Emerald Group Publishing Limited
Copyright © 2000, MCB UP Limited
Empowerment gives fluke the scope for growth
Empowerment gives fluke the scope for growth
Fluke, a manufacturer of military testing equipment, faced a business downturn with the end of the cold war. But it made structured use of team creativity to find and develop new market opportunities.
Focus on the marketplace
A company which relied heavily on military contracts for sales of its test and measurement products identified a dramatic way of finding new business opportunities when the end of the cold war threatened future growth.
US-based Fluke Corporation used team creativity to find and develop new market opportunities - and the careers of the participants. The method, known as the phoenix process, also helped to bring about a culture change and new ways of doing things.
Most high-technology specialists tend to focus on the product rather than broad trends among consumers. Fluke urges its teams to focus on understanding the marketplace.
The teams are also urged to concentrate on corporate objectives. Teams get their broad objectives right from the top - often from Fluke's chief executive. This ensures that each team understands what its charter is and what process it is involved in.
The formation of a team takes around two weeks. Volunteers for the early teams tended to be people in transition and those with professional difficulties. The high flyers, in contrast, already had stable positions and career paths. This turned out to be no bad thing. The teams concentrate on innovation, so people who appear to be performing poorly can get newly energized and become top performers again.
Team membership is cross-functional. Established expertise is avoided, since this can get in the way of the search for new areas. Coming up with new business opportunities is a process of learning, and knowledge can be the enemy of learning. The key traits are a willingness to experiment, curiosity, a desire to learn and mental flexibility.
There are between four and eight people on each Fluke team. Teams are made up of complementary personality types. There is room for:
amiable people, keen to maintain relationships, who are useful when there is conflict;
analytical people who enjoy processing information;
task-orientated people who wish to push things forward; and
expressive people with lots of ideas.
Role of the team manager
Each team has a manager who keeps the process moving and on schedule. He or she should be good with structure and have previous management experience. He or she must also be able to cope with the emotional ups and downs of the team as a whole, and be able to play a role in resolving the conflicts which inevitably arise.
Fluke teams choose their own name, mascot and rituals. The teams also have their own work room where team rules are posted on a wall to remind members what they have signed up to. Communication and information-sharing systems are established to promote interaction with the rest of the company. Teams establish a project plan, milestones and reporting system from the start.
Three stages of implementation
Each team works full time on a proposal for months. Team members are asked to go through three stages:
Initial case. Each team is given 100 days and $100,000 to spend as it likes on researching the market and customer segments within it. The team then reports on that and creates from it a spectrum of opportunities which it communicates to senior management. This allows senior managers to suggest concentrating on a particular area, or to ask further questions about which areas the team favors and why.
Business case. The business case follows the decision about which areas to focus on. It sets out how Fluke should go about taking advantage of a specific market opportunity. This is the first time that specific products are considered.
Implementation plan. The implementation plan tends to focus less on how the project will be implemented, and more on the type of results expected. This means that most of the team eventually becomes involved in the execution - which is a big reward for the people involved.
The entire process gives people the chance to reconstruct their careers. For example, an accountant may move into marketing, a marketer into sales and a salesperson into management. These opportunities help to fuel team members' enthusiasm and dynamism.
The part played by creativity
Creativity plays the role of catalyst in defining how a team will frame the business opportunity; how it will segment the market and customer groups; how it will interpret customer needs; what product concepts it should develop; what competitive strategies it should devise; how it should interpret long-term trends; and how it should use resources. Creativity involves connecting ideas in new ways, or turning bad ideas into good ones.
Fluke uses exercises called "creativity excursions". Team members paraphrase what someone else has been saying and, if they disagree with the idea, suggest improvements. When creativity dries up, teams are encouraged to discuss questions far removed from the main focus of their work - such as why the sky is blue or why the flame from a struck match rises. Team members are encouraged to express their ideas as a wish, in order to limit the self-censoring process which may otherwise come into play. Teams are also encouraged to celebrate and have fun.
The phoenix process in action
Fluke has used the phoenix process four times.
In 1992, to find an opportunity in the data-communications market which fitted Fluke's mission statement and strategy. The result, which included one acquisition, was test-tools business with sales of more than $50 million.
In 1996, to find an opportunity which would yield up to $100 million in three years and be focussed on the local-area network (LAN)-to-LAN wide-area network (WAN) installation and maintenance. The result was one acquisition and a family of new products introduced in 1998.
In 1997, to find opportunities for Fluke to provide services in the LAN market. The result was the creation of a new business with the goal that at least 15 percent of Fluke's overall revenues would come from these services within three years.
Also in 1997, to find opportunities in high-speed data communications and Internet markets for installation and maintenance tools, with a goal of sales of at least $100 million in three years.
Fluke frames an opportunity for its teams, gives them some direction, tells them to jump and then empowers them. Once the objectives are established, a team is largely free to go about its business without interference.
This is a précis of an article entitled "The phoenix process at Fluke Corporation", which was originally published in Business Strategy Review, Vol. 10 No. 1, 1999. The author was Joe Martins, business development manager, Fluke Corporation, Everett, Washington State, USA.