CH 11

Managing Change and Innovation
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Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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Turbulent Times
The Changing Work Place
Todays organizations need to continuously adapt to
new situations if they are to survive and prosper

One of the most dramatic elements is the shift to a
technology- driven workplace

Ideas, information, and relationships are becoming
critically important
Managers Challenge: Cowley manufacturing plant
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Managing Change
and Innovation
How organizations respond to the environment
through internal change and development

Basic forces for Organizational Change
How managers facilitate two change requirements
Four major types of change
How organizations can be designed to facilitate each

Topics
Chapter 11
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Organizational Change
The adoption of a new idea of behavior by an
organization

New trends require profound changes in the
organization
E-business
Supply chain integration
Knowledge management
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Todays successful organizations
simultaneously embrace two types of
planned change
Incremental change = efforts to gradually improve
basic operational and work processes in different
parts of the company
Transformational change = redesigning and
renewing the entire organization
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Model of Change
Sequence of Events
Environmental
Forces
Internal
Forces
Need for
change
Initiate
change
Implement
change
Monitor global
competition, and other
factors
Consider plans,
goals, company
problems, and
needs
Evaluate problems
and opportunities,
define needed
changes in
technology
products,
structure, and
culture
Facilitate search,
creativity, idea
champions, venture
teams, skunk works
and idea incubators
Use force field
analysis, tactics for
overcoming
resistance
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Forces for Change
Environmental Forces
Customers
Competitors
Technology
Economic
International arena
Internal Forces activities and decisions
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Need for Change
- Performance gap = disparity between
existing and desired performance levels.

Current procedures are not up to standard
New idea or technology could improve current
performance
-Based on external or internal forces
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Initiating Change
Stage where the ideas that solve perceived
needs are developed
Search = process of learning about current
developments inside or outside the organization that
can be used to meet the perceived need for change
Creativity = generation of novel ideas that might
meet perceived needs or offer opportunities for the
organization
Critical phase of change management
Experiential Exercise: Is Your Company Creative?
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Characteristics of Creative People
O Conceptual fluency
E Open-minded
O Originality
O Less authority
E Independence Self-confidence
O Playfulness
E Undisciplined exploration
E Curiosity
O Persistence
E Commitment - Focused approach
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Idea Champion
A person who sees the need for and
Champions productive change within
the organization
Change does not occur by itself
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Four Roles in Organizational Change
Inventor
Develops and
understands
technical aspects
of ideas
Does not know
how
to win support for
the idea or make a
business of it
Sponsor
High-level
manager
who removes
organizational
barriers
Approves and
protects idea
within
organization
Critic
Provides reality
test
Looks for short-
comings
Defines hard-
nosed
criteria that idea
must pass
Sources: Based on Harold L. Angle and Andrew H. Van de Ven, Suggestions for Managing the Innovation Journey, in Research in the Management of Innovation: The Minnesota
Studies, ed. A. H. Van de Ven, H. L. Angle, and Marshall Scott Poole (Cambridge, Mass.: Ballinger/Harper & Row, 1989); and Jay R. Galgraith, Designing the Innovating
Organization, Organizational Dynamics (winter 1982) 5-25.
Champion
Believes in idea
Visualizes benefits
Confronts
organization
realities of cost,
benefits
Obtains financial &
political support
Overcomes
obstacles
Championing an idea successfully requires roles in organizations
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New Venture Teams
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

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New Venture Fund
Fund providing resources from which
individuals and groups can draw to develop
new ideas, products, or businesses

Idea Incubator = in-house program that
provides a safe harbor where ideas from
employees throughout the organization can
be developed without interference from
company bureaucracy or politics
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Open Innovation
Extending the search for and commercialization of
new ideas beyond the boundaries of the organization

The boundaries between an organization and its
environment are becoming porous so that ideas flow
back and forth among different companies that
engage in partnerships, joint ventures, licensing
agreements, and other alliances
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Resistance to Change
N Self-Interest: fear of personal loss is perhaps the
biggest obstacle to organizational change
N Lack of Understanding and Trust: do not
understand the intended purpose of a change or
distrust the intentions
N Uncertainty: lack of information about future events
N Different Assessments and Goals: people who will
be affected by innovation may assess the situation
differently.
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Force-Field Analysis
The process of determining which forces
drive and which resist a proposed change
Restraining Forces (Barriers)
Lack of resources
Resistance from middle
managers
Inadequate employee skills
Driving Forces
Thought of as
problems or
opportunities that
provide motivation for
change
Kurt Lewin
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Traditional to Just-In-Time
Inventory Systems
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Tactics for Overcoming
Communication
education

Participation

Change is technical;
users need accurate
information & analysis
Users need to feel
involved; design
requires information
from others; have
power to resist
Approach When to Use
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Tactics for Overcoming
Negotiation

Coercion

Top management
support

Group has power over
implementation; will
lose out in the change
Crisis exists; initiators
clearly have power;
other techniques have
failed
Involves multiple
departments or
reallocation of
resources; users doubt
legitimacy of change

Approach
When to use
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Types of Organizational Change
Culture/People
Strategy
Structure
Technology Products
SOURCE: Based on Harold J. Leavitt, Applied Organizational Change in Industry: Structural, Technical, and Human
Approaches, In New Perspectives in Organization Research, ed.W.W. Cooper, H.J. Leavitt, and Shelly II (New York: Wiley,
1964), 55-74.
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C Technology: General rule = change is bottom up
C New product:
Horizontal linkage model emphasizes shared development of
innovations among several departments
Time-based competition is based on the ability to deliver products
and services faster than competitors
C Structure: Successful change = through a top-down approach
C Culture/people:
Training is the most frequently used tool for changing the
organizations mind-set
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Horizontal Linkage Model
For New Product Innovation
Research
Department
Marketing
Department
Manufacturing
Department
New
Technology
Customers
Market
Conditions
Organization
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Structural Changes
Any change in the way in which the
organization is designed and managed
Hierarchy of authority
Goals
Structural characteristics
Administrative procedures
Management systems
Ethical Dilemma: Research for Sale
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Culture-People Changes
Changes in structure, technologies, and
products or services do not happen on their
own

Changes in any of these areas require
changes in people
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Organization Development
Decline/revitalization Mergers/acquisitions Conflict management
Problems OD Can Address
Application of behavioral science techniques to
improve an organizations health and effectiveness
through its ability to cope with environmental
changes, improve internal relationships, and
increase learning and problem-solving capabilities
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OD Activities
Survey feedback
Team building
Large group
intervention
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OD Approaches to Culture Change
Traditional Organizational
Development Model
Large-Group
Intervention Model
Change Process: Incremental Change Rapid transformation
Focus for action:
Information
Source:
Distribution:
Time frame:
Learning:
Specific problem or group

Organization
Limited
Gradual
Individual, small group
Entire system

Organization & environment
Widely shared
Fast
Whole organization
SOURCE: Adapted from Barbara Benedict Bunker and Billie T. Alban, Conclusion: What Makes Large Group Interventions Effective, The Journal of Applied Behavioral Science 28, no 4 (December
1992), 579-591.
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Three Stages for Achieving
Behavioral and Attitudinal Change
O Unfreezing
O Changing
O Refreezing

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