Executive Summary.3
Discussion of Topic one4
Discussion of topic two7
Conclusion9
Executive Summary of Chapter 12
In his book titled Management in Technology: Managing effectively in Technology-Intensive Organizations, Hans Thamhain (2005), chapter twelve has been dedicated to the management of risks in high technology. In this chapter, Thamhain (2005) opines that effective risk management of high-technology managements brings into play numerous variables that are associated with the organizational environment, people, tools and tasks.
Navigating through such risks calls for a thorough understanding of the project work, as well as organizational processes, techniques and tools. Thamhain (2005) highlights that weaknesses inherent in risk management systems stem from defective project management platforms. There are several of indicators that serve as early warning signals that the organizational environment is no longer receptive to effective risk management. In other words, these indicators are an indication that the organization has a weak risk management ability. Thamhain summarizes these indicators as follows.
When there is underfunding, unclear objectives and deliverables and performance measurement defects, it shows that the organization has a weak risk management ability. Stovepipe execution, the lack of project plan updates, absence of change management plan, inefficient expertise and sponsorship involvement are the other indicators. In addition, disagreements with the project plan and organizational and personal conflicts are the other major indicators of a weak risk management ability in the organization.
In addition, Thamhain emphasizes the need to detect the potential risks early failure to which contributes to the inability to manage risks. In other words, risk management is a multifaceted process that must have early risk management strategies if it has to succeed. There is a no single set of guidelines that guarantee managers or organizations that early risk detection will work. However, effective managers ought to engineer a decent work environment where employees and the organization itself can navigate past organizational imperfections, ambiguity and uncertainties.
Before introducing a new product, it is paramount to foresee potential risks and challenges, and not just the opportunities it will bring. In order to undertake this mission, it is paramount for the leader of the project to be conversant with organizational dynamics that affect project performance, as well as unexpected risk management. One of the most effective ways of achieving this is the reduction of complexity in the process of project design. In addition, this calls for the assessment of the feasibility of the project as early as possible. Thamhain further emphasizes that successful risk managers do not only have a decent understanding of tools and techniques of risk management, but also the infrastructure of the organization. In other words, they must have a solid understanding of the complex social, economic and technical issues.
Analytical tools are vital in risk management because they help in the quantification of probable risks. Such analytical tools must have the capability to quantify social, political, economic and market risk factors. With respect to risk management associated with the development of new products, a five-factor model can be employed. This model champions the identification and management of risk factors, simplification of the product and its design process, as well as the development process. Fourthly, it involves a reduction in the product development time, and finally testing product feasibility as early as possible. In essence, chapter twelve has highlighted the managerial risk management strategies especially those involved in risk management. Another key focus has been on the identification and quantification of risks during new product development.
New Product Development: the significance of reading market transitions in advance
In an attempt to shade more light on the significance of reading the trends before others do, J. Howell (2008) of the Harvard Business Review interviewed Cisco’s CEO John Chambers. Cisco has been successful in the establishment of new products, and its competitors are wondering how Cisco manages its new product developments. In his interview, Chambers identifies his company’s secret as being able to identify and manage market transitions.
Firstly, it is essential to understand what a market transition means. It denotes a subtle but a clear disruptive shift in the market trends according to Chambers. The shift could be technological, social or economic in nature. Chambers opines that such a shift often begins many years prior to being identified by markets. In order to succeed, an organization must have the expertise to identify such market shifts in time ahead of their competition. Chambers gives the example of a process shift. In the computer software industry, the process shift was characterized by transition to the open source industry. In that shift, the development of computer software was made not to be anchored on a single company. However, the shift enabled individuals to contribute to product development. Market leaders such as Microsoft were caught by surprise by this new trend, and as it assessed the shift, its competitors had moved miles ahead of time.
On the other hand, the shift could be in the form of a business process. Chambers gives the example where in the 1990s, customer support was handled mainly through phone calls (customer care phone calls). Cisco read the market trends by talking to its customers. Customers wanted to find answers more easily, and in order to address this shift, Cisco identified the main technical problems its customers were facing. It then highlighted the solutions to those problems on their website. Customers no longer called the customer support team for assistance; they would easily find answers to their queries online. This shift was not only risky and radical, in that era, but Cisco read the signs and became an industry leader. Cisco has the expertise to predict trends even as far as eight years ahead in the highlight volatile technology market. The company can detect early-warning signs portrayed by their customers and engineer solutions to it.
Chambers’ insights have been supported by various scholars. Riordan (2008) opines that in the current business world, agility and adaptability are vital. Leaders or managers must be prepared to reinvent themselves if they wish to navigate through twists and turns that market transitions bring. In other words, Riordan (2008) emphasizes the importance of constantly monitoring the work environment and leadership or management style among managers. What is the significance here is the ability of the leaders to determine how they intend to adjust their management behaviors. Chambers is an example of a leader who has devised ways of adjusting to change. He has engineered the strategy of reading market trends ahead of his competitors, and as a strategy of introducing new products. In other words, new products at Cisco tend to capture market trends, and that is why they are successful.
On the other hand, Rust, Moorman, and Bhalla (2010) emphasize the significance of integrating the R & D into the customer care department. Rust, Moorman, and Bhalla (2010) hold the opinion that this strategy helps to make products that reflect real life needs. On this note, Rust, Moorman, and Bhalla (2010) warn that product development must not be based on clever engineering only, rather, it must reflect customer needs. One strategy that these authors recommend is that customers must be brought on board during a new product development. They give the example of Nokia. Nokia has Nokia Beta Labs that is in the form of a virtual developer community that helps in the collection of customer insights on features and values of Nokia products. In essence, this platform helps users and developers to engage each other during product development.
Moreover, Goncalves and Hopman (2007) contend that new product launches are complex endeavors, and they pose significant challenges to companies. In the current business world, managers have been forced to develop faster time to market products, but this is a murky affair that must be handled with caution. The only way to navigate past this challenge is to ensure that the organization can read the shift in the market. In addition, it should have the capacity to produce new products that met the need of that shift (Goncalves & Hopman, 2007). In the case study highlighted in the Harvard Business Review, Chambers provides useful insights. In order to identify impeding market transitions, he listens to the hints that customers give on new technology on the horizon, and shifts in the economic and demographic picture.
In order to undertake this mission, Thamhain (2005) opines that it is paramount for the leader of the project to be conversant with organizational dynamics that affect project performance, as well as unexpected risk management. One of the most effective ways of achieving this is the reduction of complexity in the process of project design. In addition, this calls for the assessment of the feasibility of the project as early as possible. Thamhain further emphasizes that successful risk managers do not only have a decent understanding of tools and techniques of risk management, but also the infrastructure of the organization. In other words, they must have a solid understanding of the complex social, economic and technical issues.
In order to address market shifts through the production of new products, Cisco has established sound risk management policies. First, Chambers opines that his organization employs collaborative management. Chambers notes that his organization has eliminated hierarchy; in other words, he involves his junior managers and allows for collaborative decision making. Additionally, Cisco employs collaborative teams. In order to make this goal a reality, Cisco has a teleconferencing tool that helps to bring on board everyone involved in decision making. The strategy employed by Chambers is in line with what Thamhain has proposed. Effective managers ought to engineer a decent work environment where employees and the organization itself can navigate past organizational imperfections, ambiguity and uncertainties.
In addition, Nam, Wang, and Zhang (2010) any managerial career involves risk management. When an organization is developing a new product, the risk management prowess of the managers’ in-charge is put to test. In order to navigate past this twist, managers need analytical and managerial tools; these tools are essential in the identification and quantification of the risks that are likely to be encountered during product development. Porter (1992) indicates that business risks on one hand, expose organizations to losses; on the other hand, they could be a source of opportunities. Porter (1992) highlights several examples that suggest that it is profitable to take risks such as new product development. Microsoft, for instance, took the risk of designing an operating system for the now known computer. In the other hand, Google made a risk by deviating from an industry practice. Initially, industry leaders would charge advertisers on the basis of total traffic, but Google transformed this and started charging on the basing of who visited the website and not total traffic.
There are various strategies that can be employed in risk management, particularly during new product development. Keizer, Vos and Halman (2010) contend that individual characteristic and organizational mechanisms influence the success or failure of a new product. These authors recommend collaborative decision making; his suggestion has also been raised by Mr. Chambers, the CEO of Cisco, and has shown significant success. Keizer, Vos and Halman (2010) opine that a success in risk management approaches begins with a decent problem analysis.
Risk management can also be attained through fault tree analysis. This approach is vital in assessing system reliability, maintainability and safety analysis. It is deductive in nature, and it helps in the identification of various combinations of software and hardware, as well as human errors that can cause unexpected or undesired effects. This approach can also be employed in the evaluation of the top event through the deployment of analytical or statistical methods. These computations involve quantitative maintainability and reliability information. Such information can include failure probability, failure rate or repair rate. In other words, after completing a fault tree analysis, the manager can now focus on the improvement of safety and reliability of systems.
Another approach that Keizer, Vos and Halman (2010) recommend is the failure mode and effects analysis. This approach involves a systemized group of activities that are geared towards the recognition and evaluation of the potential failure of the product. It helps in the identification of the actions that can be undertaken to minimize or eliminate the potential failure. In addition, this approach helps manufacturers to enhance safety and defects, and increase customer satisfaction.
Conclusion
In this evaluation, chapter twelve of Hans Thamhain’s book has been the center of focus. In this chapter, Thamhain highlighted the managerial risk management strategies especially those involved in risk management. Another key focus has been on the identification and quantification of risks during new product development. A case study from the Harvard Business Review, as well as scholarly literatures, have been used to shade more light on risk management during new product development. In addition, reading of market trends as a major strategy in new product development has been evaluated. Mr. Chambers, the CEO of Cisco has registered significant success through the deployment of this strategy. Chambers opines that such a shift often begins many years prior to being identified by markets. In order to succeed, an organization must have the expertise to identify such market shifts in time ahead of their competition. Effective managers ought to engineer a decent work environment where employees and the organization itself can navigate past organizational imperfections, ambiguity and uncertainties. Thamhain emphasizes the need to detect the potential risks early failure to which contributes to the inability to manage risks.
References
Goncalves, P., and Hopman, J. (2007, April 1). The Art of Managing New Product Transitions. MIT Sloan Management Review, pp. 1-5.
Howell, J. (2008, November). Cisco Sees the Future: an interview with John Chambers. The Harvard Business Review, pp. 1-8.
Keizer, J., Vos, J., and Halman, J. (2010). Risks in New Product Development: Developing a Risk Reference Framework. Eindhoven: Eindhoven University of Technology.
Nam, J., Wang, J., and Zhang, G. (2010, June 5). Managerial Career Concerns and Risk Management. Lubin School of Business, pp. 1-5.
Porter, M. (1992). Capital Disadvantage: America’s Falling Capital Investment System. Harvard Business Review, pp. 1-5.
Riordan, C. (2008, June 28). Navigating Through Leadership Transitions: Making It Past The Twists And Turns. Ivy Business Journal, pp. 1-10.
Rust, T., Moorman, C., and Bhalla, G. (2010, Jan). Rethinking Marketing. Harvard Business Review, pp.1-10.
Thamhain, H. (2005). Management in Technology: Managing effectively in Technology-Intensive Organizations. New York: Wiley.
