Chapter 8 Managing Change and Innovation

Forces for Change n External: n Customers n Competitors n Technology n Economic n International n Internal: n Production Inefficiencies n Management Goals n Employee Expectations/ Demands

Organizational Change: Two Metaphors n Calm Waters (Incremental) n White Water Rapids (Radical)

Creative People n Curiosity n Open-mindedness n Persistence n Relaxed and playful attitude

Characteristics of Creative Organizations n Open channels of communication n Assignment of nonspecialists to problems n Decentralized / Low Bureacracy n Freedom to choose problems n Resources allocated without immediate payoff (Long-time orientation) n Toleration of Failures

Idea Champions n Inventors n Other Champions of new ideas n Sponsors (High-level managers) (The same people may fill more than one of the above roles.) n Critics (sometimes are correct)

New-Venture Teams n Separate unit to develop and initiate innovations n Small, organic n Free from organizational bureaucracy n Most effective when placed high in the organizational structure

Resistance to Change n Self-interest n Lack of understanding and trust n Uncertainty n Different assessments and goals.

Resistance to Change: Self-interest Job Conditions n Less Interesting Job n More/Less Responsibility n More/Less Autonomy n Altered Social Contacts Job Outcomes n Lowered Performance n Less Pay n Less Power n Less Prestige/Status

Resistance to Change n Lack of understanding and trust Concerning the present situation n Uncertainty Fear of the future/unknown n Different Assessments and Goals Interdepartmental Conflicts Personality Conflicts Cultural Conflicts

Force Field Analysis EQUILIBRIUMEQUILIBRIUM DRIVING FORCESDRIVING FORCES RESTRAININGFORCESRESTRAININGFORCES

Types of Changes n Technology n Product n Structure n People/Culture (Usually, change in one impacts others and all impact Strategy)

Technology Change n Generally, technology change is “bottom-up” n Lower-level technical experts act as idea champions

Product Change n Product innovation often requires expertise from several departments simultaneously (e.g., Marketing, R&D, Manufacturing) n “Bottom-Up after Horizontal- Linkage” n Probability of New Product Success: Technical Completion.57 Commercialization.31 Market Success.12

Structural Change n Structural Design, Administrative Procedures, Management Systems n Usually “top-down”

Culture/People Change n Values n Norms n Attitudes n Beliefs n Behavior

Organizational Development Use of behavioral science knowledge to promote people/culture changes such as: n Skill Development n Attitude Change n Teamwork n A More Organic Organization

Changes through OD Can Help Managers Address-- n Mergers/Acquisitions n Organizational decline/revitalization n Conflict management.

OD Activities Individual n Sensitivity Training n Job Training n Career Planning Group n Role Playing n Team-building The following can include large portions and even the Entire Organization n Survey-feedback n Intergroup activities n Process- consultation

Lewin’s 3-Step Change Model Description: n Unfreezing Motivate Change (strengthen driving and/or weaken restraining forces) Motivate Change (strengthen driving and/or weaken restraining forces) n Change Use Effective Change Method Use Effective Change Method n Refreezing Solidify the Change Solidify the Change Techniques: n Unfreezing Communication/ Education Negotiation/Promise of Rewards n Change Participation/Training/ Coercion n Refreezing Reinforce with Resources/Rewards

Implementing Change n Identify True Need for Change n Find Idea That Fits Need n Get Top Management Support n Design Easy Implementation Stages - often incremental n Develop Plans to Overcome Resistance n Create Change Teams