Managing Organizational Change and Innovation Copyright © Houghton Mifflin Company. All rights reserved.13–1

Copyright © Houghton Mifflin Company. All rights reserved.13–2 The Nature of Organization Change Organization Change –Any substantive modification to some part of the organization –Areas of Change Organizational Structure and Design Technology and Operations People Forces for Change –External forces in the general and task environments that 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 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 Areas of Organization Change

Copyright © Houghton Mifflin Company. All rights reserved.13–4 The Nature of Organization Change Planned Change –Is designed and implemented in an orderly and timely fashion in anticipation of future events. Reactive Change –Is a piecemeal response to events and circumstances as they develop.

13–5 Steps in the Change Process

Copyright © Houghton Mifflin Company. All rights reserved.13–6 Understanding Resistance to Change People resist change because of: –Uncertainty about the extent and effects of change. –Threats to self-interests and power and influence. –Different perceptions of change effects and outcomes. –Feelings of loss in disrupted social networks, power, security, and familiarity with existing procedures.

Copyright © Houghton Mifflin Company. All rights reserved.13–7 Understanding Resistance to Change (cont’d) Techniques for overcoming resistance to change: –Encouraging active participation in the change process. –Providing education and communication about the change process. –Facilitating the change process by making only necessary changes, announcing changes in advance, and allowing time to adapt to change.

Copyright © Houghton Mifflin Company. All rights reserved.13–8 Force-field Analysis for Plant Closing at General Motors

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.13–9 Changing Business Processes Reengineering –The radical redesign of all aspects of a business to achieve major gains in cost, service, or time. 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– The Reengineering Process

Copyright © Houghton Mifflin Company. All rights reserved.13–11 Organization Development (OD) Organization Development –A planned, organization-wide effort, managed from the top, that is intended to increase organizational effectiveness and health through interventions in the organization’s processes using behavioral science knowledge. OD 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.

Copyright © Houghton Mifflin Company. All rights reserved.13–12 Organization Development Techniques Diagnostic Activities Team Building Survey Feedback Education Intergroup Activities Third-Party Peacemaking Technostructural Activities Process Consultation Life and Career Planning Coaching and Counseling Planning and Goal Setting

Copyright © Houghton Mifflin Company. All rights reserved.13–13 Forms of Organizational Innovation Radical 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 Innovation –Does not significantly affect competition in an industry. A new product, service, or technology that modifies an existing one.

Copyright © Houghton Mifflin Company. All rights reserved.13–14 Forms of Organizational Innovation (cont’d) Technical Versus Managerial Innovations –Technical innovation A change in the physical appearance or performance of a product or service, or the physical processes through which a product or service is manufactured. –Managerial innovation A change in the management process by which products and services are conceived, built, and delivered to customers.

Copyright © Houghton Mifflin Company. All rights reserved.13–15 Forms of Organizational Innovation (cont’d) Product 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.

Copyright © Houghton Mifflin Company. All rights reserved.13–16 Innovation Reasons for Failing to Innovate –Lack of resources –Failure to recognize opportunities –Resistance to change Promoting Innovations in Organizations –Using the reward system –Having a supportive organizational culture –Encouraging intrapreneurship in larger organizations Inventors Production champions Sponsors