Organization Change and

Innovation
 The
The Nature
Nature of
of Organization
Organization Change
Change
(cont’d)
(cont’d)
• Planned Change
– Change that is designed and
implemented in an orderly and
timely fashion in anticipation of
future events.
• Reactive Change
– Change that is a piecemeal
response to events and
circumstances as they develop.
 What
What Is
Is Change?
Change?
Change
–alterations in people, structure, or
technology
–change is an organizational reality
–managing change is an integral part of
every manager’s job
• complicates the jobs of managers
External Forces Forces
Forces For
For Change
Change
–marketplace - adapt to changing consumer
desires
–governmental laws and regulations - frequent
impetus for change
–technology - source of change in almost all
industries
–labor markets - HRM activities must change to
attract and retain skilled employees in the areas
of greatest need
–economic - uncertainties about interest rates,
budget deficits, and currency exchange rates
 Forces
Forces For
Internal Forces For Change
Change (cont.)
(cont.)
– originate from the operations of the organization
– forces may include strategy, workforce, new equipment, or
employee attitudes

Manager as Change Agent

– change agents - act as catalysts and assume responsibility
for change
• manager may serve as change agent
– may be more thoughtful, overcautious
• outside consultant - used for systemwide changes
– produce more drastic changes than insiders
 Managing
Managing Change
Change in
in Organizations
Organizations
• Steps in the Change Process
(Kurt Lewin’s Model)
– Unfreezing
• Individuals must be shown why the change is necessary.
– Implementing change
• The change itself is implemented
– Refreezing
• Involves reinforcing and
supporting the change so
that it becomes a integral
part of the system.
 Figure
Figure 7.1
7.1
Steps
Steps in
in the
the
Change
Change Process
Process
 Understanding
Understanding Resistance
Resistance to
to Change
Change
• People resist change because of:
– Uncertainty about the extent and effects of change.
– Threats to self-interests, power, and influence.
– Different perceptions of change effects and outcomes.
– Feelings of loss in disrupted social networks, power,
security, and familiarity with existing procedures.
 Understanding
Understanding Resistance
Resistance to
to Change
Change
(cont’d)
(cont’d)
• Overcoming Resistance to Change
– Encourage active participation in the change process.
– Provide education and communication about the
change process.
– Facilitate the change process by making only
necessary changes, announcing changes in advance,
and allowing time to adapt to change.
 Figure
Figure 7.2
7.2
Understanding
Understanding Resistance
Resistance to
to Change
Change
(cont’d)
(cont’d)

Force-Field Analysis for Plant Closing

at General Motors
Managerial
ManagerialActions
Actionsto
toReduce
ReduceResistance
Resistanceto
toChange
Change
 Contemporary
Contemporary Issues
Issues In
In Managing
Managing Change
Change
Changing Organizational Culture
– culture resistant to change because it is made up of
relatively stable and permanent characteristics
– strong cultures are particularly resistant to change
– Understanding the Situational Factors - makes
cultural change more likely
• dramatic crisis occurs
• leadership changes hands
• organization is young and small
• culture is weak

© Prentice Hall, 2002 13-12

 Contemporary
Contemporary Issues
Issues (cont.)
(cont.)
Changing Organizational Culture (cont.)
–How Can Cultural Change Be
Accomplished?
• requires a comprehensive and coordinated
strategy
–unfreeze the current culture
–implement new “ways of doing things”
–reinforce those new values
• change, if it comes, is likely to be slow
• protect against any return to old, familiar
practices and traditions
The
The Road
Road to
to Cultural
Cultural Change
Change
 Contemporary
Contemporary Issues
Issues (cont.)
(cont.)
Continuous Quality Improvement Programs
– continuous, small, incremental changes
– fix and improve current work activities
– rely on participative decision making from the bottom
levels
Process Reengineering
– dramatic shift in the way an organization does its work
– begins with the redesign of work
• define customer needs
• design work processes to best meet those needs
– requires participation from managers and workers
 Reengineering
Reengineering in
in Organizations
Organizations
• Business Process Change (Reengineering)
– The radical redesign of all aspects of a business to
achieve major improvements in cost, service, or time.
• Need for Business Process Change
– Entropy is a normal process leading to system decline.
– Cause of entropy is that maintenance of the status
quo puts the organization out of synch with its
environment and the organization starts consuming its
own resources.

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 Reengineering
Reengineering in
in Organizations
Organizations (cont’d)
(cont’d)
• Approaches to Business Process Change
– Recognizing the need for change and acting on it with
a sense of urgency.
– Starting with a clean slate helps open up the process.
– Using a blend of top-down and bottom-up
involvement.

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 Figure
Figure 7.3
7.3
The
The Reengineering
Reengineering Process
Process

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Continuous
Continuous Quality
Quality Improvement
Improvement Versus
Versus Reengineering
Reengineering

Continuous Quality Improvement Reengineering

• Continuous, incremental change • Radical change

• Fixing and improving • Redesigning - starting over

• Mostly “as is” • Mostly “what can be”

• Works from bottom up in • Initiated by top management

organization
 Organization
Organization Development
Development (OD)
(OD)
• Organization Development
– A planned, organization-wide effort managed from the
top, intended to increase organizational effectiveness
and health through interventions in the organization’s
processes using behavioral
science knowledge.

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 Organization
Organization Development
Development (OD)
(OD) (cont’d)
(cont’d)
• OD Assumptions
– Employees desire to grow and develop.
– Employees have a strong need
to be accepted by others
within the organization.
– Individuals will influence
the organization and the
organization will influence
the attitudes, perceptions,
behaviors, and expectations
of individuals.

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 Organizational
Organizational Development
Development Techniques
Techniques
Sensitivity
Training

Survey More Team

Feedback Effective Building
Interpersonal
Work
Environment
Process Intergroup
Consultation Development

© Prentice Hall, 2002 13-22

 Creating
Creating aa Culture
Culture for
for Change:
Change: Learning
Learning
Learning Organization
– An organization that has developed the continuous
capacity to adapt and change
– Learning Types
• Single-Loop: errors are corrected using past routines
• Double-Loop: errors are corrected by modifying routines
– Characteristics
• Holds a shared vision
• Discards old ways of thinking
• Views organization as system of relationships
• Communicates openly
• Works together to achieve shared vision
E X H I B I T 19-6
E X H I B I T 19-6

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 Creating
Creating aa Learning
Learning Organization
Organization
• Overcomes traditional organization problems:
– Fragmentation
– Competition
– Reactiveness

• Manage Learning by:

– Establishing a strategy
– Redesigning the organization’s structure
• Flatten structure and increase cross-functional activities
– Reshaping the organization’s culture
• Reward risk-taking and intelligent mistakes

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 Work
Work Stress
Stress
• Stress
– A dynamic condition in which an individual is
confronted with an opportunity, constraint, or
demand related to what he or she desires and for
which the outcome is perceived to be both uncertain
and important
• Types of Stress
– Challenge Stressors
• Stress associated with workload, pressure to complete
tasks, and time urgency
– Hindrance Stressors
• Stress that keeps you from reaching your goals, such as
red tape
• Cause greater harm than challenge stressors
E X H I B I T 19-7
E X H I B I T 19-7

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 Demands-Resources
Demands-Resources Model
Model of
of Stress
Stress
• Demands
– Responsibilities, pressures, obligations, and
uncertainties in the workplace
• Resources
– Things within an individual’s control that can be used
to resolve demands
• Adequate resources help reduce the stressful
nature of demands

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 AA Model
Model of
of Stress
Stress

E X H I B I T 19-8
E X H I B I T 19-8

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 Potential
Potential Sources
Sources of
of Stress
Stress
• Environmental Factors
– Economic uncertainties of the business cycle
– Political uncertainties of political systems
– Technological uncertainties of technical innovations
• Organizational Factors
– Task demands related to the job
– Role demands of functioning in an organization
– Interpersonal demands created by other employees
• Personal Factors
– Family and personal relationships
– Economic problems from exceeding earning capacity
– Personality problems arising from basic disposition

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 Consequences
Consequences of
of Stress
Stress
• Stressors are additive: high levels of stress can
lead to the following symptoms
– Physiological
• Blood pressure, headaches, stroke
– Psychological
• Dissatisfaction, tension, anxiety, irritability, boredom, and
procrastination
• Greatest when roles are unclear in the presence of conflicting
demands
– Behavioral
• Changes in job behaviors, increased smoking or drinking,
different eating habits, rapid speech, fidgeting, sleep disorders

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 Not
Not All
All Stress
Stress Is
Is Bad
Bad
• Some level of stress can increase productivity
• Too little or too much stress will reduce
performance
• This model is not empirically supported

E X H I B I T 19-9
E X H I B I T 19-9

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 Managing
Managing Stress
Stress
• Individual Approaches
– Implementing time management
– Increasing physical exercise
– Relaxation training
– Expanding social support network
• Organizational Approaches
– Improved personnel selection and job placement
– Training
– Use of realistic goal setting
– Redesigning of jobs
– Increased employee involvement
– Improved organizational communication
– Offering employee sabbaticals
– Establishment of corporate wellness programs

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 Global
Global Implications
Implications
• Organizational Change
– Culture varies people’s belief in the possibility of change
– Time orientation will affect implementation of change
– Reliance on tradition can increase resistance to change
– Power distance can modify implementation methods
– Idea champions act differently in different cultures

• Stress
– Job conditions that cause stress vary across cultures
– Stress itself is bad for everyone
– Having friends and family can reduce stress

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 Summary
Summary and
and Managerial
Managerial Implications
Implications
• Organizations and the individuals within them
must undergo dynamic change

• Managers are change agents and modifiers of

organizational culture

• Stress can be good or bad for employees

• Despite possible improvements in job

performance caused by stress, such
improvements come at the cost of increased job
dissatisfaction

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 Figure
Figure 7.4
7.4
Organizational
Organizational Innovation
Innovation

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 Forms
Forms of
of Innovation
Innovation
• Radical Innovation
– A new product, service, or technology developed by
an organization that completely replaces the existing
one.
– Radical innovation fundamentally changes the nature
of competition in an industry.
• Incremental Innovation
– A new product, service, or technology that modifies an
existing one.
– Incremental innovation does not significantly affect
competition in an industry.

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Forms
Forms of
of Organizational
Organizational Innovation
Innovation (cont’d)
(cont’d)
• Technical Versus Managerial Innovations
– Technical innovation
• A change in the physical appearance or performance of a
product or service, or the physical processes through which a
product or service is manufactured.
– Managerial innovation
• A change in the management
process by which products
and services are conceived,
built, and delivered to
customers.

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Forms
Forms of
of Organizational
Organizational Innovation
Innovation (cont’d)
(cont’d)
• Product Versus Process Innovations
– Product innovation
• A change in the physical characteristics or performance of
existing products or service or the creation of brand-new
products or services.
– Process innovation
• A change in the way a product
or service is manufactured,
created, or distributed.

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 Innovation
Innovation
• Reasons for Failing to Innovate
– Lack of resources
– Failure to recognize opportunities
– Resistance to change
• Promoting Innovations in Organizations
– Using the reward system
– Having a supportive organizational culture
– Intrapreneurship in larger organizations
• Inventors
• Production champions
• Sponsors

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