1. Managing Change and Innovation
Chapter 11

2. Turbulent Times The Changing Work Place
Today’s organizations need to continuously adapt to new situations if they are to survive and prosper
One of the most dramatic elements is the shift to a technology- driven workplace
Ideas, information, and relationships are becoming critically important
Manager’s Challenge: Cowley manufacturing plant

3. Managing Change and Innovation
Topics
Chapter 11
How organizations respond to the environment through internal change and development
Basic forces for Organizational Change
How managers facilitate two change requirements
Four major types of change
How organizations can be designed to facilitate each

4. Organizational Change
The adoption of a new idea of behavior by an organization
New trends require profound changes in the organization
E-business
Supply chain integration
Knowledge management

5. Organizational Change
Today’s successful organizations simultaneously embrace two types of planned change
Incremental change = efforts to gradually improve basic operational and work processes in different parts of the company
Transformational change = redesigning and renewing the entire organization

6. Model of Change Sequence of Events
Environmental Forces
Monitor global competition, and other factors
Need for change
Initiate change
Implement change
Evaluate problems and opportunities, define needed changes in technology products, structure, and culture
Facilitate search, creativity, idea champions, venture teams, skunk works and idea incubators
Use force field analysis, tactics for overcoming resistance
Internal Forces
Consider plans, goals, company problems, and needs

7. Forces for Change Environmental Forces
Customers
Competitors
Technology
Economic
International arena
Internal Forces – activities and decisions

8. Need for Change
Based on external or internal forces
Performance gap = disparity between existing and desired performance levels.
Current procedures are not up to standard
New idea or technology could improve current performance

9. Initiating Change
Critical phase of change management
Stage where the ideas that solve perceived needs are developed
Search = process of learning about current developments inside or outside the organization that can be used to meet the perceived need for change
Creativity = generation of novel ideas that might meet perceived needs or offer opportunities for the organization
Experiential Exercise: Is Your Company Creative?

10. Characteristics of Creative People
Conceptual fluency
Open-minded
Originality
Less authority
Independence Self-confidence
Playfulness
Undisciplined exploration
Curiosity
Persistence
Commitment - Focused approach

11. Idea Champion A person who sees the need for and
Change does not occur by itself
A person who sees the need for and
Champions productive change within
the organization

12. Four Roles in Organizational Change
Championing an idea successfully requires roles in organizations
Inventor
Develops and
understands
technical aspects of ideas
Does not know how
to win support for
the idea or make a
business of it
Champion
Believes in idea
Visualizes benefits
Confronts
organization
realities of cost, benefits
Obtains financial &
political support
Overcomes obstacles
Sponsor
High-level manager
who removes
organizational
barriers
Approves and
protects idea within
organization
Critic
Provides reality test
Looks for short-
comings
Defines hard-nosed
criteria that idea
must pass
Sources: Based on Harold L. Angle and Andrew H. Van de Ven, “Suggestions for Managing the Innovation Journey,” in Research in the Management of Innovation: The Minnesota Studies, ed. A. H. Van de Ven, H. L. Angle, and Marshall Scott Poole (Cambridge, Mass.: Ballinger/Harper & Row, 1989); and Jay R. Galgraith, “Designing the Innovating Organization,” Organizational Dynamics (winter 1982) 5-25.

13. New Venture Teams
New Venture Team = Unit separate from the mainstream of the organization that is responsible for developing and initiating innovations
Skunkworks = separate small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business

14. New Venture Fund
Fund providing resources from which individuals and groups can draw to develop new ideas, products, or businesses
Idea Incubator = in-house program that provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics

15. Open Innovation
Extending the search for and commercialization of new ideas beyond the boundaries of the organization
The boundaries between an organization and its environment are becoming porous so that ideas flow back and forth among different companies that engage in partnerships, joint ventures, licensing agreements, and other alliances

16. Resistance to Change
Self-Interest: fear of personal loss is perhaps the biggest obstacle to organizational change
Lack of Understanding and Trust: do not understand the intended purpose of a change or distrust the intentions
Uncertainty: lack of information about future events
Different Assessments and Goals: people who will be affected by innovation may assess the situation differently.

17. Force-Field Analysis
Kurt Lewin
The process of determining which forces drive and which resist a proposed change
Driving Forces
Thought of as problems or opportunities that provide motivation for change
Restraining Forces (Barriers)
Lack of resources
Resistance from middle managers
Inadequate employee skills

18. Traditional to Just-In-Time Inventory Systems

19. Tactics for Overcoming Resistance to Change
Approach
When to Use
Communication
education
Participation
Change is technical; users need accurate information & analysis
Users need to feel involved; design requires information from others; have power to resist

20. Tactics for Overcoming Resistance to Change
Approach
When to use
Negotiation
Coercion
Top management support
Group has power over implementation; will lose out in the change
Crisis exists; initiators clearly have power; other techniques have failed
Involves multiple departments or reallocation of resources; users doubt legitimacy of change

21. Types of Organizational Change
Structure
Technology
Strategy
Products
Culture/People
SOURCE: Based on Harold J. Leavitt, “Applied Organizational Change in Industry: Structural, Technical, and Human Approaches,” In New Perspectives in Organization Research, ed.W.W. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley, 1964),

22. Organizational Change
Technology: General rule = change is bottom up
New product:
Horizontal linkage model emphasizes shared development of innovations among several departments
Time-based competition is based on the ability to deliver products and services faster than competitors
Structure: Successful change = through a top-down approach
Culture/people:
Training is the most frequently used tool for changing the organization’s mind-set

23. Horizontal Linkage Model
For New Product Innovation
Organization
Manufacturing Department
Customers Market Conditions
New Technology
Research Department
Marketing Department

24. Structural Changes
Any change in the way in which the organization is designed and managed
Hierarchy of authority
Goals
Structural characteristics
Administrative procedures
Management systems
Ethical Dilemma: Research for Sale

25. Culture-People Changes
Changes in structure, technologies, and products or services do not happen on their own
Changes in any of these areas require changes in people

26. Organization Development
Problems OD Can Address
Mergers/acquisitions
Decline/revitalization
Conflict management
Application of behavioral science techniques to improve an organization’s health and effectiveness through its ability to cope with environmental changes, improve internal relationships, and increase learning and problem-solving capabilities

27. Large group intervention
OD Activities
Team building
Survey feedback
Large group intervention

28. OD Approaches to Culture Change
Traditional Organizational Development Model
Large-Group Intervention Model
Focus for action:
Information
Source:
Distribution:
Time frame:
Learning:
Specific problem or group
Organization
Limited
Gradual
Individual, small group
Entire system
Organization & environment
Widely shared
Fast
Whole organization
Change Process:
Incremental Change
Rapid transformation
SOURCE: Adapted from Barbara Benedict Bunker and Billie T. Alban, “Conclusion: What Makes Large Group Interventions Effective,” The Journal of Applied Behavioral Science 28, no 4 (December 1992),

29. Three Stages for Achieving Behavioral and Attitudinal Change
Unfreezing
Changing
Refreezing