When I started my career, I was interested in developing products. My interest in high performance was captured by an early business experience with a company that had attained the leadership position in its industry and then fell by the wayside due to its inability to respond quickly and forcefully to changes in its market.
The story begins in the spring of 1967. I had come to The Ohio State University in 1963 to play football for the legendary coach Woody Hayes, who was as intent to see that his players receive a good education as he was to win football games.
Despite much advice to the contrary, I had chosen to pursue a double major in mechanical engineering and business. Thus, I found myself at the end of my athletic scholarship with one year of academic work to complete to graduate. Good fortune smiled upon me and I found a well-paying, part-time job as a design draftsman in the product development group of a local industrial products company. My experience over the next two and one-half years changed my life and set my career on the path that I have now pursued for more than 40 years.
The Company had been run by its founder for many years. Under his stewardship, the Company had become a leader in its industry of fluid power components and systems. Shortly before I arrived at the Company, the Founder sold the business to a big, East Coast based conglomerate.
As the newest and most junior person on the product development staff, one of my key job duties was to be the “go for” for the department. On a daily basis, I was dispatched to all areas of the product development laboratory and the two manufacturing facilities on all kinds of errands that usually involved either delivering something, or picking something up. The “go for” was a great job. I probably got to know and talk to more people throughout the company than anyone else.
I soon found that I arrived at a particularly interesting point in the Company’s history. The Company was in the midst of two big and fundamental changes. First, the transition from the Founder’s leadership of a freestanding company to a division in a multi-division company was still underway. Second, there was a fundamental shift in the fluid power market.
A Change In Leadership
The Founder had built up the business over many years. In the early days, he designed, built, sold and serviced the products himself. The Company prospered and became the leader in its industry.
The Founder was a legend when I arrived. He had been well known, respected and loved throughout the Company. He had run the business decisively and with firm hand. He also had a great capacity with people and knew most of the employees by first name. He spent time on the factory floor almost every day. People felt he was fair, and most importantly he would listen to people’s ideas and advice.
After the sale of the Company, a “professional manager” was sent from the parent company to succeed the Founder. The New Division President had been in place for about a year. He was a mystery to most of the people in the company. He stayed in his office or traveled to the East Coast for meetings. People noticed that their managers seemed to be much more stressed since his arrival and he was reported to have “aggressive” goals for the Division.
The Division President seemed to be oblivious to the impact he was having on the managers and employees. It was my first experience with a leadership transition in the process of going bad. I will have more to say about this latter.
A Change In The Market
The traditional market for the Company’s products had been in stationary applications like factory assembly lines, cranes and hoists. This market had matured and the Company enjoyed a dominant market position. Its products were of high quality, extremely reliable, built to last 100 years and priced to reflect these attributes. If one ever did break down, a loaner product was shipped to the customer, the customer would ship the failed product back to the factory where it was rebuilt and sent back to the customer who would ship the loaner product back.
In the latter part of the 1960’s, the fluid power market was going mobile. The emerging market was for hydraulic components and systems to go into trucks, construction equipment, airplanes and other mobile applications. The equipment manufacturers wanted components and systems that were scaled to work on this equipment and reasonably (low) priced. The end users wanted components that would work reliably for a fixed life. When a component broke or wore out, they wanted to have a relatively unskilled maintenance person be able to quickly remove the component in the field, throw it away and replace it with a new one. They also wanted quick delivery of replacement components so that they would not have to keep a large inventory of them.
The Mobile Product Line
I arrived in the middle of an intensive effort to develop a new line of products for the mobile market. Several of the Company’s competitors had successfully brought out products for the new market. With every day that went by, the Company was giving this new market away to its competitors.
The product development effort had been underway for more than a year. The marketing people had done a great job understanding the needs of customers and end users and creating clear specifications. The product development people had completed designs for the new product lines and were building and testing prototypes. Over the next nine months, the prototypes were tested, refined and field-tested. At last, they were passed to manufacturing to get them into production.
What happened next was a heart-rending saga to any business person. The designs for the new products went into manufacturing engineering. The people in manufacturing engineering, who had spent their careers building the 100-year lifetime products, went to work on the new product line. Three months passed, then six months, then nine months. Finally, a full year after the new product line was handed off to manufacturing the first new products started to emerge. Much to the horror of the marketing and product development people, the new products had been re-engineered to look surprisingly like the old products. The manufacturing engineers just could not bring themselves to put “flimsy” products into the market.
It was my first experience with a broken business process and the difficulties of major organizational change.
The Bottom Line
The result is not hard to guess. It took the Company another year to get the mobile products into the market place. By that time, the competition had won the game and staked out their leadership positions.
The home office in the East had become worried about the Company’s performance and the Division President was feeling the pressure, which he passed on to management who passed it on to the employees.
Just as the Company was finally bringing its products to market, the employees revolted. A union organizing drive was started, an election was held, the Union won and the operations were shut down by a bitter and prolonged strike!
By this time, I had earned my Bachelor’s degree and an MBA. It had been fascinating to be working in a live business, which was wrestling with the real life problems of leadership, organizational change and adapting to fundamental change in its business environment. The experience kindled an interest in organizational performance and dynamics that has stayed with me to this day.
How do you create a sustainable competitive advantage?
© Copyright 2017, A. Lad Burgin, Ph.D. All rights reserved.