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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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