As the new CEO of MSP, Roberta Francis's strategy is to secure the organization viability in view of a constantly changing market. In order to do so, she needs to maintain and reinforce the core business of the company but also widen the range of activities to focus on a more profitable market. However, facing this vital external challenge, she also has to confront in the same time significant internal troubles and resistances. Indeed the prominent figure of Senior Vice President (Development), Morton Nicholson, disputes her own authority, limits her leeway, and is indirectly detrimental for the organization as a whole. Roberta's strategy will require significant changes in MSP if it is to be successfully implemented. The first part of the case study report discusses the problem that Roberta faces; the second part makes a number of recommendations.
1 - Problems
Roberta faces a number of problems in changing the organization and implementing her strategy, including the absence of unanimous and concrete business directions, an unsuitable division of authority, a problematic collegial culture, and a strong interne resistance to change.
No business directions and unclear strategy
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Recently, one of the core businesses of the organization in terms of revenue 'Diagnostic Testing' has been made vulnerable by changes in government regulation. In addition, the other key activity of the company 'Medical Equipment' seems to be too costly in terms of investment and not sufficient to insure MSP future growth. So in order to answer this challenge, a biotechnology department has been created. However, this diversification on MSP activities has created many problems.
First, the board and senior managers have been so far incapable to reach an unambiguous agreement on the best strategy MSP has to follow. Because biotechnology is not part of the core business which is physic and engineering, many board members are reluctant to engage the company in a risky diversification process. The split board does not provide future direction for the company and as a consequence nothing has been changed to compensate the fact the company cannot rely only on diagnostic testing anymore. Furthermore, because not enough involvement has been attached to the biotechnology research, senior level does not succeed to exploit their potential.
Second, because of the Board's uncertainty, there is a possibility that Morton Nicholson preference influences the direction MSP takes. His predilection for medical equipment and instrumentation could threaten MSP possible expansion in biotechnology.
Wrong distribution of authority: "Who's got the power?"
There are also problems with the power distribution inside the company. The main difficulty is the considerable influence of the Senior Vice President (Development), Morton Nicholson. First, his very strong positional power threatens Roberta's authority. This situation is a direct consequence of the previous CEO too laissez-faire management style. This is a challenge for Roberta to impose herself in the organization as a strong leader and to supervise it properly. Some central governance decisions bypass Roberta's endorsement. She cannot keep this system because as a CEO she has to be accountable for all organizational outcomes. Moreover, Morton's autocratic leadership doesn't seem dysfunctional or openly criticized so far which could make Roberta action unjustified.
A second problem concerning Morton's authority remain in the structure of the organization itself. The current Committees structure means that Roberta does not participate in most of the decision-making process inside the company. The nature of the Committees organization makes Morton a gatekeeper between Roberta and the departments. Indeed, the Committees allow Morton to gain even more power beyond the intended limits. Because he is significantly more powerful than others, he may impose their decision on the committee more easily than in a larger group. All these Committees lock the access to the decision-making process to the other senior managers. They attend the conversation but have no influence on the verdict.
Last Morton's power creates a detrimental unbalance between the two Senior Vice Presidents. Morton has created an intricate committees system that does not allow the Senior Vice President (Finance & Administration), Colin Wittington, to access the information. This unbalance creates a damaging situation for the company because it gives and encourages indirectly the partition between professional and non-professional in the company (see next paragraph).
Collegial Culture as a source of partition
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Marked to Standard
Because MSP's core business is mainly research and development, the organization has put the emphasis on consensus, teamwork, and participation in most decision by all members. This collegial culture finds meaning primarily in the discipline represented by the organization, research, and also comes from the fact that a significant proportion of MSP's employees are professional. Committees are the structural incarnation of this collegial culture. They tend to divide personal responsibility among the members of the Committees and create compromise. Nonetheless, even if most of the employees tend to view each other as peers, this culture excludes all the non-professionals - who represent ironically the vast majority of MSP's workforce - putting them in a sub-category. This division inside the company demoralizes employees and can have harmful consequences on their productivity and commitment to the organization. Demotivated employees can reduce the overall company effectiveness. Still, this culture tends to threaten the hierarchical structure of the company itself. Indeed, professionals have a tendency to accept more favorably to peer leadership. This threatens directly non-professional managers (Colin Wittington, Jane Huntington) authority and credibility. This culture could also be responsible for the lack of research integration into concrete commercial applications. Indeed, this collegial culture tends to disregard the essential part of this business which is productivity and hide a more concrete customer-oriented approach or research.
Given the previous tradition of working up through informal and autonomous culture with only one charismatic and respected leader, Morton, it is unlikely that the senior management team will readily embrace a new culture. Most of the senior managers are professional and directly profit from the current situation.
Politic and Resistance
Finally, Roberta is a newcomer to MSP and while he has some expertise in biotechnology and support of the Board of Directors, she is an unknown to the members of MSP. Her position may be further destabilized if the Senior Vice President (Development) decides to resist changes. It could decide to refuse to go along with Roberta because she represents a loss in term of influence and power. Moreover, Morton has a predilection for medical equipment and instrumentation while Roberta wants to turn the company towards biotechnology. If she allows him to retain his powerful and influential position, then he could be a major obstacle to change. Nevertheless, Roberta's latitude is very small and she definitely cannot fire him. Indeed, due to Morton's excellent network inside MSP and well-built relationship with the Board itself gives no choice to Roberta except cooperate with him. Also, Morton's talent and research expertise make him a key individual for the future success of the company.
Last but not least, the Board itself could be a source of resistance for Roberta. Board Directors are "interventionist" and look for profit, which is going to be a problem for any long-term investment with high risk taking. Similarly, if there is any failure of financial loss at the beginning of the change implementation, and it can be the case, the Board could easily get involved in the day-to-day activities of Roberta's project and thus minimize her control on the organizational change.
2 - Recommendations
Roberta needs to do a number of things if she is to be successful. First, she needs to give the company definite and sensitive direction. This new guidance for MSP has to be utterly supported by the Board to create enough legitimacy to change. Then, she will need to redefine the hierarchy of authority and Morton leadership. However, redistribution on power alone will not solve all the internal problems - she will also have to go toward a collaborative culture and do her best to line-up political sponsorship
Compelling business direction toward the future
Roberta has to create and give MSP a clear vision of which direction the organization has to follow to remain a powerful actor on the market. She will have to convince the Board that the whole MSP business model is currently changing and they have to take an active role in it.
She has to create this shared priority and common direction inside the company, Roberta will need to organize a governance framework with the Board. This governance framework could take the form of a multi-session workshop with the board and the CEO. It will aim to build and develop the global strategies of MSP to reach the agreed objectives. This workshop with the Board has to be the occasion for Roberta to influence the decision in favor of the biotechnology Research.
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Thus, Roberta has to be properly prepared to influence the workshop in a constructive and productive direction. She can build - with the assistance of an external consulting company - a business case for future growth in Biotechnology and give it for board approval. The case should give in details all the long-term advantages of an alliance with a larger company. The point of view of the consultants will probably help Roberta to enlighten the external necessity to change. In addition, she should make full use of her own background in biotechnology to give even more authority to this report. The fact that she had previous successes in other companies shows her competency and expertise to deal with the problem and give the most suitable solution. Last, to accelerate the organizational change, Roberta could join to the business case a concrete study of possible partnership with others companies. This study could be a list of the companies interesting in a joint venture concerning Biotechnology Research with all the legal and economical aspects of each agreement. Therefore, Roberta could urge the Board to poised MSP to become further engaged in partnering with pharmaceutical companies to increase the probability of success associated with identifying novel medicines to treat unmet medical needs.
She could also strongly suggest the creation of a "Research Application" department inside the Research Service, which will be responsible of the link between research and commercial application. This new and independent would be a concrete way to lay the emphasis on the commercialization part of research. Besides, it would also be a very strong sign towards managers and employees that MSP is actually changing.
Because no sense of urgency has been created yet, some members of the board will be reluctant to this fundamental change in the core business of MSP. In order to convince of the need for such a radical reorientation, Roberta could create a "burning platform" during the governance framework with the Board. It will rely on her ability to identify "burning" change issues and separate them from MSP routine challenges to deeply have an effect on Board members, senior managers and employee's willingness to accept change. This communication strategy will emphasize the need for immediate and radical change due to the dire circumstances. Some examples of a burning platform Roberta could use are " MSP is currently going through massive market share lost" or " MSP is going to experience massive loss next year as revenue will fell by approximately X percent". Because all board members had financial stake in the company, financial arguments will be effective to put them under pressure to take a decision and give strong and guidelines for the company.
Hierarchical authority and collaborative leadership
Roberta needs to establish her own influence as a CEO in the company and reorganize horizontal relationships between the Senior Vice Presidents. Roberta has to change the process of decision-making and redefine with precision which decision is made by which Manager.
In order to lesser Morton's influence she could for example rearranged the reporting relationship. From now on, it would be possible for the three Vice Presidents to directly report to Roberta. It will give her direct access to information and direct influence on the three departments' direction. It also removes some responsibilities from Morton. In the same way, Roberta could also participate to the informal meeting of the professional directors that Morton held each month. Take part to this meeting would help Roberta to enhance her horizontal communication with manager and build her control over the company by extending her direct contact with the all the professional directors in order to get information. It also allows senior managers to ask question in person to Roberta, which they may find difficult to do via email, more than ever with a new CEO.
Next, she will have to implement new rules though a directive, approved by the board. For instance, the directive could establish specific controls procedures for approval, procedures for the provision of power and responsibilities, separation of duties, dual signature system, etc. It would be a good way for Roberta to retake a direct control all the important decisions taken in the company. For instance, funds allocation could now needs a triple check signature from both Roberta, Colin and Morton.
Concerning Colin influence, Roberta has to develop his leadership capacities and enhance his control on all the financial aspects of MSP. She could for example empower him to validate Morton distribution of resources considering the global financial health of the company. It would be a way to confer him an overall view and responsibility on all the funds allocate in the company. Giving such accountability to Colin would make him more independent from Morton and would give Roberta a chance to avoid including Morton in strictly financial meetings. The redistribution of authority between the two Senior Vice Presidents could also go through the creation of common projects. These projects outcomes would have to be achieved by both divisions or penalties would be applied. This process would force Morton to cooperate with Colin. Both would have to work together and learn how to share responsibilities. At first, Roberta would have to pick up a project in which Colin would have a great expertise and competency in order to make him realize his source of power and build up his self-confidence facing Morton. Last of all, Colin could also receive some coaching and development training. All this efforts together should be
However, this recommendation assumes that Colin Wittington will be able to get through his timidity and balance Morton's Power. However, if after this attempt the unbalance between the two Senior Vice Presidents remains, Roberta could think to move Colin to another position inside the company and replace him with a charismatic and talented non-professional coming from the Operations Department.
Toward a collaborative culture
Roberta needs first to balance the inequalities of treatments between professional and non-professional to fully reintegrate the latter as a major workforce in the company. To begin the process of rebuilding the group's reputation within the company Roberta needs to give non-professional more access to decision processes. For instance, she could reframe Committees structure in order to integrate non-professionals employees. One obvious possibility is to integrate the Vice President (Operation), Jane Huntingdon, to both the Strategic Action Committee and to the Medical Advisory Board. Indeed, it would give a strong sign to other non-professional employees that the organization takes into account their considerations. Moreover, it would be absolutely relevant because the Medical Advisory Board takes decisions that directly concern Jane Huntingdon's department.
Roberta should try to incorporate the collegial culture in a more pragmatic managerial approach. The aim is to implement a bi-cultural organization with the prestige economy from the professional collegial culture and the market economy from the non-professional managerial culture. In order to create this collaborative culture, Roberta should stop the distinction between professional and non-professional. She could advocate MSP's Human Resources to take immediate steps to increase the number of non-professional in leadership positions as such positions become open. Then, adjustments should be made to ensure that non-professionals are equitably compensated for their work. Professional and non-professional with the same experience and doing the same work should be paid the same compensation. By promoting fairness and equity in the workplace, Roberta will reduce the non-professional frustration and discontent but also will gain in credibility.
Roberta needs to show both sides that they are interdependent and both essential to run the organization. To enforce this idea that there is no distinction between professional and non-professional in every employee mind, Roberta could create social occasions and events between department to mix professional and non-professional. Human Resources could create for example 3 days seminars outside the company to try to generate a common culture. These seminars could include puzzle, logic games and physic activities with sport coach in order to create a team spirit and create cohesion inside the company. However, for some individuals, particularly old professional, these informal attempts to build relationship between the two groups might prove uncomfortable and at the end ineffective.
Line-up political sponsorship
So far, the only ally Roberta has is the Board of Directors, and she has to start with that. Board Members engage her especially to transform the way MSP is running. Thus she has to plainly use this advantage and use any occasion to greater unity between her and Board Directors. For example, Roberta should involve them as soon as she wants to implement essential changes. They have to be aware of - and have approved - her projects. Truly involve the Board in Roberta strategy will give her a very strong political support, which can sustain ongoing motivation and momentum for change. Moreover, to reduce the risk that the board backpedals, she has to educate Board members about the difficulties and of a successful organizational change. She needs to explain them that "Rome wasn't built in a day": transformation is a long-term process. If the board does not understand the essence and risks of an organizational change, the risk is that Roberta will be replaced with a new CEO again, who will be given new directions by the board.
Secondly, this strong relationship with the Board could give her some precious strength to reduce Morton willingness to engage in a fight with her. For instance, Roberta could use the Board as a means of pressure to force Morton to subject him to the organizational changes. With the board support, she could menace Morton to lose even power and influence by showing reluctance to cooperate with her. Nevertheless, Roberta should take car to not treat Morton with arrogance. It could evenly be her the best ally or the worse enemy in the organization. She has to be progressive and precautious in the actions she is going to take against his authority. She could plain one-to-one encounters with him when necessary to keep him engage has a key manager of MSP and show him that she take his opinion into very high consideration.