Novell and recommends some measures for improving its business model. It has 7 sources.
Factual Summary: Novell is the world's largest networking Software Company and the fifth largest software corporation even after being trimmed down by 50% in the mid-90's.It employs 4,600 people and has 27,000 reseller partners. Jesse Hassler, is the Senior VP of the Human Resource division and her job is to modernize the 'culture' of the company and give it a distinct Novell flavor while also analyzing the previous missed opportunities to structure a new roadmap to success. Marketing of products worldwide by Novel, is done through a partner/leverage program that initially partners with small companies to market their product but once sale hits the 5 million mark, they establish a larger presence, through the opening of an individual office staffed by qualified locals.
Eric Schmidt, a highly skilled, Princeton Ph.D., was recently hired and appointed CEO with the job of implementing three basic company concerns which include alleviating the company's financial dilemma, stepping up new product releases and establishing better rapport with the company's employees. He made a lot of cost cutting changes in the company's infrastructure by cutting down the workforce and selling major subsidiaries that were losing out on revenue. His vision paid off and two years from the time of his vocation, Novell's revenue increased by 11%.
Novell's main secret has been their hiring practice, which prefers bilingual foreign students, who can easily adjust to foreign markets. Novell delivers the same product worldwide, with foreign sales accounting for 45% of the sales in 1997 mainly because of local employees who understand the culture better and can speak the language rather than an outsider (American) moving in to do business. The company is also bound by cultural and trade agreements whereby it cannot ship software to Iran, Iraq and Cuba and has to use diplomatic channels to monitor piracy of their product in countries like India and Pakistan.
Novell has to keep into account the different cultural and religious differences when advertising and promoting its products while at the same time offering the same distinct Novell experience to its customers worldwide. Also, in a software company, the biggest asset a company has is its human resource, which is duly cared for at Novell
Problems: The Company faces some problems in restructuring itself as a financially and economically viable organization. They are listed as follows:
1) Lack of an efficient roadmap to pinpoint the future direction and strategy of the company.
2) Novell has suffered financially because of constant reshuffling of it hierarchy, and also due to constant mergers resulting in layoffs.
3) New innovations have been few and far apart at Novell signaling lack of progress
4) Motivation for employees needed plus incentives required keeping workers on their toes and eager to work.
5) More locally focused products geared towards a particular worldwide market rather than a generic U.S. version for different counties.
Analysis: Novell, although in an exceptional position is still losing ground because of some imperfections in their business model. A transformation is required if the company is to stay on the top. One important change as mentioned above is 'cultural transformation'. The culture prevalent in a company is the soul of that organization and it is not easy to alter, but adaptation to different environments and ideas, assimilating the good and discarding the bad is how a culture evolves into a better one. Therefore a few methods should be adopted which are essential to bringing about change in an organization's environment. These include a few key practices which are crucial in bringing about a cultural transformation.
1) Examining a few different trends to gauge which will have the biggest positive affect on the organization, than determining the long-term repercussions of those affects.
2) Refining our mission statement over and over until it precisely indicates what it is that we do and why it is that we do it.
3) Changing hierarchical structures so that they are not the old rigid generic models every company follows but are purpose built to better accommodate inter-personal communication and management.
4) Questioning all the 'traditional' practices and procedures carried out everyday, and filtering out what's not needed while keeping only those that will be useful in the future or are efficiently working today.
5) Utilizing simple communication with employees instead of lengthy memos and creating a friendly atmosphere where the managers and the normal workers freely discuss problems and concur with the solutions (Hesselbein, 1999)
An excellent example of this is NTTDoCoMo, Japan's largest telecommunication provider and the world's number one mobile phone company (based on market share). Even though it is in an extremely traditional country, their thinking outside the box has helped create an efficient, revolutionary company. Amid sluggish sales and waning profits, free spirited individuals were brought in who totally changed the outlook of the company and turned its losses into huge profits. Mari Matusunaga was one of those people who were the epitome of a transformational manager. The first thing she did after joining was to get rid of the boring furniture and the bland decor and brought in comfortable sofas and a refrigerator stocked with beer. She renamed the conference room "Club Mari." And she and the other employees brainstormed ideas over a few drinks of beer in a relaxed environment (Zambezi, 2001). According to her, "What stiff-as-a-rod DoCoMo needed was a place where people could make themselves at home and get the alpha waves flowing...You can't do that in an ordinary meeting room." (Stoker, 2000).
One other tactic the company used was it initiated a process called 'creative chaos' on purpose to "shake up the habitual, comfortable and complacent state of employees." (Nonaka & Takeuchi, 1994) so as to facilitate dialog between upper and lower management and to open the workers minds to new concepts instead of working on the same unquestioned pattern day in day out. This is beautifully put by the former chairman of Fujitsu in the following quote
Relaxed in a comfortable place, one can hardly think sharply. Wisdom is squeezed out of someone who is standing on the cliff and is struggling to survive..."
Finally, having a hierarchical structure in the company only distances the employees from the managers and the bosses and vice versa, this is the reason many companies adopt what is called a "Flat Organization," using the 'team-management ' approach where people work together and share responsibilities in groups whose size expands and contracts. There is no boss per se and instead of the seven layers present in the Novell scenario, there are two to three layers max. An example of this is of Indus Group, a software firm started by Bob Felton, an employee in a Fortune 500 company. Realizing through experience that hierarchical models only cause lack of communication and don't really work, he based his company on the flat structure. The 250 workers in his company would discuss the projects in groups. Felton would keep in touch with the groups through e-mail and every Friday each staffer would post up on the company message board, a one page summary of the work they had accomplished, the obstacles they had encounterd and their plans for the upcoming week, many of which were answered by him too. According to Felton, "The other way doesn't work,... -- more bureaucracy, more rules, more people to keep the rules -- people get disenfranchised, and they're not responsible" (Brokaw, 2003)
Recommendations: I would recommend that roadmaps be mapped out with the concencus of the employees and not just by the top level managers, so as to facilitate co-ordination among Hassler, Schmidt and the rest of the employees. A steady shift towards the 'flat organization' method should be made and incentives and rewards like…