the organizational bullwhip

In business school, I once joined an exercise called "the beer game".  Not quite as fun as it sounds, but interesting.  Our class piled into a computer simulation lab, and we acted out parts of a brewery supply chain.  We weren’t allowed to talk to each other.  We could only place orders and fulfill orders for our part of the supply chain.  You had to guess demand based on the orders coming in.  Everybody else was also guessing, and you tended to overreact.  So, someone overreacting a little at the beginning of the supply chain created a ripple effect that makes you massively off by the end.

I picked up two things. First, that I’m crap at forecasting.  And, second, that there is something called the bullwhip effect, where one action magnifies exponentially downstream, like the cracking of a bullwhip.

I’ve been thinking there is a bullwhip effect within organizations too.  No one likes change, but of course it’s constant in business.  But, when change happens, I’ve noticed the ripple effect is often harder than the change itself.  Particularly in the immediate chaotic aftermath when everything is up for grabs and people are trying to figure out which way is up.

Anyway, judging by many of the emails I got after my Five Stages of Missing Plan cartoon, I get the sense that there are quite a few "strategic shifts" happening at the moment and people feeling the bullwhip in one way or another.