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The next wave of economic growth is going to come from knowledge-based businesses. What will those businesses and their products look like? A tire that notifies the driver of its air pressure and a garment that heats or cools in response to temperature changes are early versions of knowledge-based, or "smart," products already on the market. They are smart because they filter and interpret information to enable the user to act more effectively. The development of knowledge-based business reflects an even larger transformation occurring in our society. Education is no longer focused on the student years but is considered a lifelong pursuit. In knowledge economies, the rapid pace of technological change means that learning must be constant and that education must be updated throughout one's working life. Business, more than government, is instituting the changes that are required for the emerging knowledge-based economy. And over the next few decades, the private sector will come to eclipse the public sector as our predominant educational institution.

In his thirty-first article for HBR, Peter F. Drucker argues that what underlies the current malaise of so many large and successful organizations worldwide is that their theory of the business no longer works. The story is a familiar one: a company that was a superstar only yesterday finds itself stagnating and frustrated, in trouble and, often, in a seemingly unmanageable crisis. The root cause of nearly every one of these crises is not that things are being done poorly. It is not even that the wrong things are being done. Indeed, in most cases, the right things are being done--but fruitlessly. What accounts for this apparent paradox? The assumptions on which the organization has been built and is being run no longer fit reality. These are the assumptions that shape any organization's behavior, dictate its decisions about what to do and what not to do, and define what an organization considers meaningful results. These assumptions are what Drucker calls a company's theory of the business.

The mission of industrial design has traditionally been to support engineering and marketing by improving the look and feel of a product. But a handful of pioneering companies--such as Thomson Consumer Electronics, Apple Computer, and Northern Telecom--are extending the parameters of design, pushing to the forefront something that has been an afterthought at most companies: a product's usability. User-centered design goes beyond ergonomics to encompass the cognitive aspects of using a product, or how logical and natural a product is to use, as well as the emotional aspects, or how people feel about using it. Thomson, for example, has declared that all its entertainment products must be engaging, foster a sense of discovery, and eliminate fear. And Northern Telecom has defined usability as simplicity, ease of use, and conspicuous customer value. Photographs of Thomson's System Link universal remote, Apple's PowerBook computer, and Northern Telecom's Vista modular phone illustrate how the new definition of usability can be incorporated into products.

Alex MacDonald, president and owner of AWC Inc., a southwestern Ontario aluminum fabrication operation, is confronted with a decision of whether to install ventilation equipment that will negatively affect the financial performance of the company, possibly forcing the company out of business. His alternative is to ignore environmental regulations and risk being charged by government authorities for contravening the law. This case provides the opportunity to discuss several environmental forces that impact business decision making.

Designed specifically for the smaller U.S.-based company; provides a brief overview of the various means by which such companies can enter foreign markets and the sources of information and assistance, principally on exporting, available to them.

More than ever, the public is looking to the nonprofit sector to address the pressing social problems that are hobbling the United States. As a result, all nonprofits face increased scrutiny from both benefactors and government regulators. To survive under this spotlight, a nonprofit needs a powerful and proactive board of directors to provide oversight. The board must assume the roles played in a business by owners and the market, ensuring that the nonprofit accomplishes its mission efficiently and devising its own system of measurement and control. Four questions help board members create such a system: 1) Are the organization's goals consistent with its financial resources? 2) Is the organization practicing intergenerational equity? 3) Are the sources and uses of funds appropriately matched? 4) Is the organization sustainable?

This is an MIT Sloan Management Review article. Conventional approaches to decision making focus on generating and evaluating alternatives. According to the author, however, alternatives are relevant only as means to achieve values. Values, not alternatives, should be the primary focus of decision making. Describes "value-focused thinking," which involves clearly defining and structuring your fundamental values in terms of objectives and using these objectives to guide and integrate decision making. Presents techniques for creating better alternatives for your decision problems and for identifying more appealing decision opportunities than those that confront you. Relevant both to organizational and personal decisions, these ideas are illustrated by their application at Conflict Management, Inc.

Concerns the decision whether or not to launch a satellite television service in Asia in the 1990-1991 period. STAR TV was a joint venture between Hutchison Whampoa and Li-Ka Shing and was established to launch such a service. Li-Ka Shing's son, Richard, was CEO. Considers the background to the satellite TV industry in Europe and the United States, the likely success of such a venture in Asia, and strategic and tactical issues.

Colgate-Palmolive, the U.S.-based consumer products firm, has long emphasized international experience for its managers and has developed a comprehensive policy to manage expatriate assignments. The rise in dual-career families has made some managers reluctant to accept foreign assignments, causing Colgate-Palmolive to reexamine the way it manages international career development.

Nike and Reebok, the two largest athletic footwear companies, look to contractors in Asia to manufacture their shoes. Sourcing from Asia offers advantages of low cost and flexibility, but raises questions about human rights and corporate responsibility. How Nike and Reebok have addressed these questions is the focus of this case.

A co-operative involves many unique business features, and these are illustrated by Mountain Equipment Co-op. Of particular interest is the way in which customers are shareholders, and so the firm faces customer empowerment that both strengthens its market presence and also influences its product mix and pricing structure. Management faces a unique set of success criteria. Apart from its co-op nature, Mountain Equipment demonstrates the creative ways that a service sector retailer participates today in the manufacturing sector. Its proactive role involves ongoing contributions to the design of products, and even participation in the ownership of manufacturing facilities.

Spreadsheet supplement for case 394177.

The note examines the relationship of national culture to management. Offers a definition of culture, explains the scope of culture and its many dimensions, and describes how culture is manifested in business settings. The research of Edward Man, Geert Hofstede, and others is discussed.

Traces the history of Intel from its earliest days as a technology-driven memory company to its emergence as an increasingly market-focused microprocessor company with emerging systems capabilities. The focus is on the strategic, organizational, and management adaptation that was required to ensure the company's survival in a highly volatile industry. Under the leadership of Andy Grove and Gordon Moore, Intel is able to overlay its R&D base with manufacturing and marketing capabilities that allow it to continually adapt to changes and renew itself.

Manville Corp.'s senior managers are surprised when Japanese government officials advise them not to go forward with their plan to add a cancer warning label to diatomaceous earth (DE) products sold in Japan. The International Agency for Research on Cancer has ruled that a component of DE is probably carcinogenic, and Manville has prepared to modify its labels and material safety data sheets and to mount a communications effort to inform customers of the cancer warning. Now, Manville's senior managers are being told that it is "culturally inappropriate" to proceed with this plan in Japan.

Outlines several differing conceptions of corporate purpose and responsibility that emerged in the 1970s and 1980s.

InSpeech, Inc., the largest U.S. provider of speech, occupational, and physical therapists to nursing homes and hospitals, is faltering badly. The company is having trouble retaining its frontline employees--the clinicians who deliver its services--and its customers. Senior managers must assess the problem and devise a turnaround strategy.

NovaCare's CEO is considering how further to institutionalize the company's espoused values and beliefs. One challenge is integrating two newly acquired businesses; another is better aligning the values of the company's managers with those of its front-line employees--the health care providers who deliver rehabilitative services to patients in nursing homes and hospitals.

The continued vitality of the most successful U.S. and European pharmaceutical companies in the face of accelerating scientific and technological change holds valuable lessons for managers in all industries trying to respond to turbulent times. The pharmaceutical industry faces some serious challenges in the future, most notably, the proposed reform of the U.S. health care system. Yet its success in the crucial area of research can serve as a benchmark for companies seeking to become more innovative in the overloaded environment of the information age. New research conducted by Rebecca Henderson of MIT and Iain Cockburn of the University of British Columbia suggests that the longevity of pharmaceutical companies attests to a unique managerial competency: an ability to foster a high level of specialized knowledge within an organization, while preventing that information from fixing the company in the past, unable to respond to an ever-changing environment.

Prosecutors in the U.S. Justice Department's Office of Consumer Litigation reflect on their case against the Beech-Nut Nutrition Corp.