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Management professor Henry Mintzberg argues that a little leadership goes a long way.

Economics professors Andrew B. Bernard and Peter K. Schott, and J. Bradford Jensen of the Institute for International Economics, dispel the myth that all U.S. manufacturing is headed offshore.

Young employees are ambitious--yet hoping to stay at one company for as long as possible.

For the past two decades, say economics professor Adam B. Jaffe and business professor Josh Lerner, U.S. patent laws have gummed up the gears of innovation.

Economics professor Paul Oyer and management policy professor Scott Schaefer explain how the Civil Rights Act of 1991 hurts those it's meant to help.

Randall Yim of the U.S. Government Accountability Office urges companies to get involved in homeland defense.

L. Gordon Crovitz of Dow Jones describes how his company and Reuters successfully launched Factiva.

When you name your brand, trust your gut.

The literature on CEO succession planning is nearly unanimous in its advice: Begin early, look first inside your company for exceptional talent, see that candidates gain experience in all aspects of the business, and help candidates develop the skills they will need in the top job. It all makes sense and sounds pretty straightforward. Nevertheless, the list of CEOs who last no more than a few years on the job continues to grow. Implicit in many, if not all, of these unceremonious departures is the absence of an effective CEO succession plan. The problem is, most boards simply don't want to talk about CEO succession: Why rock the boat when things are going well? Why risk offending the current CEO? Meanwhile, most CEOs can't imagine that anyone could adequately replace them. In this article, Kenneth W. Freeman, the retired CEO of Quest Diagnostics, discusses his own recent handoff experience (Surya N. Mohapatra became chief executive in May 2004) and offers his approach to succession planning. He says it falls squarely on the incumbent CEO to put ego aside and initiate and actively manage the process of selecting and grooming a successor. Aggressive succession planning is one of the best ways for CEOs to ensure the long-term health of the company, he says. Plus, thinking early and often about a successor will likely improve the chief executive's performance during his tenure. Freeman advocates the textbook rules for succession planning but adds to that list a few more that apply specifically to the incumbent CEO: Insist that the board become engaged in succession planning, look for a successor who is different from you, and make the successor's success your own. After all, Freeman argues, the CEO's true legacy is determined by what happens after he leaves the corner office.

Misguided marketing strategies have destroyed more shareholder value than shoddy accounting or shady fiscal practices. Yet, marketing functions typically reside deep in the organization, far from the executive suite and boardroom, and they are often poorly aligned with corporate strategy. Boards of directors, it would seem, have compelling reasons to monitor their companies' marketing activities. The authors argue that boards lack a clear understanding of how their companies are meeting customer needs and how their marketing strategies drive (or often fail to drive) top-line growth. To help remedy that problem, they've devised a "marketing dashboard," a series of management reports that could give the board this critical knowledge. The dashboard has three parts, each of which the board should review regularly. The first part tracks the company's main business drivers--those business conditions that, when manipulated or otherwise changed, will directly and predictably affect the company's performance. The second part describes the specific innovations in a pipeline of growth ideas that will allow the company to reach its short- and long-term revenue goals. And the third part provides an overview of the company's marketing skill set so the board can determine not only if the company has enough marketing talent, but also if it has the right marketing talent. Unlike isolated measures of marketing performance that are often insufficient, irrelevant, or misleading, the dashboard allows the board to assess quickly and routinely the effectiveness of its company's marketing strategies. Armed with a clear understanding of marketing's role and performance, the board can expose inadequate marketing campaigns, direct management to address the problem, and monitor progress.

Annual spending on executive coaching in the United States is estimated at $1 billion. Yet, information about coaching's effectiveness is scarce and unreliable. No one has yet demonstrated conclusively what qualifies an executive coach or what makes one approach to executive coaching better than another. Barriers to entry are nonexistent--many executive coaches know little about business, and some know little about coaching. The coaching certifications offered by various self-appointed bodies are difficult to assess, and methods of measuring return on investment are questionable. But strategic coaching can provide critical help both to individuals and to organizations. In this article, Stratford Sherman, a senior vice-president of Executive Coaching Network, and Alyssa Freas, the founder and CEO, explore the popularity of executive coaching and investigate ways to make the most of the experience. They argue that coaching is inevitably a triangular relationship between the client, the "coachee," and the coach. Its purpose is to produce behavioral change and growth in the coachee for the economic benefit of the client. The best way to maximize the likelihood of good results is to qualify all the people involved. Even so, many triangular relationships continue to generate conflict among all three parties. At the most basic level, coaches serve as suppliers of candor, providing leaders with the objective feedback they need to nourish their growth. Coaching gets executives to slow down, gain awareness, and notice the effects of their words and actions. On a larger scale, the best coaching fosters cultural change for the benefit of the entire organization. It provides a disciplined way for businesses to deepen relationships with their most valued employees while also increasing their effectiveness.

Most companies don't worry about the behavior of their supply chain partners. Instead, they expect the supply chain to work efficiently without interference, as if guided by Adam Smith's famed invisible hand. In their study of more than 50 supply networks, V.G. Narayanan and Ananth Raman found that companies often looked out for their own interests and ignored those of their network partners. Consequently, supply chains performed poorly. Those results aren't shocking when you consider that supply chains extend across several functions and many companies, each with its own priorities and goals. Yet, all those functions and firms must pull in the same direction for a chain to deliver goods and services to consumers quickly and cost effectively. According to the authors, a supply chain works well only if the risks, costs, and rewards of doing business are distributed fairly across the network. In fact, misaligned incentives are often the cause of excess inventory, stock-outs, incorrect forecasts, inadequate sales efforts, and even poor customer service. The fates of all supply chain partners are interlinked: If the firms work together to serve consumers, they will all win. However, they can do that only if incentives are aligned. Companies must acknowledge that the problem of incentive misalignment exists and then determine its root cause and align or redesign incentives. They can improve alignment by, for instance, adopting revenue-sharing contracts, using technology to track previously hidden information, or working with intermediaries to build trust among network partners. It's also important to reassess incentives periodically, because even top-performing networks find that changes in technology or business conditions alter the alignment of incentives.

Would you send a half-empty truck across Europe or pay to airfreight coats to Japan twice a week? Would you move unsold items out of your shop after only two weeks? Would you run your factories just during the day shift? Is this any way to run an efficient supply chain? For Spanish clothier Zara it is. Not that any one of these tactics is especially effective in itself. Rather, they stem from a holistic approach to supply chain management that optimizes the entire chain instead of focusing on individual parts. In the process, Zara defies most of the current conventional wisdom about how supply chains should be run. Unlike so many of its peers, which rush to outsource, Zara keeps almost half of its production in-house. Far from pushing its factories to maximize output, the company focuses capital on building extra capacity. Rather than chase economies of scale, Zara manufactures and distributes products in small batches. Instead of outside partners, the company manages all design, warehousing, distribution, and logistics functions itself. The result is a superresponsive supply chain exquisitely tailored to Zara's business model. Zara can design, produce, and deliver a new garment to its 600-plus stores worldwide in a mere 15 days. So in Zara's shops, customers can always find new products--but in limited supply. Customers think, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance." That urgency translates into high profit margins and steady 20% yearly growth in a tough economic climate. Some of Zara's specific practices may be directly applicable only in industries where product life cycles are very short. But Zara's simple philosophy of reaping bottom-line profits through end-to-end control of the supply chain can be applied to any industry.

Disappointed by the high costs and elusive benefits, early adopters of customer relationship management systems came, in the post dot-com era, to view the technology as just another overhyped IT investment whose initial promise would never be fulfilled. But this year, something unexpected is happening. System sales are rising, and executives are reporting satisfaction with their CRM investments. What's changed? A wide range of companies are successfully taking a pragmatic, disciplined approach to CRM. Rather than use it to transform entire businesses, they've directed their investments toward solving clearly defined problems within their customer relationship cycle. The authors have distilled the experiences of these CRM leaders into four questions that all companies should ask themselves as they launch their own CRM initiatives: Is the problem strategic? Is the system focused on the pain point? Do we need perfect data? What's the right way to expand an initial implementation? The questions reflect a new realism about when and how to deploy CRM to its best advantage. Understanding that highly accurate and timely data are not required everywhere in their businesses, CRM leaders have tailored their real-time initiatives to those customer relationships that can be significantly enhanced by "perfect" information. After they've succeeded with their first targeted CRM project, they can use it as a springboard for solving additional problems. CRM, in other words, is coming to resemble any other valuable management tool, and the keys to successful implementation are also becoming familiar: strong executive and business unit leadership, careful strategic planning, clear performance measures, and a coordinated program that combines organizational and process changes with the application of new technology.

In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. They should try again, because a new approach sidesteps the difficulties associated with large-scale ABC implementation. In the revised model, managers estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys. This method is simpler because it requires for each group of resources, estimates of only two parameters: how much it costs per time unit to supply resources to the business activities (the total overhead expenditure of a department divided by the total number of minutes of employee time available) and how much time it takes to carry out one unit of each kind of activity (as estimated or observed by the manager). This approach also overcomes a serious technical problem associated with employee surveys: when asked to estimate time spent on activities, employees invariably report percentages that add up to 100. Under the new system, managers take into account time that is idle or unused. Armed with the data, managers then construct time equations, a new feature that enables the model to reflect the complexity of real-world operations by showing how specific order, customer, and activity characteristics cause processing times to vary. This tool kit uses concrete examples to demonstrate how managers can obtain meaningful cost and profitability information quickly and inexpensively. Rather than endlessly updating and maintaining ABC data, they can now spend their time addressing the deficiencies the model reveals: inefficient processes, unprofitable products and customers, and excess capacity.

Many deals that look good on paper never materialize into value-creating endeavors. Often, the problem begins at the negotiating table. In fact, the very person everyone thinks is pivotal to a deal's success--the negotiator--is often the one who undermines it. That's because most negotiators have a deal maker mind-set: They see the signed contract as the final destination rather than the start of a cooperative venture. What's worse, most companies reward negotiators on the basis of the number and size of the deals they're signing, giving them no incentive to change. The author asserts that organizations and negotiators must transition from a deal maker mentality--which involves squeezing your counterpart for everything you can get--to an implementation mind-set--which sets the stage for a healthy working relationship long after the ink has dried. Achieving an implementation mind-set demands five new approaches. First, start with the end in mind: Negotiation teams should carry out a "benefit of hindsight" exercise to imagine what sorts of problems they'll encounter 12 months down the road. Second, help your counterpart prepare. If they agree to something they can't deliver, it will affect you both. Third, treat alignment as a shared responsibility. Fourth, send one unified message. Negotiators should brief implementation teams on both sides together so everyone has the same information. And fifth, manage the negotiation like a business exercise: Combine disciplined negotiation preparation with post-negotiation reviews. Above all, companies must remember that the best deals don't end at the negotiating table--they begin there.

Employers are beginning to realize that they face a nearly invisible but significant drain on productivity: presenteeism, the problem of workers being on the job but, because of illness or other medical conditions, not fully functioning. By some estimates, the phenomenon costs U.S. companies over $150 billion a year--much more than absenteeism does. Yet, it's harder to identify. You know when someone doesn't show up for work, but you often can't tell when, or how much, poor health hurts on-the-job performance. Many of the health problems that result in presenteeism are relatively benign. Research in this emerging area of study focuses on such chronic or episodic ailments as seasonal allergies, asthma, headaches, depression, back pain, arthritis, and gastrointestinal disorders. The fact is, when people don't feel good, they simply don't perform at their best. Employees who suffer from depression may be fatigued and irritable--and, therefore, less able to work effectively with others. Those with migraine headaches who experience blurred vision and sensitivity to light, not to mention acute pain, probably have a hard time staring at a computer screen all day. A number of companies are making a serious effort to determine the prevalence of illnesses and other medical conditions that undermine job performance, calculate the related drop in productivity, and find cost-effective ways to combat that loss. Indeed, researchers have discovered that presenteeism-related declines in productivity sometimes can be more than offset by relatively small investments in screening, treatment, and education. So organizations may find that it pays to make targeted investments in employees' health care--by covering the cost of allergy medication, for instance, or therapy for depression.

As a newly minted CEO, you may think you finally have the power to set strategy, the authority to make things happen, and full access to the finer points of your business. But if you expect the job to be as simple as that, you're in for an awakening. Even though you bear full responsibility for your company's well-being, you are a few steps removed from many of the factors that drive results. You have more power than anybody else in the corporation, but you need to use it with extreme caution. In their workshops for new CEOs, held at Harvard Business School in Boston, the authors have discovered that nothing-not even running a large business within the company-fully prepares a person to be the chief executive. The seven most common surprises are: You can't run the company. Giving orders is very costly. It is hard to know what is really going on. You are always sending a message. You are not the boss. Pleasing shareholders is not the goal. You are still only human. These surprises carry some important and subtle lessons. First, you must learn to manage organizational context rather than focus on daily operations. Second, you must recognize that your position does not confer the right to lead, nor does it guarantee the loyalty of the organization. Finally, you must remember that you are subject to a host of limitations, even though others might treat you as omnipotent. How well and how quickly you understand, accept, and confront the seven surprises will have a lot to do with your success or failure as a CEO.

Despite a long-term decline in the circus industry, Cirque du Soleil profitably increased revenue 22-fold over the last 10 years by reinventing the circus. Rather than competing within the confines of the existing industry or trying to steal customers from rivals, Cirque developed uncontested market space that made the competition irrelevant. Cirque created what the authors call a blue ocean, a previously unknown market space. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In red oceans-that is, in all the industries already existing-companies compete by grabbing for a greater share of limited demand. As the market space gets more crowded, prospects for profits and growth decline. Products turn into commodities, and increasing competition turns the water bloody. There are two ways to create blue oceans. One is to launch completely new industries, as eBay did with online auctions. But it's much more common for a blue ocean to be created from within a red ocean when a company expands the boundaries of an existing industry. In studying more than 150 blue ocean creations in over 30 industries, the authors observed that the traditional units of strategic analysis-company and industry-are of limited use in explaining how and why blue oceans are created. The most appropriate unit of analysis is the strategic move, the set of managerial actions and decisions involved in making a major market-creating business offering. Creating blue oceans builds brands. So powerful is blue ocean strategy, in fact, that a blue ocean strategic move can create brand equity that lasts for decades.

It's fairly obvious: To make intelligent investments within your organization, you need to understand how your whole industry is changing. But such knowledge is not always easy to come by. Companies misread clues and arrive at false conclusions all the time. To understand truly where your industry is headed, you have to take a long-term, high-level look at the context in which you do business, says Boston University professor Anita McGahan. She studied a variety of businesses from a cross section of industries over a 10-year period, examining how industry structure affects business profitability and investor returns. Her research suggests that industries evolve along one of four distinct trajectories--radical, progressive, creative, and intermediating--that set boundaries on what will generate profits in a business. These four trajectories are defined by two types of threats. The first is when new, outside alternatives threaten to weaken or make obsolete core activities that have historically generated profits for an industry. The second is when an industry's core assets--its resources, knowledge, and brand capital--fail to generate value as they once did. Industries undergo radical change when core assets and core activities are both threatened with obsolescence; they experience progressive change when neither is jeopardized. Creative change occurs when core assets are under threat but core activities are stable, and intermediating change happens when core activities are threatened while core assets retain their capacity to create value. If your company's innovation strategy is not aligned with your industry's change trajectory, your plan for achieving returns on invested capital cannot succeed, McGahan says. But if you understand which path you're on, you can determine which strategies will succeed and which will backfire.