david ma wei - how to simulate a complicated, dynamic business process in program design
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“CATCH 3 MONKEYS”
C U S TO M I Z E D S I M U L AT I O N F O R B U S I N E S S I M PA C T
SERIOUS PLAY CONFERENCE 2014
USC, JULY 22-24
SIMU4WISDOM LEARNING CONSULTANTS & CO.
WELCOME BY SIMU4WISDOM !
DAVID MAWEI 马伟
• TRAINER
• DESIGNER
• GAMER
WHO IS SIMU4WISDOM?
Simulation Design
Training Deliver
Strategy Alignment
What we provide:
AGENDA
• C u s to m e r c a s e 1 0 ’
• B u s i n e s s c h a l l e n g e 5 ’
• M e t h o d o l o g y 1 0 ’
• I n t r o d u c e V i to - C r e e k s i m u l a t i o n 1 5 ’
• Q & A 5 ’
CUSTOMER (SINO-PHARMA)
• State owned company from 1950, 30Billon USD revenue in 2013
• Net profit rate<1%, Negative operation cash-flow
• Market leader in China pharmacy distribution business
• Past growth from M&A 200+ local distribution companies
MARKET
• 500Million rural people seldom go to hospital, they deal with
disease like our ancestors
• Average medical consumption per people per year: China 11$,
USA 800$.
• Notorious corruption among the local governments and
hospitals, business deal mostly under-table
DEMAND
• Communicate the strategy shift from M&A to organic growth
• Regulate the business operation ethic as a public list company
• Leadership development of the head of new M&A local
distribution companies
RESEARCH：CONCENTRATION RATIO
26%
36%
33%
5%
USA
Amersourc
ebergen
Mckesson
Cardinal
Others
9% 5%
4%
82%
CHINA
Sinopharma
SH Pharma
Huarun
Others
95% VS.18%
SAME BUSINESS DIFFERENCE IN 2 COUNTRIES
CHINA USA
Major sales channel Hospital (85%+) Retail (87%+)
Hospital admittance CFDA + Local gov. FDA
Sales competition Local gov. Fair
Payment term Local gov. Fair
Upstream relationship Local gov. Fair
…… “Guanxi” Fair
INTERVIEW WITH CUSTOMER
“What is the key successful factor of your business?”
The answer is :
“ GuanXi (Relationship)”
• The relationship with
• the local government
• the major hospitals
• the upstream company
INTERVIEW WITH CUSTOMER
“What is the headache problem that block your success?”
The answer is :
“ Meet the conflict and combined needs of 3 stakeholders”
• Local government -----------------------------------accomplishment
• Downstream channels ----------------------------categorize of medicine
• Upstream companies ------------------------------volume of sales
INTERVIEW WITH CUSTOMER
“What kind of competition you deal with?”
The answer is :
“ The competition are variable in different local market”
• Different area has different relationship level with
• local government
• Downstream channels
• Upstream company
THE UNIQUE BUSINESS MODEL
Sino-Pharm
Local government
Upstream Downstream
THE DESIGN CHALLENGES
1. How to simulate “ Guan Xi(Relationship)” in a learning programs
2. How to simulate 3 stakeholdes coupling effects
3. How to simulate the strategy characters of different company
Design Challenges
“GuanXi”
Conflict
Characteristic
THE DESIGN SOLUTIONS
1. Intangible asset measurement “ Guan Xi(Relationship)”
2. Upgrade system for 3 stakeholders coupling effects
3. Asynchronies startup among the learning groups
Design Solutions
Intangible Asset
Upgrade System
Asynchronies Startup
METHODOLOGY
1. Business impact map analysis
2. Business big picture (Over view)
3. Business value structure
4. Business logic tree
BUSINESS IMPACT MAP Behaviors Initiatives Results
Maintain No.1 and
increase the share of
market in China
Rev reach 40 Billion
USD in 2016
(CAGR 22.6%)
Increase 1% Nopat
rate and positive
operation Cash-flow
Identify the key
strategy factors and
correlated
Proactively deal with
market dynamic, build
up the solid business
relationship with
stakeholders.
Effectively allocate the
precise resources to
influence the value
chain, to achieve the
profit rate and cash-
flow
Market and value
chain analysis,
estimate the trend
and dynamic
Decomposition the
group strategy and
planning the
business and risk
control
Manipulate the key
successful factors to
influence the growth,
profitability and
cash-flow
Use KPI to guarantee
the execution and
measurement
Understand the
business challenge
and improve the
industry insight
Build up the strategy,
finance, market and
opeation capability
Find a way to
increase the
negotiation power in
value chain
Make decision in
relationship foster
and realize
Competence
HOW HOW HOW?
Local Government
BUSINESS BIG PICTURE
DUMMY Distributor Downstream
Channel Upstream Company
Backoffice Business
Logistic Financing
Cash Mgmt.
Front Business
Upstream team Downstream team Product Category Gov. relationship
Demand generation
Purchase
• Deal
• Upgrade
• Value add
Sales
• Deal
• Upgrade
• Value add
Wholesale
Sino-Pharma
Business Value
Tangible
Cash-flow Profitability Asset
structure
Intangible
Upstream Downstream Local Gov.
BUILD THE VALUE STRUCTURE
ROLE OF MANAGERS
Sino-Pharma Output
（Collect money）
Input
（Use resource）
Foster resource to build edge
2014/7/26
2014/7/26
THE BOARD
2014/7/26
Upstream
Relationship
Downstream
Relationship Local gov.
Relationship
Payment & Collection
Order
Area
UPSTREAM BRIEF
Category
◎ Generic
☆ Original
▲ Anesthetic
Company Portfolio Strategy preference Contract term
White ◎+☆ Market share High penetrate
Good refund Upgrade optimize payment
Blue ◎+ ☆ Muilti channels
Good refund Upgrade is useless
Green ☆ Hospital focus Mid refund High margin
Black ◎+▲ Binding sales ▲ No refund, need license Bad payment term
Dummy Null Money and cash 1% profit. cash on delivery
Name Category Demand Preference
H I Hospital ◎☆▲ Relationship Variety etc.
H II
H III
RC Rural Clinic
◎☆ Relationship Discount etc.
RS Retail shop ◎☆ Promotion Logistic etc.
WS Wholeseller ◎☆ Discount Variety etc.
DOWNSTREAM BRIEF
LOCAL GOVERNMENT RELATIONSHIP
Foster：
• Government Task Accomplishment • Investment, Industry benchmark , Generic coverage, etc.
• Upgrade the value chain control
Realize：
• Influence the local directory admittance
• Influence the hospital decision
• Accelerate the hospital money collection
DOWNSTREAM RELATIONSHIP
Relationship Logistic
UPSTREAM RELATIONSHIP
Hospital/Clinic
Order
Retail
Order
Wholesell
Order
Downgrade Upgrade
Distributor rank
THE SIMULATION PROCESS
Planning
1. Loan
2. Quota
3. Support
Bid
4. Hospital
5. Clinic
6. Retail
7. Wholesale
TANGIBLE ASSET
Cash 314 AR 250 Deposit 40 Logistic 16 Total asset 620 AP 0 Loan 300 Total liability 300 Beginning equity 309 Gain/Loss 11 Ending equity 320 Equity & liability 620
DIFFERENCE OF STARTUP
Alpha Beta Gamma
Tangible SAME
Intangible Difference
Wa 2 2 3
Ba 3 1 2
Gov.pt 5 5 3
Main
force Hospital I Hospital II Hospital III
MEET THE NEEDS OF 3 STAKEHOLDERS
THE MARKET FORECAST
RESOURCE PLANNING (UPSTREAM)
√
√
√
√
√
√ √ √ √
√
UPSTREAM QUOTA BID
LOCAL DIRECTORY ADMITTANCE
UPSTREAM BID
RESOURCE PLANNING(DOWNSTREAM)
2014/7/26
√
√ √
√ √
√ √
DOWNSTREAM BID
DOWNSTREAM BID
2014/7/26
EXAMPLE: THE NEED OF HOSPITAL I
GA*4, BA*1, DA*1
PRIORITY: ALPHA > DUMMY > BETA
EXAMPLE: THE RESULT OF HOSPITAL I
ALPHA DUMMY BETA
YOU GET ORDER !
Hospital/Clinic
Order
Retail
Order
Wholesale
Order
DO YOU HAVE QUOTA?
CAN THEY LIST IN LOCAL DIRECTORY?
YOU GET MONEY ! WHEN
YOU HAVE TO PAY ! WHEN
GOV.
YOU GET STATUS !
GOV. GOV.
GOV.
SIMULATION TARGET
Alpha Group
Tangible
Cashflow
Income
statement
Rev. = M Margin + Refund = M
Fixed Cost = M Net profit = M
Balance
sheet
Total Asset = M Loan = M
Equity = M ROA =
Intangible
Upstream
Relationsip
Wa·◎ Wb·☆ Ba·☆ Ga·◎ Da·▲
Downstream
Relationship
Hospital I Hospital II Hospital III Clinic Retail
Gov.
Relationship
Use ，Earn ，Reserve for next year：
BUSINESS SETTLEMENT
2014/7/26
WRAP UP
C u s to m i z e s i m u l a t i o n f i t u n i q u e c u s to m e r ’ s b u s i n e s s
s i t u a t i o n a n d t a l e n t d e v e l o p m e n t n e e d s
Design Challenges
“GuanXi”
Conflict
Characters
Design
Solutions
Intangible Asset
Upgrade System
Asynchronies Startup
VALUE CREATED
W h a t w e h a v e d o n e ?
WE SEEK US PARTNERS !
Game Designer: Templar LU
Learning Designer: David Mawei
Simu4wisdom learning consultants & Co.
Room 1607, No, 1076,Changshou Rd,
Shanghai, 200042
T +86-21-62567710/51600196
skype: Simu4wisdom
E: davidma@simu4wisdom.com
www.simu4wisdom.com
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