Chapter 7 Change and Innovation

1. Management Principles Chapter 7Change and Innovation Craig W. Fontaine, Ph.D.

2. Responding to Events or SWOT Analysis • Strategic renewal: change in an organization’s strategy through a process of creating new products, services, capabilities, and knowledge bases. • Change implementation: actions taken by organizational leaders in order to support strategic renewal and maintain outstanding performance in a dynamic environment.

3. Why Change is Needed… • Trigger event: a shift in the environment that precipitates a need for organizational change. “Trigger events….are so named because their magnitude and potential for organizational as well as personal impact set into motion a series of mental shifts as individuals strive to understand and redefine a situation. By their very nature, they unbalance established routines and evoke conscious thought on the part of organizational members. They stir up feelings and emotions that come to affect people’s reactions to the change. In short, trigger events bring people’s mindsets into the arena of change.”

4. Examples of Trigger Events

5. Examples of Trigger Events

6. Strategic Renewal and Organizational Change Shifting Competitive Environment Strategic Renewal Organizational Change New Opportunities Altering Behavior Patterns of Employees

7. Behavioral Change is Needed… • Behavioral change: alterations in employee  behavior in order to enable the organization to meet the demands of its strategy while achieving and sustaining outstanding performance. • Behavior: the enactment of roles, responsibilities, and relationships by employees within an organization.

8. Underlying Causes of Resistance • Individuals may be satisfied with the status quo. Because their needs are being met, they may view any potential change as negative. • Individuals may view change as a threat, fearing it will adversely affect them in some significant way. • Individuals may understand that change brings both benefits and costs, but feel that the costs far outweigh the benefits. • Individuals may view change as potentially positive, but may still resist because they believe that the organization’s management is mishandling the change process. • Individuals may believe in the change effort ,but still believe that the change is not likely to succeed.

9. Resistance will Occur • Resistance: efforts exerted by employees either overtly or covertly to maintain the status quo. “Employee response to change runs across a broad spectrum, ranging from commitment at one end to aggressive resistance” on the other. Each of these reactions to change helps shape the behavior of individuals and, ultimately, the success of a change effort.”

10. Management’s Role in Creating Resistance Text in this color

11. Managing Resistance to Change Educate employees Communication change-related information Have those affected by change participate in planning and implementing Let employees discuss and agree on who will do what after change Coercion

12. Mistakes Managers Make • Not establishing a great enough sense of urgency • Not creating a powerful enough coalition • Lacking a vision • Undercommunicating the vision • 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

13. Key Understandings about Resistance and Participation Imposing change from above can lead to employee resistance. but A participative process can help build support for change efforts.

14. Involve the Workers • Participation: the process of allowing employees a voice in work-related decisions. “By diagnosing problems, understanding their importance, and being part of the process of formulating solutions, people develop a psychological sense of ownership over the outcome. That ownership now creates in employees the heightened motivation to implement change in order to achieve desired goals”

15. Organizational Change Process - Lewin • Unfreezing • getting the people affected by change to believe that change is needed • Change • workers and managers change their behavior and work practices • Refreezing • supporting and reinforcing the new changes so that they stick

16. Force Field Analysis • Change forces • lead to differences in an organization over time • Resistance forces • support the status quo

19. The Anatomy of Not Changing Organizational declines occurs when companies don’t anticipate, recognize, neutralize, or adapt to the internal and external pressures that threaten their survival. • Blinded stage (failure to recognize) • Inaction stage (don’t react the need) • Faulty action stage (belt tightening response) • Crisis stage (begin to break-up company) • Dissolution stage ( bankruptcy)

20. Innovation

21. Technology Cycles • Begins with the birth of a new technology… • …ends when that technology reaches limit and dies. Examples…..anyone?

22. Discontinuity = Disruptive Technologies

23. Managing on Two Fronts • During discontinuous change, companies must find a way to anticipate and survive technological changes. and…… • Manage incremental change and innovation. So how do managers do that….

24. Different approaches for different circumstances..

25. Experiential Approach to Innovation • Used in time of uncertainty • Rapid design iteration cycles (the tactic) • Use of product prototype • Testing of the prototype • More costly approach • Milestones tracking • Involvement of multifunctional teams

26. Compression Approach • Used in more certainty times • Lower cost approach, incremental approach • Planned steps • Supplier involvement • Shorten the time of individual steps • Overlapping steps