Process Control Inc: Marketing and Technology Strategies

Background

Relevant facts of the case

This case study focuses on Process Control Inc (PCI). PCI is the European manufacturing subsidiary of the American firm. PCI is located in the UK Midlands. The company (PCI) was created in 1979 from a merger with a subsidiary of a British-owned electric company. It specialized in the production of printed circuit boards (PCBs) and process control gadgets.

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The company experienced significant growth and expansion in 1988 when its parent firm transferred most of the manufacturing jobs to the UK from the US. As a result, in the 1990s, PCI was responsible for manufacturing more than 95 percent of the firm’s total PCB orders. It had also employed 395 employees.

However, in 1988, the rapid growth in the company resulted in several operational challenges related to product quality and delivery. In turn, the US parent company suffered major drawbacks as deliveries and quality began to decline.

An increased workload led to significant dependence on the marketing and technology departments. Many claimed PCI’s problems originated from employees, who were in both marketing and technology departments because of their unrealistic and erratic demands. Many managers noted that volumes and product mix forecasts were not always correct. They also claimed the technology department altered PCB designs at manufacturing. Consequently, the performance of the manufacturing department deteriorated rather than improved. This implied that the department could not meet production requirements by the deadlines. Moreover, associated quality issues arose at the same time.

Another critical aspect of the case is the issue of the CEOs, the managers, and the employees. PCI changed its CEOs without adequate preparation or proper communication with the team. The new CEO wanted to change the company’s strategic plan too fast and focused on reviving the manufacturing department. Hence, there was internal resistance from some senior managers and employees.

Although the company had improved somehow, it focused on the manufacturing department remained ‘on-and-off’ affair. This resulted from internal resistance and partial acceptance of change by managers and employees. As a result, the department may collapse anytime due to poor change management and implementation. This would show how poorly PCI’s strategic management is done and its underlying difficulties and uncertainties.

The setting

The subsidiary is located in the UK Midlands. However, the CEO came from the US where the parent company is situated.

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In some instances, the management team had compared operations across the US, Europe, and the Far East in an attempt to find solutions to their manufacturing challenges.

The period

The company has its origin in the merger that occurred in 1979 with a British-owned electric firm. Hence, its management challenges and change management problems started in 1980 and ran to the period of the 1990s.

People Involved

The major players in the case of PCI included senior executives, who decided the parent company located in the US.

There was also the British CEO who was sacked when PCI’s situation failed to improve. The British CEO was replaced with an American CEO, who had the vision of turning the manufacturing department into an excellent producer of electric boards and circuits. There was also the ‘interim CEO’ who made intermittent visits at PCI when the company offered the American CEO another position in the US with the subsidiary.

He later became the new CEO, but a reluctant one of the company from 1990 until he was recalled by the parent company. The Materials Manager became the new CEO and managed to transform the company through effective manufacturing developed by the first American CEO. Amidst complaints, the Production Manager became the manufacturing champion and later became happy with the role he played in reviving the manufacturing department. There was also the new CEO after 1992, who replaced the former CEO when he was promoted.

Apart from these senior-level executives, there were also management team, subordinates, and the workforce. They played different roles in supporting or opposing the change.

Theory and Outcomes

Part of managing change: critical points

  • Change management is difficult, especially if not planned and coordinated with the rest of the team.

Poor communication

One major challenge with change management at PCI was poor communication. Rumors and counter-rumors were rampant in the company. Some employees claimed that the new CEO wanted to ‘Americanize’ the company. Moreover, the new CEO did not communicate the company’s strategic plan to employees and some managers effectively. A short timescale compounded the issues further.

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Poor succession planning

The parent company sacked the British CEO without notice or preparation for the employees. The company was thrown into confusion when the new CEO said that he was leaving in 1989. There was no replacement at the time.

PCI had suffered setbacks because it lacked any succession plan for executive managers. In most cases, it was not clear who would run or take over the position at the company.

Leadership

Leadership is critical for any change management process. PCI failed because of a lack of a committed CEO and leadership from senior managers to lead the company after the departure of the new CEO.

Time factor

Although the new CEO developed a strategic plan for turning around the manufacturing division, there was a lack of adequate time to discuss or inform the team about it. As a result, there was internal resistance to the plan from some of the managers and the workforce.

Strategic planning

A well-developed strategic plan helps a company to focus on a long-term course of action for implementing change strategies, identifying critical initiatives, and defining accountability processes.

People involvement

People are a critical part of any change process in organizations. From PCI’s case study, no change process can succeed without people’s involvement. From the beginning of the transition, the parent company did not prepare PCI for any change in the management structure. As a result, there was internal resistance that started from the top. Moreover, the new CEO did not identify any senior managers to help in driving the change management process.

Resistance to change

Many senior managers failed to support change processes at PCI. Instead, they adopted apathy and aggressive change resistance strategies. Employees at PCI were satisfied with the status quo. In some instances, they considered the initiated changes as detrimental to the company because of the ‘Americanization’ mindset. Change affected many people, particularly senior managers, who considered it as a threat because of failed promotions. Many senior managers believed that the new CEO was mishandling the change process, but they believed in it. However, other managers believed that change at PCI was not likely to succeed or bring any positive outcomes.

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Theory connected to the case

Strategic plan

The new CEO applied the concept of strategic planning to effect changes at PCI. As a result, he identified five critical areas that required change to achieve the desired vision. These included the following:

  1. People Involvement
  2. Supplier Partnering
  3. Just-in-Time
  4. Total Quality
  5. Social Responsibility

According to the new CEO, these elements would drive the change process at PCI based on effective implementation. However, it was impossible to implement these elements at PCI because the process lacked any sequential model or implementation strategies.

The use of a sequential model for effective change implementation

Although there was a strategic plan to change the management process at PCI, there was no sequential model of implementing the process. The new CEO did not develop a change management strategy or model. Instead, he relied on the strategic plan to drive change.

Change management requires situational analysis. Situational awareness would help employees and managers to understand all elements of change about the intended change, the scope of the change, people affected by the change, effects of the change, roles affected, and timeframe required.

The situational analysis could have addressed PCI’s history and culture and determined conditions under which the intended changes would occur. This could have addressed any past attempt to introduce changes and the need for the desired change. Finally, it could have helped the new CEO to determine the impacted groups and potential impacts of the desired changes.

There was no supporting structure at PCI. The situational analysis could have allowed the new CEO to develop a team that would be responsible for the change management process. Many managers resisted the process and the CEO acted alone with minimal support from the Materials Manager. While the roadmap was clear for the new CEO, the rest of the team did not understand it. The process was not specific and lacked any informed decision-making processes.

The new CEO also failed to identify leaders and managers who could have driven the change process at PCI. The team could have supported and communicated important initiatives to their subordinates.

The process of change management at PCI lacked a strategy analysis plan. The strategy analysis helps in assessing potential risks to the process. For instance, the new CEO noted that there were risks associated with People Involvement. Change management processes at PCI were dramatic and had high risks. PCI managers had a history and culture of resisting change. The strategy analysis could have helped the new CEO to anticipate potential resistance and develop special tactics for overcoming them. Such tactics require reviews and updates based on their outcomes.

Developing a change management strategy is the initial stage of implementing a successful change plan. The strategy is responsible for the provision of the direction, and it guides leaders in making informed decisions during various stages. Moreover, it also defines people involved and the impacts of change processes on the organization.

Change management strategy guides the development of a change management plan. The plan focuses on specific areas of driving change management strategy. Such specific details include a communication plan, the process roadmap, employee coaching, training, managing resistance to change, and reevaluating change strategy tactics. Therefore, the fundamental elements of implementing successful change management were missing in the case of PCI.

Recommendations

Actions to improve the organization

PCI requires a planned change management process. Although the new CEO managed to improve the performance of the company by ensuring profitability, meeting of completion dates, and reducing defects in the finished products, there was no serious commitment to the change process. Hence, any attempts to improve the firm must focus on commitment to change at the manufacturing division. From the case of PCI, there are four critical issues identified:

  • Any challenge to the status quo requires strong and clear leadership. There was a lack of leadership at PCI due to constant, unplanned replacement of CEOs. Consequently, there was no continuity and consistency in the change management process. This only led to increased resistance from managers
  • Rampant changes that affect executives may not be counter-productive to an organization. In this case, the company needs to develop a clear succession plan to reduce fighting among managers.
  • Only the new CEO understood the change roadmap while the rest of the team, including some senior managers, did not. This state only led to further resistance, doubt, the slow pace of change, and uncertainty about outcomes. Therefore, PCI requires a clear model for implementing change, which defines change drivers such as effective communication, ownership, supporting structures, training, and methods of overcoming resistance.
  • The challenge at PCI was compounded with time and management issues. However, the threat to close the manufacturing division led the management team to find solutions to their problems. Commitment among executives is necessary for any future success.

Recommendations for good management of change practices in the future

  • The focus on people’s involvement should be a systematical process. Any critical change in an organization must affect people and create ‘people issues’. It is imperative to identify people who will be affected by the change and possible outcomes. Change supporters should identify people or leaders who should lead the change. A study to understand organizational culture, history, and readiness to change is imperative for a successful change initiative.
  • The change should begin at the top. The change affects people at all levels of organizational structure. In case of any challenge, subordinates expect supports and direction from their CEO and other senior managers. Leaders need to accept and support change initiatives so that the rest of the team can also support it. Senior managers must also support the process to ensure that they achieve the desired changes in the organization.
  • Every department should support the process. A change process requires an organization to define strategy, set objectives, design, and implement change plans, which affect every department of the organization. Therefore, a change process must identify leaders of change at all these levels of the firm. Such leaders will support and promote the vision of change at their levels.
  • Leaders must present a formal case for change. Employees will question the rationale, change direction, and impacts of such changes on them and their roles. Leadership should respond to such queries.
  • Change initiatives require ownership. PCI could only realize a real change when the Production Manager realized that he owned the manufacturing change process. Change requires leaders to accept and take responsibility for the possible outcomes. The process of development involves participation, problem identification, and selection of individuals to lead change in their departments. However, this may require some forms of reinforcement, either financial or other forms of appreciation.
  • Change processes require effective communication. There were rumors and counter-rumors about changes at PCI due to a lack of effective communication from the CEO and senior managers. Also, the CEO assumed that other members understood the process, whereas they did not. Communication and feedback should flow throughout the change management process.
  • It is imperative to understand the culture of an organization. Leaders should understand organizational culture and behaviors before any attempt to introduce change. Evaluating the culture of an organization could help in identifying potential challenges, history of change, readiness to accept change, and develop tactics that could drive the desired change initiatives. Culture assessment should be a baseline for an effective change management process.
  • Leadership should focus on culture change. In most cases, culture could hinder any change efforts. PCI had developed a culture of resisting changes and preferred to maintain the status quo. However, the process of assessing and addressing culture explicitly requires adequate time. PCI change initiatives suffered major drawbacks because of a lack of adequate time to communicate issues and address any concerns.
  • Leaders must prepare for any possible outcomes in the process of the change management process. Change initiatives cannot always run as planned. There are various reactions from different stakeholders, external environments, and other shortfalls, which may affect the entire program. Therefore, the change management process requires constant monitoring and assessment of the overall outcomes and the ability of an organization to embrace change.
  • In some cases, it is imperative to identify individuals who may influence change in either a positive or negative manner. Such people require personal attention and persuasion to allow them to support the desired change. Leaders must get supports from such influential people in an organization. This requires the building of confidence and trust in an organization. For any change process to be successful, an organization should offer rewards, promotions, and any forms of recognition to change supporters. Still, any form of sanction against an organization could result in positive outcomes and reinforcement of change as was the case of PCI.

Is this case worth studying today?

Although the case spans more than two decades ago, it is still relevant and worth studying today because change management principles have remained the same. Moreover, difficulties encountered in the case of PCI, such as resistance to change by senior managers, change management strategy and plan are rampant in modern organizations.

The case provides practical insights on how a lack of leadership, particularly among senior managers could derail any change initiatives in the company. Leadership continues to be a major topic of discussion in many organizations and articles. Hence, the case is relevant for modern managers and students.

People who should benefit from studying or knowing this case

Senior executives should discuss this case because of practical insights it provides on factors that affect strategic leadership and strategic plan, including resistance among managers. The case is also relevant to middle-level managers and subordinates who may need to understand role changes and support expected from them during change processes.

The case of PCI also highlights the importance of teamwork, which is relevant to the entire organization. Hence, all employees will find this case useful to them. Finally, students in management studies will also observe practical elements of management and change processes, which are present in modern organizations.

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