Chapter 7: Organization Change and Innovation

Areas of Organization Change

* Organization Structure and Design - Job Design - Departmentalization - Reporting relationships - Authority distribution - Coordination mechanisms - Line-staff structure - Overall design - Culture - Human resource management * Technology and Operations - Information technology - Equipment - Work processes - Work sequences - Control systems - Enterprise resource planning * People - Abilities and skills - Performance - Perceptions - Expectations - Attitudes - Values

The Innovation Process

1. Development: Organization evaluates, modifies, and improves on a creative idea 2. Application: Organization uses developed idea in design, manufacturing, or delivery of new products, services, or processes. 3. Launch: Organization introduces new products or services to the marketplace. 4. Growth: Demand for new products or services grows. 5. Maturity: Most competing organizations have access to the idea. 6. Decline: Demand for an innovation decreases, and substitute innovations are developed and applied.

Organization Development Techniques

1. Diagnostic activities - analyzes the current condition of an organization - the results of this diagnosis may generate profiles of the organization's activities, which can then be used to identify problem areas in need of correction 2. Team building - intended to enhance the effectiveness and satisfaction of individuals who work in groups or teams to promote overall group effectiveness 3. Survey feedback - the aim of this approach is usually to change the behavior of supervisors by showing them how their subordinates view them 4. Third-party peacemaking - most often used when substantial conflict exists within the organization 5. Process consultation - An Organization Development consultant observes groups in the organization to develop an understanding of their communication and conflict resolution. 6. Life and career planning - Life and career planning helps employees formula their personal goals and evaluate strategies for integrating their goals with the goals of the organization. 7. Coaching and planning - The purpose is to help people develop a better sense of how others see them and learn behaviors that will assist others in achieving their work-related goals.

Technical innovation

A change in the appearance of performance of a product or service or of the physical processes through which a product or service is manufactured

Managerial innovation

A change in the management process in an organization

Product innovation

A change in the physical characteristics or performance of an existing product or service or the creation of a new one

Process innovation

A change in the way a product or service is manufactured, created, or distributed

Force-Field Analysis for Plant Closing at General Motors

A force-field analysis can help a manager facilitate change. A manager able to identify forces acting both for and against a change can see where to focus efforts to remove barriers to change (such as offering training and relocation to displaced workers). Removing the forces against the change can at least partially overcome resistance. * Reasons for Closing - Need to cut costs - Excess capacity - Outmoded production facilities * Reasons Against Closing - Resistance from unions - Concern about worker welfare - Possible future needs

Enterprise Resource Planning (ERP)

A large-scale information system for integrating and synchronizing the many activities in the extended enterprise

Steps in the Change Process

A manager who, when implementing change, follows a logical and orderly sequence like the one shown here is more likely to succeed than a manager whose change process is haphazard and poorly conceived. 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. Actual implementation 7. Evaluation and follow-up

Radical innovation

A new product, service, or technology that completely replaces an existing one

Incremental innovation

A new product, service, or technology that modifies an existing one

Reactive change

A piecemeal response to circumstances as they develop

Organization development (OD)

A planned effort that is organization-wide, and manager from the top, intended to increase organizational effectiveness and health through planned interventions in the organization's process, using behavioral science knowledge

Organization change

Any substance modification to some part of the organization

Planned change

Change that is designed and implemented in an orderly and timely fashion in anticipation of future events

The Reengineering Process

Reengineering is a major design of all areas of an organization. To be successful, reengineering requires a systematic and comprehensive assessment of the entire organization. Goals, top management support, and a sense of urgency help the organization recreate itself and blend both top-down and bottom-up perspectives. 1. Develop goals and a strategy for reengineering effort 2. Emphasize top management's commitment to the reengineering effort 3. Create a sense of urgency among members of the organization 4. Start with a clean slate; in effect, re-create the organization 5. Optimize top-down and bottom-up perspectives

Intrapreneurs

Similar to entrepreneurs except that they develop new businesses in the context of a large organization

Organization Development Assumptions

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 employee growth, development

Innovation

The managed effort of an organization to develop new products or services or new uses for existing products or services

Business process change (reengineering)

The radical redesign of all aspects of a business to achieve major gains in cost, service, or time