Chapter 10 Innovation and Change

2 What Would You Do? Product Innovation at Kimberly-Clark Procter & Gamble is determined to lead the market in diapers P&G responds aggressively to new innovations by Kimberly-Clark Other products, such as toilet paper are perceived to have little room for innovation

3 After discussing this section, you should be able to: Learning Objectives Organizational Innovation 1. explain why innovation matters to companies. 2. discuss the different methods that managers can use to effectively manage innovation in their organizations.

4 Why Innovation Matters Technology Cycles Innovation Streams

5 Blast From The Past Technological Innovation in the 20th Century airplane, plastic, air conditioner mammogram, zipper, sonar talking movies, penicillin, jet engine radar, helicopter, computer atomic bomb, bikini, transistor DNA, oral contraceptive, Tylenol video recorder, handheld calculator, computer mouse compact disc, gene splicing, laser printer MS-DOS, space shuttle, CD-ROM taxol, Pentium processor, Java 2001-Today mapping of human genome, first cloning of human embryo

6 Technology Cycle S-curve pattern of innovation Effort Performance Discontinuity New Technology A B C Adapted from Exhibit 10.1

7 Innovation Streams Era of Incremental Change (1) Era of Ferment (1) Variation Selection Technology Discontinuity (1) Dominant Design (1) Era of Incremental Change (2) Era of Ferment (2) Variation Selection Technology Discontinuity (2) Dominant Design (2) Era of Incremental Change (3) Era of Ferment (3) Variation Selection Technology Discontinuity (3) Dominant Design (3) Technology Substitution (2) Technology Substitution (3) Adapted from Exhibit 10.3

8 Managing Innovation Managing Sources of Innovation Managing Innovation During Discontinuous Change Managing Innovation During Incremental Change

9 Managing Sources of Innovation Creative work environments  workplace cultures in which workers perceive that new ideas are encouraged Flow  the psychological state of effortlessness

10 Components of Creative Work Environments OrganizationalEncouragement Freedom Creative Work Environments Work Group EncouragementOrganizationalImpediments SupervisoryEncouragementChallengingWork Adapted from Exhibit 10.4

11 Been There, Done That We need to have a positive attitudes towards mistakes Fear of failure hurts creativity Mistakes should be fixed, not concealed John Cleese on Innovations & Creativity

12 Managing Innovation During Discontinuous Change Discontinuous Change  technology discontinuity creates a significant breakthrough Use the experiential approach to innovation  innovation created by intuition, flexible options, and hands-on experience in an uncertain environment

13 Experiential Approach to Innovation Design Iteration Testing Milestones Multifunctional Teams Powerful Leaders

14 Managing Innovation during Incremental Change Compression approach to innovation  assumes that innovation is a predictable process that can be planned in steps Generational change  based on incremental improvements to a dominant technological design and achieving backward compatibility with older technology

15 Compression Approach to Innovation Planning Supplier Involvement Shortening the Time of Individual Steps Overlapping Steps Multifunctional Teams

16 Adapted from Exhibit 10.5 Comparing Experiential and Compression Approaches Experiential Approach Highly uncertain environment Goals: speed, significant improvements Approach: build something new and significantly better Design iterations Testing Milestones Multifunctional teams Powerful leaders Compression Approach Certain environment Goals: speed, lower costs, incremental improvements Approach: compress time and steps, small improvements Planning Supplier involvement Shortening time of steps Overlapping steps Multifunctional Teams Approach Assumptions Steps

17 After discussing this section, you should be able to: Learning Objectives Organizational Change 3. discuss why change occurs and why it matters. 4. discuss the different methods that managers can use to better manage change as it occurs.

18 Change & Resistance Forces NoChange SporadicChange DiscontinuousChange ContinuousChange Resistance Forces Strong Weak Change Forces StrongWeak Adapted from Exhibit 10.6

19 Organizational Decline Blinded Stage Inaction Stage Faulty Action Stage Crisis Stage Dissolution Stage

20 Managing Change Managing Resistance to Change Change Tools and Techniques Managing Conversations to Promote Change What Not to Do When Leading Change

21 Managing Resistance to Change Lewin’s Framework Methods of Managing Resistance to Change

22 Lewin’s Change Process UnfreezingChangeInterventionRefreezing Share reasons Empathize Communicate Benefits Champion Input Timing Security Training Pace Top management support Publicize success Employee Services

23 Methods of Managing Resistance to Change Education & Communication Participation Negotiation Top Management Support Coercion

24 Change Tools and Techniques Results-Driven Change General Electric Workout Transition Management Team Organizational Development Change Agent

25 Results-Driven Change Creates quick change by focusing on measurement and improvement of results  create measurable, short-term goals  use action steps likely to improve performance  importance of immediate improvements  consultants and staffers help managers  test actions steps to see if yield improvements  few resources required to get change started

26 General Electric Three Day Workout Boss sets agenda and identifies targets, then leaves Outside facilitator works with sub-groups, who debate solutions “Town Meeting” on day three  subgroups make suggestions  boss must decide on the spot

27 Transition Management Team (TMT) A team of employees whose full-time job is managing change Anticipate and manage employee reactions to change Top management determines change initiatives TMT accomplishes those initiatives

28 Organizational Development (OD) A philosophy and collection of planned change interventions Designed to ensure organizations long-term survival Change Agent  the person formally charged with guiding a change effort  can be internal or external person

29 General Steps for OD Interventions

30 Types of OD Interventions Large System  Sociotechnical Systems  Survey Feedback Small Group  Team Building  Unit Goal Setting Person-Focused  Counseling/Coaching  Training

31 What Really Works? Change the Work Setting or Change the People? Changing the Work Setting 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Changing the People 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success55% Probability of success57%

32 What Really Works? (Cont’d.) Changing Individual Behavior & Organizational Performance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 76% Change the Work Setting or Change the People? Do Both!

33 Managing Conversations to Initiate Change Potential Breakdown: Omitting Closure Potential Breakdown: Unclear Conditions of Satisfaction Initiate Conversation: Starting a Change Conversations for Understanding: Generating Understanding Potential Breakdown: Nothing Happens Conversations for Performance: Getting into Action Potential Breakdown: Agreement Isn’t Action Lack of Rigor Conversations for Closure: Completing the Change Adapted from Exhibit 10.13

34 What Not to Do When Leading Change Unfreezing Not establishing a great enough sense of urgency Not creating a powerful enough guiding coalition Change Lacking a vision Under- communicating the vision by a factor of ten Not removing obstacles to the new vision Not systematically planning for & creating short-term wins Refreezing Declaring victory too soon Not anchoring the changes in the corporation’s culture

35 What Really Happened? Product Innovation at Kimberly-Clark Kimberly-Clark creates a stream of its own innovative ideas year after year Developed Cottonelle Fresh Rollwipes, “premoistened” toilet paper  disperses or breaks apart in water  protected by 30 patents Significantly improves technology behind existing personal care products