Management Chapter 10: Change and Innovation

Managing for Innovation & Change Takes a Careful Hand

Allow Room for Failure
Give One Consistent Explanation for the Change
Look for Opportunities in Unconventional Ways
Have the Courage to Follow Your Ideas
Allow Grieving, Then Move On

Since change is always with us, what should I understand about it?

Companies that do not adapt to change may go through five stages of institutional decline. Two types of change are reactive and proactive. Forces for change may consist of forces outside the organization´┐Żdemographic characteristics, market changes, techno

Recognizing the Need for Change: Collins's Five Stages of Decline

Stage 1, Hubris Born of Success.
Stage 2, Undisciplined Pursuit of More.
Stage 3, Denial of Risk and Peril.
Stage 4, Grasping for Salvation.
Stage 5, Capitulation to Irrelevance or Death.

Fundamental Change: What Will You Be Called On to Deal With?

1. The Marketplace Is Becoming More Segmented & Moving Toward More Niche Products
2. More Competitors Are Offering Targeted Products, Requiring Faster Speed-to-Market
3. Some Traditional Companies May Not Survive Radically Innovative Change
4. China, Indi

Two Types of Change: Reactive Versus Proactive

1. Reactive Change: Responding to Unanticipated Problems & Opportunities
2. Proactive Change: Managing Anticipated Problems & Opportunities

reactive change

making changes in response to problems or opportunities as they arise.

proactive change

involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities.

Forces Originating Outside the Organization

1. Demographic Characteristics
2. Market Changes
3. Technological Advancements
4. Shareholder & Customer Demands
5. Supplier Practices
6. Social & Political Pressures

Forces Originating Inside the Organization

1. Employee Problems
2. Managers' Behavior

Areas in Which Change Is Often Needed

People, Technology, Structure, & Strategy

1. Changing People


2. Changing Technology

Technology is not just computer technology; it is any machine or process that enables an organization to gain a competitive advantage in changing materials used to produce a finished product.

3. Changing Structure

flattening the hierarchy,"
Changes in strategy frequently require changes in structure.

4. Changing Strategy

Shifts in the marketplace often may lead organizations to have to change their strategy.

Resistance to change

an emotional/behavioral response to real or imagined threats to an established work routine. Resistance can be as subtle as passive resignation and as overt as deliberate sabotage.

The Causes of Resistance to Change

(1) employee characteristics, (2) change agent characteristics, and (3) the change agent-employee relationship.

The Degree to Which Employees Fear Change

Least Threatening: Adaptive Change
Somewhat Threatening: Innovative Change
Very Threatening: Radically Innovative Change

Adaptive change

reintroduction of a familiar practice´┐Żthe implementation of a kind of change that has already been experienced within the same organization

Innovative Change

the introduction of a practice that is new to the organization.

Radically Innovative Change

involves introducing a practice that is new to the industry. Because it is the most complex, costly, and uncertain of the levels of change, it will be felt as extremely threatening to managers' confidence and employees' job security and may well tear at t

Ten Reasons Employees Resist Change

1. Individual's Predisposition Toward Change
2. Surprise and Fear of the Unknown
3. Climate of Mistrust
4. Fear of Failure
5. Loss of Status or Job Security
6. Peer Pressure
7. Disruption of Cultural Traditions or Group Relationships
8. Personality Confli

Lewin's Change Model: Unfreezing, Changing, & Refreezing

1. "Unfreezing": Creating the Motivation to Change
2. "Changing": Learning New Ways of Doing Things
3. "Refreezing": Making the New Ways Normal


1. Education and communication
2. Participation and involvement
3. Facilitation and support
4. Negotiation and rewards
5. Manipulation and co-optation
6. Explicit and implicit coercion


a process by which a company compares its performance with that of high-performing organizations

Kotter's Eight Steps for Leading Organizational Change

Steps 1-4 represent unfreezing
Steps 5-7 represent the changing stage
Step 8, corresponding to refreezing

1. Establish a sense of urgency.

Unfreeze the organization by creating a compelling reason for why change is needed.

2. Create the guiding coalition.

Create a cross-functional, cross-level group of people with enough power to lead the change.

3. Develop a vision and a strategy.

Create a vision and a strategic plan to guide the change process.

4. Communicate the change vision.

Create and implement a communication strategy that consistently communicates the new vision and strategic plan.

5. Empower broad-based action

Eliminate barriers to change, and use target elements of change to transform the organization. Encourage risk taking and creative problem solving.

6. Generate short-term wins.

Plan for and create short-term "wins" or improvements. Recognize and reward people who contribute to the wins.

7. Consolidate gains and produce more change.

The guiding coalition uses credibility from short-term wins to create more change. Additional people are brought into the change process as change cascades throughout the organization. Attempts are made to reinvigorate the change process.

8. Anchor new approaches in the culture.

Reinforce the changes by highlighting connections between new behaviors and processes and organizational success. Develop methods to ensure leadership development and succession.

What do I need to know to encourage innovation?

Innovation may be a product innovation or a process innovation, an incremental innovation or a radical innovation. Two myths about innovation are that it happens in a "Eureka!" moment and that it can be systematized. Ways to encourage innovation are by pr


entails the creation of something new.


which is the process of developing something new or unique.


1. Employees play the "blame game."
2. Employees suffer "self-serving bias."
3. Employees don't recognize that not all failures are created equal.
4. A company isn't a learning organization.
5. Employees are reluctant to experiment.

Two Myths About Innovation

Myth No. 1: Innovation Happens in a "Eureka!" Moment
Myth No. 2: Innovation Can Be Systematized

The Seeds of Innovation: Starting Point for Experimentation & Inventiveness

1. Hard Work in a Specific Direction
2. Hard Work with Direction Change
3. Curiosity
4. Wealth & Money
5. Necessity
6. Combination of Seeds

seeds of innovation

the starting point for organizational innovation.

Types of Innovation

Product or Process, Incremental or Radical

product innovation

a change in the appearance or the performance of a product or a service or the creation of a new one

process innovation

a change in the way a product or service is conceived, manufactured, or disseminated.

Incremental Innovations

the creation of products, services, or technologies that modify existing ones.

Radical Innovations

the creation of products, services, or technologies that replace existing ones.

Celebrating Failure: Cultural & Other Factors Encouraging Innovation

1. Culture: Is Innovation Viewed as a Benefit or a Boondoggle?
2. Resources: Do Managers Put Money Where Their Mouths Are?
3. Rewards: Is Experimentation Reinforced in Ways That Matter?


1. Recognize Problems & Opportunities & Devise Solutions
2. Gain Allies by Communicating Your Vision
3. Overcome Employee Resistance, & Empower & Reward Them to Achieve Progress
4. Execute Well

2. Gain Allies by Communicating Your Vision

Showing how the product or service will be made.
Showing how potential customers will be reached.
Demonstrating how you'll beat your competitors.
Explaining when the innovation will take place.