Please read the case, “Allentown Materials Corporation: The Elec- tronic Products Division (Abridged)” (page 213), and the student essay below. After the essay, you’ll fi nd a discussion of its organiza- tion, content, and writing style.
Case: “Allentown Materials Corporation: The Electronic Prod- ucts Division (Abridged)”
Question: Explain the two- year decline of the Electronic Prod- ucts Division and suggest measures to reverse it. The word limit is 1,500. (Note: the author used a few words less than the limit.) Don Rogers faces a problem: The Electronic Products Division’s performance has plunged in the last two years. Its reputation for delivery and service is slipping, morale is low, and employees engage in unending confl ict. Many of these issues can be traced to external causes, Rogers’s poor leadership, the dysfunction of EPD teams, a clash of cultures, and the lack of corporate support.
External Causes
EPD’s operating results have plummeted in the last two years. The markets EPD serves shifted rapidly toward lower prices and mar- gins, and competition increased. The highest- margin products are new products, but EPD’s product development is paralyzed. That puts EPD at a major competitive disadvantage and partly explains the operating results.
Rogers’s Poor Leadership
Rogers’s inability to lead is a major cause of EPD’s decline. The division lost its authoritarian leader suddenly at a time of intense external pressure. Rogers acts as a technical manager and doesn’t recognize that EPD is suff ering from a leadership vacuum. He has made changes at EPD, but they seem to have had mostly negative eff ects. Measuring Rogers’s performance against the Kotter model of change management, he has failed in virtually every respect.
• Rogers has done nothing to spread a sense of urgency even though the division is in crisis, both externally and
internally. In fact, by attending product development meet- ings and behaving as a technical manager focused strictly on details, he is signaling that the situation is normal.
• Leaders need partners to create change, but Rogers hasn’t tried to build a coalition. He is often absent from the divi- sion, giving him little time to form relationships in EPD. He has made the situation worse by jettisoning experienced managers who might have been allies. There is no evidence that he’s tried to build strong relationships at EPD.
• Rogers has no vision for EPD. Bennett didn’t need one because he made all of the major decisions. The division clearly needs a unifying vision so that everyone works toward the same goals.
• The division is littered with obstacles, yet Rogers seems oblivious to them. Most critical is the fact that confl icting incentives are impeding work and sharpening existing ten- sion and confl icts.
• Finally, EPD desperately needs quick wins to restore morale and confi dence. The New Product Development group is a potential vehicle for them. Rogers seems detached from the purpose and output of the group. He seems to be more con- cerned with avoiding confl ict than with asserting account- ability in the face of the ubiquitous blaming and excuses.
The Dysfunction of EPD Teams
EPD teams are contributors to the division’s problem. The Google model of team eff ectiveness helps explain how their lack of perfor- mance has reduced EPD’s competitiveness.
• There is no evidence that employees feel enough psycholog- ical safety to speak out. In product development meetings, participants don’t discuss the constant slippage in deadlines and lack of productivity. Just as important, no one off ers solutions to the problems that dominate discussions.
• Dependability is a major issue with the teams. Product devel- opment continually misses deadlines and no one seems to care. One manager went so far as to say that he knew he
should be held accountable, but knew Rogers wouldn’t do that. Dependability is also an issue between the functional groups. All of them believe that they can’t depend on the others. For instance, manufacturing thinks that sales is ask- ing the impossible in terms of service and delivery and isn’t bringing in orders that manufacturing can make profi tably.
Sales is frustrated that manufacturing is much more inter- ested in margins than its customers. Marketing doesn’t have the experience to carry out its mission.
• EPD has a structure, but it means little because it has no clarity. A major structural fl aw encourages confl ict: the groups’ incentives are in confl ict. Manufacturing managers are compensated on the basis of gross margin, while sales- people are compensated on volume. Each works to maximize its incentives, not serve the customer. New Product Develop- ment seems to have no incentives unique to its mission. The participants pursue the interests of their respective depart- ments. Finally, some of the division’s team leaders work in diff erent locations than their teams.
• None of the teams is having a positive impact. They don’t recognize that they’re interdependent and can have impact only when they collaborate. This is probably an unfortunate legacy of Bennett. He controlled EPD and probably saw no need to spread the message of collaboration. With the dis- appearance of centralized control, the impact that seems to matter to each team is getting the other teams to do what they want them to do or justifying their failures by blaming others.
Clash of Cultures
Clashing cultures is another cause of EPD’s problem. Rogers is used to the Allentown culture, which is a close- knit family in which hierarchy doesn’t matter. People discuss problems face– to- face;
there is formal and informal discussion among people at all levels.
He behaves as if the Allentown and EPD cultures are the same, not realizing that Bennett shaped EPD’s culture to suit his author- itarian style of leadership. He created a hierarchy in which he held all the power and made all the decisions. EPD teams have little
cohesiveness, do not discuss problems, and have a great deal of poli- tics, all of which thwart productivity and problem solving. Rogers’s cultural assumption is false, which blinds him to the work he must do to reshape the EPD culture.
Lack of Corporate Support
Rogers isn’t personally responsible for all of the leadership failures.
Senior management of the corporation is culpable. They promoted Rogers, although he had little management experience, and didn’t give him support or training to make the transition. They rec- ommended he move EPD headquarters to corporate headquarters, detaching him from the people he was supposed to be managing.
Action Plan
Rogers needs to change his own priorities, align the groups within the division, and transform the culture from one of confl ict to collaboration.
Short Term
• First, Rogers must understand what he needs to do. He needs to shed responsibilities not directly related to the division. A change process needs a full- time leader. Rogers needs to ask for corporate support— fi rst to lower fi nancial targets in the short term to take unnecessary pressure off the division. He also needs to learn much more about the division by chang- ing his tendency to talk; he needs to listen.
• From day one, he should build a sense of urgency in every corner of the division. Employees seem to be completely dis- connected from what’s happening in the market. He should address all the key people in the division and walk them through the bad business results. He should read a list of issues that need to be solved, putting his leadership at the top of the list, and ask for feedback. He will need to keep repeating this message.
• As part of his eff ort to mobilize the organization, he needs to recruit a group of allies from the functional teams. Together, they should develop a vision that is simple, inclusive, and
actionable. The vision should express the major traits of the new culture. The group should solicit feedback from every- one, regardless of their position in the EPD organization chart. It’s very important to send the message that every- one’s opinion matters in the new EPD. When work on it is fi nished, the vision should be communicated and constantly reinforced.
• Rogers should personally communicate the vision at every facility and let managers know that they need to reinforce it constantly. The vision can channel the frustration many people feel into the energy and commitment to fulfi ll it.
• Product development needs to be fi xed quickly. The old group should be disbanded and a new one created with members from all of the functions who have the needed skills and knowledge. The group should have a clear set of goals and be held accountable. The group needs to meet more frequently, and Rogers should lead it, at least temporar- ily. He should make everyone responsible for innovation and problem solving.
Long Term
• Rogers should bring all of the EPD functions together in one place. Getting everyone to work together is far more diffi - cult, if not impossible, when functions are split apart.
• Changing EPD’s culture can only be accomplished in the long term. However, many of the short- term steps will begin to alter old ways of thinking and acting. Most of the long- term steps will also contribute to cultural transformation.
Rogers should emphasize the cultural values of the vision statement on a regular basis.
• The incentives of all EPD groups should be aligned. Cur- rently, manufacturing and sales are at cross- purposes. They should be compatible with the long- term strategy of the division, as expressed in the vision. The members of the product development team should have incentives specifi c to the goals of the team. As much as possible, compensation and
bonuses should be tied to collaboration and the achievement of divisional goals, such as productivity and profi tability.
• The division lacks leadership at all levels, and Rogers should work to develop new leaders. Younger employees not steeped in the old culture may be the best candidates.
• Rogers should seek the continuing support of corporate for changes he needs to make and keep it informed of progress.