Managing Change and Innovation in a Dynamic Business Environment

1. Stephen OngStephen Ong
BSc(Hons)Econs (LSE), MBA (Bradford)BSc(Hons)Econs (LSE), MBA (Bradford)
Visiting Professor, Shenzhen UniversityVisiting Professor, Shenzhen University
Academic Fellow, Entrepreneurship & Innovation,Academic Fellow, Entrepreneurship & Innovation,
The Lord Ashcroft International Business School,The Lord Ashcroft International Business School,
Anglia Ruskin University Cambridge UKAnglia Ruskin University Cambridge UK
BUSINESS ADMINISTRATION

3. 1.1. To discuss the Forces for Change onTo discuss the Forces for Change on
businessbusiness
2.2. To understand Organizational ChangeTo understand Organizational Change
and the challenges of Managingand the challenges of Managing
ChangeChange
3.3. To discuss Innovation and managingTo discuss Innovation and managing
its impact on businessits impact on business

6. 6Source: bbc.co.uk 30th
August 2005
Creative wins MP3 player patentCreative wins MP3 player patent
One of Apple's main rivals, Creative Technology,One of Apple's main rivals, Creative Technology,
hashas
been awarded a patent in the US for the interfacebeen awarded a patent in the US for the interface
used on many digital music players.used on many digital music players.
"The first portable media player based upon the user interface covered in our Zen
Patent was our Nomad Jukebox MP3 player," said Creative CEO Sim Wong Hoo.
"The Apple iPod was only announced in October 2001, 13 months after we had
been shipping the Nomad Jukebox based upon the user interface covered by our
Zen Patent."
In its press release, Creative said Apple had filed for a patent for a user interface
in a multimedia player in late 2002, but its application had been recently rejected.
On 24 August 2006, Apple and Creative announced a broad settlement to end
their legal disputes. Apple will pay Creative US$100 million for a paid-up license,
to use Creative's awarded patent in all Apple products. As part of the agreement,
Apple will recoup part of its payment, if Creative is successful in licensing the

7. 7
Automatic hierarchical categorization of music byAutomatic hierarchical categorization of music by
metadatametadata
Patent numberPatent number : 6928433: 6928433
Filing dateFiling date : Jan 5, 2001: Jan 5, 2001
Issue dateIssue date: Aug 9, 2005: Aug 9, 2005
Application numberApplication number : : 9/755,7239/755,723
A method, performed by software executing on the processor of a portable musicA method, performed by software executing on the processor of a portable music
playback device, that automatically files tracks according to hierarchical structureplayback device, that automatically files tracks according to hierarchical structure
of categories to organize tracks in a logical order. A user interface is utilized toof categories to organize tracks in a logical order. A user interface is utilized to
change the hierarchy, view track names, and...change the hierarchy, view track names, and...
InventorsInventors : Ron Goodman, Howard N. Egan: Ron Goodman, Howard N. Egan
AssigneeAssignee: Creative Technology LTD: Creative Technology LTD
Source: bbc.co.uk 30th
August 2005

8. NASDAQNASDAQ
AAPLAAPL
Market Cap :Market Cap :
US$308.8 BUS$308.8 B
PINK CREAFPINK CREAF
Market Cap :Market Cap :
US$0.150 BUS$0.150 B

11. Organizational ChangeOrganizational Change
Any alterations in the people, structure, or technology ofAny alterations in the people, structure, or technology of
an organizationan organization
Characteristics of ChangeCharacteristics of Change
Is constant yet varies in degree and directionIs constant yet varies in degree and direction
Produces uncertainty yet is not completely unpredictableProduces uncertainty yet is not completely unpredictable
Creates both threats and opportunitiesCreates both threats and opportunities
Managing change is an integralManaging change is an integral
partpart
of every manager’s job.of every manager’s job.

12. External ForcesExternal Forces
MarketplaceMarketplace
GovernmentalGovernmental
laws andlaws and
regulationsregulations
TechnologyTechnology
Labour marketLabour market
Economic changesEconomic changes
Internal ForcesInternal Forces
Changes inChanges in
organizationalorganizational
strategystrategy
Workforce changesWorkforce changes
New equipmentNew equipment
EmployeeEmployee
attitudesattitudes

13. Lewin’s view on organisation change
Unfreezing the status quo
Changing to a new state
Refreezing to make the change permanent

15. StructuralStructural
Changing an organization’sChanging an organization’s
structural components or itsstructural components or its
structural designstructural design
TechnologicalTechnological
Adopting new equipment,Adopting new equipment,
tools, or operating methodstools, or operating methods
that displace old skills andthat displace old skills and
require new onesrequire new ones
Automation: replacing certainAutomation: replacing certain
tasks done by people withtasks done by people with
machinesmachines
ComputerizationComputerization
PeoplePeople
Changing attitudes,Changing attitudes,
expectations,expectations,
perceptions, andperceptions, and
behaviours of thebehaviours of the
workforceworkforce
OrganizationalOrganizational
development (OD)development (OD)
Techniques or programsTechniques or programs
to change people and theto change people and the
nature and quality ofnature and quality of
interpersonal workinterpersonal work
relationships.relationships.

16. 1.1. Education and communicationEducation and communication
2.2. ParticipationParticipation
3.3. Facilitation and supportFacilitation and support
4.4. NegotiationNegotiation
5.5. Manipulation and co-optationManipulation and co-optation
6.6. Selecting people who accept changeSelecting people who accept change
7.7. CoercionCoercion

17. • Set the tone through management behaviour; top managers,Set the tone through management behaviour; top managers,
particularly, need to be positive role models.particularly, need to be positive role models.
• Create new stories, symbols, and rituals to replace those currently inCreate new stories, symbols, and rituals to replace those currently in
use.use.
• Select, promote, and support employees who adopt the new values.Select, promote, and support employees who adopt the new values.
• Redesign socialization processes to align with the new values.Redesign socialization processes to align with the new values.
• To encourage acceptance of the new values, change the rewardTo encourage acceptance of the new values, change the reward
system.system.
• Replace unwritten norms with clearly specified expectations.Replace unwritten norms with clearly specified expectations.
• Shake up current subcultures through job transfers, job rotation,Shake up current subcultures through job transfers, job rotation,
and/or terminations.and/or terminations.
• Work to get consensus through employee participation and creatingWork to get consensus through employee participation and creating
a climate with a high level of trust.a climate with a high level of trust.

18. •Link the presentLink the present
and the future.and the future.
•Make learning aMake learning a
way of life.way of life.
•Actively supportActively support
and encourageand encourage
day-to-dayday-to-day
improvementsimprovements
and changes.and changes.
•Ensure diverse teams.Ensure diverse teams.
•Encourage mavericks.Encourage mavericks.
•Shelter breakthroughsShelter breakthroughs
•Integrate technology.Integrate technology.
•Build and deepen trust.Build and deepen trust.

19. ““ Turning theTurning the
outcomes of theoutcomes of the
creative processcreative process
into usefulinto useful
products,products,
services, or workservices, or work
methods.”methods.”

20. • Gillette ‘Mach 3’ razor is a first-to market productGillette ‘Mach 3’ razor is a first-to market product
• Developed at a very high costDeveloped at a very high cost
• A UK supermarket chain was quickly able toA UK supermarket chain was quickly able to
produce a good copy at a fraction of the originalproduce a good copy at a fraction of the original
costcost
• Gillette have been more dependent therefore onGillette have been more dependent therefore on
expensive television advertising to protect sales ofexpensive television advertising to protect sales of
their producttheir product
• When products are easy to copy, competitors canWhen products are easy to copy, competitors can
‘leapfrog’ original features and Wilkinson Sword‘leapfrog’ original features and Wilkinson Sword
Company have now introduced a 4 blade razorCompany have now introduced a 4 blade razor
Photos taken from www.gillette.com

21. Source:Source: “A Global Pulse of Innovation,”“A Global Pulse of Innovation,” BusinessWeekBusinessWeek, April 24, 2006, p. 74., April 24, 2006, p. 74.

22. InnovativeInnovative
firmfirm
Explanation for innovativeExplanation for innovative
capabilitycapability
AppleApple Innovative chief executiveInnovative chief executive
GoogleGoogle Scientific freedom for employeesScientific freedom for employees
SamsungSamsung Speed of product developmentSpeed of product development
Procter &Procter &
GambleGamble
Utilisation of externalUtilisation of external
sources of technologysources of technology
IBMIBM Share patents with collaboratorsShare patents with collaborators
BMWBMW DesignDesign
StarbucksStarbucks In-depth understanding ofIn-depth understanding of
customers and their culturescustomers and their cultures
ToyotaToyota Close co-operation with suppliersClose co-operation with suppliers

23. Joseph Schumpeter, The Theory of Economic DevelopmentJoseph Schumpeter, The Theory of Economic Development
(1934)(1934)
1.1. The introduction of a good (product) whichThe introduction of a good (product) which
is new to consumers, or one of higheris new to consumers, or one of higher
quality than was available in the past;quality than was available in the past;
2.2. Methods of production, which are new to aMethods of production, which are new to a
particular branch of industry;particular branch of industry;
3.3. The opening of new markets;The opening of new markets;
4.4. The use of new sources of supply;The use of new sources of supply;
5.5. New forms of competition, that leads to theNew forms of competition, that leads to the
restructuring of an industry.restructuring of an industry.
Joseph Schumpeter, The Theory of Economic DevelopmentJoseph Schumpeter, The Theory of Economic Development
(1934)(1934)
1.1. The introduction of a good (product) whichThe introduction of a good (product) which
is new to consumers, or one of higheris new to consumers, or one of higher
quality than was available in the past;quality than was available in the past;
2.2. Methods of production, which are new to aMethods of production, which are new to a
particular branch of industry;particular branch of industry;
3.3. The opening of new markets;The opening of new markets;
4.4. The use of new sources of supply;The use of new sources of supply;
5.5. New forms of competition, that leads to theNew forms of competition, that leads to the
restructuring of an industry.restructuring of an industry.

24. Michael Porter, The Competitive Advantage of NationsMichael Porter, The Competitive Advantage of Nations (1990)(1990)
1.1. “ …“ … to include both improvements into include both improvements in
technologytechnology
2.2. and better methods or ways of doing things.and better methods or ways of doing things.
3.3. It can be manifested in product changes,It can be manifested in product changes,
4.4. process changes,process changes,
5.5. new approaches to marketing,new approaches to marketing,
6.6. new forms of distribution, andnew forms of distribution, and
7.7. new concepts of scope …new concepts of scope …
 [innovation] results as much from[innovation] results as much from
organizational learning as from formal R&D.”organizational learning as from formal R&D.”
Michael Porter, The Competitive Advantage of NationsMichael Porter, The Competitive Advantage of Nations (1990)(1990)
1.1. “ …“ … to include both improvements into include both improvements in
technologytechnology
2.2. and better methods or ways of doing things.and better methods or ways of doing things.
3.3. It can be manifested in product changes,It can be manifested in product changes,
4.4. process changes,process changes,
5.5. new approaches to marketing,new approaches to marketing,
6.6. new forms of distribution, andnew forms of distribution, and
7.7. new concepts of scope …new concepts of scope …
 [innovation] results as much from[innovation] results as much from
organizational learning as from formal R&D.”organizational learning as from formal R&D.”

25. 25
• Innovation = theoretical conception + technicalInnovation = theoretical conception + technical
invention + commercial exploitationinvention + commercial exploitation
• Innovation management involves change,Innovation management involves change,
particularly technological changeparticularly technological change
• Innovation management is not exclusivelyInnovation management is not exclusively
associated with products. New ways of doingassociated with products. New ways of doing
business in service sector. Sometimes thisbusiness in service sector. Sometimes this
involves product, service and process changes.involves product, service and process changes.
The level of change is an importantThe level of change is an important
dimensiondimension
Key Concept : InnovationKey Concept : InnovationKey Concept : InnovationKey Concept : Innovation

26. 26
• Technological advancesTechnological advances
• Changing customers & needsChanging customers & needs
• Intensified competitionIntensified competition
• Changing business environmentChanging business environment
Innovation DriversInnovation DriversInnovation DriversInnovation Drivers

27. • Pfizer’s Sildenfil – akaPfizer’s Sildenfil – aka
Viagra: the fastest sellingViagra: the fastest selling
human drughuman drug
• Gore Associates’ Gore-Gore Associates’ Gore-
Tex: the versatile polymerTex: the versatile polymer
polytetrafluoroethylene (PTFE)polytetrafluoroethylene (PTFE)
• Dyson’s vacuumDyson’s vacuum
cleaner:cleaner:
Revolutionised aRevolutionised a
very stable maturevery stable mature
industryindustry
27

28. • Enterprise Resource PlanningEnterprise Resource Planning
(ERP) business software;(ERP) business software;
virtually all large firms havevirtually all large firms have
installed it.installed it.
• SAP, Oracle, Baan andSAP, Oracle, Baan and
PeopleSoft.PeopleSoft.
• SAP has over 20,000 productsSAP has over 20,000 products
installed worldwide and Oracleinstalled worldwide and Oracle
has installed databases inhas installed databases in
nearly every one of the world’snearly every one of the world’s
top 500 companies.top 500 companies.
• Moreover, it hasMoreover, it has
changed the way theychanged the way they
workwork (Gartner, 2002).(Gartner, 2002).

29. • World’s fifth largest retailerWorld’s fifth largest retailer
joined forces with Intel andjoined forces with Intel and
SAP to build a fully workingSAP to build a fully working
‘prototype’ supermarket‘prototype’ supermarket
• RFID ‘smart-tag technology’RFID ‘smart-tag technology’
used on all productsused on all products
• Shopping trolleys have touchShopping trolleys have touch
screen computers andscreen computers and
scannersscanners
• Smart tags cost 0.5 Euros eachSmart tags cost 0.5 Euros each
and are currently tooand are currently too
expensive for every item inexpensive for every item in
every supermarketevery supermarket

30. Type of innovationType of innovation ExampleExample
Product innovationProduct innovation The development of a new or improved productThe development of a new or improved product
Process innovationProcess innovation The development of a new manufacturingThe development of a new manufacturing
process such as Pilkington’s float glass processprocess such as Pilkington’s float glass process
Organisational innovationOrganisational innovation A new venture division, a new internalA new venture division, a new internal
communication system;communication system;
Management innovationManagement innovation TQM (total quality management) systems, BPRTQM (total quality management) systems, BPR
(business process re-engineering);(business process re-engineering);
introductionintroduction of SAPR3of SAPR3
Production innovationsProduction innovations Quality circles, JIT manufacturing system, newQuality circles, JIT manufacturing system, new
production planning software, e.g. MRP II,production planning software, e.g. MRP II,
newnew
inspection systeminspection system
Commercial/Commercial/
marketing innovationsmarketing innovations New financing arrangements, new salesNew financing arrangements, new sales
approach, e.g. direct marketingapproach, e.g. direct marketing
Service innovationsService innovations e-commerce auction eBay; Internet banking, etc.e-commerce auction eBay; Internet banking, etc.

31. EXTERNAL INPUTS:
societal needs;
competitors;
supplier partnerships;
distributors;
customers;
strategic alliances.
EXTERNAL INPUTS:
scientific and technological
development;
competitors;
suppliers;
customers;
university departments.
Organisation andOrganisation and
business strategybusiness strategy
Marketing
Marketing
EXTERNAL INPUTS:
macro factors
ROI
costs;
competition.
Organisation’sOrganisation’s
knowledge baseknowledge base
accumulatesaccumulates
knowledgeknowledge
overover
timetime
Researchandtechnology
Researchandtechnology
InnovationInnovation
ManagementManagement
frameworkframework
New productsSourceSource: Trott, 2005: Trott, 2005

32. • Voted world’s best airline inVoted world’s best airline in
surveys by travel magazinessurveys by travel magazines
• First-to-marketFirst-to-market
strategy for manystrategy for many
yearsyears
• More modern aircraft offering:More modern aircraft offering:
– larger than average seatinglarger than average seating
– first in-flight phones and faxesfirst in-flight phones and faxes
– Led in the introduction ofLed in the introduction of
electronic ticketselectronic tickets
– Flexible for flight confirmationsFlexible for flight confirmations
by phone, fax or emailby phone, fax or email
• Staff receive longer and moreStaff receive longer and more
detailed trainingdetailed training
– Visit senior citizens’ homesVisit senior citizens’ homes

33. 1.1. Market-based view of innovation :Market-based view of innovation :
market conditions provide the context
which facilitates or constrains the extent of
the firm’s innovation activity
(Slater & Narver, 1994; Porter, 1980, 1985).
2.2. Resource-based view of the firm :Resource-based view of the firm :
a firm’s own resources provide a
much more stable context in which to
develop its innovation activity, and to
shape its markets in accordance to its own
view (Tidd et al., 2001; Shavinina, L.V. (ed.)
(2003); Patel, P. and Pavitt, K. 2000).
3.3. SerendipitySerendipity
Innovation is all due to luck and good
fortune

34. ► BackgroundBackground
““NTT DoCoMo Japan – partnerships for innovation”NTT DoCoMo Japan – partnerships for innovation”Goffin,K. & Mitchell, R.Goffin,K. & Mitchell, R.
(2005)(2005) Innovation Management – Strategy and implementation using theInnovation Management – Strategy and implementation using the
pentathlon frameworkpentathlon framework. Palgrave Macmillan. Palgrave Macmillan
Group DiscussionGroup Discussion
 30 mins discussion in Groups of 730 mins discussion in Groups of 7
 5 mins presentation by Group representative5 mins presentation by Group representative
► Individual AssignmentIndividual Assignment
 Individual coursework (contributes to 15% overall mark of course)Individual coursework (contributes to 15% overall mark of course)
 2 pages written in English in WORD format2 pages written in English in WORD format
► SummarySummary
► Issues discussedIssues discussed
► Solutions proposedSolutions proposed
34

35. 35
• How can partnerships and alliances help a company in theHow can partnerships and alliances help a company in the
service sector achieve its innovation strategy?service sector achieve its innovation strategy?
• How can service and product strategies of different companiesHow can service and product strategies of different companies
be aligned to target specific customers segments?be aligned to target specific customers segments?
• How can a service provider make it harder for competitors toHow can a service provider make it harder for competitors to
copy innovations?copy innovations?

36. 36
PlatformPlatform
VendorsVendors
ContentContent
ProvidersProviders
HandsetHandset
VendorsVendors
NTT
DoCoMo
Inter-Operability Inter-Operability
Co-marketing Co-marketing
Business
Opportunity
Portal
Functionality
ContentHandsets
Volume
Opportunity
Revenue
Collection
Content / Handset Integration
i-modeCollaborationConceptv2.ppt

37. ““Innovation : the successfulInnovation : the successful
implementation ofimplementation of novelnovel
and appropriate ideasand appropriate ideas
within an organisation.” 3Mwithin an organisation.” 3M
37

38. Robbins S.P. & Coulter M.(2007) Management(9th
edition) Pearson.
Trott,P. (2008). Innovation management and new
product development, (4th
edition). FT Prentice Hall.
Goffin,K. & Mitchell, R. (2005) Innovation
Management – Strategy and implementation using
the pentathlon framework. Palgrave Macmillan
Nonaka,I. & Takeuchi, H. (1995). The Knowledge-
Creating Company. Oxford University Press.
Chesbrough, H. (2006). Open Innovation – The
new imperative for creating and profiting from
technology. Harvard Business School Press
38