Black Diamond Case Raises a Case Study

Excerpt from Case Study :

Such data gathering helped decide the number to be produced and the time frame to be given for the manufacturing process for the first batch at least. Similarly, data is now sought on the problem that has developed and for the development of alternatives for addressing the problem and achieving a better procedure for the future.


Management is aware that what the company needs are both short- and long-term solutions, and the two are clearly linked. If the short-term solution includes a product recall, for instance, then the long-term reputation of the company may suffer and require specific attention. The alternatives for the short-term include the following:

product recall ignore the issue as if it were a one-time freak accident continue to sell the product with a warning label sell the current inventory while also taking a look at the product and its manufacture for possible changes for the future

An added consideration any of these decisions would affect would be the possibility of lawsuits, which could be quite expensive, especially if people were injured while using this product. Putting a warning label on the product could trigger lawsuits from those who have already purchased the product and could signal to lawyers that the company is accepting responsibility for the problem. This is unfortunate but is often the case with such moves. Any movement to ignore the issue could be seen as an attempt by the company to avoid responsibility, leading again to lawsuits. Since both approaches led to the same possibility of lawsuits, the company has to do what is right and ignore that potential consequence. Putting a warning label on the product is a minimum move, and a recall is too drastic at this point. The real short-term action is to investigate thoroughly and to find out what happened, why the product failed, and then act according to that information.

What the company needs to focus on is the long-term issue. It is apparent that the company does not have a policy or mechanism in place for dealing with such a crisis, and this is because it has not had to face this eventuality before. The company now knows that it can happen and needs to be prepared to confront any issue that arises in the future and to place quality control high on the agenda in order to avoid the possibility that such a crisis will arise.

A form of internal process manager to analyze all processes and monitor all manufacturing is needed to make certain that products meet all standards. This will be especially necessary if it is found that the failure of the axe was caused by a failure in that area, but it is a good idea anyway in order to keep the process working and to assure quality. The current Quality assurance Department may have failed in this mission, and in any case it is noted that no one had a clear idea of what the role of the department is. If that department is to be given this responsibility, then the organizational structure and the place of this department in it must be clarified and broadcast throughout the company so that appeals to the department are made by all as needed and so that all information the department needs to make its decisions and fulfill its role are forwarded automatically. This department was new at the time, but that is not an excuse for leaving it out in the cold and for not making its role clear and placing it in the loop so it could do that job.

Part of that job has been to bring the company into full compliance with ISO 9000 certification, and that move would go far toward enhancing the reputation of the company further and giving it some protection over time. Knowing if this would have made a difference again requires a full understanding of what failed in this instance, and that aspect has not been decided as yet. The first step once more is to make the necessary investigation, gather the needed data, and then make a decision on all of the changes that might be needed.

It has been suggested that a Total Quality Management approach might be valuable. Innovation can be encouraged by sheer need -- major corporations tend to be more innovative when faced with disaster simply because the company has no choice but to innovate or die. Innovation can be encouraged by the use of incentives, the creation of teams charged with finding specific innovations or with developing innovative strategies, the introduction of team techniques such as TQM or quality circles, an increased emphasis on research and development and a restructuring so that R&D takes precedence over some other operations or drives the engine rather then following along, and so on. Innovation has to be rewarded at all levels to foster an atmosphere in which innovation is attempted.

Encouraging innovation in a large corporation is itself an innovation and one that must be instituted with care and in terms of a long-range program. Innovation is not something that is brought about overnight but is instead nurtured as a corporate philosophy and developed and maintained over time. The philosophy begins at the upper level and trickles down to the rest of the company. Over time, it becomes less possible to differentiate strategy and culture.

The first step is to find out what happened and why, and this has been emphasized throughout because it is necessary that any changes be based on solid information. At the present time, speculation plays as much of a role as information, and that is not the best way to make a decision. The decision made will apply to the immediate issue and will also shape the long-term response, including avoiding any such problem in the future. The meeting was a step in the right direction by informing everyone of the nature of the problem and by calling for data to be gathered on the issue for further examination, and from this a proper decision can be reached.

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