Chapter 6: Innovation and Change P a g e | 1
Effective Management 7th Edition
Chapter 6: Innovation and Change
Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter, followed by a
set of lesson plans for you to use to deliver the content in Chapter 6.
Lesson Plan for Lecture (for large sections)
Lesson Plan for Group Work (for smaller classes)
Assignments with Teaching Tips and Solutions
Highlighted Assignments Key Points
What Would You Do? 3M must return to its roots by sponsoring innovation
throughout its organization.
Management Team Decision Student groups are asked to consider how oil companies can
innovate to address future energy needs.
Additional Assignments Key Points
Management Decision A company that created an innovative line of shoes needs to
figure out how to deal with competitor companies that are
producing counterfeit products.
Develop Your Career Potential Resources are given to help students spark their own
creativity.
Learning Outcomes
6-1 Explain why innovation matters to companies.
Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological
progress is slow and improvements in technological performance are small. As a technology matures,
however, performance improves quickly. Finally, as the limits of a technology are reached, only small
improvements occur. At this point, significant improvements in performance must come from new
technologies.
The best way to protect a competitive advantage is to create a stream of innovative ideas and
products. Innovation streams begin with technological discontinuities that create significant
6-2 Discuss the different methods that managers can use to effectively manage innovation in
their organizations.
To successfully manage innovation streams, companies must manage the sources of innovation and learn
to manage innovation during both discontinuous and incremental change. Because innovation begins with
6-3 Discuss the different methods that managers can use to better manage change as it occurs.
The basic change process involves unfreezing, change, and refreezing. Resistance to change, which stems
from self-interest, misunderstanding and distrust, and a general intolerance for change, can be managed
through education and communication, participation, negotiation, top-management support, and coercion.
Knowing what not to do is as important as knowing what to do to achieve successful change. Managers
Chapter 6: Innovation and Change P a g e | 3
Terms
change agent
change forces
change intervention
coercion
generational change
incremental change
innovation streams
milestones
multifunctional teams
organizational change
organizational development
organizational innovation
technology cycle
testing
transition management team (TMT)
unfreezing
Lesson Plan for Lecture
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Review chapter and determine what points to
cover.
Bring PPT slides.
Read Chapter 6, bring book.
Warm Up Begin Chapter 6 by giving your students a brainteaser to solve. The game Mind Trap
offers several, as do any number of Mensa puzzle books on the market.
Content
Delivery
Lecture slides: Make note of where you stop so you can pick up at the next class
meeting. Slides have teaching notes on them to help you as you lecture.
Topics PowerPoint Slides Activities
6-1 Organizational
Innovation
6-1b Innovation Streams
1: Innovation and Change
2: What Would You Do?
4: S-Curves and
Technological Innovation
5: High-Tech?
Launch your lecture with
your brainteaser and
what a brainteaser has to do
with innovation. (New
problems or new ways of
6-2 Managing
Innovation
6-2b Experiential
6-2c Compression
Approach: Managing
Innovation during
10: Managing Sources of
Innovation
Environments
Approach to Innovation
14: Powerful Leaders
15: Compression
Chapter 6: Innovation and Change P a g e | 5
6-3 Managing
Organizational Change
6-3b What Not to Do
When Leading Change
6-3c Change Tools and
Techniques
18: Managing Change
19: Managing Resistance
to Change
21: What to Do When
Employees Resist Change
22: Errors Managers
Make When Leading
Change
23: Anchoring Changes
24: Change Tools and
Techniques
25: Results-Driven
Change Programs
26: GE Workout
27: Transition
Management Team
28: Primary
Adjust lecture to include the activities in the right column. Some activities should be
done before introducing the concept, some after.
Conclusion
and
Assignments:
1. Give students some experience in developing their own innovative thinking.
2. Assign students to review Chapter 6 and read the next chapter on your syllabus.
Remind students about any upcoming events.
Chapter 6: Innovation and Change P a g e | 6
Lesson Plan for Group Work
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Review material to cover and modify the
lesson plan to meet your needs.
Set up the classroom so that small groups of
4 5 students can sit together.
Read Chapter 6, bring book.
Warm Up Begin Chapter 6 by asking your students to work a brainteaser that you bring to class.
The game MindTrap is full of examples, as are the numerous Mensa and Mensa-style
puzzle books on the market.
Content
Delivery
Lecture on Why Technology Matters and Managing Sources of Innovation (Sections 6-1
and 6-2).
Conversely, break for this group activity:
“Ideation”
Divide the class into small groups of 3 4 students and give each group a bag of
disparate items. (Things rescued from the trash like milk jugs and lids, toilet-paper
tubes, and broken mechanical items make good resources.) Charge each group with
building something you specify, like a hat or a vehicle, or with first deciding what to
build then actually doing it. Depending on your resources, consider giving a set of
building materials to each student and even inviting a professor from the industrial
design department (if your university has an engineering and/or design college) to
visit your class that day to help with the activity. After the students have finished, let
them present their design to the class. If time allows, let students critique each design,
making recommendations for improvement or refinement.
Come back together as a class to share results from the group activity.
Segue into next section by asking students Does change matter?
Break for the following activity:
“What’s Happening”
Divide the class into groups of 3 4 students to map what is happening to at least two
companies facing significant change forces. For each company, students need to list
what they perceive to be the change and resistance forces at work. Consider letting
students pick one company to work with in addition to the one you give them. Also
consider giving each group a different set of companies so that when you come back
together as a class to share information, youll have a wide range of forces to discuss.
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Segue into the next section by asking students how they feel about change: embrace it,
take a wait-and-see attitude, resist it, sabotage it, etc. Youll probably get the majority of
hands at the wait-and-see or resist it probes. Ask students to account for the results:
Why do you think that is? I mean, why do people tend to be resistant to change?
What problems can that tendency create for managers?
What do you think managers can do to reduce that resistance?
Lecture on Managing Resistance to Change and What Not to Do When Leading Change
(Sections 6-3a and 6-3b).
Segue into lecturing on Change Tools and Techniques (Section 6-3c).
After presenting the various techniques in the book, simulate the GE Workout by doing
the following group activity:
“GE Workout for Campus President”
As an entire class, brainstorm a list of specific problems at your college or university.
Problems can be related to any aspect of the campus (financial, registration, social
activities, sports, etc.). Divide students into medium-sized groups of 8 10 students.
Conclusion
and
Assignments:
1. As an assignment that follows up on the Ideation exercise above, have students
2. If you have finished covering Chapter 6, assign students to review Chapter 6 and
read the next chapter on your syllabus.
Remind students about any upcoming events.
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Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment
What Really Happened? Solution
3M
In the opening case, you learned that 3M, once the most innovative company in the world, was no longer
considered innovative. Layoffs, allocating research and development funds based on performance and
potential, and Six Sigma processes the latter of which rooted out inefficiencies, reduced production
times, and decreased waste and production errors led to significantly reduced costs and record profits.
However, product innovation, as measured by the percentage of profits generated by products that were
no more than 5 years old, dropped to a record low of 21 percent, dramatically below the companys long-
term goal of 30 percent. Lets find out what happened at 3M and see what steps CEO George Buckley
took to improve 3Ms ability to introduce innovative products and services.
So, what should 3M do? From inception, 3M has been an innovator, bringing a stream of new products
In Chapter 6, we learned that organizations can create competitive advantage for themselves if they have
a distinctive competence that allows them to make, do, or perform something better than their
competitors. A competitive advantage becomes sustainable if other companies cannot duplicate the
Consequently, companies that want to sustain a competitive advantage must understand and protect
themselves from the strategic threats of innovation. Over the long run, the best way for a company to do
that is to create a stream of its own innovative ideas and products year after year. When a company does
that, its called an innovation stream, that is, a pattern of innovation over time that creates sustainable
competitive advantage. Innovation streams prevent competitors from catching up because new
innovations keep market leaders one, two, or three steps ahead of their competition.
While Six Sigma procedures reduced costs and helped make 3M more efficient and highly profitable, it
also made the company less innovative. In terms of long-run competitiveness and profitability, should 3M
continue to focus on costs and efficiencies, or should it encourage its managers and scientists to be more
innovative?
In the long run, innovation is likely to be a more profitable strategy than low costs and efficiency. Why?
Because the latter are easier to duplicate, which is another way of saying its more difficult to sustain a
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One sure thing, however, is that while Six Sigma processes increased 3Ms short-run profitability, it also
hurt the companys ability to innovate. CEO George Buckley observed, Invention is by its very nature a
disorderly process. You can’t put a Six Sigma process into that area and say, well, I’m getting behind on
invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday. That’s
not how creativity works. Former 3M employee Michael Mucci said, We all came to the conclusion
When people think of innovation, they tend to think of game-changing advances that render current
products obsolete. Innovation, however, also occurs with lots of incremental changes over time. What are
the advantages and disadvantages for 3M of each approach, and when and where would each be more
likely to work?
Game-changing advances in technology are also known as discontinuous change, where old standards
are made obsolete by new technological standards. In other words, new technology displaces old
technology. Discontinuous change is accompanied by uncertainty because no one is sure in periods of
discontinuous change which technological approaches will become the new standard, that is, the new
Whereas the experiential approach is used to manage innovation in highly uncertain environments during
periods of discontinuous change, the compression approach is used to manage innovation in more certain
environments during periods of incremental change Whereas the goals of the experiential approach are
significant improvements in performance and the establishment of a new dominant design, the goals of
the compression approach are lower costs and incremental improvements in the performance and function
of the existing dominant design.
With the experiential approach, the general strategy is to build something new, different, and substantially
better. Because theres so much uncertaintyno one knows which technology will become the market
leadercompanies adopt a winner-take-all approach by trying to create the market-leading, dominant
What are the advantages and disadvantages for 3M of each approach, and when and where would each be
more likely to work? Beyond the issues mentioned above, the primary issue is cost and time frame. Its
generally more expensive and takes longer to use the experiential approach to compete with other
companies to try to establish a new dominant design. After all, only one, or at best two, companies will
win. And, if your companys design isnt the winner, youll lose all of your development costs with
few ways to recoup them in the marketplace.
Cost considerations may be why 3M CEO George Buckley has encouraged 3Ms managers and scientists
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year. Buckley calls this finding innovations at the bottom of the pyramid. And not only is he
encouraging incremental improvements in innovation, hes also pushing 3Ms people to innovate in ways
that reduce product costs. One example is 3Ms low-cost respirator mask. Buckley said, I didn’t drive the
Another example of the incremental approach to innovation using the compression method is when 3M
scientists can leverage 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
Finally, sometimes companies innovate from within by successfully implementing creative ideas in their
products or services. Sometimes, though, innovation is acquired by purchasing other companies that have
made innovative advances. For example, while Google is generally rated as one of the most innovative
companies in the world, most people have forgotten that Google bought YouTube to combine its search
expertise with YouTube’s online video capabilities. Over time, how much should companies like 3M rely
on acquisitions for innovation? Should 3M acquire half, one third, 10 percent, or 5 percent of its new
products through acquisitions? What makes the most sense and why?
One way to grow a company is through internal or organic growth. And when your strategy is innovation,
like at 3M, that means innovating with new products and services developed from your existing
Its a difficult question to answer. When innovation is your core competency and your companys source
of competitive advantage, relying too much on acquisitions for innovation is an admission that youre
failing to generate enough innovative products and services from your existing businesses. And, while its
expensive to develop new products and services internally, its more expensive to acquire them by buying
other companies. On the other hand, acquiring other companies is a relatively quick way to fill holes in
If theres a less than 50 percent chance that acquired companies will prosper, is there some way to
increase the odds of success when acquiring companies and their technological innovations? The best
approach is probably related diversification, in which the different business units share similar products,
manufacturing, marketing, technology, or cultures. The key to related diversification is to acquire or
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Scotchgard fabric protector, transdermal skin patches, and reflective material used in traffic signs).
Furthermore, all of 3Ms divisions share its strong corporate culture that promotes and encourages risk
To what extent will 3M rely on acquisitions as it executes its innovation strategy? According to CEO
George Buckley, 3M will spend about $1 billion a year to buy 15 to 20 companies. Said Buckley, We are
using these kind of acquisitions to show the art of the possible when it can be done fast. For example,
3M paid $810 million to buy Arizant, a medical company whose products keep anesthetized patients, who
lose the ability to regulate their temperatures, warm. Arizant complements other product offerings in
3Ms health care division, particularly in its infection prevention division.
How successful has CEO George Buckley been at making 3M an innovative company again? After
restoring the 5 percent rule (which allows 3M engineers and scientists to spend 5 percent of their time
each week on anything they want, as long at its related to innovation and new product development),
Management Team Decision
FACE THE FUTURE
Purpose
This case gives students an opportunity to think about how a company should position itself within a
changing technological environment.
Setting It Up
To introduce this case, ask students if they are familiar with the following list of companies: Emerson,
Philco, Sylvania, and Westinghouse. These are all the names of once-dominant American companies that
used to manufacture televisions, but which went out of business because of their inability to respond to
technological changes in the market. Thus, you can use this brief exercise to remind students that
companies can quickly fade away if they do not evolve with changing times.
Questions
1. What is your recommendation for how the company should proceed? Should it take action on
developing an alternative fuel network or wait until a dominant design arises?
2. What are the advantages and disadvantages of choosing a technology format before a dominant
design arises?
The primary advantage is that the absence of a dominant design means that the company has an
Chapter 6: Innovation and Change P a g e | 12