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Mobile computing: Enabling virtual management
No full textThe growing power of mobile computing, with its constantly available wireless link to
information, creates an opportunity to use innovative ways to work from any location. This
technological capability allows companies to remove constraints of physical proximity so that
people and enterprises can work together at a distance. Mobile computing is expected to
enhance the implementation of a virtual management environment in the office, which will
enable workers to do their job away from management much of the time. Dealing with
essentially virtual employees will mean changes to management procedures. Management will
need to make a choice when implementing mobile computing to either use Theory X practices
that can inhibit employees, or to use Theory Y practices that will enable virtual management to
bring productivity increases. With Moore’s Law predicting that technology doubles every 18 to
24 months, management must be prepared to adapt with these innovations and new capabilitiMobile Computing 1
MOBILE COMPUTING ENABLING VIRTUAL MANAGEMENT
Mobile Computing: Trends Enabling Virtual Management
by
Alan E. Kuyatt
Dissertation submitted to the Faculty of the Graduate School of the
University of Maryland University College, in partial fulfillment
of the requirements for the degree of
Doctor of Management
2011
Dissertation Committee:
Kathleen F. Edwards, Ph.D.
Dennis E. Winters, Ph.D.
Mobile Computing 2
Dedication
Working through the entire process to complete this dissertation has taken a lot of time
and effort, which has meant a sacrifice from the family, especially my wife, Debra. She has
endured the many hours of classes, homework, research, and writing. I could not have reached
this point unless she was totally behind the effort. Her encouragement and fortitude have helped
to get through the many times where the last thing I wanted to do was spend the time to work
through the task at hand. The culmination of this work is dedicated to her sacrifice.
Alan Kuyatt © 2011
Mobile Computing 3
Acknowledgement
The accomplishment of this dissertation has been a team effort that has worked through
many long hours to create the finished product. It started off with Dr. Jim Gelatt who flamed an
interest in technology, futures, and management. The real work building, shaping, and molding
the raw work into a finished product was artfully handled by Dr. Kay Edwards through the rest
of the journey. I want to thank her for all the thought, effort, and expert guidance with a lot of
tolerance along the way. It made all the difference.
Mobile Computing 4
Abstract
The growing power of mobile computing, with its constantly available wireless link to
information, creates an opportunity to use innovative ways to work from any location. This
technological capability allows companies to remove constraints of physical proximity so that
people and enterprises can work together at a distance. Mobile computing is expected to
enhance the implementation of a virtual management environment in the office, which will
enable workers to do their job away from management much of the time. Dealing with
essentially virtual employees will mean changes to management procedures. Management will
need to make a choice when implementing mobile computing to either use Theory X practices
that can inhibit employees, or to use Theory Y practices that will enable virtual management to
bring productivity increases. With Moore’s Law predicting that technology doubles every 18 to
24 months, management must be prepared to adapt with these innovations and new capabilities
to allow the organization to remain competitive. When management considers the changes
mobile computing will bring to the organization, the specifics of the technology or architecture
are not the major focus. It is more important to see the trends that are coming and know where
they can lead. It is not a matter of whether or not a technology will be feasible, but how to use it.
Management must be aware of both the positive and negative aspects of technology in order to
balance the implementation of mobile computing in the organization. Remaining competitively
positioned ahead of the competition may involve implementing virtual management and its
disruptive innovation into the organization to keep the business at a competitive edge.
KEYWORDS: Mobile Computing, Virtual Management, Innovation
Mobile Computing 5
Table of Contents
DEDICATION........................................................................................................................................... 2
ACKNOWLEDGEMENT......................................................................................................................... 3
ABSTRACT............................................................................................................................................... 4
TABLE OF CONTENTS ........................................................................................................................... 5
LIST OF FIGURES................................................................................................................................... 9
CHAPTER 1 – INTRODUCTION.........................................................................................................10
STATEMENT AND SIGNIFICANCE OF THE PROBLEM......................................................................................... 10
IMPORTANCE TO MANAGEMENT ......................................................................................................................... 11
DEFINITION OF TERMS......................................................................................................................................... 13
Mobile computing............................................................................................................................................. 13
Virtual management ....................................................................................................................................... 13
RESEARCH QUESTION(S); WARRANT(S); ASSUMPTIONS OR PROPOSITIONS............................................. 14
RQ1: What are the trends in mobile computing technology and what will projections of
those trends indicate for the workplace? ................................................................................................................ 14
RQ2: What are the ways mobile computing is being used in the workplace and what do
those trends indicate? ..................................................................................................................................................... 15
RQ3: As mobile computing becomes pervasive in the workplace, will the technology
enable management to operate in a virtual environment?............................................................................. 16
ORGANIZATION OF THE DISSERTATION ............................................................................................................. 17
CHAPTER 2 – LITERATURE REVIEW..............................................................................................20
CRITICAL REVIEW AND ANALYSIS OF THE LITERATURE, BY TOPIC .............................................................. 20
Mobile Computing 6
U.S. management trends leading to virtual management............................................................... 20
Mobile computing............................................................................................................................................. 28
Technological growth and competition................................................................................................... 33
International innovation and mobile computing................................................................................ 36
The different generations and mobile computing............................................................................... 51
Positive indicators for using mobile computing................................................................................... 52
Negative indicators that detract from using mobile computing.................................................. 56
DISCUSSION OF THEORETICAL LENSES .............................................................................................................. 60
McGregor Theory X/Theory Y ...................................................................................................................... 60
Creative destruction and disruptive innovation .................................................................................. 62
Adoption and diffusion of technology along the Scurve..................................................................
65
RESEARCH PROPOSITIONS AS THEY EMERGE FROM AND ARE REFLECTED IN THE LITERATURE REVIEW
.................................................................................................................................................................................................. 69
Proposition One – there are identifiable trends towards virtual management..................... 69
Proposition two – the pace of change in increasing towards virtual management ............ 69
Proposition three – Theory Y enables virtual management ........................................................... 69
Proposition four – the increasing pace of technology change necessitates adoption......... 70
Proposition five – management must determine the best changes to adopt .......................... 70
Proposition six – management must incorporate mobile computing to compete ................ 70
Proposition seven – management has a choice in implementation ............................................ 71
Summary .............................................................................................................................................................. 71
CHAPTER 3 – CONCEPTUAL FRAMEWORK..................................................................................73
GRAPHICAL ANALYSIS AND SYNTHESIS.............................................................................................................. 73
Model – management and mobile computing ...................................................................................... 73
Mobile Computing 7
INTEGRATION OF SCHOLARSHIP INTO THE FRAMEWORK............................................................................... 75
Mobile computing............................................................................................................................................. 75
Technology and competition ........................................................................................................................ 77
International uses............................................................................................................................................. 78
Theory Y enabled .............................................................................................................................................. 80
Millennials............................................................................................................................................................ 81
Management decision..................................................................................................................................... 82
Summary of trends and management ...................................................................................................... 82
CHAPTER 4 – METHODOLOGY.........................................................................................................84
DISCUSSION OF THE THEORY AND PRACTICE OF EVIDENCE‐BASED RESEARCH AS IT PERTAINS TO
MOBILE COMPUTING AND VIRTUAL MANAGEMENT........................................................................................................ 84
DISCUSSION OF THE SCHOLARLY RESEARCH EVIDENCE SPECIFIC TO MOBILE COMPUTING AND VIRTUAL
MANAGEMENT ....................................................................................................................................................................... 85
Scholarly Research Practices....................................................................................................................... 86
Rationale for Selection and Exclusion of Literature........................................................................... 88
DISCUSSION OF THE USE OF THE EXPERT PANEL AS EVIDENCE OR SUPPORT............................................ 89
Summary .............................................................................................................................................................. 90
CHAPTER 5 – ANALYSIS OF FINDINGS...........................................................................................91
PRESENTATION AND SUMMARY OF FINDINGS RESULTING FROM THE LITERATURE REVIEW AND OTHER
EVIDENCE................................................................................................................................................................................ 91
RESEARCH QUESTIONS IN LIGHT OF FINDINGS ................................................................................................ 93
RQ1: What are the trends in mobile computing technology and what will projections of
those trends indicate for the workplace? ................................................................................................................ 93
Mobile Computing 8
RQ2: What are the ways mobile computing is being used in the workplace and what do
those trends indicate? ..................................................................................................................................................... 94
RQ3: As mobile computing becomes pervasive in the workplace, will the technology
enable management to operate in a virtual environment?............................................................................. 95
CONCLUSIONS......................................................................................................................................................... 96
CONSIDERATION OF OTHER POINTS OF VIEW THAN THAT PRESENTED IN THIS DISSERTATION ........... 97
SUMMARY................................................................................................................................................................ 99
CHAPTER 6 – IMPLICATIONS FOR MANAGEMENT................................................................. 101
OVERALL CONCLUSIONS.....................................................................................................................................101
IMPLICATIONS FOR MANAGEMENT ...................................................................................................................102
IMPLICATIONS OF TRENDS.................................................................................................................................107
LIMITATIONS OF THIS RESEARCH......................................................................................................................110
AREAS FOR FUTURE RESEARCH........................................................................................................................111
SUMMARY..............................................................................................................................................................114
REFERENCES...................................................................................................................................... 116
APPENDIX A – EXPERT PANEL...................................................................................................... 135
Mobile Computing 9
List of Figures
Figure 1: Computing the growth curve over five levels of technology (Kurzweil, 2005) 35
Figure 2: Exponential growth of computing, past and future (Kurzweil, 2005) 36
Figure 3: Five innovation adoption levels and S-curve (Rogers, 2003) 67
Figure 4: Model for mobile computing enabling virtual management 75
Mobile Computing 10
Chapter 1 – Introduction
Statement and Significance of the Problem
Technology is becoming powerful enough to begin to enable people to work in a mobile
environment; management must learn what these changes can mean for the workplace. The
ability for everyone to use mobile computing can allow operations to take place away from a
fixed office location. Management will need to adapt to this increased mobility for both its
management function and the operations of the organization (Alexander, 1997).
Over the last few decades, the computer technology that has become available has
become smaller and more powerful while the Internet has significantly improved connectivity.
In addition, the power of cell phones have benefited from the same technology and a new
capability to use handheld mobile computing devices that can connect to the Internet over
cellular technology has appeared. That new capability has enabled workers to have access to
communication and information away from their desks and use that availability of knowledge to
empower them to get work done quickly using the new mobile computing capabilities
(Chesbrough & Teece, 2002).
This technology is starting to change how people work and it has the potential to change
things significantly more. For instance, a major technology change began when laptop computers
enabled people to work away from their offices. Some recent technological advancements that
enable a more mobile work environment are netbooks, tablets, and smartphones, which can
access and share data anywhere. The younger generations, in particular, the Millennials, are
beginning to use mobile computing technology to connect with others using these tools, and they
accomplish work in ways very different from the traditional office (Davis, 2002). The ability to
Mobile Computing 11
move towards virtual organizations allows the management to flatten the structure and reduce the
limitations from being in a physical space to conduct operations. It can also facilitate finding the
best value capabilities for the organization’s output and thus reduce costs (Kotorov, 2001).
Allowing the organization to expand beyond a physical location can improve customer service
while reducing the cost of that service (Alexander, 1997). The virtual capabilities allow more
flexibility and adaptability in work location, team member selection, and how operations can
change when necessary (Jackson, 1999). There is also a reduction in the time limitations for
accomplishing tasks and gaining access to those with the essential information (Davis, 2002).
Importance to Management
Mobile computing has started to change the way employees, customers, and the
organizations operate, which can create both challenges and opportunities for management. The
spread of mobile computing devices that provide connectivity for people has created a
communication capability that is continuously available almost anywhere someone may work or
travel. The use of this continuous communication capability has started to become part of the
business world and employees are currently using smartphones to find information wherever
they are and even submit orders. Management can also use mobile computing to communicate
with employees using multiple tools including social networks, texting and teleconferencing
(Alexander, 1997).
There is also a rapid growth of data availability, which improves the ability for
businesses to serve customers by giving out product or service information. The data availability
will also create challenges for those businesses to determine how much information is
appropriate to share. Company information, employee information, and other parts of operations
Mobile Computing 12
that are not essential for other entities to know may need to have a limited sharing capability.
Limiting the information sharing while protecting it will be a challenge (Davis, 2002).
The growing power of mobile computing and the constant wireless link to information
will create an opportunity for people to find information and communicate with others. It will
also create the need for management to quickly determine the value of these capabilities for the
organization and how to incorporate it. Millennials are already using mobile computing for
regular communication with their friends and can feel cut off when the tools they use regularly in
their outside life are not available at work. At the very least, productivity for these employees
will be down and the dissatisfaction level will be up. At the worst, for those employers that
decide to not make this technology available to the employees, they may not be able to hire and
retain the best help (“The Millennials,” 2010; Martin, 2005).
All of these aspects of mobile computing are currently in at least limited availability and
they will start to propagate into more social and business environments. The big question will be
how fast, to what extent, and how effectively management sees a benefit to implementing them
in the organization. Management will need to monitor technology developments to see how the
diffusion of technology is progressing. They will need to determine if there are opportunities to
implement for managing employees, customers, or strategies (Davis, 2002).
The development and implementation of technology is moving faster each year, which
means that the time between the introduction of a technology and the acceptance of that
technology by a majority of the population is growing even shorter. This rapid adoption of
mobile computing will mean two things for management. The first is that the time to implement
a technology will be shorter, so preparations for monitoring technolog
Infographics_ Displaying Numerical and Factual Information Visually - DE Oracle
No full textDE Oracle @ UMUC
An Online Learning Magazine for UMUC Faculty
Center for Support of Instruction
Infographics: Displaying Numerical and Factual Information Visually
Floyd Csir
Instructional Support Specialist
Center for Support of Instruction
Published: September-October 2012
Category: » Online-pedagogy » Teaching-tools
Introduction
The display of information in a non-textual way to visual learners typically has been limited to those
with graphic design skills. New Web services now enable those who may not have graphic design skills
to communicate and display numerical data and factual information in visually meaningful formats. Free
versions of these services enable the creation of professional-looking infographics with pre-constructed
icons and graphics and drag-and-drop functionality. Faculty and students are now easily able to
develop and view interesting and creative information objects whether they contain numerical or
factual information, thereby enhancing the online classroom and the educational experience.
This article provides a brief overview of infographics and mentions some of the tools available for
creating them, as well as a few additional resources to consider if you wish to use them in your
classrooms.
What are Infographics?
Infographics visually explain a topic, usually data or numerical information, which can be a more
effective and appealing method of learning and persuasion than just written text. These objects are
typically bold and eye-catching, and they convey the creator's or author's information. They are
displayed in normal image formats, such as JPG and PNG, but are generally more detailed and complex
than a regularly viewed graph or image. Infographics have appealing visual cues, focus on a specific
question or topic, and have a poster-like quality.
One of the earliest examples of infographics comes from Florence Nightingale, who in 1858 created an
infographic of British military deaths (http://www.guardian.co.uk/news/datablog/2010/aug/13/florence-nightingale-
graphics) . Although newspapers have displayed color graphs and charts to convey data to their
readers in recent history, they are generally small in comparison to an infographic, which can fill an
entire computer screen or tablet and oftentimes involve scrolling down to see more content.
Edward Tufte, a noted scholar and expert in the fields of information design and data visualization, has
written books about how information can be represented visually, which should be considered if
exploring this topic further. Titles of his books include: The Visual Display of Quantitative Information;
Envisioning Information; Visual Explanations: Images and Quantities, Evidence and Narrative; Beautiful
Evidence; and Visual and Statistical Thinking: Displays of Evidence for Making Decisions.
Infographics vs. Data Visualizations
Although no general rule applies to Web services that enable anyone to create infographics, for the
purposes of this article, infographics are considered static media. Closely related to infographics are
data visualizations, which are considered interactive, allowing users to change the appearance of the
data dynamically by using controllers to add or manipulate the data. (It should be noted that some
Infographics: Displaying Numerical and Factual Information Visually - DE Oracle
data visualizations can be turned into infographics.) Another difference between the two types of tools
is that data visualizations contain much more raw data than infographics. With an infographic, the
designer selects the most important information to present an information snapshot, whereas a data
visualization can present many changing views of the data. In either case, the author has the freedom
to tell a compelling story. Hans Rosling's Gapminder Web site (http://www.gapminder.org/) is a prominent
site for browsing and creating data visualizations and includes a section for educators who wish to use
data visualizations in their classrooms.
Examples of Infographics
Below are just a few examples of the multitude of infographics one can find on the Internet:
Raise the Roof: The U.S. Debt Ceiling (http://visual.ly/raise-roof-us-debt-ceiling)
Hyper Connected: The Generation that Doesn't Power Down (http://awesome.good.is/transparency
/web/1206/the-generation-that-doesn-t-shut-down/flat.html)
Pioneers of the Millennial World (http://awesome.good.is/transparency/web/1112/most-innovative-countries
/flat.html)
Sources for Infographics
One of the best sources for finding infographics and data visualizations created by others is visual.ly
(http://visual.ly) . This searchable site includes infographics created by professional designers.
Other sources include:
GOOD magazine (http://www.good.is/)
Infographic Journal (http://infographicjournal.com/)
Daily Infographic (http://dailyinfographic.com/)
Cool Infographics (http://www.coolinfographics.com/)
At the very least, these sites can provide ideas for creating your own infographics or serve as the basis
for classroom discussion.
Creating Infographics
There are several Web services that make it easy for non-designers to create powerful and
eye-catching images. Although these services are not expressly created for learning environments,
they lend themselves to online learning and the images created with them can be linked, embedded, or
saved in a classroom.
Three services (easel.ly, Piktochart, and infogr.am) that are currently available for creating your own
infographics are discussed below. These services have been selected for this article based on the
following criteria:
They are free or have free versions along with paid versions.
They offer pre-made templates that can easily be modified with one's own data.
Some infographics can be made public or private.
Images can be embedded or linked from within an online classroom.
Registration is easy with social media tools, such as Facebook, Google+, Twitter, and others, or one
may register by providing an e-mail account.
Easel.ly
Infographics on the easel.ly (http://easel.ly/) site (which is still in beta) are called visuals; public visuals
can be downloaded or viewed in a browser. Although more than 25,000 public visuals have been
created on easel.ly, these infographics do not appear to be searchable.
Infographics: Displaying Numerical and Factual Information Visually - DE Oracle
Easel.ly has 15 themed templates called vhemes, which can be modified. There is drag-and-drop
functionality to the site, with many pre-made objects and backgrounds. You may also upload your own
images. Once you create an infographic, you can make it public or private. One nice feature for faculty
and students is that private visuals can still be linked or embedded in an online classroom. It should be
noted that a link to the easel.ly Web site will automatically be included at the bottom of an embedded
visual (the link can be removed by editing the HTML embed code); the link to the Easel.ly Web site
does not appear in the linked visual, because it is just a JPG image. You may also download your visual
as a JPG image.
Although the site is easy to use, it does not provide any help (aside from a marketing video that
demonstrates the site's features). An auto-save feature is not present, so you will need to save
manually before exiting a project.
Screenshot of Easel.ly
Piktochart
Piktochart (http://piktochart.com/) offers three levels of service: free, monthly fee, and an annual fee. The
free account adds a Picktochart watermark at the bottom-right corner of the image upon exporting.
Help is available along with YouTube tutorials and an FAQ.
The free account provides five basic themes (templates) that can be edited. There are numerous
pre-configured generic icons to spice up or better explain an infographic. You can upload your own
images to an infographic; however, the free account has a five-image upload limit.
Piktochart includes a "create a chart" option that allows for editing rows and columns. A chart can then
be generated from the data entered.
The Help Center provides instruction for common questions.
Although there is no HTML export or a way to link to a saved infographic, you can export the graphic in
PNG image format, which can then be uploaded into an online classroom. An auto-save feature is not
available in this service.
Infographics: Displaying Numerical and Factual Information Visually - DE Oracle
Screenshot of Piktochart
infogr.am
The infogr.am (http://infogr.am/) site (also in beta) allows users to select one of six themes and then
modify it as needed. Authors can add their own picture if desired or import Youtube or Vimeo videos
into their infographic.
The site lacks a help feature, which may deter novice users, but it is easy to use.
Publishing an infogr.am infographic makes it public, so take care not to include student names or other
FERPA-related information if you use the site. Also, publishing creates a unique URL that makes it easy
for linkage or embedding with the HTML code. Photos or images can be uploaded to infographics. One
noteworthy feature is the ability to change the width of an infographic.
By default, inforgr.am includes a copyright notice in the lower-left corner and a logo in the lower-right
corner of an infographic.
Infographics: Displaying Numerical and Factual Information Visually - DE Oracle
Screenshot of infogr.am
For more information about creating an infographic from any service, consider these articles available
at the visual.ly Web site:
Best Practices: Maximum Elements for Different Visualization Types (http://blog.visual.ly/maximum-elements-
for-visualization-types/)
Should You Make That Infographic? (http://blog.visual.ly/should-you-make-that-infographic/)
A Code of Ethics for Data Visualization Professionals (http://blog.visual.ly/a-code-of-ethics-for-data-visualization-
professionals/)
Using Infographics in the Classroom
Infographics may enhance your course materials and enrich your students' experience, particularly for
those with different learning styles. You will want to determine what information may be appropriate to
communicate in this format and whether such visual representations will be suitable aids for students.
If you decide to use infographics, you may want to give thought to the following issues. Consider
referencing sources for the data or information. One of the downsides to using infographics is that
although sources are typically mentioned (as they should be), the infographic may not indicate which
specific source contributed to a particular piece of data within the infographic. Verifying the accuracy of
an infographic may be difficult if multiple sources are used—which you will need to keep in mind if
tasking students with creating an infographic for an assignment. One solution to this problem could
involve providing numbered footnotes for these sources within the infographic. One could also provide
a separate text file that includes the reference sources and/or describes how the sources were used in
the infographic.
Infographics: Displaying Numerical and Factual Information Visually - DE Oracle
Contact Site Manager
Created and Maintained by the Center for Support of Instruction
© University of Maryland University College
Powered by ArticleMS from ArticleTrader.com
If you would like to embed infographics in your classroom, please see How to Embed External
Multimedia Objects in a WebTycho Classroom for instructions.
This article mentions a few examples of infographic tools. These references should
not be taken as an endorsement of any particular tool, technology, or company. If
you are thinking of implementing any of these tools into your course, check with
your academic administrator for suitability.
Any advertisements seen in the infographic tools are either self-promotions or
links to partner sites and not links to third-party products.
Please be aware of browser requirements before using any tool.
Additional Resources
King, L. (2012). How to create infographics online. Retrieved from http://www.wpqueen.com
/wordpress-how-to/how-create-infographics-online/ (http://www.wpqueen.com/wordpress-how-to
/how-create-infographics-online/)
Rogers, S. (2010, August 13). Florence Nightingale, datajournalist: information has always been
beautiful. The Guardian. Retrieved from http://www.guardian.co.uk/news/datablog/2010/aug
/13/florence-nightingale-graphics (http://www.guardian.co.uk/news/datablog/2010/aug/13/florence-nightingale-graphics)
About the Author(s)
Floyd Csir enjoys collaborating with colleagues on a variety of instructional technology projects that help students, faculty,
and staff reach their goals. He joined the CSI staff in August 2009 as an Instructional Support Specialist.
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Where good ideas come from: Inside the organization or through open innovation
No full textInnovations, both simple and profound, have been created and adopted for centuries, although only recently incorporated as a central part of organizational strategy. How organizations develop new innovations has been the subject of many management thought leaders, from Peter Drucker to Clayton Christensen. The recent emergence of the "era of open innovation" championed by Henry Chesbrough and others suggests that innovative opportunities can travel untraditional paths on their way to a new product, service, or process that produces value in the marketplace. “Where Good Ideas Come” will highlight the emerging movement of open innovation. Webinar participants will have the opportunity to explore how open innovation operates, how it has changed the face of competition and cooperation, and how it has helped organizations shape new business models.Presented by The Graduate School and the Alumni Association at University of Maryland University College
Moderator: Dr. Michael Evanchik, Associate Dean, The Graduate School, University of Maryland University College
Webinar Series on InnovationWebinar Series on Innovation
•
Jan 19 – The Era of Open Innovation
Dr. Tom Mierzwa
•
Feb 16 – Entrepreneurship and Innovation
Dr. Subash Bijlani
•
Mar 15 – Using Design Thinking to Deliver Systemic Innovation
Mr. Roy Luebke
•
Social Networking: The Essence of Innovation
Dr. Jay LiebowitzPresenter: Dr. Tom Mierzwa
Professor of Innovation & Sustainability
The Graduate School
University of Maryland University College
Where Good Ideas Come From:
Inside the Organization or Through Open InnovationDiscussion Agenda
•
Innovation as an Idea
•
Open Innovation – what it is
•
Examples of Open Innovation
•
Open Innovation in Business Models
•
Facilitating Open Innovation
•
Implications of Open Innovation for Business
•
Q & AOperational Definition of Innovation
•
An organizational process of intentional and novel change with a goal of producing value for those who adopt or use the innovation. That value typically produces marketplace rewards.Open Innovation – what it means
•
A process whereby firms commercialize external (inbound) innovative ideas as well as innovative ideas generated within the firm by deploying them (outbound) into the marketplace (Chesbrough, 2003)
•
It is also described as both a set of practices for profiting from innovation and a cognitive model for creating, interpreting, and researching those practices (West, et al, 2006)Chesbrough – originator of Open Innovation IdeaClosed Innovation Model
Simplified View
More Complex ViewClosed Innovation at XeroxOpen Innovation Model
Simplified View
More Complex ViewContrasting Closed vs Open InnovationIs the internal R&D function an obsolete concept?
•
Not if open innovation can leverage internal R&D
•
But…..some adjustments must be made:
•
Look both inside and outside for new growth
•
Create new organizational roles to connect with and collaborate with outside players
•
Build new skills for recognizing the fit of internal and external strategies leveraging each otherOpen Innovation in Practice: Intel’s University Model
•
Intel contributes over 100 million annually to 15 leading U.S. universities and 12 overseas universities
•
Intel defines promising areas of scientific and engineering research to focus its R&D investment
–
After NIH and NSF, Intel is one of the biggest funding sources in selected research areas
•
Intel negotiates access to university IP prior to funding research there•
Intel initiated four smaller research centers (“lablets”), each located immediately adjacent to a university:
–
U Washington
–
U California-Berkeley
–
Carnegie-Mellon
–
Cambridge
•
Each “lablet” led by an academic researcher
•
Intel staff performance measured on joint collaborative research efforts
Open Innovation in Practice: Intel’s Research EnginesCollaborative R&D Example: P&G + Clorox
•
The Problem: Clorox obtained the Glad brand from Dow as Dow reduced its business portfolio, but…..
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No R&D in its pipeline
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Risk of commoditization of Glad brand
•
The Opportunity: P&G had two technologies internally but had no path to marketplace
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Press ‘n Seal and Force FlexManagement and Implementation Challenges
•
P&G was a competitor to Clorox
•
Neither company had previously done a collaborative deal with a competitor
•
Collaboration structure considerations =
–
How much is each side contributing?
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Innovation sharing arrangement transaction
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Whether and how well each side performs
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How are the rewards distributed? Open Innovation Options for P&G
•
Launch new product independently
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Test market results were good, but….
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Tough economic times
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Likely competitive response
•
Straight license deal to Clorox
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Will marketing support be needed?
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How would they perform?
•
Outright technology sale to Clorox
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Would there be a missed opportunity of follow-on technology already in pipeline?Open Innovation Solution: A JV Company
•
Clorox held 80% and P&G held 10% with an option for another 10% (since exercised)
•
P&G paid Clorox $133M for the additional 10% in 2005
•
Glad products now in #1 market position
•
Business now tracking ahead of plan
•
Clorox didn’t have to worry about P&G entering its marketOpen Innovation Bonus = New Business Opportunities
•
Clorox has approached P&G to distribute some of its brands in Japan….rather than build its own distribution network
•
This collaboration has also been successful, but would not have occurred w/o first JV
•
Both companies had to change long-held R&D and management practices
•
Both companies win from this resultThis leads us to the question:
Which would a company rather have?
a unique, robust technology….
OR
….a flexible business modelOpen Innovation Consequences:
Marketplace risk is lower when companies incorporate open innovation in a business modelThe Firm as an Innovation Factory
Hargadon (2000)Open Business Models - CollectionOpen Business Model – Funnel ViewBusiness Model InnovationOpen Innovation Tool – Innovation TournamentsOpen Innovation Tool - CrowdsourcingOpen Innovation Implications - 1
•
For Company Strategy……
•
Centralized R&D is obsolete
•
Better management of R&D costs
•
Companies can harness internal ideas as well as external ones for innovation
•
Benefits:
–
Firms can specialize in marketing, operations and finance while innovator specialists can innovate.Open Innovation Implications - 2
•
For Innovation Intermediaries…..
•
Increased significance of their brokering roles
•
Formalized competition for innovative solutions will expand this business sector
•
Firms like IDEO, Innocentive will serve wider roles in the open innovation transaction processOpen Innovation Implications - 3
•
For Business Models…..
•
Firms not limited to business models that focus on specific market segments
•
Development costs of new innovations are reduced and innovation solutions tend to be more readily available
•
Potential for business model experimentation allows for agile responses in volatile marketsOpen Innovation Implications - 4
•
For Organizational Process…..
•
Expanding use of outsourced solutions
•
Less reliance on internal innovation champions and greater reliance on collaborative teams for idea generation and development
•
Greater emphasis on boundary-spanning functions and roles Open Innovation Implications - 5
•
For Organizational Design…..
•
Increased range of external collaborative relationships
•
Specific organizational roles for alliance development
•
Greater cross-functional collaboration within the organizationComments….
Questions?Contact information: Dr. Tom Mierzwa
E-mail: [email protected]
Phone: 240-684-2467
View slides at http://www.umuc.edu/library/libresearch
Using design thinking to deliver systemic innovation
No full textDesign thinking is a solution-focused methodology that combines elements of critical thinking, systems thinking, strategic thinking, and abductive reasoning to produce a desired future state or condition. Design thinking is not about how to create something that looks appealing, but is focused on how to find the right problem to solve, establish a goal or intent to design a future condition, and unleash the creative potential within any organization including for-profit, non-profit, or governmental entities. The “Using Design Thinking to Deliver Systemic Innovation” webinar will discuss:
An approach to framing problems more effectively
The power of more deeply understanding humans and their context of use to discover unmet needs
Analyzing qualitative and quantitative research to find new patterns and opportunities
Synthesizing findings to form unique solutions to complex issues
Mr. Luebke will also demonstrate how external issues such as strategic intent, culture, market drivers, organizational structure, and risk tolerance must be balanced against discovering human needs to develop transformative solutions.Property of:
Roy Luebke
Presented by The Graduate School and the Alumni Association at University of Maryland University College
Moderator: Dr. Michael Evanchik, Associate Dean, The Graduate School, University of Maryland University College
Webinar Series on Innovation Property of:
Roy Luebke
Webinar Series on Innovation
•Jan 19 – Where Good Ideas Come From: Inside the Organization or Through Open Innovation
Dr. Tom Mierzwa
•Feb 16 – Entrepreneurship and Innovation
Dr. Subash Bijlani
•Mar 15 – Using Design Thinking to Deliver Systemic Innovation
Mr. Roy Luebke
•Apr 19 – Social Networking: The Essence of Innovation
Dr. Jay Liebowitz Property of:
Roy Luebke
3
Structured Innovation And Design Thinking
Presented By:
Roy Luebke
March 15, 2012
Creating a repeatable, learnable process Using structured tools and methods
To consistently increased customer value And deliver economic growth. Property of:
Roy Luebke
4
What’s The Situation: Why Innovation?
Decades of cost cutting
Inward focus
China and India
Green
Debt
Outsourcing Property of:
Roy Luebke
5
The CEO Conundrum
“We have people that can build anything..….
The problem is we don’t know what we SHOULD be building”
Property of:
Roy Luebke
6
According to Peter Drucker:
The only reason a company exists
Get customers
There are 2 basic functions of a business
Marketing and innovation Property of:
Roy Luebke
7
Common Innovation Definition
•Creating something new that delivers Economic Value
•It is a combination of research, creativity and invention that is taken to the market and creates Customer Value
Incremental …………. Transformational Property of:
Roy Luebke
8
What The Heck is Design Thinking Anyway: Combining Skills
Uses methods and processes Acquire information Analyze for patterns Synthesizing potential solutions Prototyping Implementing
Empathy : Human-Centered
Creativity
Rationality and Validity
Communication
- Visual
- Metaphors
Adaptable
Playful
Abductive reasoning
Systems Thinking
Critical Thinking
Creative Thinking
Strategic Thinking
Decision oriented Property of:
Roy Luebke
Thinking About Design Thinking
Not just about ideas alone
Not just to be cool, hip or witty
Relevance
9 Property of:
Roy Luebke
10
3 Critical Solution Questions
Is it Desirable? (Do people want it)
Is it Feasible?
(Can we build it)
Is it Viable?
(Can we make money) Property of:
Roy Luebke
Design Thinking Is Simply Creating The Future
11 Property of:
Roy Luebke
12
Innovation: Summary
The Customer, The Customer, The Customer
Combination of strategic intent, culture, organization
and people.
Visualize insights to find new patterns
and Opportunities.
Define the true problem and undefined Needs.
It’s not just about ideas.
New types of thinking needed to combine analytical reasoning and creative visioning.
Property of:
Roy Luebke
13
Operations
Innovation
Safe, Proven, Rules, Routines, Linear, Reliable
Experiment, Risk,
New, Value, Validity
Business Requires Balance Property of:
Roy Luebke
14
We Cannot Prove The Future…..
“The only way to predict the future is to have power to shape the future”
-Eric Hoffer Property of:
Roy Luebke
15
Goal of reliability - Operations:
•Produce consistent, predictable outcomes. Eliminate subjectivity, judgment, and bias. Goal of validity - Innovation:
•Produce outcomes that meet desired objectives. Over time this shows the result is CORRECT.
•Quantitative analysis strips out nuance and context.
•Needs subjectivity and judgment.
Source: Roger Martin Property of:
Roy Luebke
16
Innovate What? 10 Types of Innovation
Business model
Finance
Networking
Channel
Delivery
Brand
Customer experience
Core process
Process.
Enabling process
Product performance
Offering
Product system
Service
Source: Doblin/Monitor Property of:
Roy Luebke
17
Strategic Intent
Culture
and
Motivation
Organization – People And Processes
Customers
and
Markets
Abstract
Real
Know
Make
Sense Intent
?
Know Users
Frame
Insights
Explore
Concepts
Realize
Offerings
Abstracted from Institute of Design
Structured Innovation And “Design Thinking”
Risk and Uncertainty Property of:
Roy Luebke
18
Strategy and Innovation……
Two sides of the same coin Property of:
Roy Luebke
19
Innovation - Driven By Strategy
Goal: PROFIT GROWTH
Positioning
Making choices
Establishing barriers to imitation
Create value
Product value erodes over time Property of:
Roy Luebke
20
Strategy – Where Are You going? Balancing The Factors
Strategy
Framing
Costs
Customers
Channels Property of:
Roy Luebke
21
Strategic Intent As Driving Force
Establish the desire to win:
“What can be” versus “What is”
Focus on key competitive targets,
competencies to develop, types of resources,
and segments
What timeframe strategy is to be achieved Property of:
Roy Luebke
22
New People Skills Needed
Combination of “Right Brain” and “Left Brain” thinking: Analytical and Creative.
Obtain and use qualitative data in cultural, social, cognitive, physical and emotional contexts.
Apply a wide variety of formal tools to interpret insights, recognize patterns, and develop concepts.
Evaluate concepts against contextual criteria as well as business portfolio and strategy drivers. Property of:
Roy Luebke
23
Need New Processes
Exploration and discovery
Experiment, try, prototype,
fail early/fail often, embrace
the failure….before you launch
Test and verify Property of:
Roy Luebke
Balancing Risk and Uncertainty
24
Create portfolios of options Focus and maximize investments Chose among strategic alternatives Senior leader’s tolerance for pushing the envelope Property of:
Roy Luebke
25
Portfolio Management
Maximize total value of all projects
Achieve balance of risk, long term vs. short term
Gain strategic alignment
Helps in allocating resources effectively
Common decision criteria
Build Growth Platforms Property of:
Roy Luebke
26
Look For Customer and Market Changes
Trend analysis – Changes in trends
Consumer/customer/channel Research
–Quantitative and Qualitative
•Political
•Economic
•Social
•Technical Property of:
Roy Luebke
27
Abstract
Real
Know
Make
Sense Intent
?
Know
Users
Know
Context
Frame
Insights
Explore
Concepts
Make Plans
Realize Offerings
Abstracted from Institute of Design
Design Thinking Model Property of:
Roy Luebke
28
Favorite Al Quotes
"Anyone who has never made a mistake
has never tried anything new."
"We can't solve problems by using the same kind of thinking we used when we created them."
“If I had an hour to save the world I would spend 59 minutes defining the problem and one minute finding solutions.” Property of:
Roy Luebke
29
Problem Framing – Address the correct issue
Source: Institute of Design Property of:
Roy Luebke
30
Data Driven, Portfolio-based, Value-based Decision Process
Know Context
Know Users
Frame Insights
Explore Concepts
Make
Plans
Realize
Offerings
Research Phase
Analysis Phase
Synthesis Phase
Video/Photo Research Experience Journeys Ethnographic Interviews Contextual Research
Context Maps Value Webs Innovation Maps
List Sorting Clustering Analytic Frameworks Context Analysis Activity Analysis
Concept
Definition
Concept
Matrix
Scenario
Planning
User Journey
Strategic
Roadmap
Innovation
Briefs
Strategic Plan
Tactical Plan
Business Case
Behavioral
Prototypes
Concept
Testing
Usability
Testing
Property of:
Roy Luebke
31
Research
•Know your users
•Know the context
•Understand Purpose
–Test A Hypothesis
–Discovery Property of:
Roy Luebke
32
Context: Five Human Factors
1.Physical
2.Cognitive
3.Social
4.Cultural
5.Emotional
How things are easy to hold, lift, manipulate, operate
because of the way they accommodate the human body
Making things easier to understand
Make things easier to adapt to a group of users
Making things cool, hot, and valued by people in a culture
Desire for a deep, personal interaction/engagement
Source: Institute of Design Property of:
Roy Luebke
33
Context: Human Drivers “Never Mind What People Say”
Dr. Cialdini describes six "weapons of influence":
1.Reciprocity: people will repay favors.
2.Commitment and Consistency: people will stick to commitments made publicly.
3.Social Proof: people will do what other people do.
4.Authority: people obey authority figures.
5.Liking: people are more influenced by those they like.
6.Scarcity: people desire what is perceived as scarce.
Source: Cialdini, Ariz. State Univ. Property of:
Roy Luebke
34
Qualitative Research “Observe and Learn”
•Disposable Camera Studies
•Ethnographic Interview with video and digital photos
•Extreme user studies
•Participatory design
•Scenarios and personas
•User experience journeys
•Value web diagrams Property of:
Roy Luebke
35
Synthesis – Explore Concepts, Frame Solutions, Make Plans
A solution-oriented process
Analysis focuses on patterns and insights. Synthesis focuses on concepts and plans
Synthesis happens in continuous cycles
Iterating really helps refine ideas
Concepts are combinations of ideas Property of:
Roy Luebke
36
Synthesis – The Money Maker
Synthesize What?
From the strategic intent or problem frame…….
To Include:
Contextual research and analysis
External trends and drivers
Relevant quantitative data
Organizational and cultural barriers
The world is full of analysts, NOT many Synthesists Property of:
Roy Luebke
37
Ideation Is One Component
Creativity is a process
Creativity is not primarily
aimed at economic gain
Creativity is evaluated by
the creator
Creativity is novel and
appropriate ideas
-Source: Silje Friis PhD Dissertation and by Dr. Lotte Darso
Innovation is a result
Innovation is economic gain
Innovation is evaluated
by the recipients
Innovation implements
ideas, implements change
and turns into a marketable
reality
Property of:
Roy Luebke
Prototyping and Iteration:
Fail early, fail often,
……fail inside
Learn from and build upon failures and synthesis
Link solutions to research insights
38 Property of:
Roy Luebke
39
Decision Making Is CRITICAL – Select Best Alternatives
Evaluating Concepts
Selecting among alternatives
Creating a valuable portfolio
Balance risk and investments
Common decision criteria Property of:
Roy Luebke
40
Decision Analysis: Force Field charts ADRI Analysis Equivalents 3D Graphs Waterfall charts Decision Trees Sensitivity Analysis
Decision Making Tools: Examples
1.We cannot prove the future 2. There are always unknowns
3.It’s about balancing risk and uncertainty Property of:
Roy Luebke
Implementation: Realize New Value
Innovation occurs when you take something
to the market
Incremental vs. Transformational
……..Organizational readiness
Evidence that most new offerings have high
failure rates
41 Property of:
Roy Luebke
42
Summary: Structured Innovation
You are creating the future NOT proving
Intent, culture, customer, organization and people is critical.
Visualize insights to find new patterns and new opportunities/customer needs.
Define the true problem.
Innovation is not just about ideas.
There are new types of thinking needed.
Failure early/often and learn from results.
$ Must deliver economic value. Property of:
Roy Luebke
43
Contact:
Roy Luebke
Thank You
Phone: 919-395-2990
Email: [email protected]
Childhood obesity: Relationship to fast food
No full textChildhood obesity is a serious epidemic, affecting children across the world. Fast food consumption is one potential cause of childhood obesity. It also includes the influence of family, the media, and the proximity of fast food restaurants to schools and homes. Examining the interrelationships of these angles can lead to a better understanding of the relationship between childhood obesity and fast food, and from this multi-angle viewpoint, we can see that no single aspect is solely to blame.Childhood Obesity: Relationship to Fast Food
Megan M. Kluge
Social Science Major
[email protected]
CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 2
Childhood obesity is a serious epidemic, affecting children across the world. In our country alone, 17% of all children and adolescents are now obese, triple the rate from just a generation ago (Centers for Disease Control and Prevention [CDC], 2011). This drastic increase leads researchers and ordinary citizens alike to speculate about possible causes. Fast food consumption is one potential cause that has received widespread attention. Many researchers have looked at the relationship between fast food and childhood obesity from various angles. Some of these include the influence of family, the media, and the proximity of fast food restaurants to schools and homes. Examining the interrelationships of these angles can lead to a better understanding of the relationship between childhood obesity and fast food, and from this multi-angle viewpoint, we can see that no single aspect is solely to blame.
FAMILY INFLUENCE
There is no question that a child first learns eating habits in the home. But with parents being pulled in many directions and seemingly having an endless amount of responsibilities and obligations, fast food can often times be an appealing alternative to cooking at home. Fast food restaurants have many kid-friendly selections but the nutritional value of such meals is usually lacking. A study conducted by a group of researchers in Houston showed that just 3% of kids’ meals offered at a variety of fast food restaurants met nutritional standards set forth by the National School Lunch Program (Wood, 2009). The same study showed that making a few small tweaks when ordering the meal could be the difference between a meal being considered healthy or unhealthy. For instance, a parent could order milk rather than soda or apple slices instead of fries. Condiments also make a difference; mayonnaise or oil can make the meal too fatty (Wood, 2009). A parent could order the meal without these condiments. By making these small CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 3
adjustments, a parent can teach their children how to make healthy food choices and perhaps avoid becoming a statistic of childhood obesity.
Even in other countries the familial influence on a child’s food choices and potential to become obese is strong. In a study conducted in Australia, researchers studied four key factors that they believe contribute to childhood obesity: the frequency of eating breakfast, eating while watching television, eating junk food at home, and eating fast food away from home (MacFarlane, Cleland, Crawford, Campbell and Timperio, 2009). The researchers compiled the results based on these criteria and revisited most of the participating families three years later. What the researchers found in regard to the consumption of fast food is interesting. Eating fast food away from home was not necessarily associated with an increase in body mass index (BMI) rates at the time of follow-up. However, those who ate fast food at home were more likely to be overweight (MacFarlane, Cleland, Crawford, Campbell and Timperio, 2009). The researchers speculate that the participants in the latter category might be watching television while eating, which can lead to overeating. The link between being overweight and consuming fast food at home does not take into consideration, however, the specific selections made in regard to fast food. As pointed out above by Wood’s study (2009), modifying fast food choices has the potential to make a difference.
Additional research points out that “family structures and patterns provide, in large part, the micro contexts within which meanings of food and eating practices are negotiated and developed” (Kaplan et al. 2006 and Macintyre et al. 1998 as cited in McVittie, Hepworth, and Schilling, 2008, p. 34). If a child grows up in a household with healthy parents and learns the value of making smart food choices, the child will likely continue these habits, as they get older. However, if a child is raised in a home with a pantry full of junk food and does not learn how to CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 4
recognize food’s nutritional value, the child will probably carry this with them into adulthood. The way a family consumes food is also an important factor; it is often suggested that eating at the table is best. MacFarlane, Cleland, Crawford, Campbell and Timperio (2009) have shown that eating in front of the television can potentially have a negative impact.
MEDIA INFLUENCE
Even if a family practices healthy eating habits, the media will always find a way to influence children. Most fast food establishments offer kids’ meals in bright, attractive packaging that often come with a toy (Wood, 2009). A result of such marketing is an increased recognizance of these brands by young children. In an attempt to understand and measure this recognizance, researchers conducted a study in a matching game-like fashion. Arredondo, Castaneda, Elder, Slymen and Dozier were interested, in part, in recognition rates of fast food and other food products by young children as well as the type of food logo recognized by children and some characteristics about the children themselves (2009). The game consisted of children matching the logo of restaurants with a type of food offered there. Children who had a higher BMI were able to correctly identify more fast food logos than children with lower BMI rates. The researchers in this study speculate that perhaps the marketing strategies used by these companies are successful in gaining the attention of children who, in turn, influence their parents’ behavior when it comes to food purchasing (Arredondo, Castaneda, Elder, Slymen and Dozier, 2009, p. 77). This is a clever way for fast food restaurants to ensure continued patronage by children and parents alike.
In addition to overt marketing strategies by fast food restaurants, children can also be the targeted audience of television commercials. Researchers conducted a study for the National Bureau of Economic Research to determine if banning fast food ads during children’s television CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 5
programming would have any effect on the number of overweight or obese children (Running & FitNews, 2008). Through their study, researchers concluded that banning these ads would reduce the number of overweight children ages 3-11 by 18% and would reduce the number of overweight 12- to 18-year olds by 14% (Running & FitNews, 2008, p. 2). The study also mentions that raising the price for fast food advertisements would be equally effective, as it would significantly reduce the number of ads on the air. However, banning television ads is not as easy as it seems, and the researchers note that the best way to ensure children are not viewing fast food ads on television is to limit the amount of television they are viewing as a whole (Running & FitNews, 2008, p. 2). This point reiterates the parental responsibility brought forth by MacFarlane, Cleland, Crawford, Campbell and Timperio (2009); parents are in a position to limit what their children are exposed to.
PROXIMITY
Another important factor is the proximity of fast food restaurants in relation to schools and homes. Many studies have been done from this angle, and have uncovered an array of results. Davis and Carpenter conducted a popular study in 2009 in California. To calculate the proximity of fast food restaurants to schools, the researchers referred to a database of geo-coordinates from middle and high schools from the California Department of Education. They also utilized a database of restaurants in the state that included geo-coordinates. The third component of this calculation was a list of restaurant brands classified as being “top limited-service restaurants”, or fast food restaurants (Davis and Carpenter, 2009, p. 505). Using this formula, the researchers defined ‘near’ as being (at least) one fast food restaurant within half a mile. Including these three components seems to be a very thorough calculation and a good way to determine the proximity. In regard to the student participants, the researchers relied on student CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 6
responses to the 2002-2005 California Healthy Kids Survey (CHKS). It is an anonymous survey asking multiple questions about several topics related to health behaviors (Davis and Carpenter, 2009). Almost a third of the sample of students was overweight, and 12% was obese. The researchers’ main finding showed that those students who attended school near fast food restaurants were heavier than their counterparts who attended school not near a fast food restaurant (Davis and Carpenter, 2009, p. 506).
Other studies yield different results. A study conducted by Crawford, et al. (2008) focused on the proximity of fast food restaurants to participants’ homes rather than schools. This study defined and calculated proximity in a manner similar to Davis and Carpenter’s method (2009). The researchers defined ‘near’ as being within 2km. In addition to including the BMI rates of child participants, the BMI of the children’s parents was also incorporated. The results are quite different from the study conducted by Davis and Carpenter. “Among older boys and girls, those with at least one fast food outlet within 2km of their home had lower BMI [rates]” (Crawford et al., 2008, p. 252). Equally intriguing were the results concerning the fathers in the study. “Among adult males, the further they lived from a fast food outlet, the higher their BMI” (Crawford et al., 2008, p. 252). These results clearly do not support the notion that being in close proximity to fast food restaurants increases the risk of being overweight or obese.
Other studies acknowledge that fast food restaurants located near schools can have negative effects, but also point out that fast food restaurants are not a child’s only option for junk food after school. Howard, Fitzpatrick and Fulfrost (2011) sought to find associations between schools located near fast food restaurants, convenience stores, and supermarkets and the rates of overweight students in California. Their calculation of ‘proximity’ is similar to that of Davis and Carpenter and Crawford et al.’s, however, instead of merely defining ‘near’ as being within a CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 7
half a mile (Davis and Carpenter) or within 2km (Crawford et al.), researchers in this study took into account actual pedestrian walking (Howard, Fitzpatrick and Fulfrost, 2011, p. 3). With this in mind, their definition of ‘near’ was defined as within a 10-minute walk of the school. The results showed that there is indeed a positive correlation between the rates of overweight students and the presence of nearby convenience stores and fast food restaurants (Howard, Fitzpatrick and Fulfrost, 2011, p. 4).
There are two interesting results in this study. First, the presence of supermarkets showed no relation with the rates of overweight students. This is surprising because supermarkets have the largest selection of food products compared to convenience stores or fast food restaurants. Second, convenience stores showed stronger correlations with rates of overweight students than fast food restaurants (Howard, Fitzpatrick and Fulfrost, 2011, p. 4). These results show that fast food restaurants located within close proximity to schools or homes do not necessarily mean there will be an increase in rates of childhood obesity.
INTERNATIONAL ASPECT
The topic of childhood obesity and its relationship to fast food is not just an issue in the United States. As shown by the studies conducted in Australia (Crawford et al. and MacFarlane, Cleland, Crawford, Campbell, and Timperio), other nations are also battling this issue. In Turkey, researchers conducted a survey aimed at determining the eating patterns of Turkish youth (Akman et al., 2010). The results showed that just 15% of participants reported consuming the recommended daily amount of fruits and vegetables. Nearly one-third of participants said that they choose junk food or fast food as a daily snack, and the same number also reported having fast food once or more daily (Akman et al., 2010). Perhaps 85% of participants are not getting enough fruits and vegetables due to high consumption of junk or fast food. This supports the CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 8
results of Davis and Carpenter’s study, which showed that students with a high intake of fast food had a low intake of fruits and vegetables (2009, p. 507).
Researchers in Taiwan suggest that childhood consumption of fast food can have far-reaching effects that go beyond BMI rates. Chang and Nayga (2010) conducted a nationwide survey to learn if fast food and soda consumption in children is associated with childhood obesity. Importantly, these researchers investigated whether fast food consumption impacts overall well being. They also wanted to know if fast food and soda consumption and the risk of being overweight have any relation to children’s happiness. Consistent with other research, consumption of fast food and soda leads to children being overweight or obese; however, the study did not show any correlation to children’s happiness.
CONCLUSION
Childhood obesity is a complicated issue, and its relationship to fast food is not simple. Many studies present clear results in showing that fast food consumption definitely has an influence on childhood obesity; other studies show that the issue is not so cut-and-dry. Regardless of the results of various studies, it seems clear that action needs to be taken in order to prevent this epidemic from continuing into future generations. Some researchers suggest that local policymakers need to become more involved in prohibiting new fast food restaurants from being built near schools or limiting the options available to children (Davis and Carpenter, 2009). Others suggest that education is paramount and needs to be given deep consideration (Akman et al., 2010). Still others emphasize that parents play a vital role in helping their children to develop healthy eating habits and food choices (Running & FitNews, 2008 and Wood, 2009). These are all worthy suggestions, and just as childhood obesity results from a combination of factors, so shall the solution to this growing problem. CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 9
While various studies show that there are multiple angles to the issue of childhood obesity and its relationship to fast food, there are other areas that also need to be examined. Many studies fail to explain the importance of exercise or mental stimulation. Other studies take away parental responsibility and instead place the blame on the clever marketing strategies of fast food restaurants. Researchers interested in childhood obesity give much attention to the nutritional aspect of the issue, but further research should explore and emphasize the roles of physical activity, mental stimulation, and parental influence. Attacking the epidemic from multiple angles will ensure the best chance of winning the battle of childhood obesity.
CHILDHOOD OBESITY: RELATIONSHIP TO FAST FOOD 10
References
Akman, M., Akan, H., Izbirak, G., Tanriöver, Ö., Tilev, S., Yildiz, A., & ... Hayran, O. (2010). Eating patterns of Turkish adolescents: a cross-sectional survey. Nutrition Journal, 967. Retrieved from EBSCOhost 18 September 2011.
Arredondo, E., Castaneda, D., Elder, J.P., Slymen, D., & Dozier, D. (2009). Brand Name
Recognition and Healthy Food among Children. Journal of Community Health,
34(1), 73-78. Doi: 10.1007/s10900-008-9119-3
Centers for Disease Control and Prevention (2011). Obesity. Retrieved from http://www.cdc.gov/obesity
Chang, H., and Nayga, R. r. (2010). Childhood obesity and unhappiness: The influence of soft drinks and fast food consumption. Journal of Happiness Studies, 11(3), 261-275. doi: 10.1007/s10902-009-9139-4
Crawford, D.A., Timperio, A.F., Salmon, J.A., Baur, L., Giles-Corti, B., Roberts, R.J., Jackson, M.L., Andrianopoulos, N., and Ball, K. (2008). Neighbourhood fast food outlets and obesity in children and adults: the CLAN Study. International Journal of Pediatric Obesity, 3(4), 249-256. doi: 10.1080/17477160802113225
Davis, B., & Carpenter, C. (2009). Proximity of Fast-Food Restaurants to Schools and Adolescent Obesity. American Journal of Public Health, 99(3), 505-510. doi:10.2105/AJPH.2008.137638
Howard, P.H., Fitzpatrick, M., & Fulfrost, B. (2011). Proximity of food retailers and rates of overweight ninth grade students: an ecological study in California. BMC Public Health, 11(1), 68-75. Doi: 10.1186/1471-2458-11-68
MacFarlane, A., Cleland, V., Crawford, D., Campbell, K., & Timperio, A. (2009). Longitudinal examination of the family food environment and weight status among children. International Journal of Pediatric Obesity, 4(4), 343-352. doi:10.3109/17477160902846211
McVittie, C., Hepworth, J., & Schilling, B. (2008). The Select Committee Report on Obesity (2004): The significant omission of parental views of their children's eating. Critical Public Health, 18(1), 33-40. doi:10.1080/09581590701660399
Win the Obesity War…By Banning TV Ads?. (2008). Running & FitNews, 26(6), 2-5. Retrieved from EBSCOhost September 13, 2011.
Wood, M. (2009). Kids, Fast Food & Obesity. Agricultural Research, 57(9), 20-21. Retrieved from EBSCOhost 18 September 2011
Behavioral finance: Contributions of cognitive psychology and neuroscience to decision making
No full textThis paper employs a five-paradigm model to assess various contributions of cognitive psychology and neuroscience to understanding financial decision making. Whereas conventional academic finance emphasizes financial theory, the emerging field of behavioral finance encompasses investigations of cognitive and emotional factors affecting the financial decision making processes of individuals, groups, and organizations. It looks at how people really make financial decisions, not at how theory predicts they should make such decisions. Behavioral finance expands our understanding of financial decision making in terms of personal financial decisions and how markets work but also comprises a new instrument in the decision maker’s toolbox.Forthcoming in The Journal of Organizational Psychology, volume 12, 2012
Behavioral Finance: Contributions of Cognitive Psychology and Neuroscience to Decision Making*
http://www.richard.peterson.net/investinglessons_files/image002.jpg
James A. Howard
University of Maryland University College
This paper employs a five-paradigm model to assess various contributions of cognitive psychology and neuroscience to understanding financial decision making. Whereas conventional academic finance emphasizes financial theory, the emerging field of behavioral finance encompasses investigations of cognitive and emotional factors affecting the financial decision making processes of individuals, groups, and organizations. It looks at how people really make financial decisions, not at how theory predicts they should make such decisions. Behavioral finance expands our understanding of financial decision making in terms of personal financial decisions and how markets work but also comprises a new instrument in the decision maker’s toolbox.
INTRODUCTION
Observations in the past few years of the outcomes of financial decision making by individuals has provided a new awareness (and humility) regarding the inadequacy of the accumulated knowledge that supports sound financial decision making. Actions by Congress providing incentives for individuals to make ill-advised home purchases, home owners using their homes as ATMs to increase near-term consumption, the failure of Americans to save sensibly for retirement, poor investment performance by individual investors, and poor decision making by corporate managements that have destroyed huge amounts of wealth beg the question: Why do we get such consistently poor results and how can we improve financial decision making in the future for the benefit of stakeholders?
To respond to this challenging question, an important starting point is developing a historical context describing and analyzing how financial decision making has evolved over time. This context, when combined with an assessment of where we are in understanding financial decision making, can lead us to a deeper understanding of how to use what we know more effectively and to better define what sort of research program is needed going forward to fill the gaps in our understanding. In this paper a model comprised of five financial decision making paradigms will be employed for conducting a qualitative meta-analysis of the current state of financial decision making behavior. The five paradigms are Rules of Thumb/Heuristics, Rational Being/Theory, Cognitive Psychology/Behavioral Finance, Neuroscience, and the Unconscious.
In the last 100+ years varying amounts of research has been conducted to improve financial decision making. In general, it appears that, as each then-current most-favored paradigm becomes increasingly encumbered with anomalies and unfavorable critiques, a new paradigm arises by being able to explain some of the weaknesses of the “old” paradigm and as new areas of research are opened up. The old paradigm declines and the new paradigm becomes increasingly adopted and applied to real world
observations. At the point of maximum enthusiasm, a reductionist tendency leads us to feel that finally we may have some important solutions and henceforth financial decision making will be significantly improved. The cycle continues as this currently favored paradigm reaches its maximum influence and begins to decline due to its failures to account for observed behaviors, while a new paradigm takes its place as the one now favored to move knowledge of financial decision making forward. The model employed in this paper will attempt to show how five paradigms for financial decision making have risen to prominence over time, and how the earlier ones have leveled off and/or declined in relevance due to these forces. The overall model is shown in Figure 1:
FIGURE 1
KNOWLEDGE ACCUMULATION/EVOLUTION . FINANCIAL DECISION MAKING
Each of the five components of this model will be described, analyzed, and assessed in terms of its contribution to the body of knowledge regarding financial decision making. The height of each curve in Figure 1 represents its relative influence as a paradigm at the indicated points in time. The examination and analysis will be on both a time series (how a specific component/paradigm has evolved over time) and cross sectional basis (how paradigms contribute to the body of knowledge at specific points in time). This qualitative meta-analysis approach is meant to provide an integrated view of contributing paradigms over time with the goal of providing more transparency to the very complex process of how financial decisions are made. Due to their strong influences on current financial decision making theory and practice, cognitive psychology and neuroscience contributions will be addressed in detail. With better awareness of what we know and what we don’t know, it is hoped we can move the research forward to develop better financial decision making practices in the future.
RULES OF THUMB/HEURISTICS PARADIGM
If we go back to the time before the development of financial theory post World War II, financial decision making was heavily influenced by rules of thumb or heuristics, as depicted in Figure 2. These dominated decision making theory for about 20 years.
FIGURE 2
RULES OF THUMB/HEURISTICS PARADIGM LIFE CYCLE
Rules of thumb/heuristics are simply mental shortcuts. Gigerenzer and Wolfgang (2011) provide a definition of heuristics for the purposes of this paper: “A heuristic is a strategy that ignores part of the information, with the goal of making decisions more quickly, frugally, and/or accurately than more complex methods” (p. 454). Thus, heuristics do not attempt to find the optimal solution but one that is best given the context and constraints faced by the decision maker. The case against heuristics is that because heuristics are using mental shortcuts, they are inferior to more comprehensive approaches.
Certainly, using heuristics is not the best approach in every case, but when applied appropriately, they represent the best a decision maker can do in specific situations given the tradeoff between time available to make a decision, uncertainty, and the cost of getting better information. In a situation where there is little uncertainty, adequate information, and sufficient time to process data, it may be possible to do better than employing a heuristic that uses a mental shortcut. However, as uncertainty increases, the time to make a decision becomes constrained, and the quality declines of the information that supports analysis, a heuristic may perform better than a more complex, data-driven approach. The nature of this set of tradeoffs was formalized by Simon (1957) with the term “bounded rationality.” Bounded rationality refers to the fact that the ability of a decision maker to take as much time as needed to make an optimal decision is constrained by the quantity and quality of information available and the time available to make the decision. The overall constraint is the human mind’s cognitive limitations in the pursuit of an optimal rather than satisficing (best decision, given the circumstances) decision.
Before the 1950s, finance was considered a proto-science (Jovanovic, 2008), a discipline without a robust theoretical framework. As a proto-science, financial decision making was driven by experience, available data, and simple analytical procedures developed to organize and process data for the decision maker to consider. In situations where there is good quality data and a validated analytical process, basic statistics and business condition indicators can be used effectively to judge the condition of a firm or an investment candidate. An example is the DuPont Model developed by Alfred Sloan in the 1920s for analyzing an entity’s profitability as a function of asset turnover and profit margin, as a means to direct management’s attention to those areas in the firm that require better oversight and management.
In another example, if we consider a situation where a decision maker needs to select between 3 capital investments, where there is a high degree of uncertainty and there is no theory describing how data associated with the investments can be processed to rank the investments, shortcuts based on experience may be the best approach. A popular heuristic going back to the 1800s for making the capital investment decision is the payback criterion. The investor makes the investment based on how quickly the investment can be recovered by future cash flows. If the criterion is to invest only when the investment can be recovered in three years, then any investment with a payback period beyond three years is foregone. If there are multiple investment opportunities available to achieve a goal, then the investor should select the investment that pays back the quickest, as long it meets the minimum payback period requirement. This heuristic has stood the test of time and is still used as one method to select capital investments. Another
heuristic for deciding how to allocate X to multiple approved independent investment opportunities is to use the 1/N heuristic. For example, if there are three investments, then the investor allocates one-third of available funding to each. This heuristic is employed frequently when individuals allocate their 401K retirement funds among various investment options.
Perhaps the most well-known heuristic is the Pareto principle, referred to as the 80/20 principle, or focus on the “vital few rather than the trivial many”. The basis for the principle was Pareto’s (1906) research pointing out that in Italy approximately 80% of the country’s income was earned by 20% of its population. The terms “Pareto principle” and “vital few and trivial many” were popularized by Juran (1954) based on his work in the 1940s applying the findings of Pareto to many areas of management, including finance. For example, capital investment programs appear to obey this principle, with a small percentage of projects accounting for a major portion of problems such as cost overruns and schedule slippages. Thus, a manager should focus on the 20% of the projects accounting for 80% of the associated problems.
Recent research has identified a number of additional heuristics used in general and financial decision making, such as those listed in Table 1(Gigerenzer & Wolfgang, 2011).
TABLE 1
ADDITIONAL HEURISTICS
Heuristic
Description
Recognition
If one of two alternatives is recognized and the other is not, then infer that the recognized alternative has the higher value with respect to the criterion
Fluency
If both alternatives are recognized but one is recognized faster, then this alternative is assumed to have higher value based on the criterion
Take-the-First
Choose the first alternative that comes to mind
Take-the-Best
Compare existing models and choose the best to copy
Fast & Frugal Trees
These are basically checklists rather than complex statistical techniques
In sum, there are many heuristics (only a sampling has been discussed here) developed for different decision-making situations. In some cases, they are efficient and effective and have stood the test of time. In other instances, they have been relied upon due to poor judgments driven by emotions or mistakes in judging the nature of the tradeoff between urgency and uncertainty, and the availability of additional decision-making tools.
Heuristics are alive and well in both modern general management and financial decision making, as shown in some of the examples above. What we know about heuristics and how they are employed has changed markedly, primarily due to advances in knowledge about decision making behavior. The effective use of heuristics depends on a combination of factors: the experience of the decision maker, his or her awareness of the strengths and weaknesses of the heuristic, and the decision making context. For example, if time constraints are not an issue and there is sufficient time to gather additional information and apply decision making tools, then the justification for use of a heuristic is weak. Alternatively, if there is a high degree of uncertainty, a large amount of ambiguous information, and an urgency to make a decision, then informed use of a heuristic may be the best approach. A danger for modern decision makers is the availability of too much information, where the cognitive limitations associated with bounded rationality and a time constraint can lead to either “analysis paralysis” or improper reliance on quantitative analysis that is overly complex and insufficiently transparent. The use of heuristics and the timing of their use are closely related to the concept of intuition and the effects of emotions, which will be discussed in the neuroscience and unconscious sections of the paper.
RATIONAL BEING/THEORY PARADIGM
The period from the 1940s through the 1960s saw the development of most modern finance theory in the areas of asset, portfolio, and contingent claims pricing, along with capital structure and dividend policy theory. These theories together comprise a paradigm of financial decision making theory termed Rational Being, whose prominence peaked in about 1969, as indicated in Figure 3.
FIGURE 3
RATIONAL BEING/THEORY PARADIGM LIFE CYCLE
Development of this body of theory was based on the use of sophisticated techniques such as quadratic programming and concepts from classical economics. This was a significant departure from pre- 1940s when observed behaviors in the market served as the basis of investment and trading principles.
This golden age of theoretical finance was ushered in with the theory of expected utility (Von Neumann & Morgenstern, 1944) with its assumptions of the rational decision maker, which included:
1. Completeness: People can ran- order all choices/alternatives (revealed preferences)
2. Transitivity: If alternative B is preferred to alternative A, and alternative C is preferred to alternative B, then alternative C is preferred to A.
3. Continuity: When an individual prefers A to B and B to C, then there should be a feasible combination of A and C in which the individual is then indifferent between this combination and alternative B.
Expected utility theory postulates that individuals act rationally and in accordance with these three assumptions laid out by Von Neumann and Morgenstern. Given these conditions, the expected utility curve reflecting how individuals make choices takes the following form:
FIGURE 4
EXPECTED UTILITY THEORY
Note that the preferences for a (rational) risk-averse individual would be traced out as a concave curve and be represented by:
Risk-Averse Decision Maker: U(EP=3000) > U(P) or U(3000) > U (.50*1000 + .50*50000)
In other words, the utility of the expected prospect/gamble [U(EP=3000)] is greater than the utility of the gamble [U(P)]. The point on the curve where expected utility (EU) intersects the curve is the point where the individual is indifferent between that amount earned for certain and a gamble that pays either 1,000 or 3,000 because the individual is risk-averse.
This framework for individual decision making served as a basis for modern portfolio theory developed by Markowitz (1952, 1959), the theory of capital structure and dividends (Modigliani & Miller, 1958; 1963; Miller & Modigliani, 1961), The Efficient Markets Hypothesis (EMH; Fama, 1965), The Capital Asset Pricing Model (CAPM; Sharpe, 1964), the Black-Scholes Option Pricing Models (Black & Scholes, 1973), and numerous extensions of these efforts by other researchers.
The relationship between heuristics (plus analytical techniques such as the DuPont Model) and the rise of financial theory can be credited with the evolution of finance from a proto-science to a discipline with an underlying theoretical framework. It brought a structure to financial decision making that lessened the reliance on the use of heuristics. As a result, academics flocked to the new discipline, extending additions to theory and identifying applications. Heuristics still occupied an important role in real world decision making, especially with the work of Simon (1957) formalizing a decision making model with the concept of bounded rationality. One of the best-known instances of the persistence of certain heuristics is that of Harry Markowitz, the founder of modern portfolio theory, in his 1990 speech accepting the 1990 Nobel Prize in Economics. While his theory implies that all investors should determine the weight of assets by choosing a portfolio on the efficient frontier, he indicated that he simply used the 1/N rule, where N is the number of investment choices, to allocate his funds in his retirement account.
Financial theory was met by great enthusiasm and continued to build momentum through the 1960s; however, it did have its critics. Numerous exceptions to theory, especially to the EMH and the CAPM, were identified by researchers and practitioners. Given the strong assumptions required by the theories, criticisms could be expected, but the volume and degree of deviations from how individuals were “supposed” to make financial decisions and how asset prices were “supposed” to act grew to a crescendo by 1970.
COGNITIVE PSYCHOLOGY/BEHAVIORAL FINANCE PARADIGM
The search was on for a new financial decision making paradigm as the failures of theory to adequately answer growing challenges to its validity continued to mount. The paradigm that began to emerge (Figure 5) drew on cognitive psychology.
FIGURE 5
COGNITIVE PSYCHOLOGY/BEHAVIORAL FINANCE PARADIGM LIFE CYCLE
An article appearing in a 1972 Journal of Finance paper (Slovic, 1972) began by quoting Smith (1968):
You are.face it.a bunch of emotions, prejudices, and twitches, and this is all very well as long as you know it. Successful speculators do not necessarily have a complete portrait of themselves, warts and all, in their own minds, but they do have the ability to stop abruptly when their own intuition and what is happening Out There are suddenly out of kilter……If you don't know who you are, this is an expensive place to find out. (p. 779)
The main point made by Slovic is that the development of financial theory (describing how people should make financial decisions) made no provision for human emotions, which are important drivers in how people actually behave. His paper reinforced the challenges posed by the identified anomalies to the Rational Being theory described above. In cognitive psychology, experiments were being performed to explain some of the deviations from theory.
The incorporation of the findings of cognitive psychology into the body of financial knowledge has given rise to a branch of finance known as behavioral finance. Although the contributions to financial decision making by cognitive psychology responded to a number of the criticisms leveled at the normative behavior prescribed by financial theory, “behavioral finance” has also proven to be a contentious concept within the academic community. In general, critics concede that individuals can be irrational at times but maintain that, in the aggregate, such errors will cancel out and the market will be efficient due to arbitraging (otherwise known as “the law of one price”). Those academics and practitioners who favor behavioral finance maintain that there is a systematic deviation from theory in decision making behavior and argue that this can lead to violations to the Efficient Markets Hypothesis, as well as to serious errors at the level of the individual decision maker.
In experiments, researchers Daniel Kahneman and Amos Tversky (1972) observed how people behaved when offered various choices/gambles. They identified situations where people systematically behaved inconsistently with the rational models of economic/financial theory. This resonated with a number of academics and practitioners and stimulated the development of Prospect Theory (Tversky & Kahneman, 1973, 1974, 1981; Kahneman & Tversky, 1979; Kahneman, Slovic, & Tversky, 1982). These behavioral inconsistencies can be sorted into three categories: biases, heuristics, and framing effects.
Biases are the predispositions to commit specific types of errors, as summarized in Table 2.
TABLE 2
BIASES
Bias
Description
Excessive Optimism
When people overestimate how frequently they will experience favorable outcomes and underestimate how frequently they will experience unfavorable outcomes
Overconfidence
When people make mistakes more frequently than they believe and view themselves as better than average
Confirmation
When people attach too much importance to information that supports their views relative to information