Chapter 7 Innovation and Change IDEOEmbrace Cowboys vs Farmers

Learning Outcomes After reading this chapter, you should be able to: 1.Explain why innovation matters to companies. 2.Discuss the different methods that managers can use to effectively manage innovation in their organizations. 3.Discuss why not changing can lead to organizational decline. 4.Discuss the different methods that managers can use to better manage change as it occurs. 7-2Copyright © 2015 by Nelson Education Ltd.

Class Activity 7-3Copyright © 2015 by Nelson Education Ltd. Beyond the Book

What does this brainteaser have to do with innovation? Discuss Copyright © 2015 by Nelson Education Ltd. Class Activity: Connect the Dots Beyond the Book Cowboys vs Farmers

Why Innovation Matters 5 Organizational Change: a difference in the form, quality, or condition of an organization over time Technology Cycles Innovation Streams Copyright © 2015 by Nelson Education Ltd.

Technological Innovation and S-Curves Technology cycle: a cycle that begins with the “birth” of a new technology and ends when that technology reaches its limits and is replaced by a newer, better technology Copyright © 2015 by Nelson Education Ltd.

Technological Innovation and S-Curves Copyright © 2015 by Nelson Education Ltd.

Class Activity: Technology Innovation Awards Watch the video: New Technology Awards.New Technology Awards Discuss the importance of technology innovation in the business world Copyright © 2015 by Nelson Education Ltd. Beyond the Book Embrace

Innovation Streams Patterns of innovation over time that can create sustainable competitive advantage Copyright © 2015 by Nelson Education Ltd.

Technological Discontinuity A scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function Copyright © 2015 by Nelson Education Ltd.

Innovation Streams: Technology Cycles Over Time Copyright © 2015 by Nelson Education Ltd.

Managing Innovation Managing Sources of Innovation 2.Managing during Discontinuous Change 3.Managing during Incremental Change 7-12 Copyright © 2015 by Nelson Education Ltd. IDEO

Managing Innovation: Components of Creative Work Environments Copyright © 2015 by Nelson Education Ltd.

Managing Innovation during Discontinuous Change Experiential approach to innovation Innovation is occurring within an uncertain environment. The key to innovation is to use: –intuition –flexible options –hands-on experience Copyright © 2015 by Nelson Education Ltd.

Experiential Approach to Innovation 15 Design Iteration Prototype Testing Milestones Multifunctional Teams Copyright © 2015 by Nelson Education Ltd.

Managing Innovation during Incremental Change Compression Approach: Assumes that innovation is a predictable process that can be planned in steps Examples: Xbox 360, Nintendo Wii Generational Change: Based on incremental improvements to a dominant technological design and achieving backward compatibility with older technology Example: Harry Potter films Copyright © 2015 by Nelson Education Ltd.

Compression Approach to Innovation Planning Supplier Involvement Shortening Time of Individual Steps Overlapping Steps Multifunctional Teams Copyright © 2015 by Nelson Education Ltd.

Five Stages of Organizational Decline Copyright © 2015 by Nelson Education Ltd.

Managing Change Change Forces Resistance Forces Copyright © 2015 by Nelson Education Ltd.

7-20Copyright © 2015 by Nelson Education Ltd.

Managing Resistance to Change UNFREEZE Believe that change is needed. Share reasons, communicate, and empathize. CHANGE INTERVENTION Change behaviour/work practices. Explain why; champion change; create opportunities for feedback; timing; security; educate; don’t rush. FREEZE Support and reinforce. Make it “stick.” 7-21 Copyright © 2015 by Nelson Education Ltd.

What to Do When Employees Resist Change Unfreezing Share reasons. Empathize. Communicate. Change Explain. Champion. Create opportunities for feedback. Time it right. Offer security. Educate. Don’t rush. 4.1 Source: G.J. Iskat and J. Liebowitz, “What to Do When Employees Resist Change,” Supervision, 1 August Copyright © 2015 by Nelson Education Ltd.

Managing Resistance to Change Educate/communicate Participate Negotiate Managerial support Coercion 7-23 Copyright © 2015 by Nelson Education Ltd.

Errors Managers Make When Leading Change Unfreezing 1.Not establishing a great enough sense of urgency 2.Not creating a powerful enough guiding coalition Change 3.Lacking a vision 4.Undercommunicating the vision by a factor of ten Copyright © 2015 by Nelson Education Ltd. Source: J. P. Kotter, “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review 73, no. 2 (March-April 1995):59.

Errors Managers Make When Leading Change 5.Not removing obstacles to the new vision 6.Not systematically planning for and creating short-term wins Refreezing 7.Declaring victory too soon 8.Not anchoring changes in the corporation’s culture Copyright © 2015 by Nelson Education Ltd. Source: J. P. Kotter, “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review 73, no. 2 (March-April 1995):59.

Change Tools and Techniques Results-Driven Change: Change created quickly by focusing on the measurement and improvement of results General Electric Workout: A three-day meeting in which managers and employees from different levels and parts of an organization quickly generate and act on solutions to specific business problems Copyright © 2015 by Nelson Education Ltd.

Change Tools and Techniques Organizational Development: A philosophy and collection of planned change interventions designed to improve an organization’s long-term health and performance Copyright © 2015 by Nelson Education Ltd.

28 How to Create a Results-Driven Change Program 1. Set measurable, short-term goals to improve performance. 2. Make sure your action steps are likely to improve measured performance. 3. Stress the importance of immediate improvements. 4. Solicit help from consultants and staffers to achieve quick improvements in performance. 5. Test action steps to see if they actually yield improvements. If they don’t, discard them and establish new ones. 6. Use resources you have or that can be easily acquired. It doesn’t take much Copyright © 2015 by Nelson Education Ltd. Source: R. H. Schaffer and H. A. Thomson, “Successful Change Programs Begin With Results,” Harvard Business Review on Change (Boston: Harvard Business School Press, 1998), 189–213.

General Steps for Organizational Development Interventions Copyright © 2015 by Nelson Education Ltd.

Different Kinds of Organizational Development Interventions Copyright © 2015 by Nelson Education Ltd.