Management a practical introduction 3rd kinicky chapter 10

Chapter 10: Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager The nature of change in organizations Organizational development Promoting innovation M

Chapter 10: Organizational

Change & Innovation

Lifelong Challenges for the Exceptional Manager

The nature of change in organizations

Organizational development

Promoting innovation

Managing employee fear & resistance

10.1 The Nature Of Change

Marketing niches are now more important

2 Speed is becoming a key competitive weapon

10.1 The Nature Of Change

4 Workers in nations like China and India are willing

to work twice as hard for half the pay as American workers

Companies that outsource to these countries free

up domestic employees to work in other areas

5 Knowledge is becoming the new competitive

10.1 The Nature Of Change

In Organizations

Managers have to deal with two types of change:

1 Reactive change involves making changes in

response to problems or opportunities as they arise

Managers have less time to get the information

necessary to make decisions when they deal with reactive change

2 Proactive change or planned change involves

making carefully thought-out changes in anticipation

of possible or expected problems or opportunities

10.1 The Nature Of Change

In Organizations

HOW DO MANAGERS KNOW THEIR

ORGANIZATIONS NEED TO CHANGE?

 Managers can monitor forces inside and outside the firm to identify areas of change

 There are four types of external forces :

1 demographics - the U.S workforce is now more diverse

2 market changes - companies are having to change the way they do business and build new relationships with employees, suppliers, and competitors; global economy

10.1 The Nature Of Change

In Organizations

3 technological advancements - managers must deal with the realities of information technology

4 social & political pressures - social events create new

pressures for managers

 There are two types of internal forces :

1 employee problems - job dissatisfaction can be a signal for change

2 managers’ behavior - excessive conflict between managers and employees can signal the need for change

10.1 The Nature Of Change

In Organizations

Figure 10.1: Forces For Change Outside And Inside The Organization

Chapter 10: Organizational

Change & Innovation

CLASSROOM PERFORMANCE SYSTEM

Which of the following is not an example of outside forces?

A) mergers & acquisitions

B) office automation

C) structural organization

D) values

10.1 The Nature Of Change

In Organizations

 Change is most likely to be needed in four areas:

1 changing people - perceptions, attitudes, performance, and skills are all areas where change may be needed

2 changing technology - technology (any machine or process

that enables an organization to gain a competitive advantage

in changing materials used to produce a finished product) is a major area of change for many organizations

3 changing structure - there is a trend toward flattening the traditional hierarchical structure in firms by eliminating layers

of middle managers and creating teams that are linked

electronically

4 changing strategy - marketplace changes can cause

10.2 Organizational Development:

What It Is, What It Can Do

WHAT IS ORGANIZATIONAL DEVELOPMENT?

The set of techniques for implementing planned change to make people and organizations more

effective is organizational development (OD)

• Focuses on people in the process

A consultant with a background in behavioral

sciences who can be a catalyst in helping

organizations deal with old problems in new ways is called a change agent

OD is put in place by a change agent

10.2 Organizational Development:

What It Is, What It Can Do

 OD can be used in three ways:

1 Managing conflict - OD experts can help executives

improve their relationships with other managers to reduce organizational conflict

2 Revitalizing organizations - OD can help companies

communicate, embrace innovation, and deal with stress

3 Adapting to mergers - OD can help firms integrate two

disparate organizations with different cultures, products, and procedures

10.2 Organizational Development:

What It Is, What It Can Do

HOW DOES OD WORK?

10.2 Organizational Development:

What It Is, What It Can Do

OD is most successful in the following cases:

1 Multiple interventions - combined interventions

work better than single interventions

2 Management support - when there is the

commitment of top executives and the proposed

changes are realistic

3 Goals geared to both short- & long-term results - change should only be implemented if it will produce positive results toward the organization’s goals

4 OD is affected by culture - what works in one

10.3 Promoting Innovation Within The Organization

HOW CAN MANAGERS PROMOTE INNOVATION?

 Innovation is important to keeping an organization vital and maintaining a competitive advantage

 Only four percent of U.S executives surveyed felt their

organizations were doing a good job in promoting innovation

10.3 Promoting Innovation Within The Organization

Innovation can occur by design or by accident, and

it can come from a profit or non-profit organization

Both a country’s culture and an organization’s

culture are important to innovation

Both types of culture must be conducive to the

development of new ideas

The U.S has the type of culture that is essential to innovation

10.3 Promoting Innovation Within The Organization

There are two types of innovation:

or the performance of a product or a service, or the creation of a new one

product or service is conceived, manufactured, or

10.3 Promoting Innovation Within The Organization

 Innovation has four characteristics:

1 Innovation is uncertain - progress is difficult to predict, and success is always a question mark

2 People closest to the innovation know the most about it - managers who are removed from the innovation process have difficulty understanding it

3 Innovation may be controversial - since innovation requires company resources, it may become controversial since it is not clear that it will be a success

4 Innovation can be complex - because innovation may

involve multiple departments, managers need strong

communication skills to manage its complexity

10.3 Promoting Innovation Within The Organization

HOW CAN ORGANIZATIONS ENCOURAGE

INNOVATION?

 Organizations can encourage innovation by providing:

1 the right organizational culture – celebrate failure

2 the appropriate resources – considerable resources should

be devoted to the innovation process

3 the correct reward system - experimentation (and failure) are part of the innovation process

10.3 Promoting Innovation Within The Organization

HOW CAN MANAGERS FOSTER INNOVATION?

The three steps to making innovation happen are:

1 recognizing problems that need solving and

opportunities that are presented

2 communicating your vision to get support for

innovation

3 removing obstacles that might prevent employees from executing a vision

10.3 Promoting Innovation Within The Organization

Figure 10.3: Three Steps For Fostering Innovation

10.4 The Threat Of Change: Managing

Employee Fear & Resistance

HOW SHOULD ORGANIZATIONAL CHANGE BE MANAGED?

 The degree to which employees feel threatened by change depends on whether it is adaptive , innovative , or radically

10.4 The Threat Of Change: Managing

Employee Fear & Resistance

The introduction of a practice that is new to the

organization is called innovative change

This type of change tends to create some anxiety

in people

Introducing a practice that is new to the industry is

radically innovative change

This type of change is costly, complex, and

uncertain, and so triggers considerable anxiety in

employees

10.4 The Threat Of Change: Managing

Employee Fear & Resistance

 The top ten reasons for resisting change are:

 -people’s predispositions toward change

 -surprise and fear of the unknown

10.4 The Threat Of Change: Managing

Employee Fear & Resistance

Kurt Lewin developed a three stage model to

explain how to initiate, manage, and stabilize planned change

Stage 1: unfreezing- managers encourage

employees to become more open to innovation –

creating the motivation to change

Stage 2: changing - learning new ways of doing

things - managers convey that change is a learning process that continues, it is not a one-time event

Stage 3: refreezing - managers encourage

employees to make the new ways part of their normal way of doing things

Lewin’s Change Model: Initiate,

Manage, and Stabilize Planned Change

 Unfreezing

Managers try to instill in employees the motivation to change (let go).

Need to be dissatisfied with old ways – “Benchmarking”

10.4 The Threat Of Change: Managing

Employee Fear & Resistance

 John Kotter claims that organizational change

should follow eights steps:

1 -establishing a sense of urgency

2 -creating the guiding coalition

3 -developing a vision and strategy

4 -communicating the change vision

5 -empowering broad-based action

6 -generating short-term wins

7 -consolidating gains and producing more change

8 -anchoring new approaches in the organization’s

culture