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1Copyright ©2011 by Cengage Learning. All rights reserved
Chapter 7Innovation and Change
Designed & Prepared byB-books, Ltd.
MGMT3
Chuck Williams
2Copyright ©2011 by Cengage Learning. All rights reserved
Organizational Innovation
After reading these sections, you should be able to:
1. explain why innovation matters to companies.
2. discuss the different methods that managers can use to manage innovation in their organizations effectively
3Copyright ©2011 by Cengage Learning. All rights reserved
Why Innovation Matters
TechnologyCycles
InnovationStreams
11
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Why Innovation Matters1900-1910• airplane, plastic, air
conditioner1911-1920• mammogram, zipper, sonar1921-1930• talking movies, penicillin, jet
engine1931-1940• radar, helicopter, computer1941-1950• atomic bomb, bikini, transistor1951-1960• oral contraceptive, Tylenol
1961-1970• video recorder, handheld
calculator, computer mouse1971-1980• compact disc, gene splicing,
laser printer1981-1990• MS-DOS, space shuttle,
CD-ROM1991-2000• taxol, Pentium processor, Java2001-Today• first cloning of human embryo
11
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Technology Cycles
Technology Cycle
A cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, better technology.
1.11.1
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S-Curves and Technological Innovation
Effort
Per
form
ance
Discontinuity
NewTechnology
A
B
C
1.11.1
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Beyond the Book
A Shift in the DVD Market
As the market for movie distribution shifts from discs to digital content, Best Buy has announced that it will partner with Sonic Solutions to stream movies directly to consumers online. Customers would pay once for the DVD and would be able to play it on any device, from television and Blue-ray disc players to handheld media devices and smartphones. Best Buy has also made a deal with Netflix to deliver movies from Netflix on Best Buy’s Insignia Blue-ray disc players.
Source: S. Lohr, “Best Buy Prepares for the Post-DVD Era”, The New York Times, 3 November 2009. http://bits.blogs.nytimes.com/2009/11/03/best-buy-prepares-for-the-post-dvd-era/ (accessed 11/4/2009).
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Innovation Streams
Innovation Streams
Patterns of innovation over time that can create sustainable competitive advantage.
Technological Discontinuity
When a scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function.1.21.2
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Innovation Streams: Technology Cycles over Time
VariationSelection
VariationSelection
TechnologicalSubstitution
1.21.2
Incremental Change (1)
Incremental Change (1)
Incremental Change (2)
Incremental Change (2)
Discontinuous Change (1)
Discontinuous Change (1)
Discontinuous Change (2)
Discontinuous Change (2)
Technological Discontinuity (1)
Technological Discontinuity (1)
Technological Discontinuity (2)
Technological Discontinuity (2)
Dominant Design (2)
Dominant Design (2)
Dominant Design (2)
Dominant Design (2)
10Copyright ©2011 by Cengage Learning. All rights reserved
Innovation Streams
Discontinuous Change
Discontinuous Change
Dominant DesignDominant Design
Technological Discontinuities
Technological Discontinuities
TechnologicalSubstitution
TechnologicalSubstitution
DesignCompetition
DesignCompetition
1.21.2
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Managing Innovation
ManagingSources ofinnovation
Managing DuringDiscontinuous
Change
Managing DuringIncremental
Change
22
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Managing Sources of Innovation
Creative work environments
Workplace cultures in which workers perceive that new ideas are encouraged
Flow
The psychological state of effortlessness in which you become absorbed in your work and time seems to pass quickly
2.12.1
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Components of Creative Work Environments
CreativeWork
Environments
CreativeWork
Environments
ChallengingWork
ChallengingWork
Work GroupEncouragement
Work GroupEncouragement
Lack of Organiz.Impediments
Lack of Organiz.Impediments
SupervisoryEncouragement
SupervisoryEncouragement
OrganizationalEncouragement
OrganizationalEncouragement
FreedomFreedomFlow
2.12.1
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Managing Innovation During Discontinuous Change
Experiential approach to innovation
• innovation is occurring within an uncertain environment
• the key to innovation is to use:– intuition
– flexible options
– hands-on experience
2.22.2
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Experiential Approach to Innovation
Parts ofParts ofExperientialExperientialApproachApproach
Parts ofParts ofExperientialExperientialApproachApproach
MilestonesMilestonesMilestonesMilestones
Design IterationsDesign IterationsDesign IterationsDesign Iterations
TestingTestingTestingTesting
Multifunctional TeamsMultifunctional TeamsMultifunctional TeamsMultifunctional Teams
Powerful LeadersPowerful LeadersPowerful LeadersPowerful Leaders2.22.2
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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 design and achieving backward compatibility with older technology
2.32.3
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Compression Approach to Innovation
Parts ofParts ofCompressionCompression
ApproachApproach
Parts ofParts ofCompressionCompression
ApproachApproachShortening Time ofShortening Time of
Individual StepsIndividual StepsShortening Time ofShortening Time of
Individual StepsIndividual Steps
PlanningPlanningPlanningPlanning
Supplier InvolvementSupplier InvolvementSupplier InvolvementSupplier Involvement
Overlapping StepsOverlapping StepsOverlapping StepsOverlapping Steps
Multifunctional TeamsMultifunctional TeamsMultifunctional TeamsMultifunctional Teams2.32.3
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Experimental Approach
CompressionApproach
EnvironmentEnvironment
GoalsGoals
ApproachApproach
StepsSteps
Uncertain discontinuouschange: technological substitution and design competition
Certain incremental changeestablished technology(i.e., dominant design)
Compress time/steps neededto bring about small improvements
PlanningSupplier involvementShorten time of stepsOverlapping stepsMultifunctional teams
Build something new,different, and better
Design iterationsTestingMilestonesMultifunctional teamsPowerful leaders
Managing Innovation
SpeedLower costsIncremental improvements in performance of dominantdesign
SpeedPerformance ImprovementsNew dominant design
22
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Organizational Change
After reading these sections, you should be able to:
3. discuss why not changing can lead to organizational decline.
4. discuss the different methods that managers can use to manage better change as it occurs
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Five Stages of Organizational Decline
BlindedBlinded
InactionInaction
Faulty Action
Faulty Action
CrisisCrisis
DissolutionDissolution
33
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Organizational Decline: GM
AP
Im
ages
/Set
h W
enig
As GM moved through the crisis stage, CEO Rick Wagoner was replaced by Fritz Henderson, pictured, who, unlike Wagoner, acknowledged that bankruptcy was possible. Henderson began an aggressive cost cutting plan to layoff nearly 30,000 factory workers and 10,000 white-collar employees and close 17 factories and parts centers.
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Managing Change
Resistance ForcesResistance Forces
Change ForcesChange Forces
ChangeChangeChangeChange
44
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Managing Change
Managingresistanceto change
Managingresistanceto change
What notto do when
leading change
What notto do when
leading change
Different changetools and
techniques
Different changetools and
techniques
44
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Managing Resistance to Change
UnfreezingChange
InterventionRefreezing
• Share reasons• Empathize• Communicate
• Benefits• Champion• Input• Timing• Security• Training• Pace
• Top management support
• Reinforce
4.14.1
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Managing Resistance to Change
Education and CommunicationEducation and Communication
ParticipationParticipation
NegotiationNegotiation
Managerial SupportManagerial Support
CoercionCoercion4.14.1
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Errors Made when Leading Change
UnfreezingUnfreezing
1. Not establishing a great enough sense of urgency.1. Not establishing a great enough sense of urgency.
2. Not creating a powerful enough guiding coalition.2. Not creating a powerful enough guiding coalition.
Change Change
3. Lacking a vision.3. Lacking a vision.
4. Undercommunicating the vision by a factor of 10.4. Undercommunicating the vision by a factor of 10.
5. Not removing obstacles to the new vision.5. Not removing obstacles to the new vision.
6. Not systematically planning for and creating short-term wins.6. Not systematically planning for and creating short-term wins.
RefreezingRefreezing
7. Declaring victory too soon.7. Declaring victory too soon.
8. Not anchoring changes in the corporation’s culture.8. Not anchoring changes in the corporation’s culture.4.24.2
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Change Tools and Techniques
Results-Driven ChangeResults-Driven Change
General Electric WorkoutGeneral Electric Workout
Transition Management TeamsTransition Management Teams
Organizational DevelopmentOrganizational Development
4.34.3
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Results-Driven Change
1. Create measurable short-term goals to improve performance1. Create measurable short-term goals to improve performance
2. Use action steps only if likely to improve performance2. Use action steps only if likely to improve performance
3. Stress the importance of immediate improvements3. Stress the importance of immediate improvements
4. Consultants and staffers should help managers achievequick improvements in performance
4. Consultants and staffers should help managers achievequick improvements in performance
5. Test action steps to see if they yield improvements5. Test action steps to see if they yield improvements
6. It takes few resources to get results-driven change started6. It takes few resources to get results-driven change started4.34.3
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General Electric Workout
1. Boss discusses agenda and targets specific business problems, then leaves
2. Outside facilitator works with teams, who debate solutions
3. Town Meeting
– teams make suggestions
– boss must decide on the spot—agree, say no, or ask for more information
Day
4.34.3
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Transition Management Team • A team of employees whose full-time job is to
manage and coordinate change
• Anticipate and manage employee reactions to change
• Work with the CEO to…– decide on change projects– select and evaluate people in charge– make sure change projects are complementary
Beyond the Book
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Organizational Development
• A philosophy and collection of planned change interventions
• Designed to improve an organization’s long-term health and performance
• Change Agent – the person formally charged with guiding a change
effort
– can be an internal or external person
4.34.3
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Organizational Development
1. Entry
2. Startup
3. Assessment and Feedback
4. Action Planning
5. Intervention
6. Evaluation
7. Adoption
8. Separation
General Steps for Organizational Development Interventions
General Steps for Organizational Development Interventions
4.34.3
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Kinds of OD Interventions
LARGE SYSTEM INTERVENTIONSLARGE SYSTEM INTERVENTIONS
Sociotechnical systemsSociotechnical systems
Survey feedbackSurvey feedback
SMALL GROUP INTERVENTIONS SMALL GROUP INTERVENTIONS
Team buildingTeam building
Unit goal settingUnit goal setting
PERSON-FOCUSED INTERVENTIONSPERSON-FOCUSED INTERVENTIONS
Counseling/CoachingCounseling/Coaching
TrainingTraining
4.34.3
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