How Team Works Could Be Successful

Thermos: Success through teams

When Monte Peterson took over as CEO of Thermos, a division of the Japanese manufacturer Nippon Sanso, he faced a significant problem. The $225 million division depended on gas and electric outdoor cooking grills for a significant part of its business, but the product was looking like a profitless commodity as its market growth went flat and the entire industry began to cut prices. The highly departmentalized functional bureaucracy at Thermos appeared unable to do anything differently to address the problem, and Peterson could feel the division’s future slipping away. to remedy the situation, he moved to a form of management that stressed cross functional teams to develop new products and bring them to market, in what has been called a ‘textbook lesson for any manager looking to use teamwork to revitalize a corporation.’

Peterson wanted a completely a new concept in grilling, so he created a team that had very limited connections to the ‘old’ organization. He pulled individuals from every major department and functions together and made the new team’s success their collective responsibility. Initially, some team members resisted the change in focus and the shared responsibility that team membership required, but Peterson patiently reminded them that this was their best opportunity to have a significant impact not only on their company but on the entire industry, painting what he called a vivid ‘picture of the difference between winning and losing’. To make it clear that this team was to operate differently from the way things had been done before, it was given the name Lifestyle Team, suggesting that it was more important for the group to focus on its customers’ lifestyles than on any one function or even on the design of any one grill. In fact, the team began its work by trying to forget every preconception and assumption about grilling and by going into people’s backyards to ‘discover’ how people actually grill.

As the team began to rethink grilling, it drew on Thermos’s core competence in vacuum technology, used to keep liquids cold or hot in the firm’s famous brand of Thermos bottles, to develop a concept for a totally new type of grill. Using the same vacuum bottle technology, the team was able to build an electric grill that got hot enough to sear foods, producing the cookout taste and the grill lines customers said were critical.

A product these different created problems for virtually every function represented on the team consequently, the decision was made to rotate the leadership for the team as the greatest responsibility for the design and rollout process shifted from one department to another. During the early stages R&D took the lead then production, then marketing. However, all the functional experts on the team were involved throughout the process. For instance, when a designer proposed that the grill should have tapered legs, the production experts stepped in to show how such legs would greatly increase manufacturing costs, and the marketing experts concluded that customers would not be willing to pay for them. Tin the old Thermos organization, the production group would not have known about the tapered legs until production had already been scheduled and product drawings arrived.

Once the team members had developed a prototype they could all agree on, they were not dismissed from the team and sent back to their former departments, instead, they were given the responsibility of taking their prototype on the road to test and sell it. One hindered units were given to employees, who were told to use them frequently to uncover flaws, while other units were taken to numerous retail trade shows around the country. Soon after the new units hit the market, it became apparent that the team had produced a winner. The new grill won four design awards, the company’s grill revenues climbed 13% in the design’s first year, and the company forecasted that the new unit would be the first of a series of similarly designed grilling products that would soon boost the division’s share of the grill market from 2% to 20%.