Chapter 6 - Innovation and Change Flashcards
Patent
A patent provides its owner with the legal right to limit others’ use or sale of an invention in Canada, and in exchange, the inventor must disclose the details of the invention to the public.
Intrapreneurship
entrepreneurial ideas are created inside an existing company
Organizational innovation
the successful implementation of creative ideas in organizations
Creativity
the production of novel and useful ideas
organizational change
a difference in the form, quality, or condition of an organization over time.
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
Technology cycles occurred when air-conditioning supplanted fans, when Henry Ford’s Model T replaced horse-drawn carriages, and when airplanes replaced trains as a means of crossing Canada.
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
technology cycle occurs whenever there are…
technology cycle occurs whenever there are major advances or changes in the knowledge, tools, and techniques of a field or discipline, whatever they may be.
innovation streams
patterns of innovation over time that can create sustainable competitive advantage
An innovation stream begins with a _____________________
An innovation stream begins with a technological discontinuity
technological discontinuity
a scientific advance or a unique combination of existing technologies creates a significant breakthrough in performance or function
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
Discontinuous change is also characterized by _______________
Discontinuous change is also characterized by design competition
design competition
competition between old and new technologies to establish a new technological standard or dominant design
Discontinuous change is followed by the emergence of a _______________
Discontinuous change is followed by the emergence of a dominant design
dominant design
a new technological design or process that becomes the accepted market standard
dominant design - information
Dominant designs emerge in several ways. The first is by achieving critical mass, meaning that a particular technology can become the dominant design simply because most people use it, for example, Blu-ray beating out HD-DVD. 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.
when companies bet on the wrong design or the old technology, they may experience ___________
when companies bet on the wrong design or the old technology, they may experience technological lockout
technological lockout
when a new dominant design (i.e., 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
For example, manufacturing efficiencies enable Intel to cut the cost of its chips by one-half 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.
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
Flow
a psychological state of effortlessness, in which you become completely absorbed in what you’re doing and time seems to pass quickly
A creative work environment requires three kinds of encouragement:
organizational, supervisory, and work group encouragement
Organizational encouragement of creativity occurs when…
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 the company.
Supervisory encouragement of creativity occurs when…
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…
Work group encouragement occurs when group members have diverse experience, education, and backgrounds and when the group fosters mutual openness to ideas; positive, constructive challenges to ideas; and shared commitment to ideas.
Freedom
having autonomy over one’s day-to-day work and a sense of ownership and control over one’s ideas
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
The 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
Testing
the systematic comparison of different product designs or design iterations.
Milestones
formal project review points used to assess progress and performance
For example, a company that has put itself on a 12-month schedule to complete a project might schedule milestones at the three-, six-, and nine-month points on the schedule. By making people regularly assess what they’re doing, how well they’re performing, and whether they need to take corrective action, milestones provide structure to the general chaos that follows technological discontinuities.
Multifunctional teams
work teams composed of people from different departments
Multifunctional teams accelerate learning and understanding by mixing and integrating technical, marketing, and manufacturing activities. By 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
are typically more experienced, have high status in the company, and are held directly responsible for the product’s success or failure.
On average, powerful leaders can get innovation-related projects done nine months faster than leaders with little power or influence.
Tesla, the electric car manufacturer, has had its share of ups and downs as it has led the way in electric automobile innovation. In the past two years, the firm has seen some remarkable milestones: It’s now sold tens of thousands of cars, employs nearly 6,000 people around the world, and has plans to double the world’s supply of lithium-ion batteries. The company hasn’t always looked this good, however. It nearly collapsed during the 2008 financial crisis and had to settle with one of its cofounders. A negative review from The New York Times prompted CEO Elon Musk to take to social media and appear on TV to defend the firm. Powerful leadership like this can’t be bought.
The experiential approach is used to manage innovation in highly _________ environments during periods of _____________
The experiential approach is used to manage innovation in highly uncertain environments during periods of discontinuous change
the compression approach is used to manage innovation in more ______ environments during periods of _______________
the compression approach is used to manage innovation in more certain environments during periods of incremental change
Compression approach and experimental approach - info
The goals of the experiential approach are significant improvements in performance and the establishment of a new dominant design; the goals of the compression approach are lower costs and incremental improvements in the performance and function of the existing dominant design
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
The compression approach to innovation has five aspects:
planning for incremental innovation,
involving suppliers,
shortening the time of individual steps,
using overlapping steps, and
creating multifunctional teams
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
involving suppliers
Delegating some of the preplanned steps in the innovation process to outside suppliers reduces the amount of work that internal development teams must do. Plus, suppliers provide an alternative source of ideas and expertise that can lead to better designs.
Using overlapping step
hortens the development process by reducing delays and waiting times between steps.
For example, Lions Gate Entertainment used overlapping steps to reduce the time it took to make the entire series of the Hunger Games films. In order to capitalize on the record-breaking revenues at the box office of the first movie, Lions Gate used new directors, script writers, and production teams for each of the movies in the Hunger Games series so that it could begin shooting the next film while the previous one was in post-production and the one prior to that was in the theatres.
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
five stages of organizational decline:
blinded, inaction, faulty action, crisis, and dissolution
In the blinded stage
five stages of organizational decline
decline begins because key managers fail to recognize the internal or external changes that will harm their organization
In the inaction stage
five stages of organizational decline
as organizational performance problems become more visible, management may recognize the need to change but still take no action.
In the faulty action stage,
five stages of organizational decline
faced with rising costs and decreasing profits and market share, management announces “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 it more strictly, company performance will return to previous levels.
In the crisis stage
five stages of organizational decline
bankruptcy (such as at GM) or dissolution (i.e., 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 themselves. 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.
In the dissolution stage
five stages of organizational decline
after failing to make the changes needed to sustain the organization, the company is dissolved through bankruptcy proceedings or by selling assets in order to pay suppliers, banks, and creditors
At this point, a new CEO may be brought in to oversee the closing of stores, offices, and manufacturing facilities, the final layoffs of managers and employees, and the sale of assets
Change forces
forces that produce differences in the form, quality, or condition of an organization over time
resistance forces
forces that support the existing state of conditions in organizations
Change is difficult under any circumstances. In a study of heart bypass patients, doctors told participants straightforwardly to change their eating and health habits or they would die. Unbelievably, a full 90 percent of participants did not change their habits at all
Resistance to change
opposition to change resulting from self-interest, misunderstanding and distrust, a low tolerance for change, and time and cost factors
According to Kurt Lewin, managing organizational change is a basic process of
unfreezing, change intervention, and refreezing
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 behaviour and work practices
Refreezing
supporting and reinforcing new changes so that they stick
The following methods can be used to manage resistance to change:
education and communication, participation, negotiation, top management support, and coercion.
coercion
using formal power and authority to force others to change
ecause of the intense negative reactions it can create (e.g., fear, stress, resentment, sabotage of company products), coercion should be used only during a crisis or when all other attempts to reduce resistance to change have failed.
Managers make the first two errors during the unfreezing phase.
The first error is not establishing a great enough sense of urgency.
The second mistake that occurs in the unfreezing phase is not creating a powerful enough coalition.
Errors Managers Make When Leading Change
- Not establishing a great enough sense of urgency
- Not creating a powerful enough guiding coalition
- Change
- Lacking a vision
- Undercommunicating the vision by a factor of ten
- Not removing obstacles to the new vision
- Not systematically planning for and creating short-term wins
- Declaring victory too soon
- Not anchoring changes in the corporation’s culture
__________, __________, and __________ are three change tools and techniques that can be used to address these issues.
Results-driven change, the General Electric Workout, and organizational development (OD) are three change tools and techniques that can be used to address these issues.
Results-driven change
change created quickly by focusing on the measurement and improvement of results
How to Create a Results-Driven Change Program
- Set measurable, short-term goals to improve performance.
- Make sure your action steps are likely to improve measured performance.
- Stress the importance of immediate improvements.
- Solicit help from consultants and staffers to achieve quick improvements in performance.
- Test action steps to see if they actually yield improvements. If they don’t, discard them and establish new ones.
- Use resources that you have or can easily acquire. It doesn’t take much.
General Electric Workout
a three-day meeting in which managers and employees from different levels and parts of an organization quickly generate and act on solutions to specific business problems
General Electric Workout - information
On the first morning, the boss discusses the agenda and targets specific business problems that the group will solve. The boss then leaves, and an outside facilitator breaks the group (typically 30 to 40 people) into five or six teams and helps them spend the next day and a half discussing and debating solutions. On day three, in what GE calls a “town meeting,” the teams present specific solutions to their boss, who has been gone since day one. As each team’s spokesperson makes specific suggestions, the boss has only three options: agree on the spot, say no, or ask for more information so that a decision can be made by a specific, agreed-on date.
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
This person can be someone from the company or a professional consultant.
The change agent clarifies the problem, gathers information, works with decision makers to create and implement an action plan, helps evaluate the plan’s effectiveness, implements the plan throughout the company, and then leaves (if from outside the company) after making sure the change intervention will continue to work
Small group interventions
focus on assessing how a group functions and helping it work more effectively to accomplish its goals.
Person-focused interventions
are intended to increase interpersonal effectiveness by helping people become aware of their attitudes and behaviours and acquire new skills and knowledge.
large system interventions
to change the character and performance of an organization, business unit, or department.
