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304 Risk and uncertainty management
as a marketing issue may enable non-financial incentives to be packaged
with the product one is trying to sell.
Brainstorming has four basic rules:
(1) Do not criticize ideas – the solution to the problem may turn out to lie
in an idea that, initially, may seem to be crazy.
(2) Encourage participants to put forward any idea that they can think
of – particularly unconventional or outlandish ideas.
(3) Aim to generate large quantities of ideas – in that way there is a greater
chance that one or more of the ideas will lead to a solution to the
problem.
(4) Encourage people to combine or modify ideas that have already been put
forward.
A brainstorming session can be run in several ways. However, ideally,
in addition to the group members, it will involve a facilitator, whose role
is to create a relaxed atmosphere, to encourage new ideas and to control
the group’s discussion, and a person to record the ideas put forward.
At the start of the session the specific problem is defined (for example,
how can we increase the probability of the major customer signing the
contact?) and displayed on a board or screen. Then ideas are suggested
one at a time and recorded. When the group appear to be unable to
generate further ideas the list is evaluated and the best ideas are chosen.
Table 11.3 shows some typical ideas that might be generated through
brainstorming for the Two Valleys Company. The best ideas will then
need to be investigated to establish whether they are feasible and realistic
and they will also need to be costed. Recall that our analysis has revealed
that answers to the first two questions are most likely to be of value. The
simulation model can then be re-run with the revised inputs and the
results assessed.
In this case, the following package of measures was investigated:
(i) run administrative tasks at company HQ, rather than at local factory,
(ii) contract out research and development, (iii) buy equipment that
is easily upgraded if technology advances, and (iv) put the product
instructions on the Internet, rather than supplying hard copy. All of
the measures appeared to be feasible. The probability distributions for
costs were re-estimated in the light of these changes and the new model
simulated. Figure 11.5 shows the new and old cumulative probability
distributions of annual profit at Littleton. It can be seen that the effect of
these measures is to push the bulk of the distribution to the right. This
means that any given profit up to $7 million has a higher probability of