Using System Dynamics to disrupt Nonprofits and help children in poverty – Chris Penny

From Africa-OnTheRise

Chris Penny, MIT EMBA 17

MIT Sloan’s mission is to develop innovative and principled leaders who will improve the world. This resonated with me, as I’ve always had a desire to help impoverished children, especially in the developing world. However, it wasn’t until I started this program that I was able to turn my good intentions into an actionable plan, much less a plan that might even disrupt the nonprofit world.

The key was utilizing the EMBA network, going to ‘see and assess,’ conducting small experiments, and learning from mistakes. In other words, I followed the MIT Sloan method for affecting change. Today, Broken Crayons has opened 15 businesses, which has positively impacted the lives of more than three dozen children in Ghana. Now, we’re scaling our approach to impact entire communities with plans to turn Broken Crayons into a self-sustaining organization.

Look for the root cause

The first step involved Systems Dynamics, which taught me to model the relationships in all parts of a system and how those relationships influence the behavior of the system over time. Applying this knowledge, I built models to identify the root cause of youths and poverty. The overarching question centered on how I could use simultaneous interventions to break the system of poverty.

Go see and assess

Another MIT principle is understanding the importance of observing the ecosystem you seek to impact. After connecting with a friend and former colleague Carl Dey, I decided to focus my efforts on the ecosystem of Ghana. The next step was going to ‘see and assess’ the ecosystem in Ghana. Read More »

GO-Lab Puerto Rico – Stuart Krusell

Director of the MIT Sloan Office of International Programs Stuart Krusell

Director of the MIT Sloan Office of International Programs Stuart Krusell

It has been one year since Hurricane Maria wreaked havoc in Puerto Rico, with 155 mph winds devastating the power infrastructure, shutting down roads, and, damaging an already fragile economy with total losses estimated at $91B.  More tragically, nearly 3,000 people lost their lives.  Recovery continues, but it is, by no means, complete.

Six months after the storm slogged across the island, I had the opportunity to spend a week there, traveling with a group of eleven MIT Sloan EMBA students and award-winning filmmaker Bill Carter.  They were there as part of their GO-Lab class, working on two projects addressing the value and viability of integrating reliable microgrid systems to improve resiliency and reliability in the delivery of power for the Puerto Rican people and economy.  One team focused on the architecture, the other on regulation.  Both are critical to finding a sustainable solution.  Their conclusions included:

• microgrids are viable, but an unbundling of the market needs to occur

• operators must prepare to manage the inevitability of grid defection

• support is needed for providers to pilot and coordinate on microgrids

• development of a full-functioning energy system with robust deployment of microgrids requires a fully modernized grid

• an independent and empowered energy regulator is essential to ensure steady and durable energy policy and attract adequate levels of private investment

• stakeholders must break out of their silos, minimize partisan divides, and work collaboratively to reach consensus to advance their (unrecognized) shared interests in stable, long-range policies

Read More »

Tesla needs to put a seat belt on Elon Musk – Chester Spatt

Golub Distinguished Visiting Professor of Finance, Chester Spatt

From MarketWatch

The past few months have been turbulent for Tesla CEO Elon Musk.

From publicly accusing a Thai rescue diver of being a pedophile (without evidence) and conducting a radio interview while smoking marijuana to insulting equity analysts on one earnings call and threatening to take Tesla private — then reversing those statements, triggering a SEC and a criminal investigation — Musk has engaged in some reckless behavior.

Then there are production problems with Tesla not being able to deliver cars on time. A big question is whether Musk should step down. While investor confidence in Musk has taken a big hit, he is a visionary leader and there would likely be great disappointment if he left the company.

What Musk does need is a lot more checks and balances by his management team. Investors would like Musk to have more self-control and act more like other legendary leaders, such as the late Steve Jobs of Apple and Amazon.com’s Jeff Bezos.

For that to have a chance, Tesla’s management team must play a bigger role in guiding the company’s strategy both internally and externally. If Musk is required to step down as CEO for a period of time by the SEC, the management team must be ready to take the wheel.

Tesla also needs to step back and review the basics of corporate governance. U.S. securities laws and common business practices are meant to keep market participants honest, so that they effectively represent their own best interests and those of their shareholders.

Read More »

What can a restaurant teach us about innovation? – Pilar Opazo

Pilar Opazo, Lecturer, Work and Organization Studies

From Modern Restaurant Management

When Chef Ferran Adrià shuttered his famed elBulli restaurant in 2011, foodie circles were stunned. elBulli was at the peak of its fame: it had three Michelin stars and a waiting list of two million diners. Adrià—widely considered one of the most imaginative culinary minds of the world—operated in an elite class of chefs. He kept his restaurant open just six months a year and served one meal a day, never offering the same dish twice.

Rumors circulated that the closure was due to a family feud or money problems. But the truth was that Adrià was petrified of repeating himself. (“Can you imagine this pressure?” he told The New York Times. “You cannot.”)

In 2014 Adrià reopened elBulli not as a restaurant, but as a foundation dedicated to studying and understanding the nature of creativity. It’s a subject in which Adrià has passionate expertise. When he arrived at elBulli in the early 80s, it was a French restaurant. By the 1990s Adrià was head chef and elBulli was transformed as a test kitchen for gastronomic invention.

But while he became known for dreaming up dishes like Escoffier’s classic peach melba and smoke foam, Adrià was engaged in a far more ambitious project—achieving and sustaining a culture of innovation. He and his team established a set of best practices for organizational creativity and systematic invention. The result: processes and structures that are applicable not just to restaurants but other organizations as well. Here are some elements of elBulli’s, ahem, secret sauce: Read More »

Hospitals hit back on drug pricing, but will they knock out the problem? – Ernst Berndt

From The Conversation

MIT Sloan Professor Ernst Berndt

MIT Sloan Professor Ernst Berndt

Drug manufacturing and pricing vaulted into the news several years ago when a privately held company raised the price of a drug used for infections from US$13.50 to $750 for one pill.

After an outcry from hospitals, the company later relented, dropping its price by a small margin. Still, this single dramatic increase shed light on the once obscure arena of older generic drugs that continue to be in short supply and whose prices occasionally skyrocket.

Frustrated with these shortages and alarmed by the potential for price gouging, a coalition of hospitals has recently struck back. Four not-for-profit, religiously affiliated hospital systems and the U.S. Veterans’ Administration announced their intent to form a company that would manufacture generic drugs, thereby helping to mitigate or eliminate shortages and prevent future massive price spikes for rarely used generic drugs.

I’m an economist who has studied the health care industry, including the U.S. generic industry, and I see a few regulatory and business hurdles to this approach.

Read More »