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Many Western managers were introduced to lean production in 1990, with publication of "The Machine That Changed the World," based on a five-year study of Toyota by MIT's International Motor Vehicle Program. Since then, thousands of managers have used the principles of lean management to achieve faster cycle times, reduced defect rates and sharp gains in on-time deliveries. Lean management permits a marked reduction in inventory levels across the supply chain, which should result in better financial performance -- especially because companies achieve simultaneous declines in manufacturing and service costs. But, as the authors point out, the transition takes time and is full of obstacles. One predictable hurdle is the crisis in confidence that occurs when management isn't able to improve financial performance quickly. Lean transformations generally have short-term adverse impacts on the company's bottom line (that is, things get worse before better). Management needs to anticipate these challenges and explain them clearly. To help managers overcome the financial hurdles on the path to lean, the authors offer new tools for anticipating the deterioration in financial performance that occurs as a mass producer goes lean and for understanding the real performance improvements that take place during this period. Their approach, called "value-stream accounting," helps managers plan for the short-term financial impact, monitor progress, understand the operational improvements and develop strategies to maximize the longer-term benefit. Managers need to understand that the "bad" news isn't really bad -- it's part of the necessary process of establishing a stronger, more productive organization. The authors' approach replaces the traditional cost-accounting system with a transparent accounting system that tracks the company's value streams, which incorporate all of the value-adding and non-value-adding activities required to bring a product or service from start to finish.

This is an MIT Sloan Management Review article. In global supply chains, managers have consistently struggled with sharing valuable knowledge with buyers and suppliers across borders. Increasingly, talk of the "dark side" of collaborative relationships has left managers wondering who benefits most from knowledge-sharing activities: their companies or their partners. In order to find the answers to these questions, the authors conducted an in-depth study of more than 100 cross-national supply chain partnerships in the industrial chemicals, consumer durables, industrial packaging, toy and apparel industries in multiple locations in 19 countries. The authors found three types of knowledge sharing within the supply chain, each offering distinct benefits to buyers and suppliers: information sharing, joint sense making and knowledge integration. They also found that no matter how "diverse" the home cultures of the buyer and supplier companies, these differences had no impact on the propensity to share knowledge. Drawing on examples from the auto (Toyota), aerospace (Boeing, Lockheed Martin and United Technologies) and toy industries, they examine how different types of knowledge sharing can benefit buyers or sellers individually, but more importantly, how it can enhance the performance of the partnership as a whole. They conclude that, while suppliers generally benefit more from knowledge-sharing activities, both buyers and suppliers profit; understanding the benefits of absolute versus relative gains is critical when building world-class global supply chains. Sharing knowledge effectively means understanding that a disparity in benefits is part of what it takes to build partnerships that last.

This is an MIT Sloan Management Review article. Much lip service is given today to "values-based decision making," with the implication that the underlying values are "good" values, occupying high moral ground. But the fact is that all decisions--whether highly ethical, grossly unethical or anywhere in between--are values-based. That is, a decision necessarily involves an implicit or explicit trade-off of values. The values represented in a particular decision are not always easy to identify and evaluate, however, and the shortcuts that people often take in decision making can make deeper analysis of values all the more difficult. This article presents a framework designed to explore the values implicit in decisions. Moving systematically from concrete consequences to higher-ordered values, the framework, embodied in a decision-mapping technique, helps the decision maker think through what is gained and what is given up as a result of a decision. It also encourages an expansion of choice options, motivates a more balanced view of positive and negative consequences, and provides insight into the dynamics of decision making. When good people at times say yes to bad--unethical or illegal--actions, there are four possible reasons: (a) the organization's values are fuzzy to them, leading them to resort to undeveloped intuition and expedient criteria, (b) they may not be clear on their own values, (c) their interpretation of probability conveniently favors their a priori preferred option, or (d) they see no other options (they believe their hands are tied). Each of these possibilities reflects issues that senior managers need to account for directly in addressing ethical decision making in their organizations. Illustrating the framework through a case study based on actual events, the article aims to help managers build a culture that better integrates the organization's values into staff members' decisions.

Captain Gorur Ramaswamy Gopinath started his journey with a dream - a dream inspired by one simple statement: "I want every Indian to fly at least once in their lifetime." With a population in excess of 1 billion people, India certainly offered a vast reservoir of future air travelers. In 2002, when Capt. Gopinath first broached the idea of starting a low-cost airline to serve India's travel needs, no one took him seriously. Bankers refused to fund him, aircraft manufacturers ignored him and aviation industry observers swore that India was not ready. However, he was convinced that India's burgeoning middle class, already buying color TVs and cell phones, could be converted to air travel. In 2003 he launched the first low-cost airline company in India with a leased 48-seater ATR aircraft and $10 million from investors. By 2007, Capt. Gopinath was close to realizing his dream. Air Deccan, with a market share of 21.6%, was India's fastest-growing low-cost carrier and the second-largest airline in the country. It ran the most extensive network in India, covering 61 airports, flew some 306 scheduled flights a day and operated a brand new fleet of 14 Airbus A320 and 22 ATR Turboprops. Visionary and always optimistic, Capt. Gopinath had brought about a total revolution to the highly regulated Indian skies. But every revolution carries the seeds of its own demise. Competition was increasing rapidly now that the model had been validated, and the Indian airport infrastructure was on the verge of a massive breakdown. New business models had to be devised to remain ahead of the curve. The new logo for the company enigmatically offered a glimpse of what Capt. Gopinath had in mind: S I M P L I F L Y ... Learning objectives: Learn about new business models, innovations, growth management, low cost carrier strategies, Indian issues.

Henry Ford's stubborn refusal to admit the changeability of consumer demand allowed Chrysler and GM to horn in on his market. Half a century later the whole U.S. auto industry made the same mistake: Enter the Japanese. But denial comes in many forms, as Sears, Digital Equipment, and Bear Stearns can attest.

Living alongside the roughnecks and roustabouts on two offshore oil platforms, the authors learned that when the men abandoned their macho behavior, they maximized the safety of their coworkers and did their jobs more effectively.

High interpersonal congruence-meaning alignment between team members' self-assessments and their appraisals of one another-improves the performance of diverse teams. And 360-degree feedback can help.

Choosing duty over pleasure today can cause regret down the road-whereas regret over the reverse is fleeting. Marketers of luxury products and services should consider prompting customers to predict their future feelings about choices made now.

Research shows that people favor pleasurable "want" options if the consequences are immediate, and good-for-you "should" options if the consequences will occur in the future. That finding offers potentially profitable opportunities.

Because board meetings involve two groups-directors and managers-and because directors play a difficult dual role as both cops and advisers, boardroom communication can suffer. Executive sessions and active in-meeting leadership will help.

When crucial financial estimates rely on judgment, companies can minimize their risk by turning to appraisers, actuaries, and evaluators, whether internal, external, or a combination.

A business historian reminds us that since the nineteenth century, predictions about globalization have been reliably wrong. Despite technology for the fast diffusion of knowledge, information-like wealth-seems to be concentrating even further.

Idea brokers are good at sparking cross-divisional innovation through their broad social networks. But implementation-marshaling resources and getting various stakeholders on board-requires dense webs of strong interpersonal relationships.

Employees who spend some or all of their bonuses on others-thereby creating what the authors call a "prosocial" workplace-are happier as a result. Managers can enhance that effect by providing opportunities to share the wealth.

In 2006 officials of the Municipal Corporation of Greater Mumbai and the State of Maharashtra were beginning to implement a plan to improve the economic fortunes of the city. Mumbai, formerly known as Bombay, was India's richest city, with wealth based on trade, finance and filmmaking. But the city was also famous for its enormous slums, terrible traffic congestion, and poor infrastructure. And while India's economy had been growing rapidly since the late 1980s, Mumbai seems to be losing ground to other cities in India, such as Bangalore, and to other regional financial centers such as Shanghai and Dubai. The plan the city was considering would relax land use and rent control regulations and build new infrastructure in an effort to make Mumbai more affordable and livable. The case is designed to support a discussion of the rationale for regulation and of the political economy of regulatory reform. HKS Case Number 1917.0

Set against the backdrop of under-served, over-exploited rural India, this case highlights how the use of technology by the Indian conglomerate ITC transformed the lives of many rural Indians at the same time that it was benefiting the company. Continually plagued by an inefficient supply chain in rural agriculture, ITC implemented the e-Choupal initiative in 2000. Under the initiative, ITC set up small Internet kiosks in villages that allowed farmers access to an efficient and transparent alternative to the traditional mandi for marketing their produce. By establishing a direct channel between the farmer and ITC, e-Choupal significantly marginalized the role of middlemen, thereby ensuring farmers more money for their produce. In doing so, e-Choupal not only mitigated ITC's agrarian supply chain concerns but also achieved a greater good-the economic uplift and empowerment of the Indian farmer. Although e-Choupal was conceived as ITC's answer to their supply chain woes, ITC was quick to realize that they had discovered the delicate balance between achieving corporate profitability and making a social contribution. Aware of the multitude of challenges faced by impoverished rural Indians, ITC extended its e-Choupal framework to deliver core services, such as access to health care, education and information. They even liaised with other companies, including fast-moving consumer goods companies and finance companies, to deliver products and services to rural Indians that had previously commanded huge premiums or were simply unavailable. Evolving into a platform for community development, e-Choupal was both eradicating poverty and chipping away at rural isolation, even while ITC continued to enjoy the benefits of functional procurement and distribution value chains.

The Russian Federation (Russia) was the largest of the 15 geopolitical entities that emerged in 1991 from the Soviet Union. Despite a series of reforms initiated in 1992 to help the country transition from its centrally planned economy, Russia plunged into a deep recession that was exacerbated by a financial crisis in 1998. It was not until 1999, following eight years of turmoil, macroeconomic stabilization and economic restructuring, that the economy slowly began to grow again. When Vladimir Vladimirovich Putin became president on December 31, 1999, Russia was the world's tenth-largest economy and its foreign reserves stood at $8.5 billion. By 2007, the country's economy had become the world's eighth-biggest, with reserves of $407.5 billion. In May 2008, when Russia's new president, Dmitry Medvedev, was inaugurated and Putin assumed the role of prime minister, western companies with interests in Russia faced great uncertainty. Would Putin's hand-picked successor, under Putin's powerful and watchful eye, continue to enact policies and take actions that would make the business environment increasingly unfavorable to foreign investment? Or, would the new regime chart a more liberal and democratic course for Russia that would enable the country to improve its global competitiveness and allow outside investors to participate in its prosperity? Russia had made great strides to improve its position in the world since the dissolution of the Soviet Union. Yet, it remained to be seen whether the country, particularly under its current circumstances, could create and sustain lasting international competitive advantage, which many western critics believed would require a more democratic political regime. This paper provides a brief overview of the country and explores the status of China's competitive advantage through the framework of Michael Porter's Competitive Advantage of Nations.

The administrator of the Westmount Retirement Residence is concerned about the current cost accounting system. The administrator is not clear on how much each service offered was truly costing, and therefore charged each resident the same price per month regardless of their needs. In the past, the majority of patients demanded similar services, and therefore this pricing and costing system was appropriate. However, with demographic changes to the population, some residents required intense medical care, while others were healthy and fit and required less care. A new pricing model had to be developed that reflected both the size of suite inhabited and the level of medical care and service required by each individual patient.

The manager of occupational health and safety services at the London Health Science Centre (LHSC) is a member of a team developing a plan to prepare LHSC to manage various issues in the event of an influenza pandemic, particularly in its hospitals. Such an event would place severe strain on LHSC's employees and on the organization's ability to provide health care to the public. The manager has to resolve several ethical concerns while ensuring compliance with the Ontario Health and Safety Act. She also has to recommend how best to communicate the plan to the LHSC staff.

MBA student Monroe Davies is asked by a potential employer to determine his own compensation package. This case follows Jim Hummer, President and CEO of Whole Health Management and Davies through a unique recruitment process that raises questions of compensation and employee incentives, negotiation strategy, and human resources management.