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 Chapter 11 204

CHAPTER 11

MANAGING CHANGE AND INNOVATION

CHAPTER OUTLINE

Do You Have True Grit?


I. Innovation and the Changing Workplace
A. Why Do People Resist Change?
B. Disruptive Innovation
C. The Ambidextrous Approach
II. Changing Things: New Products and Technologies
A. Exploration
New Manager Self-Test: Assess Your Creativity
B. Cooperation
C. Innovation Roles
III. Changing People and Culture
A. Training and Development
B. Organization Development
IV. Implementing Change
A. Create a Sense of Urgency
B. Apply Force-Field Analysis
C. Use Implementation Tactics

ANNOTATED LEARNING OBJECTIVES


After studying this chapter, students should be able to:

1. Define organizational change and identify some reasons that people frequently resist change.

Organizational change is defined as the adoption of a new idea or behavior by an organization.


Forces for change exist in both the external environment and within the organization. External
forces originate in all environmental sectors including customers, competitors, technology,
economic, and international events. Internal forces for change arise from internal activities and
decisions. Demands by employees, labor unions, and production inefficiencies can all generate a
force to which management must respond with change. Rapidly increasing competition in all
areas is driving the need for innovation. One vital area for innovation is introducing new
products and technologies. These new products and technologies, in turn, require substantial
changes in virtually every aspect of organizations.

Employees resist change for the following reasons:


● Self-interest. Employees typically resist a change they believe will take away something of
value:.
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205  Chapter 11

● Lack of understanding and trust. Employees often do not understand the intended purpose of
a change or distrust management’s intentions for the change.
● Uncertainty. Uncertainty is the lack information about future events.
● Different assessments and goals. Employees who will be affected by innovation may assess
the proposed change differently than an idea champion or new-venture team.

2. Explain disruptive innovation and the ambidextrous approach as possible responses to the
forces that drive innovation and change in today’s organizations.

Disruptive innovation refers to innovations in products, services, or processes that radically


change an industry’s rules of the game for producers and consumers. DVDs all but wiped out the
videotape industry, An ambidextrous approach means incorporating structures and processes that
are appropriate for both the creative impulse and for the systematic implementation of
innovations.

3. Identify the three innovation strategies managers implement for changing products and
technologies.

The three innovation strategies managers implement for changing products and technologies are
exploration, cooperation, and entrepreneurship. Exploration involves designing the organization
to encourage creativity and the initiation of new ideas. Cooperation refers to creating conditions
and systems to facilitate internal and external coordination and knowledge sharing.
Entrepreneurship means that managers put in place processes and structures to ensure that new
ideas are carried forward for acceptance and implementation.

4. Explain the value of creativity, a bottom-up approach, internal contests, idea incubators,
idea champions, and new-venture teams for innovation.

Creativity is the development of novel solutions to perceived problems. Creative individuals


develop ideas that can be adopted by the organization. If creative conditions are successful, new
ideas will be generated that must be carried forward for acceptance and implementation.

An idea incubator is run entirely in-house but provides a safe harbor where ideas from
employees throughout the organization can be developed without interference from company
bureaucracy or politics. Employees with good ideas can take them to the idea incubator for
consideration and development, rather than having to shop their ideas all over the company and
hoping someone pays attention.

Horizontal linkages provide a framework for shared development of innovations among several
departments. This approach saves both time and money in the development of innovations by
increasing coordination among departments.

Open innovation means extending the search for and commercialization of new ideas beyond the
boundaries of the organization and even beyond the boundaries of the industry. Most companies
generate their own ideas in house and then developed, manufactured, marketed, and distributed
them, a closed innovation approach. With open innovation, even customers are brought into the
innovation loop. This allows the company to get many perspectives and develop products and
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Managing Change and Innovation  206

services that result from a host of diverse ideas.

An idea champion is a person who sees the need for and champions productive change within the
organization. Personal energy and effort are required to successfully promote a new idea.
Champions are passionately committed to a new product or idea despite rejection by others.

A recent idea for facilitating corporate innovation is called a new-venture team. This team is a
unit separate from the rest of the organization that is responsible for developing and initiating a
major innovation. Its separate facilities and location free it from organizational rules and
procedures.

5. Describe the horizontal linkage model and how it contributes to successful product and
service
innovations.

One approach to successful innovation is called the horizontal linkage model, which shows that
the research, manufacturing, and sales and marketing departments within an organization
simultaneously contribute to new products and technologies. People from these departments
meet frequently in teams and task forces to share ideas and solve problems. Research people
inform marketing of new technical developments to learn whether they will be useful to
customers. Marketing people pass customer complaints to research to use in the design of new
products and to manufacturing people to develop new ideas for improving production speed and
quality. Manufacturing informs other departments whether a product idea can be manufactured
within cost limits. Throughout the process, development teams keep in close touch with
customers. The horizontal linkage model is increasingly important in a high-pressure business
environment that requires rapidly developing and commercializing products and services.

6. Explain open innovation and how it is being used by today’s organizations.

Open innovation is one of the hottest trends today in the product and service development
process. Open innovation means extending the search for and commercialization of new ideas
beyond the boundaries of the industry, sharing knowledge and resources with other organizations
and individuals outside the firm. For example, game maker Rovio extended the
commercialization of the Angry Birds brand into books, movies, and toys by letting outsiders
license the popular gaming app. Some of the best-selling products from consumer products
company P&G were developed in whole or in part by someone outside the firm. Even Apple has
found a way to tap into the power of open innovation. The Internet has made it possible for
companies to tap into ideas from around the world and let hundreds of thousands of people
contribute to the innovation process, which is why some approaches to open innovation are
referred to as crowdsourcing.

7. Discuss why changes in people and culture are critical to any change process.

Changes in people and culture pertain to how employees think. These changes involve the
adoption of a new mindset. People change pertains to just a few employees, such as sending a
handful of middle managers to a training course to improve their leadership skills. Culture
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207  Chapter 11

change pertains to the organization as a whole, such as shifting the basic organizational mind-set
from one focused on rules and policies to one focused on doing whatever is necessary to ensure
customer satisfaction.

8. Summarize the organization development (OD) stages of unfreezing, changing, and


refreezing, and define large group interventions.
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-solving capabilities. It focuses on the human and social aspects of the organization and
works to change attitudes and relationships among employees, helping to strengthen the
organization’s capacity for adaptation and renewal.

Unfreezing means that people throughout the organization are made aware of problems and the
need for change. This stage creates the motivation for people to change their attitudes and
behaviors.

Changing occurs when individuals experiment with new behavior and learn new skills to be used
in the workplace. This process is sometimes known as intervention, during which the change
agent implements a specific plan for training managers and employees.

Refreezing occurs when individuals acquire new attitudes or values and are rewarded for them
by the organization. The impact of new behaviors is evaluated and reinforced, and the change
agent supplies new data that show positive changes in performance.

The large-group intervention approach brings together participants from all parts of the
organization—often including key stakeholders from outside the organization as well—to
discuss problems or opportunities and plan for change.

9. Describe force field analysis and implementation tactics that managers can use to overcome
resistance

Force-field analysis suggests that change is a result of the competition between driving and
restraining forces. Driving forces can be thought of as problems or opportunities that provide
motivation for change within the organization. Restraining forces are the various barriers to
change, which could be things such as a lack of resources, resistance from middle managers, or
inadequate employee skills. By selectively removing the barriers that restrain change, the
driving forces will be strong enough to enable implementation of the innovation.

Employees appear to resist change for several reasons, and understanding them helps managers
implement change more effectively. Due to self-interest, employees typically resist a change
they believe will take away something of value. Because of lack of understanding and trust,
employees often do not understand the intended purpose of a change or distrust the intentions
behind change. Uncertainty is the lack of information about future events. This fear of the
unknown causes employees to resist a change when they do not know how they will be affected.
Another reason for resistance to change occurs when people who will be affected by innovation
have different assessments and goals than an idea champion or new-venture group. These
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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Change and Innovation  208

reasons for resistance are legitimate in the eyes of employees affected by the change.

Implementation tactics that can be used to overcome resistance include:


 Communication and education are used when users and others who may resist
implementation need solid information about the change.
 Participation involves users and potential resisters in designing the change. This approach is
time consuming, but it pays off because users understand and become committed to the
change. Negotiation, a more formal means of achieving cooperation, uses formal bargaining
to win acceptance and approval of a desired change.
 Coercion means managers use formal power to force employees to change. Resisters are told
to accept the change or lose rewards or their jobs. In most cases, this approach should not be
used because employees feel like victims, are angry at change managers, and may even
sabotage the changes. Coercion may be necessary in crisis situations when a rapid response
is urgent.
 The visible support of top management also helps overcome resistance to change. Top
management support symbolizes to all employees that the change is important for the
organization. Without top management support the desired change will probably not happen.

LECTURE OUTLINE

DO YOU HAVE TRUE GRIT?

This exercise measures s person’s grit, which is defined as perseverance and passion for long-
term goals. Grit is a key trait for change agents who must persevere through resistance and
setbacks to succeed with implementation of a significant innovation. Individuals high in grit do
not swerve from their change implementation goals.

I. INNOVATION AND THE CHANGING WORKPLACE

Organizational change is defined as the adoption of a new idea or behavior by an


organization. In today’s highly complex and rapidly changing world, organizations need to
continuously adapt to new situations if they are to survive and prosper. Advances in
information technology and the Internet are driving many of the changes in today’s world and
today’s organizations. Organizations must embrace many types of change.

A. Why Do People Resist Change?

1. Many people prefer the status quo, which is one reason why change is so difficult.
Understanding why people resist change is a good start toward knowing how to help
lead needed change in organizations.

a. Self- interest. Employees typically resist a change they believe will take away
something of value. A proposed change in job design, structure or technology
may lead to a perceived loss of power, prestige, pay, or company benefits. The
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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
209  Chapter 11

fear of personal loss is perhaps the biggest obstacle to organizational change.

b. Lack of understanding and trust. Employees often do not understand the intended
purpose of a change or distrust management’s intentions for the change. If
previous working relationships with an idea champion have been negative,
resistance may occur.

c. Uncertainty. Uncertainty is the lack information about future events. Uncertainty


represents a fear of the unknown, as employees do not know how a change will
affect them. Uncertainty is especially threatening for employees who have a low
tolerance for change and fear the unusual.

d. Different assessments and goals. Employees who will be affected by innovation


may assess the proposed change differently than an idea champion or new-venture
team. Critics voice legitimate disagreements over the proposed benefits of a
change.

2. These reasons for resistance are legitimate in the eyes of employees affected by the
change. The best procedure for managers is not to ignore resistance, but to diagnose
the reasons for resistance to change and design strategies to gain acceptance by users.

B. Disruptive Innovation

1. Disruptive innovation refers to innovations in products, services, or processes that


radically change an industry’s rules of the game for producers and consumers. DVDs
all but wiped out the videotape industry, and now streaming video is threatening the
same fate for DVDs. Digital cameras appear to be eliminating the photographic film
industry.

2. Western firms are using reverse innovation. Rather than innovating in affluent
countries and transferring products to emerging markets, companies are now creating
innovative low-cost products for emerging markets and then quickly and
inexpensively repackaging them for sale in developed countries.

.C. The Ambidextrous Approach

1. An ambidextrous approach means incorporating structures and processes that are


appropriate for both the creative impulse and for the systematic implementation of
innovations.

2. With this approach, managers encourage flexibility and freedom to innovate and
propose new ideas with creative departments, venture teams, and other mechanisms,
but they also use a more rigid, centralized, and standardized approach for
implementing innovations.

II. CHANGING THINGS: NEW PRODUCTS AND TECHNOLOGIES Exhibit 11.1

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Managing Change and Innovation  210

To thrive in today’s hypercompetitive environment, companies must innovate more, and


more quickly, than ever. One vital area for innovation is introducing new products and
technologies. 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. A technology change is a change in the
organization’s production processes—how the organization does its work. Technology
changes are designed to make the production of a product or service more efficient.

A. Exploration Exhibit 11.2

1. Exploration involves designing the organization to encourage creativity and the


initiation of new ideas. It is the stage where ideas for new products and technologies
are born. Creativity is the generation of novel ideas that might meet perceived needs
or respond to opportunities for the organization.

2. Creativity is the essential first step in innovation. Creative people are known for
originality, curiosity, open-mindedness, a focused approach to problem solving,
persistence, a relaxed and playful attitude, and receptiveness to new ideas. Managers
are responsible for creating a work environment that allows creativity to flourish.
Creative organizations have an internal culture of playfulness, freedom, challenge,
and grass-roots participation.
Exhibit 11.3

3. Innovative companies use a bottom-up approach, which means encouraging new


flow of ideas from lower levels and making sure they get heard and acted upon by top
executives. Some companies also use internal innovation contests.

4. The idea incubator is another popular way to encourage new ideas within an
organization. An idea incubator provides a safe harbor where ideas from employees
throughout the company can be developed without interference from company
bureaucracy or politics.

NEW MANAGER SELF-TEST: ASSESS YOUR CREATIVITY

Facilitating improvements through innovation and change is an important part of a new


manager’s job. Not everyone thrives in a position of initiating change, but for new managers,
initiating change within the first six months enhances their impact. This exercise helps students
their level of previous change initiation and preparation for the new manager role of idea
champion.

B. Cooperation

1. Internal Coordination Exhibit 11.4

a. Successful innovation requires expertise from several departments


simultaneously. The horizontal linkage model is one approach to successful
innovation. In this model, people from several departments meet frequently in
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211  Chapter 11

teams and task forces to share ideas and solve problems.

b. The horizontal linkage model is increasingly important in today’s high-pressure


business environment that requires developing and commercializing products and
services incredibly fast.

2. External Coordination

c. Organizations also look outside their boundaries to find and develop new ideas.
Some organizations build formal strategic partnerships such as alliances and joint
ventures to improve innovation success. Today’s most successful companies are
including customers, strategic partners, suppliers, and other outsiders directly in
the product and service development process.

d. Open innovation is one of the hottest trends. Open innovation means extending
the search for and commercializing new ideas beyond the boundaries of the
organization and even beyond the boundaries of the industry. Smart companies
find and use ideas from anywhere within and outside the organization.

e. The Internet enables companies to tap into ideas globally and let hundreds of
thousands of people contribute to the innovation process, which is why some
approaches to open innovation are referred to as crowdsourcing. Crowdsourcing
is also being used to gather creative ideas for solving social problems.

Another approach to innovation is to buy startup companies. This innovation by


acquisition strategy recognizes that innovation often happens with young, small,
entrepreneurial companies.

C. Innovation Roles

1. Creating mechanisms to make sure new ideas are carried forward, accepted, and
implemented is the third aspect of product and technology innovation. The formal
definition of an idea champion is a person who sees the need for and champions
productive change within the organization. Personal energy and effort are required to
successfully promote a new idea. Champions are passionately committed to a new
product or idea despite rejection by others.

2. Successful innovation in most companies involves interplay of different people. The


inventor comes up with the new idea and understands its technical value. The
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. The
sponsor is a high-level manager who approves and protects the idea, and removes
organizational barriers to its acceptance. The critic counterbalances the zeal of the
champion by challenging the concept, thereby preventing people in the other roles
from adopting a bad idea.

3. Entrepreneurship is often facilitated through a new-venture team, which is a unit


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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Change and Innovation  212

separate from the rest of the organization that is responsible for developing and
initiating a major innovation. A skunkworks is a variation of a new-venture team in
which a separate small, informal, highly autonomous, and often secretive group
focuses on breakthrough ideas for the business. A new-venture fund provides
resources from which individuals and groups can draw to develop new ideas,
products, or businesses.

III. CHANGING PEOPLE AND CULTURE Exhibit 11.5

Changes in culture and people pertain to how employees think. These are changes in mindset
rather than technology, structure, or products and services. People change pertains to just a
few employees, such as sending a handful of managers to a training course to improve their
leadership skills. Culture change pertains to the organization as a whole, such as shifting the
basic mind-set from an organizational focus on rules and policies to an organizational focus
on doing whatever is necessary to satisfy customers.

A. Training and Development

1. Training is one of the most frequently used approaches to changing the organization’s
mind-set. A company may offer training programs to large blocks of employees on
subjects such as teamwork, diversity, emotional intelligence, quality circles,
communication skills, or participative management.

2. Some companies particularly emphasize training and development for managers, with
the idea that the behavior and attitudes of managers will influence people throughout
the organization and lead to culture change. Leading companies also want to provide
training and development opportunities for everyone.

B. Organization Development

1. 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-solving capabilities. OD
can help manager’s address at least three types of current problems.

a. Mergers/acquisitions. The disappointing financial results of many mergers and


acquisitions are caused by the failure of executives to determine whether the
administrative style and corporate culture of the two companies fit. They fail to
recognize that the firms may have widely different values, beliefs, and practices.
These differences create stress and anxiety for employees, and these negative
emotions affect future performance. OD experts can help smooth the integration
of the firms.

b. Organizational decline/revitalization. Organizations undergoing a period of


decline and revitalization experience a variety of problems such as low level of
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213  Chapter 11

trust, lack of innovation, high turnover, and high levels of conflict and stress. The
period of transition requires opposite behaviors to include confronting stress,
creating open communication, and fostering creative innovation. OD techniques
can contribute greatly to cultural revitalization by managing conflicts, fostering
commitment, and facilitating communication.

c. Conflict management. Conflict can occur at any time and place within a healthy
organization. OD efforts can help resolve conflict problems.

Discussion Question #9: Do the underlying values of organization development differ from
assumptions associated with other types of change? Discuss.

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

2. OD Activities

a. Team-building activities enhance the cohesiveness and success of organizational


groups and teams.

b. Survey-feedback activities begin with an employee questionnaire asking about


items such as values, climate, participation, leadership, and group cohesion. An
OD consultant provides feedback to the employees regarding their responses and
problems identified from the survey or questionnaire.

c. Large-group interventions are more attuned to bringing about fundamental


organizational change in today’s complex, fast-changing world. Large-group
intervention brings together participants from all parts of the organization to
discuss problems or opportunities and plan for change.

3. OD Steps

a. Unfreezing. Participants must be made aware of problems and be willing to


change. This step is often associated with diagnosis. An outside expert called a
change agent, an OD specialist, performs a systematic diagnosis of the
organization. The diagnosis identifies work-related problems.

b. Changing. Changing occurs when individuals experiment with new behavior and
learn new skills to be used in the workplace. This is sometimes known as
intervention, during which the change agent implements a plan for training
managers and employees. This may include team building, survey feedback,
intergroup coaching, process-consultation, or symbolic leadership.

c. Refreezing. Refreezing occurs when individuals acquire new attitudes or values


and are rewarded for them by the organization. The impact of new behaviors is
evaluated and reinforced; the change agent supplies new data that show positive
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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Change and Innovation  214

changes in performance. Changes are institutionalized in the organizational


culture, so that employees begin to view the changes as a normal, integral part of
the organization.

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

IV. IMPLEMENTING CHANGE

C. Create a Sense of Urgency

1. External or internal forces translate into a perceived need for change within the
organization. Problems are often subtle, so managers must recognize them and make
others aware of the need for change.

2. Managers must be alert to problems and opportunities because the need for change
sets the stage for actions that create a new product or technology. A need for change
is a disparity between existing and desired performance levels.

Discussion Question #1: Microsoft and Intel are giants of the computer industry. Why do you
think that these large companies have had such a hard time competing against disruptive
innovations such as mobile computing?

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

D. Apply Force-Field Analysis Exhibit 11.6

1. Force-field analysis suggests that change is a result of the competition between


driving and restraining forces. Driving forces can be thought of as problems or
opportunities that provide motivation for change within the organization. Restraining
forces are the various barriers to change, which could be things such as a lack of
resources, resistance from middle managers, or inadequate employee skills.

2. By selectively removing the barriers that restrain change, the driving forces will be
strong enough to enable implementation of the innovation.

E. Use Implementation Tactics Exhibit 11.7

1. Top Management Support. The visible support of top management makes


people aware of the importance of the change. Top management support
is especially important when a change involves multiple departments or
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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
215  Chapter 11

when resources are being reallocated among departments. Without top


management support the desired change will probably not happen.

2. Communication and education are used when users and others who may resist
implementation need solid information about the change. Education is important
when the change involves new technical knowledge or the users are unfamiliar with
the idea. Managers should speak to people’s hearts and minds. People are more likely
to accept changes in their behavior when they both understand the rational reasons for
doing so and see a picture of change that influences their feelings.

3. Participation involves users and potential resisters in designing the change. This
approach is time consuming, but it pays off because users understand and become
committed to the change. Participation also helps managers determine potential
problems and understand the differences in perceptions of change among employees.

4. Negotiation, a more formal means of achieving cooperation, uses formal bargaining


to win acceptance and approval of a desired change. Companies that have strong
unions frequently must formally negotiate change with the unions. The change may
then become part of the union contract.

5. Coercion means managers use formal power to force employees to change. Resisters
are told to accept the change or lose rewards or their jobs. In most cases, this
approach should not be used because employees feel like victims, are angry at change
managers, and may even sabotage the changes. Coercion may be necessary in crisis
situations when a rapid response is urgent.

Answers to End-of-Chapter Discussion Questions

1. Microsoft and Intel are giants of the computer industry. Why do you think that these large
companies have had such a hard time competing against disruptive innovations such as
mobile computing?

Disruptive innovation refers to innovations in products, services, or processes that radically


change an industry’s rules of the game for producers and consumers. Smartphones have
replaced the need for desktop computers and all the hardware that goes with them—a mouse,
a keyboard, speakers, a modem. The way people connect to the Internet now is a radical
change and the giants of the computer industry are having a hard time competing.

2. A manager of an international chemical company said that few new products in her company
were successful. What would you advise the manager to do to help increase the company’s
success rate?

The manager should understand that all companies have a poor success rate with new
products. New products involve a great deal of risk, and improving the new-product
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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Change and Innovation  216

development process can bring major benefits to organizations. Based on the horizontal
linkage model, the manager should explore three things. First, do people in marketing have a
good understanding of customer needs? Marketing must know the customer well, not only
through market surveys but also through face-to-face contact. Second, does the R&D
department have an understanding of the latest technology? It should bring the latest
techniques to bear in the design of new products. Next, and perhaps most important, are
members from key departments cooperating in the development of new products? Do the
research and development specialists listen to what marketing people have to say about
customer needs? Do marketing people listen to what R&D has to say about new
technological developments and work with them to decide how these developments can be
used in new products? Only by selflessly working together can these departments increase
the rate of success of new produce. If each department fails to do its own job, or fails to
cooperate with other departments, new products have little chance.

3. As a manager, how would you deal with resistance to change when you suspect employees’
fears of job loss are well founded?

The best way to deal with a situation like this is to be as open and honest about it as possible.
Employees should be given all the information that is available, as soon as it becomes
available, so that they can begin to plan for the transition. If possible, arrangements should
be made to help affected employees find new positions in the company or with another
employer. Ignoring the situation or giving false hope to these employees will only increase
their feelings of betrayal and frustration.

4. If you were a manager responsible for floor cleaning products at a consumer


products company, how might you apply crowdsourcing to identify a new product that would
meet customer needs?

Crowdsourcing is an approach to open innovation. It can be used to gather creative ideas to


identify a new product that would meet customer needs. With the use of the Internet the
company will be able to tap into ideas globally and let hundreds of thousands of people
contribute to the innovation process of creating a new product for the company based on their
own needs.

5. To tap into the experience of battle-tested soldiers, the U.S. Army recently began
encouraging personnel from all ranks to go online and collaboratively rewrite some of the
Army’s field manuals in a Wikipedia-like fashion. When the rank and file showed little
interest, one retired colonel suggested top leaders should make soldiers participate. Does
coercion seem like a good way to implement this type of change? Discuss.

Coercion means managers use formal power to force employees to change. Resisters are told
to accept the change or lose rewards or their jobs. In most cases, this approach should not be
used because employees feel like victims, are angry at change managers, and may even
sabotage the changes. Coercion may be necessary in crisis situations when a rapid response
is urgent.

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217  Chapter 11

There is no need for a rapid response in this situation, and if soldiers are forced to participate
in this project, they are likely to be angry and may even sabotage the project by entering false
or incorrect information into the field manuals as a means of revenge against their
supervisors. Incorrect or subversive information in field manuals could result in the deaths
of soldiers at some point in the future and Army commanders cannot afford to take that
chance. A better approach might be to gather together a group of interested soldiers of
different ranks and have them use a similar process to create the manuals.

6. Analyze the driving and restraining forces of a change you would like to make in your life.
Do you believe understanding force-field analysis can help you more effectively implement a
significant change in your own behavior?

Force-field analysis examines change with respect to the social forces impinging on it. Kurt
Lewin proposed that change was the result of competition between driving and restraining
forces. By identifying and analyzing these forces, managers can enhance the driving forces
and reduce the restraining forces, thereby enabling the change to be implemented.

The important thing for students in answering the first part of this question is to practice
analyzing the social forces that work in favor of a change and those that work against it. In
that way, students can learn to understand and use force-field analysis to implement changes
in their lives and in their behavior.

7. Why do you think research has shown that idea champions are so essential to the
initiation of change? Could they be equally important for implementation?

The idea champion role is important because change does not occur by itself. Personal
energy and effort are required to successfully promote a new idea. Idea champions fight to
convince managers of the merit of a new idea and provide the passionate commitment needed
to push a new product or idea through to completion despite rejection by others.

8. You are a manager, and you believe the expense reimbursement system for
salespeople is far too slow, taking weeks instead of days. How would you go about
convincing other managers that this problem needs to be addressed?

Students are likely to express a variety of ideas on how to convince the other managers. One
thought would be to tie sales force satisfaction to the timeliness of expense reimbursement by
suggesting that speeding up the reimbursement process will increase satisfaction among
salespeople, leading to higher commitment and larger sales volume. Another approach might
be to suggest that a faster reimbursement process would facilitate increased opportunities for
salespeople to meet with clients by eliminating concerns of over-extending expense accounts.

9. Do the underlying values of OD differ from assumptions associated with other types of
change? Discuss.

The underlying values and assumptions of OD were made explicit in the chapter. They
include: “people desire personal growth and development,” “work groups can satisfy
important needs for individuals,” and “organizations can be designed to meet the needs of
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Managing Change and Innovation  218

individuals and groups and enhance their contributions to organization performance.’’ These
assumptions and values have a humanistic quality and are primarily concerned with human
values within the organization.

Values and assumptions for technology, structure, and product changes were not explicitly
described in the chapter. Students should be encouraged to think about what the underlying
values are. They might assume that the primary value is to increase organizational efficiency
and effectiveness. They may also mention that little credibility is given to the human side of
change because it is assumed that performance can be improved through changes in
technology, products, and structure. Another difference in assumption might be called
rationality; that is, rational procedures are used to initiate and implement change.
Technology, products, and structural changes are presumed to arise to meet genuine needs,
and it is expected that people will go along with these changes if they understand the needs.
Often human beings do not act in rational ways, however, and the OD approaches tend to
display an appreciation for the complex needs and behaviors of employees.

10. What do you see as the major advantages and disadvantages of a company moving to
open innovation?

Open innovation 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 with other organizations and individuals outside the firm.

With open innovation, even customers are brought into the innovation loop. This allows the
company to get many perspectives and develop products and services that result from a host
of diverse ideas. However, this could also lead the company to losses, for example, loss of
control over the external resources, increased complexity in managing innovation, higher
costs for the company, possible loss of competitive advantage, etc.

Apply Your Skills: Experiential Exercise

Is Your Company Creative?

An organization’s culture has a tremendous influence on how receptive employees are to change.
This in turn influences the effectiveness of an attempted organizational change. This exercise
measures the culture/climate of an organization for which students worked or with which they
are familiar. Once students have completed the questionnaire and have determined how
effectively their organization fosters creativity, ask them to consider how important creativity is
to the success of that organization. Some organizations may not benefit substantially from
creativity. Of course, many would argue that creativity and innovation are becoming
increasingly important to most organizations given the complexity and rate of change in the
external environment (e.g., international competition). You might ask students to identify
specific actions organizations can take to foster creativity. What actions stifle creativity?

Apply Your Skills: Small Group Breakout


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219  Chapter 11

Are You Ready to Implement Personal Change?

This exercise asks students to think of specific behavioral changes they have considered making
in their lives, then answer 12 questions provided in the exercise. After scoring their answers to
the questions, students gather in groups of three to five and describe their desired changes and
the stages of change they are in. Then, as a group, they discuss additional questions provided in
the exercise.

Apply Your Skills: Ethical Dilemma

Crowdsourcing

1. Go to the meeting and argue for abandoning crowdsourcing for now in favor of maintaining
the artistic integrity and values that Off the Hook has always stood for.

This is an option that could put you at odds with the CEO. You have to decide whether it’s
worth the risk to your relationship with him to stand up for your views. Because the CEO is
strongly in favor of crowdsourcing, you are likely to lose the argument and you may have
created bad feelings between yourself and the CEO to no avail.

2. Accept the reality that because Off the Hook’s CEO Rob Taylor strongly favors
crowdsourcing, it’s a fait accompli. Be a team player and help work out the details of the
new design approach. Prepare to lay off graphic designers as needed.

This option is one that many would probably take, but you will have to live with the fact that
you knowingly signed on to something you didn’t believe in that would cause your graphic
designers to lose their jobs.

3. Accept the fact that converting Off the Hook to a crowdsourcing business model is inevitable,
but because it violates your own personal values, start looking for a new job elsewhere.

This may be the best option, except that you will still probably end up laying off at least
some of your graphic designers before you find a new job. Of course, if you have the
resources and the desire to do it, you can always start your own graphic design company and
hire the graphic designers who are being laid off from Off the Hook.

Apply Your Skills: Case for Critical Analysis

Cleaver’s Sausage House

1. What do you think are the reasons for people’s resistance to the MRP implementation?
Explain.

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Managing Change and Innovation  220

People at Cleaver’s Sausage House were resistant to the MRP implementation for many
reasons:

a. Self-interest: Employees typically resist a change they believe will take away something
of value. A proposed change in job design, structure or technology may lead to a
perceived loss of power, prestige, pay, or company benefits. The fear of personal loss is
perhaps the biggest obstacle to organizational change. Implementing the MRP idea would
require a radical overhaul of every facet of the Cleaver’s operation. Making the system
work would require at least 25 managers and employees to change how they did their
jobs.

b. Lack of understanding and trust: Employees often do not understand the intended purpose
of a change or distrust management’s intentions for the change. If previous working
relationships with an idea champion have been negative, resistance may occur. The CFO
expressed a doubt about implementing it.

c. Uncertainty: Uncertainty is the lack of information about future events. Uncertainty


represents a fear of the unknown, as employees do not know how a change will affect
them. Uncertainty is especially threatening for employees who have a low tolerance for
change and fear the unusual. Cleaver’s senior staff warned that the change could be a
costly disaster as it involved serious money for a company of 350 employees. The vice
president of sales doubted whether the MRP system could provide the solid sales
forecasts that Cleaver needed and feared it would result in shortages of raw materials.
Even the director of logistics warned about the problems associated with the maintenance
of an MRP system which can lead to customer dissatisfaction.

d. Different assessments and goals: Employees who will be affected by innovation may
assess the proposed change differently than an idea champion or new venture team.
Critics voice legitimate disagreements over the proposed benefits of a change. It was
obvious to Allison Elam, the idea champion, the idea of MRP implementation was not a
priority topic for the other VPs and department head, as it was to her.

These reasons for resistance are legitimate in the eyes of employees affected by the change.

2. What is the value of the task force idea suggested by the CEO as a way to facilitate
implementation? Explain.

The task force idea suggested by the CEO would not hold much value. Elam believes in the
technology and its implementation like any no one else in the organization so she feels that
only she can get it done. She feels that the task force will only slow her down in the process.

3. Which implementation tactics do you think Elam should follow? Why?

To get the visible support of top management seems to be the most probable implementation
tactics for Elam to follow as it would help overcome the people’s resistance to change. Top
management support symbolizes to all employees that the change is important for the
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221  Chapter 11

organization. Top management support is essentially important when a change involves


multiple departments or when resources are relocated among departments; the MRP
implementation involves these same requirements. Without top management support the
desired change will probably not happen.

On the Job Video Case Answers


Honest tea: Managing Change and innovation

1. Part of Honest Tea’s mission is to convince consumers to make healthier choices


by offering innovative products. Based on what you saw in the video, describe at least two
“disruptive innovations” this company has made to support this goal.

One disruptive innovation was to provide a drink that did not have 100 calories or more.
When the company started there was nothing on the market that had 40 calories and all natural
ingredients. Honest Tea has since abandoned the use of sugar altogether and substituted
healthier sweeteners such as honey. Another disruptive innovation is changing the bottle from
plastic that ends up in a landfill to a new recyclable material that will promote environmental
sustainability. Both of these innovations support the company’s mission to offer healthier
products delivered in an environmental-friendly manner.

2. When Honest Tea decided to become a division of Coca-Cola, many employees and
customers expressed resistance to that change. Based on what you know about the two
companies, why do you think people might have resisted this change?

People might have resisted this change because of fear of the unknown. Coke is huge
corporate giant and Honest Tea is a small, employee-friendly company with a distinct culture.
Employees might have feared that the new ownership would threaten their job security.
Employees might not have understood that Honest Tea lacked the corrected distribution
capabilities and could not expand nationally without a large company like Coca-Cola.

3. Of the implementation tactics described in the text, which tactics did Honest Tea’s leaders
most likely use to overcome that resistance?

 Top Management Support. The visible support of Seth would make employees aware of
the importance of the change. Top management support is especially important when a
change involves resources being reallocated or when there is an acquisition. Seth felt
strongly that the company could not continue to grow unless its distribution capabilities
were addressed. He had already failed at bottling his products and realized that
increasing distribution was beyond the company’s capabilities. Therefore, as a top
manager, he initiated and supported the change of having Coca-Cola buy the company
and significantly increase the distribution of his products.

 Communication and education are used when users and others who may resist
implementation need solid information about the change. Education is important when
the change involves a new structure such as the Honest Tea’s becoming a division of
Coca-Cola.. Seth, no doubt, spoke to the hearts and minds of his employees. Honest
Tea’s employees were more likely to accept changes when they understood the reasons
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Managing Change and Innovation  222

for joining Coca-Cola and saw the big picture that would lead to company growth.

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use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.