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Chapter 10
Innovation and Change
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What Would You Do? IBM must change Share of personal computer market
was once 70 percent is now 7 percent How do you quickly and effectively
create change? The strong corporate culture will
likely produce resistance to change What would you do?
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Learning Objectives:Organizational InnovationAfter reading the next two sections on organizational innovation, you should be able to:
1. explain why innovation matters to companies2. discuss the different methods that managers can use to effectively manage innovation in their organizations
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Why Innovation Matters
Technology cycles
Innovation streams
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Technology Cycles Technology cycle
starts with a new technology and ends when that technology reaches its limits and is replaced with better technology
S-curve pattern of innovation a pattern of innovation characterized
by slow initial progress, then rapid progress, then slow progress again as technology matures
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Technology CycleS-Curve Pattern of Innovation
Exhibit 10.1
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Innovation StreamsPatterns of innovation that can create sustainable competitive advantage
Technologicaldiscontinuity
Era offerment
Technologicalsubstitution
Designcompetition
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Design Competition
Dominantdesign
Incrementalchange
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Managing Innovation Managing innovation during
discontinuous change Managing innovation during
incremental change
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Managing Innovation During Discontinuous Change Experiential approach to innovation
in an uncertain environment uses intuition, flexible options and hands-on experience to increase learning
Design iteration a cycle of repetition that improves on a
design prototype Testing
systematic comparison of different designs
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Managing InnovationDuring Discontinuous Change
Milestones Formal project review
points used to assess progress and performance
Multifunctional teams Work teams composed of
people form different departments
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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 technological design and achieving backward compatibility with older technology
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Learning Objectives:Organizational Change
After reading these next two sections on organizational change, you should be able to:
3. discuss why change occurs and why it matters
4. Discuss the different methods that managers can use to better manage change as it occurs
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Change & Resistance ForcesChange forces
forces that produce differences in the form, quality, or condition of an organization over time
Resistance forces forces that support the existing state
of conditions in organizations
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How Change is Created
Exhibit 10.4
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Organizational Decline: The Risk of Not Changing Blinded stage Inaction stage Faulty action stage Crisis stage Dissolution stage
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Managing Change Managing resistance
to change Change tools and
techniques Managing
conversations to promote change
What not to do when leading change
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Managing Resistanceto Change Lewin’s framework Methods of managing resistance to
change
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Lewin’s Change Process Unfreezing
getting those affected by the change to believe change is needed
Change and intervention getting people to change their
behaviours Refreezing
supporting and reinforcing the new changes so they “stick”
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Methods of Managing Resistance to Change Education and communication Participation Negotiation Top management support Coercion
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Change Tools and Techniques Results-driven change General Electric Workout Transition management team
(TMT) Organizational development Change agent
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Results-Driven Change Create measurable short-term goals Use action steps likely to improve
performance Immediate improvements important Consultants and staffers help
managers Test action steps to see they lead to
improvement Few resources required to get started
Adapted from Exhibit 10.6
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General Electric Workout Boss discusses agenda, targets
specific problems, then leaves Outside facilitator works with
subgroups to discuss solutions “Town meeting” on day three
subgroups present solutions boss must decide on the spot
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Transition Management Team (TMT) Establish context for change Stimulate conversation Provide appropriate resources Coordinate and align projects Ensure congruence of messages and
activities Provide opportunities for joint creation Anticipate, identify, and address people
problems Prepare the critical mass
Adapted from Exhibit 10.7
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Organizational Development (OD) A philosophy and collection of
planned change interventions Focuses on organization’s long-
term survival Change agent
person formally in charge of guiding a change
can be an internal or external person
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General Steps for OD Interventions Entry Start-up Assessment and feedback Action planning Intervention Evaluation Adoption Separation
Adapted from Exhibit 10.8
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Different Kinds of Organizational Development Interventions Large System
Sociotechnical Systems Survey Feedback
Small Group Team Building Unit Goal Setting
Person-Focused Counselling/Coaching Training
Adapted from Exhibit 10.9
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What Really Works
Changing the work setting
Changing the People
Changing Individual Behaviour and Organizational Performance
Change the Work Setting or Change the People? Do Both!
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Managing Conversations to Promote ChangeOrganization dialogue
process by which people in an organization talk effectively with each other
initiative conversations conversations for understanding conversations for performance conversations for closure
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Errors Managers Make when Leading ChangeUnfreezing
not enough sense of urgency not a powerful enough guiding coalition
Change lacking a vision undercommunicating the vision not removing obstacles to the vision not planning for and creating short-term wins
Refreezing declaring victory too soon not anchoring changes in corporate culture
Adapted from Exhibit 10.10
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What Really Happened? Changed bonus system Cut workforce from 40,000 to 20,000 Focused on participation to reduce
resistance Used coercion selectively Improved job of bringing new
technologies to market
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