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Case study: Evolve or Die

by on March 1, 2010

Executive Summary:

This case study examines the tension between tradition and the need for change within an organization.  Comfortable patterns and a consistent corporate culture can be powerful positive forces – in some cases, they can be vital components of a firm’s competitive advantage.  However, shifting environments can require organizational change; those who cannot adapt are unlikely to survive.  Garton & Graff, the furniture company discussed in this case study, is comprised of a small group of highly-skilled craftsmen who take great pride in their work and traditions.  More efficient tools are now available, and the cost of supplies for these older techniques has begun to significantly increase.  Competitors who take advantage of new opportunities – using less-skilled workers and modern infrastructure – are now outperforming G&G.  As the situation becomes clear to Karl Graff, the owner of the firm, he must consider how best to respond without losing the essence – and the workforce – of his grandfather’s workshop.

–Colin Anderson, Ross Donaldson, Surry Jones

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From → Coursework

4 Comments
  1. Nishant permalink

    Student Response:

    This case study defines the problem of how an organization could replace old hands with a new technology, in times of dire need.

    G&G is dying. It seems like it is just a matter of time that G&G would close down given their traditional method of producing furniture.

    G&G had been successful in the previous years because they had been up with the market trends by providing rich and robust furniture. However, the reason for their diminishing sales in the last few years is due to their inability to keep up with the current market trends.

    Leo Insky has been a smart employee. As noted by Tim, he had quickly identified & anticipated what took the older employees one and a half weeks to find out. This proves that he is an intelligent employee who has the capability to gauge problems well.

    Leo has already hinted that unlike previously when customers preferred to spend more on sturdy furniture, they are now more oriented towards light, economic and fancy-looking package. There is a definite need to bring a major change in terms of the workforce and alter their system. This change would require revamping the whole workforce and the structure of manufacturing. However, this change is impossible to implement in a current scenario since G&G is already wrecked with a huge financial crisis. Hence, this could be considered as a long-term goal and G&G could think of bringing on this change gradually. As of now, G&G needs some immediate measures.

    Leo Insky, being younger, does not hold enough authority to overcome the senior, more experienced decision-making forces. He would want to reconsider if he wants to continue his stint with G&G. If he would like to continue with his grandfather’s legacy, he has to stay. As a Marketing Director, Leo has to rethink G&G’s marketing strategy. His job demands that his focus should be on Marketing and not Manufacturing. One of the turnarounds, as a part of his marketing strategy, could be Market Segmentation. It is mentioned that G&G has been the best in the business in providing sturdy and high-cost furniture. So why not exploit what they are actually good at? Leo should carry out a market analysis and identify a particular segment of the market, which would be best interested in the kind of furniture that G&G’s produces. G&G should aim to sell its products only to the specific target audience and not the generic market.

    There is also another approach to this problem. Since G&G is facing a financial crisis, it is not possible for them to implement a major change, immediately. One option for them would be to obtain financial support in the form of loans. Hence, this would ensure that the business stays within the family and there is no external stakeholder (in the form of financial investors). Since they already have a well-established name, it should not be difficult for them to obtain loans. With the help of these finances, G&G can invest in a new division, which would be oriented toward the latest furniture manufacturing techniques. In this way, the old workshop remains untouched while they can gain profits from their new venture to sustain their organization.

    – Nishant, Ajay and Shilpa.

  2. Surry Jones permalink

    Executive Response #1

    My understanding is that:
    — This study is based within an economy similar to the one that we are in now (great recession).
    — G&G sales are down over 40% in the past year and market share is also declining.
    — G&G is more of a craftsman enterprise as opposed to a contemporary manufacturing enterprise.
    — Design is accomplished using manual drawing, requiring specifications to be interpreted by craftsman using woodworking machinery and tools.
    — Chief raw material is high quality hard wood that is becoming scarce and more expensive.
    — Employees begin as apprentices and gain training in the operation of machinery and tools from experienced artisans.
    — There seems to be little computerization within the company, perhaps not even for basic business systems such as payroll, AR, AP. This I find somewhat implausible for a company with somewhere around 100 employees.
    — Their competition comes from companies using modern computerized design systems capable of downloading design specifications to equipment that performs most of the manufacturing work to produce finished goods. However, there is a sense in the case study that the G&G products are considered to be of a higher quality and are more desirable, if somewhat more expensive.
    — It seems that G&G is not only currently unprofitable but also suffers from a lack of cash.
    — To continue the current course is not an alternative- G&G will go bankrupt and all employees will be left to compete in a job market that does not need their skills.

    Assuming that G&G can raise the capital (credit worthy, a good reputation), a solution could be to transition to a new identity by:
    — Continue presence in manufacture of high-end quality furnishings, but at a substantially reduced production level. This would free up current employees for a 2nd line.
    — The 2nd line would embrace computerized design and manufacturing technologies to produce lower cost products intended to have a broader appeal to consumers.
    — Retain and retrain existing staff, computerize business processes.

    John Kent
    Director, Information Technology, Seattle Art Museum

  3. Surry Jones permalink

    Executive Response #2

    There are several examples of fine craftsman that have survived and even thrived in the face of competition from lower cost companies. Steinway Pianos and Waterford Crystal are two that come to mind; I’m sure there are many more. The essence of G&G is its fine craftsmen. They may be building the wrong things but I believe they should continue to focus on high-end furniture. G&G does need to change but should not sacrifice its craftsmanship. I’m sure many changes can be made to make them more efficient without losing their essence. Karl will have to take the lead in making these changes or find someone that can help him.

    Karl must get G&G profitable now. This will mean reducing the workforce. Among the executive team, Leo has the most potential as change-maker, however he needs more mentoring by Karl (or someone) so I would keep him. Tim probably wouldn’t make the cut. Bernhard would stay assuming he can get on board with the needed changes – if not, he would have to leave. Lots of challenges – I hope Karl is up to it.

    Tony Audino
    CEO, Conenza

  4. Surry Jones permalink

    After submitting his response, John Kent had emailed me to add another bullet point to his solution (similar to a point provided by Ajay, Nishant and Shilpa):

    Another thought in passing:
    G&G, although small by many standards, is no doubt a major employer in a rural town / county. They should apply for federal and state assistance in going through this substantial makeover.

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