The Paradoxical Twins: Acme And Omega Electornics
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Analysis
In 1986 the technology products division of Erie was first bought out by a firm based in Cleveland and then resaled two plants to different investors. The two plants, later renamed to Acme and Omega, have been producing computer chips and integrated circuits and have been able to develop an expertise in printed circuit boards over the years. Whereas Acme maintained most of their original staff by for example promoting the general manager to the position of the companys president, Omega hired a new president who was a former director of a research laboratory. Because of intense growth and competition in the electronics industry both subcontractors were forced to fight for contracts. According to the ongoing and upcoming trends both companies added digital microprocessors to their product portfolios.
John Tyler, the president of Acme, promoted and stood for effectiveness in production, detailed organizational charts and retaining the basis structure developed for high volume manufacturing and being technology oriented. Jobs were narrowly defined and some managers even told that they would like to have more latitude. Acme was employing 550 people and posted annual sales of $20 m. higher than Omegas that employed 480 people.
However Jim Rawls, president of Omega, didnt believe in Org-Charts and promoted a working environment in that his specialists were able to work together in a communicative and creative way. Everyone should feel comfortable and as a part of the team. The head of the mechanical engineering department once even commented once Jim Rawls spent too much time on making everyone understand the real purpose of their jobs.
In 1992 both companies were facing a possible order from a photocopier manufacturer with a potential sales volume $7-9 m. To gain the contract Acme and Omega were required to build a number of prototypes of the rather novel and complex circuit boards. They got two weeks to finish and deliver them otherwise the customers photo copier production would be delayed.
In July 1992, John Tyler received the blueprints and so he immediately sent out memos to the purchasing department, the drafting department and industrial department (methods work design dep. serving the production dep.) to initialize the given task. The top instruction Tyler gave on how to cope with this project was primarily to work on it as efficiently as they have done all their work in the years before.
Throughout the project and especially within the first weeks all specialized departments were nearly working on their own. After a while certain problems and delays in deliveries especially of one component arose. Because of the tight schedule they decided to start the assembly with this one missing part left. Tyler was in touch with the photo copier manufacturer on a regular basis pretending that everything was going fine.
After Omega has discovered failures in the blue prints of their costumer this information was passed on to Acme as well. This change resulted in a total disassembly, extra shifts and extra personnel to finish in time. Finally they shipped the prototypes with a delay in time and without quality inspection. Earlier Tyler had also do decide on an issue the production supervisor and the methods designer werent able to cope with.
Before the blueprints were received, Rawls had already set up a meeting at first to find out whether the potential contract was worth pursuing it. Then they had a discussion among the heads of the departments regarding everyones tasks and timelines. They were having scheduled meetings every day where they discussed about the progress and offered each other help. Omegas purchase department faced the same problem with the delivery time of one part as Acmes but the head of the electrical engineering department came up with an other japanese source that turned out working well. The first prototype was assembled in the presence of people from all departments. That was where they also discovered this failure in the blueprints, redesigned it over night and contacted the photo copy manufacturer for approval to proceed. Finally and after quality control the prototypes were shipped according to schedule.
Outcome
Some of Acmes final memory units were defective
Omegas units passed the test
Photocopier disappointed with Acmes delivery delay
Final contract splitted between Acme and Omega with two directions added
Maintain zero defects
Reduce final cost
Finally, in 1993, after cutting cost by 20%, Acme was awarded the total contract.
The main problems/conclusions are:
Both Acme and Omega had to cope with an unstable environment in the electronics market. The most affecting elements within their environmental domain were the raw materials sector (prices and scarcity e.g. delay of shipment), market sector, technology sector and the international sector.
On the one hand it requires high efficiency in manufacturing in order to reduce costs to be able to compete with other electronics companies from for example the Far East.
On the other hand constantly R&D efforts (creativity) are necessary to secure the companys future by inventing new products.
Acme focused on meeting the needs of a stable manufacturing sub environment by rather being organized vertical, centralized, with separate tasks & rules and a strict hierarchy based on a mechanical system. Their main attention focused on control, stability, reliability and efficiency in production by exercising individual specialization. For short Acmes framework for organizational response to uncertainty is more complex and unstable. Because of this formality of structure Acme was not prepared to deal with the development of a new product within a short period of time. There was a lack of communication between departments. Everybody was doing what he knew best.
Omega was focusing on meeting the needs of an unstable R&D sub environment. Their organizational structure was more like horizontal and therefore promoted creativity. Jim Rawls, the CEO, tried to push communication and thinking as a team. For Omega efficiency is generated through a high level of informality and various job descriptions. For short Omegas framework for organizational response to uncertainty is