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CHAPTER 11 STUDY NOTES ANNOTATED LEARNING OBJECTIVES After studying this chapter, students should be able to: 1. Define organizational change and explain the forces driving innovation and change in today’s organizations. Organizational change is defined as the adoption of a new idea or behavior by an organization. Forces for change exist in both the external environment and within the organization. External forces originate in all environmental sectors including customers, competitors, technology, economic, and international events. Internal forces for change arise from internal activities and decisions. Demands by employees, labor unions, and production inefficiencies can all generate a force to which management must respond with change. Rapidly increasing competition in all areas is driving the need for innovation. One vital area for innovation is introducing new products and technologies. These new products and technologies, in turn, require substantial changes in virtually every aspect of organizations. 2. Identify the three innovation strategies managers implement for changing products and technologies. The three innovation strategies managers implement for changing products and technologies are exploration, cooperation, and entrepreneurship. Exploration involves designing the organization to encourage creativity and the initiation of new ideas. Cooperation refers to creating conditions and systems to facilitate internal and external coordination and knowledge sharing. Entrepreneurship means that managers put in place processes and structures to ensure that new ideas are carried forward for acceptance and implementation. 3. Explain the value of creativity, idea incubators, horizontal linkages, open innovation, idea champions, and new-venture teams for innovation. Creativity is the development of novel solutions to perceived problems. Creative individuals develop ideas that can be adopted by the organization. If creative conditions are successful, new ideas will be generated that must be carried forward for acceptance and implementation. An idea incubator is run entirely in-house but provides a safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics. Employees with good ideas can take them to the idea incubator for consideration and development, rather than having to shop their ideas all over the company and hoping someone pays attention. Horizontal linkages provide a framework for shared development of innovations among several departments. This approach saves both time and money in the development of innovations by increasing coordination among departments. Open innovation means extending the search for and commercialization of new ideas beyond the
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boundaries of the organization and even beyond the boundaries of the industry. Most companies generate their own ideas in house and then developed, manufactured, marketed, and distributed them, a closed innovation approach.
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