Tnc, a high tech start-up company

Published:

Human Resource Management at Team and Concepts Limited in Hong Kong

Framework/description of the situation

TnC, a high tech start-up company in Hong Kong with ambitions to grow and evolve, needs to re-think its strategy and restructure its “organizational capabilities”.The company, founded by David Lee in 2003, staffed primarily with former IT students (Exhibit 1,organizational chart), has developed a product PEM (Professional Event Management), a web-based software tool for event managers and users “based upon the concept of streamlining event information management”.In 2004 TnC is faced with the fundamental question; how to transition from a start-up whose main customer is the Hong Kong university community, into an enterprise with a corporate customer base. This transition dictates major choices concerning finance, management, marketing and R&D as well as its overall strategy. Lack of financing forces TnC to consider options with partners likely to “set conditions for the business and require it to adopt new behaviours and a new management structure”.The new alliances may limit its decisional autonomy but there are trade-offs such as the relocation of its offices to the ultra-modern Cyberport office complex (seeExhibit 3,cluster situation)andaccess to marketing know-how of its commercial partners.

My understanding of the problem

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Four main problems face TnC. First lack of financing forcing it to find investors, who may limit independence in decision-making. Second, some employees have finished university and are seeking more attractive jobs where the future seems brighter. TnC needs to negotiate the transfer of the financial participation of those leaving to the remaining and new employees. Third, although employees are innovative, they lack entrepreneurial and commercial know-how, experience being “limited to serving academic institutions”.TnC lacks the market requirements to develop the envisioned family of Event Information Systems (EIS) products (see

Exhibit 2,

envisioned products) to replace PEM which is “unattractive” for corporate customers.Fourth, they lack organizational capabilities to develop and expand; the Chairman David Lee is also responsible for marketing, administration etc. and cannot devote the time to investigate new market needs and opportunities and redirect the strategies and directions.

Tools/Techniques

An internal capabilities audit will be performed to identify where investments in “functional competencies” and “leadership abilities” are needed to support company strategies and objectives.Management of intangible skills is hard to measure, but creates value by giving confidence to investors and “enable[s] a company to turn its technical know-how into results”.

Ulrich and Smallwood enumerate eleven major organizational capabilities of a company. SMEs cannot succeed in every domain due to financial limitations and time, therefore to make a real change TnC must capitalize on a logical selection of the capabilities, which fits with the Company's strategy. I suggest a combination of four capabilities for the following reasons:

Shared mind-set and coherent brand identity : essential for all employees to understand the change in direction.

Consumer Connectivity: to identify market needs and directions.

Innovation : to become and remain a market leader.

Collaboration : to improve speed of execution and acquisition of know how.

Analysis of Organizational Capabilities

Shared mind-set and coherent brand identity

TnC's transition from a start-up servicing a university campus to an SME with corporate customers will require a company culture change. The university student atmosphere will change with the arrival of structured responsibility and accountability. Budgets, sales forecasts, customer satisfaction, salary administration and rewards, formal reporting etc. will become the realities of daily life. The new family of EIS products will replace PEM, which does not meet needs of corporate customers. On the positive side there will be better salaries and more job opportunities. It is critical that these benefits and changes are communicated effectively to employees and partners to ensure a “shared understanding” and that efforts are aligned with the Company's strategy and benefits are maximised for all concerned.

Customer connectivity

TnC recognised the need for provide the family of EIS products, to replace PEM to meet the needs of the corporate customer market. Prototypes exist but they have not identified a customer willing to work with them on development. They have 2 options; firstly via their new partner Chevalier (Network Solutions) Limited (CNK) which does business with large corporations. They must persuade CNK to organise combined customer visits and presentations at all levels, to gain visibility, experience and demonstrate technical know-how. TnC will learn that quality, reliability, flexibility and loyalty are very important to corporate customers. Secondly, TnC needs to cultivate contacts at all levels with companies at the Cyberport complex to discover new customers and technologies.

Innovation

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No other supplier can match the end-to-end functionality of TnC's PEM even though it does not meet corporate requirements. To exploit this competitive advantage, TnC must be able to rapidly provide improved solutions based on EIS to meet customer requirements. Identification and mastering of leading edge technologies is paramount. TnC employees are bright and innovative, but efforts must be directed and coordinated in optimal fashion. To maintain technology dominance, strategic and technical management must cultivate relationships with centres of excellence and specialists at the Cyberport complex where the cluster environment stimulates and “raises productivity and speeds the rate of innovation”.

Collaboration - “sharing of ideas and talent across boundaries”

Speed of execution and acquisition of know-how is another competitive advantage, which TnC needs to exploit.

Firstly the cluster situation (seeExhibit 3,cluster situation); TnC's offices are in the Cyberport high-tech complex.Porter advances, “firms within a cluster are often able to more clearly and rapidly perceive new buyer needs” and start-ups such as TnC can “discern buyer trends faster than isolated competitors”.Partnering within Cyberport will enhance TnC's reputation and generate “leverage in the promotion of new products”.

Secondly the partnership with CNK, an IT company with marketing experience and a corporate customer base, will develop TnC's marketing skills and “gain more knowledge of the requirements and concerns of corporate customers”and help promote the new EIS products and “target a broader set of customers”.

Recommendations

Smallwood and Ulrich maintain the “best capability plans specify actions and results that will occur within a 90-day window”.I will therefore use this time-frame as the basis of the following action-implementation plan:

  • Day 0 (D0), David Lee calls a 3 day off-site meeting with his leadership team comprising Alan Tam, Peter Yip, P:K. Chan, Reggie Chan, and Tony Sung, objectives are:
  • To develop the revised strategic plan covering markets, customers, products, staffing and finance. Each individual comes prepared to address his area of responsibility. Deliverability is an agreed high-level plan; David Lee will arbitrate if necessary.
  • Prepare a communication to employees, to be released on D5 informing that such a process will be conducted during the next 90 days.
  • Assign responsibilities for implementing the organisational capabilities plan as follows;
    • Shared Mind Set and Coherent Brand Identity - David Lee,
    • Customer Connectivity - P. K. Chan
    • Innovation - Alan Tam
    • Collaboration - Peter Yip
  • The 4 leaders will involve the other senior managers and staff as needed and are responsible for getting consensus and buy-in. Each team will meet every two weeks and issue a report by email within 24 hours. Any unresolved issue flagged to David Lee immediately and path forward agreed within 48 hours. On days D(30), D(60), and D(90) all 4 teams will present to the leadership team at a full one day meeting. Major issues resolved prior to the presentations.
  • PK Chan staffs a newly created HR-Finance-Admin function D45 latest; reporting to him. Position is key to deal with urgent staffing, personnel, finance tasks, also implementation of budget and cost control processes.
  • David Lee will identify an experienced CNK marketing manager to transfer to TnC reporting to him effective D45.
  • A half day presentation to all employees to communicate changes at the strategic level D10 and informing that operating plans and budgets will be presented by D60.
  • Preliminary budgets, cost-headcount, submitted by to finance by D60, will be processed with the leadership team and finalised effective by D90.
  • On D90 David Lee will call a full day meeting where he and the leadership team will present to all staff;
    • The new strategic plans and directions.
    • The revised organizational chart with roles-responsibilities incorporating impact of the implementation project.
    • Overview of the group operating plans with budgets and costs.

Conclusion

TnC is small company with young innovative employees naturally more open to change. The company is leading edge, benefits from the spillover effects of its cluster situation with the basic ingredients required to move into the demanding corporate customer world. Its organizational structure was technically biased and needed strengthening in HR management and customer focus areas.

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