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Fire fighting is an old, familiar way of doing business, especially when developing new products and ramping up manufacturing. But fire fighting consumes an organization's resources and damages productivity. What factors underlie this destructive pattern? Fire fighting derives from what seems like a reasonable set of rules--investigate all problems, for example, or assign the most difficult problems to your best troubleshooter. Ultimately, however, fire-fighting organizations fail to solve problems adequately and forgo so many opportunities that overall performance plummets. Some companies never fight fires, even though they have just as much work and just as many resource constraints as other companies do. They have strong problem-solving cultures. They don't tackle a problem unless they're committed to understanding its root cause and finding a valid solution. And they don't reward fire-fighting behavior. Transforming a fire-fighting organization into a problem-solving one is not easy. But there are tactical, strategic, and cultural methods for pulling your company out of fire-fighting mode.

Despite all the data that retailers and e-tailers can now gather about point-of-purchase information, buying patterns, and customer tastes, they still haven't figured out how to offer the right product, in the right place, at the right time, for the right price. But some retailers are moving profitably toward what the authors call "rocket science retailing"--a blend of traditional forecasting systems, which are largely based on the gut feel of employees, with the prowess of information technology. The authors recently finished surveying 32 retail companies in which they tracked practices and progress in four areas critical to rocket science retailing: demand forecasting, supply-chain speed, inventory planning, and data gathering and organization. In this article, the authors look at some companies that have excelled in those four areas and offer some valuable advice for other businesses seeking retailing perfection. In particular, the authors emphasize the need to monitor crucial metrics such as forecast accuracy, early sales data, and stockouts--information that will help retailers determine when to tweak their supply-chain processes to get the right products to stores at just the right time.

A new model for managing distributed innovation, the community of creation is a governance mechanism for managing innovation that lies between the hierarchy-based (closed) mechanism and the market-based (open) mechanism for innovation management. The community-centric model shifts the focus of innovation beyond the boundaries of the firm, to a community of individuals and firms that collaborate to create joint intellectual property. A community of creation requires an identified sponsor, a set of ground rules for participation, and a system for managing intellectual property rights. The community of creation model allows innovation to proceed in a complex environment by striking a balance between order and chaos. This article presents detailed case studies from the computer industry to highlight the differences among the different approaches to innovation management. It also discusses the opportunities and the unresolved issues of the community of creation model for practitioners as well as for academics.

Spreadsheet supplement for case 600-143.

Describes IDEO, the world's leading product design firm, and its innovation culture and process. Emphasis is placed on the important role of prototyping and experimentation in general, and in the design of the very successful Palm V handheld computer in particular. A studio leader is asked by a business start-up (Handspring) to develop a novel hand-held computer (Visor) in less than half the time it took to develop the Palm V, requiring several shortcuts to IDEO's legendary innovation process. Focuses on: 1) prototyping and experimentation practices at a leading product developer; 2) the role of playfulness, discipline, and structure in innovation processes; and 3) the managerial challenges of creating and managing an unusually creative and innovative company culture. Includes color exhibits.

Explores two main issues: how the IBM Technology Group was able to build a robust, scalable, and functional IT platform using packaged enterprise resource planning (ERP) software from SAP, and how the division should best leverage this capability going forward.

Discusses how Intel Corp. uses corporate venture capital to explore new technologies in new markets. Intel combines external investments with internal research and development.

Describes the history of Microsoft's Office product suite. Discusses evolution of the Office 2000 project. Set at the end of the project when Steven Sinofsky, Office vice president, must decide upon the direction for the next version of Office, as well as make changes to the process. This case is also available in multimedia format on a CD-ROM, order # 9-600-023. Must be used in conjunction with video # 9-600-502.

A junior associate in a large law firm has been offered a promotion - an excellent opportunity but one that will require an even stronger commitment to her job. She must make her decision in a short period of time, and must consider time commitments, sacrifices, balancing work and home lives, and the stress placed on her marriage. In addition, she must consider how to manage the unrealistic expectations of her superiors.

As products become more complex and global in scope, product development managers rely increasingly on suppliers for help. Limited resources necessitate developing close, long-term relationships with a few of the most important suppliers. But partners often struggle in these relationships because of conflicting needs and objectives. The OEM's wish list consists of providers with scarce resources and capabilities, including turnkey solutions, a shared strategy, and contributions to new product development; support of global product strategies (market knowledge or access and local presence); and minimized risks (assurance of good design, confidentiality, and demonstrated ability). The supplier's wish list consists of rewards for up-front involvement, protected business interests, and a share in the payoffs. OEM and supplier needs can be balanced by honoring the Ten Commandments for their relationships: three for OEMs (don't manage all suppliers equally, realize that good suppliers are hard to find, demand more of suppliers but learn to be a good customer as well); three for suppliers (recognize that competition is getting tougher and broader based, explore new business sourcing arrangements, use speed to alleviate the need to maintain propriety in NPD); and four for both parties (don't let distance hamper performance, keep score, be creative in using capabilities of global partners, and develop and encourage trust).

Must firms compete on all dimensions of value simultaneously? Or can managers pick and choose among market segments and deploy a variety of strategies to meet customer needs? Operational systems cannot simultaneously excel on all dimensions of value--cost, lead time, quality, and flexibility. The authors examine three companies similar in product, geographic location, shop floor equipment, employee skills, and customers; all three firms have survived for at least 20 years and are among the top 25 companies in their industry group. Comparing the three in terms of key strategic advantages, disadvantages, fixed costs, lead time, and employee commitment strongly supports the need to make trade-offs in competing dimensions of value in operations (although all three realize they must satisfy certain industry norms, such as quality and on-time delivery). Thus, not only do trade-offs exist, but they have significant competitive implications--trade-offs are strategic in nature. Eventually a firm hits the "productivity frontier," beyond which it cannot continue to improve all dimensions of performance simultaneously.

The advances of the Internet has enabled some companies to dematerialize their products so that digital versions can be personalized and shipped to customers without the usual logistics costs and delays. Once this is achieved, then the opportunities to provide customers with additional services, or to transform from a product-based to a service-based company, could be tremendous. Traces the experience of Intuit in pursuing its digital channel to sell and distribute its products, the challenges faced in making this migration while managing the physical channel, and the new service opportunities that the company created once the digital channel was in place.

The world's largest oil-service company has revolutionized the way it buys supplies: instead of a central purchasing office, its e-procurement system lets employees buy goods from their desktops.

Provides an overview of some current issues in logistics: the rise of third party logistics, substitution of information flows for physical flows, the economics of logistics, and international logistics.

The operations manager at Diverse Industries International's plant needs to make a decision regarding a restructuring of the plant's Automatic Dishwasher Gel production line. The restructuring suggestion which included replacing a loading table with a lift conveyor and hopper system, came from the company's industrial equipment contractor who hoped to sell them some used production equipment. The operations manager, while he was fairly sure the investment was a good idea, was concerned about how he could best justify the cost to the finance department and, if approved, how he could reallocate direct labor on the line to maximize efficiency.

Electronic hubs--Internet-based intermediaries that host electronic marketplaces and mediate transactions among businesses--are generating a lot of interest. Companies like Ariba, Chemdex, and Commerce One have already attained breathtaking stock market capitalizations. Venture capitalists are pouring money into more business-to-business start-ups. Even industrial stalwarts like GM and Ford are making plans to set up their own Web markets. As new entrants with new business models pour into the business-to-business space, it's increasingly difficult to make sense of the landscape. This article provides a blueprint of the e-hub arena. The authors start by looking at the two dimensions of purchasing: what businesses buy--manufacturing inputs or operating inputs --and how they buy--through systematic sourcing or spot sourcing. They classify B2B e-hubs into four categories: MRO hubs, yield managers, exchanges, and catalog hubs, and they discuss each type in detail. Drilling deeper into this B2B matrix, the authors look at how e-hubs create value--through aggregation and matching--and explain when each mechanism works best. They also examine the biases of e-hubs. Although many e-hubs are neutral--they're operated by independent third parties--some favor the buyers or sellers. The authors explain the differences and discuss the pros and cons of each position. The B2B marketplace is changing rapidly. This framework helps buyers, sellers, and market makers navigate the landscape by explaining what the different hubs do and how they add the most value.

Softbank Venture Capital (SBVC) has established a business incubator, Hotbank. Ellen Levy, a "Netbatsu Development Officer" with SBVC, is faced with a decision about which relationships among Hotbank/SBVC portfolio companies to facilitate.

Describes Destiny's use of "pattern language" concepts to structure its business activities. The innovative approach contrasts with a process approach and helps the company balance its needs for scalability with retained agility.

Introduces students to the basics of principal-agency theory as it applies to supply chains. Operational problems in supply chains can often be traced to incentive issues. Students and managers lack frameworks to analyze incentive problems in supply chains. This note offers such a framework.

Operations must be seen to be understood, which is why tours of operations are extremely common. Some reasons of why plant tours are valuable are offered in this note, along with a how to guide to gathering, organizing and assessing relevant data. The emphasis is on forming an overall evaluation of the operation's effectiveness.