Chapter 13: Designing Orgs for Innovation and Change

Lecture 13

Why is innovations necessary and important?

• Shorter product lifecycles make will require continuous reinvention

• Digital disruption can compress competitive windows (AI)

What are the 3 Dimensions of Innovation?

1. Degree of Change

2. Target

3. Alignment

What are the types of innovation covered in Degree of Change?

Incremental - small improvements to existing products, low risk

Radical - breakthrough change that creates new categories, high risk

What are the types of innovation covered in Target?

Product Innovation - new or improved products/services

Process Innovation - new or improved ways of working

What are the types of innovation covered in Alignment?

Technological Innovation - Changes to products, services, or production

Administrative Innovation - Changes made to structure, strategy, or management systems

What organiation design is best for Innovation?

• Innovation needs organic design

• efficiency need mechanistic, organizations usually use both and are ambidexterous

What defines an Ambidexterous Org and what are the 2 approaches?

Orgs that try to Exploit existing capabilities (efficiency) and Explore new possiblities (innovation)

The 2 approaches are:

• Structural Ambiexterity (Prefered by large corps, easier to apply at scale)

• Contextual Ambiexterity

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What is Structural Ambidexterity?

The Organization has separate units focusing on exploitation and exploration

What is Contextual Ambiexterity?

The Organization switches between exploration and exploitation

What are some specialized structures for Innovation?

Skunkworks

• Small autonomous teams that are free from bureaucracy

Innovation Labs

• Dedicated unit for explorations and prototyping (less secretive)

Corporate Venture Capital

• Investment Arm for funding external startups

Open Innovation

• Leveraging external ideas, talents and paths to market

What are some reasons why change might fail?

• Lack of Leadership Committment

• Insufficient Communication

• Unadressed Resistance

• Inadequate Resources

• No sense of Urgency

• Change Fatigue

What are some Individual resistances to change?

• Fear of the unknown

• Self-interest

• Lack of understanding

• DIfferent assessment

• Change fatigue

What are some Organizational resistances to change?

• Structural Inertia - embedded routines and processes

• Group Inertia - team norms and peer pressure maintains status quo

• Threatened Power - creates winners and loser, changes power

• Resource Constraint - change competes with other priorities

What are some strategies to overcome resistance?

• Communication and education

• Participation and involvement

• Facilitation and support

• Negotiation and agreement

• Manipulation and co-optation

• Explicit or Implicit Coercion

What are the 3 stages in Lewin’s 3 Stage Model

• Unfreeze

• Change

• Refreeze

What is the Unfreeze Stage?

This stage creates awareness and reduces resistance and builds motivation for the change

What is the Change Stage?

This is where you implement new processes, strucutures, and behaviours. Support is also provided where necessary

What is the Refreeze Stage?

This is where the new behaviours are reinforced and institutionalized, celebrating the change is also important

what is the Kotter 8 Step Process?

1. Create urgency

2. Build a guiding coalition

3. Form a strategic vision

4. Enlist a volunteer army

5. Enable action by removing barriers

6. Generate short term wins

7. Sustain acceleration

8. Institue change in culture

What is Digital Transformation?

Rethinking of how an organization uses its people, technology, and processes to radically improve their performance

Common pitfall: thinking that it is simply technological change when it is organizational change

How should things be changed?

• Structure - flatter heirarchies, cross-functional teams, remote/hybrid design

• Culture - data-driven mindset, experimentation, psychological safety

• People - digital literacy, continuous learning, new role definitons

• Processes - Redesigned workflows, automation integration, digital coordination

Technology enables transformation. Structure, culture, and people determine whether it succeeds.