Reflections of TechMark
Caveat: Before I continue on this sharing, I would like to highlight that many of the key takeaways posted in this blog are literally taken from the assignment that I have submitted post-module, least I get accused of plagiarising my own work. :)
TechMark is a two-day course (in our case) which uses a simulation programme to shape and refine the student’s holistic understanding of business operations.
Our course was taught by Professor Robert Eng from Babson College, who is also the founder of TechMark.
In the TechMark world, teams compete with each other to design, produce and market products (called Rehmertz 1, 2 and 3) for fictional global markets (Euphoria, Ledakka and Nihono). Each product has specific end uses (e.g. construction equipment, automobiles, high and low-end electronics etc.), and each market is at a different phase of development.
Consequently, consumers in these markets will have different demand for each product as well as different elasticities and preferences for the attributes for these products.
Within the two-day course, the teams input decisions for R&D, production sites, volumes, marketing and sales force allocation among many others, for six distinct periods. At the end of these periods, the teams will be evaluated against a number of key metrics such as market share, revenue growth, economic value add (EVA), inventory ratio, debt-to-assets ratio et cetera.
The winner of the competition will be the team that meets all these criteria and has the highest EVA. Key insights as well as the progress of each team were shared at the end of each period.
The fun of TechMark lies in the high inter-dependency of each team's decisions and repeated games nature of the simulation. That means that not only each team's own strategy matters, but the interactions of all the other teams' strategies and actions matter as well. And as teams learn after each period, they react and adjust their strategies accordingly.
In the end, team #4 (with the handsome CEO) won the competition (I was specifically requested by one of their team members - Kingsley - to add this in.)
TechMark is an excellent tool to learn key concepts, strategies, techniques and even business acumen, by allowing teams to make mistakes in a safe environment.
Some of the takeaways for me are as follows:
1. Stock-outs are extremely costly, more so than the cost of holding the equivalent in excess inventory. First, stock-out prevents the company from fully maximising revenue and gaining market share. Second, this is made worse when significant efforts and cash had been spent on promotion, sales and advertising. Lastly, this underestimation of the actual market share further raises the probability of future stock-out.
Being right is more important than being timely. Often, teams are too concerned about making timely decisions without realising that wrong decisions are more costly than late ones. To put it in perspective, in the Techmark world, late submission of inputs is penalised with EUR 500K. However, 500K units of goods under-produced or produced in the wrong products/markets (assuming EUR 10 margin) would have cost EUR 5 million. The same is true in the real world.
3. A balanced scorecard is critical for ensuring sustainable growth for a company, by ensuring that long-term sustainability is not sacrificed for short-term gains. A company that overemphasises on any aspect is likely to create a lopsided company with some functions wielding excessive leverage over the others.
4. Produce only what the customer wants. A product that falls short of what the customer wants will have difficulty finding a market, especially when other competitors are close by. Similarly, a product that is too ahead of its time will require a huge amount of promotional efforts to compensate for it.
Conflicts are sometimes necessary and healthy. In some cultures and/or companies that overly value consensus and avoid conflicts, many important ideas and opinions that are contrarian tend to be overlooked, self-censored and/or brushed aside.
Cultural overlays may have unintended consequences in business decisions. For instance, an Asian-centric company tends to be more conservative. In an operational setting, such a company has a tendency to under-produce. Having a good understanding of the cultural environment will help to prevent any cultural bias that might occur as a result.
7. There is no one-size fits all strategy. Different products in the same markets or the same products in different markets may require different strategies. For example, cost leadership is more effective in markets and products where people place little premium on quality. Conversely, product differentiation works better when quality is highly desired.
Every team will likely have very different takeaways from the simulation, based on their strategies as well as team dynamics.
I hope that some, if not most of my other classmates could also make use of this platform to share some of their key learnings from their experience. It is my belief that the sum of parts is greater than the whole. Together, we will be able to learn a lot more.