MANAGING: A COMPETENCY BASED APPROACH 11 th Edition Chapter 12: Guiding Organizational Change and Innovation Don Hellriegel Susan E. Jackson John W. Slocum, Jr. Prepared by Argie Butler Texas A&M University
Learning Goals 1. Describe four types of organizational change 2. Explain the planning process for organizational change 3. Identify four methods of organizational change 4. Describe how innovation relates to organizational change 5. Discuss how learning organizations foster change Chapter 12: Power. Point 12. 1
q Organizational change: any transformation in the design or functioning of an organization q Radical change: organizations make major innovations in the ways they do business q Stages of Radical Change* Unfreezing Transitioning Refreezing (*Adapted from Figure 12. 1) Chapter 12: Power. Point 12. 2
q Incremental change: ongoing process of evolution over time, during which many small adjustments occur routinely q Tempered radicals: people who strive to create radical change but do so by prodding an organization to make many small incremental changes q Total quality management: relies heavily on continuous incremental change Chapter 12: Power. Point 12. 3
1. Earn credibility first, and then leverage it 2. Gather and accept support from others along the way 3. Develop grass roots initiatives and be willing to share the stage with supporters 4. Chip away at standard operating procedures little by little over time until you achieve real success 5. Accept small changes as making progress 6. Develop your ability to compromise as well as persuade 7. Be persistent Chapter 12: Power. Point 12. 4 (Adapted from Table 12. 1)
v Reactive change: occurs when an organization is forced to adapt or innovate in response to some event in the external or internal environment v Anticipatory change: occurs when managers make organizational modifications based on forecasts of upcoming events or early in the cycle of a new trend Chapter 12: Power. Point 12. 5
Major Transformation Degree of Change Small Adjustments Incremental Anticipatory Change Incremental Reactive Change Radical Anticipatory Change Radical Reactive Change Timing of Change Before Major Shifts in the Environment Chapter 12: Power. Point 12. 6 (Adapted from Figure 12. 2) After Major Shifts in the Environment
Planning for Organizational Change: Key Steps Start 1. Assess the Environment 3. Diagnose Organizational Problems 7. Monitor Changes 6. Anticipate and Reduce Resistance 2. Determine Performance Gap 5. Develop and Implement an Action Plan Chapter 12: Power. Point 12. 7 (Adapted from Figure 12. 3) 4. Articulate and Communicate Vision for the Future
Fear Misunderstandings Chapter 12: Power. Point 12. 8 Vested interests Cynicism
Planning for Organizational Change: Snapshot “When I need to announce a change, I go to my top performers first. I give as much information as I possibly can to help them understand the reasons behind the change. I prefer one-on-one communication, particularly if it is an important change. ” Theresa Robinson, Senior Manager of Best Practices and Risk Management, Aflac Chapter 12: Power. Point 12. 9
Technological Change Organizational Redesign Job Redesign Chapter 12: Power. Point 12. 10 (Adapted from Figure 12. 4) Organizational Development
Technological Change q Involves incremental adjustments or radical innovations that affect workflows, production methods, materials, and information systems q Many new forms of information technology (IT) q IT is enabling real time and any time links between suppliers, producers, distributors, and customers Chapter 12: Power. Point 12. 11
Ø Involves incremental adjustments or radical innovations focused on realigning departments, changing who makes decisions, and merging or reorganizing departments that sell the organization’s products Ø Two basic approaches ü Change organization’s structure, such as from functional to product departmentalization ü Change organization’s processes, such as how customer complaints are handled Ø Restructuring: reconfiguring the distribution of authority, responsibility, and control in an organization Ø Reengineering: radical redesigning of an organization’s functions and business processes Chapter 12: Power. Point 12. 12
Job Redesign v Modifying specific employee job responsibilities and tasks v Job simplification: the scientific analysis of tasks § Focus on efficient workflow process for employees in a particular job § Frequent use of time and motion studies v Job enrichment: changing job specifications to broaden and add challenge to the tasks required and to increase productivity § Increases interesting and challenging work § Increases autonomy and personal freedom Chapter 12: Power. Point 12. 13
q A planned, long-range behavioral science strategy for understanding, changing, and developing an organization’s workforce in order to improve its effectiveness q Focus group discussion: a carefully planned discussion among several employees about a specific topic or issue of interest, which is led by a trained facilitator § Facilitator explains the topic to be discussed, the role of the scribe, and how the organization will use the results of the focus group discussion § Participants come prepared to discuss a specific topic. If confidentiality is a concern, participants are chosen from different units of the organization, not the same work group § Scribe: the person who takes notes about what is said, but not who says it Chapter 12: Power. Point 12. 14
Organization Development (OD) (cont’d) v Survey feedback: a process that allows managers and employees to report their thoughts and feelings about the organization and to learn about how others think and feel about their own behaviors § Feedback obtained by means of a questionnaire developed and distributed to employees, who complete it and turn it in anonymously § Content of questionnaire depends on areas of most concern Questionnaire Chapter 12: Power. Point 12. 15
Organization Development (OD) (cont’d) v Team building: process that develops the ability of team members to collaborate effectively so they can perform the tasks assigned to them § Often emphasizes developing a group climate that is safe § Openness can be risky, but promotes creativity and effective problem solving Chapter 12: Power. Point 12. 16
Ø Major organizational change is a complex process Ø Typically involves a combination of methods Ø Example: purchasing and installing enterprise resource planning [ERP] software Chapter 12: Power. Point 12. 17
Role of Innovation in Organizational Change q Innovation: the discovery, identification and diagnosis of unusual and ambiguous problems and/or the development of unique or creative solutions q Strategic importance of innovation üCritical in dynamic, changing environments üOrganizations can rest on prior success üComplacency is deadly Chapter 12: Power. Point 12. 18
Ø Technical innovation: creation of new goods and services Ø Process innovation: creating a new way of producing, selling, and/or distributing an existing good or service Ø Administrative innovation: creating a new organization design that better supports the creation, production, and delivery of goods and services Chapter 12: Power. Point 12. 19
Types of Innovation: Snapshot “Champion was an old-line paper manufacturing company with classic characteristics solidly in place. We had a traditional management structure, an adversarial relationship with unions, and information systems that reflected that type of thinking. [Now] we’ve changed our hierarchy, opened up our information systems, developed cooperative partnering with unions, and established accountability within supervisory groups. ” Mark Childers, Senior VP of Organizational Development, Champion International, a subsidiary of International Paper Chapter 12: Power. Point 12. 20
Foster Workforce Resilience Provide a Support System for Innovation Develop a Learning Environment and Learning Orientation among Employees Chapter 12: Power. Point 12. 21 (Adapted from Figure 12. 6)
q Learning organization: has both the drive and the capabilities to modify or transform itself and improve its performance continuously § Learns from past experiences § Learns from customers § Learns from various parts of the organization § Learns from other organizations Chapter 12: Power. Point 12. 22
Shared Leadership Culture of Innovation The Learning Organization Organic Organization Design Chapter 12: Power. Point 12. 23 (Adapated from Figure 12. 7) Customer-Focused Strategy Intensive Use of Information
Characteristics of a Learning Organization: Snapshot “We all make mistakes. It’s not as though at any time, Dell doesn’t have some part of its business that’s not working for us as it should. But we have a culture of continuous improvement. We train employees to constantly ask themselves, ‘How do we grow faster? How do we lower our cost structure? How do we improve service for customers? ’” Michael Dell, Chairman and Cofounder, Dell Computer Chapter 12: Power. Point 12. 24
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