Chapter 7 - Management

 Organizational innovation - the successful implementation of creative ideas in organizations - Ex: construction of the edge office building in Amsterdam  technology cycle - a cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, substantially better technology - Ex: Technology cycles occurred when air conditioners supplanted fans - when Henry Ford’s Model T replaced horse-drawn carriages - when planes replaced trains as a means of cross-country travel - when vaccines that prevented diseases replaced medicines designed to treat them, - when battery-powered wristwatches replaced mechanically powered, stem-wound wristwatches.  S-curve pattern of innovation - a pattern of technological innovation characterized by slow initial progress, then rapid progress, and then slow progress again as a technology matures and reaches its limits - The steeper slope indicates that small amounts of effort will result in significant increases in performance. - flat slope again indicates that further efforts to develop this particular technology will result in only small increases in performance.  innovation streams - patterns of innovation over time that can create sustainable competitive advantage  technological discontinuity - the phase of an innovation stream in which a scientific advance or unique combination of existing technologies creates a significant breakthrough in performance or function - goes to the first, returns to the second, and so on  discontinuous change - the phase of a technology cycle characterized by technological substitution and design competition  Technological substitution - the purchase of new technologies to replace older ones  dominant design - a new technological design or process that becomes the accepted market standard - emerge in several ways: - One is critical mass, meaning that a particular technology can become the dominant design simply because most people use it, for example, Blu-ray beating out HDDVD. Critical mass will likely determine the dominant design for wireless device charging, where instead of plugging in your device to recharge, you simply place it on top of a recharging station containing magnetic charging coils. - Dominant designs can also emerge through independent standards bodies - emergence of a dominant design is a key event in an innovation stream. First, the emergence of a dominant design indicates that there are winners and losers. Technological innovation is both competence enhancing and competence destroying. - Second, the emergence of a dominant design signals a shift from design experimentation and competition to incremental change  technological lockout - the inability of a company to competitively sell its products because it relies on old technology or a nondominant design - occurs when a new dominant design (that is, a significantly better technology) prevents a company from competitively selling its products or makes it difficult to do so.  incremental change - the phase of a technology cycle in which companies innovate by lowering costs and improving the functioning and performance of the dominant technological design` - example, manufacturing efficiencies enable Intel to cut the cost of its chips by onehalf to two-thirds during a technology cycle, while doubling or tripling their speed. This focus on improving the dominant design continues until the next technological discontinuity occurs 7-2 One consequence of technology cycles and innovation streams is that managers must be equally good at managing innovation in two very different circumstances First, during discontinuous change, companies must find a way to anticipate and survive the technological changes that can suddenly transform industry leaders into losers and industry unknowns into powerhouses. - Companies that can’t manage innovation following technological discontinuities risk quick organizational decline and dissolution Second, after a new dominant design emerges following discontinuous change, companies must manage the very different process of incremental improvement and innovation. - Companies that can’t manage incremental innovation slowly deteriorate as they fall further behind industry leaders.  creative work environments - workplace cultures in which workers perceive that new ideas are welcomed, valued, and encouraged - creative work environments have six components that encourage creativity: challenging work, organizational encouragement, supervisory encouragement, work group encouragement, freedom, and a lack of organizational impediments. - challenging work when it requires effort, demands attention and focus, and is perceived as important to others in the organization - Organizational encouragement of creativity occurs when management encourages risk taking and new ideas, supports and fairly evaluates new ideas, rewards and recognizes creativity, and encourages the sharing of new ideas throughout different parts of the company. - Supervisory encouragement of creativity occurs when supervisors provide clear goals, encourage open interaction with subordinates, and actively support development teams’ work and ideas. - Work group encouragement occurs when group members have diverse experience, education, and backgrounds, and the group fosters mutual openness to ideas; positive, constructive challenge to ideas; and shared commitment to ideas. - Freedom means having autonomy over one’s day-to-day work and a sense of ownership and control over one’s ideas. Numerous studies have indicated that creative ideas thrive under conditions of freedom.  Flow - a psychological state of effortlessness, in which you become completely absorbed in what you’re doing, and time seems to pass quickly  experiential approach to innovation - an approach to innovation that assumes a highly uncertain environment and uses intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding - experiential approach to innovation has five aspects: design iterations, testing, milestones, multifunctional teams, and powerful leaders  design iteration - a cycle of repetition in which a company tests a prototype of a new product or service, improves on that design, and then builds and tests the improved prototype  product prototype - a full-scale, working model that is being tested for design, function, and reliability  Milestones - formal project review points used to assess progress and performance example, a company that has put itself on a 12-month schedule to complete a project might schedule milestones at the three-month, six-month, and nine-month points on the schedule. - gives people a sense of accomplishment and can shorten the innovation process by creating a sense of urgency that keeps people on task -  Multifunctional teams - work teams composed of people from different departments accelerate learning and understanding by mixing and integrating technical, marketing, and manufacturing activities. - involving all key departments in development from the start, multifunctional teams speed innovation through early identification of new ideas or problems that would typically not have been generated or addressed until much later. - Powerful leaders provide the vision, discipline, and motivation to keep the innovation process focused, on time, and on target. - Powerful leaders are able to get resources when they are needed, are typically more experienced, have high status in the company, and are held directly responsible for the products’ success or failure - powerful leaders can get innovation-related projects done nine months faster than leaders with little power or influence. 7-3  compression approach to innovation - an approach to innovation that assumes that incremental innovation can be planned using a series of steps and that compressing those steps can speed innovation - innovation has five aspects: planning, supplier involvement, shortening the time of individual steps, overlapping steps, and multifunctional teams - planning was defined as choosing a goal and a method or strategy to achieve that goal. planning for incremental innovation, the goal is to squeeze or compress development time as much as possible, and the general strategy is to create a series of planned steps to accomplish that goal. Planning for incremental innovation helps avoid unnecessary steps and enables developers to sequence steps in the right order to avoid wasted time and delays between steps. Planning also reduces misunderstandings and improves coordination. - compression approach assumes that innovation can follow a series of preplanned steps, one of the ways to shorten development time is supplier involvement - shorten the time of individual steps in the innovation process. - Overlapping steps shorten the development process by reducing delays or waiting time between steps.  Generational change - change based on incremental improvements to a dominant technological design such that the improved technology is fully backward compatible with the older technology  Organizational decline - a large decrease in organizational performance that occurs when companies don’t anticipate, recognize, neutralize, or adapt to the internal or external pressures that threaten their survival - There are five stages of organizational decline: blinded, inaction, faulty action, crisis, and dissolution. - blinded stage, decline begins because key managers fail to recognize the internal or external changes that will harm their organizations. This blindness may be due to a simple lack of awareness about changes or an inability to understand their significance. It may also come from the overconfidence that can develop when a company has been successful. o Failure to recognize change - inaction stage, as organizational performance problems become more visible, management may recognize the need to change but still take no action. The managers may be waiting to see if the problems will correct themselves. Or they may find it difficult to change the practices and policies that previously led to success. Possibly, too, they wrongly assume that they can easily correct the problems, so they don’t feel the situation is urgent o recognize but do nothing - faulty action stage, faced with rising costs and decreasing profits and market share, management will announce belt-tightening plans designed to cut costs, increase efficiency, and restore profits. In other words, rather than recognizing the need for fundamental changes, managers assume that if they just run a tighter ship, company performance will return to previous levels. o Often the “cut costs” kiss of death - crisis stage, bankruptcy or dissolution (breaking up the company and selling its parts) is likely to occur unless the company completely reorganizes the way it does business. At this point, however, companies typically lack the resources to fully change how they run their businesses. Cutbacks and layoffs will have reduced the level of talent among employees. Furthermore, talented managers who were savvy enough to see the crisis coming will have found jobs with other companies, often with competitors. At this stage, hoping to generate enough cash to fund a much-needed redesign of its remaining stores - dissolution stage, after failing to make the changes needed to sustain the organization, the company is dissolved through bankruptcy proceedings or by selling assets to pay suppliers, banks, and creditors  Change forces - forces that produce differences in the form, quality, or condition of an organization over time.  resistance forces - forces that support the existing conditions in organizations.  Resistance to change - opposition to change resulting from self-interest, misunderstanding and distrust, and a general intolerance for change 7-4 - - Resistance might stem from a fear that the changes will result in a loss of pay, power, responsibility, or even perhaps one’s job. People also resist change because of misunderstanding and distrust; they don’t understand the change or the reasons for it, or they distrust the people—typically management—behind the change. Resistance isn’t always visible at first. In fact, some of the strongest resisters may initially support the changes in public, nodding and smiling their agreement, but then ignore the changes in private and do their jobs as they always have. Resistance may also come from a generally low tolerance for change. Some people are simply less capable of handling change than others. People with a low tolerance for change feel threatened by the uncertainty associated with change and worry that they won’t be able to learn the new skills and behaviors needed to successfully resistance to change is inevitable, successful change efforts require careful management. following methods can be used to manage resistance to change education and communication, participation, negotiation, top-management support, and coercion When resistance to change is based on insufficient, incorrect, or misleading information, managers should educate employees about the need for change and communicate change-related information to them. Managers must also supply the information, funding, or other support employees need to make changes. Another way to reduce resistance to change is to have those affected by the change participate in planning and implementing the change process. Employees who participate have a better understanding of the change and the need for it. Furthermore, employee concerns about change can be addressed as they occur if employees participate in the planning and implementation process. Resistance to change also decreases when change efforts receive significant managerial support. Managers must do more than talk about the importance of change, though. They must provide the training, resources, and autonomy needed to make change happen. Finally, resistance to change can be managed through coercion, or the use of formal power and authority to force others to change.  Coercion - the use of formal power and authority to force others to change  Unfreezing - getting the people affected by change to believe that change is needed  change intervention - the process used to get workers and managers to change their behaviors and work practices  Refreezing - supporting and reinforcing new changes so that they stick Resistance to change is an example of frozen behavior - the first two errors occur during the unfreezing phase: - first and potentially most serious error is not establishing a great enough sense of urgency. In fact, Kotter estimates that more than half of all change efforts fail because the people affected are not convinced that change is necessary. People will feel a greater sense of urgency if a leader in the company makes a public, candid assessment of the company’s problems and weaknesses. - second mistake that occurs in the unfreezing process is not creating a powerful enough coalition. Change often starts with one or two people. But change has to be supported by a critical and growing group of people to build enough momentum to change an entire department, division, or company. next four errors that managers make occur during the change phase: - Lacking a vision for change is a significant error at this point. vision for change makes clear where a company or department is headed and why the change is occurring. Change efforts that lack vision tend to be confused, chaotic, and contradictory. vision for change makes clear where a company or department is headed and why the change is occurring. Change efforts that lack vision tend to be confused, chaotic, and contradictory. - Under communicating the vision by a factor of ten is another mistake in the change phase. Successful communication of the vision requires that top managers link everything the company does to the new vision and that they “walk the talk” by behaving in ways consistent with the vision. - error in the change phase is not systematically planning for and creating short-term wins. Change is threatening and uncomfortable, so people need to see an immediate payoff if they are to continue to support it last two errors that managers make occur during the refreezing phase, - Declaring victory too soon is a tempting mistake in the refreezing phase. Managers typically declare victory right after the first large-scale success in the change process - last mistake that managers make is not anchoring changes in the corporation’s culture. An organization’s culture is the set of key values, beliefs, and attitudes shared by organizational members that determines the accepted way of doing things in a company. According to Kotter, two things help anchor changes in a corporation’s culture. The first is directly showing people that the changes have actually improved performance. The second is to make sure that the people who get promoted fit the new culture. If they don’t, it’s a clear sign that the changes were only temporary.  results-driven change - change created quickly by focusing on the measurement and improvement of results - Another advantage of results-driven change is that managers introduce changes in procedures, philosophy, or behavior only if they are likely to improve measured performance. In other words, managers and workers actually test to see if changes make a difference. - A third advantage of results-driven change is that quick, visible improvements motivate employees to continue to make additional changes to improve measured performance.  General Electric fastworks - quickly experimenting with new ideas to solve customer problems and learn from repeated tests and improvements - Fastworks also focuses on solving customer problems.  Organizational development - a philosophy and collection of planned change interventions designed to improve an organization’s long-term health and performance  change agent - the person formally in charge of guiding a change effort Organizational development interventions Notes: Change is impossible unless - we dismantle rigidly - we recognize that discomfort is our ticket to meaning - we drop the ‘should’ in our mindset: o how we should feel o where we should be o how others should respond to my wants o how much I should have accomplished by now fluid intelligence (younger) - global capacity to reason - ability to learn new things - thin abstractly and solve problems vs crystallized intelligence (peaks in your 50s) - prior learning and past experience - based on facts - increases with age fluid: ability to reason and think flexibly Crystalized: accumulation of knowledge, fact, and skills that are required What we need in business today - organizations are becoming more and more global - those running these organizations lament the lack of skills that prepare students to succeed across cultures and comfort zones - how do we extend. The limits of our comfort zones? - Change and innovation are moving us forward very fast Two types of change Reactive change – making changes in response to problems or opportunities as they arise) flooding along the Mississippi, gulf hurricanes) Proactive change – involves making carefully throughout change in anticipation of possible or expected problems or opportunities (also called planned change) Managing resistance to change: 3/18/21 What is creativy? Combing new idea in unique ways or making unusual connections What is innovation? Process of taking creative idea and making into a useful product, service - Ex: Beijing robots serving you food - Ex: in Europe making a fast rain 5 hours you can reach there in 50 minutes Innovation: Incremental innovation: razor, soccer ball little upgrades Innovation: ted talk 13-year-old can be an innovator and agent for change: Lion had killed a cow(bull) because the wildlife park is behind them. And lions follow the zebras, and they see his livestock and they kill it. he made a idea lions were scared of moving light and he took apart his mom radio. And a indictor box in a motorcycle. He built a light when turning it on and it flashed at night and the lions get scared. He sent it up and it’s been 2 years since no lion attack. His neighbors asked him to do them one. He got a scholarship brookhouse international school and get got money from fundraiser and now is building it all over town. His dream to become an aircraft pilot. Hat direction to take? - Career and life decision determined by age or society - A society whose per capita stupidity has always been high - Your parents… lovely people and say: get a job!! - Once you make certain choices get stuff that needs payments you are hooked and can’t go back - How to native the rapids: o What is white noise and what is relevant? o He went on a rapid and was scared for the other passengers. They said if you know it then everyone will be fine. - Ted talk: gave a example: A little gurl In the back drawing. Teach ask what you drawing? Girl said I’m drawing god. Teacher said but no one knows what he looks like.