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This case presents complex managerial challenges that stem from the institutional context in emerging markets, particularly in relation to the intellectual property regime and its impact on business strategy. The case centres around a multinational pharmaceutical firm, Novartis International AG (Novartis), that is waiting on a major court decision regarding patent policy as it pertains to one of the firm’s products. <br><br><br><br>The case takes students through the company’s journey in marketing a promising anti-cancer drug that had global sales of US$3.9 billion in 2009. Novartis’ global success with this drug is being challenged by the changing institutional environment surrounding innovation and pharmaceutical patents. The company’s decision to patent the drug in India and challenge the institutional system of patent law is meeting significant resistance from those who argue that the drug is neither novel nor affordable for most patients. With key domestic players staking their claim to the large pool of patients who could benefit from the drug, the case focuses on a controversial patents law. Given the uncertainty of the court’s final decision on these matters, students are asked to develop an action plan for the company’s future.

Family owned and managed firms represent a large proportion of businesses operating domestically and globally. Dynamics introduced by family members can develop into significant problems for the family-owned firm, and have far-reaching implications for its performance. One challenge entails coping with a family member employee who, for various reasons, behaves in ways that have toxic and damaging effects on the business. We label this phenomenon 'the Fredo effect,' referencing the incompetent brother from The Godfather books and movies. Herein, we discuss the Fredo effect in a family firm context, why the Fredo effect is unique to family firms, and how the effect develops over time in family relationships. We further analyze how the Fredo effect hurts family firms in terms of leadership succession and performance, and what family firm leaders can do to address

While supply chain management has been approached from a variety of perspectives, the role of the global supply chain as a mechanism to overcome severe supply chain disruptions has not been explored adequately. This article discusses the ways in which Japanese manufacturing firms have responded to the recent earthquake, tsunami, and nuclear disaster. Based on case studies of Japanese manufacturing firms, this article presents a discussion of the supply chain restoration process after severe natural disasters and humanitarian disruptions and reflects on supply chain lessons in terms of disaster planning and recovery responses. The critical capabilities of supply chain information design, portability, and dispersion are discussed.

In 2011, The Walt Disney Company and other content owners aggressively lobbied Congress to pass the Stop Online Piracy Act (SOPA). The intent was to prevent unauthorized copying and transmission of copyrighted materials. This had been largely eliminated on U.S.-based websites, but some copyright owners claimed it was prevalent overseas. SOPA (and its companion legislation "Protect IP Act," or PIPA), would allow the government or private companies to request court orders to bar any U.S. company from "enabling" alleged infringing sites. SOPA initially had bipartisan support, and previous efforts to strengthen copyright protection had faced little opposition. The bill supported the commercial interests of Disney and other content owners. However, many of the specifics of SOPA and PIPA had the potential to stir powerful opposition from a wide variety of sources. The case discusses copyright law and the impact of technology advances on protection of copyrighted materials. It also describes SOPA and aspects of the proposed law that might attract opposition. The case concludes by asking students to consider SOPA from the perspective of both Disney and potential opponents.

In most free-market economies, restrictions exist to curb the activity of cartels — groups of otherwise independent businesses that collaborate to lessen or prevent competition. Between 1990 and 2008, the total known affected sales of cartel activity topped US$16 trillion. Although government bodies have committed substantial resources to battling illegal corporate activity, it still happens and many corporations reoffend after being sanctioned for crimes. The authors have conducted research using a database of all known international cartels between 1970 and 2008. They suggest four courses of action to curb cartel activity: 1) Remunerative practices should be designed with a better understanding of the environmental drivers of illegal activity. Compensation should focus on solid strategic behaviours rather than rewarding short-term performance. 2) More independent boards are associated, somewhat counter-intuitively, with more illegal activity. Thus, the call for more independent boards needs to take into account the tendency of independent boards to structure CEO compensation to be more output-based, which often leads CEOs to focus only on short-term financial metrics. 3) Regulators should introduce harsher financial penalties in order to incent “means-based” organizational behaviour and punish “ends-based” activity. 4) Organizations should be made to have a legal requirement to protect society.

The difference between an effective and ineffective boardroom can be summarized in nine factors. While the existing corporate governance regime consists mostly of checklists, guidelines and best practices, the use of these tools and techniques results in liabilities of simplicity, misdiagnosis, sameness, and “the outsider.” The authors have responded to these liabilities by collecting feedback from 193 board members and have revealed five fundamental behaviours that must be developed for effective boardroom culture: a) a new approach on strategy-setting by the board; b) establishing support and respect among board members; c) encouraging director preparation; d) fostering a board that is open to change; and e) bolstering the active listening skills of directors. In addition, four secondary factors have been identified as playing an important supporting role: a) decision-making orientation; b) director satisfaction; c) curtailing rogue behavior; and d) director support for the chair, when deserved. The authors argue that the most effective corporate governance regime, based on board performance, has to originate with the board itself and the behaviours of its directors. Ultimately, the focus of all nine factors in boardroom culture is the performance of the board.

An effective board of directors is a prerequisite to a well-managed company. However, the components of an effective board are often neglected. Most boards lack a plan and instead conduct simple, routine board evaluations. Instead, they should determine key objectives and agree on what they want to accomplish in the future. They should not only provide corporate oversight, but should collaborate with management in running the company. Furthermore, consideration must be given to whether the roles of chairperson and CEO should be separated. Any board that creates a plan needs to hold itself accountable for achieving it. Unfortunately, many board members tell managers that performance and accountability are critical, but then bring a “tenure mentality” to the board. While both independence and diversity can be important considerations in the composition of a board, real performance and contribution are equally crucial. Ultimately, board culture must change. A board is not a dinner party; the shift from a friendly, collegial culture to a performance culture is essential.

Inflation-adjusted CEO pay at Canadian big banks has nearly quadrupled since the early 1990s, leaving many observers outraged. The author suggests a benchmark for CEO pay at Canadian big banks that would effectively halt the ongoing pay escalation while allowing banks to stay competitive. He recommends that annual grant-date target total CEO pay should remain flat at $10 million until it is indexed to 100 times the median Canadian family income (i.e. until the median family income surpasses $100,000, from the current median of $70,000). This would not mean that actual realized pay would be flat at $10 million, as pay on incentives would continue to vary, and this benchmark could be implemented immediately without major pay cuts. It would also return CEO pay at the Canadian big banks to where it was at the end of the 1990s, before the dot-com bubble. Many boards, when setting executive pay, assume the transferability of executive talent as a reason to keep raising CEO pay. Yet opportunities for CEOs to switch from one CEO role to another are rare and often fraught with problems. In reality, the level of CEO pay matters less to many CEOs than their perception of that pay relative to their peers’ pay.

One effective technique that a company can use to encourage innovative thinking is to imagine what it might have to do if its assumptions (e.g. about customer needs, costs and product design) are no longer valid — that is, to use “contrarian assumptions.” This article proposes ten no-cost, contrarian ideas that firms and individuals can apply to improve innovation and productivity. 1) Innovation is something everyone should strive for in their products, services and activities. R&D teams may not be needed if innovation targets and key performance indicators are present. 2) A meeting agenda should not feature a list of topics, but a list of questions. 3) Meetings should be held in spaces that encourage innovation, not just in the boardroom. 4) Meetings should be run in a way that suits the specific problem. 5) Three feasible answers should always be proposed for a problem, rather than one. 6) The prevailing assumptions in an industry are only held dear by the current players. 7) Emotion, far from having no place in business, is the root of loyalty, service and gaining buy-in. 8) Perfect certainty cannot be acquired before taking action; hold only three meetings on a specific problem. 9) Reward not only successful innovations, but also successful efforts. 10) Innovation does not come primarily out of research labs.

Governments around the world are strained financially, yet the potential of the crowd has begun to transform the way firms do business, the way ideas come to fruition, and the way social change is catalyzed. While governments increasingly offer web services that reflect citizens’ needs, there is great scope for the internal equivalent. Beyond better linkages between departments, there are at least three ways that governments can harness the wisdom of the crowd internally: a) pool resources, b) encourage agency-to-agency services and c) explore government-to-government services. Effective governments should also take steps to harness the crowd externally. Policymakers and public managers may consider the potential of the crowd in three key areas: a) the delivery base (e.g. Seniors Helping Seniors in the United States), b) the funding base (e.g. social finance) and c) the evidence base (e.g. crime mapping in Chicago). Ultimately, there are three ways to accelerate the diversification of delivery models, funding options, and evidence-based policy making: a) open up government, b) get better at working with the small details of citizens’ lives and c) trust the ability of citizens to make decisions and help shape the services they receive.

Strategic planning is among the most widely used and, often, abused management terms. This article attempts to show some of the misconceptions in the strategic planning process and to touch upon the strategic planning process in a corporate setting. It defines “strategic” and then presents a seven-part framework that practicing strategic planners can use to craft strategies for their organizations: 1) Get clarity on the boundary conditions and on the specific decision criteria upfront. 2) Conduct an industry analysis. 3) Conduct a status quo analysis to see where the firm might be in the near future in the absence of strategic planning. 4) Generate strategic options — often the most complicated step — by articulating the logic behind decisions without moving directly to the evaluation stage. 5) Assess and evaluate options using financial analysis and modern tools of sensitivity analysis and scenario planning. 6) Articulate a strategic roadmap, including goals, risks, returns, investments, etc. 7) Deploy the strategy, using a tool such as the Balanced Scorecard. The article finishes by explaining the difference between budgeting and strategic planning, terms often confused.

The rate at which data and ideas are collected, viewed, and commented on is faster than ever due to the quick pace of technology innovation. With hundreds of platforms ranging from corporate open innovation to niche platforms, the value and success of individuals coming together to solve problems is well established. This article suggests five ways to leverage the principles of crowdsourcing to create a lasting impact within organizations: 1) From optimization to innovation: Multi-discipline ideation brings diverse audiences together to identify problems and opportunities and break down current models while creating new ones. 2) From customer service to customer experience: Co-creation is the act of building a product or service with customers and end users in an iterative manner (e.g. My Starbucks Idea). 3) From managing knowledge to collective intelligence: Distributed task management is the breaking up of large, complex tasks into micro tasks scattered across global populations. 4) From old money models to new money paradigms: Crowdfunding is the collective effort of individuals to support an initiative by pooling funds together (e.g. Kickstarter). 5) From corporate responsibility to community impact: Civic community building relies on individuals within communities to raise awareness of community issues and projects to address them, with the objective of gathering support.

The largest predictor of new product success is a differentiated high-value product or service, while the best predictor of new product failure is inadequate market research and customer knowledge. With the growth of microprocessor-based products, a proliferation of usage and form factors has led to a shift between embedded devices, appliances, and platforms. Failure to navigate the generational shifts has been a major cause of failure or market share loss. Most businesses must either move from a proprietary embedded system to a more platform-oriented solution, or else package a platform-based solution in such a way as to make it more like an appliance. There are many choices on how to innovate, including product innovation, process innovation, customer innovation, and business model innovation. The digitization of content has had a profound impact on many businesses, and bundling or unbundling legal rights is the new frontier in product differentiation for content. Types of rights include level of quality, number of devices on which content can be used, and resale and inheritance rights. What constitutes a product versus a service will continue to evolve, as the migration occurs from product to service to solution to experience.

Crowdsourcing can be defined as the application of social media to the process of open innovation. It leverages social media to enable brands, places, and entrepreneurs to engage and seek input from online communities who contribute powerful, creative ideas. Crowds should reflect a diversity of opinions, be independent, be geographically dispersed, and be able to aggregate private judgements into a collective decision. Culture can be an impediment to a firm’s adoption of crowdsourcing, if the firm is not open to receiving external input. Crowdsourcing also presents various risks, such as low participation due to a lack of awareness by an audience, controversy over intellectual property ownership, and confusion within a crowd about a task. Best practices in pursuing crowdsourcing include: 1) Ensure support: All ideas and contributions should be appreciated, and executive power for developing the contributions must exist. 2) Be clear with definitions: The company must understand how social media is being used internally. 3) Do demos and pilot: Try out different solutions and approaches and find what works best for an audience. 4) Think of what you want to ask: Explain the challenge in a way that resonates with the audience and elicits concrete contributions. 5) Give kudos: Reward the best contributors.

Gokaldas Exports was a family-owned business founded in 1979 that had grown into India's largest apparel exporter by the mid 2000s. Its founder, Jhamandas H. Hinduja, had bequeathed control of the company to three sons, each of whom brought in his own son. By the end of 2004, Gokaldas had 43 factories with 258 production lines scattered in and around the southern India city of Bangalore. It had more than 35,000 workers, which was nearly double the number it employed in 1999- 2000, and its total sales had increased at an annual compounded growth rate of 19.67 percent over this period. The company was valued at approximately $215 million and exported nearly 90 percent of its production. However, to maintain its already slim margins in an increasingly competitive environment, Gokaldas needed to become more efficient. Company leaders hoped to improve profits by 10-15 percent without adding resources and Gaurav Hinduja, COO of the sportswear division and a third generation family member, became convinced that Lean would be the best means to make this happen.

In August 2007, the United States-based private equity firm the Blackstone Group acquired a 50.1 percent stake in Gokaldas Exports for $116 million. The investment was a two-part deal that included an "open offer" to Gokaldas shareholders for another 20 percent of outstanding shares valued at approximately $45 million. This gave Blackstone a total share of just over 68 percent while the Hinduja family retained 20 percent and other shareholders the remainder.

Analytics is often seen as a threat by senior managers, yet good analytics can inform decision makers and lead to better decisions. Senior executives are likely to react negatively if their deeply held intuition is challenged by results derived from data that use analytics that they do not understand. However, a manager’s job is enriched when it changes from an operations-level, decision-making function to a role in which a complex system is supervised. While leadership and interpersonal skills remain crucial, executives must now possess the ability to critically assess and utilize the innovations emerging from data and advanced analytics. Big data can also lead to new business models, such as when retailers determine the precise needs of their customers and no longer need retail space. This article suggests ways that managers can mine big data to enable their firm to establish and sustain a competitive advantage. It illustrates how Dell analysts were able to define a lucrative product line of pre-configured computers and how IBM Research partnered with Industrial and Commercial Bank of China, the world’s largest bank by market capitalization, to develop a highly successful branch network optimization system.

The tendency of firms during an economic slowdown to wait for the economy to improve and then plan to act often leads to stagnation. Lack of resources has been identified as a major challenge that firms face in implementing strategy. Lean innovation, despite a negative reputation, is an effective means of harnessing resources and eliminating excessive complexity in business. Lean innovation both frees up resources so that they can be applied to innovation projects, and creates a morale boost through eliminating waste. Ideas, the author suggests, are often found from suppliers, employees, and customers, not just R&D departments. Central to the lean innovation framework is the generation, refinement, and spread of ideas. In determining how to refine our ideas, it helps to frame the situation with a question: “What problem is being solved?” The importance of an innovation culture is illustrated by the example of Kodak, which lacked such a culture and went bankrupt after the spread of digital cameras. Indeed, incumbent firms are often unprepared to deal with the appearance of a new model and fail to adapt. Conversely, Netflix embodies the spirit of an innovation culture, as it was willing to introduce video on demand even if it meant eroding growing revenues from its traditional video rental delivery service.

The innovation function — the starting point for creating new advantages — is ineffective in most companies. Warning signs that an innovation process is broken can be grouped into six categories. 1. Innovation is episodic. Innovation should be continuous and systematic, yet it is often downsized during a company’s financial struggles and is sometimes suppressed if a new idea threatens existing business models. 2. The innovation process is invented from scratch. Companies often neglect the wealth of educational opportunities and coaching, as well as the vast literature on venturing and entrepreneurship. 3. Resources are held hostage by incumbent businesses. Allowing existing businesses to determine where employees and funds are allocated does not enable or support innovation. 4. Innovations are force-fitted into existing structures. New businesses should be given combinations of people, assets, and resources that suit their particular needs. 5. Applying the same criteria to evaluate both an innovation and the core business. It is wrong to use the same planning, budgeting, and control processes for things that are predictable and those that are not. 6. Insisting on the venture meeting the plan. Many innovation leaders try to defend past assumptions even after they have been proven wrong.

The founder and CEO of a management company needs to address the future of its joint venture in Iran with a U.S. developer of enterprise resource planning (ERP) systems. The joint venture partners need to decide whether to pursue a potential client’s request for a custom version of the ERP system that the joint venture sells. The two partners disagree regarding the strategic direction forward, but must make a decision.