Management, 13e

Richard L. Daft

Chapter 5
Managing Change
and Innovation

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What Is Organizational Change?

Copyright ©2012 Pearson Education 8-2

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Changing Things: New Products
and Technologies
 Product change: a change in the organization’s
product or service outputs
 Technology change: a change in the organization’s
production process
 Three innovation strategies for changing products
and technologies
1. Exploration
2. Cooperation
3. Innovation roles

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11.1 Three Innovation Strategies

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 1. Exploration
 Exploration – involves designing the organisation to
encourage and initiation for new ideas - new products
and technologies are born
 Creativity: generation of novel ideas that might meet
perceived needs or respond to opportunities for the
organization
 Bottom-up approach: encouraging the flow of ideas
from lower levels
 Idea incubator: safe harbor where employees’ ideas
can be developed without interference from company
bureaucracy or politics
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11.3 The World’s Most Innovative Companies, 2016

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 2. Cooperation (slide 1 of 2)
 Creating conditions and systems to facilitate internal &
external coordination and knowledge sharing
 Characteristics of innovative companies
 Work with customers to understand needs and develop
solutions
 Use new technology effectively
 Share new product development process supported by top
management
 Members from key departments cooperate in development
of new product or service
 Cross-functional team guides project from beginning to end

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 Cooperation (slide 2 of 2)
 Internal coordination
 Horizontal linkage model: research, sales, and marketing
simultaneously contribute to new products and technologies
 External coordination
 Open innovation: search for and commercialize new ideas
beyond the organization and industry
 Crowdsourcing: tap into ideas globally
 Mio by Fiat was created based on 11,000 ideas submitted by
17,000 customers worldwide
 Innovation by acquisition: buy startup companies
 Samsung bought LoopPay, a start-up that provides the
foundation for Samsung Pay

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 (3) Innovation Roles (slide 1 of 2)
 Managers put in place processes and structures to
ensure that new ideas carried forward for acceptance
and implementation
 Idea champion: person who sees the need for and
champions productive change within the
organization
 New-venture team: unit separate from the rest of
the organization that is responsible for developing
and initiating a major innovation

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 Innovation Roles (slide 2 of 2)
 Skunkworks: separate, small, informal,
autonomous, secretive group that focuses on
breakthrough ideas for the business
 New-venture fund: provides resources for new
ideas, products, or businesses

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 Changing People and Culture
 People change: changes to the mind-set of a few
employees
 Culture change: changes to the mind-set of the
organization as a whole
 Tools that smooth the culture change process
 Training and development programs
 Organization development

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 Training and Development
 Training is a frequently used approach to changing
people’s mind-sets
 Training programs can be offered to large blocks of
employees
 Emphasize training and development for managers
 Managers’ behavior and attitudes will influence
people and lead to culture change

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 Organization Development (slide 1 of 2)
 Organization development (OD): planned,
systematic process of change that uses behavioral
science to improve organization’s health and
effectiveness through its ability to adapt to the
environment, improve internal relationships, and
increase learning and problem-solving capabilities

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 Organization Development (slide 2 of 2)

 Addresses three types of problems:

1. Mergers and acquisitions
2. Organizational decline and revitalization
3. Conflict management

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 OD Activities (slide 1 of 2)

 Team building: activities that enhance the

cohesiveness and success of organizational groups
and teams
 Survey feedback: begins with an employee
questionnaire, and then an OD consultant provides
feedback to the employees regarding responses and
problems identified from the responses

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 OD Activities (slide 2 of 2)

 Large-group intervention:
bringing together participants from all parts of
the organization to discuss problems or opportunities
and plan for change

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 OD Steps to Behavioral and
Attitudinal Change
1. Unfreezing: employees become aware of the
problem and the need for change
Change agent: OD specialist who diagnoses problems
2. Changing: individuals experiment with new
behavior and learn new skills to be used in the
workplace
3. Refreezing: individuals acquired new attitudes or
values and are rewarded for them by the
organization

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 Implementing Change
 Implementation is the final step in the change
process
 Employees often resist change
 Several techniques can overcome resistance

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 Why Do People Resist Change?
 Self‑interest Conflicts. A proposed change in job design, structure or
technology may lead to a perceived loss of power, prestige, pay, or
company benefits. The fear of personal loss is perhaps the biggest obstacle
to organizational change.
 
 Lack of understanding and trust. Employees often distrust
management’s intentions for the change or do not understand the intended
purpose of a change. If previous working relationships with an idea
champion have been negative, resistance may occur.
 
 Uncertainty. Uncertainty is the lack information about future events.
Uncertainty represents a fear of the unknown, as employees do not know
how a change will affect them. Uncertainty is especially threatening for
employees who have a low tolerance for change and fear the unusual.
 
 Different assessments and goals. Employees who will be affected by
innovation may assess the proposed change differently than an idea
champion or new‑venture team. Critics voice legitimate disagreements over
the proposed benefits of a change.

 Others: Breaking routines, incongruent to organisation system

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 Create a Sense of Urgency
 A problem or crisis lowers resistance to change
 Managers must help people feel the need for change
 Need for change: a disparity between existing and
desired performance levels

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 Apply Force-Field Analysis
 Force-field analysis: change is a result of the
competition between driving and restraining forces
 Driving forces: problems or opportunities that
provide motivation for change
 Restraining forces: barriers to change

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 Kurt Lewin

OD

- Driving forces to Unfreezing

-Frozen – sustained over
the status quo & restrain forces
time
- Internal & external forces

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11.7 Tactics for Implementing Change

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