As we inch closer to the double rollover and the end of semester, forward planning becomes more important now than ever before. This is because of the substantial effects each part of the business has on one another, especially over time. Trying to manage and balance all the different business processes has been the greatest issue throughout the semester thus far.
Last week I noted that we faced a major issue concerning the disparity between demand and capacity. Under-utilized capacity isn’t good for any company in the simulation, as it has an immediate effect on your factory’s efficiency (along with many other parts of the business, including its’ Shareholder Value). To overcome this issue, I proposed being more realistic in terms of forecasting demand, in fact, underestimating what we thought demand would be. This week, we applied this action and came out with greater product demand forecast accuracy. Four of our bikes sat in the 85-95% accuracy range (one being completely new), and our fifth product, the other new bike sat just above 70% accuracy*. As a result of learning through reflection, my team was able to improve our demand forecasting for all our bikes, consequently improving our overall efficiency. However, this improvement in the firm’s efficiency cannot be solely attributed to demand forecasting.
Whilst forecasting is an important part of any organization, the key to success comes down to a firm’s management capability and how it uses its’ data as a competitive advantage. Davenport (2006) explains that killer app companies are those which use analytics to coordinate their key business activities towards an overarching goal and extract value from these activities wherever possible. This is the problem we tackle each day within the simulation; trying to manage the data from our firm’s reports through analytics, and using our findings as knowledge to making informed decisions. The permanent issue we face is perfecting coordination between business functions, which becomes more difficult as the weeks go by, due the constant discovery of new information pertinent to our firm, as well as the nature of changing markets. More recently, we have acquired another firm within our world, which means all our problems have doubled.
Broadly, Davenport’s article “Competing on analytics” (2006) describes the very nature of the MikesBikes simulation and the strategy each firm should have undertaken. All firms offer similar products and use comparable technologies, thus we have no option but to compete through points of difference achieved through distinguishing our business processes from competitors (Davenport, 2006). Over time (and rollovers), my team has done exactly that. We have engaged in continuous learning, built a strong understanding of the simulation and how the features interact with one another, and used our strengths as a competitive advantage over rivalry firms. Although we have proven to be successful, other companies haven’t been as fortunate. The new challenge we face is applying our learnings to the new company we have bought. As we endure in our journey, it is important that we continue to learn and develop our technical skill (Katz, 1955), not only for ourselves, but for the new company too.
Moving forward, I think it is important that we use our knowledge to help our new company find coordination between their key functions, and capitalize on what they do well. The conceptual skill (Katz, 1955) we have developed through the simulation is something we need to make them understand and apply to their own business. To achieve this, we will need to engage collaboratively with them, and communicate the knowledge we have to them in a way which is useful for their organization. Effectively, to overcome our issue, we must build their technical and conceptual skill (Katz, 1955), whilst teaching them how to exploit the data from their reports (Davenport, 2006), all in the hopes of creating a key point of difference and a leg to stand on.
*Figures are rough estimates based on the Product Demand Forecast Accuracy (%) graph report in the NetMike simulation.
Davenport, T. H. (2006). Competing on analytics. Havard Business Review, 87(5), 86-96.
Katz, R. L. (1955). Skills of an effective administrator. Harvard Business Review, 33(1), 33-42.