implementationimplementation cps 181s feb 20, 2003
TRANSCRIPT
ImplementationImplementation
CPS 181s
Feb 20, 2003
QuestionsQuestionsQuestionsQuestions
What is online implementation? Why does implementation matter? What is the deliver system? What are the categories of offline innovation? What is the offline innovation process? What is the new logic behind eCommerce innovation? What are the eCommerce innovation processes?
ImplementationImplementationImplementationImplementation
Delivery of the Offering to Target Customers
PeopleSystemsAssets Processes Supply chains
Innovation - Internet Requires Continual Revision of:
StrategiesOfferingsInterfaces
Change Driven ByChange Driven ByChange Driven ByChange Driven By
Evolution of technologyNew competitorsChanges in customer preferences
(and demographics) New collaborators
eCommerce Evolution and Need for Continuous InnovationeCommerce Evolution and Need for Continuous InnovationeCommerce Evolution and Need for Continuous InnovationeCommerce Evolution and Need for Continuous Innovation
BRAND PROMISE Branding Marketing Communications Customer Interface
BRAND PROMISE Branding Marketing Communications Customer Interface
IMPLEMENTATION
Deliver on the promised
experience
Renew/Innovate thecustomer experience
Source: Monitor Analysis
Objectives Achieve strategic goals Adjust product offering
and delivery system to rapidly changing ecommerce environment
INNOVATION PROCESS
DELIVERY SYSTEM
Does Implementation Matter?Does Implementation Matter?Does Implementation Matter?Does Implementation Matter?
Source: Modified version of materials in The Marketing Edge by Thomas V. Bonoma. 1985. New York: The Free Press.
Why Implementation MattersWhy Implementation MattersWhy Implementation MattersWhy Implementation Matters
Success
All that can be done to assure success has been done
Success
All that can be done to assure success has been done
Roulette
Good execution can mitigate poor strategy, forcing management to success
or Same good execution
can hasten failure
Roulette
Good execution can mitigate poor strategy, forcing management to success
or Same good execution
can hasten failure
Trouble
Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies
Trouble
Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies
Failure
Difficult to diagnose - bad strategy masked by poor execution
More difficult to fix - two things are wrong
Failure
Difficult to diagnose - bad strategy masked by poor execution
More difficult to fix - two things are wrong
Poor
Good
Appropriate Inappropriate
Strategy
Implementation
Customer Driven
Customer Driven
Organization Driven
Organization Driven
More visibility of errors = stronger
competitive implications of errors
More visibility of errors = stronger
competitive implications of errors
Lower switching barriers = increased importance of good
implementation
Lower switching barriers = increased importance of good
implementation
More complex linkages = increased
complexity of implementation
More complex linkages = increased
complexity of implementation
More fluid organizational boundaries =
increased complexity of implementation
More fluid organizational boundaries =
increased complexity of implementation
More dynamic market environment =
increased complexity of implementation
More dynamic market environment =
increased complexity of implementation
Challenges of On-Line Challenges of On-Line ImplementationImplementation
Challenges of On-Line Challenges of On-Line ImplementationImplementation
The Effects of Poor ImplementationThe Effects of Poor ImplementationThe Effects of Poor ImplementationThe Effects of Poor Implementation
For ecommerce, fulfillment is the top complainteBay’s network shutdown
> largest online trading community> network shutdown caused 20% decrease in stock and loss
of significant revenues> lost of listing fees for items offered during the outage due
to outraged customers> caused loss of confidence
Buy.com Pricing and FulfillmentBuy.com Pricing and FulfillmentBuy.com Pricing and FulfillmentBuy.com Pricing and Fulfillment
Sells at low or no margins with a model to advertise to customer base
Outsources most of its infrastructure (customer support, fulfillment)
Developed poor reputation of backordering products due to lack of delivery control
Law suits for intentionally mispricing products Significant stock price decrease
Buy.com
What is the Delivery System?What is the Delivery System?What is the Delivery System?What is the Delivery System?
Must deliver total customer experience that the brand communication has promised
Must correctly execute transaction initiated through the customer interface
Delivery system is most detailed and concrete expression of the company’s value proposition
The Five Components of the The Five Components of the Delivery SystemDelivery System
The Five Components of the The Five Components of the Delivery SystemDelivery System
People (key for successful internet companies)SystemsAssets (physical and information-based)Processes
Resource allocation processHuman-resource management processManufacturing and distribution processesPayment/billing processingCustomer support/handling processes
Supply chains
ProcessesProcesses
AssetsAssets
SystemsSystems
PeoplePeople
Source:Christensen, Clayton M. 2000. Meeting the Challenge of Disruptive Change. Harvard Business Review 78, no. 2 (March-April).
MAPPING THERESOURCE SYSTEM
DELIVERY SYSTEM
Supply ChainsSupply Chains
The Delivery System Needs to Support The Delivery System Needs to Support and Reinforce the Resource Systemand Reinforce the Resource System
The Delivery System Needs to Support The Delivery System Needs to Support and Reinforce the Resource Systemand Reinforce the Resource System
B2C - Business to ConsumerB2C - Business to ConsumerB2C - Business to ConsumerB2C - Business to Consumer
Stock it Yourself.
Outsource Warehousing
Drop Ship
Fulfillment intermediaries
Stock it Yourself.
Outsource Warehousing
Drop Ship
Fulfillment intermediaries
Four Types of Supply Chains Found In Four Types of Supply Chains Found In B2C eCommerceB2C eCommerce
Four Types of Supply Chains Found In Four Types of Supply Chains Found In B2C eCommerceB2C eCommerce
Business-to-Consumer (B2C) Business-to-Consumer (B2C) Supply ChainsSupply Chains
Business-to-Consumer (B2C) Business-to-Consumer (B2C) Supply ChainsSupply Chains
Online retailers do not need to have physical inventoryProvides flexibility in designing supply chainsMore complex than offlineMany web deliveries are time-sensitive and small packageDifferent from periodically fulfilling standard ordersNo predictable routes and volumesFulfillment is weakest linkReturns cost four to five times offline
Consumer-to-Consumer (C2C) Consumer-to-Consumer (C2C) Supply ChainSupply Chain
Consumer-to-Consumer (C2C) Consumer-to-Consumer (C2C) Supply ChainSupply Chain
eBay serves as platform for community of buyers and sellers to interact
Income from sliding scale of transaction fees
e-Commerce Innovation e-Commerce Innovation ProcessProcess
Labs Primary
Activities Time
Frame Innovation
Type
Division Labs
Product development
Product control
Technical service
Today’s business 0–3 Years
Line extension
Sector Labs Sector
technology development
3–10 Years
Changing the basis of competition
Central Research New
technology development
10+ Years
New industries
3M’s Research Paradigm
Key TakeawaysKey TakeawaysKey TakeawaysKey Takeaways
Source: Gundling, Ernest. 2000. The 3M Way to Innovation. Tokyo: Kodansha Int. Ltd. And New York, New York: Kodansha America, Inc.
Traditional off-line innovation took years and emphasized sustainable / gradual innovation
eCommerce still offers room for incremental innovation, but emphasis shifts to more drastic innovations
High information content of innovation objects increases speed of innovation: from years to months or even shorter
Short history of eCommerce means new collaborators / complementors become available frequently
Traditional off-line innovation took years and emphasized sustainable / gradual innovation
eCommerce still offers room for incremental innovation, but emphasis shifts to more drastic innovations
High information content of innovation objects increases speed of innovation: from years to months or even shorter
Short history of eCommerce means new collaborators / complementors become available frequently
Innovation Used to Be Slow and Innovation Used to Be Slow and Gradual in the Off-Line WorldGradual in the Off-Line World
Innovation by DoodlingInnovation by Doodling
Innovation by DesignInnovation by Design
Innovation by DirectionInnovation by Direction
The Off-Line Innovation Process Was The Off-Line Innovation Process Was Internal To The FirmInternal To The Firm
The Off-Line Innovation Process Was The Off-Line Innovation Process Was Internal To The FirmInternal To The Firm
What is the New Logic Behind the What is the New Logic Behind the eCommerce Innovation?eCommerce Innovation?
What is the New Logic Behind the What is the New Logic Behind the eCommerce Innovation?eCommerce Innovation?
Fundamentally shaped by the online nature of online businessNew innovation frameworks try to incorporate the new focus on co-evolving
technology and customersNew innovation processes that are emerging as applied version of these new
innovation frameworks High investment costs as key constraint in innovation selection process – higher in
offline relative to onlineLocus of innovation selection moving outside the firm’s boundaries – focus moves
from inside to outside the company and the market, and can get direct customer feedback
Adaptive innovation instead of trying to “guess it right the first time” – “sense and response,” online eager to innovate and tolerate imperfections
Off-Line Trade-Offs/Principles Supporting Funnel Approach:
Off-Line Trade-Offs/Principles Supporting Funnel Approach:
On-Line Principles
On-Line Principles
Investments required to launch new innovation very high
Limited resources force tradeoffs / choices which innovations to pursue or not
Trade-offs / choices are made inside the organization before product hits the market
Time-to-market / first mover imperative needs to be traded off with extensive time required to gather customer input
Launching early increases risk of flops and flops need to be avoided at all times:
– Costs of flops very high– Significant damage to brand-equity
Investments required to launch new products and services very moderate
Choices about future of new innovations can easily be made by markets, no need to make these choices internally
First mover imperative can be aligned with gathering (more) customer input
Launching beta-versions allows for revisioning / customization, actually benefiting innovator
Keys drivers determining success of innovation / implementation are:
– Customer base– Customer data analysis– Knowledge management
Off-Line Innovation Process vs. On-Line Innovation ProcessOff-Line Innovation Process vs. On-Line Innovation ProcessOff-Line Innovation Process vs. On-Line Innovation ProcessOff-Line Innovation Process vs. On-Line Innovation Process
What are the eCommerce What are the eCommerce Innovation Frameworks?Innovation Frameworks?What are the eCommerce What are the eCommerce Innovation Frameworks?Innovation Frameworks?
Disruptive technologiesCreate entirely new market through the introduction of a new kind
of service or productTighter link between technological innovation and performance
demanded by customers
Source: Christensen, Clayton M. 1997. The Innovator’s Dilemma. Boston, MA: Harvard Business School Press.
TIME
PR
OD
UC
T P
ER
FO
RM
AN
CE
Disruptive Technological
Innovation
Performance Demanded at the Low End of the
Market
Performance Demanded at the High End of the
Market
Progress Due to Sustaining
Technology
Progress Due to Sustaining
Technology
New Innovation Frameworks Addressing New Innovation Frameworks Addressing Co-Evolution Have EmergedCo-Evolution Have Emerged
New Innovation Frameworks Addressing New Innovation Frameworks Addressing Co-Evolution Have EmergedCo-Evolution Have Emerged
Beta 1Initial Input
Initial Input
Evolution of Customer PreferencesEvolution of Customer Preferences
Product Release
Product Release
Evolution of Technical PossibilitiesEvolution of Technical Possibilities
Integrating eCommerce with Integrating eCommerce with Customer PreferencesCustomer Preferences
Integrating eCommerce with Integrating eCommerce with Customer PreferencesCustomer Preferences
Beta 2 Beta 3
Source: Iansiti, Marco and Alan McCormack. 1998. New product development on the Internet. In Sense & Respond. Boston: Harvard Business School Press.
The Development of Navigator 3.0The Development of Navigator 3.0The Development of Navigator 3.0The Development of Navigator 3.0
FebJan AprMar May Jun Jul Aug
OBJECTIVES
Input from User Feedback
Beta 0 Internal
Beta 1
Beta 2
Beta 3
Beta 4
Beta 5
Beta 6
STABILIZE
INTEGRATION
FEATURE DESIGN AND CODING
FullRelease
SpecificationsCompleteStart
Source: Iansiti, Marco and Alan McCormack. 1998. New product development.
Distributed InnovationDistributed InnovationDistributed InnovationDistributed InnovationCUSTOMERS COLLABORATORS
ENABLERSSUPPLIERS
COMPETITORS COMPANY
. .
..
.= Boundaries of the firm
= Feedback loop