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UNC Professors Study the Effect of Feedback Frequency on Performance
Access to important information about supply and demand is now available in real time, thanks to advances in information technology.
For example, Radio Frequency Identification Technology (RFID) - small chips that can be attached to pallets or cases and can be read automatically from distances as far as several hundred meters - enable managers to get frequent updates in tracking the flow of goods in the supply chain.
Many claim that an increase in the frequency of information and the ability to quickly make decisions should lead to enhanced performance. But a study by two UNC Kenan-Flagler professors finds just the opposite - that more information is not always better. The study finds that when decision makers are provided with more frequent updates of information, their performance deteriorates.
Marketing professor Nicholas Lurie and operations professor Jayashankar Swaminathan examine the effect of feedback frequency on performance in the paper, "Is Timely Information Always Better? The Effect of Feedback Frequency on Performance and Knowledge Acquisition."
"As an example, if retailers could choose to receive a monthly, weekly or daily recap of Campbell's Tomato Soup sales, which recap frequency would they choose? Many would select the daily recap, thinking it would give them a competitive edge," says Lurie, who conducts research and teaches about how the information environment affects consumer and managerial decision-making. "However, our study finds that when a manager is given more frequent information on product demand, performance actually decreases, particularly in environments characterized by a high degree of variability."
Swaminathan says decision makers may have a tendency to overreact to frequent information even when it's not optimal to do so.
"This leads to 'chasing of demand' when feedback is given frequently. More frequent feedback may lead to greater attention to more recent data and to suboptimal decision-making," says Swaminathan, who is chair of the School's operations, technology and innovation management area and the Benjamin Cone Research Professor. "These effects are likely to be exacerbated in environments with greater randomness. Our results suggest that the promised advantages of technologies that provide rapid and continuous feedback may be overstated."
"These results shed light on the complex relationships among information sharing and updates, human decision-making and the information environment," he adds.
But although frequent feedback can sometimes hurt performance, it may help decision makers learn more about the operating environment, Lurie says.
"The implication for firms is that in implementing technologies that provide frequent feedback, firms may want to encourage managers to temper their reactions to more recent data," Lurie says.
Students, Executives Help Design Course on Using Technology for Competitive Advantage
As an extension of our e-newsletter series, we take a page from some of the innovative courses and hot topics UNC Kenan-Flagler faculty are teaching.
A new MBA course is examining timely and critical enterprise technologies being deployed in companies around the world.
In a unique approach to course design, UNC Kenan-Flagler professor Aleda Roth involved both MBA students and top executives in the creation of "Harnessing Enterprise Technology and Innovation" for spring 2005.
With the help of a $100,000 Technology Futures Initiative Grant from SAP AG, Roth's integrated design team used Enterprise Resource Planning (ERP) systems as the platform to bridge the theory and practice of technology management. ERP integrates all departments and functions across a company into a single information system that can serve different departments' and business entities' particular needs.
Each class was carefully choreographed by the UNC design team in conjunction with consultants and practitioners who are knowledgeable about the actual challenges and complexities of enterprise management systems.
Guest executives visited each class to share their insights. For instance, students explored a live case example of strategic planning for an ERP system with Rick McWhorter, Boston Scientific's vice president of operations. Steve Desirey, business planning manager for SAP implementation at DuPont, custom-designed a simulation for the class that demonstrated the impact of business process change due to ERP. Students also participated in an ERP audit with IBM. Students learned first-hand about the role of data, business intelligence and integrated analytics from Jared Schrieber, senior supply-chain and global industry consultant, with NCR Teradata.
The lessons from these executives about the influence of ERP on business practice are invaluable, says Roth, chair of the MBA global supply-chain concentration and the Mary Farley Ames Lee Distinguished Professor of Operations, Technology and Innovation Management. MBA concentration advisory board members had identified the need for such a course.
"I have done much research on ERP," Roth says. "I wanted to marry what the business world needed with what the students needed. In planning for the course, I asked top executives, 'What would an MBA student really need to know; what would make them tech-savvy?' I felt it was really important to get students' insights up front so that we could integrate management of technology issues with other MBA courses."
MBA students Johnny Chang, Raymond Hernandez, Kevin McHugh, Ki Won Nam and Joaquim Torres Neto received practicum credit for helping Roth design the course. Their insights ranged from deciding which papers should be required readings to working one-on-one with the executives on course content.
Chang says it was a great experience to be exposed to executives at the forefront of supply-chain technology.
"The topic of this course is very relevant in business today. Many of the areas we have addressed are not in any textbook. By giving us an inside view, executives are exposing us to something no text would be able to do," he says. "Through Deloitte Consulting, we have received hands-on experience with SAP, which I think is invaluable and not something most MBAs experience."
He adds, "And in my interviews for full-time positions, I felt that I knew the current issues in the industry and was able to provide important insights. I was able to discuss these topics with confidence."
Deloitte Consulting executives Steve Baldwin and Tom Lawson kicked off the first class with an overview of the evolution of ERP systems and a state-of-the-art perspective on the modules being used in contemporary practice.
"Everybody in this day and age has to understand technology," says Baldwin, a senior partner with Deloitte Consulting. "There are companies implementing ERP systems for the first time, and others are managing in that environment now and need to understand the implications. The technology is pervasive. It was brand new a few years ago; now it's fundamental."
"You need to understand how to use enterprise technology as a best advantage for your company. You may be asked to be part of a team to fix it, or a company may be doing a major overhaul," says Lawson, principal, consumer business, with Deloitte Consulting. He leads the firm's North America ERP practice.
The Deloitte executives say the management of enterprise technology is as much about the culture of an organization as it is about physical software and hardware. The class is about the "managerial side of technology - the basics of what every manager needs to know about implementing and leveraging ERP and/or operational and supply-chain technologies in business," says Roth.
"Designing good business processes, customized for the client, is something that Deloitte does well," Lawson says. "But is the organization capable of change? Is the leadership committed to change? Are they willing to take the organization through that change process?"
Roth adds, "I was deliberate in taking an operational and managerial view, how the social pieces fit with the technical pieces. It's not a course that promotes any particular type of technology. For instance, companies such as Dell and Walmart don't use ERP because it doesn't meet their needs. The students need to know why one size doesn't fit all."
Roth went through four separate sessions of SAP hands-on training at different locations to prepare for the course.
"Technology is so ubiquitous in business today, and it has such an impact," she says. "There was a lot of due diligence involved in designing the course, making sure that there would be a value proposition, that this would be something meaningful for MBA students. For the student design team, I was also helping them to become teachers. I think managers need to know how to be teachers, too."
"You have to take some risks and experiment in designing new courses," Roth adds. "We have learned so much from this pilot course roll-out, and we are ready to take it to the next level. You have to keep innovating."
MBA Alum Directs Pharmaceutical Strategy at Bausch & Lomb
Pharmaceuticals don't represent an industry so much as a higher calling to Jill Ruedy Welch (MBA '95, MHA '96).
"There's something incredibly moving and noble about pharmaceuticals," she says. "When I worked at Eli Lilly, it was about treating mental illness - getting someone back to his family, back to work, back from the brink of suicide. Here at Bausch & Lomb, it's about saving or restoring someone's eyesight. When you ask people which of their five senses they couldn't live without, people almost always say 'eyesight.' So for me, pharmaceuticals represent a higher order where peoples' lives are concerned."
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| Jill Ruedy Welch |
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Welch is the new director of pharmaceutical strategy and commercial development at Bausch & Lomb. She joins the company from Eli Lilly & Company, where she was global marketing launch leader for a brand extension of the mental health drug Zyprexa. She also worked as Zyprexa brand director and as a market research analyst at Lilly. She has held marketing and sales positions at Glaxo, Hydro Service and Supplies and Proctor & Gamble.
In her new capacity at Bausch & Lomb, Welch will help the global eye health company expand its pharmaceutical portfolio of proprietary drugs. Establishing the company as a leader in the niche ophthalmic drug market appealed to her.
"As anyone knows from reading the newspapers, big pharmaceutical companies are experiencing a series of changes and turmoil, so smaller, more nimble companies that are niche players have a better business model moving forward," she says. "And for me, the fact that it was something of a startup organization was very appealing - giving me the opportunity to come in and create something new and really make a difference. Whereas in big pharmaceuticals, it's often a more lumbering process where you can feel like a cog in the wheel."
While at UNC, Welch helped create the University's dual master's degree program in business administration and health care administration. She had been admitted to both programs and was grappling with her choice about which to attend. Welch scrutinized their respective curricula and then decided that maybe she didn't have to choose after all.
"There was so much overlap in the business management aspects of both programs I just thought, 'Heck, I'm going to work with the administration of both schools and see if we can get a dual program approved,' and we got it approved," she says. "It was one of my greatest accomplishments at UNC, and I was the first person to graduate through the dual program."
Welch earned her MBA in 1995 and her MHA in 1996. She uses the technical skills she learned in UNC's business and public health schools every day.
"Whether it involves market research techniques, business development evaluation or the health care system in America - the most complicated health care system in the world - I am able to make better choices because of my UNC education," she says.
"But more importantly, the programs gave me a sense of confidence," she adds. "And that surprised me - that was not a benefit I expected. I attended UNC for the technical skills, and I walked away with those plus a confidence that makes me a better leader."
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