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Castlebridge & Company, a maker of high-quality outerwear, is a century-old British institution. Its headquarters remain in London, but most of its manufacturing has moved offshore. With the last domestic factory slated to close, the firm's executives struggle to preserve the "Britishness" of the brand. For historian Niall Ferguson, the plant closure is a logical step. The British public has been down this road, as have foreign consumers of British products. The real risk to the brand, Ferguson asserts, is the potential loss of its high-class cachet--not its national identity. Fashion reporter Dana Thomas argues that by broadening their markets beyond the super wealthy, luxury brands have made themselves vulnerable to economic fluctuations. Cutting costs by moving production offshore is inevitable, so Castlebridge should, with characteristic British candor, come clean about it. If the firm shines light on its native roots and its international production, it could establish a winning reputation as a truly modern, global brand. Dov Seidman, CEO of LRN, takes issue with how Castlebridge has gone about the shift to offshore production. In a world where reputation matters more than ever, the firm can't just outperform competitors. It must "outbehave" them, by keeping its promises and acting in a principled manner. Seidman advises the company to rediscover and recommit to the core values that have brought it this far. Writer and consultant Gill Corkindale looks inside Castlebridge, focusing on the staff that will stay on as the company restructures. She recommends a trust-building people strategy, modeled by the CEO, which emphasizes forthright communication from management, as well as genuine solicitation of, and response to, the opinions of employees.

Recent neuroscientific research shows that the health of your brain isn't, as experts once thought, just the product of childhood experiences and genetics; it reflects your adult choices and experiences as well. Professors Gilkey and Kilts of Emory University's medical and business schools explain how you can strengthen your brain's anatomy, neural networks, and cognitive abilities, and prevent functions such as memory from deteriorating as you age. The brain's alertness is the result of what the authors call cognitive fitness--a state of optimized ability to reason, remember, learn, plan, and adapt. Certain attitudes, lifestyle choices, and exercises enhance cognitive fitness. Mental workouts are the key. Brain-imaging studies indicate that acquiring expertise in areas as diverse as playing a cello, juggling, speaking a foreign language, and driving a taxicab expands your neural systems and makes them more communicative. In other words, you can alter the physical makeup of your brain by learning new skills. The more cognitively fit you are, the better equipped you are to make decisions, solve problems, and deal with stress and change. Cognitive fitness will help you be more open to new ideas and alternative perspectives. It will give you the capacity to change your behavior and realize your goals. You can delay senescence for years and even enjoy a second career. Drawing from the rapidly expanding body of neuroscientific research as well as from well-established research in psychology and other mental health fields, the authors have identified four steps you can take to become cognitively fit: understand how experience makes the brain grow, work hard at play, search for patterns, and seek novelty and innovation. Together these steps capture some of the key opportunities for maintaining an engaged, creative brain.

Snowden and Boone have formed a new perspective on leadership and decision making that's based on complexity science. The result is the Cynefin framework, which helps executives sort issues into five contexts. Simple contexts are characterized by stability and cause-and-effect relationships that are clear to everyone. Often, the right answer is self-evident. In this realm of "known knowns," leaders must first assess the facts of a situation--that is, "sense" it--then categorize and respond to it. Complicated contexts may contain multiple right answers, and though there is a clear relationship between cause and effect, not everyone can see it. This is the realm of "known unknowns." Here, leaders must sense, analyze, and respond. In a complex context, right answers can't be ferreted out at all; rather, instructive patterns emerge if the leader conducts experiments that can safely fail. This is the realm of "unknown unknowns," where much of contemporary business operates. Leaders in this context need to probe first, then sense, and then respond. In a chaotic context, searching for right answers is pointless. The relationships between cause and effect are impossible to determine because they shift constantly and no manageable patterns exist. This is the realm of unknowables (the events of September 11, 2001, fall into this category). In this domain, a leader must first act to establish order, sense where stability is present, and then work to transform the situation from chaos to complexity. The fifth context, disorder, applies when it is unclear which of the other four contexts is predominant. The way out is to break the situation into its constituent parts and assign each to one of the other four realms. Leaders can then make decisions and intervene in contextually appropriate ways.

As the dust settles on the recent frenzy of private equity deals (including transactions topping $20 billion), what lessons can companies glean? Directors and executives of public companies may now be slightly less fearful of imminent takeover, yet the pressure remains: They face shareholders who wonder why they aren't getting private-equity-level returns. Rather than dismiss the value private equity has created as manipulated or aberrant, public company leaders should recognize the disciplined management that often underlies it. Pozen, a longtime leader in the financial services industry, finds that in the aftermath of buyouts, companies undergo five major thrusts of reform. These translate into five key questions that directors should pose to senior management: Have we left too much cash on our balance sheet instead of raising our cash dividends or buying back shares?; Do we have the optimal capital structure, with the lowest weighted after-tax cost of total capital, including debt and equity?; Do we have an operating plan that will significantly increase shareholder value, with specific metrics to monitor performance?; Are the compensation rewards for our top executives tied closely enough to increases in shareholder value, with real penalties for nonperformance?; Finally, does our board have enough industry experts who have made the time commitments and been given the financial incentives necessary to maximize shareholder value? The era of private equity is far from over--the top funds have become very large and are likely to play an influential role in future market cycles. Boards that ask these questions, and act on them, won't just beat the takeover artists to the punch. They will build stronger businesses.

In his interviews and data analysis, Harvard Business School professor Bower found that companies performed better when they appointed insiders to the job of CEO. Other researchers, including Jim Collins in "Good to Great," have come to similar conclusions working from different data sets. Yet Bower finds far too many companies are managed without leadership development as an objective; as a result, when the time comes to name a new chief executive, those firms turn to outsiders. Both insider and outsider CEOs have strengths and weaknesses at the start. Insiders know the company and its people but are often blind to the need for radical change. Outsiders see the need for a new approach but can't make the necessary changes because they don't know the organization or industry sector well enough. What companies must do, then, is find a way to nurture what Bower calls inside-outsiders--internal candidates who have outside perspective. Often such executives have spent much of their time away from the mainstream of the organization, and away from headquarters, living with new opportunities and threats. Before becoming CEO, Procter & Gamble's A.G. Lafley, for instance, worked for years building P&G's Chinese operation rather than the core detergent business. IBM's Sam Palmisano was a champion of software and open systems at a time when Big Blue was essentially a closed-system, hardware-oriented company. To groom potential leaders, a development process for inside-outsiders needs to be in place. Ideally by the time they are 30 a talented manager can be given the opportunity to manage a whole business, so that they become good insiders. But they also need to be mentored with an eye toward preserving their outsider perspective, so they learn how to turn their new ideas into great businesses and are protected from senior managers who believe out-of-the-box thinkers need a lesson.

Executing complex initiatives like acquisitions or an IT overhaul requires a breadth of knowledge that can be provided only by teams that are large, diverse, virtual, and composed of highly educated specialists. The irony is, those same characteristics have an alarming tendency to decrease collaboration on a team. What's a company to do? Gratton, a London Business School professor, and Erickson, president of the Concours Institute, studied 55 large teams and identified those with strong collaboration despite their complexity. Examining the team dynamics and environment at firms ranging from Royal Bank of Scotland to Nokia to Marriott, the authors isolated eight success factors: (1) "signature" relationship practices that build bonds among the staff, in memorable ways that are particularly suited to a company's business; (2) role models of collaboration among executives, which help cooperation trickle down to the staff; (3) the establishment of a "gift culture," in which managers support employees by mentoring them daily, instead of a transactional "tit-for-tat culture;" (4) training in relationship skills, such as communication and conflict resolution; (5) a sense of community, which corporate HR can foster by sponsoring group activities; (6) ambidextrous leadership, or leaders who are both task-oriented and relationship-oriented; (7) good use of heritage relationships, by populating teams with members who know and trust one another; (8) role clarity and task ambiguity, achieved by defining individual roles sharply but giving teams latitude on approach. As teams have grown from a standard of 20 members to comprise 100 or more, team practices that once worked well no longer apply. The new complexity of teams requires companies to increase their capacity for collaboration by making long-term investments that build relationships and trust, and smart near-term decisions about how teams are formed and run.

A price-benefit positioning map helps you see, through your customers' eyes, how your product compares with all its competitors in a market. You can draw such a map quickly and objectively, without having to resort to costly, time-consuming consumer surveys or subjective estimates of the excellence of your product and the shortcomings of all the others. Creating a positioning map involves three steps. First, define your market to include everything your customers might consider to be your product's competitors or substitutes. Second, track the price your customers actually pay (wholesale or retail? bundled or unbundled?) and identify what your customers see as your offering's primary benefit. This is done through regression analysis, determining which of the product's attributes (as described objectively by rating services, government agencies, R&D departments, and the like) explains most of the variance in its price. Third, draw the map by plotting on a graph the position of every product in the market you've selected according to its price and its level of primary benefit, and draw a line that runs through the middle of the points. What you get is a picture of the competitive landscape of your market, where all the products above the line command a price premium owing to some secondary benefit customers value, and all those below the line are positioned to earn market share through lower prices and reduced secondary benefits. Using examples as varied as Harley-Davidson motorcycles, Motorola cell phones, and the New York restaurant market, Tuck professor D'Aveni demonstrates some of the many ways the maps can be used: to locate unoccupied or less-crowded spaces in highly competitive markets, for instance, or to identify opportunities created through changes in the relationship between the primary benefit and prices. The maps even allow companies to anticipate--and counter--rivals' strategies.

Corporate alliances are growing in number--by about 25% a year--and account for up to a third of revenues and value at many companies. Yet some 60% to 70% of them fail. What is going wrong? Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements, say Hughes and Weiss, management consultants at Vantage Partners. The authors have developed five principles--based on their two decades of work with alliances--to complement the conventional advice on alliance management: (1) Focus less on defining the business plan and more on how you and your partner will work together; (2) Develop metrics pegged not only to alliance goals but also to performance in working toward them; (3) Instead of trying to eliminate differences, leverage them to create value; (4) Go beyond formal systems and structures to enable and encourage collaborative behavior; and (5) Be as diligent in managing your internal stakeholders as you are in managing the relationship with your partner. Companies that have adopted these principles have radically improved their alliance success rate. Schering-Plough, for example, engages in a systematic "alliance relationship launch": four to six weeks of meetings at which the partners explore potential challenges, examine key differences and develop shared protocols for managing them, and establish mechanisms for day-to-day decision making. Blue Cross and Blue Shield of Florida measures the quality of alliance progress through regular surveys of both its own staff and its partners'. These companies have learned that the conventional advice is not so much wrong as incomplete. The five simple rules can help fill in the blanks.

Communication may not be on managers' minds at companies that design complex, highly engineered products, but it should be. When mistakes take place, it's often because product-component teams fail to talk. The consequences can be huge: Ford and Bridgestone Firestone lost billions by not coordinating the design of the Explorer with the design of its tires. The major delays and cost overruns involved in the development of Airbus's A380 "super jumbo"--which most likely led to the CEO's exit--were a result of unforeseen design incompatibilities. To help managers mitigate such problems, the authors present a new application of the design structure matrix, a project management tool that maps the flow of information and its impact on product development. Drawing on research into how Pratt & Whitney handled the development of the PW4098 jet engine, they have developed an approach that uncovers (a) areas where communication should be occurring but is not (unattended interfaces, usually bad) and (b) areas where communication is occurring but has not been planned for (unidentified interfaces, usually good). After finding the unattended and unidentified interfaces, the next step is to figure out the causes of the critical ones. If a significant number of unattended interfaces cross organizational boundaries, executives may need to redraw organizational lines. Executives can then manage the remaining critical interfaces by extending the responsibilities of existing integration teams (those responsible for cross-system aspects, such as a jet engine's fuel economy) to include supervising the interaction, by dedicating teams to specific interfaces, or by formally charging teams already involved with the interfaces to oversee them. Finally, it's important to ensure that the teams are working with compatible design equipment; inconsistencies between CAD tools have cost Airbus dearly.

Castlebridge & Company, a maker of high-quality outerwear, is a century-old British institution. Its headquarters remain in London, but most of its manufacturing has moved offshore. With the last domestic factory slated to close, the firm's executives struggle to preserve the "Britishness" of the brand. For historian Niall Ferguson, the plant closure is a logical step. The British public has been down this road, as have foreign consumers of British products. The real risk to the brand, Ferguson asserts, is the potential loss of its high-class cachet--not its national identity. Fashion reporter Dana Thomas argues that by broadening their markets beyond the super wealthy, luxury brands have made themselves vulnerable to economic fluctuations. Cutting costs by moving production offshore is inevitable, so Castlebridge should, with characteristic British candor, come clean about it. If the firm shines light on its native roots and its international production, it could establish a winning reputation as a truly modern, global brand. Dov Seidman, CEO of LRN, takes issue with how Castlebridge has gone about the shift to offshore production. In a world where reputation matters more than ever, the firm can't just outperform competitors. It must "outbehave" them, by keeping its promises and acting in a principled manner. Seidman advises the company to rediscover and recommit to the core values that have brought it this far. Writer and consultant Gill Corkindale looks inside Castlebridge, focusing on the staff that will stay on as the company restructures. She recommends a trust-building people strategy, modeled by the CEO, which emphasizes forthright communication from management, as well as genuine solicitation of, and response to, the opinions of employees.

Castlebridge & Company, a maker of high-quality outerwear, is a century-old British institution. Its headquarters remain in London, but most of its manufacturing has moved offshore. With the last domestic factory slated to close, the firm's executives struggle to preserve the "Britishness" of the brand. For historian Niall Ferguson, the plant closure is a logical step. The British public has been down this road, as have foreign consumers of British products. The real risk to the brand, Ferguson asserts, is the potential loss of its high-class cachet--not its national identity. Fashion reporter Dana Thomas argues that by broadening their markets beyond the super wealthy, luxury brands have made themselves vulnerable to economic fluctuations. Cutting costs by moving production offshore is inevitable, so Castlebridge should, with characteristic British candor, come clean about it. If the firm shines light on its native roots and its international production, it could establish a winning reputation as a truly modern, global brand. Dov Seidman, CEO of LRN, takes issue with how Castlebridge has gone about the shift to offshore production. In a world where reputation matters more than ever, the firm can't just outperform competitors. It must "outbehave" them, by keeping its promises and acting in a principled manner. Seidman advises the company to rediscover and recommit to the core values that have brought it this far. Writer and consultant Gill Corkindale looks inside Castlebridge, focusing on the staff that will stay on as the company restructures. She recommends a trust-building people strategy, modeled by the CEO, which emphasizes forthright communication from management, as well as genuine solicitation of, and response to, the opinions of employees.

Supplements the (A) case.

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South Korea, as one of the Asian "tiger" economies, transformed itself into the world's 11th largest economy and major exporter by 1996, emerging from being one of the lowest income countries in the region back in the 1960s. Yet one year later in 1997, Korea was swept up in the Asian financial crisis and sought a record $58 billion bailout from the International Monetary Fund. The crisis exposed fundamental weaknesses in the Korean economy, from bad loans to reckless growth policies pursued by large conglomerates. Sweeping reforms took place and the Korean economy rebounded quickly. Yet as Korea approached the 10-year anniversary of the crisis, the nation found itself pondering whether it had implemented enough institutional and structural reforms, or whether more had to be done, such as searching for a new economic development model to ensure its future.

The case puts the students in the role of a member of a management team trying to create a strategy map and balanced scorecard, in an attempt to ensure alignment of strategic objectives and how to reach them.

The electric guitar market is both enticing and daunting for a small company - a multi-billion $US sector that has grown almost constantly since the 1960s, but where competition is based as much on image as on substance. The market is naturally fragmented (similar to the market for many musical instruments), yet dominant players make entry and sustenance difficult. While Asian producers or branded imports dominate the low and mid-priced market, collectors and serious players seek high-end branded or handmade instruments that can be resold with only minor loss, if any. To augment collector value, high-end guitar manufacturers constantly modify components, making short-run series with unique features (often specified by "name" musicians and sold under their signature). For established brands, vintage instruments, and handmade instruments, used guitars may sell for their original purchase price or surprising multiples thereof; the value of some pieces increases after only ten years. From this standpoint, experienced buyers can make essentially risk-free purchases. The case tells the story of Joe Naylor, the owner-manager of Reverend Guitars, a small company that made a startling impact on the electric guitar market with a clever use of innovative products, innovative marketing and innovative use of the internet to a) leverage an existing community and b) build a new one.

A team led by Vivienne Cox, Executive Vice President for Gas, Power, and Renewables, identifies and launches a new business, BP Alternative Energy. Investing on this scale in a "green" power business was a radical departure for BP.It illustrates how Cox guided the emergence of a vision for AE, got key stakeholders on board and set in place conditions for a highly motivated team.

The case examines how the best practices of two banks were organized and managed to provide financial services to a small niche of foreign customers in the mining, tourism and construction sectors in Tanzania. The two banks claimed to be similar in many ways. They both were from countries whose economies were run broadly on neo-liberal lines, in that there was little state intervention in either economy, however, differences existed with respect to how they managed their operations. The case is ideally suited to illustrate the on-going tension and different types of best practices in cross-market integration. It provides opportunities to explore the challenges faced by multinational company banks in managing global workforces, the evolution of the banking sector, and the influence of technology in shaping work in organizations.

Terminating employees is one of the most unpleasant, yet necessary, responsibilities managers have to carry out. The Wall Street Journal has reported that firing someone is one of three situations that make company presidents most uneasy. Due to a number of factors including anxiety, lack of preparation and ingrained social norms, terminations are often botched, putting companies at risk for low employee morale, negative PR, and lawsuits, among other undesirable outcomes. The ideal course of action is to prevent a termination in the first place through a combination of effective hiring, communication, coaching and management. Yet, after all other reasonable options have been exhausted, retaining a "problem employee" may be the only action worse than firing him. Keeping such an individual on staff allows substandard results or harmful behavior to continue and simultaneously sends the message to the rest of the organization that the company tolerates under-performance. As a result, the best course of action in these situations is to carefully prepare for a termination and then conduct it swiftly and respectfully. After an employee has been fired, proactively informing those with a need to know and filling the vacant position as soon as possible minimizes disruption to the organization. When a termination is properly handled, companies often resume normal business operations with very little tumult.

Introduces students to the technique of relative cost analysis, a core technique of strategists. Among the intricate quantitative analyses that strategists undertake, relative cost analysis may be the most common. The goal of a relative cost analysis is simply to estimate how a company's costs compare to a rival's. Companies examine relative costs for a host of reasons: to anticipate how a rival is likely to react to a price change; to predict how a price war may evolve; to test whether a cost advantage it believes it has is real and sustainable; to decide how low a company must bid in order to win a competitive contract from a rival; to identify opportunities for internal cost reduction; to estimate, in the context of an acquisition, how much the costs of an acquired company might be reduced and what a reasonable price might be for the company; and so forth.