SOLUTIONS AT ALLENTOWN MATERIALS ELECTRONIC PRODUCTS DIVISION Created cross-functional project teams for new product development –Corporate OE specialists on team Marketing was formally named as integrating function, trained for the role by the OE Rogers and staff withdrew from product development projects, become Resource Allocation Team Training for Rogers in more directive management style Intergroup laboratory meetings were arranged for functional groups with worst relations Change in accounting and control –Make marketing a profit center and the plants cost centers –Get corporate to alter performance standard for EDP

IMPLEMENTATION ISSUES Complaints about teams doing everything –Slowed down decision-making Problems in accountability with decision-making decentralized to teams –Frustration on the part of executive team Complaints by other groups that Marketing was not up to the job –Best people should lead regardless of area Rogers commitment to the change program kept it on track With training and experience, the teams became more effective –Improved flow of new products –Improved relations among groups E.g., scientists became business-oriented Proposed changes in formal accounting/control systems not implemented Economy improved in 1994 and business picked up

Allentown Discussion Congruence model says strategic problems are due to misalignment of the organizational archiecture– poor fit to strategy, environment; poor alignment among parts of organization. Problem identification –Problem at gap between strategic goals and outcomes First stage –Falling sales –Missing growth targets Second stage –Slow product development– insufficient new products –Poor service & delivery –Poor morale Third stage –Conflict among functional groups around product development and service Root problem: poor relations among functional groups. This is a problem in formal organization. Formal organization is about grouping and linking. Problem of linking or coordination and finding consistent mechanisms Strategy Of corporation –Leverage capabilities in product development– technologies relating to glass– and manufacturing »Maturing industries means mktg now the critical capability –Niche with defense department EPD –Use capabilities in glass to get a foothold in consumer electronics and telecommunication »Initially manufacturing, shift to marketing competence »New products– small modifications –Lack of clarity, consensus on division goals »Relatively clear group goals

–Environment Corporation –Held to same performance standards as other divisions –Career tracks for EPD people –Strong culture of corporation –EPD decentralized– less tied to corporation –Different environment, but same structure Business conditions –Old (and still true for corporation) »Stable demand for products »Little pressure to develop products quickly »High margins »Low competition in their niche –New »Intense competition on price, quality, and delivery »Greater uncertainty »Short product life cycles »Fast product development cycles »Thin and declining margins –Is the stringent environment the cause of the problems? Or simply increases the pressure to integrate and align.

– Formal organization Formal structure –How much differentiation? »How many groups? How interdependent? »Different cultures and goals of divisions »Physical proximity: PD’s focus on process – under plants. PD’s relations with Manufacturing is good. Mktg located elsewhere. »Mnfg– slow, not risk-taking (more than usual) »Sales– dispersed. Close a deal. –How much integration »Structural mechanisms: »1. Hierarchy »2. Meetings »3. There was the decentralization to plant level--liaison »Nonstructural: »Corporate culture »Marketing as de facto but not formal lead strategic function– prod dev. »Power and status of manufacturing and product development »History & culture of corp »Manu as profit center –(former) decentralization of division Formal systems –Control system (accounting): Measurement and appraisal »Manufacturing as profit center– gives them club »Marketing as cost? center »Sales evaluated on volume; wants fast delivery to please clients. »People evaluated by functional bosses »Sales orientation of marketing

–People New management team brought on by Rogers Questionable competence of marketing –Formerly people in sales –Mktg people questing competence of sales Motivation of manufacturing people to rise in corporation Mktg people unmotivated to be coordinators (Moss) Rogers as division manager –A scientist, no a general manager –Contrast with Bennett who was an entrepreneur –Smart, may be able to learn »Overcame service problem »Took initiative consult Corporate OD –Informal Organization Culture/networks –Poor alignment between culture of corp with EPD strategy & org –Weak in division, strong in corporation –Not risk-taking in corpor or division (due to Bennett?) –Top team not a cohesive or natural group

–The product development process Reciprocal interdependence but independent input, assess viability of project. Meetings as a coordination mechanisms Rogers helpful but focused on technical issues; not mgt. meetings in Allentown each acctg period to coordinate.