Licensed to: Richard L. Daft VANDERBILT UNIVERSITY Organization Theory and Design NINTH EDITION Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Vice President/Editorial Director: Jack W. Calhoun Vice President/Editor-in-Chief: Dave Shaut Senior Acquisitions Editor: Joe Sabatino Senior Developmental Editor: Emma F. Guttler Marketing Manager: Kimberly Kanakas Senior Production Project Manager: Cliff Kallemeyn Technology Project Editor: Kristen Meere Web Coordinator: Karen Schaffer Art Director: Tippy McIntosh Senior Manufacturing Coordinator: Doug Wilke Photo Editor: Deanna Ettinger Production House: Graphic World Inc. Printer: RR Donnelley Willard, OH Organization Theory and Design, Ninth Edition Richard L. Daft With the Assistance of Patricia G. Lane COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Printed in the United States of America 1 2 3 4 5 08 07 06 05 Student Edition ISBN 0-324-40542-1 Instructor Edition ISBN 0-324-42272-5 ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems, or in any other manner—without the written permission of the publisher. For permission to use material from this text or product, submit a request online at http://www.thomsonrights.com. Library of Congress Control Number: 2005937447 For more information about our products, contact us at: Thomson Learning Academic Resource Center 1-800-423-0563 Thomson Higher Education 5191 Natorp Boulevard Mason, OH 45040 USA Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: About the Author Richard L. Daft, Ph.D., is the Brownlee O. Currey, Jr., Professor of Management in the Owen Graduate School of Management at Vanderbilt University. Professor Daft specializes in the study of organization theory and leadership. Professor Daft is a Fellow of the Academy of Management and has served on the editorial boards of Academy of Management Journal, Administrative Science Quarterly, and Journal of Management Education. He was the Associate Editor-in-Chief of Organization Science and served for three years as associate editor of Administrative Science Quarterly. Professor Daft has authored or co-authored 12 books, including Management (Thomson Learning/South-Western, 2005), The Leadership Experience (Thomson Learning/South-Western, 2005), and What to Study: Generating and Developing Research Questions (Sage, 1982). He recently published Fusion Leadership: Unlocking the Subtle Forces That Change People and Organizations (Berrett-Koehler, 2000, with Robert Lengel). He has also authored dozens of scholarly articles, papers, and chapters. His work has been published in Administrative Science Quarterly, Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Accounting Organizations and Society, Management Science, MIS Quarterly, California Management Review, and Organizational Behavior Teaching Review. Professor Daft has been awarded several government research grants to pursue studies of organization design, organizational innovation and change, strategy implementation, and organizational information processing. Professor Daft is also an active teacher and consultant. He has taught management, leadership, organizational change, organizational theory, and organizational behavior. He has been involved in management development and consulting for many companies and government organizations, including the American Banking Association, Bell Canada, National Transportation Research Board, NL Baroid, Nortel, TVA, Pratt & Whitney, State Farm Insurance, Tenneco, the United States Air Force, the United States Army, J. C. Bradford & Co., Central Parking System, Entergy Sales and Service, Bristol-Myers Squibb, First American National Bank, and the Vanderbilt University Medical Center. iii Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: v Preface xv Part 1: Introduction to Organizations 1 1. Organizations and Organization Theory 2 Part 2: Organizational Purpose and Structural Design 53 2. Strategy, Organization Design, and Effectiveness 54 3. Fundamentals of Organization Structure 88 Part 3: Open System Design Elements 135 4. The External Environment 136 5. Interorganizational Relationships 170 6. Designing Organizations for the International Environment 204 Part 4: Internal Design Elements 243 7. Manufacturing and Service Technologies 244 8. Information Technology and Control 286 9. Organization Size, Life Cycle, and Decline 319 Part 5: Managing Dynamic Processes 357 10. Organizational Culture and Ethical Values 358 11. Innovation and Change 398 12. Decision-Making Processes 441 13. Conflict, Power, and Politics 481 Integrative Cases 517 1.0 It Isn’t So Simple: Infrastructure Change at Royce Consulting 518 2.0 Custom Chip, Inc. 522 3.0 W. L. Gore & Associates, Inc. Entering 1998 528 4.0 XEL Communications, Inc. (C): Forming a Strategic Partnership 543 5.0 Empire Plastics 549 6.0 The Audubon Zoo, 1993 552 7.0 Moss Adams, LLP 566 8.1 Littleton Manufacturing (A) 577 8.2 Littleton Manufacturing (B) 589 Glossary 591 Name Index 601 Corporate Name Index 610 Subject Index 614 Brief Contents Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: vii Chapter 1: Organizations and Organization Theory 2 A Look Inside: Xerox Corporation 3 Organization Theory in Action 6 Topics, 6 • Current Challenges, 6 Leading by Design: The Rolling Stones 7 Purpose of This Chapter, 10 What Is an Organization? 10 Definition, 10 • Types of Organizations, 11 • Importance of Organizations, 12 Book Mark 1.0: The Company: A Short History of a Revolutionary Idea 12 Perspectives on Organizations 14 Open Systems, 14 • Organizational Configuration, 16 Dimensions of Organization Design 17 Structural Dimensions, 17 • Contextual Dimensions, 20 In Practice: W. L. Gore & Associates 21 Performance and Effectiveness Outcomes, 22 In Practice: Federal Bureau of Investigation 24 The Evolution of Organization Theory and Design 25 Historical Perspectives, 25 • Contemporary Organization Design, 27 • Efficient Performance versus the Learning Organization, 28 In Practice: Cementos Mexicanos 32 Framework for the Book 33 Levels of Analysis, 33 • Plan of the Book, 34 • Plan of Each Chapter, 36 Summary and Interpretation 36 Chapter 1 Workbook: Measuring Dimensions of Organizations 38 Case for Analysis: Perdue Farms Inc.: Responding to 21st Century Challenges 39 Contents Preface xv Part 1: Introduction to Organizations 1 Part 2: Organizational Purpose and Structural Design 53 Chapter 2: Strategy, Organization Design, and Effectiveness 54 A Look Inside: Starbucks Corporation 55 Purpose of This Chapter, 56 The Role of Strategic Direction in Organization Design 56 Organizational Purpose 58 Mission, 58 • Operative Goals, 59 Leading by Design: Wegmans 61 The Importance of Goals, 62 A Framework for Selecting Strategy and Design 62 Porter’s Competitive Strategies, 63 In Practice: Ryanair 64 Miles and Snow’s Strategy Typology, 65 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: viii Contents viii Part 3: Open System Design Elements 135 Chapter 4: The External Environment 136 A Look Inside: Nokia 137 Purpose of This Chapter, 138 The Environmental Domain 138 Task Environment, 138 • General Environment, 140 • International Context, 141 In Practice: Ogilvy & Mather 142 Environmental Uncertainty 142 Simple–Complex Dimension, 143 • Stable–Unstable Dimension, 144 Book Mark 4.0: Confronting Reality: Doing What Matters to Get Things Right 144 Framework, 145 Adapting to Environmental Uncertainty 147 Positions and Departments, 147 • Buffering and Boundary Spanning, 147 Book Mark 2.0: What Really Works: The 4 2 Formula for Sustained Business Success 66 How Strategies Affect Organization Design, 67 • Other Factors Affecting Organization Design, 69 Assessing Organizational Effectiveness 70 Contingency Effectiveness Approaches 70 Goal Approach, 71 In Practice: Chevrolet 72 Resource-based Approach, 73 • Internal Process Approach, 74 An Integrated Effectiveness Model 75 In Practice: The Thomson Corporation 78 Summary and Interpretation 79 Chapter 2 Workbook: Identifying Company Goals and Strategies 80 Case for Analysis: The University Art Museum 81 Case for Analysis: Airstar, Inc. 84 Chapter 2 Workshop: Competing Values and Organizational Effectiveness 85 Chapter 3: Fundamentals of Organization Structure 88 A Look Inside: Ford Motor Company 89 Purpose of This Chapter, 90 Organization Structure 90 Information-Processing Perspective on Structure 91 Book Mark 3.0: The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life 92 Vertical Information Linkages, 93 In Practice: Oracle Corporation 94 Horizontal Information Linkages, 95 Organization Design Alternatives 99 Required Work Activities, 99 • Reporting Relationships, 100 • Departmental Grouping Options, 100 Functional, Divisional, and Geographical Designs 102 Functional Structure, 102 In Practice: Blue Bell Creameries, Inc. 103 Functional Structure with Horizontal Linkages, 104 • Divisional Structure, 104 In Practice: Microsoft 106 Geographical Structure, 107 Matrix Structure 108 Conditions for the Matrix, 109 • Strengths and Weaknesses, 110 In Practice: Englander Steel 111 Horizontal Structure 113 Characteristics, 114 In Practice: GE Salisbury 115 Strengths and Weaknesses, 116 Virtual Network Structure 117 How the Structure Works, 117 In Practice: TiVo Inc. 118 Strengths and Weaknesses, 118 Hybrid Structure 120 Applications of Structural Design 122 Structural Alignment, 122 • Symptoms of Structural Deficiency, 123 Summary and Interpretation 124 Chapter 3 Workbook: You and Organization Structure 126 Case for Analysis: C & C Grocery Stores, Inc. 126 Case for Analysis: Aquarius Advertising Agency 129 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Contents ix In Practice: Genesco 149 Differentiation and Integration, 149 • Organic versus Mechanistic Management Processes, 151 • Planning, Forecasting, and Responsiveness, 152 Leading by Design: Rowe Furniture Company 153 Framework for Organizational Responses to Uncertainty 154 Resource Dependence 154 Controlling Environmental Resources 156 Establishing Interorganizational Linkages, 156 In Practice: Verizon and SBC Communications Inc. 157 Controlling the Environmental Domain, 159 In Practice: Wal-Mart 160 Organization–Environment Integrative Framework, 161 Summary and Interpretation 161 Chapter 4 Workbook: Organizations You Rely On 164 Case for Analysis: The Paradoxical Twins: Acme and Omega Electronics 165 Chapter 5: Interorganizational Relationships 170 A Look Inside: International Truck and Engine Corporation 171 Purpose of This Chapter, 172 Organizational Ecosystems 172 Is Competition Dead? 173 In Practice: Amazon.com Inc. 173 The Changing Role of Management, 174 • Interorganizational Framework, 176 Resource Dependence 177 Resource Strategies, 177 • Power Strategies, 178 Collaborative Networks 178 Why Collaboration? 179 • From Adversaries to Partners, 180 Book Mark 5.0: Managing Strategic Relationships: The Key to Business Success 181 In Practice: Bombardier 182 Population Ecology 183 Organizational Form and Niche, 184 • Process of Ecological Change, 185 Leading by Design: Shazam—It’s Magic! 186 Strategies for Survival, 187 In Practice: Genentech 188 Institutionalism 188 In Practice: Wal-Mart 189 The Institutional View and Organization Design, 190 • Institutional Similarity, 190 Summary and Interpretation 193 Chapter 5 Workbook: Management Fads 195 Case for Analysis: Oxford Plastics Company 195 Case for Analysis: Hugh Russel, Inc. 196 Chapter 5 Workshop: Ugli Orange Case 199 Chapter 6: Designing Organizations for the International Environment 204 A Look Inside: Gruner Jahr 205 Purpose of This Chapter, 206 Entering the Global Arena 206 Motivations for Global Expansion, 206 • Stages of International Development, 209 • Global Expansion through International Strategic Alliances, 210 Designing Structure to Fit Global Strategy 211 Model for Global versus Local Opportunities, 211 • International Division, 214 • Global Product Division Structure, 215 • Global Geographical Division Structure, 215 In Practice: Colgate-Palmolive Company 217 Global Matrix Structure, 218 In Practice: Asea Brown Boveri Ltd. (ABB) 219 Building Global Capabilities 220 The Global Organizational Challenge, 220 In Practice: Sony 223 Global Coordination Mechanisms, 224 Cultural Differences in Coordination and Control 227 National Value Systems, 227 • Three National Approaches to Coordination and Control, 227 Book Mark 6.0: Cross-Cultural Business Behavior: Marketing, Negotiating and Managing Across Cultures 228 The Transnational Model of Organization 230 Summary and Interpretation 233 Chapter 6 Workbook: Made in the U.S.A.? 235 Case for Analysis: TopDog Software 235 Case for Analysis: Rhodes Industries 236 Chapter 6 Workshop: Comparing Cultures 239 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Part 4: Internal Design Elements 243 x Contents Chapter 7: Manufacturing and Service Technologies 244 A Look Inside: American Axle & Manufacturing (AAM) 245 Purpose of This Chapter, 247 Core Organization Manufacturing Technology 248 Manufacturing Firms, 248 • Strategy, Technology, and Performance, 250 In Practice: Printronix 251 Book Mark 7.0: Inviting Disaster: Lessons from the Edge of Technology 252 Contemporary Applications 253 Flexible Manufacturing Systems, 253 • Lean Manufacturing, 254 In Practice: Autoliv 255 Leading by Design: Dell Computer 256 Performance and Structural Implications, 257 Core Organization Service Technology 259 Service Firms, 259 • Designing the Service Organization, 262 In Practice: Pret A Manger 263 Non-Core Departmental Technology 264 Variety, 264 • Analyzability, 264 • Framework, 264 Department Design 266 In Practice: Parkland Memorial Hospital 268 Workflow Interdependence among Departments 269 Types, 269 • Structural Priority, 271 • Structural Implications, 272 In Practice: Athletic Teams 273 Impact of Technology on Job Design 274 Job Design, 274 • Sociotechnical Systems, 275 Summary and Interpretation 276 Chapter 7 Workbook: Bistro Technology 278 Case for Analysis: Acetate Department 280 Chapter 8: Information Technology and Control 286 A Look Inside: The Progressive Group of Insurance Companies 287 Purpose of This Chapter, 289 Information Technology Evolution 289 In Practice: Anheuser-Busch 290 Information for Decision Making and Control 291 Organizational Decision-Making Systems, 291 • Feedback Control Model, 293 • Management Control Systems, 293 In Practice: eBay 295 The Balanced Scorecard, 296 Adding Strategic Value: Strengthening Internal Coordination 298 Intranets, 298 • Enterprise Resource Planning, 299 • Knowledge Management, 300 Book Mark 8.0: The Myth of the Paperless Office 302 In Practice: Montgomery-Watson Harza 303 Adding Strategic Value: Strengthening External Relationships 304 Leading by Design: Corrugated Supplies 304 The Integrated Enterprise, 305 • Customer Relationship Management, 307 • E-Business Organization Design, 307 In Practice: Tesco.com 308 IT Impact on Organization Design 309 Summary and Interpretation 311 Chapter 8 Workbook: Are You Fast Enough to Succeed in Internet Time? 313 Case for Analysis: Century Medical 315 Case for Analysis: Product X 316 Chapter 9: Organization Size, Life Cycle, and Decline 319 A Look Inside: Interpol 320 Purpose of This Chapter, 321 Organization Size: Is Bigger Better? 321 Pressures for Growth, 321 • Dilemmas of Large Size, 322 Book Mark 9.0: Execution: The Discipline of Getting Things Done 325 Organizational Life Cycle 326 Stages of Life Cycle Development, 326 In Practice: Nike 329 Organizational Characteristics during the Life Cycle, 330 Organizational Bureaucracy and Control 331 What Is Bureaucracy? 332 In Practice: United Parcel Service 333 Size and Structural Control, 334 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Contents xi Bureaucracy in a Changing World 335 Organizing Temporary Systems for Flexibility and Innovation, 336 • Other Approaches to Reducing Bureaucracy, 337 Leading by Design: The Salvation Army 338 Organizational Control Strategies 339 Bureaucratic Control, 339 • Market Control, 340 In Practice: Imperial Oil Limited 341 Clan Control, 341 In Practice: Southwest Airlines 342 Organizational Decline and Downsizing 343 Definition and Causes, 343 • A Model of Decline Stages, 344 In Practice: Brobeck, Phleger & Harrison LLP 346 Downsizing Implementation, 346 In Practice: Charles Schwab & Company 348 Summary and Interpretation 348 Chapter 9 Workbook: Control Mechanisms 350 Case for Analysis: Sunflower Incorporated 351 Chapter 9 Workshop: Windsock, Inc. 352 Part 5: Managing Dynamic Processes 357 Chapter 10: Organizational Culture and Ethical Values 358 A Look Inside: Boots Company PLC 359 Purpose of This Chapter, 360 Organizational Culture 361 What Is Culture? 361 • Emergence and Purpose of Culture, 361 • Interpreting Culture, 363 Book Mark 10.0: Good to Great: Why Some Companies Make the Leap . . . And Others Don’t 364 Organization Design and Culture 367 The Adaptability Culture, 368 • The Mission Culture, 368 In Practice: J.C. Penney 369 The Clan Culture, 369 • The Bureaucratic Culture, 369 • Culture Strength and Organizational Subcultures, 370 In Practice: Pitney Bowes Credit Corporation 371 Organizational Culture, Learning, and Performance 371 Leading by Design: JetBlue Airways 372 Ethical Values and Social Responsibility 374 Sources of Individual Ethical Principles, 374 • Managerial Ethics and Social Responsibility, 375 • Does It Pay to Be Good? 377 Sources of Ethical Values in Organizations 378 Personal Ethics, 378 • Organizational Culture, 379 • Organizational Systems, 379 • External Stakeholders, 380 How Leaders Shape Culture and Ethics 381 Values-based Leadership, 381 In Practice: Kingston Technology Co. 382 Formal Structure and Systems, 382 In Practice: General Electric 385 Corporate Culture and Ethics in a Global Environment 386 Summary and Interpretation 387 Chapter 10 Workbook: Shop ‘til You Drop: Corporate Culture in the Retail World 389 Case for Analysis: Implementing Change at National Industrial Products 390 Case for Analysis: Does This Milkshake Taste Funny? 392 Chapter 10 Workshop: The Power of Ethics 394 Chapter 11: Innovation and Change 398 A Look Inside: Toyota Motor Corporation 399 Purpose of This Chapter, 400 Innovate or Perish: The Strategic Role of Change 400 Incremental versus Radical Change, 400 • Strategic Types of Change, 402 Leading by Design: Google 403 Elements for Successful Change 405 Technology Change 407 The Ambidextrous Approach, 407 • Techniques for Encouraging Technology Change, 408 In Practice: W. L. Gore 411 New Products and Services 412 New Product Success Rate, 412 • Reasons for New Product Success, 412 • Horizontal Coordination Model, 413 In Practice: Procter & Gamble 415 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: xii Contents Achieving Competitive Advantage: The Need for Speed, 416 Strategy and Structure Change 417 The Dual-Core Approach, 417 • Organization Design for Implementing Administrative Change, 418 In Practice: Tyco International 419 Culture Change 420 Forces for Culture Change, 420 In Practice: X-Rite Inc. 421 Organization Development Culture Change Interventions, 422 Strategies for Implementing Change 424 Book Mark 11.0: The Change Monster: The Human Forces That Fuel or Foil Corporate Transformation and Change 424 Leadership for Change, 425 • Barriers to Change, 426 • Techniques for Implementation, 426 Summary and Interpretation 429 Chapter 11 Workbook: Innovation Climate 430 Case for Analysis: Shoe Corporation of Illinois 432 Case for Analysis: Southern Discomfort 436 Chapter 12: Decision-Making Processes 441 A Look Inside: Maytag 442 Purpose of This Chapter, 443 Definitions 443 Individual Decision Making 445 Rational Approach, 445 In Practice: Alberta Consulting 448 Bounded Rationality Perspective, 448 Leading by Design: Motek 450 Book Mark 12.0: Blink: The Power of Thinking without Thinking 452 In Practice: Paramount Pictures 453 Organizational Decision Making 453 Management Science Approach, 453 In Practice: Continental Airlines 454 Carnegie Model, 456 In Practice: Encyclopaedia Britannica 457 Incremental Decision Process Model, 458 In Practice: Gillette Company 461 The Learning Organization 462 Combining the Incremental Process and Carnegie Models, 462 • Garbage Can Model, 463 In Practice: I ? Huckabees 466 Contingency Decision-Making Framework 467 Problem Consensus, 467 • Technical Knowledge about Solutions, 468 • Contingency Framework, 468 Special Decision Circumstances 471 High-Velocity Environments, 471 • Decision Mistakes and Learning, 472 • Escalating Commitment, 473 Summary and Interpretation 473 Chapter 12 Workbook: Decision Styles 475 Case for Analysis: Cracking the Whip 476 Case for Analysis: The Dilemma of Aliesha State College: Competence versus Need 477 Chapter 13: Conflict, Power, and Politics 481 A Look Inside: Morgan Stanley 482 Purpose of This Chapter, 483 Intergroup Conflict in Organizations 483 Sources of Conflict, 484 Leading by Design: Advanced Cardiovascular Systems 486 Rational versus Political Model, 487 Power and Organizations 488 Individual versus Organizational Power, 489 • Power versus Authority, 489 • Vertical Sources of Power, 490 • Horizontal Sources of Power, 494 In Practice: University of Illinois 496 In Practice: HCA and Aetna Inc. 498 Political Processes in Organizations 498 Definition, 499 • When Is Political Activity Used? 500 Using Power, Politics, and Collaboration 500 Tactics for Increasing Power, 501 • Political Tactics for Using Power, 502 Book Mark 13.0: Influence: Science and Practice 504 In Practice: Yahoo! 505 Tactics for Enhancing Collaboration, 505 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: In Practice: Aluminum Company of America/ International Association of Machinists 506 Summary and Interpretation 508 Chapter 13 Workbook: How Do You Handle Conflict? 510 Case for Analysis: The Daily Tribune 511 Case for Analysis: Pierre Dux 512 Integrative Cases 517 1.0 It Isn’t So Simple: Infrastructure Change at Royce Consulting 518 2.0 Custom Chip, Inc. 522 3.0 W. L. Gore & Associates, Inc. Entering 1998 528 4.0 XEL Communications, Inc. (C): Forming a Strategic Partnership 543 5.0 Empire Plastics 549 6.0 The Audubon Zoo, 1993 552 7.0 Moss Adams, LLP 566 8.1 Littleton Manufacturing (A) 577 8.2 Littleton Manufacturing (B) 589 Glossary 591 Name Index 601 Corporate Name Index 610 Subject Index 614 Contents xiii Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: xv Preface My vision for the Ninth Edition of Organization Theory and Design is to integrate contemporary problems about organization design with classic ideas and theories in a way that is interesting and enjoyable for students. Significant changes in this edition include updates to every chapter that incorporate the most recent ideas, new case examples, new book reviews, new end-of-chapter cases, and new end-of-book integrative cases. The research and theories in the field of organization studies are rich and insightful and will help students and managers understand their organizational world and solve real-life problems. My mission is to combine the concepts and models from organizational theory with changing events in the real world to provide the most up-to-date view of organization design available. Distinguishing Features of the Ninth Edition Many students in a typical organization theory course do not have extensive work experience, especially at the middle and upper levels, where organization theory is most applicable. To engage students in the world of organizations, the Ninth Edition adds and expands significant features: Leading by Design boxes with current examples of companies that are successfully using organization design concepts to compete in today’s complex and uncertain business world, student experiential activities that engage students in applying chapter concepts, new Book Marks, new In Practice examples, and new end-of-chapter and integrative cases for student analysis. The total set of features substantially expands and improves the book’s content and accessibility. These multiple pedagogical devices are used to enhance student involvement in text materials. Leading by Design The Leading by Design features describe companies that have undergone a major shift in organization design, strategic direction, values, or culture as they strive to be more competitive in today’s turbulent global environment. Many of these companies are applying new design ideas such as network organizing, e-business, or temporary systems for flexibility and innovation. The Leading by Design examples illustrate company transformations toward knowledge sharing, empowerment of employees, new structures, new cultures, the breaking down of barriers between departments and organizations, and the joining together of employees in a common mission. Examples of Leading by Design organizations include Wegmans Supermarkets, Google, The Salvation Army, JetBlue, Corrugated Supplies, Shazam, the Rolling Stones, and Dell Computer. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Book Marks Book Marks, a unique feature of this text, are book reviews that reflect current issues of concern for managers working in real-life organizations. These reviews describe the varied ways companies are dealing with the challenges of today’s changing environment. New Book Marks in the Ninth Edition include The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life; Execution: The Discipline of Getting Things Done; What Really Works: The 4 2 Formula for Sustained Business Success; Blink: The Power of Thinking without Thinking; The Company: A Short History of a Revolutionary Idea; and Confronting Reality: Doing What Matters to Get Things Right. New Case Examples This edition contains many new examples to illustrate theoretical concepts. Many examples are international, and all are based on real organizations. New chapter opening cases for the Ninth Edition include Gruner Jahr, International Truck and Engine Company, Morgan Stanley, Ford Motor Company, Boots Company PLC, Maytag, Toyota, and American Axle & Manufacturing. New In Practice cases used within chapters to illustrate specific concepts include TiVo Inc., General Electric, J.C. Penney, Genentech, Ryanair, Charles Schwab and Company, Nike, Verizon Communications, eBay, Tyco International, Sony, and the Federal Bureau of Investigation. A Look Inside This feature introduces each chapter with a relevant and interesting organizational example. Many examples are international, and all are based on real organizations. New cases include Boots Company PLC, International Truck and Engine Company, Gruner Jahr, Morgan Stanley, Toyota, and American Axle & Manufacturing. In Practice These cases also illustrate theoretical concepts in organizational settings. New In Practice cases used within chapters to illustrate specific concepts include J.C. Penney, Charles Schwab and Company, eBay, the Federal Bureau of Investigation, Ryanair, Chevrolet, Genentech, Tyco International, and Sony. Manager’s Briefcase Located in the chapter margins, this feature tells students how to use concepts to analyze cases and manage organizations. Text Exhibits Frequent exhibits are used to help students visualize organizational relationships, and the artwork has been redone to communicate concepts more clearly. Summary and Interpretation The summary and interpretation section tells students how the chapter points are important in the broader context of organizational theory. Case for Analysis These cases are tailored to chapter concepts and provide a vehicle for student analysis and discussion. Integrative Cases The integrative cases at the end of the text are positioned to encourage student discussion and involvement. These cases include Royce Consulting; Custom Chip, Inc.; W. L. Gore & Associates, Inc.; XEL Communications, Inc.; Empire Plastics; The Audubon Zoo; Moss Adams, LLP; and Littleton Manufacturing. xvi Preface Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: New Concepts Many concepts have been added or expanded in this edition. New material has been added on culture, learning, and performance; virtual network organization structures; applying ethics to create socially responsible organizations; outsourcing; lean manufacturing; customer relationship management; political tactics for increasing and using manager power; applying business intelligence; and the use of global coordination mechanisms for transferring knowledge and innovation. Many ideas are aimed at helping students learn to design organizations for an environment characterized by uncertainty; a renewed emphasis on ethics and social responsibility; and the need for a speedy response to change, crises, or shifting customer expectations. In addition, coping with the complexity of today’s global environment is explored thoroughly in Chapter 6. Chapter Organization Each chapter is highly focused and is organized into a logical framework. Many organization theory textbooks treat material in sequential fashion, such as “Here’s View A, Here’s View B, Here’s View C,” and so on. Organization Theory and Design shows how they apply in organizations. Moreover, each chapter sticks to the essential point. Students are not introduced to extraneous material or confusing methodological squabbles that occur among organizational researchers. The body of research in most areas points to a major trend, which is reported here. Several chapters develop a framework that organizes major ideas into an overall scheme. This book has been extensively tested on students. Feedback from students and faculty members has been used in the revision. The combination of organization theory concepts, book reviews, examples of leading organizations, case illustrations, experiential exercises, and other teaching devices is designed to meet student learning needs, and students have responded favorably. Supplements Instructor’s Manual with Test Bank (ISBN: 0-324-40543-X) The Instructor’s Manual contains chapter overviews, chapter outlines, lecture enhancements, discussion questions, discussion of workbook activities, discussion of chapter cases, Internet activities, case notes for integrative cases, and a guide to the videos available for use with the text. The Test Bank consists of multiple choice, true/false, and short answer questions. PowerPoint Lecture Presentation Available on the Instructor’s Resource CDROM and the Web site, the PowerPoint Lecture Presentation enables instructors to customize their own multimedia classroom presentations. Prepared in conjunction with the text and instructor’s resource guide, the package contains approximately 150 slides. It includes figures and tables from the text, as well as outside materials to supplement chapter concepts. Material is organized by chapter and can be modified or expanded for individual classroom use. PowerPoints are also easily printed to create customized transparency masters. Preface xvii Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: ExamView A computerized version of the Test Bank is available upon request. ExamView contains all of the questions in the printed test bank. This program is easy-to-use test creation software compatible with Microsoft Windows. Instructors can add or edit questions, instructions, and answers and can select questions (randomly or numerically) by previewing them on the screen. Instructors can also create and administer quizzes online, whether over the Internet, a local area network (LAN), or a wide area network (WAN). Instructor’s Resource CD-ROM (ISBN: 0-324-40579-0) Key instructor ancillaries (Instructor’s Manual, Test Bank, ExamView, and PowerPoint slides) are provided on CD-ROM, giving instructors the ultimate tool for customizing lectures and presentations. WebTutor™ Toolbox (0-324-43106-6 on WebCT or 0-324-43109-0 on BlackBoard) WebTutor is an interactive, Web-based student supplement on WebCT and/or BlackBoard that harnesses the power of the Internet to deliver innovative learning aids that actively engage students. The instructor can incorporate WebTutor as an integral part of the course, or the students can use it on their own as a study guide. Web Site (http://daft.swlearning.com) The Daft Web site is a comprehensive, resource-rich location for both instructors and students to find pertinent information. The Instructor Resources section contains an Instructor’s Manual download, Test Bank download, PowerPoint download, and case material. Experiential Exercises in Organization Theory and Design, Second Edition By H. Eugene Baker III and Steven K. Paulson of the University of North Florida Tailored to the Table of Contents in Daft’s Organization Theory and Design, Ninth Edition, the core purpose of Experiential Exercises in Organization Theory and Design is to provide courses in organizational theory with a set of classroom exercises that will help students better understand and internalize the basic principles of the course. The chapters of the book cover the most basic and widely covered concepts in the field. Each chapter focuses on a central topic, such as organizational power, production technology, or organizational culture, and provides all necessary materials to fully participate in three different exercises. Some exercises are intended to be completed by individuals, others in groups, and still others can be used either way. The exercises range from instrumentation-based and assessment questionnaires to actual creative production activities. Acknowledgments Textbook writing is a team enterprise. The Ninth Edition has integrated ideas and hard work from many people to whom I am grateful. Reviewers and focus group participants made an especially important contribution. They praised many features, were critical of things that didn’t work well, and offered valuable suggestions. David Ackerman University of Alaska, Southeast Michael Bourke Houston Baptist University xviii Preface Suzanne Clinton Cameron University Jo Anne Duffy Sam Houston State University Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Cheryl Duvall Mercer University Patricia Feltes Missouri State University Robert Girling Sonoma State University John A. Gould University of Maryland Ralph Hanke Pennsylvania State University Bruce J. Hanson Pepperdine University Guiseppe Labianca Tulane University Jane Lemaster University of Texas–Pan American Steven Maranville University of Saint Thomas Rick Martinez Baylor University Janet Near Indiana University Julie Newcomer Texas Woman’s University Preface xix Asbjorn Osland George Fox University Laynie Pizzolatto Nicholls State University Samantha Rice Abilene Christian University Richard Saaverda University of Michigan W. Robert Sampson University of Wisconsin, Eau Claire Amy Sevier University of Southern Mississippi W. Scott Sherman Pepperdine University Thomas Terrell Coppin State College Jack Tucci Southeastern Louisiana University Judith White Santa Clara University Jan Zahrly University of North Dakota Among my professional colleagues, I am grateful to my friends and colleagues at Vanderbilt’s Owen School—Bruce Barry, Ray Friedman, Neta Moye, Rich Oliver, David Owens, and Bart Victor—for their intellectual stimulation and feedback. I also owe a special debt to Dean Jim Bradford and Senior Associate Dean Joe Blackburn for providing the time and resources for me to stay current on the organization design literature and develop the revisions for the text. I want to extend special thanks for my editorial associate, Pat Lane. She skillfully drafted materials on a variety of topics and special features, found resources, and did an outstanding job with the copyedited manuscript and page proofs. Pat’s personal enthusiasm and care for the content of this text enabled the Ninth Edition to continue its high level of excellence. The team at South-Western also deserves special mention. Joe Sabatino did a great job of designing the project and offering ideas for improvement. Emma Guttler was superb as Developmental Editor, keeping the people and project on schedule while solving problems creatively and quickly. Cliff Kallemeyn, Production Editor, provided superb project coordination and used his creativity and management skills to facilitate the book’s on-time completion. Finally, I want to acknowledge the love and contributions of my wife, Dorothy Marcic. Dorothy has been very supportive of my textbook projects and has created Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: an environment in which we can grow together. She helped the book take a giant step forward with her creation of the Workbook and Workshop student exercises. Perhaps best of all, Dorothy lets me practice applying organization design ideas as co-producer of her theatrical productions. I also want to acknowledge the love and support of my daughters, Danielle, Amy, Roxanne, Solange, and Elizabeth, who make my life special during our precious time together. xx Preface Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Richard L. Daft VANDERBILT UNIVERSITY Organization Theory and Design NINTH EDITION Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Vice President/Editorial Director: Jack W. Calhoun Vice President/Editor-in-Chief: Dave Shaut Senior Acquisitions Editor: Joe Sabatino Senior Developmental Editor: Emma F. Guttler Marketing Manager: Kimberly Kanakas Senior Production Project Manager: Cliff Kallemeyn Technology Project Editor: Kristen Meere Web Coordinator: Karen Schaffer Art Director: Tippy McIntosh Senior Manufacturing Coordinator: Doug Wilke Photo Editor: Deanna Ettinger Production House: Graphic World Inc. Printer: RR Donnelley Willard, OH Organization Theory and Design, Ninth Edition Richard L. Daft With the Assistance of Patricia G. Lane COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Printed in the United States of America 1 2 3 4 5 08 07 06 05 Student Edition ISBN 0-324-40542-1 Instructor Edition ISBN 0-324-42272-5 ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems, or in any other manner—without the written permission of the publisher. For permission to use material from this text or product, submit a request online at http://www.thomsonrights.com. Library of Congress Control Number: 2005937447 For more information about our products, contact us at: Thomson Learning Academic Resource Center 1-800-423-0563 Thomson Higher Education 5191 Natorp Boulevard Mason, OH 45040 USA Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases Integrative Case 1.0 It Isn’t So Simple: Infrastructure Change at Royce Consulting Background Infrastructure and Proposed Changes Work Patterns Organizational Culture Current Situation The Feasibility Study The Challenge Integrative Case 2.0 Custom Chip, Inc. Introduction Company Background The Manufacturing Process Role of the Product Engineer Weekly Meeting Coordination with Applications Engineers Coordination with Manufacturing Later in the Day Integrative Case 3.0 W. L. Gore & Associates, Inc. Entering 1998 The First Day on the Job Company Background Company Products W. L. Gore & Associates’ Approach to Organization and Structure The Lattice Organization Features of W. L. Gore’s Culture W. L. Gore & Associates’ Sponsor Program Compensation Practices W. L. Gore & Associates’ Guiding Principles and Core Values Research and Development Development of Gore Associates Marketing Approaches and Strategy Adapting to Changing Environmental Forces W. L. Gore & Associates’ Financial Performance Acknowledgments Excerpts from Interviews with Associates Integrative Case 4.0 XEL Communications, Inc. (C): Forming a Strategic Partnership XEL Communications, Inc. The XEL Vision Which Path to Choose Staying the Course Going Public Strategic Partnership The Case Against Strategic Partnership Choosing a Partner Going Forward Integrative Case 5.0 Empire Plastics A Project to Remember Conflict Ahead Failing . . . Forward Integrative Case 6.0 The Audubon Zoo, 1993 The Decision Purpose of the Zoo New Directions Operations Financial Management The Zoo in the Late 1980s The Future Integrative Case 7.0 Moss Adams, LLP Company Background The Industry and the Market The Wine Industry Niche The Aftermath Integrative Case 8.1 Littleton Manufacturing (A) The Problems The Company The Financial Picture The Quality Improvement System How Different Levels Perceived the Problems Top Management Recommendation Time Integrative Case 8.2 Littleton Manufacturing (B) 517 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 518 Integrative Cases The lights of the city glittered outside Ken Vincent’s twelfth-floor office. After nine years of late nights and missed holidays, Ken was in the executive suite with the words “Associate Partner” on the door. Things should be easier now, but the proposed changes at Royce Consulting had been more challenging than he had expected. “I don’t understand,” he thought. “At Royce Consulting our clients, our people, and our reputation are what count, so why do I feel so much tension from the managers about the changes that are going to be made in the office? We’ve analyzed why we have to make the changes. Heck, we even got an outside person to help us. The administrative support staff are pleased. So why aren’t the managers enthusiastic? We all know what the decision at tomorrow’s meeting will be—Go! Then it will all be over. Or will it?” Ken thought as he turned out the lights. Background Royce Consulting is an international consulting firm whose clients are large corporations, usually with long-term contracts. Royce employees spend weeks, months, and even years working under contract at the client’s site. Royce consultants are employed by a wide range of industries, from manufacturing facilities to utilities to service businesses. The firm has over 160 consulting offices located in 65 countries. At this location Royce employees included 85 staff members, 22 site managers, 9 partners and associate partners, 6 administrative support staff, 1 human resource professional, and 1 financial support person. For the most part, Royce Consulting hired entry-level staff straight out of college and promoted from within. New hires worked on staff for five or six years; if they did well, they were promoted to manager. Managers were responsible for maintaining client contracts and assisting partners in creating proposals for future engagements. Those who were not promoted after six or seven years generally left the company for other jobs. Newly promoted managers were assigned an office, a major perquisite of their new status. During the previous year, some new managers had been forced to share an office because of space limitations. To minimize the friction of sharing an office, one of the managers was usually assigned to a long-term project out of town. Thus, practically speaking, each manager had a private office. Infrastructure and Proposed Changes Royce was thinking about instituting a hoteling office system—also referred to as a “nonterritorial” or “freeaddress” office. A hoteling office system made offices available to managers on a reservation or drop-in basis. Managers are not assigned a permanent office; instead, whatever materials and equipment the manager needs are moved into the temporary office. These are some of the features and advantages of a hoteling office system: • No permanent office assigned • Offices are scheduled by reservations • Long-term scheduling of an office is feasible • Storage space would be located in a separate file room • Standard manuals and supplies would be maintained in each office • Hoteling coordinator is responsible for maintaining offices • A change in “possession of space” • Eliminates two or more managers assigned to the same office • Allows managers to keep the same office if desired • Managers would have to bring in whatever files they needed for their stay • Information available would be standardized regardless of office • Managers do not have to worry about “housekeeping issues” The other innovation under consideration was an upgrade to state-of-the-art electronic office technology. All managers would receive a new notebook computer with updated communications capability to use Royce’s integrated and proprietary software. Also, as part of the electronic office technology, an electronic filing system was considered. The electronic filing system meant information regarding proposals, client records, and promotional materials would be electronically available on the Royce Consulting network. The administrative support staff had limited experience with many of the application packages used by the managers. While they used word processing extensively, they had little experience with spreadsheets, communications, or graphics packages. The firm had a graphics department and the managers did most of their own work, so the administrative staff did not have to work with those application software packages. Integrative Case 1.0 It Isn’t So Simple: Infrastructure Change at Royce Consulting* 1.0 *Presented to and accepted by the Society for Case Research. All rights reserved to the authors and SCR. This case was prepared by Sally Dresdow of the University of Wisconsin at Green Bay and Joy Benson of the University of Illinois at Springfield and is intended to be used as a basis for class discussion. The views represented here are those of the case authors and do not necessarily reflect the views of the Society for Case Research. The authors’ views are based on their own professional judgments. The names of the organization, individuals, and location have been disguised to preserve the organization’s request for anonymity. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 519 Work Patterns Royce Consulting was located in a large city in the Midwest. The office was located in the downtown area, but it was easy to get to. Managers assigned to in-town projects often stopped by for a few hours at various times of the day. Managers who were not currently assigned to client projects were expected to be in the office to assist on current projects or work with a partner to develop proposals for new business. In a consulting firm, managers spend a significant portion of their time at client sites. As a result, the office occupancy rate at Royce Consulting was about 40 to 60 percent. This meant that the firm paid lease costs for offices that were empty approximately half of the time. With the planned growth over the next ten years, assigning permanent offices to every manager, even in doubled-up arrangements, was judged to be economically unnecessary given the amount of time offices were empty. The proposed changes would require managers and administrative support staff to adjust their work patterns. Additionally, if a hoteling office system was adopted, managers would need to keep their files in a centralized file room. Organizational Culture Royce Consulting had a strong organizational culture, and management personnel were highly effective at communicating it to all employees. Stability of Culture The culture at Royce Consulting was stable. The leadership of the corporation had a clear picture of who they were and what type of organization they were. Royce Consulting had positioned itself to be a leader in all areas of large business consulting. Royce Consulting’s CEO articulated the firm’s commitment to being client-centered. Everything that was done at Royce Consulting was because of the client. Training New hires at Royce Consulting received extensive training in the culture of the organization and the methodology employed in consulting projects. They began with a structured program of classroom instruction and computer-aided courses covering technologies used in the various industries in which the firm was involved. Royce Consulting recruited top young people who were aggressive and who were willing to do whatever was necessary to get the job done and build a common bond. Among new hires, camaraderie was encouraged along with a level of competition. This kind of behavior continued to be cultivated throughout the training and promotion process. Work Relationships Royce Consulting employees had a remarkably similar outlook on the organization. Accepting the culture and norms of the organization was important for each employee. The norms of Royce Consulting revolved around high performance expectations and strong job involvement. By the time people made manager, they were aware of what types of behaviors were acceptable. Managers were formally assigned the role of coach to younger staff people, and they modeled acceptable behavior. Behavioral norms included when they came into the office, how late they stayed at the office, and the type of comments they made about others. Managers spent time checking on staff people and talking with them about how they were doing. The standard for relationships was that of professionalism. Managers knew they had to do what the partners asked and they were to be available at all times. A norms survey and conversations made it clear that people at Royce Consulting were expected to help each other with on-the-job problems, but personal problems were outside the realm of sanctioned relationships. Personal problems were not to interfere with performance on a job. To illustrate, vacations were put on hold and other kinds of commitments were set aside if something was needed at Royce Consulting. Organizational Values Three things were of major importance to the organization: its clients, its people, and its reputation. There was a strong client-centered philosophy communicated and practiced. Organization members sought to meet and exceed customer expectations. Putting clients first was stressed. The management of Royce Consulting listened to its clients and made adjustments to satisfy the client. The reputation of Royce Consulting was important to those leading the organization. They protected and enhanced it by focusing on quality services delivered by quality people. The emphasis on clients, Royce Consulting personnel, and the firm’s reputation was cultivated by developing a highly motivated, cohesive, and committed group of employees. Management Style and Hierarchical Structure The company organization was characterized by a directive style of management. The partners had the final word on all issues of importance. It was common to hear statements like “Managers are expected to solve problems, and do whatever it takes to finish the job” and “Whatever the partners want, we do.” Partners accepted and asked for managers’ feedback on projects, but in the final analysis, the partners made the decisions. Current Situation Royce Consulting had an aggressive five-year plan that was predicated on a continued increase in business. Increases in the total number of partners, associate partners, managers, and staff were forecast. Additional office space would be required to accommodate the growth in staff; this would 1.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 520 Integrative Cases increase rental costs at a time when Royce’s fixed and variable costs were going up. The partners, led by managing partner Donald Gray and associate partner Ken Vincent, believed that something had to be done to improve space utilization and the productivity of the managers and administrative personnel. The partners approved a feasibility study of the innovations and their impact on the company. The ultimate decision makers were the partner group who had the power to approve the concepts and commit the required financial investment. A planning committee consisted of Ken Vincent; the human resources person; the financial officer; and an outside consultant, Mary Schrean. The Feasibility Study Within two working days of the initial meeting, all the partners and managers received a memo announcing the hoteling office feasibility study. The memo included a brief description of the concept and stated that it would include an interview with the staff. By this time, partners and managers had already heard about the possible changes and knew that Gray was leaning toward hoteling offices. Interviews with the Partners All the partners were interviewed. One similarity in the comments was that they thought the move to hoteling offices was necessary but they were glad it would not affect them. Three partners expressed concern about managers’ acceptance of the change to a hoteling system. The conclusion of each partner was that if Royce Consulting moved to hoteling offices, with or without electronic office technology, the managers would accept the change. The reason given by the partners for such acceptance was that the managers would do what the partners wanted done. The partners all agreed that productivity could be improved at all levels of the organization: in their own work as well as among the secretaries and the managers. Partners acknowledged that current levels of information technology at Royce Consulting would not support the move to hoteling offices and that advances in electronic office technology needed to be considered. Partners viewed all filing issues as secondary to both the office layout change and the proposed technology improvement. What eventually emerged, however, was that ownership and control of files was a major concern, and most partners and managers did not want anything centralized. Interviews with the Managers Personal interviews were conducted with all ten managers who were in the office. During the interviews, four of the managers asked Schrean whether the change to hoteling offices was her idea. The managers passed the question off as a joke; however, they expected a response from her. She stated that she was there as an adviser, that she had not generated the idea, and that she would not make the final decision regarding the changes. The length of time that these managers had been in their current positions ranged from six months to five years. None of them expressed positive feelings about the hoteling system, and all of them referred to how hard they had worked to make manager and gain an office of their own. Eight managers spoke of the status that the office gave them and the convenience of having a permanent place to keep their information and files. Two of the managers said they did not care so much about the status but were concerned about the convenience. One manager said he would come in less frequently if he did not have his own office. The managers believed that a change to hoteling offices would decrease their productivity. Two managers stated that they did not care how much money Royce Consulting would save on lease costs; they wanted to keep their offices. However, for all the negative comments, all the managers said that they would go along with whatever the partners decided to do. One manager stated that if Royce Consulting stays busy with client projects, having a permanently assigned office was not a big issue. During the interviews, every manager was enthusiastic and supportive of new productivity tools, particularly the improved electronic office technology. They believed that new computers and integrated software and productivity tools would definitely improve their productivity. Half the managers stated that updated technology would make the change to hoteling offices “a little less terrible,” and they wanted their secretaries to have the same software as they did. The managers’ responses to the filing issue varied. The volume of files managers had was in direct proportion to their tenure in that position: The longer a person was a manager, the more files he or she had. In all cases, managers took care of their own files, storing them in their offices and in whatever filing drawers were free. As part of the process of speaking with managers, their administrative assistants were asked about the proposed changes. Each of the six thought that the electronic office upgrade would benefit the managers, although they were somewhat concerned about what would be expected of them. Regarding the move to hoteling offices, each said that the managers would hate the change, but that they would agree to it if the partners wanted to move in that direction. Results of the Survey A survey developed from the interviews was sent to all partners, associate partners, and managers two weeks after the interviews were conducted. The completed survey was returned by 6 of the 9 partners and associate partners and 16 of the 22 managers. This is what the survey showed. Work Patterns. It was “common knowledge” that managers were out of the office a significant portion of their time, but there were no figures to substantiate this belief, so the respondents were asked to provide data on where they spent their time. The survey results indicated 1.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 521 that partners spent 38 percent of their time in the office; 54 percent at client sites; 5 percent at home; and 3 percent in other places, such as airports. Managers reported spending 32 percent of their time in the office, 63 percent at client sites, 4 percent at home, and 1 percent in other places. For 15 workdays, the planning team also visually checked each of the 15 managers’ offices four times each day: at 9 a.m., 11 a.m., 2 p.m., and 4 p.m. These times were selected because initial observations indicated that these were the peak occupancy times. An average of six offices (40 percent of all manager offices) were empty at any given time; in other words, there was a 60 percent occupancy rate. Alternative Office Layouts. One of the alternatives outlined by the planning committee was a continuation of and expansion of shared offices. Eleven of the managers responding to the survey preferred shared offices to hoteling offices. Occasions when more than one manager was in the shared office at the same time were infrequent. Eight managers reported 0 to 5 office conflicts per month; three managers reported 6 to 10 office conflicts per month. The type of problems encountered with shared offices included not having enough filing space, problems in directing telephone calls, and lack of privacy. Managers agreed that having a permanently assigned office was an important perquisite. The survey confirmed the information gathered in the interviews about managers’ attidues: All but two managers preferred shared offices over hoteling, and managers believed their productivity would be negatively impacted. The challenges facing Royce Consulting if they move to hoteling offices centered around tradition and managers’ expectations, file accessibility and organization, security and privacy issues, unpredictable work schedules, and high-traffic periods. Control of Personal Files. Because of the comments made during the face-to-face interviews, survey respondents were asked to rank the importance of having personal control of their files. A 5-point scale was used, with 5 being “strongly agree” and 1 being “strongly disagree.” Here are the responses. Electronic Technology. Royce Consulting had a basic network system in the office that could not accommodate the current partners and managers working at a remote site. The administrative support staff had a separate network, and the managers and staff could not communicate electronically. Of managers responding to the survey, 95 percent wanted to use the network but only 50 percent could actually do so. Option Analysis A financial analysis showed that there were significant cost differences between the options under consideration: Option 1: Continue private offices with some office sharing • Lease an additional floor in existing building; annual cost, $360,000 • Build out the additional floor (i.e., construct, furnish, and equip offices and work areas): one-time cost, $600,000 Option 2: Move to hoteling offices with upgraded office technology • Upgrade office electronic technology: one-time cost, $190,000 Option 1 was expensive because under the terms of the existing lease, Royce had to commit to an entire floor if it wanted additional space. Hoteling offices showed an overall financial advantage of $360,000 per year and a one-time savings of $410,000 over shared or individual offices. The Challenge Vincent met with Mary Schrean to discuss the upcoming meeting of partners and managers, where they would present the results of the study and a proposal for action. Included in the report were proposed layouts for both shared and hoteling offices. Vincent and Gray were planning to recommend a hoteling office system, which would include storage areas, state-of-the-art electronic office technology for managers and administrative support staff, and centralized files. The rationale for their decision emphasized the amount of time that managers were out of the office and the high cost of maintaining the status quo and was built around the following points: 1. Royce’s business is different: offices are empty from 40 to 60 percent of the time. 2. Real estate costs continue to escalate. 3. Projections indicate there will be increased need for offices and cost-control strategies as the business develops. 4. Royce Consulting plays a leading role in helping organizations implement innovation. “It’s still a go,” thought Vincent as he and the others returned from a break. “The cost figures support it and the growth figures support it. It’s simple—or is it? The decision is the easy part. What is it about Royce Consulting that will help or hinder its acceptance? In the long run, I hope we strengthen our internal processes and don’t hinder our effectiveness by going ahead with these simple changes.” 1.0 Respondents Sample Rank Partners 6 4.3 Managers: 0–1 year 5 4.6 2–3 years 5 3.6 4 years 6 4.3 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 522 Integrative Cases Introduction It was 7:50 on Monday morning. Frank Questin, product engineering manager at Custom Chip, Inc., was sitting in his office making a TO DO list for the day. From 8:00 to 9:30 a.m., he would have his weekly meeting with his staff of engineers. After the meeting, Frank thought he would begin developing a proposal for solving what he called “Custom Chip’s manufacturing documentation problem”— inadequate technical information regarding the steps to manufacture many of the company’s products. Before he could finish his TO DO list, he answered a phone call from Custom Chip’s human resource manager, who asked him about the status of two overdue performance appraisals and reminded him that this day marked Bill Lazarus’s fifth-year anniversary with the company. Following this call, Frank hurried off to the Monday morning meeting with his staff. Frank had been product engineering manager at Custom Chip for fourteen months. This was his first management position, and he sometimes questioned his effectiveness as a manager. Often he could not complete the tasks he set out for himself due to interruptions and problems brought to his attention by others. Even though he had not been told exactly what results he was supposed to accomplish, he had a nagging feeling that he should have achieved more after these fourteen months. On the other hand, he thought maybe he was functioning pretty well in some of his areas of responsibility given the complexity of the problems his group handled and the unpredictable changes in the semiconductor industry—changes caused not only by rapid advances in technology, but also by increased foreign competition and a recent downturn in demand. Company Background Custom Chip, Inc., was a semiconductor manufacturer specializing in custom chips and components used in radars, satellite transmitters, and other radio frequency devices. The company had been founded in 1977 and had grown rapidly with sales exceeding $25 million in 1986. Most of the company’s 300 employees were located in the main plant in Silicon Valley, but overseas manufacturing facilities in Europe and the Far East were growing in size and importance. These overseas facilities assembled the less complex, higher-volume products. New products and the more complex ones were assembled in the main plant. Approximately one-third of the assembly employees were in overseas facilities. While the specialized products and markets of Custom Chip provided a market niche that had thus far shielded the company from the major downturn in the semiconductor industry, growth had come to a standstill. Because of this, cost reduction had become a high priority. The Manufacturing Process Manufacturers of standard chips have long production runs of a few products. Their cost per unit is low and cost control is a primary determinant of success. In contrast, manufacturers of custom chips have extensive product lines and produce small production runs of special applications. Custom Chip, Inc., for example, had manufactured over 2,000 different products in the last five years. In any one quarter the company might schedule 300 production runs for different products, as many as one-third of which might be new or modified products that the company had not made before. Because they must be efficient in designing and manufacturing many product lines, all custom chip manufacturers are highly dependent on their engineers. Customers are often first concerned with whether Custom Chip can design and manufacture the needed product at all; second, with whether they can deliver it on time; and only third, with cost. After a product is designed, there are two phases to the manufacturing process. (See Exhibit 1.) The first is wafer fabrication. This is a complex process in which circuits are etched onto the various layers added to a silicon wafer. The number of steps that the wafer goes through plus inherent problems in controlling various chemical processes make it very difficult to meet the exacting specifications required for the final wafer. The wafers, which are typically “just a few” inches in diameter when the fabrication process is complete, contain hundreds, sometimes thousands, of tiny identical die. Once the wafer has been tested and sliced up to produce these die, each die will be used as a circuit component. If the completed wafer passes the various quality tests, it moves on to the assembly phase. In assembly, the die from the wafers, very small wires, and other components are attached to a circuit in a series of precise operations. This finished circuit is the final product of Custom Chip, Inc. Each product goes through many independent and delicate operations, and each step is subject to operator or machine error. Due to the number of steps and tests involved, the wafer fabrication takes eight to twelve weeks *Copyright Murray Silverman, San Francisco State University. Reprinted by permission. Integrative Case 2.0 Custom Chip, Inc.* 2.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Pre-production • • Application engineers design and produce prototype Product engineers translate design into manufacturing instructions Production • Wafer fabrication • Assembly Circuits are etched onto layers added to . . . . . . a silicon wafer. Wafer is tested and then cut up into “die.” Die, wires, and other components are attached to circuits. 8 – 12 weeks 4 – 6 weeks Integrative Cases 523 and the assembly process takes four to six weeks. Because of the exacting specifications, products are rejected for the slightest flaw. The likelihood that every product starting the run will make it through all of the processes and still meet specifications is often quite low. For some products, average yield1 is as low as 40 percent, and actual yields can vary considerably from one run to another. At Custom Chip, the average yield for all products is in the 60 to 70 percent range. Because it takes so long to make a custom chip, it is especially important to have some control of these yields. For example, if a customer orders one thousand units of a product and typical yields for that product average 50 percent, Custom Chip will schedule a starting batch of 2,200 units. With this approach, even if the yield falls as low as 45.4 percent (45.4 percent of 2,200 is 1,000) the company can still meet the order. If the actual yield falls below 45.4 percent, the order will not be completed in that run, and a very small, costly run of the item will be needed to complete the order. The only way the company can effectively control these yields and stay on schedule is for the engineering groups and operations to cooperate and coordinate their efforts efficiently. Role of the Product Engineer The product engineer’s job is defined by its relationship to applications engineering and operations. The applications engineers are responsible for designing and developing prototypes when incoming orders are for new or modified products. The product engineer’s role is to translate the applications engineering group’s design into a set of manufacturing instructions and then to work alongside manufactur2.0 EXHIBIT 1 Manufacturing Process Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: President VP Operations VP Engineering Sam Porter Applications Engineering Pete Chang Manager Manufacturing Rod Cameron Manager Brian Faber et al. Jerry West et al. Sharon Hart Bill Lazarus Facilities Production Scheduling Product Engineering Frank Questin Manager 524 Integrative Cases ing to make sure that engineering-related problems get solved. The product engineers’ effectiveness is ultimately measured by their ability to control yields on their assigned products. The organization chart in Exhibit 2 shows the engineering and operations departments. Exhibit 3 summarizes the roles and objectives of manufacturing, applications engineering, and product engineering. The product engineers estimate that 70 to 80 percent of their time is spent in solving day-to-day manufacturing problems. The product engineers have cubicles in a room directly across the hall from the manufacturing facility. If a manufacturing supervisor has a question regarding how to build a product during a run, that supervisor will call the engineer assigned to that product. If the engineer is available, he or she will go to the manufacturing floor to help answer the question. If the engineer is not available, the production run may be stopped and the product put aside so that other orders can be manufactured. This results in delays and added costs. One reason that product engineers are consulted is that documentation—the instructions for manufacturing the product—is unclear or incomplete. The product engineer will also be called if a product is tested and fails to meet specifications. If a product fails to meet test specifications, production stops, and the engineer must diagnose the problem and attempt to find a solution. Otherwise, the order for that product may be only partially met. Test failures are a very serious problem, which can result in considerable cost increases and 2.0 EXHIBIT 2 Custom Chip, Inc., Partial Organization Chart Department Role Primary Objective Applications Engineering Product Engineering Manufacturing EXHIBIT 3 Departmental Roles and Objectives Designs and develops prototypes for new or modified products Translates designs into manufacturing instructions and works alongside manufacturing to solve “engineeringrelated”problems Executes designs Satisfy customer needs through innovative designs Maintain and control yields on assigned products Meet productivity standards and time schedules Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 525 schedule delays for customers. Products do not test properly for many reasons, including operator errors, poor materials, a design that is very difficult to manufacture, a design that provides too little margin for error, or a combination of these. On a typical day, the product engineer may respond to half a dozen questions from the manufacturing floor, and two to four calls to the testing stations. When interviewed, the engineers expressed a frustration with this situation. They thought they spent too much time solving short-term problems, and, consequently, they were neglecting other important parts of their jobs. In particular, they felt they had little time in which to: • Coordinate with applications engineers during the design phase. The product engineers stated that their knowledge of manufacturing could provide valuable input to the applications engineer. Together they could improve the manufacturability and thus, the yields of the new or modified product. • Engage in yield improvement projects. This would involve an in-depth study of the existing process for a specific product in conjunction with an analysis of past product failures. • Accurately document the manufacturing steps for their assigned products, especially for those that tend to have large or repeat orders. They said that the current state of the documentation is very poor. Operators often have to build products using only a drawing showing the final circuit, along with a few notes scribbled in the margins. While experienced operators and supervisors may be able to work with this information, they often make incorrect guesses and assumptions. Inexperienced operators may not be able to proceed with certain products because of this poor documentation. Weekly Meeting As manager of the product engineering group, Frank Questin had eight engineers reporting to him, each responsible for a different set of Custom Chip products. According to Frank: When I took over as manager, the product engineers were not spending much time together as a group. They were required to handle operations problems on short notice. This made it difficult for the entire group to meet due to constant requests for assistance from the manufacturing area. I thought that my engineers could be of more assistance and support to each other if they all spent more time together as a group, so one of my first actions as a manager was to institute a regularly scheduled weekly meeting. I let the manufacturing people know that my staff would not respond to requests for assistance during the meeting. The meeting on this particular Monday morning followed the usual pattern. Frank talked about upcoming company plans, projects, and other news that might be of interest to the group. He then provided data about current yields for each product and commended those engineers who had maintained or improved yields on most of their products. This initial phase of the meeting lasted until about 8:30 a.m. The remainder of the meeting was a meandering discussion of a variety of topics. Since there was no agenda, engineers felt comfortable in raising issues of concern to them. The discussion started with one of the engineers describing a technical problem in the assembly of one of his products. He was asked a number of questions and given some advice. Another engineer raised the topic of a need for new testing equipment and described a test unit he had seen at a recent demonstration. He claimed the savings in labor and improved yields from this machine would allow it to pay for itself in less than nine months. Frank immediately replied that budget limitations made such a purchase unfeasible, and the discussion moved into another area. They briefly discussed the increasing inaccessibility of the applications engineers and then talked about a few other topics. In general, the engineers valued these meetings. One commented that: The Monday meetings give me a chance to hear what’s on everyone’s mind and to find out about and discuss companywide news. It’s hard to reach any conclusions because the meeting is a freewheeling discussion. But I really appreciate the friendly atmosphere with my peers. Coordination with Applications Engineers Following the meeting that morning, an event occurred that highlighted the issue of the inaccessibility of the applications engineers. An order of 300 units of custom chip 1210A for a major customer was already overdue. Because the projected yield of this product was 70 percent, they had started with a run of 500 units. A sample tested at one of the early assembly points indicated a major performance problem that could drop the yield to below 50 percent. Bill Lazarus, the product engineer assigned to the 1210A, examined the sample and determined that the problem could be solved by redesigning the wiring. Jerry West, the applications engineer assigned to that product category, was responsible for revising the design. Bill tried to contact Jerry, but he was not immediately available, and didn’t get back to Bill until later in the day. Jerry explained that he was on a tight schedule trying to finish a design for a customer who was coming into town in two days, and could not get to “Bill’s problem” for a while. Jerry’s attitude that the problem belonged to product engineering was typical of the applications engineers. From their point of view there were a number of reasons for making the product engineers’ needs for assistance a lower priority. In the first place, applications engineers 2.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 526 Integrative Cases were rewarded and acknowledged primarily for satisfying customer needs through designing new and modified products. They got little recognition for solving manufacturing problems. Second, applications engineering was perceived to be more glamorous than product engineering because of opportunities to be credited with innovative and groundbreaking designs. Finally, the size of the applications engineering group had declined over the past year, causing the workload on each engineer to increase considerably. Now they had even less time to respond to the product engineers’ requests. When Bill Lazarus told Frank about the situation, Frank acted quickly. He wanted this order to be in process again by tomorrow, and he knew manufacturing was also trying to meet this goal. He walked over to see Pete Chang, head of applications engineering (see the organizational chart in Exhibit 2). Meetings like this with Pete to discuss and resolve interdepartmental issues were common. Frank found Pete at a workbench talking with one of his engineers. He asked Pete if he could talk to him in private, and they walked to Pete’s office. Frank: We’ve got a problem in manufacturing in getting out an order of 1210As. Bill Lazarus is getting little or no assistance from Jerry West. I’m hoping you can get Jerry to pitch in and help Bill. It should take no more than a few hours of his time. Pete: I do have Jerry on a short leash trying to keep him focused on getting out a design for Teletronics. We can’t afford to show up empty-handed at our meeting with them in two days. Frank: Well, we are going to end up losing one customer in trying to please another. Can’t we satisfy everyone here? Pete: Do you have an idea? Frank: Can’t you give Jerry some additional support on the Teletronics design? Pete: Let’s get Jerry in here to see what we can do. Pete brought Jerry back to the office, and together they discussed the issues and possible solutions. When Pete made it clear to Jerry that he considered the problem with the 1210As a priority, Jerry offered to work on the 1210A problem with Bill. He said, “This will mean I’ll have to stay a few hours past 5:00 this evening, but I’ll do what’s required to get the job done.” Frank was glad he had developed a collaborative relationship with Pete. He had always made it a point to keep Pete informed about activities in the product engineering group that might affect the applications engineers. In addition, he would often chat with Pete informally over coffee or lunch in the company cafeteria. This relationship with Pete made Frank’s job easier. He wished he had the same rapport with Rod Cameron, the manufacturing manager. Coordination with Manufacturing The product engineers worked closely on a day-to-day basis with the manufacturing supervisors and workers. The problems between these two groups stemmed from an inherent conflict between their objectives (see Exhibit 3). The objective of the product engineers was to maintain and improve yields. They had the authority to stop production of any run that did not test properly. Manufacturing, on the other hand, was trying to meet productivity standards and time schedules. When a product engineer stopped a manufacturing run, he or she was possibly preventing the manufacturing group from reaching its objectives. Rod Cameron, the current manufacturing manager, had been promoted from his position as a manufacturing supervisor a year ago. His views on the product engineers: The product engineers are perfectionists. The minute a test result looks a little suspicious they want to shut down the factory. I’m under a lot of pressure to get products out the door. If they pull a few $50,000 orders off the line when they are within a few days of reaching shipping, I’m liable to miss my numbers by $100,000 that month. Besides that, they are doing a lousy job of documenting the manufacturing steps. I’ve got a lot of turnover, and my new operators need to be told or shown exactly what to do for each product. The instructions for a lot of our products are a joke. At first, Frank found Rod very difficult to deal with. Rod found fault with the product engineers for many problems and sometimes seemed rude to Frank when they talked. For example, Rod might tell Frank to “make it quick; I haven’t got much time.” Frank tried not to take Rod’s actions personally, and through persistence was able to develop a more amicable relationship with him. According to Frank: Sometimes, my people will stop work on a product because it doesn’t meet test results at that stage of manufacturing. If we study the situation, we might be able to maintain yields or even save an entire run by adjusting the manufacturing procedures. Rod tries to bully me into changing my engineers’ decisions. He yells at me or criticizes the competence of my people, but I don’t allow his temper or ravings to influence my best judgment in a situation. My strategy in dealing with Rod is to try not to respond defensively to him. Eventually he cools down, and we can have a reasonable discussion of the situation. Despite this strategy, Frank could not always resolve his problems with Rod. On these occasions, Frank took the issue to his own boss, Sam Porter, the vice president in charge of engineering. However, Frank was not satisfied with the support he got from Sam. Frank said: Sam avoids confrontations with the operations VP. He doesn’t have the influence or clout with the other VPs or the president to do justice to engineering’s needs in the organization. 2.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 527 Early that afternoon, Frank again found himself trying to resolve a conflict between engineering and manufacturing. Sharon Hart, one of his most effective product engineers, was responsible for a series of products used in radars—the 3805A–3808A series. Today she had stopped a large run of 3806As. The manufacturing supervisor, Brian Faber, went to Rod Cameron to complain about the impact of this stoppage on his group’s productivity. Brian felt that yields were low on that particular product because the production instructions were confusing to his operators, and that even with clearer instructions, his operators would need additional training to build it satisfactorily. He stressed that the product engineer’s responsibility was to adequately document the production instructions and provide training. For these reasons, Brian asserted that product engineering, and not manufacturing, should be accountable for the productivity loss in the case of these 3806As. Rod called Frank to his office, where he joined the discussion with Sharon, Brian, and Rod. After listening to the issues, Frank conceded that product engineering had responsibility for documenting and training. He also explained, even though everyone was aware of it, that the product engineering group had been operating with reduced staff for over a year now, so training and documentation were lower priorities. Because of this staffing situation, Frank suggested that manufacturing and product engineering work together and pool their limited resources to solve the documentation and training problem. He was especially interested in using a few of the long-term experienced workers to assist in training newer workers. Rod and Brian opposed his suggestion. They did not want to take experienced operators off of the line because it would decrease productivity. The meeting ended when Brian stormed out, saying that Sharon had better get the 3806As up and running again that morning. Frank was particularly frustrated by this episode with manufacturing. He knew perfectly well that his group had primary responsibility for documenting the manufacturing steps for each product. A year ago he told Sam Porter that the product engineers needed to update and standardize all of the documentation for manufacturing products. At that time, Sam told Frank that he would support his efforts to develop the documentation, but would not increase his staff. In fact, Sam had withheld authorization to fill a recently vacated product engineering slot. Frank was reluctant to push the staffing issue because of Sam’s adamance about reducing costs. “Perhaps,” Frank thought, “if I develop a proposal clearly showing the benefits of a documentation program in manufacturing and detailing the steps and resources required to implement the program, I might be able to convince Sam to provide us with more resources.” But Frank could never find the time to develop that proposal. And so he remained frustrated. Later in the Day Frank was reflecting on the complexity of his job when Sharon came to the doorway to see if he had a few moments. Before he could say “Come in,” the phone rang. He looked at the clock. It was 4:10 p.m. Pete was on the other end of the line with an idea he wanted to try out on Frank, so Frank said he could call him back shortly. Sharon was upset, and told him that she was thinking of quitting because the job was not satisfying for her. Sharon said that although she very much enjoyed working on yield improvement projects, she could find no time for them. She was tired of the applications engineers acting like “prima donnas,” too busy to help her solve what they seemed to think were mundane day-to-day manufacturing problems. She also thought that many of the day-to-day problems she handled wouldn’t exist if there was enough time to document manufacturing procedures to begin with. Frank didn’t want to lose Sharon, so he tried to get into a frame of mind where he could be empathetic to her. He listened to her and told her that he could understand her frustration in this situation. He told her the situation would change as industry conditions improved. He told her that he was pleased that she felt comfortable in venting her frustrations with him, and he hoped she would stay with Custom Chip. After Sharon left, Frank realized that he had told Pete that he would call back. He glanced at the TO DO list he had never completed, and realized that he hadn’t spent time on his top priority—developing a proposal relating to solving the documentation problem in manufacturing. Then, he remembered that he had forgotten to acknowledge Bill Lazarus’s fifth-year anniversary with the company. He thought to himself that his job felt like a roller coaster ride, and once again he pondered his effectiveness as a manager. Note 1. Yield refers to the ratio of finished products that meet specifications relative to the number that initially entered the manufacturing process. 2.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 528 Integrative Cases “To make money and have fun.” W. L. Gore The First Day on the Job Bursting with resolve, Jack Dougherty, a newly minted M.B.A. from the College of William and Mary, reported to his first day at W. L. Gore & Associates on July 26, 1976. He presented himself to Bill Gore, shook hands firmly, looked him in the eye, and said he was ready for anything. Jack was not ready, however, for what happened next. Gore replied, “That’s fine, Jack, fine. Why don’t you look around and find something you’d like to do?” Three frustrating weeks later he found that something: trading in his dark blue suit for jeans, he loaded fabric into the mouth of a machine that laminated the company’s patented GORE-TEX®1 membrane to fabric. By 1982, Jack had become responsible for all advertising and marketing in the fabrics group. This story is part of the folklore of W. L. Gore & Associates. Today the process is more structured. Regardless of the job for which they are hired, new Associates2 take a journey through the business before settling into their own positions. A new sales Associate in the fabrics division may spend six weeks rotating through different areas before beginning to concentrate on sales and marketing. Among other things the newcomer learns is how GORE-TEX fabric is made, what it can and cannot do, how Gore handles customer complaints, and how it makes its investment decisions. Anita McBride related her early experience at W. L. Gore & Associates this way: “Before I came to Gore, I had worked for a structured organization. I came here, and for the first month it was fairly structured because I was going through training and this is what we do and this is how Gore is and all of that. I went to Flagstaff for that training. After a month I came down to Phoenix and my sponsor said, ‘Well, here’s your office; it’s a wonderful office,’ and ‘Here’s your desk,’ and walked away. And I thought, ‘Now what do I do?’ You know, I was waiting for a memo or something, or a job description. Finally after another month I was so frustrated, I felt, ‘What have I gotten myself into?’ And so I went to my sponsor and I said, ‘What the heck do you want from me? I need something from you.’ And he said, ‘If you don’t know what you’re supposed to do, examine your commitment, and opportunities.’” Company Background W. L. Gore & Associates was formed by the late Wilbert L. Gore and his wife in 1958. The idea for the business sprang from his personal, organizational, and technical experiences at E. I. DuPont de Nemours, and, particularly, his discovery of a chemical compound with unique properties. The compound, now widely know as GORETEX, has catapulted W. L. Gore & Associates to a high ranking on the Forbes 1998 list of the 500 largest private companies in the United States, with estimated revenues of more than $1.1 billion. The company’s avant-garde culture and people management practices resulted in W. L. Gore being ranked as the seventh best company to work for in America by Fortune in a January 1998 article. Wilbert Gore was born in Meridian, Idaho, near Boise in 1912. By age six, according to his own account, he was an avid hiker in the Wasatch Mountain Range in Utah. In those mountains, at a church camp, he met Genevieve, his future wife. In 1935, they got married—in their eyes, a partnership. He would make breakfast and Vieve, as everyone called her, would make lunch. The partnership lasted a lifetime. He received both a bachelor of science in chemical engineering in 1933 and a master of science in physical chemistry in 1935 from the University of Utah. He began his professional career at American Smelting and Refining in 1936. He moved to Remington Arms Company in 1941 and then to E. I. DuPont de Nemours in 1945. He held positions as research supervisor and head of operations research. While at DuPont, he worked on a team to develop applications for polytetrafluoroethylene, referred to as PTFE in the scientific community and known as “Teflon” by DuPont’s consumers. (Consumers know it under other names from other companies.) On this team Wilbert Gore, called Bill by everyone, felt a sense of excited commitment, personal fulfillment, and self-direction. He followed the development of computers and transistors and felt that PTFE had the ideal insulating characteristics for use with such equipment. He tried many ways to make a PTFE-coated ribbon cable without success. A breakthrough came in his home basement laboratory while he was explaining the problem to his nineteen-year-old son, Bob. The young Gore saw some PTFE sealant tape made by 3M and asked his father, “Why don’t you try this tape?” Bill then explained that everyone knew that you cannot bond PTFE to itself. Bob went on to bed. Bill Gore remained in his basement lab and proceeded to try what everyone knew would not work. At about Integrative Case 3.0 W. L. Gore & Associates, Inc. Entering 1998* *Prepared by Frank Shipper, Department of Management and Marketing, Franklin P. Perdue School of Business, Salisbury State University and Charles C. Manz, Nirenberg Professor of Business Leadership, School of Management, University of Massachusetts. Used with permission. 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 529 4 a.m. he woke up his son, waving a small piece of cable around and saying excitedly, “It works, it works.” The following night father and son returned to the basement lab to make ribbon cable coated with PTFE. Because the breakthrough idea came from Bob, the patent for the cable was issued in Bob’s name. For the next four months Bill Gore tried to persuade DuPont to make a new product—PTFE-coated ribbon cable. By this time in his career Bill Gore knew some of the decision makers at DuPont. After talking to a number of them, he came to realize that DuPont wanted to remain a supplier of raw materials and not a fabricator. Bill and his wife, Vieve, began discussing the possibility of starting their own insulated wire and cable business. On January 1, 1958, their wedding anniversary, they founded W. L. Gore & Associates. The basement of their home served as their first facility. After finishing dinner that night, Vieve turned to her husband of twenty-three years and said, “Well, let’s clear up the dishes, go downstairs, and get to work.” Bill Gore was forty-five years old with five children to support when he left DuPont. He put aside a career of seventeen years, and a good, secure salary. To finance the first two years of the business, he and Vieve mortgaged their house and took $4,000 from savings. All their friends told them not to do it. The first few years were rough. In lieu of salary, some of their employees accepted room and board in the Gore home. At one point eleven Associates were living and working under one roof. One afternoon, while sifting PTFE powder, Vieve received a call from the City of Denver’s water department. The caller indicated that he was interested in the ribbon cable, but wanted to ask some technical questions. Bill was out running some errands. The caller asked for the product manager. Vieve explained that he was out at the moment. Next he asked for the sales manager and finally, the president. Vieve explained that they were also out. The caller became outraged and hollered, “What kind of company is this anyway?” With a little diplomacy the Gores were able eventually to secure an order for $100,000. This order put the company on a profitable footing and it began to take off. W. L. Gore & Associates continued to grow and develop new products, primarily derived from PTFE. Its bestknown product would become GORE-TEX fabric. In 1986, Bill Gore died while backpacking in the Wind River Mountains of Wyoming. He was then Chairman of the Board. His son, Bob, continued to occupy the position of president. Vieve remained as the only other officer, secretarytreasurer. Company Products In 1998, W. L. Gore & Associates has a fairly extensive line of high-tech products that are used in a variety of applications, including electronic, waterproofing, industrial filtration, industrial seals, and coatings. Electronic & Wire Products Gore electronic products have been found in unconventional places where conventional products will not do— in space shuttles, for example, where Gore wire and cable assemblies withstand the heat of ignition and the cold of space. In addition, they have been found in fast computers, transmitting signals at up to 93 percent of the speed of light. Gore cables have even gone underground, in oildrilling operations, and underseas, on submarines that require superior microwave signal equipment and no-fail cables that can survive high pressure. The Gore electronic products division has a history of anticipating future customer needs with innovative products. Gore electronic products have been well received in industry for their ability to last under adverse conditions. For example, Gore has become, according to Sally Gore, leader in Human Resources and Communications, “one of the largest manufacturers of ultrasound cable in the world, the reason being that Gore’s electronic cables’ signal transmission is very, very accurate and it’s very thin and extremely flexible and has a very, very long flex life. That makes it ideal for things like ultrasound and many medical electronic applications.” Medical Products The medical division began on the ski slopes of Colorado. Bill was skiing with a friend, Dr. Ben Eiseman of Denver General Hospital. As Bill Gore told the story: “We were just to start a run when I absentmindedly pulled a small tubular section of GORE-TEX out of my pocket and looked at it. ‘What is that stuff?’ Ben asked. So I told him about its properties. ‘Feels great,’ he said. ‘What do you use it for?’ ‘Got no idea,’ I said. ‘Well give it to me,’ he said, ‘and I’ll try it in a vascular graft on a pig.’ Two weeks later, he called me up. Ben was pretty excited. ‘Bill,’ he said, ‘I put it in a pig and it works. What do I do now?’ I told him to get together with Pete Cooper in our Flagstaff plant, and let them figure it out.” Not long after, hundreds of thousands of people throughout the world began walking around with GORE-TEX vascular grafts. GORE-TEX’s expanded PTFE proved to be an ideal replacement for human tissue in many situations. In patients suffering from cardiovascular disease the diseased portion of arteries has been replaced by tubes of expanded PTFE—strong, biocompatible structures capable of carrying blood at arterial pressures. Gore has a strong position in this product segment. Other Gore medical products have included patches that can literally mend broken hearts by sealing holes, and sutures that allow for tissue attachment and offer the surgeon silk-like handling coupled with extreme strength. In 1985, W. L. Gore & Associates won Britain’s Prince Philip Award for Poly3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 530 Integrative Cases mers in the Service of Mankind. The award recognized especially the lifesaving achievements of the Gore medical products team. Two recently developed products by this division are a new patch material that is intended to incorporate more tissue into the graft more quickly and the GORE™ RideOn®3 Cable System for bicycles. According to Amy LeGere of the medical division, “All the top pro riders in the world are using it. It was introduced just about a year ago and it has become an industry standard.” This product had a positive cash flow very soon after its introduction. Some Associates who were also outdoor sports enthusiasts developed the product and realized that Gore could make a great bicycle cable that would have 70 percent less friction and need no lubrication. The Associates maintain that the profitable development, production, and marketing of such specialized niche products are possible because of the lack of bureaucracy and associated overhead, Associate commitment, and the use of product champions. Industrial Products The output of the industrial products division has included sealants, filter bags, cartridges, clothes, and coatings. Industrial filtration products, such as GORE-TEX filter bags, have reduced air pollution and recovered valuable solids from gases and liquids more completely than alternatives— and they have done so economically. In the future they may make coal-burning plants completely smoke-free, contributing to a cleaner environment. The specialized and critical applications of these products, along with Gore’s reputation for quality, have had a strong influence on industrial purchasers. This division has developed a unique joint sealant—a flexible cord of porous PTFE—that can be applied as a gasket to the most complex shapes, sealing them to prevent leakage of corrosive chemicals, even at extreme temperature and pressure. Steam valves packed with GORETEX have been sold with a lifetime guarantee, provided the valve is used properly. In addition, this division has introduced Gore’s first consumer product—GLIDE®4 —a dental floss. “That was a product that people knew about for a while and they went the route of trying to persuade industry leaders to promote the product, but they didn’t really pursue it very well. So out of basically default almost, Gore decided, Okay, they’re not doing it right. Let’s go in ourselves. We had a champion, John Spencer, who took that and pushed it forward through the dentists’ offices and it just skyrocketed. There were many more people on the team but it was basically getting that one champion who focused on that product and got it out. They told him it ‘couldn’t be done,’ ‘It’s never going to work,’ and I guess that’s all he needed. It was done and it worked,” said Ray Wnenchak of the industrial products division. Amy LeGere added, “The champion worked very closely with the medical people to understand the medical market like claims and labeling so that when the product came out on the market it would be consistent with our medical products. And that’s where, when we cross divisions, we know whom to work with and with whom we combine forces so that the end result takes the strengths of all of our different teams.” As of 1998, GLIDE has captured a major portion of the dental floss market and the mint flavor is the largest-selling variety in the U.S. market based on dollar volume. Fabric Products The Gore fabrics division has supplied laminates to manufacturers of foul weather gear, ski wear, running suits, footwear, gloves, and hunting and fishing garments. Firefighters and U.S. Navy pilots have worn GORE-TEX fabric gear, as have some Olympic athletes. The U.S. Army adopted a total garment system built around a GORE-TEX fabric component. Employees in high-tech clean rooms also wear GORE-TEX garments. GORE-TEX membrane has 9 billion pores randomly dotting each square inch and is feather-light. Each pore is 700 times larger than a water vapor molecule, yet thousands of times smaller than a water droplet. Wind and water cannot penetrate the pores, but perspiration can escape. As a result, fabrics bonded with GORE-TEX membrane are waterproof, windproof, and breathable. The laminated fabrics bring protection from the elements to a variety of products—from survival gear to high-fashion rainwear. Other manufacturers, including 3M, Burlington Industries, Akzo Nobel Fibers, and DuPont, have brought out products to compete with GORE-TEX fabrics. Earlier, the toughest competition came from firms that violated the patents on GORE-TEX. Gore successfully challenged them in court. In 1993, the basic patent on the process for manufacturing ran out. Nevertheless, as Sally Gore explained, “what happens is you get an initial process patent and then as you begin to create things with this process you get additional patents. For instance we have patents protecting our vascular graft, different patents for protecting GORE-TEX patches, and still other patents protecting GORE-TEX industrial sealants and filtration material. One of our patent attorneys did a talk recently, a year or so ago, when the patent expired and a lot of people were saying, Oh, golly, are we going to be in trouble! We would be in trouble if we didn’t have any patents. Our attorney had this picture with a great big umbrella, sort of a parachute, with Gore under it. Next he showed us lots of little umbrellas scattered all over the sky. So you protect certain niche markets and niche areas, but indeed competition increases as your initial patents expire.” Gore, however, has 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 531 continued to have a commanding position in the activewear market. To meet a variety of customer needs, Gore introduced a new family of fabrics in the 1990s (Exhibit 1). The introduction posed new challenges. According to Bob Winterling, “we did such a great job with the brand GORETEX that we actually have hurt ourselves in many ways. By that I mean it has been very difficult for us to come up with other new brands, because many people didn’t even know Gore. We are the GORE-TEX company. One thing we decided to change about Gore four or five years ago was instead of being the GORE-TEX company we wanted to become the Gore company and that underneath the Gore company we had an umbrella of products that fall out of being the great Gore company. So it was a shift in how we positioned GORE-TEX. Today GORE-TEX is stronger than ever as it’s turned out, but now we’ve ventured into such things as WindStopper®5 fabric that is very big in the golf market. It could be a sweater or a fleece piece or even a knit shirt with the WindStopper behind it or closer to your skin and what it does is it stops the wind. It’s not waterproof; it’s water resistant. What we’ve tried to do is position the Gore name and beneath that all of the great products of the company.” W. L. Gore & Associates’ Approach to Organization and Structure W. L. Gore & Associates has never had titles, hierarchy, or any of the conventional structures associated with enterprises of its size. The titles of president and secretarytreasurer continue to be used only because they are required by the laws of incorporation. In addition, Gore has never had a corporate-wide mission or code of ethics statement, nor has Gore ever required or prohibited business units from developing such statements for themselves. Thus, the Associates of some business units who have felt a need for such statements have developed them on their own. When questioned about this issue, one Associate stated, “The company belief is that (1) its four basic operating principles cover ethical practices required of people in business; (2) it will not tolerate illegal practices.” Gore’s management style has been referred to as unmanagement. The organization has been guided by Bill’s experiences on teams at DuPont and has evolved as needed. For example, in 1965 W. L. Gore & Associates was a thriving company with a facility on Paper Mill Road in Newark, Delaware. One Monday morning in the summer, Bill Gore was taking his usual walk through the plant. All of a sudden he realized that he did not know everyone in the plant. The team had become too big. As a result, he established the practice of limiting plant size to approximately two hundred Associates. Thus was born the expansion policy of “Get big by staying small.” The purpose of maintaining small plants was to accentuate a close-knit atmosphere and encourage communication among Associates in a facility. At the beginning of 1998, W. L. Gore & Associates consisted of over forty-five plants worldwide with approximately seven thousand Associates. In some cases, the plants are grouped together on the same site (as in Flagstaff, Arizona, with ten plants). Overseas, Gore’s manufacturing facilities are located in Scotland, Germany, and China, and the company has two joint ventures in Japan (Exhibit 2). In addition, it has sales facilities located in fifteen other countries. Gore manufactures electronic, medical, industrial, and fabric products. In addition, it has numerous sales offices worldwide, including offices in Eastern Europe and Russia. 3.0 Brand Name Activity/Conditions Breathability Water Protection Wind Protection GORE-TEX® Immersion™ technology Ocean technology WindStopper® Gore Dryloft™ Activent™ EXHIBIT 1 Gore’s Family of Fabrics rain, snow, cold, windy for fishing and paddle sports for offshore and coastal sailing cool/cold, windy cold, windy, light precipitation cool/cold, windy, light precipitation very breathable very breathable very breathable very breathable extremely breathable extremely breathable waterproof waterproof waterproof no water resistance water-resistant water-resistant windproof windproof windproof windproof windproof windproof Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 532 Integrative Cases The Lattice Organization W. L. Gore & Associates has been described not only as unmanaged, but also as unstructured. Bill Gore referred to the structure as a lattice organization (Exhibit 3). The characteristics of this structure are: 1. Direct lines of communication—person to person—no intermediary 2. No fixed or assigned authority 3. Sponsors, not bosses 4. Natural leadership defined by followership 5. Objectives set by those who must “make them happen” 6. Tasks and functions organized through commitments The structure within the lattice is complex and evolves from interpersonal interactions, self commitment to groupknown responsibilities, natural leadership, and groupimposed discipline. Bill Gore once explained the structure this way: “Every successful organization has an underground lattice. It’s where the news spreads like lightning, where people can go around the organization to get things done.” An analogy might be drawn to a structure of constant cross-area teams—the equivalent of quality circles going on all the time. When a puzzled interviewer told Bill that he was having trouble understanding how planning and accountability worked, Bill replied with a grin: “So am I. You ask me how it works? Every which way.” The lattice structure has not been without its critics. As Bill Gore stated, “I’m told from time to time that a lattice organization can’t meet a crisis well because it takes too long to reach a consensus when there are no bosses. But this isn’t true. Actually, a lattice by its very nature works particularly well in a crisis. A lot of useless effort is avoided because there is no rigid management hierarchy to conquer before you can attack a problem.” The lattice has been put to the test on a number of occasions. For example, in 1975, Dr. Charles Campbell of the University of Pittsburgh reported that a GORE-TEX arterial graft had developed an aneurysm. If the bubble-like protrusion continued to expand, it would explode. Obviously, this life-threatening situation had to be resolved quickly and permanently. Within only a few days of Dr. Campbell’s first report, he flew to Newark to present his findings to Bill and Bob Gore and a few other Associates. The meeting lasted two hours. Dan Hubis, a former policeman who had joined Gore to develop new production methods, had an idea before the meeting was over. He returned to his work area to try some different production techniques. After only three hours and twelve tries, he had developed a permanent solution. In other words, in three hours a potentially damaging problem to both patients and the company was resolved. Furthermore, Hubis’s redesigned graft went on to win widespread acceptance in the medical community. Eric Reynolds, founder of Marmot Mountain Works Ltd. of Grand Junction, Colorado, and a major Gore customer, raised another issue: “I think the lattice has its prob3.0 EXHIBIT 2 International Locations of W. L. Gore & Associates Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 533 lems with the day-to-day nitty-gritty of getting things done on time and out the door. I don’t think Bill realizes how the lattice system affects customers. I mean, after you’ve established a relationship with someone about product quality, you can call up one day and suddenly find that someone new to you is handling your problem. It’s frustrating to find a lack of continuity.” He went on to say: “But I have to admit that I’ve personally seen at Gore remarkable examples of people coming out of nowhere and excelling.” When Bill Gore was asked if the lattice structure could be used by other companies, he answered: “No. For example, established companies would find it very difficult to use the lattice. Too many hierarchies would be destroyed. When you remove titles and positions and allow people to follow who they want, it may very well be someone other than the person who has been in charge. The lattice works for us, but it’s always evolving. You have to expect problems.” He maintained that the lattice system worked best when it was put in place in start-up companies by dynamic entrepreneurs. Not all Gore Associates function well in this unstructured work environment, especially initially. For those accustomed to a more structured work environment, there can be adjustment problems. As Bill Gore said: “All our lives most of us have been told what to do, and some people don’t know how to respond when asked to do something—and have the very real option of saying no—on their job. It’s the new Associate’s responsibility to find out what he or she can do for the good of the operation.” The vast majority of the new Associates, after some initial floundering, have adapted quickly. Others, especially those who require more structured working conditions, have found that Gore’s flexible workplace is not for them. According to Bill, for those few, “It’s an unhappy situation, for both the Associate and the sponsor. If there is no contribution, there is no paycheck.” As Anita McBride, an Associate in Phoenix, noted: “It’s not for everybody. People ask me do we have turnover, and yes we do have turnover. What you’re seeing looks like utopia, but it also looks extreme. If you finally figure the system, it can be real exciting. If you can’t handle it, you gotta go. Probably by your own choice, because you’re going to be so frustrated.” Overall, the Associates appear to have responded positively to the Gore system of unmanagement and unstructure. And the company’s lattice organization has proven itself to be good from a bottom-line perspective. Bill estimated the year before he died that “the profit per Associate is double” that of DuPont. Features of W. L. Gore’s Culture Outsiders have been struck by the degree of informality and humor in the Gore organization. Meetings tend to be only as long as necessary. As Trish Hearn, an Associate in Newark, Delaware, said, “No one feels a need to pontificate.” Words such as “responsibilities” and “commitments” are commonly heard, whereas words such as “em3.0 EXHIBIT 3 The Lattice Structure Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 534 Integrative Cases ployees,” “subordinates,” and “managers” are taboo in the Gore culture. This is an organization that has always taken what it does very seriously, without its members taking themselves too seriously. For a company of its size, Gore has always had a very short organizational pyramid. As of 1995 the pyramid consists of Bob Gore, the late Bill Gore’s son, as president and Vieve, Bill Gore’s widow, as secretary-treasurer. He has been the chief executive officer for more than twenty years. No second-in-command or successor has been designated. All the other members of the Gore organization were, and continue to be, referred to as Associates. Some outsiders have had problems with the idea of no titles. Sarah Clifton, an Associate at the Flagstaff facility, was being pressed by some outsiders as to what her title was. She made one up and had it printed on some business cards: SUPREME COMMANDER (see Exhibit 4). When Bill Gore learned what she did, he loved it and recounted the story to others. Leaders, Not Managers Within W. L. Gore & Associates, the various people who take lead roles are thought of as being leaders, not managers. Bill Gore described in an internal memo the kinds of leadership and the role of leadership as follows: 1. The Associate who is recognized by a team as having a special knowledge, or experience (for example, this could be a chemist, computer expert, machine operator, salesman, engineer, lawyer). This kind of leader gives the team guidance in a special area. 2. The Associate the team looks to for coordination of individual activities in order to achieve the agreedupon objectives of the team. The role of this leader is to persuade team members to make the commitments necessary for success (commitment seeker). 3. The Associate who proposes necessary objectives and activities and seeks agreement and team consensus on objectives. This leader is perceived by the team members as having a good grasp of how the objectives of the team fit in with the broad objective of the enterprise. This kind of leader is often also the “commitment-seeking” leader. 4. The leader who evaluates relative contribution of team members (in consultation with other sponsors), and reports these contribution evaluations to a compensation committee. This leader may also participate in the compensation committee on relative contribution and pay and reports changes in compensation to individual Associates. This leader is then also a compensation sponsor. 5. Product specialists who coordinate the research, manufacturing, and marketing of one product type within a business, interacting with team leaders and individual Associates who have commitments regarding the product type. They are respected for their knowledge and dedication to their products. 6. Plant leaders who help coordinate activities of people within a plant. 7. Business leaders who help coordinate activities of people in a business. 8. Functional leaders who help coordinate activities of people in a “functional” area. 9. Corporate leaders who help coordinate activities of people in different businesses and functions and who try to promote communication and cooperation among all Associates. 10. Entrepreneuring Associates who organize new teams for new businesses, new products, new processes, new devices, new marketing efforts, new or better methods of all kinds. These leaders invite other Associates to “sign up” for their project. It is clear that leadership is widespread in our lattice organization and that it is continually changing and evolving. The situation that leaders are frequently also sponsors should not imply that these are different activities and responsibilities. Leaders are not authoritarians, managers of people, or supervisors who tell us what to do or forbid us to do things; nor are they “parents” to whom we transfer our own self-responsibility. However, they do often advise us of the consequences of actions we have done or propose to do. Our actions result in contributions, or lack of contribution, to the success of our enterprise. Our pay depends on the magnitude of our contributions. This is the basic discipline of our lattice organization. Egalitarian and Innovative Other aspects of the Gore culture have been aimed at promoting an egalitarian atmosphere, such as parking lots with no reserved parking spaces except for customers and 3.0 SARAH CLIFTON W. L. GORE & ASSOCIATES, Inc. SUPREME COMMANDER 1505 NORTH FOURTH STREET FLAGSTAFF, ARIZONA 86001 PHONE: 602-774-0611 TWX 910-972-0969 GORE EXHIBIT 4 The Supreme Commander Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 535 disabled workers or visitors and dining areas—only one in each plant—set up as focal points for Associate interaction. As Dave McCarter of Phoenix explained: “The design is no accident. The lunchroom in Flagstaff has a fireplace in the middle. We want people to like to be here.” The location of a plant is also no accident. Sites have been selected on the basis of transportation access, a nearby university, beautiful surroundings, and climate appeal. Land cost has never been a primary consideration. McCarter justified the selection by stating: “Expanding is not costly in the long run. The loss of money is what you make happen by stymieing people into a box.” Bob Gore is a champion of Gore culture. As Sally Gore related, “We have managed surprisingly to maintain our sense of freedom and our entrepreneurial spirit. I think what we’ve found is that we had to develop new ways to communicate with Associates because you can’t communicate with six thousand people the way that you can communicate with five hundred people. It just can’t be done. So we have developed a newsletter that we didn’t have before. One of the most important communication mediums that we developed, and this was Bob Gore’s idea, is a digital voice exchange which we call our Gorecom. Basically everyone has a mailbox and a password. Lots of companies have gone to e-mail and we use e-mail, but Bob feels very strongly that we’re very much an oral culture and there’s a big difference between cultures that are predominantly oral and predominantly written. Oral cultures encourage direct communication, which is, of course, something that we encourage.” In rare cases an Associate “is trying to be unfair,” in Bill’s own words. In one case the problem was chronic absenteeism and in another, an individual was caught stealing. “When that happens, all hell breaks loose,” said Bill Gore. “We can get damned authoritarian when we have to.” Over the years, Gore & Associates has faced a number of unionization drives. The company has neither tried to dissuade Associates from attending an organizational meeting nor retaliated when flyers were passed out. As of 1995, none of the plants had been organized. Bill believed that no need existed for third-party representation under the lattice structure. He asked the question, “Why would Associates join a union when they own the company? It seems rather absurd.” Commitment has long been considered a twoway street. W. L. Gore & Associates has tried to avoid layoffs. Instead of cutting pay, which in the Gore culture would be disastrous to morale, the company has used a system of temporary transfers within a plant or cluster of plants and voluntary layoffs. Exhibit 7 at the end of this case example contains excerpts of interviews with two Gore Associates that further indicate the nature of the culture and work environment at W. L. Gore & Associates. W. L. Gore & Associates’ Sponsor Program Bill Gore knew that products alone did not a company make. He wanted to avoid smothering the company in thick layers of formal “management.” He felt that hierarchy stifled individual creativity. As the company grew, he knew that he had to find a way to assist new people and to follow their progress. This was particularly important when it came to compensation. W. L. Gore & Associates developed its “sponsor” program to meet these needs. When people apply to Gore, they are initially screened by personnel specialists. As many as ten references might be 3.0 1200 1100 1000 900 800 700 600 1989 1990 1991 1992 1993 1994 1995 1996 1997 4000 5000 6000 7000 8000 9000 Years Gore’s Sales in Millions Billions ni . .P .D G Gore (Y1) G.D.P. (Y2) Gore G.D.P. 60 5438.7 660 5743.8 700 5916.7 750 6244.4 804 6553 828 6935.7 958 7265.4 1064 7636 1160 8079.9 EXHIBIT 5 Growth of Gore’s Sales vs. Gross Domestic Product Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 536 Integrative Cases contacted on each applicant. Those who meet the basic criteria are interviewed by current Associates. The interviews have been described as rigorous by those who have gone through them. Before anyone is hired, an Associate must agree to be his or her sponsor. The sponsor is to take a personal interest in the new Associate’s contributions, problems, and goals, acting as both a coach and an advocate. The sponsor tracks the new Associate’s progress, helping and encouraging, dealing with weaknesses, and concentrating on strengths. Sponsoring is not a short-term commitment. All Associates have sponsors and many have more than one. When individuals are hired initially, they are likely to have a sponsor in their immediate work area. If they move to another area, they may have a sponsor in that work area. As Associates’ commitments change or grow, they may acquire additional sponsors. Because the hiring process looks beyond conventional views of what makes a good Associate, some anomalies have occurred. Bill Gore proudly told the story of “a very young man” of 84 who walked in, applied, and spent five very good years with the company. The individual had thirty years of experience in the industry before joining Gore. His other Associates had no problems accepting him, but the personnel computer did. It insisted that his age was 48. The individual success stories at Gore have come from diverse backgrounds. An internal memo by Bill Gore described three roles of sponsors: 1. Starting sponsor—a sponsor who helps a new Associate get started on a first job, or a present Associate get started on a new job. 2. Advocate sponsor—a sponsor who sees that an Associate’s accomplishments are recognized. 3. Compensation sponsor—a sponsor who sees to it that an Associate is fairly paid for contributions to the success of the enterprise. A single person can perform any one or all three kinds of sponsorship. Quite frequently, a sponsoring Associate is a good friend and it is not unknown for two Associates to sponsor each other. Compensation Practices Compensation at W. L. Gore & Associates has taken three forms: salary, profit sharing, and an Associates’ Stock Ownership Program (ASOP).6 Entry-level salary has been in the middle for comparable jobs. According to Sally Gore: “We do not feel we need to be the highest paid. We never try to steal people away from other companies with salary. We want them to come here because of the opportunities for growth and the unique work environment.” Associates’ salaries have been reviewed at least once a year and more commonly twice a year. The reviews are conducted by a compensation team at each facility, with sponsors for the Associates acting as their advocates during the review process. Prior to meeting with the compensation committee, the sponsor checks with customers or Associates familiar with the person’s work to find out what contribution the Associate has made. The compensation team relies heavily on this input. In addition, the compensation team considers the Associate’s leadership ability and willingness to help others develop to their fullest. Profit sharing follows a formula based on economic value added (EVA). Sally Gore had the following to say about the adoption of a formula: “It’s become more formalized, and in a way, I think that’s unfortunate because it used to be a complete surprise to receive a profit share. The thinking of the people like Bob Gore and other leaders was that maybe we weren’t using it in the right way and we could encourage people by helping them know more about it and how we made profit-share decisions. The fun of it before was people didn’t know when it was coming and all of a sudden you could do something creative about passing out checks. It was great fun and people would have a wonderful time with it. The disadvantage was that Associates then did not focus much on, ‘What am I doing to create another profit share?’ By using EVA as a method of evaluation for our profit share, we know at the end of every month how much EVA was created that month. When we’ve created a certain amount of EVA, we then get another profit share. So everybody knows and everyone says, ‘We’ll do it in January,’ so it is done. Now Associates feel more part of the happening to make it work. What have you done? Go make some more sales calls, please! There are lots of things we can do to improve our EVA and everybody has a responsibility to do that.” Every month EVA is calculated and every Associate is informed. John Mosko of electronic products commented, “…(EVA) lets us know where we are on the path to getting one (a profit share). It’s very critical—every Associate knows.” Annually, Gore also buys company stock equivalent to a fixed percent of the Associates’ annual incomes, placing it in the ASOP retirement fund. Thus, an Associate can become a stockholder after being at Gore for a year. Gore’s ASOP ensures Associates participate in the growth of the company by acquiring ownership in it. Bill Gore wanted Associates to feel that they themselves are owners. One Associate stated, “This is much more important than profit sharing.” In fact, some long-term Associates (including a twenty-five-year veteran machinist) have become millionaires from the ASOP. W. L. Gore & Associates’ Guiding Principles and Core Values In addition to the sponsor program, Bill Gore articulated four guiding principles: 1. Try to be fair. 2. Encourage, help, and allow other Associates to grow in knowledge, skill, and scope of activity and responsibility. 3. Make your own commitments, and keep them. 4. Consult with other Associates before taking actions that may be “below the water line.” 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 537 The four principles have been referred to as Fairness, Freedom, Commitment, and Waterline. The waterline terminology is drawn from an analogy to ships. If someone pokes a hole in a boat above the water line, the boat will be in relatively little real danger. If someone, however, pokes a hole below the water line, the boat is in immediate danger of sinking. “Water line” issues must be discussed across teams and plants before decisions are made. The operating principles were put to a test in 1978. By this time word about the qualities of GORE-TEX fabric was being spread throughout the recreational and outdoor markets. Production and shipment had begun in volume. At first a few complaints were heard. Next some of the clothing started coming back. Finally, much of the clothing was being returned. The trouble was that the GORE-TEX fabric was leaking. Waterproofing was one of the major properties responsible for GORE-TEX fabric’s success. The company’s reputation and credibility were on the line. Peter W. Gilson, who led Gore’s fabrics division, recalled: “It was an incredible crisis for us at that point. We were really starting to attract attention; we were taking off—and then this.” In the next few months, Gilson and a number of his Associates made a number of those belowthe-water-line decisions. First, the researchers determined that oils in human sweat were responsible for clogging the pores in the GORE-TEX fabric and altering the surface tension of the membrane. Thus, water could pass through. They also discovered that a good washing could restore the waterproof property. At first this solution, known as the “Ivory Snow solution,” was accepted. A single letter from “Butch,” a mountain guide in the Sierras, changed the company’s position. Butch described what happened while he was leading a group: “My parka leaked and my life was in danger.” As Gilson noted, “That scared the hell out of us. Clearly our solution was no solution at all to someone on a mountaintop.” All the products were recalled. Gilson remembered: “We bought back, at our own expense, a fortune in pipeline material—anything that was in the stores, at the manufacturers, or anywhere else in the pipeline.” In the meantime, Bob Gore and other Associates set out to develop a permanent fix. One month later, a secondgeneration GORE-TEX fabric had been developed. Gilson, furthermore, told dealers that if a customer ever returned a leaky parka, they should replace it and bill the company. The replacement program alone cost Gore roughly $4 million. The popularity of GORE-TEX outerwear took off. Many manufacturers now make numerous pieces of apparel such as parkas, gloves, boots, jogging outfits, and wind shirts from GORE-TEX laminate. Sometimes when customers are dissatisfied with a garment, they return them directly to Gore. Gore has always stood behind any product made of GORE-TEX fabric. Analysis of the returned garments found that the problem was often not the GORETEX fabric. The manufacturer, “…had created a design flaw so that the water could get in here or get in over the zipper and we found that when there was something negative about it, everyone knew it was GORE-TEX. So we had to make good on products that we were not manufacturing. We now license the manufacturers of all our GORETEX fabric products. They pay a fee to obtain a license to manufacture GORE-TEX products. In return we oversee the manufacture and we let them manufacture only designs that we are sure are guaranteed to keep you dry, that really will work. Then it works for them and for us—a winwin for them as well as for us,” according to Sally Gore. To further ensure quality, Gore & Associates has its own test facility including a rain room for garments made from GORE-TEX. Besides a rain/storm test, all garments must pass abrasion and washing machine tests. Only the garments that pass these tests will be licensed to display the GORE-TEX label. Research and Development Like everything else at Gore, research and development has always been unstructured. Even without a formal R&D department, the company has been issued many patents, although most inventions have been held as proprietary or trade secrets. For example, few Associates are allowed to see GORE-TEX being made. Any Associate can, however, ask for a piece of raw PTFE (known as a silly worm) with which to experiment. Bill Gore believed that all people had it within themselves to be creative. One of the best examples of Gore inventiveness occurred in 1969. At the time, the wire and cable division was facing increased competition. Bill Gore began to look for a way to straighten out the PTFE molecules. As he said, “I figured out that if we ever unfold those molecules, get them to stretch out straight, we’d have a tremendous new kind of material.” He thought that if PTFE could be stretched, air could be introduced into its molecular structure. The result would be greater volume per pound of raw material with no effect on performance. Thus, fabricating costs would be reduced and profit margins would be increased. Going about this search in a scientific manner, Bob Gore heated rods of PTFE to various temperatures and then slowly stretched them. Regardless of the temperature or how carefully he stretched them, the rods broke. Working alone late one night after countless failures, Bob in frustration stretched one of the rods violently. To his surprise, it did not break. He tried it again and again with the same results. The next morning Bob demonstrated his breakthrough to his father, but not without some drama. As Bill Gore recalled: “Bob wanted to surprise me so he took a rod and stretched it slowly. Naturally, it broke. Then he pretended to get mad. He grabbed another rod and said, ‘Oh, the hell with this,’ and gave it a pull. It didn’t break—he’d done it.” The new arrangement of molecules not only changed the wire and cable division, but led to the development of GORE-TEX fabric. 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 538 Integrative Cases Bill and Vieve did the initial field-testing of GORETEX fabric the summer of 1970. Vieve made a hand-sewn tent out of patches of GORE-TEX fabric. They took it on their annual camping trip to the Wind River Mountains in Wyoming. The very first night in the wilderness, they encountered a hail storm. The hail tore holes in the top of the tent, and the bottom filled up like a bathtub from the rain. Undaunted, Bill Gore stated: “At least we knew from all the water that the tent was waterproof. We just needed to make it stronger, so it could withstand hail.” Gore Associates have always been encouraged to think, experiment, and follow a potentially profitable idea to its conclusion. At a plant in Newark, Delaware, Fred L. Eldreth, an Associate with a third-grade education, designed a machine that could wrap thousands of feet of wire a day. The design was completed over a weekend. Many other Associates have contributed their ideas through both product and process breakthroughs. Even without an R&D department, innovation and creativity continue at a rapid pace at Gore & Associates. The year before he died, Bill Gore claimed that “the creativity, the number of patent applications and innovative products is triple” that of DuPont. Development of Gore Associates Ron Hill, an Associate in Newark, noted that Gore “will work with Associates who want to advance themselves.” Associates have been offered many in-house training opportunities, not only in technical and engineering areas but also in leadership development. In addition, the company has established cooperative education programs with universities and other outside providers, picking up most of the costs for the Gore Associates. The emphasis in Associate development, as in many parts of Gore, has always been that the Associate must take the initiative. Marketing Approaches and Strategy Gore’s business philosophy incorporates three beliefs and principles: (1) that the company can and should offer the best-valued products in the markets and market segments where it chooses to compete, (2) that buyers in each of its markets should appreciate the caliber and performance of the items it manufactures, and (3) that Gore should become a leader with unique expertise in each of the product categories where it competes. To achieve these outcomes, the company’s approach to marketing (it has no formally organized marketing department) is based on the following principles: 1. Marketing a product requires a leader, or product champion. According to Dave McCarter: “You marry your technology with the interests of your champions, since you’ve got to have champions for all these things no matter what. And that’s the key element within our company. Without a product champion you can’t do much anyway, so it is individually driven. If you get people interested in a particular market or a particular product for the marketplace, then there is no stopping them.” Bob Winterling of the Fabrics Division elaborated further on the role and importance of the product champion. The product champion is probably the most important resource we have at Gore for the introduction of new products. You look at that bicycle cable. That could have come out of many different divisions of Gore, but it really happened because one or two individuals said, “Look, this can work. I believe in it; I’m passionate about it; and I want it to happen.” And the same thing with GLIDE floss. I think John Spencer in this case— although there was a team that supported John, let’s never forget that—John sought the experts out throughout the organization. But without John making it happen on his own, GLIDE floss would never have come to fruition. He started with a little chain of drugstores here, Happy Harry’s I think, and we put a few cases in and we just tracked the sales and that’s how it all started. Who would have ever believed that you could take what we would have considered a commodity product like that, sell it direct for $3–$5 apiece. That is so unGorelike it’s incredible. So it comes down to people and it comes down to the product champion to make things happen. 2. A product champion is responsible for marketing the product through commitments with sales representatives. Again, according to Dave McCarter: “We have no quota system. Our marketing and our sales people make their own commitments as to what their forecasts have been. There is no person sitting around telling them that is not high enough, you have to increase it by 10 percent, or whatever somebody feels is necessary. You are expected to meet your commitment, which is your forecast, but nobody is going to tell you to change it. . . . There is no order of command, no chain involved. These are groups of independent people who come together to make unified commitments to do something and sometimes when they can’t make those agreements…you may pass up a marketplace…but that’s OK, because there’s much more advantage when the team decides to do something.” 3. Sales Associates are on salary, not commission. They participate in the profit sharing and ASOP plans in which all other Associates participate. As in other areas of Gore, individual success stories have come from diverse backgrounds. Dave McCarter related another 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 539 success of the company relying on a product champion as follows: I interviewed Sam one day. I didn’t even know why I was interviewing him actually. Sam was retired from AT&T. After twenty-five years, he took the golden parachute and went down to Sun Lakes to play golf. He played golf a few months and got tired of that. He was selling life insurance. I sat reading the application; his technical background interested me. . . . He had managed an engineering department with six hundred people. He’d managed manufacturing plants for AT&T and had a great wealth of experience at AT&T. He said, “I’m retired. I like to play golf but I just can’t do it every day, so I want to do something else. Do you have something around here I can do?” I was thinking to myself, “This is one of these guys I would sure like to hire but I don’t know what I would do with him.” The thing that triggered me was the fact that he said he sold insurance and here is a guy with a high degree of technical background selling insurance. He had marketing experience, international marketing experience. So, the bell went off in my head that we were trying to introduce a new product into the marketplace that was a hydrocarbon leak protection cable. You can bury it in the ground and in a matter of seconds it could detect a hydrocarbon-like gasoline. I had a couple of other guys working on the product who hadn’t been very successful with marketing it. We were having a hard time finding a customer. Well, I thought, that kind of product would be like selling insurance. If you think about it, why should you protect your tanks? It’s an insurance policy that things are not leaking into the environment. That has implications, big-time monetary. So, actually, I said, “Why don’t you come back Monday? I have just the thing for you.” He did. We hired him; he went to work, a very energetic guy. Certainly a champion of the product, he picked right up on it, ran with it singlehanded. Now it’s a growing business. It certainly is a valuable one too for the environment. In the implementation of its marketing strategy, Gore has relied on cooperative and word-of-mouth advertising. Cooperative advertising has been especially used to promote GORE-TEX fabric products. These high-dollar, glossy campaigns include fullcolor ads and dressing the sales force in GORE-TEX garments. A recent slogan used in the ad campaigns has been, “If it doesn’t say GORE-TEX, it’s not.” Some retailers praise the marketing and advertising efforts as the best. Leigh Gallagher, managing editor of Sporting Goods Business magazine, describes Gore & Associates’ marketing as “unbeatable.” Gore has stressed cooperative advertising because the Associates believe positive experiences with any one product will carry over to purchases of other and more GORETEX fabric products. Apparently, this strategy has paid off. When the Grandoe Corporation introduced GORE-TEX gloves, its president, Richard Zuckerwar, noted: “Sports activists have had the benefit of GORE-TEX gloves to protect their hands from the elements…. With this handsome collection of gloves …you can have warm, dry hands without sacrificing style.” Other clothing manufacturers and distributors who sell GORE-TEX garments include Apparel Technologies, Lands’ End, Austin Reed, Hudson Trail Outfitters, Timberland, Woolrich, North Face, L.L. Bean, and Michelle Jaffe. The power of these marketing techniques extends beyond consumer products. According to Dave McCarter: “In the technical end of the business, company reputation probably is most important. You have to have a good reputation with your company.” He went on to say that without a good reputation, a company’s products would not be considered seriously by many industrial customers. In other words, the sale is often made before the representative calls. Using its marketing strategies, Gore has been very successful in securing a market leadership position in a number of areas, ranging from waterproof outdoor clothing to vascular grafts. Its market share of waterproof, breathable fabrics is estimated to be 90 percent. Adapting to Changing Environmental Forces Each of Gore’s divisions has faced from time to time adverse environmental forces. For example, the fabric division was hit hard when the fad for jogging suits collapsed in the mid-1980s. The fabric division took another hit from the recession of 1989. People simply reduced their purchases of high-end athletic apparel. By 1995, the fabric division was the fastest-growing division of Gore again. The electronic division was hit hard when the mainframe computer business declined in the early 1990s. By 1995, that division was seeing a resurgence for its products partially because that division had developed some electronic products for the medical industry. As can be seen, not all the forces have been negative. The aging population of America has increased the need for health care. As a result, Gore has invested in the development of additional medical products and the medical division is growing. W. L. Gore & Associates’ Financial Performance As a closely held private corporation, W. L. Gore has kept its financial information as closely guarded as proprietary information on products and processes. It has been estimated that Associates who work at Gore own 90 percent of the stock. According to Shanti Mehta, an Associate, 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 540 Integrative Cases Gore’s returns on assets and sales have consistently ranked it among the top 10 percent of the Fortune 500 companies. According to another source, W. L. Gore & Associates has been doing just fine by any financial measure. For thirty-seven straight years (from 1961 to 1997) the company has enjoyed profitability and positive return on equity. The compounded growth rate for revenues at W. L. Gore & Associates from 1969 to 1989 was more than 18 percent, discounted for inflation.7 In 1969, total sales were about $6 million; by 1989, the figure was $600 million. As should be expected with the increase in size, the percentage increase in sales has slowed over the last seven years (Exhibit 6). The company projects sales to reach $1.4 billion in 1998. Gore financed this growth without long-term debt unless it made sense. For example, “We used to have some industrial revenue bonds where, in essence, to build facilities the government allows banks to lend you money tax-free. Up to a couple of years ago we were borrowing money through industrial revenue bonds. Other than that, we are totally debt-free. Our money is generated out of the operations of the business, and frankly we’re looking for new things to invest in. I know that’s a challenge for all of us today,” said Bob Winterling. Forbes magazine estimates Gore’s operating profits for 1993, 1994, 1995, 1996, and 1997 to be $120, $140, $192, $213, and $230 million, respectively (see Exhibit 6). Bob Gore predicts that the company will reach $2 billion in sales by 2001. Recently, the company purchased Optical Concepts Inc., a laser, semiconductor technology company, of Lompoc, California. In addition, Gore & Associates is investing in test-marketing a new product, guitar strings, which was developed by its Associates. When asked about cost control, Sally Gore had the following to say: You have to pay attention to cost or you’re not an effective steward of anyone’s money, your own or anyone else’s. It’s kind of interesting, we started manufacturing medical products in 1974 with the vascular graft and it built from there. The Gore vascular graft is the Cadillac or BMW or the Rolls Royce of the business. There is absolutely no contest, and our medical products division became very successful. People thought this was Mecca. Nothing had ever been manufactured that was so wonderful. Our business expanded enormously, rapidly out there (Flagstaff, Arizona) and we had a lot of young, young leadership. They spent some time thinking they could do no wrong and that everything they touched was going to turn to gold. They have had some hard knocks along the way and discovered it wasn’t as easy as they initially thought it was. And that’s probably good learning for everyone somewhere along the way. That’s not how business works. There’s a lot of truth in that old saying that you learn more from your failures than you do your successes. One failure goes a long way toward making you say, Oh, wow! Acknowledgments Many sources were helpful in providing background material for this case. The most important sources of all were the W. L. Gore Associates, who generously shared their time and viewpoints about the company. They provided 3.0 EXHIBIT 6 Operating and Net Profits of W. L. Gore & Associates Data from Forbes Magazine’s Annual Report on the 500 Largest Private Companies in the U.S. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 541 many resources, including internal documents, and added much to this case through sharing their personal experiences as well as ensuring that the case accurately reflected the Gore company and culture. Excerpts from Interviews with Associates The first excerpt is from an Associate that was formerly with IBM and has been with Gore for two years: Q. What is the difference between being with IBM and Gore? A. I spent twenty-four years working for IBM, and there’s a big difference. I can go ten times faster here at Gore because of the simplicity of the lattice organization. Let me give you an example. If I wanted to purchase chemicals at IBM (I am an industrial chemist), the first thing I would need to do is get accounting approval, then I would need at least two levels of managers’ approval, then a secretary to log in my purchase and the purchase order would go to Purchasing where it would be assigned a buyer. Some time could be saved if you were willing to “walk” the paperwork through the approval process, but even after computerizing the process, it typically would take one month from the time you initiated the purchase requisition till the time the material actually arrived. Here they have one simple form. Usually, I get the chemicals the next day and a copy of the purchase order will arrive a day or two after that. It happens so fast. I wasn’t used to that. Q. Do you find that a lot more pleasant? A. Yeah, you’re unshackled here. There’s a lot less bureaucracy that allows you to be a lot more productive. Take Lab Safety, for example. In my lab at IBM, we were cited for not having eyewash taped properly. The first time, we were cited for not having a big enough area taped off. So we taped off a bigger area. The next week the same eyewash was cited again, because the area we taped off was three inches too short in one direction. We retaped it and the following week, it got cited again for having the wrong color tape. Keep in mind that the violation was viewed as serious as a pail of gasoline next to a lit Bunsen burner. Another time I had the dubious honor of being selected the functional safety representative in charge of getting the function’s labs ready for a Corporate Safety Audit. (The function was a third level in the pyramidal organization— department,  project, and  function.) At the same time I was working on developing a new surface mount package. As it turned out, I had no time to work on development, and the function spent a lot of time and money getting ready for the Corporate Auditors who in the end never showed. I’m not belittling the importance of safety, but you really don’t need all that bureaucracy to be safe. The second interview is with an Associate who is a recent engineering graduate: Q. How did you find the transition coming here? A. Although I never would have expected it to be, I found my transition coming to Gore to be rather challenging. What attracted me to the company was the opportunity to “be my own boss” and determine my own commitments. I am very goal-oriented, and enjoy taking a project and running with it—all things that you are able to do and encouraged to do within the Gore culture. Thus, I thought, a perfect fit! However, as a new Associate, I really struggled with where to focus my efforts—I was ready to make my own commitments, but to what?! I felt a strong need to be sure that I was working on something that had value, something that truly needed to be done. While I didn’t expect to have the “hottest” project, I did want to make sure that I was helping the company to “make money” in some way. At the time, though, I was working for a plant that was pretty typical of what Gore was like when it was originally founded—after my first project (which was designed to be a “quick win”—a project with meaning, but one that had a definite end point), I was told, “Go find something to work on.” While I could have found something, I wanted to find something with at least a small degree of priority! Thus, the whole process of finding a project was very frustrating for me—I didn’t feel that I had the perspective to make such a choice and ended up in many conversations with my sponsor about what would be valuable…. In the end, of course, I did find that project—and it did actually turn out to be a good investment for Gore. The process to get there, though, was definitely trying for someone as inexperienced as I was—so much ground would have been gained by suggesting a few projects to me and then letting me choose from that smaller pool. What’s really neat about the whole thing, though, is that my experience has truly made a difference. Due in part to my frustrations, my plant now provides college grads with more guidance on their first several projects. (This guidance obviously becomes less and less critical as each Associate grows within Gore.) Associates still are choosing their own commitments, but they’re doing so with additional perspective, and the knowledge that they are making a contribution to Gore—which is an important thing within our culture. As I said, though, it was definitely rewarding to see that the company was so responsive, and to feel that I had helped to shape someone else’s transition! 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 542 Integrative Cases Notes 1. GORE-TEX is a registered trademark of W. L. Gore & Associates. 2. In this case the word Associates is used and capitalized because in W. L. Gore & Associates’ literature the word is always used instead of employees and is capitalized. In fact, case writers were told that Gore “never had ‘employees’—always ‘Associates.’” 3. GORE RideOn is a registered trademark of W. L. Gore & Associates. 4. Glide is a registered trademark of W. L. Gore & Associates. 5. WindStopper is a registered trademark of W. L. Gore & Associates. 6. Similar legally to an ESOP (Employee Stock Ownership Plan). Again, Gore simply has never allowed the word employee in any of its documentation. 7. In comparison, only 11 of the 200 largest companies in the Fortune 500 had positive ROE each year from 1970 to 1988 and only 2 other companies missed a year. The revenue growth rate for these 13 companies was 5.4 percent, compared with 2.5 percent for the entire Fortune 500. References Aburdene, Patricia, and John Nasbitt. Re-inventing the Corporation (New York: Warner Books, 1985). Angrist, S. W. “Classless Capitalists,” Forbes (May 9, 1983), 123–124. Franlesca, L. “Dry and Cool,” Forbes (August 27, 1984), 126. Hoerr, J. “A Company Where Everybody Is the Boss,” Business Week (April 15, 1985), 98. Levering, Robert. The 100 Best Companies to Work for in America. See the chapter on W. L. Gore & Associates, Inc. (New York: Signet, 1985). McKendrick, Joseph. “The Employees as Entrepreneur,” Management World (January 1985), 12–13. Milne, M. J. “The Gorey Details,” Management Review (March 1985), 16–17. Posner, B. G. “The First Day on the Job,” Inc. (June 1986), 73–75. Price, Debbie M. “GORE-TEX style,” Baltimore Sun (April 20, 1997), 1D & 4D. Price, Kathy. “Firm Thrives Without Boss,” AZ Republic (February 2, 1986). Rhodes, Lucien. “The Un-manager,” Inc. (August 1982), 34. Simmons, J. “People Managing Themselves: Un-management at W. L. Gore Inc.,” The Journal for Quality and Participation (December 1987), 14–19. “The Future Workplace,” Management Review (July 1986), 22–23. Trachtenberg, J. A. “Give Them Stormy Weather,” Forbes (March 24, 1986), 172–174. Ward, Alex. “An All-Weather Idea,” The New York Times Magazine (November 10, 1985), Sec. 6. Weber, Joseph. “No Bosses. And Even ‘Leaders’ Can’t Give Orders,” BusinessWeek (December 10, 1990), 196–197. “Wilbert L. Gore,” IndustryWeek (October 17, 1983), 48–49. 3.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 543 In the fall of 1995, Bill Sanko, president of XEL Communications, Inc., strolled around in the new 115,000-square-foot facility with its spacious conference rooms and computerbased skills training center, into which the company had just moved. Their former facility had been a 53,000-square-foot building that just could not accommodate XEL’s growth. During the upcoming round of strategic planning sessions, Bill wondered how XEL and its management team would decide to grapple with the two-edged sword of rapid growth. Would it be possible for XEL to maintain its entrepreneurial culture while it experienced rapid growth? Would it find the resources necessary to sustain growth without harming its culture? From where? XEL Communications, Inc. XEL Communications, Inc.1 —located in the outskirts of Denver, Colorado—designed and manufactured various telecommunications products for a number of companies—primarily large U.S. telephone operating companies. Originally a division within GTE headed by Bill Sanko, it was in the process of being closed when Bill and a few key managers persuaded GTE to sell the division to them. In July 1984, Sanko and fellow managers signed a letter of intent to buy the division from GTE. Two months later, the bill of sale was signed, and XEL Communications, Inc., became an independent company. Ironically, GTE remained as one of XEL’s major customer accounts. In terms of overall financial performance, XEL was profitable. Its revenues increased from $16.8 million in 1992 to $23.6 million in 1993 and $52.3 million in 1994— over a threefold increase in three years. In 1996, XEL employed approximately 300 people. XEL designed and manufactured more than 300 individual products that enabled network operators to upgrade existing infrastructures and cost-effectively enhance the speed and functionality of their networks while reducing operating expenses and overhead costs. The firm’s products provided access to telecommunications services and automated monitoring and maintenance of network performance, and extended the distance over which network operators were able to offer their services.2 For example, XEL produced equipment that “conditioned” existing lines to make them acceptable for business use and sold products that facilitated the transmission of data and information over phone lines. Driving the need for XEL’s products was the keen interest in electronic data transference: “Businesses are more and more dependent on the transfer of information,” Bill Sanko noted. In addition, more businesses, including XEL, were operating by taking and filling orders through electronic data exchanges. Instead of dialing in to inside salespeople, businesses often accessed databases directly. One of XEL’s strengths was its ability to adapt one manufacturer’s equipment to another’s. XEL provided the bits and pieces of telecommunications equipment to the “network,” allowing the smooth integration of disparate transmission pieces. XEL also sold central office transmission equipment and a full range of mechanical housings, specialty devices, power supplies, and shelves. In 1995, XEL began developing a hybrid fiber/cable broadband modem for use by cable television firms seeking to provide enhanced data communication services over their network facilities. Cable modems were one of the hottest new products in telecommunications. The devices would enable computers to send and receive information about one hundred times faster than standard modems used with phone lines. Given that 34 million homes had personal computers, cable modems were seen as a surefire way to exploit the personal computer (PC) boom and the continuing convergence of computers and television. Media analysts estimated that cable modem users would rise to 11.8 million by the end of 2005 from a handful in 1996.3 “Business customers and their changing telecommunications needs drive the demand for XEL’s products. That, in turn, presents a challenge to the company,” said Sanko. Sanko cited the constant stream of new products developed by XEL—approximately two per month—as the driving force behind the growth. Throughout the industry, product life-cycle times were getting even shorter. Before the breakup of the Bell System in 1984, transmission switches and other telecommunications devices enjoyed a thirty- to forty-year life. In 1995, with technology moving so fast, XEL’s products had about a three-year to five-year life. XEL sold products to all of the Regional Bell Operating Companies (RBOCs), as well as such companies as GTE and Centel. Railroads, with their own telephone networks, were also customers. In addition to its domestic Integrative Case 4.0 XEL Communications, Inc. (C): Forming a Strategic Partnership* 4.0 *This case was prepared by Professors Robert P. McGowan and Cynthia V. Fukami, Daniels College of Business, as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1995 by the authors: © 1997 by the Case Center, Daniels College of Business, University of Denver. Published by South-Western College Publishing. For information regarding this and other CaseNet* cases, please visit CaseNet* on the World Wide Web at http://casenet.thomson.com. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 544 Integrative Cases business, products were sold in Canada, Mexico, and Central and South America.4 XEL’s field salespeople worked with engineers to satisfy client requests for specific services. Over a period of time, the salespeople developed a rapport with these engineers, providing XEL with new product leads. With all the consolidations and ventures in telecommunications, those who watched the industry often concluded that the overall market would become more difficult. Sanko believed, however, that “out of change comes opportunity. The worst-case scenario would be a static situation. Thus, a small company, fast to respond to customer needs and able to capitalize on small market niches, will be successful. Often, a large company like AT&T will forsake a smaller market and XEL will move in. Also, XEL’s size allows it to design a project in a very short time.” Sanko watched federal legislation keenly. The Telecommunications Act of 1996, which removed numerous barriers to competition, had clearly changed the rules of the game. Consequently, said Sanko, “we need to expand our market and be prepared to sell to others as the regulatory environment changes.” The joint venture between Time Warner and US West also signaled that telephone and cable companies would be pooling their resources to provide a broader array of information services. As for the future, Sanko saw “a lot of opportunities we can’t even now imagine.” The XEL Vision A feature that set XEL apart from other companies was its strong, healthy corporate culture. Developing a culture of innovation and team decision making was instrumental in providing the results XEL prided itself on.5 An early attempt to define culture in a top-down fashion was less successful than the management team had hoped,6 so the team had embarked on a second journey to determine what their core values were and what they would like the company to look like in five years. The team had then gone off-site for several days and finalized the XEL Vision statement (Exhibit 1). By the summer of 1987, the statement had been signed by members of the senior team and been hung up by the bulletin board. Employees were not required to sign the statement, but were free to do so when each was ready. Julie Rich, vice president of human resources, described the management team’s approach to getting the rest of the organization to understand as well as become comfortable with the XEL Vision: “Frequently, organizations tend to take a combination top-down/bottom-up approach in instituting cultural change. That is, the top level will develop a statement about values and overall vision. They will then communicate it down to the bottom level and hope that results will percolate upward through the middle levels. Yet it is often the middle level of management which is most skeptical, and they will block it or resist change. We decided to take a ‘cascade’ approach in which the process begins at the top and gradually cascades from one level to the next so that the critical players are slowly acclimated to the process. We also did a number of other things—including sending a copy of the vision statement to the homes of the employees and dedicating a section of the company newspaper to communicate what key sections of the vision mean from the viewpoint of managers and employees.” The vision statement became a living symbol of the XEL culture and the degree to which XEL embraced and empowered its employees. When teams or managers made decisions, they routinely brought out the XEL Vision document so workers might consult various parts of the statement to help guide and direct decisions. According to Julie, the statement was used to help evaluate new products, emphasize quality (a specific XEL strategic objective was to be the top quality vendor for each product), support teams, and drive the performance-appraisal process. The XEL Vision was successfully implemented as a key first step; but it was far from being a static document. Key XEL managers continually revisited the statement to ensure that it became a reflection of where they wanted to go, not where they had been. Julie believed this regular appraisal was a large factor in the success of the vision. “Our values are the key,” Julie explained. “They are strong, they are truly core values, and they are deeply held.” Along with the buyin process, the workers also saw that the managers experimented with the statement, which reflected the strong entrepreneurial nature of XEL’s founders—a common bond that they all shared. They were not afraid of risk, or of failure, and this spirit was reinforced in all employees through the vision itself, as well as through the yearly process of revisiting the statement. Once a year, Bill Sanko sat with all employees and directly challenged (and listened to direct challenges to) the XEL Vision. From 1987 to 1995, only two relatively minor additions had altered the original statement. Which Path to Choose When the 1995 annual strategic planning process got under way, XEL was in good shape on any one of a number of indicators. Profits were growing, new products were being developed, the culture and vision of the company were strong, employee morale was high, and the self-directed work teams were achieving exceptional quality.7 Rapid growth, however, was also presenting a challenge. Would it be possible for XEL to maintain its entrepreneurial culture in the face of rapid growth? Could they sustain their growth without harming their culture? Would they find the resources necessary to sustain the growth? From where? As the strategic planning retreat progressed, three options seemed apparent to the team. First, they could stay the course and remain privately held. Second, they could initiate a public offering of stock. Third, they could seek a strategic partnership. Which would be the right choice for XEL? 4.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 545 Staying the Course The most obvious option was to do nothing. Bill Sanko indicated that the management team did not favor staying the course and remaining privately held. “We had a venture capitalist involved who, after being with us for ten years, wanted out. In addition, the founders—ourselves—also wanted out from a financial standpoint. You also have to understand that one of the original founders, Don Donnelly, had passed away; and his estate was looking to make his investment more liquid. So, there were a lot of things that converged at the same time.” Once they determined they would not remain privately held, Bill mentioned that the decision boiled down to two main avenues: XEL would do an initial public offering and go public, or it would find a strategic partner. “To guide us in this process, we decided to retain the services of an outside party; we talked to about a dozen investment houses. In October 1994, we decided to hire Alex Brown, a long time investment house out of Baltimore. What we liked about this firm was that they had experience with doing both options—going public or finding a partner.” Going Public One avenue open to XEL was initiating a public offering of stock. Alex Brown advised them of the pluses and minuses of this option. Sanko reviewed their recommendations: The plus side for XEL doing an initial public offering was that technology was really hot about this time [October 1994]. In addition, we felt that XEL would be valued pretty highly in the market. The downside of going public was that XEL was really not a big firm, and institutional investors usually like doing offerings of firms that generate revenues of over $100 million. Another downside was that 4.0 XEL will become the leader in our selected telecommunications markets through innovation in products and services. Every XEL product and service will be rated Number One by our customers. XEL will set the standards by which our competitors are judged. We will be the best, most innovative, responsive designer, manufacturer and provider of quality products and services as seen by customers, employees, competitors, and suppliers.* We will insist upon the highest quality from everyone in every task. We will be an organization where each of us is a self-manager who will: • initiate action, commit to, and act responsibly in achieving objectives • be responsible for XEL’s performance • be responsible for the quality of individual and team output • invite team members to contribute based on experience, knowledge and ability We will: • be ethical and honest in all relationships • build an environment where creativity and risk taking is promoted • provide challenging and satisfying work • ensure a climate of dignity and respect for all • rely on interdepartmental teamwork, communications and cooperative problem solving to attain common goals** • offer opportunities for professional and personal growth • recognize and reward individual contribution and achievement • provide tools and services to enhance productivity • maintain a safe and healthy work environment XEL will be profitable and will grow in order to provide both a return to our investors and rewards to our team members. XEL will be an exciting and enjoyable place to work while we achieve success. EXHIBIT 1 The XEL Vision *Responsiveness to customers’ new product needs as well as responding to customers’ emergency delivery requirements have been identified as key strategic strengths. Therefore, the vision statement has been updated to recognize this important element. **The importance of cooperation and communication was emphasized with this update of the Vision Statement. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 546 Integrative Cases you had to deal with analysts, and their projections become your plan, which really turned me off. Also, shareholders want a steady and predictable rate of return. Technology stocks are not steady—there are frequent ups and downs in this marketplace—caused by a number of factors, such as a major telecommunications company deciding not to upgrade at the last minute or Congress considering sweeping regulatory changes. Finally, Alex Brown felt that the stock would have traded thinly. This, coupled with SEC restrictions on trading, made the option of going public less desirable. Strategic Partnership After taking these factors into account, Sanko said, . . . we decided to take the third path and look for a potential partner. But you have to also note that there was always the first option available as a safety valve. We could not do anything and stay the way we were. That’s the nice thing about all of this. We were not under any pressure to go public or seek a partner. We could also wait and do one of these things later on. So, we had the luxury of taking our time. In terms of finding a potential partner, there were certain key items that we wanted Alex Brown to consider in helping us in this process. The first was that we, management, wanted to remain with XEL. We had really grown XEL as a business and were not interested in going off and doing something else. The second key item was that we were not interested in being acquired by someone who was interested in consolidating our operations with theirs, closing this facility and moving functions from here to there. To us, this would destroy the essence of XEL. The third item was that we wanted a partner that would bring something to the table but would not try to micromanage our business. The Case Against Strategic Partnership In the 1990s, “merger mania” swept the United States. In the first nine months of 1995, the value of all announced mergers and acquisitions reached $248.5 billion, surpassing the record full-year volume of $246.9 billion reached in 1988. This volume occurred in the face of strong evidence that over the past thirty-five years, mergers and acquisitions had hurt organizations more than they had helped.8 Among the reasons for failure in mergers and acquisitions were the following: • Inadequate due diligence • Lack of strategic rationale • Unrealistic expectations of possible synergies • Paying too much • Conflicting corporate cultures • Failure to move quickly to meld the two companies Nevertheless, there had been successful mergers and acquisitions. Most notably, small and midsized deals had been found to have a better chance for success. Michael Porter argued that the best acquisitions were “gap-filling,” that is, a deal in which one company bought another to strengthen its product line or expand its territory, including globally. Anslinger and Copeland argued that successful acquisitions were more likely when preacquisition managers were kept in their positions, big incentives were offered to top-level executives so that their net worths were on the line, and the holding company was kept flat (that is, the business was kept separate from other operating units and retained a high degree of autonomy).9 More often than not, however, the deal was won or lost after it was done. Bad post-merger planning and integration could doom the acquisition. “While there is clearly a role for thoughtful and well-conceived mergers in American business, all too many don’t meet that description.”10 Choosing a Partner “With these issues in mind, Alex Brown was able to screen out possible candidates,” said Sanko. “In January, 1995, this plan was presented to our board of directors for approval, and by February, we had developed the ‘book’ about XEL that was to be presented to these candidates. We then had a series of meetings with the candidates in the conference room at our new facility. The interesting aside on these meetings was that, often, senior management from some of these firms didn’t know what pieces of their business that they still had or had gotten rid of. We did not see this as a good sign.” One of the firms with which XEL met was Gilbert Associates, based in Reading, Pennsylvania. Gilbert Associates was founded in the 1940s as an engineering and construction firm, primarily in the area of power plants. They embarked on a strategy of reinventing themselves by divesting their energy-related companies and becoming a holding company whose subsidiaries operated in the highgrowth markets of telecommunications and technical services. Gilbert also owned a real estate management-anddevelopment subsidiary. After due diligence and due deliberation, Gilbert was chosen by the management team as XEL’s strategic partner. The letter of intent was signed on October 5, 1995, and the deal was closed on October 27, 1995. Gilbert paid $30 million in cash.11 Why was Gilbert chosen as the partner from among six or seven suitors? Not because they made the highest bid. XEL was attracted to Gilbert by three factors: (1) Gilbert’s long-term strategy to enter the telecommunications industry; (2) its intention of keeping XEL as a separate, autonomous company; and (3) its willingness to pay cash (as opposed to stock or debt). “It was a clean deal,” said Sanko. The deal was also attractive because it was structured with upside potential. XEL was given realistic performance 4.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 547 targets for the next three years. If these targets were achieved, and Sanko had every expectation that they would be, approximately $6-$8 million would be earned. Gilbert did not place a cap on the upside. In spite of the attractive financial package, more was necessary to seal the deal. “At the end of the day,” said Sanko, “culture, comfort, and trust—those were more important than money.” It was important to XEL’s board that Gilbert presented a good fit. Sanko was encouraged because he felt comfortable with Gilbert’s chief executive officer. Vice president of Human Resources Julie Rich also noted, “The management team was to remain intact. Gilbert recognized that the XEL Vision was part of our success and our strength. They wanted to keep it going.” As one way of gaining confidence in Gilbert, Bill Sanko personally spoke with the CEOs of other companies Gilbert had recently acquired. In these conversations, Sanko was assured that Gilbert would keep its promises. Timothy S. Cobb, chair, president, and CEO of Gilbert Associates, commented at the time of the acquisition: “This transaction represented the first clear step toward the attainment of our long-term strategy of focusing on the higher margin areas of telecommunications and technical services. XEL’s superior reputation for quality throughout the industry, its innovative design and manufacturing capabilities, and its focus on products aimed at the emerging information highway markets, will serve us well as we seek to further penetrate this important segment of the vast communications market.”12 Cobb continued, “We see long-term growth opportunities worldwide for XEL’s current proprietary and Original Equipment Manufacturer [OEM] products as well as for the powerful new products being developed. These products fall into two families: (1) fiber-optic network interfaces designed specifically to meet the needs of telephone companies, interexchange carriers (e.g., AT&T, Sprint, MCI), and specialized network carriers installing fiberoptic facilities; and (2) a hybrid fiber/cable broadband modem for use by cable television firms seeking to provide enhanced data communications services over their network facilities. Going forward, we expect to leverage Gilbert’s knowledge and relationships with the RBOCs to significantly increase sales to those important customers, while also utilizing our GAI-Tronics subsidiary’s established international sales organization to further penetrate the vast global opportunities which exist. As a result, revenues from Gilbert Associates’ growing telecommunications segment could represent over half of our total revenues by the end of 1996.” Timothy Cobb had come to Gilbert from Ameritech, an RBOC which covered the Midwestern United States. He had been president of GAI-Tronics Corporation, an international supplier of industrial communication equipment, a subsidiary of Gilbert, prior to his appointment as Gilbert’s CEO. Bill Sanko offered, “When all the dust had settled, the one firm that we really felt good about was Gilbert…. Gilbert is an interesting story in itself. Ironically, they had contacted us in August, 1994, based on the advice of their consultant who had read about us in an Inc. magazine article. Unfortunately, at the time, they did not have the cash to acquire us since they were in the process of selling off one of their divisions. In the intervening period, Gilbert Associates divested itself of one of its companies, Gilbert/Commonwealth. This sale provided needed funds for the acquisition of XEL.” Once Sanko was confident that the deal would go, but before the letter of intent was signed, the pending acquisition was announced to the management team, and a general meeting was held with all employees. SEC regulations prohibited sharing particular information (and common sense seconded this directive), but Sanko and his associates felt it was important to keep employees informed before the letter was signed. During the meeting, Sanko told the employees that the board was “seriously considering” an offer. Sanko assured the employees that the suitor was not a competitor, and that he felt that the suitor was a good fit in culture and values. Sanko reiterated that this partnership would give XEL the resources it needed to grow. Questions were not allowed because of SEC regulations. Employees left the meeting concerned and somewhat nervous, but members of the management team and Julie Rich were positioned in the audience and made themselves available to talk. During the closing of the deal, Sanko held another general meeting, attended by Timothy Cobb, where more detailed information was shared with employees. Managers had been informed in a premeeting so that they would be prepared to meet with their teams directly following the general meeting. Employees wanted to know about Gilbert. They wanted to know simple information, such as where Gilbert was located and what businesses it was in. They also wanted to know strategic plans, such as whether Gilbert had plans to consolidate manufacturing operations. Finally, they wanted to know about the near future of XEL— they wanted to know if their benefits would change, if they would still have profit sharing, and if the management team would stay in place. “We have a track record of being open,” says Sanko. “Good news or bad is always shared. This history stemmed much of the rumor mill.” In the next few weeks, Tim Cobb returned to hold a series of meetings with the management team and with a focus group of thirty employees representing a cross-section of the organization. Cobb also met with managers and their spouses at an informal reception. Sanko wanted to ease the management team into the realization that they were now part of a larger whole in Gilbert. He asked Cobb to make the same presentation to XEL that he was cur4.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 548 Integrative Cases rently making to stockholders throughout the country—a presentation that emphasized the role XEL would play in the long-term strategy of Gilbert. Going Forward The human resource systems remained in place with no changes. The management bonus system would change slightly because it included stock options, which were no longer available. XEL’s internal advisory board, the “management team,” remained intact, but XEL’s external advisory board was disbanded. Bill Sanko reported to Gilbert’s chairman. XEL’s strategic plan was to follow the process it already had in place, and which was not unlike Gilbert’s. The cycle did not change: Gilbert expected XEL’s next strategic plan in early November 1996. XEL’s strategic objectives also remained the same. Nothing was put on hold. Plans were still in place to penetrate Brazil, Mexico, and South America.13 Sanko hoped to capitalize on the synergies of Gilbert’s existing international distribution network. XEL met with Gilbert’s international representatives to see if this was an avenue for XEL to gain a more rapid presence in South America. Finally, XEL was planning to move into Radio Frequency (RF) engineering and manufacturing, potentially opening the door for wireless support. Whether XEL would grow depended on the success of these new ventures. In 1996, slight growth was forecasted. But if these new markets really took off, Julie Rich was concerned about hiring enough people in Colorado when the labor market was approaching full employment. Julie considered more creative ways of attracting new hires: for example, by offering more flexible scheduling, or by hiring unskilled workers and training them internally. A new U.S. Department of Education grant to test computer-based training systems was being implemented. Nevertheless, employment was strong in the Denver metro area in 1996, and migration to Colorado had slowed. It would be a challenge to staff XEL if high growth became the business strategy. Approximately six weeks after the acquisition, Sanko noted that few changes had taken place. Now that they were a publicly held company, there was a great deal more interest in meeting quarterly numbers. “If there has been a change,” said Sanko, “it is that there is more attention to numbers.” Julie Rich noted that there had been no turnover in the six-week period following the acquisition. She took this calm in the workforce as a sign that things were going well so far. One reason things went well was that the management team had all worked for GTE prior to the spin-off of XEL. Having all worked for a large public company, they did not experience a terrible culture shock when the Gilbert acquisition took place. Time would tell if the remaining XEL employees would feel the same way. As Sanko awaited Cobb’s upcoming visit, he wondered how to prepare for the event and for the year ahead. He wondered whether XEL would attempt new ventures into RF technology, or how the planned fiber/cable broadband modem would progress. He wondered whether Gilbert’s experience in selling in South America would prove valuable for XEL’s international strategy. In addition, he wondered how he could encourage XEL and its employees to become members of Gilbert’s “team.” Would XEL’s vision survive the new partnership? Finally, according to one study of CEO turnover after acquisition, 80 percent of acquired CEOs left their companies by the sixth year after the acquisition, but 87 percent of those who did leave, did so within two years. The key factor in their turnover was post-acquisition autonomy.14 After nearly twelve years as the captain of his own ship, Sanko wondered what his own future, and the future of the XEL management team, would hold. Notes 1. For additional information on XEL Communications, Inc., and the key strategic issues facing XEL, see Robert P. McGowan and Cynthia V. Fukami, “XEL Communications, Inc. (A),” Daniels College of Business, University of Denver © 1995, published by South-Western Publishing. 2. PR Newsletter (October 5, 1995). 3. Bill Menezes “Modern Times,” Rocky Mountain News (April 28, 1996). 4. PR Newswire (October 5, 1995). 5. John Sheridan, “America’s Best Plants: XEL Communications,” IndustryWeek (October 16, 1995). 6. See McGowan and Fukami, “XEL Communications, Inc. (A),” for a larger discussion of corporate culture at XEL. 7. Sheridan, “America’s Best Plants.” 8. Philip Zweig “The Case Against Mergers,” BusinessWeek (October 30, 1995). 9. Patricia Anslinger and Thomas Copeland, “Growth Through Acquisitions: A Fresh Look,” Harvard Business Review (January–February 1996). 10. Zweig, “The Case Against Mergers.” 11. Dina Bunn “XEL to be Sold in $30 Million Deal,” Rocky Mountain News (October 27, 1995). 12. PR Newswire (October 5, 1995). 13. For more information on XEL’s global penetration, see McGowan and Allen, “XEL Communications, Inc. (B): Going Global.” 14. Kim A. Stewart, “After the Acquisition: A Study of Turnover of Chief Executives of Target Companies,” doctoral dissertation, University of Houston, 1992. 4.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: A Project to Remember In June 1991, Ian Jones a production manager with Empire Plastics Northern (EPN) was pondering the latest project to increase the production rate of oleic acid. This was the third project in 6 years targeting the oleic acid plant for improvement and arose from the policy followed by the group’s directors. This was to identify profitable plants and invest in improving their productivity and profitability, thus avoiding the need for investment in new facilities. The installation of the “wet end” went well and no problems were experienced. However, the “dry end” was a different story. It wasn’t working a year after practical completion, except in short bursts. They were still making changes to it. Jones had known all along that the technology on the dry end was relatively new and might prove troublesome, but the procurement department at Empire Consultants in their wisdom recommended its use. Granted, they did send a couple of guys over to Italy to see some similar plants first. Jones constructed an organizational chart and set about examining the key issues raised by this project (Exhibit 1). Jones had been appointed as commissioning manager at the commencement of the project. He remembered some of the nightmares experienced by colleagues during two earlier oleic acid projects and firmly resolved to make this one different; it was going to be “his” to manage on completion, and he was going to make his presence felt from the outset. The execution of the project had been overseen by the group’s engineering arm, Empire Consultants (EC), headed up by Henry Holdsworth as site project manager and John Marshall as construction engineer. It was a good team. The project was ambitious, but there were several signs of progress in the beginning. What did perplex him, though, was Marshall’s apparent lack of enthusiasm. Holdsworth described the project as a double management contract, and in this respect it was an unusual project. Empire Consultants traditionally assumed the role of management contactor and directly organized the trade contractors and discipline consultants. Times were changing, though, and both Holdsworth and Marshall had commented on the increasing frequency with which projects were now being tendered as complete packages to outside management contractors. This was their first project that involved two management contractors simultaneously, and neither Marshall nor Holdsworth was happy. Their own involvement had not been clearly defined. Western Construction had a £3.1 million contract for the “wet end” and Teknibuild a £6.0 million contract for the “dry end.” These two contractors provided all the design and management efIntegrative Cases 549 fort during the project. EC’s role was effectively reduced to acting as construction policemen; checking that design and construction were being carried out in accordance with the original process diagram and that EPN’s demanding process control and safety requirements were being maintained. Selecting the management contractors turned out to be extremely protracted and Holdsworth, encouraged by Jones, went ahead and ordered reactors for the wet end and a fluidized bed dryer for the dry end. Over 50% of the total material requirements were in order before either contractor had been formally appointed. Jones was confident that by doing this they could cut the project duration by several months. Nobody had asked Marshall for his opinion. Conflict Ahead The first line breaks were in October 1988. Site operations were supervised by Marshall and the two contractor site managers: Bob Weald from Western and Vic Mason from Teknibuild. As a construction engineer, Marshall was familiar with the antics of clients and client representatives, especially regarding their tendency to try to make changes. He commented: Clients always try and change things! When they see the job in the flesh as it were they go “Oh, we need some extra paving round here, or extra railings there!” But if they didn’t ask for that at the start, they won’t get it. If they want an extra 100 metres of paving they have to pay for it. In this project we had about £500k set aside for contingency purposes, that is unforeseen eventualities over and above the price fixed with the management contractors. If that is not used up by the end of the contract, as in this case, then we can give the clients some extras. Jones recalled that by June 1989 relationships were not going at all well at the dry end. EC had procured a fluidized bed dryer, a cooler, and more than 300 associated parts, and, as the purchasers of this equipment, they were Integrative Case 5.0 Empire Plastics* 5.0 *This case was prepared by Dr. Paul D. Gardiner, Department of Business Organisation, Heriot-Watt University, Edinburgh. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was made possible by the cooperation of an organization which wishes to remain anonymous. © 1994 P.D. Gardiner, Heriot-Watt University, Edinburgh. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 550 Integrative Cases the ones responsible for chasing up design drawings from the supplier, Sultan Engineering. Unfortunately, Teknibuild, who, as management contractors, were supposed to design and build the plant, had problems getting the necessary information from Sultan to design the steelwork and foundations. As Marshall had noted earlier: They [Teknibuild] were constantly at our doors and throats looking for more information to get on. They didn’t seem to have enough data to design properly, which led to conflict very early on. We got off to a bad start and that feeling carried on right to the end of the job. I think in every discipline we had problems with Teknibuild. Our discipline engineer against their discipline engineer. The only exception to this was with the electrical and instrumentation (E & I) work. Marshall had put that down to the E & I subcontractor coming in at the end of the log jam of information, giving them more time to get it right. While this was going on, Jones got more and more frustrated. In his opinion a lot of time was wasted between Teknibuild and EC for no good reason. He was sure that Teknibuild had more than enough design information to do their job. When confronted by Jones, Marshall remarked that the truth probably lay somewhere in between, but added that he was “particularly dismayed at Teknibuild’s unwillingness to spend man-hours on the design until they had 100% definition from Sultan Engineering,” almost to the point where they knew where every nut and bolt was. It was a real mess . . . and Marshall was accepting none of the blame. On the other hand, things went fine with Western Construction. Their approach was much more relaxed; they Empire Plastics Group PLC Empire Plastics Northern Empire Consultants Site Project Manager Henry Holdsworth Commissioning Manager Ian Jones Construction Engineer John Marshal Key Management Issues? Wet End Dry End Organizational Relationships Contractual Relationships Western Const. (Management Contractor) Teknibuild (Management Contractor) Site Manager Bob Weeks Site Manager Vic Mason Suppliers Sultan Eng. Suppliers Subtrades Subtrades EXHIBIT 1 Organizational and Contractual Relationships 5.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 551 had a design office on site with low overheads, whereas Teknibuild worked from the head office in a large design office with high overheads. On one occasion Marshall asked for Teknibuild’s planner to come down and take some site measurements. The reply he received was not very constructive: “I don’t know if I can do that, it’s at least a couple of hours to get down there.” Holdsworth agreed that Teknibuild were constantly watching their man-hours: You felt all the time that they were looking for profit rather than trying to get the job done. Even Teknibuild’s construction man, Vic Mason, had internal conflict with his own designers. But with Western it was the other way round, you really felt they were seeking to set a good impression. Jones thought that perhaps communication with Western had been good because their design and construction people operated side by side, communication was just across the corridor; whereas Teknibuild’s site men had difficulty getting answers out of their Head Office. Marshall had always maintained that the best-run jobs are the ones in which you get a good design-construction liaison, particularly by having the designers on site with you. Failing… Forward Jones considered that in the future it might be a good idea to insist that management contractors set up a local design team on site. Current practice was to leave it up to the contractor, but these days EC had few designers of their own to help. The trouble with management contractors, he surmised, is that you create an extra link in the communications chain—a large link that can easily break down, and, in his experience, did break down. Relationships had been better at the wet end, he felt, because Marshall and Weald had worked together before. Marshall knew Weald, knew how he worked and where he was coming from. They could trust each other. At the Teknibuild end, Vic Mason, their site manager, caused no end of conflict. He was a bit belligerent; thought he knew best, had done it all before, and couldn’t be told anything. It never really got out of hand . . . just a bit heated at times. At the end of the day, Marshall maintained that Mason’s intentions were ultimately to get the job built. But Jones remained unimpressed, even if Mason’s main trouble was his own designers and suppliers. Driving home, Jones wondered what the effect of the company’s new policy on managing projects would be on people like Harry Holdsworth and John Marshall. He couldn’t help remembering what Marshall had said about Teknibuild and Western independently setting up their own enquiries and going out for bids separately; there did seem to be a lot of repetition—maybe Marshall was right in viewing the new system as “a very inefficient way of doing projects.” 5.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 552 Integrative Cases The Audubon Zoo was the focus of national concern in the early 1970s, with well-documented stories of animals kept in conditions that were variously termed an “animal ghetto,”1 “the New Orleans antiquarium,” and even “an animal concentration camp.”2 In 1971, the Bureau of Governmental Research recommended a $5.6 million zoo improvement plan to the Audubon Park Commission and the City Council of New Orleans. The local Times Picayune commented on the new zoo: “It’s not going to be quite like the Planet of the Apes situation in which the apes caged and studied human beings but something along those broad general lines.”3 The new zoo confined people to bridges and walkways while the animals roamed amidst grass, shrubs, trees, pools, and fake rocks. The gracefully curving pathways, generously lined with luxuriant plantings, gave the visitor a sense of being alone in a wilderness, although crowds of visitors might be only a few yards away. The Decision The Audubon Park Commission launched a $5.6 million development program, based on the Bureau of Governmental Research plan for the zoo, in March 1972. A bond issue and a property tax dedicated to the zoo were put before the voters on November 7, 1972. When it passed by an overwhelming majority, serious discussions began about what should be done. The New Orleans City Planning Commission finally approved the master plan for the Audubon Park Zoo in September 1973. But the institution of the master plan was far from smooth. The Zoo Question Goes Public Over two dozen special interests were ultimately involved in choosing whether to renovate/expand the existing facilities or move to another site. Expansion became a major community controversy. Some residents opposed the zoo expansion, fearing “loss of green space” would affect the secluded character of the neighborhood. Others opposed the loss of what they saw as an attractive and educational facility. Most of the opposition came from the zoo’s affluent neighbors. Zoo Director John Moore ascribed the criticism to “a select few people who have the money and power to make a lot of noise.” He went on to say, “[T]he real basis behind the problem is that the neighbors who live around the edge of the park have a selfish concern because they want the park as their private backyard.” Legal battles over the expansion plans continued until early 1976. At that time, the 4th Circuit Court of Appeals ruled that the expansion was legal.4 An out-of-court agreement with the zoo’s neighbors (the Upper Audubon Association) followed shortly. Physical Facilities The expansion of the Audubon Park Zoo took it from fourteen to fifty-eight acres. The zoo was laid out in geographic sections: the Asian Domain, World of Primates, World’s Grasslands, Savannah, North American Prairie, South American Pampas, and Louisiana Swamp, according to the zoo master plan developed by the Bureau of Governmental Research. Additional exhibits included the Wisner Discovery Zoo, Sea Lion exhibit, and Flight Cage. Exhibit 1 is a map of the new zoo. Purpose of the Zoo The main outward purpose of the Audubon Park Zoo was entertainment. Many of the promotional efforts of the zoo were aimed at creating an image of the zoo as an entertaining place to go. Obviously, such a campaign was necessary to attract visitors to the zoo. Behind the scenes, the zoo also preserved and bred many animal species, conducted research, and educated the public. The mission statement of the Audubon Institute is given in Exhibit 2. New Directions A chronology of major events in the life of the Audubon Zoo is given in Exhibit 3. One of the first significant changes made was the institution of an admission charge in 1972. Admission to the zoo had been free to anyone prior to the adoption of the renovation plan. Ostensibly, the initial purpose behind instituting the admission charge was to prevent vandalism,5 but the need for additional income was also apparent. Despite the institution of and increases in admission charges, attendance increased dramatically (Exhibit 4). Operations Friends of the Zoo The Friends of the Zoo was formed in 1974 and incorporated in 1975 with four hundred members. The stated purpose of the group was to increase support and awareness of the Audubon Park Zoo. Initially, the Friends of the Zoo tried to increase interest in and commitment to the zoo, but its activities increased dramatically over the following Integrative Case 6.0 The Audubon Zoo, 1993* 6.0 *By Claire J. Anderson, Old Dominion University, and Caroline Fisher, Loyola University, New Orleans. © 1993, 1991, 1989, 1987, Claire J. Anderson and Caroline Fisher. This case was designed for classroom discussion only, not to depict effective or ineffective handling of administrative situations. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Australia Flamingo Pool Louisiana Swamp South American Pampas North American Prairie Savannah sdn la ssar G ’s ldr o W World of Primates Children’s Zoo Asian Domain Bird House Administration Sea Lion Pool Reptile House Aquarium Parking Entrance Integrative Cases 553 years to where it was involved in funding, operating, and governing the zoo. The Friends of the Zoo had a 24-member governing board. Yearly elections were held for six members of the board, who served four-year terms. The board oversaw the policies of the zoo and set guidelines for memberships, concessions, fund-raising, and marketing. Actual policy making and operations were controlled by the Audubon Park Commission, however, which set zoo hours, admission prices, and so forth. Through its volunteer programs, the Friends of the Zoo staffed many of the zoo’s programs. Members of the Friends of the Zoo served as “edZOOcators,” education volunteers who were specially trained to conduct interpretive educational programs, and “Zoo Area Patrollers,” who provided general information at the zoo and helped with crowd control. Other volunteers assisted in the commissary, the Animal Health Care Center, and the Wild Bird Rehabilitation Center or helped with membership, public relations, graphics, clerical work, research, or horticulture. 6.0 EXHIBIT 1 The Audubon Park Zoo Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 554 Integrative Cases 6.0 The mission of the Audubon Institute is to cultivate awareness and appreciation of life and the earth’s resources and to help conserve and enrich our natural world. The Institute’s primary objectives toward this are: Conservation: To participate in the global effort to conserve natural resources by developing and maintaining captive stocks of endangered plants, animals, and marine life, and by cooperating with related projects in the wild. Education: To impart knowledge and understanding of the interaction of nature and man through programs, exhibits, and publications and to encourage public participation in global conservation efforts. Research: To foster the collection and dissemination of scientific information that will enhance the conservation and educational objectives of the facilities of the Audubon Institute. Economics: To ensure long-range financial security by sound fiscal management and continued development, with funding through creative means that encourage corporate, foundation, and individual support. Leadership: To serve as a model in the civic and professional communities. To foster a spirit of cooperation, participation, and pride. EXHIBIT 2 Audubon Institute Mission Statement Source: The Audubon Institute. 1972 Voters approved a referendum to provide tax dollars to renovate and expand the Zoo. The first Zoo-ToDo was held. An admission charge was instituted. 1973 The City Planning Commission approved the initial master plan for the Audubon Park Zoo calling for $3.4 million for upgrading. Later phases called for an additional $2.1 million. 1974 Friends of the Zoo formed with 400 members to increase support and awareness of the Zoo. 1975 Renovations began with $25 million in public and private funds; 14 acres to be expanded to 58 acres. 1976 The Friends of the Zoo assumed responsibility for concessions. 1977 John Moore went to Albuquerque; Ron Forman took over as Park and Zoo director. 1980 First full-time education staff assumed duties at the Zoo. 1981 Contract signed allowing New Orleans Steamboat Company to bring passengers from downtown to the Park. 1981 Delegates from the American Association of Zoological Parks and Aquariums ranked the Audubon Zoo as one of the top three zoos of its size in America. 1981 Zoo accredited. 1982 The Audubon Park Commission reorganized under Act 352, which required the Commission to contract with a nonprofit organization for the daily management of the Park. 1985 The Zoo was designated as a Rescue Center for Endangered and Threatened Plants. 1986 Voters approved a $25 million bond issue for the Aquarium. 1988 The Friends of the Zoo became the Audubon Institute. 1990 The Aquarium of the Americas opened in September. EXHIBIT 3 Chronology of Major Events for the Zoo Source: The Audubon Institute. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 555 6.0 EXHIBIT 4 Admission Charges Source: The Audubon Institute. Admission Charges Year Adult Child 1972 $0.75 $0.25 1978 1.00 0.50 1979 1.50 0.75 1980 2.00 1.00 1981 2.50 1.25 1982 3.00 1.50 1983 3.50 1.75 1984 4.00 2.00 1985 4.50 2.00 1986 5.00 2.50 1987 5.50 2.50 1988 5.50 2.50 1989 6.00 3.00 1990 6.50 3.00 1991 7.00 3.25 Admission Number of Paid Number of Member Year Admissions Admissions 1972 163,000 1973 310,000 1974 345,000 1975 324,000 1976 381,000 1977 502,000 1978 456,000 1979 561,000 1980 707,000 1981 741,000 1982 740,339 78,950 1983 835,044 118,665 1984 813,025 128,538 1985 856,064 145,020 1986 916,865 187,119 1987 902,744 193,926 1988 899,181 173,313 1989 711,709 239,718 1990 725,469 219,668 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 556 Integrative Cases In 1988, the name of the Friends of the Zoo was changed to the Audubon Institute to reflect its growing interest in activities beyond the zoo alone. It planned to promote the development of other facilities and manage these facilities once they were a reality. Fund-Raising. The Audubon Park Zoo and the Friends of the Zoo raised funds through five major types of activities: Friends of the Zoo membership, concessions, “Adopt an Animal,” “ZooTo-Do,” and capital fund drives. Zoo managers from around the country came to the Audubon Park Zoo for tips on fund-raising. Membership. Membership in the Friends of the Zoo was open to anyone. The membership fees increased over the years as summarized in Exhibit 5, yet the number of members increased steadily from the original 400 members in 1974 to 38,000 members in 1990, but declined to 28,000 in 1992. Membership allowed free entry to the Audubon Park Zoo and many other zoos around the United States. Participation in Zoobilations (annual members-only evenings at the zoo) and the many volunteer programs described earlier were other benefits of membership. Expanding membership required a special approach to marketing the zoo. Chip Weigand, director of marketing for the zoo, stated: . . . [I]n marketing memberships we try to encourage repeat visitations, the feeling that one can visit as often as one wants, the idea that the zoo changes from visit to visit and that there are good reasons to make one large payment or donation for a membership card, rather than paying for each visit…. [T]he overwhelming factor is a good zoo that people want to visit often, so that a membership makes good economical sense. Results of research on visitors to the zoo are contained in Exhibits 6 and 7. In 1985, the zoo announced a new membership designed for business, the Audubon Zoo Curator Club, with four categories of membership: bronze, $250; silver, $500; gold, $1,000; and platinum, $2,500 and more. Concessions. The Friends of the Zoo took over the Audubon Park Zoo concessions for refreshments and gifts in 1976 through a public bidding process. The concessions were run by volunteer members of the Friends of the Zoo and all profits went directly to the zoo. Before 1976, concession rentals brought in $1,500 in a good year. Profits from operation of the concessions by the Friends of the Zoo brought in $400,000 a year by 1980 and almost $700,000 in profits in 1988. In 1993, FOTZ was considering leasing the concessions to a third-party vendor. Adopt an Animal. Zoo Parents paid a fee to “adopt” an animal, the fee varying with the animal chosen. Zoo Parents’ names were listed on a large sign inside the zoo. They also had their own annual celebration, Zoo Parents Day. Zoo-To-Do. Zoo-To-Do was an annual black-tie fundraiser held with live music, food and drink, and original, high-class souvenirs, such as posters or ceramic necklaces. Admission tickets, limited to 3,000 annually, were priced starting at $100 per person. A raffle was conducted in conjunction with the Zoo-To-Do, with raffle items varying 6.0 Family Individual Number of Year Membership Fees Membership Fees Memberships 1979 $20 $10 1,000 1980 20 10 7,000 1981 20 10 11,000 1982 25 15 18,000 1983 30 15 22,000 1984 35 20 26,000 1985 40 20 27,000 1986 45 25 28,616 1987 45 25 29,318 1988 45 25 33,314 1989 49 29 36,935 1990 49 29 38,154 EXHIBIT 5 Membership Fees and Membership Source: The Audubon Institute. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 557 from an opportunity to be zoo curator for a day to the use of a Mercedes-Benz for a year. Despite the rather stiff price, the Zoo-To-Do was a popular sellout every year. Local restaurants and other businesses donated most of the necessary supplies, decreasing the cost of the affair. In 1985, the Zoo-To-Do raised almost $500,000 in one night, more money than any other nonmedical fund-raiser in the county.6 Advertising The Audubon Zoo launched impressive marketing campaigns in the 1980s. The zoo received ADDY awards from the New Orleans Advertising Club year after year.7 In 1986, the film Urban Eden, produced by Alford Advertising and Buckholtz Productions Inc. in New Orleans, finished first among fifty entries in the “documentary films, public relations” category of the Eighth Annual Houston International Film Festival. The first-place Gold Award recognized the film for vividly portraying Audubon Zoo as a conservation, rather than a confining, environment. During the same year, local television affiliates of ABC, CBS, and NBC produced independent TV spots using the theme: “One of the World’s Greatest Zoos Is in Your Own Backyard…Audubon Zoo!” Along with some innovative views of the Audubon Zoo being in someone’s “backyard,” local news anchor personalities enjoyed “monkeying around” with the animals, and the zoo enjoyed some welcome free exposure.8 6.0 Number of Zoo Visits Over Past Two Years Respondent Four or Two or One or Never Characteristic More Three None Visited Age Under 27 26 35 31 9 27 to 35 55 27 15 3 36 to 45 48 32 11 9 46 to 55 18 20 37 25 Over 55 27 29 30 14 Marital status Married 41 28 20 11 Not married 30 34 24 13 Children at home Yes 46 30 15 9 No 34 28 27 12 Interested in visiting New Orleans Aquarium Very, with emphasis 47 26 18 9 Very, without emphasis 45 24 23 12 Somewhat 28 37 14 11 Not too 19 32 27 22 Member of Friends of the Zoo Yes 67 24 6 4 No, but heard of it 35 30 24 12 Never heard of it 25 28 35 13 Would you be interested in joining FOTZ (non-members only)? Very/somewhat 50 28 14 8 No/don’t know 33 29 26 12 EXHIBIT 6 Respondent Characteristics of Zoo Visitors According to Visitation Frequency (in %) Source: The Audubon Institute. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 558 Integrative Cases In 1993, the marketing budget was over $800,000, including group sales, public relations, advertising, and special events. Not included in this budget was developmental fund-raising or membership. Percentage breakdowns of the marketing budget can be found in Exhibit 8. The American Association of Zoological Parks and Aquariums reported that most zoos find the majority of their visitors live within a single population center in close proximity to the park.9 Thus, to sustain attendance over the years, zoos must attract the same visitors repeatedly. A 6.0 Very Very Imp. w/ Imp. w/o Somewhat Reason (Closed-Ended) Emphasis Emphasis Important Unimportant The distance of the Zoo 7 11 21 60 from where you live The cost of a Zoo visit 4 8 22 66 Not being all that interested 2 12 18 67 in Zoo animals The parking problems on 7 11 19 62 weekends The idea that you get tired 5 18 28 49 of seeing the same exhibits over and over It’s too hot during summer 25 23 22 30 months Just not having the idea 8 19 26 48 occur to you EXHIBIT 7 Relative Importance of Seven Reasons Respondent Does Not Visit the Zoo More Often (in %) Source: The Audubon Institute. Marketing General and Administrative $ 30,900 Sales 96,300 Public Relations 109,250 Advertising 304,800 Special Events 157,900 TOTAL $699,150 Public Relations Education, Travel, and Subscriptions $ 5,200 Printing and Duplicating 64,000 Professional Services 15,000 Delivery and Postage 3,000 Telephone 1,250 Entertainment 2,000 Supplies 16,600 Miscellaneous 2,200 TOTAL $109,250 Advertising Media $244,000 Production 50,000 Account Service 10,800 TOTAL $304,800 Special Events General and Administrative $ 27,900 LA Swamp Fest 35,000 Earthfest 25,000 Ninja Turtle Breakfast 20,000 Jazz Search 15,000 Fiesta Latina 10,000 Crescent City Cats 10,000 Other Events 15,000 TOTAL $157,900 EXHIBIT 8 1991 Marketing Budget Source: The Audubon Institute. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 559 large number of the zoo’s promotional programs and special events were aimed at just that. Progress was slow among non-natives. For example, Simon & Schuster, a reputable publishing firm, in its 218- page [Frommer’s] 1983–84 Guide to New Orleans, managed only a three-word allusion to a “very nice zoo.” A 1984 study found that only 36 percent of the visitors were tourists, and even this number was probably influenced to some extent by an overflow from the World’s Fair. Promotional Programs The Audubon Park Zoo and the Friends of the Zoo conducted a multitude of very successful promotional programs. The effect was to have continual parties and celebrations going on, attracting a variety of people to the zoo (and raising additional revenue). Exhibit 9 lists the major annual promotional programs conducted by the zoo. In addition to these annual promotions, the zoo scheduled concerts of well-known musicians, such as Irma Thomas, Pete Fountain, The Monkees, and Manhattan Transfer, and other special events throughout the year. As a result, a variety of events occurred each month. Many educational activities were conducted all year long. These included (1) a junior zookeeper program for seventh and eighth graders; (2) a student intern program for high school and college students; and (3) a ZOOmobile that took live animals to such locations as special education classes, hospitals, and nursing homes. Admission Policy The commission recommended the institution of an admission charge. Arguments generally advanced against such a charge held that it results in an overall decline in attendance and a reduction of nongate revenues. Proponents held that gate charges control vandalism, produce greater revenues, and result in increased public awareness and appreciation of the facility. In the early 1970s, no major international zoo charged admission, and 73 percent of the 125 zoos in the United States charged admission. 6.0 EXHIBIT 9 Selected Audubon Park Zoo Promotional Programs Source: The Audubon Institute Month Activity March Louisiana Black Heritage Festival. A two-day celebration of Louisiana’s black history and its native contributions through food, music, and arts and crafts. March Earth Fest. The environment and our planet are the focus of this funfilled and educational event. Recycling, conservation displays, and puppet shows. April Jazz Search. This entertainment series is aimed at finding the best new talent in the area with the winners featured at the New Orleans Jazz & Heritage Festival. April Zoo-To-Do for kids. At this “pint-sized” version of the Zoo-To-Do, fun and games abound for kids. May Zoo-To-Do. Annual black tie fund-raiser featuring over 100 of New Orleans’ finest restaurants and three music stages. May Irma Thomas Mother’s Day Concert. The annual celebration of Mother’s Day with a buffet. August Lego Invitational. Architectural firms turn thousands of Lego pieces into original creations. September Fiesta Latina. Experience the best the Hispanic community has to offer through music, cuisine, and arts and crafts. October Louisiana Swamp Festival. Cajun food, music, and crafts highlight this four-day salute to Louisiana’s bayou country; features hands-on contact with live swamp animals. October Boo at the Zoo. This annual Halloween extravaganza features games, special entertainment, trick or treat, a haunted house, and the Zoo’s Spook Train. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 560 Integrative Cases The commission argued that there is no such thing as a free zoo; someone must pay. If the zoo is tax-supported, then locals carry a disproportionate share of the cost. At the time, neighboring Jefferson Parish was growing by leaps and bounds and surely would bring a large, nonpaying [constituency] to the new zoo. Further, since most zoos are tourist attractions, tourists should pay since they contribute little to the local tax revenues. The average yearly attendance for a zoo may be estimated using projected population figures multiplied by a “visitor generating factor.” The average visitor generating factor of fourteen zoos similar in size and climate to the Audubon Zoo was 1.34, with a rather wide range from a low of 0.58 in the cities of Phoenix and Miami to a high of 2.80 in Jackson, Mississippi. Attracting More Tourists and Other Visitors A riverboat ride on the romantic paddle wheeler Cotton Blossom took visitors from downtown New Orleans to the zoo. Originally, the trip began at a dock in the French Quarter, but it was later moved to a dock immediately adjacent to New Orleans’ newest attraction, the Riverwalk, a Rouse development, on the site of the 1984 Louisiana World Exposition. Not only was the riverboat ride great fun, it also lured tourists and conventioneers from the downtown attractions of the French Quarter and the new Riverwalk to the zoo, some six miles upstream. A further allure of the riverboat ride was a return trip to downtown on the New Orleans Streetcar, one of the few remaining trolley cars in the United States. The Zoo Cruise not only drew more visitors but also generated additional revenue through landing fees paid by the New Orleans Steamboat Company and [helped keep] traffic out of uptown New Orleans.10 Financial The zoo’s ability to generate operating funds has been ascribed to the dedication of the Friends of the Zoo, continuing increases in attendance, and creative special events and programs. A history of adequate operating funds allowed the zoo to guarantee capital donors that their gifts would be used to build and maintain top-notch exhibits. A comparison of the 1989 and 1990 Statements of Operating Income and Expense for the Audubon Institute is in Exhibit 10. Capital Fund Drives The Audubon Zoo Development Fund was established in 1973. Corporate/industrial support of the zoo has been very strong—many corporations have underwritten construction of zoo displays and facilities. A partial list of major corporate sponsors is in Exhibit 11. A sponsorship was considered to be for the life of the exhibit. The development department operated on a 12 percent overhead rate, 6.0 EXHIBIT 10 The Audubon Institute, Inc. The Audubon Park and Zoological Garden Statement of Operating Income and Expenses Source: The Audubon Institute. 1989 1990 (Zoo) 1990 (Aquarium) Operating Income Admissions $2,952,000 $3,587,000 $3,664,000 Food and Gift Operations 2,706,000 3,495,500 711,000 Membership 1,476,000 1,932,000 2,318,000 Recreational Programs 410,000 396,000 0 Visitor Services 246,000 218,000 0 Other 410,000 32,000 650,000 TOTAL INCOME $8,200,000 $9,660,500 $7,343,000 Operating Expenses Maintenance $1,394,000 $1,444,000 $1,316,000 Educational/Curatorial 2,296,000 2,527,500 2,783,000 Food and Gift Operations 1,804,000 2,375,000 483,000 Membership 574,000 840,000 631,000 Recreational 328,000 358,000 362,000 Marketing 410,000 633,000 593,000 Visitor Services 574,000 373,000 125,000 Administration 820,000 1,110,000 1,050,000 TOTAL EXPENSES $8,200,000 $9,660,500 $7,343,000 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 561 which meant 88 cents of every dollar raised went toward the projects. By 1989, the master plan for development was 75 percent complete. The fund-raising goal for the zoo in 1989 was $1,500,000. Management The Zoo Director Ron Forman, Audubon Zoo director, was called a “zoomaster extraordinaire” and was described by the press as a “cross between Doctor Doolittle and the Wizard of Oz,” as a “practical visionary,” and as “serious, but with a sense of humor.”11 A native New Orleanian . . . Forman quit an MBA program to join the city government as an administrative assistant and found himself doing a business analysis project on the Audubon Park. Once the city was committed to a new zoo, Forman was placed on board as an assistant to the zoo director, John Moore. In early 1977, Moore gave up the battle between the “animal people” and the “people people,”12 and Forman took over as park and zoo director. Forman was said to bring an MBA-meets-menagerie style to the zoo, which was responsible for transforming it from a public burden into an almost completely selfsustaining operation. The result not only benefited the citizens of the city but also added a major tourist attraction to the economically troubled city of the 1980s. Staffing The zoo used two classes of employees, civil service, through the Audubon Park Commission, and noncivil service. The civil service employees included the curators and zookeepers. They fell under the jurisdiction of the city civil service system but were paid out of the budget of the Friends of the Zoo. Employees who worked in public relations, advertising, concessions, fund-raising, and so on were hired through the Friends of the Zoo and were not part of the civil service system. See Exhibit 12 for further data on staffing patterns. 6.0 Amoco Foundation American Express Anheuser-Busch, Inc. Arthur Andersen and Company J. Aron Charitable Foundation, Inc. Bell South Corporation BP America Chevron USA, Inc. Conoco, Inc. Consolidated Natural Gas Corporation Entergy Corporation Exxon Company, USA Freeport-McMoRan, Inc. Host International, Inc. Kentwood Spring Water Louisiana Coca-Cola Bottling Company, Ltd. Louisiana Land and Exploration Company Martin Marietta Manned Space Systems McDonald’s Operators of New Orleans Mobil Foundation, Inc. National Endowment for the Arts National Science Foundation Ozone Spring Water Pan American Life Insurance Company Philip Morris Companies Inc. Shell Companies Foundation, Inc. Tenneco, Inc. Texaco USA USF&G Corporation Wendy’s of New Orleans, Inc. EXHIBIT 11 Major Corporate Sponsors Source: The Audubon Institute. Number of Paid Number of Year Employees Volunteers 1972 36 1973 49 1974 69 1975 90 1976 143 1977 193 1978 184 1979 189 1980 198 1981 245 1982 305 1983 302 56 1984 419 120 1985 454 126 1986 426 250 1987 431 300 1988 462 310 1989 300 270 1990 450 350 EXHIBIT 12 Employee Structure Source: The Audubon Institute. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 562 Integrative Cases The Zoo in the Late 1980s A visitor to the new Audubon Park Zoo could quickly see why New Orleanians were so proud of their zoo. In a city that was termed among the dirtiest in the nation, the zoo was virtually spotless. This was a result of adequate staffing and the clear pride of both those who worked at and those who visited the zoo. One of the first points made by volunteers guiding school groups was that anyone seeing a piece of trash on the ground must pick it up.13 A 1986 city poll showed that 93 percent of the citizens surveyed gave the zoo a high approval rating—an extremely high rating for any public facility. Kudos came from groups outside the local area as well. Delegates from the American Association of Zoological Parks and Aquariums ranked the Audubon Park Zoo as one of the three top zoos of its size in America. In 1982, the American Association of Nurserymen gave the zoo a Special Judges Award for its use of plant materials. In 1985, the Audubon Park Zoo received the Phoenix Award from the Society of American Travel Writers for its achievements in conservation, preservation, and beautification. By 1987, the zoo was virtually self-sufficient. The small amount of money received from government grants amounted to less than 10 percent of the budget. The master plan for the development of the zoo was 75 percent complete, and the reptile exhibit was scheduled for completion in the fall. The organization had expanded with a full complement of professionals and managers. (See Exhibit 13 for the organizational structure of the zoo.) While the zoo made great progress in fifteen years, all was not quiet on the political front. In a court battle, the city won over the state on the issue of who wielded ultimate authority over Audubon Park and Zoo. Indeed, the zoo benefited from three friendly mayors in a row, starting with Moon Landrieu, who championed the new zoo, to Ernest “Dutch” Morial, to Sidney Barthelemy who threw his support to both the zoo and the aquarium proposal championed by Ron Forman. The Future New Directions for the Zoo Zoo Director Ron Forman demonstrated that zoos have almost unlimited potential. A 1980 New Orleans magazine article cited some of Forman’s ideas, ranging from a safari train to a breeding center for rare animals. The latter has an added attraction as a potential money-maker since an Asiatic lion cub, for example, sells for around $10,000. This wealth of ideas was important because expanded facilities and programs are required to maintain attendance at any public attraction. The most ambitious of Forman’s ideas was for an aquarium and riverfront park to be located at the foot of Canal Street. Although the zoo enjoyed political support in 1992, New Orleans was still suffering from a high unemployment rate and a generally depressed economy resulting from the slump in the oil industry. Some economists predicted the beginning of a gradual turnaround in 1988, but any significant improvement in the economy was still forecasted to be years away in 1993. (A few facts about New Orleans are given in Exhibit 14.) In addition, the zoo operated in a city where many attractions competed for the leisure dollar of citizens and visitors. The Audubon Zoological Garden had to vie with the French Quarter, Dixieland jazz, the Superdome, and even the greatest of all attractions in the city—Mardi Gras. The New Orleans Aquarium In 1986, Forman and a group of supporters proposed the development of an aquarium and riverfront park to the New Orleans City Council. In November 1986, the electorate voted to fund an aquarium and a riverfront park by a 70 percent margin—one of the largest margins the city has ever given to any tax proposal. Forman14 hailed this vote of confidence from the citizens as a mandate to build a world-class aquarium that would produce new jobs, stimulate the local economy, and create an educational resource for the children of the city. The Aquarium of the Americas opened in September 1990. The $40 million aquarium project was located providing a logical pedestrian link for visitors between [major] attractions of the Riverwalk and the Jax Brewery, a shopping center in the French Quarter. Management of the aquarium was placed under the Audubon Institute, the same organization that ran the Audubon Zoo. A feasibility study prepared by Harrison Price Company15 projected a probable 863,000 visitors by the year 1990, with 75 percent of the visitors coming from outside the metropolitan area. That attendance figure was reached in only four months and six days from the grand opening. Attendance remained strong through 1992, after a slight drop from the initial grand opening figures. Meanwhile, the zoo had its own future to plan. The new physical facilities and professional care paid off handsomely in increased attendance and new animal births. But the zoo could not expand at its existing location because of lack of land within the city. Forman and the zoo considered several alternatives. One was little “neighborhood” zoos to be located all over the city. A second was a special survival center, a separate breeding area to be located outside the city boundaries where land was available. Forman presented plans for a project called Riverfront 2000, which included expansion of the aquarium, the Woldenberg Riverfront Park, a species survival center, an arboretum, an insectarium, a natural history museum, and a further expansion of the zoo. With the zoo running smoothly, the staff seemed to need new challenges to tackle, and the zoo needed new facilities or programs to continue to increase attendance. 6.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Audubon Park Commission Executive Director Friends of the Zoo, Inc. Administrative Assistant Associate Director General Curator Deputy Director Children’s Zoo Hospital/Commissary Mammals Records Reptiles Research Rides Swamp Birds Bird Rehab. Development Zoo-To-Do Finance Personnel Maintenance Construction Visitor Services Food Gifts Other Operations Administration Education Volunteers Grounds Security Graphics Marketing Public Relations Group Sales Membership Integrative Cases 563 6.0 EXHIBIT 13 Audubon Park Commission Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 564 Integrative Cases Notes 1. Millie Ball, “The New Zoo of ’82,” Dixie Magazine, Sunday Times Picayune (June 24, 1979). 2. Merikaye Presley, “Neighbors Objecting to Audubon Zoo Expansion Project in Midst of Work,” Times Picayune (March 30, 1975), A3. 3. “Zoo Expansion Is Ruled Illegal,” Times Picayune (January 20, 1976). 4. Ibid. 5. “Society Seeks Change at Zoo,” Times Picayune (April 29, 1972), D25. 6. “Zoo Thrives Despite Tough Times in New Orleans,” Jefferson Business (August 1985), A1. 7. Ibid. 8. Sharon Donovan, “New Orleans Affiliates Monkey Around for Zoo,” Advertising Age (March 17, 1986). 9. Karen Sausmann, ed., Zoological Park and Aquarium Fundamentals (Wheeling, W. Va.: American Association of Zoological Parks and Aquariums, 1982), 111. 10. Diane Luope, “Riverboat Rides to Zoo Are Planned,” Times Picayne (November 30, 1981), A17. 11. Steve Brooks, “Don’t Say ‘No Can Do’ to Audubon Zoo Chief,” Jefferson Business (May 5, 1986), 1. 12. Ross Yuchey, “No Longer Is Heard a Discouraging Word at the Audubon Zoo,” New Orleans (August 1980), 53. 13. Ibid., 49. 14. “At the Zoo” (Winter 1987). 15. “Feasibility Analysis and Conceptual Planning for a Major Aquarium Attraction,” prepared for the City of New Orleans (March 1985). 6.0 Population 1,324,400 Households 489,900 Median Age 30.8 years Median Household EBI $29,130 Average Temperature 70 degrees Average Annual Rainfall 63 inches Average Elevation 5 feet below sea level Area 363.5 square miles 199.4 square miles of land Major Economic Activities Tourism (5 million visitors per year) Oil and Gas Industry The Port of New Orleans (170 million tons of cargo/year) Taxes State Sales Tax 4.0% Parish (County) Sales Tax 5.0% (Orleans) State Income Tax 2.1%–2.6% on first $20,000 3.0%–3.5% on next $30,000 6.0% on $51,000 and over Parish property tax of 126.15 mills (Orleans) is based on 10% of appraised value over $75,000 homestead exemption. EXHIBIT 14 A Few Facts About the New Orleans MSA Source: Sales and Marketing Management. South Central Bell Yellow Pages, 1991. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 565 References Ball, Millie. “The New Zoo of ’82,” Dixie Magazine, Sunday Times Picayune (June 24, 1978). Beaulieu, Lovell. “It’s All Happening at the Zoo,” Sunday Times Picayune (January 28, 1978). Brooks, Steve. “Don’t Say ‘No Can Do’ to Audubon Zoo Chief,” Jefferson Business (May 5, 1986). Bureau of Governmental Research, City of New Orleans, “Audubon Park Zoo Study, Part I, Zoo Improvement Plan” (New Orleans, La.: Bureau of Governmental Research, August 1971). Bureau of Governmental Research, City of New Orleans, “Audubon Park Zoo Study, Part II, An Operational Analysis,” (New Orleans, La.: Bureau of Governmental Research, August 1971). Donovan, S. “The Audubon Zoo: A Dream Come True,” New Orleans (May 1986), 52–66. “Feasibility Analysis and Conceptual Planning for a Major Aquarium Attraction,” prepared for the City of New Orleans (March 1985). Forman, R., J. Logsdon, and J. Wilds. “Audubon Park: An Urban Eden” (New Orleans, La.: The Friends of the Zoo, 1985). Poole, Susan. Frommer’s 1983–84 Guide to New Orleans, (New York: Simon & Schuster, 1983). Sausmann, Karen, ed., Zoological Park and Aquarium Fundamentals (Wheeling, WVa.: American Association of Zoological Parks and Aquariums, 1982). Yuchey, Ross “No Longer Is Heard a Discouraging Word at the Audubon Zoo,” New Orleans (August 1980), 49–60. Zuckerman, S., ed. Great Zoos of the World (Boulder, Co.: Westview Press, 1980). 6.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 566 Integrative Cases In early January, 2001, Jeff Gutsch, senior manager at Moss Adams LLP, an accounting firm located in Santa Rosa, California, met with his team to discuss the progress of a new initiative for developing the firm’s accounting practice to serve clients in the Northern California wine industry. At the meeting, Gutsch and his wine niche team reviewed the strategic plan for the coming year (Exhibit 1). Integrative Case 7.0 Moss Adams, LLP 7.0 Moss Adams LLP Santa Rosa Office Wine Industry Advisors 2001 Strategic Plan Mission Statement Our goal is to become the dominant accounting and business consulting firm serving the wine industry by providing superior, value-added services tailored to the needs of Northern California vineyards and wineries, as well as becoming experts in the industry. • We expect to achieve this goal by December 31, 2004. Five-Year Vision We are recognized as the premier wine industry accounting and business consulting firm in Sonoma, Mendocino, and Napa counties. We are leaders in the Moss Adams firm-wide wine industry group, helping to establish Moss Adams as the dominant firm in the Washington and Oregon wine regions. We have trained and developed recognized industry experts in tax, accounting, and business consulting. Our staff is enthusiastic and devoted to the niche. The Market • A firmwide objective is to increase the average size of our business client. We expect to manage the wine niche with that objective in mind. However, during the first two to three years, we intend to pursue vineyards and wineries smaller than the firm’s more mature niches would. When this niche is more mature we will increase our minimum prospect size. This strategy will help us gain experience, and build confidence in Moss Adams in the industry, as it is an industry that tends to seek firms that are well established in the Wine Industry. • There are approximately 122 wineries in Sonoma County, 168 in Napa County and 25 in Mendocino County. Of these, approximately 55% have sales over $1 million, and up to one-third have sales in excess of $10 million. In addition to these, there are over 450 vineyards within the same three counties. • The wine industry appears to be extremely provincial. That combined with the fact that most of our stronger competitors (see “Competition” on the next page) are in Napa County, we consider Sonoma County to be our primary geographic market. However, Mendocino County has a growing wine industry, and we certainly will not pass up opportunities in Napa and other nearby counties in 2001. Our Strengths The strengths Moss Adams has in competing in this industry are: • We are large enough to provide the specific services demanded by this industry. • Our firm’s emphasis is on serving middle-market businesses, while the “Big 5” firms are continually increasing their minimum client size. The majority of the wine industry EXHIBIT 1 Moss Adams’s Wine Niche Strategic Plan, 2001 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 567 7.0 is made up of middle-market companies. This “Big 5” trend increases our market each year. • We do not try to be all things to all people. We focus our efforts in specialized industries/niches, with the goal of ultimately becoming dominant in those industries. • We emphasize value-added services, which create more client satisfaction, loyalty, and name recognition. • We have offices located throughout the West Coast wine regions. • We have individuals within the firm with significant wine industry experience, including tax, accounting and consulting. We also have experts in closely related industries such as orchards, beverage, and food manufacturing. • Within California, we have some high profile wine industry clients. • The majority of our niche members have roots in Sonoma County, which is important to Sonoma County wineries and grape growers. • Our group is committed to being successful in and ultimately dominating the industry in Sonoma, Napa, and Mendocino counties. Challenges • Our experience and credibility in the wine industry are low compared to other firms. • There has been a perception in the Sonoma County area that we are not local to the area. As we continue to grow and become better known, this should be less of an issue. If we can minimize our weaknesses by emphasizing our strengths, we will be successful in marketing to the wine industry, allowing us to achieve our ultimate goal of being dominant in the industry. Competition There are several CPA firms in Northern California that service vineyards and wineries. The “Big 5” firms are generally considered our biggest competitors in many of the industries we serve, and some have several winery clients. But as noted earlier, their focus seems to be on larger clients, which has decreased their ability to compete in this industry. Of the firms with significant wine industry practices, the following firms appear to be our most significant competitors: • Motto Kryla & Fisher. This firm is a well-established wine industry leader, with the majority of their client base located in Napa County, although they have many Sonoma County clients. They are moving away from the traditional accounting and tax compliance services, concentrating their efforts on consulting and research projects. We can take advantage of this, along with the perception of many in the industry that they are becoming too much of an insider, and gain additional market share. • Dal Pagetto & Company. This firm was a split off from Deloitte & Touche several years ago. They are located in Santa Rosa, and have several vineyard and winery clients. At this time, they are probably our biggest Sonoma County competitor. However, they may be too small to compete once our momentum builds. • Other firms that have significant wine industry practices that we will compete against include G & J Seiberlich & Co., Brotemarkle Davis & Co., Zainer Reinhart & Clarke, Pisenti & Brinker, Deloitte & Touche, and PriceWaterhouseCoopers. The first two are wine industry specialists headquartered in Napa County, and although very competitive there, they each do not appear to have a large Sonoma County client base. The next two are general practice firms with several wine industry clients. However, each of these firms has struggled to hold themselves together in recent years, and they do not appear to have well coordinated wine industry practices. The last two firms listed above are “Big 5” firms that, as noted earlier, focus mostly on the largest wineries. EXHIBIT 1 Moss Adams’s Wine Niche Strategic Plan, 2001 (continued) (continued) Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 568 Integrative Cases 7.0 Annual Marketing Plan Our marketing strategy will build on the foundation we laid during the prior two years. We have established the following as our marketing plan: • Increase and develop industry knowledge and expertise: 1. Work with other Moss Adams offices, particularly Stockton, to gain knowledge and experience from their experienced staff. Additionally, work with Stockton to have Santa Rosa Wine Niche staff assigned to two of their winery audits. 2. Continue to attend industry CPE, including the Vineyard Symposium, the Wine Industry Symposium, the California State Society of CPAs–sponsored wine industry conferences in Napa and San Luis Obispo, and selected Sonoma State University and UC Davis courses. We would like eight hours of wine industry specific CPE for each Senior Level and above committed member of the Wine Niche. Jeff will have final approval on who will attend which classes. 3. Continue to build our relationship with Sonoma State University (SSU). Our Wine Niche has agreed to be the subject of an SSU case study on the development of a CPA firm wine industry practice. We feel this case study will help us gain additional insight into what it will take to be competitive, as well as give us increased exposure both at SSU and in the industry. We will also seek to become more involved in SSU’s wine industry educational program by providing classroom guest speakers twice a year. 4. Attract and hire staff with wine industry experience. We should strongly consider candidates who have attained a degree through the SSU Wine Business Program. We should also work to recruit staff within the office that have an interest in the industry. • Continue to form alliances with industry experts both inside and outside the firm. We are building relationships with Ray Blatt of the Moss Adams Los Angeles office who has expertise in wine industry excise and property tax issues. Cheryl Mead of the Santa Rosa office has developed as a Cost Segregation specialist with significant winery experience. • Develop and use relationships with industry referral sources: 1. Bankers and attorneys that specialize in the wine industry. From these bankers and attorneys, we would like to see three new leads per year. 2. Partner with other CPA firms in the industry. Smaller firms may need to enlist the services of a larger firm with a broader range of services, while the “Big 5” firms may want to use a smaller firm to assist with projects that are below their minimum billing size for the project type. We will obtain at least two projects per year using this approach. 3. Leverage the relationships we have to obtain five referrals and introductions to other wine industry prospects per year. 4. We will maintain a matrix of Sonoma, Mendocino, and Napa County wineries and vineyards, including addresses, controller or top financial officer, current CPA, and banking relationship. This matrix will be updated as new information becomes available. From this matrix, we will send at least one mailing per quarter. • Increase our involvement in the following industry trade associations by attending regular meetings and getting to know association members. In one of the following associations, each committed niche member will seek to obtain an office or board position: 1. Sonoma County Wineries Association 2. Sonoma County Grape Growers Association EXHIBIT 1 Moss Adams’s Wine Niche Strategic Plan, 2001 (continued) Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 569 7.0 3. Sonoma State University Wine Business Program 4. Zinfandel Advocates and Producers 5. Women for Winesense 6. California Association of Winegrape Growers 7. Wine Institute • Establish an environment within the niche that promotes and practices the PILLAR concept. Encourage staff in the niche to be creative and strive to be the best. Provide interesting projects and events for the niche to make participation more interesting. • Use the existing services that Moss Adams offers to market the firm, which include: 1. BOSS 2. Business Valuations 3. Cost Segregation 4. SCORE! 5. SALT 6. Business Assurance Services 7. Income Tax Compliance Services • Make use of Firm Resources 1. Use Moss Adams’s Info Edge (document management system) to share and refer to industry related proposals and marketing materials. a. All Wine Niche Proposals will be entered into and updated in InfoEdge as completed. b. All Wine Niche Marketing letters will be entered into InfoEdge as created. • Continue to have monthly wine industry niche meetings. We will review the progress on this plan at our March, April, and September niche meetings. Within our niche, we should focus our marketing efforts on Sonoma County, concentrating on smaller prospects that we can grow with, which will enable us to increase our prospect size over time. We would like to be in position to attract the largest wineries in the industry by 2004. • Establish a Quarterly CFO/Controller roundtable group, with the Moss Adams Wine Industry Group working as facilitator. We will have the Group established and have our first meeting in the summer. • Quarterly, at our niche meetings, monitor progress on the quantifiable goals in this strategic plan. Summary In 2001, one of our goals is to add a minimum of three winery clients to our client base. We feel this is a reasonable goal as long as we continue to implement our plan as written. We believe we can make the wine industry niche a strong niche in the Santa Rosa office. The firm defines niche dominance as having a minimum of $500,000 in billings, a 20% market share, and having 40% of the services provided be in value-added service codes. We expect to become the dominant industry force in Sonoma, Mendocino, and Napa counties by 2004. We are also willing to assist other offices within the firm to establish wine industry niches, eventually leading to a mature niche within the firm. We believe with the proper effort we can accomplish each of these goals. EXHIBIT 1 Moss Adams’s Wine Niche Strategic Plan, 2001 (continued) Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 570 Integrative Cases The meeting took place just before the height of the busy tax and audit season. Gutsch, 39, had been concentrating on the firm’s clients in its construction industry niche. He had not made as much headway developing new business with wine industry clients as he had hoped and opened the meeting by saying: I think the issue we are all struggling with is how to break into a well-established mature niche. Do we discount fees? If so, is that our desired position in servicing the wine industry? Do we advertise? Seems like a big commitment for something that we can’t be sure will produce results. Do we just get on every panel we can and shake as many hands as we can? I’m still trying to find the right formula. Chris Pritchard, an accounting manager who had worked with Gutsch for 2 years to develop the wine niche, said: Sorry, Jeff, but I’ve been too busy working in health care. Health care is taking off, so my time is limited on the wine side. There’s something missing, sort of a spark in this niche. There’s not as much of a hunger to close, to go out and actually close a deal, or at least go out and meet with somebody. I think that’s what’s lacking for our success right now. I think we have all of the tools we need. But we don’t have an aggressive nature to go out and start shaking hands and asking for business. We’re doing everything else except asking for the business. We don’t follow up. Neysa Sloan, a senior accountant, nodded in assent: I personally do not see us making our objectives of gathering 20% of the market share in the regional wine industry over the next 3–5 years. Our marketing tactics are not up to the challenge. We need to seriously look at what we have done in the last year or two, what we are currently doing, and what we are proposing to do in regards to marketing. If we looked at this objectively, we would see that we have not gained much ground in the past using our current tactics— why would it work now? If you allowed more individuals to market and be involved, we might get somewhere. Cheryl Mead, a senior manager whose specialty was conducting cost segregation (cost segregation is a process of breaking a large asset into its smaller components so that depreciation may be taken on an accelerated basis) studies, commented: Growing wineries are looking for help. We need to focus on wineries that are expanding their facilities, and then grow with their growing businesses. Value-added services like cost segregation could represent as much as 40% of our wine industry practice. If we want to get in, we’ve got to do much more networking, marketing, and presentations. The challenge for us here in Santa Rosa is how to manage our resources. Career choices are changing; you can’t be a generalist anymore. We need both people-related and technical skills, but those don’t usually go hand-inhand. We need someone who is famous in the field, a “who’s who” in the wine accounting industry. Claire Calderon, also a senior tax manager, said to the team: This is a hard niche to break into, Jeff. It takes a long time to develop relationships in specific industries. It could take a couple of years. First you find forums to meet people, get to know people, get people to trust you and then you get an opportunity to work on a project and you do a good job. It takes a while. Our goal is to become a trusted advisor and that doesn’t happen overnight. Gutsch replied: While consolidation is happening in the wine industry, many of the wineries we are targeting are still privately owned. When you’re dealing with privately owned businesses it’s much more personal than with public companies. Calderon added: That might explain part of it, Jeff, but the reality is that there are two other fledgling niches that are doing well and going like gangbusters. This niche is off to a slow start! Barbara Korte, a senior accountant, reassured him: Jeff, you have been very focused, very enthusiastic about this project. You’ve put a lot of time into it. As a leader, I think you are a real good manager. At stake was the opportunity to generate significant incremental client fee revenues. More than 600 wine producers and vineyards (grape growers) were in business in the premium Northern California wine-growing region encompassing Napa, Sonoma, and Mendocino counties. According to the Summer 2000 issue of Marketplace, there were 168 wine producers and 228 vineyards in Napa; 122 wine producers and 196 vineyards in Sonoma; and 25 wine producers and 61 vineyards in Mendocino. Few of these operations were large, according to Marketplace. Napa and Sonoma each had 14 wine producers reporting over $10 million in sales, and Mendocino, only one. Company Background Moss Adams was a regional accounting firm. It had four regional hubs within the firm: Southern California, Northern California, Washington, and Oregon. By late 2000, Moss Adams had become one of the 15 largest accounting firms in the United States, with 150 partners, 740 CPAs, and 1,200 employees. Founded in 1913 and headquartered in Seattle, the full-service firm specialized in middle-market companies, those with annual revenues of $10–$200 million. Each office had a managing partner. Art King was the managing partner of the Santa Rosa office (Exhibit 2). The 7.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Managing Partner Partners (4) Assistant of Partners Senior Managers (9) Managers (7) Senior Accountants (7) Staff Accountants (8) Consultant Network Administrator Office Manager Internal Accountant HR Consultant Moss Adams, LLP Santa Rosa, CA Organizational Chart Integrative Cases 571 firm was considered mid-size and its client base tended to mirror that size. King reflected on Moss Adams’s advantages of size and location: . . . it is an advantage to be a regional firm with a strong local presence. For one thing, there just aren’t that many regional firms, especially out here on the West Coast. In fact, I think we’re the only true West Coast regional firm. That gives us access to a tremendous number of resources that the larger firms have. We have the added advantage of being a big part of Sonoma County. Sonoma County companies want the same kind of services they can get from the Big Five operating out of places like San Francisco, but they also like to deal with local firms that are active in the community. Our staff is active in Rotary, 20–30, the local chambers of commerce, and so on, and that means a lot to the businesspeople in the area. Sonoma County companies will go to San Francisco for professional services, but only if they have to, so we offer the best of both worlds. Each office within the firm was differentiated. An office like Santa Rosa had the ability to be strong in more niches because it was one of the dominant firms in the area. Moss Adams did not have to directly compete with the Big Five accounting firms because they were not interested in providing services to small to mid-size businesses. Since it was a regional firm, Moss Adams was able to offer a depth of services that most local firms were not able to match. This gave Moss Adams a competitive advantage when selling services to the middle market company segment. Moss Adams provided services in four main areas of expertise: business assurance (auditing), tax, international, and consulting. Auditing comprised approximately 35% to 40% of Moss Adams’s practice, the remainder being divided among tax work in corporate, partnerships, trusts and estates, and individual taxation. In its Santa Rosa office, Moss Adams serviced corporate business and highwealth individuals. 7.0 EXHIBIT 2 Moss Adams’s Organizational Chart Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 572 Integrative Cases On the international side, Moss Adams was a member of Moores Rowland International, a worldwide association of accounting firms. Moss Adams primarily worked with local companies that did business overseas or that wanted to set up a foreign location. It also did a lot of work with local companies that had parent firms located overseas. On the consulting side, Moss Adams had about 80 full-time consultants, and this line of business represented probably 15% to 20% of the total practice. A large part of the consulting work performed by Moss Adams was in mergers and acquisitions. Its M&A division helped middle-market companies, which formed the bulk of its clientele, develop a coherent, consistent strategy, whether they were planning on selling the business and needed to find an appropriate buyer or were looking for a good acquisition target. The Big Six (Big Five in 2000) accounting firms had developed niche strategies in the 1980s, and Moss Adams had been one of the first mid-level accounting firms in the nation to identify niches as a strategy. Adopting a niche strategy had allowed Moss Adams to target a basket of services to a particular industry of regional importance. As each practice developed a niche, it also identified the “famous people” in that niche. These people became the “goto” people, the leaders of that niche. The high-technology sector represented one of the fastest-growing parts of Moss Adams’s business. According to King: It’s big in the Seattle area (where Moss Adams has its headquarters), and with the development of Telecom Valley, it’s certainly becoming big in Sonoma County. We’re finding that a great deal of our work is coming from companies that are offshoots of other large high-tech companies in the area. Financial institutions represent another client group that’s growing rapidly, as is health care. With all of the changes in the health care and medical fields, there’s been a good deal of turmoil. We have a lot of expertise in the health care and medical areas, so that’s a big market for us. Have I seen a drop-off? No, not really. The interesting thing about the accounting industry is that even when the economy slows down, there’s still a lot of work for a CPA firm. There might not be as many large, special projects as when the economy is really rolling, but the work doesn’t slow down. The Industry and the Market Accounting was a large and relatively stable service industry, according to The Journal of Accountancy, the industry’s most widely read trade publication. The Big Five accounting firms (Andersen Worldwide, PriceWaterhouseCoopers, Ernst & Young, Deloitte & Touche, and KPMG) dominated the global market in 1998 with combined global revenue exceeding $58 billion, well over half of the industry’s total revenue. All of the Big Five firms reported double-digit growth rates in 1998. However, some of the most spectacular growth was achieved by firms outside the top 10, some of which registered increases of nearly 60% over 1997 revenues. Ninety of the top 100 firms had revenue increases, and 58 of them achieved double-digit gains. In 1999, accounting industry receipts in the United States exceeded $65 billion. The industry employed more than 632,000 people. However, the industry was expected to post more modest growth in revenues and employment in the 21st century. Finding niche markets, diversifying services, and catering to global markets were key growth strategies for companies in the industry. Large international firms, including the Big Five, had branched out into management consulting services in the late 1980s and early 1990s. Accounting firms and certified public accountants (CPAs) nationwide began offering a wide array of services in addition to traditional accounting, auditing, and bookkeeping services. This trend was partially a response to clients’ demand for “one-stop shopping” for all their professional services needs. Another cause was the relatively flat growth in demand for traditional accounting and auditing services over the past 10 years, as well as the desire of CPAs to develop more value-added services. The addition of management consulting, legal, and other professional services to the practice mix of large national accounting networks was transforming the industry. Many firms began offering technology consulting because of growing client demand for Internet and e-commerce services. Accounting Today’s 1999 survey of CPA clients indicated that keeping up with technology was the strategic issue of greatest concern, followed by recruiting and retaining staff, competing with larger companies, planning for executive succession, and maximizing productivity. However, according to The CPA Journal, the attractive consulting fees may have led many firms to ignore potential conflicts of interest in serving as an auditor and as a management consultant to the same client. The profession’s standards could be jeopardized by the entrance of non-CPA partners and owners in influential accounting firms. Many companies facing these problems split their accounting and management consulting operations. In January 2001, Arthur Andersen spun off its consulting division and renamed it “Accenture” to avoid accusations of impropriety. Still, CPA firms could be expected to continue to develop their capabilities and/or strategic alliances to meet clients’ demands. Some other areas of expansion among accounting firms included administrative services, financial and investment planning services, general management services, government administration, human resources, international operations, information technology and computer systems consulting, litigation support, manufacturing ad7.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 573 ministration, marketing, and research and development. Many small and medium-size independent firms were merging or forming alliances with large service companies such as American Express, H&R Block, and Century Business Services. By the late 1990s, a trend toward consolidation got under way in the accounting industry. Several factors were fueling the drive toward consolidation. Large increases in revenue among the top 100 accounting firms between 1997 and 1998 may have been partially attributable to this trend toward consolidation. Consolidators wanted access to the large volume of business currently being done by independent CPAs. The trust that small businesses and individuals had in their CPAs was considered very valuable, and consolidators wanted to leverage the potential of an individual firm’s integrity to expand their own businesses. Consolidation caused a decline in the number of independent accounting firms that offered only tax and accounting services. The New York State Society of CPAs estimated that there was a strong possibility that up to 50 of the largest accounting firms in the United States would dissolve or merge with other entities by the end of the year 2000. In the San Franciso Bay area, for example, the Big Five dominated the industry (Exhibit 3). The Wine Industry Niche The wine industry practice was a new niche for the Santa Rosa office, as well as for Moss Adams in general. Moss Adams allowed any employee to propose a niche. All accounting firms bill at fairly standard rates, so the more business generated, the greater the profit. Moss Adams felt it was in their long-term best interest to allow employees to focus on areas in which they were interested. The firm would benefit from revenues generated, but, more importantly, employees would likely stay with a firm that allowed a degree of personal freedom and promoted professional growth. Gutsch and Pritchard had begun this niche in mid1998 for several reasons. First, both had an interest in the industry. Second, Sonoma and Napa counties had 200 wineries and numerous vineyard operations. Third, Moss Adams had expertise in related or similar business lines such as orchards, as well as significant related experience in providing services to the manufacturing sector. Finally, the wine industry had been historically serviced by either large firms that considered the typical winery a small client, or by smaller firms that were not able to offer the range of services that Moss Adams could provide. Sara Rogers, a senior accountant and member of the wine niche team, recalled: It first started with Jeff Gutsch and Chris Pritchard and another senior manager, who was in our office until November 1999. Anyway, I think it was their motivation that really started the group. The three of them were doing everything in building the niche. When the senior manager left, it sort of fell flat on its face for a little while. I think it got stagnant. Pretty much nobody said anything about it until last summer, when Jeff started the organization of it again and brought in more people, and then he approached people that he wanted to work with. Gutsch felt that Moss Adams was in position to move forward to make the wine industry niche a strong niche both in the Santa Rosa office and, eventually, the firm as a whole. He was committed to that goal and expected to achieve it within 5 years. Gutsch saw this niche as his door to future partnership. Moss Adams’s marketing strategy included the following: 1. Develop industry marketing materials that communicate Moss Adams’s strengths and commitment. 2. Develop a distinctive logo for use in the industry. 3. Create an industry brochure similar to that of the firm’s construction industry group. 4. Develop industry service information flyers such as the business lifecycle, R&E (Research & Exploration) credit, excise tax compliance, and BOSS (Business Ownership Succession Services). 5. Develop relationships with industry referral sources (e.g., bankers and attorneys that specialized in the wine industry or current clients who served or had contacts in the industry). 6. Join and become active in industry trade associations. 7. Use existing relationships with industry contacts to obtain leads into prospective wineries and vineyards. 8. Use the existing services that Moss Adams offered to market the firm, particularly in Cost Segregation. 9. Focus efforts on Sonoma County, as well as adjacent wine-growing regions, which would enable Moss Adams to increase its prospect size over time. Pritchard reflected on those early days: The first thing we did was to develop a database of regional wineries and send out an introduction letter. The other thing we did was to develop marketing materials. Jeff developed a logo. We used a top-down approach pyramid for an introduction letter, starting out general and then with an action step at the end to call us. So, we used that at first. Usually with that we’d get about 2% response, which is good, out of 300 letters or whatever we sent out. However, according to King, the major issue in growing the wine industry practice was selling: The thing about selling in public accounting is that you have to have a lot of confidence in what you do and what you can do for the client. You have to have confidence that you know something about the industry. If you go into a marketing meeting, or a proposal meeting and you’re saying, “Well, we do a couple of wineries but we really want to do more and get better at it,” you’re not going to get the work. You gain confidence by knowing how to talk the lan7.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 7.0 EXHIBIT 3 Top 20 Accounting Firms in the San Francisco Bay Area, Ranked by Number of Bay Area CPAs, June 2000 Sources: Viva Chan, San Francisco Business Times, 14 146, June 16, 2000, p. 28; Strafford Publications, Public Accounting Reports, vol. XXIV, June 2000. NR Not reported. *Indicates tie in ranking. **Excludes consulting. No. No. Bay No. No. Bay 1999 Partners No. US 1999 Area Company Area Billings in Bay Company Rev Rank Rank Company CPAs CPAs Employees Bay Area Area Partners FYE ($ 1 2 Deloitte & Touche LLP 439 8,380 1,437 NR 172 2,066 May 99 $5,3 2 1 PricewaterhouseCoopers LLP 430 430 2,000 NR 138 9,000 Sep. 99 6,9 3 3 KPMG Peat Marwick LLP 316 NR 1,778 NR 157 6,800 Jun. 99 4,1 4 4 Arthur Andersen** 312 6,161 821 NR 63 3,059 Aug. 99 3,3 5 5 Ernst & Young LLP 300 NR 850 NR 77 2,465 Sep. 99 6,1 6 6 BDO Seldman LLP 72 1,650 122 NR 15 360 Jun. 00 4 7 14 Seiler & Co. LLP 44 44 110 NR 12 12 NR N 8 7 Frank, Runerman & Co. LLP 43 51 76 NR 12 13 May 99 9 9 Hood & Strong LLP 42 42 89 NR 12 12 NR N 10* 10 Harb, Levy & Weiland LLP 38 38 80 NR 13 13 NR N 10* 13 Ireland San Filippo LLP 38 38 81 12.7M 13 17 Apr. 00 12 15 Burr, Pilger & Mayer 35 35 110 NR 10 10 NR N 13 11 Armanino McKenna LLP 34 34 87 NR 13 13 NR N 14 14 Novogradac & Co. LLP 31 36 80 NR 6 8 NR N 15 12 RINA Accountancy Corp. 26 29 59 7.3M 13 14 NR N 16* 16 Grant Thornton LLP 25 1,300 90 NR 10 300 Jul. 00 4 16* 18 Shea Labagh Dobberstein 25 25 35 NR 3 3 NR N 18 18 Moss Adams LLP 24 800 39 NR 7 144 Dec. 99 1 19 16 Lindquist, von Husen & Joyce 23 23 47 NR 5 5 NR N 20 21 Lautze & Lautze 21 28 39 NR 9 11 NR N Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 575 guage, knowing the buzzwords, knowing some of the players in the industry. You go into a meeting, all of a sudden you’re on an equal footing with them. From a confidence standpoint, that’s huge. You can’t sell public accounting services unless you’re confident about you and your firm and the people that are going to do the work. Over the last 2 years, Jeff has gone to the classes, gone to the meetings and his confidence level is much higher than it was a year ago. When he goes into these meetings he’s going to be at a level where he doesn’t have to make excuses for not having a lot of winery clients, because we have a lot of activity in the wine and the beverage processing industries. So, I think that’s going to help a lot. That’s where he’s going to have more success because we’re getting the at bats, we just need to get some hits. One of the roles of the managing partner was to mentor potential partners and help them attain the role of partner. The training process included marketing and helping them build a practice, according to King: When we’re talking with senior managers, I explain to them what they need to do to get to that next level. I had this conversation with Jeff because his primary focus when he came was, “I need to build a big practice, nothing else matters.” He trusts the system now. He’s transferred some clients to others and received some clients. You have to work well with people, you have to train people, you have to have some responsibilities, and you have to get along with your peers. The firm’s philosophy was to encourage people to really enjoy what they did. Anyone was allowed to propose a niche, even a senior manager. Pritchard explained: Well, part of the way our firm works is, there is a “fourbucket” tier to make partner. One of the buckets is to become a famous person and the fastest way of doing that is through the niche base; within a niche you get the experience and the reputation faster than you would as a generalist. Jeff is a senior manager, so now he’s trying to figure out a way to become partner. I work on Bonny Doon Winery. I have a grower client in Kenwood, so I do have some experience with that. I also like wine because I make wine. It’s an untapped market in Sonoma County for our firm. So we both got together—I had the entrepreneurial spirit to start and Jeff had the need. King described in detail the “four bucket” evaluation system at Moss Adams: We have four criteria that get evaluated by the partners and the compensation committee on a scale of one to ten. All of these are weighted equally, 25%, with a possibility of 40 points. The first is financial. We take a look at the potential partner’s financial responsibilities, what their billings are, what their fee adjustments are, what their charge hours are. I’ve transferred many clients to people in the office. That’s one way I help others grow their practices. I’m still responsible for some of those clients, because I’m the one who brought them in and I’m still the primary contact. My billing numbers may be this, but my overall financial responsibility may be bigger. That’s an objective measure because we look at the numbers, we look at the trends. The second is responsibility. Managing partner of a big office gets more points than the managing partner of a smaller office does, who in turn gets more points than a person in charge of a niche, who in turn gets more points than a line partner. Somebody who is a partner and is responsible for the tax department, let’s say, might get an extra point or half a point, whereas someone in charge of a niche might get an extra point. If they’re in charge of an office they get more points. The third is personnel. Personnel is a very big initiative within Moss Adams. Upstream and downstream evaluations are conducted by our HR person for each office and measures staff retention and the quality of our mentoring program. Each partner is also evaluated up or down from an overall office rating score. For example, our office may get a “seven,” but I may get an “eight” because I’m really good with people. Somebody who’s really hard on people would get a lower rating. The fourth and final “bucket” is peer evaluation. We have three other partners evaluate each partner. They evaluate the partner for training, mentoring, marketing, and involvement in their community. Then, evaluations are used by the compensation committee to review individual partner compensation. They are also used for partner counseling sessions. King also assured a “soft landing” to the participants of the niche teams. This meant that if a niche didn’t work out, he would assure the individuals that another niche in the firm would be found for them. This, it was hoped, fostered entrepreneurial behavior. According to King: A high level of practice responsibility for a partner would be $1 million in this office. The range is anywhere from $600,000 to $1 million in billings a year. The overall picture is where we try to get people involved in at least two niches in the office, until a niche becomes large enough that you can spend full-time in it. The upside, potentially, of the wine niche would be a practice of from $500,000 to $1,000,000 based on Sonoma and maybe some Napa County wineries. So, the upside is a very mature, profitable niche that fits right into our model of our other niches of middle market companies that have the need, not only for client services, but also our value-added services. If for some reason the wine niche didn’t take off, Jeff would become more involved in the manufacturing niche— well, wine is manufacturing anyway, but it’s just a subset of manufacturing. It might slow his rate to partner. It could 7.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 576 Integrative Cases also turn out that—all of a sudden—Jeff gets four great referrals in the manufacturing niche this year, he builds this great big practice in manufacturing, and as a result he has less time for the wine niche. The downside is we’ve spent some money on marketing, and Jeff has spent some time on marketing when he could have been doing something else. Then, we abandon the project. If that happens, then Jeff’s time becomes available and the money becomes available to go after some other initiative or something we’re already doing or some new initiative. Nobody is going to lose his or her job over it. We haven’t lost a lot of money over it. The Aftermath After the January 2001 meeting. Gutsch pondered how he should proceed to overcome some major roadblocks to building his team. King took Gutsch aside for counseling: . . . target the $10 million to under $20 million winery for which we can provide a full range of services. There’s nobody else with our range of services that’s really doing a good job in that area. There’s an under-served market for those middle-market companies. When you started, I knew it would take 2 to 3 years to really get the ball rolling. This is really going to be your year, Jeff. If it isn’t, well, we’ll reevaluate at the end of the year. Our overall marketing budget is probably in the area of 1.5% to 2% of total client billings. In 1999, the first year for the wineries, we probably spent somewhere in the neighborhood of $5,000 to $8,000, which wasn’t a lot but you joined some organizations and you did some training. Last year we probably spent $10,000 to $12,000. Now, Jeff, I know that some of our other offices spend a lot more on marketing than we do. We’ll have to decide: is this the best use of your time? Is this the best use of our resources to try to go after an industry where we just tried for three years and haven’t made any inroads? The decision to develop a niche had been based upon a gut feeling. Moss Adams did not use any litmus test or hurdle rate of return to screen possible niches. This was because, with the exception of nonprofits, most clients had similar fee realization rates. Moss Adams looked at the potential volume of business and determined whether it could handle that volume. Yet Moss Adams remained unknown in the wine industry. Time was running out. This case study was prepared by Professors Armand Gilinsky, Jr. and Sherri Anderson at Sonoma State University as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This case was originally presented at the 2001 meeting of the North American Case Research Association in Memphis, Tenn. The authors gratefully acknowledge the support of Moss Adams PLC and the Wine Business Program at Sonoma State University for assistance in preparation of this case. 7.0 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 577 Rule #1 for business organizations: People, not structure, make a business work or fail. Blindly following organizational concepts that have worked elsewhere is a sure way to waste talent and get poor results. Organizational change alone achieves nothing, while dedicated people can make any structure work. This doesn’t mean that organizational changes shouldn’t happen. But design any changes to get the most out of people in the company’s unique circumstances. Top management should never dictate change as a cure-all to avoid facing fundamental problems. Quotation from the Harvard Business Review (title and author uncited) posted on the wall of Bill Larson, Plant Manager of Littleton Manufacturing On June 21, 1990, Paul Winslow, the director of human resources at Littleton Manufacturing, was told by his boss, Bill Larson, to put together a team of employees to address a number of issues that Larson thought were hurting Littleton’s bottom line. Winslow’s assignment had come about as a result of his making a presentation on those problems to Larson. Larson had then met with his executive staff, and he and Winslow had subsequently gone to the plant’s Quality Steering Committee to discuss what to do. They decided to form a Human Resources Process Improvement Team (PIT) to prioritize the issues and propose a corrective course of action. Winslow, who had been at the plant for seventeen years, had been asked by Larson to chair the PIT. The Quality Steering Committee decided that the PIT should include two representatives each from Sales and Marketing, Fabrication, and Components. Two managers from each of these areas were chosen, including Dan Gordon, the fabrication manufacturing manager, and Phil Hanson, the components manufacturing manager. There were no supervisors or hourly employees on the team. At the first meeting, the PIT discussed the six widely recognized problem areas that Winslow had identified to Larson. Each member’s assignment for the next meeting, on June 28, was to prioritize the issues and propose an action plan. The Problems A course in management and organizational studies carried out by students at a nearby college had started the chain of events that led to the formation of the Human Resources PIT. In late 1989, Winslow was approached by a faculty member at a local college who was interested in using Littleton as a site for a field-project course. Because of ongoing concerns about communication at the plant by all levels, Winslow asked that the students assess organizational communication at Littleton. Larson gave his approval, and in the spring of 1990 the students carried out the project, conducting individual and group interviews with employees at all levels of the plant. Winslow and his staff combined the results of the students’ assessment with the results of an in-house survey done several years earlier. The result was the identification of six problem areas that they thought were critical for the plant to address: • Lack of organizational unity • Lack of consistency in enforcing rules and procedures • Supervisor’s role poorly perceived • Insufficient focus on Littleton’s priorities • Change is poorly managed • Lack of a systematic approach to training The Company Littleton Manufacturing, located in rural Minnesota, was founded in 1925. In 1942, Littleton was bought by Brooks Industries, a major manufacturer of domestic appliances and their components. At that time, Littleton manufactured custom-made and precision-machined components from special metals for a variety of industries. In 1983, through the purchase of a larger competitor, Frühling, Inc., Brooks was able to increase its domestic market share from 8 percent to about 25 percent. Brooks then decided to have only one facility produce the components that were used in most of the products it made in the United States. The site chosen was Littleton Manufacturing. To do this, Brooks added a whole new business (Components) to Littleton’s traditional activity. To accommodate the new line, a building of 80,000 square feet was added to the old Littleton plant, bringing the total to 220,000 square feet of plant space. Because of the addition of this new business, Littleton went from 150 employees in 1984 to 600 in 1986. In mid-1990, there were about 500 employees. Integrative Case 8.1 Littleton Manufacturing (A)* 8.1 *By David E. Whiteside, organizational development consultant. This case was written at Lewiston-Auburn College of the University of Southern Maine with the cooperation of management, solely for the purpose of stimulating student discussion. Data are based on field research; all events are real, although the names of organizations, locations, and individuals have been disguised. Faculty members in nonprofit institutions are encouraged to reproduce this case for distribution to their students without charge or written permission. All other rights reserved jointly to the author and the North American Case Research Association (NACRA). Copyright © 1994 by the Case Research Journal and David E. Whiteside. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 578 Integrative Cases The older part of the plant (the Fabrication side) manufactured its traditional custom-made products and sold them to a variety of industrial customers. It also supplied the newer side of the plant (the Components side) with a variety of parts that were further processed and used to make electrical components. These components were used by all other Brooks plants in the assembly of domestic appliances that were sold worldwide. About 95 percent of the products made on the Components side of the plant originated on the Fabrication side. The plant was also headquarters for Brooks Industries’ sales and marketing department, known as the “commercial group,” which had worldwide sales responsibilities for products made by the Fabrication side. These included international and domestic sales of products to several industries, including the semiconductor, consumer electronics, and nuclear furnace industry. This group marketed products made not only by Littleton Manufacturing but also those made by Brooks’s other fourteen plants, all located in the United States. Bill Larson, the plant manager, reported to the executive vice president of manufacturing of Brooks, whose corporate office was in Chicago, Illinois. Larson met once a month with his boss and the other plant managers. Reporting directly to Larson were six functional line managers and the manager of the Quality Improvement System (QIS). This group of seven managers, known as the “staff,” met weekly to plan and discuss how things were going. (See Exhibit 1 for an organizational chart.) In December 1989, there were 343 hourly and 125 salaried employees at the plant. About 80 percent of the workforce was under 45. Seventy-seven percent were male, and 23 percent were female. Seventy-six percent had been at the plant 10 years or less. All of the hourly workers were represented by the Teamsters union. The Financial Picture Brooks Industries Brooks was the second largest producer of its kind of domestic appliances in the United States. Its three core business units were commercial/industrial, consumer, and original equipment manufacturing. The major U.S. competitors for its domestic appliances were Eagleton, Inc., and Universal Appliances, Inc. In the United States, Eagleton’s market share was 47 percent; Brooks had about 23 percent; and Universal Appliances and a number of small companies had the remaining 30 percent. However, U.S. manufacturers were facing increasing competition, primarily based on lower prices, from companies in Asia and eastern Europe. In 1989, Brooks’s sales declined 4 percent, and in 1990, they declined another 5 percent, to $647 million. Their 1989 annual report contained the following statement about the company’s financial condition: “There was fierce competition…which led to a decline in our share of a stable market and a fall in prices, resulting in a lower level of sales…. With sales volume showing slower growth, we failed to reduce our costs proportionately and there was underutilization of capacity.” In May 1990, after announcing unexpected first-quarter losses, Brooks started a corporation-wide efficiency drive, including planned layoffs of 16 percent of its workforce, a corporate restructuring, and renewed emphasis on managerial accountability for bottom-line results. Because of its worsening financial condition, for the past few years Brooks had been reducing the resources 8.1 Plant Manager (Bill Larson) QIS Manager Fabrication, Materials and Engineering Manager (Greg White) Quality Assurance Manager (Joe Koenig) Fabrication, Materials Manager (Dan Gordon) Controller (Ron Fontaine) Components, Factory Manager (Phil Hanson) Director, Human Resources (Paul Winslow) Staff Administrative Assistant EXHIBIT 1 Littleton Manufacturing Organizational Chart Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 579 available to Littleton. For example, Larson’s budget for salaries had been increased by only 4 percent each year for the past several years. As a result, supervisors and middle managers complained strongly that recent salary increases had been too little and that plant salaries were too low. They also felt that the forced-ranking performance appraisal system used by the plant, which was based on a bell curve, did not reward good performance adequately. One middle manager commented: “All we get now for good performance is a card and a turkey.” In April 1990, the company cut Littleton’s capital budget by half and stipulated that any new project involving nonessential items had to have a one-year payback. In addition, in both 1988 and 1989 Brooks had charged the Littleton plant around $300,000 for various services provided, such as technical support, but in 1990 this charge was increased by $1 million. Many of the Littleton plant managers felt that this was done to help offset Brooks’s deteriorating financial condition and were frustrated by it. Indicating that he thought Brooks was using Littleton as a cash cow, one staff member said, “The more profitable we get, the more corporate will charge us.” Many managers, especially those on the Fabrication side, felt that even though they had made money for the plant, corporate’s increase in charges nullified their success and hard work. A number of managers on the Fabrication side also feared that if their operation did not do well financially, the company might close it down. In discussing the increasing lack of resources available from corporate and the plant’s own decline in profits, Larson said: “There needs to be a change in the way people here think about resources. They have to think more in terms of efficiency.” He was proud of the fact that the company had achieved its goal of reducing standard costs by 1 percent for each of the past three years and that in 1990 cost reductions would equal 5 percent of production value. He thought that if the company reduced the number of reworks, costs could be lowered by another 20 to 30 percent. Littleton Manufacturing The Fabrication and the Components operations at Littleton Manufacturing were managed as cost centers by Brooks while the commercial group was a profit center. (A profit center is a part of an organization that is responsible for accumulating revenues as well as costs. A cost center is an organizational division or unit of activity in which accounts are maintained containing direct costs for which the center’s head is responsible.) In 1989 and 1990, the Fabrication side of Littleton had done well in terms of budgeted costs, while the Components side had incurred significant losses for both years. Littleton’s net worth increased from $319,000 in 1989 to $3,094,000 in 1990 due to the addition of a new Fabrication-side product that was sold on the external market and had required no additional assets or resources. In 1990, sales for the plant as a whole were $41,196,000, with an operating profit of 3.7 percent, down from 7.3 percent in 1989. Larson estimated that the current recession, which was hurting the company, would lower sales in 1991 by 10 percent. Exhibit 2 presents an operating statement for Littleton Manufacturing from 1988 to 1990. The Quality Improvement System In 1985, corporate mandated a total quality management effort, the Quality Improvement System (QIS), which replaced the quality circles that the plant had instituted in 1980. Posted throughout the plant was a Quality Declaration, which had been developed by Larson and his staff. It read: We at Littleton Manufacturing are dedicated to achieving lasting quality. This means that each of us must understand and meet the requirements of our customers and coworkers. We all must continually strive for improvement and error-free work in all we do—in every job . . . on time . . . all the time. Bill Larson was enthusiastic about QIS. He saw QIS as a total quality approach affecting not just products but all of the plant’s processes, one that would require a long-term effort at changing the culture at the plant. He felt that QIS was already reaping benefits in terms of significant improvements in quality, and that the system had also greatly helped communication at the plant. In the QIS all employees were required to participate in Departmental Quality Teams (DQTs) that met in groups of six to twelve every two weeks for at least an hour to identify ways to improve quality. Most hourly employees were on only one DQT; middle managers were, on average, on three DQTs. Some managers were on as many as six. The results of each team’s efforts were exhibited in graphs and charts by their work area and updated monthly. There were about sixty teams in the plant. The leader from each Departmental Quality Team, a volunteer, served also as a member of a Quality Improvement Team (QIT), whose goals were to support the DQTs and help them link their goals to the company’s goals. QITs consisted of six to eight people; each was chaired by a member of the executive staff. These staff members, along with Bill Larson, composed the Quality Steering Committee (QSC) for the plant. The QSC’s job was to oversee the direction and implementation of the Quality Improvement System for the plant and to coordinate with corporate’s quality improvement programs. The QSC also sometimes formed corrective action teams to work on special projects. Unlike DQTs, which were composed of employees from a single department or work area, corrective action teams had members from different functions or departments. By 1986, there were nine corrective action teams, but by 1989, none were functioning. When asked 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 580 Integrative Cases about them, Winslow said, “I’m not sure what happened to them. They just sort of died out.” Larson and most managers believed that the QIS had improved quality. On most of its Fabrication products, the company competed on the basis of quality and customer service, and the vice president of sales and marketing thought that their quality was the best in the industry. In 1988 and 1989, the plant won several Brooks awards for quality and was publicly cited by a number of customers for quality products. Hourly employees in general also thought that QIS had improved quality, although they were less enthusiastic about the system than management. A number of hourly employees complained that since participation was mandatory, many groups were held back by unmotivated members. They thought participation should be voluntary. Another complaint was that there was inadequate training for group leaders, with the result that some groups were not productive. In the spring of 1990, the company decided that the QIS effort was “stagnating” and that DQTs should be changed to include members from different departments. It was thought that this would improve communication and coordination between departments and lead to further improvements in quality, productivity, and on-time delivery. DQTs became known is IDQTs (Interdepartmental Quality Teams). IDQTs were scheduled to begin in November 1990. In addition, the company decided to begin Process Improvement Teams (PITs), which would focus on various ongoing processes at the plant, such as budgeting and inventory management. A PIT, composed of managers from different functions, would not be ongoing but only last as long as it took to achieve its particular goals. 8.1 EXHIBIT 2 Littleton Manufacturing Operating Profit Statement Note: Changes in Operating Profit from year to year are posted to retained earnings (net worth) account on the corporate balance sheet. It must be noted, however, that the balance sheet figures include the impact of headquarters, national organization changes, and extraordinary income from other operations, which are not reflected on the operating profit statement shown above. Source: Controller, Littleton Manufacturing. 1988 1989 1990 Fabrication Sales $16,929 $18,321 $19,640 Direct costs 11,551 11,642 11,701 Contribution margin 5,378 6,679 7,939 % of sales 31.8% 36.5% 40.4% All other operating costs 4,501 4,377 4,443 Operating profit 877 2,301 3,496 % to sales 5.2% 12.6% 17.8% Components Sales $20,468 $15,590 $21,556 Direct costs 16,049 10,612 18,916 Contribution margin 4,419 4,978 2,640 % of sales 21.6% 31.9% 12.2% All other operating costs 4,824 4,797 4,628 Operating profit (405) 180 (1,988) % to sales 2.0% 1.2% –9.2% Total Littleton Manufacturing Sales $37,397 $33,911 $41,196 Direct costs 27,599 22,254 30,617 Contribution margin 9,798 11,657 10,579 % to sales 26.2% 34.4% 25.7% All other operating costs 9,326 9,175 9,071 Operating profit 472 2,482 1,508 % to sales 1.3% 7.3% 3.7% Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 581 How Different Levels Perceived the Problems In order to choose the issues to tackle first and to devise a tentative plan for addressing them, Winslow reflected on the background information he had on the six problem areas that he and his staff had identified on the basis of their own analysis and the students’ assessment of organizational communication. A Lack of Organizational Unity People often talked about “this side of the wall and that side of the wall” in describing the plant. They were referring to the wall separating the newer Components side and the older Fabrication side of the plant. (Some parts of the Fabrication side had been built in the twenties.) The Components side was brighter, cleaner, and more open, and, in summer, it was cooler. In comparing the two sides, one manager said, “At the end of the shift in Fabrication, you come out looking like you’ve been through the wringer.” On the whole, the equipment in the Components side was also newer, with most of it dating from the 1970s and 1980s and some of it state-of-the-art machinery that was developed at the plant. Much of the equipment on the Fabrication side went back to the 1950s and 1960s. These differences in age meant that, in general, the machinery on the Fabrication side required more maintenance. It was generally agreed that Components jobs were cleaner and easier, and allowed more social interaction. On the Fabrication side many of the machines could run only two to three hours before needing attention, whereas on the Components side the machines might run for days without worker intervention. On the Fabrication side, because of the placement of the machines and the need for frequent maintenance, people tended to work more by themselves and to “be on the go all the time.” It was not uncommon for senior hourly employees in Fabrication to request a transfer to Components. Hourly workers described Components as “a country club” compared to the Fabrication side. Many attributed this to how the different sides were managed. Enforcement of rules was more lax on the Components side. For example, rules requiring safety shoes and goggles were not as strictly enforced, and some operators were allowed to eat on the job. One Human Resources staff member described Components supervisors as “laid-back about sticking to the rules” and those in Fabrication as “sergeants.” He saw the manufacturing manager of Fabrication, Dan Gordon, as having a clear vision of what he wanted for the Fabrication side and a definite plan on how to get there. He also saw Gordon as keeping a tight rein on his supervisors and holding them accountable. The same Human Resources employee described the factory manager of Components, Phil Hanson, as dealing with things as they came up—as more reactive. Hanson allowed his supervisors more freedom and did not get involved on the floor unless there was a problem. When there was a problem, however, he reacted strongly and swiftly. For example, to combat a recent tendency for employees to take extended breaks, he had begun posting supervisors outside of the bathrooms right before and after scheduled breaks. Bill Larson attributed the differences in the two sides “to the different performance and accountability needs dictated by their business activities and by the corporate office.” Components met the internal production needs of Brooks by supplying all of the other Brooks plants with a product that they, in turn, used to manufacture a household product that sold in the millions each year. Fabrication, however, had to satisfy the needs of a variety of industrial customers while competing on the open market. Larson felt that Fabrication had to have a more entrepreneurial ethic than Components because “Fabrication lives or dies by how they treat their customers—they have to woo them and interact well with them,” whereas Components had a ready-made market. Larson also thought that some of the differences were due to the fact that the plant was “held prisoner by what goes on in corporate.” Although the corporate office set financial targets for both sides of the plant, it exercised more control over the financial and productivity goals of the Components side because no other Brooks plant was in the Fabrication business and Brooks understood the Components business much better. In addition, corporate was dependent on the Components side for the standardized parts—primarily wire coils—used in many of its finished products. The Components side produced as many as 2 million of some of these small parts a day. Larson also indicated that the requirements for the number of workers on the two sides of the plant were different. For example, depending on what business was like for each side, the overtime requirements could vary. Hourly employees on the side of the plant that had more overtime felt the side that was working less was getting “easier” treatment. Larson knew that the overtime disparity was due to need, not preferential treatment of one side over the other, but as he put it: “You can talk your head off, but you’re not going to be able to explain it to them to their satisfaction. So that causes a lot of frustration among the ranks down there.” The Manager of QIS traced the differences between the Fabrication side and the Components side to the consolidation at Littleton of all of Brooks’s production of wire coils needed for its domestic appliances after Brooks bought Frühling, Inc., in 1984. Most of the upper managers hired to start the Components business were brought in from Frühling, and, as he put it, “They had a different way of doing things. It wasn’t a tightly run ship.” He said that some of the old managers at the plant wondered about the wisdom of bringing in managers from a company that 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 582 Integrative Cases had not been successful. People asked, “Why use them here? They must have been part of what was wrong.” One Fabrication manager added that the manager brought in to start the Components business, Bob Halperin, had the view: “We’re going to start a new business here and do whatever is necessary to make it run and to hell with Littleton Manufacturing policies.” Also, when the new Components business was started, its manager reported directly to the Brooks corporate office and not to the plant manager. In 1986 the structure was changed so that the factory manager of Components reported to the Littleton Manufacturing plant manager. A union steward at the plant attributed some of the differences between the two sides to the fact that the workforce on the Components side tended to be younger and had more women with young children (67 percent of the hourly women in the plant worked in Components). The demands of raising children, he thought, resulted in the women needing to take more time off from work. One of the Fabrication supervisors thought that since the supervisors on the Components side were younger, they expected more from management and were more outspoken, especially about how much an hour they should be paid. A number of these supervisors had also been brought in from Frühling, and were not originally from Littleton. Lack of Consistency in Enforcing Rules and Procedures A major complaint of both hourly and salaried workers was the inconsistent application of policies and procedures. Although most people mentioned the differences from one side of the plant to the other, there were also differences from one department to another. As the chief union steward put it, “This is the number-one problem here—nobody is the same!” Some Components supervisors were letting people take longer breaks and going for breaks earlier than they were supposed to. Some supervisors allowed hourly employees to stand around and talk for a while before getting them to start their machines. In some departments on the Components side, employees were allowed to gather in the bathrooms and “hang out” anywhere from five to twenty minutes before quitting time. The chief steward cited an example where, contrary to previous policy, some workers on the Components side were allowed to have radios. “When people on the Fabrication side found out,” he said, “they went wild.” Some other examples of inconsistencies cited by employees were as follows: 1. Fighting in the plant was supposed to result in automatic dismissal, but the Human Resources administrator recalled two incidents of fighting where the people involved were not disciplined. 2. Another incident that had been much discussed throughout the plant involved an employee who was “caught in a cloud of marijuana smoke” by his supervisor. Since the supervisor did not observe the man smoking but just smelled the marijuana, the person was only given a written warning. One manager said, “We need to take a stand on these things. We need to make a statement. That way we would gain some respect.” Describing the same incident, another manager said, “It makes us close to thinking we’re giving them (hourly employees) the key to the door.” 3. Several people also mentioned the case of a mother who claimed she missed work several times because of doctors’ appointments for her children and was suspended for three days, which they compared with the case of an operator who also missed work several times, and was suspected of drug or alcohol abuse, but was not disciplined. In discussing differences in the enforcement of safety regulations throughout the plant, the administrator of plant safety and security said that when he confronted people who were wearing sneakers, often they would just say they forgot to wear their safety shoes. He said, “If I had to punish everyone, I’d be punishing 50 to 100 people a day.” There were also differences in absenteeism for the two sides of the plant. Absenteeism on the Components side was around 2.2 percent, whereas it was slightly less than 1 percent on the Fabrication side. Some attributed this to a looser enforcement of the rules governing absenteeism by supervisors on the Components side. Winslow had tried to estimate the annual cost of failure to enforce the rules governing starting and stopping work. His estimate was that the plant was losing $2,247.50 per day, for a total of $539,400 a year. Winslow’s memo detailing how he arrived at his overall estimate had been part of his presentation to Larson; it is included as Exhibit 3. Although Winslow had not said so in the memo, he later estimated that 70 percent of the total loss occurred on the Components side of the plant. Supervisors complained that when they tried to discipline subordinates, they often did not feel confident of backing by management. They referred to incidents where they had disciplined hourly employees only to have their decisions changed by management or the Human Resources department. One supervisor told of an incident in which he tried to fire someone in accordance with what he thought was company policy, but the termination was changed to a suspension. He was told he had been too harsh. In a subsequent incident he had another decision overruled and was told he had been too lenient. He said, “We feel our hands are tied; we’re not sure what we can do.” Supervisors’ decisions that were changed were usually communicated directly to the union by the Human Resources department. In these instances, the supervisors felt they wound up with “egg on their faces.” 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 583 Winslow attributed some of these problems to a lack of communication regarding the company’s policies and procedures. He thought that if the supervisors understood company policy better, their decisions would not need to be changed so frequently. There was no Human Resources policy manual, for example, although the work rules were contained in the union contract. Dan Gordon disagreed with the view that these problems were a result of the supervisors’ lack of understanding of the plant’s policies and procedures. He claimed: “Ninety-nine percent of the supervisors know the policies but they lack the skills and willingness to enforce them. Just like a police officer needs to be trained to read a prisoner his rights, the supervisors need to be taught to do their jobs.” He thought that in some of the cases where a supervisor’s decision was changed, the supervisor had made a mistake in following the proper disciplinary procedure. Then, when the supervisor’s decision was overturned, no explanation was provided, so the supervisor would be left with his or her own erroneous view of what happened. The Human Resources administrator thought that some of the supervisors were reluctant to discipline or confront people because “They’re afraid to hurt people’s feelings and want to stay on their good side.” Supervisor’s Role Is Poorly Perceived On the first shift in Fabrication there were about 70 hourly workers and 7 supervisors, and in Components there were about 140 hourly workers and 11 supervisors. Supervisors were assisted by group leaders, hourly employees who were appointed by the company and who received up to an extra 10 cents an hour. All levels of the plant were concerned about the role of supervisors. “Supervisors feel like a nobody,” said one senior manager. In the assessment of organizational communication done by the students, hourly employees, middle managers, and supervisors all reported that supervisors had too much to do and that this limited their effectiveness. A typical observation by one hourly employee was: “The supervisors can’t be out on the floor because of meetings and paperwork. They have a tremendous amount of things on their mind…. The supervisor has become a paperboy, which prevents him from being able to do his job.” In speaking about how busy the supervisors were and how they responded to suggestions by hourly employees, an8.1 MEMORANDUM From: Paul Winslow, Director of Human Resources To: Bill Larson Subject: Estimated Cost of Loss of Manufacturing Time Date: 6/18/90 Loss of Manufacturing Time* (Based on 348 Hourly Employees) Delay at start of shift 10 minutes 25% (87) 14.50 hours Washup before AM break 5 minutes 75% (261) 21.75 hours Delayed return from break 10 minutes 50% (174) 29.00 hours Early washup—lunch avg. 10 minutes 50% (174) 29.00 hours Delayed return from lunch 10 minutes 25% (87) 14.50 hours Early washup before PM break 5 minutes 75% (261) 21.75 hours Delayed return from break 10 minutes 50% (174) 29.00 hours Early washup—end of shift 5 minutes 75% (261) 65.25 hours Total 224.75 hours/day Cost: 224.75 avg. $10 hr. $2,247.50/day 240 days $2,247.50 $539,400.00/year *1. Does not include benefits. 2. Does not include overtime abuses. 3. Does not include instances of employees exiting building while punched in. EXHIBIT 3 Memo from Paul Winslow to Bill Larson Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 584 Integrative Cases other hourly person said, “The supervisor’s favorite word is, ‘I forgot.’” Supervisors also wanted more involvement in decision making. “You will! You will! You will!” is the way one supervisor characterized the dominant decisionmaking style of managers at the plant. He thought that most managers expected supervisors to just do what they were told to do. “We have a lot of responsibility but little authority,” was how another supervisor put it. Many supervisors felt that they were ordered to do things by their managers, but when something went wrong, they were blamed. Another factor contributing to the low morale of supervisors was a perceived lack of the resources that they felt were necessary to do a good job. Many complained that they were often told there was no money to make changes to improve things. They also complained of too few engineering, housekeeping, and maintenance personnel. Some supervisors thought there were too few supervisors on the second and third shifts. They thought this resulted in inadequate supervision and allowed some hourly workers to goof off, since the employees knew when these few supervisors would and would not be around. The combination of these factors—job overload, too much paperwork, lack of authority, not enough involvement in decision making, lack of resources to make changes, inadequate training, and few rewards—made it difficult to find hourly people at the plant who would accept an offer to become a supervisor. In discussing the role of supervisors, Larson said, “We don’t do a good job of training our supervisors. We tell them what we want and hold them accountable, but we don’t give them the personal tools for them to do what we want them to do. They need to have the confidence and ability to deal with people and to hold them accountable without feeling badly.” He continued by praising one supervisor who he thought was doing a good job. In particular, Larson felt, this supervisor’s subordinates knew what to expect from him. This person had been a chief petty officer in the Navy for many years, and Larson thought this had helped him feel comfortable enforcing rules. Reflecting on this, he said, “Maybe we should just look for people with military backgrounds to be supervisors.” Insufficient Focus on Littleton’s Priorities The phrase “insufficient focus on Littleton’s priorities” reflected two concerns expressed by employees. First, there was a lack of understanding of Littleton’s goals. Second, there was a questioning of the plant’s commitment to these goals. However, various levels saw these matters differently. Although the plant had no mission statement, senior managers said that they thought that they understood Littleton’s priorities. A typical senior management description of the plant’s goals was, “To supply customers with quality products on time at the lowest possible cost in order to make a profit.” Each year, Larson and the executive staff developed a four-year strategic plan for Littleton. Sales and marketing would first project the amounts and types of products that they thought they could sell. Then manufacturing would look at the machine and labor capabilities of the plant. The sales projections and capabilities were then adjusted as necessary. Throughout the process, goals were set for improving quality and lowering costs. Larson then took the plan to Brooks for revision and/or approval. Next, Larson turned the goals in the strategic plan into specific objectives for each department. These departmental objectives were used to set measurable objectives for each executive staff member. These then formed the basis for annual performance appraisals. Because of this process, all of the executive staff felt that they knew what was expected of them and how their jobs contributed to achieving the company’s goals. At the same time, both senior and middle managers thought there was insufficient communication and support from corporate headquarters. They mentioned not knowing enough about corporate’s long-term plans for the company. A number of the managers on the Fabrication side wondered about corporate’s commitment to the Fabrication business. They thought that if their operation did not do well financially, the company might end it. In discussing the status of the Fabrication side of the plant, Gordon said that Brooks considered it a “noncore business.” The Quality Assurance manager felt that corporate was not providing enough support and long-term direction for the QIS. Winslow was concerned about the lack of consistency in corporate’s Human Resources policies and felt that he did not have enough say in corporate Human Resources planning efforts. All levels below the executive staff complained that they did not have a good understanding of Littleton’s own long-range goals. Some middle managers thought there was a written, long-range plan for the company but others disagreed. One member of the executive staff reported that as far as he knew, the entire strategic plan was seen only by the executive staff, although some managers would see the portions of it that concerned their departments. He also reported that the strategic plan was never discussed at operations review meetings. Most hourly employees said that they relied on the grapevine for information about “the big picture.” In discussing the flow of information at the plant, one union steward said, “Things get lost in the chain of command.” He said he got more than 80 percent of his information from gossip on the floor. The primary mechanism used to communicate Littleton’s goals and the plant’s status with regard to achieving them was the operations review meeting held once a month by the plant manager, to which all salaried employees were ostensibly invited. At these meetings, usually attended by 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 585 about eighty people, the plant manager provided figures on how closely the plant had hit selected business indicators. At one recent and typical meeting, for example, the Manager of QIS described various in-place efforts to improve quality. Bill Larson then reviewed the numbers. He presented data on budgeted versus actual production, variances between budgeted and actual manufacturing costs, profits, the top ten products in sales, standard margins on various products, shipments of products, information on backlogs, and the top ten customers.1 When he asked for questions at the end of his presentation, there were none. The students’ organizational assessment reported that all levels appreciated the intent of the operations review meetings, but there were a number of concerns. Everyone interviewed wanted more two-way communication but thought the size and format of the meetings inhibited discussion. Middle managers thought the meetings focused too much on what had happened and not enough on the future. As one manager said: “It’s like seeing Lubbock in the rearview mirror. We want to know where we’re going—not where we’ve been. We want to know what’s coming up, how it’s going to affect our department, and what we can do to help.” Others, including some of the executive staff, complained about the difficulty of understanding the financial jargon. Some hourly employees interviewed did not know there were operations review meetings, and others did not know what was discussed at them. A number of middle managers in manufacturing thought that having regular departmental meetings would improve communication within their departments. They also said that they would like to see minutes of the executive staff meetings. When interviewed by the students for their assessment of organizational communication, a number of middle managers, supervisors, and hourly workers thought the company was not practicing what it preached with regard to its stated goals. A primary goal was supposed to be a quality product; however, they reported that there was too much emphasis on “hitting the numbers,” or getting the required number of products shipped, even if there were defects. They said this especially occurred toward the end of the month when production reports were submitted. One worker’s comment reflected opinions held by many hourly employees: “Some foremen are telling people to push through products that are not of good quality. This passes the problem from one department to another and the end result is a lousy product. They seem too interested in reaching the quota and getting the order out on time rather than quality. It’s a big problem because when the hourly workers believe that quality isn’t important, they start not to care about their work. They pass it on to the next guy, and the next guy gets mad.” The perception by a number of hourly workers that their suggestions to improve quality were not responded to because of a lack of money also resulted in their questioning the company’s commitment to quality. Change Is Poorly Managed Most of the employees interviewed by the students thought there were too many changes at the plant and that the numerous changes resulted in confusion. 1. QIS was initiated in 1985. 2. In 1986, 100 hourly employees were laid off. 3. In 1984, there were 154 managers; in 1990, there were 87 managers. 4. In 1989, corporate initiated a restructuring that changed the reporting relationships of several senior managers. 5. In 1989, as part of QIS, the plant began using statistical process control techniques and began efforts to attain ISO certification. (ISO is an internationally recognized certification of excellence.) 6. In 1989, a new production and inventory control system was introduced, with the help of a team of outside consultants who were at the plant for almost a year studying its operations. 7. In 1990, the Components side reorganized its production flow. A number of complaints were voiced about the effect of all the changes. People felt that some roles and responsibilities were not clear. There was a widespread belief that the reasons for changes were not communicated well enough and that people found out about changes affecting them too late. In addition, many were uncertain how long a new program, once started, would be continued. Larson thought that many hourly employees were resistant to the changes being made because they thought the changes would require more work for them and they were already “running all the time.” One union steward observed, “There’s never a gradual easing in of things here.” A middle manager said: “We’re mandated for speed. We pride ourselves on going fast. We rush through today to get to tomorrow.” Larson thought the culture of the plant was gradually changing due to the implementation of QIS, but he noted that a lot of time had to be spent giving the employees reasons for changes. Dan Gordon thought the plant needed to “communicate change in a single voice.” He said that Larson’s style was to leave it to the staff to tell others about upcoming changes. He commented, “By the time it gets to the last person, it’s lost something.” He felt that Larson needed to communicate changes to those on lower levels in person. The QIS manager thought that Brooks did not provide enough resources and support for changes at the plant. In explaining his view of corporate’s approach to change, he said, “Step one is to not give much. Step two is to not give anything. Step three is they take what’s left away.” Another middle manager commented, “We’re always being asked to do more with less, but the requirements by corporate don’t get cut back.” 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 586 Integrative Cases A frequently mentioned example of change that was frustrating to many people was the introduction of the Manufacturing Assisted Production and Inventory Control System (MAPICS) in 1989. MAPICS was a computerized system that was supposed to keep track of materials, productivity, and labor efficiency. Theoretically, it tracked orders from time of entry to payment of the bill, and one could find out where an order was at any point in the system by calling it up on a computer. However, the system was timeconsuming (data had to be entered manually by the supervisors), and was not as well suited to the Fabrication side of the plant as it was to the Components side, where production was more standardized. One senior manager commented, “MAPICS was sold as the savior for the supervisors, and the company was supposed to get all of the data it needed. But it’s never happened. It’s only half-installed, and there are systems problems and input problems.” Recently, there had been some question as to whether MAPICS was giving an accurate inventory count. Hourly workers felt put upon by the way in which changes were made. One person said, “We were all of a sudden told to start monitoring waste and then all of a sudden we were told to stop.” Another said, “One day the MAPICS room is over here, and then the next day it’s over there. They also put a new system in the stockroom, and we didn’t know about it.” Many resented the outside consultants that had been brought in by corporate, reporting that they did not know why the consultants were brought in or what they were doing. They feared that the consultants’ recommendations might result in layoffs. Hourly people felt that a lot of their information about upcoming changes came through the grapevine. “Rumors fly like crazy” is the way one hourly person described communication on the floor. Another said, “The managers don’t walk through the plant much. We only see them when things are going bad.” In discussing communication about changes, one middle manager said: “It’s a standing joke. The hourly know what’s going to happen before we do.” One steward said, “Lots of times, you’ll tell the supervisors something that’s going to happen and they will be surprised. It raises hell with morale and creates unstable working conditions. But nine out of ten times it’s true.” Hourly workers also felt that they were not involved enough in management decisions about changes to be made. One hourly worker said, “They don’t ask our input. We could tell them if something is not going to work. They should keep us informed. We’re not idiots.” Lack of a Systematic Approach to Training The company had carried out a well-regarded training effort when employees were hired to begin the Components side of the plant and when the QIS program was started. In addition, every two years each employee went through refresher training for the QIS. There was no other formal company training or career development at the plant. Hourly employees and supervisors in particular complained about the lack of training. One hourly employee expressed the predominant view: “When you start work here, it’s sink or swim.” In discussing the promotion of supervisors, the chief union steward said he did not know how people got to be supervisors and that as far as he knew there was no training that one had to have to become a supervisor. When they were hired, new hourly and salaried employees attended an orientation session in which they were informed about benefits, attendance policies, their work schedule, parking regulations, and safety issues. After the orientation session, further training for new salaried employees was left up to individual departments. Standard practice was for the department supervisor to assign the hourly person to an experienced hourly operator for oneon-one job training for two weeks. Winslow expressed some of his reservations about this approach by commenting, “You don’t know if the department is assigning the best person to train the new employee or if they always use the same person for training.” The Human Resources department had no separate training budget. Individual departments, however, did sometimes use their money for training and counted the money used as a variance from their budgeted goals. The training that did occur with some regularity tended to be technical training for maintenance personnel. When asked to explain why there was not more training, Winslow replied, “We would like to do more but we haven’t been able to because of the cost and staffing issues.” For example, in 1986 Winslow’s title was manager of training and development, and he had been responsible for the training program for all of the new employees hired to begin the Components unit. After the initial training was completed, he requested that the plant provide ongoing training for Components operators. However, his request was turned down by Larson, who did not want to spend the money. Winslow also recalled the over 160 hours he had spent the previous year developing a video training package for hourly workers in one part of the Components side of the plant. He said that the program had been piloted, but when it came time to send people through the training course, production management was unwilling to let people take time off the floor. Winslow also cited a lack of support from corporate as a factor in the plant’s sporadic training efforts. At one time Brooks had employed a director of training for its plants, but in 1987, the person left and the company never hired anyone to replace him. Now, Brooks had no training department; each plant was expected to provide its own training. The training Brooks did provide, according to Winslow, was for the “promising manager” and was purchased from an outside vendor. 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 587 Top Management As he sat in his office thinking about what to do, Winslow knew that any plan would have to be acceptable to Larson, Gordon, and Hanson—the plant manager and the two factory managers—and he spent some time thinking about their management styles. Bill Larson was in his late forties, had a B.S. in mechanical engineering, and had started at Littleton in 1970. He had been plant manager since 1983. His direct reports considered him bright, analytical, and down to earth. When asked once how he would describe himself to someone who didn’t know him, he said, “I keep my emotions out of things. I can remember when I was in the Army, standing at attention in my dress blues at the Tomb of the Unknown Soldier. People would come up a foot from my face and look me in the eye and try to get me to blink. But I was able to remove myself from that. I wouldn’t even see it.” He added that he had built most of his own home and repaired his own equipment, including the diesels on a cabin cruiser he used to own. Being raised on a farm in the rural Midwest, he said he learned at an early age how to repair equipment with baling wire to keep it going. Although Larson was considered accessible by the executive staff, he rarely got out on the floor to talk to people. Many managers saw him as a “numbers” person who readily sprinkled his conversations about the plant with quantitative data about business indicators, variances, budgeted costs, etc. In referring to his discomfort discussing personal things, he somewhat jokingly said about himself, “I can talk on the phone for about thirty-five seconds and then I can’t talk any longer.” In describing his own management style, Larson said, “I like to support people and get them involved. I like to let them know what I am thinking and what they need to accomplish. I like to let ideas come from them. I want them to give me recommendations, and if I feel they’re OK, I won’t change them. They need to be accountable, but I don’t want them to feel I’m looking over their shoulders. I don’t want to hamper their motivation.” He estimated that 40 percent of his job responsibility consisted of managing change. Dan Gordon, who was 38, had been at Littleton for fifteen years and had been manufacturing manager of Fabrication for seven years. In describing himself, he said, “I’m a stickler for details, and I hate to not perform well. My superiors tell me I’m a Theory X manager and that I have a strong personality—that I can intimidate people.” In speaking about how much he communicated with hourly employees, Gordon said that he didn’t do enough of it, adding that “Our platters are all so loaded, we don’t spend as much time talking to people as we should.” He said he seldom walked through the plant and never talked to hourly workers one-on-one. Once a year, though, he met formally with all the hourly employees on the Fabrication side to have an operations review meeting like the salaried people had in order to discuss what the plant was doing, profits, new products, etc. “The hourly people love it,” he reported. Reflecting on why he didn’t communicate more with hourly workers, Gordon said, “Since the accounting department’s data depends, in part, on our data collection, a lot of my time is eaten up with this. Maybe I’m too busy with clerical activities to be more visible.” He based his management decisions on documented data and regularly studied the financial and productivity reports issued by the accounting department. He said he would like to see the supervisors go around in the morning to just talk to people but acknowledged that they had too many reports to fill out and too many meetings to attend. When asked to explain what one needed to do to succeed as a manager at Littleton, Gordon answered, “You have to get things done. Bill Larson wants certain things done within a certain time span. If you do this, you’ll succeed.” Phil Hanson, in his early fifties, had been at Littleton for seven years. He was hired as materials manager for Components and was promoted to Components factory manager in mid-1989. Phil estimated that he spent 50 percent of his time on the factory floor talking to people. He felt it gave him a better insight as to what was going on at the plant and created trust. He thought that too many of the managers at the plant were “office haunts”—they felt it was beneath them to talk with hourly workers. It appeared to other managers that Hanson often made decisions based on what he learned in informal conversations with hourly employees. He tried to delegate as much as he could to his managers. When asked what a manager had to do to succeed there, he said, “You have to be a self-starter and make things happen.” Winslow remembered how a few years ago, when he was manager of training and development, the executive staff had gone to one of those management development workshops where you find out about your management style. All of the staff had scored high on the authoritarian end of the scale. This triggered a memory of a recent debate in which he had passed along a suggestion by his staff to the executive staff to “do something nice for the workers on the floor.” To celebrate the arrival of summer, his staff wanted the company to pay for buying hamburgers, hot dogs, and soft drinks so the workers could have a cookout during their lunch break. Those on the executive staff who resisted the idea cited the “jellybean theory of management.” As one manager explained it, “If you give a hungry bear jellybeans, you can keep it happy and get it to do what you want. But watch out when you run out of jellybeans! You’re going to have a helluva angry bear to deal with!” The jelly bean argument carried the day, and the cookout was not held. 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 588 Integrative Cases Recommendation Time As Winslow turned on the computer to write down his recommendations concerning the six problem areas, he recalled how Larson had reacted when the students made their presentation on organizational communication at Littleton. After praising the students’ efforts, Larson had said, in an offhanded way, “This mainly confirms what we already knew. Most of this is not a surprise.” Winslow was hopeful that now some of these issues would be addressed. One potential sticking point, he knew, was the need for the meetings that would be necessary to discuss the problems and plan a strategy. People were already strapped for time and complaining about the number of meetings. Yet unless they took time to step back and look at what they were doing, nothing would change. On a more hopeful note, he recalled that Larson had been impressed when the Human Resources staff emphasized in their presentation to him that these issues were impacting Littleton’s bottom line. Winslow felt that the decline in sales and profits at Brooks, the increasing domestic and foreign competition, the current recession, and declining employee morale made it even more important that the issues be dealt with. People at all levels of the plant were starting to worry about the possibility of more layoffs. Note 1. At Littleton, the manufacturing, engineering, and accounting departments estimated the standard labor costs for making each of the plant’s products and a budget was prepared based on those estimates. The budgeted costs were plant goals. A variance is the difference between actual and standard costs. A variance could be positive (less than) or negative (greater than) with respect to the budgeted costs. 8.1 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Integrative Cases 589 Winslow met with his staff to develop a list of proposed corrective actions. Exhibit 1 is the memo that Winslow sent, in June 1990, to the Human Resources PIT, outlining suggested corrective actions. (The action steps were not prioritized.) The PIT did not meet to discuss what to do about the six issues identified by the Human Resources department until the middle of September. The first issue the PIT decided to address was the inconsistent application of disciplinary policies and procedures. They chose this issue first because they thought that if this could be improved, many of the other issues would be resolved as well. The PIT decided to first find out how well supervisors understood the work rules and the extent to which they had different interpretations of them. To do this they developed a quiz covering Littleton’s twenty-eight work rules and gave the quiz to all supervisors. One question, for example, was “If you came in and found an employee who had just dozed off at his/her workstation, what would you do?” The supervisor then had to choose from several alternatives. This question was followed by, “If you came in and found an employee away from the job and asleep on top of some packing materials, what would you do?” Again, there was a choice of several responses. After taking the exam, the answers were discussed and the correct answer explained by Winslow and the Human Resources staff. The results revealed to the PIT that there was much less knowledge of these rules and how to apply them than management had expected. The PIT then theorized that a number of supervisors were not comfortable with confronting employees about their failure to follow the company’s policies and procedures, especially the wearing of safety shoes and goggles. They decided to seek the assistance of an outside consultant to help them develop a training program for the supervisors. However, on September 1, 1991, as a continuation of its “efficiency drive,” Brooks had imposed a freeze on salaries and a reduction in travel, and prohibited the use of outside consultants at all of its plants. When Winslow asked Bill Larson for approval to hire the consultant, he was reminded that because of the freeze they would have to do the training in-house. As a consequence, Winslow began a series of meetings with union stewards and supervisors—called “Sup and Stew” meetings—to discuss what the work rules were, different interpretations of them, and how violations of work rules should be handled. For scheduling reasons, it was planned so that half of the supervisors and the stewards would attend each meeting. These meetings were held biweekly for over a year. Winslow believed that the meetings were helping to clarify and support the role of the supervisors and were beginning to have a positive effect on the enforcement of policies and procedures. In 1991, because the plants that bought the wire coils made by Components had excess finished goods inventory, Brooks shut them down for a month during the Christmas holidays, leading Littleton to eliminate 125 positions from the Components side for the same month, to reduce production. “If we hadn’t,” Winslow said, “we would have had a horrendous amount of inventory.” The employees filling those positions had, in general, less seniority than their counterparts from Fabrication, and no one from the Fabrication side was laid off. A few of the more senior employees from the Components side were hired to work on the Fabrication side. At the time of the layoffs, business on the Fabrication side was booming. In January, the plant started rehiring the laid-off workers, and by the end of June, all of them had been rehired. In November 1991, Bill Larson learned that he had cancer, and in June 1992, he died. Because of Larson’s illness, the lack of resources, and time pressures, there was no formal attempt to address any of the issues identified by Winslow other than inconsistent enforcement of policies and procedures. The new plant manager, Bob Halperin, took over in the fall of 1992; Halperin had been managing another Brooks plant in the south for three years. One of the reasons he was chosen was his familiarity with Littleton. He had been at Littleton as an industrial engineer from 1973 to 1980, when he left to manage another facility. In 1984 he was sent back to Littleton to start and manage Components. He held this position for four years before leaving to manage the plant in the southern United States. Shortly after Halperin arrived, Winslow acquainted him with the problem areas defined the previous year, gave him a copy of the (A) case, and met with him to discuss the issues. At that time, although Winslow felt that progress had been made on having more consistent enforcement of policies and procedures from one side of the plant to the other, he did not feel much had changed with regard to the other issues. With the exception of the Sup and Stew meetings, none of the specific action steps recommended by him and his staff had been implemented. Integrative Case 8.2 Littleton Manufacturing (B)* *By David E. Whiteside, organizational development consultant. This case was written at Lewiston-Auburn College of the University of Southern Maine with the cooperation of management, solely for the purpose of stimulating student discussion. Data are based on field research; all events are real, although the names of organizations, locations, and individuals have been disguised. Faculty members in nonprofit institutions are encouraged to reproduce this case for distribution to their students without charge or written permission. All other rights reserved jointly to the author and the North American Case Research Association (NACRA). Copyright © 1994 by the Case Research Journal and David E. Whiteside. 8.2 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 590 Integrative Cases 8.2 MEMORANDUM From: Paul Winslow, Director of Human Resources To: Human Resources Process Improvement Team Subject: Proposed Corrective Actions Date: 6/14/90 Lack of Organizational Unity 1. Use job shadowing or rotation to help people understand each other’s jobs, e.g., do this across functions. 2. Reformat the Operations Review meetings, e.g., have a program committee. 3. Have a smaller group forum, e.g., have supervisors from the two sides meet. 4. Provide teamwork training for salaried employees. Lack of Consistency in Enforcing Rules and Procedures 1. Hold meetings with department managers and supervisors to discuss how to enforce policies and procedures. Have these led by Bill Larson. 2. Develop a policy and procedures review and monitoring system. Supervisor’s Role Poorly Perceived 1. Have department managers meet with supervisors to determine priorities or conflicts between priorities. 2. Have supervisory training for all manufacturing supervisors. 3. Time assessment. (How is their time being spent?) Insufficient Focus on Littleton’s Priorities 1. Use the in-house newsletter to communicate priorities. 2. Develop an internal news sheet. 3. Have a question box for questions to be answered at Operations Review meetings. 4. Have a restatement of Littleton’s purpose (do at Operations Review). 5. Have an Operations Review for hourly workers. 6. Use payroll stuffers to communicate information about goals. 7. Hold department meetings; have the manager of the department facilitate the meeting. Change Is Poorly Managed 1. Provide training in managing change. 2. Communicate changes. Lack of a Systematic Approach to Training 1. Establish annual departmental training goals. 2. Link training goals to organizational priorities. 3. Have a systematic approach to training the hourly workforce. 4. Have a training plan for each salaried employee. 5. Have an annual training budget. HR Dept. 6/90 EXHIBIT 1 Memorandum from Paul Winslow to Human Resources Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: A adaptability culture a culture characterized by strategic focus on the external environment through flexibility and change to meet customer needs. administrative principles a closed systems management perspective that focuses on the total organization and grows from the insights of practitioners. ambidextrous approach a characteristic of an organization that can behave in both an organic and a mechanistic way. analyzability a dimension of technology in which work activities can be reduced to mechanical steps and participants can follow an objective, computational procedure to solve problems. analyzer a business strategy that seeks to maintain a stable business while innovating on the periphery. authority a force for achieving desired outcomes that is prescribed by the formal hierarchy and reporting relationships. B balanced scorecard a comprehensive management control system that balances traditional financial measures with operational measures relating to an organization’s critical success factors. benchmarking process whereby companies find out how others do something better than they do and then try to imitate or improve on it. boundary spanning roles activities that link and coordinate an organization with key elements in the external environment. bounded rationality perspective how decisions are made when time is limited, a large number of internal and external factors affect a decision, and the problem is ill-defined. buffering roles activities that absorb uncertainty from the environment. bureaucracy an organizational framework marked by rules and procedures, specialization and division of labor, hierarchy of authority, technically qualified personnel, separate position and incumbent, and written communications and records. bureaucratic control the use of rules, policies, hierarchy of authority, written documentation, standardization, and other bureaucratic mechanisms to standardize behavior and assess performance. bureaucratic culture a culture that has an internal focus and a consistency orientation for a stable environment. bureaucratic organization a perspective that emphasizes management on an impersonal, rational basis through such elements as clearly defined authority and responsibility, formal recordkeeping, and uniform application of standard rules. business intelligence high-tech analysis of large amounts of internal and external data to identify patterns and relationships. C Carnegie model organizational decision making involving many managers and a final choice based on a coalition among those managers. centrality a trait of a department whose role is in the primary activity of an organization. centralization refers to the level of hierarchy with authority to make decisions. centralized decision making is limited to higher authority. change process the way in which changes occur in an organization. chaos theory a scientific theory that suggests that relationships in complex, adaptive systems are made up of numerous interconnections that create unintended effects and render the environment unpredictable. charismatic authority based in devotion to the exemplary character or heroism of an individual and the order defined by him or her. chief ethics officer high-level company executive who oversees all aspects of ethics, including establishing and broadly communicating ethical standards, setting 591 Glossary Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: 592 Glossary up ethics training programs, supervising the investigation of ethical problems, and advising managers in the ethical aspects of corporate decisions. clan control the use of social characteristics, such as corporate culture, shared values, commitments, traditions, and beliefs, to control behavior. clan culture a culture that focuses primarily on the involvement and participation of the organization’s members and on rapidly changing expectations from the external environment. closed system a system that is autonomous, enclosed, and not dependent on its environment. coalition an alliance among several managers who agree through bargaining about organizational goals and problem priorities. code of ethics A formal statement of the company’s values concerning ethics and social responsibility. coercive forces external pressures such as legal requirements exerted on an organization to adopt structures, techniques, or behaviors similar to other organizations. collaborative network an emerging perspective whereby organizations allow themselves to become dependent on other organizations to increase value and productivity for all. collective bargaining the negotiation of an agreement between management and workers. collectivity stage the life cycle phase in which an organization has strong leadership and begins to develop clear goals and direction. competing values approach a perspective on organizational effectiveness that combines diverse indicators of performance that represent competing management values. competition rivalry between groups in the pursuit of a common prize. confrontation a situation in which parties in conflict directly engage one another and try to work out their differences. consortia groups of firms that venture into new products and technologies. contextual dimensions traits that characterize the whole organization, including its size, technology, environment, and goals. contingency a theory meaning one thing depends on other things; the organization’s situation dictates the correct management approach. contingency decision-making framework a perspective that brings together the two organizational dimensions of problem consensus and technical knowledge about solutions. continuous process production a completely mechanized manufacturing process in which there is no starting or stopping. cooptation occurs when leaders from important sectors in the environment are made part of an organization. coping with uncertainty a source of power for a department that reduces uncertainty for other departments by obtaining prior information, prevention, and absorption. core technology the work process that is directly related to the organization’s mission. craft technology technology characterized by a fairly stable stream of activities but in which the conversion process is not analyzable or well understood. creative departments organizational departments that initiate change, such as research and development, engineering, design, and systems analysis. creativity the generation of novel ideas that may meet perceived needs or respond to opportunities. culture the set of values, guiding beliefs, understandings, and ways of thinking that are shared by members of an organization and are taught to new members as correct. culture changes changes in the values, attitudes, expectations, beliefs, abilities, and behavior of employees. culture strength the degree of agreement among members of an organization about the importance of specific values. customer relationship management systems that help companies track customer interactions with the firm and allow employees to call up a customer’s past sales and service records, outstanding orders, or unresolved problems. D data the input of a communication channel. data mining software that uses sophisticated decisionmaking processes to search raw data for patterns and relationships that may be significant. data warehousing the use of a huge database that combines all of an organization’s data and allows users to access the data directly, create reports, and obtain answers to “what-if” questions. decentralized decision making and communication are spread out across the company decision learning a process of recognizing and admitting mistakes that allows managers and organizations to acquire the experience and knowledge to perform more effectively in the future. decision premises constraining frames of reference and guidelines placed by top managers on decisions made at lower levels. decision support system a system that enables managers at all levels of the organization to retrieve, manipulate, and display information from integrated databases for making specific decisions. Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: defender a business strategy that seeks stability or even retrenchment rather than innovation or growth. departmental grouping a structure in which employees share a common supervisor and resources, are jointly responsible for performance, and tend to identify and collaborate with each other. dependency one aspect of horizontal power: when one department is dependent on another, the latter is in a position of greater power. differentiation the cognitive and emotional differences among managers in various functional departments of an organization and formal structure differences among these departments. direct interlock a situation that occurs when a member of the board of directors of one company sits on the board of another. divisional grouping a grouping in which people are organized according to what the organization produces. divisional structure the structuring of the organization according to individual products, services, product groups, major projects, or profit centers; also called product structure or strategic business units. domain an organization’s chosen environmental field of activity. domains of political activity areas in which politics plays a role. Three domains in organizations are structural change, management succession, and resource allocation. domestic stage the first stage of international development in which a company is domestically oriented while managers are aware of the global environment. downsizing intentionally reducing the size of a company’s workforce by laying off employees. dual-core approach an organizational change perspective that identifies the unique processes associated with administrative change compared to those associated with technical change. E e-business any business that takes place by digital processes over a computer network rather than in physical space. economies of scale achieving lower costs through large volume production; often made possible by global expansion. economies of scope achieving economies by having a presence in many product lines, technologies, or geographic areas. effectiveness the degree to which an organization achieves its goals. efficiency the amount of resources used to produce a unit of output. elaboration stage the organizational life cycle phase in which the red tape crisis is resolved through the development of a new sense of teamwork and collaboration. electronic data interchange (EDI) the linking of organizations through computers for the transmission of data without human interference. empowerment the delegation of power or authority to subordinates; also called power sharing. engineering technology technology in which there is substantial variety in the tasks performed, but activities are usually handled on the basis of established formulas, procedures, and techniques. enterprise resource planning (ERP) sophisticated computerized systems that collect, process, and provide information about a company’s entire enterprise, including order processing, product design, purchasing, inventory, manufacturing, distribution, human resources, receipt of payments, and forecasting of future demand. entrepreneurial stage the life cycle phase in which an organization is born and its emphasis is on creating a product and surviving in the marketplace. escalating commitment persisting in a course of action when it is failing; occurs because managers block or distort negative information and because consistency and persistence are valued in contemporary society. ethical dilemma when each alternative choice or behavior seems undesirable because of a potentially negative ethical consequence. ethics the code of moral principles and values that governs the behavior of a person or group with respect to what is right or wrong. ethics committee a group of executives appointed to oversee company ethics. ethics hotline a telephone number that employees can call to seek guidance and to report questionable behavior executive information system (EIS) interactive systems that help top managers monitor and control organizational operations by processing and presenting data in usable form. explicit knowledge formal, systematic knowledge that can be codified, written down, and passed on to others in documents or general instructions. external adaptation the manner in which an organization meets goals and deals with outsiders. extranet private information network. F factors of production supplies necessary for production, such as land, raw materials, and labor. feedback control model a control cycle that involves setting goals, establishing standards of performance, measuring actual performance and comparing it to Glossary 593 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: standards, and changing activities as needed based on the feedback. financial resources control over money is an important source of power within an organization. flexible manufacturing systems (FMS) using computers to link together manufacturing components such as robots, machines, product design, and engineering analysis to enable fast switching from one product to another. focus an organization’s dominant perspective value, which may be internal or external. focus strategy a strategy in which an organization concentrates on a specific regional market or buyer group. formalization the degree to which an organization has rules, procedures, and written documentation. formalization stage the phase in an organization’s life cycle involving the installation and use of rules, procedures, and control systems. functional grouping the placing together of employees who perform similar functions or work processes or who bring similar knowledge and skills to bear. functional matrix a structure in which functional bosses have primary authority and product or project managers simply coordinate product activities. functional structure the grouping of activities by common function. G garbage can model model that describes the pattern or flow of multiple decisions within an organization. general environment includes those sectors that may not directly affect the daily operations of a firm but will indirectly influence it. generalist an organization that offers a broad range of products or services and serves a broad market. global company a company that no longer thinks of itself as having a home country. global geographical structure a form in which an organization divides its operations into world regions, each of which reports to the CEO. global matrix structure a form of horizontal linkage in an international organization in which both product and geographical structures are implemented simultaneously to achieve a balance between standardization and globalization. global product structure a form in which product divisions take responsibility for global operations in their specific product areas. global stage the stage of international development in which the company transcends any one country. global teams work groups made up of multinational members whose activities span multiple countries; also called transnational teams. globalization strategy the standardization of product design and advertising strategy throughout the world. goal approach an approach to organizational effectiveness that is concerned with output and whether the organization achieves its output goals. H Hawthorne Studies a series of experiments on worker productivity begun in 1924 at the Hawthorne plant of Western Electric Company in Illinois; attributed employees’ increased output to managers’ better treatment of them during the study. heroes organizational members who serve as models or ideals for serving cultural norms and values. high-velocity environments industries in which competitive and technological change is so extreme that market data is either unavailable or obsolete, strategic windows open and shut quickly, and the cost of a decision error is company failure. horizontal coordination model a model of the three components of organizational design needed to achieve new product innovation: departmental specialization, boundary spanning, and horizontal linkages. horizontal grouping the organizing of employees around core work processes rather than by function, product, or geography. horizontal linkage the amount of communication and coordination that occurs horizontally across organizational departments. horizontal structure a structure that virtually eliminates both the vertical hierarchy and departmental boundaries by organizing teams of employees around core work processes; the end-to-end work, information, and material flows that provide value directly to customers. human relations model emphasis on an aspect of the competing values model that incorporates the values of an internal focus and a flexible structure. hybrid structure a structure that combines characteristics of various structural approaches (functional, divisional, geographical, horizontal) tailored to specific strategic needs. I idea champions organizational members who provide the time and energy to make things happen; sometimes called advocates, intrapreneurs, and change agents. idea incubator safe harbor where ideas from employees throughout the organization can be developed without interference from company bureaucracy or politics. imitation the adoption of a decision tried elsewhere in the hope that it will work in the present situation. 594 Glossary Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: incident command system developed to maintain the efficiency and control benefits of bureaucracy yet prevent the problems of slow response to crises. incremental change a series of continual progressions that maintain an organization’s general equilibrium and often affect only one organizational part. incremental decision process model a model that describes the structured sequence of activities undertaken from the discovery of a problem to its solution. indirect interlock a situation that occurs when a director of one company and a director of another are both directors of a third company. information that which alters or reinforces understanding. information reporting systems the most common form of management information system, these computerized systems provide managers with reports that summarize data and support day-to-day decision making. inspiration an innovative, creative solution that is not reached by logical means. institutional environment norms and values from stakeholders (customers, investors, boards, government, etc.) that organizations try to follow in order to please stakeholders. institutional perspective an emerging view that holds that under high uncertainty, organizations imitate others in the same institutional environment. institutional similarity the emergence of common structures, management approaches, and behaviors among organizations in the same field. integrated enterprise an organization that uses advanced information technology to enable close coordination within the company as well as with suppliers, customers, and partners. integration the quality of collaboration between departments of an organization. integrator a position or department created solely to coordinate several departments. intellectual capital the sum of an organization’s knowledge, experience, understanding, processes, innovations, and discoveries. intensive technologies a variety of products or services provided in combination to a client. interdependence the extent to which departments depend on each other for resources or materials to accomplish their tasks. intergroup conflict behavior that occurs between organizational groups when participants identify with one group and perceive that other groups may block their group’s goal achievements or expectations. interlocking directorate a formal linkage that occurs when a member of the board of directors of one company sits on the board of another company. internal integration a state in which organization members develop a collective identity and know how to work together effectively. internal process approach an approach that looks at internal activities and assesses effectiveness by indicators of internal health and efficiency. internal process emphasis an aspect of the competing values model that reflects the values of internal focus and structural control. international division a division that is equal in status to other major departments within a company and has its own hierarchy to handle business in various countries. international stage the second stage of international development, in which the company takes exports seriously and begins to think multidomestically. interorganizational relationships the relatively enduring resource transactions, flows, and linkages that occur among two or more organizations. intranet a private, company-wide information network that uses the communications protocols and standards of the Internet but is accessible only to people within the company. intuitive decision making the use of experience and judgment rather than sequential logic or explicit reasoning to solve a problem. J job design the assignment of goals and tasks to be accomplished by employees. job enlargement the designing of jobs to expand the number of different tasks performed by an employee. job enrichment the designing of jobs to increase responsibility, recognition, and opportunities for growth and achievement. job rotation moving employees from job to job to give them a greater variety of tasks and alleviate boredom. job simplification the reduction of the number and difficulty of tasks performed by a single person. joint optimization the goal of the sociotechnical systems approach, which states that an organization will function best only if its social and technical systems are designed to fit the needs of one another. joint venture a separate entity for sharing development and production costs and penetrating new markets that is created with two or more active firms as sponsors. K knowledge a conclusion drawn from information that has been linked to other information and compared to what is already known. Glossary 595 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: knowledge management the efforts to systematically find, organize, and make available a company’s intellectual capital and to foster a culture of continuous learning and knowledge sharing so that organizational activities build on existing knowledge. L labor–management teams a cooperative approach designed to increase worker participation and provide a cooperative model for union-management problems. language slogans, sayings, metaphors, or other expressions that convey a special meaning to employees. large-batch production a manufacturing process characterized by long production runs of standardized parts. large group intervention an approach that brings together participants from all parts of the organization (and may include outside stakeholders as well) to discuss problems or opportunities and plan for change. lean manufacturing uses highly trained employees at every stage of the production process who take a painstaking approach to details and continuous problem solving to cut waste and improve quality. learning organization an organization in which everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve, and increase its capability. legends stories of events based in history that may have been embellished with fictional details. legitimacy the general perspective that an organization’s actions are desirable, proper, and appropriate within the environment’s system of norms, values, and beliefs. level of analysis in systems theory, the subsystem on which the primary focus is placed; four levels of analysis normally characterize organizations. liaison role the function of a person located in one department who is responsible for communicating and achieving coordination with another department. life cycle a perspective on organizational growth and change that suggests that organizations are born, grow older, and eventually die. long-linked technology the combination within one organization of successive stages of production, with each stage using as its inputs the production of the preceding stage. low-cost leadership a strategy that tries to increase market share by emphasizing low cost when compared with competitors’ products. M management champion a manager who acts as a supporter and sponsor of a technical champion to shield and promote an idea within the organization. management control systems the formalized routines, reports, and procedures that use information to maintain or alter patterns in organizational activity. management information system a comprehensive, computerized system that provides information and supports day-to-day decision making. management science approach organizational decision making that is the analog to the rational approach by individual managers. managerial ethics principles that guide the decisions and behaviors of managers with regard to whether they are morally right or wrong. market control a situation that occurs when price competition is used to evaluate the output and productivity of an organization. mass customization the use of computer-integrated systems and flexible work processes to enable companies to mass produce a variety of products or services designed to exact customer specification. matrix structure a strong form of horizontal linkage in which both product and functional structures (horizontal and vertical) are implemented simultaneously. mechanistic an organization system marked by rules, procedures, a clear hierarchy of authority, and centralized decision making. mediating technology the provision of products or services that mediate or link clients from the external environment and allow each department to work independently. meso theory a new approach to organization studies that integrates both micro and macro levels of analysis. mimetic forces under conditions of uncertainty, the pressure to copy or model other organizations that appear to be successful in the environment. mission the organization’s reason for its existence. mission culture a culture that places emphasis on a clear vision of the organization’s purpose and on the achievement of specific goals. multidomestic company a company that deals with competitive issues in each country independent of other countries. multidomestic strategy one in which competition in each country is handled independently of competition in other countries. multifocused grouping a structure in which an organization embraces structural grouping alternatives simultaneously. 596 Glossary Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: multinational stage the stage of international development in which a company has marketing and production facilities in many countries and more than one-third of its sales outside its home country. myths stories that are consistent with the values and beliefs of the organization but are not supported by facts. N negotiation the bargaining process that often occurs during confrontation and enables the parties to systematically reach a solution. network centrality top managers increase their power by locating themselves centrally in an organization and surrounding themselves with loyal subordinates. networking linking computers within or between organizations. new-venture fund a fund that provides financial resources to employees to develop new ideas, products, or businesses. niche a domain of unique environmental resources and needs. non-core technology a department work process that is important to the organization but is not directly related to its central mission. nonprogrammed decisions novel and poorly defined, these are used when no procedure exists for solving the problem. nonroutine technology technology in which there is high task variety and the conversion process is not analyzable or well understood. nonsubstitutability a trait of a department whose function cannot be performed by other readily available resources. normative forces pressures to adopt structures, techniques, or management processes because they are considered by the community to be up-to-date and effective. O official goals the formally stated definition of business scope and outcomes the organization is trying to achieve; another term for mission. open system a system that must interact with the environment to survive. open systems emphasis an aspect of the competing values model that reflects a combination of external focus and flexible structure. operative goals descriptions of the ends sought through the actual operating procedures of the organization; these explain what the organization is trying to accomplish. organic an organization system marked by free-flowing, adaptive processes, an unclear hierarchy of authority, and decentralized decision making. organization development a behavioral science field devoted to improving performance through trust, open confrontation of problems, employee empowerment and participation, the design of meaningful work, cooperation between groups, and the full use of human potential. organization structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors; identifies the grouping together of individuals into departments and of departments into the total organization; and includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments. organization theory a macro approach to organizations that analyzes the whole organization as a unit. organizational behavior a micro approach to organizations that focuses on the individuals within organizations as the relevant units for analysis. organizational change the adoption of a new idea or behavior by an organization. organizational decision making the organizational process of identifying and solving problems. organizational decline a condition in which a substantial, absolute decrease in an organization’s resource base occurs over a period of time. organizational ecosystem a system formed by the interaction of a community of organizations and their environment, usually cutting across traditional industry lines. organizational environment all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization. organizational form an organization’s specific technology, structure, products, goals, and personnel. organizational goal a desired state of affairs that the organization attempts to reach. organizational innovation the adoption of an idea or behavior that is new to an organization’s industry, market, or general environment. organizational politics activities to acquire, develop, and use power and other resources to obtain one’s preferred outcome when there is uncertainty or disagreement about choices. organizations social entities that are goal-directed, deliberately structured activity systems linked to the external environment. organized anarchy extremely organic organizations characterized by highly uncertain conditions. Glossary 597 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: outsourcing to contract out certain corporate functions, such as manufacturing, information technology, or credit processing, to other companies. P personnel ratios the proportions of administrative, clerical, and professional support staff. point–counterpoint a decision-making technique that divides decision makers into two groups and assigns them different, often competing responsibilities. political model a definition of an organization as being made up of groups that have separate interests, goals, and values in which power and influence are needed to reach decisions. political tactics for using power these include building coalitions, expanding networks, controlling decision premises, enhancing legitimacy and expertise, and making a direct appeal. pooled interdependence the lowest form of interdependence among departments, in which work does not flow between units. population a set of organizations engaged in similar activities with similar patterns of resource utilization and outcomes. population ecology perspective a perspective in which the focus is on organizational diversity and adaptation within a community or population or organizations. power the ability of one person or department in an organization to influence others to bring about desired outcomes. power distance the level of inequality people are willing to accept within an organization. power sources there are five sources of horizontal power in organizations: dependency, financial resources, centrality, nonsubstitutability, and the ability to cope with uncertainty. problem consensus the agreement among managers about the nature of problems or opportunities and about which goals and outcomes to pursue. problem identification the decision-making stage in which information about environmental and organizational conditions is monitored to determine if performance is satisfactory and to diagnose the cause of shortcomings. problem solution the decision-making stage in which alternative courses of action are considered and one alternative is selected and implemented. problemistic search occurs when managers look around in the immediate environment for a solution to resolve a problem quickly. process organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers. product and service changes changes in an organization’s product or service outputs. product matrix a variation of the matrix structure in which project or product managers have primary authority and functional managers simply assign technical personnel to projects and provide advisory expertise. programmed decisions repetitive and well-defined procedures that exist for resolving problems. prospector a business strategy characterized by innovation, risk-taking, seeking out new opportunities, and growth. R radical change a breaking of the frame of reference for an organization, often creating a new equilibrium because the entire organization is transformed. rational approach a process of decision making that stresses the need for systematic analysis of a problem followed by choice and implementation in a logical sequence. rational goal emphasis an aspect of the competing values model that reflects values of structural control and external focus. rational-legal authority based on employees’ belief in the legality of rules and the right of those in authority to issue commands. rational model a description of an organization characterized by a rational approach to decision making, extensive and reliable information systems, central power, a norm of optimization, uniform values across groups, little conflict, and an efficiency orientation. reactor a business strategy in which environmental threats and opportunities are responded to in an ad hoc fashion. reasons organizations grow growth occurs because it is an organizational goal, it is necessary to attract and keep quality managers, or it is necessary to maintain economic health. reciprocal interdependence the highest level of interdependence, in which the output of one operation is the input of a second, and the output of the second operation is the input of the first (for example, a hospital). reengineering redesigning a vertical organization along its horizontal workflows and processes. resource dependence a situation in which organizations depend on the environment but strive to acquire control over resources to minimize their dependence. resource-based approach an organizational perspective that assesses effectiveness by observing how successfully the organization obtains, integrates, and manages valued resources. retention the preservation and institutionalization of selected organizational forms. 598 Glossary Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: rites and ceremonies the elaborate, planned activities that make up a special event and often are conducted for the benefit of an audience. role a part in a dynamic social system that allows an employee to use his or her discretion and ability to achieve outcomes and meet goals. routine technology technology characterized by little task variety and the use of objective, computational procedures. rule of law that which arises from a set of codified principles and regulations that describe how people are required to act, are generally accepted in society, and are enforceable in the courts. S satisficing the acceptance by organizations of a satisfactory rather than a maximum level of performance. scientific management a classical approach that claims decisions about organization and job design should be based on precise, scientific procedures. sectors subdivisions of the external environment that contain similar elements. selection the process by which organizational variations are determined to fit the external environment; variations that fail to fit the needs of the environment are “selected out” and fail. sequential interdependence a serial form of interdependence in which the output of one operation becomes the input to another operation. service technology technology characterized by simultaneous production and consumption, customized output, customer participation, intangible output, and being labor intensive. simple-complex dimension the number and dissimilarity of external elements relevant to an organization’s operation. Six Sigma quality standard that specifies a goal of no more than 3.4 defects per million parts; expanded to refer to a set of control procedures that emphasize the relentless pursuit of higher quality and lower costs. skunkworks separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for the business. small-batch production a manufacturing process, often custom work, that is not highly mechanized and relies heavily on the human operator. social audit measures and reports the ethical, social, and environmental impact of a company’s operations. social capital the quality of interactions among people, affected by whether they share a common perspective. social responsibility management’s obligation to make choices and take action so that the organization contributes to the welfare and interest of society as well as itself. sociotechnical systems approach an approach that combines the needs of people with the needs of technical efficiency. sources of intergroup conflict factors that generate conflict, including goal incompatibility, differentiation, task interdependence, and limited resources. specialist an organization that has a narrow range of goods or services or serves a narrow market. stable-unstable dimension the state of an organization’s environmental elements. stakeholder any group within or outside an organization that has a stake in the organization’s performance. stakeholder approach also called the constituency approach, this perspective assesses the satisfaction of stakeholders as an indicator of the organization’s performance. standardization a policy that ensures all branches of the company at all locations operate in the same way stories narratives based on true events that are frequently shared among organizational employees and told to new employees to inform them about an organization. strategic contingencies events and activities inside and outside an organization that are essential for attaining organizational goals. strategy the current set of plans, decisions, and objectives that have been adopted to achieve the organization’s goals. strategy and structure changes changes in the administrative domain of an organization, including structure, policies, reward systems, labor relations, coordination devices, management information control systems, and accounting and budgeting. structural dimensions descriptions of the internal characteristics of an organization structure the formal reporting relationships, groupings, and systems of an organization. struggle for existence a principle of the population ecology model that holds that organizations are engaged in a competitive struggle for resources and fighting to survive. subcultures cultures that develop within an organization to reflect the common problems, goals, and experiences that members of a team, department, or other unit share. subsystems divisions of an organization that perform specific functions for the organization’s survival; organizational subsystems perform the essential functions of boundary spanning, production, maintenance, adaptation, and management. switching structures an organization creates an organic structure when such a structure is needed for the initiation of new ideas. Glossary 599 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: symbol something that represents another thing. symptoms of structural deficiency signs of the organization structure being out of alignment, including delayed or poor-quality decision making, failure to respond innovatively to environmental changes, and too much conflict. system a set of interacting elements that acquires inputs from the environment, transforms them, and discharges outputs to the external environment. T tacit knowledge knowledge that is based on personal experience, intuition, rules of thumb, and judgment, and cannot be easily codified and passed on to others in written form. tactics for enhancing collaboration techniques such as integration devices, confrontation and negotiation, intergroup consultation, member rotation, and shared mission and superordinate goals that enable groups to overcome differences and work together. tactics for increasing power these include entering areas of high uncertainty, creating dependencies, providing resources, and satisfying strategic contingencies. task a narrowly defined piece of work assigned to a person. task environment sectors with which the organization interacts directly and that have a direct effect on the organization’s ability to achieve its goals. task force a temporary committee composed of representatives from each department affected by a problem. team building activities that promote the idea that people who work together can work together as a team. teams permanent task forces often used in conjunction with a full-time integrator. technical champion a person who generates or adopts and develops an idea for a technological innovation and is devoted to it, even to the extent of risking position or prestige; also called product champion. technical complexity the extent of mechanization in the manufacturing process. technical knowledge understanding and agreement about how to solve problems and reach organizational goals. technology the tools, techniques, and actions used to transform organizational inputs into outputs. technology changes changes in an organization’s production process, including its knowledge and skills base, that enable distinctive competence. time-based competition delivering products and services faster than competitors, giving companies a competitive edge. traditional authority based in the belief in traditions and the legitimacy of the status of people exercising authority through those traditions. transaction processing systems (TPS) automation of the organization’s routine, day-to-day business transactions. transnational model a form of horizontal organization that has multiple centers, subsidiary managers who initiate strategy and innovations for the company as a whole, and unity and coordination achieved through corporate culture and shared vision and values. U uncertainty occurs when decision makers do not have sufficient information about environmental factors and have a difficult time predicting external changes. uncertainty avoidance the level of tolerance for and comfort with uncertainty and individualism within a culture. V values-based leadership a relationship between a leader and followers that is based on strongly shared values that are advocated and acted upon by the leader. variation appearance of new organizational forms in response to the needs of the external environment; analogous to mutations in biology. variety in terms of tasks, the frequency of unexpected and novel events that occur in the conversion process. venture teams a technique to foster creativity within organizations in which a small team is set up as its own company to pursue innovations. vertical information system the periodic reports, written information, and computer-based communications distributed to managers. vertical linkages communication and coordination activities connecting the top and bottom of an organization. virtual network grouping organization that is a loosely connected cluster of separate components. virtual network structure the firm subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization. virtual team made up of organizationally or geographically dispersed members who are linked through advanced information and communications technologies. Members frequently use the Internet and collaborative software to work together, rather than meeting face-to-face. W whistle-blowing employee disclosure of illegal, immoral, or illegitimate practices on the part of the organization. 600 Glossary Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Page numbers followed by the letter n indicate the note in which the entry is located. A Abboud, Leila, 169n66 Abdalla, David, 132n27 Abel, Katie, 168n37 Abelson, Reed, 439n83 Abizaid, John, 30 Abramson, Gary, 317n42 Ackerman, Linda S., 119, 133n58 Ackerman, Val, 71 Adams, Chris, 169n66 Adices, Ichak, 354n26 Adler, Nancy J., 209, 240n14 Adler, Paul S., 258–259, 283n24, 284n39, 285n74, 285n79, 438n31 Aenlle, Conrad de, 240n31 Aeppel, Timothy, 355n80 Agins, Teri, 169n57 Aiken, Michael, 284n61, 354n44, 437n11 Akgün, Ali E., 439n61 Akinnusi, David M., 439n76 Alban, Billie T., 440n88, 440n89 Alderfer, Clayton T., 514n4 Aldrich, Howard E., 49n14, 167n16, 202n34 Alexander, Keith, 438n48, 480n70 Allaire, Paul, 4–5 Allen, Richard S., 440n93 Allen, Robert W., 515n63 Allison, Charles F., 432, 434–435 Alsop, Ronald, 202n49, 202n50, 202n51 Altier, William J., 132n18 Amdt, Michael, 133n45 Amelio, Gilbert, 329 Ammeter, Anthony P., 516n77 Anand, N., 133n57 Anand, Vikas, 318n45 Anders, George, 515n39 Andersen, Arthur, 8 Anderson, Carl, 397n88 Aniston, Jennifer, 466 Antonelli, Cristiano, 133n51 Archer, Earnest R., 478n14, 478n16 Argote, Linda, 283n4, 285n67, 285n75 Argüello, Michael, 479n38 Argyris, Chris, 74, 87n45, 316 Arndt, Michael, 86n16, 86n29, 317n15, 317n25 Arnold, Rick, 511–512 Arogyaswamy, Bernard, 395n34 Arthur, Mr., 41 Ashford, Susan, 201n19 Ashkenas, Ron, 440n90 Astley, W. Graham, 354n47, 514n22, 515n32, 515n47 Aston, Adam, 133n45 At-Twaijri, Mohamed Ibrahim Ahmad, 168n27 Athitakis, Mark, 478n4 Atkin, Robert S., 169n61 Atsaides, James, 356n85, 356n86 Aubin, Jean, 479n37 Auster, Ellen R., 202n56 Austin, Nancy, 41 Ayers, Nicholas, 28 B Babcock, Judith A., 169n52 Bacharach, Samuel B., 437n12 Badaracco, Joseph L. Jr., 396n70 Baetz, Mark, 86n6 Bailetti, Antonio J., 438n52 Baker, Edward, 479n37 Baker, Richard, 358 Balaji, Y., 317n41 Ballmer, Steven, 106, 330, 334 Balu, Rekha, 395n33 Bandler, James, 240n1 Banham, Russ, 317n17 Bank, David, 395n24, 478n2 Bannon, Lisa, 50n17 Barbara, Mayor, 196 Barczak, Gloria, 439n67 Barkema, Harry G., 49n3, 49n4 Barker, James R., 355n74 Barker, Robert, 437n16 Barley, Stephen R., 50n18, 318n68, 318n70 Barnatt, Christopher, 318n62 Barnett, Megan, 318n72 Barney, Jay B., 87n42, 168n48 Barone, Michael, 354n23 Barrett, Amy, 85n5, 132n17, 132n29, 240n20, 241n49, 514n8 Barrett, Craig, 472 Barrier, Michael, 396n73 Barrionuevo, Alexei, 394n3, 395n23 Barron, Kelly, 354n40, 437n8 Barsoux, Jean-Louis, 242n68 Bart, Christopher, 86n6 Bartkus, Barbara, 86n7 Bartlett, Christopher A., 133n44, 201n10, 231, 240n6, 241n63, 242n68, 242n69, 242n73, 242n74 Barton, Chris, 186 Barwise, Patrick, 316n1, 318n64 Bass, Bernard M., 440n95 Baum, J. Robert, 478n22 Baum, Joel A. C., 49n3, 201n34 Bazerman, Max H., 169n61, 396n66 Beard, Donald W., 167n17 Beatty, Carol A., 440n99 Beaudoin, Laurent, 159 Becker, Selwyn W., 354n41, 355n49, 440n103 Beckhard, Richard, 74, 87n45 Bedeian, Arthur G., 202n44 Behling, Orlando, 478n22 Bell, Cecil H. Jr., 439n85, 440n86 Bell, Gerald D., 284n64 Belohlav, James A., 241n38 Belson, Ken, 240n13, 241n53 Benedetti, Marti, 201n15 Benitz, Linda E., 392 Bennett, Amanda, 50n35 Bennis, Warren G., 74, 87n45, 440n106 Berenbeim, Ronald E., 397n90 Bergquist, William, 50n38 Berkman, Erik, 317n8 Berman, Barry, 283n33 Berman, Dennis K., 168n44 Bernstein, Aaron, 49n5, 167n7, 516n88 Berrett-Koehler, 437n4 Beyer, Janice M., 363, 394n10, 395n19 Bezos, Jeff, 488 Bianco, Anthony, 49n1 Biemans, Wim G., 439n58 Biggers, Kelsey, 313 Bigley, Gregory A., 355n55, 355n57 Binkley, Christina, 479n39 Birkinshaw, Julian, 438n39 Birnback, Bruce, 153 Birnbaum, Jeffrey H., 169n68 Black, Lord Conrad, 492 Blackburn, Richard S., 515n36 Blackman, Andrew, 318n66 Blai, Boris, 478n14 Blair, Donald, 330 Blake, Robert R., 507, 516n86, 516n87, 516n91, 516n93 Blanchard, Olivier, 242n71 Blau, Judith R., 438n32 Blau, Peter M., 284n64, 354n47 Blekley, Fred R., 201n32 Blenkhorn, David L., 86n35 Bloodgood, James M., 394n4 Bluedorn, Allen C., 167n16, 354n41 Boeker, Warren, 515n53 Bohbot, Michele, 369 Bohman, Jim, 351 Boland, M., 354n47 Boland, W., 354n47 Bolino, Mark C., 394n4 Bolman, Lee G., 514n2 Bonabeau, Eric, 479n28, 479n30 Bonazzi, Giuseppe, 133n51 Boorstin, Julia, 240n15, 394n2 Borys, Bryan, 169n54, 169n58 Bossidy, Larry, 87n54, 325, 402 Bossidy, Lawrence A., 144 Boudette, Neal E., 132n19 Boulding, Elise, 514n22 Bourgeois, L. J. III, 480n64, 514n3 601 Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Bowen, David E., 260, 284n44, 284n52 Bower, Carolyn, 50n28 Bowerman, Bill, 329 Boyle, Matthew, 61, 167n4, 395n32 Brabeck-Letmathe, Peter, 217 Brady, Diane, 284n45 Brady, Simon, 396n57 Branch, Shelly, 133n36 Brandt, Richard, 201n18 Brannigan, Martha, 49n2 Brass, Daniel J., 515n29, 516n71 Breen, Bill, 478n23 Breen, Ed, 419–420 Bremner, Brian, 241n53, 437n1 Bresnahan, Jennifer, 396n65 Brewster, Linda, 169n62 Brimelow, Peter, 354n46 Brimm, Michael, 512 Brin, Sergey, 327 Brittain, Jack W., 202n34 Brockner, Joel, 356n86, 480n72 Brodsky, Norm, 50n44, 440n92 Bronikowski, Karne, 439n62 Brooks, Geoffrey R., 402 Brooks, Rick, 50n28, 478n10 Brown, Andrew D., 394n7 Brown, Ben, 338 Brown, Eryn, 317n34 Brown, John, 355n60 Brown, L. David, 514n7 Brown, Shona L., 438n53, 438n55 Brown, Steve, 317n31 Brown, Stuart F., 284n58 Brown, Tom, 353n17 Brown, Warren B., 168n29 Bruce, Reginald A., 430 Bu, Nailin, 242n72 Buchanan, Leigh, 316n2, 318n65 Buckley, Ron, 24 Buckley, Timothy, 395n42 Buller, Paul F., 393, 440n91 Bunker, Barbara B., 440n88, 440n89 Burke, Charles, 325 Burke, Debbie, 440n90 Burke, W. Warner, 439n85, 440n86 Burkhardt, Marlene E., 516n71 Burns, Greg, 514n8 Burns, Lawton R., 133n42 Burns, Tom, 151, 168n42, 437n23 Burt, Ronald S., 169n61 Burton, Thomas M., 437n17, 437n22 Bush, George W., 103 Byles, Charles M., 395n34 Bylinsky, Gene, 283n1, 283n15, 283n20, 285n73 Byrne, John A., 115, 323, 353n12, 396n64 Byrne, John C., 439n61 Byrnes, Nanette, 514n9 C Cadieux, Chester II, 31 Cali, Filippo, 270 Callahan, Charles V., 311, 316n5 Camerman, Filip, 221 Cameron, Kim S., 76, 86n34, 87n53, 327, 331, 354n27, 355n75, 355n79, 356n86 Campbell, Andrew, 133n43 Canabou, Christine, 438n35 Canseco, Phil, 476 Cardoza, Mr. R. H., 199–200 Cardoza, Ms., 199 Carlton, Jim, 240n8 Carney, Eliza Newlin, 132n30 Carpenter, Jim, 390–391 Carpenter, Mary, 235–236 Carr, David, 240n1 Carr, Patricia, 439n84 Carr, Tom, 315 Carroll, Glenn R., 202n42 Carroll, Stephen J., 201n19 Carter, Jimmy, 336 Carter, Nancy M., 354n43 Cartwright, D., 515n28 Cascio, W. S., 285n82 Cascio, Wayne F., 356n85, 356n90 Case, John, 353n18 Casselman, Cindy, 493 Caudron, Shari, 356n86, 356n89 Caulfield, Brian, 318n60 Cavanagh, Richard, 336 Cha, Sandra Eunyoung, 395n17, 395n26, 395n35, 395n39 Chamberland, Denis, 133n50, 133n51 Champion, John M., 390 Chapman, Art, 132n27 Charan, Ram, 87n54, 144, 325 Charnes, John, 439n63 Charns, Martin P., 86n12 Chase, Richard B., 284n50, 284n52, 285n79 Chatman, Jennifer A., 395n17, 395n26, 395n35, 395n39 Chen, Christine Y., 440n101 Cheng, Joseph L. C., 285n75 Cherney, Elena, 515n43 Chesbrough, Henry W., 133n57 Child, John, 132n4, 133n60, 355n48 Chiles, James R., 252 Chipello, Christopher J., 86n14 Chow, Chee W., 297, 317n27, 317n28, 440n95 Churchill, Neil C., 354n26 Cialdini, Robert B., 504 Clark, Don, 201n17 Clark, John P., 86n39 Clark, Mickey, 394n1 Clarkson, Max B. E., 396n66 Clegg, Stewart R., 201n34, 202n53 Clifford, Lee, 317n23 Cohen, Don, 394n4 Cohen, Irit, 515n53 Cohen, Michael D., 463, 479n54 Coia, Arthur C., 506 Coleman, Henry J. Jr., 68, 133n52, 355n66, 439n69 Collins, Jim, 86n10, 353n8, 364 Collins, Paul D., 284n39, 284n64 Congden, Steven W., 283n14, 283n17 Conlon, Edward J., 50n29 Conner, Daryl R., 425, 440n97 Connolly, Terry, 50n29 Connor, Patrick E., 284n63 Cook, Lynn, 132n27 Cook, Michelle, 168n28 Cooper, Christopher, 86n18, 515n49 Cooper, William C., 284n59 Copeland, Michael V., 478n1, 478n6 Cormick, Gerald, 195 Courtright, John A., 168n43 Cousins, Roland B., 392 Coutu, Diane L., 440n107 Cowen, Scott S., 317n26 Cox, James, 316n3 Coy, Peter, 201n18 Craig, Susanne, 515n49 Craig, Timothy J., 242n72 Crainer, Stuart, 438n42 Cramer, Roderick M., 514n18 Creed, W. E. Douglas, 355n66, 439n69 Creswell, Julie, 169n72, 202n37 Crewdson, John, 354n39 Crittenden, Victoria L., 485, 514n11 Crock, Stan, 168n33 Cronin, Mary J., 317n34 Cross, Jim, 440n104 Cross, Kim, 86n17 Cummings, Jeanne, 169n67 Cummings, Larry L., 285n67, 438n44, 514n10, 514n18 Cummings, T., 275 Cummins, Doug, 126 Cummins, Gaylord, 86n36 Cunningham, J. Barton, 87n47 Cuomo, Mario, 473 Cusumano, Michael A., 283n16 Cyert, Richard M., 456, 479n43, 479n45 D Daboub, Anthony J., 169n70 Dacin, M. Tina, 202n46 Daft, Richard L., 33, 86n34, 116, 126, 133n48, 264, 284n59, 284n63, 284n65, 285n67, 295, 317n19, 317n26, 354n41, 354n47, 355n48, 355n49, 437n12, 439n71, 439n72, 439n73, 440n103, 479n42 Dahl, Robert A., 514n21 Dahle, Cheryl, 394n12 Dalton, Gene W., 168n38, 514n14 Damanpour, Fariborz, 439n70, 439n74 D’Amico, Carol, 49n12, 397n96 Dandridge, Thomas C., 395n16 Daniels, Cora, 395n31 Daniels, John D., 241n39 Dann, Valerie, 516n96 Dannemiller, Kathleen D., 440n88 Darrow, Barbara, 132n12 Datta, Deepak K., 479n34 Datz, Todd, 318n44, 438n30 Dauch, Richard, 245 Davenport, Thomas H., 515n41 David, Forest R., 86n6 David, Fred R., 86n6 David, Grainger, 283n18, 283n36 Davidow, William A., 437n5 Davidson, Harmon, 476–477 Davig, William, 317n31 Davis, Ann, 514n1, 516n81 Davis, Eileen, 49n3 Davis, Stanley M., 133n37, 133n39 Davis, Tim R. V., 316n1 Davison, Sue Canney, 241n58 Dawson, Chester, 437n1 Dawson, Sarah, 87n49 Day, Jonathan D., 133n60 Deal, Terrence E., 395n15, 395n20, 514n2 Dean, James W. Jr., 478n17, 516n65 Dearlove, Des, 438n42 Deere, John, 147 DeFoe, Joe, 448 DeGeorge, Gail, 240n28 Deitzer, Bernard A., 84 Delacroix, Jacques, 202n42 Delbecq, Andre L., 272, 285n67, 285n75, 396n71, 437n11 DeLong, James V., 515n62 DeMarie, Samuel M., 132n23 DeMott, John S., 283n23 Denis, Héléné, 285n77 Denison, Daniel R., 367, 395n28, 397n100 Deniston, O. Lynn, 86n36 Dent, Harry S. Jr., 402 Denton, D. Keith, 440n105 Denzler, David R., 318n56 DePeters, Jack, 61 Dess, Gregory G., 132n26, 133n56, 133n57, 167n17, 240n28, 437n5 Detert, James R., 395n27 Deutsch, Claudia H., 49n1 Deutsch, Stuart Jay, 50n29 Deutschman, Alan, 514n20 Dewar, Robert D., 354n42 Dickey, Beth, 87n50, 480n60 Digate, Charles, 73 Dill, William R., 479n35 Dillon, Karen, 478n13 DiMaggio, Paul J., 202n54, 202n55 602 Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Dimancescu, Dan, 438n55, 439n68 DiSimone, L. D., 437n21 DiTomaso, N., 395n40 Doehring, J., 132n27 Doerflein, Stephen, 356n85, 356n86 Dolgen, Jonathan, 453 Donald, Jim, 55 Donaldson, T., 50n29 Doran, George T., 480n63, 480n67, 480n68 Dorfman, Peter, 242n67 Dougherty, Deborah, 438n50, 439n62 Dougherty, Jack, 21 Douglas, Ceasar, 516n77 Douglas, Frank L., 439n63 Dove, Erin, 476 Dowling, Grahame R., 202n50 Downey, Diane, 132n16 Dragoon, Alice, 201n9, 201n22, 317n9 Dreazen, Yochi J., 478n18, 515n49 Driscoll, Dawn-Marie, 395n46, 396n66 Drory, Amos, 516n67 Drucker, Peter F., 49n15, 81, 353n18, 438n41, 440n98, 477 Drukerman, Pamela, 241n50 Drummond, Helga, 480n72 Drummond, Walton, 476 Druyan, Darleen, 161 Duck, Jeanie Daniel, 424 Dudley, Graham, 283n26 Duerinckx, Reina, 268 Duffield, Dave, 366 Duffy, Tom, 168n30 Dugan, Ianthe Jeanne, 515n39, 515n49 Duimering, P. Robert, 284n40 Duncan, Robert B., 103, 105, 111, 132n26, 133n32, 133n41, 146, 152, 167n17, 437n25 Duncan, W. Jack, 394n7 Dunnette, M.D., 514n6 Dunphy, Dexter C., 440n109 Dutton, Gail, 397n102 Dutton, John M., 514n13, 514n16 Dux, Pierre, 512–513 Dvorak, Phred, 133n34, 241n53 Dwenger, Kemp, 438n55, 439n68 Dworkin, Terry Morehead, 396n84 Dwyer, Paula, 49n13 Dyer, Jeffrey H., 180, 201n26, 201n27 E Eccles, Robert G., 515n41 Eckel, Norman L., 478n22 Edmondson, Amy, 440n106 Edwards, Cliff, 241n53, 438n51 Edwards, Gary, 383 Egri, Carolyn P., 438n44 Eichenwald, Kurt, 86n9 Eisenberg, Daniel J., 478n21 Eisenhardt, Kathleen M., 438n53, 438n55, 439n62, 480n64, 480n65, 514n3 Elbert, Norb, 317n31 Elder, Renee, 478n12 Elffers, Joost, 514n27 Elgin, Ben, 516n85 Elliott, Stuart, 353n6 Ellison, Larry, 94 Ellison, Sarah, 167n6 Elsbach, Kimberly D., 169n72 Emerson, Richard M., 514n24, 515n54 Emery, F., 285n81 Emery, Fred E., 167n16 Eng, Sherri, 438n34 Engardio, Pete, 49n5, 201n29 Engle, Jane, 86n22 Engle, Paul, 133n53, 133n56, 133n57 Enns, Harvey G., 516n72 Epstein, Edwin M., 168n34 Epstein, Lisa D., 203n58 Estepa, James, 149 Estepa, Jim, 168n37 Etzioni, Amitai, 85n2, 86n31, 86n32 Evan, William M., 439n70 Evaniski, Michael J., 439n70 Eveland, J. D., 86n36 Eyring, Henry B., 479n35 F Fabrikant, Geraldine, 86n27, 479n33 Fairhurst, Gail T., 168n43 Farnham, Alan, 50n34, 437n14 Fassihi, Farnaz, 478n18 Fayol, Henri, 26 Feldman, Steven P., 394n10 Feldman, Stewart, 202n40 Fenn, Donna, 201n22 Fennell, Mary L., 439n70 Ferguson, Kevin, 317n17 Ferguson, Ralph, 434–435 Ferrara, Michael, 421 Ferris, Gerald R., 515n64, 516n65 Ferry, Diane L., 33, 285n66 Fey, Carl F., 397n100 Fields, Gary, 50n33 Filo, David, 505 Finch, Byron J., 284n43 Fine, Charles H., 283n16 Finnigan, Annie, 49n13 Fiorina, Carly, 442 Fisher, Anne B., 439n82 Fisher, Michael, 479n37 Fishman, Charles, 50n30, 132n22, 202n51, 285n70 Fitzgerald, Michael, 316n4 Fletcher, Joyce K., 49n13 Flood, Mary, 318n55 Flynn, John, 432, 434–435 Fogerty, John E., 133n45 Fombrun, Charles, 50n29, 50n32, 515n47 Fontaine, Michael A., 318n55, 318n71 Ford, Bill, 89 Ford, Jeffrey D., 354n46 Ford, Robert C., 133n41 Forest, Stephanie Anderson, 202n43 Forsythe, Jason, 49n12 Foster, Peter, 197 Fouts, Paul A., 87n42 Fox, Jeffrey J., 514n27 Fox, William M., 285n81 Fraley, Elisabeth, 512 France, Mike, 168n19, 168n36, 396n64 Francis, Carol E., 273, 285n81 Frank, Robert, 167n13, 241n48, 515n43 Franke, Markus, 167n3 Freedberg, Sydney J., 50n42 Freeman, John, 183, 202n34, 202n36 Freeman, Martin, 434–435 Freidheim, Cyrus F. Jr., 240n22 French, Bell, 440n86, 440n87, 440n88 French, John R. P. Jr., 515n28 French, Wendell L., 439n85, 440n86, 440n87, 440n88 Friedlander, Beth, 196 Friedman, David, 353n14 Friel, Brian, 132n30 Friesen, Peter H., 354n26 Frieswick, Kris, 355n77 Frink, Dwight D., 515n64 Frost, Peter J., 87n46, 438n44 Fry, Louis W., 259, 284n39 Fuller, Scott, 370 G Gaber, Brian, 86n35 Gaertner, Gregory H., 439n76 Gaertner, Karen N., 439n76 Gajilan, Arlyn Tobias, 50n22 Galang, Maria Carmen, 515n64 Galbraith, Jay R., 132n11, 132n14, 132n16, 241n64, 438n44, 514n17, 516n94, 516n95 Galloni, Alessandra, 169n57 Gantz, Jeffrey, 515n63, 516n70 Gardiner, Lorraine R., 485, 514n11 Garino, Jason, 308, 318n63 Garner, Rochelle, 132n12 Garvin, David A., 317n43, 480n66 Gates, Bill, 13, 106, 330, 334 Geber, Beverly, 396n81, 397n93 Geeraerts, Guy, 354n43 George, A. L., 449 George, Bill, 86n10 George, Thomas, 479n29 Gerstner, Louis, 4, 402 Gesteland, Richard R., 228 Ghadially, Rehana, 515n64 Ghobadian, Abby, 395n26, 395n40 Ghoshal, Sumantra, 133n44, 201n10, 231, 240n6, 241n36, 241n49, 241n63, 242n68, 242n69, 242n73, 242n74 Ghosn, Carlos, 443, 478n6 Gibson, David G., 396n86 Gladwell, Malcolm, 452 Glassman, Myron, 86n7 Glick, William H., 318n45, 402 Glinow, Mary Ann Von, 439n77 Glisson, Charles A., 284n61 Gnyawali, Devi R., 201n4 Gobeli, David H., 133n38 Godfrey, Joline, 49n13 Godfrey, Paul C., 87n42 Goding, Jeff, 317n24 Goes, James B., 402, 437n13 Gogoi, Pallavi, 86n29 Gold, Bela, 283n25 Goldhar, Joel D., 283n37, 284n40, 284n41 Goldoftas, Barbara, 438n31 Goode, Kathy, 354n40 Goodhue, Dale L., 284n60 Goodstein, Jerry, 202n46 Goodwin, Brian, 201n8 Goold, Michael, 133n43 Gopinath, C., 283n14, 283n17 Gordon, G. G., 395n40 Gordon, John R. M., 440n99 Gore, Bill, 21 Gore, W. L., 92 Gottlieb, Jonathan Z., 440n94 Gottlieb, Manu, 196 Govindarajan, Vijay, 240n6, 241n34, 241n47, 241n55, 241n56, 386 Graham, Ginger L., 486 Grant, Robert M., 318n49, 318n50 Grasso, Dick, 493 Grauwe, Paul De, 221 Gray, David A., 169n70 Gray, Steven, 85n1 Grayson, C. Jackson Jr., 318n52, 479n40 Greco, Susan, 201n11 Greenberg, Hank, 491 Greene, Jay, 354n36 Greene, Robert, 514n27 Greenhalgh, Leonard, 181, 355n78, 355n79 Greenhouse, Steven, 49n12 Greening, Daniel W., 396n55 Greenwood, Royston, 132n5, 355n60 Greiner, Larry E., 327, 331, 354n27 Gresov, Christopher, 284n60, 284n61, 284n62, 285n69, 285n75 Griffin, Ricky W., 164, 437n14 Grimes, A. J., 284n62, 515n31 Name Index 603 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Grittner, Peter, 180, 201n14, 201n26, 201n27 Groetsch, David, 506 Grossman, Allen, 50n16 Grossman, John, 437n4, 437n15 Grossman, Laurie M., 351 Grossman, Robert J., 49n1 Grover, Ron, 240n24 Grover, Ronald, 241n53, 438n48, 480n70, 514n9 Grow, Brian, 167n10 Guernsey, Brock, 439n63 Guillén, Mauro F., 50n34 Gulati, Ranjay, 308, 318n63 Gunn, Jack, 480n63, 480n67, 480n68 Gunther, Marc, 396n52, 397n95 Gupta, Anil K., 240n6, 241n34, 241n47, 241n55, 241n56 Gupta, Rajat, 9 Gustafson, Loren T., 87n42 Guth, Robert A., 132n31, 168n45, 201n17 H Hackett, Edward J., 440n108 Haddad, Kamal M., 297, 317n27, 317n28 Hage, Jerald, 284n61, 354n44, 437n11 Hahn, Betty, 354n40 Hake, Ralph, 442 Haldeman, Jeffrey, 273, 285n81 Hale, Wayne, 75 Hall, Douglas T., 278 Hall, Richard H., 50n26, 86n39, 354n43 Hall, Richard L., 202n44 Hambrick, Donald C., 86n30, 241n58 Hamburger, M., 413, 438n52 Hamel, Gary, 354n21, 440n98 Hamm, Steve, 133n31, 439n75 Hammer, Michael, 133n46, 133n47, 317n24, 420 Hammond, John S., 478n13 Hammonds, Keith H., 49n5, 50n21, 133n51, 240n11, 324, 353n16, 354n25, 403 Hammonds, See, 353n17 Hampton, David L., 280 Hancock, Herbie, 55 Hanges, Paul, 242n67 Hanks, Tom, 453 Hannan, Michael T., 183, 202n34, 202n36, 202n42 Hansell, Saul, 478n6 Hansen, Morten T., 241n65, 303, 318n53 Hansson, Tom, 167n3 Harada, Takashi, 255 Harari, Oren, 51n46 Hardy, Cynthia, 201n34, 202n53, 438n50, 439n62 Harper, Richard H. R., 302 Harreld, Heather, 317n8 Harrington, Ann, 50n27, 50n34, 51n45, 86n15, 438n47, 439n59 Harrington, Richard, 78 Harrington, Susan J., 397n94 Harris, Gardiner, 169n66 Harris, Randall D., 167n16 Harvey, Cheryl, 126 Harvey, Edward, 283n8 Harwood, John, 355n64 Hassard, John, 283n26 Hatch, Mary Jo, 394n10 Hatch, Nile W., 201n26 Hawkins, Lee Jr., 86n13, 87n41, 169n63, 514n8 Hawley, A., 354n47 Hayashi, Alden M., 478n23 Hays, Constance L., 168n21, 240n30, 317n14 Hays, Kristin, 132n27 Head, Thomas C., 164 Heck, R. H., 395n40 Heide, Jan B., 201n20 Hellriegel, Don, 275, 285n80, 395n18 Hellriegel, Slocum, 285n84 Hemmert, Martin, 242n70 Hench, Thomas J., 478n23 Henderson, A. M., 354n37 Henderson, Sam, 195–196 Hendrickson, Anthony R., 132n23 Henkoff, Ronald, 284n42, 356n86 Henricks, Mark, 397n93 Henry, David, 353n15 Hensley, Scott, 438n49 Herbert, Theodore T., 209, 240n14 Heskett, James L., 372, 374, 394n11, 395n43 Heymans, Brian, 283n29 Hickel, James K., 439n79 Hicks, Tom, 489–490 Hickson, David J., 50n26, 201n13, 202n35, 202n54, 202n55, 283n5, 283n7, 515n51, 515n52, 515n58, 515n60, 516n73 Higgins, Christopher A., 438n40 Higgins, James H., 394n9, 395n25 Higgs, A. Catherine, 356n84 Higuchi, Tatsuo, 409 Hildebrand, Carol, 315 Hill, Charles W. L., 439n60 Hill, G. Christian, 132n12 Hillebrand, Bas, 439n58 Hilton, Anthony, 132n12 Himelstein, Linda, 168n33, 202n43, 355n82 Hinings, Bob, 132n5 Hinings, C. R., 50n26, 355n60, 515n51, 515n52 Hise, Phaedra, 438n38 Hitt, Michael, 68 Hject, Paola, 240n5 Hjorten, Lisa, 370 Hodder, James E., 479n36 Hof, Robert D., 202n43, 437n1, 437n9, 438n48, 480n70 Hoffman, Alan N., 201n20 Hofstede, Geert, 225, 241n66 Holbek, Jonny, 152 Holliday, Charles O. Jr., 378 Holmes, Stanley, 87n48 Holstein, William J., 7, 49n5, 240n17 Holstrom, Leslie, 396n57 Holweg, Matthias, 353n13 Hooijberg, R., 367, 395n28 Hopkins, Paul, 306 Hornestay, David, 476 Horowitz, Adam, 478n4 Hoskisson, Robert E., 68 Hosmer, LaRue Tone, 376, 395n47, 395n50, 396n62 House, Robert J., 51n47, 199, 202n34, 242n67, 396n71 Howard, Jack L., 515n64 Howard, Jennifer M., 85, 475 Howe, Peter J., 479n52 Howell, Jane M., 438n40 Howitt, Arnold, 195 Hrebiniak, Lawrence G., 85n4, 284n62, 479n47 Hsu, Cheng-Kuang, 354n43 Huber, George P., 402, 514n10 Huey, John, 50n27 Hughes, Michael D., 202n34 Hull, Frank M., 284n39, 284n64 Hult, G. Tomas M., 437n19 Hurd, Mark, 442 Hurley, Robert F., 437n19 Hurst, David K., 29, 50n43, 196 Huxley, Stephen J., 479n36 Hymowitz, Carol, 133n43, 396n58, 515n46 I Iacocca, Lee, 95, 132n13 Ihlwan, Moon, 167n1, 167n2 Immelt, Jeffrey, 261, 385, 406 Indik, B. P., 354n47 Ingrassia, P., 241n54 Ioannou, Lori, 396n52 Ip, Greg, 49n8, 515n49 Ireland, R. Duane, 68 Issack, Thomas F., 478n24 Ito, Jack K., 285n75 J Jackson, Janet, 145 Jackson, Terence, 397n101 Jacob, Rahul, 132n28 Jacobs, Robert W., 440n88 Jaffe, Greg, 50n40, 86n18, 478n18 Jagger, Mick, 7 James, Jene G., 396n84 James, John H., 390 James, T. F., 355n48 Janis, Irving L., 449, 478n20 Jarman, Beth, 354n28, 354n33 Jarvis, Mark, 94 Javidan, Mansour, 168n46, 242n67 Javier, David, 236–239 Jelinek, Mariann, 439n77 Jemison, David B., 168n27, 169n54, 169n58 Jenkins, Samantha, 236 Jennings, Daniel F., 438n39 Jobs, Steve, 223, 327, 329–330, 340 Jobson, Tom, 318n57 Johne, F. Axel, 438n53 Johnson, David W., 507 Johnson, Frank P., 507 Johnson, Homer H., 396n52, 397n104 Johnston, Marsha, 49n13 Jolly, Adam, 186 Jones, Althea, 283n21 Jones, Dr. John W., 199–200 Jones, Jerry, 451 Jones, Kathryn, 256 Jonsson, Ellen, 345, 355n81 Joyce, Kevin E., 86n15 Joyce, William F., 66 Judge, Paul C., 372 Judy, Richard W., 49n12, 397n96 Jung, Dong I., 440n95 Jurkovich, Ray, 167n17 K Kacmar, K. Michele, 515n64 Kahn, Jeremy, 49n1, 203n59 Kahn, Kenneth B., 439n61, 439n67 Kahn, Robert L., 514n22 Kahwajy, Jean L., 514n3 Kalin, Sari, 318n69 Kanigel, Robert, 50n34 Kanter, Rosabeth Moss, 514n25, 515n38, 516n84 Kaplan, Abraham, 514n22 Kaplan, David, 132n27 Kaplan, Robert S., 297, 317n27, 317n28 Karnitschnig, Matthew, 240n1, 240n3, 241n46 Kasarda, John D., 354n46 Katel, Peter, 51n46 Kates, Amy, 132n16 Katz, Ian, 169n60, 241n50 Katz, Nancy, 285n76 Kawamoto, Wayne, 317n33 Kearns, David, 3–4 Kee, Micah R., 394n14, 395n41 Keegan, Paul, 167n3 Keenan, Faith, 439n64 Keeney, Ralph L., 478n13 Kegler, Cassandra, 397n105 Keidel, Robert W., 285n76 Kelleher, Herb, 342 Kelleher, Kevin, 317n11 Keller, Robert T., 285n68, 285n69 Kelly, Kate, 515n49 Kelly, Kevin, 168n50, 201n15, 240n28, 379, 396n63 604 Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Kennedy, Allan A., 395n15, 395n20 Kenny, Jim, 492 Keon, Thomas L., 354n43 Kerr, Steve, 440n90 Kerwin, Kathleen, 132n20, 133n51, 438n48, 480n70 Kessler, Eric H., 437n25 Kets de Vries, Manfred F. R., 241n45 Kharif, Olga, 49n1 Kidman, Nicole, 466 Kiechel, Walter III, 132n18 Killman, Ralph H., 438n25 Kim, Linsu, 437n23 Kim, Myung, 355n75 Kimberly, John R., 354n26, 354n31, 354n41, 439n70 King, Jonathan B., 515n41 King, Neil Jr., 240n7, 241n51 King, Thomas R., 479n57 Kinkead, Gwen, 396n68 Kirkoff, Miss, 81–82 Kirkpatrick, David, 167n12, 168n19 Kirsch, Laurie J., 355n73 Kirsner, Scott, 284n53, 395n38, 437n8 Kisner, Matthew, 371 Klein, Gary, 478n23 Kleiner, Art, 478n19 Kleist, Robert A., 251 Kline, S. M., 284n62 Knecht, G. Bruce, 511 Knight, Gary A., 437n19 Knight, Phil, 329–330 Koberg, Christine S., 168n18 Koch, Christopher, 317n18, 318n59 Kochan, Thomas A., 514n6, 514n10 Koenig, Richard, 272, 285n75 Kohlberg, L., 396n61 Kolb, David A., 514n7 Kolde, Jeff, 411 Kolodny, Harvey, 285n77 Könen, Roland, 65 Konicki, Steve, 439n65 Kontzer, Tony, 318n46, 318n54 Koogle, Tim, 505 Koslow, Linda, 447 Kotter, John P., 85n3, 169n53, 169n64, 372, 374, 394n11, 395n43, 401, 437n2, 437n18, 440n100, 440n103, 440n109, 445 Koza, Mitchell P., 201n18 Kramer, Barry, 354n39 Kramer, Robert J., 217, 241n37, 241n40, 241n41, 241n43, 241n44, 241n61 Kranhold, Kathryn, 394n3, 395n23 Kreuze, Jerry G., 397n97 Kripalani, Manjeet, 49n5 Kruse, Howard, 103 Kruse, Paul, 103 Kuemmerle, Walter, 235 Kueng, Thomas K., 201n20 Kumar, Parmod, 515n64 Kupfer, Andrew, 167n14 Kurschner, Dale, 396n52 L LaBarre, Polly, 50n41 Lachman, Ran, 515n29, 515n53 Lafley, A. G., 415 Lagnado, Lucette, 515n62 Land, George, 354n28, 354n33 Landers, Peter, 438n33 Landler, Mark, 167n11 Lang, James R., 169n62 Langley, Ann, 479n31 Langley, Monica, 515n35 Langly, Peter, 351–352 Lansing, Shery, 453 LaPotin, Perry, 479n55 Larson, Erik W., 133n38, 515n41 Lashinsky, Adam, 241n53, 317n21, 354n30 Lasswell, Mark, 478n4 Latour, Almar, 169n55 Lau, James B., 278 Law, Andy, 428 Law, Jude, 466 Lawler, Edward E. III, 284n52, 285n84 Lawrence, Anne T., 355n79, 392 Lawrence, Lisa, 512 Lawrence, Paul R., 132n21, 133n37, 133n39, 150–151, 168n38, 168n39, 168n41, 351, 370, 395n37, 440n108, 514n13, 514n14, 516n87 Lawrence, Tom, 390–391 Lawson, Emily, 133n60 Lawson, M. T., 432, 434–435 Lazere, Cathy, 297, 317n28, 355n51, 355n58 Lazurus, Shelly, 142 Leatt, Peggy, 285n68 Leavitt, Harold J., 479n35, 479n40 Leblebici, Huseyin, 168n49 Lee, C. A., 515n51 Lee, Jean, 242n71 Lee, Louise, 480n59 Lee-Young, Joanne, 318n72 Legare, Thomas L., 132n22 Lei, David, 240n19, 240n20, 283n37, 284n40, 284n41 Leifer, Richard, 355n70, 355n73, 438n28 Lengel, Robert H., 285n67 Lennox, Annie, 55 Leo, Anthony, 189 Leonard, Devin, 167n15 Leonard, Dorothy, 438n54 Leonhardt, David, 439n66 Leslie, Keith, 133n60 Letts, Christine W., 50n16 Leung, Shirley, 241n52 Levere, Jane L., 240n4 Levering, Robert, 51n45, 87n48 Levine, David I., 438n31 Levinson, Arthur, 188 Levinson, Meridith, 317n12 Lewin, Arie Y., 57, 201n18 Lewins, Lisa A., 316n1 Lewis, Virginia L., 354n26 Lewyn, Mark, 201n18 Lieberman, David, 133n55 Likert, Rensis, 74, 87n45 Likona, T., 396n61 Lindblom, Charles, 478n7 Linder, Jane C., 133n50, 133n55 Lioukas, Spyros K., 354n47 Lippitt, G. L., 331 Litterer, J. A., 168n20 Litva, Paul F., 438n52 Liu, Michele, 285n77 Lockhart, Daniel E., 169n62 Loewenberg, Samuel, 167n9 Lohr, Steve, 354n45, 395n29 Loomis, Carol J., 478n2 Lorange, Peter, 355n78 Lorsch, Jay W., 132n21, 150–151, 168n38, 168n39, 168n40, 168n41, 370, 395n37, 514n13, 514n14, 516n87 Louis, Meryl Reise, 87n46 Love, John F., 169n57 Loveman, Gary, 292, 317n12 Low, Lafe, 516n67 Lowry, Tom, 241n53 Lublin, Joann S., 49n6, 240n32, 478n2 Luebbe, Richard L., 284n43 Lukas, Paul, 438n51 Lumpkin, James R., 438n39 Lumsden, Charles J., 202n34 Lundburg, Craig C., 87n46 Lundegaard, Karen, 514n8 Lunsford, J. Lynn, 86n17, 439n60 Luqmani, Mushtaq, 397n97 Luqmani, Zahida, 397n97 Lustgarten, Abrahm, 283n31 Luthans, Brett C., 356n85 Lyles, Marjorie A., 478n25, 478n26 Lynn, Gary S., 439n61 M Mabert, Vincent A., 317n37 Macintosh, Norman B., 264, 284n63, 284n65, 285n67, 295, 317n19, 317n26 Mack, David A., 354n29 Mack, John, 482 Mack, Toni, 132n27 Madhavan, Ravindranath, 201n4 Madison, Dan L., 515n63, 516n69 Madsen, Peter, 396n84 Magnet, Myron, 180, 201n26, 201n27, 201n28 Main, Jeremy, 259, 284n39 Mainardi, Cesare R., 240n32, 240n33 Makhija, Mahesh, 317n41 Malesckowski, Jim, 436 Malkin, Elisabeth, 169n60, 241n50 Mallak, Larry, 394n13 Mallett, Jeffrey, 505 Mallory, Maria, 202n43 Malone, Michael S., 437n5 Malone, Thomas W., 92 Mandal, Sumant, 240n2 Mang, Wayne, 197–198 Manly, Lorne, 241n53, 241n62, 515n44 Mannari, Hiroshi, 354n43 Mannix, Elizabeth A., 49n3 Mansfield, Edwin, 413, 438n52 Manz, Charles C., 318n45 March, James G., 456, 463, 479n43, 479n45, 479n54 March, Robert M., 354n43 Marchington, Mick, 180, 201n27, 201n31 Marcic, Dorothy, 38, 80, 85, 126, 164, 195, 239, 278, 351–352, 389, 394, 430, 475 Marcoulides, G. A., 395n40 Maremont, Mark, 169n58 Margulies, Newton, 284n44 Marineau, Philip, 178 Markels, Alex, 478n3 Markkula, A. C., 327 Markoff, John, 133n36, 354n45 Marple, David, 202n42 Marquis, Christopher, 396n56 Marr, Merissa, 133n34, 241n53, 478n5 Martin, Joanne, 87n46, 395n21 Martin, Lockheed, 397n87 Martinez, Barbara, 515n62 Martinez, Richard J., 202n52 Masarech, Mary Ann, 395n39 Mason, Julie Cohen, 169n56 Masuch, Michael, 479n55 Mathews, Anna Wilde, 479n53 Matlack, Carol, 240n23, 241n42, 479n52 Matthews, J. A., 133n52 Maurer, John G., 515n64, 516n67, 516n78 Mauriel, John J., 395n27 Mayer, John, 55 Mayer, Marissa, 403 Mayes, Bronston T., 515n63 Mayo, Andrew, 317n42, 317n44 Mazurek, Gene, 304 McCowan, Sandra M., 479n38 McAfee, R. Bruce, 86n7 McAllaster, Craig, 394n9, 395n25 McCann, Joseph E., 168n23, 404, 437n7, 514n17, 516n94, 516n95 McCartney, Scott, 440n101 McCauley, Lucy, 86n38, 87n43 McClain, John O., 202n42 McClenahen, John S., 283n19 McClure, Steve, 186 McCormick, John, 438n29 McCracken, Mike, 317n23 Name Index 605 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: McDermott, Richard, 318n48 McDonald, Duff, 284n48 McDonough, Edward F. III, 438n28, 439n67 McFarlin, Dean B., 516n72 McGeehan, Patrick, 353n12 McGregor, Jena, 356n88, 480n60 McIntyre, James M., 514n7 McKelvey, Bill, 202n34 McKinley, William, 203n57, 355n83, 356n84, 438n32 McLaughlin, Kevin J., 133n56, 240n28, 437n5 McLean, Bethany, 514n1, 515n48 McMath, Robert, 438n51 McMillan, Charles J., 479n34, 480n58 McNamee, Mike, 514n9 Meehan, Sean, 316n1, 318n64 Meinhard, Agnes G., 202n42 Melcher, Richard A., 168n33, 354n22, 479n46 Melnyk, Steven A., 318n56 Melton, Rhonda, 153 Meredith, Jack R., 258, 283n21, 284n38 Merrell, V. Dallas, 516n76 Merrifield, D. Bruce, 437n23 Merrion, Paul, 50n28 Messick, David M., 396n66 Metters, Richard, 284n54 Metzger, John, 176 Meyer, Alan D., 68, 402, 437n13 Meyer, J., 202n47 Meyerson, Debra E., 49n13 Miceli, Marcia P., 396n82, 396n84 Michaels, Clifford, 236 Michaels, Daniel, 439n60 Michener, James, 39 Micklethwait, John, 12 Micossi, Anita, 355n65, 355n67 Middaugh, J. Kendall II, 317n26 Migliorato, Paul, 284n49 Milbank, Dana, 167n5 Miles, G., 133n52, 133n56 Miles, Raymond E., 65, 68, 79–80, 86n26, 133n52, 241n45, 355n66, 439n69 Miles, Robert H., 354n26, 354n31 Miller, Danny, 354n26, 355n76 Miller, David, 318n55, 318n71 Miller, Karen Lowry, 49n13 Miller, Larry, 85 Miller, Lawrence M., 475 Miller, Scott, 240n12 Miller, William, 317n44 Milliken, Frances J., 168n18 Mills, Peter K., 284n44, 355n70, 355n73 Milward, H. Brinton, 201n25 Mintzberg, Henry, 16, 37, 50n24, 85n3, 132n24, 458–460, 478n23, 479n48, 479n50, 480n61 Mirvis, Philip H., 440n108 Miser, Hugh J., 479n35 Mishra, Aneil K., 367, 395n28 Mitroff, Ian I., 478n25 Mizruchi, Mark S., 169n62 Moberg, Dennis J., 284n44 Moch, Michael K., 439n70 Moeller, Michael, 132n31 Mohr, Lawrence B., 283n5 Mohrman, Susan Albers, 439n77 Molloy, Kathleen, 440n96 Montanari, John R., 168n27 Montgomery, Kendyl A., 440n93 Monticup, Peter, 309 Moore, Ethel, 315 Moore, James, 172, 201n3, 201n6 Moore, Larry F., 87n46 Moore, Pamela L., 49n1 Moore, Thomas, 202n38 Morgan, Gareth, 316 Morgan, Ronald B., 396n70 Morgan, Roy, 84 Morgenson, Gretchen, 396n54 Morouney, Kim, 126 Morris, Betsy, 256, 356n90 Morris, James R., 356n85 Morrison, Jim, 284n57 Morse, Dan, 240n10 Morse, Edward V., 439n70 Moskowitz, Milton, 51n45, 87n48 Mouton, Jane S., 507, 516n86, 516n87, 516n91, 516n93 Mueller, Robert, 383 Mulcahy, Anne, 5, 17, 49n1 Muldrow, Tressie Wright, 395n42 Mullaney, Timothy J., 133n31, 318n61 Muller, Joann, 168n19, 168n36, 514n9 Muoio, Anna, 355n69 Murphy, Elizabeth A., 396n52, 396n53 Murphy, Patrice, 440n90 Murray, Alan, 353n11 Murray, Hugh, 285n83 Murray, Matt, 353n5, 356n87 Murray, Victor V., 515n63, 516n70 Musetto, V. A., 479n56 Muson, Howard, 201n4, 201n22 Mutzabaugh, Ben, 372 N Nadler, David A., 101, 132n8, 247, 437n3 Nagl, Major John, 28 Narasimhan, Anand, 176 Narayanan, V. K., 439n63 Naughton, Keith, 132n20 Nayeri, Farah, 169n65 Neale, Margaret A., 275, 285n80, 356n84 Neale-May, Donovan, 176 Near, Janet P., 396n82, 396n84 Neeleman, David, 31, 372 Neilsen, Eric H., 514n13, 514n18, 516n94, 516n95 Nelson, Bob, 356n86 Nelson, Katherine A., 395n44, 395n51, 396n72, 396n80 Nelson, Robert T., 355n78 Nemetz, Patricia L., 259, 284n39 Neumer, Alison, 133n55 Newcomb, Peter, 202n39 Newman, William H., 354n28 Nicholas O’Regan, 395n40 Nickell, Joe Ashbrook, 317n12 Nielsen, Richard P., 396n83, 479n47 Noble, Ron, 320 Nohria, Nitin, 66, 241n36, 241n65, 303, 318n53 Nolan, Sam, 315 Nonaka, Ikujiro, 318n49 Nord, Walter R., 201n34, 202n53 Nordlinger, Pia, 168n32 Norman, Patricia M., 202n52 Northcraft, Gregory B., 275, 284n52, 285n80, 356n84 Norton, David P., 297, 317n27, 317n28 Novak, William, 132n13 Novicevic, Milorad M., 478n23 Nugent, Patrick S., 516n92 Nutt, Paul C., 478n20, 479n32, 479n34, 480n62 Nystrom, Paul C., 514n17 O O’Brien, Kevin J., 86n24 O’Connor, Edward J., 283n17, 283n22, 284n40 O’Dell, Carla S., 318n52 O’Flanagan, Maisie, 133n35 Ohmae, Kenichi, 240n29 O’Leary, Michael, 64 Oliver, Christine, 200n2, 201n19 Olsen, Johan P., 463, 479n54 Olsen, Katherine, 432, 436 Olve, Nils–Gõran, 317n30 O’Mahony, Siobhan, 318n68, 318n70 O’Neal, Stan, 503 O’Neill, Regina M., 87n52 O’Regan, Nicholas, 395n26 O’Reilly, Charles A. III, 437n3, 437n25, 438n26, 438n27, 438n36, 440n98 Orlikowski, Wanda J., 283n9 Osborne, Richard, 396n77 Ostroff, Cheri, 87n46 Ostroff, Frank, 115–116, 119, 132n6, 132n25, 133n48, 133n49, 133n59 O’Sullivan, Kate, 201n11 Ouchi, Monica Soto, 85n1 Ouchi, William C., 132n9 Ouchi, William G., 339, 349–350, 355n61, 355n68 Overby, Stephanie, 318n67 P Pacanowsky, Michael, 478n11 Pace, Stan, 439n80 Pacelle, Mitchell, 396n74 Padsakoff, Philip M., 355n59 Page, Larry, 327 Paine, Lynn Sharp, 396n59 Palmer, Donald, 169n61 Palmisano, Sam, 368 Paltrow, Gwyneth, 466–467 Parise, Salvatore, 318n55, 318n71 Park, Andrew, 514n9 Parker, Warrington S. Jr., 439n81 Parloff, Roger, 396n67 Parsons, Michael, 186 Parsons, T., 354n37 Pascale, Richard T., 50n39 Pasmore, William A., 273, 285n81, 285n83, 285n85, 285n87, 396n59 Pasternack, Bruce A., 311, 316n5 Patil, Prabhaker, 89 Patteson, Jean, 85n1 Patton, Susannah, 317n20, 317n40 Peabody, Robert L., 515n34 Pearce, Joan L., 479n44 Pearce, John, 86n6 Pearce, John A. II, 439n62 Peers, Martin, 479n53 Pellegrino, James, 440n96 Peng, T. K., 242n72 Penney, J.C., 159 Pennings, Johannes M., 50n36, 202n42, 515n51, 515n52 Pentland, Brian T., 284n56 Perdue, Arthur W., 39 Perdue, Franklin Parsons, 39, 41–44, 49 Perdue, James A. (Jim), 39, 41, 47, 49 Pereira, Joseph, 86n14, 396n56 Perez, Bill, 330 Perot, Ross, 326 Perrow, Charles, 86n11, 86n39, 264, 276, 283, 283n4, 284n55, 353n2, 494, 515n50 Persaud, Joy, 394n6 Peters, Thomas J., 396n75, 438n43 Peters, Tom, 41, 353n3 Peterson, Richard B., 285n75 Petri, Carl-Johan, 317n30 Petrock, F., 367, 395n28 Pettigrew, Andrew M., 492, 515n42, 515n59 Petzinger, Thomas Jr., 51n46, 153, 201n5 606 Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Pfeffer, Jeffrey, 168n48, 169n53, 201n12, 284n62, 495, 514n19, 514n23, 515n33, 515n40, 515n51, 515n52, 515n55, 515n56, 515n57, 516n66, 516n68, 516n74, 516n79, 516n82 Pheysey, Diana, 283n5, 283n7 Pickard, Jane, 241n59 Pierce, John L., 437n11 Pil, Frits K., 353n13 Pinchot, Elizabeth, 355n52 Pinchot, Gifford, 355n52 Pincus, Laura B., 241n38 Pine, B. Joseph II, 283n32 Pinelas, May, 196 Pinfield, Lawrence T., 479n49 Pitcher, Al, 476–477 Pitts, Robert A., 241n39 Pla-Barber, José, 241n35 Plafker, Ted, 169n65 Plana, Efren, 332 Pollack, Andrew, 167n8 Pondy, Louis R., 438n25, 514n18 Pool, Robert, 355n56 Porras, Jerry, 86n10 Port, Otis, 240n28, 258 Porter, Benson L., 439n81 Porter, Lyman W., 479n44, 515n63 Porter, Michael E., 63, 65, 68, 79–80, 86n20, 86n21, 86n25, 240n16 Posner, Richard A., 336 Post, James E., 395n49 Potter, Donald V., 353n7 Poulos, Philippos, 264 Powell, Bill, 438n29 Powell, Thomas C., 168n46 Powell, Walter W., 202n54, 202n55 Power, Christopher, 438n48, 480n70 Poynter, Thomas A., 213, 241n36 Prahalad, C. K., 440n98 Preston, L. E., 50n29 Prewitt, Edward, 133n40 Price, Ann, 450 Price, James L., 86n37 Price, Jorjanna, 132n27 Priem, Richard L., 87n44, 133n56, 169n70, 240n28, 437n5 Prince, Charles, 381–382, 384 Pringle, David, 167n1 Provan, Keith G., 201n25 Prusak, Laurence, 394n4, 515n41 Pugh, Derek S., 50n26, 201n13, 202n35, 202n54, 202n55, 283n5, 283n7 Purcell, Philip J., 482–483, 493 Purdy, Lyn, 284n40 Q Questrom, Allen, 369 Quick, James Campbell, 354n29 Quinn, E., 510 Quinn, J., 440n89 Quinn, James Brian, 437n16 Quinn, Robert E., 75–76, 87n51, 87n52, 87n53, 327, 331, 354n27, 367, 395n28 Quittner, Josh, 354n32 R Raghavan, Anita, 394n3, 395n23, 514n1 Rahim, M. Afzalur, 514n6 Raia, Anthony, 86n12 Raisinghani, Duru, 479n48 Rajagopalan, Nandini, 479n34 Rancour, Tom, 317n23 Randolph, W. Alan, 132n26, 133n41, 284n65, 285n67 Ranson, Stuart, 132n5 Rapaport, J., 413, 438n52 Rappaport, Carla, 241n45 Rasheed, Abdul M. A., 133n56, 169n70, 240n28, 437n5, 479n34 Raskin, Andrew, 201n30 Raven, Bertram, 515n28 Rawls, Jim, 165–166 Ray, Michael, 354n28 Rayport, Jeffrey F., 438n54 Rebello, Kathy, 201n18 Recardo, Ronald, 440n96 Reed, Michael, 202n34 Reed, Stanley, 133n45 Reese, Shelley, 45 Reichheld, F. F., 260 Reimann, Bernard, 354n43 Reinhardt, Andy, 49n9, 167n1, 167n2, 318n64 Reinwald, Brian R., 478n23 Renwick, Patricia A., 515n63 Rhodes, Robert, 236 Rhodes, Sean, 237 Richards, Bill, 305, 317n7 Richards, Jenna, 434 Richards, Keith, 7 Richardson, Peter, 440n105 Rickey, Laura K., 240n14 Rigby, Darrell, 61 Riggs, Henry E., 479n36 Ring, Peter Smith, 169n53, 201n27 Ringbeck, Jürgen, 167n3 Rinzler, Alan, 354n28 Ripon, Jack, 436 Robbins, Carla Anne, 478n18 Robbins, Paul, 434–435 Robbins, Stephen P., 285n78 Roberson, Bruce, 66 Roberto, Michael A., 480n66 Roberts, Karlene H., 355n55, 355n57 Robinson, Alan G., 437n4 Robinson, Jim, 84 Robson, Ross, 255 Rogers, Everett M., 440n102 Rogers, L. Edna, 168n43 Rohrbaugh, John, 75–76, 87n51 Roland, Dr. P. W., 199–200 Rolfe, Andrew, 263 Romanelli, Elaine, 354n28 Romani, John H., 86n36 Romm, Tsilia, 516n67 Rose, Jim, 240n2 Rose, Pete, 273 Rosenberg, Geanne, 395n48 Rosenberg, Jonathan, 403 Rosenberg, Tina, 354n38 Rosenthal, Jack, 355n53 Rosenthal, Jeff, 395n39 Ross, Jerry, 480n72, 480n73 Roth, Daniel, 167n12, 168n19, 354n35 Rothman, Howard, 317n22 Roure, Lionel, 438n45 Rousseau, Denise M., 51n47 Rowan, B., 202n47 Rowley, Colleen, 383 Roy, Jan, 317n30 Roy, Sofie, 317n30 Rubenson, George C., 39 Rubin, Irwin M., 514n7 Ruddock, Alan, 86n22 Ruekert, Robert W., 514n7 Rundall, Thomas G., 202n42 Rushing, William A., 283n4, 354n43 Russel, Archie, 197 Russell, David O., 466 Russo, J. Edward, 478n9 Russo, Michael V., 87n42 Rust, Kathleen Garrett, 203n57 Ryan, William P., 50n16 S Sabrin, Murray, 169n55 Sachdeva, Paramijit S., 514n22, 515n32, 515n47 Safayeni, Frank, 284n40 Safra, Joseph, 457 Salancik, Gerald R., 168n48, 168n49, 201n12, 495, 514n23, 515n51, 515n52, 515n56, 515n57 Sales, Amy L., 440n108 Salsbury, Stephen, 132n7 Salter, Chuck, 132n1, 153, 353n1 Salva, Martin, 240n32, 240n33 Sanchez, Carol M., 355n83, 356n84 Sanderson, Muir, 240n32, 240n33 Santana, Carlos, 55 Santosus, Megan, 315, 317n13 Sanzgiri, Jyotsna, 440n94 Sapsford, Jathon, 437n1 Sarason, Yolanda, 87n42 Sarni, Vic, 381 Sasser, W. E. Jr., 260 Sauer, Patrick J., 395n36 Saunders, Carol Stoak, 515n53 Sawhney, Mohanbir, 240n2 Sawka, Kenneth A., 168n33 Sawyer, John E., 437n14 Scannell, Kara, 49n6 Scarbrough, H., 285n87 Schay, Brigitte W., 395n42 Scheer, David, 397n98 Schein, Edgar H., 394n8, 394n11, 440n106, 514n5 Schick, Allen G., 355n83, 356n84 Schiller, Zachary, 168n50, 169n58, 201n15, 240n28 Schilling, Melissa A., 133n50, 133n52, 439n60 Schlender, Brent, 50n20, 50n21, 201n3, 354n32, 437n6 Schlesinger, Leonard A., 440n103, 440n109 Schlosser, Julie, 168n31, 317n10, 479n39 Schmenner, Roger W., 284n52 Schmidt, Eric, 328 Schmidt, Stuart M., 514n6 Schmidt, W. H., 331 Schmitt, Neal, 87n46 Schneck, R. E., 515n51, 515n52 Schneck, Rodney, 285n68 Schnee, J., 413, 438n52 Schneider, Benjamin, 260, 284n44 Schneider, S. C., 397n99 Schneider, Susan, 242n68 Schoemaker, Paul J. H., 478n9, 479n34 Schoenherr, Richard A., 284n64, 354n47 Schon, D., 316 Schonberger, R. J., 283n3 Schonfeld, Erick, 283n35, 284n47, 437n20 Schooner, Steven L., 396n85 Schoonhoven, Claudia Bird, 439n77 Schrempp, Jürgen, 96 Schroeder, Dean M., 283n14, 283n17, 437n4 Schroeder, Roger G., 395n27 Schuler, Randall S., 393 Schultz, Howard, 55, 451 Schulz, Martin, 318n51 Schwab, Chuck, 348 Schwab, Les, 361 Schwab, Robert C., 168n29 Schwadel, Francine, 478n15 Scott, B. R., 331 Scott, Susanne G., 430 Scott, W. Richard, 191, 202n46, 202n55 Sculley, John, 329 Sears, Michael, 161 Seibert, Cindy, 354n40 Seiler, John A., 351 Sellen, Abigail J., 302 Sellers, Patricia, 438n57, 515n37 Selsky, John, 168n23 Serwer, Andy, 7, 85n1, 256, 514n1, 515n48 Seubert, Eric, 317n41 Shafritz, Jay M., 396n84 Shane, Scott, 355n54 Shani, A. B., 278 Shanley, Mark, 50n29, 50n33 Name Index 607 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Shapiro, Benson S., 485, 514n11 Sharfman, Mark P., 478n17, 516n65 Sharma, Drew, 309 Shea, Gordon F., 395n44 Shein, Esther, 317n35 Shepard, Herbert A., 516n91, 516n93 Sherif, Muzafer, 514n5, 516n95 Sherman, Stratford P., 240n21, 355n71, 440n102 Shetty, Y. K., 72, 86n40 Shilliff, Karl A., 84 Shipper, Frank M., 39 Shipton, L. K., 434 Shirouzu, Norihiko, 240n12, 437n1 Shleifer, Andrei, 242n71 Shoemaker, Floyd, 440n102 Shonfeld, Erick, 394n5 Shoorman, F. David, 169n61 Shostack, G. Lynn, 284n44 Sibley, Miriam, 268 Siebert, Al, 347 Siehl, Caren, 260, 284n44 Siekman, Philip, 50n19, 133n51, 201n33, 283n11 Siklos, Richard, 240n24 Silveri, Bob, 318n57 Simon, Bernard, 132n1 Simon, Herbert A., 456, 478n8, 478n21, 479n43 Simons, Robert, 317n16 Simpson, Curtis, 390 Sinatar, Marsha, 438n44 Singer, Andrew W., 396n70 Singh, Jitendra V., 201n34–202n34, 202n42 Sirower, Mark L., 202n56 Skarzynski, Peter, 440n98 Skrabec, Quentin R., 396n52 Slater, Derek, 317n36, 317n38 Slevin, Dennis, 438n25 Slocum, John W. Jr., 240n19, 240n20, 275, 285n80, 354n46, 395n18 Slywotzky, Adrian, 353n9 Smircich, Linda, 394n7 Smith, Geoffrey, 168n33 Smith, Geri, 169n65 Smith, Ken G., 201n19 Smith, Ken K., 514n4 Smith, N. Craig, 395n49 Smith, Orin, 55 Smith, Randall, 514n1, 516n81 Smith, Rebecca, 49n6 Snell, Scott A., 241n58 Snelson, Patricia A., 438n53 Snow, Charles C., 65, 68, 79–80, 85n4, 86n26, 133n52, 133n56, 241n45, 241n58, 241n60 Snyder, Naomi, 168n37 Socrates, 310 Solo, Sally, 168n26 Solomon, Charlene Marmer, 241n57 Sommer, Steven M., 356n85 Song, Gao, 479n38 Soni, Ashok, 317n37 Sorenson, Ralph Z., 41 Sorkin, Andrew Ross, 241n53, 241n62, 515n44 Sparks, Debra, 240n18, 240n26, 240n27 Spears, Britney, 369 Spender, J. C., 437n25 Spindler, Michael, 329 Spragins, Ellyn, 450 Sprague, John L., 439n79 Stace, Doug A., 440n109 Stagner, Ross, 479n27 Stalker, G. M., 151, 168n42, 437n23 Stam, Antonie, 485, 514n11 Stamm, Bettina von, 439n57, 439n58 Stanton, Steve, 133n46 Starbuck, William H., 514n17 Starkey, Ken, 394n7 Staw, Barry M., 169n72, 203n58, 285n67, 438n44, 480n72, 480n73, 514n18 Staw, M., 396n76 Stearns, Timothy M., 201n20 Steensma, H. Kevin, 133n50, 133n52 Steers, Richard M., 33, 86n33, 126 Steinberg, Brian, 167n15 Steiner, Gary A., 437n16 Stempert, J. L., 87n42 Stephens, Carroll U., 57 Sterling, Bill, 39 Stern, Robert N., 50n18 Stevenson, William B., 479n44 Stewart, Doug, 516n91 Stewart, James B., 478n2 Stewart, Martha, 8 Stewart, Thomas A., 115, 355n50, 437n21, 478n23, 479n29 Stickley, Ewan, 263 Sting, 55 Stipp, David, 202n45 Stires, David, 202n41 Stodder, Seth M. M., 168n24 Stodghill, Ron II, 169n58 Stoelwinder, Johannes U., 86n12 Stone, Sharon, 369 Stonecipher, Harry, 75 Strakosch, Greg, 370 Strasser, Steven, 86n36 Stringer, Sir Howard, 223, 225, 493 Stross, Randall, 241n53 Strozniak, Peter, 283n30 Stymne, Benjt, 285n77 Suarez, Fernando F., 283n16 Suchman, Mark C., 86n8, 202n48 Summer, Charles E., 280, 432 Sun, David, 382 Surowiecki, Janes, 480n67 Susman, Gerald I., 285n79 Sutton, Charlotte B., 395n15, 395n20 Sutton, Robert I., 169n72, 355n79, 437n16 Svezia, Chris, 149 Swanson, Sandra, 318n58 Symonds, William C., 169n65, 390, 479n52 Szwajkowski, Eugene W., 169n72, 395n49 T Tabrizi, Behnam N., 439n62 Taft, Susan H., 375, 395n45 Takahashi, Toshihiro, 261 Takeuchi, Hirotaka, 318n49 Talbert, Wayne, 196 Taliento, Lynn K., 133n35 Tam, Pui-Wing, 479n46 Tan, Cheryl Lu-Lien, 153 Tanouye, Elyse, 132n29 Tansik, David A., 284n50 Tapscott, Don, 133n54 Taris, Toon W., 396n71 Tatge, Mark, 283n34 Taylor, Alex III, 86n14, 201n21 Taylor, Christopher, 352 Taylor, Frederick Winslow, 25 Taylor, Saundra, 352 Taylor, William, 241n45 Teahen, John K., 87n41 Teece, David J., 133n57, 439n70 Teitelbaum, Richard, 86n23 Teja, Salim, 240n2 Terry, Paul M., 514n3 Tetenbaum, Toby J., 50n37, 50n39 Théorêt, André, 479n48 Thoman, Richard, 4–5 Thomas, Fred, 511–512 Thomas, Howard, 478n26 Thomas-Hunt, Melissa, 51n47 Thomas, Kenneth, 514n6 Thomas, Landon Jr., 397n92, 514n1 Thomas, Mark, 196 Thomas, Owen, 317n39, 478n4, 478n6 Thompson, James D., 50n23, 86n19, 168n25, 269–271, 283n7, 285n71, 437n24, 480n58, 514n15 Thompson, Joe, 291 Thompson, P. J., 208 Thompson, Ronald L., 284n60 Thornton, Emily, 241n53 Tichy, Noel M., 515n47 Tierney, Thomas, 303, 318n53 Timmons, Heather, 353n12, 355n82 Tjosvold, Dean, 516n96 Todor, William D., 355n59 Toffler, Barbara Ley, 396n86 Tolbert, Pamela S., 202n53 Tompkins, Tommy, 196 Townsend, Anthony M., 132n23 Townsend, Robert, 472, 480n71 Toy, Stewart, 169n71 Treacy, Michael, 68 Treece, James B., 168n50, 201n15, 240n28, 353n10 Tretter, Marietta J., 241n39 Treviño, Linda Klebe, 395n44, 395n51, 396n59, 396n72, 396n80, 396n86 Trice, Harrison M., 363, 394n10, 395n19 Trist, Eric L., 167n16, 285n83 Trofimov, Yaroslav, 478n18 Trottman, Melanie, 355n72 Tsujino, Koichiro, 223 Tu, John, 382 Tucci, Joe, 144 Tucker, David J., 202n34, 202n42 Tully, Shawn, 439n78 Tung, Rosalie L., 168n22, 168n46 Turban, Daniel B., 396n55 Turcotte, Jim, 318n57 Turner, C., 50n26 Tushman, Michael L., 101, 132n8, 247, 284n65, 285n69, 354n28, 394n4, 437n3, 437n25, 438n26, 438n27, 438n36, 440n98 Tusi, Anne S., 50n29, 50n31 Tyler, John, 165–166 U Ulm, David, 439n79 Ulrich, David, 168n48, 202n34, 440n90 Ungson, Gerardo R., 168n18, 168n29 Upton, David M., 285n86 Useem, Jerry, 202n49, 202n51, 353n4 V Van de Ven, Andrew H., 33, 168n49, 169n53, 201n27, 272, 285n66, 285n67, 285n75 Van Horne, Rick, 304 VanGrunsven, Dick, 254 Vargas, Vincente, 284n54 Vaughan, Ken, 141 Veiga, John F., 129, 165 Venkataramanan, M. A., 317n37 Verschoor, Curtis C., 396n52, 396n53 Vinas, Tonya, 200n1 Vincent, Steven, 180, 201n27, 201n31 Vogelstein, Fred, 403 Volpe, Craig, 118 Voyer, John J., 516n65 Voyle, Susanna, 394n1 Vredenburgh, Donald J., 515n64, 516n67, 516n78 Vroman, H. William, 126 608 Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: W Wagner, S., 413, 438n52 Wah, Louisa, 318n47 Wakin, Daniel J., 132n3 Walker, Gordon, 168n49 Walker, Orville C. Jr., 514n7 Walker, Sam, 514n26 Wallace, Doug, 436, 478n12 Wallach, Arthur E., 440n108 Wally, Sefan, 478n22 Walsh, James P., 354n42 Walton, Eric J., 87n49 Walton, Richard E., 285n84, 507, 514n13, 514n16 Walton, Sam, 322 Warner, Fara, 283n29, 403, 438n56 Warner, Melanie, 317n32, 395n30 Warshaw, Michael, 515n30, 515n45 Washington, Major J., 196 Waterman, Robert H. Jr., 396n75, 438n43 Watson, Robert A., 338 Watts, Charlie, 7 Watts, Naomi, 466–467 Waxman, Sharon, 479n56 Weaver, Gary R., 396n86 Webb, Allen P., 396n70 Webb, Bill, 255 Webb, Terry, 283n21 Webber, Ross A., 280 Weber, James, 396n60, 397n91 Weber, Joseph, 132n29, 133n33, 168n33, 169n65, 240n20 Weber, Max, 331, 339, 354n37, 355n62 Wegman, Danny, 61 Wegman, Robert, 61 Weick, Karl E., 86n34, 382, 396n76, 480n69 Weil, Jonathan, 49n6 Weiner, Ari, 235–236 Weisbord, Marvin R., 440n88 Weitzel, William, 345, 355n81 Weldon, William C., 57, 96 Weller, Timothy, 60 Wessel, David, 49n7, 355n64, 479n41 Western, Ken, 168n33 Westley, Frances, 478n23 Wheatcroft, Patience, 394n1 Whetten, David A., 86n34, 87n42, 201n20, 354n31, 355n75 White, Anna, 479n38 White, Donald D., 126 White, Gregory L., 240n12 White, Joseph B., 514n8, 516n90 White, Judith, 375, 395n45 White, Roderick E., 213, 241n36 Whitford, David, 169n69 Whitman, Meg, 295–296, 443, 490 Wholey, Douglas R., 202n34 Wiersema, Fred, 68 Wiginton, John C., 479n42 Wilhelm, Wayne, 284n46 Wilke, John R., 50n33 Williams, Larry J., 355n59 Williams, Loretta, 351–352 Williams, Mona, 189 Williamson, James E., 297, 317n27, 317n28 Williamson, Oliver A., 355n63 Willmott, Hugh, 132n5 Wilson, Ian, 86n9 Wilson, James Q., 353n2, 437n24 Wilson, Joseph C., 3 Winchell, Tom, 195–196 Windhager, Ann, 132n27 Wingfield, Nick, 201n7, 241n50, 479n53 Winters, Rebecca, 354n32 Wise, Jeff, 283n27 Wise, Richard, 353n9 Wiser, Phil, 223 Withey, Michael, 284n59 Wolf, Thomas, 49n15 Wolfe, Richard A., 437n10 Wong, Choy, 516n96 Wood, Ronnie, 7 Woodman, Richard W., 275, 285n80, 285n84, 396n59, 437n14 Woodward, Joan, 248–250, 253, 276, 283n6, 283n10, 28312 Wooldridge, Adrian, 12 Worthen, Ben, 169n66, 514n12 Wozniak, Stephen, 327 Wren, Daniel A., 478n23 Wu, Anne, 440n95 Wylie, Ian, 168n47 Wysocki, Bernard Jr., 49n9, 316n3 X Xerokostas, Demitris A., 354n47 Y Yang, Jerry, 505 Yanouzas, John N., 129, 165 Yates, Linda, 440n98 Yee, Amy, 49n1 Yeh, Andrew, 167n1 Yoffie, David B., 169n68 Yoshida, Takeshi, 414 Young, Clifford E., 356n85 Young, Debby, 317n29 Yu, Gang, 479n38 Yukl, Gary, 390 Yuspeh, Alan R., 380, 396n78 Z Zachary, G. Pascal, 49n11, 169n51, 511 Zald, Mayer N., 494, 515n50 Zaltman, Gerald, 152 Zammuto, Raymond F., 202n44, 283n17, 283n22, 284n40, 355n79 Zander, A. F., 515n28 Zaun, Todd, 240n12 Zawacki, Robert A., 439n85, 439n86, 440n88 Zeitz, Jochen, 65 Zellner, Wendy, 169n58, 169n65, 201n15, 396n64 Zemke, Ron, 284n46 Zhao, Jun, 203n57 Zhou, Jing, 515n64 Zipkin, Amy, 396n79 Zirger, Jo, 438n48 Zmud, Robert W., 439n72, 439n73 Name Index 609 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: A A. T. Kearney, 100 Abercrombie & Fitch, 311 Acetate Department, 280–282 Acme Electronics, 165–167 Adobe Systems, 409 Advanced Cardiovascular Systems (ACS), 486 AES Corporation, 14, 92 Aetna Inc., 498 Aflac Insurance, 64 AgriRecycle Inc., 47 Ahold USA, 61 Airbus Industrie, 143, 171, 211, 322 Airstar, Inc., 84 AirTran Airways, 6, 146 Akamai Technologies, 60 Albany Ladder Company, 100 Alberta Consulting, 448 Alberto-Culver, 420 Albertson’s, 61 Allied Signal, 325, 402 Allstate, 287, 298 ALLTEL, 427 Aluminum Company of America (Alcoa), 506 Amana, 442 Amazon.com Inc., 173–174, 184, 187, 308–309, 368, 488 Amerex Worldwide, 288 America Online (AOL), 158, 222–223, 323, 389, 462 American Airlines, 427 American Axle & Manufacturing (AAM), 245–246 American Express, 322 American Humane Association, 6 American International Group, Inc. (AIG), 491 AMP, 181 Anglian Water, 410 Anheuser-Busch Company, 7, 179, 290–291, 322, 351 Ann Taylor, 311 Apple Computer, 107–108, 137, 173, 222–223, 327–330, 402, 404, 462 Aquarius Advertising Agency, 129–131 Arcelor, 111 Arthur Andersen, 58, 343, 384 ASDA Group, 156, 359 Asea Brown Boveri Ltd. (ABB), 218–220, 296, 340 Asset Recovery Center, 183 AT&T, 157, 184 Athletic Teams, 273 Autoliv AB, 255–256 Averitt Express, 366 Avis Corporation, 472 Avon, 387 A.W. Perdue and Son, Inc., 39 B Bain & Company, 61 Baldwin Locomotive, 184 Banc One, 156 Barclays Global Investors, 302 Barnes & Noble, 308 Bell Canada, 298 Bell Emergis, 298 Bertelsmann AG, 205 Bethlehem Steel Corp., 25, 111 Biocon, 140 Bistro Technology, 278 Black & Decker, 212 Blackwell Library, 39 Blockbuster Inc., 343 Bloomingdale’s, 455 Blue Bell Creameries, Inc., 103–104 BMW, 208, 222, 257 Boardroom Inc., 405 Boeing Company, 60–61, 74–75, 143, 159, 161, 171, 189, 211, 409, 415 Boise Cascade Corporation, 272 Bombardier, 159, 182 Boots Company PLC, 359, 373 Booz Allen Hamilton Inc., 89 Borden, 351 BP, 226, 253 Bristol-Myers Squibb Company, 337 British Airways, 298 Brobeck, Phleger & Harrison LLP, 346 Brown, 432 Brown Printing, 205 BT Labs, 224 Burger King, 187, 484 Business Wire, 288 C C & C Grocery Stores, Inc., 126–129 Cadillac, 443 CALEB Technologies, 455 Callaway Golf, 174 Canadair, 159 Canada’s Mega Bloks Inc., 60 Cannondale Associates, 61 Canon, 4–5, 408 Cardinal Health, 322 CARE International, 95 CareWeb, 298–299 Carroll’s Foods, 41 Caterpillar Inc., 220, 328, 372 Cementos Mexicanos (Cemex), 32 Centex Corporation, 337 Century Medical, 315 Chamber of Commerce, 196 Charles Schwab & Company, 343, 347–348 Chase, 156 Chevrolet, 72–73, 158–159 Chicago Board of Trade, 179 Chicago Electric Company, 26 Chicago Mercantile Exchange, 179 Chrysler Corporation, 95, 141, 179, 245, 323 Cigna Insurance, 298 Cingular, 157 Cisco, 183, 346, 389 Cisneros Group, 158 Citibank, 220 Citicorp, 324 Citigroup, 321, 346, 381, 384 Clark, Ltd., 491 ClientLogic, 118 Clorox, 174, 415 CNA Life, 7 Coca-Cola, 14, 69, 206, 210, 212, 322, 337, 443 Cognos, 148 Colgate-Palmolive Company, 217–218, 220, 222, 226 Columbia/HCA Healthcare Corp, 380 Comcast, 118, 173 Compaq, 442 ConAgra, 412 Connect Co., 107 Contact USA, 60 Continental Airlines, 454–455 Corning Glass, 237 Corrugated Supplies, 304, 309 Costco Wholesale, 127 C.V. Starr & Co., 491 D DaimlerChrysler, 95–96, 141, 321, 323, 343 Dayton/Hudson, 389 Dean Witter Discover & Co., 482–483, 493 Dell Computer Corporation, 7, 9, 222, 251, 256–257 Deloitte Touche, 484 Delphi Corp., 208 Deluca, 43 Denmark’s Lego, 60 Deutsche Telecom, 210 Dillard’s, 389 Direct TV, 118 Discovery Channel, 489–490 Disney, 311 Dodge, 96 Domino’s Pizza, 212 Donnelly Corporation, 192 Dow Chemical, 110, 296 DreamWorks, 443 DuPont Co, 378 Corporate Name Index 610 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: E East Tennessee Healthcorp (ETH), 512 Eaton Corporation, 215, 218 eBay Inc., 11, 26, 65, 92, 184, 295–296, 325–326, 368, 400, 443, 490, 505 Eckerd, 159 Edward Jones, 65 Eileen Fisher, 387 Electrolux, 380, 442 Electronic Data Systems (EDS), 100, 327–328, 420 Eli Lilly & Co., 210, 405, 407 EMC, 144 Emerald Packaging, 379 Emerson Electric, 337 Empire Blue Cross and Blue Shield, 493 Encyclopaedia Britannica, 457–458 Englander Steel, 111–113 Enron Corporation, 8, 58, 161, 189, 343, 360, 365, 379, 384, 419 Esso, 341 Ethics Officer Association, 383 Ethics Resource Center, 383 Eureka Ranch, 409 Exxon, 324 F Fast-Data, 236 Federal Bureau of Investigation (FBI), 383 Federal Reserve Board, 455 FedEx Corporation, 65, 183 Fiat Auto, 117 Financial Services., 100 Flextronics, 181 Ford Motor Company, 6, 72, 89, 100, 114, 121–122, 141, 156, 171, 184, 207–208, 212, 225, 257, 260, 299, 341, 416, 506 Forrester Research, 314 Four Seasons Hotels, 64, 75 France Telecom SA, 137 Frankfurter Allgemeine Zeitung, 140 Frito-Lay, 152, 299, 351, 412 Fujitsu, 152 Funk & Wagnalls, 457 G Gap, 455 Gardetto, 409 Gartner Group, 314 Gateway, 389 Gayle Warwick Fine Linen, 206 Genase, 410 Genentech, 188 General Electric (GE), 69, 84, 104, 171–172, 180, 237, 261, 296, 325, 343, 385, 406, 411, 442 General Electric (GE) Salisbury, 114–116 General Mills, 381 General Motors, 59, 72–73, 96, 110, 117, 183–184, 208, 245, 264, 276, 310, 321, 337, 341, 399, 416, 484, 506 General Shale Brick, 141 Genesco, 149 Geo Services International, 211 Gerber, 415 GID, 254 Gilead Sciences, 324 Gillette Company, 212, 461–462 Girl Scouts, 6, 107 GlaxoSmithKline, 323 Global Crossing, 380 GlobalFluency, 176 Goldsmith International, 173 Goldwater, 389 Goodyear, 506 Google, 13–14, 26, 65, 184, 326–327, 368, 401, 403 Governance Metrics International, 377 Gruner + Jahr, 205 Guess, 311 Guidant Corporation, 486 Guiltless Gourmet, 152 H Häagen Dazs, 416 Halliburton, 384 Haloid Company, 3 Harley-Davidson Motorcycles, 64, 180 Harrah’s Entertainment Inc., 292, 298, 455 Harris Interactive and the Reputation Institute, 189, 202 Hasbro, 145 HCA, 498 HealthSouth Corp., 419, 509 Heineken Breweries, 14, 224 Heinz, 337 Hewlett-Packard, 5–6, 107, 173, 251, 442 Hewlett-Packard’s Medical Products Group, 98 Hilton Hotels Corp., 298 Holiday Inn, 11, 191 Hollinger International, Inc., 492 Home Depot, 7, 66, 157, 326, 455, 498 Honda Motor Company, 60, 192, 209, 257, 260, 408 Honest Jim, 379 Honeywell Garrett Engine Boosting Systems, 306 Honeywell International, 144 Hudson Foods, 48 Hudson Institute, 386 Hugh Russel Inc., 196–197 Hughes Electronics, 118 I IBM, 4, 6, 14, 156, 158, 184, 222, 251, 327, 340, 365, 368, 402, 411, 420 ICiCI Bank, 211 IKEA, 380 Imagination Ltd., 98 ImClone Systems, 8 Imperial Oil Limited, 341 INCO, 512–513 Indiana Children’s Wish Fund, 12 INSEAD, 512 Intel Corp., 173, 472 InterCel, Inc., 392 Interface, 380 Internal Revenue Service, 60, 106 International Association of Machinists (IAM), 506 International Shoe Company, 432 International Standards Organization, 387 International Truck and Engine Corporation, 171 Interpol, 320 Interpublic Group of Companies, 321 Interstate Bakeries, 443 ITT Industries, 296 J J & J Consumer Products, 106 J. M. Smucker & Co., 359 J. Sainsbury’s, 117 J&R Electronics, 309 Jaguar Automobiles, 64 J.C. Penney, 368–369 J.D. Edwards, 94 Jeep, 96 JetBlue Airways, 14, 31, 138, 146, 372 Johnson & Johnson, 57–58, 96, 104, 106–107, 172, 189, 322, 325–326, 381 K Kaiser-Hill, 347 Karolinska Hospital, 104 Keiretsu, 211 Kennedy Foods, 412 KFC, 484 Kimberly-Clark, 414 Kingston Technology Co., 382 Kmart, 66, 144, 337, 389 Kodak, 67 KPMG Peat Marwick, 288 Kraft, 140, 412 Kroger, 61, 140 Kryptonite, 145 L Lamprey Inc., 436 Lands End, 173 Learjet, 159 Lehigh Coal & Navigation, 184 Les Schwab Tire Centers, 361–362 Levi Strauss, 178, 416 Li & Fung, 311 Liberty Mutual’s, 59 Limited, The, 311 Lockheed Martin, 161, 384, 410 Lockport, 300 Long Island Lighting Company (LILCO), 473 L’Oreal, 210 Lotus Development Corp., 156 LTV Corp., 111 Lufthansa, 64 M MacMillan-Bloedel, 380 Make-a-Wish Foundation, 107 MAN Nutzfahrzeuge AG, 171 Marriott, 420 Marshall Field’s, 446–447 Mary Kay Cosmetics Company, 364 Mathsoft, Inc., 73 Matsushita Electric, 210, 230 Mattel, 145, 187 Maytag, 442 Mazda, 257 McDonald’s, 67, 107, 157, 186–187, 208, 222, 261, 263, 278–279, 288, 293, 380, 415, 470, 484 MCI, 157 McKinsey & Company, 9, 338 McNeil Consumer Products, 106 Medtronic, 59 Memorial Health Services, 288 Mercedes, 96, 179 Merck, 184, 188, 210, 324 Merrill Lynch & Co., 380, 503 Micro Modeling Associates (MMA), 313 Microsoft Corporation, 7, 12–13, 66, 106–107, 159–160, 172–173, 178, 180–181, 330, 334, 360, 399, 403, 457 Milacron Inc., 366 Miller, 179 Milliken & Co., 401 Mindfire Interactive, 309 Mitsubishi, 96, 179, 421 Mittal Steel, 111 Mobil, 324 Moen, 416 Monsanto, 380 Corporate Name Index 611 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Montgomery-Watson Harza (MWH), 303 Morgan, Lewis & Bockius LLP, 346 Morgan Stanley, 482–483, 493 Morton Automotive Safety, 255 Motek, 450 Motorola, 100, 137, 156, 183, 208, 292, 296, 328 MTV Japan, 186 MTV Networks, 211 MusicNet, 462 Musidor, 7 N Nabisco, 351 National Industrial Products, 390 Neale-May & Partners, 176 Neoterik Health Technologies Inc., 141 Nestlé, 104, 140, 210, 216–217, 220 Netflix, 344 New Line Cinema, 58 New York Stock Exchange, 493 Newport News Shipbuilding, 13 Nextel, 157 Nike, 149, 174, 299, 329–330 Nissan, 60, 257, 443 Nokia, 137, 145, 222, 399 Nordstrom Inc., 365–366 Nortel Networks, 183, 343 Northrup Grumman Newport News, 13, 383 Northwest Airlines, 455 Norwest, 156 Novartis, 209 Novell, 328 Nucor, 66 NUMMI, 409 O Ogilvy & Mather, 141–142, 213 Oksuka Pharmaceutical Company, 409 Olive Garden, 288 Olmec Corporation, 187 Omega Electronics, Inc., 165–167 Omnicom Group, 321 Omron, 386 Oracle Corporation, 94, 211, 366, 419 Orange SA, 137 Oregon Brewers Guild, 179 Ortho Pharmaceuticals, 106 Oshkosh Truck Company, 257 Oticon Holding A/S, 30 Owens Corning, 346 Oxford Plastics Company, 195–196 P Pacific Edge Software, 370 Paramount Pictures, 66–67, 452–453 P.B. Slices, 412 PeopleSoft Inc., 94, 366 PepsiCo. Inc., 106, 220, 330, 443, 468 Perdue AgriRecycle, 48 Perdue Farms Inc., 39, 41–49 Pfizer Inc., 179, 210, 412 Philips Corporation, 409 Philips NV, 230–231 Piper Alpha, 252 Pitney Bowes Credit Corporation (PBCC), 304, 370–371 Planters Peanuts, 96 PPG Industries, 381 Pratt & Whitney, 84 Pret A Manger, 262–263 Pricewaterhouse-Coopers, 338, 484 Princeton, 140 Printronix, 251 Procter & Gamble (P&G), 110, 174, 178, 182, 206, 212, 224, 226, 230, 254, 276, 306, 321–322, 351, 399, 402, 414–415 Progressive Casualty Insurance Company, 113–114, 261, 287, 298 Prudential plc, 211 Publicis Groupe, 321 PulseNet, 310 Puma, 65 Purafil, 209–210 Purvis Farms, 41 Q Quaker Oats, 416 QuikTrip, 31 Quizno’s, 187 R RCA, 412 Reynolds Aluminum Company, 139 Rhodes Industries (RI), 236 Ricoh, 4 Ritz-Carlton Hotels, 261, 346 Robex Resources Inc., 211 Rockford Health Systems, 485 Rockwell Automation, 171, 253 Rockwell Collins, 248 Rolling Stones Inc., 6–7 Rowe Furniture Company, 152–153 Royal Dutch/Shell, 154, 210, 326 Royal Philips Electronics, 118 Rubbermaid, 178 Russell Stover, 416 Ryanair, 64–65, 138 S S. C. Johnson Company, 330 Safeway, 61 Saks Fifth Avenue, 389 Salisbury State University, 39, 42 Samsung Electronics, 7, 137, 209 Saturn, 172 Salvation Army, The, 11, 337–338 SBC Communications, 157, 173 Scandic Hotels, 380 Schering-Plough, 159, 188 SDC (Secure Digital Container) AG, 186 Shazam, 185–186, 330 Shell Oil, 154, 210, 326 Shenandoah Farms, 41 Shenandoah Life Insurance Company, 405 Shenandoah Valley Poultry Company, 41 Shoe Corporation of Illinois (SCI), 432 Short Brothers, 159 Siebel Systems, 368 Siemens AG, 95, 137, 210, 220, 251 Simpson Industries, 390–391 Sony Connect, 223 Sony Corp., 7, 67, 69, 107, 118, 174, 210, 222–223, 225, 493 Sony Pictures Entertainment, 493 Southwest Airlines, 138, 146, 342, 455 Sprint, 7, 157, 210 SPS, 299 St. Luke’s Communications Ltd, 342, 428 Standard Brands, 351 Starbucks Coffee, 11, 55–56, 64, 400, 404, 451 State Farm, 58, 59, 287 Steelcase Corp, 361 Steinway & Sons, 264 Studebaker, 184 Suburban Corrugated Box Co., 304 Subway, 187, 278–279 Süddeutsche Zeitung, 141 Sun Microsystems, 178, 183, 389 Sun Petroleum Products Corporation (SPPC), 120–121 Sunflower Incorporated, 351 Swissair, 138 T Taco Bell, 262, 484 Target, 66, 127, 157, 173, 444 Techknits, Inc., 253 Technological Products, 165 TechTarget, 370 Telecom France, 210 Tenet Healthcare, 498 Tesco.com, 308–309, 359 Texas Instruments (TI), 384, 410 Thomson Corporation, 78 3Com Corporation, 347 3M Corporation, 60, 296, 337, 365, 368, 399–400, 407, 410–411, 472 Time Incorporated, 412 Time Warner, 323, 389 TiVo Inc., 118–119, 142 Tommy Hilfiger clothing, 64 TopDog Software, 235–236 Toshiba, 118, 152 Tower Records, 137 Toyota Motor Corporation, 60, 141, 180, 208–209, 255, 321, 399, 404, 409, 414 Toys “R” Us, 174, 387, 455 Transmatic Manufacturing Co., 208 Travelers, 324 Tupperware Corp., 444, 504 Tyco International, 419 U Ugli Orange, 199 Unilever, 110, 210, 230 United Air Lines, 138 United Parcel Service (UPS), 12, 22, 246, 333–334, 339, 404, 409 Universal Pictures, 467 Unocal, 149 U.S. Airways, 138 USA Technologies Inc., 158 USX, 506 V Vanguard, 261 Van’s Aircraft, 254 Verizon Communications, 148, 157, 184, 294 Versace, 157 Viacom Entertainment Group, 453 Virgin Atlantic Airways, 322 Virgin Digital, 462 Virginia Company, 12 Volkswagen, 183, 222, 245 Volvo, 141, 276 W W. L. Gore & Associates, Inc., 21–22, 411, 415 Wal-Mart, 21–23, 47, 61, 64, 66, 127, 138, 144–145, 156–157, 159–160, 178, 184, 189–190, 195, 210, 212, 220, 226, 293, 298, 306, 321–322, 325–326, 337, 359, 365, 389, 467, 469, 498 612 Corporate Name Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Walker Research, 377 Walt Disney Company, 364 Warner-Lambert, 179, 210 Weber, 333 Wegmans Food Markets, 60–61, 139, 369 Wells Fargo Bank, 156, 346 Wendover, 100 Wendy’s, 187 Western Railroad, 91 Weyerhaeuser, 208, 299 Wheeling-Pittsburgh Steel Corp., 506 Wherehouse, 137 Whirlpool, 148, 180, 442 Wienerberger Baustoffindustrie AG, 141 Windsock, Inc., 352–353 Wipro Ltd., 7, 208 Wizard Software Company, 98–99 Wood Flooring International (WFI), 288 Woolworth, 184 WorldCom, 161, 189, 343, 380, 384, 419 WPP Group, 321 WuXi Pharmatech, 140 Wyeth, 159 X X-Rite Inc., 421–422 Xerox Corporation, 3–6, 10, 12, 15–17, 24, 31, 67, 107, 350, 380, 493, 506 Y Yahoo!, 223, 462, 505 Z Ziff-Davis, 409 Corporate Name Index 613 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Subject Index 614 A Absorption, 497 Abu Ghraib prison, abuses at, 336 Acceptance, 425 Achieving competitive advantage, 416–417 Acquisition, 156 Adaptability culture, 368 Adaptive versus nonadaptive corporate cultures, exhibit, 374 Administrative principles, 25–26 Adoption, 406 Advanced manufacturing technology, 253 Adversaries to partners, 180–183 Advocate, 410 Agile manufacturing, 253 Ambidextrous approach, 407–408 Authority, 489 Authorization, 459 Automated teller machines (ATMs), 274 B Balance sheet, 294 Balanced scorecard, 296–298, 312 major perspectives of the, exhibit, 297 Bargaining, 459 Barriers to change, 426 Bayesian statistics, 454 Benchmarking, 192, 296 Better decision making, 226 Blinded stage, 344, 346 Blogs, 141 Boeing 787, 415 Bootlegging, 411 Bottom line, 295 Boundary spanning, 17, 413–414 roles, 148 Bounded rationality perspective, 448 constraints and tradeoffs, 449–451 role of intuition, 451–453 Budget, 294 Buffering roles, 147 Bureaucracy, 26, 332–333 Weber’s dimensions of, exhibit, 332 Bureaucracy in changing world, 335 flexibility, innovation, organizing temporary systems for, 336–337 other approaches to reducing, 337–339 Bureaucratic control, 339–340, 349 Bureaucratic culture, 369–370 Bureaucratic organizations, 26 Burox, 3–4 Business intelligence, 148, 289 Business process indicators, 298 Business process reengineering, 113 C CAD. See Computer-aided design (CAD) CAM. See Computer-aided manufacturing (CAM) Capital-intensive, service firms, 260 Carnegie model, 453, 456–459, 463, 467 choice processes in the, exhibit, 457 of decision making, 500 Centralization, 334 Centralized decision making, 104 Ceremonies, 363–365 Chaebol, 211 Chain of command, 100 Change elements for successful, 405–407 process, 405 stages of commitment to, exhibit, 425 Change agent, 410 Change leaders, 426 Change, strategic role of incremental versus radical change, 400–402 strategic types of change, 402–405 Change, strategies for implementing, 424 barriers to change, 426 leadership for change, 425–426 techniques for implementation, 426–429 Chaos theory, 27 Charismatic authority, 340 Clan control, 341–343, 349 Clan culture, 369 Closed system, 14 Coalition, 456 Code of ethics, 384 Coercive forces, 191–192 Coercive power, 489 Collaborative networks, 178 adversaries to partners, 180–183 why collaboration, 179 Collective bargaining, 507 Columbia space shuttle disaster, 336, 467 Commitment, 426 Communication and coordination, 268 Companies without walls, 416 Comparison of organizational characteristics associated with mass production and flexible manufacturing systems, exhibit, 259 Competing values model, 75 Competition, 484 Competitive intelligence (CI), 148 Complex, stable environment, 145 Complex, unstable environment, 145 Computer-aided craftsmanship, 257 Computer-aided design (CAD), 254 Computer-aided manufacturing (CAM), 254 Computer simulations, 454 Computer-integrated manufacturing, 253 Concurrent engineering, 416 Configuration and structural characteristics of service organizations versus product organizations, exhibit, 262 Confrontation, 506 Consortia, 211 Constraints and tradeoffs, 449–451 Constraints and tradeoffs during nonprogrammed decision making, exhibit, 449 Contemporary applications flexible manufacturing systems, 253–254 lean manufacturing, 254–257 performance and structural implications, 257–258 Contemporary organization design, 27–28 Contextual dimensions of organization design, 17, 21–22 Contingency, 27 Contingency decision-making framework contingency framework, 468–470 problem consensus, 467–468 technical knowledge about solutions, 468 Contingency effectiveness approaches, 70 goal approach, 71–73 internal process approach, 74–75 measurement of, exhibit, 71 resource-based approach, 73–74 Contingency framework, 468–470 for using decision models, exhibit, 469 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Contingency framework for environmental uncertainty and organizational responses, exhibit, 155 Continuous improvement, 399 Continuous-process production, 249 Control mechanisms, 350 Conversion rate, 295 Cooptation, 158 Coordination and control, cultural differences in national value systems, 227 three national approaches to coordination and control, 227–230 Coordination and control, three national approaches to, 227 European firms’ decentralized approach, 229 Japanese companies centralized coordination, 228–229 United States coordination and control formalization, 229–230 Coordination roles, expanded, 225–226 Core organization manufacturing technology manufacturing firms, 248–250 performance, 250–253 strategy, 250–253 technology, 250–253 Core organization service technology designing the service organization, 262–263 service firms, 259–260 Core technology, 246 Core transformation process for a manufacturing company, exhibit, 246 Corporate culture and ethics in a global environment, 386–387 Corporate Culture and Performance, 372 Corporate entrepreneurship, 410–411 Corrugated system in action, 305 Cost savings, 226 Council on Economic Priorities Accreditation Agency, 387 Country managers, 226 Craft technologies, 265 Creative departments, 409 Creativity, 405 Crisis stage, 345 Cultural Assessment Process (CAP), 372 Culture, 361 emergence and purpose of, 361–363 interpreting, 363–367 levels of corporate, exhibit, 362 Culture and ethics, how leaders shape formal structure and systems, 382–385 values-based leadership, 381–382 Culture change forces for, 420 organization development culture change interventions, 422–423 Culture changes, 404 Culture strength, 370–371 Customer relationship management (CRM), 235, 306 Customer service indicators, 297–298 Customized output, 261 D Data, 301 Data mining, 290 Data warehousing, 289 Decentralization, 267 Decentralized decision making, 93, 104 Decentralized organizational structures, 310 Decision interrupts, 458 Decision learning, 472 Decision making and control, information for balanced scorecard, 296–298 feedback control model, 293 management control systems, 293–296 organizational decisionmaking systems, 291–293 Decision making in today’s environment, exhibit, 444 Decision mistakes and learning, 472 Decision process when problem identification and problem solution are uncertain, exhibit, 463 Decision support system (DSS), 293 Defender strategy, 66–67 Department design, 266 communication and coordination, 268 decentralization, 267 formalization, 267 span of control, 268 worker skill level, 267–268 Departmental grouping options divisional grouping, 100 functional grouping, 100 horizontal grouping, 102 multifocused grouping, 100 virtual network grouping, 102 Design, 459 Designing the service organization, 262–263 Desktop search, 403 DIAD (Delivery Information Acquisition Device), 333, 404 Diagnosis, 459 Differences between large and small organizations, exhibit, 323 Differences between manufacturing and service technologies, exhibit, 260 Differences in goals and orientations among organizational departments, exhibit, 150 Differentiation, 149–151 strategy, 64 Digital downloading, 344 Digital workplace, 9 Dilemmas of large (organization) size, 322–326 big-company/small-company hybrid, 324–326 large, 322–323 small, 323–324 Direct interlock, 158 Disclosure mechanisms, 383–384 Dissolution stage, 345 Distributive justice, 378 Diversity, 9, 421 Division of labor in the ambidextrous organization, exhibit, 408 Divisional organization structure, 104–107 Divisional structure, 269 DMAIC (Define, Measure, Analyze, Improve, and Control), 296 Domestic hybrid structure with international division, exhibit, 214 Domestic stage of international development, 209 Dual-authority structure in a matrix organization, exhibit, 109 Dual-core approach administrative core, 417–418 organization change, exhibit, 418 technical core, 417–418 E E-business organization design, 307–309 Economic conditions, 140 Economies of scale, 207 Economies of scope, 207–208 Effect of ten mega-mergers on shareholder wealth, exhibit, 324 Effectiveness, 22, 70 Efficiency, 22, 70 Efficient performance versus learning organization competitive to collaborative strategy, 31 formal control systems to shared information, 30–31 rigid to adaptive culture, 31–32 routine tasks to empowered roles, 30 vertical to horizontal structure, 28–30 Element in the population ecology model of organizations, exhibit, 185 Engineering technologies, 265 Enhanced network structures, 311 Enterprise resource planning (ERP), 299–300 Environmental decline (competition), 344 Environmental domain general environment, 140–141 international context, 141–142 task environment, 138–140 Environmental domain, controlling the change of domain, 159 illegitimate activities, 160–161 political activity, 159–160 regulation, 159–160 trade associations, 160 Environmental resources, controlling controlling the environmental domain, 159–161 establishing interorganizational linkages, 156–159 organization-environment integrative framework, 161 Environmental uncertainty, 142 framework, 145–146 and organizational integrators, exhibit, 151 Simple–complex dimension, 143–144 Stable–unstable dimension, 144–145 Environmental uncertainty, adapting to buffering and boundary spanning, 147–149 differentiation, 149–151 forecasting, 152–154 integration, 149–151 organic versus mechanistic management processes, 151–152 planning, 152–154 positions and departments, 147 responsiveness, 152–154 Escalating Commitment, 473 Subject Index 615 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Essential leadership behaviors, 325 Establishing interorganizational linkages advertising, 158–159 cooptation, 158 executive recruitment, 158 formal strategic alliances, 157–158 interlocking directorates, 158 ownership, 156–157 public relations, 158–159 Ethical dilemma, 377 Ethical framework, 378 Ethical values and social responsibility does it pay to be good, 377–378 managerial ethics and social responsibility, 375–377 sources of individual ethical principles, 374–375 Ethical values in organizations, sources of external stakeholders, 380–381 organizational culture, 379 organizational systems, 379–380 personal ethics, 378 Ethics, 374 Ethics committee, 383 Ethics hotlines, 383 Ethics officer, 383 European Production Task Force, 224 European Union (EU) environmental and consumer protection legislation, 140 Evolution, 184 Evolution of organizational applications of IT, exhibit, 290 Example of an ERP network, exhibit, 300 Excessive focus on costs, 426 Execution, 325 Executive dashboards, 294 Executive information system (EIS), 292 Expert power, 489 Explicit knowledge, 301 External adaptation, 362 External stakeholders, 380–381 Extranet, 304 F Factors of production, 208 Factory of the future, 253 Failure to perceive benefits, 426 Famous innovation failures, 415 Fast cycle teams, 416 Faulty action stage, 345–346 Fear of loss, 426 Federal Aviation Administration, 372 Federal Bureau of Investigation (FBI), 24 Feedback control model, 293 Financial perspective, 297 Financial resources, 141 Five basic parts of an organization, exhibit, 16 Flexible manufacturing systems (FMS), 253 FMS. See Flexible manufacturing systems (FMS) Focus strategy, 65 Focused differentiation, 63 Focused low cost, 63 Food and Drug Administration (FDA), 188 Forces driving the need for major organizational change, exhibit, 401 Forces for culture change diversity, 421 horizontal organizing, 420 learning organization, 421–422 reengineering, 420 Forces that shape managerial ethics, exhibit, 379 Forecasting, 152–154 Formal structure and systems, 382 code of ethics, 384 disclosure mechanisms, 383–384 structure, 383 training programs, 384–385 Formalization, 267, 334, 337 Four stages of international evolution, exhibit, 209 Four types of change provide a strategic competitive wedge, exhibit, 404 Framework, 145–146 Framework for assessing environmental uncertainty, exhibit, 146 Framework for department technologies, exhibit, 265 Framework for this book, exhibit, 35 Framework of interoganizational relationships, exhibit, 176 Functional, divisional, and geographical organization designs divisional structure, 104–107 functional structure, 102–104 functional structure with horizontal linkages, 104 geographical structure, 107–108 Functional managers, 225 Functional matrix, 110 Functional organization structure, 102–104 G Garbage can model, 453, 467 consequences, 464–467 organized anarchy, 463 streams of events, 464 General organization environment, 140–141 Generalist strategy, 187 Geographical organization structure, 107–108 Geographical structure for Apple Computer, exhibit, 108 Global arena, entering global expansion through international strategic alliances, 210–211 motivations for global expansion, 206–209 stages of international development, 209–210 Global Body Line System, 399 Global capabilities, building global coordination mechanisms, 224–226 global organizational challenge, 220–224 Global companies, 210 Global coordination mechanisms expanded coordination roles, 225–226 global teams, 224–225 headquarters planning, 225 Global economy as reflected in the Fortune Global 500, exhibit, 207 Global expansion motivations for, 206–209 through international strategic alliances, 210–211 Global geographical division structure, 215–217 Global hybrid, 220 “Global Leadership 2020” management program, 386 Global Leadership and Organizational Behavior Effectiveness (Project GLOBE), 227 Global matrix structure, 218–220 Global organizational challenge, 220 exhibit, 221 increased complexity and differentiation, 221–222 innovation, 223–224 need for integration, 222–223 transfer of knowledge, 223–224 Global product division structure, 215 Global stage of international development, 210 Global standardization, 211 Global teams, 224–225 Globalization strategy, 211–212 Goal approach, 70 indicators, 71 usefulness, 71–73 Goals, 62 Goodwill, 360 Government sector, 140 Greater revenues, 226 Gross domestic product (GDP), 221, 253 H Hawthorne studies, 26 Headquarters planning, 225 High-velocity environments, 471–472 Horizontal coordination model, 413, 415–416 boundary spanning, 413–414 for new product innovations, exhibit, 414 specialization, 413 Horizontal information linkages direct contact, 96 full-time integrator, 96–97 information systems, 95 task forces, 96 teams, 97–99 Horizontal linkage, 95 model, 416 Horizontal organization structure, 113 characteristics, 114–116 exhibit, 115 strengths, 116–117 strengths, exhibit, 116 weaknesses, 116–117 weaknesses, exhibit, 116 Horizontal organizing, 420 Horizontal relationships, 306 Horizontal sources of power power sources, 495–498 strategic contingencies, 495 Human relations emphasis, 77 Human resources sector, 140 Hurricane Katrina, 322 Hybrid, 100 Hybrid organization structure, 120–122 I I ? Huckabees, 466 Idea champions, 410 Idea incubator, 409 Ideas, 405 Illustration of independent streams of events in the garbage can model of decision making, exhibit, 465 Imitation, 470 Immigration and Naturalization Service (INS), 48 Implementation, 406 Improved horizontal coordination, 310 Improved interorganizational relationships, 310–311 In-house division, 307 Inaction stage, 344, 346 Incident command system (ICS), 336, 348 Incident commander, 337 Income statement, 294 Increased innovation, 226 Incremental change, 400 Incremental decision process model, 453, 467 development phase, 459 616 Subject Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: dynamic factors, 459–462 exhibit, 460 identification phase, 458 selection phase, 459 Incremental process model, 463 Incremental versus radical change, 400–402 Indirect interlock, 158 Individual decision making bounded rationality perspective, 448–453 rational approach, 445–448 Individual versus organizational power, 489 Industry sector, 138 Information, 301 Information linkages, 306 Information-processing perspective on structure, 91–92 horizontal information linkages, 95–99 vertical information linkages, 93–95 Information reporting system, 291 Information systems for managerial control and decision making, exhibit, 292 Information technology evolution, 289–291 Initiative for Software Choice (ISC), 160 Inspiration, 470 Institutional environment, 188 Institutional isomorphism, 191 Institutional perspective, 188 Institutional similarity, 190 coercive forces, 192 mimetic forces, 191–192 normative forces, 192–193 Institutional view, 190 Institutionalism, 188–189 institutional similarity, 190–193 institutional view, 190 organization design, 190 Institutionalization, 426 Intangible output, 259 Integrated effectiveness model, 75 effectiveness values for two organizations, exhibit, 77 four approaches to effectiveness values, exhibit, 76 indicators, 76–78 usefulness, 78–79 Integrated enterprise, 305–306 exhibit, 306 Integration, 149–151, 222 Integration of bricks and clicks, 307 range of strategies for, exhibit, 308 Intellectual capital, 301 Interaction of contextual and structural dimensions of organization design, exhibit, 18 Interdepartmental activities, 423 Interdependence, 230 Intergroup conflict in organizations rational versus political model, 487–488 sources of conflict, 484–487 Interlocking directorate, 158 Internal integration, 362 Internal process approach, 70 indicators, 74 usefulness, 74–75 Internal process emphasis, 76–77 International business development group, 217 International division, 214–215 International sector, 140 International stage of international development, 209 Interorganizational framework, 176–177 Interorganizational relationships, 172 changing characteristics of, exhibit, 180 Interpreting culture ceremonies, 363–365 language, 366–367 rites, 363–365 stories, 365 symbols, 365–366 Intranets, 298, 312 Intrapreneur, 410 Intuitive decision making, 451 iPod, 223, 329, 399, 402, 404 ISO 9000 quality-auditing system, 387 Isomorphism, 190 iTunes, 223, 402, 462 J J. D. Powers’ 2005 rankings of consumer satisfaction, 372 Job design, 274–275 Job enlargement, 274 Job enrichment, 274 Job rotation, 274 Job simplification, 274 Joint optimization, 275 Joint ventures, 158 Judgment, 459 K Kaizen, 399 Key characteristics of traditional versus emerging interorganizational relationships, exhibit, 311 Knowledge, 301 Knowledge management, 300–303 systems, 312 two approaches to, exhibit, 303 L Labor- and knowledge-intensive, service firms, 260 Labor–management teams, 506 Lack of coordination and cooperation, 426 Ladder of mechanisms for horizontal linkage and coordination, exhibit, 99 Language, 366 Large-batch production, 249 Large group intervention, 423 Leadership for change, 425–426 Lean manufacturing, 254–257 Learning organization, 28, 421–422 combining the incremental process and Carnegie models, 462–463 garbage can model, 463–467 Legitimacy, 189 Legitimate power, 489–490 Levels of analysis in organizations, 33–34 exhibit, 34 Liaison role, 96 License agreements, 157 Life cycle development, stages of collectivity stage, 327–328 elaboration stage, 328–329 entrepreneurial stage, 326–327 formalization stage, 328 Linear programming, 454 Liquid Tide, 224, 226, 402, 415 Long-linked technology, 270 Low-cost leadership strategy, 64–65 Low-cost production factors, 208–209 M Major stakeholder groups and their expectations, exhibit, 23 Management changing role of, 174–176 Management champion, 411 Management control systems, 293–296 exhibit, 295 Management information system (MIS), 291 Management science approach, 453–455 Managerial ethics, 376 Managerial ethics and social responsibility, 375–377 Manufacturing firms, 248–250 Market control, 340–341, 349 Market sector, 140 Marketing-manufacturing areas of potential goal conflict, exhibit, 485 Mass customization, 256 Matrix, 100 Matrix organization structure, 108 conditions for the matrix, 109–110 strengths, 110–113 strengths, exhibit, 111 weaknesses, 110–113 weaknesses, exhibit, 111 Measuring dimensions of organizations, 38 Mechanical system design, exhibit, 29 Mechanistic and organic forms, exhibit, 152 Mediating technology, 269 Membrane-electron assemblies (MEAs), 411 Merger, 156 Meso theory, 34 Miles and Snow’s Strategy Typology, 63 analyzer, 67 defender, 66–67 prospector, 65–66 reactor, 67 Mimetic forces, 191–192 Mintzberg’s research, 458 Mission culture, 368–369 Mission statement, 58 Mixed structure, 220 Model to fit organization structure to international advantages, exhibit, 213 Modular organization structure, 117 Modular structures, 311 Multidomestic strategy, 211–212 Multinational stage of international development, 210 Munificence, 142 N NASDAQ, 346 National Association of Manufacturers, 160 National responsiveness, 211 National Tooling and Machining Association (NTMA), 160 National value systems, 227 Natural system design, exhibit, 29 Need, 406 Negotiating strategies, 507 Negotiation, 506 Network coordinator, 226 Networking, 298 New product success rate, 412 probability of, exhibit, 413 New products and services achieving competitive advantage, 416–417 horizontal coordination model, 413–416 reasons for new product success, 412–413 success rate, 412 New-venture fund, 410 Subject Index 617 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Niche, 184–185 Non-core departmental technology analyzability, 264 framework, 264–266 variety, 264 Non-core technology, 247 Nonprogrammed decisions, 444 Nonroutine technologies, 265 Normative forces, 191, 192–193 NTMA. See National Tooling and Machining Association (NTMA) O Obeya, 399, 414 Obtaining prior information, 497 Occupational Safety and Health Administration (OSHA), 48 Office Software Group, 106 Official goals, 58 Open systems, 14–15 emphasis, 76 Operative goals employee development, 60 innovation and change, 60 market, 60 overall performance, 59–60 productivity, 60–61 resources, 60 Organic versus mechanistic management processes, 151–152 Organization. See also Organizational and Organizations defined, 10–11 importance of, 12–14 perspectives on, 14–15 types of, 11–12 Organization chart illustrating hierarchy of authority, exhibit, 19 Organization chart sample, exhibit, 91 Organization design, 190 contingency factors affecting, exhibit, 69 how strategies affect, 67–68 IT impact on, 309–311 other factors affecting, 69 outcomes of strategy, exhibit, 68 pressures affecting, exhibit, 247 Organization design alternatives departmental grouping options, 100–102 reporting relationships, 100 required work activities, 99–100 Organization design and culture, 367 adaptability culture, 368 bureaucratic culture, 369–370 clan culture, 369 culture strength and organizational subcultures, 370–371 mission culture, 368–369 Organization design, dimensions of contextual dimensions, 17, 20–22 performance and effectiveness outcomes, 22–24 structural dimensions, 17–20 Organization design for implementing administrative change, 418–420 Organization design, strategic direction in, 56–58 top management role in, exhibit, 57 Organization development culture change interventions interdepartmental activities, 423 large group intervention, 423 team building, 423 Organization development (OD), 422, 429 approach, 507 Organization-environment integrative framework, 161 Organization size dilemmas of large size, 322–326 pressures for growth, 321–322 Organization structure, 76, 90–91 Organization theory, 34 current challenges, 6–10 topics, 6 Organization theory and design, evolution of contemporary design, 27–28 efficient performance vs learning organization, 28–32 historical perspectives, 25–26 Organizational Assessment Survey, 373 Organizational atrophy, 343 Organizational behavior, 34 Organizational bureaucracy and control, 331 bureaucracy, 332–333 size and structural control, 334–335 Organizational change, 405 Organizational characteristics during the life cycle, 330–331 four stages, exhibit, 331 Organizational configuration administrative support, 16–17 management, 17 technical core, 16 technical support, 16 Organizational control strategies bureaucratic control, 339–340 clan control, 341–343 market control, 340–341 three, exhibit, 339 Organizational culture, 371–373, 379 emergence and purpose of culture, 361–363 interpreting culture, 363–367 Organizational decision making, 443–445 Carnegie model, 456–458 incremental decision process model, 458–462 management science approach, 453–455 Organizational decision-making systems, 291–293 Organizational decline and downsizing definition and causes, 343–344 downsizing implementation, 346–348 model of decline stages, 344–346 Organizational departments differentiate to meet needs of subenvironments, exhibit, 150 Organizational differentiation, 149 Organizational domain, 138 Organizational ecosystems, 172 changing role of management, 174–176 exhibit, 175 interorganizational framework, 176–177 is competition dead, 173–174 Organizational effectiveness, assessing, 70 Organizational environment, 138 exhibit, 139 Organizational form, 184–185 Organizational goal, 55 Organizational innovation, 405 Organizational learning, 371–373 Organizational life cycle characteristics during the life cycle, 330–331 exhibit, 327 stages of life cycle development, 326–330 Organizational performance, 371–373 Organizational politics, 499 Organizational purpose goals, importance of, 62 mission, 58 operative goals, 59–61 Organizational responses to uncertainty, 154 Organizational systems, 379–380 Outsourcing, 117 P Parallel approach, 416 Percentage of personnel allocated to administrative and support activities, exhibit, 335 Performance, 250–253 and structural implications, 257–258 Performance and effectiveness outcomes, 22–24 Perrow’s framework, 277 model, 264 technology framework, 266 Personal ethics, 378 Personal liberty framework, 378 Personnel ratios, 334 Pharmaceutical Research and Manufacturers of America, 160 Planning, 152–154 PLM. See Product life-cycle management (PLM) Point–counterpoint, 472 Political activity, three domains of, 500 Political model, 487 Political processes in organizations, 498 definition, 499 when is political activity used, 500 Political tactics for using power, 502–505 Politics, 499 Pooled interdependence, 269, 486 Population, 183 Population ecology, 183 niche, 184–185 organizational form, 184–185 process of ecological change, 185–187 strategies for survival, 187–188 Population-ecology perspective, 183 Porter’s competitive strategies, 63 differentiation, 64 exhibit, 63 focus, 65 low-cost leadership, 64–65 Positions and departments, 147 Power, 488 Power and organizations, 488 horizontal sources of power, 494–498 individual versus organizational power, 489 power versus authority, 489–490 vertical sources of power, 490–494 Power and political tactics in organizations, exhibit, 501 618 Subject Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Power distance, 227 Power sources, 495 centrality, 497 coping with uncertainty, 497–498 dependency, 496 financial resources, 496–497 nonsubstitutability, 497 Power strategies, 178 Power versus authority, 489–490 Preparation, 425 Pressures for (organization) growth, 321–322 Prevention, 497 Primary responsibility of top management, 56 Problem consensus, 467–468 Problem identification stage, 443 Problem solution, 443 Problemistic search, 456 Process, 113 Process of ecological change, 187 retention, 186 selection, 185 variation, 185 Product and service changes, 404 Product champion, 411 Product life-cycle management (PLM), 254 Product matrix, 110 Product structure, 104 Professional partnership, 338 Professionalism, 337 Profit and loss statement (P&L), 294 Programmed decisions, 444 Project GLOBE (Global Leadership and Organizational Behavior Effectiveness), 227 Project SAPPHO, 413 Q Quality of service, 260 R Radical change, 401 incremental versus, exhibit, 402 Radio-frequency identification (RFID), 253 Ratings of power among departments in industrial firms, exhibit, 494 Rational approach, 445–448 Rational goal emphasis, 76 Rational-legal authority, 340 Rational model, 487 Rational versus political model, 487–488 Raw materials sector, 139 Reactor strategy, 67 Reasons for new product success, 412–413 Reciprocal interdependence, 271, 487 Recognition, 458 Reengineering, 113, 420 Referent power, 489 Relationship between environmental characteristics and organizational actions, exhibit, 162 Relationship between technical complexity and structural characteristics, exhibit, 250 Relationship between the rule of law and ethical standards, exhibit, 376 Relationship of department technology to structural and management characteristics, exhibit, 267 Relationship of environment and strategy to corporate culture, exhibit, 367 Relationship of flexible manufacturing technology to traditional technologies, exhibit, 258 Relationship of organization design to efficiency versus learning outcomes, exhibit, 93 Relationship of structure to organization’s need for efficiency versus learning, exhibit, 123 Reputation Quotient study, 189 Resource-based approach, 70 indicators, 73 usefulness, 73–74 Resource dependence, 154–156 power strategies, 178 resource strategies, 177–178 Resource strategies, 177–178 Resources, 407 Responsiveness, 152–154 Retail Industry Leaders Association, 160 Retention, 186 Return on net assets (RONA), 196 Reward power, 489 Rites, 363–365 Rites of enhancement, 363 Rites of integration, 363 Rites of passage, 363 Rites of renewal, 363 Role of intuition, 451–453 Routine technologies, 265 Routine versus nonroutine technology, 266 Rule of law, 375 S S&P 500, 493 SA 8000 audits, 387 Satisficing, 456 Scientific management, 14, 25–26 Search, 459 Securities and Exchange Commission (SEC), 3, 380 Selection, 184–185 Self-control, 342 Sequence of elements for successful change, exhibit, 406 Sequential interdependence, 270, 486 Service firms definition, 259–261 new directions in services, 261 Service technology, 259 Shoreham Nuclear Power Plant, 473 Simple, stable environment, 145 Simple, unstable environment, 145 Simple–complex dimension, 143–144 Simplified feedback control model, exhibit, 294 Simultaneous coupling departments, 416 Simultaneous production and consumption, 259–260 Site performance data, 295 Six Sigma goals, 296 quality programs, 192 Size and structural control of organizational bureaucracy, 334–335 Skunkworks, 410 Small-batch production, 248 Smaller organizations, 309–310 Smart factories, 253 Social Accountability 8000 (SA 8000), 387 Social audit, 387 Social capital, 360 Social responsibility, 376 Social system, 275 Society for Human Resource Management, 376 Society of Competitive Intelligence Professionals, 148 Sociocultural sector, 140 Sociotechnical systems, 275–276 model, exhibit, 275 Sources of conflict differentiation, 485–486 goal incompatibility, 484–485 limited resources, 487 task interdependence, 486–487 Sources of conflict and use of rational versus political model, exhibit, 488 Sources of individual ethical principles, 374–375 Sources of individual ethical principles and actions, exhibit, 375 Span of control, 268 Special decision circumstances decision mistakes and learning, 472 escalating commitment, 473 high-velocity environments, 471–472 Specialist strategy, 187 Specialization, 413 Spin-off, 308–309 Stable–unstable dimension, 144–145 Stages of decline and the widening performance gap, exhibit, 345 Stages of international development, 209–210 Stakeholder approach, 23 State Farm’s mission statement, exhibit, 59 Stateless corporations, 210 Steps in the rational approach to decision making, exhibit, 446 Stickiness, 295 Stories, 365 Strategic business units, 104 Strategic contingencies, 495 Strategic contingencies that influence horizontal power among departments, exhibit, 495 Strategic partnership, 309 Strategic types of change, 402–405 Strategies for survival, 187–188 Strategy, 62, 250–253 Strategy and design, framework for selecting, 62 Miles and Snow’s strategy typology, 63, 65–67 organization design, contingency factors affecting, exhibit, 69 organization design, how strategies affect, 67–68 organization design, other factors affecting, 69 organization design, outcomes of strategy, exhibit, 68 Porter competitive strategies, 63–65 Strategy and structure change, 404 dual-core approach, 417–418 organization design for implementing administrative change, 418–420 Strengthening external relationships, 304 customer relationship management (CRM), 307 e-business organization design, 307–309 integrated enterprise, 305–306 Subject Index 619 Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to: Strengthening internal coordination enterprise resource planning (ERP), 299–300 intranets, 298–299 knowledge management, 300–303 Strengths and weaknesses of divisional organization structure, exhibit, 105 Strengths and weaknesses of functional organization structure, exhibit, 103 Structural design, applications of structural alignment, 122–123 symptoms of structural deficiency, 123–124 Structural design, options for grouping employees into departments, exhibit, 101 Structural dimensions of organization design centralization, 18 formalization, 17–18 hierarchy of authority, 18 personnel ratios, 20 professionalism, 20 specialization, 18 Structural framework, 90 Structural implications, 272–273 Structural priority, 271–272 Structure, 383 Structure, designing to fit global strategy global geographical structure, 215–217 global matrix structure, 218–220 global product structure, 215 international division, 214–215 model for global vs local opportunities, 211–214 Struggle for existence, 187 Subcultures, 370–371 Subsystems, 15 Supplier arrangements, 157 Supply chain management, 305 Sustainable development, 380 Switching structures, 409 Symbols, 365 System, 15 T Tacit knowledge, 301 Tactics for enhancing collaboration, 505–508 Tactics for increasing power, 501–502 Task, 30 Task environment, 138, 143 Team building, 423 Team focus, 427 Teams, 97 Technical champion, 411 Technical complexity, 248 Technical knowledge, 468 Technical system, 275 Techniques for encouraging technology change, 408 corporate entrepreneurship, 410–411 creative departments, 409 switching structures, 409 venture teams, 410 Techniques for implementation of change, 426–429 Technology, 250–253 Technology change, 403 ambidextrous approach, 407–408 techniques for encouraging, 408–411 Technology, impact of on job design job design, 274–275 sociotechnical systems, 275–276 Terrorist attacks (2001), 336 Technology sector, 141 The Reengineering Revolution, 420 Thompson’s classification of interdependence and management implications, exhibit, 270 Three mechanisms for institutional adaptation, exhibit, 191 Time-based competition, 416 Traditional authority, 340 Training programs, 384–385 Transaction processing systems (TPS), 289 Transformational leadership, 425 Transnational model, 220 of organization, 230–233 Transnational teams, 224 Two hybrid structures, exhibit, 121 Typology of organization rites and their social consequences, exhibit, 363 U Uncertainty avoidance, 227, 426 Using power, politics, and collaboration, 500 political tactics for using power, 502–505 tactics for enhancing collaboration, 505–508 tactics for increasing power, 501–502 Utilitarian theory, 378 V Values-based leadership, 381–382 Variation, 185 Venture teams, 410 Vertical information linkages hierarchical referral, 93 rules and plans, 94 vertical information system, 94–95 Vertical information systems, 94 Vertical linkages, 93 Vertical sources of power control of decision premises, 491–492 formal position, 490–491 information, 491–492 network centrality, 492–493 people, 493–494 resources, 491 Virtual cross-functional teams, 98 Virtual network organization structure how the structure works, 117–118 strengths, 118–120 strengths, exhibit, 119 weaknesses, 118–120 weaknesses, exhibit, 119 Virtual organizations, 211, 311 Virtual team, 98 Vulnerability, 344 W Web logs, 141, 301 Whistle-blowers, 383 Whistle-blowing, 383–384 Wikis, 301 Windows Group, 106 Win–lose strategy, 507 Win–win strategy, 507 Woodward’s classification of 100 British firms according to their systems of production, exhibit, 249 Woodward’s research into manufacturing technology, 276 Worker Adjustment and Retraining Notification Act, 347 Worker skill level, 267–268 Workflow interdependence among departments structural implications, 272–273 structural priority, 271–272 types, 269–271 Workforce Transition Program, 347 Workforce 2020, 386 Workplace mediation, 507 World Economic Forum’s annual meeting, 300 World Trade Center attacks of September 2001, 319 620 Subject Index Copyright 2007 Thomson Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.