Chapter 10Innovation and Change

Purpose of the ChapterDiscuss how organizations change

How managers can direct the innovation and change process

Discuss the Role of Change

Discuss the different types of change

Discuss organizational structure and management techniques for influencing implementation and creation of change

What is change?

Role of Change

•Adapting to change is necessary for survival

•Importance of IT

•Recent trends -> Horizontal Structures

Incremental Vs. Radical Change

Strategic Types of Change•Product and Service

•Strategy and Structure

•Culture

•Technology

•The types of changes are interdependent

•Environmental Changes

Group Activity•The iPhone 6s

•Vertical to Horizontal Structure

•Creation of Ebay

•Creation of Sales Team

•Creation of a company soccer team

Group Activity•The iPhone 6s – Incremental Product Change

•Vertical to Horizontal Structure – Radical Structure

•Creation of Ebay – Radical Service

•Creation of Sales Team – Incremental Strategy/Structure

•Creation of a company soccer team – Incremental Culture

Elements for Successful Change

Technology Change

•The Great Contradiction

•Ambidextrous Approach

Techniques for Encouraging Technology Change

•Switching Structures

•Separate Creative Departments

•Venture teams

•Corporate Entrepreneurships

New Products and Services Change

Changing the current product or services is a special case

of innovation

uncertainty

Based in technology of an organization

Success Rates

80% of new products fail upon introduction and another 10% disappear within 5 years.

o Riskyo (1994) study of 19 chemical, drug, electronics, and

petroleum labs about success rates…success: new product had to pass 3 stages of

development: technical completion, commercialization and market success.

Product Success

Study called SAPPHO looked at 17 pairs of new product innovations with one success and one failure in each pair:

o Successful innovating companies paid more attention to market and customers, made use of external advice and resources, and there was good top management support

Horizontal Coordination Model·

Organizational design for successful product creation deals with internal communication and information sharing.

4 components: specialization, boundary spanning, and horizontal coordination

Specialization, Boundary Spanning

SpecializationThere are key departments in the creation of a new

product – the marketing, R&D, and the production departments

o departments need to have special skillsBoundary Spanning

This deals with the external environment and the use of resources (boundary – outside).

·

Horizontal Coordination

Information sharingo R&d share new technologieso Marketing people provide information on customers

needs, desires, and complaints o Production – both marketing and r and d work with

the production department o Cross functional teams

Horizontal Coordination Model

Why does this matter?

Better chance of product success

Better opportunity for different ideas

Achieving Competitive Advantage: the need for speed

Adaptability, able to anticipate change

Horizontal flow of information vs sequence

Time based competition

Fast Cycle TeamsUsed to complete projects under very quick deadlines. They

Used on highly important projects to deliver product or services faster than competitors

Multifunctional and multinationalMultinational – understanding produced trends globally,

meeting diverse needs of people around the world.

Strategy and structure change

Shift towards more horizontal structures (radical change)· Trends:

o Companies changing to virtual network strategies and structures

o Process of the change is different from new product or service change

Dual Core Approach

Compares administrative and technical changesAdministrative: the design and structure or the organizationo Occurs less frequently than technical changes

Identifies unique process of administrative changeEach core has its own center for innovations

Organizational design for implementing administrative changes

Administrative innovations - mechanistic

technical innovations- organic

Administrative Change or Technical Change

Dual Core Approach Con’t.

Types of organizations with two cores: (technical and administrative) hospitals, schools, welfare agencies etc. each core has own employees, tasks and environmental changes

important for non-profit organizations

Why does this matter?

Change identification

G.S.S alignment

Successful Implementation of change

Culture Change

a change in the values, attitudes, expectations, beliefs, abilities, and behaviour of employees

fundamentally shifts how work is done in an organization

can lead to a renewed commitment and empowerment of employees

can lead to a stronger bond between the company and its customers

Forces for Culture Change

Re-engineering and Horizontal Organizing

Diversity

The Learning Organization

Organization Development Interventions for Culture Change

Organization Development: a method of bringing about culture change which focuses on the human and social aspects of the organization as a way to improve the organization’s ability to adapt and solve problems

Emphasizes the values of human development, fairness, openness, freedom from coercion, and individual autonomy

Techniques:

Large Group Intervention

Team Building

Interdepartmental Activities

Strategies for Implementing Change

implementation is the most important part of the change process, but also the most difficult

change is frequently disruptive and uncomfortable for managers and employees

Leadership for Change

Barriers to Change

Techniques for Implementation

Leadership for Change

develop the personal qualities, skills, and methods needed to remain competitive

Change Leaders

Continually growing need for change and the need for leaders who can successfully manage change

Starts from the top management leadership style

Transformational Leadership

Clear and concise vision

Leadership for Change (cont’d)

Three stages of the change commitment process

Preparation

Acceptance

Commitment

Installation

Institutionalization

Barriers to Change

Excessive focus on costs

Failure to perceive benefits

Lack of coordination and cooperation

Uncertainty avoidance

Fear of loss

Techniques for 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

Create change teams

Foster idea champions

Develop plans to overcome resistance for change

Techniques for Implementation

Develop plans to overcome resistance to change:

Alignment with needs and goals of users

Communication and training

An environment that affords psychological safety

Participation and involvement

Forcing and coercion

Kurt Lewin’s Change Model (3 Phases)

Stage 1: Unfreezing

Stage 2: Changing

Stage 3: Refreezing

The Force-field Analysis Technique