Playing with Fire

Mitigating risk is an important part of business strategy – enough so that entire departments or teams are often devoted to risk management. Going through training session after training session, consultant after consultant, many managers understandably fear risk and uncertainty.

But for most early-stage startups, venture capitalists have much to teach about risk tolerance, and making the case for increasing exposure to risk. The Wall Street Journal notes that of 10 startups, three or four will fail completely, but another three or four will not return the original investment.[1] With the expectation that many startups will fail, venture capitalists have both a perceptive eye and a tough stomach to ensure that investments are carefully placed for long-term gain.

In a 2013 Forbes article, Steve Culp, of Accenture’s Finance and Risk Services, speaks to need to increase risk to stimulate innovation. Culp notes that “innovation and risk management seemingly do not naturally go hand-in-hand in many peoples’ minds,”[2] as he explores the silver lining to increasing risk in business. Culp speaks to two specific corporate structures that do a disservice to innovation. First, he cites the use of “stage gates” in selecting new projects. He notes that, “in many cases, the stage gating process is too focused on re-enforcing what the company does well today and the funnels end up producing only weak, incremental ideas that come to market slowly and lack emphasis on new areas for expansion.” Arguably, it’s not difficult to find companies that are aligned with this trajectory, making minimal gains to keep market share, rather than innovating. Culp also speaks to culture barriers in corporate settings, noting that, “another common impediment to innovation is an existing corporate culture that overly celebrates and rewards success.” With attention on metrics, sales goals, and other analytical focuses, it’s easy to lose sight of innovation when meeting benchmarks will suffice. Such cultures may even deter innovation, overtly focusing on guaranteed successes and lacking space for the possibility of failure.

Culp summarizes a “best practices” for innovation within corporate structure as three key elements: flexibility, speed, and control. He recommends that, “rather than placing all their bets on one or two experiments, companies may want to consider building a portfolio of early innovation investments that act as options.” Since “successful [innovations] often [require] speed, companies can use rapid experimentation and agile development to increase their chances of filling their innovation portfolios with new products and extensions.” Lastly, Culp notes “venture capital firms use controls, but these controls typically are designed to increase risk tolerance, fostering a culture that embraces the logic of intelligent mistakes.” By shifting the focus from risk avoidance to a safe space for innovation, companies of all sizes can benefit from playing with fire.

Have you seen innovative projects or suggestions stifled within your company, due to risk aversion?

What kinds of projects might be possible if your company had a higher tolerance for risk?

On a related note, Gever Tully beautifully sums up this tradeoff between risk and innovation in his humorous TED Talk: “5 Dangerous Things You Should Let Your Kids Do.”

[1] http://www.wsj.com/articles/SB10000872396390443720204578004980476429190

[2] http://www.forbes.com/sites/steveculp/2013/01/07/risk-management-can-stimulate-rather-than-deter-innovation/

[3] https://www.youtube.com/watch?v=C-VacaaN75o

HEALTH CARE COMMUNICATIONS SYSTEMS PILLOW SPEAKER

 

gen_iii_analog_pillow_speaker_largecall cords and pillow speakerpillowspeakersmed

 

In my professional Career I must say this project was the most effective and rewording of all.  I will quote my professor from today “Emotional and personal commitment to a project will create capabilities beyond measurement to the success of the project”.  In my case creating a better living environment for the ill in a hospital was it.  The delima that created  the project was the 350 bed hospital with dual capacity patient rooms, so that’s 2 Tv in every room which caused a noise problem for all the patients as well as the nursing staff in the wards.  Also another problem was lost or stolen Tv remote controls with almost every check in and check out.  As a communication officer for the facility at the time I realized we were loosing over $200000 per year in materials and labor in addition to the stress added to our patients during their stay.

After extensive research and planning an initiative was adopted to interface a stand alone device in the patient room with the existing nurse call system called the pillow speaker to control TV operation as well as lights and nurse call into the room.

may risks played in this project: the major ones were:  Technical customization to different brands of televesions sets, and the acceptance of the manufactures to buy in. 2nd most critical was the lack of technical installation team in kingdom to complete as this was the first time such interface exist in the kingdom.  3rd most critical was the time line for completion while in full operation of the facility with minimal civil work in the rooms.

 

ps_repair_large

I must say with multiple obstacles in the path the driving power to succeed was the comfort level for our ill patients and the improvement of the overall experience.  I compiled a series of training sessions for the technicians to complete the install correctly, initiated training sessions for nursing staff and Medical professionals to  use the new system.  The new devices interfaced to the wall units in the room with a special connectors to secure them and keep them from being lost or stolen.  we phased the project implementation in three months depending on patient census. 70% of completion was done during the month of Ramadan we had the lowest patient admittance at that time in the hospital.

Overall the experience was most rewording raising the satisfaction level among our customers.  Technology at its best serving the population.

  • Designed and implemented pillow Speaker interface that reduced noise levels in patient rooms and impacted cost saving of over 200000 USD per year.
  • Initiated, designed, and completed implementation of pillow speaker interface system first in kingdom to integrate operations of multi-parameters in patient rooms in one device, room lighting, TV operation, calling and communicating with a nurse all in one device.

Introducing iPhone 6’s new shape: Bent

Apple reveals iPhone 6 sales

With the recent introduction of the new iPhone 6 and the iPhone 6 Plus, there has been a lot of controversy over one of the characteristics that constitutes its quality.  Both the new iPhones are a lot larger than the iPhone 5, but also a lot thinner. The current trend is moving towards thinner everything, so you might think this is great idea to create a thin iPhone. That is, until you realize that this feature can also turn awry.  As it turns out, in just the first 6 days, 9 customers complained about the iPhone bending from being carried in the back pocket.

For a prominent company such as Apple, which is known for their quality products, these news are terrible. Some might say that 9 is a very low number of instances comparing to the 10 million they sold. But, the publicity this issue is getting can drastically decrease the sales of the new iPhone, and its future products.

 

A company such as apple puts its products through so many different quality control checks, before they reach the market. Employees and machines, at different points in the process have to check the quality before it can move onto the next task. Apparently though, as mentioned in the statement by Apple, “Testing of the phones did not show any problems with bending or warping. IPhone 6 and iPhone 6 Plus meet or exceed all of the high quality standards to endure everyday, real life use.” Nevertheless, it is difficult to believe this issue never came up. Sometimes people overlook quality issues hoping someone else will catch them. And sometimes, it is just too costly to point out quality issues. If a product is already in production with an announced deadline of introduction, a design issue will cause a delay and an additional budget to fix the issue. This will create a bad reputation for the company. However, so will a bad quality product.

 

Releasing a statement that confirms the product has successfully gone through three-point-bending test, a sit test etc., does not fix the issue. Unfortunately the person, who has had their iPhone bent, might not be as happy with the company as he previously had been. And we all know, that the best form of advertising is from friends and family. If your friend has it and it is performing well, you want it. But, the same goes for when your friend has it and its not that great. Then, your opinion of it changes as well. Unfortunately, this may cause Apple to lose lots of loyal clients, and tons of sales.

 

What do you think about the bent iPhone?

Did you purchase the new iPhone? If so, any issues with bending?

Does this change your perspective on apple?

Will you continue purchasing apple products?

 

 

Arthur, Charles. “‘Bending’ IPhone 6.” The Guardian. N.p., 25 Sept. 2014. Web. 19 Oct. 2014.

 

An UberlyFantastic New Business Model

Recently ride-share programs have been all the rage. I myself cannot remember the last time I took a cab. In my opinion these ride-share programs, and I will specifically be speaking on the behalf of Uber as that is the only one I utilize, have massively decreased the amount of money I spend on cabs. On a Friday night, I can get from downtown to Lincoln Park area for about $10-$12 which is far cheaper than the usual $20 with tip I give to cab drivers.

The operations of Uber itself are quite unique and they have been as successful as they have found a way to thrive on the free-market system in the United States, as well as other countries in the world. There has been recent political pressure to shut-down the companies but it looks like those demands will not be fulfilled.

Uber has morphed together the fast smartphone world of today as well as finding a massively over-priced market and have completely changed the world know to cab drivers. We all have had experiences were you sit in a cab feeling uncomfortable as they make no effort to talk to you, are on their phone talking the entire time, and the inside of the car is beat up. Uber has change that by operating a unique manner few have tried to do. The operations of Uber itself have always impressed me as they literally have a network of hundreds of thousands of driver and they have penetrated the global markets as well.

I will always take Uber now over taking a cab, except for one instance. Surge pricing has always confused me and at times will annoy me to no end. Last season my friend and I attended a Blackhawks game and we took an Uber. Since it was snowing there was a surge pricing in effect; however, we failed to look to see the multiplier of the surcharge. Our ride ended up costing us about $60. At the time Uber was not super transparent about surge pricing but since then they have made it clear to the consumer by making sure to have the consumer actually accept the surcharge before the car is ordered.

Another thought is if Uber’s growth will sustain itself, or will there eventually be too many drivers for too little of consumers? This in my opinion directly relates itself to our class in Week 4 where we were discussing forecasting. With a new company such as Uber being in a newly created market space it is hard to look to comparables. Using forecasting techniques such as weighted average will be useless as the amount of high growth will through of the long term sustainability Uber is looking to achieve. Other techniques such as Exponential Smoothing and Trend Projection will be useless as there is not enough years to look to when performing research. It will be interesting to see in the upcoming years if Uber avoids the over forecasting pitfall so many new companies do and continue to transform the car industry as we know it today.

Uber-Taxi-NYC2-1024x615

How would you go about and forecast Uber’s growth?
Have you ever used a ride share program? If not, what would your reason be?
Have you found the ride-share programs to be dramatically cheaper than cabs?
What is your opinion about surge pricing? Is it a necessity for Uber to efficiently maximize profits or will it ends up hurting the company by turning away consumers?

Sources

http://consumerist.com/2014/09/18/how-do-uber-and-lyft-work-and-why-should-i-even-care/
https://www.uber.com/cities
http://www.nytimes.com/2014/10/01/upshot/uber-improves-life-economists-agree.html?ref=technology&abt=0002&abg=1

If CVS Pharmacy Can Say No To Smoking, You Can Too!

020514_cvsnosmoking

Link to Article: http://www.forbes.com/sites/scottdavis/2014/02/06/cvss-decision-to-dump-tobacco-delivers-on-its-brand/

CVS Pharmacy has recently taken a large step forward in their industry by making the strategic decision to remove tobacco products from all of their stores in order to show how serious they are about being committed to the health of their customers. Also, for CVS customers that are smokers, they will begin offering free online assistance to help their customers stop smoking if they choose to do so. This was obviously a difficult decision and one that could potentially lose them a lot of money, but they believe that this decision will have the opposite effect, and will actually help them strengthen their brand, retain their current customers, and inspire new customers to come into their stores.

I think this directly relates to the material that we covered in class when it comes to the decisions that departments have to make together regarding the success/failure of their company. A decision like this is obviously not made overnight and is one that can only benefit the company if everyone in the company (all departments) is onboard. In class, we learned that a part of a company’s successful strategy is that “learning and continuous renewal are essential parts of a [successful company’s] strategy.” CVS is choosing to “lead the market” instead of “follow the market” and I believe this will really pay off for them. According to the author of the article, “CVS is “putting its money where its brand is” and has the first mover advantage.”

I also believe this article directly relates to the business simulation we did in class. I think the simulation really showed us how important it is for companies to make important thought out decisions and to not try to be something that they’re not. I also think it proves to us that even though at times it was hard to let go of a product that we have been making for a while, sometimes it was the best decision for the overall health of the company. While CVS could’ve remained successful being in the tobacco industry, they chose to differentiate themselves from their competitors and hopefully help them gain a competitive advantage.

Overall, I believe that this decision was the right one for CVS especially since none of its competitors have really done anything as of yet regarding selling tobacco in their stores (Walgreens?). I believe that in order to make these decisions CVS executives strategically evaluated all of their market segments and made sure to forecast so that in case their revenues did fall dramatically, the company would be able to bounce back. One thing that really stood out to me while doing this simulation is how important forecasting is and how important knowing your market segments are in order to be successful. I feel like my team had a lot of trouble with this in the beginning of the competition and this is what caused us to suffer later on. Knowing your products and knowing the market segments that those products are is extremely important and making sure that all of your departments are working cohesively is just as important.

Do you agree with CVS’s decision to remove tobacco from their stores?
What do you think it’s competitors will do regarding CVS’s decision? Will they drop tobacco products as well?
What else do you think CVS can do to set themselves apart from their competition?
Do you believe this will negatively impact CVS’s business?

My Zynga! How does one fall so fast?

Words With Friends. FarmVille. Scramble With Friends. We’ve all heard or played these games, or we have watched our friends on Facebook or Twitter interact with these games. These games are created by Zynga, a company that is nearly six years old based in San Francisco, California. This past week Zynga’s CEO Mark Pincus announced an 18% job cut for employees throughout the gaming company.

Who or what could possibly be the cause of such an 18% job cut? Pincus, in his blog announcement, acknowledged the fact that Zynga has struggled with adapting and entering the mobile space like many other companies. Larger companies, such as Facebook, have also admittedly publicly to have struggled to get a firm grasp on the market that caters to smaller devices that have smaller screens where users expect a fast, seamless and intuitive experience – with less ads. Is this lack of leadership on Pincus’? Or could it be Zynga’s lack of innovation?

This move to lean the company is certainly one thing – focusing on the future. By decreasing the size of the company today, Zynga was able to fairly compensate the newly departed associates. By making this move now, Pincus believes that Zynga is saving money in the long run. He believes making the deep cuts now will allow Zynga to take the risks it was once able to take before it expanded.

There are many similarities in this recent move by Zynga, and the the past few recent years of Chicago based, Groupon. These small start-up online companies expand exponentially all too quickly which brings up the questions, is it lack of leadership? One difference between Zynga and Groupon is that Pincus acknowledging the issues, and addressing them head on from the get go where as it can be argued that Groupon’s first CEO (yet to be replaced), Andrew Mason, failed to take the initiative to help his company early on. Mason, after months of criticism, left by similar fashion – a blog letter written to employees riddled with his off-based humor.

Companies that scale too quickly can easily lose their focus and their identity. Pincus is taking a risk to help his company in the long run. It is a difficult decision to make, but could potentially be the right one to correct Zynga’s projection path. Do think Pincus is making the right move?

http://blog.zynga.com/2013/06/03/ceo-update-4/

Sustaining The Nike Swoosh

The sports apparel powerhouse Nike, Inc. has recently released big changes in the news by announcing a partnership with Swiss company Bluesign Technologies.  The partnership will accelerate the supply of sustainable materials and chemistries for use in all Nike products.  What does that mean exactly?  Well, it means Nike is going green – they are taking steps to make the production of their textiles more sustainable for their workers, customers, and environment.

Though I bet not many of you have heard of Bluesign Technologies, their company is quite interesting.  They have also partnered with The North Face on a journey to sustainability.  The link provided here (http://www.youtube.com/watch?v=wkOQVQdJ_Lo) is a short video which details great information regarding Bluesign; how they work, the benefit of using their technologies, and how it can better the environment.  Basically, Bluesign is an input management system.  They know everything that thNikeey put into their production and calculate the effect of a chemical used in a textile regarding their air emissions, water emissions, and how it affects the workplace so that they know the outcome a chemical has before even starting production.

Nike is utilizing two of Bluesign Technologies that will provide Nike’s supply chain with access to roll out the tools across Nike’s global supply chain.  With one of the technologies, Bluefinder, a supplier can access pre-screened sustainable textile preparations including dye systems, detergents, and other chemicals used in the manufacturing process.  The benefit of this tool is that it helps suppliers manage restricted substances and increase water/energy efficiency.  The second tool Nike will utilize is Blueguide which gives Nike access to 30,000+ materials produced using chemicals from the Bluefinder at facilities that have undergone rigorous assessment.

Nike is pursuing to enhance their sustainable material strategy.  They are looking to put a set of positive chemistries in the hands of material suppliers by preventing the use of hazardous chemicals.  With Nike using these technologies, they can change production with many manufacturers by having them use technologies in order to produce more sustainable products and increase efficiencies.

I think this is a great partnership for many reasons.  First, as we discussed in class, sustainability is win-win and has a multifold positive impact.  Furthermore, without these technologies Nike’s supply chain had to go through individual factory assessments.  Now, their supply chain will run more efficiently with more innovative products.  With the integration of Bluesign Technologies, materials will be made in a manner which is sustainable between products, the environment, and the manufacturing factory.  The sustainability advantage is not only effective in Nike’s products, but in improving their supply chain by making production more innovative, stable, and of higher quality.  This aspect of their operations management is greatly going to improve Nike to being not only a sports powerhouse, but a sustainable one as well.

 How beneficial do you think the use of Bluesign Technologies will be to Nike?

Do you look more favorably on a company that takes efforts to reduce their carbon footprint and provide more sustainable products- why/not?

Nike

Sources:

http://nikeinc.com/news/nike-partners-with-bluesign-technologies-to-scale-sustainable-textiles

http://www.environmentalleader.com/2013/03/20/nike-supply-chain-to-use-bluesign-sustainability-tools/

Beer Can Fan

Have you noticed over the past couple years all the innovation that has been swirling around beer cans? It all started with Coor’s Light and their vented can and their mountains that turned blue when they were just chilled enough to get consumed. At first, Coor’s Light caught some flack for introducing such innovations to their beer can, but it seems that competing companies such as Anheuser-Busch and Miller Brewing Co. are also trying to get in on the mix.

Coor’s Light started this innovation craze by introducing their “vented” and “cold activated” can. Recently they have introduced their new double vented can which is quite hilarious. It seems that Coor’s Light is even aware of this hilarity as they put out commercials that are seemingly mocking their new innovations. Not to be left behind, Budweiser is introducing the latest innovation with their “Bow tie” can. It is designed with a kink in the middle of the opening to allow for easier drinking. The interesting thing about this can is that it actually holds less beer than their traditional can. Another smaller competitor, the Boston Beer Company ,which brews Samuel Adams, reportedly spent over a million dollars in trying to design their own innovative can.

It is interesting to see all these brewing companies investing so much into providing so many innovations when in reality it does not change the actual product that is being consumed. Beer seems to be a product that is defined simply by consumers choosing it for its user-based and value-based aspects of quality. There is no secret to why people buy beer. Top executives at Anheuser-Busch are claiming that with their innovations they are trying to target consumers who are “trend-setters” and like to be ahead of the curve. Surely the companies realize they they are not changing the product, but instead trying to differentiate it by adding to the experience of drinking. By adding certain innovative features to the can, companies are trying to add quantities to their product attributes. In reality, the actual beer is the primary product and its primary characteristics are not being changed or altered by the changes being made to all these different beer cans. If anything, the changes to the beer cans appeal to the dimension aspect of quality since they are creating additional secondary characteristics for a simple can. Adding features that supposedly allow for easier, faster, and colder drinking does not change what the end result will be from consuming beer out of these innovative cans.

Next time you find yourself ordering a beer, keep in mind that the new can you might have in your hand has been designed to help you with your beer drinking experience.

 

 

http://business.time.com/2013/05/11/my-beer-can-is-better-than-yours-aluminum-can-ovations-for-better-beer-drinking/

HTC First to HTC Last

 

Facebook-hoaxImagine if you were Mark Zuckerberg, the CEO of Facebook, and your product attracted 175 million people on a daily basis.  I don’t know about you, but I would be thinking of other ways to capitalize on this already loyal fan base and try to introduce more products targeted toward their needs without stemming off the confines of what has made Facebook successful.  Hey, what about a cell phone?!

This idea has apparently caught AT&T’s eye when they decided to allow the new Facebook Home software to be integrated in the HTC First cell phone.

Facebook Home is software for your phone that allows Facebook to essentially take over your phone.  This allows users to take advantage of their already established social base on Facebook and communicate with these friends on their cell phone “more conveniently”.  It consists of features such as the cover feed that allows you to glance at your phone for photos and posts, chat heads that allows you to send and receive texts and Facebook messages in one place, allows notifications to be accented on your home screen and an app launcher.

To me, the advantages this product are allowing cell phone users to no longer have to pay a texting fee due to the chat heads feature and from a company point of view it allows Facebook to mass distribute its product without consumers having to buy a cell phone.   However, from a product design standpoint, I don’t think Facebook Home targets the cell phone market very well.  It tries to reinvent the cell phone world too much by focusing the cell phone software design around people instead of apps.  As a consumer would you enjoy having your cell phone constantly flowing with your friend’s pictures and status?htc-first-slide-01

Apparently the majority of Facebook Home users did not enjoy having their phone being constantly engulfed with their friend’s updates when the first month sales reports came back.  “BGR.com says that sources at AT&T indicate that fewer than 15,000 of the phones had been sold by the end of its first month.  By comparison, in the three months of the year AT&T sold 6M smart phones, of which about 1 M were android phones- an average of more than 300,000 per month. “AT&T then cut the original $100 price to $99 cents on-contract. The mistake HTC First made to integrate their product with Facebook home has seemed to have left them with an essentially useless product with a lot of inventory.  Now it is rumored that the HTC First will soon be discontinued and unsold inventory will be returned to HTC.

I would question management’s decisions during the product development stages when designing the product, how they reviewed Facebook Homes design, and most importantly how they tested the market.  If these stages were done efficiently I feel that AT&T could have better understood the consumer demand for the HTC First Facebook phone and could have been more aware of this disaster before it occurred.

As a consumer would the HTC First Facebook phone satisfy you?  How do you feel management could have avoided this disaster?

 

 

 

 

 

http://www.foxnews.com/tech/2013/05/13/no-home-for-facebook-at-att-htc-first-to-be-discontinued/
http://www.techhive.com/article/2039633/facebook-slams-brakes-on-htc-firsts-international-plans-following-poor-home-reception.html
http://www.facebook.com/help/558055177560569
http://www.guardian.co.uk/technology/2013/may/14/facebook-home-app-htc-problems
http://news.cnet.com/8301-1035_3-57329634-94/facebook-phone-who-would-buy-this-thing/
http://www.theatlanticwire.com/technology/2013/05/htc-one-isnt-saving-htc-facebook-phone/65486/
http://news.softpedia.com/news/175-Million-People-Use-Facebook-Every-Day-133744.shtml

How The Light Bulb Got Its Groove Back


incandescent_light_bulb
LED_Bulbcfl_light_bulb

In the 19th century, the only type of bulb available was the incandescent light bulb. This bulb was “the biggest thing since sliced bread” and incredibly effective at its job. Unfortunately for the light bulb, the business world seems to continuously search for improvements or replacements of the once great predecessor. Today, the incandescent light bulb seems like an antique compared to the variety of light bulbs available. Consumers can choose now choose from incandescent, fluorescent, halogen, HID (high-intensity discharge), and LED (light emitting diodes) light bulbs. Each light bulb usually provides a longer life and brighter light than their respective predecessors. Consumers also now have the option to choose from a variety of light types (i.e. warm, cool, natural) and whether they dim or not. At a certain point, a consumer can be quickly flooded with and drown in the massive amount of information and options of light bulbs.

At this point, someone may be thinking to themselves “why should I care about light bulbs?” I’ll admit that when considering a single light bulb the selection of said bulb would not save someone or a company millions of dollars, but an impact will be evident. The average person, especially not a company, does not utilize a single light bulb. Let’s consider an average home to use for as example: three bedrooms, two bathrooms, one kitchen, one dining room, etc. Each room requires at least one lighting fixture, and each fixture uses three light bulbs (if we stay on the conservative side). All these rooms and fixtures amount to a possible minimum of 30 light bulbs.

LED

Compact Florescent

Incandescent

Price per bulb

$ 35.95

$ 3.95

$ 1.25

Life Span

50,000 Hours

8,000 Hours

1,200 Hours

Kilowatts per year

329

767

3,285

Annual Oper. Cost

$ 32.85

$ 76.65

$ 328.59

Now imagine the impact this has over the possible minimum of bulbs established earlier. Although a single light bulb, or even light bulbs in general, might not seem to have a large impact on finances, this myth is quickly proven false. Buildings owners, whether residential or commercial, must take into consideration the price of and the operating costs of light bulbs into their expenses. This affects large buildings even more because of the massive amount of light bulbs in use at any given times. The light bulb is no longer solely symbolic of an idea and can now come to represent money, or $$$.

How could something so small and seemingly insignificant come to have such a large impact on the financial aspect of households and businesses? Should the government require homes and businesses to replace current light bulbs with more efficient ones? Would the requirement even be worth the hassle?

 

http://business.time.com/2013/05/09/long-live-the-lightbulb/

http://www.energystar.gov/index.cfm?c=lighting.pr_lighting_landing

http://www.megavolt.co.il/Tips_and_info/types_of_bulbs.html