Managing Change and Innovation Lecture Notes PDF

UNIVERSITY OF TECHNOLOGY, JAMAICA MANAGING CHANGE AND INNOVATION – LECTURE NOTES 1. Organizational change is defined as the adoption of a new idea or behavior by an organization. Forces for change exist in both the external environment and within the organization. External force...

UNIVERSITY OF TECHNOLOGY, JAMAICA MANAGING CHANGE AND INNOVATION – LECTURE NOTES 1. Organizational change is defined as the adoption of a new idea or behavior by an organization. Forces for change exist in both the external environment and within the organization. External forces originate in all environmental sectors including customers, competitors, technology, economic, and international events. Internal forces for change arise from internal activities and decisions. 2. Demands by employees, labor unions, and production inefficiencies can all generate a force to which management must respond with change. Rapidly increasing competition in all areas is driving the need for innovation. One vital area for innovation is introducing new products and technologies. These new products and technologies, in turn, require substantial changes in virtually every aspect of organizations. 3. The three innovation strategies managers implement for changing products and technologies are exploration, cooperation, and entrepreneurship. Exploration involves designing the organization to encourage creativity and the initiation of new ideas. Cooperation refers to creating conditions and systems to facilitate internal and external coordination and knowledge sharing. Entrepreneurship means that managers put in place processes and structures to ensure that new ideas are carried forward for acceptance and implementation. 1 EXPLORATION is the stage where ideas for new products and technologies germinate. Managers design the organization for exploration by establishing conditions that encourage creativity and allow new ideas to spring forth. Creativity, which is the first step in innovation, refers to the generation of novel ideas that might meet perceived needs or respond to opportunities for the organization. Experimentation Idea Incubator is an in-house programme that provides a safe harbour where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics. One value of an in-house incubator is that an employee with a good idea has somewhere to go with it, rather than having to shop the idea all over the company and hope someone pays attention. COOPERATION is providing mechanisms for both internal and external coordination is important. Ideas for product and technology innovations typically originate at lower levels of the organization and need to flow horizontally across departments. People and organizations outside the firm can also be rich sources of innovative ideas. Today’s most successful companies include customers, strategic partners, suppliers and other outsiders directly in the process of developing products and services. Open Innovation means extending the search for and commercialization of new ideas beyond the boundaries of the organization and even beyond the boundaries of the industry. ENTREPRENEURSHIP is the third aspect of product and technology innovation. It is creating mechanisms to make sure new ideas are carried forward, accepted and implemented. Managers can directly influence whether entrepreneurship flourishes in the organization by expressing support of entrepreneurial activities, giving employees a degree of autonomy, and rewarding learning and risk taking. Championing an idea successfully requires the roles in organizations. Sometimes a single person may play two or more of these roles, but successful innovation in most companies involves interplay of different people, each adopting one role. Championing an idea successfully requires playing different roles. These include: 1. INVENTOR -Develops and understands technical aspects of ideas. Does not know how to win support for the idea or make a business of it 2  2. CHAMPION - Believes in idea, visualizes benefits, Confronts organization realities of cost, benefits, obtains financial & political support, overcomes obstacle 3. SPONSOR - High-level manager who removes organizational barriers, approves and protects idea within organization 4. CRITIC - Provides reality test, looks for short-comings, defines hard-nosed criteria that idea must pass New-Venture Team – a unit separate from the rest of the organization that is responsible for developing and initiating major innovations. They give free rein to members’ creativity because their separate facilities and location free them from organizational rules and procedures. The characteristics of new venture teams are : 1. Small 2. Loosely structured 3. Flexible 4. The company provides the space, funding and freedom the team needs to fast-track an idea into a marketable product. Skunkworks is a separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business. The essence of skunkworks is that highly talented people are given the time and freedom to let creativity rein. New Venture Fund provides resources from which individuals and groups can draw to develop new ideas, products or businesses 4. People change pertains to just a few employees, such as sending a handful of middle managers to a training course to improve their leadership skills. Culture change pertains to the organization as a whole, such as shifting the basic organizational mind-set from a focused on rules and policies to one focused on doing whatever is necessary to ensure customer satisfaction. 5. According to Thomas and Bennis, “planned change is one deliberate design and implements of a structural innovation, anew policy or goal, or a change in operating philosophy, climate, or style.” Planned change attempts at all aspects of one organisation which are closely interrelated; technology, task, people, structure. 3   Technology related changes may include:-  Introduction of automated data processing devices like computers to facilitate managerial planning and control.  Change in methods of production like conversion of unit production to mass production.  Task related changes more focuses on:-  High internal work motivation and  High quality work performance.  Structure related changes:-  Changing the no hierarchical levels.  Changing line-staff to functional authority.  People related changes:-  Skill change and  Behaviour change. 6. Organization development (OD) is a planned, systematic process of change that uses behavioral science knowledge and techniques to improve an organization’s health and effectiveness through its ability to adapt to the environment, improve internal relationships, and increase learning and problem-solving capabilities. It focuses on the human and social aspects of the organization and works to change attitudes and relationships among employees, helping to strengthen the organization’s capacity for adaptation and renewal. 7. Organization development is an effort (1) planned, (2) organizationwide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s “processes,” using behavioral-science knowledge – Richard Beckhand Organization development (OD) is a response to change, a complex educational strategy intended to change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technologies, markets and challenges, and the dizzying rate of change itself. 8. Organization renewal is the process of initiating, creating and confronting needed changes so as to make it possible for organizations to become or remain viable, to adapt to new conditions, to solve problems, to learn from experiences, and to move toward greater organizational maturity. 9. Organizational development steps,  A seven step model for understanding Organizational development was proposed o There are different approaches to OD process but the typical process consists of seven steps  initial diagnosis, 4   data collection,  data feedback and confrontation,  action planning and problem solving,  team building,  inter group development and  evaluation and follow-up. 10. Process of planned change Kurt Lewin’s Model 5 11. Resistance to change: Employees appear to resist change for several reasons, and understanding them helps managers implement change more effectively. It can be managed through education and communication, participation, negotiation, top management support, and coercion. 12. Overcoming Resistance to Change: it can be managed through i) education and communication, ii) participation, iii) negotiation, iv) top management support, and v) coercion. 13. Classic psychological reactions to change 14. What are barriers to change? Kotter describes this in his “Leading Change” book. Familiarize yourself with a change model. Range of barriers to change: 1. Cultural Barriers: ideologies, tradition and heritage, economic well-being, values and beliefs, cultural ethnocentrism, incompatibility of a cultural trait with a proposed change. This is in many ways the most significant area of resistance for multi-national companies or for organizations wanting to link with others in different countries. 2. Organizational Barriers: threat to power and influence [e.g. mergers], technological barriers, behaviour of top level administrators, structure and bureaucracy. 3. Social Barriers: group solidarity, rejection of outsiders, conformity to norms, conflict, lack of group insight/awareness. 4. Individual Barriers: perception, homeostasis, conformity, commitment, personality, lack of conceptual and inquiring skills, low tolerance of ambiguity. 6 7