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This is an MIT Sloan Management Review article. Executives make few moves more critical than their decisions about which technology infrastructure investments will promote future strategic agility. To pinpoint best practices, three IT experts marshaled 10 years of data from 89 leading enterprises. One finding was that when companies describe their IT infrastructure capabilities as services instead of equipment (say, the provision of a fully maintained laptop computer with access to all company systems and the Internet), they do a better job of putting a value on what they are buying. Understanding the 70 IT infrastructure services that emerge consistently from the research can help executives identify which investments will make sense for which strategic business initiative. And understanding whether the contemplated initiative is supply side, internally focused, or demand side can help managers decide whether to make the infrastructure investment on a business unit level or enterprisewide. The authors find that leading companies are making regular, systematic, modular, and targeted IT infrastructure investments on the basis of overall strategic direction. If other companies can learn to recognize which IT infrastructure capabilities are needed for which kinds of initiatives, they can have some assurance that the investments they make today will serve the strategies of tomorrow.

In the quest to reduce waste on production lines, managers often find that the harder they work at improving their manufacturing processes, the more elusive the benefits become. The authors' study of data provided by Belgian manufacturer N.V. Bekaert S.A., the world's largest independent producer of steel wire, showed that only a quarter of process improvement projects delivered factorywide benefits; half had no bottom-line impact, and the remaining 25% had a negative impact on the plant's overall productivity. But it's possible to design projects that are more likely to improve the plant's bottom line. The key is making sure they deliver both conceptual and operational learning. Conceptual learning yields know-why: acquiring a better understanding of cause-and-effect relationships through statistics and other scientific methods. Operational learning yields know-how: implementing a theory and observing results. Projects that delivered high levels of both learning approaches were the only ones that enhanced the global rate of quality improvement. In such projects, teams drew on scientific insights to implement changes and produce replicable results.

Jet Propulsion Laboratory (JPL) faces a serious loss of knowledge--both because of the "faster, better, cheaper" mandate for Mars missions and from the retirement of key personnel. An extensive knowledge management system for NASA/JPL includes formal knowledge-capture mechanisms such as Web pages and digitized manuals and such informal ones as storytelling. The former are much easier to get funded and to implement than the latter, but chief knowledge architect Jeanne Holm is concerned that technology cannot solve some of the most difficult issues she faces. This case focuses more on managing the tacit knowledge held in the heads of scientists and experienced project managers than on the information technology that Holm has put in place. The switch from expensive but infrequent Mars missions to 2 missions every 26 months propelled a number of junior managers into positions of responsibility and decision making for which they had inadequate experience. In the face of increasingly tight budgets, Holm must decide what kinds of knowledge management initiatives to back--and how to encourage the cultural change that is needed in the organization.

Craig Knight, Asia Pacific digital business and customer services manager of Eastman Chemical Co., was given a mandate to sell Eastman's philosophy for an integrated electronic supply chain, otherwise known as the Integrated System Solution (ISS), to its business partners in the region and to encourage adoption. Having invested in a state-of-the-art technical architecture that would support interconnectivity with all parties along the supply chain, Eastman was keen to realize the full benefits to be gained from an integrated e-supply chain on a global scale. Following numerous rounds of discussion with key business partners in the Asia Pacific region, some progress had been made. Nagase & Co. Ltd. of Japan had agreed to adopt ISS connections with Eastman, but had some reservations regarding the extent of integration. Although the benefits of integration were proven, suppliers, customers, distributors, and other interested parties were faced with numerous limitations and considerations that would have significant implications on their established business processes and even the shaping of their corporate strategy. Adoption was not a simple choice. Knight understood these shortcomings and was making every effort to ease the adoption process by identifying to Nagase and other business partners the longer term benefits of applying XML technology to their businesses.

This case builds on the case "Merck & Company: Product KL-798" by providing market uncertainties for the drug (drug quality, the presence of a competitor, market growth, and the time to the drug's release). Details and spreadsheets are provided for the calculation of net present values for the scenarios. There is an additional challenge of how to treat the several downstream decisions (using OptQuest, for example) and how to value the license opportunity.

Spreadsheet supplement for case UV0365.

Align Technology is a four-year-old medical products company that has invented a new product requiring new manufacturing processes. Demand for the new product has grown more slowly than initial forecasts predicted, and the cost structure is preventing the company from becoming profitable. The manufacturing process involves six different operations located in California, Pakistan, and Mexico. The first dilemma requires downsizing the capacity until the demand grows. Increasing capacity in the future requires consideration of the time lags, costs, and incremental units of added capacity inherent in each of the six processes. Given the uncertainty of accurate sales forecasts as the company carries out new marketing initiatives, the manufacturing organization has been challenged to create a capacity plan to meet demand while lowering its fixed costs.

ING Direct Canada is a retail banking operation and a subsidiary of one of the top global providers of integrated financial services, ING Group of the Netherlands. ING Direct Canada needs to meet the operational demands of a growing client base, while maintaining its current staffing levels, physical space and commitment to same-day processing of accounts. The senior vice-president of operations must implement procedures to cope with the immediate challenges of the company's growth, as well as develop a long-term strategy. Options to consider included new technology, increased efficiencies, or relaxing the same day processing requirements.

Istituto Clinico Humanitas is a newly built private hospital, south of Milan, Italy, that has attained unusual profitability while treating public system patients. The hospital was built and is managed by Techosp, a subsidiary of Techint, a global engineering and consulting firm. Techosp created a design and management system that emphasizes optimizing patient throughput and utilization of all of the hospital's facilities. Physicians are all fully employed and have a significant financial incentive to maximize efficiency. The executive team is now considering whether to affiliate with the University of Milan medical school and, in effect, become Italy's first private academic medical center. The general manager must consider the effect of this affiliation on the hospital's performance.

Describes how Bank of America is creating a system for product and service innovation in its retail banking business. Emphasis is placed on the role of experimentation in some two-dozen real-life "laboratories" that serve as fully operating banking branches and as sites for testing new ideas and concepts. Focuses on: 1) how learning from experimentation can be maximized; 2) incentive and reward systems that motivate employees to experiment in "life" environments; and 3) the challenges of managing innovation in an industry that eschews risks, failure, and change.

Supplements the (A) case.

This case examines issues of asset control for Ben & Jerry's Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer's Grand, Unilever, and Meadowbrook Lane Capital in January 2000. The case provides a unique opportunity to discuss fundamental firm objectives and the implications of a nontraditional corporate orientation; it reviews the development of Ben & Jerry's strong social consciousness and the takeover-defense mechanisms that maintain management's control on company assets. Students, in the role of outside board members, are invited to review management's performance, estimate the economic cost of its social agenda, and evaluate the implications of takeover defense strategies. Ultimately, they must take a position on whether Ben & Jerry's should continue to independently pursue its social agenda or accept one of the attractive takeover offers and accept a shift toward greater profit orientation. The case requires relatively little prior finance knowledge, and is designed largely to provide a stimulating introduction to the principles of a traditional corporate finance curriculum.

Supplements the (A) case.

Focuses on modifying operations to increase profitability at an upscale senior care facility in California. Jennifer Raiser, president of Raiser Senior Services, opened the Stratford in 1992 as a high-end, continuing-care retirement community. Ten years later, the Stratford was known as one of the most prestigious senior care communities in the Bay Area, but management struggled to keep the facility from losing money each year. Raiser and her management team were finding it difficult to raise the monthly fees each year to match the increasing costs of providing services to the aging residents. As a result, the team needed to find ways to take costs out of running the business. Contains an in-depth review of the operations associated with the primary expense categories--health care and dining services--allowing students to find specific opportunities for savings.

Supplements the (A) case.

The rise and fall of central planning rank among the most significant events in the 20th century. For much of the century, central planning, which had catapulted Russia from a backward country in 1921 to a world-class superpower in the 1960s, was looked upon as a viable model of economic development for many developing countries. By the 1980s, however, the limitations of central planning had become apparent. Countries in the Soviet bloc were stagnant and appeared to be falling further behind Western countries in economic and technological development. In contrast, countries in Asia and South America that undertook market-oriented reforms had experienced rapid economic growth. Since the fall of the Berlin Wall in 1989, most formerly communist economies have engaged in a historical transition process to market economies. Despite its initial success, central planning as a system of organizing and directing a national economy had proven to be less efficient than the market system. Why this is so is the focus of this note. After a brief historical account of the rise of central planning, this note offers a conceptual framework for understanding how the centrally planned economy is organized and how central planning works, or rather how it doesn't work.

In May 2000, Sonia Syngal, director of procurement strategy and supplier relations at Sun Microsystems, needed to make a critical decision. Under Syngal's leadership, the company had just completed its first "dynamic bidding" pilot tests and, as a result, cut its sourcing costs by 30%. Given these results, the potential for cost cutting via the implementation of a dynamic bidding system on a widespread scale at Sun was enormous; on an annual basis, the company was currently spending about $9 billion in direct materials procurement. Although the potential to cut costs significantly was clear, Syngal had several other issues to consider, including: 1) Sun's suppliers and the potential impact of a dynamic bidding program on the company's critical relationships; 2) the reaction of Sun's internal constituents, namely, its commodity directors who had spent years trying to identify the most effective way to work with the company's suppliers; and 3) selecting the best software vendor, which would be difficult in a crowded space.

Martin Stein, a recent business school graduate, is the new owner of Quality Imaging Products (QIP), a $10-million-a-year remanufacturer of printer and copier ink cartridges. Within weeks of buying the company, QIP's vp for finance, gives an ultimatum: a raise or he walks, leaving Stein with the burden of straightening out a nonfunctional financial system while customers, suppliers, product managers, and production staff compete for his attention. Presents Stein as an example of a small-company manager who must juggle a far broader range of issues in greater depth than his big-company counterparts to meet the needs of customers profitably.

This note provides an overview of fiscal-policy tools and how fiscal policy influences GDP through the income multiplier. The mechanics behind the income multiplier are explained and an algebraic derivation is provided. The note also provides examples of how parameters associated with disposable income (e.g., the tax rate and marginal propensity to consumer) influence the magnitude of the income multiplier.

At the end of 2001, Cathay Pacific's CXeBuy electronic procurement system was fully operational for its headquarters in Hong Kong. The 14-month implementation project aimed at applying Internet-based technology to build the most efficient purchasing process and capability in the industry. Although the project was far from complete, a member of the Project Steering Committee (PSC) queried the actual benefits realized so far as a result of e-procurement implementation. Robert Lamoureux, manager in charge of the e-procurement initiative, proposed to the PSC to formulate a methodology that user departments could apply at will to assess the impact of CXeBuy on their operations. However, some members of the committee raised concerns that such a voluntary approach would serve only a limited purpose and would fall short of providing department heads with an overview of the impact of CXeBuy on the overall corporate mission. Other PSC members were unsure of the need for such a valuation exercise at this early stage. Something had to be done to reinstate the need for accountability and support the premise that any Cathay Pacific e-business initiative had to prove its value.