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A Principal's decision to change the “graded” organization of pupils in a large primary school in New South Wales forms the basis for this report. Using the Clark and Guba classification of processes related to and necessary for change in education, the Principal enlists the co‐operation and collaboration of teachers to change the existing form of grading. The decisions to innovate and the types of innovation to be adopted are made within the framework of a permissive organizational climate. Decision making is identified as the key factor in the process of innovation. Suggestions are made for its inclusion in the Clark and Guba model.

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