Seven CEOs, entrepreneurs, and venture capitalists tell stories of personal failures-and what they learned from them. Doug Rauch, a former president of Trader Joe's, admits to being a "control-aholic" and recounts how his micromanagement hindered the chain's East Coast expansion. Linda Rottenberg talks about her mantra, "Go big, or go home," and how she made the call to close her business in India. Anthony Tjan describes the ups and downs of his start-up when the irrationally exuberant dot-com boom went bust. Roger McNamee frankly discusses his failed bid to change the world. Wayne Pacelle, head of the Humane Society, talks about the importance of closing the deal. Peter Guber recounts a life-changing experience with Muhammad Ali. Whitney Johnson looks back on her first venture: investing in a friend's dream. Dave Strubler, a mountain climber and business professor reflects on making it almost to the top.

A decade ago, the Thomson Corporation, like most B2B companies, had a much better understanding of the people who purchased its newspapers, journals, and textbooks for their organizations than of the people who actually used them in their daily jobs. Facing an internet shakeup of its market, Thomson realized it needed to bridge that critical knowledge gap. The company began systematically scrutinizing its end users--in much the same way that Procter & Gamble tackles consumer research--as part of a new front-end customer strategy that would become the cornerstone of the firm's transformation. In this article, Harrington, Thomson's CEO, and Tjan, a consultant who advised him, describe how the company adopted a user-centric mind-set--initially in the Thomson Financial division and then throughout the organization. First came a redefinition of the division's market, which was mapped not by type of purchaser but by eight end-user segments. That gave Thomson a clear view of the division's real, addressable market and of corresponding opportunities. After conducting surveys and "day in the life" observations of users, Thomson charted their entire work flow, beginning with what they were doing three minutes before and after using a product, and saw where the organization could add value. Then, through cluster and conjoint analysis, the company determined how pain points and product preferences varied among the users. With that information, Thomson was able to identify three clusters of customers in one segment and develop three categories of offerings. Since beginning to implement this approach, Thomson has changed radically. Its revenue now comes mostly from digital, not print, products, and it generates twice the operating profit and four times the free cash flow it did 10 years ago. In a market that changes by the day, Thomson's revenue is unusually predictable and profitable.

Eager to capitalize on the Internet's potential, many companies have allowed scores of on-line projects to bubble up throughout their organizations. The result? More harm than good, as companies find themselves confusing customers, irritating employees, and wasting bushels of money. In this article, consultant Anthony Tjan explains how companies can do better. By adapting classical portfolio strategy to the digital age, executives can coordinate their Internet initiatives to avoid the needless headaches and spending, he says. Much of the market and industry data that underpin traditional portfolio analysis is unavailable for the Internet space, so Tjan replaces the two criteria used in traditional portfolio analysis--market position and industry attractiveness--with business viability and business fit. Viability captures the available quantitative data about an investment's likely payoff. Fit is qualitative; it measures the degree to which an investment dovetails with a company's existing processes, capabilities, and culture. Using viability and fit to assess their on-line initiatives, companies can then plot these efforts onto a simple matrix, called an Internet portfolio map. Their location on the matrix will suggest whether each initiative should be invested in, redesigned, sold or spun out, or killed.