MAN 1 Chapter 7 (Innovation and Change)
Managing Innovation
- During discontinuous change, companies must find a way to anticipate and survive technological changes. - Companies must also manage incremental change and innovation. - discontinuous change requires different management style than incremental change
Innovation Method: Experiential Approach
- discontinuous change management style - assumes a highly uncertain environment and uses intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding - periods of discontinuous change - highly uncertain environments goal = establishment of a dominant design 5 aspects: 1) design iterations a cycle of repetition in which a company tests a prototype of a new product or service, improves on that design, and then builds and tests the improved prototype product prototype: a full-scale, working model that is being tested for design, function, and reliability 2) testing the systematic comparison of different product designs or design iterations 3) milestones formal project review points used to assess progress and performance 4) multifunctional teams work teams composed of people from different departments 5) powerful leaders provide the vision, discipline, and motivation to keep the innovation process focused, on time, and on target
Innovation Method: Compression Approach
- incremental change management style - assumes that incremental innovation can be planned using a series of steps and that compressing those steps can speed innovation - assumes innovation is predictable - improves existing dominant design (rather than new) - more certain environments goal = lower costs, incremental improvements 1) generational change change based on incremental improvements to a dominant design such that the improved technology is fully backward compatible with the older technology 2) supplier involvement - reduces the amount of work that internal development teams must do - provide an alternative source of ideas and expertise that can lead to better designs 3) shorten the time of individual steps 4) overlapping steps - shorten the development process by reducing delays or waiting time between steps 5) multifunctional teams
"White-Water Rapids" Simile
- stability and predictability don't exist - face constant change, bordering on chaos - requires flexibility, quick response to changing conditions, comfort with ambiguity
Sources of Individual Resistance to Change
-habit -security -economic factors -fear of unknown -selective information processing
companies use technology cycles and innovation streams for which of the following purposes?
-to create a competitive advantage -to respond to environmental change -to protect themselves from strategic threats
Nova Scotia Fisheries
1 fleet fished the unknown zones instead of going to the zone with the highest catch rate (according to computer model) - wandering zone had higher value per fish than "high-catch" zone - wandering zone had high error tolerance lessons: - learning requires exploration - efficient exploitation of existing knowledge insufficient - learning process that allows knowledge to be created and updated drives success - social relationships key to transmission of ideas/methods - no optimal strategy - goal is to develop evolving spectrum of compatible strategies CANNOT MANAGE USING HISTORICAL INFO SO YOU MUST LEARN + ADAPT TO NEW INFO
Managing Change (tools/techniques)
1) results-driven change change created quickly by focusing on the measurement and improvement of results - drive change through data 2) general electric fastworks quickly experimenting with new ideas to solve customer problems and learn from repeated tests and improvements 3) organizational development a philosophy and collection of planned change interventions designed to improve an organization's long-term health and performance - long range approach - begins with recognition of a problem - then designates a change agent (the person formally in charge of guiding a change effort) - internal training
technology cycle*
a cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, substantially better technology
organizational decline*
a large decrease in organizational performance that occurs when companies don't anticipate, recognize, neutralize, or adapt to the internal or external pressures that threaten their survival 5 stages: 1) blinded stage key managers fail to recognize the internal or external changes that will harm their organizations - actively ignores need for change - people aren't doing anything (thinks it won't affect them) 2) inaction stage problems become more visible, management may recognize the need to change but still take no action - recognizes change, a lot of talk, but no one does anything 3) faulty action stage faced with rising costs and decreasing profits and market share - waited to long and now they're losing market share and CEO is pressing for layoffs (smart people choose to leave, leaving the dumb ones) - actions they take are the wrong ones. Often this stage includes downsizings and layoffs to reduce costs rather than making the fundamental changes the company needs to respond to the changing environment 4) crisis stage bankruptcy or dissolution (breaking up the company and selling its parts) is likely to occur unless the company completely reorganizes the way it does business 5) dissolution stage dissolved through bankruptcy proceedings or by selling assets to pay suppliers, banks, and creditors -> decline is reversible at the first 4 stages -> not all companies in decline reach the final stage
S-curve pattern of innovation*
a pattern of technological innovation characterized by slow initial progress, then rapid progress, and then slow progress again as a technology matures and reaches its limits
Managing Change
change is a function of the forces that promote change and the opposing forces that slow or resist change change forces: produce differences in the form, quality, or condition of an organization over time resistance forces: support the existing conditions in organizations resistance to change: opposition to change resulting from self-interest, misunderstanding and distrust, and a general intolerance for change
"Calm Waters" Simile
change is a response to break in status quo -unfreezing status quo (increase driving forces or decrease restraining forces) -change to a new state -refreezing to make change permanent -> needed in occasional situations ->future = predictable ->punctuates long periods of calm/stability
Mistakes Managers Make
during unfreezing phase: - lack of sense of urgency - pro-change coalition not powerful enough during change phase: - lack of vision - under-communicating the vision - lack of short-term wins during refreezing phase: - victory declared too soon - changes not anchored in corporate culture
Managing Sources of Innovation
innovation begins with creativity (production of novel and useful ideas) creative work environments: workplace cultures in which workers perceive that new ideas are welcomed, valued, and encouraged requires 3 kinds of encouragement: 1. organizational encouragement: management encourages risk taking and new ideas, supports and fairly evaluates new ideas, rewards and recognizes creativity, and encourages the sharing of new ideas throughout different parts of the company 2. supervisory encouragement: supervisors provide CLEAR GOALS, encourage open interaction with subordinates, and actively support development teams' work and ideas 3. work group encouragement: group members have diverse experience, education, and backgrounds, and the group fosters mutual openness to ideas; positive, constructive challenge to ideas; and shared commitment to ideas -> freedom: having autonomy over one's day-to-day work and a sense of ownership and control over one's ideas -> challenging work -> lack of organizational impediments flow: a psychological state of effortlessness, in which you become completely absorbed in what you're doing and time seems to pass quickly - removing distractions will help
innovation streams*
patterns of innovation over time that can create sustainable competitive advantage 1) technical discontinuity a scientific advance or unique combination of existing technologies creates a significant breakthrough in performance or function 2) discontinuous change technological substitution - purchase of new technologies to replace older ones & design competition - competition between old and new technologies to establish a new technological standard or dominant design 3) dominant design a new technological design or process that becomes the accepted market standard before dominant design, BIG changes after dominant design, SMALL changes technological lockout: inability of a company to competitively sell its products because it relies on old technology or a non dominant design - signals a shift from design experimentation and competition to incremental change 4) incremental change companies innovate by lowering costs and improving the functioning and performance of the dominant design
Complex Adaptive Systems Theory (CAS)
study of complexity = how order emerges organically (bottom up) from interactions among actors - theory that comes from biology ex: ant piles, bees if we have many agents, interactions, decentralization, and simple rules then we will get emergent properties and order emerges in a white-water world
Organizational innovation*
the successful implementation of creative ideas in organizations
Managing Resistance to Change
unfreezing: getting the people affected by change to believe that change is needed change intervention: workers and managers change their behaviors and work practices refreezing: supporting and reinforcing new changes so that they stick - resistance to change is natural and inevitable methods: - educate employees - communicate change-related info - have those affected by the change participate in planning and implementing the change process - let employees discuss and agree on who will do what after change - may need to use coercion with late adopters