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Cloud computing is a sea change in the way companies use technology; it's as inevitable and significant as the shift from steam power to electricity on the factory floor. Because criticisms of the cloud have gotten a lot of hype, however, many companies are hesitant to explore it. In this article, McAfee, a principal research scientist at MIT's Center for Digital Business, debunks commonly cited concerns about the cloud. When it comes to cost, reliability, and security, he says, the cloud promises to equal or better on-premise computing. Moreover, as the experiences of companies like 3M, the global contractor Balfour Beatty, and the consulting firm CSC show, cloud computing offers sizable benefits, such as improved productivity, easier collaboration, the ability to mine data for insights, and higher capacity without major capital investment. Here, McAfee walks readers through the three basic categories of cloud computing: "infrastructure-as-a-service" (the leasing of raw computing capacity), "platform-as-a-service" (the leasing of computers ready for software development), and "software-as-a-service" (the hosting of applications for users). Arguing that CEOs and senior managers need to take the lead on the shift to the cloud, he then outlines how companies can get started.

Global companies face a crucial question when they enter emerging markets: how far should they go to localize their offerings? Typically they try to sell core products or services pretty much as they've been sold in Europe or the United States, with headquarters calling all the shots-and usually with disappointing results. The authors, both of Harvard Business School, examined why KFC China has been able to find fertile ground in a market that is notoriously challenging for Western fast-food chains. KFC's executives believed that the dominant logic behind the chain's growth in the U.S.-a limited menu, small stores, and an emphasis on takeout-wouldn't produce the kind of success they were looking for in China. KFC China offers important lessons for global executives seeking guidance in determining how much of their existing business model to keep in emerging markets-and how much to throw away.

What does it take for an average manager to become a highly effective leader? There are countless books, models, and formulas for success. But the truth is that leadership transformation is deeply dependent on circumstances. The key for those who seek it is to absorb the insights that can be drawn from the successful experiences of others. During their in-depth study of seven CEOs, the authors uncovered seven interdependent metaphors, which they went on to test with more than 10,000 managers on four continents. They discuss four of those metaphors-fire, snowball, mask, and movie-here, in the context of individual managers' experiences.

Frank Gehry is, at 82, America's most celebrated living architect. Though his creativity has made him famous, his approach to budgeting, client relationships, and project management have played a large role in his success.

The developing economies are now a primary focus for consumer-oriented businesses, says Johnson, who put together Heinz's first long-term strategy for those markets soon after becoming CEO in 1998. The strategy emphasizes four A's: applicability (the product must suit the local culture), availability (sales channels must be relevant to the local population), affordability (very small packages of a product may be crucial for these customers), and affinity (local customers and employees must feel close to your brand). Sometimes Heinz takes its brands into a market and tries to grow them organically; more often it looks to acquire solid brands with good local management that will get it into the right channels. That means a second layer of due diligence regarding how the company goes to market, the tax system, the regulatory environment, currency trends, and the political climate in comparison with what exists in the United States.

Like most holy grails, sustainability as a firm's most dependable route to financial high performance has seemed a goal always beyond reach. The problem is simple. Businesses are rarely obliged to pay for the full toll their operations take on the world. Because many of these impacts have been hard to gauge with any precision-or to assign to individual businesses with fairness-their costs have remained external to businesses' accounting. That means it's generally cheaper for consumers to buy a product that has a worse impact on the environment than the equivalent product that does less harm. But what if we could get to the point where the lowest-priced T-shirt was also the one doing the least harm to the planet and society? Three trends, each gathering force on its own, are now converging to make that goal a reality: (1) The values of many vital natural resources traditionally considered priceless are being quantified so that they can be factored into economic equations and individual firm's accounting. (2) Socially responsible investing has matured beyond negative screening to become a value-seeking discipline generating positive impetus for change. (3) Industries are converging on standard indices for rating products' sustainability and seeking improvements throughout their value chains. Patagonia's Yvon Chouinard and Rick Ridgeway team up with sustainability consultant Jib Ellison to explain those trends and how their convergence is driving a new era in sustainability. According to the authors, progress in each area spurs progress in the others, to the extent that the long-sought alignment of a firm's prosperity with the best interests of the planet seems not only possible but inevitable.

Choosing a new CEO is the most important job of a company's board of directors. No other decision has such a profound impact on a firm's strategy and performance. Yet the topic of succession often gets shoved aside by concerns that seem more pressing. No one pays attention until the CEO's departure is imminent-and by then it's too late to adequately vet and train a replacement. A.G. Lafley, in contrast, began pushing the directors at P&G to begin the search for his successor as soon as he took office as CEO. From then on, the first board meeting of the year was devoted to that issue. In this article, Lafley describes the rigorous processes P&G established to ensure that it would always have a slate of strong internal CEO candidates. Among other things, P&G set up many opportunities for direct, in-depth interaction between the board and candidates; established clear leadership criteria and continually measured people against them; and developed various scenarios the company might face and identified who could best steer the firm in each situation. Lafley himself took responsibility for seeing that the company developed as many potential CEOs as it could. He became P&G's head leadership coach, responsible for training its top 500 executives. P&G's disciplined approach paid off by producing not only a first-rate successor but a contingent of senior executives who've led the company to tremendous growth.

Despite high unemployment, the war for talent rages on. Only 15% of companies in North America and Asia feel they have enough qualified potential successors to fill their top jobs, and the picture is only slightly better in Europe. The best weapon companies can wield are programs that develop their "high potentials"-the people they hope to develop into their future leaders. In a large-scale study of how companies assess and manage their rising stars, the authors have identified some guiding principles for developing high potentials. To begin with, all talent programs should clearly define what "high potential" means to them. Great performance is not enough; you must also envision yourself as a senior executive, have the right motives (the desire for positive impact), and possess leadership attributes such as the ability to derive insight and engage others. Firms also need to align their candidate selection to their strategy: A low-cost company will not need the same kind of talent as an enterprise bent on global expansion. This article describes emerging best practices in executing high-potential programs, including the latest thinking on how to nominate and assess participants, design effective job rotations and stretch assignments, provide thoughtful rewards and incentives, and communicate about the program with the rest of the organization.

Peter Drucker and other leadership thinkers have long argued that leaders should focus on strengthening their strengths. How should they do that? Improving on a weakness is pretty easy and straightforward: you can make measurable progress by honing and practicing basic techniques. But developing a strength is a different matter, because simply doing more of what you're good at will yield only incremental improvements. If you are strong technically, becoming even more of a technical expert won't make you a dramatically better leader. If, however, you use what the authors call "nonlinear development"-similar to an athlete's cross-training-you can achieve exponential results. Your technical expertise will become more powerful if, for instance, you build on your communication skills, enabling you to explain technical problems both more broadly and more effectively. The authors, all from the leadership-development consultancy Zenger Folkman, present a step-by-step process by which developing leaders can identify their strengths (through either a formal or an informal 360-degree evaluation), select appropriate complementary skills (the article identifies six to 10 for each core strength), and develop those skills to dramatically improve their strengths, making themselves uniquely valuable to their companies.

When Muhtar Kent took the helm at Coke, in 2008, he had two top priorities: to establish a long-term vision and to restore growth in North America. The vision called for doubling Coke's business in 10 years-something "not for the fainthearted," Kent says, "but clearly doable." In this edited interview he talks about the role of social media (Coke has 33 million Facebook fans), which today get 20% of the company's total media spend; the importance of creating sustainable communities to preserve the future of the business; and Coke's commitment to water neutrality by 2020-which means giving back a liter of water for every one the company uses. As the CEO of a company with 140,000 employees, Kent says, "you can only influence." He takes a low-key approach, treasures the team, and loves to visit supermarkets and observe customers.

Many manufacturing companies and some service firms have reaped considerable benefits by applying variations of the Toyota Production System, a method for making operations "lean" through relentless efforts to increase quality and efficiency and eliminate waste. But conventional wisdom holds that lean principles don't lend themselves to knowledge work, which involves judgment and expertise, not the sorts of repetitive, easily specified tasks found on an assembly line. The authors' research, including multiyear studies of some 1,800 projects at the Indian IT services giant Wipro, challenges this thinking. Knowledge work can be made lean, Staats and Upton argue, if managers draw on six principles: 1) Continuously root out all waste; 2) Strive to make tacit knowledge explicit; 3) Specify how workers should communicate; 4) Use the scientific method to solve problems quickly; 5) Recognize that a lean system will always be a work in progress; and 6) Have leaders blaze the trail. Applying these principles demands sustained investment and a grassroots reinvention of how work is performed. But the benefits are considerable: ever-increasing productivity and job satisfaction, and a system that will be hard for competitors to replicate.

Thanks to the collaboration that the internet has made possible and the open innovation that it has spurred, we live in a world where ideas and solutions are abundant. The main challenge facing innovation managers today is how to take advantage of this wealth of opportunities, says the author, a professor of innovation management. He contends that being first to launch a new technology is less important than being first to envision its greatest untapped market potential. Most companies focus on employing new technologies to better serve customers' existing needs. Those that have technology epiphanies strive to create products and services that will provide customers with a completely new reason to buy a product. Well-known examples include Nintendo, with the Wii; Apple, with the iPod; and Swatch, with its fashionable and affordable watches. Verganti explains how companies can systematically produce technology epiphanies. He illustrates the process with the story of Philips Electronics' creation of Ambient Experience for Healthcare, a system that uses LED displays, video animation, radio-frequency identification sensors, and sound-control systems to relieve the anxiety of patients undergoing CT, MRI, and other scans, creating an alternative to the risky, time-consuming, and costly practice of sedation.

The organizational structures of many multinational corporations are inadequate to the task of capitalizing on opportunities in emerging markets. Locating customer-facing processes in each country-and even using transnational structures that exploit location-specific advantages-just doesn't cut it anymore. So argue Kumar and Puranam, of London Business School. The authors show how the growth of China and India as lead markets and as talent pools, coupled with advances in technology, enable companies to optimize their organizations by segmenting R&D both vertically and horizontally, thereby creating T-shaped structures. The greatest challenge of the T-shaped structure is managing integration across countries. The solution is to allow your corporation's center of gravity to shift eastward. That means globalizing the top management team, moving headquarters outside the home country, and genuinely valuing the cultural shifts that those two changes require. Companies such as GE, Intel, and AstraZeneca have had some success in these endeavors, and all multinationals have the potential to secure the advantages of deploying a T-shaped structure.

Effective sponsors can help catapult junior talent into top management tiers, and good proteges can greatly expand the reach and impact of senior leaders-but the relationship works only when both parties recognize that it's a mutually beneficial alliance, a truly two-way street. Seeking to better understand this crucial dynamic, the authors, from the Center for Work-Life Policy, surveyed and spoke with thousands of professionals. Their findings constitute an invaluable guide. Sponsors should, among other things, advocate for their proteges' promotions, coach them, call in favors for them, and help them make connections. Proteges must be loyal, contribute 110%, and bring complementary skills and networks to the table. No matter what your career level, such relationships are lifelong projects to be carefully cultivated, consistently nurtured, and periodically refreshed.

The famed filmmaker talks about getting the best out of people, how to reignite creativity, and the benefits of going it alone.

This is an MIT Sloan Management Review article. A globally integrated strategy isn't right for every company. One important factor to consider is the combined market share of the largest companies in your industry -and how that's changing.

This is an MIT Sloan Management Review article. It has long been assumed that companies develop new products for consumers, while consumers are passive recipients -buying and consuming what producers create. However, this paradigm is fundamentally flawed, because consumers themselves are a major source of product innovations. The authors have framed a new innovation paradigm, in which consumers and users play a central and active role in developing products on their own. In this article, they summarize key findings from studies on consumer product innovation conducted in the United States, the United Kingdom and Japan. The authors describe three phases in the new innovation paradigm. Initially, markets for products and services with novel functionality are both small and uncertain, with consumers pioneering really new products (for example, the skateboard) for themselves. In the second phase, other consumers become interested in the new products. In the third phase, producer companies decide if the information on the design and function of the new product, and the projected market, are consistent with their risk profiles. The implications are significant for both consumers and producers, the authors note. Consumer innovators should realize that they play important roles in developing novel products and services. Businesses, for their part, need to think about how they can reorganize their product development systems to take advantage of prototypes developed by users. By focusing on product concepts that consumers have already prototyped and tested, companies can save money and improve their success ratios.

This is an MIT Sloan Management Review article. Catastrophic events, such as earthquakes, financial storms or mine collapses, can be divided into three phases, each calling for distinct forms of preparation or response. In this article, the authors look at the collapse of a mine in Chile in 2010 and the successful rescue of the trapped miners 69 days later to draw leadership lessons for decision making during a crisis. Following the decisions of Laurence Golborne, Chile's Minister of Mining, was made easier by the intense media focus on this event. His management of the miners'rescue was closely followed by people around the world. In addition to using news coverage of the rescue, the authors interviewed the key members of the top team, including top government officials, the manager of the El Teniente mine and the chief engineer on the site. Building on their previous work on leadership, the authors found 12 leadership principles that emerged from Golborne's actions. These are applicable to managers facing any kind of unprecedented crisis, one with which they have no prior experience. These include taking charge if you are best positioned to make a difference; assembling essential experts on your top team, but keeping the numbers small; delegating decisions beyond your expertise but retaining oversight of them; and being transparent about potential outcomes to sustain stakeholder support.

This is an MIT Sloan Management Review article. Companies such as Procter & Gamble, Cisco Systems, Genzyme, General Electric and Intel are often credited with having attained market leadership through open innovation strategies. By tapping into and exploiting the technological knowledge that resided beyond their own R&D structures, these companies outmaneuvered rivals. But while other organizations try to follow their example, this research shows that many are failing because they neglect to ensure that the outside ideas reach the people best equipped to exploit them. R&D leaders need to think not only about combing the outside world for new and potentially applicable ideas but also about how to ensure that those ideas receive serious consideration. By understanding the roles of two types of innovation brokers -"idea scouts" and "idea connectors"-in the open innovation process, and by utilizing their talents effectively, managers can preside over major improvements in the conversion of external knowledge into successful outcomes. The authors provide numerous examples, pointing out that success at open innovation depends on the presence of both types of innovation brokers. But despite these innovation brokers'importance to the organization, the people who wound up as idea scouts and connectors often came as a complete surprise to management. Innovation is too important to be left to chance, however. If innovation brokers do not exist, management is obliged to "invent" them -i.e., recruit the right people to perform these valuable roles.

This is an MIT Sloan Management Review article. Many industrial companies are trying to profit from open innovation, which involves actively collaborating with external partners throughout the innovation process. Many companies now acquire technology from external sources in order to strengthen and speed up their internal innovation processes -an approach the authors call inbound open innovation. Companies also increasingly transfer some of their own proprietary technology to other companies by means such as licensing -an approach known as outbound open innovation. The researchers studied the role of employee attitudes in open innovation through a large-scale benchmarking study of German industrial companies. The authors conclude that employee attitudes that favor internal innovation often impede the successful implementation of open innovation strategies. But the researchers found that a group of companies that pursue both inbound and outbound open innovation achieved the highest average return on sales. However, the companies that pursued traditional closed innovation strategies had a higher average return on sales than the group of companies that transfer their own technology to others but don't acquire much technology from external sources. These findings, the authors note, suggest that a focus only on outbound innovation may be dangerous, as a company risks transferring its "crown jewels." The authors note that the results of their study underscore the need to change employee attitudes if managers aim to implement open innovation strategies; managers, they note, need to communicate their open innovation strategies to employees, have executive champions for them and devise suitable incentives and organizational structures to encourage open innovation.