04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper The Real New Economy

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Agenda Starting Assumptions Myths And Realities Strategic Suggestions Critical Lessons Case Application

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper To Begin With... There Is No Such Thing As A NEW Economy... It Is Just The Same Old One With Old And Evolving Challenges Only Worse And The Same And Evolving Opportunities Only Better...

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper The Long History of the “New Economy”

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper A Look Ahead Environment: - Increasing And Erratic Technological Discovery - Increased And More Complex Social And Political Evolution - Unpredictable Population Dynamics And Impact - Rapid Communication And Transfer Of Everything Impact: - Increased Knowledge Obsolescence - Decreased Predictability (e.g., Products & Markets) - Decreased Sustainability (e.g., Any Business) - Increased Polarization (e.g., Have-Have Nots) And Evolution Of Rapid Divides

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Following The Latest “Buzz-Word” Is Not A Real Solution I.T. is Important... It’s just not primary … And

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper The Real New Economy Myth One MYTH: I.T. investments were the sole cause of increases in productivity in the “New Economy”. REALITY: Factors such as competition and innovation in conjunction with appropriate technology solutions and execution fueled productivity gains.

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper MYTH: Productivity gains were consistent across all sectors of the “New Economy”. REALITY: Only six sectors saw significant productivity improvement from IT spending. Retailing, security brokerage, wholesaling, semiconductors, computer assembly and telecommunications contributed 76% to the country’s net productivity gain. These same sectors accounted for only 32% of US GDP. The Real New Economy Myth Two

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper There Are Only Two Basic Competitive Strategies: –Differentiation (i.e., Value Creation) –Low Cost Differentiation Is Based On Value Creation As Perceived By A Real Customer Low Cost Strategy Only Works If It Is Valued By A Real Customer The Real New Economy Strategic Suggestions

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Productivity=Increased + Decreased Outputs Inputs An increase in production, added value, and entrepreneurial deployment of labor combined with reduced capital spending allowed many job sectors to increase their efficiency and therefore productivity. The real bottom line …..

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Technology’s Supporting Role in 1990’s Enabled the Development of new products and processes Facilitated rapid industry-wide diffusion of innovation Has strong Economies of Scale

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper 1.Target Productivity Levers That Matter. 2.Get the Sequencing Right. 3.Leading only when you should. 4.Pursue Managerial and Technological Innovation in Tandem. 4 Critical Lessons for successful execution

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Case Application BBA Flavor Development is more of an Art “BBA itself lacked internal precision involving flavors” Get the Sequencing Right Can something be automated when it there is no formula for success? No existing process for involving clients in flavor development Necessary Groundwork Incomplete Technology must be associated with proven processes or it can fail! Spider would facilitate communication, reduce costs for clients, and improve inventory management. Lead or Follow? Lead only when you are certain investment will be value added Involving customers and utilizing flavorists know how Defining new relationships & Choosing a methodology not easily duplicated Beta: Original Flavor won by a 3 to 1 Margin. Final decisions were based on taste tests! Target the levers that matter! Process must add value for the customer!

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Case Application Alibris Did not improve a lever, they completely changed proven revenue and business model. Failed to target productivity levers that mattered Attempted to deploy new technology without developing new processes and proper testing. Assumed new site “E- Commerce” would increase profitability on its own. Did not follow a sequential process Went with unproven technology and promised unattainable delivery date with a company that did not know their client Failed to do the Groundwork Lack of control over the supply chain. Failed to establish new relationships. Did not pursue managerial and technology changes together Failed to establish a contingency plan Your Fired

04/10/04Team Fusion: Tim Fox, Tom Maher, Alala Sundaram, Andrew Szleper Questions ?