Lecture Notes on Organizational Innovation | MGT 3304, Study notes of Introduction to Business Management

Download Lecture Notes on Organizational Innovation | MGT 3304 and more Study notes Introduction to Business Management in PDF only on Docsity! MGMT FINAL TEST Ch. 7 Organizational innovation – successful implementation of creative ideas in an organization. Creativity – a form of organizational innovation, is the production of novel and useful ideas. I. Why Innovation Matters - Technology Cycles o Technology is the knowledge, tools, and techniques used to transform inputs (raw materials, information,…) o A technology cycle – begins with the birth of a new technology and ends when the technology reaches its limit and “dies” as it is replaced by a newer, substantially better technology  Ex: horse drawn carriages replaced with trains and automobiles o S-curve pattern of innovation  Steeper slope indicates that small effort will still result in significant increases in performance  Flat slope indicates further efforts to develop this technology will result only in small increases in performances. Indicates that the limits are being reached.  The new technology is represented by the second s curve.  The changeover between old and new technologies is represented by the dotted line (vertical)  When you think about technology cycles, don’t think “high technology”, instead broaden your perspective by considering advances or changes in knowledge, tools, and techniques. - Innovation streams o Organizations can create competitive advantage for themselves if they have a distinctive competence that allows them to make, do, or perform something better than their competitors. o Technological innovation, not only can enable competitors to duplicate the benefits obtained from a company’s advantage, but also can turn a company’s competitive advantage into a disadvantage.  Kodak example o Over the long run, the best way for a company to protect themselves from strategic threats of innovation is to create a stream of its own innovative ideas and products year after year. o Innovation streams – patterns of innovation over time that can create sustainable competitive advantage  Begins with a technological discontinuity – in which a scientific advance or a unique combination of existing technologies creates a significant breakthrough in performance or function.  Technological discontinuities are followed by a discontinuous change – characterized by a technological substitution and design competition.  Technological substitution – occurs when the old technology and several different new technologies compete to establish a new technological standard or domninant design. o because of large investments in old technology, and because the new and old technologies are often incompatible with each other, companies and consumers are reluctant to switch to a different technology during a design competion. o Discontinuous change is followed by the emergence of a dominant design, which becomes the new accepted market standard for technology.  It emerges in several ways.  Critical mass (most people use it)  Solves a practical problem  Independent standard bodies. o International Telecom Union  No matter how it happens, dominant design is a key even in an innovation stream  Indicates there are winners and losers  Competence enhancing and destroying  Companies that bet on the now- dominant design usually prosper.  When companies bet on the wrong design or old technology, they experience technological lockout – occurs when a new dominant design prevents a company from selling its products. o The emergence of a dominant design signals a shift from design experimentation and competition to incremental change – a phase in which companies innovate by lowering the COST and improving the functioning and performance of the dominant design. III. Organizational decline: The risk of not changing - Organizational decline – companies don’t anticipate, recognize, neutralize, or adapt to the pressures that threaten their survival. - When they don’t recognize the need for change - Blinded stage – managers fail to recognize the internal or external changes that will harm organizations. Lack of awareness. Overconfidence in success - Inaction stage – when they recognize need for change but don’t act on it. - Faulty action stage – when faced with rising costs and decreasing profits and market share, management will announce “belt tightening”, plans designed to cut costs and increase efficiency. - Crisis stage – bankruptcy is likely to occur unless the company completely reorganizes the way it does business. Cutbacks and layoffs. - Dissolution stage - when they fail to make changes, the company is dissolved through bankruptcy proceedings, or by selling assets in order to pay suppliers, banks, creditors, and investors. IV. Managing Change - Change forces – lead to differences in the form, quality, or condition of an organization over time - Resistance forces - support the status quo, that is, the existing conditions in organizations. o ex. Even when doctors tell patients to change eating habbits, 90% don’t - Resistance to change – caused by self-interest, misunderstanding, and a general intolerance for change. - Managing resistance to change: o According to Kurt Lewin, managing change is a basic process of unfreezing, change intervention, and refreezing o Unfreezing – getting the people affected by change to believe that change is needed o Change intervention – workers and managers change behavior and work practices o Refreezing – supporting and reinforcing the new changes so that they “stick” o Resistance to change is an example of frozen behavior. o Managers should educate employees about need for change o Managers should communicate change related info to them. - What not to do when leading change o The first error is not establishing a great enough sense of urgency o Second mistake that occurs in the unfreezing process is not creating a powerful enough coalition. o Lacking a vision o Undercommunicating the vision o Not removing obstacles to the new vision o Not systematically planning for and creating short-term wins - Change tools and techniques o One of the reasons that organizational change efforts fail isthat they are activity oriented rather than RESULTS oriented o Results driven change – supplants the emphasis on activity with a laser-like focus on quickly measuring and improving results o General electric workout – a special kind of results driven change.  a three day meeting that brigns together managers and employees from all over o organizational development  a philosophy and collection of planned change interventions designed to improve an organizations long term health and performance. o Change agent – formally in charge of guiding the change effort. A professional consultant or internally. - General steps for organizational development interventions o Entry o Startup o Assessment and feedback o Action planning o Intervention o Evaluation o Adoption o Separation - Different kinds of organizational development interventions o Large system  Sociotechnical systems – intervention designed to improve how well employees use and adjust to the work technology used in an organization  Survey feedback – an intervention that uses surveys to collect info o Small group  Team building – increase the cohesion of group members  Unit goal setting – designed to help a work group establish goals o Person-focused  Counseling/coaching – designed so that a formal helper listens to managers and advises them how to deal with work or problems  Training – designed to provide individuals with the knowledge, skills, or attitudes they need to become more effective at their jobs. Ch. 9 Structure and Process - Organization structure – is the vertical and horizontal configuration of departments, authority, and jobs within a company - Organizational process – collection of activities that transforms inputs to outputs that customers value. Designing Organizational Structures I. Departmentalization - Traditionally, organizational structures have been based on some form of departmentalization - Departmentalization – is a method of subdividing work and workers into separate organizational units that take responsibility for completing tasks. o Sony separates departments for electronics, movies, computer games, theater… - Functional Departmenalization o Most common organizational structure. o When they are just small or starting out o Functional departmentalization – organizes work and workers into separate units responsible for particular business functions or areas of expertise o Advantages:  Allows work to be done by highly qualified specialists.  Lowers costs by reducing duplication, allows people to specialize in their fields.  Communication and coordination are less problematic for managers o Disadvantages:  Difficult  Slower decision making and produce managers and workers with narrow experience - Product Departmentalization o Product departmentalization – organizes work and workers into separate units responsible for producing particular products or services  Organizing product lines o Advantages:  Allows managers to specialize in one area o Disadvantage:  Duplication  Higher costs  Challenge of coordinating across the different product departments - Customer Departmentalization - Degree of Centralization o Centralization of authority – location of most authority at the upper levels of the organization.  Managers make most decisions, even small ones.  “I’ll have to ask my manager” o Decentralization – the location of a signicicant amount of authority in the lower levels of the organization.  Is decentralized if it has a high degree of delegation at all levels.  Advantages:  Develops employee capability, leading to faster decision making. o Standardization – solving problems by consistently applying the same rules, procedures, and processes. III. Job Design - “welcome to McDonald’s May I have your order please?” - Job design – the number, kind, and variety of tasks that individual workers perform in doing their jobs. - Job Specialization o Occurs when a job is composed of a small part of a larger task or process.  Simple, easy to learn steps, low variety, and high repetition (like mcdonalds)  Disadvantage: BORING  Because the work is designed to be simple, wages can remain low since it isn’t necessary to pay high salaries to attract highly experienced, educated, or trained workers. - Job Rotation, Enlargement, and Enricment o Job rotation – overcome disadvantages of job specialization by periodically moving workers from one job to another. o Job enlargement – increases number of different tasks that a worker performs within one job.  Given several tasks to perform  Workers report feeling more stress however. o Job enrichment – attempts to overcome the deficienceies in a specialized work by increasing number of tasks and by giving workers authority and control to making meaningful decisions about their work. - Job characteristics Model o An approach to job redesign that seeks to formulate jobs in ways that motivate workers and lead to positive work outcomes.  Increase motivation, satisfaction, and effectiveness o Internal motivation – motivation that comes from the job itself rather than from outside rewards, like a raise.  Workers must experience the work as meaningful  Experience responsibility for work outcomes  Knowledge of results o Psychological states arise from jobs that are strong on five core job characteristics:  Skill variety – number of different activities performed in a job  Task identity – the degree to which a job, from beginning to end, requires completion of a whole and identifiable piece of work.  Task significance – degree to which a job is perceived to have a substantial impact on others inside or outside the organization  Autonomy – degree to which a job gives workers the discretion, freedom, and independence to decide how and when to accomplish the work  Feedback – amount of info the job provides to workers about their performance o What managers can do when jobs aren’t initially motivating:  Combining tasks  Natural work units  Establishing client relationships  Vertical loading (Pushing managerial authority down to workers)  Opening feedback channels – finding ways to give employees direct, frequent feedback about performance. Designing Organizational Processes 2 kinds of designs, mechanistic and organic - Mechanistic organizations – specialized jobs, precisely defined, unchanging roles, rigid chain of command based on centralized authority and communication o Works best in stable, unchanging environment (lifeguard) - Organic organization – broadly defined jobs, frequently changing roles, decentralized authority and horizontal communication. o Works best in dynamic, changing businesses. - The key difference between these is whereas mechanistic designs focus on organizational structure, organic designs are concerned with organizational process. IV. Intraorganizational Processes - The collection of activities that takes place within an organization to transform inputs into outputs that customers value. - Reengineering o “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed”. Four key words:  Fundamental (why do we do what we do)  Radical (  Processes  dramatic