Chapter Six

Innovation and Change

The Strategic Role of Change

• To recognize and manage the threats and take advantage of

the opportunities, today’s companies are undergoing
dramatic changes in all areas of their operations.
• Many organizations are responding to global forces by
adopting self-directed teams, horizontal structures etc…
• Today’s organizations face a need for major strategic and
cultural change and for rapid and continuous innovations in
technology, services, products, and processes.
Incremental versus Radical Change

• Incremental Change: It refers to a series of continual

progressions that maintain the organization’s general
equilibrium and often affect only one organizational part.
• Radical Change: By contrast, breaks the frame of reference
for the organization, often transforming the entire
organization.
Strategic Types of Change
• Technology Change: any company that isn’t continually
adapting new technology will likely be out of business.
• Product and Service Changes: It involves the product or
service outputs of an organization.
• Strategy and Structure Changes: It pertains to the
administrative domain in an organization.
• Culture Change: It refers to changes in the values, attitudes,
expectations, beliefs, abilities, and behavior of employees.
Organizational change vs innovation

• Organizational change is considered the adoption of a new

idea or behavior by an organization.
• Organizational innovation is the adoption of an idea or
behavior that is new to the organization’s industry, market,
or general environment.
Elements for Successful Change
• Ideas: no company can remain competitive without new
ideas.
• Need: ideas are generally not seriously considered unless
there is a perceived need for change.
• Adoption: adoption occurs when decision makers choose to
go ahead with a proposed idea.
• Implementation: implementation occurs when organization
members actually use a new idea, technique, or behavior.
• Resources: human energy and activity are required to bring
about change.
1. Technology Change

• An innovative organization is characterized by flexibility and

empowered employees and the absence of rigid work rules.
• Ambidextrous approach— this is to incorporate structures
and management processes that are appropriate to both the
creation and the implementation of innovation.
Techniques for Encouraging Technology
Change
• Switching Structures: it occurs when for example a
mechanistic organization creates an organic structure for the
initiation of new ideas.
• Creative Departments: In many large organizations, the
initiation of innovation is assigned to separate creative
departments.
• Another type of creative department is the idea incubator,
an increasingly popular way to facilitate the development of
new ideas within the organization.
Cont…nd

• Venture Teams: They are a technique used to give free rein

to creativity within organizations.
• One type of venture team is called a skunk works.
• A skunk works is a separate, small, informal, highly
autonomous, and often secretive group that focuses on
breakthrough/discover ideas for the business.
Cont…nd
• Corporate Entrepreneurship: it attempts to develop an
internal entrepreneurial spirit, philosophy, and structure that
will produce a higher-than-average number of innovations.
• An important outcome of corporate entrepreneurship is to
facilitate idea champions. It is usually come in two types:
• The technical champion/product champion, is the person who
generates or adopts and develops an idea for a technological
innovation.
• The management champion acts as a supporter and sponsor to
shield and promote an idea, such as a new project or change of
structure within the organization.
2. New Products and Services

• In many ways, new products and services are a special case

of innovation because they are used by customers outside
the organization.
Reasons for Product Success

• Successful innovating companies had a much better

understanding of customer needs
• Successful innovating companies made more effective use of
outside technology
• Top management support in the successful innovating
companies was from people who were more senior and had
greater.
Organization design components
• The organization design for achieving new product
innovation involves three components:
• Specialization: it means that the personnel in all three of
these departments (R&D, marketing and production) are
highly competent at their own tasks.
• Boundary Spanning: this refers each department involved
with new products has excellent linkage with relevant sectors
in the external environment.
• Horizontal Coordination: it means that technical, marketing
and production people share ideas and information.
3. Strategy and Structure Change
• All organizations need to make changes in their strategies,
structures, management processes, and administrative
procedures from time to time.
• The dual-core approach to organizational change compares
management and technical changes.
• Management changes pertain to the design and structure of
the organization itself.
• The technical change is concerned with the transformation
of raw materials into organizational products and services
and involves the environmental sectors of customers and
technology.
4. Culture Change

• Organizations are made up of people and their relationships

with one another.
• Changing corporate culture fundamentally shifts how work is
done in an organization and can lead to renewed
commitment and empowerment of employees, as well as a
stronger bond between the company and its customers.
Forces for Culture Change
Reengineering and horizontal organizing
Diversity
The learning organization
Organization development
• Large group intervention
• Team building
• Interdepartmental activities
Strategies for Implementing Change

• Establish a sense of urgency for change.

• Establish a coalition/alliance to guide the change.
• Create a vision and strategy for change.
• Find an idea that fits the need.
• Develop plans to overcome resistance to change.
• Create change teams.
• Foster idea champions.
Barriers to Change
Excessive focus on costs.
Failure to perceive benefits.
Lack of coordination and cooperation.
Uncertainty avoidance.
Fear of loss.
Thank You for your Attention!!!