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It is difficult to overstate the extent to which most managers and the people who advise them believe in the redemptive power of rewards. But more striking is the rarely examined belief that people will do a better job if they have been promised some sort of incentive. According to numerous studies in laboratories, workplaces, classrooms, and other settings, rewards typically undermine the very processes they are intended to enhance. The findings suggest that the failure of a given incentive program is due less to a glitch in that program than to the inadequacy of the psychological assumptions that ground all such plans. Research suggests that, by and large, rewards succeed at securing one thing only: temporary compliance. Kohn explains why rewards fail in a six-point framework: rewards do not motivate; they punish; they rupture relationships; they ignore reasons; they discourage risk taking; and finally, they undermine interest. Any manager thinking about a new incentive program--or attached to an old one--would do well to consider Kohn's argument. According to Kohn, incentives (or bribes) simply can't work in the workplace.

Companies searching for a way to navigate the changes in Mexico would do well to study Vitro, Sociedad Anonima, an 84-year-old Mexican company with roughly $3 billion in sales and 44,000 employees. CEO Ernesto Martens-Rebolledo is transforming Vitro from a Mexican company to an international company, and from a complacent competitor to an aggressive one. As part of this transformation, Martens has made some controversial decisions. In 1989, he led the only hostile takeover of a U.S. company by a Mexican company when Vitro took over the Anchor Glass Container Corp. And in 1992, he laid off 3,000 workers - a first for a company that used to claim that it wasn't giving workers a job but a way of life. Through its proximity to the largest market in the world and its joint ventures with Ford, Corning, Samsonite, and Whirlpool, Vitro is well positioned to take advantage of the emerging North American market. But Vitro faces many challenges. For Martens, the most important and most difficult challenge is to convince people that they can no longer be complacent in the face of world competition.

Scores of companies have been trying to become mass customizers: businesses that produce individually customized goods or services at the cost of standardized, mass-produced goods. Mass customization entails breaking up the tightly integrated networks that form the backbone of the continuous improvement organization and creating a loosely linked collection of autonomous modules. Each module performs a different task and is perpetually reconfigured in response to customer demands. Automation typically is the key to linking these modules so that they can come together quickly and efficiently. Leaders of mass-customization organizations never know exactly what customers will ask for next. All they can do is strive to be ever more prepared to meet the next request. To that end, mass customizers are forever changing and expanding their range of capabilities.

When it comes to marketing, concentrating on the four Ps - product development, price determination, place of distribution, and promotion - no longer ensures competitiveness. Relying on short-term thinking, many companies base their marketing budgets on annual sales forecasts and then demand immediate results based on dollars spent. These companies are confusing cause and effect. They don't realize that developing a "quality" customer base - loyal customers who yield high profits - can take many years. And quality is what matters for long-term success. Companies would do better treating marketing expenditures the same way they treat capital outlays: as investments that drive revenue over time. Many industry giants - Ivory Soap, Heinz Tomato Ketchup, and Ritz Crackers, to name a few - got that way through cumulative investment of years and even decades. Newcomers can leverage to beat the odds, however, and, with a shrewd strategy, turbocharge their returns.

Spreadsheet supplement for case 794-031.

Provides an update.

Describes the ways in which managers communicate the need to change, specifically the way in which they use vision, crisis, and transition as rhetorical strategies to mobilize change. Also discusses strategies used by those trying to resist change, setting up what may be considered a rhetorical contest that determines whether change is embraced or not.

Describes some of the key principles that managers must follow in order to successfully persuade their organization of their vision for change.

Provides a 7S framework to complement the McKinsey 7S framework. Focuses on some of the critical choices that must be made in implementing change--Strategic Intent, Substance, Scale, Scope, Speed, Sequence, and Style. Overall, the note argues that these choices must be made so that they are coherent and robust.

Describes the strengths and weaknesses of three generic strategies for implementing change--programmatic change, discontinuous change, and emergent change.

Filene's Basement is in the process of deciding where, and if, to locate two new stores in its new Chicago area of operations. The existing Chicago area stores have been performing well, however, management is concerned with over saturation of the market. At the time of the case, Filene's Basement has 49 stores in operation.

Describes organization changes announced by Nestle's chariman in 1991 and updates the description of Nestle's marketing organization.

Prochnik was a large state-owned clothing manufacturer located in the textile-production-intensive region of Lodz, Poland. In the early months of economic reform, Prochnik was one of the first five state enterprises to be privatized through initial public offerings and traded on the Warsaw Stock Exchange. The case describes the array of changes necessary to transform Prochnik into an internationally competitive private enterprise.

Cross River makes and sells an innovative, folding baby stroller to the U.S. market. The company has broken even in its first year, selling mainly to small retailers. CEO Deaver Brown urgently wants to expand distribution to national chains and has secured appointments with the buyers of Macy's and K-Mart. What pitch should he make?

Members of TD's Personal Financial Services Division's marketing research team, were preparing their presentation to a group of the bank's senior vice-presidents. They had worked for three years developing and testing the Customer Service Index, the bank's first tangible tool to measure service quality. They now had to get the senior vice-presidents to ensure the successful adoption and use of this instrument. How could they convince their audience to accept and promote this new method of service measurement? The case is followed by a supplement case bearing the same name, case 9A93D010, set one year later.

In this two-part case series, Jackie Woods and her family are planning a trip to Europe when she is appointed to a key task force at Ameritech. Her colleagues are canceling their vacations to participate in the task force, but Jackie's family has been looking forward to this time together. At the same time, she and her husband have been wondering what future they have at Ameritech. See also the B case (UVA-BP-0331). A teaching note is available for registered faculty, along with video supplements to enhance student learning.

Applichem manufactures the same chemical product in four plants, each of which is located in a different country. The company has completed a major study comparing the productivity and performance of these plants. Using the data from the study, students must decide which, if any, plants to close. The case requires students to think about the relevant metrics for comparing the performance of plants that operate very differently and in different countries. An important issue is the distinction between physical measures of productivity and financial measures of performance. Finally, the case allows students to think about what management might do to ensure that productivity improvements are shared across the plant network.

A small California-based money manager is now offering specialty products for institutional investors based upon recent financial research findings.

Spreadsheet Supplement for case 294025.

The note describes the reasons for the current Canadian financial accounting standards for lease accounting and the accounting entries for both the lessor and the lessee. A comparison between a capital lease and operating lease is provided so that the financial statement impact of the accounting standard can be discussed.