c.
provide significant managerial support
d.
let employees discuss and agree on who will do what after change occurs
e.
any or all of these
61. Which of the following methods for managing resistance to change should only be used as a last resort
or under crisis conditions?
a.
mentoring
b.
arbitration
c.
negotiation
d.
coercion
e.
reinforcement modification
62. When a merger of South Carolina-based Springs Industries with the Brazilian textile producer
Coteminas was announced, the CEO of Springs was quoted as saying, “It is unclear what effect this
move will have on our employees though no immediate layoffs are planned. There may be some in the
future.” In the ____ stage of the organizational change, the CEO should use empathy and communicate
specific details of the merger.
a.
change intervention
b.
the change prototype
c.
unfreezing
d.
refreezing
e.
change mobilization
63. Tom Valerio was the point man on a major push to reinvent CIGNA Property & Casualty. His vision
for CIGNA was to become a top-quartile, specialist property and casualty company. It was a radical
proposition. During the organizational change, having this vision was especially important during the
____ stage.
a.
change
b.
the change prototype
c.
unfreezing
d.
refreezing
e.
change mobilization
64. According to John Kotter, which of the following actions will adversely influence refreezing efforts?
a.
the absence of a vision
b.
not removing obstacles to the company’s new vision
c.
not creating a powerful enough guiding coalition
d.
declaring victory too soon
e.
all of these
65. Which of the following statements describes an advantage of the results-driven change approach to
managing change?
a.
It supplants the sole emphasis on activity with a focus on quickly measuring and
improving results.
b.
Managers actually test to see if changes make a difference.
c.
Quick, visible improvements motivate employees to continue to make additional changes.
d.
Managers introduce changes in policies, procedures, rules, and regulations only when they
will improve measured performance.
e.
All of these were cited as advantages of the results-driven change approach.
66. An Internet strategy enabled Nestlé USA to change its way of doing business and allowed the
company to change its staid, risk-averse culture; from buying raw materials to processing purchase
orders to marketing the roughly 2,000 products that make up its nearly 200 brands. Employees worked
to “Make e-business the way we do business.” Nestlé USA used ____ change to reinvent the company.
a.
activity-oriented
b.
results-driven
c.
generational
d.
vision-driven
e.
resources-driven
67. The General Electric workout is a special kind of ____.
a.
activity-oriented change
b.
results-driven change
c.
generational change
d.
vision-driven change
e.
resources-driven change
68. A(n) ____ is the individual who is formally in charge of guiding a change effort.
a.
change ombudsman
b.
staff moderator
c.
change mentor
d.
change agent
e.
intrapreneur
69. Organizational development ____.
a.
takes a long-range approach to change
b.
creates change by educating workers and managers to change ideas, beliefs, and behaviors
so that problems can be solved in new ways
c.
assumes that top management support is necessary for change
d.
emphasizes employee participation in all stages of the change
e.
is accurately described by all of these
70. Organizational development ____.
a.
requires a steering committee
b.
takes a short-term approach to change
c.
is a philosophy and collection of planned change interventions
d.
assumes that top management support is not necessary for change
e.
is accurately described by all of these
71. Tom Valerio was the point man on a major push to reinvent CIGNA Property & Casualty. His vision
for CIGNA was to become a top-quartile, specialist property and casualty company. It was a radical
proposition. Valerio was a(n) ____.
a.
change ombudsman
b.
staff moderator
c.
change mentor
d.
change agent
e.
intrapreneur
72. There are eight general steps for organizational development intervention. The first step is ____.
a.
pioneering
b.
inception
c.
introduction
d.
entry
e.
startup
73. Which of the following approaches is aimed at changing large systems, small groups, or individuals?
a.
General Electric workout
b.
the functional approach to change
c.
organizational development
d.
results-driven change
e.
Lewin’s change synthesis
Levi Strauss
Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary
in the advertising department and slowly began rising through the ranks. The more she saw how the
company worked, the more dissatisfied she became. According to Morgan, the company was
“dysfunctional” and “internally competitive, one division against another.” This is why Morgan
became a part of the change initiative when talk of reinventing the company spread through
headquarters. She led the team that designed the Develop Sources process, a system for working with
suppliers. When Morgan became vice president for fulfillment, Asia, her job was to convince Levi’s
Asia suppliers to adopt more efficient production and distribution techniques. The Asian suppliers
were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources
program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.
74. Refer to Levi Strauss. In order to maintain a competitive advantage in the clothing industry, Levi had
to create more efficient new methods of dealing with its suppliers. Its ____ began with discontinuing
inefficient methods of suppliers and continued with substituting electronic networks for outdated
systems.
a.
dominant design
b.
competitive advantage
c.
innovation stream
d.
comparative differential
e.
inventive flow
75. Refer to Levi Strauss. Why did Levi decide to change the way it was conducting business?
a.
to protect its competitive advantage
b.
to downsize its work force
c.
to make outsourcing more economically feasible
d.
to create economies of scale
e.
to direct group norm development
76. Refer to Levi Strauss. Prior to the reinvention of the company, which began in 1982, the company
most likely did not have a(n) ____.
a.
history of innovation discontinuity
b.
design iteration
c.
competitive advantage
d.
creative work environment
e.
organizational culture
77. Refer to Levi Strauss. Initially, Morgan found ____ strong in Asia.
a.
change forces
b.
internal strengths
c.
frozen change
d.
acceptance forces
e.
resistance forces
78. Refer to Levi Strauss. Unfreezing, change intervention, and refreezing were the processes used by
Morgan and her team to ____.
a.
motivate Asian suppliers
b.
manage the Asian suppliers’ resistance to change
c.
create a more dynamic work environment
d.
coordinate a creative work environment
e.
gather competitive intelligence about Levi’s suppliers
79. Refer to Levi Strauss. Which of the specific techniques for dealing with resistance to change did
Morgan use to convince the Asian suppliers that it was in their best interest to adopt the Develop
Sources process?
a.
coercion
b.
top management support
c.
education and communication
d.
direction
e.
tactical manipulation
80. Refer to Levi Strauss. Emily Morgan is an example of a(n) ____.
a.
ombudsman
b.
mentor
c.
organizational liaison
d.
change agent
e.
gatekeeper
W. L. Gore
Bill Gore started the W. L. Gore Company in his basement when he left DuPont to develop innovative
uses for Teflon (polytetrafluoroethylene or PTFE), the then-new non-stick plastic. Today, W. L. Gore
is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes
and does not trap perspiration and body heat. Marketed as “Guaranteed to Keep You Dry,” Gore-Tex
is used not only for coats, gloves, and camping and hiking gear but also for protective outerwear worn
by firefighters and military, emergency, and medical personnel. But in recent years Gore-Tex sales
have steadily declined. One reason is that a number of alternative fabrics, like Entrant GII and eVENT,
work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So
the challenge for W. L. Gore is to reduce its dependence on Gore-Tex, which accounts for 21% of its
$1.6 billion in revenues, by coming up with ways to consistently develop innovative products in other
areas.
In general, W. L. Gore goes for dramatic rather than incremental improvements. On its web site,
it declares, “At Gore, we take our reputation for product leadership seriously, continually delivering
new products and better solutions to the world. Gore’s products are designed to be the highest quality
in their class and revolutionary in their effect.”
Gore has created a number of innovative products, including Glide dental floss, the first floss that
didn’t shred, tear, and get caught in your teeth. Gore used its expertise in stretched plastics to
essentially create a thin, Teflon-like tape used as dental floss. Glide was soon the number two floss in
the market and today is the number one floss recommended by dental professionals. Gore then sold
Glide to Procter & Gamble. But since Gore still makes Glide for P&G, Gore continues to make
substantial profits that it then reinvests in other innovative products such as CleanStream filters, which
filter dirt particles out of the air before it comes out of your vacuum cleaner; Radome, which is used to
cover microwave transmission sites (think of the large “golf ball” structures you sometimes see around
airports); medical stent-grafts, stents that are attached to an aorta to treat aortic aneurysms; and many
more.
Gore has also been innovative in the processes it uses to develop new products. The company
frequently asks potential customers for help when designing new products (i.e., design iterations and
testing). When Gore engineer Dave Myers was developing Elixir, Gore’s best-selling acoustic guitar
strings, which are coated with a thin layer of plastic that avoids the accumulation of dust, microscopic
layers of skin (from musicians’ fingers), and dirt and oil, all of which affect musical quality and sound,
he talked to Chuck Hebestreit, another Gore engineer who played the guitar. They, in turn, asked
experienced guitar players to give them feedback on the product. Steve Young, who now heads Elixir
products for Gore, said, “We gave it to guitar players to try out, and they were amazed that it [meaning
the guitar sound] didn’t go dead [unlike regular guitar strings].” Why? Because, thanks to their
resistance to dust, skin, dirt, and oil, Elixir guitar strings last five times as long as normal guitar
strings. Elixir guitar strings now have a 35% share of the market.
Gore also provides flexible options for innovation by making “time for dabbling.” What this
means is that everyone in the company is encouraged to spend 10% of their time on new ideas or
products. If those ideas have potential, a Gore “sponsor,” typically a more senior person, will guide
and coach that employee on how to further advance their ideas or products. When ideas or innovations
are to the point where further development requires a significant investment by the company, they are
reviewed by a multifunctional team that goes through an exercise called “Real, Win, Worth.” Gore’s
former CEO Chuck Carroll explained how this works: “Is the opportunity real? Is there really
somebody out there that will buy this? Can we win? What do the economics look like? Can we make
money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?”
81. Refer to Gore. When introduced, Gore-Tex fabric gave its manufacturer W. L. Gore a _____.
a.
discontinuous change
b.
competitive advantage
c.
product-driven vision
d.
generational product
e.
results-driven change
82. Refer to Gore. What kind of innovation is encouraged at W. L. Gore?
a.
transitional
b.
compression
c.
dominant design
d.
incremental
e.
self-initiated
83. Refer to Gore. Gore’s approach to innovation is to use frequent design iterations, frequent testing,
regular milestones, multifunctional teams, and powerful leadership. This means it uses the ____
approach to innovation.
a.
experiential
b.
transitional
c.
vision-driven
d.
generational
e.
compression
84. Refer to Gore. Elixir, Gore’s acoustic guitar string, is coated with a thin layer of plastic that avoids the
accumulation of dust, microscopic layers of skin (from musician’s fingers), and dirt and oil, all of
which affect musical quality and sound. To develop Elixir, Gore employees used ____.
a.
transitional innovation
b.
compression design
c.
dominant design
d.
incremental change
e.
self-initiated design
85. Refer to Gore. The list of Gore’s products clearly indicates that the company’s core competency is
innovation. As a company, Gore is capable of developing ____, that is, patterns of innovation over
time that can create sustainable competitive advantage, in a number of different products and
industries.
a.
technology cycles
b.
recalcitrant designs
c.
creative transitions
d.
innovation streams
e.
transitional designs
WWYD 3M
With 40,000 patents and patent applications and more than 55,000 products in numerous industries,
3M has long been one of the most innovative companies in the world. 3M codified its focus on
innovation as “30/5,” meaning 30 percent of its annual sales must come from products no more than
five years old. To achieve this, 3M encouraged its engineers and scientists to spend 5% of their time
on innovation and new product development. The goal worked and 3M ranked as the most innovative
company in the world at one time.
When the company began to pursue efficiency, however, it’s innovative spirit withered. Six
Sigma processes, popularized at Motorola and GE, were introduced by 3M’s previous CEO to analyze
how things got done, remove unnecessary steps, and change procedures that caused defects. As a
result, costs and capital spending dropped and profits surged. But the profits attributed to 30/5 product
innovation sank dramatically—21percent, dramatically below the company’s long-term goal of 30
percent—due to how Six Sigma inversely impacted product innovation. 3M soon fell from the top tier
of innovative companies, dropping to second, third, and then seventh place in industry-wide rankings,
and eventually falling out of the top 50.
Since innovation ensures being competitive in the long run, 3M’s new CEO George Buckley
needed to improve 3M’s ability to introduce innovative products and services. As CEO Buckley
observed, “Invention is by its very nature a disorderly process. You can’t put a Six Sigma process into
that area and … schedule myself for three good ideas …. That’s not how creativity works.”
Cost considerations may be why CEO Buckley encouraged 3M’s managers and scientists to
focus on innovating around its core products and services in 3M’s largest markets. Buckley
encouraged 3M scientists to being “inventing hundreds of next small things” rather than the next big
thing—that is, making current products a little bit better year after year. Buckley calls this innovating
“at the bottom of the pyramid.” In addition to incremental improvements in innovation, 3M’s people
are being encouraged to innovate in ways that reduce product costs. According to Buckley, “We often
think innovation is making a breakthrough at the top of the pyramid. That’s often not where the hardest
challenges are. The hardest challenges are often: How do I make a breakthrough for next to nothing?”
3M scientists are also leveraging ideas from other products or scientists in the company. 3M was
able to do this with its Cubitron sanding disks. 3M knew that its sanding disks would work better if
each tiny piece of ceramic “sand” on its sanding disks was identical. That would allow the disks to act
more like a razor blade when sanding off layers of materials. But, the reality was that each piece of
ceramic “sand” was a different shape with a slightly different size. That meant that the sanding disks
made uneven contact with sanding surfaces, which produced “bouncing” that made it more difficult to
do a quality sanding job. Scott Culler, a 3M Scientist said, “The big voilà happened.” And that “big
voilà” was realizing that 3M’s micro-replicating technology, used to create identical reflective
materials in reflective roads signs, could also be used to create identical, tiny pieces of ceramic sand. It
took 15 months to perfect the process, but Culler and his fellow scientists were able to do it and
produce substantially better Cubitron sanding disks, sales of which are now up 30 percent.
As a result of CEO George Buckley’s efforts, 3M has rebounded strongly from restoring the 5
percent rule for 3M engineers and limiting Six Sigma practices to factories. 3M’s organic growth rate
from products it develops from existing businesses is a healthy and it is introducing 1,000 new
products a year and has even surpassed the company goal of 30 percent for the first time in years.
86. Refer to WWYD 3M. In the case of 3M, why did the Six Sigma initiative have a negative impact on
innovation?
a.
The cost-cutting robbed R&D people of their 5% budgets.
b.
The efficiency programs prevented invention, which is not inherently efficient.
c.
Six Sigma requires 30% profit from innovative products, an impossible goal.
d.
It is still a mystery.
e.
There weren’t enough Six Sigma black belts in the company.
87. Refer to WWYD 3M. Companies such as 3M can achieve competitive advantage if they have a
__________ in a product or service.
a.
competent distinction
b.
distinctive performance
c.
distinctive competence
d.
something better
e.
unfair competence
88. Refer to WWYD 3M. “Innovating at the bottom of the pyramid” is basically a(n)____ approach to
innovation.
a.
technological discontinuity
b.
compression
c.
prototyping
d.
experiential
e.
technological
89. Refer to WWYD 3M. 3M’s CEO George Buckley encouraged the company’s scientists to innovate
around the 3M’s core products and services in the largest markets in which the company competes.
From an innovation standpoint, the result could easily result in:
a.
organizational change
b.
S-curve patterns of innovation
c.
efficiency gains in creativity
d.
technological lockout
e.
impediments from multiple small innovations instead of breakthroughs from larger
innovations
90. Refer to WWYD 3M. The patented adhesive 3M used to on its Post-It note product is an example of:
a.
s-curve
b.
technology
c.
technology cycle
d.
flow
e.
iComp improvements
91. Refer to WWYD 3M. Buckley’s desire to have 3M scientists introduce innovative products and
services on a regular basis suggests that he was concerned about the company’s ability to produce:
a.
technology cycles
b.
iComp improvements
c.
innovation streams
d.
compressed changes
e.
challenging work
92. Refer to WWYD 3M. The description of the breakthrough experienced by the Cubitron sanding team
demonstrates how 3M also used a(n)_____approach to innovation.
a.
technological discontinuity
b.
compression
c.
flow
d.
experiential
e.
incremental
SHORT ANSWER
1. Define creativity and explain its relationship to organizational innovation.
2. Briefly describe the typical pattern of technology cycles that occurs during technological innovation.
3. What are innovation streams? Describe a typical innovation stream.
ANS:
4. How are technology cycles and innovation streams related?
5. What are creative work environments and what does a manager need to do to develop and manage
creative work environments?
6. Given the nature and demands of technology cycles and innovation streams, identify the two types of
change that companies need to be able to manage. What are the approaches most appropriate for
managing each type of change?
ANS:
7. Differentiate between the experiential and compression approaches to innovation. What is the single
component that both approaches have in common?
8. Identify and briefly describe the three steps involved in the process of managing organizational change
as defined by Kurt Lewin.
9. Identify the methods that can be used to manage resistance to change. Which one should be used only
as a last resort?
ANS:
10. Provide one example of a common error made by managers when they lead change at each of the three
steps of the change process.
ESSAY
1. Explain how the concept of innovation streams relates to the concept of sustainable competitive
advantage. Give an example of how this occurs in the business world.
2. The format war between HD-DVD and Blu Ray was preceded by a nearly identical competition
between DVD and DIVX. While DVD technology was used by a variety of manufacturers (including
Sony and RCA), DIVX was a proprietary format developed by Circuit City. Both formats could play
DVD movies, which cost about $30 each. However, DIVX movies (which could be played only on a
DIVX player and not on a DVD player) could be purchased for $5 and viewed for 24 hours, with the
ability to renew (including perpetual viewing) for a reasonable charge and a telephone call. Circuit
City believed that consumers beginning to buy video disk players and disks would prefer its format,
since the disks were less expensive and offered the convenience similar to a rental with the option of a
purchase (conveniently by telephone from home) at a later date. But the DIVX format never took off,
and in mid-1999, Circuit City announced that it was being discontinued. This left DVD as the
dominant format for videodisks. By late 2008 Circuit City stores were in bankruptcy and closed.
Relate this example to the model of the innovation stream and corporate attempts to gain competitive
advantage through technological innovation. Explain how this competition in formats between DVD
and DIVX fits the model of the innovation stream.
ANS:
3. Identify and briefly describe the three things that companies need to be good at in order to successfully
manage innovation streams. Explain why managing these factors is important. Specify which one of
the three might tend to be more influenced by organizational culture and less influenced by the
manager’s own personal ability.
ANS:
4. Explain the difference between activity-oriented and results-driven change. List the advantages of the
results-driven approach to change. Characterize each of the approaches to organizational change
presented in the text in terms of their apparent degree of emphasis on activities or results.