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1、www.hbr.orgANDCOMMENTARYHBR CASESTUDYThe Cost Center That Paid Its Wayby Julia KirbyShould Camden pull the plug on its newest profit center?Four commentators offer expert advice.Reprint R0204AHBR CASESTUDYThe Cost Center That Paid Its Wayby Julia Kirbyharvard business review april 2002page 1HBR s ca
2、ses, which are fictional, present common managerial dilemmas and offer concrete solutions from experts. COPYRIGHT 2002 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.Converting a cost center at Camden Robotics into a profit center seemed like a masterstrokeespecially when it act
3、ually raked in a nifty return. Then the complaints started.“Well, Eric. You look like the cat that ate the canary. What s up?” Grace Tansky, the ma- tronly assistant to CEO Tom O Reilly, couldn t help but comment as she watched an obviously pleased with himself Eric Palmer bound up the steps toward
4、her. This was the executive suite,the topmost of the floors occupied by Camden Robotics, and she was the gatekeeper. “Another new client,” Eric called out with a grin. “Blink Ware wants us to do some print ads. Now we just have to learn something about the software business.” As he approached Grace
5、sdesk, he glanced toward O Reilly s office door, slightly ajar. “Is he interruptible? Or should I just leave a voice mail?” It was the boss who answered, though. “Hey, Eric. What s this I hear? You pulled in some business?” As he strode out into the hallway, Tom extended his hand to shake Eric s. “T
6、hat s great to hear. It s really working out, then, isn t it? See, I told you so.” Grace watched, half smil-ing, as the two walked together to the coffee station down the hall, with Eric giving Tom a play-by-play of the win.A Cost Center Comes of AgeIt was only six months ago that a more subdued Eri
7、c Palmer had been ushered into his boss s suite. The company had come to an abrupt awareness that it would have to cut costs. Cam- den supplied industrial automation tools to mid-size and large manufacturing companies and had a sizable consulting business besides. But as the economy softened, a few
8、of Camden s largest customers had experienced declining or- ders from their clients, and in short order, the slowdown had worked its way up the supply chain to Camden. It was terrible timing for Eric, the ambitious and likable fellow who headed up Camden s marketing communications department. He had
9、 campaigned successfully to increase his staff andHBR CASESTUDYThe Cost Center That Paid Its Waypage 2harvard business review april 2002had recruited some truly creativeand high- pricedtalent. At the same time, he d won funds to do an extensive technology overhaul, which would enable his group to ge
10、t serious about Web-based communications. All this was approved with the expectation that Camden s business units would launch more aggressive marketing campaigns and would require more support from Eric s headquarters-based group. But in a downturn, that spending looked like unnecessary overhead. B
11、usiness units weretrimming their marketing plans, not beefing them up. And even Eric had to admit that, in the hunt for cost-cutting targets, his department was looking like the fattest crow on the wire.When he was summoned to the top floor, he feared the worsthis own layoffand expected no less than
12、 an order to slash expenses and staff. It was written all over his face.The top-floor secretaries had been surprised,then, to see him come out of Tom s office a full hour later, practically arm in arm with the CEO. The two had cooked up a plan, and soon enough a memo came out that made it all clear.
13、 Eric s group was being recast as a business unit. It would still serve its sister units, of course, in the way it had done for years. But now, in- stead of simply cross-charging for expenses in- curred, it would charge its “internal customers” according to agreed-upon fees for its marketingservices
14、. Such fees would not necessarily reflect actual costs, or even cost-plus pricing. Instead, the new unit would be free to engage in “value pricing” and propose project work essen- tially the way an outside agency would. The ex- pectation, the memo made clear, was that Eric s group would be more than
15、 competitive in its rates; its history of serving the business units would mean no learning curve and low transaction costs. Finally, the memo noted,the marketing group might find opportuni- ties to serve external customers as well, with any excess capacity it had. Fees from such work would help to
16、defray its expenses. Marketing communications, in short, was now not a costcenter but a profit center.Careful What You Wish forThe reaction to the news was overwhelmingly positive. Any number of Tom s direct reports complimented him on the solution, and their praise seemed genuine. One commented that it was a shrewd way to make Eric come to terms with the cuts he d inevitably have tomake. Others thought a headquarters func- tion that saw them and tr
