Forces driving the need for major organizational change include increased competition, both domestic and international, as well as global changes in markets, technology, and economic integration. There are two main types of change - incremental, which involves continuous progression and product improvements, and radical change, which requires transforming the entire organization. Successful change involves ideas and identifying needs, adopting and implementing changes, and allocating necessary resources. Barriers to change can include excessive focus on costs, failure to perceive benefits, and resistance to change.

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Chapter Eleven
Innovation and Change

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Forces Driving the Need for Major
Organizational Change
More Large-Scale Changes in Organizations
Structure change Mergers, joint ventures, consortia
Strategic change Horizontal organizing, teams, networks
Culture change New technologies, products
Knowledge management, enterprise New business processes
resource planning E-business
Quality programs Learning organizations
More Threats
More domestic competition
Increased Speed
International competition
Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes
More Opportunities
Bigger markets
Fewer barriers
More international markets
Source: Based on John P. Kotter, The New Rules:
How to Succeed in Today’s Post-Corporate World
(New York: The Free Press, 1995).

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Incremental vs. Radical
Change
Continuous
progression
Paradigm-breaking
burst
Through normal
structure and
management
processes
Transform entire
organization
Affect
organizational
part
Create new structure
and management
Technology
improvements
Breakthrough
technology
Product
improvement
New products,
new markets
Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R.
Brooks, “Organizations in Disequilibrium: Environmental Jolts and
Industry Revolutions,” in George Huber and William H. Glick, eds.,
Organizational Change and Redesign (New York: Oxford University
Press, 1992), 66-111; and Harry S. Dent, Jr., “Growth through New
Product Development,” Small Business Reports (November 1990): 30-40.
Incremental Change Radical Change

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Four Types of Change
 Technology
 Changes in production process
 Products and Services
 Changes in outputs
 Strategy and Structure
 Administrative changes
 Culture
 Changes in values, attitudes, behaviors

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Sequence of Elements for
Successful Change
Environment
Suppliers
Professional
Associations
Consultants
Research
literature
Customers
Competition
Legislation
Regulation
Labor force
1. Ideas
2. Needs
3. Adoption 4.Implementation
5. Resources
Internal
Creativity and
Inventions
Perceived
Problems or
Opportunities
Organization

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Division of Labor Between Departments
to Achieve Changes in Technology
General
Manager
Creative
Department
(Organic Structure)
Using
Department
(Mechanistic Structure)

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Probability of New Product
Success
PROBABILITY
 Technical completion

(technical objectives achieved) .57
 Commercialization

(full-scale marketing) .31
 Market Success

(earns economic returns) .12
Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee,
S. Wagner, and M. Hamburger, Research and Innovation in
Modern Corporations (New York: Norton, 1971), 57.

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Horizontal Linkage Model for New
Product Innovations
Environment
Technical
Developments
Environment
Customer
Needs
Organization
General
Manager
R&D
Department
Marketing
Department
Production
Department
Linkage
Linkage Linkage
Linkage Linkage

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Dual-Core Approach to
Organization Change
Type of Innovation Desired
Administrative
Structure Technology
Direction of Change: Top-Down Bottom-Up
Examples of Change: Strategy Production
Downsizing techniques
Structure Workflow
Best Organizational
Design for Change: Mechanistic Organic
Administrative
Core
Technical
Core

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Culture Change
 Reengineering and Horizontal
Organization
 Diversity
 The Learning Organization

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OD Culture Change
Interventions
 Large Group Intervention
 Team Building
 Interdepartmental Activities

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Stages of Commitment to
Change
 Preparation
 Initial contact
 Awareness
 Acceptance
 Understanding
 Decision to implement
 Commitment
 Installation
 Institutionalization

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Barriers to Change
 Excessive focus on costs
 Failure to perceive benefits
 Lack of coordination and cooperation
 Uncertainty avoidance
 Fear of loss

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Techniques for Change
Implementation
 Establish a sense of urgency for change.
 Establish a coalition to guide the change.
 Create a vision and strategy for change.
 Find an idea that fits the need.
 Develop plans to overcome resistance.
 Create change teams.
 Foster idea champions.

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Innovation Measures
Measure
A
Your Organization
B
Other Organization
C
Your Ideal
1. Creativity encouraged
2. Diverse problem-solving
3. Time for creative ideas
4. Rewards for innovation
5. Flexible, open to change
6. Follow orders from top
7. Think and act like others
8. Concern for status quo
9. Don’t rock the boat
10. New ideas not funded
Workbook
Activity