10-Innovation and Change

©2004 by Nelson, a division of Thomson Canada Limited 1

Chapter 10

Innovation and Change

©2004 by Nelson, a division of Thomson Canada Limited 2

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