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Though the overall toy market is declining, LEGO's revenues and profits are climbing - largely because the company revamped its innovation efforts to align with strategy.

Most customer service centers use time on hold and minutes per call as measures of how effective they are. Research shows that they should look instead at the percentage of customers' problems resolved with just one call.

According to Bain & Company's chairman, persistent questioning produces the best solutions, and it's the best way to build trust and rapport.

To communicate in a way that resonates with your workers, you'll have to get to know them first.

Greening your business, and involving everyone in the process, can keep people motivated and help your company survive the economic downturn.

A Catalyst poll of business school graduates who went to work for corporations or professional firms reveals how these up-and-comers are faring during the recession.

Founded in 1987, Naxos had become the world's largest classical music label. It had reached this lofty position by being an innovative cost leader. The company's chairman, Klaus Heymann, had been quick to take advantage of a drop in the manufacturing price of CDs and the fall of the iron curtain. Recording with artists and orchestras in eastern Europe and paying musicians one-time fees instead of royalties, Naxos had developed a unique and effective business model. The company had also been a first mover in the web-based distribution of music. Having exhibited a knack for making the right move at the right time, what should Naxos do to sustain its success in the decade to come? This case was used in the Second McKinsey/HSBC Business Case Competition.

Georgie Yam went to Shanghai in 2001 as consultant for a German hair-care product line. Being a massage enthusiast, he quickly spotted a gap in the city's spa market for a value-for-money relaxation product. One discussion with his colleague and soon-to-be business partner, Eve Zhou, cemented the decision to begin drafting plans for a Western-style spa with a mystical oriental touch. Dragonfly Therapeutic Retreats was launched in 2003. Within the first two years of operations, the partners had successfully opened three shops and had no plans of stopping there. By March 2009, Dragonfly operated a network of 20 local branches and three branches overseas. The question now was how to manage rapid expansion without compromising the brand and its high standards.

The VIRGINIA-class submarine was one of the largest naval-acquisition projects in history, involving the construction of 30 submarines at an acquisition cost of $93 billion. By FY05, the VIRGINIA-class program was in its 10th year. Construction had begun on seven submarines. Unit costs were running 41% over the base-line budget, and production goals were not being met. Ship construction budget limits necessitated a 20% unit-cost reduction, an unprecedented task on a ship already in serial production. How would the program office achieve that goal and prevent the program from being truncated, the fate of its predecessor the SEAWOLF-class?

Positive environment in the workplace is usually assumed to be beneficial to employee morale, but not always a necessity for achieving the firm's strategic goals. Positive Organizational Scholarship (POS) is a field of study that focuses on how leaders and organizations can achieve extraordinary results while focusing on positive deviance. In April 2004, Prudential Financial acquired CIGNA's full-service retirement business and various challenges in integrating the two firms became present. The challenges included aligning the cultural aspects of the organizations. This case describes how senior management led the merger of Prudential and CIGNA while implementing various POS practices throughout the organization in hopes of creating a successful culture for the staff, compelling results for the clients, and a strong value for the shareholders.

Many people are skeptical of the idea that organizational cultures exert any real effects on individual and organizational behavior. One reason for this suspicion is that people often use the word "culture" as a catch-all category for "the way things are done" in a firm. But "the way things are done" can often be discussed in much more concrete terms by focusing on specific aspects of the formal organization, such as the structure of the incentive plans in place, the formal grouping and linking principles encoded in the formal organizational structure, and the established routines and operating procedures in the firm. This note examines organizational culture, focusing on the effects of strong cultures and how such cultures are created and maintained.

Cerámicas de Costaragua (CC) began producing ceramic tile in 1953. The founders were interested in forming a vertically integrated chain. During the 1990s, CC suffered the consequences of policies that liberalized the economy and, amidst a decline in sales, it decided to enter into a new unexplored market in the ceramic sector: low-income consumers. Lack of knowledge about the behavior of low-income consumers was a challenge for CC. Therefore, it sought the support of a social leader who knew the inhabitants of low-income sectors. A program called "Remodeling your Home" was launched and the community was actively included. Existing community organizations were responsible for convening and coordinating sales promoters. Two years after the initiative was established, CC expanded to other areas of city and to other cities. Strengthening of the distribution channel with specific adjustments for the low-income populations generated a growth in demand that led to a mid-term sales projection of one million m2 of ceramic tiles per month. To achieve this, Remodeling depended on the vertically integrated value chain of CC, but required a new distribution channel that was suitable for the expanded sales expectations in this market. The case poses three options to achieve the most appropriate distribution of the Elénica products: • The first assigns community organizations the most active role in distribution, putting them in charge of maintaining product inventory in their offices to supply demand for a zone; • The second proposal proposes that CC be the direct distributor of the product from the factory to the consumer's home, maintaining the role of the Elénica Service Centers that the company created in neighborhoods; and • A third option creates larger service centers that function as storage warehouses near consumers.

The case opens in March 2008 with Andrés González, the entrepreneurial mind behind Empleados Ya (EY), concerned about the financial situation of his new venture. González and Salvador Sáez, both faculty members at one of Chile's most distinguished business schools, had formed EY with startup capital of just US$ 10,000. In a nation were unemployment was historically high the partners aimed to achieve a dual purpose, namely to make a profit (i.e. create economic value) while making a contribution to solve a pervasive social problem (i.e. create social value). Chile had a longstanding headhunting industry geared towards highly qualified professionals, but labor brokerage for the low-skilled employment sector had been managed by the government through a network of municipal employment offices (Municipal Labor Intermediation Offices, henceforth OMIL). These offices, however, were inefficient in brokering employment and companies did not use them to fill vacancies. González felt that the lack of information available about the job market was one of the causes of unemployment in low-skilled sectors: Job seekers did not know where to find work, and large companies did not trust the OMIL offices to find good workers. This left a niche open for a trustworthy intermediary service to match companies with potential candidates from the low-skills sector. The case outlines the challenges facing EY to stay afloat after three years of operation. Its leaders had formed a partnership with an international labor brokerage organization that had not produced the desired results. While Sáez is willing to cut his losses and close up shop, Gonzalez is not. Still, given EY's unsatisfactory financial results, González has to make some important decisions in order to make the business profitable.

INACAP was the largest tertiary education institute in Chile, with little more than 54,000 students and with coverage throughout the country. Since 1966 the organization had delivered technical and professional formation for work through its technical training center (TTC) and its vocational center (VC). In 2007, given the growing competition of many new private TTCs, VCs and universities offering education for work, INACAP decided to broaden its technical program mix and become a university: Universidad Tecnológica de Chile. The decision entailed venturing into the provision of university education, an area where INACAP had no previous experience. One of its competitors was the DUOC, with a long-standing presence in the market. It offered high quality technical and professional education under the wing of one of the most prestigious universities in the marketplace, Universidad Católica (UC). The other competitor was Universidad Santo Tomás (UST), a university that did not enjoy the high reputation of UC, but nevertheless granted academic degrees to its graduates. This meant that, even if its programs did not measure up to those of INACAP, graduates from Santo Tomás possessed a university degree, a valued asset, in a country that overrated academic degrees. In this scenario, when INACAP's leaders saw the chance of purchasing Universidad Vicente Pérez Rosales, they made a decision to go ahead and buy it. However, the decision entailed changing INACAP's strategic position. Few months into the purchase, the incumbent Rector resigned and the new Rector, Gonzalo Vargas, was confronted with the need to evaluate the cogency of the business model INACAP had been operating and decide its competitive strategy.

The Virtue Matrix, first introduced in a 2002 Harvard Business Review article, is a tool developed by the lead author that provides a concrete, actionable framework for creating a corporate citizenship strategy. The goals of CSR have long been poorly defined and unclear, and as a result, many companies are uncertain of the rules or the benefits of doing what is 'right'. The authors argue that as regulations become tighter and solutions more difficult, the capacity of firms to innovate in this arena will become increasingly valuable. The best organizations, they say, will stand out by fully complying with the laws of their industry and jurisdiction; meeting the highest level of current non-regulated norms; having projects underway in the 'strategic frontier' of the Virtue Matrix; and being an active participant in 'structural frontier' projects as well. In addition to describing the four quadrants of the Virtue Matrix in detail, the authors show how companies can protect the best of what currently is - the civil foundation - and contribute to the expansion of what could be, through activities on the frontier.

In this May 2009 interview, Harvard Business School Professor and SSRN chairman Michael Jensen defines 'integrity', explains how it differs from morality and ethics, and argues that the effects of out-of-integrity behavior are significantly more damaging than most of us believe. He explains that people are not the only ones that can have integrity: objects and systems can have it too - indeed, they can only obtain maximum performance by maintaining integrity. He describes the distinction between the integrity of design, the integrity of implementation and the integrity of use. Reflecting on the 2008-09 finance crisis, the author says that putting the economic system back in order is deceptively simple: "people have to start honoring their word. If they do, trust will materialize almost instantly."

We care deeply about what other people think of us, and as a result, 'mattering maps' exert a powerful influence on our behavior. In principle, there is a mattering map for each person, each social environment and for society as a whole, and because each person typically belongs to more than one social group--workplace, family, friends-these groups and the mattering maps that apply to them often overlap. Mattering maps may be a source of misery for some, but given the realities of human nature, they cannot be avoided. The authors show that in the end, they enable both the greatest accomplishments of the human race when we compete to outdo one-another in things that are constructive, and our greatest follies when we compete over activities that are wasteful or destructive.

Without realizing it, managers delegate unethical behavior to people in their organizations on a regular basis. This occurs whenever someone tells their subordinates to 'do whatever it takes' to achieve production or sales goals, leaving open the possibility of aggressive or even unethical tactics; it happens when companies outsource production to offshore subcontractors that are inexpensive because they are less constrained by costly labor and environmental standards; and it happens when partners at accounting firms remind junior auditors about the importance of retaining a client that has inappropriate accounting practices. In these and countless other situations, people are motivated to overlook the problematic ethical implications of other people's behavior. The result: scandals that can cost trillions of dollars. The good news, say the authors, is that the evidence strongly supports the notion that most people value ethical decisions and behavior and strive to develop the habit of ethicality. Nevertheless, people still find themselves engaging in unethical behavior because of biases that influence their decisions-biases of which they may not be fully aware. Fighting human nature is no easy task, but the authors explain that leaders can and must make the structural changes necessary to reduce the harmful effects of our psychological and ethical limitations.

Members of organizations are naturally motivated to consider the attitudes and opinions of their peers in order to gauge others' reactions to their decisions and assess where they stand relative to organizational norms. However, the authors found strong evidence that people are not very good at estimating the percentage of others who agree with their choices, and that this tendency has major implications for ethical decision making. Specifically, they argue that people fall victim to a False-Consensus Bias, wanting to believe that others are more like them than not. While ethical pundits may predict that 'loners' would be more likely to violate ethical standards because they lack insight into others' attitudes and have fewer colleagues to whom they can turn for help or advice, the authors suggest that the social butterfly, rather than the social outcast, may actually be more likely to erroneously assume that their ethical judgments are in line with the normative view. In a workplace environment, the potential danger is that employees who act in ways that most others consider unethical may confidently believe that their actions are in line with the socially-shared ethical standard when making decisions. And as we have seen, the end-results can be widespread and severe.

Accountability has become a major buzzword of late, cited to be at the core of market meltdowns and revivals and one of the basic buildings blocks of successful businesses. As a result, it has become a topic of investigation by a large coterie of consultants, social scientists and practitioners. Break the riddle of accountability, the thinking goes, and you will have solved one of the biggest issues in modern business. The author argues that most of the proposed approaches focus too narrowly on tasks, responsibilities, personal attributes and measurement systems - all of which are important aspects of accountability, but overlook its three most important features: its relationality, reflexivity and relativity. He explains that accountability is relational in that it involves a promise or commitment from me to you; it is reflexive in that it says something about me and about our relationship that I have to internalize and accept; and it is relative to a set of background assumptions and a background audience - made up of those who can witness my commitment to you and those who cannot, but could. Keeping promises and accounting for their breaches in credible, genuine and authentic ways is what makes organizations work, societies thrive, and cultures promulgate themselves into the future. The commitment path described by the author can thus be seen as an 'audit trail' for the journey of promising, a way of assigning responsibility in the face of ambiguity, mendacity and subterfuge.