New Wave Music
New Wave Music is an international company that develops music software that is used to compose music, play recordings in clubs, and produce albums. Founder and CEO Moritz Halbach is the company’s biggest fan. He said “I started this company from nothing, just me, my ideas, and my computer. I love music---love playing music, love writing programs for making music, love listening to music---and the money is nice, too.” Moritz says that he never wanted to work for someone else or to give away his ideas and let someone else profit from them. He was keen to keep control over this ideas and their image. “New Wave Music is always ahead of the pack. In this business, if you can’t keep up, you’re out. We are the company that everyone else is concerned about keeping up with. Everyone knows that when they get something from us, they’re getting only the best and the newest.”
The headquarters for the company is in Berlin, Germany. It is the nerve center for the organization, where new products are developed and organizational strategy is established. The company does a great deal of its coding work at its office in Kiev, Ukraine and its marketing efforts are increasingly based in its Los Angeles, California office. This division of labor is partially based on technical expertise and cost issues. The German team in Berlin excels at design and production tasks. Because most of the company’s customers are English speakers, the Los Angeles office has been viewed as the best group to write ads and market products. The Kiev office is filled with outstanding programmers who don’t require the very high rates of compensation that are found in Germany and the United States. In terms of management style, Mortiz makes the final decision on hiring every employee for the company and places a heavy emphasis on independent work styles. He states “Why would I want to put my company in the hands of people that I can’t count on? My employees have to believe in what we are doing here, really understand our direction and be able to go with it. I’m not a babysitter, this is the real world.”
The work environment is that employees want to work for the firm because it has a reputation for being cutting edge. New Wave Music’s software is used by a number of dance musicians and DJs who have been the firm’s core market. They view the product as expensive but a very high quality and innovative brand. Whenever the rest of the market for music software tends to go in a certain direction, New Wave Music heads in a completely different direction to keep itself separate from the pack. This strategy has paid off. While competitors develop similar products to one another and have to continually lower their prices to compete with one another, New Wave Music has kept its revenues high by creating completely new types of products.
Unfortunately, computer piracy has eroded the company’s ability to make money with just software-based music tools and has had to move into the production of hardware (such as drum machines and amplifiers) that incorporates computer technology. Making this change would be challenging for some companies but for a company that reinvents itself every 2-3 years like New Wave Music does, the bigger battle is against stagnation and rigidity. With only 115 employees, the original management philosophy of allowing all employees to participate in decision making and innovation is still the lifeblood of the company’s culture. One developed notes “At New Wave Music, they want us to be part of the process. If you are a person who wants to do what you are told at work, you are in trouble. Most times, they can’t tell you what they want you to do next----they don’t even know what comes next! That’s why they hire employees who are creative, people who try to make the next thing happen. It’s challenging but a lot of us think that it is a very exciting environment.”
Because so much of the work can be performed on computers, Moritz decided early on to allow employees to work outside the office. The senior management in Berlin and Los Angeles are quite happy with this arrangement. Because some marketing work does require face-to-face contact, the Los Angeles office has weekly meetings. Employees who like the company are happiest when they can work through the night and sleep most of the day, firing up their computers to get work done at the drop of a hat. Project discussions often happen via social networking on the company’s intranet. Employees at the Kiev office have been less eager about this work model. Managers say that their computer programmers find working with so little structure is rather uncomfortable and are more used to a more structured environment with strong leadership and well-defined work processes. One Kiev managers stated “When I started, Moritz said that getting in touch with either him or those in Los Angeles would be no problem. We’re small and like a family, he said. Well, it is a problem. When I call Los Angeles, they say that I need to wait until their meeting day. I can’t always wait until they decide to get together. I call Moritz and he says ‘Figure it out.’ Then when I do, he says it isn’t right and we have to start again. If he just told me in the first place, we would have done it.”
Some recent events have also shaken up the company’s usual way of doing business. Developers in the corporate office had a major communication breakdown about their hardware DJ controller which required many hours of discussion to resolve. It seemed that people who seldom met face-to-face had all made progress but had all moved in different directions. To test and design the company’s hardware products, employees were finding that they needed to do more than send each other code and that face-to-face collaboration was necessary. Some spirited disagreements have been voiced within the organization about how things should move forward with regard to this problem. The Los Angeles office is also experiencing difficulties. Sandra Post, a key employee in that office, has been more critical of the company since its shift to newer products. “With the software, we were more limited in the kinds of advertising media we could access. So, now with the hardware---real instruments---we finally thought ‘All right, this is something we can work with!’ We had a whole slate of musicians, producers, and DJs to contact for endorsements but Moritz said ‘No way.’ He didn’t want customers who only cared that a celebrity liked us so he scrapped the whole campaign. He says we’re all about creativity and doing our own thing---until we don’t do things his way.”
Although the organization is not without problems, there is no question that New Wave Music has been a standout success in the computer music software industry. While many are shuttering their operations, the company is using its market power to push forward the next generation of electronic music-making tools. As Mortiz puts it, “Once the rest of the industry has gotten together and figured out how they’re all going to cope with change, they’ll look around and see that we’re already three miles ahead of them down the road to the future.”
Questions
Please answer the following questions. Your grade will be based heavily on how well you use course information/topics, as well as examples of information from the case, to support your answers. This case deals primarily with issues of personality, organizational culture, leadership, cross-culture, motivation, and job satisfaction, but feel free to utilize other concepts if you see them as relevant.
What type of organizational culture does New Wave Music appear to have? Does it seem appropriate for the company, given their industry and goals as a firm? Do you believe that a different type of organizational culture would be more appropriate? Why?
What are your thoughts about Moritz as a leader? What are his strengths and weaknesses? Overall, is his leadership style working well for the firm? Why/why not?
The firm appears to be experiencing difficulty balancing the desire for flexibility and independent work styles with concerns about communication and coordination. How can this be reconciled? If the firm decides to grow in size and locations, what will need to change to improve the communication channels throughout the organizational hierarchy at New Wave Music?
Consider some of the cultural issues that affect companies operating in such different parts of the world. Are the conflicts in the case a function of the different cultures of the countries where the firm has offices or are they a function of the type of work that is being performed in these locations, or both?
Based on what you know about motivation and personality, what types of people are likely to be satisfied working in each area/location of the company? Using concepts from the job characteristics model/theory, what might need to change to increase employee satisfaction in all areas of the firm?