ART’s Peter Vyas;
Instruction
Read the case before write
Task: Assume that you were invited to advice to ART’s Peter Vyas. What recommendations would you submit to him, and why?
Process: Before writing your recommendations you may want to address the following issues:
1. As Peter Vyas, how would you handle the expenditure request for the re-launch of the mini water oxidation system?
2. As Cynthia Jackson, would you approve the expenditure request if Vyas sends it up to you?
3. How effective has Vyas been as front-line manager at ART? How effective has Jackson been as an ART division vice president?
4. How has Vyas managed the global challenges this project involved?
5. How has ART been able to foster innovation and an entrepreneurial environment in the context of a large corporate entity?
Policies: You are NOT allowed to use or consult any other information source in reference to this case. You should do it all by yourself without any assistance whatsoever. You should clearly state in your report’s cover page that you comply with these two conditions.
________________________________________________________________________________________________________________
HBS Professor Christopher A. Bartlett and Heather Beckham prepared
this case solely as a basis for class discussion and not as
an endorsement, a
source of primary data, or an illustration
of effective or ineffective management. Th
is case, though based on real events, is
fictionalized, and any
resemblance to actual persons or entities is coincidental. Ther
e are occasional references to
actual companies in the narratio
n.
Copyright © 2010 President and Fellows of Harvard College. To orde
r copies or request permission to reproduce materials, call
1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to h
ttp://www.hbsp.harvard.edu. This publication may not be digitize
d,
photocopied, or otherwise reproduced, posted, or transmitte
d, without the permission of Harvard Business School.
CHRISTOPHER A. BARTLETT
HEATHER BECKHAM
Applied Research Technologies, Inc.:
Global Innovation’s Challenges
On June 5, 2006, Peter Vyas paced his office as he grappled with a request for $2 million to re-
launch a mini water-oxidation product. Despite two fa
ilures to bring this product to market over the
past three years, his team was confiden
t this latest iteration was a winner.
For Vyas, general manager of the Filtration Unit
of Applied Research Technologies (ART), the
request presented a major challenge. He recognized th
at his team had worked tirelessly to make this
project a reality and strongly believed they were
now headed in the right direction. But he also
understood that the Filtration Unit’s track record
of failure during this product’s development had
hurt its credibility. If he supported the proposal,
he knew he would be putting on the line not only
his own personal credibility but al
so that of the entire unit.
Due to the project’s size, final
approval would be made by Vyas’s boss, Cynthia Jackson—the
newly appointed vice president of
ART’s Water Management Division. Jackson was acutely aware of
the mounting losses in the Filtration Unit, and sh
e had already devoted a significant amount of time
trying to get them back on track. She
had confided to one of her colleagues:
When I took on this assignment, I was told my first task was to “fix” the Filtration Unit. The
unit only had one revenue-generating product line and had failed to bring a profitable new
product to market in five years. It was clear that
I was expected to either turn it around or shut
it down.
I’m trying to protect them and ensure they get su
pport, but my initial feeling is if they are to
survive, they must become much more disciplined. They seem to be making progress on that
front, but in all honesty, I sometimes wonder if it is time to cut our losses and initiate a harvest
strategy for the unit.
4168
FEBRUARY 19, 2010
For the exclusive use of M. Yu, 2014.
This document is authorized for use only by Mengchao Yu in MGT 691-57 taught by DR. JOSEPH GANITSKY, at University of Miami from October 2014 to December 2014.
4168
|
Applied Research Technologies, Inc.: Global Innovation’s Challenges
2
BRIEFCASES
| HARVARD BUSINESS SCHOOL
Applied Research Te
chnologies, Inc.
ART was one of the technology world’s emerging
giants. The company had grown through the
merger and acquisition of numerous technology-bas
ed industrial companies, acquired in the LBO
buyout waves of the 1980s and 1990s.
By 2006, ART consisted of a portfoli
o of about 60 business units, each
of which operated as a profit
center. Total corporate revenue was $11 billion in 2006.
1
Major divisions in the corporation included
Healthcare (medical diagnostic equipment), Indust
rial Automation (robotics), Energy (extraction,
conversion, and transportation solutions for
the oil and gas industry—including the Water
Management Division), and HVAC (Heating Vent
ilation and Air Conditioning, including climate
control solutions for residential, co
mmercial, and industrial markets).
Exhibit 1
shows the
organization structur
e of the company.
The company’s success had been built on its innova
tive and entrepreneurial culture, coupled with
a decentralized management philosophy. ART’s vision
statement, proudly disp
layed in almost every
office and cubicle, stated: “We aim to change the world through innovation, and to grow our place in
it through entrepreneurship.”
Culture and Practices
ART was dedicated to supporting innovation
not only with funding (the company’s R&D
spending was double the rate for U.S. industrial comp
anies), but also in its practices, several of which
were deeply embedded in the company’s culture. ART encouraged employees to spend a half day
each week “experimenting, brainstorming, and thinki
ng outside the box.” It
was a practice that the
company’s visionary founder and current CEO, Da
vid Hall, referred to as “tinker time.” He
explained the concept:
Innovation and entrepreneurship are the twin en
gines driving this company. It’s the reason
we’ve ingrained “tinker time” in our culture…I
expect all our managers, and particularly those
on the front line, to create, promote, and back
promising ideas. But we understand that when
you go for the big leap, you won’t always clear th
e bar. So there is no shame in failure when
you are stretching for big objectives. Around he
re we routinely celebrate what we call “worthy
attempts”—even when they are unsuccessful.
Knowledge sharing and dissemination was anothe
r key part of ART’s business philosophy, and
despite the high level of decentralization and profit accountability, technology and human capital
were both widely shared among divisions. For exam
ple, experts in one division routinely served as
advisors on project committees for other division
s, and it was not uncommon for employees to go
“on loan” to help another unit with a promising product idea or technology.
The company also moved quickly to bring products to market. If an idea showed promise,
funding was usually available for small “beta batch” productions, which often allowed market
testing to achieve what was called “proof of concep
t” within ART. Once an innovation was proven,
significant investment was quickly put behind it.
Objectives and Priorities
To infuse discipline into its decentralized organization, ART’s top management set highly
aggressive performance objectives and tied executive compensation tightly to them. In 2006, as in
1
Of that total, Water Management Division sales were $560 million and Filtration Unit sales were $38 million
For the exclusive use of M. Yu, 2014.
This document is authorized for use only by Mengchao Yu in MGT 691-57 taught by DR. JOSEPH GANITSKY, at University of Miami from October 2014 to December 2014.
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