I will have a positive influence on the World - MJ KIM

This analysis about Eli Lilly and Company: Innovation in Diabetes Care, HBR, prepared by Clayton M. Christensen.
Once again pay my respect to Professor Clayton M. Christensen who I admire his insight of management from my heart.

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Eli Lilly and Company: Innovation in Diabetes Care

 

Myung Joong Kim

S	W
Sustainable main earning model : Prozac Success in competition history keeping confidence: Humulin, Match, CDS Good localizing and fast-adjusting system: Affiliates at country that Lilly has significant position Aligned regional MKT and financial and accounting system Experience from leading in Augmented product: CDS	Unclear to measure profit of specific product lines Unaligned NPD function and MKT function:  Diabetes Care Business Unit and regional Affiliates Wasting control resource: Affiliates Considerable, but too conservative: Two committees for NPD decision
T	O
Changing of condition of Customer : For Doctor, Sales method need to change: detailing à ? Different object Company: Source investment, such as Long-term investment and trial time. Customer: Convinent and health, such as rate of glucose flow, cost to buy Difference between pace of innovation and that of development Market changing from low involvement to high involvement: Insulin à solution program choice of end-user: from functional to emotional	High cost to entry for market New methods for approaching NPD: selling education service CDS, long-term patient behaviour modification service New Methods for approaching NMD: Information technology Tool for Seeds move to Needs: Portable blood glucose meters Low involvement: Insulin is a commodity for patient Changing product concept: Clearly Core to Tangible, even Augmented

SO strategy:

a.      Customer convenience focusing re-modelling(repakeging) about competitor’s NPD that use new compound. For this, utilize regional Affiliates to catch customer reaction for the competitor’s NPD at the same time, to process for government approval in the regional market.

b.      As long-term development, researching tablet type Insulin for Type 1 patients, tablet that has similar shape like Prozac and marketing approaches, for instance old-fashion Prozac imitation TV advertisement to Youtube. In this stage, adapt diffusion of Innovation concept(1962) to information technology, for instance social network.

c.      Consulting supplying contract with non-diabetes service place. Provide service to supply Lilly’s medicine and know-how from CDS. Because it is new-coming business model(assume as the Text), only few place can be a direct-target at the first stage.

d.      Since our core-product is Insulin that is Life-commodity for patients and their family, Lilly should focus human itself, not profit or other benefits in every single internal and external communication activities.

"The measure of a man is what he does with power"
- Pittacus, Greek statesman and military leader

"Power is the potential to mobilize energy."[1] Like I do in my I WILL statement, I am looking for ways to influence positive impacts. Until I read Power and Influence: Achieving Your Objectives in Organization[2], I didn’t know Power also needs to exercise. It is a potential force. To have an effect, power must be exercised, Influence is the way in which you turn potential force into kinetic energy. Kinetic energy has meaning of on time usable. Maybe this is not just practice a reaction for each specific situations, rather than practice to express your power. Walk through the exercise, given feedbacks and our own feeling will polish the power to kinetic energy.

Gaining support: To obtain others’ social support through your interpersonal attractiveness.

-          Charisma

-          Linguistic ability

-          Track record[3]

As I concern, Charisma relates trust. Even the usage in normal language is different for Track record and History, but according to my definition it has same origin. The origin is implementation of own value. Both Track record and History are directly related to personal value. Personal value are supported by belief that is a confidence to be accepted from engaged society or own satisfaction. Social acceptance and own satisfaction do not need to be balanced.[4] Adjacency of the belief to social acceptance, however, is directly related with difficulty of entrance. Plus this difficulty is directly connected with Gaining support. On the other hands, Track record has distinguishable point that is social admiration, which will attract people.

Vector and Dot (Bitmap)
Vector graphics is the use of geometrical primitives such as points, lines, curves, and shapes or polygon(s), which are all based on mathematical equations, to represent images in computer graphics.
- Wikipedia serched as "vector" on 4 Feb 2011

As you understand, vector is a very computer term, especially graphic. However the origin that vector has is very fit to explain the importance of trust. The origin is direction. The direction has made at least between two points.
Do you have a experience that could not understand someone's saying? How did you understand it? From the other words what you got in the conversation? Even if you couldnt get whole sentence, what is next trial to catch up the meaning? Formal expereince with the speaker.
Value is the basement of every behavior, but every own behavior are not based on own value. Those kind of behavior ruin a relationship and also trust. 
In this picture, detail of point is not important. If it is enough to express the meaning of individual dot, then it is time to move next dot. The most important thing is draw vector line to the goal.
I can tell this is why Action-oriented is important,


Global 화가 계속된다고 하면 과연 언어의 detail 한 부분이 얼마나 중요하게 다뤄질까?
오히려 행동으로 보여줌으로써 명확하게 전달하는 방식이 더 선호되지 않을까?

자다가 생각난 것
다른 사람과의 대화내용을 누군가에게 전달할때
- Vector : 대화의 흐름을 이야기하고 예를 든다
- Dot : 이야기를 하나하나를 나누어 설명한다.

In probability theory and statistics, the Poisson distribution (pronounced [pwasɔ̃]) (or Poisson law of small numbers^[1]) is a discrete probability distribution that expresses the probability of a number of events occurring in a fixed period of time if these events occur with a known average rate and independently of the time since the last event. (The Poisson distribution can also be used for the number of events in other specified intervals such as distance, area or volume.)

The distribution was first introduced by Siméon-Denis Poisson (1781–1840) and published, together with his probability theory, in 1838 in his work Recherches sur la probabilité des jugements en matière criminelle et en matière civile (“Research on the Probability of Judgments in Criminal and Civil Matters”). The work focused on certain random variables N that count, among other things, the number of discrete occurrences (sometimes called “arrivals”) that take place during a time-interval of given length.

- definition from Wikipedia, searched at 26 Jan 2011

Summary
Most business decision, such as launching a new product, are taken with incomplete knowledge about how the future will evolve. There is a big difference between naive decision making, educated guesses and calculated risks. Risk analysis aims to achieve the last of these.
The main tools are sensitivity analysis(what-if question, what-if table), scenario analysis. decision analysis and Monte Carlo simulation. Some understanding of probabilities and a lot of common sense is required to make good use of a simulation exercise.

List of questions you shoud ask yourself that will help you to evaluate properly the results of a risk analysis exercise
What is the range of possible values for the main outputs?
What is the expected rate of return?
What is the downside of this investment?
How could I cope with the downside?
Is there any combination of uncertainties that result in catastrophic consequences?
Which are the main uncertainty drivers causing the variation in profits?
What can I do to reduce these uncertainties?
How does the risk-return profile fo this project compares to other alternatives?

Full script

Optimization based on complexity and conflicts.
I couldnt get the concept. Maybe reason why couldnt get it is lack of understanding on the definition of conflicts.

the chart of Management Science by Prof. Nishant, Rotterdam School of Management
Why are decisions hard?
- complexity : multitude of interrelated factors
- Conflicts : Competing goals and objectives
- Uncertainty: Limited knowledge of the future
- Impact : Responsibility for fat-reaching consequences
- and more...

NPV = Net Present Value
In finance, the net present value (NPV) or net present worth (NPW)^[1] of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows. In the case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool in discounted cash flow (DCF) analysis, and is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, finance, and accounting, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met.

The NPV of a sequence of cash flows takes as input the cash flows and a discount rate or discount curve and outputting a price; the converse process in DCF analysis - taking a sequence of cash flows and a price as input and inferring as output a discount rate (the discount rate which would yield the given price as NPV) - is called the yield, and is more widely used in bond trading.
From Wikipedia, the free encyclopedia

As my understanding current value of money is always greater than future one of that. (Am I correct? God, I am not good at numbers...)
After the first class...
Management Sceince is better start with simple model, with basic factors, and then put other factors that you concern as significant factor. As I understood, you better know the limit of factors that you can use in your model, actually you decide it, because of uncertainty you model could be getting worst if you put to many factors.
 More than gathering informations for factors, concentrating on analysis is better. Single-point forecasts is always wrong and decision based on them is dangerous. This is ignoring uncertainty. To use scenario, you can find range of results, and then to use sensitivity analysis, you can figure out which factors are significantly impact on the result, which mean the main uncertainty drivers. For this, methodologies are What-if analysis, one-way and Two-way sensitivity analysis and Tornado diagrams.

Note from the lecture of Management Science by Prof. Nishant, RSM MBA

Keep focus on core competence.
Think different
Hiring creative people
etc.

To achieve something difficult and important - Bill Collins Ph.D., Erasmus University

This is also very good choice, if a competitor expect to imitate your product.

정규과정에서는 첫번째로 Term 1에 있는 Organizational Behavior(조직행동론?) 수업이 시작됐다.
Bill Collins, Ph.D.에 의해서 진행된 수업은 OB가 성공적으로 활용된 예인 사우스웨스트 항공 case study로 시작되었다. 많은 책들에서 다뤄진 내용이어서 친숙한 내용이기에 한편으로는 조금 아쉬움이 있었지만 역시 Dr. Karen의 수업처럼 기존의 알고 있던 내용에 어마어마한 지식을 덧붙일수 있는 기회여서 친숙한 소재라는 것은 잊고 충분히 만족스러웠다.

오늘 OB가 적용된 사례가 무엇인지 전체를 보고 이후 과정은 가장 밑단을 이루는 Values, Beliefs, Attitudes and behavior에 다루고 그것이 반영된 목표는 어떤것인가에 다루게 될것이다.
그리고 나서야 개인 -> 사람사이 -> 조직 -> 더욱 큰 조직 의 순서로 진행이 된다.
Bill의 수업이 좋았던 것은 체계적으로 다가오는 맛이 있어서였다고 할까?
아직은 이쪽 분야에서 사용하는 단어를 잘모르지만 그 개념들을 이해!하는 것이 이번 OB 과정에서의 목표중 하나이다.
이외의 배우고 싶은 것은
"조직이 커져도 가치가 위에서 아래까지 올바르게 전달될 방법"과 이에 연결지어서 "가치가 오염되지 않을 방법, 설사 오염되었어도 다시 정화될수 있는 방법"에 대한 Key를 얻고 싶다.

What is motivator of Cognitive Surplus

 

Myung Joong KIM

RSM, Erasmus University, FT MBA 2012

Kim.diypro@gmail.com

 

In many business situations, money is the most important resource to bring change, invention or success in management. This is the point that many small companies and Non-for-profit organizations struggle to overcome, but not easily don’t. However if every single successful story has big budget which supported it, every chance to success would be focus to the Fortune 100, but is not. Also we are very familiar with success story of Wikipedia, Linux or Firefox, which are not supported by big company money rather than are supported by anonymous contributions. I insist now it is time to think about cognitive surplus and to motivate it with what.

 According to a definition in Urbandictionary.com[1], “Cognitive Surplus” is “A word coined by former Silicon Alley Reporter columnist Clay Shirky to describe the free time that people have on their hands to engage in collaborative activities, specially as applies to web 2.0.”

 Clay Shirky says Americans watch roughly 200 billion hours of TV every year, which are represents about 2,000 Wikipedia projects’ worth of time annually. (Shirky, 2010[2]) In some how this huge cognitive surplus is moving to change and influence the world. Shriky’s opinion is this behaviors are based on generosity that created by social constrains rather than contractual constraints did.(Shriky, 2010[3]) The graph below explains influencing of change fines for late-coming parents in Kindergarten.

Average number of late-coming parents. Per week ([4] Gneezy and Rustichini 2000)

 

With this point of view, Daniel Pink, who is the author of Drive : The surprising truth About What Motivates Us., stays in the line with Shriky. As the rich world is in the middle of management revolution from “motivation 2.0” to “motivation 3.0”, Pink insist that our motivation is getting closer to intrinsic motivators than to extrinsic ones.(The Economist, 2010[5])

With this new aspect of motivation, many business leaders should change their compensation system. But Shriky and Pink’s arguments are depends on highly selective reading of the academic literature. Four reviews of research on the subject from 1980s onwards have all come to the same conclusion: that pay-for-performance can increase productivity dramatically. A study of an American glass-installation company, for example, found that shifting from salaries to individual incentives increased productivity by 44%. More recent research on workers at a Chinese electronics factory also confirms that performance-related pay, especially the threat of losing income is an excellent motivator. (The Economist, 2010[6]) In the given examples, however, we need to focus 2 points. The case that researched about a glass company in USA was in the 1980s and the most motivator in Chinese factory was losing income, not rising income. In my point of view, extrinsic motivator mostly activates in material abundance culture or organization that is higher than 3^rd stage, love and belonging, in the Maslow’s hierarchy of needs. Pink also point out “This material abundance has, paradoxically, placed a new premium on the non-material”(Pink, 2008)[7]

An interpretation of Maslow’s hierarchy of needs (Wikipedia, 2010[8])

 

Finally, to tap the covered talents, which is Cognitive Surplus, is start with realizing what stage we are on. To impact every people in the each stage, we have to think about how we can deal with intrinsic and extrinsic motivators at the same time. Like Pink said the “Six senses”(Pink, 2008[9]) – design, story, symphony, empathy, play and meaning – can work as motivator for people in developed country, but they might be too emotional way for ones in developing country. As next step of this study, I would like to bring the Network Management of Dr. Karen, especially “Trust”.

 

 

 

Reference to

[1] Accessed http://www.urbandictionary.com/define.php?term=cognitive%20surplus, January 14 2011

2  Shirky, Clay 2010. Tapping the Cognitive Surplus. The Futurist, November-December:21-22

3  Accessed http://www.ted.com/talks/clay_shirky_how_cognitive_surplus_will_change_the_world.html,

 TED@cannes, posted Jun 2010

4 http://www.ted.com/talks/clay_shirky_how_cognitive_surplus_will_change_the_world.html, TED@cannes, posted Jun 2010

⁵ Anonymous. Business: Driven to distraction; Schumpeter The Economist. London: Jan 16, 2010. Vol.394; pg.66

⁶ Anonymous. Business: Driven to distraction; Schumpeter The Economist. London: Jan 16, 2010. Vol.394; pg.66

7 Daniel Pink, Do the right thing, Peoplemanagement.co.uk, Apr 3, 2008

8 Accessed http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs, January 2011

9 Daniel Pink, Do the right thing, Peoplemanagement.co.uk, Apr 3, 2008