Shugart In the early 1980s Shugart was the leading maker of disk drives. One of its major divisions was producing products that, for the most part, had reached the mature stage. Eager once again to have a product that it perceived to be exciting and new, the firm invested heavily in what it perceived would be a high-volume, highly profitable project. Unfortunately for Shugart’s managers, the project, dubbed Project Golden, encountered serious technical difficulties. About a year and a half into the project, the controller and vice president for finance at Shugart proposed terminating the project. However, they were unsuccessful. Here is the controller’s description of the situation. The V.P. of Finance and I presented an economic justification for eliminating this product in August of 1982. We felt very strongly about it. We presented the analysis at the Executive Staff Meeting. The V.P. of the Division immediately championed the product and signed up for lower costs. He also argued the asset recovery issue. I find that if any champion is willing to stick up for a project, then the financial analysis is rejected. Personalities are very important around here. The vice president for another Shugart division described his view about losing projects. You can make a program look any way you want on paper for Business Plans. Another problem is that nobody wants to destroy the P&L. I really believe it’s true that we are very risk taking with negative outcomes. Project Golden was eventually terminated in August 1983, when costs were well over target and competitors had captured what market there was. The vice president for the division that ran Project Golden made the following comments: We lacked enforced milestones, reviews, and plans. Our business review meetings are not “meat and potatoes.” You can’t have a “meat and potatoes” meeting with thirty people. We should have progress reviews, and if need be force Marketing to stop taking orders and force Manufacturing to stop producing until the problems are resolved. One problem we have is frequent management turnover. Nobody ends up responsible for the problems at the project level. Case Analysis Questions A Shugart vice president made a remark about being risk taking with negative outcomes.
Discuss this remark in the context of the concepts described in the chapter.
Discuss the comments made by the vice president for the division that ran Project Golden in the context of group process.