Analysis Phase 1. Industry Analysis: What is the current business model of this

Question

Analysis Phase 1. Industry Analysis: What is the current business model of this industry you chose? What are the technological challenges in this current model? What are the emerging models? Who are the leaders in your business, and what made them leaders? What are the social, organizational, behavioral and legal issues surrounding your industry? 2. Infrastructure Analysis: What is the information technology infrastructure required for your business? What would be needed additionally in the B2B, mobile and collaborative commerce environments? What kind of infrastructure is being used by different companies in your business (if possible)? 3. Model Analysis: What are the common business models used in your e-business? What additional models could be necessary for your pending goals? What constraints do you have concerning competition? How would different firms collaborate in a model? 4. Product or Service & Customer Analysis: What are you selling? Whom are you selling it to? How do the products differ among competitors in the same business? Who are your primary customers? What do your customers think about your business’ strengths and weaknesses? You will receive feedback about your first report once it is graded.

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Why Management Innovation Matters

General Electric. DuPont. Procter & Gamble. Visa. Linux. What makes them stand out? Great products? Yes. Great people? Sure. Great leaders? Usually. But if you dig deeper, you will find another, more fundamental reason for their success: management innovation.

As these examples show, a management breakthrough can deliver a potent advantage to the innovating company and produce a seismic shift in industry leadership. Technology and product innovation, by comparison, tend to deliver small-caliber advantages.

A management innovation creates long-lasting advantage when it meets one or more of three conditions: The innovation is based on a novel principle that challenges management orthodoxy; it is systemic, encompassing a range of processes and methods; and it is part of an ongoing program of invention, where progress compounds over time. Three brief cases illustrate the ways in which management innovation can create enduring success.

Harnessing employee intellect at Toyota.

Why has it taken America’s automobile manufacturers so long to narrow their efficiency gap with Toyota? In large part, because it took Detroit more than 20 years to ferret out the radical management principle at the heart of Toyota’s capacity for relentless improvement. Unlike its Western rivals, Toyota has long believed that first-line employees can be more than cogs in a soulless manufacturing machine; they can be problem solvers, innovators, and change agents. While American companies relied on staff experts to come up with process improvements, Toyota gave every employee the skills, the tools, and the permission to solve problems as they arose and to head off new problems before they occurred. The result: Year after year, Toyota has been able to get more out of its people than its competitors have been able to get out of theirs. Such is the power of management orthodoxy that it was only after American carmakers had exhausted every other explanation for Toyota’s success—an undervalued yen, a docile workforce, Japanese culture, superior automation—that they were finally able to admit that Toyota’s real advantage was its ability to harness the intellect of “ordinary” employees. As this example illustrates, management orthodoxies are often so deeply ingrained in executive thinking that they are nearly invisible and are so devoutly held that they are practically unassailable. The more unconventional the principle underlying a management innovation, the longer it will take competitors to respond. In some cases, the head-scratching can go on for decades.

Building a community at Whole Foods.

It’s tough for rivals to replicate advantages based on a web of individual innovations spanning many management processes and practices. That’s one reason why no competitor has matched the performance of Whole Foods Market, which has grown during the past 25 years to 161 stores and $3.8 billion in annual sales. While other grocery chains have been slashing costs to fend off Wal-Mart, Whole Foods has been rapidly evolving an extraordinary retail model—one that already delivers the highest profits per square foot in the industry. What may not be obvious to health-conscious consumers and growth-loving investors is that the company’s management model is just as distinctive as its high-margin business model. John Mackey, the company’s founder and CEO, says his goal was to “create an organization based on love instead of fear” and describes Whole Foods as a “community working together to create value for other people.” At Whole Foods, the basic organizational unit isn’t the store but small teams that manage departments such as fresh produce, prepared foods, and seafood. Managers consult teams on all store-level decisions and grant them a degree of autonomy that is nearly unprecedented in retailing. Each team decides what to stock and can veto new hires. Bonuses are paid to teams, not to individuals, and team members have access to comprehensive financial data, including the details of every coworker’s compensation. Believing that 100:1 salary differentials are incompatible with the ethos of a community, the company has set a salary cap that limits any executive’s compensation to 14 times the company average. Just as startling is the fact that 94% of the company’s stock options have been granted to nonexecutives. What differentiates Whole Foods is not a single management process but a distinctive management system. Confronted by management innovation this comprehensive, rivals can do little more than shake their heads in wonder.

Growing great leaders at GE.

Sometimes a company can create a sizable management advantage simply by being persistent. No company in the world is better at developing great managers than GE, even though many businesses have imitated elements of the company’s leadership development system, such as its dedicated training facility in Crotonville, New York, or its 360-degree feedback process. GE’s leadership advantage isn’t the product of a single breakthrough but the result of a long-standing and unflagging commitment to improving the quality of the company’s management stock—a commitment that regularly spawns new management approaches and methods.

Not every management innovation creates competitive advantage, however. Innovation in whatever form follows a power law: For every truly radical idea that delivers a big dollop of competitive advantage, there will be dozens of other ideas that prove to be less valuable. But that’s no excuse not to innovate. Innovation is always a numbers game; the more of it you do, the better your chances of reaping a fat payoff.

What Is Management Innovation?

A management innovation can be defined as a marked departure from traditional management principles, processes, and practices or a departure from customary organizational forms that significantly alters the way the work of management is performed. Put simply, management innovation changes how managers do what they do. And what do managers do? Typically, managerial work includes

In a big organization, the only way to change how managers work is to reinvent the processes that govern that work. Management processes such as strategic planning, capital budgeting, project management, hiring and promotion, employee assessment, executive development, internal communications, and knowledge management are the gears that turn management principles into everyday practices. They establish the recipes and rituals that govern the work of managers. While operational innovation focuses on a company’s business processes (procurement, logistics, customer support, and so on), management innovation targets a company’s management processes.

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