16.02.09 10 msu strategic business decision making_student handout after the talk

V 6.0

Joseph F. Dellaria, Jr., Ph.D.

Founder and Principal

(651) 436-6494

mobile: (651) 216-1563

[email protected]

www.PerceptiveRealities.com

1 © 2007 Joseph F. Dellaria, All Rights

Reserved Confidential, For Private Use Only

®

V 6.0 2 © 2007 Joseph F. Dellaria, All Rights Reserved

Confidential, For Private Use Only

What does the dog expect to happen when

he clicks “EMPTY TRASH”?

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There is a disconnect between –

Perception and Reality!

3 © 2007 Joseph F. Dellaria, All Rights Reserved


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Disciplined-Yet-Flexible (D-y-F) Thinking

4

• Feasibility

- Can or Cannot Work

• Risk/Cost

- High or Low

© 2007 Joseph F. Dellaria, All Rights Reserved


• Information Status

- Rich or Poor

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Career Highlights • Training: Ph.D. in synthetic organic chemistry

5

• Research and Discovery Experience: over 30 years of doing and/or managing

research

• Publication Summary:

- Co-inventor on 63 patents

- Author/co-author on 30 peer reviewed articles

- Author “The IDEA Formula”



• Other: - International Speaker - Inventor

- Consultant/Trainer - Workshop leader

- Numerous invited and professional lectures

• Founder: Perceptive Realities – Finding Better Ideas Faster

V 4.1 © 2007 Joseph F. Dellaria,, All Rights Reserved

Confidential, For Private Use Only 6

Companies and People who have saved time and

money while “Finding Better Ideas Faster:”

- R&D Division of a Fortune 100 Company

- R&D Division of a mid-sized Company

- Government Department needing new processes

- Personal Testimonies for life decisions



Case Study 1: Major division at 3M:

Situation: 27 new project ideas needed to be qualified

Time: Identified the best projects in 40% of the time

Resources: Used less than 20% of the resources normally used

Estimated Savings: $1 million in time alone


Confidential, For Private Use Only V

5.0

Savings :

• 62% savings in time = $ 1.09 million

• 83% fewer FTEs

• Estimated lab expenses $4.75 million

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According to Dr. Eric Klinger of the University

of Minnesota:



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According to Dr. Eric Klinger of the University

of Minnesota:

• Americans make up to 17,000 decisions per day

– some trivial ...

– others are life-changing ...



V 6.0 11

• Feasibility


• Risk/Cost

- High or Low




- Rich or Poor


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Information Poor Situations

Can Be

BIG Trouble



BIG

Quake Lake-Yellowstone Nat’l Park

© 2007 Joseph F. Dellaria,, All Rights Reserved


Point of Information

Poor Decision

Note dark storm clouds

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© 2007 Joseph F. Dellaria,, All Rights Reserved

Confidential, For Private Use Only 14 V 5.0



3-4 feet

Note single hair



41 inches

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Information Rich and Poor Situations



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Any situation where existing information CAN

PROVE whether the outcome will be positive

or negative.

(Sufficient information exists to prove the outcome.)

V

4.1



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Any situation where existing information CAN NOT

PROVE whether the outcome will be

positive or negative.

(New information must be created to determine the outcome.)



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Can or Cannot Work

New Information must be created.

This is done by doing a test or experiment.

V

4.1





Desired Destination

Smaller Mountain Top



Desired Destination

Smaller Mountain Top

Question:

Do you know whether you

can get to the snow

covered mountain top from

where you are now?



A

b

y

s

s

Cool, let’s

Go!

It maybe too

much work!

No way!

Not Now.



A

b

y

s

s



Applying Information Rich and Poor

Situations to Real Life Situations



Storm Sewer Grate

Is this information Rich or Poor?



6 Ducklings 5 Ducklings

Information Rich?

i.e. when is there enough information to prove the outcome?



6 Ducklings 5 Ducklings 1 Duckling

Information Rich?




If you are losing ducklings, stop! 6 Ducklings 5 Ducklings 1 Duckling

[See slide 75 for the entire sequence]

V 6.0

Group Exercise

Answer the questions on the handout for your group.



Information Rich

Any situation where existing

information CAN prove

whether the outcome will be


(Sufficient information exists to prove the

outcome.)

Information Poor

Any situation where existing

information CAN NOT prove

whether the outcome will be


(New information must be created to determine

the outcome.)



POOR? RICH?

Will this bomb detonate when dropped from 4-5 feet?



POOR? RICH?

LINK: https://www.google.com/?gws_rd=ssl#q=nhl+standings

Based on the standings below, can you predict

who will win the 2016 Stanley Cup?



POOR? RICH?

LINK: http://www.climatestations.com/images/stories/minneapolis/mspsnowm.gif

Will we have 9.4” of snow accumulation

in March of 2016?



POOR? RICH?

A picture of a neighborhood in Gilchrist, Texas after Hurricane Ike (category 2) went through in 2008.

Bonus: Can this house withstand a category 5 hurricane?

Can this house withstand a category 2 hurricane?



POOR? RICH?

Can the bridge hold the weight of this modular home?



POOR? RICH? Picric Acid

Crystals

SITUATION: Picric acid is a close relative of TNT and has similar explosive power. It is stable

indefinitely in water. However, as a dry crystalline material, it is shock sensitive and can blow at

the slightest bump. We found two jars of picric acid when cleaning out our chemical storage

room. There was no visible water in either jar and crystals, similar to those shown above, filled

one side of each jar . Can the jars be opened without detonating them?

Will the picric acid detonate when opening the jar?



POOR? RICH?

SITUATION: Two fires occurred at separate California golf courses during the 2010 drought. It

was known that, “The common denominator was each golfer used a titanium club and hit the

ball just out of bounds next to dry vegetation where the ground was extremely rocky.“

In the lab, scientists painstakingly recreated the course conditions on the days of the fires. Using

high-speed cameras and electron microscopes, they found that if hit upon a rock, clubs

containing titanium can produce sparks of up to 3,000 degrees that will burn for more than a

second.

Can a titanium golf club start a fire upon striking a rock?



Has this happened in industry?

V 6.0

Late 1970s – Early 1980s Minivan

• Hal Sperlich was fired at Ford

- He tried to champion FWD cars and the minivan

44

• Moved to Chrysler who was on the brink of failure

- Successfully championed both

• Record sales saved Chrysler

- K-car and minivan



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A Quote From Hal

• “Had Ford done the front-drive cars and minivans

we tried so hard to get them to do, I doubt

Chrysler would be around today and Ford would

be bigger and stronger than it is.”





Existing Business New Opportunity

• Blockbusters . . . . . . . . . . . . . Netflix

• ABC and NBC . . . . . . . . . . . . CNN

• IBM . . . . . . . . . . . . . . . . . . . . Microsoft

• AT&T . . . . . . . . . . . . . . . . . . . Internet

• UPS and US postal service . . FedEx

• Sotheby’s and Christie's . . . . eBay

• Borders and Sears . . . . . . . . . Amazon.com

• RCA and Sony . . . . . . . . . . . . iPod

• Maxwell house . . . . . . . . . . . . Starbucks

• Visa or MasterCard . . . . . . . . PayPal

V 6.0

In each case the leader in the field was:

• Focusing on optimizing their current position

47

• The new opportunity was Information Poor



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Information Rich, “Can Work” ideas are

• Easier to recognize

• Easier to reduce to practice

• Competitive (others can see it)



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Information Poor, “Can Work” ideas are

• Tougher to recognize

• Tougher to reduce to practice

• Most always lead to an innovation

• Appear to be “Maybe” ideas at the outset



V 6.0

An Example of an Information Poor,

“Can Work” idea



V 6.0

In the late 1970’s:

Computer memory was

on reel-to-reel tape.

V

4.1



V 6.0

Today:

A flash drive, or thumb

drive, holds more

memory than an

entire tape reel

V

4.1



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Can Always Work:

The science and

technology to make

this work could

ALWAYS WORK.

1st patents: 1999

1st product: 2000

V

4.1





Type Of Memory

Information Status Product Status Feasibility of Idea Working Late 1970’s 2000 Late 1970’s 2000

Reel-to-Reel Rich Rich Leading Technology

Obsolete Technology

Can Work Always

Flash Drive Poor Rich Did Not Exist

New Dominant

Technology

Can Work Always

Reality

Perception

A B

C D



Perception: Inf. Rich

Reality: Can Work

Perception: Inf. Poor

Reality: Can Work

Reality: Cannot Work


Reality: Cannot Work


Information Rich Information Poor

Can W

ork

C

annot

Work

M

AY

B

E

S

Reality

Perception

A B

C D




Reality: Can Work


Reality: Can Work

Reality: Can Not Work


Reality: Can Not Work


Information Rich Information Poor

Can W

ork

C

annot

Work

Competition Innovation

V 6.0 57

• Feasibility


• Risk/Cost

- High or Low




- Rich or Poor

Technical

Business



Business

Opportunity

Value

(Can it work

financially?)

+

Technical

Opportunity

Value

(Can it work

technically?)

= Total

Idea

Value

- All ideas generate a score and ...

- Ideas with a disqualifying flaw ...


Business

Opportunity

Value

(Can it work

financially?)

x Technical

Opportunity

Value

(Can it work

technically?)

= Total

Idea

Value

- Ideas with a disqualifying flaw ...

- Highest value ideas ...


Business

Opportunity

Value

(Can it work

financially?)

x Technical

Opportunity

Value

(Can it work

technically?)

= Total

Idea

Value

The IDEA Formula

V 6.0 V

4.1


Idea

Technical Opportunity

(Can it Work)

Business Opportunity

(Market, Financial,

Organizational) Additive Score

Multiplicative Score

1 10 0 10 0

2 0 10 10 0

3 5 5 10 25



The final step is to determine whether

the risk associated with pursuing the

idea is acceptable.

V 6.0 64

• Feasibility


• Risk/Cost

- High or Low




- Rich or Poor


V 6.0


• Hal Sperlich was fired at Ford


65



• Resulting record sales saved Chrysler

- K-car and minivan



V 6.0


• Hal Sperlich was fired at Ford –


66



• Sales records saved Chrysler –

- K-car and minivan



Risk Was:

Unacceptable

Acceptable

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Different people have different risk tolerances

• Risk Averse – no risk is acceptable

67

• Risk Tolerant – situational, some risk is

xxxxxxxxxxxxxx acceptable, some is not

• Risk Oblivious – risk, what is risk?



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Pro’s Con’s

• Risk Averse – few, if any, big few, if any, big

w losses wins

68

• Risk Tolerant – some big some big

w wins losses

• Risk Oblivious – many big many big

w wins losses





Rich

High Poor

Low Risk

Info

rmat

ion P

oor/

Ric

h

Information: Rich

Risk: High

Action: Go for it!

If the idea Can Work.

Information: Poor

Risk: High

Action: Don’t go/Wait for

more info. The situation should

be avoided. You have high risk

with little knowledge.

Information: Rich

Risk: Low

Action: Go for it!

You know the situation Can

Work and risk is low.

Information: Poor

Risk: Low

Action: Go for it!

You have little to lose. It may

be faster to try it than to

create new information.

Information: Intermediate

Risk: Intermediate

Action: Depends on the

situation! If the gain of

success is greater than the

risk – go cautiously.

V 6.0

Each team should be prepared to answer the

following questions:

• Who faces the biggest risk for your situation?

70

• Is the risk high, medium, or low for them?

• If you had to make the decision to go or not go

for your situation, which would you do? Why? © 2007 Joseph F. Dellaria, All Rights Reserved




Situation 1 Situation 2 Situation 3

Situation 4 Situation 5 Situation 6



Situation 7

V 6.0 73

• Feasibility


• Risk/Cost

- High or Low




- Rich or Poor

• Information poor situations are dangerous

• You have to work on information poor ideas

to find innovative ideas

• The IDEA Formula

Business

Opportunity

Value

x

Technical

Opportunity

Value

=

Total

Idea

Value

• Risk must be assessed in each situation

• Before acting - understand the risk as well

as possible




To Order The Book Go To:

http://perceptiverealities.com/

Select the Book tab (it will

take you to Amazon)

Or Get a signed copy today:

$20

Book ($18.67) + MN Taxes ($1.33)





6 Ducklings 5 Ducklings 1 Duckling

Information Rich?


16.02.09 10 msu strategic business decision making_student handout after the talk

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