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By the time Merck withdrew its pain relief drug Vioxx from the market in 2004, more than 100 million prescriptions had been filled in the United States alone. Yet researchers now estimate that Vioxx may have been associated with as many as 25,000 heart attacks and strokes. Evidence of the drug's risks was available as early as 2000, so why did so many doctors keep prescribing it? The answer, say the authors, involves the phenomenon of bounded awareness--when cognitive blinders prevent a person from seeing, seeking, using, or sharing highly relevant, easily accessible, and readily perceivable information during the decision-making process. Doctors prescribing Vioxx, for instance, more often than not received positive feedback from patients. So, despite having access to information about the risks, physicians may have been blinded to the actual extent of the risks. Bounded awareness can occur at three points in the decision-making process. First, executives may fail to see or seek out the important information needed to make a sound decision. Second, they may fail to use the information that they do see because they aren't aware of its relevance. Third, executives may fail to share information with others, thereby bounding the organization's awareness. Drawing on examples such as the Challenger disaster and Citibank's failures in Japan, this article examines what prevents executives from seeing what's right in front of them and offers advice on how to increase awareness. Of course, not every decision requires executives to consciously broaden their focus. Collecting too much information for every decision would waste time and other valuable resources. The key is being mindful. If executives think an error could generate almost irrecoverable damage, then they should insist on getting all the information they need to make a wise decision.

We all know the power of the killer app. It's not just a support tool; it's a strategic weapon. Companies questing for killer apps generally focus all their firepower on the one area that promises to create the greatest competitive advantage. But a new breed of organization has upped the stakes: Amazon, Harrah's, Capital One, and the Boston Red Sox have all dominated their fields by deploying industrial-strength analytics across a wide variety of activities. At a time when firms in many industries offer similar products and use comparable technologies, business processes are among the few remaining points of differentiation-and analytics competitors wring every last drop of value from those processes. Employees hired for their expertise with numbers or trained to recognize their importance are armed with the best evidence and the best quantitative tools. As a result, they make the best decisions. In companies that compete on analytics, senior executives make it clear-from the top down-that analytics is central to strategy. Such organizations launch multiple initiatives involving complex data and statistical analysis, and quantitative activity is managed at the enterprise (not departmental) level. In this article, professor Thomas H. Davenport lays out the characteristics and practices of these statistical masters and describes some of the very substantial changes other companies must undergo in order to compete on quantitative turf. As one would expect, the transformation requires a significant investment in technology, the accumulation of massive stores of data, and the formulation of companywide strategies for managing the data. But, at least as important, it also requires executives' vocal, unswerving commitment and willingness to change the way employees think, work, and are treated.

The single greatest cause of corporate underperformance is the failure to execute. According to author Ram Charan, such failures usually result from misfires in personal interactions. And these faulty interactions rarely occur in isolation, Charan says in this article originally published in 2001. More often than not, they're typical of the way large and small decisions are made (or not made) throughout an organization. The inability to take decisive action is rooted in a company's culture. Leaders create this culture of indecisiveness, Charan says--and they can break it by doing three things: First, they must engender intellectual honesty in the connections between people. Second, they must see to it that the organization's social operating mechanisms--the meetings, reviews, and other situations through which people in the corporation transact business--have honest dialogue at their cores. And third, leaders must ensure that feedback and follow-through are used to reward high achievers, coach those who are struggling, and discourage those whose behaviors are blocking the organization's progress. By taking these three approaches and using every encounter as an opportunity to model open and honest dialogue, leaders can set the tone for an organization, moving it from paralysis to action.

Bad decisions can often be traced back to the way the decisions were made-the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighed. But sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage the choices we make. In this article, first published in 1998, John Hammond, Ralph Keeney, and Howard Raiffa examine eight psychological traps that can affect the way we make business decisions. The anchoring trap leads us to give disproportionate weight to the first information we receive. The status quo trap biases us toward maintaining the current situation-even when better alternatives exist. The sunk-cost trap inclines us to perpetuate the mistakes of the past. The confirming-evidence trap leads us to seek out information supporting an existing predilection and to discount opposing information. The framing trap occurs when we misstate a problem, undermining the entire decision-making process. The overconfidence trap makes us overestimate the accuracy of our forecasts. The prudence trap leads us to be overcautious when we make estimates about uncertain events. And the recallability trap prompts us to give undue weight to recent, dramatic events. The best way to avoid all the traps is awareness-forewarned is forearmed. But executives can also take other simple steps to protect themselves and their organizations from these mental lapses. The authors describe what managers can do to ensure that their important business decisions are sound and reliable.

Nutrorim's products have been gaining national attention. In particular, sales of the company's organic, performance-enhancing sports supplement powder, ChargeUp, have gone through the roof. Now the new and improved version, called ChargeUp with Lipitrene, has recently hit the market, and expectations are high. CEO Don Rifkin has tried hard to build an inclusive, democratic culture at this successful company. But the organization's open decision-making process has proved problematic, especially during times of conflict and crisis--and a crisis there is. Several months after ChargeUp with Lipitrene is initially released, an investigator from the Minnesota state department of health calls Rifkin to report "11 cases of gastrointestinal distress" among those using the supplement. Nutrorim's top executives must now decide whether to recall the product. The head of R&D, Steve Ford, insists there is nothing wrong with the new ChargeUp, citing elaborate toxicity studies in animals and humans. Meanwhile, the heads of PR and legal want to stem any negative publicity by recalling the product and issuing a press release to that effect. The company decides to recall the supplement--but, two weeks later, the health department investigator calls back with good news: The people who had become ill, it turns out, had actually picked up a bug from their gym's smoothie bar. In other words, Nutrorim is exonerated. But the close call prompts Nutrorim to bring in a consultant to review the company's methods for making decisions. Among the many questions he's asking is, What's the right decision-making process for Nutrorim? Commenting on this fictional case study in R0601A and R0601Z are Christopher J. McCormick, the president and CEO of L.L. Bean; Hauke Moje, a partner at Roland Berger Strategy Consultants; Ralph Biggadike, a professor of professional practice at Columbia Business School; and Paul Domorski, the vice-president of service operations at Avaya.

Nutrorim's products have been gaining national attention. In particular, sales of the company's organic, performance-enhancing sports supplement powder, ChargeUp, have gone through the roof. Now the new and improved version, called ChargeUp with Lipitrene, has recently hit the market, and expectations are high. CEO Don Rifkin has tried hard to build an inclusive, democratic culture at this successful company. But the organization's open decision-making process has proved problematic, especially during times of conflict and crisis--and a crisis there is. Several months after ChargeUp with Lipitrene is initially released, an investigator from the Minnesota state department of health calls Rifkin to report "11 cases of gastrointestinal distress" among those using the supplement. Nutrorim's top executives must now decide whether to recall the product. The head of R&D, Steve Ford, insists there is nothing wrong with the new ChargeUp, citing elaborate toxicity studies in animals and humans. Meanwhile, the heads of PR and legal want to stem any negative publicity by recalling the product and issuing a press release to that effect. The company decides to recall the supplement--but, two weeks later, the health department investigator calls back with good news: The people who had become ill, it turns out, had actually picked up a bug from their gym's smoothie bar. In other words, Nutrorim is exonerated. But the close call prompts Nutrorim to bring in a consultant to review the company's methods for making decisions. Among the many questions he's asking is, What's the right decision-making process for Nutrorim? Commenting on this fictional case study in R0601A and R0601Z are Christopher J. McCormick, the president and CEO of L.L. Bean; Hauke Moje, a partner at Roland Berger Strategy Consultants; Ralph Biggadike, a professor of professional practice at Columbia Business School; and Paul Domorski, the vice-president of service operations at Avaya.

Infosys Technologies Ltd. provides a full range of IT and consulting services. One of Infosys' major customers is Prairie Four Square Insurance (PFS). PFS maintains extensive and mission critical IT systems across the United States. Relentless pressure from Wall Street to cut costs dramatically prompted the PFS senior management to outsource offshore portions of its IT maintenance activities. A PFS "white paper" had indicated that the purchasing department was one area where IT could make significant contributions in lowering operating costs. PFS managers decided to forego their traditional "best of breed" approach to outsourcing in favor of a pilot test of single sourcing. Thus, PFS managers bundled all activities related to procurement process re-engineering, vendor selection, Ariba software customization, system installation and maintenance into a single project. PFS managers narrowed candidates for the project down to two consulting firms (i.e. Excalibur and Merrimac) plus Infosys. A win for Infosys would enable it to not only grow its share of PFS business but also expand the scope of its market offerings. Successful completion of the project, in turn, would increase the likelihood that PFS would turn to Infosys for other end-to-end IT solutions.

Chronicles a day in the life of a Royal Corp. salesperson, Mary Jones, part of the Royal Reproduction Center (RRC) division. The RRC division specializes in high-quality turnaround copying and printing services. Division salespeople are responsible for selling copying/printing services, the Royal 750 color copier, and the Corporate Copy Center (CCC) concept, which involves equipping a client company with a staff and copiers to operate an on-premise reproduction operation. Focuses on Jones' difficulty in selling the CCC concept. Presents the daily sales activities of a business-to-business salesperson and the buyer behavior process of two different types of services (CCC and printing) and a product (color copier). Also reveals the difficulty of selling a new concept, typical problems that salespeople encounter, and the importance of understanding buyer behavior and the purchase process of a new product.

Lenta is a cash and carry retail business located in St. Petersburg, Russia. At the time of the case, it was operating nine stores and generating over $500 million in gross sales. The case is set at the end of 2005, after a very successful year. Lenta's founder and CEO, Oleg Zherebtsov, is faced with a dilemma: Where does he take Lenta from here?

Andres Galindo is a young Colombian from an upper-middle class family in Bogota. With his brother Carlos serving as the sole importer in the country for the top American brand Electra Sportswear, Andres sets out to create a chain of retail stores located in high-end shopping districts. Understanding that his legally imported goods were at a dramatic cost disadvantage to openly marketed illegally imported brands and counterfeit labels (due to a 40% to 120% tariff), Andres decided to approach the problem as a retailing and marketing challenge by adding value through the retail sales process. By 2005, Andres has 14 stores and a new challenge: Electra has decided to cut out the middle man--Carlos--and have Andres import the product directly. This ought to lower margins, but it's a big step. Most important, though, is crafting a growth strategy for his company in the face of unfair competition and a relatively small target population.

This technical note provides an introduction to corporate branding, including a brief history, a discussion of differences between corporate and product branding, and some strategic implications for how corporate branding is used.

This technical note provides an introduction to corporate communication, including a discussion of recent trends.

Spreadsheet for case UV6187

Provides an overview of the Coca-Cola System in Chile and focuses on the Coca-Cola Chile Foundation (CCFCH), a nonprofit organization dedicated to education. Created in 1992 with donations from Coca-Cola de Chile S.A. (CCCH) and the bottling companies Embotelladora Andina S.A., Coca-Cola Embonor S.A., and Coca-Cola Polar S.A., the foundation now faces an expansion dilemma in its most important program, the TAVEC Laboratories. Under this program, CCFCH donated interactive scientific laboratories to public schools as a way to help them teach physics, chemistry, and biology. Each donation cost approximately $60,000. In December 2004, Eduardo Romo, corporate relations manager of CCCH and general manager of CCFCH, was reviewing a proposal to simplify the laboratories, reducing their cost and, thus, allowing more of them to be implemented in schools throughout Chile. Focuses on this decision and an analysis of the pros and cons of the proposal and the overall role of the social initiative for the Coca-Cola System in Chile.

A search fund is a pool of capital raised to financially support the efforts of an entrepreneur, or a team of entrepreneurs, to locate a privately held company for acquisition. This study, as well as its predecessors in 1996, 1998, 2001, and 2003, portrays the aggregate profile of search funds and the entrepreneurs who formed them, and evaluates the investment returns generated by first-time search funds to their original investors. Together, these studies reflect changes in the characteristics of search fund entrepreneurs and the performance of their funds over time.

The development of Shanghai Me Mechanical and Electrical Equipment Chain Co. Ltd. (SHMEC) mirrored the agony and frustration experienced by many other small and medium-size enterprises operating during China's socioeconomic transformation process, particularly as it faced the challenge brought about by information technology. Details the establishment of Me-online, providing insight into how a traditional Chinese company effected strategic changes through e-business and opportunities and challenges.

Spreadsheet Supplement for case 206076.

A large restaurant chain undergoes a leveraged buyout and subsequent recapitalization. Financial and operating problems at the company force it to consider various restructuring options, including a prepackaged Chapter 11 exchange offer to its public bondholders. Two investment bankers hired by senior and junior creditors present competing company valuations to the bankruptcy court that differ by $700 million.

Julie Brighton had done some secondary research to determine the market size for her new charcoal starter, a product she hoped would be the basis for starting a small company with her friend Jim Henly. First, however, she needed to forecast how many charcoal starters she could sell in California in her first year.

Student spreadsheet to case UV2530