More and more companies are shopping outside their organizations for innovation, whether its raw ideas or market-ready businesses. Heres how to choose whats best for you from among the array of offerings.

The authors dispel a number of commonly held myths regarding how innovation happens. Additionally, the article presents innovation opportunities and challenges for Chinese companies and the Chinese economy in general. Chinese Language Publication.

Large firms puzzling over whether to pay for developed technology or take a risk on bleeding-edge concepts now have a third choice--a new kind of "innomediary" that identifies and refines innovations, reducing market risk in return for a share in the potential rewards.

We examine the implications of virtual customer environments for supporting the innovation process. By building on the literature of knowledge brokers, we introduce the concept of virtual knowledge brokers - actors who leverage the internet to support third parties' innovation activities. These actors enable firms to extend their reach in engaging with customers and they also allow firms to have a richer dialogue with customers because of their perceived neutrality. Consequently, virtual knowledge brokers help firms to complement the knowledge they can acquire through traditional physical and virtual channels for customer interaction. We highlight the capabilities and contributions of virtual knowledge brokers, and we discuss the implications of these entities for theory and practice in the management of innovation.

The article presents a rigorous tool for measuring the level of innovation at any company with regard to all ways in which the company does business. It also provides a comprehensive view of all of the dimensions of the "business system" on which companies can innovate, broadening the innovation dialogue from products and technologies to all aspects of how companies do business.

In the networked world, firms are recognizing the power of the Internet as a platform for co-creating value with customers. A key aspect of co-creation is collaborative innovation – engaging customers in the firm’s product innovation process. We focus on how firms can use the Internet as an enabling platform for collaborative product innovation. We outline key differentiating capabilities of the Internet as a platform for customer engagement, including interactivity, enhanced reach, persistence, speed and flexibility, and suggest that firms can use these capabilities to engage customers in collaborative product innovation through a variety of Internet-based mechanisms. We discuss how these Internet-based mechanisms can enhance collaborative innovation at different stages of the New Product Development (NPD) process and based on different types of customer involvement. We present two detailed exploratory case studies to illustrate how leading firms are engaging in collaborative innovation with customers - Ducati from the automotive industry and Eli Lilly from the pharmaceutical industry. We derive implications for managerial practice and research on collaborative innovation.

What's wrong with the profession of marketing and how to fix it.

Developing breakthrough customer insights requires a departure from the obvious.

Faced with saturation of their core product markets, companies in search of growth are increasingly turning to services. A few companies have enjoyed success with this approach. Not all product manufacturers have been so fortunate. A systematic approach to creating services-led growth can help managers of product companies improve the odds of success. Companies must begin by redefining their markets in terms of customer activities and customer outcomes instead of products and services. By mapping the customer-activity chain and relating the map to a service-opportunity matrix, the managers can systematically explore opportunities for new services in four directions: 1. temporal expansion, 2. spatial expansion, 3. temporal reconfiguration, and 4. spatial reconfiguration. Equally important, they must assess the pitfalls and risks that these opportunities represent, and another matrix - on risk mitigation - serves as a tool for that task.

Perspectives on the nature of customer insights.

Unlock value by using the Internet to divide your company.

Online reverse auctions look like a silver bullet that cuts costs quickly using e-business tools. Reverse auctions are fixed-duration bidding events hosted by a single buyer, in which multiple suppliers compete for business. Proponents claim reverse auctions can lower the cost of procuring products and services as much as 20%, making them the e-business application of choice for companies faced with declining sales and margins. However, the raw savings overstate the value of this vaunted online procurement technique. Like any tool, reverse auctions, when properly used, can provide value. But when they are overused or misused, the savings they promise can be illusory, and they can inflict real damage on supplier relationships.

Seven fundamental lessons about value and information technology are: 1. value is customer-defined, 2. value is opaque, 3. value is multidimensional, 4. value is a trade-off, 5. value is contextual, 6. value is relative, and 7. value is a mind-set.

Ccompanies--and by extension CIOs--often talk to the wrong people in the customer organization and measure the wrong things. If you are not careful, customer satisfaction measurement could be doing your IT organization more harm than good. Tips for getting customer satisfaction measurement right include: 1. Measure success, not satisfaction. 2. Do not let averages lie. 3. Loyalty is not satisfaction. 4. Replace ritual with reality.

The value of customers goes beyond what they spend.

The Real-Time Enterprise is the next hyped thing. Don't get swept away.

In recent years, many companies have learned to use the Internet as a powerful platform for collaborating directly with customers on innovation. But direct interactions -- facilitated by customer advisory panels, online communities and product-design tool kits -- have limitations. They don't always allow companies to reach the right customers at the right time and in the right context. Thus, to fully exploit the Internet as an enabler of innovation, companies need to complement their direct channels of customer interaction by using third parties that can help them bridge gaps in customer knowledge. The authors call this process of indirect, or mediated, innovation innomediation and the third-party actors at the center of it innomediaries. In their research, the authors identified three distinct types of innomediary and observed how each one can help companies acquire different forms of customer knowledge. Using case studies, they suggest ways in which companies can begin to think about exploiting the power of these emerging intermediaries. For businesses that learn to use customer knowledge from both direct and indirect sources, the Internet holds the key to a multichannel innovation strategy.

To get business value out of new IT solutions, vendors have to get them right.

The internet allows companies to resolve age-old debates between specialisation and generalisation, centralisation and decentralisation and scale versus focus through its ability to decouple systems, processes and companies. Decoupling is a powerful concept that allows companies to unlock new value.

This article presents the concept of collaborative marketing - the process by which firms engage customers in the co-creation of value. The principles of collaboarative marketing are outlined, along with examples of companies that are beginning to adopt these practices.

The purpose of business is greater than profits.

Show me the money may not be the right demand for e-business projects.

E-commerce can flourish anywhere if you build the right business model.

What if companies were compensated based on the value they created for their customers?

The Internet is emerging as a powerful connecting force, allowing firms to serve customers, collaborate with partners and suppliers, and empower employees more effectively than ever before. In the network economy, relationships with key stakeholders are becoming valuable assets of the firm, but few firms manage relationships effectively. A study proposes that firms need to take a more holistic approach to understanding where their relational equity resides and how it should be managed and measured. It also proposes that relational equity is not limited to relationships with customers but also includes relationships with partners, suppliers, and employees. Effective management of relational equity requires firms to think in an integrative manner along several dimensions: strategy, process, technology, organization design, and metrics. The study develops conceptual frameworks for each of these dimensions. Taken together, these frameworks offer a conceptual foundation for research and managerial practice on managing relational equity.

B2B exchanges failed because they got their business models backward.

It's time companies understand what customers are really worth.

A new model for managing distributed innovation, the community of creation is a governance mechanism for managing innovation that lies between the hierarchy- based (closed) mechanism and the market-based (open) mechanism for innovation management. The community-centric model shifts the locus of innovation beyond the boundaries of the firm, to a community of individuals and firms that collaborate to create joint intellectual property. A community of creation requires an identified sponsor, a set of ground rules for participation, and a system for managing intellectual property rights. The community of creation model allows innovation to proceed in a complex environment by striking a balance between order and chaos. This article presents detailed case studies from the computer industry to highlight the differences among the different approaches to innovation management. It also discusses the opportunities and the unresolved issues of the community of creation model for practitioners as well as for academics.

Understand what lies ahead for the Internet by looking to networks of the past.

In spite of the high financial stakes involved in marketing new motion pictures, marketing science models have not been applied to the prerelease market evaluation of motion pictures. The motion picture industry poses some unique challenges. For example, the consumer adoption process for movies is very sensitive to word-of-mouth interactions, which are difficult to measure and predict before the movie has been released. In this article, we undertake the challenge to develop and implement MOVIEMOD—a prerelease market evaluation model for the motion picture industry. MOVIEMOD is designed to generate box-office forecasts and to support marketing decisions for a new movie after the movie has been produced (or when it is available in a rough cut) but before it has been released. Unlike other forecasting models for motion pictures, the calibration of MOVIEMOD does not require any actual sales data. Also, the data collection time for a product with a limited lifetime such as a movie should not take too long. For MOVIEMOD it takes only three hours in a "consumer clinic" to collect the data needed for the prediction of box-office sales and the evaluation of alternative marketing plans. The model is based on a behavioral representation of the consumer adoption process for movies as a macroflow process. The heart of MOVIEMOD is an interactive Markov chain model describing the macro-flow process. According to this model, at any point in time with respect to the movie under study, a consumer can be found in one of the following behavioral states: undecided, considerer, rejecter, positive spreader, negative spreader, and inactive. The progression of consumers through the behavioral states depends on a set of movie-specific factors that are related to the marketing mix, as well as on a set of more general behavioral factors that characterize the movie-going behavior in the population of interest. This interactive Markov chain model allows us to account for word-of-mouth interactions among potential adopters and several types of word-of-mouth spreaders in the population. Marketing variables that influence the transitions among the states are movie theme acceptability, promotion strategy, distribution strategy, and the movie experience. The model is calibrated in a consumer clinic experiment. Respondents fill out a questionnaire with general items related to their movie-going and movie communication behavior, they are exposed to different sets of information stimuli, they are actually shown the movie, and finally, they fill outpostmovie evaluations, including word-of-mouth intentions.These measures are used to estimate the word-of-mouth parameters and other behavioral factors, as well as the movie-specific parameters of the model. MOVIEMOD produces forecasts of the awareness, adoption intention, and cumulative penetration for a new movie within the population of interest for a given base marketing plan. It also provides diagnostic information on the likely impact of alternative marketing plans on the commercial performance of a new movie. We describe two applications of MOVIEMOD: One is a pilot study conducted without studio cooperation in the United States, and the other is a full-fledged implementation conducted with cooperation of the movie's distributor and exhibitor in the Netherlands. The implementations suggest that MOVIEMOD produces reasonably accurate forecasts of box-office performance. More importantly, the model offers the opportunity to simulate the effects of alternative marketing plans. In the Dutch application, the effects of extra advertising, extra magazine articles, extra TV commercials, and higher trailer intensity (compared to the base marketing plan of the distributor) were analyzed. We demonstrate the value of these decision-support capabilities of MOVIEMOD in assisting managers to identify a final plan that resulted in an almost 50% increase in the test movie's revenue performance, compared to the marketing plan initially contemplated. Management implemented this recommended plan, which resulted in box-office sales that were within 5% of the MOVIEMOD prediction. MOVIEMOD was also tested against several benchmark models, and its prediction was better in all cases. An evaluation of MOVIEMOD jointly by the Dutch exhibitor and the distributor showed that both parties were positive about and appreciated its performance as a decision-support tool. In particular, the distributor, who has more stakes in the domestic performance of its movies, showed a great interest in using MOVIEMOD for subsequent evaluations of new movies prior to their release. Based on such evaluations and the initial validation results, MOVIEMOD can fruitfully (and inexpensively) be used to provide researchers and managers with a deeper understanding of the factors that drive audience response to new motion pictures, and it can be instrumental in developing other decision-support systems that can improve the odds of commercial success of new experiential products.

The dawn of the 21st century finds marketers in a cruel double bind. On one hand, customers are becoming very sophisticated and are demanding customized products and services to match individual preferences and tastes. These demand-side pressures are forcing marketers to adopt high-variety strategies. On the other hand, competition is becoming intense, fueled by industry convergence, deregulation, globalization, and internetworking. These supply-side pressures are forcing marketers to hold the line on prices. Platform thinking allows firms to overcome inherent contradictions in variety management by enabling simultaneous improvements in speed to market, cost, differentiation, and quality. The 5 most important dimensions along which a firm needs to think about platform strategy are the product platform, the customer platform, the brand platform, the process platform, and the global platform. The dimensions are briefly described and the common insights that tie them together are highlighted.

As place and time become increasingly irrelevant in the networked economy, vertically integrated mediators will find their franchises eroded by specialised mediators. These will offer better products and services at lower costs than full-service mediators. But in doing so, customers will be faced with a dizzying array of specialised product and service providers. Mohanbir Sawhney argues that this will in turn result in the emergence of "metamediaries", who will reassemble the offerings into bundles that are logically related from the customer's perspective. Metamediaries will reduce customer search and evaluation costs, and dramatically improve the efficiency of networked commerce transactions. Ultimately, they will make frictionless commerce possible. Further, disintermediation may not reduce the total cost of the transaction because it shifts some channel functions to customers. Customers need to search, evaluate, negotiate and configure products on their own, in the absence of mediators. To reduce the total cost, new mediators will be needed to assist customers in the search and negotiation process leading up to the transaction.

The primary objective of this paper is to develop a parsimonious model for forecasting the gross box-office revenues of new motion pictures based on early box office data. The paper also seeks to provide insights into the impact of distribution policies on the adoption of new products. The model is intended to assist motion picture exhibitor chains (retailers) in managing their exhibition capacity and in negotiating exhibition license agreements with distributors (studios), by allowing them to project the box-office potential of the movies they plan to or currently exhibit based on early box-office results. It is also of interest to practitioners in other software industries (e.g., music, books, CD-ROMs) where the distribution intensity is highly variable over the product life cycle and is an important determinant of new product adoption patterns. The model and its extensions are of interest to academic researchers interested in modeling distribution effects in new product adoption, as well as forecasters looking for ways to leverage historical data on related products to forecast the sales of new products. We draw upon a queuing theory framework to conceptualize stochastically the consumer's movie adoption process in two steps-the time to decide to see the new movie, and the time lo act on the adoption decision. The parameter for the time-to-decide process captures the intensity of information intensity flowing from various information sources, while the parameter for the time-to-act process is related to the delay created by limited distribution intensity and other factors. Our conceptualization extends existing new product forecasting models, which assume that consumers act instantaneously on the motivating information they receive about the new product. The resulting model is parsimonious, yet it accommodates a wide range of adoption patterns. In addition, the stochastic formulation allows us to quantify the uncertainty surrounding the expected adoption...

Consumer behavior researchers are getting more interested in the experiential aspect of consumption, which focuses on the fun and enjoyment that consumers derive from hedonic experiences. We build upon the experiential view of consumer behavior, and present an innovative modeling approach to studying the dynamics of hedonic consumption experiences. We develop a conceptual framework for the enjoyment of a hedonic experience, in which we propose that the enjoyment of the experience is an outcome of the dynamic interaction between stable individual difference factors, temporary moods, and the emotional content of the experience. We present an application of the conceptual framework in the context of a movie viewing experience. We model the interaction between the temporary moods of an individual and the emotional content of the movie as a stochastic process. This interaction determines the individual's instantaneous emotional states. We develop analytical expressions for the dynamic evolution of the probability distribution of the levels of achieved emotional stimulation, and, through individual difference factors, the expected enjoyment. All measurements are taken prior to watching the movie. We use these measurements to predict individual differences in the ex-post enjoyment of the movie. We present an empirical test of the movie enjoyment model (ENJMOD), and find encouraging results at the individual and segment level. We discuss the implications of our modeling approach for the segmentation and testing of movies, and for the prediction of consumer response to similar experiential products.

Brand marketers traditionally position brands based on the benefits of products associated with the brand. I suggest an alternative approach - to position brands based on an aspirational idea that is associated with the brand consumer. This landscape of ideas is the "ideascape", and it consists of a set of highly engaging and meaningful ideas that consumers can identify with. By positioning in the ideascape, brand marketers can engage in more meaningful dialogue with consumers, and they can leverage digital media to tell rich, contextual "brand stories". I highlight the different levels of the ideascape, and the challenges that brand marketers need to overcome when positioning in the ideascape.

The emergence of open standards and the consequent increase in the fragmentation of knowledge flows which are relevant for most of the industries of modern economies has changed the conceptual and practical interpretation of the management of innovation. By building on existing literature on distributed innovation and with a detailed evidence from a set of enlightening case studies, in this paper we gain two results. We first develop a taxonomy of four emerging modes of value creation and capture in the context of distributed innovation. We then analytically discuss the alternative strategic and organizational approaches through two sets of contingencies: (a) the key variables that guide firms to select the optimal model for creating value through distributed innovation; (b) the systems of incentives that help firms to extract value from the different models. In so doing we provide managerial guidance for value creation and capture in the networked world and derive implications for future research on these topics.

We review the emerging organizational forms that support distributed innovation and propose a taxonomy of organizational forms that range from community-centric to firm-centric mechanisms, and organic versus structured mechanisms. We emphasize the development of community-centric innovation and "open innovation" approaches.

This case examines the feasibility of introducing an advertising-based revenue model for a software company. The quantitative case requires students to assess the cannibalization of subscription revenues by the advertising-based line extension, and the impact of advertising-based price subsidy on profitability of the product line.

This case study examines the pros and cons of different organizational designs for solutions selling. It illustrates the challenges of creating customer-centric organizations while minimzing the risk and disruption of organizational change.

In 1994, Intel faced a fairly common problem for technology companies—an imperfection in one of its products. Intel's flagship product, the Pentium microprocessor that was the heart of most Personal Computers (PCs), was producing a very minor division error in the Floating Point Unit (FPU) when calculating reciprocal values. While such flaws or "bugs" are quite common for technology products, the Pentium floating point division error cascaded into a full-blown public relations disaster. It was not that Intel lacked the ability to filter significant, wide-reaching defects; it was not that they chose to disregard the error once it was discovered; it was not even that the situation was particularly unusual. In fact, the next version of Intel's FPU addressed the division error, and the company quietly made the necessary notifications. Rather, it was the way Intel responded to the discovery of the bug by one influential customer, Dr. Thomas R. Nicely. Having discovered the error independently, Dr. Nicely immediately contacted Intel but received no response. Ignored and frustrated, he reached out to other influential technology experts. The situation soon escalated via bulletin board posts, magazine articles, television coverage, and, finally, IBM's decision to halt all shipments containing the defective chip. In this scenario, we learn that it is not enough to deal with a crisis in customer perceptions logically and rationally; you need to treat perceptions as reality and respond to customer concerns with appropriate response strategies.

Modularity enables agilityHow does a company become agile without destroying its scale advantages? In the make-and-sell model, variety is an evil because choice is the enemy of scale. Customers now demand variety but this comes at a cost. So how can a company become agile without compromising its cost position? Business processes can also be made more agile and more effective by decoupling the front-end of the business process (the end closer to customers and markets) from the back-end of the business process (the back-office processes that support the front-end). The back- end can then be centralised to create shared services, and it can also be relocated to places where resources are more cost- effective. For example, GE has created a shared services operation called GE Capital International Services (GECIS) in India, to provide more than 450 business processes to GE businesses worldwide. This back-end is more efficient because it can benefit from greater scale as well as more cost-effective Indian talent. It is also more flexible, because it can be applied in a "plug-and-play" manner to any GE business, leaving the front-end business to focus on marketing, customer relationship management and distribution, where the most value is added. Modularity is also enabling agility at the level of industry value chains as vertically integrated companies become virtually integrated networks of companies, where each specialises in one part of the value chain and outsources the rest of its activities. Consider the operating model of Virgin Mobile in the US. The company outsources its network operations to Sprint and does not own a network. It outsources its IT operations, customer care, logistics and many other business processes to partners, focusing on building its brands and managing customer relationships. It is lean and agile and on track this year to become thefastest company to reach Dollars 1bn (Pounds 555m) in revenues in the US.

Should your customers compare prices, post opinions and pit you against your competitors? Absolutely.

Companies can open up their innovation and partner with external networks in more than one way. The question for companies and managers, however, is: how do you know which approach would be most appropriate for your company? This book will help managers find an answer to this important question. It describes the seemingly complex landscape of network-centric innovation – one that is populated by inventor networks, customer networks, supplier and partner firm networks, and open source communities – and offers a roadmap for companies to chart their own path for launching innovation initiatives that involve diverse external networks and communities. Examples and case studies from a wide range of companies and industries – IBM, P&G, DuPont, 3M, Dial, Staples, Unilever, Sun Microsystems, Merck, Salesforce.com, Boeing, Linden Lab (Second Life), etc. – are used to provide practical insights that managers can apply. Written in a highly accessible manner, the book helps managers go beyond the hype and philosophical discussions of open innovation and open source communities and focus on the real practical challenges they are likely to face in championing and leading their companies in network-centric innovation.

This is a textbook on strategic marketing that will use a process-based framework for conceptualizing strategic marketing as a set of adaptive processes for understanding, defining, realizing, delivering, capturing, communicating and sustaining value. The book is expected to be completed by summer 2005.

Edited volume of select essays from Kellogg TechVenture

Edited volume of select essays from Kellogg Techventure

Edited by Mohanbir S. Sawhney and Ranjay Gulati. Published as a CD-ROM and book.

We focus on two emerging patterns that characterize innovation in the knowledge economy: the role of customers in enacting and generating innovation; and the role of Information and Communication Technologies (ICTs) as enablers of innovation. The purpose of this book is to explore the collaborative potential that customers can bring to enhance the effectiveness of new product development in digital environments. We highlight the role that digital environments play in allowing firms to engage customers in product design and testing, through communities of creation, mediated innovation, and open innovation networks. The underlying theme of this book is that the Web has created the problem – an increasing need for innovation in a context where information is transparent, competitors are just one click away, and product lifecycles are shrinking. However, the Web also provides the solution - enabling new forms of value creation with customers and an efficient way to harness distributed competences.

Despite its clear leadership position, Blockbuster was running out of areas of high population density where new stores could be opened. As the growth and profitability of its traditional video rental business slowed, James Hilmer, chief marketing officer evaluated two growth opportunities: set up virtual reality parlors within existing video stores, the test marketing of which had shown positive results; or leverage its retailing skills by diversifying into specialty retailing of merchandise from entertainment properties of its partners Viacom and Paramount. In this case of growing a company by brand extension, Hilmer analyzes which option would let Blockbuster leverage its existing brand the most. How do the two market segments compare in terms of size, existing and future competition, investment requirements and returns and Blockbuster’s ability to grow and defend itself in the segment?

Jacob Matthews, chief strategy officer for Career Central Corporation, was faced with the challenge of growing the client base for CEC’s database of job seekers. While CEC had gained traction in signing up potential recruits, the number of employers using the site was still low and if the trend continued, the recruits might soon start leaving the site. To grow dramatically, Matthews was exploring the possibility of partnering with executive recruiters, search firms, and other online search firms. But how could he structure such partnerships without compromising the confidentiality of his candidates? How could he minimize the risk involved in trusting a third party with the company’s valuable database of employees? What was the value proposition that CEC offered its clients who currently used its competitors both online and offline? Refining the marketing message, structuring strategic partnerships, and consistently delivering on its promise were the issues that CEC had to address to grow its business.

Todd Wilson, manager of partner development at Educational Technology Corporation (ETC), needed to determine the targeting, positioning, and selling strategy for its innovative Interactive Mathematics software for the college market. He needed to decide what types of colleges to target, and what stakeholders to focus on within the institution. His task is complicated by the unclear objectives of non-profit institutions and by the differing motivations of teachers, students, and college administrators in adopting software-based learning technology. The case highlights the difficulties in innovation adoption within large non-profit institutions, and the challenges in marketing to institutions with complex decision-making processes, multiple influencers, and conflicting motivations.

Illinois Superconductor Corporation was a technology startup that came up with an innovative new superconducting filter for use in cellular base stations. It needed to estimate the demand for its filters. The manager came up with a simple chain-ratio-based forecasting model that, while simple and intuitive, was too simplistic. The company had also commissioned a research firm to develop a model-based forecast. The model-based forecast used diffusion modeling, analogy-based forecasting and conjoint analysis to create a forecast that incorporated customer preferences, diffusion effects, and competitive dynamics. Students are asked to use the data to generate a model-based forecast, and to reconcile the model-based forecast with the manager’s forecast. The case requires sophisticated spreadsheet modeling, and the application of advanced forecasting techniques.

John Williams, senior director of marketing for Microsoft's .NET, was trying to build the .NET brand, a comprehensive family of next-generation connectivity software products. This case highlights the challenges of branding and positioning a complex technology offering. The first challenge Microsoft faced was to develop a common definition of .NET, which had been in flux over the prior two years. The second challenge Microsoft had to consider was the choice between an umbrella branding strategy, a sub-branding strategy and an ingredient branding strategy. The third challenge was to create a value proposition that would appeal to three very different target audiences: business decision makers, IT professionals, and developers.

Elizabeth Sullivan, director of marketing for Motorola’s Wireless Data Group, was formulating the marketing strategy for their new wireless communicator, the Envoy. Early sales results for the Envoy as well as its competitors in the nascent Personal Digital Assistant (PDA) industry had been disappointing, and Sullivan was under pressure to change this situation. How should Motorola segment the market for wireless communications? What market segments should Motorola target with the Envoy? How should it position the Envoy? What should be the marketing mix for the Envoy? Sullivan’s short-term decisions had to consider the fact that she had limited control over changing the basic product, which was designed before she took charge of marketing the Envoy.

Jan Bakke, founder and chairman of Norway based MRT was planning U.S. market entry strategy for CardioScope - its electrocardiograph system. How could MRT get a foothold in the U.S. market against competitors who had been around for 50 years? How could he ensure that MRT would be able to defend itself once it entered the market? What segments should it target and how should it position itself?

Ontela, a technology start-up company, has introduced an innovative service called PicDeck that improves the mobile imaging experience for wireless subscribers. Ontela sells PicDeck to wireless carriers, who in turn private-label the service to their subscribers. Ontela must decide which customer segments it should target for the service and how to create a positioning strategy and a marketing communication plan to promote it. It must also consider the value proposition of the PicDeck service for wireless carriers (its direct customers), who need to be convinced that the service will lead to higher monthly average revenue per user (ARPU) and/or increased subscriber loyalty. Part A of the case provides qualitative information on customer personae that represent different customer segments. Students are asked to develop a targeting and positioning strategy based on this qualitative information. Part B provides quantitative data on customer preferences that can be used to identify response-based customer segments, as well as demographic and media habits information that can be used to profile the segments. Students are asked to revise their recommendations based on the additional quantitative data.

Ontela, a technology start-up company, has introduced an innovative service called PicDeck that improves the mobile imaging experience for wireless subscribers. Ontela sells PicDeck to wireless carriers, who in turn private-label the service to their subscribers. Ontela must decide which customer segments it should target for the service and how to create a positioning strategy and a marketing communication plan to promote it. It must also consider the value proposition of the PicDeck service for wireless carriers (its direct customers), who need to be convinced that the service will lead to higher monthly average revenue per user (ARPU) and/or increased subscriber loyalty. Part A of the case provides qualitative information on customer personae that represent different customer segments. Students are asked to develop a targeting and positioning strategy based on this qualitative information. Part B provides quantitative data on customer preferences that can be used to identify response-based customer segments, as well as demographic and media habits information that can be used to profile the segments. Students are asked to revise their recommendations based on the additional quantitative data.

This strategy simulation game focuses on dynamic decision-making in rapidly evolving technology markets. It addresses the challenges that incumbent firms face in dealing with disruptive technologies, in the context of the imaging industry. PhotoMax is an incumbent that makes cameras and film, and it must contend with a rapid but uncertain migration of its customers from analog technology to digital imaging technology. Key decisions that it must make include marketing decisions (advertising, pricing, retail channels), R&D decisions (product development strategy and spending), and partnering decisions (extent of technology licensing and licensing fees). PhotoMax must compete against another incumbent called Kanawa for market share, share of channels as well as share of complementors who join its partner ecosystem. Students are required to manage PhotoMax’s business over 20 quarters (five years) under 8 different user-selectable scenarios that vary the aggressiveness of the competitor, strength of network effects, and pace of demand change. The simulation provides a rich and challenging environment within which students can appreciate the interconnectedness of strategic decisions across functional areas as well as across time.

Chris Barnett, director of global business solutions for Rand McNally, was deliberating how Rand McNally should respond to the emergence of wireless technologies for its traditional business of providing static maps and route planning services. As maps became electronic, interactive, mobile, and enhanced with value-added features, Rand McNally’s mapping business was gravely threatened. Yet, the opportunities for Rand McNally weren’t obvious, and the pace at which wireless technology would disrupt its traditional business was also unclear. Chris was considering three opportunities: syndicate Rand McNally’s brand and mapping content to popular Web sites, become a provider of value-added services to businesses, or focus on automobile manufacturers and try to forge relationships for providing in-car mapping services. What kind of technology, organizational, and sales force restructuring would be required to align Rand McNally’s organization with the new environment? Should Rand McNally jump aggressively into the wireless business, or should it take a “wait-and-watch” approach?

Rockwell Automation’s Allen-Bradley division was considering how to deal with the threat posed by national distributors in the maintenance, repair and overhaul (MRO) business for its industrial automation products. National distributors were consolidating the MRO distribution channel, offering national account customers an integrated multi-channel solution for their MRO needs. Allen-Bradley had traditionally served its customers through high-touch, high-value-added local distributors, but this channel was inadequate for the demands of large MRO customers. An effort by Allen-Bradley and other manufacturers to create an industry-wide electronic sourcing consortium called SourceAlliance.com had failed. Now, the company had to choose between redesigning its traditional channel by creating a virtual network of local distributors, striking an alliance with a national distributor, or withdrawing from the MRO market. It had to contend with difficult channel conflict issues in choosing a channel strategy.

In December 1999, Thomson Financial (TF) began a radical transformation from 41 divisions toward a more integrated firm, organized around customer-segments. This required active, coordinated involvement from business, organization and technology functions, as well as sustained investment and execution through the crises of the technology market crash and September 11, 2001. By 2005 TF had emerged as one of the top three financial information firms globally (with Bloomberg & Reuters). LEARNING OBJECTIV Understand: 1. Building the customer-centric firm; ‘Synchronizing’ marketing (branding and sales), organizational, and technological infrastructure to focus on customer segments rather than products. 2. Making transformative, long-term investments under difficult circumstances. 3. Coordinating business, organization and technology strategies throughout a long-term transformation process.

A year into the launch of TiVo – the “revolutionary new personal TV service that lets you watch what you want, when you want” John Tebona, VP of business development, was faced with important decisions about TiVo’s revenue model and strategic alliances. As television moved from a network-based model to interactive TV, he had to decide what role TiVo would play in the emerging industry landscape. Would TiVo be just a set-top box or would it live up to the vision of revolutionizing the television viewing experience? What revenue streams should it emphasize to capture most value? What strategic relationships must TiVo form in an environment where companies were cross-investing in multiple technologies across different industry segments? How could it expand its customer base and accelerate its revenues before competitors like Microsoft’s WebTV became the default standard?

Steve Meyer, the chief marketing officer at Trilogy, was evaluating the best way to move forward with an innovative customer value-based pricing approach for its enterprise software solutions. Trilogy had radically transformed its business from a product-centric organization to a customer-centric organization, and value-based pricing was a pillar of this transformation. Meyer had to evaluate three pricing approaches: traditional license-based, subscription-based, and gain-sharing. He had to assess which pricing approach Trilogy and Trilogy’s clients would prefer, and the conditions under which gain-sharing pricing would work. He also had to address several adoption barriers that were preventing customers from embracing the gain-sharing pricing approach.