TEST 2 MGMT CH 11

Era of ferment

(Discontinuous Change)-characterized by technological substitution and design competition

Dominant Design

becomes the accepted market standard for technology; can emerge in several ways: ♣ Critical mass (most people use it) ♣ Solves a practical problem ♣ Independent standards bodies

- Break your old ways of thinking and develop completely new strategies. -Consider dramatic changes to people, systems, and processes throughout your organization.

You are the CEO of a European railroad. Recently, you have been hearing more and more about deregulation, including plans to create and develop new rail freight freeways across Europe. These freeways will totally change the rail industry. Some railroad companies will carry freight at high speeds, while others will be responsible for transporting people at slower speeds around different regions of Europe. Now you have to decide what to do with your company. Which of the following tactics will be most effective in creating this change? Check all that apply.

technological Discontinuity

a scientific advance or unique combination of existing technology that creates a significant breakthrough in performance or function -->Stating point for innovation streams

Options to grow innovation

-Create a separate in-house organization where new processes and values are developed -Divide and create an independent organization designed to specifically build the new innovation -Buy the capacity to handle and build the new innovation by acquiring a firm that has the resources to do so

It would be a less successful company. EXPLANATION: If Google did not change to meet changes in its organizational environment, it would likely become a less successful company overall. When a company's business environment changes, the company has to change to keep up.

If Google never changed its strategies or organizational design, which of the following would be most likely to occur?

Sustainable technologies

Innovative forces that improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued

Technological Change

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, better technology.

dissatisfaction

A component of the change process in which creating dissatisfaction with the status quo helps to free people and organizations from complacency or inertia. It often creates the spark needed to begin the change process.

organic change

A process by which change emerges from individuals or teams as they innovate, solve problems, seek more effective ways to accomplish their work, react to large environmental shifts, or interact with others in cross-functional positions and an ___________ comes from the company's employees, not managers.

Proactive Change

A process in which change is initiated based on some anticipatory event or opportunity on the horizon. This change happens before the company's environment changes, and an organic change comes from the company's employees, not managers.

Reactive Change

A process in which change is initiated in response to some known external threat or opportunity.

transformative change

A process in which change is radical or disruptive, typically in response to a major competitive threat and/or significant change in a firm's external or internal environments.

incremental change

A process in which small improvements or changes are made to processes and approaches on an ongoing basis.

planned change

A process where change efforts are planned and driven from corporate strategy departments or top-down directives.

process

A series of plans (communication, measurement, etc.) and approaches to implement a change effort.

would

As places like M.I.T. start to change the way automobiles are produced, it ___________ be a good idea for large automobile companies like Ford Motor Co. to consider using some of M.I.T.'s ideas in creating new cars.

disruptive technological change

EXAMPLE: M.I.T.'s new car is a good example this type f technological change. This is a change that can recreate an industry and appeal to customers that are not generally included in an industry base. Large motor companies like Ford would need to be aware of disruptive technologies, as they represent important changes in the company's environment. However, a large company like Ford may want to be careful as it pursues new products based on the disruptive technology, since it is possible to not make enough money in the new area to keep the company running. Instead, Ford would be better off setting up a separate division or company for pursuing new options while continuing to make money on existing, successful products.

Disruptive technologies

Innovative forces that include a different set of attributes than those valued by mainstream customers.

Increasing Change; Technology and globalization, in particular, are changing at faster and faster paces, and organizations like Google have to change more and more rapidly to keep up.

Overall, the rate of change in Google's business environment is:

technology change

M.I.T. is releasing Hiriko, an urban electric car that can fold so that up to three cars can be parked in a space that normally would hold just one vehicle. This is an example of _______________ in the automotive industry, as M.I.T. redefines how cars are made and pursues a different set of customers for them.

Reactive Explanation: Because you are changing the formula for your floor cleaner in response to changes in the U.S. laws, you are involved in a reactive change. Reactive changes tend to be smaller, and they are typically developed at the top of the organization and sent down throughout the company. When developing such changes, it is important to have a clear plan for implementation, including deadlines and checkpoints. There is generally less need to involve all members of the organization in a plan for reactive change, as doing so would likely make the process go on for a longer period than necessary.

Management at Work You are the CEO of a company that manufactures cleaning products. Recently, the United States government declared one of the chemicals you use in your floor cleaners to be illegal. This is not a crisis—the chemical is not a large part of the cleaner, and other substitute chemicals are available, but you know that you need to change the formula for your floor cleaner as soon as possible. The type of change that will be most effective in this situation is?

- Include deadlines and checkpoints in your plan for changing the formulation of your floor cleaner. -Create a plan for the change, and roll it out from the top down throughout the organization.

Management at Work You are the CEO of a company that manufactures cleaning products. Recently, the United States government declared one of the chemicals you use in your floor cleaners to be illegal. This is not a crisis—the chemical is not a large part of the cleaner, and other substitute chemicals are available, but you know that you need to change the formula for your floor cleaner as soon as possible. Which of the following tactics will be most effective in creating this change? Check all that apply.

Planned

Management at Work You are the CEO of a major airline, and you are planning to acquire another airline. This requires that you change the seniority system for pilots. You will be in charge of the change, and the new organization will use a system that is different from both of those used previously. Working with your vice president of Human Resources, you develop a plan that places pilots on the seniority list based on the total amount of time they have been with their present airline, regardless of previous jobs. You know that this will anger some pilots, but you feel that it is fairest for all concerned. The type of change that will be most effective in this situation is:

Innovation streams

Pattern of innovation over time than can create a sustainable competitive advantage APPLE is always innovating their products and has met a sustainable advantage

Innovation Streams

Pattern of innovation over time that can create a sustainable competitive advantage

- Work with the corporate strategy department to link the new changes with your organization's strategic plan. -Create a program for implementing the change, based on your top-down directive.

Management at Work You are the CEO of a major airline, and you are planning to acquire another airline. This requires that you change the seniority system for pilots. You will be in charge of the change, and the new organization will use a system that is different from both of those used previously. Working with your vice president of Human Resources, you develop a plan that places pilots on the seniority list based on the total amount of time they have been with their present airline, regardless of previous jobs. You know that this will anger some pilots, but you feel that it is fairest for all concerned. Which of the following tactics will be most effective in creating this change? Check all that apply

Proactive

Management at Work You are the owner of a company that makes tennis shoes. For 50 years, your company has used rubber as a key component in all of your products. Recently, you read a National Geographic article saying that rubber trees are starting to diminish and that they may become extinct in the next 15 years. Now you will have to rethink everything about the way you make shoes. The type of change that will be most effective in this situation is?

-Think about new possibilities for the organization. -Create a plan based on what should be, not what is.

Management at Work You are the owner of a company that makes tennis shoes. For 50 years, your company has used rubber as a key component in all of your products. Recently, you read a National Geographic article saying that rubber trees are starting to diminish and that they may become extinct in the next 15 years. Now you will have to rethink everything about the way you make shoes. Which of the following tactics will be most effective in creating this change? Check all that apply.

Reactive

Mr. Schmidt says that Google's growth has made managing the business "more complicated." If Google's managers changed CEOs because of Google's growth, the change was:________________.If Google managers decided on the CEO change after noticing their changing business conditions, the change would be considered _________. It was made in response to a change in the environment that had already occurred.

beliefs and values

To be effective, organizational change has to occur at the level of_________________________.

technological discontinuity

Technological discontinuity A scientific advance or unique combination of existing technology that create a significant breakthrough in performance or function

1. An urgent or crisis situation 2. High dissatisfaction 3. Low resistance to change 4. High levels of support for change 5. Leadership that has all of the information relevant to change 6. Changes that are clear

The factors that call for a directive change process include the following:

inertia

The inability of organizations to change as rapidly as the environment.

Organizational change

The processes and activities that organizations go through to align themselves with internal and external changes in the business environment and to prepare for future potential opportunities.

1)Establish a sense of urgency 2)Form a powerful guiding coalition 3)Develop a vision 4)Communicate the new vision 5)Empower others to act on the vision 6)Plan for and create short-term wins 7)Consolidate improvements and produce more changes 8)Institutionalize changes in the culture

What are the steps for Kotter's process of implementing change?

- Partner with other companies to share the costs of innovation - Invest more in research and development to create new products - Expect reduced product life cycles that need to be balanced with the costs of doing business

Which of the following are good ways for a manager to compete in a business environment that is facing rapid technological changes? Check all that apply.

-The personal relationship between Eric Schmidt and Larry Page changed. -Google was facing increased competition from companies like Facebook. -Google needed new management because of the company's rapid growth. - Google wanted a more streamlined decision-making process.

Which of the following are possible reasons Google changed the roles of its executive managers? Check all that apply.

Transformative

You are the CEO of a European railroad. Recently, you have been hearing more and more about deregulation, including plans to create and develop new rail freight freeways across Europe. These freeways will totally change the rail industry. Some railroad companies will carry freight at high speeds, while others will be responsible for transporting people at slower speeds around different regions of Europe. Now you have to decide what to do with your company. The type of change that will be most effective in this situation is?

Technology Cycles

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, better, technology ♣ Early in a technology cycle, there is still much to learn and progress is slow (POINT A) ♣ Researchers figure out how to get better performance from the new technology (POINT B) ♣ Further efforts to develop this particular technology will result only in small increases in performance and the performance limits of that particular technology are being reached (POINT C) Example: i-phone: when i-phone first comes out its new technology and there is much to learn about it, then we learn and get high performance out of it, as it gets older; we have to update the soft wear to increase the performance and then a new and better i-phone comes out (new and better technology)

model

a vision for change

Grand Strategy

broad strategic plan used to help an organization achieve its strategic goals. ♣ Guide the strategic alternatives that managers of individual businesses or subunits may use - EX: GOOGLE of innovation

Technological Substitution

occurs when customers purchase new technologies to replace older technologies

Design Competition

the old technology and several different new technologies compete to establish a new technological standard or dominant design

Stability Strategy

the purpose is to continue doing what the company has been doing, but just do it better. ♣ Try to improve the way in which they sell the same products or services to the same customers EX: GOOGLE INNOVATION

Growth Strategy

the purpose is to increase profits, revenues, market share, or the number of places (stores, offices, locations) in which the company does business ♣ Grow externally by merging with or acquiring other companies

Retrenchment Strategy

the purpose is to turn around very poor company performance by shrinking the size or the scope of the business ♣ The first step might include significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or closing or selling entire lines of products or services ♣ The second step is Recovery, which consists of the strategic actions that a company takes to return to a growth strategy. EX: GOOGLE INNOVATION