FEBRUARY 19, 2010
CHRISTOPHER A. BARTLETT
Applied Research Technologies, Inc.:
Global Innovation’s Challenges
On June 5, 2006, Peter Vyas paced his office as he grappled with a request for $2 million to relaunch a mini water-oxidation product. Despite two failures to bring this product to market over the past three years, his team was confident this latest iteration was a winner. For Vyas, general manager of the Filtration Unit of Applied Research Technologies (ART), the request presented a major challenge. He recognized that his team had worked tirelessly to make this project a reality and strongly believed they were now headed in the right direction. But he also understood that the Filtration Unit’s track record of failure during this product’s development had hurt its credibility. If he supported the proposal, he knew he would be putting on the line not only his own personal credibility but also that of the entire unit. Due to the project's size, final approval would be made by Vyas’s boss, Cynthia Jackson—the newly appointed vice president of ART’s Water Management Division. Jackson was acutely aware of the mounting losses in the Filtration Unit, and she had already devoted a significant amount of time trying to get them back on track. She had confided to one of her colleagues: When I took on this assignment, I was told my first task was to “fix” the Filtration Unit. The unit only had one revenue-generating product line and had failed to bring a profitable new product to market in five years. It was clear that I was expected to either turn it around or shut it down.
I’m trying to protect them and ensure they get support, but my initial feeling is if they are to survive, they must become much more disciplined. They seem to be making progress on that front, but in all honesty, I sometimes wonder if it is time to cut our losses and initiate a harvest strategy for the unit.
________________________________________________________________________________________________________________ HBS Professor Christopher A. Bartlett and Heather Beckham prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration.
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4168 | Applied Research Technologies, Inc.: Global Innovation’s Challenges
Applied Research Technologies, Inc.
ART was one of the technology world’s emerging giants. The company had grown through the merger and acquisition of numerous technology-based industrial companies, acquired in the LBO buyout waves of the 1980s and 1990s.
By 2006, ART consisted of a portfolio of about 60 business units, each of which operated as a profit center. Total corporate revenue was $11 billion in 2006.1 Major divisions in the corporation included Healthcare (medical diagnostic equipment), Industrial Automation (robotics), Energy (extraction, conversion, and transportation solutions for the oil and gas industry-----including the Water Management Division), and HVAC (Heating Ventilation and Air Conditioning, including climate control solutions for residential, commercial, and industrial markets). Exhibit 1 shows the organization structure of the company....
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