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Chapter 6: Implementation
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GUEST SPEAKER Tuesday, April 17 11:00-12:15 or 12:30-1:45 Room 216 AZUL CASARES Patagon Topic: Her experience starting Patagon
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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”
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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,”
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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!
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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
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Change Without Pain HBR, July 2000
- Reward Shameless Borrowing - Appoint a Chief Memory Officer - Tinker and Kludge Internally First - Hire Generalists
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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Where to Play Online and Offline
Customer Interface Yahoo! McDonald’s Egghead BN.com Fulfillment Systems Amazon.com
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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
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The Offline Innovation Process Was Internal to the Firm
Innovation by Doodling Innovation by Design Innovation by Direction
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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
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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
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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
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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
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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
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Distributed Innovation
Customers Collaborators Company = Boundaries of the firm = Feedback loop Competitors Suppliers Enablers
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Schwab IT Infrastructure
Source: Nicole Tempest and Warren McFarlan, Charles Schwab Corporation (A), Case no , Harvard Business School Publishing, September 9, 1999
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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
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