What should Volkswagen do (Part II)? | MBA Learnings

I shared a framework we discussed in a crisis management class three weeks ago – a few days after the Volkswagen emissions debacle came out in the press. I thought it was time for Part II.

I recently woke up to the following paragraph as part of my “Economist Espresso:”

“Volkswagen’s boss in America offered a congressional hearing a “sincere apology” for the company’s use of “defeat devices” which helped diesel engines cheat in emissions tests. Stressing that he was not an engineer, Michael Horn blamed “a couple of software engineers” for the modification, of which he said he had no prior knowledge. German prosecutors searched the carmaker’s headquarters.”

What should Volkswagen do? | MBA Learnings

We started our second year with a one week pre-term course on Leading and Managing Crises. We discussed responses to multiple crises – both good and bad. And, as I was on the lookout for a new crisis to apply my learning, Volkswagen appeared in the news for what has to rank among the dumbest decisions of all time.

3 productivity principles | MBA Learnings

Some of my highest impact learnings as a graduate student have been around productivity. One of my professors in the first couple of weeks described getting your MBA as a two-year course in decision making and trade-offs. I couldn’t agree more. I’ve written about what my process has looked like. And today, I thought I’d attempt to pull out three productivity principles that have become apparent to me in the past year.

A better way to evaluate performance | MBA Learnings

Incentives drive behavior. Our “Leadership in Organizations” professor repeatedly stated that incentives are among the strongest levers to changing culture.

As we discussed incentive systems, we discussed the issues with the traditional tier-based evaluation systems.

Most companies have some variant of a system that grades people above or below target/expectations relative to their peers. We discussed a couple of issues with this:

Warmth and competence | MBA Learnings

We discussed the tension between “warmth and competence” in the first week of classes at school. Academics have used this concept in various ways to show how various cultural/demographic/occupational groups are perceived in various parts of the world. As usual, I’m going to gloss over all that and focus on the implications for you and me.

One-line checkouts are better than multiple-line checkouts | MBA Learnings

A few weeks ago, I wrote about why queues form. The one line answer is that they form because of statistical fluctuations and dependent events. The concept is simple: if your presence at a meeting is dependent on the previous meeting, and the average time in the meeting is variable, it is likely that you’ll have people waiting for you, on average.

There’s a really cool application of this principle when it comes to checkout lines in stores and supermarkets. Multiple line checkouts are woefully inefficient.

A look at conflicting incentives | MBA Learnings

If there’s one thing I’ve learned about markets, they’re rife with conflicts of interest.”

Let’s now take a look at the life of John Doe. John is an executive at a leading Fortune 500 company headquartered in the US. He gets paid $1 million in cash, $4 million in stock, and $20 million in various incentive related bonuses that are tied to “EPS,” or earnings per share.

Now, let’s think about the many decisions he needs to make as a CEO that impact other constituents:

Statistical fluctuations and dependent events | MBA Learnings

In my last MBA learning post, we dove into the idea of managing queues by managing our utilization. In that post, we briefly discussed why queues form. Today, I’d like to dig deeper into that question.

So, why do queues / delays occur? They occur due to a combination of statistical fluctuations and dependent events. In simpler terms, statistical fluctuations can be described as variability. If we go back to the analogy of the ice cream stall, it is unlikely that the queue is exactly five people through the day. There will be times when the queue will be long and then times when it will be short. These differences are statistical fluctuations.

Controlling queues on the job and in your life | MBA Learnings

I’ve been sharing a run of operations learnings of late as a part of this series. This has been surprising as I never considered myself a fan of the subject. However, thanks to a combination of a professor (Gad Allon, who last week was named Kellogg Professor of the Year) who’s more than managed to pique my interest and a realization that learning to manage business operations isn’t very different from managing life operations, I’ve enjoyed my time studying operations. And today’s topic is managing queues.

Managing queues is particularly interesting as we all experience, and generally dislike, queues.