Dot-Com Pro is in the middle of sudden, unanticipated change.
Until early this year, Dot-Com Pro's core business has been building web-based systems for companies wanting to move into the e-business arena. Dot-Com Pro has been very successful, helping companies like Minus Muffler automate its supply-chain processes, the Needless Markup department store chain institute web-based catalog sales, and Overland Trucking keep track of shipments on their tractor-trailers nationwide. But with the economic downturn, business has been drying up. Morale is dropping and executives seem to be confused. In short, things feel "broken," and now Dot-Com Pro needs to change its fundamental business direction. They need your help.
Here's some background: Dot-Com Pro was founded in 1997 by four software engineers who left a larger organization, feeling that their old company wasn't nimble enough to adopt new technologies that enable web-based business. These engineers, young, smart, and loaded with energy, quickly found that the internet boom played to their strengths: in just a few months, Dot-Com Pro had four contracts worth eight million dollars from four large corporations. These web-savvy engineers quickly designed and built e-business systems for these clients and, from word of mouth alone, won business from six new corporations the following year.
In the business environment of the late 90s, the company grew quickly. In 1998, Dot-Com Pro added 14 new engineers. The following year, as more and more companies moved their business to the Web, Dot-Com Pro's revenues grew to $30 million, it hired 50 more engineers, and it opened two remote offices in Chicago and LA. And late in 1999, Dot-Com Pro had a successful IPO (initial public offering); on the first day of public trading its stock valuation reached $300 million. Most of the company's employees became paper millionaires that day.
And that mode pretty much exemplified Dot-Com Pro's business through 2000. It could practically do no wrong, growing its business by providing e-business services: writing software and installing web-based business sites.
But in early 2001, the e-business market had collapsed. When a number of new competitors had entered the market, and large corporations that had previously contracted with Dot-Com Pro finally learned how to build their own e-business processes themselves, Dot-Com Pro's business started to evaporate. With fewer and fewer customers, Dot-Com Pro started an aggressive round of layoffs, reducing the employee base from 400 to just over 150. The stock valuation dropped rapidly, paper fortunes vanished, and stock options became worthless. Voluntary turnover increased and by late Spring, it was obvious that Dot-Com Pro was no longer viable as a provider of e-business services.
With its core business gone, the executives at Dot-Com Pro scrambled to find another line of business. They thought they found it when they realized the market for web-enabled cell phones and hand-held devices was poised to take off. "What if," the executives thought, "we wrote a software program that would allow a Web user to also use his or her cell phone or Palm Pilot to engage in e-business?" With market research indicating a broad need for this service, Dot-Com Pro's executives immediately set out to produce a wireless product that users could install and conduct e-business without being directly connected to the internet.
And immediately, the company ran into further trouble. Though having survived the "dot-bomb" crash, the remaining engineers, used to installing e-business software, found it incredibly difficult to develop wireless software--the standards were so different. The new software was "buggy:" what worked on a Verizon phone didn't work on a Sprint phone; software written for an iPAQ didn't run on a Palm Pilot. With each delay in delivering sample code, the engineers began to complain, gossiping at first, then cranking out derogatory e-mails next. Management's response was to terminate the most negative employees, the same employees regarded as the most talented by the other engineers. Senior leaders hired a VP of Product Marketing to create excitement in the media for the new product, but fired him three months into his tenure. Meanwhile, the executives announced the party line: all employees were to begin referring to the new software product as the "greatest thing since sliced bread," or they'd be welcome to pursue their careers elsewhere.
That is where things stand now, early in 2004--the perception among the executives and employees is that the company is in the middle of change, but it feels as though everything's broken. The company now needs to manage its change effectively and re-establish itself, not as a provider of software services, but as a product company.
That's also where you come in.
The Questions
Consider yourself as an OD practitioner, either as an external consultant, or as an internal employee. Be sure to state clearly in your essay whether you are responding as an external or an internal consultant. Your position will have no bearing on your grade. Then, respond to the following questions, referring freely to your readings, class conferences, or postings to this point in the semester:
How would you begin to address the issues that Dot-Com Pro is facing? What's the first thing you would do and why?
Since you wouldn't have conducted any kind of analysis at this point, what do you suspect the difficulty is? Are you comfortable making that kind of assumption now? What kind of information might you need so you can proceed to an effective change intervention?
Are there any change-management theories or organizational models that might be useful in this situation? If so, what are they?
