Chapter 11 - cchristopherlee

Chapter 11
Managing Change and Innovation
Why Change?
– (1960 – 2000) From hardware, software company
– (2000 – present) To a service company (mainly,
• If organizations don’t successfully change and
innovate, they die
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Innovation & Changing Workplace
• The adoption of a new idea or behavior by an
• Change and innovation can come from outside
• Managers want to initiate change from the inside
• Disruptive innovation is a goal for global
• Trickle-up / reverse innovation: Jeep at China
Organizational Change
• Change is not easy;
• organizations must take an ambidextrous approach
– Incorporating structures and processes that are
appropriate for:
– Creative impulse and for the systematic implementation
• Managers encourage flexibility and freedom to
Changing Things: New Products
and Technologies
• Product Change – a change in the
organization’s product or service outputs
• Technology Change – a change in the
organization’s production process
• Three innovation strategies:
1. exploration,
2. cooperation, and
3. entrepreneurship
Three Innovation Strategies
• Creativity – novel ideas that meet perceived needs
or offer opportunities
• Idea incubator – a safe harbor where employees
can develop ideas and experiment without
interference from company bureaucracy or politics
– Yahoo  Brickhouse  Top management support
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
Characteristics of Creative People and Organizations
The World’s Most Innovative Companies
Cooperation – (1) Internal Coordination
• Horizontal Linkage Model:
– Simultaneously contribute to innovation
– Horizontal coordination mechanisms:
• Marketing = Research = Manufacturing
– Key to Success:
• MANAGEMENT – Planning, organizing, leadership, control
• Team Building
• Project Manager
Cooperation – (2) External Coordination
• Includes customers, partners, suppliers
• Open innovation – commercialization of ideas
beyond the organization
– P&G – Patent
– LEGO + Hollywood studios
• Crowdsoucing
– Threadless – web 2.0 (open, share, participate)
Coordination Model for Innovation
Innovation Roles
• Managers should support entrepreneurship activities and
foster idea champions
– Energy and effort is required to promote a new idea
• Sponsors approve and protect ideas when critics
challenge the concept
• New-venture teams give free rein to creativity
• Skunkworks are informal, autonomous, secretive groups
that focus on breakthrough ideas
• New-venture funds provide resources for new ideas
Four Roles in Organizational Change
Changing People and Culture
• Changes in how employees think; Changes in
People change = Training and Development (T&D)
Culture change = Organizational Development (OD)
• Large culture change is not easy
Training and Development
• Training – Frequently used approach to
changing people’s mind-sets
• Training and development is emphasized for
– Behavior and attitudes will influence people and
lead to culture change
Organizational Development
• Planned, systematic process of change using
behavioral science (psychology)
• Addresses three types of problems:
 Mergers and acquisitions (M&A)
 Organizational decline and revitalization
 Conflict management
OD Activities
• Team-building activities: Enhancing cohesiveness and
success of organizational groups and teams
• Survey-feedback activities: an employee questionnaire
asking “values, climate, participation, leadership, and
group cohesion”
• Large-group interventions: participants from all parts
of the organization to discuss problems or opportunities
and plan for change
OD Steps
• Unfreezing:
– Participants must be made aware of problems and be willing to
change; Diagnosis  Identifies work-related problems
• Changing:
– when employees learn new skills to be used in the workplace;
Intervention; Implements a plan for training managers and
employees; Include team building, survey feedback, intergroup
coaching, process-consultation, or symbolic leadership.
• Refreezing.
– When individuals acquire new attitudes or values; Rewarded;
Institutionalized in the organizational culture
11.6 OD Approaches to Culture Change
Implementing Change
• Outline the Need for Change
– Show the performance gap (disparity) b/w existing &
desired performance levels
– Get employees involved in the change as early as
possible; in the planning stage; Empower them!
• Understand the Resistance to Change
– Self-Interest
– Lack of Understanding and Trust
– Uncertainty
– Different Assessments and Goals
– Job security
11.7 Force-Field Analysis
• Change is a result of the competition
between driving and restraining forces
– Driving forces – problems or opportunities
that provide motivation for change
– Restraining forces – barriers to change
Force-Field Analysis: A Case
Tactics for Overcoming Resistance to Change
Discussion Questions
• Define organizational change and explain the forces driving innovation and
change in today’s organizations.
• Identify the three innovation strategies managers implement for changing
products and technologies.
• Explain the value of creativity, idea incubators, horizontal linkages, open
innovation, idea champions, and new-venture teams for innovation.
• Discuss why changes in people and culture are critical to any change process.
• Define organization development (OD) and large-group interventions.
• Explain the OD stages of unfreezing, changing, and refreezing.
• Identify sources of resistance to change.
• Explain force-field analysis and other implementation tactics that can be used
to overcome resistance.
Discussion Questions (continued)
Describe how IBM has changed during last two decades.
Explain the major motive of Chrysler to produce Jeep at China in early 2000s, in terms of
change management.
Explain ambidextrous approach in change management.
Describe Yahoo’s Brickhouse, from the innovation strategy perspectives.
Explain briefly key to success of horizontal linkage.
Describe P&G’s purchase of patents, in terms of innovation strategy.
Explain how LEGO survived in early 2000s, by innovation strategy.
Explain briefly crowdsourcing.
List three features of Web 2.0, in contrast to Web 1.0.
Describe innovation strategies of Treadless.
Explain briefly a skunkworks.