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This fictitious case written by Andy Blackburn, a Boston Consulting Group vice president based in San Francisco, explores the question of how PC companies can make money in the increasingly price-competitive consumer market. The senior staff of Praxim, a multibillion-dollar maker of desktop computers, face some tough questions: Is it possible to make money selling personal computers to consumers? And if so, how? What resources need to be mustered? Where should they be directed? After years of strong profits, Praxim is being dragged down by increasing competition in the consumer segment of the PC market. In response, CEO Jack Thompson has hired a new manager for the consumer division, Linda Marcus, luring her away from a leading packaged-goods company. Linda wants to make Praxim into a trusted brand by putting Praxim's people into retail stores at peak selling times, setting up an 800 number to answer consumers' technical questions in plain English, and bundling extensively. But the other members of the senior staff are skeptical. The vice president of the commercial division argues that PCs are a commodity and urges Linda to concentrate on cutting costs. The chief technology officer wants Praxim to concentrate on developing the next killer app so that it can charge consumers a premium for new technology. The CFO thinks Praxim should cut its losses and mostly give up on the consumer segment. Mindful that continued losses in the consumer segment will pull down Praxim's share price and put his top executives' stock options at risk, Jack is at a loss. Should he try to make money selling PCs to consumers? Can he keep the doubters on his staff from defecting if he goes ahead with Linda's plan? In 98603 and 98603Z, Geoff Moore, Donna Dubinsky, Larry Keeley, George Quesnelle, Scott Ward, and Philip Pifer give Jack their advice.

This fictitious case written by Andy Blackburn, a Boston Consulting Group vice president based in San Francisco, explores the question of how PC companies can make money in the increasingly price-competitive consumer market. The senior staff of Praxim, a multibillion-dollar maker of desktop computers, face some tough questions: Is it possible to make money selling personal computers to consumers? And if so, how? What resources need to be mustered? Where should they be directed? After years of strong profits, Praxim is being dragged down by increasing competition in the consumer segment of the PC market. In response, CEO Jack Thompson has hired a new manager for the consumer division, Linda Marcus, luring her away from a leading packaged-goods company. Linda wants to make Praxim into a trusted brand by putting Praxim's people into retail stores at peak selling times, setting up an 800 number to answer consumers' technical questions in plain English, and bundling extensively. But the other members of the senior staff are skeptical. The vice president of the commercial division argues that PCs are a commodity and urges Linda to concentrate on cutting costs. The chief technology officer wants Praxim to concentrate on developing the next killer app so that it can charge consumers a premium for new technology. The CFO thinks Praxim should cut its losses and mostly give up on the consumer segment. Mindful that continued losses in the consumer segment will pull down Praxim's share price and put his top executives' stock options at risk, Jack is at a loss. Should he try to make money selling PCs to consumers? Can he keep the doubters on his staff from defecting if he goes ahead with Linda's plan? In 98603 and 98603Z, Geoff Moore, Donna Dubinsky, Larry Keeley, George Quesnelle, Scott Ward, and Philip Pifer give Jack their advice.

This fictitious case written by Andy Blackburn, a Boston Consulting Group vice president based in San Francisco, explores the question of how PC companies can make money in the increasingly price-competitive consumer market. The senior staff of Praxim, a multibillion-dollar maker of desktop computers, face some tough questions: Is it possible to make money selling personal computers to consumers? And if so, how? What resources need to be mustered? Where should they be directed? After years of strong profits, Praxim is being dragged down by increasing competition in the consumer segment of the PC market. In response, CEO Jack Thompson has hired a new manager for the consumer division, Linda Marcus, luring her away from a leading packaged-goods company. Linda wants to make Praxim into a trusted brand by putting Praxim's people into retail stores at peak selling times, setting up an 800 number to answer consumers' technical questions in plain English, and bundling extensively. But the other members of the senior staff are skeptical. The vice president of the commercial division argues that PCs are a commodity and urges Linda to concentrate on cutting costs. The chief technology officer wants Praxim to concentrate on developing the next killer app so that it can charge consumers a premium for new technology. The CFO thinks Praxim should cut its losses and mostly give up on the consumer segment. Mindful that continued losses in the consumer segment will pull down Praxim's share price and put his top executives' stock options at risk, Jack is at a loss. Should he try to make money selling PCs to consumers? Can he keep the doubters on his staff from defecting if he goes ahead with Linda's plan? In 98603 and 98603Z, Geoff Moore, Donna Dubinsky, Larry Keeley, George Quesnelle, Scott Ward, and Philip Pifer give Jack their advice.

Using actual examples from front-line managerial situations, this article explains and explores three work-life principles executives can adopt to create wins for their organizations and individual employees. Most companies view work and personal life as competing priorities in a zero-sum game, in which a gain in one area means a loss in the other. From this traditional perspective, managers decide how their employees' work and personal lives should intersect and often view work-life programs as just so much social welfare. A new breed of managers, however, is trying a new tack, one in which managers and employees collaborate to achieve work and personal objectives to everyone's benefit. These managers are guided by three principles. The first is to clearly inform their employees about business priorities and to encourage them to be just as clear about personal priorities. The second is to recognize and support their employees as whole people, not only acknowledging but also celebrating their roles outside the office. The third is to continually experiment with the way work gets done, looking for approaches that enhance the organization's performance and allow employees to pursue personal goals. The managers who are acting on these principles have discovered that conflicts between work and personal priorities can actually be catalysts for identifying inefficiencies at the workplace.

In order to solve high-tech's employee retention problems, Bill Gross, the chairman and founder of Idealab, proposes a radical solution: give all workers a significant equity stake. In 1994, when the software maker Knowledge Adventure decided to spin out a new venture--Worlds, Inc.--founder Bill Gross expected the worst. He had argued with the board that it was in KA's best interests to maintain a controlling ownership stake in Worlds, whose powerful new software technology had enormous revenue potential. But the board prevailed, and KA took only a 20% ownership in the new company, giving the rest to Worlds' employees. Within a year, the company's performance had surpassed all expectations, and instead of owning 80% of a $5 million business, KA owned 20% of a $77 million business. The arithmetic may have been counterintuitive, but the lesson was clear. When KA let go of Worlds and gave its employees near total ownership, the company unleashed a new level of employee performance. That, in turn, led to the creation of economic value that more than made up for the equity KA had surrendered. So compelling was this "new math of ownership" that Gross founded a new company, Idealab, on this principle. The company, which develops ideas for Internet-based businesses and seeds the most promising ones, takes no more than a 49% equity stake in the new ventures and gives at least 1% of ownership to each employee. For Gross, this radical approach to ownership is the key to inspiring stellar performances. In part, employee-owners are motivated by their potential to earn great financial reward. But the drama of ownership, he argues, is even more important. In that drama, employees become personally involved in the struggle to outdo the competition and emerge victorious.

The orchestra conductor is a popular metaphor for managers today--up there on the podium in complete control. But that image may be misleading, says McGill University and INSEAD Professor Henry Mintzberg, who recently spent a day with Bramwell Tovey, conductor of the Winnipeg Symphony Orchestra, in order to explore the metaphor. He found that Tovey does not operate like an absolute ruler but practices instead what Mintzberg calls covert leadership. Covert leadership means managing with a sense of nuances, constraints, and limitations. When a manager like Tovey guides an organization, he leads without seeming to, without his people being fully aware of all that he is doing. That's because in this world of professionals, a leader is not completely powerless--but neither does he have absolute control over others. As knowledge work grows in importance, the way an orchestra conductor really operates may serve as a good model for managers in a wide range of businesses. For example, Mintzberg found that Tovey does a lot more hands-on work than one might expect. More like a first-line supervisor than a hands-off executive, he takes direct and personal charge of what is getting done. In dealing with his musicians, his focus is on inspiring them, not empowering them. Like other professionals, the musicians don't need to be empowered--they're already secure in what they know and can do--but they do need to be infused with energy for the tasks at hand. This is the role of the covert leader: to act quietly and unobtrusively in order to exact not obedience but inspired performance.

In this article, Michael Porter, the C. Christensen Professor of Business Administration at the Harvard Business School, explains how clusters foster high levels of productivity and innovation and lays out the implications for competitive strategy and economic policy. Economic geography in an era of global competition poses a paradox. In theory, location should no longer be a source of competitive advantage. Open global markets, rapid transportation, and high-speed communications should allow any company to source any thing from any place at any time. But in practice, location remains central to competition. Today's economic map of the world is characterized by what Porter calls clusters: critical masses in one place of linked industries and institutions--from suppliers to universities to government agencies--that enjoy unusual competitive success in a particular field. The most famous examples are found in Silicon Valley and Hollywood, but clusters dot the world's landscape. Porter explains how clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things--knowledge, relationships, and motivation--that distant rivals cannot replicate.

In this article, University of California at Berkeley professors Carl Shapiro and Hal Varian explain how a "versioning" strategy can enable a company to distinguish its products from the competition and protect its prices from collapse. This insightful article will be essential reading for any executive competing in the information economy. Many producers of information goods assume that their products are exempt from the economic laws that govern more tangible goods. But that's just not so. Information goods are subject to the same market and competitive forces that govern the fate of any product. And their success, too, hinges on traditional product-management skills: gaining a clear understanding of customer needs, achieving genuine differentiation, and developing and executing an astute positioning and pricing strategy. What makes information goods tricky is their "dangerous economics." Producing the first copy of an information product is often very expensive, but producing subsequent copies is very cheap. In other words, the fixed costs are high and the marginal costs are low. Because competition tends to drive prices to the level of marginal costs, information goods can easily turn into low-priced commodities, making it impossible for companies to recoup their up-front investments and eventually bringing about their demise. The best way to escape that fate, the authors say, is to create different versions of the same core of information by tailoring it to the needs of different customers. The authors draw on a wide range of examples to illustrate how companies use different versioning strategies to appeal to customers with different needs. The power of versioning is that it enables managers to apply tried-and-true product-management techniques in a way that takes into account both the unusual economics of information production and the endless malleability of digital data.

In this article, Bob Zider, president of the Beta Group, a California-based firm that invests in commercializing new technologies, presents an analysis of present-day venture capitalists and shows why its practitioners have a lot more in common with investment bankers than you might think. The popular mythology surrounding the U.S. venture-capital industry derives from a previous era. Venture capitalists who nurtured the computer industry in its infancy were legendary both for their risk taking and for their hands-on operating experience. But today things are different, and separating the myths from the realities is crucial to understanding this important piece of the U.S. economy. Today's venture capitalists are more like conservative bankers than the risk takers of days past. They have carved out a specialized niche in the capital markets, filling a void that other institutions cannot serve. They are the linchpins in an efficient system for meeting the needs of institutional investors looking for high returns, of entrepreneurs seeking funding, and of investment bankers looking for companies to sell. Venture capitalists must earn a consistently superior return on investments in inherently risky businesses. The myth is that they do so by investing in good ideas and good plans. In reality, they invest in good industries--that is, industries that are more competitively forgiving than the market as a whole. And they structure their deals in a way that minimizes their risk and maximizes their returns. Although many entrepreneurs expect venture capitalists to provide them with sage guidance as well as capital, that expectation is unrealistic. Given a typical portfolio of 10 companies and a 2,000-hour work year, a venture capital partner spends on average less than 2 hours per week on any given company. In addition to analyzing the current venture-capital system, the author offers practical advice to entrepreneurs thinking about venture funding.

Shortly after his 1989 inauguration, President George Bush confronts a seemingly intractable dispute which had simmered through the 1980s: how to legislate the clean-up of the so-called "big dirties", large coal-burning Midwest power plants linked to acid rain and a decline in the vitality of lakes and forests in the Northeast. This case describes both the policy innovation which helps to break a long-standing political logjam and the process of negotiation and compromise involving the White House staff (led by White House Special Assistant for Economic and Domestic Policy Roger Porter) and key members of committees of the Congress. Specifically, the case describes how the Bush administration formed an alliance with key environmental groups (such as the Environmental Defense Fund) by embracing the concept of tradeable emission rights-the right to buy and sell permits to emit sulfur dioxide, for instance, one of the key pollutant byproducts of coal-burning. The advent of such "emissions trading", however, can only proceed once agreement is reached on the total amount of pollution reduction to be achieved by the key enabling legislation which will create the permit regime, the Clean Air Act of 1990. This case, in large part, tracks the shaping of that legislation. HKS Case Number 1514.0

The case describes the foreign exchange problems faced by Mr. John Christopher, in the spring of 1995. Christopher's company, TCAS, had just been awarded the bid to deliver and install a new management information software system and local area network computer system for a customer in Canada. TCAS is a US-based company with no previous international experience. The company, as a result of the bid award, was confronted with a very large foreign exchange exposure. TCAS has additional problems, including an operating loss in the previous year, and the potential of continuing losses in the current year in the absence of the subject sale. TCAS needs to make a profit on this contract, manage its foreign exchange exposure, and restructure its balance sheet.

This note develops a variety of approaches to sensitivity analysis within the context of a promotional decision regarding a consumer product. Analyses include the development of optimistic/pessimistic scenarios, one-at-a-time sensitivity analysis with a presentation in the format of a tornado diagram, and threshold (break-even) values.

Growth by acquisition (rolling up or consolidating an industry) results in questions about integrating operations, corporate form, financial structure, and management for this company.

Supplements the (A) case.

How does a high technology firm successfully grow and compete in a market where software may be obsolete in 12 months? Cisco Systems, with annual revenues of more then $8 billion and a market capitalization larger than General Motors, is a leader in the market for computer networking equipment. They have achieved this remarkable success by designing a unique approach to a technology business that is based on people, frugality, and attention to customers. It is a success born out of a winning human resources approach that adds real value to the business.

Summarizes information on the national issue of hiring people from the welfare roles. Organized by topics relevant to business, this note reviews research findings and statistics and poses questions to assist business decision-makers in assessing a company's current or planned involvement in welfare-to-work hiring.

Sheldon Elman, founder and CEO of Medisys Health Group, Inc., a corporate health care services provider, has decided the company needs a web presence. France Mailhot, the vice president of operations, has been given the task of carrying out this idea. In order to do so, she must determine the company's needs with respect to a web site, set achievable, measurable performance objectives, and otherwise see to the implementation and administration of the site. She faces two main challenges: obtaining the necessary information and creating consensus in the organization. The case forces readers to consider the role of the Internet in a service organization's marketing strategy, and the possible impediments that need to be overcome in order to be successful.

P&G has rapidly gained market leadership in Russia with the Always feminine protection brand. The distinctive emerging market strategies employed by P&G are discussed. In planning further market development, the management team faces three decisions: 1) whether to maintain the price premium of Always or to attempt to develop the mid-market through lower priced brands; 2) whether the different marketing strategies employed in different countries in Central and Eastern Europe should be harmonized, especially in light of current parallel importing problems; and 3) whether the feminine protection portfolio should be extended by launching either Alldays pantiliners and/or Tampax Tampons.

In 1997 United CEO Gerald Greenwald was appointed chairman of the national Welfare-to-Work Partnership by President Clinton and committed United to hiring from the welfare rolls. A welfare-to-work recruitment program was rapidly established and soon followed by a mentoring program. These programs were successful--United surpassed its welfare-to-work hiring targets and attained higher retention rates. With a decreasing supply of employable welfare recipients, however, the question was whether Greenwald and United could continue to provide corporate leadership in the welfare-to-work arena.

In 1991 Marriott International established a program called Pathways to Independence to recruit and train people from the welfare rolls. The program graduated over 1,000 people in eight years and retained about 20% more of its participants than regular hires. Now the program director wished to double the program size. The questions: Was this feasible with a decreasing supply of employable welfare recipients? Could the quality control required at Marriott be maintained with such a large and rapid expansion?