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Editorial
Mitigating the Myopia of Dominant Logics: On Differential
Performance and Strategic Supply Chain Research
Stanley E. Fawcett1 and Matthew A. Waller2
1
2
he primary question of management scholarship is, What leads some rms to be successful even as others fail? Over the years, a variety
of dominant logics have emerged to inform this question. Synthesized, these logics make it clear that companies win when they create customer value better than the competition and efciently enough to be protable. That is, rms that design distinctive and dynamic value-added
systems win competitive battles. This observation is salient to the Journal of Business Logistics community as systems design and value
creation are focal decision areas of supply chain management. With this in mind, we briey discuss two of many areas for which strategic
supply chain research can inform differential performance.
INTRODUCTION
To be interesting and inuential, logistics and supply chain
research must address importantthat is, substantive and relevantquestions (Fawcett and Waller 2011a,b; Fawcett et al.
2011). Two questions that are central to competitive strategy and
supply chain design are as follows:
Observing customer
behavior helps to dene
customers real needs and
helps to delineate what
products really are and
do for the customer
A customer logic can
devalue breakthrough
innovation
diminish viability via
prot-losing decisions
create excessive
complexity and chaos
Customer
Owners (shareholders)
take risks, providing
the capital to create
the company and
therefore deserve
to be rewarded
Highly motivational,
it is easy to evaluate
status & success
Prot*
Note: *We refer to short-term accounting prot. By contrast, economic prot takes into account long-run outcomes.
Potential
limitations
It is easy to evaluate
competitive status
& success; that is,
we see who is
winning
Tracking competitor
actions informs best
practice and helps
avoid competitor-initiated
surprises
Rational
Vital insights
Companies compete
for market share
and for resources
Argument
Competitor
Strategic-objective logics
Why do companies exist?
Service
A product focus
claries operating
realities and the
need to utilize
resources efciently
Value is created as
resources are
converted to
possess a more
desirable form
Product
Value-creation logics
What drives differential performance?
174
S. E. Fawcett and M. A. Waller
Editorial
175
176
Area (km2)
Population
GDP (billion)
GDP/capita
Exports (billion)
Imports (billion)
FDI home (billion)
FDI abroad (billion)
China
Germany
Japan
USA
9,596,961
1,343,239,923
$6,989
$5,203
$1,898
$1,743
$776
$322
357,022
81,305,856
$3,629
$44,633
$1,408
$1,198
$998
$1,486
377,915
127,368,088
$5,855
$45,969
$801
$795
$147
$880
9,826,675
313,847,465
$15,060
$47,985
$1,511
$2,314
$2,874
$4,051
Editorial
177
2011; Kotzab et al. 2011; Jin et al. forthcoming). Decision makers have not yet gured out what a successful relational architecture looks like or how to build it. One point we have learned,
however, is that what actually happens in most value co-creation
relationships is different from what managers desired to achieve
(Park and Ungson 2001). The time has come to answer the question, What determines whether or not value co-creation pays off
for a rm?
To provide in-depth insight into this question, it may be useful
to target research to the three core supply chain processes where
value co-creation typically takes place: new product development, order fulllment, and customer experience.
New product development
Figure 1 illustrates the typical new product development process, identifying key steps in the process, essential decisionmaking entities, and vital roles and responsibilities. It also
breaks the process down into information, nancial, and physical ows. Much valuable research has been dedicated to these
issues. Yet, we do not fully understand the governance mechanisms, innovation architectures, and relational routines needed
to incent the right partners to generate better ideas, dedicate
scarce resources, and share innovation rents. For instance, partners seldom experience symmetrical cost and benet curves for
any given new product development project. This asymmetry
can lead to friction and possible withholding of vital resources.
The question is thus, How can decision makers structure an
innovation relationship to motivate the ideation, development,
and launch capabilities needed for innovation success? The
need to answer such questions increases in importance as the
development space becomes more crowded and innovation
cycles continue to compress.
Order fulllment
Figure 2 depicts the Supply Chain Councils well-known SCOR
model, which denotes the essence of order fulllment. Much traditional logistics research has focused on different aspects of the
SCOR model. Even so, the supply chain glitch literature suggests
that we need to better understand how to manage the value cocreation process to minimize the number of dropped batons
during the numerous handoffs inherent in the source-makedeliver-return process. Specically, Hendricks and Singhal
conducted a series of event studies to quantify the costs of dropping the supply chain baton. Upon announcing they had dropped
Deliver
Source
Make
Deliver
Return
Suppliers
Supplier
Supplier
Source
Make
Deliver
Return
Focal Company
Source
Make
Deliver
Source
Return
Customer
Customers
Customer
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Panel B suggests that distinctive customer experience engenders loyalty and leads to a lifetime stream of prots (Blackwell
1997). Moreover, loyal customers often build closer, deeper relationships with supply partners (Rust and Oliver 2000). These
relationships are characterized by larger, more frequent purchases
as well as by a higher incidence of shared resources (Gulati and
Singh 1998). Loyal customers may also become evangelists
becoming part of these companies marketing apparatus (Godin
2003; McMullan and Gilmore 2008). These benets, however,
only accrue if the customer-experience system is robust and
adaptable enough to deliver distinctive experiences repeatedly
over time. Strong relational capabilities are required as is the
ability to re-congure network resources to meet evolving expectations (Barreto 2010). If outstanding experiences are not reproducible, satisfaction will turn to disappointment as future
experiences disconrm elevated expectations (Berman 2005).
Customer experience
Peter Drucker (2001) noted, There is only one valid denition
of business purpose: to create a customer. What the customer
buys and considers value is never just a product. It is always a
utility, that is, what a product or service does for him (p. 15).
Although Drucker (2001) points to the need to cultivate an ability to deliver inimitable customer experience to achieve differential performance, little supply chain research has focused on
designing customer-experience systems.
As Figure 3, Panel A shows, customer-experience systems
must be designed to: (1) enable rms to promise unique value
propositions and (2) ensure that the experience delivers to promise.
Except in the most basic service scenarios, customer-experience
systems rely on the resources of a network of suppliers, service
providers, and customers to co-create the promised value. For
example, a partner may possess unique information regarding
market demand leading to a collaborative planning relationship
(Smith et al. 2011).
Experience is
distinctive,
exceeding
expectations
Customer
Initial
Expectations
Customer
Expectations
High
Actual
Customer
Experience
Loyalty
Company Offers
Value Proposition
Zone of Indifference
Zone of
Differential
Performance
Experience is
inferior, below
expectations
Experience is competitive,
meeting expectations
Zone of Defection
Low
Dissatisfaction
Satisfaction
Experience Continuum
Delight/Success
Editorial
ACKNOWLEDGMENTS
We thank Sebastian Brockhaus, Michael Knemeyer, and Daniel
Mattioda for their thoughtful feedback and constructive criticism,
much of which we incorporated and some of which will be
addressed in future editorials.
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