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CHAPTER 7FOSTERING AN INNOVATIVE ORGANISATION
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LECTURE OUTLINE
• The nature of change & innovation• Organisational life cycles• Change management & innovation
process• Key organisational change
components
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THE NATURE OF CHANGE AND INNOVATION
Change
Any alteration of the status quo
Innovation
New idea applied to initiating or improving a process, product or service
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THE NATURE OF CHANGE AND INNOVATION• EXTERNAL FORCES
Response to opportunities and threats from the market, regulators and other elements of the environment
• INTERNAL FORCES Strategy & plans, employees’ behaviour, change & innovation decisions, cultural change, restructures, technological & leadership change
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7–5
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ORGANISATIONAL LIFE CYCLES
Life cycles: Predictable stages of development organisations typically follow.
There are four life-cycle stages.
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ORGANISATIONAL LIFE CYCLE STAGES
Entrepreneurial stageEntrepreneurial stage
Collectivity stageCollectivity stage
Formalisation and control stageFormalisation and control stage
Elaboration-of-structure stageElaboration-of-structure stage
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ORGANISATIONAL LIFE CYCLESPossible causes for termination:• Curtailed innovation• Scapegoating• Resistance to change• Turnover• Conflict
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ORGANISATIONAL LIFE CYCLESMethods of organisational termination:
• Bankruptcy• Liquidation• Merger• Acquisition• Take-over
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Change is with us! We have three options – what will you choose?
• Change Reactively by responding only when we have no choice
• Change Proactively by anticipating the needs of the future in advance.
• Decide to ignore Change and hope that it will go away.
Today The NewWorld
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CHANGE MANAGEMENT & INNOVATION PROCESS
Making change/innovation effectiveEight-step model:• Recognition of opportunity/problem• Obtain powerful sponsors• Develop/communicate a vision• Empower others to implement• Prepare for resistance• Plan to reward visible progress• Consolidate change & facilitate more change• Institutionalise changes achieved
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CHANGE MANAGEMENT & INNOVATION PROCESS
Recognition of opportunityor problem
Recognition of opportunityor problem
Line up powerful sponsorsLine up powerful sponsors
Develop and communicatea vision
Develop and communicatea vision
Empower others toact out the vision
Empower others toact out the vision
Prepare to overcome resistancePrepare to overcome resistance
Plan for & reward visible progressPlan for & reward visible progress
Consolidate improvements & facilitate further change
Consolidate improvements & facilitate further change
Monitor & institutionalise changeMonitor & institutionalise change
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CHANGE MANAGEMENT & INNOVATION PROCESS• Organisational development• Innovation for competitive
advantage• Product development• Intrapreneurship
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CHANGE MANAGEMENT & INNOVATION PROCESS
Organisational development
Is a change effort to improve interpersonal working relationships and organisational effectiveness through strategies that use a change agent or third party who is well versed in the behavioural sciences.
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CHANGE MANAGEMENT & INNOVATION PROCESSOrganisational development
DiagnosisDiagnosis
EvaluationEvaluation
Intervention: 4 techniques•Process consultation•Team building•Third-party intervention•Technostructural activities
Intervention: 4 techniques•Process consultation•Team building•Third-party intervention•Technostructural activities
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CHANGE MANAGEMENT & INNOVATION PROCESSInnovation for competitive advantage:
Four factors needed to ensure advantage
Four factors needed to ensure advantage
1) Hard for competitors to imitate1) Hard for competitors to imitate
2) Meeting significant customer needs2) Meeting significant customer needs
3) Fit of innovation to organisation’s time advantages
3) Fit of innovation to organisation’s time advantages
4) Innovation needs to rely on capabilities accessible to the organisation, but less so to competitors
4) Innovation needs to rely on capabilities accessible to the organisation, but less so to competitors
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CHANGE MANAGEMENT & INNOVATION PROCESS
Product development principles:1. Establish a stage-gate development funnel2. Establish cross-functional teams3. Use concurrent engineering4. Involve both customers & suppliers
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CHANGE MANAGEMENT & INNOVATION PROCESSIntrapreneurship:
Encourage the take-up of entrepreneurship roles by organisation members, e.g.
• Idea generator• Idea champion• Idea sponsor• Idea orchestrator
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KEY ORGANISATIONAL CHANGE COMPONENTS
Significant change usually means changingone or more key components:
• Structural• Technological• Human resource• Cultural• Component inter-relationship
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KEY ORGANISATIONAL CHANGE COMPONENTS
Culture
Structure Human Resources
Technology
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KEY ORGANISATIONAL CHANGE COMPONENTS
Structural components:• Job definitions• Job groupings• Teams• Delegation• Reporting relationships
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KEY ORGANISATIONAL CHANGE COMPONENTSTechnological components:Technology may drive change/innovation by:
• Requiring new work methods.• Providing/removing competitive edge.
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KEY ORGANISATIONAL CHANGE COMPONENTSHuman resources components:Human resources is the vehicle for changingknowledge, skills, perceptions & behavioursneeded for a job. It utilises:
• Recruitment & selection• Training• Performance appraisal• Reward systems.
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KEY ORGANISATIONAL CHANGE COMPONENTS
Cultural components:Major organisational changes often requireconcomitant changes to organisational culture.
Organisational culture can be defined as a system of shared values, assumptions, beliefs and norms linking an organisation’s members.
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KEY ORGANISATIONAL CHANGE COMPONENTSInterrelationship amongst components:Change to one component creates tensions onother components until they are adjusted accordingly.
• Minor changeMay relate to only one component
• Major changeMay relate to all four components
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LECTURE SUMMARY• Nature of change & innovation
• Distinguishing change from innovation• External & internal forces for change &
innovation
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LECTURE SUMMARY
• Organisational life cycles
• Life cycle stages• Termination
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LECTURE SUMMARY• Change management & innovation
process• Organisational development (OD)• Innovation for competitive advantage• Product development• Entrepreneurship
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LECTURE SUMMARY
• Key organisational change components• Structural• Technological• Human resource• Cultural• Component interrelationship