Conjoint analysis!!!

Conjoint analysis








Conjoint analysis basically utilises the fact that while human beings would love to have their cake and eat it too, they often settle for one or the other or for a little less of both because of money, time and other constraints. In other words, they trade-off one benefit against the other, depending on which is more important to them.
Let us take a light-hearted example. When looking for a spouse, a man may ideally want a wife who looks gorgeous, sings beautifully, and is wonderfully kind and considerate. As time goes by, he may decide that no such lady exists, or he may realise that such a lady, if she indeed exists, would not give him a second look. So, he would need to compromise on his ideal. He may decide that kindness matters a whole lot more than looks do, and that musical talent is also slightly more important than looks are. He may, therefore, get married to a lady who sings very well, and whose face hides a heart of gold. Or, he may get married to a lady who is nice looking but not gorgeous, and who cannot attract an audience with her singing but doesn't make the neighbours protest either, and who is kind and considerate to people, except when really riled. The trade-off is a highly individual decision and will vary from person to person.
Let us now take a more serious example. A car buyer could trade-off mileage for seating capacity, or power for mileage. This could be because no one has made a car that has a mileage of 40 kmpl, 2000 horsepower, and can seat a family of eight in comfort. Or, it could be because such a car does exist, but our car buyer cannot afford it.
Conjoint analysis basically tries to quantify this trade-off.
If the attributes and their levels were:
Mileage 10, 12, 14, 16, 18; Power 300, 400, 500, 600, 700; Seating capacity 4,5,6,7
In theory, there are a 100 possible product configurations possible from the above (mileage 14—power 400—seating 4; mileage 14—power 400—seating 5; and so forth).
Since we cannot research all the combinations, we use the conjoint analysis package to generate something called an ortho-plan. An ortho-plan selects a manageable number. It could be 18 or 20 or so; the software package decides that.
It is important that we use the ortho-plan package to generate this manageable number rather than doing it ourselves; if we just do it ourselves, analysis will be tough later.
The respondents are shown these configurations and asked to rate them in terms of preference and liking. That data is fed into the conjoint package.
The output is a series of numbers called utilities and importance values i.e. we will know how important mileage is with respect to power with respect to seating capacity. We will also know within each attribute, which level has the maximum utility from the consumers' point of view.
These utilities can be used directly to predict a ‘liking' score for each of the theoretically possible 100 configurations.
The manufacturer can then decide where the cost of manufacturing and the ‘liking' score have an optimum fit, and that will most probably be the configuration to hit the market.

The leader’s emerging mindset: Sperry effect!!!

So far, the business leader has been driven by the left brain (good at analysis) and less by the right brain (good at creativity). In future, the right brain will influence the leader more. Professional success will depend more on EQ than IQ. Indian writers in English have started a new trend of writing popular novels set in business context. These novels offer an insight into human nature in business. Ravi Subramaniam (If God Was a Banker and Devil in Pinstripes) has used banking as the backdrop. Second Degree is about a crazy year at IIMA, while Mediocre But Arrogant is about B-school love and life. An imaginary journey of two young executives on a life-transforming journey is the theme of He Swam with Sharks for an Ice-cream. 

Thousands of young executives buy these books to read in flights. Story-telling is not normally welcome in management; in fact, it is pejorative. However, the narrative style seems to be interesting and influential with young people; even autobiographical books, written in narrative style, like the ones by Kishore Biyani (It happened in India) and Captain Gopinath (Simply Fly) have been received well. This tells us something about how the mind of the young executive is working. 

In February 2010, Shining’s colourful Shombit Sengupta shocked 26 CEOs, including Keshub Mahindra and Naina Lal Kidwai, first by requesting them to paint and then by printing a calendar of their paintings and arranging a CEO Thinker Painter exhibition of their atrocious works at the NCPA. “I am already getting calls from Delhi, Kolkata and Bengaluru to host this exhibition,” Sengupta says with pride. Business thinking is a hugely left brained activity; painting is a right-brained activity. Why is Sengupta trying to combine the analytical thinker with the imaginative painter? 

Some years ago, The New York Times asked Bob Lutz, a craggy, white-haired, cigar-chomping auto industry leader, what he would do differently at the troubled General Motors. Lutz replied, “It’s more right brain... I see us being in the art business — art, entertainment and mobile sculpture, which, coincidentally, also happens to provide transportation.” Art in the auto industry? 

These events are evidence of increasing recognition of the valuable right brain. Since the Age of Enlightenment, there has been a premium on logical and analytical capability compared to creative and emotive capability. The left brain has been regarded as the important half brain. The iconic leader used to be regarded as a decisive, tough-talking, I-know-itall manager. Research shows that 90% of Asian and Australian managers are left-brain oriented. The left-brain emphasis is typified by FMC CEO Robert Nuslott, “Leadership is demonstrated when the ability to inflict pain is confirmed.” 

The leadership style personified by Harold Geneen, ‘Chainsaw’ Al Dunlap and ‘Neutron’ Jack Welch is no more magic. The kiss-up-kick-down executive was quite successful: Solicitous and groveling with his upward relationships, but directive and harsh with his downward relationships. The old, autocratic style is unlikely to succeed for a sustained period. Last month, HBS professor Bill George wrote in The Wall Street Journal, “People are no more responding to top-down leadership... and that, to lead in the new century, we need authentic leaders...who collaborate throughout the organisation to achieve superior performance.” 

Howard Gardner, professor of cognition and education at Harvard Graduate School of Education, lists the disciplining, the creating and synthesising mind in his book, Five Minds for the Future. The interplay among these minds manifests in the leader’s style. Successful executives are usually from the left brained disciplines: MBA, engineering, accountancy and law. Pedagogy, company recruitment and career management practices have all conspired to reward the ‘disciplined’ mind. A shocking 90-95% of IIM students are engineers. So much for diversity! Many managers from these disciplines realise later in their career that an inadequate exposure to humanities was a flaw in their academic preparation. 

Even as the great-man-of-history view is being junked, today you hear leaders like Wikipedia founder Jimmy Wales say, “You can’t tell people what to do. When the right people are deployed in the right ways, a lot of directives aren’t necessary.” A subtle shift is underway. 

The Sperry effect: In the 1950s, Caltech professor Roger Sperry reshaped our understanding of the functioning of the human brain — the so-called less-valuable or subordinate right brain is the superior member when it comes to certain types of mental tasks: patterns, relationships, art, music, holistic appreciation and emotive interpretations.

There is an interesting anecdote to illustrate how a successful outcome arose out of an illogical and intuitive process. During military manoeuvres in the Swiss Alps, a young lieutenant sent his reconnaissance unit into the icy wilderness of the Alps. Unexpectedly, it started to snow for two whole days and the unit did not return. The lieutenant was upset that he had been foolish to send his men so unprepared. On the third day, the unit returned safely. What a miracle! What happened? Well, they were lost and were sure their end was near. They pitched a camp, and suddenly one of them found a map in his pocket. Using the map, they found their way out. Phew! The relieved lieutenant asked to see the map. To his astonishment, it was not a map of the Swiss Alps, but of the Pyrenees! So much for a logical explanation of how they solved the problem. It would appear that when you are lost, any old map will do, so long as you feel that it offers you possible alternatives. When your left brain does not have access to its tools, the right brain comes to your rescue. 

Daniel Pink, author of A Whole New Mind, says that the right brain responds to story and symphony, to design and empathy. The consumer and the employee both seek the opposing contributions of the two brains as one contemporary offering. For example, functionality, low-cost and average aesthetics all go together. Not any more. Today, basic functionality goes with high aesthetics: Think of the Nano car,Fastrack watches and Swach water purifier. Take work-life balance. Today’s manager seeks career achievement simultaneously with meaning in his life. This explains the rise of yoga, ayurveda and spirituality along with hedonism and materialism. Think of the difference between having information access and creating a synthesis of the accessed ideas.

Implications: Academic Daniel Goleman explains that to enter a profession, one needs the left-brained intelligence (IQ); once a person enters a profession, his or her future progress depends predominantly on the right-brained emotional intelligence (EQ). The conceptual and imaginative brain will play a more visible role as compared to the directive and disciplined mind in leader of the future. The leader will need to have a well-developed sense of story, architecture and symphony. However, there is a catch: early in the career, you need the opposite skills of factual, numeric and analytical skills. 

There are important implications for recruitment, management development and leadership practices. Promising managers of the future will develop an interest in the humanities, art, sports and performing arts. Recruitment diversity will increase — women, different cultures and mixed nationalities. A percentage of management recruits will be from liberal arts and classics backgrounds. Such actions will bring a broader view to business discussions, which have excessively focused on wealth in recent times. 

A significant reorientation of training is needed. In the concluding chapter of his book, Gardner offers valuable advice on how to recognise the symptoms of each mind, what are the resistances to changing, and away forward for leadership development. Practitioners of human resources and corporate leaders are already applying their minds to this vital subject.