Radiata Software Case Analysis

Radiata Software Case Analysis

1. Problem Statement

        a. Facts and Key Players

• Radiata Software makes financial software targeted to small professional service firms

• The founders of Radiate Software were three college friends

• The company was established right after they graduated

• They have a solid customer base

• They were able to expand their product line and add a website

• One of the most popular features of the site is the electronic bulletin board where professionals trade comments, seek advice, and share stories

• Because of rapid growth, the company is struggling to keep pace with managing staff, handling development of new products and services, marketing, negotiating contracts, etc.

• Rob came up with the idea for the company and served as CEO; the other two each had specific titles, but all three were involved in every aspect of the business

• Susan Boyd- representative from the venture capital firm that was Radiata’s biggest source of funds, suggested to hire professional managers to run the company.

• She recruited three managers: a chief operating officer, chief information officer, and a chief financial officer

• The earlier hype was short-lived. After six months of working with the new managers, the founders and the managers seemed to segregate on separate camps.

• They allocated Monday mornings for meetings but it often got cancelled.

• The founders often talked about business matters by themselves and this made the new managers feel left out.

• The new managers began doing the same thing, resulting in two separate groups trying to run Radiata.

• The group will be discussing whether to merge with a large software company.

• The CIO is supposedly unhappy and miserable in the company.

• Susan Boyd and the venture capital team will be unhappy if they lose the three managers.

        b. Main Issue (Rob’s POV)

• What should he do to establish a good working relationship with the new managers?

1. Key Objectives

• To set up a clear organizational structure (e.g. who will make the decisions ultimately)

• To be able to work well with the managers

1. Analysis of Cause

• Radiata Software is a relatively young company initially managed by three college friends. Due to its success, it grew rapidly demanding a more strategic approach to management.

• Even if Radiata is getting too big to manage as an entrepreneurial start-up, the founders were not able to adapt and failed to realise that the structure of their internal environment might not work for a company with high demands.

• Rob acts as the CEO but they do not have a formal organizational structure. CEO is a loose term for them as major decisions are made by the three of them.

• As an entrepreneurial business, there weren’t much planning done during the start-up stage. But since the company had advanced to the later stages, they should create a plan which would include defining specific goals and strategies for each. As a rapidly growing company, they have no formal structure thus tasks are not distributed, and it also creates confusion on the part of the founders and the managers.

• Organizing the company’s structure seems to be most needed at this point. The lack of structure, rules, procedures, and job descriptions creates a chaotic environment for the founders and managers each battling for control.

• The company might be a partnership or a corporation. It could be that it started as a partnership and became a corporation as it grew larger.

• They used equity financing to fund Radiata Software. Their biggest source of funds is a venture capital firm. It is necessary for Radiata to be in good terms with the firm. Losing the new managers might put them in a bad light and might affect the

• Radiata might be in the resource maturity stage. Radiata has achieved enough financial gains but it also means that the founders would need to let go of their old ways. For example, (1.) instead of forgoing their own roles and needing all three of them to make a decision, they should do their own job according to role description and leave the final say to the CEO, (2.) meetings with other staff (e.g. the managers) should take precedence over their informal business discussions during parties and weekend get-togethers. Detailed planning and organizing should be done in this stage.

• The founders did not deliberately exclude the managers in business discussions. It just came naturally to them as they were close friends. They weren’t able to anticipate its effects leading to the dilemma.

• Jessie was against the new managers and resented the fact that the managers had some control. He also thinks that the senior managers want the merger to go through.

• The three managers also failed to communicate what they felt. They might have talked to the founders about it but instead, they did what the founders did and became a very exclusive group. However, they could initiate discussion with the founders and communicate what it is they feel is happening and what they think would be good for the company. If the founders still won’t listen, then they could have the choice of leaving Radiata.

1. Development of Alternatives

1. Setting up Organizational Structure and assigning roles

• Make Rob the CEO and let Jessie and Thai assume the roles of the other managers

• Pros:

1. Familiarity with the other two. Rob would not have to make any adjustments because he already knows them well.
2. Would make Jessie and Thai happy
3. The company would go in the direction the founders would want it to go.

• Cons:

1. The managers would feel insulted and would eventually leave.
2. The venture capital firm would not be happy about this.
3. The company would not receive guidance from seasoned managers.
4. Their easygoing and informal approaches might hurt the company in the long run

• Make Rob the CEO and let the new managers do their jobs

• Pros:

1. The managers would take an active part in the company and would not have to leave.
2. Radiata would satisfy the venture capital firm
3. The managers have more experience in managing.

• Cons:

1. Rob’s friends won’t be too happy about it.
2. They would have to give up their concept of the company as an entrepreneurial business owned by the three of them.
3. Possibility of his two friends being removed from the company.

1. Developing their relationships with the managers

• Rob, as the CEO, communicating to his friends that their old ways no longer work

• Pros:

1. Rob holds a bit of an influence over his two friends and might convince them to agree to the changes he thinks the company needs.
2. Possibility of Jessie and Thai agreeing and participating with regards to making a formal organizational structure

• Cons:

1. Even if Rob is considered as the CEO, his friends don’t give much thought to his title and might think Rob is getting ahead of them.
2. Jessie and Thai might be more reluctant to the changes

• Strictly implementing the founders’ and the managers’ roles in the company and following the organizational structure

• Pros:

1. No conflict over the chain of command
2. The managers and the venture capital firm would be happy
3. Tasks will be efficiently distributed.
4. The company would continue to grow, for example if the merger takes place.

• Cons:

1. Rob’s friends would have less say in decision making and would not be too happy about it.
2. The founders vision for their business might not be relevant anymore.
3. Loss of flexibility and entrepreneurial spirit.

1. Selection of Alternatives

1. Make Rob the CEO and let the new managers do their jobs
2. Strictly implementing the founders’ roles in the company and following the organizational structure

1. Implementation of Desired Alternative

• The founders and the new managers should have a formal meeting regarding the structure of their company

• When every role is established, Rob as the CEO should see to it that his friends and the managers stick to it

• The organizational structure should be communicated to the whole company.

• An organizational chart should be made to make things more formal.

• The founders and managers, now with their fixed roles, can meet and discuss the challenges faced by Radiata. Rob should see to it, that they do their own job according to their roles.

• Meetings should be done regularly to update the others.

• Although roles are now fixed, they should still communicate with one another.

1. Recommendation

• Recognition of mistakes of both groups and establishing boundaries and rules through making job descriptions, rule books, etc.

• If Rob thinks the presence of Jessie and Thai is not doing the company any good, he could remove them from leadership positions, but retain their shares.

Reference: Daft, R. (2010). Management. Mason, Ohio: South-Western Cengage Learning, 9th ed