MIT Sloan Executive Education innovation@work Blog

When it comes to brand creation and product development, no other strategy is as effective as being first to market—despite the fact that enormous emphasis is placed on creativity, research, sales promotion, media spending, and especially, innovation.

“Very few people talk about speed as an advantage,” says MIT Sloan Senior Lecturer Steve Spear, an expert on sustainable competitive advantage and author of The High Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition. “They talk about cost, they talk about market access or gaining preferred access to suppliers in a static way, but the ecosystem is tumultuous. Nothing is static. Once you slow down, the world goes by.”

Creating competitive advantage with internal operations

Some companies outperform competitors in many ways at once―cost, speed, innovation, service. How do they do it? In his executive education program, Creating High Velocity Organizations, Spear shows how exceptional organizations create competitive advantage through the strength of their internal operations. As different as the industries might be—automobile, military, pharmaceutical—they have a relentless urgency about discovery. Discovery about what their customs want, how they are used, the way their products are manufactured, and whether there are better ways to meet demand.

Spear often uses the analogy of zombies to make his point—too many organizations respond to multiple threats with a zombie-like response, working around the issues. Those organizations are constantly plagued by aggravation in the workplace. And occasionally those problems coalesce to cause catastrophic failures; routine factors can catch up to an organization and cause disaster. The organizations that attack their problems with a more “heroic” and agile approach solve the problems instead of working around them and, more importantly, make the effort to understand what caused the problem(s) in the first place.

Spear’s larger point: problem solving must be a constantly nurtured core capability. “The competitive market is replete with problems to be solved. What do people need? What forms and features will be loved solutions? Those who get the answers right, fastest win outsized rewards for their success, with everyone else fighting over crumbs,” says Spear. “Look at Apple— they earn more than 90% of all smartphone profits while owning less than 20% market share.”

Douglas Ready knows a lot about leadership. The MIT Sloan Senior Lecturer is considered one of the world’s leading authorities on strategic talent management and executive development and has been named multiple times to Thinkers50, the premier ranking of the world’s top thought leaders. Ready, who is also Founder and CEO of the International Consortium for Executive Development Research, is a prolific writer on enterprise leadership and implementing strategic and cultural change; his articles have set the agenda for talent, leadership, and strategic change over the last two decades. And he is an active advisor to CEOs and top executive teams around the world.

So, when Ready shares strategic insights, people listen. Much of his writings and teachings of late are focused on implementing enterprise-wide transformation, because research is proving that the majority of these efforts fail to reach their intended objectives. Why is that?

According to Ready, when challenges to transformation persist it is often because there are embedded tensions or paradoxes that surface that seem unresolvable. Ready calls out five embedded tensions that make the successful implementation of enterprise transformations persistently difficult.

1. Revitalization vs. Normalization: At the core of many transformation efforts is the desire to revitalize ways of thinking, behaving, and working. Unfortunately, change often snowballs into multiple change initiatives, and seldom are these initiatives coordinated or provided with sufficient context. Employees can easily become weary of change and yearn for some level of normalcy.

2. Globalization vs. Simplification: The complexities brought on by globalization are often in conflict with an organization’s need to make it simple for customers to do business with them.
Leaders struggle with creating organizational responses that address the need to master globalization while offering customers and employees optimal simplification at the same time.

3. Innovation vs. Regulation: Innovation is what stimulates the creation of new business models, products, services, and ways of working. And yet, so many organizations are struggling to operate in an increasingly crushing regulatory environment (particularly in the aftermath of the global financial crisis). Pursuing creative approaches to solving unmet customers’ needs can feel like a luxury to these companies.

Contributed by Paul McDonagh-Smith, Digital Capability Leader, MIT Sloan, Office of Executive Education. With a focus on driving digital transformation and harnessing emerging technologies, Paul works with the team to create learning programs to fit how we live and work in today's digital age.

As we know from video games and fun VR experiences, the appeal of having an avatar or a “virtual self” lies in the infinitely expanded possibilities that suddenly become reality (albeit virtually). Avatars can do more in a virtual world than our bodies can in the physical one. Turns out, the same is true for education. Given the right environment, you can actually learn better—and tackle more complex material—as an avatar in a virtual classroom than you might in a more traditional setting.

For a few years now, we’ve been experimenting with virtual learning to make our programs more accessible to more participants around the world. We’ve been testing different platforms and approaches and learning a lot along the way. That’s why our most recent exploration deserves special recognition—for it may just offer the right mix of online and in-person classroom experience designed for learning complex—even technical—material in this highly effective format we call 4Dx.

What makes the latest evolution different from our previous offerings is the carefully calibrated combination of instructional design and content delivery methods built specifically for the virtual learning environment. The result is a deeply immersive educational experience that surpasses what’s possible in a physical classroom—a post-digital experience, if you will.

The program we are currently offering in this format is called Pricing 4Dx, taught by Dr. Catherine Tucker, Sloan Distinguished Professor of Management and Professor of Marketing MIT Sloan School of Management. The material is geared toward executives in marketing, product development, and strategy who are in charge of launching new products and need to know how to build an effective pricing strategy. In other words, the course can get technical rather quickly and requires the use of spreadsheets and data analysis in the online environment.

There are no shortage of methods and means to understand and improve your leadership skills, and few professionals would deny the valuable insights that professional development, coaching, and mentorship can provide. But among all the learning opportunities available, there is one that might surprise you. And it requires you to bring your camera.

Several years ago, MIT Sloan Lecturer and Executive Director of the MIT Leadership Center, Hal Gregersen, wanted to enhance his photography skills. He enrolled at the Santa Fe Photographic Workshops, where he became a mentee of renowned photographer Sam Abell. Expecting to see an improvement in his artistic passion, Gregersen was surprised to find that the lessons in image making also enriched his own research on leadership.

Gregersen saw that his core advice on how to reimagine organizational strategies and cultures mapped directly onto what Abell has taught for decades about creating photographs worthy of National Geographic. For example, seeing new possibilities for an organization often demands an eagerness to find what one is dead wrong about, a willingness to step back and quietly listen, and a patience to take in the dynamics of a situation—especially an uncomfortable one. In the same way, the best photographers develop deep “seeing skills” and patiently compose and wait out in the field, where vulnerability inevitably leads to powerful images.

Gregersen and Abell decided to team up and bring their collective insights to an executive audience—specifically, leaders interested in photography as a powerful mode of learning. The intersection between inquiry and images is the foundation of their three-day program, Leadership and the Lens: Learning at the Intersection of Innovation and Image-Making. The innovative, hands-on course has become a sought after and highly unique program within the MIT Sloan Executive Education portfolio. Gregersen and Abell lead this workshop with all the enthusiasm that comes from their discovery of a novel, hybrid method of learning.

Among their inaugural offering was Ed Higgins, a senior executive with the Federal Government and a certified executive leadership coach.

John Chambers knows a thing or two about disruption and upheaval. As former CEO of Cisco Systems from 1995 to 2015, he led the company during tumultuous times—including the market drop in 2002 when the company lost more than $450 billion, as well as Cisco’s less than successful acquisition of the Flip video camera line in 2009. Yet Chambers, now Executive Chairman of the Board at Cisco Systems, maintains there is no success without disruption, particularly when it comes to the digitization of the world around us. In essence, go digital or go home.

“The world will go digital: It will transform health care, enable people to live longer, and be a huge disruption to society. Either you disrupt or you get left behind,” said Chambers in a campus talk as part of the MIT Sloan 2017 iLead series. Chamber cautions further that the U.S. could lose some of its economic power if it doesn’t beef up its digitization plan. “There’s no entitlement just because we led before.”

Recent research by McKinsey & Co. concurs, reporting that while 90% of companies say they are engaged in some form of digitization, only 16% say they are taking a bold stance. The study also shows that the window of opportunity to put the right digital strategy in place is still open, but not for long.

Hear more insights from Chambers in this recording of his talk with Hal Gregersen, MIT Sloan Senior Lecturer and Executive Director of the MIT Leadership Center.

Setting the right price for a product or service is not easy. Pricing decisions can have a significant and often immediate effect on an organization's bottom line, yet there is much confusion about—and often scant attention paid to—pricing strategy within organizations.

Here are three pricing pitfalls that commonly ensnare businesses and startups—and ways to avoid them:

Taxi-Meter Pricing

Businesses are naturally attracted to the taxi-meter like pricing scheme, which charges customers for their use of their product or service by minute, transaction, gigabyte, etc.

“My students are always drawn to the idea of ‘simple’ and ‘transparent’ pricing schemes,” writes MIT Sloan Professor Catherine Tucker in Slate. “In theory, a simple, per-megabyte price can reassure customers who are hesitant to try your product or service.” She warns her students, often budding entrepreneurs, to take the “taxi-meter effect” into account.

“The taxi-meter effect is the feeling of discomfort you get when you’re seeing that meter go up. Even if you’re not the one who’s paying the tab,” she explains in this short video. “When we have a meter-like pricing format, we’re instilling the same feeling in our customers, putting them in a frame of mind to be thinking, ‘should I consume that extra minute?’”

Studies have shown that consumers prefer a flat rate—even when it’s not in their best interest. Turns out that this flat-rate bias is not solely economic in nature. “Consumers actively avoid schemes where there is the possibility of feeling discomfort by mentally linking every extra unit of consumption to an increase in price.” Tucker encourages entrepreneurs to offer customers an option, once they’re comfortable with the service, to purchase 200 gigabytes, for example, or two hours of time, and get rid of the meter.

Earlier this month, a memo written by (former) Google employee James Damore went viral. The controversial, ten-page letter suggested the company has fewer female engineers because men are better suited for the job. Damore argued that Google’s initiatives to increase diversity is actually a discriminatory policy, and that a liberal bias throughout management makes it difficult to discuss the issue internally. The debates kicked up by this event continue to rage on.

Aside from personal beliefs, there is a core business case to be made for diversity, one that we have made more than once on this blog. Research by McKinsey and others shows that companies with more diverse workforces perform better financially. Numerous studies continue to show the value that gender diversity has proven in boosting productivity and the bottom line within all levels of a company, from entry level to the boardroom, as well as the critical role women play in enhancing the collective intelligence of groups (see research by MIT Sloan Professor Thomas Malone).

So why is it that the workforce of tech companies is so predominantly male? In their most recent annual diversity report, Google shared that 31% of its employees are women, and only 20% of its technology roles (vs administrative occupations) are filled by women.

One explanation for the gender imbalance in tech and engineering may have to do with negative group dynamics. A new study co-authored by MIT sociologist Susan Silbey finds that many women become disillusioned with their STEM career prospects after poor internship and summer work experiences during which gender dynamics appeared to generate more opportunities for men to work on the most challenging problems, sidelining women for routine or managerial tasks. A recent Wall Street Journal article on the topic reported, “The No. 1 reason women leave tech isn’t a life transition like starting a family, but the fact that they didn’t feel welcome or included at their companies, in their teams or within the industry as a whole.” The article cites various sources for this data, including the aforementioned MIT study.

Another reason may be what MIT Sloan Professor Emilio Castilla refers to as the “paradox of meritocracy.” Progressive companies that foster merit-based practices assume they are not biased in their decisions around hiring, retention, compensation, and promotion. But, unfortunately, true meritocracies don’t really exist. Castilla’s research studying workplace inequality and merit-based pay have shown that these approaches are no protection against demographic bias.

A business school may not seem like the most logical place to find a solution for virulent disease. However, several MIT Sloan scholars have recently taken a deep look at cancer research and treatment in an effort to speed the development of a cure. From the way research is funded to the efficiency of genomic sequencing, the methods and models created by these MIT Sloan professors have the potential to reshape the industry and raise the probability of finding a cure.

Using Dynamic Work Design to improve genetic sequencing

Business professionals typically think of “work design” as an approach to making repetitive human activity more productive—and therefore especially suited for the factory floor. As such, work design would seem just about as far from the cancer research lab as you could get. However, a recent paper by MIT Sloan Lecturer Sheila Dodge and MIT Sloan Professors Don Kieffer and Nelson Repenning proves juts the opposite, sharing the results of their extended effort to improve the productivity of the genomic sequence operation at the Broad Institute of MIT and Harvard using an emerging framework called Dynamic Work Design.

The report details how, in the last three years, the Broad Institute—a leader in genomic research—has made dramatic reductions in cycle time and cost using dynamic work design principles to reconfigure the process of DNA sequencing. These gains allow genetic researchers to both run more experiments and get the results of those experiments back more quickly. Redesigning the Broad’s work has played a critical role in identifying the roots of the Ebola virus and is quite literally speeding the search for a cure to cancer and many other diseases.

Dynamic work design builds on the idea that work needs to “fit” the humans who do it, meaning that it needs to be designed in ways that matches our cognitive and emotional processes. This approach unites the contributions of process improvement methods designed for factory-like settings into a set of cohesive principles that can be extended to more creative or intellectual work. In the case of the Broad, this meant, for example, using process mapping to identify excess work and streamline their process; identifying points in the workflow that could benefit from face-to-face interaction; and instituting the notion of “pull,” a scheme widely used by proponents of lean manufacturing that involves maintaining the ideal amount of (prioritized) work.