Innovation and Change BA 152

Pressures for Innovation and Change Competition Global Markets ORGANIZATIONAL CHANGE Technology Faster Cycle Times New Work Structures Demographics

Possible Targets for Change Environment Strategy Technology Products/ Services FIT! Processes People Goals Culture Structures Systems

One Model of Change Step 1 Determine the need for change - Current Situation - Desired Situation - Is the gap big enough to make a difference?

One Model of Change: Step 2 Overcome obstacles to change - Organizational - Functional - Group - Individual

One Model of Change: Step 3 Determine the strategy for change - Revolutionary / Top Down - Evolutionary / Bottom Up

One Model of Change: Step 4 Solidify or Institutionalize the Change

Overcoming Obstacles to Change: Force Field Analysis STATUS QUO DRIVING FORCES RESISTING FORCES Competition New Technologies Changes in Strategy New opportunities FELT NEED FOR CHANGE Focus on costs Lack of benefits Lack of coordination Uncertainty avoidance Fear of loss

To Overcome Obstacles What can you do? Education Participation Less More Education Participation Facilitation Negotiation Manipulation Coercion Less More TIME COMMITMENT

Making the Change Factors How Can You Do It? Speed Employee Donald Trump Mr. Rogers Factors Speed Employee Involvement Resistance Power Execution Fast Slow Little/None Much Destroy/Ignore Win Over Have Don’t have Evolving/Adapting Careful Planning

Implementation Options Goal or purpose of the change Approach to the change Breadth of the change Pace of the change Amount of resources needed Type of change Order of implementation steps

Implementation Options

The 7S’s of Implementing Change STYLE Top-Down-- Bottom-Up SCOPE Isolated-- Org.Wide SUBSTANCE Soft--Hard FIT! STRATEGIC INTENT Precise--Broad SPEED Slow--Fast SCALE Small--Large SEQUENCE Hard-Soft-- Soft-Hard

To Insure It Works What should be done? Get top administration support Involve those most affected by the change, if . . . Minimize surprises, unless . . . Start small and build, unless . . . Make sure the pieces “fit” Publicize successes Reinforce the new Evaluate results, modify as needed Be prepared to change, again.

Remember . . . If change is the only constant in organizations, then . . . Organizations must be constantly ready to change.

Sustaining versus Disruptive Innovation What do successful companies do well? They become good at responding to evolutionary changes in their markets. They typically do this with sustaining technologies.

Sustaining versus Disruptive Innovation Sustaining Technologies Those technological changes that improve the performance of established products along dimensions of performance that mainstream customers in major markets have historically valued. Examples? Automobiles Disk drives Department stores

Technological change and the market Performance demanded at the high end of the market sustaining technologies Progress due to Performance demanded at the low end of the market Product Performance Time

The Innovator’s Dilemma Disruptive Technologies Those technological changes that initially underperform established products in mainstream markets. However, the resulting products are often cheaper, simpler, smaller, and, frequently more convenient to use than existing products. Examples? Disk drives Discount department stores Automobiles?

Technological change and the market Performance demanded at the high end of the market sustaining technologies Progress due to Performance demanded at the low end of the market Product Performance disruptive technologies Progress due to Disruptive technological innovation Time

The Innovator’s Dilemma What keeps organizations from recognizing and surviving disruptive innovations? Companies depend on current customers and current investors for resources. Small markets (those most likely served by disruptive technologies) don’t solve the growth needs of large companies. Markets that don’t exist (like those most likely served by disruptive technologies) can’t be analyzed. Technology supply may not equal market demand.

The Innovator’s Dilemma What can organizations do to prosper from potential disruptive Innovations: Align the disruptive technology with the right set of (probably new) customers. Match the size of the (new) organization with the size of the market. Recognize failure as a step toward success. Develop new markets that value the disruptive technology.

Shoe Corporation of Illinois Next Time Shoe Corporation of Illinois