Teradyne: Corporative Management of Disruptive Change

Case 1: Teradyne: Corporative Management of Disruptive Change

1. What is your assessment of the way Alex d'Arbeloff and his corporate associates managed the reluctance of his operating divisions to pursue the new technologies? Is this a failure by divisional marketing? Is there a problem with the planning and budgeting systems?

Teradyne's executive leadership managed the Aurora situation very well given the organization's cultural and structural characteristics. The reluctance of Alex d'Arbeloff's operating divisions were an integral part of Aurora's success. Engineers assigned to the project would have had to split their time between Aurora's disruptive technology and other projects which were sustaining technologies. The focus of Teradyne and its operating divisions was on pleasing current customers. The type of products sold were products the organization depended on repeat sales as well as updates to current systems that were already in place. Due to the dependence on current clients for future sales, the organization was customer driven. The operating divisions were producing quality products and making the company a lot of money. Customers were happy and so were the shareholders. Turning the Aurora division out onto its own allowed for barriers to be removed so the project could advance and grow. This is something it may not have been able to do under Teradyne's current management structure. Another important factor in Aurora's success is that many of the employees had been with the company for ten, twenty, or more years. Their vision and roles in the company are challenged plus the managers had become complacent and had become too close to their clients. Their attitude was: if something isn't broken, why fix it? Managers who had been with the company a long time had experienced previous failures and were reluctant to dedicate the time, money, and resources to the Aurora project. Upper management saw the emigration of engineers as a threat to the firm's core business. All of these factors help to explain the position of the operating managers and why the path chosen for Aurora was the right one. Marketing's purpose was in promoting incremental upgrades to clients' existing products. Marketing worked towards meeting customer's needs while building upon current products. Therefore, I feel that division marketing did not fail. The