Lessons Learned

Hi Everyone,

I was hoping we could share some "lessons learned" from our experience with MikesBikes. Our team learned a lot about risk and reward (especially in regards to product development). It was also challenging to keep our strategies aligned with our company mission - in the midst of an constantly changing environment.

Thoughts?

Strategic Control vs. Organizational Control

As defined in module 6, strategic control is a special type of organizational control that focuses on monitoring and evaluating the strategic management process to make sure that it functions properly. Organizational control is monitoring the activities and includes: measuring performance, comparing measured performance to standards, and taking corrective action. Is the main difference that strategic control focuses on providing feeback for whether steps are appropriate, compatible, and functioning appropriately while organizational control is the process of monitoring and improving the activities within the organization?

Controling What Matters

Employees behave in ways that mirror what management monitors, so it is critical to align organizational controls and measurements to what you want employees to focus on. I worked for a company that tracked (and gave bonuses for) sales performance. While corporate “focused” on payroll, it was not originally part of the bonus structure so payroll was ignored. When we started receiving labor reports and a bonus linked to controlled payroll, our behaviors changed quickly.

Simulation vs Reality

What I have learned from using Mikes Bikes is that the offline mode simulation is good for practice but it shouldn't be heavily relied on for making our real life decisions in the online mode. It is impossible to predict human behavior and emotions with a simulation. Our decisions should be based on business cirucmstances to maximize our learning.

The Doom Loop

The book "Good to Great" talks about the Doom Loop. The Doom Loop starts at the juncture of environmental analysis and strategy formulation, where the company does not choose an appropriate strategy to align the company with its environment. It also comes from a failure at the juncture of strategy implementation and formulation, where a company abandons its strategy before seeing the results of longterm decisions and chooses a new strategy as a reaction instead of as the result of careful environmental analysis.

What do you think, where does the Doom Loop starts for most failed companies?

An Example...Imitating vs. Innovating

In module 4, the example of how Japanese electronic companies were quite successful in the 1970s and 1980s in copying American technology is mentioned. By avoiding many R&D costs, the Japanese companies improved their competitive position significantly. In my Management of Innovation class we read an article, Not made in Japan, that discusses how Japan is now having issues with sustaining in the digital age. The article says that this is due mostly to the country's corporate culture as the Japanese market is disinclined to creativity and the many barriers between company divisions. To me this shows that one can only get so far with imitating and a strong long term company strategy is vital.

Imitation vs. Innovation

It is easier to imitate new products, innovative production methods, and marketing, but is this sustainable? Will it give you advantage over time? I think that the key to sustainability is innovation not imitation. Innovation can come from getting access to key resources or customers and achieving size advantage in market. This is where strategy formulation is key to overcoming the challenge of sustainability.

look forward, reason backwards

I'm about half way through an interesting read: "The Art of Strategy" by Dixit and Nalebuff.  The book applies the principles of game theory to decisions made in life and business.  The authors advise that better decisions can be made by looking forward and reasoning backwards. Competitors will react in their interests to any move you make, so you must anticipate their moves before acting.  Seems obvious...but probably isn't followed as often as it should be.

Don't copy your competitors (Except...)

Don't just copy successful competitors' corporate-level or business-level strategies. Unless they trip up, you'll always be a couple steps behind them. Discover untapped market segments rather than following competitors into crowded market segments. However, companies should definitely benchmark successful functional strategies, as long as these strategies fit into the company’s chosen corporate-level and business-level strategies.

The Power of a Plan

The company I work for begins its plan for next year less than halfway through the current year. It seemed odd at first, but I quickly realized the power inherent in knowing where you want to go, how you want to get there, and the steps you need to take along the way. By developing a solid mission and vision, and aligning goals and objectives, that company (and ours) are better set up for success.

Every decision counts...

What I've learned from playing the game so far is that every small decision the management team makes or every small change it introduces might have a large impact on operational efficiency and financial performance. That is why even the smallest of changes needs to be in line with the general strategic direction set by management. Only then will managers be confident that small changes are not hurting their company's performance for the long run.

It takes money to make money

Growth requires investment. Obviously you can't just throw money around, but you can't conserve all of your resources or shareholders will punish your stock. If you aren't doing enough investment to produce growth, then shareholders will wonder why they should give you capital. This is true in the simulation: If you have too much cash, you will be punished. Thus, if you do well one period, you may have to invest rapidly the next.

Mike's Bikes Tip

This is very practical when you're testing decisions on the single player: try to consider the long-term effects of each decision by pushing the program forward two or three quarters. One term it may work, but the next term it may seriously damage the firm. In this way, it is very similar to actual strategic management: Executives can inflate their stock value through short-term moves, but these backfire in the long-run by sacrificing investments.

Cutting and Pasting Into the Blog (Not a Strategic Management Tip)

Just a side note--I tried to cut and paste my post from Word and the blog did not like it. I kept getting HTML error messages. But when I typed directly in the blog, I had no issues. So, I would recommend just typing in the blog to save yourself some frustration. :)

Initial Thoughts About Environmental Analysis

I have found a lot of value in not dividing up the environmental analysis by functional department or comfort level. Although staying in your area of expertise allows you to offer a deeper analysis, when everyone takes the time to review and analyze all of the information the team can better find and understand the links between external and internal factors. This broad understanding usually produces a stronger strategy and more coherent team focus.