Indholdsfortegnelse for Spring 2016 i MIT Sloan Management Review

WHAT IF YOU INVESTED extensively in improving the performance of your product — only to realize that some potential customers don’t notice or care? In his article “Why Great New Products Fail,” Duncan Simester, the NTU Professor of Management Science at the MIT Sloan School of Management, illustrates that potential business pitfall with an anecdote about a friend of his who didn’t know much about bicycles — and whose main criterion for purchasing one was that it be red. “Think for a moment about the implications of this example for a bike manufacturer,” Simester writes. “Technical innovation would not increase the chances of a sale to this customer, no matter how much value the innovations created. More generally, the risk for companies is that they invest in innovations that customers…

“Rather than requiring lengthy conversations, interactions with dormant ties are often relatively short , delivering good ‘bang for your buck’ — obviously very good news for busy executives.” (From Walter et al., “How to Reconnect for Maximum Impact,” page 18.) “To be sure, facing disruption is no picnic . But it also isn’t the existential threat that so many see it as.” (From Gans, “Keep Calm and Manage Disruption,” page 83.) “To see any real economic benefit from user engagement , a website has to have a clear strategy in place.” (From Zalmanson and Oestreicher-Singer, “Turning Content Viewers Into Subscribers,” page 11.) “ The use of social media by companies for new product development lags far behind social media use by the general public.” (From Roberts and Piller, “Finding the…

Few MIT Sloan Management Review articles garner as much attention as Andrew A. King and Baljir Baatartogtokh’s article “How Useful Is the Theory of Disruptive Innovation?” in the fall 2015 issue. After interviewing and surveying 79 industry experts, King and Baatartogtokh concluded that many of the 77 industry cases cited as examples of disruptive innovation by Harvard Business School professor Clayton M. Christensen and his coauthor Michael E. Raynor did not actually fit four of the theory’s key elements well. King and Baatartogtokh’s article attracted the attention of a number of media outlets — and generated a number of interesting responses. In the essays here, two authors — Juan Pablo Vázquez Sampere of IE Business School and Martin J. Bienenstock of the law firm Proskauer Rose LLP — take issue…

No theory or framework is perfect. And one common imperfection, which is present in Clayton M. Christensen’s theory of disruptive innovation as well as many other frameworks, is that it is not entirely clear what is the core idea and what is peripheral. This ambiguity has in turn made it unclear how valuable the theory is and what adjustments might make it more valuable. My own view is that there is a very useful core idea at the heart of the theory, one that scholars and executives alike would do well to heed, but this idea has yet to be articulated clearly, either by Christensen or by critics such as Andrew A. King and Baljir Baatartogtokh. This core idea is what I call “the surprisingly bridgeable chasm.” Let me back…

SOCIAL MEDIA SUCCESS STORIES have become widely shared narratives, highlighting the impact social media can have on companies’ fortunes. For example, Burberry Group plc, the London-based luxury fashion brand, relies heavily on social media to reach customers and fans.1 As far back as 2011, Burberry was spending more than 60% of its marketing budget on digital media.2 Increasingly, companies are attempting to navigate the social media landscape and use social media as a business tool to enhance performance. This is reflected in reports of increased spending on social media initiatives and the establishment by some organizations of dedicated social media functions.3 Despite this, there is a significant opportunity that isn’t being tapped: using social media to support innovation and new product development.4 Consultants and academics alike have been touting social…

FOR MORE THAN a decade, multinational enterprises from developed countries have been moving a substantial part of their research and development (R&D) activity to emerging markets such as India and China. While the location of R&D centers in other developed countries has been driven by lucrative markets or specific expertise available in the local ecosystems of those countries, the location of R&D in developing countries has been driven largely by the availability of skilled manpower at low cost. At first, these R&D centers in emerging markets operated largely as extended arms of R&D in the home country, executing well-defined projects under close supervision from headquarters. However, the dynamics of multinationals’ R&D are rapidly changing. Emerging markets are new growth drivers of the global economy, and their unique bundle of opportunities…

IF YOU WANT to capture the attention of a business leader, say the word “disruption.” At least, that was the reaction of Andy Grove, then the CEO of Intel Corp., when he first heard the disruption theory espoused by Harvard Business School professor Clayton M. Christensen.1 Christensen argued that even when a company does everything right — for example, focuses on its customers — it remains vulnerable to competition from unexpected sources. Christensen had seen a pattern of market leaders being upended by entrants in the hard disk drive and steel industries, among others. Grove called Christensen’s message “scary,”2 and indeed, over the past 20 years, Christensen’s observations have led to widespread fear and paranoia. In the minds of many executives, disruption is just around the corner, and the fear…

The Digital Imperative Digital technology is changing business — but John Hagel III, cochairman of Deloitte’s Center for the Edge, believes that many executives are waiting too long to embrace those changes. “I think there’s a tendency to look at digital technology and think about it more as an opportunity, a choice,” he told MIT Sloan Management Review . “The mounting performance pressure in our shifting business landscape turns this from an opportunity and choice into an imperative. The longer you wait, the more marginalized you’re going to become.” Read the online-only interview here: sloanreview.mit.edu/article/the-dark-side-of-the-digital-revolution Smart Humans + Smart Machines What cognitive technology capabilities will be available in the future — and what tasks will still require human input? In a free, on-demand webinar, Thomas…

The ability to innovate and rapidly respond to changes in the business environment is critical to competitiveness and success. Creativity and problem-solving skills are key elements of improving the outcomes in projects that require innovation. Iterative development, improvisation, and experimentation combined with focus and flexibility are needed to identify new business opportunities and effectively execute projects. But business demands also require efficiency, and many organizations pursue disciplined project management and product development practices that emphasize standardization and consistency to help drive down costs. Is a disciplined approach to product development at odds with creativity and improvisation? Can managers develop skills around building improvisation and creativity, especially for innovative projects? If so, what are the right conditions for improvisation to flourish? In this article, we discuss findings from our study on…

Reconnecting with long-lost or dormant contacts can be very valuable — both professionally and personally. But choosing from among hundreds of former contacts can be challenging. We find that executives, when left to their own devices, don’t take full advantage of their opportunities to reconnect. And when they do reconnect, they tend to focus on comfort and not on re-connections that might offer the best advice. As the nature of work and professional life becomes more varied, people accumulate an ever-increasing number of former colleagues and contacts. Although the Internet and social media have made it fairly easy for people to maintain their relationships, most managers find it impossible to stay in active communication with everybody. Inevitably, they lose touch with many of their former contacts. When these previously valuable…

Every time I hear about a new study on disruptive innovation, I feel excited about the possibility that someone will come up with a way to explain the theory in a much clearer and more transparent manner. More often than not, I end up disappointed — as I was by Andrew A. King and Baljir Baatartogtokh’s article, “How Useful Is the Theory of Disruptive Innovation?” in the fall 2015 issue of MIT Sloan Management Review. For starters, King and Baatartogtokh argued that Clayton M. Christensen’s theory of disruptive innovation has not been adequately tested in the academic literature. I would encourage the authors to revisit the literature, because to my count, there are more than 40 articles, including much of an entire issue in a leading academic journal (the Journal…

CHINA’S NEXT STRATEGIC ADVANTAGE From Imitation to Innovation George S. Yip and Bruce McKern “Yip and McKern have written an eye-opening book about the startling growth of innovation in Chinese companies. Using hundreds of cases, they leave no doubt that China is now a major force in innovation with an increasing global reach. The case that engagement with the Chinese system is essential for business success in the coming decades is compelling.” —A. Michael Spence, Nobel Laureate in Economics, 2001 THE DISRUPTION DILEMMA Joshua Gans “This important and thought-provoking book has been a source of fresh, new insights for me. Even when Gans disagrees with my work, it has given me a chance to improve what the theory needs to say.” —Clayton M. Christensen, author of The Innovator’s Dilemma THE…

NOT LONG AGO, companies had to rely in large part on surveys and focus groups to understand what customers liked and didn’t like about their products. In recent years, social media and online ratings have given businesses new ways to learn about customers’ opinions about their products. Today, however, some of the products themselves — at least those devices that are part of the connected world of the Internet of Things — are starting to provide unprecedented levels of information that can be used to improve both the products and the customer experience. In particular, information from connected devices offers companies three tremendously important core pieces of contextual information that were previously unavailable: where the products are being used, how they are being used, and which customers are using them…

Why Great New Products Fail Duncan Simester (MIT Sloan School of Management) pp. 33-39 Too often, great products fail because customers do not recognize the value that they create. Although we now have ample insight into how customers evaluate new products, many companies focus primarily on creating value — without enough regard to how customers recognize innovations and evaluate new products. There are only two ways consumers can collect information, the author notes: They can search, or they can infer. Knowing when consumers will search or infer will help you determine which of your innovations customers will recognize. The Internet has had a profound impact on the way customers evaluate many products. First, it has lowered the cost of search by making information more accessible. Second, the Internet has broadened…

THE DISRUPTION DILEMMA Joshua Gans “This important and thought-provoking book has been a source of fresh, new insights for me. Even when Gans disagrees with my work, it has given me a chance to improve what the theory needs to say.” —Clayton M. Christensen, author of The Innovator’s Dilemma CHINA’S NEXT STRATEGIC ADVANTAGE From Imitation to Innovation George S. Yip and Bruce McKern “Yip and McKern have written an eye-opening book about the startling growth of innovation in Chinese companies. Using hundreds of cases, they leave no doubt that China is now a major force in innovation with an increasing global reach. The case that engagement with the Chinese system is essential for business success in the coming decades is compelling.” —A. Michael Spence, Nobel Laureate in Economics, 2001…

These days, when almost every website offers social features, a burning question is: What is the business value of users’ “likes” and “shares?” Past attempts at finding the answer have touched on the idea of user engagement, suggesting that users who are more socially active on a site continue to browse and explore it for longer periods of time, contribute more content, and communicate more about the website with others, potentially attracting new users. Our research in the last five years hints at a more concrete relationship between user engagement and website profitability: Social activity on a website can increase users’ commitment to the site and willingness to pay for its services. Our work suggests that social engagement could actually be used to solve the conversion challenge that so many…

If popular culture is an accurate gauge of what’s on the public’s mind, it seems everyone has suddenly awakened to the threat of smart machines. Several recent films have featured robots with scary abilities to out-think and manipulate humans. In the economics literature, too, there has been a surge of concern about the potential for soaring unemployment as software becomes increasingly capable of decision making. Yet managers we talk to don’t expect to see machines displacing knowledge workers anytime soon — they expect computing technology to augment rather than replace the work of humans. In the face of a sprawling and fast-evolving set of opportunities, their challenge is figuring out what forms the augmentation should take. Given the kinds of work managers oversee, what cognitive technologies should they be applying…

Having specialized in reorganizing companies in financial distress for 38 years, I have had a ringside seat to the causes and consequences of business failure. I use that experience to counsel boards of directors about formulating corporate governance to promote growth and avoid failure. It is vital to help boards detect and understand their companies’ problems when those problems can still be solved outside bankruptcy — and when the companies can still grow profits for shareholders. In my experience, the cause of business distress that is most detectable, but often undetected or disregarded until material damage is done, is a disruptive innovation as defined by Harvard Business School professor Clayton M. Christensen. In his theory of disruptive innovation, Christensen has explained how and why industry-leading companies that pay attention to…

A LOT OF great new products fail — and companies often wonder why. Although the companies were careful to listen to their customers, the products still failed. This is not a rare occurrence. A recent study of almost 9,000 new products that achieved broad distribution at a national retailer revealed that just 40% of them were still sold three years later.1 (See “About the Research,” p. 34.) Some of these products did not create value for customers and deserved to fail. However, many would have created value if customers had adopted them. But customers could not, or did not, recognize their value. While most companies focus on customer needs, they do not think hard enough about how customers decide what to purchase. We now have ample insight into how customers…

DATA ANALYTICS IS NOT ONLY ENHANCING the way manufacturers design and build products, bring goods to market and serve customers, but it is also profoundly transforming the industry itself. Using advanced analytics and data gathered from what is known as the Internet of Things (IoT)—including connected machines and equipment, connected customers and connected processes—manufacturers are boosting product quality, cutting costs, finding efficiencies, forging new customer relationships and generating entirely new ways of doing business. Consider the automobile sector. Whereas automakers have traditionally relied on after-the-fact information about vehicle performance in the field, they can now apply predictive analytics to real-time feedback from customers and vehicles. This enables them to render proactive services to avoid penalties and lower the cost of warranties and recalls, while upholding brand reputation. One OEM, for…

A BIG CHALLENGE for marketing is demonstrating its business value. As the finance function becomes more powerful within companies, some see marketing’s influence as declining.1 One major reason for marketing’s diminishing role is the difficulty of measuring its impact: The value marketers generate is often difficult to quantify. For example, Target Corp., the Minnesota-based discount retailer, positions itself as fashionable yet affordable. It is difficult to assign a dollar value to the image Target generates in consumers’ minds, and even harder to determine the return on investment (ROI) from a specific advertisement promoting that image. Although marketing metrics aren’t perfect, they might be more useful if people understood what the different measures actually mean. We have two purposes for this article: First, to clarify marketing metrics so that managers select…