Chapter Eleven
Innovation and Change
11-1
Forces Driving the Need for Major
Organizational Change
Global Changes, Competition and Markets
• Technological Change
• International Economic Integration
• Maturation of Markets in Developed Countries
• Fall of Communist and Socialist Regimes
More Threats
More Opportunities
More domestic competition
Increased Speed
International competition
Bigger markets
Fewer barriers
More international markets
More Large-Scale Changes in Organizations
Structure change
Strategic change
Culture change
Knowledge management, enterprise
resource planning
Quality programs
Source: Based on John P. Kotter, The New Rules:
How to Succeed in Today’s Post-Corporate World
(New York: The Free Press, 1995).
Mergers, joint ventures, consortia
Horizontal organizing, teams, networks
New technologies, products
New business processes
E-business
Learning organizations
11-2
Incremental vs. Radical
Change
Incremental Change
Radical Change
Continuous
progression
Paradigm-breaking
burst
Affect
organizational
part
Transform entire
organization
Through normal
structure and
management
processes
Create new structure
and management
Technology
improvements
Breakthrough
technology
Product
improvement
New products,
new markets
Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R.
Brooks, “Organizations in Disequilibrium: Environmental Jolts and
Industry Revolutions,” in George Huber and William H. Glick, eds.,
Organizational Change and Redesign (New York: Oxford University
Press, 1992), 66-111; and Harry S. Dent, Jr., “Growth through New
Product Development,” Small Business Reports (November 1990): 30-40.
11-3
Four Types of Change

Technology


Products and Services


Changes in outputs
Strategy and Structure


Changes in production process
Administrative changes
Culture

Changes in values, attitudes, behaviors
11-4
Elements for Successful Change






Organizational Change is considered the adoption
of a new idea or behavior by an organization.
Organizational Innovation is the adoption of an
idea or behavior that is new to the organization’s
industry, market, or general environment.
3M  15%
Google  Search engine
UPS  DIAD (Delivery Information Acquisition
Device)
6σ  3.4 mistakes per million parts produced
11-5
Sequence of Elements for
Successful Change
Environment
Suppliers
Professional
Associations
Consultants
Research
literature
Internal
Creativity and
Inventions
Organization
1. Ideas
3. Adoption
Customers
Competition
Legislation
Regulation
Labor force
4.Implementation
2. Needs
5. Resources
Perceived
Problems or
Opportunities
11-6
Division of Labor Between Departments
to Achieve Changes in Technology
General
Manager
Creative
Department
(Organic Structure)
Using
Department
(Mechanistic Structure)
• The Nokia Ventures Organization (NVO)隱藏天線
• Idea incubator (p.409)
• Venture Teams (pp.409-410)
11-7
Probability of New Product
Success
PROBABILITY

Technical completion


.57
Commercialization


(technical objectives achieved)
(full-scale marketing)
.31
Market Success

(earns economic returns)
Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee,
S. Wagner, and M. Hamburger, Research and Innovation in
Modern Corporations (New York: Norton, 1971), 57.
.12
11-8
Horizontal Linkage Model for New
Product Innovations
Environment
Organization
Environment
General
Manager
Technical
Developments
Linkage
R&D
Department
Linkage
Marketing
Department
Linkage
Customer
Needs
Production
Department
11-9
Dual-Core Approach to
Organization Change
Type of Innovation Desired
Administrative
Structure
Administrative
Core
Technical
Core
Direction of Change:
Top-Down
Examples of Change:
Strategy
Downsizing
Structure
Best Organizational
Design for Change:
Technology
Mechanistic
Bottom-Up
Production
techniques
Workflow
Organic
11-10
Culture Change

Reengineering and Horizontal
Organization

Diversity

The Learning Organization
11-11
OD Culture Change
Interventions

Large Group Intervention

Team Building

Interdepartmental Activities
11-12
Stages of Commitment to
Change

Preparation



Acceptance



Initial contact
Awareness
Understanding
Decision to implement
Commitment


Installation
Institutionalization
11-13
Barriers to Change





Excessive focus on costs
Failure to perceive benefits
Lack of coordination and cooperation
Uncertainty avoidance
Fear of loss
11-14
Techniques for Change
Implementation

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

Establish a sense of urgency for change.
Establish a coalition to guide the change.
Create a vision and strategy for change.
Find an idea that fits the need.
Develop plans to overcome resistance.
Create change teams.
Foster idea champions.
11-15
Workbook
Activity
Innovation Measures
Measure
A
B
C
Your Organization
Other Organization
Your Ideal
1. Creativity encouraged
2. Diverse problem-solving
3. Time for creative ideas
4. Rewards for innovation
5. Flexible, open to change
6. Follow orders from top
7. Think and act like others
8. Concern for status quo
9. Don’t rock the boat
10. New ideas not funded
11-16