Principles of Management - Ch 7: Innovation and Change

What Not to Do When Leading Change (7-4b heading)

-Errors in the Unfreezing Phase: 1. not establishing a great enough sense of urgency 2. not creating a powerful enough coalition -core change coalition: key employees, managers, board members, customers, and even union leaders guide and support organizational change -Errors in the Change Phase: 1. lacking a vision 2. Under communicating the vision by a factor of ten 3. not removing obstacles to the new vision 4. not systematically planning for creating short term wins -Errors in the Refreezing Phase: 1. Declaring victory too soon 2. not anchoring changes in the corporations culture

Components of Creative Work Environments (7-2a)

1. Organizational Encouragement 2. Supervisory Encouragement 3. Work Group Encouragement 4. Freedom 5. Lack of Organizational Impediments 6. Challenging Work A creative work environment requires three kinds of encouragement: organizational, supervisory, and work group.

Managing Resistance to Change (7-4a heading)

According to psychologist Kurt Lewin, managing organizational change is a basic process of: - unfreezing - change intervention - refreezing

Managing Change (7-4 heading)

According to social psychologist Kurt Lewin, change is a function of the forces that promote change and the opposing forces that slow or resist change.

Results-Driven Change (7-4c)

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resistance forces (7-4)

In contrast to change forces, forces that support the existing conditions in organizations e.g. when attorneys and employees refuse to change the way they do their jobs with new software, for example, as opposed to the old one that they are so used to. this has caused costly mistakes by applying the steps in the old systems to the new one

Managing Sources of Innovation (7-2 heading)

Innovation comes from great ideas. So, a starting point for managing innovation is to manage the sources of innovation, that is, where new ideas come from. Innovation begins with creativity. One place where new ideas originate is with brilliant inventors.

Managing Innovation (7-2 heading)

One consequence of technology cycles and innovation streams is that managers must be equally good at managing innovation in two very different circumstances. 1. During discontinuous change, companies must find a way to anticipate and survive the technological changes that can suddenly transform industry leaders into losers and industry unknowns into powerhouses. 2. After a new dominant design emerges following discontinuous change, companies must manage the very different process of incremental improvement and innovation. Companies that can't manage incremental innovation slowly deteriorate s they fall further behind industry leaders.

design iteration (7-2b)

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

Technology cycles (7-1a)

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 e.g. technology cycles occurred when air conditioners supplanted fans, when Henry Ford's Model T replaced horse-drawn carriages, when planes replaced trains as a means of cross-country travel, when vaccines that prevented diseases replaced medicines designed to treat them, and when battery-powered wristwatches replaced mechanically powered, stem-wound wristwatches

product prototype (7-2b)

a full-scale, working model that is being tested for design, function, and reliability

Organizational decline (7-3)

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 Companies rarely die from moving too fast, and they frequently die from moving too slowly. In other words, decline occurs when organizations don't recognize the need for change. There are five stages of organizational decline: - blinded - inaction - faulty action - crisis - dissolution

S-curve pattern of innovation (7-1a)

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 e.g. Intel's technology cycles have followed this pattern. Read the rest of example on pg. 140... (Read pg. 140 for full details of this process) After a new technology has reached its limits at the top of the S-curve, significant improvements in performance usually come from radical new designs or new performance-enhancing materials.

Organizational development (7-4c)

a philosophy and collection of planned change interventions designed to improve an organization's long-term health and performance

Flow (7-2a)

a psychological state of effortlessness, in which you become completely absorbed in what you're doing and time seems to pass quickly Removing distractions assists in creating an environment conducive to flow. Another key part of creating flow experiences, and thus creative work environments, is to achieve a balance between skills and task challenge.

Organizational development interventions (7-4c)

activities initiated to support planned change and improve work effectiveness Large-system interventions: to change the character and performance of an organization, business unit, or department Small-group interventions: focuses on assessing how a group functions and helping it work more effectively to accomplish its goals. Person-focused intervention: intended to increase interpersonal effectiveness by helping people to become aware of their attitudes and behaviors and to acquire new skills and knowledge.

Dissolution stage (7-3)

after failing to make the changes needed to sustain the organization, the company is dissolved through bankruptcy proceedings or by selling assets in order to pay suppliers, banks, and creditors At this point, a new CEO may be brought in to oversee the closing of stores, offices, and manufacturing facilities; the final layoff of managers and employees; and the sale of assets. It is important to note that decline is reversible at each of the first four stages and that not all companies in decline reach final dissolution.

Experiential approach to innovation (7-2b)

an approach to innovation that assumes a highly uncertain environment and uses intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding The experiential approach to innovation has five aspects: design iterations, testing, milestones, multifunctional teams, and powerful leaders

Compression Approach to Innovation (7-2c)

an approach to innovation that assumes that incremental innovation can be planned using a series of steps and that compressing those steps can speed innovation Aims to: -lower costs -cause incremental improvements in the performance and function of the existing dominant design. - compress the time and steps needed to bring about small, consistent improvements in performance and functionality. The compression approach to innovation has five aspects: - planning - supplier involvement: delegating some of the preplanned steps in the innovation process to outside suppliers reduces the amount of work that internal development teams must do - shortening the time of individual steps - overlapping steps: shorten the development process by reducing delays or waiting time between steps - multifunctional teams

Inaction stage (7-3)

as organizational performance problems become more visible, management may recognize the need to change but still take no action The managers may be waiting to see if the problems will correct themselves. Or, they may find it difficult to change the practices and policies that previously led to success. Possibly too, they wrongly assume that they can easily correct the problems, so they don't feel the situation is urgent.

Crisis Stage (7-3)

bankruptcy or dissolution is likely to occur unless the company completely reorganizes the way it does business At this point, however, companies typically lack the resources to fully change how they run their businesses. Cutbacks and layoffs will have reduced the level of talent among employees.

Generational change (7-2c)

change based on incremental improvements to a dominant technological design such that the improved technology is fully backward compatible with the older technology

design competition (7-1b)

competition between old and new technologies to establish a new technological standard or dominant design e.g. the telegraph was so widely used as a means of communication in the late 1800s that at first almost no one understood why telephones would be a better way to communicate. It's hard to envisions today, with everyone constantly checking cell phones for email, texts, voice mails, and social media...

Blinded stage (7-3)

decline begins because key managers fail to recognize the internal or external changes that will harm their organizations May occur due to a simple lack of awareness about changes or an inability to understand their significance. It may also come from the overconfidence that can develop when a company has been successful.

dominant design (7-1b)

discontinuous change is followed by the emergence of a dominant design a new technological design or process that becomes the accepted market standard Dominant designs emerge in several ways. One is critical mass, meaning that a particular technology can become the dominant design simply because most people use it - for example, Blu-ray beating out HD-DVD to become the dominant design for high definition video. The best technology doesn't always become the dominant design because a number of other factors come into play. For instance, a design can become dominant if it solves a practical problem. e.g. The QWERTY keyboard became the dominant design for typewriters because it slowed typists who, by typing too fast, caused mechanical typewriter keys to jam. Dominant designs can also emerge through independent standards bodies.

Change Tools and Techniques (7-4c heading)

driven change: Change created quickly by focusing on the measurement and improvement of results agile change: using daily standups, or "huddles," to review the progress of multidisciplinary teams or "Scrums," who break problems into small, clearly defined parts that team members work on in sprints it is iterative and focuses on speed and daily accountability for results. e.g. Campbell used agile change to reduce the time it takes to develop new food products from two years to nine months. General Electric fastworks: quickly experimenting with new ideas to solve customer problems and learn from repeated tests and improvements. it also focuses on solving customer problems. Finally, repeated testing and improvements depend on putting a minimum viable product in front of customers.

Faulty action stage (7-3)

faced with rising costs and decreasing profits and market share, management will announce belt-tightening plans designed to cut costs, increase efficiency, and restore profits In other words, rather than recognizing the need for fundamental changes, managers assume that if they just run a tighter ship, company performance will return to previous levels.

change forces (7-4)

forces that produce differences in the form, quality, or condition of an organization over time

Milestones (7-2b)

formal project review points used to assess progress and performance e.g. a company that has put itself on a 12-month schedule to complete a project might schedule milestones at the three-month, six-month, and nine-month points on the schedule. Regularly meeting milestones gives people a sense of accomplishment and can shorten the innovation process by creating a sense of urgency that keeps people on task.

Unfreezing (7-4a)

getting the people affected by change to believe that change is needed

Work group environment (7-2a)

occurs when 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 means having autonomy over one's day-to-day work and a sense of ownership and control over one's ideas. To foster creativity, companies may also have to remove impediments to creativity from their work environments

Organizational encouragement (7-2a)

occurs when 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

Supervisory encouragement (7-2a)

occurs when supervisors provide clear goals, encourage open interaction with subordinates, and actively support development teams' work and ideas

Resistance to change (7-4)

opposition to change resulting from self-interest, misunderstanding and distrust, and a general intolerance for change Resistance might stem from a fear that the changes will result in a loss of pay, power, responsibility, or even perhaps one's job It may also occur because of misunderstanding and distrust; they don't understand the change or the reasons for it, or they distrust the people - typically management - behind the change. Lastly, it may also come from a generally low tolerance for change. Some people are simply less capable of handling change than others. People with a low tolerance for change feel threatened by the uncertainty associated with change and worry that they won't be able to learn the new skills and behaviors needed to successfully negotiate change in their companies. Because resistance to change is inevitable, successful change efforts require careful management.

Innovation streams (7-1b)

patterns of innovation over time that can create sustainable competitive advantage

powerful leaders (7-2b)

provide the vision, discipline, and motivation to keep the innovation process focused, on time, and on target

Refreezing (7-4a)

supporting and reinforcing new changes so that they stick Managers need to unfreeze resistance to change to create successful change programs.

Technological lockout (7-1b)

the inability of a company to competitively sell its products because it relies on old technology or a non dominant design

Change agent (7-4c)

the person formally in charge of guiding a change effort They: - clarify the problem - gather information - works with decision-makers to create and implement an action plan - helps to evaluate the plan's effectiveness - implements the plan throughout the company - then leaves (if from outside the company) after making sure the change intervention will continue to work.

discontinuous change (7-1b)

the phase of a technology cycle characterized by technological substitution and design competition

incremental change (7-1b)

the phase of a technology cycle in which companies innovate by lowering costs and improving the functioning and performance of the dominant technological design e.g. manufacturing efficiencies enable Intel to cut the cost of its chips by one-half to two-thirds during a technology cycle, while doubling or tripling their speed. This focus on improving the dominant design continues until the next technological discontinuity occurs.

technological discontinuity (7-1b)

the phase of an innovation stream in which a scientific advance or unique combination of existing technologies creates a significant breakthrough in performance or function e.g. The inefficiency of elevators bounded to a steel safety cable being replaced by ones that can utilize magnetic levitation to "float" to their destinations. Multiple elevators can be in the same shaft, and therefore increases efficiency.

technological substitution (7-1b)

the purchase of new technologies to replace older ones e.g. smartphones have replaced these older technologies in the last decade: landlines, pay phones, and walkie-talkies; timers and alarm clocks; photo albums, maps and GPS devices; address books, calendars, and business cards; radios, CDs, and portable MP3 players; voice recorders and notepads; printed books, newspapers and magazines; and finally, emergency flashlights, calculators, and barcode scanners.

Organizational innovation (7-1)

the successful implementation of creative ideas in organizations

testing (7-2b)

the systematic comparison of different product designs or design iterations

Coercion (7-4a)

the use of formal power and authority to force others to change It causes intense negative reactions (such as fear, stress, resentment, sabotage, of company products), which as a result, it should only be used when a crisis exists or when all other attempts to reduce resistance to change have failed.

Multifunctional teams (7-2b)

work teams composed of people from different departments this can speed up innovation through early identification of new ideas or problems that would typically not have been generated or addressed until much later.

Change intervention (7-4a)

workers and managers change their behavior and work practices

Creative work environments (7-2a)

workplace cultures in which workers perceive that new ideas are welcomed, valued, and encouraged