Chapter 11 Self interest Employees Typically Resist Change They Believe

CHAPTER 11

MANAGING CHANGE AND INNOVATION

CHAPTER OUTLINE

Are You Innovative?

I. Innovation and the Changing Workplace

II. Changing Things: New Products and Technologies

A. Exploration

New Manager Self-Test: Assess Your Creativity

B. Cooperation

ANNOTATED LEARNING OBJECTIVES

After studying this chapter, students should be able to:

1. Define organizational change and explain the forces driving innovation and change in

today’s organizations.

Organizational change is defined as the adoption of a new idea or behavior by an organization.

Forces for change exist in both the external environment and within the organization. External

2. Identify the three innovation strategies managers implement for changing products and

technologies.

The three innovation strategies managers implement for changing products and technologies are

exploration, cooperation, and entrepreneurship. Exploration involves designing the organization

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3. Explain the value of creativity, a bottom-up approach, internal contests, idea incubators,

idea champions, and new-venture teams for innovation.

Creativity is the development of novel solutions to perceived problems. Creative individuals

develop ideas that can be adopted by the organization. If creative conditions are successful, new

ideas will be generated that must be carried forward for acceptance and implementation.

4. Describe the horizontal linkage model and how it contributes to successful product and

service innovations.

One approach to successful innovation is called the horizontal linkage model, which shows that

the research, manufacturing, and sales and marketing departments within an organization

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5. Explain open innovation and how it is being used by today’s organizations.

Open innovation is one of the hottest trends today in the product and service development

process. Open innovation means extending the search for and commercialization of new ideas

6. Discuss why changes in people and culture are critical to any change process.

Changes in people and culture pertain to how employees think. These changes involve the

7. Define organization development (OD) and large group interventions.

Organization development (OD) is a planned, systematic process of change that uses behavioral

science knowledge and techniques to improve an organization’s health and effectiveness through

8. Explain the OD stages of unfreezing, changing, and refreezing.

Unfreezing means that people throughout the organization are made aware of problems and the

need for change. This stage creates the motivation for people to change their attitudes and

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9. Identify sources of resistance to change and describe the implementation tactics that

managers can use to overcome resistance.

Employees appear to resist change for several reasons, and understanding them helps managers

implement change more effectively. Due to self-interest, employees typically resist a change

Implementation tactics that can be used to overcome resistance include:

• Communication and education are used when users and others who may resist

implementation need solid information about the change.

LECTURE OUTLINE

ARE YOU INNOVATIVE?

Personal innovativeness reflects the awareness of the need to innovate and a readiness to try new

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I. INNOVATION AND THE CHANGING WORKPLACE

Organizational change is defined as the adoption of a new idea or behavior by an organization.

In today’s highly complex and rapidly changing world, organizations need to continuously adapt

Disruptive innovation refers to innovations in products, services, or processes that radically

change an industry’s rules of the game for producers and consumers. DVDs all but wiped out

An ambidextrous approach means incorporating structures and processes that are appropriate

for both the creative impulse and for the systematic implementation of innovations. With this

II. CHANGING THINGS: NEW PRODUCTS AND TECHNOLOGIES

To thrive in today’s hypercompetitive environment, companies must innovate more, and more

quickly, than ever. One vital area for innovation is introducing new products and technologies.

A. Exploration Exhibit 11.1, Exhibit 11.2, Exhibit 11.3

1. Exploration involves designing the organization to encourage creativity and the

2. Creativity is the essential first step in innovation. Creative people are known for

originality, curiosity, open-mindedness, a focused approach to problem solving,

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NEW MANAGER SELF-TEST: ASSESS YOUR CREATIVITY

Facilitating improvements through innovation and change is an important part of a new

manager’s job. Not everyone thrives in a position of initiating change, but for new managers,

initiating change within the first six months enhances their impact. This exercise helps students

their level of previous change initiation and preparation for the new manager role of idea

champion.

B. Cooperation

1. Internal Coordination Exhibit 11.4

a. Successful innovation requires expertise from several departments

2. External Coordination

a. Organizations also look outside their boundaries to find and develop new ideas.

Some organizations build formal strategic partnerships such as alliances and joint

ventures to improve innovation success. Today’s most successful companies are

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C. Innovation Roles Exhibit 11.5

1. Creating mechanisms to make sure new ideas are carried forward, accepted, and

implemented is the third aspect of product and technology innovation. The formal

2. Successful innovation in most companies involves interplay of different people. The

inventor comes up with the new idea and understands its technical value. The

3. Entrepreneurship is often facilitated through a new-venture team, which is a unit

separate from the rest of the organization that is responsible for developing and

III. CHANGING PEOPLE AND CULTURE

Changes in culture and people pertain to how employees think. These are changes in mindset

rather than technology, structure, or products and services. People change pertains to just a few

employees, such as sending a handful of managers to a training course to improve their

leadership skills. Culture change pertains to the organization as a whole, such as shifting the

basic mind-set from an organizational focus on rules and policies to an organizational focus on

doing whatever is necessary to satisfy customers.

A. Training and Development

1. Training is one of the most frequently used approaches to changing the organization’s

mind-set. A company may offer training programs to large blocks of employees on

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B. Organization Development

1. Organization development (OD) is a planned, systematic process of change that

uses behavioral science knowledge and techniques to improve an organization’s

health and effectiveness through its ability to adapt to the environment, improve

internal relationships, and increase learning and problem-solving capabilities. OD

can help manager’s address at least three types of current problems.

a. Mergers/acquisitions. The disappointing financial results of many mergers and

acquisitions are caused by the failure of executives to determine whether the

b. Organizational decline/revitalization. Organizations undergoing a period of

decline and revitalization experience a variety of problems such as low level of

Discussion Question #9: Do the underlying values of organization development differ from

assumptions associated with other types of change? Discuss.

NOTES________________________________________________________________________

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2. OD Activities Exhibit 11.6

a. Team-building activities enhance the cohesiveness and success of organizational

groups and teams.

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a. Unfreezing. Participants must be made aware of problems and be willing to

change. This step is often associated with diagnosis. An outside expert called a

NOTES________________________________________________________________________

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IV. IMPLEMENTING CHANGE

A. Need for Change

1. External or internal forces translate into a perceived need for change within the

organization. Problems are often subtle, so managers must recognize them and make

Discussion Question #1: Times of shared crisis, such as the September 11, 2001, terrorist attack

on the World Trade Center or the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, can

induce many companies that have been bitter rivals to put their competitive spirit aside and

focus on cooperation and courtesy. Do you believe this type of change will be a lasting one?

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NOTES________________________________________________________________________

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B. Resistance to Change

1. Idea champions and members of new-venture groups often discover that other

employees are unenthusiastic about their new ideas. Managers and employees not

involved in developing an innovation often prefer the status quo. Employees appear

to resist change for the following reasons, and understanding these reasons helps

managers implement change more effectively.

a. Self-interest. Employees typically resist a change they believe will take away

something of value. A proposed change in job design, structure or technology

may lead to a perceived loss of power, prestige, pay, or company benefits. The

fear of personal loss is perhaps the biggest obstacle to organizational change.

2. These reasons for resistance are legitimate in the eyes of employees affected by the

change. The best procedure for managers is not to ignore resistance, but to diagnose

1. Force-field analysis suggests that change is a result of the competition between

driving and restraining forces. Driving forces can be thought of as problems or

opportunities that provide motivation for change within the organization. Restraining

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D. Implementation Tactics Exhibit 11.8

1. Communication and education are used when users and others who may resist

implementation need solid information about the change. Education is important

2. Participation involves users and potential resisters in designing the change. This

3. Negotiation, a more formal means of achieving cooperation, uses formal bargaining

4. Coercion means managers use formal power to force employees to change. Resisters

are told to accept the change or lose rewards or their jobs. In most cases, this

5. The visible support of top management also helps overcome resistance to change.

Top management support symbolizes to all employees that the change is important

Answers to End-of-Chapter Discussion Questions

1. Times of shared crisis, such as the September 11, 2001, terrorist attack on the World Trade

Center or the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, can induce many

companies that have been bitter rivals to put their competitive spirit aside and focus on

cooperation and courtesy. Do you believe this type of change will be a lasting one? Discuss.

Many organizations still have a competitive approach within the industry in which they compete.

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2. A manager of an international chemical company said that few new products in her company

were successful. What would you advise the manager to do to help increase the company’s

success rate?

The manager should understand that all companies have a poor success rate with new products.

New products involve a great deal of risk, and improving the new-product development process

3. As a manager, how would you deal with resistance to change when you suspect employees’

fears of job loss are well founded?

The best way to deal with a situation like this is to be as open and honest about it as possible.

4. If you were a manager responsible for floor cleaning products at a consumer products

company, how might you apply crowdsourcing to identify a new product that would meet

customer needs?

Crowdsourcing is an approach to open innovation. It can be used to gather creative ideas to

5. To tap into the experience of battle-tested soldiers, the U.S. Army recently began

encouraging personnel from all ranks to go online and collaboratively rewrite some of the

Army’s field manuals in a Wikipedia-like fashion. When the rank and file showed little

interest, one retired colonel suggested top leaders should make soldiers participate. Does

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coercion seem like a good way to implement this type of change? Discuss.

Coercion means managers use formal power to force employees to change. Resisters are told to

accept the change or lose rewards or their jobs. In most cases, this approach should not be used

6. Analyze the driving and restraining forces of a change you would like to make in your life.

Do you believe understanding force-field analysis can help you more effectively implement a

significant change in your own behavior?

Force-field analysis examines change with respect to the social forces impinging on it. Kurt

Lewin proposed that change was the result of competition between driving and restraining

7. Which role or roles—the inventor, champion, sponsor, or critic—would you most like to play

in the innovation process? Why do you think idea champions are so essential to the initiation

of change? Could they be equally important for implementation?

Students should demonstrate an understanding of the roles they choose as those they would most

8. You are a manager, and you believe the expense reimbursement system for salespeople is far

too slow, taking weeks instead of days. How would you go about convincing other managers

that this problem needs to be addressed?

Students are likely to express a variety of ideas on how to convince the other managers. One

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9. Do the underlying values of organization development differ from assumptions associated

with other types of change? Discuss.

The underlying values and assumptions of OD were made explicit in the chapter. They include:

“people desire personal growth and development,” “work groups can satisfy important needs for

10. What do you see as the major advantages and disadvantages of a company moving to open

innovation?

Open innovation means extending the search for and commercialization of new ideas beyond the

Apply Your Skills: Experiential Exercise

Is Your Company Creative?

An organization’s culture has a tremendous influence on how receptive employees are to change.

This in turn influences the effectiveness of an attempted organizational change. This exercise

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Apply Your Skills: Small Group Breakout

Are You Ready to Implement Personal Change?

This exercise asks students to think of specific behavioral changes they have considered making

Apply Your Skills: Ethical Dilemma

Crowdsourcing

1. Go to the meeting and argue for abandoning crowdsourcing for now in favor of maintaining

the artistic integrity and values that Off the Hook has always stood for.

This is an option that could put you at odds with the CEO. You have to decide whether it’s

2. Accept the reality that because Off the Hook’s CEO Rob Taylor strongly favors

crowdsourcing, it’s a fait accompli. Be a team player and help work out the details of the

new design approach. Prepare to lay off graphic designers as needed.

This option is one that many would probably take, but you will have to live with the fact that you

3. Accept the fact that converting Off the Hook to a crowdsourcing business model is inevitable,

but because it violates your own personal values, start looking for a new job elsewhere.

This may be the best option, except that you will still probably end up laying off at least some of

Apply Your Skills: Case for Critical Analysis

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Cleaver’s Sausage House

1. What do you think are the reasons for people’s resistance to the MRP implementation?

Explain.

People at Cleaver’s Sausage House were resistant to the MRP implementation for many reasons:

a. Self-interest: Employees typically resist a change they believe will take away something of

value. A proposed change in job design, structure or technology may lead to a perceived loss of

d. Different assessments and goals: Employees who will be affected by innovation may assess

the proposed change differently than an idea champion or new venture team. Critics voice

legitimate disagreements over the proposed benefits of a change. It was obvious to Allison Elam,

the idea champion, the idea of MRP implementation was not a priority topic for the other VPs

and department head, as it was to her.

These reasons for resistance are legitimate in the eyes of employees affected by the change.

2. What is the value of the task force idea suggested by the CEO as a way to facilitate

implementation? Explain.

The task force idea suggested by the CEO would not hold much value. Elam believes in the

3. Which implementation tactics do you think Elam should follow? Why?

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To get the visible support of top management seems to be the most probable implementation

On the Job Video Case Answers

Holden Outerwear

1. Identify the type of change that Holden’s leaders are managing on a daily basis.

2. Is Holden’s creative approach to outerwear an example of disruptive innovation? Why or why

not?

Holden’s mission to inject fashion into the world of snow-sport apparel is groundbreaking, but it

3. What resistance has Holden encountered while introducing innovative garment designs?

Holden is a small company that does not own its own factories or fabric mills. To produce any

garment, the company needs cooperation from outside vendors, which is not always guaranteed.