Friday, April 24, 2009

Learning from the Best

This time my blog post is a little different. It is a case example of how

I have been trying to teach business strategy to my wife.

She is an elementary school teacher and could not care less about business strategy. But I decided to try, because her situation makes it rather relevant.

She has been a teacher for more than ten years in Finland, which has been ranked the highest-performing country in education. We currently live in Japan, and the Japanese are extremely interested on what is the secret behind Finland's success, and why their system is no longer as effective.

Jim Collins, in his book Good to Great, defines a Hedgehog Concept. A concept which helps you, the hedgehog, to beat your competition, the fox, no matter how hard he tries. My wife has been able to combine the three elements for the concept
  1. What you can best in the world at – she is the best expert of Finnish school system in Tokyo

  2. What drives your economic engine – what she has done provides small extra income, enough to motivate her

  3. What are you deeply passionate about – as any teacher, she is passionate of her job
Treacy and Wiersema describe three strategic value disciplines that can create customer value and provide a competitive advantage. One of them is customer intimacy - cultivating close and long term customer relationships and intimate knowledge of customer requirements. She has managed to do that with Gakken, the biggest educational publisher in Japan. And to some extent with Mrs Itokazu, a member parliament, who is hosting and advertising her next presentation.

On her presentations we have applied the tips from Presentation Zen. You can see some sample slides here. Being her secretary, it is really refreshing to be able to design simplistic slides. Naturally she has a handout to go along with the slides.

Teachers are professionals in delivering presentations. And her presentation is Made to Stick. It has the elements of SUCCESs, it’s Simple, Unexpected, Concrete, Credible, Emotional, and is told with Stories.

Her book, The power of Finnish education (in Japanese) was written by a Japanese journalist from a Japanese point of view. It contains Simple, Unexpected, Concrete, Credible and Emotional Stories like in chapters called "My first time as home room teacher – of 33 students!", "Children deciding classroom rules", "Summer holiday without homework" and "Are field trips a nightmare for teachers?".

This is how I see her strategic position. She is not yet convinced about that and still wonders why people are interested to hear her presentation and even pay for that.

The name of this blog post is borrowed from an article written about her and the Finnish education system on page 48-49 on iNTOUCH magazine.

    Tuesday, April 14, 2009

    Leadership in Hard Times

    I was reading the latest issue of Harvard Business Review in the train on my way back home. The editorial was giving some advice for leaders during these hard times

    Leadership is never easy, but it’s incredibly tough right now.

    Some of the advice sounded familiar as I have been blocking about similar topics lately.

    Hire the best possible people to work for you, even if they fought you for your job. Surround yourself with a team of people who can challenge your thinking and whose strengths make up for your deficits. Share credit with your closest colleagues, so that they’re fully committed to your mission. Be sure to communicate, often and authentically, with your larger public. And don’t forget to relax. Says Doris Kearns Goodwin in Leadership Lessons from Abraham Lincoln.

    I have been blogging about this in my post Right People On The Right Jobs, but maybe should go a bit deeper.

    If you’re leading an organization through this downturn, you’re undoubtedly introducing major changes—and inevitably encountering resistance to them. It’s wise to engage with the resisters, learn from them, and alter your course if they suggest smart adjustments to your initiatives. Your biggest critics can be turned into your best advocates if you have the courage to listen carefully. This advice feels all the more important right now, given that an organization’s very survival may depend on making the right changes. Say Jeffrey Ford and Laurie Ford inDecoding Resistance to Change.

    I have been blogging about this in my posts Leading Change, Change Resistance and Lessons in Organizational Resistance.

    Leadership on tough times is a topic everyone writes about now. Dan McCarthy blogged about it in February "long overdue" as he said. But Lee J. Colan was early, he published a ChangeThis manifesto in December repeating his article from 2001.

    His basic message (in the manifesto above) is

    1) Change is an opportunity to improve our business
    This results in leadership behavior like upgrading the workforce and strategic cost cutting. Greater employee commitment and a strengthened ability to sustain growth are the outcomes.

    2) Involve personnel in the change - everybody needs to understand
    - Where are we going? (Strategy)
    - What are we doing to get there? (Plans)
    - How can I contribute? (Roles)
    - What’s in it for me? (Rewards)

    3) Don't panic, focus and keep doing what you do best

    I actually have nothing to add on these articles.

    Tuesday, April 7, 2009

    Beer Game

    I was reading an article from the Washington Post about how “The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. The customers who once bought them by the millions have largely vanished, and so the cars continue to pile up.” This reminded of the

    Beer Game

    we once played at the university. OK, we played many beer drinking games, but this one, The Beer Distribution Game is a simulation game created at MIT Sloan School of Management in early 1960's to demonstrate a number of key principles of supply chain management.

    The purpose of the game is to meet customer demand for cases of beer, through a multi-stage supply chain with minimal expenditure on back orders and inventory. Communication is against the rules so feelings of confusion and disappointment are common. There are three players in the game including a retailer, a wholesaler, and a marketing director at the brewery. Each player's goal is to maximize profit.
    A truck driver delivers beer once each week to the retailer. Then the retailer places an order with the trucker who returns the order to the wholesaler. There's a four week lag between ordering and receiving the beer – just as there is weeks or months lag between ordering and receiving a car.

    The following represents the results of a typical beer game as described by Peter Senge in Chapter 3 of his 1990 classic, The Fifth Discipline: The Art & Practice of The Learning Organization

    Lover’s Beer is not very popular sells four cases per week on average at the retailer who attempts to keep twelve cases in the store by ordering four cases every week. On week 2 the retailer's sales of Lover's beer doubles to eight cases, so he orders 8 cases.

    From week 3 onwards he weekly sells all the beer in stock (5-8 cases), receives less than ordered and orders extra to be on the safe side.

    The wholesaler is the only distributor of Lover's beer and delivers to several retailers. The wholesaler's policy is to keep 12 truckloads in inventory, and he orders 4 truckloads from the brewery each week and receives the beer after a 4 week lag.

    From week 6 onward he is out of stock, while the retailers are ordering 3 to 4 times more Lovers' beer than their regular amounts. Also the wholesaler receives less than ordered and orders extra to be on the safe side.

    The brewery is small but has a reputation for producing high quality beer. Lover's beer is only one of several products produced at the brewery. Orders begin to increase, but it takes two weeks to brew the beer. Even during week 14 orders continue to come in and the brewery has not been able to catch up on the backlogged orders. The marketing manager begins to wonder how much bonus he will get for increasing sales so dramatically.

    The suddenly, on week 16,
    • The brewery catches up on the backlog, but orders begin to drop off.

    • The wholesaler received zero orders from all retailers – “What is wrong with these people? Four weeks ago, they were screaming at you for beer, now, they don’t even want any.”

    • The retailer is receiving the beer he has ordered earlier, but demend is down. The pop song that made the beer popular - Cheap Credit by SubPrime - no longer tops the charts.
    At this point all the players blame each other for the excess inventory. Conversations with wholesale and retailer reveal an inventory of 93 cases at the retailer and 220 truckloads at the wholesaler. The brewery marketing manager figures it will take the wholesaler a year to sell the Lover's beer he has in stock.

    Car industry used to be the example for supply chain management. But something went terribly wrong. In the game the brewery keeps on sending beer nobody wants, in real life “new cars nobody wants to buy continue to pile up in Baltimore and at ports around the globe. Last month, when space filled up at one Swedish port, Toyota was forced to lease a cargo ship as a sort of floating parking garage for 2,500 unsold cars.”

    The problem is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect. The solution for this problem is Lean manufacturing, which Toyota should have mastered.

    Beer bubbles photo by Tambako
    New cars photo by