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Highlights the key role of selecting creative in brand communications, the challenges of building a brand in a turbulent cultural environment, the challenges of extending an advertising campaign, and the interpretation of ads as a crucial senior management skill. Includes color exhibits.

When tasks are highly complex, demand a diversity of skills, or require a commitment from the involved parties, teams are usually the most effective way to approach them. But a group of people working together does not automatically equally a team, and groups are often inefficient and ineffective. Provides detailed information on team development, team management, and team process. Also suggests specific interventions that any team member can make to improve decision making and participation, as well as ways to influence dynamics and resolve conflicts.

Brigitte Gagne, Le Petit Chef's director of microwave R&D, is deciding on the product development agenda for next year. She has to decide which of the available projects to fund, and evaluate the overall portfolio of projects currently under development. The recent poor performance of the firm prompts Gagne to think about reassessing the way projects are generated, evaluated, and selected at Le Petit Chef. However, Gagne has a pressing deadline to meet--the executive team is due to review the next year's agenda at a meeting in Paris tomorrow.

Provident Life & Accident Insurance Co. has made an initial bid to acquire a primary competitor, Paul Revere, from conglomerate, Textron. The due diligence process uncovers a significant block of problematic disability insurance policies. Provident is forced to assess the negative impact of this discovery on its initial valuation and revise its bid. In the process, the divergent views of the evolution of these policies by the bidder and seller have to be translated through discounted cash flow analysis into appropriate bid prices. Finally, this DCF analysis, in combination with multiples analysis, is used in negotiations with Textron and public shareholders.

Spreadsheet supplement for case 602080.

Spreadsheet Supplement for case 202044

The MinderSoft case explores the entrepreneur's attempt to raise a first round of venture capital. The founder and venture fund's valuation differ by a large amount. The founder must decide whether to accept this offer or search further. The case is designed to help students compare frequently used valuation frameworks including the venture capital method and discounted case flow methods.

During his first three years as CEO, Lloyd Byrne transformed Bretplex from an uninspired family-controlled company in the machine tool business into a midsize industrial conglomerate. Sales doubled, market value tripled, the company's management team grew stronger, and the board's makeup was enhanced by the appointment of several glamorous nonexecutive directors. After that strong beginning, however, Bretplex's previously unstoppable growth ground to a halt. The turning point was the company's acquisition of Hazlemere Measures, a British equipment manufacturer. The price of the acquisition had been bid up by an aggressive competitor, and the market believed Bretplex paid too much. Soon, other acquisitions were being examined. Worse, the company began missing its revenue estimates and revised them downward only as reporting dates drew near. More uncertainty emerged when Laura Barrington, the manager of an activist shareholder fund, began asking whether Lloyd had what it would take to lead the company to recovery. Board members Harriet Poole, a CEO herself, and Jefferson Souza, a strategy guru, debate solutions for Bretplex. If the company fires Lloyd, Jefferson says, the market will think the company is serious about getting its house in order, and Barrington and the fund will probably back off. Harriet, distracted by events at her own company, fears that it will be highly disruptive for Bretplex to lose its much-admired leader and, possibly, some of its senior managers. She is inclined to stick with a restructuring plan just approved by the board.

The Himalayas are one of nature's most demanding classrooms, but they can teach us important principles about taking charge of our followers--and our own egos. In this article, Wharton professor Michael Useem recounts the experiences of MBA graduates and midcareer executives who took part in a leadership program on the lower slopes of Mount Everest. Conceived to heighten participants' appreciation of what leadership is all about, the program transforms abstract concepts into practice: Not only do people learn from the historical expeditions of others, they also gain insights from their own unfolding experiences. Through hiking some 80 miles over rough terrain, the participants learned about their own limitations--one CEO grappled with the decision to turn back when others feared the altitude had become too much for him--and about the value of communication: what to do when several team members are unaccounted for as night falls. The team also learned from those they met along the path to Everest's base camp. They benefited from rare encounters, such as a private audience with the reincarnate lama, the spiritual leader for the region's largely Buddhist population, and a discussion with a passing hiker who had been part of the harrowing Everest expedition described in the best-seller Into Thin Air. During the journey, four essential principles emerged: Leaders should be led by the group's needs; inaction can sometimes be the most difficult--but wisest--action; if your words don't stick, you haven't spoken; and leading upward can feel wrong even when it's right. Through compelling stories of the trekkers' triumphs and miscalculations, the author sheds new light on several central management principles.

To move forward, society needs geniuses--those rare individuals whose flashes of insight and imagination change the way we live and see the world. Traditionally, we look for them in the arts and sciences, but geniuses appear in many guises. They can be engineers, designers, analysts, and even managers. Yet for all their creative energy, geniuses don't always make the best employees, colleagues, or bosses. They are notoriously prickly people, and they can be fiercely individualistic. Moreover, they can be surprisingly fragile. They frequently act with flamboyance, but inside they are deeply vulnerable. To understand how a manager might approach the challenges of genius, HBR senior editor Diane L. Coutu recently talked with choreographer and dancer Mark Morris. A MacArthur Fellowship winner, Morris has created some of modern dance's most enduring works, and his dance group is widely considered to be the most exciting company in the business. Morris' work with live music requires that he manage the genius of sopranos and virtuoso conductors who collaborate with his dance troupe. That makes him uniquely suited to discuss the realities of living with genius--from the inside as well as the outside. In this article, Morris discusses the roots of creativity, the truth about prima donnas, the dangers of living with mediocrity, and his drive toward authenticity. He also offers his candid opinion on geniuses: "These people are up against their own egos; that's why they're so delicate or flamboyant or insecure. Those qualities all amount to the same thing: vulnerability." To work with people effectively, he says, you must be completely honest: "Real artists or geniuses...especially need the truth. They're not fooled by false praise and empty encouragement."

If leadership, at its most basic, consists of getting things done through others, then persuasion is one of the leader's essential tools. Many executives have assumed that this tool is beyond their grasp, available only to the charismatic and the eloquent. Over the past several decades, though, experimental psychologists have learned which methods reliably lead people to concede, comply, or change. Their research shows that persuasion is governed by several principles that can be taught and applied. The first principle is that people are more likely to follow someone who is similar to them than someone who is not. Wise managers, then, enlist peers to help make their cases. Second, people are more willing to cooperate with those who are not only like them but who like them, as well. So it's worth the time to uncover real similarities and offer genuine praise. Third, experiments confirm the intuitive truth that people tend to treat you the way you treat them. It's sound policy to do a favor before seeking one. Fourth, individuals are more likely to keep promises they make voluntarily and explicitly. The message for managers here is to get commitments in writing. Fifth, studies show that people really do defer to experts. So before they attempt to exert influence, executives should take pains to establish their own expertise and not assume that it's self-evident. Finally, people want more of a commodity when it's scarce; it follows, then, that exclusive information is more persuasive than widely available data. By mastering these principles--and, the author stresses, using them judiciously and ethically--executives can learn the elusive art of capturing an audience, swaying the undecided, and converting the opposition.

In the past decade, marketing gurus have called for customer care, customer focus, even--shudder--customer centricity. But according to marketing professor Stephen Brown, the customer craze has gone too far. In this article, he makes the case for "retromarketing"--a return to the days when marketing succeeded by tormenting customers rather than pandering to them. Using vivid examples, Brown shows that many recent consumer marketing coups have decidedly not been customer driven. They've relied instead on five basic retromarketing principles: First, exclusivity. Retromarketing eschews the modern marketing proposition of "Here it is, there's plenty for everyone" by holding back supplies and delaying gratification. You want it? Can't have it. Try again later, pal. Second, secrecy. Whereas modern marketing is up-front and transparent, retromarketing revels in mystery, intrigue, and covert operations. (Consider the classic "secret" recipes that have helped to purvey all sorts of comestibles.) The key is to make sure the existence of a secret is never kept secret. Third, amplification. In a world of incessant commercial chatter, amplification is vital, and it can be induced in many ways, from mystery to affront to surprise. Fourth, entertainment. Marketing must divert, engage, and amuse. The lack of entertainment is modern marketing's greatest failure. Fifth, tricksterism. Customers love to be teased. The tricks don't have to be elaborate to be effective; they can come cheap. But the rewards can be great if the brand is embraced, even briefly, by the in crowd. Managers may be dismayed by the thought of deliberately thwarting consumers. But if marketers were really customer oriented, they'd give their customers what they want: old-style, gratuitously provocative marketing.

At some point, many managers yearn to confront assumptions, practices, or values in their organizations that they feel are counterproductive or even downright wrong. Yet, they can face an uncomfortable dilemma: If they speak out too loudly, resentment may build toward them; if they remain silent, resentment will build inside them. Is there any way, then, to rock the boat without falling out of it? In 15 years of research, professor Debra Meyerson has observed hundreds of professionals who have dealt with this problem by working behind the scenes, engaging in a subtle form of grassroots leadership. She calls them "tempered radicals" because they effect significant changes in moderate ways. Meyerson has identified four incremental approaches that managers can quietly use to create lasting cultural change. Most subtle is "disruptive self-expression" in dress, office decor, or behavior, which can slowly change an unproductive atmosphere as people increasingly notice and emulate it. By using "verbal jujitsu," an individual can redirect the force of an insensitive statement or action to improve the situation. "Variable-term opportunists" spot, create, and capitalize on short- and long-term chances for change. And through "strategic alliance building," an individual can join with others to promote change with more force. By adjusting these approaches to time and circumstance, tempered radicals work subtly but effectively to alter the status quo. In so doing, they exercise a form of leadership that is more modest and less visible than traditional forms--yet no less significant. Top managers who want to create cultural or organizational change--perhaps they're moving tradition-bound businesses down new roads--should seek out these tempered radicals, for they are masters at transforming organizations from the grass roots.

Companies have traditionally viewed their information systems as proprietary. They buy or lease their own hardware, write or license their own applications, and hire big staffs to keep everything running. This approach has many flaws--it's cumbersome and expensive and hinders collaboration. But there's been no alternative. Until now. Today, we're seeing the emergence of an entirely new approach to corporate information systems: web services. Rather than own and maintain all of their own hardware and software, companies will soon buy their information technologies as services provided over the Internet. The authors guide executives through this new IT strategy, explaining what the web services architecture is, how it differs from traditional IT architecture, and why it will provide significant cost savings to businesses while creating new opportunities for growth. They lay out a step-by-step approach for adopting the new architecture. The experiences of companies such as Merrill Lynch, General Motors, and Dell Computer, which are already transitioning to the new architecture, offer three guidelines. First, build on your existing systems, connecting them to the web services architecture to gain immediate benefits. Second, start at the edges of your company, focusing on those applications that connect your organization to customers or other companies. Third, work with your partners to develop a shared terminology for your shared applications, coming to agreement, for example, on the precise meanings of XML terms. As the new architecture matures, the distinction between users and suppliers of web services will fade. The location of particular capabilities and applications will become less important than executives' ability to discover and orchestrate these capabilities to deliver greater value to customers.

Few companies can boast a collection of star brands like LVMH Moet Hennessy Louis Vuitton, the French powerhouse that owns the likes of Dior, Dom Perignon, and TAG Heuer. What accounts for the company's spectacular success? In a rare interview, the chairman of LVMH, Bernard Arnault, opens the window on that question with HBR editor Suzy Wetlaufer. Arnault identifies how companies build star brands and describes the process LVMH uses to create its wildly innovative products. First, the luxury goods giant begins with radical innovation--an unpredictable, messy, highly emotional activity that the company wholly endorses. Unlike many companies, LVMH does not believe in managerial limit setting. Artists must be completely unfettered by financial and commercial concerns, Arnault insists, to do their best work. When it comes to getting that creativity onto the shelves, however, LVMH banishes such chaos. The company imposes strict discipline on its manufacturing processes, meticulously planning, for instance, all 1,000 tasks in the construction of one purse. Through near-draconian manufacturing disciplines, the company is able to achieve exceptionally high productivity, rivaling even some of today's most technologically advanced factories. The bottom line is that LVMH has one goal: star brands. According to Arnault, star brands are born only when a company manages to make products that "speak to the ages" but feel intensely modern. Such products sell fast and furiously, all the while raking in profits. As Arnault notes dryly, "Mastering the paradox of star brands is very difficult and rare--fortunately."

Cardiac surgery is one of medicine's modern miracles. In an operating room no larger than many household kitchens, a patient is rendered functionally dead while a surgical team repairs or replaces damaged arteries or valves. Each operation requires incredible teamwork--a single error can have disastrous consequences. In other words, surgical teams are not all that different from the cross-functional teams that have become crucial to business success. The challenge of team management these days is not simply to execute existing processes efficiently. It's to implement new processes as quickly as possible. But adopting new technologies or new business processes is highly disruptive, regardless of the industry. The authors studied how surgical teams at 16 major medical centers implemented a difficult new procedure for performing cardiac surgery. The setting was ideal for rigorously focusing on how teams learn and why some learn faster than others. The authors found that the most successful teams had leaders who actively managed the groups' learning efforts. Teams that most successfully implemented the new technology shared three essential characteristics. They were designed for learning; their leaders framed the challenge so that team members were highly motivated to learn; and an environment of psychological safety fostered communication and innovation. The finding that teams learn more quickly if they are explicitly managed for learning poses a challenge in many areas of business. Team leaders in business tend to be chosen more for their technical expertise than for their management skills. Team leaders need to become adept at creating learning environments, and senior managers need to look beyond technical competence and identify leaders who can motivate and manage teams of disparate specialists.

Consumers are regularly blitzed with thousands of marketing messages--television commercials, telephone solicitations, supermarket circulars, and Internet banner ads. Still, a lot of these messages fail to hit their targets or elicit the desired response: the purchase of a product or service. It has been very difficult for companies to isolate what drives consumer behavior, largely because there are so many possible combinations of stimuli. In this article, consultants Eric Almquist and Gordon Wyner explain that although marketing has always been a creative endeavor, adopting a scientific approach to it may actually make it easier--and more cost effective--for companies to target the right customers. "Experimental design" techniques, which have long been applied in other fields, let people project the impact of many stimuli by testing just a few of them. By using mathematical formulas to select and test a subset of combinations of variables, marketers can model hundreds or even thousands of marketing messages accurately and efficiently--and they can adjust their messages accordingly. The authors use a fictional company, Biz Ware, to describe how companies can map out on a grid a combination of the attributes (or variables) of a marketing message and the levels (or variations) of those attributes. Marketers can test a few combinations of those attributes and levels and can apply logistic regression analysis to extrapolate the probable customer responses to all of the possible combinations. The company can then analyze the experiment's implications for its resources, revenues, and profitability. The authors also present the results of their work with Crayola, in which they used experimental design techniques to test that company's e-mail marketing campaign.

During his first three years as CEO, Lloyd Byrne transformed Bretplex from an uninspired family-controlled company in the machine tool business into a midsize industrial conglomerate. Sales doubled, market value tripled, the company's management team grew stronger, and the board's makeup was enhanced by the appointment of several glamorous nonexecutive directors. After that strong beginning, however, Bretplex's previously unstoppable growth ground to a halt. The turning point was the company's acquisition of Hazlemere Measures, a British equipment manufacturer. The price of the acquisition had been bid up by an aggressive competitor, and the market believed Bretplex paid too much. Soon, other acquisitions were being examined. Worse, the company began missing its revenue estimates and revised them downward only as reporting dates drew near. More uncertainty emerged when Laura Barrington, the manager of an activist shareholder fund, began asking whether Lloyd had what it would take to lead the company to recovery. Board members Harriet Poole, a CEO herself, and Jefferson Souza, a strategy guru, debate solutions for Bretplex. If the company fires Lloyd, Jefferson says, the market will think the company is serious about getting its house in order, and Barrington and the fund will probably back off. Harriet, distracted by events at her own company, fears that it will be highly disruptive for Bretplex to lose its much-admired leader and, possibly, some of its senior managers. She is inclined to stick with a restructuring plan just approved by the board. In R0109A and R0109Z, commentators Norm Augustine, Charles Elson, Richard H. Koppes, and Nell Minow offer advice on this fictional case study.

During his first three years as CEO, Lloyd Byrne transformed Bretplex from an uninspired family-controlled company in the machine tool business into a midsize industrial conglomerate. Sales doubled, market value tripled, the company's management team grew stronger, and the board's makeup was enhanced by the appointment of several glamorous nonexecutive directors. After that strong beginning, however, Bretplex's previously unstoppable growth ground to a halt. The turning point was the company's acquisition of Hazlemere Measures, a British equipment manufacturer. The price of the acquisition had been bid up by an aggressive competitor, and the market believed Bretplex paid too much. Soon, other acquisitions were being examined. Worse, the company began missing its revenue estimates and revised them downward only as reporting dates drew near. More uncertainty emerged when Laura Barrington, the manager of an activist shareholder fund, began asking whether Lloyd had what it would take to lead the company to recovery. Board members Harriet Poole, a CEO herself, and Jefferson Souza, a strategy guru, debate solutions for Bretplex. If the company fires Lloyd, Jefferson says, the market will think the company is serious about getting its house in order, and Barrington and the fund will probably back off. Harriet, distracted by events at her own company, fears that it will be highly disruptive for Bretplex to lose its much-admired leader and, possibly, some of its senior managers. She is inclined to stick with a restructuring plan just approved by the board. In R0109A and R0109Z, commentators Norm Augustine, Charles Elson, Richard H. Koppes, and Nell Minow offer advice on this fictional case study.

This is an MIT Sloan Management Review article. Partnering with outsiders to speed innovation is increasingly the norm among high-tech companies. Then why are so many organizations still struggling to make such efforts work? The answer, say MIT Sloan School professor of management Edward B. Roberts and management consultant Wenyun Kathy Liu, is that all too often companies choose collaborative strategies without first considering what stage in the technology life cycle a given technology has entered--and which type of partnership is suited best to that stage. There are four phases in the life cycle of a technology (the fluid, the transitional, the mature, and the discontinuities), and, depending on where a particular technology is at the moment, only certain external partnerships facilitate speedy development. That reality presents a challenge for managers: Each product a company is juggling may be in a different phase, and because the partnerships developed for one phase of one technology could eventually serve a different purpose in another phase of another technology, all partnerships must be handled with care. Companies are more inclined to form alliances as the technology becomes better defined and as competitive pressure increases. In broadening past research (on the technology life cycle's effect on internal product development) to encompass the externally focused technology life cycle, the authors also have underscored the growing complexity of achieving business success. The implication for management in high-tech industries is that leaders need to excel at multitasking, thinking laterally, thinking creatively, and networking with individuals in various related industries. But all that starts with understanding the technology life cycle and what it means for outsourcing innovation.