The Case for Letting Your Best People Go A study finds a link between employees leaving for prestigious jobs and improved company status Companies loathe losing top performers to rivals, but recent research suggests letting them go on to better things has its benefits. Young professionals are among today’s biggest job hoppers: A 2016 LinkedIn survey found millennials have worked at roughly four companies in their first decade after college, compared with about 2.5 companies for the generation before them. It takes time, training and money for businesses to replenish star talent, and executives who leave take institutional knowledge, and sometimes clients, with them. Yet in the right circumstances, departures can create a competitive advantage for the company left behind, according to a study published by the Strategic Management Journal. Researchers at the University of Washington and Georgetown University analyzed industry data on U.S. law-firm hiring, and annual surveys by career website Vault.com asking legal associates to rate the prestige of law firms. The researchers found increased departure rates led to improvements in a firm’s status among survey respondents when the exits were for promotions at high-status law firms. Christopher Rider, an associate professor at Georgetown’s McDonough School of Business and one of the study’s authors, said the results suggest it is plausible such departures—and subsequent boost in prestige—could help companies attract new, junior talent at lower wages, though more research is needed to show a link. The competitive advantage applies to sectors beyond law, including technology, advertising and others that rely on human capital, said Sydney Finkelstein, faculty director of Dartmouth College’s Tuck Center for Leadership. In his book “Superbosses: How Exceptional Leaders Master the Flow of Talent,” he examined leaders who helped protégés move to other opportunities, often outside their companies. Prof. Finkelstein points to Oracle Corp. co-founder Larry Ellison. Between 1994 and 2004, he said, nearly a dozen executives who had worked closely with Mr. Ellison at Oracle went on to become a chief executive, board chief or other high-ranking executive at another company—helping to seal Mr. Ellison’s reputation as a talent magnet. More people are managing their careers as a series of steppingstones at different companies, Prof. Finkelstein said. “As a boss, are you going to accept that reality and do something about it, or are you going to fight it?” he said. “Those who fight it are going to have a more difficult time finding good people.” Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 13 Crafting a Deployment Strategy 13-* After the Atari/Coleco video game generation crashed, Nintendo was able to enter with an 8-bit system and rise to dominance by selli ...

1. The Case for Letting Your Best People Go
A study finds a link between employees leaving for prestigious
jobs and improved company status
Companies loathe losing top performers to rivals, but recent
research suggests letting them go on to better things has its
benefits.
Young professionals are among today’s biggest job hoppers: A
2016 LinkedIn survey found millennials have worked at roughly
four companies in their first decade after college, compared
with about 2.5 companies for the generation before them. It
takes time, training and money for businesses to replenish star
talent, and executives who leave take institutional knowledge,
and sometimes clients, with them.
Yet in the right circumstances, departures can create a
competitive advantage for the company left behind, according
to a study published by the Strategic Management Journal.
Researchers at the University of Washington and Georgetown
University analyzed industry data on U.S. law-firm hiring, and
annual surveys by career website Vault.com asking legal
associates to rate the prestige of law firms.
The researchers found increased departure rates led to
improvements in a firm’s status among survey respondents when
the exits were for promotions at high-status law firms.
Christopher Rider, an associate professor at Georgetown’s
McDonough School of Business and one of the study’s authors,
said the results suggest it is plausible such departures—and
subsequent boost in prestige—could help companies attract new,
junior talent at lower wages, though more research is needed to
show a link.
The competitive advantage applies to sectors beyond law,
including technology, advertising and others that rely on human
capital, said Sydney Finkelstein, faculty director of Dartmouth
College’s Tuck Center for Leadership. In his book

2. “Superbosses: How Exceptional Leaders Master the Flow of
Talent,” he examined leaders who helped protégés move to
other opportunities, often outside their companies.
Prof. Finkelstein points to Oracle Corp. co-founder Larry
Ellison. Between 1994 and 2004, he said, nearly a dozen
executives who had worked closely with Mr. Ellison at Oracle
went on to become a chief executive, board chief or other high-
ranking executive at another company—helping to seal Mr.
Ellison’s reputation as a talent magnet.
More people are managing their careers as a series of
steppingstones at different companies, Prof. Finkelstein said.
“As a boss, are you going to accept that reality and do
something about it, or are you going to fight it?” he said.
“Those who fight it are going to have a more difficult time
finding good people.”
Copyright © 2011 by the McGraw-Hill Companies, Inc. All
rights reserved.
McGraw-Hill/Irwin
Copyright © 2011 by the McGraw-Hill Companies, Inc. All
rights reserved.
McGraw-Hill/Irwin
Chapter 13
Crafting a Deployment Strategy

3. 13-*
After the Atari/Coleco video game generation crashed, Nintendo
was able to enter with an 8-bit system and rise to dominance by
selling on consignment, alleviating retailers’ risk. It had a near
monopoly from 1985-1989.In 1989, Sega was able to overthrow
Nintendo’s dominance by introducing a 16-bit system 1½ years
before Nintendo. Sony was able to break into the video game
industry by introducing a 32-bit system, investing heavily in
game development, and leveraging its massive clout with
distributors.In late 2001, Microsoft entered the video game
industry with a 128-bit system. It had an advanced machine, and
spent a lot on marketing and games, but Playstation2 already
had an installed base of 20 million. The console did well, but
never overtook Playstation2.In late 2005, Microsoft was first to
introduce the next generation console: Xbox 360. Nintendo’s
Wii and Sony’s Playstation 3 would not debut until 2006. Both
the Xbox 360 and Playstation 3 incorporated high definition
DVD players, and were quite expensive. The Wii, on the other
hand, was much simpler, and much cheaper, but had an
innovative motion-sensing remote.By February 2009, over 19
million Wiis had been sold, compared to 14.2 million Xbox
360s and 7 million Playstation 3s.
Deployment Tactics in the U.S. Video Game Industry
*
13-*
Discussion Questions:
What factors do you think enabled Sega to break Nintendo’s
near monopoly of the U.S. video game console market in the
late 1980s?
Why did Nintendo choose to not make its video game consoles

4. backward compatible? What were the advantages and
disadvantages of this strategy?
What strengths and weaknesses did Sony have when it entered
the video game market in 1995?
What strengths and weaknesses did Microsoft have when it
entered the video game market in 2001?
Comparing the deployment strategies used by the firms in each
of the generations, can you identify any timing, licensing,
pricing, marketing, or distribution strategies that appear to have
influenced firms’ success and failure in the video game
industry?
Deployment Tactics in the U.S. Video Game Industry
*
13-*
OverviewA large part of the value of a technological innovation
is determined by the degree to which people understand and use
it. An effective deployment strategy is thus a key element in a
technological innovation strategy.Some of the key elements of
an effective deployment strategy include timing, licensing and
compatibility, pricing, distribution, and marketing.
13-*
TimingThe timing of a market launch can be an important
deployment strategyStrategic Timing of EntryFirms can use
timing of entry to take advantage of business cycle or seasonal
effectsE.g., video game consoles are always launched just
before Christmas.Timing also signals customers about the
generation of technology the product represents.E.g., if too
early, may not be seen as “next generation”Timing must be

5. coordinated with production capacity and complements
availability, or launch could be weak.
13-*
TimingOptimizing Cash Flow versus Embracing
CannibalizationTraditionally firms managed product lifecycles
introduce new generation while old generation selling
well.However, in industries with increasing returns this is
risky.Often better for firm to invest in continuous innovation
and willing cannibalize its own products to make it difficult for
competitors to gain a technological lead.Cannibalization: when
a firm’s sales of one product (or at one location) diminish its
sales of another (or another location).
13-*
Licensing and CompatibilityProtecting a technology too little
can result in low quality complements and clones; protecting
too much may impede development of complements. Firm must
carefully decide:How compatible to be with products of othersIf
firm is dominant, generally prefers incompatibility with others’
platforms but may use controlled licensing for complements.If
firm is at installed base disadvantage, generally prefers some
compatibility with others and aggressive licensing for
complements.Whether to make product compatible with own
previous generations (“backward compatibility”)If installed
base and complements are important, backward compatibility
usually best – leverages installed base and complements of
previous generation, and links generations together. Can be
combined with incentives to upgrade.

6. 13-*
PricingPrice influences product positioning, rate of adoption,
and cash flow.What are firm’s objectives?SurvivalMaximize
current profitsMaximize market shareTypical pricing strategies
for new innovations:Market skimming strategy (high initial
prices)Signals market that innovation is significantRecoup
development expenses (assuming there’s demand)Attracts
competitors, may slow adoption
13-*
PricingPenetration Pricing (very low price or free)Accelerates
adoption, driving up volumeRequires large production capacity
be established earlyRisky; may lose money on each unit in short
runCommon strategy when competing for dominant designCan
manipulate customer’s perception of priceFree initial trial or
introductory pricingInitial product free but pay for monthly
serviceRazor and razorblade model: Platform is cheap but
complements are expensive (as in video games)
13-*
DistributionSelling Direct versus Using IntermediariesSelling
directGives firm great control over selling process, price and
serviceCan be expensive and/or impracticalIntermediaries may
include:Manufacturers’ representatives: independent agents that
may promote and sell the product lines of one or a few
manufacturers.Useful for direct selling when its impractical for
manufacturer to have own direct sales force for all
markets.Wholesalers: firms that buy manufacturer’s products in
bulk then resell them (typically in smaller, more diverse
bundles)Provide bulk breaking and carry inventory.Handles
transactions with retailers and provides transportation.

7. 13-*
DistributionRetailers: firms that sell goods to publicProvide
convenience for customersEnable on-site examination and
serviceOriginal equipment manufacturers (OEMs): A company
that buys products (or components) from other manufacturers
and assembles them or customizes them and sells under its own
brand name. E.g., Dell ComputerAggregates components from
multiple manufacturersProvides single point-of-contact and
service for customerIn some industries, information technology
has enabled disintermediation or reconfiguration of
intermediaries.E.g., online investing enables customers to
bypass brokers; online bookselling requires retailer to provide
delivery services.
13-*
DistributionThese factors help determine whether and what
types of intermediaries the firm should use:
How does the new product fit with the distribution requirements
of firm’s existing product lines?
How numerous and dispersed are customers, and how much
product education or service will they require? Is prepurchase
trial necessary? Is installation or customization required?
How are competing products or substitutes sold?
13-*
DistributionStrategies for Accelerating DistributionAlliances
with distributorsProviding distributor with stake in product’s
success or exclusivity contract can motivate them to promote
more.Bundling relationshipsSell in tandem with product already

8. in wide use.Contracts and sponsorshipProvide price discounts,
special service contracts or advertising assistance to
distributors, complementary goods providers or large and
influential end users. Guarantees and consignmentReduces risk
to intermediaries and complements providers.
13-*
MarketingMajor marketing methods include advertising,
promotions, and publicity/public relations.AdvertisingRequires
effective messageRequires media that conveys message to
appropriate target marketVaries in match to audience, richness,
reach, and cost.Must strike appropriate balance between
entertainment or aesthetics (to make memorable) versus
information content (to make useful)
13-*
MarketingAdvantages and Disadvantages of Major Advertising
Media
13-*
MarketingPromotionsTemporary selling tactics that
include:Samples or free trialCash rebates after
purchaseIncluding an additional product (a “premium”) with
purchase Incentives for repeat purchaseSales bonuses to
distributor or retailer sales representativesCross promotions
between two or more non-competing products to increase
pulling powerPoint-of-purchase displays to demonstrate the
product’s features Publicity and Public RelationsAttempt to
generate free publicity and word-of-mouth (e.g., mention in
articles, television programs, etc.)Produce own internally

9. generated publications Sponsor special events
13-*
Generating Awareness for DomosedanFarmos wanted to build
awareness of its new innovation in animal painkillers.Asked
university professors and advanced practitioners to help with
testing process for drug – acted as premarketing tool. Drug was
featured in conferences, articles, dissertations.Farmos also
hosted a large dinner party for all practicing veterinarians at the
drug’s launch. Domosedan was adopted rapidly around the
world and became a commercial success.
Theory In Action
13-*
MarketingTailoring the Marketing Plan to Intended
AdoptersInnovators and Early Adopters respond to marketing
that offers significant technical content and emphasizes leading-
edge nature of product.Need media with high content and
selective reachEarly Majority responds to marketing
emphasizing product’s completeness, ease o fuse, consistency
with customer’s life, and legitimacy. Need media with high
reach and high credibilityLate Majority and Laggards respond to
marketing emphasizing reliability, simplicity, and cost-
effectiveness.Need media with high reach, high credibility, but
low cost.
13-*
MarketingOften hard to transition from selling to early adopters
to early majority, resulting in “chasm.”

10. 13-*
MarketingUsing Marketing to Shape Perceptions and
ExpectationsPerceptions and expectations of value can be as
important as actual value. To influence, can
use:Preannouncements and press releases Can build “mind
share” in advance of actual market shareCan forestall purchases
of competitors’ productsReputation Provides signal to market of
likelihood of successCredible commitments Substantial
irreversible investments can convince market of firm’s
confidence and determination
13-*
Creating an Information EpidemicGladwell notes that some
individuals have a disproportionate impact on marketplace
behavior:
Connectors Have exceptionally large and diverse circle of
acquaintancesKnack for remembering names and important
dates
MavensDriven to obtain and disseminate knowledge about one
or more of their interestsWill track prices, tend to be consumer
activistsTake great pleasure in helping other consumers
SalespersonsNaturally talented persuadersAcute ability to send
and respond to nonverbal cues; can infect others with their
mood!
Research Brief
13-*
Discussion Questions
Can you identify one or more circumstances when a company
might wish to delay introducing its product?

11. What factors will (or should) influence a firm’s pricing
strategy?
Pick a product you feel you know well. What intermediaries do
you think are used in bringing this product to market? What
valuable services do you think these intermediaries provide?
What marketing strategies are used by the producers of the
product you identified for question 3? What are the advantages
and disadvantages of these marketing strategies
*
*