Summary Management
Chapter 11: Change and Innovation
Innovation and the Changing Workplace
Every organization must change and innovate to survive. Organizational
change is defined as the adoption of a new idea or behavior by an organization.
Disruptive innovation refers to innovations in products, services or processes
that rapidly change competition in an industry, such as the advent of streaming
video or e-books. Disruptive innovation is becoming a goal for companies that
want to remain competitive on a global basis.
Successful change requires that organizations be capable of both creating and
implementing ideas, which means that the organization must learn to be
ambidextrous.
An ambidextrous approach means incorporating structures and processes that
are appropriate for both the creative impulse and the systematic implementation
of innovations. With an ambidextrous approach, managers encourage flexibility
and freedom to innovate and propose new ideas with creative departments and
other mechanisms. They use a more rigid, centralized, and standardized
approach for implementing innovations.
Changing Things: New Products and Technologies
Organizations must embrace many types of change.
A product change is a change in the organization’s product or service outputs.
Product and service innovation is the primary way in which organizations adapt to
changes in markets, technology and competition. Product and service changes
are related to changes in the technology of the organization.
A technology change is a change in the organization’s production process, how
the organization does its work. Technology changes are designed to make the
production of a product or service more efficient.
There are three critical innovation strategies for changing products and
technologies:
Exploration is the stage where ideas for new products and technologies are
born:
Creativity is the generation of novel ideas that may meet perceived
needs or respond to opportunities for the organization.
Bottom-up approach means encouraging the flow of ideas from lower
levels and making sure they get heard and act upon by top executives.
Idea incubator is an organizational program that provides a safe harbor
where employees can generate and develop ideas without interference
from company bureaucracy or politics.
Cooperation guides internal and external coordination (horizontal coordination
mechanisms, customers/partners, open innovation).
Successful product and service innovation depends on cooperation, both within
the organization and with customers and others outside the organization. One
approach to successful innovation is called the horizontal linkage model
(internal coordination), an approach to product change that emphasizes shared
development of innovations among several departments. It means that several
departments, such as marketing, research, and manufacturing, work closely
together to develop new products.
, Organizations also look outside their
boundaries to find and develop new ideas.
Engineers and researchers stay aware of
the new technological developments.
Marketing personnel pay attention to
shifting market conditions and customer
needs. Open innovation (external
coordination) means extending the search
for and commercialization of new ideas beyond the boundaries of the
organization and even beyond the boundaries of the industry, sharing knowledge
and resources within other organizations and individuals outside the firm.
Crowdsourcing is an open innovation approach that taps into ideas from around
the world and let thousands or hundreds of thousands of people participate in the
innovation process, usually via the internet.
Innovation roles involves creating structural mechanisms to make sure new
ideas are carried forward, accepted and implemented.
An Idea champion is a person who sees the need for a champions productive
change within the organization. Championing an idea successfully requires roles
in organizations:
Inventor: comes up with the idea and understands its technical value, has
neither the ability nor the interest to promote it for acceptance within the
organization
Champion: believes in the idea, confronts the organizational realities of
costs and benefits, and gains the political and financial support needed to
bring it to reality.
Sponsor: high-level manager who approves the idea, protects the idea
and removes major organizational barriers to acceptance.
Critic: counterbalances the zeal of the champion by challenging the
concept and providing a reality test against hard-nosed criteria.
Another way to facilitate entrepreneurship is through a new-venture team,
which is a unit separate from the rest of the organization that is responsible for
developing and initiating a major innovation. A variation of the new-venture team
is called a skunkworks, which is a separate small, informal, highly autonomous,
and often secretive group that focuses on breakthrough ideas.
A related idea is the new-venture fund, which provides financial resources from
which individuals or teams can draw to develop new ideas, products or
businesses.
Changing People and Culture
All successful changes involve changes in people and culture as well. People
change refers to a change in the attitudes and behaviors of a few employees. It
concerns just a few employees, such as sending a handful of middle managers to
a training course to improve their leadership skills. Culture change pertains to
the organization as a whole. It is a major shift in the norms, values, and mindset
of the entire organization.
Organization development (OD) is a planned, systematic process of change
that uses behavioral science knowledge and techniques to improve an
organization’s health and effectiveness through its ability to adapt to the
environment, improve internal relationships, and increase learning and problem-
