Copyright ©2011 by Cengage Learning. All rights reserved 1 Chapter 7 Innovation and Change Designed & Prepared by B-books, Ltd. MGMT3 Chuck Williams.

1Copyright ©2011 by Cengage Learning. All rights reserved

Chapter 7Innovation and Change

Designed & Prepared byB-books, Ltd.

MGMT3

Chuck Williams


Organizational Innovation

After reading these sections, you should be able to:

1. explain why innovation matters to companies.

2. discuss the different methods that managers can use to manage innovation in their organizations effectively


Why Innovation Matters

TechnologyCycles

InnovationStreams

11


Why Innovation Matters1900-1910• airplane, plastic, air

conditioner1911-1920• mammogram, zipper, sonar1921-1930• talking movies, penicillin, jet

engine1931-1940• radar, helicopter, computer1941-1950• atomic bomb, bikini, transistor1951-1960• oral contraceptive, Tylenol

1961-1970• video recorder, handheld

calculator, computer mouse1971-1980• compact disc, gene splicing,

laser printer1981-1990• MS-DOS, space shuttle,

CD-ROM1991-2000• taxol, Pentium processor, Java2001-Today• first cloning of human embryo

11


Technology Cycles

Technology Cycle

A cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, better technology.

1.11.1


S-Curves and Technological Innovation

Effort

Per

form

ance

Discontinuity

NewTechnology

A

B

C

1.11.1


Beyond the Book

A Shift in the DVD Market

As the market for movie distribution shifts from discs to digital content, Best Buy has announced that it will partner with Sonic Solutions to stream movies directly to consumers online. Customers would pay once for the DVD and would be able to play it on any device, from television and Blue-ray disc players to handheld media devices and smartphones. Best Buy has also made a deal with Netflix to deliver movies from Netflix on Best Buy’s Insignia Blue-ray disc players.

Source: S. Lohr, “Best Buy Prepares for the Post-DVD Era”, The New York Times, 3 November 2009. http://bits.blogs.nytimes.com/2009/11/03/best-buy-prepares-for-the-post-dvd-era/ (accessed 11/4/2009).


Innovation Streams

Innovation Streams

Patterns of innovation over time that can create sustainable competitive advantage.

Technological Discontinuity

When a scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function.1.21.2


Innovation Streams: Technology Cycles over Time

VariationSelection

VariationSelection

TechnologicalSubstitution

1.21.2

Incremental Change (1)




Discontinuous Change (1)




Technological Discontinuity (1)




Dominant Design (2)

Dominant Design (2)

Dominant Design (2)

Dominant Design (2)


Innovation Streams

Discontinuous Change

Discontinuous Change

Dominant DesignDominant Design

Technological Discontinuities

Technological Discontinuities



DesignCompetition

DesignCompetition

1.21.2


Managing Innovation

ManagingSources ofinnovation

Managing DuringDiscontinuous

Change

Managing DuringIncremental

Change

22


Managing Sources of Innovation

Creative work environments

Workplace cultures in which workers perceive that new ideas are encouraged

Flow

The psychological state of effortlessness in which you become absorbed in your work and time seems to pass quickly

2.12.1


Components of Creative Work Environments

CreativeWork

Environments

CreativeWork

Environments

ChallengingWork

ChallengingWork

Work GroupEncouragement

Work GroupEncouragement

Lack of Organiz.Impediments

Lack of Organiz.Impediments

SupervisoryEncouragement

SupervisoryEncouragement

OrganizationalEncouragement

OrganizationalEncouragement

FreedomFreedomFlow

2.12.1


Managing Innovation During Discontinuous Change

Experiential approach to innovation

• innovation is occurring within an uncertain environment

• the key to innovation is to use:– intuition

– flexible options

– hands-on experience

2.22.2


Experiential Approach to Innovation

Parts ofParts ofExperientialExperientialApproachApproach

Parts ofParts ofExperientialExperientialApproachApproach

MilestonesMilestonesMilestonesMilestones

Design IterationsDesign IterationsDesign IterationsDesign Iterations

TestingTestingTestingTesting

Multifunctional TeamsMultifunctional TeamsMultifunctional TeamsMultifunctional Teams

Powerful LeadersPowerful LeadersPowerful LeadersPowerful Leaders2.22.2


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 design and achieving backward compatibility with older technology

2.32.3


Compression Approach to Innovation

Parts ofParts ofCompressionCompression

ApproachApproach

Parts ofParts ofCompressionCompression

ApproachApproachShortening Time ofShortening Time of

Individual StepsIndividual StepsShortening Time ofShortening Time of

Individual StepsIndividual Steps

PlanningPlanningPlanningPlanning

Supplier InvolvementSupplier InvolvementSupplier InvolvementSupplier Involvement

Overlapping StepsOverlapping StepsOverlapping StepsOverlapping Steps

Multifunctional TeamsMultifunctional TeamsMultifunctional TeamsMultifunctional Teams2.32.3


Experimental Approach

CompressionApproach

EnvironmentEnvironment

GoalsGoals

ApproachApproach

StepsSteps

Uncertain discontinuouschange: technological substitution and design competition

Certain incremental changeestablished technology(i.e., dominant design)

Compress time/steps neededto bring about small improvements

PlanningSupplier involvementShorten time of stepsOverlapping stepsMultifunctional teams

Build something new,different, and better

Design iterationsTestingMilestonesMultifunctional teamsPowerful leaders

Managing Innovation

SpeedLower costsIncremental improvements in performance of dominantdesign

SpeedPerformance ImprovementsNew dominant design

22


Organizational Change

After reading these sections, you should be able to:

3. discuss why not changing can lead to organizational decline.

4. discuss the different methods that managers can use to manage better change as it occurs


Five Stages of Organizational Decline

BlindedBlinded

InactionInaction

Faulty Action

Faulty Action

CrisisCrisis

DissolutionDissolution

33


Organizational Decline: GM

AP

Im

ages

/Set

h W

enig

As GM moved through the crisis stage, CEO Rick Wagoner was replaced by Fritz Henderson, pictured, who, unlike Wagoner, acknowledged that bankruptcy was possible. Henderson began an aggressive cost cutting plan to layoff nearly 30,000 factory workers and 10,000 white-collar employees and close 17 factories and parts centers.


Managing Change

Resistance ForcesResistance Forces

Change ForcesChange Forces

ChangeChangeChangeChange

44


Managing Change

Managingresistanceto change

Managingresistanceto change

What notto do when

leading change

What notto do when

leading change

Different changetools and

techniques

Different changetools and

techniques

44


Managing Resistance to Change

UnfreezingChange

InterventionRefreezing

• Share reasons• Empathize• Communicate

• Benefits• Champion• Input• Timing• Security• Training• Pace

• Top management support

• Reinforce

4.14.1


Managing Resistance to Change

Education and CommunicationEducation and Communication

ParticipationParticipation

NegotiationNegotiation

Managerial SupportManagerial Support

CoercionCoercion4.14.1


Errors Made when Leading Change

UnfreezingUnfreezing

1. Not establishing a great enough sense of urgency.1. Not establishing a great enough sense of urgency.

2. Not creating a powerful enough guiding coalition.2. Not creating a powerful enough guiding coalition.

Change Change

3. Lacking a vision.3. Lacking a vision.

4. Undercommunicating the vision by a factor of 10.4. Undercommunicating the vision by a factor of 10.

5. Not removing obstacles to the new vision.5. Not removing obstacles to the new vision.

6. Not systematically planning for and creating short-term wins.6. Not systematically planning for and creating short-term wins.

RefreezingRefreezing

7. Declaring victory too soon.7. Declaring victory too soon.

8. Not anchoring changes in the corporation’s culture.8. Not anchoring changes in the corporation’s culture.4.24.2


Change Tools and Techniques

Results-Driven ChangeResults-Driven Change

General Electric WorkoutGeneral Electric Workout

Transition Management TeamsTransition Management Teams

Organizational DevelopmentOrganizational Development

4.34.3


Results-Driven Change

1. Create measurable short-term goals to improve performance1. Create measurable short-term goals to improve performance

2. Use action steps only if likely to improve performance2. Use action steps only if likely to improve performance

3. Stress the importance of immediate improvements3. Stress the importance of immediate improvements

4. Consultants and staffers should help managers achievequick improvements in performance

4. Consultants and staffers should help managers achievequick improvements in performance

5. Test action steps to see if they yield improvements5. Test action steps to see if they yield improvements

6. It takes few resources to get results-driven change started6. It takes few resources to get results-driven change started4.34.3


General Electric Workout

1. Boss discusses agenda and targets specific business problems, then leaves

2. Outside facilitator works with teams, who debate solutions

3. Town Meeting

– teams make suggestions

– boss must decide on the spot—agree, say no, or ask for more information

Day

4.34.3


Transition Management Team • A team of employees whose full-time job is to

manage and coordinate change

• Anticipate and manage employee reactions to change

• Work with the CEO to…– decide on change projects– select and evaluate people in charge– make sure change projects are complementary

Beyond the Book


Organizational Development

• A philosophy and collection of planned change interventions

• Designed to improve an organization’s long-term health and performance

• Change Agent – the person formally charged with guiding a change

effort

– can be an internal or external person

4.34.3


Organizational Development

1. Entry

2. Startup

3. Assessment and Feedback

4. Action Planning

5. Intervention

6. Evaluation

7. Adoption

8. Separation

General Steps for Organizational Development Interventions

General Steps for Organizational Development Interventions

4.34.3


Kinds of OD Interventions

LARGE SYSTEM INTERVENTIONSLARGE SYSTEM INTERVENTIONS

Sociotechnical systemsSociotechnical systems

Survey feedbackSurvey feedback

SMALL GROUP INTERVENTIONS SMALL GROUP INTERVENTIONS

Team buildingTeam building

Unit goal settingUnit goal setting

PERSON-FOCUSED INTERVENTIONSPERSON-FOCUSED INTERVENTIONS

Counseling/CoachingCounseling/Coaching

TrainingTraining

4.34.3

Copyright ©2011 by Cengage Learning. All rights reserved 1 Chapter 7 Innovation and Change Designed & Prepared by B-books, Ltd. MGMT3 Chuck Williams.

Documents

cengage learning

organizational innovation

postdvdera slide

technological discontinuity

better technology

postdvd era

incremental change

discontinuous change