Articles

Recent studies suggest that the Internet's impact on pricing has been less dramatic than feared.

The gulf between visionary early adopters of new technologies and the pragmatists who make up the mainstream technology market was made famous by Geoffrey A. Moore in his book "Crossing the Chasm." But strategists who focus on that chasm alone will miss others that loom ahead and present significant challenges. In "Six Chasms in Need of Crossing," Babson College associate professor of marketing Anirudh Dhebar calls attention to the other gaps that business leaders must bridge if they are to implement new technology and achieve long-term success in the marketplace. Dhebar argues that changing business models can be as difficult as crossing the chasm between early and mainstream markets. This may also be true when moving from an existing technology to one that is improved but incompatible -- or from an existing technology to one that is not initially seen by current customers as an improvement (what management educator and author Clayton Christensen calls a disruptive technology). Transitioning from a product created as an expedient, short-term fix for a customer problem to a product designed to be a strategic, long-term solution is another potential imperative However, it is the chasm between established ways of thinking and fundamentally new business paradigms that is perhaps the most pervasive. Dhebar encourages managers and academics alike to take account of the broader spectrum of chasms, and he provides guidelines for crossing the chasms impeding technological progress and marketplace success. The guidelines include encouraging imagination in order to see and embrace alternatives to current realities, giving new ideas a fair hearing, working with suppliers of complementary products to build the infrastructure to support new kinds of products -- and developing markets that value the performance and value proposition of disruptive technologies.

Strategies to tackle some of the overlooked costs of outsourcing.

Is mass customization really the best way to deliver variety to consumers? Today, mass-customized products seem to be everywhere. Levi-Strauss sells custom-fitted jeans. Andersen Windows can build a window to fit any house. Consumers can get their names printed, sewn or embossed on nearly anything. But managers beware: Do not be seduced by the gaudy banner of mass customization. There are several ways to deliver variety, and mass customization may not always be the best. So argues Paul Zipkin, professor of business at Duke University's Fuqua School of Business. Mass customization actually requires unique operational capabilities. Several elements have to work well -- individually and together -- to ensure that mass customization is a plausible business strategy. Those key capabilities are elicitation (a mechanism to interact with the customer and obtain specific information); process flexibility (production technology that fabricates the product according to the information); and logistics (subsequent processing stages and distribution that are able to maintain the identity of each item and deliver the right one to the right customer). Not all companies -- or industries -- will be able to master these capabilities. Moreover, demand for customization is limited and likely to remain so. Current technology can support large-scale customization only for a few attributes of a few products. For mass customization to deliver real value, people must have sharply differing preferences for certain attributes. This signals opportunities for industries such as apparel, sports equipment and building accessories. But it also means that mass customization is not for every company. Managers should seek opportunities to add value through variety, Zipkin advises. But before committing their companies to a mass-customization strategy, they need to carefully analyze the technology, demand and costs and benefits.

Integrating design and manufacturing helps, but only if the fit is right.

All corporations engaged in multiple lines of business face a paramount strategic imperative imposed by the stock market: Maximizing the profitable growth that is possible from their constituent businesses. Meeting this imperative over the long term requires such corporations to develop new strategy-making capabilities. So how can company leaders identify and exploit the opportunities that take the fullest advantage of their companies' capabilities and potential to pursue new strategies? In their attempts to meet the stock market's imperative, multibusiness companies in the past have pursued operational efficiencies by integrating business activities and have extended their existing strategies by combining resources from various business units. But that is not enough, say Robert A. Burgelman, professor of management at Stanford University, and Yves L. Doz, professor of global technology and innovation at INSEAD. Multibusiness corporations need to develop a capability for what the authors call complex strategic integration, which involves the discovery and creation of new business opportunities by combining resources from multiple units within the firm -- each with its own perspective and vested interests -- in order to extend the corporate strategy in new directions. Only a few multibusiness companies are currently trying to develop a CSI capability. But the challenges and imperatives for all companies are the same. Company leaders need to manage the evolving tension between reinforcing the company's core business and redirecting strategy in new directions, as well as the sharing and transferring of resources. They also must ensure that senior executives develop the political and entrepreneurial skills necessary to effectively pursue CSI initiatives, along with the ability to conceive of these new strategies. Above all, company leaders have to create a corporate context that facilitates CSI as an ongoing institutionalized process rather than as an infrequent occurrence that depends on the ad hoc championing efforts of some highly dedicated senior managers. That includes developing the appropriate organizational structures, control systems and incentives.