9/10/2018

Management
Fourteenth Edition, Global Edition

Chapter 6
Managing Change

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Learning Objectives
6.1 Describe making the case for change.
6.2 Compare and contrast views on the change process.
6.3 Classify areas of organizational change.
6.4 Explain how to manage change.
Know how to be change ready by overcoming your resistance to
change.
6.5 Discuss contemporary issues in managing change.
Develop your skill in change management so you can serve as a
catalyst for change.
6.6 Describe techniques for stimulating innovation.
6.7 Explain why managing disruptive innovation is important.
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The Case for Change

• Organizational change: any alteration of people,
structure, or technology in an organization
• Change agent: someone who acts as a catalyst
and assumes the responsibility for managing the
change process

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Exhibit 6-1
External and Internal Forces for Change

External Internal
Changing consumer needs and wants New organizational strategy
New governmental laws Change in composition of workforce
Changing technology New equipment
Economic changes Changing employee attitudes

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External Factors
• Changing consumer needs and wants
• New governmental laws
• Changing technology
• Economic changes

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Internal Factors
• New organizational strategy
• Change in composition of workforce
• New equipment
• Changing employee attitudes

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Calm Waters Versus White-Water Rapids

Metaphors
• Calm waters metaphor:
– Unfreezing the status quo
– Changing to a new state
– Refreezing to make the change permanent

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Exhibit 6-2
The Three-Step Change Process

Exhibit 6-2 illustrates Kurt Lewin’s three-step change process.

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White-Water Rapids Metaphor

• White-water rapids metaphor: the lack of
environmental stability and predictability requires
that managers and organizations continually adapt
and manage change actively to survive

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Reactive Versus Proactive Change Processes

• Reactive: reacting to a situation that has occurred
• Proactive: acting in advance of a situation

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Exhibit 6-3
Four Types of Change

Exhibit 6-3 shows the four main areas of change managers face.
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Types of Change: Strategy

Failure to change strategy when circumstances
dictate could undermine a company’s success.

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Types of Change: Structure

• Changing structural components
• Changing structural design

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Types of Change: Technology

• New equipment, tools, or methods
• Automation
• Computerization

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Types of Change: People

• Organizational development: change methods
that focus on people and the nature and quality of
interpersonal work relationships

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Figure 6-4
Popular OD Techniques

The most popular OD techniques are described in Exhibit 6-4

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Why Do People Resist Change?

• Uncertainty
• Habit
• Fear of loss
• Belief change is inconsistent with goals of
organization

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Techniques for Reducing Resistance to

Change?
• Education and communication
• Participation
• Facilitation and support
• Negotiation
• Manipulation and co-optation
• Coercion

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Exhibit 6-5
Techniques for Reducing Resistance to Change
Technique When Used Advantage Disadvantage

Education and When resistance is due to Clear up May not work when mutual
communication misinformation misunderstandings trust and credibility are
lacking
Participation When resisters have the Increase involvement Time-consuming; has
expertise to make a and acceptance potential for a poor solution
contribution
Facilitation and When resisters are fearful Can facilitate needed Expensive; no guarantee of
support and anxiety ridden adjustments success

Negotiation When resistance comes from Can “buy” commitment Potentially high cost; opens
a powerful group doors for others to apply
pressure too
Manipulation and When a powerful group’s Inexpensive, easy way Can back re, causing
co-optation endorsement is needed to gain support change agent to lose
credibility
Coercion When a powerful group’s Inexpensive, easy way May be illegal; may
endorsement is needed to gain support undermine change agent’s
credibility

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Leading Change
• Managers can make change happen successfully
by:
– making organization change capable
– understanding their own role in process
– giving employees a role in the change

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Exhibit 6-6
Change-Capable Organizations
Characteristics
Link the present and the future. Think of work as more than an extension of the past; think about future
opportunities and issues and factor them into today’s decisions.
Make learning a way of life. Change-friendly organizations excel at knowledge sharing and management.

Actively support and encourage day-to-day improvements and changes.

Successful change can come from the small changes as well as the big ones.
Ensure diverse teams. Diversity ensures that things won’t be done like they’ve always been done.
Encourage mavericks. Because their ideas and approaches are outside the mainstream, mavericks can help
bring about radical change.
Shelter breakthroughs. Change-friendly organizations have found ways to protect those breakthrough ideas.

Integrate technology. Use technology to implement changes.

Build and deepen trust. People are more likely to support changes when the organization’s culture is trusting
and managers have credibility and integrity.
Couple permanence with perpetual change. Because change is the only constant, companies need to figure
out how to protect their core strengths during times of change.
Support an entrepreneurial mindset. Many younger employees bring a more entrepreneurial mindset to
organizations and can serve as catalysts for radical change.

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Creating a Culture for Change

• The fact that an organization’s culture is made up
of relatively stable and permanent characteristics
tends to make it very resistant to change.

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Understanding the Situational Factors

• Conditions that facilitate change:
– dramatic crisis occurs
– leadership changes hands
– culture is weak

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Exhibit 6-7
Changing Culture
Strategies for Managing Cultural Change
Set the tone through management behavior; top managers, particularly, need to
be positive role models.
Create new stories, symbols, and rituals to replace those currently in use.

Select, promote, and support employees who adopt the new values.

Redesign socialization processes to align with the new values.

To encourage acceptance of the new values, change the reward system.

Replace unwritten norms with clearly specified expectations.

Shake up current subcultures through job transfers, job rotation, and/or

terminations.
Work to get consensus through employee participation and creating a climate
with a high level of trust.

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Employee Stress
• Stress: the adverse reaction people have to
excessive pressure placed on them from
extraordinary demands, constraints, or
opportunities
• Stressors: factors that cause stress

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What Causes Stress?

• Task demands
• Role demands
– Role conflicts
– Role overload
– Role ambiguity
• Interpersonal demands
• Organization structure
• Organizational leadership
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Personal Factors
• Type A personality: people who have a chronic
sense of urgency and an excessive competitive
drive
• Type B personality: people who are relaxed and
easygoing and accept change easily

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Figure 6-8
Symptoms of Stress

As Exhibit 6-8 shows, stress symptoms can be grouped under three general categories:
physical, psychological, and behavioral.
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How Can Stress Be Reduced?

• Realistic job preview during selection process
• Performance planning program, e.g. MBO
• Job redesign
• Addressing personal stress
– counseling
– time management programs
– wellness programs

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Creativity Versus Innovation

• Creativity: the ability to combine ideas in a unique
way or to make unusual associations between
ideas
• Innovation: taking creative ideas and turning
them into useful products or work methods

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Stimulating and Nurturing Innovation

• An environment that stimulates innovation
includes three variables: the organization’s
structure, culture, and human resource practices.

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Figure 6-9
Innovation Variables

Exhibit 6-9 shows the three variables in an environment that stimulates innovation.
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Structural Variables
• Organic structures
• Abundant resources
• High interunit communication
• Minimal time pressure
• Work and nonwork support

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Cultural Variables
• Acceptance of ambiguity
• Tolerance of the impractical
• Low external controls
• Tolerance of risks
• Tolerance of conflict
• Focus on ends
• Open-system focus
• Positive feedback
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Human Resource Variables

• Idea champion: individual who actively and
enthusiastically supports new ideas, builds
support, overcomes resistance, and ensures that
innovations are implemented

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Innovation and Design Thinking

• When a business approaches innovation with a
design-thinking mentality, the emphasis is on
getting a deeper understanding of what customers
need and want.

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Disruptive Innovation Definition

• Disruptive innovation: innovations in products,
services, or processes that radically change an
industry’s rules of the game
• Sustaining innovation: small and incremental
changes in established products rather than
dramatic breakthroughs

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Exhibit 6-10
Examples of Past Disruptive Innovators
Established Business Disruptor Established Business Disruptor
Compact disc Apple iTunes Traveler’s checks ATMs and Visa
Carbon paper Xerox copy machine Encyclopedias Wikipedia
Canvas tennis shoes Nike athletic shoes Newspaper Craig’s List
classified ads
Portable radio Sony Walkman AM/FM radio stations Sirius XM

Sony Walkman Apple iPod Tax preparation services Intuit’s Turbo Tax

Typewriters IBM PC Yellow Pages Google

Weekly news CNN Paper maps Garmin’s GPS
magazines
TV networks Cable and Netflix Paperback books Kindle
Local travel agencies Expedia Lawyers Legal Zoom

Stockbrokers eTrade Taxis Uber

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Why Disruptive Innovation Is Important

• Disruptive innovations are a threat to many
established businesses, and responding with
sustaining innovations isn’t enough.

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Who’s Vulnerable?
• Large, established, and highly profitable
organizations are most vulnerable to disruptive
innovations because they have the most to lose
and are most vested in their current markets and
technologies.

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Implications
• For entrepreneurs
• For corporate managers
– Skunk works: a small group within a large
organization, given a high degree of autonomy
and unhampered by corporate bureaucracy,
whose mission is to develop a project primarily
for the sake of radical innovation
• For career planning

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Review Learning Objective 6.1

• Describe making the case for change.
– Change agent
– External forces
– Internal forces

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Review Learning Objective 6.2

• Compare and contrast views on the change
process.
– Calm waters metaphor
– White water rapids metaphor
– Lewin’s three-step model

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Review Learning Objective 6.3

• Classify areas of organizational change.
– Strategy
– Structure
– Technology
– People

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Review Learning Objective 6.4

• Explain how to manage change.
– People resist change because of uncertainty, habit,
concern over personal loss, and the belief that the
change is not in the organization’s best interest.
– Techniques for reducing resistance to change include:
education and communication, participation, facilitation,
negotiation, manipulation and co-optation, and
coercion

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Review Learning Objective 6.5

• Discuss contemporary issues in managing
change.
– Managers lead the change process by:
 Making organization change capable
 Understanding own role
 Giving employees a role in change process
– Managers help employees deal with stress by:
 Ensuring employees’ abilities match job
 Improving organizational communication
 Using a performance planning program
 Redesigning jobs
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Review Learning Objective 6.6

• Describe techniques for stimulating
innovation.
– Creativity
– Innovation
– Design thinking and innovation

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Review Learning Objective 6.7

• Explain why managing disruptive technology
is important.
– Disruptive innovation exists when a smaller company
with fewer resources is able to successfully challenge
established incumbent businesses.
– Disruptive innovation presents an as- set to
organizations that recognize the market potential of the
technology.

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