Change Management Automotive Industry Summary Presentation Summary V.Final Dotx

2011

MGX 9720 THE INNOVATORS PRESENTATION SUMMARY

Angela Soh
Innovation and the Global Arthur Wai Ho Cheng
Automotive Industry – Kim Ross

Presentation Summary Nutchapol Jatursrivilai

A 007 Perspective THE INNOVATORS
6/1/2011

All innovation involves
change. Not all change
involves innovation.

Introduction

The following summary report outlines content explored in the ‘Innovation and The Global
Automotive Industry’ group presentation. The outline reports on relevant change theory,
models and findings based on case studies, research and a class exercise; demonstrating the
impact innovation has on the Global Automotive Industry and constituent organisations. The
presentations findings support the understanding that innovation leads to change and the
change management process has significant implications for managers. Ultimately managers
and organisational stakeholders collectively need to address innovation strategically, ensuring
long-term sustainability, business growth and organisational success.

Innovation and creativity are inextricably linked and it is useful to review definitions of both to
understand how. Robbins et al. (2006) defines creativity as “The ability to combine ideas in a
unique way or to make an unusual association”, going on to define innovation as “turning the
outcomes of the creative process into useful products, services or work methods”. Whilst the
definition of innovation and creativity differ, uniqueness and inventiveness underpins all
organisational and especially automotive innovation. In essence innovation involves taking a
creative idea and making it useful. Therefore without creativity innovation cannot exist and
innovation is vital for survival in today’s competitive and rapidly changing global economy.

The importance of innovation was highlighted in the 2009 Innovation Tools survey (global
study), where the company asked senior executives to identify; firstly whether they thought the
climate for innovation has improved or got worse and secondly how their companies
responded in terms of spending in relation to innovation. Interestingly a significant portion of
companies continued to spend on innovation or actually increased spending during a global
recession (http://www.innovationtools.com/Reports/MS94N6/Innovation_Climate_Survey_Results_3-
09.pdf 2009).

Inevitably in order to benefit from innovation, creativity must be fostered and forecasted in
many ways within organisations. Leadership styles also have an impact on the efficacy of
cultural innovation, whereby transformational leadership is associated with greater creativity,
the ability to inspire and support ‘out of the box’ (Cangemi & Miller, 2007) thinking, which is
fundamental to innovation. Transformational leaders commonly support employees need for
flexibility, freedom and resources, further stimulating the creative process through the use of
reward systems. Innovation also directly results from effective communication and the ability
to motivate stakeholders (Giley et al., 2008).

MGX 9720 The Innovators Presentation Summary

Innovation can also be categorised according to the frequency and extent of the innovation or
simply referred to by its effect. Today automotive industries engage in Radical, Technical or
Transformational innovation processes, which involve new processes or product altogether, in
order to achieve an innovation quantum leaps in terms of new outcomes. However there are
far-reaching consequences of innovation affecting many areas of a business, through catalysing
rapid and changing business processes. Alternatively incremental innovation allows change to
create sustained innovation through managing change processes over time, often minimising
disruption allowing companies to remain responsive.

Oncemore the automotive industry globally is well known for the application of sustainable
innovation, when companies create a change in a product or service or relative to managing
innovation, technical/sustainable innovation results. The impact on the way that the final
product or service is created doesn’t change, however manufacturing philosophies such as
“Lean” or “Six Sigma” approaches usually result in more sustainable manufacturing processes.

Discussion

Sustainable innovation in the automotive industry

In today’s rapidly changing global economy and environment, automotive companies are opting
for Sustainable Innovation, which surpasses the design of ‘green technologies’, involving the
development of supportive social and normative frameworks for organisational innovation and
change. Sustainable innovation supplements and reinforces the adoption and distribution of
sustainable technologies deriving sustainable value from holistic economic, social and
environmental factors benefitting all stakeholders involved (Osch, Bohnsack & Avital, 2010).

Evidently the automotive industry is an initiative target for government environmental
regulation. Hence, the automotive industry as a whole benchmarks innovation throughout its
management of resources, industrial development and processes. Today’s automotive
management of innovation occurs through change management strategies offering a radically
different approach than traditional approaches. Today change management strategies underpin
organisational innovation programs which support organisational sustainability (Roome, 1994,
as cited in Osch et al., 2010).


According to current automotive research, sustainability is a consumer responsive value and a v
iable influencer in customer choice. For example recent demands for innovative cars for evolvin
g megacities include (Wyman, 2007).:

 Easy switching between relaxation and driving positions
 Emphasis on passenger entertainment, GPS and information systems
 Effective smog protection and air conditioning
 Nearly zero emission

Consumer awareness and changing trends identified through strategic forecasting also impact
the innovation process. Subsequently the growing numbers of automotive companies striving
to develop eco-friendly cars equates to a global industry ‘driven’ by change managed
innovation cycles. At General Motors (GM) and Nissan there is a significant development focus
on electric vehicles, whilst Toyota is producing hybrid vehicles, which is vastly different than
Daimler’s fuel-cell vehicles. Due to consumer and market demand it stands to reason that there
are fifty one new models of plug-in electric vehicles scheduled into production by 2012.

Interestingly, a change in the global environment has stimulated automotive sustainable
innovation into a rapid change/adapt cycle. For instance, GM’s Hy-Wire₂, Toyota’s Fine-N₃, and
Nissan’s Leaf demonstrate that sustainable technologies offer efficient energy usage, zero
emissions, improved safety, quietness (inside and out), customisation possibilities, and
potentially minimal maintenance, increasing the social value of automotive technological
advancement. Inextricably sustainable innovation and change management are part of the
same organisational development cycle. However, in order to allow for the diffusion of
innovative alternatives, multiple complementary social and institutional measures such as
aligning infrastructure and meeting new functional requirements are vital to the success of
reformulating cognitive and normative frameworks for individual and organisational change
(Osch et al., 2010).

Change Management theory and models for innovation in the automotive industry

Given that the world and automotive economy is in the midst of a significant transition into
sustainable eco-friendly technologies, it’s logical that the automotive industry is globalising to
reduce costs, gain resources, expand markets and develop new products and practices more
readily.

It is for these reasons the automotive industry has adopted like radical, technical and
sustainable Innovative/Change Management strategies in order to address innovation by way
of a structured and systemic approach. Theoretically this involves shifting and transitioning


individuals, teams and organisations from their current state towards a desired future state of
advancement. It’s through change management processes that organisations innovate
culturally through the empowerment of employees towards embracing change, so they can
contribute resourcefully to their current organisational environment.

In addition the measurement of change management processes is vitally important to
innovation improvement. Providing focus and attention on essential factors, illustrating how
resources can be best utilised in goal setting and in monitoring progress. The evaluation of the
effectiveness of change management on innovation, can be identified through analysing root
causes, identifying the sources of error and identifying opportunities for improvement
(Harrington, 1991, Taskinen, 2003).

Automotive Change Management /Innovation processes include (Torppa and Smith, 2011):
 Marketing – to enable communication between various stakeholders
 A visible tracking process on transformation projects
 The use of performance metrics to design appropriate intervention strategies

Whilst change management can be seen as a management and technical process, in actual fact
it’s also a significant transformational cultural process. The emotive impact of change ultimately
affects all stakeholders and in some cases early adopters are affected differently than laggards.
Inevitably the change process impacts organisational stakeholders in various ways (Waddell, D,
M., Cummings, T, G. & Worley, C, G. (2011). The Kubler-Ross model effectively illustrates how
reactions to change result from the inevitable emotive and cyclical indicators of change,
indicating when mechanisms are working in accordance with their purpose. Similarly the impact
on individuals and the organisation at various stages of the innovation change cycle often differ,
influencing innovation dynamics and the adoption of the change process (Gill, R. 2003).


Figure #1.Personal Change Curve – Representing The Kubler-Ross Model Five Stages
Change Management Institute
http://www.change-management-institute.com/Upload/CMI-Competency-Model-010408.pdf

Figure #2 Lewin’s Three Steps (1951) -
http://upload.wikimedia.org/wikipedia/commons/thumb/c/c5/Systems_Model_of_Action-
Research_Process.jpg/450px-Systems_Model_of_Action-Research_Process.jpg

Fortunately action research models such as Lewin's three stage model allows managers to view
and manage the transformation/innovation cycle effectively. Ideally participants have the
opportunity to design action research interventions, getting directly involved with innovation
changes and strategic planning. Lewin’s three step model allows change agents to respond to
organisational trends and behaviours accordingly. Allowing change management practitioners
to address organisational resistance through designing relevant interventions (Brown, D.R. and
Harvey, D. 2006). In real terms change management models offer a structural format to align
strategy with supporting innovation capacities, facilitating transformational leadership,
employee engagement and enablement.
In relation to the rapid global automotive industry transformation. Radical, Technical and
Sustainable innovation directly results from change management intervention strategies
managed well. Specifically with regards to incorporating new technologies, manufacturing
systems, production processes and management programs. Successfully managed innovation
enables stakeholders to perceive, manage and create their own mental models and metaphors
for transformation – in these circumstances change occurs from the inside out and people
champion change by way of their own investment, skill and abilities, not just from external
pressures (the outside in).


Figure #3 Kotters 8 Step Model
http://us4palin.com/wp-content/uploads/2010/05/ss2.png

Lastly, the reinforcement of innovation change management strategy for the long-term is
achieved through applying processes like Kotter’s 8 step model. In these cases change
management processes transforms cultural norms and behaviors, improving the chances of
continual change (Isabella, L. A. 1990).

Practical Exercise
The class exercise provided a useful learning point for all participants, especially with regards to
the value and practical application of Kotter’s 8 step model. Participants in groups of four
discussed one-three Kotter values relative to a chosen organisation. The class insighted latter
conclusions:

Group 1 “Inspirational” - Telstra
 Step One: Create Urgency – This value empowers and brings change into the NOW
 Step Two: Form a Powerful Coalition – Network, communicate and articulate change
 Three: Create a Vision for Change – A shared vision underpins motivation and action

Group 2 “Compelling” - IBM
 Step Four: Communicate the Vision – Communicate, communicate, communicate
 Step Five: Remove Obstacles – Remove blocks and clear the path

Group 3 “Organised” - Morgan Car Company
 Step Six: Create Short-term Wins – Celebrate, recognise and remunerate
 Step Seven: Build on the Change – Where change already exists

Group 4” Purposeful"- ANZ
 Step Eight: Anchor the Changes in Corporate Culture – Develop a value story


Conclusion

In conclusion change management practices in order to support innovation, must be specifically
designed to achieve innovation outcomes through a process of organisational transformation.
Change management strategies can often be construed as a quick fix, however it is vital
organisations and industries like the automotive sector address the implications of the change
in the long-term, when evaluating far reaching and unforeseen disruptions to their innovation
practices. Ultimately change initiatives need to be communicated effectively across an
organisation summoning commitment to change, via compelling evidence/stories for the
benefits of change to be reaped. Similarly resistance of change can come from top level
management (Hughes, 2007), in these circumstances the human and political aspects of change
management need to be well designed and thought-out to overcome such issues.

In order for successful change management to occur relative to innovation, the following
characteristics are desirable (Gill, 2003):

 The benefits to management and realisation to define measurable stakeholder aims,
need to be supported by a business case, taking into account their achievement,
assumptions, risks, dependencies, costs, return on investment, dis-benefits and cultural
issues
 Effective communications need to inform various stakeholders of the reasons for the
change, justifying the benefits of successful implementation and the details of change
 Implementing an effective training scheme for the whole organisation is also viable
 Counter resistance from employees and align them to the organisation’s overall
strategic direction
 Provide personal counseling and alternatives if required
 Monitor the change implementation process and fine-tune as required


Recommendations

As evidenced by the automotive examples outlined in the class presentation case studies, some
of the adverse effects of change are unpredictable and unforeseeable. It is therefore
recommended that managers engage in strategic forecasting activities to assess possible
intervention impacts.

A leading methodology aligned to change management and innovation relates to:

Technology Forecasting

Based on Roman (1970), Forecasting does not have universal methods or procedures, however
organisations can develop their own forecasting techniques to suit unique operational
requirements. In the case of large automotive companies ‘The Delphi’ technique is commonly
used through a consultation process which is based on prediction and commentary from
experts (Rowe & Wright, 1999).

Fordham (2001) suggests that there are 3 Steps of Technology Forecasting which are;

1. Identify the trend: To identify patterns among groups of related products and supply
what is in demand
2. Track Development: Monitor and review the development process to ensure that the
current progress matches with the original need
3. Make your Prediction: Predict trends which will catch on and the one’s that will fall by
the wayside

Lastly managers need to apply strategic forecasting practices to predict possible aspects that
will set future directions. In the case of the global automotive industry, innovation and change
management interventions are focused on sustainability and efficient production line process (a
result of Six Sigma and lean manufacturing processes). It’s also important change management
practitioners take into account trends within the context of OD which include economic,
workforce, technology and organisational factors in order to design effective innovation
interventions for ongoing and sustainable organisational success (Waddell et al (2011).


References
Cangemi, J., & Miller, R. (2007). Breaking-out-of-the-box in organizations: structuring a positive climate for the
development of creativity in the workplace. Journal of Management Development, 26(5), 401 - 410.

Fordham, D, R. (2001) Forecasting technology trends. Strategic Finance, 83(3), pp. 50-54.

Gill, R. 2003. Change management--or change leadership? Journal of Change Management, 3, 307 - 318.

Harrington, H. J. 1991. Business Process Improvement, The Breakthrough Strategy for Total Quality, Productivity
and Competitiveness, New York, McCraw-Hill Book Company.

Hughes, M. 2007. The Tools and Techniques of Change Management. Journal of Change Management, 7, 37 - 49.

Gilley, A., Dixon, P., & Gilley, J. W. (2008). Characteristics of Leadership Effectiveness: Implementing Change and
Driving Innovation in Organizations. Human Resource Development Quarterly, 19(2), 153 - 169.

Innovation Tools (2009), Innovation Climate Survey, located at:
http://www.innovationtools.com/Reports/MS94N6/Innovation_Climate_Survey_Results_3-09.pdf

Osch, W. V., Bohnsack, R., & Avital, M. (2010). From green IT to sustainable value: The path-dependent
construction of sustainable innovation. Academy of Management Annual Meeting Proceedings.

Robbins, S.P., Bergman, R., Stagg, I., Coulter, M. Foundations of Management. 4e 2006 Pearson Education,
Australia.

Roman, D, D. (1970) Technological Forecasting In the Decision Process. Academy of Management Journal. George
Washington University, 13(2), pp. 127-138

Rowe & Wright (1999) The Delphi technique as a forecasting tool: issue and analysis. International Journal of
Forecasting, 15(4)

Taskinen, T. 2003. Improving change management capabilities in manufacturing: From theory to practice.
Production Planning & Control: The Management of Operations, 14, 201 - 211.

Torppa, C. B. & SMITH, K. L. 2011. Organizational Change Management: A Test of the Effectiveness of a
Communication Plan. Communication Research Reports, 28, 62 - 73.

Waddell, D, M., Cummings, T, G. & Worley, C, G. (2011) ‘Future directions: Change in a global setting’,
th
Organisational Change Development & Transformation, 4 Edition, Cengage Learning, Victoria, pp.430-440

Wyman, O. (2007). A comprehensive study on innovation in the automotive industry:
Oliver Wyman Automotive

Images
http://www.change-management-institute.com/Upload/CMI-Competency-Model-010408.pdf
http://upload.wikimedia.org/wikipedia/commons/thumb/c/c5/Systems_Model_of_Action-
Research_Process.jpg/450px-Systems_Model_of_Action-Research_Process.jpg
http://us4palin.com/wp-content/uploads/2010/05/ss2.png


Change Management Automotive Industry Summary Presentation Summary V.Final Dotx

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