Innovation and Organizational Change

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Chapter 12

• Innovation and Organizational Change

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Planning Ahead Chapter 12

• How do organizations accomplish innovation?
• What is the nature of organizational change?
• How can planned organizational change be managed?
• What is organization development?

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How do Organizations accomplish Innovation?

• Strategic leadership creates the capacity for
  ongoing strategic change.
• Components of strategic leadership
• Anticipate, envision, maintain flexibility.
• Think strategically.
• Work with others to initiate change.
• Build learning organizations as change leaders.
• Develop the ability to innovate successfully as a
  core competency .

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How do Organizations accomplish Innovation?

• Sustainable competitive advantage relies on
  creativity and innovation.
• Creativity is the generation of a novel idea or
  unique approach to solving problems or crafting
  opportunities.
• Innovation is the process of creating new ideas
  and putting them into practice.

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How do Organizations accomplish Innovation?

• Three forms of innovation
• Process.
• Results in better ways of doing things.
• Product.
• Results in the creation of new or improved goods
  and services.
• Business model innovation
• Results in new ways of making money.
• Innovations require invention and application.
• Invention.
• Act of discovery.
• Development of new ideas.
• Application.
• Act of use.
• Implementation of new ideas.

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How do Organizations accomplish Innovation?

• Leadership responsibilities for the innovation
  process
• Imagining.
• Designing.
• Experimenting.
• Assessing.
• Scaling.
• Commercializing innovation
• Process of turning new ideas into products or
  processes that increase profits through sales or
  cost reductions.

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How do Organizations accomplish Innovation?

• Four steps of the product innovation process
• Idea creation.
• Initial experimentation.
• Feasibility determination.
• Final application.

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Figure 12.1 Process of commercializing innovation
in organizations the case of new product
development.
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How do Organizations accomplish Innovation?

• In highly innovative organizations
• Corporate strategy and culture should
• Emphasize an entrepreneurial spirit.
• Expect innovation.
• Accept failure.
• Be willing to take risks.
• Organization structure should
• Be organic.
• Have lateral communications.
• Use cross-functional teams and task forces.

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How do Organizations accomplish Innovation?

• In highly innovative organizations
• Top management should
• Understand the innovation process.
• Be tolerant of criticism and differences of
  opinion.
• Take all possible steps to keep goals clear.
• Maintain the pressure to succeed.
• Break down barriers to innovation.
• Staffing should fulfill five critical innovation
  roles
• Idea generators.
• Information gatekeepers.
• Product champions.
• Project managers.
• Innovation leaders.

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Nature of Organizational Change

• Change leader
• A change agent who takes leadership
  responsibility for changing the existing pattern
  of behavior of another person or social system.
• Change leadership.
• Forward-looking.
• Proactive.
• Embraces new ideas.

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Figure 12.2 Change leaders versus status quo
managers.
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Managing Organizational Change

• Top-down change.
• Strategic and comprehensive
• change that is initiated with the
• goals of comprehensive impact on the
  organization and its performance capabilities.
• Driven by the organizations top leadership.
• Success depends on support of middle-level and
  lower-level workers.

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Managing Organizational Change

• Bottom-up change.
• The initiatives for change come from any and all
  parts of the organization, not just top
  management.
• Crucial for organizational innovation.
• Made possible by
• Employee empowerment.
• Employee involvement.
• Employee participation.

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Managing Organizational Change
External forces for change

• Internal forces for change

• Arise when change in one part of the system
  creates the need for change in another part of
  the system.
• May be in response to one or more external
  forces.

• Globalization
• Market competition.
• Local economic
• conditions.
• Government laws
• regulations.
• Technological
• developments.
• Market trends.
• Social forces and
• values.

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Managing Organizational Change

• Organizational targets for change
• Tasks
• People
• Culture
• Technology
• Structure

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Lewins Phases of Change
UNFREEZING
CHANGING
REFREEZING
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Leading Planned Change

• Phases of planned change
• Unfreezing
• The phase in which a situation is prepared for
  change and felt needs for change are developed.
• Changing
• The phase in which something new takes place in
  the system, and change is actually implemented.
• Refreezing
• The phase of stabilizing the change and creating
  the conditions for its long-term continuity.

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Lewins three phases of planned organizational
change.
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CHANGE STRATEGIES

• FORCE-COERCION
• RATIONAL PERSUASION
• SHARED POWER

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Figure 12.4 Alternative change strategies and
their leadership implications.
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How can planned organizational change be managed?

• Force-coercion strategy of change.
• Uses power bases of legitimacy, rewards and
  punishments to induce change.
• Relies on belief that people are motivated by
  self-interest.
• Direct forcing and political maneuvering.
• Produces limited and temporary results.
• Most useful in the unfreezing phase.

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How can planned organizational change be managed?

• Rational persuasion strategy of change.
• Bringing about change through persuasion backed
  by special knowledge, empirical data, and
  rational argument.
• Relies on expert power.
• Relies on belief that reason guides peoples
  decisions and actions.
• Useful in the unfreezing and refreezing phases.
• Produces longer-lasting and internalized change.

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How can planned organizational change be managed?

• Shared power strategy of change.
• Engages people in a collaborative process of
  identifying values, assumptions, and goals from
  which support for change will naturally emerge.
• Time consuming but likely to yield high
  commitment.
• Involves others in examining sociocultural
  factors related to the issue at hand.
• Relies on referent power and strong interpersonal
  skills in team situations.
• Relies on belief that people respond to
  sociocultural norms and expectations of others.

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Resistance to Change

• WHY???

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SOURCES OF RESISTANCE

• FEAR OF UNKNOWN
• DISRUPTED HABITS
• LOSS OF CONFIDENCE
• LOSS OF CONTROL

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SOURCES OF RESISTANCE

• POOR TIMING
• WORK OVERLOAD
• LOSS OF FACE
• LACK OF PURPOSE

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Methods for dealing with resistance to change

• Education and communication
• Participation and involvement
• Facilitation and support
• Facilitation and agreement
• Manipulation and co-optation
• Explicit and implicit coercion

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What is Organizational Development (OD)?

• Organization development (OD) is a comprehensive
  approach to planned organizational change that
  involves the application of behavioral science in
  a systematic and long-range effort to improve
  organizational effectiveness.

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What is Organizational Development (OD)?

• Organization development goals
• Outcome goals focus on task accomplishments.
• Process goals focus on the way people work
  together.
• OD seeks to develop the organization members
  capacity for self-renewal.
• OD is committed to change through freedom of
  choice, shared power, and self-reliance.
• OD takes advantage of knowledge about human
  behavior in organizations.

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What is Organizational Development (OD)?

• The organization development process
• Establish a working relationship.
• Diagnosis.
• Intervention.
• Evaluation.
• Achieve a terminal relationship

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OD and the planned change process.
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What is Organizational Development (OD)?

• Action research
• The process of systematically collecting data on
  an organization, feeding it back to the members
  for action planning, and evaluating results by
  collecting more data and repeating the process as
  necessary.
• Is initiated when someone senses a performance
  gap.

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What is Organizational Development (OD)?

• Steps in the action research process
• Problem sensing.
• Data gathering.
• Data analysis and feedback.
• Action planning.
• Action implementation.
• Evaluation and follow-up

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Action research as a foundation of organization
development.
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Chapter 12 Review

• How do organizations accomplish innovation?
• What is the nature of organizational change?
• How can planned organizational change be managed?
• What is organization development?