Organizational Change and Innovation

Environment creates Demand for 3

types of Change
• Episodic
• Occurs occasionally
• Period of relative stability

• Continuous
• Occurs frequently
• Fewer and shorter periods of stability

• Disruptive
• Sudden shocks/surprises
• Radically change an industry’s rules of the game
 Strategic Types of Change
• Technology
• Changes in the organization’s production process, its knowledge/skill base that
enable distinctive competence (Examples: work methods, equipment, workflow,
product/services technique). Eg- IIMB Attendance process

• Product and service

• Small adaptations or new product categories

• Strategy and structure

• Structure, coordination systems, rewards. Changes pertaining to administrative
domain. E.g.- Supervision and Mgmt., policies, reward system, labor relation,
coordination devices, control systems, accounting and budgeting systems

• Culture
• Changes in values, attitudes, mindsets, behaviors of employees
Barriers to Change
• Focus on costs
• Failure to perceive benefits
• Lack of coordination and cooperation
• Uncertainty avoidance
• Fear of loss
Leading Change
• Establishing a sense of urgency
– difficult to get people out of their comfort zone
– overestimation of success
– lack of patience
• Creating a powerful enough guiding coalition
• Creating a vision and strategy
– directives and plans are not vision
– need for clarity
– the 5 minute rule
Leading Change
• Communication of vision
– very little communication
– great communication but no execution
• tie vision to dailies

• Removing obstacles
• Systematically planning for, and creating short-term
wins
• Not declaring victory too soon
• Anchoring changes in culture
• Ambidextrous approach : exploration and
exploitation
Other Techniques for Encouraging Change
• Switching structures- switching to organic structure to innovate
• Creative departments – Separate dept. within organization. E.g R&D,
engineering design and system analysis, incubator groups
• Venture teams
– New venture fund (provides financial resources for employees to
innovate, skunkworks
– Small company within a large company. Free from bureaucracy.
Separate location and facilities not constrained by organization
procedures.
• Corporate entrepreneurship
– Idea champions: technical or product champion; management
champion. Internal spirit, philosophy to produce innovations.
Bootlegging- unauthorized research. May use VT and Creative dept.
Other Techniques for Encouraging Change
• The dual-core approach – Management and technology core
independently. Change may happen
• Bottom-up approach
– Ideas coming from workers, customer service team, etc. Bottom-up flow
of ideas
– Innovation community, Jam
• OD: large group interventions; team building; interdepartmental
activities
The 3 M’s for launching a learning organization

• Meaning:
– What do we mean by learning?
• Thinking vs. behaving
– Who is learning?

• Management:
– Which practices lead to learning in an organization?

• Measurement:
– Which tools and indicators help us understand if learning is
achieved?
What is a ‘learning organization’?

A learning organization is an organization

skilled at creating, acquiring, and transferring
knowledge, and at modifying its behavior to
reflect new knowledge and insights
5 building blocks of a learning organization

• Systematic problem solving

– Scientific method of solving problems; data-based; statistical tools
• Experimenting with new approaches
– Systematic searching for and testing of new knowledge; demonstration
projects
• Learning from past experience
– “Santayana reviews”
• Learning from others
– Benchmarking
• Transferring knowledge
– Consultants
Measuring learning
• Learning curve
– Inverse relationship between volume and cost
• Proxy for greater manufacturing knowledge
• Assembly line

• Experience curve
– Forecasts industry cost and outputs
– Iron law of competition
• For companies and industries. To enjoy the benefits of experience, companies
would have to rapidly increase their production ahead of competitors to lower
prices and gain market share

• Half-life curve
– Focus on results: Time taken to achieve 50% improvement in specified
performance measures
• Those who take less time to improve must be learning faster