Stone Finch, Inc. Young Division, Old Division Case Solution

To judge Jim Billings’ leadership within the organization, it should also be taken into account that the current business of the company – Water Products – had passed through the maturity phase of product lifecycle, and without Jim Billings contribution, the business of Stone Finch is anticipated to generate low profitability. Openness to communication is yet another positive aspect of the leadership of Billings. The case states that Jim Billings had set up an online discussion forum which greatly facilitated the culture of freedom of expression and openness of communication within Stone Finch.

In terms of innovativeness of ideas, Jim Fillings have proved to be a highly innovative leader for he came up with the ground breaking idea of setting up the subsidiaries within the organization. There is no earlier precept of such a ground-breaking idea being implemented in the corporate environment. The credit of the success of establishing a completely unusual business model goes to Jim Fillings.

My assessment of Jim Fillings performance as the president of Stone Finch is also partly negative on certain areas where he became complacent or overlooked critical details. Firstly, organizational structure introduced by Jim Billings created an unfair work environment. This leadership initiative of Jim Fillings led to creation of resentment of organizational members in the Water Productions Division who have been working in the division for decades and were considered senior in the organization. Even though, Jim Fillings introduced a completely new organizational structure, he failed to construct trust among the employees of the company that could have made Stone Finch stronger. Rather, this oversight made the organization weaker due to resignation of key performers.

2. How do you assess the entrepreneurial subsidiary concept? How can companies manage the contradictions of managing existing products and innovation simultaneously?

Entrepreneurial subsidiary concept is an innovative concept which does not have any inherent problem with it. The only issue with the concept is the execution. Entrepreneurial subsidiary concept demands that it should implemented in a way that the existing workforce and managerial level staff often company should not be imparted a sense of injustice or being discriminated against. The incentives and pay system offered to the employees should be equitable and an equal opportunity should be given to all to join the fast-track growth path of new product development or to stick with the old business model.

Companies can manage the contradiction of managing existing products and innovation simultaneously by inculcating the culture of innovation, ownership of the organization and risk-taking throughout the organization rather than isolating these features in separate subsidiaries. The advantage of the second approach is that all employees of the company become a participant in company’s growth and it tends to motivate rather than de-motivate employees, as it occurred in Stone Finch’s case. The company can communicate to its employees that they can allocate twenty percent of their daily time for nurturing specific projects and will be allowed to work full time on the project once its viability is evinced. 

3. What are the major problems Jim Billings now faces? How quickly he should act? Why?

Jim Billings is facing a number of key problems at present, which makes it necessary for him to act quickly. Firstly, management of the disagreements and apprehensions among the employees of the company, and direct confrontation between the manufacturing and service division’s demands urgent attention of Jim Billings. This is also a chief problem for Billings because valuable human resource is leaving the organization due to the issue. The task of eliminating communication gap with the apprehenders of the new system and to create an understanding with individuals in the organization is also essential. Formation of a level work environment for all workers of the company is also highly essential step for the business.

After taking care of the immediate and urgent problems mentioned above, Jim Billings faces long-term issues of attracting energetic, entrepreneurial talent to Stone Finch, Inc., which comprises an older division that fabricates products like piping and tanks for water and wastewater processing plants, and a much newer division that develops biochemical solutions associated with water purification. Also, Jim Billings will have to find the way for financing the new division because at present much of the investment in the subsidiaries has come from the old manufacturing-based cash cow division, which is now suffering from turnover, loss of morale, and loss of competitive position. The reward system within the organization also needs to be made equitable because the solutions division is plagued by increasing polarization between the "haves" and the "have-nots." This entails that Jim will have to examine resource allocations and have to suggest an inequitable rewards system which directly affects employee motivation and culture. Overall, the problem faced by Jim Billings is to balance an innovation strategy with ongoing operations using an ambidextrous structural design.