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Digital technology is increasingly important in achieving business goals, and its pervasive effects have resulted in the radical restructuring of entire industries. Consequently, managers' extensive interest in handling digital innovation is not surprising. Recent research has illustrated how digital technologies give rise to a vast potential for product and service innovation that is difficult to control and predict. Therefore, firms need dynamic tools to support themselves in managing the new types of digital innovation processes that emerge. The nature of these processes forces firms to challenge prior assumptions about their product and service portfolio, their digital environment, and ways of organizing innovation work. In this article, we present a managerial framework that supports firms in this undertaking. The framework, geared at supporting ongoing improvements in digital innovation management, covers five key areas: user experience, value proposition, digital evolution scanning, skills, and improvisation. We also present a diagnostic tool that can be utilized as firms begin the process of implementing the framework. Finally, we conclude with our thoughts on the managerial implications of the framework when going forward in a rapidly changing digital innovation landscape.

In an increasingly complex economic and social environment, access to vast amounts of data and information can help organizations and governments make better policies, predictions and decisions. Indeed, more and more decision makers rely on statistical findings and data-based decision models when tackling problems and forming strategies. So far, discussions of data-based decision making have centered mainly on analysis: data collection, technological infrastructures and statistical methods. Yet another vital issue receives far less scrutiny: how analytical results are communicated to decision makers. Data science, like medical diagnostics or scientific research, lies in the hands of expert analysts who must explain their findings to executive decision makers who are often less knowledgeable about formal, statistical reasoning. Yet many behavioral experiments have shown that when the same statistical information is conveyed in different ways, people make drastically different decisions. Description, the authors note, is the default mode of presenting statistical information. This typically involves a verbal statement or a written report, which might feature one or more tables summarizing the findings. But the authors'own research suggests that descriptions can mislead even the most knowledgeable decision makers. In a recent experiment, they asked 257 economics scholars to make judgments and predictions based on a simple regression analysis. To the authors'surprise, most of these experts had a hard time accurately deciphering and acting on the results of the kind of analysis they themselves frequently conduct. In particular, the authors found that their description of the findings, which mimicked the industry standard, led to an illusion of predictability -- an erroneous belief that the analyzed outcomes were more predictable than they actually were. The authors argue that simulated experience enables intuitive interpretation of statistical information,

Smartphones make up an increasing share of mobile devices, and mobile apps are among smartphones' most popular features. The all-time cumulative total of mobile app downloads stood at 37 billion at the end of 2011, and showed dramatic growth in 2012. Mobile app downloads more than doubled that year, resulting in a new cumulative total of 83 billion mobile app downloads. For companies, apps provide ample revenue opportunities. Mobile advertising has seen triple-digit percentage growth each year since PricewaterhouseCoopers began capturing this data in 2010. Yet some people have doubts about the effectiveness and viability of mobile advertising and believe that apps are a better medium. Authors Glen L. Urban and Fareena Sultan think one of the most effective uses of mobile media will be apps that are designed to build trust. These are "benevolent"apps because the apps' value is directly tied not to selling products but rather to advancing consumers' interests and helping them solve problems or make decisions. One example is the Sea Tow app, offered by Sea Tow Service International, headquartered in Southold, New York, which provides emergency towing and rescue services for boaters in the United States, the Caribbean and Europe. The free app supports boaters' navigation needs by providing information about local tide tables, detailed marine weather forecasts, GPS coordinates and bearing, and speed. Urban and Sultan observe that a growing number of organizations, including well-known companies, have come forth with their own benevolent apps in which selling products takes a backseat to providing information and gaining trust. The authors present findings from two studies (one at Liberty Mutual Insurance and the other at Suruga Bank in Japan) showing that benevolent mobile apps that try to help consumers in decision making can positively impact consumers' perception of a brand, as well as their willingness to consider the brand and their preference for it.

This is an MIT Sloan Management Review article. Information technology has in recent years been viewed as a major contributor to productivity growth. However, in 14 studies that examined the IT use of more than 3,100 employees in 28 organizations in the United States, the authors found a dark side to IT use. Employees can experience "technostress"for a number of reasons. They feel forced to multitask rapidly on simultaneous streams of information from different devices simply because information feeds come at them in real time; remote work and flextime can tether them round the clock to their devices and workplaces; and short technology cycles and pressures from IT vendors mean constantly changing interfaces, screens and functionalities. Ironically, even as they dream of escaping from IT, many employees also confess to feeling "addicted"to some of these stress-causing technologies. Another aspect of the dark side of IT is the threat of employees misusing organizational IT resources and triggering "attacks"of different kinds. To mitigate these problems, the authors suggest that senior executives should encourage employees to be mindful about how they use IT and to develop a deeper understanding of the IT they use at work. The authors also argue that a company's IT leaders have a special responsibility to instruct their organization about pertinent aspects of IT systems and applications that could either exacerbate or mitigate their more negative effects. HR leaders, meanwhile, should start to assess the extent to which employees are experiencing "technostress"or technology addiction and develop programs that encourage responsible IT use. Fortunately, the authors note, a holistic and integrated approach by a company's senior executives, IT leaders and HR leaders can help mitigate the most damaging consequences of the dark side of information technology.

Recent findings indicate that the Japanese IT sector increasingly lags the U.S. IT sector in software innovation and that this underlies Japan's weakening competitive performance vis-à-vis U.S. IT. This article explores alternative explanations for this outcome and analyzes what explains the Japanese software industry's trajectory. The sources are found in the late understanding of the transformational role of software and its value-creating potential as well as in the evolution of the industry's structure. Finally, this article considers what policy makers in other nations might learn from the Japanese experience in building a more vibrant software industry.

Faced with diminished resources and a need to provide enhanced employee email services, the City of Pittsburgh's Chief Information Officer (CIO) had to navigate a stubborn bureaucracy to achieve his objectives. Using an IT-business alignment strategic approach to decide on a suitable IT solution, the City was able to select and deploy a cloud-based system in an objective and uncontested way. The City employed an Analytic Hierarchy Process prioritization methodology, which used various criteria obtained from the stakeholders to develop a decision-making framework to select the most suitable cloud solution. The case allows a review of best practices in the cloud solution selection process, using theoretical lenses from the fields of IT alignment, decision-making, and stakeholder management. This case study is particularly useful for learning how strategic decisions to adopt IT are made in public organizations.

This teaching case examines the challenges of using Information Technology (IT) outsourcing, adopting new technologies, undertaking business transformation, and evolving the IT function's structure, governance arrangements and capabilities - all in a dynamic business context. The Commonwealth Bank Australia has over the last 20 years experienced similar IT management dilemmas as countless organizations across the globe. The case foregrounds six perennial issues in IT management. First, what form of outsourcing is suitable at different stages of an organization's development, and how can that outsourcing be managed? The case here covers the challenges of single and multi-supplier outsourcing. Part 2 will focus on sourcing issues with cloud computing. Second, what are the key IT capabilities that must be retained within a large corporation? Part 2 will ask whether these capabilities change with cloud computing. Third, what are the mechanisms for developing, nurturing, maintaining, and evolving retained capabilities? Fourth, how should IT be governed in the face of changing business needs, new technologies, and changing organization structures? Fifth, Parts 1 and 2 of the case question the roles of the CEO, CIO, and business managers in leveraging IT performance for business value, the building of project and program management capabilities, and how to organize IT to support a business transformation program. Finally, the case raises the challenge for students of how an organization with its history and legacy in technology and sourcing partners can then move into even newer technologies - in this scenario cloud computing - the primary focus of Part 2 of the case. Overall, the two cases raise the fundamental challenge - what perennial management practices are effective, over time, in dealing with the challenges raised by changing technologies, and what new practices may be required, in contemporary dynamic business contexts.

This teaching case explores the business and ethics of prison sourcing, the practice of training and hiring prisoners to perform work for the private or public sectors. Although most prison employment programs train and hire workers for manual labor, such as furniture building or textiles, some prison employment programs now train and hire inmates to perform low-level Business Process Outsourcing (BPO) services like call center work, data entry, and document preparation. Prison sourcing is highly controversial. Besides the usual concerns about security and quality of work performed by prisoners, the ethical aspects of prison sourcing are hotly debated. Proponents argue prison sourcing is ethical because it defrays the costs of corrections, helps individuals successfully complete their confinement and prepares them to reintegrate into society, benefitting the individuals, their families, communities, and ultimately tax payers. Opponents argue that prison sourcing is a form of slavery, hurts small businesses, and steals jobs from law-abiding citizens. The authors developed this teaching case to allow students to explore these issues. The case is a dramatized version of an actual case study of prisoners performing BPO work for a private sector company.

When Google bought Nest, a digital thermostat and smoke detector company, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are reaching critical mass, spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors--IBM and SAP on one hand, big data start-ups on the other--offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion dollar initiative focused on what it calls the industrial internet: Adding digital sensors to its machines, connecting them to a common, cloud-based software platform, investing in software development capabilities, building advanced analytics capabilities, and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes-based business models. The company expects that number to double in 2014 and again in 2015.

Big data and the "internet of things" promise revolutionary change to management and society. But their success rests on the assumption that all the data being generated by internet companies and devices scattered across the planet belongs to the organizations collecting it. Pentland suggests that companies don't own the data, and that without rules defining who does, consumers will revolt, regulators will swoop down, and the internet of things will fail to reach its potential. To avoid this, he has proposed a set of principles and practices to define the ownership of data and control its flow. He calls it the New Deal on Data. The New Deal is "rebalancing the ownership of data in favor of the individual whose data was collected," Pentland says. "People would have the same rights they now have over their physical bodies and their money." They could see what was being collected and then opt out or opt in. Many companies are afraid that the regulation of data collection will kill their business models, he says. But he believes that it will make for a healthier economy--and that it will prevent disasters such as the criminal use of data in a way that affects critical systems and causes deaths. "If that kind of disaster happened," Pentland says, "there would be an overreaction: Shut it down. You'd see very strong regulation passed overnight, and a lot of companies would be in deep trouble."

This industry note covers how new players in cloud file sharing and storage (such as Dropbox and Box) are reshaping the overall enterprise content management (ECM) software industry in 2014. The note presents the major incumbent firms in the ECM industry in 2014, and then describes in depth 1) the latest technology, market and business model changes that potentially enable a disruption of that industry, and 2) the key new industry players. It also discusses the implications of the convergence between two industries: Small and medium business (SMB) file sharing and ECM. In addition, the note considers the strategic challenges facing these two categories of players in shaping the future of the converged industry.

Michael Lewis's book Flash Boys, published in 2014, revealed to the public numerous controversial Wall Street trading practices made possible by advances in technology, as well as regulatory changes that were (ironically) intended to improve pricing fairness in the financial markets. Lewis's story focused on the man who blew the whistle: Brad Katsuyama, a Canadian banker who ran the New York trading desk for the Royal Bank of Canada. In 2010, he had noticed some odd system responses to his trading requests and began to ask questions. The answers he discovered, and publicized, about high frequency trading set off a firestorm regarding the moral integrity of the financial markets. Very few people understood what was happening, and fewer still comprehended the central role played by information technology.

Between 2010 and 2012, SolarCity experienced tremendous growth in an industry that was generally perceived to be struggling. Many other solar start-ups were failing-Solyndra, which had received a $535M loan from the U.S. government, was the highest profile failure, declaring bankruptcy in September, 2011. Lyndon Rive noted, "Investors have been burned so badly from the solar sector. We've faced that stigma while selling our company to investors." Despite that burn, however, SolarCity went forward with an initial public offering (IPO) in December of 2012 at an IPO price of $8.00 per share. By end of the second quarter, 2014, SolarCity operated in 15 states and the District of Columbia and boasted 140,000 customers. It controlled 36 percent of the residential solar market but had never posted a profit-in 2013 it had a net loss of almost $152 million.

This case describes the design and implementation of an IT-multi-sourcing strategy at a large global sportswear company, the adidas Group, which is headquartered in Germany. To help increase the benefits and reduce the risks of its sourcing arrangements, adidas carefully selected two tier-2 vendors to work with its primary tier-1 vendor, a large Indian outsourcing firm that it had worked with closely for over a decade. The management of the multi-sourcing arrangement is posing a number of challenges. The Chief Information Officer is considering a number of options to ensure the continued success of the multi-sourcing strategy, including restructuring the IT group, developing the skills of its staff, and starting a captive center.

This teaching case presents a situation confronting Garfield Sinclair, the Managing Director of LIME Jamaica, a telecommunication provider, in March 2011, learning of a possible swap deal between the market leader, Digicel and its closest rival Claro (LIME's two biggest competitors). The unexpected deal threatens to create a new monopoly in the Jamaican telecommunications market. Ironically, LIME held a monopoly position in Jamaica until 2000, when new licenses were offered in the country. Now, LIME's very existence is threatened and Sinclair must decide what to do. This case supports debate on whether the telecommunications industry is a natural monopoly, and can serve as a vehicle that improves students' understanding of the complex interplay among technology, business strategy and the law.

The American healthcare system is at a crossroads, and analytics, as an organizational skill, figures to play a pivotal role in its future. As more healthcare systems capture information electronically and begin to collect more novel forms of data, such as human DNA, how will we leverage these resources and use them to improve human health at a manageable cost? In this article, we argue that analytics will play a fundamental role in the transformation of the American healthcare system. However, there are numerous challenges to the application and use of analytics: the lack of data standards, barriers to the collection of high-quality data, and a shortage of qualified personnel to conduct such analyses. There are also multiple managerial issues, such as how to get end users of electronic data to employ it consistently to improve healthcare delivery and how to manage the public reporting and sharing of data. In this article, we explore applications of analytics in healthcare, barriers and facilitators to its widespread adoption, and ways in which analytics can help us achieve the goals of the modern healthcare system: high-quality, responsive, affordable, and efficient care.

Mr. Rao, with several years of banking experience, approached People's Group Dubai, a venture capitalist firm, seeking financing for a micro-remittance-cum-foreign exchange service operation in Hong Kong. He argued that demand for currency exchange services in Hong Kong would continue to grow because of the high number of tourists who visited Hong Kong on their China tour. He also argued that a captive market of domestic workers who remitted their wages to their home countries would provide continuous demand for remittance services. Mr. Rao was confident that he could start quickly with a small office staffed by a few tellers and one manager in a busy location of Hong Kong, and then expand operations to other locations. However, financing to cover fixed assets and working capital would be required to open additional outlets. A major enabler of the proposed strategy was the telecommunication network of Western Union, which had established a presence in several parts of the world as a trustworthy provider of remittance services. Mr. Rao also intended to benefit from the technology support and expertise of the IT arm of People's Group based in Bangalore, India. People's Group Dubai welcomed realistic entrepreneurial ideas if they were backed by clear strategies for business growth and promised an acceptable rate of return on investment (ROI). With competition and low-cost micro-remittance services provided by pure Internet players, there were questions about the adequacy of technology support from the Bangalore arm in steering Mr. Rao's proposed venture to success and generating adequate ROI in the short and long run. People's Group directors debated the viability of the proposed venture.

Mariam Naficy (Minted CEO) and Melissa Kim (Minted COO) have grown the company to become a leader in the online printed cards, independent design and art market segments. As the business has continued to scale they wrestle with simultaneously growing their existing business while also looking at expanding into new markets, all the while keeping their existing customer base engaged. The case highlights the difficult decisions management faces in deciding where to pursue growth opportunities when choices might be overly abundant.

Neelkanth Drugs Pvt. Ltd. (NDPL), one of the leading pharmaceutical distributors in Delhi, was making plans for further expansion, and the dynamic nature of the business was leading this small- and medium-sized enterprise towards implementing an enterprise resource planning (ERP) system. The company's head of information technology had prepared a complete report on the various ERP solutions available for NDPL and presented it to the chief executive officer (CEO). According to this analysis, cloud-based ERP was the best solution out of the various options available. The CEO was indecisive because of NDPL's past cloud experience, which had been disruptive and unsatisfactory, to say the least. The CEO pondered whether it would make sense to go for a cloud-based ERP solution, or whether it would make more sense to look for an alternative that may not be as cost-effective but that would entail less risk.

A leading cement producer in southern India, Madras Cement is having trouble controlling costs due to its disorganized reporting processes. This case documents the company's two attempts to resolve these issues with the implementation of an Enterprise Resource Planning (ERP) system. The company's first attempt fails. After a company leader takes the bold step of admitting he made mistakes during this effort, Madras is ready to dig in and make the necessary changes to make the second attempt a success. The case initially seems to be about software implementation, but it is really a story about change management, transformation through transparency, business centric approaches, and the creation of a new social architecture. The company uses innovation to develop new processes that can ultimately be applied to other organizations, allowing the merger and acquisition process to begin.