LP762-L2 WEEK 7

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“John Smith and Lillyvanian Systems” Case Example

Lillyvanian Systems: Where Do We Go From Here?—Introduction

John Smith was drained. He had spent weeks trying to sift through his options before he met with his board of directors at the annual meeting and he was just not sure what to do. John was the Chief Executive Officer (CEO) of Lillyvanian Systems (also known simply as “LS”) a large multi-national corporation with 29 subsidiaries involved in operations in almost twice as many countries. John was the grandson of the founder of LS, Nathan Smith, and felt a very strong connection to the goals and mission of the company. While the company had been doing quite well financially in the past year there had been some major shifts in revenue generation that John felt had raised questions about the direction the company could, or should, be going next.

The “old timers” who had been at LS for years viewed some of these changes as quite positive and innovative, but other developments were viewed as a threat to the core identity of the company. While John had a family pedigree and connection to the company he had also worked his entire professional life in a series of different divisions of the company and had earned respect from others in the company. He was trained as a mechanical engineer and had worked in construction and equipment manufacturing at the start of his tenure at LS. He understood where LS had come from, what it was capable of doing, and now he was faced with a very challenging decision about where LS should go next.

Lillyvanian Systems: History and Company Development

“Lillyvanian Cables” had been the original name of the company when Nathan Smith, a mason and general contractor, had started the company back in Lillyvania (a small country in central Europe) in the late 1940s in the aftermath of World War II. First he had done some masonry renovation on damaged buildings and then just supplied cable and wire to local municipal departments when there was a need. Given his experience as a general contractor, and an ability to seemingly “solve any problem” his clients began asking him to expand his services, which is how he became a specialist in cables and electrical wiring in rebuilding efforts. Later, when he received the national contract for all of Lillyvania the company expanded its workforce and revenue considerably. Nathan was known as “very tough but fair” and he expected excellence from all of his workers. Lillyvanian Cables was seen as a very good place to work and workers gave it their all and when there was room for promotion Nathan always offered the position to an internal qualified worker first.

The need for cable and wire (and installation services) really took off as the country began to upgrade all electric and technological services and Nathan Smith saw that there was a need for additional services in public works projects. He, and his brother Alan Smith, created a new division of the company: “Lillyvanian Construction” designed to provide the workforce to dig the trenches, install the cables and also build up infrastructure (e.g., roads, utility poles, power switching stations). “Lillyvanian Cement and Concrete,” “Lillyvanian Construction Equipment Rental,” “Lillyvanian Manufacturing” (specializing in building of construction equipment), “Lillyvanian Payroll Services” (offering payroll service facilitation for construction projects in urban as well as in more isolated locations), and other divisions were all created later, as Nathan and Alan saw an opportunity for their company to continue to grow. This strategy was also designed to maximize profit margins as they continued to figure out how to create the products they needed for their operations directly and cut out the external suppliers, which allowed them to save money, keep costs low, and win bid after bid first in construction all over Lillyvania and later Western European countries with great success.

The official name of the umbrella company “Lillyvanian Cables” was not officially changed until 1963 but by then anyone familiar with the company knew it as it is currently named: “Lillyvanian Systems.” All Lillyvanian Systems projects, machines and branding promoted this name as well as the company’s logo, a stylized “LS” which is known around the world. LS culture continued to support internal promotions of qualified candidates when possible but rapid growth did result in hiring workers and managers from other companies by necessity. LS continued to have a strong reputation with workers in different parts of the world as a “hard but good place to work” and there was pride when someone was able to say they worked for LS. The growth in the company also led to elevated standards of living for those in the town of Gallifrey, in Northern Lillyvania, the location of the base of operations for LS. This growth and progress spread directly and indirectly into other areas of Lillyvanian society and LS was seen as a valued partner to Lillyvanian politicians, educators and business representatives.

By the time the Berlin Wall fell in 1989, Nathan and Alan were only peripherally involved with the day-to-day operations of Lillyvanian Systems and Nathan’s son (and John’s father), George Smith was running the company. He had foreseen the potential opportunities available to a construction and development company if it could get building and renovation contracts in Eastern Europe as the former Soviet Union began to break up and he worked hard to expand the company even further. LS also developed different divisions that specialized in building power plants, establishing light rail vehicle tracks and tram-systems, facilitating urban renewal planning and implementation projects, and even explored usages for alternative energies (solar and wind power) but with limited success. Gross revenues for LS in 1994 were double those of the company in 1980 (when George Smith had moved from the role of president to the role of CEO, and Nathan and Alan had moved on to the board of directors and retirement, respectively).

When George first became CEO, he clearly had a different management style from Nathan, and rather than known as “tough but fair” he was known as “just plain tough” by those under him. He held workers and managers to a very high standard and was quick to criticize but less open with his praise when things were going well. George was very focused on growth and profits and wanted LS to be “as successful as we can hope to be” but he still worked very hard to grow the company in an “organic manner,” exploring any and all options related to construction and urban planning. Despite his focus on profits, George did initially decline to explore opportunities which he felt were too “far afield from what we do” (e.g., travel industry, medical technologies) but as he became more comfortable in his role as CEO, and with the support of his board of directors, he did put in place a number of initiatives that were seen as risky at first but later paid off as the new divisions began to add great value to the larger company (see Exhibit 1 and Exhibit 2 for additional detail).

Lillyvanian Systems: John Smith

John Smith was born in 1965, the youngest of four children, and his father and mother (George and Kara Smith) raised all of their children to be “little problem solvers” and encouraged the children to face their challenges head on and not just step in to save them from some discomfort or frustration. According to his mother, John “was always getting into things and thank goodness George knew how to fix things because John was constantly breaking things in our house because he wanted to know how they worked.” John did well in school and after completing a compulsory three-year stint in the Lillyvanian Military (Corps of Engineers branch) he enrolled in the Gallifreyan Institute of Technology (founded by his grandfather and great uncle in 1962) where he earned his Bachelor’s of Science, and then his Master’s of Science, in Mechanical Engineering. John got along well with his classmates but was quite competitive and was proud to be chosen as class speaker based on his high marks and performance in school.

After John completed his graduate degree in 1991, he began working for LS Powerplant Construction in the engineering department. He liked this job very much and did well there but kept coming up with new ideas to make the machines they used more effective and more flexible for changes necessary for use in the field. After the 15th call from John about ideas he had for improvements, Michael Sheridan (then the head of the LS Manufacturing division) called back and said: “Listen, if you’re going to continue to have so many great ideas that leads to more and more work for me and my team, why don’t you just transfer over to work with us directly and we can both save a lot of time on the telephone?” John accepted the offer and put in for an internal transfer to LS Manufacturing. He worked there for two years and put in for 5 patents related to technologies that he developed. Profits in that division were very healthy and his supervisors gave him glowing comments about his contributions as a team player. He and Sheridan got along quite well and he appreciated the advice given from his boss, including his comments at John’s second yearly evaluation:

“John, you know I think you are great and I’m exceptionally pleased with your work here. You are smart, a hard worker, and you are not a pain in the ass, which is one of your most winning traits. In fact, you could spend the rest of your career here and I would be thrilled because you would keep making me look good each time you invent something that helps us make more money, but I think you should not just stick around and do what you are already good at—you need to learn what you might not even know you are not good at and then see if you can do that too. If you can, find the thing that scares you the most and see if you can face it. If you can’t, you can’t, but at least you will have tried. Don’t avoid challenges, seek them out, it makes for a much more interesting life.”

John Smith took Sheridan’s advice and after exploring available open positions within the company he applied for, and was accepted to, a position in the urban planning department of the LS Urban Planning, Design & Consultation subdivision of the LS Consulting, Sales & Marketing division. The main focus of the position was liaison work with governmental representatives involved in urban planning developments and John later said about his time there:

“I learned a lot but I hated it. Meetings, meetings, and more meetings. We used to joke with each other about whether the next meeting was a ‘real meeting’ or a ‘fake meeting’ in terms of whether anything would, or could, actually get accomplished. It was not for me. I needed to be creating something and missed getting my hands on my machines. That’s why I transferred to rental (Lillyvanian Construction Equipment Rental, a subdivision of LS Service Industries)—I still had to work with people and get better at the politics side of things but at least I was helping internal and external clients get their hands on our beautiful equipment. LS was created to build things. You can’t build things with a bunch of meetings—at the end of the day you still need a good earth mover or a back hoe.”

John did quite well in the new division after he transferred to work for Lillyvanian Construction Equipment Rental. He greatly valued loyalty and support and worked hard to maintain his relationships with other workers and supervisors he knew in the other divisions and this made his job go much more smoothly. Lanier Garibaldi was his new boss and while they sometimes “butted heads” due to Garibaldi thinking Smith was rushing at times or had not gathered all of the “right data” for the most part they got along well but it was not as close relationship as John had developed with Sheridan. John did not say this in frustration or in a passive-aggressive way, he just missed working with Sheridan who had been a close mentor (and had also been very responsive to John’s suggestions). John was often heard talking about how things could be run more efficiently if there were better planning and communication across divisions and across subdivisions at the company, always in the context of how to improve return on investment (ROI) and “improve the bottom line.” He felt one reason for limitations or frustrations at LS was linked to a lack of fluidity to get new information or new changes put in place, especially in subdivisions in which he found there were many LS managers who had only worked in one department for their entire careers.

John kept Michael Sheridan’s advice in his head and sought out challenges where he could find them, tried to identify different stakeholders, and then attempted to bring about collaborative resolution to the problem when possible. If he did not understand a problem he would seek out the person who could explain it to him, regardless of their title, role, or years of experience at the company. His specific department was well run and posted record profits based primarily on increased efficiencies and also expanded business revenues from external clients. He was promoted to a vice president role in the Service Industries division in 1996 and continued to receive high marks from supervisors, co-workers, and his supervisees spoke highly of him as well but one also joked that: “You better be focused and know what you’re talking about when you go in to see John or he’ll figure out your job better than you and then send you off with an even bigger pile of work.” John developed a reputation as someone who cared deeply about accomplishing his own tasks, and would also help others solve their challenges, but not for personal glory as much as for efficiency and because, as John would often say when someone thanked him for his help: “Hey, that’s what we do—we solve problems every day, there just doesn’t need to be so much drama.” John Smith did exceptionally well during his time in the LS Service Industries division and was viewed as a “rising star” in the company.

Lillyvanian Systems: The 2000+ Committee

From 1995 to 2007 LS continued to expand considerably on an international scale. While building and construction efforts were always the core business and revenue generators for LS, at the turn of the century the company began to expand into many different areas including fiber optics, work crew clothing and shoe manufacturing and distribution, financial and credit operations (initially specializing in municipal construction project financing but later expanded into other credit and loan projects), and web based consulting projects, among others. As mentioned above, John Smith had trained and worked in every division at the company in the 1990’s (Construction; Manufacturing; Consulting, Sales & Marketing; and Service Industries, See Exhibit 1 for more detailed information) but as he moved up the corporate ladder he felt the company was not organized in a way that made sense for optimal future development but was rather still “too tied to the way this company used to be, not the way it can be.” As international Vice President of LS Service Industries in 1999 (promoted to the position following the retirement of his boss, Lanier Garibaldi), John began to speak at length with his new direct supervisor, Malcolm Reynolds (LS President at the time), and later, at Reynolds’ suggestion, to the CEO, George Smith, about restructuring the company. (Despite the family connection, John had never “gone over the head” of any supervisor to gain his father’s support but rather said: “If I’m talking to the CEO at work I want to have earned my place in that room.”) John put together a formal proposal for Reynolds, George Smith, and the board of directors, and he was given the chance to create, coordinate, and lead the LS “2000 and Beyond” team. Efforts were to be reported directly to Reynolds who would then present on this (and other committee initiatives underway in the company) to George Smith as deemed appropriate.

The “2000 and Beyond” committee was made up of LS Vice Presidents and managers but also created subcommittees and ad hoc groups tasked with specific assignments that involved front line LS employees (e.g., engineers in the construction division, mechanics from manufacturing, human resources representatives, security operatives, sales and marketing representatives). When asked about the efficiency of a process involving so many people rather than “just picking leaders” and “getting the job done,” John would talk at length about his belief that “if we do not ask everyone at LS about where LS could be going we are just wasting resources—does that seem like a good idea to you?” He also was heard to say: “If anyone, and I mean anyone, has a good idea for this company then I want us (the committee) to hear about it.” John was well liked and well respected by those on his committee, just as he had been perceived in the Service Industries division. John was someone who believed in “giving everything you’ve got to everything you do” and he threw himself into the project.

John worked very hard to run both the “2000+ Team” (as it became known) and still meet all of his Service division responsibilities. After 1 year of this workload John was feeling physically exhausted and emotionally “burned out” and he spoke with Malcolm about perhaps “handing off this committee to someone who could do a better job for the company’s future.” He did not want to give up the “2000+ Team” but he knew the Services division was not having its best year and he felt some of the problems there were due to his splitting his attention and he felt he needed “to go back and get my own house in order.” John was preparing to hand off his leadership on the committee to his assistant chair, Hoban Washburne, but he was surprised when Malcolm reported back to him that George had declined his request to leave the “2000+ Team.” John’s efforts had been recognized, as had his willingness to set aside his own interests for the good of the company, and instead of approving John’s offer to step aside and go back to his former role, he was offered the opportunity to step aside from his Service division role and just focus on the company’s restructuring plan in a newly created “Executive Vice President of Strategic Planning” role. John was shocked by this offer but, after thinking about it and consulting with his family, he chose to “take the plunge and put it all on the line.” In talking with his wife he had expressed concerns that if he failed in the new role (his first non-revenue producing role at the company) he would only have his ideas to support him “and not my revenue streams, which have always been easy to generate” but he realized that he was genuinely excited by the chance to put his ideas related to the future of LS to the test.

John accepted the offer and in late-2000 he became Lillyvanian Systems’ youngest Executive Vice President and while he still technically reported to Malcolm Reynolds it was understood that he would also have a direct line to George. He was also expected to “produce some darn results” and “stop with all of that data gathering” per George’s directives. Finally able to focus solely on “2000+” (as it was now known) John began to be even more aggressive in seeking out new ideas and possibilities from anywhere in the company. While he met with a few external consultants early in the process John was heard to say afterwards: “So let me get this straight, they want to charge us to come in and talk to our people to find out what we think about how to make us better and stronger in the future? Hell, why do we need them? We can do that ourselves but only if we really listen. To everyone who wants to have a voice. Ok, let’s get going, but remember: Results, results, results.” John did find a close ally in the human resources division of the LS Payroll Services division, Zoe Serra, who was very good at connecting with people and he relied heavily on her, and Washburne, to help him gather “the right people with the right ideas.” By early 2001 the “2000+” made a series of presentations in each of the divisions in the company and refined their recommendations.

In 2001 there were 17 different subdivisions under the four LS divisions that included: Construction; Manufacturing; Consulting, Sales & Marketing; and Service Industries. Key in the recommendations of the “2000+” were restructuring suggestions that changed the division structure that had been in place since 1977 at LS and suggested the creation of six new formal divisions (with international and local subdivisions, as needed) that would now include (see Exhibit 1 for more detail):

*Leadership and Planning

*Manufacturing

*Service Industries

*Financial Services

*Lifestyle Brands

*Technologies

Many of the new subdivisions under the six recommended divisions were pre-existing but the placement, and reporting structure, for some could be seen as quite different as things had been done in the past. The goal for every change (and for later recommendations for new areas of exploration) was based on the belief that: “Redundancy is waste and that does not help anyone and it certainly does not foster creativity and growth.” Every division, subdivision, and even role, in the company was viewed at some point, by someone involved in the process, with John’s:

The “Three Questions Test”:

1. “Can redundancy be reduced?”

2. “ Can creativity be fostered?”

3. “Is there opportunity for growth?”

All of the recommendations from the “2000+” were based on following the data, responses, goals and values of this test which, in turn, was designed to help Lillyvanian Systems grow and flourish in the next century. Most of the recommendations were viewed positively but the one area that was viewed with great skepticism by Reynolds, George Smith, and the board of directors, was the creation of a “Lifestyle Brands” division to which George Smith responded in a loud manner during the presentation: “What the hell is that? That is just not what we do!” The original presentation showed this new division as only having two subdivisions: Work clothes and Shoes and it visually did not seem to fit in with the other divisions. John (and his team) had prepared for this likely challenge and then produced data that showed the LS logo and LS “image” actually had obtained cachet and value in areas no one at the company had originally intended. This surprisingly included an interest, internationally, in LS branded clothing. LS had spent many years involved in building and changing the world via construction and related projects, and had employed so many local laborers to do so, while still holding on to the original values set out by Nathan and Alan Smith. For a large multi-national corporation LS had an unusual but positive reputation as a supportive community partner and as a place that made people’s lives better (as the LS marketing slogan in the 1970’s and early 1980’s had said: “LS—We make your life better”, see Exhibit 3 for more detail). The company was viewed in a positive light by many people who were glad to be hired by the company and other people also wanted to be associated with the company in any way possible and one way that this was done was by wearing LS clothing.

The “2000+” presentation demonstrated that while LS Clothing & Shoe, located in the Manufacturing division, had never been viewed by Lillyvanian Systems as anything other than a way to provide the company’s international workforce with sturdy and inexpensive clothing to “get the job done”, this subdivision had actually experienced 1000% growth in the prior 5 years. They had sold 10 times the clothing the LS workforce had actually been projected to need (including all cold weather and warm weather projects) and when the representatives of the “2000+” explored this further they found that the subdivision had been having trouble keeping up with non-employee orders (something originally explored as an afterthought) and for every sale over what had been originally projected the profit-margin expanded by 15-23%, depending on the country of sale. Two internationally known hip hop rappers (a role that John had a bit of trouble explaining to George) had gotten their start, and supported their families, with construction jobs at LS subsidiaries and they continued to wear the clothing they had used for so many years. Orders and sales for LS branded clothing and work boots (of the type worn by the singers) by youth-culture focused clothing chains had actually experienced a 5000% growth in just the past year. With absolutely no advertising, marketing, or additional product development costs, this little division of LS had shown enormous growth potential and John and his “2000+” team felt that this could possibly represent a major revenue generator for LS but as it was “so outside of what we have done” it was recommended that a new division be created to allow for organic growth and development of the concept. The plan was not to stop with just clothing and shoes in this division but to explore any and all possibilities that could build on LS as a possible “lifestyle-consistent” product generator.

George Smith had been dismissive of the idea at the outset but by the end of the presentation he responded: “ I have no idea why the hell those kids would want to wear our coveralls and boots but with the numbers you just showed me I don’t really care, AS LONG AS IT DOES NOT HURT THIS COMPANY, ok—Making money is great but remember, above all, you need to make sure that you never hurt this company--Ok?!” After this the “2000+” completed their presentation and George Smith, Malcolm Reynolds, and the LS Board of Directors met to consider all of the committee’s recommendations.

Lillyvanian Systems: 2002-Present

With minor suggestions for changes the majority of the suggestions in John Smith’s proposal representing the hard work of the originally named “2000 and Beyond Committee” were approved and a major overhaul of the company’s structure was put in place. The work of the “2000+” was seen as incredibly important, successful, and John Smith was seen as someone who could “get the job done” and also as someone who “cares what other people think.” The “2000+” committee now became the “LS Future Transition Committee” and was given the mandate to work to make the transition to the new division structure a successful one. Each of the key members of the committee either stayed involved directly and received a formal title and role reflecting the transition (and were given international, across company responsibilities) or received a promotion within the division they had come from or in a new division that had just been created. Zoe Serra was elevated to the role of Executive Vice President in charge of the new LS Lifestyle Brands division and Hoban Washburne was elevated to the role of Executive Vice President of Transitional Change (a new position, directly linked to the transition) and it was announced that Malcolm Reynolds had been tapped to take on the CEO role of LS after George Smith announced his plans to retire in late 2002. John Smith was offered, and accepted, the role of President of Lillyvanian Systems that Reynolds was vacating.

John Smith asked to remain involved in the LS Future Transition Committee as key organizational changes were put in place, voluntarily delaying his move to the presidency briefly “because I have been involved from the start and I really wanted to see it through.” As he began to see that Washburne was piloting the changes successfully, John Smith took on his new role as President of Lillyvanian Systems. Over the course of 2002 Lillyvanian Systems officially put all of the structural division changes in place and there was a mandate from top management directly involved in the transition (e.g., Reynolds, John Smith, and Washburne) to not layoff any employee from a redundant subdivision if at all possible. He or she might lose their role in a specific part of the company but not a job at LS itself, and any LS employee who expressed an interest in retraining or transferring was given the opportunity. Not all employees responded positively to the changes and there were fledgling efforts to create union groups at those divisions (unions had never gained a foothold in the past due to employees being satisfied with LS treatment and having employee/management communication systems in place at all levels of the company) generated by outside union organizers. Nothing came of these efforts and the vast majority of LS employees directly affected by the changes reported that the number one reason they felt “pretty much ok with all of the change, which I guess surprised even me” (a comment from a LS Security Services employee, but echoed by a great number of other employees) was “ thanks to all of the great communication” from the management about changes as they happened (and as much in advance as possible). Despite a few internal “bumps in the road” the transition plan was quite successful and LS began to make small but important changes in strategy, growth and expansion on an international scale.

John Smith did quite well in the role of President of Lillyvanian Systems from 2002 to 2007, with his primary focus being on the transition to the new division structure and coordinating communication and strategy between each of the division leaders who reported directly to him. In 2007 Malcolm Reynolds chose to retire earlier than expected due to health reasons linked to an war-wound sustained earlier in his life and he made the obvious recommendation to the board of directors that John Smith be elevated to the Chief Executive Officer position at LS. The role was offered and John accepted. Zoe Serra, who had grown LS Lifestyle Brands into a division on par with the other LS divisions in terms of financial stability and revenue generation, was asked to be the new President at LS and she accepted. After successfully shepherding the LS transition, and additional growth-related projects for the next few years, Washburne had taken early retirement, choosing to be more of a “leaf on the wind” than stay tied to the company but he had left on good terms and would come back in a consulting role to “help out as long as you don’t get sick of me.” John Smith knew that he could rely on Washburne to fill in or consult for short periods at a time but also understood that he was not willing to be a long-term solution and that was still comforting to know he had someone he could trust and rely on to fill in when necessary.

John Smith also became much more interested in the LS Lifestyle Brands and LS Technologies divisions and was very supportive when Serra (and later her successor at Lifestyle Brands, Derrial Book) or Jayne Cobb (the Executive Vice President of the LS Technologies division) made proposals for growth or expansion opportunities. The LS Manufacturing division was still the number one revenue producer for LS, as it had been since the formation of the company, but not by as much of a margin as in the past and the profit margins (and return on investment, or ROI) were not as great as in the new divisions. The LS Financial Services division had shown great gains from 2002 to 2007 but in 2008, impacted by significant economic concerns in the United States (and “ripple effects” in non-US based markets), there were great losses, which took a number of years to recover from and get back to pre-2008 numbers. The only subdivision doing slow but steady numbers in Financial Services during that time period was LS Financial (Africa) based in part on their focus on micro-loans and sustainable investments supported by co-investment opportunities with non-governmental organizations (NGOs) and other LS divisions doing work in those areas.

The advent of web-based technologies and access to technology led to losses in the LS Service Industries subdivision of payroll services but this same situation also led to even bigger gains in the LS Technologies subdivision of LS Web Consulting. Because of communication that John Smith and Zoe Serra fostered in the management team, LS as a larger system was able to see the “big picture” and see that a loss in one area might actually be connected to a larger gain somewhere else. He did begin to put evaluation systems in place before any new endeavors, taken from the “2000+” experiences, and asked all division (and key subdivision) leaders to answer the modified “Three Questions Test,” now known as the Five Questions Test:

The “Five Questions Test”

1. “Are we the best or second best in this area?”

2. “Is creativity being fostered in this area?”

3. “Where is the opportunity for growth?”

4. “Is there redundancy that can be reduced?”

5. “Are we goal-aligned with LS values in this area?”

Answers to the Five Questions Test were evaluated very closely when considering any new projects, renovations, or concerns about a division’s results were raised. All leaders at LS knew that if they could not answer these questions to Serra’s and John Smith’s satisfaction their new project would be frozen and other projects might be brought up for evaluation and review as well. The culture at LS was still one of excellence and hard work was greatly valued, but everyone was also held accountable for what they could bring next to the growth and improvement of the company. There was a joke among management that “What have you done for us lately?” was actually the unwritten sixth question on the Five Questions Test.

Lillyvanian Systems: Where Do We Go From Here? (The Big Questions for John Smith)

Overall, things for Lillyvanian Systems, and for CEO John Smith had gone quite well from the time he took over leadership of the company. He had developed strong and positive relationships with his board of directors, with his management team, and with key governmental and business partners. As growth in the LS Lifestyle Brands and in the LS Technologies divisions grew John Smith kept wondering about whether there were even more opportunities that would help LS grow, opportunities that “we have just not thought about yet.” This thought pattern was engaged when he approved the development of LS Liquor and Spirits the year before as an experimental subdivision and the profit margins were quite strong. It was also in evidence when LS Technologies put forth proposals to develop “LS Future Space” and “LS Innovations,” two subdivisions focused on research and development, without a clear mandate for two years. LS employees who worked at those subdivisions were encouraged to “think so outside the box you don’t even remember what a box is” and the division made a major investment in hiring the best creative innovators from within the company and also made efforts to “raid” top-level creative leaders from other companies around the world. These “creative incubators” were starting to develop applications for the marketplace but practical implementation of project proposals recently given to John Smith were clearly going to take a major influx of monies, and Smith had to decide how this would impact the rest of the company in both the present and in the long-term. LS Future Space and LS Innovations both had unproven track records, both offered proposals that were very high risk, but they also could prove to be the “next big things” in the worlds of high tech applications (commercial and consumer-based) and “could really be game changers that could take LS into the next century.” John realized that what had started as an intent to find new ideas for use at LS could have actually created the new ideas that changed LS.

John felt that making the right decision could be possibly lead to a success on the scale of the invention of the IPhone, and its subsequent impact on Apple Computers, and an incorrect decision could be potentially catastrophic given the investment of capital to actually realize the plans and bring them to market. Given the intense competition to succeed in the fields these projects touched on, Smith was also very well aware that if he chose not to act in a timely fashion another company, or companies, might “ get there before us” and reduce the ability of LS to succeed in these areas. He was also concerned that even if each project was realized and was as financially successful as he thought they might be, there might be such a change in how Lillyvanian Systems was viewed that it could change the identity of the company that his grandfather had started. John was extremely concerned with being goal-aligned with the goals and mission of LS and despite increasing revenue generation across the board since taking over as CEO he was concerned with his actions impacting the very core identity of the company, which could have unexpected repercussions internally and externally. These were the questions facing John Smith as he prepared to meet with his board of directors and present his recommendations for the future direction of Lillyvanian Systems.

As John sat in his office reviewing all of the data and considering his options, he remembered the words Michael Sheridan, his former mentor, sadly now deceased, had said to him years earlier at the start of John’s professional career:

“You should not just stick around and do what you are already good at—you need to learn what you might not even know you are not good at and then see if you can do that too.

If you can, find the thing that scares you the most and see if you can face it. If you can’t, you can’t, but at least you will have tried. Don’t avoid challenges, seek them out, it makes for a much more interesting life.”

John also thought about George Smith’s clear directive after the “2000+” proposal had been made to the former CEO:

“ Making money is great but remember, above all, you need to make sure that you never hurt this company--Ok?!”

Both of these memories were in the forefront of John Smith’s thoughts as he contemplated what to say to the board of directors. He expressed this to his consultant by saying:

“Of course I want challenges and I want to continue to build an interesting life for myself, but now as CEO I am also responsible for the life of LS and every single person who works for LS everywhere in the world.

It’s not about me—it’s about everyone in the entire company. With these new ideas, from our new “think tank” programs, I think we could make a major impact, and also make an incredible amount of money—but how do I know if that will or won’t hurt the company?

What am I supposed to do now?”