UBMM1013

MANAGEMENT PRINCIPLES

Topic 8
Managing Change
and Innovation
 Learning Objectives
 Define organizational change and explain the forces driving
innovation and change in today’s organization.
 Identify and explain the three innovation strategies managers
implement for changing products and technologies.
 Explain the specific tool that can smooth the process for changing
people and culture
 Discuss why changes in people and culture are critical to any
change process.
 Define organizational development (OD) and large group
interventions.
 Explain the OD stages of unfreezing, changing, and refreezing.
 Identify sources of resistance to change.
 Explain force-field analysis and other implementation tactics that
can be used to overcome resistance.
 Organisational Change

 In today’s dynamic environment, managing

change and innovation is key
 Today’s successful companies are
continually innovating
 Organizational change (OD) ??
 Many organisations
struggle with changing
successfully ??

Creating VS
Implementing ??

??
 Ambidextrous

Creating VS
Implementing ??
??? ???
 Successful Change
Ambidextrous
 Successful change requires that organisations
be capable of both creating and implementing
ideas, which means the organisation must learn to
be ambidextrous
 An ambidextrous approach means incorporating
structures and process that are appropriate for
both the creative impulse and for the systematic
implementation of innovation
 Managers encourage flexibility and freedom to
innovate and propose new ideas with creative
departments, venture teams, and other
mechanism, but they use a more rigid,
centralized, and standardized approach for
implementing innovations
 Two vital areas of
change or
innovation??

???? ????
 Changing Things: New Products and
Technologies
Product change
 It is a change in the organization product or service outputs.
 Product and service innovative is the primary way in which
organizations adapt to changes in markets, technology, and
competition.
 Product changes are related to changes in the technology of the
organsiation

Technology change
 It is a change in the organization’s production process (how
the organisation does its work)
 Technology changes are designed to make the production of a
product or service more efficient.
 The adoption of automatic mail sorting machines is an
example of a technology change
 Changing People and Culture

 All successful changes involve changes

in people and culture as well
 Changes in people and culture pertain to
how employees think (changes in mind-
set)
 Changing People and Culture
People change
 A change in the attitudes and behaviors of a few
employees in the organization
 People change concerns just a few employees, such
as sending a handful of middle managers to a training
course to improve their leadership skills

Culture change
 Major shift in the norms, values, attitudes, and
mindset of the entire organization.
 Culture change pertains to the organisation as a whole
 Two vital areas of
change or
innovation??

Introducing new Changing people

products and
and culture
technologies

Innovation Strategy?? Two specific tools ??

 Exploration
 It is the stage where ideas for new products
and technologies are born.

 Managers design the organization for

exploration by establishing conditions that
encourage creativity and allow new ideas to
spring forth.

 Creativity, which refers to the generation of

novel ideas that might meet perceived needs or
respond to opportunities for the organization, is
the essential first step in innovation
 Cooperation

Internal Coordination External Coordination

•Successful innovation requires •The organization look outside

expertise from several their boundaries to find and
departments simultaneously, develop new ideas
and failed innovation is often
the result of failed cooperation

Horizontal Linkage Model

 Horizontal Linkage Model

Horizontal Linkage Model

• It is an approach to product change that

emphasizes shared development of innovations
among several departments
 Horizontal Linkage Model
Open
New Innovation
technologies Mechanisms

Organization

Manufacturing
Department

Research Marketing
Department Department

Formal Horizontal Linkages

Customers,
Innovation
Market Needs
Partners
Horizontal Linkage Model
Internal Coordination
 The horizontal linkage model shows that the research,
manufacturing, and sales and marketing departments within an
organisation simultaneously contribute to new products and
technologies
 People from these departments meet frequently in teams and
task forces to share ideas and solve problems
 Research people inform marketing of new technical developments
to learn whether they will be useful to customers
 Marketing people pass customer complaints to research to use in
the design of new products and to manufacturing people to develop
new ideas for improving production speed and quality
 Manufacturing informs other departments whether a product idea
can be manufactured with cost limits
Horizontal Linkage Model
External Coordination

 The horizontal linkage model shows that

 Engineers and researchers stay aware of new
technological developments
 Marketing personnel pay attention to shifting market
conditions and customer needs
 Some organizations build formal strategic
partnerships such as alliances and joint ventures to
improve innovation success
 Open innovation is the hottest trends. Open
innovation means extending the search for and
commercialization of new ideas beyond the
boundaries of the organisation and even beyond the
boundaries of the industry
 Cooperation
Internal Coordination

Characteristics of successful innovation company:

v) People in marketing have good understanding of

customer needs.
vi) Technical specialists aware of recent technological
development.
vii) Members from key department cooperate in the new
product development
 Entrepreneurship
 Third aspect of product and technology innovation is
creating mechanisms to make sure new ideas are
carried forward, accepted and implemented.
 Managers can directly influence whether
entrepreneurship flourishes in the organisation by
expressing support of entrepreneurial activities, giving
employees a degree of autonomy, and rewarding
learning and risk-taking

Idea champion New-venture Skunkworks

team
 Entrepreneurship
Idea champions

 One important matter is fostering idea champions

 Idea Champion is a person who sees the need for and
champions productive change within the organization
 Change does not occur by itself.
 Personal energy and effort are required to successful
promote a new idea
 No new product would be approved unless someone
championed it
 Research confirms that successful new ideas are generally
those that are backed by someone who believes in the idea
wholeheartedly and is determined to convince others of its
value
 Sometimes a new idea is rejected by management, but
champions are passionately committed to a new product
or idea despite rejection by others
 Four Roles in Organizational
Change
Championing an idea successfully requires roles in organizations

Inventor Champion Sponsor Critic

• Develops and • Believes in idea •High-level • Provides reality
understands • Visualizes benefits manager test
technical aspects • Confronts who removes • Looks for short-
of ideas organization organizational comings
• Does not know realities of cost, barriers • Defines hard-
how benefits •Approves and nosed
to win support for • Obtains financial & protects idea criteria that idea
the idea or make political support within must pass
a business of it • Overcomes organization
obstacles

Sometimes a single person may play two or more of these roles, but
successful innovation in most companies involves an interplay of different
people, each adopting one role
 Entrepreneurship
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

Related idea
 New Venture Fund = A fund providing resources from
which individuals and groups can draw to develop new
ideas, products, or businesses
 Changing People and Culture

Difficult to change ??

Two specific tools that can smooth the process

Training and Organisation

Development Development
 Changing People and Culture
Two specific tools that can smooth the process
Training and Development
 A company may offer training program to employees on subject
such as teamwork, diversity, emotional intelligence, quality circles,
communication skills, and participative management.

Organizational Development (OD)

 It 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
a) adapt to the environmental ,
b) improve internal relationships, and
c) increase learning and problem solving capabilities

 OD focuses on the human and social aspects of the organisation

and works to change attitudes and relationships among
employees, helping to strengthen the organisation’s capacity for
adoption and renewal
 Changing People and Culture
Difficult to change ??

Two specific tools that can smooth the process

Training and Organisation

Development Development

Address problems OD activities OD steps

Changing People and Culture
OD help to address three types of
current problems:

• Mergers/acquisitions
• Organization decline/revitalization
• Conflict management
 Mergers/Acquisitions
Mergers/acquisitions

 The disappointing financial results of many mergers

and acquisitions are caused by the failure of
executives to determine whether the administrative
style and corporate culture of the two companies fit
 Executives may concentrate on potential synergies in
technology, products, marketing, and control systems
but fail to recognize that two firms may have widely
different values, beliefs, and practices
 These differences create stress and anxiety for
employees, and these negative emotions affect future
performance
 Cultural differences should be evaluated during the
acquisition process, and OD experts can be used to
smooth the integration of two firms
Organization Decline/Revitalization
Organization decline/revitalization

 Organisations undergoing a period of decline and

revitalization experience a variety of problems,
including a low level of trust, lack of innovation, high
turnover, and high levels of conflict and stress

 The period of transition requires opposite behaviours,

including confronting stress, creating open
communication, and fostering creative innovation to
emerge with high levels of productivity

• OD techniques can contribute greatly to cultural

revitalization by managing conflicts, fostering
commitment, and facilitating communication
 Conflict Management
Conflict management

• Conflict can occur at any time and place within a

healthy organisation
• At manufacturing firm, salespeople promised deliver
dates to customers that were in conflict with shop
supervisor priorities for assembling customer orders
or two managers disliked each other intensely
• OD efforts can help resolve these kinds of conflicts,
as well as conflicts that are related to growing
diversity and the global nature of today’s
organisations
 Changing People and
Culture
OD activities
• OD consultants use a variety of specialized
techniques to help to meet OD goals

Team building Survey-feedback Large group

activities activities intervention
 Changing People and
Team building activities Culture
• Enhance cohesiveness and success of department.
• An OD expert can work with team members to increase their
communication skills, facilitate their ability to confront one
another, and help them accept common goals

Survey-feedback activities
• Survey feedback begins with a questionnaire distributed to
employees on values, climate, participation, leadership, and
group cohesion within their organisation
• After survey is completed, and OD consultant meets with
groups of employees to provide feedback about their responses
and the problems identified

Large group intervention

• Bring together participants from all parts of the organization to
discuss problems and opportunities and plan for major change.
• The idea is to include everyone who has a stake in the change,
gather perspectives from all parts of the system, and enable
people to create a collective future through sustained, guided
dialogue
Changing People and Culture
OD Steps
 The theory underlying OD proposes
three distinct stages for achieving
behavioural and attitudinal change

1 Stage: Unfreezing

2 Stage: Changing

3 Stage: Refreezing
Changing People and Culture
OD Steps

1 Stage: Unfreezing
 Means participants are made aware of problems in order to
increase their willingness to change their behavior.
 Often uses outside expertise called a change agent
 Change Agent- is OD specialist who contracts with an
organization to facilitate change.

2 Stage: Changing
 Intervention stage of OD in which individual experiment with
new workplace behaviors.

3 Stage: Refreezing
 The reinforcement stage of OD in which individual acquire a
desired new skill or attitude and are rewarded for it by the
organization.
Implementing Change

 Need for Change

 Resistance to Change
 Force-Field Analysis
 Implementation Tactics
 Need for Change
 Many people are not willing to change
unless they perceive a problem or a crisis
 However, many problems are subtle. So
managers have to recognize and then make
other aware of the need for change
 One way mangers sense a need for change
is through the appearance of performance
gap
 Performance gap = disparity between
existing and desired performance levels.
 Resistance to Change
Self-Interest
• Fear of personal loss is perhaps the biggest obstacle to
organizational change

Lack of Understanding and Trust

• Do not understand the intended purpose of a change or
distrust the intentions

Uncertainty
• Lack of information about future events

Different Assessments and Goals

• People who will be affected by innovation may assess the
situation differently.
 Force-Field Analysis
• Kurt Lewin proposed that change was a result of the
competition between Driving and Restraining Forces

 Force Field analysis - the process of determining

which forces drive and which resist a proposed
change

Driving Forces Restraining Forces (Barriers)

•Thought of as •Lack of resources
problems or •Resistance from middle
opportunities that
managers
provide motivation for
change •Inadequate employee skills
Traditional to Just-
In-Time Inventory
Systems
 Implementation Tactics
Communication and Education
 Used when solid information about change is needed by users and others who may
resist implementation.
 Education is important when the change involves new technical knowledge / unfamiliar
with the new idea.

Participation
 Involves users and potential resisters in designing the change
 Help to determine potential problems and understand the differences in perception of
change among employees.

Negotiation
 Formal mean of achieving cooperation

Coercion
 Use formal power to force employees to change

Top Management Support

 Symbolizes to all employees that the change is important for the organization.
 Important when a change involves multiple departments / resources reallocated among
departments.
Thank you