When pundits talk about the impact that artificial intelligence will have on the labor market, the outlook is usually bleak, with the loss of many jobs to machines as the dominant theme. But that's just part of the story -a probable outcome for companies that use AI only to increase efficiency. As it turns out, companies using AI to also drive innovation are more likely to increase headcount than reduce it.

While the threat of national champions is nothing new, their essential character has substantially changed, and the competitive advantage of national champions in the global marketplace has become more pronounced. Today's national champions are much more sophisticated, competing in more industries, and harder to spot than ever before. As a result, Western companies need a new strategic guide for competing against them.

The art of bian lian -or "face changing"-is integral to Sichuan opera: A main character changes masks to avoid capture by foes. The transformation is quick and surprising, the new face clearly different. In the theater of business, Chinese performers are undergoing a rapid transformation of their own as they seek to evolve from backroom producers to the world's leading face of innovation.

The dramatic rise of China's digital leaders has put the squeeze on Western internet giants. Western players must learn quickly if they are to get back in the game in the world's fastest growing digital market.

Companies that rigidly adhere to traditional approaches to goal setting may be driving their business in the wrong direction. More than ever, goals must be set in relation to the competitive environment.

To prevent email from feeling like a burden, teams should develop shared practices to enable it to help -not harm -employee productivity. This begins by developing an understanding of the relative effects of congruent vs. incongruent messages.

The conventional wisdom of goal setting is so deeply ingrained that managers rarely stop to ask if it works. The traditional approach to goals -the annual cycle, privately set and reviewed goals, and a strong linkage to incentives -can actually undermine the alignment, coordination, and agility that's needed for a company to execute its strategy.

Less than 5% of companies are using AI to reinvent how they do business, but the competitive intensity surrounding the technology suggests that a wait-and-see strategy could be a costly mistake. To get a share of the global profit pool of $1 trillion that AI will produce by 2030, the McKinsey Global Institute says companies should begin adopting it at scale within the next three years.

Unethical behavior and misconduct has been a persistent problem in the business world. A company's ethical norms are a cumulative outcome of how daily ethical dilemmas are addressed in the workplace. Over time, these micro-level issues can evolve into a corporate ethics scandal -unless organizations work to help employees make ethical choices day to day.

A relatively small number of purchase and return metrics can accurately predict customer profitability -and the likelihood of policy abuse. By using analytics to identify the few customers who cost the company the most money by abusing return policies before they make their next purchase, companies can prevent abusive returns, avoid PR disasters, and boost their profitability.

Platform businesses, like Airbnb or Lyft, often talk about themselves as if they're merely matchmakers. That's a smart pitch -when a company is negotiating with investors. But any platform that wants to succeed will have to learn something Airbnb did: Success also depends on identifying and mitigating risks for your buyers and sellers, and it will be proportional to the amount of risk mitigated.

Formal communication channels, such as protocol-guided meetings, are often eschewed by today's managers and employees, who prefer the ease of email and apps. But informal avenues can lead to oversights and inefficiencies that hurt performance. That's the central finding of research from IE Business School on manufacturers of high-tech machinery. Fortunately, formal communication protocols can be designed to both maximize performance and overcome people's resistance to adopting them.

MIT Sloan Management Review and Google's new cross-industry survey about key performance indicators (KPIs) asked senior executives to explain how they and their organizations are using KPIs in the digital era. The results shed light on the tensions and contradictions companies face when using KPIs, demonstrate the many ways advanced use of KPIs can benefit organizations, and offer steps executives can take to make the most of KPIs going forward.

When the author was tapped to join Levi Strauss, in 2011, the company's financial performance had been erratic for a decade. He went on a listening tour, conversing with each of the top 60 executives, asking them what three things absolutely must change and what three things must not. He wasn't surprised to discover that a clear strategy was lacking. But he also saw that a lack of urgency, of financial discipline, and of data discipline permeated the culture. After six months on the job, Bergh and his team rolled out a plan consisting of four key pieces: (1) Build our profitable core (80% of profits come from men's jeans and Dockers); (2) Expand for more (seize the opportunity in women's clothing); (3) Become a leading omnichannel retailer (grow sales in the company's own stores and online); (4) Achieve operational excellence (cut costs, drive cash flow, become more data driven and financially disciplined). The new strategy provided funds for investment in the company's Eureka Innovation Lab, which had been colocated with a factory in Turkey. In 2013 a new facility was opened four blocks from headquarters in San Francisco. Its biggest success has been a revamped women's denim line. A second big investment was the purchase of naming rights for the San Francisco 49ers' new stadium--a 20-year, $220 million deal. Bergh saw that as an opportunity to put the Levi's brand back at the center of the cultural conversation.

When you ask workers what matters to them, respect from superiors often tops the list. Yet employees report more disrespectful and uncivil behavior each year. This disconnect happens in large part because leaders have an incomplete understanding of what constitutes workplace respect--and so even well-meaning efforts to provide it often fall short. The author's research shows that employees value two distinct types of respect. "Owed respect" is accorded equally to all members of a work group or organization. It's signaled by civility and an atmosphere suggesting that every member is inherently valuable. "Earned respect" recognizes individual employees who display valued qualities or behaviors. To better understand the two types of respect, the author spent 15 months studying a unique work program for female prison inmates--a context that sharply highlights the differences between a respectful environment and a disrespectful one. At Televerde, a B2B marketing firm, regular displays of owed and earned respect have created an extraordinarily engaged workforce responsible for impressive profitability and growth, and recidivism among Televerde's inmate employees is 80% lower than the national average. Although Televerde operates in an unusual context, its employees' need for respect is universal. The author details seven ways in which leaders and managers can convey owed and earned respect and thus build a workplace that allows employees--and, as a result, their companies--to become the best possible versions of themselves.

Researchers have struggled to establish a causal relationship between diversity and financial performance--especially at large companies, where decision rights and incentives can be murky, and the effects of any given choice can be tough to pin down. So the authors chose a "lab rat" with fewer barriers to understanding: the venture capital industry. VC firms are fairly flat: Every investor is a decision maker, and choices have clear business consequences. Using publicly available information, researchers can see how similar or different decision makers are and compare decision quality on the basis of investments' performance. After examining tens of thousands of VC investments, Gompers has found that diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns. And even though associating with similar people can have social benefits for people who do so, it can lead investors and firms to leave a lot of money on the table. In this article Gompers and Kovvali describe the research and provide recommendations for reaping the business benefits of diversity.

When employees are disengaged and underperforming, the reaction of many managers is to try new incentives and ratchet up oversight and control. Yet often nothing improves. Why? Because the assumption behind such conventional approaches is that work is fundamentally contractual and that employees are self-interested agents who will seek to minimize personal effort. And that assumption becomes a self-fulfilling prophecy: Employees do just what is needed to earn a reward or meet a standard, and nothing more. But there is another way: Rally the organization behind an authentic higher purpose--an aspirational mission that explains how employees are making a difference and gives them a sense of meaning. If you do that, they will try new things, move into deep learning, and make surprising contributions. The workforce will become energized and committed, and performance will climb. In this article, Quinn and Thakor describe how organizations like DTE Energy, KPMG, and Sandler O'Neill have dramatically increased employee engagement after discovering their higher purposes. The authors outline eight steps other companies can follow to break free of the conventional thinking about worker motivation, help a higher purpose permeate decisions throughout the company, and set off a positive chain of events.

New technologies can be unsettling for industry incumbents, regulators, and consumers, because norms and institutions for dealing with them don't yet exist. Interestingly, businesspeople in emerging economies face similar challenges: The rules are unclear and infrastructure is lacking. In this article, the author suggests that tech pioneers would do well to heed a lesson he's gleaned from his research in the developing world: For long-term success, companies must invest in the surrounding ecosystem. The author presents examples of entrepreneurs who have done just that in China, Bangladesh, Africa, and Chile, benefiting the public as well as their own enterprises. He then describes how an Indian health care organization is tackling institutional voids as it expands into medical tourism in the Cayman Islands. An in-depth look at the nascent drone industry follows, with profiles of companies that are helping create the conditions for the industry's growth by amassing knowledge about best practices, influencing the development of regulations, exploring new uses for drones, developing a professional workforce, and so forth. The argument is that when firms launching innovative products or services look beyond their self-interest and work to collectively build the institutional infrastructure, they--and society as a whole--are more likely to prosper.

The U.S. health care system needs reform, but too often experts focus on top-down solutions stemming from federal policy changes. Such efforts alone, however, cannot fix a wasteful and misdirected system. What's needed is innovation driven by doctors, nurses, administrators, entrepreneurs, and even patients who are devising new solutions to daily challenges. This article looks at two examples of bottom-up innovation, each involving a radical transformation of health care delivery. The University of Mississippi Medical Center created a homegrown telehealth network to increase patient access to care; Iora Health developed a new business model that doubled down on primary care to reap large savings in secondary and tertiary care. These successful initiatives--one from an incumbent health care provider and one from a business start-up--demonstrate the potential of creative leaders to reshape the U.S. health system.

We are entering a new era in additive manufacturing, or "3-D printing." It has major implications for the adoption of the technology and for the choices of business models available to companies that take the plunge, says the author. Advances in the technology's capabilities and expansion of the available materials and the supplier ecosystem have made it possible to produce a much broader range of affordable things--from the soles of running shoes to turbine blades--and, in many cases, in much higher volumes. As a result, 3-D printing is moving from a limited role (such as prototyping and making conventional machine tools) to a central place in manufacturing for a growing number of industries. Strategically, that means additive is becoming a full-fledged competitive weapon: It can be used to hold on to market leadership, to dethrone the dominant player, and to diversify by exploiting a printer's capability to make products for different industries. Consequently, leaders need to understand additive's capability and potential and the choices open to them in the near future. This article presents them with a playbook and explores six possible business models that have emerged.