TerraCog is a privately held company specializing in high-quality Global Positioning Systems (GPS) and fishing sonar equipment. The company has a strong customer base of serious outdoor enthusiasts who value the durability and value-added features of TerraCog’s GPS units. In spring 2007, the company embarked on a project to enhance their high-quality GPS handheld with satellite imagery; the project was named Project Aerial.
The decision to develop the new enhancement resulted from increased customer demand, and lost market share to competitor Posthaste, who in October 2006, introduced BirdsI, the “only handheld GPS with satellite imagery”. By the end of 2007, TerraCog had developed a prototype of their version of a GPS unit with satellite imagery and planned to launch the product by the 2008 holiday season. Emma Richardson, the new Executive Vice President, was tasked with the launch of the newly developed GPS unit – she needed to finalize decisions on costs, pricing, and initial production volume.Emma’s main focus as the new EVP was to move the company toward greater operational alignment and increase cross-departmental cooperation. This focus was in response to existing tension between the U. S headquarters in Chicago and the production team in China. The development of the new Aerial would no doubt add to this tension.
The design specifications of the Aerial GPS were handed off to the prod uction team; but sales and finance were running into problems with pricing due to increased production and design costs.Emma tasked Allen Roth, the Director of design & development, and Tony Barren, Director of production, with reducing the costs so that sales could meet their price point. They were successful in only reducing costs by 8%, but this was not acceptable to sales. With the current costs, sales would have to price the product at $475; $75 over its competitor. The VP of Sales, Ed Pryor warned that the team needed to find a way to price the product at $425 to stay competitive and regain some market share.After two unsuccessful meetings and much heated discussion involving representatives from sales, production, design and other members of senior leadership, a decision could not be reached on the price and Emma was left with making a “go/no-go” decision about the Aerial GPS unit. Problem Definition Emma Richardson has inadvertently formed an inefficient cross-functional, problem-solving team tasked with making a decision on the price of TerraCog’s new Aerial GPS unit.
Slow progress on making a group decision and disagreement over the proposed price point for the product may derail or even stop the launch of the product.Relevant Theories and Models Group decision making is widely used in organizations today. There are strengths and weaknesses to using this method and it often has advantages over decisions made by individuals. Groups generate more complete knowledge and information, and they offer increased diversity of views; both allowing groups to evaluate more alternatives and consider more input. Group decisions also foster acceptance of a solution due to increased support of the final decision by the group members. Despite these strengths, group decision making is also plagued with some weaknesses.Slowed decision making is one major weakness of group decision making.
Reaching a decision within a work group is usually time-consuming since all parties may not agree on the proposed final decision. Group conformity and ambiguous responsibility also hinder group decision making. A desire for members to be accepted can result in squashing of any overt disagreement, and unclear lines of responsibility lead to little or no individual accountability. In addition to these weaknesses, group decision making also has negative effects on efficiency since it involves more work hours and resources than decisions made by individuals.Situation Analysis In the case of Project Aerial, it is clear that the group is slow to make a decision on the price of the product. Although there are varying degrees of input and information supplied by the group members, the decision making process is going too slow and a lot of time is spent meeting to discuss the available options. In addition, it doesn’t appear to be clear who is responsible for making the decision on the price.
Ed Pryor, from Sales, seems to be driving and dominating the option for more reduced costs.He is adamant about not trying to sell the product if the costs and price are not lowered. On the other hand, Tony Barren, from Production, the CFO, and Allen Roth from Design, all seems to agree that costs are as low as they are going to get. Emma is attempting to facilitate a type of brainstorming technique but it is failing because there is a lot of criticism. This is also affecting the efficiency of the group because it is blocking the thought process of the members and they cannot come up with creative ideas on how to solve the price problem and reach a consensus.Taking a step back, it helps to analyze the status and norms of groups to help understand how these form the foundation for group interaction and group decision making. Status and group norm are two group properties that are important in understanding employee behavior in groups.
Status has been shown to have some interesting effects on the power of norms and pressures to conform. High status people tend to be more assertive; they criticize more, and interrupt others in discussion, inhibiting creativity in ideas. We see this occurring quite a lot in the meetings Emma called to discuss the price of Aerial.Allen Roth and Ed Pryor both interrupt other team members while they were speaking, and most of the team members, given their status in the organization, are all very vocal in the discussions. This sets the tone and norm for this particular work group. Although the cross-functional team structure it has was probably intended to foster diversity of ideas, the status and embedded norm is causing some inefficiency in decision making and problem solving. In addition to the points already analyzed, Emma’s problem-solving team is also plagued with a few properties of an ineffective team.
There are four key components of effective teams – contextual influences, composition, work design, and process. Looking at contextual influences, we see that the group is somewhat lacking in leadership and structure of the team, as well as trust. As mentioned before, it’s not quite clear who is responsible for making the final decision, and what specific input and contribution is needed from each member. To add to this, there is a slight lack of trust on the part of Tony Barren given past quality problems in production.The other team members have placed increased pressure on him, making him less likely to take risks. This team is also lacking in the area of team composition. Let’s focus on two properties of team composition – personality and size.
In analyzing personality in groups and teams, the Big Five personality model has been shown to be relevant to team effectiveness. Three of the five traits are especially important for team performance – conscientiousness, openness, and agreeableness. Focusing on openness and agreeableness, we see that the group in this case is lacking in these areas.As already mentioned, none of the members, especially Ed Pryor is open to ideas of a higher price, and none of the members are very agreeable, possible due again, to their status in the organization. The theory and studies of these traits suggest that teams did worse when they had one or more highly disagreeable member. Evaluating the size of the team also provides us with some insight to why they are so slow to reach a decision. Experts suggest that managers should use the smallest number of people who can do the task.
A minimum of four or five members is sufficient for driving diversity in ideas and solutions; however, the group in this case includes seven members. It was a mistake on Emma’s part when she included the CFO and the VP of Design in the second pre-launch meeting. When teams have excess members, mutual accountability declines, and they have trouble coordinating. In addition, some members do less talking than others and don’t contribute. We see an example of this with Alice Gorga and Emma Richardson, who barely contributed to the discussions on setting the price. Strategy FormulationEmma Richardson has a couple of ways she can get her team back on track and focused on reaching a solution on the price of Aerial. Emma needs to finds the best way to reach this decision without creating more tension between the group members.
Strategic Alternatives and Alternative evaluation The first option for Emma is to seek the input from the group members individually and then use the information gathered to make the final decision on her own. Using this method will speed up the decision making process. It also clearly identifies that Emma is responsible and accountable for the decision since it will be an individual decision.However, should the product fail, Emma will be the sole person to blame and will receive a lot of backlash from the group members and others in the organization. This will add to tensions and loss of trust in the organization. ? A second option for Emma is to use the nominal group technique of group decision making. She should facilitate a meeting such that there is no criticism of ideas.
Allow each member to individually come up with ideas on the price before the meeting and have them state their ideas at the meeting. The group will then evaluate the pros and cons of each idea so they can make a better informed decision.This method allows the group to still meet, but it does not restrict individual thinking. In addition, since the final decision will be a group decision, it will be more widely accepted and supported. The disadvantage of this option is that some group members may be too entrenched in their original idea and may not be able to contribute to coming up with other alternatives. In addition, more time and resources will be used by having another meeting. The third and final alternative for Emma is for her to use the information she already has and make a final decision herself.
Unfortunately, this decision will likely be a “no-go” decision. The sales team has already stated they will not sell the product if it is priced above the $425 threshold. This option does not address any of the group dynamics issues that Emma has to resolve. However, it does allow for a quick decision and the team members can return to their every day jobs without further tying up these resources. Alternative choice/Solution The best option for Emma is to use the nominal group technique to reach a decision on the price of Aerial.Since the group has already met twice, Emma will have to take control of the situation and provide a lot more focus for the group. As stated before, holding this third meeting will keep the members from working on other projects, and they may present some opposition, but Emma needs to show leadership over the situation and facilitate a more productive meeting.
Before calling the third meeting, Emma should task each original member of the team, excluding the CFO and Harold Whistler, with coming up with 3 different ideas on how to solve the problem of the price.At the meeting, each member is allowed to state their ideas, without criticism, and then the group will evaluate each idea and make a decision. The group may decide at the end of the day not to introduce Aerial and focus on other company products that are more viable, but at least they would have all contributed their best ideas into reaching the final decision. The tension within the group will be reduced and trust reinstated. Finally, Emma would have also partially succeeded in her own goals of fostering more cross-functional involvement within the organization
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