The western world bought the wrong thinking system from Aristotle, says the author, and this ranks as one of the worst investment decisions we ever made. The thinking system we invested in was Aristotle's 'analytics', which monopolizes what most people characterize as 'thinking.' As a result, our thinking processes remain dominated by the culture of the sciences, and traditional approaches to strategy sit squarely at the table of logic and Science. But Aristotle actually conceived of two thinking systems, not one: he also conceived an entirely different thinking pathway that combined invention, judgment and decision wrapped up in a social process of debate. He called this process 'rhetoric', which the author calls 'design thinking' -- the Second Road to truth. The critical difference between the two roads is best understood by the different domains they address: analytics is the road by which we diagnose what already exists; rhetoric is the road by which we design alternative futures.

Despite the differences between their fields, ecologists have produced many insights that are potentially useful to strategic management. The authors show that Ecology and Strategy have much to learn from one another, and that an exchange between the fields can lead to the development of a richer and more compelling understanding of organizational strategy. They identify and describe three particular areas for cross-pollination between the disciplines: demography and competition; positional advantages; and inertia and change.

In a highly-connected world, signals from the periphery of our environment are initially difficult to capture, but they can be vital early warning signs of both threats and opportunities. Unfortunately, most of us are 'passive scanners' of our environment, say the authors: we wait for information to reach us, and deal with it as it arrives. The danger in this practice is that it is all-too easy to miss unexpected and unfamiliar weak signals on the periphery - that blurry zone at the edge of our vision, where not many people or firms focus their attention. The authors provide four guidelines for addressing the periphery of your organization.

Can we change our brains to sharpen perception and memory, increase speed of thought, and heal learning problems? According to the author, we can, and he describes how in this excerpt from his book The Brain That Changes Itself: Stories of Personal Triumph from the Frontiers of Brain Science (Viking Penguin, 2007). The author shows how leading-edge scientists are challenging the view that we are stuck with the brain we have at birth. For instance, the 'Merzenich brain', featured in the article, is structured by its constant collaboration with the world. The evidence Doidge assembles provides hope for life-long learning that defies aging: "Everything that you can see happen in a young brain can happen in an older brain."

Business strategists tend to be well-versed in the identification and analysis of constraints, says the author, but what of possibilities? If the ability to see new possibilities is fundamental to creating innovative designs - whether of products, cities or business strategies - what do we know about state-of-the-art possibility thinking? Not much, she says. Business strategy has historically been a largely analytic endeavor, with relatively little attention paid to the creative aspects of strategy formulation. She describes eight ways to illuminate new possibilities taken from Engineering success stories. Engineers have long viewed design as a core activity, says the author, and managers would be wise to turn to them for creative inspiration.

In an age where the digital machine can outperform the human mind at any task that can be represented as an algorithm, Integrative Thinking is the best revenge. The author argues that this particular kind of thinking still matters to success in business, and that figuring out how to do more of it requires a new conceptualization of thinking in terms of its integrative functions - the functions that produce successful integration across knowledge and interactional domains and confer agency upon decision makers. He describes three types of integrative thinking and why they stand out for the value they create: substantive integration; interactional integration and agency (the integration of seeing, feeling, thinking and action.)

Radical innovation requires both evidence and intuition: evidence to become informed, and intuition to inspire us in imagining and creating new and better possibilities. Research can be an immensely positive force in the innovation journey, says the author (from leading design firm IDEO), but to derive value from it, we must be willing to complement, challenge, and evolve many of the approaches and practices that traditionally prevail. She shows that design research demands commitment from innovators to reach new levels of understanding about what matters to the people they want to connect with. Three types of design research are defined - generative, evaluative and predictive - as well as how they can lead to business innovation.

Design thinking, while much less understood than scientific thinking, has characteristics of great value to teams dealing with complex, ill-formed problems. There are two main types of design thinkers, says the author: 'finders' and 'makers'. Finders exercise their creativity through discovery and are driven to find explanations for phenomena not well understood. In professional life, they usually become scientists or scholars and are responsible for much of our progress in understanding ourselves and our surroundings. Makers are equally creative, but they demonstrate their creativity through invention. Makers are driven to synthesize what they know in new constructions, arrangements, patterns, compositions and concepts that bring tangible, fresh expressions of what can be. The author describes ten characteristics of design thinking and shows how together, the characteristics of design and science thinking form a set of complementary thought processes that add considerable strength to an organization.

This is the first of a two-case series (808-040-1 and 808-041-1). From a rocky perch above the city of Boulder, Colorado, Jon Thorne gazed across the city and onto the great plains that stretched eastward before him. 'There's nothing like a vigorous mountain bike ride into the hills,' Thorne thought, 'when crucial decisions have to be deliberated.' It was a summer afternoon in 1999, and Thorne had devoted much of the past three years developing and taking to market a surgical instrument that he thought had the potential to significantly improve surgical practice. Though the feedback from surgeons had been excellent, Thorne's company, Silverglide Surgical Technologies, Inc, had little to show for his efforts. The $80,000 in start-up capital that Thorne had raised was nearly gone and his company's sales to date 'rounded to zero,' as a member of his advisory board had remarked at a board meeting earlier that week. Was it time to broaden his company's market focus from plastic surgeons into other surgical specialities? Was it time to abandon the probe and develop a new product line? Or should he abandon his entrepreneurial dream and return to a salaried job in the medical products industry from which he had come?

Supplement to case LBS113. This is the first of a two-case series (808-040-1 and 808-041-1). From a rocky perch above the city of Boulder, Colorado, Jon Thorne gazed across the city and onto the great plains that stretched eastward before him. 'There's nothing like a vigorous mountain bike ride into the hills,' Thorne thought, 'when crucial decisions have to be deliberated.' It was a summer afternoon in 1999, and Thorne had devoted much of the past three years developing and taking to market a surgical instrument that he thought had the potential to significantly improve surgical practice. Though the feedback from surgeons had been excellent, Thorne's company, Silverglide Surgical Technologies, Inc, had little to show for his efforts. The $80,000 in start-up capital that Thorne had raised was nearly gone and his company's sales to date 'rounded to zero,' as a member of his advisory board had remarked at a board meeting earlier that week. Was it time to broaden his company's market focus from plastic surgeons into other surgical specialities? Was it time to abandon the probe and develop a new product line? Or should he abandon his entrepreneurial dream and return to a salaried job in the medical products industry from which he had come?

Spiegel Online (www.spiegel.de) is the leading news Web site in Germany. The site was first designed to accompany Der Spiegel, one of Europe's largest and Germany's most influential weekly magazine, which has a weekly circulation of around one million. The site's content is produced by a team of more than fifty journalists writing in several categories: politics, business, networld, panorama, arts and entertainment, science, university, school, sports, travel, weather, and automobiles. The original content is complemented by articles purchased from news agencies and selected articles from the print edition. Spiegel-Verlag is a major contributor to the Hamburg Media School, which offers professional master's degree programs in Media Management (MBA), film, and journalism. In their second year, MBA students typically engage in consulting projects with major media companies. In a recent assignment, Spiegel Online posed two questions to the MBA team: are there any chances for an economically successful entry into the market for interactive classifieds? And if so, what should the business model look like in detail? A student team analyzed markets for classified ads and found one market segment that appeared to be particularly promising: the market for art objects. During the development of a business plan for a new venture in this market it became apparent that there is much uncertainty about the key input parameters to the business plan. As a result, it is very difficult to assess the viability of the business idea. How can the team properly account for the uncertain input parameters? What is the impact of this uncertainty on the bottom line? Will a Web site for art objects earn or lose money? How can the team communicate this uncertainty to a group of high-level decision makers who want a simple "go or no-go" recommendation?

The case describes the evolution between 1999 and 2008 of a family-owned contract manufacturing company into a publicly traded, US$400 million global firm. The son of the founder, Bernie Auyung, assumed the CEO position with the company during this period and has worked with his father to build a broader, professional management team. In the process the company has applied a range of leading-edge innovation management and strategy tools that put it far ahead of most Chinese peer companies. Computime provides an exceptional model for other companies in developing countries looking to evolve from a low-cost competitor into a global leading company with its own technologies and brands. Students are asked to assume Bernie's role and suggest the path forward. The teaching note describes what the team actually did, and addresses the questions raised at the end of the case.

The financial success of dairy farms depends critically on the price of their main output, milk. Large volatility in the price of milk poses a considerable business risk to dairy farms. This is particularly true for family-run dairy farms. The question then arises: how can a farm owner hedge the milk price risk? The standard approach to establish a price floor for a commodity such as milk is to purchase put options on commodity futures. At the Chicago Mercantile Exchange, farmers can buy put options on the price of a variety of milk products. However, the price a farm receives for its milk depends on many factors and is unique to the farm. Thus, a farmer cannot directly buy put options on the price he receives for the milk his farm produces. Instead the farmer needs to determine which of the options available for trade at the Chicago Mercantile Exchange offer the best hedge for his own milk price. The assignment in this case is to examine historical data on several prices of milk products and the milk price received by a family-run dairy farm in California. Students need to find the price that is most closely correlated to the farm's milk price and to then choose options with the appropriate strike price that serve as the best hedge for the farm's price risk.

Two Hawaiian airlines' cooperative environment is disrupted by the entry of a third competitor, Mesa Airways. The price war leads to fares as low as $0 and causes more than $100 million in losses in the first year with no end in sight. Industry risk factors for price competition were reduced in 2001 when the government granted a one-year reprieve from anti-trust laws, but increased dramatically after Mesa's announced entry.

Sara Lee Corporation's acquisition binge in the 1980s and 1990s left the company with a portfolio of vastly different businesses operating independently of one another. It had experienced rapid top-line growth, but at the same time cash flows had declined. Sara Lee ignored both internal and external warning signs until a major transformation plan became necessary. This case examines the company's multiple turnaround attempts. The learning objective of the case is to analyze "early stage" turnaround efforts by examining how the company found itself in decline, evaluating its attempts to improve its performance, and assessing the turnaround plan.

The major reason for failure in initiating new growth projects in uncertain environments is the basic tenet of classic project management-the initial strategy is assumed to be correct, and large sums are expended without dealing with the fundamental assumptions. Discovery-driven planning is vastly different from conventional planning. In conventional planning, success means delivering numbers close to what you thought you would deliver. In discovery-driven planning, success means generating the maximum amount of useful learning for the minimum expenditure. Discovery-driven planning is most useful when the situation is highly uncertain.

Senior managers in Parmalat SpA's U.S. subsidiary (Parmalat USA)-many of whom were from the Italian parent company or other Parmalat entities-uprooted, cleaned out their offices, and left as the magnitude of the parent company's fraud became known in late 2003. Parmalat USA had filed for bankruptcy in October 2003. With urgency and desperation, Enrico Bondi, the Extraordinary Commissioner of Parmalat SpA, had contacted the Milan office of AlixPartners, a global restructuring, consulting, and financial advisory firm. Bondi requested AlixPartners' assistance in determining the cash situation at the U.S. subsidiary and helping lead the struggling division, which was now void of senior management. Jim Mesterharm, a managing director in AlixPartners' Chicago office, was asked to lead this initiative as the chief restructuring officer. Parmalat SpA, often referred to as the Enron of Italy, was a trophy turnaround assignment at the outset for AlixPartners: for them, the worse the economic problem, the better the assignment. Ninety days was enough time for Mesterharm and his team to determine what could be cut off and what discussions were needed with the U.S. vendors, customers, and employees. Mesterharm's team changed the accounting methods from GAAP basis to cash basis. They constructed a 13-week cash flow model. Aggressive efforts were made to delay payables and to accelerate receivables to create cash. The battle to keep Parmalat USA afloat had begun.

In 2005, a wine snob in the critically acclaimed movie Sideways denounced merlot. Subsequently, sales of merlot, including sales for Terlato's Rutherford Hill merlot, declined significantly. Students are asked to evaluate three strategies-rebranding, cutting price, and launching television advertising-that Terlato is considering to reverse this decline. The case should be used with "Student Supplement: Terlato Wines International: Background Note on the U.S. Wine Market and Terlato Wines International," Case #KEL359.

This background note provides an overview of the U.S. wine industry and a history of Terlato Wines International. Data on market trends, key competitors, distribution channels and Terlato's segmentation and targeting for specific brands are included.

The Biaxin case deals with competition in the mature market for antibiotics designed for use in the treatment of bacterial respiratory infections. The case tells the story of how Pfizer's Zithromax stole the share dominance of an established brand, Abbott's Biaxin. The case deals with the importance in pharma markets of consumer (patient) and channel (physician and insurance payer) insight as well as pharmacological efficacy data.