the case study is called : Big Shoes to Fill by Michael Beer.

PART A: Having read the HBR Case Study, Big Shoes to Fill (attached), answer the following questions about the case. 1. What type of leader, discussed within the current course module, best characterizes former CEO Jack Donally. Be sure to provide rationale for your selection 2. What situational variables contributed to the success and maintenance of this type of leader in this specific case? PART B: Now imagine you are Stephanie Fortas, the new CEO of Innostat. 1. What leadership style/approach/theory would you embrace and implement, and why? Be sure to reference reasons for your decision (e.g., company history, current personnel, market trends, etc.). 2. How would you communicate your new strategy for the company to maximize buy-in and organizational success and why would you use this style and medium of communication? Draft detailed messages to each and every group of stakeholders you identify as necessary (e.g., board, senior management, all employees, etc.) to communicate your position(s) and rationale. These messages may take various forms depending upon the content and the audience so make size and identify the specific medium you would use to communicate with each group (e.g., memo, presentation, etc.). Reminders for Part B: Answer each of the questions above first on one page. Then draft the necessary message(s) to your organization on subsequent pages. If you choose to write memos, or emails please make sure your formatting is consistent throughout and the message length is appropriate for this type of message. . If you choose to include a white paper or other report please follow APA guidelines for formatting le.g. font, margins, page numbers, headings, etc.) If you choose to include a presentation make sure and write out the presentation content fully so that I can see exactly how the presentation would be delivered. Don't assume I will fill in the blanks. The entire assignment for Part B should NOT exceed 5 typed pages. the two Big Shoes to Fill by Michael Beer T: A larger-than-life CEO left Innostat with larger-than-life problems. The new boss knows the company needs fundamental change, but the image of her predecessor hovers. 'HE MEMORIAL SERVICE was a sellout. Jack Donally had been a colossal fig- ure who commanded a lot of respect, if not affection. He'll be a hard act to follow, Stephanie Fortas thought as she strained to make sense of the eulogy, delivered in a thick Irish accent by the same priest who had married Jack and Moira Donally 40 years ago. Moira must be feeling especially lost, Stephanie thought. A deferring, uncomplaining woman, Moira had apparently taken second place to Innostat all her married life, and just when it seemed that she would soon have Jack all to herself, he up and died. But it wasn't just Moira and her five children who looked lost, Stephanie thought. Everyone seemed bewildered. As the CEO appointed by the board to succeed Jack just before his untimely death, Stephanie knew that a lot of people would be looking to her for an swers. She edged forward to pay herre spects to Moira, aware that a lot of curi- ous eyes were fixed on her. "I've heard so much about Jack," Stephanie said, offering her condo lences to Moira. "I'm going to do my best to protect his legacy." A One-Man Show That legacy was formidable. Boston- based Innostat was very much Jack Donally's creation. He had transformed the company from a small local manu- facturer of scalpels and other surgical equipment into the world's best-known maker of prosthetic limbs and surgical implants. Sales had reached more than $2 billion, with the company employing more than 5,000 people at locations in Boston, Los Angeles, and Dublin, Ireland. Innostat also had sales and mar- keting country organizations around the world. A pharmacist's son from the rough-and-tumble Irish American strong hold of South Boston-Southie to the HBR's cases, which are fictional present common managerial dilemmas and offer concrete solutions from experts 2006 42 3 HBR CASE STUDY. Bg Shoes to Full locals - Jack had joined Innostat as a velop competitive products of their own. Innovated. But she wasn't sure that in salesman right after completing a tour Worse, the company seemed to have lost nostat was in any shape to survive a of duty in Vietnam as a medical orderly, its innovating edge. After a string of new major change initiative. His unit had been in the thick of some offerings in the 1990s, which delivered of the worst action, and he always sald annual growth in revenues and profits The Walk by the River afterwand that his passion for the com of more than 15 a year, Innostat had Stephanie believed in tackling big chal- pany and its products came from that not launched any major new products lenges head on. Her first priority was experience for the past four years, yet they were to figure out how Frank felt about her Under Jack's leadership, Innostat built essential for profitable growth. and whether she could work with him. a reputation for technological innova Stephanie had not been Jack's choice They had met at her hotel in Harvard tion and manufacturing quality. That for a successor. He had strongly pleaded Square the day after her appointment was, on the face of it, surprising since the case for Frank to the board. But was announced, and Frank had pro Jack had majored in history at the Uni three years of falling results and grow posed a stroll along the Charles. It was versity of Massachusetts and liked to ing pressure from Wall Street had a warm, early October day, and the uni- say that he had no head for "science prompted the board to look for an out versity crew teams were out on the river talk." But the truth was, he loved to sider. The directors settled on Stephanie practicing for the Head of the Charles spend time talking to surgeons and re because of her technical background. regatta later in the month. As they searchers. He had that special skill that A 1989 PhD from Stanford, she had also walked, Stephanie and Frank struggled merged an interest in technology with received an MBA from MIT's Sloan to find common ground. an understanding of what customers "Where do you plan on living?" Frank needed and wanted. He typically came asked. "Jack said that really back from his travels full of ideas for "Back Bay, probably." Stephanie said. new products. He would go straight to good ideas don't need "I don't have kids, so I don't need a big the head of R&D and get him started on house. Anyway, I like the buzz of city life." incentives, they need a project, rarely engaging innostat's se- "I know what you mean," Frank nior team in discussions of these ideas passion, and that he agreed. "I miss Back Bay. Cathy and I and how they fit in to the company's was the chief passion had a place there until the kids came broader strategy. Consequently, market- along. Now we're in the suburbs. The ing never developed as a strong func officer." schools are good, and the commute is tion, and R&D, though technologically fairly short. But I miss the edge of city sophisticated, never developed market School in the early 1990s, and then life sometimes." ing savvy. headed back West to join the marketing Frank shuffled his feet. "Look, Steph- Despite his primary focus on new department of Phasar, a medical tech-anie," he said. "You have a lot of prob- product ideas, Jack was also acutely con nology company. Stephanie's combina lems in this company, and I'm not one of scious that health care products had to tion of technological skills and busi them. I know everyone thinks of me as be error free, and he had always kept a ness savvy had marked her as a highflier, Jack's boy, and I was. But I'm not such close eye on manufacturing. Frank Tim and within ten years she had become a fool that I can't see that the company oshotsky, the self-effacing head of pro the company's chief operating officer. needs to change." He caught Stephanie's duction recruited from Toyota, had in In that role, she worked closely with eye. "We got way too dependent on troduced many of the car company's Phasar's chief science officer to ensure Jack for ideas," he said, "and, to be hon- quality practices, which had helped the that the company's R&D efforts were for est, he didn't have much faith that any firm win a Baldrige prize. cused on commercially viable products. one in the company could come up But in the three years before Jack's The headhunter had caught Steph- with them, so he didn't really develop retirement, Innostat's performance had anie at the perfect moment-right after the capability. He was always talking to troduced many of the car company's Phasar's chief science officer to ensure Jack for ideas," he said, "and, to be hon quality practices, which had helped the that the company's R&D efforts were fo est, he didn't have much faith that any firm win a Baldrige prize. cused on commercially viable products. one in the company could come up But in the three years before Jack's The headhunter had caught Steph with them, so he didn't really develop retirement, Innostat's performance had anle at the perfect moment-right after the capability. He was always talking to declined dramatically, and the com a messy divorce. She was eager to put people outside the company for ideas. pany was facing strong competitive California behind her, and a profes And now we've got a real problem on challenges in its key markets. The firm's sional challenge offered just the kind our hands." once generous margins had narrowed of distraction she needed. There was no Stephanie listened intently. "And as other companies found ways to engl doubt that innostat would present that what would you do if you had my job?" neer around Innostat's patents and de challenge. It seemed to have completely she asked pointedly. lost the ability to innovate, and investors Frank paused for a moment. "Well, Michael Beer (mbeer@hbs.edu) is the were starting to question whether the to begin with," he said, "we've got to take Cahners-Rabb Professor of Business Ad company actually had a strategy. Long a look at why people are not thinking ministration Emeritus at Harvard Busi term, Stephanie knew that she would beyond their immediate functional ness School in Boston have to radically alter the way the firm departments. People around here are 44 HARVARD BUSINESS REVIEW Big Shoes to Fill HBR CASE STUDY 70.in o es%20to%201%20CHBR%20Case).pdt HBR CASE STUDY . Big Shoes to Fill focused only on making their numbers of the product. The teams would be Stephanie forced her mind back to the within their own units, so they don't made up of those most closely related to report. The consultants believed that have much reason to respond to prod the new development: bench scientists people needed to be motivated further uct development initiatives from R&D. from R&D, a relatively senior manufac to commit the time and energy to the new Besides, they don't believe R&D's esti turing engineer, along with the man process, and recommended that employ mates of market potential. So why in ager of the plant making the product ees be held accountable to both their vest time and money on a promise they and someone from sales. functional and team heads. The consul don't believe? When Jack pushed an Because Jack had played such a dom tants also suggested that the team leaders idea, we all responded because Jack was inant role in defining new product op and members be measured on the time- the boss, and he was just that kind of portunities and pushing them through liness and profitability of new products guy. But with him gone, who's going to the organization, the consultants ac and that all incentives be monetary and stick their necks out now?" knowledged that the marketing divi based on performance. They recom- "Did you ever talk to Jack about this?" sion lacked the experience and credibil mended hiring an organizational devel- Stephanie asked more abruptly than ity to do this kind of work. On the other opment consultant to work with HR on she had intended. hand, the division had the best view of designing the new system and on creat- "1 didn't," Frank acknowledged. "But the market through its relationships ing appropriate training programs. we did get a report from PK Henderson with surgeons. Yet sales and marketing It was the final recommendation, a year ago. The board got Jack to call at Innostat was heavily sales dominated though, that obviously got the report them in for a consult. They came up and had few people with both high lev killed. Henderson had strongly urged with this reorg idea. Most of us thoughts of marketing and general manage Jack and other top executives to be less it was a little crazy and that a massive re ment skills. To get around this problem, involved in the details of developing organization was not the answer. Per the consultants had suggested creating new products, limiting themselves to sonally, I still believe that the problem is a strategic marketing department that formulating strategy, choosing the port- motivation, that the company needs would report to the CEO. This new de folio of new products, reviewing team more powerful incentives to get people partment would be responsible for progress, and continually reprioritizing thinking out of the box. Jack didn't see identifying opportunities and for lead projects and reallocating money and it, though, and he buried the report. He ing the product development process. people based on emerging information. said that really good ideas don't need No recommendation was made as to Stephanie wondered whether the con- incentives, they need passion, and that who in the company might head this sultants who recommended these mea- he was the chief passion officer." new department. It was this issue that sures would ever have received another slowed acceptance of the reorganization assignment from Innostat. Probably not. Filed but Not Forgotten plan. Jim Pappas, director of sales and Jack would never have said yes to these Stephanie had come away from the marketing, clearly didn't have the head recommendations. But should she? conversation intrigued. She'd been for this kind of work. But, like most sales told about the Henderson report in her men, he was fiercely territorial and re Company or Career negotiations with the board, but only sented losing part of his responsibilities. Stephanie put the question to Teddy in passing. The board members had Stephanie felt for Jim. He was an old Adler, her executive coach. Stephanie seemed quite dismissive, so she hadn't school salesman down to his fingertips. had first consulted Teddy for career ad- pressed them on it. She decided to get He entertained lavishly, and he probu vice shortly after joining Phasar. A fel. bly knew the golfing handicap of every low Sloan alum had recommended him: Stephanie read the report that night hospital purchasing manager in Boston "He's a bit domineering but very smart in her office over a tuna sandwich from It wasn't going to be usy for him or for the alum had said. "He can give you a the company cafeteria. She picked up anyone in the company to give up his real political edge. Teddy had more the binder and turned to the summary sovereignty once it happened, all hell than lived up to the billing. na As Frank had told her the renart ruld heak Stenbani looked After Stenhan read the renart she herself a copy henerico bly we going indicap o every Stephanie read the report that night hospital purchasing manager in Boston "He's a bit domineering but very smart," in her office over a tuna sandwich from It wasn't going to be easy for him or for the nlum had said. "He can give you a the company cafeteria. She picked up anyone in the company to give up his real political edge." Teddy had more the binder and tumed to the summary sovereignty, once it happened, all hell than lived up to the billing page. As Prank had told her, the report's could break loose. Stephanie looked After Stephanie read the report, she recommendations involved a fairly around her office, which had Jack's per and Teddy met at a small restaurant in major change to the company's man sonality Imprinted on it. A huge corner Cambridge, one of Stephanie's favorite agement practices. Decision rights for suite with an oversized mahogany an haunts when she had been a student at new product development were to be tique desk, the room communicated the MIT. The restaurant was part of a popu- taken out of R&D and given to cross force of life that had been Jack Donally. lar, upmarket local chain, and Stephanie functional new product development "He certainly was a charismatic leader, remembered having a farewell meal teams headed by senior marketing Stephanie thought, scanning her sur there with some friends after her busi- people. The teams would be responsi- roundings, but I wonder what his kids ness school graduation. She ordered a ble for seeing the development from thought of him. He must have been small Caesar salad and a glass of Diet its early stages through to introduction a difficult man to live with." Coke as she settled down to talk with 46 HARVARD BUSINESS REVIEW IT solutions, processes and automation can improve your company's success. But there's one resource that trumps all others. Your people Teddy, who was fairly dismissive of the was full of the conversation she and Henderson report."There's no way you Teddy had just had. On one level, every can win doing a wholesale reorg," he thing he said made sense. A massive reorg said, leaning in and lowering his voice. carried a lot of risks. The noncollabora "You just don't have the people to make tive culture of the company made it hard it work fast enough. It'll take five years to see how a complex matrix like cross- minimum. If he'd wanted to Jack might functional organization could possibly have made it work, but not you, not yet. work. Moreover, there was the question You've got to build some capital with of who in the company could lead the the board to make that kind of change. new strategic marketing group. As Teddy and to do that you're going to have to had pointed out, she could find herself rack up some successes." out on her ear before the results came Stephanie pushed back. "Suppose ! in. If the company survived after she don't turn out to have any great ideas left, it would be the next CEO who got for products, or the ones I do develop the glory. And that was supposing Inno- and push through just don't pan out? stat could even stay independent. It was Then we're back to square one and at obvious that the board knew that, to that point, the honeymoon, such as it Why else would it be in such a hurry? is, will be over." But Stephanie wasn't so sure that "Look, Stephanie, that's just the risk Teddy was giving her good advice. Her you take with this kind of job. What experience and values instinctively told this board wants is new products, and her that developing the organization they're not worried about how they get and its people so that the company They stand at the core of your company's ideas, partner relationships and customer knowledge. When you empower your people with the right tools, you recognize them as your greatest asset. ni company's ideas, partner relationships and customer knowledge. When you empower your people with the right tools, you recognize them as your greatest asset. "Empowering your people will empower the entire company Steve Ballmer, CEO Microsoft Corporation rack up some successes out on her car before the results came Stephanie pushed back. "Suppose I in. If the company survived after she don't turn out to have any great ideas left, it would be the next CEO who got for products, or the ones I do develop the glory. And that was supposing Inno and push through just don't pan out? stat could even stay Independent. It was Then we're back to square one-and at obvious that the board knew that, too. that point, the honeymoon, such as it Why else would it be in such a hurry? is, will be over." But Stephanie wasn't so sure that "Look, Stephanie, that's just the risk Teddy was giving her good advice. Her you take with this kind of job. What experience and values instinctively told this board wants is new products, and her that developing the organization they're not worried about how they get and its people so that the company them. They've made you CEO because would possess the capability for sus they think you can give them what they tained innovation was the way to go. In want. Remember, they saw the report, nostat has shown that it can't dream up too, and they buried it. If they'd wanted new products on its own. Shouldn't she to do what the report recommended, be looking for ways to fix that? Wasn't they would have hired some reorg ex a CEO supposed to look to the long pert instead of you. Your strong suits are term? Or was she just cooking her goose? technology and marketing. That makes Then again, she had never been in you the best person to spot new prod- this type of turnaround situation be- ucts that will work - products that you fore. Frank had said that the problem can then drive through the organiza in the company was motivation. People tion. In this respect, your biggest prob needed an incentive. Why not make a lem will be Timoshotsky because, what- larger percentage of managers' compen- ever he says, he'll resent the fact that sation contingent on sales and profits? you got the job and he didn't. The other This, together with strong leadership people will fall in line. Pappas is near the from her, might be just the solution. end of his career and won't want to Maybe Teddy was right after all. move, so he'll ultimately knuckle under. "Guys." Stephanie said to Teddy and And Chuck Bukowski over there at those who had joined them, "I have to R&D is used to playing a supporting go. I have an early morning meeting role anyway. With limited time at your tomorrow." She suggested they stay disposal, you've got no choice but to re and enjoy the rest of the evening. She peat the Jack Donally leadership for walked out of the restaurant into the mula. Create your own senior team, pick cool fall air."Let's see, which way?" she a product, and be forceful in moving said out loud, speaking to no one in it through to conclusion, even if that particular means more top-down management than is typically your style." What should Stephanie do: institute At that point, friends joined them, a basic reorganization, or re-create and the conversation shifted to the Red the Jack Donally model of strong Sox. Stephanie listened with only half leadership? Four commentators offer an ear, baseball bored her and her head expert advice Watch Steve Ballmer's webcast about how people drive business success. Visit microsoft.com/business/ peopleready Your potential. Our passion." Microsoft Coord traite where MAY 2006 M 2 PART A: Having read the HBR Case Study, Big Shoes to Fill (attached), answer the following questions about the case. 1. What type of leader, discussed within the current course module, best characterizes former CEO Jack Donally. Be sure to provide rationale for your selection 2. What situational variables contributed to the success and maintenance of this type of leader in this specific case? PART B: Now imagine you are Stephanie Fortas, the new CEO of Innostat. 1. What leadership style/approach/theory would you embrace and implement, and why? Be sure to reference reasons for your decision (e.g., company history, current personnel, market trends, etc.). 2. How would you communicate your new strategy for the company to maximize buy-in and organizational success and why would you use this style and medium of communication? Draft detailed messages to each and every group of stakeholders you identify as necessary (e.g., board, senior management, all employees, etc.) to communicate your position(s) and rationale. These messages may take various forms depending upon the content and the audience so make size and identify the specific medium you would use to communicate with each group (e.g., memo, presentation, etc.). Reminders for Part B: Answer each of the questions above first on one page. Then draft the necessary message(s) to your organization on subsequent pages. If you choose to write memos, or emails please make sure your formatting is consistent throughout and the message length is appropriate for this type of message. . If you choose to include a white paper or other report please follow APA guidelines for formatting le.g. font, margins, page numbers, headings, etc.) If you choose to include a presentation make sure and write out the presentation content fully so that I can see exactly how the presentation would be delivered. Don't assume I will fill in the blanks. The entire assignment for Part B should NOT exceed 5 typed pages. the two Big Shoes to Fill by Michael Beer T: A larger-than-life CEO left Innostat with larger-than-life problems. The new boss knows the company needs fundamental change, but the image of her predecessor hovers. 'HE MEMORIAL SERVICE was a sellout. Jack Donally had been a colossal fig- ure who commanded a lot of respect, if not affection. He'll be a hard act to follow, Stephanie Fortas thought as she strained to make sense of the eulogy, delivered in a thick Irish accent by the same priest who had married Jack and Moira Donally 40 years ago. Moira must be feeling especially lost, Stephanie thought. A deferring, uncomplaining woman, Moira had apparently taken second place to Innostat all her married life, and just when it seemed that she would soon have Jack all to herself, he up and died. But it wasn't just Moira and her five children who looked lost, Stephanie thought. Everyone seemed bewildered. As the CEO appointed by the board to succeed Jack just before his untimely death, Stephanie knew that a lot of people would be looking to her for an swers. She edged forward to pay herre spects to Moira, aware that a lot of curi- ous eyes were fixed on her. "I've heard so much about Jack," Stephanie said, offering her condo lences to Moira. "I'm going to do my best to protect his legacy." A One-Man Show That legacy was formidable. Boston- based Innostat was very much Jack Donally's creation. He had transformed the company from a small local manu- facturer of scalpels and other surgical equipment into the world's best-known maker of prosthetic limbs and surgical implants. Sales had reached more than $2 billion, with the company employing more than 5,000 people at locations in Boston, Los Angeles, and Dublin, Ireland. Innostat also had sales and mar- keting country organizations around the world. A pharmacist's son from the rough-and-tumble Irish American strong hold of South Boston-Southie to the HBR's cases, which are fictional present common managerial dilemmas and offer concrete solutions from experts 2006 42 3 HBR CASE STUDY. Bg Shoes to Full locals - Jack had joined Innostat as a velop competitive products of their own. Innovated. But she wasn't sure that in salesman right after completing a tour Worse, the company seemed to have lost nostat was in any shape to survive a of duty in Vietnam as a medical orderly, its innovating edge. After a string of new major change initiative. His unit had been in the thick of some offerings in the 1990s, which delivered of the worst action, and he always sald annual growth in revenues and profits The Walk by the River afterwand that his passion for the com of more than 15 a year, Innostat had Stephanie believed in tackling big chal- pany and its products came from that not launched any major new products lenges head on. Her first priority was experience for the past four years, yet they were to figure out how Frank felt about her Under Jack's leadership, Innostat built essential for profitable growth. and whether she could work with him. a reputation for technological innova Stephanie had not been Jack's choice They had met at her hotel in Harvard tion and manufacturing quality. That for a successor. He had strongly pleaded Square the day after her appointment was, on the face of it, surprising since the case for Frank to the board. But was announced, and Frank had pro Jack had majored in history at the Uni three years of falling results and grow posed a stroll along the Charles. It was versity of Massachusetts and liked to ing pressure from Wall Street had a warm, early October day, and the uni- say that he had no head for "science prompted the board to look for an out versity crew teams were out on the river talk." But the truth was, he loved to sider. The directors settled on Stephanie practicing for the Head of the Charles spend time talking to surgeons and re because of her technical background. regatta later in the month. As they searchers. He had that special skill that A 1989 PhD from Stanford, she had also walked, Stephanie and Frank struggled merged an interest in technology with received an MBA from MIT's Sloan to find common ground. an understanding of what customers "Where do you plan on living?" Frank needed and wanted. He typically came asked. "Jack said that really back from his travels full of ideas for "Back Bay, probably." Stephanie said. new products. He would go straight to good ideas don't need "I don't have kids, so I don't need a big the head of R&D and get him started on house. Anyway, I like the buzz of city life." incentives, they need a project, rarely engaging innostat's se- "I know what you mean," Frank nior team in discussions of these ideas passion, and that he agreed. "I miss Back Bay. Cathy and I and how they fit in to the company's was the chief passion had a place there until the kids came broader strategy. Consequently, market- along. Now we're in the suburbs. The ing never developed as a strong func officer." schools are good, and the commute is tion, and R&D, though technologically fairly short. But I miss the edge of city sophisticated, never developed market School in the early 1990s, and then life sometimes." ing savvy. headed back West to join the marketing Frank shuffled his feet. "Look, Steph- Despite his primary focus on new department of Phasar, a medical tech-anie," he said. "You have a lot of prob- product ideas, Jack was also acutely con nology company. Stephanie's combina lems in this company, and I'm not one of scious that health care products had to tion of technological skills and busi them. I know everyone thinks of me as be error free, and he had always kept a ness savvy had marked her as a highflier, Jack's boy, and I was. But I'm not such close eye on manufacturing. Frank Tim and within ten years she had become a fool that I can't see that the company oshotsky, the self-effacing head of pro the company's chief operating officer. needs to change." He caught Stephanie's duction recruited from Toyota, had in In that role, she worked closely with eye. "We got way too dependent on troduced many of the car company's Phasar's chief science officer to ensure Jack for ideas," he said, "and, to be hon- quality practices, which had helped the that the company's R&D efforts were for est, he didn't have much faith that any firm win a Baldrige prize. cused on commercially viable products. one in the company could come up But in the three years before Jack's The headhunter had caught Steph- with them, so he didn't really develop retirement, Innostat's performance had anie at the perfect moment-right after the capability. He was always talking to troduced many of the car company's Phasar's chief science officer to ensure Jack for ideas," he said, "and, to be hon quality practices, which had helped the that the company's R&D efforts were fo est, he didn't have much faith that any firm win a Baldrige prize. cused on commercially viable products. one in the company could come up But in the three years before Jack's The headhunter had caught Steph with them, so he didn't really develop retirement, Innostat's performance had anle at the perfect moment-right after the capability. He was always talking to declined dramatically, and the com a messy divorce. She was eager to put people outside the company for ideas. pany was facing strong competitive California behind her, and a profes And now we've got a real problem on challenges in its key markets. The firm's sional challenge offered just the kind our hands." once generous margins had narrowed of distraction she needed. There was no Stephanie listened intently. "And as other companies found ways to engl doubt that innostat would present that what would you do if you had my job?" neer around Innostat's patents and de challenge. It seemed to have completely she asked pointedly. lost the ability to innovate, and investors Frank paused for a moment. "Well, Michael Beer (mbeer@hbs.edu) is the were starting to question whether the to begin with," he said, "we've got to take Cahners-Rabb Professor of Business Ad company actually had a strategy. Long a look at why people are not thinking ministration Emeritus at Harvard Busi term, Stephanie knew that she would beyond their immediate functional ness School in Boston have to radically alter the way the firm departments. People around here are 44 HARVARD BUSINESS REVIEW Big Shoes to Fill HBR CASE STUDY 70.in o es%20to%201%20CHBR%20Case).pdt HBR CASE STUDY . Big Shoes to Fill focused only on making their numbers of the product. The teams would be Stephanie forced her mind back to the within their own units, so they don't made up of those most closely related to report. The consultants believed that have much reason to respond to prod the new development: bench scientists people needed to be motivated further uct development initiatives from R&D. from R&D, a relatively senior manufac to commit the time and energy to the new Besides, they don't believe R&D's esti turing engineer, along with the man process, and recommended that employ mates of market potential. So why in ager of the plant making the product ees be held accountable to both their vest time and money on a promise they and someone from sales. functional and team heads. The consul don't believe? When Jack pushed an Because Jack had played such a dom tants also suggested that the team leaders idea, we all responded because Jack was inant role in defining new product op and members be measured on the time- the boss, and he was just that kind of portunities and pushing them through liness and profitability of new products guy. But with him gone, who's going to the organization, the consultants ac and that all incentives be monetary and stick their necks out now?" knowledged that the marketing divi based on performance. They recom- "Did you ever talk to Jack about this?" sion lacked the experience and credibil mended hiring an organizational devel- Stephanie asked more abruptly than ity to do this kind of work. On the other opment consultant to work with HR on she had intended. hand, the division had the best view of designing the new system and on creat- "1 didn't," Frank acknowledged. "But the market through its relationships ing appropriate training programs. we did get a report from PK Henderson with surgeons. Yet sales and marketing It was the final recommendation, a year ago. The board got Jack to call at Innostat was heavily sales dominated though, that obviously got the report them in for a consult. They came up and had few people with both high lev killed. Henderson had strongly urged with this reorg idea. Most of us thoughts of marketing and general manage Jack and other top executives to be less it was a little crazy and that a massive re ment skills. To get around this problem, involved in the details of developing organization was not the answer. Per the consultants had suggested creating new products, limiting themselves to sonally, I still believe that the problem is a strategic marketing department that formulating strategy, choosing the port- motivation, that the company needs would report to the CEO. This new de folio of new products, reviewing team more powerful incentives to get people partment would be responsible for progress, and continually reprioritizing thinking out of the box. Jack didn't see identifying opportunities and for lead projects and reallocating money and it, though, and he buried the report. He ing the product development process. people based on emerging information. said that really good ideas don't need No recommendation was made as to Stephanie wondered whether the con- incentives, they need passion, and that who in the company might head this sultants who recommended these mea- he was the chief passion officer." new department. It was this issue that sures would ever have received another slowed acceptance of the reorganization assignment from Innostat. Probably not. Filed but Not Forgotten plan. Jim Pappas, director of sales and Jack would never have said yes to these Stephanie had come away from the marketing, clearly didn't have the head recommendations. But should she? conversation intrigued. She'd been for this kind of work. But, like most sales told about the Henderson report in her men, he was fiercely territorial and re Company or Career negotiations with the board, but only sented losing part of his responsibilities. Stephanie put the question to Teddy in passing. The board members had Stephanie felt for Jim. He was an old Adler, her executive coach. Stephanie seemed quite dismissive, so she hadn't school salesman down to his fingertips. had first consulted Teddy for career ad- pressed them on it. She decided to get He entertained lavishly, and he probu vice shortly after joining Phasar. A fel. bly knew the golfing handicap of every low Sloan alum had recommended him: Stephanie read the report that night hospital purchasing manager in Boston "He's a bit domineering but very smart in her office over a tuna sandwich from It wasn't going to be usy for him or for the alum had said. "He can give you a the company cafeteria. She picked up anyone in the company to give up his real political edge. Teddy had more the binder and turned to the summary sovereignty once it happened, all hell than lived up to the billing. na As Frank had told her the renart ruld heak Stenbani looked After Stenhan read the renart she herself a copy henerico bly we going indicap o every Stephanie read the report that night hospital purchasing manager in Boston "He's a bit domineering but very smart," in her office over a tuna sandwich from It wasn't going to be easy for him or for the nlum had said. "He can give you a the company cafeteria. She picked up anyone in the company to give up his real political edge." Teddy had more the binder and tumed to the summary sovereignty, once it happened, all hell than lived up to the billing page. As Prank had told her, the report's could break loose. Stephanie looked After Stephanie read the report, she recommendations involved a fairly around her office, which had Jack's per and Teddy met at a small restaurant in major change to the company's man sonality Imprinted on it. A huge corner Cambridge, one of Stephanie's favorite agement practices. Decision rights for suite with an oversized mahogany an haunts when she had been a student at new product development were to be tique desk, the room communicated the MIT. The restaurant was part of a popu- taken out of R&D and given to cross force of life that had been Jack Donally. lar, upmarket local chain, and Stephanie functional new product development "He certainly was a charismatic leader, remembered having a farewell meal teams headed by senior marketing Stephanie thought, scanning her sur there with some friends after her busi- people. The teams would be responsi- roundings, but I wonder what his kids ness school graduation. She ordered a ble for seeing the development from thought of him. He must have been small Caesar salad and a glass of Diet its early stages through to introduction a difficult man to live with." Coke as she settled down to talk with 46 HARVARD BUSINESS REVIEW IT solutions, processes and automation can improve your company's success. But there's one resource that trumps all others. Your people Teddy, who was fairly dismissive of the was full of the conversation she and Henderson report."There's no way you Teddy had just had. On one level, every can win doing a wholesale reorg," he thing he said made sense. A massive reorg said, leaning in and lowering his voice. carried a lot of risks. The noncollabora "You just don't have the people to make tive culture of the company made it hard it work fast enough. It'll take five years to see how a complex matrix like cross- minimum. If he'd wanted to Jack might functional organization could possibly have made it work, but not you, not yet. work. Moreover, there was the question You've got to build some capital with of who in the company could lead the the board to make that kind of change. new strategic marketing group. As Teddy and to do that you're going to have to had pointed out, she could find herself rack up some successes." out on her ear before the results came Stephanie pushed back. "Suppose ! in. If the company survived after she don't turn out to have any great ideas left, it would be the next CEO who got for products, or the ones I do develop the glory. And that was supposing Inno- and push through just don't pan out? stat could even stay independent. It was Then we're back to square one and at obvious that the board knew that, to that point, the honeymoon, such as it Why else would it be in such a hurry? is, will be over." But Stephanie wasn't so sure that "Look, Stephanie, that's just the risk Teddy was giving her good advice. Her you take with this kind of job. What experience and values instinctively told this board wants is new products, and her that developing the organization they're not worried about how they get and its people so that the company They stand at the core of your company's ideas, partner relationships and customer knowledge. When you empower your people with the right tools, you recognize them as your greatest asset. ni company's ideas, partner relationships and customer knowledge. When you empower your people with the right tools, you recognize them as your greatest asset. "Empowering your people will empower the entire company Steve Ballmer, CEO Microsoft Corporation rack up some successes out on her car before the results came Stephanie pushed back. "Suppose I in. If the company survived after she don't turn out to have any great ideas left, it would be the next CEO who got for products, or the ones I do develop the glory. And that was supposing Inno and push through just don't pan out? stat could even stay Independent. It was Then we're back to square one-and at obvious that the board knew that, too. that point, the honeymoon, such as it Why else would it be in such a hurry? is, will be over." But Stephanie wasn't so sure that "Look, Stephanie, that's just the risk Teddy was giving her good advice. Her you take with this kind of job. What experience and values instinctively told this board wants is new products, and her that developing the organization they're not worried about how they get and its people so that the company them. They've made you CEO because would possess the capability for sus they think you can give them what they tained innovation was the way to go. In want. Remember, they saw the report, nostat has shown that it can't dream up too, and they buried it. If they'd wanted new products on its own. Shouldn't she to do what the report recommended, be looking for ways to fix that? Wasn't they would have hired some reorg ex a CEO supposed to look to the long pert instead of you. Your strong suits are term? Or was she just cooking her goose? technology and marketing. That makes Then again, she had never been in you the best person to spot new prod- this type of turnaround situation be- ucts that will work - products that you fore. Frank had said that the problem can then drive through the organiza in the company was motivation. People tion. In this respect, your biggest prob needed an incentive. Why not make a lem will be Timoshotsky because, what- larger percentage of managers' compen- ever he says, he'll resent the fact that sation contingent on sales and profits? you got the job and he didn't. The other This, together with strong leadership people will fall in line. Pappas is near the from her, might be just the solution. end of his career and won't want to Maybe Teddy was right after all. move, so he'll ultimately knuckle under. "Guys." Stephanie said to Teddy and And Chuck Bukowski over there at those who had joined them, "I have to R&D is used to playing a supporting go. I have an early morning meeting role anyway. With limited time at your tomorrow." She suggested they stay disposal, you've got no choice but to re and enjoy the rest of the evening. She peat the Jack Donally leadership for walked out of the restaurant into the mula. Create your own senior team, pick cool fall air."Let's see, which way?" she a product, and be forceful in moving said out loud, speaking to no one in it through to conclusion, even if that particular means more top-down management than is typically your style." What should Stephanie do: institute At that point, friends joined them, a basic reorganization, or re-create and the conversation shifted to the Red the Jack Donally model of strong Sox. Stephanie listened with only half leadership? Four commentators offer an ear, baseball bored her and her head expert advice Watch Steve Ballmer's webcast about how people drive business success. Visit microsoft.com/business/ peopleready Your potential. Our passion." Microsoft Coord traite where MAY 2006 M 2