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MGTO120s
Managing Change and Innovation
Jian Liang
MGTO, HKUST
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Where We Are
Management
Basic Concepts
(Ch1)
Context
(ch3,4,& 5)
Retrospect
(ch2)
Plan(ch6,
7,8,& 9)
Organize(Ch 10
Lead Control
Innovation (Ch13)
Basic Concepts
(Ch1)
Context
(ch3,4,& 5)
Retrospect
(ch2)
Plan(ch6,
7,8,& 9)
Organize(Ch 10,
11,12,13) Lead Control
Managing Change & Innovation
(Ch13)
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Learning ObjectivesWhat Is Change?
Define organizational change.Explain how managers are affected by change.
Forces for ChangeDiscuss the external and internal forces for change.Contrast internal and external change agents.
Two Views of the Change ProcessContrast the calm waters and white-water rapids
metaphors of change.Explain Lewin’s three-step model of the change process.Discuss the environment that managers face today.
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Learning Objectives (cont’d)
Managing ChangeExplain how managers might change structure,
technology, and people.Explain why people resist change and how resistance
might be managed.Contemporary Issues in Managing Change
Explain why changing organizational culture is so difficult and how managers can do it.
Discuss what it takes to make change happen successfully.
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Learning Objectives (cont’d)
Stimulating InnovationExplain why innovation isn’t just creativity.Explain the systems view of innovation.Describe the structural, cultural, and human resource variables that are necessary for innovation.
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What Is Change?
Organizational Change Any alterations in the people, structure, or
technology of an organization Characteristics of Change
Is constant yet varies in degree and direction Produces uncertainty yet is not completely
unpredictable Creates both threats and opportunities Managing change is an integral part
of every manager’s job.
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Forces for Change:
External forces Marketplace Governmental laws and regulations Technology Labor market Economic changes
Internal Forces Changes in
organizational strategy
Workforce changes
New equipment Employee
attitudes
How is the situation in HK?
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Change Process Viewpoints
The Calm Waters Metaphor The environment is stable and predictable,
so change can be planed. White-Water Rapids Metaphor
The environment is uncertain and dynamic. It requires that managers and organizations continually adapt (manage change actively) to survive.
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Kurt Lewin’s Model
Successful change can be achieved through three steps Unfreezing the status quo Changing to a new state Refreezing to make the change permanent
The limitation of this model Lewin described the change process as a
break in the organization’s equilibrium state It is impossible in a dynamic period
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The Change Process
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Three Categories of Change
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Types of Change
Structural Changing the
organization’s structure or its structural components
Technological Adopting new
equipment or operating methods that displace old skills and require new ones
Automation: Computerization
Workforce Changing attitudes,
expectations, perceptions, and behaviors of the workforce
Organizational development (OD) to change people and the quality of interpersonal work relationships.
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Managing Resistance to Change
Why People Resist Change? The ambiguity and uncertainty that change
introduces
The comfort of old habits
A concern over personal loss of status, money, authority, friendships, and personal convenience
The perception that change is incompatible with the goals and interest of the organization
14Figure 1. Manifestation of resistance to change. Adapted from King & Anderson (1995)
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Fortune Magazine, April 2005
“ People around here agree we need to change, but 90% of them do not want to change themselves”-Ex-CEO Nobuyuki Idei, who picked Howard Stringer, photo on right, as new Sony CEO, to SHOCK the culture into change
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The Institutionalization in Cultural Persistence
Take 5 monkeys in a cage, and place a banana in the cage. One of the monkeys takes the banana. Next do the same, but when the monkey takes the banana throw freezing water on the monkeys.
Now remove one of the monkeys and replace with a new monkey. Repeat process. The new monkey will attempt to get the banana, but the other monkeys will attack it to stop it. The new monkey doesn’t understand why, but it doesn’t go for the banana.
Again replace an existing monkey with a new monkey. Repeat process. The other monkeys, including the monkey that doesn’t know why, will attack the new monkey when it goes to take the banana.
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The Institutionalization in Cultural Persistence (cont’d)
Continue process until none of the original monkeys is left. Even though they don’t know why, they will attack any monkey going for the banana.
Why? That’s the way things are done around here
Zucker, 1977, ASR, 42: 726-743.
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How to Change Organizational Culture
To utilize comprehensive and coordinated strategy unfreeze the current culture implement new “ways of doing things” reinforce those new values
To understand situational factors which make cultural change more likely
dramatic crisis occurs leadership changes handsorganization is young and smallculture is weak
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Stimulating Innovation
Creativity The ability to combine ideas in a unique
way or to make an unusual association. Innovation
Turning the outcomes of the creative process into useful products, services, or work methods
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Systems View of Innovation
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Mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job. Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow.
William L. McKnight
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Which can kill innovation and creativity?
“ That’s impossible!”“We don’t do things that way around here.”“We tried it before.”“I wish it were that easy.”“It’s against policy.”“When you’ve been here longer, you’ll see
why.”“The experts say…”“Who gave you permission to change the
rules?”
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Which can kill innovation and creativity?
“Let’s get real, okay?”“ that’s not logical”“what’s the evidence?”“the right answer”“avoid ambiguity”“to err is wrong”“please do not screw up again!”“quit horsing around and get to work”“follow the rules”“I’m not creative”
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How to stimulate innovation?
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Creating the “Right” Environment for Innovation
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
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Creating the “Right” Environment for Innovation (cont’d)
Cultural Variables Accept ambiguity Tolerate the impractical Have low external controls Tolerate risk taking Tolerate conflict Focus on ends rather than means Develop an open-system focus Provide positive feedback
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Creating the “Right” Environment for Innovation (cont’d)
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.
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3M
“Vision is the engine that drives our enterprise. ” --- Dr. William E. Coyne
Senior vice president, research and development
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The 3M Model for Innovation
One of “the ten most admired corporations” — Fortune annual poll of American CEOs.
The 3M model: Continuous technological innovation Institutionalized “individual
entrepreneurship” Market responsiveness
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3M: A Brief History Minnesota Mining and Manufacturing Company Established in 1902, producing abrasives and
adhesives products. The McKnight era, 1929-1966
Organizational design for continuous changes
The Lou Lehr era, 1980-1985 Reorganization and reorientation
The “Jake” Jacobson era: 1986-1991 The orientation to competition in existing markets
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Example Innovations in 3M:
Laptop: How to balance the conflicting
demands of longer battery life with the size and weight consideration
Power problem? No! it is screen brightness.
Post-it Transparent
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3M Way for Innovation: Structural Decentralization:
Locus of decision at lower lab units. Divisional autonomy response to customers’ need
Organizational design to facilitate lateral communication 3M’s Technical Forum
The strategy of growth through new niches, rather than competition in existing markets. 30% of all sales MUST from products that had been no
longer than 4 years
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3M Way for Innovation: Cultural
Innovation is the center of organizational culture
Resistance to bureaucratic intervention is encouraged The 15 percent solution
Contribution to innovation is greatly respected—legends, institutional memories, ceremonies. Carlton Society: Honorary organization for
extraordinary contribution.
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3M Way for Innovation: HR
Rewards for innovation Salary increase and promotion; Golden Step
Award (team>$5 million); Technical Cycle of Excellence;
Dual track of promotion and recognition Genesis Grants for technicians Alpha Grants for administrative, marketing and
other non-technical areas Tolerance of “well-intentioned failures”
Regard failure as an opportunity to learn rather than an occasion for punishment
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Final Presentation
Hong Kong’s Can-do Spirit
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Further readings:
Harvard business review on innovation: HD58.8 .H3694 2001
Innovation : Breakthrough thinking at 3M, DuPont, GE, Pfizer, and Rubbermaid: HD45 .I53726 1997
HKUST Forum on the Future Development of Hong Kong: HC470.3 .H625 2002 sess 2 (media resource)
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Summary
Understand the two views about organizational change
Explain Lewin’s model Why people resist change Understand creativity and
innovation Discuss how to stimulate innovation
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