Dynacorp Corporation

The Dyna Corporation, known in the industry as Dynacorp, is a major information systems and communications company. Originating in an office equipment company that moved into high technology applications in the 1960s and 1970s, Dynacorp had, by the 1990s, established a reputation for being first to the market with innovative and high-quality products that were significant advances on anything its competitors were offering. Customers would gladly wait months, and even a year or so, to take delivery of products bearing the Dynacorp logo. The customers were typically sophisticated users who were willing to do some of their own applications work and to figure out how to integrate Dynacorp’s new products with the rest of their operations.

The 1990s were a much more difficult period for the company. It continued to grow, but at a slower rate, and experienced periods of significantly reduced earnings. Competitors were closing the technology gap, and were often faster getting products to market. In a growing number of product areas, Dynacorp had been surprised by competitors that, although they had started working on a new product much later than Dynacorp, were faster at getting the product to the customer at a very attractive price. In addition, a growing number of ITC consulting firms were capturing the relationship with the large customer by offering “value-added services and solutions”. The consulting firms acted as intermediaries, supervising the purchase of ITC hardware and software, providing integration services, and capturing much of the high-margin business.

A growing number of executives in Dynacorp were coming to believe that the problems could not be addressed effectively with Dynacorp’s current organizational structure. Like most companies, Dynacorp had been established with a functional organization. However, top management was beginning to ask if Dynacorp needed a major re-design. As a first step, the CEO appointed a small internal...