Lesson #5

CH #11: Managing Innovation and Change & CH #10: Designing Organizational Structure

Driving Forces for Change & Innovation

• external conditions: technology, growth, competition, and customer demand

• internal capabilities: explorations of new opportunities and exploitation of existing brands and resources

Why do people resist change?

• fear of job loss or lack of ability to keep up

• status

• comfort zone

• more work

• association with past negative experience

• organizational insularity

Types of Innovation

• product vs process

• incremental

• disruptive and self-disruptive

• reverse

• architectural

Product vs Process Innovation

new products improvements vs new ways of producing or deliver them that are more efficient or user friendly

• ie Apple adding face recognition to their phone’s (new feature at the time) vs Apple deciding to streamline their production line

Incremental Innovation

modifications or upgrades to existing products to increase repurchasing and/or raise barriers for competitors

• ie iPhones releasing a new phone with slight upgrades every year to maintain market share such as improving the camera quality

Disruptive and Self-Disruptive Innovation

innovations in products or services that starts small and end up completely replacing an existing product or service technology for products and consumers

• ie the wheel which replace the use for horses or the lightbulb which replaced fire and lanterns

Reverse Innovation

creating innovative low-cost products for emerging markets and then quickly and inexpensively repackaging them for sale in developed countries a (could also be the reverse)

• ie budget version of phones

Architectural Innovation

redesigning or reconfiguring existing products/technology to create new markets

• ie turning a smartphone’s clock format into a smart watch

Strategies to Promote Innovation

• investments in an open culture that welcomes and incentivizes people sharing ideas, and which recognized that risk taking can create anxiety

• questioning the efficacy of current systems and processes

• training, developments, and other support for managers, teams to identify process improvements

• sponsorship in investments in cross-functional teams

• incentives, time, and resources, for open innovation

• identifying and changing incentives to resist change

Product Life Cycle (PLC)

the path of product growth, maturity, and decline over time

1. introduction - product innovation, R&D, risk taking

2. growth - process innovation, focus on efficiency and consistency

3. maturity - industry shakeout, incremental innovation

4. decline - few providers left, minimal investment, industry/product may be vulnerable to disruption

Lewin’s Three Stage Model for Implementing Change

1. unfreezing

2. changing

3. refreezing

Unfreezing

• diagnose problems or opportunities

• recognize need for change

• motivate people to change

Changing

• plan the change

• communicate the change

• train people in new skills and behaviors implement the change

Refreezing

• reward people for new values and behaviors

• celebrate success

• integrate changes into normal way of doing things

CH #10: Designing Organizational Structure

Tall Structure (centralized)

• has many hierarchical levels

• more effective where consistency is a priority and where decision making in staff is limited or well defined/programmed

• typically have small management spans

Flat Structure (decentralized)

• span of management is wide and has few levels

• more effective when autonomy is flexibility and innovation are more important

• typically have large management spans

Span of Management

the number of employees reporting to a supervisor

A single manager can oversee the work of a larger staff whenever:

When staff can work autonomously

• work is stable and routine

• subordinates perform similar work

• subordinates are in one location

• subordinates are highly trained

• rules and procedures are defined

• support systems and personnel are available

Line Authority

managers have formal authority to direct and control immediate subordinates-

• this department performs tasks that reflect the organization’s primary goal and mission, including operation

Staff Authority

narrow authority that includes the right to advise, recommend and counsel in the staff specialists’ area of expertise

• this department supports other departments (HR, finance, IT, security)