Leadership 7th Edition by Andrew DuBrin, Ann Fisher, Andrew DuBrin

Exercise 14

Manchester Foods is a large food manufacturer and processor consisting of twenty-one divisions. Many of these divisions are smaller companies purchased in recent years. The executive office, headed by Gerry Ambrose, recently decided to establish a centralized new product development group whose responsibility it would be to develop new food products. Ambrose explained to the group:
"The time has arrived for Manchester to copy what a few successful major food companies are already doing. Effective September 1 of this year, we are establishing our own centralized newproduct development group. Following the model of many high-tech companies, the unit will be located offsite. The executive office has chosen Maria Sanchez for this key assignment. Maria was a successful entrepreneur who created Tornado Tacos. Starting in her mother's kitchen, she built a national distribution for her product in three years. We bought Tornado Tacos for its growth and profitability. More importantly, we bought the talent of Maria.
"Tornado Tacos will be headed by Andres Morales while Maria is on indefinite assignment as the manager of the new-product development group. Maria will begin with six imaginative staff members. She and her group can have as much budget as they need as long as it looks like they are on the path to developing successful products."
At this point in Gerry's presentation, Garth Laidlaw, division head of Tiger Pet Foods, waves his hand. "We need clarification, Gerry. You mention that the new group will be funded as long as it looks like it is about to develop successful products. Developing a successful new product is a risky business. About 90 percent of new-product ideas never make it to marketplace. And about half of the 10 percent that do arrive on the market fail within one year."
"I'm aware of these dismal statistics," said Gerry. "But without a push on new product development, Manchester Foods is doomed to stagnation and mediocrity. Let's move forward toward a successful new-product development group. And let us all wish Maria the best of luck."
Three months after the new group was established, Maria received a visit from Gerry who said, "Maria, I get the impression that there is a lot of activity going on here, but it does not seem to be focused activity. Could you give me an update?"
"Gerry, it's premature to expect results. We have been set off company premises so we can proceed at our own pace. This is not a crash program. Don't forget, I had been working in the food business for three years before I thought of the idea for Tornado Tacos."
"It's true that we are not expecting immediate results from the new product group, but you are pretty well funded. Could you please give me a hint about any new product idea you have developed so far?"
Maria answered, "Actually, we are excited about one new idea. It's a form of instant fish called Sudden Seafood. The busy and health-conscious professional will love it. You add boiling water to pulverized seafood, and you get a mashed-potato like substance that is actually tasty seafood. We would certainly be the first on the market."
"Revolting," responded Gerry. "I would definitely turn thumbs down on Manchester investing money to market instant fish. Maybe you should interest our Tiger Pet Foods division in that idea. It could be used when travelling with cats."
Three months later, Gerry revisited Maria at the new-product development site. He said, "I'm just doing an informal check again. What new product idea is your group toying with these days?"
"I think that we have a real winner on the drawing board," said Maria. "The world is sick of wimpy soft drinks that have no real flavor, no gusto, and no boost to the psyche. We have been experimenting with a raspberry-flavored soft drink that has four times the caffeine and three times the sugar of anything on the market, even the energy drinks. Its tentative name is Razzle Razzberry. It's destined to be a winner."
"Hold on Maria. You're running counter culture. Except for energy drinks, the world is moving away from heavy soft drinks toward noncarbonated beverages. You're suggesting a beverage that is practically a narcotic. It sounds like the new-product group might be getting carried away."
"Gerry, it's too bad that you don't like this promising idea. Maybe I could meet with you and the other members of the executive office to discuss the mission of the new-product development group. I don't feel that things are going right."
"It sounds to me like you're getting a little touchy," said Gerry.
How do constraints on creativity enter into this case?