MGM102 Reading Notes PDF

Chapter 2: Managing Innovation, Adaptability, and Change Disruptive Innovation Definition: Disruptive innovation refers to innovations that radically alter the competitive landscape of an industry. Typically emerges from smaller enterprises with limited resources, targeting overlooked...

Chapter 2: Managing Innovation, Adaptability, and Change Disruptive Innovation Definition: Disruptive innovation refers to innovations that radically alter the competitive landscape of an industry. Typically emerges from smaller enterprises with limited resources, targeting overlooked market segments with lower-priced alternatives. Historical Context The concept is rooted in economic theory, originally described by Joseph Schumpeter as "creative destruction." This term emphasizes how capitalism replaces outdated technologies with newer, superior ones. Historical examples include: o Railroads disrupting the sailing-ship industry. o Alexander Bell’s telephone replacing Western Union's telegraphy. o Ford's automobile replacing horse-drawn carriages. Sustaining vs. Disruptive Innovation Sustaining Innovation: Involves incremental improvements to existing products or services, such as advancements like high-definition TVs or fingerprint recognition on smartphones. Disruptive Innovation: Characterized by dramatic changes or replacements of entire industries through new technologies or business models. Importance of Disruptive Innovation Success Can Lead to Failure: Established firms tend to grow complacent, making them vulnerable to disruption. Larger companies may resist change, entrenched in their processes and cultures, as exemplified by the declines of Kodak, Polaroid, and Woolworths. Resistance to Change Established companies often view disruptive ideas as threats to their power and existing values.  Example: IBM dismissed Ross Perot's suggestion to expand into computer services, illustrating cultural resistance to innovation. Examples of Disruptive Innovations Inventions by Xerox, such as the computer mouse and graphical user interface, were initially overlooked but later adopted widely. BlackBerry smartphones failed to compete against superior operating systems like iOS and Android. Innovations like the Segway and Google Glass, although initially recognized, failed to establish a lasting market presence. Vulnerable Businesses Established companies face greater risk of disruption due to their investments in current technologies and markets. Smaller businesses often demonstrate greater agility and innovation capacity. Examples of disruptive dynamics: o Walmart disrupted traditional department stores. o Tesla challenged established automakers such as General Motors. o Online platforms significantly impacted traditional industries, including banking and travel. Implications for Entrepreneurs and Managers Innovative individuals can capitalize on opportunities by offering simpler, more affordable alternatives to established businesses. Large organizations should create autonomous teams or "skunk works" that focus on innovation without the constraints of the main business. Management of Organizational Change Change is an inherent aspect of organizational life and requires effective management. Forces Driving Change: Various factors drive the need for change within organizations: o Pandemics (e.g., COVID-19) o Changing consumer preferences o New governmental regulations o Technological advancements Technological Change Technological advancements, such as the emergence of streaming services like Netflix, have revolutionized entire industries, necessitating rapid adaptation by companies. Types of Organizational Change Key categories of organizational change include: Economic Change: Shifts in labor markets and economic conditions compel organizations to adapt. New Organizational Strategies: Changes in business strategies require significant operational shifts; for example, Walgreens refocused from expansion to enhancing customer service and pricing competitiveness. Workforce Composition Changes: Increased diversity in the workforce presents management challenges; managers must effectively address age, race, and work preferences to maintain a productive environment. New Technology: Innovations such as 3-D printing are reshaping industries, with applications in fields like medicine and manufacturing. Changing Employee Attitudes: Significant changes can lead to employee stress and pushback if individuals feel uncomfortable with instability. Metaphors of Change The Calm Waters Metaphor: Suggests change is a series of planned disruptions in a stable environment, typically managed through a three-step process (unfreezing, changing, refreezing). The White-Water Rapids Metaphor: Represents the chaotic and continuous nature of change that many managers face today. Types of Change Agents Alterations in organizations require catalysts, often referred to as change agents. Internal Managers: Have a deeper understanding of company culture, yet may be overly cautious. External Consultants: Provide objective perspectives but may lack familiarity with the organization's history. Techniques for Managing Resistance to Change Effective change management requires strategies to minimize resistance, including: Education and Communication: Informing employees about the reasoning behind changes.  Participation: Involving employees in decision-making to foster commitment and improve outcomes. Facilitation and Support: Providing resources to help employees navigate change. Negotiation: Offering something in exchange for buy-in to reduce resistance. Manipulation and Co-optation: Subtle tactics to gain support or mitigate backlash. Coercion: Imposing change through direct threats or other forceful methods. Creativity and Innovation Creativity: The ability to generate unique ideas. Innovation: The practical application of creative ideas. Adaptability: A necessary organizational trait to foresee changes proactively instead of reacting to them. Forms of Innovation Curiosity-driven research Applied research Research and development Structural and Cultural Variables for Innovation Structural Factors: o Organic structures encourage cross-functional collaboration. o Access to ample resources is critical for overcoming challenges. o Facilitation of inter-unit communication aids in breaking down silos. o Minimizing time pressures supports creative outcomes. o Encouragement for creativity fosters a culture of innovation. Cultural Characteristics: o Ambiguity acceptance and risk tolerance are integral. o Creation of a culture that tolerates failure promotes experimentation. o Example: Mattel’s culture encourages the ethos "throw the bunny" for fostering creativity. Employee Stress Stress negatively impacts individuals facing excessive demands, constraints, or opportunities. Types of Stressors Role Conflicts: Expectations that may conflict, causing workplace stress. Role Overload: Occurs when job expectations exceed the time available. Role Ambiguity: Unclear role expectations lead to confusion and heightened stress. Personality Types and Stress Type A Personality: Characterized by urgency and competitiveness, often leading to stress. Type B Personality: Contrasts Type A, marked by a more relaxed approach to time and achievement.