The Crystal Company is a software developer with prod- ucts in the payroll and personnel records areas. Joshua and Alyson Bennett started the company fifteen years ago. The Bennetts both have significant experience in pro- gramming and accounting. Alyson wrote the company’s initial programs when her daughter was an infant. At the time, Joshua was a manager at a public accounting firm and heavily involved with clients’ record-keeping activi- ties. Their products, named Crystal Payroll and Crystal Personnel, have been mainstay products for approximately three hundred companies who use the software to compute and process their payroll and maintain all the personnel records. At the time the Crystal products were developed, they were one of the only software products that integrated both personnel records and payroll processing.

The company employs approximately twelve cus- tomer service reps, who spend all their time helping cli- ents use the systems and problem solve all types of issues. A sales staff of ten calls on small and medium-sized companies by phone and in person all across the United States. The Crystal Company is known for excellent cus- tomer service and their close ties with the Association of Personnel Management. Alyson and Joshua are frequent speakers at association meetings held at different times around the country. This combination of a good product, excellent customer service, and ties to the association has made Crystal a successful company.

At the beginning of this year, some dramatic changes in payroll tax rules occurred. In addition, competitive companies have introduced a new software product writ- ten in an easy-to-revise database format that has taken a significant amount of business away from the Crystal Company. These new products are being offered at much lower prices and give greater flexibility to the users. The Bennetts would like to start a project immediately to find a way to convert or rewrite their products into a new for- mat that might bring some of the same benefits as the new competitive products. This project will require the focus of the entire company and great effort. And the project will be extremely expensive. It may be expensive enough to put the company out of business if it is not successful.

RESPoNDiNg to thE CASE

1. What are some of the reasons people at Crystal may resist this change?

2. What actions might you suggest for helping the Crystal Company deal with the changes in a posi- tive manner?

3. How might this new product development be turned into a case of innovation?