Chapter
Innovation and Change
11
Organization Theory and Design
Twelfth Edition
Richard L. Daft
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The Strategic Role of Change
• Organizations must run fast to keep up with
changes taking place all around them
• Today’s organizations must keep themselves
open to continuous innovation to survive
• Three types of change:
– Episodic change
– Continuous change
– Disruptive change
• Change has become the norm today
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Stages of Disruptive Innovation
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Strategic Types of Innovation and
Change
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©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Elements for Successful Change
• Organizational change is the adoption of a new
idea or behavior by an organization
• Organizational innovation is the adoption of an
idea or behavior that is new to the organization’s
industry, market, or general environment
• Change process within organizations comes from
innovation and new ideas regardless of timing
• Successful change includes ideas and creativity,
need, decision to adopt, implementation, and
resources
©2017+ Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Successful Change Elements
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Technology Change
• Technology is a key driver of organizational
change
• Change is easily embraced by organizations
with empowered employees
• Innovative organizations are flexible and freeflowing without rigid work rules
• Mechanistic structures stifle innovation and
focus on rules and regulations
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Ambidextrous Organization
Incorporates structures and management
processes that are appropriate for innovation
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Techniques for Encouraging
Technology Change
• Switching Structures – create an organic
structure
• Creative Departments – department for
innovation
• Venture Teams – a small company within the
organization
• Corporate Entrepreneurship – promote
entrepreneurial spirit
• Bottom-up Approach – useful ideas come
from people and daily work
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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New Products and Services
• The failure rate for new food products is 70-80%
• Producing products that fail is part of business
• Reasons for success:
– Innovating companies understand customers
– Innovating companies successfully use
technology
– Top management supports innovation
• Horizontal Coordination Model:
– Specialization
– Boundary Spanning
– Horizontal Coordination
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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New Product Success Rates
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Horizontal Coordination
for Innovation
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Open Innovation and Crowdsourcing
• Open Innovation- extending the search for
and commercialization of new products
beyond the boundaries of the organization
and the industry
• Crowdsourcing- soliciting ideas, services, and
information from online volunteers rather
than from traditional employees
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Achieving Competitive Advantage:
The Need for Speed
• The rapid development of new products and
services can be a major strategic weapon
• New product development is associated with
lower development costs and greater success
• Firms can address shifting customer demands
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Strategy and Structure Change
• Organizations need to change strategies, structures,
processes, and procedures more often to adapt
• Many organizations are preparing for more change by:
– Cutting out layers
– Decentralizing decision making
– Shift toward horizontal structures
– Empowered teams and workers
– Virtual network strategies
– Incorporating eBusiness
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Organization Design for Implementing
Management Change
• A mechanistic organization structure is
appropriate for frequent management
changes
• The authority for strategy and structure
change lies with top management
• Employee input may be sought, but top
managers have the responsibility to direct the
change
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Dual-Core Approach to
Organization Change
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Forces for Culture Change
Reengineering and Horizontal
Organization
Diversity
The Learning Organization
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OD Culture Change Interventions
Large Group Intervention
Team Building
Interdepartmental Activities
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The Change Curve
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Leadership for Change
Transformational leaders
- Create a compelling vision
- Create an environment for risk-taking and
innovation
Leadership for Change: 80% of successful
innovative companies have top leaders who
reinforce the value and importance of innovation.
Transformational leadership is well-suited for
leading change.
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Techniques for Change
Implementation
• Establish a sense of urgency for change
• Establish a coalition to guide the change
• Create a vision and strategy for change
• Find an idea that fits the need
• Create change teams
• Foster idea champions
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Techniques for Overcoming Resistance
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Top management support
Participation and involvement
Alignment with needs and goals of users
Communication and training
An environment with psychological safety
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Design Essentials
Change, not stability, is the challenge for
managers
 There are four types of change
 Organic structures foster innovation
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Design Essentials
A top-down approach is best for change
and strategy
Top managers must foster culture
change
The implementation of change can be
difficult
Planning for change can help deal with
resistance
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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