Innovation and Adaptability Chapter 6 Innovation and Adaptability Copyright © 2016 Pearson Canada Inc.

Copyright © 2016 Pearson Canada Inc. Learning Outcomes: Understand the importance of building an innovative and adaptable organization. Describe the forces that create the need for change, innovation, and adaptability. Compare and contrast views of the change process. Classify types of organizational change. Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Why Build an Adaptable Organization? Successful Organizations: are not only efficient and effective. They are adaptable rather than simply flexible. recognize new problems, identify the potential impact of these problems, and offer solutions are proactive rather than reactive Learning Outcome 1: Understand the importance of building an innovative and adaptable organization. Successful organizations are not only efficient and effective. They are adaptable rather than simply flexible. They create a culture within their organizations that enables them to continuously recognize new problems, identify the potential impact of these problems, and offer solutions in advance of the impacts on their organizations or to their customers. They create a culture of adaptability through the development of a set of skills and processes that allows their organization to be proactive rather than just reactive. Copyright © 2016 Pearson Canada Inc.

Copyright © 2016 Pearson Canada Inc. Adaptability Wicked Problem A problem that is impossible to solve because each attempt to create a solution changes the understanding of the problem. Learning Outcome 1: Understand the importance of building an innovative and adaptable organization. wicked problem A problem that is impossible to solve because each attempt to create a solution changes the understanding of the problem. Copyright © 2016 Pearson Canada Inc.

Copyright © 2016 Pearson Canada Inc. Forces for Change External Forces The Marketplace Governmental laws and regulations Technology Labour markets Economic changes Learning Outcome 2: Describe the forces that create the need for change, innovation, and adaptability. External forces that create the need for change come from various sources. 1. The marketplace 2. Government laws and regulations 3. Technology 4. Labour markets Economic changes Copyright © 2016 Pearson Canada Inc.

Copyright © 2016 Pearson Canada Inc. Forces for Change Internal Forces Changes in organizational strategy workforce changes cultural changes employee commitment Learning Outcome 2: Describe the forces that create the need for change, innovation, and adaptability. Internal forces tend to originate primarily from the internal operations of the organization or from the impact of external changes. Changes in strategy - workforce changes - cultural changes - employee commitment Copyright © 2016 Pearson Canada Inc.

Two Views of the Change Process The Calm Waters Metaphor Lewin: a break in the organization’s equilibrium state Unfreezing the status quo Changing to a new state Refreezing to make the change permanent Learning Outcome 3: Compare and contrast views of the change process. Two very different metaphors can be used to describe the change process. The calm waters metaphor characterizes the process of change as being like a ship crossing a calm sea. It’s best illustrated by Lewin’s three-step process for change (see Exhibit 6-1). a. Unfreezing the equilibrium is the first step. This can be accomplished in one of three ways. 1) Increasing driving forces, which direct behaviour away from the status quo. 2) Decreasing restraining forces, which hinder movement from the existing equilibrium. 3) Combining the two approaches. b. The next step is to implement the change itself. The final step is to refreeze the situation. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-1 The Change Process Learning Outcome 3: Compare and contrast views of the change process. Up until the late 1980s, the calm waters metaphor was pretty descriptive of the situation that managers faced. It’s best illustrated by Kurt Lewin’s three-step description of the change process (see Exhibit 6-1). Copyright © 2016 Pearson Canada Inc.

Two Views of the Change Process White-Water Rapids Metaphor The lack of environmental stability and predictability requires that managers and organizations continually adapt (manage change actively) to survive. Learning Outcome 3: Compare and contrast views of the change process. The white-water rapids metaphor describes change that takes place in uncertain and dynamic environments. If we put the two views in perspective, we must note that not every manager faces a world of constant and chaotic change. However, the number of managers who don’t face this type of environment is dwindling fast! Copyright © 2016 Pearson Canada Inc.

What Is Organizational Change Any alterations of people, structure, or technology of an organization. Change Agent: Learning Outcome 4: Classify types of organizational change. Someone who acts as a catalyst and assumes the responsibility for managing the change process. Copyright © 2016 Pearson Canada Inc.

Managing Organizational Change Characteristics of Change Is constant yet varies in degree and direction Produces uncertainty yet is not completely unpredictable Creates both threats and opportunities Learning Outcome 4: Classify types of organizational change. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-2 Three Categories of Change Learning Outcome 4: Classify types of organizational change. The manager’s options for change essentially fall into three categories: structure, technology, and people (see Exhibit 6-2). 1. Changing Structure a. Managers can alter one or more of the structural components such as work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. b. Changing Structure—the design of the organizational structure can be changed to meet new demands. 2. Changing Technology. a. Competitive factors or new innovations often require introduction of new equipment, tools, or operating methods. b. Automation is a technological change that replaces certain tasks done by people with machines. c. Computerization has probably been the most visible technological change in recent years. 3. Changing People. Attitudes, expectations, perceptions, and behaviours. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-3 Organizational Development Techniques Learning Outcome 4: Classify types of organizational change. Organizational Development (OD): focuses on techniques or programs to change people and the nature and quality of interpersonal work relationships. Copyright © 2016 Pearson Canada Inc.

Managing Resistance to Change Global Organizational Development managers need to recognize that although there may be some similarities in the types of OD techniques used, some techniques that work for North American organizations may not be appropriate for organizations or organizational divisions based in other countries. Learning Outcome 4: Classify types of organizational change. Resistance to change is well documented. Copyright © 2016 Pearson Canada Inc.

Managing Resistance to Change Organizations can build up inertia that motivates people to resist changing their status quo, even though change might be beneficial. Learning Outcome 4: Classify types of organizational change. Resistance to change is well documented. Copyright © 2016 Pearson Canada Inc.

Managing Resistance to Change Why People Resist Change ambiguity and uncertainty comfort of old habits concern over fear of personal loss regarding: status, money, authority, friendships, and personal convenience perception that change is incompatible with the goals and interests of the organization Learning Outcome 4: Classify types of organizational change. Resistance to change is well documented. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-4 Helping Employees Accept Change Learning Outcome 4: Classify types of organizational change. Resistance will be lower if managers involve people in the change, offer training where needed, and are open to revisions once the changes have been implemented. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Creativity: Innovation: The ability to combine ideas in a unique way or to make an unusual association. Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Innovation is important to organizational success in the marketplace. A. There is a difference between creativity and innovation. 1. Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas. 2. Innovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation. 3. Entrepreneurship is the act of turning an innovation into a viable venture. Turning the outcomes of the creative process into useful products, services, or work methods. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Identifying change and disruptive innovation and making appropriate changes in advance of the impact of these changes; referred to as “being proactive.” Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Innovation is important to organizational success in the marketplace. A. There is a difference between creativity and innovation. 1. Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas. 2. Innovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation. 3. Entrepreneurship is the act of turning an innovation into a viable venture. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-5 Systems View of Innovation and Adaptability Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. We see from Exhibit 6-5 that getting the desired outputs (innovative products) involves both the inputs and the transformation of those inputs. Inputs include creative individuals and groups within the organization. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-6 Innovation Variables Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Structural Variables: Adopt an organic structure Make available plentiful resources Engage in frequent inter-unit communication Minimize extreme time pressures on creative activities Provide explicit support for creativity Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. How can managers foster innovation? By using the systems model, we can see how to foster innovation (see Exhibit 6-5). Three sets of variables have been found to stimulate innovation: structural variables, cultural variables, and human resources variables (see Exhibit 6-6). 1. Structural Variables. Structural variables can be summarized as follows: a. Organic structures positively influence innovation. b. The easy availability of organizational resources provides a critical building block for innovation. c. Frequent interunit communication helps break down barriers to innovation. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Cultural Variables: Accept ambiguity Tolerate the impractical Have low external controls Tolerate risk taking Tolerate conflict Focus on ends rather than means Develop an open-system focus Provide positive feedback Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Cultural variables show that an innovative culture is likely to be characterized by the following: a. Acceptance of ambiguity b. Tolerance of the impractical c. Low external controls d. Tolerance of risk e. Tolerance of conflict f. Focus on ends rather than means g. Open-system focus h. Positive feedback Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Human Resource Variables: Actively promote training and development to keep employees’ skills current. Offer high job security to encourage risk taking. Encourage individuals to be “champions” of change. Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Human resources variables are indicative of the important role that people play in innovative organizations. a. Innovative organizations actively promote the training and development of their employees so their knowledge remains current. b. Innovative organizations offer employees high job security. c. Innovative organizations encourage individuals to become idea champions—individuals who actively and enthusiastically support a new idea, build support, overcome resistance, and ensure that the innovation is implemented. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Idea Champions: Individuals who actively and enthusiastically support new ideas, build support, overcome resistance, and ensure that innovations are implemented. Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Innovation is important to organizational success in the marketplace. A. There is a difference between creativity and innovation. 1. Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas. 2. Innovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation. 3. Entrepreneurship is the act of turning an innovation into a viable venture. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Adaptive Organizations Employees continually acquire and share new knowledge and apply that knowledge in making decisions or doing their work. Employees throughout the entire organization—across different functional specialties and even at different organizational levels—must share information and collaborate on work activities Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Changing Organizational Culture Today’s change issues—changing organizational culture, handling employee stress, and making change happen successfully—are critical concerns for managers. Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Stimulating Innovation & Adaptability Understanding the Situational Factors: Cultures are naturally resistant to change Conditions that help cultural change: Dramatic crisis Change of leadership Young, flexible, and small organization Weak organizational culture Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

How Can Cultural Change Be Accomplished Stimulating Innovation & Adaptability How Can Cultural Change Be Accomplished Unfreeze the current culture Implement new “ways of doing things” Reinforce the new values Not a “quick fix” Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Exhibit 6-7 Mistakes Managers Make When Leading Change Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.

Characteristics of Adaptive Organizations Making Change Happen Successfully: focus on making the organization ready for change managers need to understand their own role in the process managers need to encourage employees to be change agents Learning Outcome 5: Describe techniques for stimulating innovation and adaptability. Copyright © 2016 Pearson Canada Inc.