30 05-2010 organizational change and innovation


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30 05-2010 organizational change and innovation

  1. 1. Do organizations have to change? <ul><li>Turbulent Times The Changing Work Place </li></ul><ul><li>Today’s organizations need to continuously adapt to new situations if they are to survive and prosper </li></ul><ul><li>One of the most dramatic elements is the shift to a technology- driven workplace </li></ul><ul><li>Ideas, information, and relationships are becoming critically important </li></ul>
  2. 2. From where the pressure on organization come? <ul><li>Organizations have to change because they are subject to pressures </li></ul><ul><li>from the outside world, the sector, their local area, and from within </li></ul>The outside the world Closer to home Inside the organization
  3. 3. Outside the world <ul><li>Political factors- government policies and initiatives, attitudes to industry and competition, political alignments at home and abroad. </li></ul><ul><li>Economic factors- interest rates, currency exchange rates, consumer expenditure, inflation </li></ul><ul><li>Social and cultural factors- where people live, education and health, social mobility, social and cultural attitudes to work, home and community life and behavior </li></ul><ul><li>Technological factors- new product and services, access and availability of new technologies becoming outdated </li></ul><ul><li>Legislative factors- employment law, taxation law, health and safety legislation </li></ul><ul><li>Environmental factors- pollution control, water, transport and development policies, waste disposal </li></ul><ul><li>-------or any combination of these. </li></ul>
  4. 4. Closer to home <ul><li>The pool of potential customers- do they want the organization’s product and services? Can they get them cheaper or more easily elsewhere? </li></ul><ul><li>Competitors -what action is the competition taking to steal the organization’s customers </li></ul><ul><li>Suppliers -does the organization have a choice of suppliers and are they keen to get the organization’s business? </li></ul><ul><li>Labour Market- are there enough workers with the right skills? </li></ul><ul><li>Local conditions- what’s happening locally that affects the organization viability? </li></ul>
  5. 5. Within the organization itself <ul><li>A new boss might have different styles and approach or want to take the organization in a new direction </li></ul><ul><li>A new strategy may be stimulated by an analysis of external forces and may involve: providing new products and services, cutting costs, moving into new market… </li></ul><ul><li>Attempts to make the organization more efficent by changing the way people work. </li></ul>
  6. 6. What is organizational change? <ul><li>Any substantive modification to some part of the organization. </li></ul>
  7. 7. Types of change <ul><li>Top down </li></ul>Bottom up Radical Gradual Problem solving Learning Continuous improvement Actively seek New job Restructuring Strategy Takeover, merger Development Programme
  8. 8. Radical change <ul><li>It is characterized by a major shift in the way people work or act, perhaps requiring different values and attitudes. </li></ul><ul><li>A radical change is often marked by a decision to make a distinct break from a current situation in order to reach a desired future situation. Also known as frame-breaking change. </li></ul><ul><ul><ul><li>Change that results in a major overhaul of the organization or its component systems. </li></ul></ul></ul>Current situation Process of change Desired future situation Breakpoint decisions
  9. 9. <ul><li>Some radical change is open-ended -a change is followed by soon by another and perhaps more to come, </li></ul>Current situation Desired future situation Breakpoint decisions Change processes Review/evaluate Implement Plan change
  10. 10. Top-down and bottom-up change <ul><li>Top-down change is imposed by others, usually those who in powers. </li></ul><ul><li>Bottom-up change is planned and let by the people who carry it out. It is often gradual, involving small incremental changes </li></ul><ul><ul><li>Gradual/Incremental change. </li></ul></ul><ul><ul><ul><li>Also known as frame-bending change . </li></ul></ul></ul><ul><ul><ul><li>Change that is part of the organization’s natural evolution . </li></ul></ul></ul>
  11. 11.
  12. 12. <ul><li>Planned Vs Reactive Changes </li></ul><ul><li>Planned Change : Change that is designed and implemented in an orderly and timely fashion in anticipation of future events. A performance gap is a direct response to a perceived performance gap. </li></ul><ul><ul><ul><li>A discrepancy between the actual and desired state of affairs. </li></ul></ul></ul><ul><ul><ul><li>May reflect problems or opportunities. </li></ul></ul></ul><ul><li>Reactive Changes: A place meal response to circumstances as they develop. </li></ul>
  13. 13. Model of Change Sequence of Events Environmental Forces Internal Forces Need for change Initiate change Implement change Monitor global competition, and other factors Consider plans, goals, company problems, and needs Evaluate problems and opportunities, define needed changes in technology products, structure, and culture Facilitate search, creativity, idea champions, venture teams, skunk works and idea incubators Use force field analysis, tactics for overcoming resistance
  14. 14. Forces for Change <ul><li>Environmental Forces </li></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Competitors </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Economic </li></ul></ul><ul><ul><li>International arena </li></ul></ul><ul><li>Internal Forces – activities and decisions </li></ul>
  15. 15. Need for Change <ul><li>Performance gap = disparity between existing and desired performance levels. </li></ul><ul><li>Current procedures are not up to standard </li></ul><ul><ul><li>New idea or technology could improve current performance </li></ul></ul>
  16. 16. Initiating Change <ul><li>Stage where the ideas that solve perceived needs are developed </li></ul><ul><li>Search = process of learning about current developments inside or outside the organization that can be used to meet the perceived need for change </li></ul><ul><li>Creativity = generation of novel ideas that might meet perceived needs or offer opportunities for the organization </li></ul>Critical phase of change management Experiential Exercise: Is Your Company Creative?
  17. 17. Change agents <ul><ul><li>Individuals and groups who take responsibility for changing the existing behavior patterns of another person or social system. </li></ul></ul><ul><ul><li>Sometimes hired as outside consultants. </li></ul></ul><ul><ul><li>Managers and leaders in contemporary organizations are expected to be change agents. </li></ul></ul>
  18. 18. Idea Champion A person who sees the need for and Champions productive change within the organization Change does not occur by itself
  19. 19. Four Roles in Organizational Change <ul><li>Inventor </li></ul><ul><li>Develops and </li></ul><ul><li>understands </li></ul><ul><li>technical aspects of ideas </li></ul><ul><li>Does not know how </li></ul><ul><li>to win support for </li></ul><ul><li>the idea or make a </li></ul><ul><li>business of it </li></ul><ul><li>Sponsor </li></ul><ul><li>High-level manager </li></ul><ul><li>who removes </li></ul><ul><li>organizational </li></ul><ul><li>barriers </li></ul><ul><li>Approves and </li></ul><ul><li>protects idea within </li></ul><ul><li>organization </li></ul><ul><li>Critic </li></ul><ul><li>Provides reality test </li></ul><ul><li>Looks for short- </li></ul><ul><li>comings </li></ul><ul><li>Defines hard-nosed </li></ul><ul><li>criteria that idea </li></ul><ul><li>must pass </li></ul>Sources: Based on Harold L. Angle and Andrew H. Van de Ven, “Suggestions for Managing the Innovation Journey,” in Research in the Management of Innovation: The Minnesota Studies, ed. A. H. Van de Ven, H. L. Angle, and Marshall Scott Poole (Cambridge, Mass.: Ballinger/Harper & Row, 1989); and Jay R. Galgraith, “Designing the Innovating Organization,” Organizational Dynamics (winter 1982) 5-25. <ul><li>Champion </li></ul><ul><li>Believes in idea </li></ul><ul><li>Visualizes benefits </li></ul><ul><li>Confronts </li></ul><ul><li>organization </li></ul><ul><li>realities of cost, benefits </li></ul><ul><li>Obtains financial & </li></ul><ul><li>political support </li></ul><ul><li>Overcomes obstacles </li></ul>Championing an idea successfully requires roles in organizations
  20. 20. Steps in organizational change? (or) How to Change? <ul><li>Phases of planned change.- Kurt Lewin Model </li></ul><ul><ul><li>Unfreezing. </li></ul></ul><ul><ul><ul><li>Preparing a situation for change by disconfirming existing attitudes and behaviors. </li></ul></ul></ul><ul><ul><ul><li>Susceptibility to “boiled frog phenomenon.” </li></ul></ul></ul><ul><ul><li>Changing. </li></ul></ul><ul><ul><ul><li>Taking action to modify a situation by altering the targets of change. </li></ul></ul></ul><ul><ul><li>Refreezing. </li></ul></ul><ul><ul><ul><li>Maintaining and eventually institutionalizing the change. </li></ul></ul></ul>
  21. 21. What can be done about resistance to change? <ul><li>Ways in which resistance is experienced. </li></ul><ul><ul><li>Resistance to the change itself. </li></ul></ul><ul><ul><li>Resistance to the change strategy. </li></ul></ul><ul><ul><li>Resistance to the change agent. </li></ul></ul>
  22. 22. What can be done about resistance to change? <ul><li>Why people resist change. </li></ul><ul><ul><li>Fear of the unknown. </li></ul></ul><ul><ul><li>Lack of good information. </li></ul></ul><ul><ul><li>Fear for loss of security. </li></ul></ul><ul><ul><li>No reason to change. </li></ul></ul><ul><ul><li>Fear for loss of power. </li></ul></ul><ul><ul><li>Lack of resources. </li></ul></ul><ul><ul><li>Bad timing. </li></ul></ul><ul><ul><li>Habit. </li></ul></ul>
  23. 23. Force-Field Analysis <ul><li>The process of determining which forces drive and which resist a proposed change </li></ul><ul><li>Restraining Forces (Barriers) </li></ul><ul><li>Lack of resources </li></ul><ul><li>Resistance from middle managers </li></ul><ul><li>Inadequate employee skills </li></ul><ul><li>Driving Forces </li></ul><ul><li>Thought of as problems or opportunities that provide motivation for change </li></ul>Kurt Lewin
  24. 24. Traditional to Just-In-Time Inventory Systems
  25. 25. Areas of Organizational Change Culture/People Strategy Structure Technology Products
  26. 26. Organizational Change <ul><li>Technology : General rule = change is bottom up </li></ul><ul><li>New product: </li></ul><ul><li>Horizontal linkage model emphasizes shared development of innovations among several departments </li></ul><ul><li>Time-based competition is based on the ability to deliver products and services faster than competitors </li></ul><ul><li>Structure: Successful change = through a top-down approach </li></ul><ul><li>Culture/people: </li></ul><ul><li>Training is the most frequently used tool for changing the organization’s mind-set </li></ul>
  27. 27. Horizontal Linkage Model For New Product Innovation Research Department Marketing Department Manufacturing Department New Technology Customers Market Conditions Organization
  28. 28. Structural Changes <ul><li>Any change in the way in which the organization is designed and managed </li></ul><ul><ul><li>Hierarchy of authority </li></ul></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Structural characteristics </li></ul></ul><ul><ul><li>Administrative procedures </li></ul></ul><ul><ul><li>Management systems </li></ul></ul>
  29. 29. Culture-People Changes <ul><li>Changes in structure, technologies, and products or services do not happen on their own </li></ul><ul><li>Changes in any of these areas require changes in people </li></ul>
  30. 30. Model for Planned Organizational Change Source: Adapted from Larry Short, “Planned Organizational Change,” MSU Business Topics , Autumn 1973, pp. 53–61 ed. Theodore Herbert, Organizational Behavior: Readings and Cases (New York: McMillan, 1976), p. 351.
  31. 31. Organizational Development (OD) <ul><li>An effort that is planned, organization wide, and mange from the top indented to increase organizational effectiveness and health through planned interventions in the organization’s process, using behavioural science knowledge. </li></ul>Problems OD Can Address Problems OD Can Address Problems OD can address
  32. 32. OD Techniques <ul><li>Diagnostic activities </li></ul><ul><li>Team building </li></ul><ul><li>Survey feedback </li></ul><ul><li>Education </li></ul><ul><li>Inter group activities </li></ul><ul><li>Third party peacemaking </li></ul><ul><li>Techno structural activities </li></ul><ul><li>Process consultation </li></ul><ul><li>Life and career planning </li></ul><ul><li>Coaching and counseling </li></ul><ul><li>Planning and goal setting </li></ul>
  33. 33. What is innovation? <ul><li>Schumpeter argued that innovation comes about through new combinations made by an entrepreneur, resulting in </li></ul><ul><ul><li>a new product, </li></ul></ul><ul><ul><li>a new process, </li></ul></ul><ul><ul><li>opening of new market, </li></ul></ul><ul><ul><li>new way of organizing the business </li></ul></ul><ul><ul><li>new sources of supply </li></ul></ul>
  34. 34. Innovation <ul><ul><li>The process of creating new ideas and putting them into practice. </li></ul></ul>
  35. 35. Open Innovation <ul><li>Extending the search for and commercialization of new ideas beyond the boundaries of the organization </li></ul><ul><li>The boundaries between an organization and its environment are becoming porous so that ideas flow back and forth among different companies that engage in partnerships, joint ventures, licensing agreements, and other alliances </li></ul>
  36. 36. Forms of innovation <ul><li>Radical Versus Incremental Innovation </li></ul><ul><li>Technical versus Managerial Innovation </li></ul><ul><li>Product versus Process Innovation </li></ul>
  37. 37. The Innovation Process Development Organization evaluates, modifies, and improves on a creative ideas Application Organizations uses developed idea In design, manufacturing, or delivery of New products or services or processes Launch Organization introduces new products or services to the marketplace. Growth Demand for new products or services growth Decline Demand for an innovation decreases, and substitute Innovations are developed and Applied. Maturity Most competing organizations have access to the ideas
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  40. 40. “ Re-Everything” <ul><li>“ Re-Everything” for e-Customer Focus </li></ul><ul><li>“ The most productive and successful companies focus on increasing market share by staying one step ahead of the customer and coming up with brand-new product innovations that will inspire his imagination, rather than by battling for </li></ul><ul><li>market share in an already crowded market.” </li></ul><ul><li>“ Quality, then, means anticipating the </li></ul><ul><li>needs of the customer.” </li></ul>
  41. 41. The failure to Innovate <ul><li>Lack of resources </li></ul><ul><li>Failure to recognize opportunities </li></ul><ul><li>Resistance to change </li></ul>
  42. 42. Promoting innovation in organization <ul><li>The reward system </li></ul><ul><li>Organizational culture </li></ul><ul><li>Intrapreneurship in larger organizations. </li></ul>
  43. 43. High Performance Work Systems Framework By Permission: Van Buren & Werner (1996)