Chapter 11

Managing Change and Innovation

Turbulent Times
The Changing Work Place

Todays organizations need to continuously adapt to

new situations if they are to survive and prosper

One of the most dramatic elements is the shift to a

technology- driven workplace

Ideas, information, and relationships are becoming

critically important
Managers Challenge: Cowley manufacturing plant

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Managing Change
and Innovation

How organizations respond to the environment

through internal change and development

Basic forces for Organizational Change

How managers facilitate two change requirements

Four major types of change

How organizations can be designed to facilitate each

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Topics
Chapter 11

Organizational Change

The adoption of a new idea of behavior by an

organization

New trends require profound changes in the

organization

E-business
Supply chain integration
Knowledge management

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Organizational Change

Todays successful organizations

simultaneously embrace two types of
planned change

Incremental change = efforts to gradually improve

basic operational and work processes in different
parts of the company
Transformational change = redesigning and
renewing the entire organization

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5

Model of Change
Sequence of Events
Environmental
Forces
Monitor global
competition, and other
factors

Internal
Forces
Consider plans,
goals, company
problems, and
needs

Need for
change

Initiate
change

Implement
change

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

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Forces for Change

Environmental Forces

Customers
Competitors
Technology
Economic
International arena

Internal Forces activities and decisions

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Need for Change

Based

on external or internal forces

Performance gap = disparity between

existing and desired performance levels.

Current procedures are not up to standard

New idea or technology could improve current

performance

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Initiating Change
Critical phase of change management

Stage where the ideas that solve perceived

needs are developed

Search = process of learning about current

developments inside or outside the organization that
can be used to meet the perceived need for change

Creativity = generation of novel ideas that might

meet perceived needs or offer opportunities for the
organization
Experiential Exercise: Is Your Company Creative?

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Characteristics of Creative People

Conceptual fluency
Open-minded
Originality
Less authority
Independence Self-confidence
Playfulness
Undisciplined exploration
Curiosity
Persistence
Commitment - Focused approach
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Idea Champion
Change does not occur by itself

A person who sees the need for and

Champions productive change within
the organization

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Four Roles in Organizational Change

Championing an idea successfully requires roles in organizations
Inventor
Develops and
understands
technical aspects
of ideas
Does not know
how
to win support for
the idea or make a
business of it

Champion
Sponsor
Believes in idea
High-level
Visualizes benefits manager
Confronts
who removes
organization
organizational
realities of cost,
barriers
benefits
Approves and
Obtains financial & protects idea
political support
within
Overcomes
organization
obstacles

Critic
Provides reality
test
Looks for shortcomings
Defines hardnosed
criteria that idea
must pass

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.

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New Venture Teams

New Venture Team = Unit separate from the

mainstream of the organization that is
responsible for developing and initiating
innovations
Skunkworks = separate small, informal,
highly autonomous, and often secretive
group that focuses on breakthrough ideas for
the business

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New Venture Fund

Fund providing resources from which

individuals and groups can draw to develop
new ideas, products, or businesses

Idea Incubator = in-house program that

provides a safe harbor where ideas from
employees throughout the organization can
be developed without interference from
company bureaucracy or politics

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Open Innovation

Extending the search for and commercialization of

new ideas beyond the boundaries of the organization

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

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Resistance to Change

Self-Interest: fear of personal loss is perhaps the

biggest obstacle to organizational change
Lack of Understanding and Trust: do not
understand the intended purpose of a change or
distrust the intentions
Uncertainty: lack of information about future events
Different Assessments and Goals: people who will
be affected by innovation may assess the situation
differently.

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Force-Field Analysis

The process of determining which forces

drive and which resist a proposed change

Driving Forces

Restraining Forces (Barriers)

Thought of as
problems or
opportunities that
provide motivation for
change

Lack of resources
Resistance from middle
managers
Inadequate employee skills

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Kurt Lewin

Traditional to Just-In-Time
Inventory Systems

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Tactics for Overcoming

Resistance to Change
Approach

Communication
education

Participation

When to Use

Change is technical;
users need accurate
information & analysis

Users need to feel

involved; design
requires information
from others; have
power to resist

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Tactics for Overcoming

Resistance to Change
Approach

Negotiation

Coercion

Top management
support

When to use

Group has power over

implementation; will
lose out in the change
Crisis exists; initiators
clearly have power;
other techniques have
failed
Involves multiple
departments or
reallocation of
resources; users doubt
legitimacy of change

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Types of Organizational Change

Structure

Technology

Strategy

Products

Culture/People
SOURCE: Based on Harold J. Leavitt, Applied Organizational Change in Industry: Structural, Technical, and Human
Approaches, In New Perspectives in Organization Research, ed.W.W. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley,
1964), 55-74.

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Organizational Change

Technology: General rule = change is bottom up

New product:

Horizontal linkage model emphasizes shared development of

innovations among several departments

Time-based competition is based on the ability to deliver products

and services faster than competitors

Structure: Successful change = through a top-down approach

Culture/people:

Training is the most frequently used tool for changing the

organizations mind-set
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Horizontal Linkage Model

For New Product Innovation

Organization
Manufacturing
Department

New
Technology

Research
Department

Marketing
Department

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Customers
Market
Conditions

Structural Changes

Any change in the way in which the

organization is designed and managed

Hierarchy of authority
Goals
Structural characteristics
Administrative procedures
Management systems
Ethical Dilemma: Research for Sale

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Culture-People Changes

Changes in structure, technologies, and

products or services do not happen on their
own

Changes in any of these areas require

changes in people

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Organization Development
Problems OD Can Address

Mergers/acquisitions

Decline/revitalization

Conflict management

Application of behavioral science techniques to

improve an organizations health and effectiveness
through its ability to cope with environmental
changes, improve internal relationships, and
increase learning and problem-solving capabilities
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OD Activities

Team building

Survey feedback

Large group
intervention

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OD Approaches to Culture Change

Traditional Organizational
Development Model
Focus for action:

Large-Group
Intervention Model

Specific problem or group

Entire system

Source:

Organization

Organization & environment

Distribution:

Limited

Widely shared

Time frame:

Gradual

Fast

Learning:

Individual, small group

Whole organization

Information

Change Process:

Incremental Change

Rapid transformation

SOURCE: Adapted from Barbara Benedict Bunker and Billie T. Alban, Conclusion: What Makes Large Group Interventions Effective, The Journal of Applied Behavioral Science 28, no 4 (December
1992), 579-591.

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Three Stages for Achieving

Behavioral and Attitudinal Change

Unfreezing

Changing

Refreezing

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