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and Change
11
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Describe the importance of innovation in organisations;
2. Explain the ways to manage innovation effectively;
3. Discuss four factors that cause change and ways to manage the
changes in organisations; and
4. Examine the obstacles to changes in organisations and ways to
overcome the problems.
INTRODUCTION
This section will begin by discussing the issues related to organisational
innovation. Organisational innovation means success in the implementation of
creative ideas in the organisation. Where do the ideas come from? Creative ideas
come from creativity, that is, the creation of ideas that are useful for the
organisation. Innovation can bring about many advantages and benefits to the
organisation but the main benefit is that it is able to create and retain the
competition advantage of the organisation.
The second part of this topic will explain the change in organisations.
Organisational change means the modification or alteration of organisations from
one structure, quality or condition into another form from time to time.
Organisations need to change due to several reasons; the most important is
environmental change. This section will explain the environmental factors that
affect organisations, how important change is to an organisation and how to
manage organisational change effectively.
TOPIC 11 INNOVATION AND CHANGE ! 179
ACTIVITY 11.1
In your opinion, with the rapid development in information technology
nowadays, how far does innovation play an important role in an
organisation? Discuss this with your friends.
At the early stage of the existence of the technology (denoted by point A), there is
still a lot more to be learned from the technology in order to develop it and this
results in a slightly slow progress. From point A to point B, there is a slight curve
which indicates increase in effort (in the form of finance, research and
development) that only provides a slight increase in the performance of the
technology.
180 TOPIC 11 INNOVATION AND CHANGE
When this technology matures (indicated by point B), researchers have identified
the methods to obtain better performance from that particular technology. The
curve from point B to point C indicates that the injection of effort in a small
quantity is already enough to increase the performance of the technology to a
stimulating level. Point C indicates that additional effort in developing the
technology will only result in a slight increase in performance. More importantly,
point C denotes that the technology has reached its maximum level. This means
that additional efforts will no longer bring any benefits or increase the
performance of that particular technology.
After the technology has achieved its maximum limit, that is, at the end of the
S-curve, increase in performance usually comes from new or the latest
technology. The second S-curve is the curve that represents the new technology
replacing the old technology.
EXERCISE 11.1
SELF-CHECK 11.1
Why must innovation that is a result of ideas and staff be managed and
administered?
Work will become challenging when it requires hard work, focus and attention,
and viewed as important by other people in the organisation. Challenging work
will encourage creativity since it is able to create a reward of experience in terms
of the psychology of the executor. When accepting challenging work, an
employee will try to figure out the methods or ideas that can assist in performing
the particular job. The success in performing the challenging job will give
satisfaction to the employee.
EXERCISE 11.2
suited to the various cultures in the environment. This is because the current
environment provides a diversity of workforce, either diversity from an obvious
angle up to something that can hardly be detected. Therefore, the policies of
human resource and its practices must be changed in order to attract interest and
retain a diverse workforce besides trying to avoid any court action.
Technology is viewed as one of the forces that can change the work methods and
the organisation itself. For example, the use of computers as one of the tools to
monitor and control employees causes the managerÊs span-of-control to become
wider and the structure of organisation to become more open. The sophistication
of information technology has caused organisations to be more sensitive.
Consequently, some organisations now can develop, produce and distribute
products faster than before.
SELF-CHECK 11.2
From your point of view, what are the ways to make changes in the
morals and attitude of staff in their areas of employment?
Starting from the early 1970Ês, due to the rise of the world petroleum price, the
world economy has continuously affected organisations. The most obvious
example is when the economic downturn took place in Malaysia somewhere
around the middle of 1997. The value of the ringgit fell, leading to the collapse of
the stock exchange and to the downfall of several of the countryÊs most
significant industries. It is the effect of this fall in ringgit value that also caused
Malaysia to lose its competitive force in the international market and later forced
the government to peg the ringgit to the US dollar. Besides that, the loan interest
rates that had gradually increased forced many organisations to retrench their
employees and worse, some of them were forced to close their businesses. From
the examples above, it is clear that the economy is also one of the factors why an
organisation needs to change.
This change will definitely alter the level of demand towards products and
services of the organisation. Not only that, the products and services that were
once in high demand become outdated due to this change. Therefore, the
organisation needs to make changes in order to adapt to the current condition of
social trends.
ACTIVITY 11.2
The transfer of power from the Prime Minister of Malaysia to his
deputy causes surprise and worry for foreign investors in Malaysia. Is
this good for the country? Discuss.
TOPIC 11 INNOVATION AND CHANGE ! 185
EXERCISE 11.3
Other than the examples given in Table 11.1, give one example of effects
for each of the forces of change.
Changes refer to carrying out something using new ways and methods
compared to before. Making changes in organisations without any planning
can lead to the destruction of a particular organisation. Therefore,
organisation must make planned changes. Planned changes means changing
activities that are necessary and required and these changes have to be goal-
oriented.
SELF-CHECK 11.3
According to Robbin (1998), there are two goals to changes, that is:
(a) To increase the capability of the organisation in order to be able to accept
challenges and changes in the environment; and
(b) To change the behaviour of individuals within the organisation.
If an organisation wishes to stay in the business, it must respond to the changes
in the environment. When competitors produce new products and services, the
government starts to implement new rules, the supply of resources becomes
scarce and any other changes that take place, organisations must be able to adapt
to these conditions. Generating innovation, granting power to employees and
introducing teamwork are some of the examples of planned changes activities
that are directed as a response towards the changes in the environment.
In implementing changes within the organisation, there are two types of changes,
that is:
(a) Change of first order; and
(b) Change of second order.
First order change is a linear change, slow in nature and implemented in stages.
This change is made without any apparent change in the basic structure of the
organisation. It is also conducted that way if there is no strong pressure from the
environment. Besides that, if the particular organisation has a strong culture,
changes must be implemented slowly and in stages.
ACTIVITY 11.3
Do you agree that second order change requires a leader who is
charismatic and has a clear vision in order to ensure the continuity of
the organisation? State your reasons.
We have already discussed what is meant by planned changes, its objectives and
the types of changes that can happen in an organisation. Now the question rises
on who will be responsible for managing the activities of change in organisations.
The answer is the change agents. Change agents are anyone, managers, non-
managers, employees or external negotiators. In the effort to make a significant
change in the organisation, the management is more inclined to use external
negotiators who have more knowledge regarding theories and methods of
changes.
EXERCISE 11.4
ACTIVITY 11.4
ACTIVITY 11.5
The change of a particular technology in an organisation will give rise
to substantial risk. What are the factors that must be considered to
minimise this risk?
ACTIVITY 11.6
Do you agree if a series of developmental training are conducted for the
employees in order to help them gain new skills and exposure towards
new technologies? Discuss this with your friends.
EXERCISE 11.5
ACTIVITY 11.7
if changes are to be made, then they will no longer be able to satisfy their habits.
Besides that, individuals feel anxious towards change due to their feeling of fear
towards the guarantee and security of their employment. For example, if an
organisation introduces the use of robotic equipment in the production process,
individuals will develop the feeling that their work is no longer secure.
Economics is also one of the factors that cause individuals to oppose change.
Individuals have the assumption that change will affect their income. Changes in
work activities or developing a new work routine can raise the feelings of fear in
the individuals. Individuals become worried that they are no longer able to
perform the work following the new standards, particularly if payment made is
based on productivity.
Besides that, the anxiety towards something that is unknown causes individuals
to oppose changes. They do not know whether they can perform under the new
approach. This causes the individuals to think only of negative aspects.
Other than that, the reason that contributes towards change barriers is the
selective nature in processing information. Individuals only want to hear and
process information that they desire or information that are equal to their
assumptions. Therefore, when this condition rises, individuals are usually
inclined to have negative thoughts.
Other than that, changes are also assumed to become a threat towards the
existing allocation of resources. Some groups in the organisation that have
control over the resources usually view change as a threat to their position. These
groups fear that change will result in scarcity or permanent loss of resources that
have been enjoyed all this while.
SELF-CHECK 11.4
List the differences between individual barriers and organisational
barriers.
SELF-CHECK 11.5
If you are the general manager of an organisation, what are the factors
needed to overcome barriers towards change?
EXERCISE 11.6
ACTIVITY 11.8
EXERCISE 11.7
EXERCISE 11.8
A. Organisation structure
B. Technology
C. Behaviour of employees
D. All of the above cannot be changed by the change agents
A. Negotiation
B. Force
C. Co-optation
D. Involvement