Question

Newskool Grooves is a transnational company that develops music software used to compose music, play recordings in clubs, and produce albums. Founder and CEO Gerd Finger is, understandably, the company’s biggest fan. “I started this company from nothing, from just me, my ideas, and my computer. I love music—love playing music, love writing programs for making music, love listening to music—and the money is nice, too.” Finger says he never wanted to work for someone else, to give away his ideas and let someone else profit from them. He wanted to keep control over them, and their image. “Newskool Grooves is always ahead of the pack. In this business, if you can’t keep up, you’re out. And we are the company everyone else must keep up with. Everyone knows when they get something from us, they’re getting only the best and the newest.”

The company headquarters are in Berlin, the nerve centre for the organization, where new products are developed and the organizational strategy is established. Newskool outsources a great deal of its coding work to programmers in Bangalore, India. Its marketing efforts are increasingly based in its Toronto offices. This division of labour is at least partially based on technical expertise and cost issues. The German team excels at design and production tasks. Because most of Newskool’s customers are English speakers, the Toronto office has been the best group to write ads and market products. The Bangalore offices are filled with outstanding programmers who don’t require the very high rates of compensation you would find in German or Canadian offices. The combination of high-tech software, rapid reorganization, and outsourcing makes Newskool the very definition of a virtual organization.

Finger also makes the final decision on all hiring for the company and places a heavy emphasis on independent work styles. “Why would I want to put my company in the hands of people I can’t count on?” he asks with a laugh. “They have to believe in what we’re doing here, really understand our direction and be able to go with it. I’m not the babysitter, I’m not the school master handing out homework. School time is over. This is the real world.”

The Work Culture

Employees want to work at Newskool Grooves because it’s cutting edge. Newskool’s core market is dance musicians and DJs—people who appreciate that while relatively expensive, Newskool is a very high-quality and innovative brand. Newskool sees itself as a trendsetter, and this strategy has tended to pay off. While competitors develop similar products and therefore need to continually lower their prices to compete with one another, Newskool has kept revenues high by creating completely new products that don’t face this type of price competition.

Unfortunately, computer piracy has eroded Newskool’s ability to make money with just software-based music tools, and it has had to move into the production of hardware, such as drum machines and amplifiers that incorporate its computer technology. Making this massive market change might be challenging for some companies, but for an organization that reinvents itself every two to three years like Newskool does, the bigger fight is a constant war against stagnation and rigidity.

The organization has a very decentralized structure. With only 115 employees, the original management philosophy of allowing all employees to participate in decision making and innovation is still the lifeblood of the company’s culture. One developer notes, “At Newskool, they want you to be part of the process. If you are a person who wants to do what you’re told at work, you’re in trouble. Most times, they can’t tell you what they want you to do next—they don’t even know what comes next! That’s why they hire employees who are creative, people who can try to make the next thing happen. It’s challenging, but a lot of us think it’s very much an exciting environment.”

The Virtual Environment

Because so much of the work can be performed on computers, Finger decided early to allow employees to work outside the office. The senior management in Berlin and Toronto are both quite happy with this arrangement. Because some marketing work does require face-to-face contact, the Toronto office has weekly in-person meetings. Employees who like Newskool are happiest when they can work through the night and sleep most of the day, firing up their computers to get work done at the drop of a hat. Project discussions often happen via social networking on the company’s intranet.

The Bangalore offices have been less eager to work with the virtual model. Managers say their computer programmers find working with so little structure rather uncomfortable. They are more used to the idea of a strong leadership structure and well-defined work processes. “When I started,” says one manager, “Gerd said getting in touch with him would be no problem, getting in touch with Toronto would be no problem. We’re small, we’re family, he said. Well, it is a problem. When I call Toronto, they say to wait until their meeting day. I can’t always wait until they decide to get together. I call Gerd—he says, ‘Figure it out.’ Then when I do, he says it isn’t right and we have to start again. If he just told me in the first place, we would have done it.”

Some recent events have also shaken up the company’s usual way of doing business. Developers in the Berlin office had a major communications breakdown about their hardware DJ controller, which required many hours of discussion to resolve. It seems that people who seldom met face to face had all made progress—but had moved in opposite directions. To test and design the company’s hardware products, employees apparently need to do more than send each other code; sometimes they need to collaborate face to face. Some spirited disagreements have been voiced within the organization about how to move forward in this new environment.

At the same time, the Toronto office was experiencing challenges in its ability to execute its marketing plans. According to Marketing Director Sandra Pelham, “Now that we were producing hardware—real instruments—we finally thought, ‘All right, this is something we can work with!’ We had a whole slate of musicians and DJs and producers to contact for endorsements, but Gerd said, ‘No way.’ He didn’t want customers who only cared that a celebrity liked us. He scrapped the whole campaign. He says we’re all about creativity and doing our own thing—until we don’t want to do things his way.”

Although the organization is not without problems, there is little question Newskool has been a standout success in the computer music software industry. While many companies are failing, Newskool is using its market power to push forward the next generation of electronic music-making tools. As Finger puts it, “Once the rest of the industry has gotten together and figured out how they’re all going to cope with change, they’ll look around and see that we’re already three miles ahead of them down the road to the future.”

Question

Select one problem and describe two separate alternatives to solving this issue. indicate which organizational behaviour concept or theory and state one aspect of this case surprised you the most?

Answer 1

While Newskool is a pioneer in its field of work it seems to have a one size fits all attitude where in it expects all its employees irrespective of their attitude and conditioning to follow the set values of newskool which is creativity. It has to understand that expecting all to be independent and creative in itself is bit autocratic and against the very idea of creativity.

Some of the outsourced offices like Bangalore is used to and expects a through leadership structure and are not comfortable with so less structure around. Similarly Berlin office is struggling with progress in different directions which is caused by very less face to face interactions among the employees. These caused a tangential movement in the wrong direction for the company. Toronto office is also faced with some marketing campaigning issues due to top management’s beliefs of how to proceed about the same.

These issues can be addressed with a model of satellite thought leadership /management different team placed at various outsourced shores who will be aboriginal employees and best performers. They will seat with the employees and understand their requirements and act on the same. The current idea of virtual workplace might not be a perfect fit for all employees and they will address this as well.

Here a Leader Participation Model can be followed – related leadership behavior and participation in decision making.

This, model basically argues that leaders have to adjust to each task be it normal, different, or whatever it may be.

Leadership Styles in the Vroom Leader Participation Model are;

Decide: Leader alone makes decisions and lets all know about the same.

Consult personally: Leader presents the problem to group members individually, gets their suggestions, and then makes the decision.

Here the local managers/leaders will listen to each and every employee personally and then a better workflow will be attained.

Consulting Group: Similarly a group of representative people from each office should be sitting with the top management for meetings and make decisions

Facilitate:

Here the leader will be facilitating the problem resolution in the group of people from the satellite offices.

Path-Goal Model –

Which states that it’s the leader’s job to assist his or her followers in attaining their goals and to provide the direction or support needed to ensure that their goals are compatible with the overall objectives of the group or organization?

This popular behavioral theory says that leader should assist his or her employees/followers to achieving their goals and provide correct direction to by setting compatible and attainable objectives/goals. Here it is very important for the outsourced model that newskool follows because of very low face to face interactions.

There are four House identified leadership behaviors which can be followed in this situation for newsskool

Directive leader: Gives a clear workflow and expectations to the sub ordinates on what is required from them. Also specific guidance is given to them

Supportive leader: shows empathy and supports to employees. Here handholding is required for the outsourced employees.

Participative leader: He/she will seat with groups and individual employees to understand their issues and level of involvement in the idea of the organization

Achievement-oriented leader: Will set challenging targets and goals for the leaders to perform at their best level.