Decision making requires managers to constantly estimate the probability of uncertain outcomes and update those estimates in light of new information. This article provides guidance to managers on how they can improve that process by more explicitly adopting a Bayesian approach. Clear understanding and application of the Bayesian approach leads to more accurate probability estimates, resulting in better informed decisions. More importantly, adopting a Bayesian approach, even informally, promises to improve the quality of managerial thinking, analysis, and decisions in a variety of additional ways.
This case uses Supreme, a skater-clothing brand from New York City, and a framework for understanding the concept of "coolness" (see ""A General Theory of Coolness,"" UV7307), which is the cornerstone of the firm's success, to set the stage for analyzing consumer behavior. Written using public sources, the case discusses the firm's overall strategy, including limited supply, unique shopping drops for newly released items, and a fan-like customer base. It introduces "coolness" as a marketing term to be explored with the Supreme brand. The case opens with an MBA's first assignment with her new company, in a business strategy role, to learn about the retail fashion business, understand the customer experience, and make recommendations to reengage Supreme as "cool." While conducting due diligence, the protagonist walks readers through the Supreme shopping experience, introduces what she sees as crucial to "coolness," and mulls over challenges the brand faces around how to sustain the customer experience through growth efforts.
Set in January 2020, the case describes Singapore-based retailer Iuiga's omni-channel journey. Launched in May 2017 as an e-commerce only venture, Iuiga offers a curated range of high- quality products in the 'home and living' category at affordable prices. It sources these products from China-based original design manufacturers (ODMs), which produce for large global brands (known for their superior design, quality and hence high prices), and retails them under its own brand name at much lower and transparent prices. In May 2018, Iuiga launched a pop-up store to drive greater brand presence and customer engagement. Buoyed by the store's runaway sales, the firm decided to adopt a longer-term brick-and-mortar retail strategy, and by December 2019, it had established nine retail stores that contributed 80% of its total sales and employed more than 40 sales people (full time and part time). It had been almost 20 months since Iuiga adopted omni-channel retailing. Looking at the latest sales and customer data, Jaslyn Chan - Head of marketing at Iuiga, wondered if going physical had been worth it, or whether the sales in the offline channel had grown at the cost of sales in the online channel. Moreover, what types of customers did the different channels attract? Should the company increase the physical footprint further? Would opening additional pop-up or brick-and-mortar stores enable more customer acquisitions and tapping of new market segments?
The owner and founder of The Talking Hands, a socially responsible restaurant, in Nagpur, India, had launched his company to create job opportunities for persons with disabilities. He wanted to find a balance between customer experience and customer service, but he also wanted to open two new outlets in his city and seriously consider his friend’s proposal of opening franchisee outlets of The Talking Hands in two Indian cites—Mumbai and Pune. He wanted to consolidate and expand his business without denting the restaurant’s brand identity. Also, as demand for the restaurant grew, the increasing delays in order taking and delivery needed to be managed. Could he hire some non-disabled staff members to manage rush orders and deliveries and still keep operating expenses under control? Should he go through with his expansion plans with the franchise model at this time? He needed to make a decision while renovations to his restaurant were underway.
As a leader, you will need to master action plans to implement solutions that advance your organizational goals. Here are six simple steps to diagnosing situations and systematically developing action plans.
On May 26, 2020, Latam Airlines became the largest airline in the world to be driven to bankruptcy by COVID-19. With a complex debt structure and international investor composition, the company decided to file for bankruptcy protection in the United States, which offered a more flexible reorganization procedure than the local bankruptcy process. After the filing announcement, the company reached an all-time-low stock market valuation. Some experts questioned whether the bankruptcy filing of Latam Airlines in the United States could be detrimental for the development of the Chilean capital market. Even if the company succeeded financially, would it be able to adapt to a different way of flying post-COVID?
In early 2020, 24M Technologies (24M) announced that two of its strategic investors had commenced building plants to produce lithium-ion (Li-ion) batteries based on 24M's novel semi-solid electrode technology. This promised to halve the cost of conventional Li-ion batteries, increase the energy density to provide greater range in electric vehicles, and make them safer and more reliable. Cofounders Yet-Ming Chiang and Throop Wilder had set up the company 10 years earlier in a quest to take all that was good about Li-ion technology and improve it. The founders argued that, historically, Li-ion development had focused on miniaturized cells for consumer electronics and that these design principles had been carried over into cells destined for electric cars and grid-scale batteries. It made no sense to accept these constraints. What was needed was a fresh start; to begin with a "clean sheet of paper." The technology had taken 10 years and nearly $100 million to develop from a laboratory demonstration to a commercial product. Now, the challenge was to scale it up to compete with conventional technology.
The note introduces a variety of methods to assess the accuracy of machine learning prediction models. The note begins by briefly introducing machine learning, overfitting, training versus test datasets, and cross validation. The following accuracy metrics and tools are then described: mean squared error (MSE), mean absolute deviation (MAD), Brier score, and cross-entropy, true/false positives/negatives, the confusion matrix, true positive rate (sensitivity or recall), false negative rate (Type II error rate), precision, true negative rate (specificity), false positive rate (Type I error rate), receiver operating characteristic curve (ROC) and area under the curve (AUC), and precision-recall curve.
Set in 2019, this case illustrates a design thinking intervention programme carried out at the Elite's Smile Specialized Medical Complex in the city of Taif in Saudi Arabia. The programme was part of a doctorate research project undertaken at the Singapore Management University. The case introduces Elite's Smile, a private dental clinic that offers a comprehensive range of services including routine and complex treatments for adults and children. Despite being an established clinic with broad dental expertise and state-of-the-art equipment, Elite's Smile faces great challenges in view of growing competition from new entrants and increasing service expectation from customers. The case discussion encourages the participants to evaluate whether design thinking, a human-centred problem-solving approach, would work in a small-and-medium enterprise (SME) and non-US context. The handout describes the actual intervention programme conducted over six months at Elite's Smile. At the centre of intervention is a training workshop covering the five-phase design thinking process and supporting tools for each phase. Notable improvements were observed at post-intervention in terms of increasing customer satisfaction (as seen in the patient retention and recommendation), a more cooperative work culture, and most importantly, growing income for the clinic. The instructor could use the handout to stimulate further discussion on why design thinking has worked for Elite's Smile.
If we think big enough, smart buildings can play a key role in helping us figure out what work will look like in the coming months and years. They should promote productive collaboration; improve virtual as well as physical work; yield data that's visible to employees, not just their bosses, for coaching and development; and help us apply lessons we learn about effective work over time.
Working professionals are often in the predicament of needing to make a choice between activities that will grant them more money or more time. Indeed, in large-scale representative panels of working adults, most respondents report feeling pressed for both time and money. Yet, we often are forced to make trade-offs between these valuable resources. Whether deciding to dine out vs. cook at home; to live in an expensive residence close to one's workplace vs. a cheaper abode with a longer commute; or to pursue a high-income job with long work hours vs. a humble salary with no overtime, trade-offs between money and time are prevalent in all of our major and daily decisions.
The United States had recently experienced a recession, and a credit analyst with Gift Card Capital Inc. (GCC) needed to financially evaluate two troubled restaurant chains. GCC's unusual business model involved offering capital financing in exchange for gift cards that GCC then offered to individual customers and third-party loyalty programs. The analyst needed to weigh the benefits of increasing the size and diversity of GCC's gift card portfolio against the estimated viability of any gift cards received. It was critical to determine whether the businesses could sustain operations for the gift certificates' redeemable time period-roughly up to five years. The analyst was unsure of what to do. Should he offer a cash advance to one, both, or neither of the firms? If he chose to extend a cash advance, how large should that advance be? What specific terms or conditions should be associated with any cash advance? How were the companies adapting to their financial situation and their past performance? How likely was it that either of the companies would become insolvent and shut down overnight?
The case details the challenges of running a small manufacturing enterprise in India. The current operations at Mini Iron & Alloys Private Limited (MIA), which produced springs for rail wagons, were stable, and business had grown. However, the demand for springs was expected to increase with the Indian government's announcement, in early 2019, to establish a rail freight corridor. The proprietor of MIA mused on the firm's readiness to undertake the surge in demand. He also ruminated on the prudence of relying on a single customer in a captive market.
In 2017, Advaith Group was an Indian conglomerate with interests in various businesses including chemicals, infrastructure, and engineering. An advisor to the corporate communications group was employed on a contractual basis. Each year at the time of his contract extension, organizational politics were played out around the decision to renew the contract. The advisor was very good at what he did, but his behaviour with colleagues left room for improvement. The head of human resources had his reasons to stall the extension of the advisor's contract and tried different means to have his way, including sidelining him within the organization. A new recruit in corporate communications came into the company with hope and the ambition to be successful in the corporate world. However, she was unsure if she could achieve this goal under the current circumstances. The managing director was asked by the chairman of the group to decide on the extension of the advisor's contract, but he had to look at all possible angles before doing so.
The head of the South African subsidiary of the US consulting firm McKinsey & Company (McKinsey), has to address the implications of the firm's involvement in a corruption scandal. The South African office was implicated in a scandal involving its local partner, Trillian Capital Partners (PTY) Ltd. (Trillian), and Eskom, a South African state-owned enterprise (SOE). McKinsey was required to partner with a local company as a condition of any contract with a South African SOE. McKinsey took on Trillian as its local partner after Trillian was recommended by a former client. Trillian was, however, associated with the Guptas, a family that the South African Public Protector (an ombudsman) had accused of using its influence with the South African president, Jacob Zuma, and his family for corrupt activities. The partnership (first with a company named Regiments Capital (PTY) Ltd. [Regiments] and then, following restructuring, with Trillian) directly benefited the Gupta family. More than three years into the relationship, McKinsey claimed to have discovered that its partner was politically exposed and under investigation by the South African authorities. McKinsey's new global managing partner attempted to limit the damage to the company's reputation by issuing an apology. However, the South African public appeared skeptical about the apology, and questions remained regarding McKinsey's integrity. The questions left unanswered included the following: Was Sneader's apology enough to enable McKinsey to quell the attack on its reputation? Should McKinsey do more to enhance its standing within the South African business community, or should it accept that its reputation had suffered irreparable harm?
The owner and founder of The Talking Hands, a socially responsible restaurant, in Nagpur, India, had launched his company to create job opportunities for persons with disabilities. He wanted to find a balance between customer experience and customer service, but he also wanted to open two new outlets in his city and seriously consider his friend's proposal of opening franchisee outlets of The Talking Hands in two Indian cites-Mumbai and Pune. He wanted to consolidate and expand his business without denting the restaurant's brand identity. Also, as demand for the restaurant grew, the increasing delays in order taking and delivery needed to be managed. Could he hire some non-disabled staff members to manage rush orders and deliveries and still keep operating expenses under control? Should he go through with his expansion plans with the franchise model at this time? He needed to make a decision while renovations to his restaurant were underway.