CHAPTER: SIX

INNOVATION, CHANGE AND

ORGANIZATIONAL THEORY
Contents of chapter

 The strategic role of change

 Elements of successful change

 New products and services

 Technological change

 Strategy and structure change

 Cultural change

 Strategies for implementing change.

 Introduction
Today’s organizations must keep themselves
open to continuous innovation, not only to
prosper but merely to survive in a world of
disruptive change and increasingly stiff
competition
A number of environmental forces drive this need for
major organizational change.
 Powerful forces associated with advancing technology,
international economic integration, the maturing of domestic
markets, and the shift to capitalism in formerly communist
regions have brought about a globalized economy that affects
every business, from the largest to the smallest, creating more
threats as well as more opportunities.
 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 and
horizontal structures that enhance
communication and collaboration, streamlining
supply and distribution channels, and
overcoming barriers of time and place through
IT and e-business.
In addition, today’s organizations face a need
for major strategic and cultural change and for
rapid and continuous innovations in technology,
services, products, and processes.
Strategic Types of Change
Managers can focus on four types of change
within organizations to achieve strategic
advantage.
These four types of change are , technology,
products and services, strategy and structure,
and culture.
Technology changes:-
 are changes in an organization’s production
process, including its knowledge and skill base,
that enable distinctive competence.
 Are designed to make production more efficient
or to produce greater volume.
Changes in technology involve the techniques
for making products or services.
 They include work methods, equipment, and
workflow.
ELEMENTS FOR SUCCESSFUL CHANGE
For a change to be successfully implemented,
managers must make sure each element occurs in
the organization.
If one of the elements is missing, the change
process will fail
 Ideas. No company can remain competitive without new ideas; change is
the outward expression of those ideas. An idea is a new way of doing
things.
 Need. Ideas are generally not seriously considered unless there is a
perceived need for change. A perceived need for change occurs when
managers see a gap between actual performance and desired
performance in the organization
 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. Change does not happen on its own; it requires time and
New Product and service
New products and services are a special
case of innovation because they are used
by customers outside the organization.
Since new products are designed for sale
in the environment, uncertainty about the
suitability and success of an innovation is
very high.
Organizations take the risk because
product innovation is one of the most
important ways companies adapt to
changes in markets, technologies, and
competition.
Reasons for New Product Success :-
 Successful innovating companies had a
much better understanding of customer
needs and paid much more attention to
marketing.
 Successful innovating companies made
more effective use of outside technology
and outside advice, even though they did
more work in-house.
 Top management support in the
successful innovating companies was from
people who were more senior and had
greater authority.
Strategy and structure changes
 All organizations need to make changes in their strategies,
structures, management processes, and administrative
procedures from time to time.
 In the past, when the environment was relatively stable,
most organizations focused on small, incremental changes
to solve immediate problems or take advantage of new
opportunities.
 However, over the past decade, companies throughout the
world have faced the need to make radical changes in
strategy, structure, and management processes to adapt
to new competitive demands.
 Many organizations are cutting out layers of management
and decentralizing decision making. There is a strong shift
toward more horizontal structures, with teams of front-
line workers empowered to make decisions and solve
problems on their own.
The Dual-Core Approach:-
 The dual-core approach to organizational
change compares management and technical
changes.
Management changes pertain to the design
and structure of the organization itself,
including restructuring, downsizing, teams,
control systems, information systems, and
departmental grouping.
The technical core is concerned with the
transformation of raw materials into
organizational products and services and
involves the environmental sectors of
customers and technology.
CULTURE CHANGE
 Organizations are made up of people and their
relationships with one another.
 Changes in strategy, structure, technologies, and
products do not happen on their own, and changes in
any of these areas involve changes in people as well.
 Employees must learn how to use new technologies,
or market new products, or work effectively in a
team-based structure.
 Sometimes achieving a new way of thinking requires
a focused change in the underlying corporate cultural
values and norms.
 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
 For example, reengineering and the shift to horizontal
forms of organizing, require greater focus on:-
 employee empowerment, collaboration, information
sharing, and meeting customer needs, which means
managers and employees need a new mind-set. change
is the diversity of today’s workforce.
 Diversity of work force :- today’s organizations are
implementing new recruiting, mentoring, and
promotion methods, diversity training programs,
tough policies regarding sexual harassment and racial
discrimination, and new benefits programs that
respond to a more diverse workforce
STRATEGIES FOR IMPLEMENTING CHANGE
 Managers and employees can think of inventive
ways to improve the organization’s technology,
creative ideas for new products and services, fresh
approaches to strategies and structures, or ideas
for fostering adaptive cultural values, but until the
ideas are put into action, they are worthless to the
organization.
 Implementation is the most crucial part of the
change process, but it is also the most difficult.
 Change is frequently disruptive and uncomfortable
for managers as well as employees.
 Change is complex, dynamic, and messy, and
implementation requires strong and persistent
leadership.
Leaders must develop the personal
qualities, skills, and methods needed to
help their companies remain competitive.
Indeed, some management experts argue
that to survive the upheaval of the early
twenty-first century, managers must turn
their organizations into change leaders by
using the present to actually create the
future breaking industry rules, creating
new market space, and routinely
abandoning outmoded products, services,
and processes to free up resources to build
the future.
Barriers to Change
barriers to change exist at the individual and
organizational levels.
 Excessive focus on costs. for example, a
change to increase employee motivation
or customer satisfaction.
 Failure to perceive benefits.
 Lack of coordination and cooperation. in
the case of new technology, the old and
new systems must be compatible.
 Uncertainty avoidance. At the individual
level, many employees fear the
uncertainty associated with change.
 Fear of loss. Managers and employees
may fear the loss of power and status—or
 Techniques for Implementation
A number of techniques can be used to successfully implement change.
 Establish a sense of urgency for change. Once managers identify a
true need for change, they thaw resistance by creating a sense of
urgency in others that the change is really needed.
 Establish a coalition to guide the change. Effective change
managers build a coalition of people throughout the organization
who have enough power and influence to steer the change
process.
 Create a vision and strategy for change. Leaders who have taken
their companies through major successful transformations focus
on formulating and articulating a compelling vision and strategy
that will guide the change process.
 Find an idea that fits the need. involves search procedures—
talking with other managers, assigning a task force to investigate
the problem, sending out a request to suppliers, or asking creative
people within the organization to develop a solution.
 Develop plans to overcome resistance to
change:- Many good ideas are never used
because managers failed to anticipate or
prepare for resistance to change by consumers,
employees, or other managers.
 Create change teams:- A separate department
has the freedom to create a new technology that
fits a genuine need. A task force can be created
to see that implementation is completed.
 Foster idea champions:- One of the most
effective weapons in the battle for change is the
idea champion. The most effective champion is
a volunteer champion who is deeply committed
to a new idea.
 Methods to overcome resistance to
change
Several strategies can be used by
managers to overcome resistance: -
 Alignment with needs and goals of users:-
The best strategy make sure change meets a
real need.
Communication and training. :-
informing users about the need for change and
the consequences of a proposed change,
preventing rumors, misunderstanding, and
resentment and cope with their role in the
change process.
 An environment that affords psychological
safety.
Psychological safety means that people feel a
sense of confidence that they will not be
embarrassed or rejected by others in the
organization
 Participation and involvement:-
Participation gives those involved a sense of
control over the change activity.
 Forcing and coercion.
As a last resort, managers may overcome
resistance by threatening employees with the loss
of jobs or promotions or by firing or transferring
them.
Thank you