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This is an MIT Sloan Management Review article. Executives began outsourcing substantial portions of their operations more than a decade ago to offload activities they declared to be noncore to cut costs and improve strategic focus. Today, however, companies are looking outside for help for more fundamental reasons--to facilitate rapid organizational change, to launch new strategies, and to reshape company boundaries. In doing so, they are engaging in transformational outsourcing: partnering with another company to achieve a rapid, substantial, and sustainable improvement in enterprise-level performance. On the basis of research on 20 companies that have attempted the practice, the author identifies four broad organizational categories that can benefit from transformational outsourcing. Start-ups such as TiVo, for example, need partners to scale up rapidly. "Crouching tigers" such as Family Christian Stores are being stymied by a deficiency in some key capability from meeting their strategic aspirations. "Fallen angels"--such as BP in the mid-1990s--settle into the wrong performance trajectory and need strong action to change their tack. And organizations on the edge of survival--as Britain's National Savings and Investments was several years ago--need transformational outsourcing to become "born again."

This is an MIT Sloan Management Review article. Many corporate boards adopt a one-size-fits-all approach to governance. Instead, they should consider that their primary role must shift depending on various conditions, both internal and external. Boards have four main functions--auditing, supervising, coaching, and steering--each with a different perspective and behavior. The roles reflect two main differences in board culture. The first type of board concerns itself mainly with shareholder interests or shareholder plus other stakeholder interests. The focus is on externalities. The second type of board either monitors executives' activities or gets actively involved in the conduct of the organization. Here the focus is on handling ineffective management. The basic role types are not mutually exclusive; instead they reflect different board cultures that result from different emphases on decision making and resource allocation. During any time period, a board must determine what its dominant role should be, given the current conditions.

This is an MIT Sloan Management Review article. The conventional planning process does not work for strategic experiments that are truly bleeding edge. Nevertheless, many companies cling to what they know--planning that holds managers responsible for numbers. But that is not practical for entering completely new territory, when numbers are essentially pulled out of a hat and their underlying assumptions rarely revisited. A better approach to planning comes from researchers at Dartmouth College's Tuck School of Business. It emphasizes learning instead of numbers, and it draws on in-depth studies of such companies as New York Times Digital, Thomson Corp., Corning, and Analog Devices. Their approach, theory-focused planning, diverges from conventional planning in six critical ways. Companies that use it concentrate on a few critical unknowns instead of the usual horde of details in conventional plans; they focus on the theory underlining the predictions rather than the predictions themselves; they look for trends rather than numerical benchmarks; they review the plan often, in response to important new data, instead of annually; in that review, they consider the experiment over time instead of just for the current period; and they emphasize leading indicators rather than financials. Companies still hold managers of strategic experiments responsible for performance, but performance is gauged according to how quickly managers learn from new data. To be successful in uncharted waters, the ability to learn from experience is paramount.

This is an MIT Sloan Management Review article. For decades, companies relied on push marketing to sell their products and services. Then, in the 1990s, the emphasis shifted to relationship marketing, as slogans such as "delight your customers" became the mantra of many marketers. But those tactics have been losing their effectiveness, particularly as the power of customers continues to grow. Thanks to digital technologies like the Internet, today's increasingly educated consumers expect companies to do more than just delight them. In response, innovative companies are now trying a different approach: They are providing customers with open, honest, and complete information, and then finding the best products for them--even if those offerings are from competitors. In short, they are truly representing their customers' best interests, essentially becoming advocates for them. The strategy is this: If a company advocates for its customers, they will reciprocate with their trust, loyalty, and purchases--either now or in the future. The firm might then command higher prices for its products and services, as many customers will be willing to pay for the extra value. And when people trust a company, they will often tell others about it, helping to reduce the organization's costs for acquiring new customers.

This is an MIT Sloan Management Review article. Most management advice today--whether it's from books or articles, prescribed in courses or by consultants--says that change is good and more change is better. Advice on how to change varies quite a bit, but it has three features in common: "Creative destruction" is its motto. "Change or perish" is its justification. And "no pain, no change" is its rationale for overcoming a purportedly innate human resistance to change. The author admits that creative destruction may be necessary, and even preferable, in certain situations. Companies that have enjoyed captive markets, docile suppliers, and government support may need the rude awakening it provides. In such instances, organizational stability is so ingrained that creative destruction may even be the best way to achieve change with the least amount of pain. But for every change avoider today, he says, there are many more "change-aholics"--companies that have changed more aggressively, quickly, and repeatedly than any organization could hope to do successfully. In the process, they have often suffered from "more pain, less change." The author urges executives at such companies to monitor their organizations continually for symptoms of repetitive change syndrome: initiative overload, change-related chaos, employee cynicism, and burnout.

Can managers really tame corporate knowledge? Seeks answers by exploring the internal practices of a large consulting firm and identifying those that help and those that hinder knowledge management. Examines both canonical and noncanonical practices in the firm, along with a look at some of the ironies that arose when the two types differed. The model developed here outlines appropriate strategic considerations, depending on the strategic focus and knowledge characteristics within the environment of the firm.

What is data mining, and how does it differ from traditional statistical modeling? Along with finding the answers here, managers can take a look at important recent developments in data mining, examine some of its marketing-related applications, and learn how to establish and maintain a data mining system. Armed with this information, they can then determine their firm's level of commitment to the process. Companies that do not want to commit the financial and personnel resources to data mining can still secure many of its benefits through outsourcing.

International services offer the best prospects for growth in numerous industries. Yet, compared to manufacturing, relatively little is known about the international growth and development of services, largely because fewer service firms have ventured overseas. Examines the similarities and differences between international manufacturing and services, helping to point out the challenges facing various types of service businesses. The strategies that leading service firms follow in international markets provide valuable guidelines for other companies to follow.

A major advancement is taking place in supply chain management. Radio frequency identification (RFID) technology has now been developed to the point at which it can provide suppliers, manufacturers, distributors, and retailers with precise real-time information on where their products are in the supply chain--information that can be valuable in terms of improving supply chain management (SCM) efficiencies and revenue generation. Several companies in the food and consumer packaged goods industries are involved in one or more major RFID pilot programs. Describes the critical trends and implications of applying this technology to SCM, detailing its benefits, as well as impediments, to implementation.

These days, entrepreneurs and managers in growing companies find themselves searching for cash to fund their growth. A surprisingly good but often neglected place to look for it lies right under their noses--on the company's balance sheet. Finding hidden cash on a balance sheet by using some simple analyses beats going hat-in-hand to the bank. The analyses here also provide metrics that everyone in the company--from sales manager to accounting clerk--can understand and use. Best of all, the only things you'll need are last month's financials, a calculator, and a cocktail napkin.

China's rapid transition to a market economy has remolded society culturally, especially when it comes to young people between the ages of 5 and 24. Numbering over 400 million and wielding increasing power and influence over personal and household purchases, these youths will determine the future preferences and trends of the country's consumer market. Thus, they represent enormous market opportunities for foreign companies. How important is this dynamic market? Do the challenges outweigh the attractions? And how best can marketers appeal to these bolder, more individualistic, more "Westernized" young Chinese consumers?

Although companies are devoting significant resources to corporate social responsibility (CSR) initiatives, insights into the optimal formulation, implementation, and effectiveness estimation of CSR strategies are currently scarce. Takes an in-depth look at when, why, and how CSR works from a consumer's perspective. In contrast to the simple, monotonic relationships between CSR and consumer purchase behavior evident in marketplace polls, this article proposes a more complex, contingent model of consumer responses to CSR. Articulates both the internal outcomes (e.g., awareness, attitudes, attachment) and external outcomes (e.g., word of mouth, purchase, loyalty) of CSR initiatives for not just the company, but also the consumer and the CSR issue/cause. Delineates the key factors that are likely to moderate the extent to which the inputs lead to the internal outcomes and the internal outcomes lead to the external ones. This framework can help guide companies in formulating and implementing their CSR initiatives as well as measuring the effectiveness of these initiatives.

For global companies that implement their codes of conduct within long supply chains, managing responsibility is increasingly starting to resemble managing quality, which most companies have done for many years. Compares emerging systems of (total) responsibility management (TRM) to (total) quality management (TQM) systems. Managers can think systemically about managing responsibility in the emerging competitive and activist environment by making an analogy to quality management.

Cause marketing involves a "cause-linked" promotion of a commercial product, with some part of that product's revenues being donated to the nonprofit engaged in that cause. Traditionally, the needs of the for-profit firm have for the most part initiated and driven cause marketing, with less attention directed to the needs of the nonprofit organization or its role in creating value for the partnership. Offers a framework that considers the benefits and costs from both partners' perspectives, including monetary (first-order) as well as nonmonetary (second-order) considerations. Using this framework, the article proposes a decision process aimed at enhancing the value for both partners in the relationship.

Companies are increasingly seeing corporate social responsibility as a key to long-term success and are collaborating with nonprofit organizations in various ways to establish themselves as good corporate citizens. Delves into a promising form of company/nonprofit collaboration called social alliances--long-term, collaborative efforts between companies and nonprofits that are designed to achieve strategic objectives for both organizations. The characteristics, factors, and circumstances that enable or impede social alliances are examined through an investigation of 11 social alliances involving 26 organizations. Though social alliances may be fraught with problems, they can be designed, structured, nurtured, and maintained in a manner that enables both to contribute to solving pressing social problems and to fulfilling important strategic objectives for companies and nonprofits.

Analyzes the company's ultimate decision to sell Fair Trade coffee and subsequently work with other NGOs to ensure that small farmers receive a living wage, in an effort to live up to the standards Starbucks set for itself in the area of social responsibility. Provides a brief overview of the changing environment for corporations and NGOs. Discusses the battle between Global Exchange and Starbucks over Fair Trade, including factors that led to the confrontation between Global Exchange and Starbucks, Starbucks' alternatives in the face of Global Exchange's threat, Starbucks' decision, and ensuing events. Also presents collaboration as a growing and important alternative to confrontation in business-NGO relations and offers seven lessons managers can take away from Starbucks' experience.

Corporate social responsibility has major implications for pricing decisions in some markets. An extreme case is the pricing of life-saving drugs in developing countries; industry critics have pointed to price as an obstacle to treatment and a factor in the deaths of millions of AIDS victims. Examines socially responsible pricing in the form of differential pricing across markets, taking into account ability to pay and social welfare. An analysis of AIDS drug pricing between 1999 and 2003 suggests that, in fact, the high prices of AIDS drugs in developing countries suboptimized contribution earnings in those markets. In the 1990s, multinationals could have earned greater contribution in developing countries by reducing prices, while also saving thousands of lives. However, that could have jeopardized earnings in developed countries, and this, together with other factors, created barriers to socially responsible pricing. Neither multinationals nor developing country governments can alone create conditions for socially responsible pricing to prevail. Identifies the role of different players in addressing barriers to socially responsible pricing, including multinationals, governments, nongovernmental organizations, and multilateral institutions such as the World Trade Organization and the World Health Organization. Also offers lessons for managers in industries with characteristics similar to the drug industry, where socially responsible pricing also may be needed, if not demanded.

By allowing consumers to control data about their purchases and preferences, says business and technology professor Richard T. Watson, companies can get a better sense of what their customers want to buy.

Management consultant William Dunk argues that the best new thinking resides in often overlooked nations.

We can't observe how leaders make decisions, so we judge--and often misjudge--those decisions by appearances, explains business professor Michael Useem.