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VerticalNet, a leading creator of targeted business-to-business vertical trade communities on the Internet, is trying to expand its model to facilitate e-commerce. Mark Walsh, the CEO of VerticalNet, has to decide how far he can extend the firm's business model without negatively affecting his current franchise.

Online broker DLJdirect faced two decisions during the fall of 1999: what customer segments should it target and how much should it spend on marketing? Unlike its competitors, who focused either on day traders or more mainstream investors, DLJdirect differentiated its service to meet the needs of self-directed, sophisticated, high net worth investors. But was DLJdirect forfeiting profits by not pursuing day traders? In the coming year, the ten largest online brokers were projected to spend $1.5 billion on marketing; E*Trade would lead the pack with a $300 million budget. DLJdirect was planning to spend $65 million on marketing in 1999, a 250% increase over the prior year. But would increased ad spending yield a positive long-term return as the marketing costs per new account doubled? And as advertising battles intensified, was a $65 million marketing budget big enough to allow DLJdirect to sustain its competitive position?

As more and more companies begin to see the world as their market, brand builders look with envy upon those businesses that appear to have created global brands--brands whose positioning, advertising strategy, personality, look, and feel are in most respects the same from one country to another. Attracted by such high-profile examples of success, these companies want to globalize their own brands. But that's a risky path to follow, according to David Aaker and Erich Joachimsthaler. Why? Because creating strong global brands takes global brand leadership. It can't be done simply by edict from on high. Specifically, companies must use organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies. Aaker and Joachimsthaler offer four prescriptions for companies seeking to achieve global brand leadership. First, companies must stimulate the sharing of insights and best practices across countries--a system in which "it won't work here" attitudes can be overcome. Second, companies should support a common global brand-planning process, one that is consistent across markets and products. Third, they should assign global managerial responsibility for brands in order to create cross-country synergies and to fight local bias. And fourth, they need to execute brilliant brand-building strategies. Before stampeding blindly toward global branding, companies need to think through the systems they have in place. Otherwise, any success they achieve is likely to be random--and that's a fail-safe recipe for mediocrity.

In Black and White on Wall Street, Joseph Jett, the trader blamed for Kidder Peabody's controversial demise in 1994, tells his side of the story. But his account is more than just a tale of racism and greed. Reviewer Joseph L. Badaracco, Jr., finds that Jett's experiences, when taken in the larger context of work life, are a cautionary tale about the serious challenges to personal integrity faced by knowledge workers in the new economy. Jett believed that a career on Wall Street offered valuable solutions to some age-old problems. He would be a free agent, choosing where and how he worked; his pay and promotions would depend on his performance, not on connections, company politics, or skin color. In short, Jett thought he would be his own man. Instead, he discovered that the old realities of organizational life and interpersonal relationships still shape the new workplace. According to Badaracco, it would be naive to expect the new economy to be radically different from the old one. Even if economic relationships have changed, human nature has not: self-interested managers, backroom politics, prejudice, and the seductions of power and money still shape behavior. People may now get to "eat what they kill," but bosses usually determine who gets the best hunting grounds. Thus Machiavelli's fundamental question--Can men and women in positions of responsibility lead lives of integrity in the face of uncertainty and relentless competition?--remains acutely relevant. Using Jett's experiences as a starting point, Badaracco draws several lessons about maintaining integrity in the free-agent workplace.

Susan Bishop started Bishop Partners with the aim of making it the best boutique executive-search firm in the business. Specializing in television, radio, and publishing industries, her plan was to beat out her larger, established competitors through superb execution. Great service would lead to happy clients, which would lead to more business, which would keep clients happy, which would lead to even more business. A virtuous circle, right? Wrong. Before long, she and her staff grew weary of jumping through every hoop their clients could think of--trying to find candidates for lower-level positions in remote locations at below-market rates, for instance. But what could they do? How could they afford to disappoint any customer when they didn't have that many to begin with? In this vivid first-person account, Bishop describes how she and her staff came to an answer that was highly counterintuitive: stop trying to make everyone happy. Focus instead on making the right customers happy. Raise their prices. Limit their searches to high-level positions in their field of expertise. Stick to companies big enough to give them repeat business. As hard as it was to define the right clients, it was even harder to say no to the wrong clients. One member of the staff had to turn down work worth $120,000; Bishop herself had to turn down $250,000 from her largest client, Coca-Cola. But in the end, those clients came back with higher-quality work, and her company was on its way from chaotic little start-up to successful, professional enterprise. Bishop tells the classic entrepreneur's story, one with important lessons about strategy making, courage, and discipline for all business people.

Botched leadership transitions occur with alarming frequency--a fact that's laid bare regularly in the business pages of the nation's newspapers. The headlines trumpet the premature departures of designated successors--leaders such as Merrill Lynch's Herb M. Allison and AT&T's John Walter, who left their respective companies before they could claim the CEO's seat. Dan Ciampa and Michael Watkins, who have counseled senior executives and successors through more than 100 leadership transitions in the past 25 years, point to the successor's dilemma as the dominant cause of failed leadership transitions. The dilemma is an emotionally charged power struggle played out between the CEO and his would-be heir. Ciampa and Watkins describe the way the problem builds on both sides of the desk--the CEO's fear of giving up control versus the designated successor's need to enact the changes expected of him and prove himself to the board. They cite anecdotal evidence and their own research to suggest that this complex psychological dynamic leads CEO-successor relations astray and can block the successor's path to the top spot. But the authors also offer four ways for the would-be heir to overcome the successor's dilemma. These include gauging the CEO's readiness to leave before accepting the number two spot, maintaining regular communication with the CEO despite ever-present obstacles such as travel and business schedules, and developing and using a balanced personal advice network to help navigate the shift in power. The authors stress that defusing the problem is the responsibility of the successor, not the CEO. The reason is simple: the successor has the most to lose.

In its first generation, electronic commerce has been a landgrab. Space on the Internet was claimed by whoever got there first with enough resources to create a credible business. It took speed, a willingness to experiment, and a lot of cybersavvy. Companies that had performed brilliantly in traditional settings seemed hopelessly flat-footed on the Web. And despite their astronomical valuations, the new e-commerce stars have appeared to be just as confused. Many have yet to make a profit, and no one has any idea when they will. Now, the authors contend, we are entering the second generation of e-commerce, and it will be shaped more by strategy than by experimentation. The key players--branded-goods suppliers, physical retailers, electronic retailers, and pure navigators--will shift their attention from claiming territory to defending or capturing it. They will be forced to focus on strategies to achieve competitive advantage. Success will go to the businesses that get closest to consumers, the ones that help customers navigate their way through the Web. Indeed, the authors argue, navigation is the battlefield on which competitive advantage will be won or lost. There are three dimensions of navigation: Reach is about access and connection. Affiliation is about whose interests the business represents. And richness is the depth of the information that a business gives to or collects about its customers. Navigators and e-retailers have the natural advantage in reach and affiliation, while traditional product suppliers and retailers have the edge in richness. The authors offer practical advice to each player on competing in the second generation of e-commerce.

Contrary to popular perception, business people can be benevolent. For instance, one recent study notes that four-fifths of all Harvard Business School graduates are involved with nonprofits, with more than half of those serving on boards. Most business professionals will spend some time on a nonprofit board. That's the good news, the author says. The bad news is that the involvement of business people can easily backfire. That's because they often try to take what they have learned from business school and the corporate world and apply it to their duties in the nonprofit sector. On the surface, there are similarities between the for-profit and nonprofit sectors. Both have boards of directors, trustees and chairpeople, regular meetings, and so forth. But the governance of nonprofit organizations is very different from the governance of for-profit businesses in several critical areas, including missions, measurements, and board composition. For instance, the CEO in the nonprofit world must manage a relationship with a nonexecutive board chair. In the for-profit world, the CEO is the chair. Such significant differences make it difficult to transfer ideas and practices between the for-profit and nonprofit worlds. In this article, F. Warren McFarlan describes the main differences between serving on a for-profit board and serving on a nonprofit board. As he points out, understanding the differences will make it easier for business people to move smoothly from one environment to the other and will therefore make their commitments more effective. Nonprofits need business people, but only on the right terms.

During the past two decades, the number of charitable foundations in the United States has doubled while the value of their assets has increased more than 1,100%. As new wealth continues to pour into foundations, the authors take a timely look at the field and conclude that radical change is needed. First, they explain why. Compared with direct giving, foundations are strongly favored through tax preferences whose value increases in rising stock markets. As a nation, then, we make a substantial investment in foundation philanthropy that goes well beyond the original gifts of private donors. We should therefore expect foundations to achieve a social impact disproportionate to their spending. If foundations serve merely as passive conduits for giving, then they not only fall far short of their potential but also fail to meet an important societal obligation. Drawing on Porter's work on competition and strategy, the authors then present a framework for thinking systematically about how foundations create value and how the various approaches to value creation can be deployed within the context of an overarching strategy. Although many foundations talk about "strategic" giving, much current practice is at odds with strategy. Among the common problems, foundations scatter their funding too broadly, they overlook the value-creating potential of longer and closer working relationships with grantees, and they pay insufficient attention to the ultimate results of the work they fund. This article lays out a blueprint for change, challenging foundation leaders to spearhead the evolution of philanthropy from private acts of conscience into a professional field.

In 1988, less than 2% of large deals were paid for entirely in stock; by 1998, that number had risen to 50%. The shift has profound ramifications for shareholders of both the acquiring and acquired companies. In this article, the authors provide a framework and two simple tools to guide boards of both companies through the issues they need to consider when making decisions about how to pay for--and whether to accept--a deal. First an acquirer has to decide whether to finance the deal using stock or pay cash. Second, if the acquirer decides to issue stock, it then must decide whether to offer a fixed value of shares or a fixed number of them. Offering cash places all the potential risks and rewards with the acquirer--and sends a strong signal to the markets that it has confidence in the value not only of the deal but in its own stock. By issuing shares, however, an acquirer in essence offers to share the newly merged company with the stockholders of the acquired company--a signal the market often interprets as a lack of confidence in the value of the acquirer's stock. Offering a fixed number of shares reinforces that impression because it requires the selling stockholders to share the risk that the value of the acquirer's stock will decline before the deal goes through. Offering a fixed value of shares sends a more confident signal to the markets, as the acquirer assumes all of that risk. The choice between cash and stock should never be made without full and careful consideration of the potential consequences. The all-too-frequent disappointing returns from stock transactions underscore how important the method of payment truly is.

Many policy makers at the Fed contend that the new economy is a fragile bubble--and that with the "irrational exuberance" of the capital markets, the sky is going to fall on the U.S. economy. That couldn't be further from the truth, according to William Sahlman. As long as the government doesn't interfere, he argues, the economy is sturdy, resilient, and raring to grow. The new economy is strong for several reasons. First, it is based on a business model that works. Any business system that relentlessly drives out inefficiency, forces intelligent business-process reengineering, and gives customers more of what they want will be sustainable. Second, it is built on America's admiration for entrepreneurs and its tolerance for failure, not to mention its easy access to capital. Third, the new economy is attracting the best and brightest minds in the country. And finally, says Sahlman, the new economy is strong because it is spreading. It may be primarily an American phenomenon now, but in a few short years it will start to show its effects everywhere, making the whole world a more productive place. Still, Sahlman believes, the road ahead is not without potholes and sharp curves. But that is what the new economy is all about, he maintains--companies attacking the status quo and entrenched players, companies experimenting to find new technologies that improve or replace earlier ones. Such activity presents no cause for alarm. The economic, social, and cultural factors undergirding the new economy are rock solid. It's simply a matter of letting them stand.

Year-old Priceline.com has already changed the way many people shop for airline tickets, hotels, and even cars. Founder Jay Walker discusses his company's "demand collection" model and the revolutionary nature of e-commerce.

Companies facing attacks from competitors with copycat products often find they have little legal recourse. Two researchers suggest preemptive measures for protecting brand identity.

Information industries are at the core of the celebrated new economy; they may also be at the core of a sharp deterioration in the U.S. trade position.

Lending small amounts of cash to fledgling entrepreneurs has been successful in developing countries but hasn't worked as well in America. The authors suggest reforms for U.S. microcredit programs.

Delegating responsibility is hard. Not delegating can be disastrous. Former Oklahoma City fire chief Carl Holmes shares his best practices for efficient leadership.

Products without precedent are a tough sell; consumers stick with the goods they understand. The key to marketing breakthrough products is to educate the public before making any sales pitches.

Many companies have succeeded in reengineering their core processes, combining related activities from different departments and cutting out ones that don't add value. Few, though, have aligned their organizations with their processes. The result is a form of cognitive dissonance as the new, integrated processes pull people in one direction and the old, fragmented management structures pull them in another. That's not the way it has to be. In recent years, forward-thinking companies like IBM, Texas Instruments, and Duke Power have begun to make the leap from process redesign to process management. They've appointed some of their best managers to be process owners, giving them real authority over work and budgets. They've shifted the focus of their measurement and compensation systems from unit goals to process goals. They've changed the way they assign and train employees, emphasizing whole processes rather than narrow tasks. They've thought carefully about the strategic trade-offs between adopting uniform processes and allowing different units to do things their own way. And they've made subtle but fundamental cultural changes, stressing teamwork and customers over turf and hierarchy. These companies are emerging from all those changes as true process enterprises--businesses whose management structures are in harmony, rather than at war, with their core processes. And their organizations are becoming much more flexible, adaptive, and responsive as a result.

Many managers feel overwhelmed. They have too many problems--too many monkeys--on their backs. All too often, they say, they find themselves running out of time while their subordinates are running out of work. Such is the common phenomenon described by the late William Oncken, Jr., and Donald L. Wass in this 1974 HBR classic. They tell the engaging story of an overburdened manager who has unwittingly taken on all of his subordinates' problems. If, for example, an employee has a problem and the manager says, "Let me think about that and get back to you," the monkey has just leaped from the subordinate's back to the manager's. This article describes how the manager can delegate effectively to keep most monkeys on the subordinate's back. It offers suggestions on the care and feeding of monkeys and on how managers can transfer initiative. In his accompanying commentary, Stephen R. Covey discusses both the enduring power of this message and how theories of time management have progressed beyond these ideas. Management thinkers and executives alike now realize that bosses cannot just give a monkey back to their subordinates. Subordinates must first be empowered, and that's hard and complicated work. It means bosses have to develop their subordinates and establish trust. Perhaps even more important and relevant than it was 25 years ago, Covey says, this article is a powerful wake-up call for managers at risk for carrying too many monkeys.