be controversial  Innovation can be complex because it may cross organizational boundaries

B10-16 Panel 10.5 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Three Steps for Fostering Innovation 1.Recognize problems & opportunities & devise solutions 2.Gain allies by communicating your vision 3.Overcome employee resistance & empower & reward them to achieve progress

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms Used in This Chapter  Benchmarking  Change agent  Incremental innovations  Intervention  Organizational development  Proactive change  Process innovation  Product innovation  Radical innovations  Reactive change  Technology