1. Marketspace Evolution and Need for Continuous Innovation
Brand Promise
Branding
Marketing communications
Customer interface
Implementation
Objectives
Achieve strategic goals
Adjust product offering and delivery system to rapidly changing marketspace environment
Delivery
System
Innovation
Process
Deliver on the promised experience
Renew/innovate the
customer experience
Source: Monitor Analysis

2. Why Does Implementation Matter?
Strategy
Appropriate
Inappropriate
Success
All that can be done to ensure success has been done
Roulette
Good execution can mitigate poor strategy, forcing management to success or
Same good execution can hasten failure
Good
Implementation
Trouble
Poor execution hampers good strategy -- management may never become aware of strategic soundness because of execution inadequacies
Failure
Difficult to diagnose -- bad strategy masked by poor execution
More difficult to fix -- two things are wrong
Poor
Source: Modified version of materials in Thomas V. Bonoma, The Marketing Edge, The Free Press, 1985

3. Challenges of Online Implementation
Essential Challenges of Online Implementation
Customer-Driven
Organization-Driven
Lower switching barriers = increased importance of good implementation
More complex linkages = increased complexity of implementation
More visibility of errors = stronger competitive implications of errors
More fluid organizational boundaries = increased complexity of implementation
More dynamic market environment = increased complexity of implementation
Organization-Driven
Customer-Driven
Monitor Company ©1999 — Confidential

4. From Built to Last to Built to Rebuild
Sources: Frederick P. Brooks, Built to Last, Harper Business
Smart Way to Start, 10 Principles of the New Economy, Business 2.0, March, 2000

5. The Delivery System Needs to Support and Reinforce the Resource System
Mapping the Resource System
People
Supply
Chains
Processes
Systems
Assets
Source: Clayton M. Christensen, Meeting the Challenge of Disruptive Change, Harvard Business Review 78, no. 2, March-April 2000
Monitor Company ©1999 — Confidential

6. Four Types of Supply Chains Found in Marketspace
B2C (Business-to-Consumer)
B2B (Business-to-Business)
Stock-It-Yourself
Outsource Warehousing
Drop Ship
Fulfillment Intermediaries
Customer-Centric
Vertical Hubs
C2C (Consumer-to-Consumer)
C2B (Consumer-to-Business)
Much like a vertical hub, many sites (e.g., eBay) have created customer-to-customer sales
Provides a forum for buyers and sellers to meet
Buyers and sellers trade directly (eliminating an intermediary)
A global marketplace with a large and interested trading company
C2B companies include auction services like Priceline.com. Individual consumers place bids with businesses and businesses decide whether to sell.
Also includes consumer group buying companies like Mercata.com. Mercata.com is a trading community where the more people that purchase a product, the lower the price is. Mercata allows consumers from around the world to achieve group scale economies.

7. Innovation Used to be Slow and Gradual in the Offline World
3M’s Research Paradigm
Key Takeaways
Traditional offline innovation took years and emphasized sustainable/gradual innovation
Marketspace still offers room for incremental innovation, but emphasis shifts to more drastic innovations
High information content of innovation objects increases speed of innovation from years to months or even shorter
Short history of marketspace means new collaborators/complementors become available frequently
Source: Ernest Gundling, The 3M Way to Innovation, Kodansha America, Inc., 2000

8. The Offline Innovation Process Was Internal to the Firm
Innovation by Doodling
Innovation by Design
Innovation by Direction

9. Offline Innovation Process vs. Online Innovation Process
Offline Trade-Offs/Principles Supporting Funnel Approach
Online
Principles
Investments required to launch new innovation very high
Limited resources force tradeoffs/choices about which innovations to pursue or not
Tradeoffs/choices are made inside the organization before product hits the market
Time-to-market/first-mover imperative needs to be traded off with extensive time required to gather customer input
Launching early increases risk of flops and flops need to be avoided at all times:
Costs of flow very high
Significant damage to brand equity
Investments required to launch new products and services very moderate
Choices about future of new innovations can easily be made by markets, no need to make these choices internally
First-mover imperative can be aligned with gathering (more) customer input
Launching beta versions allows for revisioning/customization, actually benefiting innovator
Keys drivers determining success of innovation/implementation are:
Customer base
Customer data analysis
Knowledge management

10. New Innovation Frameworks Addressing Co-Evolution Have Emerged
Low 2 5
Developer-Driven Development
Technology/Market Coevolution
Maturity of Technology Design 3
User-Context Development
New Application or Combination of Technologies
User-Driven
Enhancement 1 4
High
High
Low
Alignment of Product Line
With Current Customer Base
Source: Dorothy Leonard-Barton, Wellsprings of Knowledge, Harvard Business School Press, 1996

11. Integrating New Technology with Customer Preferences
Evolution of Technical Possibilities
Beta 1
Initial
Input
Product
Release
Beta 2
Beta 3
Evolution of Customer Preferences
Source: Marco Iansiti and Alan McCormack, New product development on the Internet, Sense & Respond, Harvard Business School Press, 1998

12. Distributed Innovation
Customers
Collaborators
Company
= Boundaries of the firm
= Feedback loop
Competitors
Suppliers
Enablers