This is an MIT Sloan Management Review article. New markets and new possibilities for expansion and acquisition make the global competitive landscape more dynamic, creating both threats and opportunities. The task of the global strategist involves not only identifying where to leverage a company's existing strengths but also how to enhance and renew its capabilities. The authors argue that the risks of global expansion can be greatly reduced by taking a systematic approach to the decision-making process about entering a new country. They conclude that the experience of many global companies suggests that expensive mistakes are often made when companies don't ask certain key questions before they make such internationalization decisions. By better understanding the nature of their own competitive advantages and how those advantages might fit into or be augmented by a new market, companies can greatly improve their chances of success. The authors illustrate their argument by drawing on the examples of companies such as CEMEX, Telefänica, Accor, Wal-Mart and IKEA. The authors propose two tests for the global strategist, one to use when a company is considering replicating a successful strategy in a new country, and the other to use when a company is seeking to acquire a new capability in a new market.

This is an MIT Sloan Management Review article. These days, 3-D printing is much in the news. Also known as "additive manufacturing"or "rapid prototyping,"3-D printing is the printing of solid, physical 3-D objects. Unlike machining processes, which are subtractive in nature, 3-D printing systems join together raw materials to form an object. Some see 3-D printing and related technologies as having transformative implications. "Just as the Web democratized innovation in bits, a new class of 'Äòrapid prototyping'technologies, from 3-D printers to laser cutters, is democratizing innovation in atoms,"Wired magazine's longtime editor-in-chief, Chris Anderson, stated in his new book Makers: The New Industrial Revolution. "A new digital revolution is coming, this time in fabrication,"MIT professor Neil Gershenfeld wrote in a recent issue of Foreign Affairs. But in addition to 3-D printing's technological implications, recent evolutions in 3-D printing offer important management lessons for executives about the changing face of technological innovation -and what that means for businesses. In this article, the authors examine the rapid emergence of a movement called open-source 3-D printing and how it fits into a general trend toward open-source innovation by collaborative online communities. They then discuss how existing companies can respond to -and sometimes benefit from -open-source innovation if it occurs in their industry.

This is an MIT Sloan Management Review article. Too often, conventional approaches to organizational transformation resemble the Big Bang theory. Change occurs all at once, on a large scale, and often in response to crisis. Yet we know from a great deal of experience that Big Bang transformation attempts often fail, fostering employee discontent and producing mediocre solutions with little lasting impact. Instead of undertaking a risky, large-scale makeover, organizations can seed transformation by collectively uncovering "everyday disconnects"-the disparities between our expectations about how work is carried out and how it is actually is. The discovery of such disconnects encourages people to think about how the work might be done differently. Continuously pursuing these smaller-scale changes -and then weaving them together -offers a practical middle path between large-scale transformation and smallscale pilot projects that run the risk of producing too little too late. The author has found that organizations take three approaches to discovery that are both particularly effective for uncovering everyday disconnects in the organization's work and seeding transformation from the bottom up. These techniques can be used together. The three techniques are: 1. Work Discovery Instead of assuming that you know how work is designed, examine it firsthand as it is actually conducted. Determine how to turn the (inevitable) surprises you uncover into assets. 2. Better Practices Instead of simply adopting the best practices of other organizations, screen the way work gets done in your organization through those best practices to generate new ideas. In other words, use best practices to generate even better practices. 3. Test Training Instead of locking down standard operating procedures during training, experiment with other, potentially better possibilities for changing the way the work will get done. Use training for testing these possibilities.

This is an MIT Sloan Management Review article. Although the initial concept for the human cloud was to create an eBay-like marketplace for talent and labor, there were obstacles. The simple auction model seemed ill-suited for large, complex undertakings. The model was also often perceived as too risky by managers, who had a hard time developing "virtual"rapport with workers. Today, four new human cloud models have developed, each aiming to overcome these problems in a distinct way: 1. The Facilitator model connects suppliers and buyers directly through a bidding process but offers increased visibility into the supplier's identity and work processes. Elance and oDesk are examples of this model. 2. The Arbitrator model enables buyers to compare the inputs of multiple providers before choosing which to purchase. Arbitrator platforms such as CrowdSpring and InnoCentive follow this approach. 3. The Aggregator model breaks down a job, such as proofreading, translation, transcription or tagging, into tiny bits of work -microtasks -and finds workers willing to complete these tasks, sometimes in the context of a game. Platforms like Amazon Mechanical Turk and CrowdFlower offer such capabilities. 4. The most sophisticated model, the Governor, provides project management, supplier certification and quality control to assure qualified coordination and management of complex projects. The authors note that harnessing the human cloud's power will -as with earlier outsourcing waves -require hard work and learning. Buyers may find it helpful to think about managing a human cloud initiative much the same way that they manage the main phases of any outsourcing engagement.

This is an MIT Sloan Management Review article. It's difficult to start a venture that gains traction with paying customers, but it's even harder to grow beyond certain levels of sales. Why? The authors point out that, as ventures grow, their complexity increases. Not only are there more "moving parts,"but interdependencies are more difficult to manage. The original business model must deal with new products or markets. Early leadership behaviors that worked in establishing the business are often not adequate to manage and grow it. SG&A (selling, general and administrative) costs often accelerate faster than revenues. The result: Each year thousands of promising ventures are either forced to go out of business or operate in small niches because they are unable to scale their sales activities. The authors illustrate with the example of a real company in the payroll services business. After a period of rapid growth, "BusinessProcessingCo."saw its revenue growth stall and the SG&A burden become untenable. The company had a costly ad hoc process for evaluating opportunities, forecasting and business development initiatives. The leadership team was unable to define its core customers. As the authors explain, different customers come with different transaction costs for the seller. This affects "upstream"capacity utilization in two respects: the product mix of the selling company (what kind of capacity is utilized) and how capacity is utilized (for example, production lines in manufacturing and the types of people and skills in a service business). The selection of customers also affects "downstream"after-sale economics and organizational requirements. The article discusses the importance of customer selection and how intelligent opportunity management can help companies scale their selling initiatives. It concludes with a general framework for helping executives analyze sales productivity and pipeline value.

This is an MIT Sloan Management Review article. Results from the fourth year of MIT Sloan Management Review's research collaboration with the Boston Consulting Group have found that managers who say sustainability has caused their organization to change its business model are also more likely to say that the organization's sustainability activities have added to profits. Respondents to the survey who not only changed their business model because of sustainability but also generated profits from their sustainability-related activities and decisions -"Sustainability-Driven Innovators"-represented 23% of the survey pool. The survey results suggest that business model change, top management support, collaboration with customers and having a business case are associated with creating economic value from sustainability activities and decisions. Ninety percent of all managers who said their companies have all these characteristics also say that their sustainability activities add to their profits. The authors'research suggests several ways in which companies can become more effective at connecting business model change with sustainability-based profits. Based on the behavior of Sustainability-Driven Innovators, they make three recommendations for how managers can improve their odds of profiting from their sustainability activities. First is to be prepared to change the business model, which may involve extensive corporate change, require significant top management attention and entail setting multiyear goals. Second is to learn how your customers think about sustainability and understand what they are willing to pay for in connection with sustainable products or services. The final recommendation involves increasing collaboration both internally and externally with customers, businesses and groups beyond the boundaries of the organization to improve operations and competitive advantage.

Innovative companies fund internal research and development to gain an edge in the marketplace. They also work closely with their suppliers in an effort to offer greater functionality and performance for their customers. However, some critical new product insights don't come from suppliers and customers working together but from the customer's customers. When suppliers and customers cooperate, the authors write, they can "tweak"the technology to provide big gains in value for the customer's customers. In contrast to recent research on how suppliers and customers cooperate to save on costs, the authors examine the innovation process to understand how to achieve outcomes for the end user that otherwise would not occur. Drawing on numerous examples from technology companies, they look at how suppliers and customers become open to tweaking the supplier's offering to better serve the customer's customers; what makes for successful tweaking; and various ways parties can share the fruits of collaboration so that everyone benefits. Although some progressive suppliers and customers saw the potential benefits of working together, many of the businesses the authors examined regarded this kind of cooperation as a last resort. Small suppliers saw large prospective customers as slow to make decisions and overly aggressive about claiming intellectual property that came out of collaborations; large customers also tended to withhold information about how they used the suppliers'technologies and their customers'applications. However, the authors found that some technology businesses consciously seek opportunities to cooperate with their customers and customer's customers. This was particularly true with small and medium-sized companies. The authors explore two key issues: the extent to which contact between the supplier and the customer's customer needs to be direct; and how businesses bridge across different partial understandings to improve their chances of success.

This is an MIT Sloan Management Review article. In the perennial tug of war between manufacturers and retailers, retailers seem to be winning. Today's retail industry is more concentrated than ever -in many industries and markets, a handful of retailers account for a majority of the sales. Their ability to control market access and influence consumer buying behavior means that manufacturers need retailers more than ever. And just imperatively, the authors argue, they need to understand what makes retailers tick. As retailer influence has grown, they note, power has moved downstream. For example, Wal-Mart's sale are approximately 4.5 times greater than those of its largest supplier, Procter & Gamble. Consolidation and the global scale of retailers have reduced the number of "buying points"that manufacturers can develop. Yet neither side is satisfied with the current system. Many retailers have difficulty converting trade promotion into profits. Rather than building longer-term partnerships with suppliers and nurturing store and shopper loyalty, retailers tend to compete on price and fritter away the trade support they extract from manufacturers. What can be done to improve the situation? While manufacturers are locked into large fixed investments and wedded to products and brands with long payback cycles, retailers have a variety of ways of making money. The particular approach, or the mixture of approaches, that a retailer selects defines the retailer's business model and how it differs from competitors. The article highlights four different retail business models, as exemplified by Tesco, which connects with consumers through its loyalty program; Loblaw, which relies heavily on private labels; Costco, which gets its suppliers to finance its inventory; and Wal-Mart, which focuses closely on margins.

This note focuses on the main basic concepts of finance, including the income statement and balance sheet, financial and accounting metrics, cost of capital, and value creation. It also includes updated data on many risk indicators in 2012.

Mergers and acquisitions (M&As) are important events in the life of any manager and company. However, the overwhelming evidence from years of research is that the majority of M&As fail to create value for the acquirer. This note focuses on the main methods used to assess the value creating potential of M&As. Valuation is a key tool to understand whether or not a certain merger will add value to shareholders. Thus, this note covers concepts such as: 1) Value creation through M&As. For whom do mergers create value? 2) Valuation by Discounted Cash Flows (DCF) in M&As; 3) Types of synergies and how to consider them; 4) Appropriate discount rates in an M&A setting; 5) Valuation using multiples and other market transactions as reference. Learning objectives: This note allows for an understanding of the strategic and economic considerations in mergers and acquisitions, with a focus on the key drivers of successful acquisition strategies.

As her top 60 executives arrived in London for the first strategic planning meeting after Ahrendts took the helm, she noticed that not one of them was wearing a Burberry trench coat, despite the damp, gray weather. It was a sign of the challenges the company faced. Even in a burgeoning global market, Burberry was growing at only 2% a year. It had lost focus in the process of global expansion: Each of the 23 licensees around the world was doing something different. Ubiquity was robbing the brand of its luster. Ahrendts realized that if Burberry was going to be a great, pure, global luxury brand, it needed to have one design director--a "brand czar"--and it needed to capitalize on its historical core: the trench coat. The company decided to innovate at the core to attract the luxury customers of the future: millennials.

A potent mix of modern technology and new government policy is about to transform disclosure--and with it the workings of many parts of the economy, say Richard Thaler of the University of Chicago and Will Tucker of ideas42. Increasingly, government-owned data and private-company disclosures will be made available in machine-readable formats, spurring growth of new services the authors call "choice engines"--technologies that interpret this data. Choice engines have already made significant inroads in revolutionizing markets. Consider the travel industry and websites such as Expedia and Travelocity that allow customers to bypass travel agents and search for and purchase flights and hotels. And travel sites are just the beginning. Not sure whether you should buy a laptop now or wait until prices drop? Go to Decide.com. Worried that an unwanted subscription will automatically renew? Sign up for BillGuard, a service that monitors your bank and credit card statements and sends you alerts about recurring charges. Want to lower your household energy consumption? Check out your usage patterns through the industry-led Green Button initiative. Have a family member allergic to gluten? Get a choice engine to use your shopping history to analyze food purchases and highlight items to avoid. If this sounds too good--or scary--to be true, look at the history of GPS, the now-ubiquitous global positioning system. When the U.S. government ordered the military to stop scrambling select data from Department of Defense satellites, in 2000, making the data freely available to the public, entrepreneurs quickly took over. GPS innovation has been a disaster for companies that sell maps on paper, but for consumers and the economy as a whole, it's been a boon. According to recent estimates, GPS added $90 billion in value to the U.S. economy just in 2011. The rise of choice engines, say the authors, will have an even greater, more transformative effect on the economy and on consumers' lives.

In three major waves of change over the past 30 years, employers and workers have converged on new arrangements for getting knowledge work done. First, home computers and e-mail spawned an army of freelancers, offering both workers and employers new flexibility. Next, mobile technology and global teamwork gave the same kind of work-anywhere, work-anytime flexibility to full-time employees, without asking them to forsake career progress and development within their companies. Now, in a third wave, new ways of providing community and shared space are curing a side effect of virtualization--worker isolation--and driving increased collaboration. The authors write that to make the most of this third wave of change, employers should rethink the compact they forge with workers. Five fundamental aspects of knowledge work require fresh thinking: the value of the relationship with a larger enterprise; the settings in which work is done; the organization of workflows and how individual contributors add value; the technologies used to support higher achievement; and the degree to which employment arrangements are tailored to individuals. The three waves of transformation surge forward at differing velocities across sectors and geographies and mix together in societies. Understanding how your business participates in each wave will help you make wise decisions about technology, work models, talent sources, and people practices.

Top talent is an invaluable asset: In highly specialized or creative work, for instance, "A" players are likely to be six times as productive as "B" players. So when your company has a crucial strategic project, why not multiply all that firepower and have a team of your best performers tackle it? Yet many companies hesitate to do this, believing that all-star teams don't work: Big egos will get in the way. The stars won't be able to work with one another. They'll drive the team leader crazy. Mankins, Bird, and Root of Bain & Company believe it's time to set aside that thinking. They have seen all-star teams do extraordinary work. But there is a right way and a wrong way to organize them. Before you can even begin to assemble such a team, you need to have the right talent management practices, so you hire and develop the best people and know what they're capable of. You have to give the team appropriate incentives and leaders and support staffers who are stars in their own right. And projects that are ill-defined or small scale are not for all-star teams. Use them only for critical missions, and make sure their objectives are clear. Even with the right setup, things can still go wrong. The wise executive will take steps to manage egos, prune non-team-players, and prevent average coworkers from feeling completely undervalued. She will also invest a lot of time in choosing the right team leader and will ask members for lots of feedback to monitor how that leader is doing.

For years, people have bemoaned executives' zealous focus on short-term results, which often leads CEOs to make moves that undermine their firms' long-term prospects and, some say, act irresponsibly. But all the talk won't change anything if the business world doesn't adopt a new way of measuring performance. Three professors from France's Insead believe they have the answer: an innovative scorecard that evaluates CEOs on the basis of the results they delivered over their entire tenures in office. It incorporates three metrics: industry-adjusted shareholder returns, country-adjusted shareholder returns, and increase in market capitalization over that time frame. Using this scorecard, the authors have studied and objectively ranked the performance of thousands of CEOs of major corporations around the world. In this issue, we reveal who made it into the top 100. This is the second installment of the ranking, which we published for the first time three years ago. Since then, the authors have expanded the group of CEOs studied, making it even more global. And, recognizing the growing sentiment that great financial performance is no longer enough, they also looked at social and environmental ratings to see which of the top CEOs also did well on those metrics. Accompanying this year's list is an interview with Jeff Bezos, the CEO of Amazon, whose well-known focus on the long term has served his company extremely well--earning him the #2 spot in the ranking.

Some people are practically phobic about going to the bargaining table. If their minimum needs are met, they'll sign on the dotted line just to end the stress of dealing with people who have different agendas and styles. But that can be an expensive aversion, the authors write. When you're facing an important negotiation, rigorous preparation--running the numbers, scouting the marketplace, developing a Plan B--is essential. But it's only half the story. The truth is that your passions matter in real-life deal making and dispute resolution. You need to understand, channel, and learn from your emotions in order to adapt to the situation at hand and engage others successfully. The authors studied 20 seasoned negotiators to explore their thoughts and feelings about the process. They invited their participants to find and combine pictures that metaphorically depicted those feelings, and to describe in in-depth interviews the collages they'd created. Three reasons for the stressfulness of the negotiation experience emerged: lack of control, unpredictability, and the absence of feedback. This article includes a six-step warm-up exercise to help you prepare emotionally to negotiate effectively.

As managers seek to exploit the tremendous amounts of data now available from internal and external sources, they're likely to use the approach they use with all their IT projects--that is, they'll focus on building and deploying technology on time, to plan, and within budget. That works for projects designed to improve business processes and increase efficiency, but when it comes to extracting valuable insights from data and using information to make better decisions, managers need a different approach and mind-set. A big data or analytics project is likely to be smaller and shorter than a conventional IT initiative, such as installing an ERP system. It's also more like scientific research. Commissioned to address a problem or opportunity, such a project frames questions, develops hypotheses, and then experiments to gain knowledge and understanding. The authors have identified five guidelines for taking this voyage of discovery: 1) Place users--the people who will create meaning from the information--at the heart of the initiative; 2) Unlock value from IT by asking second-order questions and giving teams the freedom to reframe business problems; 3) Equip teams with cognitive and behavioral scientists, who understand how people perceive problems and analyze data; 4) Focus on learning by facilitating information sharing, examining assumptions, and striving to understand cause and effect; and 5) Worry more about solving business problems than about deploying technology.

We've all heard of (or experienced) the "boss from hell." But that's just one form that incivility in the workplace can take. Rudeness on the job is surprisingly common, and it's on the rise. Whether it involves overt bullying or subtle acts of thoughtlessness, incivility takes a toll. It erodes productivity, chips away at morale, leads employees to quit, and damages customer relationships. Dealing with its aftermath can soak up weeks of managerial attention and time. Over the past 14 years the authors have conducted interviews with and collected data from more than 14,000 people throughout the United States and Canada in order to track the prevalence, types, causes, costs, and cures of incivility at work. They suggest several steps leaders can take to counter rudeness. Managers should start with themselves--monitoring their own behavior, asking for feedback on it, and making sure that their actions are a model for others. When it comes to managing the organization, leaders should hire with civility in mind, teach it on the job, create group norms, reward good behavior, and penalize bad behavior. Lest consistent civility seem an extravagance, the authors caution that just one habitually offensive employee critically positioned in an organization can cost millions in lost employees, lost customers, and lost productivity.

Corruption is the greatest impediment to conducting business in Russia, according to leaders recently surveyed by the World Economic Forum. Indeed, it's a problem in many emerging markets, and businesses have a role to play in combating it, according to Healy and Ramanna. The authors focus on RosPil--an anticorruption entity in Russia set up by Alexey Navalny, a crusader against public and private malfeasance in that country. As of December 2011, RosPil claimed to have prevented the granting of dubious contracts worth US$1.3 billion. The organization holds corrupt politicians' and bureaucrats' feet to the fire largely through internet-based crowdsourcing, whereby often-anonymous people identify requests for government-issued tenders that are designed to generate kickbacks. Should entities like RosPil be supported, and should companies fashion their own responses to corruption? On the one hand, there are obvious public-relations and political risks; on the other hand, corruption can erode a firm's competitiveness, the trust of customers and employees, and even the very legitimacy of capitalism. The authors argue that heads of many multinational companies are well positioned to combat corruption in emerging markets. Those leaders have the power to enforce policies in their organizations and networks, and they enjoy the ability to organize others in the industry against this pernicious threat.

The more uncertain your environment, the greater the opportunity--if you have the leadership skills to capitalize on it. Research at the Wharton School and at the authors' consulting firm, involving more than 20,000 executives to date, has identified six skills that, when mastered and used in concert, allow leaders to think strategically and navigate the unknown effectively. They are the abilities to anticipate, challenge, interpret, decide, align, and learn. This article describes the six skills in detail and includes a self-assessment that will enable you to identify the ones that most need your attention. The authors have found that strength in one skill cannot easily compensate for a deficit in another. An adaptive strategic leader has learned to apply all six at once.