Organizational Optimization

Continental Computer Corporation Case Study

Written during my MBA program

After reading this complex case study, the easiest way for me to explain how to resolve Continental Computer Corporation’s (CCC) issues is to redesign the company in skeletal form. By going over the new structure, I can address all critical talking points and reference the twelve case study questions. Those questions will be listed as Heading 2.

First, let us look at the skeleton of how the proposed corporate structure is set up, then address White’s myriad issues addressed in the CCC case study (Kerzner, 2006). Let us address the question:

Is the matrix structure well suited for the solution to the above question? 

The answer to that question is it depends. The dependent variable is the size of the company. A small company with ten or twelve employees would thrive with a silo structure. A behemoth like CCC, as it is currently structured, has and will crush the company. My solution is a hybrid-matrix organization, allowing for the free-flow of information to all department levels, allowing for little to no mis-communication in the company and increasing efficiency. Salapatas (2000) states that it is a compromise that balances the needs of the project manager and the functional manager.

Project Management Office

White states that after exponential growth in the early 90s, a restructuring took place where the three divisions were set up as silos. The thinking was that divisions would not need to communicate with each other, only through the Home Office ([HO] Corporate Headquarters). HO neglected its history: the consumer division was spun-off from the R&D division created when the DoD division needed to develop solutions for their government contracts. HO never took into account the symbiotic nature of all three divisions. Currently, both Eton (consumer division) and Lampco (DoD division) have their independent R&D centers, causing issues with overlapping projects and confusion as to who reports to whom on projects (Kerzner, 2006, p. 37-39).

If you were the vice president of either engineering or R&D, would you prefer centralized or decentralized control?

Kerzner (2018, p. 326) states that senior management can show support of a company’s project management abilities by: 

• maintaining a hands-off approach, but available when challenges arise 
• Expect updated reports on a scheduled basis
• They practice employee empowerment
• Decentralize project authority and decision making
• Expect their teams to identify and resolve challenges with recommendations

Decentralization is the proposed structure, which addresses the traits above of a mature organization, as well as:

Communication

Individuals assigned to projects on a part-time basis can still report to their functional managers regarding daily tasks, and project managers can address expectations to the employee’s functional manager.

Employee Advancement

White states that almost all technical specialists hold advanced degrees in engineering and that staff is hung up on titles. White says that five consultant engineers are making more than their department managers, and four consultant engineers are making as much as division managers. 

The head of the PMO needs to have leadership capabilities to drive the changes that need to occur within the organization. Assuming that Executive Vice President of Engineering, Ed White, possesses those qualities, he would head the PMO position upon completing the Master Project Manager (MPM) certification. Each of the three divisions will need to hold a PMP certification, which would be offered to the four consultant engineers making as much as the division managers, pending the PMP Exam’s passing.

The five consultant engineers who make more than their department managers would become project managers over product lines in their specific divisions, completing the Certified Project Management Practitioner (CPMP) certification.

Is it beneficial to have to take conflicts up two or three levels for resolution? 

Absolutely not. Productivity comes to a standstill, as the client division is currently running six months behind and growing. When working internally, between different departments, Kuula & Stam (2008) suggested a neutral third party offer a best-case scenario to negotiations. These scenarios are developed from each department ranking responses to a questionnaire. The third-party creates an alternate outcome at each stage of negotiations, essentially ensuring that each party does not feel like they are giving up more than the other. The neutral third party in this case study was HO.

Further, policies and advancement differ between each division, causing dissent within the ranks (Kerzner, 2006, p. 38). 

Divisions

The proposed structure for the three formally independent divisions centers on R&D as their main driver. From White’s narrative (Kerzner, 2006, p. 38), he stated that the DoD division was by far the oldest, and the client division spawned from efforts to apply groundbreaking technology derived from DoD contracts. White says that the client division is the most profitable. However, the products that spun out of R&D are now being handled in the appropriate divisions.

R&D

White stated that R&D had control of all products stripped from them and currently has little knowledge of what is going on in other divisions because of limited communications between silos (Kerzner, 2006, p. 38). 

Should corporate R&D be decentralized?

Because of White’s narrative of how the R&D division was developed and its role in the organization, proper marketing of the company would be to have R&D efforts front and center. This centralized approach allows for the organic growth of entrepreneurial ideas from within the company and a more formal approach to projects brought into the organization from outside sources (Kerzner, 2006, p. 38, 40, 41).

What is meant by seed money? 

Seed money comes from outside sources to fund inside projects (Kopp & Berry-Johnson, 2020, para. 1), so seed money is not used properly in this case study. Notwithstanding, from White’s description, “...R&D projects that are funded out of house, we generally have no major management problems for our project managers or project engineers.” From the entire narrative, White implies that the R&D projects funded from outside the company are presumably from their DoD contracts; the US government supplies funding for potential products to fill their needs. To tie those two concepts together, White mentioned the DoD division being the oldest, and from those efforts sprung the R&D and client divisions (Kerzner, 2006, p. 38).

How does control of seed money differ in a decentralized versus a centralized R&D environment?

The way White described the situation, an outside source was asking for inside help. In that aspect, it would be in the form of contract work in both types of organizations. 

Currently, for inside entrepreneurial ideas, an employee must petition HO for development funds, usually $50,000. That employee becomes a Project Manager of One, and the potential idea is sent to the appropriate division for development. Inside resources cannot be used for Grass Root projects, hence a high failure rate. As such, employees are discouraged from bringing ideas forward, thus stifling innovation. Seeing unseemingly endless amounts of funding from the DoD division on new development, these newly minted Grass-Root PMs become frustrated. If the project is a success, the product is passed to a manager within the division it fell, and the employee returns to his original status. Win or lose, the employee is judged according to the end deliverable (Kerzner, 2006, p. 41).

Conversely, Project Managers do not want to launch projects when pressured by younger employees. PMs will not commit to anything, as there is no steadfast program in place to begin a new program/product from R&D. White states that HO is currently LOOKING AT project management as a profession (Kerzner, 2006, p. 37). There is no corporate backing to restructure the company as a whole, yet after many failed attempts, they are beginning to develop a plan again. CCC is currently back in an exponential growth phase with six months of back-orders in the client division with many top R&D engineers working in production to cover the lack of qualified applicants. Division, Department and functional managers are afraid of this growth because changing the company structure will cause chaos. However, White states, "we continuously hold in-house seminars on project management to provide our people with training in management skills, cost control, planning, and scheduling" (Kerzner, 2006, p. 41).

Should the failure of a “grass roots'' project affect an employee’s opportunity for promotion?

The answer to that is maybe. If the idea was solid, but the cost of entry was too expensive, or parts needed became inflated (e.g., the current steel market) and accepted the loss gracefully, then absolutely not. If the project was poorly managed, and the loss resulted in unsavory behavior, that reflects on the individual, not the project.

DoD

This division would remain relatively unchanged. As a DoD contractor, this division is held to a separate standard, resulting in two sets of accounting books (Kerzner, 2006, p. 38). 

Is it common for companies to maintain two or more sets of books for cost accounting? 

In the 90s, yes. Today you can use SaaS to input actual costs and create reports to inflate labor or parts in a cost-plus environment. However, Kerzner (2004) states that DoD projects must have two sets of accounting books (p. 656).

Advancement Opportunities

The current system in place is not conducive to proper employee advancement. The way it is currently structured, employees are discouraged from bringing potential corporate ideas because the employee is judged on the final results. White states that employees believe that other divisions have a greater chance of advancement and monetary gains.

Why do most project management structures find the necessity for a dual ladder system? 

Engineers manage things; managers manage people. That is the premise of the article Career Development: What is a “dual career ladder”? (2017). The dual ladder system allows for upward mobility of employees who want leadership positions, not directly managing people. 

Client

White mentions that the R&D division is the primary area for peripherals and terminals (Kerzner, 2006, 37). Those products, assumably, are being used in both the DoD area as well as client-facing. By taking all R&D efforts that have been deemed scaleable and sending them to the Client division with its own PRODUCT manager, the Design department can create marketable ways to attract customer demand. Working in tandem with R&D, clear communication between all decisions at every level is achieved.

Opportunity Board

Normally called a change control board (CCB) (Kerzner, 2018, p. 278), the proposed structure uses marketing techniques to place a positive spin on change management. Sitting between the division PMPs and corresponding product lines, the Opportunity Board comprises product managers in each of the three divisions. The Opportunity Board receives potential products that spin out of one of the three divisions and address potential risks and threats of current products within the organization. 

Product Lines

Each product gets a Product Manager, preferably one who created the idea out of Grass Roots in-house. The thought process is:

• An idea is brought to the Opportunity Board, which can determine if it is a solid fit into the company structure regarding design capability and resources available.
• That person is given a discretionary amount of money to fund the project and sent to the R&D department to cultivate the idea in a given amount of time.
• Several factors determine success:
• • Emotional intelligence of the employee during the incubation process
  • Creativity of project
  • Monetary roadblocks that sidelined the project
  • Resource roadblocks that sidelined the project

If the project is successful, the creator is given the option to be the PRODUCT manager, overseeing future iterations of their design. Allowing this type of innovation to be encouraged allows exponential growth of the company, a sense of inclusion to those with entrepreneurial ideas, and a fast-track to management if successful. The current situation sets the employee up for failure out of the gate.

Design

The Design department of each division works in conjunction with the R&D division to update the physical design of the product and future improvements.

Manufacturing

White addressed one of the issues that high-level engineers were working in the manufacturing process because there had been a lack of qualified candidates in the application pool. One way to combat this arid environment is to have HR reach out to technical schools, colleges, and universities in the area and set-up a work-study program. A work-study program would allow for semi-skilled student-engineer employees to be mentored in the lowest aspect of the manufacturing process and then move up as their skill-level improves. What you cannot buy at the market, you grow in your yard.

Client Support

The best way to gauge customer input and create customer loyalty is that of its customer service department. The two levels of client support would achieve that. Having student-engineers manning the phones in the mentoring process would give key insights into what issues need to be addressed in the design and manufacturing process. When hired, they would become great assets to the organization.

Should project managers be permitted to talk to the customer even if the project is in support of a product line? 

I believe they should be kept in the loop about how the products are doing in the marketplace. Those ideas can be introduced in a Six Sigma environment, and kinks could be worked out in the project management environment.

Wrap-up

Should companies with several different types of projects have a uniform procedure for planning projects? 

Yes, because nearly every stage of the project management process can be duplicated across divisions. Some methodologies, such as Six Sigma, Agile, or SCRUM, are not effective in some tasks or departments. The skeleton of project management is universal, which directly addresses White’s comment about initiating a project because there is no standardized process in place (Kerzner, 2006, p. 39). 

How would you handle each of the previously defined problems? 

As my organizational structure and addressed concerns show, every aspect of Mr. White’s narrative has been addressed. 

What has not been addressed is how to get organizational-wide buy-in on restructuring the company for better efficiencies. To that topic, I am opting to take-up Case Study Two from Kerzner’s 2006 Case Study addendum. It addresses the issues from the two discussion posts and this case study and fits into my Best Practices Journal. As current and/or future project managers, it is crucial for us as Saint Leo students to understand the psychology of why people resist change and how to motivate them to accept change. To bypass this step is a great disservice to the student, the program, and the profession itself.

References

Kerzner, H. (2004). Advanced project management: Best practices on implementation (2nd ed). Wiley.

Kerzner, H. (2006). Project management: Case studies (2nd ed). John Wiley.

Kerzner, H. (2018). Project management best practices: Achieving global excellence (Fourth Edition). Wiley.

Kopp, C. M., & Berry-Johnson, J. (2020, November 19). Understanding seed capital. Investopedia. https://www.investopedia.com/terms/s/seedcapital.asp

Kuula, M., & Stam, A. (2008). A win-win method for multi-party negotiation support. International Transactions in Operational Research, 15(6), 717–737. https://doi.org/10.1111/j.1475-3995.2008.00641.x

Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge [PMBOK] Guide (Sixth Edition).

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