Shugart In the early 1980s Shugart was the leading maker of disk drives. One of

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Shugart In the early 1980s Shugart was the leading maker of disk drives. One of its major divisions was producing products that, for the most part, had reached the mature stage. Eager once again to have a product that it perceived to be exciting and new, the firm invested heavily in what it perceived would be a high-volume, highly profitable project. Unfortunately for Shugart’s managers, the project, dubbed Project Golden, encountered serious technical difficulties. About a year and a half into the project, the controller and vice president for finance at Shugart proposed terminating the project. However, they were unsuccessful. Here is the controller’s description of the situation. The V.P. of Finance and I presented an economic justification for eliminating this product in August of 1982. We felt very strongly about it. We presented the analysis at the Executive Staff Meeting. The V.P. of the Division immediately championed the product and signed up for lower costs. He also argued the asset recovery issue. I find that if any champion is willing to stick up for a project, then the financial analysis is rejected. Personalities are very important around here. The vice president for another Shugart division described his view about losing projects. You can make a program look any way you want on paper for Business Plans. Another problem is that nobody wants to destroy the P&L. I really believe it’s true that we are very risk taking with negative outcomes. Project Golden was eventually terminated in August 1983, when costs were well over target and competitors had captured what market there was. The vice president for the division that ran Project Golden made the following comments: We lacked enforced milestones, reviews, and plans. Our business review meetings are not “meat and potatoes.” You can’t have a “meat and potatoes” meeting with thirty people. We should have progress reviews, and if need be force Marketing to stop taking orders and force Manufacturing to stop producing until the problems are resolved. One problem we have is frequent management turnover. Nobody ends up responsible for the problems at the project level. Case Analysis Questions A Shugart vice president made a remark about being risk taking with negative outcomes

Discuss this remark in the context of the concepts described in the chapter.

Discuss the comments made by the vice president for the division that ran Project Golden in the context of group process.

Explanation / Answer

Part 1

The Tendency by the Division VP to support the project, despite the economic analysis suggesting otherwise, would go out to show that inspite of new developments showing otherwise, people will often be unwilling to let go of their past decisions. They will support their previous decisions without appraising any information that may have come to light.

In the given scenario, Project Golden was known to be one with technical difficulties at its inception stages and economic analysis supported this view. However, the Division VP in acknowledgint this would have had to reappraise his previous decision to support the project and incur substantial write off costs if the project was abandoned.

Despite the initial negative outcomes and the economic signs that things would not get better, the executive staff meeting chose to ignore the economic analysis and believed that the project division VP would turn the project profitable. This was a substantial risk that the staff committee was collectively making, but this was not based on a conscious forward looking strategy. It was based on stubbornness or unwillingness to accept new information. People would be unwilling to reappraise their past and would rather stand by bad decisions than to admit that they've made a blunder.

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Part 2

The Project VP made an important comment post the shut down of the project, and it was that the meetings were not "meat and potatoes". This essentially meant that the meetings held to review the project did not comprise people representing the project, but instead it consisted of a lot of deadweight. The 'thirty people' remark would mean that there were too many members in the meetings who had essentially nothing to do with the project.

In the context of group processes, this often means that there are too many irrelevant views being discussed in the group. For a dedicated group review process, the members of the group should comprise solely of the people representing the group's activities. Having too many thoughts being discussed would more often than not lead to inactivity, because its hard to arrive at a single action plan.

His Suggested measures to overcome this, was to have rigorous progress reviews, and taking immediate actions at the project level such as not accepting orders or halting production if some technical difficulties were to arise.

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