MODULE 23 INNOVATION AND ORGANIZATIONAL CHANGE “Change can be your best friend” What are the roles of innovation and change in organizations? How do managers lead the processes of organizational change? Managers should view change as an opportunity even when it does not appear that way.

Creativity and innovation are sources of competitive advantage. INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change MODULE GUIDE 23.1 Creativity and innovation are sources of competitive advantage. Innovative organizations share many common characteristics. Organizations pursue both transformational and incremental changes. Change in organizations can move from top down, bottom up, or both. In many industries, innovation is essential to the well being of the organization. It is so essential that companies are developing processes for innovation.

Commercializing Innovations INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change Creativity the generation of a novel idea or unique approach that solves a problem or crafts an opportunity. Innovation the process of taking a new idea and putting it into practice. Process Innovations result in better ways of doing things. Product Innovations result in new or improved goods or services. Commercializing Innovations turns ideas into economic value Creativity begins with an idea. Thus far, ideas have been left to individual brilliance but a few are attempting to develop new processes for idea generation based on a group effort.

INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change This process is critical to avoiding the many pitfalls of new product development. Studies have shown that less than 10% of new ideas result in successful new products.

Critical Innovation Roles in Organizations INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change Critical Innovation Roles in Organizations Idea generators—provide new insights and discoveries. Information gatekeepers—stay abreast of outside developments. Product champions—advocate for new products or processes. Project managers—keep innovation projects on track. Innovation leaders—keep innovation values, goals visible. These roles are often filled by a number of different people. Idea generators typically are creative types while project managers are process oriented. Product champions tend to be senior managers.

Types of Change Transformational Change Incremental Change INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change Types of Change Transformational Change makes radical changes in organizational directions Incremental Change continuing adjustments to existing ways and practices. Top-down Change is initiated by senior management Bottom-up change is initiated by empowered persons working at all organizational levels. These changes apply to products and processes as well as organizational structures and strategies.

How to Lead Transformational Change INNOVATION AND ORGANIZATIONAL CHANGE Roles of Innovation and Organizational Change MANAGEMENT TIPS How to Lead Transformational Change Establish a sense of urgency for change. Form a powerful coalition to lead the change. Create and communicate a change vision. Empower others to move change forward. Celebrate short-term wins and recognize those who help. Build on success; align people and systems with new ways. Stay with it; keep the message consistent; champion the vision. Transformational change is a major change in the organization direction, structure and possibly culture. It requires that senior managers be leaders as well as managers.

Adaptive organizations need change leaders, not status quo managers. INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change MODULE GUIDE 23.2 Adaptive organizations need change leaders, not status quo managers. Unfreezing, changing, and refreezing are three phases of planned change. Managers use force-coercion, rational persuasion, and shared power change strategies. Change leaders identify and deal positively with resistance to change. Organization development is a way of building sustainable capacities for change. Adaptive organizations are typically organic, Theory Y and or learning organizations.

Change Leader Planned Change Unfreezing INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Change Leader tries to change the behavior of another person or social system. Planned Change aligns the organization with anticipated future challenges. Unfreezing is the phase during which a situation is prepared for change.

Lewin’s Three Phases of Change INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Lewin’s Three Phases of Change The key here is Phase 3. There will be a tendency, for some time, on the part of managers to go back to the old way of doing things. Continued support and reinforcement is needed to avoid the problem,

Checkpoints for Successful Change INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Checkpoints for Successful Change Benefit—make sure people involved see a clear advantage in the change. Compatibility—keep the change as close as possible to existing values and experiences. Simplicity—make the change as easy as possible to understand and use. Triability—allow people to try the change step-by-step, making adjustments as they go. Change leader's task: create a felt need for change Change leaders also need to remain flexible and be willing to adjust if the situation demands it.

INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Change Strategies These strategies are consistent with the concept of the sources of authority being legitimate (force-coercion), knowledge (expertise) and charisma (reference).

Why people may resist change INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Resistance to Change Why people may resist change Fear of the unknown not understanding what is happening or what comes next Disrupted habits feeling upset to see the end of the old ways of doing things Loss of confidence feeling incapable of performing well under the new ways of doing things Loss of control feeling that things are being done “to” you rather than “by” or “with” you Poor timing feeling overwhelmed by the situation or that things are moving too fast Work overload not having the physical or psychic energy to commit to the change Loss of face feeling inadequate or humiliated because it appears that the old ways weren’t good ways Lack of purpose not seeing a reason for the change and/or not understanding its benefits Resistance to change is normal. Fear of the unknown is the biggest problem. Managers need to believe and communicate that “We cannot get there with the present system. If we could, we would not be making these changes.”

Organizational Development INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change Organizational Development a comprehensive and participatory approach to change that involves organization members in a data-based process of diagnosis, intervention, and evaluation. Organizational development can help but senior management must always lead the way. Not just support but LEAD.

INNOVATION AND ORGANIZATIONAL CHANGE Leading the Processes of Organizational Change