For three people In particular, Mod IV also typified the challenges of working amid new pressures and demands. As director of HAVE Controls, one of the Building Controls Division’s four product areas, Linda Whitman was the senior marketing person for the Mod IV product line and had primary profit and loss responsibility for Mod IV. She could see the Impact a delay would have on her area’s performance, and she understood the pressing market need to have Mod IV contain attractive features. When she first became director of HAVE Controls in 1 986, she realized that marketing had to play a more active role in development of Mod IV.
Since then she had watched her fellow marketers on the Mod IV team work through problems and conflicts with engineers, and she knew some of the most difficult issues still had to be resolved. But addressing any issue required patience, persistence, and tact, and even then Linda often found herself torn. She had to make sure HAVE Controls met its projections, which required collaborating with engineering and manufacturing, both of which seemed at times overburdened and at times unresponsive. Larry Rodgers, lead design engineer on Mod IV, had been Involved In the Mod IV project for five years.
He could sense the pressure mounting both on the team and on the division as Mod IV encountered difficulties entering the final months of the project. Larry and six of the engineers he supervised had their hands full trying to reduce the noise the Mod IV motor was generating. He knew the marketers had concerns about Mod Ivy’s appeal to customers, but with Bib’s limited resources and its stress on fast development, he wondered how he could address himself to marketing’s concerns at this time.
Like many engineers at BCC, Larry understood the competitive and financial challenges BCC faced, but he wondered if others appreciated the depth and complexity of design work and engineering problems. Research Associate Joshua D. Marigolds prepared this case under the supervision of Professor Anne Donnelly as the basis for class discussion rather than to Illustrate either effective or Ineffective handling of an administrative situation. Figures In this case have been disguised. Call (617) 495-6117 or write the Publishing Division, Harvard Business School, Boston, MA 02163.
No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means? electronic, mechanical, photocopying, recording, or otherwise?without the permission of Harvard Business School. 1 This document is authorized for use only by Wing Chou in Project MGM taught by George Variations Case Western Reserve University from August 2014 to December 2014. 491-030 John Bailey, general manager of BCC, could all but hear the footsteps of competitors eager to grab business from his division.
Although he bristled at the thought of a delay and its effect on Bib’s ability to meet corporate financial targets,l he wanted to respect the team’s autonomy. John knew the team was grappling with several ribosome issues, and though he focused his attention on making sure the division met its objectives, he wanted to find ways to support the team as it addressed the problems before it. Building Controls Division Honeywell Building Controls Division (BCC) produced climate controls and systems for four market areas: HAVE, burners and boilers, lighting, and water products.
BCC employed 1250 people and recorded 1988 sales of more than $150 million. The division dealt with two types of customers, original equipment manufacturers (Moms) and trade customers. The Moms incorporated Honeywell products into their own reduces, which they in turn sold to the market. Trade customers sold Honeywell products directly to the market. BCC placed highest priority on the quality of its products, on the division’s flexibility, and on its response to customers.
The division’s profitability and return on investment?both well above industry averages?were points of pride. 1981 marked the first and only year in Honeywell history that its Residential and Building Controls Division lost money. Controls were Honeywell original business, and the shock of 1981 brought new management to this division, management determined to regain Honeywell competitive edge. As part of the recovery process, Honeywell split residential and building controls into two separate divisions, thus creating the Building Controls Division.
To end the days when people from engineering, manufacturing, and marketing/sales worked in different locations, a new building was constructed with enough room to house everyone. To integrate the three major functional areas, BCC introduced a series of changes that intertwined to create a new form of product development. BCC hoped to transform itself into an agile organization capable of outnumbering competitors through faster Product Development and the Controls Business
In the old system of product development, the product passed through each functional area in a sequence of discrete steps: marketers conceived of a product idea and passed it along to design engineers, who would design the product and pass the design to process engineers; process engineers determined how to make the product and then dropped the plans into the laps of the manufacturing engineers and the plants. At each stage in the sequence, people encountered problems created by work done at earlier stages.
Process engineers, for example, would discover they could not make what the design engineers had crafted. Product development thus became a game of “tossing the bear over the wall. ” When you completed your particular piece of the project, you tossed it over the wall to the next group, not caring what took place on 1 . A widely-cited economic model developed by McKinney and Company “calculates that going 50% over budget during development to get a product out on time reduces . .. Profits by only 4%. But staying on budget and getting to market six months late reduces profits by a third. (David Woodruff and Stephen Phillips, “A Smarter Way to Manufacture,” Business Week, April 30, 1990, p. 111 . See also Brian Domains, “How Managers Can Succeed Through Speed,” Fortune, February 13, 1989. ) 2 the other side. If you had problems with work done at previous stages, you made your changes and tossed the design back to the previous group for them to adjust their work. The process was slow and costly. Every change meant more time, higher cost, and heightened animosity between functional areas. But rapid changes in the controls business inspired the division to look for new approaches.
John Bailey explained: In the early sass the move to electronics and microelectronics was accelerating, and e were having a hard time dealing with that by using engineering and manufacturing techniques that had evolved over one-hundred years and were slighted toward a really slow-moving industry and slow-moving technology. To suddenly get into a cycle going from products that you could design and have on the line for thirty years, to three years life expectancy?well, we couldn’t do a development in three years. So there was a big need for change imposed on us by technology and by the new competitors that technology brought into the market. Layers, to at one point in the early sass we counted 160 competitors?150 of them ere little electric assembly shops, where a couple of engineers would get together, lay out a circuit board, stuff it, and start selling. A few of those competitors grew up, prospered, and became viable. They grew out of that change in technology. But it meant we had to change. We had to change for many reasons. We were coming out of a period when we weren’t profitable enough. We were changing because we were going from part of a division to a stand-alone division.
Our competitive environment was changing, technology was changing, and our customers were demanding a different set of requirements from us. So there was no alternative but to change. Parallel Development and Teams When BCC abandoned sequential development in the mid-sass, it embraced a new process called “parallel development. ” In this system, a core team of people assembled from the three critical functions?manufacturing, marketing/sales, and engineering?worked together to guide a project from the conceptual stage all the way through final production.
People still reported to their functional managers, who continued to supervise and evaluate all employees, and each functional area continued to perform its specialized role on the project; yet all areas now worked on he same project simultaneously. The core team guided and tracked the development, coordinating efforts across functions and addressing issues of mutual concern. A program manager secured resources for the team, orchestrated its work, kept an eye on the complete project, and served as a liaison to senior managers.
One BCC employee described the personal effect the new approach had: The team system does not allow people to single-minded defend the position of their functional area, of what’s easiest, or best, or cheapest for their own functional area. It forces people to look at a bigger picture. . “Engineering,” when used alone, refers to both product and process engineering. 3 As BCC made the transition to parallel development, it had to confront its history and discard old habits. Marketing had always enjoyed a sacred position at BCC, as John Bailey explained: “Marketing called all the shots, controlled the purse strings.
Engineering felt it worked for marketing. ” To make the team-system work, Bailey and his senior staff felt they would have to create parity among the functional groups. Each area had to see itself as an equal partner and contributor. People had to accept additional responsibility responsibility for the success of the entire project, not Just relevant to their functional area or not. A manufacturing engineer, for example, had to attend team meetings even if the project was only at a design stage.
Since people were accustomed simply to completing a task and passing the project on, they felt team meetings stole time from doing actual work and added to total work-load. As people gradually adapted to parallel development and teams, they continued to struggle with their expanded roles and responsibilities. Many people at BCC felt the new product development system exerted too much reassure on them. Because people now worked on projects from beginning to end, not Just when their piece had to be done, they had multiple projects to Juggle at once. Combined with the emphasis on fast development, this at times overwhelmed BCC employees.
Several people described the pressures they felt and what they perceived to be their sources: We have to make a decision on the deployment of resources. When it comes to choosing between things to do, the answer from above is, ‘Do both’?with no added resources. Or if we get additional resources, we’re Just stealing them from another project. The system is heavily loaded, especially since we’re learning a new way of working. There are many things to do with little headcount and no relief with the project schedule. Engineering doesn’t have a realistic schedule. This puts stress on the system.
Teams could help but there are obstacles to having a team work on a project. You need true support from management. If somebody’s supposed to be dedicated to a team, management has to be willing to let that person spend all of his or her time on the project. Logistics also need work. You have to be able to work out the fractions of people’s time. You need one fully dedicated person from each function, but you also rely on the entire functional group. So people working on multiple projects have to know how to split their time. How do you prioritize projects? All work is high priority.
And how do you reward people? Even John Bailey recognized he would have to alter his management style. The tone of the way the division is managed comes right from the top. If I want teams, and I promote ‘me and cultivate them, then there will be teams. If I’m going to dictate orders, then that’s the way my staff will act? dictate orders. I mean those things get reflected right through an organization because I think people look up to see what’s happening, and if you don’t lead by example, then you’re not going to get what you want. People watch actions more than words. I can’t be autocratic and dictatorial to my people, as I tended to be when I was vice pretty good dictator. I’m very comfortable with that style. Part of the problem is, I grew up in this business. I understand HAVE. It’s real easy for me to tell people what I think they have to do on almost any issue. But if I do that, and my staff does that, it goes right down the line, and we don’t have teamwork. We also don’t benefit from the ideas and perspectives of the whole work force. So I’ve tried to learn to have patience, change my style, look for consensus, have involvement of my staff as a team, share more information, be more open.
I’ve had to learn that you take a risk with this and not everything comes out the way you want it, but the potential payoffs far outweigh the risks. I don’t know how you legislate dedication, creativity, or motivation into people. I don’t think you can. You can’t tell people they have to do it a certain way. What you do is create the environment and the responsibility and be flexible. But those are all new things for me. I didn’t come to this as a natural team player. I got into this because it looked like the way this business could run best.
People throughout BCC spoke highly of John Bailey, crediting him with creating a vibrant climate, but they perceived remnants of an autocratic style. Two stories circulated widely through BCC, highlighting both John’s own struggle to change and the two sides to communication within the division. One story detailed the way John and his staff calmly received a team’s decision to cancel a project and start anew after the team determined the initial plan to be unfeasible. The other told of John’s visit to a team meeting?to show his support?where he learned of a time delay.
Although John made sure not to criticize the team, he was visibly upset and subsequently castigated his senior managers for not informing him of the delay. Some of those managers were themselves unaware of the delay, and the team both sensed and learned of John’s displeasure with the news. Using parallel development, BCC management believed the division was now in a position to make better products?and in less time. Because all functional areas participated in the entire development, team members could understand the needs f their teammates and could work on their pieces of the project with those requirements in mind.
Engineers could design a product with a better grasp of customer needs and manufacturing requirements, while manufacturing and marketing people would understand the limits of what the engineers could do. Instead of tossing the product and problems back and forth over walls, teams could identify potential problems and prevent them. The walls could come down as people from different functions talked with one another more frequently. Fewer problems and overlapping work would deliver what John Bailey coveted most: reduced placement time.
According to the division’s estimates, the new product development system had reduced development time from an average of 38 months to an average of 14 months. John saw speed as Bib’s weapon for reclaiming competitive prominence, and he campaigned tenaciously to cut the time it took to get products from “concept to carton. ” 5 Although people attributed much of the division’s resurgence in the sass to the close working relationships that now existed between different functional groups, there was some feeling that antagonism had not evaporated entirely and that finger- pointing still occurred.
A marketer and an engineer gave separate examples: From a schedule standpoint, engineering’s credibility was no good. They were telling us dates that Just weren’t getting met. We tried to arrange shared goals and objectives, and it was like pulling teeth from engineering. They said they had their own milestones. The first shared deadline they suggested wasn’t valid since we needed things from them well before that. We in engineering thought we had a minor design problem that we could solve as we worked on other problems. However, the problem didn’t go away, so we moved it up on our list of priorities.
Finally, we had to blow the whistle on ourselves because we felt the changes would require more time than the schedule allowed. We went to the head of marketing with our position. We said we were making progress but did not feel we would make our introduction date and needed more time. He said we had to stick to the dates we had. It’s his prerogative to demand that the target dates be met, so the target dates were not changed, even though the team knew we weren’t going to make it. Insisting that a date not change, though, can lead too project problem.
I’m not sure what’s accomplished by insisting on unrealistic dates. Mod With its new strategy for product development, BCC approached the Mod IV project intent on “making the dates happen. ” John Bailey explained the urgency behind the project: “Two competitors have introduced new products and retooled. They have overcapacity and are Just waiting to steal market share. We cannot make a mistake. ” BCC was spending $19 million to develop Mod IV and planned to have it replace products accounting for over 30% of the division’s profit. These figures led one senior manager to call Mod IV “our golden egg. Although the golden egg was about to hatch, Mod IV had had a long gestation. History of Mod IV In 1981 Jay Lander, process engineer on the current Mod IV team, was asked to examine how the company could improve the quality of its motors and reduce their cost. His study turned into a cost-reduction, quality-improvement initiative executed in three phases. Mod IV represented the final and most ambitious phase. Although inspired by engineering, Mod IV promised the most dramatic innovations in manufacturing and therefore was deemed a “flexible manufacturing project. With the one Mod IV motor line, BCC planned to automate its entire assembly process and over $20 million in revenue. The project promised to reduce costs and improve profit arising, making it attractive to the manufacturing people. But some marketers were concerned that customers would not accept this new motor and BCC would lose market share. That would reduce revenues, the primary index of marketing’s contribution to the organization. The team, 6 however, intended to offer a product replete with features and enhancements attractive to customers.
The team would then use price incentives to encourage customers to convert to the Mod ‘V. BCC began work on Mod IV in 1984, prior to the introduction of teams and parallel development, but the same design and process engineers had worked together on Mod IV from the beginning. They had even carved out an open office area, nicknamed “the bullpen,” by removing partitions between cubicles and setting up a central conference table. Manufacturing engineers were frequent visitors to the bullpen and initiated many of the impromptu meetings.
Design, process, and manufacturing, however, did not collaborate closely with marketing until 1986, when the current Mod IV marketing people began replacing their predecessors on the project. One engineer spoke about marketing’s involvement: The marketing people have changed since the project began while the engineers have been the same since the beginning. Marketing decisions changed each time the marketing people changed. We had to do two rounds of market research. This has had a negative psychological effect. It leaves the impression that the rationale developed in marketing is only as good as the people who developed it.
So we lived through a change of direction. Not one marketing person is the same as when the project began. For a long time, marketing didn’t buy into Mod IV. They were forced enthusiastic. Now they’re enthusiastic because it’s a better product, but it’s been a lot of extra work for them. They would have been better off with the combination of the old reduce and the absence of this extra work. From the time Linda Whitman became director of HAVE Controls in 1986, she had collaborated closely with her peers in other functional areas.
As she put it in terms of Mod IV, “Manufacturing and engineering were a whole lot further ahead in the project. And if it was going to be successful, there had to be a balance in terms of expertise and authority. ” Linda stressed equal participation, but her role as director think that’s the way business-unit directors are expected to perform. Of all the players, we have ultimate responsibility for the P&L [Profit and Loss]. And I am responsible for my engineering deliverables. The engineers do not report to me, but I am accountable for telling them what projects to work on and in what order.
Likewise, sales does not report to me, but my marketing group controls the revenue plan and unit-sales targets they must achieve to earn bonuses. We’re also responsible for developing their programs for customers and for authorizing special deals. We’re responsible for defining the product road-maps and introducing the products. We provide the technical support to customers the training, the hotlist, the technical support for the field reps. We’re in charge of pricing, advertising, and sales promotion activities. We’re also responsible for arbitrating unresolved delivery problems and for determining delivery codes and lead times.
It runs the gamut. 7 Linda explained how marketing had to make up for lost time on Mod IV: Marketing was uninvolved for a long time?for two reasons. First, it was never a marketing- driven development, which is highly unusual. Second, marketing was so Johnny- come-lately. By the time we had a solid marketing team established, engineering and manufacturing were entrenched in the way they believed it should be done. That made it much harder when we did come along. The new marketers’ concern led the team to revise the project’s scope, but marketers still had some lingering uneasiness.
A marketer explained: Mod IV is replacing our bread and butter for no market-driven reason. Sure, it’s a cost reduction and a quality improvement, but our motors already are very high quality and provide high margins, so from a marketing standpoint, it didn’t have to be done. The customer-benefits derived from Mod ‘V, including modules, could be developed for our present motor lines. Team Members Linda Whitman Director, HAVE Controls. Linda became the head of marketing for HAVE Controls, one of Bib’s four market areas, in early 1986.
In nine years with Honeywell, Linda had progressed through five positions, each time dramatically improving the department she supervised. Although Linda succeeded in each of her new positions, with three of her Job changes she replaced an incumbent man who had been relegated to another position; as she acknowledged, “This was not the Linda described herself as “results-oriented, hard-driving, intense, and compassionate. ” Organization, discipline, and strong strategic planning were Land’s llamas, but she insisted on letting her marketers work autonomously.
She enjoyed working at BCC and praised its comfortable, diverse environment. Her management style, though, had caused her to think about “being female in an engineering- dominated, Midwestern manufacturing company. ” It’s extremely difficult for many people to accept a woman who’s hardwiring and results-oriented the same way they can accept a man in that role. It’s the old classic. A lot of times pejoratives are assigned, whereas if it were a man, it’s Just ‘a person doing his Job. ‘ I think there’s much more forgiveness for men to have quirks than there is for women.
Linda was in her mid thirties. Jack Scott Program Manager, Manufacturing. Jack served as Program Manager while also supervising the project’s manufacturing efforts. He also supervised several other manufacturing activities. Jack had Joined the Mod IV team a year and a half earlier, and though he had known all of the project’s engineers for ten years, he called himself “the new kid on the block. ” Jack described his role: 8 I try to keep all ends tied together for the net result. Where are we on tooling dollars, engineering design, order and delivery of the production machines?
I tie all the ices together to make sure they hit the floor at the same time. I make sure communication is happening so that all things are getting done. I make sure we don’t get one of these things where we get all done and someone says, You didn’t tell us about that. ‘ Jack was in his forties. Jay Lander Senior Principal Process Engineer. “Father” of the Mod ‘V. Jay’s 1981 study led to development of Mod ‘V, which he now worked on. Jay was in his sixties. Larry Rodgers Mechanical Design Manager. In charge of all engineering efforts on Mod ‘V, Larry supervised all seven design engineers working on HAVE Controls products.
Six of those engineers were working on Mod ‘V, and Larry himself had worked on Mod IV since it began in 1984. Larry displayed constant equanimity, rarely letting the pressure of a situation disturb his demeanor, which some considered aloof. However, he readily acknowledged the history of tension on the project: The impetus for the program was increased profit. The project is attractive to manufacturing because they’re profit-driven. Marketing is revenue-driven, and this product may reduce revenue. Since it will cost less to make the Mod IV, customers will want it for less, and that will reduce revenue. Engineering’s objectives are to
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