Machco’s New Finishing Machine Case Analysis

CASE SUMMARY

Machco’s New Finishing Machine

Charles Guo 260694314

Core capabilities can sometimes become core rigidities, which is always a paradox in managing new product development. But this time, Machco did it very well.

Machco is a leading machine and equipment company which was founded more than 100 years ago. By 1988, the company had grown to three major business segments with eight groups, among which Production Equipment Group (PEG) was Machco’s major revenue engine. Before 1988, PEG almost dominated US market. However, Machco’s market share began to shrink as a result of Taiwanese competitors, who sold the same machine at a more attractive price.

Determined to respond to questioning voice from distributors, PEG decide to revolutionize the market by delivering a new machines product. The development project “Hurricane” was framed to be finished by 1 year, while based on usual approach, it would take at least 3 years to complete a similar project. Therefore, unless Machco moved out of conventional ways as well as totally revolutionized its organization structure and decision making process, it was impossible to meet the aggressive 1-year objective.

At the very beginning, a multidisciplinary team was created to undertake the great challenge. It was the first time for people from different functional departments simultaneously working together. Compared to working successively, it actually helped everyone understand their common goal.

During the development process, lots of tradeoffs were incurred because of the radical product design, which also enhanced the difficulty and uncertainty of the project. Ideas regarding the product were so novel that people often got stuck in rigid circumstances where they had no choice but to fight against the existing knowledge base, technical systems, and managerial structures.

After one year, the new machine was proven to be a great market hit. Even though, organizational problems were still deep-rooted and may hinder Machco’s further innovation and development. Outstanding issues include:

1. Payroll system didn’t change simultaneously. People who worked beyond others were discouraged.

2. Project was not empowered with authority. Different functional units were not well aligned for the long-run strategic goal.

3. Existing projects competing for resources. Future projects were unable to break out of the old system