Generating Long Term Shareholder Value Through FactBased Management
Generating Long Term Shareholder Value Through Fact-Based Management
THE ANATOMY OF HOLISTIC ENTERPRISE MODELING … a discipline whose time has come … a competitive advantage today … a requirement for survival tomorrow Presented to UAEU by David W. Low 27 -Apr-2004
Today, we examine the architecture of a customizable holistic enterprise model • Target Market Model – Segmented by Income Level, Shopping Loyalty – Migration into and out of target market – Changes in … • Income level, due to economic changes • Loyalty to enterprise & competitor, due to satisfaction • Enterprise Model – Employees & Managers • Segmented by experience, training, and loyalty to firm • Performance in different situations depends on these factors • Labor Market Model – Labor pool model also includes migration effects – Competitors try to hire from the same pool as enterprise
Any respectable Enterprise Model begins with the Target Market – carefully segmented For this example, we segment our target market by income level, loyalty to the client, and loyalty to the competition
Population dynamics are modeled and calibrated carefully: first – migration We include estimated flow into and away from our Target Market – again, by segment
Population dynamics are modeled and calibrated carefully: then – economics Economic ups and downs are constantly changing the mix of disposable income within the target market
We now shift our focus from the target market to the client We model the flow of customers to the client’s establishment, where the products and services they encounter generate a level of satisfaction Both the frequency of shopping and the spending rate depend on the customer’s current loyalty to the client Depending on the customer’s satisfaction at the client establishment, his/her loyalty to the client may change
Advertising attempts to affect customer loyalty directly Advertising can increase or decrease the customer’s loyalty to the client, within a particular target market segment
Competitors have the same opportunities and risks as the client Customers flow to the competitors based on their loyalty to them
Competitors have the same opportunities and risks as the client Based on the customer’s experience at the competitor’s establishment, his/her loyalty to the competitor may change
We now begin to look at those client assets that make excellent customer service possible In a business with high service content, the client’s human resources can be its greatest asset We segment employees by experience, training, and loyalty to their employer
Employee flow to and from work is carefully modeled Each employee is assigned a work schedule, including time off for lunch and breaks Employees begin the day with their individual experience and training, as well as a certain level of loyalty to their employer
Employee flow to and from work is carefully modeled After working all day, they return home, perhaps with a different degree of loyalty to the company The quality of the employees’ interaction with customers depends on the employees’ experience, training, and current degree of loyalty to the company
All employee characteristics are dynamic, for example, their level of experience Each week of simulated time, employee experience is updated automatically, … … and the quality of experience-related tasks should gradually improve
All employee characteristics are dynamic, for example, their level of training Employees attend classes, based on a training schedule
All employee characteristics are dynamic, for example, their level of training Levels of employee training are updated upon return from class
The source of the firm’s employees is also modeled Workers are segmented by experience and training
The flow of workers to and from the labor pool is also carefully modeled When employees leave the firm, they re-enter the labor pool
The flow of workers to and from the labor pool is also carefully modeled When workers join the firm, they are assigned a work schedule and an employee type
We model the labor pool dynamics in the same way we did for the target market New workers enter and current workers leave the labor pool every day
There always competitors for workers, just as there are competitors for customers Other firms obtain their workers from the same labor pool
It’s now time to build a model of those very special people who run the business We model managers as a special class of employee They’re segmented on management experience, training, & loyalty to the firm
They manage themselves and the other employees in the firm’s daily operations Managers have work schedules, just like the other employees Based on their daily experiences, their loyalty to the firm may change
From time to time, exceptional employees are promoted into management These new managers will retain their loyalty, but will start from scratch with management experience and training
The management team’s characteristics are also maintained dynamically With this increasing experience, the manager’s performance on experience-related management tasks should gradually improve Each week of simulated time, the manager’s experience level is updated appropriately
Special training for managers is required by the firm Managers attend classes, based on a management training schedule Upon their return from class, they will be appropriately reclassified as having an increased level of management training
The client draws its management from the available management pool This pool is the source of all new managers except those promoted from within Just like the labor pool, new managers enter and current managers leave the management pool all the time
Other companies compete for the best candidates in the management pool Managers move between the pool and other firms just as they move between the pool and the client enterprise
THANKS!
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