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Optimal Marketing
Companies selling multiple products in multiple territories face the difficult question of how to allocate marketing resources. But comparing the profit potential of, say, razors in Germany with batteries in the United Kingdom is a difficult analytical task that demands reams of data. Finding the optimal answer is only half the battle. The rest involves the political and organizational challenge of shifting the money around. One company, Samsung, overcame these challenges by using hard data, not intuition, to allocate its marketing dollars. Marketing executives undertook an intensive 18-month project to gather diverse and detailed information about more than 400 possible product-category and country combinations. It collected all that data in a single, easy-to-access site and used the software's analytical power to predict the impact of different allocation scenarios. Such what-if testing enables management to find the budget allocation that will yield the highest total marketing ROI. Samsung also worked to anticipate and defuse organizational resistance to change. -
Lean Service Machine
Jefferson Pilot Financial (JPF), a life insurance and annuities firm, was looking for new ways to grow. Its top managers recognized that JPF needed to differentiate itself in the eyes of its customers, the independent life-insurance advisers who sell and service policies. To establish itself as these advisers' preferred partner, it set out to reduce the turnaround time on policy applications, simplify the submission process, and reduce errors. JPF's managers looked to the "lean production" practices that U.S. manufacturers adopted in response to competition from Japanese companies. Lean production is built around the concept of continuous-flow processing--a departure from traditional production systems, in which large batches are processed at each step. JPF appointed a "lean team" to reengineer its New Business unit's operations, beginning with the creation of a "model cell"--a fully functioning microcosm of JPF's entire process. This approach allowed managers to experiment and smooth out the kinks while working toward an optimal design. The team applied lean-manufacturing practices, including placing linked processes near one another, balancing employees' workloads, posting performance results, and measuring performance and productivity from the customer's perspective. The results were so impressive that JPF is rolling out similar systems across many of its operations. -
And Now, a Word from Our Sponsor (HBR Case Study)
Bryant Pharmaceutical's flagship product, a popular arthritis medicine called Seflex, is selling well--but not well enough. With generic versions due on the shelves in a couple of years, the drug company is looking for a dramatic sales increase. VP Laura Goldenberg knows she has to reach more consumers, but in an environment where people bombarded with advertising are using devices such as TiVo to skip ads, her job has suddenly taken on a new intensity. In search of a new, gangbuster campaign, Laura and her ad agency come up with the idea of product placement--not your typical integration of a product into a television or movie script, but a less traditional approach. Their idea is to hire a much-loved, elderly actress to extol the virtues of Seflex on a morning news program. The news segment would be about arthritis, and Seflex would be casually mentioned during the interview. The company would have to pay the actress $1 million, and there are risks: What if it gets out that Bryant is paying her? What if the actress errs and says something about Seflex's side effects? Should the company green-light Laura's plan? This fictional case study looks at the pros and cons of traditional product placement and newer, more subtle alternatives to advertising. Commenting on the case in R0310A and R0310Z, are Bob Gamgort, president of Masterfoods USA; Michelle R. Nelson, an assistant professor of journalism and mass communications at the University of Wisconsin, Madison; FTC commissioner Mozelle W. Thompson; and Mike Sheehan, president and CEO of Hill, Holliday, Connors, Cosmopulos. -
And Now, a Word from Our Sponsor (Commentary for HBR Case Study)
Bryant Pharmaceutical's flagship product, a popular arthritis medicine called Seflex, is selling well--but not well enough. With generic versions due on the shelves in a couple of years, the drug company is looking for a dramatic sales increase. VP Laura Goldenberg knows she has to reach more consumers, but in an environment where people bombarded with advertising are using devices such as TiVo to skip ads, her job has suddenly taken on a new intensity. In search of a new, gangbuster campaign, Laura and her ad agency come up with the idea of product placement--not your typical integration of a product into a television or movie script, but a less traditional approach. Their idea is to hire a much-loved, elderly actress to extol the virtues of Seflex on a morning news program. The news segment would be about arthritis, and Seflex would be casually mentioned during the interview. The company would have to pay the actress $1 million, and there are risks: What if it gets out that Bryant is paying her? What if the actress errs and says something about Seflex's side effects? Should the company green-light Laura's plan? This fictional case study looks at the pros and cons of traditional product placement and newer, more subtle alternatives to advertising. Commenting on the case in R0310A and R0310Z, are Bob Gamgort, president of Masterfoods USA; Michelle R. Nelson, an assistant professor of journalism and mass communications at the University of Wisconsin, Madison; FTC commissioner Mozelle W. Thompson; and Mike Sheehan, president and CEO of Hill, Holliday, Connors, Cosmopulos. -
Making the HR Outsourcing Decision
This is an MIT Sloan Management Review article. Some observers see outsourcing as a key trend (perhaps even the key trend) shaping the future of human resources. They envision HR departments focused entirely on strategic activities, leaving all the transactional and administrative activities to vendors. But, the author cautions that outsourcing any business activity creates potential risks as well as benefits: Companies can find themselves overly dependent on suppliers, and they can lose strength in strategically core competencies. The author synthesizes the strongest of the available research on the outsourcing decision and identifies the six key factors that companies should consider when making important outsourcing decisions. The framework, which helps assess the pros and cons of outsourcing, can be applied specifically to HR functions. In particular, it can help explicate the managerial issues of outsourcing agreements such as the recent landmark deal between BP and Exult Inc. That $600 million, seven-year arrangement provides a window into the many opportunities--and complexities--of HR outsourcing. -
Challenges of Innovating for Sustainable Development
This is an MIT Sloan Management Review article. Over the past decade, companies have become increasingly aware of the social and environmental pressures facing business. Many management scholars and consultants have argued that these new demands offer terrific opportunities for progressive organizations, and innovation is one of the primary means by which companies can achieve sustainable growth. But, say the authors, the reality is that managers have had considerable difficulty dealing with sustainable-development pressures. Specifically, their innovation strategies are often inadequate to accommodate the highly complex and uncertain nature of these new demands. In response, the authors propose the concept of sustainable-development innovation, or SDI. In contrast to conventional, market-driven innovation, SDI considers the added constraints of social and environmental pressures. SDI is, therefore, usually more complex, because there is typically a wider range of stakeholders, and more ambiguous, as many of the parties have contradictory demands. Furthermore, sustainable-development pressures can be driven by science that has yet to be accepted fully by the scientific, political, and managerial communities. Organizations that fail to understand such issues could well find themselves making costly mistakes in bringing new technologies to market. -
Limits of Structural Change
This is an MIT Sloan Management Review article. Corporate America has spent the last few years in restructuring mode, drastically reorganizing processes to wring profits from a battered economy. However beneficial these efforts may be to the bottom line, say the authors, a reliance on restructuring has had unintended negative side effects, as hierarchies that once controlled the direction of many companies become less relevant, and loyal employees become increasingly disheartened by disruptive--and often short-sighted--strategies. In response, companies resort to even more restructuring, frequently with less than optimal results. The authors recommend that companies shift away from knee-jerk responses such as restructuring and hierarchy building toward a transformation of established corporate structures, a wider distribution of knowledge, and the use of modern performance measurement systems and technologies. Citing examples at BP, North Carolina's Duke Power, and W.L. Gore, the authors claim that only companies developing their advantage on the agility and flexibility of their processes, people, and technologies can build lasting value for their company, customers, and employees. -
Power of the Branded Differentiator
This is an MIT Sloan Management Review article. If a brand fails to develop or maintain differentiation, consumers have no basis for choosing it over others. The product's price will then be the determining factor in a decision to purchase. Absent differentiation, says the author, the core of any brand and its associated business--a loyal customer base--cannot be created or sustained. In a time when the competitive terrain for most brands is difficult to brutal, the author describes a new tool that can help companies maintain an advantage: the branded differentiator. A branded differentiator can be a feature, service, program, or ingredient. It must be meaningful to customers; that is, it must be both pertinent and substantial enough to matter when people are purchasing or using the product or service. It must also be actively managed (and, thus, be able to justify the investment of management time) over an extended period--years or even decades--so that it does not become stagnant. Explores the different types of branded differentiators, the pros and cons of developing them internally vs. looking outside for them, and questions about managing these brands-within-brands. -
Making Routine Customer Experiences Fun
This is an MIT Sloan Management Review article. Most consumption experiences are the routine stuff of life--filling the gas tank, buying groceries, grabbing a quick lunch. Such tasks for the most part are neither fun nor painful; they're simply things that need to get checked off the list. Indeed, the authors say, they are so neutral that people often choose the seller with little thought and forget the experience in a matter of hours. Some providers of neutral services want to keep things that way. They want to be so convenient and reliable that people continue to use them unthinkingly. For certain mature service businesses, however, the addition of fun can be an important differentiator. The authors present three case studies taken from industries not known for fun--furniture retailing, consumer banking, and the grocery business--to show how it can be turned to profitable advantage. Jordan's Furniture, Commerce Bank, and Stew Leonard's operate their basic business models at a very high standard of excellence. But they also have what it takes to make a routine experience into something positive: strong leadership, a clear vision, a discriminating filter for new employees, a focus on hiring for attitudes rather than skills, and the ability to come up with the unexpected. The authors offer some general guidelines and cautionary notes to help managers who may want to try to emulate these successful companies. -
Orange Imagineering
As a proven entrepreneur, Rich Miner has been successful in the start-up world. Now, following the acquisition of his start-up, he has established a corporate R&D/venture operation in America to serve as the "eyes and ears" of his European parent company, Orange Telecom. He has resources that he never imagined, but getting Orange's attention is very hard to do. -
Burberry
In 2003, Rose Marie Bravo, Burberry's CEO, is debating how to maintain the currency and cachet of the brand across its broad customer base, while entering new product categories and expanding distribution. In the past five years, the brand has become one of the hottest luxury brands in the world. But Bravo now faces a number of key decisions, including (1) which new product categories to enter, (2) how to deal with the appropriation of the brand by nontarget customers, and (3) how prominent the company's famed "check" pattern should be in its advertising and clothing. Includes color exhibits. -
Urban Homesteading Assistance Board
Thirty years after its founding in 1973, New York City's Urban Homesteading Assistance Board (UHAB) found itself at a crossroads. The nonprofit, church-related organization that had long-provided tenants with assistance in renovating abandoned properties and converting them into cooperatives, UHAB was under pressure to adapt to a changing business climate, as the number of tax-foreclosed, city-owned properties declined in a resurgent New York city. What's more, UHAB, led by the same executive director for more than 20 years, faced tensions between an idealistic, semi-autonomous staff and the needs and demands of public contracts with requirements that specific tasks be completed in a measurably cost effective manner. As UHAB entered its fourth decade, a new chief operating officer must address its programmatic and managerial challenges, such that its idealism and individualism could happily co-exist with sound business practice. HKS Case Number 1711.0 -
Nice Girls Don't Ask
Managers who pride themselves on giving employees what they request may be shortchanging women, simply because men ask for a lot more than women do. This can be costly for companies, and it requires management intervention. -
How to Fix Knowledge Management
People's tendency to hoard their information and release it only selectively is often a core problem in many corporate cultures. But some firms are finding that their employees are more eager to share when they perceive there's something in it for them--like appearing more valuable to their companies. -
Innovating a Classic at Airstream
Airstream's ability to innovate and grow depends on balancing longtime owners' expectations with new buyers' desires. In this conversation, president and CEO Dicky Riegel speaks about making sure that the more the iconic, egg-shaped aluminum trailers change, the more they remain the same. -
Making Pro Formas Perform
Regulators are trying to clear up the muddle created by earnings-report adjustments called "pro formas" that companies issue. Constraining such reporting, as the regulators seem bent on doing, isn't the solution. Firms should increase alternative reporting--and fully account for their accounting. -
Jaguar or Bluebird? (A): Mark Chan's Decision to Stay Overseas or Return Home after his Expatriate Assignment
Case A: Mark Chan worked for a British multinational in Singapore and was posted on an international assignment to its corporate headquarters in London. He performed well at his job and enjoyed a successful international career. When he and his wife decided to return home, he was unable to find a position that was requisite with his experience and skills back at the company's Singapore subsidiary. The case ends with Mark Chan wondering what he should do. -
From Jaguar to Bluebird (B): Mark Chan Returns Home after his Expatriate Assignment
Case B: Mark Chan decided to move back home to Singapore and accepted a lower rank position compared to the one he held overseas. He started to feel bored with his job after a few months. His attempts to find a new job that was requisite with his experience and skills within his company did not yield any results. His wife and children also experienced problems adjusting back to life in Singapore. The case ends with Mark Chan taking the first step to find a new job. -
Clean and Abundant? A Case for a Hydrogen Economy
Technological and scientific innovation in recent years has opened up much research and development into renewable and alternative energies. Increasing pressure from environmental and governmental groups has led to the investigation of new and cleaner energy sources for the future. This case looks specifically at developments surrounding hydrogen-generated energy, focusing particularly on the possible benefits and market potential of such innovation and the challenges the industry might expect to encounter going forward. -
Out of this World: A Case for Martian Expansion
Technological and scientific innovation in recent years has opened up much research, development and debate on the possibilities of colonizing other worlds. This case looks specifically at developments in the exploration of Mars, focusing particularly on the idea of inhabiting the planet, and the benefits and challenges this concept poses for the industry going forward.