Growing Pains

Executive summary

Cyrus Maher, CEO of Waterway Industries, catches a telephone conversation as passing by the office of Lee Carter, director of marketing. It points to the assumption that Lee may think of leaving the company for a better position and pay. That means the company a trouble, since having joined Waterway right after her MBA graduation, she revived the marketing and sales, not only in the core canoe making but also in its newly launched, high-impact kayak business. Unprecedented growth, steadily increasing sales, brand awareness and reputation that the company can be eventually grateful for this talent lady.

Well aware of that, Maher intends to explore what’s behind, what could lead to this position.

Cyrus Maher is facing several problems within his organization because several employees have been asking for better salary conditions. Among these employees there is the director of the Marketing Department, Lee Carter, who seems to be receiving a proposal for a better package. Maher faces the dilemma to change or not her salary conditions, with all the implications of such a decision.

What problems could Maher identify?

Maher was wondering on the prevailing informal work style of his staff, in contrast to the formally born Marketing Department represented by Lee Carter, the new director. He found a cultural contradiction here.

Further investigating, Maher considered ongoing material issues within the company: the lucrative packages that similar businesses can provide for top managers somewhat differed from theirs; Upon his conversation with his business partner, he needed to reconsider his reward system.

Maher faced confronted himself when applying for a credit line extension at his bank, namely, the outstanding sales figures are accompanied by the same movement in related expenses. He concluded that a well established performance measurement could eliminate the misaligned strategies.

Lastly, Moher considered the top management as catalysts of the company, how they could contribute to the situation arised. When he explored the fact that could lead to this situation, he admitted that various measures should have been taken on corporate level as well.

1. Waterway’s Culture

Problem Statement

In our opinion, Waterway’s culture is also a problem that Maher should have in consideration. He assumed the “informal work style” that rules inside the company, as a positive characteristic for the working environment. Probably, this easygoing culture was appropriate during the first steps of the business, but now the company is growing at a fast peace, and a more organized work style should be followed, in order to guarantee that Waterway is serving its customers needs in an efficient way. Should Mahler consider a change in the company’s culture?

Another important problem is presented at the end of the case, when Maher says that he “never thought until now that the cutting edge was where he wanted Waterway to be”. If the CEO of the company doesn’t know what he wants to do, we can infer that the company is not following any kind of strategy (if it really exists!). As we are going to develop later in this report, a company that don’t have a strategy will also have problems in defining its “personality” - its culture, or will have a culture that reflects the lack of orientation towards the future. Shouldn’t the CEO have a clear strategy for the company?

Analysis of the problem (with possible solutions)

As we said at the beginning of this analysis, the problem of the culture is also related with the problem of the lack of strategy. Along the case, there are significant evidences that the company was more like floating on the sea, than on the edge of the front wave. It was only because of the “insistence of a Friend that Mahler decided to venture into kayaks. (…) “Until 1990, Waterway’s sales and revenues had increased with the market, and Maher hadn’t been motivated to push any harder (…) …there had never been a formal, structured marketing department in Waterway.”

These citations from the case support our assumption that company is not being managed in order to maximize the value creation that the business can offer. They also illustrate the complete lack of corporate strategy that we have identified before. A company without strategy is like a company without future, especially to people like Carter, which normally need challenging projects and strategies to maintain their motivation (as Maher recognized:”…she would leave when the kayak boom eventually played out.”).