BSBMGT608: Innovation and Continuous Improvement in A.C. Gilbert

This case study analyzes the factors contributing to the downfall of A.C. Gilbert, a company that failed to adapt to changing market trends through innovation and continuous improvement. The analysis covers key processes such as supply chain management, organizational systems, and product/service delivery, evaluating their effectiveness using tools like Key Result Areas (KRAs), Key Performance Indicators (KPIs), and Service Level Agreements (SLAs). The report assesses the company's performance up to 1966, highlighting strengths and weaknesses, and recommends strategies for internal and external improvements, including hiring specialized teams for engineering, manufacturing, packaging, and marketing to enhance product quality, innovation, and brand awareness. It also touches upon performance improvement strategies, risk analysis, and implementation plans for transitioning the organization towards continuous improvement.

Manage Innovation and Continuous Improvement in A.C. Gilbert 0
Title: Manage Innovation and Continuous Improvement in A.C. Gilbert
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Manage Innovation and Continuous Improvement in A.C. Gilbert 1
Contents
Introduction................................................................................................................................3
Assessment Task One................................................................................................................3
1. Key Processes at A.C. Gilbert.........................................................................................3
2. Analysis of the Key Processes........................................................................................5
3. Evaluation of the review strategy and suggestions for improvement.............................6
4. Performance Analysis up to 1966...................................................................................7
5. Trends..............................................................................................................................8
6. Recommendation...........................................................................................................10
Assessment Task Two..............................................................................................................10
1. Performance Improvement Strategy.............................................................................10
2. Management Team Briefing.........................................................................................12
3. Lead Session..................................................................................................................13
4. Risk Analysis Strategy..................................................................................................15
5. Cost-benefit analysis.....................................................................................................16
Assessment Task Three............................................................................................................16
1. Implementation.............................................................................................................16
2. Action Plan for Transition.............................................................................................18
3. Contingency plans.........................................................................................................19
4. Follow Up......................................................................................................................20
Conclusion................................................................................................................................24

Manage Innovation and Continuous Improvement in A.C. Gilbert 2
References................................................................................................................................25

Manage Innovation and Continuous Improvement in A.C. Gilbert 3
Introduction
The aspects of innovation and continuous improvements facilitate an organization to
adapt to the changes that occur due to the emerging trends in the market. It is vital for
organizations to identify these changes as it helps in attaining competitive advantages. Also,
if an organization ignores these new innovative trends then the organization may face
humongous losses, in the same manner, the organization A.C. Gilbert faced. It is through
innovation and continuous improvement that an organization incorporates the trait of being
flexible and adapting to any change with the transforming times. In this assignment, the case
of A.C. Gilbert has been analyzed to explore the various issues that lead to the downfall of
the organization.
Assessment Task One
1. Key Processes at A.C. Gilbert
a. Supply Chain
The supply chain management in an organization has a responsibility of
transferring products from suppliers to manufacturers to wholesalers to retailers and
finally to the customers. At the A.C. Gilbert, the supply chain consisted of three main
people that are suppliers, manufacturers, and retailers.
 Suppliers – They conducted the task of recognizing the demands of the
customers and they also have the responsibility of taking orders for the toys
from the customers.
 Manufacturers – They were responsible for the production of the toys which
was conducted on the basis of demands and orders.

Manage Innovation and Continuous Improvement in A.C. Gilbert 4
 Retailers – The retailers offer the product to the customers and functions as a
mediator between the customer and the suppliers1.
b. Organizational Systems
The organizational system at A.C. Gilbert includes various different aspects,
which helped the organization in attaining their goals. The organizational system
includes –
 Designs – The designs of the toys were conducted with boys as the main target
market. The designers of the organization were finalized according to the
demands of the customers.
 Planning – After the finalization of designs, effective planning is conducted
for the development of the product, the sale of the product, and to fulfill the
main organizational objectives.
 Purchasing – For the production of toys, the organization requires raw
materials for its development and packaging, which is purchased from the
suppliers.
 Manufacturing – The process of production and packaging are included in
the manufacturing process.
 Distribution – The process of distribution includes the delivery of the product
to the final customer and the retailers. The process of distribution also includes
the storage of the final product in the warehouses.
c. Product & Service Delivery
In the A.C. Gilbert, the product delivery is conducted through an efficient
manner, as proper planning is conducted for delivery the toys on time to the retailers
and the customers.
1 M A. Hitt, R Ireland & R E. Hoskisson, Strategic Management Cases: Competitiveness and Globalization, in ,
10th ed., Texas, Cengage Learning, 2012, pp. 120-240.

Manage Innovation and Continuous Improvement in A.C. Gilbert 5
2. Analysis of the Key Processes
The analysis of the process that is practiced in the organization A.C. Gilbert,
highlights the aspect that these processes can help in elevating the performance of the
organization. The different assessment tools and sustainability measures that can be
utilized by the organization are –
 Key Result Areas
The key result area is determined by the organization's outcome that is,
the profit attained through sales. Thus, in the A.C. Gilbert, the organization’s
profit will be the best way to identify and examine the KRAs.
 Key Performance Indicators
The key performance indicators of the A.C. Gilbert Company are –
 The toys quality.
 Customer satisfaction.
 Performance Review Processes
The customer’s preferences have evolved with the changing times. The
shift in the customers demand to more realistic toys, will force the
organization to provide new products to the customers. The performance of
the A.C. Gilbert can be reviewed through the feedback that customers will
provide on the new approaches of the organization2.
 Service Level Agreements (SLA)
The main customers of the organization are children and teenagers,
thus their assessment about the delivery, durability, and quality of the product
will be most effective for the assessment of SLA.
2 G Arzu Akyuz & T Erman Erkan, "Supply chain performance measurement: a literature review",
in International Journal of Production Research, vol. 48, 2010, 5137-5155.

Manage Innovation and Continuous Improvement in A.C. Gilbert 6
3. Evaluation of the review strategy and suggestions for improvement.
The organization A.C. Gilbert has utilized several techniques, which includes
the management techniques that have been utilized for improving the product quality
and also for continuous improvement.
The main aim of continuous improvement is to increase the efficiency of
business operations. This helps in improving the organization’s product, management,
processes, and services. In the organization A.C. Gilbert, the supply chain
management was effective and was in sync with the various company’s functions.
Even with such efficiency, the organization suffered a loss of 1.1 million in the year
1961 and this lead to selling the major part of the organization to Jack Wrather. This
was also due to the low standard of innovation practiced in the organization and also
the ignorance that the organization exhibited to the emerging trends in the market3.
After the takeover by Jack Wrather, the organization suffered losses for six
continuous years. Though these losses were less in comparison to the earlier ones and
it was due to the continuous changes and improvement that Jack brought to the
organization. For the purpose of continuous improvement, it was crucial that the
organization utilize the PDCA cycle. This helps in improving the performance of the
organization. The model facilitates an organization with the opportunity to improve at
different stages. The stages are the plan, do, check and act. The other theories that can
be utilized are the six-sigma approach and the total quality management. The total
quality management is an effective approach for A.C. Gilbert to improve the quality
of product that degraded after the takeover by Jack Wrather.
3 J Chen, Y Li & B Shady, "From value stream mapping toward a lean/sigma continuous improvement process:
an industrial case study", in International Journal of Production Research, vol. 48, 2010, 1069-1086.

Manage Innovation and Continuous Improvement in A.C. Gilbert 7
4. Performance Analysis up to 1966
 Quality
Initially, the products were designed only for boys. After Jack Wrather took
control the products were targeted to pre-school children and teenagers. In the
year 1963, the quality of the products degraded. The change in the customer’s
preferences to have dolls with changing clothes option were identified by the
organization, but the quality of the product was very bad.
 Sales
The sales decreased from 1961 to 1963 massively. In the year 1965, they were
increased to $14.9 million, this was due to the changes that were formulated by
the organization by targeting a broader audience. But in the year 1966, the sales
dropped.
 Profits
The organization hardly attained any profits from 1961 to 1966. The
organization required a better pricing strategy, especially after the decrease in the
profits from 1963 to 1964. The poor quality products made it difficult for the
organization to make profits.
 Supply chain Performance
The organization supply chain got less effective and performed less efficiently
with each passing year. Especially after 1962, the organization utilized no
innovation methods, which affected the supply chain and the delivery of the
product immensely.
 Business Growth
The staff turnover of the organization increased after Jack Wrather dismissed
many key employees of the organization after his takeover. The new elected team

Manage Innovation and Continuous Improvement in A.C. Gilbert 8
dismissed furthermore crucial employees of the organization. This was further
continued with the new CEO Isaacson, who removed the complete sales team.
All these factors reduced the performance of the organization and increase staff
turnover4.
5. Trends
It is very crucial for an organization, to identify the different trends, which
emerge in the market. In 1950, the biggest mistake made by the A.C. Gilbert was
ignoring the new emerging trends and the change in customer preferences due to the
trends.
The strengths and weaknesses of the organization before 1960 –
Strengths Weaknesses
The organization though being small,
have a great market share.
The company lacked stability.
The product quality was great and it
provided the organization with a
credible reputation.
The company lacked innovation and
never changed according to the
emerging changes.
The company always offered immense
customer satisfaction.
Innovation was at the lowest level.
The supply management was efficient. The financial decrease in the
organization affected the employee’s
performance.
4 C Cheng et al., "Enhancing service quality improvement strategies of fine-dining restaurants: New insights
from integrating a two-phase decision-making model of IPGA and DEMATEL analysis", in International
Journal of Hospitality Management, vol. 31, 2012, 1155-1166.

Manage Innovation and Continuous Improvement in A.C. Gilbert 9
The trends relevant to the A.C. Gilbert are –
 Market Share
The organization in 1950, gained a solid market share with the increase in
sales up to $17 million.
 Reputation
The organization had a reputation for providing high-quality products that
were durable and also were immensely innovative.
 Stability
The organization attained stability of customers by offering great customer
satisfaction.
 Profits & sales
Even after offering the customers with expensive products, the profit and sales
were stable.
 Adapt to change
The company’s weakest aspect was adapting to changes.
 Customer service standard.
Due to the high-quality product, the customers were always immensely
satisfied.
 Innovation
The only innovation that was conducted was the production of erector
engineering set. Else, the organization lacked innovation.
 Employee performance
The employee was dedicated to their work and the organization. Their main
goal was to provide a high-quality product. But, after the demise of Gilbert senior, the
performance of the employees degraded.

Manage Innovation and Continuous Improvement in A.C. Gilbert 10
 Production and manufacturing
The organization produced limited products but all of them were of high
quality. The organization has the main aim of not compromising with the product
standard.
6. Recommendation
Some of the recommendations for the organization are –
 Internal
The organization A.C. Gilbert produced products that were used for
educational motives. It would have been beneficial for the organization to hire
engineering, which would have helped the organization in improving the quality
of the product at a lesser price and also to include the new advancement in the
field of technology for the betterment of the product.
The A.C. Gilbert also should have hired a more efficient manufacturing and
packaging team. The organization needs to increase the level of innovation and
thus, it was crucial to hire professional designers, who will also conduct the
production in a set budget.
 External
The organization should have appointed an aggressive marketing team that
conveyed the core message of the organization through different channels and to
a larger audience. The organization was in need of serious brand awareness and
brand formulation.
Assessment Task Two
1. Performance Improvement Strategy
 Strategic Goals

Manage Innovation and Continuous Improvement in A.C. Gilbert 11
According to the circumstances in the A.C. Gilbert Company, the organization is
in need of innovation and continuous improvement. Thus, the strategic goals are –
 To increase the sales of the organization up to 20 million.
 To increase the profit of the organization.
 Hire a more efficient workforce that has the potential to foresee emerging
changes.
 To offer the customers with a variety of good quality products.
 To have better marketing approaches5.
 Proposed processes
According to the different organizational goals decided for the A.C. Gilbert, the
organization also requires certain changes in the organization’s processes.
 The supply chain management needs to utilize the raw material that is cheaper
in price but still offers the customers with a satisfying quality product.
 The organization requires a separate team for conducting marketing
operations.
 The organization also have to broaden their approaches in delivering the
products. Thus, it requires more distribution channels.
 The products require a new pricing strategy, which helps in dealing with
emerging competitors.
 KRAs, KPIs, Targets
The organization has to identify new KRAs, so as to evaluate the performance
of the organization in a better way. For the A.C. Gilbert organization, the key result
areas should include customer satisfaction, quality of the product, and operational
cost. The KPIs may include efficient management, correct utilization of resources,
5 M de Assunção, A di Costanzo & R Buyya, "A cost-benefit analysis of using cloud computing to extend
the capacity of clusters", in Cluster Computing, vol. 13, 2010, 335-347.