Visionary Design System
Harvard Business School
9-495-011 Rev. April 14, 1995
Visionary Design Systems
Are Incentives Enough? Visionary Design Systems was a systems integrator and Computer ost Aided Design (CAD) hardware and software reseller located in Sunnyvale, California. In its first three years, Visionary Design’s revenues jumped from $1.1 million in 1990, to $5.5 million in 1991, to $9.8 million in 1992, to $17.8 million in 1993, prompting local newspapers to pronounce Visionary Design Systems a Silicon Valley success story. The founders credited much of their success to the quality of their people and to their philosophy of empowerment combined with generous rewards for performance. The company was unusual both in the degree to which employees were granted autonomy, and in the way they were rewarded. Every employee was a shareholder, and earned significant compensation through commissions and bonuses. The company’s growth record and retention rate spoke to the success of this philosophy. Most employees raved that this was the best company they had worked for: “I feel good in this environment—we laugh together, everyone is pulling toward the same goals. It’s the people here who are special, and it starts at the top.” VDS’s y or P future looked bright but for one cloud on t h e horizon. Product Data Management, one of the promising new complements to the Computer Aided Design market, was a struggling division within VDS. Product Data Management (PDM) was a critical market for the company and VDS had hired two experts in the field. Management offered significant incentives for growing the PDM business but the PDM experts would not take the reins and drive VDS forward in this industry. Things were not progressing quickly enough and top management did not know what to try next. The CAD Industry
History
Before CAD was available to mechanical engineers, designers stood at 3x4 foot drawing boards using rulers and compasses to design products. The limitation of working in two
9-495-011 Rev. April 14, 1995
Visionary Design Systems
Are Incentives Enough? Visionary Design Systems was a systems integrator and Computer ost Aided Design (CAD) hardware and software reseller located in Sunnyvale, California. In its first three years, Visionary Design’s revenues jumped from $1.1 million in 1990, to $5.5 million in 1991, to $9.8 million in 1992, to $17.8 million in 1993, prompting local newspapers to pronounce Visionary Design Systems a Silicon Valley success story. The founders credited much of their success to the quality of their people and to their philosophy of empowerment combined with generous rewards for performance. The company was unusual both in the degree to which employees were granted autonomy, and in the way they were rewarded. Every employee was a shareholder, and earned significant compensation through commissions and bonuses. The company’s growth record and retention rate spoke to the success of this philosophy. Most employees raved that this was the best company they had worked for: “I feel good in this environment—we laugh together, everyone is pulling toward the same goals. It’s the people here who are special, and it starts at the top.” VDS’s y or P future looked bright but for one cloud on t h e horizon. Product Data Management, one of the promising new complements to the Computer Aided Design market, was a struggling division within VDS. Product Data Management (PDM) was a critical market for the company and VDS had hired two experts in the field. Management offered significant incentives for growing the PDM business but the PDM experts would not take the reins and drive VDS forward in this industry. Things were not progressing quickly enough and top management did not know what to try next. The CAD Industry
History
Before CAD was available to mechanical engineers, designers stood at 3x4 foot drawing boards using rulers and compasses to design products. The limitation of working in two