Chapter 12: Managing Organization Change and Innovation

what is organization change?

• any substantive modification to some part of the organization

• can involve any dimension or element of an organization

• can have effects beyond actual area where change is implemented

• common for multiple to go on at same time

what are external forces?

• From organization’s general and task environments

• new rules of production, laws, courts, inflation, cost of living, $$$, what products are made, etc.

• highly affected by regulators and competitors (ex. laptops)

what are internal forces?

• forces inside the organization that cause change

• could reflect external forces

• organization must respond directly to the internal pressure generated

what is planned change?

• change that is designed and implemented in an orderly and timely fashion in anticipation of future events

• almost always preferred to reactive change

• best to anticipate forces urging change and plan ahead to deal with them

what is reactive change?

a piecemeal response to circumstances as they develop

what is the “Lewin Model”

• suggests every change requires three steps

1. unfreezing (people affected by change must be led to see why change is necessary)

2. change itself

3. refreezing (reinforcing and supporting the change so it becomes a part of the system)

what is the comprehensive approach to change?

• takes a systems view and delineates a series of specific steps that often lead to successful change

List the reasons for resistance to change

1. uncertainty (become anxious and nervous, ability to meet job demands, threaten job security, dislike ambiguity)

2. threatened self-interests (change could diminish power or influence of manager)

3. different perceptions (people not agreeing with situations)

4. feeling of loss (disrupt social networks from altering work arrangements)

List how to overcome resistance to change?

1. participation (employees are better able to understand reasons for change)

2. education and communication (reduce uncertainty)

3. facilitation (making only necessary changes, announcing changes in advance, allowing people time to adjust)

4. force-field analysis (listing forces and try to tip balance so forces facilitating change outweigh those hindering it)

why might the organization change?

1. basic components of organization structure or design

2. change overall design

3. any part of its human resource management system

list important forms of technological change

1. information technology

2. equipment (keep up with competitors)

what is enterprise resource planning (ERP)?

• a large-scale information system for integrating and synchronizing the many activities in the extended workplace

• bought from external vendors who tailor products to client’s needs

• manage companywide processes (cut across product lines, departments, and geographic locations)

• integrates all activities and information flows that relate to the firm’s critical processes

• keeps updated real-time information on their current status, reports past and future transactions, and provide electronic notices that action is required to meet schedules (bunch of other stuff)

how do you deploy the ERP system?

• identifying the key processes that need critical attention (supplier relationships, materials flows, or customer order fulfillment)

explain why people, perceptions and expectations, and employee attitudes and values are a focus of organization change?

1. change skill level of its workforce (change tech or upgrade quality of workforce)

2. increase workers’ performance level (incentive system or performance-based training)

3. informing and educating the workforce about the comparative value of its compensation package.

4. adopting a more collaborative relationship

what is business process change (reengineering)

• The radical redesign of all aspects of a business to achieve major gains in cost, service, or time

• more comprehensive than ERP

why do businesses go through business process change?

• organizations subject to entropy —> decline

• recognize onset of environmental shifts or entropy to correct

what is organization development (OD)

an effort that is planned, organization-wide, and managed from the top, intended to increase organizational effectiveness and health through planned interventions in the organization’s process, using behavioral science knowledge

what are the theory and practice of OD based on?

1. employees have desire to grow and develop

2. employees have a strong need to be accepted by others in organization

3. total organization and its design will influence the way individuals and groups within the organization behave

what are some OD techniques?

1. diagnostic activities

2. team building

3. survey feedback

4. education

5. intergroup activities

6. third-party peacemaking

7. technostructural activities

8. process consultation

9. life and career planning

10. coaching and counseling

11. planning and goal setting

what is innovation?

the managed effort of an organization to develop new products or services or new uses for existing products or services

what is innovation development?

• the evaluation, modification, and improvement of creative ideas

• transform low potential product/service to significant potential

what is innovation application?

• stage in which an organization takes a developed idea and uses it in the design, manufacturing, or delivery of new products, services, or processes

• innovation —> tangible goods/services

what is application launch?

• stage which organization introduces new products or services to the marketplace

what is application growth?

• after innovation is launched

• high economic performance for organization, demand > supply

• if fail to anticipate, could unintentionally limit growth or overestimate = sit in warehouse

what is innovation maturity?

• stage which most org have access to an innovation and are applying it in approximately the same way

• does not provide competitive advantage

what is innovation decline?

• org not keep competitive advantage from an innovation from maturity, encourage workers to search for new innovation

• stage which demand for an innovation decreases and substitute innovations are developed and applied

what are radical innovations?

• a new product, service, or technology that completely replaces an existing one

• firms shift nature of competition and interaction of firms within their environments

• Ex. CD —> spotify for music

what is incremental innovations?

• a new product, service, or technology that modifies an existing one

• alter but do not change competitive interaction in industry

• ex. each generation of iPhone

what are technical innovations?

a change in the appearance or performance of products or services or of the physical process through which a product or service passes

what are managerial innovations?

a change in the management process in an organization

what are product innovations?

• a change in the physical characteristics or performance of an existing product or service or the creation of a new product or service

• affect broader context of development

what are process innovations?

• a change in the way a product or service is manufactured, created, or distributed

• directly affect manufacturing

what are reasons organizations may fail to innovate?

1. lack of resources (dollars, time, and energy)

2. failure to recognize opportunities (evaluate innovations and select ones with most potential)

3. resistance to change (need to give up old and do new)

what are ways to promote innovation?

1. the reward system (encourage and discourage certain behaviors by employees; salaries, bonuses, and pre-reqs; reward creativity)

2. organization culture (support innovative activity, communicate innovation is valued and rewarded and some failure is fine)

3. Intrapreneurship in Larger Organizations

what is intrapreneurship?

similar to entrepreneurs except that they develop new businesses in the context of a large organization

what are the intrapreneurial roles?

1. inventor (person who conceives and develops new idea, product or service by means of the creative process)

2. product champion (middle manager who learns about the project and becomes committed to it)

3. sponsor (top-level manager who approves and supports a project)