Teradyne Corporation: the Jaguar Project - Case Study Example

1.1 What themes and issues were facing Teradyne in this case? With respect to project management and behavioral issues In the early 1990s, the CEO of Teradyne Corporation, Alex D’Arbeloff changed the way the company was conducting its operations through the introduction of a total quality management (TQM) program. The move came as a result of the impending loss in its competitive advantage; the loss is attributed to late deliverance of its product to the market, reliability problems and suffered quality (Gino and Pisano, 2006). Majority of the company’s processes were not under control like the basic operating processes. The processes’ performance was not measured and a systematic effort to improve the processes lacked. To counter the effect of these deficiencies, the company adopted TQM (total quality management); it contains a set of philosophies, practices, and principles that puts more emphasis on the improvement and continuous scrutiny of the company’s processes. The TQM was embedded in most of the company’s work aspect and results in some sections of the company improved significantly. The sections include customer service and manufacturing quality (Gino and Pisano, 2006). The CEO of Teradyne, D’Arbeloff had high hopes that once TQM was initiated, it would transform the engineering organization of Teradyne Corporation. TQM had no effect on the engineering projects; the projects were delivered late and there was the issue of over-budget. There was resistance from the engineers as they saw TQM as a violation to their freedom; of particular interest was the resistance of the structured approach to problem-solving as proposed by TQM. An initiative that was dubbed revolutionizing product development was launched under the leadership of Ed Rogas and an Engineering Process Improvement Team (EPIT). EPIT consisted of the senior engineering leadership of the company. The role of EPIT and Rogas was to develop and implement new approaches to product development at the Teradyne Corporation (Gino and Pisano, 2006). The company’s problems at the time fell into parts. The first problem was the overcommittment of the company’s engineering on projects; the capacity utilization was estimated to be over 300 percent. To solve the problem, company implemented Aggregate Project Planning (APP). APP was a rigorous and a more structured project planning process. The APP process was guided by two principles; (a) perform projects that were in line with the overall strategy of the organization, and (b) not to over-commit - the aim here was to begin projects when the resources are appropriate and adequate. The APP process required more behavioral change and discipline (Gino and Pisano, 2006). The second problem was the execution of the individual projects by Teradyne Corporation. The mode of project planning was very poor. The goals and the scope of the projects were not clearly defined and as a consequence, the projects were faced with expansion as the engineers and the marketers thought of adding more features. The project milestones were poorly defined and they often missed the target. Little rigor was applied in the putting up of the project schedule. The senior management found it very hard to intervene when a problem occurred because a systematic method for tracking the progress of the project was lacking. There was no one responsible for the entire project because the projects were under different individual engineering functions. Thus, quality problems and major delays were common specifically due to poor communication and coordination (Gino and Pisano, 2006). The Teradyne culture did not mandate the use of a particular tool. The mandate was left at the discretion of the managers and individual divisions to decide on which recommendations they were to follow. The approach created division in the company and even within the divisions as some accepted the approach and the others totally rejected them. This was attributed to the absence of behavioral change (Gino and Pisano, 2006). 2.2. Compare and Contrast Teradyne’s traditional project execution strategy to the approach it used in Jaguar Teradyne used to design a completely different test system for each of the semiconductor device (these devices include digital/logic, memory, mix-signal, analogy and others). The system was advantageous because it allowed the optimization of the tester design according to the requirements of the particular device. The organizational structure of Teradyne was based on different market segments. By mid-1990s, a need to have a tester platform that could test multiple forms of devices arose. The company did not succeed because of the complication and the cost of developing these tester platforms. The previous project management process had its own flexible tester projects in different locations that are in Agoura Hills and Boston. The start of the Jaguar project meant that the two teams had to merge. Behavioral issues still encompassed the previous and recent project execution strategy. For example, the merger still brought animosity between the groups as each group had their own suitable approach choices and thought their approach could win. Behavioral issues are a key similarity in both cases as the project team members are reluctant to accept any change brought by the management. A new approach to development process was adopted by the Jaguar project team. The approach involved spending more time than in the normal case in the early stages of development process that is in product planning and concept development. Other approaches used were; (a) clear identification of the customer’s requirements and commitment to the main product specifications, (b) identification of all the critical technical risks and the emergency plans for the management of those risks. The approaches were not used in the Teradyne’s traditional project execution strategy. The Jaguar team was more organized than the previous team. The team presented a 75 page presentation to the senior management. The presentation highlighted the proposed system design, architecture, functional specifications for the critical subsystems, project execution plan and the target performance specifications. The Jaguar team utilized the project management tools and processes. The project management tools and the processes were missing in the previous team. The tools and processes that were mostly used include; work breakdown structure, 3-point estimation, critical path analysis, and earned value analysis (Gino and Pisano, 2006). Project management involves the planning, coordinating and controlling of the complex and diverse activities of the modern commercial, industrial, IT and management change projects. The main aim of the project management is to predict any dangers and problems and to organize, plan and control activities so that the projects can be completed successfully despite the risks involved (Lock, 2007). The project team leader of Jaguar was a strong believer of the project management tools. He was of the opinion that these tools would assist in the communication of the project status to the management and assist in the identification of the important issues such as possible delays that required the intervention of the senior management (Gino and Pisano, 2006). This was not the case in the previous projects where monitoring and the use of project management tools were neglected. Project management is based on three parameters; time, quality, and cost. It is imperative to note that a successful project is one that has been completed on time or before the deadline, has attained a specific level of quality and it is within the limits of the budget (Haynes, 2002). The Jaguar team mainly focused on these three parameters but the previous team failed occasionally in one of the parameters. They could achieve quality at one time but delay in the delivering of the products to the market. 3.3. What impact did the project management tools have on the Jaguar project? Jaguar project introduced management tools that incorporated an element of operation shift traditionally carried out at Teradyne. Several management and operational impacts were therefore experienced at the Corporation, some of which can be mentioned as discussed below. One of the impacts felt at Teradyne was the coordination of distinct tasks in the line of operation at the Corporation. Through the creation of a work breakdown structure (WBS), the management was able to highlight the various pillars of production in terms of specific tasks. By providing such detail as would be necessary for an accurate task implementation, a clear demarcation was introduced in the production system. The Corporation was able to identify and specify detail regarding necessary project tasks. Perhaps, production was approached from a more clearly defined approach than before, where no information on task identification and detail is provided (Bower and Gilbert, 2005). The second project management tool that introduced change at Teradyne was the completion time estimation plan. Popularly known as the 3-Point Estimation System, the plan was embarked at Teradyne to facilitate project expediting plan. By incorporating such changes, the Corporation was able to set out a timeframe of project implementation and a scale of performance used to measure its time sensitivity. A three level scale system of gauging performance was used to estimate efficiency in implementing timeframe targets for the operation. Thirdly, by combining the results of the first two changes touching on task outlining as well as their timing, Teradyne was capable of introducing another project management tool. Identification of a critical path and its sensitivity on success was the most important connectivity that needed to be created to link the first two tools. Managing these initial tools enabled the identification of lead tasks that heavily guided the operation plan of the project. Critical path (CP) analysis enabled the Corporation to monitor the project at the most critical junctures that determined the stability of the entire operation. The fourth project implementation tool introduced at the Corporation was the earned value analysis. By introducing the tool, the management ensured that the operations of the project would be guided by some predetermined score. The impact of implementation of this tool in the project was facilitating some form of plan and order. Setting targets changed the entire management and operation tasks at the Corporation. Specifically, how did they change behavior? How did they influence performance? As a project management tool, task identification and description enables the organization to accurately depart from an ineffective routine without controversy or uncertainty, since the necessary detail is provided. Efficiency is likely to be enhanced since the entire operational process is identified and broken down into units where tasks are allocated. When monitoring the operation of the project, it is easy to refer to the various demarcated tasks for evaluation and analysis. Operational and management efficiency are therefore easily introduced. By adopting task breakdown system, Teradyne endorsed a plan to implement changes that would facilitate monitoring and evaluation of the project. This impacted in the general running of the project where more task specificity was introduced. Through the second tool, Teradyne was able to introduce time tracking system for each task as outlined in the task breakdown system. The highest efficiency score was dubbed best case, the average case dubbed expected time while the lowest score was designated as maximums or worst case. By facilitating such a program for the Corporation, the management was able to introduce time specific task implementation for better and fast results delivery. Time allocation for every task changed the production mindset of the Corporation. Critical Path Analysis at Teradyne introduced far reaching changes at the Corporation in that it defined the most sensitive operation stages that the management needed to take extra caution about. The fact that these critical path stages were based on the entire Corporations’ operation blueprint positioned presented the management team with a more representative approach. The impact of this tool would therefore ensure that the most important stages of production are not biased but based on the actual project logistics and outline. The fourth tool impact established a target specific operation. Behaviorally, the Corporation used the earned value analysis tool to embark on a change of operation setting since results were to be based on a strict predetermined plan. Performance would be focused on achievement of the predetermined scope. 4.4 What were the unintended consequences of using the project management tools? From the onset, the Corporation seems to be aware that some challenges would be encountered thereby created a separate program management department from the management team. This was perhaps in anticipation of the inevitability of the challenges that follow in the next discourse under this subtopic. The project management tools appeared to be contradictory and likely to duplicate roles and effort, which could impact negatively in conversion of input into results. While the project involved two modules touching on both hardware and software, it was difficult to demarcate tasks throughout the two modules. Hardware module needs some chronological order of progression and completion whereas software seems to be free of such physical difficulty. The first tool was therefore almost inapplicable across the two modules. Using Primavera, the Corporation was able to discover the critical path (CP) stages in the operation outline. The challenge presented in the commitment involved in not only in the internalizing of roles by all the players regarding their respective CP but also the commitment needed to overcome the sensitivity issues involved. Learning the intricacies of carrying out the 3 point estimates across the tasks was particularly necessary before implementing the tool across the stages. There was a common feeling that some of the inefficiencies experienced in the project were occasioned by general lack of operational knowledge from all sections of project staff. Besides some level of lack of knowledge for the project management tools implementation, handling of data was also problematic in some instances. Where the tools delivered useful data that could be used in realization of better performance, it was not expedited upon causing delayed benefits from the processing of the data. Some useful data was ignored in some cases resulting in devastating results. There was the fear of concentrating too much and over-relying on the project management tools restricted initiative and limited concentration of members. The members put a lot of emphasis on following the tools but failed to think about how faulty the systems could have been. Delays were experienced along the actual implementation, which called for flexibility of the management team. Several re-evaluation meetings had to be held in order to ensure that the delays in certain task areas did not materially affect the entire project schedule. Allocation and re-allocation of resources proved necessary along the implementation plan as well, in order to ensure that the lag areas did not suffer from resource deprivation (Bower and Gilbert, 2005). These processes seemed to be an extra and unplanned vigilance activity that could have been targeted elsewhere in terms of resources and time. What lessons should Teradyne take away from the Jaguar project? From the manner of operation of the Jaguar project at Teradyne, management lessons that future project ought to extract include; Envision a complete change of corporate culture for better practices (Xacia, 2008) Familiarize the implementation team with the intricacies of the tools Take data interpretation seriously just as processing it is Introduce a section of project leaders to identify blind compliance (WTS) Identify all the necessary tasks for the project Eliminate unnecessary tasks to avoid duplications (3 Point Estimation) Allocate reasonable time to tasks Define earliest possible and latest possible scenarios of time compliance (CP) Identify most sensitive tasks, both qualitatively and quantitatively Internalize the process such that adverse situations could be overcome by over-going or intensifying certain tasks (EV) Constantly review progress on a predetermined yardstick Set out three key progress evaluation parameters namely; Budgeted Cost of Work Schedule, Actual Cost of Work Performed, Budgeted Cost of Work Performed Find out the cost variance and schedule variance References Bower, J. L. & Gilbert, C. G. (2005) From resources allocation to strategy, Norfolk, UK: Oxford University Press Gino, F. & Pisano, G. (2006). Teradyne Corporation: the Jaguar project. Harvard Business School, 1-23. Haynes, M. E. (2002). Project management: Practical tools for success. Belmont, CA: Cengage Learning. Lock, D. (2007). Project management. Burlington, MA: Gower Publishing Ltd. Xacia, (2008) “Cultures and Groups: Teradyne,” Retrieved form: http://www.oppapers.com/essays/Teradyne/150396 Read More