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BSBMGT608 Manage innovation Task 2

To demonstrate the skills and knowledge required to develop options for continuous improvement.

Assessment description

Based on the case study provided, you will develop a performance improvement strategy, brief a team of peers on the strategy, develop the strategy and encourage innovation within the group session, and incorporate results of consultation into strategy. You will develop risk and cost-benefit analyses which you will submit to your assessor for approval.

Procedure

1. Read the case study ‘A. C. Gilbert’ (Appendix 1). Assume no improvements have been made and the company is still operating in the same way today as when it closed in 1967.

2. Consider the following scenario:

Your manager, as per organisational processes for continuous improvement, has asked you to develop a performance improvement strategy, brief the management team, develop the idea with the team, seek the team’s approval and seek final approval from your manager.

3. Develop a one-page performance improvement strategy related to competitiveness. Include:

a. strategic goals

b. description of proposed process or amendment to current process

c. brief explanation of how proposal will improve performance and competitiveness

d. KRAs, KPIs, targets.

4. Prepare to deliver a 20–30-minute management team briefing and consultation session:

a. distribute your proposed strategies to team (team members may be other learners, or another group approved by assessor)

b. ask team to consider strategy, including:

i. pros and cons

ii. changes or improvements to strategy

iii. preparing to discuss changes or improvements at team briefing and consultation session.

c. agree on a time for session (agree on time with assessor to ensure assessor can observe session).

5. Lead session:

a. explain to team the objective of the session and how the outcome will contribute to the goals of the organisation

b. discuss options and work through group suggestions

c. use creative techniques to generate or develop ideas

d. work through implications of suggestions to trial them

e. encourage group to point out issues or potential problems during trialling

f. if and when applicable, accept failure of ideas and recognise successful ideas.

6. Summarise results of session and seek group’s approval for amended strategy.

7. Incorporate results of session into revised strategy.

8. Develop a risk analysis for strategy.

9. Develop a cost-benefit analysis for strategy.

10. Arrange a time to meet with assessor (in role of your manager) to discuss strategy, risk and cost-benefit analyses. Explain costs and benefits and discuss the creativity and innovation theories you have considered for this strategy. Seek approval for strategy.

11. Submit documents to your assessor as per the specifications below. Ensure you keep a copy of all work submitted for your records.

Specifications

You must provide a:

one-page performance improvement strategy

20–30-minute team briefing and consultation session (team members may be other learners, or other group approved by assessor)

revised one-page performance improvement strategy

written risk analysis

written cost-benefit analysis.

Your assessor will be looking for:

application of quality management and continuous improvement theories in improvement strategy

demonstration of creativity and innovation theories in group consultation

application of organisational learning principles

demonstration of cost-benefit analysis

demonstration of risk management

analytical skills to identify improvement opportunities

demonstration of creativity skills to think laterally and identify improvement opportunities that come from group

explanation of creativity and innovation theories considered

demonstration of learning skills to develop options for continuous improvement

demonstration of teamwork and leadership skills to lead group session.

Adjustment for distance-based learners

No variation of the task is required.

A follow-up interview may be required (at the discretion of the assessor).

Documentation can be submitted electronically or posted in the mail.

Briefing and consultation session may be conducted and observed live or via an appropriate teleconferencing tool.

Appendix 1: A. C. Gilbert

History 1909–1961

Alfred Carlton Gilbert was an inventor and a toy manufacturer who invented the Erector engineering set. His original company, The Mysto Manufacturing Company, was founded in 1909 to manufacture the Erector set. In 1916, Mysto became the A. C. Gilbert Company and gained a reputation for producing quality toys.

By the 1950s, A. C. Gilbert was one of the leading toymakers in the United States, with annual sales regularly topping $17 million. This was an outstanding achievement for a relatively small company.

In 1961, A. C. Gilbert, Senior, died, leaving the company in the hands of his son, A. C. Junior. At the time A. C. Junior took over the firm, the company was established as a traditional, reliable and profitable manufacturer of educational toys.

Product lines and rationale

A. C. Gilbert produced train sets, but their most popular lines were chemistry sets, microscopes and their best seller, the Meccano-like Erector engineering sets that had been popular with children for more than 50 years.

A. C. Gilbert toys were not cheap. They were high quality, solidly crafted and made to endure. Parts and packaging were designed to last for many years, with the Erector set packaged in long-lasting metal boxes. The focus was on educational toys, primarily aimed at boys rather than girls. The company had a limited range, but what they did manufacture was top-quality and highly regarded.

Systems and processes

A. C. Gilbert was a small company. The following models demonstrate the systems and processes in place.

Note: These flow charts have been included for assessment purposes only, and may not accurately reflect the actual processes in place at A. C. Gilbert.

History 1961–1967

As the 1950s moved into the 1960s, there were huge cultural changes across the world. The fifties were a very traditional era of family values and morals, conservative and staid. Then came the ‘swinging sixties’. The sixties were a time of rapid change both technologically and culturally. Old-fashioned values gave way to new moral freedoms.

Where the fifties represented solidarity and familiarity, the sixties embraced change. Everything was bolder, brighter and more daring. A new young president and rising social activism by youth saw changes in clothing, music and interests. Young people rebelled against the values of their parents and embraced a more fast-paced, exciting and riskier lifestyle.

Changes to the toy industry

Cultural changes had a huge impact in western toy markets. Barbie and Action Man became ‘must have’ toys. Girls moved away from baby dolls and cots and wanted dolls that were more grown up, modern and trendy. They wanted dolls they could dress in the latest fashions and who had exciting ‘careers’, boyfriends and cars of their own. Boys were moving away from the traditional train sets and towards exciting new slot-car racing sets and action figures from popular movies and television shows.

Traditionally, toy advertising had been done via magazine promotions, but the sixties brought in a new phenomenon: television advertising. A hugely powerful medium, TV advertising became increasingly ‘hard sell’, with toys heavily promoted, especially in the lead up to Christmas. Children wanted the latest and greatest toys that they saw in these advertisements, and they put pressure on their parents to buy, which their parents did.

Retailing of toys during this period reflected a shift in retailing in general. Small, specialty retailers with experienced and knowledgeable staff were going out of business, replaced by large discount stores catering for the mass market. The goal of this type of retailer was to turn over stock. Heavily advertised lines were in demand, and that is what they would stock. Cheap was in, and giant retailers were after a quick profit from easily saleable, inexpensive products. They weren’t interested in catering to a niche market by stocking more expensive, harder to shift lines.

Packaging was bright and colourful in order to attract children growing up in a world of colour TV, hypercolour clothing and visual stimulation provided by the swinging sixties.

Effects on A. C. Gilbert

As a small, traditional company, A. C. Gilbert was slow to react to these changes. It may have been that they were not aware of the changes or were overly confident that their good name and reputation were sufficient to continue trading as before. The consequences of this short-sightedness soon became apparent.

1961 (figures approximate)

L/Y Sales

Actual sales

Difference

Profit

$12.6 million

$11.5 million

($1.1 million)

$20,011.00

This drop in sales was also reflected in a fall in the share price of the company.

Outcomes

As a result of the falling profits and share price, the company became attractive to an opportunistic businessman, Jack Wrather. Jack Wrather was an independent television producer who had made his money producing the popular programs ‘Lassie’ and ‘The Lone Ranger’. Jack Wrather wanted to purchase a successful business and felt that in
A. C. Gilbert, he had the opportunity to use his knowledge of popular entertainment and apply it to the production of toys. He purchased 52% of A. C. Gilbert for $4 million and immediately set about making his mark on the company. A. C. Junior stayed on as Chairman but his influence was minimal.

Actions taken by Jack Wrather

Set a goal to achieve sales of $20 million in 1963.

Replaced the top A. C. Gilbert executives with his own people.

Initiated a massive advertising campaign.

Increased sales staff by 50%.

Instructed sales staff to adopt an aggressive sales approach.

Introduced 50 new toy lines, raising the lines to 307.

Changed the focus from traditional boys' toys to ranges for pre-school children,
and dolls and other toys aimed at girls between the ages of 6 and 14.

Spent $1 million on changing the packaging for all lines to brighter, more
colourful boxes.

Performance report

Year

Sales

Difference from previous year

Profit/loss

1961

$11.5 million

($1.1 million)

$20,011.00

1962

$10.9 million

($600,000.00)

($281,000.00)

1963

$10.7 million

($200.000.00)

($5.7 million)

1964

$11.4 million

$700,000.00

($2.6 million)

1965

$14.9 million

$3.5 million

($2.9 million)

1966

$12.9 million

($2 million)

($12,872,000.00)

1967

A. C. Gilbert closed (1909–1967)

Key milestones

1962:

Jack Wrather purchased 52% of A. C. Gilbert.

Replaced existing executives with his own people.

Increased sales staff by 50%.

Implemented extensive television advertising.

Set an organisational goal to achieve sales of $20 million for 1963.

Company recorded a loss of $281,000.00.

Introduced 50 new lines in less than 12 months, using existing engineers and production departments who lacked training and experience in the new product range.

Repackaged existing lines at a cost of $1 million.

1963:

Sales and profits down on previous year.

Anticipated drop in profits due to expansion and cost of establishing new lines.

Sales fell short of expectations.

Decline in quality of toys – feedback indicated products poorly made and designed (dolls did not even come with a change of clothing).

New range perceived by customers as poor quality and overpriced – not value for money nor attractive to the target market.

1964:

Jack Wrather fired most of the top management team he had hired two years previously.

Crisis management led to multiple changes and dramatic measures being taken and then changed – often one measure contradicting the previous.

Jack Wrather hired new CEO – Isaacson.

Isaacson fired the entire sales team.

Isaacson made huge cutbacks in spending.

Sales were channelled through independent manufacturer’s reps, which was cheaper than maintaining an in-house sales force.

Long-standing relationships soured as the independent reps worked on commission and pushed sales, with no interest in maintaining or building relationships with customers.

A. C. Gilbert had built its success on personal service and building relationships – that was destroyed within 12 months.

A. C. Gilbert Junior died and is replaced as Chairman by Jack Wrather. Isaacson assumes the role of President.

Prior to Christmas, many of the previous year’s failed products were deleted and 20 new items introduced.

Reduced the price of core lines such as the Erector set from $75 to $20, but quality also impacted – cardboard box instead of metal boxes, and brittle parts instead of sturdy, long-lasting parts.

Sales increased and there was some degree of optimism.

1965:

Sought to capitalise on popular crazes such as James Bond and The Man from U.N.C.L.E. by introducing action figures for Christmas.

Due to internal strife and staff cutbacks, the new lines were not delivered to the stores until after Christmas.

Operated on a skeleton workforce.

Due to lack of staff, A. C. Gilbert was unable to implement changes or introduce new lines quickly enough to capitalise on trends.

1966

Increased advertising spending to $3 million.

Introduced point-of-purchase display products supplied to dealers free of charge.

Borrowed $6.25 million, granted on the event that the company made a profit in 1996.

Company made a loss of $12,872,000.00.

1967

February – A. C. Gilbert closed its doors after 58 years.

Note: This case study is a true story. You may wish to read more about this organisation or to conduct additional research online.

Reference material

Tibballs, G., 1999, Business blunders, ‘A. C. Gilbert: Toy Story’, Robinson Publishing Ltd, pp. 43.

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