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Category Archives: Technology, Operations, and Value Chain Management

Are consumers or lawmakers better at regulating energy efficiency standards?

A recent energy goal set by President Obama has MIT Sloan Professor Christopher Knittel and some colleagues questioning how best to track and control the public’s use of energy efficiency programs to make that goal a reality. The President’s goal aims to cut in half the energy wasted by our homes and businesses over the next 20 years.

However, Knittel, who is the William Barton Rogers Professor of Energy Economics at MIT Sloan and Co-Director of the Center for Energy and Environmental Policy Research (CEEPR) at MIT, says before we buy into more stringent energy efficiency goals, we need to analyze the current situation more rigorously.

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Your company’s key innovators are, most likely, your consumers

The wave of technological innovation we are currently riding has brought us wearable computing and 3D printing, with products like Google Glass and Nike Fuelband becoming the stars of recent tech conferences, including May’s All Things D. Continually fueled by the question “what’s next?,” product innovators leave no stone unturned in their quest to produce the next big thing. According to the latest research, however, it’s consumers not the product innovators who should be viewed as the new experts. A new school of innovation thinking says that product innovators who work for manufacturers have received far too much credit for product innovation, while product users have received far too little.

In an MIT Sloan Management Review interview with Eric von Hippel, founder of the Entrepreneurship Program at MIT, the MIT Sloan Professor paints a new picture of the shifting paradigm of innovation from producer to user and how it is effecting change in the global economy.

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Three ways to profit from business complexity

Business complexity is usually seen as an obstacle to increased profit margins. A publication of The Global Simplicity Index revealed that complexity is costing 200 of the biggest companies in the world 10.2% of their annual profits—which, collectively, totals over $237 billion. But other recent studies show there is a profitable flipside to business complexity—a relatively unexplored area of opportunity hiding in plain site. For some companies, managing business complexity can be a unique opportunity to grow their market share.

Not All Complexity in Business is Value Destroying

According to Martin Mocker, Research Scientist at MIT’s Sloan Center for Information Systems Research (CISR), not all complexity in business is value destroying. In fact, in some instances business complexity can be value-adding, offering companies an opportunity to grow their market share. The key, says Mocker, is to focus on complexity that delivers “variety seeking, one-stop-shopping, customization, or seamless integration.” Finding balance, “keeping the complexity of their processes and systems—both internal and customer-facing—under control,” is the way to manage business complexity toward a profitable advantage.

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Bringing process innovation and creativity into operations

When was the last time you re-thought your operations processes? Are they still relevant?

Process innovation and creativity are key elements to successful operations strategies. Companies reluctant to rethink their operations processes can learn a lot from those companies that successfully applied process innovation and creativity to their value chain, including:

  • IDEO, a small design firm that has incorporated creativity into its design and development process, resulted in the company holding more than one thousand patents and produced the first commercial mouse, the first commercial laptop, and the first stand-up toothpaste tube.
  • McDonald’s Corporation, whose operations strategies include balancing certainty and discipline with creativity which resulted in franchises creating some of the icon’s most famous items, such as the Big Mac, Filet-O-Fish, and Egg McMuffin.
  • CVS, where process design engineering principles were used to improve the pharmacy order fulfillment process.
  • And, of course, Procter & Gamble (P&G).

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Three ways to use privacy policies to build stronger customer relationships

In the quest for progress, companies continue to explore how technology can interpret consumer data to improve our quality of life. For example, Google continues to push boundaries with its latest invention, Google Glass, designed to display information in a smartphone-like hands-free format and interact with the Internet via natural language voice commands (see video below).

But with this new breakthrough comes increased concerns. Recently, eight members of the House Privacy Caucus sent a letter to Google co-founder and CEO Larry Page concerning the privacy aspects of Google Glass—and for good reason. The new Google Glass technology exposes anyone in the path of a Google Glass wearer to unauthorized photography and monitoring. Unfortunately, the lines are becoming increasingly blurred between using big data to improve our lives and intruding upon our privacy.

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