Chapter Ten Organizational Change & Innovation

Lifelong Challenges for the Exceptional Manager

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, All Rights Reserved.

Two Types of Change

Reactive change
making changes in response to problems or opportunities as they arise

Proactive change
involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities Also called planned change

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The Forces for Change: Outside the Organization

1. 2. 3. 4. Demographic characteristics Market changes Technological advancement Social & political pressures

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Forces For Change Outside and Inside the Organization

Figure 10.1
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Areas in Which Change is Often Needed

1. Changing people
Perceptions, attitudes, performance, skills

2. Changing technology 3. Changing structure 4. Changing strategy

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Organization Development
Organization development (OD)
set of techniques for implementing planned change to make people and organizations more effective

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Organization Development
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

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The OD Process

Figure 10.2
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Types of Innovation
Product innovation
change in the appearance or performance of a product or the creation of a new one

Process innovation
change in the way a product is conceived, manufactured, or disseminated

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Types of Innovation
Incremental innovation
creation of products, services, or technologies that modify existing ones

Radical innovation
creation of products, services, or technologies that replace existing ones

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Four Characteristics of Innovation

1. Innovation is an uncertain business 2. People closest to the innovation know the most about it, at least initially 3. Innovation may be controversial 4. Innovation can be complex because it may cross organizational boundaries

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Three Steps For Fostering Innovation

Figure 10.3
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Reasons Employees Resist Change

Peer pressure Disruption of cultural traditions or group relationships Personality conflicts Lack of tact or poor timing Non-reinforcing reward system

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Lewins Change Model

Unfreezing
creating the motivation to change

Changing
learning new ways of doing things

Refreezing
making the new ways normal

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Steps to Leading Organizational Change

Table 10.2

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REVISION
1. (p. 312) People are generally comfortable and embrace change, even change in apparently major matters.
FALSE

People are generally uncomfortable about change, even change in apparently minor matters. If small changes can cause uneasiness, large changes can cause considerable stress.
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2. (p. 313) Kodak is an example of the trend emerging that knowledge, not information, is becoming the new competitive advantage.

FALSE
Kodak found its sales hit $14 billion in 1999 and dropped to $13.3 billion in 2003 because it did not transition quickly enough into the digital imaging business.
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3. (p. 319) OD focuses specifically on the people aspects of change. TRUE OD focuses specifically on people in the change process. Organization development (OD) is a set of techniques for implementing planned change to make people and organizations more effective.
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4. (p. 322) The spirit of innovation is essential to keeping an organization vital in maintaining a competitive advantage. TRUE

Innovation is essential to keeping an organization vital. Otherwise, the innovation will come from your competitors, forcing you to scramble to catch upif you can.
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5. (p. 330) In the refreezing stage of change of Lewin's change model, employees need to be given new information, perspectives and models for behavior.

FALSE
In the changing stage, employees need to be given the tools for change: new information, new perspectives, and new models of behavior.
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