Mobile ESPN was a cellular phone which was introduced in 2006 and had an ideal sports application with the help of ESPN[Entertainment and Sports Programming Networks] to get real-time news, scores, and the highlights of the matches when there was a live broadcast. This was the first time which introduced such an application to a mobile device.
Decisions
1. Instead of introducing larger screens or better applications that make ease of day to day life just like email, ESPN had only introduced sports service through the cellular phone to the market.
2. The first price of the cellular phone was more than $350. In 2006, It was a very high price for a customer and phone has been acting as a luxury device.
3. To get the ESPN service continuously via the cellular phone, the mobile user had to pay a cost between $60 and $250 per month.
Negative Outcomes of the decisions
1. After six months from its launch, total sales of the product reduced to zero
2. The project only reached 6% of the total sales target
3. After one year, the end of 2006, the project had to be completed shutdown.
The low-prioritized cardinal decision issues that acted as significant contributors to the negative outcomes
Need Issue
★ Receiving real time sport news,scores and highlights was a breakthrough innovation in 2006. Though it was breakthrough innovation the people were not ready to accept such kind of facility at that time. Another issue was that the Mobile ESPN sold at around a price at $400. This amount was not affordable to customers.
★ Here it can be seen that the Mobile ESPN has made a decision when it is not necessary. Therefore the need issue come into the picture.
★ Here the company has not looked into calamities and opportunities towards the company. They not analyzed them.
★ If the mobile company could have done survey like thing before releasing the product, they would have gone through the bad effect beforehand.
★ In the news also it is stated that it was a stupid idea by the CEO and wanted to go with it. It clearly shows that they have taken the decision when it is not necessary.
Value Issue
At the time 2006, ESPN has introduced the mobile ESPN through their breakthrough innovation “Sanyo” cellular phone. The project team had spent over $150 million for manufacturing and distributing ESPN mobile around the world including a $30 million commercial ads to promote. Why this kind of huge investment?. It is to take value for the beneficiaries and the stakeholders. But, getting the bad decisions at the wrong time had to kill the entire business project in less than one year. When the total sales and the income reduce gradually, the beneficiaries could not full fill at least their investment to the project despite taking the profit. The mobile ESPN project was able to achieve only 6% of the sales target within 6 months. There were a lot of stakeholders mainly including employees throughout that project. But what happened when the project was going to fail. The company couldn’t fulfill their requirement including salaries, services, job opportunities etc. So stakeholders had to displease and take actions for that. Because of that beneficiaries had to negatively care of the mobile ESPN entire project and shutdown it within one year.
Options Issue
Before manufacturing the ESPN phone in large scale the company didn’t do a market research to find the best options that they have on their hand.As they didn’t do a proper market research the company didn’t know the needs and the wants of the general public.Because of that the CEO of the company got a wrong decision. Maybe this is the phone that the CEO wanted for his use but not the general public.So the company did something that they want not the general public. All the workers did their job well by manufacturing the phone on time by following the guidelines given by the CEO of the company) even though they got more creative and productive options in their mind.The top management didn’t get inputs from the hierarchy below as they didn’t invite others to give their creative and productive options (ideas).
Judgment issue tells about if select an option what possibility actually happens. In this problem decision manager’s goal was to ensure the judgments are guiding the company’s decision accurately. There are several issues cause for this situation. Following are the identified issues.
★ Deciders are overconfident in their judgment skills.
This situation happens in 2006, and this phone sales for $399. That period the best performance phone may be high price but customers refused to buy this phone which available ESPL app. Only they earned 6 % profit. If deciders firstly decided problem this may not happen.
★ Enhancing deciders’ own accuracy
This can talk with under different topics.
1. People involved
a. Number of judgment
If they use high number of people they can go to high judgment accuracy.
b. Redundancy can happen
Even if you have a number of people and same experience and common knowledge, can’t come up with accurate judgment. Then accuracy reduce because of redundancy.
2. Social dynamics
In this issue tend to discuss common things. Not going to share their expertise knowledge. In our discussed question if at least one expert thought about the final price and customers’ financial level. That problem may not be happened.
3. False indicators
This means believe something is true for a situation. But actually it is not. Actually they believed entertainment sport broadcast app will hit very well, but it was not happening. They only can earned 6%.
changes in company practices would greatly reduce the chances of similar failures in the future
There are two approaches can use to get rid of above judgement issues.
They are,
Solution for overconfidence :
Can focus on 3+ rule, that means they can contact multiple consultants. When deciding the best action to be taken. Consultant can use past track records and predict the future.
When taking multiple consultants, there may be disagreements, there are two approaches to solve that disagreement.
★ Mechanical approach
★ Deliberative approach
In mechanical approach, if two consultants come up with two different opinions, then take average as the decision.
Decision of mechanical approach = first one opinion + second one opinion /2
In deliberative approach there is a “Delphi method”. That works as an iterative process. There is a facilitator and multiple experts.
1. Facilitator decide who are the experts.
2. Facilitator ask experts to rate this is a good approach.
3. Experts work individually and rate it and justify answers.
4. Send back to facilitator and facilitator remove names and give document to all.
5. Then expert know his opinion and what is others’ ideas.
6. This happens 2 or three rounds until come up with one agreement.
From this method most of the times each and every expert can come up with one particular solution. According to their domain experience their final decision may not be wrong one.
2. Devil’s Advocacy
In set of deciders provide different judgments, different possibilities. Someone idea can be a false indicator. One is the devil in the group and he criticizes whatever ideas that experts give. Not because he does not agree. It just to evaluate idea, it just a role. If one person criticize this action sometimes their money and time will be saved.
2. Solution for Need Issue :
The company can take Vigilance approach as a remedy for this scenario.
In Vigilance approach the updates on the competitive market is observed by several people assigned.
The company should actively directing attention to anything and everything that potentially should prompt important decisions. Here the company need to monitor the market properly. This will be done by assigned set of people. Here the company will monitor the customer base and their competitors. Then suggestions are made by the monitoring panel and those are to be reviewed.
The reporters are the set of people who identify the calamities and opportunities and those are reported to the reviewers. Then they can decide whether to take the decision or not.
Therefore company would not take decisions when it is necessary.
3. Solution for Value Issue
When making a decision we have to judge whose value is important and have to concern. Basically, there are two parties — Beneficiaries and stakeholders. what are the reasons to consider those parties? beneficiaries matter because they invest in the project and are looking for profits. stakeholders matters because if they are going to displease and take negative actions that will directly affect to the beneficiaries value. Here the project has taken some bad decisions. In 2006, the technology was at the low level. All phones had very basic features including SMS/call and a very basic web browser. In such kind of situation, the project team had to focus to innovate a new feature that sense to make ease of day to day life without paying attention to the sports. Because people are willing to use the cellular phone for more than sports and life is not the sports. And when there is no sport what is the purpose of using the device?. So taking sports as the key feature badly affected to create value issues. $400 per a single device killed the people’s attitude to buy the product. If the product was in a low price range they might grow their market at least. They had to bear the cost until it crosses the break-even-point.
4. Solution for Options Issue
The company can handle these kinds of issues by using these common approaches.
★ Waiting — “Let’s just see what comes along.”
★ Exhortation — If the CEO got an idea or an option to implement he can give instruction as try harder and think on this idea for improvements, more options and alternatives.
★ Invitation — Invite others to generate more good ideas or the options like this.“If and when a good idea comes to mind,please let us know.”
★ Consultation — “Let’s find somebody who’s an expert at this sort of problem.”
★ Emulation — “What’s worked for similar problems?”
★ Brainstorming — “Let’s meet, kick some ideas around, and try to stimulate one another’s imagination.”
★ Exhaustive Search / Generation — “Leave no stone unturned! Consider every possibility!”
★ Derivation — “Given our aims and how things work, what makes sense for us to do?”
Comments