ch08 innovation and change

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Realized by: BELFELLAH Younes

1

Innovation and Change



Forces Driving the Need for Major

Organizational Change

2

More Large-Scale Changes in OrganizationsStructure change Mergers, joint ventures, consortium

Strategic change Horizontal organizing, teams, networks

Culture change New technologies, products

Knowledge management, enterprise New business processes

resource planning E-business

Quality programs Learning organizations

More ThreatsMore domestic competition

Increased Speed

International competition

Global Changes, Competition and Markets Technological Change

International Economic Integration

Maturation of Markets in Developed Countries

Fall of Communist and Socialist Regimes

More OpportunitiesBigger markets

Fewer barriers

More international markets

Source: Based on John P. Kotter, The New Rules: How to Succeed in Today¶s Post-Corporate World

(New York: The Free Press, 1995).



Degrees of Change

Evolutionary

± Incremental improvement

± Based on existing systems

± Examples: Process Improvement, TQM

Revolutionary

± Breakthrough, radical innovation

±Can be result of

Evolution or µpuncturedequilibrium¶ or natural selection



Incremental vs. Radical Change

4

Continuous

progressionParadigm-breaking

burst

Through normal

structure and

management

processes

Transform entire

organization

Affect

organizational

part

Create new structure

and management

Technology

improvements

Breakthrough

technology

Product

improvement

New products,

new markets

Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R.

Brooks, ³Organizations in Disequilibrium: Environmental Jolts and

Industry Revolutions,´ in George Huber and William H. Glick, eds.,

Organizational Change and Redesign (New York: Oxford University

Press, 1992), 66-111; and Harry S. Dent, Jr., ³Growth through New

Product Development,´ Small Business Reports (November 1990): 30-40.

Incremental Change Radical Change



Four Types of Change

Technology

± Changes in production process

Products and Ser vices

± Changes in outputs

Strategy and Structure

± Administrative changes

Culture ± Changes in values, attitudes, behaviors

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Sequence of Elements for

Successful Change

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Environment

Suppliers

Professional

Associations

Consultants

Research

Customers

Competition

LegislationRegulation

Labor force

1. Ideas

2. Needs

3. Adoption 4.Implementation

5. Resources

Internal

Creativity and

Inventions

Perceived

Problems or

Opportunities

Organization



Division of Labor Between Departments to

Achieve Changes in Technology

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General

Manager

Creative

Department

(Organic Structure)

Using

Department

(Mechanistic Structure)



Probability of New Product

Success PROBABILITYPROBABILITY

yTechnical completionx

(technical objectives achieved) 57%yCommercialization

x (full-scale marketing) 31%

yMarket Successx (earns economic returns) 12%

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Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee,

S. Wagner, and M. Hamburger, Research and Innovation in

Modern Corporations (New York: Norton, 1971), 57.



Horizontal Coordination Model for New

Product Innovations

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Environment

Technical

Developments

Environment

Customer

Needs

Organization

General

Manager

R&D

Department

Marketing

Department

Production

Department

Coord Coord Coord



Dual-Core Approach to

Organization Change

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Type of Innovation Desired

Administrative

Structure

Technology

Direction of Change: Top-Down Bottom-Up

Examples of Change: Strategy Production

Downsizing techniques

Structure Workflow

Best Organizational

Design for Change: Mechanistic Organic

Administrative

Core

Technical

Core



Organization Development /

ChangeOrganization Development/ Change is definedas:

y the system-wide application of

y behavioral science knowledgey to the planned development and change

y of organizational strategies, structures, andprocesses

y with the aim of improving organizational, team, andindividual effectiveness.

( after: Cummings & Worley, 1997)



Culture Change

Reengineering and Horizontal Organization

Diversity

The Learning Organization

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OD Culture Change Interventions

Large Group Inter vention

Team Building

Interdepartmental Activities

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Lewin¶s Change Model

Unfreezing

Mov

ingRefreezing



Stages of Commitment to Change

Preparation

± Initial contact

± Awareness

Acceptance ± Understanding

± Decision to implement

Commitment

± Installation ± Institutionalization

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Change Processesy Unfreezing

y Create motivation/readiness for change

x Demonstrate need for change

x Communicate desired future

x Engender commitment

y Change/Move

x Cognitive restructuringx Identification with new vision of the organization

x Benchmark, invent, innovate

y Refreeze

x Link new behavior to self-concept, reward

x

Create social acceptance of new behav

ior



Shewhart¶s PDSA

Plan

DoAct

Study/Check



PROVENA

PProblem or need for process changeidentified

RRecognize excellence/best practice

OOrganize a team

VValidate knowledge

EEvaluate causes

NNegotiate improvements AAct



Barriers to Change

Excessive focus on costs

Failure to perceive benefits

Lack of coordination and cooperation Uncertainty avoidance

Fear of loss

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Techniques for Change 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.

Develop plans to overcome resistance.

Create change teams.

Foster idea champions.

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Innovation Measures

MeasureMeasure A A

Your OrganizationYour Organization

BBOther OrganizationOther Organization

CCYour IdealYour Ideal

1. 1. Creativity encouragedCreativity encouraged

2.

2. Diverse problemDiverse problem--solvingsolving

3. 3. Time for creative ideasTime for creative ideas

4. 4. Rewards for innovationRewards for innovation

5. 5. Flexible, open to changeFlexible, open to change

6. 6. Follow orders from topFollow orders from top

7.7. Think and act like othersThink and act like others

8.8. Concern for status quoConcern for status quo

9. 9. Don¶t rock the boatDon¶t rock the boat

10. 10. New ideas not fundedNew ideas not funded

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Realized by: BELFELLAH Younes

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Decision Making Processes



Today¶s Business Environment

New strategies

Reengineering

Restructuring Mergers/Acquisitions

Downsizing

New product/market development . . . Etc.

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Decisions Made Inside the Organization

Complex, emotionally charged issues

More rapid decisions

Less certain environment Less clarity about means/outcomes

Requires more cooperation

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A New Decision-Making Process

Required because

± no one person has enough info to make all major decisions

± No one person has enough time and credibility toconvince many

Relies less on hard data

Guided by powerful coalition

Permits trial and error approach

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12 - 26

Organizational Decision making

Organizational decision making:³The process of responding to a problem by

searching for and selecting a solution or course of

action that will create value for organizational

stakeholders.´

There are basically two kinds of decisions that

managers are called upon to make:

Pro g rammed and Non-Programmed



Steps in the Rational Approach to Decision-

Making

27

Monitor

Decision

Environment

Implement

Chosen

Alternative

DefineDecision

Problem

Specify

Decision

Objectives

DiagnoseProblem

Develop

AlternativeSolutions

Evaluate

Alternatives

ChooseBest

Alternative1

2

3

45

6

7

8



12 - 28

The assumption that

decision makers have

all the information they need

The assumption that decision makers

are smart

The assumption that decision makers agree

about what needs to be done

Criticism of the rational model assumptions



Management 8/e - Chapter 7 29

Programmed decisions

±Apply solutions that are readily a

vailable

from past experiences to solve structured

problems.

±Structured problems are ones that arefamiliar, straightforward, and clear with

respect to information needs.

±Best applied to routine problems that can beanticipated.



Management 8/e - Chapter 7 30

Nonprogrammed decisions

±Develop novel solutions to meet thedemands of unique situation that present

unstructured problems.

±Unstructured problems are ones that are full

of ambiguities and information deficiencies.

±Commonly faced by higher-level

management.



Constraints and Trade-offs

During Non-programmed Decision-Making

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Trade-off

Trade-off

Trade-off

Personal Constraints:Desire for prestige, success;

personal decision style; and

the need to satisfy emotional

needs, cope with pressure,

maintain self-concept

Organizational Constraints:Need for agreement, shared

perspective, cooperation,

support, corporate culture and

structure, ethical values

Bounded Rationality:Limited time, information,

resources to deal with complex,

multidimensional issues

Decision/Choice:Search for

a high-quality

decision

alternativeTrade-off

Trade-off

Sources: Adapted from Ir ving L. Janis, Crucial Decisions

(New York: Free Press, 1989); and A. L. George, Presidential

Decision Making in Foreign Policy: The Effective Use of

Information and Advice (Boulder, Colo.: Westview Press, 1980).



Choice Processes in the Carnegie

Model

32

Hold joint discussion

and interpret goals

and problems

Share opinions

Establish problem

priorities

Obtain social support

for problem, solution

Adopt the first

alternative

that is acceptable

to the coalition

Conduct a simple,

local search

Use established

procedures if appropriate

Create a solution

if needed

Managers have

diverse goals,

opinions, values,

experience

Information is

limited

Managers have

many constraints

Uncertainty Coalition Formation Search

Satisficing

Conflict



12 - 33

Differences

Rational ModelInformation is available.Decision making is costless

Decision making is ³value free.´

All possible alternatives are generated.

Solution is chosen by unanimous agreement.

Solution chosen is best for the organization.

Carnegie ModelLimited information is available.

Decision making is costly.

Decision making is affected by the preferences and values of decision makers

A limited range of alternatives is generated.

Solutions are chosen by compromise, bargaining, and accommodation between

organizational coalitions.Solution chosen is satisfactory for the

organization.



12 - 34

Incremental Decision Process Model

Incrementalist Model ² managers select

alternative courses of action that are only

slightly, or incrementally, different fromthose used in the past.

Often referred to as the

³science of muddling through.´



The Incremental Decision Process Model

o Identification Phaseo Recognition

o Diagnosis

o Development Phaseo Search

o Screen

o Design

o Selection Phaseo Judgment (evaluation ± choice)

o Analysis (evaluation)

o Bargaining (evaluation ± choice)

o Authorization

o Dynamic Factors

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Contingency Framework for Using

Decision Models

36

Certain UncertainProblem

Consensus

Individual:

Rational Approach

Computation

Organization:

Management Science

Individual:

Bargaining, Coalition

Formation

Organization:

Carnegie Model

Individual:

Judgment

Trial-and-error

Organization:

Incremental Decision

Process Model

Individual:

Bargaining and Judgment

Inspiration and Imitation

Learning Organization:

Carnegie and Incremental

Decision Process Models,

Evolving to Garbage Can

Solution

Knowledge

Certain

Uncertain

4

21

3



12 - 37

The Nature of Organizational Learning

Organizational learning:

The process of improving organization member¶scapacity to understand and manage the

organization and its environment so that

managers can make decisions that continuously

raise organizational effectiveness.



12 - 38

The Nature of Organizational Learning

Learning organization :An organization that purposefully designs and

constructs its structure, culture, and strategy to

enhance and maximize the potential for organizational learning to take place

Managers need to encourage learning at

four levels: individual, group,

organizational, and inter-organizational



New Issues

Not Only:How do we satisfy group member needs?ButHow does the team meet organization needs?

Not Only:

How can team members work together well?ButHow do we work with other parts of the organization?

Not Only:How do we understand group dynamicsButHow do we manage team-environment interactions



Learning Organization Decision Process When Problem

Identification and Problem Solution Are Uncertain

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When problem identification is

uncertain, Carnegie model applies

Political and social process is

needed

Build coalition, seek agreement,

and resolve conflict about goals

and problem priorities

When problem solution is uncertain,

Incremental process model applies

Incremental, trial-and-error

process is needed

Solve big problems in little steps

Recycle and try again when

blocked

PROBLEM IDENTIFICATION PROBLEM SOLUTION



Decision Styles

Your Your

decisionsdecisions Approach used Approach used

Advantages and Advantages and

disadvantagesdisadvantages

Your Your

recommendedrecommended

decision styledecision style

1.1.

2.2.

Decisions byDecisions by

othersothers

1.1.

2.2.

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