1. Chapter 6: Implementation

2. GUEST SPEAKER
Tuesday, April 17
11:00-12:15 or 12:30-1:45
Room 216
AZUL CASARES
Patagon
Topic:
Her experience starting Patagon

3. TODAY’S CLASS “Practitioners Perspective on
5:00-6:00 Discussion: Implementation
6:00-6:15 Break
6:15-7:40 Don Hazell, BEA Systems
“Practitioners Perspective on
Implementing e-Business
Solutions”

4. Homework due next session
Prepare Case: Chapter 8
Prepare Crossfire - Valuation of e-Businesses
Prepare Amazon.com
Supporting articles:
“Disciplined Decisions,”
“Investment Opportunities as Real Options,” and
“A General Manager’s Guide to Valuation,”

5. Innovation is the mainspring of the new economy.
Ideas are critical…
Innovation is the mainspring of the
new economy.
But as more and more companies compete in
ideas, the game changes to competing in the
implementation of the ideas.
In this next stage of competition:
Getting an idea gives way to getting it done!

6. Lessons from HelloAsia.com (Fast Company, June 2000)
- Don’t move until you know where you’re going
- Strategize globally, but plan locally
- Don’t make a move until all your people know
their places
- Write it down
- The best-laid plans need to change

7. Change Without Pain HBR, July 2000
- Reward Shameless Borrowing
- Appoint a Chief Memory Officer
- Tinker and Kludge Internally First
- Hire Generalists

8. Marketspace Evolution and Need for Continuous Innovation
Brand Promise
Branding
Marketing communications
Customer interface
Implementation
Objectives
Achieve strategic goals
Adjust product offering and delivery system to rapidly changing marketspace environment
Delivery
System
Innovation
Process
Deliver on the promised experience
Renew/innovate the
customer experience
Source: Monitor Analysis

9. Two Integral Components of Implementation
Objectives
Deliver the promised customer experience
Turn strategic intent/concepts into results
Build the
infrastructure to deliver on the brand promise
Objectives
Maintain fit between marketspace evolution and the company’s delivery system and product offering
Innovate/Renew the customer experience
Source: Monitor Analysis

10. What do I like? - Cases and discussions (9)
- Relevant topics & Strategy aspect of the material
- Talking about controversial issues & unresolved problems
- Project “working on real projects with real customers
- Analysis of business models that are failing
- Textbook and readings
- Combining theory and practice
- Small size of the class

11. What do I not like?
- Projects (too structured, too undefined, too narrow,
too controlled, poorly pre-screened, companies not
“on board,” better negotiated to run more smoothly,
better organized).
- Lengthy discussions
- Time management of the classes
- More speakers
- Too many readings

12. Why Does Implementation Matter?
Strategy
Appropriate
Inappropriate
Success
All that can be done to ensure success has been done
Roulette
Good execution can mitigate poor strategy, forcing management to success or
Same good execution can hasten failure
Good
Implementation
Trouble
Poor execution hampers good strategy -- management may never become aware of strategic soundness because of execution inadequacies
Failure
Difficult to diagnose -- bad strategy masked by poor execution
More difficult to fix -- two things are wrong
Poor
Source: Modified version of materials in Thomas V. Bonoma, The Marketing Edge, The Free Press, 1985

13. Challenges of Online Implementation
Essential Challenges of Online Implementation
Customer-Driven
Organization-Driven
Lower switching barriers = increased importance of good implementation
More complex linkages = increased complexity of implementation
More visibility of errors = stronger competitive implications of errors
More fluid organizational boundaries = increased complexity of implementation
More dynamic market environment = increased complexity of implementation
Organization-Driven
Customer-Driven
Monitor Company ©1999 — Confidential

14. From Built to Last to Built to Rebuild
Sources: Frederick P. Brooks, Built to Last, Harper Business
Smart Way to Start, 10 Principles of the New Economy, Business 2.0, March, 2000

15. The Delivery System Needs to Support and Reinforce the Resource System
Mapping the Resource System
People
Supply
Chains
Processes
Systems
Assets
Source: Clayton M. Christensen, Meeting the Challenge of Disruptive Change, Harvard Business Review 78, no. 2, March-April 2000
Monitor Company ©1999 — Confidential

16. Four Types of Supply Chains Found in Marketspace
B2C (Business-to-Consumer)
B2B (Business-to-Business)
Stock-It-Yourself
Outsource Warehousing
Drop Ship
Fulfillment Intermediaries
Customer-Centric
Vertical Hubs
C2C (Consumer-to-Consumer)
C2B (Consumer-to-Business)
Much like a vertical hub, many sites (e.g., eBay) have created customer-to-customer sales
Provides a forum for buyers and sellers to meet
Buyers and sellers trade directly (eliminating an intermediary)
A global marketplace with a large and interested trading company
C2B companies include auction services like Priceline.com. Individual consumers place bids with businesses and businesses decide whether to sell.
Also includes consumer group buying companies like Mercata.com. Mercata.com is a trading community where the more people that purchase a product, the lower the price is. Mercata allows consumers from around the world to achieve group scale economies.

17. Where to Play Online and Offline
Customer Interface
Yahoo!
McDonald’s
Egghead
BN.com
Fulfillment Systems
Amazon.com

18. Innovation Used to be Slow and Gradual in the Offline World
3M’s Research Paradigm
Key Takeaways
Traditional offline innovation took years and emphasized sustainable/gradual innovation
Marketspace still offers room for incremental innovation, but emphasis shifts to more drastic innovations
High information content of innovation objects increases speed of innovation from years to months or even shorter
Short history of marketspace means new collaborators/complementors become available frequently
Source: Ernest Gundling, The 3M Way to Innovation, Kodansha America, Inc., 2000

19. The Offline Innovation Process Was Internal to the Firm
Innovation by Doodling
Innovation by Design
Innovation by Direction

20. Offline Innovation Process vs. Online Innovation Process
Offline Trade-Offs/Principles Supporting Funnel Approach
Online
Principles
Investments required to launch new innovation very high
Limited resources force tradeoffs/choices about which innovations to pursue or not
Tradeoffs/choices are made inside the organization before product hits the market
Time-to-market/first-mover imperative needs to be traded off with extensive time required to gather customer input
Launching early increases risk of flops and flops need to be avoided at all times:
Costs of flow very high
Significant damage to brand equity
Investments required to launch new products and services very moderate
Choices about future of new innovations can easily be made by markets, no need to make these choices internally
First-mover imperative can be aligned with gathering (more) customer input
Launching beta versions allows for revisioning/customization, actually benefiting innovator
Keys drivers determining success of innovation/implementation are:
Customer base
Customer data analysis
Knowledge management

21. New Innovation Frameworks Addressing Co-Evolution Have Emerged
Performance Demanded at the High End of the Market
Progress Due to Sustaining Technology
Product Performance
Performance Demanded at the Low End of the Market
Progress Due to Sustaining Technology
Disruptive Technological Innovation
Time
Source: Clayton M. Christensen, The Innovator’s Dilemma, Harvard Business School Press, 1997

22. New Innovation Frameworks Addressing Co-Evolution Have Emerged
Low 2 5
Developer-Driven Development
Technology/Market Coevolution
Maturity of Technology Design 3
User-Context Development
New Application or Combination of Technologies
User-Driven
Enhancement 1 4
High
High
Low
Alignment of Product Line
With Current Customer Base
Source: Dorothy Leonard-Barton, Wellsprings of Knowledge, Harvard Business School Press, 1996

23. Integrating New Technology with Customer Preferences
Evolution of Technical Possibilities
Beta 1
Initial
Input
Product
Release
Beta 2
Beta 3
Evolution of Customer Preferences
Source: Marco Iansiti and Alan McCormack, New product development on the Internet, Sense & Respond, Harvard Business School Press, 1998

24. The Development of Navigator 3.0
Specifications Complete
Full Release
Start
Input from User Feedback
Objectives
Feature Design and Coding
Integration
Stabilize
Beta 0 Internal
Beta 2
Beta 4
Beta 6
Beta 1
Beta 3
Beta 5
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Source: Marco Iansiti and Alan McCormack, Sense & Respond, Harvard Business School Press, 1998

25. Distributed Innovation
Customers
Collaborators
Company
= Boundaries of the firm
= Feedback loop
Competitors
Suppliers
Enablers

26. Schwab IT Infrastructure
Source: Nicole Tempest and Warren McFarlan, Charles Schwab Corporation (A), Case no ,
Harvard Business School Publishing, September 9, 1999

27. Timeline for Schwab Innovations
Entire trade clearing system brought in-house
Equalizer: DOS-based product enabling PC users to trade stocks online
Telebroker: 24/7 quote and order placement by telephone
SchwabLink: Service for fee-based financial advisors
OneSource: Mutual fund program allowing investors to purchase Schwab and non-Schwab funds free of charge
Streetsmart: Windows-based software allowing online trading of equities, bonds and mutual funds
October 1995
eSchwab: Electronics software package dialing into Schwab system
June 1995
Advisor Source: Referral service for fee-based advisors
March 1996
Upgraded eSchwab: First major brokerage firm to offer trading via the Internet
September 1997
Customized asset allocation tool available online
October 7, 1997
SchwabLink available on the Web
October 1, 1997
First speech-recognition service for investors
January 27, 1998
MoneyLink: Electronic funds transfer service
May 14, 1998
First US website enabling order placement in Chinese
January15, 1998
Schwab.com launches
January 20, 1998
IRA Analyzer launches
September 21, 1998
CD ROM tool for retirement setup and monitoring
November 23, 1998
Web tool to track and benchmark investor performance
April 16, 1999
New site based on user input
April 27, 1999
Retirement Planner online
August 14, 1999
Velocity software trading system for active investors
September 8, 1999
New Web tools for investment advisor offering
May 24, 1999
MySchwab launches
August 19, 1999
Plans for cross-platform wireless trading
November 9, 1999
Paperless trading with eConfirms
October 20, 1999
After Hours trading
November 23, 1999
Velocity 2.0 launch
December 1, 1999
Enhanced Analyst Center
December 22, 1999
New online mutual fund tools
February 3, 2000
Learning Center: Interactive education tool for online learning
March 7, 2000
Schwab and Barclays announce Internet-based foreign exchange service
March 15, 2000
Schwab expands advice offering with Portfolio consultation
March 31, 2000
Schwab and Dow Jones unveil online Chinese news and research service
May 7, 2000
Stock Analyzer launched, offering third-party equity analyst recommendations and earnings projections