A leading medium-sized manufacturer of specialized electronic devices
The company had experienced steady growth over its long history. Its organizational structure was based on traditional functional areas, e.g., manufacturing, engineering, finance, sales, marketing, etc.
About 1½ years prior to engaging Frontier Associates (FAI), two senior executives had attended a conference at which the benefits of a team operation were extolled. Upon their return, the two executives convinced the other senior executives to convert the company’s organization structure from the existing functional orientation to one based on product line teams.
During the first six months after this new structure was implemented, sales and profit increased at a much faster pace than ever before. However, after the first six months, both sales and profit began to level off, and then began to fall. All efforts to halt this decline had failed, including exhorting the teams to do better and threatening team members with replacement by others.
We conducted interviews with about 21 employees, representing a variety of functional areas and levels throughout the company. It quickly became clear that High Tech Enterprises had never implemented real teams, but rather had six separate pseudo-teams .
When the team-based structure was first implemented, people believed what they were told and operated the teams with a high sense of ownership and excitement. As a result, there was a great deal of innovation, creativity, and focus on getting the job done, with a consequent rise in sales and profits.
However, at the six month point, the teams began to realize that they really didn’t have the authority they thought (and had been told) they had been given. The company had not created, and thus was not benefiting, from creating real teams. Instead they had "pseudo-teams".
After explaining the above analysis, we made two recommendations:
1) That the senior executives be trained in the principles and techniques of teams, team-building, and team operation, and
2) At the end of the training workshop, that the leadership make a decision as to what organizational structure they were going to implement, and implement it, i.e., choose between really implementing the team-based structure or returning to the functionally-based structure they previously had.
In the end the vice-presidents were unwilling to give up their power, and so the product line teams were disbanded and the company returned to a functional structure. Having eliminated the additional overhead of the pseudo-teams, the company's sales and profits soon returned to the steady growth it had previously enjoyed, although not at the pace experienced when they had first converted to teams.