Articles

Companies must understand their customers’ needs and appoint a manager to oversee the production of high-quality information.

A four-stage model helps companies balance supply and demand in managing IT.

By sharing components and production processes across a platform of products, companies can develop differentiated products efficiently, make their manufacturing processes more flexible, and take market share away from competitors that develop only one product at a time. The platform approach also enables companies to manufacture products in high volumes that are tailored to meet the needs of individual customers. A platform is a collection of assets -- components, processes, knowledge, people, and relationships -- that are shared by a set of products. The platform planning effort involves two key tasks. First, product planning and marketing managers determine which market segments to enter, what the customers in each segment want, and what product attributes will appeal to those customers. Second, system-level designers decide what product architecture to use to deliver the different products while sharing parts and production steps across the products. Using an example from the automobile industry -- the design of an instrument panel, or dashboard -- the authors illustrate how the platform-planning process works. They point out three key ideas that underlie the process: 1. Customers care about distinctiveness, how closely the product meets their needs. At the same time, the cost of a firm's internal operations is driven by the level of parts held in common among a group of products. 2. Given a particular product architecture, a trade-off exists between distinctiveness and commonality. 3. Product architecture dictates the nature of the trade-off between distinctiveness and commonality. By developing and aligning three tools -- a product plan, a differentiation plan, and a commonality plan -- managers can balance the need for distinctiveness with the need for commonality. Together these tools provide a common language that a company's marketing, design, and manufacturing functions can all understand. To successfully meet the challenges inherent in the platform approach, the process must be cooperative, involving all key functions, and must be guided by top management.

Companies today are outsourcing the activities of their IS departments at unprecedented rates. Interviews with senior executives in fifty companies worldwide show that three kinds of strategic intent drive the decision to outsource. -- Companies pursuing IS improvement seek cost reduction, better performance from core IS resources, and the acquisition of new technical skills and competencies. -- Outsourcing for business impact focuses on deploying IT to improve critical aspects of business performance -- Outsourcing for commercial exploitation aims to leverage technology-related assets through the development and marketing of new technology-based products and services Each type of strategic intent requires different approaches and tactics in the areas of the contract type, the performance measurement and evaluation scheme, the compensation system, and the assignment of decision-making rights to the vendor. Since the nature of the risks and rewards for each of the three types is different, the control mechanisms must be different as well. In all cases, the customer's relationship with the vendor must be aligned with the strategic intent underlying the outsourcing initiative. When strategic intent is well understood and the critical issues are carefully addressed, the chances for success are greatly increased. In evaluating IT outsourcing opportunities and structuring relationships, managers should design the outsourcing contract to reflect and reinforce each strategic intent pursued; make sure that their organization and the vendor have the right mix of competencies and know-how; make sure that their organizational culture and work practices are compatible with those of the vendor; and enable continuity by designing contracts and relationships to anticipate change.

A unifying framework for thinking about processes & #x2014;or sequences of tasks and activities & #x2014; that provides an integrated, dynamic picture of organizations and managerial behavior.

Technology has made it possible to redefine where work is done. The "virtual office" offers companies and their workers many benefits: lower real estate costs, higher productivity, and increased flexibility. At the same time, organizations forfeit the benefits of the traditional office: a shared understanding of the corporate culture; a sense of loyalty; informal communication; access to people, information, and materials; and managerial control. Drawing on the results of field research, the authors discuss how firms can maximize the benefits while minimizing the losses of these alternative work arrangements. The authors identify five common arrangements: "telecommuting" refers to situations in which workers with fixed offices occasionally work at home; "hotel"-based workers come into the office frequently, reserving a cubicle where they can use the telephone and link their laptop computers to the network; the "tethered worker" has some mobility but reports to the office on a regular basis; "home" workers work entirely from a room in their homes; and "fully mobile" workers are on the road or at customer sites during the workday. Companies considering adopting virtual work must be clear about the type of virtual office that best addresses their needs and its advantages and disadvantages. If virtual work is to pay off, managers must adopt new approaches in five key areas: managing people, managing information, managing teams, managing processes, and managing facilities. Companies need to institute new information flows to replace those that are lost; educate workers on how to be more effective providers and consumers of information; provide training in virtual worker management skills and personal work strategies; and create dialogue on how to deal with changed family relationships. Effective management of alternative work arrangements means mixing virtual and nonvirtual offices. Companies should analyze the variety of approaches possible and their particular circumstances to determine just how much virtuality is appropriate.

To achieve lasting competitiveness through IT, according to the authors, companies face three enduring challenges: focusing IS efforts to support business strategies and using IT innovations to develop new, superior strategies; devising and managing effective strategies for the delivery of low-cost, high-quality IS services; and choosing the technical platform on which to mount IS services. Three strands of research -- on the CIO's role and experience, the CIO's capabilities, and IS/IT outsourcing -- demonstrate that businesses need nine core IS capabilities to address these challenges: 1. Leadership. Integrating IS/IT effort with business purpose and activity. 2. Business systems thinking. Envisioning the business process that technology makes possible. 3. Relationship building. Getting the business constructively engaged in IS/IT issues. 4. Architecture planning. Creating the blueprint for a technical platform that responds to current and future business needs. 5. Making technology work. Rapidly achieving technical progress -- by one means or another. 6. Informed buying. Managing the IS/IT sourcing strategy that meets the interests of the business. 7. Contract facilitation. Ensuring the success of existing contracts for IS/IT services. 8. Contract monitoring. Protecting the business's contractual position, current and future. 9. Vendor development. Identifying the potential added value of IS/IT service suppliers. IS professionals and managers need to demonstrate a changing mix of technical, business, and interpersonal skills. The authors trace the role these skills play in achieving the core IS capabilities and discuss the challenges of adapting core IS capabilities to particular organizational contexts. Their core IS capability model implies migration to a relatively small IS function, staffed by highly able people. To sustain their ability to exploit IT, the authors conclude, organizations must make the design of flexible IS arrangements a high-priority task and take an anticipatory rather than a reactive approach to that task.

While franchising has become the dominant mode of retailing in the United States, three-quarters of new franchise systems fail within twelve years. This high failure rate makes it important for potential franchisees to identify new franchisors that are likely to succeed and for franchisors to be aware of policies and practices that enhance long-term survival. To meet these needs, the authors present a model, based on a twelve-year study of 157 companies in 27 industries, of what makes new franchise systems succeed. The story of Newfran, a fictional composite of the successful new franchisors in the study, illustrates the key characteristics of success and their relationships to one another. For potential franchisees, the example of Newfran offers six criteria for selecting a new franchise system: 1. Seek franchisors that are expanding rapidly. Establishing brand name is crucial to success. A slowly growing franchise system may not be able to promote its brand name cost-competitively. 2. Do not seek a franchise system that promises a lot of field support. Field support is costly. New franchisors are better off devoting scarce resources to growing the franchise system. 3. Do not be dismayed by the lean headquarters of a new franchise system. A lean operation enhances growth and brand-name development. 4. Seek franchisors that are developing strong brand names. Indicators of brand-name value include a large system size relative to the industry average and the system's ranking in Entrepreneur Magazine. 5. Look for membership in the International Franchise Association and registration with state authorities. These associations provide a quality check on the franchise system and signal the franchisor's reliability. 6. Be wary of new franchisors that offer masterfranchising. Selling the responsibility to recruit and manage franchisees to another party allows the franchisor to grow more quickly but increases the probability of system failure. For new franchisors, these criteria highlight the need to develop the brand name, expand rapidly, and show a trustworthy nature to potential franchisees. Following the policies identified in the study does not guarantee success but significantly increases a franchise system's prospects.

How can organizations make their negotiations more efficient and rewarding? Managers must recognize that negotiations inside the organization strongly influence the outcome of negotiations outside the organization. Using the example of Alta Systems, an information technology consulting services company, the author illustrates how internal and external negotiations processes are integrally linked and describes how managers can enhance negotiation results by improving those processes. Alta's difficult negotiations with an important client demonstrate the obstacles that arise when organizations are balancing internal and external negotiations: negotiators walk away from good deals because these do not match the organization's stated position or they agree to suboptimal deals because the organization views any agreement as better than no agreement; negotiating parties fail to explore underlying interests and see the other's perspective; negotiators function as advocates rather than as joint problem solvers; internal and external negotiations are compartmentalized; and the parties do not discuss the negotiations process. Managers of negotiators can take the following actions to overcome these obstacles: Choose wisely among options and alternatives. Use internal prenegotiations to gain agreement on the organization's best alternatives and to clarify the negotiator's role and authority in gathering information, sharing interests and alternatives, and committing to deals. Change the negotiator's role. Treat negotiators as "handymen" who undertake different tasks at different times; negotiators may serve, for example, as meeting facilitators or problem solvers as the need arises. Integrate internal and external negotiations. Institute flexible processes that survey the interests of all parties and encourage ongoing interaction among internal and external groups. Explicitly discuss the negotiations process. Encourage negotiators to set meeting agendas that focus on establishing the long-term plans, goals, and purposes of the negotiations. Communications within organizations too often sabotage the success of negotiations with suppliers, customers, and clients. By taking steps to align internal and external negotiations, managers can significantly increase the value that their organizations derive from any agreement.

Compared to new companies or niche players, established companies find it difficult to innovate strategically -- to reconceptualize what the business is all about and, as a result, to play the game in an existing business in a dramatically different way. Drawing on examples of highly profitable companies in diverse industries, the author explains how long-time players can overcome the four chief obstacles to strategic innovation. 1. Inertia of success. Strategic innovators monitor their strategic health for early signals of trouble and are willing, if necessary, to abandon the status quo for the uncertainty of change. These companies also work to convince employees that current performance is good but not good enough. They develop a new challenge to galvanize the organization into active thinking, and they expend significant time and effort selling the challenge to everyone. 2. Uncertainty about what to change into. Strategic innovators challenge their dominant way of thinking and shift emphasis away from determining how they need to compete toward questioning who their customers are and what they really want. They institutionalize a questioning attitude and find ways to shake up the system every few years. 3. Uncertainty surrounding new strategic positions. At a given time, a company does not know which idea will succeed and which core competencies will be essential. Successful strategic innovators follow the model of capitalism: they create internal variety, even at the expense of efficiency, and allow the outside market to decide the winners and losers. 4. The challenges of implementation. Successful companies set up a separate organizational unit to support a new strategic innovation and create a context that supports integration between different units within the company. In managing the transition from the old to the new, they let the two systems coexist but gradually allocate resources to the new so that it grows at the expense of the old. For established companies, the challenge of strategic innovation is organizational: developing a culture that questions current success while promoting experimentation. Strong leadership is essential in creating that culture. Only those companies that strive for self-renewal, the author argues, will succeed in the long term.