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Most companies do a poor job of capitalizing on the wealth of expertise scattered across their organizations. That's because they tend to rely on centralized knowledge-management systems and technologies. But such systems are really only good at distributing explicit knowledge, the kind that can be captured and codified for general use. They're not very good at transferring implicit knowledge, the kind needed to generate new insights and creative ways of tackling business problems or opportunities. The authors suggest another approach, something they call T-shaped management, which requires executives to share knowledge freely across their organization (the horizontal part of the "T"), while remaining fiercely committed to their individual business unit's performance (the vertical part). A few companies are starting to use this approach, and one--BP Amoco--has been especially successful. From BP's experience, the authors have gleaned five ways that T-shaped managers help companies capitalize on their inherent knowledge. They increase efficiency by transferring best practices. They improve the quality of decision making companywide. They grow revenues through shared expertise. They develop new business opportunities through the cross-pollination of ideas. And they make bold strategic moves possible by delivering well-coordinated implementation.

Lots of companies say they use brainstorming, hot teams, and other techniques to foster innovation. But for IDEO, the successful design firm in Silicon Valley, that work is its bread and butter. In The Art of Innovation, IDEO general manager Tom Kelley explains how the firm works. Reviewer Michael Schrage, research associate at MIT's Media Lab, extols the book for its engaging style and comprehensive coverage. But he warns readers that what really drives the company is not fancy methodologies but an underlying "cult" of innovation. As a result, IDEO has come up with many great new products, but it's had much less success in teaching client companies to be innovative themselves. The book may suffer a similar fate. This cult of innovation is what allows IDEO to get beyond the political gamesmanship that stifles many traditional companies. The firm's employees believe passionately in innovation, a focus that enables individuals from diverse backgrounds to argue about alternatives but still unite in generating an effective design. And the company's emphasis on prototyping gives people concrete things to play with, so they don't get bogged down in mere talk. The back-and-forth within these hot teams--and ideally with clients--helps the firm settle on creations that are likely to succeed in the marketplace. IDEO's culture allows it to be very innovative about the process of innovation itself. But the overwhelming majority of organizations can't afford to make faith in innovation the cornerstone of their cultures. IDEO is as much a cultural outlier as Virgin or Southwest, says Schrage. Ignore at your peril, but imitate at your own risk.

Describes the musings of the managing partner of a law firm as he returns from an executive education program. He thinks about the many issues confronting him and his firm. Teaching Purpose: To prepare executive education participants to return to their companies and implement what they have learned.

The ready-to-eat cereal industry had been flat for five years, and Kellogg's share had been shrinking. Now it had acquired Worthington and a new management team was in place. A new vice president must figure out how to integrate the new company. The case is appropriate for use in a series on postmerger integration, as the students must craft an integration plan de novo. It can be followed by the "Note on Acceleration Transition" and "Albany-Geschmay Merger" to illustrate the application of PWC's integration methodology.

Many top executives say they routinely make big decisions without relying on any logical analysis. Instead, they call upon their "intuition," or "gut instinct"--but they can't describe the process much more than that. What exactly is gut instinct? In this article, author Alden Hayashi interviews top executives from companies such as America Online and Johnson and Johnson to find out how they make decisions. Hayashi also presents the research of leading scientists who suggest that our emotions and feelings might not only be important in our intuitive ability to make good decisions but may actually be essential. Specifically, one theory contends that our emotions help us filter various options quickly, even if we're not consciously aware of the screening. Other research suggests that professional judgment can often be reduced to patterns and rules; indeed, truly inspired decisions seem to require an ability to see similar patterns across disparate fields. But various traits of human nature can easily cloud our intuitive decision making. One potential pitfall is our tendency to see patterns where none exist.

Increasingly, it seems, there are just two types of companies left in the world: dot-coms, born on the Internet, and "wanna-dots," established organizations that are seeking to incorporate the Internet into their businesses. Some wanna-dots manage the deep mind-shift required to cross the digital divide. These are the pacesetters--the first movers and fast followers that exhibit organizational curiosity and the desire to innovate. But most wanna-dots are laggards; they don't rise to the challenge with the same resolve. In a global research effort involving more than 800 companies, the author uncovered so many wanna-dots making the same kinds of mistakes that it almost seemed they were following a How Not to Change guide. In this article, Kanter creates just such a guide, offering ten pieces of antiadvice that expose the tendency of wanna-dots to make only cosmetic changes when deep transformation is required. Beyond delineating what not to do, Kanter serves up two examples of wanna-dots that got it right: Williams-Sonoma and Honeywell.

Some CEOs inspire their people to outstanding performance; others prompt yawns from their employees. A new study suggests that part of the difference lies in the words they choose to convey their messages.

Companies are always looking for innovative ideas. But employees often keep good ideas to themselves, afraid to test them in the workplace. Here's how managers can help erase the fear factor and promote experimentation

Introduces Reverend Jeffrey Brown, one of the cofounders of the Ten Point Coalition in Boston, Mass. The Ten Point Coalition, a group of ministers that worked to change the dynamics between the Boston Police Department and the kids on the street, was instrumental in reducing the rate of youth violence in Boston. Describes the unique history of Boston and how the coalition came to be successful in Boston. Wrestles with the question of whether or not the success can be replicated in other cities around the world.

This is an MIT Sloan Management Review article. Today's vast array of Web applications for supply chain integration, sales force automation, work group collaboration, and the sale of everything from equities to automobiles makes it perfectly clear that information technology has evolved beyond the role of mere infrastructure supporting business strategy. In more and more industries today, IT is the business strategy. Unfortunately, many CEOs are ill-equipped to manage effectively in the Information Age. The problem has less to do with IT literacy than with a range of behaviors and attitudes that cause such CEOs to shirk their IT responsibilities. By their actions, many CEOs send negative signals about IT's role to other leaders in their organization, who then repeat the behavior. Companies with such leaders frequently fail to reap business advantage from information technology. The authors describe seven types of CEOs and their behaviors and attitudes toward IT and explain why all but one are decidedly unfit to lead companies in the Information Age. Only the "believer CEO" is ready to play a constructive role in his or her company's use of IT. Believers understand that IT enables strategic advantage and demonstrate such beliefs in their daily actions. Believers are involved in IT decision making and are proactive in addressing IT problems and opportunities. They seek advice from a variety of sources, study the IT strategies of competitors, and set examples for others managers in their company to follow. Using examples, the authors explain how believer CEOs play a critical role in their corporate IT strategies, how they craft IT-savvy organizational cultures, and how these actions benefit their businesses. The authors prescribe a variety of methods for leaders to address their shortcomings and master the techniques of believers.

Meg Whitman takes over as CEO of eBay from the founder. She must figure out how to lead the company through a stage of phenomenal growth without compromising eBay's unique external customer culture and internal culture--its key success factors. A rewritten version of an earlier case.

Spreadsheet supplement for case 401024.

Spreadsheet supplement for case 801-282.

In January 1994, Igor and Ludmilla Ivanovic opened the doors of their bakery, Iggy's Bread of the World. This case describes their unusual mission statement and the way in which they try to bring a social consciousness mentality to a for-profit business. Six years later, they have grown beyond their physical and administrative capacity. The Ivanovics must decide how to reconfigure the leadership structure of the company without losing their control over the fundamentals.

C.J. Albert, the head of family-owned Armor Coat Insurance, receives an unsettling phone call from his star salesman. Fifty-two-year-old Ed McGlynn has just returned from a business dinner with his younger technology mentor, and he's none too happy with the way he's being treated. If C.J. doesn't take this attack dog off him, Ed warns, he's gone. C.J. had indeed assigned 28-year-old Roger Sterling--the company's monomaniacal, slightly antisocial director of e-commerce--to teach Ed about digital strategy and the Web. Reverse mentoring seemed like a good way to create synergy between the sales and technology groups. The goal was to create a digital insurance product that would allow Armor Coat to keep up with its competitors. But there'd been tension between Ed and Roger right from the start--stemming from their personalities and their two departments. So when the two reluctantly agreed to meet for dinner to talk, the conversation didn't go well. C.J. faces some difficult discussions with both disgruntled parties. What should he do? Six commentators, including a mentor-protege pair, offer their advice in this fictional case study.

In January 1999, Francisco de Narvaez sold Tia, his family's retail business in Argentina. De Narvaez reflects on the decision to sell and the selling process.

Describes Rob Waldron's actions upon assuming leadership of SCORE! Educational Centers, an after-school tutoring enterprise. Examines the issue of acquiring and growing a small, privately-owned company into a professional organization, especially regarding corporate culture. Describes the measures Waldron takes to build a culture and how he maintains the culture after the acquisition. Focuses on Waldron's actions in dealing with a growing employee morale problem. Concludes with Waldron deciding whether or not to alter the company's recruiting strategy. Includes SCORE! background material. A rewritten version of an earlier case.

This is an MIT Sloan Management Review article. Today's workforce is increasingly made up of volunteers--at least in spirit if not in fact. How will the traditional management tasks of motivating and directing employees change in the face of that new reality? The authors answer this question by examining an example of an economic enterprise that acts in many ways like a voluntary organization: the open-source software movement. The authors pose the following essential questions: What motivates people to participate in open-source projects? How is participation governed in the absence of employment or fee-for-service contracts? The answers revealed some important lessons for traditional organizations about the challenges of keeping and motivating knowledge workers and the process of managing in the new arena of networked or virtual organizations. First, traditional organizations should plan for a broader array of employee motivations than they often do today. Money is only one. Professional contributors are also motivated by the personal benefit of using an improved software product and by a number of social values such as altruism, reputation, and ideology. Second, traditional organizations should consider ways to shift from the management of knowledge workers to the self-governance of knowledge work. Despite their clear potential for chaos, open-source projects are often surprisingly disciplined and successful by means of multiple, interacting governance mechanisms. Membership management, rules and institutions, monitoring and sanctions, and reputation build on the precondition of a shared culture to self-regulate open-source projects.

This is an MIT Sloan Management Review article. Grooming in-house candidates for leadership roles is critical for companies that want to stay competitive. Leadership experts Robert M. Fulmer, Philip A. Gibbs, and Marshall Goldsmith provide insights about today's best leadership development practices, basing their observations on a recent study that benchmarked six best-practice companies. Arthur Andersen, General Electric, Hewlett-Packard, Johnson & Johnson, Shell, and the World Bank all recognize that keeping a steady stream of leaders moving up is important to the strategic vision. The authors pinpoint five essential elements of success: awareness (learning about the latest approaches to leadership development), anticipation (using forward-looking scenarios to envision the future needs of the business), action (finding ways to use executive learning programs to support strategic initiatives), alignment (ensuring that company documents used for performance appraisal, succession planning, and education are consistent), and assessment (evaluating how leadership education has improved business results). Approaches vary. The World Bank gives future leaders a stint in impoverished countries so they can do a better job of supporting the bank's goal of reducing poverty. At GE, the company's famed Six Sigma quality-improvement program and creative ideas for expansion in emerging economies flowed from presentations made at leadership development events. In the best-practice organizations, the most senior people set an example of support for leadership development programs.

This is an MIT Sloan Management Review article. Unless an enterprise generates new knowledge and pumps it efficiently throughout its network, it will soon be playing tomorrow's game with yesterday's tools. Many rely on an information technology infrastructure; but no matter how sophisticated, it is not the key to effective knowledge management. Success, say the authors, depends more on the social system in which people operate--the social ecology of a company. Social ecology drives people's expectations, defines who will fit in, shapes individuals' freedom to pursue actions without prior approval, and affects how they interact with both insiders and outsiders. Focusing on Nucor Corp.'s success in the 1980s and 1990s, the authors suggest that it was the company's social ecology that contributed to it becoming one of the most efficient steel producers in the world. Through effective management of knowledge, Nucor developed and constantly upgraded its main strategic and proprietary competencies: plant construction and start-up know-how, manufacturing process expertise, and the ability to adopt breakthrough technologies earlier than competitors. Nucor's social ecology also allowed, among other things, excellence in the tasks associated with sharing and mobilizing knowledge: identifying opportunities to share knowledge, encouraging individuals to share knowledge, building effective and efficient transmission channels, and convincing individuals to accept and use the knowledge received. The authors explain how others can maximize knowledge sharing by setting stretch goals, providing high-powered incentives, cultivating empowerment, equipping every unit with a well-defined "sandbox" for experimentation, and cultivating an internal market for ideas. It's a difficult challenge. But its very difficulty means that companies tackling it successfully will have a competitive advantage that rivals cannot beat merely by buying the same software.