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A Classic Case:  Launching the New Model "Epsilon" Automobile

This case is set in the automobile industry. It is about how a major manufacturer periodically takes each of its established models and redesigns the whole thing to create a new version. In this case it took three years;  a thousand engineers and other specialists worked together to re-design and re-engineer every part of that car. Every sub-system must function correctly with the others and the whole thing must be designed so that it can be produced efficiently AND so that car buyers will love it. Every car launch is an epic challenge in collaboration. The leaders of this launch team set out to radically improve the traditional launch process by applying the tools and thinking of organizational learning with the help of the Senge group at the MIT Center for Org. Learning. The process was documented as a "learning history" by George Roth and Art Kleiner.

This is the “Epsilon” new car design and launchproject at "AutoCo" one of the major US-based automobile producers. I use the pseudonyms "AutoCo" and "Epsilon" in compliance with the agreements of the original researchers (Roth et al., 2000). It was a three-year OT initiative in collaboration with the former Center for

Organizational Learning at MIT (OLC). The mission of the Center was to test the ideas presented

in The Fifth Discipline (Peter Senge, 1990). Epsilon (and several other change projects at

AutoCo) developed out of earlier presentations on systems thinking and organizational learning

given to automobile executives at this manufacturer. My sources for this case include several

interviews with the two leaders of the Epsilon program (Fred Simon and Nick Zeniuk) in addition to the learning history by Roth and Kleiner.

The Epsilon case is a sterling success story for the efficacy of applying learning-based

leadership, systems thinking and other methods of the Grow approach to improve the process of

managing a new car design and launch. Throughout the industry, these launches were typically late,

often over budget, and always a nightmare of last-minute fixes and catch-up efforts, with a

significant number  of essential parts being late. In the last weeks many engineers would be

working all-nighters, trying frantically to fix late-appearing problems and creating new problems

for their colleagues in other areas of the car (Walton, 1997). But not this time. Epsilon’s launch

was not just on time but a week early; under budget by $30 million; and lacking the usual

pandemonium and distress. The launch was a glorious "non-event", close to an average working day!

What contributing factors should get the major credit for these results? A broad package of

organizational learning methods should probably be credited, with special credit going to the

change in behavior by the two Epsilon project leaders who worked to create a climate of more

openness to employees’ ideas, more participation in planning and problem solving, with more

emphasis on learning together and less of the blaming and bullying by senior managers, that had

previously been common (Walton, 1997). In other words, they were practicing learning-based

leadership, a core element in the Grow approach. Managers continued to set major project goals

but within those goals they now encouraged workers (mostly engineers) to take more initiative,

to be more open about their difficulties so that help could be provided earlier, and to participate

more in key design decisions, using more of their talents.

From the start of this project a "core learning team" was formed with the ten senior Epsilon

managers, two internal OD staff, and several staff from MIT (researchers/consultants), which

met every month or two for nine months. They conducted joint assessment and diagnosis on

team working issues and began learning (applying) basic tools of organizational learning.

Members of this leadership group first engaged themselves in some serious learning, before

asking the rest of the staff to learn and change. To develop the learning agenda several members

of the core learning team. interviewed other program employees about their "greatest challenges

and strengths".

 

Later the core team used the same method to study "why are we always late?" (i.e. behind project deadlines). Working together they created a systems map of many factors, which led them to discovering the point of leverage. It was the fact that engineers having a problem with their component would not report this until very late, which caused other related work to be delayed, unnecessarily compounding the problem. Had the problem been revealed earlier, others could have helped to speed up the solution (since most issues involved several areas anyway) and prevented the escalation effect.

Concealing problems in one's own area was a consistent pattern. The team considered why

this happened, concluding that it was a combination of "engineering culture" (don't report any

problem until you know the solution) and a company culture in which reporting a problem

without a solution was held against you in performance appraisals, rewards, and reputation. The

Epsilon core team wanted to change that and they realized that it would require establishing trust

among the program staff that "bearing bad tidings would be safe". This required other supporting

beliefs and values, for example that cooperation for the good of the whole program was more

important than some individuals being embarrassed because their work was not going well right

now. Clearly the Epsilon team was creating a culture very different from the traditional one at

AutoCo.

These insights that opened the door to attitude and behavior change were developed first

among the core learning team, over many meetings, including a two-day off-site "learning lab".

Several similar learning labs were held for a total of one-third of the entire staff and many

briefings and discussions were held with all of them. Much of the curriculum was concerned

with communications and with changing the norms of communication. The greater openness and

honesty in work team communication allowed managers to drop much of the paperwork and

formal reporting they previously used to “control” the workforce. This produced more work

satisfaction and less stress. It was more efficient and enabled them to produce the recordbreaking

launch results.

Describing these changes several years later the Epsilon Launch Manager (number two

manager) explained as follows.

[At the start] we had a very formalistic organizational structure around the teams…

My responsibility was to control all aspects of the program. And have everyone report to

me, to tell me how they were doing and where they were going - including engineering

releases and all that… And what happened is we changed those structures… We allowed

the teams to self-organize themselves around their work. We allowed the teams to quit

doing the formalistic kind of reporting and had them actually tell us what kind of

measurables they really needed and what they needed to know. In other words, we really

let go and the natural processes evolved tremendously. And I worked very carefully with

[program manager] and the other managers to make sure that we were beginning to behave

as we were espousing. Basically, walking our talk.

(Tape recorded interview with Nick Zeniuk, August 2, 1999.)

REF.  

George Roth and Art Kleiner, CAR LAUNCH: The Human Side of Managing Change. NY: Oxford, 2000.