Whisky Business Model

 the Whisky Business Model

Understanding the Business Model

In whisky production, the argument for maintaining long stock days is rooted in the value-added nature of aging. As whisky matures, it often increases in perceived value and market price, making the conventional focus on reducing inventory inapplicable. From a Theory of Constraints (TOC) and throughput accounting perspective, this model has unique characteristics:

1. The Role of Inventory

• Positive Aspects:

○ Inventory (whisky in barrels) is a value-generating asset, unlike typical inventory that depreciates over time or ties up cash without direct value addition.

○ Aging transforms whisky into a higher-quality product with premium pricing potential.

• Negative Aspects:

○ Long aging periods delay cash realization, creating high working capital requirements.

○ The need for substantial storage and maintenance costs over extended periods increases operational expenses.

• TOC Viewpoint:

○ Inventory, in this case, should not be treated as a liability but rather as an essential part of the business’s throughput-generating process.

○ Instead of reducing inventory, TOC would focus on identifying and managing the system's constraint to optimize flow.

2. Constraints and Cash Flow

• Key Constraint:

○ The time required for whisky aging is the primary constraint. Unlike other processes, this cannot be significantly reduced without compromising product quality.

○ This constraint inherently limits throughput in terms of volume and speed.

• Cash Flow Management:

○ The long cash-to-cash cycle challenges liquidity. Strategies must focus on ensuring sustainable cash flow while maintaining sufficient aging stock.

3. Throughput Accounting Analysis

• Throughput Focus: Revenue is generated when aged whisky is sold. The time spent in maturation is a non-bottleneck activity essential for value creation.

• Inventory as Investment: While conventional throughput accounting encourages minimizing WIP, in this model, inventory acts as an appreciating asset, and maintaining optimal levels is critical.

Recommendations for Improvement

1. Align Inventory Levels with Market Demand:

○ Maintain an inventory mix that includes stock for different aging periods (e.g., 3, 5, 10, and 12 years).

○ Ensure that the production schedule supports both current sales and future demand for aged products.

2. Cash Flow Optimization:

○ Pre-Sales Strategy: Introduce a futures market or pre-sales mechanism for high-value aged whisky, allowing early cash inflow without immediate delivery.

○ Blended Products: Incorporate blended or younger whiskies into the product line to generate quicker cash flows, balancing the delayed returns of long-aged products.

3. Exploit Constraint Opportunities:

○ If the constraint is aging time, focus on optimizing the utilization of storage and maturing capacity.

○ Consider innovations in maturation technology (e.g., accelerated aging techniques) that preserve quality but shorten the aging process.

4. Strategic Market Differentiation:

○ Emphasize the premium value of long-aged whisky through branding and marketing.

○ Develop a pricing strategy that reflects the rarity and time investment of aged products, further justifying higher inventory levels.

5. Financial Leverage:

○ Use inventory as collateral to secure favorable financing terms. Highlight the appreciating nature of aged stock to lenders.

6. Buffer Management:

○ Use TOC’s buffer management to ensure the right quantities of whisky are aged for each target market segment (short, medium, and long-term).

Conclusion

The whisky business’s argument for maintaining high inventory levels is valid, as it aligns with their strategy of leveraging the appreciating nature of aged stock. However, TOC would encourage further improvements by:

• Focusing on optimizing the aging process as the core constraint.

• Using throughput accounting to measure financial performance in terms of throughput per unit of constraint time.

• Enhancing liquidity without disrupting the aging strategy through innovative financial and market strategies.

TOC provides tools to manage this unique model efficiently, balancing the long-term benefits of aged whisky with the need for sustainable cash flow and operational efficiency.

step-by-step guide to systematically identify and resolve business problems

 

a step-by-step guide to systematically identify and resolve business problems, incorporating clear root cause analysis, S&T tree development, and strategies for stakeholder buy-in.

Phase 1: Problem Identification

1. Define the Problem:

○ What is the primary issue impacting performance or outcomes?

○ How does this issue manifest (specific symptoms)?

○ Who are the key stakeholders affected by this problem?

2. Collect Data:

○ What data can verify the problem’s existence (KPIs, metrics, anecdotal evidence)?

○ Are there historical trends related to the problem (e.g., recurring oversupply, consistent delays)?

○ What is the financial, operational, or emotional impact of the problem?

3. Ask Critical Questions:

○ Is the problem systemic or isolated?

○ Are external factors (e.g., market changes, regulations) contributing?

○ Are internal inefficiencies (e.g., bottlenecks, misaligned priorities) part of the issue?

4. Engage Stakeholders:

○ Who needs to be involved in solving this problem?

○ How will you gather their perspectives (interviews, surveys, workshops)?

○ Are there conflicting opinions on the problem’s nature?

Phase 2: Root Cause Analysis

1. Build a Current Reality Tree (CRT):

○ Identify Undesirable Effects (UDEs): 

§ What recurring negative outcomes stem from the problem?

○ Trace cause-effect relationships between UDEs to pinpoint root causes.

2. Validate Root Causes:

○ Are the identified root causes within your control to address?

○ Are there deeper systemic issues beyond the immediate root causes?

3. Test Assumptions:

○ Why do these root causes exist?

○ What implicit beliefs or practices perpetuate them?

Phase 3: Develop Solutions

1. Formulate the Conflict Cloud:

○ Define the goal or objective.

○ Identify conflicting actions (D and D’) and their underlying needs (B and C).

○ Challenge assumptions that make the conflict seem unavoidable.

2. Develop the Future Reality Tree (FRT):

○ What Desired Effects (DEs) will resolve the UDEs?

○ Map injections (solutions) to create DEs and break conflict points.

3. Brainstorm Injections:

○ What innovations, processes, or tools can address the root causes?

○ Ensure each injection aligns with your goal and removes constraints.

Phase 4: Strategy and Tactic (S&T) Tree Development

1. Establish the High-Level Goal (Level 1):

○ What is the overarching objective (e.g., increase profitability, improve efficiency)?

2. Define Strategic Objectives (Level 2):

○ What measurable outcomes will achieve the high-level goal?

○ Break objectives into actionable, result-oriented categories (e.g., reduce waste, stabilize output).

3. Outline Tactics (Level 3):

○ What broad strategies will meet each strategic objective?

○ Focus on practical, feasible methods.

4. Detail Actions (Level 4):

○ For each tactic, list specific actions necessary for implementation.

○ Ensure actions are clear, measurable, and time-bound.

5. Develop Sub-Actions (Level 5):

○ Break each action into 3–5 sub-actions to ensure no step is overlooked.

○ Specify responsibilities, timelines, and expected results.

6. Incorporate Assumptions:

○ Necessary Assumptions: Why is this tactic required to achieve the strategy?

○ Parallel Assumptions: Why is this tactic better than alternatives?

○ Sufficiency Assumptions: Why will this tactic effectively accomplish the strategy?

Phase 5: Buy-In Preparation

1. Engage Stakeholders Early:

○ Share findings from the CRT and root cause analysis.

○ Explain how the S&T tree aligns with organizational goals.

2. Tailor Communication:

○ For executives: Focus on ROI, risks, and high-level strategies.

○ For managers: Highlight actionable steps and implementation timelines.

○ For staff: Address day-to-day impacts and how changes will benefit them.

3. Address Resistance:

○ Identify potential layers of resistance (e.g., fear of change, lack of understanding).

○ Use TOC’s 6 Layers of Resistance: 

1. Lack of agreement on the problem.

2. Lack of agreement on the direction of the solution.

3. Lack of agreement that the solution will solve the problem.

4. Fear of negative consequences.

5. Obstacles to implementation.

6. Habitual behavior.

4. Pilot Solutions:

○ Test injections or tactics on a small scale to demonstrate feasibility.

○ Collect data and testimonials to build confidence.

5. Iterate and Finalize:

○ Incorporate feedback from stakeholders.

○ Refine the S&T tree as needed to ensure practicality and alignment.

Phase 6: Implementation and Monitoring

1. Launch Implementation:

○ Assign roles and responsibilities for each action and sub-action.

○ Ensure all resources (financial, technical, human) are in place.

2. Track Progress:

○ Use dashboards or regular check-ins to monitor KPIs.

○ Identify bottlenecks or deviations early.

3. Communicate Success:

○ Share progress with stakeholders at every stage.

○ Highlight early wins to build momentum.

4. Adapt as Needed:

○ Revisit the S&T tree if new challenges or opportunities arise.

○ Use continuous feedback loops to refine the process.

5. Document Learnings:

○ Create a repository of insights, successes, and failures.

○ Use these to guide future problem-solving efforts.

Checklist Summary

1. Problem Identification: 

○ Define, collect data, ask critical questions, engage stakeholders.

2. Root Cause Analysis: 

○ Build CRT, validate root causes, test assumptions.

3. Develop Solutions: 

○ Create conflict clouds, FRT, and brainstorm injections.

4. S&T Tree Development: 

○ High-level goal → Strategic objectives → Tactics → Actions → Sub-actions.

○ Incorporate necessary, parallel, and sufficiency assumptions.

5. Buy-In Preparation: 

○ Engage stakeholders, address resistance, pilot solutions.

6. Implementation and Monitoring: 

○ Launch, track progress, adapt, and document learnings.

This structured approach ensures clarity, focus, and alignment, making it easier to tackle complex business problems and achieve sustainable results.

Checklist for Tackling a Business Problem

 

Checklist for Tackling a Business Problem Using TOC with Assumption Hacking and Mystery Analysis

This comprehensive checklist integrates assumption hacking and mystery analysis techniques to refine problem-solving, identify root causes, and systematically create and implement effective strategies using TOC.

Phase 1: Problem Identification

1. Define the Problem:

○ What is the primary issue impacting performance or outcomes?

○ How does this issue manifest (specific symptoms)?

○ Who are the key stakeholders affected by this problem?

○ Mystery Analysis Question: What about this problem feels unexplained or unexpected? What contradictions or surprises exist?

2. Collect Data:

○ What data can verify the problem’s existence (KPIs, metrics, anecdotal evidence)?

○ Are there historical trends related to the problem?

○ What is the financial, operational, or emotional impact of the problem?

3. Ask Critical Questions:

○ Is the problem systemic or isolated?

○ Are external factors (e.g., market changes, regulations) contributing?

○ Are internal inefficiencies (e.g., bottlenecks, misaligned priorities) part of the issue?

4. Engage Stakeholders:

○ Who needs to be involved in solving this problem?

○ How will you gather their perspectives (interviews, surveys, workshops)?

○ Are there conflicting opinions on the problem’s nature?

Phase 2: Root Cause Analysis

1. Build a Current Reality Tree (CRT):

○ Identify Undesirable Effects (UDEs): 

§ What recurring negative outcomes stem from the problem?

○ Trace cause-effect relationships between UDEs to pinpoint root causes.

2. Validate Root Causes:

○ Are the identified root causes within your control to address?

○ Are there deeper systemic issues beyond the immediate root causes?

3. Apply Assumption Hacking:

○ What implicit assumptions underpin the root causes and current processes?

○ Which assumptions are unquestioned but could be false or limiting?

○ Explore alternative assumptions: 

§ If this assumption were false, what would we do differently?

§ How would this problem look if the opposite of the assumption were true?

4. Use Mystery Analysis:

○ What anomalies challenge your understanding of the root causes?

○ Are there “missing links” in the cause-effect chain that need investigation?

○ Which observations seem contradictory or require deeper explanation?

Phase 3: Develop Solutions

1. Formulate the Conflict Cloud:

○ Define the goal or objective.

○ Identify conflicting actions (D and D’) and their underlying needs (B and C).

○ Challenge assumptions that make the conflict seem unavoidable.

2. Incorporate Assumption Hacking in the Cloud:

○ Which assumptions justify the conflict’s existence?

○ Test these assumptions: 

§ What if this assumption were invalid?

§ What if both conflicting actions could coexist?

3. Develop the Future Reality Tree (FRT):

○ What Desired Effects (DEs) will resolve the UDEs?

○ Map injections (solutions) to create DEs and break conflict points.

4. Brainstorm Injections:

○ What innovations, processes, or tools can address the root causes?

○ Ensure each injection aligns with your goal and removes constraints.

5. Validate Injections with Mystery Analysis:

○ Could the injection fail due to unexplored anomalies or contradictions?

○ Does the injection address all critical elements of the problem?

Phase 4: Strategy and Tactic (S&T) Tree Development

1. Establish the High-Level Goal (Level 1):

○ What is the overarching objective (e.g., increase profitability, improve efficiency)?

2. Define Strategic Objectives (Level 2):

○ What measurable outcomes will achieve the high-level goal?

○ Break objectives into actionable, result-oriented categories (e.g., reduce waste, stabilize output).

3. Outline Tactics (Level 3):

○ What broad strategies will meet each strategic objective?

○ Focus on practical, feasible methods.

4. Detail Actions (Level 4):

○ For each tactic, list specific actions necessary for implementation.

○ Ensure actions are clear, measurable, and time-bound.

5. Develop Sub-Actions (Level 5):

○ Break each action into 3–5 sub-actions to ensure no step is overlooked.

○ Specify responsibilities, timelines, and expected results.

6. Integrate Assumptions at Each Level:

○ Necessary Assumptions (NA): Why is this tactic required to achieve the strategy?

○ Parallel Assumptions (PA): Why is this tactic better than alternatives?

○ Sufficiency Assumptions (SA): Why will this tactic effectively accomplish the strategy?

Phase 5: Buy-In Preparation

1. Engage Stakeholders Early:

○ Share findings from the CRT and root cause analysis.

○ Explain how the S&T tree aligns with organizational goals.

2. Tailor Communication:

○ For executives: Focus on ROI, risks, and high-level strategies.

○ For managers: Highlight actionable steps and implementation timelines.

○ For staff: Address day-to-day impacts and how changes will benefit them.

3. Address Resistance Using TOC’s 6 Layers:

○ Lack of agreement on the problem: Present evidence from CRT and mystery analysis.

○ Lack of agreement on the direction of the solution: Validate injections using assumption hacking.

○ Lack of agreement that the solution will solve the problem: Use FRT to demonstrate sufficiency.

○ Fear of negative consequences: Mitigate risks by piloting injections.

○ Obstacles to implementation: Highlight tactical steps and available resources.

○ Habitual behavior: Emphasize the benefits of change through success stories.

4. Pilot Solutions:

○ Test injections or tactics on a small scale to demonstrate feasibility.

○ Collect data and testimonials to build confidence.

5. Iterate and Finalize:

○ Incorporate feedback from stakeholders.

○ Refine the S&T tree as needed to ensure practicality and alignment.

Phase 6: Implementation and Monitoring

1. Launch Implementation:

○ Assign roles and responsibilities for each action and sub-action.

○ Ensure all resources (financial, technical, human) are in place.

2. Track Progress:

○ Use dashboards or regular check-ins to monitor KPIs.

○ Identify bottlenecks or deviations early.

3. Adapt as Needed Using Assumption Hacking:

○ Revisit original assumptions if new challenges arise.

○ Test alternative assumptions and refine strategies accordingly.

4. Communicate Success:

○ Share progress with stakeholders at every stage.

○ Highlight early wins to build momentum.

5. Document Learnings:

○ Create a repository of insights, successes, and failures.

○ Use these to guide future problem-solving efforts.

Checklist Summary with Enhanced Techniques

1. Problem Identification: 

○ Define, collect data, engage stakeholders, apply mystery analysis.

2. Root Cause Analysis: 

○ Build CRT, validate root causes, apply assumption hacking and mystery analysis.

3. Develop Solutions: 

○ Create conflict clouds, FRT, brainstorm injections, validate with mystery analysis.

4. S&T Tree Development: 

○ High-level goal → Strategic objectives → Tactics → Actions → Sub-actions.

○ Integrate necessary, parallel, and sufficiency assumptions.

5. Buy-In Preparation: 

○ Engage stakeholders, address resistance, pilot solutions.

6. Implementation and Monitoring: 

○ Launch, track progress, adapt with assumption hacking, document learnings.

Why This Approach Works Better

By incorporating assumption hacking, the process challenges long-held beliefs, encouraging innovative solutions. Mystery analysis ensures hidden anomalies and contradictions are addressed, providing a clearer, more accurate understanding of the problem. Together, these techniques complement TOC’s structured methods, ensuring solutions are robust, practical, and effective.

曾昭灝大廈

位於中環威靈頓街160至164號的曾昭灝大廈

曾昭灝大廈：

• 興建年份： 1970年。
• 著名租戶： 老牌茶樓蓮香樓自1996年起租用該大廈地鋪及一樓，因而聞名。
• 產權變更： 2019年，鍾楚義的資本策略以近四億港幣購入大廈所有業權，計劃重建。蓮香樓一度結業，後又重開。
• 未來命運： 由於大廈樓齡已超過半個世紀，預計仍有很高機會會被拆卸重建。

曾氏家族：

• 家族背景： 祖籍梅縣，早期在印尼經商。
• 曾晏泉（1873-1968）：
  • 曾任香港曾氏宗親會會長及崇正總會監事長。
  • 在香港開設三亞洋行（Sam A. Company），並曾擔任嘉華銀行董事。
  • 控制了於1926年註冊、1972年解散的曾忠信堂，該公司發展了包括曾昭灝大廈在內的物業。
• 曾氏家族成員：
  • 長子曾肇基： 在印尼發展事業。
  • 次子曾德堅： 在香港開設德彰洋行，代理多種英國產品，曾任南洋輸出入商會會長及中總會董。其夫人黃麗嫦是黃克競的妹妹，亦是東區婦女會的領袖。
  • 三子曾蘇齊（炎基）： 曾在三亞工作並開設德森洋行，於1967年去世，比其父早一年過世。其夫人黃德從是西區婦女會的領袖。
• 家族社會參與： 曾家多人除了參與曾氏宗親會外，也活躍於跑鵝街坊會。
• 家族物業： 除了曾昭灝大廈外，曾家還擁有上環的慶豐商業大廈。
• 慈善貢獻： 1995年，曾德堅在家鄉捐建曾晏泉方志館，以紀念其父親。

嘉華銀行 林子豐

嘉華銀行（現中信銀行國際）的百年歷史， 林子豐家族

創辦人林子豐家族（1922-1970）

• 創立背景： 1922年，林子豐與其他浸信會教友以「做會」形式合作的嘉南堂及南華公司出資在廣州創立嘉華銀號，後於1923年更名為嘉華儲蓄銀行。
• 香港發展： 1924年在香港設立分行，由林子豐和譚希天主持，業務迅速發展，1931年更成立上海分行。
• 社會貢獻： 1933年，林譚二人協助浸信會在何文田興建培正中學，由嘉華提供貸款。林子豐也曾捐建九龍城浸信會。
• 經營波折： 1935年，嘉華曾因在廣西投資失利引發擠提而短暫結業，但隔年便復業。
• 林子豐的事業與社會角色： 除經營嘉華外，林子豐也投資捷和電筒廠，並先後於1956年和1959年創辦浸會書院（現浸會大學）和浸會醫院，同時兼任浸會和培正的校長。他曾在北京協和醫學院就讀，後因故棄醫從商。其弟林樹基曾任浸會醫院義務院長。
• 林子豐的家庭： 林子豐與妻子陳植亭育有七子二女，多位子女曾參與家族事業。文章簡述了各子女的成就和婚姻，例如長子林思顯曾任嘉華及浸會學院主席，次子林思齊曾任卑詩省督等。

南洋幫年代（1971-1985）

• 股權變更： 1970年，林子豐在世時已將嘉華控制權售予遠東財務。賣盤後，林子豐的兒子林思顯和林思進仍繼續擔任嘉華的董事長和總經理。
• 遠東財務背景： 遠東財務股東包括劉本贊和林繼興。劉本贊大部分時間在美國，林繼興則較多時間在香港。
• 劉燦松入主： 1974年劉本贊去世後，劉燦松成為嘉華大股東並繼任總裁。劉燦松作風進取，擴展嘉華的分行網絡，並成立嘉華保險。
• 擴張策略： 劉燦松與其他「南洋幫」人士一樣，採取高調的擴張策略，例如興建嘉華銀行中心，並於1980年將銀行上市。
• 爆煲與後續： 1985年，由於與海託關係密切，海託爆煲牽連嘉華，被發現有巨額壞賬。1986年，嘉華由中信集團接管。劉燦松及其兄弟等人因涉嫌詐騙被香港政府通緝，後棄保潛逃。

中信年代（1986-2010）

• 中信接管： 1986年，中信集團注資取得嘉華控制權。金德琴和曹允祥分別出任嘉華董事長和總經理。
• 業務復甦： 在金德琴領導下，嘉華迅速轉虧為盈，並持續增長。
• 高層變動與風波： 1995年後，嘉華高層經歷多次變動，包括舒慈煌、郭炎和洪允成先後出任董事長。金德琴後因舊賬被指控侵吞公款而入獄。
• 現代化與更名： 1998年，嘉華正式更名為中信嘉華。陳許多琳出任零售業務主管，後於2002年成為香港銀行界首位女CEO。孔丹曾出任嘉華董事長。2002年，嘉華收購華人銀行。2007年引入西班牙BBVA為股東。2010年，正式更名為中信銀行國際。

劉鑾雄（大劉） 簡民威。吊扇出口

在70、80年代經營吊扇出口，一位是劉鑾雄（大劉），另一位是簡民威。

劉鑾雄（大劉）：

• 早期經歷： 70年代在家族生意友聯岳記吊扇廠幫手時，已重視中東市場，因當時中東地區受惠於油價暴升，經濟起飛，加上當地天氣炎熱，對吊扇需求龐大。能源價格暴升也使歐美市場對較節能的吊扇需求增加。
• 創立愛美高（Evergo）： 1978年與梁英偉共同創立愛美高，出口吊扇到中東及歐美市場。
• 事業發展： 愛美高在五年內便發展到能夠上市，大劉也因此獲得「風扇劉」的綽號。

簡民威與永達電器製造廠：

• 創立與早期發展： 1960年由合發電器行老闆簡民威創立，最初在西環吉席街生產風扇及火牛，透過合發及其他同行分銷本地市場。
• 拓展海外市場： 1965年，產品已在本港各政府大廈及學校安裝，並出口到五十多個海外市場。公司在新蒲崗興建八層高工業大廈（現為業豐工業大廈）。
• 與中東合作： 1976年與沙特阿拉伯的Al-Hakbani集團合資成立豐達製造廠（永達佔51%股權，Al-Hakbani佔40%）。
• 擴大生產規模： 1981年，豐達投資5000萬港幣在大埔工業邨設廠生產吊扇出口到中東，是當時中東資本在香港工業的最大投資，也是最早在大埔工業邨開業的工廠之一。
• 事業轉型： 80年代中期以後，市場飽和，公司業務開始下滑。
• 後續發展： 簡民威於2005年逝世，事業由其子簡肇昌（Fred Kan）接手。簡肇昌在2001年至2008年間曾任上市公司英發國際的主席。

鳳香園和泰國餐廳黃珍珍

 九龍城發跡的麵包生產商鳳香園和泰國餐廳黃珍珍。

鳳香園：

• 創立與早期發展： 1956年在九龍城寨由何茂庚創立，後遷至賈炳達道59號。1983年，何氏因子女無意繼承且自身移民加拿大，將生意轉讓給做餐車生意的潘漢聲夫婦。
• 潘氏接手後的發展： 據稱80年代曾佔全港方包批發市場兩成，24小時運作，並曾承包啟德機場員工餐廳的麵包供應。
• 現代化轉型： 2001年，鳳香園從九龍城遷至葵涌任合興大廈的二萬呎自動化廠房。2009年後，潘氏剛從英國商科畢業的兒子潘煒燊（Jacky Poon）開始接手，著重品質，堅持不使用防腐劑，並於2014年成為香港首家獲得ISO22000認證的麵包生產商。這與近日因食品安全問題結業的廖孖記形成鮮明對比。
• 現況： 鳳香園目前仍為香港主要麵包生產商，每日生產超過三千條麵包，由11部車隊運送到港九新界二百多家餐廳商鋪，包括太興、瑞士咖啡室、魚米家等連鎖餐飲集團，以及中環蘭芳園等老牌茶餐廳。

黃珍珍：

• 創立與早期發展： 1973年由泰國來港的新娘黃妮在九龍城創立，以家鄉菜聞名，迅速發展成多家分店，並帶動許多泰國同鄉在區內開設餐廳，使九龍城有「小泰國」之稱。
• 經營者變更： 80年代末，因周轉不靈，黃妮將餐廳轉讓給潘家後返回泰國。
• 潘氏接手後的發展： 在潘家管理下，黃珍珍高峰期曾有六家分店。
• 現況： 目前在九龍城百營中心設有三層旗艦店。雖然老闆是華人，但餐廳員工有六成是在此工作十幾二十年的泰國人（廚房員工全是泰國人），以保持菜餚的正宗風味。