(n

Explain why innovation matters to companies. change, in which customers purchase new technologies, and

u
=
Technoloqy cycles typically follow an S-curve pattern of innovation
Early in the cycle, technological progress is slow, and improve-
tu
F ments in techno ogical performance are small. As a technology
matures, however, performance improves quickly. Finally, as the
limits of a technology are reached, only small improvements occur
IJJ At this point, significant improvements in performance must come
v from new technologies. The best way to protect a competitive
advantage is to create a stream of innovative ideas and products.
lnnovation streams begin with technological discontinuities
vt that create significant breakthroughs in performance or func-
UJ
tion. Technological discontinuities are followed by discontinuous
companies compete to establish the new dominant design.
Dominant designs emerge because of critical mass, because
they solve a practical problem, or because ofthe negotiations of
independent standards bodies. Because technological innovation
both enhances and destroys competence, companies that bet on
the wrong design often struggle, while companies that bet on
the eventual dominant design usually prosper. When a domi-
nant design emerges, companies focus on incremental change,
lowerlng costs, and making small but steady lmprovements in the
dominant design. This focus continues untii the next technological
discontinuity occurs.

o
= Organizational innovation the suc- Technological discontinuity the phase Dominant design a new technologi-
U cessful implementation of creative ideas ln of an innovation stream in which a scientif c cal design or process that becomes the
F organizations (p. 137) advance or unique combination of existing accepted market standard (p. 141)
:) technologies creates a significant break- Technological Iockout the inabillty of a
o Technology cycle a cycle that begins
with the blrth of a new technology and
through in performance or function (p. 139) company to competitively sell its products
(, ends when that technoloqy reaches its lim- Discontinuous change the phase because it relies on old technology or a
its and is replaced by a newer, substantially of a technology cycle characterized by nondominant design (p. 142)
better technoloqy (p. 1 38) technological substitution and design lncremental change the
z=E, S-curve pattern of innovation a pat-
competition (p. 140)
phase of a
technology cycle in which companies
tern of technological innovation characterized Technological substitution the pur- innovate by lowering costs and improving
by slow initial progress, then rapid progress, chase of new technologies to replace older
the functioning and performance of the
ul and then slow progress again as a technology ones (p. 140) dominant technological deslgn (p. 142)
J matures and reaches its limits (p. 138)
Design competition competition
N lnnovation streams patterns of innova- between old and new technologies to
u tion over time that can create sustainable establish a new technological standard or
lrJ competitive advantage (p. 139) dominant design (p. 140)
F
o-

I Discuss the different methods that managers can use to
U effectively manage innovation in their organizations.
To successfully manage innovation streams, companies must
manage the sources of innovation and learn to manage innovation
during both discontinuous and incremental change. Because inno-
vation begins with creativity, companies can manage the sources
of innovation by supporting a work environment in which creative
thoughts and ideas are welcomed, valued, and encouraqed. Creative
work environments provide challenqinq work; offer orqanizational,
supervisory, and work group encouragement; allow significant
freedom; and remove organizational impediments to creativity.
Discontinuous and incremental change require different strategies.
Companies that succeed in periods of discontinuous change typi-
cally follow an experlential approach to innovation. The experiential
approach assumes that intuition, flexible options, and hands-on
experience can reduce uncertainty and accelerate learning and
understanding. A compression approach to innovation works best
during periods of incremental change. This approach assumes
that innovation can be planned using a series ofsteps and that
compressing the time ir takes to complete those steps can speed
up innovation.

Creative work environments workplace
cultures in which workers perceive that new
ideas are welcomed, valued, and encouraqed
(p 143)
FIow a psychological state of effortless-
ness, in which you become completely
absorbed in what youte doing, and time
seems to pass quickly (p. 144)
Experiential approach to innovation
an approach to innovation that assumes a
highly uncertain environment and uses intu-
ition, flexible options, and hands-on experi-
ence to reduce uncertainty and accelerate
learning and understanding (p. 145)
Design iteration a cycle of repetition Multifunctional teams work teams
in which a company tests a prototype of composed of people from different
a new product or service, improves on departments (p. 147)
that design, and then builds and tests the
Compression approach to
improved prototype (p. 146)
innovation an approach to innovation
Product prototype working
a full-scale, that assumes that incremental innovation
model that is being tested for design, func- can be planned using a series ofsteps and
tion, and reliability (p. 146) that compressing those steps can speed
innovation (p. 148)
Testing the systematic comparison of
different product designs or design itera- Generational change change based on
tions (p. 146) incrementai improvements to a dominant
technological design such that the improved
Milestones formai prolect review points used
technoloqy is fully backward compatible
to assess progress and performance (p. 1 47)
with the older technology (p. laB)

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 Discuss why not changing can lead to organizational than facing up to the fundamental changes needed to ensure
survrval, ln the crisis stage, failure is Iikely unless fundamental reor-
ta decline. The five-stage process oforganizational decline begins
ganization occurs. Finally, in the dissolution stage, the company is
when organizations don't recognize the need for change. ln
the blinded stage, managers fail to recognize the changes that dissolved through bankruptcy proceedings; by selling assets to pay
E, threaten their organization's survival. ln the inaction stage, man- creditors; or through the closing of stores, offices, and facilities. If
UJ companies recognize the need to change early enough, however,
F agement recognizes the need to change but doesn't act, hoping
that the problems will correct themselves. ln the faulty action dissolution may be avoided.
stage, management focuses on cost cutting and efficiency rather
lU
\Z
Organizational decline a large that occurs when companies don't to the internal or externa pressures that
decrease in organizational performance anticipate, recognize, neutralize, or adapt threaten their survival (p. 149)
t1
LU

o a Discuss the different methods that managers can use

to better manage change as it occurs. The basic change
process involves unfreezing, change intervention, and refreezing.
U Resistance to change stems from self-interest, misunderstanding,
F. and distrust as well as a general intolerance for change. Resistance
f, can be managed through education and communication, par
o ticipation, negotiation, top management support, and coercion.
Knowing what not to do is as important as knowing what to do
creatlng a guiding coalition, lacking a vision, undercommunicating
the vision, not removing obstacles to the vision, not creating short-
term wins, declaring victory too soon, and not anchoring changes
in the corporation's culture. Finally, managers can use a number of
change techniques. Results-driven change anci the General Electric
fastworks reduce resistance to change by gettlng change efforts
offto a fast start.Organizational development is a
planned change interventions (large-system, small-grcup, person-
collection of

(, to achieve successful change. Managers should avoid these errors focused), gulded by a change agent, that are designed to improve
an organization's long-term health and performance.
Z when leading change: not establishing a sense of urgency, not

zE, Change forces forces that produce dif- Refreezing supporting and reinforcing an organizatron's long-term health and
'l55)
ferences in the form, quality, or condition of new changes so that they stick (p. 151) performance (p.
lrJ an organization overtime (p. 150) Coercion the use offormal power and Change agent the person formaily in
J Resistance forces forces that support the authority to force others to change (p. 1 52) charge ol guidlng a change effort (p. 155)
N existing conditions in organizations (p. 150) Results-driven change change created
E, Resistance to change opposition to quickly by focusing on the measurement

ul change resulting from self-interest, mis- and improvement of results (p. 154)
F understanding and distrust, and a general General Electric fastworks quickly
o- intolerance for change (p. 1 50) experimenting with new ideas to solve
Unfreezing getting the people affected by customer problems and learn from repeated

I I
U
changeto believethatchange
Change intervention the
is needed

to get workers and managers to change

(p
process used

their behaviors and work practices (p.151)

151) tests and improvements (p, 154)
Organizational development
philosophy and collection of planned
change interventions designed to improve
a

Exhibit 7.6
Different Kinds of 0rganizational Development lnterventions
Large-System lnterventions
Sociotechnical An intervention designed to improve how well employees use and adjust to the work technology used in an
systems orqanization.

Surveyfeedback An intervention that uses surveys to collect information from the members ofihe system, reports the results ofthat
survey to the members, and then uses those results to develop action plans for improvement.

Small-Group lnterventions
Team building An intervention designed to increase the cohesion and cooperation of work group members.

Unit goal setting An intervention designed to help a work group establish short- and long-term goals.

Person-Focused I nterventions
Counseling/ An intervention designed so that a formal helper or coach listens to manaqers or employees and advises them on how
coaching to deal with work or interpersonal problems.

Training An intervention designed to provide !ndividuals with the knowledge, skills, or anitudes they need to become more
effective at their Jobs.

Source: W. l. Rothwell, R. Sullivan, and G. l!4. Mclean, Practicinq Orqonizatianal Develcprnenl: AGuide for Cortsulldn15 (San Diego: Pfe ffer & fo., 1 995).

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