For 160 years, Singapore Post had been one of Singapore’s main postal service providers, delivering trusted and reliable postal services to homes and businesses. However, in 2019, Singapore Post was plagued by recent service lapses and operational problems, which had elicited customer complaints and concern from various stakeholders. Singapore Post was also facing increasing pressure from rising customer expectations, surging mail volumes, and the growing popularity of e-commerce. In response, Singapore Post pursued several initiatives to improve service operations and maintain its competitiveness in the postal industry. However, the company needed to devise a long-term plan to address recent problems, market changes, and deeply-rooted operational issues—and to regain consumer confidence over the long term.
In March 2017, the director of operations at Namratha Oil Refineries Pvt. Ltd., a leading manufacturer and distributor of high-quality packaged coconut oil in southwest India, faced a challenge. Because of inefficiencies in the company’s packaging division, pouches, jars, and bottles were being overfilled with coconut oil, leading to an “oil giveaway” that had weakened the company’s bottom line. The director analyzed the current processes and discovered improper data recording, frequent breakdowns, poor allocation of the maintenance crew, and an improper inventory management system. His experience told him that the existing production facilities were sufficient to meet the company’s requirements, and therefore, the existing processes needed to be streamlined to ensure minimal or no loss of oil. What strategy should he recommend to reduce losses and restore the company’s profitability?
For 160 years, Singapore Post had been one of Singapore's main postal service providers, delivering trusted and reliable postal services to homes and businesses. However, in 2019, Singapore Post was plagued by recent service lapses and operational problems, which had elicited customer complaints and concern from various stakeholders. Singapore Post was also facing increasing pressure from rising customer expectations, surging mail volumes, and the growing popularity of e-commerce. In response, Singapore Post pursued several initiatives to improve service operations and maintain its competitiveness in the postal industry. However, the company needed to devise a long-term plan to address recent problems, market changes, and deeply-rooted operational issues-and to regain consumer confidence over the long term.
In March 2017, the director of operations at Namratha Oil Refineries Pvt. Ltd., a leading manufacturer and distributor of high-quality packaged coconut oil in southwest India, faced a challenge. Because of inefficiencies in the company's packaging division, pouches, jars, and bottles were being overfilled with coconut oil, leading to an "oil giveaway" that had weakened the company's bottom line. The director analyzed the current processes and discovered improper data recording, frequent breakdowns, poor allocation of the maintenance crew, and an improper inventory management system. His experience told him that the existing production facilities were sufficient to meet the company's requirements, and therefore, the existing processes needed to be streamlined to ensure minimal or no loss of oil. What strategy should he recommend to reduce losses and restore the company's profitability?
Emmanuel Faber, Chairman and CEO of the food and beverage company Danone, believed that humankind had only ten years to bend the curve on climate change and restore the biodiversity that the global food and agricultural ecosystem was critically dependent on. Upon becoming CEO in 2014, he had built on Danone's long history of CSR-engagement to give a boost to the company's mission to bring health through food to as many people as possible. In September 2019, he reflected on the progress achieved thus far, including efforts to support regenerative agriculture through new contract types for famers in their milk division. Still, many questions remained in his journey to fix what he saw as the food industry's broken system: How could they manage the desired long-term transition to a sustainable system while also meeting the company's short-term financial targets? What was the role of the private sector? What economic model could support an inclusive transition? How to engage partners and consumers to embark on this journey?
Since its establishment in 2005, Hamburg's Martini Klinik had single-mindedly focused on prostate cancer care with a commitment to measure long term health outcomes for every patient. A wholly owned subsidiary of the University Hospital Hamburg, Martini Klinik was a "hospital in a hospital" in close proximity to other medical departments and services. By 2019, Martini Klinik had become the largest prostate cancer treatment program in the world with 8,000 outpatient cases and more than 2,500 surgical cases annually. Patients came from all over Germany and from around the world. A new and expanded facility was under construction to have the capacity to manage more patients with prostate cancer.
After reading and analyzing the case, students will be able to leverage product and brand opportunities to drive growth against multiple audience segments; understand the relationship between managing and maintaining strong brands, sustaining brand image clarity, and pursuing revenue growth; understand the key sources of customer value and develop a sustainable value proposition.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 1 starts with a discussion of the relationship between and an evaluation of heuristics and biases, heuristics deriving from biases we develop. Biases grow from the brain's limited information processing power, developing into mental blind spots. An overview of the brain is then given, including explanations of neurons, axons, grey and white matter, lobes, and hemispheres. Behavioral biases are presented in three categories: attention biases (emerging from the way our brains process incentives), memory biases (since human memory is flawed), and knowledge biases (stemming from the interactions between new information and what we have experienced in the past). The book's organization is broken down, and the chapter ends with a reminder that our own biases are the hardest to understand.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. This chapter describes modes of thinking and the brain. Three modes of thinking that are key to investing are instinct, intuition, and reasoning, each of which is supported by different brain networks. The amygdala supports instinct; the default mode network and basal ganglia support intuition; the task network (external thinking), default mode network (internal thinking), and areas specialized in language, perception, and memory support reason. However, context is extremely important in determining which mode of thinking will be used in a specific situation. When reason is not used and intuition and instinct are relied on too much, we develop cognitive biases.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 3 is an in-depth look at attention biases. Building on chapter 2, many attention biases span intuition and reason, marked by failures to attend to key information while devoting too much attention toward other information. This chapter starts by discussing focused attention biases: salience bias, default effect, optimism bias, ostrich effect, framing bias, hindsight bias, in-group bias, and hot hand effect. Next, cognitive illusions related to attention are unpacked, including illusion of control, Gambler's fallacy, and decision fatigue. These biases stem from interactions between our attention systems and our conscious beliefs. Relevant research, examples, and relevant brain mechanisms to each bias are also described as well as important remedies to each bias when it comes to investing.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 4 focuses on memory. Only memories that the brain considers to be relevant features of reality are stored. Memory systems include sensory storage, information we can work on, and long-term memories; the hippocampus is essential for storing memories as well as transferring stored memories. Several factors cause certain events or features to be more memorable to us. These factors include visualization, having recently experienced something, and emotion. Because emotions are personal, they can distort memories, storing some details without other important details. Deeply processed information-information built into a narrative and that is actively related to previous memories-sticks with us as well. Context is vital in retrieval of memories; we access more memories when the current context overlaps with that of the memories' contexts.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 5 covers a variety of biases that are directly tied to our memory systems. Some of these memory biases have to do with the likelihood of later recall, others with the undue influence of things we have seen before affecting our thinking about current positions. While these biases can ultimately be helpful, they can also result in critical errors when it comes to analyzing our positions. The biases covered are the availability bias, primacy effect, recency bias, endowment effect, consistency bias, sunk cost effect, affect bias, and expectancy bias. Definitions, background research, and relevant brain mechanisms are all explained for each bias along with that bias's relevance to investing and how to avoid falling into the bias.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. This chapter gives an overview on brain functions related to knowledge. Knowledge is constantly being accumulated, bridging the gap between attention and memory. Patterns are found by the brain and then automatically grouped together; identifying these patterns allows us to take shortcuts by acting similarly toward whole sets of information, gaining speed and accuracy. However, this process has the potential to lead us to find meaning that does not actually exist in incoming information. By noticing similarities and differences between environments and situations, we form mental models and schemas. Priming occurs when prior information quickly and automatically influences our current thinking; however, the difficulty with fast associations like this is realizing when they are incorrect.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 7 goes into the different types of knowledge bias. Sometimes what we know matches the context we are dealing with, but sometimes we impose incorrect patterns onto a situation. Our knowledge-and perception of our knowledge-can influence our way of thinking, and having a deep knowledge about a subject leaves us vulnerable to a set of biases that are rooted in knowing too much. We overreach our assumptions because we believe we know how things will play out, leading to mental laziness and the failure to question ourselves. Some of these biases come from believing we understand more than we actually do, others happen due to our becoming blind to key information based on our considerable degree of knowledge and still others are driven by social behavior.
People can be irrational in the financial market setting, leading to catastrophic mistakes and costing millions of dollars. We tend to take credit for our successes but disown our failures. We have limited powers of attention, preventing us from noticing critical factors in investment analysis. Memories can lead to faulty assumptions that serve as the foundation for financial decisions. Emotions often lead to giving inappropriate weight to some factors while discounting others. Researchers have discovered over 100 predictable biases that lead people to make consistent errors. The chapters cover financial biases most relevant to investing, evidence of how they develop, and practical strategies that can help investors improve their performance by minimizing bias's negative influence. This book offers readers a guide to cognitive bias as it occurs in real financial situations and to categorizing the different biases based on fundamental brain science while emphasizing practical implications of financial decision making and providing a scientific basis for adjusting investment practices to avoid cognitive traps. Chapter 8 provides guidance offering best practices and advice geared toward enhancing the decision-making process and minimizing the undue influence of heuristics and biases in the investment process. The main strategies discussed are using a rules-based investment process, active management, and limiting bias in the idea generation process. Further techniques within each of these strategies are also given. Taking an active role with this chapter will bring about the most benefit in improving the investing process. Employing these techniques will enable vigilance and objectivity without having to take on each individual bias one-by-one. Becoming a better investor is a constant endeavor; part of the challenge is recognizing how personal thinking is influenced by bias and adjusting processes to compensate. Knowledge about bias is only the first step.
Malcolm Turner becomes the new athletic director at Vanderbilt University, tasked with increasing athletics-related revenue and improving on-field performance, while maintaining Vanderbilt's academic rigor for student-athletes.
Set in February 2019, Stark Resorts Hotel ('Stark Resorts') is a case based on the real-world experiences of the authors. The hotel, a USD155 million investment, had been plagued by insects since its grand opening 15 months earlier. Of even more concern was the avid social media influencer who had stayed in the resort a year ago and was diagnosed for Dengue fever, which she allegedly caught at the hotel poolside. It didn't take time for the negative word of mouth to spread. While the staff tried their best to handle the problem and were vigilant about initiating and overseeing the administration of pest control, even they were losing confidence and morale. Stark Resorts' revenue rate per available room (RevPAR), a key hotel metric, had fallen 6% over the past six months. Other resorts in the area had pest problems as well, but they did not seem to be experiencing the same reputational and financial damage. Jack Lim, the manager at Stark Resorts has his work cut out for him - he has to tackle the pest issue at hand, repair the reputational damage, and win over customer loyalty of his guests.
The case describes how the Italian multinational Enel Group, one of the largest power utilities companies in the world, embraced the transformation of the energy sector, combining open innovation with sustainability - or what the company calls "Innovability"). CEO Francesco Starace believes that technology and business model innovation are the key to reducing CO2 emissions and creating a more sustainable future by boosting renewable energy production. From 2014, he makes innovation and sustainability his strategic pillars, embracing the notion of 'open innovation' - harvesting ideas externally (rather than just in-house) from an ecosystem of start-ups, SMEs, universities, researchers, suppliers, other corporations, and employees.
In October 2014, Carestream Health Inc. (Xiamen) (CHX) was faced with a supply chain disruption caused by a labour dispute involving most of the ports on the west coast of the United States. The work-to-rule strike was having a considerable impact on the operations of the ports and was putting pressure on CHX’s lean supply chain. In particular, the supply of wide rolls of films, the key material to CHX operations, was compromised. In an emergency meeting, CHX’s management team discussed using other shipping options. One of these options, (airfreighting) appeared to be feasible but costly. The meeting’s leader who was the director of the Asia Pacific Lean Six Sigma asked the management team to determine when CHX should use airfreight for its supply of wide rolls, how many rolls should be airfreighted each time, and what the best mechanism would be to govern the use of airfreight.