This is an MIT Sloan Management Review article. In many ways, the Industrial Age has been an era of harvesting natural and social capital to create financial and productive capital. So far, the New Economy looks more like the next wave of the industrial era than a truly postindustrial one. Why should we care? Because, say the authors, the basic development patterns of the industrial era are not sustainable. In the face of this challenge, organizational learning expert Peter Senge and former Volvo and IKEA senior executive Goran Carstedt hail the emergence of a new environmentalism driven by innovation, not regulation--radical new technologies, products, processes, and business models. They describe how more and more companies are recognizing the business opportunities that a focus on sustainability creates. Such a shift in thinking is already evident in many companies and industries, where learning-organization principles are being applied to create sustainable business models. Simultaneously, they become inspirational, energetic places to work, where even relationships with customers and suppliers improve. Nonetheless, ecoefficiency alone will not create a truly postindustrial age: a strategy must consider how the economic system affects the larger ecological and social systems within which it resides. Only a more integrated view will enable companies to innovate for long-term profitability and sustainability. There are three core competencies that learning organizations must master to profit from sustainability: encourage systemic thinking to sense the emerging future; convene strategic conversations with investors, customers, suppliers, and even competitors to build the trust needed to change outmoded mental models about what business success is; and take the lead in reshaping economic, political, and societal forces that stymie change. According to Senge and Carstedt, no time in history has afforded greater possibilities for a collective change in direction.

This is an MIT Sloan Management Review article. The quest for competitive advantage often inspires executives to imitate the strategies of the most successful companies. Interestingly, however, precisely opposite factors are considered sources of competitive advantage at different points in time. Henry Ford's emphasis on focus has been touted as the key to success right alongside General Motors' product-line breadth. IBM's vertical integration was considered an unassailable source of competitive advantage a generation ago; today, everyone admires the outsourcing flexibility inherent in the nonintegrated business models of Cisco Systems and Dell Computer. If history is any guide, the practices and business models that constitute advantages for today's most successful companies confer those advantages only because of particular factors at work under particular conditions at a particular time. Harvard Business School's Clayton Christensen, a leading thinker on disruptive technologies, alerts managers to the imperative of understanding the context that supports a particular competitive advantage. He explains why, for example, pharmaceutical companies' current focus on ever larger mergers is moving them in exactly the wrong direction at exactly the wrong time. He blames their strategists (and investment bankers) for not thinking deeply about cause and effect with respect to competitive advantage. He also notes that the very existence of competitive advantage sets in motion creative innovations that, as competitors strive to level the playing field, cause the advantage to dissipate. That does not mean the search for competitive advantage is futile. Rather, it suggests that successful strategists need to cultivate a deep understanding of the processes of competition and progress and of the factors that undergird each advantage. Only then will they be able to see when old advantages are poised to disappear and how new advantages can be built in their stead.