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Based on the 3M case (Chapter 2, De Wit & Meyer), does 3M seem to follow the outside-in or inside-out perspective? Explain. Which of Treacy & Wiersema's "three generic competitive advantages" (Strategy Synthesis) does 3M appear to pursue? Explain. Based on the case, infer: is 3M more in alignment with the portfolio organization (SBU) perspective or with the integrated organization (core competence) perspective? Explain.
i. 3M followed the inside-out perspective. This was because 3M always devoted itself to building up a strong resource base. It emphasized on resources over markets. Firstly, it constantly developed new products. It encouraged every employee to develop new products. It also provided sufficient financial and material resources to support their new ideas. Its business was very flexible. It well developed lateral thinking that its technology designed for one business can be used in another business. Secondly, it positioned itself based on its new products. It had entered into many new markets through developing new products. It earned 30 percent revenues from its new products. It also changed the rules of the existing markets. Thirdly, 3M built up strong dynamic capabilities. Its products were hard to imitate. Therefore, 3M built up a strong competitive position and created imitation barriers through providing innovative products.
ii. 3M appeared to pursue the product leadership synthesis. 3M did not pursue operational excellence or customer intimacy synthesises. This was because it applied itself to providing innovative products. It did not emphasize on providing standardized and low-cost products or building up closer relationships with customers. 3M pursued the product leadership because it engaged in constant product innovation. Moreover, its entire organization was a R&D department. It provided sufficient financial and material resources to encourage every employee to develop their new ideas. It built up strong dynamic capabilities that its products were hard to imitate. Furthermore, there was a close collaboration between its marketing department and R&D department. 3M had entered many new markets with these innovative products and taken up the leading position in many areas.
iii. 3M was more in alignment with the integrated organization perspective. Its core competency was constant product innovation. It emphasized on synergy over responsiveness. Every department and employee in 3M engaged in product innovation. Every employee was free to work on their new ideas. 3M also provided sufficient financial and material resources to help them develop new ideas. Moreover, each department in 3M was tightly related to each other. The inter-disciplinary venture team was responsible for examining each innovative idea and putting possible ideas into practice. It entered many new markets with these innovative products. It was famous for lateral thinking because it was able to apply one technology developed for one business to the other business. It had taken up the leading position in product innovations in many different industries.
Consider the Merck short case (Chapter 7, De Wit & Meyer). Use any tow drivers of industry development to explain why there is increasing collaboration among companies in the pharmaceutical industry. Use any four of the six inhibitors of industry development to explain why Merck is finding itself as a "rule breaker" in its refusal to engage in more collaboration. Should Merck engage in more collaboration and why?
i. Firstly, the competition within the pharmaceutical industry became more and more intensive. Because the generic drug companies lost their patent protections, a large quantity of new smaller drug manufactures entered the market with similar products at lower prices. Moreover, developing new products were costly and time-consuming. However, the smaller drug companies were more specialized and they were able to develop specialized new products more quickly and less costly. Secondly, governments put price regulations on the pharmaceuticals. Meanwhile, the healthcare organizations and insurance companies tried to place pressure on pharmaceutical prices and clamp down their expenditures. This greatly increased the bargaining power of buyers.
ii. â‘´. Underlying conditions: With the increasingly fiercer competition in the pharmaceutical industry, most of the big drug companies cooperated with specialized small biotech firms in order to obtain economies of scale and compete on price. However, Merck refused to engage in more collaboration and continued to invest more in its R&D. It held that collaboration would not improve its performance.
â‘µ Industry integration: In the early days, big drug companies took up the monopoly positions in the pharmaceutical industry because of patent protections. However, it became more and more difficult for them to renew their patents. Their products were easily imitated by smaller drug manufacturers. Therefore, they chose to collaborate with those smaller companies. However, Merck was able to obtain patents at the lowest costs. Therefore, it did not follow the industry trend to collaborate with others.
â‘¶ Power structures: Because of the loss of patent protections, more and more big drug companies chose to collaborate with small biotech companies. They spent a considerable amount of money and effort in the collaborations. They saved 10 percent to 20 percent costs in their R&D investments. Big companies became marketers and distributors for their partners. If they changed the rule, they would lose a lot or even go bankruptcy. However, Merck only collaborated with several firms which can improve its technologies.
â‘· Risk averse: Changing the rule was quite risk for the big companies who had collaborated with others. They preferred to continue their collaboration process. However, Merck refused to do so because it believed that it was able to improve its performance through internal growth.
iii. Merck should engage in more collaboration in future. It is important for Merck to carry out its future development and to maintain its leading position in the industry. Developing a new drug is costly and time-consuming. Many small firms were specialized and they were able to produce the drugs quickly and less costly. It is helpful to greatly reduce its business risk by collaborating with small biotech firms. Moreover, it also can decrease its R&D investments by a large amount. In this way, it is helpful to enhance its competitive position in the entire industry and improve its bargaining power.
Consider the Pfeffer and Sutton's article "Evidence-based management" (on Sakai). Explain the main point(s) of the article in your own words. Now use the insights from the article to evaluate the advice offered by Willie Pietersen in "The Mark Twain Dilemma" (on Sakai). In other words, does Pietersen's advice qualify as "evidence-based management"? Indicate your agreement or disagreement with Pietersen's advice - regardless of whether it qualified as evidence-based or not.
i. The article firstly talked about six traditional ways that managers used as evidences for decision-making, including previous knowledge, past experience, personal strengths, marketing, belief and imitation. It used GE forced ranking program to illustrate how managers should carry out evidence-based management. It suggested that managers should carefully use benchmarks and critically imitate the programs of established companies. Moreover, managers should pay close attention to the negative effects of their performances and improve their performances based on those effects. Finally, it provided four suggestions on how companies conduct evidence-based management. Firstly, companies should build up an evidence-based management culture and always use evidences and facts to explain what was going on in their companies. Secondly, companies should pay attention to the logic of management researches and critically analyze assumptions and alternatives. Thirdly, companies should continuously conduct experiments and learn from the repeated experiments. Fourthly, companies should pay close attention to real-world observations and encourage employees to continue studies.
ii. Pietersen's advice cannot be qualified as "evidence-based management". Pietersen provided six advices on how to deal with leadership changes. He summarized his own past experiences and many other companies' examples. He used these experiences and some existing theories to support his advices. However, evidence-based management suggested not using past experience and previous knowledge to make decision. Because every company was different from its competitors in size, culture, background, organization structure and so on. It was not wisdom to imitate the other's examples directly. An example worked in one company may not work in the other company. In face of the leadership changes, every company should carefully analyze all the evidences and facts in their own company and critically follow what the other company did in the same situation. Moreover, they should pay close attention to the negative effects of their performance and improve their performance based on these effects.
Consider the Mintzberg and Westley article "Decision-making: It's not what you think" and Pfeffer and Sutton's article "Evidence-based management" (both on Sakai). Do you see the advice offered in two articles as complementary or contradictory? Be sure to briefly summarize each article, even if you already did in the previous question, and to use real world examples to illustrate the concepts in the articles and to support your arguments.
i. The article "evidence-based management" firstly talked about six traditional ways that managers used as evidences for decision-making, including previous knowledge, past experience, personal strengths, marketing, belief and imitation. It used GE forced ranking program to illustrate how managers should carry out evidence-based management. Finally, it suggested companies conduct their evidence-based management from four perspectives, including building up evidence-based culture, examining the logics of management researches, as well as how to treat their organization and wisdom employees.
ii. The article "Decision-making: it's not what you think" introduced three different models of making decisions, including thinking first, seeing first and doing first. The authors described the steps of each model and analyzed the benefits and limitations of each model. It was suggested that it was better to integrate all the three models together in order to make a better decision.
iii. The advice offered in these two articles was complementary. The first article talked about the definition of evidence-based management and the regular way of conducting evidence-based management. The second article gave a detailed introduction of three different decision-making models used in different situations. It argued that thinking first model did not always work well in any situations. Therefore, companies had to use seeing first and doing first to carry out their business. It also suggested that these three models are highly related and they should be integrated together in order to make a better decision. Thinking first model was based on facts, seeing first model was based on ideas and doing first model was based on experience. It was hard to get the solution all the time by using thinking first model. Seeing first and doing first can improve the evidence-based management. It was better to integrate all the three models to find out the reasons and solutions. For example, when a drug company developed a completely new drug, firstly they had to synthesize the drug by themselves. This was the doing first step. Then they should test it and communicate across boundaries to improve the product. This was the seeing first step. Moreover, after producing the product and putting them into practice, they should collect all sales figures and market reflections to further analyze their product. In this way, they were able to well improving and marketing their products. This was the thinking first step. By combining the three models, the company was able to conduct its evidence-based management very well.