Case Study – Global Mobile Corporation

Case Study – Global Mobile Corporation

“Damn it, he’s done it again!”

Charlie Newburg had to get up and walk around his office, he was so frustrated. He had been

reviewing the most recent design, parts, and assembly specifications for Global Mobile’s latest

smart phone (code named: Nonphixhun) that had been released for production the previous

Thursday. The files had just come back to Charlie’s engineering services department with a

caustic note that began, “This one can’t be produced, either…” It was the fourth time production

had returned the design.

Newburg, director of engineering for the Global Mobile Corporation, was normally a quiet

person. But the Nonphixhun project was stretching his patience; it was beginning to appear like

several other new products that had hit delays and problems in the transition from design to

production during the eight months Charlie had worked for Global Mobile. These problems were

nothing new at Global Mobile’s Asian factory; Charlie’s predecessor in the engineering job had

run afoul of them, too, and had finally been fired for protesting too vehemently about the other

departments. But the Nonphixhun phone should have been different. Charlie and the firm’s

president, Hannah Hoover, had video-conferenced two months earlier (on July 3, 2006) with the

factory superintendent, Tyson Wang, to smooth the way for the new phone’s design. He thought

back to the meeting …

• “Now, we all know there’s a tight deadline on the Nonphixhun,” Hannah Hoover said, “and

Charlie’s done well to ask us to talk about its introduction. I’m counting on both of you to find

any snags in the system, and to work together to get that first production run out by October

2. Can you do it?” “We can do it in production if we get a clean design two weeks from

now, as scheduled,” answered Tyson Wang, the factory manager. “Charlie and I have already

talked about that, of course. I’ve spoken with our circuit board and other parts suppliers and

scheduled assembly capacity, and we’ll be ready. If the design goes over schedule, though, I’ll

have to fill in with other runs, and it will cost us a bundle to break in for the Nonphixhun.

How does it look in engineering, Charlie?” “I’ve just reviewed the design for the second

time,” Charlie replied. “If Marianne Price can keep the salespeople out of our hair, and avoid

any more last minute changes, we’ve got a shot. I’ve pulled my technical support people off of

three other overdue jobs to get this one out. But, Tyson, that means we can’t spring engineers

loose to confer with your production people on other manufacturing problems.” “Well

Charlie, most of those problems are caused by the engineers, and we need them to resolve the

difficulties. We’ve all agreed that production problems come from both of us bowing to sales

pressure, and putting equipment into production before the designs are really ready. That’s

just what we’re trying to avoid on the Nonphixhun. But I can’t have 500 people sitting on their

hands waiting for an answer from your people. We’ll have to have some engineering

support.” Hannah Hoover broke in, “So long as you two can talk calmly about the problem

I’m confident you can resolve it. What a relief it is, Charlie, to hear the way you’re

approaching this. With Brady (the previous director of engineering), this conversation would

have been a shouting match. Right, Tyson?” Tyson nodded and smiled. “Now there’s one

other thing you should both be aware of,” Hoover continued. “Doc Brown and I talked last

night about a new battery-charging technique, one that might reduce the charging time of the

Nonphixhun by 25%. There’s a chance Doc can come up with it before the Nonphixhun

reaches production, and if it’s possible, I’d like to use the new process. That would give us a

real jump on the competition and quiet the environmentalists.”

Four days after that meeting, Charlie found that two of his key people on the Nonphixhun

project had been called to an emergency video consultation about a problem in final

assembly: The two halves of the new smartphone interface wouldn’t fit together because

recent changes in the face required a different chassis design for the rear end.

One week later, Doc Brown proudly walked into Charlie’s office with the new battery

casing. “This won’t affect the other modules of the Nonphixhun much,” Doc had said. “Look,

it takes three new pins, a new connector, and some new shielding, and that’s all.”

Charlie had tried to resist the last-minute design changes, but Hannah Hoover had stood

firm. With considerable overtime by the engineers and technical support staff, engineering

services should still be able to finish documenting the parts and specifications in time.

Two hardware engineers and three support staff went into 12-hour days to get the

Nonphixhun ready, but the specifications were still five days late reaching Tyson Wang. Two

days later, the files came back to Charlie, heavily commented in red. Wang worked all day

Saturday to review the job and found more than a dozen discrepancies in the specifications—

most of them caused by the new battery-charging process and insufficient checking time

before release. Correction of these design faults gave rise to a new generation of

discrepancies: Wang’s cover note on the second return of the prints indicated that he had had

to release the assembly capacity reserved for the Nonphixhun. On the third iteration, Wang

committed other production capacity to another rush job. The Nonphixhun would be at least

one month late getting into production. Marianne Price, the vice-president for sales, was

furious. Her customer needed units now. Global Mobile was the customer’s only supplier not

to come out with a new model this quarter.

“Here we go again,” thought Newburg.

COMPANY HISTORY

Global Mobile Corporation traced its lineage through several generations of electronics

technology. Its original founder, Bob Murray, launched the firm in 1960 as Global Electronics

& Equipment Co. to manufacture several electronic testing devices he had invented as an

engineering faculty member at a large university. The firm entered communications

equipment in 1980. A well-established corps of direct sales representatives, mostly engineers,

called on industrial, scientific, and government accounts but concentrated heavily on original

equipment manufacturers. Using their technical know-how, they entered the mobile phone

market in the mid-to-late 1980s and changed their name to Global Mobile Corporation. In this

market, Global Mobile had developed a reputation as a source of high-quality, innovative

designs. The firm’s salespeople fed a continual stream of challenging problems into the

engineering department, where the creative genius of Doc Brown and several dozen other

engineers “converted problems to solutions” (as the sales brochure bragged). Product design,

especially hardware and structural design, formed the spearhead of Global Mobile’s growth.

By 2010, Global Mobile offered a wide range of products in two major lines. Mobile phone

sales had benefited from the phenomenal growth of cell phones. However, the shift from

analog to digital technology and the emergence of smart phones mean that mobile phones

only accounted for 35% of company sales. Smart phone sales, on the other hand, had

blossomed and, with the rapid technological changes and Global Mobile’s reputation, there

was an increasing demand for phones with unique features, ranging from specialized screen

displays, functions, applications, and novel form factors.

The company had grown from 100 employees in 1980 to more than 2,000 in 2010.

Hannah Hoover, who had been a student of the company’s founder, had presided over

most of that growth and took great pride in preserving the family spirit of the old

organization. Informal relationships between Global Mobile’s veteran employees formed the

backbone of the firm’s day-to-day operations; all managers relied on personal contact, and

Hoover often insisted that the absence of bureaucratic red tape was a key factor in recruiting

outstanding engineering talent. This personal approach to management extended throughout

the organization. All exempt employees were paid a straight salary and a share of the profits.

Global Mobile boasted an extremely loyal group of senior employees, and very low turnover

in nearly all areas of the company.

The highest turnover job in the firm was director of engineering services. Newburg had

joined Global Mobile in January 2010, replacing Jim Brady, who had lasted only ten months.

Brady, in turn, had replaced Tom Swanson, a talented engineer who had made a promising

start but had taken to drinking after a year in the job. Swanson’s predecessor had been a genial

old-timer, who retired at 70 after 25 years in charge of engineering. (Doc Brown had refused

the directorship in each of the recent changes, saying, “Hell, that’s no promotion for a bench

man like me. I’m no administrator.”)

For several years, the firm had experienced a steadily increasing number of disputes

between product development, engineering, sales, and production people that generally

centered on the problem of new-product introduction. Quarrels between departments became

more numerous under Swanson, Brady, and Newburg. Some managers associated these

disputes with the company’s recent decline in profitability—a decline that, despite higher

sales and gross revenues, was beginning to bother people. Hoover commented:

o Better cooperation, I’m sure, could increase our output by 5 to 10%. I’d hoped Brady could

solve the problems, but pretty obviously he was too young—too arrogant. People like

him—that conflict type of personality—bother me. I don’t like strife, and with him it

seemed I spent all my time smoothing out arguments. Brady tried to tell everyone else how

to run their departments, without having his own house in order. That approach just

wouldn’t work, here at Global Mobile. Charlie Newburg, now, seems much more in tune

with our style of organization. I’m really hopeful now. Still, we have just as many

problems now as we did last year. Maybe even more. I hope Charlie can get a handle on

engineering services soon.

ENGINEERING DEPARTMENT: PRODUCT DEVELOPMENT

According to the organization chart Newburg was in charge of both product development (the

applied research and design function) and engineering services (engineering support). To

Newburg, however, the relationship with design was not so clear-cut:

o Doc Brown is one of the world’s unique people, and none of us would have it any other

way. He’s a creative genius. Sure, the chart says he works for me, but we all know Doc

does his own thing. He’s not the least bit interested in management routines, and I can’t

count on him to take any responsibility in scheduling projects, or checking budgets, or

what-have you. But as long as Doc is director of product development, you can bet this

company will keep on leading the field. He has more ideas per hour than most people have

per year, and he keeps the whole engineering staff fired up. Everybody loves Doc—and

you can count me in on that, too. In a way, he works for me, sure. But that’s not what’s

important.

Doc Brown—unhurried, contemplative, casual, and candid—tipped his stool back against

the wall of his research cubicle and talked about what was important:

o Hardware and structural design engineering. That’s where the company’s future rests.

Either we have it there, or we don’t have it. There’s no kidding ourselves that we’re

anything but a bunch of Rube Goldbergs here. But that’s where the biggest kicks come

from—from solving development problems and dreaming up new ways of doing things.

That’s why I so look forward to the new designs we get involved in. We accept them not

for the revenue they represent but because they subsidize the basic development work that

goes into all our basic mobile phone products. This is a fantastic place to work. I have a

great crew and they can really deliver when the chips are down. Why, Hannah Hoover and

I (he gestured toward the neighboring cubicle, where the president’s name hung over the

door) are likely to find as many people here at work at 10 P.M. as at 3 P.M. The important

thing here is the relationships between people; they’re based on mutual respect, not on

policies and procedures. Administrative red tape is a pain. It takes away from development

time. Problems? Sure, there are problems now and then. There are power interests in

production, where they sometimes resist change. But I’m not a fighting man you know. I

suppose if I were, I might go in there and push my weight around a little. But I’m an

engineer, and can do more for Global Mobile sitting right here, or working with my own

people. That’s what brings results.

Other members of the product development department echoed these views and added

additional sources of satisfaction from their work. They were proud of the personal contacts

built with customers’ technical staffs—contacts that increasingly involved project work as

expert advisors in thinking through operational problems like international compatibility,

interoperability issues between carriers, next generation technologies, and so on. The

engineers were also delighted with the department’s encouragement of their personal

development, continuing education, and independence on the job.

But there were problems, too. Shawn Reynolds, of the structural design group, noted:

o In the old days I really enjoyed the work—and the people I worked with. But now there’s a

lot of irritation. I don’t like someone breathing down my neck. You can be hurried into

jeopardizing the design.

Philip Sanchez, head of the hardware design section, was another designer with definite

views:

o Production engineering is almost nonexistent in this company. Very little is done by the

pre-production section in engineering services. Charlie Newburg has been trying to get

preproduction into the picture, but he won’t succeed because you can’t start from such an

ambiguous position. There have been three directors of engineering in three years. Charlie

can’t hold his own against the others in the company. Brady was too aggressive. Perhaps

no amount of tact would have succeeded.

Paul Hodgetts was head of special components in the R&D department. Like the rest of the

department, he valued engineering design work. But he complained of engineering services:

o The services don’t do things we want them to do. Instead, they tell us what they’re going to

do. I should probably go to Charlie, but I don’t get any decisions there. I know I should go

through Charlie, but this holds things up, so I often go direct.

ENGINEERING SERVICES DEPARTMENT

The engineering services department (ESD) provided ancillary and support services to R&D

and served as liaison between engineering and the other Global Mobile departments. Among

its main functions were the maintenance of the design systems, simple and advanced

prototyping, management of the central technicians’ pool, scheduling and expediting

engineering products, documentation and publication of parts lists and engineering orders,

preproduction engineering (consisting of the final integration of individual design

components into mechanically compatible packages), and quality control (including

inspection of incoming parts and materials, and final inspection of subassemblies and finished

equipment). The original description of the department included the line, “ESD is responsible

for maintaining cooperation with other departments, providing services to the design

engineers, and freeing the more valuable people in R&D from essential activities that are

diversions from their main focus.”

Many of the 75 ESD employees were located in other departments and locations. Quality

control people, for example, were scattered through the manufacturing and receiving areas of

the Asian plant, and technicians worked primarily in the research area or the prototype

fabrication room. The remaining ESD personnel were assigned to leftover nooks and crannies

near the engineering sections. Newburg described his position:

o My biggest problem is getting acceptance from the people I work with. I’ve moved slowly

rather than risk antagonism. I saw what happened to Brady, and I want to avoid that. But

although his decisiveness had won over a few of the younger R&D people, he certainly

didn’t have the department’s backing. Of course, it was the resentment of other departments

that eventually caused his discharge. People have been slow accepting me here. There’s

nothing really overt, but I get a negative reaction to my ideas. My role in the company

has never been well-defined, really. It’s complicated by Doc’s unique position, of course,

and also by the fact that ESD sort of grew by itself over the years, as the design engineers

concentrated more and more on the creative parts of product development. I wish I could

be more involved in the technical side. That’s been my training, and it’s a lot of fun. But in

our setup, the technical side is the least necessary for me to be involved in. Wang is hard

to get along with. Before I came and after Brady left, there were six months when no one

was really doing any scheduling. No workloads were figured, and unrealistic promises

were made about releases. This puts us in an awkward position. We’ve been scheduling

way beyond our capacity to manufacture or engineer. Certain people within R&D, for

instance Philip Sanchez, understand scheduling well and meet project deadlines, but this is

not generally true of the rest of the R&D department, especially the design engineers, who

won’t commit themselves. Most of the complaints come from sales and production

department heads because new products, such as the Nonphixhun, are going to production

before they are fully developed, under pressure from sales to get out the unit, and this

snags the whole process. Somehow, engineering services should be able to intervene and

resolve these complaints, but I haven’t made much headway so far.640641 I should be able

to go to Hoover for help, but she’s too busy most of the time, and her major interest is the

design side of engineering, where she got her own start. Sometimes she talks as though

she’s the engineering director as well as president. I have to put my foot down; there are

problems here that the front office just doesn’t understand.

Salespeople were often observed taking their problems directly to designers, while production

frequently threw designs back at R&D, claiming they could not be produced and demanding

the prompt attention of particular design engineers. The latter were frequently observed in

video conference with production supervisors from the assembly floor. Charlie continued:

o The designers seem to feel they’re losing something when one of us tries to help. They feel

it’s a reflection on them to have someone take over what they’ve been doing. They seem to

want to carry a project right through to the final stages. Consequently, engineering services

people are used below their capacity to contribute, and our department is denied functions

it should be performing. There’s not as much use made of engineering services as there

should be.

An ESD technician supervisor added his comments:

o Production picks out the engineer who’ll be the “bum of the month.” They pick on every

little detail instead of using their heads and making the minor changes that have to be

made. The people with 15 to 20 years of experience shouldn’t have to prove their ability

any more, but they spend four hours defending themselves and four hours getting the job

done. I have no one to go to when I need help. Charlie Newburg is afraid. I’m trying to

help him but he can’t help me at this time. I’m responsible for 25 people and I’ve got to

support them.

Roxanne Walsh, who Newburg had brought with him to the company as an assistant, gave

another view of the situation:

o I try to get our people in preproduction to take responsibility but they’re not used to it, and

people in other departments don’t usually see them as best qualified to solve the problem.

There’s a real barrier for a newcomer here. Gaining people’s confidence is hard. More and

more, I’m wondering whether there really is a job for me here. [Walsh left Global Mobile a

month later.]

Another subordinate of Newburg gave his view:

o If Doc gets a new product idea, you can’t argue. But he’s too optimistic. He judges that

others can do what he does—but there’s only one Doc Brown. We’ve had over 500

production change orders this year—they changed 2,500 documents. If I were in Charlie’s

shoes, I’d put my foot down on all this new development. I’d look at the reworking we’re

doing and get production set up the way I wanted it. Brady was fired when he was doing a

good job. He was getting some system in the company’s operations. Of course, it hurt

some people. There is no denying that Doc is the most important person in the company.

What gets overlooked is that Hoover is a close second, not just politically but in terms of

what she contributes technically and in customer relations.

Production personnel said that Brady had failed to show respect for old-timers and was

always meddling in other departments’ business. This was the reason for his being fired, they

contended. Taylor Flores, in charge of quality control, commented:

o I am now much more concerned with administration and less with work. It is one of the

evils you get into. There is tremendous detail in this job. I listen to everyone’s opinion.

Everybody is important. There shouldn’t be distinctions— distinctions between people. I’m

not sure whether Charlie has to be a fireball like Brady. I think the real question is whether

Charlie is getting the job done. I know my job is essential, I want to supply service to the

more talented people and give them information so they can do their jobs better.

SALES DEPARTMENT

Marianne Price was angry. Her job was supposed to be selling, but instead it had turned into

settling disputes and making excuses to waiting customers. She pointed a finger toward her

desk:

o You see that telephone? I’m actually afraid nowadays to hear it ring. Three times out of

five, it will be a customer who’s hurting because we’ve failed to deliver on schedule. The

other two calls will be from production or ESD, telling me some schedule has slipped

again. The Nonphixhun is typical. Absolutely typical. We padded the delivery date by six

weeks to allow for contingencies. Within two months, the slack had evaporated. Now it

looks like we’ll be lucky to ship it before Christmas. (It was now November 28.)

We’re ruining our reputation in the market. Why, just last week one of our best

customers—people we’ve worked with for 15 years—tried to hang a penalty clause on

their latest order. We shouldn’t have to be after the engineers all the time. They should be

able to see what problems they create without our telling them.

Phil Klein, head of mobile phone sales under Price, noted that many sales decisions were

made by top management. He thought that sales was understaffed and had never really been

able to get on top of the job.

o We have grown further and further away from engineering. The director of engineering

does not pass on the information that we give him. We need better relationships there. It is

very difficult for us to talk to customers about development problems without technical

help. We need each other. The whole of engineering is now too isolated from the outside

world. The morale of ESD is very low. They’re in a bad spot—they’re not well-

organized. People don’t take much to outsiders here. Much of this is because the

expectation is built by top management that jobs will be filled from the bottom. So it’s

really tough when an outsider like Charlie comes in.

Eric Norman, order and pricing coordinator for smart phones, talked about his relationships

with the production department:

o Actually, I get along with them fairly well. Oh, things could be better, of course, if they

were more cooperative generally. They always seem to say, “It’s my bat and my ball, and

we’re playing by my rules.” People are afraid to make production mad; there’s a lot of

power in there. But you’ve got to understand that production has its own set of problems.

And nobody in Global Mobile is working any harder than Tyson Wang to try to straighten

things out.

PRODUCTION DEPARTMENT

Wang had joined Global Mobile just after the Iraq War where he had seen some combat and

worked a stint in the intelligence organization. Both experiences had been useful in his first

year of civilian employment at Global Mobile. The former factory superintendent and several

middle managers had apparently been engaging in highly questionable side deals with Global

Mobile’s suppliers. Wang gathered the evidence, revealed the situation to Hoover, and stood

by the president as the accusations and terminations ensued. Seven months after joining the

company, Wang was named factory manager.

Wang’s first move had been to rebuild the factory team with new people from outside the

corporation. This group did not share the traditional Global Mobile emphasis on informality

and friendly personal relationships and had worked long and hard to install systematic

manufacturing methods and procedures. Before the reorganization, production had controlled

purchasing, stock control, and final quality control. Because of the scandal, management

decided on a check-and-balance system of organization and moved these three departments

from production to ESD. The new production managers felt they had been unjustly penalized

by this reorganization, particularly since they had uncovered the behavior that was

detrimental to the company in the first place.

By 2007, the production department had grown to 500 employees, of whom 60% worked in

the assembly area—an unusually pleasant environment that had been commended

by Factory magazine for its colorful decoration, cleanliness, and low noise level. Another

30% of the work force, mostly skilled technicians, staffed various production support

departments. The remaining employees performed scheduling, supervisory, 642643and

maintenance duties. Production workers were not union members, were paid by the hour, and

participated in both the liberal profit-sharing program and the stock purchase plan. Morale in

production was traditionally high and turnover was extremely low.

Wang commented:

o To be efficient, production has to be a self-contained department. We have to control what

comes into the department and what goes out. That’s why purchasing, inventory control,

and quality ought to run out of this office. We’d eliminate a lot of problems with better

control there. Why, even Taylor Flores of QC would rather work for me than for ESD; he’s

said so himself. We understand his problems better. The other departments should be

self-contained, too. That’s why I always avoid the underlings, and go straight to the

department heads with any questions. I always go down the line. I have to protect my

people from outside disturbances. Look what would happen if I let unfinished half-baked

designs in here—there’d be chaos. The bugs have to be found before the designs go to

parts manufacturers and into assembly, and it seems I’m the one who has to find them.

Look at the Nonphixhun, for example. [Tyson had spent most of Thanksgiving Day (it was

now November 28) reviewing the latest set of specifications from the system.] ESD should

have found every one of those discrepancies. They just don’t check the files properly. They

change most of the things I flag, but then they fail to trace through the impact of those

changes on the rest of the design. I shouldn’t have to do that. And those engineers are

tolerance crazy. They want everything manufactured and assembled to a thousandth of an

inch. I’m the only one in the company who’s had any experience at that level. We make

sure that the things that engineers say on their drawings actually have to be that way and

whether they’re obtainable from the kind of raw materials and parts we use. That

shouldn’t be production’s responsibility, but I have to do it. Accepting bad designs and

documentation wouldn’t let us ship the order any quicker. We’d only make a lot of junk

that had to be reworked. And that would take even longer. This way, I get to be known as

the bad guy, but I guess that’s just part of the job. [Wang paused and smiled wryly.] Of

course, what really gets them is that I don’t even have a degree.

Wang had fewer bones to pick with the sales department, because he said that they trusted

him.

o When we give Marianne Price a shipping date, she knows the equipment will be

shipped then. You’ve got to recognize, though, that all of our new product problems stem

from sales making absurd commitments on equipment that hasn’t been fully developed.

That always means trouble. Unfortunately, Hoover always backs sales up, even when

they’re wrong. She always favors them over us.

Ralph Simon, executive vice-president of the company, had direct responsibility for Global

Mobile’s production department. He said:

o There shouldn’t really be a dividing of departments among top management in the

company. The president should be czar over all. The production people ask me to do

something for them, and I really can’t do it. It creates bad feelings between engineering

and production, this special attention that they [R&D] get from Hannah. But then Hoover

likes to dabble in design. Wang feels that production is treated like a poor relation.

PRODUCT RELEASE

At the executive committee meeting of December 6, it was duly recorded that Wang had

accepted the prints and specifications for the Nonphixhun smart phone and had set December

29 as the shipping date for the first 100 phones. Hoover, as chairperson, shook her head and

changed the subject quickly when Newburg tried to initiate a discussion of interdepartmental

coordination.

About a week later, Hoover called Newburg into her office.

o Charlie, I didn’t know whether to tell you now, or after the holiday. But I figured you’d

work right through Christmas Day if we didn’t have this talk, and that just wouldn’t have

been fair to you. I can’t understand why we have such poor luck in the engineering

director’s job lately. And I don’t think it’s entirely your fault. But.…

Charlie only heard half of Hoover’s words, and said nothing in response. He’d be paid

through June 30. He should use the time for searching.… Hoover would help all she could.…

Jim Brady was supposed to be doing well at his own new job, and might need more help.

Charlie cleaned out his desk and numbly started home. The electronic carillon near his

house was playing a Christmas carol. Charlie thought again of Hoover’s rationale: conflict

still plagued Global Mobile—and Charlie had not made it go away. Maybe somebody else

could do it.

Questions o 1. What is your diagnosis of the strategy and organization

design at Global Mobile? How well does Global Mobile’s strategic intent fit with its external environment?

o 2. How would you work with Hannah Hoover and the executive committee to bring about strategic change at Global Mobile?

*

This case is an adaptation and revision of Rondell Data Corporation, by John A. Seeger, Professor of

Management at Bentley College, Waltham, MA, 1981.