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Chapter 7 - Managing Change and Innovation

CHAPTER 7 - MANAGING CHANGE AND INNOVATION


LEARNING OUTCOMES
After reading this chapter, students should be able to:
1. Describe what change variables are within a anager!s control.
". Identif# e$ternal and internal forces for change.
%. &$plain how anagers can serve as change agents.
'. Contrast the (cal waters( and (white water rapids( etaphors for change. &$plain wh# people are
li)el# to resist change.
*. Describe techni+ues for reducing resistance to change.
,. Identif# what is eant b# the ter organization development, and specif# four popular -D
techni+ues.
7. &$plain the causes and s#ptos of stress.
.. Differentiate between creativit# and innovation.
/. &$plain how organi0ations can stiulate innovation.
Opening Vignette
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In 5ul# 1//*, Michael 6ol)ea was prooted to C&- at 7eran Miller at 8ust %/ #ears of age because
of his successful anaging of the file cabinet division. 9he copan# had built its reputation b# producing
onl# preiu office furniture. :ut it wasn!t wor)ing in the 1//;s. 9he copan#!s e$penses were also
growing faster than its sales. Additionall#, copetitors li)e 1teelcase were successfull# attac)ing 7eran
Miller!s arguent that better designs e+uated to productivit# gains.

-ne of the few bright spots in the copan# was a sall division that built a less e$pensive line of
furniture, 1<A, for 1iple, <uic), and Affordable. Man# sall businesses )new the 7eran Miller nae
and wanted to own their furniture. It also prided itself on using technolog# to provide rapid deliver#.
7eran Miller!s 1<A on-tie deliver# has increased to // percent, and the increased efficiencies in
anufacturing and decreased inventor# has led to a =*, illion cut in production costs.
Teaching notes
1. As) students to deterine what characteristics were uni+ue to 7eran Miller, what was it about their
furniture that ade it desirable to custoers >regardless of the changes in the ar)etplace?.
". @ow create a list of the changes 7eran Miller ade in its product line and doing business.
%. Ainall#, as) students, with these changes is this the sae copan#B 7ow soB 7ow notB
'. 9he point is, when a copan# goes through change, is the result a ore conteporar# copetitive
copan#, or essentiall# a different copan#, which is ore copetitive, etc.B
*. At what point does change CcreateD a new copan#, not erel# iprove an e$isting oneB
I !HAT IS CHANGE"
A Int#o$%ction
1. Change is an alteration of an organi0ation!s environent, structure, technolog#, or people.
". If it weren!t for change, the anager!s 8ob would be relativel# eas#.
a? Elanning would be without probles.
b? 9he issue of organi0ation design would be solved.
c? Decision a)ing would be draaticall# siplified.
%. Change is an organi0ational realit#.
a? 7andling change is an integral part of ever# anager!s 8ob.
'. A anager can change three things.
a? 1tructure.
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b? 9echnolog#.
c? Eeople
d? 1ee &$hibit 7-1.
A &o#ces 'o# Change
*. 9here are both e$ternal and internal forces that constrain anagers.
,. 9hese sae forces also bring about the need for change.
( !hat A#e the E)te#na* &o#ces C#eating a Nee$ 'o# Change"
7. 9he# coe fro various sources.
a? @ew copetition.
b? Fovernent laws and regulations.
c? 9echnolog#.
d? &conoics.
C !hat A#e the Inte#na* &o#ces C#eating a Nee$ 'o# Change"
.. Internal forces tend to originate priaril# fro the internal operations of the organi0ation or
fro the ipact of e$ternal changes.
/. Ghen anageent redefines or odifies its strateg#, it often introduces a host of changes.
a? &plo#ees a# have their 8obs redesigned, need to undergo training to operate the new
e+uipent, or be re+uired to establish new interaction patterns within their foral group.
b? An organi0ation!s wor)force is rarel# staticH its coposition changes.
c? 9he copensation and benefits s#stes ight also need to be rewor)ed to reflect the
needs of a diverse wor) force and ar)et forces.
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D Ho+ Can a Manage# Se#,e as a Change Agent"
1;. Changes within an organi0ation need a catal#st.
11. Eeople who act as catal#sts and assue the responsibilit# for anaging the change process
are called change agents.
a? An# anager can be a change agent.
b? A nonanager can also be a change agent.
1". Aor a8or s#stewide changes, internal anageent will often hire outside consultants to
provide advice and assistance.
a? -utside consultants can offer an ob8ective perspective.
b? :ut the# a# have an inade+uate understanding of the organi0ation!s histor#, culture,
operating procedures, and personnel.
c? 9he# are also prone to initiate ore drastic changes than insiders.
1%. Internal anagers who act as change agents a# be:
a? ore thoughtful.
b? possibl# ore cautious.
( T+o Vie+s on the Change P#ocess
1. 9he (cal waters( etaphor envisions the organi0ation as a large ship crossing a cal sea.
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Chapter 7 - Managing Change and Innovation
a? Change surfaces as the occasional stor, a brief distraction in an otherwise cal and
predictable trip.
". 9he (white water rapids( etaphor, the organi0ation is seen as a sall raft navigating a
raging river with uninterrupted white water rapids.
a? Change is a natural state and anaging change is a continual process.
C Ghat Is the -Ca*. !ate#s- Metapho#"
1. 9he (cal waters( etaphor doinated the thin)ing of practicing anagers and acadeics.
a? 9he prevailing odel for handling change in cal waters is Jewin!s three-step odel.
b? 1ee &$hibit 7-".
". According to Jewin, successful change re+uires unfree0ing the status +uo, changing to a new
state, and refree0ing the new change to a)e it peranent.
a? 9he status +uo can be considered an e+uilibriu state.
%. 2nfree0ing is necessar# to ove fro this e+uilibriu.
a? 9he driving forces can be increased.
b? 9he restraining forces can be decreased.
c? 9he two approaches can be cobined.
'. -nce unfree0ing has been accoplished, the change itself can be ipleented.
*. 9he new situation needs to be refro0en so that it can be sustained over tie.
a? 2nless this is done, there is a strong chance that the change will be short-lived.
b? 9he ob8ective of refree0ing is to stabili0e the new situation b# balancing the driving and
restraining forces.
,. Jewin!s three-step process treats change as a brea) in the organi0ation!s e+uilibriu state.
D !hat Is the -!hite !ate# Rapi$s- Metapho#"
1. 9he (white water( etaphor ta)es into consideration that environents are both uncertain
and d#naic.
a? 6ariable college curriculu e$aple.
". 9he stabilit# and predictabilit# of the cal waters do not e$ist.
a? Man# of toda#!s anagers face constant change, bordering on chaos.
%. Is the white water rapids etaphor erel# an overstateentB
a? @oK &$aple of Converse Inc., of @orth 3eading, Massachusetts.
E Does E,e#/ Manage# &ace a !o#*$ o' Constant an$ Chaotic Change"
1. @ot ever# anager faces a world of constant and chaotic change.
". :ut the set of anagers who don!t is dwindling rapidl#.
%. Aew organi0ations toda# can treat change as the occasional disturbance.
a? Most copetitive advantages last less than eighteen onths.
b? EeopleLs &$press was described as the odel (new loo)( firH it went ban)rupt.
c? 1outhwest Airlines, and 21Airwa#s Metro8et use this no-frill odel and are successful.
'. 9o Eeters, (If it ain!t bro)e, #ou 8ust haven!t loo)ed hard enough. Ai$ it an#wa#.(
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I ORGANI0ATIONAL CHANGE AND MEM(ER RESISTANCE
E Int#o$%ction
*. As change agents, anagers initiate change because the# are concerned with iproving their
organi0ation!s effectiveness.
,. Change can be a threat to anagers.
7. It can be a threat to nonanagerial personnel as well.
A Manage.ent C*assic
Coch an$ &#ench1 Resistance to Change
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-ne of the ost faous studies on organi0ational change, the 7arwood Manufacturing Copan#.

9he
plant had a long histor# of disruptions ever# tie changes were adeH although the changes were
t#picall# inor, the eplo#ees resisted.
9he usual wa# that 7arwood!s anageent ade these changes was autocraticall#. 9he changes would
be ipleented iediatel#. 9he eplo#ees would rebel. 1o 7arwood!s e$ecutives brought in a
consultant as a change agent to help with their proble. As an e$perient, the consultant arranged for the
ne$t change to be conducted in three groups, using three different ethods.

9he change agent gathered data over a fort#-da# period. Ghat he found strongl# supported the value of
participation. In the control group, resistance occurred as before. In the representative and full-
participation groups, there were no resignations, onl# one grievance, and no absenteeis and participation
was positivel# related to productivit#.
9he conclusion of the Coch and Arench stud#--for peranent change to occur without e$tensive
resistance, eplo#ees ust be involved.
Teaching notes
1. Discuss the following scenario with #our students.
4our collegeMuniversit# is going to revise its general education re+uireents to better reflect
eplo#ers! re+uireents in ters of proble solving, oral counication and presentation s)ills,
basic use of technolog# for inforation anageent, and a broad )nowledge of national and
international current affairs. 9his change will result in ore highl# structured a8ors, fewer elective
choices for students, a ore rigorous progra of stud#, and the creation of a professional portfolio of
wor) fro various classes.
". As) students to consider the following +uestions:
1hould the collegeMuniversit# involve students, facult#, etc., in discussions and the design of this
changeB Ghat would be the advantages, the drawbac)s of such inclusionB
If the# are going to include others, who should be included in these discussionsB
Ghat )ind of resistance is li)el# to arise and fro what sta)eholder groupsB
Ghat strateg#>ies? ight the collegeMuniversit# ta)e in order to inii0e resistance fro
sta)eholdersB
%. Discuss as a class or brea) into sall teas, have the teas discuss in class and then prepare, outside
of class, a 1;-inute oral presentation of their answers.
& !h/ Do Peop*e Resist Change"
1. An individual is li)el# to resist change for three reasons: uncertaint#, concern over personal
loss, and the belief that the change is not in the organi0ation!s best interest.
a? 1ee &$hibit 7-%.
". Changes substitute abiguit# and uncertaint# for the )nown.
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Chapter 7 - Managing Change and Innovation
a? &plo#ees in organi0ations often hold a disli)e for uncertaint#.
%. 9he second cause of resistance is the fear of losing soething alread# possessed.
a? Change threatens the investent one has alread# ade in the status +uo.
b? 9he ore people have invested in the current s#ste, the ore the# resist change.
c? 9he# fear the loss of their position, one#, authorit#, friendships, personal convenience,
or other benefits that the# value.
'. A final cause of resistance is a person!s belief that the change is incopatible with the goals
and best interests of the organi0ation.
a? If e$pressed positivel#, this for of resistance can be beneficial to the organi0ation.
& !hat A#e So.e Techni2%es 'o# Re$%cing Resistance to O#gani3ationa* Change"
*. D#sfunctional resistance to change can be addressed with several tactics.
a? 1ee &$hibit 7-'.
,. &ducation and counication.
a? Assues that uch of the resistance lies in isinforation or poor counication.
7. Earticipation
a? Involving those individuals directl# affected b# the change in the decision a)ing.
b? 9his allows e$pression of feelings, increases the +ualit# of the process, and increases
eplo#ee coitent to the final decision.
.. Aacilitation and support
a? 7elping eplo#ees deal with the fear and an$iet# associated with the change effort.
/. @egotiation
a? &$changing soething of value for lessening the resistance to the change effort.
b? 9his techni+ue a# be +uite useful when the resistance coes fro a powerful source.
1;. Manipulation and cooptation
a? Covert attepts to influence others about the change.
b? It a# involve twisting or distorting facts.
11. Coercion
a? Involves the use of direct threats or force against the resisters.
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I MA4ING CHANGES IN THE ORGANI0ATION
G !hat Can a Manage# Change"
1". Changing structure includes an# alteration in an# authorit# relationships, coordination
echaniss, degree of centrali0ation, 8ob design, or siilar organi0ation structure variables.
a? 9hese structural coponents give eplo#ees the authorit# and eans to ipleent
process iproveents.
1%. Changing technolog# encopasses odification in the wa# wor) is processed or the ethods
and e+uipent used.
a? 9he priar# focus on technological change in continuous iproveent initiatives is
directed at developing fle$ible processes to support better +ualit# operations.
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b? &plo#ees are constantl# loo)ing for things to fi$.
c? Gor) processes ust be adaptable to continual change and fine tuning.
d? 9his adaptabilit# re+uires an e$tensive coitent to educating and training wor)ers.
1'. Changes in people refers to changes in eplo#ee attitudes, e$pectations, perceptions, or
behaviors.
a? 9he# re+uire a wor)force coitted to the organi0ation!s ob8ectives of +ualit# and
continuous iproveent.
b? Again, necessitating proper education and training.
c? It also deands a evaluation and reward s#ste that supports continuous iproveents.
G Ho+ Do O#gani3ations I.p*e.ent -P*anne$- Changes"
1. Most change in an organi0ation does not happen b# chance.
". 9he effort to assist organi0ational ebers with a planned change is referred to as
organi0ation developent.
H !hat Is O#gani3ation De,e*op.ent"
%. -rgani0ation developent >-D? is an activit# designed to facilitate long-ter organi0ation-
wide changes.
'. Its focus is to constructivel# change the attitudes and values of organi0ational ebers so
that the# can ore readil# adapt to, and be ore effective in achieving, the new directions of
the organi0ationB
*. -rgani0ation leaders are, in essence, attepting to change the organi0ation!s culture.
,. Aundaental to organi0ation developent is its reliance on eplo#ee participation.
I A#e The#e T/pica* OD Techni2%es"
7. An# organi0ational activit# that assists with ipleenting planned change can be viewed as
an -D techni+ue.
a? 1ee &thical Dilea in Manageent.
.. 9he ore popular -D efforts rel# heavil# on group interactions and cooperation.
/. 1urve# feedbac) efforts are designed to assess eplo#ee attitudes about and perceptions of
the change the# are encountering.
a? &plo#ees are generall# as)ed to respond to a set of specific +uestions regarding how
the# view such organi0ational activities.
b? 9he data the change agent obtains are used to clarif# probles.
1;. In process consultation, outside consultants help anagers to (perceive, understand, and act
upon process events( with which the# ust deal.
a? 9hese ight include wor) flow, inforal relationships aong unit ebers, and foral
counications channels.
b? Consultants are not there to solve these probles. 3ather, the# act as coaches to help
anagers diagnose which interpersonal processes need iproveent.
11. 9ea building is generall# an activit# that helps wor) groups set goals, develop positive
interpersonal relationships, and clarif# the role and responsibilities of each tea eber.
a? 9he priar# focus is to increase each group!s trust and openness toward one another.
1". Intergroup developent attepts to achieve the sae results aong different wor) groups.
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Chapter 7 - Managing Change and Innovation
Di*e..a in Manage.ent
The OD Inte#,ention
12MMA34
-rgani0ation developent interventions often produce change results that are viewed as positive.
7owever, an# change agent involved in an -D effort iposes hisMher value s#ste on those involved in
the intervention, especiall# when the cause for the intervention is cowor)er istrust. 1oeties the#
wal) a ver# thin line because for personal probles to be resolved in the wor)place, participants ust
disclose private, and often sensitive inforation. 3efusal to divulge such inforation a# carr# negative
raifications. -n the other hand, active participation can lead to eplo#ees! spea)ing their inds. :ut
that, too, carries soe ris)s. 1a#ing what one believes can result in having that inforation used against
one at a later tie. &ven though the intent was to help overcoe cowor)er istrust, the end result a# be
ore bac)stabbing, ore hurt feelings, and ore istrust aong participants >see &$hibit 7-*?.
5%estions
1. Do #ou thin) that cowor)ers can be too open and honest under this t#pe of -D interventionB
". Ghat do #ou thin) a change agent can do to ensure that eplo#ees! rights will be protectedB
Teaching notes
1. Discuss with the class.
". 7ave students discuss in the conte$t of a focus group on teaching within the business departent.
2nder what circustances would students feel cofortable about spea)ing their indsB
Ghat negative and positive conse+uences ight there be to )eeping silent or spea)ing upB
7ow realistic are their positive e$pectations, their fearsB
%. 7ave "-% students help record the classL ideas on the board.
'. At the end of the discussion as) the class what their coents tell the about the atosphere for
change and feedbac) in #our departentMcollege.
I STRESS1 THE A&TERMATH O& ORGANI0ATIONAL CHANGE
6 !hat Is St#ess"
1%. 1tress is a d#naic condition in which an individual is confronted with an opportunit#,
constraint, or deand related to what he or she desires, and for which the outcoe is
perceived to be both uncertain and iportant.
1'. It is a cople$ issue.
1*. 1tress can anifest itself in both a positive and a negative wa#.
a? It is positive when the situation offers an opportunit# for one to gain soething.
b? It is when constraints or deands are placed on us that stress can becoe negative.
1,. Constraints are barriers that )eep us fro doing what we desire.
a? 9he# inhibit #ou in wa#s that ta)e control of a situation out of #our hands.
17. Deands a# cause #ou to give up soething #ou desire.
a? Deands preoccup# #our tie and force #ou to shift priorities.
1.. Ghen coupled with uncertaint# about the outcoe and iportance of the outcoe,
constraints and deands can lead to potential stress.
1/. Ghen constraints or deands have an effect on an iportant event and the outcoe is
un)nown, pressure is added--pressure resulting in stress.
";. It is iportant to recogni0e that both good and bad personal factors a# cause stress.
a? A @orthwestern @ational Jife Insurance stud# reported that ore than ,; percent of
wor)ers surve#ed e$perienced significant 8ob stress resulting in ore than =1*; billion in
lost tie and productivit#.
"1. And stress on the 8ob )nows no boundaries.
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a? In 5apan, there is a concept called karoshi, which eans death fro overwor)ing--
eplo#ees who die after wor)ing ore than %;;; hours the previous #ear.
"". &plo#ees in Feran# and :ritain, too, have suffered the ill effects of stress.
4 A#e The#e Co..on Ca%ses o' St#ess"
"%. Aactors that create stress can be grouped into two a8or categories-organi0ational and
personal.
a? 1ee &$hibit 7-,.
"'. 9he discussion that follows organi0es stress factors into five categories: tas), role, and
interpersonal deandsH organi0ation structureH and organi0ational leadership.
"*. 9as) deands are factors related to an eplo#ee!s 8ob.
a? Design of the person!s 8ob, wor)ing conditions, and the ph#sical wor) la#out.
b? Gor) +uotas can put pressure on eplo#ees.
c? 9he ore interdependence between a eplo#ee!s tas)s and the tas)s of others, the ore
potential stress there is.
",. 3ole deands relate to pressures placed on an eplo#ee as a function of the particular role he
or she pla#s in the organi0ation.
a? 3ole conflicts create e$pectations that a# be hard to reconcile or satisf#.
b? 3ole overload is when the eplo#ee is e$pected to do ore than tie perits.
c? 3ole abiguit# is created when role e$pectations are not clearl# understood.
"7. Interpersonal deands are pressures created b# other eplo#ees.
".. -rgani0ation structure can increase stress.
a? &$cessive rules and an eplo#ee!s lac) of opportunit# to participate in decisions.
"/. -rgani0ational leadership represents the supervisor# st#le of the organi0ation!s anagers.
%;. Eersonal factors that can create stress include fail# issues, personal econoic probles, and
inherent personalit# characteristics.
a? 1oe eplo#ees bring their personal probles to wor) with the.
b? &plo#ee personalit# can have an effect on how susceptible heMshe is to stress.
c? 9#pe A behavior is characteri0ed b# feelings of a chronic sense of tie urgenc#, an
e$cessive copetitive drive, and difficult# accepting and en8o#ing leisure tie.
>1? -nl# the hostilit# and anger associated with 9#pe A behavior is actuall# associated
with the negative effects of stress.
d? 9#pe :!s never suffer fro tie urgenc# or ipatience.
>1? And 9#pe :!s are 8ust as susceptible to these sae an$iet#-producing eleents.
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L !hat A#e the S/.pto.s o' St#ess"
%1. 9here are three general wa#s that stress reveals itself.
%". Most of the earl# interest over stress focused heavil# on ph#siological.
a? 7igh stress levels result in changes in etabolis, increased heart and breathing rates,
increased blood pressure, headaches, and increased ris) of heart attac)s.
b? Detecting these re+uires the s)ills of trained edical personnelH therefore, their relevance
to 73M is negligible.
%%. -f greater iportance to anagers are ps#chological and behavioral s#ptos of stress.
1%;
Chapter 7 - Managing Change and Innovation
%'. 9he ps#chological s#ptos can be seen as increased tension and an$iet#, boredo, and
procrastination--which can all lead to productivit# decreases.
%*. 1o too, can the behaviorall# related s#ptos--changes in eating habits, increased so)ing
or substance consuption, rapid speech, or sleep disorders.
H Ho+ Can St#ess (e Re$%ce$"
1. 1oe stress in organi0ations is absolutel# necessar#. Githout it, there!s no energ# in people.
". Ma)e sure that eplo#ees are properl# atched to their 8obs and that the# understand the
e$tent of their (authorit#.(
%. Jetting eplo#ees )now precisel# what is e$pected of the, role conflict and abiguit# can
be reduced.
'. 3edesigning 8obs can also help ease wor) overload-related stressors.
*. 3egardless soe eplo#ees will still be (stressed-out.(
a? 9o help deal with this issue, an# copanies have started eplo#ee assistance and
wellness progras.
,. &plo#ee assistance progras >&AEs? as the# e$ist toda# are e$tensions of progras that
had their birth in 2.1. copanies in the 1/';s.
a? It is estiated that 2.1. copanies spend alost =1 billion each #ear on &AE progras
and the# save up to =*.;; for ever# &AE dollar spent.
7. 1ince their earl# focus on alcoholic eplo#ees, &AEs have ventured into new areas.
a? -ne of the ost notable is the use of &AEs to help control rising health insurance
preius, especiall# in the areas of ental health and substance abuse services.
.. A wellness progra is an# t#pe of progra that is designed to )eep eplo#ees health#.
a? 9hese progras a# include such things as so)ing cessation, weight control, stress
anageent, ph#sical fitness, nutrition education, etc.
b? Gellness progras are designed to help cut eplo#er health costs, and to lower
absenteeis and turnover b# preventing health-related probles.
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I STIMULATING INNOVATION
M -Inno,ate o# $ie7-
/. 9he rall#ing cr# of toda#!s anagers.
1;. 9he standard of innovation to which an# organi0ations strive is that achieved b# such
copanies as du Eont, 1harp, &astan Cheical, and the %M Copan#.
11. Manageent at %M has developed a reputation for being able to stiulate innovation over a
long period of tie.
1". Ghat!s the secret to %M!s successB
I Ho+ A#e C#eati,it/ an$ Inno,ation Re*ate$"
1. Creativit# eans the abilit# to cobine ideas in a uni+ue wa# or to a)e unusual
associations between ideas.
". An organi0ation that stiulates creativit# is one that develops novel approaches to things or
uni+ue solutions to probles.
%. Innovation is the process of ta)ing a creative idea and turning it into a useful product, service,
or ethod of operation.
1%1
Eart III -rgani0ing
a? Custo Aoot, a Connecticut-based shoe anufacturer, has cobined ass production
with custoi0ed custoer desires.
b? Another e$aple @ovo @ordis), a biotechnolog# copan# in Denar).
'. 9he innovative organi0ation is characteri0ed b# the abilit# to channel its creative 8uices into
useful outcoes.
*. 9he %M Copan# is aptl# described as innovative because it has ta)en novel ideas and
turned the into profitable products.
,. 1o, too, is the highl# successful icrochip anufacturer Intel.
N !hat Is In,o*,e$ in Inno,ation"
7. 1oe people believe that creativit# is inbornH others believe that it can be developed with
training.
.. Creativit# can be viewed as a fourfold process consisting of perception, incubation,
inspiration, and innovation.
/. Eerception involves how #ou see things. :eing creative eans seeing things fro a uni+ue
perspective.
1;. Ideas go though a process of incubation.
a? During this incubation period, eplo#ees should collect assive data that are stored,
retrieved, studied, reshaped, and finall# olded into soething new.
b? During this period, it is coon for #ears to pass.
11. Inspiration in the creative process is the oent when all #our prior efforts successfull#
coe together.
1". Creative wor) re+uires an innovative effort.
a? Innovation involves ta)ing that inspiration and turning it into a useful product, service, or
wa# of doing things.
b? 9hoas &dison is often credited with sa#ing that (Creativit# is 1 percent inspiration and
// percent perspiration.(
c? 9hat // percent, or the innovation, involves testing, evaluating, and retesting what the
inspiration found.
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6 Ho+ Can a Manage# &oste# Inno,ation"
1. 9here are three sets of variables that have been found to stiulate innovation.
a? 9he# pertain to the organi0ation!s structure, culture, and huan resource practices.
O Ho+ Do St#%ct%#a* Va#ia8*es A''ect Inno,ation"
". Airst, organic structures positivel# influence innovation.
a? 9he# are lower in wor) speciali0ation, have fewer rules, and are ore decentrali0ed than
echanistic structuresH the# facilitate the fle$ibilit#, adaptation, and cross-fertili0ation
that a)e the adoption of innovations easier.
%. 1econd, eas# availabilit# of plentiful resources provides a )e# building bloc) for innovation.
a? An abundance of resources allows anageent to afford to purchase innovations, bear
the cost of instituting innovations, and absorb failures.
'. Are+uent inter-unit counication helps to brea) down possible barriers to innovation b#
facilitating interaction across departental lines.
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Chapter 7 - Managing Change and Innovation
a? %M, for instance, is highl# decentrali0ed and ta)es on an# of the characteristics of
sall, organic organi0ations.
P Ho+ Does an O#gani3ation9s C%*t%#e A''ect Inno,ation"
*. Innovative organi0ations tend to have siilar cultures.
,. 9he# encourage e$perientation.
7. 9he# reward both successes and failures.
a? 9he# celebrate ista)es.
.. An innovative culture is li)el# to have the following seven characteristics:
a? Acceptance of abiguit#.
b? 9olerance of the ipractical.
c? Jow e$ternal controls.
d? 9olerance of ris).
e? Mista)es are treated as learning opportunities.
f? 9olerance of conflict.
g? Aocus on ends rather than on eans.
h? -pen s#stes focus.
5 !hat H%.an Reso%#ce Va#ia8*es A''ect Inno,ation"
/. Innovative organi0ations activel# proote the training and developent of their ebers so
that their )nowledge reains current, offer their eplo#ees high 8ob securit# to reduce the
fear of getting fired for a)ing ista)es, and encourage individuals to becoe chapions of
change.
1;. -nce a new idea is developed, chapions of change activel# and enthusiasticall# proote the
idea, build support, overcoe resistance, and ensure that the innovation is ipleented.
11. 3esearch finds that chapions have coon personalit# characteristics: e$treel# high self-
confidence, persistence, energ#, and a tendenc# to ta)e ris)s.
1". Chapions also displa# characteristics associated with d#naic leadership.
a? 9he# inspire and energi0e others.
b? 9he# are also good at gaining the coitent of others to support their ission.
c? Chapions have 8obs that provide considerable decision-a)ing discretion.
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SUMMAR:
1. Managers can change the organi0ation!s structureH the# can change the organi0ation!s technolog#H or
the# can change people b# altering attitudes, e$pectations, perceptions, or behavior.
". &$ternal forces for change include the ar)etplace, governent laws and regulations, technolog#,
labor ar)ets, and econoic changes. Internal forces of change include organi0ational strateg#,
e+uipent, the wor)force, and eplo#ee attitudes.
%. Managers can serve as change agents b# becoing the catal#st for change in their units and b#
anaging the change process.
'. 9he (cal waters( etaphor views change as a brea) in the organi0ation!s e+uilibriu state. 9he
(white water rapids( etaphor views change as continual and unpredictable.
*. Eeople resist change because of uncertaint#, personal loss, and the belief that it ight not be in the
organi0ation!s best interest.
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Eart III -rgani0ing
,. 9here are si$ tactics for reducing the resistance to change: education and counication,
participation, facilitation and support, negotiation, anipulation and cooptation, and coercion.
7. -rgani0ation developent is an organi0ational activit# designed to facilitate long-ter organi0ation-
wide changes. 9he ore popular -D efforts in organi0ations rel# heavil# on group interactions and
cooperation and include surve# feedbac), process consultation, tea building, and intergroup
developent.
.. 1tress is soething individuals feel when the# face opportunities, constraints, or deands that the#
perceive to be uncertain and iportant. It can be caused b# organi0ational factors or personal factors.
/. Creativit# is the abilit# to cobine ideas in a uni+ue wa# or to a)e unusual associations between
ideas. Innovation is the process of ta)ing creative ideas and turning the into a useful product,
service, or ethod of operation.
1;. -rgani0ations can stiulate innovation with fle$ible structures, eas# access to resources, and fluid
counication.
REVIE! AND APPLICATION 5UESTIONS
Rea$ing 'o# Co.p#ehension
1. Gh# is handling change an integral part of ever# anager!s 8obB
Ans+e# N Change is an organi0ational realit#. 7andling change is an integral part of ever# anager!s
8ob. Change is an alteration of an organi0ation!s environent, structure, technolog#, or people. If it
weren!t for change, the anager!s 8ob would be relativel# eas#.
". Describe Jewin!s three-step change process.
Ans+e# N 9he prevailing odel for handling change in cal waters is Jewin!s three-step odel. 1ee
&$hibit 7-". According to Jewin, successful change re+uires unfree0ing the status +uo, changing to a
new state, and refree0ing the new change to a)e it peranent. 9he status +uo can be considered an
e+uilibriu state.
2nfree0ing is necessar# to ove fro this e+uilibriu.
9he driving forces can be increased.
9he restraining forces can be decreased.
9he two approaches can be cobined.
-nce unfree0ing has been accoplished, the change itself can be ipleented.
9he new situation needs to be refro0en so that it can be sustained over tie. 2nless this is done, there
is a strong chance that the change will be short-lived.
9he ob8ective of refree0ing is to stabili0e the new situation b# balancing the driving and
restraining forces.
%. 7ow is it different fro the change process needed in the white water rapids etaphor of changeB
Ans+e# N 9he (cal waters( etaphor doinated the thin)ing of practicing anagers and
acadeics. 9he prevailing odel for handling change in cal waters is Jewin!s three-step odel.
Jewin!s three-step process treats change as a brea) in the organi0ation!s e+uilibriu state.
9he (white water( etaphor ta)es into consideration that environents are both uncertain and
d#naic. 9he stabilit# and predictabilit# of the cal waters do not e$ist. Man# of toda#!s anagers
face constant change, bordering on chaos. Aew organi0ations toda# can treat change as the occasional
disturbance. Most copetitive advantages last less than eighteen onths.
'. 7ow do wor) overload, role conflict, and role abiguit# contribute to eplo#ee stressB
Ans+e# N 9as) deands are factors related to an eplo#ee!s 8ob: design of the person!s 8ob, wor)ing
conditions, and the ph#sical wor) la#out. 9he ore interdependence between a eplo#ee!s tas)s and
1%'
Chapter 7 - Managing Change and Innovation
the tas)s of others, the ore potential stress there is. Gor) overload is when the eplo#ee is e$pected
to do ore than tie perits. 3ole deands relate to pressures placed on an eplo#ee as a function
of the particular role he or she pla#s in the organi0ation. 3ole conflicts create e$pectations that a#
be hard to reconcile or satisf#. 3ole abiguit# is created when role e$pectations are not clearl#
understood.
*. 7ow do creativit# and innovation differB Five an e$aple of each. 7ow does an innovative culture
a)e an organi0ation ore effectiveB Do #ou thin) such an innovative culture could a)e an
organi0ation less effectiveB Gh# or wh# notB
Ans+e# N Creativit# eans the abilit# to cobine ideas in a uni+ue wa# or to a)e unusual
associations between ideas. An organi0ation that stiulates creativit# is one that develops novel
approaches to things or uni+ue solutions to probles.
Innovation is the process of ta)ing a creative idea and turning it into a useful product, service, or
ethod of operation. Custo Aoot, a Connecticut-based shoe anufacturer, has cobined ass
production with custoi0ed custoer desires. Another e$aple @ovo @ordis), a biotechnolog#
copan# in Denar).
9he innovative organi0ation is characteri0ed b# the abilit# to channel its creative 8uices into useful
outcoes. 9he %M Copan# is aptl# described as innovative because it has ta)en novel ideas and
turned the into profitable products. 1o, too, is the highl# successful icrochip anufacturer Intel.
Lin;ing Concepts to P#actice
1. Gho are change agentsB Do #ou thin) that a low-level eplo#ee could act as a change agentB
&$plain.
Ans+e# N Changes within an organi0ation need a catal#st. Eeople who act as catal#sts and assue the
responsibilit# for anaging the change process are called change agents. An# anager can be a
change agent. A nonanager can also be a change agent. Does the individual e$ercise influence, are
the# credible, do the# control resources, etc.B If the# eet these conditions the# can be a change
agent.
". Gh# is organi0ation developent considered to be planned changeB &$plain how planned change is
iportant for organi0ations in toda#!s d#naic environent. Ghich organi0ation--I:M or Intel--do
#ou believe would have ore difficult# changing its cultureB &$plain #our position.
Ans+e# N Most change in an organi0ation does not happen b# chance. 9he effort to assist
organi0ational ebers with a planned change is referred to as organi0ation developent.
-rgani0ation developent >-D? is an activit# designed to facilitate long-ter organi0ation-wide
changes. Its focus is to constructivel# change the attitudes and values of organi0ational ebers so
that the# can ore readil# adapt to, and be ore effective in achieving, the new directions of the
organi0ationB -rgani0ation leaders are, in essence, attepting to change the organi0ation!s culture.
Aundaental to organi0ation developent is its reliance on eplo#ee participation. 1tudent answers
will var#.
%. (Managers have a responsibilit# to their eplo#ees who are suffering serious ill effects of wor)-
related stressB( Do #ou agree or disagree with the stateentB 1upport #our position.
Ans+e# N 1tress is a d#naic condition in which an individual is confronted with an opportunit#,
constraint, or deand related to what he or she desires, and for which the outcoe is perceived to be
both uncertain and iportant. 1tress can anifest itself in both a positive and a negative wa#. It is
iportant to recogni0e that both good and bad personal factors a# cause stress. Aactors that create
stress can be grouped into two a8or categories--organi0ational and personal. 1ee &$hibit 7-,.
1%*
Eart III -rgani0ing
Managers have responsibilit# to the degree that their anageent of eplo#ees creates conditions
that lead to stress. 9as) deands are factors related to an eplo#ee!s 8ob--the ore interdependence
between a eplo#ee!s tas)s and the tas)s of others, the ore potential stress there is. 3ole deands
relate to pressures placed on an eplo#ee as a function of the particular role he or she pla#s in the
organi0ation. Interpersonal deands are pressures created b# other eplo#ees. -rgani0ation structure
can increase stress. &$cessive rules and an eplo#ee!s lac) of opportunit# to participate in decisions.
-rgani0ational leadership represents the supervisor# st#le of the organi0ation!s anagers. Eersonal
factors that can create stress include fail# issues, personal econoic probles, and inherent
personalit# characteristics.
'. Do #ou thin) changes can occur in an organi0ation without a chapion to foster new and innovative
wa#s of doing thingsB &$plain.
Ans+e# N It would be difficult because who would fulfill the functions of a chapionB -nce a new
idea is developed, chapions of change activel# and enthusiasticall# proote the idea, build support,
overcoe resistance, and ensure that the innovation is ipleented. 3esearch finds that chapions
have coon personalit# characteristics: e$treel# high self-confidence, persistence, energ#, and a
tendenc# to ta)e ris)s. Chapions also displa# characteristics associated with d#naic leadership.
9he# inspire and energi0e others with their vision of the potential of an innovation and through their
strong personal conviction in their ission. 9he# are also good at gaining the coitent of others
to support their ission. In addition, chapions have 8obs that provide considerable decision-a)ing
discretion. 9his autono# helps the introduce and ipleent innovations.
MANAGEMENT !OR4SHOP
TEAM S4ILL-(UILDING E<ERCISE1 The Ce*estia* Ae#ospace Co.pan/
P%#pose1 9o illustrate how forces for change and stabilit# ust be anaged in organi0ations and to
illustrate the effects of alternative change techni+ues on the relative strength of forces for change and
forces for stabilit#.
Ti.e1 *;-,; inutes.
Inst#%ctions1
1. 9his can be done entirel# in class or outside of class with reporting in class.
". If done outside of class.
In the last 1* inutes of class, assign teas, have students read situation, as) for clarif#ing
+uestions.
&$plain students are to eet before the ne$t class, identif# the forces necessitating the change and
the resistance to that change found in the copan#.
9he# should brainstor % tentative solutions.
%. 7ave students read the situation.
The sit%ation
12MMA34
9he ar)eting division of the Celestial Aerospace Copan# >CAE? has gone through two a8or
reorgani0ations in the past seven #ears, changing fro a functional to a atri$ for, and then bac), due
to confusion and coplaints. 9his (new( structure aintained ar)et and pro8ect teas, but no functional
specialists were assigned to these groups. After the change, soe probles began to surface. Ero8ect
anagers coplained that the# could not obtain necessar# assistance fro functional staffs and this
affected their services to custoers. 1enior anageent is pondering #et another reorgani0ation and have
re+uested an outside consultant >#ou? to help the.
Inst#%ctions1
'. Divide into groups of five to seven and ta)e the role of consultants.
1%,
Chapter 7 - Managing Change and Innovation
*. @e$t class, as) teas to record on the board.
9he forces necessitating the change.
9he forces of resistance to that change.
,. Discuss, copare, and contrast the lists.
7. Call on each group to present one strateg# for dealing with the forces necessitating change.
.. As) each group to present one strateg# for dealing with the forces resisting change.
/. After each group has presented, probing +uestions should be posed b# other (consulting groups(
about the presenting group!s recoendations.
DEVELOPING :OUR S4ILL AT CREATIVIT:1
S%..a#/
D#naic environents and anaging chaos re+uire that anagers loo) for new and innovative wa#s to
attain their goals, as well as those of the organi0ation.
Steps in P#acticing the S;i**
1. 9hin) of #ourself as creative.
". Ea# attention to #our intuition.
%. Move awa# fro #our cofort 0one.
'. &ngage in activities that put #ou outside #our cofort 0one.
*. 1ee) a change of scener#.
,. Aind several right answers.
7. Ela# #our own devil!s advocate.
.. :elieve in finding a wor)able solution.
/. :rainstor with others.
1;. 9urn creative ideas into action.
P#acticing the S;i** - C#eati,it/
1. 7ow an# words can #ou a)e using the letters in the word Brainstorm?
". 9here are at least /*.
Teaching tips
1. 9his can be an individual or group e$ercise.
". Consider having students wor) alone on a list for 1; inutes.
%. 9hen go around the roo, round-robin, ta)ing one ter fro each student, until #ou e$haust
ever#oneLs lists.
A CASE APPLICATION1 De,e*oping :o%# Diagnostic an$ Ana*/tica* S;i**s
Changing Mits%8ishi
12MMA34
Mitsubishi Motor Corporation lost ore than =.;; illion in 1//7. 9he fourth largest autoa)er in
5apan, was suffering fro wea) truc) and bus ar)ets at hoe and had been slow to ta)e on 9o#ota and
7onda in the hot inivan and sport-utilit# sectors. 9he a8or proble lies in the roots of the larger
s#ste. 9he group!s annual revenues of =%7; billion e+ualed 1; percent of 5apan!s gross doestic
product.
Much of the Mitsubishi epire is isolated in an# wa#s fro the real world of copetition, doing things
the wa# the#!ve been doing the for ore than a centur#. Ghen a reporter as)ed a senior Mitsubishi
e$ecutive wh# his copan# didn!t follow 2.1. st#le anageent practices, the e$ecutive sternl# replied,
(&plo#ent is ore iportant than profitsK( Mitsubishi e$ecutives lac) incentives or respond to ar)et
pressures that ight a)e their counterparts in @orth Aerica or &urope change.
1%7
Eart III -rgani0ing
5%estions
1. Ghat effect is the centur#-old organi0ation culture at Mitsubishi having on the copan#B
Ans+e# N It is a)ing it uncopetitive and a# lead to its deise.
". Ghat role do #ou believe the crisis of losing nearl# a billion dollars annuall# will have on fostering
change at MitsubishiB Do #ou see this issue as one that will proote cal-water or white-water
rapids forces of changeB &$plain.
Ans+e# N It depends on how the loss is viewed. If it is seen as a catastrophe that the copan# and its
leaders are responsible for, then it will facilitate change. If it is seen as an inevitable short-ter effect
of a changing ar)et, no changes will be ade.
%. 2sing the 7 characteristics of organi0ational culture and innovation, describe how each of the seven
eleents is affecting innovation and creativit# at Mitsubishi.
Ans+e# N 1tudents! responses will var# but should ta)e the following seven characteristics:
Acceptance of abiguit#.
9olerance of the ipractical.
Jow e$ternal controls.
9olerance of ris).
Mista)es are treated as learning opportunities.
9olerance of conflict.
Aocus on ends rather than on eans.
-pen s#stes focus.
DEVELOPING :OUR INVESTIGATIVE S4ILLS1 Using the Inte#net
6isit www.prenhall.coMrobbins for updated Internet e$ercises.
ENHANCING :OUR !RITING S4ILLS1 Co..%nicating E''ecti,e*/
>Aor ideas regarding the use of these e$ercises in #our course, please refer to the 9eaching 9ips in the
Ereface of this Manual.?
1. Describe a significant change event #ou e$perienced >li)e going fro high school to college,
changing 8obs, etc.?. 7ow did #ou prepare for the change. Ghat (fears( did #ou encounter, and how
did #ou overcoe those fearsB Onowing what #ou )now now about the change, what would #ou do
differentl# toda# that #ou didn!t do thenB 7ow can #ou appl# these (should-ofs( to changes #ou!ll face
in the futureB Fo to the eplo#ee assistance progras provider Interloc)!s website at
Phttp:MMwww.interloc).orgQ.
". 3esearch the website the following inforation: Ghat are the coponents of an &AE, and how does
Interloc) evaluate an &AE!s progra successB Also identif# how Interloc) recoends
ipleenting an &AE in an organi0ation. Erovide a %-* page suar# of #our findings.
%. :usiness progras have traditionall# focused on developing rationalit#. 9he# haven!t ephasi0ed
creativit#. 9hat a# be a ista)e. In "-% pages, describe how #ou would change the business
curriculu to proote student creativit#. 1pecif# the )inds of courses or activities that #ou thin)
should be included in business schools classes that would foster creativit# and innovation.
1%.