Compulsory Question: should Butler and Brandy accept the ten additional bank branches into its experimentation portfolio?
The likely outcomes of acceptance will determine the decision to consider or reject adding ten extra bank branches into the Butler and Brandy’s experimentation portfolio. In particular, the decision to accept the ten additional bank branches would increase the amount of floor space needed to carry out experiments. Nowadays, the available floor space for conducting experiments presents limitations on the bank’s ability to process its ideas (Thomke, 2013). Furthermore, adding the extra ten bank branches would allow the bank to work through its substantial experimental backlog within a shorter period. Moreover, the bank can study the impacts of different geographic locations together with experiments at the same time. It will help address the role of geographic location in the success of experiments and rule out doubts of contributions of geographic location to the experimental outcome (Thomke, 2002). Experimenting in different bank branches, as opposed to the existing major branch, would help verify whether the locality of a bank branch affects the outcome of the experiment. It would be important for experimentation teams to discern the effects because the sole purpose of experiments is to discover offerings that would enhance customer satisfaction irrespective of the bank branch (Thomke, 2013). Furthermore, the additional ten bank branches would serve as distributed points for which experiments will be carried out (Hess & Slutz, 2012). Therefore, they would provide experiment with the robustness required to generate as many outcomes as possible. Finally, increasing the amount of branches, in which experiments will be conducted, would enhance the probability of success.
However, the downside of utilizing the ten additional bank branches is resources and budget. Currently, Butler and Brandy operates on limited resources; however, it will need them in each branch to conduct experiments. If it were to utilize the ten additional branches, it would be required to distribute resources among them. In addition to the limitation of resources, the budget is also a matter of concern. The bank would need to recruit and hire personnel to conduct experiments in the additional branches. Alternatively, it would need to pay well the existing staff responsible for carrying out experiments, which would constrain the allocated budget significantly. Therefore, in terms of feasibility, utilizing the extra ten bank branches would be tricky because the branches would need an upgrade to standards desired for them to be experimentation program. If the bank were to hire new staff to carry out experiments in these ten branches, it would need to train the recruits (Thomke & Manzi, 2014). Furthermore, if the bank considered utilizing the existing staff members, it would also need to train them for the program. Management and measuring outcomes of additional ten branches may be challenging to the bank. It is evident that when the bank had added five more branches, it experienced much strain in time and resources. However, the bank had failed to increase research budget for experimentation, which may explain why the it faced a constraint in resources and time.
Having considered the positive and negative impacts of accepting the additional ten branches, it is evident that the positive outcomes outweigh the adverse ones. If the success of experimentation is to be realized, then there is a need to take risks and respond in a positive manner. This way, Butler and Brady should approve the ten additional bank branches into experimentation portfolio. However, the budgetary allocation for experimentation will have to be increased proportionately. Butler and Brady should put across this condition before accepting the additional branches, which will allow the ten branches to be utilized effectively in the development process. In turn, if budget allows and the ten branches are accepted, the bank will reduce significantly its experiment backlog and encourage fast impementation of successful innovations throughout the bank. As such, the repayment period for bank’s investment would reduce.
Question 1: How would you characterize BoA’s new system for developing services? Focus on its process, organization, management and culture.
One can characterize the Bank of America’s new system as incremental innovations service improvements. The system is an experiment, and thus, work in progress that experiences refinements at each stage of development. Some elements of the new system have proved successful while some of them have not brought any benefit. Regardless of its successes and failures, the new system reflects what a true research and development operation looks like inside a banking industry. The bank is not interested in achieving large strides in terms of innovation; instead, it is eager to improve innovation (Thomke, 2002). Therefore, there is a willingness to take risks and learn from failures when it does not succeed.
In the past, the bank as an organization did not have any recognized arrangement for developing new ideas. The Bank of America had never considered innovation until recently. Several years ago, it recognized the need to leverage on innovation and considered the importance of improving its innovation performance (Thomke, 2002). As a result, the Bank of America resolved to establish a new corporate unit named “innovation and development team” that would deal with innovation under quality and productivity department. As an independent department, the latter gives the unit autonomy of performance (Thomke, 2002).
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The management of the Bank of America has three divides, including the customer, the product, and geography. The aim of the group of management is to serve customers, another group of management focuses on banking products while the third management team is dedicated to geography organization and management. The three divisions of management work independently but in collaboration with one another to ensure the success of the bank. For instance, the customer division communicates customer needs to product division so that the latter can create a product that matches consumer needs. Geographically, the Bank of America strives to serve all areas regardless of boundary limitations. Therefore, at the core of the business is the innovation, which seeks to eliminate geographical boundaries. The management at the Bank of America is concerned with institutionalizing an innovation culture (Thomke, 2002). In particular, the bank’s decision to dedicate 50 percent more of its resources to research and development proves this policy. Innovation at the bank is not only essential for product development but also for enhancement of customer’s satisfaction. In a competitive environment in which the bank serves, it has to be continually innovative to remain ahead of the competition. In addition, the bank’s management desires to concentrate on improving the existing service and providing new ones to increase customer satisfaction (Thomke, 2002). Finally, the senior management also makes effort to attract new customers.
In the bank, each employee enjoys freedom, responsibility, and authority to serve the clients in the best approach possible. The workers have the power to make decisions concerning the service they disseminate to customers. However, they take joint responsibility for the quality of customer service (Thomke, 2002). Furthermore, cost reduction and consolidation guide the bank’s culture. It has a passion for winning customers and clients and is results oriented. The latter is the reason the bank has invested heavily in research, development, and innovation to enhance customer satisfaction, provide new products, and improve the efficiency of existing products.
Question 3: What is the role of experimentation in new product development? How can
companies maximize their learning from experimentation?
Experimentation plays an important role in the development of a product, and more importantly, in the growth of an organization. Product develoopment refers to the process in which a business either creates a new product or modifies an existing one (Cooper, 2011). To achieve this creation or modification, the business must experiment with the product. Through experimentation, an organization discovers and creates knowledge, which leads to development and improvement of processes, products, and business models (Cooper, 2011). Experimentation employs the use of prototypes, models, computer simulations, and controlled environments that provide innovators with an opportunity to reflect, improvise, and evaluate generated ideas. Through experimentation, an organization learns and gains experience and wisdom in carrying out processes in an experiment.
More than often, companies innovate and introduce products and services that they consider and improvement of which they provided before. However, customer’s reaction to the improvement can be a surprise to the business. Therefore, through experimentation, the business can conduct a survey on a small scale, which will allow the organization to predict the outcome on a larger scale. Thus, through experimentation, the company can obtain real-world information that puts the company at the advantage of predicting the outcome. Rather than implementing a failure, the business has a chance to experiment with a smaller population until the improvement is deemed a success (Hill, Jones, & Schilling, 2014).
A business enterprise can maximize their learning from experimentation in various ways. First, a company can experiment frequently without overloading or over stretching the company’s resources (Buliga, 2014). Experimenting more frequently not only saves the company’s money but also minimizes costs of redesign and problem-solving delays. This way, companies need not set up or disband experimental teams because their roles are ever active. Moreover, considering that new technologies reduce the cost of testing considerably, it becomes essential to frequently experiment (Nambisan, 2009). However, the company will need to be prepared to deal with increasing load of information associated with experimentation.
Second, companies can also maximize their learning from experimentation by anticipating and exploiting information early enough using a front-loaded approach to innovation processes (Buliga, 2014). This early experimentation technique allows the company to explore several ideas, which result in multiple information and better products.
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It is also advisable for companies to integrate new and old technologies to unleash untapped potential (Zwick & Rapoport, 2002). While new technologies such as computer simulations are great, they are not extremely effective and cannot achieve more than 80% of traditional technologies. Therefore, companies have an opportunity to enhance overall performance and enjoy advantages of cheaper experimentation through integrating new and old technologies (Zhou & Wu, 2010).
Moreover, companies can learn through failure. Organizations ought to fail early but learn to avoid mistakes. Further, early failures allow the company to note challenges in the business and get rid of unfavorable option fast, hence enhancing learning. Thus, companies should bear in mind that unsuccessful experiments are not botched ones (Zwick & Rapoport, 2002). Another aspect that organizations can learn from experimentation is to manage projects in a similar manner to that of experiments. Projects serve as a powerful tool for knowledge management, change management, and knowledge creation within the organization.
In addition, companies can also organize rapid experimentations, which are integral to learning and innovation, which in turn helps reduce the time for experimentation and provide time for evaluating experiment results. All results generated from an experiment need to be keenly scrutinized to generate as much information as possible.
According to Thomke (2002), the Bank of America has managed to engage fidelity, iteration time, cost, signal-to-noise ratio, and strategy to maximize learning from project and experiments.