Consumer product returns in the United States are approaching three-hundred billion dollars annually. In the majority of cases, the returned products are perfectly functional convenience returns. Managers have a multi-billion dollar profit opportunity to reuse the products by strategically employing remanufacturing. Yet, remanufacturing has multiple barriers that must be understood and addressed. This article addresses several key managerial issues regarding remanufactured consumer products. First, will consumers buy remanufactured products? Second, will the green consumer segment desire remanufactured products? Third, will remanufactured product sales cannibalize new product sales? Finally, this article provides guidance regarding pricing and cannibalization mitigation strategies.
Two related trends characterize the recent past: value propositions are migrating from the physical to the informational, and value creation is shifting from firms to consumers. These two trends meet in the phenomenon of " consumer generated intellectual property" (CGIP). This article addresses the question: " How should firms manage the intellectual property that their customers create?" It explores how CGIP presents important dilemmas for managers and argues that consumers' intellectual property should not be leveraged at the expense of their emotional property. It integrates these perspectives into a diagnostic framework and discusses eight strategies for firms to manage CGIP.
Technology has transformed individuals from mere consumers of products to empowered participants in value co-creation. While numerous firms experiment with involving a crowd in value creation, few companies turn crowdsourcing projects into thriving platforms with a powerful business model. To address this challenge, this article analyzes successful platforms to identify patterns of effective crowdsourcing-based business models. The results provide guidance for managers who need to create new (or adapt existing) business models.
The automobile industry' s high costs of entry, economies of scale, and network effects from distribution, fueling, and service lead many to conclude that new entrants have no chance. Tesla Motors has overcome many barriers to pioneer electric cars. Starting with partnerships and a minimum viable product, Tesla is working to innovate and scale up. Tesla now produces a top-selling luxury car and has a market capitalization twice that of Fiat Chrysler and half that of General Motors or Ford. Tesla has shown that a startup can enter and disrupt the status quo in one of the most established industries.
The purpose of the Manizales-Mas case is to show the inner workings of the first three years of a comprehensive economic development project that uses entrepreneurship-extraordinary company growth -as the driving wedge. The BEEP project started in 2010 with a contact by the general director, Ana Maria Gonzales, of the Luker Foundation, a non-profit foundation established by the local Restrepo family that owns Casa Luker, which had focused on education promotion since its inception in 1995. Gonzales approached Babson and BEEP, who together conducted a two-month pilot. Between 2010 and 2012 Gonzales worked hard to coalesce a group of funders and stakeholders to back the project, both financially and in terms of non-financial involvement. Having created a consensus among 11 local organizations, Gonzales then negotiated the project with Babson, yielding numerous conflicts and misunderstandings. Marcela Escobar was hired in late 2011 as project team leader, and conducted the project from that time onward, during Phases 2-3. The case takes place as Phase 3 is transitioning to Phase 4, with several acute problems, such as conflict among the stakeholders and an important staff member, the director of communications, who has just announced her resignation.
In June 2015, FC Barcelona president Josep Bartomeu sees his team lift the UEFA Champions League trophy, completing an impressive trophy haul in the 2014-2015 season. Unique for a club of its caliber, five of the starting eleven are products of FC Barcelona's youth academy, La Masia. Yet none of the trophies and accolades guarantee future success. Bartomeu faces pressing questions about the club's business model-and in particular about the tensions between local and global activities-as well as decisions about the ongoing investment in the youth academy, funding for the club's Foundation and other sports, and its relatively low ticket prices. How could Barça continue to win on and off the field in the increasingly competitive and global world of European football, while still protecting its local focus and traditions?
Helps students to understand how the characteristics of a business are reflected in the firm's financial statements. In this exercise, students are given balance sheet data in percentage form (common-size balance sheets) and other selected financial ratios for a set of 12 unidentified firms from 12 different industries (all 12 companies are listed on the Australian Securities Exchange, ASX). Students must use the balance sheet data and the financial ratios along with their basic knowledge of the operating characteristics of these various industries to match each firm to the correct industry.
The market vision that led to Siri, the virtual personal assistant that's now an integral part of Apple's iPhone, can be traced back to 2003, when a mobile phone's primary applications were still limited to ringtones and messaging. The author and his colleagues at SRI International recognized that the phone's growing capabilities would eventually put a communicating supercomputer in everyone's pocket. They believed that their company was well suited to be a leader in the inevitable technology and market revolution--as it had been in every previous computing revolution. They didn't originally plan to create a stand-alone venture. They talked to dozens of telecom carriers and handset providers, with the aim of jointly starting a project that would license the technology. But because the few resulting commercial projects implemented only small parts of its original vision, the founding team decided to drop that idea and create and build its own venture. Speech-to-text was the easy part: SRI had launched Nuance, a world leader in speech solutions. The hard part was analyzing words so as to understand the user's intent and then reason about and answer the request. The runaway success of Siri demonstrates how well the team met that challenge.
At some point, every company makes a mistake that requires an apology--to an individual; a group of customers, employees, or business partners; or the public at large. And more often than not, companies and their leaders fail to apologize effectively, if at all, which can severely damage their reputations and their relationships with stakeholders. Companies need clearer guidelines for determining whether a mistake merits an apology and, when it does, for crafting and delivering an effective message. In this article, the authors present their framework--the apology formula--to help companies navigate the tricky terrain. Leaders should ask themselves four questions: (1) Was there a violation? (2) Was it core to our promise or mission? (3) How will the public react? (4) Are we committed to change? As a general rule, the more central to the mission of the company the violation is and the more people it affects, the more important it is that the apology be pitch-perfect. Once a company decides that an apology is necessary, it needs to carefully consider the who, what, where, when, and how of executing it. For core violations, the "who" has to be senior leaders, the "what" has to show a tremendous commitment to change, the "where" has to be high profile, the "when" has to be fast, and the "how" must be deeply sincere and demonstrate empathy.
Ever since it became clear that smart design led to the success of many products, companies have been employing it in other areas, from customer experiences, to strategy, to business ecosystems. But as design is used in increasingly complex contexts, a new hurdle has emerged: gaining acceptance of the "designed artifact" into the status quo. In fact, the more innovative a new design is, the more resistance it's likely to meet. The solution, say the CEO of IDEO and the Rotman School's former dean, is to also apply design thinking to the introduction of the innovation itself. This process, "intervention design," grew organically out of the iterative prototyping that designers did to help understand customers' reactions to new products. Not only did iterative prototyping create better offerings, but it was a great way to get organizational funding and commitment, because it improved the chances of success and reduced fear of the unknown. Intervention design uses iterative prototyping to get buy-in too, but extends it to interactions with all the principal stakeholders--not just customers. When Intercorp Group devised a revolutionary concept for Peru's schools, it needed to win acceptance for corporate-run education and for a very different role for teachers. Thanks to intervention design, it now has 29 schools in operation and is rapidly growing.
In large organizations, design is moving closer to the center of the enterprise. This shift isn't about aesthetics and product development, however. It's about imparting the principles of design--collectively known as "design thinking"--throughout the organization. The approach is in large part a response to the complexity of many products, services, and processes. People need help--they need their interactions with technologies and other complicated systems to be intuitive and pleasurable. Design thinking is an essential tool for simplifying and humanizing. The principles include a focus on users' experiences, especially their emotional ones; the creation of physical models, such as diagrams and sketches, to explore problems; the use of prototypes to experiment with solutions; a tolerance for failure; and thoughtful restraint in product features so that even a complex piece of technology can be easy to use. Creating a design-centric culture requires understanding that the returns on an investment in design are difficult to quantify, allowing people to take chances, and appreciating what design can and cannot achieve. Design helps people and organizations cut through complexity and imagine the future, but it doesn't solve all problems.
Until 20 years ago, South Korea's Samsung Electronics manufactured inexpensive, imitative electronics for other companies. Its leaders valued speed, scale, and reliability above all. The few designers working for the company were dispersed in engineering and new-product units, and they had little status in a company that emphasized efficiency and engineering rigor. Then, in 1996, Lee Kun-Hee, the chairman of Samsung Group, grew frustrated by the company's lack of innovation and concluded that in order to become a top brand, Samsung needed expertise in design, which he believed would become "the ultimate battleground for global competition in the twenty-first century." He set out to create a design-focused culture that would support world-class innovation. But shifting to an innovation-focused culture without losing an engineering edge is not a simple matter. It involves managing a number of very real tensions. Samsung's success in making this shift stems from a single early decision--to build design competency in-house rather than import it. The authors describe how the company created a committed, resourceful corps of designers who overcame internal resistance by deploying the same tools they use in pursuing innovation: empathy, visualization, and experimentation in the marketplace.
PepsiCo's CEO Indra Nooyi believes that each PepsiCo product must engage customers so directly and personally that they fall in love with it. So in 2012 she hired renowned designer Mauro Porcini as PepsiCo's first chief design officer. What Nooyi calls "design thinking" now informs nearly everything the company does, from product creation, to the look on the shelf, to how consumers interact with a product after they buy it. HBR Editor in Chief Adi Ignatius interviews Nooyi about how she transformed the company's strategy, its products, and its organizational culture by placing design at the center. The article also includes a sidebar, written by Mauro Porcini, called "How Design Can Thrive."
With cyberattacks soaring, corporations must step up efforts to protect their IT networks. Most firms could learn from the U.S. military, which has been tightening its cyberdefenses for the past six years. In the past year alone, it adroitly repelled more than 30 million intrusions. A focus on reducing human error is core to the military's heightened security. As is true in the private sector, mistakes by administrators and users open the door to the vast majority of successful attacks. To address this, the Defense Department has been borrowing from the "high reliability" practices of the U.S. Navy's nuclear program, which hasn't had a single accident in its six decades of existence. In this article the former vice chairman of the Joint Chiefs of Staff, a special assistant to the Joint Chiefs' chairman, and a management professor describe the military's approach and how business leaders can apply it in their firms. It involves six cultural principles: integrity, which leads people to adhere fully to protocol and own up immediately to mistakes; depth of knowledge, which is ensured by rigorous and continual training and testing; procedural compliance, which is enforced by extensive inspections; forceful backup, to prevent problems that could be introduced by workers acting alone; a questioning attitude, which induces people to investigate anomalies quickly; and formality, which prevents miscommunication. By taking charge, making everyone accountable, and instituting tough standards for IT training and operation, CEOs can embed these principles in their organizations and close critical gaps in security.
Certainty profoundly shapes our behavior. The more certain we are of a belief--regardless of its objective correctness--the greater its influence will be on what we do. People who are certain of their opinions are more likely to buy, buy sooner, and spend more; more willing to recommend products; and more apt to resist challenges to their beliefs. Certainty is the catalyst that turns attitudes into action. Imagine that two customers flying Virgin America give the carrier the same high rating--a 9 out of 10--on a satisfaction survey. Most marketers, seeing that the customers are both highly satisfied, assume they'll behave similarly--that they're equally likely to fly Virgin America again, recommend it to friends, and so on. But their behavior depends less on their stated opinion than on how firmly they hold it. Suppose that one of the Virgin customers is a frequent flier and has had reliably good experiences. She is likely to be very certain of her favorable attitude and to remain a loyal customer. The other may have flown just once on the carrier. She's probably less certain of her opinion--wondering whether future experiences would be different--and therefore less likely than the frequent flier to choose Virgin again. They may hold the same view, but if one of them is more certain of that view than the other, she'll be the better customer. Despite the voluminous body of research on the influence of certainty on behavior, it is poorly understood in business and rarely measured or put to use.
For ambitious executives working in dynamic global businesses, big career transitions--to new roles, organizations, industries, or geographic locations--are a fact of life. So is the need to constantly adapt to new technologies, work groups, strategies, and ways of thinking and behaving. And yet even seasoned professionals find this sort of change difficult. Management researchers have a lot to say about the best way to approach organizational change, but when it comes to personal transitions, there is no blueprint for success. Over years working with MBA students and executives, the author has developed a framework to help in thinking about change. It involves navigating through the Seven C's: Complexity (considering all the issues in a particular change effort); Clarity (understanding and prioritizing those issues); Confidence (believing that one can be successful in making the change); Creativity (brainstorming innovative solutions to problems that arise); Commitment (beginning to implement the change); Consolidation (leaving behind the previous identity to adopt the new one); and Change (living into the change and its consequences).
Benjy's, an electronics and appliance retailer, is losing business because of "showrooming": Customers come into the chain's stores to see, touch, and compare products but then buy at a lower cost from online competitors. Does the company's answer lie in matching online prices, trying to thwart price comparisons, improving customer service, offering exclusive products, charging manufacturers a fee for showcasing their products, or something else? Expert commentary comes from Roberto Leao, a finance executive for a global retail organization, and Steve Conine, chief technology officer of Wayfair, on online retailer.
Benjy's, an electronics and appliance retailer, is losing business because of "showrooming": Customers come into the chain's stores to see, touch, and compare products but then buy at a lower cost from online competitors. Does the company's answer lie in matching online prices, trying to thwart price comparisons, improving customer service, offering exclusive products, charging manufacturers a fee for showcasing their products, or something else? Expert commentary comes from Roberto Leao, a finance executive for a global retail organization, and Steve Conine, chief technology officer of Wayfair, on online retailer.
Benjy's, an electronics and appliance retailer, is losing business because of "showrooming": Customers come into the chain's stores to see, touch, and compare products but then buy at a lower cost from online competitors. Does the company's answer lie in matching online prices, trying to thwart price comparisons, improving customer service, offering exclusive products, charging manufacturers a fee for showcasing their products, or something else? Expert commentary comes from Roberto Leao, a finance executive for a global retail organization, and Steve Conine, chief technology officer of Wayfair, on online retailer.