Week 2 Assignment 1

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This case was prepared by R. William Reynolds (MBA ’07), and Robert D. Landel, the Henry E. McWane Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright © 2007 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to [email protected]. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

OPPORTUNITY CONSULTANTS, INC., 2007

The lackluster reputation of the student club Opportunity Consultants, Inc., (OCI) was beginning to concern the administration of the Darden Graduate Business School. The poor quality of the work produced by the club, which provided pro bono consulting services to local small businesses and nonprofits in Charlottesville, Virginia, was negatively impacting the school’s brand within the community. Unless rapid and sustainable initiatives to improve client satisfaction were implemented, the club was in danger of being disbanded. To avoid that undesirable result, OCI leadership enlisted the support of a select group of second-year students to help the club improve its performance.

The student “turnaround” team conducted multiple informal interviews with club members and analyzed the processes driving client acquisition, project selection, member recruiting, and project staffing, as well as the overall dynamics of project teams. The work of the turnaround team revealed several factors that it believed limited productivity and interfered with the quality of the work of the project teams. Based on these findings, the team proposed several initiatives that it thought would significantly improve client satisfaction and begin to turn OCI’s reputation around during the next year. Proposed Initiatives

Client acquisition and project selection

While advertising for clients drew a sizable number of applications, there were several drawbacks. For one, the year-to-year response rate was unpredictable. In addition, there was a frequent disconnect between the expectations of a potential client and the resources of the club. Many applications were rejected outright because of scope and feasibility, while others were discarded when it was obvious that the potential clients viewed OCI as a source of cheap, “worker-bee” labor. Increased advertising improved the number but not necessarily the quality of potential projects. Currently, OCI had accumulated $2,200 in its treasury. Next year’s treasury would consist of the money not spent this year plus the income from completed projects multiplied by the standard $300 fee; there was talk of changing the fee.

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The club credited a number of its applications to personal referrals from satisfied clients in the community and to its reputation. One referral from a satisfied influential client would often lead to numerous good referrals. Unfortunately, the reverse was also true, and dissatisfied clients had discouraged their peers from utilizing the club. Compared to the rapid turnaround in the performance of business clients served by OCI, improvement in the club’s reputation would take longer by several years as many former business clients now had new, satisfied owners who probably had neither knowledge nor need of OCI’s services.

Under the current process of client acquisition, only a low percentage of inquiries were considered for high-quality projects, and the large membership of the club required OCI to select a minimum number of projects. As limiting club membership was not an option, in many cases, projects deemed low in quality were selected. By accepting projects of poor quality, OCI was forced to assign unappealing projects to club members, with the result that the projects were a poor fit, adversely affecting not only the quality of the project work, but also the satisfaction of club members. It was a vicious circle that the club wanted to break.

The turnaround team believed it would be unwise for OCI to even consider breaking out of its current slump without first improving both the number and the quality of projects from which to choose, and the quality of projects from advertising and personal referrals would improve only after the club’s reputation had significantly improved. The team proposed two initiatives. The first involved using faculty connections for quality leads, as Darden faculty not only understood the capabilities of OCI, but also were connected to the local business community. The team believed that faculty should be encouraged to recommend projects of high quality that would fit OCI’s requirements. The downside was that faculty members had their own reputations to consider and were wary of referring business acquaintances to an organization with a reputation for poor delivery.

The second initiative required a proactive approach by club leaders, who considered actively soliciting Charlottesville businesses that had some personal appeal. They believed that this effort would not only yield projects of better quality, but also increase the attractiveness of and personal commitment to the targeted projects, which, in turn, would improve the productivity and motivation of project team members. But there was a catch. Cold-calling local companies needed to take place during August and September, months traditionally scheduled for recruiting new members. If club leaders continued the practice of targeted cold-calling, they would have to accept a trade-off owing to time constraints.

Member recruiting

Unlike other clubs, OCI had an extremely small window of opportunity in which to sign up new and returning members. Under the club’s timeline, all OCI projects had to be completed by the end of the school year, so staffing decisions were made by early October. Club membership was highly erratic as several factors had an effect on first-year recruiting. Often, prospective members’ conversations with former members impeded recruitment; it was a double- edged sword that could either increase or decrease the sign-up rate, depending on a former member’s experience during the previous year. Former members’ level of satisfaction with the

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OCI experience also directly influenced the second-year return rate as dissatisfied former members not only tended not to return but also encouraged others to do the same. Club leadership devoted a significant amount of effort and resources to recruit new members. Currently, all resources in September were dedicated to recruiting, and the turnaround team challenged the idea that it was the most efficient use of resources.

Offering course credit was the solution proposed year after year and was unlikely ever to be approved. The turnaround team believed it would be valuable to model, however, because of the insights into system dynamics that it might reveal.

Project staffing

Because it was club policy never to turn away members, the job of staffing projects required skill. The standard staffing level for a project was seven (six first-year students led by one second-year student). If there were not enough projects, however, staffing levels were raised significantly, which often had an adverse effect on productivity and member satisfaction. The only means of lowering the staffing levels was to accept more projects, but when the quality of the projects was low, this decision led to the same negative results. Although club leaders wanted to select only high-quality projects, they knew that, in the current situation, this initiative would create unacceptably high staffing levels.

OCI leaders were responsible for overseeing the projects, but because there were only five members on the leadership committee, their ability to provide effective supervision would be severely limited if the total number of projects grew, as more than two projects per leader was considered unwieldy.

Team dynamics

The turnaround team did not blame the low number of quality projects entirely for the poor quality of the project work. In deciding to challenge OCI’s long-held assumption that the most effective staffing model was six first-year students and one second-year student, the team had formed several conclusions.

The first concerned the assumption that returning second-year students made the best project leaders because they had work experience and would be effective leaders owing to their recent experience with OCI. Although the turnaround team generally agreed with this premise, it wondered whether that was part of the problem because the low quality of last year’s work and leadership example had resulted in team leaders with poor skill sets and expectations. In other words, were the policies of second-year students leading individual teams to worsen OCI’s rut?

Considering productivity to be as important as the quality of the work, the turnaround team focused on the ideal size for a project team, keeping in mind that the more members working on a project, the higher the scheduling conflicts, which was the greatest hindrance to productivity. But there was a limit to reducing the size of a project team. The turnaround team believed that fewer than four members on a project resulted in an overwhelming workload and

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damaged both motivation and productivity. The most revealing insight concerned the second- year students, who had different schedules than the first-year students. This difference dramatically increased scheduling conflicts, so in that respect, second-year students’ position as project leaders only exacerbated the situation.

Although motivation was hard to measure, first-year students appeared to be more motivated than their second-year leaders because they were interested in learning about the consulting experience and how to pad their résumés. And unless the second-year leader was attracted to a particular project, he or she often showed less motivation than the rest of the team. While this assessment usually applied, the overall motivation of the team fluctuated during the academic year. In general, the higher the team members perceived the quality and productivity of their work, the greater their morale. OCI suspected that offering course credit would improve the motivation of second-year students, but was hesitant to use this rationale as an argument for policy change.

Another idea considered by club members was whether to offer formal training in five sessions based on portions of the one-week Darden Consulting Process course. It was hoped that the training would improve the quality of OCI work, but finding enough time to fit in the five sessions would be difficult, and the turnaround team worried that the sessions would aggravate students’ scheduling conflicts. Simulation Model Development

After gathering the data and considering the various proposed initiatives, the turnaround team developed an interactive simulation model to help OCI leadership recognize how all the system variables interacted. The team ran a base case to show the slow, subtle cycle of decay within the organization and then proceeded to model several of the proposed initiatives. OCI leadership was then be able to understand to what extent the current cycle needed to be broken in order to set OCI on the path to a sustainable, high-quality level of performance. The model would help club leadership decide on the various operational policy changes to make at the start of a given year and other years by running the model over a series of four years. The goal was to find the best way to effect significant turnaround improvement and to devise sustainable policies for the long term.

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