Chapter 13: Organizational Innovation and Change

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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

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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

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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

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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

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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.

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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.

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Characteristics of a Learning Organization
13.2
Shared Leadership
The Learning Organization

• Culture
• Empowerment
• Continuous learning
• Sense of community

• Strategy
• Customer-focused
• Long-term perspective
• Internal alignment

• Organization Design
• Team-based
• Strategic alliance network
• Boundaryless

• Use of Information
• Extensive scanning
• Measurement-oriented
• Shared problemsand solutions

Adapted from Figure 13.1
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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.

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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
  organizations goals.

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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.

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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.

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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

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The Process of Organizational Change
13.3
Diagnose organizational problems
Determine performance gap
Assess environment
Start
Identify sources of resistance
Reduce resistance
Set goals
Search for approaches to change
Implement the changes
Follow up the change
Adapted from Figure 13.2
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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.

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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
• Govt regulations
• Globalization
• Shareholders

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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.

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Diagnose Organizational Problems

• Identify the nature and extent of problems before
  taking action.
• Dont process change prematurely
• - Organizations often hire outside consultants
  to assist with problem diagnosis.

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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

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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 organizations stability/existence

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Set Goals

• For change to be effective, goals should be set
• based on realistic objectives
• stated in clear and measurable terms
• consistent with the organizations overall goals
  and policies
• attainable
• Positive reinforcement for goals obtained.
  (Rewards)

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Implement the Change

• Select and implement a practical approach to
  achieve the change.
• Areas for change
• technology
• design
• task
• people

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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, dont judge to soon.

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Four Approaches to Organizational Change

• -Technology based approach
• -Redesign approach
• -Task based approach
• -People-oriented approach

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Approaches to Organizational Change
13.9

• Technology-based
• Sociotechnical systems
• Information technology

• Redesign
• Reengineering
• Restructuring

Organizational Change

• Task-based
• Job specialization
• Job enrichment

• People-oriented
• OD
• HRM systems

Adapted from Figure 13.3
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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

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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

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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

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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
  organizations workforce to improve its
  effectiveness
• individual growth, group growth, organizational
  growth
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