PowerPoint Presentation

to Accompany
Management, 9/e
John R. Schermerhorn, Jr.

Chapter 12:
Innovation and Organizational Change

Prepared by: Jim LoPresti

University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
 Planning Ahead — Chapter 12 Study Questions

How do organizations accomplish

innovation?

What is the nature of organizational
change?

How can planned organizational
change be managed?

What is organization development?

Management 9/e - Chapter 12 2

Study Question 1: How do organizations accomplish
innovation?

Strategic leadership creates the capacity

for ongoing strategic change.

Components of strategic leadership:
 Anticipate, envision, maintain flexibility.
 Think strategically.
 Work with others to initiate change.
 Build learning organizations as change leaders.
 Develop the ability to innovate successfully as
a core competency .

Management 9/e - Chapter 12 3

Study Question 1: How do organizations accomplish
innovation?

Sustainable competitive advantage

relies on creativity and innovation.

Creativity is the generation of a novel
idea or unique approach to solving
problems or crafting opportunities.

Innovation is the process of creating
new ideas and putting them into
practice.

Management 9/e - Chapter 12 4

 Study Question 1: How do organizations accomplish
innovation?

Three forms of innovation:

 Process.
 Results in better ways of doing things.
 Product.
 Results in the creation of new or improved goods
and services.
 Business model innovation
 Results in new ways of making money.

Innovations require invention and application.

 Invention.
 Act of discovery.
 Development of new ideas.
 Application.
 Act of use.
 Implementation of new ideas.

Management 9/e - Chapter 12 5

 Study Question 1: How do organizations accomplish
innovation?

Leadership responsibilities for the innovation

process:
 Imagining.
 Designing.
 Experimenting.
 Assessing.
 Scaling.

Commercializing innovation
 Process of turning new ideas into products or
processes that increase profits through sales or
cost reductions.

Management 9/e - Chapter 12 6

Study Question 1: How do organizations accomplish
innovation?

Four steps of the product innovation

process:
 Idea creation.
 Initial experimentation.
 Feasibility determination.
 Final application.

Management 9/e - Chapter 12 7

Figure 12.1 Process of commercializing innovation in
organizations: the case of new product development.

Management 9/e - Chapter 12 8

Study Question 1: How do organizations accomplish
innovation?

In highly innovative organizations …

 Corporate strategy and culture should:
 Emphasize an entrepreneurial spirit.
 Expect innovation.
 Accept failure.
 Be willing to take risks.
 Organization structure should:
 Be organic.
 Have lateral communications.
 Use cross-functional teams and task forces.

Management 9/e - Chapter 12 9

Study Question 1: How do organizations accomplish
innovation?

In highly innovative organizations …

 Top management should:
 Understand the innovation process.
 Be tolerant of criticism and differences of
opinion.
 Take all possible steps to keep goals clear.
 Maintain the pressure to succeed.
 Break down barriers to innovation.
 Staffing should fulfill five critical innovation
roles:
 Idea generators.
 Information gatekeepers.
 Product champions.
 Project managers.
 Innovation leaders.

Management 9/e - Chapter 12 10

Study Question 2: What is the nature of
organizational change?

Change leader.
 A change agent who takes leadership
responsibility for changing the existing
pattern of behavior of another person
or social system.

Change leadership.
 Forward-looking.
 Proactive.
 Embraces new ideas.

Management 9/e - Chapter 12 11

Figure 12.2 Change leaders versus status quo
managers.

Management 9/e - Chapter 12 12

Study Question 2: What is the nature of
organizational change?

Top-down change.
 Strategic and comprehensive change
that is initiated with the goals of
comprehensive impact on the
organization and its performance
capabilities.
 Driven by the organization’s top
leadership.
 Success depends on support of middle-
level and lower-level workers.

Management 9/e - Chapter 12 13

Study Question 2: What is the nature of
organizational change?

Bottom-up change.
 The initiatives for change come from
any and all parts of the organization,
not just top management.
 Crucial for organizational innovation.
 Made possible by:
 Employee empowerment.
 Employee involvement.

 Employee participation.

Management 9/e - Chapter 12 14

Study Question 2: What is the nature of
organizational change?

Integrated change leadership.

 Successful and enduring change combines
advantages of top-down and bottom-up
approaches.
 Top-down:
 Breaks up traditional patterns.
 Implements difficult economic adjustments.
 Bottom-up:
 Builds capability for sustainable change.
 Builds capability for organizational learning.

Management 9/e - Chapter 12 15

Study Question 2: What is the nature of
organizational change?

Transformational and incremental change.

 Unplanned change.
 Response to unanticipated events.

 Good leaders act on opportunities for reactive

change.
 Planned change
 Aligning the organization with anticipated
future challenges.
 Activated by proactive leaders who are
sensitive to performance gaps.
 Transformational change  major and
comprehensive redirection.
 Incremental change  adjusting existing
systems and practices.
Management 9/e - Chapter 12 16
Study Question 2: What is the nature of
organizational change?

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.

Management 9/e - Chapter 12 17

Study Question 2: What is the nature of
organizational change?

External forces for change:

 Globalization.
 Market competition.
 Local economic conditions.
 Government laws and regulations.
 Technological developments.
 Market trends.
 Social forces and values.

Internal forces for change:
 Arise when change in one part of the system
creates the need for change in another part of the
system.
 May be in response to one or more external forces.

Management 9/e - Chapter 12 18

Study Question 2: What is the nature of
organizational change?

Organizational targets for

change:
 Tasks
 People
 Culture
 Technology
 Structure

Management 9/e - Chapter 12 19

Study Question 3: How can planned organizational
change be managed?

Phases of planned change

 Unfreezing
 The phase in which a situation is prepared for
change and felt needs for change are developed.
 Changing
 The phase in which something new takes place in
the system, and change is actually implemented.
 Refreezing
 The phase of stabilizing the change and creating
the conditions for its long-term continuity.

Management 9/e - Chapter 12 20

Figure 12.3 Lewin’s three phases of planned
organizational change.

Management 9/e - Chapter 12 21

 Study Question 3: How can planned organizational
change be managed?

Force-coercion strategy of change.

 Uses power bases of legitimacy, rewards and
punishments to induce change.
 Relies on belief that people are motivated by self-
interest.
 Direct forcing and political maneuvering.
 Produces limited and temporary results.
 Most useful in the unfreezing phase.

Management 9/e - Chapter 12 22

Study Question 3: How can planned organizational
change be managed?

Rational persuasion strategy of change.

 Bringing about change through persuasion
backed by special knowledge, empirical data,
and rational argument.
 Relies on expert power.
 Relies on belief that reason guides people’s
decisions and actions.
 Useful in the unfreezing and refreezing phases.
 Produces longer-lasting and internalized
change.

Management 9/e - Chapter 12 23

Study Question 3: How can planned organizational
change be managed?

Shared power strategy of change.

 Engages people in a collaborative process of
identifying values, assumptions, and goals
from which support for change will naturally
emerge.
 Time consuming but likely to yield high
commitment.
 Involves others in examining sociocultural
factors related to the issue at hand.
 Relies on referent power and strong
interpersonal skills in team situations.
 Relies on belief that people respond to
sociocultural norms and expectations of others.

Management 9/e - Chapter 12 24

Figure 12.4 Alternative change strategies and their
leadership implications.

Management 9/e - Chapter 12 25

Study Question 3: How can planned organizational
change be managed?

Reasons for people resisting change:

 Fear of the unknown
 Disrupted habits
 Loss of confidence
 Loss of control
 Poor timing
 Work overload
 Loss of face
 Lack of purpose

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Study Question 3: How can planned organizational
change be managed?

Methods for dealing with resistance

to change:
 Education and communication
 Participation and involvement
 Facilitation and support
 Facilitation and agreement
 Manipulation and co-optation
 Explicit and implicit coercion

Management 9/e - Chapter 12 27

Study Question 4: What is organization
development?

Organization development (OD) is a

comprehensive approach to planned
organizational change that involves
the application of behavioral science
in a systematic and long-range
effort to improve organizational
effectiveness.

Management 9/e - Chapter 12 28

 Study Question 4: What is organization
development?

Organization development goals:

 Outcome goals focus on task accomplishments.
 Process goals focus on the way people work
together.
 OD seeks to develop the organization members’
capacity for self-renewal.
 OD is committed to change through freedom of
choice, shared power, and self-reliance.
 OD takes advantage of knowledge about human
behavior in organizations.

Management 9/e - Chapter 12 29

Study Question 4: What is organization
development?

The organization development

process:
 Establish a working relationship.
 Diagnosis.
 Intervention.
 Evaluation.
 Achieve a terminal relationship.

Management 9/e - Chapter 12 30

Figure 12.5 Organization development and the
planned change process.

Management 9/e - Chapter 12 31

Study Question 4: What is organization
development?

Action research
 The process of systematically collecting
data on an organization, feeding it back
to the members for action planning,
and evaluating results by collecting
more data and repeating the process as
necessary.
 Is initiated when someone senses a
performance gap.

Management 9/e - Chapter 12 32

Study Question 4: What is organization
development?

Steps in the action research

process:
 Problem sensing.
 Data gathering.
 Data analysis and feedback.
 Action planning.
 Action implementation.
 Evaluation and follow-up.

Management 9/e - Chapter 12 33

Figure 12.6 Action research as a foundation of
organization development.

Management 9/e - Chapter 12 34

Study Question 4: What is organization
development?

Individual OD interventions
 Sensitivity training (T-groups)
 Management training
 Role negotiation
 Job redesign
 Career planning

Management 9/e - Chapter 12 35

Study Question 4: What is organization
development?

Team OD interventions

 Team building

 Process consultation

 Inter-group team building

Management 9/e - Chapter 12 36

Study Question 4: What is organization
development?

Organization-wide OD interventions

 Survey feedback

 Confrontation meeting

 Structural redesign

 Management by objectives (MBO)

Management 9/e - Chapter 12 37

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