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Ovation 275

running at full tilt, producing all the sales collateral, demos, sales materials, and communications programs. (In Figure 11-1, note that sales is substantially overstaffed for the product development stage.) The group spent at a high rate, in hopes of generating indeterminate future revenues on a product that didn't exist and ultimately never would. The marketing and sales effort was impressive, as indicated by the fact that Ovation had already won an award for having the most important and innovative new product, and the approach should have proved effective if the actual product could have been built.



The CEO receives bad marks for his inability to get Ovation back on track once the imbalance in its growth pattern became evident. The top-level group clearly was not operating as a coordinated and unified team, with complementary functions making steady progress. The board, in its capacity as primary reviewer and counselor to the company, also failed to identify and rectify the problems before they turned into fatal errors. This latter point is not surprising, since the board had virtually no outside representation and was composed entirely of the marketing and sales staff that the CEO had drafted from his previous company, a Digital Equipment Corporation (DEC) reseller. The head of engineering was not on the board and, by some accounts, may have been treated as an outsider rather than as a team member.



Ovation's substantial cash, more than what a normal start-up might have been able to obtain, was spent aggressively at a time when the chances for future financing were diminishing. The company's poor track record for achieving any externally measurable results (such as alpha testing, beta testing, bookings, or sales) negatively impacted further funding. Control and operations were primitive in relation to where Ovation was supposed to be in the product development stage hence, the firm was out of control, and had been all along.



Even with twenty-twenty hindsight, it is not certain that prompt intervention would have saved Ovation or made it viable. However, careful and constant monitoring, using a method such as the Bell-Mason Diagnostic, would have served as an "early warning system," guarding against the expensive eventuality of failure. In Ovation's case, the results of the diagnostic would have sounded an alarm almost at the very outset.

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