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Pursuing a merger or acquisition is inherently difficult. Things get even harder when executives are blind to their own faulty assumptions, say Lovallo--a professor at the University of Western Australia Business School and a senior adviser to McKinsey--and three of his McKinsey colleagues. The authors identify biases that can surface at each step of the M&A process and provide practical tips for rising above them--an approach they call targeted debiasing. During the preliminary due-diligence stage, biases abound. To overcome the confirmation bias, aggressively seek evidence that challenges your initial hypothesis about a deal. The best medicine for overconfidence in identifying revenue and cost synergies is to learn from precedents at your firm and others. Avoiding underestimation of cultural differences between your company and the target requires understanding the differences in the ways people interact at each organization. Misjudging the time and resources you need is at the core of the planning fallacy, which you can elude by formally identifying best practices and continually revisiting them. Finally, dilute conflict of interest by soliciting dispassionate external expertise. The bidding phase is vulnerable to the winner's curse, a phenomenon common in auctions. To avoid paying too much for a target, actively generate alternatives to the deal under consideration and develop a set of bidding cutoff rules. After offering an initial bid, deal makers are susceptible to anchoring, whereby they remain attached to their original price estimate, and to the sunk cost fallacy that they've invested too much to stop now. The secret to overcoming both: Use your newly available access to the target's books to better assess the investment case--and change your tune accordingly.

Large organizations are by nature complex, but over the years new business challenges--globalization, innovative technologies, and regulations, to name a few--have conspired to add layer upon layer of complexity to corporate structure and management. Organizations have become increasingly ungovernable and unwieldy: Performance is declining; accountability is unclear; decision rights are muddy; and data are crunched repeatedly, often with no clear purpose in mind. To avoid frustration and inefficiency, executives need to systematically attack the causes of complexity in their companies. Ashkenas and his partners at Robert H. Schaffer & Associates have worked with dozens of firms to help them develop strategies for simplification. In this article, the author details the elements of a simplicity-minded strategy: Streamline the structure; prune products, services, and features; build disciplined processes; and improve managerial habits. ConAgra Foods' experience illustrates how one company turned itself around through careful execution of a simplicity strategy. The packaged-food supplier had become enormously successful by acquiring well known brands and then allowing them to operate autonomously, evolving into a $14 billion organization with more than 100 brands, a food services business, and a commodity trading operation. ConAgra, however, had no common method for reporting, tracking, or analyzing results. Over time, therefore, it became a highly unwieldy enterprise, riddled with inefficiencies and unable to communicate adequately with investors and other stakeholders. When CEO Gary Rodkin came on board in 2005, he invested in a series of initiatives to combat complexity. The tactic not only made life easier for customers and employees but also saved millions of dollars in costs. This article has an online interactive questionnaire that can help you assess your own company's level of complexity.

Minor innovations make up most of a company's development portfolio on average, but they never generate the growth companies seek. The solution, says Day--the Geoffrey T. Boisi Professor of Marketing and a co-director of the Mack Center for Technological Innovation at Wharton--is for companies to undertake a systematic, disciplined review of their innovation portfolios and increase the number of major innovations at an acceptable level of risk. Two tools can help them do this. The first, called the risk matrix, graphically reveals the distribution of risk across a company's entire innovation portfolio. The matrix allows companies to estimate each project's probability of success or failure, based on how big a stretch it is for the firm to undertake. The less familiar the product or technology and the intended market, the higher the risk. The second tool, dubbed the R-W-W (real-win-worth it) screen, allows companies to evaluate the risks and potential of individual projects by answering six fundamental questions about each one: Is the market real? explores customers' needs, their willingness to buy, and the size of the potential market. Is the product real? looks at the feasibility of producing the innovation. Can the product be competitive? and Can our company be competitive? investigate how well suited the company's resources and management are to compete in the marketplace with the product. Will the product be profitable at an acceptable risk? explores the financial analysis needed to assess an innovation's commercial viability. Last, Does launching the product make strategic sense? examines the project's fit with company strategy and whether management supports it.

Venerable Detroit automaker Atida Motors has a new call center in Bangalore that the company hopes will raise its reputation for customer service. But it doesn't appear to be doing so yet. Complaints about the Andromeda XL--the hip new model Atida hopes will capture the imagination of Wall Street--are flooding the call center. Call backlogs are building, and letters of complaint are piling up. One loyal Atida customer is so upset about getting the brush-off that he's not only talking to a lawyer but threatening to go on YouTube and take his case to the court of public opinion. In the Internet age, does Atida need a new way to deal with unhappy customers? Tom Farmer, the creator of the unintentionally viral PowerPoint presentation "Yours Is a Very Bad Hotel," says that Atida needs to stop defining customer service solely as a response to bad news and nip problems in the bud by making online dialogue intrinsic to the brand experience. Nate Bennett, of Georgia Tech, and Chris Martin, of Centenary College, observe that Atida has violated its customers' sense of fairness within three dimensions--distributive, procedural, and interactional--thus increasing their desire for revenge. Lexus Vice President for Customer Service Nancy Fein thinks Atida isn't even in the ballpark when it comes to world-class customer service. She offers as an example a Lexus rep who drove 80 miles to deliver $1,000 to a stranded Lexus owner whose purse had been stolen. Barak Libai, of Tel Aviv University and MIT's Sloan School, suggests that Atida invest in a CRM system so that it can determine which customers have enough purchasing and referral value to be given the red carpet treatment and which should be gently let go.

Venerable Detroit automaker Atida Motors has a new call center in Bangalore that the company hopes will raise its reputation for customer service. But it doesn't appear to be doing so yet. Complaints about the Andromeda XL--the hip new model Atida hopes will capture the imagination of Wall Street--are flooding the call center. Call backlogs are building, and letters of complaint are piling up. One loyal Atida customer is so upset about getting the brush-off that he's not only talking to a lawyer but threatening to go on YouTube and take his case to the court of public opinion. In the Internet age, does Atida need a new way to deal with unhappy customers? Tom Farmer, the creator of the unintentionally viral PowerPoint presentation "Yours Is a Very Bad Hotel," says that Atida needs to stop defining customer service solely as a response to bad news and nip problems in the bud by making online dialogue intrinsic to the brand experience. Nate Bennett, of Georgia Tech, and Chris Martin, of Centenary College, observe that Atida has violated its customers' sense of fairness within three dimensions--distributive, procedural, and interactional--thus increasing their desire for revenge. Lexus Vice President for Customer Service Nancy Fein thinks Atida isn't even in the ballpark when it comes to world-class customer service. She offers as an example a Lexus rep who drove 80 miles to deliver $1,000 to a stranded Lexus owner whose purse had been stolen. Barak Libai, of Tel Aviv University and MIT's Sloan School, suggests that Atida invest in a CRM system so that it can determine which customers have enough purchasing and referral value to be given the red carpet treatment and which should be gently let go.

Consumers of health care constitute a highly diverse market, but the idea that companies might segment customers and profit by addressing their varied needs seems almost foreign to the health industry. You can tap hidden value by making use of patterns in the demand for health products and services, especially if you segment consumers according to health and wealth at the same time.

A company's ability to function during a flu pandemic is only as good as the weakest link in its supply chain. Hoffman-La Roche, the maker of a frontline antiviral drug, works closely with its suppliers to ensure that their preparedness plans are as robust as its own.

Executives of multinationals partnering with Chinese firms should be alert to Mao Zedong's lingering influence on some of the country's most successful executives--and, in particular, watch for a leadership tactic that can undermine a joint venture.

Private equity fund performance is most often reported in a way that exaggerates the truth. A modified calculation gives a more accurate read of performance and can change a fund's relative rank.

With so many management tools out there, from benchmarking to outsourcing, it's hard to decide which ones to try. To help executives make informed choices, the authors compare levels of use and satisfaction for the most popular tools, and chart the evolution of a select few.

By watching a colleague assemble diverse, high-performing teams, the CEO of the Boston Consulting Group learned the art of nurturing individual strengths and steering team members away from tasks that would expose their weaknesses.

A detached and impassive executive may seem like the corporate decision-making ideal, but people make better choices when they're experiencing intense emotions, according to new research.

Ed Zore is the CEO of Northwestern Mutual, a highly admired 150-year-old insurer. Relevance, not innovation, matters most to customers, he says, and should matter most to companies as well.

Marketers commonly estimate customer lifetime value in order to decide which customers are worth continued investment. But the way companies typically calculate that value is flawed because it overlooks the real option of abandoning unprofitable customers.

The protagonists are Lara Jackle and Lynn Graham, CEO and VP Marketing for LifghtFull Foods respectively. LightFull is a beverage start-up based in Northern California that is struggling with a major strategic decision which centers around its use and possible replacement of an ingredient called Stevia (an all natural, zero calorie plant derivative which is often used as a sweetener by consumers and companies) with an artificial sweetener. Jackle and Graham like Stevia for its inherent qualities that play to the company's and product's strengths: all-natural ingredients, low calorie, nutritious and tasty snack-replacement satisfaction. Some board members argue, however, that replacing Stevia with an artificial sweetener will not negatively impact the brand, and may in fact appeal to a larger audience in more mainstream channels (e.g., WalMart vs. Whole Foods, the latter of which does not allow artificially sweetened food items on its shelves). While approved by the FDA for use as a dietary supplement, Stevia has not yet been approved as a sugar substitute, food additive or sweetener. In fact, companies are overtly barred from using Stevia as anything but a dietary supplement and inclusion of the ingredient necessitates that the company classify the entire product (in this case a beverage) as a nutritional supplement, not a food.

"Parfums Cacharel, a division of L'Oréal, used to have a dominating position on the European market with both the number one and number two best-selling fragrances: Anaïs Anaïs and Loulou. At the time of the case however, sales were declining at a rate of 15 % per year and Cacharel was a fragance brand in need of a major revitalization. The task assigned to Dimitri Katsachnias, the new general manager of Cacharel, is to turn around the business. But before doing that, he needs to understand the brand. 1. Brand identity decoding • What is Cacharel's brand identity? What are its conceptual and tangible components? Can it be summarized in less than five words? • Does the Cacharel umbrella brand itself have an identity beyond that of its sub-brands? Which sub-brands are mostly responsible for creating Cacharel's identity? 2. Brand revitalization • What is the root source of Cacharel's maturity crisis and how can understanding the brand's identity help? • Should Kataschnias bring the Cacharel brand closer to where the market is now? Should he focus on meeting the desires of today's consumers or in remaining faithful to the brand's original identity Students can watch the television commercials mentioned in the case on the dedicated case website: http://cases.insead.edu/cacharel/home. On this website, instructors can also access video interviews with the managers mentioned in the case, more recent television commercials, and PowerPoint presentations to be used in the classroom or as handouts using the login and password mentioned in the teaching note."

In January, 2008, Schweiz Aluminum Alloy Division is preparing to introduce its new GH 1000 alloy. The Division was a worldwide leader in the marketing of high strength, relatively exotic aluminum alloys. Recently, one of its talented metallurgists had developed a new formulation for one alloy in the 7000 series of high strength, hard alloys. The formulation was significantly lower in cost than the previous one used, but had absolutely no impact on the performance characteristics and appearance. For all practical purposes, it was identical to the existing more expensive alloy that it would replace. Andrew McAndrews, product manager for high strength aluminum alloys, was responsible for setting a price for the new alloy.

This case deals with efforts by HSBC, one of the two largest banks in the world by market capitalization, to develop a wholesale banking franchise that can effectively challenge those of major universal bank competitors such as Citigroup, as well as dominant "monoline" firms such as Goldman Sachs and Morgan Stanley. It highlights the key dimensions of wholesale financial intermediation: loan syndication and project finance, loan securitization and credit default swaps, equity capital markets, debt capital markets, secondary market trading and other investment banking services for clients, as well as principal trading and positioning. Like most players in this market, HSBC had some notable successes and failures, but on the whole did not succeed in breaking into the top ranks of global investment banks despite clearly having the resources to do so. By understanding what it takes to succeed, students should learn a great deal about the competitive dynamics of this industry.

This three-part case series traces the fortunes of a California winery. In June 2001, Brooke Correll, a former executive at MTV, Ziff-Davis Media, and WineShopper.com, joined the privately owned Clos Du Val Wine Company, in Napa, California, as director of Marketing. Cofounded by an expert winemaker with ties to the famous Château Lafite Rothschild, Clos Du Val had seen its glory days, with high ratings accompanied by robust sales. During the 1990s, however, sales had begun to lag. As the winery's first marketing professional, Correll must chart a new course for the winery to revive the once-hot brand and reverse flagging sales. See also the A and B cases.

What are the differences between being a good tactical leader and being a good strategic leader? As he nears retirement, Robert Lincoln muses about his successor at Lincoln Industries. The case describes the backgrounds of four potential successors, all of whom are tactically astute and very competent general managers. Lincoln realizes that the company is at a crossroads and wonders what it would take for his potential successors to graduate from being good tactical leaders to effective strategic leaders.