MGMT Chapter 7

Launch:

Organization introduces new products or services to the marketplace -important question: "Will customers want to purchase innovative product and service?"

Application:

Organization uses developed idea in design, manufacturing, or delivery of new products, services, or processes. -The innovation emerges from the lab and is transformed into tangible goods and services. Business incubators and similar concepts are often used to facilitate innovation application.

Changing in Organizational structure and design:

Organizational change might be focused on any of the basic components or organization structure or on the organization's overall design. Thus, the organization might change the way it designs its jobs or its bases of departmentalization. Likewise, it might change reporting relationships or the distribution of authority. Ex. the trend toward flatter organizations. The organization might change its overall design Ex. a growing organization might drop its functional design and adopt a divisional design. The organization might change any part of its human resource management system, such as its selection criteria, its performance appraisal methods, or its compensation package. Ex. changing the schedule so that you could work offsite one day per week

OD techniques:

-Diagnostic activities -Team building -Survey feedback -Third party peacemaking -Process consultation -Life and career planning -Coaching and counseling:

Failure to innovate:

-lack of resources -failure to recognize opportunity -resistance to change

promoting innovation in an organization

-the reward system -organizational culture -Intrapreneurship in Larger Organizations.

General steps in reengineering:

1. developing goals and setting a strategy for reengineering effort 2. Top managers must begin and direct the reengineering effort 3. Create a sense of urgency 4. Start with a clean slate; recreate the organization 5. Optimize top-down and bottom-up perspectives.

Innovation Process:

1. development 2. Application 3. Launch 4. Decline 5. Maturity 6. Growth transforms a product, or service with only modest potential into a product or service with significant potential. Ex. Parker Brothers decided not to market an indoor volleyball game but instead to sell separately the appealing little foam ball design for the game. The firm will never know how well the volleyball game would have sold, but the Nerf ball and numerous related products generated millions.

Assumptions of OD:

1. employees have a desire to grow and develop. 2. Employees have a strong need to be accepted by others within the organization 3. The total organization and the way it is designed will influence the way individuals and groups within the organization behave. Thus, some form of collaboration between managers and their employees is necessary to: (1) take advantage of the skills and abilities of the employees (2) eliminate aspects of the organization that retard employe growth, development, and group acceptance. -Many organizations rely on one or more OD consultants to implement and manage their OD program.

Understanding resistance to change:

Another element in effective management of change is understanding the resistance that often accompanies change. Ex. of resistance to change: when companies issue smartphones to employees, most graciously accept, except for one, who maintains two cellphone numbers.

Organizational change:

Any substantive modification to some part of an organization

Decline:

Demand for an innovation decreases, and substitute innovations are developed and applied. At the maturity stage, an organization does not gain competitive advantage for its innovation, so it encourages scientists to come up with new innovations.

Top managers must begin and direct the reengineering effort

Emphasizing top management's commitment to the reengineering effort. Ex. If a CEO announces that business process change is to occur but does nothing else, the program is unlikely to be successful. But, if the CEO is constantly involved in the process, underscoring its importance and taking the lead, business process change stands a much better chance of success.

Evaluation and follow up

If the change is implemented as planned, the results should then be evaluated. If the change was intended to reduce turnover, managers must check turnover after the change has been in affect for a while.

Force-Field Analysis:

In almost any change situation, forces are acting for and against the change. To facilitate the change, managers start by listing each set of forces and then trying to top the balance so that the forces facilitating the change outweigh those hindering the change. It is important to remove or at least minimize some of the forces acting against the change. Ex. GM is considering a plant closing as part of a change. Three factors are reinforcing the change: GM needs to cut costs, it has excess capacity, and the plant has outmoded production facilities. At the same time, there is resistance from the UAW, concern for workers being put out of their jobs, and feeling that the plant might be needed again in the future. GM might convince UAW by presenting profits and losses. IT could then offer relocation and retraining to displaced workers. It might shut down the plant and put it in "mothballs" so that it can be renovated later. The three major factors hindering the change are thus eliminated or reduced in importance.

Implementation:

Issues to consider: the costs of the change, its effects on other areas of the organization, and the degree of employee participation appropriate for the situation.

The Lewin Model:

Kurt Lewin, a noted organizational theorist, suggested that every change requires three steps. 1. unfreezing: individuals who will be affected by the impending change must be led to recognize why the change is necessary. 2. Implementation: implementing the change itself. 3. Refreezing: reinforcing and supporting the change so that it becomes a part of the system. Ex. Caterpillar dealt with recession by unfreezing and cutting 3000 jobs. Then it worked to improve its damaged relationship with its workers by promising pay hikes and no more cutbacks. -Lacks operational specificity. A more comprehensive model is preferred.

Areas of organizational change:

Most change interventions involve organization structure and design, technology and operations, or people.

Start with a clean slate; recreate the organization

Rather than assuming that the existing organization is a starting point and then trying to modify it, business process change usually starts by asking questions such as "how customers are best served and competitors neutralized." New systems are then created and imposed in place of existing ones.

Changing Technology and Operations:

Tech transforms input into outputs. The adoption of institutionalization of information technology innovations are almost constant in most firms. -work processes -work sequence -integrated software systems

developing goals and setting a strategy for reengineering effort:

The organization must know in advance what new business processes are supposed to accomplish and how those accomplishments will be achieved.

Feelings of Loss:

altering work arrangements in ways that disrupt existing social networks. Social relationships are important, and most people resist any change that might adversely affect those relationships. Other intangibles threatened by change include power, status, security, familiarity, with existing procedures and self-confidence.

Intrapreneur:

develop new businesses in the context of large organizations.

Survey Feedback:

each employee responds to a questionnaire intended to measure perceptions and attitudes(ex. satisfaction and supervision style). Everyone involved, including the supervisor, receives the results of the survey. The aim of this approach is usually to change the behavior of supervisors by showing them how their subordinates view them. After the feedback has been provided, a workshop may be conducted to evaluate the results and suggest constructive changes.

Life and Career Planning:

helps employees formulate their personal goals and evaluate strategies for integrating their goals with the goals of the organization. Ex. specification of training needs and plotting a career map. GE has the reputation for doing an outstanding job in this area.

Changing People, Attitudes and Behaviors:

human resources. Ex. an organization may decide to change the skill level of its workforce. This change might be prompted by changes in tech, or by a general desire to upgrade the quality of the workforce. -Perceptions and expectations are also a common focus of organization change. Workers in an organization might believe that their wages and benefits are not as high as they should be. -Change might also be directed at employee attitudes and values. This is the hardest thing to do.

Team building:

intended to enhance the effectiveness and satisfaction of individuals who work in groups or teams and to promote overall group effectiveness. -taken on increased importance. -An OD consultant might interview team members to see how they feel about the group, then an off site meeting could be held to discuss the issues that surfaced and iron out any problem areas or member concerns.

Product Vs. process innovations:

two most important types of innovations: Product innovations: changes in the physical characteristics or performance of the product/service or the creation of brand new product or service. Process innovations: changes in the way products/services are manufactured, created, or distributed. Ex. the implemtation of robotics. Managerial innovations generally affect the broader context of development, process innovations directly affect manufacturing.

Work Sequence:

may or may not accompany a change in equipment or a change in work processes. Making a change in work sequence means altering the order or sequence of the workstations involved in a particular manufacturing process. Ex. a manufacturer might have two parallel assembly lines producing two similar sets of machine parts. The lines might converge at one central quality-control unit, where inspectors verify tolerances. The manager, however, might decide to change to periodic rather than final inspection. Under this arrangement, one or more inspections are established farther up the line.

Third party peacemaking:

most often used when substantial conflict exists within the organization. can be implemented on the individual, group or organizational level. The OD consultant uses a variety of mediation or negotiation techniques to resolve any problems or conflicts among individuals or groups.

Overcoming resistance to change:

no surefire cures, but there are several techniques that have the potential to overcome resistance.

Participation:

often the most effective technique for overcoming resistance. Employees who participate in planning and implementing a change are better able to understand the reasons for the change. Uncertainty is reduced, self-interests and social relationships are less threatened. Ex. Virginia Pajama Factory: Two groups were allowed to fully participate in planning and implementing the change. This improved productivity and satisfaction. Ex. 3M company recently attributed several million dollars in cost savings to employee participation in several organizational change activities.

Growth:

once an innovation has been successfully launched, it then enters the stage of application growth. It is a period of high economic performance for an org because demand for the product/service is often greater than supply.

Development:

organization evaluates, modifies, and improves on a creative idea.

Creating a sense of urgency:

people in the organization must see the clear and present need for the changes being implemented and appreciate their importance.

Coaching and Counseling:

provide non-evaluative feedback to individuals. The purpose of this is to help people develop a better sense of how often others see them and learn behaviors that will assist others in achieving their work related goals. The focus is not on how the individual is performing today; its on how the person can perform better in the future.

Education and Communication:

Educating employees about the need for and the expected results of an impending change should reduce their resistance. IF open communication is established and maintained during the change process, uncertainty can be minimized. Caterpillar used these methods during many of its cutbacks to reduce resistance. First it educated UAW representatives about the need for and potential value of the planned changes. Then, management told all employees what was happening, when it would happen and how it would affect them individually.

Establishment of goals for change:

Ex. Goals for change include: to increase market share, to enter new markets, to restore employee morale, to settle a strike, and to identify investment opportunities

Select a step that will accomplish intended goals (Selection of appropriate change technique):

Ex. If turnover is caused by low pay, a new reward system may be needed. If the cause is poor supervision, interpersonal skills training may be called for.

Diagnose what brought the need for change (diagnose relevant variables)

Ex. Turnover might be cause by low pay, poor working conditions, poor supervision, or employee dissatisfaction. Though turnover may be the immediate stimulus for change, managers must understand its causes to make the right decision.

Facilitation:

Make only necessary changes and announce them in advance. and allowing time for people to adjust to new ways of doing things can help reduce resistance to change. Ex. a manager at Prudential Regional Offices spent several months systematically planning a change in work procedures and job design. He then became too impatient, coming in over the weekend with a work crew and rearranging the office layout. When employees walked in on Monday, they were hostile, anxious and resentful. The entire plan had to be scrapped.

Threatened self interest:

Many impending changes threaten the self-interests of some managers within the organization. A change might diminish their power or influence within the company, so they fight it. Ex. When Sears tried to launch another segment of stores that would not be located in malls, and would not feature major appliances, managers of the appliance sector objected so strongly that the plan was canceled.

Maturity:

Most competing organizations have access to the idea. Innovation does not provide competitive advantage to any one firm.

Recognition of the need for change:

Reactive change might be triggered by employee complaints, declines in productivity or turnover, court injunctions, sales slumps, or labor strikes. Recognition may simply be manager's awareness that change in a certain area is inevitable. Ex. Managers may be aware of the general frequency of organizational change undertaken by most organizations and recognize that their organization should probably follow the same pattern. The immediate stimulus might be the result of a forecast indicating new market potential, the accumulation of a cash surplus for possible investment, or an opportunity to achieve and capitalize on a major tech breakthrough.

ERP:

a large scale information system for integrating and synchronizing the many activities in the extended enterprise. In most cases, these systems are purchased from external vendors who then tailor their products to the client's unique needs and requirements. Companywide processes, such as materials management, production and planning, order management, and financial reporting, can all be managed through ERP. In effect, these are the processes that cut across product lines, departments, and geographic locations. -starts by identifying the key processes that need critical attention, such as supplier relationships, material flows, or customer order fulfillment. This process could result in sales processes being integrated with production planning and the integrating both of these into the firm's financial accounting systems. Ex. a customer in Rome can place an order that is to be produced in Ireland, schedule it to be shipped through air cargo to Rome, and then have it picked up by a truck at the airport and delivered to the customer's warehouse by a specified date. -Integrates all activities and information linages in one massive database. Keeps updated real-time information on their current status, reports recent and past transactions, and upcoming planned transactions, and provides electronic notices that action is required on some items if planned schedules are to be met.

Work Processes:

A change in work processes or work activities may be necessary if new equipment is introduced or new products are manufactured. In manufacturing, a major reason for changing a work process is to accommodate a change in the materials used to produce a finished product.

Optimize top-down and bottom-down perspectives.

Strong leadership is necessary, but too much involvement by top management can make the changes seem autocratic. Employee participation is important, but too little involvement by leaders can undermine the program's importance and create a sense that the top managers don't care. care must be taken to balance these countervailing forces.

Steps in the changing process:

1. recognition of the need for change 2. establishment of goals for the change. 3. Diagnosis of relevant variables. 4. Selection of appropriate change technique. 5. Planning for implementation of the change 6. Evaluation and follow-up

The innovation Process:

A final element in organization change. -the managed effort of an organization to develop new products or services, or new uses for existing products or services -Without innovation, an organization will fall behind its competition.

Different Perceptions:

A manager may make a decision and recommend a plan for change on the basis of her own assessment of a situation. Others in the organization may resist the change because they do not agree with the manager's assessment or perceive the situation differently. Executives at 7-Eleven battled this problem as they attempted to enact a major organizational change. Ex. The corporation wanted to take its convenience stores a bit "upscale" and begin selling fancy fresh foods to go, the newest hardcover novels, gourmet products, and higher-quality products. Many franchisees balked because they say this move as taking the firm away from its core blue collar customers.

Reactive Change:

A piecemeal response to circumstances as they develop. May be hurried, so the potential for poorly conceived and executed change is increased. Ex. Caterpillar's reaction to the recession.

Process Consultation:

An OD consultant observes groups in the organization to develop an understanding of their communication patters, decision making and leadership processes, and methods of cooperation and conflict resolution. The consultant then provides feedback to the involved parties about the processes he or she has observed. The goal of this form of intervention is to improve the observed processes. A leader who is presented with feedback outlining deficiencies in his/her leadership style might be expected to change and overcome them.

Diagnostic activities:

An OD diagnoses analyzes the current condition of an organization. To carry out this diagnosis, managers use questionnaires, opinion or attitude surveys, interviews, archival data, and meetings to assess various characteristics of the organization. The results may generate profiles of the organization's activities, which can then be used to identify problem areas in need of correction.

Uncertainty:

Biggest cause of employee resistance. Employees will become anxious; worrying if they will be able to meet the new job requirements. They may think that their job security is threatened. The office Example: When Ryan tries to teach the employees to use the website, and the Scranton Brach resists. Ex. Nabisco was once the target of an extended and confusing takeover battle and during the entire time, employees were nervous about impending change.

Internal Forces for change:

Ex. if top management revises the organization's strategy, then change is likely to result. A decision by an electronics company to enter the home computer market or a decision to increase a ten year product sales goal by 3% would constitute many organization changes. -Other internal forces may be reflections of external forces. As sociocultural values shift, for example, workers attitudes toward their job may also shift, and even though the force is rooted in the external environment, the organization must respond directly to the internal pressure it generates.

Technical Vs. Managerial innovations:

Technical innovations: changes in the physical appearance or performance of a product or service or of the physical processes through which a product or service is manufactured. Ex. Replacement of integrated circuit with the microchip. Managerial innovations: changes in the management process by which products and services are conceived, built, and delivered to customers. They do not affect the physical appearance or performance of the products or services directly. Ex. reengineering.

External forces of change:

come from the organization's general and task environments. Ex. two energy crises, an aggressive Japanese automobile industry, floating currency exchange rates, and floating international interest rates are all manifestations of the international dimensions of general environment that influenced US auto companies. new production and competition forced them to dramatically alter the way they do business. Ex. In the political arena, new laws, court decisions, and regulations affect organizations. The economic dimension is affected by inflation, the cost of living, and money supplies. The task environment is a more powerful force for change. competitors influence an organiztion through their price strucutres and product lines. Ex. When Dell lowers prices, Hewlett Packer may have no choice but to follow suit. -Because the customer determines what products can be sold for, organizations must be concerned with consumer tastes and preferences. -Suppliers affect organizations by raising or lowering prices or changing product lines. Regulators can have dramatic effects on an organization. Ex. OSHA rules that a particular production process is dangerous to workers. Unions can force change when they have to clout to negotiate for higher wages or if they go on strike.

Organizational development:

concerned with changing attitudes, perceptions, behaviors, and expectations. -a planned effort that is organization-wide, managed from the top and intended to increase organizational effectiveness and health through planned interventions in the organization's process, using behavioral science knowledge.

Planned Change:

designed and implemented in an orderly and timely fashion in anticipation of future events. Preferred to reactive change. Ex. Georgia Pacific's effort to become a safer place to work. -Companies usually implement some kind of moderate change at least every year and one or more major changes every four or five years. **Gap analysis. "Here's where you are and here's where you want to be" The larger the gap, the larger the change.

Radical vs. Incremental Innovations:

radical: new products, services, or technologies developed by an organization that completely replace the existing products, services, or technology in the industry. -Firms that implement radical innovations fundamentally shift the nature of competition and the interaction of firms within their environments. Ex. CDs, DVDs, Incremental: new products/services/tech that modify existing ones. -Firms that implement incremental innovations alter, but do not fundamentally change competitive interaction. -more numerous. Ex. new generation of an iphone.

Implementing software systems:

systems such as Enterprise Resource Planning (ERP) link virtually all facets of the business, making it easier for managers to keep abreast of related developments.

comprehensive Approach to change:

takes a systems view and delineates a series of specific steps that often leads to successful change. Refer to "steps in the changing process."

Business process change (reengineering):

the radical redesign of all aspects of a business to achieve major gains in cost, service, or time. ERP is a common platform for changing business processes. Ex. Corning has undergone major reengineering. a 150 year old business that used to manufacture cookware now manufactures thin screens used in smartphones and laptops.