Wednesday, September 3, 2014

Avoiding Forecasting Disasters & Cultural Differences in Process Knowledge in the Service Industry

Forecasting and managing process knowledge are two of the topics we covered this week, and they are both key in determining the success or failure of an organization or product. In particular, inaccurate forecasting can lead to disastrous results and years of wasted research and development. One specific example of awful forecasting is the Virtual Boy, a video game console launched by Nintendo in 1995. As a boy, I remember picking up the product for $149.99 the first day it was released; two weeks later, the price fell to an abysmal $39.99.

Coming off the success of its Super Nintendo and Game Boy consoles in the early 1990s, Nintendo was uniquely confident in its ability to launch new and innovative hardware. The Virtual Boy was a system which strapped to its users head, and crowded out a player’s vision completely with a red-and-black screen placed mere centimeters away from the user’s eyes. Despite a sales forecast of 3 million units, the Virtual Boy only sold 350,000 units from the summer of 1995 until December of that year.[i]

What went wrong? I suspect it had a lot to do with overconfidence and inadequate market research for a novelty item. Out of my group of friends, I was the only person who did not develop debilitating headaches within an hour of playtime. Furthermore, parents often expressed concern that a screen placed so close to their children’s eyes could ruin their eyesight and lead to near-sightedness.

Relying on brand name recognition and past success, Nintendo most likely just didn’t think it necessary to test the Virtual Boy despite its radical departure from gaming norms. If they had conducted proper product testing or just surveyed customers, they would certainly have found reason for alarm. Parents were concerned about eyesight, players experienced severe headaches, and its red-and-black color palette was just off-putting.

Cultural Differences in Process Knowledge

The stages of process knowledge taxonomy developed by Ramchandran Jaikumar and Roger Bohn are useful for management to design processes based on available knowledge. One area I’m interested in is the difference in process possibilities generated by cultural differences, especially in the service industry.

I’m a fluent Japanese speaker, and one feature of the language that remarkably differs from English is the large amount of set phrases used by Japanese in day-to-day life. Due to the large amount of these phrases as well as the way in which Japanese refrain from asking store clerks personal questions (such as “how are you?”), most Japanese stores have manuals for clerks that give them instructions on exactly what to say in nearly any situation that would arise on the job. Thus, service in Japan is ubiquitously good and eerily similar wherever you go.

The Japanese are in the process of developing robots to care for the elderly,[ii] and I wonder if the main reason that Japan represents the cutting edge in the service robotics industry is due to this cultural difference. Japanese robots have to respond to a much more limited set of phrases and questions than their American counterparts, and Japanese customers expect a much more limited set of phrases than American customers. 
Because of this difference, Japanese robots can provide better service with less processing power.

In its current state, the Japanese service industry is essentially operating at a level 6 stage of process knowledge, whereas, due to the much looser nature of the English language, the American service industry is only operating at level 5. In order to build the service robots that could run a store without human overseers, level 8 process knowledge would be necessary. I believe that due to this difference in language and culture, Japan will be able to employ a large number of robots in many services long before the technology advances to the point where it could be incorporated in Western countries.


[i] Langshaw, Mark. “Virtual Boy retrospective: Nintendo's disastrous foray into VR.” Digital Spy. April 5th, 2014. Retrieved from:

[ii] Nuviun Digital Health. “Affectionate Humanoid Robot "Pepper" Will Take Care of Japan’s Elderly Next Year.” Nuviun. June 10th, 2014. Retrieved from:

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