Chapter 6 Enhanced Version Implementation Exhibits/Tables October 22, 2000

Chapter 6 Enhanced Version

Implementation

Exhibits/Tables

October 22, 2000

ZOP-BOK-FinalImp-04-12-00-MRS

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Supporting Slide 6-A:

Two Integral Components of Implementation

ObjectivesDeliver the promised

customer experience

Turn strategic intent / concepts into results

ObjectivesMaintain fit between

Marketspace evolution and the company’s delivery system and product offering

Build theinfrastructure to

deliver on the brand promise

Innovate / Renew the customer experience

Source: Monitor Analysis


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Supporting Slide 6-B: Two Components of Implementation

Delivery System

InnovationProcess


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Exhibit 6–1: Marketspace Evolution and Need for Continuous Innovation

BRAND PROMISE Branding Marketing Communications Customer Interface

BRAND PROMISE Branding Marketing Communications Customer Interface

IMPLEMENTATION

Deliver on the promised

experience

Renew/Innovate thecustomer experience

Source: Monitor Analysis

Objectives Achieve strategic goals Adjust product offering

and delivery system to rapidly changing Marketspace environment

INNOVATION PROCESS

DELIVERY SYSTEM


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Source: Modified version of materials in The Marketing Edge by Thomas V. Bonoma. 1985. New York: The Free Press.

Exhibit 6–2: Why Does Implementation Matter?

Success

All that can be done to assure success has been done

Success

All that can be done to assure success has been done

Roulette

Good execution can mitigate poor strategy, forcing management to success

or Same good execution

can hasten failure

Roulette

Good execution can mitigate poor strategy, forcing management to success

or Same good execution

can hasten failure

Trouble

Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies

Trouble

Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies

Failure

Diffibult to diagnose - bad strategy masked by poor execution

More difficult to fix - two things are wrong

Failure

Diffibult to diagnose - bad strategy masked by poor execution

More difficult to fix - two things are wrong

Poor

Good

Appropriate Inappropriate

Strategy

Implementation


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Essential challenges of On-line Implementation

Customer Driven

Customer Driven

Organization Driven

Organization Driven

More visibility of errors = stronger

competitive implications of errors

More visibility of errors = stronger

competitive implications of errors

Lower switching barriers = increased importance of good

implementation

Lower switching barriers = increased importance of good

implementation

More complex linkages = increased

complexity of implementation

More complex linkages = increased

complexity of implementation

More fluid organizational boundaries =

increased complexity of implementation

More fluid organizational boundaries =


More dynamic market environment =


More dynamic market environment =


Exhibit 6-3: Challenges of On-Line Implementation


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Built to Last:

The Offline World

Built to Rebuild (Fast):

The On-line World Name of the game is to consistently outplan the

competition elaborate strategic planning process important for long term success

No time for elaborate planning (‘Be fast or be last’) frequent experimentation and adaptability, as well as locking in alliances earlier than competitors keys for success

Organizational growth is based on organic growth with selective use of acquisitions to fill pockets of deficiencies (slow post-merger integration-processes)

Acquiring competencies, assets and customer-base far more important than organic growth definition of ‘the organization’ more flexible and hence, same goes for design of organizational architecture

Scaling up requires years of building up physical assets and brand equity

Scaling up takes months and is based on information-assets

Growth is constrained by the limited number of available market opportunities

Growth is constrained by the company’s ability to capitalize on the overload of opportunities out there (people, infrastructure)

Most successful companies are not founded on ‘Great Idea’

Most successful companies are based on “great ideas”

Sources: Brooks, Frederick P. 1994. Built to Last. New York: Harper Business. Business 2.0. 2000. Smart Way to Start, 10 Principles of the New Economy (March).

Supporting Slide 6-C:

Point-Counterpoint: From Built to Last to Built to Rebuild


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ProcessesProcesses

AssetsAssets

SystemsSystems

PeoplePeople

Source:Christensen, Clayton M. 2000. Meeting the Challenge of Disruptive Change. Harvard Business Review 78, no. 2 (March-April).

MAPPING THERESOURCE SYSTEM

DELIVERY SYSTEM

Supply ChainsSupply Chains

Exhibit 6-4: The Delivery System Needs to Support and Reinforce the Resource

System


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B2C - Business to ConsumerB2C - Business to ConsumerB2C - Business to ConsumerB2C - Business to Consumer

Stock it Yourself.

Outsource Warehousing

Drop Ship

Fulfillment intermediaries

Stock it Yourself.

Outsource Warehousing

Drop Ship

Fulfillment intermediaries

B2B - Business to BusinessB2B - Business to BusinessB2B - Business to BusinessB2B - Business to Business

Customer Centric

Vertical Hubs

Customer Centric

Vertical Hubs

C2C - Consumer to ConsumerC2C - Consumer to ConsumerC2C - Consumer to ConsumerC2C - Consumer to Consumer

Much like a vertical hub, many sites (i.e., eBay) have created a 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

Much like a vertical hub, many sites (i.e., eBay) have created a 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 - Consumer to BusinessC2B - Consumer to BusinessC2B - Consumer to BusinessC2B - Consumer to Business

C2B include auction services like Priceline.com. Individual consumers place bids with businesses and businesses decide whether to sell.

Also include consumers group buying like Mercata.com. Mercata.com is a trading community where the more people that purchase a product, the lower the price is. Mercata alllows consumers from around the world to achieve group scale economies.

C2B include auction services like Priceline.com. Individual consumers place bids with businesses and businesses decide whether to sell.

Also include consumers group buying like Mercata.com. Mercata.com is a trading community where the more people that purchase a product, the lower the price is. Mercata alllows consumers from around the world to achieve group scale economies.

Exhibit 6-5: Four Types of Supply Chains Found In Marketspace


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Exhibit 6-6: Where to Play On-Line and Off-Line

FULFILLMENT SYSTEMS

CUSTOMERINTERFACE

ON-LINE OFF-LINE

Yahoo!

Amazon.com

BN.com

McD

on

ald

s

Eg

gh

e ad


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Laboratories Primary

Activities Time

Frame Innovation

Type

Division Laboratories

Product development

Product control

Technical service

Today’s business 0–3 Years

Line extension

Sector Laboratories Sector

technology development

3–10 Years

Changing the basis of competition

Central Research New

technology development

10+ Years

New industries

3M’s Research Paradigm

Key TakeawaysKey TakeawaysKey TakeawaysKey Takeaways

Source: Gundling, Ernest. 2000. The 3M Way to Innovation. Tokyo: Kodansha Int. Ltd. And New York, New York: Kodansha America, Inc.

Traditional off-line 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

Traditional off-line 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

Table 6–1: Innovation Used to Be Slow and Gradual in the Off-Line World


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Innovation by DoodlingInnovation by Doodling

Innovation by DesignInnovation by Design

Innovation by DirectionInnovation by Direction

Exhibit 6–7: The Off-Line Innovation Process Was Internal To The Firm


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Off-Line Trade-Offs/Principles Supporting Funnel Approach:

Off-Line Trade-Offs/Principles Supporting Funnel Approach:

On-Line Principles

On-Line Principles

Investments required to launch new innovation very high

Limited resources force tradeoffs / choices which innovations to pursue or not

Trade-offs / 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

Table 6-2: Off-Line Innovation Process vs. On-Line Innovation Process


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Source: Christensen, Clayton M. 1997. The Innovator’s Dilemma. Boston, MA: Harvard Business School Press.

TIME

PR

OD

UC

T P

ER

FO

RM

AN

CE

Disruptive Technological

Innovation

Performance Demanded at the Low End of the

Market

Performance Demanded at the High End of the

Market

Progress Due to Sustaining

Technology

Progress Due to Sustaining

Technology

Exhibit 6-8: New Innovation Frameworks Addressing Co-Evolution Have

Emerged


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33

22

11 44

55

Developer-Driven Development

Technology / Market Coevolution

User-Context Development

User-DrivenEnhancement

New Application or Combination of Technologies

High Low

High

Low

Mat

uri

ty o

f T

ech

no

log

y D

esig

n

Alignment of Product Linewith Current Customer Base

Source: Leonard-Barton, Dorothy. 1996. Wellsprings of Knowledge, Boston, MA: Harvard Business School Press.

Exhibit 6-9: New Innovation Frameworks Addressing Co-Evolution Have

Emerged


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Beta 1Initial Input

Initial Input

Evolution of Customer PreferencesEvolution of Customer Preferences

Product Release

Product Release

Evolution of Technical PossibilitiesEvolution of Technical Possibilities

Exhibit 6-10: Integrating New Technology with Customer Preferences

Beta 2 Beta 3

Source: Iansiti, Marco and Alan McCormack. 1998. New product development on the Internet. In Sense & Respond. Boston: Harvard Business School Press.


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Exhibit 6-11: The Development of Navigator 3.0

FebJan AprMar May Jun Jul Aug

OBJECTIVES

Input from User Feedback

Beta 0 Internal

Beta 1

Beta 2

Beta 3

Beta 4

Beta 5

Beta 6

STABILIZE

INTEGRATION

FEATURE DESIGN AND CODING

FullRelease

SpecificationsCompleteStart

Source: Iansiti, Marco and Alan McCormack. 1998. New product development.


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Exhibit 6-12: Distributed Innovation

CUSTOMERS COLLABORATORS

ENABLERSSUPPLIERS

COMPETITORS COMPANY

. .

..

.= Boundaries of the firm

= Feedback loop


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Exhibit 6-13: Schwab IT Infrastructure

Source: Tempest, Nicole and Warren McFarlan. 1999. Charles Schwab Corporation (A). Case no. 9-300-024, 9 September. Boston: Harvard Business School Publishing.


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Exhibit 6-14: Timeline for Schwab Innovations

1979 1985 1989 1991 1992 1993 1995 1996 1997 1998 1999 2000

Entire trade clearing system brought in-house

Equalizer: DOS based product enabling PC users to trade stocks on-line

Telebroker: 24x7 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 on-line trading of equities, bonds and mutual funds

October 1995eSchwab:

Electronics software package dialing into Schwab system

June 1995Advisor

Source: Referral service for fee-based advisors

March 1996Upgraded

eSchwab: First major brokerage firm to offer trading via the Internet

September 1997Customized asset

allocation tool available on-line

October 7, 1997SchwabLink

available on the web

October 1, 1997First speech

recognition service for investors

January 27, 1998MoneyLink:

Electronic funds transfer service

May 14, 1998First U.S. website

enabling order placement in Chinese

January15, 1998Schwab.com

launches

January 20, 1998IRA Analyzer

launches

September 21, 1998CD ROM Tool for

retirement setup and monitoring

November 23, 1998Web tool to track and

benchmark investor performance

April 16, 1999New site

based on user input

April 27, 1999Retirement

Planner on-line

August 14, 1999Velocity software

trading system for active investors

September 8, 1999New web tools for

investment advisor offering

May 24, 1999MySchwab launch

August 19, 1999Plans for cross-

platform wireless trading

November 9, 1999Paperless trading with

eConfirms

October 20, 1999After Hours trading

November 23, 1999Velocity 2.0 launch

December 1, 1999Enhanced Analyst

Center

December 22, 1999New on-line mutual

fund tools

February 3, 2000Learning Center:

Interactive education tool for on-line learning

March 7, 2000Schwab and Barclays

announce internet-based foreign exchange service

March 15, 2000Schwab expands advice

offering with Portfolio consultation

March 31, 2000Schwab and Dow

Jones unveil on-line Chinese news and research service

May 7, 2000Stock Analyzer

launched, offering third party equity analyst recommendations and earnings projections

Documents

Chapter 6 Enhanced Version Implementation Exhibits/Tables October 22, 2000