hype is gone. The tech mantra has switched from “revolution”
to “evolution,” and Kellogg School experts show
how business leaders can extract real value from innovation.
Matt Golosinski and Kari Richardson
All photos ©Nathan Mandell except as noted
was on its way to Silicon Valley, and in March of 2000, when
Kellogg School Professor Tony Paoni and his group of two dozen
TechVenture students landed there for the field research portion
of the popular Kellogg technology course, that meant the air
was filled with the scent of camellias — and the optimism
that came from a technology industry still riding the Internet
then firms were shedding jobs, the Valley still buzzed with
ideas, pitches, promises and money. Revolution was a cliché
tossed around by marketers who intended to sell pet food and
furniture through wires connected to computers. Rules were
changing, paradigms shifting and the 24 Kellogg students emerging
from their hotel into the cool morning piled into vans that
would take them to their first appointment: A start-up called
Parachute, a firm built around the concept of charging retailers
$39.95 to deliver luxury goods.
of TechVenture, an intensive hands-on Kellogg course established
in 1998 to give students a behind-the-scenes look at premier
technology firms, Paoni’s group formed part of the 150-strong
Kellogg contingent participating in the course, co-taught
by Professors Mohanbir Sawhney and Ranjay Gulati. A few days
before the 2000 trip, Paoni confirmed an exciting agenda for
arrived at Parachute promptly at 8:30 a.m.,” Paoni recalls.
“The company was located in an old warehouse. We knocked
the CEO answered the door with some unpleasant news: The cavernous
office sat empty, all the employees sent home. The company
had gone out of business.
was eerie,” Paoni says. “The cubicles were all
still piled with papers. Pens were poised as if someone had
just set them down. Voicemail message lights blinked on the
had burned through $12 million of venture funding, mostly
on an expensive software program and a fleet of 25 customized
PT Cruisers it planned to use to make deliveries. But the
company had delivered fewer than 100 items, one of many facts
the CEO shared with Paoni and his students during their sobering
CEO said, ‘Boy did I learn something,’”
remembers Paoni. “‘Just because we thought we
had a good idea doesn’t mean it was going to work.’
He said he was up all night wondering how it went so wrong.”
One of things he learned is this: Infatuation with the machine
— the black box, silver-bullet magic solution —
can create critical errors that leave CEOs alone in their
executive was hardly alone in pondering his company’s
fate, though. In the post-boom tech world, his tale became
an Everyman saga etched in silicon. What’s consistent
in these accounts is the seemingly inexplicable demise of
a company founded on a good idea. Kellogg School scholars
are quick to point out that having a good idea is like having
a fancy tool, but they caution that the tool cannot substitute
for a sound business model and skilled execution.
the Internet boom, companies snatched up new technologies,
assuming that these tools alone would transform their businesses.
They were wrong.
got scared they were going to be left behind, and that all
this new technology being created as a result of the Internet
going mainstream would somehow give them a competitive advantage,”
says Sawhney, the McCormick Tribune Professor of Technology
and director for the Kellogg Center for Research in Technology
now have too much high-tech gear. Their challenge today is
linking what they have to a viable strategy, contends Sawhney,
who teaches technology marketing and is co-author of The
Seven Steps to Nirvana: Strategic Insights into eBusiness
Transformation. He is also one of several Kellogg faculty
members engaged in fulfilling th]e Office of the Dean’s
vision to bring customized executive education to corporate
partners such as Microsoft, Boeing, and UBS, Switzerland.
is drugs, bugs and plugs,” Sawhney quips. One could
name a thousand examples and still not be done with the parade
of marvels: space-age tools that allow humanity to leave its
Neolithic past far behind in favor of the utopian future.
evolution, however, is not without potential hazards —
one reason why some industry observers, including Erik Davis
in his text Techgnosis, liken technology to the Trickster
figure, the ambiguous creator-destroyer-prankster that appears
in many cultural myths. Just as fire always requires someone
to tend it, so too, say Kellogg experts, does technology.
is a marvelous enabler, but we must keep our eyes on it to
ensure we direct the innovation in ways that maximize excellence,”
explains Kellogg School Dean Dipak C. Jain, a thought leader
in marketing and new product innovation. Jain insists that
executives should not embrace technology simply because it’s
there, but for its potential to leverage efficiencies and
cultivate closer customer relationships.
need talented, creative leaders to manage this innovation,”
says the dean. “Providing this exceptional level of
leadership is at the heart of the Kellogg School curriculum,
one that itself embraces continuous innovation.”
the Kellogg School’s achievement in developing its robust
Industry Management curriculum to provide both specialists
and general managers with the skills they need to manage and
market technology. The underlying assumption is that technology
now impacts every company.
the full-time MBA program has changed with the times, so has
the Kellogg Executive Education curriculum. It includes unique
courses, such as Driving
Strategic Results Through IT Portfolio Management, that
give managers a financially grounded way to optimize technology
investments. The course takes the mystery out of a process
that can seem driven by mania, rather than business fundamentals.
fast, but smart
Too often during the Internet boom, Jain believes, firms focused
on speed, getting to market first — often a legitimate
goal, but hardly the only consideration — and so let
ideas run unfettered by anything other than a vague strategy.
really think there was a kind of enchantment with technology,”
he says. “To a degree, this blinded people to the fact
that innovation demands strong leaders with vision to see
the road ahead, and the skills to execute a plan to take the
organization where it needs to go.”
the road ahead while traveling at the speed of fiber optics
isn’t easy. If any quality defines technology and innovation,
it’s the velocity with which markets change as they
adapt to increasingly demanding customers. It’s a condition
that Jain and Kellogg School marketing guru Philip Kotler
have termed the “nanosecond culture,” adopting
the expression from futurist Jeremy Rifkin and employing it
within the context of marketing leadership.
they act smart, companies can achieve a strong competitive
advantage by performing faster. They must become turbomarketers,
learning the art of cycle-time compression and speed-to-market,”
says Kotler, the SC Johnson and Son Distinguished Professor
of International Marketing.
speed is of the essence, it can also kill. The dot-com graveyard
is littered with companies done in by bad initiatives conceived
and executed under pressure. Those who have weathered the
storm have done so by balancing the need for speed with powerful
insights into their customers’ needs.
strategy in our world requires developing very deep core competencies
very fast, then applying that selection to build excellence
and customer value,” says Mark Pereira ’00, manager
of operations integration for Seattle-based Amazon.com. “The
tech sector has tended to overdeliver on technology while
underdelivering on the customer experience. Our job is to
create great customer experiences via technology, while continuing
to deliver customer value.”
echoes what Kellogg School thinkers believe: There’s
always pressure to innovate, and usually that translates into
greater complexity of products or services. What really matters
is how these offerings match customer needs.
authorities note that the tech industry craves novelty. There’s
a mercurial quality to technology, and a slick Trickster promise
that life will get much better if we just flip this switch,
press that button.
often is adorned with rhetoric that accents its promise, rather
than its reality.
C. Gerron Vartan
'67 says customer centricity is fundamental to success.
have to look at technology for what it is: A set of machines,
industries or abilities, rather than throwing this blanket
term ‘technology’ over everything that valorizes
the ‘new new thing’ without necessarily understanding
it, or how we want to use it,” says Kellogg Marketing
Professor Robert Kozinets, an anthropologist by training,
whose research considers “technocultural consumption,”
the intersection of technology, marketing and postmodern culture.
often touted as winners — Customer Relationship Management
(CRM) platforms or Enterprise Resource Planning (ERP), tools
that enable firms to turn mountains of data into useful information
that lets them better understand their business and their
customer — won’t work miracles in a vacuum.
have gotten sick of the overpromise, underdeliver,”
says Gulati, the Michael Ludwig Nemmers Distinguished Professor
of Strategy and Organizations at Kellogg. Gulati, along with
Paoni and Sawhney, is editor of TechVenture:
New Rules on Value and Profit from Silicon Valley as well
on Innovation and Technology. In his strategy implementation
course, he teaches Kellogg students how to move beyond hype
to execute strategy that uses technology to create intimacy
with the customer.
are now saying ‘I want to see tangible payoffs for adopting
your technology,’ insists Gulati. “They’re
not buying into hype. A few years ago, people thought IT was
going to solve all our problems. Absent changes in organizational
processes, IT can’t solve anybody’s problems.”
case of the missing customer
During the boom, businesses did expect technology to solve
big problems, and create bigger fortunes. A company that grew
infatuated with its technology often forgot the needs of the
customers it was supposed to serve.
of the giddiness created by the stock market’s rise,
but also because the people driving the creative process,
often engineers and scientists, were unfamiliar with the marketing
insights that could have helped them understand their customer.
alum C. Gerron Vartan ’67 is president and CEO of Bay
Area-based Aegis Partners, a marketing consulting firm that
specializes in the technology industry. Vartan was one of
those involved with creating the original 1984 brand strategy
for Microsoft. Since then, he’s worked with many tech
firms to develop strategies to connect companies with their
customers. It has not always been easy.
'00 (left) and Jennie Tsai '00 keep Danger.com in the
word ‘customer-centric’ was just a really interesting
hyphenated term to many of these companies that were driven
by the ‘build it and they will come’ paradigm,”
Vartan says. “What masked the problem behind this model
was that all through the 1990s you could build it and people
would buy it.”
the dot-com crash was less a product of e-commerce quirks
than a byproduct of the culture of established technology
companies. “It’s in the DNA of many of these firms
to think that building more and more features into the products
will win the day, while having little regard for customers’
views or competitors’ alternatives,” he says.
oversights are no longer tolerated, says Gulati. As technologies
mature, barriers to entry diminish, creating more competition.
New companies benefit from the research and development of
earlier players. Customers also expect more for less and care
less about incremental improvements. As a result, technology
firms must differentiate based not on gadgets but on “total,
requires you to think of your customer in holistic terms,
and your product as more than just a box,” Gulati explains.
“Now, saying you’re going to provide customer
solutions is easy, but how do you achieve it organizationally?
How do you also tackle strategic questions such as pricing
and architecting your solution?”
says that a company’s culture and organization proves
key. While recent studies report that about 60 percent of
CEOs polled believe their companies are selling solutions,
he believes that many executives confuse solutions with the
bundling together of multiple products or services under a
single offering, usually at a discount. The first step toward
offering solutions is getting multiple functional and product
areas inside the firm talking to one another.
“At the end of the day, if you don’t execute you’ll
time to think?
The high expectations swirling around dot-coms — and
the subsequent rapid demise of many of them — didn’t
come as a surprise to J. Peter Murmann, Kellogg assistant
professor of management and organizations, who has studied
the adoption of technologies from radio to synthetic dye.
you see frequently with new technology is an overshooting,
an overinvestment — and then there comes a shakeout,”
he says. “For anyone who’s studied the history
of technology, this is not a new thing. Just like other technologies
that came into being, the Internet might have a declining
point, but it is here to stay.”
alum Gil Penchina ’97 is responsible for corporate development
at Palo Alto-based eBay.com, one of the Internet success stories
to date. Penchina is also a self-described Silicon Valley
history buff whose views on the dynamics of his industry echo
Murmann’s. He notes that the latest shakeout is nothing
intrinsically new, and cites various computer, software and
biotech booms as evidence.
made the Internet boom different was that it didn’t
require an engineering or biology degree to be a player,”
Penchina says. “It was one of the few in the last 50
years where anybody could come in and claim to be an expert
entrepreneur or investor. That attracted a lot more people
a lot faster.”
perceives other distinctions between so-called old and new
the tech world involves more modular parts, the role of partnerships,
alliances, networks and ecosystems becomes critical in technology
markets, and managing all these elements is a critical skill,”
too, is conceptually different among technology firms compared
with their more traditional counterparts. Tech companies tend
to emphasize the corporate brand, rather than individual product
brands, since the products change so rapidly.
Sawhney sees differences in how technology firms do market
research. Customers’ needs are often unclear, and this
inability to articulate grows more pronounced in the high-tech
sector. So marketers must excel at understanding these needs,
relying significantly upon direct, ethnographic research.
This “contextual inquiry” is one Sawhney stresses
in his classes.
key is developing value propositions that stand the test of
time while devising platforms that can be flexible over time,”
of the tech industry demand skills “built for speed,”
but also require managers to understand the same business
fundamentals as in any industry.
dot-com companies had difficulty creating viable revenue models,”
says Dean Jain. “Their models often created value for
the customer without capturing that value to bring revenues
into the firms.”
Moseley ’00 agrees that the basics of business —
“Phil Kotler’s Four P’s” —still
apply in her job as director of marketing communications for
Danger.com, a Bay Area firm in the wireless communications
through all these strategic issues is as absolutely critical
for us as it is for any other industry; for us, it’s
just a matter of having a faster reaction time.”
in January 2000, Danger recently landed $35 million in Series
D funding for its Hiptop solution, a wireless all-in-one device
the firm sells to mobile operators. However, Moseley and fellow
2000 Kellogg alum, Jennie Tsai, Danger’s senior business
development manager, note that their industry can’t
take too much time pursuing traditional marketing strategies.
can’t afford to analyze trends and perform in-depth
studies of the marketplace, because things change constantly,”
says Moseley. “We have to take informed guesses and
make leaps of faith because we’re involved in real-time
dynamics apply for Dora Lee ’00. As product line manager
at Apple Computer, Lee must ramp up to meet today’s
in our industry is different than in others,” says Lee.
“Product cycles are shorter and shorter because competition
is fierce. Everyone is trying to capture customer mindshare
by delivering something that’s faster, better, cooler.”
acknowledges the “enormous pressures” under which
tech firms operate, and believes the half-life of information
will only get shorter. However, he says that too many technology
companies got away from the business basics.
principles of marketing are called principles for a reason,”
established in packaged goods marketing 40 years ago still
apply. Business-to-business people think the rules are entirely
different in their world, but they’re not. It’s
still about the fundamentals of being market-driven and customer-driven.”
leadership and innovation
The unraveling of so many dot-coms so quickly may have led
some business students to believe — wrongly —
that technology is an inconsequential area of study. While
Kellogg School tech gurus once were besieged with pleas from
students desperate to take their classes, they now find some
MBA candidates shying away for the wrong reasons.
tell students that 80 percent of them will not be working
on the supply side of technology, but 100 percent of them
will be users of technology,” says Sawhney. “Therefore,
you need to understand how to align and leverage technology
and business strategy — whether you are an investment
banker, brand manager or corporate finance executive.”
Professor of Technology Mark Jeffery agrees, saying that now
more than ever general managers must have a solid grounding
in technology. “It’s absolutely essential,”
he says. “Kellogg graduates who were unable to take
my course now contact me for the case packets and class notes.”
He shrugs and smiles. “They should have taken the class.”
(Fortunately, lifelong learning opportunities exist for alums
through Kellogg’s Executive
Education and the MBA Update & Leadership Series.)
Professor Shane Greenstein, an economics expert who teaches
strategic management in dynamic markets, his approach to his
subject has, paradoxically, remained both static and fluid
over the last several years.
philosophy was to stick to tried-and-true themes, teaching
the students frameworks that would last them a lifetime,”
explains Greenstein, the Elinor and Wendell Hobbs Professor
of Management and Strategy.
same time, I peppered my classes with updated cases and market
detail, showing students where recent events raised questions
about standard lessons.”
says that beneath much of the buzz about “revolutionary”
markets lie some familiar lessons: Strategy involves aligning
business organizations with market environments; markets tend
to evolve in predictable ways; organizations in these markets
tend to behave in particular ways.
Greenstein believes information-intensive domains are changing
fast and demand leaders versed in classic business fundamentals,
but who are able to move quickly in particular niches as they
Emily Edwards ’96, who works as an account director
for Teradata, a division of NCR, urges Kellogg students to
become students of technology and learn how it relates to
classic business models.
the use of information is just a fundamental part of business
strategy,” Edwards says. “It’s something
that all managers need to understand.”
as brand manager, marketers must understand how data warehouses
and data mining work in order to build and maintain effective
customer relationships. They must know how to execute direct
marketing campaigns using the latest tech tools.
Chopra, the IBM Distinguished Professor of Operations Management
and Information Systems at Kellogg, lists ERP and CRM as two
valuable, data-intensive tools that can help companies link
their processes across the entire organization, while generating
information that results in more intimate customer relationships.
However, having the data is just the first step.
big value comes once I have all this data and can plan better
and make better decisions,” he says. “Market research
teaches business students how to do this. Technology begins
to automate those models. That technology in the hands of
someone untrained is a deadly weapon.”
agrees, saying that a marketer who doesn’t have a clue
about CRM, for example, won’t be able to exploit its
capabilities. “That’s why we are insisting in
the marketing curriculum that our students become technical
too,” he says.
School’s technology offerings can be divided into two
tracks: horizontal and vertical. The horizontal track is for
generalists looking to develop strategic fluency, while students
seeking a deeper knowledge can take the intensive vertical
these innovative courses is Professor James Conley’s
Intellectual Capital Management. It drives home the need to
methodically manage the intellectual assets that result from
innovation and branding activities, including protecting a
firm’s investment in innovation through copyrights and
patents, for instance, that can help sustain competitive advantage.
have made Kellogg a leading-edge model for other MBA schools,
but Kellogg has eschewed trends.
Kellogg technology curriculum was never about the NASDAQ and
will never be about the NASDAQ,” Sawhney says. “I
started my technology marketing course in 1994 and I’m
still teaching the course. It was always called ‘technology
marketing.’ It was never called ‘Internet marketing.’”
of the Kellogg technology curriculum, completed in 2002 by
Jeffery, found the school offered a greater variety of technology
courses than any of its peers. Students who are especially
tech-minded might register for TechVenture, the field-study
course that has produced two texts consisting of student-faculty
case study collaborations on promising firms and technologies.
initiatives are one important way we nurture our students
so that they develop their own thought leadership skills,”
says Dean Jain.
innovation-minded students organize the annual Kellogg School
Digital Frontier Conference. But even the technophobes among
the student body realize that technology is nearly impossible
to escape — especially on campus.
they begin their first day of classes, some students complete
online learning modules as a way to sharpen their accounting,
microeconomics, math or statistics skills. Once classes start,
they discover that class speakers and conference addresses
they may have missed are often available on the Kellogg Web
Grimsted, associate dean of finance, planning and technology
at the Kellogg School, is charged with sorting out which technologies
are likely to enhance the student and alumni experiences.
Grimsted predicts Internet video will play an even more significant
role in the future.
learning may help Kellogg develop curricula for custom Executive
Education clients. For example, a firm might send a handful
of its people to Evanston to learn from the Kellogg faculty.
Faculty might then travel to the company to teach a second
group of employees. But a third group — as many as 5,000
people — could use distance learning to study a shortened
version of the course, Grimsted says.
will also continue to strengthen the connection between alumni
and Kellogg, Grimsted says. The school soon will introduce
a next-generation system that allows grads to form virtual
the principles to work
has always prepared students to be leaders in their fields,
using experience to guide future choices, these days there
may be few options for some decision makers other than to
pave their own way.
you’re working in high technology, you’re creating
your own footsteps because there are none to follow,”
says Professor Alicia Löffler, director of the Kellogg
Center for Biotechnology.
especially true in biotechnology, where leaders not only blaze
trails, but confront ethical choices — from cloning
to the use of stem cells.
Microsoft marketing executives Mich Matthews (left) and
Steve Petitpas have helped create a thriving partnership
with the Kellogg School.
is extremely important when technology moves so fast,”
Löffler says. “Government usually can’t react
fast enough. That’s one of the challenges we face at
Kellogg, to teach managers to make these decisions, because
the decisions they make will not only affect their employees,
but the rest of society, and even the direction of nature.”
the ideas discussed at Kellogg not only affect the school’s
students, faculty and staff, but are increasingly having real
impact in the larger business world, through Kellogg partnerships
with industry leaders and customized Executive Education delivered
both in Evanston and around the globe.
nowhere are the challenges, and results, of this collaboration
more visible than at Seattle-based Microsoft Corp., a firm
that by its own admission can be resistant to outsiders. When
this industry leader wanted to rejuvenate its marketing approach,
it turned to Kellogg for the insights to get the job done.
outsiders may look at us and say, ‘Whoa! Marketing machine,’
internally we’re looking at ourselves and seeing areas
that could benefit from a new approach,” says Mich Mathews,
corporate vice president of marketing for Microsoft. She and
senior management have been “delighted” with the
1-year-old partnership, because of the Kellogg School’s
expertise and ability to deliver customized excellence that
produces immediate benefits.
did not come in here simply with an offer of spotty executive
lectures,” Mathews says. “They embraced our business
problems in an effort to solve them. This partnership has
challenged us and brought back rigor and discipline”
into how Microsoft thinks about marketing strategy.
Microsoft CEO Steve Ballmer: “The training our partnership
with Kellogg is bringing to Microsoft is a cornerstone of
our efforts to develop our marketing profession. Through their
contact with hundreds of our marketers around the world, Kellogg
is showing us how to become more customer-centric.”
speak for themselves: Courses such as Doing Marketing @Microsoft
have generated some of the very highest executive responses
in the company’s history.
Kellogg, I knew we were not just going to learn in the classroom,
but we were also going to learn first-hand about what customer-centricity
really is,” says Steve Petitpas, director of Marketing@Microsoft
Professional Development in the corporate marketing group.
Kellogg influence has not stopped at the classroom, according
to Dave Perry ’88, the Kellogg alum who helped spark
the partnership and who says it’s been the most fulfilling
project he has ever been involved with.
Kellogg training is not only having a great impact on Microsoft’s
marketing function; it’s also starting to have an impact
on the entire corporate culture there,” says Perry,
formerly a director of marketing at Microsoft where he worked
for 10 years, who is now serving in a marketing role with
Seattle-based board game company Cranium. “I knew Kellogg
would do a great job, but I’ve been overwhelmed at just
how hard Professor Sawhney and Dean Jain have worked at this.
I don’t think I’ve ever worked with people of
Kellogg School partnerships have enjoyed similar success.
One was born after a group of Conley’s students completed
a project for Motorola, exploring ways the company could find
external markets for software and other IT products it had
created and used internally.
could not have been more delighted with the students’
work and they wanted to take it to the next level,”
recalls Conley. “They asked, ‘How do we capture
more of this in a focused way, so we can bring some of this
outside thinking into our planning and see beyond the limitations
of our corporate world?’”
Motorola Research Scholars Program, now entering its second
year, puts selected Kellogg School students to work on a research
question of interest to academics as well as managers in the
Jonnalagadda, one of two current students chosen for 2002
in a competitive review process, explored the concept of “orphan
assets” — intellectual property that is ignored
because it does not coincide with a company’s core business.
partnerships with top companies, such as Microsoft,
deliver customized thought leadership that produces
real-world benefits. Left to right: Dave Perry '88,
Microsoft CEO Steve Ballmer and Kellogg
Dipak C. Jain.
Motorola spends some $4 billion each year on research and
development, the financial implications of the research are
critical to the company and potentially worth billions, says
Toby Redshaw, Motorola’s corporate vice president of
IT strategy, global e-business and architecture. Jonnalagadda
will present his research results to the company this spring.
job is to transform IT at Motorola. To do that I have to engage
people who will challenge me,” Redshaw says, adding
that Kellogg students have proven smart, capable and unafraid
to tackle problems in new ways.
Bockelman, also a Motorola Research Scholar for 2002, used
his project to explore Web services, an emerging paradigm
for managing information technology.
as researchers can sit around and come up with great questions
to answer all day long,” says Robert Wolcott, a research
fellow with Kellogg’s Center for Research in Technology
& Innovation, who works with the Motorola Research Scholars,
alongside Conley and other Kellogg professors. “But
it’s even better when you get private sector partners
because they can help you validate whether the questions you’re
asking are not only the right ones, but the questions that
have the most impact.”
of Kellogg’s partnerships began when Mark Jeffery looked
to Teradata to help him put together cases for the new Kellogg
class on IT portfolio management.
cases turned out to be very high quality and we began to think
about how we could leverage what we’d done before,”
Jeffery recalls. “The natural next step was to think
about collaborative research.”
research on how to use real options to value enterprise data
warehouse — the company’s product — evolved
from the relationship. “It’s quantitatively difficult,
but it has a lot of value. No one else has done valuation
of this kind of system,” he says.
also has sponsored Gulati’s research on the critical
enablers for companies that successfully implement enterprise
data warehouse systems. Gulati is working on a benchmarking
survey that will help determine what these companies’
best practices are. At present, he notes that as many as 60
percent of firms with CRM type applications in place are still
not getting the total value from it, a fact he says illustrates
the importance of aligning the technology with “massive
organizational adjustments” to deliver results.
wave — focus on business sector
of the attention during technology’s first wave focused
on the consumer sector, Kellogg experts such as Sawhney say
the potential for innovation to transform the business-to-business
quadrant is enormous.
cites innovations, such as fuel cell technology, which promise
to be huge. He notes that Iceland is already taking steps
to make their country nearly free of fossil fuels within the
next 10 years, turning instead to wind power. Optical networking
and interactive TV are also increasingly close to being marketable
realities, and he reports that interesting developments in
telemedicine, particularly in diagnostics, deserve attention.
Wireless applications may soon allow companies to track containers,
the location of vehicles or other elements in a supply chain
using tiny sensors — some as tiny as dust particles.
is enthusiastic about such possibilities, but like Sawhney
warns that the technology must be integrated properly for
maximum benefit. With that caveat, Chopra sees Collaborative
Planning Replenishment and Forecasting technology having a
big impact by allowing companies to collaborate across the
supply chain. This technology is not new, but has habitually
been underutilized. The reasons tend to have less to do with
the hardware than they do with people.
issues are much more organizational,” he says. “They
involve incentives and achieving cooperation and trust within
the supply chain. These were the same issues 15 years ago,
and they are the same issues today.”
Jose-based Redback Networks, a player in the telecommunications
equipment marketing place, Manish Gupta ’00 is also
focusing on the integration of existing technology rather
than looking too far into the future. Gupta, director of marketing
and business development for Redback, notes that technologies
such as ERP, CRM and distributed computing were widely believed
to deliver significant savings to customers in the late 1990s.
Today, he says the data suggest a more limited impact. He
contends the challenge for marketers now is to better communicate
the benefits of technology to their clients, instead of relying
completely on CRM. For that, Gupta notes, even general managers
need to understand the technology.
Ron Swift, vice president of strategic customer relationships
for Teradata, looked to a Kellogg partnership to ensure
his company's data warehousing products meet customer
future, as he perceives it at Redback, is about “articulating
a marketing strategy that does not promise a revolution, but
an evolution of existing telecommunications networks and services.”
thinking is at work in the data storage space, according to
Blake McConnell ’98. As business development manager
for Mountain View, Calif.-based Veritas Software, a leading
provider of storage software and data management solutions,
McConnell works with companies such as IBM to develop partnerships
that deliver high availability solutions to enterprise customers,
by increasing performance and filtering out data that’s
redundant or noncritical. To achieve this goal, he says, many
companies demand that the solutions use the firm’s existing
Afèche, assistant professor of managerial economics
and decision sciences, thinks that information technology
holds much potential as an enabler for optimizing business
processes, ranging from procurement and distribution to targeting
customers and revenue management.
first phase of the Internet commercialization focused on big-picture
changes,” Afèche says. “People thought
entire industry structures would completely change and were
dreaming about running new companies that would crush the
the dust has settled, people focus more on using information
technology to improve their business. But solving problems
and transforming key processes using technology may seem more
straightforward than it actually is, he says.
a big difference between two businesses, one that can successfully
identify and execute process improvements and the other that
cannot,” Afèche says. “Being able to do
it is not luck.”
vice president of strategic customer relationships for Teradata,
agrees that technology, used well, separates top performers
from the rest of the pack. Teradata helps companies integrate
multiple data channels to get one view of their customers
using the enterprise data warehousing approach.
can make a significant difference when applied to creating
business intelligence and making timely, more effective decisions,”
systems have made it possible for airlines to phone frequent
customers with the news their flights will be delayed. They
allow cell phone companies one last pitch to keep disgruntled
customers by giving call centers information they need about
length of service, repair history and plan volume. Banks,
retailers and suppliers have been other big winners.
of the barriers companies often encounter when they try to
implement sophisticated systems, Afèche says, is the
amount of information involved. While collecting volumes of
data is now virtually effortless, using the information to
increase sales, serve customers better or improve a product
is not so easy.
aims to help Kellogg students sort through the complexities
with a course he will develop. Students who register for this
future offering would take a key set of business problems
and decide on appropriate analytical methods to solve them.
will be a course that focuses on the systematic selection
and use of analytical tools and decision support technologies
to improve business processes,” Afèche explains.
says one way companies have begun using technology to their
advantage is by redrawing the boundaries of their firms. Among
other things, modern information systems allow companies to
keep a tight rein on product quality data and communicate
changes in product design quickly to the manufacturer.
used to be very vertical,” Paoni says. “They owned
all of the assets it took to process and handle their various
functions. Today, I don’t need to own the manufacturing.
I can have it outsourced.”
urges students to separate what he calls “little pi”
thinking from “big PI” thinking. The former refers
to “process improvement,” or making an existing
process faster, better or cheaper, while the latter means
“process innovation,” or starting from scratch.
During the next wave of technology, Paoni predicts firms will
move beyond what he calls “yesterday’s thought
processes,” freeing them up to redefine their companies.
you take a business process that was created decades ago and
apply computer technology to that process you are paving a
cow path,” Paoni says. “You are applying technology
without rethinking the fundamentals. Instead of making the
current process more efficient, people are stepping back and
saying, ‘Lets take a clean sheet of paper.’”
Research Scholars Shantaram Jonnalagadda '03 (left)
and Andrew Bockelman '03 (right) with Robert Wolcott,
a research fellow in the Kellogg Center for Research
in Technology and Innovation.
anyone count out the Internet as a way of doing business,
Sawhney says that would be a mistake. While the tendency during
the medium’s high-flying days was to overestimate its
potential, these days the pendulum may have swung too far
in the opposite direction.
may be one of the areas that best illustrates both the promise
and the challenge of a high-tech future. While stem cell research
and “personalized medicines” specific to an individual’s
genetic makeup provide hope for a time when diseases will
be erased from the genetic code, getting there is not so simple.
just one new biotechnology product takes an average of 10
to 15 years and about $800 million, says Löffler. What’s
more, winnowing the truly revolutionary from the duds is a
process that takes years and millions of dollars. Just one
in 10,000 attempts to produce a new product is successful,
and only one of three drugs ever recovers the cost of production.
companies traditionally have been extremely dependent on capital
markets for funding. Start-ups, especially, are feeling pains
from investors’ low tolerance for risk, which has plummeted
along with the NASDAQ. That reluctance to invest might limit
the number of promising therapies in the pipeline.
value chain of innovation is extremely fragile. If any of
the links of that chain weaken, the innovative fabric in the
U.S. will disappear,” Löffler says.
question for Kellogg experts is, “What does it all mean?”
How will businesses use the Internet, wireless communication
and other new technologies in the future?
have a very hard time predicting what a technology can do,”
Murmann says. “IBM, when they were first talking about
computers, thought they would sell five computers in the entire
on, people envisioned radio as an alternative to the telephone,
a method of point-to-point communication between ship captains,
for example. And the pioneers of the Internet thought they
were creating a tool to link universities and research centers.
have a history of quickly figuring out ways to channel technology
into new uses, says Kotler. Radio, they discovered, could
broadcast product advertisements to millions, and phones could
be used to reach customers at home with a sales pitch.
marketers now use the Internet to interact with communities
of their customers, gather sophisticated demographic information
and promote their products shouldn’t come as a surprise,
of the advances in communications have been brought into use
by advertisers and marketers,” Kotler says. “The
Internet and computer applications have just opened up new
equally important to tend the fire of these possibilities.
Kozinets cautions that technology appeals to our desire to
be more than our nature allows — the old Faustian gamble.
What is the impulse behind the Internet, for instance, but
an attempt to be omniscient, to know everything and be connected
to every place at once?
can lead humanity down as easily as up, notes Kozinets, who
hardly considers himself a technophobe. Yet he believes that
the desire for transcendence that is part of our love affair
with technology can prove destructive.
it’s an urge to transcend our bodies. It’s very
artificial — in the literal sense of building artifice
— and that can be very alienating,” he says.
the future holds, one thing is for certain. Technology will
continue beguiling us with promises that will demand leaders
whose skills are even more formidable than those of Aladdin,
who found he had to compel the genie in the lamp to keep its
word and deliver the treasures pledged.
the boom, people forgot that the ‘e’ in e-business
really meant ‘enabling,’” says Gulati. “The
Internet itself is not a business. The Internet is an enabling
communications tool to help you help your business. You have
to provide the magic, and the sweat.”