Managing Change and Innovation

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 EnvironmentalForces 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 InternalForces 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 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 • 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 • Inventor • Develops and • understands • technical aspects of ideas • Does not know how • to win support for • the idea or make a • business of it 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 beyondthe 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 • 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

18. Traditional to Just-In-Time Inventory Systems

19. 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 Tactics for Overcoming Resistance to Change Approach When to Use

20. 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 Tactics for Overcoming Resistance to Change Approach When to use

21. Types of Organizational Change Structure Strategy Products Technology 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), 55-74.

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 Research Department Marketing Department New Technology

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. 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 ChangeProcess: IncrementalChange Rapidtransformation 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.

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