chapter 7 innovation and change © 2015 cengage learning mgmt7
TRANSCRIPT
Chapter 7Innovation and
Change
© 2015 Cengage Learning MGMT7
Organizational Innovation
• Organizational Innovation o The successful implementation of creative ideas in an organization.
• Creativityo the production of novel and useful ideas.
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Why Innovation Matters
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1900-1910• airplane, plastic, air
conditioner1911-1920• mammogram, zipper, sonar1921-1930• talking movies, penicillin, jet
engine1931-1940• radar, helicopter, computer1941-1950• atomic bomb, bikini, transistor1951-1960• DNA, oral contraceptive,
Tylenol
1961-1970• video recorder, handheld
calculator, computer mouse1971-1980• compact disc, gene splicing,
laser printer1981-1990• MS-DOS, space shuttle,
CD-ROM1991-2000• taxol, Pentium processor, Java2001-Today• mapping of human genome,
first cloning of human embryo
Technology Cycles• Begins with the birth of a new technology…
• …ends when that technology reaches limit and dies.
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S-Curves and Technological Innovation
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Technological Discontinuity
A scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function.
Innovation Streams• Patterns of innovation over time
that can create sustainable competitive advantage.
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Innovation Streams
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Discontinuous Change
Characterized by technological substitution and design competition
Dominant Design
The new accepted market standard for technology
Copyright ©2008 by Cengage Learning. All rights reserved
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Innovation Streams
Discontinuous Change
(Era of Ferment)
Discontinuous Change
(Era of Ferment)
Dominant DesignDominant Design
Technological Discontinuities
Technological Discontinuities
TechnologicalSubstitution
TechnologicalSubstitution
DesignCompetition
DesignCompetition
1.21.2 Critical MassSolves a pratical problemIndependent Standards Body
Innovation Streams: Technology Cycles over Time
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Innovation Streams
• Technological innovation can enable a company to sustain its competitive advantage, but it can also quickly turn a company’s competitive advantage into a competitive disadvantage.o Ex. Kodak
• Companies that want to sustain a competitive advantage must understand and protect themselves from the strategic threats of innovation.
• Over the long run, the best way for a company to do that is to create a stream of its own innovative ideas and products, year after year.
Emergence of Dominant Design
• There are winners and loserso technological lockout
• Signals a shift from design experimentation and competition to incremental change
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Managing Innovation
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ManagingSources ofInnovation
Managing DuringDiscontinuous
Change
Managing DuringIncremental
Change
Managing Sources of Innovation
• Creativity is the production of novel and useful ideas. o innovation begins with creativity.
• Creative work environmentso Workplace cultures in which workers
perceive that new ideas are encouraged
• Flowo The psychological state of
effortlessness in which you become absorbed in your work and time seems to pass quickly
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Components of Creative Work Enviroments
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Managing Sources of Innovation
• Experiential ApproachoManaging Innovation during
Discontinuous Change
• Compression ApproachoManaging Innovation during Incremental
Change
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Managing Innovation During Discontinuous Change
Experiential approach to innovation
• innovation is occurring within an uncertain environment
• the key to fast product innovation is to use:o intuitiono flexible optionso hands-on experience
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2.22.2
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Experiential Approach to Innovation
Aspects ofExperiential
Approach
Aspects ofExperiential
ApproachTestingTesting
Design IterationsDesign Iterations
P:roduct PrototypeP:roduct Prototype
MilestonesMilestones
Multifunctional TeamsMultifunctional Teams2.22.2
Experiential Approach• Design iteration
o a cycle of repetition in which a company tests a prototype of a new product or service, improves on the design, and then builds and tests the improved product or service prototype.
• Product prototypeo a full-scale working model that is being tested for design,
function, and reliability
• Testingo a systematic comparison of different product designs or
design iterations
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Experiential Approach• Milestones
o formal project review points used to assess progress and performance
• Multifunctional teamso accelerate learning and understanding by
mixing and integrating technical, marketing, and manufacturing activities
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Expanding Sources of Innovation
Companies can avoid internal impediments to creativity by looking outside the organization. Customers are an important source of innovation. Sportime International followed a customer idea and created Hands-On basketballs for children who need help learning how to shoot.
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Managing Innovation During IncrementalChange(Compression Approach)
• Periods of incremental changeo The focus is on systematically improving the
performance and lowering the cost of the dominant technological design.
• Compression approach to innovationo Assumes that innovation is a predictable process that can be
planned in steps and the time it takes to compress the steps can speed up the innovation.
o Most planning for incremental innovation is based on the idea of generational change.
• Occurs when incremental improvements are made to a dominant technological design such that the improved version of the technology is fully backward compatible with the older version. 24
Compression Approach
• Generational change• Supplier involvement• Shorten the time of individual steps• Overlapping steps
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Compression Approach to Innovation
• Planning for incremental innovation,-the goal is to squeeze or compress development time as much as possible, and the general strategy is to create a series of planned steps to accomplish that goal
• Generational change-based on incremental improvements to a dominant technological design and achieving backward compatibility with older technology
• Supplier involvement-delegating some of the preplanned steps in the innovation process to outside suppliers reduces the amount of work that internal development teams must do
• Shorten the time of individual steps in the innovation process. One of the most common ways to do that is through computer-aided design (CAD).
• Overlapping steps shortens the development process by reducing the delays or waiting time between steps.26
Managing Innovation
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Experimental Approach
CompressionApproach
EnvironmentEnvironment
GoalsGoals
ApproachApproach
StepsSteps
Uncertain discontinuouschange: technological substitution and design competition
Certain incremental changeestablished technology(i.e., dominant design)
Compress time/steps neededto bring about small improvements
PlanningSupplier involvementShorten time of stepsOverlapping stepsMultifunctional teams
Build something new,different, and better
Design iterationsTestingMilestonesMultifunctional teamsPowerful leaders
SpeedLower costsIncremental improvements in performance of dominantdesign
SpeedPerformance ImprovementsNew dominant design
The Risk of Not Changing
• Organizational Declineo Occurs when companies don’t anticipate,
recognize, neutralize, or adapt to the internal or external pressures that threaten their survival.
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Five Stages of Organizational Decline
BlindedBlinded
InactionInaction
Faulty ActionFaulty Action
CrisisCrisis
DissolutionDissolution
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Five Stages of Organizational
Decline• In the blinded stage, decline begins because key
managers don’t recognize the internal or external changes that will harm their organizations.
• In the inaction stage, as organizational performance problems become more visible, management may recognize the need to change but still take no action.
• In the faulty action stage, due to rising costs and decreasing profits and market share, management will announce “belt-tightening” plans designed to cut costs, increase efficiency, and restore profits.
• . In the crisis stage, bankruptcy or dissolution (i.e., breaking up and selling the different parts of the company) is likely to occur unless the company completely reorganizes the way it does business.
• In the dissolution stage, after failing to make the changes needed to sustain the organization, the company is dissolved through bankruptcy proceedings or by selling assets in order to pay suppliers, banks, and creditors.
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Managing Change
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Managingresistanceto change
Managingresistanceto change
What notto do when
leading change
What notto do when
leading change
Different changetools and
techniques
Different changetools and
techniques
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Resistance to Change
Resistance ForcesResistance Forces
Change ForcesChange Forces
ChangeChange
Forces• Change forces
o lead to differences in the form, quality, or condition of an organization over time
• Resistance forceso caused by self-interest, misunderstanding, and distrust
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Managing Change• Resistance to change
o Self-interest• Fear that change will cost or deprive them.
o Misunderstanding and distrust• Don’t understand change or distrust people
behind the change.
o Low tolerance for change• Threatened by uncertainty associated
with change.
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Lewin’s Managing Resistance to Change
UnfreezingChange
Intervention Refreezing
• Share reasons• Empathize• Communicate
• Benefits• Champion• Create opportunity for feedback• Time it right• Offer security• Educate• Don’t rush
• Top management support
• Reinforce
Managing Resistance to Change
• Educate employees• Communication change-relate d information• Have those affected by change participate in
planning and implementing• Let employees discuss and agree on who will do
what after change• Coercion
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Mistakes Managers Make
• Not establishing a great enough sense of urgency• Not creating a powerful enough coalition• Lacking a vision• Undercommunicating the vision by a factor of 10• Not removing obstacles to the new vision• Not systematically planning for and creating
short-term wins• Declaring victory too soon• Not anchoring changes in the corporation’s
culture
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Change Tools and Techniques
Results-Driven ChangeResults-Driven Change
General Electric WorkoutGeneral Electric Workout
Transition Management TeamsTransition Management Teams
Organizational DevelopmentOrganizational Development4.34.3
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Results-Driven Change1. Create measurable short-term goals to improve performance1. Create measurable short-term goals to improve performance
2. Use action steps only if likely to improve performance2. Use action steps only if likely to improve performance
3. Stress the importance of immediate improvements3. Stress the importance of immediate improvements
4. Consultants and staffers should help managers achievequick improvements in performance
4. Consultants and staffers should help managers achievequick improvements in performance
5. Test action steps to see if they yield improvements5. Test action steps to see if they yield improvements
6. It takes few resources to get results-driven change started6. It takes few resources to get results-driven change started4.34.3
Change Tools and Techniques
Results-driven change• supplants emphasis on activity with focus on
quickly measuring and improving results
General Electric Workout• three-day meeting that generates solutions to
specific business problems
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General Electric Workout
1. Boss discusses agenda and targets specific business problems, then leaves
2. Outside facilitator works with teams, who debate solutions
3. “Town Meeting”o teams make suggestionso boss must decide on the spot—
agree, say no, or ask for more information
Day
4.34.3
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Organizational Development
• A philosophy and collection of planned change interventions designed to ensure organizations long-term health and performance.
• Organizational development takes a long-range approach to change, assumes that top management support is necessary for change to succeed, creates change by educating workers and managers to change ideas, beliefs, and behaviors so problems can be solved in new ways, and emphasizes employee participation in diagnosing, solving, and evaluating problems.
• Change Agent o the person formally charged with guiding a change efforto can be an internal or external person
4.34.3
General Steps for Organizational Development Interventions
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Different Kinds of Organizational Development Interventions
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<click screenshot for video>
Holden Outerwear1. Identify the type of
change that Holden’s leaders are managing on a daily basis.
2. What resistance has Holden encountered while introducing innovative garment designs? How was it able to overcome that resistance?
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