Monday, June 30, 2008
Always look for simple solutions
Case 1
When NASA began the launch of astronauts into space, they found
out that the pens wouldn't work at zero gravity (ink won't flow
down to the writing surface). To solve this problem, it took
them one decade and $12 million. They developed a pen that
worked at zero gravity, upside down, underwater, in practically
any surface including crystal and in a temperature range from
below freezing to over 300 degrees C.
And what did the Russians do...?? They used a pencil.
Case 2
One of the most memorable case studies on Japanese management
was the case of the empty soapbox, which happened in one of
Japan's biggest cosmetics companies. The company received a
complaint that a consumer had bought a soapbox that was empty.
Immediately the authorities isolated the problem to the
assembly line, which transported all the packaged boxes of soap
to the delivery department. For some reason, one soapbox went
through the assembly line empty.
Management asked its engineers to solve the problem.
Post-haste, the engineers worked hard to devise an X-ray
machine with high-resolution monitors manned by two people to
watch all the soapboxes that passed through the line to make
sure they were not empty. No doubt, they worked hard and they
worked fast but they spent a whoopee amount to do so.
But when a rank-and-file employee in a small company was posed
with the same problem, he did not get into complications of
X-rays, etc., but instead came out with another solution. He
bought a strong industrial electric fan and pointed it at the
assembly line. He switched the fan on, and as each soapbox
passed the fan, it simply blew the empty boxes out of the line.
Moral: Always look for simple solutions.
Devise the simplest possible solution that solves the problems
Always Focus on solutions & not on problems
Monday, June 23, 2008
The Story About Subsidy
A man called Maha owns a farm which can produce 10 apples every day.
He has 5 workers to operate the farm.
Each of them eats 1 apple daily and it is enough to keep them operating the farm
normally.
The remaining 4 apples, the landlord sells them at RM10 each and he earns RM40.
He uses the RM25 to improve the farm operation and facilities.
He gives RM2.00 to each of his workers and he keeps the remaining RM5.00 as profit.
Day by day, the farm is well developed and all of the 5 workers are happy with the
money they can save.
When Maha passed away and there is a new landlord, Abdul comes to continue the farm
operation.
He says to the workers:" We need to improve the farm quality and redefine our way of
thinking.
From now on all of you only need to pay RM1.00 for each apple you eat.
It is very cheap as the price is RM10 each outside the farm."
The workers have no choice but to pay RM1.00 for the apple they eat daily.
Their earning decrease from RM2.00 to RM1.00 per person.
As usual, Abdul sells the 4 apples and he gets RM40.
He uses RM25 for farm improvement and pays RM10 to his 5 workers.
He gets RM5.00 as profit. On top of that, he gets another RM5.00 from the apples
that he sells to his workers.
In total, he gets RM10 as profit every day.
Soon, the apple price increases to RM20 each.
The new landlord gets a higher profit as he gets RM80 for the 4 apples he sells daily.
Then, he decides to give the farming improvement contract to one of his close
friend, Samy.
Samy says:"Apple cost naik, improvement cost also misti naik."
So, the farm improvement cost increases from RM25 to RM50.
In actual, the improvement only cost RM30.
The remaining RM20, Abdul and Samy share evenly among themselves.
Let's calculate how much Abdul gets daily:
RM10 (from farm improvement cost)
RM20 (Net profit by selling 4 apples: [Gross profit, RM80] - [Improvement
cost, RM50] - [Wages RM10] = RM20)
RM5 (from selling apples to his workers)
In total, Abdul gets RM35 daily compare to RM10 initially when he takes over
the farm from Maha.
His profit increases RM25 and the workers are still getting RM1.00 daily per
person.
The greedy Abdul does not want to stop there.
One day, he says to his fellow workers:" You see ah, the current market price for
one apple is RM20 and you are only paying RM1.
See how lucky you are! I have to SUBSIDY RM19.00 for each of the apple you buy and
total I need to SUBSIDY RM95.00.
This will greatly burden the farm and we might get bankrupt if we continue like this.
In order to avoid bankruptcy, I need to increase the apple price that you buy from
RM1.00 to RM1.50 and I will bear the remaining RM18.50 per apple as my subsidy to
you all. "
So, greedy Abdul adds RM2.50 to his current profit and the number becomes RM37.50.
After you have read the story, I am sure you have already understood the meaning of
"SUBSIDY" given by the government.
The RM95 subsidy never existed in the first place and so was the RM52 billion fuel
subsidy generously "given" by the government
Cutting fuel subsidy is actually just a reason to steal money from your pocket.