Chapter 10 MGT 250
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Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager Vocabulary Adaptive Change: reintroduction of a familiar practice Change Agent: a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways Core Innovations: the optimizing of products or services for existing customers Creativity: the act of developing new and imaginative ideas into reality Disruptive Innovation: a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors Innovative Change: the introduction of a practice that is new to the organization Intervention: the attempt to correct the diagnosed problems Invention: creating or making up something new Organizational Development: a set of techniques for implementing planned change to make people and organizations more effective Proactive Change: (planned change) involves making carefully thoughtout changes in anticipation of possible or expected problems or opportunities Process Innovation: a change in the way a product or service is conceived, manufactured, or disseminated Product Innovation: a change in the appearance of the performance of a product or a service or the creation of a new one Radically Innovative Change: introducing a practice that is new to the industry Reactive Change: making changes in response to problems or opportunities as they arise Resistance to Change: an emotional/behavioral response to real or imagined threats to an established work routine Seeds of Innovation: the starting point for organizational innovation Technology: not just computer technology; it is any machine or process that enables an organization to gain a competitive advantage in changing materials used to produce a finished product Transformational Innovations: the invention of breakthrough products or services that don’t exist yet and that are aimed at creating brand new markets and customers Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager 10.1 The Nature of Change in Organizations Fundamental Change: What Will You Be Called on to Deal With? o Supertrends shaping the future of business The marketplace is becoming more segmented & moving toward more niche products More competitors are offering targeted products, requiring faster speedto market Some traditional companies may not survive radical change China, India & other offshore suppliers are changing the way we work Knowledge, not information, is becoming the new competitive advantage Two Types of Change: Reactive versus Proactive o As a manager, you typically have to deal with two types of change Reactive change: responding to unanticipated problems & opportunities Proactive change: managing anticipated problems & opportunities The Forces Change: Outside & Inside the Organization Forces Originating Outside the Organization o Demographic characteristics o Technological advancements o Shareholder, customer, & market changes o Social & political pressures Forces Originating Inside the Organization o Human resources concerns o Managers’ behavior Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager 10.2 Types & Models of Change Three Kinds of Change: From Least Threatening to Most Threatening Least Threatening: adaptive change—“we’ve seen stuff like this before” Somewhat threatening: innovative change—“this is something new for this company” Very threatening: radically innovative change—“this is a brandnew thing in our industry” Lewin’s Change Model: Unfreezing, Changing, & Refreezing “Unfreezing”: Creating the Motivation to Change “Changing”: Learning New Ways of Doing Things “Refreezing”: Making the New Ways Normal Kotter’s Eight Steps for Leading Organizational Change Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager 10.3 Organizational Development: What It is, What It Can Do What Can OD Be Used For? o OD can be used to address the following three matters: o Managing Conflict o Revitalizing organizations o Adapting to mergers How OD works 1. Diagnosis: What Is the Problem? 2. Intervention: What Shall We Do about It? 3. Evaluation: How Well Has the Intervention Worked? The Effectiveness of OD Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager o Research has found that OD is most apt to be successful under the following circumstances o Multiple interventions o Management support o Goals geared to both short & longterm results o OD is affected by culture 10.4 Promoting Innovation within the Organization How Does Failure Impede Innovation? o Many people don’t believe you learn from failure but Lafley Two Myths about Innovation Myth No. 1: Innovation Happens in a “Eureka!” Moment Myth No. 2: Innovation Can Be Systematized The Seeds of Innovation: Starting Point for Experimentation & Inventiveness 1. Hard work in a specific direction 2. Hard work with direction change 3. Curiosity 4. Wealth and money 5. Necessity 6. Combination of seeds Types of Innovation: Product or Process, Core or Transformations o Innovations may be of the following two types o Product versus process innovations o Core versus transformation innovations Celebrating Failure: Cultural & Other Factors Encouraging Innovation o For ways to providing innovation is by o Culture: Is innovation viewed as a benefit or a boondoggle? o Human capital: are the right kind of people available? o Resources: do managers put money where their mouths are? o Rewards: is experimentation reinforced in ways that matter? How You Can Foster Innovation: Four Steps 1. Recognize Problems & Opportunities & Devise Solutions a. Recognizing a problem – find a “better way” b. Recognizing an opportunity 2. Gain allies by communication your vision a. Showing how the product or service will be made b. Showing how potential customers will be reached c. Demonstrating how you’ll beat your competitors d. Explaining when the innovation will take place 3. Overcome employee resistance & empower & reward them to achieve progress 4. Execute well Chapter 10 : Organizational Change & Innovation Lifelong Challenges for the Exceptional Manager 10.5 The Threat of Change: Managing Employee Fear & Resistance The Causes of Resistance to Change 1. Employee characteristics 2. Change agent characteristics 3. Change agentemployee relationship The Reasons Employees Resist Change 1. Individual’s predisposition toward change 2. Surprise & fear of the unknown 3. Climate of mistrust 4. Fear of failure 5. Loss of status or job security 6. Peer pressure 7. Disruption of cultural traditions or group relationships 8. Personality conflicts 9. Lack of tact or poor timing 10.Nonreinforcing reward systems