OB MiniCase : Culture and Performance

SWISSTRADE Watchmaker

Swisstrad is a watchmaking company specialized in the production of watches

in the middle price range. Established in 1865, it was one of the jewels of the
Swiss economy. Famous for its know-how, as well as the quality and precision
of its watches, Swisstrad was the leader in the market. Marc Frey, the
company’s newly elected CEO, has just taken over from his father, Olivier. In
front of him, on his desk, is an article published in Fortune, the American
business magazine eagerly read by all managers. This article dates back to
1972. However, all Swisstrad Department heads still have a copy of it in their
drawers.

Olivier Frey, the then CEO of Swisstrad, was a much sought-after Managing
Director. The company’s world-wide success was attributed to his own
personal approach based on discipline and the attention paid to even minor
details. The article states: “People buy our watches because they know that
with our product there is no risk of having defects. Our watches are never
slow. They are 100% reliable. Besides, their classic look makes them a long-
term investment. When you buy one of our watches you surely pay a higher
price than for those made by our competitors but there is no doubt you will
be wearing it for many years. You are making an investment, not simply
buying an item . . .. Working with our company is a proof that one is serious
about his work,” he adds. “All companies want to hire our employees,
because they know that they are the best-qualified employees in this industry
and also because they are eager to do things well. Their work relies on
precision and passion. All departments, not just production, pay equally
attention to details and abide by very strict quality standards. When our
managers have a meeting in order to make a decision, everything always
goes smoothly. There never is any conflict between our departments. The
only criterion applied in order to know if a decision is good or not is to
confront it with our credo: does it guarantee the best quality and highest
possible reliability to our clientele? Have all details been taken into
consideration? If the answer to this question is a double yes, then everybody
becomes a client. We don’t have any other secret. That is why we are number
one. And, believe me, we notice the same state of mind even among our
cleaning ladies. Even for them, paying attention to detail is the basic rule.
Take a look around you. Would you have anything to say about the
cleanliness of the premises? Isn’t everything nice and orderly? I’m sure you
wouldn’t have anything to say about it. It may seem to be all very simple but
it actually is the result of a sound management based on the principles it
preaches.”

Marc Frey understands that it is precisely this state of mind that is the source
of his present and main problem. The world itself has changed since that
article was written. The watchmaking industry, at least as regards the middle
price range, is completely different now. Electronic watches have replaced
manual ones. Therefore, precision is no longer guaranteed by human beings
but by machines. A watch is no longer a classic product, it has become a
 OB MiniCase : Culture and Performance

fashionable item. Clients buy on average one every six months. This new
trend implies that watchmakers have to create at least 20 different models a
year (instead of 2 every five years). Taking the time to do things well is no
longer a trump card, it is a brake on the production. Since adapting to fashion
has become a must, then you cannot take your time to do things well.
Nowadays, a good manager is someone who knows how to take risks, an
employee has to be creative and a designer is the most precious capital a
company may have. In short, everything that used to make Swisstrad the
leader in its field is exactly what is now jeopardizing the entire future of the
company.

Marc was wondering if he would be able to change this state of mind. How
could he convince his managers that they now had to abandon their long-time
principles and adopt new ones? How could he explain that a decision can no
longer be based on quality and reliability (which now is a fact) but rather on
originality, innovation and an ability to listen to the clientele’s wishes? How
could he encourage his marketing managers to better understand what the
market is looking for? How could he tell all these managers – so proud to
belong to this company and convinced that they are the key to its success –
that now discipline is no longer the name of the game but that watch
designers and marketing managers are undoubtedly holding the key positions
within their company?

Assignment:
Using the relevant theories from the articles by Sorensen and Flamholtz,
please analyze the consequences that the organization’s culture has had on
the firm’s performance in the past, as well as the effect it currently has.

You should not only prepare appropriate tables, but also write a one page
analysis to this question.

You must bring both the tables and your one page essay to class.