Operations

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The Pitfalls of Project Status Reporting

Accepting five inconvenient truths about project status reporting can greatly reduce the chance of being blindsided by unpleasant surprises. For instance, many employees tend to put a positive spin on anything they report to senior management. And when employees do report bad news, senior executives often ignore it. Overconfidence is an occupational hazard in the executive suite, and executives need to examine their own assumptions and beliefs about project status reporting.

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Should Your Business Be Less Productive?

Research suggests that productivity improvements can have counterproductive results in a service business. Productivity gains are not always easy to make without sacrificing perceptions of quality, and unlike on the assembly line, increased productivity may not always lead to increased profitability. Instead, in a service business, productivity must be treated as a strategic decision variable.

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Reducing the Risk of Supply Chain Disruptions

Most managers know that they should protect their supply chains from serious and costly disruptions — but comparatively few take action. The dilemma is that solutions to reduce risk mean little unless they are evaluated against their impact on cost efficiency. To protect their supply chains from major disruptions, companies can build resilience by segmenting or regionalizing supply chains, and limit losses in performance by avoiding too much centralization of resources.

Image courtesy of Flickr user Sjors Provoost

How to Win a Price War

There are usually no winners in price wars. But under the right circumstances, it’s possible to win a price war by leveraging a specific set of strategic capabilities. These include the ability to read how things are changing, the skills to analyze data to identify trends and opportunities and the wherewithal to implement organizational changes both internally and across the value chain. Albert Heijn, a Dutch grocer, started and won a price war through its strategic capabilities and skills.

Image courtesy of Flickr user DaveMN

What Unhappy Customers Want

Companies have tried for decades to improve customer complaint resolution — without notable success. Customer expectations are rising; customers now expect positive results and not just the chance to complain. Many customers want nonmonetary remedies, such as an apology or a chance to vent. In addition, companies must recognize that they must treat every customer interaction as if it were playing out on a Facebook page or a YouTube video, because it might be.

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Image courtesy of Flickr user mike fabio.

The High Price of Customer Satisfaction

No company can last for long without satisfied customers. But misguided attempts to improve satisfaction can damage a company’s financial health. Research finds that the relationship between customer satisfaction and customer spending behavior is very weak, and that the return on investments in increasing customer satisfaction is often trivial or even negative. What matters is how customers rank your brand in satisfaction relative to your competitors.

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Free Article

From the Editor: How Important Is the Customer’s Voice?

It’s easy to say customer satisfaction is very important – but harder to put that into practice. The Spring 2014 issue of MIT Sloan Management Review features a special report on understanding your customers, from gauging global clients’ satisfaction through the use of big data to figuring out better strategies for improving customer complaint resolution.

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Reading Global Clients’ Signals

How can geographically distributed companies monitor large clients’ attitudes about their services? Traditional customer satisfaction surveys can lack sufficient timeliness and detail. But taking a big data approach to analyzing collaborations lets companies gain valuable and timely insights into client satisfaction. Examining the structural properties of email communication patterns and correlating them with external performance metrics can offer managers helpful insights.

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Inside Renault’s Digital Factory

  • Interview
  • Read Time: 12 min 

Engaging with the digital technology in consumers’ lives creates unique challenges for traditional companies. Renault hired Patrick Hoffstetter, an executive with extensive Web experience, to shape its Digital Factory concept — a new way of marketing its cars. Hoffstetter says Renault must shift its mindset about the auto business and uses pilot programs in test markets to help the company respond more quickly to consumer interest in things like content for their cars or shopping online.

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Raising the Bar With Analytics

More than half of managers surveyed strongly agree that their organizations need to step up analytics use, according to a 2013 global survey by MIT Sloan Management Review and SAS Institute. In addition, survey data suggests that in companies where analytics has improved the ability to innovate, managers are more likely to share data with partners and suppliers.

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Should You Outsource Analytics?

Outsourcing analytics activities can offer benefits, but it requires a carefully constructed relationship between the company and the business process organization (BPO). Customers must be careful not to lose their expertise or their core intellectual property. Research suggests that companies with superior analytics capabilities will approach outsourcing differently than companies that are analytically challenged.

David Simchi-Levi

Overheard at MIT

“Big Data in Manufacturing” was the theme of a daylong conference held in Cambridge, Massachusetts, in November 2013 and sponsored by the MIT Forum for Supply Chain Innovation and the Accenture and MIT Alliance in Business Analytics. But the speakers’ insights weren’t restricted to manufacturing.

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Rewriting the Playbook for Corporate Partnerships

In fast-changing markets, some companies are developing flexible, adaptive strategic partnerships to leverage the resources of both customers and suppliers. Incentive arrangements focus partners on joint value creation, and companies are sharing information extensively to solve problems together. These partnerships make the most sense when the product or service is of strategic importance to the customer, when the vendor has superior expertise and when there is uncertainty in the relationship.

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Strategic Decisions for Multisided Platforms

Some of the fastest growing businesses in recent years — companies such as Facebook, eBay and LinkedIn — are “multisided platforms” that enable interactions between two or more sets of participants. The spectacular success of some of these MSPs has caught the attention of many entrepreneurs and investors. But building a multisided platform business requires savvy decisions on everything from design to governance to pricing.

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The Real Savings From IT Outsourcing

Research suggests that outsourcing IT can help reduce sales expenses and general and administrative costs, which are often four to five times IT costs. Managers need to take a balanced approach to their investments in internal systems and outsourcing to reap greater benefits in terms of cost savings. Analyzing the impact of outsourcing on non-IT costs and formulating strategies for maximizing the savings on these expenses can help companies get the most out of outsourcing spending.

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Free Article

Are Predictive Analytics Transforming Your Supply Chain?

While some industries like health care and retail are starting to see the transformational potential of big data and predictive analytics, these strategies haven’t quite panned out for supply chain managers. Why? Two big barriers: The cost of hiring skilled employees and the complexity of connecting nodes across an extended supply chain network. New research suggests that the convergence of data science, predictive analytics and big data have the potential to transform the way in which supply chains leaders lead, and supply chains operate.

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Video: New Opportunities in the Transformed Music Industry

  • Interview
  • Read Time: 1 min 

It’s been a difficult decade for any company that’s been in the recorded music business. But at Universal Music, the company is using external partnerships, technology, new platforms and “democratized data” to surmount challenges in one of the first industries to go digital. Universal’s Rob Wells explains how he and his colleagues have dealt with massive change and how they take advantage of new opportunities to put the company at the forefront of the industry landscape.

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