Nathan J. KerrHeider College of Business- Creighton UniversityITM 738

Back Bay Battery Simulation:

1. Briefly describe a challenge you faced in each scenario.

The challenge I felt the most was forecasting of sales numbers. Although I should have realized early on, price reductions actually influenced the model. When dealing with disruption, you just do not have the forecasting models that can predict proper price points.

2. Identify at least two strategies that you used in addressing the challenge described above. Identify one strategy that worked and one strategy that did not work.

To finally get a handle on profits/ losses/ etc., I initially raised the price of the ultra-capacitor to minimize the losses and to set a price-point different from the default set by the model in 2012. This allowed me to devote a minimum of 3 million per year in process improvements for price reductions of $0.50 per year. The remaining funds went to energy density research until the breakthrough. I then shifted money to self-discharge for ultra-capacitors as that was the second desire from customers. No money went to NiMH until self-discharge for ultra-capacitors had breakthrough and then I shifted money to process improvements for NiMH so as to keep prices low and milk the rest of that market.

3. Based on what you experienced in this simulation as well as what we have covered in class, identify at least one specific piece of advice would you give to an innovative CEO. Your response should be clearly related to the readings and any readings referred to should be cited.

My biggest piece of advice is to forecast five and ten years out in order to identify the needs of the customer and potential disruptors. Find unresolved problems from the customer’s stand-point and resolve them without overshooting. Use “associational thinking” by finding similar solutions to other problems to apply to your niche. (Anthony, 2012)

4. What did you learn from the simulation about running a business and making the decisions of a CEO faced with a possible disruptive innovation?

First, many CEO’s are well compensated to run the organization. The issue is the profits of each quarter are sometimes more important to stockholders than the long-term viability of the company. Some years, profits may need to suffer (dividends delayed) in order to transition into newer markets that will invariably disrupt the current cash-cow. I was fired five times during this simulation when I really do think the long term interest of the company may not have been in mind. NiMH was the cash cow, but it quickly depleted

over the last 4-5 years of the simulation.

5. What did you like or not like about the simulation?

Like any simulation, it is a model. I liked that it made the CEO make their own forecasts and that the CEO was treated realistically from the board of directors. This project would have been a great small group project performed in real time with fellow students. No CEO will ever go it alone and having fellow students put their minds together with existing data would have been a great collaborative learning experience.

Reference

Anthony, S. (2012). The little black book of innovation: how it works, how to do it. Boston,:

Harvard Business Review Press.