Fantasy CEO – Round 4 Annual Report

Filthy LucreScores

The Times have improved the way they report the scores with separate tabs for each round. They are still not ideal in various ways – not least in that the 4th round results aren’t up yet – but I have spent too much time this week staring at spreadsheets and daring them to blink to comment on scoring this week. Shane has sent me the aggregated scores and I’ll send them to anyone playing the game who emails me at astrea_gw at yahoo dot co dot uk.

Fantasy CEO or Fantasy Marketing?

It occurred to me this week to wonder if this is a game of Fantasy CEO we are playing, or is it Fantasy Market Research?

The analysis you go through and decisions you make in Marketing and Finance are relatively detailed compared with what you do in Production. It is also glaringly obvious that IT is taken for granted. Now I find this interesting. This implies Marketing, Production and Finance strategies matter but that IT strategy is irrelevant, that it is not a business activity even. I live and work in IT so I find that rather depressing, and wonder if it’s a home truth.

There could be any number of reasons for this. Maybe business studies teachers and management lecturers don’t understand IT. Maybe market analysis can be simplified in a way that production can’t. Maybe MSI’s main customers in business schools are more interested in Marketing than in IT, Production, Engineering and the other Techie stuff. In fairness the Times haven’t enabled the Total Quality Management and concepts around production could be worked through there.

In the late1990s, the netgeist started claiming that IT strategy is the strategy: this can be argued very strongly in the case of companies like Amazon and eBay, and it is often forgotten that decisions around IT were a sub-plot in Enron’s final chapter. I get my veggies online from an organic farm and the rest of my groceries are delivered by Tescos  which shows the wide range of businesses who have moved into on-line sales. So I buy into the idea that IT strategy is the strategy, but I’ll admit that I’m biased.

A lot of IT decisions seem doctrinal anyway: some advocate getting all your software and hardware from one vendor such as, say, IBM, to pick the one remaining candidate at random. In theory everything works together and it’s the vendor’s problem if it doesn’t. Others believe you should cherry pick the best and then mix and match, getting your HR software here and your Financial software there and stitch it all together. Some believe in “off the shelf” and others believe in “bespoke”. Yes, in some circumstances one approach is better than others but you get my drift.

It is tempting to come to the judgemental conclusion that we are losing our manufacturing edge in the West because our business studies classes and business schools focus on Marketing at the expense of Production and we are turning into a hemisphere of shop-keepers. I think it’s got more to do with sweatshops and containerised shipping myself, but losing our expertise in Production does not help. We should be automating and manufacturing locally even if the factories are run by half a dozen people and we won’t be able to do that if all we know is how to spend a promo budget.

All of this is irrelevant to the Round 4 Annual Report, but having spent the first couple of weeks thinking how complicated and detailed the simulation is, I thought it worth noting some of its limitations.

This week

Well I was rather cocky when I pressed the “submit” button on Friday, but I’m feeling a lot less smug now I’ve got my reports for this round.  I’m still pants at forecasting it seems – so much so that failed to predict how much cash I’d need and ended the round needing an emergency loan.    Having been overly cautious in the first three rounds, I wasn’t cautious enough this round and I significantly over-estimated how many of my main Low Tech widgets I’d sell.  How annoyed am I?

I thought I’d pushed through a barrier this week. When I looked at the pro forma balanced scorecard I found that my predicted score was much better than before, based on sensible decisions on forecasts I had worked out rather painstakingly. It is frustrating to find I am actually less skilled at the process of analysis and decision-making than before.  I think it’s not just poor forecasting though, I think it is poor contingency planning too.  Hey ho.

So what else have I learned so far?

I think I’ve finally realised that the advice about forecasting is just that – advice. I was trying to follow it as a process and getting frustrated with the vagueness of it all. Once I realised that they describe an art not a science I felt happier.  Mind you it’s an art I obviously haven’t mastered. In real life I’d like to think it’s nearer a science, otherwise how can I possibly take people who work in Marketing seriously?

I’m getting more comfortable using the tool itself, which makes using it quicker and slicker.

More usefully, I’m getting a more intuitive understanding of the balanced scorecard, (see previous post) and beginning to understand the pros and cons of the different ways of financing a company.

Or at least I thought I was doing all these things until I got this rounds results.  Still, I’m buggered if I’m letting one bad round put me off.  It’s worrying that I am going to be so extremely pushed for time over the next two weeks.

Next Week

Next week I plan to email some of the visitors to this site and asking them how they play the game – how long they spend on it, how much relevent experience they already have, how much is new, stuff like that.  If I get any replies I’ll pull out some extracts and publish them here, though possibly not until the week after next depending on other commitments and time.

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15 responses to “Fantasy CEO – Round 4 Annual Report

  1. Hi Aphra, I read your comments about ‘the apparent irrelevance of IT’ in this simulation with a smile. I am not in IT but I do work in a software dev firm on the business side, and I am an engineer (or at least I used to be). So I can claim I understand where you’re coming from.

    I suggest you read Nick Carr’s seminal HBR article ‘IT doesn’t matter’. When it first came out in 2003, the response was so strongly negative from the IT sector (ahem) that the author had to write another article explaining his position. If I remember correctly, his point was that it is not that IT does not matter anymore, but that it can no longer be used as the provider of any strategic competitive advantage. If you see it from that point of view, it becomes clear why IT factor is missing from the simulation.

    Very interesting article. Do read if you haven’t already. I am sure you can find it online. In fact, here you go: http://www.nicholasgcarr.com/articles/matter.html
    (tell me again, how did we survive when there was no Google?)

    I am too mad at myself right now to comment on round 4 results.

    Cheers,

    K

  2. Well, what do you know:
    http://www.fernandopolo.com/HBR%20may03%20-%20Does%20IT%20matter%20-%20Nicholas%20Carr.pdf

    Knowledge should be shared freely. That’s my motto. So, I am not sure if this PDF is legally published but I am sure that by now, this article is very much in the public domain and hopefully HBR won’t be after me with their hammers and sickles…)

  3. Oh, interesting…. I’ll be reading that when I get home tonight.

    >> his point was that it is not that IT does not matter anymore, but that it can no longer be used as the provider of any strategic competitive advantage

    Inter-rest-ing. Written in 2003, eh? So after the merger-fest of the 1980s, when some mergers were simply not possible because if IT incompatibilities, and after the expensive embarrassments of the dot com bubble, (which was as much a failure by the finance houses to hold onto to their common sense and mathematical models than a failure by the dot coms to deliver money for nothing and chicks for free). But written before Google and others started offering Storage on demand, then Apps on Demand and finally Systems on Demand.

    Ye-es. I can kinda see where he’s coming from, but…

    The idea reminds me strongly of the Japanese academic who wrote a book in the 1990s claiming “history is dead” – his view was that the world in the 1990s had achieved political, social and technical stability, and the patterns of the late 20th century would hold true for the next decades or centuries. I do hope he lost tenure after 9/11.

    Let me put it this way – IT may not be a source of competitive advantage in the humungous corporations because of the levelling hand of Best Practice and because we all use the same products from the same vendors anyway. However in companies the size and shape of the one we are supposedly running in Fantasy CEO land, with $50 turnovers, in other words in the tens of thousands of SMEs out there, IT is still a differentiator. Of course SMEs are neither glamorous nor particularly easy to write case studies about, nor do they feature in the ambitions of Harvard graduates, so they tend to slip through Harvard Business School’s net.

    Oooh get me. Bitch that I am.

    I’ll read the article with interest – I am partly won over to the point of view by your summary of it alone K-man.

    Thanks

    Aphra.

  4. Ouch! I got badly burnt this time. Needed an emergency loan because of unsold inventory. Funny enough, though, it didn’t greatly affect the predicted result of my scorecard.
    I did it all following the textbook but to no avail. I don’t want to sound as a disgruntled looser or a cynic, but I can only wonder if that unexplained 70% market that I mentioned above has anything to do with my not being able to capture any more of the market.
    I suppose I could write and discuss lots of the details but don’t want to be boring. Maybe the latest article in The Times, which suggests getting a team would be the appropriate thing to do. Sadly I don’t know anybody with the slightest interest in this area… And that’s why I’m writing so much here….
    Well, let’s wait for the publication of the results for this round to see how I did “in the real world”,

    Dar

  5. Once more we get a real discussion outside the remit of the game. A lot to discuss from the blog, so forgive the ‘mix and match’ response.

    As another IT ‘bod’ I agree with Aphra in that at a corporate level businesses tend to have an ERP system from one of the big vendors; this has generally equalised the back-office playing field for the larger Organisations.

    Where there is still IT competitive advantage to be gained is how Organisations aggregate and analyse their data. As a consequence, the smart ones they gain an understanding of their customers behaviour and any trends that this may reveal. For example the way Amazon attempts to link customer purchases; although much of this may be explained by psychological profiling.

    The interesting thing about the balanced scorecard is that it appears to analyse and manage through the use of a variety of ratios. Now having experienced this method of management by one of the leading conglomerates of the 80’s and 90’s and who eventually (and thankfully) disappeared but in the process managed a whole host of businesses beyond redemption I do hold a somewhat cynical view of this overall method.

    I agree with you Aphra that we lost our manufacturing capability because of the reasons you outline. It became easier to set up plants in the Far East that could be less restrictive environmentally; the work force would be more compliant … Allows the West to get on its ‘high-horse’ and lecture the rest without realising that we sustain 5 billion souls in the world because of our embracing Technology.

    But then I happen to like manufacturing, but I do hope that if we are to be dependant upon the financial sector that they can continue to sustain the economy. I also hope that they can keep whatever competitive edge that they have in place for the foreseeable future, but it does seem to be a bit of a risky strategy in the overall scheme of things – eggs, basket.

    Round 4 produced a mix bag, not too unhappy but neither do I think that I have closed the gap on KR. Couple of stock outs and the great hope of three rounds ago didn’t cut it as well as I expected in the high sector. Ah well, great fun nevertheless!!

  6. Mi casa es tu casa guys. Feel free to say as much as you like here, on topic or off topic – ones and zeros are cheap and no-one’s forced to read it. 😀

    Also it helps to have somewhere to chat about the wretched thing without causing people’s eyes to glaze over.

    Cheers

    Aphra.

  7. Perhaps the question here is where are the boundaries of IT? Is it just setting up servers/networks/PCs/CRMs or is it also the process of deducing strategic results from the data that IT channels, such as CRM, provides?

    It takes a strategic mind to take the competitive data and come up with a good strategy to generate value. Give the same data to an ordinary marketing VP (we have all seen a few of those) and the same data turns into molten doo-doo. Depending on the size of the company, the mktg vp blames the CRM system and proceeds to buy a newer, more expensive one with no effect on results. This is true for SMEs as well as Tesco’s of the world.

    So the point is that anyone can buy fancy IT systems, but not everyone can use it to generate great results. This is the same as the fact that anyone can buy market research reports and run focus groups, however, not everyone gets the same results from them. Hence the reason KR is leading this game ’cause KR and team are better at reading the numbers provided and building a strategy around it than all of us….so far 😉

  8. Well the predicted leader score after 4th round is 239.4, we did badly than predicted in this round.

  9. The ‘new’ results numbers have been posted and suddenly they appear to be a little inflationary from Round 3, perhaps some correction somewhere.

  10. The scores are – once again – decidedly odd. More worryingly, they are also inconsistent. I’m sure I’m not the only one who’s emailed the Times.

    Aphra.

  11. Well this is the way that I see it:-

    KR has 470.8 under the new score and is in second place, but having extracted into Excel and total the four columns after that number gives the 239.2 which for the purpose of this exercise is close enough to the expected (see KR’s comment above)

    This would also keep them in 1st position.

    An explanation from the Times as to what is occuring here would be appreciated!

  12. FZ has the best chance, as I guess his recap round scores ( we lost points in the emergenacy loan category) appears to be much better so far. Hoping to beat FZ on the customer category and take the lead again from the round 5 onwards.

    Also there seems to some problem at this point of time with the recap score ( mostly wrong at the home page (where you upload ) )

    The current situation leaves us from the burden of maintaining the lead and enjoy as all others playing the catching game.

    Good luck all,

    KR

  13. Well I don’t see any problem with the scores being odd , they seems to be correct , except with the recap score shown to you at your “Fantasy CEO Dashboard”. but the total score ( including the recap score ) shown at the overall results page seems to be right ( as it more or less matches with the predicted recap score at the end of round 4 in the excel sheet that we are working).

    KR

  14. KR, total your scores week by week and see if they match the Times’s aggregates – ie all the scores for finance, all the scores for production, etc.

    To be honest, it doesn’t matter for those of us who are mid-field, but they are unreliable enough for me to want to start drawing conclusions from them.

    If anyone wants a copy of the spreadsheets I’ve put together please email me at astrea_gw at yahoo dot co dot uk. I’d send it straight to you KR, but I haven’t got your email address.

    AB

  15. I had a reply from the Times confirming what you had already worked out, KR, that the “recap” score also counts.

    This seems to be a way of giving credit for good decisions which have worked out well over two or more rounds. I don’t have the exact wording here, so I can’t quote them.

    The point is that the “recap” score – which certainly shows in the personal scores you get from the Times site – would account for the apparent anomalies. For whatever reason the Times cannot easily harvest them for including in the weekly score-sheets they publish.

    I am sure that if asked nicely the Times would provide a more detailed explanation, but the one that I got was good enough for me. I’m nowhere near the dizzy heights of KR and FZ where the air is thin and it looks as if you can touch the stars. 🙂

    Thanks all for reading and commenting.

    AB

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