Managing Segway's Early Development
9-804-065
REV: SEPTEMBER 15, 2004
RICHARD G. HAMERMESH DAVID KIRON
Managing Segway's Early Development
It was a cold dreary morning on December 20, 1999 as Dean Kamen – inventor, founder and owner of DEKA, a Manchester, New Hampshire R&D company – began his annual speech to his employees. The entire staff had gathered “to hear him talk about the past year, the year ahead, and whatever else had been gnawing at him lately. The speech was usually equal parts lecture, oration, pep talk, and homily, all of it seasoned with wisecracks. After the speech, Dean always called each employee’s name and gave out Christmas bonus checks, along with handshakes for the men and hugs for the women.”1[77] Bonuses were especially important at DEKA, where engineers worked for below-market salaries and received no stock options. Now Kamen was wondering if he could continue this approach. DEKA had attracted some of the brightest engineers because of Kamen’s allure and DEKA’s cutting edge projects. But for the first time, recruitment and retention were becoming issues. In the midst of the Internet boom, many of the most attractive engineering candidates were looking for positions that offered compensation packages that included stock options and salaries higher than what Kamen was willing to offer. Kamen’s long-time friend and most trusted lieutenant, Mike Ambrogi, had recently accepted a job at Sycamore Networks, which had offered Ambrogi a lucrative compensation package that included stock options. In 1999, DEKA had a difficult year, several projects were canceled or behind schedule, and many of the gathered staff had concerns that these cancellations and delays would diminish, if not eliminate, their bonuses. DEKA employees were also concerned about stock options, which had been promised only to employees on a secret project that many had never seen. Kamen had created a separate company within DEKA to design and manufacture a product that the team had nicknamed “Ginger.”2 Kamen
REV: SEPTEMBER 15, 2004
RICHARD G. HAMERMESH DAVID KIRON
Managing Segway's Early Development
It was a cold dreary morning on December 20, 1999 as Dean Kamen – inventor, founder and owner of DEKA, a Manchester, New Hampshire R&D company – began his annual speech to his employees. The entire staff had gathered “to hear him talk about the past year, the year ahead, and whatever else had been gnawing at him lately. The speech was usually equal parts lecture, oration, pep talk, and homily, all of it seasoned with wisecracks. After the speech, Dean always called each employee’s name and gave out Christmas bonus checks, along with handshakes for the men and hugs for the women.”1[77] Bonuses were especially important at DEKA, where engineers worked for below-market salaries and received no stock options. Now Kamen was wondering if he could continue this approach. DEKA had attracted some of the brightest engineers because of Kamen’s allure and DEKA’s cutting edge projects. But for the first time, recruitment and retention were becoming issues. In the midst of the Internet boom, many of the most attractive engineering candidates were looking for positions that offered compensation packages that included stock options and salaries higher than what Kamen was willing to offer. Kamen’s long-time friend and most trusted lieutenant, Mike Ambrogi, had recently accepted a job at Sycamore Networks, which had offered Ambrogi a lucrative compensation package that included stock options. In 1999, DEKA had a difficult year, several projects were canceled or behind schedule, and many of the gathered staff had concerns that these cancellations and delays would diminish, if not eliminate, their bonuses. DEKA employees were also concerned about stock options, which had been promised only to employees on a secret project that many had never seen. Kamen had created a separate company within DEKA to design and manufacture a product that the team had nicknamed “Ginger.”2 Kamen