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Although many organizations initiate communities of practice to drive performance and innovation, managers typically have little insight into their internal effectiveness and business impact. Offers network analytics, interventions, and metrics (both in terms of network connectivity and business outcomes) to improve and track the success of such community initiatives. Specifically, shows how social network analysis can help move a community from an ad hoc, informal group to a value-producing network by focusing on five critical levers: improving information flow and knowledge reuse; developing an ability to sense and respond to key problems or opportunities; driving planned and emergent innovation; nurturing value-creating interactions; and engaging employees through community efforts.

Online markets have dramatically altered the retail landscape. By eliminating barriers associated with geography as well as the physical costs of maintaining a storefront, online markets have created a "democracy" of buyers and sellers. However, the fluidity of this marketplace and the relative anonymity of transactions has made the problem of maintaining trust critically important. Solving the "trust problem" represents a key competitive advantage for many of the successful players in the online space. For instance, much of the remarkable success of eBay has stemmed from its ability to create valuable and informative reputations for its users through its feedback system. The lock-in associated with a user's reputation on eBay helped it to stave off challenges by Amazon and Yahoo. Describes how eBay's solution to the "trust problem," has led to the creation of a "market for feedback" whose sole purpose is the "manufacture" of reputation for eBay users. Presents a study and statistical analysis of this market in order to show that its maintenance represents a crucial challenge to eBay's future competitive advantage and, more generally, to solving the "trust problem" in other online markets.

With the recent loss of public confidence in firms in America, Australia, Britain, and other countries, more companies are being forced to promote themselves to their internal and external stakeholders in order to maintain and protect their reputations. Advises firms to communicate their reputation message in the form of a corporate story--a narrative that speaks about the company's mission, morality, and modes of operation--and then provides guidelines for creating and evaluating these stories.

In the wake of globalization, still more regional clusters are globally outsourcing (purchasing components that were originally manufactured internally) or offshoring (globally relocating manufacturing while maintaining ownership control). Policy makers and business strategists alike are searching for theoretical frameworks to understand the underlying dynamics of this global reshuffling of production activities and how this will affect innovation and competitiveness. Examines production relocation from a regional perspective and shows that the impact of globalization on regional clusters depends on the modularity and digitalization of the regional production activities, which affect stickiness and coordination costs.

Despite the large number of firms offering loyalty programs and their high levels of consumer membership, many of these loyalty programs have not been successful. Differentiates among four different types of loyalty programs and offers a series of guidelines to assist firms to develop, implement, and control an effective loyalty program. Describes several potential pitfalls that need to be avoided.

One of the biggest management challenges anywhere is how to improve student performance in urban public schools in the United States. There has been no shortage of proposed solutions: Find great principals and give them power; create competitive markets with charters, vouchers, and choice; establish small schools to ensure that students receive sufficient attention--the list goes on. Although these approaches have created positive changes in individual schools, they have failed to produce a single high-performing urban school system. In this article, the authors, who are members of Harvard University's Public Education Leadership Project (PELP), explain why. One reason, they say, is that educators, researchers, and policy makers see the district office, which oversees all the schools in a district, as part of the problem rather than a crucial part of the solution--and this is a mistake. The district office plays an important role in developing strategies, identifying and spreading best practices, developing leadership capabilities at all levels, building information systems to monitor student improvement, and holding people accountable for results. The authors propose a holistic framework that district leaders can use to develop an improvement strategy and build coherent organizations to implement it. The framework is based on three beliefs. First, school systems need their own management models; they cannot simply import them from the business world. Second, "the customer" is the student; therefore, urban districts need to focus on improving teaching and learning in every classroom at every school. Third, district leaders must design their organizations so that all the components--culture, systems and structures, resources, and mechanisms for managing stakeholders and the external environment--reinforce one another and support the implementation of the strategy across schools.

Never a fad, but always in or out of fashion, innovation gets rediscovered as a growth enabler every half dozen years. Too often, grand declarations about innovation are followed by mediocre execution that produces anemic results, and innovation groups are quietly disbanded in cost-cutting drives. Each managerial generation embarks on the same enthusiastic quest for the next new thing. And each generation faces the same vexing challenges--most stemming from the tensions between protecting existing revenue streams critical to current success and supporting new concepts that may be crucial to future success. In this article, Harvard Business School professor Rosabeth Moss Kanter reflects on four major waves of innovation enthusiasm she's observed over the past 25 years. She describes the classic mistakes companies make in innovation strategy, process, structure, and skills assessment, illustrating her points with a plethora of real-world examples--including AT&T Worldnet, Timberland, and Ocean Spray. A typical strategic blunder is when managers set their hurdles too high or limit the scope of their innovation efforts. Quaker Oats, for instance, was so busy in the 1990s making minor tweaks to its product formulas that it missed larger opportunities in distribution. A common process mistake is when managers strangle innovation efforts with the same rigid planning, budgeting, and reviewing approaches they use in their existing businesses--thereby discouraging people from adapting as circumstances warrant. Companies must be careful how they structure fledgling entities alongside existing ones, Kanter says, to avoid a clash of cultures and agendas--which Arrow Electronics experienced in its attempts to create an online venture. Finally, companies commonly undervalue and underinvest in the human side of innovation--for instance, promoting individuals out of innovation teams long before their efforts can pay off. Kanter offers practical advice for avoiding these traps.

Multicultural teams offer a number of advantages to international firms, including deep knowledge of different product markets, culturally sensitive customer service, and 24-hour work rotations. But those advantages may be outweighed by problems stemming from cultural differences, which can seriously impair the effectiveness of a team or even bring it to a stalemate. How can managers best cope with culture-based challenges? The authors conducted in-depth interviews with managers and members of multicultural teams from all over the world. Drawing on their extensive research on dispute resolution and teamwork and those interviews, they identify four problem categories that can create barriers to a team's success: direct versus indirect communication, trouble with accents and fluency, differing attitudes toward hierarchy and authority, and conflicting norms for decision making. If a manager--or a team member--can pinpoint the root cause of the problem, he or she is likelier to select an appropriate strategy for solving it. The most successful teams and managers, the authors found, dealt with multicultural challenges in one of four ways: adaptation (acknowledging cultural gaps openly and working around them), structural intervention (changing the shape or makeup of the team), managerial intervention (setting norms early or bringing in a higher-level manager), and exit (removing a team member when other options have failed). Which strategy is best depends on the particular circumstances--and each has potential complications. In general, though, managers who intervene early and set norms; teams and managers who try to engage everyone on the team; and teams that can see challenges as stemming from culture, not personality, succeed in solving culture-based problems with good humor and creativity. They are the likeliest to harvest the benefits inherent in multicultural teams.

For manufacturers, customers are the open wallets at the end of the supply chain. But for most service businesses, they are key inputs to the production process. Customers introduce tremendous variability to that process, but they also complain about any lack of consistency and don't care about the company's profit agenda. Managing customer-introduced variability, the author argues, is a central challenge for service companies. The first step is to diagnose which type of variability is causing mischief: Customers may arrive at different times, request different kinds of service, possess different capabilities, make varying degrees of effort, and have different personal preferences. Should companies accommodate variability or reduce it? Accommodation often involves asking employees to compensate for the variations among customers--a potentially costly solution. Reduction often means offering a limited menu of options, which may drive customers away. Some companies have learned to deal with customer-introduced variability without damaging either their operating environments or customers' service experiences. Starbucks, for example, handles capability variability among its customers by teaching them the correct ordering protocol. Dell deals with arrival and request variability in its high-end server business by outsourcing customer service while staying in close touch with customers to discuss their needs and assess their experiences with third-party providers. The effective management of variability often requires a company to influence customers' behavior. Managers attempting that kind of intervention can follow a three-step process: diagnosing the behavioral problem, designing an operating role for customers that creates new value for both parties, and testing and refining approaches for influencing behavior.

On February 1, 2003, the world watched in horror as the Columbia space shuttle broke apart while reentering the earth's atmosphere, killing all seven astronauts. Some have argued that NASA's failure to respond with appropriate intensity to the so-called foam strike that led to the accident was evidence of irresponsible or incompetent management. The authors' research, however, suggests that NASA was exhibiting a natural, albeit unfortunate, pattern of behavior common in many organizations. The foam strike is a prime example of what the authors call an ambiguous threat--a signal that may or may not portend future harm. Ambiguous threats differ from threats with obvious causes--say, a fire in the building--for which the response is clear. They also differ from unmistakable threats that may lack straightforward response paths (such as the frightening oxygen-tank explosion aboard Apollo 13). However, when the warning sign is ambiguous and the threat's potential effect is unclear, managers may choose to ignore or discount the risk. Such an approach can be catastrophic. Firms that do a good job of dealing with ambiguous threats do not improvise during a crisis; rather, they apply a rigorous set of detection and response capabilities that they have developed and practiced beforehand. In this article, the authors outline how to put such capabilities in place long before a crisis strikes. First, companies need to hone their teamwork and rapid problem-solving skills through practice. Second, they must learn to recognize weak signals, amplify the threat, and encourage employees to ask disconcerting "what if" questions in a safe environment. Finally, they should explore possible responses to threats through quick, low-cost experimentation.

When disaster strikes, many corporations respond generously. After the 2004 tsunami, for instance, U.S. firms alone contributed more than half of a billion dollars in cash and in-kind donations. But a host of reactive efforts don't produce the best results--and may even get in the way. To make the most of their humanitarian efforts, companies need to address two fundamental questions: What kind of aid do we want to contribute--philanthropic (money and in-kind donations) or integrative (backroom, operational assistance)? And how do we want to contribute it--by working one-on-one with a single agency or by joining a consortium? The permutations of those two decisions lead to four different approaches, each with its own strengths and challenges. Single-company philanthropic partnerships work well when there's a good match between what a company wants to contribute and what an agency needs, as with Coca-Cola's donations of water to the Red Cross. More diffuse, but also potentially more effective, are the benefits of joining a multicompany philanthropic partnership, which enables the resources of many firms to be matched to the missions of many agencies. More difficult to establish but more fundamental in its impact is a single-company integrative partnership, in which a corporation works to improve the way an aid agency operates, as the logistics giant TNT has done to help the distribution efforts of the World Food Programme. And most difficult to implement--but potentially most effective--is a multicompany integrative partnership, which brings to bear the collective best practices of many companies to improve the response capabilities of multiple agencies. It's easy to see why the image of a relief worker carrying a sack of grain delivers an emotional wallop, but the behind-the-scenes work of process enhancement is just as crucial to humanitarian efforts. The sooner executives realize this, the better positioned the world will be to respond to global disasters.

In the aftermath of seismic debacles like those that toppled Enron and WorldCom, corporate boards have been shaken up and made over. More directors are independent these days, for instance, and corporations now disclose directors' salaries and committee members' names. Research shows that most of the changes are having a positive effect on companies' performance. They are primarily structural, though, and don't go to the heart of a board's work: making the choices that shape a firm's future. Which decisions boards own and how those calls are made are largely hidden from the public. As a result, boards are often unable to learn from the best governance practices of their counterparts at other companies. This article pulls back the curtain and provides an inside look. Drawing on interviews with board members and executives at 31 companies, along with a close examination of three boardroom decisions, the author identifies several formal processes that can help companies improve their decision making: creating calendars that specify when the board and the standing committees will consider key items; drafting charters that define the decisions committees are responsible for; and developing decision protocols that divvy up responsibilities between directors and executives. The author also identifies a number of informal decision-making principles: Items that are strategically significant and touch on the firm's core values should go to the board. Large decisions should be divided into small pieces, so the board can devote sufficient attention to each one. Directors must remain vigilant to ensure that their decisions are effectively implemented. The CEO and either the nonexecutive chair or the lead director should engage in ongoing dialogue regarding which decisions to take to the full board and when. And directors should challenge assumptions before making yes-or-no decisions on management proposals.

The information age has brought with it a host of new technologies--and an overabundance of choices. Managers are hard-pressed to figure out what all those innovations do, let alone which ones to adopt and how to implement them. Furthermore, many so-called advancements haven't lived up to expectations: Frustration, delays, and even outright failures tempt many executives to avoid dealing with IT altogether. But those who turn away are selling their companies short. Executives have three critical responsibilities when it comes to IT: They must help choose technologies, using an inside-out approach that keeps the true needs of the business in mind; smooth the adoption of those technologies, taking into account that they may encounter strong resistance; and encourage their exploitation by leveraging already standardized data and work flows. What's most important, though, is that they look beyond the individual IT projects they select to the broader picture of how IT is likely to affect the organization. Information technology can be classified into three types, each of which provides companies with a particular level of change. Function IT encompasses technologies--such as spreadsheet and word-processing applications--that streamline individual tasks. Network IT includes capabilities like e-mail, instant messaging, and blogs and helps people communicate with one another. Enterprise IT brings with it approaches such as customer resource management and supply chain management and lets companies re-create interactions between groups of workers or with business partners. Different types of technology bring about different types of organizational change, and managers should tailor their own roles accordingly. Categorizing IT in this manner can help leaders determine which technologies to invest in and how they can assist organizations in making the most of them.

Global companies that create and institutionalize a systematic framework for assessing risk will be the ones best positioned to capitalize on China's enormous promise.

A particularly incendiary example of the law of unintended consequences.

Rigorous research shows a correlation between stock market performance and the phases of the moon.

Immigrants in developed countries who send money to and buy goods for relatives in the developing world are creating a vast new international market.

New research says they do, in spades, especially for online businesses.

Ivor Tiefenbrun, head of the high-end audio equipment maker Linn Products, explains why the assembly line isn't always the most efficient way to manufacture.

Few companies even record their discounting practices, much less manage them. Here's how to do discounts right.