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lntegron lncorporoted

Dcvic Uplon, Micheilelorror-d ond Lourie Thomosi

The lntegroted Components Division (lCD)


L,alr Llovd, r'ice president of the lntegrateci Ccimporlents l)iuslon
I( D tif lntegrorr Inc., pondered over his computer as tre put toaether
hi. iliclei summirrizins the Lrenchmarking stuclr,receutlv cornpleted fbr his
ritr'h Lurlcashccl Nlultichip N{odulc (NICNI) rnirnr-tfhcturing orsanizrttiotr.
In.fantralr-I!)9,1-trr'o nronths prcviousl.,,-Jris division had assurtrcd firll
ltecilrne ablc to cotll1tr, rf-rr ancl loss resportsibilitr. f<tr the f-rrst time, and
pete fbr- busirtess ontsicle the lntcsrotr gr()uP.

Lltx,d hircl contrriissionecl the str-rclr' {itr tu'o reasons. First-, ICD lrad
lrttltt lterlrt'retll improretttt'tll l)l')qrlnls in arr t llirt'l l. hor)\l '.1)lPctitireness; :rnd Llovr,l rr.anted the bcrtchrnarkirlg studr. ttl guicic lirrther irriti:,rtiles ancl to determine u,hicl-r irriprovclrtent stcps shoulcl c:otrtitrticl t<r
be pursuecl. Second, he planneil to nse the restrlts :rs a llasis {ol' settirlg rr
nerr strategic direction. Llovcl kneir' that his team o[ n]anagers tl'as tt:r:hniculh,skillecl ancl cxcited abotrt t:rcklins the ne\v clrallengcs, bttt hc u'as
cttncernecl about their lack of experience in cxternal markets.'Ihis strrd.'u'ouicl be an irlrportant step in huilding rr.liat harl ottce beett a tnatrtr{1r:turing cost ccnter into an orqanizaticirr that cotrlcl exploit its capaltilities
to general.e l1e\\' col]llllerciaI cippo|tr.rtlities.
The results of the str-rclr', hortcr-cr, u'ere $,orristtrne. T'hcv irnplicd that
the }IICINI organizirl.ion ncericd to Inake sornc raclical charrSes in order tt-,
meet prevailing market tteerls. Altl.rotrsh Llovrl :rgrcecl th:rt thr: Nf(lN'I
group had to rnake sorue firnclamental chnngcs. he had sevelal naeuiug
cloubts irncl qtrestions regaldins the consultants' Ilntlings:

1. Horr rr,ell dicl bcr.rchrnalking the cllrrent compertition reallv help


detclmine the path fcl' cler,elopin{r ne\v oper:itiotrs capzrbilitics
Lrr l'reIessril Dl\.,d LIpt()n. anc[ \lB.\ c:rttclirt:rtes Nliclrr:l1c -[arratcl
tlrc basis titr class clisr:ussion t-ather thatr to illtlstf:llc ttithcr ellectilc
or int'1tr :irc harrcllins-. oI an achlinistrative sitlration. N:rtnts irnc[.]:th hayc beerr rlisgtLisccl.
Cioprri:i:i , 1!)911 ltv thc Prt'siclrnt ancl }ellous oI I:lalr:rrcl Ciollt:g.-e. To ordcr copics,,t
recluE:i r ( r'nlission to reproduct: niateli:tls. call 1-8(Xlir'15-7(r83 ol n'ritc lI:trrarcl Bttsitlt:ss
S.h,, ,.',itlishins, B()stoll. \1.\ lr21(j3. No part ol this prrblication ntat be teprOclttcetl.
st()tc - :t .i |etlietltl sYsteln, uscal in e s1;re:rtlshcct. ()r tr:lnsnrittetl itt linr lilrtrt rlr llr :ttlr
nra..,r .-rtectxrnic, rnechanical. photocopvirrg. r-ecorclirtg, ot othet tise-rt'ithottt [hc

T[is ce... rr.ri p;cf]:ire(]


artd LaLt::t Tlromas

pe r r

i-

,rr o1

:rs

Harr,arcl lJusiness School.

Port

Doto Goihering, Anolysis, ond Engogemeni Monogemenl

in the f.ture? The MCM market \,vas in irs infanq,, and the srate
o{'competitors hacl bv no means stabilized. Ind,stry experts
seemed ,nable ro agree on an outlook; credible prediclions
ransed fr.m explosive srowth to complete clissol,tion. Lloyd
r'r'orried that focusing on a goal based on current standarcls
rnisht leave them behind in this fast-pacecl, capricious inclustrrr
2. Horv should ICD focr"rs its marketing strarep;,? The NTCNI market
cornprised se'eral diverse segments, and foc.sing on the development of onc set of capabilities misht preclucle ICD from serr.
ing other seg-tnents as r,r,ell as thev coulcl in the future.
3. Sh<luld ICD's rnanufact,ri,g impro'ement plans Ibcus on one
element .f performance, such as qualit,r., to the exclusion of the
others, such as q,ick-response and cost? ICD had embarked on
a n,rnber of qualitl.in)provement schernes over the vears and
Iasr lear had placed lrighest ernphasis on cusrorner-ser'ice
impror-eme.t. This -vear ICD was imprementins rvidespread
cost cr.rtting initiatives.

Evolution of the Current Orgonizotion


Integro, I.c. was tl-re third largest telecommunicatio,s equiprnent

supplier in the United states. The ICD clir,ision had its beginninosin the
early 1960s r,vhen Inresron developecl technoiopl.for- builcling hl,brid
i,tcgrated circuits. Inter.al dernand for tirese circ.its boomeci a'd by

the rnicl-1970s, Iive or six mantrfacturing pranrs had been built to provide
rnrrch-nceded capar:itri At the same time, telecornrnunications L..n*.
much more softlvare intensive and clemancl for cledicatecl hardware
slou,ed. Manufhcturing ol hvbrid integrated circuits, (a technologv combining cligital and :rnalog technologies) r,r,as consoliclatecl into the sinsle

plant in Kincl-rer Falls, oreson. In 1990, rvith tlre fonnal integration of


R&D and ma.ufacttrrins oreanizations, the .nit shifted fro,r its functional rcporting structure to zr b.si'ess unit strlrctlrre as a self-co,tained
cost centcr.

Bccause ICD had been a capti'e srrpplier to orher groups rvithi, Integron, its organization u,as designed auurcl the support o] internal
cus-

torners. Prodr-rcts rr,erre passed liom unit to unit a.t cost, anrl the business
driven by research ancl the resulting technolosicai needs in Intcgr.on
as a lr,holc. The $30 million busir.ress unit lr,as organizecl on a product
and customer basis, ancl even thoush R&D ensineers l.racl been intervas

grated into the olganization, there nere lingering barriers behveen


the
firnctional areas. Demancl lbr n111. given product usuallv evoh,ecl through
infonnal channels of cornrnunication benveen the clesisn engineers at
Kincher Falls ancl clesign ensineers at the "custorners"' (other irrt.urorr;
r,rrrits. Such a customer u,oulcl either approach lCD's design .rrnirr"..,
wirh a technical problem or ICD's clesign engine er.s.noulcl c'all the-downstrcanr custonlers to discuss sorre ne\r technological development or
opportunitr,. I{'there was a rnatch, clesign ensineers from botl-r r-urits

Cose

. ic.1!r

3.2

lntegron lncorporoted

\\hile

t11) to clelelop tr prodrrct.


eiicth ne\\: product \v:ts a
,,1 .r,-1;r11 v1l1lzed (lesiqn, its teclrnical char-actct-istics (lid trotchan{.lc
r irg
Pl-oductioll. A nerr, I)roducl rllight be pro(hlccd lbr r.elirs
ir:lillc2lnt rnoclification. S(), parildoxicall\,, r,vitilc the cler.clop-

rr',i(
'L-

.r
rr

,.r1r

ielt pressllre to l)c agile ancl responsin'c, ntarrufhrlurz)zgar tlre

L.rlLr Iacilitr'\\,ns orsanizecl {or l-ria'h-r ulrrrriers u.il.h clcdicaterl lirre

rrt r,

ih specializccl r,r,orklirrcc.

Stonding AIone
fi .,,c late

1980s, business rrrrits u,ithin Integron kneu, ttrerv l.oulcl


,, htcotttc inclepenclent :urcl stalt to Ilncl cxtern;r1 sources ol busi., Ir l!)87, Hcnrr,DornLrers, lnr.egron's CE(), let it lter knorvn that tl-re
-'r-. r-,,1c1 companv could no longcr bc m:rnagecl as a hierarcirical
r r:r-' ih. His goal \\:lts t() clccentralize clccisiorr rnaking so thzLt ()pcr:1tr-< iiri. \ tclt solcir.responsiblc lor settins str2ll.egic clircctiol, imple-

r:r.:nti1ri ('()llpctitivc initiatir.es.:rrld tnceting financial hurdle rates.


-',:lr, rriglr L)ornbcr-s clicl not spccil\ requirccl hrrrclle ratcs publiclr-. trnit
l.in.igcr-i kncrv tirer rtoulcl be helct lcsponsible [or atraining aggr-essire
irnarrcial r'esults

r er-r,

quicklr,.

\\-ith the chill u,inds ol chanse bloh.ing througir the conrpirnr,. ICll)
iltiti:rtecl scrc't':rl improvt'rncnt pl'()e-r:uns in un cffirrt to bcconte rriore
r'()tllpetiti\ e itt t]-rc cxternal utarke t. (lontirruous qualitr improvernerrt
lracl long brcn a ccntral theme at lClD. Inrleccl, the brrsincss rrnir urrs
pr,rr-t ol a gr'()Llll rr,inning t.lie prestiuiorrs SkinncrAv:rrcll 1br Chr:rlitr in
1!)!)3. NIo:t L'nri)lovees in thc plant rlelc rnenrbcrs of at lcirst one
clr-ralitr- team.

IttJarttralr l!)!)+. t(lD nas lirrmzrllr,coru'crtccl fiorn ir cr()st center to tl


Plofit center'. \t the time o{'tire Lrenchnrarkins stlrd\,, thc fledgling rriarketing dep:tt trnernt u.as six rleeks o1cl. ancl the unit stil1 lackccl a (le(lic:rlcd
sales lorce. Nerv nrarketine per-sonnel t,erc \{restlilrg u'ith novel :rncl
unlarlili:rr issur:s strch as billina policr,, pr-ic:inu, segn)entation analr,sis,
and sales striitcgies for cxternlrl crLlst.omcrs" rlost. o1- u,horl rr'ere original
eqlripnient rnirntrfactrir-ers (OE,\Is),
'I'iiis neu. rcsponsibilitv c:1me
to I(lD at a \.el'\, clifficrrlt timc. Fir.st, thc
hvblicl inte3-r'atccl cirr:irits pr'oclucr 1ine. the nta.jorin of I(lD's rc\rc.nucs,
\\'iIS re.t( irittg rriaturitr'. Thcse procluc[s u'e rc userl br tc]ccornrnrinications
cust()1rrcl'\-prirnarih 2l cirptir'e rna|ket. '['hc or-er':rll market \\r:is pl.og1'o\\: rlt just .1-'.% per t,ear, artrl I-lor-ci knerv iris lntegron cus-jectccl I1)
tonlct: r\et'e st:trting to seek.)ilt extet.nal suppliers in sear.ch of a bet.ter
pricr' , 'i gilcu iet'els of per'liilrnancc. ,\clclitior-rirllr', the rrrost prorrrisine
grcN.-l .i|eu. the erncrqing rrrultichip tllorhrle rnat.ket, \\'2rs s() neu,that it
\\'rts -r. ,rtishinglv ditficult to predict ho.n lalge ii u,oul<l gr'6ur. rl,hich rnarkct .-ar:rents lr,orrlcl gro\,r thc rtrost, irncl ufiich spccific srrltstrate tec.hnolo,-- . .1c1 i>e in irishcst clenrancl.

ti

166

Port

Doio Goihering, Anolysis, ond Engogemeni Monogemenl

Mulrichi

Modules

A rn,ltichip rn,dule (M(ll.l) consisted of se'eral microelectronic


cornponents bondcd onto a comrnon substrate. A module began lif-e as a
substrate or.rto lvhich conductive rnaterial \\'as patterned to form circuit

intelconnections. Different combinations of integratecl circuits or


"clrips." placecl on tire subsrrate formed a hybrid circuit that was capable
of perfbnning more complex fur-rctions than rvould be practicable on a
single chip. The N'ICNI itself consisted of several lavers oI hvbrid integratecl circuits sep:rr':rted bv ir thin-film polyrner. The module incorporated passive colnpotlents, such as resistors and capacitors, which
pror,icled ir \\,ith functionirlitv bei.ond th:rt of existins inLesrared circuits.
NtlcN{s provided cost-effecti'e, cLlstom solutions for technically
advancerd applications requiring hieh speecls in space-constrained
systems. Flolvever, as speed requirernents increased, the density of electricai cornponents on the N,ICN{s had also increasecl, causing routing
probiems that rnanifested themselves as siqnal delays and interference
on the circuit.

Thcre nere three basic substrate tvpes, which distinguisrrecr the various \{ClN{ families: MCN,I-C (Cieramic), MCM-L (Laminate) anrl MCM-D
(Diclech-ic). Each familv o1 N,ICNI varied in rerns of the solutions it
ofI'erecl. N'icM-cs were based on a thick-filrn technologl.substrate. The
MCN{-L technoloe-1"r,as similar to surface lnollnr techrorogl (sNIT), in
that it achieved high densities anrl rvas the cheapest r, produce. Finall1.,
the x'ICli\I-D technolog.v was thc most technicallr acllancecl of the three
product n'pes. Bursed on :r thin-fiirn technologr. snbstlate, it lvas excellent
for ror-rting nnd densit-v problems. MCN{-Ds rrere als. capable of
',orking
at verv higli freq r-rencies, currently those above 1 00 \IHz, as cornpared
to
printecl circuit boards. ivhich u.ere limited to applications belou,50 NIHz.
ICD ofl'ered proclucts in the N{cN{-D ciass and u-as also u,orking on an
acivanced technologr.proclr-rct in the MCN{-D categon,that u,oulcl enable
it to ofI'er a nrtrch lorvcr-cost dielectric solution.

Monufocf urin

Process

Producl Reolizotion
The creratio, of multichip rlodrrles at ICD \l-as a process characterized by hear.r, early interacticin betrveen the custonrer- ancl ICD applicatior-rs enginccrs zrnd desisners. Prior to the .rcttral bid, a team

cornprisine' clrstotner engineers ancl ICD per-ronnel cleterminecl


r'r,as a technicai match rrnd whetl-rer I(lD had the operational capabilities to nteet necess:ir\ lead tin'rc. r,rr.rd produce the

u'hether there

requirecl r,oiumes.

Next, the custotners and ICD <lesigners decidecl upon the technical
spccifications ancl lavout of the lr-rocLnle. Agrecment reearding the

Cc:se

specific:rtions

1t,as

acknorvledged

1:1.

3.2

lntegron lncorporoted

3 1r.,r211 ac cePtancc: le tter. Th is s telr

et)sured tlurt all teanl mcrnbers haci clciuly'laicl out their rJc,signs ancl
Pro(luct critcria. The tearlr Lhen eml);{l'kecl o1l z1 lrrotot\?ins pl"occss to
builct ancl test. thc nroclcls a.ncl prototype batches. Throtrghout this
Ilrocess, (ktrolvu to all as the product realizatiolr process, PI{t}), arduou.s
fiurctional tcstinq" u,as done to simtrlate the lot in ltrli proclrrction rtith
thc highcst possible fidclity The crrsronlers cl:eckccl rhc clesisu of the
sample procluct f-or thcir application irfter- tlri.s hrst group of urodels hacl
l:een built ilnd testecl r'r'ithin ICID. TIris step u,zrs ckrctrlnentcd u.ith a cus*
tortter r:roclel acceptance letter. The per:icld {i-orn rhc ol'iq-iniil rlesign
accept?illce lett.er

until the rnoclel acceptiurce lettet

\\,as I'Picall1,

fbur

\,rrecks.

Dtu'ing the fir-ral 10 rveek pltasc bef,orc volurue proclrrction, the clcsic*n
built an engineering 1>ilot hatcir, rrslrally a groui) of 10 to ?0 moclules thtrt the ctrstonrer tvould trse in his or her riesign proccss (ratherte2lnr

thatr situpl1, check fi>r functionality). Tliis prc)cess ltas sirnilar to thc
model ltrocess. I)esi.gn cJ:;lng'cs \t,erc iti:or-prl'atcd ancl the mirutr|actrlr'ir-rg process rA/as ftrlh,tlot:umentecl to facilitate r:oltrme produc{.ion. A{ter

corlpletiotr of the lot, the cnstor-ner irg;rin signecl olf rvitlr :r prodtrc{.
or- he r.r'as reacly to bcgin vohrrtre

acceptlillce lcttet', indicating that she


procluction (see Exhihit 3.1).
Velerffixe Froduefiem

T'he volrrme prodtrction process at ICD l:egzur rr,ith ei(her-a flbrccastecl

in anticipatiou of il "$,irr," or n'ith a halcl order. z\fter'


the orcler-\\ItIs enterecl into the s1'sterrr, thc rrxltcriarl ftir Lhe strbstrate u,:rs
cudcrec"l. The lezrd tirne to receive tlre silicon l\rls 16 neek.s-ir bottlerrcck
for thc entirc llrocess. The rnaster schechrling s)'sterlt ctreclied firr bill ol''
tnater:ial availabilit), 8trrl cak:rtlatcd availablc capacitv in the factorV. If
t-t-tateri:rl irtrd ca"1lilcit1, rvere ar,:rilal:le, tlie st'steru autont;lticallr, sr:ltecluk:cl
t.he builcl rvithout the interventiorr,oft a plzrrrner-.
or-cler', gene:'atecl

Once schccluled, a r ollte c:rrcl ancl shop order \r,erc creatcd irncl clisi:atched to the first step of thc rnarrnlhcturing prc)ccss. A stroug ru'tion
insrairted custotr-:rnd1:r'acticr: dictiitccl rrery specific rolcs fbr eaclr oper:
irtor; nccessitating a stal:le o{'material haurllcrs, displitclrers, ancl "regrrlar" olterzltol's. Iiach operator carelirllv docullentcd, on the rotite carcl,
his or lrer coutribtrtion to the l]l'ocess and urovert the lot thrr:ugh the
linc. At the encl of ttre process, thc i:ar-ts lr,ere cnterecl r,ia a b:u' cocle
reacler into the on-line trircking sys(em, and inpr"ocess vield l<;.rses \rere
calcul:tted. The prodttct rvas packed irncl shipped in a small roonr.jtrst
ncx{. l.o t}re manuflrctrrring Area.

ht t"he e irdy 1090's, as 1l2ut ol'ICD's cornrnitrneilt to improving its r-n:rntufitcfttriug abilities, thc nrantrfilcturinu irr"ea bcg;ur trarrs{orrrring itsel{'
fi'our a ltrnctic-rtral la-votrt to three focusecl firr:tories, each focusiug olt zr
clifferent tt1:e of clecfronic packlrging. Uncler thc nelu s\rstem, all orders

t67

Port

Doto Gothering, Anolysis, ond Engogement Monogement

ldentify
Customer
Opporlunitv

lnitial

Customer

Opportunity
Evaluation/
r^hhi^al tr.r^h'

/eio\
&

Letter Drawn
UD

Certify FitnessJotruse

Circuit Layout
Design & Component
[,4apping

Electrical
Test Spec.
Compatibility
Bedes gn as Needed

Assessment

48 Hour Technica
Debug Process

Tesl N/odel Evaluation

Cose

3.2

Iniegron lncorporoted

t\-pe \,v()uld bc procrtrccd o, trre s.nre ri.e. ICL),s


) \\e .e srlrc tllis la'.ut *ri.lcl herlp r-eclucc r,:inrrfnctr.-ina leaclr ' r rrc.erLse flcxibilin' to r,.lrrrne ricr.a,ds :r.d desisn
.t,",rg.r.
' -ire. 1b. specialt' procructs, rvas schecr.recr firr cornprction i,

'-'ilr-o(hr(t

',,J

.e

e Exlribit .,1.2).

Existing lnternol Volume Production process

Forecast Beceived

Forecast Entered into


EPPS by Customer
Service
I\,4aterial Planners
Stars Custom Silicon

buy

i\,4/S

System

(AtvlAPS)

Checks BOM
& Capacity
Availability

lf Forecast Not Sufficient or


)w Order

System Directiy
Schedules Build

Shop Order &


Bouter Created

Shop Order & Fate Card


(Dispatcher
Starts Process)

lni ates Sl rop Order

initiates t loute Card


10 Produ( ilon: Picks
yvrth Su lstrate to

CSLO' Tracker
Proqra m (in)

i,lanufactul inq 1 st Step


SK )reroom

Recetves
Electror ic Pick
) Stage to BOI\,,1

Production Process
Occurs

Packaging &
Shipping Occurs
Adjacent to Production

Port

Doto Gothering, Anolysis, ond Engogement Monogement

The Morket

for Mulrichi Modules

N'Iarket fbrecasts fbr multichip rnocrules rvere {iustratirrgly r,aried and

uncertairr. orrc iridustry research organization, Dzltaquest, estimated the


currcnt marker at $300 million and expected it to grow to $1g billion bv
the ye:rr 2000. Hou,e'er, these market size estimates hacl bee' de creasing
srrbstarrtiallrr e\:ery r,'ear. Dataquest also estimated tl.tat Z07o of all chipi
r'r'oulcl be solci as part of a rnr-rltichip modr.rle by that time. The federal
govcrnmellt was supporting the growth of the market b,v deemirre it a
critical te chnoioer.'. and in late l993, it appropriated $70 million in ftmdi.g frorn the Dcferrse Adr,a.ced Reseirrch projects Auency (DARPA).
There rernained, holer,er, other industry obscrvers r,l,ith ]ess optimistic
viervs. Thcv believecl that rnultichip moclules r,l.ould be confinecl to small
nichcs, bccarrse crlrrenr single-chip packaging techniques couplecl with
hrrther shrinking of traditioniri microprocessors nould offer the rnost
cost-effectirre tcchnical sohrti on.

Not .niv wirs the overall gron,th of' the multichip moclule rnarket
urrcertain" but the relrfiit.te gronth of each of the hishly diverse se{rments
u,as also cliflicult to predict. There rvere thrce primary market segments:
personal computer.s, .wircless, and automirted test equiprnent.
Personsl computers & workstofions ICD projected rhis segme.t

u,oulcl srou, frorn about $70 million in 1993 ro ahorrr $1.1 biliion in 1995.
Altho,gh it *'as the largcst single segme,t, it u,o.ld most likcly ha'e the

t.ost st.ringcnt cornpetiti'e requirernents. Procl.ct life cycles tverc

'e'y
short. custcimers dernancled fast prototvpins abilities, and cost pressures
$'ere tremendous. Also, most cllrrent rnultichip moclule competitors
$'ere focusecl cln this segment. ICD hacl {bcused on the high-encl rvorkstirtion portior-r of this segment ir-r order to ler,erage its leading-edge
techr-rologl capabilities, but rnanirgers \\rere certain of thc n.l"d t,,
derr:lop a ne\\', cheape' tech.ologv to .emai^ a co.tcnder in this
segmellt.

wireless Inter,al projectio.s estir,ated this segment r'ould qrorv

[i'om irbo.t $40 rnillion in 1993 to g280 millio, bl, 1g95. This segnie't
currentll hacl longer procluct lif'e cl.cles than tire pcl market, ur-rd tlr.
required prod.rctiorr runs were also longer. Horver.er, the rvireless market
ru:rs lacing t.oush cost pressures and u.as moving to the Lrse of ,,platfbrm,,
prochrcts-birse prodncl.s that coulcl be urodified or uperaded over dmc
u'ithout :r full-scalc redesign. To compete in this seg:ment, ICD might
have to rcoricnt its rvhole "custom-clesien" process to shift from 100%
cust()11 to a much more incremental approach.

Aulom,,ted Test Equipmenr and rnsrrumentqtion (ATE) The targeted areas o1'the ArE market includecl vision sr,srenrs. irieh-speed
instmmclrts. integratecl circuit testers, and circuit bo:rrci testers. This marker
was expectcd to grorv fiom $28 million in 1993 to s72 millior-r bv 19g5.

Cose

3.2

lntegron lncorPoroied

, r---.:, rechnical requirements ill this segrnent {itted u,ell with lCl)'s
l,,i-L-)

technolog)'. ICID had alreadv ilcql.lirecl a Prcsl.igiot.ts cxt.ernai cus-

,..r ur ihis segmeltt, rrnd scveral o[hers \{cre in the pipeliuc'

etitio
Bccrrr-tse

the ntrrltichip lnoclulc tnarket

..c ,qrorrth possibilities, a rallgc of clif


ttl .rttL:tcteci, each trying to capttlre a piece of thel market'

r-

so ne\\', irrld nright off'er


rent types of competitor ha(l
\\'21s

Vertically inlegrated syslems comPsnies lnteqron \vas a nlenlber


,i tltis category alons u,ith comPanies sr.lch as IBX'I, AI&T; Fujitstr, and
DEC.. These companies originallv der,eloped n-rultichip moclllle exPel:
risc ro solve internal technical challenges ancl rvcre nory lqoking for
r\rern:il conll)terci2rl opportunities to leveraElc thcir tcchnical abilities.
Each of thesc flnr-rs hacl substanti?rl ir)ternai clematrd th:rL collid sttstllirl
ihe ttr tht'orrgh e:rr11', uncert:rin externirl mat'kct dcYelopments' Hor'r'ever'

theit' specifii rnarket approach tactics \verc beginnitls [rl diverger. IBNL
,\T&T ancl lntesron had kept N,ICM capi,rbilities in-hor-rsc, but recentlY,
DECI hacl clitesterl its capabilities intc'r an ilidepenclent contprurr. \'[icro

\lociule Sr,stems

(MN'IS)

Technological compelifors Poterltizrl compctitors in this groltp

inclrrclecl Cvpress Semiconcluctor, I'Iotorola, Hirrris Sermicotrdr.rctotr,


Pacific \{icroelectronics, zrnd 'fexas Instt'tur-rents. These plavers compered primaril_v throush their abilities rvith tlror-rolithic silicon. but sonle
rret'e ernterins rhe N'IC\I mirrket. The rn:rrket\\'as tlttracti\rc to these comto ril'['set
llllties 19t orilv as a S()urce of grc-rrvth but alst, irs llngfoPllortunitv
NI(l\ls
hopeci
them
N'
an1'
core
prgducts.
of
their
cornmc,clitizatign
the
rlrlrlcl pror.icle price premiums and opPortunities to difl-erentiate on the
brisis of'perfornlance and service. \{hile these compeLitors did have
C\perrise in packauing rnr-tltiple chips in one unit, most did trot vet have

the capabilitics to integrate prtssive conlllorlents (individual componcnt.s


rh21t enablccl increasecl firnctionalitl' o1'\'lClN[s, sucit :rs capacitors al)(l
cliocles) into prodgcts r,r,ith6nt the assistancc of OENIs. These conrpetirors had .t..ri-rg rclationships rr.ith potential \"ICI'I customers thrortsh
their other product o{I'erings. Several of thenl \\''ere beginlrins to u'ork
u.ith OEN{s to build requisite skills.

Conlrscl c,ssembly houses (iompanies in this segnlent inchtdc<l


nChip, Flextlonix, and Prorncx. Historicall-v, these cornpetit.ors had
lackccl rhc high-perfornrance multichip module design c:rpahilities
and nere thr-ri relegatecl to pror,iclins matrufacturing outsourcilrg for

chip n-rakers ancl systc,,ns houses (c.g., Sun N'ficrosYstems) ' Aclditi<lnallf',
the. MCII inclustry lackecl specific staudarcls, rn:rking it ciif1lcrrlt lor
assembiv houscs to replicatc modtrlcs fbr appropriate specificatiousmaly of the stalclar<{s tl-rat clicl cxist hacl done so 611v tacitlr', allong

Port

Doio Gothering, Anolysis, ond Engogement Monogement

lzrrger companies' ensineers. Ho,r,vever, with the crevelopment of thirciparty softlvare-suites of standarcl design tools, contract assemblers were
expected to acquire desisn capabilities quickly. In ad.dition, the Microelectronics and cornputer Consortiuur was clevekrpinu industrr-rvide
standards. If these competitors o\-ercarne their current obstacles, thel,
u,ould be in an excellent competitive position, because end users \,vanted
the flexibilitv to ,se diff-erent companies' chips in any given clesign.

Withi,

these cornpetiti'e segments, the specific players $,ere not


a,d changed fionr rveek to lveek. At the tirne of the
benchmarking stuch', several cornpanies had exited the m,rtichip moclule market lr,hile a number of others r,r,ere just entering. Industrv expert.s
believed that the u,innins competitors rvoulcl be those lr,ho had the most
llnancial sta,vins po\,\,er ancl who ber upon the right technological
option: either high-end, technically complex proclucts or chcaper,
standardized proclucts. It seerned to Llo,vd thaL evervone was simplv garnbling on their best hunch.
solidlv establishecl

The Problem
Gambling, according to Llor,d, \{as not soocl enoush for his manr,rf-acso he u,as determined to clevelop abilities across
a broarl front to cover all of the perssibilities.

turing orgirniz:rtion, and

I-lo,vd k.er^, ICD had to becor.e externallv competitive

in order to

grorv, arrd the organization had developed a to do list to help boost irs

abilities (see Exhibit 3.3). He nored:

I utotr,ld lore to thinh th,L there is some perfect, fbcusecl sfra,teg\ out
there that uould enyure our success. lhtt the
('the matter is tltat ute
lact

hout lu fterforttt tt'cll in nll rt.:prrtt nI out l,usintst. .\pet if it srntreg-i.


in.itirtiues nre fif,rical\ the result of srme personnl, uision. lv[y okl bos.s,
Mike NId\Ianus, started, to .foat' on quality. M1 current boss,
Jert,rLl
Dudky, thinks zue need to strengthen Lhe uoice of the antom.r; theret'ore,
ute ha,ue kLunl:hed, scuera,l. (:ustomer seruice

ini,tiatives inclurli.ng

a,

satis:

.faction surac).

Llovd brousht in tlvo consultants from Hantrvood Associates, to conduct a benchmarking st,d,v of the r.anufacturinu operation fbr trrro
1'easor1s. First, he'wanted to assess the progress that had been made in
the various, periciclic improvement initiatives in the past. second, he
r'vanted a methocl bv which the manufacturing sroup could set operational goals for itself. The consultants, Debra Spoouer and charlene
crandall, both recent graduates of a lr,ell-knon,n Eastern business
school, initiall,v ernbarked o. the generic steps of a benchrnarking
studv but quickl,v ran into problems as they thor,rsht aborit the clesign of
this particular stud\,.

Cose

ME INITIATIVES

3.2

lniegron lncorPoroted

9::r:ll !':t :l?i.:r:i':l: i:::!trll fr:q::T


ME OBJECTIVES OPERATIONAL PROGRAMS
CUSTOMER
SATISFACTION

l. lSO900l

Certificotion

2. Customer Soilsfoction Plonning Orgonizoiion

3. DQI Progrom
4. Customer Servlce ond Quoliiy

lmprovement

Foru ms

5.
6.

/.

IMPROVE
CUSTOMER
SATISFACTION

ORDER

1. Monufociuring ond Order Monogemenl

Sysiems

NEW PRODUCT

l.

New Producl Reolizotion lmprovemenls

INTRODUCTION

2. MCM Product Reollzotion


3. FCP Migrotion Progrom

PEOPLE

INCREASE
PEOPLE
LEADERSHIP

FCP Product Reolizotion Process

Skinner Assessmeni

1 . Quolity lmprovemeni/Tosk Teoms


2. Suppori Teom
3. Employee Suggestion Progrom
4. Customer Focus

1. Leodership Troining

2.
3.
PROFIIABLE

GROWTH
COMPLETE

FINANCIAL
COMMITMENT

TECHNOLOGY

ENVIRONMENTAL

Process

4.

4.

PLAN

Acceplonce

Service lo Customer Wonl lmprovemenls

INVOLVEMENT

TURNAROUND

&

2.

REALIZATION

SKINNER
DISCIPLINE

INVOLVEMENT

Customer Removol Rote


Customer Chonge Notificoiion
Progrom
T2 Roting

L
2.
3.

Monogemenl Teom Initioiives


Performonce Approisol
Skills Enhancement Proqrom
Microeleclronics Tronsition
Domestic Soles Growth
lnternotionol Soles Growth

1 . ABC lmplementotion
2. MCM Focus Foctories
3. FCP Focus Fociories
4. Expense Reduction Initioiives

'l
. MCM-L Iniroduction
2. Low-cost Metollizotion lnlroduciion
3. New Polymer Introduction
4. MIT lniroduciion
5. FCP Developmenl I I I Proqromsl

CFCICHC Eliminotions

2.
3.

SARA 3,13 (Alr)


Poper Recycling ond Reduction

Whal altributes should be benchmorked? Tl're constrltants \\'anted


to benchmark a specific operati()nal irtfibute 21s it aPplied to a sirlglc
n)21rkel scglncnt. Hotcver, Llovcl hircl exprcssed strollg I'eelings that ltis

organizad;n h:rcl to br-rild a set of sctleral capabilities that i:oukl scrve all
segmi:nts. He hopccl that thc stucll"lvoulcl help unc:rrth this set of rcquired
skills; thus, hc clid not \,vant the consultattts to 1l21rro\{ the sttrdl ilr atrv rvav

Port

Doto Goihering, Anoiysis,


ond Engogement Monogement

How shourd dota be corected?Beca,se


there u,ere no crear indus_
di(1 no_t \,vant to fircus solely
co,rpe tit,rs' sk,r.s They.also
upon
s.specl;d that if co,rpetiti'e
prant tours
\\('re
rlrer rr..uld he Ioo gs11.,,.,,;
'.rirnrerl.
r,, be lrt.lplui.,;j,rT,;:,;:.:i:
torners
was :t pote.tial alte.,at.,
;',r;r.,., ,f infbrmation; hor,r,ever,
hzrcl
ICD
'er'f'erv oEtrI .r,r,.,-",. ,,,-rh;;;;". of rhe sr.clr.. eaaiiiorurtl;
consurtarts
tt,"
srspectccl th.t these oru..
n"a l,er' little cont:,rct \{dth other
t\{cM prodrtcers. Th*s, sp.,,r,r..
or-il c.anaalt *,ere fhced
u.it^ the task
of ,enc'nrarking a broaa
ser ;p;;,;"nce
crircria across rb,r market
scemenls ivith litrle access
to competitots.

tr' ieaders' trre' c.,,sultants

risks associatecl rvitn benchm,rki.g


in the

,",I'l}|l|:.||:?:llfl;orne
r

Slr,rrrld berrr.hrrar.kinq lrt.ase6l

iri

this f.stpacecr,

rJre
s .,,,i.;,i]:F

lr:rscrl orr
ft , c,

s i

..i"

i,..1,,.t

,r7

"i

,rll ttt

st.t lorrg_ler.rrr

objcctires
.l]

ii"r,:"'ji,"::*::::t1,
I I(-_D set specific ohjt.< tircs

JT:lffi :l ::,H: il, :i:,t*: iL: ;i

tor.s migh t ah,ezrdr. have


.srirpasse d.

o \\io.ld the be'chrnarkirg


pr-ocess cause the flrm
to o'erreact in
crevelopi,u its strateg-: For
exa,rple, if technical capabiiities
ivere the cLlrrel) t ltasis .l.corn1r"titir,r,
ancl ICID
firctised on boost_
ins tl-rose skilts, *.ouicl the_v
be .bt. ur;;;;';;l:::T:t:::l
re2lct if cost began to
i,iiir,e,..e over rhc ;r;;;r;;ilurc-io
EJain

rnitior

approoch._tBecanse

o1' the probleurs ;rncl risks,


the co,sur_
tants settlecl on an approach
that clerliated slightly frorn
a traclitional
bc.ch,rrrkire srtrcl). b":,":-\rJ';,p'r"t
ai.".rional rargets. ._,rey
tres ti.nn air-e ( lixhibi
t's.
a.rig,red ro o,-,rru",,rr...

;T*"ff:i

i;

J,,rl

o \,\rhich rnanufar.ttrring
perforrnancc criteria most
influenced
custorner,s
buving clecision

'
.

Flolvrvelr clid IC-D perfbrrri


asainst these criteria?
Horr rrt-ll rrcr.c t.ompctitor.s

pt.rlirr.ntirrgl

Thc cluestionnaire r,vas gir.,en


to OEX{s i
* cr r as r c o..
f
fii.,:
:
;:i]..:ilii JJ :"I::J
"
tlte 1r'irnrrry inrer.la<
:::lii
:,::cr^r,,rrrerli. : l";:ll,:",?:,:.1:::.,
r :;,
r'rrrr
c)E\l

i;;ii.

::

;i:Jll:ilil:T,,11i;*Hi?riiHIi'1H1,ll,"ii""3i:'J?:l:::
tt)r. cutitomers. spooner
crandar
:rncr
feit rhat ,rr" ,il".i,""i,-,"j.1:ii
c o,,, p c n a re Ib
r th e *iX, i'i:lH:,.;l-:T:,:1._::1,
Tiii : : I ;],..,f:t
r'ante. ro corrpirre rhe i,re.n.I
p.r.;.;tt,. of ICD peopre w,ir]i cus,
.
."'.. u1
i;; * :; *"0,
;?ill l,:'il F:l :;:., ;
,i1,,
i ili ;l
",,,,,,,;.n
tio.s; seco, <1, trr e criff.e
rencc

*i:

;;
rr"*"",, :"dililili::l::ffi "J;
..:
rerporterl
**:

ICD's perfbrmallce, as

b1,

custorne

r s.

Cose

3.2

lntegron lncorporoted

*39ron Benchmorking Questionnoire


-

-'

o{ Oueslionnoire

::: . onolyzing ihis questionnoire is to goin on understonding of customer's needs, percep: -: :: -'eoron, ond perceptions of the competiiion in the high-end multichip module morket. The
::-': ( ce compiled ond used to help determine lntegron's strengths ond weoknesses. Pleose
: : : i:* nlnuies io look over the questions, We will coll to discuss your responses,

- -.

I Overoll Perception o{ lntegron


' -:s been, or ore they now, o supplier to you?-if
- .'. -:' is rour oenerol imoression of their:
Criterion

Good

so, whoi do they supply?

Averoge

Poor

3-:l;ry
:chnicol Competency
):ice
3iher

j ,hot is lntegron's strongest copobility?


rj/ t&hu,4, dU,4,tu tnlmh M,n, fuMnaa],.tt^h.4il!
Who mokes the purchose decision regording this type of technology?

'
2

is it lhe engineer/purchosing or o coolition? Cealrtim

How long do you spend tolking with lhe lniegron Soles rep prior to the buy decision?

!b*L t n*r"tlt

Whot is the criticol foctor needed to finolize o purchose from lntegron?


/.a/41tuU461)1hrlrn,

nhwbntxt,e4ot

Whot criterio ore importont to you when considering the purchose o{ MCMs? Pleose
ronk these on o scole of I -7 (l : not importont, 3-4 of overoge importonce, 7 criticoi). At the end, pleose ronk your top five criterio by writing their ronk next to them.

Cost io you vs. other MCMs


Cost to you vs. subsiitute lechnologies

Quolity (odherence to spec.)

ree of customizotion ovoiloble


Difficulty ond cosis of chonging from current
Length of iime to get prototypes

of time to oet volume produciion


Adequote documenioiion of process specs.

Ability for supplier io be primory supplier


Coniinuing obility to offer leoding-edge
iechnicol solutions

Ability to order ony lot size


Abiliry to produce ot high volume

Continued on the next poge

;-+,
,\..-+
''l'.rlr
h, 'l qF
^'

Port

Doto Gothering, Anolysis ond


Engogement Monogemenl

(Continued)

D'

Pleose rqnk how

:r"..,.1:;"1;f.:,
Rqnk

we'you feer.rntegron performs on the

erage, 7 exceilentt|).

Al:;;

;[;,;'

Criterion

;"nk
t

some criterio berow.

4
x

Cosi io you vs. other MCMs


Cost lo you vs. subslitule tec

Meet errrro^r r^-L^;^^l

---

Ouoliiy {odherence to soec.l


5

(r -

rnresron,s five srronsesr

u,,r,rcury ono costs ot chonging from


currenl
tooling,/designs: j.e.. swiiching
costs

\.

Length of time to get volume production

Ahil;h, I^.

rurrrurirg oDlrry to olter leoding_edge


technicol sojutions

y suppl

Renrrtntin"./l^^^^,,;*. ^r
-ah;l;

Other:
I

E.

Pleose define whot ,,flexibility,,


meons to you.
'1' lf
vou hod ro choose, *.rrd;.r';;;;;

r"of""]urtori.otion obirity or shorrer reod


rjmes

receive your protol.ype lots?

ro

ShdW tun bt4r4 _ qfAeuo/,ruthwto"tbmu


catt. nlbw)flh

' li:Ai:iffi:::iJ:'lt6?
LwttL 6j.L G llhn/e4
F.

prerer

ro*e' cost &'rimlted Ensineerins Chonse


orders

tLAt

Whot McM orternotives to rnregron


do you know
r'rrl con incrude substitute tech-" This
nologies os well os direct MCivicomp"titorr. "-" of?

/4r41

nLhW

Ptfrlalt n&tfiL, @t"t,


)1ta1,l"tj4ry d4ft , 4h4tt4/,

7qd4*
tn?u

Tnwrulaa*dtfu
tuthMl, t)ar4alrna&cl

ce4t, thtubLli4t

P4oitLrAW

N,fGT

fn*rut

441X,

7wwral,,;a.etbruy

pt,id.rq&*

C6an,

awqL+wh*t/t

ll
RWLi&

AMLtuW
Co,"t

G.

ls your physicol

proximity to o supplier importont?

h@.

Continued

.; th" *^t p.g"

Cose

:::h

3.2

lnleoron incorporoted

criterion below, pleose determine lntegron,s slrongest competitor qnd ronk

::-icrmonce on o scole of 1-Z (l:poor,3-4 overoge, T excellent)


Compony
Cost to you vs. oiher MCMs
Cosl to you vs. substiiute

Quolity (odherence io spec.)


Meet curreni lechnicol requirements
Degree of cusiomizotion ovoiloble
Dif{iculty ond costs of chonging from

i.e., swiiching costs


Length

of

time to get prototypes

Length of time to get volume produciion

Adequote doc unentotion of pro.es. specs.?

Ability of supplier fo be Primory supplier


Continuing obility to offer leoding-edge
lechnicol solutions
Repuiotion/lonoevity

of supplier

Ability to order ony lot size


Ability to produce ot high volume

!vhot ore the three most importont things lntegron could chonge to improve their
,e otionship with you?
.'

.,.

: .,t o *nttt, penf,

rt,.':t tl*

@-,tad

whe

tu

qtt

d4 a

lrum

wtk atl,.urrti*rat yteq*.

fau&l

Pleose odd ony other informotion thot would help us ossess lntegron's relqtive compelitiveness.
' :...

. L.t t e'"

We, fu.lpl

Results of the 5f udy


Erhibit 3..i shorts a t'pical rcspor)sc frorn the telcph.nc sur'\'c\.coll-

. ttcl llv ths collt,rltants. To irssess the fit bct\\.een l(ll)'s

rnanu{lrctrrlirrg

' lr1l{ths atrcl c:ustlrttrerrs' lrttving criteriil, thev trskc-cl crrstollerii to r-lrtc
'i. D: per'1br-mance on elrch ol their critelia. Next, the crinsrrltants
r .rlrzeci the clifJ'elences bet\\:ee, ICD's pcrlirrnlalrce ratilrgs and its
til]letitors' ratings to rlctcrrlir-tc the rnagllit.rrdc ol irnt. corrrpet.itirc:

--,;r:, -\lthough loD fared u,ell in these conlparisons, tlre analr.scs


-.hlig'hterl :r nurrrber of u,cnknesscs (sec- Exhibit .er.5).

Thc consulrants

alsc'r

alscr

rlacle ser.eral observiitions based on conrrnent.s

:r.ir alose cluring the sur.,'ev.

o I_ach markct segmelrt citccl sirnilar- bur-ing cr-itcri:r brit irssignccl


cliffblcnt prioritics ro eac h (see Exhil>it 3.6).

Doio Gothering, Anolysis, ond Engogemeni Monogement

Survey Response Summory Doto

PERFORMANCE

coMPETtTOR

BUYING

IMPORTANCE
TO BUYING
DECtStON

Customer

CRITERIA

(Customer Avg.)

Averoge

MCM

5.25

4.60

2.50

5.7 5

7.00

Cost lo you vs.

600

3.7A

1.50

500

600

6.40

6.00

5.00

5.7 5

5.00

6.80

6.00

5.00

5.50

5.00

510

6.25

454

500

4.50

Difficulty ond costs of


chonging from currenl
tool ng/des ig ns

4.50

500

3.50

7.O0

4.50

Length of time io gel


prototypes

5.50

3.70

4.04

550

4.OO

Length of time to get


volume production

5.60

3.50

4.50

5.50

4.00

Adequote documentolion

420

4.7 5

400

6.7 5

5.50

600

6.50

6.00

4.50

5.20

6.75

5.00

7.OO

550

s.80

670

7.00

7.O0

4.50

500

5.50

4.00

550

4.OO

tcD

App. Eng.
Averoge

PERFORMANCE

Customer

Averoge

App. Eng.
Averoge

Cost to you vs. other

substituie technoloqies

Guolity (odherence to
specificotions)
Meet currenl technicol
requ iremenis

Degree of cuslomizotion
ovo ilo

le

o[ procgss ond specs.


Ability for supplier ro be
primory supplier
Coniinuing obility to ofler
leoding-edge iechnicol
so lu tion s

Reputotion/longevity
pplier

o1

su

Abiliiy to order ony lot size

Comporison of Buying Criterio by Segment

Workstotion

Meel currenl iechnicol reqs.

2. Quolity
3. Cost & obility to produce

ATE

l.

Wireless

Service

2. Meel currenl technicol

1. Quoliiy
reqs

3. Quolity

3. Abiliiy ro

4.

4.

high volumes

4. Longevity / reputotion
5 Length of time to get
volume produclion

2. Meei current technicol

Cosi

5. Continuing obiliry to offer


iechnicol solutions

reqs

resr

Cosi

5. Abiliiy to produce or high


volume

Cose

3.2

lniegron lncorporoted

-lilil.Lic:rtions eltginecrs :llso qeneratccl a


sirnilar Iisr oI'critr\,r\\ign(.d r.elllirt. irrr;ror l:rrrr.r qrrile
diff'er-errth, fiorn

'.

[r1e 1'S (see

Ex]ribit l].7).

. .( )\t

seric)Lls clisparit.r.in per<.eptiolt concerltcd


the
,f cost. Clrtstonters
tlstonlcl's
,...1,. OnC
,.-- -- ()i
rLr J r.itr.rl
--r.--citc(l rnct
Lrrurr
()nly
cost rc
L.(rbr
as ()II\r
()f
olc
ltlany
lllany

irrpor_

blrrtii.r.s
blff.t-ie fS
''irrr1 rlrt.rrr lr.orrr arloprirrq \l( \ls_rrf,if.
,,fffi,l,
i,,,,.
- :.rr.1s c-.,siste,tl's:rr.r,it:rs titc rn.st critical eler,e,t iin tltr:
r

g riecision

.,,1;,lrllilctllring ,re:rnizatio*, i. ch.osinil ge


a
neral :rpltroach
,,1 .eg-rn.rts, nriaht ha\,e Lree'
I:rili,g u, ur".,i thc *ecrls ,l.arrr
- \e91.e llt (sce Exhiltit 3.8). F,r cxarnple,
,,e crrst,rner. lr,lt.

^'s

ron Applicotions Engineers

_::_

''::' -g curreni iechnicol


: -::v ry,/repulolions

requiremenls

obility to ofler iechnicol solutions

Workslotion Cuslomers
I

Meeling current

Quoiity

Cost & obility to produce ot high volume

techn

icol requireinenis

Longevity/ reputotions

length of time to get volume production

Morket Positioning

nsh

Intergraph, MIT Linc

Complexity

Selected Applicotions Engineer Commenfs


"lCD either needs ro find new niche markets
for high-priced producrs
MCMs."
"l'm,n,ot sure
con't'. "

if one orgonizorion con odequotery oddress oil four

"Am I supposed fo help cust'omers sorve probrems


iobs."

or

crose deors?

or

row-cost'

morkefs:

feer rike

iobricotion of

know our producrs

Im

osked to

do

two

r,illing to pa' a high pricer req*irecl procluct characteristics


that n'ere to. diffic,rt tr man,faiture. Another c,sto[]er
felt
that the costs requirecl to prod,ce a \rery simple procl,ct
too high.
',ere
Applications e,gineers ['elt that ICD's approach l'as ,nfocusecr
and that it inadeq.atcl'mer the specific needs of each
segment.
Thel' also t-elt they nerer bei.g asked to fil tr,r,o differerrf
rores,
as a salesperson ancl one as a technical consultant (see
:n_e
Exhibit 3.9)
was

Ajter heari,g

the consultants' fi,dinus, Lroycl realized there lvere


some critical decisions to be macre before ct,artir-r.q ICD,s
future path. He
Icl1 thc presentatiorl, urent back t, his office, and
startecl to p..rt iogethe,
hit rer omnrerrdutious.

Dilem mo
The follor'r,inc Tuesclar,, G.ary Llovd l.oked dor.vrr at the
rec.rnmencla_
he
c1c'r'eroped. The,v'irnpiied major char-rges for
his .rga.iza-tracl
i
tiorr, ancl he had several lingering doubts ,ilo.,t th"it.,cly,.

tio,s

. First, the sur'ey.es,lts *,ere baseci o, a very sr.alr number,f responclerts. Ll,r'cl's feeling *,as that the resrrlts were {rene'ary
acc.rirte, but he
had to arlrr-rit ther.n,cre by no rneans stirtisticalltj signilicarrt.
i"."ra, f Cn
had plentv to do rvithout the rrphezrval of the raclicar
crrange irnpriecl b,,
the fi,dinss.f'the sur'er,, n,t the reast oI'l'hich *,as
to."r*;rrrr"'r.rJrf
internal custo*ers. ()ther Integro, rinits neecled rris orsanization,to
rcrnirin at the fore{iont of tech,ological clc'elopr.ents,
and he clid .ot
watlt to do an,vthir-rg to put that capaltilih.at risk.
Llo,vcl r''as fi.strateci. He courci rlot preclict horv
the market w.urd
cha.ge,.b,t the st,dr.h:rd shorvn tirat eaih ,f the emersent
lil_v pacls r,r,as
movins in a difl'ere,t dir ection, ar ulrknow, specd. anii
,.,..a"a diff.er_
ent cap:Lbilities from its s,pprier. At the same time, his manufact,ring
pe'ple desperatclv neecrecl to k.orv if their i,rpro'ernent plans
rvere
lrcad..d in rht. riglrr clir.ccrion.

Llo'd coulcl act no\\r or *,ait and repeat the studv rvhen the.e
u,erc:
r"nore c.storners a'ailablc to participate, and rhc.
mer-kct hacl becorne

Cose

3.2

lniegron lncorporoted

: . ", -t. Postponing action was very tempting. The MCM market was
- .,: :'-iicklr., and he did notwant to gamble on a strategy that could

. '...me

outdated.

r i riirect reports were waiting to hear his recommendations and


': -.:r in the conference room next door. "Okay," he thought as he
-- -.,,ril his desk, "let's seewhatl have to say. . ."

\ofe fo Cose
-^er Aword wos on internotionolly recognized oword for quolity.

t
I