PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business and Economics. All rights reserved. Chapter 7 part 2 Managing Change

7–27–2Copyright © 2006 Thomson Business and Economics. All rights reserved. Change Forces for Change –Changes in the business environment creates the necessity for change in a firm’s strategy which requires altering the functions and structure of the firm (technology and people) to support the strategy. –A competitive firm creates an organizational structure that supports its strategy which, in turn, is constantly revised to respond to environmental change. Some Great Quotes: –“ Do not fear change, for it is an unchangeable law of progress” Anonymous –“Things do not change, we do” Thoreau –“God grant me the courage to change things, and the peace of mind to accept the things I cannot, and the wisdom to know the difference.” Anonymous –“The only constant is change”. Anonymous

7–37–3Copyright © 2006 Thomson Business and Economics. All rights reserved. Types of Organizational Change Exhibit 7–1

7–47–4Copyright © 2006 Thomson Business and Economics. All rights reserved. Forms of Change Incremental Change –Continual improvement that takes place within already accepted frameworks, value systems, or organizational structure that is necessary for survival and success. Radical Change –Rapid change in strategy, structure, technology, or people. –Radical change alters accepted frameworks, value systems, or organizational structure.

7–57–5Copyright © 2006 Thomson Business and Economics. All rights reserved. Change = Grieving Process 1.Anger  Listen 2.Bargaining  Stay the course 3.Anxiety  Feed them information as it comes 4.Sadness  Encourage Sharing & Sympathize 5.Disorientation  Extra support, Listen 6.Depression  Help people understand what control they do have. 7.Re-commitment Keys – Information and Communication (2 Way) Change Process Change Process

7–67–6Copyright © 2006 Thomson Business and Economics. All rights reserved. Resistance to Change and Ways to Overcome Resistance Exhibit 7–3

7–77–7Copyright © 2006 Thomson Business and Economics. All rights reserved. Innovation Innovative Organizational Structures –Flat organizations with limited bureaucracy –Generalist division of labor –Coordinate with cross functional teams –Informal with decentralized authority –Create separate systems for innovative groups –Attract and retain creative employees –Reward innovation and creativity Innovative Organizational Cultures –Encourage risk-taking –Foster intrapreneurship –Have open systems –Focus on ends rather than means –Accept ambiguous and impractical ideas –Tolerate conflict

7–87–8Copyright © 2006 Thomson Business and Economics. All rights reserved. 3M’s Rules for an Innovative Culture Set goals for innovation Commit to research and development Inspire intrapreneurship Facilitate, don’t obstruct Focus on the customer Tolerate failure “3M Leadership - Of all the pathways to growth, investing in our people is most important. The premise is very simple — if your people grow, your company will grow. The key: linking growth in individuals to those things that unlock energy and activities that our customers value.Leadership development remains at the top of the company's agenda.” (source: 3M.com) 3M – 25% of Revenue from R&D in last 5 Years. ($20B = $5B)