Management Class Case Analysis

I CASE APPLICATION #f Top Secret { I f isons are easier to enter than Visa's top-secret pOp..rtions Center East (OCE), its biggest. newest J- and most advanced U.S. data center."56 And Rick Knight, senior vice president at Visa and formerly the head of global operations and engineering, is responsible for its security and functioning. Why all the precautions? Because Visa acknowledges that (1) hackers are increasingly savvy. {2) data is an increasingly desirable black-market commodity, CHAPTER 14 Foundations of Control 445 castle moat, which was also designed as protection. There are also hundreds of security cameras and a superb security team of former military personnel. If you're lucky enough to be invited as a guest to OCE (which few people are), you'11 have your photo taken and right index fingerprint encoded on a badge. Then you're locked into a "mantrap portal" where you put your badge on a reader that makes sure you are you, and then put it on another reader with your finger and (3) the best way to keep on a fingerprint detector. If itse1fsafeiswithaninforma-youmakeitthrough,you're rion network in a forrress rhat PfiSOnS afe ga$igf tO entef than ","ur,o enrer rhe network r:p- instantly responds to threats. ViSa'S OCE! erations center. With a wall Inayear,stime,Visapro-rcofscreensinfrontofthem, cesses more than 91.6 billion each employee sits at a desk retail electronic payments from around the globe. And every with four monitors. In a room behind the main center, three day, Visa's system connects up to 2.2 billion debit and credit top-notch security expe(s keep an eye on things. Knight says cards, millions of acceptance locations, 2.1 million ATMs, and that "about 60 incidents a day warrant attention." t4,400 financial institutions.sT Visa, which completes an an' Although hackers are a primary concern, OCE also wor- nual "stress test" of its system in preparation for the holiday ries about network capacity. Right now, maximum capacity is season, recently processed a peak volume of 56,000 messages currently at 56,000 transactions per second. Ifthe network goes per second.58 (Do some math on that and be amazed!) So what over that capacity, the network wouldn't just stop processing seems to us a simple swipe of a card or keying in our card one message, it would stop processing all of them. OCE is de- numbers on an online transaction actually triggers a robust set scribed as a "Tier-4" center, which is a certification from a data of activities including the basic sales transaction processing, center organization. To achieve that certification, every (and risk management, and information-based services. That's why yes, we mean every) mainframe, air conditioner, and battery OCE's workers have two jobs: "Keep hackers out and keep has a backup. the network up, no matter rvhat." And that's why Visa doesn't reveal the location of OCE-on the eastern seaboard is as spe- DiSCUSSiOn 0UgStiOnS cific as the description gets' 14-14 ls Visa being overly cautious? why or why not? Beneath the road leading to the OCE, hydraulic posts ^ can rise up fast enough ro srop u ",. going"50 m,es r Hli.l3 wll.ii::f,[ff:ffi,,#ffilJ:[H|;]Til'fl[: feedfor. hour. And a car won't be able to go that fast or it will miss L/ ward, concurrent, orfeedback? Explain. a "vicious hairpin turn" and drive off into a drainage pond. ft t+"tl What other managerial c6ntrgls might be useful to the Back in medieval days, that would have been known as the company? I WHAT lS FEEDFORWARD CONTROL? The most desirable type of control-feedforward control- prevents problems because it takes place before the actual activity.l8 For instance, when McDonald's began doing business in Moscow, it sent company quality control experts to help Russian farmers learn techniques for growing high-quality pota- toes and to help bakers learn processes for baking high-quality breads. Why? McDonald's demands consistent product quality no matter the geographi- cal location. They want french fries in Moscow to taste like those in Omaha. Still another example of feedforward control is the scheduled preventive maintenance programs on aircraft done by the ma- jor airlines. These schedules are designed to detect and hopefully to prevent structural damage that might lead to an accident. Fiftv-five The key to feedforward controls is taking managerial action before a problem occurs. That way, problems can be prevented rather than having to correct them after any damage- poor-quality products, lost customers, lost revenue, etc.-has already been done. However, these controls require timely and accurate information that isn't always easy to get. Thus, managers frequently end up using the other two types of control. WHEN lS CONCURRENT CONTROL USED? Concurrent control, as its name implies, takes place while a work activity is in progress. For instance, the director of business product management at Google and his team keep a watchful eye on one of Google's most profitable businesses-online ads. They watch "the number of searches and clicks, the rate at which users click on ads, the revenue this generates-everything is tracked hour by hour, compared with the data from a week earlier and charted."te If they see something that's not working particularly well, they fine-tune it. CHAPTER 14 . Foundatlons of Control 431 A Microsofr. uses concurrent {,t r/ ffi:["i l:Ix11iffi:::T"H"* cenLer. control technician Ray Nichols monitors real-time data on heating, coohng and other systems in the company's buildings that will help Microsoft achieve its goals of improvlng its carbon footpflnt and reducing its impact on the environmenl. percent of employees say that niicromanaging decreases iireir productivi ty .20 Technical equipment (such as computers and computerized machine controls) can be designed to include concurrent controls. For example, you've probably experienced this with word-processing software that alerts you to a misspelled word or incorrect grammati- cal usage. Also, many organizational quality programs rely on concurrent controls to inform workers whether their work output is of sufficient quality to meet standards. The best-known form of concurrent control, however, is direct supervision. For example, Nvidia's CEO Jen-Hsun Huang had his office cubicle torn down and replaced with a conference table so he's now available to employees at all times to discuss what's going on.2l Even GE's CEO, Jeff Immelt, spends 60 percent of his workweek on the road talking to employees and visiting the company's numerous locations .22 All managers can benefit from using concurrent control because they can correct problems before they become too costly. MBWA, which we described earlier in this chapter, is a great way for managers to do this. WHY tS FEEDBACK CONTROL SO POPULAR? The most popular type of control relies on feedback. In feedback control, the control takes place after lhe activity is done. For instance, remember our earlier Denver Mint example. The flawed Wisconsin quarters were discovered with feedback control. The damage had already occurred even though the orga- nization corrected the problem once it was discovered. And that's the major problem with this type of control. By the time a manager has the information, the problems have already occurred, teading to waste or damage. However, in many work areas-the financial area being one example-feedback is the only viable type of control. (Continued on p. 435) feedforward control C0ntrol that takes place before a work activity is done concurrent control Control that takes place while a work activity is in pr0gress feedback control Control that takes place after a work activity is done Elaine Thompson/AP lmages Keeping Track Using a Balanced Scorecard Approach Balanced scorecard approach looks at more than the financial perspective26 by typically looking at four areas that contribute to a company's performance: ofThe goals @ Financial @ Customer @ lnternal processes @ People/innovation/ growth assets IVI(,LII four'.-areas and then measure whether are being met. Sharilulin Valery/ltaFTass Photos/Newscom balanced scorecard A performance measurement t00l that l0oks at more than just the financial perspective Feedback controls do have two advantages.2T First, feedback gives managers meaningful information on how effective their planning efforts were. Feedback that shows little variance between standard and actual performance indicates that the planning was generally on target. If the deviation is significant, a manager can use that information to fbrmulate new plans. Second, feedback can enhance motivation. People want to know how well they're doing, and feedback provides that information. o Try lt! If your professor has assigned this, go to the Assignments section of mymanagementlab.com to complete the Simulation : Controlling. 435 -