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HBR asked top management thinkers to share what they were resolved to accomplish in 2011. Here are their answers: Joseph E. Stiglitz will be crafting a new postcrisis paradigm for macroeconomics whereby rational individuals interact with imperfect and asymmetric information. Herminia Ibarra will be looking for hard evidence of how "soft" leadership creates value. Eric Schmidt will be planning to scale mobile technology by developing fast networks and providing low-cost smartphones in the poorest parts of the world. Michael Porter will be using modern cost accounting to uncover-and lower-the real costs of health care. Vijay Govindarajan will be trying to prototype a $300 house to replace the world's poorest slums, provide healthy living, and foster education. Dan Ariely will be investigating consumers' distaste for genetically modified salmon, synthetic pharmaceuticals, and other products that aren't "natural." Laura D. Tyson will be promoting the establishment of a national infrastructure investment bank. Esther Duflo will be striving to increase full immunization in poor areas of India. Clay Shirky will be studying how to design internet platforms that foster civility. Klaus Schwab will be undertaking to create a Risk Response Network through which decision makers around the world can pool knowledge about the risks they face. Jack Ma will be working to instill a strong set of values in his 19,000 young employees and to help clean up China's environment. Thomas H. Davenport will be researching big judgment calls that turned out well and how organizations arrived at them. A.G. Lafley will be proselytizing to make company boards take leadership succession seriously. Eleven additional contributors to the Agenda, along with special audio and video features, can be found at hbr.org/2011-agenda.

The capitalist system is under siege. Recently business has been criticized as a major cause of social, environmental, and economic problems. Companies are widely thought to be prospering at the expense of their communities. Trust in business has fallen, leading governments to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle. A big part of the problem is firms' narrow approach to value creation. Focused on short-term financials, companies overlook the broader influences on their long-term success. Why else would they ignore the well-being of their customers, the depletion of vital natural resources, the viability of suppliers, and the economic distress of the communities in which they produce and sell? It doesn't have to be this way. Companies could bring business and society back together if they redefined their purpose as creating "shared value"-generating economic value in a way that also produces value for society by addressing its challenges. Firms can do this in 3 ways: by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters near their locations. A number of leading firms have already embarked on such initiatives. Nestle, for example, redesigned its coffee procurement, providing small, impoverished farmers advice on agricultural practices; helping them secure plant stock, fertilizers, and pesticides; and paying them a premium for better beans. Higher yields and quality increased the growers' incomes, the environmental impact of farms shrank, and Nestle's reliable supply of good coffee grew significantly. Shared value was created. Shared value could transform capitalism. It could also drive the next wave of innovation and growth as it opens managers' eyes to immense human needs to be met, large new markets to be served, and the internal costs of social deficits-as well as the competitive advantages available from addressing them.

To survive over the long haul, a company must reinvent itself periodically, jumping from the flattening end of one business performance curve to the rising slope of another. Very few companies make the leap successfully when the time comes. That's because they start the reinvention process too late. Once existing business begins to stall and revenue growth drops significantly, a company has less than a 10% chance of ever fully recovering. Accenture's Nunes and Breene, reporting on the results of their long-running High Performance Business research program, point to a striking difference between companies that have successfully reinvented themselves and those that failed. High performers manage their businesses not just along the growth curve of their revenues but also along three much shorter, though equally important, S curves: tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. By planting the seeds for new businesses before revenues from existing ones begin to stall, these companies enjoy sustained high performance.

Many Western multinationals expect to find most of their future growth in emerging economies. But they have frequently struggled to exploit the opportunity, relentlessly cutting costs and accepting profit margins close to zero. The problem, say the authors, who are all with the innovation consultancy Innosight, is not that these companies can't create viable offerings but that simply transplanting their domestic business models to the new markets won't work. They must devise fundamentally new models-by identifying an important unmet job consumers need to do; performing that job profitably at a price the customer will pay; and carefully implementing and evolving the model by constantly testing assumptions and making adjustments. Drawing on their experience investing in, incubating, and consulting for companies that have created 20 new business models in developing markets, the authors describe the vast potential demand represented by the "middle market" in emerging economies-the millions of people who have the desire and wherewithal to pay for goods and services, from refrigeration to clothes washing to money transfers, that will help them do the "jobs" no current offering adequately can.

With product life cycles growing ever shorter and competition cropping up in unexpected places, nearly every industry is facing disruption. How can you tell if your model is running out of gas? For starters, if your next-generation innovations provide smaller and smaller improvements and your people have trouble thinking of new ways to enhance your offering. Pay heed to the signs and start experimenting with several new options until you find one that will turn your threat into an opportunity.

Most executives believe that competing through business models is critical for success, but few have come to grips with how best to do so. One common mistake, the authors' studies show, is enterprises' unwavering focus on creating innovative models and evaluating their efficacy in standalone fashion-just as engineers test new technologies or products. However, the success or failure of a company's business model depends largely on how it interacts with those of the other players in the industry. (Almost any business model will perform brilliantly if a company is lucky enough to be the only one in a market.) Because companies build them without thinking about the competition, they routinely deploy doomed business models. Moreover, many companies ignore the dynamic elements of business models and fail to realize that they can design business models to generate winner-take-all effects similar to the network externalities that high-tech companies such as Microsoft, eBay, and Facebook often create. A good business model creates virtuous cycles that, over time, result in competitive advantage. Smart companies know how to strengthen their virtuous cycles, undermine those of rivals, and even use them to turn competitors' strengths into weaknesses.

Fending off new competitors is a perennial struggle for established companies. Govindarajan and Trimble, of Dartmouth's Tuck School of Business, explain why: Many corporations become too comfortable with their existing business models and neglect the necessary work of radically reinventing them. The authors map out an alternative in their "three boxes" framework. They argue that while a CEO manages the present (box 1), he or she must also selectively forget the past (box 2) in order to create the future (box 3). Infosys chairman N.R. Narayana Murthy mastered the three boxes to reinvigorate his company and greatly increased its chances of enduring for generations.

In 1977 John Mackey moved into a vegetarian co-op, became its food buyer, and went to work in a natural foods store, putting him on the path to founding Whole Foods. An iconic brand, Whole Foods dominates natural-foods retailing in the United States. Mackey talked to HBR about how top management functions at the company (decisions are made by consensus), his sustainable seafood initiative, and what he means by "conscious capitalism." Among other things, conscious capitalism recognizes the stakeholder model, whereby customers, employees, investors, suppliers, larger communities, and the environment are all interdependent. Conscious leadership and a conscious company culture-which allows the organization to fulfill its higher purpose-are important ingredients as well. Part of Whole Foods' higher purpose is realized through the Whole Planet Foundation, which has set up microlending organizations in the communities where the company actually trades. "Nothing we've ever done in our history has created more goodwill with our team members than that," Mackey says.

When Brian Dunn became interested in social media, about five years ago, it was a personal interest, not a strategy. Now he uses Twitter and Facebook to connect directly with customers and employees, watch trends, and keep on top of the news. On Memorial Day 2010, after he tweeted a simple thank-you to U.S. service members and Best Buy employees in the reserves, Dunn heard back from a company product specialist that her fellow employees had put together a technology system (using a laptop, a webcam, and Skype) that enabled her and her three children to talk with their father, a soldier in Iraq. To Dunn, this was a moment of serendipity-and an illustration of how important his employees' work can be. Social media are absolutely core to his company's strategy, Dunn says, because the more people become involved with them, the greater the demand for connectivity and the PCs and mobile devices that deliver it. That's why Best Buy has a Twitter feed called Twelpforce, where customers can post tech problems and company associates or other users can post solutions. Dunn acknowledges that social media can have a downside-such as when his Twitter account was hacked in a particularly embarrassing way, causing a brief crisis at Best Buy-but he remains a committed fan.

When the world's largest financial institutions had to be rescued from insolvency in 2008, many experts laid the blame at the feet of corporate boards. But insufficient board oversight is a problem that had supposedly been solved in 2002. As the United States reeled from the blatant failures of corporate governance at Enron and WorldCom, Congress passed the famous Sarbanes-Oxley Act to prevent such failures from happening again. The new rules looked promising. The majority of a board's directors now had to be independent. And senior executives were required to conduct annual assessments of their internal controls for review by external auditors, whose work would be further reviewed by a quasi-governmental oversight board. By the time of the financial meltdown, most major financial institutions were SOX compliant-but that didn't stop the failures. More than 80% of collapsed banks' board members were independent, as were all members of their audit, compensation, and nominating committees. All the firms evaluated their internal controls yearly, and, in 2007, their external auditors' reports showed no material weaknesses. Neither did the reviews by the quasi-governmental board. So why were the SOX reforms so ineffective? In the author's view, it's because they merely added a new layer of legal obligations for governance without improving the quality of people serving on the boards or changing their behavioral dynamics. The author-formerly the president or chairman of two global financial firms, an independent director of several large industrial companies, and a longtime scholar of corporate governance-identifies three chronic deficiencies of boards: They tend to be too large to operate effectively. Members often lack sufficient expertise in the relevant industry. And few devote enough time to fully understand the complexities of the business. In this article, Pozen presents a new model for the corporate board.

Consumers today connect with brands in fundamentally new ways, often through media channels that are beyond manufacturers' and retailers' control. That means traditional marketing strategies must be redesigned to accord with how brand relationships have changed. In the famous funnel metaphor, a shopper would start with a number of brands in mind and then systematically narrow them down to a final choice. His relationship with both the manufacturer and the retailer ended there. But now, relying heavily on digital interactions, he evaluates a shifting array of options and often engages with the brand through social media after a purchase. Though marketing strategies that focused on building brand awareness and the point of purchase worked pretty well in the past, consumer touch points have changed in nature. For example, in many categories today the single most powerful influence to buy is someone else's advocacy. The author describes a "consumer decision journey" of four stages: consider a selection of brands; evaluate by seeking input from peers, reviewers, and others; buy; and enjoy, advocate bond. If the consumer's bond with the brand becomes strong enough, she'll enter a buy-enjoy-advocate-buy loop that skips the consider and evaluate stages entirely. Smart marketers will study the decision journey for their products and use the insights they gain to revise strategy, media spend, and organizational roles.

Companies today increasingly find themselves under attack from dissatisfied customers, disgruntled employees, and just about anyone who has a personal computer and an ax to grind. As many are learning the hard way, small-scale snipers in command of new-media and social-network weapons can inflict large-scale damage to a company's reputation-and fast. Blogs, tweets, text messages, online petitions, Facebook protest sites, and digital videos all represent potent new threats, and companies need to learn how to respond. Gaines-Ross, the chief reputation strategist at a global public relations consultancy, outlines six defensive tactics for companies whose good names come under assault. It's important to avoid a disproportionate show of force; to respond quickly, with instincts honed by advance training; and to empower the front line to meet message with counter message. Companies should not be afraid to "go rogue" themselves, and they should recruit and deploy supporters to serve as "force multipliers." Finally, they should muster their past credentials as they prepare to go into battle. It may never be possible to declare final victory in reputation warfare; the battle is ongoing. But by changing their mind-sets and adopting new tools, companies can protect their businesses from the worst of the reputation snipers' attacks.

Social technologies are helping-if not forcing-marketers to form new kinds of relationships with customers. But traditional brand management models don't account for these new kinds of interactions between companies and consumers. Brand marketers need to update their models to include "new-media ringmasters"-digitally savvy executives who move fast, understand how to integrate social media into corporate communications, and can organize cross-functional teams.

It's wrong to think we're entering a world in which traditional marketing activities will become irrelevant. Yet the scale and speed of social media make it urgent to get the branding basics right. Remember the internet-fueled backlash against Dell's flammable laptops and Kryptonite's expensive but easily picked lock. The obvious danger is failing to keep pace with social media developments. An equal, less obvious danger is getting distracted by them and losing sight of the fundamentals. Brands should exploit new media's possibilities to deliver on four basics: offering and communicating a clear customer promise; building trust by delivering on it; continuously improving the promise; and innovating beyond the familiar. Virgin Atlantic does this by, for example, scanning travel websites to learn what people are saying; including travel tips from crew members on its Facebook page; communicating with customers on Twitter in rapidly changing situations; offering a taxi-sharing system to enhance its brand; and maintaining V-Travelled, a site where customers exchange stories and advice while they plan a big trip. As they experiment with social media, companies should gain customer insights rather than simply try to increase sales, capitalize on the media's speed and reach while protecting the brand's reputation, and carefully follow the unwritten rules of customer engagement online.

When the name Robert S. McNamara is mentioned, one thought usually springs to mind: the tragedy of Vietnam. But McNamara's career was brilliant long before he served as secretary of defense under presidents Kennedy and Johnson-and long after as well. Spanning five decades, it included leading roles in academia (as a professor at Harvard Business School in the early 1940s), private enterprise (as an executive who helped turn around the ailing Ford Motor Company after the war), government (in his seven-year stint at the U.S. Department of Defense), and humanitarian service (as president of the World Bank for more than a decade). In this illuminating essay, Rosenzweig, a professor of strategy and international business at IMD, presents McNamara not only as an idealist and an accomplished manager but as the personification of management itself in his time. In his work we see the evolution of the discipline, from the development of frameworks to make sense of markets and organizations, to the embrace of quantitative analysis in decision making, to the growing understanding of human psychology. Vietnam was a crisis that revealed the limitations of managerial thinking at the time, but McNamara never stopped learning. As the discipline of management continued to evolve, so did he. In the end, his willingness to examine the mistakes of the past and learn from them may be his greatest legacy.

No longer content with being the world's factory for low-value products, China has quietly opened a new front in its campaign to become the globe's most powerful economy: It's on a quest for high-tech dominance. In pursuit of this goal, the Chinese government has ensured that it will be both buyer and seller in certain key industries by retaining ownership of customers and suppliers alike. It has consolidated manufacturers in those industries into a few national champions to generate economies of scale and concentrate learning. And it is co-opting, cajoling, and coercing multi-national corporations to part with their latest technologies, imposing regulations that put those companies in a terrible bind: They can either comply with the rules and share their technologies with would-be Chinese competitors or refuse and miss out on the world's fastest-growing market. Foreign companies doing business in China cannot wait for balancing macroeconomic forces or multilateral solutions; if they wish to survive as global technology leaders, they must bring greater imagination to bear on the problem. Above all, China's maneuvers cast into doubt the optimistic premise that engagement and interdependence with the West would cause capitalism and socialism to converge quickly, reducing international tensions. Storm clouds are gathering over China and the U.S. in particular. Can two economies with such radically different structures and objectives peacefully coexist? Most people expect that the systems will eventually become more similar. However, the authors argue, this will happen only when China becomes as rich-and as technologically advanced-as the U.S.

Employee wellness programs have often been viewed as a nice extra, not a strategic imperative. But the data demonstrate otherwise, according to Berry, of Texas A&M University; Mirabito, of Baylor University; and Baun, of the University of Texas MD Anderson Cancer Center. Their research shows that the ROI on comprehensive, well-run employee wellness programs is impressive, sometimes as high as six to one. To achieve those kinds of results, employers cannot merely offer workers a few passes to a fitness center and nutrition information in the cafeteria. The most successful wellness programs are supported by six essential pillars: engaged leadership at multiple levels; strategic alignment with the company's identity and aspirations; a design that is broad in scope and high in relevance and quality; broad accessibility; internal and external partnerships; and effective communications. Companies in a variety of industries-including Johnson & Johnson, Lowe's, H-E-B, and Healthwise-have built their employee wellness programs on all six pillars and have reaped big rewards in the form of lower costs, greater productivity, and higher morale. Those benefits are not easy to achieve, and verifiable paybacks are never a certainty. But the track record inspires emulation, especially when you see the numbers.

Multinational retailers have been slow to understand consumers in the developing world. As a result, they've been vulnerable to local competitors that know how their shoppers think, what they crave, and how they buy. These local retailers offer some valuable lessons: Forget the myth that the high end is the most lucrative segment. In emerging markets, the number of affluent consumers who could champion your product is small, and the wealthy tend to favor shopping trips abroad. Instead, aim your products at low-income segments from the start. Cater to consumers' tendency to buy a lot of the cheapest products and a little of the best by providing decent quality at the low end and aspirational choices at the high end. Turn your stores into centers of learning, where shoppers can fill the gaps in their product knowledge. Expect the unexpected and develop quick reflexes-you'll need them to deal with the rapid market expansion and demographic change of emerging economies.

Millions of people are struggling at work. Some are in the wrong jobs. Others feel no connection to their colleagues or engagement with their tasks. The result is rampant dissatisfaction and underachievement. Hallowell, a child psychiatrist specializing in learning differences, describes the Cycle of Excellence, a plan for helping people achieve peak performance. It consists of five steps: Select a job that reflects what you like to do and what you do best and that adds value to the organization. Research has shown that good job fit reduces stress and increases satisfaction and performance. Connect with the people around you. Robust relationships in the workplace galvanize people and build their engagement with their jobs. Small talk may seem trivial, but it pays big dividends. Play on the job. It sounds like an oxymoron, but people do their best-and are most satisfied-when they're imaginatively involved with their work. And when you're hard at play, you're building your brain. Grapple and Grow-that is, work hard to achieve a difficult task. The stress you may feel as you engage with a tough assignment and connect with others to complete it is not the toxic kind. Shine in the acknowledgment of your achievements. Praise releases chemicals that make us feel good, and it fills our uniquely human need to be of value, to matter. If you aren't getting it, ask for it. The need for recognition is fundamental to optimal human performance.

Stephen Greer's Hong Kong-based scrap-metal-recycling company, Hartwell Pacific, was enjoying a period of fantastic growth in the late 1990s: Within 18 months, the firm grew from two employees to 200 and opened locations in seven countries. But Greer's experience offers a vivid illustration of what can go wrong when an entrepreneur ambitiously expands without understanding that emerging markets operate by very different rules. Greer didn't realize that the corollary to cheap local wages is a poor population that may be tempted to supplement paychecks by stealing from employers; his company ultimately lost several million dollars from employee theft and embezzlement. This episode of fraud led Greer to learn to sacrifice some growth for control, to embrace bureaucracy, and to overcome his distrust and return to the optimistic mind-set that's essential for entrepreneurial growth.