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CHAPTER 10 Organization Size, Life Cycle And Decline Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organization Size: Is Bigger Better? Companies in all industries strive for growth to acquire the size and resou...

CHAPTER 10 Organization Size, Life Cycle And Decline Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organization Size: Is Bigger Better? Companies in all industries strive for growth to acquire the size and resources needed to compete globally. The dilemma related to organizational size begins with the concept of growth. Growth drivers ◦ Competing on a global scale ◦ Investing in new technologies ◦ Controlling distribution channels ◦ Ensuring access to markets ◦ Economic stability ◦ Attracting high-quality human resources ©2024 Grazia Garlatti Costa  ! how much you want to group up balance what is the right Large VS Small Organizations advantages) , agility moration ©2024 Grazia Garlatti Costa  Dilemmas of size: the paradox The paradox is that the advantages of small companies sometimes enable them to succeed and, hence, grow large. Small companies can become victims of their own success as they grow, shifting to a mechanistic design emphasizing vertical hierarchy and spawning “organization men” rather than entrepreneurs. Giant companies are “built for optimization, not innovation” THE SOLUTION IS THE AMBIDEXTROUS APPROACH: “big-company/small-company hybrid” ©2024 Grazia Garlatti Costa  Organizational ambidexterity Organizational ambidexterity means being able to combine the capacity to implement current business organization methods (exploitation) with the capacity to explore (exploration) new ways of conducting business. Charles O'Reilly and Michael Tushman ©2024 Grazia Garlatti Costa  Three types of organizational ambidexterity ◦ CONTEXTUAL ambidexterity (e.g., 3M and its "15% free time policy") – This is the most challenging to achieve. ◦ SEQUENTIAL ambidexterity (an exploitation phase is followed by an exploration or focus phase) – This is typical of N.P.D. (new product development) projects. ◦ STRUCTURAL ambidexterity (creating new business units/spin-offs, even in competition with the company itself) – This is the most recommended for "exploring." ©2024 Grazia Garlatti Costa  Three types of organizational ambidexterity Type Focus Best Suited For Challenges Organizations with a Requires high employee Balancing within a Contextual single unit strong innovative autonomy, strong leadership, culture and cultural alignment. Risk of losing momentum or Shifting focus over Project-based work Sequential time like NPD market relevance during transitions between phases. Can create silos or competition Separate units for High-risk innovation Structural explore/exploit (e.g., new markets) between units if not managed carefully. ©2024 Grazia Garlatti Costa  Contextual ambidexterity Exploration and exploitation under the same roof. Managers foster the generation of ideas, projects, and even new lines of business that may compete with each other and with the company's core business. ©2024 Grazia Garlatti Costa Sequential ambidexterity ©2024 Grazia Garlatti Costa  Structural ambidexterity COMPANY SPIN OFF MECHANISTIC ORGANIZATIONAL DESIGN ORGANIC ORGANIZATIONAL FOCUS on DESIGN EXPLOITATION FOCUS on EXPLORATION ©2024 Grazia Garlatti Costa  Organizational Life Cycle The concept of an organizational life cycle is a useful way to think about organizational growth and change. A typical four-stage model includes: 1. Entrepreneurial stage – emphasizes creating a product or service and surviving in the marketplace. 2. Collectively stage – organizations begin to develop clear goals and direction. 3. Formalization stage – involves the installation and use of rules, procedures and control systems. 4. Elaboration stage – focuses upon on collaboration and teamwork. ©2024 Grazia Garlatti Costa  ven ther is a civic before enter in ai stage if the company sonot do it its die Organizational Life Cycle ©2024 Grazia Garlatti Costa  Organization Characteristics During the Life Cycle 1. Entrepreneurial 2. Collectivity 3. Formalization 4. Elaboration Characteristic Nonbureaucratic Pre-bureaucratic Bureaucratic Very Bureaucratic 3 Formal procedures, Teamwork within Informal, one-person Mostly informal, Structure division of labor, new bureaucracy, small- show some procedures specialties added company thinking - Major product or Products or Line of products or Multiple product or service Single product or service service, with services variations services lines ~ Reward and Personal, contribution Impersonal, Extensive, tailored to ~ Personal, paternalistic control systems to success formalized systems product and department Innovation By owner-manager By employees and managers By separate innovation group department - By institutionalized R&D Internal stability, Reputation, complete Goal Survival Growth market expansion organization * Top management Individualistic, Charismatic, Delegation with Team approach, attack style entrepreneurial direction-giving control bureaucracy W Y ©2024 Grazia Garlatti Costa  What is Bureaucracy? § Sociologist Max Weber defined bureaucracy as a threat to personal liberties but the most efficient possible system for organizing § Weber’s concept of bureaucracy - Bureaucracy provided many advantages over organization forms based on favouritism, social status, and so on. - However, it is a potential threat to basic personal liberties. § Bureaucratic characteristics tend to increase with large size. § Critics of bureaucracy tend to overlook the positive benefits of its ‘impersonality’ and conveniently disregard the limitation of alternatives to bureaucracy for dealing effectively and fairly with large, complex administrative tasks. ©2024 Grazia Garlatti Costa  become more succenture of characteristic to set Weber’s Dimensions of Bureaucracy different antigenit fairnes , manteunti a tashtoimpress - of with siffent ↑ Ex Mc Donald T lea Hospitals clear chain of promote continuity - command ans efficiency > - ex military eganisation ex ↓ > ment ©2024 Grazia based and expertise Garlatti on chille Costa replotism is rauced  Size and Structural Control Organization size is an important variable that influences structural design and methods of control. Large organizations are different from small organizations along several dimensions of bureaucratic structure. à Dimensions of bureaucratic structure: ØFormalization refers to rules, procedures and written documentation. ØCentralization refers to level of hierarchy with authority to make decisions. Larger organizations permit greater decentralization. ØPersonnel ratios – clerical and professional support staff ratios. ©2024 Grazia Garlatti Costa  Percentage of Personnel Allocated to Administrative and Support Activities if the reduction increase you size ~ Simmense ©2024 Grazia Garlatti Costa  Bureaucracy in a Changing World Bureaucracy worked for the industrial age. The system does not necessarily work for today’s challenges. Today bureaucracy can lead to inefficiency. How can organizations overcome the problems of bureaucracy in rapidly changing environments? Some are implementing innovative structural solutions. One structural concept is to use temporary systems. Organizations are creating temporary structures to respond to crisis. ©2024 Grazia Garlatti Costa Other Approaches to Busting Bureaucracy ◦ Steps that organizations can take to reduce bureaucracy include: Cutting layers of the hierarchy Keeping headquarters staff small Giving lower-level employees greater freedom to make decisions without excessive rules and regulations Leveraging their employees’ professionalism (formal training and experience) Providing on-going training to employees ©2024 Grazia Garlatti Costa  Bureaucracy and Other Forms of Control ◦ William Ouchi suggested three control strategies that organizations can adopt are: 1. Bureaucratic control ØRational-legal authority ØTraditional authority ØCharismatic authority 2. Market control 3. Clan control ◦ Each form of control uses different types of information, but all three types may appear simultaneously in an organization ©2024 Grazia Garlatti Costa  Three Organizational Control Strategies Type Requirements Bureaucratic Rules, standards, hierarchy, legitimate authority Market Prices, competition, exchange relationship Clan Tradition, shared values and beliefs, trust ©2024 Grazia Garlatti Costa  Organizational Decline § Every organization goes through periods of temporary decline. § Organization decline is a condition in which a substantial absolute decrease in an organization’s resource base occurs over a period. § The decrease of an organization’s resources is caused by: ◦ Organizational atrophy ◦ Vulnerability ◦ Environmental decline or competition ©2024 Grazia Garlatti Costa  A Model of Decline Stages ◦ If not managed properly, decline can move through five stages and result in the dissolution of the organization: 1. Blinded stage 2. Inaction stage 3. Faulty action stage (including downsizing) 4. Crisis stage 5. Dissolution stage ©2024 Grazia Garlatti Costa  BLOCK 11 Dual-purpose (hybrid) Organizations, Corporate Sustainability and CSR, Organizational Culture and Ethics Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Designing the Dual-Purpose Organization ◦ A hybrid organization pursues both profit and social missions within a single organization ◦ Such enterprises face the risk of mission drift, or giving more importance to generating revenue and profit ◦ The consequence of mission drift for social enterprises is severe because it threatens their reason for existence ◦ Pressure to be financially viable and socially responsible has pushed both for-profit and nonprofit organizations to create social and financial value as part of their core business: hybrid zone ©2024 Grazia Garlatti Costa Organizational Approaches for Societal Benefit (slide 1 of 2) Term Description Benefit A legal for-profit entity whose charter includes legal corporation responsibility for positive social or environmental goals in addition to profit-seeking goals. B Corporation An organization that has received a private certification issued by B Lab, based on an 80-item assessment of accountability and transparency in social and environmental performance. Often used in locations where legal government chartering as a benefit corporation is not available. L3C – Low profit A legal structure used in a few states that allows for limited liability investment in socially responsible enterprises that are for- company profit. Shared Value Business practices that increase the competitiveness of a Approach company and at the same time contribute to positive economic and social impact in the community. ©2024 Grazia Garlatti Costa Organizational Approaches for Societal Benefit (slide 2 of 2) Term Description Bottom of the Corporate approach of expanding business by creating pyramid ventures products or services to serve poorer populations. Conscious Concerned with social and environmental issues both Capitalism at a local and global level. Awareness of the impact of products and services on people and the environment. Social Founding a profit-seeking new business venture with the Entrepreneurship goal of tackling a specific societal problem while earning enough profit to sustain the business. Social Enterprise An established hybrid business with the dual goals of addressing a societal problem and making a profit. ©2024 Grazia Garlatti Costa wor profit organia B-Corp O ©2024 Grazia Garlatti Costa  Facing the Challenge ◦ Logics are the personal beliefs, values, and preferences of an organization’s employees ◦ Within hybrid organizations, two main logics are usually at play ØCommercial logic: Sell products and services for economic gain or profit ØSocial welfare logic: Sell products and services as a mechanism for meeting societal needs ©2024 Grazia Garlatti Costa The Two Opposing Logics Embedded Within a Hybrid Organization had , dif ©2024 Grazia Garlatti Costa Designs for Achieving Dual Commercial and Social Welfare Goals Structures and techniques for organizing people who hold opposing mindsets and values about an organization’s purpose include: 1. Knowing when to use an integrated structure versus separate departments 2. Hiring employees with a balanced mindset 3. Setting clearly defined goals and measures of effectiveness 4. Collaborating with like-minded organizations 5. Keeping the social mission alive in the minds of employees 6. Choosing the correct legal framework, such as incorporating as a benefit corporation ©2024 Grazia Garlatti Costa Corporate Social Responsibility (CSR) (slide 1 of 2) ◦ Corporate social responsibility (CSR) refers to management’s efforts to make choices and take actions that contribute to the welfare and interest of all organizational stakeholders ◦ Companies can now be measured on their performance along environmental, social, and governance (ESG) dimensions ◦ Trade-offs can exist between a firm’s financial performance and its performance on ESG-type dimensions: Improving one may involve a cost to the other ©2024 Grazia Garlatti Costa Corporate Social Responsibility (CSR)(slide 2 of 2) ◦ Approaches and models that businesses adopt to organize their socially responsible activities include: ◦ The green movement, sustainability and circular economy ◦ The triple bottom line ◦ Conscious capitalism ◦ Stakeholder mapping ◦ Serving the bottom of the pyramid (BOP) ©2024 Grazia Garlatti Costa  The Triple Bottom Line Organisation pay attention to people planet and profit ©2024 Grazia Garlatti Costa  Conscious Capitalism ◦ Conscious capitalism, which has also been referred to as a shared value approach, refers to organizational policies and practices that both enhance the economic success of a company and advance the economic and social conditions of the communities in which the company operates. ©2024 Grazia Garlatti Costa Major Stakeholder Groups and What They Expect Pay attention not only to profit but to all this aspects ©2024 Grazia Garlatti Costa  The Bottom of the Pyramid (BOP): the World Economic Pyramid Large multinational can alleviate poverty selling their product at lower prices for lower classes in different countries Reserve innovation- simplified products and selling them at lower cost ©2024 Grazia Garlatti Costa The Consequences for Doing Good ◦ Studies have generally found a positive relationship between socially responsible behavior and a firm’s financial performance ◦ Researchers have also found that people prefer to work for companies that demonstrate a high level of ethical behavior and social responsibility ◦ Many customers would switch brands to do business with ethical and socially responsible companies ©2024 Grazia Garlatti Costa  Designing a Structure for Executing a Sustainability Program ◦ A successful implementation of a sustainability or CSR program depends heavily on: 1. Inclusion of all employees in the sustainability initiative 2. External stakeholder collaboration and involvement 3. Tying sustainability or CSR planning to company-wide strategy and goals 4. Recognition or reward of employee dedication to the sustainability initiative ©2024 Grazia Garlatti Costa United Nations Sustainable Development Goals (slide 1 of 4) ©2024 Grazia Garlatti Costa United Nations Sustainable Development Goals (slide 2 of 4) Goal Description of Goals 1. No Poverty End poverty in all forms everywhere 2. Zero Hunger End hunger, achieve food security and improved nutrition and promote sustainable agriculture 3. Good Health and Well- Ensure healthy lives and promote well- being being for all at all ages 4. Quality Education Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all 5. Gender Equality Achieve gender equality and empowerment for all women and girls 6. Clean Water and Ensure availability and sustainable Sanitation management of water and sanitation for all ©2024 Grazia Garlatti Costa United Nations Sustainable Development Goals (slide 3 of 4) Goal Description of Goals 7. Affordable and Clean Ensure access to affordable, reliable, Energy sustainable and modern energy for all 8. Decent Work and Promote sustained, inclusive and Economic Growth sustainable economic growth, full and productive employment and decent work for all 9. Industry, Innovation and Build resilient infrastructure, promote Infrastructure inclusive and sustainable industrialization and foster innovation 10. Reduced Inequalities Reduce inequality within and among countries 11. Sustainable Cities and Make cities and human settlements Communities inclusive, safe, resilient and sustainable 12. Responsible Ensure sustainable consumption and Consumption and production patterns Production ©2024 Grazia Garlatti Costa United Nations Sustainable Development Goals (slide 4 of 4) Goal Description of Goals 13. Climate Action Take urgent action to combat climate change and its impacts 14. Life Below Water Conserve and sustainably use the oceans, seas and marine resources for sustainable development 15. Life on Land Sustainably manage forests, combat desertification, and halt and reserve land degradation, halt biodiversity loss 16. Peace, Justice and Promote just, peaceful and inclusive Strong Institutions societies 17. Partnership for Goals Revitalize the global partnership for sustainable development ©2024 Grazia Garlatti Costa  BLOCK 11 – PART 2 Organizational Culture and Ethical Values Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organizational cultures Culture is the element that put everything togheter in an organisation ©2024 Grazia Garlatti Costa  Social capital and organizational Culture ◦ Social Capital refers to the quality of interactions among people and Social whether they share a common Capital perspective. ◦ With a high degree of social capital: relationships are based on trust, mutual Ethics understanding, and shared norms and values that enable people to Organizational cooperate and coordinate their Culture activities to achieve goals. ◦ Social capital is linked to both organizational culture and ethics. ©2024 Grazia Garlatti Costa  What is Culture? Organizational culture is the set of values, norms, guiding beliefs, and understandings that are shared by members of an organization and taught to new members as the correct way to think, feel, and behave. ◦ It is the unwritten, feeling part of the organization. ◦ It represents the informal organization ◦ Organizational culture exists at two levels: 1. Visual artifacts and observable symbols 2. Underlying values, assumptions, beliefs, and thought processes ©2024 Grazia Garlatti Costa Levels of Corporate Culture ©2024 Grazia Garlatti Costa Emergence and Purpose of Culture § Culture provides a sense of organizational identity. § Two critical functions in organizations: - To integrate members so they know how to relate to one another. - To help organization adapt to external environment. 1. Internal integration means that members develop a collective identity and know-how to work together effectively. 2. External integration refers to how the organization meets goals and deals with outsiders. ©2024 Grazia Garlatti Costa * Observable Aspects of Organizational Culture S parties for employees on gatilvde upper part icbery retiment e share values parred through - this part generation managesufficient for Success be hiechical mechanic flexible can - on E or organic ©2024 Grazia Garlatti Costa  Interpreting Culture § Rites and ceremonies – special occasions that reinforce specific values, and create a bond among people. - Rites of passage, rites of enhancement, rites of renewal and rites of integration. § Stories are narratives based on true events that are frequently shared among employees. - Some stories are myths. § A Symbol – something that represents another thing. § Language – many companies use a specific saying, slogan or other form of language to convey special meaning to employees. ©2024 Grazia Garlatti Costa  Organization Design and Culture § Managers want a corporate culture that reinforces the strategy and structural design that the organization needs to be effective within environment. § The correct relationship among cultural values, organizational strategy and structure, and the environment can enhance organizational performance. § Culture can be assessed along many dimensions. § Two specific dimensions are: (1) The extent to which the competitive environment requires flexibility or stability. (2) The extent to which the organization’s strategic focus and strength are internal or external. ©2024 Grazia Garlatti Costa  Culture and Organization Design Four categories of culture are associated with these differences: adaptability, achievement, clan, and bureaucratic ©2024 Grazia Garlatti Costa  Organizational Design and Culture § Adaptability culture – focuses on external environment through flexibility and change to meet customer needs. - Not only reacts quickly to change, it actively create change. § Achievement (or Mission) culture – emphasis on a clear vision of the organization’s purpose and on the achievement of goals. § Clan culture – focuses on the involvement and participation of the employees and on external expectations. § Bureaucratic culture – an internal focus and a consistency orientation for a stable environment. ©2024 Grazia Garlatti Costa  Culture Strength and Organizational Subcultures § Culture strength refers to the degree of agreement among members of an organization about the importance of specific values. § Culture is not always uniform throughout the organization, particularly in large organizations. § Subcultures develop to reflect the common problems, goals and experiences that members of a team or department share. § Subcultural differences can lead to conflicts between departments or divisions § Cultural conflicts can be particularly challenging in the case of mergers and acquisitions ©2024 Grazia Garlatti Costa  Organizational Culture, Learning and Performance Culture is important to learning and innovation during challenging times. Culture has a significant impact on organizational performance Successful companies are those in which managers are evaluated and rewarded for paying careful attention to cultural values and business performance Such companies have high-performance cultures The right culture can drive high performance. Non-adaptive cultures encourage rigidity and stability. Strong adaptive cultures often incorporate the following values: (1) The whole is more important than the parts. (2) Equality and trust are primary values. (3) The culture encourages risk taking, change, and improvement. ©2024 Grazia Garlatti Costa Combining Culture and Performance ©2024 Grazia Garlatti Costa  The Cultural Focus of Control Systems Managers consider both control of the overall organization and control of departments, teams, and individuals Many companies are adopting a decentralized control process rather than a hierarchical control process Hierarchical control and decentralized control represent different philosophies of corporate culture. ©2024 Grazia Garlatti Costa  Hierarchical and Decentralized Methods of Control (slide 1 of 2) Hierarchical Control Decentralized Control Basic People are incapable of self- People work best when they are assumptions discipline and cannot be trusted. fully committed to the They need to be monitored and organization. controlled closely. Actions Uses detailed rules and Features limited use of rules; procedures and formal control relies on shared values, group systems. and self-control, selection, and socialization. Uses top-down authority, formal hierarchy, position power, Relies on flexible authority, flat supervision, quality control structure, and expert power; inspectors. everyone monitors quality. Relies on task-related job Relies on results-based job descriptions. descriptions; emphasizes goals to be achieved. ©2024 Grazia Garlatti Costa  Hierarchical and Decentralized Methods of Control (slide 2 of 2) Hierarchical Control Decentralized Control Actions Emphasizes extrinsic rewards Emphasizes extrinsic and intrinsic (continued) (pay, benefits, status). rewards (meaningful work, opportunities for growth). Features rigid organizational culture and distrust of cultural Features adaptive culture; norms as means of control. culture recognized as means for uniting individual, team, and organizational goals for overall control. Consequences Employees follow instructions and Employees take initiative and do just what they are told. seek responsibility. Employees feel a sense of Employees are actively engaged indifference toward work. and committed to their work. Employee absenteeism and Employee turnover is low. turnover is high. ©2024 Grazia Garlatti Costa  Ethics and Ethical Values ◦ Top corporate managers are under scrutiny from the public as never before, and even small companies are finding a need to put more emphasis on ethics to restore trust among their customers and the community. ◦ Ethics refers to the code of moral principles and values that governs behavior with respect to what is right or wrong ◦ Ethics are personal and unique to each individual, although in any given group, organization, or society, there are many areas of consensus about what constitutes ethical behavior. ◦ Each person is a creation of his or her time and place in history. ©2024 Grazia Garlatti Costa Sources of Individual Ethical Principles and Actions ©2024 Grazia Garlatti Costa  Relationship Between the Rule of Law and Ethical Standards The rule of law arises from a set of codified principles and regulations that describe how people are required to act, that are generally accepted in society, and that are enforceable in the courts. ©2024 Grazia Garlatti Costa  Organizational ethics ◦ Ethical standards generally apply to behaviors not covered by the law ◦ The rule of law applies to behaviors not necessarily covered by ethical standards ◦ Organizational ethics are principles that guide managerial decisions and behaviors with regard to whether they are right or wrong ◦ Some decisions represent ethical dilemmas that are exceedingly difficult to resolve ©2024 Grazia Garlatti Costa Source of Ethical Values in Organizations § Personal ethics - Every individual brings a set of personal beliefs and values into the workplace. § Organizational culture - Companies should make ethics an integral part of the organization’s culture. § Organizational systems - Formal organizational system can reinforce ethical values that exist in the informal culture. § External stakeholders - Organizations are part of a larger community. - Important external stakeholders are government agencies, customers and special-interest groups. ©2024 Grazia Garlatti Costa  Formal Structure and Systems for Building an Ethical Organization § Structure - Ethics committee. - Chief ethics officer. - Ethics hotline. § Disclosure mechanisms - Whistle-blowing. § Code of ethics - A formal statement of the company’s values concerning ethics and social responsibility. § Training programmes § These formal structures and systems alone are not sufficient to build and sustain an ethical company. § Ethics should be integrated into the organizational culture. ©2024 Grazia Garlatti Costa  Corporate Culture and Ethics in a Global Environment The global environment presents tough ethical challenges. Complexity of the global environment and organizational domain creates a greater potential for ethical problems or misunderstandings Varied attitudes and beliefs among employees in different countries make it difficult to establish a sense of community and cohesiveness based on the ethical culture Components that characterize a global culture: üMulticultural rather than national values. üBasing status on merit rather than nationality. Managers must think broadly about ethics. Social audits measure and report ethical, social and environmental impact of a company’s operation. ©2024 Grazia Garlatti Costa  CHAPTER 12 Innovation and Change Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Innovate or died § Today’s organizations must poise themselves to innovate and change, not only to prosper but merely to survive in a world of increasing competition. § Environmental forces drive major organizational change: ◦ Technology. ◦ International economic integration. ◦ Maturing domestic markets. ◦ Globalization. § To manage threats and opportunities, organizations must change. ©2024 Grazia Garlatti Costa  Forces Driving the Need for Major Organizational Change and Innovation Inovation am be can on opportunity threat o ©2024 Grazia Garlatti Costa  Three types of Change and Innovation ◦ Organizations can respond to environmental shifts with: ØEpisodic change ØContinuous change ØDisruptive change and innovation ◦ Disruptive innovation refers to (often) small product or service innovations that end up completely replacing an existing product or service technology ©2024 Grazia Garlatti Costa  Stages of Disruptive Innovation Sources: Based on Clayton M. Christensen and Michael B. Horn, “Innovation Imperative: Change Everything,” The New York Times, 2013, ©2024 Grazia Garlatti Costa  Incremental versus Radical Change § Incremental change represents a series of continual progressions that maintain the organization’s general equilibrium and often affect only one organizational part. - It occurs through the established structure and management process. § Radical change breaks the frame of reference for the organization, often transforming the entire organization. -Involves the creation of a new structure and new management processes. à Two forms of change are sometimes needed at the same time. ©2024 Grazia Garlatti Costa  Strategic Types of Innovation ◦ Managers can focus on four types of innovation to achieve strategic advantage: 1. Technology innovations: Changes in the production process that enable distinctive competence 2. Product and service innovations: Introduction of new product lines or adaptations of established products 3. Strategy and structure innovations: Changes in structure, strategic management, policies, reward systems, labor relations, coordination devices, management information and control systems, accounting and budgeting systems 4. Cultural innovations: Changes in the values, attitudes, expectations, beliefs, abilities, and behavior of employees ©2024 Grazia Garlatti Costa Strategic Types of Change ©2024 Grazia Garlatti Costa  Elements for Successful Change 1. Ideas ◦ - Ideas can come from within or from outside the organization. ◦ - Internal creativity is a key element of organizational change. 2. Need – Ideas are generally not seriously considered unless there is a perceived need for change. 3. Adoption occurs when decision makers choose to go ahead with a proposed idea. 4. Implementation occurs when organization members actually use a new idea, technique or behaviour. 5. Resources – Change requires time, resources and energy. ©2024 Grazia Garlatti Costa  to seate muoration to sped = for have Elements for Successful Change interne , exterce you need to implement need to be useful is ed and Transfor ,t Can come in rouching carrete from entrsone otherwise islea - ↓ drive from is V ↓ A able to do this with resources ©2024 Grazia Garlatti Costa  1- Technology Innovation ◦ Technology is a key driver of organizational change ◦ Innovative organizations are flexible, and free-flowing, and without rigid work rules ◦ A mechanistic structure stifles innovation and focus on rules and regulations, but it is often the best structure for efficiently producing routine products ◦ Managers must create both organic and mechanistic conditions within the organization to achieve both innovation and efficiency ©2024 Grazia Garlatti Costa  The Bottom-Up Approach ◦ Many useful ideas come from the people who do the daily work of serving the customers, fighting off the competition, and figuring out how best to get their jobs done ◦ Companies can support innovation by implementing mechanisms, systems, and processes that encourage a bottom-up flow of ideas and by making sure they get heard and acted upon ◦ It is just as important to turn ideas into actions as it is to create them ©2024 Grazia Garlatti Costa  Techniques for Encouraging Technology Change 1. Switching structures create organic structures as needed for idea initiation 2. Creative departments, including creative incubators, create changes for adoption in other departments through research and development, engineering, design, and systems analysis 3. Venture teams, including skunkworks and new-venture funds, are like small companies that are not constrained by organizational procedures and bureaucracy 4. Corporate intrapreneurship develops an internal entrepreneurial spirit, philosophy, and structure that will produce a higher-than-average number of innovations à Idea champions. ©2024 Grazia Garlatti Costa  2- New Products and Services § New product success rate - Approximately 80% of new products fail upon introduction and another 10% disappear within 5 years. § Reasons for new product success - Innovating companies understand customers. - Innovating companies successfully use technology. - Top management supports innovation. § Horizontal coordination model 1. - Specialization. 2. - Boundary spanning. 3. - Horizontal coordination. ©2024 Grazia Garlatti Costa  Horizontal Coordination Model for New Product Innovations collaboration within the ©2024 Grazia Garlatti Costa rece went with constitution mechanism  Open Innovation and Crowdsourcing ◦ Open innovation extends the search for and commercialization of new products beyond the boundaries of the organization and the industry ◦ Crowdsourcing is the solicitation of ideas, services, and information from online volunteers rather than from traditional employees ©2024 Grazia Garlatti Costa  Achieving Competitive Advantage: The Need for Speed § Rapid development of new products and services is becoming a strategic weapon in a changing marketplace. § Regardless of the approach to innovation, the key point is the same – get people working together simultaneously on a project rather than in sequence. § Time-based competition means delivering products and services faster than competitors, giving companies a competitive edge. § Many new product development teams today are global teams because products are expected to meet diverse needs worldwide. ©2024 Grazia Garlatti Costa  3- Strategy and Structure Change The need to make radical changes in strategy, structure, and management processes to adapt to new competitive demands. Responsibility of the organization’s top managers § The dual-core approach – management and technical innovation. 1. Management (Administrative) changes affect the design and structure of the organization itself. 2. Technical change is concerned with the transformation of raw materials into organizational products and services and involves the environmental sectors of customers and technology. § The importance of the dual-core approach Organizations must adopt frequent administrative changes and need to be structured differently from organizations that rely on frequent technical and product changes for competitive advantages. ©2024 Grazia Garlatti Costa Dual-Core Approach to Organization Innovation To hnorate you have to put Together Youmoratapart two different wed > erotem up - islede freem ©2024 Grazia Garlatti Costa To change stategies you have to implement top-down With Bota up  Organization Design for Implementing Management (Administrative) Innovation § Organizations that successfully adopt many management (administrative) changes have/are: - A mechanistic organization structure. - Larger administrative ration. - Larger in size. - More bureaucratic. - More formalized. - More centralized. ©2024 Grazia Garlatti Costa  4- Culture Innovation § Changing culture often leads to a number of consequences: ü How work is done in an organization. ü Renewed commitment and empowerment of employees. ü A stronger bond between the company and its customers. § Forces for culture change - Reengineering and horizontal organization - Diversity - The learning organization § Changing to a learning organization involves more fundamental changes in the structure, procedures and decision making process. ©2024 Grazia Garlatti Costa  Organization development § Organization development (OD) culture change interventions - OD is one method of quickly bringing about culture change. - It emphasizes the values of human development and openness. - It is a process of fundamental change in the human and social systems of the organization. § Techniques of OD: - Large group intervention - Team building - Interdepartmental activities ©2024 Grazia Garlatti Costa  Leadership for Change Implementing complex changes requires strong and persistent leadership. § Transformational leadership is particularly suited – enhances organizational innovation both directly and indirectly. § Three stage of the change commitment process: - Preparation - Acceptance - Commitment § Leaders must develop the skills and methods needed to help their organization remain competitive. ©2024 Grazia Garlatti Costa The Change Curve - manage use Technic to enable change ©2024 Grazia Garlatti Costa  Barriers to Change § Many barriers to change exist at the individual and organizational levels: - Excessive focus on costs. - Failure to perceive benefits. - Lack of coordination and cooperation. - Uncertainty avoidance. - Fear of loss. ©2024 Grazia Garlatti Costa ! Leadership for Change Techniques for Techniques for Implementation Overcoming Resistance 1. Establish a sense of urgency 1. Top management support for change 2. Participation and involvement 2. Establish a coalition to guide the change 3. Alignment with needs and 3. Create a vision and strategy goals of users for change 4. Communication and training 4. Find an idea that fits the need 5. An environment with 5. Create change teams psychological safety 6. Foster idea champions ©2024 Grazia Garlatti Costa