SOLUTIONS AT ALLENTOWN MATERIALS ELECTRONIC PRODUCTS DIVISION

• Created cross-functional project teams for new product development– Corporate OE specialists on team

• Marketing was formally named as integrating function, trained for the role by the OE

• Rogers and staff withdrew from product development projects, become Resource Allocation Team

• Training for Rogers in more directive management style

• Intergroup laboratory meetings were arranged for functional groups with worst relations

• Change in accounting and control– Make marketing a profit center and the plants cost

centers – Get corporate to alter performance standard for

EDP

IMPLEMENTATION ISSUES

• Complaints about teams doing everything– Slowed down decision-making

• Problems in accountability with decision-making decentralized to teams– Frustration on the part of executive team

• Complaints by other groups that Marketing was not up to the job– Best people should lead regardless of area

• Rogers commitment to the change program kept it on track• With training and experience, the teams became more

effective – Improved flow of new products– Improved relations among groups

• E.g., scientists became business-oriented

• Proposed changes in formal accounting/control systems not implemented

• Economy improved in 1994 and business picked up

Allentown Discussion

Congruence model says strategic problems are due to misalignment of the organizational archiecture– poor fit to strategy, environment; poor alignment among parts of organization.

• Problem identification– Problem at gap between strategic goals and outcomes

• First stage– Falling sales– Missing growth targets

• Second stage– Slow product development– insufficient new products– Poor service & delivery– Poor morale

• Third stage– Conflict among functional groups around product development and service

Root problem: poor relations among functional groups.

This is a problem in formal organization. Formal organization is about grouping and linking. Problem of linking or coordination and finding consistent mechanisms

• Strategy

• Of corporation– Leverage capabilities in product development– technologies relating to

glass– and manufacturing » Maturing industries means mktg now the critical capability

– Niche with defense department• EPD

– Use capabilities in glass to get a foothold in consumer electronics and telecommunication

» Initially manufacturing, shift to marketing competence» New products– small modifications

– Lack of clarity, consensus on division goals» Relatively clear group goals

– Environment

• Corporation

– Held to same performance standards as other divisions

– Career tracks for EPD people

– Strong culture of corporation

– EPD decentralized– less tied to corporation

– Different environment, but same structure

• Business conditions

– Old (and still true for corporation)

» Stable demand for products

» Little pressure to develop products quickly

» High margins

» Low competition in their niche

– New

» Intense competition on price, quality, and delivery

» Greater uncertainty

» Short product life cycles

» Fast product development cycles

» Thin and declining margins

– Is the stringent environment the cause of the problems? Or simply increases the pressure to integrate and align.

– Formal organization• Formal structure

– How much differentiation?» How many groups? How interdependent?» Different cultures and goals of divisions» Physical proximity: PD’s focus on process – under plants. PD’s

relations with Manufacturing is good. Mktg located elsewhere.» Mnfg– slow, not risk-taking (more than usual)» Sales– dispersed. Close a deal.

– How much integration» Structural mechanisms:» 1. Hierarchy» 2. Meetings» 3. There was the decentralization to plant level--liaison

» Nonstructural:» Corporate culture

» Marketing as de facto but not formal lead strategic function– prod dev.» Power and status of manufacturing and product development» History & culture of corp» Manu as profit center

– (former) decentralization of division

• Formal systems– Control system (accounting): Measurement and appraisal

» Manufacturing as profit center– gives them club» Marketing as cost? center» Sales evaluated on volume; wants fast delivery to please clients.» People evaluated by functional bosses» Sales orientation of marketing

– People

• New management team brought on by Rogers

• Questionable competence of marketing

– Formerly people in sales

– Mktg people questing competence of sales

• Motivation of manufacturing people to rise in corporation

• Mktg people unmotivated to be coordinators (Moss)

• Rogers as division manager

– A scientist, no a general manager

– Contrast with Bennett who was an entrepreneur

– Smart, may be able to learn

» Overcame service problem

» Took initiative consult Corporate OD

– Informal Organization

• Culture/networks

– Poor alignment between culture of corp with EPD strategy & org

– Weak in division, strong in corporation

– Not risk-taking in corpor or division (due to Bennett?)

– Top team not a cohesive or natural group

– The product development process

• Reciprocal interdependence but independent input, assess viability of project.

• Meetings as a coordination mechanisms

• Rogers helpful but focused on technical issues; not mgt.

• meetings in Allentown each acctg period to coordinate.