UVA-OB-0782

THE VIDSOFT TRIANGLE (A)

Alaji Babatunde sipped some fresh brewed black tea as he stared out his office window in
January 2001. He had a tough decision to make in the next few days. Babatunde had graduated
from the Darden Graduate School of Business Administration in May 1998. Jumping on the
Internet craze bandwagon, he moved to California after graduation and took a job at VidSoft
Technologies. He was now a senior technical support manager at VidSoft. Although it never
snowed in the Bay Area, the outside temperature had dropped to a chilly 45 degrees. Even the
office temperature had dropped to an uncomfortable 65 degrees. Babatunde shivered as he
began to reflect on the events that had led to Alex Hsu requesting a transfer so that he could
report to Babatunde directly.

Hsu was a technical support engineer who had reported directly to Babatunde until three
weeks ago. Then, Babatunde made public the decision that he had been contemplating for the
past couple of months—the promotion of one of his engineers to be a manager. This meant that
the organization structure would change and a new layer would be created between the support
engineers and Babatunde. Hsu had approached Babatunde a week ago to express his
dissatisfaction with his new supervisor, Jennah Li, and had asked to be transferred to another
group that still reported to Babatunde.

Transferring Hsu to the other group would be relatively easy in terms of paperwork, but
what message would that send to the others that remained in Li’s group? How would Li feel,
given that this was her first managerial assignment? A bigger question that troubled Babatunde
was: should he be the one making this decision? After all, Li was Hsu’s manager and maybe she
should be the one choosing the outcome. However, Babatunde could not shake off the feeling
that he needed to be involved, especially since Li was a young, inexperienced manager. Would
creating a triangle (“Hsu, Li, and Babatunde”) of relationships and working together solve this
issue? Babatunde had told Li about Hsu’s request, and the tension between Hsu and Li was
growing stronger each passing day. Babatunde knew that he had to make a decision quickly
since Hsu’s resentment towards Li was starting to affect the rest of his engineering team.
Gulping the remainder of his tea, Babatunde leaped to his door unsure of just whose office he
was headed to—his supervisor, James White, or Li, or Hsu.

This case was prepared by Rajesh Nakhwa (MBA ’04) under the supervision of Associate Professor Lynn A.
Isabella. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an
administrative situation. Copyright  2003 by the University of Virginia Darden School Foundation,
Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenpublishing.com. No part
of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any
form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of
the Darden School Foundation. Rev. 7/04.
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VidSoft

VidSoft Technologies was an Internet company based in Sunnyvale, California, and was
formed in mid-1996. VidSoft developed enterprise software to solve the procurement needs for
its customers. Customers were both large and varied companies and included the likes of Cisco
Systems, Johnson and Johnson, and Telefonica Spain. After going public in June 1999, the
company grew at a rapid pace in both revenues and employees. Quarterly revenues grew from
$50M to over $250M by the end of 2000. Employee base quadrupled from 500 to over 2,000
employees worldwide.

Keith Nash, chief executive officer of VidSoft, was mild-mannered but charismatic. He
developed a culture that encouraged employees within VidSoft to speak their minds. Nash’s
motto was simple: “If you find something that isn’t right, speak up and then go find a way to fix
it!” Employees were encouraged to work hard and to do whatever was necessary to deliver
customer satisfaction. Nash always believed that if VidSoft’s customers were successful, the
company in turn would be successful. Employees that excelled were promoted rapidly.

Teamwork was highly encouraged at VidSoft. In fact, teams were awarded bonuses
based on how they collectively worked together to ensure that VidSoft’s customers were
satisfied. As such, VidSoft sought to hire those who were friendly and interacted well with
others.

VidSoft’s culture was not always about work. Employees were given a lot of latitude in
their work habits as long as their assigned projects were completed. Foosball and ping pong
tables were available on each floor at VidSoft’s corporate headquarters. Friday afternoon happy
hours were packed with alcohol and appetizers. For the most part, employees seemed to work
hard and play hard as well.

Nash believed that all managers at VidSoft should always try to promote from within;
this was a useful motivation tool for employees. Only if no one within a department was
qualified to be promoted should a manager be hired externally. Moreover, Nash always stated
that managers should only hire candidates that were better than them. In fact, Nash made his
point clear by saying that if he personally did not hire people that were better than him, he would
be now working with a bunch of “idiots.” Nash guaranteed that no one would lose their jobs
because they hired smarter people, since there was always something that could be worked on
within the company.

This attitude prevailed until after VidSoft went public. As the Internet bubble expanded,
the demand for qualified candidates grew, and even though there was a mass influx of talent into
Northern California, technology companies could not find talented individuals. The few
individuals that remained demanded very high compensation packages. As VidSoft grew,
managers found that they had to relax their selection criteria of hiring people better than
 -3- UVA-OB-0782

themselves. They had to start taking chances on average talent with the hope of training them to
keep up the hectic pace within VidSoft

Alaji Babatunde

Alaji Babatunde grew up in Nigeria and immigrated to the United States to attend
college, graduating with a degree in computer and information science. He moved to Northern
California to work at various high-technology companies before he went to Darden for his MBA.
Post Darden, he moved back to the Bay Area in May 1998 and went to work for VidSoft where
he began as manager of a division within VidSoft Technical Support. Initially, Babatunde did
not have any direct reports, but as VidSoft grew so did his responsibilities and staff. He was
promoted to senior technical support manager, and in the next eighteen months he managed two
product lines in VidSoft’s Technical Support department. Exhibit 1 illustrates the organization
structure in December 2000.

Babatunde’s style of management changed during his employment at VidSoft. Initially,

he had a micro-management attitude because he wanted his team to succeed. He oversaw
everything little detail of everyone’s work. But he soon learned that would not work as the
number of his direct reports increased. As the manager, he and an employee agree upon a set of
objectives to be completed in an assigned period of time, usually a quarter. At the end of the
period, he and the employee would meet to evaluate and discuss how well the objectives agreed
upon were or were not met. Typically, an employee’s compensation was based on meeting a
certain number of objectives in each period. Babatunde loved this approach and used it quite
effectively to manage his staff.

By end of 2000, Babatunde managed eleven engineers. As his responsibilities grew, he

decided to change his reporting structure. He envisioned having two managers reporting to him
and all engineers reporting to those managers. Given the culture of promotion at VidSoft,
Babatunde decided to promote one of his engineers, Jennah Li, to manage one of his product
lines. With the remainder of his staff being relatively young and inexperienced, he decided to
hold off on promoting anyone else for the remaining management slot. Exhibit 2 illustrates the
organization structure as of January 2001.

Alex Hsu

Hsu was of Chinese descent even though he grew up in the Bay Area. He obtained a
bachelor’s degree in computer engineering from University of California (UC), Berkeley. Hsu
was the first one in his extended family to graduate with a science degree. Although Hsu was
not mathematically inclined, he forced himself to think as an engineer would, as he felt that a
structured and logical way of thinking would make him climb the corporate ladder faster.
 -4- UVA-OB-0782

Hsu joined VidSoft as a technical support engineer immediately after he graduated from
UC in May 2000. His primary responsibilities included responding to customer issues and
debugging1 software codes. Although Babatunde had some reservations about Hsu in terms of
his ability to work within a team, Hsu was hired since it was felt that he could bring varied
experiences into the team especially from a foreign culture. Hsu was a hardworking individual
and although not a top performer, he produced above average customer satisfaction scores. Hsu
kept to himself mostly and did not participate in many of the group’s nonwork-related events.
Babatunde tried to instill in Hsu a sense of team camaraderie but was not able to turn Hsu
around.

Jennah Li

Li was also of Chinese descent and grew up in Hong Kong. She immigrated to the
United States after graduating with a degree in environmental management at University of
Hong Kong. Li worked for a variety of technology companies throughout Northern California
prior to joining VidSoft. Babatunde hired Li even though Li did not have an engineering
background because he was particularly impressed by her skills in managing customer
relationships. Given VidSoft’s motto of hiring people better than oneself, Babatunde felt that he
could learn a lot from Li’s commitment to and her handling of customers.

Li worked very hard after she was hired to prove her worth. Initially, it took her twice as
long to resolve issues and debug software. However, given her determination, she gained the
admiration of the rest of the engineers and consistently delivered very high customer satisfaction
scores. Given that English was not her strong suit, Li worked diligently to learn how to
communicate effectively with the rest of the engineering staff. She was also a team player and
made sure that she helped everyone else on the team succeed. She was awarded the best team
player award for two consecutive quarters.

James White

White had been with VidSoft ever since its inception. His mechanical engineering
background came in handy when solving customer issues. He was the first employee hired to
run the Technical Support department and was responsible for hiring all the employees that
eventually became managers. White grew up in a middle-class family in Ohio and had to work
for everything he wanted.

White’s upbringing made him have a no-nonsense approach to management. He

stipulated certain goals that he wanted met each quarter. Achieving those goals was his key
concern—he did not particularly care how his employees went about meeting the deadlines.

1
Debugging is the process of examining a software program and locating trouble spots in the program that can
cause the program to behave erratically.
 -5- UVA-OB-0782

However, this did not mean that he did not care about his staff. To the contrary, he did
everything he could to make his staff succeed in their endeavors. White was also very
competitive, and he always wanted to win at everything he participated in. If one of the groups
he managed was not doing well, he took an active role at managing that group until it met his
standards. When a group excelled, White had a very hands-off approach to managing that group.

White hired Babatunde initially to manage one of VidSoft’s three product lines in the
United States. White was particularly interested in Babatunde—even though Babatunde had
limited managerial experience—because of his MBA training. Given Babatunde’s high-
technology background, White felt comfortable with Babatunde getting up to speed and learning
the ropes of growing and managing a team. Initially, White spent a long time coaching
Babatunde on how to lead a team and how to hire the right people. As Babatunde seemed to
catch on, White spent less and less time with him, and by mid-2000, Babatunde was given free
reign to decide how to best organize his team.

The Promotion

As the number of customers increased, Babatunde’s staff grew. Babatunde had taken the
time to hire each one of his engineers personally. Every one of his engineers continued to excel
at work. Even with Hsu ’s nonteam player attitude, the team performed beyond expectations.
Babatunde’s group frequently received accolades for receiving the highest customer satisfaction
scores in all of Technical Support (see Exhibit 1 for the organization chart).

A year after joining VidSoft, Babatunde was promoted to a senior manager role and was
assigned the task of managing another product line. Babatunde spent the next several months
hiring for his new group. By late fall of 2000, Babatunde decided to add a layer of management
between him and his employees. He needed to do so as he discovered that he could not allocate
his time effectively among each of his employees, whose number had now increased to eleven.
Given VidSoft’s continued growth, he needed to continue hiring. Babatunde’s plan was to split
his team into two groups to work on two distinct product lines. Babatunde looked at his staff and
he found only one candidate that he felt comfortable promoting to management. That individual
was Li. He would need to hire another manager from outside VidSoft to manage the other
product line after splitting the group.

Babatunde deliberated over this decision for several weeks; he knew that Li did not have
any prior management experience. Moreover, he was not sure that even if he offered the position
to Li that she would accept it. Babatunde had chosen Li for the promotion because he felt that
she would be able to grow into that position and that the chemistry of the group would not be as
negatively affected as if he had brought in an external manager. He felt comfortable in his
choice of Li, given her hard work and devotion. He knew, given his experience, that he could
train Li to be an effective manager. Babatunde did not make this decision lightly and sought the
consensus of his supervisor, White. White, too, felt comfortable with Babatunde’s choice of Li
 -6- UVA-OB-0782

managing one of the product lines. In addition, Babatunde had to make a decision as to which
employees he would put into the two groups. This decision was quite simple: most employees
only handled one product line’s issues, and as such it was easy to identify the two sets.

After Thanksgiving, Babatunde approached Li and made her the offer of managing one of
the product lines. Initially, Li was hesitant at accepting the role of manager since she was unsure
whether she would be able to do a good job in that position. Moreover, that meant that some of
her counterparts would now report to her. She was unsure how her colleagues would feel about
this and whether there would be any resentment to her promotion. Li finally accepted the job
before Christmas. The next step of the transition to her new role would be tricky.

Babatunde decided to wait until the New Year to introduce it to his team. Everyone in
his team loved the idea and Li got a resounding round of approval. Exhibit 2 describes the new
organizational chart. Over the next several weeks Li spent a lot of time with Babatunde learning
the ropes of being an effective manager. Both Babatunde and White were pleased with Li’s
development and comfort in her new role. At the same time, Babatunde had to learn how to
delegate some of his duties to Li and to let her manage her group the way she saw fit. He had to
come to terms with this style when managing Li, and he did not want to interfere with Li’s
management style.

The Situation

Li’s group of engineers worked with her and began to get used to her style of
management. A few weeks after Li’s promotion, Hsu approached Babatunde and wanted to
speak candidly about Li. Hsu told Babatunde that he would like to be transferred to the support
group that supported the other product line (the one that did not have a manager yet). Hsu
mentioned that he did not want to report to Li any longer for several reasons. First, he did not
respect Li and could not learn to respect her, given that she did not have a technical background
(like he did). Hsu alluded to the fact that since Li did not graduate with a science degree, there
was no way she would be able to understand the hardships that he went through to get his degree,
and as such he could not see himself reporting to a nontechnical manager. Second, Hsu claimed
that he joined VidSoft because he was very impressed with Babatunde and his management
style. As such, he should not be made to work for a manager that he did not know he would be
working for when he originally accepted his employment offer. Finally, Hsu expressed his
frustration given that Li was inexperienced at managing people—how could Hsu hope to learn
anything from a “new” manager?

After the conversation Babatunde was perplexed. He thought he had covered all the
bases in terms of getting the right approvals for Li’s promotion. Everyone in the team seemed to
get along with Li. White had given his nod as well. No else except Hsu had come forward to
discuss this. Could there be others?
 -7- UVA-OB-0782

Babatunde felt that Li should know about this. He asked Hsu if Hsu would have any
issue if Babatunde spoke with Li, given that Li was Hsu’s manager. Hsu agreed to have Li
involved regarding his request. Babatunde met with Li and was rather surprised when Li burst
out crying during the meeting. Li told Babatunde that she felt that her worst nightmare had come
true. She considered herself a failure because she felt that she was not doing her job correctly as
a manager. She was also surprised that Hsu had not even hinted about his true feelings about her
during their regular weekly meetings. After consoling Li, Babatunde told her that he would
advise both of them individually to think about their choices.

After considering several options, Babatunde and Li decided to have a three-way meeting
with Hsu so that he could air his views. Hsu agreed—he wanted a speedy resolution to his
request. Even though several meetings were held over the next two weeks, neither party wanted
to budge. Hsu remained steadfast in his resolve to be a part of the “other” group managed by
Babatunde, even though there was a possibility that the manager hired for that group could be
someone that Hsu did not like or respect. Li remained determined that Hsu continue to report to
her. She felt that, as a first time manager, she had a lot to learn and that she could not accept his
transfer because that move might be viewed negatively by her remaining staff. She would be
viewed, as she called it, “a namby-pamby manager.”

To Babatunde, the world seemed a lot easier when he was just a manager. Everyone
respected him, liked him, and seemed to get along with each other—at least most of his staff.
What should he do? Should he let Li fend for herself and resolve this issue to her liking? Was it
proper to not honor Hsu ’s request? Should he intervene and let Hsu join his other group? How
would his other staff members, including Li, feel about him doing this? After all, would this
transfer set a precedent for others? He had to make a decision by the next day.
 -8- UVA-OB-0782

Exhibit 1

THE VIDSOFT TRIANGLE (A)

Organizational Chart as of December 2000

James White
Director

Carmen Brown Reynir Weiss Alaji Babatunde

Senior Manager Overseas Manager Senior Manager

Alex Hsu Jennah Li Other Technical

Support Engineer Support Engineer Support Engineers
 -9- UVA-OB-0782

Exhibit 2

THE VIDSOFT TRIANGLE (A)

Organizational Chart as of January 200

James White
Director

Carmen Brown Reynir Weiss Alaji Babatunde

Senior Manager Overseas Manager Senior Manager

Jennah Li TBD
Manager Manager

Alex Hsu Other Engineers

Steve Ball

Charlie Estevez

Joe Barber

Kathy Vann