Hanjo Arms

Dynamic models for managing big decisions

Purpose – This paper seeks to describe a new approach to analyzing critical resource investment plans, Dynamic Decision Making (DDM), an A.T. Kearney innovation based on a sophisticated modeling process that can improve the quality and transparency of decision making.Design/methodology/approach – The paper explicates the five components of the novel DDM approach: formal, but narrowly focused, future modeling; improve the understanding and evaluation of risk; design a dynamic strategy; calculate “Total Value” of dynamic strategies and according probability distribution; and formalize the decision making process.Findings – In a volatile environment, this system, which promotes flexibility and maps out contingency plans, has proven exceptionally useful with clients making large capital investment decisions and “Bet the Company” strategic moves.Practical implications – Each step in the DDM decision‐making process reveals contingencies and opportunities to react to a competitor, a policy, or an environmental c...

Making Bull’s-Eye Decisions in Volatile Settings

Though luck plays a role in determining which team wins the race, there’s obviously more to it than that. Being the fastest driver does not automatically lead to a cork-popping award ceremony spiced by the ladies’ kisses. As race track conditions can make things rough even for the best of drivers, the technical support provided by engineers is critical for success.

Evolution of the New Approach

The world of motor sport understands what it means to make changes in method and practice. Aerodynamic performance, for example, is always being scrutinized and further developed. In the past, prototypes of new components were constructed using a 1:3 ratio and then tested in a wind tunnel. But the development and testing process changed fundamentally once CFD (computational fluid dynamics) technology made its debut.

Solving the Mystery of Uncertainty

The thrill at the racetrack is linked to the risk: drivers put their lives on the line. Their state of health and frame of mind on race day influence the risk – a risk that impacts the entire team. Motor sport is also a business. Not being the first one at the finish line translates into loss of money for a string of stakeholders. The various risks are not all equal in significance or danger.

Taking Action – Applying DDM

The challenge managers face is similar to automotive companies dealing with the issue of investing in e-mobility. Should they pour millions of euros into technology at an early stage, perhaps gambling away the future of their companies? Or would it be better to keep a tight hold on cash and wait at the sidelines, risking being left out of their industry’s future? It goes without saying that the world managers inhabit is not a sequence of carefully lined vehicles in a traffic jam but more like a fast-moving car race.

The Totalvalue of Today’s Decisions … and Tomorrow’s

Sensors and digital communication enable the real time flow of key information between the race car driver and the control center. The possibility of rapid, automated analyses leads to quick decision making, not to mention immediate adjustments to changing conditions.

Value Flexibility – It Propels Sustainable Decisions

Motor sport is not only fast and attractive – it’s also complex in every respect. That’s why racing teams are always at work on fine tuning their strategies.

Applying Dynamic Decision Management – Four Case Studies

Capacity constraints in air travel and significant latent demand for service between two major cities triggered the plans of a major transportation authority to conduct a pre-feasibility study on a High Speed Rail(HSR) connection between those two cities.

Flexibility Surprises – Its Significance and Its Value

A racing team’s flexibility is linked directly to economic decisions, such as whether to invest in the construction of a wind tunnel or simply to rent one as needed. Such a decision is influenced by the fact that CFD technology (Computational Fluid Dynamics) diminished the necessity of wind tunnel testing. This means that capital previously tied up in fixed assets can now be invested in learning about other ways to enhance speed, such as upgrading the design and construction of the rear wing – flexibility in practice. For example, by making a small slit in the cockpit, airflow is created. This is then channeled to the rear wing while driving.

FLEXIBILITÄT IST ETWAS WERT – UND KANN BEWERTET WERDEN

Wie flexibel ein Motorsportt eam ist, hangt auch von wirtschaft lichen Entscheidungen ab, zum Beispiel von der Frage, ob man einen eigenen Windkanal baut oder nach Bedarf von einem Dienstleister mietet. Die Einfuhrung der Computatio nal Fluid Dynamics (CFD)-Technik hat Windkanaltests fast vollstandig uberflussig gemacht. Damit kann das bislang in Anlagevermogen gebundene Kapital in den Aufb au von Know-how investiert werden, wie beispielsweise die Optimierung der Heckflugel. Durch einen kleinen Schlitz in den Cockpits kann wahrend der Fahrt Luft einstromen, die kanalisiert und zum Heckflugel geleitet wird. Auf diese Weise kommt es auf Geraden zu einem Stromungsabriss, es entsteht weniger Luft widerstand. Das sorgt fur Tempo, mit dem man einen komfortablen Punktevorsprung herausfahren kann. Wahrend die Konkurrenz weiterhin Windkanaltests durchfuhrt, gewinnt der eigene Fahrer ein Rennen nach dem anderen.