Case 6: Connor Metal Christopher Jones CIS 410-02 3/28/2017
Connor Metal s Mission Statement: To be a leader in producing high quality metal springs and stampings for large U.S. original equipment manufacturers. Background of Connor Metal: In 1947, Joe and Henry Sloss purchased the Connor metal company. The Sloss family expanded the company in the 1960s, building divisions in San Jose, Phoenix, Los Angeles, and Portland. Vice President of Operations, George Halkides ran the company during this time. Halkides used traditional accounting and control systems to manage the company. In the early 1980s Halkides retired, and Joe Sloss son, Bob Sloss, became president. Bob had worked in the company for several years and even enrolled in Stanford s summer executive education program to prepare himself for this new role in the company. At Stanford, Bob gained business knowledge and had a new vision for Connor. Halkides ran the company as a no debt, low investment, slow growth organization. Bob wanted to apply some of his knowledge about how new technology was changing the business world. Bob also realized that foreign competitors would drive Connor out of business, with lower costs and higher quality products. Connor Metal s Strategy: Bob refocused the business to a service oriented organization. Bob changed from a cost leadership operating strategy to a differentiation strategy. Connor would now focus on high Page 2 of 11
quality, custom-developed metal stampings and wire forms. Bob purchased new machinery, hired engineers, and established a statistical process control system. Bob also knew the importance of involving his employees, giving them more information and autonomy than his predecessor. He knew how giving the employees better wages and stock options improved their moral and performance. Bob setup an ESOP program. Bob changed the name of the company to Connor Formed Metal Products. He invested in marketing tactics. Because of all these changes under Bob, the company became a vendor to Honeywell, Motorola, and HP. Shipments rose by $9 million dollars from 1982 to 1988. Bob decentralized the structure of the organization, giving each division great autonomy and responsibility. Bob changed the organizational structure from a hierarchical to a divisional structure. The Case: Before Bob took over Connor, the company s IT architecture consisted of a IBM System 34 mini-computer. This computer was used to produce payroll, accounts receivable, and accounts payable. Everything else in the company was paper based and done manually. Engineers produced estimates by hand, orders typed out, and sales information kept in notebooks. In 1985, Bob tried to reduce paperwork and bought an IBM System 36 for the Los Angeles office, San Jose office, and Portland office. These were used for basic office tasks, but were not complex enough to produce estimates and shop ordering. Page 3 of 11
Stan Petty who headed the San Jose division, had created a system called Job Boss. Job Boss automated most of the offices tasks, including ordering and estimating. Bob wanted to be able to know which department s machinery produced the best margins. Bob also wanted to be able gain insight on who his customers were, so he could try to get more of them. Bob believed that he could use PCs and custom business software to do these things. Bob hired Michael Quarrey, who had programming expertise. The Los Angeles division was performing poorly. Quarrey was tasked with implementing Bob s computerization project to the Los Angeles division. Quarrey used a relation database PC package, called Clipper to create a network at Los Angeles. The system enabled those on the shop floor to provide input into the business process. By 1990 the system was operational in Los Angeles. The business process in the Los Angeles division changed dramatically. Much less use of paper, and reduced time spent doing estimates. Customer service reps could easily view historical information, and sales people used PCs to communicate customer needs. The Los Angeles division began to see improvements. Within months run speeds on jobs increased by almost 20%. Defective jobs were reduced by 14%. Credits issued to customers and late jobs fell. Sales had also risen by 28%. Despite higher prices, customers were willing to pay for the high-quality products that Connor produced. Connor can charge more because they are being recognized for their quality. This is an example of Connor s differentiation strategy in play (Tanwar). Connor and its executives are now faced with a problem; do we implement the system that the Los Angeles division has adopted? They hold a meeting and discuss this issue. Portland Page 4 of 11
management seems to want the new system. San Jose managers are concerned because they are doing well and see no need to switch their system to something different. Groups of employees usually have a clear understanding of power relations inherent in current work arrangements and are usually ready to marshal all their resources and ingenuity to fight changes that threaten their position. (Morgan). The managers at San Jose may see this new system as an unwelcomed technology. If Sloss pushes too hard for an implementation at San Jose, there could be a pushback. Stakeholders: Employees of Connor: The non-managerial employees of Connor. Customers of Connor: The companies that buy from Connor. Shareholders of Connor: Those who have shares of Connor. Connor Management: Executives and managers of Connor, including Bob Sloss. Four Stage Model of Growth: The four-stage model by Gibson & Nolan, and later modified by McFarland and McKinney, is used to analyze how new technologies are assimilated into IT architecture. We use models because they give us understanding, which help us describe, predict, and control (Wikipedia). If we can leverage the model correctly, we can better assimilate technology into an organization s architecture. Stage 1 is the Technology Identification & Investment stage (Initiation). An example of this would be a vendor at a conference. The vendor is trying to promote a new product from a Page 5 of 11
company. The vendor is trying to hawk off this new product and hopes that it sells, if this is unsuccessful with an individual, that is referred to as stagnation block A. Stage 2 is the Contagion or Learning & Adaptation stage. An example that Dr. Barker gave was that he got an ipad, and Dr. Guan saw how cool it was so Dr. Guan buys one for himself. Dr. Wright then gets one after seeing how cool the ipads are. If Dr. Guan was not impressed and didn t get an ipad, that would be stagnation block B. Stage 3 is the Rationalization & Control stage. The example that was used in class was how the university placed a message on their help page about how they would only help setup email on cellphones for Android and ios devices. Any other device and there would be no help from the helpdesk. This is because it would consume so much time and effort from the helpdesk if they had to provide support for a variety of platforms. Stage 4 is Integration. The organization integrates new technology into IT architecture. This model helps describes why changing business processes, especially with new technology, must be done carefully. If the new technology is forced on users, there will be a pushback. By understanding the model, management can first roll out the technology to its top performers, train them extensively and make it a reward and less a requirement. Other employees will then view this as a reward that can improve their performance. Dr. Barker gave an example of an appliance salesman with a 4G connected ipad. The salesman can check inventory status and make better decisions on the fly. Because of buyer s remorse, some customers may not purchase after having time to contemplate. With the ipad, the salesman can close the deal on the spot and get more sales. However, if management forced the ipads on all salesman, there Page 6 of 11
may be some pushback, especially on older, less tech-savvy salesman. By making the ipad appear to be a reward that will help them, users are more likely to adopt new technology. Porter s Five Forces: Competitive Rivalry: High. Connor faced competition from 600 to 700 primarily owneroperated job shops (Barker). Connor also faced competition from foreign competitors who were taking market share with lower prices. Threat of New Entrants: High. With the smaller shops and offshore competition and low barriers of entry into the industry, the threat of new entrants is high for Connor Metal. Threat of Substitutes: Low. A substitute product is a product from another industry that offers benefits to the consumer like those of the product produced by the firms within the industry (Team FME). Customers are not easily going to find products or services that meet their needs from another market. Bargaining Power of Suppliers: Low. Connor can easily buy metal from another supplier. Connor s suppliers cannot easily produce what Connor produces. It is important to note that the labor force of Connor, specifically the engineers have high bargaining power. Bargaining Power of Customers: Low. Because of Connor s high quality, customized goods, customers are willing to pay a premium. Customers could go elsewhere for their products, but they would also take the chance of buying low quality products that may fail. Page 7 of 11
Courses of Action: 1. Do Nothing, do not implement the Connor Software to any of the other divisions. Connor Metal would continue to operate as they are. Employees of Connor: Employees will continue to go along as they are. The company is successful so most employees may remain content. Customers of Connor: Customers will enjoy high quality customized products as they have been. Shareholders of Connor: Shareholders will continue as they were. Connor Management: Managers in Portland may be a bit bothered because they want to implement the Connor Software. San Jose managers would be happy because they are content with the Job Boss system. 2. Management would implement Connor Software to all divisions. All divisions will be implemented with Connor Software. Employees of Connor: Based on the four stages model, the autonomy of most employees who are forced into the new Connor Software system, will be upset to some degree. Simply because management thinks this new system is a good idea, doesn t mean that it will be met with enthusiasm by its users. Users tend to show resistance when things infringe on their autonomy (Barker). Page 8 of 11
Customers of Connor: The effects on customers may depend on how the new system implementation works out at various divisions. At some divisions, the implementation of the Connor Software may go very smoothly and customers will benefit. At other divisions, the implementation may go poorly and customers may suffer from poor service or quality. Shareholders of Connor: Shareholders may benefit or suffer depending on how implementation is received at the other divisions. Connor Management: Executives and managers of Connor, including Bob Sloss may benefit or suffer depending on how implementation is received at the other divisions. 3. Let the divisions decide individually, four stages model. Managers of divisions will meet with their employees and decide what to do. Employees of Connor: Employees will be happier and may perform better if they are given some choice of whether to implement the new system. San Jose may not want to change their computer system. They are already doing well and have invested heavily in training on the Job Boss system. While other divisions may embrace the new technology. Customers of Connor: The effects on customers will depend on how the new system implementation works out at various divisions. Page 9 of 11
Shareholders of Connor: Shareholders may benefit or suffer depending on how implementation is received at the other divisions. Connor Management: Executives and managers of Connor, including Bob Sloss may benefit or suffer depending on how implementation is received at the other divisions. Recommendation: My recommendation is to leverage the four stages of growth model and let the divisions make the choice of whether to implement the Connor system. This way no one feels that their autonomy is being infringed and there is no pushback from employees who are mad about having to change the way that they are doing things. If divisions have time to see how the Connor Software helps business processes, they may be more accepting of the system. With employees involved in the ESOP, employees have a vested interest in the success of the company. Connor is currently in the data processing era of technology. They have already entered stage one of the stages theory of IT adoption and organizational learning. The technology has been adopted by at least one division. Connor is nearly at stage four as they decide whether to implement the new technology at all divisions (Cash). In conclusion, based on the four stages model, Connor should let the divisions decide on whether to implement the Connor Software. Page 10 of 11
Works Cited Tanwar, Ritika. Porter s Generic Competitive Strategies. IOSR Journal of Business and Management 15.1 (2013): 11 17. Web. Cash, James. Corporate Information Systems Management: The Challenges of Managing in an Information Age. 5th ed. Boston: McGraw Hill Higher Education, 1999. Print. Pg 97. Barker, Robert. CIS 410 Lecture. March 23 rd, 2017. Team FME. Porter s Five Forces - Strategy Skills. www.free-management-ebooks.com: www.free-management-ebooks.com, 2013..PDF. Morgan, Gareth. Images of Organization: International Version. Thousand Oaks, CA: SAGE Publications, 1997. Print. Pg. 175. Wikipedia https://en.wikipedia.org/wiki/stages_of_growth_model#stage_iii_.e2.80.93_control Page 11 of 11