Knowledge that Transforms

Founded at the dawn of the Internet industry in 1995, Razorfish's pioneering technology, marketing, human resource, and acquisition strategies enabled it to become a paragon of global success in just 5 years. In 2000 and 2001, it appeared that this success would be short–lived. Increased competition, declining demand, and an economic recession all combined to threaten Razorfish's future. This case chronicles the rise of Razorfish and the Internet industry, as well as the challenges presented by a changing industry and economic context. In the spring of 2001, Razorfish management faced options that appeared as either high–risk or highly distasteful.

This case focuses on the decisions confronting Sally Bennett, the new Director of Market Risk Management (MRM), a unique department created within the Marketing Division of a large, diversified energy conglomerate. MRM played a crucial role in supporting the trading and marketing operations in a complex, competitive environment. Bennett was facing important challenges as the demand for MRM's service exploded. She wondered if a more formalized approach to risk assessment might be better and if so, who should design the new system. The proper organizational arrangement for MRM was also unclear. Overlaid upon these issues were larger questions of when and how the department should transition from an entrepreneurially oriented to professionally managed department.

This note provides guidance to instructors who may be interested in using the case study, “Razorfish,” for educational purposes in their classrooms.

This case illustrates that intrapreneurial ventures, just like firms, proceed through stages and that when the product or service being provided is information based, it creates the impetus for organizational change. This case highlights the difficulties and trade–offs involved in making the transition from one stage of organizational development to another. A complicating factor in this case is the matter of scaling up a new venture involving a novel computer application that promises a significant competitive advantage, but may create large organizational upheaval.

This commentary makes two contributions to a better understanding of interlocking directorates in family firms. First, we compare agency costs in family and nonfamily firms. Second, we present additional propositions on how interlocking directorates address agency issues in family firms.