Exam Answer — Rondell Data Corporation

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					      HUID 305 4924 40 24                         LEAD Final Exam — Monday, March 22, 2010

Exam Answer — Rondell Data Corporation
Word Count ~ 2,082



Rondell Data Corporation is suffering from an extreme case of an innovative company that has let
the technical aspect of its business processes overwhelm everything else. As a result, although
continual innovation is essential for the company to remain competitive, the culture this has
fostered has increasingly hindered its ability to make the products customers are demanding.
This, combined an increasingly blame driven culture, is causing serious problems and hindering
Rondell‟s ability to ship on time. Forbus, having recently joined the company as manager of ESD
Division (ESD), finds himself at the center of these problems dealing with the conflicting
demands of sales, engineering and production. Most recently, the 802 wide-band modulator,
which was supposed to ship on October 2, slipped by 2 months due to 4 iterations of changes to
iron out bugs between design, production and ESD.

Rondell’s Business

Rondell‟s business is developing and manufacturing leading edge broadcast and data transmission
equipment. Rondell competes by delivering products to unique specifications to its primarily
OEM customer base. Being relatively small1, Rondell‟s competitive advantage is its ability to
innovate and deliver what the customer wants. However, customers have been increasing their
demands for unique products, worsening the strain on Rondell‟s development cycle. This has lead
to delays and decreased customer satisfaction.

Furthermore, it is unclear whether all of the business which Rondell is doing for customers is
profitable —some of its business is probably generating more cost & pain than is justified.
Indeed, net profits have been declining over time.

Overall Organizational Culture & Tensions

The organization houses units of many different cultures with production relatively isolated and
design really dominating the overall organizational culture. Growth has put significant strain on
the formally informal relationships between the departments, however personal contact is still the
key to getting around the organization. There are now significant strains between the key

1 800 people

      HUID 305 4924 40 24                                       LEAD Final Exam — Monday, March 22, 2010

departments, ESD, Production and Sales. Turnover — although low across the organization —
has increased dramatically in ESD as this department has taken the full brunt of the conflicts that
are now arising around product development.

The design department, run by Reeves, is motivated by developing „clever designs‟, but these are
generally not production ready and have little understanding of manufacturing issues. 2 In
addition, design often misses deadlines. However the President, Hunt, is design focused and
doesn‟t appreciate the difficulties of turning these innovations into products3.

The Production department, run by Schwab, is described as “self contained”. There is significant
tension between Production and ESD, particularly over quality control. Having been burnt in the
past, production is hyper-sensitive to design-problems and doesn‟t work collaboratively to help
resolve them.4 This lack of respect for ESD, results from problems under its previous heads.

The Sales department, run by Porter, has become increasing agitated as the problems have
worsened. They dealing with more complaints from customers and now little trust the
development process. Furthermore heavily backed by Hunt, sales frequently makes what other
departments view as “absurd” promises about product features and schedules.

Analysis of Forbus’ Position

Forbus inherited ESD after its three previous heads left each after only a short period of time.
Importantly, the pervious head, Kilman, was seen as a heavy charger, trying to get things done by
brute force and subsequently creating significant frictions resulting in his firing. Thus has the task
resolving these difficult pre-production issues, as well as sorting out the bad will Kilman
generated and he is in a relatively weak position to do all this.

Forbus’ Problem

Although Forbus has the backing of the Hunt, Hunt‟s heart is really with design. Thus the process
changes Forbus might want to instigate may go against Hunt‟s passion. In addition, it is clear that
Hunt does not fully appreciate the depth of the organizational issues, his comment, “as long as
you can talk calmly about the problem, I‟m confident you can resolve it. .” illustrates this.

Furthermore, the recent problems over the manufacture of the 802 have damaged Forbus’
credibility throughout the organization. In addition, Forbus faces three key problems in
running his own department :

2 For example, the tolerances are often too high

3 For example, he insisted in putting relatively late changes into filter circuitry of the 802 model.

4 An example of this is how Schwab handled the issues with the 802 but just sending it back with increasingly sarcastic

     HUID 305 4924 40 24                          LEAD Final Exam — Monday, March 22, 2010

          ESD is decentralized making it difficult to take control and position himself as a
           leader. The 75 people he manages are scattered throughout the manufacturing and
           receiving areas, and aren‟t loyal to him. As the case points out “even Don Naylor in
           QC would rather work [for production]”. Design, which he theoretically is in charge
           of, does not see him as the leader.
          He has a morale problem, that if left unchecked will increase poor performance and
           accelerate attrition. In addition, because of the low esteem, ESD is held in
           throughout the organization, his engineers are ―used below capacity‖ — this is a
           severe problem for him since engineers such as these need to be motivated by the
           excitement of the work.
          His department has been marginalized and has little organization power it is
           sandwiched in the middle between research and production, both of which are run by
           powerful figures.

Furthermore, Forbus must install discipline in the design/production process. However, being
new to the organization, which has deep traditions and is so design centric, he is in a weak
position to put in place the necessary changes.

Other moves so far to resolve issues

These problems have not gone unnoticed and The Executive Committee is an to attempt to
resolve them. However, this committee appears to just act as a forum for people to blame one
another about the disputes and most product debate seems to take place off line and in a fact free
way. It has not resolved the essential problem — the lack of co-ordination between the
departments, and a commonly agreed vision of what the company‟s mission is.



Short Term (day 0 to Week 4)

Forbus must move quickly to restore his credibility, boost morale in his department, and put in
place quick process changes to limit problems in the post-design to production phase. Because of
his position in the organization he must work with others, particularly production, to achieve
broader buy-in.

In the shorter term, he will need to gain buy-in to basic process changes to lessen immediate
problems, and also bring problems “out into the open”. He will also need to persuade others,
particularly Hunt, to start to examine the organizational mission — crucially Hunt must decide
whether he wants be more selective about serving all customer demand.

Goal & Objective           1. Gain buy-in from Hunt, Reeves and Schwab to start pre-
                              production design freeze to enable ESD to resolve more problems
                              with designs before they enter production

      HUID 305 4924 40 24                                     LEAD Final Exam — Monday, March 22, 2010

                                  2. Gain allies, particularly Symmes, who appears to be a natural ally
                                  3. Restore credibility with Hunt, Porter and Schwab after 802
                                  4. Closely align Schwab‟s interests with Forbes
                                  5. Boost morale of ESD engineers before the attrition worsens
                                  6. Strengthen his position to lead ESD
                                  7. Change mode of operation of Executive Committee to examine
                                     problems on a fact basis
                                  8. Persuade Hunt to examine whether all customer work is

Key Assumptions                   1. I assume that the last minute design changes were a key drivers in
                                     the problems encountered, and that once more transparent metrics
                                     are put in place then any skill problems will be discovered
                                  2. In addition, I assume that making „public‟ the impact of changes
                                     should encourage a change in behavior by sales & Hunt
                                  3. Assume that Schwab will “play ball” once the problems are being
                                     addressed — appeal to him by demonstrating an understanding of
                                     the production issues

Strategy & Tactics                1. December 7 – Meet with Symmes to talk thru changes you want
                                     to put in place. Ask him to talk with Hunt about examining the
                                     economics of work being done for customers, particularly should
                                     all the work be done? Is there a potential to charge for engineers
                                     visits? Symmes is in a better position to talk to Hunt about these
                                  2. December 7 – Meet with Schwab:
                                                   i. Apologize for the late design changes on the 802
                                                      which caused all the problems
                                                  ii. Tell him that you‟ve decided to insist on 4 week
                                                      “post design freeze” stage to bug test and prevent
                                                      a recurrence of the 802 problem. It is important
                                                      to gain Schwab’s support to ask Reeves and
                                                      Hunt for this freeze.
                                                 iii. Ask him to give you insight into the scheduling
                                                      process and how you can work together to
                                                      improve it
                                                 iv. Ask him to support a system where the ESD and
                                                      production engineers do job rotation so that they
                                                      can understand one another better and work more
                                                      effectively to resolve problems
                                                  v. Ask him to support the development of post
                                                      design metrics to measure the improvements in
                                                      this process
                                  3. December 9 – Meet with Reeves

5 He has been in the organization substantially longer and appears to be well respected

      HUID 305 4924 40 24                                    LEAD Final Exam — Monday, March 22, 2010

                                                    i. Tell him about the design freeze. It makes sense
                                                       to tell him before Hunt because you are his boss
                                                       and his appears to be supportive. Ask for his and
                                                       tell him you‟re doing to talk to Hunt also
                                                   ii. Seek his support for developing a more formal
                                                       process for deadlines during design phase
                                                  iii. Set up a meeting with John Oats and Reeves to
                                                       ask Oats to develop a formal design deadlines
                                                       system, for roll out in 2 weeks
                                 4.   December 9 – Meet with Hunt
                                                    i. Tell him that it is essential to introduce a design
                                                       freeze stage to ensure that bugs are removed from
                                                       the designs early enough. Schwab should have
                                                       supported this move, so point out that Schwab
                                                       supports it
                                                   ii. Ask for his support in gaining buy in from Sales;
                                                       since it‟s unlikely that Forbes has the credibility
                                                       to do this. Ask Hunt to meet with Sales to discuss
                                                       this change
                                 5.   December 10 – Meet with Porter and Schwab to confirm
                                      design freeze period. Hunt should already have told Porter about
                                      design freeze, the purpose of this meeting is to let Porter know in
                                      detail what changes are going to occur and to “keep him onside”
                                 6.   December 18 – Once buy in on design freeze has been
                                      obtained, and R&D deadlines developed by Oats, meet with
                                      entire ESD department 6
                                                    i. New Post-design process and its impact.
                                                   ii. New job rotation schedule to ensure that
                                                       engineers are working closely with production,
                                                       particularly design engineers
                                                  iii. Ask Oats to present new R&D deadline tracking
                                                  iv. Announce regular bi-weekly (Friday‟s) ESD-
                                                       wide brainstorming in groups on challenges
                                                       currently being faced. This will start to build a
                                                       sense of camaraderie and also to position Forbes
                                                       as the leader
                                 7.   Come to all future Executive Committee meetings with
                                      metrics to focus discussion on problem solving design /
                                      production issues.
                                                    i. Introduce a regular report which is debated at
                                                       each meeting7

6 Schwab should be at this meeting also

7 This report should contain metrics about the current work in process, number of changes, time behind in front of
    deadline, cost of changes etc.

      HUID 305 4924 40 24                                LEAD Final Exam — Monday, March 22, 2010

                                                   ii. Ask Schwab to contribute8

Likely Outcomes /               1. It is likely Schwab will support design freeze; it benefits him and
Main Risks &                       will immediately resolve many of the post-design issues. He may
Contingencies                      be more reluctant to provide public metrics on production, in
                                   which case Forbes should go ahead and just start publicizing his
                                   own metrics, and work to get buy-in later
                                2. Hunt may not agree to it. It is essential Forbes insist — without
                                   a design freeze backed by Hunt, it‟s unlikely Forbes could
                                   succeed in his position. Therefore, if Hunt disagrees he should
                                   say he cannot succeed without it, needs his support and if he isn‟t
                                   going to get it, then he will leave.

Method to monitor               1. Forbes should work together with design and production to put in
success of plan                    place a simple ABC type system to monitor the number, cost and
                                   impact of post design problems. Having these common metrics
                                   will help them work together to improve the process
                                2. The system which Oats develops for tracking R&D deadlines
                                   should be completely transparent to everyone

Medium & Longer Term Action Plan (4 weeks to 12 months)

Forbus should work with Schwab to formalize the pre-production process with metrics. He should
also start to bring in people from production to help work out the bugs in designs. He should
introduce more training into the pre-production department function.

Goal & Objective                1. Bed-down Pre-production process, deadlines & metrics and make
                                   transparent to entire company
                                2. Use these metrics in Executive Committee to get Sales on board
                                   and encourage reduced number of design changes
                                3. Get Schwab more involved in the pre-production process;
                                   something which would have been harder earlier
                                4. Have gained buy in of senior leaders to roll out performance
                                   related pay for hitting schedules
                                5. Ask Executive Committee to change compensation scheme to
                                   reward Sales, Design, R&D and Production engineers for hitting
                                   agreed schedules with bonus (without buy in of Executive
                                   Committee it would be difficult to do this, given overall
                                   organizational culture)
                                6. Support Hunt / Executive Committee in implementing findings
                                   from analysis of customer economics

8 This should be discussed in the Schwab meeting

    HUID 305 4924 40 24                         LEAD Final Exam — Monday, March 22, 2010

Strategy & Tactics

                          1. Having gained credibility with Schwab and Reeves, work with
                             them to set-up joint pre-production test team, consisting of
                             design, pre-production and production engineers on a rotation
                             basis, to test designs at this stage — and spread understanding of
                             production — before full production
                          2. Introduce training for pre-production engineers to improve
                             performance. Closely monitor performance and over time move
                             or fire those who under-perform.
                          3. Appeal to Hunt & Executive Committee to roll out incentives to
                             hit schedules across entire company; this will help ally the
                             interests of sales, design and production.

HUID 305 4924 40 24   LEAD Final Exam — Monday, March 22, 2010