Vice President of the United States and Task Force Assignment

Vice President of the United States and Task Force Assignment Words: 4564

9-494-015 REV: OCTOBER 15, 2004 JOHN J. GABARRO Aston-Blair, Inc. Bringing Aston-Blair’s June 12 executive committee meeting to a close Wynn Aston, III, chief executive officer and chairman of the board, asked Peter Casey, vice president of marketing, and Chris Trott, vice president of corporate planning, to seriously reexamine the company’s procedures for forecasting sales. Aston hoped that improved product demand projections would lead to better inventory control, financial planning, and production scheduling.

Aston-Blair had suffered significant losses in the first quarter of 2004 and expected even greater losses in the second quarter (the first losses the company had experienced since 1975). Aston felt that poor forecasting was one of several underlying factors contributing to the firm’s poor performance. Casey and Trott subsequently met with Richard Pack, president and chief operating officer, to briefly discuss his ideas on the subject. The two men then decided to form a task force to investigate the forecasting problem.

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Casey and Trott agreed to put Michael Bacon, special assistant to Chris Trott, in charge of the task force. Bacon had been with Aston-Blair for two years, having come to the company from a distinguished academic and professional career. After graduating magna cum laude from Yale, Bacon spent two years with Boston Consulting Group, and was a recent graduate of Harvard Business School (see Exhibit 1). Prior to his present assignment, Bacon had worked as a financial analyst in Trott’s financial planning group, and he was now assigned to Trott’s market planning group.

The assignment to market planning was an intentional move on Trott’s part to broaden Bacon’s exposure to different aspects of Aston-Blair’s business. Both Trott and Casey regarded Bacon as an especially promising and capable individual. Company Background Aston-Blair was the third largest developer of children’s educational products in the Unites States. The medium-sized company was headquartered in Chicago and had four major sales offices throughout the United States. Its products included books, music, educational computer software, and films, primarily for children between the ages of 2 and 12.

Aston-Blair distributed its materials to wholesale clubs, mass merchandisers, Internet retailers, and specialty stores. The company’s present difficulties were precipitated by recent losses in almost every product line. Children’s books sales had remained steady but with little growth for a number of years. The company’s premier author had entered into retirement after over 100 successful titles, and there was no replacement for lost revenue from his series. Furthermore, children’s music sales had been ____________________________________________________________ ___________________________________________________ Professor John J. Gabarro prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1993 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www. bsp. harvard. edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 494-015 Aston-Blair, Inc. fluctuating dramatically after the boom of the 1990’s. Sales had oscillated over the past 5 years, resulting in either product overstock or shortages.

The software market was quite competitive – the company had not produced a blockbuster product in years and could not meet its sales forecasts. The same was true for the film market. Sales of Aston-Blair’s hit language educational series “‘Round the World” were down for the first time since the product debuted in 2000. The success of Aston-Blair’s other films often depended upon the timing and popularity of major new releases by its rivals, making accurate forecasting difficult.

Moreover, as the firm has tried to increase sales growth, it has introduced more completely new titles and relied less on sequels to past hits. The increasing emphasis on new titles has further complicated forecasting efforts. The combination of declining demand and Aston’s Blair’s overly optimistic sales forecasts for the first two quarters of 2004 had resulted in excessive inventories and sizable losses. Aston-Blair’s current problems stood in dramatic contrast with the company’s recent record of outstanding growth and profitability.

Aston’s great grandfather founded the company in 1910 as a producer of children’s books, and as the company evolved into multimedia, it had always enjoyed a reputation for being a premiere supplier. During Aston’s 10-year stewardship as chief executive officer, the firm had quadrupled in size and had become the most profitable firm in the industry. Aston attributed this recent success to the company’s aggressive marketing efforts and to its ability to identify potential multimedia users and to work with them in developing products tailored to their requirements.

Under Aston’s and Pack’s direction, the company was the first firm in the industry to develop a marketing organization where market managers and product managers were responsible for focusing on specific market segments and applications areas. (Pack had been vice president of marketing prior to his promotion to president in 1989). Despite his family’s obvious influence in the company, Aston had come up through the ranks and had a solid grounding in the business.

Himself an MBA, Aston had made a concerted effort to hire business school-trained managers since becoming chief executive officer and had hired a number of MBA’s from Columbia, Dartmouth, Harvard, MIT, Stanford, and Wharton. It was generally acknowledged that many of these MBAs were received with some resistance from industry oldtimers, although several of them had gained considerable influence and success within the company, including Casey (a Harvard MBA) and Trott (an Amos Tuck MBA), both of whom were now vice presidents.

Formation of the Task Force After some discussion, Trott and Casey concluded that the major area for the task force to study should be the Marketing Division, because it was the four market managers who made the final forecasts for product demand. The market managers based their forecasts on information they received from their product managers, the vice president of sales, the vice president of manufacturing, and the macroeconomic forecasts made by the vice president of economic analysis and forecasting (see Exhibit 2 for company organization chart).

Having decided on the task force’s mandate, Casey and Trott met with Bacon and described the problem as they saw it. Casey said that he would appoint three product managers to the task force to represent the Marketing Division. He suggested that it would not be necessary to involve the market managers (to whom the product managers reported), since they were very busy and had been resistant to similar changes in procedures in the past. Trott, in turn, said that he would ask Jed Burns, vice president of Sales, to appoint a representative from Sales to the task force.

He also suggested that two others, in addition to Bacon, be assigned from Corporate Planning. The first was Vicki Reiss, a young Harvard MBA, whom Trott felt would add analytic strength to the group; and the second was Robert 2 Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 Aston-Blair, Inc. 494-015 Holt, a man in his middle 50s, whom Trott thought would add balance because he was an old-timer and would be able to relate well to the product managers. Trott also added that he would ask Dr. Russell Cornelius, vice president of economic analysis, to appoint a representative from his group.

The three then agreed that the task force would report back to Trott, Casey, and the market managers on August 4. After the August 4 presentation, Trott would arrange for a subsequent presentation to the president and chairman of the board later in the month. Initial Meeting of the Task Force A week after his discussion with Trott and Casey, Bacon had his first meeting with the newly appointed task force. In addition to himself, Vicki Reiss, and Robert Holt, it included the three product managers from the Marketing Division, Randy Meir, an economic analyst from Dr.

Cornelius’ group, and Emile Bodin, a special assistant to the vice president of Sales. (See Exhibit 1 for the names and positions of the task force members. ) The three product managers were all men in their middle to late 40s; all were obviously uneasy at the beginning of the meeting. Bacon had had few prior contacts with them and did not know them well. By contrast, he knew Vicki Reiss and Robert Holt fairly well because they also worked for Trott in Corporate Planning. Bacon had previously worked with Reiss and had come to admire her analytic ability, quickness, and perceptiveness.

Although he had never worked directly with Holt, he knew that Holt was widely respected within the company for his competence, knowledge, and thoughtfulness. Randy Meir, the representative from the Economic Analysis and Forecasting group, was a Wharton MBA and a contemporary of Bacon and Reiss. Bacon had once worked with Meir on a project before Meir had been transferred from Corporate Planning to Cornelius’ group. Bacon had found this experience to be less than satisfying, and he and Meir disagreed over several issues while working together.

Emile Bodin, the representative from the Sales Division, was in his late 50s and had spent almost all his career in sales. His last five years had been as a troubleshooter, and special assistant to the vice president of sales. Bodin, like Holt, was well-liked and widely respected within the company. The meeting had a slow and awkward beginning, with Emile Bodin, Vicki Reiss, and the three product managers saying almost nothing. In contrast, Randy Meir was quite vocal and emphatic about the need to develop a model for the internal forecasting process.

Meir argued that it was essential for the task force to identify the basic assumptions on which the present product demand forecasts were based, and then to make a model of the entire process. Reiss finally interrupted Meir to say that although she agreed a forecasting model might be useful in the future, she thought the creation of such a model should not be the task force’s purpose. Rather, it might be one of the recommendations that the task force might make based on what they found. She also added that it was much more difficult to develop a single-firm forecasting model than it was to develop the macroeconomic odels that Dr. Cornelius and his group worked with. After a long pause, Robert Holt suggested that the task force divide up its work so that he and the three product managers could concentrate on the Marketing Division and Meir could concentrate on gathering whatever hard data he felt were necessary for a model. Bacon thought that this was a good idea. He then asked Vicki Reiss and Emile Bodin if they would be willing to concentrate on the Sales Division’s inputs into the forecast. Reiss and Bodin exchanged ideas briefly and then agreed to take responsibility for this part of the project.

Shortly thereafter the meeting adjourned, the consensus being that individual subgroups would stay in contact with Bacon. 3 Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 494-015 Aston-Blair, Inc. Preparation of the Task Force Report In the following five weeks, Bacon spent much of his time working with Holt and the three product managers on the Marketing Division’s part of the study and with Reiss and Emile Bodin on the Sales Division’s part. Holt and the product managers worked well together and Bacon found his meetings with them to be enjoyable and at times exciting.

He also found that he, Reiss, and Bodin enjoyed working together and that the three of them were making considerable progress in identifying how the regional sales managers prepared the sales estimates for the vice president of sales (which in turn constituted the Sales Division’s inputs to the market managers). Meir, on the other hand, spent most of his time traveling to the various sales offices gathering data on historic sales trends, as well as interviewing all of the product mangers in the company headquarters.

Bacon’s exchanges with Meir were brief and infrequent and occasionally strained. Bacon suspected that Meir resented Bacon’s more rapid progress within the company. He had also heard through the grapevine that Meir’s boss, Dr. Cornelius, was disturbed that he had not been asked by Aston to look at the forecasting problem, or by Trott and Casey to head the task force. Several of Meir’s comments reinforced Bacon’s suspicions, since Meir made it clear that the internal product demand forecasting should be done by Cornelius’ group instead of the market managers.

By July 23, Bacon felt that the group had made enough progress to report back to Trott, Casey, and the market managers. The next day, he called the members of the task force together to share their findings and to discuss a strategy for presenting their recommendations to Casey and Trott on August 4. All of the task force members attended, except Meir who was in New York City gathering sales data and could not make the meeting. Holt and the three product managers were quite enthusiastic about several recommendations that they were sure would improve the quality of the product-demand forecasts.

Bodin and Reiss also reported that they had found what they described as some systematic biases in the Sales Division’s inputs into the forecast. They felt that they needed more time, however, before they could make any specific recommendations. They did think that they could make some recommendations of a general nature at the August 4 presentation. After the meeting ended, Emile Bodin took Bacon aside and explained that the information he had on how the regional managers made their sales estimates was quite sensitive, and that he needed to discuss it with Jed Burns, the vice president of Sales, before proceeding further.

Bodin said that he would first prepare a report of his findings for only Bacon and Reiss to look at; then, after the three had discussed it, he would take the report to Burns. He said that he did not yet have all the information necessary and that the report would probably not be ready before the August 4 presentation. He also added that it would take several discussions with Burns before his findings could be presented to the rest of the task force since he thought his report would place the Sales Division in an embarrassing situation.

He expected, however, that once Burns understood the report and its implications, some significant changes could be made to improve the Sales Division’s inputs into the market manager’s forecasts. He also felt that Burns would support these recommendations. Reiss joined Bodin and Bacon partway through their conversation, and she concurred that all of this work could not possibly be completed by August 4. She suggested that their general recommendations be followed up at a later date with more specific recommendations after Bodin had discussed his report with Burns.

During the following week Robert Holt and the product managers spent most of their time preparing for the presentation, while Emile Bodin worked as rapidly as he could on his report for Burns. Vicki Reiss, in addition to consulting with Bodin on the report, concentrated on preparing some general recommendations about the Sales Division’s input into the forecast. Bacon had spoken with Meir as soon as he returned from New York and briefed him on the results of the earlier meeting. Meir agreed to outline a proposal for the development of an internal planning 4

Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 Aston-Blair, Inc. 494-015 model as his part of the August 4 presentation. Meir added that gathering his data had been a frustrating experience, and that he suspected that the regional sales managers were hiding information from him. The August 4 Report of the Task Force Prior to the task force’s oral presentation on August 4, Bacon, Holt, and the three product managers agreed that Holt should be the one to report his subgroup’s findings and recommendations.

The three product managers felt that if they made the presentation, it would put them in an awkward position with their bosses, the market managers, because several of their conclusions were critical in nature. Bacon agreed with this strategy; he also decided (with the approval of the other members of the task force) on a tentative agenda. The plan was for Bacon to begin the oral report with a 15-minute summary of the group’s purpose, what they saw as the general problems, and their major recommendations.

He was to be followed by Meir, who would recommend that an internal forecasting model be developed to assist the market managers in making their individual product-demand forecasts. Meir would also report on the historic sales data and on what he thought were the critical, underlying assumptions that needed to be clarified in developing an internal forecasting model. Then, Holt would report his subgroup’s findings on how the Marketing Division should restructure its procedures for making future product-demand forecasts.

After Holt’s report was completed, Reiss would present her general recommendations concerning the Sales Division’s inputs into the productdemand forecasts. The presentation was scheduled to last from 10:00 a. m. to 1:00 p. m. in Peter Casey’s office. Bacon arrived at his own office at 8:00 a. m. to go over his notes and flip charts. Shortly after 9:00 a. m. , Emile Bodin came into Bacon’s office with a copy of the report he had been working on all week. Bodin had stayed up most of the night typing it himself so that Bacon could see it before going into the meeting.

Bacon skimmed the six summary statements on the first page and was indeed surprised by what they said. It was clear that the regional sales managers were consistently overstating their sales estimates in order to insure adequate inventory and rapid delivery. He called Reiss on the telephone and the three decided to discuss Bodin’s report the next day, but not to report any of its findings at the presentation. The presentation began promptly at 10:00 a. m. Everyone seemed very much at ease, except for the three product managers. The meeting went smoothly until Meir finished his portion of the presentation.

Meir asked if there were any questions, and one of the market managers said he hoped that what the others had to say would be more relevant than Meir’s recommendations. He added, “You guys in Cornelius’ group can’t even forecast what the economy is going to do; how the hell are your models going to tell me what our customers are going to do? ” The other market managers laughed at this remark, and to save Meir further embarrassment, Bacon said that Meir’s recommendations would make more sense after the market managers heard the other reports.

Holt then presented the report on the Marketing Division’s procedures for forecasting product demand and the task force’s recommendations on how they should be changed. During Holt’s presentation, the product managers asked him several questions of a clarifying nature, which Bacon felt were useful in getting certain points across to the market managers. At the conclusion of Holt’s presentation, Paulson, one of the product managers, said that all three of them felt that the conclusions and recommendations were sound, and that they were prepared as individuals to stand solidly behind them and take personal responsibility for their consequences.

Following this remark, Casey, the vice president of marketing, asked his market managers what they thought of Holt’s presentation. One of them said he thought the recommendations might improve 5 Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 494-015 Aston-Blair, Inc. the forecasts, while the other three said that the recommendations could not possibly work. Their comments included such arguments as the recommendations would not allow enough room for necessary subjective factors, and that the new procedures would involve too much red tape.

The discussion became quite heated, with most of the questions being addressed to Holt. Several times the product managers were cut off by their bosses in their attempts to answer the questions or clarify certain points. Finally, one of the marketing managers said to Holt, “Robert, frankly, I’m amazed that this kind of nonsense could come from you. I would expect it from a tenderfoot like Bacon or Reiss or Meir, but from you? You’ve been around here long enough to know our business better than to come up with this nonsense. ” A second market manager added, “Look, I’m just getting things under control again so we won’t lose money next quarter.

The last thing I need is this garbage. ” He then turned to Casey and said, “In no way am I going to swallow this stuff. ” Casey began to respond, when Trott interrupted to say that he thought tempers were hot and that the recommendations were not as controversial as they might first appear to be. He suggested that the meeting be adjourned until 3:00 p. m. to give everyone a chance to cool off and think things over. Casey agreed that the suggestion was a good one and the meeting ended at 11:30 a. m. Trott asked Bacon to remain after everyone else had left.

Trott then closed the door and said to Bacon, “We’ve got one hell of a mess here, and you better figure out what you’re going to do at 3:00. In the meantime, Casey and I will put our heads together and see what we can come up with. ” Bacon picked up his notes and left. When Bacon returned to his own office, he found Meir sitting at his desk thumbing through the report that Emile Bodin had left for him earlier in the morning. Bacon explained that the report had been loaned confidentially to Bacon for study purposes only, and that Bodin had to discuss the report with his boss before presenting it to the full task force.

Bacon added that none of the report data would be presented in the afternoon meeting, except in the most general terms. He said that it was important to respect Bodin’s wishes and that the report would be shared with the task force when the time was right. Meir responded by saying that Bodin’s data would certainly have made his own task much easier; he suspected all along that the regional sales managers had been withholding information from him. Meir added that he was angry that he had not received more support from Bacon and Reiss when the market managers had attacked him during the morning meeting.

Bacon explained his rationale for wanting to move the discussion on to another topic – one of his reasons for doing so was to get Meir out of the tough spot that he was in. He said he was sorry that Meir had interpreted it as a lack of support. Meir accepted his apology and left. A few moments later, Reiss came in to ask Bacon to join her for lunch. The two spent most of their lunch discussing what Bacon should do when the meeting reconvened at 3:00 p. m. After lunch, Reiss accompanied Bacon back to his office where they found Dr. Cornelius waiting at Bacon’s door.

Cornelius said that he wanted some information on two of the points that Bodin had made on the first page of his report. Bacon noticed that Cornelius was holding a piece of yellow lined paper with Bodin’s six major points written on it. Cornelius stated that he needed this information for a meeting that he had scheduled for 4:00 p. m. with Jed Burns, the sales vice president (and Bodin’s boss), to get “some real progress going on the forecasting problem. ” Bacon replied that it was impossible to give him that data, and that the report was considered confidential.

Cornelius smiled and asked how company information could be thought of as confidential when it was a corporate vice president who was asking for it. Cornelius left by saying that he would get the information he needed from Burns himself when they met at 4:00 p. m. Reiss who had overheard Bacon’s exchange with Cornelius, seemed incredulous at what had transpired. Bacon explained that Meir had seen the report before lunch and that he had explained its confidentiality to him. Meir had presumably understood the situation, although he had not actually 6 Purchased by omar alobud (obood. [email protected] com) on October 21, 2011

Aston-Blair, Inc. 494-015 said that he would keep it confidential. Reiss was by now quite angry, and said that if Emile Bodin was in any way hurt or compromised by this turn of events, it would be Bacon’s responsibility. She said that Bodin had taken a personal risk in sharing the information with them and that if Bodin ended up in trouble because of it, Bacon’s word would not “be worth a plugged nickel” in the future. Bacon attempted to again explain what had happened, but Reiss cut him off by saying, “You’ve got a problem, man, which you’d better fix in a hurry. ” 7 Purchased by omar alobud (obood. [email protected] om) on October 21, 2011 494-015 Aston-Blair, Inc. Exhibit 1 Members of the Forecasting Task Force Michael Bacon, 28, chairman: Market planning analyst and assistant to the vice president of corporate Planning; (Graduated magna cum laude from Yale University, spent two years at Boston Consulting Group, Harvard MBA, at Aston-Blair for two years) Vicki Reiss, 27: Financial planning analyst; representative of Corporate Planning; (Harvard MBA, at Aston-Blair for one year). Robert Holt, 54: Corporate development specialist; representative of Corporate Planning; (B. S. , Missouri School of Mines, Rolla. Aston-Blair employee for 15 years).

Peter Ratliff, 47: Product manager (Music market group); representative of Marketing Division; (B. S. , Wayne State. Aston-Blair employee for 10 years). Charles Paulson, 43: Product manager (Film market group); representative of Marketing Division; (B. S. , Illinois Institute of Technology. Aston-Blair product manager for 7 years). David Kolinsky, 48: Product manager (Software market group); representative of Marketing Division; (M. S. City University of New York, Aston-Blair veteran of 13 years). Emile Bodin, 58: Special assistant to the vice president of Sales; representative of the Sales Division; (B. M. S. Massachusetts Maritime Academy. Aston-Blair veteran of 17 years). Randy Meir, 29: Economic analyst; representative of the Economic Analysis and Economic Forecasting Group; (Wharton MBA, Aston-Blair employee for 4 years). 8 Purchased by omar alobud (obood. [email protected] com) on October 21, 2011 494-015 -9- Exhibit 2 Simplified Organizational Chart Chairman and Chief Executive Officer Wynn Aston President and Chief Operating Officer Senior Vice President Product Development Vice President Corporate Counsel Treasurer Vice President And Controller Vice President Manufacturing Vice President Sales Jed Burns Vice President Marketing Peter Casey

Vice President Corporate Planning Chris Trott Vice President Economic Analysis & Economic Forecasting Dr. Russell Regional sales managers Special Assistant Emile Bodin Director Macroeconomic Forecasting Randy Meir Market Manager Music Market Group Market Manager Film Market Group Market Manager Software Market Group Market Manager Book Market Group Director Financial Development Director Corporate Development Director Market Planning Product Manager Ratliff Product Manager Paulson Product Manager Kolinsky Product Managers Vicki Reiss Robert Holt Michael Bacon Purchased by omar alobud (obood. [email protected] com) on October 21, 2011

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