Dialogue for Surfacing and Testing Assumptions

Suggested Ground Rules

1. Suspension of assumptions. Typically people take a position and defend it, holding to it. Others take up opposite positions and polarization results. In this session, we would like to examine some of our assumptions underlying our direction and strategy and not seek to defend them.
2. Acting as colleagues. We are asking everyone to leave his or her position at the door. There will be no particular hierarchy in this meeting, except for the facilitator, who will, hopefully, keep us on track.
3. Spirit of inquiry. We would like to have people begin to explore the thinking behind their views, the deeper assumptions they may hold, and the evidence they have that leads them to these views. So it will be fair to begin to ask other questions such as “What leads you to say or believe this?” or “What makes you ask about this?”

Over the two days, many previously closed subjects became open, blocks to communication came down, and rifts were healed. None was more important for the organization than the healed rift between R&D and marketing and sales.

Joe Grauweiler, the head of R&D, and Charlie Smyth, the head of marketing and sales have had a friendly albeit distant relationship for over ten years. Both are deeply proud of what DataQuest has achieved. Both believe deeply in its commitment to “participative management” and its related ideals about people and the organization. Yet, both are caught in a conflict that epitomizes the forces that are restraining DataQuest Drives’ continuing growth. R&D is viewed as artists, designers, creators. Marketing sees itself, and is seen by others, as “the great unwashed,” dealing in the messy world of sleazy dealers’ bargain making (who have no particular loyalty to DataQuest), price discounting, and irate customers.

The “two cultures” of R&D and Marketing are reflected in numerous organizational conflicts. For example, both Grauweiler and Smyth have their own product budgets. Grauweiler’s is for new development. Smyth’s is for acquisitions, buying smaller companies whose products round out DataQuest’s and make the firm, in Smyth’s eyes, more competitive in the marketplace. There is no integrated product plan uniting the two. Marketing felt compelled to this “end run” because they saw R&D as being unresponsive to the full range of customer needs. R&D, it turns out, saw, itself being cut out of important product decisions. As the dialogue unfolded, Grauweiler expressed a level of concern that came as a surprise, because people assumed that R&D valued its autonomy:

GRAUWEILER: Let me offer a way to look at the issue of product strategy, which I submit today is being viewed as sort of an arm wrestle. We have, in effect, amassed a two pronged product strategy. We’ve not been overt or clear about it. My evidence is that we’ve not really brought the full competencies of the organization together to understand what amounts really to Data Quest’s make/buy decision on product. That being the case, we have one group of people spending money on some product programs with a certain level of confidence and another group of people spending money on product programs with a different view. And “never the twain shall meet.” That’s just insane to me. There should be a singular, overriding product strategy that supports R&D and marketing. And, beneath that, come any number of make/buy decisions …”

MACCARTHY: I think we all fundamentally agree with that.

GRAUWEILER: Could I submit that we are telegraphing the opposite.

OTHERS: Yes.

GRAUWEILER: It’s more acute than just not doing it well. We’re being perceived as doing the opposite.

SMYTH: I was trying to get back and think of the rationale for why the make versus buy decision is a different and separated decision. At this point, it appears disjointed … One is, in my view, problem-solving, research-driven focus. The DataQuest label … On the other hand, in other products that DataQuest has not directed resources to, we are doing that through “buy.” We’re acquiring the access to that in a way other than Data-Quest’s research … because it is more market reactive than fundamental problem-solution driven. And we don’t want to pollute, you might say, the purity of what it is we want to do with research…. PHILLIPS (HUMAN RESOURCE VP): I think that has put us in conflict.

GRAUWEILER: Absolutely! That’s the problem. That’s the prejudgment that I don’t tolerate. How about the people who you’re depending upon having some say in it? And don’t protect my purity for me.

SMYTH: Well … I’m not uncomfortable with the rationale for what we have done. There may be a better way to do it. But I do think that, at some point in our history here, we decided not to invest in vertical storage disk files … just conventional junk that the market will buy that’s not innovative. It’s not interesting … And we wanted to allocate our finite resources and talent to what DataQuest’s image is, which is research, innovative, product-driven … So we went out and acquired the more pedestrian stuff.

PHILLIPS: If we are just blue-skying it today, let me tell you what has always confused me. And I’m laying that on both marketing and R&D. “Research-driven product company” is how we’ve always talked about ourselves. And when we talk that way, it kind of puts us to say that any product that doesn’t have the DataQuest investment in innovative research is outside Data-Quest. Somehow or another, we’ve structured ourselves that way and become in competition …

MACCARTHY: That’s one definition of research-based. Do you know the other definition? The other definition is that nobody else in DataQuest does any research and development if it’s not on a new product.

GRAUWEILER: I don’t like that one either.

PHILLIPS: YOU hit point number two, because I was saying to myself … if you take the overriding direction statement as it is on the board, whether or not your decision is to make or buy, it still has to be research-and development-driven. It’s got to be innovative …

MACCARTHY: I think we’re onto something here. What we’re saying is that the company in the past has been locked in. The only thing that made us great was product research and development. So we’re having this incredible tension here. I would suggest that we bought subsidiaries to launch us … I think the dilemma that you’re [Grauweiler] helping us to see is that … we should be offering whatever products the customer fundamentally needs. But then there’s the other side that says, “But if it come out of DataQuest’s research, it has to carry a DataQuest label.” What you’re saying is that’s not true. That [what label to put on] ought to be a marketing decision based on what positioning you’re trying to do. That’s very helpful … because most of us have felt that if a product is not going to have a DataQuest label on it, you won’t develop it in the first place.

HADLY (MANUFACTURING VP): But that’s also making a statement that the entire company is research-driven, not just R&D, that other innovative ideas including product can come from other sides of the company. It doesn’t all have to funnel through R&D.

GRAUWEILER: That’s fine, but I don’t know why that needs to be said. I’m not challenging you at all. But I think there’s an inference here again that troubles me. I feel saddled representing the R&D legacy of the past, which I don’t buy into. And I find it ironic that the more I work desperately to move our organization forward to the new reality, the more you’re convinced to hold us back where we used to be! And I find that a strange dilemma.

HADLY: And conversely, there’s a feeling here that that’s the same on the other side.

ALL: Yes.

HADLY: We try to move the organization forward … we seem to be held back because you can’t be research-driven and innovative unless it comes through R&D.

GRAUWEILER: I never said that! … Now, could I play it a different way? I think the statement of a research-driven product company is a correct statement. I firmly believe that the company’s success will, in part … always be governed by our prowess with products. Anything that I see that starts to erode that orientation scares me to death. You have to have good stuff … good services and good products. I don’t say that implies how you get them. Or that there’s only one way to get good product … We don’t have a very concerted or collaborative process in place to get that, but I know we have to.

MACCARTHY: Now the other side would be this—I believe some of the work that Charlie [Smyth] has done in marketing and in distribution [developing a new network of exclusive DataQuest dealers] is as much “R&D effort” as what goes on in R&D.

GRAUWEILER: I totally believe that.

MACCARTHY: And yet we suffer that, if the investment made there doesn’t become instantaneously converted into a return, there’s an incredible criticism of the organization.

GRAUWEILER: Welcome to the world of R&D.

SMYTH: There are two points I want to make from this. It looks to me like your efforts could be put to developing a product that could be manufactured outside … it looks to me that we’ve thrown away some development efforts that could have been licensed to other companies even … I’ve always thought it was crazy that, in order to get a product out of R&D, you had to put a DataQuest label on it.

GRAUWEILER: That’s been a constraint on our program …

SMYTH: NOW, the other thing is that we’re not communicating in any kind of rich way between marketing and R&D. As a matter of fact, it’s getting more separate … If we’re going to work on the total needs of the customer … there has to be a way that that’s seen in a lot of different places in the company.

HADLY: YOU started off by asking why is there this tension between R&D and marketing. You also have the tension between manufacturing and finance … To me it comes down to two words: “Empowerment versus Control.” We tend to be a very control-oriented organization overall … Because they’ve got control and won’t let me in, I’m going to go over here and do my own thing because I feel powerless to affect that at all. That’s where I think some of it comes in—not by anything we necessarily want to have happen, but it’s happening all over the company.

The results of this dialogue were nothing short of remarkable for DataQuest. First, a thirty-year rift between R&D and marketing started to be healed. Second, the “end run” that marketing had been doing to augment product lines was no longer necessary. R&D was interested and wanted to participate in studying acquisitions as well as developing products that could be marketed under other labels, as part of one coordinated product plan. The sacrosanct DataQuest label was not limited to products developed by DataQuest’s own R&D but should be used based on “market considerations.” The R&D head made it clear that he did not want to be fit into an old stereotype that R&D alone was responsible for innovation. The other functions, in his view, were equal partners in innovation, by innovating in processes, in understanding customer needs, and in business management. Moreover the R&D head was angry that he was even being saddled with an old stereotype.