Articles

When two business models, and two business units, make sense.

In theory, IT innovation is important — except it's often not a priority in company budgets.

When a crisis strikes, brands can avert backlash from consumers -- and even strengthen the brand -- with well-considered and thoughtfully deployed communication. Based on scientific research on persuasion, the authors present a comprehensive crisis communication framework to help restore consumer trust, illustrating these recommendations using cases of both successful and unsuccessful recovery from brand crises. The authors draw heavily on Toyota's recent experience in responding to the unintended acceleration of some of its vehicles. Toyota's responses provide examples both of what to do, and what not to do, when a company is accused of wrongdoing. The authors contend that there is no one best communications path to follow when a company is in crisis. Rather, they say, the best approach will depend on the answers to three central questions: Is the accusation prompting the crisis true? Is the crisis severe? Has the company established its brand as something that customers closely identify with? Taking these factors into account, a company might best be served by some combination of seven communications strategies. These strategies range from admitting error and apologizing on the one extreme to defiantly denying and wrongdoing and even attacking the accuser on the other. In addition to describing these seven communications strategies, the authors also lay out four lessons on corporate crisis communications that emerge from the Toyota debacle. One, in the Internet age, speed of response is imperative. Second (and a corollary to the need for speed), companies need to be ready for a crisis at all times, and have at hand a step-by-step protocol to follow when bad things happen. Third, it is essential that in a time of crisis, the CEO him or herself -- not lower level management--needs to step forward and publicly articulate the company's responses. And fourth, companies must not delude themselves that they can skate by while ignoring a crisis. Response is essential.

Sustainability initiatives have three stages, each requiring differing organizational capabilities.

A general assumption about innovation-oriented partnerships between companies is that success grows out of good relationships based on mutual trust, while poor cooperation and a lack of trust lead to disaster. Yet examples abound of high-trust partnerships that fail to innovate and of turbulent ones that succeed. Is trust in fact overrated? Is it sometimes an actual hindrance to innovation? Can we think in terms of an optimal level of trust -- not too little and not too much? Because case studies are not adequate for evaluating correlations between the level of trust and innovativeness -- it is impossible to disentangle trust from the many other contributing factors -- we set up a series of experiments, using pairs of individuals who already knew each other and who had sufficient prior experience together so as to have formed distinct trust perceptions. Results point to a major finding: As mutual trust increases, the partnership's creativity goes up, reaches a maximum point and then starts to decline. Similarly for innovativeness. As mutual trust increases, innovativeness also goes up -- but only to a certain point, after which innovativeness declines, even though it stays at higher levels because of greater commitment. We explain this seemingly strange pattern as follows: If a team enjoys a high level of trust and mutual caring, individuals might become too accommodating, quickly accepting their partners' ideas and thus reducing the amount of dynamic task-oriented conflict. The team might then have lower creative tension, consequently reducing the partnership's effectiveness. The bottom line: When inventing together, trust is good; but avoiding too much trust is better.

Supply chain managers can impact sustainability in areas such as packaging and transportation.

An interview with Thomas W. Malone, director of the MIT Center for Collective Intelligence, by editor-in-chief Michael S. Hopkins. These new technologies are not just fancy technologies that let individual people do different things better or faster. These new technologies change the essence of organizations. An organization itself is really primarily a huge human-based machine for communicating information and making decisions. And these new technologies are all about communicating information and helping to make decisions. So, to a greater degree than any technologies since, for instance, those that enabled the Industrial Revolution, we’re now in the midst of a transformation in how businesses are organized that is enabled this time not by new kinds of production technology, but by new kinds of coordination technology.

From Apple to Twitter, some of the most successful businesses are not what their inventors originally envisioned.

A new book argues that companies need to adapt to a fundamental change in business.

Many companies see customers’ product returns as a major inconvenience and an eroder of profits. But recent studies have begun illuminating the potential benefits of allowing customers to return products with impunity. This research finds that when a company has a lenient product-return policy, which allows customers to return almost any product at any time, customers are more willing to make other purchases, thereby raising the company’s revenues from sales. The authors’ own research extended these studies by exploring the trade-offs between the costs of product returns–particularly when customers deem such experiences satisfactory–and their long-term benefits to the company. Analyzing six years of purchase, product-return and marketing-communications data from “Company 1?–a large national catalog retailer that sells apparel and accessories–they confirmed that ignoring product return behavior, or even trying to discourage it directly by not marketing to customers who return products (such as by not sending them catalogs), would be a mistake. In fact, managers should embrace customers’ product-return behavior and offer them a satisfactory experience. In a field experiment with a second catalog retailer, “Company 2,” which sells footwear, apparel and other accessories through the Internet and mail-order catalogs, the authors found that under a lenient product-return policy, customers’ purchases, induced profits and referrals were greater than under a strict policy (which discourages and limits product returns). These measures could be raised even further through a catalog-mailing strategy that takes into account the expected future profits from each customer and the relationship between purchases and product-return behavior–i.e., through an optimal allocation strategy.