CHAPTER 6: MANAGING CHANGE INNOVATION AND

ENTREPRENEURSHIP

CH 6© 2015 SAGE Publications

Innovation and Change• Crucial for firms’ performance and survival• Innovation

• Implementation of a new idea• Product Innovation

• New goods and services• Process Innovation

• New way of doing things• Organizational Change

• Alterations of existing work routines and strategies that affect the whole organization

Forces for Change• Environment

• Internal and external factors

• Technology Cycles• Begins with the birth of a new technology and ends when it is

replaced by a newer technology• Next Generation

• Allows the old technology to still work with the new technology• The Management Functions

• Managers hire, orient, train and evaluate performance• New methods or techniques ensure objectives are met

Types of Change• Changes in Strategy: made at the corporate, business

and/or functional level• Changes in Structure: how the organization is

departmentalized into units • Changes in Technology: new machines and equipment,

information processing and automation• Changes in People: employee’s attitudes and

behaviors

Forms of Change• Incremental Change

• Continual improvement which takes place within the existing technology cycle

• Discontinuous Change• Significant breakthrough in technology that leads to design

competition and a new technology cycle

Incremental vs. Discontinuous Change  Incremental Change Discontinuous Change

Approach Compression Experimental

Environme

nt

More certain Uncertain

Goals To lower costs and incrementally

improve performance and

functions of the existing dominant

design

To make significant improvements in

performance and to establish a new

dominant design creating the next

technology cycle

Strategy To continue to improve the

existing technology as rapidly as

possible moving to the next

generation technology while still

allowing the use of the old

technology

To build something new and

different, a substantially better

breakthrough in technology to begin

a new technology cycle that leaves

the old technology obsolete

Managing Innovation• Innovative Structure

• Flat organization with limited bureaucracy• General division of labor• Coordinate with cross-functional teams• Flexible• Small team structures• Informal authority

Managing Innovation• Innovative Culture

• Firms tend to have similar cultures• Managers are asking employees to express opinions• Encourage and reward employees for taking risk without fear

of punishment • Failure is viewed as a learning experience

Managing Innovation During Incremental Change• Compression approach used in more certain

environments• Goal: lower costs and improve performance• General strategy: continue to improve existing technology as

soon as possible moving to next generation

Managing Innovation Discontinuous Change• Experimental approach used in more uncertain

environment• Goal: make significant improvement in performance and

establish new dominant design creating the next technology cycle

• General Strategy: build something new and different to begin a new technology cycle that leaves the old technology obsolete

Resistance to Change• Denial

• changes are often difficult to understand• Resistance

• people often doubt there really is a need for change• Exploration

• often through trainings• Commitment

• necessary to implement changes

Resistance to Change• Reasons employees resist change

• Fear of the unknown• Learning anxiety• Self-interest• Fear of economic loss• Loss of power, status or security

Variety of Resistances• Intensity

• People have different attitudes toward change• Source

• Facts• Beliefs• Values

• Focus• Self• Others• Work environment

Overcoming Resistance• Establish a positive trust climate• Set clear objectives• Explain the need for the change• Create a win-win situation• Involve employees• Provide support and evaluation • Create urgency

Lewin Model of Change

Comprehensive Change Model1. Recognize the need for changes2. Identify possible resistance and plan how to overcome it3. Plan the change interventions4. Implement changes5. Control changes

Organizational Development Interventions• Specific actions taken to implement specific changes

• Team building• Process consultation• Forcefield analysis• Survey feedback

Team Building and Process Consultation

• Most widely used• Is an OD intervention• Help to increase

structural and team dynamics performance

• More narrowly focused intervention

• Is often part of team building

• Improve team dynamics• Communication• Conflict resolution• Decision making

Team Building Process Consultation

• Used by a small group of people

• Solves specific problem• Diagrams the current

level of performance, the forces hindering change, and the forces driving toward change

• Uses questionnaire• Gather data• Identify problems• Group of people do not

work together

Forcefield Analysis Survey Feedbacks

Forcefield Analysis and Survey Feedbacks