Chapter 6

Managing Change and Innovation

What is Change?

• Change refers to an event that occurs when something passes from one state or phase to another.

• In another way, Change occurs when one state of equilibrium is disturbed and ends at other state of equilibrium.

Few changes over the yearsFew changes over the years

Nobody can go back and start a new beginning, but anyone can start today and make a new ending.

When change is likely to happen

Organisations go for a change only when above equation holds true for it.C=ChangeD= Dissatisfaction with present state or status quo.V=Vision, Where to go? How to go? What to do?A=Ability, resources, money, time, expertise.FS=First StepR=Resistance

Beckhard’s Change Equation

C={D x V x A x FS > R}

Kurt Lewin’s Formula of Change

Unfreezing

Changing

Refreezing

What is Change Management?

Change Management is management of transition from the present state to desired state.

Present State

Desired State

Transition State

Hence, change management is management of transition between the current and desired state. Any change that does not require management of transition state does not require change management

Current State • Employees (including management and executives!) generally

prefer the current state, because that is where they live

Current State

Transition State

Future State

“better the devil you know is better than the devil you don’t”

Future State • The future state is unknown to the employee; will it be better,

or worse?• This is where Project teams “live”

Current State

Transition State

Future State

Transition State • The transition state creates stress and anxiety

Current State

Transition State

Future State

CHANGE

• External• Organisational• Quicker• More visible• More predictable• Physical• Tangible

• Internal• Personal• Slower• Less visible• Less predictable• Psychological• Intangible

TRANSITION

Change vs. TransitionChange vs. TransitionChange is the shift, transition is the process of one state of being to another

Change vs. TransitionChange vs. Transition

The Change Process • The Calm Waters Metaphor

– Lewin’s description of the change process as a break in the organisation’s equilibrium state.

• Unfreezing the status quo• Changing to a new state• Refreezing to make the change

permanent

• White-Water Rapids Metaphor– The lack of environmental stability

and predictability requires that managers and organisations continually adapt (manage change actively) to survive.

.

Metaphor: a figure of speech in which a word or phrase literally denoting one kind of object or idea is used in place of another to suggest a likeness or analogy between them.“He was drowning in paperwork” is a metaphor in which having to deal with a lot of paperwork is being compared to drowning in an ocean of water

External and Internal Forces for ChangeTypes of forces to consider  

Competition Economic Factors Political Factors Available Resources Traditions Vested interests

Introduction of new

technology Organisational structures Relationships Social or organisational

trends Attitudes of people Present or past practices Union Pressures Institutional policies or norms Costs

Organisational Change and Change Agents

• Organisational Change - any alterations in the people, structure, or technology of an organisation.

• Change Agents - persons who act as catalysts and assume the responsibility for managing the change process.

Types of Change Agents• Managers: internal

entrepreneurs• Non-managers: change

specialists• Outside consultants:

change implementation experts

The Three-Step Change Process

Force Field Analysis

Proposed Change

Driving Forces

Restraining Forces

Upgrading

Factory

with new

manufacturing

machinery

1. Customers want new products

2. Improved speed of production

3. Enhanced volume of output

4. Maintenance costs increasing

1. Loss of staff overtime

2. Staff frightened of new technology

3. Environmental impact of new techniques

4. High cost of the technology

5. Disruption

4

2

3

1

3

3

1

3

3Total = 10

Total = 13

Three Types of Change

Types of Change• Structure

– Changing an organisation’s structural components or its structural design

• Technology– Adopting new equipment, tools, or operating methods

that displace old skills and require new ones• Automation - replacing certain tasks done by people with

machines• Computerisation

• People– Changing attitudes, expectations, perceptions, and

behaviours of the workforce

Organisational Development

• Organisational Development (OD) - techniques or programmes to change people and the nature and quality of interpersonal work relationships.

• Global OD - OD techniques that work for U.S. organisations may be inappropriate in other countries and cultures.

Popular OD Techniques

Managing Resistance to Change• Why People Resist Change

– The ambiguity and uncertainty that change introduces

– The comfort of old habits

– A concern over personal loss of status, money, authority, friendships, and personal convenience

– The perception that change is incompatible with the goals and interest of the organisation

ADKR Model

Techniques for Reducing Resistance to Change

Changing Organisational Culture

• Cultures are naturally resistant to change.

• Conditions that facilitate cultural change:– The occurrence of a dramatic crisis

– Leadership changing hands

– A young, flexible, and small organisation

– A weak organisational culture

Changing Culture

Stress and Stressors

• Stress - the adverse reaction people have to excessive pressure placed on them from extraordinary demands, constraints, or opportunities.

• Stressors - factors that cause stress.

What Causes Stress?

• Role Conflicts - work expectations that are hard to satisfy.

• Role Overload - having more work to accomplish than time permits.

• Role Ambiguity - when role expectations are not clearly understood.

Personal Factors Causing Stress

• Type A personality - people who have a chronic sense of urgency and an excessive competitive drive.

• Type B personality - people who are relaxed and easygoing and accept change easily.

Symptoms of Stress

Stimulating Innovation

• Creativity - the ability to combine ideas in a unique way or to make an unusual association.

• Innovation - turning the outcomes of the creative process into useful products, services, or work methods.

Stimulating Innovation (cont.)

• Idea Champions - individuals who actively and enthusiastically support new ideas, build support, overcome resistance, and ensure that innovations are implemented.

Change-Capable Organisations

World’s Most Innovative Companies

Innovation Variables

Structural Variables

• Adopt an organic structure

• Make available plentiful resources

• Engage in frequent inter-unit communication

• Minimise extreme time pressures on creative activities

• Provide explicit support for creativity

Cultural Variables• Accept ambiguity• Tolerate the impractical• Have low external controls• Tolerate risk taking• Tolerate conflict• Focus on ends rather than means• Develop an open-system focus• Provide positive feedback

Human Resource Variables

• Actively promote training and development to keep employees’ skills current

• Offer high job security to encourage risk taking

• Encourage individuals to be “champions” of change

• What can happen if change is NOT managed?

• Productivity declines as people become more consumed with the change being introduced.

• Passive resistance festers.• Active resistance emerges and sabotages the change.• Valued employees leave the organization, a very costly

proposition in terms of the lost contribution and the cost to replace them.

• Employees become disinterested in the current state and the future state.

• Employees begin arguing about change and the direction of the company.

• People are left to wonder why the change is happening.• More people begin taking sick days or not showing up

for work.• People find work-around to avoid implementing the

new way of doing things.• Employees revert back to the old way of doing things.• Changes are not fully implemented.• Changes are scrapped and cancelled due to the lack of

support throughout the organization.• Divides are created in the organization between 'us' and

'them'.• The organization builds a history of failed and painful

changes.• Many types of risk are created - risk to the project, to

the organization, to the employees involved and to the individuals supporting or chartering the change

• What can happen if change is EFFECTIVELY managed?

• Employees have a solid understanding of why change is happening.

• Employees engage in both the solution and the change.• Training is used to build knowledge after employees

have made the personal decision to support the change.• Resistance is identified and dealt with early in the

process.• Senior leaders demonstrate their own and the

organization's commitment to the change.• Communications are segmented and customized for

different audiences, answering the questions that they care about.

• Momentum is built throughout different areas and levels within the organization.

• Changes are less painful to the organization and to the employees.

• A coalition of support among senior leaders and managers creates momentum throughout the organization.

• Probability of meeting project objectives is increased.• The organization begins to build a history of successful

change, creating a better 'backdrop' for the next change initiative