Answers to Discussion Questions_ Luckin Coffee Crisis Simulation.docx

this is about the elaboration of the crisis

1. 1. Which of Drucker’s tasks did Luckin’s real managers
prioritize first? Did your team do the same?
Luckin’s real management prioritized Drucker’s “Planning” (Task 1) and “Organizing”
(Task 2) as their top immediate actions—aligning with the most urgent needs of the crisis.
•Real Luckin’s Priorities:
They first planned to stop the collapse by defining two urgent objectives: (a) satisfy
regulators to avoid harsher penalties, and (b) stabilize operations to prevent store closures.
To execute this, they organized quickly: replacing the fraudulent top team (COO, CEO) with
leaders experienced in compliance, and assigning dedicated teams to regulator
communication, investor relations, and internal audits. This directly addressed the root of
stakeholder distrust (lack of credible leadership) and operational chaos.
•Typical Team Alignment in Simulations:
Most student teams also prioritize Planning and Organizing first—for example, defining “stop
investor flight” as an urgent objective (Planning) and splitting roles like “regulator liaison” or
“audit coordinator” (Organizing). This alignment shows intuitive understanding: in crises, you
must first set clear goals and structure action before motivating teams or measuring
progress.
2. The reading says managers must “develop people” (Task 5).
How did Luckin’s ethics training reflect this?
Drucker emphasized that “developing people” means growing subordinates’ skills and
reinforcing organizational values—something Luckin’s ethics training directly embodied,
turning a crisis into a learning opportunity.
•Real Luckin’s Ethics Initiatives:
After the fraud, Luckin launched mandatory ethics training for all 30,000 employees, focusing
on:
◦Transparency practices: Teaching store staff to report sales accurately (no more
“fictional orders”) and finance teams to document transactions fully.
◦Compliance accountability: Training managers to spot unethical behavior (e.g.,
fake customer data) and create “speak-up” channels for employees to report issues
without fear.
◦Leadership modeling: New executives led training sessions to demonstrate that
ethics were no longer “optional”—reinforcing that the company’s culture had shifted
from “growth at all costs” to “integrity first.”
•Link to Drucker’s Task:
This wasn’t just “training”—it was developing people to embody the values needed for long-
term survival. Drucker argued that managers don’t just “manage work”—they “develop

2. people”; Luckin’s training turned a workforce shaken by fraud into one equipped to prevent
future crises.
3. What would you add to Luckin’s actual plan after our
simulation?
While Luckin’s recovery was effective, student simulations often reveal gaps that could
strengthen the plan—rooted in Drucker’s underemphasized tasks or stakeholder needs:
•1. Double down on “Motivating/Communicating” (Task 3) for franchise owners:
Luckin’s real plan focused on corporate-level recovery but overlooked franchisees (who
owned ~40% of stores). In simulations, teams often propose:
◦A “Franchise Survival Fund”: Short-term subsidies for stores with >80% sales drops
(e.g., covering 50% of rent for 3 months) to prevent mass closures.
◦Weekly “Franchise Town Halls”: New CEOs directly answer questions about support
—addressing anxiety faster than generic emails.
•2. Add “co-creation” with customers to “Planning” (Task 1):
Luckin used discounts to win back customers, but simulations show customers value trust
more than cheap coffee. A stronger addition:
◦A “Customer Transparency Council”: Invite 50 loyal customers to review monthly
sales reports and audit store operations—turning critics into “brand advocates” who
verify Luckin’s honesty.
•3. Tie “Measuring Performance” (Task 4) to ethics:
Luckin tracked sales and customer return rates, but simulations often suggest adding ethics
metrics:
◦Monthly “integrity scores” for stores (based on audit accuracy and employee
feedback).
◦Quarterly reports to regulators showing how many employees used the “speak-up”
channel—proving that ethics training wasn’t just “window dressing.”
These additions would make Luckin’s plan more holistic, addressing Drucker’s full set of
tasks and strengthening bonds with under-served stakeholders (franchisees, customers).