Articles

The article focuses on the importance of innovation in delivering a customer service experience that builds loyalty. DIY chain Home Depot invested in more employees, revitalized store environments, and created an employee reward program to improve their customers' experience. Computer company Dell is investing in an improvement strategy that includes product, service, and support initiatives to enhance the customer experience. General Electric has initiated its CENCOR (calibrate, explore, create, organize, realize) initiative. Companies must constantly work to ensure customer loyalty.

Seemingly high-potential opportunities flop. Soaring products suddenly face the specter of commoditization. And booming brands lose their luster. Many marketers attribute these disappointing outcomes to the inherent randomness of innovation. Yet there is a way out of the morass. Companies that use the jobs-to-be-done model can master the innovation life cycle —detecting valuable prospects, enhancing existing products, and infusing energy into even the most inert categories.

The product with the highest unit profit may not be the product with the highest profit per unit of resource consumed. The Theory of Constraints (TOC), with its emphasis on throughput costing, offers one possible approach to profitability analysis, but it is focused on the short term. The authors discuss why throughput costing, in combination with ABC, is a better option to guide long-term, strategic decision making.

Some external factors, such as inflation and interest rates, have been more stable in recent years, which ought to lead to greater certainty in planning and budgeting. Other factors, such as the rapid downturn in the global economy, have made forecasting demand increasingly difficult. At the same time, the level of competitive activity is stepping up so that companies often find themselves facing new competition from unexpected quarters.

Keynote presentation to the Central and East European Management Development Association (CEEMAN).
Presented at Sabanci University, Istanbul, September 27, 2007.
By Professor Ichak Adizes