The case reveals how Porsche has become one of the world's leading car companies. Central to Porsche's growth strategy is creating great products, including its legendary 911 Carrera sportscar, and offering innovative customer experiences. As the automotive industry is undergoing disruptive changes, the company's leadership is making changes to its product portfolio and customer experiences.
Though they've been warned for decades about the dangers of overrelying on gut instinct and personal experience, managers keep failing to critically examine--much less challenge--the ideas their decisions are based on. To correct this problem they need to think and act like scientists. That requires doing five things: (1) being a knowledgeable skeptic and relentlessly questioning assumptions; (2) investigating anomalies--things that are unexpected or don't look right; (3) devising testable hypotheses that can be quantifiably confirmed or disproved; (4) running experiments that produce hard evidence; and (5) probing cause and effect. Drawing on the experiences of Harrah's Entertainment, Sony, Bank of America, and Lego, Thomke and Loveman show how scientific methods can help companies discard ineffective practices, increase marketing and operational efficiency, boost customer satisfaction and sales, find new sources of growth, and even turn around struggling businesses.
The case reveals how Booking.com has become the world's leading travel accommodation platform. The company has put online experimentation at the heart of how it designs digital experiences for its customers and partners. To unlock the potential of large-scale testing, the leadership team had to challenge conventional assumptions about culture, process, and the management of innovation.
Sony used to be synonymous with "innovation" and "cool products". The case reveals how the company lost its edge and describes the leadership initiatives to restore its former glory. In 2012, Kazuo (Kaz) Hirai becomes CEO and successfully transforms Sony, including a relentless focus on differentiation through "wow" products instead of chasing scale. How should he organize and manage the company's response to digital opportunities, such as virtual reality, that could affect the company's entire value chain?
Ferrari is among the world's most powerful brands but how the company operates has remained mysterious. The case reveals the inner workings of the company - the Ferrari Way - from the way it designs, produces, and markets its cars, to how its leadership team is driving future growth. Central to Ferrari's strategy is its response to disruptive changes in the automotive industry and their impact on the company's products and brand.
In the fast-moving digital world, even experts have a hard time assessing new ideas. Case in point: At Bing a small headline change an employee proposed was deemed a low priority and shelved for months until one engineer decided to do a quick online controlled experiment--an A/B test--to try it out. The test showed that the change increased revenue by an astonishing 12%. It ended up being the best revenue-generating idea Bing ever had, worth $100 million. That experience illustrates why it's critical to adopt an "experiment with everything" approach, say Kohavi, the head of the Analysis & Experimentation team at Microsoft, and Thomke, an HBS professor. In this article they describe how to properly design and execute A/B and other controlled tests, ensure their integrity, interpret results, and avoid pitfalls. They argue that if a company sets up the right infrastructure and software, it will be able to evaluate ideas not only for improving websites but also for new business models, products, strategies, and marketing campaigns--all relatively inexpensively. This will help it find the right path forward, especially when answers aren't obvious or people have conflicting opinions.
The case describes how A. Lange & Sohne became one of world's leading watch companies. Its obsession with quality and innovation were behind its initial rise in the 19th century and, after a 40-year involuntary hiatus under the East German regime, again at the end of the 20th century. In 2016 its current CEO Wilhelm Schmid and the heads of product development and production have to decide on how to price its innovative watch collection and how to grow the Glashutte-based watchmaker.
Anyone who has recently travelled, gone shopping, or tried to have a problem solved may have little recollection of the experience. Worse yet, some are frustrated by the lack of responsiveness or empathy that they encountered. The reality is that most customer experiences are mediocre, forgettable and some are plain awful. But once in a blue moon, an experience is so great that it leaves positive memories for years. Why do some product or service experiences have that undeniable "wow" factor, while others lack that pizzazz, relegating them to either being loathed or erased from memory? This case prepares participants for an in-class exercise in which they discover design principles that make experiences great. The exercise uses two methodologies: LEGO® Serious Play® (LSP) and Storytelling. It requires the purchase of special purpose LEGO® elements.
Describes the detailed inner workings of a high performance Formula One (F1) racing team. It shows how Lotus F1 Team has been able to battle bigger rivals in a very fast-moving, highly regulated, and ultra-competitive environment, where winning races can come down to split seconds. The case explores all elements a of their high performance system: strategy, innovation, leadership, technology, engineering, and operations. Emphasis is placed on the interplay of these elements and how they confer competitive advantage to teams. Management dilemmas that are explored: retention of high performing individuals, response to disruptive technological changes, and regulatory design in competitive environments.
The data you already have can't tell you how customers will react to innovations. To discover if a truly novel concept will succeed, you must subject it to a rigorous experiment. In most companies, tests do not adhere to scientific and statistical principles. As a result, managers often end up interpreting statistical noise as causation--and making bad decisions. To conduct experiments that are worth the expense and effort, companies need to ask themselves several questions: (1) Does the experiment have a clear purpose? Managers must figure out exactly what they want to learn in order to determine if testing is the best approach. (2) Have stakeholders made a commitment to abide by the results? Are they willing to walk away from a project if the findings suggest they should? (3) Is the experiment doable? The complexity of the variables in a business experiment and their interactions can make it difficult to determine cause-and-effect relationships. Choosing the right sample size is important. (4) How can we ensure reliable results? Randomized field trials, "blind" tests, and big data can help. (5) Have we gotten the most value out of the experiment? Conducting the experiment is just the beginning. Use the data to assess which components of a new initiative might have the highest ROI or the markets where it is most likely to be successful.
As this case opens, iconic toymaker LEGO stands on the brink of bankruptcy. Jorgen Vig Knudstorp, LEGO's young and newly appointed CEO, must size up changes in the toy industry, learn from the company's recent moves, and craft a strategy that will put LEGO back on track.
Think you need exceptional employees, advanced IT, or rigid controls to build a high-performance organization? The dabbawalas of Mumbai prove otherwise. Six days a week, these 5,000 self-managed, semiliterate workers deliver upwards of 130,000 lunches from customers' homes to their offices with astonishing precision--negotiating the crowded city by train, bicycle, and handcart, without the aid of any technology or even cell phones. The 100-year-old service is legendary for its reliability: Despite monsoons, floods, riots, and terrorist attacks, mistakes by the dabbawalas are extremely rare. Thomke, an HBS professor, studied the dabbawalas to find the keys to their success. He uncovered a unique system with four pillars: organization, management, process, and culture. A flat structure, consisting of autonomous units of 25 people each, is well suited to providing low-cost service. The tight schedule of the train lines over which meals are ferried regulates everyone's work. Buffer capacity is built in to address extremely thin margins of error; each unit has extra workers who fill in wherever they are needed, and members are cross-trained in all activities. Variations that might derail the works are discouraged; the lunchboxes used, for instance, are all a standard size. A simple coding system helps workers quickly sort lunches and get them where they need to go. And democratic decision making and deep emotional bonds among workers promote a high degree of cooperation. The dabbawalas show that with the right system, even ordinary workers can achieve the extraordinary.
LEGO has emerged as one of the most successful companies in the toy industry. The case describes LEGO's gradual rise, rapid decline, and recent revitalization as it is keeping up with a changing market place. Central to LEGO's management model is the ability to find the right balance among growing through innovation, staying true to its core, and controlling operational complexity.
Why do certain product and service experiences seem like magic, making them all but destined for success, while other items languish on store shelves? For a better understanding of that, perhaps there's no better place to turn to than the world of magic. Consider that some professional magicians are constantly under pressure to come up with new "effects" that will wow the audience and ultimately result in a transformational customer experience. As such, these magicians can't just be innovative on a whim; they must have a systematic way of doing so on a regular basis. The note provides some practical insights into a process of creation that is common to both the "tricks" that awe a spellbound audience, and what companies need to do to give customers unforgettable product and service experiences.
Many companies approach product development as if it were manufacturing, trying to control costs and improve quality by applying zero-defect, efficiency-focused techniques. While this tactic can boost the performance of factories, it generally backfires with product development. The process of designing products is profoundly different from the process of making them, and the failure of executives to appreciate the differences leads to several fallacies that actually hurt product-development efforts. In this article, the authors, an HBS professor and a consultant, expose these misperceptions and others. They look at six dangerous myths: 1) High utilization of resources will make the department more efficient; 2) Processing work in large batches will be more economical; 3) Teams need to faithfully follow their development plan, minimizing any deviations from it; 4) The sooner a project is started, the sooner it will be finished; 5) The more features a product has, the better customers will like it; and 6) Projects will be more successful if teams "get them right the first time." The authors explain the negative effects these "principles" have when applied to product development, offer practical guidelines on overcoming them, and walk readers through a visual tool that will help them keep projects on track.
Dassault Systemes, a leader in product lifecycle management software, has enjoyed a very profitable business model in 3D engineering design. In the past, it has successfully managed market disruptions and opportunities through acquisition and organic innovations. Its latest brands, 3DVIA, offers 3D models and life-like experiences to a new non-professional client category, the consumer. In November 2009, President and CEO Bernard Charles has to decide how to best address this new market segment, characterized by rapidly expanding open communities and new pricing models. What is the right business model for the new brand, and how will it affect the future of Dassault Systemes?
Describes the Mumbai-based Dabbawala organization, which achieves very high service performance (6 Sigma equivalent or better) with a low-cost and very simple operating system. The case explores all aspects of their system (mission, information management, material flows, human resource system, processes, etc.) and the challenges that the Dabbawala organization faces in a rapidly changing environment. An outside consultant proposes the introduction of new technologies and management systems, while the leading logistics companies (e.g., FedEx) come to Mumbai to learn about the Dabbawala system.
Describes the Mahindra & Mahindra Group's approach to innovation. The Group is among the top industrial houses in India and its managing director Anand Mahindra has put innovation at the core of its growth strategy. Emphasis is placed on managing the balance between structured processes and the creation of an environment in which radical innovations can succeed. The Farm Equipment Sector, one of the Group's largest and most successful sectors, is developing a revolutionary tractor outside its conventional development process with the help of a "Maverick" innovator. Not surprisingly, the project encounters numerous obstacles and setbacks. Focuses on: 1) the role of creative innovators in breakthrough innovations; 2) the need for process, structure and early feedback from markets; 3) the sources of radical product concepts; and 4) the marketing of innovations.