Organizing for Innovation

1
Organizing for Innovation

• Understanding innovation
• Scanning the environment
• Structure and boundaries
• Product development
• Innovation management
• Entrepreneurship
• Climate and culture
• Changing systems
• Developing people

2
Understanding Innovation
3
Organizing for Innovation

• Innovation Understanding, Scanning the
  environment, Structure and boundaries, PD,
  Innovation Management
• Climate and Entrepreneurship Entrepreneurship,
  climate culture
• OD Changing systems Developing People

4
Radical innovation vs Incremental improvement

• Radical innovation offers a technical leap that
  breaks with the past, for example the electric
  light, or solar energy compared to fossil fuels.
  Incremental innovation refers to an improvement
  in an existing design, for example a steadier
  workbench, a better computer or improved TV
  image. One might expect radical innovation to be
  associated with an innovative cognitive style
• The distinction between radical and incremental
  innovations is not always as sharp as it might
  first appear. Radical innovations are often
  radical in their impact rather than genesis. What
  appears innovations are often radical innovation
  is often the end point of a series of separate
  improvements by a number of different individuals
• The importance of evolutionary, incremental
  changes tends to be underestimated in the West,
  where most public and press attention has
  historically focused on the big breakthroughs.
  Yet radical innovation is the exception rather
  than the rule and cumulative gains from
  incremental improvement are critically
  significant. It is estimated that more than four
  fifths of all technical changes are of an
  incremental or evolutionary type

5
Product vs process improvement

• Product innovation refers to new product
  performance, such as the invention of the steady
  Workmate. Product improvements often enhance
  performance and reduce costs an example would be
  the cheaper, lighter, two-height Mark II
  Workmate.
• One can also offer better, cheaper, faster
  services. Two major service innovations are
  hole-in-the-wall banking, and the Direct Line
  insurance companys telephone sales insurance
• Process innovation refers to new processes used
  to manufacture the product, either in a way
  others have yet to master, or in a way that
  enables better performance or lower cost. The
  integrated circuits case above required both
  product and process innovations. Process
  improvements often reduce cost and improve
  performance. Reworking costs are one area that
  offer scope for cost savings.

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Technology push model

• In the immediate post-war period, government and
  business subscribed to a linear technology push
  model of innovation, where one starts with pure,
  then applied science, followed by engineering,
  manufacturing and marketing (a relay model that
  emphasized research and development (RD)). This
  approach seemed to work well with scientific
  inventions and industrial innovations such as
  nylon and laser. Many government with policies
  that emphasize support for RD may do so because
  they still implicitly subscribe to this
  traditional way of thinking about innovation

7
Market pull model

• The trouble with the technology push model is
  that it neglects both the role of the market and
  the fact that basic science is expensive and
  rarely produces commercially viable new products
  directly
• Cooper and Kleinschmidt (1991) argue that over
  80 of products seem to derive more from market
  pull than technology push. However, the market
  pull approach risks paying too much attention to
  the market and not enough to the consequences, or
  neglecting basic RD that might prepare the
  organization for any future radical change

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Coupling model

• By the 1970s, firms were having to consolidate
  and retrench and needed to understand innovation
  better. Case studies revealed that both the
  technology push and market pull models were too
  simplistic innovation was neither simple nor
  linear. The market pull model was synthesized
  with technology push to allow for an interactive
  coupling that incorporated the need for iteration
  and feedback between technological capability and
  market needs, taking account of both within a
  complex set of communications. This was
  essentially a sequential model with feedback. It
  recognized the role of key entrepreneurial
  individuals. High-risk radical innovations like
  the Sony Walkman and cellular phones arose from
  this type of process

9
Integrated model

• By the 1980s, the superiority of Japanese
  approaches to innovation was compelling.
  Researchers identified integration and parallel
  development, internal and external networking
  (with suppliers and customers), along with
  Just-in-time (JIT) and Total Quality Management
  (TQM), as critical factors. This integrated,
  overlapping approach to innovation is found in
  the automotive sector in companies like Toyota,
  Nissan and Hitachi. It has led to innovations
  like the laserjet printer and digital cellular
  phones

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Systems integration and networking model (I)

• It posits a continuous innovation process based
  on integrated systems and extensive networking
  leading to increasing flexibility and customized
  responses. In particular, it features
  collaboration between companies using a network
  of electronic communication. The key aspects are
  (i) integration, (ii) flexibility, (iii)
  networking and (iv) parallel real-time
  information processing. This approach demands
  that organizations have an ability to learn. It
  recognizes the importance of both personal
  learning and IT, plus that of collaborating with
  suppliers and co-development of new products. It
  emphasizes the speed of development, flexibility,
  and quality

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Systems integration and networking model (II)
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Patterns of development

• Innovation life cycle
• Once an innovation has reached the market
  typically it goes through a product life cycle.
  Initially several rival designs compete to
  outperform each other and key features are
  improved. Conventional wisdom has it that
  gradually a dominant design emerges. Subsequently
  manufacturers devote their attention to improving
  the manufacturing process, for example, machine
  rather than hand-blown bulbs for electric lights.
  Manufacturing costs are usually substantially
  reduced in the case of the electric light bulb,
  for example, labour time fell from an hour to 20
  seconds. Subsequently the innovations diffused to
  a wider innovation comes to challenge the
  technology, e.g. fluorescent light (Taylor, 1996)

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Dominant designs (I)

• Abernathy and Utterback (1988) found a consistent
  pattern of innovation in mass-market industries
  which was characterized by the emergence of a
  dominant design (which usually takes the form of
  a new product synthesized from technological
  innovations introduced independently in prior
  product variants).
• Initially, a wave of new firms enter the
  business, but with the appearance of the dominant
  design, there is a series of exits and a shift
  towards an oligopolistic structure. The industry
  is then vulnerable to a new wave of technology
  which will sweep away most of the existing firms.
  Their influential model of innovation, shown in
  Figure 1.15, portrays the changing rates of major
  product and process innovation as an industry
  moves from its initial fluid phase, through the
  transitional phase, to its final specific phase.
  The emergence of a dominant design marks a change
  from high rates of product innovation to higher
  rates of process innovation, followed by
  subsequent decline of both.
• The dominant design has the effect of enforcing
  or encouraging standardization and results in
  shifts at several different levels Products,
  Processes, Organizations, Market and Competition

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Dominant Designs (II)
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Scanning the Environment
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Scanning the Environment

• Competitors Creative swiping
• Until recently the conventional wisdom has been
  that organizations should be creatively original
  and therefore produce unique products that set
  them apart from their competitors.
• Peters (1991) suggests that an organization may
  also steal good ideas from competitors.
• Copying ideas is popular with managers these
  days, with benchmarking the best practice of
  competitors commonplace. However, an idea that is
  successful in one context is not always as
  effective when transferred to another setting, so
  copying must always be done with care and usually
  benefits from adaptation to the local
  circumstances

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Strategy Building

• Strategic reconnaissance Flying over the
  future and determining the general features of
  the terrain
• Benchmarking Identifying best competitors and
  working out improvements in design and
  manufacture
• Zero defects quality A system of production
  that gets things right first time with no need
  for revisions
• Revenue prospects A definition of market
  prospects, technological evolution and
  governmental policy worldwide, the combination of
  constraints giving the size of the Xerox share of
  the pie
• High concepts One-line verbal encapsulation of
  strategies, allowing review discussion and
  modification
• Consensor Polling system used to determine
  common agreements about external context and
  preferred strategy

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Benchmarking Practice

• A benchmark can be defined as follows
• Anything taken or used as a point of reference or
  comparison
• Something that serves as a standard by which
  others may be served
• Anything or something that is comparatively
  measurable
• A physiological or biological reference value
  against which performance is compared, e.g.
  normal heartbeat is 60-80 beats per minute a
  normal walking speed in industrial work is two
  miles per hour a normal electrocardiogram has
  a particular shape often used in rating
• Benchmarking is used in the following ways
• As an enabler for achieving and maintaining high
  levels of competitiveness
• As a measurement of business performance against
  the best of the best, through a continuous effort
  of constantly reviewing processes, practices and
  methods
• As a process which can be characterized by a
  standard (an excellence point obtained) and
  variables (expectations, performance and
  measurements)
• As a continuous process of measuring our
  products, services and business practices against
  the toughest competitors and those companies
  recognize as industry leaders (Xerox definition)
• To emulate the best by continuously implementing
  change and measuring performance

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Reasons for benchmarking
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Futures

• Scenario building forecasting errors has been
  increasingly frequent and sometimes the forecasts
  have been dramatically wrong. The oil industry
  furnishes us with may examples. The abrupt and
  unpredictable nature of external events in this
  particular sector has meant that organizations
  such as Shell need to plan for discontinuity
• The real benefit of scenario planning is not in
  the accuracy, or otherwise, of the scenario, but
  in the change of global perceptions and increased
  flexibility of view that its construction induces
• Shared vision Another approach to preparing for
  the future involves the use of visioning.
  Burnside (1991) defines a vision as a desirable
  future. He describes two cases employing
  visioning one a chemical company and the other
  an advertising agency

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Strategy Mintzbergs fallacy

• the fallacy of predetermination Forecasting
  is central to planning but unfortunately,
  regardless of their sophistication, most
  forecasts are not very accurate, and worse still
  they miss discontinuities
• the fallacy of detachment whereby planners
  collect and analyse hard data such as market
  research figures, analyses of competitors,
  performance reports, etc. while missing all the
  invaluable, often intuitive, local knowledge or
  soft data that line managers have
• the fallacy of formalization, because analysis
  is not synthesis, strategic planning is not
  strategy formation. Analysis may precede and
  support synthesis, by defining the parts that can
  be combined into wholes. Analysis may follow and
  elaborate synthesis, by decomposing and
  formalizing its consequences. But analysis cannot
  substitute for synthesis. No amount of
  elaboration will ever enable formal procedures to
  forecast discontinuities, to inform managers who
  are detached from their operations, or to create
  novel strategies

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Strategy

• Foresight In their classic article, Competing
  for the future, Hamel and Prahalad (1994) make
  an impassioned plea for the need for foresight,
  which offers a way of involving staff in
  developing organizational strategy. They argue
  that foresight is necessary for growth, pointing
  out that though downsizing may cut costs in the
  short term, it ultimately risks losing market
  share
• Stories Its all very well to have a vision and
  a plan, but another matter to convey it in a way
  that carries people with you. In the Managing
  Innovation and Change reader, Shaw et al.
  describe the merits of stories, rather than the
  ubiquitous bullet points, to convey ideas in a
  way that people can buy into. They argue that
  stories convey key relationships and insights
  more effectively than bullet points and gain more
  attention and buy in. They feel that 3Ms use of
  strategic stories is one of the reasons they have
  managed to maintain a high level of innovation

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Structure and Boundaries
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Structure and Boundaries

• Organizations have been striving to lower their
  cost base and structure themselves in a manner
  that facilitates more flexible responses. This
  has led to considerable delayering, which has
  produced leaner organizations, with flatter
  structures, and a fair degree of decentralization
• At the organizational level, this involves large
  organizations like Hewlett Packard introducing
  divisions based around product types. Many
  manufacturing companies have followed the lead of
  early pioneers (such as Volvo) to base
  manufacturing around a cell structure made up of
  multidisciplinary teams
• In addition more work is done in cross-functional
  and cross-departmental project teams

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Project based enterprise (I)

• A basic relay structure, where projects move from
  department to department (e.g. engineering to
  manufacturing), can work for a succession of
  short-term projects in which control and fixed
  responsibilities are important, though most
  writers on innovation now frown upon the relay
  structure and advocate a more integrated approach
• The matrix organization method takes staff out of
  their normal jobs and assigns them to additional
  work on special projects. Although the projects
  can be constructed in a free and flexible way,
  the dual responsibilities to the project and
  functional department can be an extra stress.
  At Holt (1991) says, this seems like a system
  designed to create social problems of loyalty and
  authority
• The independent project approach is appropriate
  for large projects. It places staff on full-time
  transfer and locates the project team together
  physically. However, there is a period of
  learning during which the team members have to
  adjust to the knowledge and style of their new
  associates. Similarly, when the team disbands,
  the staff have to re-adjust to take up their
  former places in the organization

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Project based enterprise (II)

• The venture team method offers a small group a
  chance to work outside standard reporting
  structures. It seeks a way of generating a
  climate for innovation by encouraging the
  qualities of small-scale entrepreneurship by
  divorcing the new group from the everyday
  strictures of the parent organization. This last
  option is popular, and generally more successful
  where there is a real stimulus from top
  management
• Nonaka and Takeuchi (1995) argue for a dual
  structure, sometimes known as the hypertext
  organization, where a traditional
  hierarchical-type structure handles routine work
  and a parallel network of project teams pursue
  creative and innovative projects. This differs
  from a matrix structure in that people belong to
  and report only to one structure

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Alliances

• Partnership Partnerships and alliances between
  different organizations seem to be increasingly
  common these days. They take a variety of forms
  ranging from subcontracting, technology
  licensing, and research consortia, through
  intercompany networks and joint ventures to
  mergers and acquisitions. Alliances often provide
  an organization with access to new technologies
  and a chance develop their competencies
• Joint ventures New technology is often risky
  and, when the cost of entry into a new market, or
  the development cost of a new product becomes too
  large, the stakes can become too high for a
  single organization. This has led to some
  surprising joint ventures. The high cost of
  development in industries like automobiles, has
  led to co-operation even amongst erstwhile
  competitors
• Mergers The main reasons for collaboration are
  to reduce costs, time or risk of access to new
  markets or technologies. The larger the number of
  partners, the greater the transaction costs
  however, in the longer term, partnerships and
  alliances have the potential to help an
  organization develop or extend competencies. The
  degree of trust and level of communication
  between partners seem to have a strong bearing on
  the success of the outcome

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Networks

• Inter-organizational networks It now play an
  important role in many different sectors, from IT
  and transport to retailing and entertainment.
  They take many forms. Two of the most successful
  innovations ever Visa and Internet are based
  round inter-organizational networks with
  distributed ownership
• Franchising It offers another example of tasks
  becoming split across what are, in effect,
  different organizations. McDonalds and The Body
  Shop are two well-known franchising operations
• Outsourcing The idea of outsourcing
  (subcontracting to an external agency) certain
  specialist functions (for example the provision
  and maintenance of IT facilities, catering and
  cleaning) is increasingly common. Many less
  capital-intensive industries, such as retailing,
  practise vertical disaggregation, i.e. much of
  the manufacturing and retailing is outsourced to
  a network of suppliers

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Product Development
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Innovative Products

• Innovation can be a slow, risky and expensive
  process. Many of the major radical innovations,
  such as the photocopier and the Hoercraft, have
  taken over a decade from discovery to making a
  profit. Managers would love to be able to
  distinguish those products that are likely to be
  successes from those that are not. However, this
  is a tall order
• Product advantage unique features higher
  quality reduced costs solved customer problems
  superiority to competition
• Proficiency of predevelopment activities
  initial screening preliminary market and
  technical assessment detailed market study and
  financial analysis
• Protocol/definition target market customers
  needs wants and preferences product concept and
  specification

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Idea screening

• A good idea is not enough it needs to fit the
  organization its resources, capabilities,
  finances, structure and values and the external
  environment the market, the needs of customers,
  and relevant regulations
• An idea can fail at any of these levels, or may
  progress quit far into detailed realization only
  to fail alter. At the beginning of the innovative
  process there is a very large pool of
  half-focused and half-articulated ideas. The
  number of ideas is rapidly filtered until one or
  two front-runners emerge. The process as a whole
  can be portrayed as a logarithmic decline (see
  Figure 4.1)

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Product Development (I)

• Long-term co-operation The Western reaction to
  product development has traditionally been to cut
  staff and costs, and find a cheaper supplier. The
  Japanese tactic of a more co-operative approach
  and a longer-term perspective may be a more
  productive way forward in the long run. The now
  commonplace, more integrated approach to product
  development entails a rugby team rather than a
  relay race, with different functional specialists
  working together in multidisciplinary teams
• Concurrent engineering Computer-aided design
  (CAD) and overlapping phases in planning help,
  but effective communication and better working
  rapport with suppliers are also critical. In
  short, reduced lead time seems to come from a
  coherent system of overlapping stages, intensive
  communication, manufacturing capability and
  supplier engineering

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Product Development (II)
34
Product Development (III)

• Product families The key to the successful
  management of product families is setting clear
  design goals that can meet a wide variety of
  market needs and trends, and enabling industrial
  designers and marketing specialists to work
  together as an integrated team during product
  specification and the development of mock-ups
• Job rotation Many Japanese firms have policies
  where there is a high degree of job rotation
  between members of these functional groups. After
  ten years with a company, many employees have
  spent roughly equal amounts of time in
  manufacturing, marketing and design. This helps
  people to speak the different languages of
  different functional departments and to bridge
  the interfaces between them

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Integrated systems

• Greater overall organization and systems
  integration
• parallel and integrated development
• earlier supplier involvement
• involving leading-edge users in product
  development
• establishing horizontal technical collaboration
• Flatter, more flexible organizational structure
• more empowered managers at lower level
• empowered project champions and leaders
• Developed internal databases
• effective data-sharing systems
• electronically assisted product development (CAD,
  simulation)
• Effective external data link
• co-development with supplier
• use of CAD with customer
• effective datalinks with RD

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Innovation Management
37
Innovation Management

• Suggestion schemes It offers a means of tapping
  employees ideas for improvement. They may take
  the form of a box on the factory floor or a
  special section of the company in-house magazine.
  Research suggests that companies can increase
  their chance of success by publicizing the
  scheme, providing feedback to employees, ensuring
  they act upon a subset of the suggestions and
  publicizing the fact that they have done so
• Continuous improvement Companies need policies
  to systematically involve all the workforce in
  continuous improvement of all business processes.
  Schroeder and Robinson (1999) argue that
  continuous improvement programmes, centred around
  suggestion schemes and other incentive systems
  such as bonuses, seem to be a factor in long-term
  competitiveness.

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Users and Openness

• Users A number of organizations now make a point
  of systematically obtaining ideas and information
  from users. The shortened product life cycle and
  increasing prominence of niche markets means that
  being in touch with the customer and being able
  to respond to their wishes are critical in many
  industries, most obviously in fashion and popular
  music. Customers can provide vital information on
  usability
• Openness Companies need to be continuously open
  to ideas. Lester suggests that organizations need
  to orchestrate a conversation between a community
  of creative individuals in RD and production as
  well as customers, retailers and others outside
  the company. He claims that the engineering
  approach to RD where one allows an engineer to
  solve a problem is as outmoded as the idea of the
  manager as a captain, or the organization as a
  machine. He asserts that, particularly in the
  formative phase, too much analysis and
  prescription is inappropriate rather, the
  organization has to live with ambiguity to keep
  possibilities open

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Managing Innovation

• Freedom and incentives 3M is widely recognized
  as one of the most innovative companies in the
  world.
• Mitchell (1991) describes some of the principles
  and systems that 3M adopt as
• Keep divisions small
• Tolerate failure
• Motivate the champions
• Stay close to the customer
• Share the wealth
• Dont kill a project
• Post-it pads are one of 3Ms successful products,
  indeed, so successful it is hard to remember the
  world before Post-it pads. It is harder still to
  imagine that at their first launch no on knew
  what to do with them, and that a large marketing
  investment was needed to demonstrate and persuade
  people of their usefulness

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Innovative Organizations

• Maidique and Hayes (1984) suggested that many of
  them found the way to manage the conflict between
  continuity and rapid change by alternating
  periods of consolidation and continuity with
  reorientation and restructuring

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Organizational Strategy

• Organizations have different marketing
  strategies. Maidique and Patch (1988)
  differentiate between four such strategies
• First to market strong RD offering temporary
  monopoly
• Fast follower nimble development and
  engineering capability
• Late to market product, process or economies of
  scale offer cost advantage
• Niche specialist special applications
• Each has different implications for company
  policy as the strategy adopted has consequences
  for the type of RD, manufacturing, finance,
  timing and organizational style that is
  appropriate

42
Public Policy

• Governments often attempt to aid organizational
  innovation. Peters (1991) is one of those who
  thinks public policy could be more creative in
  this respect. His suggestions for government
  policy makers include tax incentives for
  training, supporting basic research (e.g. through
  RD tax credit), having policies that encourage
  co-operation between universities and industry,
  making finance available for small and mid-size
  firms, and offering tax credits for domestic
  manufacturing. He also argues for dropping
  protectivist legislation and promoting
  competition (though others argue that new
  industries need nurturing and protection)
• Governments have been more interventionist, such
  as Korea

43
Small business

• Governments often see small firms as the source
  of future innovation and have directed various
  enterprise policies at such businesses. Yet the
  problems of small business remain much the same
  now as they were twenty years ago, namely
  obtaining finance and learning to delegate,
  market and apply cost control information
  (Bolton, 1971)
• Part of the problem is that the government
  assumes small businesses wish to grow into large
  ones. However, many small-business owners value
  their independence and limit the size of their
  organization in order to maintain it (Gray,
  1993). One of the implications for policy is that
  less resources might be spent on initial start-up
  support and more on helping small businesses
  employ and manage staff

44
Strategic Perspective

• Whittington (1993) conveniently sets out for
  fundamental perspectives on strategy the
  traditional, rational Classical the
  environmentally conscious Evolutionary the
  pragmatic, learning-orientated Processual and
  the socially aware Systemic
• These four generic approaches to strategy differ
  fundamentally about what people are like and how
  they get on in the world in which they live and
  work. People are seen variously as objective
  calculating machines, muddled makers-do, or the
  particular products of their place and time,
  rational only according to the criteria of their
  peculiar culture and interests.
• The world in which they operate is portrayed by
  some as a simple series of markets to be
  conquered, by other as a jungle of fierce and
  unpredictable competition, or by still others as
  a complex interweaving of the social, the
  political and the economic. How you resolve these
  opposing views about people and the world in
  which they operate will deeply influence your own
  personal approach to policy

45
Entrepreneurship
46
Visionary Leadership

• Leadership styles can be categorized as
  autocratic, democratic, participative and
  laissez-faire. Westley and Mintzeberg (1991)
  differentiate further between the different
  entrepreneurial leadership styles of those who
  spearhead fundamental change.
• There are idealistic visionary leaders like René
  Lévesque, the Canadian politician. There are
  entrepreneurial leaders like Steve Jobs of Apple
  or Edwin Land who invented the polaroid camera.
  Jobs was a visionary, dependent on the technical
  support of others, Land and Dyson were more
  involved with developing the products for which
  they are famed. And there are the
  transformational leaders who transform existing
  companies and their products or services from the
  inside such as Lee Iacocca and Jan Carlzon of SAS
  (the Scandinavian airline company)
• Two contrasting approaches to leadership are
  leading from the front and facilitating from
  behind and one or other usually comes more
  naturally to most individuals

47
Innovators

• Innovations depend upon commercial or social
  success and wide diffusion. Inventors can become
  innovators once an idea has proved itself in the
  public realm. Until that time inventors may be
  seen as cranks peddling unworkable ideas. Many
  innovators are seen as mavericks. They can be
  obsessive. But out of that independence can come
  original devices, and out of obsession the
  necessary stamina and persistence to pursue a
  goal. Their style may vary considerably as can be
  seen in the contrast between Watson, Roddick,
  Iaccoca and Gates that follows

48
Climate and Culture
49
Climate and Culture

• Ekvall (1991, 2002) and others distinguish
  between culture and climate, using the term
  culture to refer to more deep-rooted beliefs and
  values (for example, national differences in
  individualistic or more collectivist identities)
  and organizational climate to refer to the more
  accessible observable behaviours, attitudes and
  feelings (for example, work groups shared norms
  for working hours, levels of effort and attitudes
  to employment).
• Elsewhere, the terms are used interchangeably.
  Ekvall sees climate as a moderating force on
  communications, problem solving, decision making,
  learning and motivation

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Creative vs uncreative climate
51
Trust Forgive

• Handy (1991) has argued that a climate of trust,
  in which mistakes are forgiven, is an essential
  feature of the creative organization. Handy adds
  that organizations generally could do with more
  curiosity, forgiveness and love. Such cultures
  are likely to facilitate creativity and
  innovation since it is a psychological truism
  that people are more forthcoming and prepared to
  explore new territory in environments where they
  feel safe
• Handy elaborates on the conditions necessary for,
  and consequences of, a culture based round trust.
  He points out that a high-trust culture with
  minimal controls does not mean that anything
  goes. Indeed, he goes so far as to argue that
  such cultures are incompatible with a job for
  life, since people who do not live up to
  expectations have to leave.
• Handy further argues that high-trust cultures are
  best restricted to a core of trusties, a
  smallish core of people you know and in whose
  competence you have reason to have confidence. He
  points out that a probable consequence is that
  peripheral tasks are likely to be outsourced

52
Changing Culture

• Attempts to change organizational culture meet
  with variable success. When BP tried to introduce
  their first ever culture-change programme, the
  idea was to shift the culture from a yes but to
  more of a yes and mentality. To achieve this,
  BP asked staff to move to open thinking, personal
  impact, empowerment and networking, but now admit
  that the two years allowed for this change was
  not enough time to achieve this
• One of the BP change managers involved admits
  that these are Anglo-American concepts can that
  he had something of an uphill struggle trying to
  sell the approach in southern Europe where
  hierarchy and bureaucracy are more acceptable. He
  also stressed the importance of walking the
  talk if the initiative is to have credibility.
  He felt such initiatives need top-management
  support and a long timescale if they are to have
  an impact. He explained how a proportion of
  managers were simply unable to change to the new
  way of working and chose to leave (Henry, 1991)

53
Changing Systems
54
Organizational Development

• Management Fads Over the last fifty years
  managers have shown remarkable faith in the
  successive organizational change fads that have
  come to prominence. In Figure 8.1 Pascale
  attempts to map the rise and fall in popularity
  of these various fads, from management by
  objectives to one-minute managing
• More recently, we have seen the rise of total
  quality management, continuous improvement,
  quality assurance, focus groups, the learning
  organization, reengineering, and knowledge
  management

55
Management Fads
56
Quality

• Deming (1988) elaborated 14 points to increase
  productivity through quality. The 14 points are
  summarized below and include factors relating to
  suppliers, subtle statistical control, training
  and culture
• Suppliers choose the most reliable not the
  cheapest reduce number
• Training train on the job, train employees in
  simple statistics, continuously retrain
• Quality provide statistical evidence of process
  control, look for faults in the system not in
  individual performance, eliminate numerical
  production goals
• Culture drive out fear, break down barriers
  across departments, think long term

57
Dale and Cooper (1992) four-stage model

• Quality inspection was primarily concerned with
  the inspection and testing of outputs. This was
  largely the responsibility of someone other than
  the actual provider of that output, often a
  Quality Department and often led to an
  adversarial approach where quality was someone
  elses problem
• Quality control was, in essence, inspection plus
  feedback. Information was now used to identify
  causes of defects and take corrective action. The
  major evolution was the attempt to control the
  process and the emphasis was at least on meeting
  the specification
• Quality assurance saw the onset of a more
  proactive stance, usually introducing some form
  of quality management system (QMS) which would
  require every part of the process, be it product
  manufacture or service provision, to be
  understood and managed.
• Total quality management (TQM) went one step
  further. Whereas QMS was concerned with doing
  things by the book, TQM sought to win over hearts
  and minds. It is about attitudes, about culture
  and about empowerment. TQM is essentially about
  empowering staff to improve not just the
  efficiency of individual processes, but the
  effectiveness of the overall process. QMSs are
  about achieving quality, whereas TQM is about
  improving quality continuously

58
Continuous Improvement

• Harding (1999) presents a positive picture of the
  potential for quality initiatives, but she places
  great emphasis on learning as the key to both TQM
  and to continuous improvement. This implies two
  very important lessons for the management of
  innovation within organizations.
• The first is that individuals need to learn (and
  often to unlearn as well), and the organization
  has to recognize and value this learning,
  allowing people to contribute rather than merely
  expecting them to what theyre told. Managers
  must accept that they dont have a monopoly on
  good ideas.
• The second is that the organization itself must
  learn. Good practice, once discovered, cannot be
  allowed to reside in the head of individuals, or
  even small groups It must be promulgated as
  widely as possible. Successful organizations will
  be those that not only encourage this
  dissemination of good ideas, but continually
  update their systems accordingly

59
Reengineering

• The original Business Process Reengineering (BPR)
  premise is quite plausible. Given the rate of
  technological advance, and the possibilities
  offered by information and communications
  technology in particular, does it still make
  sense to organize (all types of) work in the
  time-honoured manner? BPR take a If wed known
  then what we know now wed never have done it
  that way attitude, and proceeds to redesign
  business activities starting with a clean sheet
  of paper
• The degree to which one can embrace reengineering
  varies. Venkatraman (1994) outlines five
  different levels of reengineering in Figure 8.3
  below. As he explains in the box below, each
  level has an explicit focus on IT but varies in
  the degree of business transformation required

60
Levels of reengineering
61
Knowledge Management

• Knowledge management is another management idea
  that emphasizes the part played by IT. At the
  start of the twenty-first century, knowledge
  management is the current management buzzword. It
  focuses on developing intangible assets and tends
  to emphasize the part played by IT in
  facilitating knowledge transfer
• In organizations nowadays it is generally ideas,
  intellect and information not land, labour or
  capital that are the key players. The market
  recognizes this and places much a higher price on
  intangible assets, such as research, branding,
  people and know-how, than on tangible assets. For
  example, the market value of the top 200
  businesses on the London Stock Exchange is three
  times their fixed assets, and in high-tech
  companies the difference can be 20 times (Handy,
  1995)

62
Technology Impact

• Virtual office With the sophisticated
  telecommunications available nowadays, a number
  of organizations, especially information-based
  companies, have begun to question whether office
  costs are necessarily justified and have adopted
  some form of hot-desking or home-based
  tele-working programme. Some companies merely
  provide staff with a laptop to enable them to
  work at home some of the time
• E-commerce The Internet offers the promise of
  instant access, speed of response and cost
  savings. On the strength of optimistic forecasts
  for the Webs potential for business, venture
  capitalists and other keen not to be left out,
  have funded numerous new Web-based companies like
  last.minute.com. Many existing companies have
  shifted a portion of their business to Web-based
  activities.

63
Developing People
64
Empowerment

• A theme underlying many of the new employment
  practices has been the trend to empower staff to
  a greater degree than hitherto. The principal aim
  of empowerment is to increase the organizations
  flexibility and speed of response. Empowerment
  can also lead to a more co-operative and
  committed workforce. Instead of being coerced
  through management monitoring, staff are given
  responsibility and expected to police themselves.
  They are trusted to produce quality material
  without the imposition of bureaucratic control
  procedures, a scenario which has benefit for both
  sides
• If employees can be encouraged to take
  responsibility for themselves, companies need no
  longer support layers of managers who exist only
  to exert control over those below them in the
  hierarchy. Moreover, by taking this
  responsibility, employees find themselves in a
  more adult and psychologically healthier role,
  which may make their work more interesting and
  less alienating

65
Contingencies of empowerment
66
Learning Organizations

• The idea of learning organization offers the
  promise of meeting organizations need to change,
  adapt and improve continuously. It attempts to
  encourage facilitate and support the development
  of individual employees so that the organization
  itself also learns. This idea can be seen as an
  attempt to put into practice many of the ideas
  and ideals that you have met at various points in
  the course, so that they become a natural part of
  the way a company operates. The logic behind this
  approach is that the organizational capacity to
  develop may become a source of competitive
  advantage since a learning organization can
  outgrow unproductive behaviours and adapt to
  changing conditions

67
Double-loop learning

• Crucially, the type of learning that employees
  engage in is also important. Indeed, Garratt
  (1987) argues that double-looping learning is
  the litmus test of a learning organization. While
  single-loop learning involves learning a skill,
  how to correct certain errors, adjust or refine
  some process, double-loop learning means that an
  individual (or an organization) learns how to
  learn and how to challenge the assumptions
  underpinning the system. Thus, whereas
  single-loop learning might involve knowing how to
  implement a particular process, double-loop
  learning involves understanding the reasons for
  that process, questioning these assumptions and
  considering ways in which they might productively
  be changed

68
Senge (1990, 1994)

• System thinking emphasizing interrelatedness
  and ways of making patterns of relationships
  clearer, and the importance of feedback
• Personal mastery highlighting the need for
  organizations and individuals to attend to
  personal and professional development and
  learning in individual employees
• Mental models acknowledging the all-pervasive
  influence of unquestioned and often unconscious
  assumptions (mindsets) and the need to expose
  thinking and leave it open to the influence of
  others ideas
• Shared vision the idea of building a shared
  vision of the future that fosters genuine
  commitment
• Team learning asserting that team learning (as
  opposed to individual or organizational) is the
  key vehicle for learning in an organization

69
Self Organization

• Self Organization offers a radical approach to
  learning in organizations that entails an extreme
  form of empowerment. In addition to a flat
  structure and an open climate, it assumes
  innovation goes hand-in-hand with greater trust
  in, and decisions made by, the workforce,
  reducing bureaucracy to a minimum, and open
  accounting
• Semler offers a radical version of the learning
  organization based round trust and participation
  that entails minimal management, open accounting
  and upwards appraisal, practices which, he
  argues, build trust
• Semler explains his vision of workplace democracy
  and describes Semcos gradual transformation from
  a formal, hierarchical company to a much more
  participative organization that has set aside
  much conventional management procedure