What strategy should Francesca pursue: institute a basic

What strategy should Francesca pursue: institute a basic reorganization, or recreate the Jack Dodson model of strong leadership? ? Give detailed reasons for your answer based on the circumstances of the case.

Francesca had come away from the conversation intrigued. She'd been told about the Henderson report in her negotiations with the board, but only in passing. The board members had seemed quite dismissive, so she hadn't pressed them on it. She decided to get herself a copy.

Francesca read the report that night in her office over a tuna sandwich from the company cafeteria. She picked up the binder and turned to the summary page. As Frank had told her, the report's recommendations involved a fairly major change to the company's management practices. Decision rights for new product development were to be taken out of R&D and given to cross-functional new product development teams headed by senior marketing people. The teams would be responsible for seeing the development from its early stages through to introduction of the product. The teams would be made up of those most closely related to the new development: bench scientists from R&D, a relatively senior manufacturing engineer, along with the manager of the plant making the product and someone from sales.

Because Jack had played such a dominant role in defining new product opportunities and pushing them through the organization, the consultants acknowledged that the marketing division lacked the experience and credibility to do this kind of work. On the other hand, the division had the best view of the market through its relationships with surgeons. Yet sales and marketing at Interboro was heavily sales dominated and had few people with both high levels of marketing and general management skills. To get around this problem, the consultants had suggested creating a strategic marketing department that would report to the CEO. This new department would be responsible for identifying opportunities and for leading the product development process. No recommendation was made as to who in the company might head this new department. It was this issue that slowed acceptance of the reorganization plan. Jim Pappas, director of sales and marketing, clearly didn't have the head for this kind of work. But, like most salesmen, he was fiercely territorial and resented losing part of his responsibilities.

Francesca felt for Jim. He was an old-school salesman down to his fingertips. He entertained lavishly, and he probably knew the golfing handicap of every hospital purchasing manager in Boston. It wasn't going to be easy for him or for anyone in the company to give up his sovereignty; once it happened, all hell could break loose. Francesca looked around her office, which had Jack's personality imprinted on it. A huge corner suite with an oversized mahogany antique desk, the room communicated the force of life that had been Jack Dodson. "He certainly was a charismatic leader," Francesca thought, scanning her surroundings, "but I wonder what his kids thought of him. He must have been a difficult man to live with."

Francesca forced her mind back to the report. The consultants believed that people needed to be motivated further to commit the time and energy to the new process, and recommended that employees be held accountable to both their functional and team heads. The consultants also suggested that the team leaders and members be measured on the timeliness and profitability of new products and that all incentives be monetary and based on performance. They recommended hiring an organizational development consultant to work with HR on designing the new system and on creating appropriate training programs.

It was the final recommendation, though, that obviously got the report killed. Henderson had strongly urged Jack and other top executives to be less involved in the details of developing new products, limiting themselves to formulating strategy, choosing the portfolio of new products, reviewing team progress, and continually reprioritizing projects and reallocating money and people based on emerging information. Francesca wondered whether the consultants who recommended these measures would ever have received another assignment from Interboro. Probably not. Jack would never have said yes to these recommendations. But should she?

Company or Career

Francesca put the question to Teddy Adler, her executive coach. Francesca had first consulted Teddy for career advice shortly after joining Razar. A fellow Sloan alum had recommended him: "He's a bit domineering but very smart," the alum had said. "He can give you a real political edge." Teddy had more than lived up to the billing.

After Francesca read the report, she and Teddy met at a small restaurant in Cambridge, one of Francesca's favorite haunts when she had been a student at MIT. The restaurant was part of a popular, upmarket local chain, and Francesca remembered having a farewell meal there with some friends after her business school graduation. She ordered a small Caesar salad and a glass of Diet Coke as she settled down to talk with Teddy, who was fairly dismissive of the Henderson report. "There's no way you can win doing a wholesale reorg," he said, leaning in and lowering his voice. "You just don't have the people to make it work fast enough. It'll take five years minimum. If he'd wanted to, Jack might have made it work, but not you, not yet. You've got to build some capital with the board to make that kind of change, and to do that you're going to have to rack up some successes."

Francesca pushed back. "Suppose I don't turn out to have any great ideas for products, or the ones I do develop and push through just don't pan out? Then we're back to square one - and at that point, the honeymoon, such as it is, will be over."

"Look, Francesca, that's just the risk you take with this kind of job. What this board wants is new products, and they're not worried about how they get them. They've made you CEO because they think you can give them what they want. Remember, they saw the report, too, and they buried it. If they'd wanted to do what the report recommended, they would have hired some reorg expert instead of you. Your strong suits are technology and marketing. That makes you the best person to spot new products that will work - products that you can then drive through the organization. In this respect, your biggest problem will be Tambor because, whatever he says, he'll resent the fact that you got the job and he didn't. The other people will fall in line. Pappas is near the end of his career and won't want to move, so he'll ultimately knuckle under. And Chuck Bukowski over there at R&D is used to playing a supporting role anyway. With limited time at your disposal, you've got no choice but to repeat the Jack Dodson leadership formula. Create your own senior team, pick a product, and be forceful in moving it through to conclusion, even if that means more top-down management than is typically your style."

At that point, friends joined them, and the conversation shifted to the Red Sox. Francesca listened with only half an ear; baseball bored her, and her head was full of the conversation she and Teddy had just had. On one level, everything he said made sense. A massive reorg carried a lot of risks. The noncollaborative culture of the company made it hard to see how a complex matrix like cross-functional organization could possibly work. Moreover, there was the question of who in the company could lead the new strategic marketing group. As Teddy had pointed out, she could find herself out on her ear before the results came in. If the company survived after she left, it would be the next CEO who got the glory. And that was supposing Interboro could even stay independent. It was obvious that the board knew that, too. Why else would it be in such a hurry?

But Francesca wasn't so sure that Teddy was giving her good advice. Her experience and values instinctively told her that developing the organization and its people so that the company would possess the capability for sustained innovation was the way to go. Interboro has shown that it can't dream up new products on its own. Shouldn't she be looking for ways to fix that? Wasn't a CEO supposed to look to the long term? Or was she just cooking her goose?

Then again, she had never been in this type of turnaround situation before. Frank had said that the problem in the company was motivation. People needed an incentive. Why not make a larger percentage of managers' compensation contingent on sales and profits? This, together with strong leadership from her, might be just the solution. Maybe Teddy was right after all.

"Guys," Francesca said to Teddy and those who had joined them, "I have to go. I have an early morning meeting tomorrow." She suggested they stay and enjoy the rest of the evening. She walked out of the restaurant into the cool fall air. "Let's see, which way?" she said out loud, speaking to no one in particular.

Expert Answer

No answer yet for this question.