Role of teamwork in schools????

This is not an academic refection. I just try to figure out the rationale behind team formation in our class.
I don't really get this team based work. As far as I observed, you have the really good teams that managed somehow or simply had the luck to get the best members, and then you have the teams that are made out of half good, half floaters. I define floaters as those persons that change teams due to their lack of contribution/low performance/lack of interest, etc.
The good teams are already locked and they don't let anybody in or out. They are happy of having the best students and they don't want to risk it by taking newcomers, and I do not blame them. I would do the same probably. These teams can easily manage the assignments even if only one person works on the task. My team takes the same approach. We take turns and each of us do a task during the period of a course. It is easier and saves time. It takes more to travel with the bus from Raslatt, find a empty room (which is very hard to find by the way), then start talking and arguing which solution is better and why. Usually these conversations take hours and nothing productive comes out. And even so, the one that is the most insistent gets his/her idea through. Better have one dictator per assignment.

But what about the other teams? The teams that have floaters in them? What about these free riders? These teams will always get such students and I tell you why: as we take new classes and have the opportunity to remake the teams, the poorly performing students are usually thrown out. The rest of the team is sick of covering for that person, for waiting for their mails and so on. But who will replace this student? Well... most probably another "lemon", because these are the students that cannot stick to a team, or better said the team does not let them stick. Good students do not move, and a wise team will do its best to keep it. If another team wants that student, they cannot get him/her because he/she comes in packages of 3-4 (depending of the size of that team).
Maybe I shout explain this in more detail.
First of all, you can really see differences between the students here. Some did other things rather than a BA in Business and have a hard time comprehending the material. Others have a hard time speaking English. And others just don't care and are here to have fun. I don't blame neither. All are great people! In my opinion, these students make around 25% of class.
Now, the usual team here is made out of 4 people. There is a high change that you will get 1 such student per team. The other 3 well performing students will stick together (part of the same team) for the next class. They cannot get 1 more good student, cause these "luxuries" come in package of 3. So they will get stuck with another lemon floater....
So what to do?
Well... nothing I guess.... You need to help these students catch up. Many want to learn, but you have to teach them everything, which takes a lot of time and stress...

But then I ask myself: is this fair? 50% of the grade is based on teamwork. Why should those teams that have all members above average get good grades even if their individual work was less? Why do good students in bad teams need to suffer?

In the long run, this problem will solve by itself. Good students will also move one by one (and be assimilated int he 3 person group) and poor performing students will eventually improve. But What to do till then?

The schools knows about this issue. Anybody can figure this one out just by comparing the quality of the team based articles submitted VS the independent finals.

The results of this will only decrease the reliability of the student's grades. It will make some poor performing students get overqualified jobs while others, who worked more than the average in order to make up for the teams' members, underestimated grades.

Who has to win? Well... the smart or lucky teams that managed to get all members above average from the start.

This writing was not meant to insult/praise anybody. I just wanted to point out the flaw in the system, which I just realized that it is pretty useless, cause the students know about it and the university also knows about it, as I previously mentioned. So, I guess that my work was futile, but I will post this anyways....

Good night and have a great weekend

Reflections on the Middle Management Guest Lecture- for Leadership Module

The role of middle management has been debated for a long time. Some give them a crucial strategic importance within the company, while others see middle managers as additional costs which company needs to reduce. However, in nowadays fast changing business world, it became obvious that the success of important management processes such as implementing change initiatives and pursuing new directions depends heavily on the middle manager. Balogun and Johnson mention in their article “Organizational Restructuring and Middle Manager Sensemaking” that middle managers are “recipients of change as much as its implementers” and that their role will “increase in importance as organizations become increasingly complex” (Balogun & Johnson, 2004).
The role of middle managers and the dilemmas they face was the topic of the guest lecture presentation we had at JIBS. The guest lecture was Mica Wulff Kamm, the Head of Global Product Management at TeliaSonera. Mica has been working in the company for 11 years now and has passed through as many restructuring periods. In her opinion, “in knowledge intensive industries middle managers are definitely needed”. The role of middle managers is crucial in suggesting and implementing changes, not only executing somebody else’s plans (M.Kamm, guest lecture presentation, 2008-11-24).
In providing arguments, Mica used lots of examples from her personal experience and did it with a lot of enthusiasm and inspiration. At one point, TeliaSonera had to respond to a competitor’s action (we are talking about Skype). So Mica together with her team proposed to introduce a new service, and this suggestion was fully supported by the senior management. According to Balogun’s article “From Blaming the Middle to Harnessing its Potential: Creating Change Intermediaries” (2003), middle managers take advantage of the resources they possess to initiate innovative ideas and take advantage of the business opportunities. Moreover, they encourage projects within the department they manage and use their position to gather the necessary information (Balogun, 2003). What Mica did was developing a plan to react to the competitor’s move and showing all the information to senior management. This is one of the many examples she gave that supported the importance of middle management when it comes to innovation and needed change.
In the article “Middle Managers and Strategy: Micro-Dynamics of Inclusion”, Westley discusses the role of middle managers in strategic operations in bureaucratic organizations. The advice in this case is to keep middle managers “included” and “energized”. Middle managers are more enthusiastic and energetic if they are not excluded from “hierarchy of coalitions” and negotiation of rules with senior managers is possible. Also, middle managers should be allowed to dominate the “framing rules in a strategic conversation (Westley, 1990). Westley’s article can be categorized as pieces of advice for senior managers when it comes to supporting the middle management of their company. In TeliaSonera’s case, empowerment is used as a motivation and is one of the shared values of the company. According to Mica, empowerment is used to encourage innovative thinking and acting (M.Kamm, guest lecture presentation, 2008-11-24).
Moreover, middle managers play an important role in balancing emotions and facilitating organizational adaptability. This is how they succeed at “change, continuity in providing quality in customer service, and developing new knowledge and skills” (Huy, 2002). Especially when dealing with change, middle managers should pay special attention to the employees, as “tension between continuity and change also exists on the individual level” (Huy, 2002). If you want employees to join you in the implementation of change, you should foster an atmosphere of trust and support.
My personal opinion is that middle managers are indeed a strategic asset to the company and their value cannot be denied. They facilitate communication and guide employees when it comes to implementing changes. In her presentation, Mica gave us a couple of advices. One is to get involved in whatever is happening in the company, not just watch. Her leadership style is a participative one and she encourages us to be the same way. She has three golden rules for succes:
• be there when the ground shakes
• make your co-workers visible
• make your team self-running.


References:
Balogun, J. & Johnson, G. (2004) “Organizational Restructuring and Middle Manager Sensemaking”. Academy of Management Journal. Vol 47, 523-549.

Balogun, J. (2003) From Blaming the Middle to Harnessing its Potential: Creating Change Intermediaries, British Journal of Management, vol. 14, 69-83.

Huy, N. Q. (2002) Emotional Balancing of Organizational Continuity and Radical Change, Administrative Science Quarterly, 47(1), 31-69.

Kamm, M.W. (2008). Guest Lecture 24th of November, Middle Management - Real Life, Retrieved 2008-11-26 from Jönköping International Business School’s website:
http://jibsnet.hj.se/documents/files/download/832478114/3385827292690149047/Microsoft%20PowerPoint%20-%20Middle%20Management%20JIBS%2020081124.

Westley, F. T. (1990) Middle Managers and Strategy: Micro-Dynamics of Inclusion, Strategic Management Journal, Vol. 11 (5), 337-351.

SME strategic planning

Today we talked about various strategic management tools that may help small and medium size companies with their strategic development.
I was thinking about the efficiency of applying such strategies. Most of these companies may be really small and not afford the time, energy and capital to invest in such techniques. As a matter of fact, as Mittelstand (Tabellenband, 2004) research shows, companies give up planning as years pass. His research showed that most planning is (if ever) done in the first years, after which a steady decline is noticed. Also, the smaller the company, the less planning is done.
Planning and applying strategic management tools may coagulate the various sectors of your company, binding them together (as McKinsey's 7S model does for example). The 7S model tries to analyze various parts of your company (Skills, Staff, Structure, Strategy, Structure, System) and bind them into one, Shared Value unit. My opinion is that by doing this the company's departments become more interrelated and dependable on one another. Also one change may have bigger repercussions in the other 6 sectors the company defines. There may also be the fear of implementing change due to the risk of uncertainty that will be created in other sectors of the SMEs.
Thus, I believe that for small and small to medium size enterprises, devising strategic management tools may have as a consequence the company's loss of flexibility and thus its main competitive advantage against big corporations.

Cheap and effective marketing

It is becoming a real burden for companies to advertise through conventional advertising techniques. TV commercials, radio, street posters become in my opinion outdated and expensive. Of course they will work, bust most of us became so accustomed to street posters that we just think of them as part of the city background, TV commercials as forced interruptions from our favorite shows and so on.
I noticed nowadays more and more companies that advertise through more unconventional means. Placing a cell phone in one of the celebrity's hands as s/he makes a video clip may prove to be less expensive and more effective.
Let's say Nokia decides to advertise its new youth cell phone. Making a TV commercial will cost the company a lot: you need a team to come up with an idea after which you need to pay a lot for transforming the idea into a short video clip, then you need to finance for every second the commercial airs (fees which vary depending on the show you watch/time/audience).
But if Nokia would give a cell phone to a singer who makes a videoclip and agree to pay 30% of the videoclip's cost (which may in some cases cost the same as one single TV advertisement during a peak hour) if that persons flashes the device in front of the TV for several times (see: Puff Daddy Ft Keyshia Cole - Last night on you tube: http://www.youtube.com/watch?v=FxIR5vvdw2U from minutes 0:30 onward) then it would end up spending a lot less: no team to come up with an idea, no advertising campaign and no payment every time the ad airs. Plus the intended audience can be very well selected this way. Putting a cellphone into a celebrity's videclip will be watched by a lot more teenagers than a regular TV ad. Plus you have broadcasters like youtube, MTV and many others that will broadcast the singer's song and implicitly the clip with the cell phone it it. It is a way of "market bundling" by attaching a product next to another product (this case a service)-e.g. mp3 player comes with headphones.

This marketing technique may even extend to books (for example authors may encompass in their writing -if it fits the scenario- about coming into a specific bar and drinking only a special brand of beer). Think that the audience may be a lot larger (if the books turns out to be a bestseller), cheaper to reach and the individuals may be a lot more attached to the general subject and subconsciously to the subliminal product advertised rather than identifying with it in a random TV add.

Company visit - ITAB

The company visit was very educational in my opinion. Well… at least I learned more from it than by reading somebody’s article and then discussing it in class… But I guess we need both theory and practice in life.
I was amazed how well the company was doing in its domain(s). It focused on store layouts and equipment. These services will always be in demand simply because there will always be businesses that need to find efficient solutions for their store arrangement and outfitting. It’s like dentistry: you will always find clientele that needs teeth improvement.
In my opinion, one of the elements that made this company what it is today was the early age in which it entered the market. I believe that it started 40 years ago. It was there when these services were starting to be in demand. Plus, the company managed to adapt and expand, providing in time both the service and some of the equipment, diversifying its portfolio, reducing risk and dependability from the suppliers that produced the same equipment. It provides a great example of vertical integration, since it provides both the solution and the means to a problem. As we walked through the company, I could see that most of the store layout equipment provided for their clientele was organically produced. ITAB had machines that cut the steel, molded it; it had a painting division, binding division, electronics, delivery, etc.
What I found interesting was that they did not rely on advertising. After some clarifications, it became pretty clear why: ITAB relied on B2B relationships and most of the local clientele was already theirs. Due to the age of the company, it managed to recruit these businesses from the beginning. The company focused on a big portfolio of retail stores (not all of which Swedish) that gave the company enough work with their every newly opened store.
R&D was also strong. We saw a prototype for self checking products. Most of the stores today have a supervisor that randomly checks the clientele that uses this kind of service. This is done because it gives the customer the possibility to cheat (clientele may scan less products and thus pay less). But the problem arises as soon as the random check is done because the clientele may associate this action as an insult.
The new ITAB self scanning machine requires the clientele to put the merchandise on a belt after scanning. This belt weights the purchased article and correlates it to the scanned product. If the weight differs (within +/-1 gram), or an additional, not scanned object is placed there, then it detects this as an abnormality.
I believe that ITAB will have a good performance even during these times of recession because it mainly collaborates with retail stores that rely on low cost products like Metro, Kaufland, Ika, and so on.
I would like to see more of such visits in my future schedule.

Fusion marketing. How to set up a fusion marketing alliance?

I will talk some more about this topic, since I found it very interesting. '
I will explain how to set up such an alliance.
First of all, you need to define who could be your partner(s). Be sure to look for companies that do not engage in the same business as you, since this would make the alliance cannibalistic. Entrepreneur.com offers examples of competitors that are not direct competitors, but nevertheless aim for the same market: landscaper/builder, realtor/mortgage broker, network marketer/entrepreneur, massage therapist/chiropractor
Next you need to agree with your partners how much is each willing to sacrifice in order to convince the customer to go with this alliance, but without making one company suffer more than the other. The sacrifices made by the companies should be more of less of equal value or proportional with the amount of revenue each store would receive from the redirected customer, depending on the type of business and profit margin of each.
Binding the agreement is also important, since it should be clearly defined the tasks of each partner, in order to avoid future possible issues.
Next you must transform the idea into reality. You need to exchange information and create a common advertising material that will be distributed by all the companies involved. Try to make this offer as easy as possible. Don’t make it hard for the customer to benefit from the alliance: for example (related to the pizza store example in the previous blog) don’t make the customer buy a certain number of pizzas in order for the coupon to be valid.
Try to make this network work as fluent as possible. Also be sure to constantly search for new partners that want to join in. The more you find, the more advantages your clientele will have and thus more likely to choose you than a direct competitor that does not posses such bundle of offers.

Source: www.entrepreneur.com

Fusion marketing. What is it?

I found this interesting concept called “fusion marketing” that seemed pretty important, but rarely used by companies.
On entrepreneur.com there is such an example of a pizza place and a dry cleaners store that implemented fusion marketing. The customer that would go into the pizza place would see discount coupons for the dry cleaning place and vice-versa. This alliance would help both companies survive by sending traffic to each other.
In my country for example, there are only few businesses that actually do that, and many of them are owned by the same person. Most people are scared to engage in such activities for the fear of making the “opponent” stronger. But what they fail to realize is that fusion marketing is not meant to be done between direct competitors, but more between companies that aim towards the same target market.
A concrete example would be a strategic alliance between a wedding planner, a catering service and a bride dress store. Neither stores are in direct competition, since a wedding will require all of these services, but they nevertheless aim for the same target market: the future married couples.
Fusion marketing can occur in many forms, not only by discount coupons as I mentioned above. For example a joint mailing list that is incorporated in the store’s business card or printed on each of the store’s packaging material.

Source: www.entrepreneur.com

My opinion about the rationale behind change reluctance goal setting. Reflection on Ownership and Leading Change course

For the “Ownership and Leading Change” class we had to read 6 articles regarding change.
Riley and Clarkson’s article “The Impact of change on Performance” talks about the negative effects of change on organizations. It says that performance is indirectly proportional with change. This affects mostly employees, which start to become confused and do not have enough time to accommodate. They start questioning the effectiveness of the process itself and whether the path taken by the organization is for the better.
I believe that the change the author is talking about here is more of the “dramatic” type, as Nguyen & Mintzberg talk in their article “The Rhythm of Change” since it is felt and reacted upon. Usual, unintended change is occurring all the time within the organization, even if it is internal (like organic or systematic change) or external, in outside environment through the advances made in the industry or market (technological, customer preferences, economic conditions, etc). But this change is not perceived by us in most cases, since we take it as given. We accept to go with the wave, but refuse to go faster without performance drop.
I was thinking that this reaction is due to insecurity and subconscious analogy of this phenomenon with risk. I believe that most employees are risk adverse and are reluctant to change. They prefer a stable job in which they do a stable task and thus receive a stable income. I see few people starting to change jobs just because they are bored of it. I see even fewer starting in a completely new direction, a new job in a new industry just because they became bored of what they did that far. Reason: unwillingness to change, to learn new things, to reshape their mentality and logic, to memorize and process new information, especially after a certain period of tine exposed that specific environment.

So most of the employees are scared of changes and associate it as a transition towards the worse. The more they work in a sector, the harder they get accustomed to new things. I believe that the interest to discover new things, the desire to stay up to date with all what is happening is decreasing as age passes. Reasons may be that we absorb information slower than we previously did in our childhood, plus we realize that the amount of information is way too vast for us to comprehend. So we tend to stay with the things we knew when we were younger.
For example, the amount of people over the age of 60 that know how to operate the computer is a bit more than a handful (at least back home, where they did not receive any IT lessons). But these people prefer reading instead, a “hobby” many had when they were young. Our generation spends more time on the PC, playing games, reading e-news and watching youtube than reading physical books. I am trying to say that we assimilate the environment and try to fit in until a certain age, when we found our equilibrium. From that point onward, it will be harder for us to accept changes (i.e. old people learning PC skills and us abandoning the PC and starting to read books instead).
Ok.. now let’s get back to Rieley and Clarkson. Their solution to this fast change is developing reality based measures, clear objectives and benchmarks. They say that being vague is not recommended.
I believe that the rationale behind this is to help people reach change by hiding the process itself. If I were a worker and had a lot of imagination, I would envision change as a swim in the sea. I don’t know where the current will take me (thus I am reluctant to go into the water in the first place), but people (the change makers) push me in the water. By setting a goal, a clear objective, for example somebody telling me that there is a island 2000 feet in front of me (even if the island – goal- is not there, but it will appear, the closer we get), will give me enough power to propel through water and materialize that “island”, instead of having my thoughts caught in concerns such as the deepness of the water or the fear of drowning.
People are usually reluctant to change, unless it is a mass phenomenon. After a certain period of time we prefer more our old friends, car and apartment. But when a change is made, it is better to have a clear objective. This will help you best to pass through the transition period and keep your eyes on the price.

Reference:
Rieley, J.B. & Clarkson, I. (2001) “The Impact of Change on Performance”.
Nguyen Huy, Q. & Mintzberg, H. (2003) “The Rhytm of Change”.

E business - How to differenciate from others?

The web is full of products. It is up to the e-seller to convince the customer that his/her product is the best. Price, of course, is a big motivator for any buyer, but I will try to talk here more about customer service, which can also attract clientele, and even better, be able to maintain a long run relationship with that person, in the sense that he/she may return and make additional purchases in the future.

The reliability of the seller is a big issue. If you are a big, well known company or even have store front locations, you may convince the customer to go ahead with the purchase. But when it comes to C2C business, references may become a bigger priority for the buyer than the actual price of the merchandise involved in the transaction.
Ebay and other sites use references to inform customers about the seller, how serious s/he really is about the sale, if s/he had any complaints in the past, and so on. Tripadvisor.com also uses customer feedback for hotels and restaurants.

But what happens if you are a small, newly formed B2C company that has no background, no history and hadn't accomplished that many sales yet?
Every no-name e-company that was concerned in providing products and services probably passed through this stage through their beginning.
If they had an initial physical store or office, then things would have been easier, since they may have gained some reputation at least throughout the local redidents, but many merchandise selling companies started only with a hall which was used as inventory space and office and a couple of computers.
What did they do to advance? Here are some tips:
-Always have ways that the customer can reach you (telephone, mail, email and even sms). Even if this may require more people to hire, it is important that you listen to your every customer.
-Stay in touch: become involved with your customers. If they don't want to return at your e-store, ask why (email or call them). It may be that they just misunderstood a term or are upset that a product is not in stock. They may find the site difficult to navigate. This way you may earn the customer back, since he/she fells taken care of, but also receive valuable info about your weak spots that need improvement.
-Respond quickly: HP for examples set a goal to respond to each mail within 24 hours. Customers don't like to wait. A good strategy is to have some frequently answered questions in hand, so that you just forward them if necessary. But when using this strategy, try to individualize the mail as much as possible, even if it involves only putting the customers name is the reply. For the rest of the mails, that require particular answers, take your time and answer the question thoroughly.
-Be ready to provide customer support for the product purchased. Dell has several such services for the laptops you buy from them. Online chat is available 24/7 and this even includes remote desktop alternatives.

These are just some of the customer support. Even though they are basic, they nevertheless are able to increase the customer's return rate and site reputation. Their back-draw is that they require time and money, reason why many e-businesses are reluctant to try them and prefer to spend more on advertising.

References: http://www.entrepreneur.com/, last visited on 08/11/08

E business – How to generate income?

There are a few ways to make money using an online site. One of them is obviously selling e-merchandise (products and services) and getting your return from a markup or simply for your expertise work and time invested (if you sell a service).
But money can be made also without selling a particular product. Providing good information on your site so that it becomes an attraction for others is enough. Independent online newspapers earn their income this way. They provide free news that attract a lot of visitors. The more visitors you have, the more valuable is the web space in which you public the news. Advertising companies may want to "rent" a portion of your web page in order to advertise their products. The most common practices are the following:
I will use Facebook, because it came handy. But please keep in mind that these prices are a bit hi, since Facebook is a well known, frequently visited web site.

The site mentions 2 options(these are quotes from www.facebook.com):
"Daily Budget: What is the most you want to spend per day?(min US$1.00)" - the standard bid was set at 25$
"Max Bid: What is the most you are willing to pay per click?(min US$0.01)
Suggested bid: US$0.31 - 0.42"
So, the first option displays the banner and does not count the click on it, while the second pays only if a click is done. For both, the more you pay, the bigger the chances of your add to pop-up.

Entrepreneur.com talks about the costs that may be associated with putting the site up. It says that allowing credit card payment on your site increases the monthly fee for maintaining the site. You should also consider the fact that there is another monthly processing fee, and all these fees vary with the amount of transactions you make.

So in this post I talked about the website's owner options of earning income, either by selling products, services or space, but also about the cost he/she may incur when making web transactions and the income he/she may receive when selling virtual space.

E business – What are the possible dangers?

The bankruptcy rate of these companies is very high. One reason is that most of them generate no or insignificant cash flow and rely only on investment money. Most e companies are inclined to the errors I will point out bellow. These are the aspects need to be taken into consideration:

These companies mostly rely on mass customers in order to generate their revenue. There is a huge market out there and a lot of tastes. You do not know whether your web site will reach the intended customer and attract his/her attention. So the revenue that you expect is very subjective and volatile. The mistakes the companies make is spend heavily at the beginning of unnecessary equipment (expensive offices, overpriced and over performing PC’s that are not really required in the early stages, and so on) even before receiving a significant income form the business. These companies should reduce costs as much as possible at this stage, until they can establish a relation between revenue and expenses (a cash flow) and thus a bracket on the range of their affordable expenses.

Businesses should always define the exact source of income. Solely stating that revenues will come from future ad dollars and e-commerce is not enough. The income generating sector should be well defined before the activity can start, so that you know for sure that the possibility of revenue will appear in the future.

Try to balance the revenues with the market share. Many low-cost product e-businesses appear first on the search engines like “pricegrabber” when you look for the lowest price of a certain equipment or service. These companies rely heavily on market share, but hardly generate any revenue from sales. They rely on huge purchases in order to survive, which makes this strategy very volatile since you rely of customers that go with the lowest bidder (not loyal) and that leave you as soon as they find a better offer. Of course, going on the other side is not good either (high price and low sales).
The best alternative is a balance between the two at the point where you have the highest rate of returning customers. But for that you will probably have to focus on more than just the product (fast delivery, optional features of the products, customized parts discounts for repeated purchases or high volume of merchandise bought, etc)

Focus on the industry you are in. Do not try to cover everything because you will have nothing to win since bigger competitors in that are better than you as a new entrant.

Source: http://www.entrepreneur.com

E businesess - why?

I still want to start an internet business. I did some research (most of it was found on entrepreneur.com web site) and came up with reasons why one should start an internet business:

Cheap –low budget required for start up, cheap marketing due to lack of printing and mailing costs for advertising,
Up to date info - instead of printouts (catalogs), that expire as soon as new products or services are added or the price changes.
Staff is low, so wages and salaries are allocated only to a handful of people
Open 24/7 – as long as the server works
The world is your market and namely every e-customer from any corner of the world that might be interested in your products or services
Low requirements on permits and government bureaucracy when you are at startup
Never have to face customers – in the case you are not that customer oriented, social kind of person.

During my next blogs I will share with you more about the internet business

IBC Course Project -abandoned idea

I thought about a web based business idea that would provide customers with online info about the restaurants in the Jönköping area.
I will be brief, since the concept will never fulfill…
Each restaurant would have its own space on our website that would comprise of a small map on where the store is, some info about the atmosphere it provides, menu, working hours and maybe a couple of pictures. The data would be ordered either in alphabetical order or by geographical location, the view it provides, prices, menu characteristics, happy hour, customer age, and so on.

A team was supposed to go through town and talk with the owners to provide some info and pictures that would be posted for free on the web (trial period). After the site would have above a certain number of clicks, we would ask the restaurants a small fee for storing their advertisement.

But this idea fell apart yesterday when I encountered this site:
http://www.jlunch.se/lunch/Restaurang/Tusen%20&%20en%20natt (last visited on 02 Nov 2008)

I will try now to come up with another idea.... Hopefully one that is not already taken...

The marketing error of Sanevit

Since this week there wasn't a lot of new material taught in school, I decided to make some research on Savenit, a Romanian company that was founded in my city. I will try to explain why it failed as an enterprise.


Short history

After the fall of communism, Romania still had to import medical equipment; it lacked any means of producing cheap and competitive basic medical paraphernalia. We had to pay a lot in order to provide the patients with the basic syringes that were used nationwide on a daily basis. Shortages of these utensils cumulated and created a problem, so the state had to come out with a solution: Sanevit.

Sanevit was born in October, 1991 in Arad as one of the most important investments of the Romanian private capital; the only firm of such kind in the Eastern Europe. Its goal was to produce and commercialize low-cost syringes and needles at international quality standards (160 mil peaces syringes and 520 mil peaces needles per year) and to reduce the risk of contaminations. Its main stockholders were SIF Banat and Crisana and the rest (between 10-15%) was made out of private investors. The capital required to buy top of the art machinery valuing 37 million US dollars was attained by a loan guaranteed by the State.

Sanevit started producing around the year 1995 and detained monopoly over the domestic market.

Advantages over the competitors:
The syringes were made out of the cylinder, a plunger and a rubber piston which presented several advantages:
-the rubber piston better sealed the liquid content that was present in the cylinder when the syringe was in use
-tightness is maintained for a longer period of time, having a warranty of 5 years
-the force required to push the piston was smaller than the usual syringe (the special rubber used reduced friction), thus enabling uniform dosing of the injectable liquid through gentle slide
-superior rigidity of the plastic components
-easier to read the observation reference marked on the syringe due to the contrast present between the colored markers and the black rubber
-danger of plastic particles injection is eliminated by the presence of the rubber
- The conditions of needle manufacture comply with all existing International Standards: ISO 7886-1/1993; ISO 7864/1993; DIN 13098-1/1994; ISO 9626/1991; ISO 6009/1992; ISO 683/1986; ISO 594-1/1986


Disadvantages that lead to the fall of Sanevit

The present Romanian medical system:
In Romanian medical assistance is free. Everybody who comes into the hospital is treated upon the government’s expense; hospitals don’t benefit from financial autonomy. That makes every monetary choice matter due to the lack of funding towards this branch. The scarce monetary resources must be effectively allocated in order to achieve some level of effectiveness. The price for land transportation plus the initial high price of the superior quality syringes made it an impediment for this industry to evolve. Hospitals argued that too much money was spent on buying these products instead of importing them. They wanted to keep the Romanian syringe factory, but at the same time try to buy the products from the most convenient seller. The government was funding the syringe factory to produce and sell high-class, expensive products which the government had to buy indirectly in order to satisfy the demand present in the hospitals.


Location:
Due to its extreme western location, it was cheaper for most of the major cities in the east to import similar syringes (of approximately the same quality) from the eastern countries, or just ship them on the Black Sea. The price they had to pay on transporting the products was becoming an issue. Placing the factory somewhere close to the center of the country could have reduced these costs, or at least distribute them evenly to the marginal cities. Placing the factory in the far west led to an unbalance price of the product and thus to inefficient allocation of the scarce funds the eastern hospitals had.


Outside competition:
First the Romanian state tried to prohibit imports of syringes thus forcing the domestic market to buy Sanevit’s products and imposing import barriers. They wanted to give the syringe factory a head start to recruit its buyers and to have time to accommodate into the new market, taking into notice the fact that there was no other firm that created the same products, no other model in the Eastern Europe from which the company could learn or take as an example.
But later on, because of the high costs the government incurred in its strive to maintain and develop this “experiment”, because of the pressure created by the hospitals and some unjustified errors and ordinances issued by the Ministry, the gates that allowed outside competition to invade were opened. In 1997 the import barriers were no longer and the market was taken over by the foreign firms. In that year Sanevit held 7 million syringes in his stock for the purpose of selling and was confronting financial difficulties regarding the repayment of the loan. Because of the multiple sellers most of the stock wasn’t sold as planed and thus the money needed to pay the loan did not arrive.
By doing this, the government will experience a better use of their funding towards medical paraphernalia, but at the same time kill their investment they had done in the Romanian syringes industry. It was a bad move made with the sole purpose of stopping the avalanche of medical riots that was beginning to cumulate nationwide.

Late payments:
After loosing monopoly upon the market, Sanevit experienced a great loss in their sales. Still it did not lose all of its customers and was still able to make a profit. But late payments of the buyers because of the lack of funding and multiple crisis and riots present during that time in the medical sector pushed the factory on the edge of bankruptcy. They were distributing syringes but were not receiving any money from them; still they had to provide the products because the debtors were the only buyers, thus their only way to get the money was through them.
Another factor that determined the late payment of the loan was the delay vis-à-vis of the starting of in the production. Because of internal financial difficulties and bad management, the production started in 1995 instead of 1993. The company lost 2 years in which they could have produced syringes and needles for the Romanian market.


Failure to pay the loan:
All the delays leaded to the failure of the company to pay its loan. The opening of the domestic market to the international sellers in 1997 and failure of the buyers to pay in time the products purchased led to the inability of Sanevit to pay back the borrowed money. The loan cumulated till the profit of the company was not enough to cover the loan. The company had no way of getting out of this situation, so it declared bankruptcy and turned to the government for help. The state compensated the loaning agencies and the company was given to AVAB, a governmental agency designed to sell the company on the market. The factory was transferred under the property of the Health Ministry by selling the stocks in order to pay the loan.


Info found on the company (till 2003):
Most of the buyers paid meanwhile the loan they had, giving Sanevit a second chance. Besides that, the company was trying to obtain a short term loan in order to attempt to restart the production. All these could lead to the rebirth of Sanevit.
An advantage that Sanevit had now was the financial autonomy of the county health centers. The Health Ministry (the present owner of Sanevit) was having a fierce battle with the independent importers of syringes for the domination of the market. The Health Minister wanted to provide superior products at a higher price, thus reducing contaminations, and tried to stop Romania from becoming dependent from imported articles, but this initiative was pushed backwards by the importers who buy cheap products from outside or products that are dumped or sold for nothing because they are close to the expiry date.

I could not find any relevant info about the factory starting from 2003 onward. So.. in a way I don't know how the factory is doing today. Still, when I left home this summer the factory was still functioning. I don't know at what capacity though.

Sources:
http://www.visualia.hu/sanevit/syringes.htm
http://www.e-next.ro/modules.php?op=modload&name=News&file=article&sid=2798&mode=thread&order=0&thold=0
http://www.prefectura-arad.ro/cpresa/cp0615II.pdf
http://stiri.acasa.ro/1252.html
http://www.activebancare.ro/index.php?unde=prs_int&id=131&PHPSESSID=b5f21fbb0098d242de03ad467615b8cd

Michael Dell's Operating Cash Cycle

I started reviewing for the exam, and I passed Module 4 again. It concerns Financing Growth.
Churchill & Mullins mention in their article “How fast can your company afford to grow?” about components of an operating cash cycle. They offer along the way a small schematic on this OCC should look like:



I would like to talk about Michael Dell, a great entrepreneur that revolutionized the computer. The result of his strategy would turn the above diagram around.

The customer first sends the criteria for the desired computer, after which he/she has to pay in order to allow green light for the PC to enter in the manufacturing process.
Thus from the company’s point of view, the “Goods Sold” come first in line, followed by inventory ordering. We considered in the diagram bellow that the inventory will be received faster than the money from the customer gets in the Account Receivable
This method probably does not reduce the operating cash cycle, but definitely increases the effectivnes of holding the inventory, since only required components are purchased. Days of Account Payable remains unchanged, but the “Duration Cash is Tied Up” is smaller. It is not marked in the diagram, but the “Duration Cash is Tied Up” would be in-between “Inventory Received” and “Payment Received”
We considered this case in which Inventory received comes in front of Payment Received, but if it would be the other way around, then the durations of the cash being tied up would probably be 0.
Also the “Days of Holding the inventory” (components that need to be assembled) is also reduced if not totally taken out of the equation in we consider that the assembly starts as soon as the components arrive.

Patents in genetics - related to the Entrepreneurial Growth class - Module 6

A brief definition of the patents can be found in Merriam Webster Dictionary:
“a writing securing for a term of years the exclusive right to make, use, or sell an invention”

Reading Module 6 for the Entrepreneurial Growth course, we find out that there are 3 types of patents:
1. Utility Patents: protects the working mechanism of a certain mechanism or service (ex: Intel micro chips or the patented specialized software of a company)
2. Design Patent: protects the way an object looks
3. Plant Patent: protects new plants that reproduce asexually (various species of vines)

Doing some individual research, I found out about a 1980’s case, which gave birth to another type of patent. I am referring to the Diamond vs. Chakrabarty Case.
Just to give you a quick briefing on the case:
-Dr Chakrabarty was a renowned genesist who modified a species of bacteria in his laboratory. The result was that the bacteria would eat oil. When thrown on a spot of oil, the bacteria would start to eat and decompose the chemical into other, non- greasy substances, after which it would starve.
-he saw this as a great invention so he went to the US Patent Office in order to get the protection rights. But the Office stated that the law says is clear that no living organisms can be patented. So they denied his request
-Dr Chakrabarty appealed the decision. Helped by General Electric, he went all the way to the US Custom Court Appeal and eventually the case was overruled in Chakrabarty's favor. "the fact that micro-organisms are alive is without legal significance for purposes of the patent law. […] A live, human-made micro-organism is patentable subject matter under [Title 35 U.S.C.] 101. Respondent's micro-organism constitutes a "manufacture" or "composition of matter" within that statute.”( John Paull “Beyond Equal From Same but Different to the Doctrine of Substantial Equivalence” M/C Journal 11(2) May 2008 ). The court saw the invention more as a detergent than as a living organism.
-after seven years, the US Patent Office declared that it issued the decree through which all life can be patented, except a full grown human being.

Patenting parts of life was admitted by a series of countries, including SUA, Japan and most countries in Europe, but some remain skeptic about the implications of such an action and decided to disagree on the issue (Canada for example).

Joel Bakan’s movie “Corporation: The Pathological Pursuit of Profit and Power” discusses more on this issue. The movie documents how genetic companies started to patent all discovered genomes as soon as the law was issued. They invested huge amount of capital in research in order to discover and isolate genes as fast as possible.
New species were created, like the Harvard mouse (see picture), a lab rat that requires permission from the institution in order to be used.

Now there are a lot of moral dilemmas involved here since genetic companies will eventually develop and own parts of human body.
The "good part" is that humans will have the possibility to “renew” themselves, raising their living expectancy. Many diseases will be cured or be one step closer to being cured (cancer in its initial phases can be extracted from the organism, and the infected organ replaced with a new one). Also the black organ market will be part of history.
Further more, consumption will increase (food industry – people will have less fear of destroying their bodies, since organs like kidneys or liver can be “replaced”; cigarette industry – don’t quit, just buy a new lung). I am starting to sound a bit Sci Fi, but there is some truth in what I just wrote.

I hope that this article had some impact on the way you see the future of genetic medicine. But for now, we just have to stay with the stem cell research ;)


Sources:
http://en.wikipedia.org/wiki/
http://www.bustpatents.com/
http://digital-law-online.info/
http://caselaw.lp.findlaw.com/
John Paull “Beyond Equal From Same but Different to the Doctrine of Substantial Equivalence” M/C Journal 11(2) May 2008

CREATIVITY - Book analysis: De Bono, Edward - Six Thinking Hats ----- PART 3

Impressions about the book:

The book was really interesting. It showed a new completely new thinking process that may solve many problems faster and more effective. The book was very well structured and contained a lot of real life examples that really made a difference.
By applying the Six Thinking Hats principle, creativity is boosted due to nature of the process employed since it allows division of the task and enables one to dedicate its focus to only on one part of the assignment at a time, thus reducing the complexity of the chore. One can dedicate exclusively to the emotional part or the informational part or to creativity, criticism and so on.
Another advantage is the ability to switch the thinking perspective, so that all the participants have the chance to see the task from the same angle. Everybody is aware of each other’s hats they are wearing, and their actions are not considered offensive as long as they play the role (this mainly applies to the use of the black hat, a necessity in every decision taking, but whose actions may have as an indirect effect making some participants uncomfortable).
I considered this book a real pleasure to read and I found it very educative.


The picture of De Bono is taken from www.wikipedia.org, last visited on 5/10/08

CREATIVITY - Book analysis: De Bono, Edward - Six Thinking Hats ----- PART 2

As I promised, I will continue to talk about the hats. I found some spare time during the weekend that I put to good use ;)
I will talk about each hat separately.
In my next blog posting I will probably give a brief summary about the book. So stay tuned.

THE WHITE HAT:

The author tells us the best circumstances in which to use the hats. Even though no order is mandatory, in some cases it is recommended. I found his arguments pretty solid.
It is better to be used towards the beginning since it reveals all the background available info. But it can also be used at the end to put all the pieces together and summarize the ideas created.
The hat does not generate ideas. It is neutral in that aspect. It only lays them out and defines the objective, asking the factual question that needs to be searched for. Thus it points out the parts that need to be worked on (the missing information).
It is important for the wearer to communicate just the pure fact out. He/she should be neutral in that aspect since any subjectivity may easily influence the outcome. De Bono gives as an example a lawyer, who even though it may seem to asks factual questions like “Where were you” or “What did X say when you approached him”, it actually represents the opposite side of the white hat, since he/she tries to “bend” the story through these questions in such a way that it will make his/her client innocent.
Own opinions are not allowed when using this hat. Even if statements such as “allegations, gossip and hearsay” (De Bono, 34) are allowed, these beliefs need to have realistic foundations (be checked as facts) and not be mere opinions of the speaker
The author also does a good job in describing how the rest of the participants should prepare themselves for the debate. He does not advise anyone to start any discussion with a preconceived idea. The ideas that help reach the final decision should evolve naturally, as more and more thoughts are added, making the context more comprehensive. De Bono points out that the Western culture does exactly the opposite, since it just bends the preconceived idea till it fits the shape that all the participants agree upon (he refers to the consensus meetings). The white hat hinders this kind of rationale, since it offers everyone who is wearing it to renounce to his/her preformed ideas and contribute with objective facts.

THE RED HAT

As I mentioned in my previous blog, the red hat symbolizes feelings and emotions. Feelings will appear while making any decisions, so the red hat merely enables them to be openly revealed and ensures that they do not remain hidden. They should not be justified, since this may inhibit their conception. The red hat comes as a complement to the white hat.
De Bono starts his analysis by stating the advantages of using the hat. First he talks about ordinary emotions, such as dislikes, sympathies, fears and so on. The author tells us that it is better to bring these thoughts to the surface, so that everybody is aware of them and their influence on the decision making. Furthermore, people do not have to spend time trying to figure their colleagues feelings about a certain issue. They can just offer them the hat and let them confess, thus setting aside any ambiguities, confusions or misconceptions that might have arisen if that person would have remained silent. This way, counterbalance measures may be established in order to render the final result as fast and objective as possible.
De Bono continues his idea, talking about more complex judgments, such as sense or intuition, which are feelings that need to be nurtured. The red hat enables the persons wearing it to express their “hunches” which are at the source of creativity and discoveries. But they should look only for those “intuitions” which are based on judgment and experience. Good entrepreneurs “seem to have this feel for situations” (De Bono, 57) which gives them an extra sense, if you may call it that way, with which they may see new opportunities based on their experience and knowledge in the field.
I was amazed by the amount of practicabilities the hat had. For example, the time spend on a negotiations can be greatly reduced. Since the "negotiation" is due to the existence of variable values (De Bono, 65) (different valuations of the same object), by stating each of the party’s perceived values directly (make them wear the hat), maters can be resolved much faster.

THE BLACK HAT

Also names “the hat of caution” (De Bono, 71), the black hat analyzes what things to avoid and be careful about – analyzes the risks of an idea or the dangers it may bring. The wearer must point out things that do not fit in the overall scenario, things that might cause problems later on. By implementing a logical thinking pattern, this hat relies on criticism (not to be confounded with emotional criticism, which falls under the red hat).
This hat does not favor balanced arguments. It should focus only on the negative aspects of things, the pessimistic view. Focusing only on he cons of every argument, “the black hat legitimizes the value and importance of caution” (De Bono, 75). It points out weaknesses in a project, making it easy to decide whether the plan should continue or be abandoned.
It is important not to argument the thinking, but merely to point out areas that require caution. Also it should not be abused, since it always was easier to criticize than to come up with something productive.

THE YELLOW HAT

This hat comes in play in order to counterbalance the black hat. It is conceived to render the benefits of the ideas and find out opportunities. It represents the optimistic way of looking at things. Compared to the black hat, the yellow one is harder to apply since the brain is more inclined to detect dangers than values. Its goal is to set value into ideas; view them in a “speculative-positive” way (De Bono, 91).
The author very well points out the small details that may make huge differences. For example self interest is very important when wearing the hat, since people think more positive if the idea came from them. But often times this is not the case, so the wearer must deliberately search for optimistic ideas. For that it must always ask him/herself the following question “what to focus on in order to make the idea happen?”
Again, De Bono reminds us to use the hat cautiously. It should not be used to the extreme, and make people overoptimistic since they might loose touch with reality. The author gives a good example and refers to lottery fanatics, whose persistent actions and overconfidence rend them more failures than wins.
Nonetheless, these ideas that point out long shots chances should be mentioned, since once they are said, chances of increasing their occurrence odds can be thought out, making them in some cases viable initiatives.
Positive ideas are best to be justified. But this is not a set rule. Speculations are also encouraged, as long as they lead to constructive ideas. The black hat should be very active when such a case appears and do its best to filter the information afterwards as much as possible in order to determine its feasibility. The yellow hat can come again after the black hat and correct those ideas that were criticized.

THE GREEN HAT

It is used to promote new ideas and new approaches. The hat either improves the existing ones or comes with alternative possibilities. It involves risky exploration of unfamiliar territory.
De Bono sets this hat apart from the rest. Even if all the prior hats demanded for the wearer a certain input: white – information input, red – feeling, black – criticism and so on, the green hat demands actual effort to be invested. He/she is to come up with new ideas, so the green hat wearer may demand time and brainstorming for generating them. Also, instead of judging (as the black and yellow), the greet hat wearers re-quire “movement” (De Bono, 124) meaning passing the idea through different circumstances in order to encourage creativity.
I was intrigued by the radical approach the author makes in order to promote green hat thinking. He says that provocations are encouraged in order to generate thoughts. Placing extreme ideas (some of which may be even illogical or absurd) may be accepted in this scenario. The results may be either to remain stuck, to end up at in the same place you started or come up with a new pattern that may turn out to be helpful.
Overall, as far as I understood, the goal of the green hat is to generate as many ideas as possible in order to have alternatives from which to choose at the end, even if some require you to go beyond the obvious. The creativity process may be and it is recommended to be paused in any moment in order to allow the thinkers to find any alternatives or new ideas within that paused stage that may lead to other solutions (branching).

THE BLUE HAT

The author says that “The blue hat is for thinking about thinking.” (De Bono, 145) What he tries to say is that it acts as “manager” whose main task is to control.
The author goes through all steps in which the hat may prove useful. If we use it at the beginning the wearer will define the situation, the purpose of the discussion, the goals that need to be achieved. The blue hat defines the strategy that will be adopted, maintains discipline along the way and makes sure that the main discussion doesn’t alter from its main course.
The hat, as the author mentions should be used by the facilitator, chairperson or leader of the session. Once the person undertakes that role, he/she cannot change it. Nevertheless, others may suggest alternatives procedures to him/her. Still the main role of the hat wearer is to monitor and not to interfere in the discussions, unless he/she wants to make adjustments to the direction of the discussion or impose discipline.
At the end of the discussion, the blue hat wearer will ask fort the outcome or summary of the work and see the progress done. Even though he/she is allowed to make comments along the way with what he/she observes, a summary and a conclusion are essential since it summarizes all the scattered ideas that were said during the discussions. Even if no progress was done, the blue hat still has to mention that.

CREATIVITY - Book analysis: De Bono, Edward - Six Thinking Hats

De Bono struck me even from class as a remarkable person. He is best known for his lateral thinking concept also knows as structured creativity. He considers that people should be more creative, so he devised a series of techniques like lateral thinking (more on that topic can be found in his 1992 book called “Serious Creativity”) which were considered to be more effective than existent unstructured creativity methods such as the well known brainstorming method.
The book that intrigued me the most was “Six Thinking Hats”. I will discuss it throughout my next postings on the blog. The full title is: De Bono, Edward (2000). Six Thinking Hats Little, Brown and Company, Boston. This book seemed very friendly and full of useful examples that clarified the concepts he tried to explain. It is comprised of approximately 180 pages that are divided into 42 chapters. There are several copies at the Jönkoping Library and I advise you to go through it if you have the chance.

Introduction

The author starts by describing the huge impact this thinking strategy has done around the world. De Bono claims that by using the method of the parallel thinking of The Six Hats, corporations can reduce their project team discussions from 20 days all the way to two days. For that, he uses a series of examples, starting with IBM, a company whose researchers announced a reduction of 400% of the time spend in meetings. Norway’s Statoil Company, a firm that had a problem once with one of their oil rigs (costing them $100.000 a day), also solved its issues within 12 minutes by implementing the thinking hats strategy! The statement was given by Jens Arup, a certified trainer working for the corporation. More examples of successful implementation are given, from businesses like Siemens all the way to the judicial system.

As far as I understood, the success behind the strategy is the possibility to separate emotions, information, creativity, etc which make our decisions way to complicated. By simplifying our thinking, the author claims that we are able to reduce confusion and allow ourselves to successfully focus and process simpler decisions. By placing ourselves in the character defined by the hat we are wearing, we can narrow our field of vision and take the best decision for only that particular role we are playing.

The parallel thinking ideology the author is using is based of analyzing all aspects of the problem, not only from one perspective. De Bono uses an example involving four people observing a house. Instead of fighting who is the one who sees the house correctly, he suggests that they should rotate and inspect all views, thus having at least one moment when everyone is looking in the same direction.
Hats implement the same logic. They make the people rotate around the issue, but everyone will take the other’s role and eventually inspect the problem with the same eyes as the others did or will do. Overall, as far as I understood, Hats label thinking and direct the way people should perceive an issue, so that the aspects of the problem are viewed in parallel from all perspectives by everybody.

Why hats? The author gives a number of reasons:
-symbol to indicate a role, a direction of thinking
-easily can be put or taken off
-it is visible by the rest

The author also sets some confinements when using the hat:
-hats describe directions of thinking, and not descriptions, meaning that the idea said should be under the umbrella of the thinking concept assumed by the color of the hat. One should not state an idea and then describe it using different hats, but form the idea towards the direction imposed by the hat he/she is wearing.
-the hats are not descriptions of the behavior and thinking of people, but roles of behavior.
-hats should “rotate” among the debate participants. One should not undertake only one role, under one hat color. Still all can wear the same hat at the same time, if collective thought is required.
-the rules of the game should be respected by everyone. Aggressiveness in thinking is allowed only under the hat that allows you to (e.g. yellow hat)

De Bono justifies his theory by writing about the feedback he received from several people who implemented the hat concept. He shows some of the benefits that resulted from adopting his ideology:

Power: this method allows the experience, knowledge and intelligence of all the members of the group to be used at full potential. Everybody’s ideas –pros and cons- can be heard once they go through all the hats; both strengths and weaknesses can be said.

Time saving: parallel thinking makes all the members look in the same direction at every moment in time. By stating the ideas in parallel, no one makes counterarguments at another one’s thoughts, but merely places his/her new solution along side the existing one. This way, all the alternatives scenarios are thought, and there will be only one debate at the end that will determine which idea from all the alternatives will be implemented.

Removal of Ego: removed by rotation – the subject is analyzed objectively this way

One thing at a time: narrowing the fields we have to cover when we make a decision. For example by wearing the green hat we only look at new ideas, white hat - only focus on information and so on.

Before he starts describing the hats in detail, De Bono gives us a brief introduction about what the hats symbolize. I will cite the author’s description:

White Hat: neutral and objective. Concerned with objective facts and figures
Red Hat: suggests an emotional view like anger or rage
Black Hat: somber and serious. Person should be cautious and careful. It points out weaknesses in the ideas.
Yellow Hat: sunny and positive. Optimistic aspects that cover hope and positive thinking
Green Hat: symbolizes creativity and new ideas
Blue Hat: concerned with control, the organization of the thinking process and the use of other hats.

The usage of the hats can differ. Overall, there are two main alternatives:
-single use, in order to cover the idea from the perspective of one hat (for example “we should see this issue from the perspective of the Black Hat”)
-sequence use: use the hats in sequential order for full coverage. Not all hats should be used and the sequence itself should be random, in order not to influence the outcome. Some orders may be recommended though, like for example using the yellow hat after the black one, since it would be better first to see the beneficial part before analyzing the back draws. If there are few beneficial aspects of an idea, there is no need to continue, since chances are that the thought will fail once it passes through analysis of the black hat. Also the red hat should be used among the first, in order to reveal all the resentment one has about a certain subject before proceeding into the matter.

In my next posting I will discuss in detail about the Six Thinking Hats.

Outline for a Crazy Business idea

Introduction

I was thinking yesterday of getting a job. Realizing that this is almost impossible (unless you know Swedish), I thought about becoming self employed. I came up with this idea that may be far fetched, but may also work. It encompasses innovation, creativity and business creation.


Idea:

Initial investment: 9160 Euros that may be amortized in approximately 2 years
Monthly gross income: Approximately 2600 Euros (if business is constant)

Start a business that focuses on improving the student’s academic performance. The idea would be to provide focused database of teaching materials designed for both undergraduate and graduate students. The database will be classified depending on the majors thought at the university. The model is focused for now only on JIBS, but it may be expanded for the rest of the Schools. For simplicity, we will call our business from now on Business X and the administrator Y.

Place:

Several rooms would be provided for students. The ideal location would be closest to the main campuses or student residence halls. The ideal room arrangement for this place would be three rooms interconnected on one side of the apartment, separated from the other half of the place by a corridor. The other side would be comprised of two rooms and a water closet.
The three rooms would be equipped with tables, chairs and sofas. The other side would be a recreational room, equipped with a coffee machine and some game consoles. The corridor would have hangers and will serve as a welcoming space for new comers.

The corridor will have a multitude of shelters filled with teaching materials. An employed student will re responsible for handing over the papers to the “customers”. In order to keep track, students will be allowed to borrow only one piece of work at once. The returned works will be closely inspected for any sign of damages.

Database:

The paper database will be divided according to the major programs, classes and teachers.

They would include:
-past exams - they will be bought from the JSA Center and consist not only of present exams, but also past ones, examinations that Business X purchased along the years.
-summary of chapters- they will be related to the present but also past books that the university used and uses during classes.
-work assignments, essays and even printed blog writing of students- Business X would purchase these materials from students.
-Business X will not only have blank exams, but also solved ones that will allow students to compare their solutions with the correct ones. Some essays will also be graded with the same grade that the student who submitted it received from the teachers. Also they may include comments made by the professors on their writings. This will be done of course only with the permission of the submitter.

Membership fee

The business would ask for a membership fee that would be updated monthly or offer a pay per entrance alternative for irregular visitors.

Why not infringe copyrights?

Hopefully I am right in what I say, but if not, please leave a comment.

Past Exams:
I was amazed that JIBS provides past exams in exchange for money. I found this magical place in the JIBS’ JSA center. Business X would purchase a couple of copies from each possible exam. Also, Mr. Y will make regular visits to the JSA center and check for new releases. Business X intends to rent these papers to students at a lower price that it would cost the student to buy a copy. In fact, all the “customers” of Business X would be prohibited to copy any material that is handed over to them. There will be no Xerox machines at that place and students will not be allowed to leave with any of the “company’s” possessions. I figured that if the library buys the books and allows the students to read them without breaking any copyright laws, then the same may apply here. It would be unwise to allow this to happen also because the business would loose its competitive advantage.

Student made summaries, work assignments, etc.:
I looked through the internet and I could not find any rule that prohibit the distribution of summarized material from a book, compendium, etc. As long the references are made correctly, the paper could be considered an independent piece of work.
Students need to go through chapters in order to prepare for exams and many would write summaries of these chapters in order to make it easier for them to recapitulate during final exams and midterms. At least this is how I proceeded. After the completion of the class I would usually throw away all the summaries. In some occasions I would keep them, day-dreaming that I would use them again as references and guidelines in my future endeavors, but they eventually ended also in the garbage bin. Regarding the papers and essays - I would just store them in a file somewhere on my computer and forget about them.
Business X would purchase these materials (purchasing also the ownership rights) from the students who finished the class and would prefer some cash instead of a filled paper recycler in the garbage room.
If the student would surrender to Business X all his work for the class he/she just completed, consisting of 3 essays and a summary of the book, he/she would receive approximately 650 SEK.

Why will this work?

You would probably ask yourself who will be a member or pay for such a thing?
It happened to me at least once per year to remember a day before that I have an exam and that I did not studied for a long time at that class. I remember staying late those nights, drinking endless cups of coffees and going to the exam hoping that the essay question that counts the most would be from the first part of the semester, from the chapters that I managed to go through.
Business X can help students that find themselves in that unfortunate situation. It may provide the resume of the chapters faster than if that person would choose the alternative of reading! Plus it will offer just the pure facts, without obvious examples that sometimes can be found in books.
This is not, of course, the best way to study, since the student would probably forget those things after two days, and in order for the information to settle, it must be reinforced with examples, BUT in lack of time, the alternative that Business X provides can deliver more facts to the student and may offer him a better chance to get a higher grade compared to having the possibility to read only half of the material.
Further more, if the student did not understand some issues that were presented in the book, the resume may offer a better understanding. Schematics, drawings and explanations made by a student for another student are always easier to understand than a page full of text.
Another reason would be the GenEd classes (General Education). During my undergrad education, our system was made in such a way that it would require the student to take at least two classes from fields like History, Exact Sciences, English, Arts, etc. I noticed during my College years that a lot of the students didn’t like these classes and study not because they want to, but because they have to. My roommate for example, who was following a Major in Mathematics didn’t exactly like “The history of Jazz” (a class required in order to obtain GenEd points in Fine Arts). He hardly studied at all and received barely a passing grade. Business X can offer him the shortcut: a higher grade for the same, insufficient allocation of study time.

Business X would also carry vast past exams purchased along time from JSA. We offer the following advantages:
-possibility of rental- why buy them when you need them only once?
-huge database – exams purchased in the past will also be available.
-we offer some exams that are already solved, with step by step explanations.
All these are competitive advantages over the JSA center.

Business X would also offer past essays from students. Students may find it easier to make their own essay once they see others’ work on the same topic. Business X does not encourage plagiarism, and the works of other students are presented for the sole purpose of providing some sort of guidance. They must remember that the University has all the electronic versions of all the students who submitted their work, plus probably a series of web search engines like turnitin.com.

Why not library?

Students may prefer the library, since it has a greater collection of books and they are free, but Business X focuses on a niche segment that surpasses the library in the area of “class related resources”. Also it provides not only the study environment that can be found in the library, but also an isolated recreational room, where students may take a five minute break without disturbing the others.

Quality of service & opportunities for students who collaborate with Business X

Business X will put a lot of emphasis on quality. All the potential purchases would pass through a pre-inspection process. Payment for the work would be made based on the easiness of the reader to comprehend the information, amount of information per page, summary length, page layout, etc. For the essays, papers and blogs payment would be made based on the same criteria stated above plus the grade received from the professor (by doing this, Business X also encourages students who want to sell their work to strive for better grades).
Also Business X may also offer part time jobs for students who:
-make resumes of books required for classes but are not yet in the company’s database
-offer tutoring lessons to groups of students (the students will pay additional for these tutoring classes, Business X working just as an intermediary)


Database:

The business will start with 280 writings. 140 essays and 120 summaries will be provided from the beginning. Every month, Business X will enrich its portfolio with 14 new essays and 10 summaries. Considering an 8 month/year activity, the firm will enlarge its database with 192 papers. The more the company will operate, the less it will have to spend due to the cumulative effect. But in the financials, I neglected this, and wrote the amount spend as a constant.

Financials

I could not import the excel spreadsheet, so I made some alteration to the format.
Remember that the prices are calculated EUROS!!

Cost of the INITIAL investments (I multiplied the number of items purchased with the average price of one item). Furniture price approximations were taken from IKEA.com

-------------------------------------
DATABASE -average cost for a essay, paper: 140*15=2100
DATABASE average cost for a summary:120*20=2400
Coffee machine (recreational room):1*400=400
Play Station:1*400=400
Plasma TVs:2*800=1600
Tables (study rooms):3*60=180
Chairs(study rooms):12*15=180
Sofas:3*400=1200
Shelves (corridor):1*300=300
Unpredicted additional costs:1*400=400

TOTAL INITIAL INVESTMENT:9160 EUROS

--------------------------------------
Sources of income

membership fees per months =130(members)*25(price of membership)=3250
tickets sold per months=200(tickets)*2(price of ticket)=400

TOTAL MONTHLY INCOME: 3650 EUROS


--------------------------------------
Monthly fees

Rent including bills:1*1000=1000
Money allocated for additional essays, summaries, etc:1*200=200
Salaries for students per week (summary making):4*200=800
Wages for full time personnel (week):4*200=800
Marketing expenses (flyers, posters):1*100=100
Unpredicted expenses:1*100=100

TOTAL MONTHLY FEES: 3000 EUROS

-------------------------------------
Monthly Gross income:650 EUROS
Yearly gross income (8 months of activity):5200 EUROS


I am waiting for your comments

In some cases cathing the wave with the right board may be more important than beeing a good surfer.

In my home country (Romania) businesses evolved whenever a major social, political, technological, economical change occurred. Rather than steadily appearing after 1990 and presenting a constant increase in number, major Romanian business boomed whenever changes in the macroeconomic, political, technological, social, etc were made present. This is a normal evolution of a capitalist market, since every major shift opens new niches that can turn into successful business opportunities. So it was more important to catch the right wave rather than have the right skill.
I am not saying that a brilliant entrepreneur would not make a difference, but it was a lot easier to expand in a newly created sector and benefit from the first mover advantage rather than to enter in an already saturated sector. I would also want to point out that the companies that were in a particular market sector for a long period of time found ways to increase efficiency and become very competitive. This level of effectiveness certainly lags the one of the large western companies specialized in same activities (evidence for that being the fact we hardly have any firms that compete on a multinational level), but nevertheless surpasses in many cases any newly formed local company, regardless of who founds or manages it.

The ideal solution would have been to open a business in the past and expand as fast as possible. The present day niches become less frequent and the ability for one to take the start in such a race is almost impossible since it:
-requires huge capital (like recent business opportunities in the energy sector for creating Aeolian windmills - even if they require huge initial investment, they turn out to be very profitable if you find the right piece of land, since there are plenty of government subsidies and EU funding available)
-requires to know the information well in advance (Transelectrica, the Romanian institution responsible for allowing independent energy generating plants to connect to the National Energy Distribution grid was already saturated with applications that surpassed the grid acceptance potential even before the Aeolian Energy Projects were made public)
-may quickly become a battle ground where small, inexperienced and financial fragile entrants fight a loosing battle even from the beginning. New comers need to expand in niches that big companies operating in the same industry would find unattractive and without sufficient potential for them to allocate time and money.

Given that, several barriers are already set for the young, new entrepreneurs of today before they even consider starting a business. Even if they manage to come up with a great idea that bypasses all the above mentioned problems, they will still require a decent financial infusion into the start up. The Romanian system makes it hard for such companies to acquire that initial capital. You need to either come with some collateral or prove that you have a steady flow of cash, like a salary, or some sort of expertise in the field you want to open your business. But if you do not posses any of these guarantees that may allow the bank to trust you with the future repayment, and cannot find an alternative source of financing (family, friends, angels), then you find yourself stuck.

So there are a lot of barriers in today’s Romanian business world that became more stringent as time passed. There is little space for small businesses and in the case some decide to enter, they should be prepared for fierce competition. It is a market where size and financial power determines the winners. Good entrepreneurs may find it very hard to succeed without proper backing up. Their true value may be useful only after they manage to enter the game and secure a market segment without becoming a target for the big competitor’s.


References:
"Boom of the Aeolian Energy sector" http://business.rol.ro/content/view/69305/2/, last visited on 18 Sep 2008
"Entrepreneurial lessons" http://www.startups.ro/lectia-de-antreprenoriat

Creativity seminar - the correlation between GMAT and entrepreneurial thinking

I would like to discuss about the article made by Shepherd, D., Douglas, E., Fitz-Simmons, J. (2008) MBA Admission Criteria and an Entrepreneurial Mind-Set: Evidence from “Western” Style MBAs in India and Thailand. Academy of Management Learning & Education, 7(2)

“We find that MBA students with higher GMAT scores have career mind-sets that are more averse to work effort and risk , and therefore, the GMAT may discriminate against applicants with a greater propensity to behave entrepreneurially. “ (Shepherd, D; p 158)

This quote can be found at the beginning of the article and has the purpose of summarizing the results of the research conducted. I do not deny the results and the tests conducted based on the information given, but I wonder about the reliability of the result. I thought about some factors that might have bised the results.

1.First of all, the sample size is very small. Due to this, the precision of the test results may not be accurate, since only some preferences of a narrow portion of the population size may show up.

2. In order to increase the reliability of the survey, the study should have included more variables that were not thoroughly discussed. Social and financial background or the desire to migrate towards the western countries as a future goal may also have some impact on the outcomes.

3. The case is valid only for the two countries from which the students were surveyed. Even though a sublime generalization is made towards the end of the reading, we should nevertheless consider the result applicable only for that narrow segment.

4. The surveyed group was composed of students who “were on average relatively young; all with at least a bachelor’s degree” (Shepherd, D. p 165). Statistics show that the average age of entrepreneur is 37.6 (Simon C. Parker “The Economics of Entrepreneurship: What We Know and What We Don’t” University of Durham, Durham, UK), meaning that most of these survey takers may later still turn out to disagree with part of the test results.

5. Top Universities in India require huge tuition fees (http://www.indiaedu.com/top-educational-institutes/top-universities/index.html, last visited on Sep 16 2008). Many students have the to get a loan in order to be able to attend. This financial pressure will determine them to become more risk adverse and prefer a “safer route”, meaning finding employment and a decent wage after graduation which will enable repayment of the debt. These variables could have been included in the test conducted.

6. GMAT is “designed to measure basic verbal, mathematical and analytical writing skills” (http://www.gmac.com/gmac, lat visited Sept 15, 2008). Overall it is a widely used testing platform that grades students based on the same scale. It examines among other things, the ability of the person to process information and conduct logical and analytical tasks. Top results may point out students that are clever, bright and quick thinkers. This, together with impressive work experience, good GPA and extracurricular activities are the criteria that top Universities look for.
In developing countries like India and Thailand, financial security is a priority. Top Universities offer students a better chance to attain that security, and the applicants that gain acceptance have all the reasons to assume a possible financially stable suture. Once this subconscious idea is present, there is the tendency of students to try to reduce risks and aim for a job that requires less uncertainty at an above average wage, which together with a high social status, may turn out to be sufficiently enough. High GMAT score may not “discriminate against applicants with a greater propensity to behave entrepreneurially” (Shepherd, D; p 158), but simply makes these people more risk averse and reluctant to take such a path.

Open Debate on Jonathan Drori's speech: Why we don’t understand as much as we think we do

The author starts with 4 questions:
1. Where does the seed take all the stuff that enables it to turn into a tree?
2. Can you light a bulb using wires and a battery?
3. Why is it hotter is summer than in winter?
4. What is shape the Solar system?

Before you click on the link, try to answer them.

Link: http://www.ted.com/index.php/talks/jonathan_drori_on_what_we_think_we_know.html

! The 7 year old had better scores than MIT students

Reasons: Gaining of knowledge from common sense from observing the nature
Adults: Misconception of the real world as it is learned from books

Question to debate about:

Is school an impediment towards our true education?
Do we have less creativity after than before school? If so, why continue studying and gain “knowledge” that separates us from the real word?
Should we observe things and experience them hands on rather than engulf ourselves in books, diagrams and schemes?


By the way, the answers to the questions:

1. Air
2. Yes. He shows a picture
3. Rays from the sun are spread out more
4. Round

Source: www.ted.com, last visited on Sept 07 2008

CREATIVITY SEMINAR - Ways to increase creativity and effectiveness within your company

I thought of some creative approaches that may increase efficiency in a business. A manager is encouraged to try out as many of them as possible, but at the same time try to monitor the cost of the investment and the benefit it brought back in order to see what strategies fit best for his/her particular enterprise.

DIVERSIFY YOUR JOB

The company should encourage employees not to focus only on their respective jobs in which they specialized, but also to try as much as possible to study a bit of every function that exists in the company. Many ideas may come observing or working in other jobs. Also this will enable easy tasks to be switched among employees, thus embellishing the every day working dull pattern and making the work more interesting and fun for everybody.

FLATTEN YOUR BUSINESS

Eliminate unnecessary management levels. This will save you money, time and increase efficiency. Try your best to make your business flatter by eliminating middle or higher management if they do not represent a vital segment for the company. But be careful not to loose control of your activities!
Also, now that the company is flatter, everybody should adopt equal positions towards one another (at least when it comes to sharing ideas and opinions). Always try to follow this rule: when no vital decision taking is involved, everybody is equal in the company and every idea or suggestion has equal weight, without regard of who said it.
Don’t be afraid to get your hands dirty! No manager, CEO or any person that has an upper function should hide behind his/her big desk and give orders. They should try instead to place themselves in the shoes of as many employees as possible and see how improvements could be made in that area in order to increase the local efficiency and creativity level.

REDUCE BUREAUCRACY

Reduce bureaucracy wherever it is possible. This will facilitate the flow of information throughout the company and eliminate bottlenecks or loss of information that may appear if the information is passed through different layers of management. Having a very stratified structure will make it almost impossible for workers to be heard. Let’s take an example here: if a blue-collar worker, who is basically the heart of any labor oriented business, has a complaint or an idea to share with the CEO within a stratified company, then the chances of the report to pass from the worker to the supervisor, then to the leading supervisor, then to lower, middle and upper management all the way to the secretary and then the CEO will probably be unlikely to happen or just take too much time to actually mater when it finally reaches the desired person.
Also don’t use special forms or formal reports for sending information within the company. Better have a face to face discussion. Rely better on the speed and easiness of the employees to communicate their thoughts in an informal way. Remember to listen to their thoughts, ideas and suggestions and learn as much as you can from them.

TAKE CARE OF YOUR PEOPLE

First of all, hire wisely. I would like to partially agree with Sutton R., who wrote in his article “The Weird Rules of Creativity” (HBR, September 2001), about hiring a couple of people that have nothing to do with their work related activity. Indeed, these persons that have not yet been academically indoctrinated and haven’t yet settled in will pose a lot of nonconformist questions and come up with various thinking approaches that would have been instantly excluded from the mind of an experienced employee who already has a solid thinking pattern formed along years of work.
I do not agree though with the author’s point of view in regard to hiring people that make others feel uncomfortable. In my opinion, these persons will create a lot of problems later on, even if they are brilliant in what they do. Cliff S. writes about such a character in his article “What a Star – What a Jerk” (Harvard Business Review, September 2001) showing that these individuals negatively disrupt the entire cycle of the company (with or without their rude personal remarks), bringing discomfort within the business and making a lot of employees diverge their attention towards him instead of on the company’s tasks.
Most of the people that I would suggest hiring instead would be independent individuals, knowledgeable in their field, but communicative, flexible in thinking and eager to discover.
As a good entrepreneur, try to discover from the interview as many traits as possible. Aim for the independent risk takers. Under the right control- free environment they can achieve a lot. Do not offer them big salaries in the hope that they will perform better, because this may inhibit their willingness to take risks. It is wiser to go with bonuses, which should be awarded for every innovation they come up with, even then ones that do not bring any significant financial revenues to the company.
When it comes to improving the level of creativity and effectiveness of this team, it is crucial to provide the proper working environment in which they can evolve. Build a business that revolves around ethics, values and integrity. Employees need to be content with the environment they work in, with their jobs and with their contribution to the society. This may lead to a more dedicated team that is willing to work and follow you in better and worse.
Another tip would be to invest as much as possible in quality. People get frustrated if things break over and over again. Even if the purchases cost you more in the beginning, you will be better off in the long run, by avoiding the maintenance bills and the unnecessary waste of time. It is enough for one of your employees’ computer to crash in unexpected times and for him/her to lose all the unsaved info to ruin his/her entire day. Always have the critical equipment like the Xerox machine, computers or the fax machines in top shape.

ENCOURAGE COMMUNICATION

Organize events in which your employees get to know one another, exchange ideas, hobbies, family info, etc. Celebrate birthdays and organize various trips together. Try to become more than just a boss – be a friend. Meet with the team of Fridays afternoon at the local pub and buy them some beverages for their hard work and dedication. Try to keep the team involved in common activities, so that they feel comfortable working together.
Have anonymous feedback boxes and encourage people to use them so that you are up to date to the complaints or announcements your employees want to tell you and the rest about. Always have a constant flow of information from them. One of my University professors always said that “No news is bad news”, meaning that if nobody reports anything then something is definitely bad. We are all humans and we always make mistakes. It is in our nature. So a company that we, as imperfect individuals, build can never be perfect either.
Also try to have as many open spaces as possible. When it comes to brainstorming and coming with new ideas and innovations, a big working room in which people have the opportunity to talk to one another and exchange ideas fast is far better than individual office spaces. Try to keep people to work in close contact.

BOOST THE OVERALL CONFIDENCE AND ENCOURAGE INNOVATION

The leader of the company should always have clear visions and objectives. Try to look as confident as possible. Have a strong stomach and don’t let confusion or fear show when situations get difficult. Your employees will have the tendency to be more assertive if they take you as their work role-model, if they know that a true leader is guiding them.
Invest in training as much as possible in order for your employees to feel confident in their respective fields of work. Try as well to provide the right equipment to everybody. This boost will give them courage to further explore and welcome the unknown. Encourage all new attempts they make, even if they do not work from the first time. Try to give useful tips if possible.
Allow them to work on their own, but always set deadlines when doing so. Let them be flexible with their assigned task, but also responsible when it comes to handing in the work. Do not interfere and don’t be persistent in monitoring their every-minute activities. Give them freedom to allocate their own time, but have feedback on their progress during brief meetings while having lunch or set general, informal meetings at the end of the day. Don't be afraid to criticize, but do it in private, and always praise somebody in public.

VERTICAL INTEGRATION

Make customers work for you: multilevel marketing is always welcomed because it offers customers the opportunity to become part of the business themselves. Offer them the opportunity of becoming distributors since they may turn into a powerful marketing tool. The best, cheapest and most effective advertising technique today is the word of mouth. By empowering your customers with the task of selling your products, they become more responsible, have the incentive to vend and will try their best for the moral and/or financial satisfaction which they will get in return (which may be in the form of a commission or product bonuses) but also, and most importantly, infiltrate your product among their friends (and later on unknown customers) and push the sale. Don’t put any pressure on them by imposing sale quotas or deadlines. Have them work for you because the want to. This way your team will sell with pleasure and be really dedicated to the task.
In my country AVON used this technique and quickly penetrated the market (especially the young segment of teenagers and college students) by collaborating with students that wanted to earn some additional income.
Encourage these persons to be creative and reward them for the sales they make. Offer them some basic selling guidelines, but don’t impose too many limitations. Let them be creative when selling, let them find their own way to make the sale. They will realize on their own the most effective and efficient way to make the transaction. Also ask for feedback. Maybe some innovative replies may turn into future selling techniques.