Quiz 11: Managing Innovation and Change

Southern Discomfort Jim Malesckowski remembers the call of two weeks ago as if he just put down the telephone receiver. "I just read your analysis and I want you to get down to Mexico right away," Jack Ripon, his boss and chief executive officer, had blurted in his ear. "You know we can't make the plant in Oconomo work anymore-the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week." At that moment, Jim felt as if a shiv had been stuck in his side, just below the rib cage. As president of the Wisconsin Specialty Products Division of Lamprey, Inc., he knew quite well the challenge of dealing with high-cost labor in a third-generation, unionized U.S. manufacturing plant. And although he had done the analysis that led to his boss's knee-jerk response, the call still stunned him. There were 520 people who made a living at Lamprey's Oconomo facility, and if it closed, most of them wouldn't have a journey-man's prayer of finding another job in the town of 9,000 people. Instead of the $16-per-hour average wage paid at the Oconomo plant, the wages paid to the Mexican workers-who lived in a town without sanitation and with an unbelievably toxic effluent from industrial pollution-would amount to about $1.60 an hour on average. That's a savings of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transportation, and other matters. After two days of talking with Mexican government representatives and managers of other companies in the town, Jim had enough information to develop a set of comparative figures of production and shipping costs. On the way home, he started to outline the report, knowing full well that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate. The plant in Oconomo had been in operation since 1921, making special apparel for persons suffering injuries and other medical conditions. Jim had often talked with employees who would recount stories about their fathers or grandfathers working in the same Lamprey company plane-the last of the original manufacturing operations in town. But friendship aside, competitors had already edged past Lamprey in terms of price and were dangerously close to overtaking it in product quality. Although both Jim and the plant manager had tried to convince the union to accept lower wages, union leaders resisted. In fact, on one occasion when Jim and the plant manager tried to discuss a cell manufacturing approach, which would cross-train employees to perform up to three different jobs, local union leaders could barely restrain their anger. Yet probing beyond the fray, Jim sensed the fear that lurked under the union reps' gruff exterior. He sensed their vulnerability, but could not break through the reactionary bark that protected it. A week has passed and Jim just submitted his report to his boss. Although he didn't specifically bring up the point, it was apparent that Lamprey could put its investment dollars in a bank and receive a better return than what its Oconomo operation is currently producing. Tomorrow, he'll discuss the report with the CEO. Jim doesn't want to be responsible for the plant's dismantling, an act he personally believes would be wrong as long as there's a chance its costs can be lowered. "But Ripon's right," he said to himself. "The costs are too high, the union's unwilling to cooperate, and the company needs to make a better return on its investment if it's to continue at all. It sounds right but feels wrong. What should I do?" What forces for change are evident at the Oconomo plant?

Times of shared crisis, such as the September 11, 2001, terrorist attack on the World Trade Center or the Gulf Coast hurricanes in 2005, can induce many companies that have been bitter rivals to put their competitive spirit aside and focus on cooperation and courtesy. Do you believe this type of chance will be a lasting one? Discuss.

Crowdsourcing Last year, when Ai-Lan Nguyen told her friend Greg Barnwell that Off the Hook Tees, based in Asheville, North Carolina, was going to experiment with crowdsourcing, he warned her she wouldn't like the results. Now, as she was about to walk into a meeting to decide whether to adopt this new business model, she was afraid her friend had been right. Crowdsourcing uses the Internet to invite anyone, professionals and amateurs alike, to perform tasks such as product design that employees usually perform. In exchange, contributors receive recognition-but little or no pay. Ai-Lan, as vice president of operations for Off the Hook, a company specializing in witty T-shirts aimed at young adults, upheld the values of founder Chris Woodhouse, who, like Ai-Lan, was a graphic artist. Before he sold the company, the founder always insisted that T-shirts be well designed by top-notch graphic artists to make sure each screen print was a work of art. Those graphic artists reported to Ai-Lan. During the past 18 months, Off the Hook's sales stagnated for the first time in its history. The crowdsourcing experiment was the latest in a series of attempts to jump-start sales growth. Last spring, Off the Hook issued its first open call for T-shirt designs and then posted the entries on the Web so people could vote for their favorites. The top five vote-getters were handed over to the in-house designers, who tweaked the submissions until they met the company's usual quality standards. When CEO Rob Taylor first announced the company's foray into crowdsourcing, Ai-Lan found herself reassuring the designers that their positions were not in jeopardy. Now Ai-Lan was all but certain she would have to go back on her word. Not only had the crowdsourced tees sold well, but Rob had put a handful of winning designs directly into production, bypassing the design department altogether. Customers didn't notice the difference. Ai-Lan concluded that Rob was ready to adopt some form of the Web-based crowdsourcing because it made T-shirt design more responsive to consumer desires. Practically speaking, it reduced the uncertainty that surrounded new designs, and it dramatically lowered costs. The people who won the competitions were delighted with the exposure it gave them. However, when Ai-Lan looked at the crowdsourced shirts with her graphic artist's eye, she felt that the designs were competent, but none achieved the aesthetic standards attained by her in-house designers. Crowdsourcing essentially replaced training and expertise with public opinion. That made the artist in her uncomfortable. More distressing, it was beginning to look as if Greg had been right when he'd told her that his working definition of crowdsourcing was "a billion amateurs want your job." It was easy to see that if Off the Hook adopted crowdsourcing, she would be handing out pink slips to most of her design people, longtime employees whose work she admired. "Sure, crowdsourcing costs the company less, but what about the human cost?" Greg asked. What future course should Ai-Lan argue for at the meeting? And what personal decisions did she face if Off the Hook decided to put the crowd completely in charge when it came to T-shirt design? What Would You Do? 1. Go to the meeting and argue for abandoning crowdsourcing for now in favor of maintaining the artistic integrity and values that Off the Hook has always stood for. 2. Accept the reality that because Off the Hook's CEO Rob Taylor strongly favors crowdsourcing, it's a fait accompli. Be a team player and help work out the details of the new design approach. Prepare to lay off graphic designers as needed. 3. Accept the fact that converting Off the Hook to a crowdsourcing business model is inevitable, but because it violates your own personal values, start looking for a new job elsewhere.

Southern Discomfort Jim Malesckowski remembers the call of two weeks ago as if he just put down the telephone receiver. "I just read your analysis and I want you to get down to Mexico right away," Jack Ripon, his boss and chief executive officer, had blurted in his ear. "You know we can't make the plant in Oconomo work anymore-the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week." At that moment, Jim felt as if a shiv had been stuck in his side, just below the rib cage. As president of the Wisconsin Specialty Products Division of Lamprey, Inc., he knew quite well the challenge of dealing with high-cost labor in a third-generation, unionized U.S. manufacturing plant. And although he had done the analysis that led to his boss's knee-jerk response, the call still stunned him. There were 520 people who made a living at Lamprey's Oconomo facility, and if it closed, most of them wouldn't have a journey-man's prayer of finding another job in the town of 9,000 people. Instead of the $16-per-hour average wage paid at the Oconomo plant, the wages paid to the Mexican workers-who lived in a town without sanitation and with an unbelievably toxic effluent from industrial pollution-would amount to about $1.60 an hour on average. That's a savings of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transportation, and other matters. After two days of talking with Mexican government representatives and managers of other companies in the town, Jim had enough information to develop a set of comparative figures of production and shipping costs. On the way home, he started to outline the report, knowing full well that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate. The plant in Oconomo had been in operation since 1921, making special apparel for persons suffering injuries and other medical conditions. Jim had often talked with employees who would recount stories about their fathers or grandfathers working in the same Lamprey company plane-the last of the original manufacturing operations in town. But friendship aside, competitors had already edged past Lamprey in terms of price and were dangerously close to overtaking it in product quality. Although both Jim and the plant manager had tried to convince the union to accept lower wages, union leaders resisted. In fact, on one occasion when Jim and the plant manager tried to discuss a cell manufacturing approach, which would cross-train employees to perform up to three different jobs, local union leaders could barely restrain their anger. Yet probing beyond the fray, Jim sensed the fear that lurked under the union reps' gruff exterior. He sensed their vulnerability, but could not break through the reactionary bark that protected it. A week has passed and Jim just submitted his report to his boss. Although he didn't specifically bring up the point, it was apparent that Lamprey could put its investment dollars in a bank and receive a better return than what its Oconomo operation is currently producing. Tomorrow, he'll discuss the report with the CEO. Jim doesn't want to be responsible for the plant's dismantling, an act he personally believes would be wrong as long as there's a chance its costs can be lowered. "But Ripon's right," he said to himself. "The costs are too high, the union's unwilling to cooperate, and the company needs to make a better return on its investment if it's to continue at all. It sounds right but feels wrong. What should I do?" What is the primary type of change needed-changing "things" or changing the "people and culture?" Can the Wisconsin plant be saved by changing things alone, by changing people and culture, or must both be changed? Explain your answer.

A manager of an international chemical company said that few new products in her company were successful. What would you advise the manager to do to help increase the company's success rate?

Southern Discomfort Jim Malesckowski remembers the call of two weeks ago as if he just put down the telephone receiver. "I just read your analysis and I want you to get down to Mexico right away," Jack Ripon, his boss and chief executive officer, had blurted in his ear. "You know we can't make the plant in Oconomo work anymore-the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week." At that moment, Jim felt as if a shiv had been stuck in his side, just below the rib cage. As president of the Wisconsin Specialty Products Division of Lamprey, Inc., he knew quite well the challenge of dealing with high-cost labor in a third-generation, unionized U.S. manufacturing plant. And although he had done the analysis that led to his boss's knee-jerk response, the call still stunned him. There were 520 people who made a living at Lamprey's Oconomo facility, and if it closed, most of them wouldn't have a journey-man's prayer of finding another job in the town of 9,000 people. Instead of the $16-per-hour average wage paid at the Oconomo plant, the wages paid to the Mexican workers-who lived in a town without sanitation and with an unbelievably toxic effluent from industrial pollution-would amount to about $1.60 an hour on average. That's a savings of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transportation, and other matters. After two days of talking with Mexican government representatives and managers of other companies in the town, Jim had enough information to develop a set of comparative figures of production and shipping costs. On the way home, he started to outline the report, knowing full well that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate. The plant in Oconomo had been in operation since 1921, making special apparel for persons suffering injuries and other medical conditions. Jim had often talked with employees who would recount stories about their fathers or grandfathers working in the same Lamprey company plane-the last of the original manufacturing operations in town. But friendship aside, competitors had already edged past Lamprey in terms of price and were dangerously close to overtaking it in product quality. Although both Jim and the plant manager had tried to convince the union to accept lower wages, union leaders resisted. In fact, on one occasion when Jim and the plant manager tried to discuss a cell manufacturing approach, which would cross-train employees to perform up to three different jobs, local union leaders could barely restrain their anger. Yet probing beyond the fray, Jim sensed the fear that lurked under the union reps' gruff exterior. He sensed their vulnerability, but could not break through the reactionary bark that protected it. A week has passed and Jim just submitted his report to his boss. Although he didn't specifically bring up the point, it was apparent that Lamprey could put its investment dollars in a bank and receive a better return than what its Oconomo operation is currently producing. Tomorrow, he'll discuss the report with the CEO. Jim doesn't want to be responsible for the plant's dismantling, an act he personally believes would be wrong as long as there's a chance its costs can be lowered. "But Ripon's right," he said to himself. "The costs are too high, the union's unwilling to cooperate, and the company needs to make a better return on its investment if it's to continue at all. It sounds right but feels wrong. What should I do?" What do you think is the major underlying cause of the union leaders' resistance to change? If you were Jim Malesckowski, what implementation tactics would you use to try to convince union members to change to save the Wisconsin plant?

As a manager, how would you deal with resistance to change when you suspect employees' fears of job loss are well founded?

How might businesses use the Internet to identify customer needs through open innovation? What do you see as the major advantages and disadvantages of the open innovation approach?

To tap into the experience of battle-tested soldiers, the U.S. Army recently began encouraging personnel from all ranks to go online and collaboratively rewrite some of the Army's field manuals in a Wikipedia-like fashion. When the rank and file showed little interest, one retired colonel suggested top leaders should make soldiers participate. Does coercion seem like a good way to implement this type of change? Discuss.

Analyze the driving and restraining forces of a change you would like to make in your life. Do you believe understanding force-field analysis can help you more effectively implement a significant change in your own behavior?

Which role or roles-the inventor, champion, sponsor, or critic-would you most like to play in the innovation process? Why do you think idea champions are so essential to the initiation of change? Could they be equally important for implementation?

You are a manager, and you believe the expense reimbursement system for salespeople is far too slow, taking weeks instead of days. How would you go about convincing other managers that this problem needs to be addressed?

Do the underlying values of organization development differ from assumptions associated with other types of change? Discuss.

How do large-group interventions differ from OD techniques such as team building and survey feedback?