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HBS Case Presentations Visionary Design Systems

HBS Case Presentations Visionary Design Systems. 指導教授 耿念豫博士. 學 生:何子福（59327210） 周佳欣 （ 59327223）. Contents. 1. Company Profile Page 3 ~17 2. The CAD industry Page 18~25 3. The Compensation System Page 26~52

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HBS Case Presentations Visionary Design Systems

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  1. HBS Case PresentationsVisionary Design Systems 指導教授 耿念豫博士 學 生:何子福（59327210） 周佳欣（59327223）

  2. Contents 1.Company Profile Page 3 ~17 2.The CAD industryPage 18~25 3.The Compensation SystemPage 26~52 4.PDM:A test of VDS’s philosophy Page 53~67

  3. 1.Company Profile(1/15) ◎VDS was founded in June 1990 ◎Location : Sunnyvale California ◎Business : System integration CAD hardware & software reseller ◎Founders: Doug Tyson President & CEO HP’s prior No. 1 CAD salesman Jerry Cohen Midwest Sales Manager HP’s prior employee Gerald Stark Director of Engineering HP’s prior employee Donald Conway CFO Tyson’s college friend

  4. 1.Company Profile(2/15) ◎The reasons of foundation: Tyson:”suggested to HP’s CAD managers that HP provide systems integration consulting along with the CAD products”. HP’s mangers:”suggested that Tyson start his own company and guaranteed VDS a supply of HP’s products and enabled he to take a few of his customers and some other HP employees to the new company”. With no need for production facilities or inventory and a supply contract with HP, VDS was able to start up with a few salespeople and almost no outside financing.

  5. 1.Company Profile(3/15) ◎Initial Concept and Strategy: Long-term goal: to become a systems integrator Tactics: 1.To provide customers with a new interface for the CAD software. 2.To customize the to company’s specific design. 3.CAD package: engineering analysis tools and WorkManager (VDS’s Product of Data Management system). 4.In order to help clients to use these tools, VDS provided both training and consulting. 5.Consulting was done on-site by evaluating company’s situation.

  6. 1.Company Profile(4/15) ◎Initial Concept and Strategy: Company’s corporate strategic plan: Vision 2000TM Vision 2000TM: VDS’s conception for the coming generation of mechanical engineering processes. Highlighting : the steps necessary to bring their client into the forefront of mechanical engineering processes and technology.

  7. 1.Company Profile(5/15) ◎Founding Beliefs: 1.Tyson: “People are the greatest and the most wasted resource in most companies”. 2.A different style of managing employees. 3.To envision a company in which management and employees respected one another and worked together as a team. 4.Everyone would be an owner, share in the profit, and take responsibility for making the company succeed. 5.Employees referred to the Founders: “Founding Fathers”.

  8. 1.Company Profile(6/15) ◎Founding Beliefs: 6.To preserve teamwork and cooperative spirit, everyone hired into VDS was interviewed by the entire regional office. 7.Offices work as independent teams to fulfill their goals. 8.One employee commented”There is a family feeling here and a great sense of ethics and morals. If HP gives us a lower price, the Sales Reps pass the savings on to the customer. That’s the kind people who work here, they work hard and care a lot”.

  9. 1.Company Profile(7/15) ◎Mission, Goals, Tactics & Objectives: Mission: 1.Each founder served in a distinct role at VDS, so having a thorough understanding of their common goals was necessary to coordinate their decision. 2.After the first 3 years of surprising rapidly growth, Conway suggested that the founding 4 come together and outline the company’s priorities and strategies for the future. 3.It took 8 months to carve out who VDS are, but we wanted to make sure that all employees were involved.

  10. 1.Company Profile(8/15) ◎Mission, Goals, Tactics & Objectives: Mission: 4.VDS put their beliefs on paper, now everyone knows who we are as a company, what we stand for, and where we are going. 5.Everyone in this company is a partner, it’s at the foundation of our values. 6.These beliefs would be sustained through our growth and hopefully keep us focused. 7.VDS want employee’s decisions to be consistent with the overall goals of the company. 8.VDS want to continue empowering employees.

  11. 1.Company Profile(9/15) ◎Mission, Goals, Tactics & Objectives: Each category within the document(Customer Goal, Employee Goal, Financial Goal, Technology Goal) was discussed in 3 sections: Goals, Tactics, and Objectives. 1.The Goals section laid out the primary goal in each category. 2.Tactics:VDS hoped to use to achieve each goal. 3.Objectives:these would yield the fulfillment of each goal. 4.There was an action plan for each point in the Tactics and Objectives section.

  12. 1.Company Profile(10/15) ◎Mission, Goals, Tactics & Objectives: 5.Managers used the action plan to aid them in directing and motivating their subordinates. 6.The Missions, Goals, Tactics and Objectives document laid out a 5 year strategy plan, but VDS made annual adjustment to the action plans to keep on top of project completion and industry movements.

  13. 1.Company Profile(11/15) ◎Empowerment: 1.Empower – Developing a knowledge base in each employee of company, mission, goals, tactics, and plans that enables them to take action and make decisions consistent with the company’s strategy and values. 2.Decisions to be made by the people who were closer to, and most knowledgeable about, the issues involved in the decision. But not creating large decision-making hierarchies, management also hoped to stay closer to the customers.

  14. 1.Company Profile(12/15) ◎Empowerment: 3.In order to let employees to make substantive decisions, management tried to align employee interests with those of the firm.Three methods were applied. A.By giving stock to each full-time employee and by providing additional stock options through the bonus plan. B.By using commissions and bonuses to link cash rewards directly to desired performance goals. C.VDS established an atmosphere of friendliness and respect, hoping that people would work to build and maintain a workplace they enjoyed.

  15. 1.Company Profile(13/15) ◎Empowerment: 4.How to ensure that employees had sufficient information to make the “right decisions”: A.Management provided training and education to all employees. B.Business fundamentals such as how to read balance sheets and income statements. C.Through educational lectures and group discussions in week-long sessions 3 times a year. D.Only by not stepping in when they make mistakes will they learn and become better decision makers.

  16. 1.Company Profile(14/15) ◎Employees: Job category Number Sales Representatives 20 Applications Engineers 25 Administration 20 Specialists 7 Software Engineers 3 Total 75 ◎Offices: 11 satellite offices that were accounted for as separate Profit center.

  17. 1.Company Profile(15/15)

  18. 2.The CAD industry(1/8) ◎Step 1: Before CAD was available to mechanical engineers,designers stood at 3x4 foot drawing boards using rulers and compasses to design products. Any changes in the product’s design required altering large numbers of drawings. ◎Step 2: The introduction of Computer Aided Design in the early 1970s automated the measuring lines and angles, significantly reducing the amount of time it took to draw actual objects and making alterations easier and more timely.

  19. 2.The CAD industry(2/8) ◎Step 3: By the early 1980s CAD producers developed 3-D wire modeling programs which, when coupled with the proliferation of PC’s, brought affordable wire modeling technology to the market. ◎Step 4: Three dimensional solids design, the newest CAD technology, included many new capabilities and provide clear discernible pictures with shading and depth.

  20. 2.The CAD industry(3/8) 3-D solids modeling

  21. 2.The CAD industry(4/8) 2-D

  22. 2.The CAD industry(5/8) Recent Development in CAD industry ◎Concurrent engineering-simultaneously designing, testing and manufacturing a product, work toward this goal. ◎Engineering Analysis Tools 1.It automated the physical testing of parts created by a CAD system. 2.Analysis tools identified weaknesses and flaws in early product design, greatly reducing the time and cost of the testing period. 3.A full 80% of a product’s life cycle cost was borne before the product went into production, shortening the design phase yielded high returns.

  23. 2.The CAD industry(6/8) Recent Development in CAD industry ◎Product Data Management(PDM) 1.Itemerged in the early 1980s to store CAD document in an organized manner. 2.PDM’s capabilities expanded to included storing other information such as marketing information or the current prices of input materials. 3.Allbusiness divisions can share the resources of PDM system. 4.The ability to document, communicate, and change product information on-line opened countless opportunities to restructure old design process.

  24. 2.The CAD industry(7/8) Recent Development in CAD industry ◎Product Data Management(PDM) 5.These process changes enabled companies to re-engineer their design flow, maximizing the efficiency of the organization and their communications structure. ◎Prediction and Need 1.In many new fields, no one could predict when the market would take off. 2.Plenty of entrants were loosing their investment as customers scaled down their requirements and delayed implementing their PDM programs.

  25. 2.The CAD industry(8/8)

  26. 3.The Compensation System(1/27) Company’s Revenues Commissions Bonuses

  27. 3.The Compensation System(2/27) ◎Guiding philosophy 1.People make as they produce. 2.The pay scale was based on output rather than position or seniority.

  28. 3.The Compensation System(3/27) ◎Base salaries 1.Everyone within a job type earned almost the same base salary. Experiences were made a significant differences. 2.VDS preferred to alter compensation via commission and bonus. 3.For the past 4 years salaries at VDS had not been raised for anyone but administrative people. 4.Compensation towards commissions and bonuses rather on base salaries.

  29. 3.The Compensation System(4/27)

  30. 3.The Compensation System(5/27) ◎Commissions 1.Qualification: Every full time employee. 2.Total commission payment on any sale was spread across a number of job types. 3.Management set payment estimates to aid them in establishing commission schedules and not as promises or commitments to the employee. 4.To link commissions to whichever revenue flows an employee worked with, and his or her daily tasks.

  31. 3.The Compensation System(6/27)

  32. 3.The Compensation System(7/27) ◎Commissions The differences between the Commissions Plan of the year 1993 and 1994. 1.Total commissions = Total Bookings + Hardware revenues + Software revenues. 2.To encourage Sales Reps to focus on higher margin business. 3.Sales Reps received 4% of the total training and consulting revenue from their office. 4.VDS’s total benchmarks for commission rate increases did not change. HP’s benchmarks were routinely bumped up as performance improved. Sales people’s success only begat higher goals.

  33. 3.The Compensation System(8/27)

  34. 3.The Compensation System(9/27)

  35. 3.The Compensation System(10/27)

  36. 3.The Compensation System(11/27) ◎Bonuses 1.Qualification: Every full time employee. 2.Basically, 10% of an individual’s income. 3.The actual amount depended on office, company and personal performance during the years. 4.Sales Reps received bonuses determined by a formula, whereas administrative staff bonuses were subject to supervisory discretion. 5.Periods: Monthly, Quarterly, and Annually.

  37. 3.The Compensation System(12/27)

  38. 3.The Compensation System(13/27)

  39. 3.The Compensation System(14/27) ◎Bonuses Annual Bonuses Plans Sales Reps: 1.Everyone’s annual bonuses were awarded for surpassing performance benchmarks set by management at the beginning of each year. 2.The profit goals of company and office were set, everyone received bonuses when the company or office surpassed its goals. 3.Individual bonus quotas varied among Reps according to the sales opportunity and their territory and their experience in the company.

  40. 3.The Compensation System(15/27) ◎Bonuses Annual Bonuses Plans Applications Engineers: 1.AEs were rewarded for generating new business above and beyond a specified quota. 2.The bonus plans for AEs set office quotas which equaled the sum of the quotas for the Sales Reps within that office. 3.The quotas could vary according to location. 4.AEs also received bonuses when the company surpassed its company and office goals.

  41. 3.The Compensation System(16/27) ◎Bonuses Annual Bonuses Plans Specialists and administration: 1.They had to be customized according to each individual’s duties, goals and upcoming tasks. 2.The Missions, Goals, Tactics and Objectives document was frequently referred and evaluated how each person could contribute toward those goals and objectives. 3.This was frequently a highly subjective and judgment-filled process. 4.Donald Conway:”Evaluating them and their plans is often not black and white”.

  42. 3.The Compensation System(17/27)

  43. 3.The Compensation System(18/27)

  44. 3.The Compensation System(19/27)

  45. 3.The Compensation System(20/27)

  46. 3.The Compensation System(21/27)

  47. 3.The Compensation System(22/27)

  48. 3.The Compensation System(23/27)

  49. 3.The Compensation System(24/27) ◎Stock Ownership 1.Most of VDS’s equity held by management and the employees. Every employee owned equity in the company. 2.Management’s desire to reward those who were will to take the risk of joining unknown. 3.Management relied on employees’ sense of ownership when giving individuals significant decision rights. 4.Management believed that equity was an effective motivator that would inspire employees to work together toward a common goal.

  50. 3.The Compensation System(25/27) ◎Stock Ownership 5.Almost 100% of the employees earned additional options each year. 6.Employees of VDS owns about 10 times the amount of stock that employees in similar firms own. ?Employees did not really understand what the stock was about or what it was worth. Option’s exercise price 75¢〓 The value of a share

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