Chapter 10

Innovation and Change

2

What Would You Do? Product Innovation at Kimberly-Clark Procter & Gamble is determined to lead the

market in diapers P&G responds aggressively to new innovations by

Kimberly-Clark Other products, such as toilet paper are perceived

to have little room for innovation

3

After discussing this section, you should be able to:

Learning ObjectivesOrganizational Innovation

1. explain why innovation matters to companies.

2. discuss the different methods that managers can use to effectively manage innovation in their organizations.

4

Why Innovation Matters

TechnologyCycles

InnovationStreams

5

Blast From The PastTechnological Innovation in the 20th Century1900-1910

airplane, plastic, air conditioner1911-1920

mammogram, zipper, sonar1921-1930

talking movies, penicillin, jet engine1931-1940

radar, helicopter, computer1941-1950

atomic bomb, bikini, transistor1951-1960

DNA, oral contraceptive, Tylenol

1961-1970 video recorder, handheld calculator,

computer mouse1971-1980

compact disc, gene splicing, laser printer

1981-1990 MS-DOS, space shuttle, CD-ROM

1991-2000 taxol, Pentium processor, Java

2001-Today mapping of human genome, first

cloning of human embryo

6

Technology CycleS-curve pattern of innovation

Effort

Per

form

ance

Discontinuity

NewTechnology

A

B

C

Adapted fromExhibit 10.1

7

Innovation Streams

Era ofIncrementalChange (1)

Era ofFerment (1)

VariationSelection

TechnologyDiscontinuity (1)

DominantDesign (1)

Era ofIncrementalChange (2)

Era ofFerment (2)

VariationSelection

TechnologyDiscontinuity (2)

DominantDesign (2)

Era ofIncrementalChange (3)

Era ofFerment (3)

VariationSelection

TechnologyDiscontinuity (3)

DominantDesign (3)Technology

Substitution (2)

Technology Substitution (3)

Adapted fromExhibit 10.3

8

Managing Innovation

Managing Sources of Innovation

Managing Innovation DuringDiscontinuous Change

Managing Innovation DuringIncremental Change

9

Managing Sources of Innovation Creative work environments

workplace cultures in which workers perceive that new ideas are encouraged

Flow the psychological state of effortlessness

10

Components of Creative Work Environments

OrganizationalOrganizationalEncouragementEncouragement

FreedomFreedom

Creative WorkCreative WorkEnvironmentsEnvironments

Work GroupWork GroupEncouragementEncouragement

OrganizationalOrganizationalImpedimentsImpediments

SupervisorySupervisoryEncouragementEncouragement

ChallengingChallengingWorkWork

Adapted fromExhibit 10.4

11

Been There, Done That

We need to have a positive attitudes towards mistakes

Fear of failure hurts creativity Mistakes should be fixed, not concealed

John Cleese on Innovations & Creativity

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Managing Innovation During Discontinuous Change Discontinuous Change

technology discontinuity creates a significant breakthrough

Use the experiential approach to innovation innovation created by intuition, flexible options,

and hands-on experience in an uncertain environment

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Experiential Approach to Innovation

Design Iteration

Testing

Milestones

Multifunctional Teams

Powerful Leaders

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Managing Innovation during Incremental Change Compression approach to innovation

assumes that innovation is a predictable process that can be planned in steps

Generational change based on incremental improvements to a

dominant technological design and achieving backward compatibility with older technology

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Compression Approach to Innovation

Planning

Supplier Involvement

Shortening the Time ofIndividual Steps

Overlapping Steps

Multifunctional Teams

16

Adapted fromExhibit 10.5

Comparing Experiential and Compression Approaches

Experiential Experiential ApproachApproach

Highly uncertain environment

Goals: speed, significant improvements

Approach: build something new and significantly better

• Design iterations• Testing• Milestones• Multifunctional teams• Powerful leaders

Compression Compression ApproachApproach

Certain environmentGoals: speed, lower costs,

incremental improvements

Approach: compress time and steps, small improvements

• Planning• Supplier involvement• Shortening time of steps• Overlapping steps• Multifunctional Teams

ApproachApproach

Assumptions

Steps

17

After discussing this section, you should be able to:

Learning ObjectivesOrganizational Change

3. discuss why change occurs and why it matters.

4. discuss the different methods that managers can use to better manage change as it occurs.

18

Change & Resistance Forces

NoNoChangeChange

SporadicSporadicChangeChange

DiscontinuousDiscontinuousChangeChange

ContinuousContinuousChangeChange

Res

ista

nce

Fo

rces

Strong

Weak

Change ForcesStrongWeak

Adapted fromExhibit 10.6

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Organizational Decline

BlindedStage

InactionStage

FaultyActionStage

CrisisStage

DissolutionStage

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Managing ChangeManaging Resistance

to Change

Change Toolsand Techniques

Managing Conversationsto Promote Change

What Not to Do WhenLeading Change

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Managing Resistance to Change Lewin’s Framework Methods of Managing Resistance to Change

22

Lewin’s Change Process

UnfreezingUnfreezingChangeChange

InterventionInterventionRefreezingRefreezing

• Share reasons• Empathize• Communicate

• Benefits• Champion• Input• Timing• Security• Training• Pace

• Top management support

• Publicize success• Employee Services

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Methods of Managing Resistance to Change Education & Communication Participation Negotiation Top Management Support Coercion

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Change Tools and Techniques

Results-Driven Change

General Electric Workout

Transition Management Team

Organizational Development

Change Agent

25

Results-Driven Change Creates quick change by focusing on

measurement and improvement of results create measurable, short-term goals use action steps likely to improve performance importance of immediate improvements consultants and staffers help managers test actions steps to see if yield improvements few resources required to get change started

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General Electric Three Day Workout Boss sets agenda and identifies targets, then

leaves Outside facilitator works with sub-groups,

who debate solutions “Town Meeting” on day three

subgroups make suggestions boss must decide on the spot

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Transition Management Team (TMT) A team of employees whose full-time job is

managing change Anticipate and manage employee reactions

to change Top management determines change

initiatives TMT accomplishes those initiatives

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Organizational Development (OD) A philosophy and collection of planned

change interventions Designed to ensure organizations long-term

survival Change Agent

the person formally charged with guiding a change effort

can be internal or external person

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1. Entry A problem is discovered and the need for change becomesapparent. Search begins for someone to deal with the problem andfacilitate change.

2. Start-up A change agent enters the picture and works to clarify the problemand gain commitment to a change effort.

3. AssessmentandFeedback

The change agent gathers information about the problem andprovides feedback about it to decision makers and those affected byit.

4. ActionPlanning

The change agent works with decision makers to develop an actionplan.

5. Intervention The action plan, or organizational development intervention, iscarried out.

6. Evaluation The change agent helps decision makers assess the effectivenessof the intervention.

7. Adoption Organizational members accept ownership and responsibility for thechange, which is then carried out through the entire organization.

8. Separation The change agent leaves the organization after first ensuring thatthe change intervention will continue to work.

General Steps for OD Interventions

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Types of OD Interventions

Large System Sociotechnical Systems Survey Feedback

Small Group Team Building Unit Goal Setting

Person-Focused Counseling/Coaching Training

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What Really Works?

Change the Work Setting or Change the People?

Changing the Work Setting

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Changing the People

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 55%

Probability of success 57%

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What Really Works? (Cont’d.)

Changing Individual Behavior & Organizational Performance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 76%

Change the Work Setting or Change the People? Do Both!

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Managing Conversations to Initiate Change

PotentialBreakdown:

Omitting Closure

Potential Breakdown:

Unclear Conditions of Satisfaction

InitiateConversation:

Starting aChange

Conversationsfor Understanding:

GeneratingUnderstanding

PotentialBreakdown:

Nothing Happens

Conversations forPerformance:Getting into

Action

PotentialBreakdown:

Agreement Isn’t Action

Lack of Rigor

Conversations forClosure:

Completing theChange

Adapted fromExhibit 10.13

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What Not to Do When Leading ChangeUnfreezingUnfreezing

• Not establishing a great enough sense of urgency

• Not creating a powerful enough guiding coalition

ChangeChange

•Lacking a vision•Under-communicating the vision by a factor of ten

•Not removing obstacles to the new vision

•Not systematically planning for & creating short-term wins

RefreezingRefreezing

•Declaring victory too soon

•Not anchoring the changes in the corporation’s culture

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What Really Happened? Product Innovation at Kimberly-Clark Kimberly-Clark creates a stream of its own

innovative ideas year after year Developed Cottonelle Fresh Rollwipes,

“premoistened” toilet paper disperses or breaks apart in water protected by 30 patents

Significantly improves technology behind existing personal care products