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This is an MIT Sloan Management Review article. As competition intensifies and profit margins shrink, managers are under overwhelming pressure to create value. Traditional prescriptions such as cost reduction, reengineering, and outsourcing, although critically important, cannot solve the problem. The need to innovate is greater than ever, but the focus of innovation must change, say the authors. By synthesizing societal trends and early experimentation in companies such as General Motors, LEGO, and Medtronic, the authors paint a picture of the "next practices" of innovation in which the locus of value creation will inevitably shift from products and services to "experience environments." The intent of experience innovation is not to improve a product or service, per se, but to enable the co-creation of an environment in which personalized, evolvable experiences are the goal, and products and services are a means to that end. Profitable company growth results from individual consumers co-creating their own unique value, supported by a network of companies and consumer communities. From that perspective, say the authors, managers must learn to view existing and emerging technologies not as enhancers of products, features, and functions, but as facilitators of experiences. They offer examples of how technological capabilities such as miniaturization, networked communication, and adaptive learning are fostering experience innovation at companies such as Sony, Apple, Microsoft, and TiVo, illustrating their contention that technology will be the key facilitator of the nascent trend toward experience innovation.

This is an MIT Sloan Management Review article. Established businesses usually consider innovation as an attack to be met with defensive measures. And, indeed, disruptive technologies and business models have toppled many established industry leaders and will likely continue to do so. The real story behind disruptive innovation, however, is not one of destruction, but its opposite: In every industry changed by disruption, the net effect has been total market growth. Moreover, disruption can be a powerful avenue for growth through new market discovery for incumbents as well as for upstarts. There are several keys to the successful navigation of this growth path: to recognize that disruption is not an immediate phenomenon--it can take years and even decades before the upstart business encroaches heavily on the established market; to find new customers who are eager to be served by the disruption; and to build an organization that is capable of serving the new customers. The author explains each aspect in detail, drawing on extensive research involving online newspapers, minicomputers, cardiology, and semiconductors.

Sets up a situation in which participants must create presentations that assess the IT risk of a large company.

Supplements the (A) and (B) cases.

Supplements the (A) and (B) cases.

The Pasteur Institut is implementing a proactive commercialization strategy under the direction of Christian Policard. Highlights the government's innovation policy and the role that the Pasteur Institut can play in shaping it. Also addresses issues relating to higher education and life-sciences research in France.

North American Motors is a large automobile manufacturer. The facility engineer for a particular assembly plant has to decide what to recommend concerning a new oven. The current oven, used to remove excess paint from various materials handling equipment in the plant's painting operations, did not clean the equipment adequately. The engineer, who has been in the position for only a short time, must analyse the situation both quantitatively and qualitatively before reporting to the plant engineering manager.

Pollock & Thacker is a multinational consulting firm. A partner in the firm is reviewing the consultants that are available for an upcoming project. The partner has to consider who is best qualified, consultant development and the wishes of the client - the client requested that the consulting team consist exclusively of Canadians. Although this could be accomplished, there are two problems with the client's request. First, to form the best team possible, the group would have to include some consultants from the United States. Second, the client would have to wait several weeks before the project could begin for a Canadian analyst to become available. This delay would prevent the project from being immediately staffed, with the risk that those already selected for the team might be unavailable for staffing later.

Few senior executives pay much attention to computer security. They either hand off responsibility to their technical people or bring in consultants. But given the stakes involved, an arm's-length approach is extremely unwise. According to industry estimates, security breaches affect 90% of all businesses every year and cost some $17 billion. Fortunately, the authors say, senior executives don't need to learn about the more arcane aspects of their company's IT systems to take a hands-on approach. Instead, they should focus on the familiar task of managing risk. Their role should be to assess the business value of their information assets, determine the likelihood that those assets will be compromised, and then tailor a set of risk abatement processes to their company's particular vulnerabilities. This approach, which views computer security as an operational rather than a technical challenge, is akin to a classic quality assurance program in that it attempts to avoid problems rather than fix them and involves all employees, not just IT staffers. The goal is not to make computer systems completely secure--that's impossible--but to reduce the business risk to an acceptable level. This article looks at the types of threats a company is apt to face. It also examines the processes a general manager should spearhead to lessen the likelihood of a successful attack. The authors recommend eight processes in all.

Foster Technologies Inc. is a wholly owned research and development subsidiary of LB Foster that focuses on wheel counter research and development for traffic control and the railway industry. The failed test of the railway wheel counting prototype was jeopardizing the company's promised delivery of the devices to a customer by the end of the month. With the company's and the vice-president of operations reputations at stake, he must decide what the next move is: Can his team resolve the problems with the prototype? Should he ask to have the chief design engineer removed or should he resign?

In recent years, increasing attention has been paid to buyer-supplier relationships and supply chain management in general. Views of buyer-supplier relationships have evolved from the old school of the 1980s, where buyers and suppliers were viewed as part of a zero-sum game, to the more collaborationist outlook of the 1990s, which claimed that buyers and suppliers could cooperate to the benefit of both, to the more network-oriented view of the 2000s, where buyers and suppliers are parts of organic business ecosystems. One interesting fact is that, empirically, buyer-supplier relationships exist in surprisingly multifarious forms in different geographic regions and business sectors. There is no one dominant mode. This case provides an outline of eight different real-life examples to illustrate a broad range of buyer-supplier relationships.

The Atlanta Symphony Orchestra, conducted by its newly appointed music director, performed a rarely heard composition. The musical performance was, by all accounts, superb. While most in the audience cheered the performance, a few of the audience members stormed out of the concert hall. These audience members were largely reacting to the high-tech mixed media show designed by a well-known artist that accompanied the performance. This performance was one of the Atlanta Symphony Orchestra's recent occasional and innovative breaks from concert tradition. The vice-president and general manager of the Atlanta Symphony Orchestra recognized that opportunities existed onstage and offstage for broadening and enriching the orchestra's services and the concert experiences of its audience, in order to facilitate growth.

In the early 1990s, grocery suppliers and retailers joined forces to streamline operations--an initiative called "efficient consumer response." Today, suppliers feel like they're not getting their fair share of the profits from ECR. But they stand to lose more if they give up on it, the authors say.

Preliminary results from Phase 1 clinical trials of a newly developed compound, STI571, showed that 31 out of 31 patients with chronic myelogenous leukemia (CML) had their blood counts return to normal. In the world of oncology, this was unheard of. This was the unexpected data processed by Alex Matter, head of oncology research at Novartis, AG. CML was a rare form of cancer that affected a very small number of individuals in the world. The development of STI571 was a pioneering concept in genetically targeted drug development. This case enables students to decide whether and how they would advance the development, production, and distribution of the drug given these extraordinarily successful Phase 1 results. Provides details on factors that complicate this decision, including production complexity, precedents from other high-profile drug treatments, and market pressures.

When Dr. Daniel Vasella learned of the early Phase 1 trial results, he immediately decided what course of action Novartis would take. Students will be able to examine and assess the concrete steps, and the rationale behind them, that Novartis took in response to this challenge. Focuses not on morality versus immorality but on principled decision making, action, and the practical implications of making good on a moral decision.

Distribution center operations (from order taking to order fulfillment) and the importance of attending to process details at Arrow Electronics, a large distributor of electronic components and computer products are described. The case also details the actions the company takes to achieve and maintain accurate inventory records and the importance of inventory record accuracy to the company's strategy.

Requiring manufacturers to manage their products when they become waste is an innovative form of regulation, one that countries in Asia, Europe, and North America have adopted on a variety of products, ranging from vehicles to appliances to batteries. However, even in many unregulated industries, some manufacturers are voluntarily assuming more responsibility for their end-of-life products, driven by customer demand and cost efficiencies. Explores various forms of take-back regulation and highlights some of the key features of the institutions that emerge in response. Also presents seven strategic product recovery alternatives and discusses some factors managers should consider in developing a take-back strategy.

Companies are more security conscious than ever, but they've neglected their greatest vulnerability: ordinary employees. Former hacker Kevin Mitnick tells companies that every employee is part of the problem--and had better be part of the solution.

In August, 2002, Melody Johnson, the deputy superintendent of the Providence, Rhode Island, School District, was hastily appointed acting superintendent, in the wake of the resignation of her predecessor and close colleague Diana Lam. Lam and Johnson together had been embarked, over the previous three years, on an ambitious reform plan to upgrade the low-performing system. Despite some indicators of improvement, however, Johnson knew that there remained significant resistance to the changes-as evidenced, in part, by a bitter contract dispute recently settled with the system's teachers. This case describes the challenge facing Melody Johnson as she sought to gain rank-and-file support for reform, in the immediate months after her appointment as superintendent in her own right. It focuses on specific steps that she considered to gain that support, without compromising reforms including, radically, a day in which classes would be cancelled so that she and others could address the teaching force as a whole. This public leadership case is designed to highlight the choices and techniques of "adaptive leadership", as described in the work of Kennedy School professor Ronald Heifetz, "Leadership Without Easy Answers" (Belknap Press, September 1994). See also case # 1690.0. HKS Case Number 1689.0

In August, 2002, Melody Johnson, the deputy superintendent of the Providence, Rhode Island, School District, was hastily appointed acting superintendent, in the wake of the resignation of her predecessor and close colleague Diana Lam. Lam and Johnson together had been embarked, over the previous three years, on an ambitious reform plan to upgrade the low-performing system. Despite some indicators of improvement, however, Johnson knew that there remained significant resistance to the changes-as evidenced, in part, by a bitter contract dispute recently settled with the system's teachers. This case describes the challenge facing Melody Johnson as she sought to gain rank-and-file support for reform, in the immediate months after her appointment as superintendent in her own right. It focuses on specific steps that she considered to gain that support, without compromising reforms including, radically, a day in which classes would be cancelled so that she and others could address the teaching force as a whole. HKS Case Number 1690.0