Articles

Effective product returns strategies can result in increased revenues, lower costs and enhanced levels of customer service.

It is common for senior managers to look for meaningful correlations within their businesses -- for example, to search for the most direct drivers of profitability. However, managers often overreach, overstating relationships that are tenuous at best or may not even exist. In support of this view, the authors, who are consultants in the area of customer loyalty, cite their own recent investigation into common beliefs about customer loyalty (that is, "It costs more to acquire a customer than to retain a customer"), many of which proved to be unfounded. In general, the authors argue, professional managers are too willing to suspend disbelief about cause-and-effect relationships. They allow biases toward a specific business outcome to shape their interpretation of causes and effects. The authors refer to this phenomenon as management teleology. The tendency to hold onto the most rewarding view of events, the authors offer, is not unique to managers. However, when managers substitute beliefs for knowledge and don't acknowledge the leap, they put their businesses at risk. New management ideas will always challenge current practices. But before managers embrace new ways of approaching problems, they should require a higher level of analytic rigor. They need to cultivate the habit of questioning the underlying assumptions of their own views, and be open to ideas that come from the outside.

Which jobs are good candidates for global disaggregation?

Globalization, at its core, is about a new operating theory of the world based on connectedness between, across, above, below and through preexisting political, social, economic, thematic, geographic and security boundaries. The connections and interactions can be so intense and transformative, says the author, that we can no longer distinguish between actors and their environments. Advances in telecommunication have linked the information and economic domains of customer, competitor and collaborator as never before. And, because all players have access to virtually the same information and information technologies, and can therefore equally target a demographic with precision, there is no compelling competitive advantage in any digital marketing capability. At the end of the day, marketers confront the same dilemma they turned to the Internet and information technology to solve: consumers opting out in ever greater numbers. To grow a business today, says the author, companies must take a marketing ecosystems view, which shifts away from the logic of "brand" as the primary unit for business strategy. Citing Microsoft, Google, AT&T and McKinsey, among others, the author suggests that the only sensible way for a company to compete is not by offering new products with similar functional attributes, but by being better than its rivals at molding the ecosystem in which the competition takes place.

The history of the Swedish retailer IKEA illustrates the role that adaptation and experimentation play in the development of an innovative strategy.

In nearly half a century of literature on corporate strategy, the term has become more complicated and fractured. There are now at least 10 separate schools of thought regarding strategy, and more than a dozen common definitions of the term. To clarify and deepen our understanding of corporate strategy, the author suggests general guidelines that set the boundaries of the discipline and highlight its specifics in order to facilitate future executive decisions. The author argues that strategy comprises three objectives: creating value, handling imitation and shaping a perimeter. The ability to sustain value creation, whether from the customer's or the shareholder's perspective, is the ultimate goal of any strategy. Concepts such as benchmarking, differentiation, core competencies, unique resources, institutionalism and competitive rivalry are all connected with the ability to prevent, implement or leverage imitation. Decisions about diversification, outsourcing, vertical integration, internationalization and positioning are all linked with the search for a profitable perimeter.

The colonization of American manufacturing by distributors has pushed U.S. companies overseas.

Managing product variety can be easy but hard to do well. And the difference can be significant.

The term "value chain" suggests an orderly progression of activities that allows managers to formulate profitable strategies and coordinate operations with suppliers and customers. Using examples from the telecom, pharmaceutical, steel and auto industries, the authors argue for a more complex view of value -- one that is represented by a "value grid". The grid approach allows firms to move beyond their industry lines to identify opportunities and threats. It pushes managers to understand the power balance between suppliers and manufacturers. The new pathways to value can be vertical (as firms explore opportunities upstream or downstream from the adjacent tiers in their value chain); horizontal (as firms identify opportunities from spanning similar tiers in multiple value chains); and even diagonal (as firms look more integratively across value chains and tiers for prospects to enhance performance and mitigate risk).

The author re-examines the role of IT as a commodity and considers whether IT can still be used to provide strategic advantage. In discussing regulation, outsourcing relationships and corporate dependence on IT, this article further clarifies the argument that IT will soon be handled by larger corporate utilities. While agreeing that most IT functions can be outsourced to utility-style providers, the article suggests that in-house corporate computing can still provide a strategic advantage. By examining failed IT outsourcing relationships, the author identifies key aspects of IT, including auditing and reporting procedures and customer-facing resources that are too important to a firm's success to outsource. The author argues that to better exploit these advantages, managers should embrace the fact that IT is no different than any other corporate function, instead of placing it in its own silo separate from other business practices. Only then will the real commoditization of IT be complete and the long-promised benefits be seen.