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Managing Innovation and Change.docx

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University of Toronto Mississauga
Dave Swanston

Managing Innovation and Change Paradigm Shifts Paradigm Shift: occurs when a new technology or business model comes along that dramatically alters the nature of demand and competition • established enterprises have to adopt new strategies to survive • appear to be more likely in an industry where technology is mature and approaching its natural limit • new disruptive technology has entered the marketplace • company develops a new business model that is radically different from that used by competitors Natural Limits to Technology • Richard Foster – made a relationship between the performance of a technology and time o (called technology S-curve) o Shows the relationship overtime between cumulative investments in R&D and the performance of the technology • New technology investments seem to yield rapid improvements, then later its not that effective • Because the successor technology is initially less efficient than the established technology, successor technology would sudden have a huge improvement and established companies are not prepared for it, and they die Disruptive Technology • Clayton Christensen – disruptive theory o Refers to a new technology that gets its start away from the mainstream market, then main market • Disruptive because they revolutionize industry structure and competition, often causing the decline of established organizations  cause a technological paradigm shift • Established companies are often aware of the new technology but do not invest in it because they listen to their customers, and their customers do not want it o Big companies listened too much to their customers o Didn’t want to invest in new smaller technology (too cocky) New Business Model Business Model: the way in which an enterprise intends to make money • Reshape competition in their respective markets by developing novel business models that offer more value to consumer’s enabling them to take demand from establish enterprises o Google makes money with ads o Gillette sells the razor for decent price, then blades for premium Punctuated Equilibrium Punctuated Equilibrium: a view of industry evolution asserting that long periods of equilibrium are punctuated by periods of rapid change when industry structure is revolutionized by innovation • The new technology lowers barriers to enter the industry-> new companies enter the market using the new technology makes industry more competitivecompanies get eliminated different firms dominate market Organizational Inertia Organization Intertia: internal and external forces that make it difficult to change the strategy or organization architecture of an enterprise • Ex. Organizational culture, strategic commitments, capabilities etc. Cognitive Schemata Cognitive Schemata: a manager’s mental model of the world their enterprise inhabits • Ex. Beliefs about what works and does not work, what is important and what isn’t • Based on experience • When a management team have worked together for a while, they often share the same view o But then they will have blindspots: ignore events/data/suggestions that fall outside of their view o May not understand the threat posed by new technologies and new enterprises • Icraus paradox: managers become so dazzled by their early success thaWt they believe more of the same type of effort is the way to future success o ppl develop a powerful cognitive schemata about what works Internal Political Constraints • power is accumulated for managers  unlikely to give it up  any change that harms them, they say no  b/c they have power, ppl consider it o if they are successful in convincing others, this constitutes a source of organizational inertia that might slow or stop change Organization Culture • another source of organizational inertia • value systems are hard to change Commitments and Capabilities Strategic Commitments: are a firm’s investments in tangible and intangible assets to support a particular way of doing business (a particular business model) • once a firm has a strategic commitment, it will be hard to respond to new competition it if requires breaking the commitment External Institutional Constraints • unions might resist job cuts or attempts to introduce flexible work rules Organization Change • what managers can do to implement organizational change quickly and successfully • 4 steps: o Leadership o Committed to change o Unfreezing the organization o Moving the organization toward a new strategic and organizational configuration and freezing it again Leadership Committed to Change • Organizes cannot change unless their leaders recognize the need for change and are committed to it • When managers decide to institute radical change, they often turn to an outsider for advice • A leader who is committed to organization change knows the need for change and not only can communicate this eloquently to employees, motivating them to support the change effort, but must “walk the talk” • Laggards-- Ppl who ignored concerns are resisted changes Leaders – ppl who took a
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