Chapter

Thirteen
Managing
Organization Change
and Innovation
Slide content created by Charlie Cook, The University of West Alabama
Copyright © Houghton Mifflin Company. All rights reserved.
 The Nature of
Organization Change
• Organization Change
– Any substantive modification to some part of the
organization (e.g., work schedules, machinery,
employees).
• Forces for Change
– External forces in the general and task
environments that force the organization to alter
the way it competes.
– Internal forces inside the organization cause it to
change its structure and strategy; some internal
forces are responses to external pressures.

Copyright © Houghton Mifflin Company. All rights reserved. 13–2

 The Nature of
Organization Change (cont’d)
• Planned Change
– Is designed and
implemented in an orderly
and timely fashion in
anticipation of future
events.
• Reactive Change
– Is a piecemeal response
to events and
circumstances as they
develop.

Copyright © Houghton Mifflin Company. All rights reserved. 13–3

 Managing Change in
Organizations
• Steps in the Change
Process (Lewin Model)
– Unfreezing
• Individuals must be shown why
the change is necessary.
– Implementing change
• The change itself is implemented
– Refreezing
• Involves reinforcing and
supporting the change so that it
becomes a permanent part of
the system.

Copyright © Houghton Mifflin Company. All rights reserved. 13–4

 Figure 13.1: Steps in the
Change Process

Copyright © Houghton Mifflin Company. All rights reserved. 13–5

 Understanding
Resistance to Change
• People resist change because of:
– Uncertainty about the extent and effects of
change.
– Threats to self-interests and power and influence.
– Different perceptions of change effects and
outcomes.
– Feelings of loss in disrupted social networks,
power, security, and familiarity with existing
procedures.

Copyright © Houghton Mifflin Company. All rights reserved. 13–6

 Understanding
Resistance to Change (cont’d)
• Techniques for overcoming resistance to
change:
– Encouraging active participation in the change
process.
– Providing education and communication about the
change process.
– Facilitating the change process by making only
necessary changes, announcing changes in
advance, and allowing time to adapt to change.

Copyright © Houghton Mifflin Company. All rights reserved. 13–7

 Figure 13.2: Force-field Analysis
for Plant Closing at General
Motors

Copyright © Houghton Mifflin Company. All rights reserved. 13–8

 Table 13.1: Areas of
Organization Change

Copyright © Houghton Mifflin Company. All rights reserved. 13–9

 Reengineering in
Organizations
• Reengineering
– The radical redesign of all aspects of a business to
achieve major gains in cost, service, or time.
• Need for Reengineering
– Entropy occurs as the maintenance of status quo puts an
organization out of synch with its environment, and it
starts consuming its own resources.
• Approaches to Reengineering
– Recognizing the need for change and acting on it with a
sense of urgency.
– Starting with a clean slate to open up the process.
– Using a blend of top-down and bottom-up involvement.

Copyright © Houghton Mifflin Company. All rights reserved. 13–10

 Figure 13.3: The
Reengineering Process

Copyright © Houghton Mifflin Company. All rights reserved. 13–11

 Organization Development
(OD)
• Organization Development
– A planned, organization-wide effort, managed from
the top, that is intended to increase organizational
effectiveness and health through interventions in the
organization’s processes using behavioral science
knowledge.
• OD Assumptions
– Employees desire to grow and develop.
– Employees have a strong need to be accepted.
– Individuals will influence the organization and the
organization will influence individuals.

Copyright © Houghton Mifflin Company. All rights reserved. 13–12

 Organization Development
Techniques
• Diagnostic Activities • Technostructural
Activities
• Team Building
• Process Consultation
• Survey Feedback
• Life and Career
• Education Planning
• Intergroup Activities • Coaching and
Counseling
• Third-Party
Peacemaking • Planning and Goal
Setting

Copyright © Houghton Mifflin Company. All rights reserved. 13–13

 Figure 13.4: The
Innovation Process

Copyright © Houghton Mifflin Company. All rights reserved. 13–14

 Forms of Organizational
Innovation
• Radical Innovation
– Fundamentally changes the nature of competition
in an industry.
• A new product, service, or technology developed by an
organization that completely replaces the existing
product, service, or technology in an industry.
• Incremental Innovation
– Does not significantly affect competition in an
industry.
• A new product, service, or technology that modifies an
existing one.

Copyright © Houghton Mifflin Company. All rights reserved. 13–15

 Forms of Organizational
Innovation (cont’d)
• Technical Versus Managerial Innovations
– Technical innovation
• A change in the physical appearance or performance of
a product or service, or the physical processes through
which a product or service is manufactured.
– Managerial innovation
• A change in the management process by which products
and services are conceived, built, and delivered to
customers.

Copyright © Houghton Mifflin Company. All rights reserved. 13–16

 Forms of Organizational
Innovation (cont’d)
• Product Versus Process Innovations
– Product innovation
• A change in the physical characteristics or
performance of existing products or service or
the creation of brand-new products or services.
– Process innovation
• A change in the way a product or service is
manufactured,
created, or distributed.

Copyright © Houghton Mifflin Company. All rights reserved. 13–17

 Figure 13.5: Effects of Product
and Process Innovation on
Economic Return

Copyright © Houghton Mifflin Company. All rights reserved. 13–18

 Innovation
• Reasons for Failing to Innovate
– Lack of resources
– Failure to recognize opportunities
– Resistance to change
• Promoting Innovations in Organizations
– Using the reward system
– Having a supportive organizational culture
– Encouraging intrapreneurship in larger organizations
• Inventors
• Production champions
• Sponsors

Copyright © Houghton Mifflin Company. All rights reserved. 13–19

 Key Terms
• organization change • managerial innovation
• planned change
• product innovation
• reactive change
• enterprise resource • process innovation
planning • intrapreneurship
• business process change • intrapreneurs
(reengineering)
• organization development
(OD)
• innovation
• incremental innovation
• technical innovation

Copyright © Houghton Mifflin Company. All rights reserved. 13–20