Baker Paper Hand in Assignment
By Ruijia Fang and Zhou Chang 1. The engine and transmission example illustrates the part that is response for manufacturing an engine rejected to adding cost of the engine to eliminate the waste of transmission. But in fact, the change can save 50 million for the company. The example supports Baker’s view that the recent business models work like the world of machines. The hidden costs are much more than the visible costs that the financial system measured. Top management could learn and understand three key lessons from Baker’s engine and transmission example. First, the effects of the interactions, which are invisible to the management system, should be regarded. The traditional assumption is the best performance of the whole is the sum of the optimization of each of the parts is wrong. We can find the evidence in the engine and transmission example. The best decision of manufacture apartment did effect the transmission, which leads to loss for whole company. Actually, two good performances of parts in the system may affect each other negatively. Thus, management should focus on the effects of the interactions among all the parts of the system. Second, to improve the performance of the enterprise, it should be operate as one whole system. The approach to improve the parts of system separately may have the negative influence, which we have learn from first lesson. In order to regard the system as a whole, it can be described as a map, from which we can see objects and events. We make the connections and see certain kinds of relationships between the parts. After understanding the effect of interaction and the importance of one whole system, the enterprise as a system should perform by interdependence. Each part of the system fit together perfectly result in optimized performance. The collection of parts without good interdependence can lead to unsolved mysteries, wrong conclusions, and...
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