Deishin Lee

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Deishin Lee is an Assistant Professor of Business Administration in Technology and Operations Management. Professor Lee studies how economic and environmental value can be created and captured by leveraging operational synergies to maximize natural resource utilization. Professor Lee received her Ph.D. from Stanford University’s Graduate School of Business. She also holds dual MS degrees in Mechanical Engineering and Management from MIT as a Leaders for Manufacturing fellow, and a BS degree in Mechanical Engineering from MIT. Before her doctoral studies, Professor Lee worked at Motorola in the Operations group within the Paging Products, Wireless Data, and Multi-Media divisions.

Featured Work

  1. Transforming Manufacturing Waste into Profit

    Every manufacturing process leaves waste, but Assistant Professor Deishin Lee believes much of this left-behind material can be put to productive—and profitable—use. Key concepts include:

    • The concept of "by-product synergy" consists of taking the waste stream from one production process and using it to make a new product.
    • Productively using waste instead of trashing it can cut costs by reducing disposal fees and opening up additional revenue streams through by-product sales.
    • The greatest returns are realized when a company widens its scope to think strategically to consider waste processing as a joint-production process.
    • In some cases, maximizing profit might mean, paradoxically, creating more waste.
  2. Managing Know-How

    For many firms, the ability to create, organize, and disseminate know-how is a key factor in their ability to succeed. But should all companies engage in formal knowledge management? If not, which companies derive most value from a formal knowledge system? Conditional on implementing such a system, should the company focus more on learning from successes or learning from failures? Should such knowledge systems simply capture all experience, or should they be more selective? This paper develops and applies an economic framework to examine these questions. Key concepts include:

    • Supporting firms' focus on best practice, information about successes is typically more useful than information about failures. Past successes can guide future successes, while past failures only point out certain pitfalls.
    • Recording mediocre know-how can be counter-productive by inefficiently reducing employees' incentive to experiment.
    • Larger firms with high turnover potentially gain the most from knowledge systems, but should also be the most selective when encoding information.
    • The framework in this paper can be used to explore other questions on knowledge management. As knowledge management continues to grow in importance, a systematic economic perspective may shed important insights.

Publications

Journal Articles

  1. Optimizing Organic Waste to Energy Operations

    A waste-to-energy firm that recycles organic waste with energy recovery performs two environmentally beneficial functions: it diverts waste from landfill and it produces renewable energy. At the same time, the waste-to-energy firm serves and collects revenue from two types of customers: waste generators who pay for waste disposal service and electricity consumers who buy energy. Given the process characteristics of the waste-to-energy operation, the market characteristics for waste disposal and energy, and the mechanisms regulators use to encourage production of renewable energy, we determine the profit-maximizing operating strategy of the firm. We also show how regulatory mechanisms affect the operating decisions of the waste-to-energy firm. Our analyses suggest that if the social planner's objective is to maximize landfill diversion, offering a subsidy as a per kilowatt-hour for electricity is more cost effective, whereas if the objective is to maximize renewable energy generation, giving a subsidy as a lump sum to offset capital costs is more effective. This has different regulatory implications for urban and rural settings where the environmental objectives may differ.

    Keywords: Business Ventures; Energy Generation; Renewable Energy; Revenue; Customers; Strategy; Corporate Governance; Wastes and Waste Processing; Environmental Sustainability; Governing Rules, Regulations, and Reforms; Cost Management; Urban Scope;

    Citation:

    Ata, Baris, Deishin Lee, and Mustafa H. Tongarlak. "Optimizing Organic Waste to Energy Operations." Manufacturing & Service Operations Management 14 (Spring 2012): 231–244.
  2. Turning Waste into By-Product

    This paper studies how a firm can create and capture value by converting a waste stream into a useful and saleable by-product (i.e., implementing by-product synergy [BPS]). We show that BPS creates an operational synergy between two products that are jointly produced. In essence, BPS is a process innovation that reduces the marginal cost of the original product and/or the by-product. The firm creates value through this process innovation and can capture this value by capturing newly created market opportunities, taking market share from competitors, or licensing the innovation to its competitors. We determine the optimal operating and licensing strategies for the firm and find market conditions under which the firm would benefit most from implementing BPS. We show that the optimal operating and licensing strategies are driven by the size of the cost reduction enabled by the BPS process innovation. We also show that leveraging the synergies between the original product and by-product can lead to counterintuitive profit-maximizing operating strategies such as increasing the amount of waste generated, and strategically increasing the quantity of original product above the business as usual production volume. We present a framework for assessing the environmental impact of BPS which incorporates the impact of the optimal operating and licensing strategies.

    Keywords: Value Creation; Innovation and Invention; Cost Management; Opportunities; Market Participation; Framework; Profit; Competition; Wastes and Waste Processing; Product; Business Processes;

    Citation:

    Lee, Deishin. "Turning Waste into By-Product." Manufacturing & Service Operations Management 13, no. 1 (winter 2011).
  3. Managing Know-How

    We study how firms can use a knowledge management system to optimally leverage employee-generated know-how. In particular, we consider the following practical strategic questions for the manager of a knowledge-intensive firm: should her firm develop a formal knowledge system? And if so, how should it be managed, particularly in terms of what information to record? We find that firms benefit more from a knowledge system when they are larger, face the same issues more frequently, have higher turnover, and face problems about which there is less general knowledge. In terms of what information to record, a key insight is that recording moderately successful practices can be counter-productive, since doing so may inefficiently reduce employees' incentives to experiment. This "strong-form competency trap" forces firms into an exploration-exploitation trade-off. Firms that value a knowledge system most should also be most selective in recording information. We further find that recording successes is more valuable than recording failures, which supports firms' focus on best practice. Beyond these main principles, we also show that it may be optimal to disseminate know-how on a plant-level but not on a firm-level, and that recording back-up solutions is most valuable at medium levels of environmental change.

    Keywords: Change; Employees; Information; Knowledge Management; Outcome or Result; Practice; Problems and Challenges; Motivation and Incentives; System; Value;

    Citation:

    Lee, Deishin, and Eric J. Van den Steen. "Managing Know-How." Management Science 56, no. 2 (February 2010): 270–285. (Articles in Advance published online on November 25, 2009.)
  4. Divide and Conquer: Competing with Free Technology under Network Effects

    We study how a commercial firm competes with a free open source product. The market consists of two customer segments with different preferences and is characterized by positive network effects. The commercial firm makes product and pricing decisions to maximize its profit. The open source developers make product decisions to maximize the weighted sum of the segments' consumer surplus, in addition to their intrinsic motivation. The more importance open source developers attach to consumer surplus, the more effort they put into developing software features. Even if consumers do not end up adopting the open source product, it can act as a credible threat to the commercial firm, forcing the firm to lower its prices. If the open source developers' intrinsic motivation is high enough, they will develop software regardless of eventual market dynamics. If the open source product is available first, all participants are better off when the commercial and open source products are compatible. However, if the commercial firm can enter the market first, it can increase its profits and gain market share by being incompatible with its open source competitor, even if customers can later switch at zero cost. This first-mover advantage does not arise because users are locked in, but because the commercial firm deploys a divide and conquer strategy to attract early adopters and exploit late adopters. To capitalize on its first-mover advantage, the commercial firm must increase its development investment to improve its product features.

    Keywords: Profit; Product Launch; Network Effects; Open Source Distribution; Adoption; Competitive Strategy; Competitive Advantage;

    Citation:

    Lee, Deishin, and Haim Mendelson. "Divide and Conquer: Competing with Free Technology under Network Effects." Production and Operations Management 17, no. 1 (summer 2008): 12–28.
  5. Adoption of Information Technology under Network Effects

    Because information technologies are often characterized by network effects, compatibility is an important issue. Although total network value is maximized when everyone operates in one compatible network, we find that the technology benefits of the users depend on vendor incentives, which are driven by the existence of “de facto” or “de jure” standards. In head-to-head competition, customers are better off “letting a thousand flowers bloom,” fostering fierce competition which results in a de facto standard if users prefer compatibility over individual fit, or a split market, if fit is more important. In contrast, firms that sponsor these products are better off establishing an upfront, de jure standard to lessen the competitive effects of a network market. However, if a firm is able to enter the market first, by choosing a proprietary/incompatible technology, it can use a “divide and conquer” strategy to increase its profit compared to head-to-head competition, even when there are no switching costs. When there is a first mover, the early adopters, who are “locked-in” because of switching costs, never regret their decision to adopt, whereas the late adopters, who are not subject to switching costs, are exploited by the incumbent firm. Whereas in head-to-head competition, customers are unified in their preference for incompatibility, when there is a first mover, late adopters prefer de jure compatibility since they bear the brunt of the first-mover advantage. This again underscores the interdependence of user net benefits and vendor strategies.

    Keywords: Network Effects; Standards; Competitive Strategy; Customization and Personalization; Information Technology; Technology Adoption;

    Citation:

    Lee, Deishin, and Haim Mendelson. "Adoption of Information Technology under Network Effects." Information Systems Research 18, no. 4 (December 2007).

Working Papers

  1. Overcoming Organizational Barriers to Waste Heat Recovery

    Waste heat recovery is a proven technology for improving energy efficiency and reducing the environmental impact of energy-intensive manufacturing firms. However, evidence suggests that opportunities for recovering waste heat are untapped. By showing how the process characteristics of waste heat recovery are manifested in the manufacturing firm's capital budgeting process, we identify organizational barriers to waste heat recovery. In particular, the tight operational coupling between the waste heat recovery system and the manufacturing process, and the technological complexity present challenges during capital project evaluation. We study three mechanisms that can potentially overcome these adoption barriers: government subsidy, corporate environmental initiative, and partnership with an energy service company (ESCO). Our findings suggest that a combination of subsidy with a corporate environmental initiative can make waste heat recovery attractive enough for the manufacturer to pursue. We find that partnering with an ESCO can also create significant value. The ESCO benefits from learning effects, risk diversification, and economies of scale, thus making waste heat recovery in general more profitable and less risky.

    Keywords: sustainability; energy; capital budgeting; waste heat recovery; manufacturing; Energy Industry; Manufacturing Industry;

    Citation:

    Jira, Chonnikarn Fern, and Deishin Lee. "Overcoming Organizational Barriers to Waste Heat Recovery." Working Paper, 2013.
  2. The Effect of Supply Chain Complementarities on Local Food

    We study the operational tradeoffs of a retailer and farmers in a fresh produce supply chain to determine the equilibrium supply chain structure. These operational tradeoffs arise as a result of the geographic constraints posed by the availability of arable land and the spatial population distribution. We model the interdependent operating decisions of a retailer and farmers and show that technological advances in transportation, spatial characteristics of population distributions, and advances in farming technologies has led to a dominant economies-of-scale model of production, distribution, and retailing in fresh produce supply. When farm capacities are asymmetric, the small local farmer has a disadvantage and can be completely squeezed out of the supply chain if the large farm has enough capacity to fill demand. However, we quantify how backhauling and vertical differentiation can increase the retailer's margin for local food, thus increasing the small local farmer's competitiveness. We also show how the local farmer can leverage polyculture farming, a farming practice that increases the resilience and yield of crops, to mitigate risk of weather or pest damage, increasing his competitiveness.

    Keywords: Geographic Location; Plant-Based Agribusiness; Food; Supply Chain; Agriculture and Agribusiness Industry;

    Citation:

    Ata, Baris, Deishin Lee, and Mustafa H. Tongarlak. "The Effect of Supply Chain Complementarities on Local Food." Working Paper, December 2012.
  3. Got Local Food? Understanding the Fresh Produce Supply Chain

    Keywords: sustainability; local food; operations management; supply chain;

    Citation:

    Ata, Baris, Deishin Lee, and Mustafa H. Tongarlak. "Got Local Food? Understanding the Fresh Produce Supply Chain." Working Paper, 2012.
  4. Energy Efficiency: Picking up the Twenty Dollar Bill

    Keywords: sustainability; energy efficiency; capital budgeting;

    Citation:

    Jira, Chonnikarn Fern, and Deishin Lee. "Energy Efficiency: Picking up the Twenty Dollar Bill." Working Paper, 2012.

Cases and Teaching Materials

  1. Konys, Inc. (TN)

    This case describes the sourcing policy for a consumer electronics company. The company must decide how to structure contracts with their supplier—using a purchase contract, an option contract, or combination of the two. The company can also buy from the spot market. The students use a spreadsheet model with Monte Carlo simulation to analyze the contracting options.

    Keywords: supply chain; contracts; option contract; uncertainty; sourcing; supplier relationship; Supply Chain;

    Citation:

    Lee, Deishin, and Tunay Tunca. "Konys, Inc. (TN)." Harvard Business School Teaching Note 613-094, April 2013.
  2. Konys, Inc. (CW)

    Keywords: supply chain; contracts; option contract; uncertainty; sourcing; supplier relationship;

    Citation:

    Lee, Deishin, and Tunay Tunca. "Konys, Inc. (CW)." Harvard Business School Spreadsheet Supplement 613-703, December 2012. (Revised May 2012.)
  3. Konys, Inc.

    This case describes the sourcing policy for a consumer electronics company. The company must decide how to structure contracts with their supplier—using a purchase contract, an option contract, or combination of the two. The company can also buy from the spot market. The students use a spreadsheet model with Monte Carlo simulation to analyze the contracting options.

    Keywords: supply chain; contracts; option contract; uncertainty; sourcing; supplier relationship; Risk and Uncertainty; Contracts; Supply Chain; Consumer Products Industry; Electronics Industry;

    Citation:

    Lee, Deishin, and Tunay I. Tunca. "Konys, Inc." Harvard Business School Case 613-065, November 2012. (Revised April 2013.)
  4. Harvest: Organic Waste Recycling with Energy Recovery (TN) (A) and (B)

    This case describes the waste management industry and a clean technology solution for landfill diversion and renewable energy production. The (A) case focuses on the operational characteristics of organic waste recycling with energy recovery, and the characteristics of the waste management industry. The intent of the (A) case is to have students perform operational analysis on the organic waste to energy process to evaluate whether a potential new plant is economically feasible and attractive. The (B) case focuses on the sourcing dilemma: pre-processing vs. source separation. To ensure that the organic waste input is of sufficiently high quality (i.e., low level of inorganic contaminants), the company can either build a pre-processing facility to sort incoming waste to filter out contaminants, or work with suppliers to source separate their waste stream.

    Keywords: sustainability; waste management; sourcing; operations management; supply chain management; environment; Wastes and Waste Processing; Renewable Energy; Operations; Supply Chain Management; Utilities Industry; Manufacturing Industry;

    Citation:

    Lee, Deishin. "Harvest: Organic Waste Recycling with Energy Recovery (TN) (A) and (B)." Harvard Business School Teaching Note 612-107, June 2012.
  5. Harvest: Organic Waste Recycling with Energy Recovery (A)

    This case describes the waste management industry and a clean technology solution for landfill diversion and renewable energy production. The (A) case focuses on the operational characteristics of waste management and waste to energy, as well as the characteristics of the waste management industry. The intent of the (A) case is to have students perform operational analysis on the organic waste to energy process to evaluate whether a potential new plant is economically feasible and attractive. The (B) case focuses on the sourcing dilemma: pre-processing vs. source separation. To ensure that its waste input fuel is of sufficiently high quality (i.e., low level of inorganic contaminants), the company can either build a pre-processing facility to sort incoming waste to filter out contaminants or work with suppliers to source separate their waste stream.

    Keywords: Renewable Energy; Logistics; Wastes and Waste Processing; Corporate Finance; Green Technology Industry; Utilities Industry; Energy Industry;

    Citation:

    Lee, Deishin, Baris Ata, and Mustafa H. Tongarlak. "Harvest: Organic Waste Recycling with Energy Recovery (A)." Harvard Business School Case 611-033, October 2010. (Revised August 2012.)
  6. New England Apple Slices

    Citation:

    Lee, Deishin, and James Weber. "New England Apple Slices." Harvard Business School Case 612-045, March 2012.
  7. Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability (TN)

    Teaching Note for [607003].

    Keywords: Design; Consumer Products Industry;

    Citation:

    Lee, Deishin. "Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability (TN)." Harvard Business School Teaching Note 609-013, July 2008. (Revised March 2012.)
  8. Polyface: The Farm of Many Faces (TN)

    Keywords: Agribusiness; Agriculture and Agribusiness Industry;

    Citation:

    Lee, Deishin. "Polyface: The Farm of Many Faces (TN)." Harvard Business School Teaching Note 612-054, January 2012.
  9. Polyface: The Farm of Many Faces

    This case explores a method of value creation through exploiting synergies that exist in an environment where there is diversity. The context of the case is a farm where biodiversity is leveraged to create value. This is contrasted to industrial farming, which operates on the principles of economies of scale. The case also provides an opportunity for students to discuss the environmental impact of different types of operating systems.

    Keywords: Agribusiness; Product Development; Production; Corporate Social Responsibility and Impact; Environmental Sustainability; Value Creation; Agriculture and Agribusiness Industry;

    Citation:

    Lee, Deishin, and Stephanie van Sice. "Polyface: The Farm of Many Faces." Harvard Business School Case 611-001, October 2010. (Revised October 2011.)
  10. Cook Composites and Polymers Co.

    This case describes how a company improves resource efficiency and process quality in its manufacturing process by developing a waste by-product into a new product. The case describes how CCP cleans production equipment between batches using styrene, which becomes a costly hazardous waste. Having worked on minimizing waste for the past 20 years, CCP believed it could not reduce the use of styrene without risking product quality. Instead, CCP was exploring the development of a by-product from its "rinse styrene," but faces uncertainty regarding the operational, financial, and environmental implications of doing so. This case contains data to support quantitative analyses of financial, operational, and environmental issues including some basic life-cycle analysis (LCA) calculations that focus on greenhouse gas emissions.

    Keywords: Innovation and Invention; Product Development; Business Processes; Performance Efficiency; Natural Environment; Wastes and Waste Processing; Pollution and Pollutants; Environmental Sustainability; Chemical Industry; Manufacturing Industry;

    Citation:

    Lee, Deishin, Michael W. Toffel, and Rachel Gordon. "Cook Composites and Polymers Co." Harvard Business School Case 608-055, June 2008. (Revised March 2011.)
  11. Harvest: Organic Waste Recycling with Energy Recovery (B)

    This case describes the waste management industry and a clean technology solution for landfill diversion and renewable energy production. The (A) case focuses on the operational characteristics of waste management and waste to energy, and the characteristics of the waste management industry. The intent of the (A) case is to have students perform operational analysis on the organic waste to energy process to evaluate whether a potential new plant is economically feasible and attractive. The (B) case focuses on the sourcing dilemma: pre-processing vs. source separation. To ensure that its waste input fuel is of sufficiently high quality (i.e., low level of inorganic contaminants), the company can either build a pre-processing facility to sort incoming waste to filter out contaminants, or work with suppliers to source separate their waste stream.

    Keywords: Framework; Wastes and Waste Processing; Management; Operations; Social Issues; Problems and Challenges; Energy Generation; Renewable Energy; Quality; Industry Structures; Energy Industry;

    Citation:

    Lee, Deishin, Baris Ata, and Mustafa H. Tongarlak. "Harvest: Organic Waste Recycling with Energy Recovery (B)." Harvard Business School Supplement 611-034, October 2010. (Revised August 2012.)
  12. Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability

    Herman Miller decided to implement the cradle-to-cradle (C2C) design protocol during the design of its mid-level office chair, Mirra. The C2C protocol was a set of environmentally friendly product development guidelines.

    Keywords: Product Design; Production; Supply Chain Management; Business Processes; Environmental Sustainability;

    Citation:

    Lee, Deishin, and Lionel Bony. "Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability." Harvard Business School Case 607-003, May 2007. (Revised December 2009.)
  13. Cook Composites and Polymers Co.

    Teaching Note for [608055].

    Keywords: Chemical Industry;

    Citation:

    Lee, Deishin, and Michael W. Toffel. "Cook Composites and Polymers Co." Harvard Business School Teaching Note 608-079, June 2008. (Revised January 2014.)

    Research Summary

  1. Sustainable Operations

    Professor Lee studies how operational synergies between different supply chains can be used to create economic value and improve environmental sustainability. She uses an operational lens to approach sustainability problems, focusing on the management of material flow (and disposal) through the value chain. In particular, her research addresses how raw material resources can be utilized more effectively by increasing operational scope. She has studied the implications of operational scope in a number of different industries including food, energy, high tech, and industrial manufacturing.

     

    Keywords: environment; Environmental Operations; sustainability; operations management; operational disruptions; supply chain; supply chain management; food security;