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The debate on business and the environment has typically been framed in simple yes-or-no terms: "Does it pay to be green?" But the environment, like other business issues, requires a more complex approach--one that demands more than such all-or-nothing thinking. Managers need to ask instead, "Under what circumstances do particular kinds of environmental investments deliver returns to shareholders?" This article presents five approaches that managers can take to identify those circumstances and integrate the environment into their business thinking. These approaches will enable companies with the right industry structure, competitive position, and managerial skills to reconcile their responsibility to shareholders with the pressure to be faithful stewards of the earth's resources. Some companies can distance themselves from competitors by differentiating their products and commanding higher prices for them. Others may be able to "manage" their competitors by imposing a set of private regulations or by helping to shape the rules written by government officials. Still others may be able to cut costs and help the environment simultaneously. Almost all can learn to improve their management of risk and thus reduce the outlays associated with accidents, lawsuits, and boycotts. And some companies may even be able to make systemic changes that will redefine competition in their markets. All five approaches can help managers bring the environment down to earth. And that means bringing the environment back into the fold of business problems and determining when it really pays to be green.

One of the most common business phenomena is also one of the most perplexing: when successful companies face big changes, they often fail to respond effectively. Many assume that the problem is paralysis, but the real problem, according to Donald Sull, is active inertia--an organization's tendency to persist in established patterns of behavior. Most leading businesses owe their prosperity to a fresh competitive formula--a distinctive combination of strategies, relationships, processes, and values that sets them apart from the crowd. But when changes occur in a company's markets, the formula that brought success instead brings failure. Stuck in the modes of thinking and working that have been successful in the past, market leaders simply accelerate all their tried-and-true activities. In attempting to dig themselves out of a hole, they just deepen it. In particular, four things happen: strategic frames become blinders; processes harden into routines; relationships become shackles; and values turn into dogmas. To illustrate his point, the author draws on examples of pairs of industry leaders, like Goodyear and Firestone, whose fates diverged when they were forced to respond to dramatic changes in the tire industry. In addition to diagnosing the problem, Sull offers practical advice for avoiding active inertia. Rather than rushing to ask, "What should we do?" managers should pause to ask, "What hinders us?" That question focuses attention on the proper things: the strategic frames, processes, relationships, and values that can subvert action by channeling it in the wrong direction.

Supplements the (A) case.

This case describes a vacuum cleaner manufacturer whose program for operational improvement includes the development of performance measures. Management decides to start with the service department. Students are asked to design a system of performance measures that are simple and feasible and that relate to both company strategy and what people do. Balanced scorecard or other frameworks may be used, but students find that fitting the situation to a preconceived framework does not work as well as the other way around.

Deals with key strategic challenges facing Eli Lilly, a highly successful U.S.-based drug company.

Examines major issues faced by Eli Lilly as it evaluates the appropriateness of a focused matrix organization with extensive use of cross-functional teams.

exciting mystery movie. Walsh has the final say on the development and production of movie scripts for major box-office release. This new movie idea, like so many others in the film industry, is risky. It could become a blockbuster hit, but it could also become a costly failure. Alternatively, Anderson could recommend that Walsh forgo production of the movie drama and use the studio's currently available resources to produce a film from another script for Home Box Office (HBO). Anderson has to determine the best use of the studio's current production resources. The HBO option would provide fairly certain profits. Conversely, a huge hit at the box office could put High Places on the map as a major contender among the Hollywood studios, but a flop could incur significant losses, which High Places could ill afford. See also the B case, UVA-QA-0547.

In the B case, a question arises concerning what type of contract to offer the film's star. Should the studio offer a standard fixed-fee contract, or should it offer a smaller fixed fee plus a percentage of the gross? Moreover, which alternative would the star prefer? See also the A case, UV6214.

The Acer Group is one of the world's largest PC and computer component manufacturers. The vice-president of Global Operations is pondering whether the timing and environment is conducive for Acer, based in Taiwan, to commence full-scale manufacturing operations in the Chinese mainland. Students are asked to examine the criteria on which Acer should base their decision to manufacture overseas, and in so doing, create the framework for a corporation's global manufacturing strategy. The teaching objectives also include having students consider the political, economic and social environments of a global manufacturing strategy. A related case entitled Acer Group's R & D Strategy - The China Decision (9A99M007) is also available.

This note discusses organizational culture, distinguishing among surface-level artifacts, formal and informal practices and norms, and deep-seated assumptions and values. The typology can be used to perform a cultural audit of a group or organization.

This note discusses rewards in organizations. Theories of individual motivation to perform are addressed, as are ways of analyzing organizational-reward distributions. Recent reward-system innovations are mentioned, and a decision tree for assessing performance issues is included.

Members of the development team for the AES Corp.'s power plant project in India must decide what plant technology to specify in their application for techno-economic clearance from the government of India's Central Electric Authority. Their choice is between more expensive technology that would enable the plant to meet more demanding U.S. environmental standards or less costly technology that would meet local environmental standards and free up funds for contributions to other needs of communities surrounding the projected plant. At the same time, executives at AES headquarters in Arlington, VA, are considering whether the company's traditional focus on meeting its social responsibility through CO2-offset programs is the best approach to social responsibility as the company expands worldwide.

To ensure that acquisitions generate value, what should the priorities of the new management team be? If it starts with rationalization (closing duplicate facilities, reducing the head count), it will make rapid progress on the cost side, but risk a demotivated work force. If it emphasizes acculturation (building relationships, fostering a common culture), it will have happy employees, but little cost savings. Doing both at the same time is no answer, either. Intensive analysis of three case studies suggests a model for the acquiring firm in deciding whether to pursue the "high road" by first emphasizing human integration before concentrating on operational synergies, or the "low road" of attending to cost savings initially and subsequently focusing on relationships. Evidence supports the case for a "high road" approach when the acquired firm's key assets are R&D and knowledge-intensive. A three-phase model--initial actions, follow-up, and second wave--is offered to help top management avoid the perils on either side of an optimal integration path. Specific examples are drawn from the experiences documented in the three case studies.

Accounting and law firms around the globe are following with great interest the progress through British courts of a lawsuit. Those familiar with the suit, filed by Prince Jefri of Brunei against the professional service firm KPMG Peat Marwick, remark that its judgment will be "a landmark ruling with profound implications." At stake is nothing less than how professional service firms conduct their business. The case highlights: (1) the emerging tension between how accounting firms and law firms view their responsibility to clients and (2) the use and limitations of "Chinese walls" in managing potential conflicts within firms.

Supplements the (A) case.

Supplements the (A) case.

Supplements the (A) case.

A family-owned brick manufacturer has built an export business to Japan and other Asia markets from zero to ten per cent of its volume in seven years. The case examines the company's export strategy and organization in light of the recent Asian economic crisis and the reasons for their competitive success both in Australia and Asia. The managing director is raising the question of whether it is time to change their regional export strategy and organizational structure.

Less than half an hour after Donald Hastings became chairman and CEO of the Lincoln Electric Company in July 1992, he got the shocking news: losses from the company's European operations were so steep that Lincoln was at risk of defaulting on its loans and being unable to pay its employees their year-end bonus. Since the bonus was the foundation of the company's unusually successful manufacturing operations, Hastings knew that failure to pay it could lead to the company's unraveling. How had Lincoln gotten into this predicament? By a program of rapid foreign expansion. Lincoln was primarily a U.S. company until the mid-1980s, but recession at home and competition from abroad led executives to dream that the company could become a global power. Between 1986 and 1991, Lincoln took on unprecedented debt in order to finance foreign acquisitions, mostly in Europe. A number of factors doomed the venture: recession in Europe, unfamiliarity with Europe's labor culture, lack of international expertise at the top. But the root cause, Hastings admits, was overconfidence on the part of Lincoln's leaders in the company's manufacturing abilities and systems. Hastings, now chairman emeritus, recounts how the company suffered through the early 1990s and then returned to prosperity. It wrote off most of its European operations, ramped up domestic production and sales, and hired top managers and board members with international experience. As a result of strenuous efforts at all levels of the company, it managed to keep paying the bonus and to largely regain the trust of its people.

The selection of a CEO is one of the most important--and risky--events in the life of any company. Yet the way CEOs are chosen remains little discussed and little understood. The succession process has traditionally unfolded behind closed doors--some observers have even likened it to the election of a pope. To shed light on what works and what doesn't in CEO succession, the authors lead a roundtable discussion with five distinguished corporate directors: Philip Caldwell, George D. Kennedy, G.G. Michelson, Henry Wendt, and Alfred M. Zeien. Collectively, the five directors have participated in dozens of successions, either as board members or as CEOs. In a lively and frank exchange of views and experiences, the roundtable participants explore a broad range of questions: What can a company do to ensure a successful succession? How should management-development and succession processes be managed? How should the board work with the sitting chief executive during the process? What makes for a strong CEO candidate? When should outside candidates be considered? How much competition should be encouraged among potential CEO candidates? What role should executive search firms play? What role should former CEOs play after they are succeeded? Their conversation illuminates a corporate challenge that is as difficult as it is important.