The first four recommendations I made for turning around Autodesk in Information Letter 14 implied reorganising the company around product line profit centres rather than overhead functions such as Development, Marketing, and Sales (see page). The management response to Information Letter 14 began with a top-to-bottom reorganisation of the company into ``business units'' focused around principal product lines. Unfortunately, management's response to Information Letter 14 basically ended with the reorganisation. On June 16, 1991, Marc Stiegler, who had served as the chief architect of the reorganisation, laid it all out in a paper titled ``The New Autodesk,'' accompanied by a 39 page booklet of organisation charts. Reading between the lines with the benefit of hindsight, one can see how this plan contained the seeds of its undoing. The U.S. domestic sales department and all the overseas territories remained independent of the product organisations (due to intense lobbying by the managers affected). The product organisations still could not, therefore, shift the attention of the sales organisation away from easy AutoCAD revenue onto emerging products and markets. The structure also reinforced the passivity of senior management, removing it one level further from a position of overall leadership and instituting an ``Executive Review Board,'' whose major function was to adjudicate squabbles between subordinate organisations, not to plot the grand strategy of the company and see that it was implemented, as senior executives are supposed to do.
Overall, the organisation Marc proposed was not inherently flawed and was certainly an improvement over the ``Old Autodesk.'' The reality was, though few people had yet realised it--certainly not me--that no structural change in the company could turn Autodesk around without a change in the way senior management led the company, or a change in personnel at the top. With the right people, it could have worked. With the wrong people, it was foredoomed.
The creation of the Americas territory in December 1991 returned many of the marketing functions to a central overhead organisation, effectively undoing the essence of this reorganisation.
``Now it's time to consider whether Autodesk has become stuck in the past; whether it's time for Autodesk to change and how. The changes may be unpleasant to contemplate and difficult to carry out, but they may be just as necessary and, if successfully made, as rewarding.''-- John Walker, Information Letter #14
There never has been, and probably never will be, a ``best'' organization for a company with hundreds of employees. There are only organizations which are better for a particular company for a particular period of time. The restructuring along product lines proposed here is intended to serve Autodesk better during the coming decade would simple growth-by-accretion on the current structure.
This document describes a framework for product line oriented structures, as well as a proposal for how the framework could accommodate the new Autodesk. It starts by discussing four problems that the new structure might solve; continues with the goals of the restructuring; and then goes on to discuss the organizational components of the new structure and the functions of the people in it. The document ends with a set of questions and answers; some of the answers duplicate material in the document, but they also help explain why the proposed restructuring might successfully solve additional problems.
Some people may agree with the idea of moving to a product-line structure simply because John Walker proposed it in Information Letter #14. Some people may agree simply because this organizational structure has served other companies, such as Microsoft, so well. Some people may never agree with it until it proves that it works. For most people, however, the key question may well be, ``Why does a product-line structure work so well for companies like Microsoft, and why would it be better for Autodesk?''
To partially answer this complex question, I list here several current and near-term corporate problems that a product-line structure could solve.
Currently, virtually every department in the company is an overhead center, from programming to technical writing to marketing to manufacturing. Eventually, all such arrangements breed inefficiency. When swift shipment and low cost are of secondary importance, as they are in overhead centers, the entire department's focus slowly shifts from doing the job quickly and effectively to doing it perfectly, with decreasing regard for how long it takes or how much it costs. Worse yet, the meaning of ``perfectly'' also shifts, away from a customer's definition to one that reflects the priorities of the overhead center.
This is not an indictment of the people who make sincere efforts to make the system work--it is an indictment of the system itself. The Federal Government is the shining example of this: there are many excellent people who work grueling hours in the government yet cannot point to any worthwhile national achievement. Over the long run, such an overhead operation is the breeding ground for slowly deteriorating effectiveness.
At Autodesk, the Tech budget for FY 92 is 43% larger than Tech costs were in FY 91. Yet it is difficult to determine where the money went. No one can look at Tech and identify a 43% growth in productivity or effectiveness. On the contrary, almost every product seems to take longer to deliver than ever. One can look at each project and explain why it's having problems; one can also look at each expenditure and say why it hasn't paid off with more products yet. But if one does this for every project and every expenditure, one winds up suspecting that there may be a forest behind all those trees.
By moving more activities from overhead centers into product lines with direct profit-and-loss responsibility, we redefine success and failure in customers' terms--the most effective way of consistently leading and winning in any marketplace. Even if we believe that such a redefinition is not needed today, it seems likely that it will be critical to our success in coming years.
With the current structure, neither the success nor failure of any product can be credited to anyone. This has peculiar ramifications in the case of failure: suppose the manager of a software development project hires such a large staff for a project that, when the product ships, it does not generate enough revenue to pay for the staff. The marketing people are not to blame: they sold the product well and brought in lots of money. From their point of view, they succeeded. Meanwhile, from the software manager's point of view, he/she also succeeded: the product shipped on time, with all the features customers could want.
Certainly, the software manager and the marketing people wanted the product to succeed overall; they are sincerely interested in the company's success. But when push comes to shove, they also must consider first that part of the puzzle for which they are responsible. Here, every individual was a success, yet the company failed.
By moving responsibility for profit and loss into the hands of a product manager whose total focus is the total success of the product, we ensure that someone takes credit for its success...or its failure.
Arranging to do an AutoCAD port to a new platform (even to ``just another UNIX Box'') requires a tremendous amount of consensus-building. The VP of Marketing cannot initiate a port on his own--he needs the support of the VP of Tech. Similarly, the VP of Tech cannot initiate this action on his own either--if the VP of Marketing won't support selling it, it hardly makes sense. The lowest level person in the company with all the authority needed to do a simple port is the President.
By giving the AutoCAD family a general manager with authority to initiate marketing and development, we eliminate one or two levels of management overhead. Achieving a consensus of many participants will remain important, but giving GMs authority eliminates many potential decision-making bottlenecks.
This is a very important improvement, since decisions need to be responsive to rapidly changing market conditions. Breaking out the AutoCAD family into multiple products, each with individual profit-and-loss responsibility, could reduce even more management overhead for many decisions. By making product managers responsible for profit and loss, we give them a better yardstick for success than any higher manager could supply. (And, at the same time, we get higher management out of the role of trying to act like market forces themselves).
Microsoft's multi-year product plans have been lauded for their excellence. What does it take to do this kind of planning?
First, it takes both marketing and technical people, standing toe to toe, figuring out what the product means. It takes a leader who is totally focused on the long-term, overall success of the product. And it takes incentives for the leader and the marketing and technical people to put it all together into a plan. The product manager is the leader: in the product-line structure, he or she has the resources needed to develop a plan; the negotiation with the Executive Review Board over development and profitability targets (described below) is one of the incentives to develop it.
Editor: John Walker