Chapter 10

Innovation and Change

©2004 by Nelson, a division of Thomson Canada Limited

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 What Would You Do?
 IBM must change
 Share of personal computer
market was once 70 percent is
now 7 percent
 How do you quickly and effectively
create change?
 The strong corporate culture will
likely produce resistance to change
 What would you do?
©2004 by Nelson, a division of Thomson Canada Limited
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 Learning Objectives:
Organizational
Innovation
After reading the next two sections
on organizational innovation, you
should be able to:

1. explain why innovation matters to

companies
2. discuss the different methods that
managers can use to effectively
manage innovation in their organizations

©2004 by Nelson, a division of Thomson Canada Limited

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 Why Innovation Matters

Innovation
streams

Technology cycles

©2004 by Nelson, a division of Thomson Canada Limited

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 Technology Cycles
 Technology cycle
 starts with a new technology and
ends when that technology reaches
its limits and is replaced with better
technology
 S-curve pattern of innovation
 a pattern of innovation characterized
by slow initial progress, then rapid
progress, then slow progress again as
technology matures
©2004 by Nelson, a division of Thomson Canada Limited
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 Technology Cycle
S-Curve Pattern of
Innovation

Exhibit 10.1

©2004 by Nelson, a division of Thomson Canada Limited

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 Innovation Streams
Patterns of innovation that can
create sustainable competitive
advantage
Technological Era of
discontinuity ferment

Technological Design
substitution competition

©2004 by Nelson, a division of Thomson Canada Limited

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 Design Competition

Dominant
design

Incremental
change

©2004 by Nelson, a division of Thomson Canada Limited

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 Managing Innovation
 Managing innovation during
discontinuous change
 Managing innovation during
incremental change

©2004 by Nelson, a division of Thomson Canada Limited

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 Managing Innovation
During Discontinuous
Change
 Experiential approach to innovation
 in an uncertain environment uses intuition,
flexible options and hands-on experience to
increase learning
 Design iteration
 a cycle of repetition that improves on a
design prototype
 Testing
 systematic comparison of different designs
©2004 by Nelson, a division of Thomson Canada Limited
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 Managing Innovation
During Discontinuous
Change
 Milestones
 Formal project review
points used to assess
progress and
performance
 Multifunctional
teams
 Work teams composed of
people form different
departments
©2004 by Nelson, a division of Thomson Canada Limited
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 Managing Innovation
During Incremental
Change

 Compression approach to
innovation
 assumes that innovation is a predictable
process that can be planned in steps
 Generational change
 Based on incremental improvements to a
dominant technological design and
achieving backward compatibility with older
technology
©2004 by Nelson, a division of Thomson Canada Limited
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 Learning Objectives:
Organizational Change
After reading these next two sections
on organizational change, you should
be able to:

3. discuss why change occurs and why it

matters
4. Discuss the different methods that
managers can use to better manage
change as it occurs

©2004 by Nelson, a division of Thomson Canada Limited

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 Change &
Resistance Forces
Change forces
 forces that produce differences in the
form, quality, or condition of an
organization over time
Resistance forces
 forces that support the existing state
of conditions in organizations

©2004 by Nelson, a division of Thomson Canada Limited

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 How Change is Created

Exhibit 10.4

©2004 by Nelson, a division of Thomson Canada Limited

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 Organizational Decline:
The Risk of Not
Changing
 Blinded stage
 Inaction stage
 Faulty action stage
 Crisis stage
 Dissolution stage

©2004 by Nelson, a division of Thomson Canada Limited

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 Managing Change
 Managing resistance
to change
 Change tools and
techniques
 Managing
conversations to
promote change
 What not to do when
leading change

©2004 by Nelson, a division of Thomson Canada Limited

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 Managing Resistance
to Change
 Lewin’s framework
 Methods of managing resistance to
change

©2004 by Nelson, a division of Thomson Canada Limited

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 Lewin’s Change Process
 Unfreezing
 getting those affected by the change
to believe change is needed
 Change and intervention
 getting people to change their
behaviours
 Refreezing
 supporting and reinforcing the new
changes so they “stick”
©2004 by Nelson, a division of Thomson Canada Limited
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 Methods of Managing
Resistance to Change
 Education and communication
 Participation
 Negotiation
 Top management support
 Coercion

©2004 by Nelson, a division of Thomson Canada Limited

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 Change Tools
and Techniques
 Results-driven change
 General Electric Workout
 Transition management team
(TMT)
 Organizational development
 Change agent

©2004 by Nelson, a division of Thomson Canada Limited

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 Results-Driven Change
 Create measurable short-term
goals
 Use action steps likely to improve
performance
 Immediate improvements
important
 Consultants and staffers help
managers
 Test action steps to see they lead
Adapted from Exhibit 10.6

©2004 by Nelson, a division of Thomson Canada Limited

to improvement 22
 General Electric
Workout
 Boss discusses agenda, targets
specific problems, then leaves
 Outside facilitator works with
subgroups to discuss solutions
 “Town meeting” on day three
 subgroups present solutions
 boss must decide on the spot

©2004 by Nelson, a division of Thomson Canada Limited

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 Transition Management
Team (TMT)
 Establish context for change
 Stimulate conversation
 Provide appropriate resources
 Coordinate and align projects
 Ensure congruence of messages and
activities
 Provide opportunities for joint creation
 Anticipate, identify, and address people
problems
 Prepare the critical mass
Adapted from Exhibit 10.7

©2004 by Nelson, a division of Thomson Canada Limited

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 Organizational
Development (OD)
 A philosophy and collection of
planned change interventions
 Focuses on organization’s long-
term survival
 Change agent
 person formally in charge of guiding a
change
 can be an internal or external person

©2004 by Nelson, a division of Thomson Canada Limited

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 General Steps for OD
Interventions
 Entry
 Start-up
 Assessment and feedback
 Action planning
 Intervention
 Evaluation
 Adoption
 Separation
Adapted from Exhibit 10.8

©2004 by Nelson, a division of Thomson Canada Limited

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 Different Kinds of
Organizational Development
Interventions
 Large System
 Sociotechnical Systems
 Survey Feedback
 Small Group
 Team Building
 Unit Goal Setting
 Person-Focused
 Counselling/Coaching
 Training
Adapted from Exhibit 10.9

©2004 by Nelson, a division of Thomson Canada Limited

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 What Really Works
Change the Work Setting or Change the People? Do Both!
Changing the work setting

Changing the People

Changing Individual Behaviour and Organizational

Performance

©2004 by Nelson, a division of Thomson Canada Limited

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 Managing
Conversations to
Promote Change
Organization dialogue
 process by which people in an
organization talk effectively with each
other
 initiative conversations
 conversations for understanding

conversations for performance

conversations for closure

©2004 by Nelson, a division of Thomson Canada Limited

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 Errors Managers Make
when Leading Change
Unfreezing
 not enough sense of urgency
 not a powerful enough guiding coalition
Change
 lacking a vision
 undercommunicating the vision
 not removing obstacles to the vision
 not planning for and creating short-term wins
Refreezing
 declaring victory too soon
 not anchoring changes in corporate culture
Adapted from Exhibit 10.10

©2004 by Nelson, a division of Thomson Canada Limited

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 What Really Happened?
 Changed bonus system
 Cut workforce from 40,000 to
20,000
 Focused on participation to reduce
resistance
 Used coercion selectively
 Improved job of bringing new
technologies to market
©2004 by Nelson, a division of Thomson Canada Limited
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