COVID Innovation Scavenger Hunt

frugal-innovationMuch of the news focuses on how hard businesses have been hit by the pandemic. However, strategy is about finding opportunities and adapting in a dynamic environment. Let’s not forget to focus on inspirational examples along these lines. Send students on a scavenger hunt (like the business combination scavenger hunt) to find unique examples. Invite students to identify 5 innovations have each student introduce an innovation and others who have the same innovation must cross it off their list. See how many unique innovations your class can identify. This can be done easily in a synchronous online session or in threaded discussion. Some types of examples to consider:

  • Innovations to meet critical shortages. The shortage of ventilators has spurred multiple innovations such as the possibility of one ventilator serving up to 4 patients and the adaptation of CPAP machines.  Many innovations have increased the supply of protective equipment (PPE) including companies re-purposing production facilities.
  • New Treatments. Of course many firms are working to find treatments and/or an effective vaccine. These efforts are spread around the world so it is a race to see what will be most effective.
  • Product Adaptations. Some products can be adapted to new uses and it is a question of how to recognize those opportunities. For example, Kinsa thermometers has collected data on fevers due to normal influenza patterns. The were then able to back out normal patterns to identify atypical fevers that might be due to COVID before patients began showing up in emergency rooms.
  • Process Adaptations: Many service firms have adapted their processes to avoid contact. Some firms may be better equipped to do this than others (physical facilities, etc.) and it may help them survive. Even some farmers who have lost distribution channels have created contactless alternatives while others have had to destroy food that they could not get to market.
  • Delivery Partners as a lifeline. Restaurants and other businesses often rely on partners to get their products to consumers. While these partners may have been a side business previously, they are a critical lifeline now (see EatStreet, GrubHub, DoorDash and others). Amazon has also done better than other retailers for this reason.
  • Products in heavy demand. It isn’t just toilet paper and hand sanitizer. Other products have experienced significant demand and need to adapt their supply chains and processes to meet needs. Automatic door openers, video conferencing tools like zoom, door cameras like ring, are all in greater demand than anticipated.
  • Innovation on the front lines. Healthcare workers and others on the front line are also innovating to try and do their jobs safely. Telemedicine has taken off sharply as a way to treat COVID and other types of medical problems while limiting the spread of COVID. These may also highlight opportunities for firms.

Contributed by Russ Coff

Bringing COVID into Your Classroom (not literally, please)

Health-Workers-COVID-19I have taught during numerous crises (various wars, 911, 2008 crash, etc.) and always regretted missing opportunities to bring the events into the classroom. So how can we encourage our students to think strategically about the COVID crisis? Here are a few ideas for discussion or team projects (but please add more ideas in the comments):

  • Dynamic capabilities and Resource Redeployment. How can different types of firms redeploy their resources in this crisis to: 1) help others survive the pandemic, and/or 2) keep the business from going under? How does this redeployment lesson link to other types of challenges? Consider, for example, Eight Oaks’ distillery conversion to produce hand sanitizer.
  • Resource Acquisition & Retention. Many resources (especially Human capital) have been released. This could be an opportunity for some firms to access resources. For others, the challenge is to retain the resources through the crisis so they are able to ramp up once the crisis passes. How should firms respond?
  • Firms’ Ethical Responsibilities. The two issues above raise inherently ethical problems. What are the firm’s responsibilities to its employees? To shareholders? To society? To survive?
  • Generic virus strategies. China opted for extensive testing, isolated those who test positive from their families, and limited travel. The policies are well aligned (like a generic strategy) to limit spread. Is there an alternative aligned strategy involving limited testing? To what extent are countries “stuck in the middle?”
  • Technology strategy. What new technologies can be deployed to fight the virus? For example, Kinsa produces a connected thermometer that allows them to map parts of the US where there are unusual fevers— a week before people need hospitalization. How can this new resource be effectively deployed?
  • Entrepreneurial Strategy. What business opportunities are created by the crisis? How can an entrepreneur pursue them when resources are scarce? What are the implications for social entrepreneurship?
  • Global strategy. How can firms adapt to disrupted supply chains? Are there global opportunities created by the crisis? Along the lines of the first bullet, this could be opportunities to help those in hard hit areas or those that allow the firm to survive.
  • Diversification. Are there portfolios of businesses that are more or less likely to survive COVID? What do firms need to do to leverage those parts of their portfolio? What is the role of the corporate HQ?
  • Rigorous Data Analysis. The media presents data on cases and deaths at the country level. There are so many questions one might raise. Is the country the right level of analysis? Given the limited testing in some countries, does the number of known cases even provide useful data? How do we interpret missing data in countries like China and Russia?

Contributed by Russ Coff

Amazon’s New Spin

AmazonSpinTreeAmazon is encouraging employee spinouts. They are offering employees $10,000 plus 3 months salary to quit and form entrepreneurial ventures in their Delivery Service Partner Program. This makes for an excellent “ripped from the headlines” case. I ask students to read a brief packet of news articles on the program and complete a poll before class (here is the poll I used). Since the program started, Amazon has shifted 30-50% of its delivery needs away from big vendors (USPS, UPS, FedEx, etc.) in favor of internal and small external service providers. It brings out multiple strategic issues and can be used to frame a semesters worth of strategy issues:

  • Market structure: How does this alter the market structure for Amazon? On the other side, what is the market structure that employee entrepreneurs face?
  • Competitive dynamics: How will players respond? (FedEx has now declined to serve Amazon)
  • Internal analysis: How might this move enhance Amazon’s competitive advantage? Do the entrepreneurial ventures enjoy any competitive advantages?
  • Entrepreneurship: Is the opportunity for employee entrepreneurs attractive?
  • Corporate: Should Amazon vertically integrate into the delivery business? How does their tapered integration affect the market?
  • Alliances: How do the collaborative relationships between Amazon and its partners differ between big and small partners?

I have created a student spreadsheet that allows students to analyze the proposal from the perspective of an employee. It helps them consider two key sources of uncertainty: 1) how much help will Amazon provide on an ongoing basis? and 2) how smoothly will their implementation go? This is then compared against buying a FedEx route since there is an active market for these businesses. This is shown in the decision tree above. In addition, this is a final spreadsheet with the scenarios and decision tree completed.

Contributed by Russ Coff

Print the Legend: A multidimensional case

Print the Legend (2014) is a documentary about the 3-D printing industry, that offers an engaging case study covering industry, firm & technology life cycles, disruptive technologies, and strategy in emerging firms & industries. This industry was established in the 1980s focusing on large expensive printers for industrial use – Two key players dominated using different technologies. The market was seriously shaken by startups in the 2010s that drastically reduced pricing created a consumer market. As such, we see two distinct market segments (industrial & consumer) and two technologies (stereolithography & fused-deposition) all battling it out.

The film follows two startups from emergence through VC funding, and shows their diverging paths as one is acquired and one remains independent. MakerBot, hires an experienced Strategy Director who (with the VC) radically shifts the founding strategy. This leads to high turnover and eventually, founder exit and acquisition by a leading industrial 3-D printing incumbent. In contrast, FormLabs, takes a more emergent approach to strategizing and positioning. The award-winning film is very well-made and fun to watch – Students love it and learn from it. It features a prominent VC (Brad Feld) and startups that students may be aware of.

Teaching notes: The film (available on Netflix) runs 100 minutes, so with discussion, it takes a full 3-hour class. It is helpful toward the end of the semester as a “movie day” with popcorn and snacks – students appreciate a break the week before their big final project is due. It is helpful to spend about 20 minutes at the start of class giving a mini-lecture on firm & industry life cycles and disruptive technologies, to set up the film, as well as about 10 minutes at the end for a debrief. One can show the film in 10-20 minute segments, pausing to discuss what has happened so far. This case has been a big hit over the 2 years it has been in use. It’s a little logistically complex, and requires strict adherence to a schedule, but once you have it down, it’s a very easy class and case to teach. Full teaching notes, assigned pre-reading, slides, and film segments are available on Gina’s shared teaching site.

Contributed by Gina Dokko

Free Money … No Takers?

FreeMoneyEntrepreneurship students often think they’ve found a “no brainer” idea – one that everyone “obviously” will want. We’ve all seen it before – an idea that is so good that it requires zero dollars for customer acquisition because word of mouth and social media will lead to infinite sales, virtually overnight.

Here’s an exercise that may help open students eyes to just how hard it can be to sell something. Even something as wonderful as their idea. Give each student group five single dollar bills. Ask them to develop a plan for giving away the dollar bills to strangers, in a public place. Have them develop a business plan that includes a target audience, script, etc. Giving away free money is harder than it appears! And if it’s hard to give away dollar bills, it will also be hard to get the attention of customers even for a “no brainer” idea. This exercise comes from the following video which might be assigned after the exercise as part of the debriefing.

Contributed by Susan Cohen

Deflategate: Letting the air out of strategic planning

ballStrategies rarely work out as planned but somehow, students remain eternally hopeful that everything will go exactly as they expect. This experiential exercise allows students to “feel” Mintzberg’s (1994) critique of strategic planning. It also helps to illustrate and compare causation and effectuation decision-making logics (e.g., finding entrepreneurial opportunities). You can bring “Deflategate” (from the 2015 NFL season) to a classroom near you. The exercise proceeds as follows:

  1. Air pumpInflate ball & sit on it. Ask 2 volunteers to inflate a heavy duty inflatable ball using a small air pump (one can buy these a sport store) and try to sit on it afterwards for a minute. While introducing the exercise, the instructor should keep the plug hidden in her/his pocket. Inflating the ball is amusing (both the volunteers and the audience). It is not easy or quick to inflate the ball.
  2. Where’s the plug? After inflating, students look for a plug. The instructor waits a few seconds and plugtakes the plug out admitting that she/he had it all the time. The class will laugh. It may be frustrating for the volunteers but then we begin the debrief and explain the reason for the deception in the exercise.
  3. Debrief: According to Mintzberg, decision-makers (those who inflate the ball) expect everything will go smoothly according to what they planned but usually some unexpected circumstances occur that alter the plan’s effectiveness. Decision-makers cannot anticipate everything and the exercise drives this home and shifts focus to decision-makers’ bounded rationality. It is quite rare that students will look for a plug before doing the exercise (though it happens on occasion). One might move from here to discuss innovation, business models and disruptive innovation.

Other related toolbox exercises that demonstrate the challenge of predicting outcomes and implementing effectively include the Tinkertoy Exercise, the Strategy Puzzle, and the Paper fight. There are also some materials under the topic of scenario planning.

Contributed by Piotr WÓJCIK

Trumped up Strategy Class

This isn’t the first time polls have been wrong. The election of Donald Trump was a shock to many college students (as well as the press) and this may warrant some class time. Some instructors responded by providing space for students to express their feelings and this may be within the scope of the educational objectives for some classes. For a strategy class, a more relevant focus might be to examine the implications of the outcome for business strategies or to examine the campaigns from a strategic perspective. This might be considered as a template for how to discuss other sudden world events in the strategy classroom. Here are some takes on how to bring the election in while still emphasizing the pedagogical objectives of a strategy course:

  • Project case scenario analyses (Aya Chacar). Scenario analysis is designed to unearth factors that affect the efficacy of a given strategy. In a global context, country risk is a central factor in assessing strategic alternatives. In class, students discussed the likely impact of the election on the companies their teams are studying. Can you help the company? What do you think “could” be the impact on the companies under the new American administration -based on stated positions or past behavior? The companies they chose to study in this class are Amazon, Auchan, Didi Chuxing, General Motors, Naver, Uber, Volkswagen, and Walmart. All already have major international presence with some but not all having significant operations in China, Europe, India, Japan, Mexico, South Korea, SouthEast Asia and the US.
  • Entrepreneurship/Opportunity Recognition. The pollsters were all wrong. Often businesses and whole industries miss critical trends in consumer preferences and this probably means that there is unserved market space. Given trends that are now unearthed by the election, what market opportunities might there be for firms in various industries? One could use the project firms, cases you have done or specific firms that you think might be affected.
  • SWOT on campaigns (Peter Klein). While this framework is not preferred by most strategy scholars, it may raise some good points. A few examples from the Clinton campaign: O: demographics (e.g., increased Hispanic population, more socially tolerant electorate), unpopular opponent,chance to make history. T: middle-class concerns about economic inequality, backlash against political correctness, Clinton fatigue, incumbent fatigue, WikiLeaks. S: experience; support from major media, Wall Street, large corporations; ties to Obama and WJ Clinton; large staff of handlers; polish. W: experience; support from major media, Wall Street, large corporations; ties to Obama and WJ Clinton; large staff of handlers; polish.
  • Resources/Capabilities. Many of the campaign strengths turn out to be weaknesses depending on the context (experience, polish, support from corporations, etc.). What resources give a party a sustained advantage? What does “sustained” mean in this context? This might bring in a discussion of core rigidities and how once valuable resources can become critical weaknesses over time.
  • Disruptive Innovation (David Burkus). Clay Christensen described disruptive innovations as an innovation (typically from an outsider) that creates a new market and value network that eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The Trump campaign might be viewed in this light as a disruptive strategy that overtook the conventional establishment.
  • PESTEL. Of course, this demonstrates the value/importance of looking outside of the industry for trends that may influence whether a given strategy will be effective or not. The PESTEL framework is a simple tool for bringing this in to the analysis (Political, Economic, Social Technological, Environmental, and Legal).
  • First 100 Days. Trump offered an ambitious list of things he planned to try and accomplish in the first 100 days. One can divide the list among groups and ask them to identify the implications of the policies for business in general or, preferably, for a specific firm/client.

Contributed by Russ Coff

Will Pokémon Keep GOing?

The augmented reality (AR) game, Pokémon Go, has taken the world by storm as players roam the real world catching Pokémon and battling in Pokémon gyms. The game has set 5 records since its launch in July 2016 — including the most revenue by a mobile game in its first month ($206.5 million). Nintendo’s stock doubled 15 days into the release, adding $7.5B in value, but then settled back into a mere 50% increase when it became clear that Nintendo was a partner with limited ownership in the company that developed the game (Niantic, a Google spinoff). Although the game is free, users can make purchases in the app store to support their Pokémon ‘hunting’. The bewildering success must clearly be keeping Niantic’s CEO, John Hanke, and his crew awake at night. Besides the operational issues related to scaling up, intellectual property (IP) had become a big issue. A slew of imitators were emerging as well as a number of companies trying to steal the game’s data content and algorithm. In addition, the formidable international expansion faces roadblocks in the most populous Asian countries while potential users were impatient. There were many additional potential revenue sources to be tapped and explored such as the recent win-win partnership with McDonalds Japan. Moreover, while getting gamers out and about was good, there were a number of unintended consequences. On the plus side, many entrepreneurs were finding ways to make money from the game — for example restaurants could lure in customers if there was a Pokestop nearby. At the same time, users and non-users worried about possible injuries, trespassing, and invasion of privacy among other things. Naturally, this makes an outstanding ripped-from-the-headlines case for strategy courses. It is a great vehicle to cover key topics such as entrepreneurship, strategic alliances, internal analysis/capabilities, and external analysis. The following are some materials that are useful for the case:

Contributed by Aya Chacar and Russ Coff

K-Cosmetics: Covering the Globe

Successful strategy is often a combination of luck firm specific skills and favorable conditions. AmorePacfic makes a great ripped-from-the-headlines case since it rose to be the #1 South Korean firm buoyed by a growing and large domestic demand from a growing population. Hallyu – the Korean equivalent of Hollywood was also a driving factor as South Koreans want to look like their favorite stars and use the same cosmetic products and that includes men. In fact, it is estimated that a whopping 20% of South Korean men use cosmetic products on a regular basis. AmorPacific capitalized on this growing trend by building up its brand and investing in R&D and ultimately riding the popularity of K-pop and K-movies to expand internationally. At a time that demand is softening, K-cosmetics are still growing with exports increasingly exceeding imports and Korean cosmetics brands now more popular than European brands in China and increasing their penetration in many countries including China, Hong Kong, Japan, the US, Vietnam, and in a surprising list of other countries such as Poland where their addition to Sephora’s product line and other large retailers will ensure broad distribution. How has a $150 1.7 oz managed to gain global popularity? Some materials for the case might include:

Contributed by Aya Chacar

Research Chatter: Coffee talk for geeks

Ronnie Chatterji and Charlie Williams have put together an excellent research podcast series. They describe it as “Big ideas from business school professors.” It offers an excellent bridge between cutting edge business research and the world of practice. The podcast is sponsored by the Strategic Management Society (publisher of the Strategic Management Journal, Strategic Entrepreneurship Journal, and Global Strategy Journal). You can find the podcasts at iTunes, Soundcloud, and YouTube among other places. Want a quick taste? Here are some of the topics that this reviewer found especially interesting in the realm of entrepreneurship and innovation:

Contributed by Russ Coff

Having your IP Stolen is a Real Beach

Knowledge and intellectual property inherently complicate exchange (e.g., property rights are poorly defined, the value is unclear, there are high transaction costs). One manifestation of this is the disclosure problem (Arrow’s 1962 information paradox). Figuring out the “price” for an idea requires revealing data which intrinsically reduces its value. Entrepreneurs often have ideas stolen by larger corporations that have significant complementary assets. Accordingly, they often try to go it alone despite the fact that their lack of such resources may ultimately create less value (for example, Tony Fadell tried to go it alone before bringing the iPod idea to Apple). His alliance with Apple turned out very well. However, this is often not the case. This clip illustrates what happened to Kramer (on Seinfeld) when he approached Calvin Klein with his idea for a new cologne called “beach” hoping to access their resources while gaining a signal of the idea’s value. He reveals the idea in an effort to obtain both. While it is funny, it will also kick off a serious discussion on this issue.

Contributed by Michael LeibleinMarcel Bogers and Marcus Holgersson

How Xerox PARC Lost the PC: Putting the “O” in VRIO

Sometimes students struggle with how a firm can have valuable, rare, inimitable resources and still not have an advantage. This is central to the resource-based view and the VRIO framework. This clip from “Triumph of the Nerds” shows how PARC Xerox developed the GUI interface, object-oriented programming, and local area networks. Then it shows how they failed to exploit any of these innovations. In particular, it shows how Steve Jobs toured PARC and lifted the GUI to create the Macintosh computer. Here is a nice discussion of what the Xerox engineers thought of Steve Jobs’ visit. This can lead to a nice discussion of intellectual property, complementary assets, internal and external analysis. It is useful to show the first half (first 4.5 minutes) and ask students to speculate on why we don’t all have Xerox computers. Then the second half explains how Apple exploited the innovations.

Given Apple’s legal actions against Samsung and Google over the look and feel of their product, there is a certain irony that Apple imitated Xerox in their flagship product.

Contributed by Rich Makadok

Smooth Recovery: Learning to Pivot

Pivoting from one strategy to another is essential for entrepreneurial firms but also for more established firms operating in a dynamic environment (see other materials on dynamic capabilities on this site). The video below can stimulate a conversation on what it takes to pivot (both in entrepreneurial and established contexts). Of course, its also moderately entertaining…

Contributed by Russ Coff

Exercise: Show Me the Money

Here is a simple exercise to demonstrate competitive advantage on the first day of class. Hold up a crisp $20 bill and ask “Who wants this?” When people look puzzled, ask, “I mean, who really wants this?” and then “Does anyone want this?”  Continue this way (repeating this in different ways) until someone actually gets up, walks over, and takes the $20 from your hand. Then the discussion focuses on why this particular person got the money. How did their motivation differ? Did they have different information or perception of the opportunity? Did they have a positional advantage based on where they were sitting? Other personal attributes (e.g., entrepreneurial)? The main question, then, is why do some people/firms perform better than others? This simple exercise gets at the nexus of perceived opportunity, position, resources, and other factors that operate both at the individual and firm level. Note that instructors should tell the class not to share this with other students. However, if you do have a student who has heard about the exercise (and grabs the money), asymmetric information about an opportunity is certainly one aspect of the discussion. The following “vine” might also help drive home the point about money and resources…

Contributed by Rich Makadok

The Emperor’s New Rope…

This is another in a series of reminders that individuals respond to perceptions even if they are inaccurate. The short video of the invisible rope prank might be followed by a discussion of how firms can influence the perceptions of their rivals, complementors, and/or customers. This is especially an issue in contexts where there is a great deal of uncertainty (entrepreneurship, technology, etc.). An earlier post presents a driving prank with a similar theme.

Contributed by Russ Coff

Strategic Complementarities at Steak

Complementarities drive so many aspects of strategy — particularly in the context of corporate strategy. M&A, Alliances, diversification and global strategy are fundamentally about complementarities between businesses and regions. On the video below, Will Mitchell notes that it would , “get a conversation started about one of the 3 additional forces I use in industry analysis – Porter 5, plus social factors, new strategies, and complementary organizations. The video is short enough to make the point about complementation, then to spark discussion of what this would mean in business strategy (e.g., software upgrades for hardware).” The video is also valuable in exploring how a narrow product can expand its market appeal or find new markets. See also the classic complementarities video here.

Contributed by Will Mitchell

Die Another Day Gazelle

This clip shows a cheetah catching a gazelle. Then a hyena tries to steal dinner from the cheetah. While they are busy fighting, the gazelle, who was playing dead, gets up and runs away. In this way, a cunning weaker firm might avoid being noticed by more resource rich firms until the moment when it has more resources of its own. A basic principle of competitive dynamics under bounded rationality is to fly under the radar so as to avoid retaliation from stronger incumbents.

Contributed by Russ Coff

Rejection Therapy: For PhDs, entrepreneurs & other failures

What is the most significant thing that differentiates entrepreneurs from others? Somehow, in the face of overwhelming odds that they will fail, they still manage to push forward. Rejection, almost inevitable, doesn’t deter them. The rest of us kill inventive ideas before we even test them because we fear rejection. This NPR story explores a new form of therapy where rejection is turned into a game: how many times can you get rejected in a day? Could desensitizing people to failure create more entrepreneurs? This also has important implications for academics who typically face many rejections from journals for each manuscript that gets accepted. Without “rejection therapy,” they may avoid sending papers to journals because they are concerned that the work will be rejected. Like would be entrepreneurs, they kill ideas before they have had a chance to test the waters.

Contributed by Don Hatfield

Strategic Magic: Success stunts learning

i-failAn emerging literature focuses on learning from failures — both in terms of entrepreneurship and strategy more broadly. For some recent examples, see studies by Ariño and de la Torre (1998), Eggers (2012), and Kim & Miner (2007). It might appear that learning from success should be taken for granted — the actor has done something well and will naturally repeat the behavior. However, in the complex world of strategic decision-making, causality and can be especially hard to determine. It turns out that failure tends to trigger more rigorous analysis of the causes (even if these analyses suffer from attribution biases). On balance, success may tend to trigger much less rigorous analysis (if any) that is even more biased in the attributions made. This WSJ article on a magician’s ability to dupe audiences illustrates the principle nicely. In class, this discussion might be used to discuss the role of luck and how it may skew attributions, reducing the likelihood of serial success in strategic decision-making. The magic trick described in the article (or something similar) might be a nice, and dramatic, way to introduce the topic in class — all you need is two dimes…

Contributed by Donald E. Hatfield

Honda “B” Emerges

In this video, Henry Mintzberg presents the story behind the classic Honda B case. That is, when Honda tried to enter the traditional US motorcycle market with large machines but ran into implementation problems that pushed it toward introducing small bikes through non-traditional distribution channels. As a result of their pivots, they were able to create a new market for smaller bikes in the US. This was a startling contrast to the “A” case which implied that the strategy was intentional from the start.

Heard Through Marko Rillo