Chapter Ten

Innovation and Change

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

1 10-1

Forces Driving the Need for Major Organizational Change

Global Changes, Competition and Markets Technological Change
International Economic Integration Maturation of Markets in Developed Countries Fall of Communist and Socialist Regimes

More Threats
More domestic competition Increased Speed International competition

More Opportunities
Bigger markets Fewer barriers More international markets

More Large-Scale Change in Organizations

Structure change Strategic change Culture change Knowledge management, enterprise Resource planning Quality programs
Source: Based on John P. Kotter, The New Rules: How to Succeed in Todays Post-Corporate World (New York: The Free Press, 1995).

Mergers, joint ventures, consortia Horizontal organizing, teams, networks New technologies, products New business processes E-commerce Learning organizations
10-2

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Incremental vs. Radical Change

Incremental Change
Continuous progression Affect organizational part Through normal structure and management processes Technology improvements Product improvement
Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R. Brooks, Organizations in Disequilibrium: Environmental Jolts and Industry Revolutions, in George Huber and William H. Glick, eds., Organizational Change and Redesign (New York: Oxford University Press, 1992), 66-111; and Harry S. Dent, Jr., Growth through New Product Development, Small Business Reports (November 1990): 30-40.

Radical Change
Paradigm-breaking burst

Transform entire organization

Create new structure and management Breakthrough technology New products, new markets
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-3

Four Types of Change

Technology
Changes in production process

Products and Services

Changes in outputs

Strategy and Structure

Administrative changes

Culture
Changes in values, attitudes, behaviors
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-4

Sequence of Elements for Successful Change

Environment
Suppliers Professional associations Consultants Research literature Internal Creativity and Inventions

Organization
1. Ideas

3. Adoption
Customers Competition Legislation Regulation Labor force

4.Implementation

2. Needs 5. Resources
Perceived Problems or Opportunities
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-5

Division of Labor Between Departments to Achieve Changes in Technology

General Manager

Creative Department (Organic Structure)

Using Department (Mechanistic Structure)

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-6

Probability of New Product Success

PROBABILITY

Technical completion
(technical objectives achieved)

.57
.31 .12
10-7

Commercialization
(full-scale marketing)

Market Success
(earns economic returns)
Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee, S. Wagner, and M. Hamburger, Research and Innovation in Modern Corporations (New York: Norton, 1971), 57.

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Horizontal Linkage Model for New Product Innovations

Environment Organization Environment

General Manager

Technical Developments

Linkage

R&D Department

Linkage

Marketing Department

Linkage

Customer Needs

Production Department

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-8

Dual-Core Approach to Organization Change

Type of Innovation Desired
Administrative Structure Administrative Core Technical Core Technology

Direction of Change: Examples of Change: Best Organizational Design for Change:

Top-Down Strategy Downsizing Structure Mechanistic

Bottom-Up Production Techniques Workflow Organic

10-9

2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Culture Change
Reengineering and Horizontal Organization Total Quality Management The Learning Organization
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-10

OD Culture Change Interventions

Large group intervention Team building

Interdepartmental activities
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-11

Stages of Commitment to Change

Preparation
Initial contact Awareness

Acceptance
Understanding Decision to implement

Commitment
Installation Institutionalization
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-12

Barriers to Change
Excessive focus on costs Failure to perceive benefits Lack of coordination and cooperation Uncertainty avoidance Fear of loss
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-13

Techniques for Change Implementation

Identify a true need for change. Find an idea that fits the need. Obtain top management support. Design the change for easy implementation (in stages/steps). Develop plans to overcome resistance. Create change teams. Foster idea champions.
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

10-14

Workbook Activity

Innovation Measures
Measure
1. Creativity encouraged 2. Diverse problem-solving 3. Time for creative ideas 4. Rewards for innovation 5. Flexible, open to change 6. Follow orders from top 7. Think and act like others 8. Concern for status quo 9. Dont rock the boat 10. New ideas not funded
2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

A
Your Organization

B
Other Organization

C
Your Ideal

10-15