Chapter 11 Managing Change and Innovation

Managing Change and Innovation
Chapter11

Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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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

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Managing Change
and Innovation
 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

Topics
Chapter 11

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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

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 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

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Model of Change
Sequence of Events
Environmental
Forces
Internal
Forces
Need for
change
Initiate
change
Implement
change
Monitor global
competition, and other
factors
Consider plans,
goals, company
problems, and
needs
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

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

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

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Initiating Change
 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
Critical phase of change management
Experiential Exercise: Is Your Company Creative?

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Characteristics of Creative People
 Conceptual fluency
 Open-minded
 Originality
 Less authority
 Independence Self-confidence
 Playfulness
 Undisciplined exploration
 Curiosity
 Persistence
 Commitment - Focused approach

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

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Four Roles in Organizational Change
Inventor
· Develops and
understands
technical aspects
of ideas
· Does not know
how
to win support for
the idea or make a
business of it
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.
Champion
· Believes in idea
· Visualizes benefits
· Confronts
organization
realities of cost,
benefits
· Obtains financial &
political support
· Overcomes
obstacles
Championing an idea successfully requires roles in organizations

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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

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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

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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

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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.

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

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Traditional to Just-In-Time
Inventory Systems

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Tactics for Overcoming
 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
Approach When to Use

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Tactics for Overcoming
 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
Approach When to use

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Types of Organizational Change
Culture/People
Strategy
Structure
Technology Products
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), 55-74.

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 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

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

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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

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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

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Organization Development
Decline/revitalizationMergers/acquisitions Conflict management
Problems OD Can Address
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

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OD Activities
Survey feedback
Team building
Large group
intervention

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OD Approaches to Culture Change
Traditional Organizational
Development Model
Large-Group
Intervention Model
Change Process: Incremental Change Rapid transformation
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
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), 579-591.

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Three Stages for Achieving
Behavioral and Attitudinal Change
 Unfreezing
 Changing
 Refreezing

Chapter 11 Managing Change and Innovation

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