Leading Innovation And Change

Leading Innovation And Change New technologies, opportunities and threats force organizations to acquire adaptive capacities in order to remain relevant, competitive and survive in an increasingly complex business environment. Organizations and individuals have to embrace change initiative programmes in order to ensure organisational long-term success. In this paper, we look at the main theories of innovation and change, whilst maintaining a general view on how an organization goes about its change management decisions. We will describe one successful, one less successful change initiative and the impact of these two on the organizational culture. We also come to the conclusion that for a successful implementation of change, a company must be more transparent and listen to every employees opinions. Then, an integrated approach to the authors personal performance as a leader and what is still lagging to acquire the skills necessary to change development will be covered. Introduction Change, innovation, and even creativity are not new concepts in the framework of organizational development. The past few decades have witnessed the development of several theoretical models aiming to improve the way organizations function. Change demands both creativity and innovation. Wickoff describes creativity as the act of connecting the new into the existing and making connections that no one else has made (Wycoff, 1991). According to Pearce (Pearce, 1974), individual culture exerts a negative influence on creativity, however, were it not for creativity, culture itself would not be created. Innovation means successfully drawing on new ideas. All innovation begins with creative ideas. Thus, creativity is the starting point for innovation. Changes in innovation are necessary for the successful exploitation of new ideas. In an organizational setting, creativity is the generation of an idea, and innovation as the implementation of these creative ideas, known as creative output. (Woodman, 2008). Amabile implies that creativity requires individuals with creative characteristics, while a group of people are primarily responsible for implementing these creative ideas, so they can result in innovation (Amabile, 1983). At the core of organizational success, an employee is likely to be creative when they expect that their creativeness will lead to personal consequences that are more rewarding. (Ford, 1990) There are individual differences that may trigger employees creativity. Many theories revolve around the fact that individual creativity is a function of personality factors, creativity-relevant skills, specialized knowledge and genuine motivation. Overall, the success of an organization depends on the capacity of its staff to communicate and share knowledge (Bryans, 2001), and it is observed that the importance of specialized knowledge in an organization has been steadily increasing (Ingram, 2000) Hughes states that managing change is one of the major challenges that face not only the organizations, but also the individuals creativities that should accompany the organizations in their processes of change (Hughes 2006). Organizational change is related to organizational strategy, which will guide organizational direction and activities (Thornhill 2000). As individual change is pivotal part of organization change, change management need to be adopted at individual level in order to initiate the change and consequently obtain successful organization change (Hughes 2006). Beer and Noria explain that due to, heightened competition, globalisation, advancements in communications and information technologies, inter-alia, change initiatives have interested the majority of leading organisations. Organizational change initiatives can maximize shareholder value (i.e. economic value theory) and develop organizational capabilities (i.e. organizational capability theory) (Beer, 2000). Throughout this paper, we explore the theories behind innovation and change, evaluating one successful and one less successful innovation/change initiative related to the relevant theories. It also offers a reflection on the authors own performance as a leader of innovation and change, including the development of an action plan for further practicing the relevant skills leading innovation and change. Theories of Innovation Mulgan and Albury (Mulgan, 2003) define innovation as the creation and implementation of new processes, products, services and methods of delivery which result in significant improvements in outcomes efficiency, effectiveness or quality. They further elaborate this concept by linking the idea of creation to a source of value both for the individual consumer and companies. According to Joseph Schumpeter (Schumpeter 1934), innovation is different from invention insofar as the latter covers only aspects related to technical progress while innovation relies on acceptance and marketing. In addition he highlights the importance of innovation for growth and economic development. For example, a technical discovery without a valid product or a service cannot be regarded as an innovation. Van de Ven (Van De Ven 1986) adopts a broader definition of innovation by setting it as the development and implementation of new ideas by individuals who, over time, engage with others in a defined institutional context. Through these different definitions with the common denominator in the individual, innovation could be summarized as a creation, whose application would generate business opportunities meeting existing needs or addressing new needs. Through Schumpeter (Schumpeter 1934), we discover the five major types of innovations: (i) the introduction of a new product; (ii) the introduction of a new method of production, (iii) the opening of new markets; (iv) the conquest of a new source of supply of raw materials; (v) the conception of new organizations. Different from Schumpeters theory, Tidd and Bessant (Bessant, 2009) summarized four dimensions of change, which they define as the 4Ps of innovation: Product innovation changes in things (products/services) which an organization provides; (ii) Process innovation Changes in the ways these things (products/services) are created and delivered; (iii) Position innovation Changes in the context in which the products/services are introduced; (iv) Paradigm innovation Changes in the underlying mental models which frame what the organization does. At the root of innovation is creativity, which is a process and a skill that can be developed and managed throughout the organization. A process is needed together with a culture that will help maximize creative assets. This is innovation capability that triggers organizational health. Tidd (Bessant, 2009) states that the implementing phases of innovation carry a high degree of risky as companies need to invest substantial resources and the uncertainty can significantly influence the implementation process. A great deal of research has been conducted to try to identify what factors affect the rate and extent of adoption of innovation by the markets. A number of characteristics of innovation have been found to affect diffusion (Rogers 2003): Relative advantage, (ii) Compatibility, (iii) Complexity, (iv) Trialability, (v) Observability In a dynamic environment, success comes from looking for the next opportunity and having the ability to finding insights into new products or services. Innovations may also be classified by their degree of intensity. When an innovation brings an improvement to the processes, it is described as incremental innovation. Christensen (Christensen 1997) states that incremental innovation does not change the nature of the product or service but allows the company to strengthen its offer without upsetting its value chains. Conversely, when an innovation is accompanied by a major technological breakthrough that improves the product or service, it is called disruptive innovation (Christensen 1997). Another dimension of innovation may be classified by its degree of novelty. Innovation is not only a matter of major advances or radical innovations but also includes small-scale changes or incremental innovations (Tidd, 2006). Innovation was considered largely as the creation and development of new ideas. However, generating new ideas is just one step of an innovation. Thus, as Tidd states, innovation is a process, not a single event, and needs to be managed as such. The influences on the process can be manipulated to affect the outcome that is, it can be managed à ¢Ã¢â€š ¬Ã‚ ¦ One notable model describing the innovation process is the innovation pentathlon framework (Goffin, 2005). A more generic innovation process model by Tidd and Bessant (Bessant, 2009) divides the innovation process into four phases: (i) Generating new ideas how can we find opportunities for innovation? (ii) Selecting the good ones what to do and why? (iii) Implementing them how to make it happen? (iv) Capture how to get benefits from it? In his research, Shapiro argues that perpetual and pervasive innovation is the key to long -term sustainable success in the continuous search for new consumers. (Shapiro, 2002) To survive competition, organizations must rapidly and repeatedly re-invent themselves often through its best resource, the employees. The road map to reinvention starts by applying the seven Rs. 1. Rethink your underlying assumptions. 2. Reconfigure how you carry out work. 3. Resequence when work takes place 4. Relocate where work is done to cut down on handoffs and delays. 5. Reduce the frequency of carrying our specific activities. 6. Reassign who does the work by asking if anyone else could achieve the same result more effectively and efficiently. 7. Retool the technology that supports getting the work done. Could new software and automated equipment transform our ways of working? Tidd (Tidd 2006) recognizes that shocks trigger innovations and changes occur when a threshold is reached (be it opportunity or threat). Similarly, Schumpeter (Schumpeter 1934) identifies the resistance to change when the resistance manifests itself in the groups threatened by the innovation, then in the difficulty finding the necessary cooperation, finally in the difficulty in winning over consumer. Change and change models An analysis of some of the works of authors considered masters of leadership explains this (Porter 1980) (Drucker 1999). The reasons for change resistance are essentially within the individuals of the organization and the environment in which they operate. Some changes occur because of the opportunities that arise, while others are planned as in mergers/acquisitions. The onus is then placed on effective change management, which allows people to reorient the organization, achieve its goals, maximize their performance and ensure the continuous improvement in an ever-changing business environment. Change occurs efficiently only if there is a complete commitment from within the organization. Change happens through people therefore, as part of the process of change it is necessary to know and stimulate their values, their beliefs, their behaviors and their emotions. Kim argues that organizations learn via their individual members (Kim 1993). Therefore, understanding individual learning theories are important for understanding organizational learning. There are different areas of change within an organization. Balogun and Hailey describe four types of changes: adaptation, reconstruction, evolution and revolution (Hailey, 2004). Scope of Change Nature of change Realignment Transformation Incremental Adaptation Evolution Big Bang Reconstruction Revolution Senior and Fleming see change as either soft change (group work change agent as catalyst, more complex) or hard change (clear objectives, achievable, less complex) (Fleming, 2006) Planned change takes conscious and attentive effort on the part of the organization. Kanter originated the concept of the change master: a person or organization skilled at the art of anticipating the need for and of leading productive change (Kanter, 1983) . Changes will not occur unless the necessity for change is significant. Employees and organizations usually resist change unless they have to. Before embarking on an organizational change initiative, a clear strategy must be planned in order to anticipate potential problems. One often criticized model for change is Lewins model of change, which consists of unfreezing, transforming, and freezing. Unfreezing refers to conditioning individuals readiness for change, and establishing ownership. It revolves around increased awareness by stakeholders of the existence of a dissonance between the organization and its environment. It fosters a desire for transformation that is then spread in the organization. This is a period of self questioning where reflections abound on the driving forces and changing patterns of perception. This stage is characterized by instability, loss of landmark and a degree of uncertainty resulting in the sense of the need to change (Lewin, 1951). During the transformation, momentum builds when stakeholders introduce change and plan its implementation and transformation with the commitment of individuals to accept the change initiatives. In the final phase, refreezing, individuals recognize the change and reestablish the equilibrium, both personally and within the organization. This last step in the process of change is the institutionalization of new practices. It is therefore the consolidation, convergence and adoption of new behaviors. In addition, during this phase, the organization assists the rooting of new standards and the emergence of a new culture. Refreezing thus prevents individuals to return to the previous step, and wide acceptance leads to progress. (Gilley 2005). Lewins Force field analysis (Lewin 1951) further considers that an issue is held in balance by the interaction of two opposing sets of forces the positive and the negative in terms of those forces driving change and those forces restraining change. Lewin considers a number of positive forces that support this state together with a set of restrictive forces that oppose and counterbalance it. In essence, this resistance allows Lewin to conceive patterns of continuity and discontinuity within relatively stationary structures in group behavior. In this respect, behavioral change is not conceived of as naturally emergent, but rather as a planned process requiring the intervention of a change agent . Lewins model has several limitations in that it fails to address the human side of change and doesnt address the emotional state of people during the change process and relies on the change agent to act as a cohesive between states of stability while helping to diffuse resistance. Not every employee or stakeholder will agree on the new vision or let alone implement it. Another risky limitation is preventing organizations to move back to former phases where updating may be required. This can send wrong signals to employees, especially when the realization of moving too fast or too early into a new stage, triggering significant changes in the internal environment. Very similar to Lewins model, Kotters (Kotter 1996) eight steps of change is another linear model for change. Its eight steps are: establishing a sense of urgency, forming a powerful guiding coalition, creating and communicating a vision, empowering others to act on the vision, planning for and creating short-term wins, consolidating improvements and producing still more change, and finally institutionalizing new approaches. However, knowing the required change is the critical question to ask. Those changes with wide-reaching impacts requiring significant unlearning by an individual are the ones that will generate the more resistance to change. In the following table, we combine the foundations of the two models. Kotters eight phases can essentially be reduced to three stages, similar to Lewins model. This allows us to consider an integrative model to the two different approaches. Lewins model Kotters model Phase 1 Awareness of the need to change Challenge the status quo Lack of stability created Create a sense of urgency Crete a guiding coalition Elaborate a vision for change Phase 2 Moving towards change Discussion and reflections on the inefficient existing practices Communicate the vision Empower the change agents Create short terms gains Phase 3 Institutionalize new practices Consolidate new behaviors Solidify new norms Consolidate longer-term gains Solidify new approaches into culture Similar to Lewins model, Kotters fails to address the human side of change, assuming everyone will agree, and doesnt address the emotional state of people during the change process. In practice, during the different phases, greater attention is granted to managing the change process rather than the individuals affected by the change process. Employees lack the recognition that they are treated as competent and important elements of the organization. Their worth has to be recognized respected. To avert this during the change process, the organization can, inter-alia, instill a sense of belonging, enhance management-employee relations, improve the supervisory quality and decision making process, disseminate information and foster feedback and provide access to training. Researchers estimate that 70% of change initiatives fail. (Noria). Kotters model risks failure if the sense of urgency is not created, if a strong enough coalition is not formed, with blurred vision, not allowing adjustments or the elimination of harmful practices in the change process, failing to obtain success in the short term, or quickly calling victory and not anchoring the changes in culture of the organization. Lewin (management.net 2012) describes four essential steps to managing change: Define the change you want to see by creating a diagram or table of the future desired state. Brainstorm and analyze the restraining forces those that oppose change. Evaluate the driving and restraining forces and focus on the impact of each on the change initiative. Impose a strategy that analyses the driving and restraining forces. The result should be an action plan that will achieve the greatest impact. Egan (Egan, 1988), clearly influenced by Lewins, proposes a simple model for change in three steps: Assessing the current scenario Creating a preferred scenario Designing a plan from the current into the preferred scenario. Support and momentum must be gathered for effective change, always considering the human factor in order to prevent failure. During the change planning, it is imperative to bring on-board different profiles to achieve effective change. Senior and Fleming (Fleming, 2006) argue that for effective change, an organizational leader must engage and drive the initiative forward in the organization. The importance of stakeholder, in determining the driving and restraining forces, is important throughout the process Two radically different models of change are Beer and Norias theory E and Os (Beer 2000). Theory E focuses on creating value to the shareholder, and uses structures and systems to achieve change. This approach often resorts consulting firms and economic incentives as a way to entice the organizational changes at the lower level. Opposite is theory Os goal to change a companys ways from the bottom to the top, that is from the front line employees to the CEO. Management, employees, culture and behavior are addressed through the involvement of all the employees through a transparent communication scheme. Organizations abiding by theory O create systems which make employees emotionally committed to increasing their performance within the organization. Under theory O, employees are requested to become involved in identifying and solving work-related problems whereas managers believe that creating value is the essence of this approach. As there is no one right approach, the limitation of Beer and Norias model is that they cannot be implemented as stand-alone given the economic and human risks associated. Simultaneous implementation of both theories, know as tension between E and O, together with hard and soft change approaches, extremely delicate, will provide a sustainable advantage to organizations embracing it. The principles of creativity and innovation must be formulated and discussed across the spectrum between executives, middle managers and employees. A participatory approach early on the process can lead to failures in the change initiative. Change agents and executives of the organization should be alert on providing innovative frameworks for successful change. Whether planned or unplanned, the onus should be placed on having a clear understanding of the specific situation, its complexity and the selection of an appropriate change strategy and communication plan. Change initiatives need to be designed wit h all stakeholders in perspective; only successful change is operated from a stakeholder perspective. (Holbeche, 2006) A simple stakeholder analysis, adapted from Cleland (Ireland, 2004) can sustain an effective communication plan. Leadership and Leading change The most common definition of leadership refers to the ability to get others to do what you want. According to Bolman and Deal (Bolman 1997), the word leader was introduced more than a thousand years ago. It derives from the Anglo-Saxon laedare, which has undergone a few changes. In old English it meant conducting travelers on the road. Bolman and Deal (Bolman 1997) refine the term leader into those individuals that are helpful, make us feel secure and alleviate fears; those that see possibilities and discover hidden resources. Power is key to leadership. Robbins and Coulter differentiate between a manager and a leader, in that managers are chosen by the board or by shareholders of the company based on academic and work experience while leaders emerges from a group, and are able to influence employees performances (Robbins 1996). Koontz (Koontz 1995) states that leadership as an art that influences people to work voluntarily and enthusiastically to achieve collective goals (Kotter 1996, 490) In this sense, the leader faces the challenge of developing skills that drive change and guiding direction and vision. However, before being able to exercise effective leadership, individuals must continually seek self-learning and self-advancement. That is why, as a fundamental aspect, the leader of any group or organization must be committed to the challenge of increasing the value or the importance of his own organization. This self-improvement is fundamental part of any organizations culture. Robbins and Coulter mention qualities that characterize the leader such as: intelligence, charisma, decision, enthusiasm, strength, value, integrity and confidence in it (Robbins 1996, 573). Another common view is that leaders provide organizations and individuals with a clear vision capable of generating a compelling image of the future. In this regard, Kotters works (Kotter 1996) have been oriented to establish a clear difference between management and leadership: Management is a set of processes whereby complicated systems of individuals and technology run smoothly. The most important aspects of management are planning, budgeting, organizing, human resources and problem solving. On the other hand, leadership is a set of processes that prioritize organizations and adapt them to significantly changing circumstances. The leadership defines the future by aligning people with a vision and inspires them to make it reality despite the obstacles. This assessment refers to the ability of these individuals to assist a group of people in circumstances of uncertainty through a practical, achievable vision within a certain period and whose development is both an exercise of the intellect and heart. The vision is an image of the future, with an increasingly favorable individual and collective change with respect to the present. Organization leadership should work through the change agents to gain momentum and support the change initiative. The leaders function is critical to implementing the desired change. They do not necessarily need to be directly involved. Buchanan (2003) argues that change leaders should perceive the need for change and advocate the change. However, acting alone will not be successful and functioning though a change agent, with the responsibility to implement change is a more sustainable strategy. All stakeholders should be part of the change effort and it is important to consider each stakeholder in planning strategies in order to gain support for the change effort. Leaders must advocate the change in a way that makes it appealing and less threatening to the stakeholders. Somewhat dissonant to Lewins theory, Kanter states that it is easier to implement change when it is: conducted on a small scale, can be reversible if unsuccessful and in line with the organizations current direction. (Kanter R. , 1983) Leaders must think in the longer term and look beyond the unit of work of the department towards a greater scope. Their intuition of the environment is used to exhort influence. (Higgs) They possess vision, and have the political skills to deal with the challenging and resisting changing environments and groups of followers (Bolman 1997). Senior and Fleming (Fleming, 2006) assert that another important trait in change management leadership is the will to take risks. Leaders not only must assert their creative and emotional intelligence, but they must motivate for how change is accomplished (Fleming, 2006, p. 348) Transformational leaders, willing to take risks, exerting consistent behavior with high levels of ethics and integrity are able to inspire and motivate employees by demonstrating a shared commitment to the new goals and vision of the organization. (Riggio, 2006). Successful change Robert Heller states that good change management teams are those that know what to change, have the competence to accomplish change and above all carry it out. It helps to operate change under a cultural banner. One theory that groups thinking from Lewin, Kotter and Beer and Norias models is Bolman and Deals four frames, which require creative thinking beyond the described linear model of change. We look at the experience in creating organizational learning and change relates to Bolmans and Deals (Bolman 1997) four frames of organizational structure. The case of a large United Nations (herein referred to as UN) organization will be presented. It is an interesting example of a UN organization operating in changing environments with offices in over 70 countries and a diverse multicultural cadre of staff. Unpredictability is embedded its organizational culture and resilience to change gives it a comparative advantage over other UN organizations. Staffs in the field, away from headquarters, are expected to be mobile and work in the most challenging circumstances and deliver results. The importance of a field presence close to the beneficiaries served is of vital importance. The UN organization strives to increase its expertise in finding and providing efficient and effective solutions to hunger and malnutrition. In retrospective, a stakeholder analysis identified the following stakeholders in the change process: Importance of stakeholder >>> Influence of stakeholder >>> Little or no importance Some importance Significant importance Significant influence C A Somewhat influential Little or no influence D B Group A: Executive management, Middle management, Board of directors Group B: Employees, Host government, staff unions, Project teams Group C: Donor countries, Staff counselors Media and journalists Group D: Staff families, Beneficiaries, Local communities Structural frame: The structural frame emphasizes goals, specialized role, and formal relationships, commonly depicted by organizational charts (Bolman 1997, 13) It highlights the structural aspects of organizations and assumes the following: organizations exist to achieve goals and objectives; things work best when rationality prevails over human needs; it is most effective and efficient to assign roles using specialization and division of labor; effective coordination and control is needed for individuals to work together to meet the organizations goals; problems are a result of poor structure (Bolman 1997) Given the current state of global economic, social and political affairs , combined with the organizations thirst to remain relevant, it is expected to do more with less and continue to be as innovative (and more creative in reaching results). This translated into a change on the approach starting with a rapid organizational assessment that was immediately undertaken to facilitate a process of reflection, review and analysis. The results of this assessment were reviewed by a team of change sponsors/advocates within the organization. A wide range of going-forward organizational design and operating recommendations were made to the executive director and developed into a framework for action calling for a strategy based on participation and action planning and guiding coalition. In order to be more efficient, boost creativity and innovation, it was determined that decisions had to be streamlined, eliminating redundant positions, and improving communication through a wide internal and external participation. The result was a process driven by function rather than focused on current personnel. Immediately, a new structure was designed harmonizing the executive functions, and eliminating redundant director jobs, and ultimately streamlining decision making closer to where the operations are. The result is an organization with one executive director, one deputy executive director and four assistant executive directors (effectively two functions of deputy executive director were eliminated). The assistant executive directors moved from supervising thrust areas in HQ to managing functional areas across the entire organization. Regional directors, responsible for managing vast operations areas, are given more powers to support the country directors without having to resort to HQs approval. Country directors empowered as the centre of gravity with increased decision making authority. Change advocates not only mobilized the energy to drive the process forward but also lead a process of innovation and change by inviting employees to participate in the change process (Beer, 2000). In turn this meant that all key managers position across the spectrum in HQ, regional offices and country offices had to face the reality that their jobs were evolving to meet the new longer-term goals. New skills were to be learned and a comprehensive program on capacity building was planned. A thorough review of job description woul