Fishing: A personal reverie, systems simulation, and sustainability challenges

blue fishing boat
Gone fishing

As we entered the lecture hall today, we saw ten placards spread around the class. The twin professors were already there to usher us in. They asked us to form teams of three and sit behind one of the placards. Blue Lagoon, Salmon Fry, Atlantic Crew, Brave Sharks – some of the names on these placards.

When all of us were seated, the professor asked us to guess what we expected to be doing today based on names on these placards. I looked around and found that the names on these placards had a common theme relating to ocean and fishes.

“Are we Pirates?” a classmate asked. The professor denied.

A few more guesses later, it was revealed to us that we were fishing companies. We were going to fish.

Fish, fishing, fish markets, the ocean – these are magical to me. I could observe them with awe for hours. In Chennai, one of my most favorite activities was to walk through the little fish market that ran parallel to the beach. In the evenings, you’d see women seated on both sides of the road with fishes of different sizes and colors brought in from the sea by their menfolk only a little while earlier. You’d feel the cool breeze of the sea and your nose would tingle from the ocean smell of fresh fish. You’d hear the names of fishes crooned by the sellers to attract buyers. Just beside the sellers would be the other women who cleaned and sliced the fish that the customers had bought, an additional service that you have to pay for. People ambled from vendor to vendor, wide-eyed, and all along pregnant with the excitement of a delicious fish dinner later in the night.

I think the certain thrill is because fishing is the only act and fish is the only food that still retains the primeval adventure of hunting-gathering that is no more in poultry or meat or other common food. Most food is domesticated and raised in captivity, while most fish still comes from the untamed sea.

With this elevated mood, I was all set for the simulation. We owned ships which we used for fishing. We would be competing with the other teams in the class. Our task was to increase our net worth by the end of the ten rounds. Our revenue came from our catch. Our decisions were limited to two things. One, we could buy and sell ships; two, we decided where to send our ships – deep ocean, coastal ocean, or keep them in the harbor. Each had its own cost. The decision on where to send your ship rested on the expected catch per ship which was determined by where our competitors chose to send their ships.

One of our team members who knew a little about this game warned that this was about sustainability. The teams would buy a lot of ships initially to rake in the revenues but they do not account for the fact that the stock of fish depletes as every team indulges in over-fishing. The average catch per fish then drops to a nadir that it is not economically sustainable to operate the business.

From this insight, we tried to formulate our strategy. While we understood the perils of owning too many ships, we also understood the need to have enough ships in the initial stages to rake in some revenues. The broad idea was to buy more ships initially and auction the ships when there is still demand for ships in the market. If we’re too late, the competitors would figure out that low fish stock and would not be interested in buying the ships. We debated what would be ideal time to start selling the ships. One said it shouldn’t be before the sixth round, another said that it might be too late. The professor leaned in to listen as we discussed our strategic options.

The game began. It was year one, the catch was good. Both coastal and deep ocean were equally attractive. We bought a few ships. And then, into the fourth round, a gap developed between the profitability of coastal and deep ocean based on what the other teams decided. We had to play a guessing game about where the nine other teams would send their ships. Being overly rational, we started to simply assign our ships equally to diversify our risk. A round later, we managed to sell a couple of our ships. One team which had too many ships on its balance sheet was desperately trying to off-load it. It came to a point when they were tried to sell their ships at a price lower than the price of a fish!

The game came to a close. The team with the most ships was at the bottom of the table. We were in the middle. It was expected. We followed a risk-averse strategy, we couldn’t have hoped for more returns.

We then played another cycle of the game. This time with the addition of an ‘association’ formed out of one member from each team. The association met after every three rounds to discuss matters regarding industry regulation. However, the decisions made are not binding on the members. But the association did not have any impact on the game, in fact, no decisions made. The association was hijacked by a few loud voices who believed they understood what was happening in the industry and also had the solutions to it. Much of it was targeted at the player with the highest number of ships who was raking in a lot in revenues. No one spoke about the need to protect the resources.

Soon, the fish stock in the ocean went to zero. The industry crashed.  Everyone, along with the player that owned the highest number of ships lost. Self-regulation did not work. Everyone was a loser in the end. Even nature. It was a tragedy of commons.

It was half past ten in the night, well past the scheduled class time. We had to break for the night, quite reluctantly. The simulation was surprisingly effective in demonstrating the tragedy of the commons, and self-preservative decision-making that leads to this outcome. When we discussed in our team if we should propose a rule of alternating between coastal and deep ocean fishing for the whole industry, we dismissed that reasoning it would hamper our revenues.

But it is not just a game. This situation is too close to reality that it is terrifying. Over-fishing is a danger that is imminent. Today, there are parts of the ocean that are wiped out of fish population. How the world’d oceans could be running out of fish is an interesting BBC feature that narrates the danger we face. Meanwhile, countries like China, who have exhausted their own fishing resources are now subsidizing and sending large fishing carriers into African waters, hitting the livelihood, the food source, and the marine resources of the African coastal nations like Senegal. This could be the next biggest geopolitical tension.

Last year, I had picked up an interesting travel book on a related theme. In Following Fish: Travels Around the India Coast, author Samanth Subramanian chronicles how fish intertwines with the history and the culture of the coastal regions of India. He explores it through food, religion, history, fishing communities, sport, ship-building, and many more. It is a riveting read. Recalling the book reminds me of the smell of the ocean.

A couple of days from now, we will return to class to apply systems thinking to the fishing simulation and do policy analysis to tackle issues of tragedy of the commons and sustainability. It is all very important and critical to our world. If we continue to do business as usual, my enjoyable walks in the little fish market, the livelihoods of many a people, the fascination of the ocean, and the above-mentioned author’s chronicles would become a thing of the past. It would be a shame to lose our blessings.

.  .  .

The simulation is MIT Sloan School’s Fishbanks: A Renewable Resource Management Simulation. It can be accessed by anyone. Try your hand at it.

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Day 108: A thinking morning, modeling urban dynamics, and a bit of cynicism

crowded street with cars passing by
Snapshots from a city

With half sleep and a half breakfast, it’s a little difficult to start one’s thinking machines at 8:45 in the morning. But we had to: the first class of the morning was Business Dynamics. We played around with our beer game simulation model as we tried to arrive at the target inventory level that’s reduce the overall costs of inventory and backlog. We then moved onto a working on a problem in urban dynamics.

Such big-picture problems always have me more interested. The scenario was this: as employment opportunities increase in the city, there is an in-migration to the city with a lag of a few years. This influx of migration creates demand for services which further leads to business expansion and more employment opportunities. This would be our reinforcing loop in our causal loop diagram.

But this is only one part of the story. The population growth drives housing construction and consumes the land. As land is a fixed resource, the increasing housing stock limits the land available for business expansion, which then reduces the demand for labor and a concomitant decline of in-migration. This is our balancing loop.

It was simple enough to figure out the behavior of the system: the jobs will go up exponentially at the beginning and then tend to an equilibrium. Now, we had to figure out the variables in the system and decide which ones we will model as a stock variable and the one we will model as a flow variable.

Working with this problem, I seemed to get a better hang of designing causal loops and ‘stock and flow’ diagrams. But I did make my fair share of mistakes that now look blatant. At one point, I modeled a flow into the land variable. The blatant error is that nothing can make land to grow. Moments of learning.

Our model was ready. But there was a problem. One which our professors had built-in by design. On running the simulation, the jobs tended to equilibrium much before the land was depleted. Ideally, that should happen only when land is depleted. This was our home assignment: to find the crack in the model.

There was quite a bit a cynicism among colleagues today. A friend seated near said that whatever the model it would only be a poor reflection of the reality. But I believe that the comparison must be made with the other existing approaches to solving problems and not with the reality. Another colleague questioned during lunch how these approaches would help us in decision making in our careers. The broad answers I gave did not satisfy him. But the question was a sincere one. I hope we will get our answers as the term progresses.

Day 106: Test run wisdom, meaningful motivation, and my first systems simulation

city cars road houses
A nice little town

“If you were to test a product that is to be launched in the metro cities, where would you test the product?” Our marketing strategy professor threw this question at us.

“In a similar metro city. It will have similar characteristics to that of the launch market.”

“In a city with a diverse set of population. The capital city of New Delhi would be a good fit as it has a wide range of demography.”

“In a tier-II city. No one might notice my product in a metro city.”

After three or four responses from the class, the alternatives saturated. The professor explained his logic. It would be wise to test the product in a tier-I or a tier-II city for two reasons. First, it ensures that there is not much hullabaloo and the competitors do not notice the product. Second, in the event of a failure, the brand is less affected as there is less visibility in these cities.

.  .  .

The more we are in real situations of leadership the more we understand that building and caring for our teams are immensely critical than any strategic operational plan we may come up with. Just a couple of days ago my colleague in the student-run committee brought up the issue of too much work, no fun, and the junior members feeling unappreciated for their effort. I felt exposed. Getting great output from the team is not enough, it is important to keep them motivated. These skills are called upon in various situations – in student-run organizations, in one’s learning team, or in competition teams.

As I wondered about this, the power of analytics seems to have figured what I needed. This HBR article on motivation showed up on my LinkedIn feed: What Not to Do When You’re Trying to Motivate Your Team

The author begins with a startling question: “How many of you have ever received a compliment from your boss that actually offended you?”

I ran my memory to recall the kind of compliments I had paid my team members. Could I have offended someone?

The author then lists the kind of motivation techniques that could have a negative effect – high praise, insincere compliments, effusive expressions of public appreciation as compensation. Then, in a helpful manner, suggests a few ideas that model meaningful expressions of recognition – asking for the story behind their work, let them know how the person’s work has contributed to the larger goal, acknowledge their personal costs behind their accomplishments.

I have unknowingly used these better ideas of meaningful motivation at times, but it was not conscious. Now that I understand it better, I’m determined to be more meticulous about the recognition I give to those working with me.

.  .  .

In the Business Dynamics class today, we built our first simulation model using Vensim. We modeled the beer game. The system behaved the same way as the graphs we plotted after our game. This is extremely cool. But I need to spend time with the reading material and examples to get a good hold of it.

Day 99: Intense thinking, causal loop diagrams, and personalizing my room

 

man standing infront of white board
Quite some thinking that

During the course brief, the instructors mentioned that the Business Dynamics classes will be intensive on thinking. Today, we experienced that.

We took a step towards modeling phenomena by learning to construct causal loop diagrams (CLD). We started with some simplified phenomena with just two variables like birth and population and later moved onto phenomena with more variables.

The CLD helps us to move away from the common but unreal linear cause-effect model.

Here’s a video introduction to Causal loop diagrams: Introduction to Causal Loops

Here is a good introduction to causal loop diagrams from The Systems Thinker: The Causal Loop Construction

During the discussion, we had to invariably touch upon correlation vs causation. Just always remember that correlation does not necessarily mean causation.

We built stories around CLDs that were shown on the screen. I was soon able to appreciate the power of this approach to thinking about phenomena. We then started to map the behavior of the models. Balancing loops are equilibrium seeking and the reinforcing loops keep moving away from equilibrium.

Our next task was to come up with a CLD for the beer game we played last week. The idea is to know the behavior of the system and then figure out the model that will describe this behavior. Here, we learned to add delay to the model.

Here’s a little more complex CLD capturing the piracy phenomena which contains multiple loops: Piracy Causal Loop Diagram

How can consultants apply this?

The biggest takeaway in applying this approach to business problems is this: If you see that an oscillating behavior in an organization with respect to a particular phenomenon, then we could conclude that this behavior is caused by a balancing loop and a delay. Having identified this, we can go forward to break the balancing loop or reduce the delay.

This is hard but very exciting. I understand that I need to spend a lot of time to get a grasp of it and then effectively apply to a particular phenomenon.

.  .  .

I’ve been uninspired for the last couple of days. I made the jump to personalize my room a tad. Nothing much, a couple of wall stickers or posters. One had to be a large wall art of the world – a symbol of my desire for exploration, the vastness of our world and the sense of perspective that brings to me. The second was something I just came across while I was just looking for interesting posters. It is a poster from the film The Sound of Music. A picture of Maria (Julie Andrews) feeling exuberance on the hills. The mood of the film and the character Maria has always inspired positivity and light spiritedness in me. This poster will be a reminder of that.

I understand how important it is to create a space of our own and add little things to your environment.

Day 94: Playing the beer game and personal annual reports

alcoholic beverage bar beer beverage
The Beer Game

Did I ever imagine I’d spend a couple of hours procuring and shipping beer in a b-school? This is what we did in our business dynamics class today. It’s called the Beer Game. It is often used as an experiential tool in supply chain and systems thinking courses.

Every supply chain consists of 4 roles – the retailers, the wholesalers, the distributors, and the factory. My friend and I were given the role of wholesalers. A whole supply chain consisting of the four roles is one team. We had four such teams in the class. The instructor and his assistant act as the customers placing orders to the retailers.

Take a look at this video introduction to the beer game: The Beer Game

Whoever wins this game will have the opportunity for a weekend lunch with us (the instructor couple).

Whoever had the least total costs in terms of inventory and backlog costs at the end of 40 rounds will be declared the winner.

Summer is coming..

As the game started, we saw the demand coming in small numbers. As wholesalers, we decided to reduce our inventory. But three or four rounds down, the instructor announced that ‘Summer is coming,’ and increased the order size. But by then we not have enough inventory to fulfill the retailer’s need. The distributors too could not fulfill our (wholesaler) orders. After that, we started to place bigger orders, yet we had to wait for them. Our backlog built up and it took ten rounds to get even again. But then there was a new problem now: our inventory was building up.

But then we had played 22 rounds, and the instructors called the game to an end.

Debriefing:

  1. The professor asked the four teams for our numbers. Despite our gross mismanagement, we were surprised to find that we were second among the four teams.
  2. Then, each of the retailers, wholesalers, distributors, and the factory were asked to draw the graphs of their inventory and the incoming orders. All the four teams had a similar pattern. The inventories went down and then up.
  3. And finally, the customer demand graph was drawn. It was just a step function with two values – the demand had been constant from the customer side. But the flow of information exacerbated the variation to create waves as we moved up the supply chain. The bullwhip effect in play.

Lessons:

  1. Your behavior was determined by the system. The four teams had different kinds of people. There were even people who’d already played the game, yet they ended up playing as everyone else. We behaved as systems rather than as individuals.
  2. There is a delay in the system. A information by the retailer takes six weeks to reach the factory for them increase or decrease the production commensurately.

It was certainly an action-packed evening. We walked out of the classrooms as the rain came down hard.

.  .  .

I’ve got a new found pleasure in reading annual reports. Today, I was going through the annual report of a leading private sector bank in India. The annual report is an insightful document. What if individuals and families had annual reports? Maybe, I’d convince my family to have an annual report in the future.

Till then I could have individual annual reports: the progress I made in that year, the highlights, and then some management discussion and analysis to reflect on my performance and future strategy. One could also add their personal finances. Exciting.

Here are some insights on personal annual reports:

  1. Own Annual Report
  2. Ten Years of Personal Annual Report
  3. Stephanie Personal Annual Report

Day 92: Pulling an all-nighter, solving Romania’s problems, and my first Fazer candy

adult architect blueprint business
Working all night

We had to pull an all-nighter. The three of us sat through from 10:30 in the night to 9:30 on the next morning when we finally decided to break for breakfast. As I worked on the slides, there were moments when I just fell asleep for a few seconds before I returned, glad that my teammates didn’t notice or that would be embarrassing. The crack of dawn is the most difficult time. Past 7 AM, the briskness of the day sets in and it feels like a new day with new energy. Looking back, I’m glad that we pulled through and not give in to the temporary craving for sleep.

I’ve developed a liking for this kind of mission-mode work. Where you decide to deprioritize every other thing in your life and focus on just one thing with a couple of other people. For one, I don’t have to make many decisions every hour. Despite the hard couple of days, the exhilaration from having done a good job is unmatched.

We fulfilled our submission, now it’s just left to the evaluators. Working with a team that shares common goals, where the people are genuinely nice, and every minute spent is immensely productive is an experience to cherish.

.  .  .

The course will expect you to not only be physically present, but mentally alert as well. So, please have a good night sleep before each class, and grab a bite before class if you usually tend to feel hungry 😉

That was the email from our professor. Today we had our first class of the Business Dynamics course, one of the most awaited courses this term. The application of systems thinking and modeling is among the foremost objective.

The interesting thing is that we have a young husband-wife team taking our class. It excites me to be part of this unique situation. They are almost perfect complements for each other – one, a slightly subdued intellectual and the other, a bundle of energy who can attract and hold attention with his talking.

The scenario: 1960s in Romania, the birthrates are as low as 15 per 1000. Romania’s dictator has hired you as a consultant to solves this problem and increase the birth rates.

We started by identifying the problems, then the class suggested a variety of solutions, and we tried to guess what Romania would’ve done. Advertising, ban abortion, incentives. They worked for a year, the birth rate shot up, but it then fell steeply in the subsequent years. We discussed the reasons for this.

This then brought us to mental models. We make decisions based on certain assumed boundaries and often follow an open loop thinking. We don’t account for the fact that our decisions affect the environment which then impacts our goals.

Here’s a sneak peek: John Sternman’s Business Dynamics Class at MIT

And of course, I have a film reference. I’m pleased when I do so. I had one for the situation we were dealing with in Romania. I had a watched a film 4 Months, 3 Weeks and 2 Days that portrays the courage and the friendship of Romanian college students as one of them had to have an illegal abortion. Having watched this film, I was able to relate to the situation better. It is a validation of my belief that good films are a great way to gain exposure to the diverse world around us.

.  .  .

I opted to be the observer in the last negotiation class. The theme of the class was about packaging deals that aim at creating maximum value. The negotiation was between the executives of two firms aimed at signing a contract. The most interesting observation was that they eschewed going for the option that’d have benefited both (they do not know this) for fear of having lower bargaining power in the negotiation. That’s where they missed the opportunity to create value.

In the product brand management class, we explored brand polarization and the various care strategies for lovers and haters. The little web and thinking activities that our professor enlists us for in class is fascinating. I did not take a liking to this method initially but now I’ve become a fan of it. Today it was Tripadvisor’s List of top 10 restaurants in Tapei, Maggi’s comeback, Ryan Air and many more.

At the end of the class, the professor played the promotional videos of Fazer, a top Finnish candy brand: Fazer Angry Birds Sweets

The contents of the video titillated my sweet tooth. As we discussed Fazer’s innovative idea of setting up candy parks for people to visit, the professor surprised us by taking out a real box of Fazer candies: Marianne – a peppermint crust filled with dark chocolate. We discussed the packaging of the candy box, and how such items have to be packaged so that the unboxing/opening is an experience. Christmassy-red stripes packaging brought me the feeling of festive joy.