1
CHALLENGES OF MANAGING IN HIGH TECHNOLOGY

HUGHES AND THE DIRECT BROADCASTING BUSINESS

Today, Hughes Electronics, a unit of General Motors, is a successful part of the communications revolution. The company designs, manufactures, and markets advanced electronic systems, including telecommunications equipment, offering digital television entertainment and information programming via satellite Hughes operates a network of satellites, including DIRECTV, the largest US direct broadcast satellite (DBS) system, marketed via PanAmSat Corporation, offering 150 channels of movies, cable TV programs, and sporting events directly to anyone in the United States, Canada, and part of South America. Hughes had secured part of this market niche already in 1997 by forming an alliance between its PanAmSat subsidiary and SatMex (Satellites Mexicanos) to bid for an additional strategic satellite position. Other bidders included Primestar and EchoStar. At 77 degrees west longitude the Mexican slot was the last to allow a satellite to beam full conus coverage of the United States and Mexico.

The direct broadcast satellite (DBS) ventures are part of the world's most complex, but also fastest growing businesses. Today, DIRECTV/Hughes markets its services through PanAmSat to more than 10 million subscribers with annual revenues of nearly $7 billion. For Hughes Electronics, a subsidiary of General Motors, this new business started 15 years ago, when the Federal Communications Commission (FCC) set aside part of the radio spectrum for TV programs. But digital compression had not been invented then, and satellites were more primitive. Yet, competitors such as Rupert Murdoch's Sky Broadcasting in Europe and Hutchison Whampoa of Hong Kong broadcasting into Asia started their ventures as early as 1990. DIRECTV/Hughes' satellite factory, "High Bay" in El Segundo near Los Angeles International Airport, appears unusual by traditional norms of manufacturing. There are no assembly lines, no conveyor belts, and no grinding machine tools. Workers gather around a half-dozen shiny objects, which create a Star Wars ambiance. High Bay is the plant where Hughes finishes satellites before launching them into space. Many of the satellites are more conventional telecommunications relays that will handle international calls. But the stars of High Bay are the body-stabilized DBS models, which are crammed with stuff: power amplifiers, radio-wave propagators, titanium fuel tanks, navigational gear, explosive charges for deploying solar panels, azure-blue glass solar cells, thruster jets, antennas, solar panels. Hughes hopes that this product will transform the television industry, and the anticipation in this plant is palpable. The combination of great stakes, exotic technology, and painstaking team efforts by many people, culminating in a single event that may bring instantaneous success or the total disaster of launch failure, makes satellite building the most tension-laden business in the world.

At the beginning of 2004, Hughes Electronics planned to sell its DIRECTV business for $6.6 billion to News Corporation, while GM intended to sell the remaining Hughes Electronics businesses, including satellite network operator PanAmSat and satellite equipment maker Hughes Network Systems, to EchoStar (DIRECTV's main rival) for $18 billion. However, the GM-EchoStar deal was rejected by the FCC.

Source: Hughes Electronics Corporation at www.hughes.com.

1.1 MANAGING IN TODAY'S HIGH-TECH BUSINESS ENVIRONMENT

The complexities and challenges faced by Hughes Electronics and its DIRECTV business are quite common in today's technology-based business environment.1 Activities often cluster around projects with team efforts that span organizational lines involving a broad spectrum of personnel, support groups, subcontractors, vendors, partners, government agencies, and customer organizations. Effective linkages, cooperation, and alliances among various organizational functions are critical for proper communication, decision making, and control. This requires sophisticated teamwork and, as is typical for many high-tech organizations, the ability to manage across functional lines with little or no formal authority, dealing effectively with resource sharing and multiple reporting relationships and accountabilities.

Yet, to be sure, technology and its management are not new phenomena. It has been around for a long time. From Noah's Ark and the Egyptian pyramids to railroads and steel mills, people have used and managed technology, and developed special skills to deal with the challenges, risks, and uncertainties. However, today's technologies have created a new business environment that has pushed conventional boundaries ever farther, with high risks and great opportunities for big gains. New technologies, especially those related to computers and communication, as shown in the Hughes DBS situation, have radically changed the workplace and transformed our global economy, with a focus on effectiveness, value, and speed. Every organization is under pressure to do more things faster, better, and with fewer resources. Speed especially has become one of the great equalizers of competitive performance. As for the Hughes broadcasting satellite, a system that requires five years of development time, it may be obsolete in a couple of years, unless provisions for continuous upgrading and enhancement have been built into the system and are implemented according to evolving market needs. The impact of accelerating technology is even more visible in consumer markets. A new computer product introduced today will be obsolete in four months, while the firm's concept-to-market development cycle may take a year or more! Hence, the new breed of business leaders must deal effectively with a broad spectrum of contemporary challenges that focus on time-to-market pressures, accelerating technologies, innovation, resource limitations, technical complexities, social and ethical issues, operational dynamics, cost, risks, and technology itself, as summarized in Table 1.1. Traditional linear work processes and top-down controls are no longer sufficient, but are gradually being replaced with alternate organizational designs and new management techniques and business processes, such as concurrent engineering, design-build, and Stage-Gate protocols (Thamhain 2003). These techniques offer more sophisticated capabilities for cross-functional integration, resources mobility, effectiveness, and marker responsiveness, but they also require more sophisticated management skills and leadership.

Taken together, the business environment is quite different from what it used to be. New technologies and changing global markets have transformed our business communities. Companies that survive and prosper in this environment have the ability to deal with a broad spectrum of contemporary challenges that focus on speed, cost, and quality. They have also shifted their focus from managing specific functions efficiently to an integrated approach of business management with particular attention being paid to organizational interfaces, human factors, and the business process.

1.2 MOT SCOPE AND FOCUS

Both the scope and the definition of management of technology (MoT) have been the subject of intense debate, controversy, and confusion. The words "management" and "technology" each carry different meanings and boundaries, and in combination, they stand for a wide array of actions, methods, tools, and techniques. For some people, MoT relates to scientific research and the development of new concepts. To others, MoT means engineering design and development, manufacturing, or operations management, while yet others relate MoT to managing hospitals, financial businesses, the Olympic Games, or eBay. Indeed the scope of MoT is very broad and diverse. Its boundaries also overlap considerably with those of the major disciplines of science, engineering, and management. Furthermore, with the increasing complexity of our business environment, MoT focuses more strongly on "managing" the organizational processes and the people affiliated with them.

Table 1.1 Characteristics and Challenges of Today's Technology-Based Businesses