Quiz 11: Managing Innovation and Change

Business

Manager J has just been asked to evaluate the potential move of a production plant to Mexico. There are a number of forces for change evident at Company L: • Labor cost : wages in Mexico are considerably lower than those paid today at Company L's plant. • Labor flexibility : the union has refused to consider any sort of changes, including lower wages and different work flow models. • Competitive pressures: competitors now are selling similar products for a lower price, and are close to surpassing quality levels as well. • Return on investment: the combination of all the above factors has resulted in the Company L plant returning less to the corporation than they would earn if they just put the annual plant operating costs in a bank account.

Major crises can inspire companies who are generally rivals to work together, for the good of the community. However, this change isn't lasting. Once the crisis is over, the conditions, such as competing for the same customers and selling similar products, will still be there - and so the companies will once again begin focusing on making sales, at the expense of the other company.

To determine an action to take on the proposed new business model, A needs to balance the vision of the company - producing high quality designs that are a work of art - against the basic value of a business, which is to produce items that meet customer needs and to make a profit for shareholders. In terms of the vision, the crowdsource-produced designs do not meet the original vision, as the quality is not as high as those developed in-house by professional designers. In terms of the business and its future success, the new designs are very attractive to customers and are more profitable due to the lack of professional design effort required to produce them. In the meeting, A should argue for a return to the original vision of the organization. This is the model she and the other designers came to the company to support. If she finds that the company wishes to continue with the more profitable crowdsource design model, she should begin seeking employment elsewhere that is more compatible with her personal values of high-quality design.