Management Question

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Scenario 4: Influence With Authority, High Urgency
You are the CEO and founder of Spectrum Sunglass Company.
While you generally feel good about the state of the business, you are beginning to think about your legacy. You
are reading more and more professional articles emphasizing the importance of sustainable development for
business and linking the themes of sustainability and innovation, such as “Why Sustainability Is Now the Key Driver
of Innovation.” You are frustrated that you don’t have any new sunglass products to offer to the vocal customers
who increasingly express concerns about Spectrum’s environmental impact. Not only does sustainable development
make sense to you personally, from both a moral and an economic standpoint, you also see this as an opportunity
to differentiate Spectrum’s products and company from your competitors, which focus primarily on price and design.
You have a potential new product design that has received positive focus group feedback as well as some exciting
branding deals with Hollywood celebrities in the works. Even still, you are preoccupied with sustainability.
At Spectrum’s annual executive strategy retreat, you decide to ask for a special, unplanned session to discuss the
conversations you recently had with a vice president at Spectrum Sunglass Company’s largest retail customer,
BigMart, which comprises 30% of Spectrum’s annual revenues. The VP explained he was now in charge of national
sunglass procurement for BigMart, and that they had recently made a policy to promote all products which bear a
Green Stamp manufacturing certification for environmental friendliness. He added that, notably, BigMart’s market
research revealed that even its most price-sensitive consumers were starting to prefer green products within their
price range. The VP explained that BigMart was now considering recommending that all of its suppliers go through
the Green Stamp certification process.
Paul Diaz (CFO): What exactly are BigMart’s terms?
You: They want us to reduce petrochemical raw materials, such as polycarbonate plastics, in the manufacturing
process from 90 percent to 50 percent within two years. The VP not-so-subtly threatened that, if we don’t respond
within three months with a detailed implementation plan, then BigMart will consider canceling all our contracts with
them and shift to a competitor who will. While this is unexpected, this could be an opportunity to develop a unique
product line for a mass market base, and I think we’re up to the challenge!
Leslie Harris (VP of sales and marketing): A sustainability feature will help distinguish us in the long term and this
marketing angle may open up new consumer markets, such as exporting to more environmentally conscious
countries in Europe.
Paul Diaz (CFO): We can’t afford to start a sustainability project just because BigMart demands it! Green material
substitutes for petroleum are probably expensive. We’re highly levered as it is, so a drop in profitability might put
our ability to meet our debt covenants at risk.
Daisha Farook (VP of operations): We just spent 12 months undergoing a grueling Six Sigma quality certification
process. Our plant managers will absolutely refuse another major change in material inputs.
Louise Orysh (benefits administrator): Spectrum is still recovering, and has only recently begun rehiring workers;
isn’t a dramatic shift in focus to sustainability premature?
Mary Gopinath (VP of human resources): But we need to give this serious thought, there’s a lot at stake at ignoring
this. Why don’t you head a cross-functional task force to come up with a compromise solution?
You agree, suggesting the following plan for the team’s work:
1) The four additional members come from marketing, R&D, finance, and production.
2) They devote at least 75 percent of their time to developing a proposal for BigMart that is acceptable to
all four departments.
3) You will devote 50 percent of your time to the task force while juggling your responsibilities as CEO.
4) The task force will present Spectrum’s senior management team with a financially acceptable plan to use
petrochemical alternatives within three months.
The management team concurs with your task force proposal. As the retreat ends and everyone heads to dinner,
you start pondering the numerous issues and obstacles to overcome in developing an acceptable plan for BigMart
within three months. Your central challenge is to convince your team that a dramatic change in the organization’s
strategy and products is necessary and that environmental sustainability is critical to the company’sfuture—no small
task in a relatively short period of time. However, when BigMart tells Spectrum to jump, the usual response is to ask,
“How high?” Fortunately, you also have the formal authority and widespread respect throughout the organization
to tackle this challenge in a meaningful way.


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