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In response to the potential collapse of large financial institutions in 2007, the U.S. government committed trillions of dollars to loans, asset purchases, guarantees, direct spending to provide fiscal stimulus, expansionary monetary policy, and bailouts of various private financial institutions. The bailouts were especially controversial because public money was used to protect private financial institutions and their wealthy executives while ordinary citizens received no such protection. One outcome of the government's response was the proposal to enact into law the Volcker rule, which prohibited banks from engaging in proprietary trading, or trading for their own-not their clients'-benefit. Proprietary trading was believed to generate up to 10 percent of total trading revenues, which would have exceeded $5.9 billion in 2010 for the six largest American banks alone. If the Volcker rule were to become law, government agencies, including the Federal Reserve, the Securities and Exchange Commission, the FDIC, and the Office of the Comptroller of the Currency, would write the detailed regulations that would implement the law. These agencies employed civil servants but were run by political appointees with technical backgrounds. After issuing a notice of proposed rulemaking the agencies would solicit comments from the public, which would help shape the regulations. Executives of large banks needed to decide how to respond to this potential change in their business environment.

CBM Pte Ltd (CBM) originated as a subsidiary developed to support the facilities management (FM) needs of its property development parent, Singapore-based City Developments Ltd. Viewed as an industry, FM comprised a surprisingly large component of the GDP in mature markets such as Europe and North America, and was beginning to grow rapidly in emerging markets such as Asia and the Middle East. With the Singapore market approaching saturation, and new opportunities arising in overseas markets to which the recently reorganised firm had good access, CBM had achieved several years of double-digit growth. However, the FM market was evolving as large players began to expand their overseas networks and integrate their services to follow multinational clients around the globe. Was the trend toward service integration and environmental sustainability an opportunity for CBM, or a threat? How could they sustain their profitable growth?

Spreadsheet Supplement for UV0849

This case is about Colbun, Chile's second largest electricity generator, which is facing significant uncertainty regarding the cost and availability of alternative energy sources. Problems with the contracted supply of natural gas and the volatility of oil prices, coupled with pressure from collective activists, force Colbun to revise its business strategy and its sourcing mix. The case also deals with the pros and cons of various energy sources in view of their perceived environmental impact. The company's CEO, Bernardo Larrain Matte, has to take all these different considerations into account when planning Colbun's future, especially in the light of new opportunities and challenges posed by global climate change. The case analyzes the operations of Colbun to illustrate the complexities associated with conducting business under the influence of global energy markets, political uncertainty, and environmental activism.

Supplement for case 809011

The FDA approvals of novel therapeutics were seen as signs in the personalized medicine community of real progress in the growth of personalized medicine; The FDA's approval of such drugs, along with companion diagnostics, suggested a shift in thinking and regulatory practices at the agency. Beyond the regulatory questions, many considered the reimbursement system archaic, dispersed, unpredictable, and unnecessarily time consuming. Many questioned whether the traditional models of reimbursement were relevant in the era of personalized medicine, and who should be covering the cost of tests needed to identify the sometimes small number of patients who could benefit from expensive targeted drugs. This case focuses on the array of possibilities and the ambiguity surrounding these regulatory and reimbursement issues.

As U.S. Secretary of State, Hillary Rodham Clinton acted on a long-standing interest in public-private partnerships to elevate and activate an Office of Global Partnerships reporting directly to her. One major initiative that also addressed her interest in women's empowerment was to create an alliance for clean cookstoves, a significant environmental and public health issue in developing countries. This case examines the change process within the State Department and across the federal government as well as the process of developing partnerships, and looks at what happens on the ground to deploy resources. It raises the question of whether the alliances will be sustainable when Sec. Clinton leaves office.

This case explores the challenge of investing in basic research as a public good. CSIRO was Australia's leading science and research agency, and it was chartered to enhance national prosperity through R&D. Its Flagships program was designed to align research interests with national priorities, with a strong focus on the adoption of research outputs. The Light Metals Flagship (LMF) was one of six flagships established in 2003, and its goal was to help the nation capture more of the added value of its resources by developing and commercializing downstream technologies in the processing and fabrication of products made from aluminum, magnesium, and titanium. While the LMF met with technical successes, Australian industry was reticent to co-invest. This lack of industry enthusiasm was in many ways unsurprising, as governments often found it important to fund long-term basic research that was outside of the horizon of firms. But what kind of a signal would stopping the program send? Was CSIRO prepared to let short-term thinking in light metals firms drive its agenda? The case examines the technical decision-making process.

From 2000-2010, John Williams, co-founder of Frog's Leap Winery in California, invested in dry farming, organic, and biodynamic agriculture; geothermal and solar power; year-round employment and benefits for immigrant workers; and the industry's first LEED-certified tasting room. Despite static production, inventory and debt load grew. In May 2011, Williams how to grow Frog's Leap sustainably.

Paul Lui, Executive President at Private Client Services Division (PCSD), had the difficult task of designing a new incentive compensation system for financial consultants at the wealth management division of a mid-tier financial services firm that had limited resources compared to its larger rivals. Luil had many objectives in mind in designing the new incentive compensation system: to motivate financial consultants to stay, perform, and excel; to attract new consultants to fill in the vacated positions; and to generate new business in the face of labor shortages and significant competition from larger firms. How did the current compensation plan at PCSD compare to those of rival firms? How could Lui change the compensation plan for PCSD, given the resource constraints his company faced as a mid-tier financial services firm? Beyond changing compensation plans, what could Lui do to recruit new experienced consultants; stop top producers from leaving; and more generally, improve the morale at PCSD?

This case details the desperate negotiations in September of 2008 to prevent the failure of the New York investment bank Lehman Brothers. Following the collapse of the U.S. subprime mortgage market in February of 2007, a downturn in the global financial markets began to accelerate. Lehman Brothers, heavily exposed to the U.S. subprime and commercial real estate markets, began to experience increasing levels of distress. Looking for a merger to save the company, Chairman of the Board and Chief Executive Officer Richard "Dick" Fuld began to actively seek a buyer for the company. Rebuffed by several potential suitors, Fuld instructed his attorney to approach Bank of America about a deal. Negotiations between Lehman Brothers and Bank of America ensued and were encouraged by U.S. government officials. Talks between Lehman and Bank of America failed. After conversations with Barclays Bank about a bid for Lehman also stalled, Dick Fuld was isolated from the discussion and U.S. government officials began to directly manage the negotiations regarding the fate of Lehman Brothers. In a critical moment, U.K. financial authorities balked at a proposed deal to save Lehman. The Lehman Brothers board of directors was monitoring these negotiations and met four times over the weekend of September 13th and 14th. During the fourth meeting, a U.S. government official addressed the board and stated that a Lehman Brothers bankruptcy would be in the best interest of the nation. The Lehman Brothers board was now faced with a stunning dilemma: whether to further stall for time, vote against the expressed wishes of U.S. government officials, or acquiesce to the bankruptcy of the company.

Defense is big business, especially for companies like Lockheed Martin. Lockheed Martin, formed in 1995 through the merger of Lockheed Corp. and Martin Marietta, was one of the largest defense contractors in the world, employing about 140,000 worldwide. Lockheed Martin was considering the acquisition of NationScape, Inc., a firm that supports U.S. military readiness, diplomatic and development efforts, and peacekeeping, stabilization and nation building activities in more than 65 countries around the world. The acquisition could increase Lockheed Martin's overseas defense support operations and expand its capabilities to provide diplomatic and development services to complement its existing defense business. The corporation needed to determine an appropriate price for the acquisition and evaluate whether the acquisition would be a good strategic and cultural fit for the corporation as well.

This is part of a case series. This case explores the process a social venture went through in raising funds to expand its business. The case focuses on the risks and opportunities of possible funding methods, and actions that can be taken to protect key values throughout the process. The case provides an opportunity to debate the challenges involved in growing socially responsible businesses, how social responsibility can be embedded in a company's value chain, and whether corporate size benefits or constrains an organization's ability to operate in a socially responsible way.

Supplement to case LBS195

Most big deals--megamergers, major sales, infrastructure projects--are built on a series of smaller ones. Each component deal presents a tactical challenge, but sequencing the parts in a way that achieves the target outcome is a strategic challenge that can unfold over months or years. This process, which the authors call a negotiation campaign, must generally be conducted on several fronts, each involving multiple parties. A multifront campaign can be much more effective than direct negotiation. After failed talks between longshoremen and the Pacific Maritime Association--a group of shippers and port operators--the PMA's president turned away from the bargaining table and embarked on a campaign to align member--firms, the business community, the U.S. government, and the public around his target outcome: the deployment of new information technologies to help unclog busy ports. The result was an agreement that was ultimately mutually beneficial. Designing and executing a negotiation campaign involves identifying the relevant parties, grouping them into fronts according to shared interests, determining whether to combine fronts (if, for instance, doing so would unite your allies), and deciding which fronts to approach early on and which to engage only after you've made progress elsewhere. The deal between the PMA and the longshoremen involved high stakes, but many small-scale deals--such as gaining approval for a new product--also play out on multiple fronts. Going straight to a key decision maker often makes sense, but in many cases a multifront campaign is the only way.

Though the term "family business" may call to mind visions of local mom-and-pop firms, family- controlled companies play a huge role on the global stage. Not only do they include sprawling corporations like Walmart and Tata Group, but they account for more than 30% of all companies with sales in excess of $1 billion. And over the long term, their financial performance exceeds that of traditional public companies, according to a new study by BCG and Ecole Polytechnique. Family-controlled companies surpass their peers because they focus on resilience, not short-term results. During economic booms, this approach leads them to forgo some opportunities (and hence do slightly worse than their counterparts), but it puts them in a position of strength during downturns, when they shine. The researchers identified seven specific ways in which family-run businesses build their resilience: 1) They're frugal in good times and bad; 2) They set a high bar for capital expenditures; 3) They carry little debt; 4) They acquire fewer (and smaller) companies; 5) They're more diversified; 6) They're more international; and 7) They retain talent better than their competitors do. Though these practices come more naturally to executives who feel an obligation to be stewards for the next generation, executives at any corporation can adopt them. Indeed, the researchers uncovered a number of nonfamily-controlled companies that mimicked the behaviors of family firms and saw very similar patterns of performance.

Getting product assortment right isn't easy, yet it's absolutely critical to retail success. Unlike inventory management and pricing, where retailers have lots of data and analytical tools to guide decision making, assortment optimization is still much more art than science. And making the wrong call can be disastrous. A new approach to assortment planning addresses this deficiency. The foundation for the approach is the notion that most of the time customers don't buy products; they buy a bundle of attributes. For instance, when customers consider buying a TV, they think about screen size, resolution, price, LCD or plasma, and brand. The new method uses sales of existing products to estimate the demand for their various attributes and then uses those estimates to forecast the demand for potential new products on the basis of their attributes. This technique helps retailers do a better job of replacing slow sellers with new ones, understanding whether customers are likely to settle for another choice if they don't find their ideal product, and customizing assortments of individual stores or clusters of stores.

Think you need exceptional employees, advanced IT, or rigid controls to build a high-performance organization? The dabbawalas of Mumbai prove otherwise. Six days a week, these 5,000 self-managed, semiliterate workers deliver upwards of 130,000 lunches from customers' homes to their offices with astonishing precision--negotiating the crowded city by train, bicycle, and handcart, without the aid of any technology or even cell phones. The 100-year-old service is legendary for its reliability: Despite monsoons, floods, riots, and terrorist attacks, mistakes by the dabbawalas are extremely rare. Thomke, an HBS professor, studied the dabbawalas to find the keys to their success. He uncovered a unique system with four pillars: organization, management, process, and culture. A flat structure, consisting of autonomous units of 25 people each, is well suited to providing low-cost service. The tight schedule of the train lines over which meals are ferried regulates everyone's work. Buffer capacity is built in to address extremely thin margins of error; each unit has extra workers who fill in wherever they are needed, and members are cross-trained in all activities. Variations that might derail the works are discouraged; the lunchboxes used, for instance, are all a standard size. A simple coding system helps workers quickly sort lunches and get them where they need to go. And democratic decision making and deep emotional bonds among workers promote a high degree of cooperation. The dabbawalas show that with the right system, even ordinary workers can achieve the extraordinary.

Organizations are inherently political, and pretending they're not is just plain impractical. But strategizing like a politician to advance your career doesn't have to mean compromising your integrity. You can craft a campaign plan that actually gets results without making you feel sullied. So argues Clark, who has worked with top-tier politicians and business executives as they strive to achieve their goals. She recommends that in business, as in politics, aspiring leaders choose their career milestones from the get-go and plan precisely what reaching each one will demand. That means taking inventory of the skills you'll need to acquire and figuring out exactly where and how you'll develop them. The best career planners work backward on the calendar: They start with the end points and carefully mark, in reverse, all the steps along the way. Then they set out on the course, identifying influential people whose favor they need to win and getting specific about how to garner it. They use power maps to home in on the most influential individuals and groups, and they aren't shy about courting votes. "Being political" still sounds negative to many people in business, but learning how to play the game doesn't have to be a Machiavellian endeavor. Indeed, harming people in the process won't help you at all, but if you eschew the political process altogether, you'll only harm yourself.

Charles Begley is the first ever managing director of diversity recruiting for GlobeBank, and he has worked hard to develop a pipeline of high-potential minority talent. He and his deputy director, Kumkum Bhatnagar, see an article their CEO has written for a business magazine website that downplays their efforts. Kumkum thinks the company should start pegging compensation to executives' minority hires and promotions. Charles resists her idea--particularly after his teenage son says he would never want to work for a company that used quotas. But two of Charles's high potentials complain about the low-level deals they're consistently stuck with, and when Charles approaches another senior executive to ask why, he gets stonewalled. Should he advocate for financial incentives to increase the number of minority promotions? With commentaries by Steve Reinemund, of Wake Forest University; John B. Veihmeyer, of KPMG; and George Borst, of Toyota Financial Services.