Focused Sponsor Projects
One of the primary missions of the MIT Center for Digital Business is to conduct research in all aspects of Internet-enabled business. Each of our Founding and Research sponsors directly support one or more "Focused Research Projects", which are conducted by our faculty and their graduate students on a topic agreed between the sponsor and the faculty principal investigator. Many of these projects have active involvement from the sponsor.

Completed Projects

eBusiness Process Handbook:  Linking to the Matrix of Change
Professor Thomas Malone
Sponsor:  British Telecom
The eBusiness Process Handbook is an on-line repository of many kinds of knowledge about eBusiness, including innovative business models, processes, and technologies.  This project focuses on linking the eBusiness Process Handbook to the Matrix of Change (MoC) software tool.  The MoC software tool helps users analyze the positive and negative interactions between different aspects of current and proposed business systems in a company.  Some users may find, for example, that potential ebusiness innovations they are considering would be incompatible with their current business and would be best pursued in a separate business unit.  The project includes (a) developing a robust stand-alone tool for MoC analyses, (b) adding capabilities to store and retrieve MoC analyses in the eBusiness Process Handbook repository, (c) developing case examples of generic patterns of use for MoC analyses, and (d) supporting limited experimental use of the integrated tools.

The Virtual Customer
Professor Ely Dahan
Sponsor:  CSK
The main objective of this research is to develop a means to get (online) input from the customer in a natural and effective manner on a schedule that meets the needs of the design team.  We are experimenting with five related approaches so that we understand the strengths and weaknesses of each method and so that we can refine the method(s) for use by design teams.  The four initial approaches are: user design on the web, virtual concept testing, securities trading of concepts (STOC), and Fast Polyhedral Adaptive Conjoint Estimation (FastPACE).  A fifth approach of having customers interact with new product and service concepts, based on game consoles, will be explored in future years.

Customer Retention at Dell Using Data Mining
Professor Dimitris Bertsimas
Sponsor:  Dell Computer Corporation
In this research we study the problem of retention of prospective customers that visit a web site using data mining techniques.  Current data suggest that retention rates are extremely low, yet web sales represent a significant portion of corporate revenues.  Hence, improving the retention rate is a problem of undeniable importance.  We propose to partition the study into three areas.
(1) Classifying customer’s behavior using data mining methods from click stream data.  (2) Development of behavioral models that explain the clusters found in Part 1.  (3) Control mechanisms to improve customer retention.  The goal is to understand and influence how customer interest can be converted to purchase.

The Value of Aggregation
Professor Stuart Madnick and Dr. Michael Siegel
Sponsor:  FleetBoston
The main goals of this research are to analyze the business and technical implications of new strategies towards small business customers and better understand some of the general challenges raised by these e-commerce strategies.  Our assumption is that the key success factor of these initiatives is not technical, but relies on the ability of banks to build and maintain trust between network members (partners and SB customers). In this context, we define trust as the combination of “reliability” and “fairness”.  We will analyze four small business targeted projects developed by a number of banks, through interviews with top executives and operational managers. In this analysis, we will use integration and data connectivity issues as a unifying thread, verify the validity of the main research assumption and suggest suitable techno-organizational setups to maximize effectiveness in these ventures.

Price Competition and Margins
Professor Erik Brynjolfsson
Sponsor:  FleetBoston
As the Internet develops into a robust channel for commerce, it is increasingly important to understand the determinants of price competition, differentiation and margins.  In the first wave of research, we develop and implement a methodology for comparing the pricing behavior of online and offline retailers for a carefully matched set of products.  We find that prices on the Internet are lower and change in smaller increments than offline prices.  We also find substantial and persistent dispersion in prices on the Internet.  This price dispersion may be explained, in part, by heterogeneity in retailer-specific factors.  The second wave of research was focused on better understanding the sources of price dispersion and retailer differentiation.  We obtained data from over 1.5 million product offerings by Internet retailers at shopbots sites that allow consumers to make "one-click" price comparisons for product offerings from multiple retailers.  We develop a multinomial logit model for assessing the determinants of consumer choice.   We find that while price is important, even among shopbot consumers, branding, service quality and customer loyalty are very important in head-to-head product comparisons.  We also find that consumers use brand as a proxy for a retailer’s credibility with regard to non-contractible aspects of the product bundle.  In each case our models accurately predict consumer behavior out of sample, suggesting that our analyses effectively capture relevant aspects of consumer choice processes.

Listening In:  Creating a Virtual Engineer to Identify Design Opportunities by Monitoring Internet Exchanges Between Buyers and a Virtual Buying Consultant
Professor Glen Urban
Sponsor:  General Motors
Identifying unmet consumer needs is important, but often difficult and expensive.  Previous research at MIT (funded by GM and applied to trucks) has developed a new approach to Internet marketing based on an advisor communicating with a consumer in a trusting environment to determine the right product for them to buy.  This trust-based marketing interaction with a virtual expert consultant yields an input measure for the utility of each existing product option.  By noting where no product is able to increase utility in response to a need expressed by the consumer, a need gap could be identified that may be a productive design opportunity.  In this research we will develop an algorithm to identify gaps or unfulfilled needs and aggregate such input across consumers to assess the approximate size of the design opportunity (e.g. the opportunity for a new mid-sized SUV may be large because the utility increases for many customers with that product option while a SUV with four wheel steering may be small since few customers identify the gap of a big truck that is easier to turn in tight spots).  The system will be tested with customers in a market research study to determine if the output is useful to engineers in designing better products.

 Using the Internet for B2B eCommerce for Small and Medium Enterprises
Professor Gabriel Bitran
Sponsor:  Hewlett-Packard
B2B ecommerce is critical for small and medium enterprises (SMEs) to enter markets where their size might otherwise be a limiting factor in generating and servicing business.  In the initial phase of our research in this area, we will focus on the customer interface for SMEs as they design their channel and plan for capacity.  In the following phases we will compare and contrast findings with multiple service, single channel and single service, multiple channel scenarios.  Our ultimate goal is to develop models that will show us optimum product architectures and bundle pricing policies.

Building an Internet Trust Generator:  Adaptive Experimentation on the Internet to Improve Site Trust and Sales
Professor Glen Urban
Sponsor:  Intel Corporation
Trust is becoming a key element in Internet strategy. The purpose of this project is to build and test an adaptive experimental Internet system to identify which site attributes are most important in building trust and modifying these elements to maximize trust and sales over time.  We call this system a “trust generator”.  Optimal experimental design and control theory will be the primary methodologies, but evolutionary operations will also be investigated as a means of assuring effective implementation of the trust generators with web masters.  At each period an experiment will be designed for the web site (e.g. vary use of trust marks and format of navigation).  About 100 variables are envisioned as candidates for experimentation in the site attribute fields of security, privacy, brand, navigation, and friendliness/professional appearance.   After observing trust and sales results, the underlying response model will be updated and a new experiment will be generated.  In this way over time the system will adaptively learn the best site configuration for the market or a segment of the market.

eBusiness Process Handbook:  Linking to Supply Chain Visualization
Thomas Malone
Sponsor:  Intel Corporation
The eBusiness Process Handbook is an on-line repository of many kinds of knowledge about eBusiness, including innovative business models, processes, and technologies.  By relating and recombining these different ideas, we also expect this tool to help generate new ideas for further innovations.  This project focuses on linking the eBusiness Process Handbook to tools for supply chain visualization and simulation.  For example, the project is integrating the Process Handbook with  “tangible user interfaces” developed in the MIT Media Lab that allow users to interact with supply chain models by manipulating physical objects that represent different elements of a supply chain.  The project also includes linking the Process Handbook (and the tangible user interfaces) to systems dynamics simulations that help users understand the complex (and often counter-intuitive) behavior of supply chains that include numerous feedback loops and delays. 

The Integrated Global Digital Financial Factory of the Future/Focus On Integrating Financial Information
Professor Stuart Madnick
Sponsor:  Merrill Lynch
The Financial Services business has changed dramatically in recent years. The globalization of the business, the advent of 24-hr trading, increased regulation, and the need for up-to-date integrated risk management are some of the major drivers for change.  Many of these changes have been made possible through developments in technology (e.g., networks, databases, and computer hardware).  The goal of this overall research effort is to define a new agile organization as the Integrated Global Digital Financial Factory (IGDFF) of the future, with a specific focus on the consequences of becoming increasingly global and the need to rapidly, effectively, and meaningfully integrate information throughout the Merrill organization and with its partners. The major focus of this research is on data integration and aggregation, with particular emphasis on data standards, aggregation strategy, and information semantic requirements for financial information infrastructures and eBusiness solutions.

Advisors in On-Line Investing
Professor Dan Ariely
Sponsor:  Merrill Lynch
The goal of this project is to understand how advice of different mechanisms (personal, professional, friend, electronic friend, electronic professional, etc.) will be perceived and whether consumer behavior will change as a result.  To address this issue, we are testing a mixture of personal recommendations (ones based on the consumer's own behavior), friendly recommendations (ones based on others similar to the consumer), and expert recommendations (ones based on external objective information).  These recommendation methods are tested in Internet-based electronic interactions in order to understand how the different mediums will change the impact of the different recommendation methods.  The experiments themselves are in the domain of personal investment and we are examining issues such as the tendency to seek advice, act on it and satisfaction.  In a different part of the project we are conducting web surveys to understand the behaviors of real on-line investors.  The results of the surveys show the addiction aspects of on-line investors and also the rational and non-rational drivers of investors' behavior.

Towards a Design Handbook for Designing Robust, Efficient B2B Marketplaces
Dr. Mark Klein and Professor Chrysanthos Dellarocas
Sponsor:  Neptune Technologies
One of the long-predicted effects of the Internet is the increased use of market mechanisms for the exchange of goods and services.  The objective of this work will be to:  (a) analyze the mechanisms underlying a number of B2B marketplaces of interest to Neptune Technologies and MIT, including  B2B marketplaces for catalogued products, configured products and services; (b) systematically identify exceptions associated with these mechanisms; (c) for each identified exception type, design handlers, to be provided by the marketplace infrastructure, in order to either avoid the exception, or detect its symptoms and resolve it in the best possible manner; (d) distill the most successful handlers designed by the previous step into innovative services that B2B marketplaces can offer to their participants; and (e) capture the knowledge gained by the previous steps into a hyperlinked document, which will then act as a “design handbook” for B2B developers.

The Impact of the Internet on the Future of the Financial Services Industry
Professor Stuart Madnick and Dr. Michael Siegel
Sponsor:  Suruga Bank
The main objective is to gain a better understanding of what the financial services industry (in Japan) will look like in 2005, and to develop a strategic framework.  This research is interested in understanding how eBusiness is going to change B2B and B2C relationships in the financial services industry, including (1) new products and services to be enabled and provided via the Internet; (2) understanding who will be the true future competitors – both existing financial services companies and new financial service companies like Sony and Seven-Eleven; (3) understanding the market options for leadership in the financial services industry (in Japan); and (4) developing a framework for a competitive response to changes in the marketplace.
The focus of the research project will be to (1) understand the potential for aggregation in the financial services industry; (2) research the “environmental” changes in financial services (trust, customer interaction, fund settlement, etc.); and (3) to design new business models in the financial industry.

Using the Internet for B2B and B2C eCommerce
Professor Gabriel Bitran
Sponsor:  UPS
The use of the Internet for business transactions has caused significant changes in current business dynamics.  With the advent of eCommerce, the end customer has gained access to more information and a larger selection, thus becoming a powerful member of the supply chain. This increased power on the customer's side has altered the supply chain management by accelerating the channel shift from supply-push to more demand-pull in the B2B and B2C supply chains.  This research project seeks to explore the implications of the Internet and eCommerce on the logistics industry.  Its goal is to understand the dynamics of the channel shift from traditional channels to online eCommerce as well as its implications on the value chain.  In phase one, the potential list of enablers and barriers to the channel shift will be identified and prioritized. In phase two, the value chain opportunities for logistics companies after the channel shift will be examined.  In phase three, questionnaires and focus groups will be used to determine the technology and factors needed to enable the shift to eCommerce.  

The Strategic Use of Reverse Auctions in the Supply Chain
Professor Sandy Jap
Sponsor:  Visteon
One of the contemporary challenges of supply chain management is the introduction of new approaches to doing business such as the introduction of web-enabled, auction sites in which suppliers must compete for sales contracts.  The purpose of this research is to determine how the introduction of a web-enabled, auction site can be successfully introduced into an existing supply chain.  Specifically, its objectives are to:  (1) identify the factors that are associated with successful introduction of the concept; (2) mathematically model the impact of the relationship structure, individual characteristics, and organizations on acceptance of the new business approach; and (3) develop implications for best practice in introducing e-commerce technologies into an existing supply base.  In the first stage, we are primarily looking at overall savings, impact on supply chain relationships and differences across open and sealed bid auction formats.  In the second stage we are examining the role of reverse auctions in the overall sourcing strategy.  Using the same web-based survey design as stage 1, we are also collecting data on product and supply base characteristics, to better understand when these auctions ought to optimally be used.

Building Trust on Web Sites: Identifying and Understanding the Importance of Site Cues
Professor Glen Urban
Sponsor:  IPG/McCann-Erickson/Weber
Understanding how trust is achieved can lead to improved site design, sales conversion, and profits.  Our purpose is to understand what drives the differences in trustworthiness of Internet sites (e.g. brand, trust marks like “TRUSTe,” privacy policies, ease of use, friendliness, location of stimuli on screen, and content) and how this understanding can be used to enhance the shopping experience on line.  Our aim is to build structural links and overall tools for building trust.
We will use two convergent methods: cross sectional statistical studies of existing sites and behavioral lab experiments on specific cognitive site stimuli.  The statistical research will be based on consumer evaluations and cross sectional site comparisons.  A questionnaire will be designed to measure trust cues in the overall areas of professional/friendly interface navigation, brand credibility, privacy information quality and quantity, and advice and fulfillment.  These factors will be statistically linked to dependent measures of trust (e.g. overall trust, confidence, and believability).  We will collect site evaluations for 1000 respondents across the largest 50 sites in B2C on the Internet.  Based on these data we will develop an index to predict trustworthiness as a function of the evaluation of site cues and their links to trust.  The behavioral lab experiments will be conducted along two lines of investigation.  The first is to examine brand effects due to exposure, context (positive/negative), and their interaction on trust and liking judgments.  The second line of experimentation is to examine the effect of location of stimuli on a Web page and the location transference to subsequent pages.

Venturing in Wireless: Mobile Commerce and Wireless Data
Professor Jim Short
Sponsor:  Zefer
The goal of this research project is to investigate two strategic aspects of the emerging wireless communications and m-commerce environment.  First, to investigate how fast and in what ways wireless communications is replacing wire-guided media in social, community and business settings.  Second, to investigate how new markets for wireless services and their underlying business models are being developed. The first study builds on earlier communications research focusing on social and community information flows, and seeks to contribute to our understanding of the ways in which wireless is substituting for wire-guided communications, and the way in which it is creating an environment for entirely new modes of communications and commerce (in business and social settings). The second study builds on entrepreneurship, strategy and regulatory literatures, and seeks to contribute to our understanding of how wireless infrastructure providers and new and existing services companies combine to develop communications infrastructures, wireless services and new business models to build m-commerce markets. The two studies will use different but complimentary research models for collecting industry and firm-level data, and will run in slightly different timings.

Support Services That Enable 'Always On' Infrastructures
Professor Gabriel Bitran, Dr. Mark Klein, Professor Erik Brynjolfsson, and Research Associate George Herman
Sponsor: Hewlett-Packard
Computing is increasingly becoming a kind of utility, embedded in the environment, available everywhere and all the time, made up of highly diverse components that include handhelds, mainframes, and potentially thousands of other computing devices at work and in the home. This shift in computing paradigm will require associated changes in the way support services are provided.  Our project will address these questions by focusing on two key elements: business models and software technology. The business models portion of the project will use business process innovation methodologies developed at MIT to help HP define potentially powerful new ways of providing support services.  It will also analyze the relative merits of different pricing models for such services.  The software technology portion of the project will define and evaluate 'agent-based' techniques for increasing the reliability of open heterogeneous distributed computing systems.  In this scheme, a set of software agents is created that work together to monitor the 'health' of a distributed computing system, looking for important failure modes and taking the appropriate coordinated actions when necessary to avoid, repair, or at least notify the right people or systems, about the problem.

Artificial Markets, Electronic Market Maker and Adaptive Agents
Professors Tomaso Poggio and Andrew Lo
Sponsor: Merrill Lynch
The project aims to study the design, development and characterization of artificial financial markets, as well as the cooperative behavior of intelligent adaptive distributed agents capable of learning from experience and of optimizing multiple goals. We will leverage our recent work in statistical learning theory and specifically in developing algorithms for supervised learning as well as for reinforcement learning. The research will give insights for designing financial and non-financial electronic markets, and populate them with automatic software agents serving key functions such as market making and trading. In particular we will develop an artificial market-making agent that is able to learn viable strategies subject to multiple objectives and under different market scenarios.

Two Tier Support Business Models
Professor Gabriel Bitran
Sponsor: Hewlett-Packard
The delivery process of a B2B operation involves the internal environment (design of product and services), the external environment (customers), and the customer interface.  The latter element plays a key role in the acquisition and retention of customers since it is the communication channel through which firms interact with their customers. The goal of this project is to develop a two-fold support model for providers of computing and imaging solutions and services.  Such a model would accommodate the needs of those end-users that have a two-tier support model, and at the same time, incorporate features attending to the needs of intermediaries.  To identify the attributes of successful e-business models enabling two-tier, multi-vendor support, the intermediary's industry serving U.S.-based firms as well as the characteristics, needs, and expectations of end-users will be studied.

Wireless and Mobile Commerce Opportunities for Payments Services
Professor Jim Short
Sponsor: MasterCard
Mobile commerce and wireless services present important opportunities and challenges for global payment services.  Against a baseline of key adoption characteristics in lead consumer and business markets (for example, SMS text messaging in Europe), the research project will focus on three primary questions: (1) What are the key product/market characteristics and adoption rates of location-based, handheld devices and related services, and what are the emerging business models? (2) What is the converging product/market, technological and utility "space" of handheld devices and PDAs? Specifically, what business factors (economic, strategy, marketing, etc.) are driving convergences, and what are the underlying business models? These questions will be addressed by analyzing a mix of primary and secondary data. (3) The project will consider business case examples from lead markets; including for example, transponder services and related location based wireless transaction services. 

A Data Mining Approach for Identifying the Most Valuable Consumers
Professor Dimitris Bertsimas
Sponsor: Unilever
The most valuable customers (MVC) of a company are often responsible for the vast majority of revenue.  In this research we develop new data mining methods to identify the most valuable customers of companies.  The approach for this research is based on the belief that the precise definition of who constitutes an MVC dynamically changes over time. Given data that relates characteristics of customers and revenue generated, we develop new dynamic logistic regression models that are able to dynamically classify MVCs and better capture the time dimension in the data. Moreover, we develop new optimal logistic regression models that only use a pre-specified number of independent variables. We also examine how this improved understanding can lead to incremental revenue or cost savings through more precise targeting and messaging.

Internet Organization: Documenting and Measuring the Business Process of Technology Leaders and the Creation of Intangible Assets
Professor Erik Brynjolfsson
Sponsor: Cisco Systems, Inc.
This project seeks to address the question: What are the key attributes of organizations that use the Internet and related technologies extensively and what are the effects on performance? We will study this question primarily via the statistical analysis of large data sets, supplemented with interviews with executives at all levels and a review of the relevant research and business literature.  A special focus of the project is on identifying and measuring computer-related intangible assets, including human capital and organizational capital.  The culmination of this endeavor will increase our understanding of Internet-based organization, culture, processes and business models. It will include a summary of the key business practices associated with effective use of the Internet, a set of usage and performance metrics and a model of the pattern of adoption of these practices.

Information Transparency and Value Reporting
Professors S P Kothari and Jim Short
Sponsor: PricewaterhouseCoopers
In this study, we examine the following three elements and inter-relations among the three:  (1) Firm and organizational governance characteristics, institutional settings, and new information technologies that influence the reporting and disclosure of information; (2) Corporate reporting and disclosure practices based on content analysis of corporations mandated and supplemental reporting and disclosures, including the annual report, quarterly press releases, analysts' meetings, etc.  (3) Market-based measures of the consequences of changes in corporate disclosure practice, and the introduction of new information technologies.

Project Supernova
Professor Gabriel Bitran
Sponsor: Merrill Lynch
Supernova is a one-year research project examining the design and delivery of financial services. Within Merrill Lynch, Project Supernova is a new business practice model designed to increase service quality and productivity of Financial Advisors by implementing structured time management and a disciplined client and prospect contact process.  The research is expected to have significant influence on future management decisions regarding larger scale deployment of Supernova or similar practice models.  In addition, it provides an opportunity for MIT students and researchers to test pre-existing methods as well as develop new ones while making a significant original contribution to a difficult but critical challenge to develop methods to design service systems, measuring the effectiveness of pilot programs deployed in the "noisy environment" of rapidly shifting markets, highly independent business practices, and divergent client expectations and behaviors.

Pricing Products and Services in the High-Tech Industry
Professor Gabriel Bitran
Sponsor: Hewlett-Packard
This research project seeks to answer the following questions:  (1) How can we price bundles of products and services when the services will be provided continuously for several periods after an initial setup (or hardware) cost?  (2) How do high-tech companies in highly competitive environments to determine the optimal bundle's composition and price while maximizing total expected profits?  (3)  Is there a scientific or economic bundling theory being used by the PC manufacturers in their pricing strategy?  (4) How can we set prices and structure contracts for computing resources based on required bandwidth, storage capacity, response time requirements, reliability requirements, CPU time, etc? How can we calculate return on investments in Internet infrastructure, Internet Data Centers or computing resources in general?
(5) Produce a survey on Pricing Goods and Services on the Internet.

Implications of e-Commerce for New Services and Structure of Logistics Systems
Professor Gabriel Bitran
Sponsor: UPS
The goal of this research project is to assist a logistics company in understanding the dynamics of the supply chain management on the Web, identify opportunities for this company, and provide a map that will guide it in the execution of its strategy.  The following questions needs to be addressed by the research:  (1) What are the implications to supply chain roles (both participant and provider) given the Supply Chain Transformation?  (2) What new business models/processes are enabled by the Web that are not supported by the traditional supply chain?  (3) As the supply chain turns in to a supply web, what firms are stepping up to facilitate the flow of goods, information and/or funds between the nodes of network? (4)  What are the best of these firms doing right? Where are they coming up short?  (5) What are the primary opportunities for traditional providers?

Payment Method Design: Psychological and Economic Aspects of Payments
Professor Dan Ariely
Sponsor: MasterCard
Paying for goods and services creates disutility for the payer.  Based on ideas from behavioral economics, we contend that the disutility of paying can be substantially influenced by the method of payment.  In this work we aim to develop a model of the consumer that takes into account phenomena such as the pain of paying, the sunk-cost effect, and self-control issues. Once we have formulated the model we will test the relative effects of the model's component in a set of laboratory experiments.

Seeing Ahead: Forecasting New Wireless Markets
Professor James Short
Sponsor: Nortel Networks
The sheer number and mix of new wireless technologies becoming available in today's wireless markets make "seeing ahead" difficult.  This project begins with the contention that the challenge of forecasting new wireless markets is a two-step process of first analyzing market signaling behavior by key sector participants, and second, testing market signaling against actual investment performance.  This project will conduct a broader, more systematic analysis of a specific industry sector, wireless communications, in three steps:  (1) create a new, unique dataset of disclosure information; (2) create a pilot sub-sample database of investment data on key producer firms; (3) construct analysis methods and analyze and report what we find. A variety of business literatures, including technology adoption, entrepreneurship, strategy, finance and regulation, will be reviewed, along with methodological literatures in content analysis and disclosure (accounting).

Getting Something for Nothing (maybe):
The Case of Probabilistic Purchases
Professor Dan Ariely
Sponsor: MasterCard
In the traditional economic view, payment is linear, which means that paying more is worse than paying less and the magnitude of adversity is relatively constant (a dollar more in price is equal to X level of disutility).  Yet, multiple types of psychological observations suggest that this is not the case.  In particular, we are interested here in the discontinuity around the price of 0 (free) by exploring two probabilistic purchasing mechanisms:  (1) What does "Probabilistic Purchases" means?  (2)  Why is "Probabilistic Purchases" likely to work?  To test these ideas we will create a set of experiments ranging in abstraction from gambling to real purchases and use populations that range from local students to a broader sample of the population.

Dream CRM
Professor Glen Urban
Sponsor: General Motors Corporation
The objective of this project is to understand the response in the market to the full power of CRM and trust generating activities in terms of attitude change, customer information processing, and purchasing.  Analysis will compare test to control conditions for top line results and detailed information flow, attitude formation, and purchasing models estimated from the data.  The goal is to measure the incremental impact of the trust/CRM activities in the year and projected forward to estimate longer term effects.  The study will bring a strategic perspective to the CRM efforts at GM and unify innovation in advertising, Internet sites, and dealer training programs.

Adaptive Site Experimentation and Strategic Trust Audit
Professor Glen Urban
Sponsor: Qwest Communications
This project will design and implement a specific experiment for Qwest.com that will use a mix of trust cues to generate trust and provide substantial inputs into making Qwest.com a highly customer responsive and trustworthy site based on continual market experimentation. Ultimately, this will help Qwest progress toward a full trust strategy.  The strategic trust audit will provide substantial inputs into making Qwest a highly capable organization in delivering under a trust based strategy and generate a profile of market and corporate requirements for success in a trust based strategy and generate recommendations for programs to fill gaps between requirements and current capabilities. The audit will lay emphasis on assessing the capabilities and importance of E-Business initiatives in filling the requirements gaps.

Coordination in the Customer Experience
Professor Tom Malone
Sponsor: MasterCard International
This project consists of several key elements:  (1) Extending the Matrix of Change; (2) Developing Experience Lifecycle Mapping; (3) Open Process Handbook Initiative Software Tools Development; (4) “Coordination in the Customer Experience” Seminar: We will deliver at the end of the funding period, a “Coordination in the Customer Experience” Seminar at MIT.  In this day and a half event, we will orchestrate demonstrations of the tools and experiences we have accumulated during the intervening year, provide a set of experiential learning events for the participants, and arrange a set of lectures by MIT professors and Researchers targeted for MasterCard International Consultant’s needs.  Our initial plan involves a unique MIT collaborative music experience for all participants in order to cap off the first year and launch the second.

Mobile Weblogging and User Study
Professor James Short
Sponsor: Nortel Networks
A novel design to study wireless LAN adoption and use in the Nortel-MIT Wireless LAN Trial is proposed.  The core idea is to study adoption and use interactively via the formation of a student-run mobile weblogging site (“channel”), where student mobile users will be encouraged to post mobile content to the site, and in weblogs, share their views and experiences regarding the pilot Wireless LAN technology. The resulting database of postings, content and communications will be analyzed using content analysis methods.  A key component of the study will be to study the differences in growth of “organic” communities and “functional” communities.  A simplified four-category model is envisioned as a starting point: communities which formed on their own, and communities which developed around incentives on one axis; and on the other axis, functional uses and emotive uses. Understanding differences in adoption rate, patterns of use, and application will be emphasized.

Building a Customer Advocate for Broadband Service Purchasing:  Matching Cognitive
Decision Style in an Individually Adaptive Site 
Professor Glen Urban
Sponsor: BT
This is a project to design, build, and test a prototype "My Broadband Advocate" Internet site that adapts individually to a customer’s decision style and demographics.  It utilizes past work by my group in the telecommunication industry to build a site that morphs as an individual reveals their style of decision making and youthfulness.  Two cognitive styles will be modeled:  1. "Just give me the facts and I can decide things myself", and 2. “I want a personal advisor and help in learning”.  Clicks on the site indicate the likely importance of these styles of decision making to an individual and the site morphs to reflect the relative importance of the functions of facts, advice, and learning along the continuum between the two extreme styles.  We will also morph the site along the dimension of youthfulness from young to old.  It is our hypothesis that this individualized matching to decision style and age will result in more trust, site acceptance, and click through to intended purchase than a single fixed site design.  Over the next 16 months we will build an operating prototype and test it in a forced exposure market research study in England.  The site design will offer “competitive transparency” with other non-BT product offerings.  Overall, this site design will have the potential to help British Telecom be more successful in the residential broadband market in Great Britain and will contribute to MIT's research agenda on customer advocacy and site design.

IT and Best Organizational Practices for Improving Firm-Level Productivity
Professor Erik Brynjolfsson
Sponsor: Cisco Systems
This is a project to perform an in-depth econometric analysis of data gathered in the 2003 and 2005 Net Impact Research surveys sponsored by Cisco Systems to understand what productivity enhancing organizational practices are used by firms that make significant investments in IT. Through our analysis, we hope to understand better what roles specific intangible assets such as investments in business process re-engineering, organizational culture, organizational learning and standardization efforts play in improving productivity of firms that invest heavily in IT. We hope to rigorously validate the best practices findings in the ‘Net Impact: United States Private Sector – Customer Service and Support’ report through a careful statistical analysis that includes control variables and goes beyond simple correlation analysis.  We will also attempt to match the customer service productivity data gathered in the surveys with third-party data on overall firm financial performance and productivity and assess whether the reported productivity levels in customer support and service functions reported in the surveys correlate with firm-level metrics data obtained from other third-party sources. Other questions that we will attempt to answer – how do productivity-enhancing best practices and their effects vary across industries? Do IT decision makers and business decision makers differ on key issues?  The analytic technique employed will be theory-driven hypothesis generation followed by a multiple regression statistical analysis to test the hypotheses. We will make use of different econometric coefficient estimation techniques to make the best possible assessment of the direction and magnitude of the hypothesized effects. We will be doing cross-sectional analysis of the gathered data and, under the assumption that several companies will be common to both the 2003 and the 2005 surveys, we will be able to do a time-series analysis to understand how changes in best practices as well as investments in IT can affect productivity.

Towards total Security Quality Management (TSQM) 
Professor Stuart Madnick and Michael Siegel
Sponsor: Cisco Systems
There are many important similarities between the Total Quality Management (TQM) efforts (of the 1950s onward) and the increasing concerns about the cost and quality of security in enterprises today.  At one time it was thought that one had to choose between improving quality and lowering cost.  TQM showed that it was possible to improve both quality and cost efficiency.  Many people now view security as an “add-on” cost (as improved quality was once considered), but that view is being increasingly challenged.  There are those that believe that a clearer understanding of security can lead to not only increased security but also lower costs.  An important early step in the TQM effort was to more precisely define what “quality” meant, especially in a more holistic sense.  In order to make serious progress towards improving enterprise level security, we need to define the concept of enterprise “security” (which we will refer to as Total Security Quality Management or TSQM) and develop effective ways to assess and measure it.

Emerging Trends in Supply Chain Governance:  The Role of Systems Integrator
and Trading Firms
Professor Gabriel Bitran
Sponsor: UPS
This project focuses primarily on the change in supply and value chain governance structures that is observed across many industry sectors including the automotive, electronics manufacturing, and apparel trade sectors. Through a literature review and specific case examples from these industry sectors, we discuss the possible reasons behind the changing industry and governance structures, and further the implications of such change on the operational performance of supply chains and the component firms.  To capture the significant effect of the change in governance modes, we highlight the expanding role (and to a certain extent the unique trends) followed by prominent trading and systems integrator firms in select industry sectors. For example, we capture the main descriptors of these systems integrator and trading firms in terms of (i) their business model (s) in relation to the dynamics of the supply chains that they help coordinate, (ii) their internal organization, and (iii) their innovative roles within and their contributions to their respective supply chains. The scope of this report is therefore broad, and the objective is to capture the general trends in supply chain governance within these industry sectors; hence firm-specific details are provided only for the one or two firms within an industry sector, that are either highly successful in their role of systems integrators, or are representative of the trends followed by similar companies in the sector.  To this end, we elaborate on the emergence of systems integrator firms such as Flextronics International in the electronics manufacturing services industry, and Li & Fung in the apparel sector, and discuss in more detail their special roles and influence in the transformation of the respective groups of supply chains or networks that these firms help govern.

Impact of Information and Communication Technologies on Small and Medium Size
Enterprises
Professor Tom Malone, Professor Brian Subirana, Rob Laubacher
Sponsor: France Telecom
The ICTSME project aims to develop a methodology that can help SME executives understand the impact of ICT on their business processes.  It will analyze ICTs used to enable specific business process in the SME context.  The aim is to use MIT’s Process Handbook (http://ccs.mit.edu/ph/) to map and catalog ICT-enabled processes in SMEs and, if appropriate data sets are available, to develop tools for evaluating ICT investments in the SME context.  
This project will extend the Process Handbook by developing detailed models of selected SME processes.  These models will, in turn, provide the basis for deriving systematic taxonomies of the characteristics of SMEs that make heavy use of IT.  This may shed light on why some SMEs are more productive than others.  The project will be coordinated with and draw upon the Center for Coordination Science’s Activity-Based Performance Measurement (ABPM) effort.  ABPM involves development of a method to measure performance at the activity level and to connect the resulting activity-based metrics with business unit and enterprise level measures of performance.

 Activity Based Performance Measurement
Professor Tom Malone
Sponsor: Intel
The goal of the project is to develop a method to measure performance at the activity level and to connect the resulting activity-based metrics with business unit and enterprise level measure of performance.  This project is applied research—we are developing a tool rather than testing a hypothesis. 

 Communication Futures
Professor Charlie Fine
Sponsor: Intel
The project is focused on four important issues:  (1) Inventing technologies that create discontinuous innovation; (2) Creating enablers of industry transformation around broadband infrastructure, regulation, privacy and security, edge core dynamics, and rights management; (3)   Aligning members across the communications value chain to speed innovation; and (4)    Developing awareness around big opportunities from emerging technologies