Showing papers in "MIT Sloan Management Review in 2016"

The hard truth about business model innovation

Abstract: The landscape of failed attempts at business model innovation is crowded and becoming more so as management teams at established companies mount both offensive and defensive initiatives involving new business models. This article assembles knowledge that the primary author has developed over the course of two decades studying what causes good businesses to fail, complemented by a two-year intensive research project to uncover where current managers and leadership teams stumble in executing business model innovation. Many failed business model innovations involve the pursuit of opportunities that appear to be consistent with a units current business model but that in fact are likely to be rejected by the existing business or its customers. To achieve successful business model innovation, organizations should focus on creating new business models, rather than changing existing ones. Once a new business is launched, it must remain independent throughout the duration of its journey, but maintaining autonomy requires ongoing leadership attention.

What makes work meaningful - or meaningless?

Abstract: New research offers insights into what gives work meaning — as well as into common management mistakes that can leave employees feeling that their work is meaningless.

Beyond the hype: The hard work behind analytics success

Abstract: Many companies still struggle to figure out how to use analytics to take advantage of their data. In many respects, the hype surrounding the promise of analytics glosses over the hard work necessary to fulfill that promise. It is hard work to understand what data a company has, to monitor the many processes necessary to make data sufficient (accurate, timely, complete, accessible, reliable, consistent, relevant, and detailed), and to improve managers ability to use data. This unsexy side of analytics is where companies need to excel in order to maximize the value of their analytics initiatives, but it is also where many such efforts stall. Most managers are still quite positive about the potential of analytics. They've seen increased interest in analytics over the past few years, and they expect its use to continue to grow in their organizations. In addition, use of analytics for innovation remains steady. Achieving competitive advantage with analytics requires resolve and a sustained commitment to changing the role of data in decision making. This commitment touches many aspects of organizational behavior, from revamping information management to adapting cultural norms.

Just How Smart Are Smart Machines

Abstract: A simple framework that plots cognitive technologies along two dimensions. (See What Today's Cognitive Technologies Can and Cant Do, p. 23.) First, it recognizes that these tools differ according to how autonomously they can apply their intelligence. On the low end, they simply respond to human queries and instructions; at the (still theoretical) high end, they formulate their own objectives. Second, it reflects the type of tasks smart machines are being used to perform, moving from conventional numerical analysis to performance of digital and physical tasks in the real world. The breadth of inputs and data types in real-world tasks makes them more complex for machines to accomplish. Depending on the type of task a manager is targeting for redesigned performance, this framework reveals the various extents to which it might be performed autonomously and by what kinds of machines. The most capable machine learning systems have the ability to learn their decisions get better with more data, and they remember previously ingested information. Mapping cognitive technologies by how autonomously they work and the tasks they perform shows the current state of smart machines and anticipates how future technologies might unfold.

A new approach to automating services

Abstract: Although the term robot brings to mind visions of electromechanical machines that perform human tasks, the term as it relates to service automation refers to something less threatening: software that performs certain repetitive and dreary service tasks previously performed by humans, so that humans can focus on more unstructured and interesting tasks To help make sense of the landscape, the authors of this article classified the tools along a service automation continuum based on the specific types of data and processes This article focuses on what is called robotic process automation software tools and platforms that can automate rules-based processes that involve structured data and deterministic outcomes A broad range of service tasks are suitable for robotic process automation Typically, companies indicated that they saw returns on investment of 30% or more during the first year of robotic process automation implementation; however, because of the nature of our study of early adopters, we cant say whether or not such returns on investment are typical The field of service automation is progressing rapidly Many case study participants said the next horizon would be tackling unstructured data with cognitive automation tools

Finding the right role for social media in innovation

Abstract: Although some companies have been able to use social media to develop new insights that lead to successful new products, many others simply do not know how to utilize social media for innovation. Whats more, some companies have seen their innovation performance negatively affected. Nevertheless, social media provides a game-changing opportunity for companies that learn how to exploit it. In order to use social media for innovation, organizations need clear strategies and objectives. The authors of this article recently studied the social media practices of large global companies as they relate to new product development, using data from the Product Development Management Associations 2012 Comparative Performance Assessment Study. Broadly speaking, we found that for many companies, the results of using social media for new product development fell short of expectations. Less than 50% of the companies surveyed use social media during the new product development process. Many of the companies we surveyed didn't seem to recognize the differences and functionalities of different social media platforms and media sources. It is critical that top leadership play an active role by encouraging cooperation and idea sharing among the various players.

What's Your Strategy for Supply Chain Disclosure?

Abstract: Many companies have limited visibility of their supply chain information, have a poor understanding of their capabilities for capturing and reporting this information, and have not overtly considered their supply chain information disclosure strategy. In this article, the authors discuss the pressures on companies to disclose supply chain information, the drivers and impediments to supply chain disclosure, and the types of supply chain information. Companies should anticipate the information demands of external stakeholders. The adoption of new information and communication technologies, particularly in the areas of tracking and tracing, such as radio frequency identification, has facilitated tremendous transparency potential. Steps companies should take include: 1. Analyze the pressures for increased supply chain transparency. 2. Assess current capabilities and resource base. 3. Identify current levels and quality of critical information in the supply chain. 4. Clarify strategic thinking around the supply chain information disclosure. 5. Decide on the type and level of information disclosure. 6. Ensure strategic alignment between supply chain information and company strategy.

How Crowdfunding Influences Innovation

Abstract: Crowdfunding is changing how entrepreneurs bring new products to market. It has allowed thousands of innovating entrepreneurs to raise money, build brand awareness, and join a broader conversation with large numbers of potential backers, all while still in the product development process. Examples of crowdfunded products include the Glif, whose creators raised more than $137,000 for the device. The more than 200 Kick-starter alumni providing data for our study collectively raised more than $17 million from roughly 239,000 backers during their Kickstarter campaigns. Since we were primarily interested in product innovations, our research focused on four categories: technology, product design, hardware, and video games. Of the product innovations in the study, 15% were created by individuals or organizations that were crowdfunding their third (or subsequent) campaign.

Is your company ready to operate as a market

Abstract: New technologies are eroding transaction costs and in the process creating a world that is increasingly connected. The resulting level of interdependence creates a radically new set of challenges for management. In particular, complicated business situations are being replaced with complex ones. In a complicated system, even though there may be many inputs and outputs, one can predict the outcome by knowing how the system works. Connecting parts of a system that used to be sealed off from one another can create enormous benefits. For instance, companies installing enterprise resource management (ERM) systems benefit from having different operations across silos able to share information. Managing in such a complex environment requires not only traditional management skills such as planning and controlling, but also new ones, such as negotiating complex agreements, quickly detecting the unexpected, accelerating organizational learning, and fostering the creation of trusting relationships among groups and teams.

Managing Tensions Between New and Existing Business Models

Abstract: By interviewing managers and reviewing relevant information, the authors studied Danish, Portuguese, and Swiss postal operators to find out how they have dealt with the challenge of exploring new business models since the turn of the millennium. The organizations studied strived to maintain their core business while at the same time incubating new ventures. Managers at all of the organizations felt there were potential new business models that they could benefit from developing, but when exploring the building blocks of these business models, they found that tensions emerged in their organizations. The tensions highlighted in this research imply that the design of an organizational structure that accommodates both new and older business models needs to be considered an intricate part of business model innovation. Organizational design has to be questioned and experimented with as part of the exploration. A top management team that is prepared for such exploration and aware of the organizational dimension of business model exploration may well be more likely to succeed at business model innovation.

The long-tail strategy for IT outsourcing

Abstract: Today’s rapid pace of technological change has fundamentally transformed global IT outsourcing. Traditionally viewed as a cost-saving measure, IT outsourcing is increasingly leveraged as a strategic tool for acquiring cutting-edge innovation. Many companies are expanding their portfolios of IT suppliers to include smaller, highly innovative companies. This pursuit of emerging technologies and capabilities, however, has elevated the complexity of managing supplier portfolios. The outsourcing practices that companies have been maturing in the past decade are under a new level of duress. Today, organizations need to reimagine IT outsourcing strategies in increasingly turbulent business environments.

GE's big bet on data and analytics

Abstract: While many software companies like SAP, Oracle, and Microsoft have traditionally been focused on providing technology for the back office, General Electric (GE) is leading the development of a new breed of operational technology (OT) that literally sits on top of industrial machinery. Long known as the technology that controls and monitors machines, OT now goes beyond these functions by connecting machines via the cloud and using data analytics to help predict breakdowns and assess the machines overall health. GE executives say they are redefining industrial automation by extracting lessons from the IT revolution and customizing them for rugged heavy-industrial environments. One such environment is the oil and gas industry, where GE sees a $1 billion opportunity for its OT software. In September 2015, GE projected its revenue from software products would reach $15 billion by 2020 three times its 2015 bookings. While software sales today are derived largely from traditional measurement and control offerings, GE expects that by 2020, most software revenue will come from its Predix1 software, a cloud-based platform for creating Industrial Internet applications. GE wants to go beyond helping its customers manage the performance of individual GE machines to managing the data on all of the machines in a customers entire operation.

How Workplace Fairness Affects Employee Commitment

Abstract: Workplace engagement is an important determinant for the level of commitment and loyalty that employees show toward their respective organizations. Executives must understand what motivates employees to excel in their jobs to reduce the risk of brain drain and, ultimately, to create sustainable organizational success. One of the crucial prerequisites for workforce well-being is that employees feel they can trust their line managers. Trust in decision-making authorities fundamentally shapes employees expectations about how they will be treated in the future. Study findings suggest that employees who expect their line managers to be untrustworthy are more likely to be disloyal toward the organization and exhibit lower levels of motivation. The research generally confirmed the view that workers who show a high level of trust in management are more committed toward their organization than those who mistrust their superiors. The findings have clear implications for managing employee well-being. Guidelines for managers are presented.

How CEOs can leverage twitter

Abstract: While a number of companies have embraced Twitter, many CEOs don't leverage the power of Twitter to the fullest extent. As of September 2014, only 42 Fortune 500 CEOs had Twitter accounts. Of those, only about 70% were truly active and tweeting in a meaningful way. One high-profile Twitter user is Elon Musk, CEO of Tesla Motors Inc. and SpaceX. Musk typically tweets numerous times a month, and his tweets sometimes contain new and exciting information. Twitter, one of the worlds leading social media platforms,2 has more than 300 million active users. In contrast to Facebook, which skews heavily toward personal communication, Twitter is used more actively for business. As a result, brand managers, customer service agents, and other businesspeople became early adopters so that they could stay abreast of the streams of information they cared about. Rather than waiting for impressions to be driven by the media or individuals with ulterior motives, CEOs can use tweeting to help shape their public image and that of their companies. This article describes the opportunities for CEOs.

Keep calm and manage disruption

Abstract: Contrary to some claims, disruption can be averted. Indeed, although disruption can happen, many businesses find ways of managing through it, and this can weaken any relationship between a disruptive event and the actual disruption. To be sure, facing disruption is no picnic. But it also isnt the existential threat that so many see it as. The phenomenon of disruption is something that management theorists and scholars have pondered for decades. Businesses have countered potential disruption through effective reactive management, often by investing aggressively in that new innovation after entrants had brought it to market or by acquiring the entrants. Three responses to disruption that can be implemented once disruption is actually occurring are beating them, joining them, or outlasting them.

Why digital transformation needs a heart

Abstract: Three technology-driven forces are transforming the nature of management. Automation is making it more and more possible for companies to do work without humans involved. Data-driven management supplements intuition and experience with data and experimentation. Resource fluidity matches tasks to the people who can best perform them, whether inside or outside the organization. Taken together, these three forces are helping leaders rethink the way work is organized and managed. Computers can diagnose situations and identify challenges that humans don't see. Real-time information makes it possible to run experiments rather than guessing what might work. On the whole, these forces will help managers to increase productivity, innovation, and customer satisfaction in the coming years. However, if you lead a traditional company, be careful not to let these forces push your management approach to extremes.

Data-driven city management: A close look at Amsterdam's smart city initiative

Abstract: Ger Baron, Amsterdam's chief technology officer, says using private-sector data is key to changing policy. Amsterdam's quest to be a smart city seems like a 21st-century phenomenon, but cities have been using computerized data analysis to try to offer better city services since the 1960s. Amsterdam's smart city effort comprises a sprawling, complex group of activities, projects, partnerships, and entities. The technology-oriented transformation of urban management by city officials like Ger Baron is one among many efforts. While no single organization or person coordinates all of the distinct efforts to improve the integration of information technology with Amsterdam's city services, the city is well-placed to determine which of the many Amsterdam Smart City (ASC) pilots should be expanded. This article spotlights key city managers, a smart city project, a founding member of the ASC platform, and the AMS Institute.

Digital today, cognitive tomorrow

Abstract: Enterprises and governments are rapidly becoming digital as they seek to capture the cost savings, agility, and collaboration enabled by cloud, analytics, mobile, and social technologies. However, digital is not the destination. Rather, it is laying the foundation for a much more profound transformation to come. The technologies required for cognitive systems not just artificial intelligence (AI), but a broad spectrum of capabilities that include natural language processing, human-computer interaction, deep learning, neural nets, and more have made exponential advances in recent years.

The metrics that marketers muddle

Abstract: As the finance function becomes more powerful within companies, some see marketing's influence as declining. One major reason for marketing's diminishing role is the difficulty of measuring its impact: the value marketers generate is often difficult to quantify. Although marketing metrics aren't perfect, they might be more useful if people understood what the different measures actually mean. This article discusses five of the best-known marketing metrics: market share, net promoter score, the value of a like, customer lifetime value, and ROI.

Harnessing the best of globalization

Abstract: The opportunities for global businesses are expanding thanks to rapidly emerging product markets, the worldwide race for talent, and the widening impact of digitization. The traditional route to becoming a global company involves taking existing products or services to new markets. In contrast to traditional efforts by mature businesses to exploit international differences for internal cost advantages or incremental sales, innovative global models use market differences (be they costs, skill levels, or resource availability) as part of their value proposition and construct businesses that take advantage of the opportunities globalization offers. Most companies approach globalization from the perspective of taking their best products or resources to overseas markets. However, some global ventures (such as Rocket Internet and Alvogen) seek to harness the best the world has to offer.

Using artificial intelligence to set information free

Abstract: Artificial intelligence (AI) is about to transform management from an art into a combination of art and science. Specialized AI will allow us to apply data science to our human interactions at work in a way that earlier management theorists like Drucker could only imagine. These specialized forms of AI can process and manipulate enormous quantities of data at a rate our biological brains can't match. Therein lies the applicability to management: within the next five years, forward-thinking organizations will be using specialized forms of AI to build a complex and comprehensive corporate knowledge graph. Specialized AI will be ubiquitous throughout the organization, indexing every document, folder, and file. AI will also be sitting in the middle of the communication stream, collecting all of the work products, from emails to files shared to chat messages.

A new vision for personal transportation

Abstract: Smartphones and Internet-based technologies have helped launch and enable new business models in transportation like Uber, Lyft, and car2go. But the future of transportation - what we call mobility - will go far beyond these developments. Intermodal routing is nothing new. It simply means you're using more than one mode of transportation car, bus, bike, walking, train, subway, plane, or anything else on a given route. Recent advancements enable intermodal routing to be realized on a large scale and in real time. Consider OpenTripPlanner, an open-source platform for journey planning that combines public transit, walking, cycling, and car travel. The project has attracted attention from developers and users and is supported by public agencies, startups, and consultancies. One idea is to design systems that utilize and aggregate the needs of millions of individual users, taking into account their specific context, to create personalized solutions, yet with the efficiency associated with mass-produced ones. This concept is known in other industries as mass customization or mass personalization. It is now possible to learn about a person's mobility preferences from data generated by his or her smartphone. The emerging ecosystem of mass-customized mobility will provide a template for similar changes in other industries in which previously separated systems are connected by a platform for smart services.

Rise of the strategy machines

Abstract: Just as contemporary autonomous vehicles can take the wheel under certain conditions, well see situations in which strategic decision making can be automated. Other situations, however, will require that a human strategist take the wheel and change direction. Big-picture thinking is one capability at which humans are still better than computers and will continue to be for some time. Machines are not very good at piecing together a big picture in the first place, or at noticing when the landscape has changed in some fundamental way. Good human strategists do this every day. In a world of smart, strategic machines, humans need to excel at big-picture thinking in order to decide, for example, when automation is appropriate for a decision; what roles machines and people will play, respectively; and when an automated strategy approach their organization has implemented no longer makes sense. There is a level of sense-making that only a human strategist is capable of at least for now. Its a skill that will be more prized than ever.

Achieving meritocracy in the workplace

Abstract: Many executives strongly believe that they need to recruit and retain top talent. And to do so, they must foster meritocracies hiring, rewarding, and promoting the best people, based on their merit. Such approaches are no protection against demographic bias. When managers believe their company is a meritocracy because formal evaluative and distributive mechanisms are in place, they are in fact more likely to exhibit the very biases that those systems seek to prevent. To create more meritocratic systems, companies should promote organizational accountability and transparency in three key areas: 1. processes and criteria, 2. outcomes, and 3. audiences. Setting up a pay-for-performance system that is both accountable and transparent does not require a cumbersome bureaucracy. In fact, it can be quite simply done.

Crowd-based capitalism? Empowering entrepreneurs in the sharing economy

Abstract: In a recent blog in the Washington Post, Arun Sundararajan, professor at New York University's Stern School of Business, explains why he is so gung-ho about the sharing economy. In an interview, Sundararajan talks about the challenges of ensuring the success of this alternative business model. Sundararajan says the sharing economy, which is sometimes called the collaborative economy or the on-demand economy, started out as a way for consumers to pay to temporarily access or share products and services rather than buying or owning them. Today, its really a broad and emerging economic system with five characteristics. One is that its market-based, meaning that there is some sort of digitally enabled market that enables the exchange of goods and the emergence of new services. Uber and Airbnb are good examples. One is a peer-to-peer marketplace providing transportation, and the other is a marketplace for short-term accommodation. The sharing economy is also characterized by the blurring of lines between what used to be personal and what used to be professional.

How to manage alliances strategically

Abstract: Decisions by Daimler, Toyota, and Panasonic to collaborate with Tesla highlight that individual companies may not need to own all of the resources, skills, and knowledge necessary to undertake key strategic growth initiatives. When conditions are uncertain and the stakes are high, partnerships can be an attractive alternative to going it alone or to mergers and acquisitions. Accordingly, many companies now maintain alliance portfolios. As a result, executives must manage multiple alliances with diverse partners across the globe simultaneously. However, the skills required to develop and manage alliances are still not well understood. Prescriptions for how to achieve effective alliance management. In this article, the authors attempt to address these shortcomings by offering an integrative and holistic framework of alliance management along with practical guidance. Although some alliances end in bitter conflict, dissolving an alliance is not always a sign of failure. Terminating an alliance should follow a process that clearly stipulates the responsibilities of the partners and the various stakeholders.

What email reveals about your organization

Abstract: By sifting through data from such sources as email archives, Twitter feeds, and Facebook group pages, managers can in fact learn a lot about how to manage these and other areas of their organizations. They can then use this information to generate better results. By studying data from various sources (such as email archives, tweets, and blog links), social network researchers have identified several indicators of how effective collaborative communication works. The indicators can guide managers in decisions about how groups should be organized and led, recommended levels of participation for group members, how quickly members should be expected to respond, the tone of the language that team members should use, and how technical the language should be. The research found that creative people work more effectively when they have strong leaders. For account management teams at a global services company, researchers found that customer satisfaction was higher when a few designated leaders communicated regularly with customers, rather than having a large number of employees communicate with the customer.

Leading in the Age of Super-Transparency

Abstract: Every day, images or events with the potential to incite passions get captured digitally, get posted to the Web, and go viral. With social media, people share their experiences with friends or followers, who then share with more people. Within a short space of time, incidents can strike a nerve with a nascent virtual community. Evocative images and events have always propelled causes and controversies, but not always from such obscure, unexpected, or geographically remote sources or with such speed. The capacity to generate causes and controversies almost instantly is perhaps the most salient aspect of the super-transparent society, which has rapidly become a new norm. Your success in maintaining the integrity of your data depends on your ability to imagine all of the different ways information might flow in a flood. The much-vaunted Internet of things has already invaded our homes and businesses, and unbeknownst to many people, it has the potential to transmit lots of data about what we do or what we say. Managing your image has become a new game, and being prepared to respond quickly, especially to information that is incorrect, is a big part of it.

Managing the bots that are managing the business

Abstract: The core function of management has gone from managing the business to managing the bots that are managing the business. A typical programmer in a 20th century IT shop was a worker building to a specification, not that different from a shop floor worker assembling a predefined product. A 21st century software developer is deeply engaged in product design and iterative, customer-focused development. Leadership means organizing a shared creative vision. Technology is not a back-office function. It is central to the management capability of the entire organization. And companies whose CEOs are also the chief product designers (think Larry Page of Alphabet Inc., Jeff Bezos of Amazon, or Apple under Steve Jobs) can outperform those whose leaders lack the capability to lead not just their human workers but their electronic workers as well. Even in jobs that are not considered programming jobs, the ability to create and marshal electronic resources is key to advancement. The great management challenge of the next few decades will be understanding how to get the best out of both humans and machines, and understanding the ins and outs of who manages whom.