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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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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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Bringing Sustainability Metrics to Purchasing Decisions

When hotel chain Hilton Worldwide looked at supply chain sustainability, it lacked tools to help weigh sustainability factors. Hilton partnered with sustainability consultant BSR to create the Center for Sustainable Procurement. In this interview with MIT SMR’s David Kiron, Hilton’s VP of supply management William Kornegay and Eric Olson of BSR discuss how the initiative evolved.

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Three Things Retailers Must Do To Compete

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  • Read Time: 2 min 

Companies looking to build a satisfied and loyal customer base need to understand what drives satisfaction for their particular group of customers. Grocer Trader Joe’s, for instance, typically carries only about 4,000 carefully selected items, in contrast the the 50,000 found in many other grocery stores.

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From the Editor: Beyond the Organization

Business executives today are figuring out how to harness the energy not just of the talented people within an organization, but of those outside of it as well. The fall 2013 issue of MIT Sloan Management Review features a special report on leveraging external innovation, from the phenomenon of corporations using innovation contests to an investigation of what motivates volunteers to take part in innovation projects.

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How Serious Is Climate Change to Business?

The fifth annual global executive survey about sustainability and innovation conducted by MIT Sloan Management Review and the Boston Consulting Group suggests that climate change has yet to become a very urgent issue for most companies — and that only a minority of companies are preparing for its effects. In a preview of our upcoming report (due out in the fourth quarter of 2013) we present six charts that provide a snapshot of report statistics.

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Driving Change Through Corporate Programs

CEOs of large companies introduce corporate programs as a way to foster strategic renewal. But whether the goal is boosting profitability, improving business models or establishing new directions for growth, it’s important to match the design of the program with the desired outcomes.

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The Question Every Project Team Should Answer

Many projects fail because they are launched without a clearly articulated reason why they’re being pursued. Without a clear vision, a project team can become overwhelmed by conflict and confusion. Exploring the four dimensions of a compelling “why statement” can improve a project’s chances of success. Karen A. Brown, Nancy Lea Hyer and Richard Ettenson explain those four dimensions.

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Hans Jôhr. Nestlè. Corporate Head of Agriculture.Foto:  Toini Lindroos

Creating Shared Value at Nestlé

Hans Joehr, Nestlé’s corporate head of agriculture, is responsible for providing technical and strategic leadership for Nestlé’s worldwide agricultural material supply chain. One of the ways Nestlé accomplishes its goals is by providing agricultural “extension services” for the hundreds of thousands of rural farmers who are its suppliers. It’s all part of the company’s Creating Shared Value (CSV) approach to business, a process that seeks to create value for shareholders while also ensuring the company creates value for the communities in which they operate.

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Five Steps to Digitally Transforming City Government

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Boston Mayor Tom Menino is almost radically tech averse, yet he’s led a revamp of a customer relationship management system that has transformed the way the city, its workers, and its citizens interact. Starting with its Citizens Connect app (initially for better pothole reporting), Boston has expanded its data interface to allow faster turnaround times for repair, and has even held a competition across departments to reward the quickest response to citizen requests.

Image courtesy of Flickr user Paul L Dineen.
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Does Data Have a Shelf Life?

Recent research out of the Department of Operations and Information Systems at the University of Utah, Salt Lake City, and the Department of Management Information Systems, Eller School of Management at the University of Arizona, Tucson, asks a seemingly simple question about organizations’ data collection and usage that could have some big implications on your own data techniques. The question: When is the right time to refresh data to support organizational decision-making?

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Capturing the Value of Synchronized Innovation

How can companies coordinate their product development efforts? Research by Jason P. Davis (MIT Sloan School of Management) shows that synchronization can take three forms: proactive planning with partner organizations; reactive action to signals by other companies; or combining these two in a hybrid. Each approach has its own implementation costs and challenges. Moreover, the network of relationships that already exist within an industry affects how quickly synchrony emerges.

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Analyzing Performance in Service Organizations

We can’t always trust our intuition about how employees will perform. Intuition can be misleading, or just plain wrong. So a growing number of savvy service businesses have investigated the use of a sophisticated linear programming technique called DEA, or data envelopment analysis. Authors H. David Sherman and Joe Zhu, who call DEA “balanced benchmarking,” write that the technique helps companies locate best practices not visible through other management methodologies.

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How to Drive Customer Satisfaction

There are six significant drivers of customer satisfaction for companies to pay attention to: adaptability, commitment to customers, connection with other customers, product assortment, easy transactions and appealing environment. A Trader Joe’s grocery store, for instance, carries about 4,000 items, compared to 50,000 in a typical store. Less is better: Items are chosen to match the demographic and psychographic profiles of Trader Joe’s customers, and provide the assortment customers want.

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Competing in the Age of Omnichannel Retailing

Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing, enabling retailers to interact with consumers through multiple touch points and expose them to a rich blend of offline sensory information and online content. In response to these changes, retailers and their supply-chain partners will need to rethink their competitive strategies.

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Video: The Digital Transformation of Health Care

  • Interview
  • Read Time: 1 min 

One of the largest health insurers in the United States, WellPoint, is using technology to change its business model. Lori Beer, WellPoint’s executive vice president of specialty businesses and information technology, talks about how technology is helping doctors and nurses be more efficient and effective and lowering costs. Beer explains how WellPoint, which is the first commercial adopter of IBM’s Watson technology, is using analytics to help health-care providers work more efficiently.

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How Starbucks Has Gone Digital

  • Interview
  • Read Time: 15 min 

Starbucks chief digital officer Adam Brotman and chief information officer Curt Garner explain how they collaborate closely. The two constantly seek to improve customer experience through technology and to unify marketing efforts across channels. Their partnership has forged a fast-paced rollout of new digital efforts, from faster payment processing to mobile ordering, across Starbucks’ 17,000 stores.

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Outsourcing Business Processes for Innovation

Although many organizations initiate business process outsourcing to reduce costs or acquire new skills, it can evolve into much more. Sometimes, service providers deliver substantial long-term improvements to the client’s operating efficiency and strategic performance. But these improvements seldom happen unless clients and providers implement a process that combines acculturation across organizations, a method for generating ideas, adequate funding and a system for managing change.

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