Sai Kotari

When you want to compare two or more groups and those groups are of different sizes. Unbalanced design has unequal number of observations in some treatment groups. While balanced design has equal number of observations in all treatment groups. True of t-test, ANOVA and multivariate tests. A simple example below, where 2 Teaching Techniques for 3 Languages compared between groups. Observations/Sample sizes remain same for balanced while for unbalanced we have variations. Unbalanced is a problem because one of the assumptions for the t-test is “approximately equal sample size”, Divide the larger group by the smaller group, and make sure the ratio is less than 1.5. Assuming that the groups are equal, we can do a t-test on an unequally sized groups. But it may be wrong. Primary reason that t-test also assumes that the variances of the groups are equal. This is the assumption of “homogeneity of variance”. When sample sizes are equal than, unequal variances are not a problem. T-test is insensitive to Heteroscedasticity. As the sample size become more unequal, the more that ratio differs then the t-test becomes increasingly sensitive to heteroscedasticity. If we compare two groups –40 (n=40) and the other of 3 (n=3), that test will be highly sensitive to violation of variances. Balanced design provides following advantage: 1) Power of an ANOVA is highest when samples sizes are equal across all combinations and we have the best chances of detecting the differences among the mean across treatment combinations. 2) Overall F-statistics of ANOVA is less sensitive to violation of equal variance. There are various reasons why unbalanced design can occur. For ex. Individuals may decide to opt out, Options with unbalanced design: 1) Fix your research group so that each group is equally sized. True for t-test, ANOVA and multivariate analysis. Get the group sizes equal. 2) Collect more data, especially in case of n=3, get another round of data collection 3) If the problem is of unequal sample size but you have plenty of cases – is to randomly sample the larger group to get an equally sized comparison group 4) Welsch’s t-test- Does not have the assumption of homogeneity of variances between groups, so unequal samples sizes will not affect like with student’s t-test.

Parametric analysis of Variance (ANOVA) is used to compare multiple populations and even subgroups of those populations, tells us if there are any statistical differences between the means of three or more independent groups. ANOVA is extension of t-test which allowed us to test two groups if there is difference in means. If you have multiple groups, you could use t-test multiple times but a better way of doing that is through ANOVA. Anova is the ratio of Variability between and Variability within. Various ways of comparing variances for more than 2 population: One-way Anova/Single factor: One-way means the analysis of variance has one independent variable, Measures single factor from multiple sources. It helps to identify if there are significant differences between the means of independent variables. Factorial ANOVA/Two-Way Anova- Covers ANOVA tests with two or more independent categorical variables. It allows us to “account for variation” for the ROW level due to other factors as each row will have its own mean and std deviation. This allows greater focus on Group differences making it easier to detect differences. Through this we are attempting to minimize the Error variance by detecting variance. Two-way/Two-factor with replication – Measures 2 factors, but has multiple repetitions of each combinatio Two-way/Two-factor without replication/ Randomized block design - Measures 2 factors Total variance: Total variance is ratio of between groups by within groups. Larger the difference, the more likely the groups have different means and that we should reject the Null Hypothesis. a) Variation within each group b) Variation between the groups Concept of confidence interval: ANOVA tells us groups are different, but it does not tell us what the difference is. Confidence interval helps us assess the location. Pairwise comparison will lead to Type I error by compounding the error. The most important statistics in the analysis of variance table are the p-value (P), S, R2, and adjusted R2 values. Collectively, these values tell if means are significantly different from each other P-value - If P is less than or equal to the alpha level, one or more means are significantly different. - If P is larger than the a-level, the means are not significantly different. If the ANOVA results indicate that there are significant differences, we can look at the individual statistics and confidence intervals to learn more about the differences. S, R2, and adjusted R2 are measurements to show how good the model fits the data. There are multiple comparison methods: - Fisher’s LSD – This is used in conjunction with ANOVA. While ANOVA tells us if two of the groups are different from each other, Fisher’s LSD tests two specific groups against each other. - Tukey Method – For pairwise comparison after One Factor ANOVA - Scheffe Procedure – Similar to Tukey Method, this method is used when Null Hypothesis is rejected after ANOVA, this test is used to determine where the difference exists. - Bonferroni Correction – Method used to detect false positives When might you use Anova? A few scenarios as example when we might want to use Anova: · A group of patients trying three different therapies and to compare if one therapy is better than the others. · Three different types of drinks for a group of people, and compare the reaction time · Students from different colleges take the same exam, check if one college outperforms the other

Yamazumi means to “to pile” or “to stack up” in Japanese. These graphs help visualize process performance through a stacked bar graph for Value Add and Non-Value Add activities. Simplifying process steps and eliminating non-value add activities are critical contributors to improve performance of the process. Yamazumi charts help with visualization of the process steps, variation between operators and/or workstations. This method was used by Toyota for Line balancing and workflow optimization. Here I am using a simple example of Pizza Order Delivery (using Yamazumi chart for Process Efficiency): We have 60 Orders per Day to deliver, Each day of 6 Hours Productive Time. Takt Time: (6*60)/60 = 6 Mins Steps of creating Yamazumi Chart: · Y axis for Time and X axis for Process Steps · Below Hypothetical Example for X axis: “Current state/As is state” Process Steps Process Time (minutes) Step 1. Order Received 7 Step 2. Dough Preparation 15 Step 3. Toppings 5 Step 4. Oven 3 Step 5. Retrieve and Slice 7 Step 6. Package 5 · Draw Graph with Takt time as Secondary Axis (6 Mins) · Graph below represented by blocks for Non Value Added Activity for sub processes Process efficiency using Yamazumi Chart: Yamazumi charts help visualize Waste. Being able to differentiate value added activity versus nonvalue added activity encourages organization to challenge current way of working and think of ways to improve. 1. It is used for simple easy visualization to show the problem areas and highlight bottlenecks. Any process step that goes beyond Takt time is immediately a candidate for Optimization. 2. This graph has also been used for Line Balancing i.e. to balance work content between the processors/workstations. 3. Integrate and Visualize results of Lean Technique ECRS (Eliminate, Combine, Re-Arrange and Simplify) using Yamazumi charts - Eliminate - Eliminate Waste and Non-value add activities. In the example, all process steps optimized by eliminating waste - Combine – Combine steps to optimize the flow. Step 3 & 4, as well as Step 5 & 6 combined - Re-Arrange – Remove bottlenecks by re-arranging the steps. Step 2 has 2 processors to avoid bottlenecks and process orders faster - Simplify – Make the process flow and work easier Process Steps Process Time (minutes) – Current State Process Time (minutes) – Post Improvements Step 1. Order Received 7 5 Step 2. Dough Preparation – Dough Making 15 6 Step 2a. Dough Preparation – Pre heat 5 Step 3. Toppings 5 6 Step 4. Oven 3 Step 5. Retrieve and Slice 7 6 Step 6. Package 5 Yamazumi charts can be used to motivate teams and leadership towards Continuous Improvement and driving process efficiency in a systematic way.

Multi-voting is a structured method for group brainstorming that encourages contribution from everyone and helps with decision making without getting into arguments. Encourages consensus and agreement on relative importance of issues, problems, or solutions. When to use: When teams have a long list of possibilities and teams must narrow their options into a manageable size that can be discussed When teams must decide on which options should be given priority When some members are much more vocal than others or some members think better in silence When group does not generate quantities of ideas When all or some group members are new to the team and/or some members not participating Steps: We have recently used this technique for the process deep dive where teams across the organization had their individual long list of irritants which was leading to delays in prioritizing actions. It was also leading to conflict. We followed following steps to create a nominal based prioritization. Preparation – A good preparation that explains the purpose and expected outcome. Ensure participation from all relevant stakeholders and most important, schedule well ahead of time. Idea generation - Generate list of options by every participant. Several ways of achieving this, we can take offline feedback, round robin collection, via individual posts etc. Discussion of the ideas - Create clarity for each option amongst the participant, allow questions and queries to create deep understanding of each idea Voting – Number each idea and allow each member to Vote and rank in priority. We used for our brainstorming 5 votes per participant. As we are in virtual times with Covid, ensure everyone understands how to vote digitally, and has used their voting rights successfully. Discussion on initial voting - Tally results and review top choices. This is an important step as it helps realize the top problems. As well it might happen that a particular top issue is not perceived as important as it felts during discussions. Final voting – This steps is required if there is high number of choices and need further narrowing down. Benefits: Promotes participation and team engagement Eliminates arguments, gives fair chance to all Allows teams to select most important items Allows groups to narrow options into manageable size Saves group time by focusing on greatest potential Prioritizes a list of options following of brainstorming session Pitfalls/limitations: Voting gets skewed if the team is unequally represented, sometimes one division may have subdivisions and more representation than others Risk of voting being perception and feeling based instead of it being fact driven If the team members are not well informed or have the knowledge of the subject During the brainstorming, some members may not get time to share all their ideas End goal: Multi-voting is a great visual tool as everyone can see what everyone else in the group considers as important. Result is to get a list of options, not necessarily to make an actual decision or have one specific option that everyone agrees on, but really is to get a list of options that are more specific and more narrowed down. And, also to create a discussion on options with highest priority.

It’s a system development methodology, developed to respond to the needs of delivery system very fast. First developed in mid 1970s by New York Telephone Co Systems Development center under the guidance of Dan Gielan. RAD term was originally used to represent software development process. In 1990, James Martin documented interpretation of the methodology in more broader sense that had variety of methods and speedy application development approach. Grew out of convergence of two trends: Increased demand of speed of doing business Ready availability of high-powered technological capabilities and tools Goal: To rapidly analyse business process To design a viable system to meet user’s requirement through collaboration To provide the finished product faster It’s a strategy of developing information systems. This is agile methodology, some of similarities and differences Its incremental approach, building upon something and making it better. Components and functions are built in parallel with each other Developments have very tight timeframe, product that is usable quickly Mini projects are pulled together to a working prototype Feedback is critical, helps refine prototype. Incremental and iterative in nature until prototype meets user requirement Four phases: Phases are same, but shorter and combined to produce more faster and streamlined development technique: Outlining requirements (Analysis and quick design): combines elements of system planning and system analyses phases of the SPLC. This includes discussion between users and project team to agree on specifications, scope, system requirement and understanding of constraints. Prototype cycles (Demonstrate, Refine and Develop): This phase involve development of prototype based on user specification, and interaction with use to validate and feedback. This is an iterative process and key to success. Another important factor is Segmenting the product in multiple segments, almost as independent product that will talk to each other, treated as parallel process and different project teams work independently same time. Different project team engaged work on building the final product out of working prototype. Development phase: Earlier phases shortens system functionality and user interface requirement while in the development phase its task are programming, application development, coding, unit integration, and system testing. Cutover phase – Final phase of testing, deployment, and user training. Relies on five key factors: Extensive user involvement - customer and developers interact, so that customer can share requirements to the developer, and get specification Joint application design sessions Prototyping Integrated CASE tools Code generators Deliverable's and outcomes: Application being developed A description of users and business process requirements Logical and physical design Application construction and implement with a plan for its continued maintenance and support Advantages: Reduced time to develop Increase reusability of components Encourages customer feedback Tackling integration early avoids later issues Disadvantages: Need strong team to identify business requirements Communication – As its involves multiple team, they is a heavy requirement to communicate and engage along the lifecycle. To be able to segment and modularize, some products can not be segmented Dependency on modelling skills, one should have data, activity and process modelling capability to make sure all the modules meet end result Requires high skilled developers and designers as teams work independently When to use RAD: Clear well-defined scope and business objective Product required in 2-3 months and can be segmented High availability of design specialists and developers to position them into projects Large budget due to requirement and time limitation If Technical architecture is defined and clear, key technological components are in place and tested Reasonable and well within capabilities of technologies in use Resources available with required business knowledge, available and can work on the project, need quick and correct decisions being made Mostly with large organisation, where they have project teams and skills available. Also, for products that need to go out of door quickly. Sometimes market competition influences use of this methodology with a goal of Quick to market and/or grab market share early on.

Forecasting predicts most likely future while Backcasting assesses feasibility of desired future. We use backcasting in our lives in its simplest ways e.g. when we want to order food, when we want to get somewhere. However, enterprise application is complex and desired state is an image 10-20 years from now. For ex. what would a specific system look like in 10-20 years perspective. Forecasting focuses on incremental innovation while backcasting prepares for future vision and works backwards to Today. Due to constraints and demands of current business, most companies get stuck with modest level of innovation. Whereas backcasting breaks away the barriers, defines ideal future state, involves highly innovative vision. And, from that vision one can work backwards to today (current state), work on pipeline of products and services to get to future vision. The term "Backcasting" was coined by Robinson in 1982 to develop future scenarios and explore feasibility. It became popular as a Tool to connect desired state to the present situation. This is used as planning and problem-solving tool to define and visualize desired future. And then work backwards to set up initiatives using imagination and innovation to get to desired state. Ex. Urban development strategies. Long term vision/image requires balance between scientific and social research, innovation, technology. This must all involve all stakeholders. Then these solutions are explored, bottlenecks identified, option selected, action plan setup together with stakeholders Steps of methods- Create the scenario – The method is used to predict the potential impact on a market, industry or society in a 10 to 20-year perspective. Future map could be challenging, involves big difference from today. Start with image of future, like a jigsaw, put the pieces together, till you generate the picture. Should be simple, straightforward and easy to understand. Examples - higher education, health industry, 3d printing, digital change in TV industry, driver less technology etc. Analyse the scenario – Involve all stakeholders, management, leadership, investors, decision makers. Check for things that may work against the scenario, review pros, and cons. Current state – Analyse current state, gather information of present conditions Establish policy and strategy to make the vision a reality Define intermediate steps/phases – Define Intermediate phases. Divide into sequence of phases from where we are today to where we want to be, at least 1 intermediate phase. Could be: Experimental phases, market introduction of technologies before a final launch for full use of technology. Describe phases – describe individual phase with who is using, who is driving the development, who is against the development, what supporting services required etc. Identify phase triggers – Identify what’s needed to move from 1 phase to other to jump from where we are to next phase. Include business and cost models. Estimate timings – Estimate the timing about each phase and follow through. Use the map - check for opportunities, business roles, investment strategy. Take advantage of expected transformation Principles for sustainability- There are 4 principles agreed in scientific community to comply with sustainability. Benefit – everybody can agree on principles, people communicate clearly, people to bring their specialist knowledge. For examples a chess player has their own moves but they all comply with principles and rules. Following 4 principles to comply with sustainability, also known as ABCD principle: Awareness and Vision– Setting up vision and common understanding of sustainable future. Encouraging people to set ambitious goal that requires a radical change. Baseline – Gap analysis of major flows and impact of the organisation to ensure its activities are running in support to sustainability principles. Use these principles on how we are operating and highlight issues without any constraint. Creative solutions – Identify opportunities and potential solution, begin with end in mind. This prevents people developing strategies that solve just today’s problem. Decisions – Prioritise the measures that move the organisation towards sustainability, step by step implementation and action planning. Understand where are we, where we need to get to, how to make path from here to there for being sustainable, understanding the condition, how sustainable business would look like. A few common challenges – · Scenarios are unknown and complex, · Difficult for people to agree on shared vision · Unable to define phases to get there · Scenario can change in the head, someone may have different perspective, conflict of interest · Not easy to achieve Conclusion – Forecasting has its limitations as we make decisions based on what we already know. We take problems with us to the future. Whereas a successful outcome is expected out of backcasting by answering a simple question: what should we do today to reach the future. This involves systematic investment to achieve long term sustainable goal.

Delphi Technique is a systematic consensus building method for a problem or future event by generating opinions and forecasts which involves structured interaction with a group of experts. Uses a highly engaged communication process in allowing a group of experts to participate in problem solving. This is used in combination or by itself for decision making mostly in organisations that are geographically diverse. RAND corporation invented this technique to forecast the impact of technology on warfare. Advantages: · This technique generates number of independent judgements without face to face meeting · It leverages resources across geographies and departments · Investment of time and cost related to face to face meetings is avoided · Experts can adjust their answer each round based on group response · Addressing three main problems with Focus groups and/or brainstorming – o dominant personalities, o Group pressure, ideas are overrun and subverted by the group, o noise as it’s difficult to keep focus group on topic o Sometimes conclusions and ideas deviate from the objective Disadvantages: · As this process is time consuming, it cannot be used for situations that require speedy decision. · Expert opinion is a belief that may or may not be true · Does not develop the rich array of alternatives · Consensus does not always mean the correct answer, Common ‘everybody agrees’ so may be this is right. Even if everybody agrees, the solution is wrong · Internal validity or reliability is largely unknown · Lacks the advantages of live discussion – understanding and assessing each view point Planning and considerations of Delphi Study Due to lack of single methodology and lack of guidance, proper planning is critical. Following needs to be planned: · Understanding the need – What problem it solves and why do we need it · Design of the survey tool – as communication is survey based, selecting a proper tool that is easy and reliable is important. Followed by pilot test of the tool for its reliability and validity · Size of expert panel · Implication on lack of anonymity · Level of consensus – Definition and rules on how consensus will be arrived based on data/information from the survey. · Timeline – Usually takes 2 weeks between rounds, so consider a larger timeline for entire process Delphi Workflow: Following steps involved in the process: 1. Problem indications - A precise and comprehensive definition of the problem 2. Select facilitator - A neutral person, familiar with subject, knows process of data collection and analysis 3. Select experts - 15-20 experts who have knowledge and experience, capacity and willingness, sufficient time to participate 4. Round 1 - Questionnaire - Open ended questions (4-5) for idea generation. Can be replaced with focus groups or face to face interview 5. Qualitative analysis - Ideas collated, summarised, and grouped based on similar viewpoints 6. Round 2 - Questionnaire - Closed ended questions created based on information from round 1. Ranked based on importance and agreement, and sent back to experts for feedback 7. Consensus? Else, repeat round - Rules of consensus is prerequisite to initiative DT. Continue rounds till consensus is obtained. 70% response rate preferred. 8. Conclusion & Inference - Rank statements reached consensus from high to low. Use descriptive techniques such as plots for Inference. Before we look at uses of Delphi and Nominal Techniques, lets understand Nominal Group Technique in Brief: This is a group brainstorming process that encourages participation from everyone. Effective way of pooled judgement or decisions in a group that meets face to face. This technique can generate many creative ideas. It allows every member of the group to express their ideas while minimising the influence of the other participants. A common challenge of Nominal group technique is managing discussions. Discussion if not balanced, conversation may turn into argument. Facilitator should remember that the primary purpose is clarification and not to resolve difference of opinions Advantages of Nominal Technique: · Decision-making process is shorter · Participants know each other, they get opportunity for equal participation · Distractions avoided · Ideas are visible to all Steps involved in Nominal Technique: · Generate: Objective shared and discussed to generate as many ideas as possible · Record: Members record their ideas and share · Discussion: Each recorded idea discussed to determine clarity and importance · Voting: Participants vote on ideas, and help prioritise When do we use these techniques: Use of Delphi Technique Use of Nominal Technique Recap of Delphi Technique: Expert ideas taken anonymously and passed around the group until a consensus is met. Participants are physically distant, no interaction between the experts, individual response is recorded, and consensus is arrived. · To get consensus in a large group where difference of opinion may not resolve through discussions · To shortlist priorities, usually for future events · Develop policy - When there is no clear-cut resolution of a given policy issue · To avoid investment of time and cost related to face to face meetings · If decision making involves people from all geographies, various departments · To build consensus for a particular group · Should only be used on absence of Analytical technique · When we have longer duration for decision making as this technique takes time Recap of Nominal Technique: Allows each member to write down and present the idea to the group, ideas made visible to all. Participants get to know each other as they meet face to face. Ideas are ranked and consensus made. · To generate lot of ideas · To allow group thinking specially for introverts and extroverts - some groups are vocal, some think in silence · Where members do not participate in surveys · If group does not generate ideas (normally) · If some team members are new to the group · When you want to identify priorities and select few alternatives · When time available for consensus is short and needs immediate implementation Conclusion: As a lean six sigma consultant, we are always faced with problems that needs out of the box thinking, fresh perspective, innovative solutions. It’s important to use “Divergent” and “Convergent” thinking to do this. Divergent thinking allows generation of lot of potential ideas, solutions and possibilities which is commonly known as brainstorming. While convergent thinking involves evaluating those options and choosing more relevant one. We must consider using combination of these two methods to develop new ideas and solutions. As using just one-way thinking could lead to unbalanced or biased decision. Hence combination of Delphi with Nominal technique would be ideal by leveraging its strengths, which also includes brainstorming to allow maximum innovative ideas with deeper understanding of its capabilities.

Parkinson’s Law: In 1955, British Historian and Author Cyril Northcote published an article that described and defined the natural tendency of officials to make more work for each other. He also mentioned common observation that work expands to fill the time available for its completion. He used the example of an elderly lady writing a postcard to her niece. Since she has no other work, much obvious simple task takes up entire day. Though he was hinting inefficiency prevalent at bureaucratic level from his studies. A task feels bigger and more difficult the more time you allot. This leads to procrastination and do less important things first, takes mental energy with stress and pressure. If a Project has 2 weeks to complete, its most likely that team will start to put it together in last 2 days. Last minute thing that we all have in projects. Quality of deliverable will be almost same even if you have more time in hand. I would like to discuss its impact in various fields and tips to master and benefit from the law. A. Parkinson law in personal productivity: I find this critical as we can not manage any organisational goal without understanding its impact at individual level. If you allow a week to complete for something that usually takes 3 hours, it will take a week. Task expands in complexity and takes longer to complete. Common examples: Last day before holiday is always busy, chaotic, feeling exhausted, brain fog, multiple tabs open on screen, not able to focus, failed multitasking. For ex. Writing a book, Preparing for Exam Set shorter deadlines -Intense attention for shorter period is often better than extended, lazy attention over a long period of time. Set up time block - Set a timer for start and end time, push yourself to get it done during this time. If you are competitive, then see this as your personal competition that you are trying to improve yourself on this. 100% undivided attention is must. Eliminate distractions. Keep actionable tasks – Activity breakdown to clear tasks with measurable time is key. Avoid broad tasks which have difficulty estimating time required to complete Rule of Five - Begin with 5 most imp things you must do for the day. Stay committed to 5 task list Prioritise - Order 5 imp things in priority. Don’t go to 2nd unless 1st one is complete. Understanding how our brain perceives time helps make most out of the day by setting shorter time limits which increases focus and making sure we are not wasting our time. Limit time wasting activities - scrolling through social media, reading headlines again and again, checking emails B. Managing teams and Project deadlines: Managing project deadlines is a common challenge as it involves a team to work together towards the goal in that limited time. Team manager is always found busy, so much so that their most important job of managing the team gets neglected. A few tips to improve productivity: Ensure activity breakdown – Projects always start with detailed project plan, but key here would be to have daily realistic goals, clear ownership and follow up. Create tighter deadlines – Self-reflection, assess your abilities and team’s abilities and estimate accordingly, Identify team’s strengths and weaknesses. Set up ambitious deadlines based on how long it took last time, do we have any time constraints. Analyse team mix – Understand your team mix, introverts and extroverts have different traits and approach to the tasks assigned. Harmonize on the individual strengths and weaknesses to maximize outcome Stop working late - productivity per hour declines sharply if someone works more than 50 hours per week. Encourage team to finish on time. Use 80/20 rule to your advantage - Identify most imp elements, focus on what matters and eliminate non important activities (VA and NVA) review your work, identify more important elements, and drop the rest Track your time - Identify critical tasks and time taken to complete, ROI of the task. Team will find there are activities that does not bring any value Make a time limit rule - Compressed time, for ex. Daily tasks. Make a rule to complete daily tasks in set time Take frequent breaks - During your moments of focused productivity, check how long you can stay highly focused. Apply “Pomodoro technique" – break down work into intervals and enjoy the break C. Bureaucracy and demand management: Two of his findings indicate organisations have tendency to expand: - Officials wants to multiple subordinates to avoid direct competition - Officials make unnecessary work for each other While this is not true everywhere but sounds familiar too i.e. without considerable increase in workload, we have layers of management that continue to grow. Usually companies start with flat hierarchy, as they grow, they hire subordinates, and a pyramid starts to grow. As the pyramid gets large, it gets expensive. Create awareness - Companies should be more aware and transparent of time spent on all kind of activities Maximise value – Through understanding of value added and non-value added activities Demand and capacity management – Review demand for its relevance, efficiency possibility. Simple example of resource back fill without assessment of workload Consistent pyramid reviews - Revisit organisation structure against the set strategy and goals, ROI of the role Conclusion: We can get more done in less time using Parkinson’s law. This gives a sense of achievement, allows better time management, focusing on one activity at a time. Important in today’s time when we all work from home, dealing with conflicting priorities between home and office chores. Key to getting it done is Commitment of building daily structures, breakdown of activities and adhering to time blocks.

Blind spot analysis is means to identify and deal with incorrect and outdated assumptions that could potentially influence decision making. The term “blind spot analysis” was first coined by Michael Porter, well known for his research on competitive strategy and Porter’s Five Forces. He believed that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent from success. A blind spot is also known as conventional wisdom is an area in the range of vision that one is unable to see or unable to understand. A common example for drivers is the area that one cannot see while looking at rear view. One has to turn his/her head to see if there is a vehicle, now we have better solutions: split rear facing mirrors, sensors etc. Other example is psychological – This blind spot occurs when we allow our emotions and thoughts, mostly unconscious to influence our behaviours. We are wired to make cognitive shortcuts based on experience and assume outcome. This mostly sets us on autopilot. Blind spots manifests in several ways due to following cognitive biases: Anchoring bias – Rely on pre-existing information no matter how reliable that information is. For ex. For ex. We check out a handbag for 4000, and then look at one that costs 800. Prone to see the 2nd one as cheap. Availability Heuristic bias – Assumptions based on information, news stories. These days social media is mis-educating people on many choices that they can make Bandwagon effect – Following the rest of the world. Common example – Stock market investment, Business meetings – If most people agree on an idea then most likely one would be quiet if he/she does not agree Choice Supportive Bias – Usually leaders defend own choice, ignore downside of their own bad decision, Confirmation Bias – Choice made based on confirmation that we already believe, or we already know. Ostrich Bias – Subconscious bias to ignore negative information. For ex. Looking at amount of work left, instead procrastinate hoping it will go away Outcome Bias – Evaluating performance only on outcome even if it was mere luck Overconfidence – Based on opinion or gut, mainly people make this mistake in stock market Placebo bias – Belief that it will help recover Survivors Bias – judging based on surviving information, for ex. Building in old city have strong foundation, but what we don’t see is how many buildings collapsed. We only see what’s still standing, (a few) Selective Perception – Perceive message owing to frame of reference Blind Spot Bias – One believes he/she is less bias than others Common examples at organisations that affects decision making process: 1) Organisational blind spots – Usually resulted out of defence to unrealistic strategy or problems resulting from policy, goals, expectations. Organisational blind spots arise when leadership and/or management is unable to acknowledge outcome of unworkable strategies leading to splitting, blame and idealisation. This results in distorted organisation overview with many many blind spots. A few factors to consider are: · Employees/managers bringing best version to the bosses, hiding the gaps/skills that they lack · Telling boss only what they want to hear instead of what needs to be said · Problems not brought up to leadership immediately, managers afraid of appearing to not be in control · Measures do not represent reality, and leaders making decision out of data and not feedback 2) Leadership Blind Spot - Leadership blind spots are the specific areas that a leader lacks attention to or does not acknowledge gap (this could be skill). Leaders can be successful in certain areas but could have a weakness that gets offset and never acknowledged. A progressive and good leader would self-analyses and take this as an opportunity to grow. Common blind spots we see in leaders: · Doing it alone – not involving honest feedback or discussions · Being unaware of the behavior exhibited · “I Know” attitude · More and more data driven and time spent in meetings instead of meeting real people and talking · Actively avoid uncomfortable conversations · Blaming and playing victim – commonly blaming predecessors · Surrounded by Inner circle – Lacks diverse thinkers · Impulsive triggers – decisions made of experience or perception 3) Competitive blind spots - This is critical as failure to analyse competition leads to wrong strategic decisions, slow response to competition, weakening in its ability to seize the opportunity and many more. A simplified framework for competitive blind spot below: Industry Misjudging industry boundaries and trends, critical technologies Customers Misjudging customer’s changing needs, customer segmentation and buyer behaviour Competitors Poor identification of competition & their strengths, not analysing competitors’ strategy, Advertising, branding, expansion, pricing Organisation Weak organisational culture and structure, lack of skills, brand positioning, failure to capitalise own strength Performing blind spot analysis: Common approach used by many organisations is to check the various ways that unconscious bias could manifest. Benjamin Gilad, Psychologist and philosopher developed a systematic 3-step method: Step 1: Refer to the previous strategic decisions, its context of the decision, various factors involved and system of solution agreed. Conduct Michael Porter’s 5 Force analysis to identify change drivers and if organization overlooked any important aspects. Step 2: Collect competitive intelligence on the target company. Sources may include annual reports, letters to shareholders, interview in the press, public appearances, industry meetings etc. Step 3: Compare result of Step 2 with analysis of Step 1, Any contradiction with the analysis on Step 1 is a potential blind spot. Top executives/leaders are smart, capable people yet exposed to several decision biases that comes with situation they are in. Objective analysis of blind spots could greatly help leaders in identify the potential blind spots and treat them. A few ways to overcome blind spots is by cultivating · Diverse networks – Embrace diversity and inclusion for diverse opinions, grow inner circle to include others · Building deeper connection in the organisation with the employees and not get blinded with results · Feedback loop – encourage telling truth versus what’s more convenient Self reflection helps identify where are our blind spots and then accordingly manage them.

Inventory management system helps estimate Inventory value for stock sold versus stock left, considering the product flow (queue or stack). Also, helps calculate the unit cost of sold goods and how to optimise sales at profitable rate. Here is a brief summary of two popular methods with its differences: FIFO (FIRST IN FIRST OUT) LIFO (LAST IN LAST OUT) Definition Oldest stock is used first, and new stock is the last one in queue Newest stock is first to be purchased, Oldest stock goes to the back. Not for perishable products. Examples Pharmacy, Beverage & Other Business, Dairy Products Retail firms – to sustain fashion trends, Real-estate , Gold & Diamond Business, Marble slab Cost of Goods Sold (With a simple example) Maximises profit, but Cost of Inventory goes up Week 1 (Produce): 100 Quantity for 10 $ Week 2 (Produce): 100 Quantity for 20 $ Week 3 (Produce) : 100 Quantity for 30 $ ------------------ Week 4 ( Sold – 200 Q for 40$): 100 Q x 10 $ 100 Q x 20 $ ------------------ Cost of Goods Sold: 3000 $ Profit : 5000 $ Reduces profit, which helps with reduced tax Week 1 (Produce): 100 Quantity for 10 $ Week 2 (Produce): 100 Quantity for 20 $ Week 3 (Produce) : 100 Quantity for 30 $ ------------------ Week 4 ( Sold – 200 Q for 40$): 100 Q x 30 $ 100 Q x 20 $ ------------------ Cost of Goods Sold: 5000 $ Profit : 3000 $ Flow of Goods Cycle of buying and selling stocks is much easier. Simple to keep track of inventory balance. Flow of goods in complex as old stock could stay for long on the system. Record Keeping As the older goods are sold, record keeping is reduced. Old stock does not get recounted or left for too long that its unusable Complicated and confusing due to inventory layers, old stocks skew the value of inventory in balance sheets, older inventory sits for years and may never be sold Inflation As the initial cost of inventory is lower (usually) and selling price is higher. Usually product price is going up, which would mean more profit for the old stock. However, this also means new products are more costly, and that effects profit margin. Profit Calculated profit shows more, leading to heavier taxes specially during inflation period. Diminishes company’s cash flow and growth opportunity. Leads to less profit as price of product is also going up. LIFO will have less profit compared to FIFO, where product cost would have been lesser Taxation More profit leads to higher taxes. Miss out on tax advantages that LIFO has Bigger tax advantage as goods sold are of higher cost, and low profit Financial Reporting Approved by International standards IFRS does not allow this method. Mostly popular in US Industry Account statement Accounts based on costs from months or few years old, that makes forecast inaccurate More accurate as LIFO reflects what is currently going on in the market. Investors want the most current forecast, prices for better investment decision. Mainly LIFO is used to leverage taxation benefits to manage impact of inflation. As well LIFO supports investors with better investment decisions based on current market conditions. However, this is not approved by IFRS. Most businesses use FIFO for material flow to avoid old products stock up in the warehouse as well as easy physical flow of stocks.