Holden outerwear promotes innovation at the individual employee level by

Chapter 6

Innovation and Change

© 2016 Cengage Learning

What Would You Do?

3M (Minneapolis, Minnesota)

Should 3M continue to focus on using Six Sigma procedures to reduce costs and increase efficiencies, or should it strive again to encourage its scientists and managers to focus on innovation? Which will make 3M more competitive in the long run?

Over time, how much should companies like 3M rely on acquisitions for innovation? Should 3M acquire half, one-third, 10 percent, or 5 percent of its new products through acquisitions? What makes the most sense and why?

© 2016 Cengage Learning

2

3M Headquarters, Minneapolis, Minnesota

With 40,000 global patents and patent applications, 3M, maker of Post-it Notes, reflective materials (Scotchlite), and 55,000 products in numerous industries (displays and graphics, electronics and communications, health care, safety and security, transportation, manufacturing, office products, and home and leisure), has long been one of the most innovative companies in the world. 3M codified its focus on innovation into a specific goal, “30/5,” which meant that 30 percent of its sales each year must come from products no more than five years old. The logic was simple but powerful. Each year, five-year-old products become six years old and would not be counted toward the 30 percent of sales. Thus, the 30/5 goal encouraged everyone at 3M to be on the lookout for and open to new ideas and products. Furthermore, 3M allowed its engineers and scientists to spend 5 percent of their time, roughly two hours per week, doing whatever they wanted as long as it was related to innovation and new product development.

And it worked, for a while. A decade ago, the Boston Consulting Group, one of the premier consulting companies in the world, ranked 3M as the most innovative company in the world. In subsequent years, it dropped to second, third, and then seventh. Today, 3M doesn’t even crack the top 50. Dev Patnaik, of Jump Associates, an innovation consulting firm, says, “People have kind of forgotten about those guys [3M]. When was the last time you saw something innovative or experimental coming out of there?” So, what happened?

When your predecessor became CEO ten years ago, he found a struggling, inefficient, oversized company in need of change. He cut costs by laying off 8,000 people. Marketing, and research and development funds, which had been allocated to divisions independent of performance (all divisions got the same increase each year), were now distributed based on past performance and growth potential. Perform poorly, and your funds would shrink the next year. Likewise, with U.S. sales stagnating and Asia sales rising, management decreased headcount, hiring, and capital expenditures in the United States, while significantly increasing all three in fast-growing Asian markets. Six Sigma processes, popularized at Motorola and GE, were introduced to analyze how things got done, to remove unnecessary steps, and to change procedures that caused defects. Thousands of 3M managers and employees became trained as Six Sigma “black belts” and returned to their divisions and departments to root out inefficiencies, reduce production times, and decrease waste and product errors. And it worked incredibly well, in part. Costs and capital spending dropped, while profits surged 35 percent to record levels. But, product innovation, as compared to the 30/5 goal sank dramatically, as only 21 percent of profits were generated by products that were no more than five years old.

So, what should 3M do? From inception, 3M has been an innovator, bringing a stream of new products and services to market, creating value for customers, sustainable advantage over competitors, and sizable returns for investors. Thanks to your predecessor, 3M has lower costs, is highly efficient, and much more profitable. But it no longer ranks among the most innovative firms in the world. In fact, the use of Six Sigma procedures appears to be inversely related to product innovation. If that’s the case, should 3M continue to focus on using Six Sigma procedures to reduce costs and increase efficiencies, or should it strive again to encourage its scientists and managers to focus on innovation? Which will make 3M more competitive in the long run?

When people think of innovation, they tend to think of game-changing advances that render current products obsolete, for example, comparing the iPhone to text-based “smartphones.” Innovation, however, also occurs with lots of incremental changes over time. What are the advantages and disadvantages for 3M of each approach, and when and where would each be more likely to work? Finally, some companies innovate from within by successfully implementing creative ideas in their products or services. Sometimes, though, innovation is acquired by purchasing other companies that have made innovative advances. For example, although Google is generally rated as one of the most innovative companies in the world, most people have forgotten that Google bought YouTube to combine its search expertise with YouTube’s online video capabilities. Over time, how much should companies like 3M rely on acquisitions for innovation? Should 3M acquire half, one-third, 10 percent, or 5 percent of its new products through acquisitions? What makes the most sense and why?

If you were in charge at 3M, what would you do?

Technology Cycles

Birth of a new technology

© 2016 Cengage Learning

Technology reaches limits

6-1

Exhibit 6.1 S-Curves and Technological Innovation

© 2016 Cengage Learning

6-1

4

Early in a technology cycle, there is still much to learn, so progress is slow, as depicted by point A on the S-curve. The flat slope indicates that increased effort (in terms of money or research and development) brings only small improvements in technological performance. Fortunately, as the new technology matures, researchers figure out how to get better performance from it. This is represented by point B of the S-curve in Exhibit 6.1. The steeper slope indicates that small amounts of effort will result in significant increases in performance. At point C in Exhibit 6.1, the flat slope again indicates that further efforts to develop this particular technology will result in only small increases in performance. More important, however, point C indicates that the performance limits of that particular technology are being reached. In other words, additional significant improvements in performance are highly unlikely. After a technology has reached its limits at the top of the S-curve, significant improvements in performance usually come from radical new designs or new performance-enhancing materials. In Exhibit 6.1, that new technology is represented by the second S-curve. The changeover or discontinuity between the old and new technologies is represented by the dotted line. At first, the old and new technologies will likely coexist. Eventually, however, the new technology will replace the old technology. When that happens, the old technology cycle will be complete, and a new one will have started.

“High-Tech?”

Technology cycles involve advances or changes in any kind of knowledge, tools, and techniques…not just “high technology.”

© 2016 Cengage Learning

6-1

Innovation Streams

Patterns of innovation over time that can create sustainable competitive advantage.

© 2016 Cengage Learning

6-1

6

Companies that want to sustain a competitive advantage must understand and protect themselves from the strategic threats of innovation. Over the long run, the best way for a company to do that is to create a stream of its own innovative ideas and products year after year.

Exhibit 6.2 Innovation Streams: Technology Cycles over Time

© 2016 Cengage Learning

6-1

7

Exhibit 6.2 shows a typical innovation consisting of a series of technology cycles. Recall that a technology cycle begins with a new technology and ends when it is replaced by a newer, substantially

better technology. The innovation stream in Exhibit 6.2 shows three such technology cycles. An innovation stream 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, which is characterized by technological substitution and design competition. Technological substitution occurs when customers purchase new technologies to replace older technologies. Discontinuous change is also characterized by design competition, in which the old technology and several different new technologies compete to establish a new technological standard. 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 competition. In addition, during design competition, the older technology usually improves significantly in response to the competitive threat from new technologies; this response also slows the changeover from older to newer technologies. Discontinuous change is followed by the emergence of a dominant design, which becomes the new accepted market standard for technology.

Dominant Designs

Discontinuous change is followed by the emergence of a dominant design. Dominant designs emerge in several ways:

Critical mass

Solves a practical problem

Independent standards bodies

6-1

© 2016 Cengage Learning

Emergence of Dominant Design

Emergence:

indicates there are winners and losers.

may lead to technological lockout (when a new dominant design makes it difficult for a company to sell its products).

signals a shift from design experimentation and competition to incremental change.

© 2016 Cengage Learning

6-1

Managing Sources of Innovation

Innovation begins with creativity, the production of novel and useful ideas.

Two factors can significantly affect innovation:

Creative work environment

Flow

© 2016 Cengage Learning

6-2

10

When we say that innovation begins with great ideas, we’re really saying that innovation begins with creativity. Creativity is the production of novel and useful ideas. While companies can’t command creativity from employees (“You will be more creative!”), they can jump-start innovation by building creative work environments, in which workers perceive that creative thoughts and ideas are welcomed and valued.

Work is challenging when it requires hard work, demands attention and focus, and is seen as important to others in the organization. Researcher Mihaly Csikszentmihalyi said that challenging work promotes creativity because it creates a rewarding psychological experience known as “flow.” Flow is a psychological state of effortlessness, in which you become completely absorbed in what you’re doing and time seems to fly. (You begin work, become absorbed in it, and then suddenly realize that several hours have passed.) When flow occurs, who you are and what you’re doing become one. Csikszentmihalyi first encountered flow when studying artists. He said, "What struck me by looking at artists at work was their tremendous focus on the work, this enormous involvement, this forgetting of time and body. It wasn't justified by expectation of rewards, like, 'Aha, I'm going to sell this painting.'”

Exhibit 6.3 Components of Creative Work Environments

© 2016 Cengage Learning

6-2

11

A creative work environment requires three kinds of encouragement: organizational, supervisory, and work group encouragement. 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. To foster creativity, companies may also have to remove impediments to creativity from their work environments. Internal conflict and power struggles, rigid management structures, and a conservative bias toward the status quo can all discourage creativity. They create the perception that others in the organization will decide which ideas are acceptable and deserve support.

Experiential Approach to Innovation

Assumes that innovation occurs within a highly uncertain environment and that the key to fast product innovation is to use intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding.

6-2

© 2016 Cengage Learning

Experiential Approach to Innovation

The experiential approach has five aspects:

Design iteration

Product prototype

Testing

Milestones

Multifunctional teams

6-2

© 2016 Cengage Learning

13

Companies that want to create a new dominant design following a technological discontinuity quickly build, test, improve, and retest a series of different product prototypes. By trying a number of very different designs or making successive improvements and changes in the same design, frequent design iterations reduce uncertainty and improve understanding. Simply put, the more prototypes you build, the more likely you are to learn what works and what doesn’t. Also, when designers and engineers build a number of prototypes, they are less likely to fall in love with a particular prototype. Instead, they’ll be more concerned with improving the product or technology as much as they can. Testing speeds up and improves the innovation process, too. When two very different design prototypes are tested against each other, or the new design iteration is tested against the previous iteration, product design strengths and weaknesses quickly become apparent. Likewise, testing uncovers errors early in the design process when they are easiest to correct. Finally, testing accelerates learning and understanding by forcing engineers and product designers to examine hard data about product performance. When there’s hard evidence that prototypes are testing well, the confidence of the design team grows. Also, personal conflict between design team members is less likely when testing focuses on hard measurements and facts rather than personal hunches and preferences.

A design iteration is a cycle of repetition in which a company tests a prototype of a new product or service, improves on the design, and then builds and tests the improved product or service prototype. A product prototype is a full-scale working model that is tested for design, function, and reliability. Testing is a systematic comparison of different product designs or design iterations. Milestones are formal project review points used to assess progress and performance. 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. Milestones also shorten the innovation process by creating a sense of urgency that keeps everyone on task. Multifunctional teams are 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 problems that would typically not have been identified until much later.

Powerful Leaders

Powerful leaders provide the vision, discipline, and motivation to keep the innovation process focused, on time, and on target.

6-2

© 2016 Cengage Learning

14

Powerful leaders provide the vision, discipline, and motivation to keep 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 product success or failure.

Compression Approach to Innovation

Assumes that innovation is a predictable process, that incremental innovation can be planned using a series of steps, and that compressing the time it takes to complete those steps can speed up innovation.

6-2

© 2016 Cengage Learning

15

While the experiential approach is used to manage innovation during periods of discontinuous change, a compression approach can be used during periods of incremental change, in which the focus is on systematically improving the performance and lowering the cost of the dominant technological design. A compression approach to innovation assumes that innovation is a predictable process, that incremental innovation can be planned using a series of steps, and that compressing the time it takes to complete those steps can speed up innovation.

Planning for Incremental Innovation

Generational change

When incremental improvements are made to a dominant technological design such that the improved version of the technology is fully backward compatible with the older version.

© 2016 Cengage Learning

6-2

16

When 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. Most planning for incremental innovation is based on the idea of generational change.

Shortening Development Time

Ways to shorten development time:

Adjust supplier involvement

Shorten the time of individual steps

Develop overlapping steps

6-2

© 2016 Cengage Learning

17

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. Another way to shorten development time is simply to shorten the time of individual steps in the innovation process. In a sequential design process, each step must be completed before the next step begins. But sometimes multiple development steps can be performed at the same time. Overlapping steps shorten the development process by reducing delays or waiting time between steps.

Managing Change

Change forces lead to differences in the form, quality, or condition of an organization over time.

Resistance forces support the status quo.

Causes of resistance to change include self-interest, misunderstanding, distrust, and general intolerance for change.

6-3

© 2016 Cengage Learning

18

Resistance to change is caused by self-interest, misunderstanding, distrust, and a general intolerance for change. People resist change out of self-interest because they fear that change will cost or deprive them of something they value. For example, 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, that is, they don’t understand the change or the reasons for it, or they distrust the people, typically management, behind the change. Ironically, when this occurs, some of the strongest resisters may support the changes in public, nodding and smiling their agreement, but then ignore the changes in private and just do their jobs as they always have. Management consultant Michael Hammer calls this deadly form of resistance the “Kiss of Yes.”

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 are 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 negotiate change in their companies.

Managing Resistance to Change

© 2016 Cengage Learning

Unfreezing

Change intervention

Refreezing

6-3

19

According to Kurt Lewin, managing organizational change is a basic process of unfreezing, change intervention, and refreezing. Unfreezing is getting the people affected by change to believe that change is needed. During the change intervention itself, workers and managers change their behavior and work practices. Refreezing is supporting and reinforcing the new changes so that they stick.

Managing Resistance to Change

Educate employees.

Communicate change-related information.

Have employees participate in planning and implementing change.

Discuss and agree on who will do what.

Give significant managerial support.

Use coercion.

© 2016 Cengage Learning

6-3

20

Resistance to change is an example of frozen behavior. Given the choice between changing and not changing, most people would rather not change. Because resistance to change is natural and inevitable, managers need to unfreeze resistance to change to create successful change programs. The following methods can be used to manage resistance to change: education, 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 and funding or other support employees need to make changes. For example, resistance to change can be particularly strong when one company buys another company. 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. Employees are also less likely to resist change if they are allowed to discuss and agree on who will do what after change occurs. 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. Because of the intense negative reactions it can create (e.g., fear, stress, resentment, sabotage of company products), coercion should be used only when a crisis exists or when all other attempts to reduce resistance to change have failed.

Exhibit 6.4 What to Do When Employees Resist Change

© 2016 Cengage Learning

6-3

Exhibit 6.4 summarizes some additional suggestions for what managers can do when employees resist change.

21

Exhibit 6.5 Errors Managers Make When Leading Change

© 2016 Cengage Learning

6-3

22

Exhibit 6.5 shows the most common errors that managers make when they lead change. The first two errors occur during the unfreezing phase, when managers try to get the people affected by change to believe that change is really needed. The first and potentially most serious error is not establishing a great enough sense of urgency. Indeed, 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. The second mistake that occurs in the unfreezing process is not creating a powerful enough coalition. Change often starts with one or two people, but it has to be supported by a critical and growing group of people if an entire department, division, or company is to be affected. Besides top management, Kotter recommends that key employees, managers, board members, customers, and even union leaders be members of a core change coalition that guides and supports organizational change.

The next four errors that managers make occur during the change phase, when a change intervention is used to try to get workers and managers to change their behavior and work practices. Lacking a vision for change is a significant error at this point. A vision (defined as a purpose statement in Chapter 4) is a statement of a company’s purpose or reason for existence. A 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. By contrast, change efforts guided by visions are clear and easy to understand and can be explained in 5 minutes or less. Undercommunicating the vision by a factor of 10 is another mistake in the change phase. According to Kotter, companies mistakenly hold just one meeting to announce the vision. Or, if the new vision receives heavy emphasis in executive speeches or company newsletters, senior management undercuts the vision by behaving in ways contrary to it. 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. Furthermore, even companies that begin change with a clear vision sometimes make the mistake of not removing obstacles to the new vision. They leave formidable barriers to change in place by failing to redesign jobs, pay plans, and technology to support the new way of doing things. Another error in the change phase is not systematically planning for and creating short-term wins. Most people don’t have the discipline and patience to wait 2 years to see if the new change effort works. Change is threatening and uncomfortable, so people need to see an immediate payoff if they are to continue to support it. Kotter recommends that managers create short-term wins by actively picking people and projects that are likely to work extremely well early in the change process.

The last two errors that managers make occur during the refreezing phase, when attempts are made to support and reinforce changes so that they stick. 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. Declaring success too early has the same effect as draining the gasoline out of a car: It stops change efforts dead in their tracks. With success declared, supporters of the change process stop pushing to make change happen. After all, why push when success has been achieved? Rather than declaring victory, managers should use the momentum from short-term wins to push for even bigger or faster changes. This maintains urgency and prevents change supporters from slacking off before the changes are frozen into the company’s culture. The last mistake that managers make is not anchoring changes in the organization’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.

Anchoring Changes

Show people directly that changes have actually improved performance.

Make sure that people who get promoted fit the new culture.

© 2016 Cengage Learning

6-3

Change Tools and Techniques

Results-driven change supplants the emphasis on activity with a focus on quickly measuring and improving results.

An advantage of results-driven change is that quick, visible improvements motivate employees to continue to make additional changes to improve measured performance.

6-3

© 2016 Cengage Learning

24

One of the reasons that organizational change efforts fail is that they are activity-oriented rather than results-oriented. In other words, they focus primarily on changing company procedures, management philosophy, or employee behavior. Typically, there is much buildup and preparation as consultants are brought in, presentations are made, books are read, and employees and managers are trained. There’s a tremendous emphasis on doing things the new way. But, with all the focus on “doing,” almost no attention is paid to results, to seeing if all this activity has actually made a difference. By contrast, results-driven change supplants the emphasis on activity with a laserlike focus on quickly measuring and improving results. An advantage of results-driven change is that quick, visible improvements motivate employees to continue to make additional changes to improve measured performance.

Exhibit 6.6 Results-Driven Change Programs

© 2016 Cengage Learning

6-3

Exhibit 6.6 describes the basic steps of results-driven change.

25

GE Workout

First morning

The boss discusses the agenda.

First and second days

Groups discuss and debate solutions.

Third day

A town meeting is held.

Only three options are available– “yes,” “no,” or a request for more information.

6-3

© 2016 Cengage Learning

26

The General Electric workout is a special kind of results-driven change. The “workout” involves a three-day meeting that brings together managers and employees from different levels of an organization to generate quickly and act on solutions to specific business problems. On the first morning, the boss discusses the agenda and targets specific business problems that the group will solve. Then, the boss 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 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 an agreed-on date.

Transition Management Team

A transition management team is a group of 8 to 12 people assigned to manage and coordinate a company’s change process.

6-3

© 2016 Cengage Learning

27

While the GE workout clearly speeds up change, it may also fragment change if different managers approve conflicting suggestions in separate town meetings across a company. By contrast, a transition management team provides a way to coordinate change throughout an organization. A transition management team (TMT) is a group of 8 to 12 people whose full-time job is to manage and coordinate a company’s change process. One member of the TMT is assigned to anticipate and manage the emotions and behaviors related to resistance to change. Despite their importance, many companies overlook the impact that negative emotions and resistant behaviors can have on the change process. TMT members report to the CEO every day, decide which change projects to approve and fund, select and evaluate the people in charge of different change projects, and make sure that different change projects complement one another.

It is also important to say what a TMT is not. A TMT is not an extra layer of management further separating upper management from lower managers and employees. A TMT is not a steering committee that creates plans for others to carry out. Instead, the members of the TMT are fully involved with making change happen on a daily basis. Furthermore, it’s not the TMT’s job to determine how and why the company will change. That responsibility belongs to the CEO and upper management. Finally, a TMT is not permanent. Once the company has successfully changed, the TMT is disbanded.

Exhibit 6.7 Primary Responsibilities of Transition Management Teams

© 2016 Cengage Learning

6-3

28

Exhibit 6.7 lists the primary responsibilities of TMTs.

Organizational Development

A philosophy and collection of planned change interventions designed to improve an organization’s long-term health and performance.

6-3

© 2016 Cengage Learning

29

Organizational development is a philosophy and collection of planned change interventions designed to improve an organization's long-term health and performance. Organizational development takes a long-range approach to change, assumes that top management support is necessary for change to succeed, creates change by educating workers and managers to change ideas, beliefs, and behaviors so problems can be solved in new ways, and emphasizes employee participation in diagnosing, solving, and evaluating problems.

Exhibit 6.8 General Steps for Organizational Development Interventions

© 2016 Cengage Learning

6-3

30

As shown in Exhibit 6.8, organizational development interventions begin with the recognition of a problem. Then, the company designates a change agent to be formally in charge of guiding the 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 to 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.

what really works Change the Work Setting or Change the People? Do Both!

© 2016 Cengage Learning

Changing the Work Setting

Changing the People

Changing Individual Behavior and Organizational Performance

31

Changing the Work Setting

An organizational work setting has four parts: organizing arrangements (control and reward systems, organizational structure), social factors (people, culture, patterns of interaction), technology (how inputs are transformed into outputs), and the physical setting (the actual physical space in which people work). Overall, there is a 55 percent chance that organizational change efforts will successfully bring changes to a company’s work setting. Although the odds are 55–45 in your favor, this is a much lower probability of success than you’ve seen with the management techniques discussed in other chapters. This simply reflects how strong resistance to change is in most companies.

Changing the People

Changing people means changing individual work behavior. The idea is powerful. Change the decisions people make. Change the activities they perform. Change the information they share with others. And change the initiatives they take on their own. Change these individual behaviors and collectively you change the entire company. Overall, there is a 57 percent chance that organizational change efforts will successfully change people’s individual work behavior. If you’re wondering why the odds aren’t higher, consider how difficult it is to change personal behavior. It’s incredibly difficult to quit smoking, change your diet, or maintain a daily exercise program. Not surprisingly, changing personal behavior at work is also difficult. Viewed in this context, a 57 percent chance of success is quite high.

Identify the type of change that Holden’s leaders are managing on a daily basis.

What resistance has Holden encountered while introducing innovative garment designs? How was it able to overcome that resistance?

Management Workplace - Holden Outerwear

© 2016 Cengage Learning

32

Holden Outerwear: Managing Change and Innovation

Founded in 2002 by professional snowboarder Mikey LeBlanc, Holden Outerwear has given traditional baggy outerwear a complete style make-over. Unlike ski-apparel brands that focus on utility at the expense of looking good, Holden pants and jackets possess features that are inspired by runway brands like Marc Jacobs and G-Star, as Holden is always looking to bring new elements of style to the slopes. Holden has the attention of everyone in its industry. Retailers wait anxiously to see LeBlanc’s newest collections, and competitors from Burton and Salomon to Bonfire and Walmart borrow heavily from Holden’s collections. LeBlanc doesn’t worry too much about the rampant plagiarism that goes on in his industry. As he sees it, imitation is the highest form of flattery. Plus, Holden’s business is based on finding the next big thing. When it comes to style, Holden is the leader, never the follower.