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Change Management Automotive Industry Summary Presentation Summary V.Final Dotx


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Change Management Automotive Industry Summary Presentation Summary V.Final Dotx

  1. 1. 2011MGX 9720 THE INNOVATORS PRESENTATION SUMMARY Angela Soh Innovation and the Global Arthur Wai Ho Cheng Automotive Industry – Kim Ross Presentation Summary Nutchapol Jatursrivilai A 007 Perspective THE INNOVATORS 6/1/2011
  2. 2. All innovation involves change. Not all change involves innovation.IntroductionThe following summary report outlines content explored in the ‘Innovation and The GlobalAutomotive Industry’ group presentation. The outline reports on relevant change theory,models and findings based on case studies, research and a class exercise; demonstrating theimpact innovation has on the Global Automotive Industry and constituent organisations. Thepresentations findings support the understanding that innovation leads to change and thechange management process has significant implications for managers. Ultimately managersand organisational stakeholders collectively need to address innovation strategically, ensuringlong-term sustainability, business growth and organisational success.Innovation and creativity are inextricably linked and it is useful to review definitions of both tounderstand how. Robbins et al. (2006) defines creativity as “The ability to combine ideas in aunique way or to make an unusual association”, going on to define innovation as “turning theoutcomes of the creative process into useful products, services or work methods”. Whilst thedefinition of innovation and creativity differ, uniqueness and inventiveness underpins allorganisational and especially automotive innovation. In essence innovation involves taking acreative idea and making it useful. Therefore without creativity innovation cannot exist andinnovation is vital for survival in today’s competitive and rapidly changing global economy.The importance of innovation was highlighted in the 2009 Innovation Tools survey (globalstudy), where the company asked senior executives to identify; firstly whether they thought theclimate for innovation has improved or got worse and secondly how their companiesresponded in terms of spending in relation to innovation. Interestingly a significant portion ofcompanies continued to spend on innovation or actually increased spending during a globalrecession ( 2009).Inevitably in order to benefit from innovation, creativity must be fostered and forecasted inmany ways within organisations. Leadership styles also have an impact on the efficacy ofcultural innovation, whereby transformational leadership is associated with greater creativity,the ability to inspire and support ‘out of the box’ (Cangemi & Miller, 2007) thinking, which isfundamental to innovation. Transformational leaders commonly support employees need forflexibility, freedom and resources, further stimulating the creative process through the use ofreward systems. Innovation also directly results from effective communication and the abilityto motivate stakeholders (Giley et al., 2008).MGX 9720 The Innovators Presentation Summary
  3. 3. Innovation can also be categorised according to the frequency and extent of the innovation orsimply referred to by its effect. Today automotive industries engage in Radical, Technical orTransformational innovation processes, which involve new processes or product altogether, inorder to achieve an innovation quantum leaps in terms of new outcomes. However there arefar-reaching consequences of innovation affecting many areas of a business, through catalysingrapid and changing business processes. Alternatively incremental innovation allows change tocreate sustained innovation through managing change processes over time, often minimisingdisruption allowing companies to remain responsive.Oncemore the automotive industry globally is well known for the application of sustainableinnovation, when companies create a change in a product or service or relative to managinginnovation, technical/sustainable innovation results. The impact on the way that the finalproduct or service is created doesn’t change, however manufacturing philosophies such as“Lean” or “Six Sigma” approaches usually result in more sustainable manufacturing processes.DiscussionSustainable innovation in the automotive industryIn today’s rapidly changing global economy and environment, automotive companies are optingfor Sustainable Innovation, which surpasses the design of ‘green technologies’, involving thedevelopment of supportive social and normative frameworks for organisational innovation andchange. Sustainable innovation supplements and reinforces the adoption and distribution ofsustainable technologies deriving sustainable value from holistic economic, social andenvironmental factors benefitting all stakeholders involved (Osch, Bohnsack & Avital, 2010).Evidently the automotive industry is an initiative target for government environmentalregulation. Hence, the automotive industry as a whole benchmarks innovation throughout itsmanagement of resources, industrial development and processes. Today’s automotivemanagement of innovation occurs through change management strategies offering a radicallydifferent approach than traditional approaches. Today change management strategies underpinorganisational innovation programs which support organisational sustainability (Roome, 1994,as cited in Osch et al., 2010).MGX 9720 The Innovators Presentation Summary
  4. 4. According to current automotive research, sustainability is a consumer responsive value and a viable influencer in customer choice. For example recent demands for innovative cars for evolving megacities include (Wyman, 2007).:  Easy switching between relaxation and driving positions  Emphasis on passenger entertainment, GPS and information systems  Effective smog protection and air conditioning  Nearly zero emissionConsumer awareness and changing trends identified through strategic forecasting also impactthe innovation process. Subsequently the growing numbers of automotive companies strivingto develop eco-friendly cars equates to a global industry ‘driven’ by change managedinnovation cycles. At General Motors (GM) and Nissan there is a significant development focuson electric vehicles, whilst Toyota is producing hybrid vehicles, which is vastly different thanDaimler’s fuel-cell vehicles. Due to consumer and market demand it stands to reason that thereare fifty one new models of plug-in electric vehicles scheduled into production by 2012.Interestingly, a change in the global environment has stimulated automotive sustainableinnovation into a rapid change/adapt cycle. For instance, GM’s Hy-Wire₂, Toyota’s Fine-N₃, andNissan’s Leaf demonstrate that sustainable technologies offer efficient energy usage, zeroemissions, improved safety, quietness (inside and out), customisation possibilities, andpotentially minimal maintenance, increasing the social value of automotive technologicaladvancement. Inextricably sustainable innovation and change management are part of thesame organisational development cycle. However, in order to allow for the diffusion ofinnovative alternatives, multiple complementary social and institutional measures such asaligning infrastructure and meeting new functional requirements are vital to the success ofreformulating cognitive and normative frameworks for individual and organisational change(Osch et al., 2010).Change Management theory and models for innovation in the automotive industryGiven that the world and automotive economy is in the midst of a significant transition intosustainable eco-friendly technologies, it’s logical that the automotive industry is globalising toreduce costs, gain resources, expand markets and develop new products and practices morereadily.It is for these reasons the automotive industry has adopted like radical, technical andsustainable Innovative/Change Management strategies in order to address innovation by wayof a structured and systemic approach. Theoretically this involves shifting and transitioningMGX 9720 The Innovators Presentation Summary
  5. 5. individuals, teams and organisations from their current state towards a desired future state ofadvancement. It’s through change management processes that organisations innovateculturally through the empowerment of employees towards embracing change, so they cancontribute resourcefully to their current organisational environment.In addition the measurement of change management processes is vitally important toinnovation improvement. Providing focus and attention on essential factors, illustrating howresources can be best utilised in goal setting and in monitoring progress. The evaluation of theeffectiveness of change management on innovation, can be identified through analysing rootcauses, identifying the sources of error and identifying opportunities for improvement(Harrington, 1991, Taskinen, 2003).Automotive Change Management /Innovation processes include (Torppa and Smith, 2011):  Marketing – to enable communication between various stakeholders  A visible tracking process on transformation projects  The use of performance metrics to design appropriate intervention strategiesWhilst change management can be seen as a management and technical process, in actual factit’s also a significant transformational cultural process. The emotive impact of change ultimatelyaffects all stakeholders and in some cases early adopters are affected differently than laggards.Inevitably the change process impacts organisational stakeholders in various ways (Waddell, D,M., Cummings, T, G. & Worley, C, G. (2011). The Kubler-Ross model effectively illustrates howreactions to change result from the inevitable emotive and cyclical indicators of change,indicating when mechanisms are working in accordance with their purpose. Similarly the impacton individuals and the organisation at various stages of the innovation change cycle often differ,influencing innovation dynamics and the adoption of the change process (Gill, R. 2003).MGX 9720 The Innovators Presentation Summary
  6. 6. Figure #1.Personal Change Curve – Representing The Kubler-Ross Model Five StagesChange Management Institute #2 Lewin’s Three Steps (1951) - action research models such as Lewins three stage model allows managers to viewand manage the transformation/innovation cycle effectively. Ideally participants have theopportunity to design action research interventions, getting directly involved with innovationchanges and strategic planning. Lewin’s three step model allows change agents to respond toorganisational trends and behaviours accordingly. Allowing change management practitionersto address organisational resistance through designing relevant interventions (Brown, D.R. andHarvey, D. 2006). In real terms change management models offer a structural format to alignstrategy with supporting innovation capacities, facilitating transformational leadership,employee engagement and enablement.In relation to the rapid global automotive industry transformation. Radical, Technical andSustainable innovation directly results from change management intervention strategiesmanaged well. Specifically with regards to incorporating new technologies, manufacturingsystems, production processes and management programs. Successfully managed innovationenables stakeholders to perceive, manage and create their own mental models and metaphorsfor transformation – in these circumstances change occurs from the inside out and peoplechampion change by way of their own investment, skill and abilities, not just from externalpressures (the outside in).MGX 9720 The Innovators Presentation Summary
  7. 7. Figure #3 Kotters 8 Step Model, the reinforcement of innovation change management strategy for the long-term isachieved through applying processes like Kotter’s 8 step model. In these cases changemanagement processes transforms cultural norms and behaviors, improving the chances ofcontinual change (Isabella, L. A. 1990).Practical ExerciseThe class exercise provided a useful learning point for all participants, especially with regards tothe value and practical application of Kotter’s 8 step model. Participants in groups of fourdiscussed one-three Kotter values relative to a chosen organisation. The class insighted latterconclusions:Group 1 “Inspirational” - Telstra  Step One: Create Urgency – This value empowers and brings change into the NOW  Step Two: Form a Powerful Coalition – Network, communicate and articulate change  Three: Create a Vision for Change – A shared vision underpins motivation and actionGroup 2 “Compelling” - IBM  Step Four: Communicate the Vision – Communicate, communicate, communicate  Step Five: Remove Obstacles – Remove blocks and clear the pathGroup 3 “Organised” - Morgan Car Company  Step Six: Create Short-term Wins – Celebrate, recognise and remunerate  Step Seven: Build on the Change – Where change already existsGroup 4” Purposeful"- ANZ  Step Eight: Anchor the Changes in Corporate Culture – Develop a value storyMGX 9720 The Innovators Presentation Summary
  8. 8. ConclusionIn conclusion change management practices in order to support innovation, must be specificallydesigned to achieve innovation outcomes through a process of organisational transformation.Change management strategies can often be construed as a quick fix, however it is vitalorganisations and industries like the automotive sector address the implications of the changein the long-term, when evaluating far reaching and unforeseen disruptions to their innovationpractices. Ultimately change initiatives need to be communicated effectively across anorganisation summoning commitment to change, via compelling evidence/stories for thebenefits of change to be reaped. Similarly resistance of change can come from top levelmanagement (Hughes, 2007), in these circumstances the human and political aspects of changemanagement need to be well designed and thought-out to overcome such issues.In order for successful change management to occur relative to innovation, the followingcharacteristics are desirable (Gill, 2003):  The benefits to management and realisation to define measurable stakeholder aims, need to be supported by a business case, taking into account their achievement, assumptions, risks, dependencies, costs, return on investment, dis-benefits and cultural issues  Effective communications need to inform various stakeholders of the reasons for the change, justifying the benefits of successful implementation and the details of change  Implementing an effective training scheme for the whole organisation is also viable  Counter resistance from employees and align them to the organisation’s overall strategic direction  Provide personal counseling and alternatives if required  Monitor the change implementation process and fine-tune as requiredMGX 9720 The Innovators Presentation Summary
  9. 9. RecommendationsAs evidenced by the automotive examples outlined in the class presentation case studies, someof the adverse effects of change are unpredictable and unforeseeable. It is thereforerecommended that managers engage in strategic forecasting activities to assess possibleintervention impacts.A leading methodology aligned to change management and innovation relates to:Technology ForecastingBased on Roman (1970), Forecasting does not have universal methods or procedures, howeverorganisations can develop their own forecasting techniques to suit unique operationalrequirements. In the case of large automotive companies ‘The Delphi’ technique is commonlyused through a consultation process which is based on prediction and commentary fromexperts (Rowe & Wright, 1999).Fordham (2001) suggests that there are 3 Steps of Technology Forecasting which are; 1. Identify the trend: To identify patterns among groups of related products and supply what is in demand 2. Track Development: Monitor and review the development process to ensure that the current progress matches with the original need 3. Make your Prediction: Predict trends which will catch on and the one’s that will fall by the waysideLastly managers need to apply strategic forecasting practices to predict possible aspects thatwill set future directions. In the case of the global automotive industry, innovation and changemanagement interventions are focused on sustainability and efficient production line process (aresult of Six Sigma and lean manufacturing processes). It’s also important change managementpractitioners take into account trends within the context of OD which include economic,workforce, technology and organisational factors in order to design effective innovationinterventions for ongoing and sustainable organisational success (Waddell et al (2011).MGX 9720 The Innovators Presentation Summary
  10. 10. ReferencesCangemi, J., & Miller, R. (2007). Breaking-out-of-the-box in organizations: structuring a positive climate for thedevelopment of creativity in the workplace. Journal of Management Development, 26(5), 401 - 410.Fordham, D, R. (2001) Forecasting technology trends. Strategic Finance, 83(3), pp. 50-54.Gill, R. 2003. Change management--or change leadership? Journal of Change Management, 3, 307 - 318.Harrington, H. J. 1991. Business Process Improvement, The Breakthrough Strategy for Total Quality, Productivityand Competitiveness, New York, McCraw-Hill Book Company.Hughes, M. 2007. The Tools and Techniques of Change Management. Journal of Change Management, 7, 37 - 49.Gilley, A., Dixon, P., & Gilley, J. W. (2008). Characteristics of Leadership Effectiveness: Implementing Change andDriving Innovation in Organizations. Human Resource Development Quarterly, 19(2), 153 - 169.Innovation Tools (2009), Innovation Climate Survey, located at:, W. V., Bohnsack, R., & Avital, M. (2010). From green IT to sustainable value: The path-dependentconstruction of sustainable innovation. Academy of Management Annual Meeting Proceedings.Robbins, S.P., Bergman, R., Stagg, I., Coulter, M. Foundations of Management. 4e 2006 Pearson Education,Australia.Roman, D, D. (1970) Technological Forecasting In the Decision Process. Academy of Management Journal. GeorgeWashington University, 13(2), pp. 127-138Rowe & Wright (1999) The Delphi technique as a forecasting tool: issue and analysis. International Journal ofForecasting, 15(4)Taskinen, T. 2003. Improving change management capabilities in manufacturing: From theory to practice.Production Planning & Control: The Management of Operations, 14, 201 - 211.Torppa, C. B. & SMITH, K. L. 2011. Organizational Change Management: A Test of the Effectiveness of aCommunication Plan. Communication Research Reports, 28, 62 - 73.Waddell, D, M., Cummings, T, G. & Worley, C, G. (2011) ‘Future directions: Change in a global setting’, thOrganisational Change Development & Transformation, 4 Edition, Cengage Learning, Victoria, pp.430-440Wyman, O. (2007). A comprehensive study on innovation in the automotive industry:Oliver Wyman AutomotiveImages 9720 The Innovators Presentation Summary
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