Innovation and Change

Realized by: BELFELLAH Younes

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Forces Driving the Need for Major Organizational Change

Global Changes, Competition and Markets
Technological Change
International Economic Integration Maturation of Markets in Developed Countries Fall of Communist and Socialist Regimes

More Threats
More domestic competition Increased Speed International competition

More Opportunities
Bigger markets Fewer barriers More international markets

More Large-Scale Changes in Organizations

Structure change Strategic change Culture change Knowledge management, enterprise resource planning Quality programs Mergers, joint ventures, consortium Horizontal organizing, teams, networks New technologies, products New business processes E-business Learning organizations
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Source: Based on John P. Kotter, The New Rules: How to Succeed in Todays Post-Corporate World (New York: The Free Press, 1995).

Degrees of Change
Evolutionary
Incremental improvement Based on existing systems Examples: Process Improvement, TQM

Revolutionary
Breakthrough, radical innovation Can be result of Evolution or punctured equilibrium or natural selection

Incremental vs. Radical Change

Incremental Change
Continuous progression Affect organizational part Through normal structure and management processes Technology improvements Product improvement
Sources: Based on Alan D. Meyer, James B. Goes, and Geoffrey R. Brooks, Organizations in Disequilibrium: Environmental Jolts and Industry Revolutions, in George Huber and William H. Glick, eds., Organizational Change and Redesign (New York: Oxford University Press, 1992), 66-111; and Harry S. Dent, Jr., Growth through New Product Development, Small Business Reports (November 1990): 30-40.

Radical Change
Paradigm-breaking burst Transform entire organization

Create new structure and management

Breakthrough technology New products, new markets

Four Types of Change

Technology
Changes in production process

Products and Services

Changes in outputs

Strategy and Structure

Administrative changes

Culture
Changes in values, attitudes, behaviors

Sequence of Elements for Successful Change

Environment
Suppliers Professional Associations Consultants Research Internal Creativity and Inventions

Organization
1. Ideas 3. Adoption 2. Needs 4.Implementation

Customers Competition Legislation Regulation Labor force

5. Resources
Perceived Problems or Opportunities

Division of Labor Between Departments to Achieve Changes in Technology

General Manager

Creative Department (Organic Structure)

Using Department (Mechanistic Structure)

Probability of New Product Success

PROBABILITY

y Technical completion
x (technical objectives achieved) 57% 31% 12%

y Commercialization
x (full-scale marketing)

y Market Success
x (earns economic returns)
Source: Based on Edwin Mansfield, J. Rapaport, J. Schnee, S. Wagner, and M. Hamburger, Research and Innovation in Modern Corporations (New York: Norton, 1971), 57.

Horizontal Coordination Model for New Product Innovations

Environment Organization Environment

General Manager

Technical Developments

Coord

R&D Department

Coord

Marketing Department

Coord

Customer Needs

Production Department

Dual-Core Approach to Organization Change

Type of Innovation Desired
Administrative Structure Administrative Core Technical Core Technology

Direction of Change: Examples of Change:

Top-Down Strategy Downsizing Structure Mechanistic

Bottom-Up Production techniques Workflow Organic

Best Organizational Design for Change:

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Organization Development / Change

Organization Development/ Change is defined as: y the system-wide application of y behavioral science knowledge y to the planned development and change y of organizational strategies, structures, and processes y with the aim of improving organizational, team, and individual effectiveness.
( after: Cummings & Worley, 1997)

Culture Change
Reengineering and Horizontal Organization Diversity The Learning Organization

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OD Culture Change Interventions

Large Group Intervention Team Building Interdepartmental Activities

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Lewins Change Model

Unfreezing

Refreezing

Moving

Stages of Commitment to Change

Preparation
Initial contact Awareness

Acceptance
Understanding Decision to implement

Commitment
Installation Institutionalization

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Change Processes
Unfreezing y Create motivation/readiness for change x Demonstrate need for change x Communicate desired future x Engender commitment y Change/Move x Cognitive restructuring x Identification with new vision of the organization x Benchmark, invent, innovate y Refreeze x Link new behavior to self-concept, reward x Create social acceptance of new behavior
y

Shewharts PDSA
Plan

Act

Do

Study/Check

PROVENA
P Problem or need for process change identified R Recognize excellence/best practice O Organize a team V Validate knowledge E Evaluate causes N Negotiate improvements A Act

Barriers to Change
Excessive focus on costs Failure to perceive benefits Lack of coordination and cooperation Uncertainty avoidance Fear of loss

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Techniques for Change Implementation

Establish a sense of urgency for change. Establish a coalition to guide the change. Create a vision and strategy for change. Find an idea that fits the need. Develop plans to overcome resistance. Create change teams. Foster idea champions.

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Innovation Measures
Measure
1. Creativity encouraged 2. Diverse problem-solving problem3. Time for creative ideas 4. Rewards for innovation 5. Flexible, open to change 6. Follow orders from top 7. Think and act like others 8. Concern for status quo 9. Dont rock the boat 10. New ideas not funded
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A
Your Organization

B
Other Organization

C
Your Ideal

Decision Making Processes

Realized by: BELFELLAH Younes

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Todays Business Environment

New strategies Reengineering Restructuring Mergers/Acquisitions Downsizing New product/market development . . . Etc.
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Decisions Made Inside the Organization

Complex, emotionally charged issues More rapid decisions Less certain environment Less clarity about means/outcomes Requires more cooperation

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A New Decision-Making Process

Required because
no one person has enough info to make all major decisions No one person has enough time and credibility to convince many

Relies less on hard data Guided by powerful coalition Permits trial and error approach

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Organizational Decision making

Organizational decision making: The process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational stakeholders. There are basically two kinds of decisions that managers are called upon to make: Programmed and Non-Programmed

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Steps in the Rational Approach to DecisionMaking

Implement Chosen Alternative Choose Best Alternative Monitor Decision Environment Define Decision Problem

8 7 6 5

1 2 3 4

Evaluate Alternatives

Specify Decision Objectives

Develop Alternative Solutions

Diagnose Problem

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Criticism of the rational model assumptions The assumption that decision makers have all the information they need The assumption that decision makers are smart The assumption that decision makers agree about what needs to be done
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Programmed decisions
Apply solutions that are readily available from past experiences to solve structured problems. Structured problems are ones that are familiar, straightforward, and clear with respect to information needs. Best applied to routine problems that can be anticipated.
Management 8/e - Chapter 7 29

Nonprogrammed decisions
Develop novel solutions to meet the demands of unique situation that present unstructured problems. Unstructured problems are ones that are full of ambiguities and information deficiencies. Commonly faced by higher-level management.

Management 8/e - Chapter 7

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Constraints and Trade-offs During Non-programmed Decision-Making

Bounded Rationality:
Limited time, information, resources to deal with complex, multidimensional issues

Trade-off

Trade-off

Personal Constraints:
Desire for prestige, success; personal decision style; and the need to satisfy emotional needs, cope with pressure, maintain self-concept

Decision/ Choice: Trade-off

Search for a high-quality decision alternative

Trade-off

Organizational Constraints:
Need for agreement, shared perspective, cooperation, support, corporate culture and structure, ethical values

Trade-off

Sources: Adapted from Irving L. Janis, Crucial Decisions (New York: Free Press, 1989); and A. L. George, Presidential Decision Making in Foreign Policy: The Effective Use of Information and Advice (Boulder, Colo.: Westview Press, 1980).

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Choice Processes in the Carnegie Model

Uncertainty
Information is limited Managers have many constraints

Coalition Formation
Hold joint discussion and interpret goals and problems Share opinions

Search
Conduct a simple, local search Use established procedures if appropriate Create a solution if needed

Conflict
Managers have diverse goals, opinions, values, experience

Establish problem priorities Obtain social support for problem, solution

Satisficing
Adopt the first alternative that is acceptable to the coalition
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Differences
Rational Model
Information is available. Decision making is costless Decision making is value free. All possible alternatives are generated. Solution is chosen by unanimous agreement. Solution chosen is best for the organization.

Carnegie Model
Limited information is available. Decision making is costly. Decision making is affected by the preferences and values of decision makers A limited range of alternatives is generated. Solutions are chosen by compromise, bargaining, and accommodation between organizational coalitions. Solution chosen is satisfactory for the organization.

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Incremental Decision Process Model

Incrementalist Modelmanagers select alternative courses of action that are only slightly, or incrementally, different from those used in the past. Often referred to as the science of muddling through.

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The Incremental Decision Process Model

o Identification Phase
o Recognition o Diagnosis

o Development Phase
o Search o Screen o Design

o Selection Phase
o o o o o Judgment (evaluation choice) Analysis (evaluation) Bargaining (evaluation choice) Authorization Dynamic Factors

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Contingency Framework for Using Decision Models

Certain Problem Consensus 2 Individual: Rational Approach Computation Organization: Management Science Individual: Bargaining, Coalition Formation Organization: Carnegie Model Uncertain

Certain

Solution Knowledge

3 Individual: Judgment Trial-and-error Organization: Incremental Decision Process Model

Uncertain

4 Individual: Bargaining and Judgment Inspiration and Imitation Learning Organization: Carnegie and Incremental Decision Process Models, Evolving to Garbage Can
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The Nature of Organizational Learning

Organizational learning: The process of improving organization members capacity to understand and manage the organization and its environment so that managers can make decisions that continuously raise organizational effectiveness.

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The Nature of Organizational Learning

Learning organization : An organization that purposefully designs and constructs its structure, culture, and strategy to enhance and maximize the potential for organizational learning to take place

Managers need to encourage learning at four levels: individual, group, organizational, and inter-organizational
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New Issues
Not Only: How do we satisfy group member needs? But How does the team meet organization needs? Not Only: How can team members work together well? But How do we work with other parts of the organization? Not Only: How do we understand group dynamics But How do we manage team-environment interactions

Learning Organization Decision Process When Problem Identification and Problem Solution Are Uncertain
PROBLEM IDENTIFICATION PROBLEM SOLUTION
When problem solution is uncertain, Incremental process model applies Incremental, trial-and-error process is needed Solve big problems in little steps Recycle and try again when blocked

When problem identification is uncertain, Carnegie model applies Political and social process is needed Build coalition, seek agreement, and resolve conflict about goals and problem priorities

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Decision Styles
Your decisions 1. 2. Decisions by others 1. 2. Approach used Advantages and disadvantages Your recommended decision style

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