Project Background: Assume that you are a project
manager who has delivered a number of projects exceeding customer
expectations within the schedule and budget in high-technology sectors
including aerospace and robotics. So far in your career, you have been
managing projects under different organisational forms including
functional, projectized, and matrix structures. You have completed
projects to initiate new business units in existing organisations.
However, you do not have experience in starting an organisation, in
particular an organisation where the time to allow the employees to work
collectively as a team is limited.
An entrepreneur, Dr. Ryan O’Neal, and an investor, Jeff Hoffman,
approach you with a business idea and a funding of $12 million. Ryan and
Jeff would like you to develop an innovative system in warehouse order
fulfilment. The system will consist of a group of autonomous mobile
vehicles which will move quickly through the warehouse and load and move
orders to the fulfilment platform. Dr. O’Neal is an expert in mobile
robotics while Jeff Hoffman is an investor with a strong background in
warehouse management, supply chain management, and fulfilment
technologies. A critical project requirement is to implement the
business idea and launch the product within 10 months. Ryan and Jeff are
both convinced that if the product is launched in 10 months, there will
be a set of committed customers in the U.S. to sustain future venture
funding. Ryan and Jeff estimated that about 100 professionals will be
needed for eight months to undertake the necessary technical and
engineering work. This translates to 1,000 staff-months.
The brief project statement that you wrote together with Ryan and Jeff is:
To create the start-up company so that the product (as defined in
a charter document) is available for installing at customer sites in 10
months from the start date and a production operation is also in place
by that time to develop the vehicles at a rate of 50 units per week and
control station at one per week.
The proposed name for the new organisation is Sturata Inc. and it
will be setup in Vermont, USA. You will be the interim COO (Chief
Operating Officer) of the company until successful completion of the
setup phase. Jeff Hoffman will be the president and CEO (Chief Executive
Officer) of the company at least during the setup phase, while Dr.
O’Neal will be vice president, engineering and the CTO (Chief Technical
Let us assume that after discussion with your family and friends you
decide to become the key player of the executive team together with Jeff
Hoffman and Dr. O’Neal. Miss Yamaguchi, a young Japanese-American with a
degree from The Robotics Institute at Carnegie Mellon
University and an MBA, was hired as VP, Administration. Miss Yamaguchi
has earlier experience of setting up two start-ups in cross-cultural
configurations. The position of a CFO (Chief Financial Officer) is still
There are a number of issues involved with this project, including the following:
- The product needs to be extensively tested in a live warehouse
environment before it can be rolled out or even before performing test
installations on potential customer sites.
- Safety regulations must be met because the mobile vehicles will work
in warehouses together with human workers. These safety regulations are
different for different states in the U.S.
- The project team needs to be assembled. As the overall project is of
significant size and challenging in multiple dimensions, you need to
employ staff quickly and the team members you recruit need to start
contributing as soon as they are hired. On the other hand, as the
project is at the “idea level” at this point in time, it will take some
time before work can be assigned. Therefore, employing staff should be
- The project consists of two phases, work on which must continue on
an ongoing basis: Phase A) Research, Design and Development and Phase B)
Production. Although production will lag the first phase, the
infrastructure needs to be ready before production begins and therefore
production planning should start very early during the first phase.
- The management of and relationship with the suppliers of components
and subsystems needed in developing autonomous mobile vehicles (or
robots) and other technical systems is an important aspect of the
project. The autonomous mobile vehicles and other technical systems will
be designed in-house, but an estimated 100 suppliers will supply
necessary components even during the first phase. Moreover, production
needs to begin and the supply chain should be in place for production
needs by the end of Phase A.
- The project also involves some challenging research work. Dr. O’Neal
has background in research and has contacts in some best schools around
the world especially in the Republic of Ireland,
Italy, Germany, and California, and the
UK. However, a liaison function needs to be
developed to interface with the academics involved in the project.
- No company has been set up to undertake the project so far.
Therefore, all legal and administrative work to form a legal business is
also included in the project.
Acquisition Proposal: Jeff Hoffman discovered a
small company called Ryoichi in Tokyo, Japan, which undertakes contract
work. The company is comprised of 13 closely-knit engineers. Jeff
reported that the team at Ryoichi had the skills and expertise Sturata
Inc. needs to design autonomous mobile vehicles. Jeff knows a few people
from within Ryoichi. In fact, one of them was his student at a course
which he taught at UC Berkeley. Dr. O’Neal was also impressed by the
portfolio of contract work Ryoichi has delivered. He agreed that their
skills and expertise correspond to the needs of Sturata Inc. Jeff wants
to buy Ryoichi, using a mix of stock options and cash to finance the
purchase. Ryan instead wants to use Ryoichi as a contract company
because he is concerned about difficulties in communications (only five
people from Ryoichi speak fluent English), the entrepreneurial spirit of
that team, and the fact that the team members are very tightly knit
Assume that after discussions and negotiations mediated by you,
Sturata Inc. decided to acquire Ryoichi and use it as a design and
development centre. A formal offer is being prepared to acquire Ryoichi
for US$1.25 million 30/70 cash/options ratio (ratio of cash to the
underwritten value of stock options that a buying company offers to the
shareholders of the company being purchased). As a start-up company,
Sturata can only offer stock options and not marketable securities with
cash or other tangible assets. It was also agreed that the team will
look into the possibility of opening up a production centre in China.
This has further complicated the overall project.
Recent Developments: Each member of
the executive team spent 60 hours during the first week just to develop a
hiring plan and to engage recruiters. During the second week of
operations, a series of unfortunate events occurred. Ryoichi requested a
revision in the buyout offer to a 50/50 cash/options ratio. Jeff
Hoffman suffered a mild heart-attack and is currently hospitalised. Dr.
O’Neal had to take a leave of five days to travel to Ireland for the
funeral of his grandmother. These events have almost destroyed the
original start-up project plan you had designed. Things were changing
too fast and you found yourself under immense pressure to keep the
project on schedule. More than half of your project contingency buffer
has already been absorbed in a matter of just one week. There is no more
room for error, and obviously, you are under immense pressure.
In a conference call, the executive team emphasised that start-ups
are high-stress and high-stake undertakings and thought that there
should be a way to control leadership stress.
Final Project Requirements (Due at the end of Week 8):
Your project deliverables will include:
- An organisational design plan for the start-up showing its evolution over 10 months. Include the following in this plan:
- Your decision for the initial organisational form. What should the
organisational form look like as the project progresses towards
completion? Provide explanations to support your answer.
- An interface diagram to show interfaces between various teams and
units within the organisation and their interfaces with external
organisations and regulatory bodies. For each internal and external
interface, identify stakeholders. Describe what form of leadership
skills will be needed for interaction at these interfaces.
- Concrete activities and a plan to resolve the potential conflict between Jeff Hoffman and Dr. O’Neal about Ryoichi.
- Assessment of any behavioural issues with regard to Sturata Inc.
buying Ryoichi and whether you should put a structure in place so that
Ryoichi employees are assimilated cohesively within the new
organisation. Explain your answer.
- A plan to manage leadership and team member stress individually and
collectively. You need to research to find and the best ways to control
leadership stress. Your description for these should not exceed two
paragraphs. Your research should not be limited to the recommended text.
Explain how leaders can reduce stress for team members.
- A Code of Ethics for Sturata Inc. highlighting the value system the
organisation should embrace keeping in view its multi-cultural and
cross-functional nature. The code should include one short paragraph to
explain each of the following:
- General employee conduct in a multicultural environment
- Conflict of interest and post-work activities
- Recording organizational communications
- Relationship with suppliers
- Relationship with customers and partners
- Gifts, favours, and commissions
- Responsibility to society and environment
Glindinning. M. (2009) ‘Kiva robots save Zappos shoe leather’, Material Handling Wholesaler[Online]. Available from: http://www.mhwmag.com/article.cfm?id=27246&PageNum=1 (Accessed: 22 February 2009).
Please make sure that you cite and reference all your outside sources properly, as per the Harvard Referencing System.