NTC Harmony Case Analysis

SIM 2

Analysis of NTC Harmony

By - Aditya Ishan

NTC Harmony Case Analysis

1. Introduction Northern Telecom Limited (NTC) is more than a 100 year old company which is founded in Montreal, Quebec in the year 1895, which is later known as ‘Nortel Networks Corporation’. Currently the company is in Bankruptcy state which earlier was a pioneer in telecommunications, networking equipment manufacturer. During 1980’s it has become a key supplier of telecom equipments to the Bell Canada and ever since it has emerged into a leading operator in telecommunications and networking competing with Ericsson, Cisco Alcatel, Lucent etc. It is also one of Canada’s biggest companies by market capitalisation during that time and has been at the forefront of innovation in the ever evolving history of communications.

The case study in the current context is developing a new product line EBasic 800 later named as ‘Harmony Project’ which has an official completion deadline by Nov 1983 for Jan 1984 release into the market. The Project is initially headed by Doug Clark appointed by Alan Lutz, general manager of the plant. Later a new manager Jim Retallack got appointed to head the entire product development phase who has come from a R&D background from BNR (Bell-Northern Research). In this case the analysis will be much focussed on what strategy is chosen from the beginning, staffing, issues concerning the product development and also on the organizational structure of the project.

2. Galbraith’s Star Model

Analysis: In the Galbraith’s model, the overall structure, strategy of the NTC harmony project is defined and also how it connects with the people, processes and rewards is discussed as follows:

Structure: In case of NTC Harmony for the development of a new model telephone, General Manager Alan Lutz initially appointed Doug Clark as the acting project manager by whom the whole process of product innovation got initiated. Later Alan appointed an outsider Jim Retallack a PHD in Electrical Engineering from the Bell Northern Research (BNR) for the full time Project manager. The

complete power is given to Jim in taking key decisions and also for driving the organisation throughout the product development of the project. The organisational structure is hierarchical where general manager Alan and project manager Jim acts as top heads and directors, managers report to them. Directors, Engineers, and individual division managers were not given much scope for planning and the power of decision making always rested at the top-level which is the reason why there is a lot of noise inside the organisation throughout the development of the project.

Strategy: The firms’ strategy is very clear to revolutionize the telephone industry and establish themselves in Terminal business by developing a niche product for the market apart from their core switching business. To get established as niche players in the market they had collaborations with Bell forming a Bell Northern research. The product development team was headed by Alan Lutz, General Manager of the plant, where he completely surrendered the control to Jim for any key decision making. NTC has moved very strategically in its product development approach by forming 10 cost functional individual teams where each team is responsible for each telephone part. The collaboration has been established between the teams to work together where the teams are dependent on each other.

Processes: To see how each team is working a detailed plan is introduced by Jim where the status of individual teams is closely monitored with each next step of the project clearly defined, milestone charts, team meetings, memos, sign-off procedures and tracking procedures. The project is well structured and the decision making always at the top in which some of the employees, engineers suggestions were not taken into consideration very seriously right from the start. This issue prolonged during the course of the project and the deadlines are getting nearer, and many of the issues are not resolved and many negative opinions rose internally which has become a huge issue for the project manager. These issues would have been solved initially itself. Even the decision of electrets transmitter, difference of opinion among design and manufacturing teams should have been taken initially itself. Individual teams are set-up but more efforts have to be made to make team efforts more integrated and more productive.

Reward Systems: The project itself is a huge goal for the organisation. But the organisation couldn’t properly align with the employees in setting right directions in the process of product development to achieve these goals. The employees have not been given due diligence in decision making process which led to issues between teams over various problems encountered. Doug was somewhat successful in making the teams aligned to the organisation objectives and goals.

People: Right from the start of the project there was difference of opinion among the people j the organisation. Many important questions have been raised initially itself. They opined that the organisation is going against what they are good at ie., switching business. The initial Personal selection was done by Doug Clark and also established a team of core members. Later when Jim was appointed as the Project manager teams started working closely but due to the decisions of automation and low cost product design the employees’ morale was down and in the middle of a lot of hue and cry in the organisation many key decisions have been taken without valuing employee views. Their concern being the effect of automation on 1300 member work force which would reduce the number of jobs available in the plant. Official approval has made them silent but internally the issues existed in the team in the entire process.

3. Egg of Innovation: Analysis:

NTC organization (management) was in crucial situation to meet the deadline in order to deliver the product on time. NTC already has a creative product which is EBasic 500 series. From this they have started with an idea of developing more innovative and most affordable product with a dial pad and transmitter and receiver (electret transmitter). They set up a team to develop innovative telephone for residential as well as for commercial purpose. Doug Clark is considered as Project Champion for the NTC Harmony project as he is very much involved as the key market researcher and also formulated a product strategy as the temporary project manager. He was the man behind the setting up the core team of 4 members initially to develop the new product in a cost effective way. Evaluation was done by Jim Retallack, who was later appointed as the Project manager, by having regular team meetings, follow-up procedures, memos, status reporting, milestone charts etc which proved effective for the project. The project management was much concerned about the cost of the product with good quality as they needed to deliver the product at the lowest cost. Project is handled by 10 different teams each owning responsibility for individual part. The overall project is functioning satisfactorily while issuing between teams existed because of lack of proper integration between the teams. Coordination between the functional teams is the need of the hour to complete the project in time.

4. Six success factors:

The six success factors were discussed for NTC (Harmony) are presented as follows.

a. Business Focus - Technologically innovate the idea of communication between two people

sitting in different parts of the world. Make the telephone accessible to the entire world with low cost and unique design. Design of telephone, which can really affect the field of telecommunication products around the globe. Main aim is to connect the world. Progress has to be made from telephones to wired connections to handsets, to digital telephones and thus revolution and evolution of Internet.

b. Adaptability – They are the perfect example of adaptability. They adapted to the frequent

demand and change of technology around and available. The evolution of first prototype telephones to main basic residential sets to business class phones (Unity I and Unity II) to digital and then to internet evolution; this revolution has come up due to the frequent adaptability of the organization from time to time based on technology available and demand seen in the world market.

c. Organizational Cohesion - From the beginning and introductory phase there was tough

pressure on the company and the mandate was “Do or Die”. It was important for them to develop new product or close the company and shut down manufacturing plant in London and thus unemployed several that is around 1300 employees would lose their job. The deadlines and meeting the production was very important for the company and they succeeded in that completely by making several organized teams based on the product level with qualified, devoted and loyal employees. Later stage the business grew and then we could see that the line of business grew too from basic telephone to digital and to Internet.

d. Entrepreneurial Culture – We can see a good example of entrepreneurial culture in NTC as

an organization. We have seen them meeting the deadlines, taking risks managing teams to deliver, selecting correct people and holding them together always helped the organization to boost up the business. These proper and motivated cultures had always led NTC as an organization to stand up above competitors during their market introduction phase. The top most of the company were always in contact with the team directly to see and monitor the production and development and thus controlling the production in automation and marketing of the product with the financial aspects.

e. Sense of Integrity – Due to the very selective hiring and proper organization of the teams and

product development plan all the teams and all the people in the teams were well linked and aware of the things which another team were involved with. This helped the organization to synchronize the product development and put the product into direct automation so that the product can be developed in less time and in under budget. Teams were also divided based on the parts of the products. Each team was responsible for one key component: - Developing a reliable design that could be manufactured within the cost objectives - Maintaining a close liaison with the other cross functional teams - Maintaining close liaison with marketing, quality control, production control and purchasing. - Producing a design that would lend itself to automation which will further save time and will help in the amount of production on time and on demand.

f. Hands on Top Management - The top management had already selected the employees and

developed and distributed the teams for the best efficiency. Even the CEO and the managing Directors and the GM of the company were appreciated and they did a lot of appreciations and motivations to all the teams as they totally believed them and thus always succeed and thus company grew enormously and successfully.

5. Fish Bone for NTC Harmony Analysis:

As there are numerous problems inside the project team of NTC harmony, a fish-bone diagram would help find out what reasons are causing the problems and the respective effects. In terms of manpower major concern is Jim Retallack an outsider, appointment as the project leader mid way and also an absence of 6 months has a negative impact among the employees and other key associates. Other problem being the use of electret from the Japanese suppliers which will affect experienced employees.

In terms of methods, some of the methods like implementing memos, team meetings, work and employee trackers were effective but still the decision making capability mainly rested at the top which is one of the biggest problems for NTC. Functional team were not integrated and there is no overlap between the teams which created problems during the design and engineering teams. Other problem being, decision whether to build or buy the electret transmitter since it production cost is about $1, while Japan producing in $.25 where quality is uncertain.

In terms of material used to fit the transmitter in plastic mould not a satisfying solution is concluded. The confusion between Jack team and circuit board and transmitter teams over the jack size, hole size for transmitter and circuit board being different is also unresolved. There are still lots of issues between teams and this will overall affect the product delivery in budget and on time.

6. Cross functional integration: Some of the product phases are left blank as the project is still ongoing. Once the case is analysed completely the rest of the phases will be filled in.

7. Heavy weight / Light weight team structure:

Four types of project teams are as follows:

1. Functional Team Structure: in the basic traditional functional organization employees are

grouped principally by discipline, each working under the direction of a specialized sub function manager and a senior manager.

2. Lightweight Team Structure: Like the above functional Team structure, those assigned to the lightweight team reside physically in their functional areas, but each functional organization designates a liaison to represent it on a project coordinating committee or to a project manager.

3. Heavyweight Team Structure: These are different from the lightweight team structure as here the project manager has direct access to and responsibility for the work of all those involved in project. It is hard to implement but found much successful.

4. Autonomous Team Structure: In the autonomous team structure which is often called as “tiger team”, employees from the different functional areas are formally assigned, dedicated and co-located to the project team and the project manager is given full control.

Analysis: NTC was found to be Lightweight Team Structure as we have seen that the functional managers were directly linked to the department heads such as engineering, manufacturing and marketing. Further there was the project manager on the working area who controlled the team but did not have full right. Here project managers were considered as middle or junior level person who, despite considerable expertise, usually has little status or influence in the organization. NTC lacked in communication and coordination for example during the production of the unit using automation.

This communication gap is there right from the start of the project with a lot of uncertainties on who is heading the team and even employees did not get the feeling of having heavyweight project leader at the top. Even though the entire authority to take any decision is given over to Jim, he did not communicate it to the organization effectively. As the project is still on-going the best possible thing is to communicate all functional teams of the project mission and vision in an effective way to align them to the organization's interests.

Conclusion from the case study:

In the previous sections, emphasis is made to see how the organisation is structured and how it behaved during the lifecycle of the product development. After analysing the case very carefully looking at the current circumstances where the project deadline is getting very closer, a more effective integrated team approach is needed. Currently the functional teams are not having an overlap with the other teams to understand and identify the issues which might come up in the future. This approach not only helps the individuals in identifying the issues but also makes them ready to face challenges in the later stages. The organisation and even the general and project manager are very much focussed in delivering a less priced product without compromising on quality. But the problem is where they have to concentrate on , where employee concerns have to be addressed and have to be involved in the key decision making process as it is seen lacking in the current operation. The jobs of the 1300 workforce very much depend on how the approach is going to be in the final stages of the product development. Mainly the decision of using their own engineers for designing the electrets would be more fruitful even if the cost of the product increases slightly. The decision of using the Japanese suppliers would be very damaging to the organization in terms of doubting their own employees’ capabilities. As the meeting is going to start very soon the key decisions pending should be taken in favour of the employees to finish the product development in time as the deadline is getting closer which also wins the hearts of the employees.

The reason for numerous issues and many negative opinions inside the organization is due to the appointment of an outsider as the project manager Jim Retallack in the project team. He is seen much as a technical expert and an outsider in the organization by the employees. This continued on during the critical phases of the project which in turn made Jim pressurizing employees with meetings and status reports. A leave period of 6 weeks has also carried out a negative impression as the leave was during the critical phases. But Jim’s contribution is also one of the things to be talked about as some of the teams functioned well under him. As the project deadline is getting closer it is wise on part of Alan to re-appoint Doug who is regarded as a concept custodian and a project champion as the Project leader. Doug Clark is the driving force behind the market research and who had also formulated a strategy for the new product would be a suitable replacement for Jim to save the organisation from the crisis. Jim would be better in filling up the gap of a technical expertise as well as an advisor to Doug would help finish the project very efficiently and mostly in the stipulated time.

Sources:

http://www.nortel-canada.com/about/history/ http://www.ft.com/cms/s/0/b1c473e6-089a-11e0-b981-00144feabdc0.html#axzz3Jo0jnzLU http://en.wikipedia.org/wiki/Bell-Northern_Research http://en.wikipedia.org/wiki/Nortel http://open4m.org/2009/03/22/designing-your-organization/