American universities are turning out more and brighter Ph.D.'s who, in their search for the American dream, do their high-tech research on government grants and hope to be the next Bill Gates. Should they come up with a marketable idea, and venture capital, they could easily turn into small business owners.
The next phase of development for one of these small businesses is often the point at which a big business becomes interested in the new product or idea, buys out the original owner, and absorbs the business into its own hierarchy. The difficulty is to maintain the advantages of the small research business culture, while instilling the disciplines necessary to become a customer-driven organization with a strong commitment to making a product on time and on budget.
These small research businesses tend to have three characteristics in common:
- An organization with little formal structure and no documented employee guide or handbook.
- A manufacturing operation given to experimenting with methods, design changes and general tweaking just to satisfy curiosity. The layout is also unplanned and inefficient.
- Financial behavior that lacks concern for the bottom line, typically as a result of a passion for technology that allows experimentation to outweigh financial performance.
It isn't easy to overlay a bureaucratic, hierarchical, big-business structure on a small research business without the whole venture going south. The entrepreneurs may lose the freedom to experiment if they feel pressured to meet certain demands by certain deadlines; you can't rush creativity! They may have to deal with a new management hierarchy that doesn't understand the technology, isn't as smart as them and-heaven forbid-is driven by profits.
You cannot turn a group of scientists into manufacturing engineers and managers--with specific production guidelines and deadlines--overnight. To make the organization work it is critical to get the people to recognize and accept the need for two areas of focus, and that each employee will be in one or the other, but not both.
One focus area should be on the customer and production; that is, making the product that the customer needs, when it is needed. The other focus area should be on research and development. This group needs to direct its efforts on new and improved products, and supporting manufacturing in its effort to stabilize processes.
Those in R&D will have to make the biggest adjustment. They will no longer be able to go onto the shop floor any time they choose to experiment with new materials, designs or processes. They will now have to plan for time on the shop floor without disrupting production. On the other hand, those focused on production should not hesitate to seek help from the R&D group at virtually any time. Communication between the two groups has to be frequent and open.
Successfully absorbing a small business into a larger company's hierarchy is contingent upon many things. From the start, the new owners must invest in the people. They should not expect the highly educated scientific staff to move easily from experimentation to production. This would probably cause a bolt for the door, with a devastating loss of critical knowledge. Therefore, it will be necessary to hire production professionals skilled in customer focus.
What initially might look like a daunting task that requires a huge investment becomes less formidable once these two facts are recognized: First, more people will be needed. Second, if it is done right, improvements in quality, customer service, future development and cost containment will make it well worthwhile.
What's your opinion? Whether you agree or disagree, Ron Miller will welcome your com- ments. You can contact him via the Bourton Group's Web site. Just point your browser to www.bourtongroup.com and click on "Contact Us."
