Chapter 13: Organizational
Innovation and Change
The primary purpose of this chapter is to help
you understand how organizations can use
innovation and change to survive, and even
thrive, in a changing world.
“The Firm”
David Kopp
Erin Alvey
Thomas Lafferty
Innovation
• Innovation is simply the process of creating
and implementing a new idea or ideas.
• Three main types of innovation exist:
1) Process Innovation
2) Technical Innovation
3) Administrative Innovation
Process Innovation
• Process innovation is achieved through the
creation of a new means of producing,
selling, and/or distributing an existing
product or service.
• Some examples are:
- Online Banking, etc.
- E-commerce
Technical Innovation
• Technical innovation is simply the creation
of a new product or service.
• Some examples:
- A new line of automobiles
- The introduction of cellular telephones
Administrative Innovation
• Administrative innovation is the creation of
a new organization design which better
supports the creation, production and
delivery of services or products.
• An example is:
- Virtual Teams: any task-focused group that
meets w/out all members being in the same
room or even working at the same time.
Learning Organizations
• Involve all of the employees in the process
of identifying and solving problems. This
enables the organization to continuously
experiment, improve and increase its
capacity to deliver its customers new and
improved products and services.
• A learning organization, through continuous
innovation and change, creates sustainable
competitive advantage in its industry.
13.2
Characteristics of a Learning
Organization
Shared Leadership
Culture
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

Empowerment
Continuous learning
Sense of community
The
Learning
Organization
Organization Design


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Team-based
Strategic alliance
network
Boundaryless
Strategy

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Customer-focused
Long-term perspective
Internal alignment
Use of Information
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Extensive scanning
Measurement-oriented
Shared problems
and solutions
Adapted from Figure 13.1
The Five Building Blocks of a
Learning Organization
• 1) Shared Leadership: All employees share
at least some leadership responsibilities.
Everyone is encouraged to find ways to
improve products and services and to
experiment with new methods to better
serve the organization.
• This sharing of decision-making and
leadership creates a culture that supports the
efforts and goals of the organization.
2) Culture
• The learning organization encourages these
empowered employees to identify and
experiment with new methods and
approaches.
• Empowerment provides a way to integrate
tasks and allows the employees to buy into
an organization’s goals.
3) Strategy
• This aspect addresses three key issues:
1) Customer Focus: reflects a clear
understanding of how important customers
are to success.
2) Long-term Perspectives: the process of
learning and change simply take time.
3) Internal Alignment: the business strategy
drives the design of all systems within the
organization.
4) Organization Design
• In a learning organization, this emphasizes
the use of teams and strategic alliances.
- Teams: Team members take responsibility
of aspects such as training, purchases,
safety and scheduling.
- Strategic Alliances: suppliers, competitors
and customers collaborate and communicate
as a method of learning.
5) Use of Information
• This is the “lifeblood” of a learning
organization.
• There are three main aspects involving the
use of information in a learning
organization.
- Extensive scanning
- Measurement Oriented
- Shared problems and solutions
13.3
The Process of Organizational
Change
Start
Assess
environment
Determine
performance gap
Diagnose
organizational
problems
Set goals
Reduce
resistance
Identify sources
of resistance
Search for
approaches
to change
Implement
the changes
Follow up
the change
Adapted from Figure 13.2
Reasons for Organizational
Change
• Reasons for organizational change:
– New innovations
– Adjusting to changing environment and
keeping up with competitors
– Unsatisfactory performance
– Concerns of external stakeholders
* Def: Any transformation in the design or
functioning of an organization.
Assess the Environment
• Organizations should
be aware of the need
to scan the
environment for info
that may signal the
need for change/s.
• Factors:
–
–
–
–
–
–
–
–
Technology
Customers
Competitors
The workforce
Unions
Gov’t regulations
Globalization
Shareholders
Determine the Performance Gap
• The difference between what the
organization wants to do and what it is
actually doing.
• Where you are performing/Where you want
to be.
Diagnose Organizational
Problems
• Identify the nature and extent of problems
before taking action.
• Don’t process change prematurely
- Organizations often hire outside
consultants to assist with problem
diagnosis.
Identify Source of Resistance
• Experienced managers understand why
people resist change and what can be done
to overcome resistance.
• Change resist can be due to the following:
–
–
–
–
–
Vested Interests
Fear
Misunderstandings
Different Assessments of Situation
Interorganizational Agreements
Reduce Resistance
• Resistance to change will never disappear
completely, but it can be managed through:
–
–
–
–
Education
Participation
Negotiation
Co-optation - bringing new stakeholders
representatives into the strategic decision
making process as a means of averting threats
to an organization’s stability/existence
Set Goals
• For change to be effective, goals should be
set:
– based on realistic objectives
– stated in clear and measurable terms
– consistent with the organization’s overall goals
and policies
– attainable
• Positive reinforcement for goals obtained.
(Rewards)
Implement the Change
• Select and implement a practical approach
to achieve the change.
• Areas for change:
–
–
–
–
technology
design
task
people
Follow Up Change
•
•
Managers need to monitor results to ensure that
the change process has been successful.
Based on:
–
–
–
–
Employee satisfaction
Productivity
New-product development
Market share
Results take time, don’t judge to soon.
Four Approaches to
Organizational Change
-Technology based approach
-Redesign approach
-Task based approach
-People-oriented approach
13.9
Approaches to Organizational Change
Technology-based
Redesign
Sociotechnical systems
Information technology
Reengineering
Restructuring
Organizational
Change
Task-based
People-oriented
Job specialization
Job enrichment
OD
HRM systems
Adapted from Figure 13.3
Technology Based Approach
– Goal is to increase organizational efficiency
• Sociotechnical Systems - works toward satisfying
employee needs while simultaneously producing
goods efficiently
• Information Technology - networking of computers,
telecommunications systems, and remote-controlled
devices used to link organizations to its suppliers
and its customers
Redesign Approach
Redesign approach involves internal
structural changes
– Reengineering - creating new ways to get work
done
– Restructuring - making changes in the
distribution of authority, responsibility, and
control in the organization
Task Based Approach
• Task Based Approach - changing employee
responsibilities and tasks
– Job simplification - discovery of procedures
that produce maximum output for the minimum
input
• fast food restaurants
– Job enrichment - changing job specifications to
add challenge to the tasks required in order to
increase productivity
People Oriented Approach
• People Oriented includes activities intended
to improve individual competencies and
performance levels
– Organizational Development
• planned long range behavioral science approach for
understanding, changing, and developing an
organization’s workforce to improve its
effectiveness
– individual growth, group growth, organizational growth
– Survey Feedback