Medco Powerpoint The case study of Robert Mason and his company, Medco, is presented in Chapter 1 (p

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Medco Powerpoint

The case study of Robert Mason and his company, Medco, is presented in Chapter 1 (p. 15) to illustrate common issues faced by entrepreneurs and their companies as they move through various stages of growth. As the case study notes, as Medco started to grow in revenue ($20 million), they began to experience certain organizational problems, or what are referred to as “growing pains.”

Using the Medco case study, develop a 4–6 slide PowerPoint in which you:

· Choose 4–6 of the challenges (growing pains) discussed in the case study and provide a summary of each.

· Briefly explain how one of the four steps listed under “The Need for Transitions” can be applied to solve each of the challenges identified above.

· There should be a transitional solution for every challenge

Use the case study below to complete the assignment. No plagiarism allowed.

 

 

 

Medco’s Early History Bob Mason, the founder of Medco, began his career as a salesman for a major medical products manufacturing and marketing firm. He worked hard to learn all he could about the industry, and discovered that the company for which he was working was not adequately meeting all of its customers’ needs, and that there was an untapped market for medical products. So he decided to start his own company, a medical products business.8 Apparently Bob’s belief about the demand for his products was accurate, because within a few years, his business began to experience rapid growth. Within five years, the company had reached more than $20 million in annual revenues, and it was estimated that within four more it would achieve $50 million in yearly sales.

The Onset of “Growing Pains” When Medco reached $20 million in sales, and Bob Mason was feeling good about that, he also became aware that the business was beginning to experience certain organizational problems, which are what we term “growing pains,” as described below:

Many People Were Not Aware of What Others Were Doing. A significant number of people did not understand what their jobs were, what others’ jobs were, or what the relationships were between their jobs and the jobs of others. This problem resulted, in part, from a tendency to add personnel without developing formal descriptions of roles and responsibilities. Since employees were added on an ad hoc basis whenever a staff shortage seemed imminent, there was often little time to orient them to the organization’s operations or to train them adequately in what their own responsibilities would be. Indeed, there was no formal training program. Copyright © 2016 John Wiley & Sons, Inc. 16 Transitions Required to Build Sustainably Successful Organizations® Some people were given job descriptions, but did not adhere to their specified roles. Others were given a title, but no explicit responsibilities. Surprisingly, many individuals often did not know to whom they were to report, and managers did not know for which employees and activities they would be held accountable. People learned what they were supposed to do on a daily basis; long-range planning was nonexistent.

Interactions between Departments Was Also a Problem. Managers often did not understand what their responsibilities were and how what they were doing fit in with the firm’s overall operations. New departments were created to meet Medco’s product and marketing needs, but many managers were not aware of how these departments fit in with the rest of the organization. One manager complained, “People sit outside my door, but I don’t even know what they do.” Another new manager described his introduction tpeopleo Medco as follows: “I was walked to an area and was told: ‘It’s your department. Run it.’” This lack of formal roles and responsibilities made it easy for personnel to avoid responsibility whenever a task was not completed or was completed unsatisfactorily. This also led to duplication of effort between departments. Since no one knew precisely whose responsibility a particular task was, two or more departments or people often would complete a task, only to find that it had already been accomplished by someone else.

People Felt There Were Not Enough Hours in the Day. Most employees felt overloaded. They commonly stayed after hours to complete their work. Department managers, in particular, felt that their workload was too great and that deadlines were unrealistic. This situation resulted, in part, from the lack of adequately developed day-to-day systems to support Medco employees’ work. The accounting, operational planning, and communication systems were adequate for a small company, but quite inadequate for one as large as Medco had become. Systems for purchasing, inventory control, and even distribution were either poorly developed or nonexistent.

People Spent Too Much Time Putting Out Fires. Perhaps the best indication that Medco was beginning to choke on its growth was that employees spent an increasing amount of time dealing with short-term problems resulting from the lack of long-range planning. This was particularly evident in the constant lack of space within the company’s headquarters. It appeared to most employees that as soon as the company increased its office space, the space already was filled, and it was time to begin planning for another move. It seemed that there was never enough space or equipment to support the company’s staff adequately. When they worked at the firm’s headquarters, salespeople usually arrived early to ensure they would be able to find a vacant desk from which to make their calls. Employees who did not go out into the field attempted to handle the cramped space by creating “schedules” for using phones, computers, and even desks.

Employees Began to Feel That Medco Never Planned, It Simply Reacted. A joke around the company was: “At Medco, long-range planning means what I am going to do after lunch.” This was caused partly by the changes in the marketplace and the new demands placed upon the company. It also resulted from the tendency of entrepreneurial companies like Medco to spend most of their time simply staying afloat without keeping an eye on the future. Copyright © 2016 John Wiley & Sons, Inc. Transitions Required for Continuing Success: An Overview Case Example 17 Employees began to think that, simply because crisis is the norm at the company, that is the way they should operate. They began to call themselves “the fire fighters,” and even took pride in their ability to deal with crises.

There Were Not Enough Good Managers. Most managers at Medco were promoted to their positions in recognition of service. Some were good managers, but most were described by their direct reports as “good technicians who lack people skills.” Further, they were seen as clones: Many employees believed that management had one and only one way of doing things, and that to deviate from the norm would result in adverse consequences. Plenty of people had the title “manager,” but relatively few really behaved as managers. After promotion, many people simply kept doing the things they had done in their former roles. They were poor delegators, often doing the work themselves rather than assigning it to others. As a result, employees came to believe that their managers did not trust them. Bob Mason was a strong individual who wanted things done his way, and he wanted to control almost everything. He recognized this, referring to himself as “someone who sticks his nose into everything.” Few decisions were made without Bob’s approval or review. As a consequence, one of two things tended to happen concerning managers: (1) the stronger managers tended to butt heads with Bob and ultimately left; and (2) the remaining managers were slowly marginalized. Those managers who decided not to leave Medco tended not to take Bob on, at least directly, and they had little real authority and certainly no power. Inadvertently, Bob had created an organization of “managerial pygmies.” In effect, Bob was a victim of his own need for control. This phenomenon is part of what we have previously termed the “entrepreneur’s syndrome.”9

When Business Plans Were Made, There Was Very Little Follow-Up, and Things Did Not Get Done. As is true of many small and growing firms, Medco had traditionally operated on an ad hoc basis. No formal strategic planning system was needed, since Bob had provided all of the organization’s direction. Further, the informal structure had allowed Medco’s employees the freedom to generate new product and marketing ideas. As the company grew, however, Bob and his senior management team began to realize that they needed to monitor its operations. Unfortunately, Medco had not developed the systems necessary to have accountability.

There Was a Lack of Understanding About Where the Firm Was Going. Many Medco employees complained that not only did they not know what was expected of them; they could not understand where the company was headed in the long term. This resulted from the inability of Medco’s management to communicate its vision for the future to the company’s personnel. Employees were aware that changes were being made, but were not always sure how these changes would affect them or their departments. Consequently, employees experienced high levels of anxiety. When this anxiety became too great, many left the firm.

Most People Felt Meetings Were a Waste of Time. Employees complained that too many meetings were held among top managers and not enough among the lower levels of the organization. In addition, those meetings that were held were often inefficient and did not result in resolutions to problems. It was because few meetings had written agendas or minutes—many of those attending Copyright © 2016 John Wiley & Sons, Inc. 18 Transitions Required to Build Sustainably Successful Organizations® described them as “free-for-alls.” They were at best discussions, and at worst fights between departments or individuals. Worst of all, they went on interminably. Moreover, people complained that most meetings were called on an ad hoc basis. Since these meetings were unscheduled, people typically came to them without any sense of their purpose and certainly with no preparation. Thus, they tended to have the atmosphere of bull sessions in which people shot from the hip. In addition, people felt that they could not plan their work because they were constantly interrupted for “crisis” meetings.

Some People Began to Feel Insecure About Their Places at the Firm. This problem grew out of the many changes taking place and the large number of problems the firm was encountering as it grew. Some original founding members were terminated and replaced. This caused people to wonder who was next. Although many recognized that some employees had not grown as the company grew, they worried about their jobs and their places within the firm. This, in turn, led people to spend an increasing amount of their time covering their vested interests.

The Company Grew in Sales but Not in Profits. Medco, like many entrepreneurial firms, traditionally had been most concerned with increasing sales. It adopted the philosophy of many growing firms: “If we’re selling more, we must be making more profits.” Unfortunately, this is not often the case. The other side of the profit equation, costs, often increases along with sales, and if costs are not contained, the firm soon may find itself in a position of losing, rather than making, money. Thus, although Medco sales were increasing at a rapid rate, profits were remaining relatively constant. Medco’s problems certainly are not unique. Indeed, these are the classic symptoms of what we have termed “growing pains,” as will be described in detail in Chapter 5. It should be noted that while these “symptoms” represent problems in and of themselves, they also suggest a deeper, more systemic organizational problem. Specifically, they signal that the organization is coming precariously close to choking on its own growth. This, in turn, indicates that the organization must change its very nature; it must make a transition to a different kind of organization, a more professionally managed firm with processes and systems to facilitate growth.

 

 

The Need for Transitions Bob Mason recognized that his business was experiencing problems. He realized that the organization had outgrown the current way it was being managed, and that both he and the organization needed to make some serious changes in the way things were being done. His first step was to get deeper insight into the kinds of problems he was facing at Medco. He did a search for books that would help, and obtained a copy of an earlier edition of Growing Pains. After reading the book, he initiated action to help his company overcome the problems associated with growth. Specifically, he began a program of organizational development for Medco. The four specific steps in the program were as follows:

STEP I: Conduct an organizational assessment.

STEP II: Formulate an organizational development plan.

STEP III: Implement the organizational development plan.

STEP IV: Monitor progress. Copyright © 2016 John Wiley & Sons, Inc. Transitions Required for Continuing Success: An Overview Case Example 19

Step I: Conduct an Organizational Assessment An organizational assessment was performed to evaluate Medco’s current state of development and future needs. The assessment involved collecting information from employees about their perceptions of Medco and its operations. One tool used in this process was the Growing Pains Survey©, which will be presented and described in Chapter 5. This survey measures the extent to which an organization is experiencing the 10 classic symptoms of growing pains. At Medco, the scores on this survey ranged from 30 to 34, with an average score of 32. As explained further in Chapter 5, this indicated that the company was experiencing some “very significant problems,” which required immediate attention. Specifically, the assessment revealed that the company needed to: • Better define organizational roles and responsibilities and linkages between roles. • Help employees plan and budget their time. • Develop a long-range business plan and a system for monitoring it. • Increase the number of qualified present and potential managers. • Identify the direction the company should take in the future. • Reduce employee and departmental feelings that they always “needed to do it themselves” if a job was to get done correctly. • Make meetings more efficient by developing written agendas and taking and distributing meeting minutes. • Become profit oriented rather than strictly sales oriented.

Steps II–IV: Formulate and Implement an Organizational Development Plan and Monitor Progress Having identified its organizational problems and developmental needs, Medco proceeded to the next step: designing and implementing a program that would resolve problems and help the company develop the infrastructure necessary to accommodate its rapid growth. Management met at a retreat to design a plan for the firm. The plan included specific action steps to overcome its problems. Some of these steps were (1) acquisition of human resources and development of operational systems needed to support current operations and continued growth; (2) implementation of a strategic plan that clearly defined where the company was going, and how it was going to get there; (3) implementation of performance management systems to motivate people to achieve the company’s goals; (4) design of a management and leadership development program to help people become better managers and overcome the “doer syndrome”; (5) development of a system to explicitly manage the corporate culture. In addition, Bob be