Business Management 2B

COBMB2-11

Eduvos (Pty) Ltd (formerly Pearson Institute of Higher Education) is registered with the Department of Higher Education and Training as a private higher education institution under the
Higher Education Act, 101, of 1997. Registration Certificate number: 2001/HE07/008
 Managing Change and Innovation
Chapter 5

Eduvos (Pty) Ltd (formerly Pearson Institute of Higher Education) is registered with the Department of Higher Education and Training as a private higher education institution under the
Higher Education Act, 101, of 1997. Registration Certificate number: 2001/HE07/008
Week 2: Managing Change and Innovation (Chapter 5)
Lesson 5 on MyLMS

In this lesson, you will learn about:

(1) Define organisational change and compare and contrast views on the change process.
(2) Explain how to manage resistance to change.
(3) Describe what managers need to know about employee stress.
(4) Discuss techniques for stimulating innovation.

• The learning outcome that will be covered is Learning Outcome 5.

• The assessment criteria that will be covered are AC’s 5.1 – 5.4
 What will be covered
in today’s lesson?
Define organizational change and
compare and contrast views on the
change process.

Week 2 Explain how to manage

resistance to change.
Lesson 2
Describe what managers need
to know about employee stress.

Discuss techniques for

stimulating innovation.
What is Organisational Change?
It is any alteration or adaptation of an organisation’s structure, technology, or people.
(Textbook, p.157)

Categories of Organisational Change (Textbook, Exhibit 5.1 p.157)

Change is an organisational reality. All managers will have to deal with ongoing change in their
environment and guide their response to it within their organisation.
Why Do Organisations Need To Change?
The External Environment

Various external forces cause organisations to change the ways they do things in
response to these forces. These external forces would include changes in the
following areas: the marketplace, technology, government laws and regulations, the
labour market, and the economy. (Textbook, p.158)

The Internal Environment

Various internal forces also cause organisations to change the ways they do things.
These internal forces usually originate from operations and/or changes in strategy.
Other sources of internal forces include changes in employee attitudes and changes
in the workforce composition. (Textbook, p.159)
 Let us discuss:

Two external forces facing South African firms in

recent times are the growth in online shopping and
increases in loadshedding. How would a manager
of a hardware shop respond to these changes?
Who Initiates Organisational Change?
The Change Agent

People within the organisation who assume responsibility for the change process are
called Change Agents. They act as catalysts in bringing about the desired change.
A change agent might be either a manager or a non-manager (such as an internal
staff specialist or an external consultant). Outside consultants are commonly used
when the desired changes are large and/or drastic. (Textbook, p.159)
How does Organisational Change happen?
The “crossing of waters” metaphors

Making change happen within an organisation can follow two possible paths, which
can be visualised by two respective metaphors.

In the “Calm Seas” metaphor, change is likened to a ship sailing on a calm sea from
one port to another, with only the occasional storm to disturb the ship’s steady
progress. Here, change is gradual and steady. (Textbook, p.160)

In the “White Water Rapids” metaphor, change is likened to a raft sailing down a
raging river with uninterrupted white-water rapids throwing the raft from left to
right. Here, change is a continual process and new developments can quickly become
obstacles pushing the organisation in directions it didn’t intend to go. (Textbook, p.161)
 Let us discuss:
For each of the following firms, indicate whether
the “calm seas” or “white water rapids” approach
to change would apply:

Patel & Johnson is a firm of accountants who

provide auditing services to several established
clients.

VR-ninjas is a firm of IT specialists advising

companies on the use of virtual reality in
commerce.
Organisation Development (OD)
When changes affect the organisation’s structures and technology, there will be
consequent changes for the people in the organisation. Managers can make use of
OD to assist people deal with the changes by constructively changing attitudes and
values of the organisation members to more readily adapt to the new situation.
(Textbook, p.162)

Any activity that assists with implementing planned change can be viewed as an OD
activity. Popular activities used would include:

OD Activity Description
Survey feedback Data from survey is used to determine worker attitudes & needs
Process consultations External consultants gather information for managers
Team-building Activities to encourage trust and openness in teams
Intergroup development Activities to encourage cohesion between different teams
Team Building in the OD context

Group Activity:
Your firm’s OD director is currently in hospital, but a team
building has been scheduled for early next week. Your
manager asks you to step in and organise it. What sort of
activities would you arrange?
Step 1: Divide into groups of 3-4 members.
Step 2: Brainstorm ideas to answer the above question.
Step 3: Decide on a list of two team-building activities.
Step 4: For each activity, agree on how it will be
beneficial in building a team from the participants.
Step 5: Have a spokesperson report your conclusions.
How do Managers Manage Resistance to Change?
People often resist change even when it would be beneficial

Why do people resist change?

Let’s look at four reasons. (Textbook, p.163)
Reason Why

Uncertainty Change replaces the known with uncertainty and we don’t like uncertainty.

Habit We do things out of habit.

Concern over We fear losing something already possessed.

Personal Loss

Change is not in the We believe that the change is incompatible with the goals and interests of the organisation.
organisation’s best
interest
How to reduce resistance to change
There are several techniques a manager could use to assist in the reduction of
resistance to a change that is to be introduced. (Textbook, p.168)

Exhibit 5.4 p.168

Stress in the context of Change
Organisational Change can lead to stress in affected persons

Stress in this context is defined as a response to anxiety over intense demands,

constraints, or opportunities. (Textbook, p.164)

Constraints (an obstacle that prevents you from doing what you desire), demands (the loss
of something desired), and opportunities (the possibility of something new, something
never done) are all potential sources of anxiety and, consequently, stress.

For potential stress to become actual stress there needs to be uncertainty over the
outcome and the outcome needs to be important. (Textbook, p.165)
Can Stress be managed?
Guidelines for managing stress
Stress can unfortunately never be entirely eliminated; but not all stress is dysfunctional.
But for stress that is dysfunctional, two areas of concern can be managed. (Textbook, p.167)
Job related factors:
• Employee Selection: ensure that the employee’s abilities match the job requirements.
• On-the-job: Manage employees with clear communication, ensure jobs are properly
designed, and allow employees to participate in decision making.
Personal factors:
This is not as easy for a manager to control, but the following measures might be used:
• Employee assistance programs (EAPs): the goal is to get a productive employee back on
the job as soon as possible.
• Wellness program: the goal is keep employees healthy and well, in all life areas.
(Textbook, p.167)
How can Managers Encourage Innovation?
Innovation is the key to continued organisational success

The modern world of global competition demands that business organisations must
continually create new products and services and adopt state-of-the-art technologies if
they are to compete successfully. (Textbook, p.169)

How are Creativity and Innovation related?

Creativity is defined as “the ability to produce novel and useful ideas” whereas
Innovation is defined as “the process of taking a creative idea and turning it into a
useful product, service, or method of operation”. Here it can be seen that innovation
follows on from creativity. (Textbook, p.169)
What is involved in Innovation?
Innovation is the result of a four-fold process

Those who believe creativity is a skill that can be learned would acquire it using the
following process. (Textbook, p.169)

Stage Description

Perception Being creative means seeing things from a unique perspective. One person may see
solutions to a problem that others cannot or will not see at all.

Incubation Sometimes employees need to sit on their ideas, waiting for clarity to be gained.

Inspiration Inspiration is the moment when all your efforts successfully come together.

Innovation Innovation involves taking that inspiration and turning it into a useful product, service, or
way of doing things.
How can a Manager Foster Innovation?
The Systems Model

The systems model (inputs -> transformation process -> outputs) can help us
understand how organisations become more innovative. If an organisation wants
innovative products and work methods (outputs), it must take its inputs and transform
them into those outputs. Those inputs include creative people and groups within the
organization.

But having creative people isn’t enough. The transformation process requires having
the right environment to turn those inputs into innovative products or work methods.
This “right” environment - that is, an environment that stimulates innovation - includes
three variables: the organisation’s structure, culture, and human resource practices.
(Textbook, p.170)
How can a Manager Foster Innovation?
Let’s examine the three areas just mentioned: structure, human resources, and
culture. (Textbook, p.171)

Exhibit 5.5 p.171

 Let us discuss:

A firm that wishes its staff to be more innovative has

decided to incentivise the process. How can they use
monetary reward to grow innovation?

Another firm that wishes its staff to be more innovative

has no spare budget but has some unused office space.
How can they use this space to grow innovation?
 What Happens Next?
• During the next lesson, you will learn about Planning and Goal Setting (Chapter 6)
Organisation Development (OD)
The Sharing Economy

Companies such as Airbnb and Uber are part of a modern trend called the Sharing
Economy. This is where asset owners share with other individuals through a peer-to-
peer service, for a fee, their underutilized physical assets (such as a home or a car).
This sharing may also extend to other “assets” such as knowledge, expertise, skills or
time. (Textbook, p.133)

As the sharing economy has grown, other terms - such as digital economy,
collaborative economy, on-demand economy, gig economy, freelance economy, peer
economy, access economy, crowd economy, and platform economy - have been used
to better describe the various iterations of sharing that take place.
The Demographic Component – Modern Trends
Aging Populations

For most of human history, individuals over the age of 65 have never exceeded 3 or 4
percent of a country’s population. By 2050, however, this number could potentially
reach 25 percent, on average.
By 2050, it’s predicted that China will have more people of age 65 and older than the
rest of the world combined.

Experts say that by 2050 emerging economies led by India and China will collectively
be larger than the developed economies. Small European nations with low birthrates
such as Austria, Belgium, Denmark, Norway, and Sweden will drop off the list of the
30 biggest economies. (Textbook, p.134)
How does the External Environment affect managers?
1. Through Jobs and Employment

Not only do changes in external conditions affect the types of jobs that are available,
but they also affect how those jobs are created, designed, and managed.
For instance, many employers are using flexible work arrangements with tasks done by
freelancers hired on an as-needed basis, or by temporary workers who work full-time
but are not permanent employees. (Textbook, p.135)