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Media and Information Center


What the Experts Say About the XIAMETER®Brand

Media / Articles

Harvard Business Review,December 2008 Reinventing Your Business Model. Authors: Mark W. Johnson, Clayton M. Christensen, Henning Kagermann

“In 2002, Dow Corning discovered that many customers experienced in silicone application no longer needed technical services; they needed basic products at low prices. Since the current business model was based on high-priced, innovative product and service packages, it had to develop a fundamentally lower cost structure dependent upon a new IT system that would offer a standardized, self-service option for its customers.  XIAMETER was born. XIAMETER … went on to become a major transformative success.  Beforehand, Dow Corning had had no online sales component; now 30% of sales originate online, nearly three times the industry average.”

IndustryWeek,November 1, 2008 Straight to the Source Author: Nick Zubko

“Even at a time when few people are seen during the workday without some sort of communications device clutched in their hand, attached to their ear or strapped to their belt, there are still a few companies out there that think buying materials via the Web is just a little too futuristic. However, the volatility of many different raw material markets is making some manufacturers change their minds, as the ability to have up-to-date pricing information can prove to be increasingly beneficial. In an attempt to stay ahead of the curve, Dow Corning started a Web-based offering called Xiameter in 2002 to help enable customers to purchase its silicon-based products in bulk, directly off the Internet.

IndustryWeek,  October 8, 2008 When the Going Gets Tough, the Tough Get Innovating Authors: Scott D. Anthony, President and Joseph V. Sinfield, Senior Partner, Innosight

 “Some companies have even created growth by introducing new business models. For example, about five years ago Dow Corning created Xiameter, a low-cost, online-only distribution channel for commodity silicones. Xiameter went from an idea to a viable business in nine months; three months after launch Dow Corning's entire investment had been paid off.”

Forbes.com,September 8, 2008From Strategy to Execution: Turning Accelerated Global Change into Opportunity(excerpt). Authors: Mark Johnson and Josh Suskewicz.

“The Xiameter story shows that established, mature companies can succeed at accelerating innovation by leveraging the unique resources at their disposal to beat out nimble, disruptive entrants. The key to success is recognizing that new disruptive growth represents a distinct challenge from growing the core business, and that processes, tools and resources must be customized accordingly.”

Forbes.com,  April 1, 2008 A Playbook for Moving Down Market  Author: Scott D. Anthony

“Xiameter has been a blockbuster success. As we note in the introduction to The Innovator's Guide to Growth: "In six short months, Xiameter went from ideation to test market. Three months later it launched in full. Three months after that, Dow Corning's entire investment had been paid back. In a year, Dow Corning went from an idea to a successfully launched business."

Harvard Business School Online,  March 7, 2005 Dow Corning's Big Pricing Gamble  Author: Loren Gary,

“Specialty chemicals giant Dow Corning caught its competitors by surprise in 2002 when it launched Xiameter, a Web-based discount sales channel whose mandate was to bring in new business as well as retain cost-conscious customers who were fleeing their traditional, high-touch relationship with the company.

Throughout the industry, profit margins for many mature products had been declining for nearly a decade; the strategy that Dow Corning and its competitors had taken to date was to add yet more services to their offerings as a vehicle for boosting margins. By contrast, Xiameter adopted what looked like a radical tactic: Dow Corning customers could bulk order some of the parent company's most established products without the premium prices that reflected added services.

Some industry analysts saw this as suicidal. A two-tiered pricing system, they argued, would undermine Dow Corning's core business; purchasers of premium-priced products—available for a lower price through the Xiameter channel—would think they were being overcharged and would clamor for a better deal. To date, however, Xiameter has been a clear winner: It paid back its original investment to the parent company in just three months.

The story of Xiameter's development and early existence offers valuable lessons not only about the importance of reading the signs that an industry has reached a strategic inflection point but also about how an industry leader can manage the inherent tensions between its established business and the low-end disruption it creates to further grow its business.”


Case Studies

Harvard Business Review, 2006: Strategies to Fight Low-Cost Rivals,  Author:  Nirmalya Kumar

"Dow Corning’s creation of Xiameter is an excellent illustration of how companies should use the two-pronged approach."

Dartmouth Case Study: Xiameter: E-commerce Solution Covering Customer Ordering and Information Processes  Authors: Stephen Lin and Enrico Senger

"Xiameter has seen rapid adoption from both existing Dow Corning customers as well as new customers, with success in all major geographies.”

Innosight Case Study: Simple Steps to Create Disruptive Growth Business

"By taking advantage of scale economics and understanding how to design distinct business models, Dow Corning has created a profitable new growth opportunity in a very challenging market space."    

 

White Papers

Business Model Innovation: Why and How, Henning Kagermann, Clayton Christensen & Mark Johnson, March 14, 2006

“The leader in the silicone business,Dow Corning successfully launched a low-cost business model with its Xiameter brand, revolutionizing the way bulk silicone was sold.

Dow Corning’s senior management saw that the company was vulnerable to low cost, low margin disruptors and developed Xiameter, a business unit with an ambitious new Web-based business model that drove profits by tearing cost and complexity out of the system and delivering bulk silicone at market-driven prices.”

Books

The New Age of Innovation:  Driving Cocreated Value through Global Networks
C.K. Prahalad and M.S. Krishnan. ©2008. McGraw-Hill Publishers. pp. 55, 197-202

The Stakeholder Balance Sheet: Profiting from Really Understanding your Market.  Farrokh Suntook and John A. Murphy. ©2008. John Wiley & Sons Limited. pp 17, 52-53, 86, 165

Innovator's Guide to Growth - Putting Disruptive Innovation to Work.
Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, Elizabeth J. Altman ©2008, Innosight, LLC. pp 7, 11-12, 51, 238

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