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Supplements the (A) case.

On its 75th anniversary, HBR asked five of the business world's most insightful thinkers to comment on the challenges taking shape for executives as they move into the next century. 1) In "The Future That Has Already Happened," Peter Drucker examines the effects of the increasing underpopulation of the world's developed countries. 2) Esther Dyson's article "Mirror, Mirror on the Wall" reveals the mind shift executives will need to make in a networked world, where companies will be known for what they do rather than for what they say. 3) The old language of property and ownership no longer serves executives, writes Charles Handy in "The Citizen Corporation." 4) Technology has given executives more information than today's machines can help them understand, explains Paul Saffo in "Are You Machine Wise?" 5) Peter Senge's article "Communities of Leaders and Learners" urges executives to reject the myth of leaders as isolated heroes and instead to build a community of leaders.

The rise of the World Wide Web provided one of the most challenging environments for product development in recent history. The market needs that a product is meant to satisfy and the technologies required to satisfy them can change radically--even as the product is under development. In response to such factors, companies have had to modify the traditional product-development process, in which design implementation begins only once a product's concept has been determined in its entirety. In place of that traditional approach, they have pioneered a flexible product-development process that allows designers to continue to define and shape products even after implementation has begun. This innovation enables Internet companies to incorporate rapidly evolving customer requirements and changing technologies into their designs until the last possible moment before a product is introduced to the market.

In our personal life, experience is often the best teacher. Not so in corporate life. After a major event--a product failure, a downsizing crisis, or a merger--many companies stumble along, oblivious to the lessons of the past. Mistakes get repeated, but smart decisions do not. Most important, the old ways of thinking are never discussed, so they are still in place to spawn new mishaps. In an effort to solve this problem, a group of social scientists, business managers, and journalists at MIT have developed and tested a tool called the learning history. It is a written narrative of a company's recent critical event, nearly all of it presented in two columns. In one column, relevant episodes are described by the people who took part in them, were affected by them, or observed them. In the other, learning historians--trained outsiders and knowledgeable insiders--identify recurrent themes in the narrative, pose questions, and raise "undiscussable" issues. The learning history forms the basis for group discussions, both for those involved in the event and for others who also might learn from it.

John Browne believes that all companies battling it out in the global information age face a common challenge: using knowledge more effectively than their competitors do. And he is not talking only about the knowledge that resides in one's own company. "Any organization that thinks it does everything the best and that it need not learn from others is incredibly arrogant and foolish," he says. British Petroleum's chief executive, who engineered the revival of BP Exploration and Production and poised BP for spectacular growth, never accepts that something can't be done and is always asking if there is a better way and if someone might have a better idea. Under his leadership, BP is doing the same. And no matter where knowledge comes from, Browne says, the key to reaping a big return is to leverage that knowledge by replicating it throughout the organization so that each unit is not learning in isolation.

Two decades after affirmative action became law, progress on increasing diversity in the U.S. workplace--particularly beyond the entry level--is mixed. On one hand, people of color make up a larger percentage of senior managers than at any point in the past. On the other hand, many people of color still struggle with the closed doors of institutional racism. For its 75th anniversary issue, HBR asked a group seldom heard from in the media--executives of color--to address the central questions on race and work in the United States: How far has American business come? Is there reason for optimism? Which programs work and which fail? Who is primarily responsible for bringing about advances in diversity? And what does the future hold?

The primary decision maker operated an extensive shrimp farming business in Ecuador. The shrimp value chain consisted of many activities that culminated in the preparation of a wide variety of frozen appetizers and dinners. In order to increase profitability, the company faced the challenges of moving up the value chain. Meanwhile, global consumption of shrimp value-added products was increasing rapidly. Foreign food processors and retailers had an interest in guaranteeing supply by integrating backwards into the shrimp farming business. A joint venture might offer benefits to both the company and a foreign corporation. The case raises issues of concern from the perspective of both potential partners. Ecuador had just emerged from a political revolution; interest rates and foreign exchange rates were unstable; financial institutions in Ecuador were charging extremely high interest rates; labour unrest might result in various kinds of work stoppages. In such a rapidly changing environment of business, how should the company plan for its economic future?

In early 1996, Vincor was Canada's largest wine company. It had grown rapidly, largely through acquisition. It was now looking at the prospects of an Initial Public Offering (IPO) in order to reduce debt and fund further growth. But what specifically was the case to put before the investment community? What were the industry opportunities? And what were the strategies to capitalize on these? Could a compelling case be built for a reasonably priced IPO? The case presents relevant industry and company data and asks the reader to take the position of management and develop the IPO case. (A 23-minute video, which presents management's road show program, can be purchased for the case; video 7A96M007.) Data are available on the nature and success of the IPO.

The case describes the actions taken by Dennis Hightower as president of Disney Consumer Products in Europe and the Middle East from 1988 to 1994. It focuses on how he has gone about establishing a regional office and knitting local operations closer together, the benefits that the process has generated, but also the tensions it has created within the organization. It ends with Hightower contemplating whether he should be changing directions, given the emerging strategic and organizational challenges.

Innovate or fall behind: The competitive imperative for virtually all businesses today is that simple. Responding to that command is difficult, however, because innovation takes place when different ideas, perceptions, and ways of processing and judging information collide. And it often requires collaboration among players who see the world differently. As a result, the conflict that should take place constructively among ideas all too often ends up taking place unproductively among people. Disputes become personal, and the creative process breaks down. The manager successful at fostering innovation figures out how to get different approaches to grate against one another in a productive process the authors call creative abrasion. Managers who want to encourage innovation need to examine what they do to promote or inhibit creative abrasion.

Most profitable strategies are built on differentiation: offering customers something they value that competitors don't have. But most companies concentrate only on their products or services. In fact, a company can differentiate itself at every point where it comes in contact with its customers--from the moment customers realize they need a product to service to the time when they dispose of it. The authors believe that if companies open up their thinking to their customers' entire experience with a product or service--the consumption chain--they can uncover opportunities to position their offerings in ways that neither they nor their competitors thought possible. The authors show how even a mundane product such as candles can be successfully differentiated. By analyzing its customers' experiences and exploring various options, Blyth Industries, for example, has grown from a $2 million U.S. candle manufacturer into a global candle and accessory business with nearly $500 million in sales and a market value of $1.2 billion.

Nortel, a large Canadian telecommunications company, has been doing business in China since 1972. By mid-1994, Nortel had successfully developed two joint ventures in China but two others were bogged down in negotiations. The two that had been finalized would not make any money for Nortel, while the one in Guangdong that would make a profit was hopelessly bogged down. The chairman of Nortel China was contemplating alternative ways of expediting the negotiations. One alternative was to help the Chinese achieve their telecommunication-related industrial policy, by investing in an agreement whereby Nortel would help train R&D technical experts in China; this demonstration of goodwill might expedite the Guangdong project. Other options included selecting a new set of more cooperative partners; standing tough in the current negotiations; using the unsigned Advanced Semiconductor joint venture as a bargaining chip, as it would contribute to the Chinese government's goal of industrial self-sufficiency; or investing more heavily in back door and guanxi relationships. If Nortel could not find a way in which to expedite negotiations with the Chinese, one of Nortel's major competitors could easily pick up where Nortel left off.

Supplements the (A) case. Includes excerpts from speeches by Ecolab president Al Schuman, CEO Sandy Grieve, and three senior sales executives, and highlights the camaraderie and goodwill among senior executives of Ecolab's Institutional Division. May be used in place of the video.

Supplements the (A) case. In the weeks following the employee defections, Al Schuman toured Ecolab's offices extensively. The case excerpts from one of the speeches he made during his tour. May be used in place of the video.

Three cases deal with the introduction of a new product to Teradyne's line of semiconductor test equipment. Teradyne: Managing Strategic Change provides historic and administrative background for the other two cases. Teradyne: The Aurora Project deals with the problems facing the head of a start-up division responsible for developing and bringing to market a new product based on technology deemed very important to the future but unattractive to present customers and, therefore, the operating divisions. This case deals with the same set of problems from the perspective of corporate management--in particular why the skunk works approach was necessary and what new problems this approach creates even if the project is successful.

Three cases deal with the introduction of a new product to Teradyne's line of semiconductor test equipment. Teradyne: Managing Strategic Change provides historic and administrative background for the other two cases. This case deals with the problems facing the head of a start-up division responsible for developing and bringing to market a new product based on technology deemed very important to the future but unattractive to present customers and, therefore, the operating divisions. This revision is shorter and provides a simpler description of the technology involved. Teradyne: Managing Disruptive Change deals with the same set of problems from the perspective of corporate management--in particular why the skunk works approach was necessary and what new problems this approach creates even if the project is successful.

The U.S. defense industry has seen more than 50% of its market disappear, and the companies that make up the industry have faced the need for the equivalent of self-administered surgery with no insurance, no anesthetic, and no assurance of long-term health. In 1995, Martin Marietta and Lockheed combined to form Lockheed Martin. That company has emerged in a most coveted role: survivor. In fact, it has seen its stock price nearly double in less than two years. In this article, CEO Norman Augustine relates the company's experience and offers some difficult--and painful--prescriptions. Companies in technology-driven industries must reinvent themselves continually. The bad news is that change requires hard decisions. The good news is that success awaits organizations willing to make those decisions.

In many industries, superior technology integration--the approach used to choose and refine the technologies employed in a new product, process, or service--is the key to achieving superior R&D productivity and speed, and superior products. In this article, which is based on an ongoing study of R&D in various segments of the global computer industry, Marco Iansiti and Jonathan West contend that technology integration has become much more important--and challenging--for obvious reasons. A radical change in the approach of U.S. companies to technology integration helps explain the resurgence of the U.S. electronics industry in the 1990s. But one size does not fit all. Indeed, the authors have found that an approach that works well in one country may not be the best for another. To be effective, an approach must suit the local culture and conditions.

In 1991, Warner-Lambert Company, a firm involved in three core businesses-ethical pharmaceuticals, nonprescription health care products, and confectionery-has just completed its most successful year ever. However, Mel Goodes, the new CEO, is worried that the current organizational structure is inconsistent with an increasingly global business environment. The key issue in the case is how to shift a classic multidomestic, country-oriented firm to a more responsive, tighter-linked global structure. This should lead to a discussion of the pros and cons of running a business on a global versus local basis. The issue becomes quite complex with Warner-Lambert because of the differences between its three core businesses.

Procter & Gamble has been in Eastern Europe for 2 1/2 years. The case outlines the problems, missed opportunities and difficulties Procter & Gamble has had in transplanting their corporate culture onto the newly liberalized economies of Eastern Europe. The case requires students to generate alternatives for Procter & Gamble's future strategy in Eastern Europe given the political, economic, societal, and technological (PEST) environment.