PLEASE READ CASE STUDY BELOW ABOUT DDI.

*Make sure the all the questions should be answered in one go

Question:

What are your considerations on execution based compensation frameworks at DDI? Does their present culture should be refreshed before executing another presentation based compensation framework?

Planning AND IMPLEMENTING A REWARD SYSTEM AT DISK DRIVES, INC.* Disk Drives, Inc. (DDI) is a forte electron-ics firm that plans, markets, and distrib-utes plate drives for the PC business. DDI started in 1980 by assembling and

advertising enormous organization plate drives for little PC firms, like Digital Equipment Corporate (DEC) and Data General, just as for unpredictable, huge scope word-handling frameworks offered by Xerox and Wang. DDI's first items were very effective and the organization developed to incomes of $119 million by 1985. An essential choice to coordinate various advances inside the circle drive for a vary ent kind of client came about in a more up to date and more modest product offering with lower expenses and lower costs. Sadly, DDI was late to market and its items didn't have the exhibition includes these clients needed or required. In this way, regardless of the new clients and higher item volumes, deals and benefits dove as its unique items blurred and its new goad ucts vacillated.

One of DDI's auxiliaries, notwithstanding, was planning and selling unique and surprisingly more modest plate drives to PC unique prepare ment makers (OEMs). Following a dif-ferent plan of action, they had re-appropriated their assembling ability to a Japanese plant. The auxiliaryover the 19851989 time periodsaved DDI from disappointment. By 1988, DDI declared it would quit creating and fabricating the entirety of its bigger circle drives and spotlight on the more modest ones for PCs. It additionally eliminated its homegrown assembling drama tions and started sourcing its drives only from the Japanese plant. While 66% of DDI's 1988 incomes had come from huge drives fabricated locally, before the end

*This case was gotten and adjusted from materials found in C. Christensen, "Quantum CorporationBusiness and Product Teams," Harvard Business School Case 9-692-023 (Boston: Harvard Business School, 1992); S. Mohrman, "PC Components," Center for Effective Organizations (Los Angeles: University of Southern California, 2012).

of 1989, 100% of its incomes were from the little drives made in Japan. The inquiry confronting DDI the board was the manner by which to keep up the energy. It's anything but a cautious gander at the current association and determin-ing its qualification for what's to come. The head of HR at DDI, who was very

learned in association change and advancement, persuaded the chief group to go through a methodical cycle of diagnosing the association's present working model and updating the organization to deal with the supportive of jected development and the expanded intricacy it was confronting.

THE CURRENT DDI ORGANIZATION

At the full scale level, contest in the circle drive market was portrayed by high speed tech-nology change and item advancement just as various similarly measured contenders. To begin with, clientsthe OEM makers of PCs, like IBM, Dell, Toshiba, and HPwere not just planning more current, quicker, and more sophis-ticated PCs, they were requesting and expecting fresher, quicker, and more complex circle drives. In spite of the fact that administration was confi-imprint in the association's specialized capacity to offer the best value/execution items in the indus-attempt, they understood that the period during which another DDI drive could hold an exhibition edge prior to being jumped by a contender was getting more limited and more limited. Second, when an OEM declared another PC model, the entirety of the circle drive makers contended aggres-sively to get the business. The circle drive firms had a restricted measure of timetypically not exactly a couple of monthsto make their bid, and it was normal dependent on yet untried mechanical capacities. Additionally, the business cycle had a "dash for unheard of wealth" or "the champ bring home all the glory" feel. In the event that a circle drive maker could win an agreement with an OEM producer, it generally implied that an entire line of plate drives, including follow-on models, would be essential for the arrangement. Therefore, quality, speed of client reaction, and cost were progressively significant measurements to be overseen. Quality was important to win the con-fidence of the OEMs and increment the shots at winning follow-on business, speed of reaction was essential given the restricted time period, and cost watchfulness was important to deliver a benefit. In this climate, the organization was clear about the cycles for adding esteem (Figure 1).

The key work measures included:

1. Working with fitting specialized help, it was imperative to offer and win on new records. A Request for Proposal (RFP) given by the OEM point by point the specialized determinations for the plate drive in its new PC model.

2. The circle drive was then intended to fit the specialized details and to meet quality and cost targets.

3. The subsequent plan was then ready for move to the assembling office.

4. The drive was produced in Japan. 5. The drive was then delivered to the OEM to be consolidated into the PC, and backing issues were dealt with.

DDI was developing quick and new models were

being ceaselessly delivered that typified tech-nology progresses, new abilities, and upgraded plans. The existence cycle for a circle drive (when a con-plot was endorsed with the OEM) was around six to eight months for advancement, first-run creation, and field appropriation and administration. In any event, including a subsequent delivery (follow-on) item, the whole life cycle for the model was by and large around 12 to 16 months. The organization was taking care of around five to six circle drive plans at a specific time and that number was required to increment fundamentally.

As portrayed above, DDI had marked a longterm,

restrictive agreement to re-appropriate assembling to a Japanese organization that guaranteed, thus, to con-tinually retool and redesign its assembling capa-bilities as DDI developed. To deal with this cycle, DDI had encountered producing engineers, quality confirmation, measure advancement, and circulation staff to design the development of the circles into the contracted industrial facility and to deal with its presentation into the field.

In accordance with this practical construction and work measure, the association was administered by the chief board, made out of the CEO and confided in partners who had "grown up" together in the business. Each assumed liability for certain practical errands (Figure 2). Each recruited individuals to complete the capacities they oversaw as the com-pany made progress and developed quickly. The leader group was likewise liable for

the arranging, coordination, and joining of the exercises of promoting and deals, specialized devel-opment, and overseeing tasks and field distri-bution and backing. That is, dynamic, objective setting, and vital heading were unified to this gathering. Likewise, the association's presentation the board framework was incorporated and conventional. Administrators and useful workers were given by and large organization focuses for income and each func-tion was required to make an interpretation of those objectives into spe-cific destinations for their gathering. Utilitarian administrators gave yearly execution evaluations that gave the premise to justify pay increments. What's more, all DDI representatives were qualified for a benefit sharing reward that had been running at around 5% of compensation. Chiefs were qualified for investment opportunities also.

Taking part IN A REDESIGN OF DDI

Albeit content with the new achievement of the

organization, the chief group understood that it couldn't proceed to develop and be effective as it was right now planned. It was not viably coordinat-ing the intricacy that accompanied quick development, and it was experiencing difficulty staying aware of interest. It had encountered a few deferrals and quality inci-imprints, including one significant field guarantee issue because of a circle drive disappointment. The chief group was profoundly engaged with continuous operational issues, and the CEO was worried that they didn't have the opportunity to take care of the essential choices needed in the quickly creating PC industry. He also believed that the executive team had become a bot-tleneck and was slowing product decision making. The CEO recalled being in an executive committee meeting and asking about why a particular product had not yet shipped to the customer. After collect-ing a variety of data and information about compo-nent inventories, capacity planning, forecasts, and other details, he realized that managementin particular, the executive committeewas part of the problem. We were trying to manage details we werent knowledgeable about. We had a band-width problemthe executive staff just didnt have enough time or brain capacity to keep making all the key decisions. The executive team decided that they needed to assume a more strategic role in the organization and decentralize cross-functional integration and operational decision making about new product development, manufacturing, and field support. Although they wanted insight into product devel-opment progress and milestone achievement, they also understood that to decentralize this integra-tion and decision making, they needed to be clear about the roles, responsibilities, and accountabili-ties for success. They believed such a change would create and build a cadre of future leaders for the organization. Based on the diagnostic data and the executive teams requirements, the head of HR led the team through a systematic redesign of the organization. Commitment to Strategic Direction The executive team first recommitted itself to the basic strategy of rapidly advancing the technology through aggressively bidding on and delivering disk drives to computers that required increasing oper-ating speed, flawless quality, and continual new functionalities.

Structure Modification

The executive team believed that the existing func-tional structure provided important advantages. There was a clear focus on technical excellence and clear technical career paths. However, to achieve the cross-functional integration and speed objec-tives and to begin building leadership skills, they decided to implement cross-functional product teams as a lateral structure to coordinate the devel-opment of each disk drive. Functions would remain the core units of the company, but the management of each disk drive model would be carried out by a team, established as soon as a contract was signed, to manage the product over its life cycle (see the dotted horizontal lines in Figure 3). The members of each product team would be functional managers at the director or senior man-ager levelmoving the operational crossfunctional coordination and management lower in the organi-zation and freeing up the executive team to concen-trate on more strategic issues. The teams were to consist of seven members, one from each function (although there was no member from the sales organization). They were to be collectively responsible for the general manage-ment of their product and not just represent their functional point of view. In general, the engineer-ing team member was to be the leader during the initial phases of the program, but as the product approached commercial launch, the marketing member would assume more leadership responsi-bilities. The engineering team member would also lead a dedicated group of engineers assigned to develop the drive and to work through any product design problems encountered during manufactur-ing and in the field (see the solid vertical lines in Figure 3). The engineering member was the only person with a functional group dedicated to the product; all other functions would allocate personnel to a product team based on the projects stage of development and need. Each team member would continue to have management responsibilities within their function. In other words, working on a team was considered an overload responsibility in addition to their regular functional responsibilities. Management Processes The executive team was careful to delineate which issues were the responsibility of the product teams, the functional organizations, and the executive staff. The product team would be empowered to make all decisions relating to developing and bringing a specific product into the fieldand it would be incented to bring the product to market on time, within cost, and with high levels of quality and customer satisfaction. Teams were responsible for the revenues and gross margins generated by the product and for the inventories required to support the revenues. The product teams were responsible for achieving faster and faster development cycle times. Each product team was given clearly defined milestones that were derived from the contract, including cost, quality, and profitability targets. Functional groups, on the other hand, were charged with managing ongoing functional activi-ties and expenses, providing effective career paths and skill-building programs, executing the plans, and staffing the programs initiated by the product teams. For example, the engineering organization was responsible for maintaining DDIs overall technical edge, dedicating a group of engineers to a specific product, and defining professional development. In addition, each function was divided into discipline groups that carried out specialty tasks. For example, the quality function had a group that specialized in design quality, prototype testing, and manufacturing quality specifications and monitoring (the latter work-ing closely with the contract manufacturing facility). The responsibilities of the product teams and the functional organizations are summarized in Table 1. Finally, the executive team controlled mile-stone reviews for each product, including prototype design completion, design completion/release to manufacturing, release to customer, and the three-week release to field. Performance Management The executive team next considered the question of performance management and incentives.