1. Chapter 13: Organizational Innovation and Change
The primary purpose of this chapter is to help you understand how organizations can use innovation and change to survive, and even thrive, in a changing world.
“The Firm”
David Kopp
Erin Alvey
Thomas Lafferty

2. Innovation
Innovation is simply the process of creating and implementing a new idea or ideas.
Three main types of innovation exist:
1) Process Innovation
2) Technical Innovation
3) Administrative Innovation

3. Process Innovation
Process innovation is achieved through the creation of a new means of producing, selling, and/or distributing an existing product or service.
Some examples are:
- Online Banking, etc.
- E-commerce

4. Technical Innovation
Technical innovation is simply the creation of a new product or service.
Some examples:
- A new line of automobiles
- The introduction of cellular telephones

5. Administrative Innovation
Administrative innovation is the creation of a new organization design which better supports the creation, production and delivery of services or products.
An example is:
- Virtual Teams: any task-focused group that meets w/out all members being in the same room or even working at the same time.

6. Learning Organizations
Involve all of the employees in the process of identifying and solving problems. This enables the organization to continuously experiment, improve and increase its capacity to deliver its customers new and improved products and services.
A learning organization, through continuous innovation and change, creates sustainable competitive advantage in its industry.

7. Characteristics of a Learning Organization
13.2
Characteristics of a Learning Organization
Shared Leadership
The
Learning
Organization
Culture
Empowerment
Continuous learning
Sense of community
Strategy
Customer-focused
Long-term perspective
Internal alignment
Organization Design
Team-based
Strategic alliance network
Boundaryless
Use of Information
Extensive scanning
Measurement-oriented
Shared problems and solutions
Adapted from Figure 13.1

8. The Five Building Blocks of a Learning Organization
1) Shared Leadership: All employees share at least some leadership responsibilities. Everyone is encouraged to find ways to improve products and services and to experiment with new methods to better serve the organization.
This sharing of decision-making and leadership creates a culture that supports the efforts and goals of the organization.

9. 2) Culture
The learning organization encourages these empowered employees to identify and experiment with new methods and approaches.
Empowerment provides a way to integrate tasks and allows the employees to buy into an organization’s goals.

10. 3) Strategy This aspect addresses three key issues:
1) Customer Focus: reflects a clear understanding of how important customers are to success.
2) Long-term Perspectives: the process of learning and change simply take time.
3) Internal Alignment: the business strategy drives the design of all systems within the organization.

11. 4) Organization Design
In a learning organization, this emphasizes the use of teams and strategic alliances.
- Teams: Team members take responsibility of aspects such as training, purchases, safety and scheduling.
- Strategic Alliances: suppliers, competitors and customers collaborate and communicate as a method of learning.

12. 5) Use of Information
This is the “lifeblood” of a learning organization.
There are three main aspects involving the use of information in a learning organization.
- Extensive scanning
- Measurement Oriented
- Shared problems and solutions

13. The Process of Organizational Change
13.3
The Process of Organizational Change
Diagnose
organizational
problems
Assess environment
Determine performance gap
Start
Reduce
resistance
Identify sources
of resistance
Set goals
Search for
approaches
to change
Implement
the changes
Follow up
the change
Adapted from Figure 13.2

14. Reasons for Organizational Change
New innovations
Adjusting to changing environment and keeping up with competitors
Unsatisfactory performance
Concerns of external stakeholders
* Def: Any transformation in the design or functioning of an organization.

15. Assess the Environment
Organizations should be aware of the need to scan the environment for info that may signal the need for change/s.
Factors:
Technology
Customers
Competitors
The workforce
Unions
Gov’t regulations
Globalization
Shareholders

16. Determine the Performance Gap
The difference between what the organization wants to do and what it is actually doing.
Where you are performing/Where you want to be.

17. Diagnose Organizational Problems
Identify the nature and extent of problems before taking action.
Don’t process change prematurely
- Organizations often hire outside consultants to assist with problem diagnosis.

18. Identify Source of Resistance
Experienced managers understand why people resist change and what can be done to overcome resistance.
Change resist can be due to the following:
Vested Interests
Fear
Misunderstandings
Different Assessments of Situation
Interorganizational Agreements

19. Reduce Resistance
Resistance to change will never disappear completely, but it can be managed through:
Education
Participation
Negotiation
Co-optation - bringing new stakeholders representatives into the strategic decision making process as a means of averting threats to an organization’s stability/existence

20. Set Goals For change to be effective, goals should be set:
based on realistic objectives
stated in clear and measurable terms
consistent with the organization’s overall goals and policies
attainable
Positive reinforcement for goals obtained. (Rewards)

21. Implement the Change
Select and implement a practical approach to achieve the change.
Areas for change:
technology
design
task
people

22. Follow Up Change
Managers need to monitor results to ensure that the change process has been successful.
Based on:
Employee satisfaction
Productivity
New-product development
Market share
Results take time, don’t judge to soon.

23. Four Approaches to Organizational Change
-Technology based approach
-Redesign approach
-Task based approach
-People-oriented approach

24. Approaches to Organizational Change
13.9
Approaches to Organizational Change
Technology-based
Sociotechnical systems
Information technology
Redesign
Reengineering
Restructuring
Organizational
Change
Task-based
Job specialization
Job enrichment
People-oriented OD
HRM systems
Adapted from Figure 13.3

25. Technology Based Approach
Goal is to increase organizational efficiency
Sociotechnical Systems - works toward satisfying employee needs while simultaneously producing goods efficiently
Information Technology - networking of computers, telecommunications systems, and remote-controlled devices used to link organizations to its suppliers and its customers

26. Redesign Approach
Redesign approach involves internal structural changes
Reengineering - creating new ways to get work done
Restructuring - making changes in the distribution of authority, responsibility, and control in the organization

27. Task Based Approach
Task Based Approach - changing employee responsibilities and tasks
Job simplification - discovery of procedures that produce maximum output for the minimum input
fast food restaurants
Job enrichment - changing job specifications to add challenge to the tasks required in order to increase productivity

28. People Oriented Approach
People Oriented includes activities intended to improve individual competencies and performance levels
Organizational Development
planned long range behavioral science approach for understanding, changing, and developing an organization’s workforce to improve its effectiveness
individual growth, group growth, organizational growth
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