Group 4

COMMERCE
MULTIPURPOSE PRESENTATION
 2

Short overview of the Case

Company culture is important for growth
Visionary Design System is a software based design solution company. The company grew exponentially in the first three years of their
operations. With employee incentive system, they were getting better sales and customer acquisition rate was high. They introduced the
new system called PDM which was supposed be very profitable as it was the most advanced of its kind. But due to a lack in management
and the employee knowledge, they did not get their projected sales. As the employees lacked the proper product knowledge and training,
the whole company suffered a lot and the profits went down. A change in personnel training and corporate culture is need to make PDM a
success story.
 ABOUT THE COMPANY 3

Company overview of VDS

VDS or visionary design System is a CAD developing company which was founded in June 1990.Its headquarters
were located in Sunnyvale California.

The main business that they did was System integration and CAD hardware & software reseller. The revenue
growth of the company was exceptional.

The founders were Doug Tyson, Jerry Cohen, Gerald Stark, Donald Conway. They came from different backgrounds

The Company set up some long term goals in order to understand their own work needs and catered them to their
needs.

Vision 2000TM : VDS’s conception for the coming generation of mechanical engineering processes. The process
highlighted the steps necessary to bring their client into the forefront of mechanical engineering processes and
technology.

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 Mission, Goals and Objectives 4

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 ABOUT THE COMPANY (cont.) 5

Founding Beliefs
Founding Beliefs:
1. Tyson: “People are the greatest and the most wasted resource in
most companies” which is A different style of managing employees.

2. To envision a company in which management and employees

respected one another and worked together as a team.

3. Everyone would be an owner, share in the profit, and take

responsibility for making the company succeed. Employees referred to
the Founders: “Founding Fathers”.

4. To preserve teamwork and cooperative spirit, everyone hired into

VDS was interviewed by the entire regional office.

5. Offices work as independent teams to fulfill their goals.

6. One employee commented, “There is a family feeling here and a

great sense of ethics and morals. If HP gives us a lower price, the Sales
Reps pass the savings on to the customer. That’s the kind people who
work here, they work hard and care a lot”.

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 MISSION, GOALS, TACTICS 6

Features
Mission:

1.After the first 3 years of surprising rapidly growth, Conway suggested that the
founding 4 come together and outline the company’s priorities and strategies for the
future.
2.It took 8 months to carve out who VDS are but we wanted to make sure that all
employee were involved.
3.VDS put their beliefs on paper, now everyone knows who we are as a company, what
we stand for, and where we are going.
4.Everyone in this company is a partner, it’s at the foundation of their values.
5.These beliefs would be sustained through our growth and hopefully keep us focused.
6.VDS want employee’s decisions to be consistent with the overall goals of the
company.
7.VDS want to continue empowering employees.

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 MISSION, GOALS, TACTICS 7

Features
Goals

Each category within the document (Customer Goal, Employee Goal, Financial Goal,
Technology Goal) was discussed in 3 sections:

1.The Goals section laid out the primary goal in each category.
2.Tactics: VDS hoped to use to achieve each goal.
3.Objectives: these would yield the fulfillment of each goal.
4.There was an action plan for each point in the Tactics and Objectives section.
5.Managers used the action plan to aid them in directing and motivating their
subordinates.
6.The Missions, Goals, Tactics and Objectives document laid out a 5 year strategy plan,
but VDS made annual adjustment to the action plans to keep on top of project
completion and industry movements.

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Empwerment of Employees
 Continued 9

Sense of Achievement
The Company clearly stated that the employees would have a sense achievement and empowerment whenever they are working at their
company. This sense of Empowerment was considered crucial for the rapid growth of the company. The Company clearly stated that the
employees would have a sense achievement and empowerment whenever they are working at their company.

Valued Democracy
This is evident in their philosophy that reflects the values of our democracy and is pillared by the concepts of fulfillment
and transformation.

Develop a good knowledge

There were a decentralized decision making system everyone was allowed to give their opinion but in most cases the
most knowledgeable one’s was considered.

Environment
VDS established an atmosphere of friendliness and respect, hoping that people would work to build and maintain a
workplace they enjoyed.

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 HOW TO MAKE RIGHT DECISIONS 10

How to ensure that employees had sufficient information to make the “right decisions”:

Training
Management provided training and
education to all employees.

Logs were kept

Business fundamentals such as how to read
balance sheets and income statements.

Group discussions and Lectures

Through educational lectures and group
discussions in week-long sessions 3 times a
year.

Climatic
Only by not stepping in when they make
mistakes will they learn and become better
decision makers.

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 COMPENSATIONS 11

The system was designed to attract

entrepreneurial people and to align
company's incentives with employees.
According to VDS guiding principle,
employees should earn according to
what they produced, so the pay scale
is based on output rather than position
or seniority. All employees received a
base salary, a commission, and an
annual bonus. Commissions and
Bonuses were very important in the
compensation system, and employees
earned more than the industry average
during good years (1990-1993) but
less in bad years (1994). However,
employees were less likely to be laid
off than in competitors.

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 Compensations 12

Bonuses

Commissions Stock options

Base Salary Miscellaneous

Review
Types of compensations that the
employees recieved

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 COMPENSATIONS 13

Commissions
Every full time employee earns commissions as part of his compensation and the total
commission payment on any sale is spread across a number of job types giving each person
involved in the process the incentive to contribute. Commissions were customized by job type
to provide link between revenue flows an employee worked with and his tasks.

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PDM: A Test of VDM’s Philosophy
 Problems 15

Platform suppliers: System integrator: Independent PDM Revenue fell No recognition

suppliers:
HP, IBM and Digital Anderson During the first 3 Nor was VDS recognized
They had
years, PDM revenues throughout the field as a
had begun consulting and burgeoned under PDM supplier.
fell below quota by
designing PDM EDS had private
the growing 40%, and failed to
software through suppliers of PDM, cover PDM costs.
their CAD program. whose programs demand.
they supplied with
their own systems
implementations.

Responsibility is the sticking point. Management expect empowerment to mean that we

don’t have to manage it. They hear the empowerment message, but don’t take us up on
it
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 About Fred Bulatao 16

He had established himself at HP

as the “database guy”, an early
specialists in PDM whose
reputation was growing in the Database guy
industry. VDS hired Fred to lead
them into the market and to head-
up their PDM program Increasing Sales with Zero
Credit or Commission
No matter how largest deal was done,
but I got minimal credit.

Consulting Poor Fred

Cutting corners
The products VDS sells often cost more
than the customer wants to pay, so they
look for things to cut. Sales Reps will cut
the number of consulting days if it’s need
to make a sale.

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 About Bill Braxton 17

He was an expert in PDM with

degrees in both mechanical
engineering and computer science.
PDM guy
He was technically focused.

He had written PDM software for

In the past his bonus was tied to his previous employers before
completing specific tasks. Consulting Go to guy there was either an industry or a
Customers don’t really want to do name for
the integration, which sets up a
great opportunity for the company.

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 Importance of Involvement of Management 18

Prioritize
Tell them about the strategy

Understand the situation

Where the company is headed

Get frontline managers

to establish goals for each sales
representatives

Engage
should be measurable like VDS selling so
it's clear when they have been achieved.

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 Importance of Raising Capabilities 19

01 Support
Providing supports to raise
capabilities can lead to
03 Create confidence
to know what their employees
need, and to procure it while
achieve the goals of the keeping within their
company. departments' budgets

02 Better financial decisions

This includes each
department's budget for the
04 Access to knowledge
If the sales reps don't have access to
the knowledge and resources necessary
fiscal year to sell their targeted PDMs, the
company's achievement suffers

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 Importance of Cultural Reform
MVP
Policy creation
The way the company is run day to
day, based on those policies, helps
establish the corporate culture.
Encouraging culture
A culture that encourages creativity,
innovation and out-of-the-box
thinking is likely to result in a
company that is successful and
continually comes up with new ideas.
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20
Provide support
When employees know they have
the top management team's support,
they contribute without holding back.
Same for PDM
The top level management should
reform its culture slightly to achieve
the effective results like VDS.
Solution
 SOLUTION 22

Phase 1: Theory
The functioning and customization options
and working will be understood thoroughly
during this period.

Phase 2: Pairing with the one

PDM specialized Sales Rep
A few existing sales representatives
will be paired with the PDM specialized
sales rep to gain greater insights of the
working.
 23

Phase 3: On the Job experience

The trainees will be evaluated and given
hands on experience of the sales.

Phase 4: Feedback and rewards

Based on performance, meaningful feedback and
rewards will be disbursed. Inputs from the sales
personnel will also be given importance.
 24

Better management
Bill and Fred will also be able to
contribute with their core
responsibilities and so with the other
due to the phase approach.

Better Incentives
Compensation incentives will be added
to the pay of PDM specialists,
Application engineers and sales
representative.

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 Pros and Cons 25

Reduce cost New engineers

will require more
money

Better for Bill Increased HR

and Fred expense

Cons

Gain
Adjusted
knowledge
PDM costs
No reduced Time
consultancy consuming
hours

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Conclusion
 27

Thank you so
much for
everything
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