Take a Holistic Approach to Business Problem Solving | MIT News


“Price cutting is one of my pet peeves,” says Sharmila Chatterjee. No, the academic lead for the Enterprise Management (EM) stream of the MIT Sloan School of Management MBA program does not cater to deal-seeking clients. Rather, it’s a point in a big-picture thinking conversation thread, honed by years of research.

Chatterjee is an award-winning business-to-business (B2B) marketing expert and case writer who examines issues in the areas of distribution channels, sales force management, and relationship marketing. “No one should be engaged in price gouging, of course,” she says, “but get a fair return on the value provided by your offerings, so you can sustain investments for the long-term success of your brand. .”

Citing Millward Brown’s finding that brands account for more than 30% of the market value of S&P 500 companies, The Economist recognized that for many businesses, their brand is their most valuable asset. Consider United Airlines’ 2017 branding crisis that sent its stock plummeting by $1.4 billion in days after video footage emerged showing a passenger forcibly removed from a overbooked flight.

Brand, according to Chatterjee, is a function of customer experience. In a 2019 opinion piece for USA today, Chatterjee highlighted the importance of customer experience by examining the case of brick-and-mortar (B&M) retailers. When e-commerce emerged in the early 1990s, traditional retailers tried to compete by slashing prices. As a result, they’ve been forced to cut costs elsewhere: they’ve cut sales teams, neglected investments in training, and ignored merchandising and product development, all at the expense of the in-person customer experience.

Their misunderstanding of the situation resulted in a self-fulfilling prophecy. Customers flocked online for discounts, leaving big brands like RadioShack, Toys R Us and Sears to file for bankruptcy, among others. In an unexpected twist, the rise of the digital age has revealed the importance of the human interface. Today, savvy retailers recognize the benefits of combining e-commerce and B&M, integrating online and offline. “Technology is a great enabler and enabler. Problems arise when we look to technology as a panacea,” warns Chatterjee. “Human capital is essential to achieving good results in most cases – minimizing it comes at a high cost.”

For further proof of the need for human-technology complementarity, we need look no further than the high rates of technology implementation failures experienced by businesses today. In 2001, Gartner reported a 50% failure rate in implementing customer relationship management (CRM). Fast forward to 2021, and those numbers have only gone up. How do you reconcile this with the fact that CRM spending shows no signs of slowing down, and for many companies CRM has become the number one item of enterprise software spending?

Meanwhile, a recent study by MIT Sloan Management Review with Boston Consulting Group found that technology implementation failure rates of 70% or more are the norm, and only 10% of companies are reporting meaningful returns on their AI investments. “There’s obviously huge potential for technology to deliver value, but that potential isn’t being realized, and that’s where the role of human capital lies,” Chatterjee says.

In an effort to understand the high rate of technology implementation failures, particularly in the B2B context, Chatterjee conducted an empirical analysis of purchasing organizations that have purchased and implemented business intelligence software. She found that the most significant predictors of successful technology uptake and overall customer satisfaction related to a set of intangibles that the buyer attributed to the software seller; the “soft” service facet, reflecting a holistic understanding of the customer’s business context, potential for value creation and pathway to value.

She calls this “the value mindset.” Once a company has a competitive product, it needs to be able to communicate how best to extract potential value from the technology. This means, among other things, sharing with the buyer the necessary change management in legacy processes as well as business best practices and lessons learned from failures. According to Chatterjee, salespeople who communicated a “value-driven mindset” had significantly higher customer satisfaction ratings, as measured by a three-to-one effect. “Again, this demonstrates in spades the incredible value of the human interface – uncommunicated value is undelivered value. Again, technology and humans as complements,” she explains.

Chatterjee’s research began with a fascination with information silos nurtured during her time as a graduate student at the Wharton School, where she first learned of a statistic that revealed that only 30% of prospects marketing were pursued by sales teams. This revelation regarding the gap in the sales-marketing interface was something Chatterjee channeled through years of research in the field of lead management and customer retention. Focused on this disconnect between human behavior and the rhythms of capitalism, she would conduct some of the first studies in the critical area of ​​the sales-marketing interface, particularly sales lead management, including a study she and her colleagues titled “The Sales Lead Black Hole: On Salespeople’s Follow-Up to Marketing Leads.”

A self-proclaimed empiricist in his research, Chatterjee uses polls coupled with econometric methods of analysis that test models in the real world. This focus on real-world business challenges extends to his administrative role as head of the EM track at MIT. All MBA programs offer content, whether in finance, marketing, operations, or leadership. But at the Institute, Chatterjee stresses the importance of mindset. From the outset, students in the EM track are encouraged to think like CEOs while moving toward future leadership. In practice, this means training students to move away from siled thinking while adopting a holistic, cross-functional approach to problem solving in order to transform organizations.

The best way to instill this leadership mindset is for students to work on real-life business projects and challenges with companies while applying concepts and theoretical frameworks learned in class. In the first year, students are immersed in the deep end. Through the Business Management Lab (EM-Lab), EM Track students have the opportunity to work in the field with large corporations to address business challenges. “My students’ work on real business challenges embodies the MIT motto “mens et manus”, mind and hand,” she says.

Companies like Procter & Gamble/Gillette, Amazon, BMW and IBM have all participated in EM-Lab projects. “Multinationals come back to us year after year because we provide useful results that they can implement in their businesses,” says Chatterjee. At the same time, MIT students benefit from real-world experience, honing their research skills while developing the mindset of future business leaders. “It’s a very symbiotic relationship, a partnership that benefits all parties involved,” Chatterjee says.


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