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Smi donnelley group4_upload


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Smi donnelley group4_upload

  2. 2. CASE FACTS Company’s Background •Org & Incentives , Business, Industry Shifts , Emerging Competition Digital Vision •New Business Model •Economic and Technical ValidationReengineering the technology Development •The existing process Process •The redesigned process From Vision to Reality •Information Services Group •Operations & Technology Building the division •Org, Reporting relationships & roles •Marketing & sales strategy Challenges of Internal Acceptance 2
  3. 3. R.R. DONNELLEY & SONS COMPANY BACKGROUNDFounded in 1864By 1995; 41000 employees in 22 countriesWent public in 1956$4.9 billion printing giantGenerated 60% of revenues from directories, catalogs, magazinesMajor customers • Telephone operating companies • Retail and direct-mail merchandisers • Publishers of books, magazines, and software 3
  4. 4. ORGANIZATION AND INCENTIVESManufacturing and sales were core functionsThree sector  8 business groups  38 divisionsThree sectors• Commercial print, Networked Services, and Information ResourcesHighly autonomous• Division mangers were vice presidents• Held accountable for operating profitBusiness group contained plants (divisions)• Its own sales force• Group’s P&L is aggregate of Divisions’ P&L 4
  5. 5. SALES FORCESales force numbered nearly 500 peopleSold to print buyersHad considerable knowledge about customers• Quite involved with customers• E.g. helped reduce inventory, shorten cycle timesUpper management came through sales 5
  6. 6. DIFFERENCES IN ORGANIZATIONS: Traditional: - Digital: - long runs Short runs Economies Of Scale System Price per page Databases Infrastructure setup Speed Plans built for specific Use this as a marketing tool clients/contract Unclear who is the customer Clear who is the customer CRITICAL SUCCESS FACTORS FOR TRADITIONAL PRINT: Long term relationship building Large print runs 6
  7. 7. PRE 94 (PRIOR TO APR 94 – JAN 95:CHANGE) : BUILD: - Pilot numbersDREAM/VALIDATE: - Suppliers MarketingValidate Technology Need a business planBuild a team of people Build relationships across organization APRIL 94 - JAN 95 JAN 95 - JUNE 95 (DIVISION WITH P & L) DELIVER: - Deploy Customers Someone to sell to 7
  8. 8. RR DONNELLEY & DIGITAL PRINTINGRR Donnelley & Sons believed that Digital technology would change the economies ofbook publishing by allowing printers to publish short runs of books on demand.RR Donnelley’s leading customers showed little interest in the technology & newbusiness didn’t perform well as it was expected.Key Executives started moving on: a clear threat to the core organizationRR Donnelley framed the disruptive technology into singular term: As either a strongthreat or as an independent opportunityThe management did not play a significant role: when money & other resources werebeing allocated then they treated disruptive innovation as threatBut when hard strategic work of discovering & responding new markets began theytreated it as an sustainable opportunity ……..but why this happened ??
  9. 9. RR DONNELLEY & DIGITALPRINTING The ability to manage the competing frames of threat and opportunity is not an easy skill to master. The major problem was internal related to the organizational structure of RRD. Incentive pay structure dividing the business units in themselves • Causing each unit to duplicate other functions with-in • Adding high cost equipment to their own plants • Grudging on Sales for our particular unit Another Reason: Digital Division not welcomed into the rest of the organization • Some thought Digital division is still looking for a market • Resisting changes for the traditional way of business Each business group was looking for its own profitability instead of organization’s profitability
  10. 10. THE DIGITAL VISION : A NEW BUSINESS MODELConceptualized by Cowan to link Donnelley with upstream“content owners” & downstream customers Transaction Management System Accounting system DIGITAL Object Oriented DIVISION Database Manufacturing database 10
  11. 11. ECONOMIC & TECHNICALVALIDATION • Venture Capital fund FUNDING established • Determine potential FIELD OF DREAMS competitive advantage TEAM • Explore economies of scale • Convinced staff & customers REENGINEERING • Analyzing traditional approach TECH. • Aimed at more speed & DEVELOPMENT Instilled checkpoints PROCESS • Improved financial data 11
  12. 12. REDESIGNING TRADITIONAL PROCESS • Decision to initiate formal program taken by VP andPROGRAM INITIATION customers • No limits to money required for proving concept • Phase II reviewPROOF OF CONCEPT • Rigorous financial review requiring Sr. VP approval • Phase III reviewDEPLOYMENT COMMITMENT • Final financial review requiring Sr. VP approval before deployment • Actual metrics compared to the planned values • Verification of process and roles & responsibility issuesPOST COMPARISON • Only program manager has authority to take critical decisions 12
  13. 13. KEY STRATEGIC CHALLENGES1. Hierarchy of roles & responsibilities is 3. The process doesn’t seem transparentambiguous  Highly autonomous structure of the 4. Lack of clearly articulated mission at divisions in the organization each level of operation  Knowledge sharing made difficult  Each division duplicates the same 5. Focused on current customer needs functions with other divisions rather creating long term strategies  Same work done at various levels in the existing hierarchy 6. There was no companywide rollout plans. Individual team goal were not2. Incentive pay structure dividing the aligned to the organizational goalbusiness units in themselves  Each group wanted to maximize profit Within Schetter  Moving work around became difficult Scope  No coordination among each other  Causing each unit to duplicate other 1. Clarity in Roles & responsibilities functions with-in 2. The process doesn’t seem transparent  Adding high cost equipments to their own 3. Lack of clearly articulated mission at each plants level of operation  Grudging on sales for their particular unit 4. Focused on current customer needs rather creating long term customer relationship 13
  14. 14. AN ACTION PLAN.1. Restructure the organization such that each employee at all levels is clear about their roles & responsibilities and also their reporting authority2. An HR system in place that aligns company’s goals with the individual goals3. A clearly articulated mission for each team at all levels4. Weekly/monthly/daily meeting should be conducted within the team depending on the criticality of the work5. Divide the work among the teams in a manner such that there is no duplicity for the same work6. Incentive mechanism needs to be improvised. Revenues should contribute to partial incentives, this will reduce tendency to work in autonomously7. There is a need to build company rollout plans.8. Induce transparency in the work culture . Employees should have right to ask questions and be answered. 1. A clearly articulated mission for each team at all level Within Schetter 2. Weekly/monthly/daily meetings Scope 3. Divide the work among the teams in a manner such that there is no duplicity for the same work 4. Induce transparency in the work culture 14
  15. 15. Thank You ! 15