AIG is an American insurance company. A trade dispute between the United States and the European Union threatens to block the accession of China to the World Trade Organization, and AIG plays a role as the only foreign firm to own fully controlled subsidiaries in China. The disagreement is about the future of these existing subsidiaries, as well as potential new ones that AIG might seek to establish in China. What are the issues from each stakeholder's perspective, and what options are available to resolve this dispute?

Coming up with fabulously successful products takes more than creative people with groundbreaking ideas. Top executives need to roll up their sleeves and get involved. Because they control resources and have the power to cut through red tape, they can clear a path for the creative team to develop hit products.

Mergers with substantial business overlap face a barrier to speedy integration: Antitrust regulations limit the information companies can share before a deal closes. But as Dow Chemical and Union Carbide found, premerger planning by "clean teams" of former employees can help merging companies hit the ground running.

Executive consultant Marshall Goldsmith tells his CEO clients that he's not the real coach; the people around them are. To change your behavior, he says, quit whining about the past and start asking your colleagues how you can do better. You're not done until they think you are.

Business fads can change companies, for better or worse. They can introduce useful ideas, but often fail to deliver on promises. So how can managers tell a fad from a tool that might endure? For one thing, beware of suspiciously simple techniques. If they seem too easy, they probably are.

Well before the fateful morning of September 11, 2001, the threat posed to Americans and the United States by Osama bin Laden and his al Qaeda ("The Base") network of terrorists was well documented and closely monitored. Two US agencies-the Central Intelligence Agency (CIA) and the Federal Bureau of Investigation (FBI)-each maintained units devoted to bin Laden. In 1998 and 2000, al Qaeda attacks on US targets had precipitated intensive investigations which yielded a wealth of knowledge about the terrorist operation. Those attacks also promoted increased cooperation between the FBI and CIA, which regularly exchanged personnel and information. Moreover, throughout the summer of 2001, there had been a steady drumbeat of warnings about terrorist attacks, which the US government treated with utmost seriousness. American travelers abroad, US embassies, businesses and military installations were all in a heightened state of alert. The Federal Aviation Authority issued general warnings to airlines. An FBI office reported on suspicious Middle Eastern men taking flying lessons in Phoenix; an aviation student in Minnesota was arrested. The CIA notified the FBI that two suspected al Qaeda members were in the US. This case brings together accounts of what U.S. law enforcement and intelligence agencies knew about al Qaeda before September 11, 2001 and raises the question of why that knowledge-tips, satellite pictures, intercepted communications, defector reports, courtroom testimony-did not thwart the terrorist attacks on the World Trade Center in New York and the Pentagon in Washington. It frames, in particular, the challenges of synthesizing intelligence-the difficulties involved in assembling seemingly random incidents into a coherent picture and distinguishing between credible warnings and probable false alarms. It can be used as a vehicle for discussion about intelligence-gathering per se, as well as government inter-agency and inter-departmental coordination.

In the spring of 1998, nonprofit agencies known as "child-sponsorship" organizations found themselves on the defensive. The agencies-dedicated to raising charitable funds in the United States to support children and their communities in poor, developing countries-had been the subject of a scathing critique, a two-part series in the Chicago Tribune accusing them, in effect, of misleading donors. The series asserted that the organizations had not lived up to the promise implicit in fundraising advertisements: that specific children would benefit directly from the contributions of individual sponsors. The agencies mounted a spirited and largely successful public defense of their approach-one in which aid was targeted not only at individual children but at the communities in which they lived. At the same time, however, they sought new ways to reassure the public about their effectiveness. This case details the ensuing effort by a group of six child sponsorship agencies to agree on "industry" standards that would make their goals and methods clear. The case describes the differing situations of the various organizations so as to lay the groundwork for discussion about likely difficulties in reaching agreement on standards, as well as extrapolation as to what sort of standards could both command consensus among the agencies and satisfy public demands for "transparency." The case serves the broader purpose of framing the issues and dynamics of industry self-regulation more generally, particularly in a nonprofit context. See also, Part B (1665.0). HKS Case Number 1664.0

In the spring of 1998, nonprofit agencies known as "child-sponsorship" organizations found themselves on the defensive. The agencies-dedicated to raising charitable funds in the United States to support children and their communities in poor, developing countries-had been the subject of a scathing critique, a two-part series in the Chicago Tribune accusing them, in effect, of misleading donors. The series asserted that the organizations had not lived up to the promise implicit in fundraising advertisements: that specific children would benefit directly from the contributions of individual sponsors. The agencies mounted a spirited and largely successful public defense of their approach-one in which aid was targeted not only at individual children but at the communities in which they lived. At the same time, however, they sought new ways to reassure the public about their effectiveness. This case details the ensuing effort by a group of six child sponsorship agencies to agree on "industry" standards that would make their goals and methods clear. The case describes the differing situations of the various organizations so as to lay the groundwork for discussion about likely difficulties in reaching agreement on standards, as well as extrapolation as to what sort of standards could both command consensus among the agencies and satisfy public demands for "transparency." The case serves the broader purpose of framing the issues and dynamics of industry self-regulation more generally, particularly in a nonprofit context. See also, Part B (1665.0). HKS Case Number 1665.0

Enlarges the "extended enterprise" metaphor from its origins in manufacturing-logistics management to embrace the full range of constituencies that are vital to the survival and success of the corporation. Presents a new "stakeholder view" of the firm that holds that stakeholder relationships are the ultimate sources of the firm's wealth-creating capacity. According to this view, long-term business success requires a firm to develop and integrate relationships with its multiple stakeholders within a comprehensive management strategy. To illustrate the validity of this approach, this article describes and analyzes the evolution and impact of comprehensive stakeholder management policies in three major firms.

Comprising networked organizations that span advanced and developing countries, the athletic footwear sector is at the cutting edge of globalization. An important dimension of corporate responsibility is setting and maintaining labor standards for contractors' employees in countries where workers have little or no legal protection against exploitation. This article examines how adidas, the industry's No. 2 firm, has utilized a code of labor practice to regulate the labor standards of its main manufacturing suppliers. A comparative analysis of a matched sample of two contractors in China shows that although the code requirements were met in both cases, relationships with adidas not only differed but also made a difference. Compared with compliance-type relationships, collaborative global firm-contractor ties encourage higher workplace performance and better employment relations in contractor factories.

What is discontinuous about the moment of radical technological change? Discontinuity typically does not lie in a radical advancement in technology itself; rather, it stems from a shift of an existing technical lineage to a new domain of application. Seeming revolutions such as wireless communication and the Internet did not stem from an isolated technical breakthrough; rather, their spectacular commercial impact was achieved when an existing technology was reapplied in a new application domain. The biological notion of speciation events, which form the basis for the theory of punctuated equilibrium, can reconcile the process of incremental technical change with the radical change associated with the shift of an existing technology to a new application domain. This concept can assist managers to cope with, and potentially exploit, such change processes.

Information security is not a technical issue; it is a management issue. It rests on three cornerstones--critical infrastructures, organization, and technology. Although critical infrastructures are beyond the direct control of the organization, balancing them is a critical component of corporate governance. Total security is neither technically feasible nor operationally practicable. Therefore, the organization must determine which information assets must be protected and the degree of protection. As Internet-based commerce diffuses through society, there will be decreasing tolerance on the part of customers for losses stemming from perceived or actual cyber vulnerabilities. Only senior management can initiate the plans and policies that address the different aspects of security in a balanced and integrated manner. Leaving security primarily to the IT function will strengthen just one of the cornerstones--namely, technology--and will not yield the intended results. Security lapses are management failures more than technical failures. This article presents an organizational security approach that senior managers can use as a roadmap to initiate security plans and policies and audit their implementation.

Current trends appear to suggest that globally integrated strategies are the wave of the future for many industries, but no theoretically sound, firm-level model explains this situation. International business models explain industry trends from economic perspectives, and organizational theory is beginning to examine the organizing principles of multinational firms. However, a gap exists in explaining the strategic motivations of multinational firms as they expand and integrate worldwide. This article develops a capability-driven, as opposed to market-driven, framework of multinational strategy. This contingent framework explains the organizational consequences of international expansion and global integration depending on the capability types, capability strategies, and multinational strategies of the multinational firm.

Many participants and observers have analyzed the 1996 Mount Everest tragedy and blamed a host of factors, including the weather, equipment failures, and human error. This article examines the people and events through three theoretical lenses: behavioral decision theory, group dynamics, and complex systems. Factors at each level--individual, group, and organizational system--interacted with one another to cause the tragedy. This analysis provides a framework for understanding and diagnosing large-scale organizational failures, and it provides several important lessons for managers making and implementing high-stakes decisions within organizations.

This is an MIT Sloan Management Review article. Vertical command and control sabotages organizations that need bottom-up innovation to be competitive. Yet, organizational integration is increasingly essential. New research shows how technology is helping cutting-edge companies meet the challenge by integrating horizontally. A fundamental management challenge, particularly in large, diversified global enterprises, is the tension between subunit autonomy and companywide cohesion. New research uncovers several ways top companies balance that tension. In the last decade, performance criteria often ignored how managers of subunits contributed to companywide performance. Empowerment efforts improved unit competitiveness but left knowledge sharing behind. Today (because customer needs span internal boundaries and technology has changed the way innovation gets managed) managers are recognizing the need to address the integration side of the tension. At one company, BP, CEO John Browne created a peer-assist process to help his business unit leaders integrate horizontally. Managers who ran similar businesses were assigned to help one another improve both individual and collective performance. As the culture evolved and managers successfully handled ever tougher endeavors, both entrepreneurship and mutual trust were strengthened. Executives who want to build horizontal integration without disrupting entrepreneurship must allow time for persistent action and reinforcement to take hold.

This is an MIT Sloan Management Review article. All organizations sense competitive pressure intuitively, but most, says the author, do not do a good job of managing it. That is, in part, because it is often difficult to see the overall pressure system--a complex, shifting pattern of overlapping contacts among rivals that continually alters the climate of an industry. Illustrates how pressure systems can be mapped and controlled to a significant extent. A map based on measured pressures has important implications for an organization's market and competitor selection, growth plans, product portfolio and diversification strategy, resource allocation priorities, competitive-intelligence system, merger and acquisition strategy, and scenario-planning process. In any industry, companies can develop competitive strategies by using a pressure map to answer two critical questions: If the current pressure pattern continues, what position will my company ultimately hold? How can my company stabilize or shift the direction of pressure to reduce (or enhance) the predicted impact of the current pressure system? Through detailed discussion of different industries, the author demonstrates how pressure maps can reveal the underlying competitive dynamics of an industry. He then offers a variety of mechanisms by which organizations can and do affect their competitive landscapes.

This is an MIT Sloan Management Review article. Executives make few moves more critical than their decisions about which technology infrastructure investments will promote future strategic agility. To pinpoint best practices, three IT experts marshaled 10 years of data from 89 leading enterprises. One finding was that when companies describe their IT infrastructure capabilities as services instead of equipment (say, the provision of a fully maintained laptop computer with access to all company systems and the Internet), they do a better job of putting a value on what they are buying. Understanding the 70 IT infrastructure services that emerge consistently from the research can help executives identify which investments will make sense for which strategic business initiative. And understanding whether the contemplated initiative is supply side, internally focused, or demand side can help managers decide whether to make the infrastructure investment on a business unit level or enterprisewide. The authors find that leading companies are making regular, systematic, modular, and targeted IT infrastructure investments on the basis of overall strategic direction. If other companies can learn to recognize which IT infrastructure capabilities are needed for which kinds of initiatives, they can have some assurance that the investments they make today will serve the strategies of tomorrow.

This is an MIT Sloan Management Review article. In an article written well before Enron became a euphemism for corporate irresponsibility, the authors make the case that such misdeeds, so prevalent in recent months, are symptoms of a syndrome of selfishness that has taken hold of our business institutions, our societies, and our minds. Drawing on history, literature, philosophy, and management thinking, they argue that the syndrome is built on a series of half-truths--or fabrications--each of which has driven a debilitating wedge into society. Our narrow view of ourselves as "economic man" has driven a wedge of distrust between our individual wants and our social needs. A distorted view of shareholder value has driven a wedge of disengagement between those who create economic performance and those who harvest it. Our obsession with heroic leadership has created a wedge of disconnection between leaders and everyone else. The glorification of the lean and mean organization has driven a wedge of discontinuity between short-term and long-term goals. And the convenient, widely held notion that "a rising tide lifts all boats" has ratified a wedge of disparity between the prime beneficiaries of stock-price increases and the large numbers of people disadvantaged by the corresponding actions. The authors challenge and deconstruct each of these flawed premises and offer an alternative. Real prosperity, they say, combines economic development with social generosity--and that requires a new philosophy of social and managerial engagement.

Cheryl Hailstrom, the CEO of Lakeland Wonders, a manufacturer of high-quality wooden toys, is the first person outside the Swensen family to hold the top job. But she's not a stranger to this 94-year-old company: She'd been the COO of one of its largest customers and had worked with Lakeland to develop many best-selling products. Wally Swensen IV, the previous CEO, chose Cheryl because she knew how to generate profits and because he believed her energy and enthusiasm could take the company to the next level. Yet here she is, nearing her six-month anniversary, wondering why her expansive vision for the company isn't taking hold. She's tried to lead by example: traveling a pounding schedule to visit customers, setting aggressive project deadlines, and proposing a bonus schedule. She has a plan to reach the board's growth goals. The problem is that while Cheryl's senior managers are giving her the nod on the surface, they're all really dragging their feet. Is Cheryl pushing too much change too quickly? Should she bring in outsiders to speedily adopt the changes she envisions and overhaul Lakeland's corporate culture? Or should she keep trying to work with the current team? In R0210A and R0210Z, commentators Kathleen Calcidise of Apple Retail Stores; executive coach Debra Benton; Dan Cohen, co-author of The Heart of Change; and consultant Nina Aversano offer advice in this fictional case study.

It isn't always easy to change leadership hats or to alter the way you assess a business problem. Under pressure, most executives fall back on the management style or approach that worked in the last crisis they faced. But old approaches rarely work in new and demanding situations. Just ask Leonard Schaeffer, chairman and CEO of WellPoint Health Networks, one of the country's largest and most successful managed-care companies. In this account, he describes how he consciously adopted three very different styles of leadership at critical points during his 30-year career, depending on the business challenges at hand. Schaeffer headed up the U.S. Health Care Finance Administration during the Carter years--and led the charge toward more efficient work practices at that agency. Then he transformed Blue Cross of California from a floundering bureaucracy losing close to $1 million each day into a strong public company, WellPoint. The dire circumstances at Blue Cross had dictated that Schaeffer initially be an autocratic leader, which he considers the managerial equivalent of being an emergency room surgeon--forced to do whatever it takes to save a patient's life. Most recently, Schaeffer has turned into a reformer--a leader who works with one foot outside the company to spur changes in health care and society. There are pitfalls in switching leadership styles, Schaeffer admits, but this flexibility is necessary for realizing corporate--and personal--success.