Timothy Li EAS545 VDS

03/26/13

Visionary Design Systems started their company on sound values that motived employees of their CAD business, but three years later, when they founded their PDM group, the founding fathers had strayed from their original vision, due to their emphasis on scaled growth and profits. When VDS was first founded, many of their incentives were focused on making their employee feel as a valued person in the company. While they had profit and stock-based incentives, they also focused on empowerment, personal development, and giving their employees opportunities to do work right. Employees were more satisfied of the inclusive culture than the worth of their stock options. Several of the quotes taken from the case refer to the family feeling, not the amount of salary they were earning. Though they were making base salary that was lower than market competitors, their profitability inflated their salaries and masked a potential problem, which arose in the PDM group. By this time, the company had put such a focus on extrinsic incentives that many of the sales force were working against the success of the PDM group. The sales group made their commission based off sales, while making the incentive for the PDM group to offer training and consulting. Because the sales group negotiated the terms, they often cut out consulting first. The sales group lacked the training and understanding of PDM to understand the need for consulting, but what was worse was that the founders created conflicting incentives. In addition, the leadership team dangled future investment of the PDM group in front of them, only if concrete goals were met. However, with only two full-time PDM experts, the company lacked the resources to get the job done. The PDM market was a new and unknown market, which meant it required education on the part of the sales group, as well as more employees to travel around and work with companies to understand and integrate the PDM software they already purchased. Despite the verbal agreements to increased staffing, the lack of action meant that Fred and Bill didnt have opinions that mattered to the company.

Timothy Li EAS545 VDS

03/26/13

If I could fix the problem, I would focus back on the intrinsic motivators the company was founded on. In the beginning, employees were given autonomy and resources to control their own decisions. In the case of the PDM group, the leadership team strictly controlled their budget and tied it to performance requirements. I believe that giving the PDM group some financial autonomy, in addition to decision autonomy would allow them to actually get what they need to do their best work. I would change the external motivators system to, at a minimum, align both groups to the same goal. Since they were a profit-searching company, the logical thing would be to give them goals that were linked, not contrary. I would also implement a global training platform, so sales groups could understand and disseminate knowledge to past, present, and future customers about PDM, as well as invest in customer training programs to teach existing customers the potential value of the PDM software they purchased. I think that the problem with VDS is that the founders believed that they were still following the same vision from the beginning of the company, and therefore could not comprehend the challenges that the PDM group faced. Their original plans were sound, but they way they chose to develop rewards, pushed them away from their original plan. By the time PDM came around, they were so far removed, that it was a struggle for the PDM group to succeed.