Management Innovation and Big Data 9811992304, 9789811992308

Citation preview

Management for Professionals

Zheng Qin Yan Li Yinzhou Yang

Management Innovation and Big Data

Management for Professionals

The Springer series Management for Professionals comprises high-level business and management books for executives, MBA students, and practice-oriented business researchers. The topics span all themes of relevance for businesses and the business ecosystem. The authors are experienced business professionals and renowned professors who combine scientific backgrounds, best practices, and entrepreneurial vision to provide powerful insights into how to achieve business excellence.

Zheng Qin · Yan Li · Yinzhou Yang

Management Innovation and Big Data

Zheng Qin School of Business Southern University of Science and Technology Shenzhen, Guangdong, China

Yan Li School of Business and Management Shanghai International Studies University Shanghai, China

Yinzhou Yang School of Business Southern University of Science and Technology Shenzhen, Guangdong, China

ISSN 2192-8096 ISSN 2192-810X (electronic) Management for Professionals ISBN 978-981-19-9230-8 ISBN 978-981-19-9231-5 (eBook) https://doi.org/10.1007/978-981-19-9231-5 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

Management innovation is constantly developing along with human wisdom and social progress, and countless vivid and successful cases are creating brilliance every moment, and the practice of management innovation and big data is even more fascinating. Based on absorbing the latest research results and practical experience of management innovation and big data practice, this book introduces and summarizes the basic concepts, basic methods and management cases in management and big data analysis at home and abroad, researching and exploring the role played by management innovation and big data in the economy, society, business, and government. In terms of content selection, the book insists on combining theoretical introduction and practical case introduction, drawing on and referring to the achievements and application of management innovation and big data practice at home and abroad, especially the cases based on advanced network platforms and big data analysis that have emerged in recent years. In terms of content organization, the chapters in this book are both interrelated and independent of each other, and the content of each chapter forms its own system. The structure in the book not only facilitates readers’ fragmented learning, but also becomes convenient for readers to study and discuss in depth on a certain interested issue, case, and practical content. The close connection between the chapters logically ensures that the overall content of the book is constantly open and innovative. The compilation of this book refers to many domestic and foreign literature books, whose achievements have played an important role in the manuscript of this book. Students Hanlin Xiao and Liya Su participated in the collection of data and the writing of the “case part” of the book, and we would like to express our sincere thanks to them. It is inevitable that there are deficiencies in the book, so we would like to thank the readers for their criticism and correction. Shenzhen, China Shanghai, China Shenzhen, China

Zheng Qin Yan Li Yinzhou Yang

v

Executive Summary

This book introduces the basic concepts, basic methods and practical cases of management innovation and big data practice. It is divided into two parts. The first part is management innovation, which mainly introduces the basic concepts, basic methods, and management practice cases of organization, leadership, control, decision-making, and innovation; the second part is big data, which mainly introduces the basic concepts, basic methods, and management practice cases of big data. This book can be used as a textbook for undergraduates or postgraduates majoring in economics and management, which is also suitable for experts, scholars, and researchers engaged in higher education. At the same time, it can be used as an innovative teaching material or reference book for universities, training institutions, enterprises, governments and related research and practice departments to explore management innovation and big data practice.

vii

Contents

Part One 1 Decision-Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Basic Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Analysis Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research Methodology for Decision Context (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Method of Selecting the Direction of Activity (Sanduo et al., 2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Activity Schema Generation Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for Evaluation of Programs of Activities . . . . . . . . . . Methodology for Selecting Programs of Activities . . . . . . . . . . . . . . Programming Methods for Implementing Decisions (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for Advancing the Plan (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for Decision Tracking and Adjustment (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Encourage Employee Participation in Decision-Making (Guohua, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 2 (Midea’s Official Website) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 3 (Nanjing Korun Company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 4 4

10 11 14 15 16

20

24

29 31 33 33 34 36 37 39 39 39 40 ix

x

Contents

2.2

Basic Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approach to Organizational Integration (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leader’s Approach to Team Building (Guohua, 1998) . . . . . . . . . . . Methods to Prevent Tissue Ageing (Guohua, 1998) . . . . . . . . . . . . . Approach to Implementing Organizational Change (Guohua, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Reduce Resistance to Organizational Change (Guohua, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Systematic Approach to Human Resources Management (Koontz & Weihrich, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways and Means of Selecting and Recruiting Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for the Recruitment of Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology of Personnel Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . Training Methods for Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods of Training Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Improve the Efficiency of the Commission’s Work (Sanduo et al., 2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Avoid Organizational Conflict (Sanduo et al., 2018) . . . . Ways in Which Employees Learn About Organizational Culture (Robbins & Kurt, 2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 2 (Adapted from: Liu Zhiying, Et Al, Xxxx) . . . . . . . . . . . . . . Case 3 (Deng, 2017; Listening to the Voice of Growth, 2015; Zhilin & Fei, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

3 Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Basic Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Basic Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways for Leaders to Build Prestige (Guohua, 1998) . . . . . . . . . . . . . Methods of Motivation (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . .

71 71 71 72 72 73 73

41 42 44 45 46 47

50

51 52 53

58 60 62 63 64 64 65 67 69

74

Contents

Ways to Overcome Communication Barriers (Sanduo et al., 2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods of Conflict Suppression (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods for Stimulating Conflict (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Improve Business Leadership and Execution (Argyris, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 2 (According to ?Endeavour-Oriented? & Related Materials. Hang Weiwei, ?Endeavour-Oriented?, 2014) . . . . . . . . . . Case 3 (King, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Basic Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for Determining Control Criteria (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods of Control of the Organization . . . . . . . . . . . . . . . . . . . . . . . . Methods of Control of Personnel Behaviour (Guohua, 1998) . . . . Quality Control Methods (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information Technology Methods for Modern Control (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods of Crisis Control (Sanduo et al., 2018) . . . . . . . . . . . . . . . . Methodology for Risk Identification (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology for Risk Assessment (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods for Controlling Risks (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 2 (Prepared on the Basis of Relevant Media Reports. The Case is Taken from Management) . . . . . . . . . . . . . . . . . . . . . . . . . .

xi

83

86

89 90 93 93 94 95 98 99 99 100

100 100 113

116

120 121

122

125

128 131 131 132

xii

Contents

Case 3 (Xi & Maher, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 5 Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Basic Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approaches to Creating a Learning Organization (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Deal with Resistance to Change (Key teaching materials for Marxist theoretical research & construction projects, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways to Promote Innovation in Organizational Development (Guohua, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ways for Managers to Effectively Organize Innovation Within the System (Sanduo et al., 2018) . . . . . . . . . . . . . . . . . . . . . . . . Ways to Think Outside the Box (Yiqun, 2019) . . . . . . . . . . . . . . . . . . Approaches Suitable for Managing Innovation (Yiqun, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approaches to Autonomous Innovation (Ziming et al.) . . . . . . . . . . 5.3 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 2 (Xiaojuan, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Case 3 (Hufeng & Manyu, 2014, Sanduo et al.) . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

139 139 140

140

140 141 142 144 146 149 150 150 151 153 157

Part Two 6 Basic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 The Age of Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Managing Change in the Era of Big Data . . . . . . . . . . . . . . . . . . . . . . . 6.4 Frontier Technologies Related to Big Data Communications . . . . 4.1 5G-Related Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 6G-Related Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Root Server Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Satellite and 5G/6G Terrestrial Mobile Convergence Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

161 161 163 163 164 164 167 170

7 Decision-Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Basic Storage Methods for Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributed Data Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cloud Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edge Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Basic Processing Methods for Big Data . . . . . . . . . . . . . . . . . . . . . . . . .

175 175 175 175 176 176

171 173

Contents

xiii

Distributed Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Graph Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Batch and Flow Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cloud Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edge Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Basic Methods of Data Analysis in the Field of Management . . . Basic Methods of Descriptive Statistical Analysis . . . . . . . . . . . . . . . Basic Methods of Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Methods of Correlation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . Basic Methods of Regression Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Methods of Correlation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . Basic Methods of Cluster Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Methods of Classification Analysis . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

176 177 181 183 185 188 188 189 191 193 196 197 199 200

8 Management Practice Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Case 1: Artificial Intelligence Empowers New Retail in Enterprise A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Case 2: Big Data Reengineering Company B . . . . . . . . . . . . . . . . . . . 8.3 Case 3: Big Data Driven C Convenience Store . . . . . . . . . . . . . . . . . . 8.4 Case 4: Enterprise D: Using Artificial Intelligence to Help Circle Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Case 5: Data-Driven E Convenience Store Relies on “Store Portraits” to Open Convenience Stores . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Case 6: The Age of the Big Smart Cloud, an Opportunity or a Threat? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Case 7: G Enterprise IoT Era Takes off . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Case 8: Big Data Helps Group Rent Governance (Jian, 2020) . . . 8.9 Case 9: I Features of Enterprise Big Data Applications (China Case Sharing Center Case Library) . . . . . . . . . . . . . . . . . . . . . . 8.10 Case 10: Features of Big Data Applications in Company J (Xing, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

203 203 205 206 207 208 209 210 210 211 212 213

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

About the Authors

Zheng Qin male, Han nationality, CPC member. Professor, doctoral supervisor. He serves as founding vice president of Southern University of Science and Technology, and founding dean of the School of Information Management and Engineering, Shanghai University of Finance and Economics. He has taken charge of and finished many academic projects of national natural science foundation, provincial natural science foundation and at provincial and ministerial-level. He has published more than 100 theses at home and abroad, and has finished 16 works and 2 national patents. He has won provincial and ministerial science and technology progress awards, 2005 Citigroup Financial Information Technology Education Fund Project Excellence Award Teaching Fellowship, 2006 Shanghai University of Finance and Economics Outstanding Communist Party Member, 2006 Baosteel Outstanding Teacher Award., etc. Yan Li female, Han nationality, CPC member. Associate professor and master supervisor of Shanghai International Studies University. Visiting scholar of University of Michigan, USA. She has presided over and completed a number of scientific research projects, such as the National Natural Science Foundation of China, sub-projects of major Social Science Projects, and Special Fund for Outstanding Young Teachers in Shanghai Universities. Published more than 30 papers at home and abroad; She was awarded the International Paper Award in 2016, The National Excellent Case Award in 2014, the Shao Yibing Teaching Award in 2018, the Backbone Teacher in 2016, and the march eighth Pace-setter of Shanghai International Studies University in 2012. Yinzhou Yang female, Han nationality, member of the Communist Youth League, master of Finance in Southern University of Science and Technology. In 2019, she joined the research group led by Professor Qin Zheng, focusing on the bottleneck and countermeasures of the local government’s introduction of university resources, and published papers at international conferences as the corresponding author. She has won the second prize of university-level outstanding students for many times.

xv

Part One

The first part is about management innovation, which mainly introduces the basic concepts, basic methods, and practical cases of decision-making, organization, leadership, control, and innovation in management.

1

Decision-Making

1.1

Basic Concepts

Decision-making is an important process to realize management. It is the behavior of the organization to identify problems, solve problems, take advantage of opportunities and choose reasonable solutions. The basic concepts of decision-making are also expressed in several different forms: (1) In the narrow sense, decision-making is an act that makes choices in several action plans. If there is only one course of action, there is no choice, therefore, there is no decision-making. Decision-making requires two or more options that can be substituted by each other. In the broad sense, decisionmaking is a process that includes all the activities that must be carried out before the final choice is made. Generally speaking, decision-making refers to the analysis and judgment process of selecting one plan among several alternatives to achieve a certain goal (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) Decision-making is what managers do (or try to avoid), which refers to choosing between two or more alternatives (Robbins & Kurt, 2017). (3) Decision-making is the process by which managers identify and solve problems, and take advantage of opportunities (Sanduo et al., 2018). (4) Decision-making is a process of analysis and judgment in which a satisfactory solution is selected from several feasible solutions in order to achieve a specific purpose (Yiqun, 2019). (5) Decision-making refers to the selection and determination of action measures from alternatives, which is the core of the plan (Koontz & Weihrich, 2014). (6) Decision-making is a reasonable process of choosing an effective scheme (or means) from more than two alternatives to achieve a certain purpose (Guohua, 1998). © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_1

3

4

1.2

1

Decision-Making

Basic Methods

Environmental Analysis Methods (1) General environmental analysis method—PEST analysis (Key teaching materials for Marxist theoretical research & construction projects, 2019) PEST analysis means exploring and recognizing the important factors that affect the development of an organization in four aspects: political and legal environment (P), economic environment (E), social and cultural environment (S), and technological environment (T). For a certain organization, a general environmental analysis within a specific period of time also requires particular identification of the specific elements of each aspect. As already highlighted in the hierarchical analysis of environmental factors, many general environmental factors tend to affect businesses by influencing specific environmental factors. This requires the organization to identify the sensitivity of the specific environment to general environmental factors. For the enterprises, it means analyzing factors in the general environment that are closely related to the industry where it is, which actually means that the enterprises need to identify a set of factors in various general external environmental factors that are meaningful to the industry and themselves, thus significantly narrowing the scope of the enterprises’ analysis of the general environment. PEST analysis usually draws on the existing research results in various economic, social and other relevant disciplines, but on the basis of these results it is necessary to conduct further research on issues relevant to the organization. Since general environmental analysis relies on knowledge from many relevant disciplines and the situation of each organization varies considerably, there is no general and generic approach to PEST analysis and it needs to be problem-specific. (2) Specific environmental analysis method—Porter’s five forces model (Key teaching materials for Marxist theoretical research & construction projects, 2019) The specific environment has a more direct and frequent impact on the organization and is therefore the focus of the organization’s analysis of the external environment. In this regard, Michael Porter’s five forces model is an effective method. Michael Porter found that there are five main factors in the business environment that can frequently provide opportunities or create threats for the firm, which come from other existing firms in the industry, sellers (suppliers), buyers (customers), potential entrants among other industries and substitute products, as shown in Fig. 1.1. Analysis of potential entrants means potential competitor analysis in terms of entry barriers. A barrier to entry is a loss that a firm outside the industry must pay to enter and that a firm within the industry does not have to pay again. Obviously, the greater the entry barriers, the lower the threat of potential entrants. In addition, the attractiveness of the industry, the risk of industry growth, and the likelihood

1.2 Basic Methods

5

Fig. 1.1 Five forces model. Source [US] Michael. Porter, Competitive Strategy, translated by Xiaoyue Chen, Huaxia Press, 1997 edition, p. 12

of collective retaliation by firms within the industry all influence the magnitude of the entry threat. Analysis of substitute products, i.e., identification of substitution threats. Substitution is the process by which one product replaces another product in meeting a particular customer need or multiple needs. The existence of substitute products expands the customer’s choice. In the short run, the price and performance of one product are limited by the substitute; in the long run, the rise of one product or industry has the potential to cause the disappearance of another. Analysis of buyer and seller bargaining power refers to assessing the ability of buyers and sellers to control the price of a transaction. There is both cooperation and conflict of interest among firms, their customers and suppliers. Both sides of a transaction always want to compete for a price favorable to themselves, and price changes make one side gain excess revenue while directly causing the other to lose. In specific trading activities, there are many factors that affect bargaining strength, such as the location of the transaction negotiation, the quality of personnel, the schedule and so on, but these are all operational-level factors. At the industry level, the bargaining strength of both deal parties is governed by several industry characteristics. Through these one can better recognize how firms build relationships that are compatible with the external environment. Analysis of industry competitors, i.e. the present and future of competitors. There is usually more than one manufacturer and distributor of the same product, and multiple enterprises producing the same product are bound to take various measures to compete for users, thus creating competition in the market. Within the industry, the basic information about the main competitors, the reasons for the threat posed to the enterprise and the development of the competitors are analyzed. Michael Porter’s Five Forces model is applicable to both businesses and other types of organizations. This model helps one to deeply analyze the sources of competitive pressure in an industry and provides a clearer understanding of the

6

1

Decision-Making

strengths and weaknesses of an organization, as well as the opportunities and threats in the trends of the industry in which the organization is operating. (3) Integrated analysis method of internal and external environment (Key teaching materials for Marxist theoretical research & construction projects, 2019) Management is achieved through various resources and conditions within the organization. Therefore, while analyzing the external environment, an organization must also analyze its internal environment, that is, its own capabilities and constraints, and identifying the strengths and weaknesses that characterize it. The business process of any organization is actually a continuous search for a dynamic balance among internal environment, external environment and business objectives. The internal and external environment of an organization can never be separated. If a company is very capable and has a clear competitive advantage, then uncertainty in the external environment will not pose too big threats to it. On the contrary, a company that does not have any business characteristics will not grow rapidly even if the external environment is favorable. Therefore, the opportunities and threats in the external environment should be compared with the internal strengths and weaknesses of the organization in order to make full use of the organization’s strengths, seize the external opportunities, and avoid internal weaknesses and external threats. SWOT analysis is the most commonly used technique for comprehensive analysis of internal and external environment and is proposed by Andrews team in Harvard University. SWOT analysis is short for Strengths, Weaknesses, Opportunities and Threats analysis method. It summarizes the results of environmental analysis into four parts: strengths, weaknesses, opportunities, and threats, forming an environmental analysis matrix. The reason why SWOT analysis is widely used in management practice in various industries and has become one of the most commonly used management tools is that, firstly, it organically combines the internal and external environment, thus helping people to understand and grasp the dynamic relationship between them, adjust the organization’s business strategy in a timely manner, and seek better development opportunities. Secondly, it reflects the complex relationship between internal and external environment in a intuitive and simple two-dimensional matrix. Thirdly, it encourages people to think critically. Strengths, weaknesses, opportunities and threats are all relative and can only be identified in comparative analysis. Finally, SWOT analysis can lead to a variety of choices of action plans which are based on careful comparative analysis, so that it can improve the quality of decision-making. (4) Analytical approach to environmental change (Key teaching materials for Marxist theoretical research & construction projects, 2019) In order to enable organizations to face different possible outcomes of environmental changes with comfort, in the long run, a method—the scripting method

1.2 Basic Methods

7

(scenario analysis)—has been applied and continuously refined by many large international companies in response to environmental changes. The original intent of the scripting method was scenario analysis. Scenarios can be applied both to environmental forecasting and to the formation of decision options. In environmental analysis, a scenario or a set of scenarios can also be referred to as a script; in organizational decisions, a script is a decision scenario. Clearly, scenario scripts are based on environmental scripts, that is, environmental scripts are formed first and then based on them the scenario scripts for the decisions are made. Scenario analysis methods can be divided into quantitative and qualitative scripting methods according to different methods of compiling scripts during use. The quantitative scripting method builds models based on econometric or other quantitative analysis methods and generates different scripts by selecting and adjusting various parameters. With the aid of computer simulations, this method can quickly generate a large number of scripts, some as many as 1,000 or more. The analysts then assess the plausibility and occurrence probability of each script. In the generation process, one variable is changed, keeping the others constant, to produce a different script. The qualitative scripting method identifies important environmental factors through human thoughts and judgments and analyzes their relationships, overcoming the mechanics inherent in the seemingly precise and complex methods of the quantitative scripting method. Also, based on human thinking, the qualitative scripting method can focus on and identify a wide range of factors. However, demanding data requirements of the quantitative scripting method limit the range of factors to be selected, despite it can consider many factors. The advantage of the scripted approach is that it opens the minds of business managers, expands their horizons, increases their alertness to environmental threats, and allows for greater flexibility in business strategies, without hampering efforts to seize long-term growth opportunities. Even if some scenarios do not actually occur, it is beneficial to take contingency measures in advance to build up a firm’s responsiveness to accept uncertain changes. (5) TOWS matrix (Koontz & Weihrich, 2014) The TOWS matrix has a wide range of applications and is a conceptual framework for systems analysis, which facilitates the combination of external threats and opportunities and internal organizational strengths and weaknesses. Companies are often advised to understand their strengths and weaknesses as well as the threats and opportunities in the external environment. However, it is often overlooked that bringing these factors together may require clear strategic choices to be made. To systematize these choices, the TOWS matrix uses a “T” for external threats, an “O” for external opportunities, a “W” for internal weaknesses and an “S” for internal strengthes. The TOWS matrix starts with a threat because in many cases it is the perception of a crisis, problem or threat that leads a company to focus and develop a strategic plan.

8

1

Decision-Making

(1) Four alternative strategies Figure 1.2 presents the four alternative strategies of the TOWS matrix, which are based on a combined analysis of the external environment (threats and opportunities) and the internal environment (weaknesses and strengths). The WT strategy minimizes disadvantages and threats and can be called a “very small, very small” strategy. This may mean, for example, that companies need to form joint ventures, shrink or even liquidate. The WO strategy seeks to minimize disadvantages while maximizing opportunities. In this way, firms that are disadvantaged in certain areas address these issues either through the firm itself or by acquiring the required capabilities from outside (such as technology or people with the required skills) so that the firm can take full advantage of opportunities in the external environment. ST strategy is the use of an organization’s strengths to counter threats in the environment with the aim of maximizing organizational strengths and minimizing threats. In this way, a company may use its technical, financial, managerial or marketing strengths to neutralize the threat posed by a competitor’s new product. SO strategy is the most ideal situation. Managers can build on their strengths and take advantage of external opportunities while leveraging the company’s internal strengths. Indeed, the aim of the company is to move from the other quadrants of the matrix to the SO strategy item. If the company has a disadvantage, it has to work to overcome it and turn it into a strength. If it faces threats, it has to face them head-on and take them in stride so that it can focus on opportunities.

Fig. 1.2 Application of TOWS matrix in strategy development

1.2 Basic Methods

9

So far, the TOWS matrix analysis of the relevant factors has all fallen under the concept of a specific point in time. However, the external and internal environment of a firm is dynamic: some factors change over time, while others may be relatively stable. Thus, the strategy designer must prepare TOWS matrices for several different points in time, so that one can start the analysis with the past TOWS matrices, then analyze the current situation, and perhaps most importantly focus on different periods in the future (T1, T2, etc.). (2) Application of blue ocean strategy in TWOS matrix In a red ocean scenario, the traditional competitive strategy is to be stronger than competitors by fighting them in their existing markets. In contrast, the blue ocean strategy concentrates on unopposed markets, where a distinctive product or service is offered. Blue ocean strategy avoids competition in existing markets and attempts to create and develop new products or services that trigger new demand. At the same time, those companies that are successful will use more differentiation and low-cost strategies. Those companies proposing to adopt a blue ocean strategy should consider four courses of action. a. b. c. d.

Identify and eliminate those factors that are not relevant to the customer. If they cannot be eliminated, consideration should be given to reducing them. Enhance or add those elements of uniqueness. Develop new or novel and unique factors that customers want and competitors ignore.

How to apply Blue Ocean Strategy to the TOWS Matrix? The traditional Red Ocean strategy is similar to the ST strategy (Strengths + Threats) in that a company can respond to the threats posed by competition with its strengths. Overly aggressive competition under a red ocean strategy is often a red sea. Conversely, a blue ocean strategy is similar to an SO strategy (strengths + opportunities) where the company uses its strengths to seize external opportunities. There is also a blue ocean strategy option, the WO strategy (disadvantage + opportunity), where the company recognizes its disadvantages and finds a solution, seeking special opportunities to overcome its disadvantages. Often, the disadvantaged company is demoralized and more motivated to seek opportunities that are not considered by its competitors, which is precisely what happens when a blue ocean strategy is employed. In summary, companies adopting a blue ocean strategy can resort to the two choice matrices, SO and SW, shown in Fig. 1.2. Although it is sometimes inevitable to encounter the ST strategy option, it is nevertheless advisable for firms to try to plan a blue ocean strategy before using it in order to avoid a bloody competitive situation due to being forced to choose the ST strategy.

10

1

Decision-Making

Research Methodology for Decision Context (Key teaching materials for Marxist theoretical research & construction projects, 2019) The steps in the analysis of the decision context are as follows. (1) Clarifying the subject of decision-making It is only when the themes are clearly identified that the various tasks of contextual analysis for decision-making have a clear direction and focus. The identification of themes may relate to the entire organization’s activities or to only one aspect of them. (2) Formulation of hypotheses Based on the identification of the topic, the environmental researcher also conducts a preliminary analysis, using the information available to the organization and based on his or her experience, knowledge and judgement, to formulate preliminary hypotheses about the problems encountered in the organization’s activities: to determine which factors may be responsible for the organizational problems and which of the many possible causes are the most important. (3) Collection of information Testing the hypothesis requires the possession of information that reflects the internal and external environment of the organization. This information can be obtained from two sources: first, from a variety of sources that exist inside and outside the organization, such as various records of organizational activities, published press literature external to the organization, etc. The second is adequate environmental research and specialized environmental surveys. The collection of information is often done in the course of scanning and monitoring. (4) Collation of information The original information collected by the environmental survey is processed and organized in order to be meaningful and to reflect the objective environment more correctly. The processing of information consists of two tasks: firstly, the accuracy and authenticity of the information is reviewed in order to remove the falsehoods and remove the roughness and refinement; secondly, the processed information is used to analyze the relationship between the various factors affecting the organization’s activities and to verify whether the assumptions made earlier about the causes of the problem are correct. If so, the information can be used to make predictions about the likely effects of the measures taken. (5) Trend forecasting and assessment Using certain scientific methods and the information obtained from environmental surveys, trends in the environment and the future development of the organization

1.2 Basic Methods

11

are predicted. The first is to use the analysis of relevant information to identify the trend of environmental changes and then to predict the possible future state of the environment based on this trend; the second is to study whether the problems of the organization can be solved and to predict whether the conditions of the organization’s future activities can be improved after taking appropriate measures based on the verification of hypothetical causes and on the analysis of the relationship between various factors influencing the organization’s activities.

Method of Selecting the Direction of Activity (Sanduo et al., 2018) (1) Business unit portfolio analysis method The basic idea of the operating unit portfolio analysis method is that most enterprises have more than two operating units, each of which has a mutually distinct product-market slice, and that the enterprise should determine the direction of its activities for each operating unit. The method advocates that the relative competitive position of the enterprise’s operating units in the market and the growth of their business should be taken into account in determining the direction of the activities of each operating unit. The relative competitive position is often reflected in the enterprise’s market share, which determines the ability and speed of the enterprise to generate cash, since a higher market share can generate higher sales volumes and sales profits for the enterprise, thus giving it a higher cash flow base. The growth rate of business has a twofold effect on the choice of activity direction. First, it facilitates the expansion of market share, since in stable industries, increases in the sales of a firm’s products often come from a decline in the market share of its competitors. Second, it determines the magnitude of investment opportunities, since rapid business growth allows firms to recover their investments quickly and achieve a substantial return on investment. Based on the two criteria mentioned above—relative competitive position and business growth rate—the business units of an enterprise can be divided into four main categories, as shown in Fig. 1.3. The enterprise should choose the appropriate direction of activity according to the characteristics of each type of operating unit. Fig. 1.3 Schematic diagram of the operating unit portfolio analysis method

12

1

Decision-Making

(1) “Golden Calf”. Characterized by a high market share and a low business growth rate. A higher market share generates more profits and cash for the business, while a lower business growth rate requires less investment. The “golden calf” operating unit generates a large amount of cash to meet the operating needs of the business. (2) “Star”. This business unit has a high market share and business growth rate, and therefore requires and generates a large amount of cash. The “star” business unit represents the highest profit growth rate and the best investment opportunity, so the enterprise should invest the necessary capital to increase its production scale. (3) “Young children”. This business unit has a high growth rate and a low current market share, which may be a promising area that the business has just developed. Since a high growth rate requires significant investment and a low market share provides only a small amount of cash, the business is faced with the option of investing the necessary capital to increase market share and expand sales to turn it into a “star”. If the newly developed area is not considered to be transformed into a “star”, it should be abandoned in time. (4) “Thin Dogs”. Characterized by low market share and business growth rates. With low market share and sales volume, or even negative growth, “thin dog” units can only bring in less cash and profits, and the capital required to maintain productive capacity and competitive position may even exceed the cash they provide, thus becoming a potential capital trap. Therefore, enterprises should adopt a strategy of contraction or abandonment for such depressed business units. The steps of the operating unit portfolio analysis method are usually as follows. (1) Dividing the business into different operating units. (2) Calculate the market share and business growth rate of each operating unit. (3) The relative size of individual operating units based on the proportion of assets they hold in the enterprise. (4) Mapping the business unit portfolio of the enterprise. (5) Determine the direction of activity that should be selected based on the location of each operating unit on the map. Business unit portfolio analysis is based on the assumption that the objective of the enterprise is to pursue growth and profit. For enterprises with multiple operating units, it allows for the efficient use of capital within the enterprise by directing profits generated by more profitable operating units with lower potential growth rates to those with higher growth rates and potential profitability. (2) Policy guidance matrix The policy guidance matrix, i.e., the matrix is used to guide decision-making. Specifically, the current situation and characteristics of each business unit of the

1.2 Basic Methods

13

enterprise are analyzed from the perspective of market prospects and relative competitiveness, and they are labelled on the matrix to guide the choice of the direction of the enterprise’s activities. Market prospects depend on factors such as profitability, market growth rate, market quality and regulatory restrictions and are classified as strong, medium or weak in attractiveness; relative competitiveness depends on factors such as the position of the operating unit in the market, production capacity, product research and development and is classified as strong, medium or weak. Based on the above classification of market prospects and relative competitiveness, business units can be classified into nine categories, as shown in Table 1.1. Operators in regions 1 and 4 are more competitive and have better market prospects. Priority should be given to developing these operators to ensure that they have access to sufficient resources to maintain their favourable market position. The operating units in Region 2, although with better market prospects, are not sufficiently utilized by enterprises—these operating units are not competitive enough. More resources should be allocated to these operations to improve their competitiveness. Operators in region 3 have good market prospects but are weakly competitive. These units should be treated differently depending on the situation: the most promising should be developed rapidly, while the rest need to be phased out, due to the limited resources of the enterprise. Operators in Region 5 generally have 2–4 strong competitors in the market. Sufficient resources should be allocated to these operations to allow them to grow as the market develops. Operators in regions 6 and 8 are less attractive and less competitive, or have some competitive capacity (the enterprise has invested in these operations and developed some production capacity) but are less attractive in the market. These units should be slowly abandoned so that the recovered capital can be invested in more profitable units. Operators in Region 7 are more competitive but their market prospects are not promising. These operators should not be developed per se, but their greater competitiveness could be used to provide financial support to other fast-growing operators. Table 1.1 Policy guidance matrix

Weak market outlook

Middle market outlook

Strong market outlook

Strong competitive

7

4

1

Middle competitive

8

5

2

Weak competitive

9

6

3

14

1

Decision-Making

Operators in Region 9 have poor market prospects and are less competitive. These units should be abandoned as soon as possible, and funds should be withdrawn and transferred to more favourable units.

Activity Schema Generation Method (1) 5W2H method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Why, What, Who, When, Where, How, How much (how to evaluate). (2) Brainstorming method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Invite a certain number of experts to judge the future development trend and status of the predicted objects. Through thinking resonance, the combination effect is produced, and obvious results can be obtained in a short time. The following are four principles of brainstorming method. Do not make any comments on other people’s suggestions. The more suggestions, the better. The more novel and extraordinary the idea, the better. Necessary improvements and additions can be made. The selection of experts and the careful organization of the meeting are significant. Generally speaking, the size of the expert group is best to be 10–15 people, and the meeting time is best to be 40–60 min. (3) Delphi method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Depending on the experts to express their own opinions back to back, the management team carries out the statistical processing and the information feedback of the experts’ opinions. After several rounds of the circulation, the scattered opinions are gradually unified, and finally the higher prediction accuracy is achieved. The deficiency of the method is that the time is longer and the cost is higher. (4) Forced association method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Establishing a relationship between irrelevant views and goals is the basis of this approach. One goal is fixed, others can be selected completely randomly or from the list. And participants should find as many ways as possible to link the fixed goal with randomly selected goals. The compulsion of connections leads to many new methods.

1.2 Basic Methods

15

(5) Nominal panel technology (Sanduo et al., 2018) In collective decision-making, nominal group techniques can be used if the nature of the problem is not fully understood and there are serious disagreements. Under this technology, the members of the group are not discussed or negotiated together, so that the group is only nominal. The nominal group can effectively stimulate individual creativity and imagination. Under this technology, managers first gather knowledgeable people, then tell them the key contents of the problems to be solved, and ask them to think independently to write down their options and opinions as much as possible. Afterwards, let them state their plans and opinions one by one. On that basis, the members of the group vote on all the proposed alternatives. According to the result of the vote, the alternative with the largest number of people in favor is the preferred one. Of course, managers still have the right to determine whether to accept or reject the proposal in the end.

Methodology for Evaluation of Programs of Activities (1) Quantitative and qualitative evaluation methods (Key teaching materials for Marxist theoretical research & construction projects, 2019) Quantitative indicators are more specific and intuitive and can usually be expressed in terms of monetary amounts, quantities produced and sold, completion ratios, stages of completion, etc. Quantitative indicators have many advantages, such as the possibility of setting clear evaluation criteria, the possibility of calculating the actual value of the indicator when measuring actual performance, and the fact that the quantitative presentation gives a direct and clear impression of the evaluation results. However, not all factors that reflect the level of the programme can be quantified, so qualitative indicators need to be designed to reflect these factors. The selection of evaluation indicators follows the principle of combining quantitative and qualitative indicators. (2) Financial and non-financial evaluation methods (Key teaching materials for Marxist theoretical research & construction projects, 2019) Traditional financial evaluations have focused mostly on financial indicators that can be measured in monetary units. However, in many cases non-financial indicators are becoming increasingly important. For example, indicators such as product quality, technological progress, production efficiency and market share are also critical to the comprehensiveness and accuracy of the final choice when evaluating an enterprise’s operational options.

16

1

Decision-Making

(3) Dynamic versus static evaluation methods (Key teaching materials for Marxist theoretical research & construction projects, 2019) The system of evaluation indicators for decision-making should be relatively stable in terms of the content of the indicators, the number of indicators and the composition of the system. As the business environment changes, the decision evaluation system should also be changed accordingly. Therefore, the performance evaluation system also has obvious dynamic characteristics. (4) Marginal analysis method (Koontz & Weihrich, 2014) In evaluating the alternatives, marginal analysis (MARGINAL ANALYSIS) can be used to compare the change in marginal revenue and marginal cost due to increased output. As basic economics tells, this goal is achievable when marginal revenue equals marginal cost, provided that the goal of the firm is determined to be profit maximization. That is, if the marginal revenue from increased production is greater than the marginal cost, then the more is produced, the greater the profit. However, in the case where the marginal cost from increased production is greater than the marginal revenue, it may be possible to make a larger profit by reducing production. (5) Cost-benefit analysis method (Koontz & Weihrich, 2014) The cost–benefit analysis approach, is a modification or variation of the traditional marginal analysis approach. The cost–benefit analysis approach seeks the optimal ratio of costs to benefits, i.e., to find ways to achieve objectives at the least cost, or to obtain the most value for a given cost base.

Methodology for Selecting Programs of Activities (1) Decision tree method (Key teaching materials for Marxist theoretical research & construction projects, 2019) The decision tree method is a method of making decisions by using a tree diagram to describe the benefits of various scenarios in different situations (or states of nature) and calculating the expected benefits of each scenario accordingly. A rectangular node in a tree diagram is called a decision point, and a number of branches leading from the decision point represent a number of options and are called option branches. Circular nodes are called state points, and a number of branches leading from the state points represent a number of states of nature, called state branches. There are two natural states in the diagram: well-sold and poorly-sold, and the number following the natural state indicates the probability of that natural state occurring. At the end of the state branch are the gains or losses of the various scenarios in the different states of nature. From this, the expected returns of the various scenarios can be calculated.

1.2 Basic Methods

17

(2) Linear programming (Key teaching materials for Marxist theoretical research & construction projects, 2019) Linear programming is a method of solving for the maximum or minimum of a linear objective function subject to the constraints of some linear equation or inequality. The steps in using linear programming to build a mathematical model are. (1) Identify the variables that affect the size of the objective and list the equation for the objective function. (2) Identify the constraints to achieving the objectives. (3) Find the feasible solution that makes the objective function optimal, i.e., the optimal solution of this linear programming. (3) Cost-volume-benefit analysis (Sanduo et al., 2018) Volume cost benefit analysis, also known as capital preservation analysis or breakeven analysis, is a method that provides a basis for decision making by examining the relationship between production (or sales volume), cost and profit, and the law of change in profit and loss. In applying the cost–benefit analysis, the key is to find out the output of the enterprise when it does not make a profit or a loss (called the capital preservation output or break-even output, when the total revenue of the enterprise equals the total cost). There are two methods of finding the capital preservation output: graphical and algebraic. (1) Graphical method. The graphical method is a method of examining the relationship between output, cost, and profit using a graph, as shown in Fig. 1.4. In applying the graphical method, it is usually assumed that neither the product price nor the unit variable cost varies with output, so that the sales revenue curve, the total variable cost curve, and the total cost curve are straight lines. (2) Algebraic method. The algebraic method is a method of expressing the relationship between output, cost and profit in algebraic terms. Assume that p represents the price per unit of product, Q represents the volume of production or sales, F represents total fixed costs, v represents variable costs per unit, π represents total profit, and c represents the contribution per unit of product (c = p–v). a. Seek capital preservation production. When the firm does not make a profit or loss, pQ = F + vQ Therefore, the capital preservation yield Q = F/(p–v) = F/c b. Seek to preserve the production of the target profit. Let the target profit be π, then pQ = F + vQ + π

18

1

Decision-Making

Fig. 1.4 Schematic diagram of the diagramming method

Therefore, the output Q for a guaranteed target profit π = (F + π)/(p–v) = (F + π)/c c. Seeking profit. π = pQ − F − vQ d. Find the margin of safety and the marginal rate of safety. Margin of safety = output from the programme − capital preservation output Margin of safety = Margin of safety/production from the programme. (4) Opportunity evaluation framework methodology (Key teaching materials for Marxist theoretical research & construction projects, 2019) The evaluation targets innovative opportunities and evaluates the value potential of entrepreneurial opportunities in eight main areas. Industry Market: (1) Market is easily identifiable and can generate sustained revenue. (2) Customers can accept the product or service and are willing to pay for it. (3) Product has high added value. (4) Product has a high impact on the market. (5) The product to be developed has a long life. (6) The project is in an emerging industry with little competition. (7) Market is large with a sales potential of $10 million to $1 billion. (8) The market growth rate is 30–50% or even higher. (9) The production capacity of existing vendors is almost completely saturated. (10) It can take the market leadership position of 20% or more within 5 years. (11) It has a cost advantage by having low-cost suppliers.

1.2 Basic Methods

19

Economic factors: (1) The time required to reach the break-even point is 1.5– 2 years. (2) The break-even point does not increase gradually. (3) The return on investment is above 25%. (4) The project does not have a high capital requirement and is able to obtain financing. (5) The annual growth rate of sales is higher than 15%. (6) There is a good cash flow that can account for 20–30% of sales. (7) A durable gross profit can be obtained, with a gross margin of 40% or more. (8) Ability to earn a durable after-tax profit, with an after-tax margin of more than 10%. (9) Low concentration of assets. (10) Modest working capital, with a gradual increase in demand. (11) Low capital requirements for research and development work. Harvesting conditions: (1) The added value from the project is of greater strategic importance. (2) Existing or predictable exit options exist. (3) The capital market environment is favorable to enable capital flows. Competitive advantages: (1) Low fixed and variable costs. (2) Higher control over costs, prices and sales. (3) Protection of ownership of patents has been obtained or can be obtained. (4) Competitors have not yet awakened and competition is weak. (5) Has patents or has some exclusivity. (6) Has well-developed network relationships and can easily obtain contracts. (7) Has outstanding key personnel and management team. Management Team: (1) The team of entrepreneurs is a combination of excellent managers. (2) Industry and technical experience is at the highest level within the industry. (3) The management team can achieve the highest level of integrity and honesty. (4) The management team knows what areas they lack knowledge in. Fatal flaw issues: There are no fatal flaw issues. Personal Criteria: (1) Personal goals are compatible with entrepreneurial activity. (2) The entrepreneur can achieve success with limited risk. (3) The entrepreneur can accept losses such as a reduced salary. (4) The entrepreneur desires to pursue entrepreneurship as a lifestyle and not just to make a lot of money. (5) The entrepreneur can tolerate appropriate risk. (6) The entrepreneur remains in good shape under stress. Strategic differences between ideal and reality: (1) Ideal matches the reality of the situation. (2) Management team is already the best. (3) Great service concept in customer service management. (4) Business started is in line with the times. (5) Technology adopted is groundbreaking and there are not many alternatives or competitors. (6) Ability to adapt flexibly and make quick trade-offs. (7) Always on the lookout for new opportunities. (8) Pricing is nearly equal to the market leader. (9) Access to sales channels or already has a ready network. (10) Ability to allow for failure. (5) The method of taking the big out of the small (Sanduo et al., 2018) Managers using this approach take a pessimistic view of the future, believing that the worst state of nature will occur in the future, and therefore, regardless of which option is adopted, only the minimum benefit from that option will be obtained. In the decision making using the smallest of the large method, the benefits of each

20

1

Decision-Making

option under different states of nature are first calculated and the smallest benefit resulting from each option, i.e., the benefit under the worst state of nature, is found, and then compared and the option with the greatest benefit or least loss under the worst state of nature is selected as the desired option. (6) The method of taking the big out of the big (Sanduo et al., 2018) Managers who use this method have an optimistic view of the future and believe that the best state of nature will occur in the future, so that the maximum benefit of that option is obtained regardless of which option is adopted. In decision making using the greater of the greater method, the benefits of each option in different states of nature are first calculated and the maximum benefit from each option, i.e., the benefit in the best state of nature, is found, and then compared and the option with the greatest benefit in the best state of nature is selected as the desired option. (7) Minimum maximum regret value method (Sanduo et al., 2018) After a manager has chosen an option, he (or she) will regret his or her choice if the state of nature that occurs in the future indicates that the benefits of other options are greater. The minimum maximum regret value method is the method that minimizes the regret value. When this method is used for decision making, the regret value of each option in each state of nature is first calculated (regret value of an option in a state of nature = maximum gain in that state of nature − gain of that option in that state of nature) and the maximum regret value of each option is found and then compared and the option with the minimum maximum regret value is selected as the desired option.

Programming Methods for Implementing Decisions (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Rolling plan method Basic idea: “near specificity, far generality”. The causes of discrepancies and problems identified during the implementation of the plan are continuously analyzed and revised and adjusted in the light of the analysis of the internal and external environment. In the course of the implementation of the plan, the long-term plan is gradually specified and made into an implementable plan, thus integrating the long-term plan with the short-term plan and even with the specific implementation plan.

1.2 Basic Methods

21

(2) Project planning techniques The work process is divided into three phases: (1) Definition of the project. The overall objective of the project is defined around the final outcome of the project. The definition of the overall objective should take into account various factors such as feasibility, concreteness, clear time frame, etc. Typically, the overall goal should be further broken down into a series of milestones in order to give the goal a more command and coordination role. (2) Action Breakdown. Since the project is nonconventional and exceptional work with tight time requirements, it is necessary to plan the project more carefully, make further decomposition of the project, and further analyze the time of each action, the resources required and the cost budget, etc., that is, to clarify when each action will be done, who will do it, how it will be done, and how much it will cost, etc. (3) Action integration. Analyze and identify the intrinsic linkages between numerous specific actions, plan them rationally, and then reintegrate the numerous actions. (3) Plan review techniques The Plan Review Technique is a planning control method developed on the basis of network theory, the core tool of which is the network diagram, i.e., a graphical representation of the relationship between the various tasks in a project. The main element of the plan review technique is that a well thought out plan is developed before an operation begins and a complete set of execution plans is developed based on the plan. The execution plan is then plotted into a network diagram using symbols such as directional lines, nodes, and numbers, and is then controlled based on the network diagram. With the help of the network diagram, each project member can see his or her critical role in the success of the project, unrealistic timelines can be identified and adjusted during the project planning phase, and all members can focus their attention and resources on the truly critical tasks. (4) Gantt chart The crosswalk on the Gantt chart corresponding to each job indicates the time required for that job, the solid part of the crosswalk indicates the actual completion of the job, and the blank part indicates the job not performed. In this way, the actual progress of work can be checked at any point in time (Fig. 1.5). (5) Input–output method (Guohua, 1998) The input–output method is a modern scientific method that uses the methods of higher mathematics to carry out a scientific analysis of the quantitative dependence between sectors of material production or between products and products, and to carry out a comprehensive balance of reproduction. It takes the final product as the

22

1

Decision-Making

Fig. 1.5 Gantt chart

goal of economic activity and determines the conditions for reaching equilibrium from the point of view of the whole economic system. Its basic principle is that the economic activity of any system consists of two main parts: inputs, which are the consumption in the production activity, and outputs, which are the results of the production activity. There is a certain quantitative relationship between inputs and outputs in production activities, and the input–output method uses this quantitative relationship to establish an input–output table, carry out a scientific analysis of the relationship between inputs and outputs based on the input–output table, and use the results of the analysis to prepare a plan and carry out a comprehensive balance. The input–output table is divided into four quadrants, with the first quadrant in the upper left corner and the horizontal rows indicating the flow of products. xij —the quantity of the product of the ith production sector invested as the jth production sector. n j=1 xij —the quantity of products invested in all production sectors by the ith production sector. n i=1 xij —the amount of all resources required for the production of the jth production sector. The second quadrant is the upper right part yi —the amount of the product of the ith production sector used for accumulation and consumption. xi —the quantity of all products produced by the ith production sector in a given period. The third quadrant is the lower left part vj —the amount spent on labour remuneration in the jth production sector. mj —the amount of net social income generated by the jth production sector.

1.2 Basic Methods

23

The third quadrant shows the initial distribution of newly created value. The fourth quadrant is used to represent the second allocation of newly created value. However, due to the complexity of this part of the picture, which needs to be further studied, it is generally omitted from the input–output tables. Such input–output tables are applicable to all sectors of the economy of all sizes. The flow of products from these sectors can be divided into three parts: first, they are retained for the use of the sector as the consumption part of production; second, they are supplied to other sectors as the consumption part of production; and third, they directly satisfy the final needs of society, including individual consumption, social consumption, reserves and exports. An example is the second sector in the horizontal row of the table. x22 for their own products for their own use. x21 , x23 , …, x2n is provided to other sectors as a production consumption component. y2 is the part of production in sector 2 that directly meets the final needs of society. So the total product produced by sector 2 (total product) x2 is the sum of all these three components. In the vertical direction, let us take the second sector as an example. x22 is the product input provided by the sector. x12 , x32 , …, xn2 are products from other sectors as inputs to this sector. These inputs are necessary for the production of the sector and are all material. In the third quadrant v2 is the reward given for human labor. All of the above can be considered costs. m2 is the remaining portion of net social income. Add up all of column 2 to form the total output of sector 2. The x in total product 2 and the x in total output are 2 equal. Therefore n j=1

Xj =

n i=1

Xi

That is, total social output equals total social product. The input–output method uses this input–output relationship for planning. The analysis of input–output tables makes it possible to determine the proportional relationships in the economic development of the national economy as a whole or of sectors and enterprises, and can serve to set reasonable prices. In addition, the analysis makes it possible to forecast the effects of a policy once it has been implemented; to prepare a long-term or medium-term plan from a systemwide perspective, and to facilitate an integrated balance, as well as to calculate the impact of a project under construction on the system as a whole. In short, the input–output approach is a practical and scientific planning method. (6) Econometric methods (Guohua, 1998) Econometrics is the use of modern mathematics and various statistical methods to describe and analyze various economic relationships. This method is of great

24

1

Decision-Making

practical value to managers in regulating economic activities, strengthening market forecasting, as well as rationalizing production planning and improving business management. Strictly speaking, the so-called econometrics is to take the doctrine of economic relations in economics as a hypothesis, apply the method of mathematical statistics, measure economic relations based on actual statistical data, and then compare the results of the measurement with the actual situation. The procedure for solving practical problems using econometric methods is as follows. (1) Factor analysis. That is, the analysis of the types of factors affecting the problem, the interrelationship between the factors and the degree of influence of each factor on the problem according to its actual situation. (2) Modeling. Based on the results of the analysis, the main factors affecting the problem are listed as independent variables, and all secondary factors are represented by a random error term. And the problem itself is taken as the dependent variable, and then a mathematical model containing some unknown parameters is built. (3) Parameter estimation. Since the model has many parameters to be determined, this is done econometrically, using statistical information. Once the parameters are estimated the correlation coefficients are calculated to check the degree of influence of the independent variable on the dependent variable. In addition, the parameters are subjected to theoretical and statistical tests, and if the results of these two are not good the reasons are analyzed, the model is modified and the third step is repeated until the model is satisfactory. (4) Practical Applications. There are three main uses of econometric models: a. Economic forecasting, i.e., predicting the future values of the dependent variable. b. Evaluating options, i.e., evaluating options in planning or decisionmaking to select the best option. c. Structural analysis, i.e., using the model to analyze the economic system in greater depth and to deepen understanding. All three uses of econometric models can be applied to planning, and they can lead to better and more scientific planning.

Methodology for Advancing the Plan (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Target management 1. Meaning of goal management It is a management method or management system that encourages members of an organization to actively participate in the setting of work goals and to exercise self-control in the performance of their work and consciously complete their work

1.2 Basic Methods

25

tasks. The theory assumes that all subordinates are able to actively participate in goal-setting and exercise self-control in its implementation. 2. Characteristics of goal management a. Participatory management. In the process of goal setting and decomposition, organizations and departments at all levels mobilize their subordinates to actively participate in goal setting and decomposition, fully express their opinions and actively discuss organizational goals and individual goals. This process is the process of full communication between the top and bottom, rather than the process of subordinates passively obeying orders and instructions. By participating in this activity, members of the organization can deepen their comprehensive and profound understanding of the environment and objectives, which is conducive to the coordination of the relationship between organizational objectives and individuals. b. Emphasis on the results of work rather than the act of work itself. The fundamental difference between goal management and other management methods is that it does not require or forcefully prescribe how subordinates should do, but assesses their work results and evaluates their work performance by using goals as the standard. Subordinates can choose the ways and methods that suit them to achieve their goals while maintaining the set objectives, thus stimulating their subjective initiative and creativity. Of course, since no uniform requirements are made for the way subordinates act, managers do not have to put their own energy into monitoring the details of employees’ behavior, and can avoid unnecessary disputes between managers and employees over the details of methods to accomplish goals. c. Emphasis on self-control of organizational members. Goal management is centred on the self-management of subordinates. Subordinates can self-evaluate the standard and progress of their work based on clear objectives, responsibilities and criteria for rewards and penalties, self-arrange work progress plans, take contingency measures and improve work efficiency according to specific situations. The manager’s supervisory workload is reduced, but it does not affect the control in the process of achieving work objectives, because subordinates can exercise self-control. d. Establishment of a systematic goal system. By mobilizing the masses to set goals for each position and department from the bottom up and the top down, goal management links the top-level goals of the organization with the grassroots goals and individual goal layers, forming a systematic integration of overall goals and local goals, organizational goals and individual goals. This allows the organization’s goals to unfold internally at every level, ultimately forming an interconnected goal system.

26

1

Decision-Making

3. The process of goal management The first phase is goal-setting and roll-out. The central task of this phase is to coordinate up and down and to set good objectives for all levels of the organization. Three specific tasks are involved. a. Research. The development of organizational goals involves researching both external and internal influences on the organization. The research on external influencing factors is used to understand the possibility of changes in the organization’s environmental factors during the planning period, and to grasp the key factors and the possible impact of these key factors on the organization. Through the research of internal factors, the main purpose is to grasp the organization’s past performance, development rate, problems in development and strengths and weaknesses. Based on the comprehensive analysis of internal and external factors, the organization’s mission is used as a guide to determine the overall goals of the organization. In the process of determining the organization’s overall objectives, it is still necessary to communicate with the grassroots organizations and employees to pool their wisdom, so that the determination of the organization’s objectives is more realistic and in line with the fundamental interests and requirements of the organization, and to lay the foundation for the further development of the overall objectives. b. Goal roll-out. Goal unfolding is the cascading of the organization’s overall objectives to each department, position and individual. The measures of implementation of the objectives at the higher level of the organization often constitute the objectives of the next level of the organization, cascading down. c. Delegation of responsibility. According to the size and difficulty of the objectives, the corresponding authority is determined in order to authorize their implementation and ensure their accomplishment. Similarly, according to the main characteristics of the objectives, the criteria for rewards and penalties are determined in advance, and the responsibilities and conditions for rewards and penalties are clearly defined to facilitate implementation. The second stage is the implementation of the objectives. Each takes measures around its own objectives, tailored to the local context and time, to ensure the successful achievement of the objectives. The following should be done during this phase. a. Advisory guidance. Since superiors do not impose hard and fast rules on how to achieve goals, managers do not have to monitor subordinate behavior against some so-called rules. However, this is not the same as managers can leave their hands alone and just wait for results. Managers should actively help their subordinates, give support in human, material, financial, technical and information aspects, and guide them to improve their efficiency as much as possible. Especially for the lack of work experience of subordinates, should give support, guidance. Of course, this kind of consultation and guidance should obtain the

1.2 Basic Methods

27

consent of subordinates, and should not forcefully interfere with the work of subordinates. b. Follow-up. Managers should also keep abreast of information such as work progress and difficulties in the implementation of objectives, and keep abreast of the operation of the entire organization, both to facilitate the consultation and guidance of subordinates and to address prevalent problems and rely on the strength of the organization to solve them. c. Coordination and balance. While there are many collaborative relationships between departments and posts, there may be fragmentation in the implementation of objectives in order to accomplish their own objectives while ignoring the objectives of other departments and posts. This requires managers to carry out the necessary coordination work in terms of people, money, materials and work progress in order to balance the development of departments and posts, thus contributing to the achievement of the overall organizational goals. The third stage is outcome evaluation. The results completed are evaluated against the objectives, and rewards and sanctions are applied. There are three main tasks. a. Evaluation. Evaluation is conducted against the results of work against predetermined target values. A combination of self-evaluation and superior evaluation is generally practiced to jointly determine the achievement or accomplishment of objectives. The evaluation process is the basis for conducting rewards and punishments, and if the evaluation is not fair and truthful, it will bring about the problem of unfairness and untruthfulness in rewards and punishments, which will lead to serious consequences of demotivating employees. b. Implementation of rewards and penalties. Based on the achievement of the objectives of each department and member and the pre-defined system of rewards and punishments, the corresponding rewards and punishments will be applied in order to motivate the advanced and spur the backward, which will be conducive to the smooth implementation of the next period of objective management. c. Summarize lessons learned. A careful summary of problems and experiences in the implementation of objectives, analysis of causes and lessons learned for future improvements. (2) PDCA cycle 1. Meaning of PDCA cycle PDCA stands for the four basic stages of plan, do, check and action. P (Planning) refers to establishing the necessary objectives and action plans to deliver results based on customer requirements and the organization’s policy. D (Implementation) refers to implementing the action plans to concretely operate and achieve the contents of the plans. C (Checking) refers to summarizing the results of implementing the plans based on the policy, objectives, and product requirements,

28

1

Decision-Making

sorting out what went right and what went wrong, clarifying the effects, identifying problems, monitoring and measuring the processes and products, and reporting the results. A (improvement) refers to the implementation and standardization of new operating procedures to prevent the recurrence of original problems or to set new improvement targets. The results of the summary inspection are processed, and successful experiences are recognized and standardized, or operating instructions are developed for future work to follow; lessons learned from failures are also summarized to avoid recurrence. Problems that are not solved should be handed over to the next PDCA cycle to be solved. 2. Steps for implementing the PDCA cycle a. Analyze the current situation and identify problems. This specifically includes identifying where the problem is, collecting and organizing data, and setting goals and measurements. b. Analyze the various causes or influences that create the problem. c. Identify where the problem lies. This process involves comparing and selecting the major, immediate influencing factors. d. Develop measures and propose action plans for the major factors of the problem. This process, in turn, involves finding possible solutions, then testing and selecting them, and finally proposing an action plan and corresponding resources. e. Implementing the action plan. This means implementing the measures according to the established plan, coordinating and following up, and paying attention to data collection. f. Evaluate the results. Based on the analysis of data, evaluate whether the results are consistent with the objectives, how effective each measure is, where there are gaps, what can be learned from it, etc., in order to confirm the standardization of measures and new operational standards. g. Standardization and further dissemination. Measures are taken to ensure long-term effectiveness, while attention is paid to documenting new rules, setting procedures and measurement methods, and thus enabling the sharing of results, the exchange of good experiences, and the conclusion of solutions that can be repeated. h. Problems that have not been solved in this cycle are raised and carried over to the next PDCA cycle. (3) Budget management Zero-based budgeting is one of the typical budgeting methods. The basic idea is that at the beginning of each budget year, all continuing activities are considered as starting from zero, and the budget is then based on zero, with the budget staff rearranging activities and the allocation of resources and income and expenditure for each department, guided by the idea of starting from scratch. Compared with traditional budget management, the advantages of zero-based budgeting are that the budget is more scientific and facilitates the allocation of funds and the control of expenditures; its disadvantages are the high workload and cost of budgeting. The essence of zero-based budgeting is a control ideology.

1.2 Basic Methods

29

Methodology for Decision Tracking and Adjustment (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Tracking and adjustment methods based on organizational decisions 1. Fish bone diagram It is a method of analysis that uncovers the root causes of problems. It is characterized by its simplicity and practicality, as well as its depth and intuitiveness. The problem or defect (i.e., the consequence) is marked outside the head of the fish. Growing fish spines on the bones of the fish with a list of possible causes of the problem by the number of chances of occurrence helps to show how the causes interact with each other. In use, the characteristics of key issues are always influenced by a number of factors that need to be identified through brainstorming and organized by interrelatedness along with the characteristic values, layered and organized, and labeled as important. This analytical approach of looking through the phenomena to the essence can be widely used in the decision making process (Fig. 1.6). 2. Radar map It is mainly applied to the evaluation of business conditions such as profitability, productivity, liquidity, safety and growth (Fig. 1.7).

Fig. 1.6 Fish bone diagram

30

1

Decision-Making

Fig. 1.7 Radar map

3. Trend graphs A statistical graph is used to present the trend of something or some information data. It is used to show the results of measurements obtained over a certain time interval. The measured data is plotted as the vertical axis and the time as the horizontal axis. The main use of trend charts is to determine if there are significant temporal patterns in various types of problems so that the causes can be investigated and thus directions for decision tracking and adjustment can be found. (2) Tracking and adjustment methods based on individual decisions 1. Mouse lab This is a research system that tracks the process of information acquisition by subjects. With the spread of computers, a study that allows the study of information acquisition by mouse movement on a computer, the mouse lab, was born, based on the assumption that the location of the mouse represents what the brain is currently processing. 2. Eye movement technology The theory is based on the eye-brain assumption that the information being acquired by the eyes and the information being processed by the brain are the

1.2 Basic Methods

31

same. Even though the eye gaze position does not necessarily change when people shift their attention, the change in gaze point and the shift in attention are coupled when processing complex information. Thus, eye-movement data can provide stable and reliable data on information acquisition for decision tracking and adjustment. 3. Decision-making window-shifting technology The researcher first presented information on the screen, in a masked manner, for M alternative options on N trait dimensions. When the subject decides to access a particular piece of information, he or she simply gazes continuously at the corresponding cell. When the eye tracker captures the gaze point, the system program will automatically remove the masking on that cell and present the information within the cell. When the subject stopped gazing at the cell, the information was re-masked. During the course of the experiment, the eye tracker continuously recorded the subject’s eye movement numbers, including gaze points, eye jumps, gaze trajectories, and pupil size. Each information unit, along with options and trait labels, served as an area of interest.

Ways to Encourage Employee Participation in Decision-Making (Guohua, 1998) (1) Democratic discussion The use of democratic discussion to decide issues means that all subordinate members participate and give full decision-making power to the group, and the supervisor follows the group’s decisions in full. However, several issues should be noted when using this approach: (1) The identity of the supervisor changes in this format; he is no longer the decision maker, but only the leader of the decision discussion; he can influence the collective by providing information, but cannot replace the collective decision. (2) The content of the discussion in this format should preferably be about matters of common interest. (3) The facilitator should be good at guiding the discussion so that it is directed to the problem to be solved, and not making irrelevant debates and avoiding the pursuit of personal goals rather than organizational goals. (4) This format should be used mainly at high levels. (2) Hearing Listening is also known as consultative management. This approach is where the leader seeks the views of the employees on issues that concern them before making a decision. The advantage of this approach is that leaders are free to communicate their views with their subordinates. It is not restricted by meeting procedures, is uninhibited, cordial, flexible, enhances mutual feelings, and avoids conflicts and

32

1

Decision-Making

contradictions of different opinions among employees. Moreover, the leader still retains the final decision making power, and this method does not diminish the formal authority and status of the leader. However, the leader who adopts this approach must be sincere and respectful of the opinions of the staff, and acknowledge that group opinions are superior to individual wisdom. If they always listen but do not take, employees will be reluctant to say more. (3) Rationalization proposals The purpose of rationalization is to encourage employees to provide suggestions to improve their work. When the suggestions provided by employees are accepted, the organization gives various material and moral rewards as required. It is highly estimated and widely adopted in Japan. However, it is also believed that this method has to be applied carefully in order to be effective. The reasons for this are: (1) Suggestions are written and face-to-face verbal communication is lacking, thus failing to stimulate the interest of all employees in providing suggestions. (2) Suggestions made by employees often focus on their own interests at the expense of the organization’s interests, thus making them much less effective. (3) Employees are often reticent to actively provide well-meaning suggestions about changes in production procedures and work methods. This is because what is good for the job is not necessarily good for them. (4) The leader of the unit in general often expresses dissatisfaction with the employee who offers his opinion, believing that too much of the employee’s opinion is tantamount to criticism of his ability and efficiency at work. (4) Cross-level participation This is a method of joint participation of lower-level executives in achieving management by having them meet to study the company’s problems and make possible recommendations. The company places no restrictions on them other than to provide information. However, all recommendations must be unanimously agreed to by those present. Responsibility for recommendations should be shared, and recommendations must be approved by supervisors before they can be implemented. The leapfrog approach, in addition to its function of providing advice, can also develop senior management talent. (5) Staff Council The staff congress is the basic form of democratic management of enterprises in China, and is the authority of the staff to participate in the decision-making and management of the enterprise and to supervise the cadres. It has the right to deliberate on the production and operation, planning and financial budget of the enterprise; to decide on the internal distribution of the enterprise, the methods of rewarding and punishing employees, important rules and regulations and issues

1.3 Management Practice Cases

33

of immediate interest to the employees; to supervise, recommend the appointment, reward, discipline or election and dismissal of cadres; and to propose any disagreement with the instructions and decisions of higher authorities.

1.3

Management Practice Cases

Case 1 After decades of development, a company has become a global technology group integrating five business segments, including smart home, robotics and automation, digital innovation, etc. It is one of the leading companies in the industry, with several R&D centers and production bases around the world and users in more than 200 countries and regions. However, around 2010, due to the rapid development and long-term rough business model, the company’s operating income and profit margin continued to decline, operating cash flow was negative for two consecutive years, the core competitiveness of the product was insufficient, and the selling price and revenue were even beaten by the brands ranked below it. Faced with such a situation, the chairman of the company decided with the courage to break his arm to fully promote the group to carry out a strategic transformation to a quality-oriented business model and to lean management transformation. The company fully realized that relying on the stimulating effect of short-term policies or excessive incentives at the sales end could not really maintain the sustainable development of the enterprise, and that products were its foundation. Therefore, in response to the problem of low-level competition in products at that time, the company evaluated all kinds of products, decisively abandoned low-end and low-margin categories, and focused its efforts on developing home appliances, cutting a number of production lines unrelated to home appliances. At the same time, it closed and sold more than ten industrial parks across the country, invested almost all the funds obtained in R&D innovation, hired a large number of scientists and engineers at home and abroad, purchased the most advanced equipment and software, strengthened basic and cutting-edge technology research, increased investment in automation and information technology, and set up several R&D centers one after another around the world. At the beginning of the implementation of this strategic decision, the company’s turnover dropped dramatically by 1/3, its market share plummeted, and it was not understood by the outside world that the chairman’s strategic direction was wrong. However, after three years of persistence, the company’s financial data strongly proved the importance of the reform and the correctness of the decision. Not only did the revenue return to the pre-reform level, but the profit margin even increased significantly, and the net profit exceeded RMB 10 billion for the first time, and the annual net profit growth rate had even exceeded 20% yearon-year. In the past five years, the company has applied for more than 30,000 patents in the field of home appliances alone, ranking among the top in the global

34

1

Decision-Making

home appliance industry, establishing a strong competitive barrier, a technological barrier, and laying a solid foundation for the company’s subsequent development into a multi-business, globalized technology group. Questions: 1. What is decision making? Please briefly describe your understanding. 2. What methods did the company use to implement its strategic transformation?

Case 2 (Midea’s Official Website) In 1968, the founder of Company A started his business with 23 residents of Shunde Beinuma, raising 5,000 yuan to produce plastic bottle caps, glass bottle caps and leather balls under the street office. 1980 saw the production of electric fans, 1985 saw the production of air conditioners, and 1992 saw the conversion of the company. 2010’s operating revenue exceeded 100 billion yuan. 2016, Company A’s operating revenue 159.8 billion yuan, net profit 15.9 billion yuan, with about 130,000 employees, becoming the first Chinese home appliance industry brand among the world’s top 500. the operating revenue in the first half of 2017 alone exceeded 120 billion yuan, and the annual operating revenue is expected to exceed 230 billion yuan. From 2011 to 2017, the sales revenue of Company A has more than doubled, what changes have occurred behind this? On July 22, 2011, Company A issued the Decision on Accelerating the Promotion of the Group’s Strategic Transformation to promote the transformation of its operation from focusing on quantity to focusing on quality, from low value-added to high value-added, and from sloppy management to lean management. It realizes the transformation from the scale oriented crude growth mode to the core product quality improvement, customer-centric and profit-oriented internal growth mode. Officially open the curtain of transformation. (1) Product leadership Company A first focused on supply-side reform, reducing the original 23,000plus product varieties to more than 2,000, closing 16 industrial parks nationwide, returning more than 7,000 acres of land, and investing a large amount of money in R&D. In 2014, the 400-acre old factory building was converted into a global innovation center with a five-year investment of 10 billion yuan for product R&D. On January 22, 2015, Company A’s inverter energy-saving technology won the National Science and Technology Progress Award. Company A’s technology transformation refers to the continuous “addition” of technology investment, including strengthening basic technology and cutting-edge technology research, increasing investment in human resources, increasing investment in automation and information technology, and establishing 11 R&D centers around the world. In the

1.3 Management Practice Cases

35

past five years, Company A has applied for 32,000 patents, ranking first among global home appliance companies, and in 2017, after successfully acquiring several overseas companies, Company A gradually transformed from a Chinese home appliance company to a global technology group. (2) Efficiency driven Company A had net profit after tax of $6.6 billion in 2011, $13.6 billion in 2015, $15.9 billion in 2016, and is expected to exceed $20 billion in 2017. Over the past four years, net cash flow has been 1.5 times greater than net profit. per capita efficiency increased 2.2 times in 2015 compared to 2011. Manufacturing efficiency has improved by 15% per year and the number of employees has been reduced from 196,000 in 2011 to 93,000 (monthly average) in 2015. Among the assessment indicators for the past five years is a hard indicator: labor productivity must grow faster than labor costs. In terms of cash cycle, in 2011 it was 30 days, in 2015 it was 6 days and in the first half of 2016 it was 0 days. That is, the cycle of taking money for raw materials, producing the product, to selling the product and recovering the cash takes up almost no additional capital space. Another indicator of efficiency assessment—the labor cost rate, i.e. the ratio of the cost of each employee’s salary, bonus and benefits to sales revenue, was 11.7% in 2011 and dropped to 6.7% in 2015. In terms of manufacturing efficiency, we have closed more than a dozen production bases in the past, and moved many of the bases that were moved to overseas back to Shunde. After returning 7,000 mu of land to the government, Company A now has 900,000 square meters of unused factory space. There is still a lot of room for efficiency improvement. (3) Global management Company A initially chose the OEM approach to enter the international market, but later gradually developed overseas markets through acquisitions, joint ventures and holdings. 2011, Company A chose a joint venture with a U.S. company to jointly develop the Latin American market, quickly making Company A the largest manufacturer of home air conditioners in the Latin American market; in 2012, Company A acquired a 32.5% stake in an Egyptian company for $57.48 million, gaining the company’s brand, market and channel advantages and quickly taking a dominant position in the Egyptian market. In 2012, Company A acquired 32.5% of the shares of an Egyptian company for US$57.48 million, gaining the brand, market and channel advantages of the company and quickly taking a dominant position in the Egyptian market. In June 2016, Company A acquired an 80.1% equity interest in a Japanese electrical company, obtaining a 40-year global license of the Japanese brand and more than 50,000 patented technologies. In the same year, operating income increased by RMB7,524 million and net profit increased by RMB32 million. In the first half of 2016, Company A acquired 80% of a famous central air conditioning enterprise

36

1

Decision-Making

company in Italy to further increase its share in the European central air conditioning market and obtain a complete central air conditioning production line as well as advanced technology management experience. In 2017, Company A continued to maintain the pace of internationalization, successively acquiring a number of technology companies and establishing joint ventures, and the proportion of overseas business continued to climb. 43.5% of Company A’s overseas sales in 2016 and will exceed 65% in 2017. Questions: 1. In 2011, why did Company A make a strategic transformation? 2. How has Company A implemented its transformation strategy since 2011?

Case 3 (Nanjing Korun Company) Founded in 2000, Company A is a first-class industrial media total solution provider in China. As of the end of 2016, A provides energy-saving and environment-friendly complete solutions for more than 3,000 industrial customers worldwide in heat treatment and cooling, metal processing and forming, surface treatment, cleaning and rust prevention in the fields of aerospace, automotive, wind power, shipping, petroleum, home appliances, coal mining machinery, iron and steel metallurgy and other industries. The key to Company A’s continuous breakthrough in development bottlenecks from nothing to something, from something to something, lies in its holding the “bull’s nose” of enterprise transformation and development—three keys of technological innovation, model innovation and talent training. Technological innovation is the key to cultivate the core competitiveness of enterprises. First, to establish a high-level R&D platform. company A is committed to the key technology research of advanced process materials and its application, the first enterprise research institute model in the industry, the full integration of basic research, product development, application technology, experimental testing and other functions, the establishment of industrial media research institute. Second, actively undertake major scientific research projects. Actively strive to host and participate in the provincial and ministerial level and above major issues and industrialization projects, exercise the R&D team, to enhance R&D capabilities. Third, strengthen the cooperation between industry, academia and research. Establish cooperation with the University of Science and Technology of China, Tsinghua University, Nanjing University and other scientific research institutions to achieve the complementary advantages of research and development resources and sharing. Model innovation is the key for enterprises to climb up to high value-added segments. Firstly, we build an intelligent collaborative R&D system, create a product R&D process of “project creation—product design and development—product application—product production”, and build an instant communication platform for enterprises and customers through online video conferencing system to enhance market development and remote collaborative work efficiency. Through online video conference system, we can build an instant communication platform for

References

37

enterprises and customers to strengthen the efficiency of market development and remote collaborative work. Second, innovative business model. In line with the development trend of manufacturing services, we strengthen the service elements of logistics and distribution, supply chain management and market docking at the back end, and change from simply providing products for customers to providing total solutions for industrial media products to enhance market competitiveness. Third, the implementation of customized production mode. Customer demandoriented, optimize the industrial process, targeted industrial media products, and promote the transformation of product manufacturing to mass customization mode. Talent training is the key to achieve long-term healthy development of enterprises. First, to build a high-level talent team, A company has built “Jiangsu provincial engineering technology center” and “national post-Bo scientific research workstation”, “external attraction and internal training” to build excellent talent team. Second, the implementation of differentiated talent incentive policy. By providing special funds for the introduction of high-end talents, interest-free loans for house purchase and other policies to attract returnees and high-level domestic talents. Focus on “external attraction” and “internal training” at the same time, promote the professional skills of talents at different levels, actively carry out skill competitions, and cultivate senior blue-collar engineers. Third, to create a positive, comfortable and harmonious environment for the growth of talents. The company and talents will cooperate in the growth, mature in the cooperation and integrate in the maturity, so as to show the value of talents and team strength. Questions: 1. What is a market segment? What is a hidden champion? 2. Why are technology, model and talent, the three keys to the continuous development of the company?

References Guohua, X., De, Z., & Ping, Z. (1998). Management. Koontz, H., & Weihrich, M. (2014). Management. Essentials (9th ed.). Key teaching materials for Marxist theoretical research and construction projects. (2019). Management. Robbins, S. P., & Kurt, M. (2017). Management (13th ed.). Sanduo, Z., & Chuanming, C. (Eds.), (2018). Prepared based on information provided by Nanjing Korun Company. The case is taken from Management (5th ed.). Sanduo, Z., Chuanming, C., Zixin, L., & Liangding, J. (2018). Management——Principles and methods (7th ed.). Sanduo, Z., et al. (2018). Written according to Midea’s official website (http://www.midea.com/er/ about_midea/history.shtml) and related reports. The case is taken from “Management: Principles and methods” (7th ed.). Yiqun, X. (2019). Management (5th ed.).

2

Organization

2.1

Basic Concepts

Organization An organization is an expression of the associative relationships between people established to achieve its goals. The basic concept of organization is also expressed in several different forms as follows. (1) An organization is a group of people who come together for a common purpose, and in order for each person to provide the contribution required by the target activity in an appropriate manner, there is first a division of labour and then a need to coordinate their divided labour (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) Organization means organizing and designing the work of employees to achieve organizational goals (Robbins & Kurt, 2017) (3) The organization is designed according to the requirements of the job and the characteristics of the personnel, and through delegation and division of labour, the right people are placed in the right positions, and the duties and interrelationships of the members are defined in a system so that the whole organization functions in a coordinated manner (Sanduo et al., 2018). (4) Organization is the process of designing and maintaining a rational division of labour and collaboration to effectively achieve organizational goals (Yiqun, 2019) (5) Organization is the creation of a carefully planned role structure that fits the configuration of employees within the enterprise (Koontz & Weihrich, 2014). (6) Organization refers, on the one hand, to the structure set up to implement the programme, which largely determines whether the programme can be

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_2

39

40

2

Organization

achieved, and, on the other hand, to the organizational processes undertaken to achieve the objectives of the programme (Guohua, 1998).

Organizational Culture Organizational culture is an organization’s own common group consciousness developed through long-term practice. The basic concept of organizational culture is also expressed in several different forms, as follows. (1) Organizational culture refers to the cultural phenomenon that is characteristic of an organization and is a general term for the group consciousness of values, ways of thinking, psychological expectations, codes of conduct, team affiliation and work styles that are commonly accepted and followed by all members of the organization over a long period of time (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) Organizational culture refers to the shared values, principles, traditions and ways of doing things that distinguish different organizations from each other by the actions of their members (Robbins & Kurt, 2017). (3) Organizational culture is the sum of values, group consciousness, work style, behavioural norms and ways of thinking that are characteristic of the organization and that have been developed over a long period of time and are generally recognized and followed by its members (Sanduo et al., 2018). (4) Organizational culture refers to the increasingly stable and unique values (cultural concepts) gradually formed and developed in the long-term development process of the organization in a certain economic and social cultural background, as well as the code of conduct, moral code, group consciousness, customs and habits formed by this core; organizational culture is actually the common conceptual system of the organization, a common understanding that exists among the members of the organization. It is a common understanding (Yiqun, 2019). (5) Organizational culture is the general manner of behaviour, shared beliefs and values that are common to its members (Koontz & Weihrich, 2014). (6) Organizational culture is the highest goals, value standards, basic beliefs and behavioral norms that all employees of an enterprise cultivate and follow in their long-term production and operation activities, and it is a composite of enterprise conceptual, material and institutional culture (Guohua, 1998).

2.2 Basic Methodology

2.2

41

Basic Methodology

Approach to Organizational Integration (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Integration of formal and informal organizations Focus on the role of informal organizations: To meet the needs of organizational members; to facilitate intra-organizational communication; to increase tacit understanding and cohesion among organizational members; and to facilitate the orderly conduct of organizational activities. Reduce the negative impact of informal organizations: Increase participation in decision-making to avoid conflicting goals; enhance communication and information sharing to avoid the spread of gossip; provide proper guidance to informal organizations; encourage managers at all levels to participate in informal organizations and establish authority; and create an organizational culture and climate conducive to integration. (2) Hierarchical integration A separation of powers approach is usually used, whereby senior managers delegate procedural decision-making matters to the heads of subordinate agencies and concentrate on non-procedural decisions and exceptions themselves. There are three types of authority. (1) Line authority: The authority of a manager to directly direct the work of subordinates, extending from the top of the organization to the bottom, forming a linear chain of command. (2) Staff authority: Certain specific powers held by staff members in an organization that are complementary to line authority. (3) Functional authority: In addition to taking advice from staff members, line managers can delegate some of their authority to other individuals or functional departments when necessary, and the delegated party can be a subordinate under the manager’s direct supervision or a department outside their own jurisdiction. Delegation of authority is an integral part of the system of separation of powers. Delegation of authority means the organization of work tasks; transfer of authority; and clarification of responsibilities. (3) Integration of line and staff officers A line manager is a manager located in a specific position in the vertical hierarchy of an organization with line authority. Staff officers are managers who provide advice and counsel to managers at a particular level from a professional perspective.

42

2

Organization

Straight line and staff integration approach (1) Be careful with the setting of staff officers Improve the overall capacity of line managers and control the size of staff officers appropriately. Emphasize the adaptability of staff officers to the job. Emphasize the source of staff members. Staff members may come from within or outside the organization. (2) Clarify the relationship of responsibilities Clarify the relationship between the respective responsibilities of line and staff officers, with line decision making, command and execution, and staff officers thinking, planning and advising. Improve the communication mechanism between line managers and staff officers. Line managers should fully listen to the advice of staff members before making decisions and provide timely feedback on the adoption of the situation and the reasons for not adopting it. (3) Delegation of the necessary functional authority to staff officers In order to facilitate the role of staff officers and to overcome the influence of irrational factors of line managers, the organization may delegate some functional authority to staff officers when necessary.

Leader’s Approach to Team Building (Guohua, 1998) (1) Meet the members Before the team activity officially begins, meet informally with each member to exchange backgrounds and feelings about the team, and to find out if the member’s motivations contribute to the team’s goals. (2) Defining the goals of the team State your expectations for the team and check the timeline, budget and constraints. Engage each member in a pre-set agenda discussion to get a clear understanding of the team’s mission and goals. (2) Clarification of roles Make it clear to everyone what the team expects of them.

2.2 Basic Methodology

43

(4) Establishment of standards Encourage teams to develop standards for working together, such as full participation in all meetings, valuing commitment, allowing for disagreements, maintaining confidentiality, etc. (5) Depiction of the plan Development goals and action plans, including assignments and deadlines for completion, etc. (6) Encouraging questions Disagreements are natural, and leaders should show that they encourage questioning of the status quo and acceptance of different opinions. (7) Maintenance of balance Effective teams have a good balance of members with different styles. Balance does not mean that each style is utilized equally across the board, but rather that each style is appropriately referenced when necessary. (8) Sharing the glory It is up to the leader to decide how much each member contributes and how well the team achieves. In addition, leaders are responsible for sharing their joy with the outside world, especially senior executives and editors of internal company communications. (9) Emphasis on participation Involve every member in the work of the team and have everyone assigned to tasks. For important decisions, try to reach consensus. (10) Celebration of achievements Celebrate the achievements of each stage with other important events. (11) Assessing how effective the team is Leaders should be responsible for facilitating at least an annual self-assessment of the team’s strengths and progress, as well as the timeliness and effectiveness of tasks, satisfaction with the quality of work, and necessary changes.

44

2

Organization

Methods to Prevent Tissue Ageing (Guohua, 1998) (1) Periodic review Putting organizational restructuring and streamlining on the agenda and doing it regularly. In many enterprises in the United States and Japan, organizational structures are reviewed and adjusted once a year, including the elimination of functional departments and the merger and reorganization of business units. In some enterprises in the United States, the “sunset law” is applied, whereby each organization, like the sun rising and setting, reports its reasons for continued existence at the beginning of each year, and the leadership reviews them individually to decide whether they should continue to exist and whether they should be abolished, merged or reorganized. (2) Breaking the rules In order to break through the rigidity of the organization and its bureaucratic impediments, there are a number of breakthroughs that can be used to force the organization to rejuvenate itself. In China, it is common to “work on the spot”, where the heads of the relevant departments are brought together to analyse the problem and to discuss and resolve it, so that matters that have been pending for a long time can be resolved; it is also possible to simplify the procedures; to break through old rules and regulations, and to put in place cumbersome regulations that have already been in place before they are broken. (3) Walk-around management and transgressional recommendations In order to overcome the ageing and bureaucratization of the organization, and to make the managers understand the situation, in Europe, America and Japan, there is a popular way of “mobile management”, which stipulates that the managers of the authorities should not rely only on meetings and documents, but should go to the front line, go to the scene to investigate and study, understand the real situation, modify and improve the policy, and can also be in the They can also provide face-to-face guidance on site. Some famous entrepreneurs have personally travelled around the world to rejuvenate multinational companies. Other famous companies have an “open-door policy” and encourage suggestions at different levels. The door of the president’s office is always open to all employees, and ordinary employees are encouraged to reflect problems, make suggestions and participate in management. All these measures have yielded good results. (4) Parallel movement of personnel A person working in one department for a long time and doing one job for a long time tends to cause rigidity in thinking and behaviour, as well as the formation of informal groups, which is not conducive to organizational change. The introduction

2.2 Basic Methodology

45

of a system of equal transfer of managers and administrators not only prevents and overcomes this phenomenon, but also facilitates the development of versatile and overall management personnel. (5) Flexible employment methods Using a combination of employment methods such as full-time, two days a week, two hours a day, etc., allows the organization to increase its flexibility and prevents it from aging. The department store industry in Japan currently has more than 100 types of employment practices to suit different business environments. (6) Formation of team organizations Forming a number of lean team organizations based on the needs of the job is an effective way to rejuvenate the organization.

Approach to Implementing Organizational Change (Guohua, 1998) (1) Command, participatory and decentralized change according to the involvement of subordinates in the decision and degree of change Directive means that the leader makes the decision to change and issues orders from the top down, stating what changes are to be made and the responsibilities of subordinates in implementing those changes. Participatory means involving subordinates to varying degrees in discussing, analyzing and selecting options for change, drawing on the wisdom of the crowd. Decentralized means that decisionmaking authority is delegated to subordinates, who discuss their own problems, come up with their own solutions to them and are ultimately responsible for them. (2) Classification of planned and improved change according to the depth of problem solving by change Planned change refers to a systematic and extensive study of the problem, the overall situation, planning, and then a planned and systematic implementation, the change and policies, work systems, management style improvements, personnel training at the same time, so that workers have adequate mental preparation. Modified change refers to the problem of symptomatic treatment, small changes, repair, which is often used in the organization of a change approach, the advantage is to meet the actual needs, local resistance to change is less, more secure, the disadvantage is the lack of overall and long-term planning, headache, foot, with random and expedient nature.

46

2

Organization

(3) Breakthrough and incremental changes according to the pace at which the reform is carried out The breakthrough approach is one in which the leader, with the greatest determination and vigour, demands that changes of a major nature be completed in one step and on a regular basis. While this approach has the potential to resolve problems in the short term, it creates greater resistance to change due to rushed, poorly thought out or low morale due to people’s attitudes. The incremental approach is to use enough time to advance the change gradually in steps to reach the goal of change without realizing it. This approach is naturally less resistant and easier to accept, but it can also easily make change protracted and less effective. Generally speaking, the attitude of subordinates is crucial to the implementation and success of change in major issues, and we should maximize support and cooperation and minimize resistance, so that sudden changes and orders are not used except in emergencies and with certainty. Change. However, this conclusion is not absolute.

Ways to Reduce Resistance to Organizational Change (Guohua, 1998) (1) Persuasive advocacy to make the motivation and purpose of the change and its potential performance and benefits properly understood by a wider audience. To give people a proper understanding of the intent of the change. (2) Involvement of relevant personnel in the design of the change programme. When the issue of change is important, complex and wide-ranging, and the change agent alone is not sure and capable of developing a change programme, it is important to involve the relevant departments and personnel in the design of the change programme so as to draw on their collective wisdom and make the change practicable and effective. (3) Careful analysis of the advantages and disadvantages of change, weighing the pros and cons, and proper handling of new problems that may arise from change in advance, in order to gain the sympathy and support of the majority of people for reform. In general, only changes that have the sympathy and support of the majority of the people will be successful. (4) Adequate consultation and coordination, when the programme of change may affect the interests of certain sectors and groups, prior consultation and coordination should be sought with the parties concerned, so that the programme of change can take into account the interests of all parties as far as possible. Do not pursue the ideal reform programme; a realistic programme of change is one that is acceptable to the majority of people. (5) Choose the right approach and strategy for change, avoid haste, handle the relationship between change and stability well, do not make reforms without stopping, and consolidate the results of one reform before starting another.

2.2 Basic Methodology

47

(6) When implementing change, it is important to collect timely information on indicators that can measure the effects of change. Some systems of information indicators are available to measure the effects of change, while others require specific indicators to be designed separately. Based on the information collected, it is important to assess and determine the trend of change effectiveness throughout the reform period, because the effectiveness of a change cannot be measured only at a single point in time; some changes have a significant effect at the beginning but quickly return to normal, while others have no effect or even a negative effect at the beginning but gradually increase later. Actual results should be compared with planned results, and corrective action should be taken in a timely manner for deviations.

Systematic Approach to Human Resources Management (Koontz & Weihrich, 2014) Figure 2.1 shows the relationship of the people management function to the overall management system. Specifically, the corporate plan becomes the basis for the organizational plan to ensure that corporate objectives are met. The current and future organizational structure determines the number and type of managers required. Based on the management talent pool, the needs of managers can be compared with the current staffing situation. On the basis of this analysis, external and internal human resources are used in the process of recruitment, selection, placement, promotion and transfer of personnel. Other key aspects of people management include appraisal, career strategies and training and development of managers. As shown in Fig. 2.1, people management affects the leadership and control chain. For example, well-trained managers will create an environment where people work together in different shifts to accomplish the goals of the business while also achieving their personal goals. In other words, proper staffing arrangements will facilitate leadership. Similarly, the selection of qualified managers will affect control, for example, by preventing many small deviations from becoming major problems. People management requires an open systems approach. It is true that people management takes place within the enterprise, but it is also closely linked to the external environment. Therefore, internal factors of the enterprise, such as personnel policies, organizational climate and compensation systems, must be taken into account. Obviously, without proper compensation, it is impossible to attract and retain good managers. The external environment cannot be ignored either; hightech jobs require well-trained, well-educated and technically skilled managers. If managers do not meet these requirements, the rate of growth of the enterprise will be greatly affected.

48

2

Organization

Fig. 2.1 Relationship of the people management function to the overall management system

(1) Factors affecting the number and type of managers The number of managers needed in an enterprise depends not only on the size of the enterprise, but also on the complexity of the organizational structure, plans for expansion and the frequency of managerial turnover. There is no definite proportional relationship between the number of managers and the number of employees and, regardless of the size of the business operation, it is possible to change the structure of the company by expanding or reducing the scope of authority, thus increasing or decreasing the number of managers in a given situation. While the need to determine the number of managers required is highlighted here, the number of personnel is only one aspect of the overall issue and, specifically, the conditions of service for each position must be clarified in order to select the most qualified managers. (2) Identification of existing managerial resources: Management talent pool Companies (and also most non-business units) usually have a stockpile of raw materials and manufactured goods on hand to carry out their business activities, yet they rarely have a stockpile of available human resources, especially managers, even though competent managers are critical to the success or failure of

2.2 Basic Methodology

49

the business. Companies can keep track of the potential of their management pool by using a management talent pool map (also known as a management turnover map), which is simply an organizational chart of a unit that shows the positions of managers and the possible paths of advancement for each incumbent. (3) Analysis of managers’ needs: External and internal sources of information for the enterprise As shown in Fig. 2.1, the demand for managers is determined by the growth plans of the enterprise and, more specifically, by an analysis of the number of managers required and the pool of managerial talent available. In addition to this, there are a number of other factors, both internal and external, that affect the supply and demand for managers. External factors include economic, technological, social, political and legal factors. For example, economic growth results in an increased need for products, which requires an increase in the workforce, thus also increasing the demand for managers. At the same time, competitors will expand and hire additional people from the same workforce, which reduces the supply of managers. Firms must also consider trends in the labor market, demographics, workforce knowledge and skills, and attitudes toward the firm that make up the structure of the community. Firms can obtain information on long-term labour market trends from several different sources. Four supply and demand scenarios were formed based on personnel needs and availability, each with a different emphasis on personnel courses of action, and these are illustrated in the matrix in Fig. 2.2.

Fig. 2.2 Personnel action plan based on the supply and demand of managers within the enterprise

50

2

Organization

One should not look at the supply and demand for labour only from the perspective of national or even local markets. In fact, in the global market, the imbalance between demand and supply is increasing. In the past, labour was a very constant factor in production, but in some developing countries and regions, such as Taiwan, China, South Korea, Poland and Hungary, rapid economic growth and increasing demand for qualified labour and management personnel have led to shortages of motivation. In addition, the educational attainment of the global workforce is changing as the proportion of university graduates increases in developing countries such as China and Brazil. (4) Other important aspects of the people systems approach Once the need for managers has been identified, it may be necessary to “recruit” candidates, i.e. to attract qualified candidates to fill organizational vacancies. On this basis, managers or potential managers are selected, i.e. the process of “selecting” the most suitable managers from among the candidates, with the aim of “placing” them in positions where they can build on their strengths, overcome their weaknesses through experience or train them. The aim is to “place” people in positions where they can develop their strengths, overcome their weaknesses through experience or train to improve their skills. Finally, the placement of managers in a new position within the enterprise usually implies “promotion”, generally by assigning them to additional responsibilities. This is because recruitment, selection, placement and promotion is a complex process.

Ways and Means of Selecting and Recruiting Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Ways and means of selection and recruitment within the organization (2) Promotion of people within the organization Promoting internal members is the best way to fill vacancies within an organization. Not only does it place members with managerial talent in more appropriate positions, but more importantly, it can have a motivating effect on the motivation of the organization’s members. For internal promotion to be successful, the following must be done: Firstly, the members of the organization must be tested for eligibility for promotion and candidates must be identified. This is followed by testing the candidates for promotion and measuring their competencies, which must be done in such a way that each candidate for promotion is comparable on a comprehensive basis. Finally, candidates for promotion are identified. (2) Transfer of positions within the organization The organization moves members of the organization from their previous positions to work in vacant positions at the same level.

2.2 Basic Methodology

51

(3) Internal selection and recruitment methods Internal selection and recruitment is done mainly through job selection posters, verbal dissemination, selection from the organization’s personnel records, and merit-based promotion scales; of which job selection posters are commonly used. (2) Organization of external staff recruitment (3) Ways of external recruitment Employment agencies and job exchange market, headhunters, campus selection, open selection. (2) Methods of external recruitment Job advertisements: Use newspapers, magazines, television and radio to post job offers. Online recruitment: Recruitment information is disseminated to the public via computer networks. Information can be transmitted quickly and in a timely manner; it is also extremely widespread (it can reach abroad). (3) Procedures for external recruitment The process of external recruitment is usually divided into four stages: Preparation and planning, promotion and application, comprehensive assessment and selection on the basis of merit.

Methodology for the Recruitment of Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Multiple elimination type Each test method in the multiple elimination style is eliminative, and candidates must achieve a certain level on each test in order to pass. In this method, multiple assessments and tests are administered sequentially, eliminating a number of low scorers each time. Those who pass all the assessment items are then ranked according to their actual scores in the final interview or test and are selected on the basis of merit. (2) Compensation type The scores of different tests in the compensatory formula can be complementary to each other, and finally the hiring decision is made based on the total score of the candidate in all the tests. If the candidates are selected separately for the written test and the interview, then the total scores of the candidates are calculated in

52

2

Organization

accordance with the prescribed weighting ratios of the written test and the interview, and the hiring decision is made. It is worth noting that the hiring candidates may differ due to different weighting ratios. (3) Combined formula In the combined format, some tests are elimination and some are interchangeable, and candidates pass the elimination test before they can take the other tests.

Methodology of Personnel Appraisal (1) Actual measurement method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Assessment is done through actual measurement of various items. (2) Achievement record method (Key teaching materials for Marxist theoretical research & construction projects, 2019) The achievements are recorded and evaluated in terms of the final cumulative results. This method is mainly applicable to production operations where continuous daily recording is possible. (3) Written examination method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Assessment is carried out through various written examinations. This method is suitable for measuring the theoretical knowledge acquired by the appraisee. (4) Visual assessment method (Key teaching materials for Marxist theoretical research & construction projects, 2019) The appraiser makes the evaluation based on his or her subjective judgement, based on his or her usual contact with and observation of the appraisee. This method is simple and easy to implement, but it is susceptible to the subjective likes and dislikes of the appraiser and is not scientifically sound. (5) Situational simulation method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Design specific situations to test the appraisee’s ability to handle random situations in the field. (6) Democratic Assessment Method (Key teaching materials for Marxist theoretical research & construction projects, 2019)

2.2 Basic Methodology

53

Collectively scored and assessed by members of the organization. (7) Factor scoring method (Key teaching materials for Marxist theoretical research & construction projects, 2019) Assess each appraisal factor separately, rate each factor, and then aggregate them to determine the results. (8) Panel assessment methods (Guohua, 1998) More recently, an alternative performance appraisal method has been used, which uses rating criteria including planning, decision-making, organization, coordination, people, motivation and control, and may also include other factors such as sales skills. This appraisal process involves the appraisee and includes the following steps: Selection of job-related criteria; development of observable examples of behaviour; selection of 4–8 appraisers (peers, colleagues, other supervisors and, naturally, direct supervisors); preparation of an appraisal form appropriate to the job; completion of the appraisal form by the appraiser; synthesis of the various appraisal results; analysis of the appraisal results and preparation of the appraisal report. The advantage of this method of appraisal is that it draws material from many sources when conducting appraisals, not just from superiors, and therefore has a fairly high degree of accuracy. It can be used to identify the predispositions of the appraiser (e.g. always giving high or low ratings, or targeting particular groups of people, such as women or ethnic minorities). Apparently, the appraisee considers this method to be fair, as they are involved in choosing the assessment criteria and the appraiser. This method allows people to compare themselves with each other. Although this method has been adopted by a variety of businesses, it appears that further evaluation is needed.

Training Methods for Managers (1) On-the-job training (Sanduo et al., 2018) (2) Have a plan to move forward A planned progression of footballs gives managers a clear understanding of their development path. Managers know where they are now and understand where they might be in the future. For example. A junior manager can see a rough blueprint for progression from supervisor to plant manager, all the way to becoming a production manager, and in turn learn what is required for promotion and how to get it. Unfortunately, there can be too much emphasis on working hard for the next job and neglecting the fact that there should be good performance in the current job. Trainees may see planned advancement as a straightforward way to reach the

54

2

Organization

top, but in reality planned advancement is a step-by-step approach that requires working hard to do well at each level. (2) Job rotation This includes both management and non-management rotations. Non-management rotations involve rotating trainees through different parts of the company’s production and operations, depending on their personal experience, to help them gain knowledge of the various jobs and familiarize themselves with the company’s operations. Management rotation is the practice of having a manager work in some lower-level departments before being promoted to a higher-level position in order to gain experience in the management of different departments and to understand the position and role of each management department in the company as a whole and their interrelationship. As an important method of developing management skills, job rotation not only enables trainees to enrich their technical knowledge and management skills and grasp the whole picture of company business and management, but also cultivates their spirit of collaboration and system concept, making them clear about the role of each part of the system in the operation and development of the whole, so that when solving specific problems, they can consciously take a systemic perspective and deal with the relationship between the part and the whole Relationship. In order to effectively achieve the purpose of job rotation, managers who are trained for rotation are given clear requirements against which their performance during their time in the respective departments is strictly assessed. (3) Creation of assistant positions The creation of assistant positions at some higher management levels not only relieves the principal from the burden of busy day-to-day management and allows him or her to concentrate on the consideration and handling of important issues, but also has the advantage of training managers to be promoted. For example, it enables the assistant to start to be exposed to higher-level management practices and, through handling these practices, to accumulate experience in top-level management and become familiar with the contents and requirements of top-level management; it enables the assistant to observe the work of the supervisor well, to learn how the supervisor handles problems and to absorb his excellent management experience, thus promoting the growth of the assistant; in addition, it enables the training organizer to better understand the trainee’s (assistant’s) In addition, it allows the training organizer to better understand the management ability of the trainee (assistant) and to observe his organizational and leadership skills by letting him take charge of an important task alone, so as to decide whether it is necessary to continue training or whether it is possible to promote him. (4) Temporary positions and the “Peter phenomenon”

2.2 Basic Methodology

55

When a position is vacant for a certain period of time due to travel, illness or vacation of a supervisor in the organization (although such vacancies can be consciously arranged by the organization), the trainee may be considered for the job on a temporary basis. Temporary acting assignments have similar benefits to the creation of assistant positions, allowing the trainee to gain further experience in senior management and to demonstrate his or her managerial skills to the fullest during the acting period, or to quickly fill in the gaps in his or her managerial skills. The creation of acting positions is not only a way to train managers, but it can also help the organization make the right promotions and prevent the “Peter phenomenon” from occurring. The “Peter phenomenon” is the idea that every managerial position is eventually filled by an employee who is incompetent for it. How can the “Peter phenomenon” be prevented? In theory, it is always possible (and desirable) for organizations to replace incompetent management staff in a timely manner. In practice, however, it is highly unlikely that “mediocre” managers will be demoted, and organizations tend to be more lenient with “poor performers”. In order to be “responsible” for them, the organization often needs to provide them with an opportunity to improve. By the time their abilities are again proven not to meet the requirements of the job and the organization is determined to replace them, the work of their department has already had some negative impact on the achievement of organizational goals. Thus, the cost to the organization of the negative approach of replacing incompetent managers after promotion is sometimes extremely high. One important reason why the “Peter phenomenon” can arise is that we tend to promote managers primarily on the basis of their past performance and competence. Can a manager who has excelled at a lower level and has outstanding competencies perform at a higher level of management? The answer is no. It is only when these individuals have some degree of proven ability to manage at a higher level that the organization should consider promotion. One possible way to test whether a manager is qualified for a higher level position is to place him or her in a temporary “acting” position. By examining the proxy, the organization can gain a better understanding of his or her ability to work independently. If, prior to acting, the manager had performed well, had good interpersonal skills within the department and had shown some innovation in the execution of his work, but during the acting process was afraid to make decisions or even panicked, it would be inappropriate to convert the “acting” to “regular” duties. “is obviously inappropriate. Since “acting” is only a temporary position, removing the “acting” from the original job would not be a blow to the agent himself. It would, however, help the organization to avoid a wrong promotion. (5) Committees and Grassroots Management Committees Committees and grass-roots management committees, also known as multi-level management, are sometimes used as a method of developing managers, giving

56

2

Organization

trainees the opportunity to interact with experienced managers. In addition, the trainees, who generally come from the middle and some from the grass-roots level of the enterprise, begin to familiarize themselves with issues throughout the organization, so that they learn about the relationships between different departments and the issues that arise from the interaction of those departments. Trainees may have the opportunity to present reports and recommendations to committees or grassroots boards to demonstrate their analytical and imaginative skills. The negative side of this approach is that senior management may treat trainees in a paternalistic manner and may not give them the opportunity to be truly involved in management, with an approach that can cause frustration and negativity. In this way, this approach is detrimental to their growth. (6) Mentoring On-the-job training is a step-by-step process. Coaching is the responsibility of every line manager, and for it to be effective, an atmosphere of mutual trust and confidence must be established between the supervisor and the trainee. The supervisor must be patient and wise, must be able to delegate, and must acknowledge and appreciate the good work of the subordinate. Effective coaching reinforces the subordinate’s strengths and potential abilities and helps them to overcome their weaknesses. Coaching takes time, but when done well, it saves time, money, and prevents subordinates from making costly mistakes. Thus, in the long run, coaching will benefit all three—supervisors, subordinates and the business. (2) Internal and external training (Koontz & Weihrich, 2014) (3) Meeting items The conference program can be used for both internal and external training. In this approach, managers or successor managers are exposed to the views of various experts. Internally, they can be taught about the history of the enterprise, its objectives, policies, relations with customers, consumers and other groups, etc., while conferences outside the enterprise are extremely rich, covering a wide range of issues from specific management methods to those involving the relationship between the enterprise and society. These programs can be valuable if they can meet the requirements of the training and are thoughtfully planned. Careful selection of training topics and experts can increase the effectiveness of this approach. In addition, having a discussion can make a session more successful because, through a two-way exchange, participants can ask for clarification on specific topics that are particularly relevant to them. (2) University Management Project Many universities now offer a number of courses, workshops, seminars and formal training programmes for training managers, in addition to undergraduate and

2.2 Basic Methodology

57

postgraduate degrees in business administration. These are offered in the form of evening classes, short seminars, residential courses, full-time postgraduate courses and even specially designed programmes to suit the requirements of different companies. Some SMDCs even offer career development support programmes to meet the specific training and development requirements of junior executives, middle managers and senior managers. These university projects expose managers to theories, principles and new developments in management. In addition, managers participating in these projects are in similar management positions, face similar challenges and often share their valuable management experience during the projects. (3) Internal “universities” McDonald’s University near Chicago is known as a center for in-house training. This university has its own library and modern electronic equipment classrooms where managers learn how to run McDonald’s restaurants. There are a number of such universities strategically located around the world, and many companies have created their own universities. (4) Reading, television, e-learning and online teaching (Jing et al., 2012) A further method of developing managers is the systematic reading of relevant and up-to-date management literature, which is essentially a self-development method. Managers can be assisted by training departments, which often produce catalogues of valuable books. Discussions of relevant articles and writings with other managers and superiors can also enhance learning. Management and a number of other topics have become the subject of educational television programs day by day. College credit is available for certain training programs. In addition, there are videotapes on different topics that can be used in university or corporate classrooms. Investment in online education is growing, and institutions offering online education can be divided into three categories: Colleges; universities; and corporate and business training organizations (Dongjun & Wisdom, 2008). Universities are adopting new technologies for graduate programs and extended courses. (5) Enterprise simulation and outreach training Corporate simulation games and outreach training have been available for some time, and the advent of computers has made these training and development methods even more popular. However, computers are only one of the tools, and many trainings do not require any hardware at all. A large variety of business simulation approaches can best be explained by the topics discussed at the Association for Business Simulation and Experiential Learning (ABSEL) conference. The ABSEL conference was held in New York City, USA. These approaches range, for example, from behavioural training on

58

2

Organization

concepts and values to courses such as marketing, accounting, decision support systems and business policy and strategic management. (6) Electronic training (Marx, 2009) With the increasing breadth of business activities, many companies have introduced web-based training courses that may be more cost effective than classroom training in the traditional sense. Companies use a variety of possible training methods, ranging from providing near-real-world content to forming virtual classrooms where instructors and students are able to interact. Electronic training that is the same pace as live lectures appears to be more effective than self-paced learning methods that require self-discipline. Live lectures can use a combination of projected film, slides and handouts to accommodate students at different times of the day. One approach is to mix near real-world projects with live e-training. Those knowledge-intensive companies have successfully applied e-learning approaches. In recent years, e-training has been widely used to impart skills. The e-learning approach is still in its infancy and more research is needed to make it more effective in order to properly balance self-directed learning with teacher-led training. (7) Special training projects Managers must be developed using an open-system approach in order to respond to the needs and demands of the external environment. There is a growing recognition of the need to develop training programmes specifically for ethnic minorities and persons with disabilities. Many companies have made efforts to train these individuals to bring out their full potential in contributing to corporate goals. The company can also provide specific training programs for the chosen subject. Topics related to ethics and morality can be discussed to provide guidelines for employees on how to behave. Topics related to corporate culture can be discussed in a formal or informal manner, and Japanese companies in particular are known for making every effort to instil a corporate philosophy among their employees in order to promote a corporate culture.

Methods of Training Personnel (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Lecture method Often used for training in some conceptual knowledge. Easy to use and easy for the trainer to control the whole process. However, one-way information transfer and poor feedback.

2.2 Basic Methodology

59

(2) Audiovisual technology act Mostly used for training in presenting organizational overviews, imparting skills, etc., but also for training in conceptual knowledge. Uses visual and auditory perception and is intuitive and sharp; however, feedback and practice from participants is poor and it is expensive to produce and purchase and easily becomes outdated within. (3) Discussion method The cost and complexity of the operation can be further divided into two types of workshops and general group discussions. Seminars are based on presentations, and participants are allowed to communicate with the presenters in the middle or after the session. General group discussions are multi-directional in their approach to information exchange. (4) Case Study Method By providing relevant background information to the training audience and allowing them to find the appropriate solution. Low cost of use and good feedback. Trainees can be trained to analyze and solve problems, and are mostly used for knowledge-based training. However, the time required is long and the information related to the problem may sometimes not be clear, affecting the results of the analysis. (5) Role-playing method Mostly used for interpersonal skills training. Allow trainees to play a role in a work situation designed by the trainer, and other trainees and the trainer make appropriate comments after the trainee’s performance. Information transfer is multi-directional, feedback is effective, practical and low cost. (6) Interactive group method It allows participants to enhance their ability to handle interpersonal relationships through hands-on experience in training activities. This method is mainly applied to practical training and communication training for managers. It has the advantage of significantly improving interpersonal and communication skills, but its effectiveness depends to a large extent on the level of the trainer. (7) Master-Disciple Transmission Method A way in which a person who is senior in age or experience supports a person who is less senior in personal or career development. The role of a mentor encompasses a coach, an advisor, and a supporter.

60

2

Organization

Ways to Improve the Efficiency of the Commission’s Work (Sanduo et al., 2018) (1) Prudent use of the format of the Commission’s work Since the work of committees consumes a great deal of time and expense, those trivial, complicated and specific day-to-day matters are not appropriate to be dealt with in the form of committees. Not only is the volume of such routine business high, but the time requirements are often very demanding. If committees are used to deal with them, the risk of delays in decision-making may often arise. Conversely, committees, as advisory staff bodies or even as policy-making bodies, can be used to deal with issues that have a more important and longer-term impact on the organization as a whole, and thus tend to be less time-critical, and which the organization has to justify in detail. Moreover, since committees can often be used as a tool for coordination, their use may seem redundant when dealing with issues that are internal to only one function or one interest group, and the committee format is often more effective for dealing with issues that involve the interests and competencies of different sectors. (2) Selection of suitable committee members The selection of the appropriate members is based on the nature of the committee, which is used for the purpose of carrying out specialized studies, advice and recommendations, and whose members should have theoretical and practical knowledge of the different professions involved in the issue. If the purpose of using the committee is to coordinate the interests and competencies of various parties, the members of the committee should be the heads of relevant functional departments or representatives of interest groups. If the committee works as a decision-making body, its members should not only have the necessary expertise and be able to represent the interests of different parties, but should also have considerable synthesis, analytical skills and a spirit of cooperation. In a committee of any nature, members should have a strong capacity for expression and understanding, not only to express their own views but also to correctly grasp the thoughts of other members. This is because an important factor in determining the efficiency of a committee’s work is mutual communication among its members, and a necessary prerequisite for better communication is the strong communication skills of those working together. (3) Determining the appropriate size of the Commission The size of the committee is influenced by two main factors: The effectiveness of the communication and the nature of the committee. The Commission uses meetings and discussions to carry out its work. The number of participants in the discussion is so large that it is more difficult to give each

2.2 Basic Methodology

61

participant sufficient opportunity to properly understand the views of others or to fully articulate his or her own views. The quality of information communication is inversely proportional to the number of participants in the meeting: The fewer the members of the committee, the more effective the communication; conversely, the more members, the more difficult it is to communicate. Thus, when examined from the perspective of information communication, there seems to be a preference for smaller committee sizes. However, if the Commission is small, it may run counter to the logical mission of this way of working. A committee composed of only a small number of people cannot “integrate knowledge”, “represent a wide range of interests” and “give implementers sufficient opportunities to participate”. In order to achieve better communication while ensuring representation, the issues to be discussed are subdivided into a number of areas and subcommittees are formed so that representatives of the relevant sectors or groups are given sufficient opportunity to express their views. In determining the size of the Committee, an effort is made to strike an appropriate balance between the pursuit of “communication effectiveness” and “representation”. (4) Role of the chairman of the committee The chairmanship of a committee is an important role, and the effectiveness of the committee’s work is undoubtedly influenced to a large extent by the leadership of its chairman. In order to avoid wasting time and frivolous arguments, the chairman of a committee should draw up a detailed work plan before each meeting, choose an appropriate theme for the meeting, arrange the agenda, and prepare the necessary background materials on the topic for the participants that can help them familiarize themselves with the situation; during the discussion process, he or she should be good at organizing and guiding, and be able to treat every opinion fairly, without taking sides, respect every In the course of the discussion, he or she should be able to organize and guide the discussion, treating each opinion fairly, not taking sides, respecting each member and giving them equal opportunities to express their views freely; at the same time, he or she should be able to synthesize various views from a general perspective and put forward new ideas that are easily accepted by most members. (5) Work of the appraisal committee To improve the efficiency of the Committee, it is necessary to understand the work of the Committee and to assess the efficiency of its work. Since the Commission conducts its work mainly through meetings, the assessment of the Commission’s work must examine the efficiency of its meetings. The efficiency of meetings is related to the favourable outcome of the meeting held and the costs incurred to achieve that favourable outcome. While it is difficult to calculate the monetary

62

2

Organization

benefits of the Committee’s decisions and, in particular, to quantify the coordination, communication and motivational effects of the meetings themselves, the direct costs of holding the Committee’s meetings can be readily calculated using the following formula. C=A×B×T where C denotes the direct cost of the meeting, A denotes the average hourly wage rate of participants, B denotes the number of attendees, and T denotes the length of time the meeting continues. Clearly, reducing the amount of meeting time required to achieve a given outcome, with the number of committee members and wage rates remaining constant, is an important way to reduce the direct costs of meetings and thus increase the efficiency of the committee.

Ways to Avoid Organizational Conflict (Sanduo et al., 2018) (1) In the case of informal organizations, we must first recognize the necessity and objectivity of the existence of informal organizations, actively guide the positive contributions of informal organizations so that their goals are consistent with those of formal organizations, and establish a good organizational culture to regulate the behavior of informal organizations. (2) The necessary relationship of authority should first be clarified between the line and the staff officer, recognizing both the positive role of the staff officer and the importance of collaboration and improvement of the line’s work, without overstepping, competing for or taking credit for the work. Secondly, in order to ensure the role of the staff officers, they should be given the necessary functional authority, which should be more of a supervisory power; at the same time, the staff officers should be given the necessary working conditions to enable them to keep abreast of the progress of the activities of their line departments and to make recommendations of greater practical value. (3) In the case of the Committee, it is important to select qualified members who are willing to take on responsibilities and to pay attention to the theoretical and practical background of the Committee’s candidates in order to make it an effective decision-making body and an expert think tank, while at the same time setting limits on the size of the Committee. Obviously, the quality of information communication is related to the number of members, and it is important to strike a balance between the pursuit of communication effectiveness and representativeness as much as possible. In order to improve the efficiency of the committee, to play an active role as the committee chairperson, and to avoid rambling arguments and wasted time, it is important to prepare the meetings well, and the chairperson should be good at guiding and grasping each opinion during the discussion, taking the best from the worst, and grasping the direction of organizational interests in general.

2.2 Basic Methodology

63

Ways in Which Employees Learn About Organizational Culture (Robbins & Kurt, 2017) (1) Story Organizational stories often contain narratives of important events or people, such as the organization’s founders, rule-breakers, and reactions to past mistakes. To help employees understand the culture, organizational stories use the past as a spiritual anchor for the present, provide explanations and justifications for what is being done today, give examples of what is important to the organization, and paint a compelling picture of the organization’s goals. (2) Rituals Corporate ceremonies are a series of repeated events that express and reinforce important values and organizational goals. One of the most famous corporate ceremonies is Mary Kay Cosmetics’ annual awards ceremony for sales representatives. The company spends more than $50 million on awards each year. Set in a large auditorium, the ceremony looks like a mix of a circus show and a Miss America pageant, with a large crowd cheering in front of the stage and all participants attending in glamorous evening gowns. Salespeople who achieve their sales goals are presented with an array of expensive gifts, including a big screen TV, diamond ring, trip and pink Cadillac. The “show” serves as an incentive by recognizing outstanding sales performance in public. In addition, the point of the ceremony reinforced the late Mary Kay’s founder’s qualities of determination and optimism that had enabled her to overcome personal hardships to start her own company and ultimately achieve success. The ritual taught her salespeople that meeting sales goals was important and that through hard work and encouragement, they too could succeed. Through the contagious enthusiasm and excitement of the Mary Kay sales reps, it was clear that this annual ritual played an important role in establishing desired levels of motivation and behavioral expectations, ultimately meeting managers’ expectations of the organizational culture. (3) Material symbols When you enter different types of businesses, do you have a sense of the work environment—formal, casual, fun, serious, etc.? These responses demonstrate the role of material symbols in creating organizational personality. Material symbols communicate to employees who is important and the types of behaviors that are expected and appreciated (e.g., risk-taking, conservative, authoritarian, participatory, and individualistic behaviors, etc.). (4) Language

64

2

Organization

Many organizations, and units within organizations, use language as a way to identify and unite members. By learning this language, members can demonstrate their acceptance of the organization’s culture and their willingness to maintain it. Over time, organizations often develop specialized terms to describe equipment, key staff, suppliers, customers, processes, or products related to the business. New employees are often overwhelmed by these acronyms and jargon, but after a while, these too become part of their language. Once acquired, this language becomes a common denominator that connects members.

2.3

Management Practice Cases

Case 1 A company has grown from a small factory on the verge of bankruptcy to a global group with hundreds of billions of dollars in revenue today, which cannot be separated from the company’s continuous innovation and adjustment of its organizational structure. First, to address the problem of inventory backlogs and high production waste, the company redesigned its ordering system to collect shipment information from downstream retailers, get real-time information on product sales and inventory at retailers, and then use this data to adjust its own production and sales schedules and calculate supplemental shipment quantities and delivery times. This has allowed the company to significantly reduce inventory costs and significantly improve its performance and operational efficiency. Second, in order to attract more outstanding talents, the company pays great attention to the development of talent recruitment model. Taking school recruitment as an example, the company has introduced a digital recruitment assessment integrated operation platform to unify resume screening, assessment interview and other aspects on the platform, while using the platform to create a characteristic and influential employer brand image. The use of digital platform in the context of the new crown epidemic in recent years fully meets the needs of online recruitment, while effectively saving HR’s time, each recruitment site only takes about—two weeks to complete the entire recruitment process of preaching, assessment, preliminary test, retest and final test. In addition, the big data stored in the platform can provide reliable data analysis for HR department’s recruitment afterwards. Thirdly, to improve the efficiency and effectiveness of the managers, the company organizes a 2–3 day brainstorming session for the managers to share their views on the difficulties faced by the department, and form a solution to be submitted to their superiors for adoption. The company has set up a special training center to provide coaching for managers, who will learn from other good companies how to improve customer loyalty and satisfaction, how to handle the relationship with

2.3 Management Practice Cases

65

upstream suppliers, etc. At the same time, in terms of incentives, the bonus of the managers will be directly linked to the results of the completion of the product quality requirements, which will be evaluated by the evaluation system set up by the company, and the best part of the staff will be able to obtain material rewards such as shares and options. Fourthly, in order to improve the efficiency and effectiveness within the organizational structure, the company adopted a sub-organizational operation model with each team as the unit, setting up several teams around the three core directions of product planning, research and development, and operation, which are responsible for various aspects of product production, independently and cooperatively, contributing together to the overall product generation and creating many excellent ideas with market prospects. Questions: 1. What is organization? Please briefly explain your understanding. 2. What do you think of the company’s sub-organizational operating model?

Case 2 (Adapted from: Liu Zhiying, Et Al, Xxxx) Founded in 1999, Company B has been committed to the development of technological innovation and the creation of an innovative atmosphere. 2007 saw the development of a reading terminal for the blind, “Sunshine Hearing”, which can help blind people listen to any electronic book. 2010 saw the development of screen reading software for the blind. Company B was listed on the Shenzhen Stock Exchange in 2008. Today, Company B is the largest voice listed company in Asia Pacific and the leader in China’s intelligent voice and artificial intelligence industry. (1) Entrepreneurial integration stage (1999–2003) In 1999, when the founder led a young team to start the business, Chinese speech applications were almost all monopolized by foreign companies, and Microsoft, IBM, Motorola, etc. had all set up special speech research bases in China. At that stage, the corporate culture established by Company B was to achieve the ideal of employees and create social value. The aim of “Achievement of employee’s ideal” is to provide a broad stage for like-minded employees to show their ability and simple and sincere interpersonal relationship, and to provide employees with generous rewards and continuous training and growth space to match their contribution. “Creating Social Value” aims to create sunny and healthy social values with high technological content and high added value, and to create unique social values that can represent the region and the country in global high-tech competition.

66

2

Organization

(2) Transformation and development phase (2004–2007) At this time, Company B’s speech synthesis technology had made an important breakthrough and could already meet the application requirements of many industries in society. However, it was an important problem for Company B to make this technology to be promoted to all aspects of social life in the fastest way, so as to occupy the market to the maximum extent. At this stage, Company B adopted “dedication, innovation and progress” as its corporate spirit, and its corporate management philosophy required that Company B be built into a big family with family rules, which is sincere, equal, self-disciplined and sharing, and that it pays attention to the growth of employees and considers talents as the biggest asset of the company. At the same time, the company has formed a code of conduct for employees that they collectively agree with and abide by, including the pursuit of team success, continuous learning and progress, mutual trust and respect, and constantly going beyond and striving to be the first. Third, accelerated development phase (2008 to present) After listing on the Shenzhen Stock Exchange in 2008, Company B’s core technology research and development and industrialization of achievements have a larger and broader capital platform and have entered the fast track of development. During this period, the company’s corporate culture and values were further systematized and matured. Based on the core concept of “Achievement of employee’s ideal and creation of social value”, the company has formed four modules of human-oriented culture, execution culture, innovation culture and brand culture from different dimensions, such as internal operation, process control, flexible and independent, and external development, to build up the core system of company B’s culture. On August 8, 2016, the founder of Company B officially announced the values of Company B as “Corporate Value Proposition: Customer Achievement. Organizational success traits: Innovation, perseverance. Staff professional standards: Teamwork, simplicity and sincerity, professionalism and dedication, commitment and progress”. The history of Company B, though short, clearly demonstrates the relationship between culture and development. Questions: 1. What is organizational culture and what does it contain? What characteristics do you think organizational culture has? 2. Based on the process of organizational culture change in Company B, try to analyze the role of organizational culture on corporate development.

2.3 Management Practice Cases

67

Case 3 (Deng, 2017; Listening to the Voice of Growth, 2015; Zhilin & Fei, 2012) People who go to Company A will be surprised: within the company, some ordinary employees can be exempt from punching attendance, employees will automatically work overtime when the work is busy, some positions are not well paid, but even ordinary workers have a spontaneous A Company people sense of glory …… What is the way to make employees do these?The management of Company A said that These are not simply constrained by systems or management tools, but through the penetration of corporate culture. The key lies in the implementation of strategic human resource management oriented to corporate strategy and culture, as a set of internally consistent management practices, which, on the one hand, reflect the values and management beliefs of the company through corporate strategy and executives connected to corporate culture; on the other hand, as explicit, concrete management practices, it is a process of conveying information to employees and telling them through that process what behaviors are On the other hand, as an explicit and concrete management practice, it is a process of communicating information to employees and telling them what behaviors are “important”, “expected”, and “should be rewarded”, thus guiding and motivating them to perform behaviors that are conducive to improving corporate performance. Thus, strategic human resource management becomes the bridge between company A’s corporate culture, employee behavior and corporate performance. (1) High-level guidance Company A’s strategic human resource management system was designed from the top management, and in the implementation of corporate culture, the formulation of various human resource management principles and implementation details were firstly supported by the top leadership, especially the CEO, and then started from the management’s leading example. Human resource management is the entry point to build the basic norms of corporate culture. (2) System construction Law and ethics are the two main tools of state governance, and similarly the tools of corporate governance can be divided into system and culture. Laws and systems are rigid and unbreakable; ethics and culture are flexible and subtle, achieved by self-discipline and environmental influence. Company A believes that corporate culture is like a roadmap on the road of high-speed development, which is a direction guide; and the system is like a guardrail on the road of high-speed development, which is used to ensure the rapid progress of the enterprise. Company A’s corporate culture is a kind of internal motivation, which can stimulate the subconsciousness of employees, enhance cohesion, and bring into play the subjective initiative of people; while the strategic human resource management system is a benign guarantee for the operation

68

2

Organization

of the enterprise, which can make the enterprise management more scientific and efficient through the mechanism. (3) Employee behavior shaping Strategic human resource management each specific practice undertakes specific work, A company from the selection of people to employee training, performance appraisal and compensation management, and then personal growth in all aspects of the corporate culture is reflected, the corporate culture from the slogan to guide the specific behavior of employees. (1) Identify with the selection and employment criteria of the corporate culture Recognition of the corporate culture is a necessary condition to become an employee of Company A. When recruiting and selecting talents, Company A does not attach too much importance to academic qualifications. Different positions do not require the same abilities and qualities, and these abilities and qualities are not all completed by school education, plus the derailment of school education and corporate needs, the education can only represent a person’s learning experience, and cannot be set for life. The company believes that the core values of the company are the norms of being a human being; A company advocates diligent and forgetful work, so people who pursue comfort are not suitable for development in A company; some people are high-minded and arrogant and do not fit into the culture of A company; some people pursue personal interests excessively and do not meet the requirements of the core values of win–win situation, so they cannot be accepted by A company. A company in the selection process, more important is the ability and mentality of people, and the identification of the corporate culture. (2) Training: Seeking the common growth of the company and employees with the corporate culture as the cornerstone Corporate training is a necessary means for the growth of employees and a necessary way for corporate culture to penetrate into people’s hearts. Corporate culture is based on the behavior of employees, and the behavior is based on awareness, and training is the main method to change and enhance the awareness of employees. Company A’s training is based on corporate culture, and seeks the common growth of the company and its employees on the basis of commitment to long-term corporate development. In the training and development of employees, on the one hand, to improve their working ability, on the other hand, the corporate culture training and education, including discipline education and corporate development history education, accelerates the new employees to identify with the cultural values of Company A, and consolidates and strengthens the old employees to share and pass on the corporate values. The significance of the personal growth and future development of employees.

References

69

(3) Performance appraisal and compensation management: Guide employees to show more behaviors in line with the corporate culture The core of human resource management is employing people, and the standard to measure the result of employing people is the assessment and evaluation system of the enterprise. When evaluating and rewarding employees, if performance is the only indicator, it will make some employees do whatever it takes to reach the goal and bring losses to the long-term development of the enterprise. Therefore, when evaluating and rewarding employees, Company A should not only insist on performance indicators, but also combine the assessment of character with the requirements of corporate culture to urge employees to obtain performance in the right way, so as to maximize the long-term interests of the enterprise. To sum up, Company A has designed a performance evaluation system and compensation system based on corporate culture and with the aim of achieving corporate strategic goals, seeking to motivate employees through material and spiritual rewards, while guiding employees through performance evaluation and compensation to demonstrate behaviors consistent with corporate values and culture, improve their understanding and recognition of corporate values, and enhance long-term corporate performance. Questions: 1. Combine what you have learned about organizations and analyze the aspects from which Company A Home Textiles builds the organizational structure of the company. 2. Analyze the relationship between the corporate culture and staffing of Company A’s home textiles and its management practices in the context of what you have learned.

References Adapted from: Liu Zhiying, et al. (2014). Co-evolution of organizational culture change and dual competence from the perspective of strategic orientation: A case study based on iflytek. management case study and review, (3). the case is taken from management (Fifth Edition), edited by Zhou Sanduo & Chen Chuanming. Dongjun, S., Organizational Wisdom. (2008). The Commercial Press. The case is extracted from “Management”, a key textbook for Marxist theoretical research and construction projects. Guohua, X., De, Z., & Ping, Z. (1998). Management. Jing, L., Feng, F., & Zhong, Y. (2012). Promotion, obstacle, and management measures for enterprise knowledge sharing-taking the construction of organizational wisdom “of jiangsu tongling company as an example”, economic management, No.7, No. 60–70. The case is extracted from “Management”, a key textbook for Marxist theoretical research and construction projects. Koontz, H., & Weihrich, M. (2014). Management. Essentials (9th ed.). Key teaching materials for Marxist theoretical research and construction projects. (2019). Management.

70

2

Organization

Marx. (2009). Economic and philosophical manuscripts of 1844, “Collected works of marx and engels” volume 1, people’s publishing house. Office of the leading group for the implementation of the trademark strategy in jiangsu province, jiangsu administration for industry and commerce, jiangsu provincial radio and TV station financial broadcasting, listening to the voice of growth, yangcheng evening news publishing house, 2015, pp. 123–129. The case is extracted from “management”, a key textbook for marxist theoretical research and construction projects. Robbins, S. P., & Kurt, M. (2017). Management (13th ed.). Sanduo, Z., Chuanming, C., Zixin, L., & Liangding, J. (2018). Management——Principles and methods (7th ed.). Yiqun, X. (2019). Management (5th ed.). Yu Deng Deng Deng. (2017). Violet home textiles turn round and direct selling, knowledge economy, no 9, pp 71–73. The case is extracted from “management”, a key textbook for marxist theoretical research and construction projects. Zhilin, H. & Fei, L. (2012). Channels as the key to find the right channels for sales, china fortune publishing house, pp. 84–87. The case is extracted from “management”, a key textbook for marxist theoretical research and construction projects.

3

Leadership

3.1

Basic Concept

Leadership Leadership is the act of exercising management by those who have the right to manage. The basic concept of leadership is also expressed in several different forms as follows. (1) Leadership is a process of management activity in which the organization’s authority and its own abilities are used to direct and influence subordinates to work hard to achieve organizational goals (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) A leader is a person who is able to influence others and has managerial authority, leadership is the process of influencing a team to achieve organizational goals and is something that the leader does (Robbins & Kurt, 2017). (3) Leadership is the process of directing, leading, guiding and encouraging subordinates to work towards the achievement of goals (Sanduo et al., 2018). (4) Leadership is the process by which individuals exert influence on others and lead and direct their activities to achieve group or organizational goals (Yiqun, 2019). (5) Leadership is the art or process of influencing people to work willingly and enthusiastically to achieve the goals of the group (Koontz & Weihrich, 2014). (6) Leadership is a form of influence, i.e. the process of exerting influence on the activities of an organization to establish goals and achieve them (Guohua et al., 1998).

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_3

71

72

3

Leadership

Incentives Motivation is the drive and process that motivates and encourages members of an organization to achieve organizational goals. The basic concept of motivation is also expressed in several different forms as follows. (1) Motivation is the management process by which an organization induces individuals to be motivated to satisfy certain needs and thus to converge their behaviour with organizational goals (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) Motivation is a process that reflects the intensity, direction and persistence of an individual’s efforts to achieve a goal (Robbins & Kurt, 2017). (3) Motivation is the driving force that inspires, guides and sustains individual effortful behaviour (Sanduo et al., 2018). (4) Motivation is the process of inspiring and encouraging people to take action towards a desired goal (Yiqun, 2019) (5) Motivation is the process of creating conditions that satisfy the various needs of workers and motivate them to work so that they develop specific behaviours to achieve organizational goals (Guohua et al., 1998).

Communication Communication is the process of conveying and understanding a message. The basic concept of communication is also expressed in several different forms as follows. (1) Communication is the process of transferring and understanding a message, an exchange of facts, ideas, opinions and feelings between two or more people. Understanding here does not necessarily require that the other person fully accept his or her point of view and values, but it does require that the other person fully understand the point of view and values of the sender (Key teaching materials for Marxist theoretical research & construction projects, 2019). (2) Communication is the transmission and understanding of meaning. Communication encompasses interpersonal communication (communication between two or more people) and organizational communication (various communication patterns, networks and systems in an organization) (Robbins & Kurt, 2017). (3) Communication is the process by which comprehensible information or ideas are transmitted or exchanged between two or more (Sanduo et al., 2018).

3.2 Basic Methodology

73

(4) Communication is the process of transferring information from the sender to the receiver, and the information is what the receiver understands, and communication is one of the basic skills that managers must master to carry out their various tasks (Yiqun, 2019; Koontz & Weihrich, 2014). (5) Communication is the process of communicating ideas or exchanging information between (Guohua et al., 1998)

3.2

Basic Methodology

Ways for Leaders to Build Prestige (Guohua, 1998) (1) Proper understanding of one’s tasks and responsibilities Generally speaking, the leader’s task is twofold: First, to accomplish the organizational goals, i.e., to fulfill the tasks assigned by superiors and the organization; second, to meet the needs of the organization’s members, which are both material and spiritual, as much as possible. If there is only the first task and not the second, it is difficult to motivate the masses, to maintain a vigorous earthiness, and for the leaders themselves to exert influence, because the masses always tend to follow those who can satisfy their desires and needs, and without a following there is no influence. Of course only the second without the first would be welfarism, ingratiation. The two tasks of the leader determine the dual position of the leader: On the one hand, he should represent his superiors and the organization, the long-term and overall interests of the people; on the other hand, he should represent the interests of the members of the organization. An important sign of a skillful and authoritative leader is, first of all, the skillful reconciliation of these two, and only when there is a contradiction and it is impossible to reconcile them, he deals with them according to the principle of partial subordination to the whole and individual subordination to the collective, and educates the masses. A leader must have the ability to influence and dominate his subordinates in order to accomplish organizational goals. But in order to represent the interests and meet the needs of his employees he must also be allowed to have some influence over his superiors so that he can influence and change their policies, measures and regulations. Some leaders only allow themselves to have influence over their subordinates, but do not allow them to have influence over him, which inevitably makes it difficult for them to accomplish the two tasks of the leader and puts them in a difficult position. (2) Establishing a correct view of authority (1) Break the fetish for the power of the position. Do not think that if you have a position and power, you must have prestige. The obedience that results from administrative power is often superficial and even false. Once the

74

3

Leadership

power is lost, it is often a case of ?rats scattering from a sinking ship? or even ?walls falling down?. The only way out for a leader to avoid such an ignominious end is to work on his personal power, to make his expertise more outstanding, to make his personal character more noble, so as to attract subordinates to trust and follow him sincerely. (2) Properly understand the source of authority. Leaders should clearly understand that superiors can only grant you authority, but not prestige. And the authority granted to you by your superiors is only effective if your subordinates are willing to accept it. In this sense, the power in your hands is, ultimately, given by your subordinates. Therefore, while you are accountable to your superiors, you must make every effort to gain the understanding, acceptance and support of your subordinates. (3) Use power correctly. a. Be diligent, i.e., have a high sense of responsibility and good dedication, be fully committed to your work, do practical work and see results; b. Be honest. Must not use power for personal gain, but should be out of the public mind, fair, clean and honest; c. Should see that influence is a two-way street: you have to exert influence on subordinates, but also to first listen to subordinates? opinions and suggestions with an open mind, and take the initiative to accept the influence of subordinates. According to the above analysis, in order for a leader to make himself credible, he must first have good qualities, i.e., have sufficient knowledge, ability and experience, and be good at pooling the wisdom of the masses; secondly, he must have power, i.e., be a man of his word and have clear organizational authority; thirdly, he must be a man of harmony, i.e., be able to get along with others, have good interpersonal relations, be good at seeing the psychology of the masses, create a stimulating working environment, and meet the needs of the masses; fourthly, he must convincing, that is, being decent, fair, dedicated, and not using his power for personal gain. Do not think that leadership means using the power of the position to give orders and to supervise subordinates but should guide, direct and take the lead. Leaders must use their personal authority first and use the authority of their position only when necessary.

Methods of Motivation (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Work incentives Motivate employees to work intrinsically by designing and assigning work tasks appropriately. (1) Job expansion method: By expanding the scope of job work and increasing the duties of the job, we can eliminate the dullness and boredom of employees who are engaged in monotonous and tedious work, thus improving the

3.2 Basic Methodology

75

labor efficiency of employees. This includes horizontal expansion of work and vertical expansion of work. Horizontal job enlargement means that the scope of work of employees is expanded horizontally along the organizational hierarchy, i.e., employees are given more types of work at the same level. For example, operations that are part of a very fine division of labour are combined, and instead of one person being responsible for one process, several people are jointly responsible for several processes. Vertical expansion of work means extending the scope of work of employees along the vertical direction of the organizational hierarchy, i.e., transferring some of the functions of operational managers to producers. For example, production workers participate in planning and decide on their own production goals, operating procedures, methods of operation, etc. (2) Job enrichment method: By increasing the technical and skill content of the job, the job content is made more challenging and autonomous to meet the higher level of psychological needs of employees. It consists of five main areas. a. Technical diversity. Develop a variety of skills and techniques for each employee and give employees the opportunity to use different techniques. b. Work as a whole. The employee is made aware of the relationship of the tasks assigned to the position to the overall mission, goals, and processes of the unit. c. Participation in management and decision-making. The organization provides opportunities for employees to participate in management and decision-making through various forms. d. Granting the necessary autonomy. Under the premise of ensuring the achievement of the overall objectives of the unit and departmental subobjectives, employees can set their own short- and medium-term work objectives and tasks to enhance their sense of responsibility and mission. e. Focus on communication and feedback of information. To enable the employee to receive frequent information from the organization or his supervisors on the results of his work and performance, so that the employee can see the meaning and value of his work. (3) Job rotation method: allows employees to change jobs for a predetermined period of time so that they can gain experience in different positions. For different employees, the job rotation method includes the following forms. a. Identify job rotations for new employees. At the end of induction training, new employees are assigned to different departments based on an initial suitability test, and their performance should be evaluated at the end of each job rotation. In this way, the company gets a clearer picture of the new employees? suitability and finalizes their regular job placement. b. Develop a versatile rotation of veteran employees. In order to adapt to an increasingly complex business environment, organizations require

76

3

Leadership

employees with strong adaptability. Therefore, in day-to-day situations, the organization must consciously arrange for the rotation of veteran employees to do different jobs, develop their multiple job skills and develop their potential abilities to adapt to the complex and changing business environment. c. Rotation of managers for the development of the operational backbone. For the long-term development of the organization, rotation of managers is an important measure to develop the backbone of management. For top management, they should have a comprehensive understanding of the organization’s work and the ability to analyze and judge global issues. To this end, organizations should move managers laterally between different departments to enhance their understanding of interdependencies and to create a more comprehensive and systematic perception of organizational activities. (4) Incentives for results Give employees reasonable rewards based on proper assessment of their work output to ensure a virtuous cycle of employee work behavior. (1) Material incentive: from the satisfaction of the material needs of employees, the material interests of the relationship to regulate, so as to stimulate the motivation of employees to work motivation way. a. Wages. Wages are directly linked to the employee’s work behaviour and performance and are paid directly to the employee by the organization on a regular basis for his or her labour, and consist of such components as hourly wages, basic wages, job salaries, piece rates, bonuses, allowances and subsidies, and overtime pay. b. Benefits. Benefits are insurance and welfare costs paid regularly to all employees or paid regularly for them by the organization in accordance with the employment contract and relevant State regulations, such as basic and supplementary pension insurance premiums, medical insurance premiums, unemployment insurance premiums, work injury insurance premiums, maternity insurance premiums, employee education funds, employee housing funds and other costs, with a certain proportional dependence on wages. c. Employee stock ownership plans. An employee stock ownership plan is a special type of material incentive that is designed to attract, retain and motivate the company’s employees by giving them stock ownership, a benefit-sharing mechanism that gives them residual claim rights and a participation mechanism that gives them the right to make business decisions. In organizations that implement employee stock ownership plans, employees are no longer employed by the organization, but are owners of the organization and share in its profit and loss, so employees will spontaneously develop a positive work ethic.

3.2 Basic Methodology

77

(2) Spiritual motivation: to meet the needs of employees in the spiritual aspect, different from the material motivation of intangible incentives. a. Emotional motivation. Emotional motivation is a means of motivation by means of emotional connection between managers and employees. Managers can enhance the emotional interaction with employees through a variety of ways, such as communication of ideas, solving problems, condolence home visits, interaction and entertainment, criticism and help, common labor, democratic consultation, etc. Through emotional exchanges, not only can fully reflect the human touch of the organization, but also can well meet the needs of employees who are eager to care, love and respect. b. Honour motivation. Honor motivation is a means of motivating employees to pursue a good reputation. Common measures are: public praise, staff evaluation, title name, promotion and promotion, and naming something after the employee. Honor incentive is a symbolic incentive, is the organization’s recognition and affirmation of the value of the outstanding employees themselves, not only can mention the self-confidence of employees, but also can effectively meet the needs of employees respect and self-fulfillment. c. Trust-based motivation. Trust motivation is a form of motivation based on the superior’s understanding of and trust in the subordinate. Common measures include: granting real power, assigning important responsibilities, allowing mistakes, etc. Trust motivation reflects the organization’s trust and respect for employees, and can effectively motivate employees to work for their own good and enthusiasm. d. Goal motivation. An enterprise goal is a banner that calls and guides thousands of employees and is the core of enterprise cohesion. It embodies the meaning of the workers? work, foretells the glorious future of the enterprise and can motivate all workers at the level of ideals and beliefs. The ideals and beliefs of the employees should be stimulated by the corporate goals and make the two integrated. Enterprises should publicize their long-term and near-term goals with great fanfare and make them known to everyone, so that all employees can see the great social significance and bright future of their work, thus inspiring a strong sense of enterprise and mission. When carrying out goal motivation, attention should also be paid to combining organizational goals with personal goals, promoting the consistency between corporate goals and personal goals, that corporate goals contain the personal goals of workers, and that workers can achieve their personal goals only in the process of accomplishing corporate goals. Make everyone understand concretely how much the business of the enterprise will be developed, how much the efficiency of the enterprise will be improved, accordingly, how much the wages and bonuses and benefits of the workers will be improved and how much the stage of personal activities will be expanded, so that everyone can really feel the truth of ?I am rich when the factory is prosperous and I am glorious when the factory is prosperous?, thus stimulating a strong sense of belonging and This will inspire a strong sense

78

3

Leadership

of belonging and a great passion for labor. IBM, Matsushita, Toyota and FAW in China are all effective in motivating their employees to achieve their goals. e. Image motivation. The information that a person perceives through visuals accounts for 80 per cent of all information, so making full use of the role of visual images to stimulate a sense of honour, glory, achievement and pride among workers is also a proven method of motivation. The most common method is the photo on the honor list, through which to recognize the standard bearer and model of this enterprise. Nowadays, many large enterprises have installed closed-circuit television systems and opened TV programs such as ?Factory News?, which makes image motivation a more effective, richer and more flexible means. The new people, new things, five good young workers, excellent party members, model family members, model workers, technical experts, factory lovers and so on, all become news figures in the ?factory news?, and immediately spread to thousands of households through visual images, so that not only I feel honored, but also the whole family is proud of it. f. Interest motivation. Interest has a strong influence on people’s attitude to work, their level of research and their creative spirit, and is often closely linked to the pursuit of knowledge, beauty and self-actualization. Paying attention to the interest factor in management will achieve very good motivational effect. There are enterprises both at home and abroad that allow and even encourage ?twoway choice and reasonable mobility? within the enterprise, including employees to find the work they are most interested in. Interest can lead to concentration and even fascination, and this is an important motivation for outstanding achievements. We absorb some workers who like to study the operation technology and are enthusiastic about technical innovation activities into the ?technical improvement group? and ?TQC? group, which will not only make their hobbies useful but also stimulate their sense of participation and belonging and increase their sense of ownership and responsibility. This will not only give them a place for their hobbies, but also stimulate their sense of participation and belonging, and increase their sense of ownership and responsibility. Amateur cultural activities are another arena in which workers? interests can be exercised. Many enterprises have organized interest groups or associations for photography, drama, dance, chess, calligraphy and painting, philately, singing and so on, which have satisfied the hobbies of workers, enhanced the exchange of feelings among them, made them feel the warmth of the enterprise and the richness of their lives, greatly increased their sense of belonging, satisfied their social needs and effectively improved the cohesion of the enterprise. g. Motivation to participate. How to stimulate the ownership spirit of the workers? There is only one way, that is, the factory manager puts the workers in the position of the master, respects them, trusts them, gives them the bottom card of the enterprise, allows them to participate in decision-making at different levels

3.2 Basic Methodology

79

and in different depths, absorbs their correct opinions, and wholeheartedly relies on them to run the enterprise well. This is called ?participation incentive? in management science. Through participation, it forms the workers? sense of belonging and identity to the enterprise, and further satisfies the needs of selfesteem and self-fulfillment. TQC group, workers? participation in the democratic management of the team, and workers? participation in the major decisions of the enterprise through the representatives in the ?Staff Council? and ?Enterprise Management Committee? are the main channels for workers to participate in enterprise decision-making and enterprise management in China. Other common forms of participation incentives include family visits, ?Zhuge Liang meeting?, ?paying for criticism? and so on. The system of ?rewarding employees for their rationalized suggestions?, which is commonly used in enterprises at home and abroad, is a proven form of employee participation. (3) Motivation by criticism In management practice, a large number of violations and malpractices can be resolved through criticism. Criticism is the most common weapon used by managers, and unlike fines and administrative sanctions, which are ?merciless?, it helps the offender to recognize his or her mistakes, gain confidence and correct them through verbal and emotional exchanges between the critic and the criticized person, and at a deeper level plays a motivational role, turning negative factors into positive ones. (1) Clarify the purpose of criticism Before criticizing, it is important to clarify the purpose of the criticism. In different situations, criticism of different targets can have different purposes, for example: to help the target of criticism to recognize the harmful results that can or have resulted from the behaviour; to help the target of criticism not to make the same mistake next time; to help the target of criticism to remedy the negative results of the mistake; to help the target of criticism to recognize the reasons for the mistake and to make him realize that things could have been done better, thus restoring his Self-confidence. (2) Know the wrong facts Once the purpose of the criticism is clear, the facts to be criticized must also be known before the criticism can be formalized. To understand the facts of the error is to know where the error is, when it was wrong, how it happened, who did it wrong, why it was done wrong, and so on. Only by knowing the facts of the error can we target our criticism and make it convincing and not abstract and general.

80

3

Leadership

(3) Pay attention to the method of criticism a. Be careful to address the matter and not the person. Criticism of a person should be directed at a particular matter, not at a particular person. Criticism directed at one person may make the target of the criticism feel that the leader has a negative opinion of him or her. Moreover, if the criticism is directed at a person, it seems that a person’s problem is inseparable from his characteristics, not due to some special reason, and thus may cause the target of criticism to resent and not listen to it. On the contrary, if the criticism is directed only at the problem, at a particular matter, and shows that it could have been done better on the other person’s terms. In this way, the person sounds comfortable and receptive, and has the confidence to correct the problem. b. Be careful to choose appropriate language. Try to use language that makes the person feel that you are helping them, not criticizing them. For example, if you use the phrase ?what I would do if I were you?, it will be more effective than a blunt accusation that ?you are not doing it the right way. ?? ? is better. c. Choosing the right occasion. Except in exceptional cases, ?making an example? in public is generally not advocated. This will easily embarrass the employee being criticized and will damage his self-esteem, which will easily cause resentment. Therefore, it is necessary to point out the problem to the other party and give criticism on individual occasions as far as possible. Choosing the right occasion means doing so at a time when both parties can sit down calmly to discuss and analyse the problem. d. Take care to choose the appropriate time for criticism. Some Western business managers believe that workers should not be criticized before lunch and after work. Criticism before lunch sometimes causes displeasure to the person criticized, thus not only affecting his appetite and his health, but also risking bringing discontent to the table and spreading it among the workers; while after work, people are generally in a hurry to get back and will not pay much attention to criticism, so they will not receive good results. (4) Pay attention to the effectiveness of criticism Paying attention to the effect of criticism means that the critic should understand whether the target of criticism understands the purpose of criticism and how it should be done (what is wrong and what should be done to avoid repeating it next time) during and at the end of the criticism, and should also pay attention to the check after the criticism. The purpose of criticism is to help the worker to correct his mistakes. Therefore, the leader’s criticism should not be suspended with the end of the conversation. For criticism to be effective, attention should also be paid to post-criticism follow-up in order to avoid repeating similar mistakes.

3.2 Basic Methodology

81

(3) Training and education incentives The quality of employees mainly includes both moral and business skills. Through education and training, the subordinates? own quality is improved, thus enhancing their ability to motivate themselves. (1) Mobilizing workers? motivation by improving their moral character is a fine tradition of China’s enterprise management, which must be carried forward in the new situation. By educating employees about their moral character, we can help them correctly understand the historical mission they have to shoulder, make them establish a correct outlook on life, values and morality, and form lofty ideals and aspirations, so that they can be rich in enterprising spirit, actively work hard and show high enthusiasm in their work. In order to ensure that ideological and moral education receives the desired effect. When leaders carry out work in this area, they should pay attention to the following basic principles: they should stick to economic construction as the center, make ideological work serve economic construction, and pay attention to respecting and protecting employees? personal privacy; they should link theory with practice, and prevent empty talk about theory and empty lectures; they should treat employees equally, adhere to democratic principles, and prevent themselves from being educators or ?lecturers ?; pay attention to the combination of criticism and praise, but mainly praise; pay attention to improving the ideological awareness of employees while practically solving the practical difficulties they encounter in work and life; pay attention not only to educate others, but also to strictly require themselves, to set an example and influence employees with their actions. (2) Cultivating and activating self-motivation mechanisms of workers and also paying attention to the training of professional knowledge and technical skills. Aggressiveness and personal business quality are mutually reinforcing: strong aggressiveness motivates workers to work hard to acquire new knowledge and work skills, which allows for more personal quality. In turn, good business quality gives individuals more chances of success and can bring more psychological satisfaction. And success and the resulting experience of psychological satisfaction will motivate individuals to pursue career advancement, which will inspire them to strive to acquire more new knowledge and skills. In order to promote the improvement of the quality of workers and thus enhance their enterprising spirit, leaders should carry out training work in a planned, focused, organized and targeted manner according to the characteristics of enterprise operations and individual workers. For example, for management personnel, attention should be paid to both theoretical learning to enable them to master new knowledge and methods of modern management and training in practice to improve their ability to solve and deal with practical business management problems; for production workers, attention should be paid to education in cultural

82

3

Leadership

knowledge to improve their literacy level, and also to training in operational methods improvement or basic skills of related operations in conjunction with their own work For engineering technicians, attention should be paid to various ways to keep them abreast of the development of the discipline and the latest knowledge of the discipline, as well as to give them more opportunities to use new knowledge so that they can contribute to the technology, process materials and product innovation of the enterprise by using the latest scientific and technological knowledge they have. The very action of systematically sending workers to training bases or schools for off-the-job study and to study abroad can strongly make workers perceive the importance and expectations of the organization, which can greatly increase their responsibility and motivation. (4) Quality of Work Life Program Quality of Work Life (QWL) programs are a systems approach to work design and are promising in the broad field of work enrichment, with roots in the management approach of socio-technical systems. QWL is not only a broad approach to work enrichment, but also an interdisciplinary field of inquiry and activity that is closely related to the disciplines of industrial and organizational psychology and sociology, industrial engineering, organizational theory and development, motivation and leadership theory, and industrial relations. Although the quality of work life approach came to prominence only in the 1970s, there are now hundreds of case studies and practical programmes and a number of quality of work life project centres, mainly in the United States, the United Kingdom and Scandinavia, among other regions. The Quality of Work Life program has received strong support from many quarters. Managers see it as a promising way to address stagnant productivity, especially in the United States and Europe. Employees and union representatives also see it as a means of improving working conditions and productivity, and as a way to justify higher wages. The quality-of-work-life approach is also attractive to government agencies as a means of increasing productivity and reducing inflation, as well as a way of gaining industrial democracy and minimizing labour disputes. There are a number of steps that one usually needs to follow in the implementation of a quality of work life programme, commonly the establishment of a labour management steering committee, usually headed by a quality of work life specialist or functionary, to develop measures to enhance the dignity of employees, make work more attractive and increase productivity through job enrichment and redesign of job content. In this, employee and union involvement (if the operating unit is unionized) is critical, not only as an initiative that reflects industrial democracy, but also because people at work know best what will enrich their work and make it possible for them to receive more tangible benefits. This typical approach to quality of work life planning makes it easier to address the problems encountered in work enrichment programmes. As a result of the Commission’s deliberations, it may make recommendations for changes in the design of work and in the work environment as a whole. The

3.2 Basic Methodology

83

Commission’s recommendations may also extend to such issues as the restructuring of enterprises, means of improving communication, problems that have never existed before and their solutions, changes in working arrangements through technical improvements such as the redesign of assembly lines, better quality control and other matters such as sound organizational structures and productivity improvements. (5) Comprehensive incentives Complementary motivational methods other than the four primary motivational methods listed above. (1) Motivation by example: the organization selects individuals or collectives with advanced internal practices and outstanding achievements to be recognized and praised, and asks other individuals or collectives to learn from them. (2) Crisis motivation: the organization constantly instills the concept of crisis to employees, so that they understand the difficulties of the survival environment, and the possible adverse effects of this on their own work and life, and then motivate employees to work hard spontaneously. (3) Environmental motivation: the organization improves the political, work, living and interpersonal environment so that the employees are comfortable and energized in the work process.

Ways to Overcome Communication Barriers (Sanduo et al., 2018) (1) Understand the importance of communication and treat it correctly Managers attach great importance to planning, organizing, leading and controlling, and are often negligent about communication, believing that an organizational system is sufficient for the transmission of information, and often taking a suppressive attitude towards ?gossip? in informal communication. All these phenomena show that communication is not given the importance it deserves, and it is urgent to re-establish the status of communication. (2) Learning to listen Listening is an active, proactive, conscious thinking. (2) Emphasis on feedback The recipient of the message gives the sender of the message a message informing that the message has been received and the extent to which it has been understood. Feedback can be both verbal and non-verbal.

84

3

Leadership

(4) Overcoming cognitive differences The message sender should make the message clear and unambiguous. Make every effort to understand the context of the person to whom you are communicating and choose words and organize the message in a way that is easily understood by the recipient of the message. (5) Suppression of emotional responses The easiest way to do this is to pause communication until calm is fully restored. Managers should do their best to anticipate an employee’s emotional response and be prepared to deal with it. Also pay attention to changes in your own emotions and how that change affects others. (6) Creating a small environment of mutual trust and conducive to communication Managers must gain the trust not only of their subordinates but also of their superiors and peers. (7) Shorten the information transmission chain, broaden the communication channels and ensure the unimpeded flow and integrity of information The way forward is to streamline the organization and reduce overlap and excessive hierarchy, as the chain of information transmission is too long, slowing down the flow of information and causing distortion. In addition, while using formal channels of communication, informal direct channels from senior to junior managers can be created to facilitate the transfer of information. (8) Staff Council The annual staff meeting provides a good opportunity for the plant manager to report on his work. The plant manager informs all employees on major issues such as the achievements, problems and future development of the enterprise in the past year, and employees can also communicate and exchange with the plant manager face-to-face on issues of concern to them. (9) Working Group When a major problem arises in the enterprise that is of top and bottom concern, managers may authorize the formation of an ad hoc thematic working group. The task force, in which a portion of the management and a portion of the workforce participate on a voluntary basis, spends a certain amount of working time investigating the enterprise’s problems and reporting back to the highest authorities. The top management also publishes their reports regularly and communicates enterprise-wide on certain major or ?hot? issues.

3.2 Basic Methodology

85

(10) Strengthening parallel communication and promoting horizontal exchange Generally speaking, communication within the enterprise is mostly vertical communication in line with the chain of command, while horizontal communication between departments, workshops and work groups is less frequent, and parallel communication can strengthen horizontal cooperation. Specifically, working meetings can be held periodically with the participation of department heads to report on the work of their departments and make requests to other departments, in order to strengthen horizontal cooperation. (11) Use of the Internet for communication Managers can communicate with interested individuals or all interested persons through a public website or a dedicated website. (12) Proposals to improve written communication Effective written communication is more of an exception than a rule, and neither education nor high intelligence guarantees good written communication. Many people are keen to use technical jargon that is only understood by peer experts. Common problems in written communication are writers who omit conclusions from their reports, or infiltrate conclusions into their reports, or who drag out line checks, poor grammar, poor word choice, confusing sentence structure, and misspelled words. But following these guidelines may greatly improve written communication (Sage, 1998): use concise words and phrases; use phrases and familiar words; use personal pronouns (e.g., ?you?) whenever possible; provide illustrations and examples and use diagrams; use short sentences and small paragraphs; use the active voice (e.g., ? Managers? Plan ???); and avoid superfluous language. John Fielden Fielden recommends, in particular, that when the writer has a certain amount of power, his or her writing style should be ?imperative? and be both courteous and firm. When the writer’s position is lower than that of the recipient of the message, a ?straightforward? style is appropriate; for good news and persuasive requests for action, a ?private letter? style is appropriate, and for negative news, an ?impersonal style? is usually appropriate. The ?impersonal style? is usually appropriate. A ?vivid and colorful? style is appropriate for writing good news, advertisements, and sales letters. For common business correspondence, a straightforward official letter style is appropriate, without the need to be literary.

86

3

Leadership

Methods of Conflict Suppression (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Competitive strategy Competitive tactics, also known as coercive tactics, are ?I win, you lose? tactics that ignore the interests of others in order to satisfy their own interests. This strategy is difficult to convince the other party and is not a good way to resolve the conflict. However, it is often useful when one party has the overwhelming power and position in the conflict, when it is not critical to gain the acceptance of the other party, or when there is time pressure on some important issues that need to be resolved immediately. (2) Cooperation strategy It is about meeting the interests of both parties to the extent possible and represents a win?win situation in conflict resolution. Cooperation is the process of understanding the differences between the two parties through open and honest communication with each other and trying to identify possible win?win solutions to maximize the possible benefits for both parties, provided that a foundation of mutual trust is first established. When both parties to a conflict are interested in finding a win?win solution, or when the issue is too important to compromise and the time pressure is not too great, cooperation may be the best solution. (3) Avoidance strategies It is a conflict resolution strategy that is neither cooperative nor insistent, and that satisfies neither one’s own interests nor the interests of the other party. Avoidance strategies may be effective in the short term if the conflict itself is not too important, or if the conflict has triggered an excessive emotional response, but they are often ineffective in the long term because they ignore the other person’s point of view and are vulnerable to criticism. (4) Accommodation strategy Accommodation strategies, also known as restraint strategies, are when the person suppresses his or her own needs in order to meet the needs of others. Usually, accommodation strategies are used in exchange for the cooperation of the other person in the long run, or to yield to the other person’s power and will. (5) Compromise strategy A compromise strategy is essentially a trade off, also known as a negotiation strategy. It requires each party to the conflict to take a step forward and partially meet the demands and interests of both parties through a series of negotiations, concessions, and bargains. Compromise may be the best strategy when the parties to a

3.2 Basic Methodology

87

conflict are evenly matched, are at loggerheads, are anxious to reach a temporary solution to some issue, or are under considerable time pressure. (6) Mediation Act This is an approach in which the parties to a conflict negotiate or negotiate an agreement or convention to resolve the conflict. The leader of a conflict should be a mediator. He should first listen fully to both sides, understand the situation and identify where they disagree, and then analyse what is reasonable and what they have in common. Then he or she should look for common goals and interests on a larger scale and make proposals to try to bring the two sides together in order to find common ground and compromise. Finally, an agreement or convention is drawn up based on the new objectives and implemented together under the supervision of the leadership. Differences may be significant at the beginning of the consultation, but as the consultation proceeds, the convergence grows and eventually the differences are eliminated. This approach to conflict resolution is based on the premise that the problem to be solved is objective and not an unreasonable demand by the parties to the conflict. The advantage of this approach is that the parties do not first distinguish between who is right and who is wrong, and there are fewer negative factors. However, it is more time-consuming and slower to achieve results. On the whole, it is a better solution. (7) Mutual Aid Act This is a better approach to conflict resolution. It is an approach where both parties to a conflict are guided by the assistance of a third party (expert and leader) to resolve the conflict through full discussion. The key to using this approach is the involvement of a knowledgeable expert or leader, followed by the creation of an atmosphere in which both parties can sit down and discuss the issue in a calm manner. With these two elements in place, even the most complex problems and conflicts can be resolved relatively well. The steps are firstly, with the participation of experts, both sides fully present their views and grounds and analyse and compare them, thus establishing a common basis of understanding. Each side then proposes a solution to the problem based on the common understanding, and the experts work together to rank and compare them, and finally select or summarize the most reasonable solution to be implemented. This approach has many advantages, mainly that disagreements are eliminated more thoroughly, motivation is mobilized more quickly and new programmes are born more reasonably. The disadvantage is that the process is quite long and consumes a lot of time and energy. In practice, it has proved to be very effective, provided that the experts and leaders involved are sufficiently competent. The difference between this approach and the previous one is that the previous one emphasizes mediation, compromise, compromise and mutual concessions by

88

3

Leadership

both sides. This approach, on the other hand, seeks a common basis of understanding and uses it as a boundary condition for a collaborative search for a reasonable solution. (8) Adjudication Act The adjudicative method is a method by which a person or organization in a position of authority decides on a conflict. The obvious advantage of this method is that it is simple and effortless, and the most serious conflicts and complex issues can be decided by a few words of the authority that appears, and the person being decided can only obey unconditionally. This approach can only be correct and just if the authority is a competent, impartial person who is familiar with the situation and understands what is going on. If not, it is bound to seriously demotivate the person being adjudicated. Even if the ruling is correct, since it often involves a determination of right and wrong, the wrongdoer will naturally be unhappy and unconvinced; the rightdoer, though happy, will take it for granted, so it will not have many positive consequences. In addition to authoritative arbitration, lotteries are sometimes used to resolve conflicts, which are only applied when both or several parties to the conflict consider it just and when the probabilities of success and failure are equal for all parties. Adjudicative law has a special role to play when the situation is urgent. But at all times authority is not only power, but more importantly experience, competence and character. (9) Reorganization Act Specific organizational adjustments are made in the following ways. (1) Absorption and consolidation and separation by replication. For example, the research department often has some processing tasks that may conflict if the production shop is always allowed to do the processing. In this case, a small processing unit can be assigned to the research department to work exclusively on the processing tasks of the research department, and the production plant is no longer responsible for the processing tasks of the research department. (2) Use a matrix organization to surface the conflict and bring the conflict players together to discuss the process of conflict resolution. (3) Rotate conflicting positions and personnel with each other for role experience and better understanding of each other. (4) Restructure individual responsibilities so that there is a single division of labour, simplifying role requirements and role conflicts. For example, to reduce the conflict between research and teaching, teachers specialize in one of these tasks at a given stage. (5) Separation using buffers or buffering using a concatenated role. The diagram may illustrate when the caster shop and the machine shop disagree on whether

3.2 Basic Methodology

89

a batch of blanks passes or fails due to their different views and requirements on the quality standards of the blanks. If they talk directly, they may not be able to argue. The usual solution is that they do not talk directly and that the blank depot, the quality inspection section or the plant dispatcher established by the plant acts as an intermediary, thus reducing the conflict. (6) Dominance Act This is a method of conflict resolution in which a party to a conflict uses power or force in its hands to force the other party to the conflict to retreat and give up; this method of conflict resolution is called domination. Domination can be individual domination, joint domination or majority domination. Individual domination means that a manager can use his or her authority to remove one or more of the opponents in the conflict from office or to make other personnel changes. Joint domination is where several people form a centre of power to dominate others or dominate the other party to the conflict. Majority domination is when managers work to develop a majority view so that the power held by the disagreeing opponent is so small as to be negligible, forcing the opponent to withdraw from the conflict or remain silent. However, domination is often directed at specific people, and conflicts are not always caused by one person, so that although people are dominated, the conflict is not really resolved. Therefore, although simple, this method is often ineffective and should be used with caution and only as a last resort. (11) Delaying method This refers to the method of delaying for some time, so that the agitation of the conflicting parties can be calmed down and the substance of the problem exposed more clearly, which is also known as the ?cooling-off method?. This method is suitable for dealing with people, especially for political reasons. It is more prudent to deal with people not on the ?edge of the storm? and at the ?head of the fury? of both sides, but after they have cooled down, which can be more secure and has fewer side effects.

Methods for Stimulating Conflict (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Legitimizing the conflict Managers should communicate messages that encourage conflict to employees and take supportive actions to give conflict a legitimate place in the organization. For example, employees who dare to challenge the status quo and offer dissenting or innovative ideas should be given tangible rewards, such as public praise, pay raises, promotions, etc.

90

3

Leadership

(2) Moderate introduction of external fresh blood to stimulate a competitive atmosphere within the organization The internal promotion system can inspire a sense of belonging and motivation for advancement, but for some organizations, this ?inbred? approach can lead to a state of stagnation within the organization. In contrast, outsiders with different attitudes, backgrounds and values may lead to conflicts of opinion between old and new members, but they also often bring new perspectives and ideas, which are conducive to internal dynamism. (3) Organizational structure The traditional organizational structure of an enterprise, especially the linearfunctional structure, is particularly prone to induce destructive conflicts, which are very detrimental to the achievement of corporate goals. Therefore, companies should make organizational changes, changing the traditional pyramidal control organization to a flattened network organization. The general trend of change in enterprises is to expand the scope of management, reduce management levels, widely introduce work teams, and realize the flattening, networking and virtualization of organizational structure. The new organizational structure, which emphasizes equality and communication, can effectively increase the level of constructive conflict in the organization and thus improve corporate performance.

Ways to Improve Business Leadership and Execution (Argyris, 2004) (1) Improving the positive leadership role of the principal person in charge of the enterprise The influence of the words, actions and working ability of the main person in charge of the enterprise on the whole enterprise is huge. The main person in charge can exert influence on managers at all levels in terms of safety production management, selection and employment, professional knowledge level, safety culture concept, etc., and gradually influence all employees, so that the whole staff will be consistent in their work ideas. And take practical actions to lead the enterprise staff and improve the execution of all staff, such as: (1) taking the lead in promoting the safety concept; (2) taking the lead in complying with safety rules and regulations; (3) taking the lead in formulating and implementing personal safety action plans; (4) taking the lead in conducting behavioral observation; (5) taking the lead in teaching safety lessons; (6) taking the lead in conducting safety risk identification; (7) taking the lead in conducting safety experience sharing activities. (2) Establish a sound production safety management system and implement a production safety responsibility system

3.2 Basic Methodology

91

A sound production safety management system is an important foundation for the safe operation of an enterprise, while the production safety responsibility system clarifies the responsibilities of personnel at all levels in terms of production safety. The requirements of national laws and regulations, standards and norms are refined, decomposed and integrated into the management system to ensure the effectiveness of the management system. Enterprises should strictly follow the work requirements of the management system, implement responsible departments and responsible persons, formulate work plans, effectively implement them, strictly assess the results, and continuously improve them. Clear responsibility for safety production can enable personnel at all levels to be clear about their respective work responsibilities, so that they can be exempted from responsibility for their duties and held accountable for their failures. (3) Strengthen education and training, and build up the talent pool Moral and talented management personnel is an important guarantee to enhance the leadership and execution of enterprises. Whether they are managers or executors, their comprehensive quality and professional ability are related to whether the enterprise’s safety management system can be put into practice. Talent team building needs to think about the long-term development of enterprises, as a longterm work to implement, to achieve the institutionalization of talent education and training and normalization. Education and training can include corporate culture concept, management system requirements, professional knowledge and skills, etc., and can take the form of pre-shift and post-shift meetings, safety activity days, knowledge competitions and daily training. Training content such as: (1) national laws and regulations, standards and norms; (2) corporate culture concept, management system, job operation procedures, etc.; (3) professional knowledge, operation skills, accident cases, etc. (4) Enriching safety culture activities and creating a safety culture The forms of safety culture activities should be varied, lively and practical. You can give full play to the power of the staff, brainstorming, to discover more and more close to the staff activities. For example: regular thematic discussions, safety knowledge lectures, safety experience exchange, on-site safety training, emergency drills, etc.; can also invite employees? relatives to participate in the enterprise’s safety culture activities, so that employees can better appreciate the importance of safety for themselves and their families; can create advanced workshops, teams of cases, and experience summaries to promote, to play the role of point to point. Enterprise leaders and managers should attach great importance to and actually participate in safety culture activities. This will not only improve the importance of safety culture activities in various departments, but also be able to supervise and guide specific activities, which will be conducive to the continuous enrichment of the activities, improve the accuracy and effectiveness of the activities, and create a strong safety culture atmosphere for the enterprise.

92

3

Leadership

(5) Guaranteeing financial input related to safety production The normal production of the enterprise, maintenance of equipment and facilities, issuance of labor protection supplies to employees, rectification of hidden dangers, education and training of personnel, and construction of enterprise culture are all inseparable from financial support. Reasonable capital investment is the material basis for enterprises to maintain normal production, and facilitates personnel at all levels to carry out the task instructions of superiors more effectively. Enterprises should ensure that production safety-related funds are fully invested and earmarked in accordance with the requirements of laws and regulations. (6) Increased cross-enterprise and cross-industry exchange and learning for managers Managers play the dual role of leaders and executors in the enterprise, and should have certain professional knowledge, management ability, development vision and other qualities. Managers need to continuously learn and frequently communicate with advanced enterprises to learn from their strengths and weaknesses. Frequent training in various professional knowledge, participation in industry exchanges, and participation in technical forums of cross-industry enterprises will enable managers to see more advanced production technologies and management concepts to enrich themselves and thus promote the work of safety production in their own enterprises. (7) Strict implementation of the assessment and incentive system The implementation of the enterprise management system should be checked and handled in strict accordance with the assessment and incentive system, so that all production and operation behaviors run under the system. Enterprises should combine the requirements of laws and regulations, constantly improve the assessment and incentive system, and formulate practical assessment and incentive rules. Enterprises can form inspection teams of different levels, such as enterprise level, department level and team level, to conduct regular or random inspection and appraisal of the corresponding jurisdictions, and conduct statistical analysis and record archiving of the results. The appraisal results can be used as the basis for employee promotion, remuneration and benefits, as well as the evaluation of priorities and merits. Assessment methods such as (1) seminars, knowledge competitions, safety knowledge examinations, departmental self-assessment, enterprise self-assessment; (2) random sampling of post employees to ask about what they should know and know how to do, and also on-site simulation; (3) year-end assessment of the completion of the safety responsibility system, etc.

3.3 Management Practice Cases

3.3

93

Management Practice Cases

Case 1 A company has become a well-known domestic and foreign chemical raw material manufacturing enterprise, and its great success cannot be separated from the excellent leadership of its chairman, which is not only reflected in his adoption of strict and clear management, visionary and firm beliefs, but also in his correct and decisive decisions, and his charisma of not forgetting the original intention and sticking to social responsibility. In response to the low motivation and low productivity of the employees at that time, the chairman of the company developed a very clear equity incentive system to motivate employees to work, with each level of employee receiving a different number of stock awards according to the regulations. The recipient of the stock is entitled to dividends and appreciation of the stock, but has no ownership rights and therefore cannot buy or sell the stock held, and will be repurchased by the company upon separation. Within this company, employees are motivated by a striver mentality to create value for the company and for customers. Most employees will use the dividend money to hold more shares of the company’s stock after the dividend is paid, and the growth rate of the company’s stock earnings brings them benefits that greatly exceed their salaries, stimulating them to work harder to create greater value to some extent. At the same time, in the face of the backward domestic raw material manufacturing technology, most of the patents are monopolized by foreign countries, the chairman of the board was not tempted by short-term profits, quick money, not shaken by the outside world’s questions and taunts, adhere to the road of independent innovation and research and development, and constantly increase investment in research and development, leading employees to strictly control product quality, vigorously innovate to enrich product varieties, through years of dedicated efforts, and finally developed and manufactured a variety of special chemical materials with high Through years of subtle efforts, we finally developed and manufactured a variety of special chemical materials with high technical content and high quality to meet the diversified needs of customers, so that the company won the trust and favor of many enterprises at home and abroad, bringing a large number of orders. Although the company’s market capitalization has reached tens of billions of dollars, its chairman is very enthusiastic about charity and poverty alleviation, and is very concerned about the protection of employees? rights and interests. He provides employees with generous welfare benefits and higher salaries, always does his best to provide substantial help when employees encounter difficulties in their lives, gives substantial financial help when employees are sick, cares about their personal living conditions, and holds group weddings for them. In addition, he has donated many assets under his name, more than ten billion yuan, to various industries such as medical care and education one after another. Whenever a disaster occurs in a certain region of the country, he always actively provides donations to lend a helping hand to the affected areas. In the cause of poverty alleviation, the

94

3

Leadership

chairman of this company knows that donating money only has a relieving effect and cannot really eradicate poverty, so he helps poor households to develop their own industries by taking into account the actual situation of the local area, which opens a new chapter in the lives of poor households. The behavior of this chairman has gained him the general respect from the outside world and invariably set up a good image for the company, and it has also created a great influence within the company, driving the progress of the company’s staff and top management and forming a good working atmosphere. Questions: 1. What is leadership? Please briefly describe your understanding. 2. Try to analyze which ways the chairman of the company uses to motivate employees?

Case 2 (According to ?Endeavour-Oriented? & Related Materials. Hang Weiwei, ?Endeavour-Oriented?, 2014) Officially incorporated in 1987, Company B has been the world’s number one telecom equipment manufacturer since 2012, with sales revenue of 53.92 billion euros (about 420 billion RMB) in 2016.What has Company B grown on? The book ?Striver-oriented? shows that the vitality of Company B relies on its core competence, which comes from its core values of customer focus, striver orientation and long-term perseverance in hard work. Customer-centeredness is the fundamental meaning of the existence of a company. Serving customers is the only reason for the existence of Company B. Customer needs are the driving force behind the development of Company B. Company B insists on being customer-centric, responds quickly to customer needs, continues to create long-term value for customers, and helps customers achieve success, rather than earning a penny by serving customers and achieving success for itself. To provide effective service to customers without pursuing the maximization of company’s profit. To stand in the position of the customer and think one step more than the customer. To have money for everyone to earn, share the profit to the industry chain or upstream and downstream partners, and live together to win together. We can say that all people who create value for customers are the strugglers of the enterprise. They firstly have the spirit of hard learning; secondly, they have the ?wolf nature?, which has three characteristics?keen sense of smell, indomitable and defiant attacking spirit, and group struggle; finally, they are dedicated to their work and have the spirit of self-criticism, and take the overall situation as the priority. Always maintain a sense of crisis and mission. They are the leaders of the company regardless of their positions, and they are the locomotive of the company. They are customer-oriented and take the responsibility to meet the needs of customers, and

3.3 Management Practice Cases

95

have a certain entrepreneurial spirit. The company’s assessment and evaluation mechanism is also tilted towards the strivers and contributors. The basis for such a culture to be passed on is not to let Lei Feng suffer, and those who give must be reasonably rewarded. The biggest difference between strivers and laborers is that laborers can only be treated in comparison to the industry, not the internal standards of Company B. Strivers have to voluntarily give up some things, such as overtime pay, but they can enjoy saturation allotment of shares. Only strivers are eligible for equity incentives, so identifying strivers themselves creates some sort of internal competition. Strivers are incentivized with virtual stocks, and the incentive recipients have the right to dividends and net asset appreciation income, but they have no ownership and voting rights, and cannot transfer or sell the virtual stocks. The current shareholding structure of Company B is 98.7% owned by the union committee of Company B and 1.3% owned by the chairman of Company B. Company B adopts a ?saturation share allotment system? in which employees at each level will not participate in new share allotments once they reach the upper limit. The highest ranking employee is 23, and employees with three years of service at level 14 or above are granted approximately tens of thousands of shares per year, while more senior employees at level 18 can receive up to 400,000 shares. When an employee leaves the company, the union committee buys back the shares at the current year’s net asset price per share. The funds for the stock incentive come from two sources: (1) bank loans, which the founding employees of Company B obtained in the name of ?personal assistance? to pay for the purchase of shares; and (2) dividend payments. Most of the employees of Company B’s founders invest their dividends in new shares after the dividend is paid, because the increase in stock returns is much higher than the increase in salary. Companies do not reward hard, ineffective work. If a striver works hard but does not create value for the customer, his efforts are superfluous. Questions: 1. How do you understand ?strivers?? 2. Try to analyze the ?strivers-oriented? incentive system of the founder of Company B.

Case 3 (King, 1998) Two men who were wholeheartedly pioneering their vision drove a revolution in personal computing. However, the path of discovery they took was different. Steve Jobs and Bill Gates changed the way the world does things today, but the story of their leadership style is more compelling than the success and innovation achieved by Apple Computer and Microsoft.

96

3

Leadership

(1) Bill Gates and Steve Jobs: early Bill Gates began his career developing computer skills with his childhood friend Paul Allen at a place called Lakeside School in Seattle. Bill. Gates was 14 years old when he and Paul Allen started their first computer company. After graduating from high school, Allen and Gates left Seattle for Boston, where Gates enrolled at Harvard University and Allen began a career at Honeywell. After only two years at Harvard, Gates and Allen left Boston for Albuquerque, where they developed a computer language for the new Altair 8080 personal computer. This computer language became the BASIC language and laid the foundation for the partnership Microsoft Corporation, which was founded in 1975. After five years in New Mexico, Microsoft moved to the Washington, D.C., area in 1980, by which time it had mastered BASIC and two other computer language (COBOL and FORTRAN) tools. Later that year, IBM began developing its first personal computer and was in desperate need of an operating system. Microsoft developed the Microsoft Disk Operating System (MS-DOS) for IBM, while two other companies introduced systems to compete with it. Gates? strong determination and successful brokering of the development of MS-DOS operating programs by other software companies made the Microsoft system the default platform for IBM. As Microsoft became increasingly successful, Gates realized that he needed others to help manage the company. His passion, vision and hard work were the driving force behind the company’s rapid growth, but he knew even better the need for professional management. So Gates brought in Steve Ballmer, a classmate of his from Harvard University. Ballmer had been working at Procter & Gamble since graduating from Harvard as an undergraduate and was pursuing a master’s degree in business administration at Stanford University. Gates convinced Ballmer to leave school and join Microsoft. In 1983, Gates continued to demonstrate his entrepreneurial charm by hiring Jon Shriley to join the company. The latter reorganized Microsoft and restructured the company, while Balmer became an advisor and strong director to Gates. Throughout the 1990s, Microsoft continued its growth and prosperity, dominating the office suite market with Windows and, at the same time, with Microsoft Office. Gates recognized that his role was to provide a vision for the company, so he needed professional managers to run Microsoft. He combined unwavering determination and passion with an architecturally optimized management team to create the global behemoth that is Microsoft today. Another visionary, Steve Jobs and his friend Steve Wozniak, launched Apple Computer in 1976 in the garage of the Jobs family home in Los Alatos, California. In contrast to Bill Gates, Jobs and Wozniak were computer hardware experts who began with a dream of making personal computers not only affordable but simple to use. When Microsoft offered the BASIC language to Apple, Jobs immediately refused, believing that he and Wozniak could create their own version of BASIC in a weekend. this was typical Jobs: decisive but sometimes bordering on

3.3 Management Practice Cases

97

insanity. Jobs eventually agreed to license Microsoft’s BASIC language, while continuing to develop his own more user-friendly interface system for use on personal computers. Many people see Jobs as the opposition to Gates. In contrast to Gates, Jobs was a pioneer and creator, while Gates was more of an industry standard-setter. Jobs? goal was to change the world with his computers, and he was very demanding of his employees. Jobs was very different from Gates, Allen and Wozniak in that he was not a committed computer programmer, he was the one who sold the concept of the personal computer to the masses. Jobs decided to change the direction of Apple by means of developing a McIntosh machine that used a new graphical user interface and introducing the mouse and on-screen graphical command characters to the world. Jobs forced people to choose between the Microsoft-IBM operating system and his McIntosh operating system. Initially, Jobs became the visionary who changed the world of computing, dwarfing Microsoft with Apple Computer, Inc. Along with these successes, a serious problem developed at Apple: Steve Jobs was too arrogant to see Gates and Microsoft as a major threat to Apple. Shortly after the McIntosh machine hit the market, Jobs asked Microsoft to develop software for the McIntosh operating system. Gates agreed to the request and implemented a plan to copy and improve Apple’s user interface. The result of this collaboration was the introduction of Microsoft Windows. Jobs? arrogant attitude and poor management skills became a threat to Apple’s success. He never asked questions or set budgets and had a strained relationship with his employees. Wozniak left Apple after the launch of the McIntosh machine because of his disagreements with Jobs, and in 1985, John Scully, the CEO of PepsiCo, replaced Jobs as president and CEO of Apple Computer. (2) Microsoft and Apple at the turn of the century: an industrial giant and a resurgent leader With the success of Windows, its suite of office applications and Internet Explorer, Microsoft has become a household name, and Bill Gates is known as a corporate genius. Gates was branded as a corporate genius. In fact, allegations by Microsoft’s competitors, the media and the U.S. Department of Justice that Microsoft was a monopolist reinforced Gates? determination to succeed. Many people questioned whether Microsoft would be spared from the U.S. Department of Justice’s ruling. However, Bill Gates has proven to be a master at adapting to dynamic market conditions and technological changes. Throughout the 1990s, Apple moved in the opposite direction. Outdated operating systems and sharply declining market share eventually led to a decline in software development for McIntosh machines. At this critical juncture, Steve Jobs returned to Apple Computer in 1998 to serve as CEO during the transition. Once again, his vision gave birth to the innovative McIntosh machine with its classic Jobs-type design. Back in the 1980s, he created the easy-to-operate McIntosh machine to appeal to those using IBM personal computers and compatibles. Now,

98

3

Leadership

he has added some long-overdue excitement to the computer market by developing a simple, stylish computer with easy access to the Internet. Jobs also became a manager and leader, becoming more mature and able to listen to the advice and ideas of his professional staff. Although he was a transitional CEO, he sold all of his Apple stock, leaving only one share. Many believed that this would bring Apple back from the dead on the road to continued success and would be the beginning of a new battle between Gates and Jobs. Questions: 1. How do the leadership styles of Bill Gates and Steve Jobs differ? 2. Compare and contrast the management practices of Gates and Jobs.

References According to ?Endeavour-oriented? and related materials. Weiwei, H. (2014). Endeavour-oriented. In Z. Sanduo et al. (Eds.), The case is taken from ?management: principles and methods? (7th ed.). CITIC Publishing House. Argyris, C. (2004). Organizational learning (2nd ed.) (Z. Li & L. Ping, Trans.). Renmin University of China Press. Guohua, X., De, Z., & Ping, Z. (1998). Management. Key teaching materials for Marxist theoretical research and construction projects. Management. A variety of sources have been used, including Philip Rosenzweig, ?Bill Gates and the Management of Microsoft,? Harvard Business School Case, July 8, 1993; Philip Elmer-DeWitt, ?Steve Jobs: Apple’s Anti-Gates,? Time, December 7, 1998, p. 205ff; Susan King, ?Pirates of a Modern Age,? Los Angeles Times, June 20, 1999, p. 3ff; Walter Isaacson, ?In Search of the Real Bill Gates,? Time, January 13, 1997, p. 44ff; Bill Gates, The Road Ahead (New York: Penguin, 1996); Jay Green and others, ?On to the Living Room: Can Microsoft Control the Digital Home?? Business Week, January 21, 2002, pp. 68?71; Cliff Edwards, ?Come on, Steve, Think beyond the Mac,? ibid, p. 72; ?Microsoft: Extending its Tentacles,? The Economist, October 20, 2001, pp. 59?61; ?Steve Jobs - Apple,? www.apple.com/pr/bios/jobs.html, accessed November 17, 2011; See also ?Apple Computer,? www.apple.com, accessed November 17, 2011; ?Microsoft?, www.microsoft.com, accessed November 17, 2011; ?IBM,? www.ibm.com, Accessed November17, 2011. Case from Management (Essentials Edition 9), harold koontz, Mainz Weihrich. Koontz, H., & Weihrich, M. (2014). Management. Essentials (9th ed.). Robbins, S. P., & Kurt, M. (2017). Management (13th ed.). Sage, B. (1998). The fifth discipline: art and practice of learning organizations (G. Jinlong, Trans.), Revised by Yang Shuoying. Shanghai Sanlian Publishing House. Sanduo, Z., Chuanming, C., Zixin, L., & Liangding, J. (2018). Management??Principles and methods (7th ed.). Yiqun, X. (2019). Management (5th ed.).

4

Control

4.1

Basic Concepts

Control is the process of leading, monitoring, and correcting organizational activities or job performance The basic concept of control is also expressed in several different forms as follows. (1) Control is the measurement and correction of management activities and their effectiveness within an organization to ensure that the organization’s objectives and the plans drawn up for them are achieved (Key teaching materials for Marxist theoretical research and construction projects). (2) Control is the process of monitoring, comparing and correcting work performance (Stephen). (3) Control is the process of monitoring the activities of all aspects of the organization to ensure that the actual operating conditions of the organization are dynamically adapted to the plan (Sanduo). (4) Control is a checking and corrective activity or process undertaken by an organization in a dynamic environment to ensure the achievement of established objectives (Yiqun). (5) Control is the measurement and correction of performance to ensure that business objectives and the plans made to achieve them are met. (6) Control is the process of checking whether work is carried out according to established plans, standards and methods, detecting deviations, analysing the causes and making corrections to ensure the achievement of organizational objectives (Guohua et al.).

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_4

99

100

4.2

4

Control

Basic Methodology

Methodology for Determining Control Criteria (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Statistical calculation method This means that statistical methods are used to determine standards for all aspects of business operations based on historical information or comparisons with similar companies. Such standards, which are established by statistical calculation, are called statistical standards. The data used to establish such standards may be derived from the historical data of the enterprise or from the statistical data of other enterprises. (2) Empirical estimation method That is, the criteria are established based on the knowledge and experience and subjective judgement of the manager. Such criteria established using empirical estimation are called empirical criteria. In reality, not all work quality and results can be expressed in statistical data, and not all enterprise activities keep historical statistics. For work that is newly performed or for which statistics are not available, the enterprise may establish standards for it through the experience, judgement and assessment of experienced managers or persons familiar with the work. (3) Engineering methods That is, work standards are established by objective analysis of the work situation and based on accurate technical parameters and actual measured data. A standard established using engineering methods is called an engineering standard. Strictly speaking, an engineering standard is also a control standard developed by statistical methods, except that it is not developed using historical statistics, but is based on objective analysis and actual measured data. For example, the output standard of a machine is the maximum output calculated by its designer when it is used under normal conditions, etc.

Methods of Control of the Organization (1) Hierarchical control Hierarchical control refers to the use of formal charters, rules, policies, standards, section authority, written documents and other section mechanisms to regulate the behaviour of departments and members within an organization and to assess performance. Hierarchical control is the most basic form of control in most medium-sized and large organizations.

4.2 Basic Methodology

101

(1) Budgetary control (Key teaching materials for Marxist theoretical research & construction projects, 2019) Budgetary control is to check and monitor the production and operation activities of each department according to the income and expenditure standards specified in the budget, so as to ensure that various activities or departments make effective use of operating resources in the process of fully achieving the set objectives and realizing profits, thus keeping the cost expenditure under strict and effective control. As a means of control, budgetary control is carried out through the preparation and execution of budgets. As the characteristics of production activities vary from enterprise to enterprise, the items in the budget statement will vary to varying degrees. In general, however, the budget content should cover the following areas: income budget; expenditure budget; cash budget; funds expenditure budget; and assets and liabilities budget. a. Revenue budget. Both revenue and expense budgets plan and forecast the results of future activities and the costs required to achieve those results from a financial perspective. Since the main source of revenue for a business is product sales, the main component of the revenue budget is the sales budget. The sales budget is prepared on the basis of sales forecasts, i.e. by analyzing the enterprise’s past sales, the characteristics of current and future market demand and its development trends, comparing the operating strength of competitors and the enterprise, and determining the level of sales that the enterprise must achieve in the future period in order to achieve its target profit. Since enterprises usually produce more than one product and these products are not only sold in a particular regional market, it is often necessary to prepare itemized sales budgets for each operating unit by product, regional market or consumer group (market level) in order to be able to provide a detailed basis for controlling future activities and to facilitate checking the implementation of the plan. At the same time, since sales volumes tend to be erratic in different quarters and months of the year, it is also usually necessary to project sales revenues for different quarters and months, and such projections are important for the preparation of cash budgets. b. Expenditure budget. The products sold by an enterprise are processed and manufactured in an internal production process in which the enterprise draws on a certain amount of labour and uses and consumes certain material resources. Therefore, in contrast to the sales budget, the enterprise must prepare a budget for the production activities that will ensure that the sales process is carried out. With regard to the budget for production activities, it is necessary not only to determine the quantity of products needed to obtain a certain amount of sales revenue, but also, and more importantly, to anticipate the costs of obtaining these products and achieving sales revenue, i.e. to prepare a budget for various expenses. The first is the direct materials budget. The direct materials budget is a detailed analysis of the types and quantities of raw materials that the enterprise must

102

4

Control

utilize in order to produce these products, based on the types and quantities of products required to achieve sales revenues, and it is usually expressed in physical units, which, after taking into account the inventory factor, can serve as the basis for the procurement department to prepare a purchasing budget and organize procurement activities. Next is the direct labor budget. A direct labour budget entails anticipating what types of workers the firm will need in order to produce a certain amount of product, how many of each type of worker will be needed at what time, and what the direct cost of utilizing the labour of those personnel will be. Finally, there is the budget for additional costs. Direct materials and direct labour are only part of the total cost of running a business. Business administration, marketing and promotion, staffing, sales and service, equipment maintenance, depreciation of fixed assets, financing, and taxes also cost the business money. These costs also need to be budgeted for, and this is the additional cost budget. c. Cash budget. A cash budget is a forecast of the future inflow and outflow of cash from the production and sales activities of an enterprise and is usually prepared by the finance department. Cash budgets can only include items in the cash process: receivables from credit sales cannot be included as cash receipts until they are actually paid by the user, raw materials purchased on credit cannot be included as cash expenses until they are paid to the supplier, and investment costs that need to be spread over future years require actual cash expenditures in the current year. Thus, the cash budget does not need to reflect the assets and liabilities of the business, but rather the actual cash flows and processes of the business in its future activities. Even if the sales revenue and profits of a business are considerable, but most of them have not yet been recovered or recovered and then tied up in large amounts of inventory materials or work in progress, it is unlikely to be cash-friendly for the business. Cash budgeting can help the business to identify idle or insufficient funds and thus guide the business to make timely use of the temporary excess cash or to raise the shortfall for maintaining the operations at an early stage. d. Capital expenditure budgets. The above-mentioned budgets usually cover only a certain operating phase and are short-term budgets; capital expenditure budgets, on the other hand, may cover several phases and are long-term budgets. If an enterprise’s income and expenditure budgets are well executed, the enterprise organizes the use of its resources efficiently, and the income from the sale of the products obtained from the use of these resources exceeds the expenditure on the consumption of resources, thus giving the enterprise a surplus, which it can use to restore and expand its production capacity. Since these expenditures are in the nature of investment, their planning is usually referred to as investment budget or capital expenditure budget. Items in the capital expenditure budget include expenditure on upgrading or expanding production facilities, including plant and equipment; expenditure on research and development to increase variety, refine product performance or improve processes; expenditure on personnel training and development to improve the quality of the workforce and

4.2 Basic Methodology

103

management team; and expenditure on market development for advertising and customer search. e. Asset-liability budget. The asset and liability budget is a forecast of the financial position of an enterprise at the end of its fiscal year. By aggregating the subbudgets of the various departments and projects, it shows what the assets and liabilities of the enterprise will be at the end of the financial period if the various business activities of the enterprise meet predetermined criteria. As a summary of the sub-budgets, managers are not required to make new plans or decisions when preparing the asset and liability budgets, but the analysis of the budgetary statements can identify problems with certain sub-budgets and thus help to take timely adjustment measures. Analysis of the ratio of current assets to current liabilities may reveal that the future financial security and solvency of the enterprise is not strong, and may require the enterprise to make corresponding adjustments in the way it raises funds, its sources and its plans for their use. By comparing the current period budget with the actual assets and liabilities incurred in the previous period, it also reveals what adverse changes in the financial position of the business may occur and thus guides ex ante control. Budgetary control actually puts the strategic plan of the enterprise into practice, thus indicating the direction of the organization’s activities and enabling effective coordination of the operational activities of all aspects and links within the organization; the use of budgetary criteria in quantitative form against the actual results of the organization’s activities facilitates the performance assessment process and makes performance management more objective and reliable. Budgetary control also has limitations. On the one hand, budgets can only help enterprises to control those business activities that can be measured, especially in monetary units, but it is difficult to control improvements in corporate culture, corporate image, corporate dynamism, etc., which cannot be measured and which may be critical to the success of the enterprise. On the other hand, budgets are usually prepared with reference to the budget items and criteria of the previous period, which may result in underestimation of the actual needs of the current period’s activities and may easily lead to under-resourcing or wastage. Furthermore, the external environment of the organization is constantly changing and these changes can affect the organization’s cost expenditures for acquiring resources or the realization of sales revenues, which may be difficult to predict at the time of preparation, thus making the budget untimely. (2) Audit controls (Key teaching materials for Marxist theoretical research & construction projects, 2019) Audit control refers to the review and validation of accounting records and financial statements that reflect the process of the organization’s financial movements and their results, in order to judge their authenticity and fairness, thus serving as a

104

4

Control

control. Audit is a more independent economic control activity and is divided into external audit, internal audit and management audit. External audit is an independent examination and assessment of the organization’s financial statements and the financial position reflected therein by auditors selected by a body external to the organization (e.g., an accounting firm). In order to check whether the financial statements and the accounts of the assets and liabilities reflected therein are consistent with the true state of the organization, the external auditor is required to examine a sample of the organization’s underlying financial records to verify their truth and accuracy and to analyse whether they comply with generally accepted accounting standards and bookkeeping procedures. External auditing is in fact an important and systematic check on falsehoods and deceptions within the organization and facilitates the uncovering of fraud, falsehoods and other illegal, wasteful or uneconomic practices in the organization, and therefore has the effect of checking falsehoods and encouraging honesty. Moreover, since the audit is carried out by a body external to the organization, the auditor is not dependent on the organization’s management and is not influenced by it, so external auditing also ensures the independence and impartiality of the audit. Internal auditing is carried out independently by a body within the organization or by a dedicated member of the finance department, and its purpose is to provide a means of checking and evaluating the effectiveness of controls within the organization. Internal auditing not only verifies the truth and accuracy of financial statements, as external audits do, but also analyses the soundness of the organization’s financial structure; not only assesses the efficient use of financial resources, but also examines and analyses the effectiveness of the organization’s control systems; and not only examines the current state of operations, but also provides recommendations for improving that state. Internal audit is thus the general control over other forms of control. Internal auditing can supervise the truthfulness, correctness, reasonableness and legality of various management information, including accounting information, and promote the sound application and effective implementation of various internal control systems, thereby maintaining the safety of organizational property and contributing to the achievement of management objectives. Both external and internal audits have their limitations. The role of external auditing in the control process of the organization is mainly indirect, and external auditors may encounter some difficulties in the audit process of specific operations because they do not understand the internal structure of the organization, the operational characteristics of the production process, etc. Internal auditing, on the other hand, can be costly and more demanding for the auditors. Management auditing is broader in its scope and scope, and is a method for the comprehensive and systematic evaluation and appraisal of all the management of an enterprise and its performance. While management audits can also be conducted by the relevant departments within the organization, in order to ensure that certain

4.2 Basic Methodology

105

sensitive areas are objectively evaluated, enterprises usually hire external experts to conduct them. Management auditing is a method of comparing an enterprise with other enterprises in the same industry or with reputable enterprises in other industries, using publicly available information on record, to determine the health of the enterprise’s operations and management in terms of a number of aspects that reflect the enterprise’s management performance and the factors that influence it. The main factors reflecting the management performance of the enterprise and its influencing factors are economic functions, business organization, revenue rationalization, research and development, financial policies, productivity, sales capacity, and assessment of the management. Management audits have encountered many criticisms in practice, the more important of which is the view that such audits evaluate too much of the organization’s past efforts and results without working to predict and guide future efforts, to the extent that some enterprises have encountered serious financial difficulties soon after obtaining management audits that were extremely well evaluated. Nevertheless, rather than comparing one or two easily measurable areas of activity, the management audit evaluates the management performance of the organization as a whole and, as such, can provide a useful reference to guide the enterprise in improving the structure, work processes and results of the management system in the future. (3) Financial control (Key teaching materials for Marxist theoretical research & construction projects, 2019) Financial control refers to the measurement and correction of the process and results of the enterprise’s capital investment and earnings to ensure that the enterprise’s objectives and the financial plan to achieve them are achieved. The specific method is to compare the relevant items on the enterprise’s balance sheet and income statement to form a series of ratios, which reflect the intrinsic relationship between the relevant metrics and reflect both the problems of the enterprise’s finances and the financial position and operating results of the enterprise through cross-analysis. The commonly used ratios can be divided into three categories. a. Debt-servicing capacity ratio. Solvency refers to the ability of an organization to meet its debt obligations. The organization must have sufficient capacity to meet its obligations, but must not leave too much idle capital to avoid wasting it. Commonly used solvency ratios include current ratio, quick ratio, gearing ratio and interest payment capacity ratio. The current ratio is the ratio of a firm’s current assets to current liabilities, and it measures the ability of a firm’s current assets to be turned into cash to pay off current liabilities before short-term debt becomes due, i.e., short-term solvency. The quick ratio, also known as the acid test ratio, is the ratio of a firm’s quick moving assets to its current liabilities. Quick assets are the difference between current assets minus less liquid assets such as inventories. The quick ratio

106

4

Control

is used to reflect the ability of a business’s current assets to be immediately available to pay off current liabilities. The gearing ratio is the ratio of the total liabilities of an enterprise to its total assets, i.e. what proportion of the total assets of the enterprise is accounted for by the total break in liabilities. It reflects the ability of the enterprise to use funds provided by creditors to carry out its business activities and also provides a measure of the degree of security of funds lent by creditors. b. Profitability ratio. The profitability ratio is an indicator of the profitability of an organization, which reflects its profitability and operating performance. A strong profitability of an enterprise is very important for achieving the profitability of investors’ investments, securing the repayment of principal and interest payments to creditors, and measuring the operating performance of operators; therefore, the profitability ratio is an important and commonly used control indicator. Commonly used profitability ratios are return on total assets and profit margin on sales. Return on total assets is the ratio of the total profit of an enterprise in a certain operating period to all the assets occupied in that period, which reflects whether the enterprise has gained sufficient profit from the utilization of all the invested capital, and is an important indicator of the effectiveness of capital utilization of the enterprise. Sales margin is the ratio between net profit on sales and total sales, and it reflects whether a company is making enough profit from the sales of its products in a given period. c. Operating capacity ratio. The operating capacity ratio is an indicator of the efficiency with which an organization uses its available economic resources, and it is a measure of the overall operating capacity of an enterprise. The level of operating capacity has an important impact on the solvency and profitability of the enterprise. Commonly used operating capacity ratios include inventory turnover, accounts receivable turnover, market share, etc. Inventory turnover ratio is the ratio of cost of goods sold to average inventory, which is an indicator to measure and evaluate the sales capacity and the efficiency of managing inventory of an enterprise. Inventory turnover reflects how well an enterprise’s inventory is used and utilized over a certain period of time, i.e. how efficiently it is utilized. The accounts receivable turnover ratio is the ratio of a firm’s net credit sales revenue to its average accounts receivable balance, and it is a measure of a firm’s efficiency in collecting its accounts receivable. The accounts receivable turnover ratio reflects the speed with which a firm’s accounts receivable flow and is related to the credit policy adopted by the firm. Market share, also known as market share, is the share of a firm’s main product in the total market sales of that product, and it reflects the market share held by the firm in a changing market.

4.2 Basic Methodology

107

(4) Profit and loss control (Sanduo et al., 2018) Profit and loss control is a method of integrating control over the management activities of an enterprise or a separately accountable division of an enterprise and its effectiveness based on its profit and loss statement. The income statement of an enterprise shows the income and expenditure of the enterprise’s various activities and its profit for the period. Profit is a comprehensive indicator of the enterprise’s performance, and the profit and loss statement records some information that affects the changes in profit. If the profit indicator for the current period deviates from the budgeted profit level, the individual items that caused the deviation should be analysed in order to find the reasons for the deviation and develop appropriate corrective measures. Profit and loss control also has shortcomings; it is an ex post facto control. Ex post facto control cannot improve on prior periods, but it can provide lessons for later periods. Since many matters are not necessarily reflected in the current income statement, such as a failure in an activity (e.g. investment in a nonperforming project), changes in the external environment, etc., the main reasons for deviations in profit cannot be accurately determined from the income statement alone. (5) ROI control (Cot, 2008) ROI control is the measurement of the absolute and relative effectiveness of a company or division within a company in terms of the ratio of capital investment to earnings. Return on investment measures (often referred to as “ROI”) have been a central part of DuPont’s control system. ROI is a measure of the return a company or division can earn on the capital it invests. As such, the tool does not view profits as absolute, but rather as what a firm earns from the use of capital. Again, the goal of the firm is not necessarily to maximize profits, but rather to maximize the return on capital invested in the firm. This criterion recognizes the fundamental fact that capital is a critical element in relation to almost any business and that its scarcity is sufficient to limit the growth of the business. This approach to control also emphasizes the fact that it is the duty of supervisors to do their utmost to make full use of the assets entrusted to them. (6) Yield calculation method by discounting (Guohua, 1998) Discounting is a form of loan obtained from a bank by an enterprise. In order to obtain cash at an early date, an enterprise or individual with an outstanding instrument (such as a bill of exchange) requests a discount from a bank, which pays the cash to the enterprise or individual requesting the discount at the market interest rate, less interest from the date of discount to the date of maturity of the

108

4

Control

instrument. The specific discounted value is calculated as follows. Discounted value = amount due on the note /(1 + interest rate)n where: n—number of units of time. The discounted rate of return method involves changing the interest rate in the above equation to a rate of return, and then making the left side of the equation the rate of return. Using the new equation allows for control of the investment. For example, if you currently have $100,000 in cash and if you invest in a business that is expected to pay back $200,000 in one year, you can use the new equation to calculate a rate of return of 100%. This rate of return is then compared with the rate of return under normal circumstances, and if this rate of return is higher than the rate of return on the investment under normal circumstances, the investment is favorable, otherwise it should not be invested. This method of controlling investments is more scientific and includes the time value of money used. Yield = (amount due on the note/discounted value)1/n − 1

(2) Market control (Key teaching materials for Marxist theoretical research & construction projects, 2019) Market control refers to the organization’s use of economic forces to regulate the behavior of departments (units) and employees within the organization through the price mechanism. The motivation for market control is the high cost of managing the organization within the enterprise. There are three levels of market control within a company, the corporate level, the departmental level and the individual level. First, at the corporate level, market control is typically used to regulate separate business (operational) divisions, each of which is a profit center, and top corporate management typically uses profit and loss indicators to evaluate the performance of business (operational) divisions. Second, market control at the sectoral level manifests itself as intra-firm transactions. Transfer pricing is a method by which firms use market mechanisms to adjust internal transactions. The transfer price, which is the internal price determined when transactions are made between different business (operational) departments within the enterprise. When the market price decreases due to competition in the external market, the transfer price within the firm should not be higher than the external market price. In this way, market control of transfer prices increases the pressure on each business (business) department to control costs, pushing each business (business) department to reduce costs by acquiring resources from outside the enterprise (i.e., outsourcing), and at the same time stimulating the vitality of internal tapping. For example, training and development can be done either by the company’s internal HR department or by an external consultancy. In recent years, transfer pricing has been an important tool for multinational companies to

4.2 Basic Methodology

109

allocate resources globally, avoid high taxes, and respond to host governments in order to reap high profits. Finally, market-based control at the individual level often manifests itself in the form of incentive and wage systems. Incentives and wages are the market price for labor compensation and are often the best measure of an employee’s potential value, and market-based controls can stimulate employees to continually improve their skills, allowing those with higher economic value to advance more quickly to higher positions. Market-based control is in line with today’s trend in human resource management to place greater emphasis not simply on improving employee benefits, but on improving employee employability. stock options for CEOs are in essence a method of market-based control, and more than half of a CEO’s compensation today depends on outstanding performance over time. Alibaba’s partnership system and Shenzhen Vanke Group’s business partnership system are both market controls at the individual level, and both have achieved influential results. (3) Group control (Key teaching materials for Marxist theoretical research & construction projects, 2019) Group control is the integration of the individual into the group, the alignment of individual values with the values and goals of the organization, and the achievement of self-regulation and self-control of organizational members through the group’s common behavioral paradigm. Effective group control requires the construction of an innovative organizational culture. According to research, innovative organizational cultures have several characteristics: challenge and participation, freedom, trust and openness, time for creativity, fun and humour, conflict resolution, debate, and risk-taking. Effective group control also requires creating a culture that is responsive to customer needs. To this end, organizations should eliminate rigid rules, regulations and procedures, clearly articulate their commitment to customers, select employees with the right personality and attitude, provide ongoing training for employees on product knowledge, communication skills, etc., and empower employees to make as many decisions as possible so that they can provide customer satisfaction the first time. Effective group control also requires the creation of a good workplace spirit. Workplace spirit is part of the organizational culture, where employees gain a sense of the corporate vision and mission by engaging in meaningful work in a collective environment. Organizations with a good workplace spirit have five characteristics: a strong sense of mission, a focus on personal development, trust and openness, empowerment of employees, and tolerance of their opinions. (4) Cost control (Sanduo et al., 2018)

110

4

Control

(1) Cost allocation methods a. Direct cost allocation methods. Direct costs are those costs that can be easily and accurately attributed to cost objects, i.e., costs can be allocated using the retrospective method. There are two types of retrospective methods of cost allocation: the direct retrospective method, and the motive retrospective method. The direct tracing method is the process of directly identifying costs that have a specific or physical link to a cost object for allocation to that cost object, a process that can usually be achieved through field observations. In practice, however, it is often neither practical nor possible to derive the exact amount of resources consumed by a cost object using field observations, so motive tracing is required. Although not as accurate as the direct traceback method, it is still possible to achieve a high degree of accuracy in cost attribution if the causal relationship is properly established. Motivational tracing uses two types of motives to trace costs: resource motives and job motives. Resource drivers measure the need for resources in each operation and are used to allocate resource costs to individual operations; job drivers measure the need for jobs in each cost object and are used to allocate job costs. b. Indirect cost allocation methods. Indirect costs are costs that cannot be readily or accurately attributed to a cost object. Indirect costs cannot be traced to cost objects, i.e., there is no causal link between the cost and the cost object or traceability is not economically feasible. The process of allocating indirect costs to the various cost objects is known as apportionment. Since there is no causal link, apportionment of indirect costs is based on the principle of simplicity or assumed linkage. In practice, the best costing strategy may be to allocate only direct (i.e., traceable) costs. If certain requirements are met and indirect costs need to be apportioned, at least the results of the allocation of direct and indirect costs should be reported separately. (2) Steps of cost control a. Establish cost control standards. Standard cost systems anticipate quantities and costs on a unit product basis, and these unit estimates include budgets for labor, materials, and manufacturing costs. The standard cost is thus the cost that should be spent to produce a product or provide a service. Historical experience, engineering studies and the opinions of production operators are three potential sources of quantitative standards. While historical experience can provide an initial basis for setting standards, the use of historical data to derive input–output relationships is likely to perpetuate inefficiencies. Engineering studies can determine the most efficient way to operate and can provide rigorous guidance, but process standards are often too stringent and likely to be unattainable by operators. Since standards ultimately need to be practiced by operators, they should have an important role in their development.

4.2 Basic Methodology

111

Participatory management not only makes the standards developed practical and workable, but also motivates participants to improve them. Standards can generally be divided into two categories: ideal standards and realistic achievable standards. The ideal standard requires maximum efficiency and can only be achieved with perfection; the realistic achievable standard is the one that can be achieved under conditions of efficient operation. It allows for normal machine breakdowns, production interruptions, not-quite-perfect skills, etc. In practice, people generally set realistically achievable and challenging standards. b. Accounting for cost control performance and analysis of cost incurred deviation investigation. In order to control cost expenditure in a timely manner, in the process of cost formation, the costs incurred should be inspected and monitored according to the control standards, compared and analyzed with the standard costs, and the amount of deviation should be found in time to judge the performance of cost control. The frequency of cost accounting should be specifically determined according to the nature of business operations. Budget variances are the difference between actual costs and planned costs. Under the standard cost system, the budget variance is decomposed into price variance and quantity variance. Using SP to represent the standard unit price of an input and SQ to represent the standard quantity of input at actual output, the planned or standard input cost is SP-SQ; using AP to represent the actual price per unit of input and AQ to represent the actual quantity of input consumed, the actual input cost is AP-AQ. Whenever the actual price or usage of an input is greater than the standard price or usage, there is an unfavorable variance; if the opposite occurs situation, then it is a favorable variance. A favorable variance and an unfavorable variance are not equivalent to a good variance and an unfavorable variance. Whether a variance is good or bad depends on the reason for the variance, which requires careful analysis by managers. Because of the costs associated with investigating the causes of discrepancies and implementing improvements, investigations are, on balance, only conducted when the expected benefits outweigh the expected costs. Assessing the benefits and costs of discrepancy investigations is not a simple task. In reality, managers have to determine both the nature of the deviation (qualitative analysis) and the extent of the deviation (quantitative analysis). In general, the problems to be addressed fall into four categories: common problems; what appears to be an exceptional event but is essentially a common, common problem; first occurrences of general problems; and truly exceptional and special events. In fact, with the exception of the fourth category of truly exceptional events, all problems require only solutions of universal significance—a rule, a policy, a principle—and once a true principle is established, all problems of the same kind can be solved. While this is effective in solving problems, judging the nature of the problem often carries some risk. At the same time, managers can use a cost control early warning system to determine the acceptable range of control. If the qualitative analysis determines that the deviation has the potential to recur, managers will have to investigate and take improvement actions even if

112

4

Control

the quantitative analysis deviation is not outside the acceptable range because of the cost sharing nature. If the qualitative analysis determines that the deviation is a particular problem, it is examined to see if the quantity is outside the acceptable range, and investigations and actions are taken only if the variance is outside the upper or lower control limits. How do managers determine the acceptable range? The acceptable range is equal to the standard plus or minus the allowable deviation. The upper and lower limits of the acceptable range are called control limits, with the upper control limit equal to the standard plus the allowable deviation and the lower control limit equal to the standard minus the allowable deviation. While formal statistical procedures can be used to determine control limits, the reality is that the vast majority of corporate management determines allowable deviations based on past experience, intuition, and judgment. Therefore, the analysis of the quality and quantity of deviations relies on the experience, intuition and judgement of the management as well as the executive staff. c. Taking corrective measures. Based on the analysis of the causes of deviations, appropriate corrective measures are formulated and implemented to specific departments and executors. Doing a good job of cost control and continuously reducing the operating costs of an enterprise is the most direct and effective means of improving the competitiveness and thus the economic efficiency of the enterprise. Controlling costs and reducing all waste in the process of enterprise value activities is the essence of lean production. (5) Benchmarking (Sanduo et al., 2018) Benchmarking is a management method that takes the most competitive company or the leading company in an industry or a department within an industry as a benchmark, evaluates and compares the actual status of the company’s products, service management measures or related practices with these benchmarks in a quantitative manner, and formulates and implements improvement strategies and methods on this basis, and continues to do so repeatedly. The goals set by benchmarking management should be both challenging and feasible to a considerable degree. Since benchmarking is very similar in content and nature to control, benchmarking can be viewed as a control method. The usual steps of benchmarking are as follows (1) Identify projects and targets for benchmarking and develop work plans. (2) Conduct research, gather information, identify gaps and determine methods of correction. (3) Initially propose an improvement programme and then amend and refine that programme. (4) Implementing the programme and monitoring it. (5) Learn from the experience and start a new round of benchmarking.

4.2 Basic Methodology

113

Benchmarking also has shortcomings. First, benchmarking may cause the enterprise and the target enterprise to converge, without any characteristics of the enterprise, that is, lost the opportunity to implement a differentiation strategy. Secondly, it is easy to make the enterprise fall into the vicious circle of “lagging behind → implementing benchmarking management → lagging behind again → implementing benchmarking management again”. In fact, in the case of lagging behind, a leapfrogging strategy may be more effective than a catching-up strategy. (6) Balanced Scorecard (Dell, 1991) Balanced scorecards are widely used by businesses, non-profit organizations, and government departments to ensure that a company’s operations are aligned with its vision and strategy, as well as to improve internal and external communication within the business. Thus, the balanced scorecard is used not only for control but also often for strategic planning and day-to-day management. To achieve the company’s vision and strategy, one needs to consider four perspectives: (1) a “learning and growth” perspective involving goals, standards, tasks, and measures; (2) “internal business processes,” which indicate whether the company’s products and services meet consumer requirements and expectations that are consistent with the company’s mission; and (3) “internal business processes,” which indicate whether the company’s products and services meet (3) “Consumer Satisfaction”, even if the financial indicators are satisfactory, consumer dissatisfaction may be a major indicator of future problems; (4) “Financial Perspective”, needless to say, the financial perspective is important, but it is important not to lose sight of several other perspectives. The balanced scorecard approach focuses on the importance of goals and objectives and the close relationship between planning and control. In addition, the balanced scorecard emphasizes the importance of the entire management process, integrating internal strengths and weaknesses with external opportunities and challenges in an organic manner. Also, the balanced scorecard emphasizes the importance of meeting or exceeding consumer expectations and satisfaction with a company’s products and services.

Methods of Control of Personnel Behaviour (Guohua, 1998) (1) Identification-based evaluation methods This method is the simplest and most commonly used method of evaluating personnel performance. It consists of the appraiser writing an appraisal of the appraisee’s strengths and weaknesses, on the basis of which the manager gives the appraisee a preliminary estimate. The basic assumption of this approach is that the appraiser knows exactly what the appraisee’s strengths and weaknesses are, has a good

114

4

Control

understanding of the person, and is able to write the appraisal objectively. However, in practice, these basic assumptions are sometimes not fully met. Moreover, since the content of the appraisal varies and the criteria are not consistent, the use of this method gives only a preliminary estimate, and complete reliance on it often leads to errors in the appraisal. This method is suitable for decision-making in personnel matters such as transfers or appointments. (2) Field review methodology This method is often a means of review. Once a preliminary estimate of the evaluee has been made through other methods, a field visit is made to the unit or job site of the evaluee to verify the accuracy of this estimate. At this point, the local evaluators are brought together to discuss and determine uniform criteria for the evaluation. The different opinions of these evaluators are then reviewed. The manager’s review in the field reveals the lenient attitude of these evaluators and provides a more in-depth understanding of the evaluee. This method, however, would take considerable time and effort and is therefore suitable only for important personnel decisions. (3) Strong selection of columns and other methods This method is designed to overcome bias and subjective intent and to establish more objective evaluation criteria. The approach is for the manager to list a series of possible situations about the evaluee and then for the evaluator to select and mark the entry among them that best suits the evaluee. The manager weights the ratings accordingly, with high scores being good and low scores being poor. This method is more accurate, but it is limited in its application to jobs of a similar or standard nature, beyond which its accuracy will be greatly reduced. (4) Pairs of equivalents comparison method This method is based on a two-by-two comparison of the personnel to be evaluated, i.e., each person is compared with all the others and then selected according to certain evaluation criteria. For example, the contribution of the person being evaluated to the business over the year, or the pioneering and enterprising spirit in the workplace. In a two-by-two comparison, the better one is selected and marked. When all comparisons have been made, the one with the most marks is the best one according to the criteria set, while the unmarked one is the worst one. Figure 4.1 shows a practical selection form, according to which it is possible to determine exactly which of the group members is the best, Li XX, and which is the worst, Zhou XX. But this method has the drawback that the comparison criteria are only

4.2 Basic Methodology

115

Fig. 4.1 Paired column equivalence comparison method

a single item. If there are multiple criteria to be measured together, only one comparison can be made for each criterion, then a weight is given for each criterion, and finally a weighted comparison is made to determine the order. This further increases the workload, especially when the number of people to be evaluated is large. In addition, this method can sometimes produce large errors because it is based on subjective judgments, and it is better to have several people working individually on the evaluation at the same time, and then take an average to reduce such errors. This method, together with the strong selection column and other methods, is suitable for evaluating salaries, bonuses, etc. (5) Incidental event evaluation method In this approach, managers are required to have a record sheet to keep track of positive or negative contingencies of the employee against which the employee’s performance can be evaluated on a regular basis. Evaluation based on such contingencies is more objective, but the key is whether all contingencies of the employee can be recorded. In addition, there are various accountability systems for employees, and this method can be effective in motivating employees if the work standards set by the accountability system are agreed to by the employees, otherwise there is a sense of unfairness. This method is used in conjunction with target management to effectively monitor the work of employees.

116

4

Control

Quality Control Methods (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Total quality management approach According to the International Organization for Standardization, Total Quality Management (TQM) is “a management approach in which an organization focuses on quality, based on the participation of all employees, with the aim of achieving long-term success by satisfying customers and benefiting stakeholders such as the organization’s owners, employees, suppliers, partners or society”. The basic requirement of total quality management is “three whole and one more”, that is, quality management of the whole process, quality management of the whole staff, quality management of the whole organization and quality management of multiple methods. Quality management of the whole process emphasizes that the end-user’s evaluation of product quality is based on the degree of applicability, the durability of use and the stability of use of the product; therefore, enterprises should plan their quality objectives, set quality standards and continuously improve the applicability of their products with user satisfaction as the benchmark. The quality of any product or service has a process of generation, formation and realization, and this process consists of several interconnected and mutually influential links. In order to ensure and improve quality, all links and factors affecting quality must be controlled to form an integrated quality management system for continuous quality improvement. Quality management for the entire workforce means that quality control is extended to all personnel in the organization. The quality of products or services is a comprehensive reflection of the quality of work at all levels, in all departments and in all parts of the enterprise, therefore, quality management should involve the whole staff and everyone is responsible for it. To this end, the organization should do a good job of quality education and training for all staff, and establish the awareness of “quality first, everyone is responsible”. At the same time, it should develop a quality responsibility system for each level, department and employee to form an efficient, coordinated and tight quality management system. Organization-wide quality management requires that the continuous improvement of quality be ensured from both the vertical and horizontal aspects of the organization. Vertical quality management means that the achievement of quality objectives requires the collaboration of the upper, middle and lower levels of the organization, especially the full commitment of top management, which will play a decisive role; horizontal quality management requires that all activities of the enterprise to develop, maintain and improve quality must form an effective whole to ensure and improve the quality of the product or service. Multi-method quality management refers to the application of all methods that can be applied, not only mathematical and statistical methods. With the development of modern technology, quality management has formed a diverse system of methods, such as PDCA cycle, hierarchical method, causal analysis, value

4.2 Basic Methodology

117

engineering method, etc.; mathematical and statistical methods include histogram, control chart, scatter diagram, preference method, etc.; new tools include system diagram method, correlation diagram method, KJ method, matrix diagram method, PDPC method, etc. In the process of quality management, various methods and technical tools should be used in an integrated manner to truly achieve scientific procedures, flexible methods and remarkable results. The basic approach to total quality management is the PDCA cycle, which consists of four stages: plan, do, check, and action. In total quality management, the four stages of the PDCA cycle are usually further refined into eight steps: analyze and evaluate the current situation to identify areas for improvement; identify goals for improvement; find possible solutions to achieve those goals; evaluate those solutions and make a choice; implement the selected solutions; measure, verify, analyze, and evaluate the effects of implementation to determine that those goals have been achieved; formally adoption of changes; and review of results, if necessary, to identify opportunities for further improvement. PDCA cycle can be used repeatedly, big ring set small ring, small environmental protection big ring, interlocking, mutual promotion, and constantly promote the quality improvement process. It can be seen that proficiency and flexibility in the use of the PDCA cycle method is very important to improve the effectiveness and efficiency of the operation of the quality management system. (2) Six Sigma management method Six Sigma management is a quality control method built on statistical standards and designed to reduce defect rates to help reduce costs, save time and improve customer satisfaction. The purpose of Six Sigma management is to eliminate non-value-added activities, shorten production cycles, and improve customer satisfaction. Its guiding principle is to attach importance to considering problems from the perspective of the organization as a whole, from the standpoint of the customer, and to adopt scientific methods to pursue defect-free quality in all areas of the organization’s operations, to minimize the organization’s operating costs, and to improve competitiveness. The approach focuses the organization’s attention on both the customer and the organization, which is conducive to reducing costs and product defect rates, shortening production cycles, increasing market share and return on investment, and improving customer satisfaction. The six principles of Six Sigma management are a strong focus on customer needs; managing based on data and facts; focusing on process improvement; conducting proactive improvement-oriented management; collaborating without boundaries; and striving for perfection but tolerating failure. A key issue in the implementation of Six Sigma activities in an organization is the creation of a team of experts committed to process improvement and the identification of various roles and their responsibilities within the team to form a Six Sigma organizational system. A Six Sigma organization usually consists of senior leaders, champions, master black belts, black belts, green belts, business

118

4

Control

leaders, and other members who each have their own responsibilities for achieving the desired goals. Senior leadership is a key factor in the successful implementation of Six Sigma management. A common characteristic of successful Six Sigma management is the full support of senior leaders. Leaders must have a deep understanding and high level of buy-in to the benefits of Six Sigma management for the business and the goals to be achieved by implementing the program, be enthusiastically supportive and actively involved, and foster a climate of change within the organization aimed at continuous improvement. The champion initiates and supports Six Sigma Black Belt projects and is a key player in Six Sigma management. The champion is usually a member of the organization’s Six Sigma leadership team or a middle-level manager or above, whose job is usually to provide a strategic perspective on Six Sigma management, conduct overall strategic planning, project planning and goal setting, resource allocation and process monitoring, and ultimately take responsibility for the Six Sigma activity as a whole. The Master Black Belt is a high level Six Sigma management officer and expert in the use of Six Sigma management tools. Their primary responsibilities are: acting as trainers, training Black Belts to ensure they have the applicable tools and methods; providing guidance to Black Belts and Green Belts on Six Sigma projects; coordinating and directing cross-functional Six Sigma projects; and assisting management in selecting and managing Six Sigma projects. Black Belts are the most important role in Six Sigma management; they specialize in Six Sigma improvement projects, are the technical backbone of successful Six Sigma projects, and are the core strength of the Six Sigma organization. The main responsibilities of a Black Belt are: leading the Six Sigma project team, implementing and completing Six Sigma projects; providing training to team members on applicable tools and methods; identifying process improvement opportunities and selecting effective tools and techniques to implement improvements; communicating Six Sigma management concepts to the team and building consensus on Six Sigma management; reporting to management on the progress of Six Sigma projects; transferring the knowledge gained through project implementation transfer to the organization and other Black Belts; provide project guidance to Green Belts. Green Belts are members of Black Belt project teams, or team leaders on smaller projects, who are trained in Six Sigma techniques similar to Black Belts, but at a slightly lower level of content. Once trained, the Green Belt’s role is to bring the new concepts and tools of Six Sigma to the daily work of the organization. Their main responsibilities are: building the Green Belt project team and communicating with colleagues who are not on the team; facilitating a change in team mindset and maintaining high morale; implementing improvement plans to reduce costs; and discussing project implementation and future projects with the Black Belts. Successful Six Sigma projects also require the support and cooperation of the relevant business unit leaders (process managers), otherwise it is difficult to

4.2 Basic Methodology

119

achieve the desired fruitful results. Business leaders are not required to complete the project independently. Their main responsibilities are: to assist in the selection of Black Belts and Green Belts and to provide resource support; to follow the project implementation process of Black Belts and Green Belts, and to coordinate the Black Belt and Green Belt projects under their jurisdiction to ensure consistency with the business direction; and to ensure that process improvements can be implemented and the improvement results maintained. In addition, organizations are often required to staff Six Sigma projects with financial representatives who are responsible for the full process of financial review, from the assessment of the potential benefits of the project, to the cost– benefit analysis of the solution, to the measurement of the benefits of the project outcomes. The vast majority of companies implement Six Sigma management using training as they implement (learning by doing). The most common method used for Six Sigma business improvement is DMAIC: Define, Measure, Analyze, Improve, Control. Define i.e. define the boundaries of the project. The main components include: identifying improvement opportunities, mapping SIPOCO, identifying customer needs and key quality characteristics, mapping detailed processes, and building the project team. Project definition is critical to the success of a Six Sigma project. The main elements of measurement are: defining the object, method and indicators to be measured, defining the measurement process, determining the relationship between process output indicators and key quality characteristics, the relationship between process output indicators and input indicators and process indicators, and conducting a measurement system analysis. The purpose of the measurement is to ensure that the project work can use the right methods, measure the right indicators, have as little variation in the measurement results as possible, and ensure that the data used in the subsequent analysis phase are accurate and reliable. Analyse is a combination of statistical methods and management techniques, statistical analysis of data, comparative tests, defect analysis, analysis of sources of variation, analysis of key factors, multivariate analysis, correlation and regression analysis, analysis of failure modes and effects, and analysis of operational valueadded, etc., to identify key and potential causes that affect performance indicators. Improvement (IMPROVE) is a bold solution to a problem based primarily on the causes found in the analysis phase. Undoubtedly, some non-traditional creative thinking methods are very useful at this stage. Improvement solutions are evaluated and screened in several rounds until a satisfactory consensus is reached. In addition, to ensure the success of the programme implementation, it is necessary to conduct some local operational tests to validate the improvement programme. Control (control) is the control of deviations of the main variables within the permitted limits. After some improvements are made to the process, the next problem is to stick to the improvements and avoid going back to old habits and processes. In the control process, there is no control without job descriptions and process procedures for each person in each part of the business process. Thus, the

120

4

Control

success of a Six Sigma project depends on those who stick to it as they should and on a superior control system.

Information Technology Methods for Modern Control (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Electronic Data Processing System (EDPS) Electronic Data Processing Systems (EDPS), also known as Transaction Processing Systems (TPS), are used primarily for management control at the operational level to process routine, recurring business events, often dealing with specific electronic data. (2) Management Information System (MIS) A management information system (MIS) is a system designed to support managers in the performance of their functions and to collect, analyse and communicate information, both internal and external to the organization, in a timely and efficient manner. It is a computer application system supported by a high-capacity database and based on data processing. MIS is based on a systems viewpoint, forming scattered information into a more complete information system that greatly improves the efficiency of information processing and can serve all levels and departments in the organization. Management information system usually consists of four parts: (1) EDPS part, which mainly realizes data collection and input, database management, operation, query, report output, etc.; (2) analysis part, which mainly realizes deep processing of data, such as using various management models and quantitative analysis tools to analyze the organization’s operation; (3) decision part, which mainly solves structured management decision problems and provides an optimal decision solution for senior (4) database part, mainly for data file storage, organization, backup, etc., is the core part of the management information system. (3) Decision Support System (DSS) Decision support system (DSS) is a human–computer system with intelligent role to support decision making activities based on management science and behavioral science, etc., and computer technology, simulation technology and information technology for semi-structured decision making problems. The system can provide decision makers with data, information and background materials required for decision making, help clarify decision objectives, identify problems, build models, provide various alternatives, evaluate various alternatives, analyze, compare and judge through human–computer interaction functions, and provide the necessary support for correct decision making.

4.2 Basic Methodology

121

From the conceptual structure, the decision support system consists of a session system, a control system, an operation and operating system, a database system, a model base system, a rule base system and a user. Its operation process is as follows: the user inputs the decision problem to be solved through the session system, and the session system passes the input problem to the problem processing system; then, the problem processing system starts to collect data information and judge and identify the problem based on the knowledge already in the knowledge base; after identification, the session system will engage in an interactive dialogue with the user until the problem is clarified; after that, the system searches for a model of the problem solution. Computational reasoning leads to the analysis result of the feasibility of the solution, and the decision information is provided to the user.

Methods of Crisis Control (Sanduo et al., 2018) Management control before and after a crisis outbreak mainly includes crisis identification, crisis mitigation, crisis communication, and post-crisis learning. The first is crisis identification. This includes not only identifying the potential impact of a crisis on an enterprise quickly after it has broken out, so that it can be responded to as quickly as possible to minimize its damage, but also capturing crisis information before it breaks out and taking early preventive and mitigating action where possible. According to Barton, signals that may indicate a crisis include “technology disruption” due to breakthrough innovations, customer resistance to corporate technology innovation, intractable rumors and suspicions within the company, persistent customer complaints, less rigorous management standards, and internal employee anxiety and appeals. Ignoring such signals can cause companies to miss good opportunities to act. Therefore, management, especially top management, should be highly sensitive to such signals and the issues they reflect (Hansen & Moven, 2008). The second is crisis mitigation. Once a crisis event has erupted, management should act swiftly to prevent the negative impact of the event from spreading. The key to crisis management is the timeliness of action. In a sense, swiftness of action may be more important than correctness of action to achieve the goal of minimizing the impact of a crisis. By waiting until the response plan is well developed before taking action, the crisis may have done irreparable damage to the business. Once again, it is the communication of information between the enterprise and the external public as well as the internal staff. After the outbreak of a crisis, not only do the stakeholders directly affected by the incident urgently need to know the truth of the incident, the extent of the harm, the attitude of the enterprise, especially the measures the enterprise is currently taking in response, but other internal and external members of the public are also eager to grasp the relevant information in a

122

4

Control

timely manner. In today’s world where the Internet has spread to all corners of the globe, it is basically impossible for enterprises to conceal or block any information. Cover-ups and delays can only lead to resentment and even anger. The only thing an enterprise can do is to deliver the true information in good faith and in a timely manner after the outbreak of a crisis without affecting the enterprise’s trade secrets or technical secrets. The transmission of truthful information not only reflects the sincere attitude of the enterprise, but also avoids possible inconsistencies in the contact between different departments of the enterprise and external parties and the various suspicions that may result from this. Finally, there is an effort to learn from the crisis. Learning from crises is, first and foremost, to identify and explore opportunities in crises. As the Chinese word “crisis” implies: a crisis may bring danger to business operations, or it may bring opportunities for growth and development after overcoming the danger. As the saying goes, “Nothing is broken, nothing is established”, and a crisis may force a company to break the old equilibrium and find an opportunity to break through the barriers. Learning in crisis also means mastering the general rules of crisis management through the practice of crisis management. It is important to summarize the experience and lessons learned from this crisis management, analyze the gains and losses in all aspects of work such as signal identification, measure selection and communication with the public, and provide lessons for similar situations that may arise in the future. In particular, through the summary of crisis management, it is necessary to find out the hidden dangers that may still exist in the current operation of the enterprise and take preventive measures as early as possible, so as to guarantee the healthy operation of the enterprise in the future.

Methodology for Risk Identification (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Field survey method The risk manager is generally on site to physically observe the operation of the departments and to inspect the various facilities of the organization and the operations carried out. Before conducting an on-site investigation, the risk manager should be well prepared so that he or she can target the investigation. First, schedule the investigation well. Choose an appropriate time to implement the survey and determine the time needed for the survey. Second, identify the items to be investigated. Risk managers need to make a detailed plan for the investigation, clarifying the items to be investigated, the focus of the content and the risk identification methods used. In order to prevent the omission or neglect of the content, you can refer to the previous records in advance to draw up a good survey project sheet or survey record sheet, so as to facilitate the investigation process to record, fill in. Finally, identify the risk owners of each department to facilitate the smooth conduct of the survey.

4.2 Basic Methodology

123

In the process of site investigation, risk managers should pay attention to communication and exchange with frontline staff, exercise flexibility and creativity, and remain acutely aware of potential risks, so as to maximize the impact of site investigation. After the site survey, the risk manager will act promptly to summarize the findings, identify and analyze potential risks, and take appropriate actions. The advantages of the on-site survey method are that it allows the risk manager to obtain first-hand information and that it facilitates the risk manager to establish and maintain good relationships with managers and junior staff in various departments. The disadvantage is that the on-site survey method is time-consuming and costly. At the same time, regular on-site surveys may cause others to neglect risk identification or become overwhelmed by the survey process. (2) Audit sheet survey method The audit form survey method involves the completion of a pre-designed questionnaire by the relevant responsible person or risk manager, which is then used to identify and analyse the content of the form. The questionnaire is usually designed by the risk manager in conjunction with a specialist and is based on the organization’s reality, or a standard form and questionnaire designed by a professional can be used directly. These questionnaires usually systematically list the risks an organization may face, and the user answers each of the questions in the questionnaire to build a risk framework for the organization. The advantages of the audit form survey method is: has a wide range of applicability, and can be adjusted according to the need to amend the survey content in the form at any time; can obtain a large amount of information and lower cost. Disadvantages are: the production of the form has a high professional requirements well to have extensive practical experience; due to the quality of the staff filling out the form, such as inaccurate, not objective; some general questionnaires are difficult to reveal the special characteristics of an organization. (3) Organizational charting method The organizational mapping method involves drawing and analyzing an organizational chart to identify the areas and scope of risk that may occur. The method provides greater insight into (1) the nature and scale of the enterprise’s activities. For example, which subsidiaries (branches) an enterprise group consists of, whether there are foreign subsidiaries, what nature of business each of them operates, etc. (2) The intrinsic linkages, the configuration of power and the degree of interdependence between the various departments within the enterprise, and the analysis of whether there is an intersection of business and power. (3) Separate accounting units that can be distinguished within the enterprise, which must be considered when making decisions about the financial treatment of risks. (4) Vulnerabilities in the enterprise that could worsen the risk profile, and the likely extent of potential risks.

124

4

Control

The organizational charting method is applicable to risk identification in all types of businesses and is a desk-based approach to risk identification. Organizational charts can show how departments are set up, working relationships, power configurations and relationships between people in an organization, and can be used to identify some of the risk factors that exist in organizational departments, and thus examine the areas and scope of risk that may occur. (4) Flowchart method The process mapping method refers to the mapping of organizational activities into flow charts according to their inherent logical connections, and the identification and analysis of risk factors, risk incidents and possible loss consequences for each link in the process, especially critical links and weak links. Flowcharts reflect the type and sequence of an organization’s business activities and can reveal critical points and bottlenecks in operations. To use flowchart to identify risks, the flowchart should be drawn according to the identification purpose and requirements, and then analyzed in detail. (1) Each link in the chart should be investigated one by one to identify the potential risks. And analyze the possibility of risky incidents and the resulting loss consequences. (2) To analyze the relationship between each link in order to identify the key links and weak links, and analyze and identify the possible risks and their loss consequences in these links accordingly. The advantage of the flowchart method is that it facilitates risk identification by dividing a problem into a number of manageable issues. In addition, flowcharts are more concise, clear and can basically reveal the entire production operation process, which facilitates the identification of risks in each step. However, the flowcharting method also has some disadvantages, such as the need to consume a lot of time. From understanding the production process, to drawing the flow chart, and also analyzing the flow chart and identifying the potential risks, the whole process is time-consuming. In addition, the flowchart method only emphasizes the outcome of an accident and does not allow for an assessment of the likelihood of an accident occurring. (5) Financial statement analysis method Financial statement analysis is a method of analyzing and identifying potential risks facing an organization by using financial statement data to evaluate the financial position and results of operations and future prospects of the organization. The statements usually used in financial statement analysis are the balance sheet, income statement and cash flow statement, and the three main methods of identifying risks are trend analysis, ratio analysis and factor analysis. The trend analysis method refers to the comparison and analysis of relevant data in the financial statements of an enterprise based on several consecutive periods in order to reveal the trend of changes in the financial position and operating results of the enterprise. Trend analysis can take the form of multi-period comparative

4.2 Basic Methodology

125

analysis, structural percentage analysis and fixed-base percentage analysis, etc. By comparing with previous indicators, it is possible to determine the operating efficiency and management level of the enterprise in the current period and to analyse whether there are any business risks in the enterprise. Ratio analysis refers to the analysis of the interrelationship between items presented in the financial statements by comparing relevant data from the same accounting period with each other and finding the ratio between the relevant data. The use of ratio analysis allows for the evaluation of various aspects of a company’s financial position and allows for the identification of potential risks. Factor analysis is based on analyzing the relationship between indicators and influencing factors, and quantitatively determining the degree of influence of each factor on the indicators. There are usually difference analysis, indicator analysis, serial substitution and fixed base substitution methods. Using this method, the impact of risk factors on risky incidents can be determined. The advantages of the financial statement analysis method are that the information required for risk identification is easier to obtain and is characterized by reliability and objectivity. In addition, using the financial statement analysis method, the results of the study are mainly prepared in the form of accounting accounts, which makes it easy to identify hidden potential risks and can be prevented before they occur. However, the disadvantage of the financial statement analysis method is that it is highly specialized and lacks the expertise in financial management to identify potential risks in the organization. In addition, when the financial statements are not true, it becomes difficult to accurately identify the potential risks faced by the organization.

Methodology for Risk Assessment (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Estimation of probability of loss and extent of loss Risks are measured and evaluated in two main ways: first, the likelihood of the risk occurring, i.e., the probability of loss; and second, how much damage the risk incident could cause if it occurred, i.e., the degree of loss. In general, three factors need to be considered when estimating the probability of loss: first, the number of units at risk; second, the pattern of loss; and third, the loss event (or cause). Different combinations of these three factors will result in different magnitudes of risk loss probabilities. In practical estimation, the usual methods used are statistical tools such as binomial distribution, Poisson distribution, and normal distribution. Here, the method of estimating the probability of loss is illustrated by estimating the number of loss events in a given time period. Suppose that n risk units are all threatened by the same risk incident, whether or not this risk incident occurs in each risk unit at a given time is—a random event, and there are only two outcomes for the risk unit with respect to this risk: occurrence and non-occurrence. If the number of times that the stated risk accident

126

4

Control

occurs in a given time for n risk units is noted as X and the conditions are satisfied: (1) each risk unit has the same probability of having the same risk accident, set to p, and the probability of not having this accident is q = 1 − p; (2) the occurrence of a risk accident in any risk unit is independent and does not affect the occurrence of the same risk accident in other risk units; (3) the same risk unit has the same risk accident in a given The probability of more than two accidents occurring in a given time is extremely small and can be considered to be zero. Thus, X is a random variable that obeys a binomial distribution and the distribution law is P { X = k } = C(n, k)pk qn−k (k = 0, 1, 2, . . . , n) Thus, according to the law of distribution, it is possible to calculate how many risk units and their occurrence of accidents in a given time period Since the number of times a risk unit may suffer a risk accident in the next time period is a random variable, it is difficult to determine how many risk accidents will occur in the survey. However, it is sufficient for the risk manager to know the average number of incidents of the n risk units in the next time period and their deviation. In this case, the mathematical expectation of X, E(X) = np, represents the mean of the √ number of incidents, while the standard deviation σ = npq is used to describe how far the actual situation deviates from the expectation. The degree of loss of a risk is the maximum value of damage that could result from a risk incident if it occurs. In measuring the degree of loss of a risk, various factors need to be considered, such as the internal structure of the risk unit, its use, fire protection facilities, etc. In addition, factors such as the pattern of loss, frequency of loss, timing of loss and amount of loss are also considered. For example, for multi-form losses due to the same cause, not only the direct losses caused by the risk incident but also the related indirect losses caused by the risk incident should be considered. In many cases, indirect losses may be more severe than direct losses, e.g. losses such as downtime losses and possible breach of contract liability and loss of customers due to machine breakdown are much greater than losses due to machine damage. Similarly, the longer the risk incident occurs and the more frequent the loss, the higher the degree of loss will be. In addition, the greater the monetary amount lost after a risky incident occurs, the higher the degree of loss. In reality, to estimate the amount of loss from a risky accident, some probability distributions are usually used. There are two major types of probability distributions, discrete and continuous, which are divided into univariate distributions of one variable and joint distributions of multiple variables. The probability distributions commonly used in risk management are normal, log-normal and Pareto distributions, etc. Risk managers can obtain an assessment of risk based on the probability distribution characteristics of losses. For example, for some loss frequency distributions that resemble the density function graph of a normal distribution, i.e., there is only one peak and it is approximately symmetric about the peak, a normal distribution can be fitted and used to estimate the probability of the loss amount falling on a certain interval and the probability of the loss amount exceeding a certain value.

4.2 Basic Methodology

127

(2) Situational analysis A method of analysis that generates possible future scenarios by means of assumptions, forecasts, simulations, etc., and analyses the possible impact of the various scenarios on the achievement of organizational objectives. It can be conducted by formal or informal, qualitative or quantitative means, and is mainly applicable to risk analysis of projects with a high number of variables. Risk analysis for projects with a high number of variables. It is the construction of multiple possible future scenarios based on the trend of events, the assumption that certain key influencing factors may occur, the presentation of multiple possible future outcomes, and the adoption of appropriate measures based on possible loss scenarios in order to prevent problems before they occur. (3) Sensitivity analysis It is a method of confirming the tolerance of the system to various risks by analyzing and measuring the magnitude of changes in system evaluation indicators caused by changes in the main factors of the system and the degree of impact of changes in various factors on the achievement of desired goals. In the course of organizational operation, there are various uncertainty factors, and the degree of influence of these factors on the operation of the organization is different. A small change in some factors can cause a large change in the organization’s indicators, or even a change beyond a critical point, thus affecting the original risk management decision, and these factors are called sensitivity factors. Whereas some factors can cause only small changes or even no change in the evaluation indicators even if there is a large change, these factors are known as non-sensitive factors. The purpose of sensitivity analysis is to identify sensitive and insensitive factors among the many uncertainties and to analyse the extent to which sensitive factors affect the organization’s activities, so that risk managers can grasp the organization’s risk level and identify ways and technical methods for further risk management. (4) Risk maps Risk mapping is a method of graphically representing the likelihood and impact of one or more risks in order to inform risk management decisions. Risk maps can be used to quantitatively or qualitatively estimate the likelihood and impact of a risk in the form of a heat map or flow chart. When describing risks, it is important to highlight which risks are more important and which are less important, so that the graphical representation is visual and easy to use.

128

4

Control

Methods for Controlling Risks (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Risk avoidance Risk avoidance is a method of risk treatment such as suspension, abandonment or adjustment by an organization to avoid risk losses where the likelihood of risk occurrence is high and the level of impact is high. In general, organizations can adopt the following risk avoidance approaches in different situations. (1) Complete refusal to assume a risk. When an organization assesses a risk and finds that the likelihood of a risky incident occurring and the level of loss is high, or it does not feel it wants to assume the risk, it can simply decline to assume the risk. (2) Trial taking some of the risk. When the organization assesses the risks and finds that the risks of carrying out a business activity in one step are too great for the organization to bear, it can carry out the activity in steps, avoiding some of the risks. (3) Abandonment of risk-taking in the middle of the process. When an organization is engaged in a business activity and the risk increases or the organization’s ability to bear the risk decreases due to changes in the internal and external environment, it may take the form of terminating the activity to avoid the risk. Risk avoidance generally applies to risks where the frequency and magnitude of losses are high; risks where the frequency of losses is low but the consequences of losses are severe and cannot be compensated; and where the cost of implementing risk response measures exceeds the expected benefits of the activity. (2) Risk-sharing Risk sharing is a way of dealing with risk in which an organization consciously transfers some or all of the risks or losses it may suffer to other economic units through legitimate and legal means. There are two forms of risk sharing, one is financial risk sharing, such as insurance, trade credit, hedging contracts, futures, options, etc. The second is nonfinancial risk sharing, such as outsourcing, leasing, selling, delegated management, etc. Insurance is one of the most common forms of risk sharing. The use of insurance for risk sharing is the transfer of potential risks faced by an organization to an insurance company through an insurance contract in the form of an insurance policy. Insurance is essentially a combination of a number of risk-bearing units that are brought together through the establishment of an insurance fund to jointly cope with the occurrence of a risky event. The business transfers the risk to the

4.2 Basic Methodology

129

insurance company by taking out insurance and paying premiums. The insurance company, in turn, combines a large number of enterprises exposed to risk in order to establish an insurance fund, which is used to compensate the enterprises that are exposed to risk. Obviously, this is a way to reduce the average loss by transferring the losses suffered by a few insured enterprises to all insured enterprises to share. The transfer of risk through insurance is relatively simple and easy to implement and is therefore widely used. On the one hand, enterprises can reduce the amount of risk reserves set aside, and on the other hand, they can obtain advice and counsel from insurance companies and insurance intermediaries on risk prevention and management, thus enhancing their ability to manage and prevent risks. Non-financial risk sharing is a way for an enterprise to transfer risks that could cause losses to non-insurance economic units through a series of contracts. There are a number of non-financial risk sharing options available to organizations, a few of which are briefly described. (1) Outsourcing. Outsourcing refers to a business activity in which an enterprise hands over the business and its control of non-core links in the value chain that it does not specialize in to an external professional vendor. Business outsourcing is actually a way for enterprises to integrate and utilize external resources in order to reduce costs, improve productivity and capital utilization efficiency, and thus enhance their core competitiveness. Due to the rapid changes in technology, environment and market demand, there are huge risks for enterprises to engage in projects that are not their core competitive advantage. (2) Lease. A lease is a contract whereby one party leases its premises, premises, means of transport, equipment or household goods, etc., together with some of the risks, to another party for a rental fee. Of course, organizations can also use leases to mitigate the risks they may assume. (3) Entrusted management. In other words, by entering into a commission contract, the entrusted enterprise entrusts its property to the entrusted enterprise, while paying a certain fee. Generally, according to the terms of the entrustment contract, the entrusted enterprise is liable to compensate the entrusted enterprise in the event of loss of the entrusted property due to negligence or negligence. In this way, the entrusted enterprise passes on the potential loss of the entrusted object to the entrusted enterprise. Of course, the bailee enterprise may also pass on the loss of the commission to the commissioning enterprise under certain conditions in accordance with the terms of the contract. (4) Sale. That is, the organization transfers risk by selling property, etc., that may be potentially risky. Using the sale method, the company can divest its troubled business operations, quickly recoup capital and consolidate resources in order to strengthen its core competitiveness and enhance its competitive advantage. (3) Loss mitigation management

130

4

Control

It is a way of dealing with risk in which an organization consciously accepts the existence of risk in its business management and, with a prudent attitude, reduces large risk to small risk and large loss to small loss by spreading the risk and controlling the risk of loss. (1) Risk diversification. Refers to the segmentation of the risk units faced into a number of smaller and low-value independent units and dispersing them in different spaces in order to reduce the level of risk losses that the organization may suffer. It is important to note that this approach increases the number of individual risk units that need to be controlled while separating them, and an incident in any of the independent risk units can cause losses to the business. Moreover, the diversification of risk units requires financial support, and excessive diversification may strain the enterprise’s resources and create problems in developing or maintaining core competencies and competitive advantages. (2) Replication risk unit. This means that the organization backs up a copy of the resources needed to maintain normal business activities, and the backup risk unit can function in place of the original asset when the original resources are not available for normal use for various reasons. It is important to note that replicating risk units does not make the original risk smaller, but it can reduce the extent of loss from one incident in the event of a risk incident. Similarly, the use of replicated risk units can mitigate expected incident losses, but also entails organizational resources and additional expenses, thus placing a burden on the enterprise. (4) Risk retention Risk retention means that the organization exposed to the risk bears the losses caused by the risk incident and makes the appropriate funding arrangements. The essence of this type of risk treatment is that when a risk incident occurs and causes a loss, the organization covers the loss suffered through internal funding. After the organization has adopted risk retention, it needs to determine the appropriate funding arrangements. At this point, the focus should be on factors such as the source of funding, the extent of compensation for losses, and the liquidity of the source of compensation funding after a loss has occurred. Usually, the organization can adopt the funding methods such as existing income, unexpected loss reserve, special fund, external borrower funds, etc. Of course, in addition to raising funds to improve its own resilience to risk, the organization can also implement risk management by means of hedging and professional captive insurance companies.

4.3 Management Practice Cases

4.3

131

Management Practice Cases

Case 1 A company is a platform-type company, which has been in the top ranking list of Internet companies for years, and its ranking in the world’s top 500 companies is rising year by year, with nearly 200,000 employees in the group and an annual turnover of more than 100 billion RMB. Although the company now has a relatively solid market position and an extremely good performance, a few years ago, in the face of stimulating industry competition, the company’s development has been in a low period, market share is constantly occupied by companies in the same industry, operating income declined year by year. In order to change the situation and enhance its competitiveness, the company established a series of effective control systems. In response to the uneven quality of merchants among similar products in the platform and the increase in consumer complaints, the company repositioned itself, insisting on selling only genuine licensed products and strictly catching counterfeit products. The company has strengthened the review of merchants, strict control of the screening platform merchants, only brand stores or actual authorized dealers can be stationed in the company’s platform sales products, from the source to protect the quality of products, and won the unanimous praise of consumers. At the same time, the company attaches great importance to improving the protection of the rights and interests of consumers on the platform, issuing a number of relevant rules and regulations to improve supervision, and introducing third-party mediation agencies to actively coordinate the resolution of online and offline conflicts and disputes between consumers and merchants, and compensate for user losses, effectively improving the user experience. In addition, in order to enhance the company’s competitiveness and maintain a differentiated competitive advantage among many Internet sales platforms, the company turned its attention to the logistics industry, focusing on the construction of the logistics and distribution chain, investing about 50% of its capital and energy in the logistics system, and setting up four logistics centers and hundreds of distribution sites across the country, covering every city in the country. It then continued to innovate and introduced more diverse, advanced and technological logistics services, such as self-pickup cabinets, drone delivery, etc., providing consumers with more choices. While improving the infrastructure, the company has also implemented a management system with clear rewards and punishments for its delivery staff, with generous treatment and strict auditing. Excellent employees can be promoted in their positions, enjoy various welfare benefits, and even receive equity incentives, but the company is also gaining insight into users’ evaluation of logistics services through more than ten channels such as complaint systems, forums, and netizen reviews, etc. If a user has a poor experience with a delivery person’s service, once confirmed, the delivery person will face demotion and dismissal.

132

4

Control

Since corruption is easy to breed within platform companies, in order to control the decline within the organization, the company not only set up an ethics committee to promote self-discipline and integrity at the ideological level and issued a self-discipline declaration to be widely publicized throughout the company, but also set up a strict internal audit mechanism to control corruption at the technical level. The company’s internal audit body is subordinate to the board of directors and has great authority; even the president of the company can be denied by the internal auditors if he declares unreasonable reimbursement expenses. At the same time, the company has gradually built a financial system integrated with the entire business process to monitor each business link in real time, improve the transparency of financial data, reverse the business activities that have a key impact through financial report data, calculate the corresponding measurement indicators, and quickly make corrections and improvements according to the actual business situation. Questions: 1. What is control? Please briefly describe your understanding. 2. Why has internal risk control become one of the company’s management priorities?

Case 2 (Prepared on the Basis of Relevant Media Reports. The Case is Taken from Management) On January 21, 2016, the State Food and Drug Administration notified the public of 35 food service units operating in food suspected of illegally adding poppy husk to food. One of them involved two Company A’s cottage stores in a province, a stone that stirred up a thousand waves. The media, unaware of the truth, pushed the issue and spread falsehoods. company A carried out a crisis management. (1) Public declaration, attorney’s declaration January 21, A company through the official website, official WeChat, official microblogging push “solemn statement” the company publicly affirmed that “a city in a province, Suyong Meng intersection store, a city Yongqiao District Huipeng business store and my company does not have any relationship. The company’s lawyers will prosecute and pursue the legal responsibility of the relevant business units and responsible persons”; because A company has long insisted on direct chain, never authorized any units and individuals in a province to open any “A company” trademark as the name of the store or the name of the A company of any business entities and business The behavior. At the same time, Company A entrusted Hubei Luojia Law Firm to issue a lawyer’s statement, accusing the two counterfeit stores of allegedly infringing Company A’s exclusive trademark rights,

4.3 Management Practice Cases

133

and Company A is planning to take legal measures to pursue its civil liability for the infringement. At the same time, we urge the network media that have inaccurately reported or reprinted the article to immediately remove the inaccurate title, summary or picture added from the date of issuance of the statement, otherwise we will pursue the legal responsibility of the relevant network media according to law. (2) The official voice of the competent place January 21, Wuhan City Food and Drug Administration official WeChat released “a province A company? Why don’t you say Huang Hailu is also yours! an article, saying that Company A did not open a store in a province. Wuhan City Food and Drug Administration law enforcement officers have carried out several inspections of Company A enterprises in Hubei, and no problems were found. January 22, Hubei Province Food and Drug Administration official website released “the provincial bureau on the supervision and sampling of Hubei A company products to the media interview” said, after investigation, A company and a city in a province, Suxiang Meng intersection store, a city Yongqiao District Huipeng business store does not have any business relationship, A company’s sales stores are directly managed stores. A company has not yet opened a store in a province. (3) Creative marketing, triggering user attention Company A released the microblogging topics “#Why is it always the duck that gets hurt” and “#A duck’s grievance”, and launched the “No crying” poster series. The topic “Why is it always the duck that gets hurt” was ranked No.1 on the social list and No.3 on the trending list, with a reading volume of 44,939,000; the topic “#a duck’s grievance” was ranked No.4 on the trending list, with a reading volume of 7,528,000. The series of creative copy shows that he is “innocent to the core”, and also @DuckFan to gain support from his fans while complaining about being hacked. (4) Implant advertising to promote the brand Weibo topic “Duck’s True Love” was released. Fans were encouraged to pose in front of the official A Company store and take pictures of the A Company signboard, then tweet @A Company’s official Weibo account together with the address of the A Company store and the A Company’s empty farewell method, etc. The top 10 fans would receive a gift from A Company. This topic occupies the 2nd place in the social category list and the 4th place in the popular things, with 15,955,000 reads. In this way, Company A turned the crisis into a marketing opportunity through a series of public relations activities.

134

4

Control

Questions: 1. Which characteristics of the crisis are reflected in the crisis faced by Company A? 2. What is the merit of the way Company A responded to the crisis?

Case 3 (Xi & Maher, 2014) Company B’s B2B information system consists of three parts: the public platform, the B2B functional module and the value-added module. The public platform provides the basic functions in B2B platform, such as protocol conversion, access rights management, etc. It also includes reconciliation system and supplier security authentication system, where the most important goal of the reconciliation system is to achieve online reconciliation with suppliers, to achieve the purpose of financial data, documents and reports exchange between the two sides of the transaction (Company B headquarters, branches and upstream suppliers); the supplier security authentication system should first ensure that The supplier security authentication system should firstly ensure that the users logging into the platform can identify their user identity; ensure the confidentiality of information and resistance to repudiation; and ensure that the signed documents are legally valid. To this end, Company B B2B has established a set of security authentication platform from server authentication, user authentication, digital signature of documents, etc. B2B functions include business process management, business document management, etc.; the value-added module provides internal and external service functions. Through B28, real-time transmission and exchange of data including orders, shipments, warehousing and sales summary will be realized. Both the purchasing staff of Company B and the sales staff of the supplier, based on a common sales information platform, decide on purchasing supply and terminal promotion, and technically realize the function of supplier management inventory. Company B’s B2B, as an extension of SAP, is integrated with SAP. In China, Company B has basically realized the whole interconnection with large manufacturing enterprises, and the advanced technology means to guarantee the business development of Company B, which is always in the leading position among the same industry. Company B to achieve the full interconnection with suppliers and stores, from the project implementation point of view, is actually more complex, which involves both sides of the process, involving change. company B every time to carry out B2B work, talk more about business processes, such as shipping, how many times a week to send goods, how many times a week to open orders, which orders need to open regularly, which orders are immediate, how to adjust the price information, shipping and receiving The outbound and inbound orders, the VAT invoices issued by suppliers, etc. are all a single to a single, and more in talking about how to standardize the original non-standard practice.

4.3 Management Practice Cases

135

There are many irregular operations in invoicing, shipping and receiving, what goods should be received, what should not be received, how to return the goods when something happens, many processes need to be reflected on B28, also including daily prototype processing, forecasting, replenishment on the CPFR system collaboration, etc. CPFR is deployed between Company B and Motorola, Samsung, all these will also be in fully reflected on B2B, which really connects all the links in the supply chain. There are currently more than 10,000 suppliers operating on Company B’s B28 platform, and two main approaches are used. One is the direct connection method, that is, the docking between the two ERPs. The direct connection method is mostly accessed by larger suppliers; the direct connection system connects Company B’s B2B platform with the supplier’s ERP system, and both parties can quickly adjust their business plans based on each other’s business data, Company B can make adjustments to procurement, replenishment, and logistics, and the supplier can make changes to procurement materials and production plans. The data transmission technology of the direct connection system adopts RosettaNet, which enables users to share their business processes and data with their trading partners through IBM WebSphere Business Connect (WBIC). (RosettaNet is an open e-commerce standard dedicated to collaborative development). The other is the portal approach, in which Company B provides a unified platform and those suppliers who are limited by technical conditions can log in to the portal and achieve the same basic functions as the direct link. The portal platform provides a free FTP data download service to suppliers, who can quickly get Company B’s sales data to guide their own production. The most groundbreaking aspect of the B2B supply chain system is its transformation of the process. after the implementation of the B2B system, it has brought essential changes to the procurement, goods warehousing and collaboration management with suppliers, and has realized process reengineering. Moreover, after using the B28 platform, all processes are run on the system and the data is very transparent. It is through all kinds of B2B information technology, B company’s supply chain management level in the full information sharing continue to be improved. It is understood that the B2B project of Company B has won the “2005 China Enterprise Informatization Top 500 Application Award—Best Supply Chain Management Application Award” jointly evaluated by the Informatization Office of the State Council, the Department of High-tech Development and Industry of the Ministry of Science and Technology and other organizations. With the continuous progress of concept and technology, the B2B information platform that Company B spent a lot of money to build after the IPO began to play an increasingly important role in the supply chain integration. Information technology has strongly contributed to the transformation of Company B’s business model. From the beginning of the simple price difference to win, to more stores, to charge the upstream suppliers channel fees, entry fees, advertising fees, promotion fees, to optimize the upstream and downstream supply chain, to speed up the

136

4

Control

turnover, reduce losses, and finally win by brand and service, information systems are indispensable. Taken together, the impact of Company B’s service information system on Company B itself in terms of benefits includes the following five main aspects. (1) Cost-effectiveness Company B can get considerable revenue by opening data to some suppliers through B2B. According to the current situation of company B, the management cost of an order is about 40–50 yuan, after using B2B system online orders, the management cost of an order is only 10–20 yuan, according to the current scale of company B, there are about 500,000 orders per year, after the implementation of the project according to 250,000 orders online, the savings of 20 yuan per order is calculated, the annual cost savings of about 5 million yuan. (2) Information integration Through the data exchange of all parties in the supply chain (contracts/agreements, orders, outgoing orders, incoming orders, invoices, return orders, settlements, market data, etc.), the purpose of data sharing is achieved, thus the transparency of the whole supply chain rises; at the same time, information integration and control between the group and branches within Company B and between external companies and suppliers is realized. (3) Supply chain collaboration On the basis of information sharing, Company B achieves the purpose of integrating and optimizing the supply chain through the collaborative operation of business processes of each node enterprise in the supply chain. Due to the adoption of electronic procurement and automatic settlement, the business process is greatly simplified, the transaction cycle is shortened, and the efficiency and speed of logistics are improved. At the same time, suppliers can grasp the sales and inventory information of each terminal in a timely manner, which facilitates making accurate market forecast in advance, arranging production and organizing replenishment in a timely manner, thus enhancing the overall market competitiveness of the supply chain. Create a synergistic supply chain, including the rational integration of each link in the upstream, midstream and downstream of the supply chain, and each interacting process such as production, sales and logistics. Through the comprehensive enhancement of B2B system by information technology, Company B realizes a series of fully digitalized, standardized and assembly-line operation management such as data exchange, automatic order placement, replenishment and automatic settlement, and achieves a comprehensive, systematic and transparent information strategy with suppliers. A modernized logistics and distribution system has been established. Real-time procurement is

4.3 Management Practice Cases

137

carried out through the informatization platform, and through order-based procurement, suppliers make the best distribution of logistics according to Company B’s national regional demand, saving procurement costs by more than 35%, especially saving inventory costs by more than 80%. (4) Establishing a “pyramidal” service chain As a service-oriented company, the most fundamental task of Company B is to provide customers with high quality services. Service is the only product of Company B. All services are established on the information platform, involving the whole process of “pre-sales—sales—after-sales”, and the service chain of “chain store—logistics—after-sales—customer service” has been established. After-sales—customer service” service chain, the four terminals constitute a “pyramid” type service network, the front sales and back-end service in close cooperation, all-weather operation, become the most competitive killer app of Company B. It is also the most core element of Company B’s brand. For example, Company B has created the “5S” and “Sunshine Package” services, which have played a great role in the “home appliances to the countryside” and “trade-in” services. For example, Company B has created the “5S” and “Sunshine Package” services, which have played a great role in the “home appliances to the countryside” and “trade-in”, making it a leading enterprise in the home appliance service industry. (5) Enhance the relationship with suppliers Company B and other suppliers have jointly established an all-round cooperation platform in the cross-field industry chain, basically forming specific cooperation in various aspects of the whole industry chain from technology research and development, product manufacturing to marketing and sales, with the aim of achieving the most effective integration of resources of the three parties, complementing each other’s advantages and maximizing market competitiveness. Using the consumer information advantage of Company B, the two suppliers can grasp the market more accurately, and Company B can use this platform to obtain the most advantageous purchase orders provided by suppliers, and all three parties have found their own profit points in the value chain reshaping. With the help of its own information platform, Company B has achieved interoperability of information with relevant manufacturers. Taking IT products as an example, the cooperation between the company and mainstream IT vendors has achieved a shift to B2B (vendor direct supply) mode, and has now established direct supply relationships with many manufacturers. This signifies that the relationship between Company B and its suppliers has evolved from a simple upstream and downstream model to a strategic partnership with a certain degree of exclusivity, which means that the company is able to gain a head start over its competitors in terms of limited supplier resources.

138

4

Control

Questions: 1. Control includes many types. What controls are included in Company B’s B2B information technology? What are the improvements? 2. Are these information technology applications of Company B suitable for all companies? What other factors would a company consider when choosing a control tool besides efficiency?

References Cot, J. P. (2008). Power and influence. Mechanical Industry Press. Dell, E. (1991). The great organizer (S. Yaojun, Trans.). China social sciences press. Guohua, X., De, Z., & Ping, Z. (1998). Management. Hansen, D. R., & Moven, M. M. (2008). Management accounting (8th ed.). Peking University Publishing House. Key teaching materials for Marxist theoretical research and construction projects. (2019). Management. Maher, C. X. (2014). Slow Gome PK Fast Suning, Chinese Entrepreneur, No. 6, 2014. The case is extracted from “Management”, a key textbook for Marxist theoretical research and construction projects. Prepared on the basis of relevant media reports. The case is taken from Management (5th ed.). Zhou Sanduo and Chen Chuanming. Robbins, S. P. Mary Kurt. Management (13th ed.). Sanduo, Z., Chuanming, C., Zixin, L., & Liangding, J. (2018). Management——Principles and methods (7th ed.). Yiqun, X. Management (5th ed.).

5

Innovation

5.1

Basic Concepts

Innovation is the process of reaching a desired new goal. Management innovation is the practical process of reaching the desired new goals of the organization. The basic concept of innovation is also expressed in several different forms as follows. (1) Innovation, in a broad sense, refers to activities that generate new ideas and behaviours (Key teaching materials for Marxist theoretical research and construction projects. Management). The continuous changes inside and outside the organization require continuous changes in the techniques and methods of activities within the organization, continuous optimization of organizational activities and human arrangements, and even the direction, content and form of organizational activities need to be constantly adjusted, and these changes, optimization and adjustments are realized through the innovation function of management (Key teaching materials for Marxist theoretical research and construction projects management). Management innovation activity is another type of management activity relative to maintenance activity, it is a process of change of management activity based on the inquiry of the law of human innovation activity, a process of generating new management ideas and new management behavior (Key teaching materials for Marxist theoretical research and construction projects. Management). (2) Innovation is the key to sustained success and is defined as the need to transform the results of creative processes into useful products or ways of working (Robbins) Management innovation refers mainly to changes in the organization regarding people, structures and technology (Robbins). (3) Innovation is an idea and a practice guided by that idea, a principle and a specific activity guided by that principle, a continuous adaptation of the content and objectives of the system’s activities to the changing requirements of the © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_5

139

140

5

Innovation

environment (Sanduo et al.). Management innovation is a “recombination of factors of production”, including the production of a new product, the adoption of a new method of production, the opening of a new market, the acquisition or control of a new source of raw materials and semi-finished products, the realization of a new industrial organization (Sanduo et al.). (4) Innovation is the process or activity of changing something existing or introducing something new, or improving something existing or introducing something new (Yiqun). (5) Innovation is the application of new ideas (Harold Koontz). Managing innovation is converting new ideas into products or services (Harold Koontz).

5.2

Basic Methodology

Approaches to Creating a Learning Organization (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Systems thinking. The key to systems thinking is to have a systems view and a dynamic perspective, and its art is to see through the structures behind the complexity that trigger change. (2) Self-transcendence. Self-transcendence is a vision and the process of achieving that vision that will eventually deepen into the subconscious of organizational members by constantly pushing the limits. (3) Improving mental models. Mindset is the logic of thinking that is deeply rooted within people. The practice of improving mental models means constantly reflecting on one’s own mental models and exploring the mental models of others to improve organizational adaptability. (4) Building a shared vision. While the organization continuously encourages the development of individual visions, it integrates individual visions into a common organizational vision that drives people to strive and dedicate themselves to it. (5) Group learning. Group learning is the process of developing the ability of members of an organization to cooperate and achieve common goals as a whole, and the purpose of organizational learning can only be achieved by integrating the strength of individuals into the strength of the whole and improving the collective IQ.

Ways to Deal with Resistance to Change (Key teaching materials for Marxist theoretical research & construction projects, 2019) (1) Education and communication Generally applied in situations where information is lacking or where information and analysis is imprecise. The advantage is that once people are

5.2 Basic Methodology

(2)

(3)

(4)

(5)

(6)

141

convinced, they tend to help implement the change. The disadvantage is that it can be time consuming if there are many people involved. Participation and investment The general application conditions are that the information required by the initiator of the change is incomplete or that opposition from others is strong. The advantage is that those who participate in the change plan will be enthusiastic about its implementation and the relevant information they have will be included in the plan. The disadvantage is that it is a waste of time if the participants design an inappropriate change plan. Provision of facilitation and support The general application condition is that people are objecting because of the adjustment issue. The advantage is that this is the best way to deal with adjustment problems. The disadvantage is that it can be time and money consuming and potentially futile. Consultation and consent The general application is that some people or groups will suffer significantly from the change and that opposition from these groups is strong. The advantage is that it is sometimes an easy way to avoid strong resistance. The disadvantage is that it can be quite costly to the organization if it reminds everyone else that they have to negotiate to comply. Manipulation and solicitation The general application condition is when all other techniques are ineffective or too expensive. The advantage is that it is a relatively quick, time-saving solution. The disadvantage is that it sets up a potential problem for the future, as people may recognize that they have been manipulated. Expressed or implied compulsion The general conditions for application are time urgency and considerable power for the initiator of the change. The advantage is that it is quick and can resolve any resistance. The disadvantage is that it can be dangerous if the initiator angers some people.

Ways to Promote Innovation in Organizational Development (Guohua, 1998) (1) Sensitivity training: a way to change behaviour through unstructured group interaction. (2) Team building: activities that help team members understand how other members think and work. (3) Survey feedback: a technique used to assess attitudes and perceptions, identify discrepancies in them, and eliminate them through the use of survey information obtained by the feedback team. (4) Process consulting: external consultants assist managers in understanding how interpersonal processes influence the way work is done.

142

5

Innovation

(5) Intergroup relationship development: changing the attitudes, stereotypes and perceptions of members of the work team towards each other.

Ways for Managers to Effectively Organize Innovation Within the System (Sanduo et al., 2018) (1) Proper understanding and role of “manager” Managers tend to be conservative. They tend to assume that the organization employs them to keep it running and that their role is therefore first and foremost to ensure that the pre-determined rules are enforced and that the plan is fulfilled. The symbol of a good manager is that “the activities of the system do not deviate from the requirements of the plan”. Therefore, they often play the role of guardian of the existing rules and regulations, consciously or unconsciously. In order to reduce the risks in the operation of the system and to prevent catastrophes, they tend to be fussy about failures in innovative attempts, to punish at will those who fail in their attempts to innovate, or to reward easily those who never innovate and never take risks. …… But it is clear that the role of the manager cannot be understood in such a narrow way. Managers must consciously take the lead in innovation and strive to provide and create an environment for members of the organization that is conducive to innovation and actively encourage, support, and guide them in their efforts to innovate. (2) Creating an organizational climate that promotes innovation The best way to promote innovation is to publicize it and stimulate it, and to establish a new concept of “if you don’t do something, you did something”, so that everyone is motivated, motivated, eager to try and boldly experiment. To create an organizational atmosphere where everyone talks about innovation, thinks about innovation all the time, and does not innovate anywhere, so that those who have no desire to innovate or have the desire to innovate but do nothing feel that they have no place in the organization, so that everyone realizes that the purpose of employing oneself in the organization is not to simply repeat the operation that may have been repeated many times in the established way, but to explore new methods and find new procedures. The only way to qualify to remain in the organization is to keep exploring and experimenting. (3) Develop a flexible plan Innovation means breaking old rules and implies unplanned appropriation of time and resources, therefore, innovation requires that the organization’s plans must be flexible.

5.2 Basic Methodology

143

Innovation requires thinking, and thinking requires time. By scheduling everyone’s working day to a very tight schedule and imposing a “full workload” on everyone at every moment, many opportunities for innovation cannot be discovered and innovative ideas cannot be created. At the same time, innovation requires experimentation, and experimentation requires physical conditions and a place to experiment. By requiring rigorous planning and implementation in every department at all times, innovation loses its base and new ideas that never get tried remain in people’s heads or on the drawing board. It is unlikely to bring any real results to the organization. (4) Correct approach to failure The process of innovation is a process fraught with failure. Innovators should recognize this, and the organizers of innovation should recognize it even more. Only by recognizing that failure is normal, even necessary, can managers allow it, support it, and even encourage it. Of course, supporting experimentation and allowing failure does not mean encouraging members of the organization to sloppy work, but rather hoping that innovators will learn a useful lesson from failure, learn something, and become more understanding so that the journey from the next failure to innovation success will be shorter. (5) Establishment of a reasonable reward system A reasonable system of evaluation and rewards and punishments must also be established to stimulate the enthusiasm of each individual for innovation. The original motivation for innovation may be the individual’s sense of achievement, the need for self-fulfilment, but if innovative efforts are not recognized by the organization or society, and if they are not fairly evaluated and reasonably rewarded, the incentive to continue to innovate will gradually be lost.

(1) Pay attention to the combination of material and spiritual rewards. Rewards do not have to be monetary and often do not need to be monetary; spiritual rewards may drive the psychological need to innovate more than material rewards. Considered from an economic perspective, material rewards are less effective than spiritual rewards because the marginal utility of money is diminishing, and organizations have to pay increasingly larger bonuses in order to motivate or maintain the same level of innovation. For the individual innovator, material rewards are useful only in one context: the size of the bonus is seen first and foremost as a measure of the individual’s work output and effort. (2) Rewards should not be seen as “reward for not making mistakes”, but rather as reward for exceptional contributions, or even for efforts that aspire to make exceptional contributions; they should include not only those who innovate after success, but also those whose efforts preceded success, or even did not achieve success. In terms of organizational development, perhaps what matters

144

5

Innovation

is not the outcome of innovation, but the process of innovation. If the reward system promotes active exploration and innovation by each member, results beneficial to organizational development are bound to result. (3) The reward system should both promote internal competition and ensure cooperation among members. Both internal competition and cooperation are important for innovation. Competition stimulates everyone’s desire to innovate, thus facilitating the identification of innovative opportunities and the generation of innovative ideas; excessive competition leads to internal fragmentation and blocking each other. Collaboration combines diverse knowledge and capabilities, thus making each innovative idea better, but cooperation without competition makes it difficult to distinguish individual contributions, thus weakening individual desire to innovate. To ensure the combination of competition and collaboration, we can consider setting more collective awards and fewer individual awards, more individual awards and fewer overall awards, and more small awards and fewer or even no grand prizes, so as to give everyone the hope of success and avoid the “superstar syndrome where only a few people can succeed”, thus preventing mutual blockades and mutual innovation. “This will prevent the phenomenon of mutual blocking and secrecy”, which undermines cooperation.

Ways to Think Outside the Box (Yiqun, 2019) (1) Out of the ordinary Logical thinking is necessary for innovative activities. The main characteristic of logical thinking is to follow the law of “no contradiction”, i.e. to make sense of everything. However, the germ of innovative thinking is rooted in the interruptions of logic, which requires us: to find this germ of innovation, we must boldly abandon the hard logical thinking and dive into the sea of more elastic non-logical thinking, in order to find what you need. (2) Indulging in ambiguous thinking The habits of the human brain have always sought clarity and understanding, and ambiguity is often rejected. In fact, ambiguity is an integral part of human thinking, and it is the unity of the opposites of clarity and ambiguity that drives the development of human thinking. Innovation is the process of moving from ambiguity to clarity. When your mind is in a fuzzy state, contradictory ideas may emerge, which may stimulate your imagination to break out of the original narrow ideas and produce the germ of new creative thinking. If you can indulge the vagueness of your thinking without worrying about becoming a fool, it is likely that innovation will come out in spades.

5.2 Basic Methodology

145

Precisely because clarity and ambiguity are relative, we should not be obsessed with everything in corporate management practice. The vast majority of corporate pay and appraisal content and rules should be clear, but a portion of ambiguity needs to be retained to better accommodate many special situations. It is also the existence of this vague part that gives managers more room for innovation in management techniques. (3) Proactive challenge to rules Superstitious belief in rules may be one of the major reasons for the creation of stereotypes in thinking. A rule is something that should certainly be followed within certain limits, because it is, after all, a summary of the experience and knowledge of previous generations. But as circumstances change, when it comes to the end of its life, it should be boldly discarded. In management innovation, if we are brave enough to challenge the concepts, laws, rules and solutions that have not been discarded, our mind-set will be swept away. In order to proactively challenge the rules, a system of regular reviews of systems, processes, and operations can be developed within the company, so that the company is constantly prompted to abolish old rules that are no longer compatible with the company’s development and to establish new rules that are compatible with the company’s development. (4) Overcoming ideological subordination Herding behavior is a phenomenon in which individuals, under the influence of social behavior, abandon their own opinions and ideas and take actions that are in agreement with the majority. In the real world, herding is common because there is a greater margin of safety in herding. Yet security is often connected to stability and conservatism, and sometimes it may not really be secure. In a market economy, manufacturers whose products are not selling well are often part of the herd, producing whatever others produce, and the end result is naturally a backlog. On the contrary, those products that are popular in the market are mostly products with characteristics that do not follow the crowd. The way of success for some enterprises is “I have what others have, I have what others have, and I have what others have, and I have what is new”, and they pursue differentiation instead of following the crowd. Conformity in thought, on the other hand, is a sign of inertia in thinking. What most people want to do must be orthodox and stable, with few new ideas. Therefore, if you can overcome the herd in your daily work, you will also help to overcome the stereotype. (5) Good at seeking multiple answers One of the important features of the stereotype of thinking is its deterministic, single-minded nature. And the development of things always points in the direction

146

5

Innovation

of diversity and complexity. By settling for only one state, one answer, the world freezes and innovation stops. If we can go beyond our existing experience and knowledge and actively search for multiple answers, it will help us overcome our thinking stereotypes and look at problems from all angles, thus obtaining more innovations. In the process of breaking out of the established patterns of thinking and seeking multiple answers, it is a good way to overcome inertia and inertia by making bold assumptions, which, although they do not necessarily lead to direct creative results, can stimulate the imagination. This can lead to a whole new germ. The most effective way of hypothesizing is to take existing things to extremes, to bring out new contradictions or problems. At that point, stereotypes of thinking play no role. Using the imagination to the fullest is then one of the keys to seeking multiple answers. Imagination is a natural ability, and every human being has a rich imagination when he or she is a child. With age, knowledge, and the restrictions and limitations of society (including laws, regulations, institutions, traditions, etc.), the human imagination is declining. We need to restore the rich imagination of the past and recover the valuable imagination that has been lost. The “what if” method of thinking is an effective tool for restoring the imagination. When a person thinks with a sense of “what if”, his or her imagination is freed from the shackles of laws, regulations, institutions, traditions, etc. Many successful products have come from bold imagination; the no-sharpen pencil came from the imagination of “if the pencil could continue to write without a knife”, the microwave oven from the imagination of “if the stove could cook without a fire”. (6) Reverse thinking Reverse thinking is a way of thinking that every manager should master. For any employee, in you think satisfied, you must see his shortcomings, this is responsible for him, if only see the advantages, indulge, and will eventually destroy him. When we decide to do or not to do a thing also need to reverse thinking, even if you decide to do, but also to think about not to do what will happen, not to do there is no benefit, can not do the benefits of the dry inside, so as to do better, all these need to reverse thinking. Reverse thinking is commonly said to stand on the opposite side of the thinking problem, or refers to the general people, general business thinking about different aspects of the problem. People do not want, think is normal things, but you think about it, from which you find the problem, this is the reverse thinking.

Approaches Suitable for Managing Innovation (Yiqun, 2019) (1) Problem identification methods (2) “Why” method

5.2 Basic Methodology

147

The “why” method is the simplest way to identify a problem, by changing the definition of the original problem to gain a new perspective on the problem, which in turn can lead to a viable solution to the problem, until the highest level of problem abstraction is obtained. The “why” method is useful for expanding the scope of a problem and exploring its various boundaries. 2) Five major questioning techniques One asks the purpose; two asks the place; three asks the time; four asks the person; and five asks the method. (2) Enumeration method The enumeration method is a way to promote comprehensive thinking about issues and prevent omissions by listing relevant items, thereby generating multiple ideas. The enumeration method can be combined with the brainstorming method when enumerating issues, options and selection of options to obtain a new name and more innovative ideas. The enumeration method includes the characteristic enumeration method, the disadvantage enumeration method, the hope point enumeration method, etc. Among these methods, the characteristic enumeration method is the basic method, and the other methods are merely clever applications of the characteristic enumeration method. 1) Property Listing Method This is an important innovation technique for performing management innovation, which is done by listing the characteristics of existing things and proposing new innovative ideas for the problems that need improvement in them. It is based on breaking down the problem to be solved into local sub-problems, listing all the features and attributes of the object and organizing them into categories, followed by a detailed analysis. The problem is posed, flaws are identified, and then other management elements such as functions, structures, people, and principles are replaced with other similar argumentative attributes to produce the idea of management innovation. This innovation technique is particularly suitable for improving management in old companies and is an important aid for management innovation in old companies. The advantage of the characteristic enumeration method is that it prompts us to consider the problem comprehensively, prevents omissions, and makes it easier to find an entry point to the problem. 2) The method of enumeration of shortcomings This method believes that the main reason for improving something is that the old thing has shortcomings and cannot meet the requirements, and that the shortcomings are the direction for improving the old thing. Therefore, by listing the

148

5

Innovation

unsatisfactory shortcomings in the characteristics of the thing, the problem can be found, and the shortcomings can be analyzed item by item to form various solutions to overcome the shortcomings. The method of enumeration of shortcomings revolves around improving the shortcomings of old things, so it usually does not touch the essence of the original thing and the whole, and is a passive method, which is generally used in business management to solve soft technical problems belonging to the category of “things”. For example, the enterprise through the regular diagnosis, to identify the existence of problems, and then think about how to solve these problems, is the use of shortcomings enumeration method. 3) Hope Point Enumeration Method The method assumes that the old thing is largely unsatisfactory and must be replaced by a new thing, which should have the characteristics that satisfy people’s wishes. So the hope point enumeration method is dissatisfied with the old thing as a whole, and sees the old thing as a whole as a shortcoming, and the hope points it enumerates are often difficult to have in the nature of the old thing. Hope point enumeration method is a proactive approach, often can break through the box of the old things, the formation of more significant innovation. For example, if a company formulates a strategy, puts forward development requirements, and then reconstructs its corporate culture and organizational structure system according to the strategic development requirements, in a sense, it is also an application of the hope point enumeration method. (3) Associative analogy method The core of associative analogy is to infer from the properties of the known to the unknown that the unknown has similar properties through comparison between the known and the unknown. The uncertainty of analogical reasoning can help us break through the limitations of logical thinking to find a new logical starting point. In daily life, people often use well-known examples to illustrate certain difficult things or concepts by analogy, which is actually the use of analogy. Associative analogy is based on comparison. In the process of exploring the unknown, people, with the help of analogy, compare unfamiliar objects with familiar ones, and compare the unknown with the known ones, so that they can learn from each other and play the role of inspiring ideas, providing clues, and giving examples. The key to the associative analogy method is association. Without a strong ability of association, it is impossible to bridge the gap between the known and the unknown, and no analogy can be drawn. The shareholding system has been applied to the reform of industrial and commercial enterprises and has been successful, so can the further deepening of the reform of the rural economy be based on the experience of the shareholding system and the implementation of the sharefield system? Can banks, whose greatest function is the storage of funds, operate other businesses, such as “time banks”, based on the way banks operate?

149

There are three broad types of associative analogies: direct analogies, structural analogies, and integrative analogies. Direct analogy is a method of making a direct connection between two things; structural analogy is a method of inferring from certain structural similarities between the unknown and the known that the unknown also has certain properties; and comprehensive analogy is made when the relationship between the elements within the known and the unknown is very complex and there are comparable similarities between the two. (4) Transplantation method Transplantation is the method of transplanting technology, methods, principles or ideas from one field to another to produce something new. For example, the application of standardized management techniques in production management to the field of business operation results in a new way of doing business—chain operation, which realizes business scale operation by means of unified image, unified purchase, unified price and unified management system. The greatest advantage of this innovative technique is that it is not bound by logical thinking. When wanting to transplant a technique or principle from one field to another, it does not require much clear understanding rationally; it is often done first, which provides a variety of ways for something new to take shape.

Approaches to Autonomous Innovation (Ziming et al.) How to achieve independent innovation, combined with the exploration and practice over the past few years, summarized eight words, specifically “clear the will and do the right thing, strengthen the foundation and cultivate the yuan”. It is important to clarify the objectives of innovation and the strategic trend of innovation. At the same time, market orientation is one of the driving forces of innovation. The will, the ambition, looks at how to integrate internal and social resources for innovation to achieve the goal from the perspective of ambition. Dukes, how to go about sticking to it, playing to our common strengths and taking the route of integrated innovation overtaking. line, to achieve innovation goals in an open and pluralistic way in the midst of the innovation process. Solid, how about laying a good foundation to strengthen the system in three areas: innovation capacity building, innovation system building, and innovation overall thinking strategy. From the perspective of the pursuit of innovation, it is also important to grasp the standards, the initiative to master the standards and the rules. It is also important to cultivate the atmosphere of innovation and the spirit of innovation.

150

5.3

5

Innovation

Management Practice Cases

Case 1 A company is one of the leading companies in the food consumption field with a market capitalization of hundreds of billions of RMB. For more than a decade, the company has been adhering to an innovative development strategy, creating a variety of pioneering products with a forward-looking, advanced concept, and eventually becoming unique in the highly competitive food industry, with its products ranking among the top in the industry in terms of market share for many years. When artificially processed milk almost completely occupied the market, the company did not blindly follow the industry trend, but creatively began to develop natural and pure milk products, investing a lot of time and money in discovering quality milk sources, setting up eight quality milk sources bases one after another across the country, so that the concept of natural and non-additive was deeply rooted in people’s hearts. At the same time, the product itself has been constantly innovating, launching several new varieties to meet the different needs of people of all ages for water, such as infant versions of milk powder and low-fat high-calcium milk designed for the elderly. In addition, the company continues to increase investment in technology research and development, its juice drinks in the juice concentration of up to 30– 40%, far more than the average concentration of 10% of the market juice drinks, and the first to launch mixed fruit and vegetable juice drinks, the establishment of a very strong technical barriers, after the success of the development of no preservatives, no need to refrigerate storage of fruit and vegetable juice, won wide praise and good reputation. In the era of sugary drinks, the company was also one of the first to launch a low-sugar, zero-calorie tea drink made from natural high-quality tea leaves, which coincides with the health concept of low sugar and low fat that people have been advocating in recent years. At the same time, the company is constantly updating and strengthening its marketing approach. In the case of milk, for example, the company has not only streamlined its representative advertising slogan to reflect the “natural and healthy” characteristics of the product, but also to make it catchy and easy to disseminate, but also used story-based advertising clips to strengthen users’ memory of the natural milk source, thus highlighting the essential differences between its products and those of other companies in the same industry and enhancing users’ loyalty. In addition, the company’s marketing has also kept abreast of the trends of the times. To cater to the preferences of young people, the company has co-branded with many famous IPs such as Tomb Raider and Forbidden City Culture, cooperated in launching customized products, and also actively sponsored popular variety shows, which has greatly increased brand awareness and taken the company’s industry status to new heights.

5.3 Management Practice Cases

151

Questions: 1. What is innovation? Please briefly describe your understanding. 2. Try to summarize the innovation points that the company focused on in its development path.

Case 2 (Xiaojuan, 2010) Company A was formerly a school-run business. in the early 1990s, the founder used his patent—a high-power, high-capacity electrical connector—to run a school-run business. The patent was to solve the problem of power transmission and connection between train cars. Due to the special circumstances of China’s large population and poor road conditions, the introduction of foreign connectors would heat up and explode when the power consumption increased. The patent solved this problem and won the first prize of scientific and technological progress of the Ministry of Electrical and Mechanical Technology with self-locking function. 1994 was recognized by the Ministry of Railways and designated as an updated product. The company has made great profits because of this product and laid the foundation for future development. In 1997 and 1998, Company A entered the field of doors, and in 1997, the MT30 type pull door (i.e. main line railroad passenger car pull door system) was successfully developed. According to the needs of railroad development, the original doors were imported, but now they are replaced by localization, and the products of Company A account for more than 40%, which makes the price of doors drop by half. In 1999, Company A entered a new field, namely the subway. At that time, the state required the subway doors to be autonomous. The most important thing about the door is the problem of locking and opening. To ensure safety, after the door is closed, there must be a lock to lock this door firmly; to open, it has to be unlocked. Unlocking requires an additional power source, pneumatic or electromagnetic. For example, a lock is latched on, and when opening the door, it is sucked open with electromagnetism. In China, the subway traffic is very high, especially in the morning and evening rush hours, and the doors are subjected to a large load. Under this heavy load, the door will be deformed and it will be very difficult to open electromagnetically or pneumatically. This means that the reliability of this physical, powered opening system is poor and often fails under high passenger flow conditions. In addition, electromagnetism has a natural decay problem, and its reliability decreases over time. However, door opening and locking is very important, the car must be opened when it arrives at the station; after the car starts, the door must be locked when there are more people. This is the basic paradigm of the door: the locking system and the opening system. For more than a hundred years, door innovation has been done mainly on these two systems.

152

5

Innovation

In the early days, it was a series of innovations along the path of others. The real breakthrough came in 2006, when the biggest difference between Company A and traditional doors was that there was no lock. If there is no lock, it will be “closed without lock, open without key”. The key question is: what can be “no lock and closed, no key and open”? Inspired by the jack, the spiral extension angle of the jack thread is small, and always has a self-locking function, so that the heaviest things can not collapse it; but it can be rotated to let it rise and fall. If the extension angle of the thread is large enough, it is not self-locking, and the nut can move freely on the thread. By combining zero extension angle and large extension angle, we can achieve “no locking”, self-closing without lock and self-opening without key. Now, A company to solve is in a screw with different helical extension angle, variable helical extension angle can also achieve transmission, the solution to this problem requires a leap of thought: to degenerate this face into a point, into a line, so as to achieve the transformation of freedom in different helical extension angle. Finally, this ordinary nut is simplified into a kind of round latch to realize the transmission. After this was worked out, it was proved to be feasible through experiments. It was a completely own creation. This invention is of great use to the enterprise. In 2006, the enterprise was in a very difficult situation, and the enterprise undertook the door device of Metro Line 1 in Shanghai. (1) The locking device of the vehicle door was developed by the enterprise itself, but it had a lot of similarities with the competitor’s patent, causing intellectual property disputes. (2) The device developed at this time encountered difficulties in the Shanghai metro, and the door could not be opened when the passenger flow was high. The company’s competitor communicated with Siemens that if Company A could not solve the problem, it would change the supplier of the door. Siemens asked company A to solve the problem within 3 months. (3) At that time, the competitor also intended to acquire Company A. The company was also discussing a more acquisition. At that time, Company A was doing a new “non-locking” innovation, and participated in the exhibition in September, and made the model in October, and was able to open and close the door self-locking and achieve the basic function. On the day of the basic function test, the company was having a board meeting and was discussing about being acquired. When the news of the success of the model test was reported to the chairman and general manager of the meeting, the company decided to make it into a product and replace the subway doors in Shanghai. After a period of desperate experimentation and replacement, it finally succeeded. Siemens requirements are very strict, must pass a variety of strict tests, for example, 1000 times to open and close the door experiment, 60 doors, 60,000 times to open and close, there is any one door error, it will not pass. In the process of opening and closing the door to do a variety of tests, anti-crush, anti-barrier, etc., can not make a mistake. Company A’s “lockless and closed, keyless and open” door not only saved itself, but also played a huge role in promoting the development of rail transportation in China. Since this “lockless” door, half of the doors of China’s high-speed rail and

5.3 Management Practice Cases

153

subway are made by Chinese companies themselves. The world’s largest and most famous company with the longest history of automatic doors for rail transportation, which once monopolized the door market in China, has not received a single order for subway doors in China since Company A got the “non-locking” door, and has changed its general manager several times. If they did not want to be acquired, the competitor would punish Company A: one is the patent penalty, the second is the bundling penalty, the door and other systems of the vehicle are bundled together, buy its brake must buy its door, and the third is to poach people. Since the “no-lock” door, competitors have mainly worked with Company A. “No lock” technology is completely original, the patent penalty can not succeed; “no lock” various performance indicators superior to the original traditional door, and to solve the problems arising from the reality of China’s operation, the bundling penalty also did not succeed; because of the locking and opening two sets of systems, the traditional Door weighs 180 kg each; and “no lock” door is only 120 kg each, which not only improves the carrying capacity of the vehicle, but also greatly reduces the cost of each door, the competitiveness of enterprises greatly increased, the benefits greatly improved, the talent was not poached. Without the core technology, to break the foreign monopoly, the price of this product down, it is impossible. a company since the “no lock” door, market share has been increasing, not only in the domestic, but also in foreign markets. Questions: 1. What are the characteristics of Company A’s innovation? 2. What have you learned from Company A’s innovation and entrepreneurship?

Case 3 (Hufeng & Manyu, 2014, Sanduo et al.) Company B has grown into a well-known domestic jewelry brand with an annual turnover of RMB 1.5 billion. However, his insight as a management scholar also made the CEO of Company B think deeply: How can we establish an internal mechanism for mutual learning and knowledge sharing in the company, so that the discovery, idea, insight, or experience of an employee can be quickly amplified into the behavior of the whole organization and passed on through a structured and driven way? In this way, even if the employee leaves the organization one day, the organization can still function efficiently. Under the strong promotion of the CEO of Company B, Company B places great emphasis on organizational learning and knowledge sharing, and has formed a series of characteristic knowledge management systems and methods. company B has put its own organizational knowledge throughout every corner of the company.

154

5

Innovation

(1) Acquisition of organizational knowledge (2) Sources of organizational knowledge: staff suggestions are widely included and subdivided Employees are the basic constituent unit of an enterprise, and thus their opinions are essential to the formation of organizational knowledge. In the concept of the CEO of Company B, “the success of a company is to let ordinary people do extraordinary things, to give full play to the knowledge of every employee in the company, and to turn individual competitiveness into corporate competitiveness”. As a result, Company B tried to “force” employees to make suggestions by including them in its performance appraisal system. In the first quarter of fiscal year 2010–2011 alone, Company B received 177 suggestions from administrative employees, of which 134 were accepted or partially accepted. Among these 177 suggestions, three of them came from Chen Lin of the finance department. The suggestions he made were all closely related to his own work, and it was with his usual work experience and thinking that his suggestions were all adopted, and two of them won the first and second prizes in the excellent employee suggestion competition. Company B’s managers give serious and open answers to every suggestion they receive, stating the reasons for accepting or rejecting it. Company B also has an open communication environment with collective participation, so that all employees can regularly share their views on some issues, and employees who make work suggestions can appeal to the head of the department who has been perfunctory. This mandatory standardized management enables employees’ knowledge to run through the growth veins of the organization, resulting in every employee being a manager and sharing the power of growth with the organization. 2) Organizing the refinement of knowledge: spark collision analysis session There is an old Chinese saying, “It is better to teach people to fish than to teach them to fish”. Organizational knowledge plays the role of this “fish”. Enterprises must establish an internal mechanism to distill the regular essence of guiding the development of the company in practice based on the theories and experiences of the predecessors and their own characteristics, so that the successful discoveries, ideas, insights or experiences and skills of an individual can be rapidly amplified into the behavior of the whole organization. Company B’s analysis meeting system is a refinement of such a process. company B identifies, analyzes and solves management problems within the company through various committees. company B’s analysis meeting is essentially a strategic correction tool, and all problems solved in the analysis meeting are shared publicly on the company intranet, and their improvement is also monitored. participation in the analysis meeting is also linked to departmental rewards.

5.3 Management Practice Cases

155

The organizational knowledge system of a company requires that the regular principles guiding the future development of the company be distilled from its own needs by combining the characteristics of its own industry, the stage of its development history, the resources it possesses, its corporate culture and other elements. The analysis will give the managers a timely reminder, so that they can be firm in front of the complicated knowledge and exclude various issues that are not applicable to the long-term development of the company, while extracting the essence of knowledge that is beneficial to the company and ensuring that all the company’s affairs can move forward along the right track. 3) Curing of organizational knowledge: Systematic innovation to see the real trick When the various sources of organizational knowledge are discussed in the analysis meeting and combined with the actual situation of Company B, they are refined into the prototype of organizational knowledge. The essence of the distillation must be solidified to become understandable organizational knowledge, and Company B solidifies organizational knowledge through the implementation of a systematic innovation system. In 2010, the Berlinale celebrated its 60th birthday, and the competition for sponsors also started with the preparatory work of the festival’s organizing committee. For the VIP jewelry, the organizing committee requires perfection, elegance and elegance from design to workmanship, and the requirements for sponsors are also extremely strict, with design, workmanship, details, brand name, etc., all being important factors in winning. At the 60th edition of this landmark film festival, Company B beat out many competitors to become the sole official jewelry sponsor. As a result, they declared this project as a systematic innovation for the company, solidifying the result of their experience and knowledge. (2) Sharing of organizational knowledge (3) Internal magazine: let the knowledge into the heart of employees Company B’s internal magazine was founded in 1998 and is published every half month, with nearly 200 issues so far. The most important feature of the internal magazine is that the news on it is purely internal propaganda, in fact, it is to spread the organizational knowledge of Company B. Company B’s system is a chain management system, and it needs to pass on the organizational ideas, through such a newspaper is a very good way. In order to make the internal newsletter achieve the desired effect, Company B designed a “structure” to drive it to disseminate organizational knowledge. First, it was necessary to organize regular learning for employees. However, Company B’s performance appraisal system is different from that of other companies, i.e., the benefits involved in the learning of the internal magazine are not only personal, but also those of their departments. In such a collective, one’s own interests are related to everyone’s interests, and employees of Company B are usually very

156

5

Innovation

enthusiastic to study the internal magazine to understand the organizational knowledge of Company B. The internal magazine publishes some management concepts or methods of the organization; the internal magazine also accepts the exchange of some employees’ working methods and work experience. each store of Company B has its own internal magazine correspondent, and these correspondents share their own or their department’s recommendable sales experience in the internal magazine, which sometimes becomes a company-wide standard for the stores, thus promoting the sharing of organizational knowledge. 2) Training: “Let’s all share” Training is an important way to share knowledge in Company B’s organization, and employees can come together to share various professional knowledge and management knowledge. Company B’s training system consists of three major parts: administrative staff training, professional skills training and business organization training, and through these courses, knowledge in the organization is well shared and exchanged. In order to encourage people to actively improve their knowledge and ability through training, all training courses in Company B have credits that are linked to employees’ performance evaluation and promotion, and the company also promotes the effectiveness of training through various competitions. Company B uses a number of incentives and selection measures to build up its own team of internal instructors, which are divided into two parts: management trainers, who lead most of the management knowledge courses, and professional trainers, who are responsible for offering professional knowledge courses. The company selects lecturers from within, gives them the appropriate teaching tasks, and pays for the teaching expenses. In addition to material incentives, internal lecturers can be used as an important credential for salary increase and promotion. (3) The key to knowledge management All systems and initiatives are no longer isolated systems, but are part of the overall management system, and are ultimately linked to the company’s incentives, forming what is called a “structure-driven” management model, which is the key to their effectiveness. This is the key to their effectiveness. Employees follow the organizational knowledge and combine it with specific methods to produce results that allow the organizational knowledge to be tested and valued. Company B holds a quarterly fiscal meeting every six months to evaluate and recognize outstanding employees. In addition to the awarding of prizes, of course, each quarterly meeting will be a debate competition around Company B’s organizational knowledge and its derivatives. The CEO of Company B, the president, believes that “whether an employee is excellent or average depends on the level of individual intelligence and ability, as well as on the level of organizational knowledge of the company where he works, and also on the extent to which he has mastered the organizational knowledge”. Therefore, we strengthen organizational

References

157

knowledge and deepen employees’ mastery of organizational knowledge by means of debate competitions. In the December 2010 quarterly meeting, a debate was held on the relationship between Company B’s target incentive system and employee satisfaction, which led to a discussion on whether the “Snail Award” (a term for the worst performing department) was appropriate. The debate was about the appropriateness of the Snail Award. The HR Department, as the pro side, thought that the “Snail Award” reflected the idea of ranking management derived from the target incentive of Company B, while the Operations Center, as the con side, thought that the “Snail Award” hurt the satisfaction of employees and was against the organizational culture of Company B. In fact, the purpose of the debate on the “Snail Award” is not to simply affirm or deny the implementation of the “Snail Award”, but to make it clear that the management philosophy of Company B includes target motivation and employee satisfaction, so that these management concepts are deeply rooted in the hearts of employees. The highlight of the quarterly conference was the awards, each of which included a keyword sharing. For example, the keyword shared in the awarding of the Outstanding Administrative Department is “collaboration”, which reflects the culture of knowledge sharing in Company B. The Outstanding Administration Department Award is designed to motivate the administration department to communicate and collaborate with other departments, which is a means to solidify the organization’s knowledge in the form of rewards. In addition, the key word for the Most Actionable Award is “action”, which is also emphasized by Company B. This debate and award also helped Company B to strengthen their organizational knowledge. Questions: 1. How should companies innovate their systems to facilitate knowledge sharing? 2. In the context of knowledge management process, how to implement innovation in organizational culture?

References Adapted from interview materials and relevant reporting materials with Shi Xiang, chief engineer of Nanjing Connie Mechanical and Electrical Co., Ltd. The case is taken from “Management: Principles and Methods (7th Edition)”, edited by Zhou Sanduo, et al. Koontz, H., & Weihrich, M. (2014). Management. Essentials (9th ed.). Hufeng, P., & Manyu, H. (2014). Innovation of retail business model and its path analysis in the new technology environment: Taking Suning Yunshang as an example. Macroeconomic Research, No. 2. The case is extracted from “Management”, a key textbook for Marxist theoretical research and construction projects. Key teaching materials for Marxist theoretical research and construction projects. (2019). Management. Robbins, S. P., & Kurt, M. (2017). Management (13th ed.).

158

5

Innovation

Guohua, X., De, Z., & Ping, Z. (1998). Management. Sanduo, Z., Chuanming, C., Zixin, L., & Liangding, J. (2018). Management——Principles and methods (7th ed.). Yifan, Y. X, (2010). Complete works of Suning management model. Wuhan University Press, pp 212–227. The case is extracted from “Management”, a key textbook for Marxist theoretical research and construction projects. Yiqun, X. (2019). Management (5th ed.). Ziming, Z., Fang, L., & Zhiping, C. et al. (2018). Edge computing: platforms, applications and challenges. Computer Research and Development, 055(002), 327–337.

Part Two

The second part is big data practice, which mainly introduces the basic concepts of big data, the basic methods of big data storage and processing, and the practical cases of big data application in management innovation.

6

Basic Concepts

6.1

Big Data

(1) The concept of big data has been expressed in several different ways, as follows (2) A large collection of data that is difficult to manage with existing general technology. (3) Big data refers to data sets whose size exceeds the capacity of conventional database tools, acquisition, storage, management and analysis, but he also emphasizes that it is not necessary to have data sets exceeding a specific terabyte value to be considered big data (McKinsey Global Institute in its report). (4) Big data refers to information that is so large that it cannot be captured, managed, processed, and organized into information that helps business decisions for more positive purposes in a reasonable amount of time through current mainstream software tools (Wikipedia). (5) Big data i.e. massive data size, rapid data processing, diverse data types, low data value density (Internet Central IDC). (6) Big Data is a massive, high-growth and diverse information asset that requires new processing models for greater decision making, insight discovery and process optimization (global IT research and consulting firm). (7) Instead of using shortcuts like random analysis (sample surveys), all data are used for analytical processing. (The Age of Big Data by Viktor MayrSchönberg and Kenneth Cukier). (8) “Big Data” is the new processing paradigm needed to have greater decisionmaking power, insight discovery and process optimization capabilities to accommodate the massive, high growth rate and diversity of information assets. (Research firm Gartner). (9) Big data (big data), an IT industry term, refers to a collection of data that cannot be captured, managed and processed within a certain time © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_6

161

162

6

Basic Concepts

frame with conventional software tools, and is a massive, high-growth and diverse information asset that requires new processing models to have greater decision-making power, insight discovery and process optimization capabilities. (Baidu Encyclopedia). (10) Big data is a collection of data whose contents cannot be crawled, managed and processed by conventional software tools within a certain time frame. Big data consists of giant data sets that are often larger than humans can collect, cupboard, manage, and process in an acceptable amount of time. (MBA Think Tank Encyclopedia). (2) Typical characteristics of big data Volume: With the exponential increase in sensing devices, mobile devices, network broadband, online transactions and social networks, producing thousands of terabytes of data per day, the size of data is growing exponentially. The Volume of Big Data refers to the large volume of data and the integrity of the scale. The volume of data is growing at an unprecedented rate globally, and the storage capacity of data is expanding from the terabyte level to the BB order of magnitude. Diversity (Variety): Diversity (Variety) data types many types of data, big data involves a variety of data types, including structured data and unstructured data. The volume of new multi-structured data is also exploding, and some statistics show that in the future, the proportion of structured data and unstructured data is disparate, and unstructured data will reach more than 90%. Web diaries, electronic documents, emails, web pages, audio, video, images, geolocation information and a lot of other unstructured data already account for a large share of the total data volume. Velocity: Velocity consists of two aspects: the speed of growth and the speed of processing. Big data is growing fast: Statistics show that the digital universe will grow at an annual rate of 41% between 2009 and 2020. Big data processing speed is fast: Massive data mining and analysis as much as possible second response. Big data requires fast data processing speed, which is the most significant feature that distinguishes it from traditional data. In reality, this is reflected in the demand for real-time data, otherwise, even more valuable data, as long as it is past its timeliness, also loses its meaning of existence. Low value density (Value): The level of value density is inversely proportional to the size of the total amount of data. How to quickly “purify” the valuable data has become a challenge to be solved in the context of big data. Veracity: the accuracy and trustworthiness of the data, i.e. the quality of the data. (3) Latest technologies, e.g. 6G, satellite, big data collection technology, big data pre-processing technology, big data storage and management technology, big data analysis and mining technology, big data presentation and application technology.

163

6.2

The Age of Big Data

In a column in the New York Times, it was stated that the era of “big data” had arrived, and that in business, the economy and elsewhere, decisions would increasingly be made on the basis of data and analysis, rather than on experience and intuition. Gary King, a professor of sociology at Harvard University, said, “It’s a revolution, and the vast resources of data have allowed the quantitative process to begin in all fields, whether it’s academia, business or government, all fields will begin that process.” “The difference between the various economic epochs lies not in what is produced, but in how it is produced and with what means of labour. The means of labour are not only a measure of the development of human labour, but also an indicator of the social relations by which labour is carried on.” Marx called the development of human society the Stone Age, the Bronze Age, the Iron Age, and the Great Machine Age, according to the criteria of the means or instruments of labor. Marx did not see the advent of the Information Age, but when information technology was used as a very important means or tool of production, we still call this age the Information Age based on Marx’s theory. Now with the arrival of Big Data, which continues to manifest itself as a new means of production and a great role in productive activities, it is natural that we should think about the coming of the Big Data era. “It follows from the nature of things that the development of man’s labor power is especially manifested in the development of the means of labor, or the means of production.” The means of labor are an important criterion for the level of development of productivity, which is the essential characteristic of an era. The emergence of big data as a new means of labor has a direct contribution to the development of productivity, which is why the era of big data is called an era. (Change of thinking in the era of big data—Wang Hao).

6.3

Managing Change in the Era of Big Data

The advent of the new era of big data requires management innovation because of the big changes in the technological environment and the consequent changes in management concepts, ideas and methods. The complexity of Big Data poses great challenges for business practices and leveraging the value of Big Data, and the characteristics that Big Data possesses that are different from traditional data collections make it transformative for traditional strategic management thinking and corporate innovation practices. The impact of big data on innovation management is developed in four dimensions: Innovation model, innovation subject, innovation strategy and innovation organization. (An analytical framework for the change of corporate innovation management in the era of big data—Xue-Chen Ding).

164

6.4

6

Basic Concepts

Frontier Technologies Related to Big Data Communications

4.1 5G-Related Technologies (1) Basic concepts of 5G The 5th Generation Mobile Communication Network (5G or 5G technology for short) is an extended development following 4G (LTE-A, WiMax), 3G (UMTS, LTE), and 2G (GSM) technologies. As with earlier technologies, 5G networks are digital cellular networks. (2) Basic 5G technology 5G uses advanced key technologies for wireless transmission and network transmission. In terms of wireless transmission technology, key technologies include large-scale beam assignment, ultra-dense networking, new coding and modulation, millimeter-wave high-band communication, and terminal passthrough. In core network transmission, key 5G core network technologies include serviceoriented architecture, software-defined network, network slicing, network function virtualization, edge computing, etc..1 (3) Typical applications of 5G With the increasing number of mobile Internet users and network traffic, existing mobile communication technologies are being challenged. 5G technology is used to meet the burgeoning demand for mobile communications and richer service delivery capabilities, with performance targets for high data rates, reduced latency, energy savings, reduced costs, increased system capacity and large-scale device connectivity,2 with low-cost, low-energy, safe and reliable features. Specifically: The transmission rate is increased by 10 to 100 times, the peak transmission rate reaches 10Gbit/s, the end-to-end delay reaches ms level, the connected device density is increased by 10 to 100 times, the traffic density is increased by 1000 times, the spectrum efficiency is increased by 5 to 10 times, and the user experience can be guaranteed at a speed of 500 km/h. It can make information and communication break through the limitation of time and space, bring excellent interaction experience to users, and quickly realize the interconnection of people and things.3 Several standards organizations have given definitions of 5G application scenarios. The 3rd Generation Partnership Project (3GPP) divides 5G applications into two categories: Mobile Internet and IoT applications; the International Mobile Telecommunications System (IMT)-2020 (5G) divides the main 5G application

1

Shaohui et al., (2018). https://baike.baidu.com/item/5G/29780?fr=aladdin#4 3 Guo-feng et al., (2015). 2

6.4 Frontier Technologies Related to Big Data Communications

165

scenarios into four categories: Continuous wide coverage, hotspot high capacity, low power large connectivity, and high reliability low latency; the International Telecommunication Union (ITU) divides 5G application scenarios into three categories: Enhanced mobile broadband (eMBB) scenarios, massive machine communication (mMTC) scenarios, and highly reliable low latency communication (uRLLC) scenarios. 5G applications cover a wide range of areas, including mobile monitoring and control, ultra-high definition video, augmented reality (AR)/virtual reality (VR), gaming, drones, connected vehicles, and smart cities, power grids, factories, education, and healthcare. 5G initially centers on pan-video and image transmission and processing scenarios for various fields, such as AR/VR-type, ultra-high definition video, and image-based applications. (1) XR 5G provides opportunities for XR development. XR is a general term for multiple video presentation and interaction methods of VR, AR, Mixed Reality (MR), and Holographic Display (HR). XR has a wide range of industry application scenarios and value-added space in various verticals, such as autonomous driving, mobile monitoring and control, smart manufacturing, home entertainment, smart retail, smart education, etc. The application development of XR in various fields are specifically. (a) Virtual prototype Virtual prototyping offers designers the opportunity to quickly interact with and modify virtual worlds containing prototypes, and the ability to take clients into constructed virtual worlds to communicate ideas, and has important uses in business, such as real estate and architecture, as well as in the design of aircraft, spacecraft, automobiles, furniture, clothing, and medical devices. (b) Education The areas where XR will have the greatest impact on education are in the humanities, such as history, anthropology and foreign languages. Users can view physical museums through a virtual reality interface, as well as scan and display artifacts in a virtual museum. (c) Health care For distributed medicine, doctors can provide guidance advice through telepresence and provide training using XR technology. Also physicians can provide a better view of 3D organ models generated from medical scan data. In addition, XR can provide physical therapy to patients, including overcoming phobias and stress disorders through repetitive ground exposure, improving or maintaining cognitive

166

6

Basic Concepts

skills to combat aging, and improving motor skills to address issues such as body balance or neurological disorder disorders. (d) Augmented and mixed reality Users view the real world by overlaying additional graphics to enhance its appearance. For example, by placing text, icons, and other graphics in the real world, users can use the power of the Internet to assist in many operations, such as navigation, social interaction, and mechanical maintenance. (2) Telematics Telematics is a large system network for wireless communication and information exchange between vehicles to anything (V2X) (X is vehicle, road, pedestrian and Internet, etc.) based on intra-vehicle network, inter-vehicle network and in-vehicle mobile interconnection network, according to agreed communication protocols and data interaction standards.5G mobile communication technology with its more flexible architecture solves the diverse application scenarios of Telematics with differentiated 5G mobile communication technology, with its more flexible architecture, solves the problems caused by performance indicators in diverse application scenarios of Telematics, enabling vehicles and in-vehicle terminals to obtain better performance under high-speed movement. With the all-round connection and efficient information interaction between people, vehicles, roads and clouds, Telematics is evolving from information service applications to traffic safety and efficiency applications, and gradually to collaborative service applications that support the realization of autonomous driving. In the future, 5G is likely to serve as a unified connectivity technology to meet connectivity needs such as remote operation, automated and collaborative driving, and to be widely used in vehicle autonomous driving and safety, road traffic management, etc. (3) Smart Grid In the smart grid, wireless communication in general contains two types of scenarios: Control and acquisition, and 5G technology is needed to meet its needs in the following application scenarios: High-precision wide-range wireless network timing; distribution network synchronous phase measurement (PMU); intelligent distribution automation; distributed energy regulation and control; demand-side response of electricity load; intelligent inspection and emergency command; facility operation status monitoring and remote operation. (4) Industrial sector Wireless technology in the industrial field is mainly used in the collection of equipment and product information, non-real-time control and the realization of internal

6.4 Frontier Technologies Related to Big Data Communications

167

factory information. With the continuous development and maturity of 5G technology, especially the features of low latency, high reliability and large broadband, it is possible to apply wireless technology to new areas of industrial applications such as actual control of field equipment, remote maintenance and control, industrial high-definition image processing, etc. It also lays the foundation for future flexible production lines and flexible workshops. 4 main scenarios of 5G technology are: real-time control, industrial wear, scheduling and navigation, and High density access.4

4.2 6G-Related Technologies (1) 6G Basic Concept Sixth generation mobile communication standard, also known as sixth generation mobile communication technology. (2) 6G Basic Concept According to the analysis of SK’s research progress, the future 6G network technology includes three main directions.5 (1) Terahertz wireless communication technology In order to achieve network rates of Tbps magnitude, while taking into account the low-frequency resource constraints, the 6G network will enter the terahertz (THz) band range, that is, the submillimeter band, the frequency range of 0.1THz-3THz. the band that into microblogging communications and optical communications advantages, with high transmission rate, high capacity, strong directionality, high security and good penetration and many other characteristics, and determine its wireless communications in the field Obvious technical advantages: Wide spectrum resources, communication tracking and capture capability, anti-interference, anti-interception capability, excitation and acceptance difficulty, customer service near space communication black barrier capability. Therefore, terahertz wireless communication technology has become one of the important core technologies of 6G networks.

4

Lu P, Li J, Zhao W.D. 5G in vertical industries [J]. ZTE Communication Technology, 2019, 25(01):67–74. 5 Wang Xue, Li Ping. Analysis of 6G network development trend [C]. TD Industry Alliance, Mobile Communication Magazine. Proceedings of 5G Network Innovation Workshop (2019). TD Industry Alliance, Mobile Communication Magazine:Mobile Communication Magazine, Seventh Research Institute of China Electronics Technology Group Corporation, 2019:378–381.

168

6

Basic Concepts

(3) Ultra-dense cellular network/cellular-free network technology The existing 2G/4G and the upcoming 5G will use cellular network architecture, but the coverage distance is short. 6G will use ultra-dense cellular network architecture and cellular-free network architecture. 6G era will face difficulties such as denser base stations, high inter-station interference, difficult network optimization, increased network investment, and more difficult base station construction. According to SK Korea, the 6G network architecture will evolve in the direction of “cellular-free network architecture”, which will reduce network investment cost by adopting “collaborative beam assignment technology” and “user-centric coverage” to reduce signal interference and achieve the “user-centric coverage”. The network performance is maximized by using “collaborative beamforming” to reduce network investment costs and “user-centric coverage” to reduce signal interference. The “cellular-free network architecture” is realized by combining virtualized radio access network RAN and Massive MIMO technology, which makes network deployment more flexible, network performance maximized and network configuration more cost-efficient. (4) Satellite terrestrial (satellite and ground) converged communications technology Compared with terrestrial mobile communication networks, satellite communication can achieve wide area or even global coverage by using high, medium and low orbit satellites, and can provide indiscriminate communication services to users worldwide. The integration of satellite communication systems and terrestrial communication, together forming a seamless global coverage of sea, land, air and sky integrated communication network to meet the needs of users for a variety of services, is an important direction for the development of 6G technology. The integration of satellite and 6G will give full play to their respective advantages and provide users with more comprehensive and high-quality services, for example, satellite can provide economical and reliable network services in remote areas that cannot be covered by terrestrial 6G networks, on board aircraft or on board ocean-going vessels. Satellites can also provide continuous and uninterrupted network connectivity for IoT devices and users of mobile carriers such as aircraft, ships, trains and automobiles, enhancing 6G system service capabilities. (5) Other technologies 6G era technologies also include artificial intelligence, quantum communications, edge computing and more. (6) Typical applications of 6G With the development of mobile Internet and Internet of Things, 5G will realize the vision of “Internet of Everything”. 6G will introduce satellite network in space

6.4 Frontier Technologies Related to Big Data Communications

169

on the basis of perfecting the inadequate functions of 5G system to realize seamless connection and coverage of sea, land and air globally; at the same time, it will combine the real world with the virtual world, that is, people, things, things, processes and data will be combined with each other to truly realize “Internet of Everything”, so that the network connection will be more relevant and the network will be more valuable. At the same time, the real world will be combined with the virtual world, that is, people, things, things, processes and data will be combined with each other to truly realize the “Internet of Everything”, making the network connection more relevant and the network more valuable. Therefore, the early stage of 6G will extend and deepen 5G services, based on AI, edge computing and IoT, and deeply integrate intelligent applications with the network to achieve virtual reality, virtual users, intelligent networks and other functions. The long-term evolution of 6G, driven by AI theory, emerging materials and integrated antennarelated technologies, will produce new breakthroughs and even build new worlds. The 6G network system for 2030 will go beyond the scope of existing mobile communication networks and will be a convergence of multiple technologies, featuring “wider coverage, higher spectrum, more comprehensive applications and stronger security”. Applications in the 6G era will explore three main areas6 : new media, new services, and new architectures. (1) New media field Media applications supported by new media data transmission technologies, such as holograms, holographic telepresence applications. (2) New service areas From simple web, language and video services to high-precision and highassurance business services, mainly including holographic communication services, telemedicine, industrial Internet and other high-precision services. (3) New architecture areas Expanding from the original terrestrial communications to higher space (satellite communications) and exploring converged communications between terrestrial and satellite communications to achieve full global three-dimensional coverage. The development of the new architecture consists of two stages: First, to realize

6

Wang Xue, Li Ping. Analysis of 6G network development trend [C]. TD Industry Alliance, Mobile Communication Magazine. Proceedings of 5G Network Innovation Workshop (2019).TD Industry Alliance, Mobile Communication Magazine: Mobile Communication Magazine, Seventh Research Institute of China Electronics Technology Group Corporation, 2019:378–381.

170

6

Basic Concepts

the joint networking of satellite and terrestrial communications for full network coverage; and second, to realize roaming services between satellite mobile communications on the basis of ground-satellite converged communications.

Basic Root Server Technology The root server, also known as the root domain name server, is primarily used to manage the Internet’s home directory and is the infrastructure necessary to architect the Internet.7 The root server can command Web browsers such as Firefox or Internet Explorer and e-mail programs to control Internet communications. The root name server stores the authoritative records of all top-level domains and is responsible for the final resolution of top-level domains. Theoretically, all requests from Internet visitors’ browsers to translate a domain name into an IP address are directed through the root server to the authoritative domain name server for that domain name. All IPv4 root servers are managed by ICANN, the U.S. government-authorized Internet Corporation for Assigned Names and Numbers, which is responsible for the management of the global Internet domain name IPv4 root servers, the domain name system, and IP addresses. Since DNS uses the User Datagram Protocol (UDP), which has a 512B length limit on data packets, the number of root servers can only be limited to 13 if all DNS root server information is contained in the same UDP data packet, and each server is identified by a single letter in the alphabet (A-M) and is operated and maintained by 12 separate organizations.8 One of these is the primary root server in the United States. The remaining 12 are all secondary root servers, 9 of which are in the United States, 2 in Europe, located in the United Kingdom and Sweden, and 1 in Asia, located in Japan. On the basis of full compatibility with the existing IPv4 root server architecture, Project Snowman completed the installation of 25 IPv6 root servers in 16 countries worldwide in 2016, in fact forming a new pattern of 13 original roots plus 25 IPv6 roots, and laying a solid foundation for the establishment of a multilateral, democratic and transparent international Internet governance system. This will lay a solid foundation for the establishment of a multilateral, democratic and transparent international Internet governance system. China has deployed four of them, consisting of a primary root server and three secondary root servers.9

7

http://www.iana.org/domains/root/servers. Yan C W, Geng G G, Li H T, Li X D. Research on the development of DNS root service system [J]. Journal of Network and Information Security, 2017, 3(03):1–12. 9 https://baike.baidu.com/item/根域名服务器/5907519?fromtitle=根服务 器&fromid=136331&fr=aladdin. 8

6.4 Frontier Technologies Related to Big Data Communications

171

Satellite and 5G/6G Terrestrial Mobile Convergence Technologies According to the orbital altitude of the satellite during its operation, it can be divided into geosynchronous (GEO) satellite communication system and low orbit (LEO) satellite communication system. GEO satellite system is the earliest developed satellite communication system, due to its high orbital altitude, wide coverage area and relatively fixed star, only three satellites are needed to cover most of the regions of the world except the North and South Poles. At present, the world’s well-known GEO satellite communication systems include Inmarsat, Thuraya, TerreStar, SkyTerra and other systems. In recent years, LEO satellite Internet of Things systems have been developing rapidly. At present, the LEO systems built abroad include Iridium, Globalstar, Oneweb and the Starlink Internet constellation system built by spaceX. The development of China’s LEO satellite communication system is slow, and there are only a few planned LEO satellite systems, such as the major project of the integrated information network between heaven and earth, the “Hong Yan” system and the “Xing Yun Project”. (1) Satellite communications and 5G convergence Compared with terrestrial mobile communication networks, satellite communication can provide wide area or even global coverage using high, medium and low orbit satellites, which can provide indiscriminate communication services to users worldwide. Commercial mobile satellite communication systems such as Iridium, Inmarsat and Thuraya provide effective solutions for maritime, emergency and personal mobile communication applications; medium and low orbit satellite constellations such as O3b, OneWeb and Starlink integrate satellite communication services with Internet services, injecting new vitality into the satellite communication industry. The new vitality of the satellite communication industry. At the same time, the future terrestrial fifth generation mobile communication (5G) will have a perfect industry chain, a huge user base, flexible and efficient application service mode, etc. Satellite communication systems and 5G will integrate with each other to complement each other’s strengths and weaknesses, and together they will form a seamless global coverage integrated communication network of sea, land, air and sky to meet the ubiquitous and multiple service needs of users, which is an important direction for future communication development. This is evident in. (1) In remote areas that cannot be covered by terrestrial 5G networks, on board aircraft or on board ocean-going vessels, satellites can provide economical and reliable network services, extending the network to places where terrestrial networks cannot reach. (2) Satellites can provide continuous and uninterrupted network connectivity for IoT devices as well as mobile carrier users such as aircraft, ships, trains and automobiles, and the convergence of satellites with 5G can substantially enhance the service capability of 5G systems in this regard.

172

6

Basic Concepts

(3) The superior broadcast/multicast capability of satellites can provide efficient data distribution services to the network edge and user terminals. (2) Satellite communications and 6G convergence 6G features a satellite-based Internet, with the following development trends: first, higher communication frequency bands to support higher transmission rates; second, an integrated network in heaven and earth, with terrestrial mobile networks providing broadband, low-latency and efficient communications for user-dense areas and satellite networks achieving seamless global coverage and seamless global communications on land, at sea, in air and in space; and third, intelligent connectivity, with networks and users integrated and Intelligent applications are deeply integrated with the network. Key Technologies (1) Starboard terahertz phased-array antenna technology: Phased-array antenna technology is now relatively mature, and has been used on a large scale in engineering applications, but the starboard terahertz phased-array antenna has many technical difficulties that need to be tackled. First, the terahertz starboard components: There are no mature products, need to advance the layout, start development. Second is the large-scale (hundreds of) very narrow beam formation and control technology: the star is required to generate hundreds of very narrow beams at the same time, each accurately point to the corresponding communication users, in the low-orbit satellite high-speed movement always automatically track the user, and maintain the pointing accuracy, which puts forward high requirements for the antenna design. Third, the miniaturization and reliability design technology of the on-board antenna: the limited installation area of the LEO satellite platform has a strict limitation on the size and weight of the on-board antenna, which will greatly increase the difficulty of antenna design. (2) Artificial intelligence-based integrated design technology for pass, guide and remote: First, artificial intelligence, edge computing and satellite network fusion technology: Will make satellite computing and signal processing capabilities exceptionally powerful. Second is the deep learning-based signal detection and channel estimation technology: It will be analyzed by the satellite to estimate the channel model under various conditions autonomously and perform accurate matching and equalization. Third is the integrated application technology of communication, navigation and remote sensing: The satellite network is based on artificial intelligence to automatically schedule and allocate communication, navigation and remote sensing tasks in the whole network, so that the system utilization rate can be optimized. (3) Low-orbit satellite self-assembling technology: First, dynamic networking technology: The low-orbit constellation system automatically updates and maintains the network topology according to the real-time changes of users, feeders and inter-satellite links. Second, the system autonomous management

References

173

technology: The constellation system is based on artificial intelligence to maintain the relative position of each low-orbiting satellite and maintain the satellite orbit attitude autonomously. Third, the network management technology based on deep learning: The satellite network will automatically negotiate and schedule each other according to resource usage and interference to achieve optimal system performance.

References Guo-feng, Z., Jing, C., Yuan-bing,H., & Chuan, X. (2015). Review on key technologies of 5G mobile communication network. Journal of Chongqing University of Posts and Telecommunications (Natural Science Edition), 27(04), 441–452. Shaohui, S., Qiubin, G., Ying, D., Xiaofeng, L., & Ming, A. (2018). Design and standardization progress of the 5th generation Mobile Communication System. Journal of Beijing University of Posts and Telecommunications,41(05), 26–43.

7

Decision-Making

7.1

Basic Storage Methods for Big Data

Distributed Data Storage Distributed storage systems, which store data decentralized on multiple independent devices. Traditional network storage systems use centralized storage servers to store all data, and the storage servers become the bottleneck of system performance and the focus of reliability and security, which cannot meet the needs of large-scale storage applications. Distributed network storage systems use a scalable system architecture, using multiple storage servers to share the storage load and location servers to locate the stored information, which not only improves the reliability, availability and access efficiency of the system, but also is easy to scale (Hu W-B, Xu Z-L. Design and study of distributed storage scheme [J]. Computer Technology and Development, 2010, 20(4):65–68).

Cloud Storage Cloud storage is a model of online storage where data is stored on multiple virtual servers, usually hosted by a third party, rather than on a dedicated server. Hosting companies operate large data centers, and those who need data storage hosting meet their data storage needs by purchasing or leasing storage space from them. The data center operator prepares the storage virtualization resources on the back end according to the customer’s needs and makes them available as a storage pool, which the customer can then use to store files or objects (Source: Baidu.com).

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_7

175

176

7

Decision-Making

Edge Storage Edge Storage is a data storage method that stores data directly at the data collection point without transferring the collected data over the network (on-the-fly) to the central server (or cloud storage) where the storage is stored. This type of storage at the end (edge) is also known as distributed storage or can be called decentralized storage. The requirements of edge storage include several aspects such as efficient utilization of network bandwidth resources, reliability, security and privacy protection. Edge storage is an extended concept of edge computing, which mainly provides real-time reliable data storage and access for edge computing. Edge storage has not yet been defined in detail by industry and academia. Unlike centralized cloud storage services, edge storage migrates data storage from the remote cloud server side to the edge storage device or edge data center close to the data, with lower network communication overhead, interaction latency and bandwidth cost, higher adaptive capability and scalability. (Source: Hu Fei Pupil Link: https://www.jia nshu.com/p/585935132321).

7.2

Basic Processing Methods for Big Data

Distributed Computing Distributed computing is a computational science that uses the idle processing power of the CPUs of computers on the Internet to solve large computational problems. These projects are huge and require a staggering amount of computation, and it is never possible for just a single computer or individual to compute them in an acceptable amount of time. In the past, these problems should have been solved by supercomputers. However, supercomputers are very expensive to build and maintain and are not affordable for an ordinary research organization. With the development of science, a cheap, efficient and easy to maintain method of computing came into existence—distributed computing. (1) Basic concepts of distributed computing Broad definition: the study of how to divide a problem that requires very large computational power to solve into many small parts, then assign these parts to many computers for processing, and finally combine the results of these computations to get the final result. Narrow definition: the sharing of information with each other in two or more pieces of software that run either on the same computer or on multiple computers connected through a network. (CAS definition). Sharing scarce resources and balancing the load is one of the core ideas of distributed computing for computers.

7.2 Basic Processing Methods for Big Data

177

(2) Main features (3) Rare resources can be shared. Each organization can access the rare resources shared by other organizations while providing shared rare resources to the network, and the use of distributed computing can pool resources very effectively. (4) Distributed computing allows balancing the computational load across multiple computers. (5) A program can be placed on the computer that is best suited to run it. Among other things, sharing scarce resources and balancing the load is one of the core ideas of distributed computing for computers. (6) Low computer prices and availability of network access. Today’s personal computers have computing power far beyond that of previous mainframe computers, while decreasing in size and price. Coupled with the fact that the Internet connects the world, the large number of interconnected computers creates an ideal environment for distributed computing. (7) Fault tolerance. Distributed computing provides fault tolerance as compared to single machine computing. Resource availability in case of system failure can be maintained through resource replication. (8) Multiple points of failure (failure of one or more computers, or of one or more network links, can cause problems in a distributed system). (9) Security (distributed systems provide more opportunities for attacks by unauthorized users).

Graph Calculation (1) Basic concepts of graph calculation Basic definition of a graph: a graph (Graph) consists of an exhaustive non-empty set of vertices and a set of edges between vertices, denoted as G(V, E). Where G denotes a graph, V is the set Vertices of vertices in the graph G, and E is the set Edges of edges in the graph G. According to whether E has a direction, the graph can be divided into directed and undirected graphs. According to whether E has weights, the graph can be divided into weighted graphs (nets) and unweighted graphs. Then each vertex v and each edge e of the graph has an associated value, and the values of both vertices and edges can be modified. Graph computing system As the size of graph data continues to grow, the demand for graph computing power is increasing, and a large number of computing systems dedicated to graph data processing are born in this context. Pregel was developed by Google is the pioneer of dedicated graph computing systems (Grzegorz et al., 2010). Pregel proposes a vertex-centric programming model that analyzes the graph analysis process into several rounds of computation,

178

7

Decision-Making

with each vertex executing its own vertex program independently in each round, synchronizing state between vertices through message passing. Giraph is an open source implementation of Pregel, and Facebook uses 200 machines to analyze trillions of edges of graph data based on Giraph, taking nearly 4 min to compute a round of PageRank (Ching et al., 2015). GraphLab comes from CMU’s lab and is based on a shared memory mechanism that allows users to compute in an asynchronous manner to speed up the convergence of certain algorithms. PowerGraph is optimized on top of GraphLab and proposes the idea of vertex partitioning for the power-law distribution property of vertex degrees in real graph data, which can achieve finer granularity of data partitioning and thus achieve better load balancing (Gonzalez et al., 2012). Its computational model has also been used in subsequent graph computing systems, such as GraphX. Although these aforementioned graph computing systems have shown significant performance improvements over MapReduce, Spark, etc., they are still very inefficient in terms of computation and are not even as efficient as carefully optimized single-threaded programs (Hopfgartner et al., 2015). Gemini was proposed by a team from the Department of Computer Science at Tsinghua University to address the limitations of existing systems by proposing a computation-centric design concept that enables the system to have scalability without losing efficiency by reducing the overhead brought by distribution and optimizing the implementation of the local computation part as much as possible (Zhu et al., 2016). For each feature of graph computing, Gemini proposes corresponding optimizations in data compression and storage, graph partitioning, task scheduling, and communication mode switching, which are an order of magnitude faster than the fastest performance of other well-known graph computing systems. In addition to using distributed graph computing systems that scale outward to handle graph data that scale beyond the memory of a single machine, there are solutions that perform large-scale graph computing tasks by efficiently using external memory on a single machine, represented by GraphChi, X-Stream, FlashGraph, GridGraph, Mosaic, etc. (2) Typical applications of graph computation (1) Applications in the medical industry The advent of graph computing has made it possible to make intelligent diagnoses of patients. Prescriptions for patients need to be based on the patient’s medical characteristics and previous health conditions, as well as on medicationrelated conditions. Traditional data processing systems cannot pull up multiple databases related to patient conditions, insurance conditions, and drug conditions at once-the challenge is that the information must be pieced together from multiple online sources, including electronic medical records listing diseases and treatments, health insurance or other databases that track medical services, databases

7.2 Basic Processing Methods for Big Data

179

that describe drugs, and in some cases, separate databases that track clinical trials. The scenario is a classic linked network with interdependencies between each node. Variables may include patient age and gender, the outcome of a particular drug (or drug combination), a particular dose, the stage of disease at the time of administration, and potential drug interactions. It is practically impossible to compute such problems with traditional SQL databases because traditional pure software graphs cannot provide the deeply nested connections required by the application, whereas the advent of graph analysis systems makes such scenarios possible. (2) Applications in the financial industry In the financial entity model, there are many different types of relationships and billions of nodes and edges. Some are relatively static, such as equity relationships between firms and kinship relationships between individual customers, while others are constantly changing dynamically, such as transfer relationships, trade relationships, and so on. Behind these static or dynamic relationships lies a lot of information that we did not know before. Previously, in the process of data analysis and mining of a financial business scenario, we usually analyze the differences and differences between individuals (such as enterprises, individuals, accounts, etc.) from the perspective of the individuals themselves, and seldom analyze them from the perspective of the correlation relationships between individuals, so we will ignore many original objective existence, and will be more unable to accurately achieve the data analysis and mining goals of that business scenario. Graph computing and graph-based cognitive analytics make up for the shortcomings of traditional analytic techniques in this regard, helping us to look at the problem from the perspective of the essence of finance and analyze the problem from the perspective of the economic behavioral relationships between entities and entities. In the financial industry, graph computing and cognitive technology focus on the application of business areas including: financial risk control, customer marketing, internal audit and supervision, and investment and financial management. For example, banks face the risk of money laundering crimes. Currently, in many cases, banks still rely on investigators to do the investigation and analysis of money laundering tricks and methods manually, which is not only inefficient and heavy workload, but also very easy to cause the problem of missed investigations. The current money-laundering techniques and steps are intricate and complex, and the whole process can be broadly divided into the following three areas, and cross over and overlap each other repeatedly. a. Placement: The placement of the proceeds of crime into the financial system. b. Layering: converting the proceeds of crime into another form, e.g. from cash to cheques, precious gold, etc. Properties, stocks, insurance savings, property, etc. c. Integration (Integration): After different disguises, the cleansed property is integrated into the economic system as if it were legal property.

180

7

Decision-Making

Faced with such a complex and difficult problem, the means currently adopted by financial institutions are based on predefined rules to analyze the possibility of money laundering behind each transaction, distinguishing these high-probability transactions into transaction groups and referring them to investigators for review and investigation, but the final results usually reveal that the warning messages identified using such predefined rules have a high false alarm rate, in some cases reaching 80% or more, bringing a lot of unnecessary workload to the investigator. Therefore, how to improve the accuracy rate of high-risk transaction identification is an urgent problem in the field of AML. The use of graph computing and graph cognition technology, starting from the transaction itself, probes the transaction history of the counterparty, tracks the trajectory of the transaction, traces the flow of funds, identifies new money laundering patterns that cannot be covered by the rules approach, and updates the existing probing rules in a timely manner, thus significantly reducing the false alarm rate. Another example is the credit risk problem faced by all domestic commercial banks: the non-performing rate of enterprise customer loans has climbed due to the impact of the domestic economic downturn. In order to improve the bank’s ability to predict the transmission of corporate non-performing risks, graph computing and graph cognition technologies are used to completely portray the social and economic relationships between corporate customers and between enterprises and natural persons, and to build an all-round risk association network to realize the dynamic and complete presentation of risk elements. When credit risk occurs in a certain enterprise in the network, cross-correlation analysis is conducted using the customer portrait and economic behavior trajectory of risky customers in the risk correlation network to predict the transmission path and spread of risk, helping banks to take effective measures to block the source of risk contagion and isolate risk, thus improving the reliability and accuracy of risk management. (3) Applications in the Internet At present, big data is mainly applied in the business of advertising, reporting and recommendation system in Internet companies. In advertising business, big data is needed to do application analysis, effect analysis and targeting optimization, etc. In recommendation system, big data is needed to optimize relevant ranking, personalized recommendation and hot click analysis, etc. The emergence of graph computing meets the needs of these application scenarios with high computational volume and high efficiency requirements. Graph computing model is a very popular model in big data companies, especially IT companies, and it is the most direct solution to many practical problems. In recent years, with the diversification of data, the substantial increase of data volume and the breakthrough of computing power, the ultra-large scale graph computation plays an increasingly important role in big data companies, especially the series of algorithms represented by the combination of deep learning and graph computation for large-scale graph characterization.

7.2 Basic Processing Methods for Big Data

181

The development and application of graph computing has a spurt, and major companies have launched graph computing platforms accordingly, such as Google Pregel, Facebook Graph, Tencent Star Graph, Huawei Graph Engine Service GES, etc.

Batch and Flow Calculations (1) Basic concepts of batch and flow calculations Batch computing overview: Big data batch computing model, represented by the MapReduce processing model proposed by Google in 2004, the MapReduce processing process uses the idea of “divide and conquer” to divide the data to be processed into multiple processing nodes to reduce the overhead of data transmission, and then the results of each processing node are aggregated, and the above process is executed in a continuous loop until the desired result is obtained. After that, the processing results of each processing node are aggregated, and the above process is executed in a continuous loop until the desired result is obtained. Streaming data (or data streams) is a series of dynamic data aggregates that are infinite in time distribution and quantity, where the value of the data decreases with the passage of time, and therefore must be computed in real time to give second-level responses. Streaming computing, as the name implies, is the processing of data streams and is real-time computing [5]. Real-time computing means that the data is continuously inputted and processed and then outputted and the data processing is limited to a very small period of time (Long, 2015). Stream computing refers to the real-time acquisition of massive data from different data sources, which is analyzed and processed in real time to obtain valuable information [4]. Stream computing adheres to a basic idea that the value of data decreases with the passage of time, such as user click streams. Therefore, events should be processed as soon as they appear, rather than cached for batch processing. In order to process stream data in a timely manner, a low-latency, scalable, and highly reliable processing engine is required. As shown in Fig. 7.1, batch computing first stores the data and then computes the stored static data centrally. Hadoop is a typical big data batch computing architecture, in which the HDFS distributed file system is responsible for storing static data and distributing the computation logic to each data node for data computation and value discovery through MapReduce; As shown in Fig. 7.2, in streaming computation, it is not possible to determine the moment of arrival and the order of arrival of the data, nor is it possible to store all the data. Therefore, instead of storing the streaming data, the data is computed directly in memory in real time when the streaming data arrives. Such as Twitter’s Storm, Yahoo’s S4 is a typical streaming data computing architecture, data in the task topology is calculated, and output valuable information.

182

7

Decision-Making

Fig. 7.1 Big data batch computing

Fig. 7.2 Big data stream computing

(2) Typical applications of streaming computing (1) Applications in the financial banking sector In the daily operation of the financial and banking sector, a large amount of data is often generated, and the timeliness of these data is often short. Therefore, the financial banking field is one of the most typical application scenarios of big data streaming computing, and is also the earliest application area of big data streaming computing. Within the financial banking system, there is a large amount of often structured data flowing between systems at every moment, and it needs to be computed in real time. At the same time, the financial banking system and other systems also have a large amount of data flow, these data will not only have structured data, but also semi-structured and unstructured data. Through the flow of these big data, we can discover the intrinsic characteristics that are hidden in them, which can help the financial and banking system to make real-time decisions. (2) Applications in the Internet field With the continuous development of Internet technology, especially the advent of the Web 2.0 era, users can share and provide all kinds of data in real time. This has not only increased the amount of data, but also made it more available in semistructured and unstructured forms. According to statistics, 75% of the data in the Internet comes from individuals, mainly in the form of images, audio, video data, the need for real-time analysis and calculation of these large, dynamic data.

7.2 Basic Processing Methods for Big Data

183

(3) Applications in the field of Internet of Things In the IoT environment, individual sensors generate large amounts of data. These data usually contain time, location, environment, and behavior, and are distinctly granular in nature. Due to the diversity and differentiation of sensors and the diversity of environments, these data are characterized by heterogeneity, diversity, unstructured, noisy, and high growth rates. The amount of data generated is unprecedentedly dense, real-time and low value density, which requires real-time and efficient computation.

Cloud Computing (1) Basic concepts of cloud computing The idea of Cloud Computing dates back to the 1960s, when John McCarthy said that “sooner or later computing will become a public infrastructure”, meaning that computing power can be distributed as a commodity, just like gas, water and electricity, This means that computing power can be distributed as a commodity, like gas, water, and electricity, easily and cheaply accessible.1 At present, there is no single definition of cloud computing, and there are several different forms of expression. (1) China Cloud Computing Network defines cloud computing as the development of Distributed Computing, Parallel Computing and Grid Computing, or the commercial implementation of these scientific concepts (Quan & Qianni, 2009). (2) Wu Jiyi et al. synthesized various definitions of cloud computing and proposed the following definition: “Cloud computing is a supercomputing model based on virtualization technology, providing infrastructure, platform, software and other services in the form of network as a carrier, and integrating large-scale scalable computing, storage, data, applications and other distributed computing resources for collaborative work. “ Cloud computing enables computing resources to be allocated dynamically and efficiently, allowing consumers (end users, organizations or IT departments) to maximize the use of computing resources without having to manage the underlying complex technology (Jiyi et al., 2009). (2) Key features of cloud computing Cloud computing system mainly has the following three characteristics: First, support virtualization, cloud computing system can be seen as a virtual resource pool, by deploying multiple virtual machine applications on a server, so as to improve the utilization of resources, and support the migration of load when a server is

1

Jianxun et al. (2010)

184

7

Decision-Making

overloaded; Second, high reliability, availability and scalability, cloud computing system must ensure to provide reliable services to users, to ensure that Third, autonomy, cloud computing system is an autonomous system, the management of the system is transparent to users, different management tasks are done automatically, the hardware, software and storage of the system can be automatically configured, so as to achieve on-demand provisioning for users. The system hardware, software and storage can be automatically configured to provide on-demand services to users (Jianxun et al., 2010). (3) Categories of cloud computing Cloud computing can be broadly classified into four types: public, private, community, and hybrid clouds. Public clouds (also known as public clouds and shared clouds) are a model based on standard cloud computing in which service providers create resources, such as applications and storage, and the public can access these resources over the web Public cloud services can be free or pay-per-volume models. Examples include Amazon’s Elastic Compute Cloud (Amazon EC2), IBM’s Blue Cloud, Sun Cloud, Google’s AppEngine, and Windows’ Azure service platform. Public clouds are public in nature and can aggregate workloads from across the community at huge scale, resulting in huge economies of scale. It is easy and cheap to install and scales well to meet demand as service providers pay for hardware, applications and loans. Private clouds are built for the sole use of one customer, thus providing the most effective control over data, security and quality of service. Private clouds can be built by a company’s own IT organization, or by a cloud provider. In this “managed private” model, a cloud provider such as IBM can install, configure and operate the infrastructure to support a dedicated cloud within a company’s corporate data center. While every public cloud provider claims that its services are very secure in every way, especially the management of data. But for enterprises, especially large ones, business-related data is their lifeline and is not to be threatened in any way, so in the short term, whereas private clouds are very advantageous in this regard, as they are generally constructed behind a firewall. “Community cloud” is a component of the larger “public cloud” category. It refers to the form of cloud computing formed by the unified provision of computing resources, network resources, software and service capabilities by cloud computing service providers within a certain geographical area. That is, based on the advantages of network interconnection and easy integration of technology in the community, through the integration of various computing capabilities in the region in the form of unified services, combined with the commonality of user needs in the community, to achieve a cloud computing service model for regional user needs. The “community cloud” becomes an integral part of the cloud computing world through a wider interconnection. Based on the advanced architecture design of the “community cloud”, combined with the convenience of the next generation Internet, we will be very convenient to extract the advantageous services

7.2 Basic Processing Methods for Big Data

185

of the “cloud” and provide services for similar users in a larger area. The Community Cloud has four characteristics: regional and industry-specific; limited special applications; efficient sharing of resources; and high participation of community members. Hybrid cloud, is a target architecture in which there is a common cloud and a private cloud. Due to security and control reasons, not all enterprise information can be placed on the public cloud, so that most of the enterprises that are already applying cloud computing will use the hybrid cloud model. Many will choose to use both public and private clouds. Hybrid clouds mix and match private and public clouds. Leverage storage, database and service processing in the private cloud, while leveraging the public cloud for data processing needs during peak demand periods without having to purchase additional hardware. There are already many companies moving towards this cloud architecture and at the same time it is the key to maximizing the benefits. Also hybrid clouds provide a good basis for resilience needs for other purposes, for example, disaster recovery. This means that the private cloud uses the public cloud as a platform for disaster transfer and goes to use it when needed. This is a highly cost effective concept (Lin & Yaofei, 2015).

Edge Computing (1) Basic concepts of edge computing Edge Computing (EC) does not yet have a strict unified definition and has several different expressions as follows. (1) Wei-Song Shih, Wayne State University, et al. define edge computing as “a new computing model that performs computation at the edge of the network, where the downlink data at the edge in edge computing denotes cloud services and the uplink data denotes Internet of Everything services, and the edge of edge computing refers to arbitrary computational and network resources between the path from the data source to the cloud computing center (Weisong et al., 2017).” (2) Ziming Zhao et al. of the National University of Defense Technology define edge computing as “a new computing paradigm that unifies resources in geographic or network proximity to users to provide computation, storage, and network services to applications.”2 In short, edge computing takes action at the data source. (3) According to IBM, edge computing is a distributed computing framework that brings enterprise applications closer to data sources, for example, Internet of Things (IoT) devices or local edge servers. Such proximity to the data

2

Ziming et al., (2018)

186

7

Decision-Making

source can deliver real business benefits: faster access to insights, reduced response times, and increased bandwidth availability (https://www.ibm.com/ cn-zh/cloud/what-is-edge-computing). (4) Huawei likens the edge computing model to an “octopus”. As the highest IQ among invertebrates, the octopus has a huge number of neurons, but 60% of them are distributed on the octopus’ eight legs (wrist feet), and only 40% are in the brain; similarly, edge computing is the processing of data, the operation of applications, and even the implementation of some functional services are implemented from the center of the network down to the nodes at the edge of the network (https://www.zhihu.com/question/35792003/answer/425 689401).3 Edge mainly include user terminals such as mobile phones and personal computers, infrastructure such as Wi-Fi access points and cellular network base stations and routers, embedded devices such as cameras and set-top boxes, Cloudlet, Micro Data Center and other small computing centers. These resources are numerous, independent of each other and scattered around the users and are called edge nodes. Edge computing is to unify these independent and scattered resources and provide services to the users (Ziming et al., 2018). (2) Key features of edge computing The amount of data generated daily in the era of big data has surged, and the data in the context of the Internet of Things (IoT) Internet of Everything application is more geographically dispersed and places higher demands on response time and security. Although the emergence of cloud computing provides an efficient computing platform for big data processing, the current growth rate of network bandwidth is far from catching up with the growth rate of data, and the cost of network bandwidth decreases much slower than the cost of hardware resources such as CPU and memory, while the complex network environment makes it difficult to make breakthrough improvements in network latency, so the traditional cloud computing model needs to solve the bandwidth and latency Therefore, the traditional cloud computing model needs to solve the two bottlenecks of bandwidth and latency.4 The emergence of edge computing makes up for these shortcomings of cloud computing. The edge computing model has three major advantages: first, a large amount of temporary data is processed at the edge of the network and no longer all uploaded to the cloud, which greatly relieves the pressure on network bandwidth and data center energy consumption; second, data processing is done at the source of data, and there is no need to request a response from the cloud computing center through the network, which greatly reduces system latency and enhances service responsiveness; third, users’ private data is no longer uploaded, but stored on the network edge devices, reducing the risk of data leakage and protecting user data security and privacy (Weisong et al., 2019).

3

https://www.zhihu.com/question/35792003/answer/425689401. Zhao ZM, Liu F, Cai ZP, et al. Edge computing: platforms, applications, and challenges [J]. Computer Research and Development, 2018, 055(002):327–337.

4

7.2 Basic Processing Methods for Big Data

187

(3) Typical applications of edge computing Edge computing has been gaining good results in numerous application areas, such as real-time data processing in public safety, virtual reality, industrial IoT, smart homes, smart cities, etc. Public safety affects the lives of the general public from all aspects of society, such as firefighting and travel. With the construction of smart cities and safe cities, a large number of video surveillance is installed in all corners of the city to enhance public safety. Although a large number of cameras are currently deployed in cities, most of them do not have front-end computing functions, but need to transfer data to data centers for processing or require manual methods for data filtering. Establishing an edge computing based detection system can judge the video content at the front end or close to the video source to detect camera failures, content errors and dynamic adjustment of video quality based on the content. The emergence of virtual reality (VR) and augmented reality (AR) technologies has revolutionized the way users interact with virtual worlds. To ensure user experience, VR/AR image rendering needs to be highly real-time. Studies have shown that offloading the computational tasks of VR/AR to edge servers or mobile devices can reduce the average processing latency. Industrial IoT is the use of machines, computers and people to achieve intelligent industrial operations using advanced data analysis results obtained from business transformation. However, the application practices in the field of Industrial IoT have high requirements for industrial real-time control and security privacy of edge devices, and the data generated needs to be processed locally, so applying edge computing to Industrial IoT has become a direction of development in the industry. Edge computing applied to industrial IoT has 3 advantages: first, improve performance, the common applications in industrial production such as reporting and alarm analysis near the data producer will be faster processing and decision-making, by reducing the communication with the cloud data center, can increase the elasticity of edge processing; second, ensure data security and privacy, can avoid data transmission to the shared data center after the data exposure and other security and privacy issues brought; third, reduce operational costs, by doing computational processing at the edge, the amount of data transfer and bandwidth between edge devices and data centers can be reduced, thus reducing the cost of industrial production brought about by the network, cloud data center computing and storage. With the development of IoT technology, smart home system has been further developed, which uses a large number of IoT devices (such as temperature and humidity sensors, security systems, lighting systems) to monitor the internal status of the home in real time, accept external control commands and finally complete the regulation of the home environment to enhance home security, convenience and comfort. However, with the increasing number of smart home devices, and these devices are usually heterogeneous, how to manage these heterogeneous devices will be a pressing problem to be solved. And, due to the privacy of home data, users are not always willing to upload data to the cloud for processing, especially

188

7

Decision-Making

some intra-home video data, while edge computing can push the computation to the intra-home gateway to reduce the outflow of home data, thus reducing the possibility of data leakage and improving the privacy of the system. Smart city is the use of advanced information technology to achieve intelligent management and operation of the city. Edge computing has rich application scenarios in the construction of smart cities. In urban pavement detection, sensors are installed on streetlights on both sides of the road to collect information on urban pavement, detect environmental data such as air quality, light intensity and noise level, and provide timely feedback to maintenance personnel when streetlights fail. In intelligent transportation, the edge server is used to obtain and analyze data in real time by running an intelligent traffic control system to control traffic signals according to real-time road conditions to reduce road vehicle congestion, etc. (Weisong et al., 2019).

7.3

Basic Methods of Data Analysis in the Field of Management

Basic Methods of Descriptive Statistical Analysis Descriptive statistics is a method of organizing and analyzing data information through graphical or mathematical methods, and estimating and describing the state of distribution, numerical characteristics and relationships between random variables. Descriptive statistics are divided into three main parts: concentrated trend analysis and off-center trend analysis and correlation analysis. Concentration trend analysis: Concentration trend analysis relies on statistical indicators such as mean, median, and plurality to indicate the concentration trend of the data. For example, what is the average score of the subjects? Is it a positive or negative skewed distribution? Off-Center Trend Analysis: Off-center trend analysis relies on statistical indicators such as full distance, quadratic difference, mean difference, variance, and standard deviation to study the off-center trend of the data. For example, if we want to know which of two teaching classes has a more dispersed distribution of language scores, we can use the quartiles or percentiles of the two classes to compare. Inferential statistics: Inferential statistics is a relatively young part of statistics and indeed psychometrics. It uses statistical results as a basis for proving or disproving a proposition. Specifically, it is the analysis of differences in sample-tosample distributions to estimate whether there is a significant difference between the sample and the aggregate, between the pre and post test scores of the same sample, and between the achievement gap of the sample and the aggregate. For example, we want to investigate whether educational background affects a person’s IQ test scores. One can find a group of 100 24 year old college graduates and 100 24 year old middle school graduates. Collect some of their IQ test scores. Using inferential statistics to process the data, one would end up with something

7.3 Basic Methods of Data Analysis in the Field of Management

189

like this: “The study found that the college graduate group scored significantly higher than the middle school graduate group, and the two were significantly different at the 0.01 level, indicating that the college graduates scored better on some intelligence tests than the middle school graduate group.”

Basic Methods of Testing (1) t-test The t-test, also known as the student’s t test (Student’s t test), is used primarily for normal distributions with small sample sizes (e.g., n < 30) and an unknown overall standard deviation σ. The t-test uses t-distribution theory to infer the probability of a difference occurring and thus to compare whether the difference between two means is significant. Applicable conditions: (1) An overall mean is known. (2) A sample mean and the standard deviation of that sample can be obtained. (3) The sample is from a normal or near-normal aggregate.

Main Category: The t-test can be divided into a single overall test and a double overall test, as well as a paired samples test. Single-sample test A single overall t-test is a test of whether the difference between a sample mean and a known overall mean is significant. When the overall distribution is normal, such as when the overall standard deviation is unknown and the sample size is less than 30, then the deviation statistic of the sample mean from the overall mean is t-distributed. The single overall t-test statistic is. t = Xσ√−μ X . n

Σn

i=1 xi

/ Σn

(x −x)2

i=1 i is the is the sample mean, s = where i = 1 . . . n, x = n n sample standard deviation, and n is the number of samples. This statistic t obeys a t-distribution with degree of freedom n under the null hypothesis: μ = μ0 is true.

Two-sample test A double overall t-test is a test of whether the difference between two sample means and the overall population they each represent is significant. The double overall t-test is further divided into two cases: the independent sample t-test (no correlation exists between the experimental treatment groups, i.e., independent

190

7

Decision-Making

samples), which is used to test the difference between data obtained from two groups of uncorrelated sample subjects; and the paired sample t-test, which is used to test the difference between data obtained from two groups of matched subjects or data obtained from the same group of subjects under different conditions, both of which The sample consisting of the sample is the sample of interest. Independent samples t-test The independent sample t-test statistic is. t=/

X1 − X2 (

(n 1 −1)S12 +(n 2 −1)S22 n 1 +n 2 −2

1 n1

+

1 n2

)

S12 and S22 are the two-sample variances; n1 and n2 are the two-sample capacities. Paired sample test The paired samples t-test can be considered as an extension of the one-sample ttest, but the test is changed from a group of independent samples from a constant allocation to the difference between the observations of two paired samples. If the difference between the two paired samples x1i and x2i is di = x1i − x2i independent and from the normative allocation, then whether the parent expectation μ of √0 . di is μ0 can be determined using the following statistic. t = sd−μ / n where i = 1 . . . n, d = / ( )2 i=1 di −d n−1

Σn

Σn

d

i=1 di

n

is the mean of the paired sample differences,

sd = is the standard deviation of the paired sample differences, and n is the number of paired samples. The statistic t obeys a t-distribution with degrees of freedom n-1 under the null hypothesis: μ = μ0 is true. (2) F-test F-test (F-test), the most common alias is called joint hypotheses test (English: joint hypotheses test), in addition to the variance ratio test, variance chi-square test. It is a kind of test under the null hypothesis (H0), the statistical value obeys the F-distribution. It is usually used to analyze statistical models with more than one parameter to determine whether all or part of the parameters in the model are suitable for estimating the parent. The square of the standard deviation of the sample, i.e. S2 =

Σ

(x − x)2 /(n − 1)

Two sets of data give two S2 values F = S2 /S2

7.3 Basic Methods of Data Analysis in the Field of Management

191

The calculated F-value is then compared with the F-table value obtained by looking up the table, and if. F < F table indicating no significant difference between the two data sets. F ≥ F Table indicates that there is a significant difference between the two data sets.

Application Examples of usual F-tests include. Suppose a series of matrices that obey a normal distribution all have the same standard deviation. This is the most typical F-test, which is also important in analysis of variance (ANOVA). Assuming that a regression model fits its data set well, test whether the linear relationship between the explanatory and explanatory variables in a multiple linear regression model is significant in the aggregate. (3) Cardinality test The chi-square test is a very versatile hypothesis testing method that is used in statistical inference of categorical information, including: chi-square tests for the comparison of two rates or two compositional ratios; chi-square tests for the comparison of multiple rates or multiple compositional ratios and correlation analysis of categorical information. The chi-square test is the degree of deviation between the actual observed value of the statistical sample and the theoretical inferred value. The degree of deviation between the actual observed value and the theoretical inferred value determines the size of the chi-square value; if the chi-square value is larger, the greater the degree of deviation between the two; conversely, the smaller the deviation between the two; if the two values are exactly equal, the chi-square value is 0, indicating that the theoretical value is exactly the same. Note: The chi-square test is for categorical variables.

Basic Methods of Correlation Analysis Correlation analysis is a statistical analysis method that studies the correlation between two or more random variables that are on equal footing. For example, the correlation between height and weight of a person; the correlation between relative humidity in the air and rainfall are all problems studied by correlation analysis. Correlation analysis is the analysis of the signs in the aggregate that do have a connection, the main body of which is the analysis of the signs in the aggregate that have a causal relationship. It is the process of describing how closely objective things are related to each other and expressing them in terms of appropriate statistical indicators. A positive correlation between the two indicators is indicated by the fact that the birth rate rises with the level of the economy over a period of

192

7

Decision-Making

time, while a negative correlation between the two indicators is indicated by the fact that the birth rate falls in another period of time as the level of the economy develops further. In order to determine the relationship between the variables of interest, some data should first be collected, which should be paired. For example, the height and weight of each person. These points are then described on a right-angle coordinate system, a set of points called a “scatter plot”. According to the scatter diagram, when the independent variable takes a certain value, the dependent variable corresponds to a probability distribution, and if the probability distribution is the same for all values of the independent variable, it means that the dependent variable and the independent variable are uncorrelated. Conversely, if, for different values of the independent variable, the distribution of the dependent variable is also different, then there is a correlation between the two. The degree of correlation between two variables is indicated by the correlation coefficient r. The correlation coefficient r has a value between −1 and 1, but can be any value within this range. With positive correlation, the value of r is between 0 and 1 and the scatter plot is slanted upwards, when one variable increases and the other increases; with negative correlation, the value of r is between −1 and 0 and the scatter plot is slanted downwards, when one variable increases and the other will decrease. the closer the absolute value of r is to 1, the stronger the degree of correlation between the two variables, and the closer the absolute value of r is to 0, the weaker the degree of correlation between the two variables. (1) Relevance The degree of correlation between one variable x0 and another set of variables (x1, x2, …, xn) is studied. For example, occupational prestige is influenced by a set of factors (income, culture, power ……) at the same time, then the relationship between the sum of this set of factors and occupational prestige is a complex correlation. The complex correlation coefficient R0.12…n can be determined by finding the regression line of x0 on a set of variables x1, x2, …, xn and then calculating a simple linear regression between x0 and the estimated value of pity using the regression line. The complex correlation coefficient for R0.12…n takes values in the range 0 ≤ R0.12…n ≤ 1. The larger the value of the complex correlation coefficient, the closer the relationship between the variables. (2) Partial correlation The study of the degree of linear correlation between two variables in a multivariate situation when controlling for the effects of other variables. Also known as net or partial correlation. For example, the partial correlation coefficient r13.2 represents the straight-line correlation between variable x1 and variable x3 after controlling for the effect of variable x2. The biased correlation coefficient is a

7.3 Basic Methods of Data Analysis in the Field of Management

193

truer reflection of the association between the two variables than the simple linear correlation coefficient.

Basic Methods of Regression Analysis In statistics, regression analysis refers to a method of statistical analysis that determines the quantitative relationship between two or more variables that are dependent on each other. Regression analysis is divided into univariate regression and multiple regression analysis according to the number of variables involved; simple regression analysis and multiple regression analysis according to the number of dependent variables; and linear regression analysis and nonlinear regression analysis according to the type of relationship between the independent and dependent variables. (1) Linear Regression Linear Regression It is one of the most well known modeling techniques. Linear regression is usually one of the preferred techniques that people use when learning predictive models. In this technique, the dependent variable is continuous, the independent variable can be continuous or discrete, and the nature of the regression line is linear. Linear regression uses a best-fit straight line (also known as a regression line) to create a relationship between the dependent variable (Y) and one or more independent variables (X). Multiple linear regression can be expressed as Y = a + b1 * X + b2 * X2 + e, where a denotes the intercept, b denotes the slope of the line, and e is the error term. Multiple linear regression can predict the value of a target variable based on a given predictor variable (s). (2) Logistic Regression Logistic Regression Logistic regression is used to calculate the probability of “Event = Success” and “Event = Failure”. Logistic regression should be used when the type of the dependent variable is a binary (1/0, true/false, yes/no) variable. Here, the value of Y is 0 or 1 and it can be represented by the following equation. odds = p/ (1 − p) = probability of event occurrence/probability of not event occurrence ln(odds) = ln(p/(1 − p)) logit(p) = ln(p/(1 − p)) = b0 + b1X1 + b2X2 + b3X3 .... + bkXk

In the above equation, p expresses the probability of having a certain characteristic. Since the binomial distribution (dependent variable) is used here, a link

194

7

Decision-Making

function needs to be chosen that is optimal for this distribution. It is the Logit function. In the above equation, the parameters are chosen by the maximum likelihood estimate of the observed sample, rather than minimizing the sum of squares error. (3) Polynomial Regression Polynomial Regression For a regression equation, if the exponent of the independent variable is greater than 1, then it is a polynomial regression equation. The following equation is shown. y = a + b ∗ x2 In this regression technique, the line of best fit is not a straight line. Rather, it is a curve used to fit the data points. (4) Stepwise Regression Stepwise Regression This form of regression can be used when dealing with multiple independent variables. In this technique, the selection of the independent variables is done in an automated process that includes non-human operations. This feat is done by looking at the values of statistics such as R-square, t-stats and AIC indicators to identify the significant variables. Stepwise regression fits the model by simultaneously adding/removing covariates based on specified criteria. Some of the most commonly used stepwise regression methods are listed below. The standard stepwise regression method does two things. That is, it adds and removes the required predictions for each step. The forward selection method starts with the most significant prediction in the model and then adds variables for each step. The backward elimination method starts simultaneously with all predictions of the model and then eliminates the least significant variable at each step. The aim of this modeling technique is to maximize the predictive power using the minimum number of predictor variables. This is one of the methods used to deal with high-dimensional datasets. (5) Ridge Regression Ridge regression analysis is required when there is multicollinearity (high correlation of the independent variables) between the data. In the presence of multicollinearity, even though the estimates measured by least squares (OLS) are not biased, their variances can be large, making the observed values far from the true values. Ridge regression reduces the standard error by adding a bias value to the regression estimates. In the linear equation, the prediction error can be divided into 2 components, one due to bias and one due to variance. The prediction error may be caused by either or both of these. Here, the error caused by the variance will be discussed.

7.3 Basic Methods of Data Analysis in the Field of Management

195

Ridge regression solves the multicollinearity problem by contracting the parameter λ (lambda). Consider the following equation. L2 = argmin||y = xβ|| + λ||β|| In this formula, there are two components. The first is a least squares term and the other is a λ-fold of β-squared, where β is a vector of correlation coefficients added to the least squares term along with the contraction parameter to obtain a very low variance. (6) Lasso Regression Lasso regression It is similar to ridge regression, Lasso (Least Absolute Shrinkage and Selection Operator) also gives penalty value terms on the vector of regression coefficients. In addition, it can reduce the degree of variation and improve the accuracy of the linear regression model. Look at the following equation. L1 = agrmin||y − xβ|| + λ||β|| The Lasso regression differs from the Ridge regression in one respect in that it uses a penalty function of L1 parametrization rather than L2 parametrization. This results in penalty (or a value equal to the sum of the absolute values of the constraint estimates) that makes some parameter estimates equal to zero. The larger the penalty value used, the more further the estimation will make the reduced value converge to zero. This will result in having to select variables from a given n variables. If the predicted set of variables is highly correlated, Lasso selects one of the variables and shrinks the others to zero. (7) ElasticNet regression ElasticNet is a hybrid of Lasso and Ridge regression techniques. It uses L1 for training and L2 preference as a regularization matrix. ElasticNet is useful when there are multiple related features; Lasso picks one of them at random, while ElasticNet selects two. The practical advantage between Lasso and Ridge is that it allows ElasticNet to inherit some of the stability of Ridge in the cyclic state. Data exploration is an inevitable part of building a predictive model. It should be the preferred step when selecting the appropriate model, such as identifying the relationships and effects of variables. Comparing the merits of different models suitable for the analysis of different indicator parameters such as statistically significant parameters, R-square, Adjusted R-square, AIC, BIC, and error terms, another is Mallows’ Cp criterion. This one mainly checks for possible biases in your model by comparing the model with all possible sub-models (or selecting them carefully).

196

7

Decision-Making

Basic Methods of Correlation Analysis Association rule mining algorithm most commonly used shopping basket analysis for knowledge discovery is a rule-based machine learning algorithm that is an unsupervised machine learning method. The purpose of this algorithm is to discriminate the strong rules present in the database using some metrics. Usually we use the metrics minimum support and minimum confidence to select the rule of interest from the set of all possible rules. (1) Basic principle of Apriori algorithm The Apriori algorithm is used for association analysis and its objectives include two: discovering frequent item sets and discovering association rules. (2) Discovery of frequent item sets Frequent itemsets are those sets that occur together frequently. Given a dataset, frequent itemsets are discovered using Apriori with only one input parameter: minimum support. Apriori initially generates candidate sets of all individual items, then scans the dataset and filters out the candidates that are smaller than the minimum support, then combines the remaining sets to generate candidate sets containing two elements, and so on until all candidates are eliminated. In the process of retrieval, Apriori follows two laws to reduce the scope of the search and increase the speed of high operations. Apriori’s Law 1: If a set is a frequent itemset, then all its subsets are frequent itemsets. For example, suppose a set {A, B} is a frequent itemset, i.e., if the number of times A and B appear in a record at the same time is greater than or equal to the minimum support min_support, then its subsets {A}, {B} must have a number of occurrences greater than or equal to min_support, i.e., all its subsets are frequent itemsets. Apriori’s Law 2: If a set is not a frequent itemset, then all its supersets are not frequent itemsets. For example, suppose the set {A} is not a frequent itemset, i.e., the number of occurrences of A is less than min_support, then any of its supersets such as {A, B} must have fewer occurrences than min_support, so its supersets must also not be frequent itemsets. apriori uses this principle to avoid computing the support of infrequent itemsets and all their supersets. After retrieving the frequent itemsets, all eligible association rules are retrieved next. If a rule does not satisfy the minimum confidence requirement, then all subsets of that rule will not satisfy it either. (3) Discovery of association rules Association rules originate from frequent item sets, and any frequent item set can generate several association rules. The quantitative metric of association

7.3 Basic Methods of Data Analysis in the Field of Management

197

rules is plausibility, and the plausibility of a rule P → H is defined as support(P ∪ H)/support(P). For any frequent item set, all association rules generated by it, the credibility is calculated and the rules with low credibility are removed. However, sometimes the number of elements of the frequent itemset is so large that it may generate many association rules, and to reduce the computational complexity, this law is used: if a rule does not satisfy the minimum confidence requirement, then all subsets of that rule also do not satisfy the minimum confidence requirement.

Basic Methods of Cluster Analysis Cluster analysis is a set of statistical analysis techniques that classify research objects into relatively homogeneous groups (clusters). The input to clustering is a set of unlabeled samples, and the clusters are divided into groups based on the distance or similarity of the data itself, with the principle of minimizing the intra-group distance and maximizing the inter-group (external) distance. This exploratory analysis does not require any prior artificially given criteria for classification in the process of classification; it is able to automatically classify the data based on the sample data. And the different methods used in this process can lead to different conclusions, and thus the number of clusters obtained may not be consistent. (1) K-means The k-mean clustering is the best known algorithm for partitioning clusters, and its simplicity and efficiency make it the most widely used of all clustering algorithms. Given a collection of data points and a desired number of clusters k, with k specified by the user, the k-mean algorithm iteratively partitions the data into k clusters based on some distance function (Jiangtao et al., 2006). (a) The k clustered prime points (clustercentroids) are randomly selected as μ1 , μ2 , μ3 . . . μ K ∈ R n (b) Repeat the following procedure until convergence {for each sample i, compute the class to which it should belong. C (i ) := argmin j ||x (i ) − μ j ||2

For each class j, recompute the center of mass of that class Σm (i) = j}x (i ) i=1 1{C μj = Σ m (i) = j} i=1 1{C

198

7

Decision-Making

where K is the number of clusters we have given in advance, and C i represents the closest of the k classes from which sample i C i . The value of is one of 1 to k. Minkowski distance from Minkowski/European distance. ( dist(X , Y ) =

n Σ

)1

p

|xi − yi |

p

i=n

(2) Hierarchical Clustering A hierarchical nested clustering tree is created by calculating the similarity between the data points of different categories. In a clustering tree, the original data points of the different categories are the lowest level of the tree and the top level of the tree is the root node of a cluster (Wenyan et al., 2006). Hierarchical clustering uses Euclidean distance to calculate the distance (similarity) between data points in different categories, calculated as follows (Jianfei et al., 2008). / D = (x1 − y1 )2 + (x2 − y2 )2 The data points, the result of data combination calculation is presented as a tree diagram is the hierarchical clustering tree. The bottom layer is the original 7 data points from A to G. The second level of the clustering tree is the second level (A, F), (B, C), (D, E) and G. And so on to generate the complete hierarchical clustering tree. (3) Density-based method (density-based method) DBSCAN (Density-Based Spatial Clustering of Applications with Noise) is a very typical density clustering algorithm, and compared with K-Means, BIRCH, which are generally only applicable to convex sample sets, DBSCAN is both can be applied to both convex and non-convex sample sets (Jiawei et al., 2010). Description of the DBSCAN algorithm: Input: Database containing n objects, radius e, minimum number of MinPts; Output: All generated clusters that meet the density requirement. Repeat. Pulling an unprocessed point from the database. IF the drawn point is a core point THEN find all objects that are accessible from that point density to form a cluster. ELSE draws points that are edge points (non-core objects) and jumps out of this loop to find the next point. UNTIL all points are processed. DBSCAN is sensitive to user-defined parameters, where small differences can lead to widely varying results, and the selection of parameters is irregular and can only be determined empirically.

7.3 Basic Methods of Data Analysis in the Field of Management

199

Fig. 7.3 Linearly divisible classification problem

Basic Methods of Classification Analysis Classification is a supervised learning process where what categories are known in the target database and all the classification process needs to do is to assign each record to the corresponding category. (1) Support vector machine classification model Support Vector Machine (SVM), developed on the basis of statistical learning theory, is a learning method that specializes in finite sample prediction. Linearly divisible support vector machine: in the linearly divisible case, a support vector machine works by finding the optimal classification hyperplane of two classes of samples in the original space. A line such as the one in Fig. 7.3 is a line with was the normal direction and that correctly divides the two types of points, but obviously such a line is not unique. Without changing the normal direction, we can nudge the line parallel to the upper right or lower left, until it hits a certain class of training points. This gives us two extreme lines and, where the parallel lines between and can correctly divide the two classes of points, and the line L “in the middle” of and is optimal because it makes the two classes of samples the farthest apart (Boyd & Vandenberghe 2004). (2) Decision tree classification model A decision tree is a directed acyclic graph constructed to assist in decision making; in machine learning, we usually use a decision tree as a predictive model, commonly known as Classification Tree and Regression Tree. For regression trees, in the process of feature selection, if the parent node to be split is denoted as S and the left and right children nodes are denoted as L and R, the sum of squared errors (SSE) is usually used to portray the heterogeneity of node S (Nguyen et al., 2013).

200

7

Decision-Making

(3) Random Forest Classification Model Random Forests (RF) or Random Decision Forests (RDF) are integrated learning methods for tasks such as classification and regression by constructing a large number of decision trees at training time and outputting class patterns (classification) or mean predictions (regression). Tin Kam Ho used the Tin Kam Ho created the first stochastic decision forest algorithm using the “random discriminant” classification idea proposed by Eugene Kleinberg using a random subspace approach. Random forests are integrated learning algorithms using decision trees as the base learner, and Hastie et al. say that tree learning “comes closest to meeting the requirements of an off-the-shelf process used as data mining” because it is “invariant under scaling and various other transformations of feature values” containing un correlated features, and generates checkable models. But using decision trees alone is prone to overfitting the training set, i.e., low bias but large variance. Random forests are a method of averaging multiple deep decision trees that are trained on different parts of the same training set, with the aim of reducing variance. Random forests are typically grown using the CART approach, using binary splitting to recursively partition the tree into homogeneous or near-homogeneous terminal nodes (the ends of the tree). Four variable importance measures are implemented in the RF software code, typically using both the GINI index based on node impurities and the OOB data classification accuracy.

References Boyd, S., & Vandenberghe, L. (2004). Convex Optimization, Cambridge University Press. Ching, A., Edunov, S., Kabiljo M., Logothetis, D., & Muthukrishnan, S. (2015). One trillion edges: graph processing at facebook-scale. Proceedings of the VLDB Endowment, 8(12). Gonzalez, J. E., Low, Y., Gu, H., Bickson, D., & Guestrin, C. (2012). Powergraph: Distributed graph-parallel computation on natural graphs. In Presented as part of the 10th {USENIX} Symposium on Operating Systems Design and Implementation ({OSDI} 12) (pp. 17–30). Grzegorz, M., et al. (2010). Pregel: a system for large-scale graph processing. Proceedings of the 2010 ACM SIGMOD International Conference on Management of data. ACM. Hopfgartner, F., et al. (2015). Real-time Recommendation of Streamed Data. ACM Conference on Recommender Systems. Jianfei, S., Huaizhi, Y., & Zhanyun, N. (2008). An improved hierarchical clustering algorithm based on agglomeration. Transactions of Beijing Institute of Technology, (01), 70–73. Jiangtao, R., Jinghao, S., & Xiaoxiao, S., et al. (2006). An improved K-means algorithm for text clustering. Journal of Computer Applications, 26(s1), 73–75. Jianxun, Z., Zhimin, G., & Chao, Z. (2010). Application Research of Computers, 027(002), 429– 433. Jiawei, W., Xiongfei, L., & Tao S., et al. (2010). Neighborhood equilibrium density clustering algorithm. Journal of Computer Research and Development, 47(6), 1044–1052. Jiyi, W., Lingdi, P., & Xuezeng, P., et al. (2009). Cloud computing: from concept to platform. Telecommunication Science, (12), 29–36. Lin, L., & Yaofei, H. (2015). A brief discussion on the classification and characteristics of cloud computing. Mobile Information, (6), 25–25. Long, S. (2015). Research and implementation of real-time big data analysis system based on Storm. Shanghai Jiaotong University.

References

201

Nguyen, C., Wang, Y., & Nguyen, HN. (2013). Random forest classifier combined with feature selection for breast cancer diagnosis and prognostic. Biomedical Science and Engineering, 6, 551–560 JBiSE. http://dx.doi.org/10.4236/jbise.2013.65070, Published Online May 2013 (http://www.scirp.org/journal/jbise/) Quan, C., & Qianni, D. (2009). Cloud computing and its key technologies. Journal of Computer Applications, (9), 2562–2567. Weisong, S., Hui, S., & Jie, C., et al. (2017). Edge computing: a new computing model in the internet of everything era. Computer Research and Development, (5). Weisong, S., Xingzhou Z., & Yifan, W., et al. (2019). Edge computing: current situation and prospect. Journal of Computer Research and Development, 56(01), 73–93. Wenyan, G., Deyi, L., & Jianmin, W. (2006). A hierarchical clustering method based on Data field. Acta Electronica Sinica, 34(2), 258–262. Zhu, X., et al. (2016). Gemini: a computation-centric distributed graph processing system. Operating Systems Design and Implementation USENIX Association. Ziming Z., Fang, L., & Zhiping C., et al. (2018). Edge computing: platforms, applications and challenges. Journal of Computer Research and Development, 055(002), 327–337.

8

Management Practice Cases

8.1

Case 1: Artificial Intelligence Empowers New Retail in Enterprise A

Used cars are typically a non-standard product, that is, a car in one condition, a car at one price. The price will be different at different points in time, the car has a product curve and the price is different every month. In the non-standard industry, used cars are destined to be priced transactions. Such a pricing transaction is difficult to accomplish offline. In China, before the emergence of e-commerce, there is no chain of used car dealers to do particularly large, car dealers have more than 100,000, of which the annual sales of 10 million units, the average to each family is 8 units, there is to buy, love to buy. So, A business did one thing is to make the scale bigger, only the scale bigger, can help the user to do more choices. Enterprise A does two things (https://www.ebrun.com/?eb=com_detail_fun c_nav): First, build a product gene pool. Just said no two cars are exactly the same, now through the A enterprise testing is 30,000–40,000 cars per month, so there are three to four million cars on the market is through the A enterprise appraiser testing, appraiser is a technical work, five years of appraisers and three years of appraisers are not the same. Through the system to completely standardize each action, whether it is a one-year appraiser or three months, five months, as long as the point three months, how to take pictures, how to define scratches, etc., all data standardization. This data then becomes the database of A business. The external data includes the maintenance records of each car, do their best to get the car maintenance records in the market, now 85% of the cars can be checked within the scope of authorization allows the data, so that there can be better preservation. There is also online data, when the car is maintained, tracking behavior track, how long each car has been parked, will enter the platform of enterprise A, to make better recommendations to buyers. In Enterprise A, there is a product called

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5_8

203

204

8

Management Practice Cases

“Thousand People, Thousand Faces”, which means that each person sees a different car on the platform. The offline experience is structured in such a way that the appraiser will summarize what is going on, which part of the car is failing, and other cars of the same type will have the same problem. A enterprise gene pool includes car data, buyer data, seller data, sales data, customer service data, appraiser data, how appraisers now evaluate, what places to go first, and then what places, consumers get buyer–seller data is it possible to deal, these things are turned into data into the background. Second, the use of intelligent algorithms. 58 cities across the country to see which step first, and then which step, are standardized. Buyers look at what price is what price, A business extracts the cost of services because it does not earn the difference, how to make the price more in line with the market supply price, 295 tests are entered into the background to facilitate the evaluation. After the inspection, Enterprise A will give the car a detailed report and valuation, if the two sides can reach a consensus on the valuation, then Enterprise A will advance a certain percentage of the money to the owner, note that it is not bought, and not transferred to Enterprise A. The car is then “prepared” in the A-enterprise second-hand car store, at the lowest cost to make the old car new, such as four-wheel alignment, in the market, about 300–500 yuan, but in the Aenterprise second-hand car store, as long as 30 yuan. Then it will be listed on the website of Enterprise A for sale to the C-side. If someone buys the car, they will pay the purchase price to Enterprise A. Enterprise A will then pay the final payment to the owner, and the seller will transfer the car directly to the buyer (https:// www.sohu.com/a/254423655_116611). This year Enterprise A pricing system did a PK with a five-year appraiser, he came up with a price, the system came up with a price, and the final deal was closer to whoever was closer to the predicted price. Earlier this year the pricing system has successfully PKed the five-year appraiser down. The next major scenario application, each buyer like what color, what car, the use of years and how long each month stop, to A business platform browsing will be recommended. If you look at the red car for a longer time, the next time you will focus more on recommending the red car. Including the optimization of advertising, A enterprise advertising costs 1 billion, 500 million invested in the line, has been following the customer’s click, and finally to the transaction, become advertising material. Plus classification models, clustering models, regression models will do reviews, these are the things that are constantly done in the background. Unlike daily consumer goods and other e-commerce, used car e-commerce involves a much longer chain and requires various supporting services, which naturally generates many application scenarios, especially after the layout of offline stores, the scenarios are even richer, including stores, consulting, storage, inspection, etc. It is because of these rich scenes that A enterprise’s AI technology can be applied in intelligent customer service, intelligent sites, intelligent car inspection, user profiling, wind control, etc., which in turn enriches the data and refines the algorithm, forming a positive cycle.

8.2 Case 2: Big Data Reengineering Company B

205

Questions: (1) How is information technology applied in the new retail model of used cars in company A? (2) How does big data and artificial intelligence empower the new retail model of Enterprise A?

8.2

Case 2: Big Data Reengineering Company B

Company B focuses on the market-oriented operation of transportation big data, actively carries out the main business around the core business of big data, related business and derivative business, and builds the whole industrial chain of big data in transportation industry. In the core business of big data, the company focuses on building a transportation big data research and development center to realize the cleaning, mining, processing, sharing and research of industry data through production and sharing, innovation and application, and exchange and collaboration to form the core technical force of big data development in the transportation industry. In terms of big data-related businesses, one is to strengthen the ETC pass card. The company has helped Guizhou province become the first province in southwest China to realize the national network of ETC. The company strives to build Guizhou as a national ETC operation demonstration province. Second, the company holds one of the only two “third-party payment licenses” in Guizhou Province. Based on the payment license resources, the company provides accurate marketing and insurance agency services for all ETC card users and strives to build an Internet ecosystem for post-transit services. In terms of big data-derived business, we are striving to build an information highway network. The company is comprehensively upgrading the highway information network to promote the development of the province’s big data industry, based on the information high-speed network to synchronize the use of travel services, intelligent logistics, industry management, traffic and travel integration and other aspects of information technology, and constantly improve the level of industry services, so that the public has a greater sense of access to big data.1 In the future, ETC pass card online and offline application scenarios will continue to expand, in the city merchants, high-speed service areas to achieve card shopping, food and beverage consumption, car service functions, in high-speed rail, subway stations, large shopping areas, community and other parking lots to achieve barrier-free parking, etc., to bring more convenience for users to travel.2

1 Introduction to Guizhou Qiantong Zhilian Technology Industry Development Co., LTD. http:// www.qiantongzhilian.com/intro/1.html. 2 Guizhou launches "Guizhou Card" to Build Smart Transportation System. http://www.gog.cn/zon ghe/system/2016/02/18/014773386.shtml.

206

8

Management Practice Cases

Questions: (1) Briefly explain how Company B is using big data to develop its business, taking into account the development of the use of big data in the transportation industry? (2) In the future, what other areas can Company B continue to improve and develop?

8.3

Case 3: Big Data Driven C Convenience Store

The concept of unmanned stores has been hot recently, generally referring to stores without salespeople; however, C Convenience Store’s unmanned stores do not mean no salespeople, but rather that there are no people in the entire business decision-making process. Selling, stocking and cleaning are all manned, but its business decisions are made by a system that is automatically completed and pushed to the store every 15 min. c convenience store believes that every manned node will lead to a decrease in overall efficiency. Therefore, C Convenience Store has listed many skills for its employees, the most important being ordering, production, scheduling, and pricing, all of which have to be intelligent. it takes about 2 years to train a good store manager at 7–11, but at C Convenience Store if it is an employee who has never been exposed to the convenience store or fast food industry, it only takes 6 months for C Convenience Store’s entire system to train him to become a store manager. Many goods are 24, 48 h expired, the attributes are very much like airlines or hotels, and the most “taboo” is the convenience store food expiration, so the store uses the airlines a lot of dynamic pricing, electronic price tag method, the store manager does not have to worry about and do not know the sales of goods, if the shelf life is almost up, the electronic price tag will be automatically turned over. If the shelf life is about to expire, the electronic price tag will automatically turn red. If the shelf life of a product is about to expire, the electronic price tag will automatically turn red. When any product in the store is on sale, the automatic electronic price tag will remind the store manager. In Convenience Store C’s system, there is a series of data sequences arranged by time, such as when the sales of bread are lower than expected, when the discount starts, how many times the discount is applied, and when the original price is restored (DHASJKDH CSDN network). Today, C Convenience Stores is accelerating the opening of new stores, investing more in food R&D and production, and continuing to use big data and algorithms to support store operations. To achieve large-scale convenience store openings in the Chinese environment requires taking away all human decisions from the entire day-to-day operations and having them all communicated by computers through complex data structures so that efficiency is optimal and every store is well run.

8.4 Case 4: Enterprise D: Using Artificial Intelligence to Help Circle Marketing

207

Questions: (1) How can C Convenience Stores better manage user information? (2) C How can convenience stores use data to select products to better meet user needs?

8.4

Case 4: Enterprise D: Using Artificial Intelligence to Help Circle Marketing

In recent years, the brand communication of car companies has been shifting from traditional media to new media to enhance brand awareness and influence with the advantages of low cost and high efficiency. In the new media environment, everyone is a communicator, just like Tencent’s definition of its own self-media: even small individuals have their own brand, and D, as a global famous auto brand, of course also has its own self-media platform to speak for itself, such as the official Weibo and official WeChat platforms. The official Weibo and WeChat public platforms are the main channels for target users and fans to get information, whether it’s about new products or news and activities of the company, you can see the most comprehensive and three-dimensional information here. It is also the main channel for car companies to fully disseminate themselves and promote themselves, and they can use the almost zero-cost selfpublishing platform to make targeted information releases according to their own communication plans, to make up for the lack of brand information dissemination by other media, and to guide brand opinion in the direction of their own interests when a crisis occurs. Through the real-time updates and the large amount of information, the company disseminates news about the brand’s activities, especially the PR activities that have an important positive impact on the brand image, and continuously maintains the fans’ pursuit of the brand’s reputation. Interesting short videos, beautiful nine-frame pictures and GIF animations enhance the fans’ interest in reading among the many information updates. The official WeChat public platform has more emotion compared to the official microblog, using the communication method of long articles, paying more attention to the form of reading and the depth of content, mainly spreading the story behind the product and spreading the brand culture, so that users can reach emotional resonance. In addition, cell phone SMS has also started the function of linking H5 with the technology of new media, mainly for the old customers, using the form of SMS plus H5 link and user interaction, with the spread of micro-blog and weibo, guiding the circle of old customers to forward, and finally leading to the attention of micro-blog and weibo, becoming the disseminator and recipient of product information (Xinlei).

208

8

Management Practice Cases

Questions: (1) How can D enterprises break the traditional enterprise marketing barrier through circle marketing? (2) How can D enterprises achieve “AI + marketing” of circle marketing?

8.5

Case 5: Data-Driven E Convenience Store Relies on “Store Portraits” to Open Convenience Stores

Some experts believe that convenience stores want to achieve scale, first of all, we must first tie a region to the deepest, and then to develop the surrounding market. For different areas, even different consumption scenarios, convenience stores also need to provide different services to meet different consumer demand. The second is to improve the degree of matching the goods and services with the surrounding customer base. Based on this background, more brands hope to solve these problems with the help of digitalization. E convenience stores can be the first in this regard, using big data to paint a portrait of each store. This portrait includes not only the location, but also its positioning, product structure and a series of other issues. In fact, in the digitalization of the so-called people, goods and fields, the digitization of the field is not easier than the digitization of “people”. Therefore, E convenience stores rely on “store portrait” to create a thousand stores with a thousand faces. For E convenience stores, the data drive has not only brought about changes in the back office, but also in the front office. For example, electronic price tags have been implemented in E convenience stores. It is not controlled by human, but is a real-time promotion and stocking system based on data, all done by the digital system. Although the tools of big data, but in the retail industry’s most basic, the most important field management level, still can not be separated from the human experience and guidance. From its inception, E Convenience Store hopes to break the top model of traditional convenience stores through technology, grasping consumer information from the beginning, and after a certain period of data accumulation, the store location, consumer preferences and stocking quantity can be projected through algorithms. Compared to traditional brand stores, E convenience stores can also achieve scale more quickly while improving efficiency and meeting personalization.3

3

See how convenience bees can scale through the digital process? DHASJKDH CSDN. https:// blog.csdn.net/DHASJKDH/article/details/83447594.

8.6 Case 6: The Age of the Big Smart Cloud, an Opportunity or a Threat?

209

Questions: (1) For E Convenience Store, how does his idea of using data play a role in the daily operation process? (2) What do you think is the specific direction of E Convenience Store’s future efforts?

8.6

Case 6: The Age of the Big Smart Cloud, an Opportunity or a Threat?

Compared to international technology giants, F Enterprises is a local company with the ability to innovate at source in the field of intelligent voice and even artificial intelligence. f Enterprises puts R&D at a strategic level and insists on market-oriented innovation and iteration of core technologies. The first manifestation of the construction of source technology barriers by F enterprises is the continuous and high-intensity investment in research and development. On the one hand, it builds its own core R&D platform, on the other hand, it integrates external industry R&D resources from the source, and builds a special R&D system by cooperating with universities and scientific research institutions, government agencies and enterprises, industry enterprises, and independent research teams in the form of jointly building joint laboratories. In terms of key resource capabilities, increase investment in R&D and maintain platform advantages. This requires F enterprises to increase investment in R&D, retain outstanding talents and attract a large number of outstanding talents. F enterprises need to rely on the power of capital, increase the strength of equity incentives, and bundle the future of the enterprise with the interests of employees, which is a more realistic way to attract high-end talents. At present, the characteristics of “asset-heavy” operation of F enterprises are particularly obvious, with the annual increase in R&D investment burning money and the capitalization of R&D expenses, the ratio of non-current assets of the company may continue to increase, and the characteristics of its “asset-heavy” operation may be difficult to change in the short term, or even further. The company needs to make full use of all kinds of external resources to reduce the number of The company needs to make full use of all kinds of external resources, reduce its own investment, focus its resources on the most profitable links of the industrial chain, and focus on operating leverage, which is sufficient to improve the profitability of the company (Yanfeng, 2019). Questions: (1) What are the advantages and disadvantages of increasing R&D investment in company F? (2) What opportunities does the era of the Great Intelligence Cloud bring to F companies?

210

8.7

8

Management Practice Cases

Case 7: G Enterprise IoT Era Takes off

The Internet of Things is an important part of the new generation of information technology and an important development stage in the era of “information technology”. Community economy, sharing economy and experience economy are also considered as the three characteristics of the Internet of Things. The so-called community economy is to provide services for each person according to his needs. The prosperity of the IoT era can never be separated from the connection with people’s needs, which is the experience economy of the new era, and the exploration of G enterprises in the IoT era for many years relies on the grasp of the end-game thinking of the IoT era and the unique path leading. G Enterprises has an important cornerstone of the Black Sea strategy—the chain group. Simply put, “chain group” is a non-linear autonomous organization that achieves unity of purpose throughout the chain from sales to production: to produce “pop-ups” that sell smoothly in the industry, not just one product. In order to achieve this goal it is necessary to string together all the links of users and production, meaning that if a certain experience chain group finds a new user demand or problem feedback, it can directly and quickly find the relevant person in charge of the production chain, mobilize productivity or solve the problem, and then to create a single chain group of subsequent work of iterative innovation, and finally to successfully obtain a detonation on the e-commerce platform. What the chain group is doing is to replace the original enterprise control the hands of production products, so that people who are really involved in the whole process of user value creation and order delivery to master these autonomy, in order to articulate the collaboration between the team to achieve value creation and sharing. Questions: (1) How can G companies improve their competitiveness in the era of IoT? (2) What is the “black sea” for G companies?

8.8

Case 8: Big Data Helps Group Rent Governance (Jian, 2020)

City H “uses big data to crack the management problem of group rented rooms”. The staff discovered the group rented rooms through the analysis of water, electricity and gas consumption data, and then supervised the usage status of the group rented rooms through data changes. According to the requirements of 46 types of hidden dangers such as anti-terrorism, public security, fire prevention, safety and health, the rental rooms are divided into key households, concerned households and ordinary households through big data analysis. Each rental house is registered with residence information and generates a QR code, through which the grid operator collects and verifies the personnel and safety of the rental house in a

8.9 Case 9: I Features of Enterprise Big Data Applications (China Case Sharing …

211

targeted manner. In the basic mapping link, through the government purchase of services and other means, the coordinators, social workers, community police and other government forces and labor-intensive employment enterprises, community property companies, owners’ committees, housing agencies and other collaborative carpet mapping of rental housing in the district, according to the principle of one file per household to establish archival information as the original basic data. H city use big data technology means to speed up the collection and convergence of rental housing, housing rental intermediaries, property service enterprises related information and water, electricity and gas usage abnormalities and other group rental housing related data and sharing applications. The community police are mobilized to combine door-to-door visits with health registration, platform declarations and data pushing, and timely additions, deletions and changes to the ledger base, in an effort to comprehensively, truly and accurately grasp the bottom of the city’s mobile population, rental housing, especially group rented housing. Questions: (1) How is big data technology being used in H-city to assist in the management of group rentals? (2) Are there any group rentals in your city, and how do you use big data technology to manage them?

8.9

Case 9: I Features of Enterprise Big Data Applications (China Case Sharing Center Case Library)

Big data applications in I offshore enterprises have three characteristics. I provides customers with a free smart device and app to calculate mileage, but sells a new form of car insurance to make a profit. The smart device transmits data on vehicle driving, and pricing is based on the actual mileage driven by the vehicle to achieve differentiation—the lower the mileage driven by the vehicle owner, the lower the premium. The mileage pricing principle is not only easy to understand and accept by car owners, but also helps to make car insurance premiums fair and more attractive to potential customers. The future of car insurance will be more fair, simpler and more transparent, and driving data will become a personal asset for car owners. Second, the use of intelligent value-added services to solve customer pain points. Under the traditional model, 65% of the total premium income of general auto insurance is spent on claim expenses, and marketing costs reach 5% of the total expenses, both of which take up most of the auto insurance premium income. However, I-companies are trying to break the traditional model by not only having an advantage in price, but also by receiving data through smart devices to provide car owners with convenient and effective smart services, for example, in the IOS APP application, car owners can see the amount of gas they need to consume per

212

8

Management Practice Cases

mile, optimize their travel routes, and remind them to drive carefully to reduce the accident rate. This novel model increases user stickiness and accumulates a large amount of data, which also saves the company money on claims and marketing and advertising expenses. The third is a comprehensive after-sales service guarantee, and the company uses this data analysis in the follow-up of car maintenance and gasoline pricing. For example, I Enterprises will tell the car owner exactly which route is suitable for the car to drive, and the route chosen may be both flat and the closest; in addition, the car owner can learn the details of any problems during the use of the vehicle in the APP application, so that when the car owner goes to the repair shop is not easy to be deceived by the car repair staff. The company’s service concept is to let customers not worry when they see the “check engine light” come on, but to feel confident that they can leave it to the I company. Questions: (1) How do I companies use big number differentiated pricing? (2) How can I enterprises use intelligent value-added services to solve customer pain point problems?

8.10

Case 10: Features of Big Data Applications in Company J (Xing, 2016)

Unlike other health insurance companies, J Offshore was founded to use big data to promote the development of health care for seniors and to provide lower premiums for those who purchase commercial health insurance. J will then help these customers improve their health status and improve overall clinical outcomes, moving from disease treatment to disease prevention. Features of J’s big data applications. First, innovative unstructured data integration technology has been developed. This technology helps identify potential patient risks and helps physicians provide better care. The company first collects insurance claims information to track users’ medical history, then integrates this unstructured data into a complete system to build software models that distinguish different people’s risk of illness, which is an important foundation for J’s insurance service delivery. Health interventions are then performed according to the user’s different levels of risk status, thereby reducing the user’s treatment costs and the insurance company’s claims costs. Second, changing the treatment of disease model to a prevention of disease model. j operates by combining patient-centered data analytics with specialized health care to identify potential risks for members of a covered plan and provide direct preventive care accordingly, effectively reducing the number of patient visits to the hospital, thereby reducing the cost of hospital care for patients and generating more revenue for the company. j takes a real-time digital record of

References

213

the patient’s current health status and history, and a comprehensive view of the patient’s health status by integrating qualifying checks from the patient’s individual EMR (electronic medical record, EMR is an electronic patient record based on a specific system that provides users with access to complete and accurate data, alerts, prompts and clinical decision support systems). J then takes on a role similar to that of a personal physician, helping patients become healthier by, for example, encouraging them to take certain prescription medications or managing patients throughout their chronic conditions. The third is to provide more discounted services. The two main reasons that make J excel over other health insurance companies are that the company does not charge customers extra for going to the hospital to consult doctors online, and that it regularly combs customers’ health data and predicts them accordingly, as well as helping them manage their conditions by employing a professional medical care team to provide preventive care for them. J’s senior management believes that these marketing strategies are made possible by technological advances that give them an advantage over traditional health insurance companies. Questions: (1) What are the features of J’s big data application? (2) Can Chinese healthcare companies use relevant big data technologies?

References China Case Sharing Center Case Library. DHASJKDH CSDN network. Jian, L. (2020). Big data helps group rent governance. Shanghai Premises. Sohu.com https://www.sohu.com/a/254423655_116611 Xing, E. P., Ho, Q., Xie, P., et al. (2016). Strategies and principles of distributed machine. Xinlei, M. Exploring the realization path of artificial intelligence. Iflytek. Yibang Power Network. https://www.ebrun.com/?eb=com_detail_func_nav Yanfeng, Z. (2019). Big data applications in the US property and casualty industry. China Insurance News, 004.

Bibliography

Blog original link: https://blog.csdn.net/qq_38265137/java/article/details/80547695 Blog original link. https://www.cnblogs.com/duanxz/p/12610999.html Caiyi. (1996). The essence of Chinese management culture. Higher Education Press. Chen, X. (2009). Cross-cultural management (2nd ed.). Tsinghua University Publishing House. Cot, J. P. (2008). General manager (G. Shuai, Trans). Mechanical Industry Press. Dawei, S., Guangyan, Z., & Weimin, Z. (2014). Big Data Streaming: Examples of Key Technologies and Systems [J]. Journal of Software, 25(4), 839862. Ding, X., Liu, X. (2018). An analytical framework for innovation management change in big data era [J]. Research Management, 12. Engels. (2009). On authority. In Collected works of Marx and Engels (Vol. 3). People’s Publishing House. Eternity Catering Network Frederick, T. (2013). Principles of scientific management (F. Ma, Trans.). Mechanical Industry Press. Fang, H., et al. (Trans.) (2006). Editor-in-chief of the detox foundation, organization for the future. Renmin University of China Press. Guizhou, T. L. http://www.qiantongzhilian.com/ Hamer, M., Qian Pi, J. (2007). Business reengineering (S. Wang, et al., Trans.). Shanghai Translation Publishing House. Henri, F. (2013). Industrial management and general management (L. Chi, et al., Trans.). Mechanical Industry Press. Henry, M. (2007). Mintzberg on management (J. Lu, Trans.). Mechanical Industry Press. Herbert a Simon. (2014). Management behavior (Z. Zhan, Trans). Machinery Industry Press. http://www.iana.org/domains/root/servers https://baike.baidu.com/item/5G/29780f?fr=aladdin#4 https://www.ibm.com/cn-zh/cloud/what-is-edge-computing https://www.zhihu.com/question/35792003/answer/425689401 https://baike.baidu.com/item/rootdomainnameserver/5907519?Fromtitle=rootserver&fromid=136 331f&fr=aladdin He, Q., Li, N., Wenjuan, L., et al. (2014). Overview of machine learning algorithms under big data [J]. Pattern Recognition and Artificial Intelligence, 27(4), 327–336. Hu, W., Xu, Y. (2010). Design and research of distributed storage scheme [J]. Computer Technology and Development, 20(4), 65–68. Jinping, X. (2016). Propaganda Department of the CPC Central committee: Series of important speeches by general secretary. Learning Press, People’s Publishing House.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Z. Qin et al., Management Innovation and Big Data, Management for Professionals, https://doi.org/10.1007/978-981-19-9231-5

215

216

Bibliography

Lewis, P. S., Goodman, S. H., & Fandt, P. M. (1998). Management: Challenges in the 21st century (2nd ed., pp. 189–218). South-Western College Publishing, (copy of the Northeast University of Finance and Economics Press). Liangyi, K., Jianfei, W., Jie, L., et al. (2018). Overview of parallel and distributed optimization algorithms for extensible machine learning [J]. Journal of Software, 29(1), 109–130. Lin, L., & He, Y. (2015). On the classification and characteristics of cloud computing [J]. Mobile Information, 6, 25–25. Liu, H. (2018). Sina finance and economics. The core of the innovation idea of China automotive is to catch up and surpass. https://finance.sina.com.cn/meeting/2018-12-01/doc-ihpevhcm5680 898.shtml. Lu, P., Li, J., & Zhao, W. (2019). 5G application in vertical industry [J]. ZTE Technology, 25(01), 67–74. Marx. (2009a). Capital (Volume 1), Collected works of Marx and Engels (Vol. 5). People’s Publishing House. Marx. (2009b). Critique of political economy (1857–1858 Manuscripts), Collected works of Marx and Engels (Vol. 8). People’s Publishing House. Marx. (2009c). On the outline of Fedunbach, Collected works of Marx and Engels (Vol. 1). People’s Publishing House. Marx. (2009d). Critique of political economy preface, collected works of Marx and Engels (Vol. 2). People’s Publishing House. Mayr-Schoenberg, V., Cook, K. (2013). The age of big data (S. Y. Yang & Z. Tao, Trans.). Zhejiang People’s Publishing House. Na, S., Liu, B., Allen, L. W. (2019). Overview of distributed machine learning platforms and algorithms [J]. Computer Science, 46(03), 9–18. Nguyen, C., Wang, Y., & Nguyen, H. N. (2013). Random forest classifier combined with feature selection for breast cancer diagnosis and prognostic. Journal of Biomedical Science and Engineering, 6, 551–560. Peter, D. (2006). The practice of management (R. Qi, Trans.). Mechanical Industry Press. Quan, C., & Qianni, D. (2009). Cloud computing and its key technologies [J]. Computer Applications, 9, 2562–2567. Rehn, D. A. (2009). The history of management thoughts (5th ed.) (S. Jianmin, H. Xiaoyong, & Y. Lee, Trans.). Renmin University of China Press. Rifkin, J. (2012). The third industrial revolution (T. Zhang & Y. Sun, Trans.). CITIC Press Robbins, S. P., & Mary, C. (2013). Management (11th ed.). Prentice-Hall International, Inc., Tsinghua University Press, Photocopy. Rosenberg, L., Nash, J., & Graham, A. (2014). Big decision: predictive analysis and decision management in the big data era (J. Chen & Z. Hu, Trans.). Shanghai Academy of Social Sciences Press. Shaohui, S., Gao, Q., Du, Y., Liu, X., Ming, A. (2018). Progress in the design and standardization of the 5th generation mobile communication system [J] Journal of Beijing University of Posts and Telecommunications, 41(05), 26–43. Shi, W., Sun, H., Cao, J., et al. (2017). Marginal computing: A new computing model in the age of interconnection [J]. Computer Research and Development, 2017(5). Shi, J., Yan, H., Niu, Z. (2008). Improvement of hierarchical clustering algorithm based on aggregation [J]. Journal of Beijing Institute of Technology, 2008(01), 70–73. Tao, R. J., Sun, J., Shi, X. et al. (2006). An improved K-means algorithm for text clustering [J]. Computer Applications, 26(s1), 73–75. Tong, H. F., Link: https://www.jianshu.com/p/585935132321. Wang, X., Li, P. (2019). 6G Network Development Trend Analysis [C]. TD Industry Alliance, Mobile Communications magazine. Proceedings of 5G Network Innovation Symposium (2019). TD Industry Alliance, Mobile Communications magazine: China Electronic Technology Group Company, 7th Research Institute, Mobile Communications magazine, pp. 378–381. Wei, Y. (2018). Research on distributed data storage methods and survivability [D]. Xidian University.

Bibliography

217

Wei, J., & Yan J. (2006) Management communication: the cornerstone of successful management. Machinery Industry Press. Weisong, S., Xingzhou, Z., Yifan, W., et al. (2019). Marginal computation: Current situation and prospect [J]. Computer Research and Development, 56(01), 73–93. Womack, J. P., Jones, D. T., & Ruth, D. (2015). The machine that changes the world (F. Yu, Trans.). Machinery Industry Press. Wu, J., Lingdi, P., Xuezeng, P., et al. (2009). Cloud computing: From concept to platform [J]. Telecommunications Science, 12, 29–36. Wu, J., Li, X., Tao, S., et al. (2010). Neighborhood balanced density clustering algorithm [J]. Computer Research and Development, 47(6), 1044–1052. Xiaoping D. (1993). The pace of reform should be accelerated, Selected works of Deng Xiaoping (Vol. 3). People’s Publishing House. Xiaoping, D. (1994). Emancipating the mind, seeking truth from facts, looking forward in unity, selected works of Deng Xiaoping (Vol. 2). People’s publishing house. Xu, J. (Eds.) (2011). Risk management (4th ed.). China Finance Press. Yan, G. W., Li, D., Wang, J.-M. (2006). A hierarchical clustering method based on data field [J]. Acta Electronica Sinica, 34(2), 258–262. Zedong, M. (1991). Against capitalism, selected works of Mao Zedong (Vol. 1). People’s Publishing House. Zedong, M. (1991). On practice, selected works of Mao Zedong (Vol. 1). People’s Publishing House Zhang, Y., ed. (2017). Entrepreneurship and the foundations of entrepreneurship. Higher Education Press. Zhang, J., Gu, Z., Zheng, C. (2010). Overview of research progress on cloud computing [J]. Computer Application Research, 027(002), 429–433 Zhao, G., Chen, J., Han, Y., & Xu, Y. (2015). Overview of key technologies of 5G mobile communication network [J]. Journal of Chongqing University of Posts and Telecommunications (Natural Science Edition), 27(04), 441–452. Zhao, Y. (2019). When “health insurance” meets “big data”. China Insurance Press. Zheng, W. M. (2015). Reviewing big data computation from a system perspective. Big Data Research Zhiwei, Y., Guanggang, G., Li, H., & Li, X. (2017). Research on the development of DNS root service system [J]. Journal of Network and Information Security, 3(03), 1–12. Zhong, Y. et al. (2013). Organizational behavior: a perspective of Chinese culture (3rd ed.). Nanjing University Press, 2013. Zhou, S. (1996). Sun zi’s art of war and business strategy. Fudan University Press.