This is an MIT Sloan Management Review article. For several years now, marketers have been urged to embrace one-to-one marketing and to offer micro-segmented consumers customized products and services through targeted outreach. While the "market of one" approach can pay off, say the authors, it requires a significant upfront investment, including: implementing customer relationship management software applications; filtering, enhancing, and cleaning customer data; and personalizing interactions (e-mail, billing, offers, and so on). These activities take time and the coordination of multiple parts of the organization (marketing, customer service, sales, information technology), which can be daunting for companies trying to react quickly to a changing environment. In addition, those systems have often produced disappointing results because their use was not well integrated with corporate strategy. Also, micro-marketing strategy, on its own, is too narrow. Companies still need to reach broad groups of people with messages that are not dependent on an individual's decision to open an envelope (whether virtual or physical), pick up the phone, or click on a box. But broad-based, broadcast media is ineffective and expensive. Fortunately, there are alternative solutions, such as one-to-one targeting and the broadcasting of 30-second television spots. The author's research on trends in marketing spending and consumer attitudes about advertising reveals four strategies available to companies that want to reach broad groups of people without breaking their marketing budget. The strategies are liberally illustrated with examples from Nike, Microsoft, UBS, Delta, Sony, Procter & Gamble, Citibank, Nextel, Honda, Nokia, and McDonald's, among others.
This is an MIT Sloan Management Review article. Organizations often try to include as many people as possible in the decision-making process, but sometimes it's just not possible to involve anyone beyond a small group. The need for confidentiality and speed are constraints, as is the sheer difficulty of polling an entire organization regarding decisions that will affect an entire company. Managers or executives must sometimes "download" a decision to their people after the fact--and this is where many a decision crashes on rocky shoals. Mergers fail as key employees leave and others resist change; union contracts are rejected after months of negotiation; and changes in employee benefits meet with strident protest. What's behind these failures, and what can be done to avert them? The authors lay out reasons for ineffective downloading: a disconnect between the two sides as the negotiating parties fails to see the negatives of a decision; a failure to clarify responsibilities, which results in rumor and word-of-mouth being the primary channels of communication; a desire to inform people quickly--which often means superficially; and a paternalistic desire to protect members of an organization when people would prefer to just hear the truth. Against this record of mistakes and misguided notions, the authors set their four-stage process for robust decision downloading. Their process is informed by survey research of several hundred employees in a variety of organizations, as well as interviews with dozens of executives.
This is an MIT Sloan Management Review article. As companies are increasingly taking on the challenge of global sustainable development, they are forced to rethink the standard business plan based on increasing consumption of products. Drawing from case studies involving Gage Products, PPG Industries Inc., and Xerox Corp., the author shows that some companies are already building their business plans around services and a few key products, and that they are seeing benefits both to the bottom line and in customer retention and acquisition. The author identifies six keys to the new model: building on existing service strengths, redesigning contracts to redefine the basis of profit to create win-win situations when product consumption is reduced and services are improved, communicating the new business plan to current customers, changing sales incentives, acquiring new organizational skills to ensure a better understanding of consumption, and learning to highlight the potential benefits of taking steps to improve the environment.
Cities, buildings, products, services, systems, and strategies all face the same need to combine expertise, insight, engagement, and adaptation. As a result, it is time to confront the tensions of design, say the authors, who then define three approaches to design: the formulaic approach, exemplified by planned-city Brasilia; the visionary approach, exemplified by IKEA; and the evolutionary approach, exemplified by Linux. Along the way they show that design is not just a metaphor for management, but the very essence of it.
Exponential economic growth in the western world began in the late-18th century and has continued, more or less unabated, until the present. However, the author warns that anyone who believes that the future will be a straightforward continuation of the past must address the fact that seven key drivers of past growth in industrialized countries are showing signs of saturation or exhaustion. Only one of the seven is a viable driver of future economic growth: increasing the technological efficiency of converting resource inputs into 'useful work' and power. The author also looks ahead to the next century and outlines the key obstacles to sustainability by 2100, outlining some of the harsh realities that our mistreatment of the environment will reap.
Retailers live or die by a simple creed: stock products that sell, and don't stock products that don't sell. As North American and European companies source more of their goods from China, the risk of getting this wrong increases dramatically. Some companies - including Wal-Mart, Home Depot and Toyota -- are having second thoughts about their China-sourcing strategies, and are either reworking their North American logistics networks or even retreating from China. The authors argue that a firm focus on reducing time and variability in the China-anchored supply chains serving North America and Europe can help companies dramatically reduce their costs, improve their margins, and build competitive advantage. They show why North American and European companies should be looking closer to home, where the cost-of-labor penalty (relative to labor rates in China) is more than compensated for by superior supply-chain performance that is significantly less variable and virtually unaffected by port and surface-capacity constraints.
In the last two decades, Behavioral Economics (the importation of ideas from Psychology to Economics) has become a prominent fixture on the intellectual landscape. In turn, it has spawned the field of 'Neuroeconomics', whereby ideas from Neuroscience are imported into Economics. The study of the human brain and nervous system is beginning to allow for direct measurement of thoughts and feelings; and this, in turn, is challenging our understanding of the relation between mind and action, leading to new theoretical constructs and calling old ones into question. The authors describe the findings to date, covering automatic vs. controlled processes and cognitive vs. affective processes, and their general implications for Economics.
Yesterday's approaches to problem solving just won't cut it in today's complex environment, say the authors. The high-value decision maker of the future will be characterized by a capacity for Integrative Thinking. They show that Integrative Thinking stands not as an enemy to traditional business disciplines, on whose shoulders it can be seen to squarely rest, but rather as a constructive challenge to produce more adaptive-reasoning patterns, more valuable instruments of prediction, and a more inclusive approach to inter-disciplinary dialogue. The new model for business education they argue for acknowledges the vital role of integration in modern business, stressing the virtues of 'nimble mindedness', 'big mindedness' and 'tough mindedness' over the seductive trap of narrow perfectionism.
A combination of sheer size and spectacular growth has China on course to become the world's largest economy by 2020. It is also the world's second-largest recipient of foreign direct investment, behind the U.S. Continued balanced growth for China will require an increasingly-sound financial system, says the author, who explains the consequences of China's forthcoming banking and financial sector reform and why such reform presents a unique and crucial challenge within China's economic transition from central planning to a market economy.
In 1992 Joe Jackson, former manager of DuPont Motorsports for twelve years, was angling to get the paint business at Rick Hendrick's sixty-five automotive dealerships across the United States. In order to win the Hendrick car dealership paint contract, Jackson and Hendrick met to discuss the possibility of sponsoring Hendrick's new team and rookie NASCAR driver-Jeff Gordon. As a result of that meeting, DuPont signed on to be the primary sponsor. By 2006 Gordon was a NASCAR superstar, and the DuPont logo-viewed by millions-was a household brand. While this level of exposure was exciting for the company, executives at DuPont could not help but wonder if they were fully leveraging this tremendous marketing opportunity. Gordon was on fire-but was DuPont maximizing the heat? The DuPont-NASCAR case tasks students and executives with designing a creative marketing campaign to activate the NASCAR sponsorship opportunity and maximize value beyond conventional sponsorship marketing. This open-ended challenge encourages students and executives to think outside of the traditional marketing tactics typically employed by business-to-consumer (B2C) NASCAR sponsors. Additionally, the nature of DuPont creates the need to develop a multi-dimensional plan that caters to a breadth of brands. Beyond designing a new marketing campaign, a key objective of the case is to focus students and executives on designing metrics for measurement of the return on investment (ROI) into a campaign plan. As a first step, it is important to clearly articulate the campaign, business strategy, and key business objectives mapped to the strategy.
The case simulates the experience of a private equity investor evaluating a potential investment, requiring the student to: (1) determine the risks and merits of an investment in Toys "R" Us, (2) evaluate the spectrum of returns using multiple operating model scenarios, and (3) identify strategic actions that might be undertaken to improve the risk/return profile of the investment. The case also discusses trends and participants in the private equity industry.
Bruce-Alfred Technologies (BAT) has built a successful business selling packaged software. Its marketing has long promised free technical support to all customers, a key point of differentiation from BAT's competitors. However, the call center providing tech support is now in crisis. Wait times for callers are unacceptably high, leading to low customer satisfaction and negative press. BAT managers are evaluating the Fast Track Proposal, which would create two classes of calls. Fast Track calls would be promised a one-minute wait but pay for service. Standard calls would still be free but be given lower priority and have no wait time guarantee. Considers both the operational impact of this change and the strategic considerations of backing away from free tech support.
Trend Micro, an antivirus and Internet content security software provider, accidentally releases a flawed pattern file update that disables users' computers. The primary impact is on users in Japan, where 150,000 customers are affected. As the media press for answers and the stock price plummets, Eva Chen (CEO) and Akihiko Omikawa (president of Trend Micro Japan) must decide how to respond.
Focuses on a simple question: should Zimmer develop a gender-specific artificial knee? The decision is complicated because while the idea seems to make sense, there is little clinical evidence that a gender-specific knee produces superior patient outcomes, and orthopedic surgeons are likely to be skeptical of the innovation.
After the company's first aviation fatality, Southwest Airlines's CEO is faced with new and difficult decisions. The alacrity and compassion that characterized the company's response serves as a paradigm for any organization facing a future crisis situation.
Once a decision has turned out poorly-such as Merck's decision to launch and support the painkiller Vioxx-it is easy to criticize. However, are these bad outcomes the result of a good decision which turned out unlucky, or are they decisions where the bad outcome could have been predicted? This case follows Merck's pharmaceutical product Vioxx from initial development to launch and subsequent withdrawal, and considers the decisions made at each stage by the Merck executives involved. The case concludes by examining the financial impact of the Vioxx withdrawal on the company and on the Merck stock value.