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1. Events:

The government announces an expansion of medical school enrollment (from 3,000 to 5,000 students) → Intern doctors go on strike in protest → The government issues a "return-to-work order" → The strike escalates, with senior doctors joining the wave of resignations.

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2. Patterns of Behavior:

● Regional Imbalance: 80% of South Korea’s high-quality medical resources (top-tier doctors and equipment) are concentrated in major cities like Seoul, while rural areas (e.g., Gangwon-do, Jeolla-do) have a doctor density less than one-third of Seoul’s. Data: 3.5 doctors per 1,000 people in Seoul vs. only 1.2 in some remote regions.

● Monopoly by the Doctor Community: Artificial supply restriction: The Korean Medical Association (KMA) has long maintained industry scarcity by strictly controlling medical school enrollment quotas (only about 3,000 students per year), ensuring high doctor incomes (South Korean doctors’ average income is among the highest in OECD countries, over six times that of ordinary workers).

3. System Structure:

Once vested interests benefit, they act exclusivity to protect their advantages.

●  Doctor Community: Concerned that expansion will devalue their profession and worsen resource allocation imbalances (urban-rural/departmental disparities).

●  Government Goals: Focus on quickly alleviating medical shortages while overlooking the system’s capacity to handle the changes (training resources, job demand).

4. Mental Models:

Social Issues:

●  Patients’ "Big Hospital Dependency": South Koreans generally idolize top-tier hospitals—even for common colds, they go to Seoul National University Hospital, further exacerbating resource strain.

●  Aging Pressure: The population aged 65+ accounts for 18.4% (2023), with surging demand for chronic disease care and emergency services. However, doctor training takes over 10 years, highlighting significant policy lag.

Doctor Community:

●  "Elitism": High investment in medical education should guarantee professional returns; expansion dilutes the industry’s value.

●  "Distrust in Government": Policies fail to address grassroots overwork and specialty imbalances; expansion is seen as a perfunctory response to public demands.

Government Perspective:

●  "Quantity as the Solution": Doctor shortages require a rapid increase in supply, overlooking systemic complexity (refer to CAS theory on Page 11).

●  "Authoritative Control": Strikes = challenges to public order, necessitating forceful suppression (ignoring feedback loop effects).

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What’s the event?

Thousands of residents and interns went on strike following the announcement of new government policies that significantly increased medical student admission quotas.

What’re the system behaviors?

·      Increased strikes

·      Public protests supporting both sides

·      Disruption to medical services

·      Public sentiment shifts

What’re the system structures?

·      Healthcare system

·      Government policies

·      Union and stakeholder interests

What’re the mental models?

·      Pay equality

·      Professional responsibility: Doctors should prioritize patient care, potentially framing strikes as self-serving.

·      Government policies and impacts on medical service

·      Impacts of strikes

·      Reduced quality, job competition, and worse working conditions.

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2024 South Korean Doctors' Strike

1. Event

Resident doctors are striking against the government’s plan to increase medical school admissions from 3,000 to 5,000 per year, fearing oversupply and lower wages.

2. System Behavior

- Short-term: Hospital shortages, delayed treatments, government threats to revoke licenses.

- Long-term: Possible doctor surplus, reduced salaries, strained healthcare quality.

3. System Structure

- Government: Wants more doctors to fix shortages, especially in rural areas.

- Doctors: Say expansion will hurt quality and incomes; demand better pay for rural roles instead.

- Public: Split—some blame doctors, others blame the government.

4. Mental Models

- Government: "More doctors = better healthcare access."

- Doctors: "More doctors ≠ better care if distribution & pay aren’t fixed."

5. Possible Solutions

- Gradual enrollment increase + incentives for rural practice.

- Better negotiation between government & doctors.

Summary

A clash over healthcare policy reveals deeper issues in resource distribution. Strikes hurt patients now, but long-term fixes require systemic reform, not just more doctors.

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1. Event Core​​

​​Trigger​​: In February 2024, the South Korean government announced an annual increase of ​​2,000 medical school seats​​ starting in 2025 (from 3,058 to 5,058), aiming to add 10,000 doctors by 2035.

​​Strike Escalation​​:

o​​Feb 20​​: Over 9,000 resident doctors (73% of trainees) launched an indefinite strike; nearly 10,000 submitted resignations.

o​​March​​: 70% of medical students suspended studies; professors at 40 universities resigned or reduced services.

o​​June​​: Private clinics joined (4% closed); the Korean Medical Association (KMA) organized nationwide protests.

​​Government Response​​:

oFiled criminal complaints against 5 KMA leaders for "obstructing justice".

oDeployed military and public health doctors (138 initially, later 250) to fill gaps.

2. System Behaviors​​

​​(1) Healthcare Collapse​​

​​Service Disruption​​: Major hospitals (e.g., Seoul National University Hospital) closed ER/oncology wards (10/60 units); ​​>50% surgeries canceled​​.

​​Resource Shortages​​: Patients rejected by 7 hospitals consecutively; an 80-year-old woman died after cardiac arrest due to delayed care.

​​Economic Loss​​: Hospitals lost ​​740,000daily∗∗;AsanHospitalfaced∗∗7.4M single-day debt​​.

​​(2) Escalating Confrontation​​

​​Government Actions​​ ​​Doctor Countermeasures​​

Issued back-to-work orders (3-year jail threat) Doctors changed phone numbers; evaded home visits

Paused license suspensions as "olive branch" KMA threatened "total strike" (senior doctors joined)

Promised 80-hour weekly caps & OB/GYN subsidies Rejected negotiations; demanded policy withdrawal

​​(3) Public Backlash​​

​​Support Reversal​​: Initial 75% public backing for enrollment expansion plummeted to ​​80% opposing strikes​​ by June due to treatment delays.

​​Patient Protests​​: Cancer patient groups declared, "Doctors abandon patients to die".

3. System Structures​​

​​(1) Resource Imbalance​​

​​Domain​​ ​​Issue​​ ​​Data​​

​​Regional​​ Seoul vs. rural disparity Rural ER access <45% (vs. Seoul’s 90%)

​​Specialty​​ Pediatrics/ER shortages vs. dermatology oversupply Pediatric residency vacancy: ​​74%​​ (152/205 slots unfilled)

​​Legal Risk​​ High malpractice suits in critical fields Korean doctors’ litigation rate: ​​580× UK’s​​

​​(2) Institutional Conflicts​​

​​Education-Employment Mismatch​​: Medical graduates flock to urban/high-income specialties (e.g., plastic surgery), ignoring rural/essential fields (pediatrics).

​​Labor Exploitation​​: Residents comprise ​​40%​​ of major hospital staff (vs. 14% in U.S.), working ​​100+ hours weekly​​ for 1/3 attending physicians’ pay.

​​Payment Flaws​​: Fee-for-service models prioritize profitable procedures (e.g., imaging) over preventive care.

​​(3) Policy Failures​​

​​Deterrence Collapse​​: License threats backfired, triggering professor resignations.

​​Inadequate Incentives​​: Subsidies for rural OB/GYNs ignored litigation risks; doctors refused relocation.

4. Mental Models​​

​​(1) Government Perspective​​

​​Core Belief​​: "Doctor shortage = quantity problem" → Expansion is a ​​constitutional duty​​ (ensure healthcare access).

​​Hidden Assumption​​: Supply increase automatically fixes distribution (ignores structural incentives).

​​(2) Doctor Perspective​​

​​Professional Anxiety​​: Fears of "​​income drop​​" and hyper-competition (especially in lucrative fields).

​​Distrust of Government​​: Policies imposed without consultation; core issues (hours, lawsuits, rural gaps) unaddressed.

​​(3) Public Sentiment​​

​​Short-Term Anger​​: Supported expansion but condemned strikes → "​​Doctors abandon patients​​" narrative spread.

​​Long-Term Contradiction​​: Demanded cheap care (e.g., $2,500 appendectomy) but ignored doctor burnout.

Conclusion: Systemic Deadlock and Pathways​​

​​Crisis Essence​​: Not a labor dispute but a ​​structural breakdown​​ (resource allocation + payment systems + legal risks).

​​Resolution Barriers​​:

o​​Government​​: Must abandon "quantity-only" approach; boost salaries in high-risk fields 2–3× and reform malpractice laws.

o​​Doctors​​: Accept partial enrollment hikes in exchange for ​​hour protections​​ and rural healthcare rebuilding.

o​​Public​​: Recognize need for ​​cost rationalization​​ (e.g., higher insurance premiums for sustainable care).

​​Status Quo Risk​​: If unaddressed, 2025 enrollment expansion will worsen specialty imbalances and trigger recurring strikes.

​​

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1. Event Overview

What is the Event?

The 2024 South Korea Doctor Strike is an ongoing labor action initiated by trainee doctors (residents and interns) in response to the government's announcement to increase medical school admission quotas from 3,000 to 5,000 students annually. The strike began in February 2024 and has involved:

• Mass resignations of trainee doctors from major hospitals
• Walkouts affecting patient care and hospital operations
• Escalation to include senior doctors and medical faculty
• Government "back-to-work" orders that intensified the conflict
• Disruption of South Korea's healthcare system

2. System Behaviors

The strike demonstrates several key system behaviors:

Escalating Resistance Pattern:
• Initial policy announcement → Trainee doctor protests
• Government pressure → Increased resistance
• "Back-to-work" orders → Stronger waves of protests and resignations
• Senior doctor involvement → System-wide disruption

Reinforcing Feedback Loops:
• More government pressure → Greater doctor solidarity → Stronger resistance
• Hospital disruptions → Public attention → Political pressure → Harder government stance
• Media coverage → Public debate → Polarized positions → Entrenched conflict

Unintended Consequences:
• Policy intended to improve healthcare access → Reduced current healthcare capacity
• Efforts to control doctors → Loss of medical workforce
• Attempts to resolve quickly → Prolonged conflict

3. System Structures

Several structural elements contribute to the conflict:

Hierarchical Medical System:
• Rigid training hierarchy (interns → residents → specialists)
• Limited autonomy for trainee doctors
• High barriers to entry and advancement

Government Healthcare Policy Structure:
• Centralized decision-making without stakeholder consultation
• Top-down policy implementation
• Limited feedback mechanisms from medical professionals

Economic Structures:
• Medical education as investment with expected returns
• Competition for specialist positions
• Fee-for-service healthcare model affecting doctor income

Legal and Regulatory Framework:
• Government authority over medical education quotas
• Labor laws affecting healthcare workers
• Professional licensing and certification requirements

4. Mental Models

Conflicting mental models drive the dispute:

Government Mental Model:
• "More doctors = Better healthcare access"
• "Market forces will adjust to increased supply"
• "Government has authority to make healthcare policy"
• "Doctors should prioritize public service over personal interests"

Doctor Mental Model:
• "Quality over quantity in medical training"
• "Professional autonomy and self-regulation"
• "Economic security through controlled supply"
• "Government doesn't understand medical profession complexities"

Public Mental Models:
• "Doctors are privileged and should serve public interest"
• "Healthcare is a right that should be accessible"
• "Professional strikes harm innocent patients"
• "Both sides should compromise for public good"

5. Systems Analysis Framework

Behavior Over Time Graph (BOTG)

Key variables showing concerning trends over time:

Doctor Participation in Strike (↑):
• Started with trainee doctors
• Expanded to senior doctors
• Continues to grow despite government pressure

Healthcare System Capacity (↓):
• Reduced patient care capacity
• Delayed surgeries and treatments
• Emergency services affected

Government-Doctor Relations (↓):
• Initial policy announcement created tension
• "Back-to-work" orders worsened relations
• Trust and cooperation at historic lows

Public Support Variability (~):
• Initial sympathy for healthcare access
• Growing concern about service disruptions
• Mixed opinions on both sides

Figure 1

Causal Loop Diagram (CLD) Analysis

Reinforcing Loop R1: Resistance Escalation
Government Pressure → Doctor Resistance → Strike Intensity → Public Attention → Political Pressure → Government Pressure

Reinforcing Loop R2: Solidarity Building
Strike Actions → Doctor Solidarity → Collective Action → Strike Actions

Balancing Loop B1: Public Pressure
Healthcare Disruption → Public Concern → Pressure for Resolution → Negotiation Attempts → (Potential) Conflict Resolution

Reinforcing Loop R3: Trust Erosion
Authoritarian Approach → Trust Breakdown → Communication Failure → Misunderstanding → Authoritarian Approach

Figure 2

6. Why "Back-to-Work" Orders Intensified the Conflict

The government's "back-to-work" orders paradoxically strengthened the strike for several systems reasons:

Psychological Reactance:
• Authoritarian approach triggered professional autonomy concerns
• Doctors felt their expertise and judgment were being dismissed
• Created "us vs. them" mentality

Systems Leverage Points:
• Government focused on symptoms (work stoppage) rather than root causes (policy concerns)
• Failed to address underlying mental models and structures
• Increased system stress rather than reducing it

Unintended Consequences:
• Orders legitimized doctors' concerns about government overreach
• Created moral imperative for resistance
• Shifted public narrative from healthcare access to professional rights

Network Effects:
• Senior doctors joined to support trainees
• Medical schools and faculty became involved
• International medical community attention

7. Systems-Based Recommendations

Based on systems thinking principles:

Address Mental Models:
• Facilitate dialogue to understand different perspectives
• Create shared vision for healthcare improvement
• Acknowledge legitimate concerns from all stakeholders

Modify System Structures:
• Establish formal consultation mechanisms for policy changes
• Create graduated implementation timeline
• Develop quality assurance frameworks for expanded medical education

Change Intervention Points:
• Focus on high-leverage points (relationships, trust, communication)
• Address root causes rather than symptoms
• Build collaborative rather than adversarial approaches

Design Balancing Loops:
• Create feedback mechanisms for policy adjustment
• Establish early warning systems for stakeholder concerns
• Build in flexibility for course correction

8. Conclusion

The 2024 South Korea Doctor Strike illustrates how complex systems can produce unintended consequences when interventions focus on isolated parts rather than systemic relationships. The government's well-intentioned policy to increase healthcare access created a cascade of resistance due to misaligned mental models, inadequate stakeholder engagement, and authoritarian implementation approaches.

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1. Event (Visible Layer)

Immediate Trigger: The South Korean government announced a medical school enrollment quota increase from 3,000 to 5,000 students per year, aiming to address doctor shortages (especially in rural and essential care fields).

Doctors' Response:

Interns and resident physicians (40% of the nation's doctors) launched mass resignations and strikes.

Senior doctors joined in solidarity, refusing non-emergency treatments.

Government Actions:

Issued "return-to-work" orders, threatening license suspensions or legal action.

Deployed military and public health doctors as temporary replacements.

2. Patterns of Behavior (Hidden Layer)

Short-Term Dynamics:

Doctor strikes → Hospital closures → Patient care disruptions → Public anger escalates.

Government crackdowns → Harder-line protests → Deadlock persists.

Long-Term Trends (BOTG Analysis):

Doctor Supply: Medical school quotas were frozen for a decade, slowing growth (2.6 doctors per 1,000 people vs. OECD average of 3.7).

Resource Distribution: 80% of doctors cluster in Seoul/metro areas, leaving rural regions chronically underserved.

Policy Lag: Even with expanded quotas, new doctors require 10+ years of training—no immediate relief.

3. System Structure (Deep Layer)

Key Feedback Loops (CLD Analysis):

Reinforcing Loop (R1):

text

Quota increase → Doctors fear income/status loss → Strikes → Government repression → Stronger collective resistance → Policy paralysis

Balancing Loop (B1):

text

Aging population + Rising demand → Government expands quotas → Doctor supply eventually rises (after 10 years) → Partial demand relief

Structural Flaws:

Payment System: Specialists rely on private hospitals/high-volume surgeries; primary care offers weak incentives.

Training Monopoly: Incumbent doctors control specialty training slots, creating "gatekeeping" barriers.

4. Mental Models (Core Layer)

Government Perspective:

"More doctors = solution to shortages" (linear thinking).

Ignores doctors' concerns about quality dilution (e.g., strained training resources).

Doctors' Perspective:

"Expansion devalues our profession" (zero-sum mindset).

Demands better working conditions/rural incentives over blanket quota hikes.

Public Perspective:

"Doctors are selfish" (moral outrage), yet unchanged reliance on urban mega-hospitals.

Systems Intervention Proposals

Leverage Points:

Mental Models:

30-day "cooling-off period" + tripartite data platform to publicly share specialty/regional gap analyses.

Structural Reforms:

Quota-Service Binding: For each new enrollment slot, require 5-year rural service;违约者补交 1.5x training costs.

DRG Point Adjustments: +30% reimbursement for ER, pediatrics, and rural high-need services to rebalance incentives.

Training Transparency: Allocate 50% of specialty review board seats to health officials/independent scholars.

Feedback Control: Tie annual quota adjustments to "primary care utilization rates" to prevent oversupply.

Key Takeaways

Systems Insight: Surface-level conflict masks deeper structural imbalances and clashing mental models.

HR Parallel: Similar to corporate policy changes (e.g., performance reforms) failing when employee concerns are dismissed.

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Systems Thinking Iceberg analysis of the 2024 South Korean doctor dispute:

1. Visible Event (Tip of the Iceberg)

In February 2024, thousands of South Korean doctors and medical students went on strike, resigning from hospitals and boycotting classes to protest a 65% expansion in medical school admissions (from 3,058 to 5,058 students annually). This triggered:

• Hospital chaos: 50% fewer surgeries, overwhelmed emergency rooms, and rural clinics closing due to staff shortages.

• Public backlash: 85.6% of Koreans condemned the strike as selfish amid a healthcare crisis.

• Government crackdown: Threats to revoke licenses and legal action against striking leaders.

2. Underlying Patterns (Above Waterline)

3. Systemic Structures (Below Waterline)

Structural Drivers:

1. Private Healthcare Dominance:

o 95% of hospitals are private, prioritizing high-profit specialties (e.g., dermatology) over low-paying, high-demand fields (pediatrics, ER).

o Rural areas lack incentives (e.g., tax breaks, housing subsidies) to retain doctors.

2. Education Pipeline Bottlenecks:

o Medical school admissions are centralized, with limited slots for rural-focused training.

o Residency programs favor urban hospitals, perpetuating regional imbalances.

3. Policy Rigidity:

o The government’s top-down approach ignored doctors’ demands for regional quota increases or specialty pay reforms, deepening mistrust.

4. Mental Models (Foundation)

Core Beliefs Fueling the Crisis:

• Doctors’ Perspective:

o “Expansion = income dilution”: Fear that oversupply will reduce salaries and prestige.

o “Quality over quantity”: Belief that better training, not more doctors, is the solution.

• Government’s Perspective:

o “Demographic time bomb”: Panic over aging population and doctor shortages.

o “Top-down efficiency”: Trust in centralized planning over decentralized solutions.

• Public’s Perspective:

o “Doctors are privileged”: Resentment toward high-income professionals striking during a crisis.

o “Healthcare is a right”: Demand for equitable access, regardless of cost or doctor opposition.

Conclusion

The strike was not an isolated event but a symptom of deep systemic flaws: privatization-driven inequality, rigid education policies, and clashing mental models about healthcare’s purpose. Without addressing these underlying structures, short-term fixes (e.g., partial expansion) will fail to resolve the crisis.

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Group 4 HR Rock the World

1. What is the event?

Trainee doctors in South Korea launched a prolonged strike in 2024 in response to the government's announcement of increasing the quota for medical schools from 3,000 to 5,000.

2.What are the system behaviors?

- Trainee doctors express their protests through strikes, which may lead to a reduction in the supply of medical services and delays in some treatments.

- The government insists on the enrollment expansion policy, forming an oppositional interaction with the doctor group.

- The public may feel anxious due to the tension of medical resources, and their attitudes towards the event may be divided (supporting doctors or the government).

3.What is the system structure like?

- Core elements: the government (policy maker), the trainee doctor group (stakeholder), the medical system (resource bearer), and the public (service audience).

- Relationship chain: The government's enrollment expansion policy affects the career prospects of doctors (such as intensified competition and possible decline in treatment), triggering a doctor strike; The strike reacts on the operation of the medical system and the interests of the public, which may then put pressure on the government's policies.

-Conflicts of interest exist within the system structure: The government prioritises the equitable distribution of public medical resources; doctors are concerned about medical quality and work intensity; patients worry about the quality of medical services.

4.What are the mental models?

- Government: It is believed that enrollment expansion can alleviate the shortage of medical resources and improve the overall medical service capacity, focusing on macro public interests.

- Trainee doctors: They are worried that enrollment expansion will lead to intensified career competition, reduced professional thresholds, and worsened future practice environment, focusing on individual career development rights and interests.

- Public: They may both look forward to more medical resources and worry about the impact of strikes on current medical needs, and there is a trade-off cognition between "short-term service interruption" and "long-term resource improvement".

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1. Let store managers become a partner to motivate sales

2. Shorten service time to increase service quality

3. Have customers rate the staff, which affects their commission

4. Marketing strategy: provide a solution to hair loss, have free scalp examination

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Mini Group Project:

1.If they open new shops, make sure that they have more traffic

2.Close the unprofitable shops that don’t do well

3.Focus on recruiting more capable people who are good at sales and services

4.Build more hair-washing beds so people can be served

5.Set a system to reduce the customers’ complaints

6.Set up a promotion system to employees who do well for the technicians and promote them to be the shop owner and can get the company share

Core Logic Summary

By increasing base salary to reduce employees’ survival pressure, adding service quality rewards to guide behavioral shifts, and optimizing performance indicators to clarify that "good service drives better sales," we aim to achieve a positive cycle:

Quality service → Customer satisfaction → Higher repurchase rates → Long-term sales growth → Stable employee income (no need for hard-selling)

This cycle fundamentally resolves the conflict between "sales" and "service" goals.

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Employees

1. Adjust the salary system: 70% basic salary (earnable by meeting basic work requirements) + 10% sales commission + 10% customer reviews (positive reviews)

Store managers:

1. Lower store performance targets and set reasonable Level 1 targets that at least 90% of stores can meet

2. Include turnover rate in store managers' assessments

3. Include positive store reviews in store managers' assessments

Customers:

1. Customers who recharge can earn points

2. Those who refer friends can earn points

Brand:

1. Optimize the brand positioning from "treating hair loss" to "hair care"

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1.The Vicious Cycle Breakdown

(Current State)

Low base wage → Hard selling pressure → Rushed service → Customer complaints → Fewer repeat clients → Lower sales → Unrealistic targets → Manager/employee demotivation → High turnover

Key Failures:

• Incentives misaligned with service quality

• Targets disconnected from capacity (1-2 beds/store)

• Profit focus undermining long-term sustainability

Solutions: Redesigning Goals, Incentives & Structure

2.Align Incentives with Real Capacity

(1). Current Flaw Redesign

3% sales/6% service commissions → encourages overbooking

Hybrid Commission:

• 3% base commission for all completed services

• +2% bonus if customer retention rate >60%

• +1% bonus if Google review ≥4.5 stars

Unrealistic sales targets (only 30% managers hit 70% of L1)

Dynamic Target Setting:

• Base targets on store capacity (e.g., max 8 clients/day/bed)

• Tier bonuses on attainable thresholds (L1 = 70% capacity utilization; L2 = 85%; L3 = 95%)

(2) Restructure Manager Roles

Current Role Redesigned Role

Focus on hitting sales targets (3% store sales)

Coach-Performance Manager:

• Salary: 70% base + 30% team retention/service quality bonus

• KPIs: Staff retention rate (>80%), customer satisfaction (NPS≥40), capacity utilization

• No training/coaching incentives Require weekly skill-building sessions (e.g., consultation techniques)

(3) Break Capacity-Overbooking Loops

• Digital Booking System:

• Limit daily appointments to 120% of bed capacity (e.g., max 10 bookings for 2 beds) → reduces rushed service.

• Add buffer times (15min slots) for complex cases.

• Service-Volume Bonus: Reward managers for consumption rate (services rendered/sold packages) >85% → aligns sales with deliverable capacity.

(4) Cultural Shift: From Sales to Retention

• Replace "Sales Leader boards" with:

• "Customer Loyalty Index" (repeat rate + referral %)

• "Quality Champion" awards (based on reviews)

• Staff Empowerment: Allow employees to comp 1 service/month for dissatisfied clients → reduces complaints.

(5)Metrics to Balance Dual Goals

• Goal Performance Metric Incentive Weight

• Revenue Stability Sales target attainment (capacity-based) 40%

• Service Quality Customer satisfaction (NPS/reviews) 30%

• Sustainable Capacity Service consumption rate (≥90%) 20%

• Employee Wellbeing Staff retention rate 10%

3.Expected Systemic Impacts

1.Short-Term (3-6mo):

• Customer complaints ↓ 50% (reduced hard selling + overbooking)

• Staff turnover ↓ 30% (fair targets + well-being focus)

2. Long-Term (1yr+):

• Virtuous Cycle: Better service → higher retention → stable revenue → achievable targets → motivated staff → better service.

4.Execution:

(1)Use 1-2 stores in different city as model store to see the intervention effect,flagship store; (2) Expand the models to more stores; (3) Patience about the outcome and set a tolerance period.

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Offline (Physical Stores) and Online Sales Strategy Optimization

Current Challenges:

Offline stores are experiencing increased sales but declining consumer engagement and satisfaction.

Long-term risks include brand deterioration and reduced customer loyalty.

Offline stores aim to provide both sales and services, but face competition and inconsistent customer experiences.

Online platforms need to integrate product offerings with seamless service to remain competitive.

Strategic Objectives:

1. Shift Sales Focus from Offline to Online:

Leverage online channels to boost overall sales volume.

Enhance customer experience through integrated product and service offerings online.

2. Improve Service Levels:

Elevate the quality of service in both online and offline channels.

Ensure a consistent and high-quality customer experience across all platforms.

3. Marketing and Customer Engagement:

Implement flexible marketing strategies to attract and retain customers.

Utilize targeted promotions, loyalty programs, and personalized communication.

4. Store Competition and Customer Convenience:

Enable customers to enjoy consistent service regardless of the store they visit.

Reward stores based on performance metrics such as customer satisfaction and sales.

5. Incentive and Compensation Structure:

Develop a balanced compensation package combining fixed salary and performance incentives.

Set realistic targets focusing on:

Number of customer visits

Quality of service provided

Incentives should motivate staff to improve customer engagement and service excellence.

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Reconstructed Incentive and Performance System Centered on Corporate-Level Multi-Channel Strategy

I. Corporate Strategic Positioning: Clear Division of Roles

Multi-channel sales is defined as a corporate-level strategic priority, overseen by a headquarters-led "Omnichannel Operation Center" responsible for building and operating online stores, live-streaming, community marketing, and third-party platform partnerships. These channels take on the primary task of driving sales growth.

Physical stores, meanwhile, refocus on their core function: enhancing service experience. They serve as the "trust anchor" for all channels, converting traffic from multi-channel sources through high-quality services, thereby fundamentally reducing sales pressure on stores.

II. Incentive Mechanisms: Differentiated by Roles

A. Incentives for Corporate Omnichannel Teams (Driving Revenue Growth)

A "Omnichannel Growth Bonus Pool" is established, with 5% of incremental sales from online channels (vs. previous periods) allocated as bonuses for the team (including operators, live-streamers, and customer service staff). For example, an extra 2% bonus is awarded if a single live-stream achieves ¥100,000 in GMV.

A "New Customer Conversion Incentive" rewards online operators with 3% of a new customer’s first in-store spending, encouraging online teams to actively drive traffic to physical stores.

B. Incentives for Physical Stores: Service First, with Natural Sales Rewards

Base Security & Service Incentives

Store staff salaries are set at the 75th percentile of industry standards to reduce income anxiety, allowing focus on service.

A "Service Excellence Award" is granted to entire store teams if they meet targets for customer satisfaction (in-store ratings ≥4.8/5), repurchase rate (≥40%), and zero aggressive sales complaints.

Sales Incentives: Service-Driven Rewards

Stores are not assigned rigid sales quotas. Instead, staff earn an 8% commission on sales derived from positive service experiences (e.g., customers voluntarily purchasing products after 满意服务). This rate is higher than for forced sales, encouraging "service-led sales."

III. Performance Metrics: Focused and Synergistic

A. Corporate-Level Omnichannel Metrics

Metric Category Specific Metrics Target Examples

Channel Growth Online sales as % of total sales ≥40% annually

User Conversion Conversion rate of online leads to first in-store visit ≥25%

Cross-Channel Efficiency Redemption rate of online vouchers in stores ≥95%

B. Store Metrics: Service (70%) + Supplementary Sales (30%)

Core Service Metrics: In-store customer satisfaction (≥90% "very satisfied"), compliance with service duration standards, and ≥95% rate of "no aggressive sales" feedback.

Supplementary Sales Metrics: Ratio of service-driven natural sales to total store sales (≥60%), and rate of guiding in-store customers to repurchase via online channels (≥30%).

IV. Implementation Guarantees

Omnichannel teams receive dedicated resources (budgets, equipment) from headquarters, with no diversion of store resources.

Stores are only required to assist with basic tasks like voucher redemption, not burdened with online sales targets.

Staff training clarifies that "corporate channel expansion eases store pressure," aligning teams with the strategy.

This system turns multi-channel sales into a corporate-wide initiative, freeing stores to focus on service. It creates a virtuous cycle: corporate channels drive growth → stores retain customers through service → omnichannel repurchases increase, achieving true synergy between service and sales.

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1. Separate service and product sales.

2. Test if the service can generate profit. If not, close the offline service stores with unsatisfactory data that cannot generate a positive profit for a certain period, thereby reducing costs.

3. Removing service costs from the product and expanding sales channels with a more competitive price.

4. Reinvest the cost saved from offline stores into marketing.

5. Link the customers' level of satisfaction to assessment criteria

6. Experiment with the economy of scale. Consolidate smaller service stores into bigger ones, which will help reduce service costs and increase service quality.

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Product Pricing:

The products are divided into high-end and mid-end lines, with some stores being transformed into high-end stores.

Performance Evaluation Plan:

Add a customer satisfaction score: Maintain 70% of the sales goal, plus 10% for customer satisfaction.

Training:

Enhance service technician training. Train employees not only from a sales perspective but also need to include service aspects.

Sales:

Add new product sales channels, such as live-streaming sales.

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Group7: The Struggled Hair Care Chain Case

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Group7: The Struggled Hair Care Chain Case

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Group7_The Struggled Hair Care Chain Case

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The bees are divided into two groups (Group A and Group B) and measured their honey collection daily.

On the first day, the group with the higher honey collection would win and receive rewards.

If they damage other group，they would score 0 points.

Starting from the second day, an additional rule is added: if the total honey collection breaks historical records, both teams would earn extra rewards.

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If the goal is to collect the most honey, bees will stay close to the hive and continue visiting the productive flower fields until those fields are depleted.

If the goal is to visit the most flowers, bees will spread out and cover more ground, but they won’t bring back much honey.

The best plan is to split the bees into two groups: a production group and a discovery group.

The discovery group focuses on visiting many flowers and finding new areas with potential for the future.

The production group focuses on collecting as much honey as possible from the fields that are already proven to be productive.

With both groups working together, the bees can continue to produce honey while also ensuring that new flower fields are ready for later.

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A. Process & Measurement Indicators

1. Process Metrics Dimension

Daily reports → good for short term, but not friendly for high-efficiency/high-performing bees in the long run.

Adjustment: only under-performing bees write daily reports; high-performers write weekly reports or none at all.

2. Process Breakdown

Split into stages: encountering flowers, collecting nectar, analyzing different flower conditions.

B. Regional Operations & Goals

3. Regional Assignment

Different bees are assigned to different flower areas → avoids duplicate exploitation.

Risk: dissatisfaction from bees assigned to less-favorable areas.

Mitigation: different areas have different target metrics (not absolute numbers but completion percentages).

C. System Optimization

4. Path Optimization

Add process tracking: analyze repeated visits to the same area/flower type.

Identify optimal path and required time.

Create a reminder mechanism: suggest optimal path to bees.

Includes “lazy bee” monitoring and leader alerts.

5. Honey Concentration Optimization

Analyze nectar concentration differences among flower types.

For high-quality flowers, allocate more effort for extraction.

D. Incentives & Governance

6. Reward & Punishment Mechanism

If a reminder is given but the task is not completed → punishment.

If the task is completed after reminder → reward.

7. Bee Ranking System

A leaderboard shows top-performing bees.

Possibility of bottom-tier elimination mechanism.

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1.       Core System Components:

2. Data Capture Points:

Departure: Numbering, departure time

Flower Visits: GPS, time spent, honey collected (estimated via bee weight delta before/after visit?).

Return & Weigh: Return time, honey delivered (measured)

3. Key Performance Metrics (KPIs):

Individual Bees:

Efficiency: (Honey Delivered) / (Time Away) or (Honey Delivered) / (Energy Expended)

Productivity: Total Honey Delivered (per trip/day)

Exploration Score: % New Flower Patches Discovered (vs. returning to known)

Persistence: Failure Rate Recovery(attempts after returning empty)

Colony (Hive):

Throughput: Total Honey Collected per Day/Week

Energy Balance: (Total Honey Calories) - (Total Bee Energy Expended)(critical for survival)

Resource Optimization: Average Distance Flown per Unit Honey

2.Mental Models & How They Affect Mental model

Cognitive Miser

Bees use simple heuristics to save energy

Reward task completion even with low efficiency

Adaptive Learner

Bees learn from experience & environment

Reward discovering new, productive patches

Social Communicator

Bees communicate via waggle dance/chemical signals

Reward sharing successful locations & avoiding known failures

3. Shortly and future?

Bee will follow the rules shortly. However, in long term, we need to implement the honey depletion risk measures

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Mini Project Group 4

1.working peers monitoring system from the bees’ peers: report to the bear (the boss) and the disciplinary committee of the bees, and also policing in the Chinese socialism way as the governing system

2.honey source is under a threashold, so to forbid the bees to only collect the honey in the nearby areas, bees who are willing to go far away, such as going abroad to be sent to Huawei Pakistan, could be rewarded with more honey

3.Set a punishment system evaluating the death rate, if it goes too high, all bonus will be cancelled for everyone.

4.The new performance system should shift from a "single-dimensional focus on results" to a multi-dimensional evaluation that considers "results + process + collaboration + long-term value" to prevent misconduct and ensure fairness and sustainable development.

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Appraisal Objects

All worker bees (individuals) and foraging teams (teams) involved in honey collection tasks in the bee house.

Appraisal Dimensions & Indicators

Can be divided into two patterns: individual vs team performance

Individual Performance

1）Quantitative Result Indicators

①Honey Weight & Difficulty Coefficient

Base score = Honey weight (g) × Difficulty coefficient.

Difficulty coefficients include: Distance coefficient (1.2-1.5 for remote flower sources, 1.0 for nearby ones), Location difficulty coefficient (1.3-1.8 for complex terrain/rare flower species, 1.0 for regular terrain), Time coefficient (1.2 for off-peak hours/adverse weather, 1.0 for regular hours).

②Honey Quality

Evaluated by purity (10-15 points for impurity-free; 5-9 points for slight impurities; 0-4 points for more impurities) and nectar type (3-5 extra points for rare flower honey).

2）Non-Quantitative Behavioral Indicators

①Work Discipline

Attendance compliance; Adherence to bee house rules; Emergency response.

②Additional Contributions

Discovery of new foraging locations/flower species (5-10 points each after verification); Training new worker bees (3 points for each successfully trained bee).

③Team Collaboration

Evaluated by peer feedback (3-5 points for active assistance, e.g., helping overloaded peers or sharing nectar sources; 2-4 points deducted for selfish behavior).

Team Performance

①Total Honey & Average Quality

Calculated by total team honey (40%) and average quality score (20%), with 10 extra points if exceeding the target by over 10%.

②Collaboration Efficiency

Rationality of nectar source allocation (5 points for no overlapping foraging areas); Task response speed (8 points for team attendance rate ≥90%).

③Sustainable Development

Number of new flower species developed (3 points each); Number of new worker bees trained (5 points for every 5 bees).

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System Design Based on Digital Sensor Applications

1. Rationality Assumptions:

Bee Characteristics: Bees are social insects capable of communicating via the "waggle dance," possessing learning abilities (e.g., memorizing flower locations), and optimizing flight paths (minimizing flight distance). Each bee has a unique ID (achievable via microchip sensors).

2. Hive Infrastructure: The hive features a "Weighing Station" (an automated station that records bee ID, return time, and nectar weight). Data is stored and analyzed by a central system (e.g., Raspberry Pi + database).

3. Performance Objectives: Maximize nectar collection efficiency (nectar per unit time), while encouraging exploration, reliability, and group collaboration. The system should be fair, scalable, and adaptable to environmental changes.

Performance System Design: BeePerf System

The BeePerf System is a modular framework comprising three main modules: Data Collection, Performance Evaluation, and Feedback & Rewards. The system operates on a daily cycle (24 hours), evaluating both individual bee and colony performance.

1. Data Collection Module

Departure Registration: When a bee departs the hive, its ID is scanned to record the departure time.

Flower Monitoring: Flowers are embedded with low-power sensors (e.g., IoT devices), recording nectar levels, visiting bee IDs, and visit times (assumed low-cost and deployable). Weighing Station: When a bee returns, the nectar is weighed (accuracy ±0.1g), recording the return time, nectar weight, and bee ID.

Central Database: Stores all data (e.g., SQLite), including bee attributes (e.g., age, experience) and flower maps (location, nectar replenishment rate).

Performance Evaluation:

Flight Distance Nectar Weight

Feedback & Rewards Module

Purpose: Provide real-time feedback to motivate bees to improve and adapt to changes.

Individual Rewards: High-performing bees (top 20%) receive extra pollen or sugar water (simulating natural rewards).

Group Rewards: When the Total Daily Nectar (TDN) exceeds the target, the entire colony receives a "rest day" (reduced foraging activity to conserve energy).

Penalties: Bees with a low Reliability Index (RI) (e.g., return rate < 80%) undergo "training" (simulated route guidance).

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To design a “perfect” bee performance system that incentivizes bees to collect nectar efficiently without overworking and damaging the garden ecosystem, we need to balance three core goals:

1. Motivate bees to collect nectar efficiently.

2. Prevent overexploitation that could collapse the garden ecosystem.

3. Ensure bees are motivated to work within a reasonable timeframe.

Here is a detailed “Hive Performance Contract 3.0” that treats bees as “independent contractors” and uses data and reward structures to guide their behavior.

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Core Design Philosophy

1. “Nectar Credits” Replace “Working Hours”: Instead of setting specific working hours, each bee is given a daily “energy credit” (nectar-credit, NC). Once a bee collects its quota, it can return early.

2. “Garden Health Index” Affects Bonuses: The hive is equipped with sensors to measure real-time flower density and pollen diversity. If the index drops, the entire colony’s bonuses are reduced, encouraging bees to self-regulate.

3. “Tiered Rewards” + “Diminishing Marginal Returns”: The first 80% of the quota is rewarded at a high rate, but the reward drops sharply for the 80-100% range. Any collection beyond 100% yields zero reward, eliminating the incentive to overwork.

4. “Reputation NFTs” and “Mating Market”: The efficiency and ecological compliance records of bees are recorded on a blockchain as “reputation.” Male bees with high reputation are prioritized in the queen’s mating selection, creating evolutionary pressure.

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Specific Operating Mechanism

1. Daily Nectar Credits (NC) Quota

• Personal Base Quota: Calculated based on body size and experience, approximately enough to fly for 30-40 minutes with a full load.

• Dynamic Adjustment: If the Garden Health Index (GHI) > 90%, the quota increases by 10%; if < 60%, it decreases by 20%.

• Tradable Remaining Credits: Diligent bees can sell their unused NC to those who want to collect more, forming a “time-limited carbon trading” market. The price is determined by supply and demand, further discouraging overcollection (as buying credits becomes expensive).

2. Nectar Collection Reward Function (Diminishing Margins)

Collection Percentage Nectar-to-Honey Conversion Rate Additional Bonus

0-80% 1 NC = 0.8 mg of honey Normal

80-100% 1 NC = 0.3 mg of honey Decreased

>100% 1 NC = 0 mg of honey Forced Return

3. Garden Health Index (GHI)

• Algorithm: GHI = (Flower Density Weight 0.4 + Pollen Diversity 0.3 + Water Quality 0.2 + Soil Nitrogen and Phosphorus Indicators 0.1).

• Transparency: The hive entrance has an LED ticker displaying the index in real-time. Bees can see “whether it’s worth working hard today” before taking off.

• Penalty Mechanism: If GHI < 50% for three consecutive days, the entire worker bee population enters “conservation mode,” with NC quotas halved and the queen ceasing egg-laying for 24 hours.

4. Reputation NFT & Mating Market

• Blockchain Data: Each time a bee returns, it scans a QR code on its wing tag, automatically recording “collection efficiency, route optimization, and compliance violations.”

• Reputation Score: Maximum 100 points. Bees with scores below 60 are banned from mating flights for the season.

• Queen’s Mating Selection: The system automatically screens the top 10% of male bees by reputation, accelerating the spread of “good genes.”

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Behavioral Psychology Reinforcement

1. “Return Red Carpet”: The top 5% of bees by efficiency each day trigger a red LED at the hive entrance, satisfying their vanity.

2. “Hive Spotify”: Bees who reach 80% of their quota can activate “victory music” in the hive. Other bees hear “someone is off early,” creating social comparison pressure.

3. “Lazy Bee Public Shaming”: Bees who use less than 50% of their NC for three consecutive days have a “blue dot” sticker on their wings and are “nipped” (lightly attacked) by fellow bees, forming a group norm.

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Preventing “Cheating” and “Overtime Work”

1. Geofencing: RFID readers are placed at the garden boundary. Bees flying out of bounds lose their daily NC, preventing them from working overtime in other gardens.

2. Weight Sensors: If a bee returns with an overloaded nectar sac (>110% theoretical value), an “unloading valve” is activated to force it to expel the excess nectar, maintaining ecological balance.

3. AI Patrol Bees: Miniature drones (camouflaged as wasps) patrol, taking photos of bees working after sunset. They immediately mark “violations,” reducing the bee’s NC quota by 30% the next day.

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Long-Term Ecological Feedback

• Garden Zone Rotation: The system automatically designates 20% of the area as a “no-collection conservation zone” each month. The bee navigation map updates to a blackout, completely preventing entry.

• “Bee Retirement Fund”: Elderly bees (with wing wear >40%) can switch to “conservation consultants,” flying for only 5 minutes a day to patrol the conservation zone, receiving a fixed honey amount to avoid “overworking until death.”

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Conclusion

This system makes “overtime work” economically irrational and evolutionarily disadvantageous while using “reputation markets” and “real-time data” to internalize conservation values in bees. The ultimate goal is to achieve a dynamic balance between “30-minute efficient nectar collection” and “sustainable gardens” for each bee—enjoying the honey bonuses of returning early while ensuring there are still flowers to collect next year.

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Bee – Performance System

Key problems:

1. Ethics – no reward for stealing, aggression, or exploiting other bees

2. Long-term sustainability of flowers

3. Collective gain over individual performance

System development to counteract problems:

Divide the bees into 3 groups, assume each group should cooperate to achieve collective goals; each group of bees out for 8-10 hours, the lowest performance group will take the “night shift” as punishment, and peered with the best performing group for 1 week. Performance reviewed weekly to ensure fairness.

• Best performer: 6am – 2pm (prime shift) Flowers have highest nectar density (morning dew + no midday heat), easiest foraging.

• Moderate performer: 2pm – 10pm. Moderate nectar levels; evening cooling helps, but some flowers close

• Low performer: 10pm – 12am. 70% of flowers are closed; lower nectar, higher predation risk

o Low-performing groups get 1 week of “mentored foraging” (paired with top-performing groups during the Prime Shift)

Criteria that classify a group as “good performer”:

1. Ethics – prevent theft, aggression, harm

a. Goal: Ensure no bee is harmed, stolen from, or excluded—collective success depends on every bee returning and contributing ethically.

b. Bee return rate%: Count departures vs. returns to ensure bee numbers

c. Group punishment for unethical behaviour

2. Flower visit diversity

a. Unique flower patch visit: track the number of flowers visited; develop a tier

b. Flower health score (via honey quality)

3. New field/flavour development

a. New field validation

b. New flavour verification

4. Honey production

a. Group net honey weight: measure honey via bee weight

b. Foraging efficiency

c. Measure the amount of honey through bee weight

Scoring by weight:

Criterion

Weight

Ethics

30%

Flower visit diversity

25%

New field/favour development

20%

Honey production

25%