Chapter Ten Organizational Change & Innovation

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Two Types of Change: Reactive versus Proactive  Reactive: making changes in response to problems or opportunities as they arise. Proactive: involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities. Forces of Change 1)Demographic characteristics 2)Market changes 3)Technological advancements 4)Social & behavioral pressures Areas Where Change is Needed: People Changes 1)Perceptions  Attitudes  Performance  Skills  Technology  Changing Structure  Changing Strategy

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Forces for Change Outside and Inside the Organization Demographic characteristics Market changes Technological advancements Social & political pressures Employee problems Manager’s behavior The Need for Change Outside Forces Inside Forces

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. The Degree to Which Employees Fear Change: From Least to Most Threatening  Adaptive Change  Innovative Change  Radically Innovative Change Lewin’s Change Model  Unfreezing  Changing  refreezing Eight Steps for Leading Organizational Change  Establish a sense of urgency  Create the guiding coalition  Develop a vision & strategy  Communicate the change vision  Empower broad-based action  Generate short-term wins  Consolidate gains and produce more change  Anchor new approaches in the culture Organizational Development (OD) Organization Development (OD) a set of techniques for implementing planned change to make people and organizations more effective. OD is put into practice by a Change Agent a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways.

McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. What Can OD Be Used For? 1)Managing conflict 2)Revitalizing organizations 3)Adapting to mergers Characteristics of OD 1)OD aims for fundamental change 2)OD is process-oriented, not content-oriented 3)OD is value-loaded The OD Process 1. Diagnosis2. Intervention3. Evaluation

Types of Innovation: Product or Process  Product Innovation: is a change in the appearance or the performance of a product or a service or the creation of a new one.  Process innovation: is a change in the way a product or service is conceived, manufactured, or disseminated. Types of Innovation: Incremental and Radical  Incremental innovation: the creation of products, services, or technologies that modify existing ones.  Radical innovations: the creation of products, services, or technologies that replace existing ones. Four Characteristics of Innovation  Innovation is an uncertain business  People closest to the innovation know the most about it, at least initially  Innovation may be controversial  Innovation can be complex because it may cross organizational boundaries Three Steps for Fostering Innovation 1.Recognize problems & opportunities & devise solutions 2.Gain allies by communicating your vision 3.Overcome employee resistance & empower & reward them to achieve progress