Mature companies often lack the vision and resolve to fully commit to new technologies - even when consumers are ready for them. This leads companies to develop watered-down products with limited capabilities and leaves them exposed to upstart competitors.
When business executives and economists think about whether developing an innovation will be worthwhile, they tend to focus on the economic value of the outcome of the innovation process. However, the authors argue, that standard cost-benefit assessment is seriously incomplete when applied to individual innovators. These individuals can gain significant benefits from participation in a development process as well as or even instead of benefits from using or selling the innovation created. When innovation project sponsors can offer volunteer innovators such benefits, the net cost of those innovation projects can be much lower. The authors define innovation process benefits as all those benefits that innovators will get if they directly participate in the innovation development process and will not get if somebody just hands them the solution to an innovation challenge. Important examples of innovation process benefits include enjoyment and learning obtained from participation in the project, as well as reputational gains obtained from being known as having made high-quality contributions. Innovation process benefits are distinct from benefits associated with using or selling the innovation created. They are only available to participants in the development process. Together with other researchers, one of the authors studied the range of motivations experienced by consumer- innovators individuals creating or modifying consumer products to better fit their personal needs. Both a study of Finnish consumer-innovators and a study of consumer-innovators in whitewater kayaking found that motivations for these innovators included not only a desire to use or sell their innovations but also enjoyment and learning gained from the innovation process, as well as a desire to help others. The authors note that designing innovation projects with individual volunteers innovation process benefits in mind can amplify total investment in R&D and innovation in societies by making it attractive for some consumers to devote some fraction of their leisure time to that purpose. The net effect is to make innovation cheaper from the societal perspective and also from the perspective of an innovation project sponsor.
Online retailing is far and away the fastest growing retail sector in the United States. The growth is being fed by two forces: (1) traditional retailers are getting their "Internet acts" together, and (2) "pure play" retailers are becoming increasingly innovative.The authors studied two groups: online retailers selling popular-brand consumables for the home, such as laundry detergent, pet supplies and diapers (represented by Netgrocer.com and Diapers.com); and online retailers selling specialty items, including fashion eyeglasses and apparel for men (represented by WarbyParker.com and Bonobos.com). They came up with a set of findings that may have important implications not just for pure-play Internet retailers but for more traditional retailers, too. Among them:Individual consumer acceptance depends on offline shopping costs. For Internet retailers, the best market opportunities are with customers in locations where offline retail shopping is limited and costs (including sales tax) are high.Sales evolution is structured and predictable. Although initial online sales in a particular region, and some geographic variation in sales across regions, may be driven by offline product costs, growth is fueled by the sharing of information among friends and neighbors. The authors' research on Netgrocer.com, an online retailer that delivers groceries, found that ZIP codes with lots of new customers tended to be adjacent to areas that had high concentrations of customers in earlier periods.Migrating from "good" to "great" requires expansion to niche locations. Although sales emerge first in areas where customers face high offline shopping costs and are propagated through local customer interactions, in order for online retailers to extend their reach they need to tap into hundreds or thousands of markets that individually represent few sales but collectively add up to significant numbers.Different locations require different customer acquisition strategies. In ZIP codes with a high physical density of customers, offline word of mouth can be particularly powerful. Traditional print advertising tended to work well in less dense environments.
As salespeople and anyone trying to communicate already knows, individuals process information in different ways. Messages delivered in the matched cognitive style will be more effective. Advances in technology and behavioral science are beginning to enable an empathetic Web to emerge--a Web that can figure out for itself how a user wants to be talked to.
Despite studies indicating the contrary, many academics and practitioners assert that the business cycle can't be predicted and therefore can't be managed. However, managers who draw upon forecasting models, closely follow leading economic indicators and manage their business cycle proactively are likely to emerge from tough economic times intact, says the author. To this end, the ?master cyclist? project has evaluated companies' market literacy, forecasting capabilities and use of macroeconomic strategy. From the evaluation, it developed a set of managerial principles, defining how a market-literate management team would approach short-run functional decisions regarding inventory, production, marketing and pricing as well as more strategic choices regarding capital expansion, acquisitions and divestitures. According to the author, explicitly cycle-savvy companies like Johnson & Johnson, Southwest Airlines, DuPont and Duke Power weathered rough economic times well, while companies like Cisco Systems, which rejected the use of macroeconomic forecasting, was caught during the recent recession with crippling levels of product and supply-chain inventories. It follows then, according to the author, that strategic, tactical and functional decisions are better informed by intelligent speculations about the business cycle. As economic-forecasting indicators and techniques continue to improve, so should our understanding of both the business cycle and the principles associated with effectively managing it.
Business-process outsourcing is a key trend shaping the future of human resources. Six factors can help companies determine which HR processes to outsource and which to retain.
