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Chapter12.InnovationandChange.pptx

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Chapter 12 Innovation and Change

Organization Theory and Design

Thirteenth Edition

Richard L. Daft

Chapter

Learning Objectives

Describe the types of strategic innovation.

Explain the necessary elements for successful organizational change.

Compare and contrast techniques for encouraging technology innovation with those that encourage product and service innovation.

Explain how innovation speed provides a competitive advantage.

Describe the dual-core approach to organizational change.

Explain how a large group intervention can be used to bring about culture change in an organization.

List techniques for overcoming resistance to change.

The Strategic Role of Innovation

Today’s organizations must keep themselves open to continuous innovation not only to prosper, but to survive

Organizations can respond to environmental shifts with:

Episodic change

Continuous change

Disruptive change and innovation

Disruptive innovation refers to (often) small product or service innovations that end up completely replacing an existing product or service technology

Stages of Disruptive Innovation

Strategic Types of Innovation

Managers can focus on four types of innovation to achieve strategic advantage:

Technology innovations: Changes in the production process that enable distinctive competence

Product and service innovations: Introduction of new product lines or adaptations of established products

Strategy and structure innovations: Changes in structure, strategic management, policies, reward systems, labor relations, coordination devices, management information and control systems, accounting and budgeting systems

Cultural innovations: Changes in the values, attitudes, expectations, beliefs, abilities, and behavior of employees

The Four Types of Innovation

Elements for Successful Change

Organizational change is 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

Change process within organizations comes from innovation and new ideas, regardless of timing

Successful change includes ideas and creativity, need, decision to adopt, implementation, and resources

Sequence of Elements for Successful Change

Technology Innovation

Technology is a key driver of organizational change

Innovative organizations are flexible, and free-flowing, and without rigid work rules

A mechanistic structure stifles innovation and focus on rules and regulations, but it is often the best structure for efficiently producing routine products

Managers must create both organic and mechanistic conditions within the organization to achieve both innovation and efficiency

The Ambidextrous Approach

An ambidextrous approach incorporates structures and management processes that are appropriate to both the creation and the implementation of innovation

The Bottom-Up Approach

Many useful ideas come from the people who do the daily work of serving the customers, fighting off the competition, and figuring out how best to get their jobs done

Companies can support innovation by implementing mechanisms, systems, and processes that encourage a bottom-up flow of ideas and by making sure they get heard and acted upon

It is just as important to turn ideas into actions as it is to create them

Techniques for Encouraging Technology Change

Switching structures create organic structures as needed for idea initiation

Creative departments, including creative incubators, create changes for adoption in other departments through research and development, engineering, design, and systems analysis

Venture teams, including skunkworks and new-venture funds, are like small companies that are not constrained by organizational procedures and bureaucracy

Corporate intrapreneurship develops an internal entrepreneurial spirit, philosophy, and structure that will produce a higher-than-average number of innovations

New Products and Services

Product innovation is one of the most important ways companies adapt to changes in markets, technologies, and competition

However, developing and producing products that fail is a part of business in all industries

Reasons for product innovation success include:

Understanding customers and paying more attention to marketing

Making more effective use of outside technology and outside advice

Having top management support from people who are more senior and have greater authority

New Product Success Rate

Horizontal Coordination Model

The horizontal coordination model is an organization design for achieving new product innovation, and it involves three components:

Specialization

Boundary spanning

Horizontal coordination

Horizontal Coordination Model for New Product Innovations

Open Innovation and Crowdsourcing

Open innovation extends the search for and commercialization of new products beyond the boundaries of the organization and the industry

Crowdsourcing is the solicitation of ideas, services, and information from online volunteers rather than from traditional employees

The Need for Speed

The rapid development of new products and services can be a major strategic weapon

Faster new product development is associated with lower development costs and greater success

Firms can quickly address shifting customer demands

Strategy and Structure Change

Many organizations are preparing for more change by:

Cutting layers of management

Decentralizing decision making

Shifting toward horizontal structures

Empowering front-line teams and workers to make decisions and solve problems on their own

The dual-core approach compares management innovation and technical innovation

Examples of management innovation include the implementation of a balanced scorecard and establishment of a joint venture for global expansion

Dual-Core Approach to Organization Change

Organization Design for Implementing New Management Processes

A mechanistic organization structure is appropriate for frequent management changes

The authority for strategy and structure change lies with top management

Employee input may be sought, but top managers have the responsibility to direct the change

Top-down change does not mean that lower level employees are not educated about the change or allowed to participate in it

Culture Change

Changing organizational culture challenges people’s core values and established ways of thinking and doing things

Recent trends have contributed to a need for cultural makeovers at many companies, including:

Shifts to horizontal forms of organizing

Diversity of today’s workforce

A growing emphasis on learning and adaptation in organizations

Culture Change Interventions

Organization development (OD) emphasizes the values of human development, fairness, openness, freedom from coercion, and individual autonomy that allows workers to perform the job as they see fit, within reasonable organizational constraints

OD techniques include:

Large group intervention

Team building

Interdepartmental activities

The Change Curve

Leadership for Change (slide 1 of 2)

80% of successful innovative companies have top leaders who reinforce the value and importance of innovation

Transformational leadership is well-suited for leading change, and such leaders must:

Create a compelling vision

Create an environment for exploration, experimentation, risk-taking, and sharing of ideas

Managers and employees must devote the time and energy needed to reach new goals, and they also need the coping skills to endure possible stress and hardship

Managers can use the curve of change to guide people successfully through the difficulties of change

Leadership for Change (slide 2 of 2)

Techniques for

Implementation

Establish a sense of urgency for change

Establish a coalition to guide the change

Create a vision and strategy for change

Find an idea that fits the need

Create change teams

Foster idea champions

Techniques for

Overcoming Resistance

Top management support

Participation and involvement

Alignment with needs and goals of users

Communication and training

An environment with psychological safety

Organizational Design Essentials (slide 1 of 2)

Change—not stability—is the natural order of things in today’s global environment.

Organizations need to build in change as well as stability, to facilitate innovation as well as efficiency.

Managers can encourage the generation of novel ideas by increasing diversity, making sure employees have opportunities to interact with people different from themselves, allowing time for experimentation, and supporting risk-taking and learning.

Approaches to technology innovation include ambidextrous design; establishment of a separate department, venture teams or idea incubators; and application of mechanisms, systems, and processes that encourage a bottom-up flow of ideas that get heard and acted upon by top executives.

Organizational Design Essentials (slide 2 of 2)

New products and services generally require cooperation among several departments, so companies use a horizontal coordination model for new product innovation.

Strategy and structure innovations are in the domain of top managers who take responsibility for restructuring, for downsizing, and for changes in policies, goals, and control systems.

Culture changes are generally the responsibility of top management, and they require significant shifts in employee and manager attitudes and ways of working together.

Strong leadership is needed to guide employees through the turbulence and uncertainty and build organization-wide commitment to change.