Harvard Case - Arctic Timber AB: Engineered Woods Division (A)
"Arctic Timber AB: Engineered Woods Division (A)" Harvard business case study is written by Michael L. Tushman, David Kiron, Wendy Smith. It deals with the challenges in the field of Organizational Behavior. The case study is 14 page(s) long and it was first published on : May 27, 2005
At Fern Fort University, we recommend that Arctic Timber AB's Engineered Woods Division (EWD) implement a strategic plan focused on enhancing operational efficiency, fostering innovation, and strengthening its leadership position in the engineered wood market. This plan should address key areas of concern identified in the case study, including: * Improving communication and collaboration across functional areas.* Developing a robust talent management strategy to address skills gaps and leadership development.* Investing in technology and analytics to optimize production processes and enhance product development.* Building a strong organizational culture that values innovation, teamwork, and customer focus.
2. Background
Arctic Timber AB, a leading Scandinavian forestry company, faces challenges in its Engineered Woods Division (EWD). Despite strong market demand for engineered wood products, EWD struggles with internal communication, inefficient production processes, and limited innovation. The division faces increasing competition from global players and needs to adapt to changing market dynamics.
The main protagonists in this case are:
- Per-Olof Larsson: EWD's Managing Director, a seasoned leader with a strong technical background but lacking experience in managing complex organizational change.
- The EWD Management Team: A group of experienced professionals with strong functional expertise but limited cross-functional collaboration.
- The EWD Employees: A diverse workforce with varying levels of experience and motivation, facing challenges in communication and collaboration.
3. Analysis of the Case Study
This case study highlights several key challenges facing EWD, which can be analyzed through the lens of organizational behavior, leadership, and change management.
Organizational Behavior:
- Communication and Collaboration: The case highlights a lack of effective communication and collaboration between different functional areas within EWD, leading to inefficiencies and missed opportunities.
- Organizational Culture: The existing culture at EWD is characterized by a siloed approach and a lack of innovation. This culture hinders the division's ability to respond effectively to changing market demands.
- Leadership: Per-Olof Larsson's leadership style, while effective in technical areas, lacks the necessary skills to drive organizational change and foster a collaborative environment.
Leadership:
- Leadership Styles: Per-Olof Larsson's leadership style, characterized by a focus on technical expertise and a command-and-control approach, is not conducive to fostering innovation and collaboration.
- Leadership Development: The case highlights a lack of leadership development programs within EWD, leading to a shortage of leaders with the necessary skills to drive change and manage complex organizational challenges.
Change Management:
- Resistance to Change: The case study suggests that EWD employees may resist change due to a lack of communication and a perceived lack of ownership in the change process.
- Lack of Clear Vision and Strategy: The absence of a clear vision and strategy for EWD's future hampers the division's ability to effectively manage change and adapt to evolving market dynamics.
4. Recommendations
To address these challenges and achieve sustainable growth, EWD should implement the following recommendations:
1. Enhance Communication and Collaboration:
- Implement cross-functional teams: Establish cross-functional teams to improve communication and collaboration between different departments. This will foster a shared understanding of goals, challenges, and opportunities.
- Develop a communication strategy: Implement a clear and consistent communication strategy to ensure all employees are informed about the division's goals, progress, and upcoming changes. This strategy should utilize various communication channels, including meetings, emails, and internal newsletters.
- Promote open dialogue: Encourage open dialogue and feedback between employees at all levels. This can be facilitated through regular team meetings, suggestion boxes, and employee surveys.
2. Foster Innovation and Talent Development:
- Invest in R&D and technology: Allocate resources to research and development to explore new product designs, manufacturing processes, and sustainable materials. This includes investing in technology and analytics to optimize production processes and enhance product development.
- Develop a robust talent management strategy: Implement a comprehensive talent management strategy that addresses skills gaps, identifies potential leaders, and provides opportunities for professional development. This could include leadership training programs, mentorship initiatives, and career development plans.
- Promote a culture of innovation: Encourage employees to share ideas and contribute to product development. This can be achieved through innovation challenges, idea-sharing platforms, and recognition programs for innovative contributions.
3. Strengthen Leadership and Organizational Culture:
- Develop leadership skills: Provide leadership training programs for Per-Olof Larsson and other key leaders to develop their skills in leading change, fostering collaboration, and promoting innovation.
- Embrace a collaborative leadership style: Encourage a more collaborative and empowering leadership style that values employee input and fosters a sense of ownership.
- Promote a customer-centric culture: Emphasize the importance of customer satisfaction and build a culture that prioritizes meeting customer needs. This can be achieved through customer feedback programs, employee training on customer service, and a focus on delivering high-quality products.
5. Basis of Recommendations
These recommendations are based on a comprehensive understanding of the case study, considering the following factors:
- Core competencies and consistency with mission: The recommendations align with Arctic Timber AB's core competencies in forestry and wood processing, while also supporting the company's mission of sustainable growth and innovation.
- External customers and internal clients: The recommendations focus on improving customer satisfaction and fostering a more collaborative work environment, which benefits both external customers and internal clients.
- Competitors: The recommendations address the need to stay ahead of competitors by investing in innovation, technology, and talent development.
- Attractiveness - quantitative measures: While the case study does not provide specific financial data, the recommendations are expected to lead to increased efficiency, reduced costs, and improved product quality, ultimately contributing to profitability.
6. Conclusion
By implementing these recommendations, Arctic Timber AB's Engineered Woods Division can overcome its current challenges, enhance its operational efficiency, and strengthen its leadership position in the engineered wood market. This will require a commitment to change management, leadership development, and a focus on building a high-performing and innovative organizational culture.
7. Discussion
Other alternatives not selected include:
- Outsourcing production: This option could provide short-term cost savings but would result in a loss of control over production processes and potentially damage the company's reputation.
- Merging with another company: While this could provide access to new resources and markets, it would require significant integration efforts and could disrupt the existing organizational culture.
Key assumptions:
- The recommendations assume that Arctic Timber AB is committed to investing in the EWD's future and is willing to support the necessary changes.
- The recommendations assume that EWD employees are receptive to change and willing to embrace new ways of working.
8. Next Steps
To implement these recommendations, EWD should:
- Develop a detailed implementation plan: Outline specific actions, timelines, and responsibilities for each recommendation.
- Communicate the plan to all employees: Ensure transparency and build buy-in for the proposed changes.
- Establish a dedicated change management team: This team will oversee the implementation process, monitor progress, and address any challenges that arise.
- Monitor progress and adjust as needed: Regularly evaluate the effectiveness of the implemented changes and make adjustments as necessary to achieve desired outcomes.
By taking these steps, Arctic Timber AB's Engineered Woods Division can transform itself into a high-performing and innovative unit, achieving sustainable growth and success in the competitive engineered wood market.
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Case Description
Describes the leadership challenges involved in managing strategic innovation and change in a highly mature business unit. Allows systematic exploration of organizational structures, incentives, competencies, and culture that impede innovation. Pivots on a new leader's dilemmas in shaping both his team and larger organization to initiate both incremental as well as radical innovation.
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