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Transcript of CH08 Innovation and Change
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Realized by: BELFELLAH Younes
1
Innovation and Change
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Forces Driving the Need for Major
Organizational Change
2
More Large-Scale Changes in OrganizationsStructure change Mergers, joint ventures, consortium
Strategic change Horizontal organizing, teams, networks
Culture change New technologies, products
Knowledge management, enterprise New business processes
resource planning E-business
Quality programs Learning organizations
More ThreatsMore domestic competition
Increased Speed
International competition
Global Changes, Competition and Markets Technological Change
International Economic Integration
Maturation of Markets in Developed Countries
Fall of Communist and Socialist Regimes
More OpportunitiesBigger markets
Fewer barriers
More international markets
Source: Based on John P. Kotter, The New Rules: How to Succeed in Today¶s Post-Corporate World
(New York: The Free Press, 1995).
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Degrees of Change
Evolutionary
± Incremental improvement
± Based on existing systems
± Examples: Process Improvement, TQM
Revolutionary
± Breakthrough, radical innovation
±Can be result of
Evolution or µpuncturedequilibrium¶ or natural selection
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Incremental vs. Radical Change
4
Continuous
progressionParadigm-breaking
burst
Through normal
structure and
management
processes
Transform entire
organization
Affect
organizational
part
Create new structure
and management
Technology
improvements
Breakthrough
technology
Product
improvement
New products,
new markets
Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R.
Brooks, ³Organizations in Disequilibrium: Environmental Jolts and
Industry Revolutions,´ in George Huber and William H. Glick, eds.,
Organizational Change and Redesign (New York: Oxford University
Press, 1992), 66-111; and Harry S. Dent, Jr., ³Growth through New
Product Development,´ Small Business Reports (November 1990): 30-40.
Incremental Change Radical Change
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Four Types of Change
Technology
± Changes in production process
Products and Ser vices
± Changes in outputs
Strategy and Structure
± Administrative changes
Culture ± Changes in values, attitudes, behaviors
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Sequence of Elements for
Successful Change
6
Environment
Suppliers
Professional
Associations
Consultants
Research
Customers
Competition
LegislationRegulation
Labor force
1. Ideas
2. Needs
3. Adoption 4.Implementation
5. Resources
Internal
Creativity and
Inventions
Perceived
Problems or
Opportunities
Organization
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Division of Labor Between Departments to
Achieve Changes in Technology
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General
Manager
Creative
Department
(Organic Structure)
Using
Department
(Mechanistic Structure)
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Probability of New Product
Success PROBABILITYPROBABILITY
yTechnical completionx
(technical objectives achieved) 57%yCommercialization
x (full-scale marketing) 31%
yMarket Successx (earns economic returns) 12%
8
Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee,
S. Wagner, and M. Hamburger, Research and Innovation in
Modern Corporations (New York: Norton, 1971), 57.
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Horizontal Coordination Model for New
Product Innovations
9
Environment
Technical
Developments
Environment
Customer
Needs
Organization
General
Manager
R&D
Department
Marketing
Department
Production
Department
Coord Coord Coord
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Dual-Core Approach to
Organization Change
10
Type of Innovation Desired
Administrative
Structure
Technology
Direction of Change: Top-Down Bottom-Up
Examples of Change: Strategy Production
Downsizing techniques
Structure Workflow
Best Organizational
Design for Change: Mechanistic Organic
Administrative
Core
Technical
Core
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Organization Development /
ChangeOrganization Development/ Change is definedas:
y the system-wide application of
y behavioral science knowledgey to the planned development and change
y of organizational strategies, structures, andprocesses
y with the aim of improving organizational, team, andindividual effectiveness.
( after: Cummings & Worley, 1997)
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Culture Change
Reengineering and Horizontal Organization
Diversity
The Learning Organization
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OD Culture Change Interventions
Large Group Inter vention
Team Building
Interdepartmental Activities
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Lewin¶s Change Model
Unfreezing
Mov
ingRefreezing
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Stages of Commitment to Change
Preparation
± Initial contact
± Awareness
Acceptance ± Understanding
± Decision to implement
Commitment
± Installation ± Institutionalization
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Change Processesy Unfreezing
y Create motivation/readiness for change
x Demonstrate need for change
x Communicate desired future
x Engender commitment
y Change/Move
x Cognitive restructuringx Identification with new vision of the organization
x Benchmark, invent, innovate
y Refreeze
x Link new behavior to self-concept, reward
x
Create social acceptance of new behav
ior
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Shewhart¶s PDSA
Plan
DoAct
Study/Check
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PROVENA
PProblem or need for process changeidentified
RRecognize excellence/best practice
OOrganize a team
VValidate knowledge
EEvaluate causes
NNegotiate improvements AAct
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Barriers to Change
Excessive focus on costs
Failure to perceive benefits
Lack of coordination and cooperation Uncertainty avoidance
Fear of loss
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Techniques for Change Implementation
Establish a sense of urgency for change.
Establish a coalition to guide the change.
Create a vision and strategy for change.
Find an idea that fits the need.
Develop plans to overcome resistance.
Create change teams.
Foster idea champions.
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Innovation Measures
MeasureMeasure A A
Your OrganizationYour Organization
BBOther OrganizationOther Organization
CCYour IdealYour Ideal
1. 1. Creativity encouragedCreativity encouraged
2.
2. Diverse problemDiverse problem--solvingsolving
3. 3. Time for creative ideasTime for creative ideas
4. 4. Rewards for innovationRewards for innovation
5. 5. Flexible, open to changeFlexible, open to change
6. 6. Follow orders from topFollow orders from top
7.7. Think and act like othersThink and act like others
8.8. Concern for status quoConcern for status quo
9. 9. Don¶t rock the boatDon¶t rock the boat
10. 10. New ideas not fundedNew ideas not funded
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Realized by: BELFELLAH Younes
22
Decision Making Processes
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Today¶s Business Environment
New strategies
Reengineering
Restructuring Mergers/Acquisitions
Downsizing
New product/market development . . . Etc.
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Decisions Made Inside the Organization
Complex, emotionally charged issues
More rapid decisions
Less certain environment Less clarity about means/outcomes
Requires more cooperation
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A New Decision-Making Process
Required because
± no one person has enough info to make all major decisions
± No one person has enough time and credibility toconvince many
Relies less on hard data
Guided by powerful coalition
Permits trial and error approach
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12 - 26
Organizational Decision making
Organizational decision making:³The process of responding to a problem by
searching for and selecting a solution or course of
action that will create value for organizational
stakeholders.´
There are basically two kinds of decisions that
managers are called upon to make:
Pro g rammed and Non-Programmed
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Steps in the Rational Approach to Decision-
Making
27
Monitor
Decision
Environment
Implement
Chosen
Alternative
DefineDecision
Problem
Specify
Decision
Objectives
DiagnoseProblem
Develop
AlternativeSolutions
Evaluate
Alternatives
ChooseBest
Alternative1
2
3
45
6
7
8
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The assumption that
decision makers have
all the information they need
The assumption that decision makers
are smart
The assumption that decision makers agree
about what needs to be done
Criticism of the rational model assumptions
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Management 8/e - Chapter 7 29
Programmed decisions
±Apply solutions that are readily a
vailable
from past experiences to solve structured
problems.
±Structured problems are ones that arefamiliar, straightforward, and clear with
respect to information needs.
±Best applied to routine problems that can beanticipated.
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Management 8/e - Chapter 7 30
Nonprogrammed decisions
±Develop novel solutions to meet thedemands of unique situation that present
unstructured problems.
±Unstructured problems are ones that are full
of ambiguities and information deficiencies.
±Commonly faced by higher-level
management.
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Constraints and Trade-offs
During Non-programmed Decision-Making
31
Trade-off
Trade-off
Trade-off
Personal Constraints:Desire for prestige, success;
personal decision style; and
the need to satisfy emotional
needs, cope with pressure,
maintain self-concept
Organizational Constraints:Need for agreement, shared
perspective, cooperation,
support, corporate culture and
structure, ethical values
Bounded Rationality:Limited time, information,
resources to deal with complex,
multidimensional issues
Decision/Choice:Search for
a high-quality
decision
alternativeTrade-off
Trade-off
Sources: Adapted from Ir ving L. Janis, Crucial Decisions
(New York: Free Press, 1989); and A. L. George, Presidential
Decision Making in Foreign Policy: The Effective Use of
Information and Advice (Boulder, Colo.: Westview Press, 1980).
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Choice Processes in the Carnegie
Model
32
Hold joint discussion
and interpret goals
and problems
Share opinions
Establish problem
priorities
Obtain social support
for problem, solution
Adopt the first
alternative
that is acceptable
to the coalition
Conduct a simple,
local search
Use established
procedures if appropriate
Create a solution
if needed
Managers have
diverse goals,
opinions, values,
experience
Information is
limited
Managers have
many constraints
Uncertainty Coalition Formation Search
Satisficing
Conflict
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Differences
Rational ModelInformation is available.Decision making is costless
Decision making is ³value free.´
All possible alternatives are generated.
Solution is chosen by unanimous agreement.
Solution chosen is best for the organization.
Carnegie ModelLimited information is available.
Decision making is costly.
Decision making is affected by the preferences and values of decision makers
A limited range of alternatives is generated.
Solutions are chosen by compromise, bargaining, and accommodation between
organizational coalitions.Solution chosen is satisfactory for the
organization.
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Incremental Decision Process Model
Incrementalist Model ² managers select
alternative courses of action that are only
slightly, or incrementally, different fromthose used in the past.
Often referred to as the
³science of muddling through.´
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The Incremental Decision Process Model
o Identification Phaseo Recognition
o Diagnosis
o Development Phaseo Search
o Screen
o Design
o Selection Phaseo Judgment (evaluation ± choice)
o Analysis (evaluation)
o Bargaining (evaluation ± choice)
o Authorization
o Dynamic Factors
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Contingency Framework for Using
Decision Models
36
Certain UncertainProblem
Consensus
Individual:
Rational Approach
Computation
Organization:
Management Science
Individual:
Bargaining, Coalition
Formation
Organization:
Carnegie Model
Individual:
Judgment
Trial-and-error
Organization:
Incremental Decision
Process Model
Individual:
Bargaining and Judgment
Inspiration and Imitation
Learning Organization:
Carnegie and Incremental
Decision Process Models,
Evolving to Garbage Can
Solution
Knowledge
Certain
Uncertain
4
21
3
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The Nature of Organizational Learning
Organizational learning:
The process of improving organization member¶scapacity to understand and manage the
organization and its environment so that
managers can make decisions that continuously
raise organizational effectiveness.
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The Nature of Organizational Learning
Learning organization :An organization that purposefully designs and
constructs its structure, culture, and strategy to
enhance and maximize the potential for organizational learning to take place
Managers need to encourage learning at
four levels: individual, group,
organizational, and inter-organizational
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New Issues
Not Only:How do we satisfy group member needs?ButHow does the team meet organization needs?
Not Only:
How can team members work together well?ButHow do we work with other parts of the organization?
Not Only:How do we understand group dynamicsButHow do we manage team-environment interactions
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Learning Organization Decision Process When Problem
Identification and Problem Solution Are Uncertain
40
When problem identification is
uncertain, Carnegie model applies
Political and social process is
needed
Build coalition, seek agreement,
and resolve conflict about goals
and problem priorities
When problem solution is uncertain,
Incremental process model applies
Incremental, trial-and-error
process is needed
Solve big problems in little steps
Recycle and try again when
blocked
PROBLEM IDENTIFICATION PROBLEM SOLUTION
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Decision Styles
Your Your
decisionsdecisions Approach used Approach used
Advantages and Advantages and
disadvantagesdisadvantages
Your Your
recommendedrecommended
decision styledecision style
1.1.
2.2.
Decisions byDecisions by
othersothers
1.1.
2.2.
41