Paul G. Allen

Oct 29, 2002

Critical Thinking Case Study 1:

TV/COMM International, Inc.

TV/COMM International, Inc. was a multimillion-dollar satellite communications company, and was formerly a subsidiary of Oak Industries, Inc., manufacturers of the analog television cable tuners that were found in many homes throughout the United States. TV/COMM pioneered the development of sophisticated digital television transmission equipment in the early 1990's, a version of which is used today in all digital cable and satellite television transmission systems throughout the world. In April of 1995 I was hired as an Engineering Technician by TV/COMM. This case study involves first hand knowledge of the decisions that, over the course of the next two years, ultimately lead to the demise of TV/COMM.

In 1995, TV/COMM was purchased by the Hyundai Corporation, in particular Hyundai Electronics America, Inc. (HEA), after their previous capital investor filed for bankruptcy earlier that year. The digital transmission system that TV/COMM had been developing was on the leading edge of technology and as of 1990, approximately five years ahead of all other competitors in the market. The Hyundai Corporation saw the potential to enter the digital television market with an end-to-end solution with the capability to use TV/COMM technology and innovation to corner the market in this up and coming industry. With this goal, they spared no expense in the funding of TV/COMM's efforts to bring the product to market. While this may sound like a win-win situation for TV/COMM, due to a severe lack of critical thinking, it was not.

Oak Industries had always been on the leading edge of technology within the television transmission industry so it was no surprise that this small subdivision was able to come up with a new system that lead the way into the next generation of television. In the early 1990's, TV/COMM engineers designed an MPEG-2 digital television transmission system that would still be considered advanced even by today's standards. This system was so new that it relied upon electronics technology that had yet to be released to the general market and was still in its prototype and testing stages. With technology this new comes risks and changes in initial designs are nearly always required before a final product can be completed. In addition, in any electronic design, especially one of this magnitude, some portions often need to be scrapped and replaced completely by new designs. This is the nature of what is called R&D, or Research and Development, and it was clearly the nature of the TV/COMM MPEG-2 system.

Early designs of major portions of the system were poorly designed and the result was an unreliable product. In addition, changes in prototype components as they reached the production stages of their development amplified the various design issues. As time went on, TV/COMM's competitors began to pickup on the technology in their own ways and by 1994, TV/COMM's five year lead had diminished to zero. By 1995 TV/COMM was competing directly with Scientific Atlanta, Inc. for market share of the United States in the television transmission industry. Though TV/COMM's previous capital investor had declared bankruptcy, HEA stepped in and, excited about the potential of the technology, essentially gave TV/COMM a blank check for continued R&D and manufacturing. Things were looking good for TV/COMM and new facilities were built, more employees hired, new equipment purchased, and highly qualified engineers hired. TV/COMM had a system that far exceeded the capabilities of any competitor, and now they had the financial backing to improve and manufacture it as needed. Somehow, this was not enough.

The early design problems began to rear their ugly heads and as production facilities were built and units were produced in quantity, the severity of those issues was brought to light. The new design engineers and lead engineering technicians recognized, diagnosed, and were able to fix all design problems, but were limited by management in what they could actually implement. In addition a lack of troubleshooting documentation on the production lines inhibited the ability of the production technicians and test engineers to efficiently troubleshoot and repair production failures and RMAs. While the lack of documentation was recognized, management would not allow the design engineers and others in the know to produce the required documentation. As a result, hundreds of systems remained on the shelves for weeks and months while one senior and one junior technician struggled to diagnose and repair them through nothing more than experience and intimate knowledge of the systems.

Over the course of the next two years, the situation steadily grew worse. As customers complained about the unreliable systems they received, TV/COMM lost revenue and Scientific Atlanta gained control of the entire United States. Management would not allow the engineering and manufacturing recommended changes to be implemented and the system continued to be flawed and difficult to produce. In April, 1997, 50% of the manufacturing workforce and all of the Test Engineering department was cut, as were a few marketing and engineering personnel. In this move, TV/COMM management effectively eliminated all personnel that had the experience and knowledge to produce, troubleshoot, test, and repair production systems. Less than 3 months later, entire systems were being scrapped due to the inability of the remaining personnel to troubleshoot and repair them. Within the next two years, TV/COMM International, Inc. was closed and HEA sold all their assets.