Shugart In the early 1980s Shugart was the leading maker of disk
drives. One of its major divisions was producing products that, for
the most part, had reached the mature stage. Eager once again to
have a product that it perceived to be exciting and new, the firm
invested heavily in what it perceived would be a high-volume,
highly profitable project. Unfortunately for Shugart’s managers,
the project, dubbed Project Golden, encountered serious technical
difficulties. About a year and a half into the project, the
controller and vice president for finance at Shugart proposed
terminating the project. However, they were unsuccessful. Here is
the controller’s description of the situation. The V.P. of Finance
and I presented an economic justification for eliminating this
product in August of 1982. We felt very strongly about it. We
presented the analysis at the Executive Staff Meeting. The V.P. of
the Division immediately championed the product and signed up for
lower costs. He also argued the asset recovery issue. I find that
if any champion is willing to stick up for a project, then the
financial analysis is rejected. Personalities are very important
around here. The vice president for another Shugart division
described his view about losing projects. You can make a program
look any way you want on paper for Business Plans. Another problem
is that nobody wants to destroy the P&L. I really believe it’s
true that we are very risk taking with negative outcomes. Project
Golden was eventually terminated in August 1983, when costs were
well over target and competitors had captured what market there
was. The vice president for the division that ran Project Golden
made the following comments: We lacked enforced milestones,
reviews, and plans. Our business review meetings are not “meat and
potatoes.” You can’t have a “meat and potatoes” meeting with thirty
people. We should have progress reviews, and if need be force
Marketing to stop taking orders and force Manufacturing to stop
producing until the problems are resolved. One problem we have is
frequent management turnover. Nobody ends up responsible for the
problems at the project level. Case Analysis Questions A Shugart
vice president made a remark about being risk taking with negative
outcomes Discuss this remark in the context of the concepts described in
the chapter. Discuss the comments made by the vice president for the division
that ran Project Golden in the context of group process.