CHAPTER 7

FOSTERING AN
INNOVATIVE
ORGANISATION

LECTURE OUTLINE
The nature of change &
innovation
Organisational life cycles
Change management &
innovation process
Key organisational change
components

THE NATURE OF CHANGE

AND INNOVATION
Innovation
Change
Any
alteration
of the status
quo

New idea
applied to
initiating or
improving a
process, product
or service

THE NATURE OF CHANGE

AND INNOVATION
EXTERNAL FORCES

Response to opportunities
and threats from the market, regulators
and other elements of the environment

INTERNAL FORCES
Strategy & plans, employees
behaviour, change & innovation decisions,
cultural change, restructures,
technological & leadership change

75

ORGANISATIONAL LIFE
CYCLES
Life cycles:
Predictable stages of development
organisations
typically follow.
There are four life-cycle stages.

ORGANISATIONAL
LIFE CYCLE STAGES
Entrepreneurial
Entrepreneurialstage
stage

Collectivity
Collectivitystage
stage

Formalisation
Formalisationand
andcontrol
controlstage
stage

Elaboration-of-structure
Elaboration-of-structurestage
stage

ORGANISATIONAL
LIFE CYCLES
Possible causes for
termination:

Curtailed innovation
Scapegoating
Resistance to change
Turnover
Conflict

ORGANISATIONAL
LIFE CYCLES

Methods of organisational
termination:

Bankruptcy
Liquidation
Merger
Acquisition
Take-over

Change is with us!

We have three options what will you choose?

Change Reactively by responding only when

we have no choice
Change Proactively by anticipating the
needs of the future in advance.
Decide to ignore Change and hope that it
will go away.
Today

The
New
World

CHANGE MANAGEMENT & INNOVATION

PROCESS

Making change/innovation effective

Eight-step model:

Recognition of opportunity/problem
Obtain powerful sponsors
Develop/communicate a vision
Empower others to implement
Prepare for resistance
Plan to reward visible progress
Consolidate change & facilitate more change
Institutionalise changes achieved

CHANGE MANAGEMENT & INNOVATION

PROCESS
Recognition
Recognitionof
ofopportunity
opportunity
or
orproblem
problem

Prepare
Prepareto
toovercome
overcomeresistance
resistance

Line
Lineup
uppowerful
powerfulsponsors
sponsors

Plan
Planfor
for&&reward
rewardvisible
visibleprogress
progress

Develop
Developand
andcommunicate
communicate
aavision
vision

Empower
Empowerothers
othersto
to
act
actout
outthe
thevision
vision

Consolidate
Consolidateimprovements
improvements&&
facilitate
facilitatefurther
furtherchange
change

Monitor
Monitor&&institutionalise
institutionalisechange
change

CHANGE MANAGEMENT &

INNOVATION PROCESS

Organisational development
Innovation for competitive
advantage
Product development
Intrapreneurship

CHANGE MANAGEMENT &

INNOVATION PROCESS
Organisational development
Is a change effort to improve
interpersonal working relationships
and organisational effectiveness
through strategies that use a
change agent or third party who is
well versed in the behavioural
sciences.

CHANGE MANAGEMENT &

INNOVATION
PROCESS
Organisational development
Diagnosis
Diagnosis

Intervention:
Intervention: 44techniques
techniques
Process
Processconsultation
consultation
Team
Teambuilding
building
Third-party
Third-partyintervention
intervention
Technostructural
Technostructuralactivities
activities

Evaluation
Evaluation

CHANGE MANAGEMENT &

INNOVATION PROCESS
Innovation for competitive
advantage:

1)1)Hard
Hardfor
forcompetitors
competitorstotoimitate
imitate

Four
Fourfactors
factors
needed
neededto
to
ensure
ensure
advantage
advantage

2)2)Meeting
Meetingsignificant
significantcustomer
customerneeds
needs
3)3)Fit
Fitofofinnovation
innovationtotoorganisations
organisationstime
time
advantages
advantages
4)4)Innovation
Innovationneeds
needstotorely
relyon
oncapabilities
capabilities
accessible
accessibletotothe
theorganisation,
organisation,but
butless
lessso
so
totocompetitors
competitors

CHANGE MANAGEMENT &

INNOVATION PROCESS
Product development
principles:
1.
2.
3.
4.

Establish a stage-gate development funnel

Establish cross-functional teams
Use concurrent engineering
Involve both customers & suppliers

CHANGE MANAGEMENT &

INNOVATION PROCESS
Intrapreneurship:

Encourage the take-up of entrepreneurship roles

by organisation members, e.g.

Idea
Idea
Idea
Idea

generator
champion
sponsor
orchestrator

KEY ORGANISATIONAL
CHANGE COMPONENTS
Significant change usually means changing
one or more key components:

Structural
Technological
Human resource
Cultural
Component inter-relationship

KEY ORGANISATIONAL CHANGE

COMPONENTS
Technology

Human Resources

Structure

Culture

KEY ORGANISATIONAL
CHANGE COMPONENTS
Structural components:

Job definitions
Job groupings
Teams
Delegation
Reporting relationships

KEY ORGANISATIONAL
CHANGE COMPONENTS
Technological components:
Technology may drive change/innovation by:
Requiring new work methods.
Providing/removing competitive edge.

KEY ORGANISATIONAL
CHANGE COMPONENTS

Human resources components:

Human resources is the vehicle for changing
knowledge, skills, perceptions & behaviours
needed for a job. It utilises:

Recruitment & selection

Training
Performance appraisal
Reward systems.

KEY ORGANISATIONAL
CHANGE COMPONENTS
Cultural components:
Major organisational changes often require
concomitant changes to organisational
culture.
Organisational culture can be defined as a
system of shared values, assumptions,
beliefs and norms linking an organisations
members.

KEY ORGANISATIONAL
CHANGE COMPONENTS
Interrelationship amongst
components:

Change to one component creates tensions on

other components until they are adjusted
accordingly.
Minor change
May relate to only one component

Major change
May relate to all four components

LECTURE SUMMARY
Nature of change &
innovation
Distinguishing change from
innovation
External & internal forces for
change & innovation

LECTURE SUMMARY
Organisational life cycles
Life cycle stages
Termination

LECTURE SUMMARY
Change management &
innovation process
Organisational development
(OD)
Innovation for competitive
advantage
Product development
Entrepreneurship

LECTURE SUMMARY
Key organisational change
components
Structural
Technological
Human resource
Cultural
Component interrelationship