ARLYN J. MELCHER THOMAS A.

KAYSER

Leadership Without Formal Authority

The Project Department

is diflBcult and little understood. The project director is faced with two sets of problems. First, there is the problem of building a team that is directly under his control. Second, he must obtain the cooperation from other departments outside his authority. The project director is held responsible for the project but often with little or no formal authority over groups that provide essential information and services. These other departments typically are under pressures from responsibilities directly assigned to them and from other groups who press for service. A project director's job is to build his team, obtaining the necessary services from other groups without jeopardizing future relations with top management and service units. This is an intensive case study of a project director in action. The focus is how he built cooperative relations with other departments, and the factors that tended to undermine this cooperation. It is a
LEADEBSHIP OF A PROJECT GROUP

profile of a leader who enthusiastically undertook major responsibilities, achieved a large degree of success, but at a critical point lost the support he needed. The story undoubtedly is being told and retold in Research and Development units and other project groups across the country. In 1961 the Dunhill Container Corporation, a large diversified manufacturer, established a new products department (The name of the firm, individuals in the firm, and the product mix are disguised. ) Its responsibilities entailed sustained longrange attention, in particular bridging the gap between the Research Center, which generated products tliat might have marketability if developed further, and the Marketing Department, which focused on distributing market-tested products. The project depended upon other departments at both the corporate division levels for needed services. The project director did not, however, have formal authority over these units.

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The focus is upon a synthetic material that had potential for development into a major consumer product. The study covers a six-year period from the point a product was selected for development until the decision was made to go to market. Attention is directed to organizational and behavioral factors affecting that period of development rather than toward those technical problems which marked the evolving product. Tlie first four and one-half years were accompanied by slow but steady progress. Team relations, intergroup relations, and relations with top management were excellent. The director of the New Products Department referred to this period as "the Colden Years." Relations with top management and with other groups deteriorated later and were accompanied by sharp conflict. This article develops the factors that contributed both to the "Colden Years" and to the later period of stress and conflict. Attention is upon leadership style and conditions that affected these relationships. Harold Scott was brought in from outside the firm to head the department. He had an excellent background in marketing and developing consumer products. His first step was to revie'w the products that had been developed by the research group to determine which had the greatest potential. The first product selected for sustained attention was a consumer product, later named Ferlin. It was a noncumbustible synthetic fabric that had great potential use in the garment industry. The product had been under technical development off and on for about seven years. It reached a point, though, where the research laboratory had shelved the project. As expressed by the inventor of the product: I wrote a report to the council for R & D Policy stating that I'd tried out all the ideas for improving the product but none of them really worked. I didn't have any other possible ideas to suggest, so Ferlin was shelved. That is where it would have stayed if the New Products Department had not become involved. They brought the project to the attention of the corporate executives, and obtained funds to get the project moving again. Scott had to maneuver in a difficult context in dealing with other corporate units. The New Products Department needed information and assistance from several groups yet it had no authorit}' to requisition these. It was dependent upon vital in-

puts from corporate departments, including the controller, legal, market research, personnel, engineering, advertising, and from the divisions.

Leadership Style
Scott used several techniques to obtain cooperation. He obtained top management's interest and support for the project and subsequently cultivated this support. Close friendships were developed with key personnel; he further capitalized on the contacts his subordinates had in the firm. He actively conveyed the project's importance to key groups, emphasizing their contributions to the total team, involving them in decisions, and representing them when dealing with top management. Further, he made a series of accommodations to adjust to the special views of other departments when a direct approach wasn't feasible. Wlien these didn't work, he was prepared to challenge their decisions at higher levels. As a critical first step, he obtained the support of top management Scott sought to gain and hold support for the project at the executive level. To do this he presented Ferlin's potential at management meetings during the formative months of the team. A main item in Scott's campaign to win top management's interest was that the potential consumer market was totally untapped. Scott stressed that a vast new market awaited the first company that could crack the market with a new material. Using information from a trade journal, they projected that the consumer market would rise to sales of $125 million in eight years. The product was appealing also because the demand did not fluctuate with the business cycle. It offered the possibility of smoothing sales and profits for the firm. The president of the firm and the major executives became personally interested in the product. Scott systematically cultivated their support as the project developed. He enthusiastically represented Ferlin at management meetings, keeping management Informed of the project's progress and its problems. He developed the idea of "the Blue Book" which was submitted to the R & D Executive Policy Council at the beginning of each year. It contained four major sections: (1) accomplishments of the past yearwhat management got for its money; (2) objectives of the coming yearwhat the project team would try to accomplish; (3) the California Management Review

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program for meeting the objectives; (4) the budget for the coming yearhow much management was asked to spend for the project Every three months a supplementary written report was sent to the Executive Council. Whenever there were major deviations from the plans outlined in the Blue Book, the written report was accompanied by an oral presentation of why objectives weren't being met, or why the Ferlin team wasn't following its program. Scott made these oral presentations alone, or was accompanied by the appropriate specialist when discussing particular problems. Support from top management was critical in a number of ways. The various departments reahzed the project had top management backing so filled the team's requests for help partly to protect themselves. Mike Badalich, the first section leader of tlie Ferlin project, commented on what may have motivated the cooperation;
I suspect the majority of our cooperation resulted from the fact that certain members were more interested in protecting themselves than they were in aiding the project. In oQier words, if you were head of the Cardboard and Styrofoam Division and you knew this project had received a blessing from the president, you might not be interested in the project but you knew darn well that you'd better cooperate officially or you'd find yourself doing a lot of explaining to the corporate ofiicers. It's a simple matter. When projects come to the personal attention of the president of the company and the board, then magically, everyone is aware of this and makes sure that no one will accuse them of not cooperating.

Van Felt also gave Scott leverage with other departments. As developed by Van Pelt:
After I became secretary of the Executive Council for R & D Policy, I could help "Scotty" by going with him to talk to people. They reafized that I had the responsibility for following technical efforts throughout the whole company. If they failed to cooperate, it might be brought to the attention of the Executive Council as a reason the project was delayed.

Besides developing personal friends, Scott also relied upon the influence of his subordinates. An example illustrates tlie approach. Before the pilot plant was built, the fibers had to be spun on production equipment in a plant in one of the divisions. Mike Badalich, one of Scott's subordinates, had two friends in the plant, the Director of Development, and a plant engineer. Scott encouraged Badalich to obtain help from these men whenever it was necessary to make runs of the Ferlin material. Badalich did get good cooperation from the Director of Development, who was able to exert enough influence to remove other production from the line to make equipment available. A useful method for securing cooperation from other groups was to emphasize the importance of that group's contributions. Scott brought the heads of otlier departments together, pointing out how each department had a vital role in the overall success of the project. Scott commented on this method of selling the project:
. One device-.u'^pd tQ get these various staff functions gung-ho into our act was periodic meetings. These were held every six to nine months. Here we would give a progress report, complete with fiip-fiops and samples of the product (just as if we were selfing to a customer). Meetings were held with accounting people, personnel people, legal people, production people, engineering people, and so on. A marketable consumer material was the final goal always emphasized at these meetings. I wanted each department to know what we were shooting for, how they could contribute, and the pride that they would feel by knowing they had a part in helping Ferlin reach a successful end. This was, generally speaking, a device to try to sell the people whom we internally needed to help us do the job. An example that illustrates the effectiveness of SjiOtt's techniqnp; fnr selling ft>>prs fm fbp

One method widely used by Scott to build his influence was to develop close friendships with influential men within the company. After gaining their friendships, Scott enHsted their support to obtain information that was useful in working with their departments and top management. Especially in the early years (but later on as well), Derek Van Pelt, Director of R & D Operations and Secretary of the powerful Executive Council for R & D Pohcy, helped to get things done. Scott discussed Van Pelt's importance to him:
Derek, having been here a while, knew where the various skeletons were. He was able to supply me with information on who to see and where to go to get problems resolved or to get things done. Furthermore, he was quite sensitive and helpful in deteiinining the timing on when to go.

project is shown by his following; remark concerning. .a new (A phone call interrupts the scheduled interview.)
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Well, there we were interrupted by a perfectly good example of what I have done by getting Personnel involved and enthusiastic about Ferlin. This happened to be a personnel problem that came up in connection with Ferlin. I am being fed infoi-mation by a man that I have done nothing but buy a lunch for one day and sell him on why he should be gung-ho about Ferlin. It was a personal sales job to get him involved. Since that luncheon, he's done more for me than I've been able to get done in some areas of Personnel since I've been connected with this project. Scott also used participation. He commented on the value he saw associated with this method: I would say that there is a noticeable change in the elevation of morale among individuals when they participate in the decision-making processes that directly affect their jobs. For example, if we're talking about a clothing-wear test that we want to conduct, Paul Howard (as the marketing manager) could go ahead and set up the trial on his own, conducting it without the cooperation of Research Center personnel. However, by bringing them into the picture and making them feel that they are a part of the decision-making process in setting up the trial, we not only improve motivation and morale but also increase the cooperation we receive. After all, the results of the clothing-wear test would just be passed on to research so they could improve certain aspects of the material. And, if they've had some say in conducting the test, they were more strongly motivated to perform their research task than if the results simply ; were handed to them by the marketing department. jA-

but I didn't go over Joe to management and say, "Hey, research doesn't have enough people," and get them into hot water. Scott made adjustments in liis approach to a department when it had a restricted or special view of its role. Steven Howard, one of the team members, commented on how they obtained cooperation from the Controller's Department. The Products Croup wanted the accountants to work up some project costs. The latter was u,sed to working with fairly precise facts and figures. That is what they wanted from the project team, precise facts and figures concerning the cost of making Ferlin fiber, the amount of production expected during a given period of time, the cost of labor involved, etc. We could not give exact figures in these area,s. We could talk only in "ball park" figures. We solved this problem by submitting two or three figures for each area, along with a set of assumptions for each figure; that is, assuming this t)'pe of equipment, assuming this composition of the fiber at this cost per roll, assuming this number of direct labor hours at this rate, and so forth, what should be the selling price to obtain X percent return on investment? Thus we would submit figures with a corresponding set of assumptions and would receive several economic rollouts, one for every set of assumptions. At times, Scott formally challenged^ecisions^_of_ other departments or devised methods to work, around them. Relations with the ment illustrate this approach. Scott explained the nature of the confiicts: Personnel, in its subjective wisdom, at first consistently put jobs in the Ferlin group on lower job levels than they should have. I know they are too low. In trying to find people I knew what job level and salary they had and what job level and salary they would have if they came aboard. This was true for about three years. We thought maybe we could live with it, but it became progressively worse. As a result, I started some table banging and finally got another policy adopted. We would find the right people for Ferlin, and then we would set up the job levels.

Another method of building the team in relation with other units was to represent their interests actively to top management. Late in the project, as the pressure from top management increased and delays were regarded witli greater alarm, tliis became more important. When deadlines were missed, Scott's defense of the technical branch illustrates the point. Even though Scott felt that technical was partly as fault in missing the deadlines, he said:
^ . as the stakes got bigger and the game moved into the major leagues, there tended to be a covering of tracks~on the part of technical; they were having difiSculties meeting their product goals, in an ettort to maint:ain haiTnony and to provide as press^ire-free an atmosphere as possible, i took responsiHIIty^for these missed deadlines. Now, to clarify, I didn't say that it was my fault. I did, however, point out to management that these were tough goals, that research was doing a good job, and that they should not be castigated too severely because of the missed deadlines. Another thing, I really did happen to feel that they did not have enough people to try to solve the problems. I made that quite clear to the research director, 60

Scott also explained how he dealt with Personnel Department in obtaining more money for Ferlin team members.
When it came to merit raises and job promotions, I had to fight the good fight with all my might to get those through. In the Personnel Department we find there's a natural stumbling block (well, it's not natural, but anyway it's normal) where they get the fence up and presumably you can't get over it. Consequently, I found a way to go around it. This was to use a combina-

California Management Review

tion of merit increase in salary and job classification advancement. In that way I could get them some dough that they otherwise wouldn't get on the straight merit system. There are some people that get mad at me as an individual, but my people are taken care of, that's the important thing.

Often a leader operating within the formal structure will run into roadblocks that are hard to eliminate. One method of creating a more cooperative climate is to modify the formal structure. Scott used a low-key approach to reduce the team's dependence upon other departments. He campaigned to get men assigned directly to the team from critical departments even though they remained on the payroll of the other department. Eor example, individuals for Market Research, Patent Law, and Advertising were assigned full time to work with Products group. One from the Controller's department was assigned part time. He thus did not have to negotiate continually for their help. They represented a bonus to Scott in that they also had entree to the facihties and other persoxmel within their own departments.

Scott's immediate supervisor was marketing oriented throughout most of this period. This meant he always had strong support at the coi^porate level. While the technical director of the Ferlin project was a chemist, he also realized the importance of market considerations in achieving ultimate success with Ferlin. He fully supported Scott in his dealings with other units. There were no competitors in the market exerting pressures upon the finn at the beginning of the period and only one later in the period. Intergroup working relations could be canied out in a relaxed atmosphere. There was a change in all of these factors over a relatively brief period of time.

Late in the period, the Columbia Chemical Company marketed Dylan, a good competitive material. There was a brief setback on the Eerlin team as members adjusted to the unpleasant fact that they were not going to comer the market first. However, they saw some distinct advantages to being second in the market place. Derek Van Pelt explained:
Being second in the market was not as critical to_the Ferlin team as it first appeai'^d. CulliniBia had to break down consumer resistance to the product. They had spend millions ot dollars tor mibal udvtirUtJJLli^. They had to make the public aware that a svnthetic product could do the job better than natural fibers.

Environmental Setting
During the first four and one-half years Scott successfully advanced the Eerlin project. His techniques for obtaining the inputs from other departments upon which the team depended and for maintaining top management support and enthusiasm were effective. Aside from his leadership style, several factors contributed to a favorable climate.
It was relatively easy to keep top management enthusiastic during the initial years of the project's development. Management was experimenting with the project team idea and was wilHng to give the team approach a fair chance to prove itself. The idea of the Ferlin fiber was exciting to top management. They believed there was a large market with potentially large profits. Delays and missed deadlines were accepted as part of the price. Financial expenditures for plant equipment and personnel were still relatively moderate. The project could be aborted without large losses.

However, witli the passing of time, this factor began to exert pressure on tlie Eerlin project team. Columbia Chemical became more and more entrenched in the market as their product began to gain wide acceptance with manufacturers and consumers. At Dunhill, teclinical problems continued to plague the team, causing further delays in the market introduction. Still, Dunhill seemed assured of being second in the market. But suddenly, three other large companies appeared on the horizon and their materials seemed to be at almost the same level of development as Dunhill's. Revised economic rollouts indicated the project payout would take longer to achieve. The pressures on the Eerlin team became intense. After spending six years and $18 million to research and develop Ferlin they felt they had to be second in the market. Missed deadlines no longer were overlooked by a restive top

Arlyn J. Melcher is a Professor of Maiiagement at Kent State University. He has published on industrial relations, statistics, research methodology, and organization theory.

Thomas A. Kayser is an Instructor of Management at the University of South Florida. He is presently co-authoring a book entitled Planned Change in Organizations.

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management. They called upon Scott for explanations. It became mandatory to meet goals on time. Scott, commenting on the changed attitude of top management after a change in key personnel at the top said: There has been a lack of team spirit among some executives. Just recently we started up meetings with key executives again; however, the character of these meetings changed. We formerly had used such meetings for informing these executives, making them gung-ho, and getting help from them. Now we had a highly centralized authoritarian body cross-examining and interrogating us to the point that the meetings turned into nothing but inquisitions. The pressures from management brought to tlie forefront a dispute over whether the project was ready for market, Scott and his team said "no"; the technical-production people and some key corporate executives said "yes." The diametrically opposed answers to this one question spawned serious conflict. Scott characterized the differences: Management apparently thinks that we have a great product. But, they don't recognize some of the product's weaknesses. There's almost a view that if Dunhill makes it, with its great research and production capabiHt}', that any potential customer would be a fool not to buy it in great quantity. This is not the name of the game when dealing with a consumer product. It is, indeed, the name of the game in some of the industrial oriented businesses through which our management grew. We are faced with Ferlin having to be right for the market. When I mentioned that I have resisted the increased centralization I mean that I have not accepted every decision handed down by top management. I'm referring to their overriding pressure toward goals of immediate sales and profits, at the expense of a good product. My personal resistance here follows the line that the sales and the profits will follow when we have the product and not before. The resistance movement that I lead is against centralized decision making at tlie top management level. I do not think this project should be forced into going to market until the product is ready. As pressure on the group increased it affected not only tlie relationship between the group and top management, but also between technical (research center) and marketing (product team members). Scott offered an analogy in referring to the deterioration of the relationships: Early in the game the duet of marketing and technical gave forth gorgeous music. As the chips got bigger and the game started moving into the major leagues, a few sour notes crept into this duet. There tended to be a covering of tracks on the part of technical because they 62

were having difficulties meeting their product goalssuch things as having the product ready for market introduction, or having a summer weight fiber ready for market introduction on such and such a date, and so on. Finally, although this duet continued to sing, the music had more discord than harmony in it. Several personnel changes occurred in positionboth within and outside the team. The ones that had a substantial effect were changes in personnel at the vice president level and at lower levels in the product research group. The section leader of the Ferlin project was replaced by a man far less marketing oriented. He believed that marketing and technical should remain as distinct units interacting only on the formal basis. The vice president and director of Products Research was replaced by a man who felt that any project team should be run from a technical rather than a marketing orientation. Earlier, the vice president of marketing and material services had been replaced by a man with a technical background but who appreciated the value of marketing. He in turn was replaced by the previous president of Dunhill International, who was technically oriented. The difference in orientation of these key personnel rapidly had an effect. Scott was frank in discussing his feelings about his new superior: Dr. Tomanek came into the project at a critical time, coming aboard just after the decision was made to go to market. Now, since Dr. Tomanek came in from Dunhill International, he had no idea what the Ferlin project was. He knew only that something was going on. He had many new responsibilities added to his job all at once. Quite naturally, he was not in a position to devote as much time to learning about Ferlin as would be necessary for anyone to give direction and management inspiration to the project. Through a series of meetings I tried to update and educate him on what we were trying to accomplish. I haven't gotten through to him and after these meetings I've heard comments that he isn't sure we're on the right tiack. He wants to go back to fundamentals, but he never explains what he means by fundamentals. I don't understand what role he would like to play in Ferlin. I'm trying to find this position, to help to bring him in. And naturally I want all the help I can get. But we cannot continue to spend long arduous horns going over the past, always looking at yesterday and never tomorrow. Dr. Tomanek has decided that he can give management inspiration and leadership without consulting with me by simply second guessing my every past move. Tlie marketing and technical subgroups began California Management Review

to withdraw from what Howard called a "close-knit marriage." In the past, team members had visited the R & D Center informally to discuss research and development decisions with research personnel. Now, each team member was called upon to concentrate his efforts in his own area, rather than to dabble in aspects that were beyond the requirements of his particular job. The new technical director believed in specialization and drew lines of demarcation early in his administration. He said:
At present the marketing people, in no way that I can think of, interfere with the technical development of the product. They provide excellent assistance in evaluating the properties that cannot be measured in the lab. But this represents a change over the situation as it existed when I first became associated with the project in 1964. At that time, the leadership permitted the marketing people to direct activity, so to speak. When I assumed the technical effort I set about trying to correct the situation. It has happened gradually, but it has happened. This change was achieved in spite of the view of the team. It was the marketing specialist's view that: At present, although marketing inspects only the appearance and feel characteristics, we should have a say in setting tlie specification limits for the physical properties. The specifications which are in effect now at the R & D Center were set up by production on the basis of what Ferlin material they were able to produce. I feel we must look at this from the marketing standpoint and set specifications based on what the customer will accept.

increasingly fell outside the limits of his signing authority. He had to obtain management's approval for the funds, equipment, or people he needed more often. Management did not deny his requests, but he was placed in a defensive position. Scott commented on this change to centralization:
The name of the game now is the centralized decision making at the Executive Council for R & D, Executive Council for Capital Appropriations, and so on. In the early days I was invited to these meetings to state my case and strike the balance, and to subject myself to questions concerning Ferlin. The questions varied by occasion, and by the subject to be discussed. In that atmosphere was a certain contribution to motivation. Recently the good doctor [his immediate superior] decided that he will be spokesman for Ferlin at these councils or executive meetings, and he does not wish to have me participate. I have had to go along with decisions that are made for me, but not in consultation with me. This is an area that has materially retrogressed. In this final stage of the product, Scott's position concerning decision acceptance by higher level management changed. He said: When the team started out, I accepted top management decisions with an open mind, or tried to, in all cases. Today my attitude is more reluctant. I find that I do not take anything, communications or decisions (and this even pre-dates Tomanek to a degree), with an open mind. I look at opinions, suggestions, and decisions with caution to be sure that they jibe with my estimate of the situation as it exists. I also look in terms of the possible lack of complete knowledge by tlie decision-maker or opinion-giver. If I don't agree, then I go topside to fight the good fight. A good example is not accepting management's overriding pressures toward the goals of immediate sales and profits at the expense of a good product.

During the first four-and-a-half years the Ferlin project team operated in a decentralized atmosphere aside from the broad restrictions management placed upon Scott and his department. These were that: for capital funds in excess of $10,000 Scott had to go to the Executive Council for Capital Appropriations, for personnel to the Executive Council for Employee Relations, and for operating expenditures to the Executive Council for Research and Development. All of the day-to-day product decisions, and even the policy decisions concerning the goals of Ferlin were delegated. Scott said, "By giving me my head the two superiors I had during the first four-and-ahalf years said, 'This is your program. You work it out. Come to me when you need management approval.' " Centralization increased with the new superior. As the project grew in size, the greater expenditures WINTER / 1970 / VOL. XIII / NO. 2

Top management's and technical's position finally prevailed and a decision was made to go into marketing. The original members of the product team had nearly all left the firm by this time, partly because of the opportunities elsewhere and probably because of the reduced attractiveness of the project. Subsequently, the product manager resigned to look for another position. The commercial success of the product was unknown at tlie end of the study and still is unknown. Columbia Chemical dominates the market partly because of its early entry and partly because it offers a broad spectrum of materials. Dunhill has been able to offer a material that only satisfies one portion of the market. It still is attempting to resolve this problem, but price cutting, principally initiated by a Japanese firm, has caused
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payoff periods to be extended further. Most of the other potential competitors, however, have at least temporarily withheld their products from the market.

Conclusion
The development of this product illustrates the interaction of a number of factors that affect product development. Pressure from the environment, management reaction to pressure, formal organization, leadership style, and complementary key personnel were each important in influencing individual, group, and intergroup relations. Where the context is permissive, an adaptive persuasive leadership style should be able to elicit cooperation patterns, particularly if top manage-

ment indicates its interest in the project. Complementary personnel and formal authority over other units may be useful but not necessary. When the pressure is on to meet difficult goals and standards, carefully built relationships are likely to erode rapidly, particularly if there also are changes in key personnel at the operating and general management level. Greater attention to formal organizational arrangements would lay a better basis for continuity of relations when pressures increase. When a new project group is introduced it minimizes immediate conflict to assign it responsibility without changing traditional authority relationships. This is, however, likely to be associated with the greater cost of making it more difficult for the director of a new group to carry out these responsibilities.

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California Management Review