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ONLINE SIMULATION SCENARIO INTRODUCTIO N
Change Management: Power and Influence
Scenario 3: Director of Product Innovation
You are the Director of Product Innovation within the Research & Development unit of Spectrum
Sunglass Company. You have noticed that the topic of sustainable economic development and the link
between sustainability and innovation is featured in more professional articles, such as "Why
Sustainability Is Now the Key Driver of Innovation." You are frustrated that you don’t have any new
sunglass products to offer to the vocal customers who increasingly express concerns about Spectrum’s
environmental impact. Sustainable development makes sense to you personally, from both a moral and
an economic standpoint, and you also see this as an exciting opportunity to differentiate Spectrum’s
products and the overall company from your competitors, which focus primarily on price and design.
At a Spectrum executive strategy retreat in October, you decide to ask for a special, unplanned session to
discuss the conversations you recently had with a vice president at Spectrum Sunglass Company’s largest
retail customer, BigMart, which has more than 1,000 retail outlets across the continental United States.
Sales to BigMart constitute 30% of Spectrum’s annual revenues, representing the company’s top account.
Just a few days ago, at the annual sunglass-industry trade show in Las Vegas, a BigMart executive
approached Spectrum’s booth. The VP explained that he was now in charge of national sunglass
procurement for BigMart and that BigMart recently started an in-house labeling program whereby
products that receive a "Green Stamp" manufacturing certification for environmental friendliness would
get special promotion at BigMart. Notably, the retail giant’s in-house market research revealed that even
its most price-sensitive consumers were starting to prefer green products within their price range. The VP
explained that BigMart was now considering recommending that all of its suppliers go through the Green
Stamp certification process.
As your colleagues at the Spectrum retreat listen to your presentation, they become increasingly agitated.
When Henry Adams, the CEO, asks what BigMart’s specific terms are, you reply that BigMart wants
Spectrum to reduce its dependence on petrochemical raw materials (such as polycarbonate plastics) in the
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sunglass manufacturing process from 90% to 50% within two years. The company has also given
Spectrum a quantitative target and a deadline to meet. Furthermore, BigMart’s VP not-so-subtly
threatened that if Spectrum doesn’t respond within three months with a detailed implementation plan of
how it is going to reduce its manufacturing dependence on petroleum, then BigMart will consider
cancelling all of its contracts with Spectrum and shift business to a competitor that has indicated its
willingness to comply with these demands.
You state that while the timing is unexpected, you think this is a positive (if urgent) growth opportunity
for Spectrum’s R&D department to develop a unique product line for a mass-market customer base and
you think Spectrum is up to the challenge. At this point, Spectrum’s VP of Sales and Marketing, Leslie
Harris, enthusiastically chimes in, agreeing with your perspective. She says that a sustainability feature
will help distinguish the company in the long term and that this marketing angle may open up new
consumer markets for Spectrum’s products (such as exporting to more environmentally conscious
countries in Europe), as well as strengthen its brand among U.S. consumers.
Paul D’Arcy, the CFO, cuts short Leslie Harris’ support, angrily commenting that Spectrum can’t afford
to start a sustainability project just because BigMart demands it. Because Spectrum is highly levered, a
drop in profitability might put at risk the company’s ability to meet its debt covenants. The CFO thinks
that any green raw material substitutes for petroleum would likely be too expensive for Spectrum’s
manufacturing process and would negatively impact the company’s profit margins. Just when you start
to think up counter-arguments to the CFO, you get a double whammy in the form of Luke Filer, the VP of
Operations, who says that there is no way that the plant managers will support another major change in
raw material inputs. The Spectrum plant has just spent the past 12 months undergoing a grueling Six
Sigma quality certification process, and he is extremely reluctant to retrain, retool, and retest to
accommodate the use of "unproven," environmentally friendly raw material substitutes.
Breaking the impasse, the VP of Human Resources, Mary Gopinath, suggests that Spectrum needs to give
the BigMart request serious thought because of the significant size of the account and proposes that you
head a cross-functional task force to come to a compromise solution. The CEO agrees, imposing the
following conditions: (1) that the additional four members come from Marketing, R&D, Finance, and
Production; (2) that everyone on the task force devote at least 75% of their time to developing a proposal
for BigMart that is acceptable to all four departments; and (3) that the task force present him with a
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financially acceptable plan to convert one new or existing product line to be based on petrochemical
alternatives within three months.
The management team at the retreat concurs with the CEO’s task force proposal. As the retreat ends and
everyone heads to dinner, you start pondering the numerous issues and obstacles to overcome in
developing an acceptable plan for BigMart within three months. Your central challenge is to convince
your colleagues that a dramatic change in the organization’s strategy and products is necessary and that
environmental sustainability is critical to the firm’s future – no small task in a relatively short period of
time. This challenge is somewhat complicated by the fact that you must influence the rest of the
organization without the formal authority to command employees’ attention. However, when BigMart
tells Spectrum to jump, the usual response is to ask, “How high?” Furthermore, you have a reputation for
being competent and trustworthy within Spectrum, and this reputational capital will be invaluable to you
as you take on this new challenge.
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Scenario 3: Organizational Structure for Spectrum Sunglass
Henry Adams Chief Executive Officer
Paul D'Arcy
Chief Financial Officer
Bob Ingram Corporate Controller
Walt James
Director, Information Systems
Deborah Edge
VP, R & D
YOU
Director, Product Innovation
Yao Li
Director, Process Innovation
Luke Filer
VP, Operations
Diane McNatt
Plant Manager
Mark Roberto
Foreman
Paul Schenian
Foreman
Mary Gopinath
VP, Human Resources
Ian Newman
Director, Health &
Safety
Louise Orysh
Director, Benefits Administration
Leslie Harris
VP , Sales & Marketing
Sam Puffer
Director, Marketing
Regina Quinn
Director, Sales
Anne Thompson
Manager, Customer Relations
Michelle Barth Executive Assistant
Andrew Chen
General Counsel