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Management, 9/eJohn R. Schermerhorn, Jr.
Chapter 12:
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Chapter 12: Innovation and Organizational Change
Planning Ahead — Chapter 12 Study Questions
�How do organizations accomplish
innovation?
�What is the nature of organizational
change?
Management 9/e - Chapter 12 2
change?
�How can planned organizational
change be managed?
�What is organization development?
Study Question 1: How do organizations accomplish
innovation?
� Strategic leadership creates the capacity for ongoing strategic change.
� Components of strategic leadership:
� Anticipate, envision, maintain flexibility.
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� Anticipate, envision, maintain flexibility.
� Think strategically.
� Work with others to initiate change.
� Build learning organizations as change leaders.
� Develop the ability to innovate successfully as a core competency .
Study Question 1: How do organizations accomplish
innovation?
� Sustainable competitive advantage
relies on creativity and innovation.
� Creativity is the generation of a novel
idea or unique approach to solving
Management 9/e - Chapter 12 4
idea or unique approach to solving
problems or crafting opportunities.
� Innovation is the process of creating
new ideas and putting them into
practice.
Study Question 1: How do organizations accomplish
innovation?
� Three forms of innovation:� Process.
� Results in better ways of doing things.
� Product.� Results in the creation of new or improved goods and services.
Management 9/e - Chapter 12 5
and services.
� Business model innovation� Results in new ways of making money.
� Innovations require invention and application. � Invention.
�Act of discovery.�Development of new ideas.
� Application. � Act of use.� Implementation of new ideas.
Study Question 1: How do organizations accomplish
innovation?
� Leadership responsibilities for the innovation process:� Imagining.
� Designing.
� Experimenting.
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� Experimenting.
� Assessing.
� Scaling.
� Commercializing innovation
� Process of turning new ideas into products or
processes that increase profits through sales or
cost reductions.
Study Question 1: How do organizations accomplish
innovation?
� Four steps of the product innovation
process:
� Idea creation.
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� Idea creation.
� Initial experimentation.
� Feasibility determination.
� Final application.
Figure 12.1 Process of commercializing innovation in
organizations: the case of new product development.
Management 9/e - Chapter 12 8
Study Question 1: How do organizations accomplish
innovation?
� In highly innovative organizations …
� Corporate strategy and culture should:
� Emphasize an entrepreneurial spirit.
� Expect innovation.
Management 9/e - Chapter 12 9
� Expect innovation.
� Accept failure.
� Be willing to take risks.
� Organization structure should:
� Be organic.
� Have lateral communications.
� Use cross-functional teams and task forces.
Study Question 1: How do organizations accomplish
innovation?
� In highly innovative organizations …� Top management should:
� Understand the innovation process. � Be tolerant of criticism and differences of opinion.
� Take all possible steps to keep goals clear.
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� Take all possible steps to keep goals clear.� Maintain the pressure to succeed.� Break down barriers to innovation.
� Staffing should fulfill five critical innovation roles:
� Idea generators.� Information gatekeepers.� Product champions.� Project managers.� Innovation leaders.
Study Question 2: What is the nature of organizational change?
� Change leader.
� A change agent who takes leadership responsibility for changing the existing pattern of behavior of another person
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pattern of behavior of another person or social system.
� Change leadership.
� Forward-looking.
� Proactive.
� Embraces new ideas.
Figure 12.2 Change leaders versus status quo
managers.
Management 9/e - Chapter 12 12
Study Question 2: What is the nature of
organizational change?
� Top-down change.
� Strategic and comprehensive change that is initiated with the goals of comprehensive impact on the
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comprehensive impact on the organization and its performance capabilities.
� Driven by the organization’s top leadership.
� Success depends on support of middle-level and lower-level workers.
Study Question 2: What is the nature of
organizational change?
� Bottom-up change.� The initiatives for change come from any and all parts of the organization, not just top management.
Crucial for organizational innovation.
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� Crucial for organizational innovation.
� Made possible by:� Employee empowerment.
� Employee involvement.
� Employee participation.
Study Question 2: What is the nature of
organizational change?
� Integrated change leadership.
� Successful and enduring change combines
advantages of top-down and bottom-up
approaches.
Management 9/e - Chapter 12 15
� Top-down:
� Breaks up traditional patterns.
� Implements difficult economic adjustments.
� Bottom-up:
� Builds capability for sustainable change.
� Builds capability for organizational learning.
Study Question 2: What is the nature of
organizational change?
� Transformational and incremental change.� Unplanned change.
� Response to unanticipated events.
� Good leaders act on opportunities for reactive change.
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change.
� Planned change
� Aligning the organization with anticipated future challenges.
� Activated by proactive leaders who are sensitive to performance gaps.
� Transformational change major and comprehensive redirection.
� Incremental change adjusting existing systems and practices.
Study Question 2: What is the nature of
organizational change?
� How to lead transformational change:� Establish a sense of urgency for change.
� Form a powerful coalition to lead the change.
� Create and communicate a change vision.
� Empower others to move change forward.
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� Empower others to move change forward.
� Celebrate short-term “wins” and recognize those who help.
� Build on success; align people and systems with new ways.
� Stay with it; keep the message consistent; champion the vision.
Study Question 2: What is the nature of
organizational change?
� External forces for change:� Globalization.
� Market competition.
� Local economic conditions.
� Government laws and regulations.
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� Government laws and regulations.
� Technological developments.
� Market trends.
� Social forces and values.
� Internal forces for change:� Arise when change in one part of the system creates the need for change in another part of the system.
� May be in response to one or more external forces.
Study Question 2: What is the nature of
organizational change?
�Organizational targets for
change:
Tasks
Management 9/e - Chapter 12 19
� Tasks
� People
� Culture
� Technology
� Structure
Study Question 3: How can planned organizational
change be managed?
� Phases of planned change� Unfreezing
� The phase in which a situation is prepared for change and felt needs for change are developed.
Changing
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� Changing� The phase in which something new takes place in the system, and change is actually implemented.
� Refreezing� The phase of stabilizing the change and creating the conditions for its long-term continuity.
Figure 12.3 Lewin’s three phases of planned
organizational change.
Management 9/e - Chapter 12 21
Study Question 3: How can planned organizational
change be managed?
� Force-coercion strategy of change.
� Uses power bases of legitimacy, rewards and
punishments to induce change.
� Relies on belief that people are motivated by self-
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� Relies on belief that people are motivated by self-
interest.
� Direct forcing and political maneuvering.
� Produces limited and temporary results.
� Most useful in the unfreezing phase.
Study Question 3: How can planned organizational
change be managed?
� Rational persuasion strategy of change.
� Bringing about change through persuasion
backed by special knowledge, empirical data,
and rational argument.
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� Relies on expert power.
� Relies on belief that reason guides people’s
decisions and actions.
� Useful in the unfreezing and refreezing phases.
� Produces longer-lasting and internalized
change.
Study Question 3: How can planned organizational
change be managed?
� Shared power strategy of change.� Engages people in a collaborative process of identifying values, assumptions, and goals from which support for change will naturally emerge.
Management 9/e - Chapter 12 24
emerge.
� Time consuming but likely to yield high commitment.
� Involves others in examining sociocultural factors related to the issue at hand.
� Relies on referent power and strong interpersonal skills in team situations.
� Relies on belief that people respond to sociocultural norms and expectations of others.
Figure 12.4 Alternative change strategies and their
leadership implications.
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Study Question 3: How can planned organizational
change be managed?
� Reasons for people resisting change:
� Fear of the unknown
� Disrupted habits
� Loss of confidence
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� Loss of control
� Poor timing
� Work overload
� Loss of face
� Lack of purpose
Study Question 3: How can planned organizational
change be managed?
�Methods for dealing with resistance to change:� Education and communication
� Participation and involvement
Management 9/e - Chapter 12 27
� Participation and involvement
� Facilitation and support
� Facilitation and agreement
�Manipulation and co-optation
� Explicit and implicit coercion
Study Question 4: What is organization
development?
�Organization development (OD) is a
comprehensive approach to planned
organizational change that involves
Management 9/e - Chapter 12 28
organizational change that involves
the application of behavioral science
in a systematic and long-range
effort to improve organizational
effectiveness.
Study Question 4: What is organization
development?
� Organization development goals:
� Outcome goals focus on task accomplishments.
� Process goals focus on the way people work
together.
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together.
� OD seeks to develop the organization members’
capacity for self-renewal.
� OD is committed to change through freedom of
choice, shared power, and self-reliance.
� OD takes advantage of knowledge about human
behavior in organizations.
Study Question 4: What is organization
development?
� The organization development
process:
� Establish a working relationship.
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� Establish a working relationship.
�Diagnosis.
� Intervention.
� Evaluation.
� Achieve a terminal relationship.
Figure 12.5 Organization development and the
planned change process.
Management 9/e - Chapter 12 31
Study Question 4: What is organization
development?
� Action research
� The process of systematically collecting
data on an organization, feeding it back
to the members for action planning,
Management 9/e - Chapter 12 32
to the members for action planning,
and evaluating results by collecting
more data and repeating the process as
necessary.
� Is initiated when someone senses a
performance gap.
Study Question 4: What is organization
development?
� Steps in the action research
process:
� Problem sensing.
Data gathering.
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� Data gathering.
� Data analysis and feedback.
� Action planning.
� Action implementation.
� Evaluation and follow-up.
Figure 12.6 Action research as a foundation of
organization development.
Management 9/e - Chapter 12 34
Study Question 4: What is organization
development?
� Individual OD interventions
� Sensitivity training (T-groups)
� Management training
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� Management training
� Role negotiation
� Job redesign
� Career planning
Study Question 4: What is organization
development?
� Team OD interventions
� Team building
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� Process consultation
� Inter-group team building
Study Question 4: What is organization
development?
�Organization-wide OD interventions
� Survey feedback
Management 9/e - Chapter 12 37
� Confrontation meeting
� Structural redesign
� Management by objectives (MBO)
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