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Chapter 7 Innovation and Change

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  1. MGMT3 Chuck Williams Chapter 7Innovation and Change Designed & Prepared byB-books, Ltd.

  2. Organizational Innovation After reading these sections, you should be able to: explain why innovation matters to companies. discuss the different methods that managers can use to manage innovation in their organizations effectively

  3. Why Innovation Matters TechnologyCycles InnovationStreams 1

  4. 1900-1910 airplane, plastic, air conditioner 1911-1920 mammogram, zipper, sonar 1921-1930 talking movies, penicillin, jet engine 1931-1940 radar, helicopter, computer 1941-1950 atomic bomb, bikini, transistor 1951-1960 oral contraceptive, Tylenol Why Innovation Matters • 1961-1970 • video recorder, handheld calculator, computer mouse • 1971-1980 • compact disc, gene splicing, laser printer • 1981-1990 • MS-DOS, space shuttle, CD-ROM • 1991-2000 • taxol, Pentium processor, Java • 2001-Today • first cloning of human embryo 1

  5. Technology Cycles 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. 1.1

  6. Discontinuity C New Technology Performance B A Effort S-Curves and Technological Innovation 1.1

  7. Beyond the Book A Shift in the DVD Market As the market for movie distribution shifts from discs to digital content, Best Buy has announced that it will partner with Sonic Solutions to stream movies directly to consumers online. Customers would pay once for the DVD and would be able to play it on any device, from television and Blue-ray disc players to handheld media devices and smartphones. Best Buy has also made a deal with Netflix to deliver movies from Netflix on Best Buy’s Insignia Blue-ray disc players. Source: S. Lohr, “Best Buy Prepares for the Post-DVD Era”, The New York Times, 3 November 2009. (accessed 11/4/2009).

  8. Innovation Streams Innovation Streams Patterns of innovation over time that can create sustainable competitive advantage. Technological Discontinuity When a scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function. 1.2

  9. Innovation Streams: Technology Cycles over Time Technological Substitution Technological Discontinuity (2) Variation Selection Incremental Change (2) Discontinuous Change (2) Dominant Design (2) Technological Discontinuity (1) Variation Selection Incremental Change (1) Discontinuous Change (1) Dominant Design (2) 1.2

  10. TechnologicalSubstitution DesignCompetition Innovation Streams Technological Discontinuities Discontinuous Change Dominant Design 1.2

  11. ManagingSources of innovation Managing DuringDiscontinuous Change Managing DuringIncrementalChange Managing Innovation 2

  12. Creative work environments Workplace cultures in which workers perceive that new ideas are encouraged Flow The psychological state of effortlessness in which you become absorbed in your work and time seems to pass quickly Managing Sources of Innovation 2.1

  13. OrganizationalEncouragement SupervisoryEncouragement ChallengingWork CreativeWorkEnvironments Lack of Organiz.Impediments Work GroupEncouragement Freedom Flow Components of Creative Work Environments 2.1

  14. 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 2.2

  15. Design Iterations Testing Parts ofExperientialApproach Milestones Multifunctional Teams Powerful Leaders Experiential Approach to Innovation 2.2

  16. Managing Innovation During Incremental Change • Compression approach to innovation • assumes that innovation is a predictable process that can be planned in steps • Generational change • based on incremental improvements to a dominant design and achieving backward compatibility with older technology 2.3

  17. Planning Supplier Involvement Parts ofCompressionApproach Shortening Time ofIndividual Steps Overlapping Steps Multifunctional Teams Compression Approach to Innovation 2.3

  18. Experimental Approach Compression Approach Environment Goals Approach Steps Speed Lower costs Incremental improvements in performance of dominantdesign Speed Performance Improvements New dominant design Managing Innovation Uncertain discontinuouschange: technological substitution and design competition Certain incremental changeestablished technology(i.e., dominant design) Compress time/steps neededto bring about small improvements Build something new,different, and better Design iterations Testing Milestones Multifunctional teams Powerful leaders Planning Supplier involvement Shorten time of steps Overlapping steps Multifunctional teams 2

  19. Organizational Change After reading these sections, you should be able to: discuss why not changing can lead to organizational decline. discuss the different methods that managers can use to manage better change as it occurs

  20. Blinded Inaction Faulty Action Crisis Dissolution Five Stages of Organizational Decline 3

  21. Organizational Decline: GM As GM moved through the crisis stage, CEO Rick Wagoner was replaced by Fritz Henderson, pictured, who, unlike Wagoner, acknowledged that bankruptcy was possible. Henderson began an aggressive cost cutting plan to layoff nearly 30,000 factory workers and 10,000 white-collar employees and close 17 factories and parts centers. AP Images/Seth Wenig

  22. Managing Change Change Forces Change Resistance Forces 4

  23. Managing Change Managing resistanceto change What not to do whenleading change Different changetools andtechniques 4

  24. Managing Resistance to Change Unfreezing ChangeIntervention Refreezing • Share reasons • Empathize • Communicate • Benefits • Champion • Input • Timing • Security • Training • Pace • Top management support • Reinforce 4.1

  25. Education and Communication Participation Negotiation Managerial Support Coercion Managing Resistance to Change 4.1

  26. Unfreezing • 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 10. 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. Errors Made when Leading Change 4.2

  27. Results-Driven Change General Electric Workout Transition Management Teams Organizational Development Change Tools and Techniques 4.3

  28. Create measurable short-term goals to improve performance 2. Use action steps only if likely to improve performance • Stress the importance of immediate improvements 4. Consultants and staffers should help managers achievequick improvements in performance • Test action steps to see if they yield improvements • It takes few resources to get results-driven change started Results-Driven Change 4.3

  29. General Electric Workout Day • Boss discusses agenda and targets specific business problems, then leaves • Outside facilitator works with teams, who debate solutions • Town Meeting • teams make suggestions • boss must decide on the spot—agree, say no, or ask for more information 4.3

  30. Beyond the Book Transition Management Team • Ateam of employees whose full-time job is to manage and coordinate change • Anticipate and manage employee reactions to change • Work with the CEO to… • decide on change projects • select and evaluate people in charge • make sure change projects are complementary

  31. Organizational Development • A philosophy and collection of planned change interventions • Designed to improve an organization’s long-term health and performance • Change Agent • the person formally charged with guiding a change effort • can be an internal or external person 4.3

  32. Organizational Development General Steps for Organizational Development Interventions • Entry • Startup • Assessment and Feedback • Action Planning • Intervention • Evaluation • Adoption • Separation 4.3

  33. LARGE SYSTEM INTERVENTIONS Sociotechnical systems Survey feedback SMALL GROUP INTERVENTIONS Team building Unit goal setting PERSON-FOCUSED INTERVENTIONS Counseling/Coaching Training Kinds of OD Interventions 4.3

  34. Beyond the Book Biz Flix: Field of Dreams When someone suggests an idea to you that you don't completely understand, how open are you to considering it? Which character is the most resistant to the idea of changing the farm into a ball field? Which characters demonstrate the most creativity and vision? Take Two Video Click