Two and a Half Days in the world of TECHMARK

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Cao Zihua, Trainee of First Session for MBA in Entrepreneurship

The TechMark Management Combat Simulation Course founded by Babson School of Business was the first compulsory class of MBA in Entrepreneurship at NBS, which is important for us all. Everyone wanted to perform well in the “first” show. Yet, it was also a challenge for Chen Hua, the mentor of the course: it was really a pressure to promote this course of EMBA to extreme atmosphere and effect by organizing MBA class of trainees aged only 32 in average, of which almost half had no experiences in top management. However, the final result showed: though the discussion was as profound as in the program of EMBA, the competition was also fierce. Everyone used what they have learned to the maximum and made some excellent decisions. Consequently, before the quarterly financial data were brought out, the atmosphere was so tense that no one would feel happy. Being the youngest among all of us, I also found it was full of challenges and opportunities. The challenge was that I had no experiences in top management and no clear picture of the operation and management of a company. The opportunity was that due to the limited experiences, in the world of TECKMARK, I could have a more objective and accurate understanding of the enterprise management and business environment; due to being less influenced by reality, I made many innovative and accurate decisions and effectively resolved the exceptional operation status and crisis in some quarters. At the end of the course, no one had given full expression to the views. Due to the limited time, I could express only some views when speaking on behalf of the group. With our group as an example, I would like to take this opportunity to talk about the experiences and lessons gained in the course.

[Teamwork]

It was not an element emphasized by the teacher, but it was believed by every group as a very important point. During the course of two and a half days, the time was extremely tight for six quarters. Only one and a half hours were given to make a decision for each quarter, within which we had to analyze the statement of the preceding fiscal quarter, prepare the R&D direction and operation strategy for the current fiscal quarter, accurately calculate the output, and reasonably allocate the sales force and advertise. With such high speed, strength and difficulty, it would be a problem for every group to avoid any mess and promptly unify the views for execution and only teamwork would make it possible to complete the task successfully. Teamwork is an outdated topic in modern enterprises and no one would doubt about the huge benefits brought about by teamwork. Teamwork requires everyone to carry out their respectively to the maximum as well as for integration to maximize the benefit. To this end, adequate communication and trust is required. Our team and the winning group (No. 4) were the two groups with increasing financial data and growth for each fiscal quarter. In view of our group alone, it should be the excellent teamwork to a great extent. The representatives of all the groups talked about teamwork unexceptionally, indicating its importance. In running an enterprise, the teamwork should be always carried out, as is the highest impression.

[Strategy and Orientation]

This is the point the teacher has repeatedly emphasized and reminded from time to time. “It is better to do a correct thing than to do correctly”. It is a question of direction to do a correct thing, involving strategy and orientation. With the accurate strategic orientation, the error in some particulars will not cause any major effect on the overall situation. It is a question of quality to do correctly. You can do things correctly, but if you do in an incorrect direction, the better you do, the higher the difference will be and the higher the effect will be on the company. Upon studying carefully all the elements of TECHMARK time, it may be observed that the R&D cost of the enterprises, especially in the last fiscal quarters, it almost became a piece of cake for everyone to complete the large-span product transformation for the purpose of pursuing the accurate strategy and orientation and favoring the market of high profit and high demand. Then, the biggest factor affecting the operation of the company is its strategy. We have to take into comprehensive account the major market, product, possible competitors, customer demand and favor and pricing, as the strategy to be integrated into the blood of the enterprise at the time. Accurate orientation and long-range strategy will add brilliance to the operation of a company in all aspects, but it will often become passive once any problem is observed with orientation and strategy, for any decision, even the correct one, can only “offer fuel in snowy weather” to slow down the declining tendency of operation. It is in the third fiscal quarter that Group 2 ran into problems that could not be resolved to the end. It is until the last quarter that they could manage to achieve the ROI required by the shareholder. If the business operation and management is assimilated with writing an article, strategic orientation is the main idea of the article, in line with which all corporate behaviors should be undertaken, while the quality of the article will depend on whether the main idea of the “article” is positive and incisive to a great extent. “Writing” can only expound it, but not control it.

[Execution]

The importance of the foregoing two aspects is already undoubted. Yet, good teamwork and good strategic conception may not necessarily transform advantages into triumphs. As a scale for corporate behaviors, execution determines the extent to which corporate target is transformed to reality. The execution of our group was really mixed up with “love and hate”. We won due to execution, but also lost due to execution. In the first five fiscal quarters, we executed well and achieved the target for each quarter properly, with liability reduced, continuously, inventory ratio lowered, profits increase, market share and sales amount increased, and, ROA and ROE also climbing up, far beyond the expectation of the shareholder on us. Since insisting on and carrying out the teacher’s idea of “the higher the participation, the more will be learned”, I studied the data adequately and gave many proposals proven to be accurate, in terms of accurate orientation of product parameters as well as control of output and sales strategy o f inventory and advertising; due to proper execution, we climbed up steadily, maintaining the second position all the way, and had a hope of defeating the leading Group 4 in the last quarter by buying back the stock. Yet, execution became our headache. In the last fiscal quarter, only with the four indicators meeting the requirement could we be qualified, but we could control the inventory ration with a range of 4% ~9%, while our inventory ratio was lowered to 2% in the last but one fiscal quarter. Then, I proposed one strategy: to control the inventory, we make 2% ~4% of the inventory in the market with low demand and low production cost to meet the minimum inventory ratio of 4%, and control the inventory in other regions so as to control the risk. As the advisor to our group, the teacher also considered it an excellent strategy. I also convinced the principals for production and sales of three products to execute accordingly. Due to the limited time, I went on with studying the product parameters. Half an hour after accurate orientation (a duty of my team) of results, when submitting the decision sheet, all changed in a sudden, with the group members changing my data for inventory making and stating that as previous experiences, as long as in bulk production, there will be inventory and it will be risky to break through 9% by making2%~3% of the inventory. It was a typical inconsiderable decision, without any ground. Since it was impossible to ensure the quantity of inventory, why not control the inventory in other regions on the basis of meeting the minimum requirement, as we could do so? As a result, since having no time to convince them to eliminate such idea, I had to submit the decision hastily. Finally, with the inventory ratio of only 1%, we were out unexpectedly (or expectedly). It should be noted that the group replacing us to win the second had just successfully controlled the inventory ratio of 4.1% by executing such strategy. In the circumstance with the stock price and financial data lower than ours, they won the award. It is just execution. Execution is an attribute as powerful as creativity and destructive force, which is not a question of being correct or wrong. Decision may be correct or wrong, but execution not. At a big developed company, there is one practice: once being made, a decision, correct or wrong, will be definitely executed level by level. Since different people are in different posts, when making a decision, the top management will have their view and consideration, which may not be understood by those at the level of execution. However, at this moment, the correct choice is to execute to the extreme, even though such decision may be eventually proven to be incorrect. Naturally, the group member (CMO) convincing others to change the strategy also said afterwards, the inadequate preliminary participation, inaccurate understanding of data and inadequate information had led to such result. I agree with one expression of hers: defected beauty is also a kind of beauty; without making such mistake at class, we would not be able to know this mistake and we would fall into a trap upon starting up in the future. It is correct to say process is more important than result.

[Decision]

Decision is the carrier for the operation and management of a company. The management personnel win for a brilliant future through one after another brilliant decision, correct or wrong. This course has made me to have a new understanding of “decision”. The classmate cracked a joke: “decision is just to pat the head to make, pat the chest to ensure, pat the lap to regret and then pat the heap to go”, which has described most incisively the risk of inconsiderable decision. By talking about decision, I wanted to share my experiences in making decisions. During the course of two and half days, I made several correct and clever decisions: e.g., strategy of making the inventory ratio, as mentioned above; market transfer: on the basis of meeting the quantitative requirement and ensuring the breakeven point, the crisis was successfully resolved for the 700,000 boxes of Rehmertz 2 resulting from the third fiscal quarter, by selling the inventory; in the brand building by Nehru upon studying the purchasing habit, the accurate orientation of parameters and high price have causes a positive effect on the profit of the company and optimization of other financial data, for which there are many other examples, not to be mentioned herein. What I wanted to say is how such decisions were made and why talking about it today. Last night, before going to sleep, my mine was full of all such words as: Euphoria, Ledakka, Nehru, Rehmertz 1, 2 and 3 (and nine combinations there from), resistance, torque, production cost, demand, advertisement, stock price, etc. While sleeping, I would dream of E1, N 2 and L3. Don’t misunderstand for it is not a matter of being possessed by the Devil, but only inertia. It is only meant to explain that a correct decision is made on the basis of controlling comprehensively and studying repeatedly the data as much as possible. “Decision is meant to look for a target market and to allocate it with necessary resources.” Hence, the importance of data support is self-evident. It is not hard to look for a target market and no huge data will be required, but one has to be prudent and considerable. One element you omit may cause a deviation in positioning the target market. Yet, accurate data computing is required for allocating resources. To achieve the target, some necessary (not necessarily in a huge quantity, but in an adequate quantity) and optimal (not necessarily the best, but suitable) resources should be projected for the target market. Since I encountered many inconsiderable decisions during the four years of service, the experience during the course has made a big impact on my thing: data or adequate and comprehensive data will not tell a lie. In the world of TECHMARK, the data may be excessively numerous and jumbled. In the times of being lean, there will not be so many production lines for you to decide. However, we should not forget TECHMARK is an ideal world. In reality, it will be more complex. Though the data are not so huge, we have to consider more comprehensively. Naturally, I have also found some defects with my financial knowledge, for which I have to make up in the near future.

[Communication and Leadership]

Some people may consider it unnecessary to put the two elements together, because leadership is a very big concept, involving all the aspects of management art. However, I have taken our group as an example and the problems with the two elements burst out at one point of time, so they are obviously associated with each other. Those working on engineering would know the key for project management is communication and the corporate management is also communication to a great extent, between upper level and lower level. Many problems can be solved, if communication is properly undertaken. The leadership of an individual is also correlated to his or her capacity of communication. Let us come back to the last fiscal quarter. At this critical stage for rushing to the peak, I failed to insist on the decision I considered correct. If to find any reason from myself, the mode of communication must be the aspect to be improved. Since limited time was available for use to make a decision, I would be excited when finding a point of decision and wanted to convince other group members to execute according to my idea. Thus, I became anxious and unstable in the process of expounding. Furthermore, the other group members are my big brothers 5 or 10 years elder than me. In listening, they would not trust me. Therefore, by delivering the information with simplest wording in a way of clear conception and proper arrange, instead of repeating the same wording in a hurry, the communication would become more effective in the environment at that time and show better leadership so that others would be willing to understand your ideas. When the communication is improper, the effect would be the same no matter how many times you repeated it. If I had kept calm to communicate, rather than blaming others for not understanding my purpose and submitting the decision in a hurry, the result would have been different. Upon knowing about it, Teacher Chen Hua had not shown any regret and sympathy for such result. Perhaps, in her opinion, it would be a mistake if a correct decision could not be carried out eventually and it would be due to the improper leadership. The problem of communication and leadership were both exposed at one point. This is also the aspect to be improved. Thus, no matter the decision is correct or not, all have found the problems with each other in the process. Process is really important.

[Prospect]

This is the first compulsory class at NBS (the open class and elective class were taken earlier) as well as the first class with all the students present and the last class before school starts. I have seen many classmates that have never appeared before. Some have started or run the business of their own or entrusted other for managing and some are the youngster that have walked out of the institution and prepared to seize the opportunity for startup. They are a group of people who are young, characteristic and full of strength. This brilliant first class has made us to expect that the emerging business school dedicated to innovation and entrepreneurship and founded in the mode of public-run and social-funded but actually out of the institution will bring us more surprises after school starts officially. Then, the renowned teachers shown the school timetable will stage on successively. While looking forward to that, we also sincerely hope Teacher Chen Hua not included in the school timetable will remember us, care for us and help us and we will continue consult you whenever having any question. In the two and half days of TECHMARK, we were in a teacher-student relationship, but we hope we will be still friends after the course.

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