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					Chapter 7: Innovation and Change


Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter,
followed by a set of lesson plans for you to use to deliver the content in Chapter 7.
      Lesson Plan for Lecture (for large sections) on page 4.
      Lesson Plan for Group Work (for smaller classes) on page 6.
      Lesson Plan for Biz Flix (video) lesson plan on page 8.
      Lesson Plan for Management Workplace (video) lesson plan on page 10.

Assignments with Teaching Tips and Solutions begin on page 11.
   Case assignment – Whirlpool                           Take Two Video assignment – Biz Flix
   Management Decision – Change costs                    clip on October Sky
    more than pennies                                    Take Two Video assignment – Ziba
   Management Team Decision – Brushing                   Designs, Minneapolis, creative work
                                                          environment
    up at Colgate
   Practice Being a Manager – Inventor or               Review Questions
    Investor?                                            Additional activities and assignments


 Highlighted Assignments                Key Points
 What Would You Do?                     At Whirlpool, where efficiency was king, the idea of
                                        innovation as a key to success met considerable resistance.
                                        Management now explores the value of innovation as a key
                                        to success
 Management Decision                    To be competitive, really to survive, you need to approach
                                        your operations in a more systematic fashion. Is hiring an
                                        outsider to consultant and implement change worthwhile?
 Management Team Decision               In the face of faltering performance, Colgate seems like it
                                        could use some innovation – or is innovation always the best
                                        strategy?
 Develop Your Career Potential          Resources are given to help students spark their own
                                        creativity.
 Take Two – Biz Flix                    A clip from October Sky, the film about Homer Hickam‘s
                                        early attempts to invent a rocket, depicts aspects of how to
                                        manage innovation.
 Take Two – Management Workplace        Original Penguin has reinvented itself for a 21st century
                                        market through creativity and innovation in retailing and
                                        merchandising.

 Supplemental Resources                 Where to Find Them
 Course Assessment                      IRCD
 PowerPoint slides with video and       IRCD
 lecture notes
 PowerPoint slides with lecture notes   Online
 Test Bank                              IRCD in Examview and Word; online in Word




Chapter 7: Innovation and Change                                                                  1
Learning Objectives
1   Explain why innovation matters to companies.

Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological
progress is slow, and improvements in technological performance are small. As a technology matures,
however, performance improves quickly. Finally, as the limits of a technology are reached, only small
improvements occur. At this point, significant improvements in performance must come from new
technologies. The best way to protect a competitive advantage is to create a stream of innovative ideas
and products. Innovation streams begin with technological discontinuities that create significant
breakthroughs in performance or function. Technological discontinuities are followed by discontinuous
change, in which customers purchase new technologies and companies compete to establish the new
dominant design. Dominant designs emerge because of critical mass, because they solve a practical
problem, or because of the negotiations of independent standards bodies. Because technological
innovation is both competence enhancing and competence destroying, companies that bet on the wrong
design often struggle, while companies that bet on the eventual dominant design usually prosper.
Emergence of a dominant design leads to a focus on incremental change, lowering costs and making
small, but steady improvements in the dominant design. This focus continues until the next technological
discontinuity occurs.


2   Discuss the different methods that managers can use to 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. Since innovation begins with
creativity, companies can manage the sources of innovation by supporting a creative work environment in
which creative thoughts and ideas are welcomed, valued, and encouraged. Creative work environments
provide challenging work; offer organizational, supervisory, and work group encouragement; allow
significant freedom; and remove organizational impediments to creativity.
         Companies that succeed in periods of discontinuous change typically follow an experiential
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 of steps and that compressing the time it takes to complete those steps can speed
up innovation.

3   Discuss why not changing can lead to organizational decline.

The five-stage process of organizational decline begins when organizations don‘t recognize the need for
change. In the blinded stage, managers fail to recognize the changes that threaten their organization‘s
survival. In the inaction stage, management recognizes the need to change, but doesn‘t act, hoping that the
problems will correct themselves. In the faulty action stage, management focuses on cost cutting and
efficiency rather than facing up to the fundamental changes needed to ensure survival. In the crisis stage,
failure is likely unless fundamental reorganization occurs. Finally, in the dissolution stage, the company is
dissolved through bankruptcy proceedings, by selling assets to pay creditors, or through the closing of
stores, offices, and facilities. If companies recognize the need to change early enough, however,
dissolution may be avoided.




2                                                                       Chapter 7: Innovation and Change
4   Discuss the different methods that managers can use to better manage change as it occurs.

The basic change process is unfreezing, change, and refreezing. Resistance to change, which stems from
self-interest, misunderstanding and distrust, and a general intolerance for change, can be managed through
education and communication, participation, negotiation, top management support, and coercion.
Knowing what not to do is as important as knowing what to do to achieve successful change. Managers
should avoid these errors when leading change: not establishing urgency, not creating a guiding coalition,
lacking a vision, not communicating 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 and the GE workout reduce
resistance to change by getting change efforts off to a fast start. Organizational development is a
collection of planned change interventions (large system, small group, person-focused), guided by a
change agent, that are designed to improve an organization‘s long-term health and performance.




Terms
organization innovation            creativity                     technology cycle
S-curve pattern of innovation      innovation streams             discontinuous change
technology substitution            design competition             dominant design
technological lockout              incremental change             creative work environments
flow                               experiential approach          design iteration
product prototype                  testing                        milestones
multifunctional teams              compression approach to        generational change
                                   innovation
organizational decline             change forces                  resistance forces
resistance to change               unfreezing                     change intervention
refreezing                         coercion                       results driven change
General Electric workout           organizational development     change agent




Chapter 7: Innovation and Change                                                                 3
Lesson Plan for Lecture

Pre-Class Prep for You:                             Pre-Class Prep for Your Students:
 Review chapter and determine what points to       Bring book.
  cover.
 Bring PPT slides.

Warm Up       Begin chapter 7 by giving your students a brainteaser to solve. The game Mind Trap
              offers several, as do any number of Mensa puzzle books on the market.

Content       Lecture slides: Make note of where you stop so you can pick up at the next class
Delivery      meeting. Slides have teaching notes on them to help you as you lecture.


               Topics                       PowerPoint Slides           Activities
               ORGANIZATIONAL               1: Change and Innovation    Launch your lecture with
               INNOVATION                   2: Organizational           your brainteaser and
               1 Why Innovation             Innovation                  prompt students to think of
                  Matters                   3: Beyond the Book          what a brainteaser has to do
                  1.1 Technology            4: Why Innovation           with innovation. (New
                      Cycles                Matters                     ways of thinking of old
                  1.2 Innovation            5: Why Innovation           problems (or new ones)
                      Streams               Matters                     leads to innovation and new
                                            6: Technology Cycles        technology.)
                                            7: S-curve Pattern of
                                            Innovation
                                            8: Beyond the Book
                                            9: Innovation Streams
                                            10: Innovation Streams
                                            11: Innovation Streams
                                            12: Beyond the Book
               2   Managing Innovation      13: Managing Innovation
                   2.1 Managing Sources     14: Managing Sources of
                       of Innovation        Innovation
                   2.2 Experiential         15: Creative Work
                       Approach             Environments
                   2.3 Compression          16: Expanding Sources of
                       Approach             Innovation
                                            17: Discontinuous
                                            Change
                                            18: Experiential
                                            Approach
                                            19: Incremental Change
                                            20: Compression
                                            Approach
                                            21: Managing Innovation

               ORGANIZATIONAL               22: Organizational          Text uses Barney‘s as an
               CHANGE                       Change                      extended example of
               3 Organizational             23: 5 Stages of             organizational decline. It

4                                                                   Chapter 7: Innovation and Change
                     Decline: The Risk of     Organizational Decline       might be interesting in class
                     Not Changing             24: Beyond the Book          to do an ―intensive care‖
                                                                           review of General Motors‘s
                                                                           situation.
                4    Managing Change          25: Managing Change
                     4.1 Managing             26: Managing Change
                         Resistance to        27: Managing Resistance
                         Change               to Change
                     4.2 What Not to Do       28: Managing Resistance
                         When Leading         to Change
                         Change               29: Errors Made When
                     4.3 Change Tools and     Leading Change
                         Techniques           30: Change Tools and
                                              Techniques
                                              31: Results-Driven
                                              Change
                                              32: GE Workout
                                              33: Beyond the Book
                                              34: Organizational
                                              Development                  The clip in slide 37 offers
                                              35: Organizational           an interesting example of
                                              Development                  approaches to innovation. It
                                              36: Kinds of OD              is an edited sequence of the
                                              Interventions                process Homer Hickam
                                              37: Biz Flix – October       used as high school student
                                              Sky                          to invent a rocket.

               Adjust lecture to include the activities in the right column. *Some activities should be
               done before introducing the concept, some after.

Conclusion     Assignments:
and               1. Give students some experience in developing their own innovative thinking.
Preview               Assign the Develop Your Career Potential exercise, or adapt the Ideation activity
                      in the Assignments and Activities section for homework. To do so, require
                      students to assemble the disparate items and create a hat, vehicle, animal, or
                      other item you determine. Have them submit a photo of their item along with a
                      written piece on how their innovation process evolved, the challenges of the
                      assignment, and their reaction to the assignment in general.
                  2. Assign students to review Chapter 7 and read the next chapter on your syllabus.

               Remind students about any upcoming events.




Chapter 7: Innovation and Change                                                                   5
Lesson Plan for Group Work

Pre-Class Prep for You:                         Pre-Class Prep for Your Students:
Review material to cover and modify the lesson Bring book and
plan to meet your needs.
Set up the classroom so that small groups of 4-
5 students can sit together.

Warm Up      Begin Chapter 7 by asking your students to work a brainteaser that you bring to class.
             The game MindTrap is full of examples, as are the numerous Mensa and Mensa-style
             puzzle books on the market.

Content      Lecture on Why Technology Matters and Managing Sources of Innovation
Delivery     (Sections 1 & 2)

             A necessary component of innovation is creativity the creative work environment. To
             give your students a break from the traditional tenor of the academic classes they likely
             take, use the teaching notes below to do the Develop Your Career Potential in class.

             Conversely, break for this group activity:

              “Ideation”
              Divide the class into small groups of 3 to 4 students and give each group a bag of
              disparate items. (Things rescued from the trash, like milk jugs and lids, toilet-paper
              tubes, and broken mechanical items make for good resources.) Charge each group
              with building something you specify, like a hat or a vehicle, or with deciding first
              what to build, then actually doing it. Depending on your resources, consider giving a
              set of building materials to each student and even inviting a professor from the
              industrial design department (if your university has an engineering and/or design
              college) to visit your class that day to help with the activity. After the students have
              finished, let them present their design to the class. If time allows, let students critique
              each design, making recommendations for improvement or refinement.

             Come back together as a class to share results from the group activity.

             Segue into next section by asking students ―Does change matter?‖

             Lecture on Organizational Decline (Section 3)

             Introduce the section on Managing Change by lecturing on change forces, resistance
             forces, and resistance to change.

             Break for the following activity:

              “What’s Happening”
              Divide the class into groups of 3-4 students to map what is happening to at least 2
              companies facing significant change forces. For each company, students need to list
              what they perceive to be the change and resistance forces at work. General Motors,
              Saks Fifth Avenue, Walgreen, Sony, and ExxonMobil are some examples. Consider
              letting students pick one company to work with in addition to the one you give them.
              Also consider giving each group a different set of companies so that when you come
6                                                                      Chapter 7: Innovation and Change
                back together as a class to share information, you‘ll have a wide range of forces to
                discuss.

               Segue into next section by asking students how they feel about change: embrace it, take
               wait-and-see attitude, resist it, sabotage it, etc. You‘ll probably get the majority of hands
               at the ―wait-and-see‖ or ―resist it‖ probes. Ask students to account for the results:

               ―Why do you think that is? I mean, why do people tend to be resistant to change?‖
               ‗What problems can that tendency create for managers?‖
               ―What do you think managers can do to reduce that resistance?‖

               Lecture on Managing Resistance to Change and What Not to Do When Leading Change
               (Sections 4.1 - 4.2)

               Segue into Lecture on Change Tools and Techniques (Section 4.3)

               After presenting the various techniques in the book, simulate the GE Workout by doing
               the following group activity:

                “GE Workout for Campus President”
                As an entire class, brainstorm a list of specific problems at your college or university.
                Problems can be related to any aspect of the campus (financial, registration, social
                activities, sports, etc.) Divide students into medium-sized groups of 8-10 students.
                Ask one student from each group to volunteer to be the campus president for that
                group. Have the managers leave the room (or sit together away from their
                ―department chairs‖) for 5 minutes and let them think of possible solutions their
                teammates might put before them. Reintegrate the presidents with their management
                teams and conduct the GE Workout. Time this part of the exercise to simulate the
                rapid nature of the workout. You don‘t want to give the presidents too long to decide
                on any given item or to get into debates/discussions with department chairs about the
                topic.


Conclusion     Assignments:
and              1. As an assignment that follows up the Ideation exercise above, have students write
Preview              a paragraph about their experience with the design process and one about their
                     response to the critique process.
                 2. If you have finished covering Chapter 7, assign students to review Chapter 8 and
                     read the next chapter on your syllabus.

               Remind students about any upcoming events.




Chapter 7: Innovation and Change                                                                     7
Video Lesson Plan – Biz Flix
Because they are so short, the Biz Flix videos are best used to supplement another style lesson plan. They
are designed to illustrate the content rather than convey all the chapter concepts.

Segment Summary: October Sky

Homer Hickam bases October Sky on the autobiographical book Rocket Boys. Jake Gyllenhaal, who plays
Homer Hickam, leads an all-star cast. As a teenager, Homer is facing a dreary future as a coal-miner until
he sees the Soviet satellite Sputnik pass over his small mining town of Coalwood, West Virginia. A new
interest in rockets infects Homer, who begins to experiment with model rockets in the summer of 1957.
Soon, Homer has convinced several of his friends to join him in designing a rocket to enter in the national
science fair.


Pre-Class Prep for You:                              Pre-Class Prep for Your Students:
 Preview the clip from October Sky.                  Bring book.
 Determine how you want to show the video.
   The clip can be launched from PowerPoint
   slide 37 in Chapter 7, or from the DVD that
   goes with the book.
 Make sure you have all equipment needed to
   show the video to the class.
Warm Up        Review sections 1.2 on innovation streams and 2.1 on managing innovation.

               Poll the class to see who has seen the movie. Ask a student who has seen it to give a brief
               summary to the class. If no one has seen the movie, provide a context by reading (or
               paraphrasing) the segment summary above.

View           While watching, instruct students to think about the clip in terms the work environment
               and the approach the boys take to managing innovation. Ask your students to watch the
               clip for the answer to the following question:

               ―Are the Rocket Boys working with discontinuous or incremental change?‖

               The most defensible answer is discontinuous change. Evidence of the experiential
               approach the boys take to manage this discontinuous change includes:

                  Design iterations: The boys are obviously repeatedly tweaking and refining their
                  rocket design.
                  Product prototypes: Scenes in the shop show the boys building product prototypes
                  (one at a time) for test launch.
                  Testing: Regular visits to the launch site, which includes a protective viewing station,
                  indicate a commitment to testing several design iterations over time. Examining the
                  failed prototype launches enables the boys to make successive improvements and
                  changes to the same design. Notice throughout the clip that the actual shape of the
                  rocket does not change. For example, they don‘t try to launch a flat rocket or a helical-
                  shaped rocket. They use the fundamental rocket design that is familiar to us all (now)
                  and simply tweak the mechanics. Each prototype improves their understanding until
                  they finally launch a successful rocket.
                  Multifunctional teams: It is fairly clear from the clip that the Rocket Boys are a
                  multifunctional team comprised of: the boy who uses the technical, scientific language
8                                                                      Chapter 7: Innovation and Change
                  to identify the problem with the mass of the propellant in relation to that of the rocket;
                  the boy who translates that simply into, ―He‘s afraid it‘s too light‖; the boy who knows
                  where to find the source of pure alcohol; and the African-American machinist who
                  helps guide the practical application of their theories. The team also has a powerful
                  leader, played by Jake Gyllenhaal, whose dream is the impetus for the experiments and
                  invention in the first place.

               Show the clip one last time. *Showing the clip 2 times enables students to solidify their
               thinking about the topics illustrated by the clip.

Follow Up      Ask students how the work environment influenced the innovation process.

               Creative work environments are challenging (the difficulties in designing a successful
               rocket are clear from the number of unsuccessful launch attempts); organizational
               encouragement (not seen in the clip, the high school science teacher encourages the
               boys, but the main character‘s father does not); work group encouragement (clear
               throughout the clip, from the shop, to the brainstorm about the fuel); and freedom (not
               seen in the clip, the boys have been prohibited from conducting their experiments on
               mining company property, but once they find a location off site – hence their rides in the
               truck – they have the freedom to work through the design and testing process).




Chapter 7: Innovation and Change                                                                    9
Video Lesson Plan – Management Workplace
The Chapter 7 clip on Innovation and Change features Original Penguin and is 10.57 minutes long.
Below are several activities from which you can choose to teach the chapter‘s concepts through the video.


Pre-Class Prep for You:                                        Pre-Class Prep for Your
                                                               Students:
   Preview segment on Original Penguin. Topics covered  Bring book.
    are learning points 1.1, 2, and 3.3.                          Complete reading of Chapter 7
 Review lesson plan.                                                prior to class.
 Make sure you have all of the equipment needed to
    show the video to the class, including the DVD and a
    way to project the video.
Warm Up         Ask students to look at Exhibit 7.1, S-curve and Technological innovation. Use
                this figure as a model to spark discussion about products that have experienced
                innovation. Some examples could be:
                Toothpaste: cavity fighting paste, DISCONTINUITY, tartar control, gels,
                whitening, DISCONTINUITY, bubble gum, cinnamon and lemon flavors.
                Television: VCR and DVD, DISCONTINUITY, TiVo and DVR.
                Original Penguin: Golf and Bowling shirts, DISCONTINUITY, Perry
                Ellis/Original Penguin launch new men and women‘s apparel line.
View            (Section 2) While watching the video, instruct students to take notes on
                management innovation discussed in terms of:
                      Creative work environment
                      Experiential Approach
                      Compression Approach
Follow Up       VP Kris Kolb discusses the innovative process of Original Penguin‘s resurrection
(In Class)      in terms of innovation, risk, and being a catalyst for Perry Ellis. Use Exhibit 7.6,
with lecture Steps for Organizational Development, to trace the course of events Kris Kolb
                discussed as he led Perry Ellis through the innovation process of transforming
                Original Penguin into a successful brand.
Follow Up       For the next class:
(After               1. How does Original Penguin use the flagship store (featured in the video)
Class) with              as an innovative source and testing ground?
assignment           2. Think of 2 companies that failed in the innovation process. In other
                         words, the initial cycle was successful, however, in the discontinuity
                         phase, dominant design was not achieved. Be prepared to discuss the
                         technological lockout of the company. In hindsight, what could have
                         been done differently, if anything, for the company to be successful?
                     3. Predict the next big ―innovation‖. Think of a company that you think
                         could be successfully emerging from point C of the S-curve model in
                         Exhibit 7.1. What do you think gives this company an edge? Be prepared
                         to discuss your answers




10                                                                     Chapter 7: Innovation and Change
Assignment with Teaching Tips and Solutions
Case Assignment - What Would You Do?

WHIRLPOOL HEADQUARTERS
Benton Harbor, Michigan. Standing in the showroom of a local appliance store, you realize the
problem almost immediately. Virtually all of the washers, dryers, refrigerators, freezers, and dishwashers
are white. It is tough to tell one company‘s product from another, and the biggest signs in the place
announce the low prices on this versus that model. This is the exact reason that Whirlpool‘s senior
management team developed the ―Brand-Focused Value Creation‖ strategy: to create innovative, branded
solutions that consumers will find appealing, that will generate brand loyalty, and, most important, that
will command a premium price. During its 95-year history, Whirlpool has become an expert in
manufacturing excellence. Its machines are among the most reliable in the industry, and their products are
in almost every household in the United States at one time or another. Periodically the products have
gotten a facelift or a small improvement in performance or function, but rarely did this constitute much
more than an additional wash cycle.
     How do you make a company like Whirlpool innovative? How would you measure success? How can
you teach people to be creative, especially when your core capability is manufacturing so-called ―white
goods‖? When the idea of innovation as a key to success was first suggested at the company it met with
considerable resistance. Corporate director Nancy Snyder said, ―Over the years people have used many
nice adjectives to describe Whirlpool. But ‗innovative‘ has rarely been among them.‖ Worse yet, J.C.
Anderson, your VP of group manufacturing, proclaimed, ―its cost reduction that has made Whirlpool
great.‖
     Nonetheless, you can see that without significant innovation, Whirlpool will be mired in a never-
ending price-cutting battle. Generic-looking products are compared on price, and your cost-cutting
measures will only take the company so far. The first effort at innovation within the company produced
some new product lines, but expenses far exceeded the positive results of those innovations. During that
effort, the former CEO pushed all 61,000 employees to unleash their creativity for the future of the
company. Most employees saw the effort as a waste of time and employee morale dipped severely,
making the next effort all the more difficult for you.
     There is no real financial crisis at Whirlpool. The company is performing well for now, but future
success will be limited if it can‘t differentiate its products from the pack.. How can you develop a culture
of innovation at Whirlpool? If the company produces a commodity item such as a standard, white clothes
washer, how can that be changed so that it produces a premium-priced product? With manufacturing as
Whirlpool‘s core strength, how will you develop a customer focus?
     As you stand in the appliance store, you realize that these questions need to be addressed and need to
be addressed quickly. You can‘t afford to have another failure in this effort at the company. Beyond
managing for innovation, how might you implant innovation as a standard of your business? What role do
the leaders of the organization play in this effort? If you were in charge at Whirlpool, what would you
do?

What Really Happened? Solution

WHIRLPOOL
In the case assignment for Chapter 7, you learned about the dilemma facing Whirlpool, the 100-plus-year-
old manufacturer of washers and dryers. The marketplace had been dominated for decades by classic
white appliances that sold on the basis of their efficiency, durability, and low price. As Whirlpool had
worked for decades to develop machines that were of the highest quality and lowest cost, efficient
manufacturing was its core competency. A move toward innovation and risk taking as a means of
business success was going to require not only a strong plan but also a change in the culture and focus of
the company.

Chapter 7: Innovation and Change                                                                   11
How do you develop a culture of innovation?

You learned in the chapter that developing a creative work environment is a function of managing six
different aspects simultaneously. These areas are:
1. Organizational encouragement. The effort at Whirlpool was directed from the top down, with the
main cheerleader being the CEO. Senior management made innovation a cornerstone of the company‘s
strategy. The company initially created three ―I-Boards‖ consisting of senior managers who evaluated the
effort to embed innovation in the company, funded new ideas, and defined success.
2. Supervisory encouragement. Over 600 midlevel managers were trained as ―I-Mentors.‖ They were
trained in the tools of innovation as well as the means to encourage and evaluate new ideas. These
supervisors pushed the effort throughout the organization.
3. Work group encouragement. Embedding the innovation process was further pushed down in the
organization by training more than 22,000 employees to look for product, market, and in-job innovations.
After two years, the value from the pipeline of new ideas grew from sales of $350 million a year to over
$3 billion.
4. Freedom. Effective innovation is best when work groups and employees are given the time and
freedom to make mistakes. In the Whirlpool culture where efficiency was king, this was a tough sell.
Now, work teams are encouraged to bring all ideas to the table, and work time is set aside to develop new
ideas
5. Lack of organizational impediments. Whirlpool created the Innovation Embedment Wheel to show
progress and to ensure an organization-wide mechanism for maintaining momentum. The wheel has eight
distinct aspects and provides those with the ideas both the tools and the processes for being successful.
6. Challenging work. What could be more challenging than taking a classic generic product stream that
exists in virtually every household and turning it into a unique, highly desired product? The results of
challenging employees to think differently about the company‘s products have been tremendous.
Whirlpool, which had been on a run of revenue declines due to pricing pressures, is now growing at a rate
of more than 5 percent a year.

How can a company that produces a commodity item change to producing a premium-priced product?

In the chapter, we talked about creating discontinuous change and innovation streams. The success of
innovation is not on the single product or the one ―big‖ hit for the firm. It is based upon the sometimes
small but continual changes that the organization fosters. Using multifunctional teams, Whirlpool has
developed refrigerators with colorful finishes, stackable washer/dryer combinations, and dishwashers with
―turbo zones‖ that can clean the worst caked-on mess. The company has gone high-tech and Internet
savvy: Now your washer can call your cell phone if there is a problem with the load, or your dryer can
message you when it finishes a cycle; if you‘re away from home and don‘t want your clothes to sit there
wrinkling, you can message back to continue tumbling for whatever period of time you set. Creativity in
approach and an eye to the needs and wants of the customer have allowed Whirlpool to be very open to
changes in its standard product line.

With manufacturing as the company’s core strength, how will you develop a customer focus?

Managing resistance to change is a process that can best be handled with education, communication,
participation, negotiation, top management support, and even coercion. Whirlpool created the Innovation
Embedment S-Curve to show everyone how innovation works. The S-Curve has five distinct stages. In
Launch, the investment far exceeds the output. This stage includes both the idea and proof of concept
efforts. In Scale, the business has shown some promise and is heavily invested in to bring it to the point
where there are returns for the company. At this point the investment is still more than the return. At the
third stage, Breakthrough, the investment and the return have equaled each other and the innovation is
making a material difference in the organization. Next is Sustaining, the stage in which the investment is
showing significant returns and the innovation acts as a catalyst in the organization for success and
opportunity. Finally comes the Continuous Improvement stage, during which the organization sees the

12                                                                     Chapter 7: Innovation and Change
value in innovation and identifies that creating that value as the key to success. Everyone in the
organization is mobilized to create new opportunities for the company. Seven years into its innovation
effort, Whirlpool believes it is now somewhere between the Breakthrough and Sustaining stages.

Sources: B. Stopper, “Innovation at Whirlpool: Embedment and Sustainability,” Human Resource Planning 29 (3), 11 March
2007, 28–30; L. Collins, “Embedding Innovation into the Firm,” Research Technology Management 50 (2), March/April 2007,
5–6; P. McNamara, “Your Washer’s Calling and the Dryer’s on IM,” Network World 23 (27), 17 July 2006, 45–46.

Close-ended assignment

WHIRLPOOL
During its 95-year history, Whirlpool has become an expert in manufacturing excellence with its classic
white appliances engineered for efficiency, long-lasting life, and low price. Periodically the products have
received a facelift or a small improvement in function and performance, but this usually amounted to little
more than a new wash cycle option.
         At Whirlpool, where efficiency was king, the idea of innovation as a key to success met
considerable resistance. Corporate director Nancy Snyder said, ―Over the years people have used many
nice adjectives to describe Whirlpool. But ‗innovative‘ has rarely been among them.‖ Initial efforts at
innovation produced some new products. Expenses, however, far exceeded any positive results from those
innovations, and when the former CEO tried to push all 61,000 employees to exercise their creativity,
most employees saw the effort as a waste of time and employee moral dropped.
         Nonetheless, without significant innovation, Whirlpool will find itself in a never-ending price-
cutting battle. In its second attempt at an innovation campaign, Whirlpool worked to establish innovation
as a cornerstone of company strategy, creating three ―I-Boards‖ of senior managers to evaluate effort and
fund new ideas. 600 mid-level managers were trained as ―I-Mentors‖ in innovation tools and techniques
to encourage and evaluate new ideas. The training of 22,000 employees to look for product and marketing
innovations brought about new ideas that helped increase annual sales from $350 million to over $3
billion.
         Looking for new innovative ideas is not just a matter of finding one-big hit either. It‘s often a
matter of finding small but continual processes or improvements. Teams comprised of employees from
different areas of the company developed more colorful and appealing refrigerators, stacking
washer/dryer combinations, and dishwashers with ―turbo zones‖ for cleaning particularly crusty dishes.
         To manage resistance, Whirlpool management created what it calls the Innovation Embedment S-
Curve, a five-stage model that demonstrates the importance of innovation and how it becomes established
in an organization. Ultimately, this will help the organization see the value of innovation as a key to
success and mobilizes them to create new opportunities for the company.

Questions

1. Whirlpools used ______ to help develop several product innovations, such as more colorful
   refrigerators and stacking washer/dryer combos.
   a. milestones
   b. multifunctional teams
   c. testing
   d. product prototypes
   e. design iteration

Ans:
a. Incorrect. Multifunctional teams are work teams composed of people from different departments. See
    Section 2.2 Experiential Approach: Managing Innovation During Discontinuous Change.
b. Correct.
c. Incorrect. Multifunctional teams are work teams composed of people from different departments. See
    Section 2.2 Experiential Approach: Managing Innovation During Discontinuous Change.


Chapter 7: Innovation and Change                                                                             13
d. Incorrect. Multifunctional teams are work teams composed of people from different departments. See
    Section 2.2 Experiential Approach: Managing Innovation During Discontinuous Change.
e. Incorrect. Multifunctional teams are work teams composed of people from different departments. See
    Section 2.2 Experiential Approach: Managing Innovation During Discontinuous Change.

2. In an effort to encourage a creative work environment, which of the following would Whirlpool NOT
    have used?
    a. organizational encouragement
    b. supervisory encouragement
    c. freedom
    d. work group encouragement
    e. incremental change

Ans:
a. Incorrect. A workplace with a creative work environment has a culture in which workers perceive that
    new ideas are welcomed valued and encouraged. Incremental Change is a phase in the innovation
    stream in which companies innovate by lowering the cost and improving the functioning and
    performance of the dominant design. See Section 2 Managing Innovation.
b. Incorrect. A workplace with a creative work environment has a culture in which workers perceive that
    new ideas are welcomed valued and encouraged. Incremental Change is a phase in the innovation
    stream in which companies innovate by lowering the cost and improving the functioning and
    performance of the dominant design. See Section 2 Managing Innovation.
c. Incorrect. A workplace with a creative work environment has a culture in which workers perceive that
    new ideas are welcomed valued and encouraged. Incremental Change is a phase in the innovation
    stream in which companies innovate by lowering the cost and improving the functioning and
    performance of the dominant design. See Section 2 Managing Innovation.
d. Incorrect. A workplace with a creative work environment has a culture in which workers perceive that
    new ideas are welcomed valued and encouraged. Incremental Change is a phase in the innovation
    stream in which companies innovate by lowering the cost and improving the functioning and
    performance of the dominant design. See Section 2 Managing Innovation.
e. Correct.

3. Whirlpool‘s senior management ―I-Boards‖ would be an example of:
   a. organizational encouragement
   b. collegial encouragement
   c. work group encouragement
   d. freedom
   e. flow

Ans:
a. Correct.
b. Incorrect. 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. Whirlpool‘s I-Boards
    were composed of senior managers who were in charge of encouraging, supporting, and evaluating the
    company‘s efforts at innovation. See Section 2.1 Managing Sources of Innovation.
c. Incorrect. 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. Whirlpool‘s I-Boards
    were composed of senior managers who were in charge of encouraging, supporting, and evaluating the
    company‘s efforts at innovation. See Section 2.1 Managing Sources of Innovation.
d. Incorrect. 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. Whirlpool‘s I-Boards

14                                                                   Chapter 7: Innovation and Change
    were composed of senior managers who were in charge of encouraging, supporting, and evaluating the
    company‘s efforts at innovation. See Section 2.1 Managing Sources of Innovation.
e. Incorrect. 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. Whirlpool‘s I-Boards
    were composed of senior managers who were in charge of encouraging, supporting, and evaluating the
    company‘s efforts at innovation. See Section 2.1 Managing Sources of Innovation.

4. Whirlpool experienced _____ when employees thought that the new drive for creativity was a waste of
   time.
   a. change forces
   b. resistance forces
   c. change intervention
   d. refreezing
   e. coercion

Ans:
a. Incorrect. Resistance forces support the status quo or the existing conditions in an organization. At
    whirlpool where efficiency came first, the idea of exercising creativity initially was not readily
    embraced. See Section 4 Managing Change.
b. Correct.
c. Incorrect. Resistance forces support the status quo or the existing conditions in an organization. At
    whirlpool where efficiency came first, the idea of exercising creativity initially was not readily
    embraced. See Section 4 Managing Change.
d. Incorrect. Resistance forces support the status quo or the existing conditions in an organization. At
    whirlpool where efficiency came first, the idea of exercising creativity initially was not readily
    embraced. See Section 4 Managing Change.
e. Incorrect. Resistance forces support the status quo or the existing conditions in an organization. At
    whirlpool where efficiency came first, the idea of exercising creativity initially was not readily
    embraced. See Section 4 Managing Change.

5. As the individual in charge of implementing techniques for encouraging innovation, Whirlpool‘s CEO
   would be an example of a(n):
   a. resistance force
   b. intervention force
   c. change agent
   d. milestone
   e. reinforcement agent

Ans:
a. Incorrect. A change agent is formally in charge of guiding the company‘s efforts at change. See Section
    4.3 Change Tools and Techniques.
b. Incorrect. A change agent is formally in charge of guiding the company‘s efforts at change. See Section
    4.3 Change Tools and Techniques.
c. Correct.
d. Incorrect. A change agent is formally in charge of guiding the company‘s efforts at change. See Section
    4.3 Change Tools and Techniques.
e. Incorrect. A change agent is formally in charge of guiding the company‘s efforts at change. See Section
    4.3 Change Tools and Techniques.

6. Though Whirlpool is financially stable right now, the loss in market share that might occur if it doesn‘t
   figure out how to distinguish itself from the competition may result in:
   a. change forces
   b. resistance to change

Chapter 7: Innovation and Change                                                                     15
     c. milestones
     d. incremental change
     e. organizational decline

Ans:
a. Incorrect. Organizational decline occurs when companies don‘t anticipate, recognize, neutralize, and
    adapt to the internal and external pressures that threaten their survival. There are five stages to
    organizational decline. A loss in market share would probably come in the second stage, inaction,
    when problems become more visible. See Section 3 Organizational Decline: The Risk of Not
    Changing.
b. Incorrect. Organizational decline occurs when companies don‘t anticipate, recognize, neutralize, and
    adapt to the internal and external pressures that threaten their survival. There are five stages to
    organizational decline. A loss in market share would probably come in the second stage, inaction,
    when problems become more visible. See Section 3 Organizational Decline: The Risk of Not
    Changing.
c. Incorrect. Organizational decline occurs when companies don‘t anticipate, recognize, neutralize, and
    adapt to the internal and external pressures that threaten their survival. There are five stages to
    organizational decline. A loss in market share would probably come in the second stage, inaction,
    when problems become more visible. See Section 3 Organizational Decline: The Risk of Not
    Changing.
d. Incorrect. Organizational decline occurs when companies don‘t anticipate, recognize, neutralize, and
    adapt to the internal and external pressures that threaten their survival. There are five stages to
    organizational decline. A loss in market share would probably come in the second stage, inaction,
    when problems become more visible. See Section 3 Organizational Decline: The Risk of Not
    Changing.
e. Correct.

7. After years of producing the same plain white appliances, which had rarely experienced any
   fundamental design changes, Whirlpool found it was lacking in creativity.

     T
     Correct.
     F
     Incorrect. Creativity, which is a form of organizational innovation, is the production of novel and
     useful ideas. Whirlpool‘s appliances, though highly efficient, rarely underwent any changes beyond
     the addition of new functions, such as additional wash cycles. See Introduction: Organizational
     Innovation.

8. Which of the following did the use of multifunctional teams play a role in?
   a. Discouraging all 61,000 employees to exercise their creativity.
   b. Making efficiency the primary objective.
   c. Increasing annual profits from $350 million to $3 billion.
   d. Creating new designs, like a stacking washer/dryer combination.
   e. The Innovation Embedment S-Curve

Ans:
a. Incorrect. Multifunctional teams are work teams composed of people from different departments.
    Whirlpools used multifunctional teams to create new ideas and designs for it productions. See Section
    2.2 Experiential Approach: Managing Innovation during Discontinuous Change.
b. Incorrect. Multifunctional teams are work teams composed of people from different departments.
    Whirlpools used multifunctional teams to create new ideas and designs for it productions. See Section
    2.2 Experiential Approach: Managing Innovation during Discontinuous Change.



16                                                                     Chapter 7: Innovation and Change
c. Incorrect. Multifunctional teams are work teams composed of people from different departments.
    Whirlpools used multifunctional teams to create new ideas and designs for it productions. See Section
    2.2 Experiential Approach: Managing Innovation during Discontinuous Change.
d. Correct.
e. Incorrect. Multifunctional teams are work teams composed of people from different departments.
    Whirlpools used multifunctional teams to create new ideas and designs for it productions. See Section
    2.2 Experiential Approach: Managing Innovation during Discontinuous Change.

9. Whirlpool‘s highly efficient, low-priced, classic, white appliances are a good example of the _____ for
   appliances.
   a. resistance forces
   b. milestones
   c. dominant design
   d. design iterations
   e. s-curve pattern for technology

Ans:
a. Incorrect. A dominant design is the accepted market standard for technology. See Section 1.2
    Innovation Streams.
b. Incorrect. A dominant design is the accepted market standard for technology. See Section 1.2
    Innovation Streams.
c. Correct.
d. Incorrect. A dominant design is the accepted market standard for technology. See Section 1.2
    Innovation Streams.
e. Incorrect. A dominant design is the accepted market standard for technology. See Section 1.2
    Innovation Streams.

10. Whirlpool needed to innovate as a result of discontinuous change in the technology cycle.

   T
   Incorrect. Discontinuous change is the phase in the technology cycle characterized by technological
   substitution and design competition. Whirlpool‘s problem was not that new technology was arriving
   on the market, but rather that its products were indistinguishable from other brands. See Section 1.2
   Innovation Streams.
   F
   Correct.

11. With an organizational culture resistant to change, Whirlpool‘s workers needed to undergo:
   a. coercion
   b. unfreezing
   c. discontinuous change
   d. refreezing
   e. milestone

Ans:
a. Incorrect. Unfreezing is getting the people affected by change to believe that change is needed. At the
    time Whirlpool was financially stable, so some of the problems weren‘t readily apparent. See Section
    4.1 Managing Resistance to Change.
b. Correct
c. Incorrect. Unfreezing is getting the people affected by change to believe that change is needed. At the
    time Whirlpool was financially stable, so some of the problems weren‘t readily apparent. See Section
    4.1 Managing Resistance to Change.



Chapter 7: Innovation and Change                                                                   17
d. Incorrect. Unfreezing is getting the people affected by change to believe that change is needed. At the
    time Whirlpool was financially stable, so some of the problems weren‘t readily apparent. See Section
    4.1 Managing Resistance to Change.
e. Incorrect. Unfreezing is getting the people affected by change to believe that change is needed. At the
    time Whirlpool was financially stable, so some of the problems weren‘t readily apparent. See Section
    4.1 Managing Resistance to Change.

Management Decision

Purpose
The purpose of this activity is to allow students to consider the tradeoffs of bringing in a change agent
versus hiring a team of expert consultants to shepherd a company‘s change process. Companies in need of
change are often in crisis and may not be able to afford lavish solutions, so students much consider the
need for change as well as the available funding for change initiatives.

Setting It Up
This exercise is suited for either individual or group work. Push students to examine the possible
reactions from employees for each of the choices proposed by the case: external change agent,
consultants, or internal teams.

CHANGE COSTS MORE THAN PENNIES
As you wipe your feet, you can‘t help but notice how messy the carpet is. ―Well, that‘s what it‘s for,‖ you
think. ―This is a factory, not a bookstore.‖ But seeing all those metal chips in the rug makes you think
about the plant floor. You turn back around and survey the shop. Everywhere you look, parts are stacked
in metal bins on wooden palettes, next to the palettes, on tables by machines, encroaching into the
aisles—which are marked off with vibrant yellow striping to remind workers to keep them clear. It looks
like there is much more work than the roughly $500,000 worth of parts that are actually in process.
     Slowly, you begin to wind your way through the machines. Your plant uses five basic types of
machines to make hundreds of thousands of different parts for everything from motorcycles to hospital
beds to nail guns to industrial water purifiers. You make the mechanism that fills Downy bottles at
Procter & Gamble and the tumblers that spit the movie tickets out from under the counter at theaters
across the country. Machines are organized by type, so as a job moves through the plant, it will hit any
number of machines in a particular order. A job with multiple operations might get moved around the
plant from area to area up to seven times. Even though things are always moving, many areas of the plant
seem crowded, as jobs line up waiting for their turn on the next machine. Red tickets in pans scattered
around the shop and in a designated area are a reminder that there‘s still quite a bit of scrap (or bad) work
being run. Twenty-five percent of jobs going through the shop have to be fixed or rerun because the parts
are the wrong size, if only by 0.001 inch. When you make it to the scheduling area, colored Post-it notes
show how many jobs are rush jobs, how many are late, and how many haven‘t even been started. The on-
time delivery rate is only 70 percent. For a precision machine shop that can cut metal to measurements in
the ten-thousandths of an inch, the overall operations aren‘t so precise.
     Everywhere you look, you see disorder. Maybe those consultants were right: To be competitive,
really to survive, you need to approach your operations in a more systematic fashion. A large percentage
of companies with your capabilities have gone out of business, but even though there is less competition,
there are fewer customers. The types of parts you manufacture are either being designed out of products
or are being outsourced to China and Mexico. Without significant change, you‘re not going to be able to
survive the decade, let alone double your size in two years (which is your secret stretch goal).
     Last week, a local manufacturing consultancy sent a few members to your shop to present a
preliminary proposal on how they could help you run a more efficient operation. The company would
assign a team to help your workers learn new, leaner processes of doing work; promises of increased
productivity, profitability, and morale were made, with references galore. The consultants even invited
you and your management team to take a plant tour of one (or more) of their most recent clients.
Ultimately, the consultants would provide materials, workshops, and follow-up support to your shop

18                                                                      Chapter 7: Innovation and Change
employees every day all day for several days over a period of six months—for approximately $200,000.
Right out of the gate, they would send two consultants to your shop for five consecutive weeks. But at
$250 per hour per consultant, that‘s a quick $100,000 to spend on teaching communication skills and
showing workers how to identify waste issues that prevent them from doing their jobs effectively and
efficiently.
     With only $8 million in revenue in a business where labor and the costs of goods sold are high, your
profits are slim. Spending money on the outsiders could very well mean finishing the year in the red
instead of the black. Maybe you could hire someone to do the job full-time for half that amount. For
$100,000, you could hire someone to do the same job full-time for a year. That might be better than
having some consultants come, give their workshops, and leave the rest up to you after they head home.
And will telling your employees that ―things are going to change around here‖ be the best way to get
things in order? Maybe it would be better if change initiatives started from the bottom. The majority of
your 65 workers has been with you for over 20 years (turnover is not one of your problems), but with
tenure comes intractability. In general, your employees are set in their ways. Still, they want the company
to succeed, so maybe that concern will be a strong enough motivator.
Questions

1. Consider the above situation. What are the benefits to hiring outsiders to manage your change
   efforts?
The primary benefits of hiring the consultancy would primarily be the training the consultants would
provide to both management and employees. Further, after the tours they offered, you have evidence that
their work has produced substantial results in the past. They will also be sending two agents to directly
oversee the change process in the initial stages.

2. Do you pay the $200,000 for the consultancy, do you hire a dedicated change agent, or do you
   try to marshal internal teams to spearhead a change effort?
One advantage to internal teams would be that change initiatives proposed by in-house agents might be
better received by the workers. On the other hand though, it seems many efforts at maintaining efficiency
(the yellow tape and the scheduling boards) have proven ineffective. It seems considering the degree of
change that is necessary here, a plan needs to be developed by a central agent, or else efforts might end up
being only partially instituted.
         In spite of the benefits, the consultancy is very costly, considering your current revenues, and
with many workers who have been working a long time and have become set in their ways, the concern
about employees not being receptive to outsiders seems legitimate. Hiring a dedicated change agent is not
nearly as expensive and could potentially be developed in house. Such a figure would still provide the
direction and planning needed to bring about change in your company.


Management Team Decision

Purpose
Articles abound in the business press about the importance of innovation. Fast Company, Fortune, and
Business 2.0, all had issues dedicated to innovation and innovative companies in the same year! Most
often the articles champion innovation as the lifeblood of an organization, without which there can be no
success. For every thesis, however, there is an antithesis. And this exercise is designed to prod students to
thinking of the validity of an antithesis. That is, in a market saturated with innovation and new products,
is there something to be said for a ―keep it simple‖ approach?

Setting It Up
Because this is a Management Team Decision, have your students work through it using one of the group
decision-making techniques they learned about in Chapter 5. Group work is ubiquitous, in college and in
the workplace, so students will be well served to have experience with techniques other than simple

Chapter 7: Innovation and Change                                                                     19
―consensus‖ which seems to dominate student projects. This activity can be used either as an in-class
exercise or as an assignment.
    As an assignment, direct students to go back at least two years to research recent press articles about
Colgate and its competitors, primarily Procter & Gamble and Unilever. Once students complete their
research, teams will need to meet to share results and work through the answers to the case questions.
Remind students that a more successful case solution can be built through the use of background
information collected through outside research.
    Even if you decide to use the case in class, consider having students prepare for the in-class exercise
by conducting the research described above. That groundwork will make for more fruitful debates in
class.

BRUSHING UP AT COLGATE
Ever since Procter & Gamble merged with Gillette, your phone has been ringing off the hook from
investment bankers wanting your company, Colgate, to make a deal with Alberto-Culver, S.C. Johnson,
Reckitt Benckiser, or Clorox, and today is no exception. Your management team has assembled to listen
to yet another set of bankers outline some grandiose proposal. You‘ve got another plan for Colgate,
however, and it doesn‘t involve a big acquisition. Quite the opposite, in fact. For the first time in nearly a
decade, Colgate‘s earnings shrank last quarter (by 10 percent), and you are planning to cut 4,400 jobs,
restructure the company, and save $300 million in the process.
     Colgate‘s problems are no secret. In a decades-long tug-of-war, P&G has regained the edge thanks to
its innovation machine. In the last five years, P&G has aggressively expanded in the oral care markets
where it competes most heavily with Colgate. New flavors of Crest whitening toothpastes, Crest
Whitestrips, SpinBrush, and a licensing arrangement with W.L. Gore for Glide floss have all helped Crest
reemerge as the leader in the markets it serves. Colgate‘s most recent innovations—Colgate Total, Motion
and Actibrush electric toothbrushes, and Simply White tooth whitener—are now either fading memories
or also-rans. And even though Colgate has a strong reputation as a reliable brand, it has been slow to
develop new products for developing and existing markets. Perhaps it‘s just gun-shy. The company‘s
most aggressive innovation was the tooth-whitening system Simply White. Regardless of the product‘s
quality, the bottle and applicator looked like Liquid Paper and proved no match for P&G‘s Crest
Whitestrips. After that near debacle, Colgate managers apparently decided that going for big hits wasn‘t a
workable strategy. The company now seems to be playing catch-up to P&G and GlaxoSmithKline, a new
competitor in the oral care market. In fact, in a recent year, P&G spent $229 million on its toothpaste and
tooth-whitening products; Colgate spent only $80 million.
     Innovation isn‘t the only area where Colgate has failed to invest. The company‘s annual ad budget of
$1 billion pales in comparison with the $5 billion P&G spends each year to promote its consumer
products. Heavy spending has helped P&G capture 51 percent of unit sales and 70 percent of dollar sales
in the tooth-whitening segment. Colgate weighs in with 21 percent and 10 percent, respectively. P&G‘s
innovative approach to advertising has helped catapult its products to the forefront of consumers‘ minds.
For example, advertising and sales for Whitestrips began on the Web, where the demand was
overwhelming. Once the product was rolled out on the market, the day after Colgate‘s Simply White,
P&G had a blockbuster. Simply White hit the shelves and stayed there.
     After hanging up from yet another conference call with investment bankers urging your management
team to consider a merger, you lean back in your chair and look around the table. ―I think we all know
what we‘re not going to do,‖ you begin cautiously. ―The real question is what we are going to do. Now
that we have announced measures to conserve resources, we need to decide how to invest what we save.‖
     For this exercise, assemble a team of four to five students to play the role of the management team at
Colgate.

Sources: “Can Colgate Brush Off the Competition?” Marketing Week, 27 January 2005, 23; Seth Mendelson, “The War of
the Roses: Colgate and Crest Have Fought for Decades for Supremacy in the Toothpaste Category. Suddenly, One Has
Gained an Edge and the Other Is Challenged to Change Its Strategy,” Grocery Headquarters, January 2005, 64; David Kiley,
“Reuben Mark: Profit and Floss,” BusinessWeek, 20 December 2004, 46; Pallavi Gogoi, “Colgate’s Big Bid to Freshen Up
Profits,” BusinessWeek Online, 8 December 2004; “Colgate: Brushing Mergers Aside,” BusinessWeek Online, 4 February
2005; Eric Dash, “Colgate to Cut Jobs and Use Savings to Spur Sales,” New York Times, 8 December 2004, C1; “Squeezed:
Colgate-Palmolive Shuts Factories to Save $300 Million,” Sunday Business (London), 12 December 2004.

20                                                                             Chapter 7: Innovation and Change
Questions

1. Is innovation really necessary at Colgate? In other words, in a market saturated with
   innovation, is there something to be said for the “keep it simple” approach? Explain.

Part of Colgate‘s operational cuts included selling all of its laundry businesses to focus exclusively on
oral care and high-margin products. Colgate is simplifying its product offerings. In that context, Colgate
must carefully balance innovation and simplicity. Nothing angers or confuses customers more than
becoming attached to a brand that subsequently gets quickly pushed out of a product line to make space
for new innovations. Colgate needs customers to find what they like in its oral care product line. Colgate,
then, needs to innovate to meet the level of its key competitor, P & G, and then find and develop areas of
innovation as yet untapped by its rival.
     For students who propose a ―keep it simple‖ approach, you may want to push students to review
Exhibit 7.1 and think about how long a company can be successful marketing the ―same old thing.‖ With
the pace of innovation accelerating across industries, the life cycle of a hit product or idea is not as long
as it once was. Nonetheless, there is some longevity in a blockbuster, say, like iPod, but even then, it
doesn‘t take long for competitors to build incrementally on a discontinuous innovation and gain
significant market share themselves.

2. Do you use the $300 million saved from operational cuts to fund innovation, or do you use the
   money to better market current products?

Students‘ answers will vary, but you can tell them that Colgate plowed a tremendous amount of its
restructuring savings into marketing. In 2005, the company increased its spending on marketing
(advertising, promotions) to nearly $300 million, which represented a significant increase over the
previous year. Advertising spending alone increased 16%. This focus on marketing had measurable
impact on the bottom line. Revenues increased by 10.5%, the biggest single-year increase in over 10
years. Unfortunately, however, that jump in revenue did not correspond to higher profitability. Overall,
the company saw earnings decline 7% (including restructuring charges). Unilever, another key competitor
in this industry, also pushed marketing spending to terrific levels, but like Colgate, paid for its marketing
efforts with profitability. Unilever‘s campaign for real beauty drove sales up 11%, but earnings
plummeted 25%. So, significant investment in marketing programs does not always bring about the
anticipated return.

3. Where do you suggest Colgate look for sources of innovation?

Companies can look for sources of innovation internally, by fostering creative work environments, or
externally, through customers, suppliers, consultants, and other sources. Colgate has looked both inside
and outside the company for innovative ideas. One idea from inside the company has been the
development of a toothpaste containing salt. Colgate‘s Indian division developed the product to meet fill a
gap in that country‘s oral care market. Salt is widely used across India as an oral care product, so Colgate
created a product that combined traditional and modern oral care knowledge. In the U.S. market, there
was only one new product introduced in the toothpaste segment in 2005: Colgate‘s Luminous, a product
aimed at strengthening tooth enamel and removing surface stains. Although Colgate is not the first
company to try enamel-strengthening hook in the toothpaste market, the company has decided to
highlight a secondary product attribute (whiter teeth) rather than the primary (keeps teeth stronger
longer).
     Colgate-Palmolive is also looking for innovations from external sources. The company has formed an
alliance with Introgen Therapeutics Inc., a biopharmaceutical company focused on the discovery,
development and commercialization of targeted molecular therapies for the treatment of cancer and other
diseases. Introgen and Colgate are hoping to find practical ways of applying gene therapy research in the
oral care market. Specifically, Colgate and Introgen will investigate methods to deliver treatments for oral


Chapter 7: Innovation and Change                                                                     21
cancers via mouthwashes and other oral health care products. Colgate purchased $20 million of
Introgen's shares and will have the rights to any products developed by the alliance.

4. As Colgate begins implementing a new innovation strategy, do you recommend that the
   company follow a compression approach to innovation or an experiential approach?

Students‘ answers will vary, but you can tell them that in the past, Colgate has not taken a ―swing for the
fences‖ approach that better characterizes the incremental approach to innovation. Instead, the company
has opted for incremental changes to existing technologies (adding breath-freshener strips to toothpastes,
for example). That choice of strategy stems in large part from the fumble with Simply White, Colgate‘s
biggest investment in a breakthrough innovation. Going forward, Colgate will most likely need to
incorporate more risk-taking into its innovation processes in order to reap significant gains (simply
increasing marketing spending will not suffice, as indicated in the answer to question 2). Colgate will also
need to think innovatively not just about its products, but untapped markets. The company will need to
identify areas unserved or underserved by competitors because of the stiff brand competition. Now that P
& G has merged with Gillette, the Cincinnati-based consumer-products giant boasts the Crest brand, the
license for Glide floss, and now also Oral B.

Sources in addition to those in book endnotes: A. Pollack, ―Gene Therapy in a Bottle of Mouthwash,‖ The New
York Times, 7 November 2005, C6; T. Wasserman, ―Colgate Luminous Launch Highlights Slow Segment: Enamel-
Strengthening SKU One of Few New Toothpastes,‖ Brandweek, 31 October 2005, 5; ―Colgate Sales Soar, Earnings
Sour,‖ Global Cosmetic Industry, October 2005, 6; ―A Salt Course for Gums,‖ Soap, Perfumery & Cosmetics,
September 2005, 6.

Practice Being a Manager

INVENTOR OR INVESTOR?

Successfully managing innovation is challenging. Companies must find ways to support creativity and
invention, while at the same time screening their investments in support of innovation. This exercise will
give you an opportunity to experience a bit of the organizational dynamic regarding innovation and
investment.

Step 1: Assign roles. Your professor will assign you to a pair or small group, and give your team a role
as either ―Inventors‖ or ―Investors.‖
Regardless of role, assume that you work for a large clothing and accessories company that targets
college students. Your company makes some traditional clothing and gear (such as backpacks and folios),
but also prides itself on developing new and innovative products. And recently there has been some
interest in considering new services that the company might offer to the college market, things like event
or trip planning.

Step 2: Work with your partner(s) on the following tasks depending upon your assigned role.
Inventors: Brainstorm and work to develop a new product or service concept. Be prepared to explain
your concept to those inside the company who screen ideas and recommend investments.
Investors: Discuss and agree upon some criteria that your company should use to screen new product and
service concepts and to identify which ones to recommend to senior management. Be prepared to listen to
one or more concept presentations, ask questions, and then to use your criteria to evaluate the concept(s).

Step 3: Pair up. As instructed by your professor, Inventor and Investor groups should pair up. Inventors
will now present their new concept, and investors will ask questions and then use their criteria to rate the
concept.

Step 4: Change roles. As time allows, your professor will rotate Inventor and Investor pairings through a
few rounds of concept presentation and investor evaluation.

22                                                                      Chapter 7: Innovation and Change
Step 5: Debrief. Return to your original Inventor or Investor pair/group, and discuss your experiences in
this role-play. What are some of the challenges of playing this role? What was it like to interact with the
―other side‖ of the presentation/evaluation process?

Step 6: Discuss challenges. As a class, discuss the challenges likely faced by companies as they try to
successfully manage innovation. Some items for discussion might include:
1. What is the impact of an ―evaluation/rating‖ on the creative process?
2. Do you think that ―inventor units‖ (such as product development and R&D) and ―investor units‖
(finance) often clash over new-product investment decisions? Why or why not?
3. What role might organizational culture (and subculture) play in the innovation and investment
processes?
4. How might managers support healthy innovation and wise investment?

TEACHING NOTES
Exercise Overview and Objective
This exercise is a basic simulation of the interaction between members of the same organization who
occupy ―inventor‖ roles, and those who occupy ―investor‖ roles. Although organizations use cross-
functional teams and other tools to help them synthesize invention and investment perspectives, it is not
uncommon to encounter groups of employees in the same organization who exhibit much greater loyalty
to one or the other of these roles. In such cases, the two groups may find it challenging to work
collaboratively. The purpose of this exercise is to help students feel this basic tension between inventor
and investor, and then to discuss its likely impacts on innovation and change.

Preparation
No student preparation is necessary for this exercise. You may wish to ask students to scan the Web site
of a company similar to that described in the exercise—―large clothing and accessories company that
targets college students‖—but this is entirely optional. A few companies that fit this description include
The Gap and Abercrombie & Fitch.
         You should assign each student to either an Inventor or Investor pair (e.g., 2 students as
Inventors) or small group (e.g., 3 students as Investors). Make sure that you assign equal numbers of
pairs/small groups to each type, so that each Inventor pair/group can work directly with an Investor
pair/group. To speed things along, you may want to assign pairings in advance (e.g., PAIR 1: Investor
Group #1 and Inventor Group #1; PAIR 2: Investor Group #2 and Inventor Group #2).

In-Class Use
Encourage students in each condition to carefully read and follow the instructions in Steps 1 and 2. For
example, Investors need to ―discuss and agree upon some criteria that should be used by your company to
screen new product and service concepts.‖
         To streamline this exercise, no specific financial or manufacturing information is included here.
But you should encourage students to think about the types of issues that might be important to people in
their particular role, and to discuss them in general terms. For example, investors might be concerned
about the complexity/difficult of a particular design. Although students in the investor condition are not
given manufacturing cost data, they should feel free to use the rough proxy of ―greater
complexity/difficulty = higher costs.‖ Students in the inventor condition likewise must work in the
absence of sales data and marketing research, but they should feel free to argue from observation and
anecdotal evidence in support of, say, a new and innovative backpack design.
         The aim of the exercise is to help students feel and experience the ―mindset‖ of inventor and/or
investor. Technical matters are of little or no importance to the success of the exercise. Assumptions and
evidence on particular technical points are only useful to the degree that they support the aim of engaging
students in the role that they are playing. As mentioned in Step 4 of the exercise, you should rotate roles
as time allows. Ideally each student should have the opportunity to play each role at least once.
         Class discussion items are included in Step 6. Question (a) is central to the problem of inventor-
investor tension. Evaluation/rating of new product concepts may be a useful tool for making investment
Chapter 7: Innovation and Change                                                                    23
decisions. Ratings appear more objective than intuitive (―gut feel‖) approaches. However, students who
played the inventor roles should recognize the potential chilling effect of such ratings. Inventors may
learn to ―play it safe‖ by making incremental improvements to established products.
         The remaining questions (b-d) ask students to use their experience in the exercise to explore some
of the group and organizational dynamics surrounding innovation and investment decisions. ―Inventor‖
units, such as a Research and Development lab, may develop a sub-culture that rewards risk taking,
meticulous scientific testing, and independent thinking. A Corporate Finance department, on the other
hand, may develop a sub-culture around such ―investment‖ elements as numbers-based decision-making,
conservative profile, and checks-and-balances on judgment. Students may suggest a number of means for
supporting healthy innovation and wise investment (question d), including cross-functional teams, matrix
organization, job rotation, as well as fostering informal collaboration and negotiation.

Develop Your Career Potential

Purpose
To help students reconnect with their innate level of creativity and help it flourish.

Setting It Up
This exercise can be used successfully in or out of class. The additional exercise ―Ideation‖ builds on the
text portion in a way that is also suited to in-class work as well as an assignment. The ―Ideation‖ exercise
takes a decent amount of time, but students will not only enjoy it, they will gain valuable insights into
sources of innovation and the challenges of inventing something new. (See below for teaching tips.)
     Another – simpler – way to communicate that same challenge is to assign students to create an
original, closed geometric shape that does not look like anything else. The shape can use curved and
straight lines, but no lines can intersect such that the interior of the shape remains open space. Tell
students to either scan their shape and email it to you, or bring it to class on a piece of 11 X 17 paper. You
can then proceed with a class critique of the shapes. What is certain to happen is that someone will say
something like, ―That looks like a bird (or plane, building, tree, coffee cup).‖ The artist of the
simulacrum will probably have been completely unaware that the shape was beginning to look like a
familiar item, so intent was he or she on creating a ―new‖ shape. Students experience how hard it is to
disprove the adage; ―There‘s nothing new under the sun.‖
     The activity in the text encourages students to do three things:

1. Investigate the Web site for Eureka Ranch and find out how this brain tank thinks of creativity. Prior
   designs for the Eureka Ranch Web site included links from the splash page directly to information
   about the three dimensions of creativity. At the time I wrote this, students needed to go to the Eureka
   7.0 white paper. In essence, the three dimensions are brain writing, dialog, and brainstorming.

2. Research Brain Brew radio and tune in to a program. Brain Brew is a radio program invented by the
   founder of Eureka Ranch, Doug Hall, who has a best-selling book titled Jump Start Your Brain. Brain
   Brew is broadcast weekly on radio stations courtesy of Public Radio International. Students can find
   information on Brain Brew at http://www.doughall.com.

3. Shop the catalog of Mindware, an innovative toy and game company. Targeted toward parents who
   are interested in educational products, Mindware offers ―brainy toys for kids of all ages.‖ Books of
   Escheresque mazes, three-dimensional architectural puzzles, robot invention kits, chemistry kits, spy
   kits, and games based on colonial barter systems, geography, Egyptian barter systems, and learning
   Shakespeare are only a tiny representation of the catalog‘s complete offerings. For fun, call the
   company (800-999-0398) to request enough catalogs to hand out to your students. Most likely, it has
   been quite a while since your students played a strategic board game.

Optional Assignment



24                                                                       Chapter 7: Innovation and Change
As an extension to the actual exercise, you could have them peruse the catalog and write a list of the 5
most interesting items they see, why they are attracted by those items, and how they think the items
would expand a person‘s creativity or innovative thinking skills.


SPARK YOUR OWN CREATIVITY
Creativity is a vital part of every organization—and not just the whiz-bang, multimillion-dollar type of
creativity. Even banal tasks can benefit from a new approach: an office assistant may think creatively
about how to manage the company‘s filing system or figure out a simple way to keep track of who is in
and out of the office. A Chicago company called Inventables has developed innovation kits—boxes
containing disparate items to spark creativity—which it sells to clients like Procter & Gamble and
Motorola four times a year. The idea is that tinkering with the contents of the kits will inspire designers
and engineers.
You don‘t need Inventables to become inspired, however. Nor do you have to wait for your company to
develop a creative work environment before you can become creative. You can spark your own creativity
and think ―outside the box‖ on your own. Eureka! Ranch, a Cincinnati-based innovation consultancy
company, uses toys to help adults remember how to be imaginative, and its long client list of Fortune 500
companies is a testament to founder Doug Hall‘s methods. Another company, Mindware, specializes in
educational activities and toys that can help adults regain access to their imaginations. Just looking
through its catalog of erector sets, science sets, puzzle books, strategy games, and tangrams may be
enough to get your juices flowing.
Sources: Julie Schlosser, ―Inside-the-Box Thinking,‖ Fortune, 1 November 2004, 54;
http://www.mindwareonline.com; http://www.eurekaranch.com.


Activities


1. Visit http://www.eurekaranch.com and search for the audio clip of what the company does
   and how it does it. Listen to the clip. What do you think of the three dimensions of creativity?
2. At the Eureka Ranch Web site, find the page on Brain Brew. What is Brain Brew Radio? Is it
   available in your area? If it is, consider listening to it once a month to hear the creative ideas that
   people across the country are working on.
3. Visit http://www.mindwareonline.com and peruse some of the products the company sells. Which
   products do you find most appealing? If it's in your budget, order one of the items as a tool to help
   you develop and refine your creative side.


Take Two – Biz Flix

OCTOBER SKY
1. Are Homer and his friends working toward discontinuous change or incremental
   change? Explain.

The most defensible answer is discontinuous change. In the movie summary, students are told that the
Soviet satellite, Sputnik, which represents a technological discontinuity, inspires Homer Hickam.
Technological discontinuities are followed by discontinuous change, or a period of technological
substitution and design competition. Rather than simply improve on Sputnik‘s design, which would be
incremental change, Homer begins working on a rocket that can take U.S. astronauts to the moon. His
process for doing so follows the experiential approach.

2. Which approach to innovation best describes what the “Rocket Boys” are doing?
   Identify the elements of the approach you choose that are evident in the clip.


Chapter 7: Innovation and Change                                                                       25
Evidence of the experiential approach the boys take to manage this discontinuous change includes:

     Design iterations: The boys are obviously repeatedly tweaking and refining their rocket design.
     Product prototypes: Scenes in the shop show the boys building product prototypes (one at a time) for
          test launch.
     Testing: Regular visits to the launch site, which includes a protective viewing station, indicate a
          commitment to testing several design iterations over time. Examining the failed prototype
          launches enables the boys to make successive improvements and changes to the same design.
          Notice throughout the clip that the actual shape of the rocket does not change. For example, they
          don‘t try to launch a flat rocket or a helical-shaped rocket. They use the fundamental rocket design
          that is familiar to us all (now) and simply tweak the mechanics. Each prototype improves their
          understanding until they finally launch a successful rocket.
     Multifunctional teams: It is fairly clear from the clip that the Rocket Boys are a multifunctional team
          comprised of: the boy who uses the technical, scientific language to identify the problem with the
          mass of the propellant in relation to that of the rocket; the boy who translates that simply into,
          ―He‘s afraid it‘s too light‖; the boy who knows where to find the source of pure alcohol; and the
          African-American machinist who helps guide the practical application of their theories. The team
          also has a powerful leader, played by Jake Gyllenhaal, whose dream is the impetus for the
          experiments and invention in the first place.

Take Two – Management Workplace


ORIGINAL PENGUIN

1. How can you apply the concept of innovation streams to the fashion industry?

Innovation streams are defined as patterns of innovation over time that can create sustainable competitive
advantage (6.1.2). A company that produces a single innovation in the fashion industry may become a
―one hit wonder.‖ But a fashion company that produces a succession of related innovations will likely
build a sustainable advantage over rivals. In fact, in this industry a ―succession of related innovations‖ is
another way of saying that the company is buiding a profitable and distinctive brand. Brand building is
an important aspect of strategy in the fashion industry.

2. Based on the tour of the store, what kind of work environment would you expect to find at
      Original Penguin?

The store was laid out as a home, and the products were featured in cozy and informal displays. The
creative designer pointed out the family photos and layout of various rooms (e.g., bedroom). This store
had a comfortable and rather understated atmosphere. Based on these characteristics of the store, one
might expect to find a casual and warm work environment at Original Penguin. It seems likely that the
company values close working relationships and informal style. David Bodwell also pointed out the
value that the company places on creative touches. He says that the company does not merely want to
take orders from the market, and then serve the market precisely what it requested (e.g., knit shirts in 12
colors). Rather, he says that Penguin wants to incorporate creativity and unique touches in both meeting
market demand, and, perhaps, increasing the buying power of customers. Based upon this description, we
might expect the work environment at Original Penguin to value subtle touches of creativity.

3. What role does Kolbe play in the Perry Ellis organization?

Kolbe is something of an ―outsider‖ to the established Perry Ellis organization. His career prior to Perry
Ellis involved serving the young urban market. Perry Ellis, on the other hand, is a company devoted to
the more mature suburban market. Kolbe brought fresh creativity and innovation to Perry Ellis. He is
now more of an ―insider,‖ but an insider who serves as an innovative catalyst. His success at Original
26                                                                        Chapter 7: Innovation and Change
Penguin has no doubt given him greater status within Perry Ellis. This makes it possible for Kolbe to act
as a positive force for change in Perry Ellis, helping to spark creativity and to challenge status quo
thinking.




Additional Assignments and Internet Activities
Review Questions

1. What is the relationship between technology cycles and the S-curve pattern of innovation?

Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological
progress is slow, and improvements in technological performance are small. As a technology matures,
however, performance improves quickly. Finally, as the limits of a technology are reached, only small
improvements occur. At this point, significant improvements in performance must come from new
technologies. In its infancy, then, a new technology exists alongside the old technology until the point
occurs at which the new technology is accepted as dominant (i.e., obtains critical mass, or clearly
surpasses the older design in form or function).

2. Explain why innovation matters to companies?

It is obvious that technology is rapidly changing our lives. Products that we used yesterday are obsolete
today and in some cases not even available. Organizations that do not keep pace with these changes are
destined for failure. As Jack Welch said, ―If the rate of change outside the organization is faster than the
rate of change inside the organization, the end is in sight.‖

3. Describe innovation streams.

Innovation streams are patterns of innovation over time that can create a sustainable competitive
advantage. The four stages of an innovation stream are:
     Technological discontinuity: scientific advance or unique combination of existing technologies
        that creates a significant breakthrough in performance or function.
     Era of ferment: phase of a technology cycle characterized by technological substitution and
        design competition.
     Dominant design: a new technological design or process that becomes the accepted market
        standard.
     Incremental change: the phase of a technology cycle in which companies innovate by lowering
        costs and improving the function and performance of the dominant technological design.

4. How can companies create creative work environments?

Companies can use a variety of tools to fashion a creative work environment. First, companies can
provide their employees with challenging work that demands attention and focus and is important to
others. Managers can also foster creative work environments by encouraging risk taking and new ideas
and setting clear goals. Another way to create creative work environments is by ensuring that work group
members have a variety of experiences. Finally, when its employees have autonomy over one‘s day-to-
day work, a company is more likely to experience the benefits of a creative environment.

5. What is the difference between incremental change and discontinuous change?

Technological discontinuities are followed by a discontinuous change, which is characterized by
technological substitution and design competition. Technological substitution occurs when customers
Chapter 7: Innovation and Change                                                                     27
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 or dominant design. Because of large investments in old
technology, and because new and old technologies are often incompatible with each other, companies and
consumers are reluctant to switch to a different technology during design competition. At a certain point,
a dominant design will emerge. That is, a specific design becomes the accepted new market standard for
technology. This can happen because most people use the design (i.e., it has critical mass), or because it
solves a practical problem.
    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
function and performance of the dominant design. This focus continues until the next technological
discontinuity occurs.

6. Compare the experiential approach to managing innovation with the compression approach.

The experiential approach to innovation assumes a highly uncertain environment and uses intuition,
flexible options, and hands-on experience to reduce uncertainty and accelerate learning and
understanding.
    The steps to the experiential approach are:
          Design iterations
          Testing
          Milestones
          Multifunctional teams
          Powerful leaders
    In contrast, the compression approach to innovation assumes that incremental innovation can be
planned using a series of steps, and that compressing those steps can speed innovation. It is used in an
environment that is certain when the firm has entered an era of incremental change with established
technology.
    The steps to the compression approach are:
          Planning
          Supplier involvement
          Shortening the time of the individual steps
          Overlapping steps
          Using multifunctional teams

7. How do change forces work to bring about change? How do resistance forces work against
     change forces?

According to social psychologist Kurt Lewin, change is a function of the forces that promote change and
the opposing forces that slow or resist change. Change forces lead to differences in the form, quality, or
condition of an organization over time. By contrast, resistance forces support the status quo, that is, the
existing conditions in organizations.
    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 one‘s job. People also resist change because of misunderstanding
and distrust; they don‘t understand the change or the reasons for it, or they distrust the people, typically
management, behind the change. 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 feel 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.

8. How can companies manage resistance to change?


28                                                                     Chapter 7: Innovation and Change
Employees might resist change because of self-interest, misunderstanding and distrust, and a general
intolerance for change. The five ways to manage resistance to change are:
     Education and communication: When resistance is based on insufficient or incorrect
        information, managers should educate employees and communicate change-related information to
        them.
     Participation: When employees participate in planning the implementing the change process,
        they are less likely to resist change because they are helping to create it.
     Negotiation: Employees that discuss and agree on who will do what after change occurs are less
        likely to resist change.
     Top management support: Resistance to change will decrease if managers secure the support of
        top management.
     Coercion: This is the last resort to manage resistance to change and should only be used if a crisis
        exists or when all other methods have failed.

9. What mistakes do managers commonly make when leading change?

The following are common errors made by managers when managing change: 1) not establishing a great
enough sense of urgency; 2) not creating a powerful enough coalition,; 3) lacking a vision; 4) not
communicating the vision; 5) not removing obstacles to the vision; 6) not systematically planning for and
creating a series of short-term wins; 7) declaring the win too soon; and 8) not basing the changes within
the existing organizational culture.

10. List and describe the four main change tools and techniques.

Managers can use a number of change techniques. Results-driven change and the GE workout reduce
resistance to change by getting change efforts off to a fast start. Transition management teams, which
manage a company‘s change process, coordinate change efforts throughout an organization.
Organizational development is a collection of planned change interventions (large system, small group,
person-focused), guided by a change agent, that are designed to improve an organization‘s long-term
health and performance.

Activities and Assignments

Out-of-Class Project: “Shapes.” Assign students to create a unique geometric shape using curved and
straight lines. Lines should not intersect so that the shape‘s interior space is unbroken. The shape should
not look like anything (bird, plane, tree, house, etc.) and should be completely original. Have students
bring shapes to class for critique.

In-Class Activity: “Creative Learning Environments.” Divide the class into small groups (4-5
students). Using the ―creative work environment‖ model in Exhibit 7.3, have each group come up with
ideas for each component of how innovation can occur in higher education. Students should list ideas for:
1) how to make the work challenging; 2) organizational encouragement; 3) supervisory encouragement;
4) work group encouragement; and 5) freedom. They should also list what organizational impediments
exist. The instructor may adapt this exercise to how to make public education more creative.

“Change and Civilizations.” Go to www.learner.org/exhibits/collapse. This is part of a Web site
maintained by Annenberg/CBP about why great civilizations collapse. Read the story of one of the four
great civilizations in this Web site. What can Corporate America learn from this experience? How does
this relate to the business world? What would happen to a business if it continued to ignore change?

“Innovation in Education.” Go to the Web site of Intel‘s ―Innovating in Education‖ at
www.intel.com/education. What initiatives has Intel started to promote innovation in education? What


Chapter 7: Innovation and Change                                                                    29
does innovation mean to Intel? How will students benefit from this program? How will Intel benefit from
this program?

“Think Tanks.” Go to the Web site of Teen Think Tanks at www.teenthinktank.org. This organization
allows teens to brainstorm on ideas of how to prevent school violence. Click to see the survey (take it, if
you want), and click to see other aspects of the Web site. How does this brainstorming organization
work? What kind of technology does it use? How can the business world learn from such techniques?

“Change Agents.” Go to the Web site of Patty Hathaway, ―the change agent,‖ at
www.thechangeagent.com. This is a commercial Web site that introduces Patty Hathaway as a
motivational speaker who can (for a fee) come to a company and help make change work. What exactly
does Ms. Hathaway do to accomplish this? What are her qualifications? What are some the products and
services she offers? Can an outside consultant such as Patty really incite and implement change in an
organization? Why or why not?

“High Tech Innovation.” Use the Internet to find high tech companies that are known for innovation and
change. What are the characteristics of these companies? What kinds of products do they sell? What is
their mission statement?

Out-of-Class Project: “Ideation.” Divide the class into small groups of 3 to 4 students and give each
group a bag of at least 10 disparate items (like the Inventables described in the Develop Your Career
Potential exercise). Things rescued from the trash, like milk jugs and lids, toilet-paper tubes, and broken
mechanical items make good resources. Also think of things like the items on this list:

Pipe cleaners                 Magnets                     Thumbtacks                  Milk-jug lids
Pom-poms                      Paper clips                 Empty cans                  Plastic chopsticks
String                        Floral wire                 Styrofoam balls/cubes       Wooden blocks
Fabric scraps                 Old stapler                 Keys                        Rubber bands, all sizes
Binder clips                  Cardboard scraps            Paper tubes                 Steel wool
Old kitchen utensils          Qtips                       Tweezers                    Balloons
Unused/old CDs                Plastic cups                Dental floss                Egg cartons
Screws/nuts/bolts/washers     Old hand tools              Paint sticks                Marbles
Funnels                       Plumbing supplies           Happy Meal toys             Any small, metal item

Charge each group with building something you specify, like a hat or a vehicle. Or, you can tell groups
that they need to first decide what they‘ll build, and then actually do it. Depending on your resources,
consider giving a set of building materials to each student and even inviting a professor from the
industrial design department (if your university has an engineering and/or design college) to visit your
class that day to help with the activity. After students have finished, let them present their design to the
class. If time allows, let students critique each design, making recommendations for improvement or
refinement.




30                                                                       Chapter 7: Innovation and Change