Mgmt 371
Chapter Thirteen
Managing Organization Change and
Innovation
Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
1
The Nature of
Organization Change
 Organization Change
 Any substantive modification to some part of the
organization (e.g., work schedules, machinery,
employees).
 Forces for Change
 External forces in the general and task environments
that force the organization to alter the way it competes.
 Internal forces inside the organization cause it to
change its structure and strategy.
 Some internal forces are responses to external
pressures.
2
Classifications of
Organization Change
 Planned Change
Is designed and
implemented in an orderly
and timely fashion in
anticipation of future
events.
 Reactive Change
 Is a piecemeal response
to events and
circumstances as they
develop.

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Managing Change in
Organizations
 Three Step Change Process
Model (Kurt Lewin)



Unfreezing
 Individuals must be shown why
the change is necessary.
Implementing change
 The change itself is
implemented
Refreezing
 Involves reinforcing and
supporting the change so that it
becomes a permanent part of
the system.
4
Steps in the Formal Change Process
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Understanding Resistance to
Change
 People resist change because of:

Uncertainty about the extent and effects of
change.

Threats to self-interests and power and
influence.

Different perceptions of change effects and
outcomes.

Feelings of loss in disrupted social
networks, power, security, and familiarity
with existing procedures.
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Overcoming Resistance to Change
 Techniques for overcoming resistance to
change:

Encouraging active participation in the
change process.

Providing education and communication
about the change process.

Facilitating the change process by making
only necessary changes, announcing
changes in advance, and allowing time to
adapt to change.
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Overcoming Resistance: Force-field
Analysis for Plant Closing at GMC
8
Areas of Organization Change
9
Reengineering in Organizations
 Reengineering

The radical redesign of all aspects of a business
to achieve major gains in cost, service, or time.


Focus is on identifying & eliminating
marginal activities.
Downsizing (a.k.a., Right-sizing) - Intentional
reduction of the workforce.


May result from closing facilities.
Avoid organizational anemia.
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Reengineering in Organizations
 Need for Reengineering
 Entropy occurs as the maintenance of status quo
puts an organization out of synch with its
environment, and it starts consuming its own
resources.
 Approaches to Reengineering
 Recognizing the need for change and acting on it
with a sense of urgency.
 Starting with a clean slate to open up the process.
 Using a blend of top-down and bottom-up
involvement.
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The Reengineering Process
12
Organization Development (OD)
 Organization Development
 A planned, organization-wide effort,
managed from the top, that is intended to
increase organizational effectiveness and
health through interventions in the
organization’s processes using behavioral
science knowledge.
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Organization Development (OD)
 OD Assumptions
Employees desire to grow and develop.
 Employees have a strong need to be
accepted.
 Individuals will influence the organization
and the organization will influence
individuals

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Organization Development
Techniques
 Diagnostic Activities  Technostructural
 Team Building
Activities
 Survey Feedback
 Process Consultation
 Education
 Life and Career
 Intergroup Activities
 Third-Party
Peacemaking
Planning
 Coaching and
Counseling
 Planning and Goal
Setting
15
The Innovation Process
16
Forms of Organizational
Innovation
 Radical Innovation
 Fundamentally changes the nature of competition
in an industry.
 A new product, service, or technology
developed by an organization that completely
replaces the existing product, service, or
technology in an industry.
 Incremental Innovation
 Does not significantly affect competition in an
industry.
 A new product, service, or technology that
modifies an existing one.
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Forms of Organizational Innovation
(Technical v. Managerial Innovations)
 Technical innovation

A change in the physical appearance or
performance of a product or service, or the
physical processes through which a product or
service is manufactured.
 Managerial innovation

A change in the management process by which
products and services are conceived, built, and
delivered to customers.
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Forms of Organizational Innovation
(Product v. Process Innovations)
 Product innovation
 A change in the physical characteristics or
performance of existing products or service
or the creation of brand-new products or
services.
 Process innovation
 A change in the way a product or service is
manufactured,
created, or distributed.
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Effects of Product and Process
Innovation on Economic Return
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Innovation
 Reasons for Failing to Innovate
Lack of resources
 Failure to recognize opportunities
 Resistance to change

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Innovation
 Promoting Innovations in
Organizations
Using the reward system
 Having a supportive organizational culture
 Encouraging intrapreneurship in larger
organizations




Inventors
Production champions
Sponsors
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