Traditionally, complex business structures in the Chinese market have kept foreign companies out. Now, with Kodak leading the way, corporate structures from the West are gaining acceptance and are providing a way for China to let foreign companies in through the back door.

How would your company fare in the Business Olympics? An INSEAD professor and his students assess the "corporate fitness" of the largest firms in Europe and the United States and map out which companies and industries are likely to take the gold.

Internet entrepreneur Martin Varsavsky applies what he does best--building high-tech companies--to improving education in Argentina.

In 2000, SAS Institute, the largest privately owned software company in the world, confronted the decision of whether to become a public company. The organization, know for its family-friendly policies and low turnovers, had to consider whether being a public company would adversely affect its ability to maintain its unique culture. The leadership in the organization had to address the question: If the company were to go public, what should they do to ensure its continued success?

In 1991 Peru undertook perhaps the most radical tax administration reform in the developing world as President Fujimori created the National Tax Administration Superintendency (SUNAT): a semi-autonomous revenue authority charged with putting the country's fiscal house in order. The reform met with initial success as it increased revenues and reduced evasion, though SUNAT's strategy came to be questioned by the same government that created it. In particular, the powerful ministry of finance raised doubts about the wisdom of SUNAT's autonomy and advocated taking a second look at the reform model. At the same time, corporate taxpayers, as well as the informal sector, vigorously joined the debate. This public sector reform, hailed as an important achievement in tax administration, raises serious questions about the reform of the state in developing countries by revisiting the old, fine line between politics and administration. HKS Case Number 1596.1

In 1991 Peru undertook perhaps the most radical tax administration reform in the developing world as President Fujimori created the National Tax Administration Superintendency (SUNAT): a semi-autonomous revenue authority charged with putting the country's fiscal house in order. The reform met with initial success as it increased revenues and reduced evasion, though SUNAT's strategy came to be questioned by the same government that created it. In particular, the powerful ministry of finance raised doubts about the wisdom of SUNAT's autonomy and advocated taking a second look at the reform model. At the same time, corporate taxpayers, as well as the informal sector, vigorously joined the debate. This public sector reform, hailed as an important achievement in tax administration, raises serious questions about the reform of the state in developing countries by revisiting the old, fine line between politics and administration. HKS Case Number 1596.0

The classic brand manager dealt with simple brand structures in part because he or she was faced with a relatively simple environment and simple business strategies. Today the situation is far different. Brand managers now face market fragmentation, channel dynamics, global realities, and business environments that have drastically changed their task. In addition, there is pressure to leverage brand assets because of the prohibitive cost of creating new brands. This set of challenges has created a new discipline called "brand architecture." A coherent brand architecture can lead to impact, clarity, synergy, and leverage rather than market weakness, confusion, waste, and missed opportunities. Brand architecture is an organizing structure of the brand portfolio that specifies brand roles and the nature of relationships between brands. This article introduces a powerful brand architecture tool, the "brand relationship spectrum." It is intended to help brand architecture strategists employ insight and subtlety to subbrands, endorsed brands, and their alternatives. Subbrands and endorsed brands can play a key role in creating a coherent and effective brand architecture.

A new model for managing distributed innovation, the community of creation is a governance mechanism for managing innovation that lies between the hierarchy-based (closed) mechanism and the market-based (open) mechanism for innovation management. The community-centric model shifts the focus of innovation beyond the boundaries of the firm, to a community of individuals and firms that collaborate to create joint intellectual property. A community of creation requires an identified sponsor, a set of ground rules for participation, and a system for managing intellectual property rights. The community of creation model allows innovation to proceed in a complex environment by striking a balance between order and chaos. This article presents detailed case studies from the computer industry to highlight the differences among the different approaches to innovation management. It also discusses the opportunities and the unresolved issues of the community of creation model for practitioners as well as for academics.

The success of Internet-based businesses in the business-to-customer segment in recent years has been impressive. It is widely projected that the business-to-business segment is poised for a spectacular growth as well. However, a consistent definition and a framework for a business model for Internet-based business is still non-existent. This article proposes a three-dimensional framework for defining a business model and applies it to the emerging market structure. It also identifies certain factors that can guide organizations in their choice of an appropriate business model.

Most large companies are not radical innovators. They are good at making close-in changes to existing products or technologies, but they cannot seem to commercialize breakthrough ideas. This is the case because of their "genetic" makeup: values embodied in their leadership practices, their cultures and structures, their reliance on internal R&D, and their inability to attract and motivate the kind of aggressive and agile entrepreneurs who are the source of most radical innovations. Large companies in traditional industries that want to increase their access to radical innovation have a variety of approaches available to them. These range from ones that draw on existing organizational resources but are unlikely to stimulate radical innovation to ideas that involve a rethinking of external relationships with entrepreneurs and venture capitalists. As the focus of innovation moves from what is inside to what is outside the organization, the keys to success move from mechanisms of owning and controlling the radical innovation to mechanisms that promote learning about its commercial potential.

Executives should not take a reputation for ethical leadership for granted. Based on interviews with senior executives and corporate ethics officers, this article reveals that a reputation for executive ethical leadership rests on two essential pillars: the executive's visibility as a moral person (based upon perceived traits, behaviors, and decision-making processes) and visibility as a moral manager (based upon role modeling, use of the reward system, and communication). Developing a reputation for ethical leadership pays dividends in reduced legal problems and increased employee commitment, satisfaction, and employee ethical conduct. The alternatives are the unethical leader, the hypocritical leader (who talks the talk, but doesn't walk the walk), and the ethically neutral leader (who may be an ethical person, but employees don't know it because the leader has not made ethics and values an explicit part of the leadership agenda). The article also offers guidelines for cultivating a reputation for ethical leadership.

Change or perish is a corporate truism, but so is its unhappy corollary: many companies change and perish. The process of change can tear an organization apart. Drawing on his research over ten years, the author suggests that companies alternate major change initiatives with carefully paced periods of smaller, organic change, using processes he calls tinkering and kludging (kludging is tinkering on a large scale). The result is dynamic stability, which allows change without fatal pain. Citing examples from General Electric to Barnesandnoble.com, the author describes dynamic stability as a process of continual but relatively small reconfigurations of existing practices and business models rather than the creation of new ones. As they tinker and kludge, successful companies would be wise to follow these four guidelines: reward shameless borrowing; appoint a chief memory officer who can help the company avoid making the same old mistakes; tinker and kludge internally before searching for solutions externally; and hire generalists, because generalists tend to be more adept at tinkering and kludging. As a paradigm of successful pacing, the author cites the efforts of Lou Gerstner at IBM, American Express Travel Related Services, and RJR Nabisco.

Fire fighting is an old, familiar way of doing business, especially when developing new products and ramping up manufacturing. But fire fighting consumes an organization's resources and damages productivity. What factors underlie this destructive pattern? Fire fighting derives from what seems like a reasonable set of rules--investigate all problems, for example, or assign the most difficult problems to your best troubleshooter. Ultimately, however, fire-fighting organizations fail to solve problems adequately and forgo so many opportunities that overall performance plummets. Some companies never fight fires, even though they have just as much work and just as many resource constraints as other companies do. They have strong problem-solving cultures. They don't tackle a problem unless they're committed to understanding its root cause and finding a valid solution. And they don't reward fire-fighting behavior. Transforming a fire-fighting organization into a problem-solving one is not easy. But there are tactical, strategic, and cultural methods for pulling your company out of fire-fighting mode.

The current high level of venture capital investment is driving enormous innovation in business. About 40% of the growth in the U.S. GDP is coming out of the tech sector, and most of that can be traced to the vibrancy of entrepreneurial initiatives, according to accomplished entrepreneur and venture capitalist Vinod Khosla. But in a wide-ranging interview, Khosla says greed is at a high level, too, and he's concerned about its effect on entrepreneurs and their infant businesses. Today, an entrepreneur with a plan for a new business can get funded within a week. But the entrepreneur doesn't get an honest, painstaking critique. The weaknesses of the plan are often ignored. The result is that great ideas don't reach their full potential. Khosla touches on the qualities required of today's entrepreneurs and the difficulties that established companies face in adapting to the Internet. He also offers some of his secrets for finding and exploiting the biggest new technologies.

Despite all the data that retailers and e-tailers can now gather about point-of-purchase information, buying patterns, and customer tastes, they still haven't figured out how to offer the right product, in the right place, at the right time, for the right price. But some retailers are moving profitably toward what the authors call "rocket science retailing"--a blend of traditional forecasting systems, which are largely based on the gut feel of employees, with the prowess of information technology. The authors recently finished surveying 32 retail companies in which they tracked practices and progress in four areas critical to rocket science retailing: demand forecasting, supply-chain speed, inventory planning, and data gathering and organization. In this article, the authors look at some companies that have excelled in those four areas and offer some valuable advice for other businesses seeking retailing perfection. In particular, the authors emphasize the need to monitor crucial metrics such as forecast accuracy, early sales data, and stockouts--information that will help retailers determine when to tweak their supply-chain processes to get the right products to stores at just the right time.

The almost universal belief among executives today is that bigger is better: companies are entering into huge, pricey cross-border mergers at an unprecedented rate. Common wisdom is that industries will become more concentrated as they become more global. In this article, the authors debunk the myth of increased concentration; the perceived links between the globalization of an industry and the concentration of that industry are weak. Empirical research shows that global--or globalizing--industries have actually been marked by steady decreases in concentration since World War II. The authors present the biases that managers often have about consolidation and offer alternative strategies to pursuing the big M&A deal. There are better, more profitable ways of dealing with globalization than relentless expansion, they say. Those strategies include buying up cast-off assets from merging rivals; focusing more on domestic or regional growth rather than on global expansion; taking advantage of merging rivals' weakened market position during integration and launching an aggressive marketing campaign; and building alliances with other companies rather than buying them up.

In the early 1990s, IBM was a has-been. Fujitsu, Digital Equipment, and Compaq were hammering down its hardware margins. EDS and Andersen Consulting were stealing the hearts of CIOs. Intel and Microsoft were running away with PC profits. Today, Big Blue is back on top, a leader in e-business services. This is the story of how the company, which had lagged behind every computer trend since the mainframe, caught the Internet wave. Much of the credit for the turnaround goes to a small band of activists who built a bonfire under IBM's rather broad behind. Together, building simultaneously from the top and the bottom of the organization through an ever-widening grassroots coalition of technicians and executives, they put IBM on the Web and morphed it into an e-business powerhouse. People who want to foment similarly successful insurrections can learn a lot from their example.

It's been four years since Dave Souza, Joe Castle, and Ryan Bahar started Socaba.com--an e-business that sells office supplies and services. Six months ago, acting on the advice of their VC, the young founders hired three seasoned managers to help bring the business to the next level. The new executives appeared to complete the Socaba management team. But even as early as the welcome lunch for the three, a rift between the insiders and outsiders developed. Just minutes after the party, the founders were seen drifting into Dave's office to assess the three newcomers. Such exclusionary meetings have continued on both sides, further aggravating the situation. To complicate matters, one of the company's main competitors wants to partner with Socaba, and there's controversy about whether to enter into the deal. Socaba.com is at a crossroads--the company is in position to grow, but internal conflicts could hold it back. In R00408 and R00414, commentaand Stever Robbins offer advice on this fictional case study.tors Tom Scott, Ted Murguia, Christine Comaford,

Thanks to the development of the Kyoto Protocol--an international plan to limit carbon dioxide and other so-called greenhouse gases in the atmosphere--global warming is beginning to assume a prominent position on the agendas of business executives. Although weather patterns aren't going to change overnight, new regulations designed to curb climate change may themselves disrupt the flow of business. Faced with such a complex problem, however, many executives have wondered where to begin. A sensible way to start is by taking a close look at the risks--and the inevitable opportunities--associated with shifts in the weather, potential regulatory changes, and the battle over public opinion. Forward-looking companies in a range of industries, from energy to insurance to automobiles, are already seeking ways to mitigate the effects of the weather on their operations, shape any regulatory regime that governments may devise, and inform the public about their efforts to reduce the problems associated with climate change. Companies that calculate the risks and opportunities effectively--as they would for any other part of the business--will be able to make wise investments that allow them to survive the coming storms.

In the rush to build Internet businesses, many executives mistakenly concentrate all their attention on attracting customers rather than retaining them. But chief executives at the cutting edge of e-commerce--from eBay's Meg Whitman to Vanguard's Jack Brennan--know that customer loyalty is an economic necessity: acquiring customers on the Internet is very expensive, and unless customers stick around and make lots of repeat purchases, profits will remain elusive. For the past two years, the authors have studied e-loyalty. Contrary to the popular perception that on-line customers are fickle by nature, they found that most of today's on-line consumers exhibit a clear proclivity toward loyalty, and Web technologies, if used correctly, reinforce that inherent loyalty. In this article, the authors explain the enormous advantages of retaining on-line buyers. They also describe what Grainger, Dell, America Online, and other Internet leaders are doing to gain their customers' trust and earn their loyalty. By encouraging repeat purchases among a core of profitable customers, companies can initiate a spiral of economic advantages. This loyalty effect enables them to compensate their employees more generously, provide investors with superior cash flows, and reinvest more aggressively to further enhance the value delivered to customers.