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Entries in business model (28)

Monday
Dec222014

Experimentation in business

In order to understand what works and what doesn't in business, it's best to test and measure--to experiment--and apply what you learn. Thomas Davenport's 2009 HBR article "How To Design Smart Business Experiments" is an excellent primer on some of the challenges as well as the benefits of conducting sound experiments.
 
Davenport summarizes his findings as follows:
  • Too many business innovations are launched on a wing and a prayer—despite the fact that it’s now reasonable to expect truly valid tests.
  • Companies that equip managers to perform small-scale yet rigorous experiments don’t only save themselves from expensive mistakes—they also make it more likely that great ideas will see the light of day.
  • With a small investment in training, readily available software, and the right encouragement, an organization can build a “test and learn” capability.

To these, I would add the following comments:
  • At the end of the day, little else than controlled, replicated, consistent experimentation can establish causality between two observables. This challenges not only the businesses that do not a have a “test & learn” culture, but also those who attempt to measure what they do, but rely mainly on non-causal ex-post estimations. Rigorous experimentation can tell you when you are wrong, and if you are right, it is a good hygiene factor.
  • The approach of the article is very pragmatic when stating that experimentation mainly serves to test tactical changes / decisions. Based on Mars’ experience with marketing science and “laws of growth,” I would argue that replicable, rigorously established patterns can definitely serve as the foundation for the marketing strategy of a company. While the tactical improvements are the main short term outcome of a good experimentation culture and practice, it can be a critical enabler for scientifically grounded and effective strategic shifts.
  • Last but not least, the idea that "With a small investment in training, readily available software, and the right encouragement, an organization can build a “test and learn” capability” can have far reaching consequences on an organization like Mars. Mars has historically been a decentralized, locally driven, entrepreneurial company. This has arguably been a critical enabler for Mars’ success so far, especially in period of fast economic growth and distribution expansion. Now that growth is expected to be close to flat in mature markets, that population aging and nutrition concerns are effecting a slow decline in the per capita calorie consumption, we are more than ever in need of the creative power of entrepreneurship to sustain our growth. In the increasingly complex, multi-channel, heterogeneous, information-overloaded business ecosystem, it will probably have to be a very well informed entrepreneurship. The opportunity for decentralized learning that is offered by a small scale rigorous experimentation capability is a critical enabler for today’s and tomorrow’s entrepreneurship, probably as important as the freedom of action granted by decentralized decision making. 
And I would recommend this great book about the topic, which is a very easy read and takes us through the disruption from rigorous experimentation to business, manufacturing, sociology, government, education, health, etc :-)
 
-- Yassine El Ouarzazi
Tuesday
Dec162014

Catalyst: Cracking Complex Business Challenges for Mars

When Associates think about research at Mars, many point to our efforts in cocoa sustainability or WALTHAM’s study on human animal interaction. But did you know that Mars also has its very own Think Tank that delivers solutions to some of our most complex business challenges? 

For more than five decades, Mars has invested in Catalyst, a distinctive capability made of highly skilled, diverse Associates with unique access to experts. Catalyst takes creative risks to conceptualize, develop and pilot breakthrough business solutions to help position Mars purposefully in the thought leadership space.  Catalyst’s work has been recognized as cutting edge by scientific and business communities and continues to be a source of competitive advantage for Mars.

“By harnessing innovative and abstract ideas from a vast pool of stakeholders, including internal, external and academic experts, Catalyst unlocks transformational business strategies,” said Bruno Roche, Chief Economist and Managing Director of Catalyst.  “We strive to be a change agent for Mars, helping the company deliver long-term growth that we can be proud of.”

Catalyst is behind some of our company’s most exciting initiatives, including:

  • The launch of new inclusive business model pilots with Wrigley of Kenya and in the Philippines, in slums and remote areas where Financial Capital is scarce.  These pilots have demonstrated that delivering and measuring Human Capital (individual well-being) & Social Capital (trust within a community) among the Wrigley micro-entrepreneurs is a driver of increasing Financial Capital -- a major breakthrough that is unlocking a sustainable route to market, and that is scaling up.
  • A partnership with the Said Business School at Oxford University to co-develop a new management theory whereby Mutuality is driving business performance – through modified management practices and metrics; and
  • A contribution to a special edition of “the Brewery,” for the World Economic Forum in Davos in January, 2014.

Additionally, through its Labs, Catalyst is working to harness abstract ideas and transform them into strategies to help the company deliver growth. For instance, the Demand Lab has made great strides to bring discipline and rigor to our marketing activities by utilizing insights from applied mathematics, statistics and data mining, as well as psychology, cognitive sciences, neurosciences, ethnography, and behavioral economics. The results have been incredible – through its work, the Marketing Lab has doubled the efficiency of Mars’ advertising and deciphered the role of media in the laws of growth for our brands, bringing huge savings to the business and giving Mars a set of capabilities envied by our competition.

Catalyst has also made great achievements through its Culture Lab, which has developed a ‘best practice’ integration of acquisitions into Mars (based on a fusion of sociology and business anthropology), bringing huge value and enabling smooth cultural integrations. Furthermore, Catalyst’s Mutuality Lab has influenced the company’s 25-year vision, Mars' recent corporate branding, and is developing a new holistic performance measurement system for mutuality across the entirety of our business & identifying corresponding management practices to enact mutuality (Economics of Mutuality program).

'The only thing we have in common at Catalyst is that we have nothing in common,' an associate once observed. Catalyst is not a traditional team, by design.  It strives to be an agile organization made of associates & fellows from different backgrounds, nationalities, walks-of-life with a common passion to leverage values, sciences & knowledge to improve the world, and a relentless conviction that business/entrepreneurship is a powerful vehicle to achieve this goal.  Over its lifetime, Catalyst has demonstrated that Forrest Mars Sr's 1967's intuition that 'management is to apply sciences to economic problems' was correct. "The economic problems of today are not the same as in 1967, the sciences have also evolved in a dramatic way, yet Catalyst’s approach to transform abstract academic thinking into breakthrough business solutions and a means to ensure changes 'stick' culturally remains more relevant today than ever. " said Bruno.

So what’s next for Catalyst?

--Bruno Roche

Friday
Dec122014

Mutuality: Define, study, teach

In June of this year, Mars Catalyst and Oxford University's Said Business School entered into a multi-year partnership to explore the concept of mutuality in business and how to enact it.  The collaborative research program will build on the long experience of Mars, Incorporated, which has Mutuality as a core principle alongside Quality, Responsibility, Efficiency and Freedom.  It will also build on the breakthrough work of the company’s corporate think tank — Catalyst — in designing and testing new non-monetized metrics to help the business move from a profit maximization model to a holistic value optimization approach across People / Planet / Performance that could one day help Mars become the most mutual company in terms of fairness and shared benefits.  

Mutuality as a business concept is rapidly gaining support since the global economic crisis of 2008 and as consumers demand more demonstrated ‘values’  behind the value that they seek with their buying habits.  It is not enough, therefore, for one company to become more mutual in its business practices, as one cannot be mutual in a vacuum.  The Mars/Catalyst-Oxford/Said partnership, therefore, is about spreading the word to the next generation of MBAs and to rising business managers through executive education.

Specifically, the partnership will:

  1. Help define mutuality generically and develop a broad understanding of the values and principles of mutuality and their application in different business and economic contexts;
  2. Identify the management practices that can enact mutuality in different ways;
  3. Develop a business management theory based on mutuality; and
  4. Co-create MBA and executive management training curricula that will position ‘mutuality’ as a viable business model alternative to the current dominant Chicago School of Business Financial Capitalism approach.

Former Oxford Said Dean Colin Mayer is leading the Oxford side of the partnership with Mars/Catalyst along with former Harvard Business School Professor and current Said Dean Peter Tufano.  Prof. Mayer's essay on Mutuality and Morality in Business appeared in the January edition of The Brewery, a trade publication that featured writings on mutuality from Mars Chairman Stephen Badger, CEO Paul Michaels, Bruno Roche and myself from Catalyst, and other leaders from global businesses and government.

This partnership is the start of an exciting journey, whereby the world can become a better place through more mutual business practices.  Stay tuned!

--Jay Jakub

 

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