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To Ally or Not to Ally
460
J PROD INNOV 1996:13:453-m
MANAG
erans regained operational credibility by a stint back in line positions, many to return to skunk works again later. One of the more interesting conclusions by Ford management was that these very creative and innovative free-forms could also be managed to goals within time frames. They even provided activity-based costing. To Ally or Not to Ally, Sanjit Sengupta and Louis P. Bucklin, Marketing Management (Fall 1995), pp. 25-33
This article does not lend itself to the usual abstracting, because we don’t have space to report on the major graphic output of the research. But, a description of it may send the reader to the full article. The problem this research addressed was that many firms in recent years have been forming various alliances, the result of which sometimes is failure. Alliances are expensive, so all managements would like to know more about how to increase the probable success of their decisions. For this purpose, the authors propose using a set of eight cells that reflect the varying nature of situations being considered for alliances. But first they wanted to demonstrate the options available for handling complementary product strategy: 1. Make the product yourself, in the normal manner. 2. Buy the complementary product, in finished form,
in the normal manner. 3. Form an alliance:
a. Horizontal alliance, wherein the allying firms lie at the same level in different value chains. Such alliances can be for codevelopment or for comarketing. b. Vertical alliance, wherein two firms in the same value chain ally. An example of that was HewlettPackard’s alliance with Canon to build laser-printer engines. 4. Form an interface relationship. The firm does not invest directly in the complementary product but instead provides an interface between its products and complementary products produced by others. MSDOS was such an interface, as is the RS232C. a. The interface may be proprietary-Matsushita owned VHS recording and licensed it out. b. The interface may be standard, as was the case with MSDOS. To find which of the six options here should be selected for a particular case requires that a firm study
ABSTRACTS
its situation and make three judgments. First, how good is the organizationalfit? High or only moderate? Such fit is high if there is good compatibility with core competencies, if there will be good response speed, and if there are adequate human, physical, and financial resources by the parties. Second,
how good is the business
opportunity?
Again, high or moderate? High business opportunity comes with the availability of good profit margins, opportunity for continued growth, and potential for competitive advantage. Third, how good is the multiplier eflect? Again, high or moderate? A high multiplier comes from seeing the creation of new users, added value for end users, and the enabling of superior interfaces between existing and complementary products. Scoring any situation in this manner can result is eight outcomes-from three highs, to three moderates. That means eight different decision situations, and for each the authors construct variations from the six options above. As one example, they describe three situations faced by Kodak when they were preparing to produce and market a Photo CD. 1. Photo CD integace specification: Scored High, Moderate, and Moderate on the three factors above. The author’s structure of analysis recommended that Kodak develop a proprietary interface, which it happens was what they did, with Philips. 2. Photo CD player: Scored High, High, and Moderate, so the model recommended selective codevelopment, which they actually did, this time also with Philips. 3. Manufacture of Photo CD player: Scored Moderate, High, and High, so the model recommended an alliance with an OEM supplier to manufacture it for Kodak to resell. Kodak now buys them from Philips and resells them under a Kodak brand. Awareness, Use, and Effectiveness of Models and Methods for New Product Development, Ed J. Nijssen and Karin F. M. Lieshout, European Journal of Marketing (Number 10, 1995), pp. 27-44
Many methods or techniques have been developed over the years to aid in the process of product innovation. The authors, having studied the literature that reported on these methods and on their use by new products managers, became concerned that usage was dragging behind publicity. So they crafted an approach to learn more about the awareness and the usage.
J PROD INNOV 1996:13:453-m
MANAG
erans regained operational credibility by a stint back in line positions, many to return to skunk works again later. One of the more interesting conclusions by Ford management was that these very creative and innovative free-forms could also be managed to goals within time frames. They even provided activity-based costing. To Ally or Not to Ally, Sanjit Sengupta and Louis P. Bucklin, Marketing Management (Fall 1995), pp. 25-33
This article does not lend itself to the usual abstracting, because we don’t have space to report on the major graphic output of the research. But, a description of it may send the reader to the full article. The problem this research addressed was that many firms in recent years have been forming various alliances, the result of which sometimes is failure. Alliances are expensive, so all managements would like to know more about how to increase the probable success of their decisions. For this purpose, the authors propose using a set of eight cells that reflect the varying nature of situations being considered for alliances. But first they wanted to demonstrate the options available for handling complementary product strategy: 1. Make the product yourself, in the normal manner. 2. Buy the complementary product, in finished form,
in the normal manner. 3. Form an alliance:
a. Horizontal alliance, wherein the allying firms lie at the same level in different value chains. Such alliances can be for codevelopment or for comarketing. b. Vertical alliance, wherein two firms in the same value chain ally. An example of that was HewlettPackard’s alliance with Canon to build laser-printer engines. 4. Form an interface relationship. The firm does not invest directly in the complementary product but instead provides an interface between its products and complementary products produced by others. MSDOS was such an interface, as is the RS232C. a. The interface may be proprietary-Matsushita owned VHS recording and licensed it out. b. The interface may be standard, as was the case with MSDOS. To find which of the six options here should be selected for a particular case requires that a firm study
ABSTRACTS
its situation and make three judgments. First, how good is the organizationalfit? High or only moderate? Such fit is high if there is good compatibility with core competencies, if there will be good response speed, and if there are adequate human, physical, and financial resources by the parties. Second,
how good is the business
opportunity?
Again, high or moderate? High business opportunity comes with the availability of good profit margins, opportunity for continued growth, and potential for competitive advantage. Third, how good is the multiplier eflect? Again, high or moderate? A high multiplier comes from seeing the creation of new users, added value for end users, and the enabling of superior interfaces between existing and complementary products. Scoring any situation in this manner can result is eight outcomes-from three highs, to three moderates. That means eight different decision situations, and for each the authors construct variations from the six options above. As one example, they describe three situations faced by Kodak when they were preparing to produce and market a Photo CD. 1. Photo CD integace specification: Scored High, Moderate, and Moderate on the three factors above. The author’s structure of analysis recommended that Kodak develop a proprietary interface, which it happens was what they did, with Philips. 2. Photo CD player: Scored High, High, and Moderate, so the model recommended selective codevelopment, which they actually did, this time also with Philips. 3. Manufacture of Photo CD player: Scored Moderate, High, and High, so the model recommended an alliance with an OEM supplier to manufacture it for Kodak to resell. Kodak now buys them from Philips and resells them under a Kodak brand. Awareness, Use, and Effectiveness of Models and Methods for New Product Development, Ed J. Nijssen and Karin F. M. Lieshout, European Journal of Marketing (Number 10, 1995), pp. 27-44
Many methods or techniques have been developed over the years to aid in the process of product innovation. The authors, having studied the literature that reported on these methods and on their use by new products managers, became concerned that usage was dragging behind publicity. So they crafted an approach to learn more about the awareness and the usage.