Duncan Simester on customer response: Why guess and get it wrong when you could do a little experimenting and get it right?

MIT Sloan Prof. Duncan Simester

The business pages are filled with examples of companies that have taken big hits to their brands because they’ve made marketing decisions that ran afoul of customer expectations. Take Netflix, and its aborted scheme to divide its streaming and DVD video offerings. Netflix could have avoided its embarrassing reversal if it had experimented on this decision before publically announcing the change.

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Asst. Prof. Karen Zheng: When a handshake is enough–the role of trust in supply chain management

MIT Sloan Asst. Prof. Karen Zheng

Trust is important to our relationships with friends, family, and acquaintances. Less understood, though, is the role trust can play in business relationships. When businesses deal with each other, their first impulse often is to summon their lawyers. But I have found in my research that there are many situations in which trust can be an effective replacement for costly and time-consuming contract negotiations.

To understand the role of trust in business, I and two colleagues, Ozalp Ozer of the University of Texas at Dallas and Kay-Yut Chen of Hewlett-Packard Laboratories, conducted a series of computer laboratory experiments that simulated one of the most vexing problems in supply chain management: The tendency for manufacturers to issue overly optimistic forecasts.

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