The language is supposed to be a marked contrast to "research and development". the traditional path to innovation. The feature article in this issue provides the best possible view of what P&G is doing – the inside view.
A Pointed Lesson About Product Features by marc abrahams
In the dog-eat-dog world of the adaptive markets hypothesis, it's survival of the fittest. This may be fine in the accounting department and for a generic organizational structure, but it squeezes the life out of innovation.
Future Shop
Eliminate the Middleman?
The China Question
A Cautious Welcome
Sure, labor is inexpensive in China, but what about dealing with government bureaucracies
We can’t begin to see all the hidden costs.”
When Greg and Dan landed in Taipei, Morris met them at the airport and drove them to the complex that included the Neihu Technology Park and the Nankang Software Park. Built in 1980, the Hsinchu Science Park had the lush look of a botanical garden – a stark contrast to the glossy Taipei complex.
From Supplier to Rival?
Promises, Promises
So, do you have any plans to launch your brand in China in the near future?” he asked. We will separate the design from the manufacturing work," Joe replied. "Your orders will be designed in the USA.
Culture and Complexity
We plan to expand it and build a new factory in Shanghai to better serve our customers.” Greg decided that a straight talk was in order. Don't forget," May added, "that with our enhanced design capability and volume manufacturing capacity, we can help you improve your margins."
How can we keep sharing our expertise,
We have three initiatives that will enhance the service we provide to US-Tech,” she said. “First, we are expanding our production base to other Chinese cities. Finally, we are acquiring capabilities that will allow us to ship products directly to your US later this year.
Then May spoke up. "It's hard for Joe to change his mind," she said with a teasing smile on her face. "He is an engineer who prides himself on being a top quality supplier. Truly effective relationships must be based on a current, quantitative and shared understanding of the supply chain environment and best practices.
As Greg gathers data on suppliers, he should consider alternatives to a pure
One is the recognition that reliance on a single original design manufacturer, or ODM, for both the development and production of technology products hinders a broad understanding of supply chain risks and opportunities. The growing demand for IT products in China – and Tai-Source's ability to respond to that demand with its own brand products – should be a sign.
COMPLETELY NEW
In 2005, lacking the capital needed to regain control and with four weeks to exercise their right to regain control, they turned to Merrill Lynch.
FINANCING SOLUTION
WHAT’S REMARKABLE ISN’T THAT WE DEVISED A
WHAT’S REMARKABLE IS HOW WE DID IT
In retrospect, the degree to which USTech trusted TaiSource will seem shockingly naive
In addition to the potential cost advantage, sourcing in China will give USTech a base from which to penetrate the world's fastest-growing market—and a supply chain at that. Despite these challenges, however, Greg will have to do at least some sourcing in China.
Greg might continue using TaiSource for products sold in existing markets while shifting to Chinese
But even in the long term, USTech must seek a favorable solution with its supplier. And we determined that in some cases it would be economically beneficial for our new products to be manufactured not in China but in the US.
Having determined a supplier’s economic interests, the next step is to consider whether
When you source directly from China, you typically build a relationship with the factory and the Chinese entrepreneur who owns it. The economic interests of this entrepreneur are basically to get a good return on his capital investment in the factory.
POLE POSITION
A growing percentage of students attending business schools today majored in business as undergraduates—or they came to business school with five or six years of experience in investment banking or management consulting. But if you think about it, the very fact that they are already so familiar with the content of the traditional.
Leadership in Literature
In his classes, Badaracco uses texts such as Arthur Miller's Death of a Salesman, Sophocles' Antigone, and Joseph Conrad's The Secret Part to help students understand issues of leadership, decision-making, and moral judgment. I was teaching a leadership class and asked a group of very senior executives to read a short story by Joseph Conrad called The Secret Divider. I had no idea if.
MBA students perhaps need a little less in the
Bad-aracco, Jr., the John Shad Professor of Business Ethics at Harvard Business School, has offered just that kind of course to the school's MBA students. Leaders aim for success, not self-destruction, but self-destruction is exactly what Tony has brought upon himself, raising one of the most perplexing topics in literature and leadership—the perils of success.
Empathy is a decent, even noble, impulse of
This is the theme of Louis Auchincloss's novel I Come as a Thief about Tony Lowder, a lawyer in his early forties who commits a brilliantly unsolved crime. He is the main character of Chinua Achebe's Things Fall Apart, which is probably the most widely read African novel.
Taking responsibility means coming to grips
Crisis moments like the captain's in "The Secret Sharer" will come to anyone in a position of responsibility. The captain in "The Secret Sharer" faces his challenge of accepting responsibility when he is finally given command of a ship.
Leaders may need to embrace a more complex
Another possible interpretation of the play is that Willy does not dream with his eyes open. Good dreams have deep roots in everyday life, not in the seductions of society around them.
Procter & Gamble’s radical strategy
But by applying a fundamentally new approach to innovation, we were able to accelerate Pringles Prints from concept to launch in less than a year and at a fraction of what it would have otherwise cost. Back in 2002, while we were brainstorming ways to make food fresher and more fun, someone suggested we print pop culture images.
In the old days, it might take two years to bring that product to market, and you would take all the investment and risk internally.
INSIDE PROCTER & GAMBLE’S NEW MODEL FOR INNOVATION
CONNECT
AND DEVELOP
We quickly realized that each chip needed to be printed as it came out of the fryer while still at a high humidity and temperature. Traditionally, we would have spent the bulk of our investment just developing a workable process.
From R&D to C&D
Half of our new products, Lafley said, would come from our own labs, and half would come through them. Today, more than 35% of our new products on the market have elements that originate outside of P&G, up from about 15% in 2000.
Where to Play
We had to shift the company's attitude from aversion to innovations that "were not invented here" to enthusiasm for those that were "proudly found elsewhere." And we had to change how we defined and perceived our R&D organization—from 7,500 people internally to 7,500 plus 1.5 million externally, with throughput. They help us explore questions like "Which of our key technologies do we want to strengthen?" "What technologies do we want to acquire to help us compete better with our competitors?" and "Of the ones we already have, which ones do we want to license, sell, or further develop the code?".
How to Network
Among the most successful products we have brought to market with the help of Connect and Development are Olay Regenerist, Swiffer Dusters and Crest SpinBrush. Focusing on oral care, we expanded the Crest brand beyond toothpaste to include whitening strips, electric toothbrushes and flossers.
Most companies are still clinging to a bricks-and-mortar R&D infrastructure and the idea that their innovation
If we set out without clearly defined goals, we would find tons of ideas, but perhaps none that would be useful to us. This is not an exhaustive list; instead, it's a snapshot of the network capabilities we found most useful.
Leading Connect and Develop
Network members interested in posted briefings contact Yet2.com and request an introduction to the relevant customer. Through Yet2.com, P&G was able to license its low-cost microneedling technology to a company that specializes in drug delivery.
When to Engage
Yet2.com. Six years ago, P&G joined a group of Fortune 100 companies as an initial investor in Yet2.com, an online intellectual property exchange marketplace. Yet2.com works with customers to write briefs that describe the technology they seek or make available for license or purchase, and distributes these briefs through a global network of businesses, laboratories and institutions.
The Osaka Connection
DISCOVER
EVALUATE
LAUNCH
COCREATE
At this point, the outside product has entered a development pipeline that is in many ways similar to that for any internally developed product. Ultimately, for every hundred ideas found outside, only one makes it to the market.
Push the Culture
We will then engage our external business development (EBD) group to contact the product manufacturer and begin negotiating licensing, collaboration or other deal structures.
Adapt or Die
Words of Warning
What makes this story so exciting is that quite a few of Toyota's plants grow. It is a true story, a happy story and best of all, a story with no end in sight.
NESE
CONSUMER
INSIDE THE MIND OF THE
The first misconception is that the Chinese people, having broken away from collectivism, are now mainly focused on working hard and getting rich. The second is that the Chinese workers now flooding the factories and offices of major cities are highly ambitious, fully mobilized and actively involved.
The Chinese Work Ethic
The primary aim of Chinese work- ers is to work hard and get rich. We found that few
To fill this information gap, we at the Gallup Organization undertook an ambitious ten-year, nationwide survey of the Chinese people, beginning in 1994 and ending in 2004. The data obtained from the surveys do not represent just a snapshot , but a moving picture of the Chinese people's changing tastes and desires during a decade of explosive development.
WHITHER PERSONAL AMBITION?
Others focus more on the business-to-consumer opportunities – the fantasy of getting a billion consumers to buy previously inaccessible foreign goods ranging from shampoo to luxury cars. The data suggests that many of the perceptions held by companies outside—and even inside—China are inaccurate.
LIVING TO WORK
What is surprising is that the number of respondents who adopted an apparently more capitalist view (“work hard and get rich”) fell much more significantly, by 15 percentage points between 1994 and 2004. See the exhibition “Whither Personal Ambition?”. Over the past six months, someone at work has been talking to me about my progress.
Made in China, for China
But without committed employees, it appears that China's true performance potential will not be realized. Overall, it seems that China's famed work ethic is not what it appears to be; perhaps it never was.
Beyond the Basics
Chinese consumers now have a lot of money to spend. Certainly, the endless drumbeat in
Given China's culture and history—as well as its focus on high-production operations—Chinese managers may not embrace the idea that an efficient assembly line requires personal satisfaction and individual development. Many experts have said that the opportunities now offered by China's entry into the World Trade Organization will open the door for marketing-savvy and smartly managed multinationals.
LOOK OUT FOR GENERATION Y
The biggest markets among Chi- nese consumers are for basic household products. We
In some product categories, where consumers live appears to be a more important predictor of consumption than prosperity. By and large, wealthy city dwellers already own a good deal of what they want: Televisions and cell phones are ubiquitous.
WHAT URBAN AND AFFLUENT
CHINESE CONSUMERS WANT (2004)
SHE HAS HER FATHER’S EYES
AND HER MOTHER’S NOSE
AND HER EGG DONOR’S CHIN
YELMAGCYANBLACK
Managing
Middlescence
Mid-career employees – those between the ages of 35 and 54 – make up more than half of the workforce. In short, far too many mid-career employees are working more, enjoying less and looking for alternatives.
The Problems
Mid-career employees are the least likely to say that their workplace is pleasant and fun or that it offers enough opportunity to try new things. It's time to apply it to the much broader, and too often neglected, constituency of mid-career employees.
Sources
Employers view these people as solid corporate citizens, trust their loyalty and commitment, and assume they will do well. Chances are you're already using some of the career revitalization techniques we recommend, but we're willing to bet you're mainly focusing them on the stars of your company.
In our March 2004 HBR article, "It's Time to Retire," we wrote about strategies to combat the coming brain drain as the vanguard of baby boomers approaches retirement age. This means making the current work more enjoyable and enriching, because the way to keep your medium feelings long-term is by re-engaging them today.
Six Strategies for Revitalizing Careers
When the company centralized HR, he was one of the few people with both production and marketing. Many mid-career employees are happy to take charge of change initiatives, which are particularly appealing as a way to help colleagues, improve results and serve the company's higher mission.
Don’t just assume they’ll stay, and then hope for the best
Sabbatical year. One of the best ways to rejuvenate, personally and professionally, is simply to get away from the routine of the job for a significant amount of time. Hallmark Cards uses sabbaticals not only to get people out of the routine at work, but also to place them in a-.
Avoiding Midcareer Crisis
But, she added, she doesn't know a single person who would take advantage of the benefit. There are organizations that understand this – that know that the cost of replacing a middle worker who needs a break can far outweigh the cost of paid time off.
Rekindle Now
The most important benefit, of course, is a returning employee who is highly energetic and committed to the organization. Participation in leadership development programs is a form of recognizing an employee's value and potential, and employees graduate from them with a renewed commitment to the organization's goals.
Under pressure to keep costs down, customers may only look at price and not listen to your sales pitch
CUSTOMER VALUE PROPOSITION” has become one of the most used terms in business markets in recent years. Yet our management practice research shows that there is no agreement about what a customer value proposition entails – or what makes one persuasive.
Help them understand – and believe in – the superior value of your offerings
Customer Value Propositions
Some managers view the customer value proposition as a form of spin that their marketing departments develop for advertising and promotional copy. We have conducted management practice research over the past two years in Europe and the United States to understand what constitutes a customer value proposition and what makes one compelling to customers.
Three Kinds of Value Propositions
The company's latest presentation chart listed ten reasons why the municipality should award the project to the firm. You ask each of the firms to provide a final, best price, and then you award the project to the firm that gives the largest price concession.
Which Alternative Conveys Value to Customers?
Another pitfall of the all-benefits value proposition is that many, even most, of the benefits may be points of parity with those of the next-best alternative, diluting the effect of the few genuine differences. But the chart had little persuasive power because the other two finalists could make most of the same claims.
The Building Blocks of a Successful Customer Value Proposition
Although the redesigned packaging provided six favorable points of difference relative to the next best alternative, Sonoco chose to emphasize one point of parity and two points of difference in what it called its distinctive value proposition (DVP). Instead, it chose to place much greater emphasis on the two points of difference and one point of commonality that mattered most to the customer, thus delivering a value proposition with resonant focus.
Substantiate Customer Value Propositions
But as the best practices we've studied point out, thinking through a resonating focus value proposition disciplines a company to research its customers' businesses enough to help solve their problems. As the experience of a leading resin supplier amply illustrates, the pursuit of customer value pays off.
Demonstrate Customer Value in Advance
To let its prospective customers' customers verify this for themselves, Akzo Nobel brought them sample wafers it had produced for testing. Akzo Nobel combines this point of equality with two points of difference: significantly lower energy costs for conversion and significantly lower maintenance costs.
Document Customer Value
Akzo Nobel now has data from an actual production machine to validate claims about its product and projected cost savings, and evidence that the semiconductor wafers produced are as good as or better than what the consumer currently grows using the next best alternative. .
Case in Point: Transforming a Weak Value Proposition
Since GEIW&PT began using VGP in 1992, GEIW&PT has documented more than 1,000 case histories accounting for $1.3 billion in customer cost savings, 24 billion gallons of water saved, 5.5 million tons of waste eliminated, and 4.8 million tons of air emissions removed . . Because of this extensive and detailed knowledge, they become confident in predicting the cost savings and added value that potential customers are likely to receive.
Superior Business Performance
Many multinational companies adopted a matrix arrangement in the belief that they could maintain both the economies of scale of centralized functions and the flexibility of their product line and geographic business units. The constant search for new organizational forms is driven by fundamental changes in the nature of competition and the economy.
What Kind of System Do You Need?
Process perspective. The third perspective of the balanced scorecard describes the corporate synergies gained when multiple business units reap savings by sharing common processes, such as purchasing, manufacturing, distribution, and research. Learning and growth perspective. The ultimate perspective enables corporations to leverage their intent to create enterprise-level value from activities related to human capital development (including recruitment, training, and leadership development activities) and knowledge management (such as Information Systems based on IT for capturing, storing and communicating knowledge and best practices across different organizational units).
Putting It All Together
The customer's perspective. Corporate synergies can also be created by leveraging relationships between multiple business units to offer mainstream customers lower prices, greater convenience, or more complete solutions than specialty competitors can offer. Companies can also capture process economies of scope by leveraging core competencies in particular technologies—such as optics, miniaturization, or displays—across multiple business units.
Strategic Themes
The exhibition 'Mapping a strategic theme' shows how the theme of cross-selling is represented by linked objectives, measures and initiatives that span the four perspectives. Theme owners oversee and approve the way in which the theme's objectives, measures and targets are applied to the strategy maps and scorecards of the operating units.
Mapping a Strategic Theme
Each goal and each measure in the theme is supported by one or more strategic initiatives. The theme's learning and growth goals include e.g. development of new skills for the employees (relationship management and financial planning), introduction of new information systems (customer databases and financial planning systems) and reconciliation of the employees’ personal goals. and incentives to motivate them to achieve a process goal of investing more time with high-potential customers.
Mapping Corporate Strategy at DuPont
So the EP "encouraged" its local leaders to stop any project that did not contribute to one or more of the five themes. Therefore, EP's product managers from several units participated in a workshop with the major customer to build a balanced scorecard that was related to thematic goals.
Overcoming Silos at DuPont
Executive theme owners, together with the top management team, periodically assess the performance of the initiatives and test everyone's underlying theory. This led to more productive discussions and dialogue, based on a shared understanding of the fundamental drivers of overall business performance.
Coordinating Diversity in the Royal Canadian Mounted Police
In the Northwest Territories, for example, the threat of terrorist activity would be low, so his strategy map does not contain objectives that support this strategic theme. Collectively, the results of initiatives outlined in the strategy maps were impressive, as was the exhibition.
Measuring Satisfaction with the Mounties
Both DuPont EP and the RCMP were able to use corporate scorecards and strategy maps organized around strategic themes to realize the enormous value that their portfolio of assets, people and skills represented. And how easy it is for you to help protect the prairies and the penguins and the planet.
Achieve anything
I have three wishes
Even the people who kept their jobs weren't exactly thrilled with the way things were being handled. Line managers worked with HR to tell people their jobs were being cut, and they were ex-.
Why It’s So Hard to Be Fair
But senior managers there explained the strategic intent of the layoffs several times before they were implemented, and executives and middle managers made themselves available to answer questions and express condolences to both those who lost their jobs and those who lost their jobs. those who remained. Although company A spent much more money during its restructuring, company B exhibited much greater process fairness.
The Business Case for Fair Process
Process justice is more likely to generate support for, for example, a new strategy and foster a culture that promotes innovation. To put that in monetary terms, the expected cost savings from practicing process fairness are.
Using process fairness, companies could spend
Most companies say they want to foster creativity and innovation, but few use process fairness to achieve those goals. Operational autonomy can of course be seen as the extreme version of process fairness.
Fair Process as a Performance Booster
Furthermore, since the operational managers felt respected, they demonstrated a similar level of process fairness with their direct reports during the actual restructuring, making the change run more smoothly. She has consistently found that work environments in which employees have a high degree of operational autonomy lead to the highest degree of creativity and innovation.
When employees feel that they are heard in the decision-making
Professor Teresa Amabile of Harvard Business School has conducted extensive research on employees working in creative activities to understand how work environments promote or hinder creativity and innovation. Creativity and innovation tend to suffer in work environments characterized by low levels of process fairness, such as when employees believe that the organization is strictly controlled by upper management or when they believe their ideas will be summarily discarded .
Michael Beer, of Harvard Business School, and Russell Eisenstat, president of the Center for Organizational Adaptability, recently provided evidence of how procedural justice (embedded in an action learning methodology known as process of strategic fit. , or SFP) has helped many organizations capture value by getting employees to buy into strategies. A critical element of the SFP is the appointment of a task force composed of eight well-respected managers from one or two levels below senior management.
The team leaders swarmed like bees to honey for the few managers who had reputations for being good listeners and open to new ideas. One company that has used process fairness to create value is Progressive Casualty Insurance.
Why Isn’t Everybody Doing It?
The team leaders were then brought into a room where company executives were gathered and asked to "sell" as many of their team's ideas as possible. Other executives stood idly by because they assumed from past experience that team leaders would not listen to them.
Instead of wrestling with uncomfortable emotions, many managers find it easier to sidestep the issue–
For example, the CEO of a renowned electrical company wanted to change the corporate culture to be more receptive to new ideas. So he divided a large group of employees into teams of ten and asked each team to come up with ten ideas. ideas to improve the company. Potential customers felt they were treated fairly, and this practice attracted many new sales.
The desire to avoid unpleasant situations is another reason that managers do not practice procedural justice. The company's senior managers admitted to me that they were tempted to avoid officials—partly out of guilt and partly because they doubted whether they would be able to keep their cool enough to act honestly.
Toward Process Fairness
They identified me with the problem and suggested that I was partly responsible for the decision to downsize. When senior managers made themselves more accessible to their staff, employees responded positively and the organization developed a renewed sense of purpose.
It’s not enough for executives just to be fair;
The CEO and his senior management team wanted me to talk to the middle managers about how the layoffs will affect the people who remain and what they can do to help their direct reports "get by". However, the middle managers, feeling betrayed and scared, were not in the mood to help others return to business as usual. I tried to counsel this unfortunate and suspicious group, and I completely understood the discomfort managers feel when asked to act compassionately toward people who feel aggrieved.
Make procedural fairness a top priority. Like most managerial behaviors, the practice of process justice must begin at the top. I worked with a company, for example, that selected its employee of the month based on process fairness skills as well as bottom line results.
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Your company's marketing ROI is closely monitored by shareholders and financial analysts, so you need to consider every customer contact. You turn to your company's newly implemented customer relationship management (CRM) system, which tracks what each customer buys and.
Knowing What to Sell, When, and to Whom
You know that if you can get some of your customers to buy from you, then you will increase the chances of them coming back again in the future; Second-time customers are more likely to become third-time customers than first-time customers are to become second-time customers, and so on. But mail is an expensive proposition, and you know that in the past only about 3% of customers actually responded to mail by making a purchase.
Kumar, Rajkumar Venkatesan, and Werner Reinartz
Our research into the purchasing patterns of thousands of customers at two major companies shows that their predictions about whether a particular customer will buy a particular product at a particular time are correct only about 60% of the time. result that hardly justifies the costs of having a CRM system. Rather, the problem lies in the limitations of the mathematical methods most companies use to interpret the data.
A Problem of Probabilities
But as we will demonstrate, poor predictions are not the result of any fundamental problem with CRM systems or any failure of the predictive power of past behavior. We've developed a new way to predict customer behavior, based on the work of Nobel Prize-winning economist Daniel McFadden, that delivers vastly improved results.
Many companies may be actively damaging revenues in an attempt to make sure that no
Part of the problem is that the timing of a customer's purchase is affected by the type of product purchased. This causes sampling error, the inaccuracy of results that occurs when a sample of the population is used to explain the behavior of the total population.
Eliminating Sampling Error
The probabilities obtained by the two methods produced very different numbers, as seen in the exhibition 'How Different Are Our Numbers?' The exhibition compares the probability that a single, high-frequency customer will choose to buy one or both of two products purchase over a period of four quarters. For example, when our methodology predicted that a given customer had a high probability (defined as greater than 50%) of purchasing product 1 in a given quarter, the customer actually purchased that product 85% of the time. . The hit rates for purchasing product 2 separately and purchasing both products 1 and 2 together were 74% and 80%, respectively.) But when the traditional methodology indicated that a customer had a high probability of purchasing product 1, the prediction was correctly in .
More Bang for the Marketing Buck
Given the sample size of over 20,000 customers, the increase in profit amounted to about $32 million for the sample group alone. For the financial services firm, the average profitability improvement per customer was about $400, representing a 200% ROI improvement.
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Ensure involvement of the most senior executive responsible for the project, such as the CEO or division head. Agrippa, a skilled orator, then told a parable about how the different parts of the body all play an essential role in the survival of the body.
Burbach, MD Physician
I and many other doctors no longer accept insurance because we have found that corporate restrictions prohibit our best and most thoughtful practice. Unfortunately, most patients have to accept and adapt their medical care to the limitations of surgical volume services.
March 2006
We needed to move the company’s attitude from
The group found that many of the perceptions held by companies outside – and even inside – China are incorrect. Only 33% of the 7,700 workers the authors surveyed feel energized by their work; 36% say they are in a dead end job.
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