MIT Sloan Management Review

For manufacturers and service companies alike, the ability to sell integrated solutions requires completely new organizational structures and capabilities.

Companies with a restricted view of innovation can miss opportunities. A new framework called the “innovation radar” helps avoid that.

Many companies make incremental improvements to their service offerings, but few succeed in creating service innovations that generate new markets or reshape existing ones. To move in that direction, executives must understand the different types of market-creating service innovations as well as the nine factors that enable these innovations.

A focus on design —which translates to a focus on customers’ true needs and unarticulated aspirations — ultimately creates better-informed, more nimble companies.

Companies should focus less on marketplace premiums for their innovations and more on opportunistically exploiting subsidies for innovations. Thus Microsoft‘s Windows 95 development effectively garnered a $900 million subsidy by drawing upon a valuable technical population to test and help improve the system. An innovation subsidy, says the author, is individuals‘ and institutions‘ cost-effective bartering of resources to reduce risk.

Outsourcing can be more than a tool for cutting costs and improving organizational focus. Increasingly, it is a means of acquiring new capabilities and bringing about fundamental strategic and structural change.

In a world of commoditized products, companies are turning to service offerings for growth. The key to success involves redefining markets in terms of customer activities and outcomes, not products and services.

Companies often launch spinoffs to enter a market quickly. But the more sustainable strategy is to establish a group that is (or will be) integrated with their existing operations.

The product-development process is often seen as an undependable “black box” that rarely produces results that exceed business expectations. With an approach called “net present value, risk-adjusted,” the author offers an operational framework of quantitative tools that can be integrated into existing stage-gate methodologies to create a risk-adjusted NPV that considers the impacts of product portfolio, user needs, and technical and marketing risks.

Firms gain competitive advantage by improving the performance of suppliers and by sidestepping the snares common to such efforts.

Increasingly, information technology isn’t just for supporting the strategy, it is the strategy. Unfortunately, many CEOs send their managers negative signals about IT’s role. Only the “believer CEO,” who demonstrates through daily actions a belief in the strategic value of IT, can help others manage effectively in the Information Age. The authors offer examples of such CEOs and give some techniques for addressing blind spots to improve an organization’s competitiveness.

A three-step process to ensure that companies launch new products that make a profit and please customers.

The corporation has emerged as perhaps the most powerful social and economic institution of modern society. Yet, corporations and their managers suffer from a profound social ambivalence. Believing this to be symptomatic of the unrealistically pessimistic assumptions that underlie current management doctrine, Ghoshal et al. encourage managers to replace the narrow economic assumptions of the past.

Strategic failure usually comes from an inability to make clear choices on which customers to target, what products to offer, and how to improve efficiency. Incumbents routinely bow to upstarts that innovate in those areas. The author shows established companies how to prepare for and counter such disruption with a dynamic process of continual strategic renewal.

To sustain excellence, companies need dual strategies —one for the present and one for the future.

Every decade or two, a big idea in management thinking takes hold and becomes widely accepted. The next big idea must enable businesses to improve the hit rate of strategic initiatives and attain the level of renewal necessary for successful execution. Scientific research on complex adaptive systems has identified principles that apply to living things, from amoebae to organizations. Four principles relevant to strategic work at Royal Dutch/Shell are outlined.

In the continuous battle for strategic supremacy, leaders and challengers must control the patterns of turbulence and select an appropriate method for creating wealth.

How Toyota’s product design and development process helps find the best solutions and develop successful products.

Leading software developers use platform approaches to leverage technology into families of software products and systems.

How Allen Bradley Canada and its suppliers collaborated and learned from each other through shared resources and experiences.