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MGTO120s

Managing Change and Innovation

Jian Liang

MGTO, HKUST

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Where We Are

Management

Basic Concepts

(Ch1)

Context

(ch3,4,& 5)

Retrospect

(ch2)

Plan(ch6,

7,8,& 9)

Organize(Ch 10

Lead Control

Innovation (Ch13)

Basic Concepts

(Ch1)

Context

(ch3,4,& 5)

Retrospect

(ch2)

Plan(ch6,

7,8,& 9)

Organize(Ch 10,

11,12,13) Lead Control

Managing Change & Innovation

(Ch13)

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Learning ObjectivesWhat Is Change?

Define organizational change.Explain how managers are affected by change.

Forces for ChangeDiscuss the external and internal forces for change.Contrast internal and external change agents.

Two Views of the Change ProcessContrast the calm waters and white-water rapids

metaphors of change.Explain Lewin’s three-step model of the change process.Discuss the environment that managers face today.

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Learning Objectives (cont’d)

Managing ChangeExplain how managers might change structure,

technology, and people.Explain why people resist change and how resistance

might be managed.Contemporary Issues in Managing Change

Explain why changing organizational culture is so difficult and how managers can do it.

Discuss what it takes to make change happen successfully.

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Learning Objectives (cont’d)

Stimulating InnovationExplain why innovation isn’t just creativity.Explain the systems view of innovation.Describe the structural, cultural, and human resource variables that are necessary for innovation.

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What Is Change?

Organizational Change Any alterations in the people, structure, or

technology of an organization Characteristics of Change

Is constant yet varies in degree and direction Produces uncertainty yet is not completely

unpredictable Creates both threats and opportunities Managing change is an integral part

of every manager’s job.

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Forces for Change:

External forces Marketplace Governmental laws and regulations Technology Labor market Economic changes

Internal Forces Changes in

organizational strategy

Workforce changes

New equipment Employee

attitudes

How is the situation in HK?

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Change Process Viewpoints

The Calm Waters Metaphor The environment is stable and predictable,

so change can be planed. White-Water Rapids Metaphor

The environment is uncertain and dynamic. It requires that managers and organizations continually adapt (manage change actively) to survive.

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Kurt Lewin’s Model

Successful change can be achieved through three steps Unfreezing the status quo Changing to a new state Refreezing to make the change permanent

The limitation of this model Lewin described the change process as a

break in the organization’s equilibrium state It is impossible in a dynamic period

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The Change Process

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Three Categories of Change

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Types of Change

Structural Changing the

organization’s structure or its structural components

Technological Adopting new

equipment or operating methods that displace old skills and require new ones

Automation: Computerization

Workforce Changing attitudes,

expectations, perceptions, and behaviors of the workforce

Organizational development (OD) to change people and the quality of interpersonal work relationships.

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Managing Resistance to Change

Why People Resist Change? The ambiguity and uncertainty that change

introduces

The comfort of old habits

A concern over personal loss of status, money, authority, friendships, and personal convenience

The perception that change is incompatible with the goals and interest of the organization

14Figure 1. Manifestation of resistance to change. Adapted from King & Anderson (1995)

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Fortune Magazine, April 2005

“ People around here agree we need to change, but 90% of them do not want to change themselves”-Ex-CEO Nobuyuki Idei, who picked Howard Stringer, photo on right, as new Sony CEO, to SHOCK the culture into change

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The Institutionalization in Cultural Persistence

Take 5 monkeys in a cage, and place a banana in the cage. One of the monkeys takes the banana. Next do the same, but when the monkey takes the banana throw freezing water on the monkeys.

Now remove one of the monkeys and replace with a new monkey. Repeat process. The new monkey will attempt to get the banana, but the other monkeys will attack it to stop it. The new monkey doesn’t understand why, but it doesn’t go for the banana.

Again replace an existing monkey with a new monkey. Repeat process. The other monkeys, including the monkey that doesn’t know why, will attack the new monkey when it goes to take the banana.

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The Institutionalization in Cultural Persistence (cont’d)

Continue process until none of the original monkeys is left. Even though they don’t know why, they will attack any monkey going for the banana.

Why? That’s the way things are done around here

Zucker, 1977, ASR, 42: 726-743.

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How to Change Organizational Culture

To utilize comprehensive and coordinated strategy unfreeze the current culture implement new “ways of doing things” reinforce those new values

To understand situational factors which make cultural change more likely

dramatic crisis occurs leadership changes handsorganization is young and smallculture is weak

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Stimulating Innovation

Creativity The ability to combine ideas in a unique

way or to make an unusual association. Innovation

Turning the outcomes of the creative process into useful products, services, or work methods

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Systems View of Innovation

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Mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job. Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow.

William L. McKnight

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Which can kill innovation and creativity?

“ That’s impossible!”“We don’t do things that way around here.”“We tried it before.”“I wish it were that easy.”“It’s against policy.”“When you’ve been here longer, you’ll see

why.”“The experts say…”“Who gave you permission to change the

rules?”

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Which can kill innovation and creativity?

“Let’s get real, okay?”“ that’s not logical”“what’s the evidence?”“the right answer”“avoid ambiguity”“to err is wrong”“please do not screw up again!”“quit horsing around and get to work”“follow the rules”“I’m not creative”

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How to stimulate innovation?

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Creating the “Right” Environment for Innovation

Structural Variables Adopt an organic structure Make available plentiful resources Engage in frequent interunit

communication Minimize extreme time pressures on

creative activities Provide explicit support for creativity

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Creating the “Right” Environment for Innovation (cont’d)

Cultural Variables Accept ambiguity Tolerate the impractical Have low external controls Tolerate risk taking Tolerate conflict Focus on ends rather than means Develop an open-system focus Provide positive feedback

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Creating the “Right” Environment for Innovation (cont’d)

Human Resource Variables Actively promote training and

development to keep employees’ skills current.

Offer high job security to encourage risk taking.

Encourage individual to be “champions” of change.

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3M

“Vision is the engine that drives our enterprise. ” --- Dr. William E. Coyne

Senior vice president, research and development

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The 3M Model for Innovation

One of “the ten most admired corporations” — Fortune annual poll of American CEOs.

The 3M model: Continuous technological innovation Institutionalized “individual

entrepreneurship” Market responsiveness

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3M: A Brief History Minnesota Mining and Manufacturing Company Established in 1902, producing abrasives and

adhesives products. The McKnight era, 1929-1966

Organizational design for continuous changes

The Lou Lehr era, 1980-1985 Reorganization and reorientation

The “Jake” Jacobson era: 1986-1991 The orientation to competition in existing markets

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Example Innovations in 3M:

Laptop: How to balance the conflicting

demands of longer battery life with the size and weight consideration

Power problem? No! it is screen brightness.

Post-it Transparent

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3M Way for Innovation: Structural Decentralization:

Locus of decision at lower lab units. Divisional autonomy response to customers’ need

Organizational design to facilitate lateral communication 3M’s Technical Forum

The strategy of growth through new niches, rather than competition in existing markets. 30% of all sales MUST from products that had been no

longer than 4 years

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3M Way for Innovation: Cultural

Innovation is the center of organizational culture

Resistance to bureaucratic intervention is encouraged The 15 percent solution

Contribution to innovation is greatly respected—legends, institutional memories, ceremonies. Carlton Society: Honorary organization for

extraordinary contribution.

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3M Way for Innovation: HR

Rewards for innovation Salary increase and promotion; Golden Step

Award (team>$5 million); Technical Cycle of Excellence;

Dual track of promotion and recognition Genesis Grants for technicians Alpha Grants for administrative, marketing and

other non-technical areas Tolerance of “well-intentioned failures”

Regard failure as an opportunity to learn rather than an occasion for punishment

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Final Presentation

Hong Kong’s Can-do Spirit

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Further readings:

Harvard business review on innovation: HD58.8 .H3694 2001 

Innovation : Breakthrough thinking at 3M, DuPont, GE, Pfizer, and Rubbermaid: HD45 .I53726 1997

HKUST Forum on the Future Development of Hong Kong: HC470.3 .H625 2002 sess 2 (media resource)

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Summary

Understand the two views about organizational change

Explain Lewin’s model Why people resist change Understand creativity and

innovation Discuss how to stimulate innovation