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MIT Sloan Management Review

MIT Sloan Management Review Spring 2012

MIT Sloan Management Review leads the discourse among academic researchers, business executives and other influential thought leaders about advances in management practice, particularly those shaped by technology,  that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological and societal change.

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United States
MIT Sloan Management Review
4 Issues

in this issue

2 min.
why it’s so hard —yet exciting —to rethink your business

LET’S FACE IT: It’s not easy to make significant changes to the way you do business. As Gerry Johnson, George S. Yip and Manuel Hensmans point out in their article “Achieving Successful Strategic Transformation” (p. 25), relatively few companies are able to make major changes in strategy unless they are prodded to by financial pressure. Part of the reason is simply a function of how difficult it is to do two things well at once — successfully managing the existing business and exploring a new direction. “Although many executives recognize the need to exploit current capabilities while developing new ones, few are very effective at managing this conflicting set of activities,” Johnson, Yip and Hensmans write. Once made, “choices on business model design often go unchallenged for a long time,” observe…

2 min.
on the web sloanreview.mit.edu

What Sells CEOs on Social Networking In a 2006 MIT Sloan Management Review article, Andrew McAfee coined “Enterprise 2.0” as a shorthand term for what collaboration and sharing tools such as blogging and wikis (and, today, Twitter) would mean for enterprises. Now, in a new interview with MIT Sloan Management Review, McAfee, a principal research scientist at the MIT Center for Digital Business, looks back at the past six years and discusses what he’s learned about the triggers that generate CEO interest in social networking. “The problem is that if ‘social’ is a bad word in the enterprise these days, ‘knowledge management’ is absolute kryptonite,” McAfee said. One useful tool to get people’s attention: a quote attributed to Lew Platt, the former CEO of Hewlett-Packard, who noted, “If only HP knew what…

2 min.
quick takes

“Learning to meet the evolving needs of customers is as much a process of purposeful forgetting as it is intentional discovery.” (From Goddard et al., “Uncommon Sense: How to Turn Distinctive Beliefs Into Action,” page 33.) “Because business model innovation can be such a potentially powerful competitive tool , managers must be attuned to the possibility of competitors’ efforts in this area. Competitive threats often of index : $8.50 of come nuary 31, from outside their traditional industry boundaries D for HTC .” (From Amit and Zott, “Creating Value Through Business Model Innovation,” page 41.) “Many multinationals engage partners in emerging markets on a project-by-project basis. Unfortunately, this transactional approach only yields incremental value or one-off hits at best.” (From Radjou and Prabhu, “Mobilizing for Growth in Emerging Markets,” page 81.) “ Most…

6 min.
are ceos getting the best from corporate functions?

Few CEOs give enough direction to the heads of their corporate-level functions. That’s the conclusion of a survey we conducted of more than 50 function heads at some of Europe’s leading companies. We are referring here to larger companies in which corporate-level functions such as finance, human resources, information technology, strategy, purchasing and legal provide policies, controls and services to decentralized operating divisions. Fortunately, some CEOs have found ways to address the problem. In our survey, fewer than one in 10 function heads felt they had received sufficient guidance on how their function should contribute to the company’s overall strategy. Instead, they were expected to develop their own ideas and functional strategies. In addition, although many heads of corporate functions had key performance indicators, these rarely assessed the overall contribution of their…

3 min.
the impact of it investments on profits

CEOs often struggle with some critical choices as they allocate their companies’ discretionary dollars among various categories of investments. Should they invest more in IT than in, say, advertising or research and development? And when they do invest in IT, what kinds of projects should they focus on? A recent study we conducted offers some insight on such questions. Although several earlier studies by other researchers had not detected a significant effect of IT investments on profitability, we found that more recent information technologies — those deployed since 1995 — have a significant positive impact on profitability. Our study used data from more than 400 global companies from 1998 to 2003. (More detailed information about our research can be found in an article in the March 2012 issue of MIS Quarterly.) What’s…

7 min.
learning how to grow globally

Learning may be the single greatest challenge when entering offshore markets. Few, if any, employees have in-depth knowledge of markets other than the one where they live. Faced with the need to learn quickly about a foreign market, many companies employ a variety of approaches, in a variety of sequences. How does the sequence in which a company applies learning approaches affect performance? To assess this question, we observed nine companies in the high technology industry. To minimize geographic and cultural bias, we selected companies with headquarters in three culturally distinct markets: Finland, the U.S. and Singapore. Our studies show that most organizational learning results from four direct and two indirect approaches to learning: Direct Approaches to Learning Trial and Error: In this approach, companies engage in particular actions and then assess the outcomes…