What Are The Detailed Steps To Win In Harvard Business Review: Change Management Simulation: Power And Influence V2 Scenario 1, Acting As The Director Of Product Innovation?
scenario 1, acting as the director of product innovation
scenario 2, acting as the ceo
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Change Management: Power and Influence
Scenario 1: Director of Product Innovation
You are Director of Product Innovation within the Research & Development unit of Spectrum Sunglass
Company. Spectrum’s immediate future looks bright as the company enters its second decade of
operations. Externally, the consumer sunglass market is growing again, and competitive-pricing
pressures have subsided. The company recently rehired some of the workers laid off during the last
recession, and many departmental budgets have been restored to well-funded, pre-recession levels. You
are especially proud that one potential new product design has received positive focus group feedback
after the first phase of development, and some exciting branding deals with Hollywood celebrities are
under negotiation. Everyone at Spectrum Sunglass is looking forward to growth and enhanced earnings.
While you generally feel very positive regarding the situation at Spectrum, you have noticed that the
topic of sustainable economic development and the link between sustainability and innovation is
featured in many of the professional articles you read, such as “Why Sustainability Is Now the Key
Driver of Innovation.” You are frustrated that you don’t have any new sunglass products to offer to the
vocal customers who increasingly express concerns about Spectrum’s environmental impact. Not only
does sustainable development make sense to you personally, from both a moral and an economic
standpoint, but you also see this as an opportunity to differentiate Spectrum’s products from your
competitors, which focus exclusively on design and price.
During Spectrum Sunglass Company’s annual strategy retreat, you decide to pitch the idea of forming a
task force to make the company and its products more environmentally sustainable. Your vision for
Spectrum consists of three specific goals: (1) Eliminate 25% of waste by redesigning the manufacturing
process; (2) reduce the current level of greenhouse gas emissions by 15%; and (3) create a new product
line based entirely on environmentally benign materials. You argue that these goals, while aggressive, are
achievable within the next two years. You also add that based on your current understanding, the task
force will need to pursue the following activities: (1) Conduct energy audits and set aggressive milestones
Online Simulation Scenario 1 Introduction—Change Management Simulation: Power and Influence
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for improvement on the three goals; (2) redesign processes and products to be more environmentally
sustainable (and scale up successful experiments quickly); (3) analyze environmental life cycles
throughout the entire value chain inside the firm and with its suppliers; (4) seek to replace fossil-fuel
energy sources with renewable energy sources; and (5) seek to replace petroleum-based materials with
biodegradable materials.
After politely listening to your proposal, Andrew Chen, the
General Counsel
, interjects that in his
professional opinion, the sustainability project opens up the company to unnecessary legal risks. If the
company does go ahead, he advises that only one of the three goals be pursued and that it not be publicly
announced or promised until after a careful internal due diligence process. Then the CFO, Paul D’Arcy,
speaks up, adding that instead of focusing on a pie-in-the-sky sustainability project, the task force’s time
and money would be better spent on finding innovative ways for Spectrum to reduce raw material costs
and counteract the seasonality of its business. Just when you are about to inject a counterargument to this
increasingly negative reception, Luke Filer, the VP of Operations, states that he is concerned about a
product and process change that is likely to increase raw material costs and disrupt existing production
flows.
Breaking the impasse, Leslie Harris, Spectrum’s VP of Sales and Marketing, argues that this idea has
considerable promise and that it would be foolish to reject it prematurely. After an hour-long discussion,
during which some members of the top management team voice support for the initiative while others
express skepticism, Henry Adams, the CEO and the rest of the management team agree to support your
proposal, with the condition that the measure of success be your team’s ability to achieve the proposed
three goals within the next two years. The CEO agrees to allow you and your task force members to
spend 75% of your time on this change initiative over the next two years. You agree to this arrangement,
and you recommend that the task force report directly to the CEO in order to signal its importance to the
rest of the organization and to facilitate direct communication on key issues as they come up. As the
retreat ends and everyone heads to dinner, you start pondering the numerous issues and obstacles you’ll
need to overcome in order to implement your sustainability vision.
Your central challenge is to convince your colleagues that a dramatic change in the organization’s
strategy and products is necessary and that environmental sustainability is one of the keys to the firm’s
future. This challenge is somewhat complicated by the fact that you must influence the rest of the
organization without the formal authority to command employees’ attention, and there is no generally
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perceived need to change at this moment because of the firm’s return to normal profitability. However,
you do have a reputation for being competent and trustworthy, and this reputational capital will be
invaluable to you as you take on this new challenge.
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Scenario 1: Organizational Structure for Spectrum Sunglass
Henry Adams
Chief Executive Officer
Paul D’Arcy
Chief Financial Officer
Bob Ingram
Corporate Controller
Walt James
Director, Information Systems
Deborah Edge
VP, R & D
YOU
Director, Product Innovation
Yao Li
Director, Process Innovation
Luke Filer
VP, Operations
Diane McNatt
Plant Manager
Mark Roberto
Foreman
Paul Schenian
Foreman
VP, Human Resources
Ian Newman
Director, Health &
Safety
Louise Orysh
Director, Benefits
Administration
Leslie Harris
VP , Sales & Marketing
Sam Puffer
Director, Marketing
Regina Quinn
Director, Sales
Anne Thompson
Manager, Customer Relations
Michelle Barth
Executive Assistant
Andrew Chen
General Counsel
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Change Management: Power and Influence
Scenario 4: CEO
You are the CEO and founder of Spectrum Sunglass Company. As Spectrum enters its second decade of
operations, its immediate future is looking bright. Externally, the consumer sunglass market is growing
again, and competitive pricing pressures have subsided. Spectrum recently rehired some of the workers
laid off during the last recession, and many departmental budgets have been restored to well-funded,
pre-recession levels. A potential new product design has received positive focus group feedback after the
first phase of development; furthermore, some exciting branding deals with Hollywood celebrities are
under negotiation. Everyone at Spectrum is looking forward to growth and enhanced earnings.
While you generally feel good about the state of the business, you just turned 60 years old, and are
beginning to think about your legacy. You are reading more and more professional articles emphasizing
the importance of sustainable development for business and linking the themes of sustainability and
innovation, such as “Why Sustainability Is Now the Key Driver of Innovation.” At work, you are
frustrated that you don’t have any new sunglass products to offer to the vocal customers who
increasingly express concerns about Spectrum’s environmental impact. Not only does sustainable
development make sense to you personally, from both a moral and an economic standpoint, but you also
see this as an opportunity to differentiate Spectrum’s products and overall company from your
competitors, who focus primarily on price and design. Fortunately, something happens at a trade show
that enables you to act.
At a Spectrum executive strategy retreat in October, you ask for a special, unplanned session to discuss
the conversations you recently had with the company’s largest retail customer, BigMart, which has more
than 1,000 locations across the continental United States. Sales to BigMart constitute 30% of Spectrum’s
annual revenues, representing the company’s top account. Recently, at the annual sunglass-industry
trade show in Las Vegas, a BigMart vice president approached Spectrum’s booth. The executive
explained that he was now in charge of national sunglass procurement for BigMart and that BigMart
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recently started an in-house labeling program whereby products that received a “Green Stamp”
manufacturing certification for environmental friendliness would get special promotion. BigMart’s in-
house market research revealed that even its most price-sensitive consumers were starting to prefer green
products within their price range. The VP explained that BigMart was now considering recommending
that all its suppliers go through the Green Stamp certification process.
As your colleagues at the Spectrum retreat listen to your presentation, they become increasingly agitated.
To the CFO’s question of what BigMart’s specific terms are, you reply that Big Mart wants Spectrum to
reduce its dependence on petrochemical raw materials (such as polycarbonate plastics) in the sunglass
manufacturing process from 90% to 50% within two years. The company has also given Spectrum a
quantitative target and deadline to meet. Furthermore, BigMart’s VP not-so-subtly threatened that if
Spectrum doesn’t respond within three months with a detailed implementation plan of how it is going to
reduce its manufacturing dependence on petroleum, then BigMart will consider cancelling its contracts
with Spectrum and shift business to a competitor that has indicated its willingness to comply with these
demands.
After you lay out the demands from BigMart, you state that while the timing is unexpected, you think
this is a positive growth opportunity for Spectrum to develop a unique product line for a mass-market
customer base and that you think Spectrum is up to the challenge. At this point, Spectrum’s Sales and
Marketing VP, Leslie Harris, enthusiastically chimes in, agreeing with your perspective. She says that a
sustainability feature will help distinguish the company in the long term and that this marketing angle
may open up new consumer markets for Spectrum’s products (such as exporting to more
environmentally conscious countries in Europe), as well as strengthen its brand among U.S. consumers.
However, Paul D’Arcy, the CFO, cuts short Leslie Harris’ explanation, angrily commenting that Spectrum
can’t afford to start a sustainability project just because BigMart demands it. Because Spectrum is highly
levered, a drop in profitability might put at risk the company’s ability to meet its debt covenants. The
CFO thinks that any green raw material substitutes for petroleum would likely be too expensive for
Spectrum’s manufacturing process, and with no pricing flexibility it would negatively impact Spectrum’s
profit margins. Just when you start to think up counter-arguments to the CFO, you get a double whammy
in the form of Luke Filer, VP of Operations, who says that there is no way that the production operation
will support another major change in raw material inputs. The Spectrum plant has just spent the past 12
months undergoing a grueling Six Sigma quality certification process, and the Spectrum Production
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Manager is extremely reluctant to retrain, retool and retest to accommodate the use of “unproven”
environmentally friendly raw material substitutes. Adding fuel to the fire, Louise Orysh, the Benefits
Administrator, comments that Spectrum is still recovering from the recession and has only recently
begun hiring back workers and therefore a dramatic shift to focus on sustainability may be premature.
Breaking the impasse, Mary Gopinath, the VP of Human Resources, suggests that Spectrum needs to give
the BigMart request serious thought and proposes that you, the CEO, head a cross-functional task force to
come to a compromise solution. You agree, suggesting the following plan for the team’s work: (1) that the
four additional members come from Marketing, R&D, Finance, and Production; (2) that they devote at
least 75% of their time to developing a proposal for BigMart that is acceptable to all four departments; (3)
that you will devote 50% of your time to the task force, while juggling your responsibilities as CEO; and
(4) that the task force will present Spectrum’s senior management team with a financially acceptable plan
to use petrochemical alternatives within three months.
The management team at the retreat concurs with your task force proposal. As the retreat ends and
everyone heads to dinner, you start pondering the numerous issues and obstacles to overcome in
developing an acceptable plan for BigMart within three months. Your central challenge is to convince
your team that a dramatic change in the organization’s strategy and products is necessary and that
environmental sustainability is critical to the firm’s future – no small task in a relatively short period of
time. However, when BigMart tells Spectrum to jump, the usual response is to ask, “How high?”
Fortunately, you also have the formal authority and widespread respect throughout the organization to
tackle this challenge in a meaningful way.
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Scenario 4: Organizational Structure for Spectrum Sunglass
YOU
Chief Executive Officer
Paul D’Arcy
Chief Financial Officer
Bob Ingram
Corporate Controller
Walt James
Director, Information Systems
Deborah Edge
VP, R & D
Nancy Kerr
Director, Product Innovation
Yao Li
Director, Process Innovation
Luke Filer
VP, Operations
Diane McNatt
Plant Manager
Mark Roberto
Foreman
Paul Schenian
Foreman
Mary Gopinath
VP, Human Resources
Ian Newman
Director, Health &
Safety
Louise Orysh
Director, Benefits
Administration
Leslie Harris
VP , Sales & Marketing
Sam Puffer
Director, Marketing
Regina Quinn
Director, Sales
Anne Thompson
Manager, Customer Relations
Michelle Barth
Administrative Assistant
Andrew Chen
General Counsel