Chapter 11 Managing Change and Innovation Turbulent Times The Changing Work Place Today’s organizations need to continuously adapt to new situations if they are to survive and prosper One of the most dramatic elements is the shift to a technology- driven workplace Ideas, information, and relationships are becoming critically important Manager’s Challenge: Cowley manufacturing plant Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Managing Change and Innovation Topics Chapter 11 How organizations respond to the environment through internal change and development ● Basic forces for Organizational Change ● How managers facilitate two change requirements ● Four major types of change ● How organizations can be designed to facilitate each Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Organizational Change The adoption of a new idea of behavior by an organization New trends require profound changes in the organization – – – E-business Supply chain integration Knowledge management Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Organizational Change Today’s successful organizations simultaneously embrace two types of planned change ● ● Incremental change = efforts to gradually improve basic operational and work processes in different parts of the company Transformational change = redesigning and renewing the entire organization Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Model of Change Sequence of Events Environmental Forces Monitor global competition, and other factors Internal Forces Consider plans, goals, company problems, and needs Need for change Initiate change Implement change Evaluate problems and opportunities, define needed changes in technology products, structure, and culture Facilitate search, creativity, idea champions, venture teams, skunk works and idea incubators Use force field analysis, tactics for overcoming resistance Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Forces for Change Environmental – – – – – Customers Competitors Technology Economic International arena Internal Forces Forces – activities and decisions Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Need for Change Based on external or internal forces Performance gap = disparity between existing and desired performance levels ● Current procedures are not up to standard ● New idea or technology could improve current performance Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Initiating Change Critical phase of change management Stage where the ideas that solve perceived needs are developed Search = process of learning about current developments inside or outside the organization that can be used to meet the perceived need for change Creativity = generation of novel ideas that might meet perceived needs or offer opportunities for the organization Experiential Exercise: Is Your Company Creative? Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Characteristics of Creative People 10 Conceptual fluency Open-minded Originality Less authority Independence Self-confidence Playfulness Undisciplined exploration Curiosity Persistence Commitment - Focused approach Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Open Innovation 15 Extending the search for and commercialization of new ideas beyond the boundaries of the organization The boundaries between an organization and its environment are becoming porous so that ideas flow back and forth among different companies that engage in partnerships, joint ventures, licensing agreements, and other alliances Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Resistance to Change Self-Interest: fear of personal loss is perhaps the biggest obstacle to organizational change Lack of Understanding and Trust: not understand the intended purpose of a change or distrust the intentions Uncertainty: lack of information about future events Different Assessments and Goals: people who will be affected by innovation may assess the situation differently 16 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Force-Field Analysis Kurt Lewin The process of determining which forces drive and which resist a proposed change 17 Driving Forces Restraining Forces (Barriers) •Thought of as problems or opportunities that provide motivation for change •Lack of resources •Resistance from middle managers Inadequate employee skills Copyright â 2005 by South-Western, a division of Thomson Learning All rights reserved Traditional to Just-In-Time Inventory Systems 18 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Tactics for Overcoming Resistance to Change Approach 19 Communication education Participation When to Use Change is technical; users need accurate information & analysis Users need to feel involved; design requires information from others; have power to resist Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Tactics for Overcoming Resistance to Change Approach 20 Negotiation Coercion Top management support When to use Group has power over implementation; will lose out in the change Crisis exists; initiators clearly have power; other techniques have failed Involves multiple departments or reallocation of resources; users doubt legitimacy of change Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Types of Organizational Change Structure Technology Strategy Products Culture/People SOURCE: Based on Harold J Leavitt, “Applied Organizational Change in Industry: Structural, Technical, and Human Approaches,” In New Perspectives in Organization Research, ed.W.W Cooper, H.J Leavitt, and Shelly II (New York: Wiley, 1964), 55-74 21 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Organizational Change 22 Technology: General rule = change is bottom up New product: · Horizontal linkage model emphasizes shared development of innovations among several departments · Time-based competition is based on the ability to deliver products and services faster than competitors Structure: Successful change = through a top-down approach Culture/people: · Training is the most frequently used tool for changing the organization’s mind-set Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Horizontal Linkage Model For New Product Innovation Organization Manufacturing Department New Technology 23 Research Department Marketing Department Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Customers Market Conditions Structural Changes Any change in the way in which the organization is designed and managed ● ● ● ● ● Hierarchy of authority Goals Structural characteristics Administrative procedures Management systems Ethical Dilemma: Research for Sale 24 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Culture-People Changes Changes in structure, technologies, and products or services not happen on their own Changes in any of these areas require changes in people 25 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Organization Development Problems OD Can Address Mergers/acquisitions Decline/revitalization Conflict management Application of behavioral science techniques to improve an organization’s health and effectiveness through its ability to cope with environmental changes, improve internal relationships, and increase learning and problem-solving capabilities 26 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved OD Activities Team building Survey feedback Large group intervention 27 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved OD Approaches to Culture Change Traditional Organizational Development Model Focus for action: Large-Group Intervention Model Specific problem or group Entire system Source: Organization Organization & environment Distribution: Limited Widely shared Time frame: Gradual Fast Learning: Individual, small group Whole organization Information Change Process: Incremental Change Rapid transformation SOURCE: Adapted from Barbara Benedict Bunker and Billie T Alban, “Conclusion: What Makes Large Group Interventions Effective,” The Journal of Applied Behavioral Science 28, no (December 1992), 579-591 28 Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved Three Stages for Achieving Behavioral and Attitudinal Change 29 Unfreezing Changing Refreezing Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved ... reserved Managing Change and Innovation Topics Chapter 11 How organizations respond to the environment through internal change and development ● Basic forces for Organizational Change ● How managers... competition, and other factors Internal Forces Consider plans, goals, company problems, and needs Need for change Initiate change Implement change Evaluate problems and opportunities, define needed changes... Resistance to Change Self-Interest: fear of personal loss is perhaps the biggest obstacle to organizational change Lack of Understanding and Trust: not understand the intended purpose of a change