Strategy

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Creating More Resilient Supply Chains

Global supply chains bring increased risks of disruption from events such as natural disasters. But by understanding and planning for such risks, Cisco Systems improved its own supply chain resilience. Its five-step process: identify strategic priorities; map the vulnerabilities of supply chain design; integrate risk awareness into the product and value chain; monitor resiliency; and watch for events. John Chambers, Cisco chairman and CEO, calls this type of risk management “a key differentiator.”

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Is Your Company Addicted to Value Extraction?

Is your company focused on creating value — or on siphoning it off from others? Capturing value from other stakeholders by manipulating the competitive market process to the company’s advantage exposes a company to reputational or legal risks. It also can undermine corporate values. Value extraction is typically easier than developing a competitive advantage through ongoing value creation. Companies can get hooked on the practice, to the detriment of real value creation.

Image courtesy of Flickr user Wilber Baan.
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The Risks and Responsibilities of Tech Innovation

The introduction of Google’s breakthrough wearable computer, Google Glass, creates numerous possibilities for risky behavior on the part of Glass users. Should companies on the cutting be held responsible for their customers’ poor judgment in using new tech? There are legal and social precedents that say they should, but business and corporate responsibility expert Christine Bader suggests ways companies can combat this problem.

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The Digital C-Suite

A new study finds that executives at large companies are unhappy with their digital strategies and ability to make decisions on technology. The problem? Lack of cohesion and coordination among departments. Having all C-level executives engage with technology and digital business strategy might be the answer.

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The American Red Cross: Adding Digital Volunteers to Its Ranks

The American Red Cross has become an excellent example of how to use social media to connect people during the three cycles of disaster: preparedness, response and then recovery. Its digital volunteers help calm people in the middle of events, and its community mobilizers help coordinate services afterwards. “We want to blur that line about who’s a Red Crosser and who’s not, to say, ‘actually, this is up to all of us,’” says the organization’s Wendy Harman.

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How to Win With a Multisided Platform Business Model

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“Increasing awareness of business models and the spectacular MSP successes from the past decade have prompted many entrepreneurs and investors to attempt building or identifying ‘the next eBay,’” writes Andrei Hagiu, an associate professor in the strategy group at the Harvard Business School. But successful MSPs such as PayPal, eBay and Alibaba are the exception rather than the rule. Haigi offers four observations about what new companies can do to position themselves to be among the winners rather than the losers.

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Reimagining Customer Service at KLM Using Facebook and Twitter

For KLM, social business arose as a spontaneous response to the Icelandic volcanic eruption that spewed ash into Europe’s airspace for days, halting all air travel and stranding thousands of passengers. Since the abrupt birth of the airlines’ social business strategy, e-commerce senior vice president Martijn van der Zee has made the company a model for using social in customer service.

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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 the World Economic Forum/Flickr.

Creating Societal Benefits and Corporate Profits

The odds of launching a new business that creates value for both the company and the public can be improved with good planning. An in-depth analysis of how four companies created for-profit initiatives that also have high societal value suggests that each followed a similar step-by-step process to achieve what the researchers call synergistic value creation. Those steps include establishing cross-business incubators and installing multi-perspective monitoring systems.

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Is Hostility to Blame for Sustainability’s Leadership Gap?

When a conservative think-tank challenged Apple’s sustainability programs at a recent shareholder meeting, CEO Tim Cook didn’t back down, refusing to bow to its calls to suspend any activities that didn’t “add to the bottom line.” Apple’s shareholders rewarded him with resounding support. If sustainability is to increase its profile as a business priority, more executives will need to follow Cook’s lead.

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The Science of Managing Black Swans

In business, a black swan is neither a bird nor a ballerina — it’s a very rare convergence of factors that leads to catastrophe. New research suggests that by exploiting all types of data, managers can help prevent some black swan events, and reduce the hazards of other risky blind spots. The caveat: less intuition; more data.

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The Art of Selling with Social Tools

“Our lives have increasingly migrated online in recent years, so why wouldn’t [sales] reps want to connect with customers on the social media front as well?” That’s the logic of Hearsay Social, whose platform lets sales people keep track of what their customers are posting on Twitter, LinkedIn and even Facebook. Says Gary Liu, vp of marketing, “social media can be used very effectively to enhance real-world interactions.”

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When Should You Fire Customers?

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Many customers are simply not profitable. Letting them go is one option, but so is trying to train them out of expensive behavior. Options suggested by Jiwoong Shin and K. Sudhir, both of Yale School of Management, include reducing services to unprofitable customers and educating them to use less costly service channels. “We recognize the mix of concerns, both ethical and practical, that swirl around firing customers,” write Shin and Sudhir. “We advocate firing customers only as a last resort.”

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From the Editor: Decision Making in the Digital Age

Business executives today have access to far more data than any previous generation, and that transforms the way business decisions are made. The Winter 2014 issue of MIT Sloan Management Review features a special report investigating how, even with plenty of data, making wise decisions about topics like strategy can be challenging. No matter how much data we collect and analyze, our perspectives are still colored by human foibles.

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Stories That Deliver Business Insights

Companies are gaining value from ethnography, the in-person study of how people actually use a product or service. Through its attention to the details of people’s lives, ethnography can be a powerful tool to help executives gain insights into their markets. Ethnographic stories can also be indispensable in helping executives rethink their assumptions about what customers care about and about overall strategic direction.

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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 Art of Strategic Renewal

What does it take to transform an organization before a crisis hits? How can leaders initiate major transformations proactively? The key often lies in strategic renewal — a set of practices that can guide leaders into a new era of innovation by building strategy, experimentation and execution into the day-to-day fabric of the organization. It’s not easy: leaders find it much easier to resist change than to embrace it.

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How to Revitalize Your Digital Business Model

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What should a company do if its digital business model isn’t working very well? Peter Weill, chairman of the MIT Sloan School of Management’s Center for Information Systems Research, has created some principles to revamp the fortunes of a digital business. His framework focuses around three planks: content, experience and platform. Executives should decide which plank offers competitive advantage and develop a world-class version of it online, partnering with others for the other two planks.

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Acquisitions That Make Your Company Smarter

It’s challenging to successfully integrate any acquired company. It’s even more complicated when you purchase a business for its knowledge. From Pfizer Inc.’s acquisition of Icagen Inc. to Walt Disney’s acquisition of Pixar, knowledge-based acquisitions are focused on acquiring new knowledge — related to product features, customer needs, processes or technologies — and depend on assimilating the two companies’ expertise. Included: a sidebar on “Six Steps for Smoother Knowledge Transfer.”

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