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Much of the discussion about globalization has missed a very important point, these co-authors claim, and seeing this point and understanding it are critical if executives are to really grasp what globalization is all about. The co-authors write that far from a single, global market, most trade takes place within regional blocks or clusters. Trade activity effectively occurs in the triad of North America, the European Union and Japan, and an approach based on national or regional realities, not global ones, will make the most sense for companies. The authors have ample evidence to substantiate their argument and they suggest what executives can do to counter and manage despite the widely propagated myth of globalization.

In a fast-moving, increasingly competitive world, a firm's only enduring source of advantage is its knowledge. Managing that knowledge is therefore crucial, and this article offers suggestions on how leaders can meet that challenge effectively. The author describes a practical six-step process for making knowledge management work. The process he describes will interest CEOs and managers of global corporations as much as it will entrepreneurs of small and medium-sized firms.

Chronicles International Paper from 1957 to 2001 in its transition from a company with a unique focus on forest products to one that embraced land management practices and fostered recreational and wildlife uses of forestlands. In 2001, International Paper (IP) was a billion-dollar global paper and forest products company with stewardship over 12 million acres of private forestlands in the United States. IP's foray into land management was spearheaded in 1983 by forester and biologist Tom Bourland. Describes Bourland's first business plan for leasing recreational opportunities (hunting and camping) on IP land, IP's forestry management practices, revenues from recreation and, in 2001, new challenges facing the company: providing support for environmental management programs in the face of declining demand for hunting areas and increased demand for forest products that meet various environmental criteria.

Within the context of the large established organization, breakthrough ideas are frequently lost. This article describes how breakthrough innovations are captured through opportunity recognition. Based on evidence from a six-year-long study of twelve radical innovation projects in ten large U.S. firms. Highlights inefficiencies in current managerial processes and provides examples of organizational structures, mechanisms, and roles directed at reducing these inefficiencies. Presents a set of approaches for improving opportunity recognition capabilities and identifies several mechanisms for senior management to encourage "radical innovation" people and processes.

Management tools, such as strategic planning, benchmarking, pay-for-performance, outsourcing, customer segmentation, reengineering, balanced scorecard, and total quality management, garner considerable attention in the popular management literature. Companies throughout the world spend millions of dollars each year implementing a dozen or so of these tools. This survey examines the usage of these tools over a seven-year period, assesses user satisfaction with the tools, and attempts to correlate tool usage with company performance. Identifies tools that have been consistently used over time as well as those that seen to have been passing fads.

AmBev, the merger of the two largest Brazilian beverage companies (Brahma and Antarctica) wants to become a strong South American multinational, able to compete with the main global players in this sector. AmBev creation process raised an important polemic. Competitors said AmBev would have a monopolistic power (controls about 70% of the Brazilian beer market). The Brazilian Government had to intervene and, finally, AmBev was authorized only with some minor restrictions.

The merger announcement between DeWaal Pharmaceuticals and BioHealth Labs was front-page news. Two months later, the press had moved on to a new story, and the hard labor of integration loomed. CEO Steve Lindell had worked tirelessly to clear regulatory hurdles, and all signs pointed toward approval in the near future. Now Steve was feeling pressure to attack the real challenge of the merger: bringing together two very different cultures as quickly and efficiently as possible. DeWaal was an established drugmaker based in the Netherlands, and BioHealth, headquartered just north of New York City, had in recent years become competitive at the highest tier of the market. The first step in integrating the two companies was to select the top layers of management for the new company. At the moment, there were some 120 people on two continents for about 65 senior-level jobs. Steve's urgency was not without cause: talented people from both sides were jumping ship, and BioHealth's stock price had dipped 20% after the initial euphoria over the deal had worn off. As the two men attempt to work through the important personnel issues during a lunch meeting, they quickly hit a roadblock. How can they come to agreement about who goes and who stays? In R0101A and R0101Z, commentators David Kidd, Lawrence J. DeMonaco, Grand Freeland, and Patrick O'Sullivan offer advice on this fictional case.

Many companies face the challenge of balancing art with commerce. The conflict between corporate pragmatism and artistic passion and quality is persistent: designers chafe under corporate requirements, budgets, and deadlines, and nondesigners struggle to understand the business value of artistic choices. At German carmaker BMW, the fanaticism about design excellence is matched only by the company's driving desire to remain profitable. Global design director Chris Bangle presides over the intersection of art and commerce at BMW, managing the often-strained relationships among the designers, engineers, and business managers. Bangle goes to great lengths to protect his designers from the unproductive commentary of others in the company, literally posting "Stop: No Entry" signs on the design studio doors. He also protects the design process, making sure that time-to-market pressures do not harm the designs by shifting the focus to engineering too soon. As a mediator, Bangle appeals to the core values of the company and a deeply held sense about BMW-ness--a pride of product shared by everyone in the company that expresses itself in the classic quality of the cars. Every employee, designer and nondesigner alike, understands that if a car doesn't meet this standard of excellence, it's simply not a BMW--and customers won't buy it.

Why is business so admired in the United States and so often denigrated in Europe? How has America created 30 million new jobs in the last 20 years while the European Union, with a bigger population, only managed 5 million? What is feeding America's apparently inexhaustible appetite for growth and its recent dramatic improvements in productivity? In 1831, French philosopher Alexis de Tocqueville came to America to examine its prison system and returned with a vision of democracy so profound it has become part of our cultural heritage. More than a century and a half later, renowned British business philosopher Charles Handy retraces Tocqueville's intellectual journey, this time focusing not on democracy but on capitalism. The result is an eye-opening look at some of the fundamental assumptions underpinning business in America today. It is America's optimism that Handy finds most striking, the unquestioned belief that tomorrow can--and should--be made better than today. The energy engendered by American optimism, coupled with the Puritan belief in work and in the nobility of earned wealth lies, in Handy's view, at the heart of America's success. Will American capitalism, born as it was from a property-owning democracy, now adapt to a dematerialized world, where property is intellectual rather than physical? Handy lays out the challenges that must be overcome for tomorrow to indeed continue to be better than today in this still-young country.

Management theorists have long sought to identify precisely what makes some people flourish under pressure and others fold. But they have come up with only partial an­swers: rich material rewards, the right cul­ture, management by objectives. The prob­lem with most approaches is that they deal with people only from the neck up, con­necting high performance primarily with cognitive capacity. Authors Loehr and Schwartz argue that a successful approach to sustained high performance must con­sider the person as a whole. Executives are, in effect, "corporate athletes." If they are to perform at high levels over the long haul, they must train in the systematic, multilevel way that athletes do. Rooted in two decades of work with world-class athletes, the integrated theory of performance management addresses the body, the emotions, the mind, and the spirit through a model the authors call the per­formance pyramid. At its foundation is phys­ical well-being. Above that rest emotional health, then mental acuity, and, finally, a spiritual purpose. Each level profoundly influences the others, and all must be ad­dressed together to avoid compromising performance. Rigorous exercise, for in­stance, can produce a sense of emotional well-being, clearing the way for peak mental performance. Rituals that promote oscilla­tion - the rhythmic expenditure and recov­ery of energy - link the levels of the pyramid and lead to the ideal performance state. The authors offer case studies of execu­tives who have used the model to increase professional performance and improve the quality of their lives. In a corporate envi­ronment that is changing at warp speed, performing consistently at high levels is more necessary than ever. Companies can't afford to address employees' cognitive ca­pacities while ignoring their physical, emo­tional, and spiritual well-being.

In this HBR interview, CEO Michael Ruettgers speaks in detail about the managerial practices that have allowed EMC to anticipate and exploit disruptive technologies, market opportunities, and business models ahead of its competitors. He recounts how the company repeatedly ventured into untested markets, ultimately transforming itself from a struggling maker of minicomputer memory boards into a data storage powerhouse and one of the most successful companies of the past decade. The company has achieved sustained and nearly unrivaled revenue, profit, and share-price growth through a number of means. Emphasizing timing and speed, Ruettgers says, is critical. That's meant staggering products rather than developing them sequentially and avoiding the excessive refinements that slow time to market. Indeed, a sense of urgency, Ruettgers explains, has been critical to EMC's success. Processes such as quarterly goal setting and monthly forecasting meetings help maintain a sense of urgency and allow managers to get early glimpses of changes in the market. So does an environment in which personal accountability is stressed and the corporate focus is single-minded. Perhaps most important, the company has procedures to glean insights from customers. Intensive forums involving EMC engineers and leading-edge customers, who typically push for unconventional solutions to their problems, often yield new product features. Similarly, a customer service system that includes real-time monitoring of product use enables EMC to understand customer needs firsthand.

The merger announcement between DeWaal Pharmaceuticals and BioHealth Labs was front-page news. Two months later, the press had moved on to a new story, and the hard labor of integration loomed. CEO Steve Lindell had worked tirelessly to clear regulatory hurdles, and all signs pointed toward approval in the near future. Now Steve was feeling pressure to attack the real challenge of the merger: bringing together two very different cultures as quickly and efficiently as possible. DeWaal was an established drugmaker based in the Netherlands, and BioHealth, headquartered just north of New York City, had in recent years become competitive at the highest tier of the market. The first step in integrating the two companies was to select the top layers of management for the new company. At the moment, there were some 120 people on two continents for about 65 senior-level jobs. Steve's urgency was not without cause: talented people from both sides were jumping ship, and BioHealth's stock price had dipped 20% after the initial euphoria over the deal had worn off. As the two men attempt to work through the important personnel issues during a lunch meeting, they quickly hit a roadblock. How can they come to agreement about who goes and who stays? In R0101A and R0101Z, commentators David Kidd, Lawrence J. DeMonaco, Grant Freeland, and Patrick O'Sullivan offer advice on this fictional case.

The merger announcement between DeWaal Pharmaceuticals and BioHealth Labs was front-page news. Two months later, the press had moved on to a new story, and the hard labor of integration loomed. CEO Steve Lindell had worked tirelessly to clear regulatory hurdles, and all signs pointed toward approval in the near future. Now Steve was feeling pressure to attack the real challenge of the merger: bringing together two very different cultures as quickly and efficiently as possible. DeWaal was an established drugmaker based in the Netherlands, and BioHealth, headquartered just north of New York City, had in recent years become competitive at the highest tier of the market. The first step in integrating the two companies was to select the top layers of management for the new company. At the moment, there were some 120 people on two continents for about 65 senior-level jobs. Steve's urgency was not without cause: talented people from both sides were jumping ship, and BioHealth's stock price had dipped 20% after the initial euphoria over the deal had worn off. As the two men attempt to work through the important personnel issues during a lunch meeting, they quickly hit a roadblock. How can they come to agreement about who goes and who stays? In R0101A and R0101Z, commentators David Kidd, Lawrence J. DeMonaco, Grant Freeland, and Patrick O'Sullivan offer advice on this fictional case.

Spreadsheet supplement for case 300-018.

Two new product launch decisions face Christopher Carson, managing director of BRL Hardy, Europe. Responsible for the European operations of a major Australian wine company, Carson has begun to globalize his strategy beyond selling the parent company's wines. After a difficult joint venture with a Chilean wine source, he is proposing to launch an Italian line of wines. His local team has also developed a new Australian brand that would compete directly with a parent company's global brand rollout.

Enables a condensed analysis of Ventro (formerly known as Chemdex), which builds and operates multiple B2B marketplace companies. Part of the Building-E-Business Online series.

John Couch, CEO of DoubleTwist, has transformed a software products company into an Internet application service provider, racing to provide databases and tools for those working to explore the human genome. Crafting strategy and building organizational capability are challenges in this fast-moving field.

This technical note introduces students to the use of earnouts and other forms of incentive payments in the context of mergers and acquisitions. The note describes the use of incentive payments in M&A, recent deals in which earnouts were used, the trend and volume of earnout deals, the benefits and disadvantages of earnout structures. The large concept in the evaluation of earnouts is their similarity to call options. This conceptual approach provides the foundation for considering how an earnout might best be structured, and how its value might be estimated. The note concludes with a generic valuation example and refers the reader to a spreadsheet model that might serve as a template for future assessments of earnouts.

Discusses the shortcomings of the current "rules of thumb" for intellectual asset valuation in the context of intellectual property licensing transactions. As an alternative to the present scheme, this note proposes quantitative methods for such valuations in order to better inform the parties negotiating the elements of an IP transaction.