Monday, December 26, 2011

Changing Environment - changing response

In the last blog, we concluded the implications of history to a practicing manager. Now, before we continue with the next set of blogs on organization development, and their process of growth. Let us look at a small case, though a bit old it would be give us a good starting point for the discussion over the next few blogs.

TV is a semi-autonomous division of a medium sized equipment manufacturing firm which is part of a large, highly diversified conglomerate. TV manufactures a line of heavy duty pumps and some components for fluid movement systems. The company does most of its own castings, makes many of its own parts and maintains a complete stock of replacement parts. TV also does special-order foundry work for other firms as its production schedule allows. 

Until recently, TV had defined its business as providing quality products and services to a limited set of reliable customers. TV's GM, a first-rate engineer who had spent most of his time in the machine shop and foundry, personified the company's image of quality and cost efficiency. In the mid-90's corporate management became concerned about both the speed and direction of TV's growth. The management and staff at corporate headquarters began considering two new product and market opportunities, both in the energy field. Fluid movement systems required for nuclear power generation provided one of these opportunities, and the development of novel techniques for petroleum exploration, well recovery and fluid delivery provided the second. TV had in the past done some large for these markets, but the opportunity now clearly indicated growth opportunities. 

TV initially moved towards exploiting these opportunities tentatively, the GM realized that the contract sales involved extensive planning, field-contact work, and careful negotiation. These didn’t suit the GM's primary strength or his area of interest. The Parent organization moved the present GM to another position at the headquarters and in his place got a new manager with extensive background both in sales and engineering and who was adept at large-scale contract negotiations.

Within a year of this changeover, TV landed several lucrative contracts, and more appeared to be in the offing. The new business created by these contracts, however, placed heavy coordination demands on company management, and while the organization's technology (production and distribution system) has not been drastically revised over the past 2 years, workflow processes and the operational responsibilities of several mangers have changed markedly. Materials control and scheduling, routine tasks in the past are now complex activities, and managers of these operations meet regularly with the executive planning committee. Moreover, a rudimentary matrix structure has emerged in which various line manages undertake specific project responsibilities in addition to their regular duties. Key personnel addition have been made to the marketing department and more are planned, with particular emphasis on individuals who are capable of performing field planning and supervising and who can quickly bring new fluid systems to full operation. Budget of some of the older departments are being cut back, and these funds are being diverted to the new areas of activity.

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