Sun Hydraulics

  

Day 6: Question 2 – Initial Post What would Daniel Pink (“The Surprising Science of Motivation”) think of Sun Hydraulics?Download the Video Transcript. What were Bob Koski’s assumptions about how to get the best efforts
out of employees and how do they compare with Daniel Pink’s view of
motivation? Asked differently, to what extent is what Sun Hydraulics does (or will do) similar and/or different from what Pink says? Be sure to use examples that support your analysis.
Finally, in what ways are Sun’s principles and practices similar to
and/or different from your organization (or one you used to work for)? Name three similarities and/or differences between Sun and your
organization and the impact/consequences on employee behavior and
motivation. Provide examples.
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CPID 713019
HRMG 6200: Managing People and Organizations
Leonard Glick and Burt Spector
Northeastern University
Spring 3 2017
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HRMG 6200: Managing People and Organizations,
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Northeastern University
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Table of Contents
“Medisys Corp.: The IntensCare Product Development Team” by Donnellon,
Anne; Margolis, Joshua D.
“Sun Hydraulics Corp. (A) and (B) (Abridged)” by Barnes, Louis B.; Kaftan,
Colleen
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11
XanEdu Extra
An Excel−formatted spreadsheet containing the exhibits for the case above is available at
http://content.xanedu.com/hs/491119p2.xls
“Zappos.com 2009: Clothing, Customer Service, and Company Culture” by
Frei, Frances X.; Ely, Robin J.; Winig, Laura
27
XanEdu Extra
An Excel−formatted spreadsheet containing the exhibits for the case above is available at
http://content.xanedu.com/hs/610015p2.xls
“The Discipline of Teams (HBR OnPoint Enhanced Edition)” by Katzenbach,
Jon R.; Smith, Douglas K.
55
67
Bibliography
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4059
OCTOBER 30, 2009
ANNE DONNELLON
JOSHUA D. MARGOLIS
MediSys Corp.:
The IntensCare Product Development Team
It was just six months away from MediSys’s planned August 2009 launch of IntensCare, their new
remote monitoring system for use in hosptials’ intensive care units. The company was investing $20.5
million in the new system, which represented the most ambitious project in the company’s 10-year
history.
Valerie Merz, marketing manager for IntensCare, was feeling enormous pressure as she reviewed
the agenda for the upcoming meeting of the product development team. Once again there was no
scheduled time to resolve the debate over the modular design that she knew was critical to successful
adoption and long-term success in the market. Without this modularity, she was certain that the
system would lose market share to the competition’s forthcoming products, both scheduled for
release within the year. And it wasn’t just her P&L that would take the hit; the team, and the whole
company, would look second-rate.
“Why isn’t Jack stepping up on this issue and getting it resolved?” Merz wondered. Jack Fogel,
senior production manager, was the project lead for IntensCare, but in Merz’s opinion, he was far too
focused on the details of the product side and far too little concerned about the business issues and
the impending launch. Perhaps it was time for her to blow the whistle and get the bosses involved.
How else could she get her colleagues to do the right thing for the company and not just for their
own departments?
MediSys: Background and Organization
MediSys Corp., a privately held U.S.-based medical device manufacturer, was founded in 2002.
Its annual revenues in 2008 were $400 million, and the company employed 1,750 people.1 The
company developed, manufactured, and sold medical monitoring systems for the hospital segment.
1 In 2008, the average value of annual shipments per paid employee in the medical equipment industry was approximately
$190,000.
________________________________________________________________________________________________________________
Babson College Professor Anne Donnellon and HBS Professor Joshua Margolis prepared this case solely as a basis for class discussion and not as
an endorsement, a source of primary data, or an illustration of effective or ineffective management.
This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional
references to actual companies in the narration.
Copyright © 2009 Harvard Business School Publishing. To order copies or request permission to reproduce materials, call 1-800-545-7685, write
Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored
in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or
otherwise—without the permission of Harvard Business Publishing.
Harvard Business Publishing is an affiliate of Harvard Business School.
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4059 | MediSys Corp.: The IntensCare Product Development Team
MediSys’s first two products were highly successful specialty pulmonary and renal monitoring
systems. Though still relatively small, the company was very profitable. Its entrepreneurial culture
had fostered innovative thinking across the company, and as a result, numerous promising initiatives
were at various stages of development—from redesign to development of new systems.
However, the board of MediSys saw early signs that growth was slowing. Two well-known
public competitors, with deep pockets and strong reputations in the industry, had announced they
were moving into MediSys’s key markets with products designed to compete with IntensCare. A
similar competitive response seemed likely as MediSys launched future products as well.
Partly to counter this threat, an aggressive new president, Art Beaumont, was hired in January
2008 to sharpen strategic focus while preserving the innovative culture and restimulating rapid
growth. Within weeks, Beaumont introduced a series of changes. As shown in the MediSys
organization chart (see Exhibit 1), the company continued to be organized functionally; however,
Beaumont created an Executive Committee consisting of his five direct reports: the vice presidents of
sales and marketing, research & development, design and engineering, production, and
administration. His intention was to develop them into an executive team that would jointly create
and implement a strategy for growing the business swiftly. His early months in the job convinced
him that, despite the entrepreneurial culture, some of these managers had become entrenched in their
functional roles and that progress could take some time. While he worked on shaping his
management team, Beaumont also formalized a process for product development. He believed that
MediSys could outmaneuver its larger, richer competitors by speeding product development through
the use of cross-functional teams. Speed was the key. 2
New Product Development at MediSys
Historically, MediSys’s approach to product development was essentially sequential:
1.
Research & Development (R&D) staff typically started the development sequence by
proposing new technologies or new systems that could yield significant new business
opportunities.
2.
Once the leadership agreed on a new idea, Marketing developed product descriptions from
customer needs and responses to new MediSys concepts, and then passed these on to Product
Engineering and Software Design.
3.
Engineering and Software Design developed them into product specifications, and passed
those on to the Regulatory group who researched and, where necessary, conducted clinical
trials to test prototypes of the systems.
4.
Once these specifications were finalized, they were passed on to the production group, which
arranged for the fabrication and assembly of the products.
In August 2008, Beaumont introduced a new parallel system for product development in which a
”core team” of people assembled from all the critical functions—R&D, Marketing & Sales, Product
Engineering, Software Design, Regulatory, and Production—worked together continuously to move
a product from conceptual stage to final production. For every core team, a project leader was
designated to orchestrate its work, keep an eye on the complete project, secure resources for the team,
2 A widely cited economic model developed by McKinsey & Co. calculates that going 50% over budget during development to
get a product out on time reduces profits by only 4%, but staying on budget and getting to market six months late reduces
profits by a third.
2
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MediSys Corp.: The IntensCare Product Development Team | 4059
and serve as a liaison to senior management. Beaumont believed that the project leader needed to
have cross-functional expertise, a track record of high performance, and the respect of his or her
colleagues.
Most of MediSys’s professional employees embraced the cross-functional team design and parallel
development process. Conceptually, it fit their entrepreneurial and team-like approach, though it
was more disciplined and formal than they were used to. They understood that parallel
development required new ways of thinking and behaving, particularly in relationship to the
functional areas that had grown up with the company. “Parallel development doesn’t allow people to
single-mindedly defend the position of their functional area,” one employee noted, “or what’s easiest
or best or cheapest for their own functional area. It forces people to look at the bigger picture.”
While requiring that functions look at the “bigger picture,” parallel development did not alter the
way reporting and evaluation occurred. All employees, including core team members, continued
reporting to their functional managers who continued to supervise and evaluate them.
Art Beaumont recognized that the management style of all the MediSys executives would also
have to change in a parallel development environment:
I know I am asking these folks to give up control, which will be hard for them in the context of
this major investment. But as the company has grown, a management style has evolved here
that doesn’t reflect the entrepreneurial spirit that everyone loves to brag about. It has become
much more of a command-and-control culture with an emphasis on technical excellence. Not
that we don’t need that, but the competition has become intense and our reputation is on the
line, so we need all the brain power and discretionary effort we can get. I think that crossfunctional teams are the only way to get that. But it will be challenging for my direct reports
and me to change our styles to be more patient, open, and trusting, and not to intervene.
History of the IntensCare Project
IntensCare had developed in typical MediSys fashion (see Exhibit 2 for a time line of this product
development effort). In September 2006, Aaron Gerson from the R&D group had the idea for a
patient monitoring system that would collect data on patients in intensive care units and post it to an
electronic database that could provide an integrated profile of an individual patient’s health and
would also send email messages to various physicians and nurses involved in the patient’s care. He
pitched this concept to Peter Fisher, a friend in Sales, who tested it with clients and found great
interest. The two invited a third friend from Software Design (who later left the company) to chat
with them about how this might work, and before long an ad hoc product development group had
organized itself informally to develop this opportunity.
Over the next year, this ad hoc group developed preliminary market research and product
designs, which they took to the senior leaders of MediSys to request funding for further product
development. In July 2007, the group was given $500,000 to be used for software development and
ongoing product engineering work. Progress was slow, as the team members were often pulled
away to work on other priorities in their functional areas. Fisher had been promoted to vicepresident of Sales and Marketing, but started working immediately to identify an external hire to
replace himself in this effort.
In August 2008, Beaumont formalized a core team and chartered it to accelerate the new
monitoring system. (See Exhibit 3 for his notes on a list of team members and their backgrounds that
Beaumont had obtained from Human Resources as he was planning the changes in the IntensCare
project.) The team members included two people from the original ad hoc group: Aaron Gerson, the
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4059 | MediSys Corp.: The IntensCare Product Development Team
R&D researcher who formulated the idea, and Bret O’Brien, a manager in product engineering. Jack
Fogel, senior production manager, was named project leader based on his extensive production
experience at MediSys and his track record for successfully managing the interface between
engineering and production. Dipesh Mukerjee was assigned to oversee the software design and
development (and had made it known immediately that he intended to outsource both functions to a
firm in India). Karen Baio was asked to represent Regulatory Affairs, and a new external hire in
Marketing—Valerie Merz—was assigned to oversee the product launch and manage the P&L for the
new product. Managing this as a business was Merz’s sole assignment for the next three years.
Beaumont approached the IntensCare project with a sense of urgency: “Two competitors have
announced that they will launch similar monitoroing systems within the year. We have to get this
product out the door on time and we cannot make a mistake.” Beaumont committed an additional
$20 million to the rapid development of IntensCare and communicated the new IntensCare goal:
“Launch an innovative, world-class MediSys product by August 2009.”
The IntensCare Team
Before the IntensCare team was formally chartered by Beaumont, the group was convened by
Aaron Gerson and typically met every other Friday afternoon for an hour or so. When Jack Fogel
was appointed project leader, he continued this practice but he also met frequently with Bret O’Brien,
Gerson, and Mukerjee individually or together to brainstorm solutions to problems that had arisen.
In addition to Fogel’s various departmental responsibilities within production, he was responsible
for the final assembly of the IntensCare product. Fogel characterized his role on the team as follows:
I try to keep all ends tied together for the net result. Where are we on software development
and testing, engineering design, order and delivery of the component parts, and fabrication
planning? I tie all the pieces together to make sure they hit the floor at the same time. I make
sure communication is happening so that all things are getting done.
While the team had made significant progress in the six months since it had been reconfigured,
Fogel knew there were still difficulties to overcome if they were to meet Beaumont’s very aggressive
release date.
On February 2, 2008, Mukerjee sent everyone a terse text message that suggested even bigger
problems to come, as O’Brien’s critical path depended on getting the software in final form by May 1:
“Problems again with delivery dates from India. Need to talk to you asap.”
On February 7, O’Brien e-mailed Fogel:
Jack,
We are running into some serious engineering problems trying to fit the data displays and
battery units into the customer size specs Marketing provided. Can you spare some time
tomorrow to meet alone with me and Aaron to brainstorm solutions to this? I know we have a
meeting tomorrow afternoon with the whole team, but we need to do some serious thinking
together before we put this in front of the rest of the team. I can’t afford the time to deal with
Valerie’s predictable drama over this.
Bret
P.S. Have you talked to Dipesh recently about the delays with the software? Any updates?
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“Bret’s right,” Fogel muttered to himself; “Valerie is going to go through the roof if she hears
about these two major problems. We’d better get these issues and the specifics all nailed down before
we bring these up in the team meetings.”
Merz had her own critical path to product launch, and any major problems in product design
would create a cascade of delays in the marketing of the product that the IntensCare business plan
could not accommodate, from the production of marketing copy to the development and publication
of technical installation guides to the final development of the webpages devoted to the system. In
fact, she was hoping that an accelerated time line might leave room for at the least the initial planning
of how the monitoring system could be modularized for the variety of clinical situations where the
system might be used, from military surgery units to neonatal intensive care. While she was not
counting on this, she felt she had to demand it now if she had any hope of getting it in the next
version.
Merz’s experience to this point with her colleagues on the IntensCare team had not given her
much confidence in their competence in general or, more particularly, in their ability to deliver the
product that Beaumont and the market were expecting. She was very frustrated with Fogel as the
team leader. Having led two other major product development teams for her former employer, Merz
knew what was possible “when the team leader was really in the driver’s seat.” Yet, here she was
responsible for the IntensCare’s P&L, but not in a formal position to get the other team members to
deliver. She described her relationship with the product and the team this way:
I feel my position is mini-general manager. I have ultimate responsibility for profit and loss on
IntensCare. The engineers and production staff don’t report to me, but I’m responsible for
refining the product road-map. If I don’t keep on them, they’ll stray to other projects. I
provide the technical support to customers: the training, the hotline, the technical support for
field reps. I’m in charge of pricing, advertising, and sales promotion activities. I have all the
responsibility but no authority to get others to live up to their commitments. I have no idea
what Jack is doing, but it looks like he is just another “good guy” who doesn’t want …
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