Siemens Electric Motor Works (A) (Abridged)

Robert S. Kaplan

Case | HBS Case Collection | July 1990 (Revised October 1997)

Siemens Electric Motor Works (A) (Abridged)

Abstract

Explores how a cost system can help support a firm's decision to change strategies. In the process, the students are introduced to a simple activity-based cost system. Siemens Electric Motor Works found itself facing an increasingly competitive environment and so made a decision to move from mass production of specialty motors to the production of small lots of custom motors. In doing so, they found their old cost system led them to poor decision making. By switching to a simple activity-based system, more accurate product costs were computed, facilitating better divisional performance.

Keywords: Activity Based Costing and Management; Cost Accounting; Cost; Adoption; Cost vs Benefits; Management Analysis, Tools, and Techniques; Production; Business Strategy; Electronics Industry; Manufacturing Industry;

Format: Print

7 pages

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Citation:

Kaplan, Robert S. "Siemens Electric Motor Works (A) (Abridged)." Harvard Business School Case 191-006, July 1990. (Revised October 1997.)

Currently, few health care providers measure and report their patient outcomes, which leads to several problems. Attempts to introduce price transparency without outcomes transparency could trigger a “race to the bottom.” Should Medicare coverage be expanded to non-elderly populations, its much lower reimbursements will create pressure on providers to lower their spending in ways that produce even worse outcomes. Even without Medicare expansion, the lack of systematic outcomes measurement has made the migration from fee-for-service to value-based reimbursements, especially bundled payments, less effective and more difficult to implement. Hidden variation in outcomes prevents providers from learning from others how to produce better outcomes for their patients. We propose that the Congress elected in November 2020 mandate the Centers for Medicare and Medicaid Services to begin requiring outcomes measurement by all providers reimbursed under government Medicare and Medicaid programs.

Working Paper | HBS Working Paper Series | 2019

Intelligent Design of Inclusive Growth Strategies

Robert S. Kaplan, George Serafeim and Eduardo Tugendhat

Improving corporate engagement with society, as advocated in the Business Roundtable’s 2019 statement, should not be viewed as a zero-sum proposition where attention to new stakeholders detracts from delivering shareholder value. Corporate programs for sustainable and ethical sourcing practices, however, have fallen far short of solving the underlying causes of extreme poverty, extensive use of child labor, and threats to the environment and human health. We identify several causes to explain this disappointing shortfall in societal performance, including traditional company policies and incentives that inhibit the implementation of innovative, inclusive growth strategies. We propose the role for a new actor, a catalyst, to help companies forge new relationships with external funders, local intermediary companies, NGOs, and community leaders. The catalyst aligns the multiple stakeholders from multiple sectors into enduring, mutually beneficial relationships that produce more value than that currently produced when stakeholders connect only by transactional relationships. The catalyst attracts funding from public and private sources to invest in the new ecosystem, which can generate attractive financial returns while alleviating poverty and environmental degradation. Finally, the catalyst engages the multiple participants to collectively co-create explicit strategies and scorecards of metrics, which serve to motivate, create accountability, and enable an enduring governance model for a multi-stakeholder ecosystem.

Keywords: inclusion; sustainability; performance measures; Environmental Sustainability; Social Issues; Strategy; Governance; Corporate Social Responsibility and Impact; Business and Stakeholder Relations;

Citation:

Kaplan, Robert S., George Serafeim, and Eduardo Tugendhat. "Intelligent Design of Inclusive Growth Strategies." Harvard Business School Working Paper, No. 20-050, October 2019. View Details

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We applied a value (outcomes and cost) analysis to extracorporeal life support (ECLS), a relatively rare but very expensive ICU therapy with highly variable outcomes. To address the outcome component of the value approach, we created guidelines for ECLS delivery; to address the cost component, we applied time-driven activity-based costing to identify opportunities for more efficient care. We learned that patient and family preferences for more humane and sensitive end-of-life care, if respected, will lead to less intensive use of ICU resources. Patients will have outcomes concordant with their goals and preferences, and society incurs lower costs to help them achieve those preferences. Cost reduction can be achieved by increasing efficiencies in the delivery of care and minimizing care outside of locally developed appropriate use guidelines. Reducing ECLS demands on ICU resources allows these resources to be redeployed to patients who are more likely to benefit from them, which also helps the institution financially.

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Siemens Electric Motor Works (A) (Abridged)

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