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A case analysis entitled

Convex Controls

Submitted to the

Ramon V. Del Rosario College of Business

De La Salle University - Manila

In partial fulfillment

Of the course requirements in

BUS 500M Management Principles and Dynamics

Saturday Class 1245 – 1600, Section KRG

Term 1, A.Y. 2014-2015

July 25, 2014

Submitted by:

Group 3

Añora, Maria Wilvenna

Bariuan, Dennis

Gabato, Jomar

Malibiran, Bernard

Submitted to:

Mr. Rey Lugtu

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I. SYNTHESIS

Convex Controls produces electronic control valves that regulate flows through natural gas pipelines. It has approximately 1,400 employees and has successfully produced a standard line of control valves that are priced competitive in the industry. However, problem arises whenever the production of a new control valve is required. Developments of these new products have been associated with interdepartmental conflict and disagreement. Consider CV305, a new product that provides precision control which is currently in the process of development. The research and development (R&D) group developed the basic design and the engineering department converted it into a prototype control valve. Now the materials department must acquire parts for the prototype and make plans for obtaining parts needed for production runs. The production department needs to manufacture and assemble the product, and marketing is responsible for sales. Department heads believe that the future work on the CV305 should be done simultaneously instead of sequentially. Marketing wants to provide input to research and development so that the design and specifications will meet customer needs. Production insists that the design fit machine limitations and be cost efficient to manufacture—indeed, it wants to speed up development of the final plans so that it can acquire tolling to be ready for standard production. Engineering, on the other hand, wants to slow down development to ensure that specifications are correct and have thoroughly tested. All of these controversies with the CV305 exist right now. Department managers are frustrated and becoming uncommunicative. The R&D and engineering departments are keeping their developmental plans secret causing frustration to the other departments. Moreover, several department managers are new and inexperienced in new product development. Ms. Crandell, the executive vice president (EVP), likes to keep tight control over the organization. Department managers must check with her before making major decisions. However, with the CV305, the span of control is so large that Ms. Crandell has no time to personally shepherd the product through the system. Nonetheless, management must act soon to enable CV305 to be ready for production in 30 days to keep up with their competitor who are already producing similar precision control products. II. POINT OF VIEW The case study shall adopt the point of view of Ms. Crandell, the executive vice president of Convex Controls. III. STATEMENT OF THE PROBLEM Faced with interdepartmental conflict and disagreement, how can Ms. Crandell resolve the current situation to facilitate production of the CV305 over the next 30 days? IV. OBJECTIVES Short-Term Objective: Facilitate production of CV305 over the next 30 days. Long-Term Objective: Develop structural changes to prevent interdepartmental conflict and disagreement in future new-product developments.

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Clan teamwork,

sense of family

Adhocracy creativity,

adaptability, innovativeness

Heirarchy order, rules,

regulations, and stability

Market competitive

advantage, goal achievement,

market superiority

Figure 2: Webster Model of

Organizational Culture Types

V. AREAS OF CONSIDERATION The case will be initially analyzed using the five (5) stages of Conflict Process Framework (Robbins, 2011) to identify the sources of conflict among the various departments at Convex Controls. After which, the case will be examined using the Webster Model of Organizational Culture Types (Racelis, 2005) hand-in-hand with the mainstream and multistream approach to organization design (Dyck, 2012).

In the case of Convex Controls, the potential opposition is on the communication and structure of the different departments. First, each of the departments has different set of strategies for product development that does not fit well with the strategies of the other departments. Marketing wants to provide inputs to R&D that in turn keeps their development plans secret. Production wants to speed up development of the final plans while conversely engineering wants to slow down development to ensure that specifications are correct and products are thoroughly tested. Moreover, the company has a wide span of control and chain of command as Crandell likes to keep tight control over the organization where department managers must check with her before making major decisions which in turn delays the progress of product development. In terms of cognition, the company exhibits both perceived and felt conflict from the department heads which can be attributed to miscommunication and differing intentions of the various departments where marketing wants to collaborate, production want to compete but R&D and engineering insists to be less collaborating and accommodating by keeping their developmental plans secret. Hence, each of the departments does not seem to understand their function and degree of dependence with respect to the other departments which in turn causes undesirable outcomes to Convex Controls. To understand the type of organizational design to adapt in this case, we will first classify

Convex Controls using the Webster Model of Organizational Culture Types. Based on the facts

and conflicts presented above, Convex Controls would currently fall under the hierarchy

quadrant where focus is on internal maintenance and

mechanistic process. However, a move towards the market

quadrant is necessary to develop a competitive advantage

among its competitors. Nevertheless, the company must

maintain its mechanistic process, being in a manufacturing

industry that requires control, stability, and order. In order to

achieve this desired organizational culture, there should be a

balance between the mainstream and multistream approach

to organization design. Hence, we must incorporate the

standardization, specialization, centralization and

departmentalization structure of the mainstream approach

with the experimentation, sensitization, dignification and

participation structure of the multistream approach.

Stage I: Potential opposition

•Communication

•Structure

•Personal Variables

Stage II: Cognition and personalization

•Perceived conflict

•Felt conflict

Stage III: Intentions

•Competing

•Collaborating

•Compromising

•Avoiding

•Accomodating

Stage IV: Behavior

•Overt conflict: Party's Behavor

•Overt conflict: Other's reaction

Stage V: Outcomes

•Increased group performance

•Decreased group performance

Figure 1: Five Stages of Conflict Process

Mechanistic Process

Inte

rnal

Mai

nte

nan

ce

Extern

al Po

sition

ing

Organic Process

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VI. ALTERNATIVE COURSES OF ACTION Ms. Crandell can choose among the following alternatives: ACA1: Mainstream Approach A mainstream approach can be imparted to organization design through the following: (a) standardizing the work processes and scope that is handled by each department, (b) grouping similar specializations together through departmentalization where one should not participate in another department but only on its own and (c) centralizing the separately functioning departments via one decision making body or committee. Hence, the different departments will function separately and sequentially in order of the standardized product development process. Pros: This will hasten the product development process and hence be able to address short-term objective of producing CV305 in the next 30 days. Cons: This might not effectively address long-term objective of preventing interdepartmental conflict and disagreement as each department functions separately and not collaboratively. Moreover, this can hinder the generation of creative ideas and flow of valuable inputs in the product conceptualization stage as active participation in the thought process will not be participated by all departments. ACA2: Multistream Approach Convex Controls can impart a multistream approach to organization design through a collaboration of all departments for coming up with ideas in the product conceptualization stage. Here, specializations are not departmentalized by the book. Marketing can participate with R&D’s function. Engineering as well as production can get involved with the work progress of R&D. Hence, an open and collaborative environment is developed and each function acts simultaneously in the product development process instead of sequentially. Pros: This can effectively address the long-term objective of preventing interdepartmental conflict and disagreement as all of the departments function collaboratively. Moreover, this can encourage generation of creative ideas and flow of valuable inputs in the product conceptualization stage as active participation in the thought process will be participated by all departments. Cons: This can slow down the product development process and short-term objective of producing CV305 in the next 30 days may not be addressed. ACA 3: Balance Mainstream and Multistream Approach A balance between mainstream and multistream approach to organization can be carried out through the following: (a) collaboration of R&D, Materials Procurement and Engineering department to ensure correct specifications and products are thoroughly tested, (b) R&D can work hand-in-hand with the marketing, materials procurement and engineering department to include market research in the development of new products, (c) appoint product initiative leaders to head the product development teams per product category, centralize end-to-end product development stream and shepherd the product through the system and (d) replacement of new and inexperienced department managers with more highly-capable and experienced leaders. Here, standardized work process is still followed with departmentalization of similar specializations, but in a collaborative, semi-sequential and semi-simultaneous way. Pros: This can address both short-term and long-term objective of producing CV305 in the next 30 days, and preventing interdepartmental conflict in the developments of new products in the future, while encouraging generation and creation of innovative products more collaboratively.

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Cons: This might need several work scope and process revisits, re-alignments and re-staffing to achieve desired organization design and address both short-term and long-term objective. VII. RECOMMENDATION Convex Controls must do several re-staffing and re-alignment of functions in order to prevent interdepartmental conflict and disagreement in future new-product developments. However, an initial fast-track plan must be created to address urgent business need of producing CV305 over the next 30 days prior to this re-staffing and structural overhaul. Decision Criteria Weight ACA 1 ACA 2 ACA 3

Agility in producing CV305 in the next 30 days 30% 30% 10% 30%

Prevent interdepartmental conflict and disagreement 30% 10% 30% 25%

Improvement on product development process

(collaborative, organized and foster creativity)

20% 10% 15% 20%

Sustainability of results 20% 10% 10% 15%

Total 100% 60% 65% 90%

Based on the criteria indicated above, ACA 3 is the best option for Ms. Crandell. A balance between multistream and mainstream approach can likewise address both short-term and long-term objective sustainably. To address the urgent need of producing CV305, the company can temporarily increase the number of specialized staff in the engineering department coming from the R&D team to ensure that the specifications they have indicated are correct and products are thoroughly tested at a much faster rate as compared to their current rate. After which, production can start regular run after trial run results are acceptable already. To address the long-term objective of preventing interdepartmental conflict, the company can implement the standardization, specialization, centralization and departmentalization structure of the mainstream approach with the experimentation, sensitization, dignification and participation structure of the multistream approach which will be detailed in the succeeding section. VIII. IMPLEMENTATION PLAN

In order for Convex Controls to address the short-term objective of producing CV305 within 30

days and the long-term objective of preventing interdepartmental conflict and disagreement in

future new product developments, a balance of the mainstream and multistream approach to

organization design must be carried out.

The process starts with the company temporarily increasing the number of specialized staff to

the engineering department coming from the R&D team, Materials Procurement, and Production

department to ensure that the specifications they have indicated are correct, the products are

thoroughly tested at a much faster rate as compared to their current rate, and the design fits

machine limitations to be cost-efficient to manufacture. The collaboration of these three

departments will allow production of the CV305 to start immediately. This would take less than

30 days considering the thoroughness of testing and agility being exhibited by the new structure

of the merged engineering, R&D, materials procurement, and production department.

After the short-term objective has been addressed, Convex should undergo re-staffing, re-alignment and structural overhaul. A new product development process must be developed to ensure that competitive and innovative products are still developed while preventing

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interdepartmental conflict and disagreement throughout the revised process. To do this, the R&D department can work hand-in-hand with the marketing, materials procurement and engineering department during the product conceptualization stage to include market research in the development of new products thereby employing the participation structure of the multistream approach. This market research team should generate product concepts based on the needs and wants of the customers in the industry, improvements that can be done for current products in the market and upcoming product trends that might not be available in the market currently but will likely become a hit with the customers should the new concept be introduced. After the product conceptualization stage, the proposed project should be presented to the management where a highly-capable governing body should be available to serve as the approving committee. The approving committee should have all the necessary documentation such as market studies and product feasibility studies before they give final approval for a project. Hence, Crandell as EVP can be a part of this approving committee composed of the heads from the marketing, R&D, engineering, materials procurement and production department. Moreover, she should not anymore require that departments must check with her in every major decision that should be made in order to hasten the process. To centralize product development stream, there must be an appointed product leader to head end-to-end product development of a particular product type. This appointed person should oversee the product development process from start to finish and across all departments. He or she must also ensure that the process is on track in terms of budget and schedule. Therefore, this person must personally shepherd the product through the system along with the help of the assigned project team members of each new product initiative. After project approval, the project team should do a trial run in the pilot then manufacturing plant before they launch the product to the market. To address, competing pace of the production and engineering department, selected R&D staff and engineering team can work synergistically to ensure correctness of specifications and thoroughness of product checks at a much faster rate so production runs can then proceed. It must be ensured that the minimum possible time is taken from conceptualization to product manufacturing stage to be able to compete well in terms of innovation. After mass production of the newly-conceptualized product, the marketing team can now implement the sales, branding and after-sales strategies they have already developed early on (during the validation phase of the proposed product; after the product conceptualization stage). Through all these stages, transparency and open communication must be exercised among all the departments where information flow can be facilitated by the identified initiative leaders of each product category. Moreover, to ensure the proper implementation of these new strategies, alignments and organization structures, the new and inexperienced department managers must be replaced with more innovative and experienced leaders. The table below shows the implementation plan details of the selected course of action (ACA3).

Action Plan Responsible Parties

Timeline Resource Requirement

Potential Barrier

Remedy or Options

Gather all departments

for a meeting to

develop new

organization design

and address objectives

EVP Crandell, Department Heads

2 days (Day 1 to 2)

Market Research, Product Development and Sales Past Results; Company’s Vision and Mission

Opposition from current department heads

Explain the potential benefits of re-defining the organization’s culture and design to meet objectives

Collaboration of R&D, Engineering, Materials and Production to finalize prototype

R&D, Engineering Department

1 week (Day 3 to 9)

Product Concept Specifications, Testing Results

Conflict between the departments

Explain the potential benefits of collaboration to meet objectives

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Actual manufacturing plant trial run and on-going production

R&D Team; Production Team

2 weeks (Day 10 to 23)

Trial run results and data trends

Failed trial run

Operation plan backed up by pilot plant run results

Product launch to the market

Marketing and Sales Team

1 week (Day 24 to 30)

Newly Manufactured Product (complete); Marketing campaign

Cold response from the market

Strategies conceptualized by experts and proven effective

Appointment of initiative leaders per product type and approving committee

EVP Crandell, HR, Department Heads

1 week (Day 31 to 37)

Performance Appraisals, Employee Work Plans

Questions from those not selected

Explain criteria for selections and how those criteria were met

Replacement of selected departments heads with more highly-capable leaders and change to more appropriate roles for replaced leaders

EVP Crandell, HR, Department Heads

1 week (Day 38 to 44)

Performance Appraisals, Employee Work Plans

Questions from those replaced

Explain benefits of replacement and appointment in new more fitting roles

Re-alignment and communication of new organization design, work scope and work process, new department heads; role changes and new initiative leaders

EVP Crandell, HR, Department Heads; all employees

3 days (Day 45 to 47)

Conceptualized organization design, work scope and standard work process; role changes and appointments

Opposition from employees

Explain the potential benefits organization re-design and re-staffing to meet objectives

START OF NEW CYCLE (IMPROVED PRODUCT DEVELOPMENT PROCESS) (1) Product Conceptualization [R&D, Engineering, Materials, Marketing]; (2) Approval [Approving Committee];

(3) Pilot Plant Run [R&D, Engineering]; (4) Trial and Production Run [Production, R&D, Engineering]; (5) Market Launch [Marketing - sales strategies developed after collaboration with R&D]

INITIATIVE LEADER (per product category) should oversee product development process end-to-end and manage assigned product development team members.

LEARNING POINTS

1. A desired organizational culture must be identified first prior to the organization design itself.

This desired organizational culture can be identified with any of the four quadrants of the

Webster Models which includes clan, hierarchy, adhocracy and market. Organizations can

either put a single focus on one quadrant or varying focus on several quadrants.

2. A mainstream and/or multistream approach can be employed in order to achieve a desired

organizational culture. However, the best type of approach to use depends on the current

situation of the company, existing environmental factors, strategy and technology. All these

factors taken into consideration defines the structure of the organization and hence, the

organizational type.

Bibliography Dyck, B. & Neubert, M. (2012). Management: Current Practices and New Directions. Cengage Learning. Robbins, S.B. & Judge, T. (2011). Organizational Behavior. NJ: Prentice-Hall.