Wednesday, June 22, 2005

...and an early morning

I am participating in a business simulation activity in my company, and it involves a bi-weekly teleconference. Because the guy coordinating the teleconference and one of the teams are in Australia, they seem to think that make it acceptable to hold teleconferences at 8 a.m.  In some countries this is a normal working time, but Japan tends towards later starting times and much later finishing times.  So, I arrived home at nearly midnight, drunk, woke up at 5:30 (still a little drunk), and caught a 6:30 shinkansen to be at work by eight.
We won!  Today's teleconference was the last one prior to the championship round, which consists of the top four teams in the world.  The game has 64 teams divided up into 16 'worlds' of four teams each. We pulled out all the stops and won our world.  I have heard that we have a decent chance to make it into the top four. Yeah! It was almost worth coming it at eight.  There is a further rumour that if we win the whole contest we will be flown to the U.K. to give a presentation to the group CEO. That would be cool!
I will take all of the credit for our win.  The way it worked is that we were given an Excel-based 'tool' and had to make some decisions concerning our business, and then enter them in the tool.  We did well the first year, but got our butts kicked the second year.  Looking at how our competitior did this, it became obvious that we needed to do some things differently.  In our industry, the common wisdom that the more customers you have, the better.  The other common wisdom is that you can't raise prices.  I took a look at that and decided to let the numbers speak for themselves. It turns out that certain segments are worth much more than other segments. So, I increased the prices for the less desirable segments to the point that they were once again desirable for us to serve.  While pricing is hugely important to certain segments, to others it is less so, and we were able to generate substantial customer satisfaction while at the same time charging more.  We also decided that we would continue to focus more on the segments that were less sensitive to pricing.  We focused a lot of attention on imrpoving all areas *except* pricing, to minimize a customers overall dissatisfaction.
It was a good strategy, but the team of Australians that we vanquished were left whining.  It is a good thing that I didn't have any time the night before to record 'We are the Champions' on to my mobile to play when the results were announced. There would have definitely been an explosion. Actually one of my own team-mates is disgusted and didn't show up to the teleconference...I warned everyone that this was a strategy to win the game, not to be confused with running a real company looking five years ahead.  I said that if we wanted to win, this was the only way I could see, but that it wouldn't be something we would be able to be particularly proud of.  It was three to one to go the direction we did. 
When I mentioned that the Australians were pissed off to another colleague, he said 'it's only a game! What's their problem." I know exactly what their problem is, which is that they wanted to win.  I don't consider myself particularly cut-throat, but when it comes to games or competitions I am fiercly competitive, in my fairly mild-mannered way.  If it is clear what needs to be done to win, I will do it.  Why the Aussies didn't, I don't know, since with their bigger market share they could have beat us at our own game.  This is the advantage of being a geek who has no concept of finance, marketing, or sales: I and my other geeky team mates (the one guy that got pissed off with our strategy is in marketing, I think) only looked at how to win.  Because this is a learning exercise, perhaps we should not have approached it this way, but as soon as they talked about winners and losers, there was no changing our approach. The problem is in the criteria: Our strategy and results ended up being very similar to our own company's, and the criteria are the same ones that the group uses to evaluate each country's business.  It is clear that shareholders are looking at some other factors, though, and that  this is not a formulae for long-term success, nor for overall market success, but for short-term financial success.  That was particularly educational.  If we make it into the final four, and then win and need to make a presentation to the CEO, we have decided to use our presentation as an appeal to him to change those criteria.
Actually, that may have been one of the reasons that our chief executive quit last year: The short-term financial focus of global is not in keeping with longer-term viability in the Japanese market.  Having said that, both are absolutely necessary. Actually, our Australian competitors did a better overall job at balancing the two. Unfortunately, the criteria are not balanced, and rewards pricks like me who only care about short-term profitability (or who play the game based on short-term profitability, which is actually the case).


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