Competitive Advantage in Park Royal Coffee Shop

Last week, a friend of mine took me to a new fancy coffee shop recently opened  in West Vancouver’s famous Park Royal shopping center. Location is prime and a French name makes it even more attractive. Inside the shop, I was wondering about its competitive advantage. Three issues draw my attention: haircut of the supervisor, her attitude and the way she handled bakery. Her haircut was disgusting. I noticed none of seniors ever looked that direction. Then her attitude was unique. A customer asked for napkin and she shouted and pointed to the bar in the shop. By no surprise, the napkin container on the standing bar was empty. The last issue was her way of preparation of pies to put in oven in front of the eyes of the customers. Nice idea and wrong way to do it! She was doing it with bare hands! I noticed some people shaking their heads. Isn't that funny that a business man invests such huge amount of money in a competitive coffee shop business and display the competitive advantage in this way?

POSDCORB

In 1937, Luther Gulick in his paper “Notes on the Theory of Organization”  submitted to Brownlow Committe draw the remarkable concept of "POSDCORB" from French industrialist, Henry Fayol. The short form, POSDCORB, stands for steps that he suggested a manager should take in any administrative process. POSDCORB stands for: Planning, Organizing, Staffing, Directing, Coordinating, Reporting and Budgeting. POSDCORB was Glick's response to this question: "What is the work of the chief executive? What does he do?"  His response that created this acronym was in detail as follows:

·         Planning, that is working out in broad outline the things that need to be done and the methods for doing them to accomplish the purpose set for the enterprise;

·         Organizing, that is the establishment of the formal structure of authority through which work subdivisions are arranged, defined, and co-ordinated for the defined objective;

·         Staffing, that is the whole personnel function of bringing in and training the staff and maintaining favorable conditions of work;

·         Directing, that is the continuous task of making decisions and embodying them in specific and general orders and instructions and serving as the leader of the enterprise;

·         Co-Ordinating, that is the all important duty of interrelating the various parts of the work; OR that means is a common thread that run through all the activities of the organisation.

·         Reporting, that is keeping those to whom the executive is responsible informed as to what is going on, which thus includes keeping himself and his subordinates informed through records, research, and inspection;

·         Budgeting, with all that goes with budgeting in the form of planning, accounting and control.

Gulick also suggested that some functions can be delegated to others in organization and he tried to explain limitations of this division of work. POSDCORB fits classical management definition and has influenced management and public administration within the years.

But no idea goes without critics. Among other criticisms,  Herbert A. Simon states that the POSDCORB principles are an oversimplification of administration. Simon's criticisms largely center around span of control and unity of command, stating that sometimes it is necessary for a subordinate to receive guidance or directives from more than one source, as well as Gulick's division of labor concepts.

Risk Reserve

In  the JPL case we get familiar with “Risk Reserve” concept. Lee, the risk manager, justifies the cost of the Tiger team by this concept. He says: “When a risk review board concludes that a particular item needs a 100% cost and time reserve, it is predicting that the component will need three or four tiger teams along the way to come in and solve some serious problems”.

“Risk reserve” is a precautionary allocation in total project budget to deal with uncertainties. We could prepare an operation budget based on the assumption that everything will continue as planned. But life and projects have always surprises. Once work breakdown structure “WBS” is prepared, appointed risk manager needs to allocate a contingency fund to cover identified and registered risks. Here comes another question: are all risks predictable?  The answer is simply no! Unregistered risks are also part of life and business.  The “management fund” could address this concern.  

Risk reserve is not only about funds. Delivery time could need a risk reserve assumption. How about staffing? Are you sure that your hired staff won’t leave the project?

Risk manager should think of risk reserves seriously.  In the JPL case risk reserve allowed Tiger team to form and intervene. It should be the same in all projects.

I summarize my point as follows:

·         A risk or project manager always should identify backup resources.

·         Risk reserves are inclusive of monetary funds, work schedule and commitments, staff and material.

·         Always learn from past for success in future. Study failed or troubled projects.

Dr. Joe Iverstine

I would like to take a moment and write about Dr. Joe Iverstine. When I first attended SLU for my MBA program, I was advised to take production management course with Dr. Iverstine. The reason was simply “he is a good and great guy!" Everyone shared this idea. So I did it. For a semester I was listening to a prof of great heart and knowledge. During my time in SLU there was not a single day without meeting this unique good and knowledgeable prof.

Operated by a Boeing 727-235, N 4737 Clipper Defiance, was a regularly scheduled passenger flight from Miami to San Diego, with en route stops in New Orleans and Las Vegas. On July 9, 1982, the plane that made this route was forced down by a microburst and crashed into the New Orleans suburb of Kenner. All 145 people on board, as well as 8 more on the ground, were killed. The crash had the highest number of aviation fatalities in 1982, and as of 2013 remains the fifth-deadliest air disaster to occur in United States territory.

Regrettably, Dr Joe Iverstine and his wife Kay were among passengers.

Dr. Iverstine was head of the department of management and finance at SLU and Kay was a school teacher at Ponchatoula High School.

God bless them.

JPL Case and Tiger team

Here is a tip for your assignment on the JPL case. Don't forget to write about "Tiger team." According to the case, the risk review board decided to form a tiger team to address the serious BMSA problems. A tiger team developed solutions to mission-critical problems that the project team could not fix. The team members were the best technical experts within JPL and NASA and from everywhere in the world. The procedure was to know the problem, develop mitigation plans to solve it and get instruments ready for launch. It was costly but necessary. Lee justified it as the role of risk reserve.

My advice to MBA students when working on JPL case is not to ignore this subject in your study and report. Otherwise you will lose marks. Good luck! 

Characteristics of a Risk Manager

    

    This question is asked in management courses when risk management in studied. What are the characteristics of a risk manager? Is he like other managers or runs other type of show? That’s an important question. This question is crucial to top management who is looking at a project. Who should lead risk management task?

The main point to understand is the essence of RM. Risk manager in fact is a manager with no subordinates. Seems funny but it is true. Let’s consider JPL case in MBA course. JPL wants to lunch a space craft to Mars. Ever division is doing its job. CEO assigns Gentry Lee a risk manager.  He has to work with all departments but he runs no division. He is a man caught in fire. CEO, lead engineers and managers have their own expectations which are quiet contradicting. What kind of manager Lee needs to be? I bring some points as follow:

1. ·         Organizer: organize risk committee
2. ·         Communicator: Capacity to connect
3. ·         Historian: to table mistakes in the past
4. ·         Broker: one who can strike a deal
5. ·         Reporter: make efficient report to CEO on current work and results
6. ·         Zealot: Stands firm on his work and not influenced by CEO and others
7. ·         Eagle: an observer with sharp eyes and ears
8. ·         Achiever: Dedicated to do the job
9. ·         Decision maker: capability of summarizing and delivering his expert view clearly

There might be other points too. The idea is to show the unique quality of a risk manager. According to Mr. Lee “ a minister with no ministry”

Accident Prevention

The advanced concept on industrial safety is prevention. In an environment where machine, man and nature are incorporating to produce a product there is possibility that things go wrong. The art of management is to mitigate such events. This process needs education and management. The work process and risky zones needs to be identified and dealt with, but this is not an easy task. The safety precautions might affect production and slow down the job. The managers mainly don't like it. But safety could improve productivity and prevent budget overrun.
Any industrial company needs safety department. It should work just under CEO to show the importance. No aspect of their business should need authorization from any subdivision. Now comes the main subject and question. Who is responsible for safety and risk management in this field? is it head of "Safety"? the right is:CEO. This is his task to ensure safe environment in work place. Safety man works on his behalf.. This is the key issue neglected.