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The paradoxicaltwin: Acme and Omega Electronics

In 1955, Technological Products of Erie, Pennsylvania was bought out by a Cleveland manufacturer. The Cleveland firm had no interest in the electronics division of Technological Products and subsequently sold to different investors two plants that manufactured printed circuit boards. One of the plants, located in nearby Waterford, Pennsylvania, was renamed Acme Electronics, and the other plant, within the city of Erie, was renamed Omega Electronics, Inc. Acme retained its original management and upgraded its general manager to president. Omega hired a new president, who had been a director of a large electronics research laboratory, and promoted several of the existing personnel within the plant. Acme and Omega often competed for the same contracts. As subcontractors, both firms benefited form the electronics boom of the early 1960s and both looked forward to future growth and expansion. Acme had annual sales of $10 million and employed 550 people. Omega had annual sales of $8 million and employed 480 people. Acme was consistently more effective than Omega and regularly achieved greater net profits, much to the chagrin of Omega’s management. Inside Acme

The president of Acme, John Tyler, credited his firm’s greater effectiveness to his managers’ ability to run a “tight ship”. He explained that he had retained the basic structure developed by Technological Products because it was most efficient for high-volume manufacture of printed circuits and their subsequent assembly. Tyler was confident that had the demand not been so great, its competitor would not have survived. “In fact,” he said, “we have been able to beat Omega regularly for the most profitable contracts, thereby increasing our profits.” Acme’s basic organisation structure is shown in Exhibit 1. People were generally satisfied with their work at Acme; however, some of the managers voiced the desire to have a little more latitude in their jobs. One manager characterised the president as a “one-man band”. He said, “whilst I respect John’s ability, there are times when I wish I had a little more information about what is going on.” Exhibit 1: Acme Electronics Organisation Chart President Vice President Marketing Vice President Operations Vice President Personnel Controller Plant Manager Production Industrial Engineering Drafting Mechanical Engineering Electrical Engineering Purchasing Shipping & Quality Control

Inside Omega
Omega’s president, Jim Rawls, did not believe in organisation charts. He felt that his organisation had departments similar to Acme’s, but he thought the plant was small enough that things such as organisation charts just put artificial barriers between specialists who should be working together. Written memos were not allowed, since, as Jim expressed it, “the plant is small enough that if people want to communicate, they can just drop by and talk things over.” Other members of Omega complained that too much time was wasted “filling in” people who could not contribute to the problem solving. As the head of the mechanical engineering department expressed it, “Jim spends too much of his time and mine making sure everyone understands what we’re doing and listening to suggestions.” A newer member of the industrial engineering department said, “When I first got here, I wasn’t sure what I was supposed to do. One day I worked with some mechanical engineers and the next day I helped the shipping department design some packing cartons. The first months on the job were hectic, but at least I got a real feel for what makes Omega tick.” Most decisions of any significance were made by the management team at Omega.

PART II: In 1966, the integrated circuits began to cut deeply into the demand for printed circuit boards. The integrated circuits (ICs), or “chips” were the first step into micro-miniaturisation in the electronics industry. Because the manufacturing process of ICs was a...
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