Change Management and Innovation: Research Review

Introduction

Organisations exist in a constantly evolving environment, warranting change. Organisational change occurs as a result of factors such as industry and market shifts, technological advances, socioeconomic changes, and political and regulatory shifts (Hayes, 2014). Adapting to change is a crucial ingredient of success in today's world. Indeed, examples of previously powerful organisations that have declined or collapsed due to failure to adapt are not uncommon. Nokia, BlackBerry, Motorola, Kodak, Sears, the U.S. Postal Service, Blockbuster, Yahoo, and Xerox are ideal examples. These organisations failed to innovate and embrace change, leading to either acquisition by other companies or outright collapse.

In an ever-changing world, organisations must remain innovative — they must embrace change by introducing new products, services, processes, and/or structures (Euchner, 2013). This paper critically evaluates research on change management. Following a comprehensive definition of the field, attention is paid specifically to innovation in change management as well as the future direction of change management research.

Defining Change Management

Change management within the context of organisations essentially denotes the process of initiating, implementing, and monitoring change (Hayes, 2014). It is the process of managing the redirection or redefinition of organisational resources, processes, or other aspects that substantially alter how an organisation operates. Change management is further defined as the management of transition from one state to another (Cummings & Worley, 2013). The process is anchored in diverse disciplines, including behavioural science, sociology, psychology, and information technology (Cameron & Green, 2012). Tremendous scholarly advancements have been made in the field since the 1980s, and change management is now a major subject in organisational behaviour. Scholarly work has focused on issues such as reasons for change, change implementation, change evaluation, antecedents of successful change management, and change management challenges.

Change may involve introducing or terminating products or services, pursuing or withdrawing from markets, reorganising business divisions, adopting a new organisational structure, introducing new processes, and so forth. These changes may be driven by technological, economic, political, industry, and socio-cultural factors (Cameron & Green, 2012; Cristina, 2013). For instance, technological advancements have led organisations across diverse sectors to integrate social media into customer relationship management and marketing processes. Equally, improved economic growth in developing countries has presented multinational organisations with significant market expansion opportunities. Irrespective of the reason, organisational change is mainly intended to enhance internal efficiency, increase competitive advantage, and improve bottom-line performance (Hayes, 2014).

Scholarly work has also produced a range of change management models. Popular models include Kotter's 8-step model, Kurt Lewin's unfreeze-and-freeze model, McKinsey's 7-S model, and Deming's plan-do-check-act (PDCA) model (Kotter & Schlesinger, 2008; Hayes, 2014). Though each model is unique, there are considerable similarities among them. They depict change management as a systematic process that generally involves preparing for change, mapping the desired future state, addressing obstacles that may hinder change, executing change, monitoring progress, and embedding change within the organisation's culture. Even so, change management remains a difficult undertaking for many organisations. At times, change may not produce the anticipated outcomes; at other times it may be abandoned before completion, leading to wastage of time, effort, and resources (Cameron & Green, 2012). All in all, if effectively managed, change can be highly beneficial to an organisation.

Innovation in Change Management

An important aspect of change management relates to innovation. Change largely encompasses changing how things are done within an organisation or introducing better products and processes — and this is the core of innovation. Simply put, innovation is a key driver of organisational change (Euchner, 2013; Chen & Adamson, 2015). Organisations cannot survive in a constantly changing world unless they innovate (McKinley, Latham & Braun, 2014). They must pursue new business models, eliminate wasteful processes, adopt technology, and improve their products or services. Innovation is about taking advantage of internal and external factors to become more competitive in an ever-changing environment. For instance, if a mobile phone manufacturer makes its handsets more physically appealing, it leverages shifts in consumer preferences to gain competitive advantage in a fiercely competitive industry. Similarly, a financial firm that introduces online banking takes advantage of technological advancements to improve the customer service experience. These examples illustrate how change and innovation are heavily interconnected.

The topic of innovation and change management is premised on a number of theories beyond those previously mentioned. An important one is organizational learning theory, which views organisations as learning entities that continuously acquire knowledge. Knowledge acquired in the present and in the past helps an organisation navigate an increasingly uncertain future. Based on this theory, adapting to change requires learning — an organisation that successfully implements change is one that learns continuously. Internal and external triggers motivate organisations to invest in the new learning required for innovation (McKinley, Latham & Braun, 2014; Hsu, 2015). External triggers may include customer needs, competition, new technology, demographic shifts, economic factors, industry changes, environmental concerns, and regulatory shifts. Internal triggers may include operational problems, inefficiency, organisational growth or decline, and changes in leadership. Essentially, these events provide an opportunity for organisations to learn, innovate, and change. As Tidd & Bessant (2013) put it, innovation is a response to change triggers.

The influence of internal and external factors means that an important step in innovation implementation is examining both environments (Hayes, 2014). Internal factors are those the organisation can control, while external factors are those it cannot. For instance, an organisation controls the type of employees it hires but has no control over government regulation. Analysis of the internal environment enables the organisation to understand its strengths — its resources, competencies, and capabilities — as well as its weaknesses, such as shortcomings and inefficiencies. Analysis of the external environment enables the organisation to identify available opportunities and threats that may hinder their exploitation. With knowledge of both environments, the organisation can utilise its strengths to exploit opportunities while overcoming weaknesses and minimising threats (Tidd & Bessant, 2013). For example, in response to environmental concerns, an automobile firm with strong research and development (R&D) capabilities may introduce electric vehicles, gaining competitive advantage in the process.