Topic 8

UBMM1013 MANAGEMENT PRINCIPLES

Topic 8 Managing Change and Innovation

Learning Objectives 

Define organizational change and explain the forces driving innovation and change in today’s organization.

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Identify and explain the three innovation strategies managers implement for changing products and technologies.

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Explain the specific tool that can smooth the process for changing people and culture

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Discuss why changes in people and culture are critical to any change process.

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Define organizational development (OD) and large group interventions.

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Explain the OD stages of unfreezing, changing, and refreezing.

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Identify sources of resistance to change.

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Explain force-field analysis and other implementation tactics that can be used to overcome resistance.

Organisational Change 

In today’s dynamic environment, managing change and innovation is key

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Today’s successful companies are continually innovating

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Organizational change (OD) ??

Many organisations struggle with changing successfully ??

Creating VS Implementing ?? ??

Ambidextrous

Creating VS Implementing ?? ???

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Successful Change Ambidextrous  Successful change requires that organisations be capable of both creating and implementing ideas, which means the organisation must learn to be ambidextrous  An ambidextrous approach means incorporating structures and process that are appropriate for both the creative impulse and for the systematic implementation of innovation  Managers encourage flexibility and freedom to innovate and propose new ideas with creative departments, venture teams, and other mechanism, but they use a more rigid, centralized, and standardized approach for implementing innovations

Two vital areas of change or innovation??

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Changing Things: New Products and Technologies Product change  It is a change in the organization product or service outputs.  Product and service innovative is the primary way in which organizations adapt to changes in markets, technology, and competition.  Product changes are related to changes in the technology of the organsiation Technology change  It is a change in the organization’s production process (how the organisation does its work)  Technology changes are designed to make the production of a product or service more efficient.  The adoption of automatic mail sorting machines is an example of a technology change

Changing People and Culture 

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All successful changes involve changes in people and culture as well Changes in people and culture pertain to how employees think (changes in mindset)

Changing People and Culture People change  A change in the attitudes and behaviors of a few employees in the organization  People change concerns just a few employees, such as sending a handful of middle managers to a training course to improve their leadership skills Culture change  Major shift in the norms, values, attitudes, and mindset of the entire organization.  Culture change pertains to the organisation as a whole

Two vital areas of change or innovation??

Introducing new products and technologies Innovation Strategy??

Changing people and culture Two specific tools ??

Exploration 

It is the stage where ideas for new products and technologies are born.

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Managers design the organization for exploration by establishing conditions that encourage creativity and allow new ideas to spring forth.

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Creativity, which refers to the generation of novel ideas that might meet perceived needs or respond to opportunities for the organization, is the essential first step in innovation

Cooperation Internal Coordination

External Coordination

•Successful innovation requires expertise from several departments simultaneously, and failed innovation is often the result of failed cooperation

•The organization look outside their boundaries to find and develop new ideas

Horizontal Linkage Model

Horizontal Linkage Model

Horizontal Linkage Model •

It is an approach to product change that emphasizes shared development of innovations among several departments

Horizontal Linkage Model Open Innovation Mechanisms

New technologies Organization Manufacturing Department

Research Department

Formal Innovation Partners

Marketing Department

Horizontal Linkages

Customers, Market Needs

Horizontal Linkage Model Internal Coordination 

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The horizontal linkage model shows that the research, manufacturing, and sales and marketing departments within an organisation simultaneously contribute to new products and technologies People from these departments meet frequently in teams and task forces to share ideas and solve problems Research people inform marketing of new technical developments to learn whether they will be useful to customers Marketing people pass customer complaints to research to use in the design of new products and to manufacturing people to develop new ideas for improving production speed and quality Manufacturing informs other departments whether a product idea can be manufactured with cost limits

Horizontal Linkage Model External Coordination 

The horizontal linkage model shows that   

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Engineers and researchers stay aware of new technological developments Marketing personnel pay attention to shifting market conditions and customer needs Some organizations build formal strategic partnerships such as alliances and joint ventures to improve innovation success Open innovation is the hottest trends. Open innovation means extending the search for and commercialization of new ideas beyond the boundaries of the organisation and even beyond the boundaries of the industry

Cooperation Internal Coordination Characteristics of successful innovation company: v)

vi)

vii)

People in marketing have good understanding of customer needs. Technical specialists aware of recent technological development. Members from key department cooperate in the new product development

Entrepreneurship 

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Third aspect of product and technology innovation is creating mechanisms to make sure new ideas are carried forward, accepted and implemented. Managers can directly influence whether entrepreneurship flourishes in the organisation by expressing support of entrepreneurial activities, giving employees a degree of autonomy, and rewarding learning and risk-taking

Idea champion

New-venture team

Skunkworks

Entrepreneurship Idea champions      

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One important matter is fostering idea champions Idea Champion is a person who sees the need for and champions productive change within the organization Change does not occur by itself. Personal energy and effort are required to successful promote a new idea No new product would be approved unless someone championed it Research confirms that successful new ideas are generally those that are backed by someone who believes in the idea wholeheartedly and is determined to convince others of its value Sometimes a new idea is rejected by management, but champions are passionately committed to a new product or idea despite rejection by others

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

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

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

Sometimes a single person may play two or more of these roles, but successful innovation in most companies involves an interplay of different people, each adopting one role

Entrepreneurship 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 Related idea  New Venture Fund = A fund providing resources from which individuals and groups can draw to develop new ideas, products, or businesses

Changing People and Culture Difficult to change ?? Two specific tools that can smooth the process

Training and Development

Organisation Development

Changing People and Culture Two specific tools that can smooth the process Training and Development  A company may offer training program to employees on subject such as teamwork, diversity, emotional intelligence, quality circles, communication skills, and participative management. Organizational Development (OD)  It is a planned, systematic process of change that uses behavioral science knowledge and techniques to improve an organization’s health and effectiveness through its ability to a) adapt to the environmental , b) improve internal relationships, and c) increase learning and problem solving capabilities 

OD focuses on the human and social aspects of the organisation and works to change attitudes and relationships among employees, helping to strengthen the organisation’s capacity for adoption and renewal

Changing People and Culture Difficult to change ?? Two specific tools that can smooth the process

Training and Development Address problems

Organisation Development OD activities

OD steps

Changing People and Culture OD help to address three types of current problems: • • •

Mergers/acquisitions Organization decline/revitalization Conflict management

Mergers/Acquisitions Mergers/acquisitions 

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The disappointing financial results of many mergers and acquisitions are caused by the failure of executives to determine whether the administrative style and corporate culture of the two companies fit Executives may concentrate on potential synergies in technology, products, marketing, and control systems but fail to recognize that two firms may have widely different values, beliefs, and practices These differences create stress and anxiety for employees, and these negative emotions affect future performance Cultural differences should be evaluated during the acquisition process, and OD experts can be used to smooth the integration of two firms

Organization Decline/Revitalization Organization decline/revitalization 

Organisations undergoing a period of decline and revitalization experience a variety of problems, including a low level of trust, lack of innovation, high turnover, and high levels of conflict and stress

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The period of transition requires opposite behaviours, including confronting stress, creating open communication, and fostering creative innovation to emerge with high levels of productivity

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OD techniques can contribute greatly to cultural revitalization by managing conflicts, fostering commitment, and facilitating communication

Conflict Management Conflict management • •

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Conflict can occur at any time and place within a healthy organisation At manufacturing firm, salespeople promised deliver dates to customers that were in conflict with shop supervisor priorities for assembling customer orders or two managers disliked each other intensely OD efforts can help resolve these kinds of conflicts, as well as conflicts that are related to growing diversity and the global nature of today’s organisations

Changing People and Culture OD activities • OD consultants use a variety of specialized techniques to help to meet OD goals

Team building Survey-feedback activities activities

Large group intervention

Changing People and Team building activities Culture • •

Enhance cohesiveness and success of department. An OD expert can work with team members to increase their communication skills, facilitate their ability to confront one another, and help them accept common goals

Survey-feedback activities • Survey feedback begins with a questionnaire distributed to employees on values, climate, participation, leadership, and group cohesion within their organisation • After survey is completed, and OD consultant meets with groups of employees to provide feedback about their responses and the problems identified Large group intervention • Bring together participants from all parts of the organization to discuss problems and opportunities and plan for major change. • The idea is to include everyone who has a stake in the change, gather perspectives from all parts of the system, and enable people to create a collective future through sustained, guided dialogue

Changing People and Culture OD Steps  The theory underlying OD proposes three distinct stages for achieving behavioural and attitudinal change 1 Stage: Unfreezing 2 Stage: Changing 3 Stage: Refreezing

Changing People and Culture OD Steps 1 Stage: Unfreezing   

Means participants are made aware of problems in order to increase their willingness to change their behavior. Often uses outside expertise called a change agent Change Agent- is OD specialist who contracts with an organization to facilitate change.

2 Stage: Changing 

Intervention stage of OD in which individual experiment with new workplace behaviors.

3 Stage: Refreezing 

The reinforcement stage of OD in which individual acquire a desired new skill or attitude and are rewarded for it by the organization.

Implementing Change    

Need for Change Resistance to Change Force-Field Analysis Implementation Tactics

Need for Change  

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Many people are not willing to change unless they perceive a problem or a crisis However, many problems are subtle. So managers have to recognize and then make other aware of the need for change One way mangers sense a need for change is through the appearance of performance gap Performance gap = disparity between existing and desired performance levels.

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.

Force-Field Analysis •

Kurt Lewin proposed that change was a result of the competition between Driving and Restraining Forces

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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

Traditional to JustIn-Time Inventory Systems

Implementation Tactics Communication and Education  

Used when solid information about change is needed by users and others who may resist implementation. Education is important when the change involves new technical knowledge / unfamiliar with the new idea.

Participation  

Involves users and potential resisters in designing the change Help to determine potential problems and understand the differences in perception of change among employees.

Negotiation 

Formal mean of achieving cooperation

Coercion 

Use formal power to force employees to change

Top Management Support  

Symbolizes to all employees that the change is important for the organization. Important when a change involves multiple departments / resources reallocated among departments.

Thank you