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As ACS continues to grow, it is important that the founders address the issues
that are occurring in every office due to a decentralized business model with a lack of
control mechanisms. As would be expected within a decentralized business model,
empowerment has been an extremely important part of the strategic management of
ACS, and it has worked extraordinarily well in the past because the founders were able
to spread their client philosophy and business style throughout the organization while it
was relatively small. However, as the organization expanded from Boston into the other
three markets (San Jose, Detroit, and Philadelphia), the organizational philosophy that
applied to small businesses no longer applied to their new, expanded organization.
Therefore, ACS was faced with the issue of balancing the two concepts of
empowerment and control. Formal management systems must be instituted without
destroying the entrepreneurial spirit that has allowed their organization to flourish
though the years.
Long-term solutions must consider an entire renovation of strategic objectives, a
revamped mission statement, and implementation of the four levers of control.
Organizational communication will be key to the implementation of the long-term
strategy. But before addressing the long-term solutions, it is important to focus on short-
term crisis control in each of the four regional offices. Short-term fixes will only be
temporary, so that the organization can buy itself some time to work out a long-run
solution to the various issues raised in the founders’ August 2010 meeting. These
issues include questionable billing practices, lack of a business development plan,
inability to control bids for certain questionable projects, rising expense categories at the
office level, and incentive plan problems. These issues ultimately stemmed from a lack
of control in the business processes at the independent offices. The founders are very
attached to the system that has brought them so much success: decentralized,
substantial independence. However, there comes a point in time when decentralization
must be balanced with formal systems to assure management that the business units
are operating with the strategic objectives of the organization in mind.
A long-term plan for ACS will involve a revision of strategic objectives and the
implementation of more formal management systems and procedures. The new
strategic objectives of ACS, as stated in the case, include: identifying and maintaining a
unified company strategy and image, maintaining a high and profitable growth rate,
communicating goals and responsibilities to employees, effectively motivating and
monitoring performance, and facilitating the sharing of knowledge and ideas among
offices. These objectives will give a new direction to the organization as a whole, as
they attempt to balance the traditional decentralized structure based on empowerment
and the new control mechanisms that must be implemented. Communication at all
levels of the organization is key to the success of ACS going forward. The founders
must insist that this is the proper thing to do because the business is becoming too
complex to manage with limited controls. All partners must be involved in the process of
selecting which controls within the four levers are closely related to organizational
strategy. The following is an explanation of the four levers of control that will form the
foundation of the long-term strategy of ACS.
Four Levers of Control: Diagnostic systems, Belief systems, Boundary systems, and
Interactive systems.
Diagnostic systems
• Include profit plans, budgets, goals, and objectives; measured periodically, at the
discretion of management
• Keep critical performance variables within preset limits
• Eliminate the burden of constant monitoring
• Track progress of individual offices
• Monitor goals and targets as you progress toward them
• Open this system for feedback from partners
• Not adequate without the support from the other three levers
Belief system
• The belief system communicates the core values of the organization to management
so that they are inspired to act in the best interest of the organization as a whole
• As the complexity of ACS increases, it is important to revise the mission statement
with reverence to the core values and beliefs of the organization; should be agreed
upon by all partners
• This is probably the most important control system for ACS, because without a formal
beliefs system, employees in this decentralized organization may not have a clear
understanding of the core values of the business
• This control system inspires employees to maintain entrepreneurial sprit and search
for new ways of creating value
Boundary system
• Essential control system to support the belief system
• ACS should implement this control system to communicate what the different offices
should NOT do, rather than what TO do, to maintain entrepreneurial sprit while
establishing the activities that are off limits
• Establishing ethical and strategic boundaries allows innovation within clearly defined
limits
• Maintaining growth and strong client relationships (strategic objective) relies upon trust
and reputation
• The founders must anticipate the inevitable temptations and pressures that arise from
a complex, decentralized organization such as ACS and spell out the rules clearly and
unambiguously.
• This code of conduct will be especially important in the San Jose/Philadelphia (ethical
code of conduct) and Detroit (strategic code of conduct) offices
• The boundary system should establish direction, motivate and inspire, and protect
against damaging behavior
Detroit long-term
• Detroit's long-term strategy must be based upon the founders' discussion of the client
prospecting system. This system is an interactive control system that would monitor
prospecting activity and the probably volume of upcoming work, putting to rest the
issue of an unforeseen lack of demand.
• The partners’ opposition to this system would be relieved by the belief control system.
The partners must be motivated by company goals and objectives, and realize that
ACS can still be a decentralized business within the constructs of this interactive
control system, but proper belief and boundary systems must be in place to assure
that they are using the client prospecting system in the correct manner. This system
would generate very useful data for resource planning for the entire firm. It would help
ACS to better serve their large clients.
• The partners must be debriefed and learn that the financial incentive is not enough,
and some sort of interactive monitoring system must be implemented. Implementation
can be eased by slow adoption and a belief system that encourages strategic focus.
Boston long-term
• The Boston office raised the issues of controlling bids for one-time jobs and the
strategic direction with respect to the manufacturing and service sectors. The long-
term strategy in the Boston office, and the company as a whole, should be to focus on
the boundary control system and the interactive control system.
• Using the boundary control system, ACS can identify the criteria that define strategic
focus to help judge whether a job should be pursued or not. If should not be pursued,
it will be clearly stated in the strategic boundary control system (RED area).
• Using the interactive control system, the founders and the partners can work together
in a series of meetings to identify the opportunities in the emerging service sector and
formulate the best plan of action to cater to this market. Perhaps the offices should
create two divisions, one that requires skills that are important for service sector
consulting jobs, and one that requires the traditional manufacturing focused skill set.
This would all depend on the demand and possibilities for growth in each market.
Philadelphia long-term
• The problems that were identified in the Philadelphia office, that the founders
suspected occurred in the entire company, were a result of the traditional revenue
growth strategic focus.
• The diagnostic control system would address these problems, as profit plans, budgets,
goals, and objectives would be developed to assist the different offices in maximizing
revenue and controlling expenses. This would ultimately convert each office into a
profit center rather than a revenue center, and this would be in the best interest of the
company.
• Incentive plans would have to be revised which could result in implementation
problems. These problems could be relieved by the belief control system. If the
motives of the organization were clearly defined to all members of the organization,
and the reasons for the changes were stated clearly and objectively, implementation
could go much smoother. The belief system would also address the issue of lack of
motivation to maintain a unified, firm-wide image.