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                                        Swiss-AIT-Vietnam Management Development Programme
c/o HCMC University of Technology, 268 Ly Thuong Kiet, Dist.10, Ho Chi Minh City, Vietnam Tel: (84-8) 865 08 80 Fax: (84-8) 865 08 81 E-mail: /

  Course SM 2.01:                      Management of Technology

  Case No. 1                           THE BEST LITTLE COOKIE HOUSE AROUND

  A chocolate chip cookie is a pretty straightforward thing- -a bit of flour, a bit of sugar, a bit of
  shortening, a whole lot of chocolate chips, and not much more. But, there has been a major
  revolution in the chocolate chip cookie industry. This revolution was brought about by a young
  woman, Debbi Sivyer Fields, whose chocolate chip history goes back to her early years, when she
  baked just for family and friends.

  Mrs. Fields opened her first cookie shop in Palo Alto, California, in 1977. By 1980, she had
  established shops in other cities throughout northern California and Hawaii. During this expansion,
  she maintained control and personal involvement in all of them, and her success was as much a
  tribute to the personal relationship she felt with her customers and her natural business savvy as to
  the quality of her cookies. As she began her expansion to other parts of the country, however, it
  became apparent that conventional methods of conducting a far-flung business would not allow her
  to maintain the personal control and involvement in day-to-day operations that she wanted. At that
  time, she felt that franchising, for example, would involve transferring a degree of authority to others
  and a concomitant loss of control over the quality of the cookies and the service, which was
  unacceptable to Mrs. Fields. So, initially, the challenge became one of cooking up an organizational
  and operational structure to meet Mrs. Fields' requirements.

  Enter Mr. Fields. (Yes, folks, there is a Mr. Fields behind the cookie dough, too.) Randy Fields is an
  economist, and together the Fields have developed a business that, according to a company
  spokesperson, included 248 domestic Mrs. Fields cookie stores. The Fields solved the early problem
  of retaining direct control over their far-flung enterprises by developing a very flat organizational
  structure and an effective information system.

  The Fields believes “ that the less hierarchy the better… that with hierarchy, the larger an
  organization, the more managers turn to managing people and less managing key business
  processes”. Thus employees have titles and job responsibilities, but there is no official organization
  chart. Communication takes place between people as needed, regardless of title or position.

  Each outlet has only one administrative person, a store manager. A district store manager (DSM)
  supervises several store managers and reports to a regional director of operations (RDO). The RDOs
  report to two directors of operations, who in turn report to Mrs. Fields.

  One regional director described her job and the company’s management philosophy as follows:
  I manage six district managers, each of whom manages six stores. I also manage a store myself, so I
  know what my district managers need to know. To do this I print out a bout 300 pages of report a
  day. My district managers get about 50 pages a day. Daily, I work with my controller in Park City to
  discuss any accounting differences in my stores.

My store managers are on average 20 to 25 years old and have one to two years of college
education. The turn over of store managers is about 100% per year. When they leave, they usually
return to college. I think our turn over is above average for this kind of business, however.

The regional and district managers make marketing decisions for the stores, and store controllers at
the headquarters in Park City, Utah, manage the financial affairs. Each day, the store controllers
look at the computer reports of sales at each store. They also note the trends, monitor unusual
conditions, any problems and contact field managers for explanation. Within 24 hours, the controllers
relay their findings to Mrs. Fields via a vice president.

The objective of being able to run each store essentially as Debbi ran the original Palo Alto store
guided the implementation of information technology at Mrs. Fields’.

The MIS (Management Information Systems) people at Mrs. Fields implement and support the
personal computer arrangement in each store, develop financial software, and manage
telecommunications equipment and a voice-mail system. The strategic goal of the MIS area,
according to Randy Fields was, “to put as much decision making and intelligence into the store level
PC as is necessary to free the managers to do those things that uniquely people do”. Randy believed
that it was “demeaning for people to do what machines can do”. Store managers, he felt, has better
things to do than paper work –such as selling cookies.

With respect to systems development at Mrs. Fields, MIS director Paul Quinn explained
Anyone can come to me or any of my MIS people and ask for anything. Before a proposed system is
accepted, it is subjected to a cost /benefit analysis and then justified according to one of three
criteria: 1) Does it offer an economic advantage? 2) Will it promote new sales? 3) Does it have any
strategic importance? “Strategic” in this industry means promoting sales and controlling labour and
food costs.

Mr. Fields sees information systems as a way for the company to grow without incurring the cost of
expanding staff. The Fields consistently encourage their people working with the technology to think
up new, creative applications.

The original MIS for Mrs. Fields has evolved into a "spin-off" business in its own right, Fields
SoftWare Group, headed by Mr. Fields, which markets its software product ROI (Retail Operations
Intelligence) to other multi-unit retail and service organizations.

The computer system that is installed in each store has many applications. For example, it is used to
monitor the financial records, schedule operations in the store, provide marketing support, make
hourly sales projections, record employee work hours, track inventory, interview applicants, and
support electronic mail. At the beginning of each workday, the store manager enters the information
for that day, such as day of the week, any special event in the area that might influence sales, and
Weather conditions, into the computer. The computer program responds with specific questions, then
uses a mathematical model to outline the day's schedule. For example, it tells the manager how
many sales per hour to expect and how many cookies per hour to bake. Next, the manager enters
the types of cookies to be made that day, and the system prescribes the number of batches to mix,
when the batches are to be mixed, and when any unused dough must be discarded. For example,
the following mixing information

When to mix                   Length of time         # of batches to mix

8AM                           10AM- 3PM                     31
1PM                           3PM-6PM                       7

would tell the manager: ”At 8 AM mix 31 batches of cookies. Use the dough from 10 AM to 3 PM. At
that time the dough is no longer up to our standards, so discard any remaining dough. At 1 PM mix 7
batches of dough for use from 3 to 6 PM”.

Sales are entered into the computer throughout the day, and the system adjusts its projections and
the mixing schedules accordingly. The system also makes suggestions. For example, if the customer
count was down, the system may suggest doing some sampling. If, on the other hand, the customer
count was acceptable, but the average sales was down, the system might recommend that more
suggestive selling be done. Managers could follow or disregard these suggestions. From sales and
inventory information stored in the computer, the information system computed projections, and
prepared and (after being checked by the store managers) generated orders for supplies. A single
corporate database tracked sales in each store and produce reports that were reviewed daily.
Headquarter thus learned immediately when a store was not meeting its objective and was able to
respond quickly.

The information system has been explicitly designed to reflect the manager’s perspective, according
to Debbi. “Asking store managers making salaries of $20,000 –25,000 annually to meet annual quota
of a half million dollars,” she explained, “ like asking them to fly to the moon. They can not really
relate to those big numbers. But if you break it down to $50 or $60 an hour, the quotas become easy
goal. Even if an hourly quota is missed by $5 or $6, our employees feel they can easily make it up the
next hour.

The most efficient way for managers to communicate is via electronic mail, but they also daily call
their phonemail box in Park city for audio messages. Thus, the managers do not simply read memos
from the president, but often personally heard her voice.

Mrs. Fields' information system also plays an integral part in the hiring of employees. The information
submitted by a job applicant is entered into a program that compares that applicant's qualifications
with those of Mrs. Fields' employees. The program looks for a "fit" with the corporate culture, then
advises the manager whether to call the applicant back for a follow-up interview, which is conducted
interactivelv with the computer. The program once again recommends whether to hire the applicant,
but the manager may appeal the recommendation directly to the personnel department. In addition
to the Day Planner and Interview applications, the capabilities of the information system most
frequently used by store managers include: Form Mail, a menu-driven application used primarily for
messages between the manager and staff; Labor Scheduler, an expert system that schedules the
staff; Skills Test, a set of multiple-choice tests for employees being considered for raises and
promotions; and Time Clock, a program that enables staff to punch in and out and that also
facilitates the payroll process.

In April 1987, Mrs. Fields plans to acquire from another company a 119 store French
bakery/sandwich chain. It is, according to Randy, a logical extension for the bakery aspect of
Mrs.Fields’Cookies. The focus of the company expanded store strategy is Mrs.Fields’Bakeries.
“These”, explained Randy,” are destination outlets combining full lines of both cookies and bakery

What was a cookie company to do? Explaining what he meant by “having a consistent vision” Randy
Fields has said that he could has described as far back as 1978, when he first began to create it, the
system that exists today. But he doesn’t mean the machines or how they are wired together. MIS in
this company, he says, has always had to serve two masters. First, control. Rapid growth without
control equals disaster. We needed to keep improving control over our stores. And second,
information that lead to control also lead to better decision making. To the extent that the information
is then provided to the stores and field management level, the decisions that are made there better
and they are more easily made.

The Fields had accommodated past expansion by modifying the information system. Is that what is
needed now? Randy wondered as he walked purposefully through corporate headquarters.

Study Questions

       1. In what way has the management information system created a competitive advantage for
       Mrs. Fields?

       2. How might the management information system contribute to a reported 100 percent
       turnover of store managers?

       3. Will the management information system support or inhibit the expansion of Mrs. Fields'
       outlets? Why?


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