Chapter 12

Ideas

Change is an outward expression of ideas. No company can remain competitive without new ideas.19 An idea is a new way of doing things. It may be a new product or service, a new management concept, or a new procedure for working together in the organization.

Corporate Intrapreneurship.

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

Resources

Human energy and activity are required to bring about change. Change does not happen on its own; it requires time and resources, for both creating and implementing a new idea.

Need

Ideas are generally not seriously considered unless there is a perceived problem or crisis that provides a need for change. A perceived need for change occurs when managers see a gap between actual performance and desired performance in the organization.

Implementation

Implementation occurs when organization members actually use a new idea, technique, or behavior. Materials and equipment may have to be acquired, and workers may have to be trained to use the new idea.

creative departments

Staff departments such as research and development, engineering, design, and systems analysis create changes for adoption in other departments. Departments that initiate change are organically structured to facilitate the generation of new ideas and techniques. Departments that use those innovations tend to have a mechanistic structure more suitable for efficient production.

idea champions.

These go by a variety of names, including advocate, intrapreneur, or change agent. Idea champions provide the time and energy to make things happen. They fight to overcome natural resistance to change and to convince others of the merit of a new idea.5

Boundary Spanning.

This component means each department involved with new products has excellent linkage with relevant sectors in the external environment. R&D personnel are linked to professional associations and to colleagues in other R&D departments.

Horizontal Coordination.

This component means that technical, marketing, and production people share ideas and information. Research people inform marketing of new technical developments to learn whether the developments are applicable to customers. Marketing people provide customer complaints and information to R&D to use in the design of new products.

continuous change

This type of change occurs frequently, with fewer and shorter periods of stability. Managers embrace change as an ongoing organizational process, using research and development (R&D) to build a flow of new product and service innovations to meet shifting needs.

Episodic change

This type of change occurs occasionally, with periods of relative stability, and managers can respond with technical, product, or structural innovations as needed.

Organizational innovation

in contrast, is the adoption of an idea or behavior that is new to the organization's industry, market, or general environment.

skunkworks

is a separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business. The original skunkworks was created by Lockheed Martin more than 50 years ago and is still in operation.

management core

is above the technical core in the hierarchy. The responsibility of the management core includes the structure, control, and coordination of the organization itself and concerns the environmental sectors of government, financial resources, economic conditions, human resources, and competitors.

technical core

is concerned with the transformation of raw materials into organizational products and services and involves the environmental sectors of customers and technology.

organizational change

is considered the adoption of a new idea or behavior by an organization.

Creativity

is the generation of novel ideas that may meet perceived needs or respond to opportunities.

bootlegging

many highly innovative companies allow employees to develop new technologies without company approval.

Switching structures

means an organization creates an organic structure when such a structure is needed for the initiation of new ideas.

open innovation

means extending the search for and commercialization of new products beyond the boundaries of the organization and even beyond the boundaries of the industry.79 For example, Procter & Gamble wanted to intro-duce a new version of its successful snack food Pringles, with trivia questions, facts, and jokes printed on the chips.

Strategy and structure innovations

pertain to the administrative domain in an organization. The administrative domain involves the supervision and management of the organization. These innovations include changes in organization structure, strategic management, policies, reward systems, labor relations, coordination devices, management information and control systems, and accounting and budgeting systems. Strategy, structure, and system changes are usually top-down—that is, mandated by top management—whereas product and technology changes often come from the bottom up.

Product and service innovations

pertain to the product or service outputs of an organization. New products include small adaptations of existing products or entirely new product lines. New products and services are normally designed to increase the market share or to develop new markets, customers, or clients.

Team building

promotes the idea that people who work together can work as a team. A work team can be brought together to discuss conflicts, goals, the decision-making process, communication, creativity, and leadership. The team can then plan to overcome problems and improve results.

Culture innovations

refer to changes in the values, attitudes, expectations, beliefs, abilities, and behavior of employees. Culture innovations pertain to changes in how employees think; these are changes in mindset rather than technology, structure, or products.

disruptive change and innovation

refers to innovations in products or services that typically start small and end up completely replacing an existing product or service technology for producers and consumers. Companies that initiate a disruptive innovation typically win big; companies affected by a disruptive innovation may be put out of business. Established companies typically ignore the initial small innovation because they want to hang onto their established business models.

Management innovation

refers to the adoption and implementation of a management practice, process, structure, strategy, or technique that is new to the organization and is intended to further organizational goals.

Large Group Intervention.

sometimes referred to as "whole system in the room," brings together participants from all parts of the organization—often including key stakeholders from outside the organization as well—in an off-site setting to discuss problems or opportunities and plan for change. A large group intervention might involve 50 to 500 people and last for several days.

The four types of innovation

technology, product, structure, people

ambidextrous approach

to incorporate structures and management processes that are appropriate to both the creation and the implementation of innovation. Exploration means encouraging creativity and developing new ideas, whereas exploitation means implementing those ideas to produce routine products.

techniques to successfully implement change

1. 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. Organizational crises can help unfreeze employees and make them willing to invest the time and energy needed to adopt new tech-niques or procedures. When there is no obvious crisis, good managers find cre-ative ways to make others aware of the need for change. 2. 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. For implementation to be successful, there must be a shared commitment to the need and possibilities for change. Top management support is crucial for any major change project, and lack of top management support is one of the most frequent causes of implementation failure.128 In addition, the coalition should involve lower-level supervisors and middle managers from across the organization. For smaller changes, the support of influential managers in the affected departments is important. 3. Create a vision and strategy for change. Leaders who have taken their companies through major successful transformations often have one thing in common: they focus on formulating and articulating a compelling vision and strategy that will guide the change process. Even for a small change, a vision of how the future can be better and strategies to get there are important motivations for change. 4. Find an idea that fits the need. Finding the right idea often involves search pro-cedures—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. This is a good opportunity to encourage employee participation because employees need the freedom to think about and explore new options.129 5. Create change teams. This chapter has emphasized the need for resources and energy to make change happen. Separate creative departments, new-venture groups, and ad hoc teams or task forces are ways to focus energy on both cre-ation and implementation. 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. The task force can be responsible for communica-tion, involvement of users, training, and other activities needed for change. 6. 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 cham-pion who is deeply committed to a new idea. The idea champion sees that all technical activities are correct and complete. An additional champion, such as a manager sponsor, may also be needed to persuade people about implement

Techniques for Overcoming Resistance

1.Top management support. The visible support of top management makes people aware of the importance of the change. For instance, one of the pri-mary correlates of the success of new business ventures is the strong top managers, which gives the project legitimacy.130 Top management support is especially important when a change involves multiple departments or when resources are being reallocated among departments. Without top management support, changes can get bogged down in squabbling among departments or contradictory orders from lower-level mana 2. Participation and involvement. Early and extensive participation in a change should be part of implementation. Participation gives those involved a sense of control over the change activity. They understand it better, and they become committed to its successful implementation.131 At Domino's, some franchise owners resisted the switch to a new point-of-sale (POS) system that headquarters managers mandated as part of a drive to improve accuracy, boost efficiency, and increase profits. The franchisees hadn't been involved in the process of designing and configuring the new system, and many of them wanted to stay with the sys-tem they were accustomed to. "It was hard for a lot of us to embrace," said Tony Osani, who owns 16 Domino's restaurants in the Huntsville, Alabama, area.132 The team-building and large group intervention activities described earlier can be effective ways to involve employees in a change process. 3. Alignment with needs and goals of users. The best strategy for overcoming resistance is to make sure change meets a real need. Employees in R&D often come up with great ideas that solve nonexistent problems. This happens because initiators fail to consult with the intended users. Resistance can be frustrating for managers, but moderate resistance to change is good for an organization. Resistance provides a barrier to frivolous changes and to change for the sake of change. The process of overcoming resistance to change normally requires that the change be good for its users. When David Zugheri wanted to switch to a primarily paperless system at First Houston Mortgage, he emphasized to employees that storing customer records electronically meant they could now work from home when they needed to care for a sick child, or take a vaca-tion and still keep track of critical accounts. "I could literally see their attitudes change through their body language," Zugheri says.133 4. Communication and training. Communication means informing users about the need for change and the consequences of a proposed change, preventing rumors, misunderstanding, and resentment. In one study of change efforts, the most commonly cited reason for failure was that employees learned of the change from outsiders. Top managers concentrated on communicating with the public and shareholders but failed to communicate with the people who would be most intimately involved with and most affected by the change—their own employ-ees.134 Open communication often gives managers an opportunity to explain what steps will be taken to ensure that the change will have no adverse conse-quences for employees. Training is also needed to help people understand and cope with their role in the change process. 5. 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. People need to feel secure and capable of making the changes that are asked of them.135 Change requires that employees be willing to take risks and do things differently, but many people are fearful of trying something new if they think they might be embarrassed by mistakes or failure. Managers support psychological safety by creating a climate of trust and mutual respect in the organization. "Not being afraid someone is laughing at you helps you take genuine risks," says Andy Law, one of the founders of St. Luke's, an advertising agency based in London.13

Interdepartmental Activities

Representatives from different departments are brought together in a neutral location to expose problems or conflicts, diagnose the causes of joint problems, and plan improvements in communication and coordination.

Decision to adopt

The decision to adopt occurs when managers or other decision makers choose to go ahead with a proposed idea. Key managers and employees need to be in agreement to support the change.

Specialization.

The key departments in new product development are R&D, marketing, and production. The specialization component means that the personnel in all three of these departments are highly competent at their own tasks. The three departments are differentiated from each other and have skills, goals, and attitudes appropriate for their specialized functions.

crowdsourcing

The most straightforward way to enlist the help of a crowd is with a contest.86 Elastec/American Marine, based in Carmi, Illinois, won a $1 million prize for a new oil recovery system can recover oil from the ocean's surface at a rate of 4,600 gallons a minute, more than four times the industry standard.

idea incubator

an increasingly popular way to facilitate the development of new ideas within the organization. An idea incubator provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics.

Venture teams

are a technique used to give free rein to creativity within organizations. Venture teams are often given a separate location and facilities so they are not constrained by organizational procedures. A venture team is like a small company within a large company.

Technology innovations

are changes in an organization's production process, including its knowledge and skill base, that enable distinctive competence. These changes are designed to make production more efficient or to produce greater volume. Innovations in technology involve the techniques for making products or services. They include work methods, equipment, and workflow.

dual-core approach

to organizational change compares management and technical innovation. The dual-core approach to organizational change identifies the unique processes associated with management change.98 Organizations—schools, hospitals, city governments, welfare agencies, government bureaucracies, and many business firms—can be conceptualized as having two cores: a technical core and a management core. Each core has its own employees, tasks, and environmental domain. Innovation can originate in either core. The point of the dual-core approach is that many organizations—especially non-profit and government organizations—must adopt frequent management changes and need to be structured differently from organizations that rely on frequent technical and product changes for competitive advantage.

idea generation and idea conversion

which correspond to exploration and exploitation. Idea generation refers to coming up with new ideas for products or services; idea conversion means the efforts to convert those ideas to product development processes.

organization development

which focuses on the human and social aspects of the organization as a way to improve the organization's ability to adapt and solve problems. 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.

new-venture fund

which provides financial resources for employees to develop new ideas, products, or businesses.

change process

within organizations tends to be identical, whether a change is early or late with respect to other organizations in the environment. Innovations typically are assimilated into an organization through a series of steps or elements. For a change to be successfully implemented, man-agers must make sure each element occurs in the organization. If one of the elements is missing, the change process will fail.