Chapter 6: Innovation and Change P a g e | 13
3. What steps could the company take to help ensure that electric engines become the dominant
design?
Some of the steps that the company could take include: forming alliances or working
relationships with other energy providers; forming alliances with auto manufacturers to insure
Practice Being a Manager
SUPPORTING CREATIVITY
Exercise Overview and Objective
This exercise is a basic simulation of the interaction between members of the same organization who
occupy inventor roles and investor roles. Although organizations use cross-functional teams and other
tools to help them synthesize invention and investment perspectives, it is not uncommon to encounter
groups of employees in the same organization who exhibit much greater loyalty to one or the other of
these roles. In such cases, the two groups may find it challenging to work collaboratively. The purpose of
this exercise is to help students feel this basic tension between inventor and investor and then to discuss
its likely impacts on innovation and change.
Preparation
No student preparation is necessary for this exercise. You may wish to ask students to scan the website of
a company similar to that described in the exerciselarge clothing and accessories company that targets
college studentsbut this is entirely optional. Companies that fit this description include The Gap and
In-Class Use
Encourage students in each group to carefully read and follow the instructions in Steps 1 and 2. For
example, Investors need to discuss and agree upon some criteria that your company should use to screen
new-product and service concepts.
To streamline this exercise, no specific financial or manufacturing information is included here. But
you should encourage students to think about the types of issues that might be important to people in their
particular role and to discuss them in general terms. For example, investors might be concerned about the
complexity/difficulty of a particular design. Although students in the investor condition are not given
manufacturing cost data, they should feel free to use the rough proxy of greater complexity/difficulty =
higher costs. Students in the inventor condition likewise must work in the absence of sales data and
Chapter 6: Innovation and Change P a g e | 14
played the inventor roles should recognize the potential chilling effect of such ratings. Inventors may
learn to play it safe by making incremental improvements to established products.
The remaining questions ask students to use their experience in the exercise to explore some of the
group and organizational dynamics surrounding innovation and investment decisions. Inventor units, such
Self-Assessment
MIND BENDERS
Because innovation is a key to corporate success in many industries, companies will often hire outside
consultants to help tap the creativity of their work force. Their goal in doing so is to fill any gaps in their
own creative thinking by looking outside the organization.
For managers, being able to think creatively is an important skill. Creativity should be part of a
In-Class Use
Give students 5 7 minutes to complete the inventory.
Scoring
Scoring instructions are included in the Self-Assessment at the end of the chapter. But students will want
to know what their raw score means. Heres what you can tell them:
Add up the numbers associated with your responses to the 20 items. Generally speaking, the higher
your score, the more innovative your attitude. Compare your score to the norm group (consisting of
graduate and undergraduate business school students, all of whom were employed full time)
Score Percentile
39 5
53 16
62 33
71 50
Chapter 6: Innovation and Change P a g e | 15
Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
50-minute class around them. Alternatively, they can provide a springboard into a group lesson plan. The
Management Workplace video for Chapter 6 would be a nice companion to your introduction to the
course on the first day of classes.
VIDEO: HOLDEN OUTERWEAR
Managing Change and Innovation
Summary:
Founded in 2002 by professional snowboarder Mikey LeBlanc, Holden Outerwear has given traditional
baggy outerwear a complete style makeover. Unlike ski-apparel brands that focus on utility at the expense
of looking good, Holden pants and jackets possess features that are inspired by runway brands like Marc
Jacobs and G-Star, as Holden is always looking to bring new elements of style to the slopes. Holden has
Discussion Questions:
1. Identify the type of change that Holdens leaders are managing on a daily basis.
2. What resistance has Holden encountered while introducing innovative garment designs? How
was it able to overcome that resistance?
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.
In the video, designer Nikki Brush says that being highly innovative means doing things
differently. This requires managers to push on outside apparel manufacturers and vendors in ways
Chapter 6: Innovation and Change P a g e | 16
Management Workplace Video Quiz
Students are able to take the following video quiz on CourseMate. The video is broken into segments, and
each segment has related questions to make sure students understand how the clip connects to the chapter
concepts.
Video Segment 1
Video segment title Managing Change and Innovation
Start time (in sec) 0:00
Stop time (in sec) 1:43
Quiz Question 1 Holden Outerwear is engaged in the following type of change:
a. Organizational change
b. Incremental change
Quiz Question 2 Based on the video, Holden Outerwear promotes creative innovation at the
individual employee level by:
a. Hosting creativity seminars
b. Hiring open-minded employees who thrive on innovation, change, and
experimentation
c. Using team-based brainstorming and devils advocate techniques
d. Copying ideas from top competitors
Correct option b: Hiring open-minded employees who thrive on innovation, change, and
experimentation
Feedback A key source of innovation at Holden is the creativity of the people that it
brings onboard.
Quiz Question 3 The primary source of innovation and change at Holden is:
a. External economic forces
Chapter 6: Innovation and Change P a g e | 17
Video Segment 2
Video segment title Managing Change and Innovation
Start time (in sec) 1:44
Stop time (in sec) 4:13
Quiz Question 1 Which one of the following facts results in a distinctive competence and
competitive advantage for Holden?
a. Holden draws its design inspiration from the world of high fashion, not
the world of ski sports apparel
Quiz Question 2 When Holden garment designer Nikki Brush says she likes taking
something everyone does everyday and doing it slightly different, she is
describing:
a. Radical innovation
b. Incremental change
Quiz Question 3 As part of its dedication to eco-friendly business practices, Holden in 2005
invented the worlds first natural-fiber waterproof breathable fabric for use
in snowboarding outerwear garments. This breakthrough reflects a:
a. Design competition
Chapter 6: Innovation and Change P a g e | 18
Video Segment 3
Video segment title Managing Change and Innovation
Start time (in sec) 4:13
Stop time (in sec) 7:00
Quiz Question 1 According to owner Mikey LeBlanc and designer Nikki Brush, Holden
Outerwear faces increasing resistance from outside vendors that help
Holden manufacture its highly innovative performance outerwear. Sources
of this resistance include all the following except:
a. Fear of economic loss
Quiz Question 2 Acting as change agents, Holdens managers can overcome their
manufacturing partners resistance to change by:
a. Educating partners on how innovative new products can be made using
standard factory technologies and processes
b. Giving partners a share of profits on sales of innovative garments
Quiz Question 3 Companies that rely on innovation, like Holden, can create a creative work
environment by encouraging all of the following except:
a. Challenging work
b. Organizational impediments
c. Freedom
Chapter 6: Innovation and Change P a g e | 19
Additional Assignments and Activities
Review Questions
1. What is the relationship between technology cycles and the S-curve pattern of innovation?
Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological
2. Explain why innovation matters to companies.
It is obvious that technology is rapidly changing our lives. Products that we used yesterday are
3. Describe innovation streams.
Innovation streams are patterns of innovation over time that can create a sustainable competitive
advantage. The four stages of an innovation stream are:
Technological discontinuity: scientific advance or unique combination of existing
4. How can companies create creative work environments?
5. What is the difference between incremental change and discontinuous change?
Technological discontinuities are followed by a discontinuous change, which is characterized by
technological substitution and design competition. Technological substitution occurs when customers
Chapter 6: Innovation and Change P a g e | 20
6. Compare the experiential approach to managing innovation with the compression approach.
The experiential approach to innovation assumes a highly uncertain environment and uses intuition,
flexible options, and hands-on experience to reduce uncertainty and accelerate learning and
understanding.
The steps to the experiential approach are:
In contrast, the compression approach to innovation assumes that incremental innovation can be
planned using a series of steps, and that compressing those steps can speed innovation. It is used in an
environment that is certain when the firm has entered an era of incremental change with established
technology.
The steps to the compression approach are:
7. How do change forces work to bring about change? How do resistance forces work against change
forces?
According to social psychologist Kurt Lewin, change is a function of the forces that promote change
and the opposing forces that slow or resist change. Change forces lead to differences in the form,
8. How can companies manage resistance to change?
Employees might resist change because of self-interest, misunderstanding and distrust, and a general
intolerance for change. The five ways to manage resistance to change are:
Education and communication: When resistance is based on insufficient or incorrect
Chapter 6: Innovation and Change P a g e | 21
9. What mistakes do managers commonly make when leading change?
10. List and describe the four main change tools and techniques.
Managers can use a number of change techniques. Results-driven change and the GE workout reduce
Management Team Decision
INNOVATION COPYCATS
Purpose
In this exercise, students are given the opportunity to take on the role of an innovator that is facing serious
competition from counterfeiters. A shoe company that has introduced a novel product line sees
diminished sales because of other companies that are selling unauthorized duplicates. Students must
consider how they are to deal with not only the threat of competitors, but a threat against the companys
innovation.
Setting It Up
You can introduce this exercise by showing students some recent statistics on the financial impact of
piracy and counterfeiting. For example, an article on Dailytech.com shows that companies around the
world lost more than $50 billion due to software and movie piracy. With such a huge financial impact,
then, what steps should a company take to protect its property?
Scenario
Until a few years ago, your company, Vibram, was known for making soles for hiking boots. Its the only
thing your company did for over 75 years. But one day, a member of your design team came up with a
Chapter 6: Innovation and Change P a g e | 22
Not all is rosy with Vibram, however. First of all, it faces stiff competition from some of the
biggest names in the athletic apparel industry, as Nike, New Balance, and others are planning to release a
similar product. But even more worrisome are counterfeiters. Over the past few months, youve
discovered more than 200 websites that sell fake versions of the FiveFingers shoes. And these websites
Questions
1. As a manager, would you recommend that Vibram keep paying the costs associated with fighting
counterfeiters? Why or why not?
2. Some Virbram employees might be discouraged by counterfeiters, feeling that the innovations
they worked hard to create are being stolen too quickly. How would you nurture the creative
environment at Vibram in spite of counterfeiters?
The text discusses a number of ways in which companies can create creative work environments.
Creative work environments have six components that encourage creativity: challenging work,
Develop Your Career Potential
SPARK YOUR OWN CREATIVITY
Purpose
To help students reconnect with their innate level of creativity and help it flourish.
Setting It Up
This exercise can be used successfully in or out of class. The additional exercise Ideation in Lesson
Plan for Group Work builds on the text portion in a way that is also suited to in-class work or as an
assignment. The Ideation exercise takes a decent amount of time, but students will not only enjoy it, but
This activity encourages students to do three things:
1. Investigate the website for Eureka! Ranch and find out how this brain tank thinks of creativity.
Prior designs for the Eureka! Ranch website included links from the splash page directly to
2. Research Brain Brew radio and tune in to a program. Brain Brew is a radio program invented by
3. Shop the catalog of Mindware, an innovative toy and game company. Targeted toward parents
who are interested in educational products, Mindware offers brainy toys for kids of all ages.
Books of Escher-esque mazes, three-dimensional architectural puzzles, robot invention kits,
chemistry kits, spy kits, and games based on colonial barter systems, geography, Egyptian barter
Chapter 6: Innovation and Change P a g e | 24
Additional Activities
In-Class Activity: “Creative Learning Environments.” Divide the class into small groups (4 5
students). Using the creative work environment model in Exhibit 6.3, have each group come up with
ideas for each component of how innovation can occur in higher education. Students should list ideas for:
1) how to make the work challenging; 2) organizational encouragement; 3) supervisory encouragement;
4) work group encouragement; and 5) freedom. They should also list what organizational impediments
exist. The instructor may adapt this exercise to how to make public education more creative.
“Change Agents.” Go to the website of Patty Hathaway, the change agent, at
www.thechangeagent.com. This is a commercial website that introduces Patty Hathaway as a
“High-Tech Innovation.” Use the Internet to find high-tech companies that are known for innovation
and change. What are the characteristics of these companies? What kinds of products do they sell? What
is their mission statement?
“Ideation.” Divide the class into small groups of 3 4 students and give each group a bag of at least 10
disparate items. Things rescued from the trash, like milk jugs and lids, toilet-paper tubes, and broken
mechanical items make good resources. Also think of things like the items on this list:
Pipe cleaners Magnets Thumbtacks Milk-jug lids
Pom-poms Paper clips Empty cans Plastic chopsticks
String Floral wire Styrofoam balls/cubes Wooden blocks
Fabric scraps Old stapler Keys Rubber bands, all sizes