Growing the Business - Deep or Wide?

Reading through an HBR case for ITMgmt, on Merrill Lynch's decision to aggressively move to online services (1999), it highlighted an interesting contrast in strategies.  On one hand, they talked about aligning their services in a vertical manner, "holding more wallet-share of the existing customers".  This model is less expensive for customer acquisition, but it adds the cost and complexity of providing greater value through an integrated set of products.  On the other hand, Merrill Lynch set huge 2005 growth goals with these new services, and the only way to reach those numbers would require them to aggressively add new customers, outside of their sweet-spot customer segments. These new customers were typically younger customers, with net-worth less than $75,000, and more familiar with online transactions through low-cost providers like Charles Schwab (this was pre-eTrade, etc.).

Some questions come to mind:

• Can both strategics co-exist in the same organization, especially with different capture models and different margin models?
• Does one model work better with new products than with existing products?  
• Is this just a matter of market segmentation, and not really two different strategies?
• Should a company go-to-market for new customers with a deep vertical offering, or should they initial start with a simpler model to ease adoption by new customers? 

Both my previous and existing company are both going this dual strategy challenge, so I'll be very interested to see how the discussion in class, with viewpoints from classmates experience, matches or diverges from my experiences.

Connect the Dots - Networking your Social Networks

As I was flipping through HBR this evening, I came across an article about Social Networking, written by Alex "Sandy" Pentland.  Dr. Pentland runs the Human Dynamics group within the MIT Media Lab.  Back in the spring of 2007, I had the good fortune to meet Dr. Pentland, get to know about many of the really cool things being built within the Media Lab, and actually work on the project that is described in the paper.  My former company was a Media Lab sponsor and we co-funded some of the initial work in this area of dynamic social networking.  Needless to say, it was a nice surprise to see something you worked on (albeit slightly) published in HBR.

So what does this have to do with MBA programs?  Actually, quite a bit.  We covered social networks briefly in LOB with Dr. Miller, but only to the extent that people need to be aware of where the strong vs. weak links are within their companies.  Social networking came up again this weekend, during a discussion in our OpsMgmt class, as we discussed the connection between groups within the production process (product mgmt, engineering, production, etc..). What Dr. Meredith pointed out is that many times one of these groups will be outsourced, and then eventually other connected groups move as well because the communication channels break down over distances.  

This latter point seems to be proven out in Dr. Pentland's MIT research.  As much as I enjoyed using technologies like Telepresence, distance has consistently proven to be a huge barrier to effective communication and collaboration.  So why does this matter?  It matters if parts of your business are moving offshore, or great distances from where you are located.  Chances are, if that group is really important, then they are going to get tired of the communications breakdowns and look to move your function closer to them.  All the more reason for US companies to step up their efforts to bring expertise and skill-levels back up to competitive levels with the rest of the world. Unfortunately, it's more than just low-cost labor that might move jobs overseas.