An Executive Fable About Management

Author: Joel Fleiss Date: Jan 05, 2015

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INTRODUCTION

When Veronica missed that easy overhead on match point in the third set, her tennis partner said, "where is your focus?  You hardly ever miss an easy overhead, especially in crucial situations." Veronica realized that her mind had been elsewhere, where usually her focus was one of her greatest assets. Veronica responded to her best friend and partner, "Marilyn, I've just been under a lot of stress at work, and almost backed out of playing in the tournament this weekend. I apologize for my poor performance.  I'll be better next tournament.

 

Veronica wondered if it was a wise decision she made six months ago to leave her old job as the Vice President of Marketing and Sales at FunMaker. FunMaker created and marketed application games on cell phones and electronic devices for young children. FunMaker was dominating the market within three years after their start.  They had spun off from Sony eight years ago, where Veronica had started as a software engineer, became a manager, moved to marketing support, than sales and finally to the Executive Vice President of Marketing and Sales after six years of 60-70 hour weeks.  Now, at her new company, GoodTimes, where she is the CEO, the actual company that started the children's electronic game industry fifteen years ago, her new organization was in a downhill spiral.  For the last three years sales were declining by over ten percent annually, while the industries sales were rising annually by eight percent.  Where they were once number one in sales, they were now the fourth leading organization in terms of sales in the children's electronic game industry.

Veronica was hired to stop this downward trend four months ago. The industry had changed from introducing a new application every three-six months ten years ago to where competitors were now introducing new applications on a weekly basis. Instead of being the only company in the industry fifteen years ago, there were now hundreds of companies competing in the market space with four companies representing over 90% of the market. Prior to her joining, GoodTimes had transitioned into introducing new applications every two months about six months prior to her working at GoodTimes.

 

Veronica had believed the problem lied in the marketing and sales department. During the first three months she interviewed each of the senior marketing staff members, eleven in all, and replaced four of them with former colleagues who Veronica had worked with and knew would do a far better job than those she replaced.  That was a month ago and she was worrying about how long she would have to make things better.  She knew she needed a plan to improve GoodTimes share of the market.

The market analysis from her staff said that their electronic game buyers, parents who listened to their young children, were smitten with new, dazzling products, whether games, fairy tales, adventures or educational. It seemed that an application's life cycle was at best four months.  Although GoodTimes products were often rated technically in the top two by a monthly periodical about the electronic gaming industry GoodTimes sales and market share did not reflect their rating.  They were turning out fewer products than their key competitors. They also didn't seem to be as in-tune to the latest youthful fads, which seems to drive sales more than the application quality.

Like her predecessor company, GoodTimes encouraged everyone to submit ideas for new games.  The submitter would write a 10-15 page business case describing the new game, its intended market, estimated development cost, marketing plan, cost to market and estimated future sales. GoodTimes senior management team would review each business case.  They would then meet twice a year to hear brief elevator presentations from each of the submitters. Then after pondering what they had heard, read and discussed, they would select those games that they felt would provide the best ROI for the company. They would stage when each project would start, worrying about timing, resource allocation and most importantly, which games would provide the greatest return on their investment. The review of the business cases and selections were a time consuming effort, taking significant time from the selection committee (seven in all including Veronica).

The GoodTimes Chairman of the Board, Joshua Jones or JJ had hired Veronica away from FunMaker by offering a significant equity position based on performance and an annual salary that was 30% higher than what she was making at FunMaker.  The idea of running a company plus the greater financial rewards had enticed Veronica to leave her comfort zone at FunMaker.  When JJ called her this morning, he said "I'm going be in town the end of next week and want to have lunch with you."   Veronica knew it was not going to be a nice social visit. She had to have a plan for turning GoodTimes sluggish sales around, or she wasn't going to be long in her present position.

Veronica decided it was time to call an emergency meeting of her steering committee.  She called each of them right after her phone call from JJ telling them she would email an agenda in an hour for an emergency meeting and they should report to work at 7 AM the next day. The goal is to create a plan to change GoodTimes dismal downward trend.  She told each of them they would have their agenda by 7:30 PM tonight and they should think about the challenges we're facing and possible remedies. She also stated that tomorrow's meeting was about changing the processes GoodTimes was using to improve their market performance.

Veronica started the meeting by discussing the downward trend GoodTimes was having the last couple of years and how the industry as a whole was thriving. Veronica stated clearly that it is up to us, as senior management, to turn this trend around and now is the time to correct problems that are hindering us from achieving our goal of becoming an industry leader.  Veronica emphatically stated that now is the time to be pro-active, otherwise major changes would take place in the near future for all of us.  She also stated that she is sure JJ is not expecting an instantaneous miracle, but needs to see a plan that clearly illustrates the vision that we are working towards that will give him confidence we are on the right path.

After much heated discussions, debate and a few arguments, the challenges were narrowed down to four, which were:

• Market Analysis (predictive analytics)
• Project Selection (ranking)
• Resource Allocation
• Implementation Complexity

Numerous other challenges were discussed, but it was agreed that these four would solve the lion's share of achieving their goals. Now that they narrowed their list to four major challenges, Veronica asked each to take a two hour break and separately specify for each challenge what GoodTimes needed to do solve each challenge and the major tasks and milestones for each challenge's accomplishment. Veronica also created a table for each of the four challenges. The columns in the table were; "Action," "Justification," "Expected Result," "Estimated Effort" and "Responsibility." Veronica said "you each need to fill out the table as best you can and be ready to discuss when we meet again at 11 AM.  Veronica had the obvious advantage of creating these tables the night before.

Veronica had hired Craig, her mentor, to participate in the meeting and help them focus on solving each of the challenges.  Craig was actually Veronica's doubles partner's father. He had been the CEO of several major companies and had served as a sounding board to Veronica throughout her career.  Craig and the remaining management team joined Veronica and she said we would look at each challenge separately and create a combined table for each. In order to encourage as much participation from everyone, she said we would complete the tables in a round-table fashion, where each person would describe a complete entry, with no comments or criticisms, until no one had any more entries from their list.

For the first topic, everyone agreed the major responsibility should be the marketing department. Richard, who was the Director of GoodTimes Marketing, led a conference reviewing the responsibilities of the six current staff members. This included understanding current marketing trends, writing requirements with the originator for each approved project, controlling changes to the requirements, projecting sales for future projects and analyzing the success and failure of each application GoodTimes launched.  Richard described his team member's responsibilities and his job of coordinating their efforts.

Craig asked to see the statistics for the last year of launched projects. While looking over the data, which Richard expeditiously provided, he noticed there was no comparison to our competitors for similar activities.  He also discussed the need for more marketing detail on potential projects so that the selection process could make more enlightened decisions. Craig also asked how often the selected project's data was updated.  Richard responded that once the data was documented, it was no longer updated. We all agreed that the following changes were needed from Richard's group:

• Weekly update of marketing data for each active project
• Addition of competitive application marketing data in parallel to active project data
• Devising and implementing a measuring process to assess progress in achieving each goal of becoming the industry leader

Richard was tasked with describing how his team would achieve the above and writing a plan using their scheduling tool, which was currently Microsoft Project, on how they would accomplish these additions.  He was given two days to report his plan to the committee.

Veronica then described the current process for selecting new applications (projects). Everyone agreed that Veronica had captured the essence of the process when she described how:

• The company encouraged everyone to submit their ideas for new applications to the director of marketing
• The submittal included a business case of 10-15 pages describing the application, estimated development cost and anticipated revenues
• The selection committee would twice a year review potential application business cases
• The selection committee would hear a brief elevator presentation from the submitter, usually about 4 minutes
• The selection committee would then rank the potential applications in order of benefit to the company

Veronica led the discussion of the problems with the current process, which included:

• The criteria of just cost and ROI were not enough, GoodTimes needed to consider other criteria such as risk, cash flow, compliance with government regulations, synergy with other applications, available technical expertise, etc.
• Often applications were selected for personal/political reasons instead of the merits of the application.  The vetting process determining each project's ranking had to occur far more frequently. For the world was changing daily.
• The fact that what was deemed a "good" application for us to launch today may not be the right application tomorrow

Craig mentioned that he had just seen a demonstration of a project portfolio management product that solved all these challenges. He mentioned the tool seemed to be a very comprehensive Management tool supporting requirements, scheduling, costing and numerous other features.   Claudia, the Vice President of Software Engineering, said she would investigate the product.  Claudia was tasked with writing a plan using a scheduling tool on how they would resolve each of these challenges.  Like Richard, she was given two days to submit her report to the committee.

Everyone agreed a major challenge for the company was having the right people available for each of their tasks, especially those involved with the launching of a new application.  This not only included all the on-going application development, but the day-to-day activities the company staff did repeatedly.  Claudia mentioned the long hours and weeks she and several of her key members spent trying to determine the staffing needs for future projects. Craig once again mentioned that the same product had a patented resource allocation scheme that daily assigned the best available person for the needed labor category to the most important project (application) task.  In addition it had a spiffy resource-modeling tool to help optimize staffing for would be projects when combined with on-going projects.  Claudia said she would look into this when she investigated this potential product.  Claudia volunteered to do this in addition to the "project selection/ranking" task.

Claudia described how most applications made use of numerous canned routines that GoodTimes had developed or existed in public domains. Most new applications represented less than 25% of the actual source code if one included the existing canned routines used for each application.  She then mentioned that the simplest of applications took about 3 weeks to develop and the most complex took about 6 months.  She stated that the average application took about 7 weeks. Martin asked the question, "Had anyone looked at the cost of each application versus the revenues achieved?" The answer was a big "No!" What if, Craig said, our complex applications do not bring any more revenue to the company than our simple applications?"  Veronica stated "we certainly need to add to our selection criteria the complexity of implementation if we find that there is little difference in our future revenues whether the application can be done at minimal cost or is expensive to implement."

 

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CONCLUSION:

If you want to know more about how this story ends or wish to add an ending of your own feel free to Contact Us. Although this fable is Management related it encompasses real world issues that we face on an everyday basis.  Let us help you improve your process or feel free to offer your comments as well.

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