Managing Change and Managing Change and

InnovationInnovation

(Chapter – 13)

What Is Change?What Is Change?

• Organizational ChangeOrganizational Change Any alterations in the people, structure, or technology Any alterations in the people, structure, or technology

of an organizationof an organization

• Characteristics of ChangeCharacteristics of Change Is constant yet varies in degree and directionIs constant yet varies in degree and direction Produces uncertainty yet is not completely Produces uncertainty yet is not completely

unpredictableunpredictable Creates both threats and opportunitiesCreates both threats and opportunities

• Managing change is an integral partManaging change is an integral partof every manager’s job.of every manager’s job.

Forces for ChangeForces for Change

• External ForcesExternal Forces MarketplaceMarketplace

Governmental laws Governmental laws and regulationsand regulations

TechnologyTechnology

Labor marketLabor market

Economic changesEconomic changes

• Internal ForcesInternal Forces Changes in Changes in

organizational organizational strategystrategy

Workforce changesWorkforce changes

New equipmentNew equipment

Employee attitudesEmployee attitudes

Change Process ViewpointsChange Process Viewpoints

• The Calm Waters Metaphor:The Calm Waters Metaphor: Lewin’s description of the change process as a break Lewin’s description of the change process as a break

in the organization’s equilibrium state:in the organization’s equilibrium state:

UnfreezingUnfreezing the status quo the status quo

ChangingChanging to a new state to a new state

RefreezingRefreezing to make the change permanent to make the change permanent

• White-Water Rapids MetaphorWhite-Water Rapids Metaphor The lack of environmental stability and predictability The lack of environmental stability and predictability

requires that managers and organizations continually requires that managers and organizations continually adapt (manage change actively) to survive.adapt (manage change actively) to survive.

The Change ProcessThe Change Process

Change AgentsChange Agents

• Change Agents:Change Agents:

Persons who act as catalysts and assume the Persons who act as catalysts and assume the

responsibility for managing the change process.responsibility for managing the change process.

• Types of Change Agents:Types of Change Agents:

Managers: internal entrepreneursManagers: internal entrepreneurs

Non-managers: change specialistsNon-managers: change specialists

Outside consultants: change implementation expertsOutside consultants: change implementation experts

Three Categories of ChangeThree Categories of Change

Types of ChangeTypes of Change

• StructuralStructural Changing an organization’s Changing an organization’s

structural components or its structural components or its

structural designstructural design

• TechnologicalTechnological Adopting new equipment, Adopting new equipment,

tools, or operating methods tools, or operating methods

that displace old skills and that displace old skills and

require new onesrequire new ones Automation: replacing certain Automation: replacing certain

tasks done by people with tasks done by people with

machinesmachines

ComputerizationComputerization

• PeoplePeople Changing attitudes, Changing attitudes,

expectations, perceptions, expectations, perceptions,

and behaviors of the and behaviors of the

workforceworkforce

• Organizational Organizational

development (OD)development (OD) Techniques or programs to Techniques or programs to

change people and the change people and the

nature and quality of nature and quality of

interpersonal work interpersonal work

relationships.relationships.

Organizational DevelopmentOrganizational Development

• Organizational Development (OD):Organizational Development (OD):

Techniques or programs to change people and the Techniques or programs to change people and the

nature and quality of interpersonal work relationships.nature and quality of interpersonal work relationships.

• Global OD:Global OD:

OD techniques that work for U.S. organizations may OD techniques that work for U.S. organizations may

be inappropriate in other countries and cultures.be inappropriate in other countries and cultures.

Organizational Development TechniquesOrganizational Development Techniques

Managing Resistance to ChangeManaging Resistance to Change

• Why People Resist Change?Why People Resist Change?

The ambiguity and uncertainty that change introducesThe ambiguity and uncertainty that change introduces

The comfort of old habitsThe comfort of old habits

A concern over personal loss of status, money, A concern over personal loss of status, money,

authority, friendships, and personal convenienceauthority, friendships, and personal convenience

The perception that change is incompatible with the The perception that change is incompatible with the

goals and interest of the organizationgoals and interest of the organization

Managerial Actions to Reduce Managerial Actions to Reduce Resistance to ChangeResistance to Change

• Education and communication

• Participation

• Facilitation and support

• Negotiation

• Manipulation and co-optation

• Selecting people who accept change

• Coercion

Issues in Managing Change (cont’d)Issues in Managing Change (cont’d)

• Changing Organizational Cultures:Changing Organizational Cultures:

Cultures are naturally resistant to change.Cultures are naturally resistant to change.

Conditions that facilitate cultural change:Conditions that facilitate cultural change:

The occurrence of a dramatic crisisThe occurrence of a dramatic crisis

Leadership changing handsLeadership changing hands

A young, flexible, and small organizationA young, flexible, and small organization

A weak organizational cultureA weak organizational culture

Strategies for Managing Cultural ChangeStrategies for Managing Cultural Change

• Set the tone through management behavior; top managers, Set the tone through management behavior; top managers,

particularly, need to be positive role models.particularly, need to be positive role models.

• Create new stories, symbols, and rituals to replace those currently Create new stories, symbols, and rituals to replace those currently

in use.in use.

• Select, promote, and support employees who adopt the new values.Select, promote, and support employees who adopt the new values.

• Redesign socialization processes to align with the new values.Redesign socialization processes to align with the new values.

• To encourage acceptance of the new values, change the reward To encourage acceptance of the new values, change the reward

system.system.

• Replace unwritten norms with clearly specified expectations.Replace unwritten norms with clearly specified expectations.

• Shake up current subcultures through job transfers, job rotation, Shake up current subcultures through job transfers, job rotation,

and/or terminations.and/or terminations.

• Work to get consensus through employee participation and Work to get consensus through employee participation and

creating a climate with a high level of trust.creating a climate with a high level of trust.

Issues in Managing Change (cont’d)Issues in Managing Change (cont’d)

• Handling Employee Stress:Handling Employee Stress:

Stress:Stress:

The adverse reaction people have to excessive pressure The adverse reaction people have to excessive pressure placed on them from extraordinary demands, constraints, or placed on them from extraordinary demands, constraints, or opportunities. opportunities.

Functional StressFunctional Stress

– Stress that has a positive effect on performance.Stress that has a positive effect on performance.

How Potential Stress Becomes Actual Stress:How Potential Stress Becomes Actual Stress:

When there is uncertainty over the outcome.When there is uncertainty over the outcome.

When the outcome is important.When the outcome is important.

Causes of StressCauses of Stress

Symptoms of StressSymptoms of Stress

Issues in Managing Change (cont’d)Issues in Managing Change (cont’d)

• Reducing Stress:Reducing Stress:

Engage in proper employee selectionEngage in proper employee selection

Match employees’ KSA’s to jobs’ Tasks, Duties, and Match employees’ KSA’s to jobs’ Tasks, Duties, and Responsibilities (TDR’s)Responsibilities (TDR’s)

Use realistic job interviews for reduce ambiguityUse realistic job interviews for reduce ambiguity

Improve organizational communicationsImprove organizational communications

Develop a performance planning programDevelop a performance planning program

Use job redesignUse job redesign

Provide a counseling programProvide a counseling program

Offer time planning management assistanceOffer time planning management assistance

Sponsor wellness programsSponsor wellness programs

Issues in Managing Change (cont’d)Issues in Managing Change (cont’d)

• Making Change Happen Successfully:Making Change Happen Successfully:

Embrace changeEmbrace change—become a change-capable —become a change-capable organization.organization.

Create a simple, compelling message explaining why Create a simple, compelling message explaining why change is necessary.change is necessary.

Communicate constantly and honestly.Communicate constantly and honestly.

Foster as much employee participation as possible—Foster as much employee participation as possible—get all employees committed.get all employees committed.

Encourage employees to be flexible.Encourage employees to be flexible.

Remove those who resist and cannot be changed.Remove those who resist and cannot be changed.

Characteristics of Change-Capable OrganizationsCharacteristics of Change-Capable Organizations

• Link the present and the future.

• Make learning a way of life.

• Actively support and encourage day-to-day improvements and changes.

• Ensure diverse teams.

• Encourage mavericks.

• Shelter breakthroughs

• Integrate technology.

• Build and deepen trust.

Stimulating InnovationStimulating Innovation

• CreativityCreativity The ability to combine ideas in a unique way or to The ability to combine ideas in a unique way or to

make an unusual association.make an unusual association.

• InnovationInnovation Turning the outcomes of the creative process into Turning the outcomes of the creative process into

useful products, services, or work methods.useful products, services, or work methods.

• Idea ChampionIdea Champion Dynamic self-confident leaders who actively and Dynamic self-confident leaders who actively and

enthusiastically inspire support for new ideas, build enthusiastically inspire support for new ideas, build

support, overcome resistance, and ensure that support, overcome resistance, and ensure that

innovations are implemented.innovations are implemented.

Innovative Companies Around the WorldInnovative Companies Around the World

Data: Boston Consulting Group * We broke ties by comparing 10-year annualized total shareholder returns. In ties between a public and a private company, the public company was favored.

Systems View of InnovationSystems View of Innovation

Innovation VariablesInnovation Variables

Creating the “Right” Environment for Creating the “Right” Environment for InnovationInnovation

• Structural Variables:

Adopt an organic structure

Make available plentiful resources

Engage in frequent interunit communication

Minimize extreme time pressures on creative activities

Provide explicit support for creativity

Creating the “Right” Environment for Creating the “Right” Environment for Innovation (cont’d)Innovation (cont’d)

• Cultural Variables:Cultural Variables:

Accept ambiguityAccept ambiguity

Tolerate the impracticalTolerate the impractical

Have low external controlsHave low external controls

Tolerate risk takingTolerate risk taking

Tolerate conflictTolerate conflict

Focus on ends rather than meansFocus on ends rather than means

Develop an open-system focusDevelop an open-system focus

Provide positive feedbackProvide positive feedback

Creating the “Right” Environment for Creating the “Right” Environment for Innovation (cont’d)Innovation (cont’d)

• Human Resource Variables:Human Resource Variables:

Actively promote training and development to keep employees’ skills current.

Offer high job security to encourage risk taking.

Encourage individual to be “champions” of change.