3. • Representation of useful tools to drive decision-makers
in designing competitive strategies & measuring resulting
outcomes
• Useful measures of performance + Strategic levers
• Weak understanding of impact of current decisions on
future growth and the strategy to undertake to cope with
major changes
Conventional PM
(Performance Management)
• Understanding and leveraging the feedback interrelationships of
complex management systems
• Identifying and analyzing both determinants and implications of
a given business phenomenonSD(System Dynamics) Modelling
COMBINED
Capturing causal relationships underlying the functioning of a business system
Simulate performance behavior over time and contributes in evaluating the trade-offs between
short and long term outcomes related to the adoption of a given strategy
1
2
4. System dynamics (SD) + Performance management (PM)
Adds dynamic and non-linear perspective in designing and implementing
PM system in complex and unpredictable contexts
Strategic resources → Value drivers → End-results
Overcomes limitations set by conventional PM approach, which is based
on linear, static and bounded point of view
5. Strategic resources
• Uber’s perceived price per ride (compared to competitors’)
• Uber’s perceived pickup time (compared to competitors)
• Uber’s perceived service value
Drivers
• Relative price
• Relative pickup time
End results
• Change in perceived service value (positive or negative)
• Change in Uber’s customers (positive or negative)
Feedback
DPM Model #1
7. Strategic resources
• Uber’s commission percentage
• Uber’s bonus spending
• Bonus spending: financial resources provided to attract drivers, including
car loans & performance-based bonuses
Drivers
• Relative commission (between Uber and competitors)
End results
• Number of drivers leaving Uber
• Number of drivers tempted to leave Uber (positive or negative)
DPM Model #2
9. Potential customers in NYC become interested in using ride-hailing service
when they hear about the service from current users
Potential customers become Ride-hailing Customers (Uber, Gett, Lyft, etc.)
Some of the customers may use the service more often than the others in
the population (have different effect on new potential users)
Some stop to use the service (the “Regretters”)
Customer’s Perception of Service Value determines number of Uber’s
customers (dependent on relative price & pickup time)
10.
11.
12. Likewise, assumes word of mouth effect
Potential Drivers that eventually will become Uber Drivers in NYC
Uber Drivers attract more Potential Drivers to become a driver-partnership
a reinforcing loop total ridership [figure 5]
[figure 2] : [figures 6] ; Customer’s Perception of Service Value determines
number of Uber’s customers (dependent on relative price & pickup time)
flip side model
Potential drivers in NYC / Awaiting Drivers / Active Uber Drivers in NYC
To capture the change(due to surge/plunge pricing policy in effect) in
service capacity(the number of Uber drivers) of Uber platform
13. Describes the dynamics of service requests by Uber customers
Price Threshold ratio
= (Effective Price per Ride) / (Uber’s Normal Price per Ride)
“Effect of Price Threshold ratio on closing app”
“Matched Rides” & “Rides Arriving”
“Effective Pickup Time”[Uber’s performance indicator]
Customer’s Perception of “Pickup Time”
the Service Value Service Demand Form Uber
n(“Matched Rides” delivered by Uber’s drivers) = income for each drivers
and gross revenues for Uber
14.
15.
16. The structure where customers perception of service price
become updated [figure 10]
• Another performance driver Relative Price(Service Charge loop)
Perceived Price
• Uber’s Fare Price = Base Fare + (Cost per minute * time in ride)
+ (Cost per mile * ride distance) + Booking Free
Perceived Pickup Time
• Customer hailing a ride ~ Driver arriving
Perceived Service Value
• Factors: Service Price per Rice and Pickup Time
• Service Price : Waiting Time (weights) = 75%:25%
Commission Percentage: 20% to 25%
17.
18. Service Demand for Uber =
Reported number of customer X Standard Rides Need per customer
19. Price Threshold Ratio = Effective Price per Ride / Uber’s Normal Price per Ride
Price Threshold Ratio on closing app :
Those who opened the app but closed without requesting
20. Normal Price per Ride
=Base Fare + Booking Fee
(+cost per minute) (+cost per mile)
25%
Perceived Pickup Time
= time between a moment a
customer hails a ride and a moment
the drive arrives
75%
