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Building a strong supply chain is essential for business success. But when it comes to improving their supply chains, few companies take the right approach. Many businesses work to make their chains faster or more cost effective, assuming that those steps are the keys to competitive advantage. To the contrary: Supply chains that focus on speed and costs tend to deteriorate over time. The author has spent 15 years studying more than 60 companies to gain insight into this and other supply chain dilemmas. His conclusion: Only companies that build supply chains that are agile, adaptable, and aligned get ahead of their rivals. All three components are essential; without any one of them, supply chains break down. Great companies create supply chains that respond to abrupt changes in markets. Agility is critical because in most industries, both demand and supply fluctuate rapidly and widely. Supply chains typically cope by playing speed against costs, but agile ones respond both quickly and cost efficiently. Great companies also adapt their supply networks when markets or strategies change. The best supply chains allow managers to identify structural shifts early by recording the latest data, filtering out noise, and tracking key patterns. Finally, great companies align the interests of the partners in their supply chains with their own. That's important because every firm is concerned solely with its own interests. If its goals are out of alignment with those of other partners in the supply chain, performance will suffer. When companies hear about the triple-A supply chain, they assume that building one will require increased technology and investment. But most firms already have the infrastructure in place to create one. A fresh attitude alone can go a long way toward making it happen.

Just five years ago, salespeople at Whirlpool were in the habit of referring to their supply chain organization as the "sales disablers." Now the company excels at getting products to the right place at the right time while managing to keep inventories low. How did that happen? In this first-person account, Reuben Slone, Whirlpool's vice-president of global supply chain, describes how he and his colleagues devised the right supply chain strategy, sold it internally, and implemented it. Slone insisted that the right focal point for the strategy was the satisfaction of consumers at the end of the supply chain. Most supply chain initiatives do the opposite: They start with the realities of a company's manufacturing base and proceed from there. Through a series of interviews with trade customers large and small, his team identified 27 different capabilities that drove industry perceptions of Whirlpool's performance. Knowing it was infeasible to aim for world-class performance across all of them, Slone weighed the costs of excelling at each and found the combination of initiatives that would provide overall competitive advantage. A highly disciplined project management office and broad training in project management were key to keeping work on budget and on benefit. Slone set an intense pace--three "releases" of new capabilities every month--that the group maintains to this day. Lest this seem like a technology story, however, Slone insists it is just as much a "talent renaissance." People are proud today to be part of Whirlpool's supply chain organization, and its new generation of talent will give the company a competitive advantage for years to come.

The strength of the American economy does not rest on its manufacturing prowess, its natural resources, or the size of its market. It turns on one factor--the country's openness to new ideas, which has allowed it to attract the brightest minds from around the world and harness their creative energies. But the United States is on the verge of losing that competitive edge. As the nation tightens its borders to students and scientists and subjects federal research funding to ideological and religious litmus tests, many other countries are stepping in to lure that creative capital away. Ireland, Canada, Australia, New Zealand, Denmark, and others are spending more on research and development and shoring up their universities in an effort to attract the world's best--including Americans. If even a few of these nations draw away just a small percentage of the creative workers from the United States, the effect on its economy will be enormous. In this article, the author introduces a quantitative measure of the migration of creative capital called the Global Creative-Class Index. It shows that, far from leading the world, the United States doesn't even rank in the Top 10 in the percentage of its workforce engaged in creative occupations. What's more, the baby boomers will soon retire. And data showing large drops in foreign-student applications to U.S. universities and in the number of visas issued to knowledge workers, along with concomitant increases in immigration in other countries, suggest that the erosion of talent from the United States will only intensify. To defend the U.S. economy, the business community must take the lead in ensuring that global talent can move efficiently across borders, that education and research are funded at radically higher levels, and that we tap into the creative potential of more and more workers. Because wherever creativity goes, economic growth is sure to follow.

In an increasingly diverse business environment, managers must be able to navigate the thicket of habits, gestures, and assumptions that define their coworkers' differences. Foreign cultures are everywhere--in other countries, certainly, but also in corporations, vocations, and regions. Interacting with individuals within them demands perceptiveness and adaptability. And the people who have those traits in abundance aren't necessarily the ones who enjoy the greatest social success in familiar settings. Cultural intelligence, or CQ, is the ability to make sense of unfamiliar contexts and then blend in. It has three components--cognitive, physical, and emotional/motivational. Although it shares many of the properties of emotional intelligence, CQ goes one step further by equipping a person to distinguish behaviors produced by the culture in question from behaviors that are peculiar to particular individuals and those found in all human beings. In their surveys of 2,000 managers in 60 countries, the authors found that most managers are not equally strong in all three of these areas of CQ. The authors have devised tools that show how to identify one's strengths and developed training techniques to help people overcome weaknesses. They conclude that anyone reasonably alert, motivated, and poised can attain an acceptable level of CQ.

Why shouldn't engineers study success? Because failures tell you so much more, civil engineering professor Henry Petroski contends.

Too much friendship can make teams insular and ineffective, Joe LaBianca's research shows. Far better for team members to socialize across the company.

Software CEO Bernard Liautaud explains how he's kept growth manageable by building his global sales force incrementally.

They're in your organization--and they're easy to mistake for high potentials. But psychologists Robert Hare and Paul Babiak are readying a test to flush them out.

Should the CEO and chair be one person or two? It doesn't matter, argues corporate governance professor Charles Elson.

Solid-state is the first new lighting technology in 100 years. Soon it may drastically reduce your costs.

Oil shocks, war, tax cuts, deficits, market bubbles--nothing has really affected the long-run rate of GDP growth in the last 30 years.

Working women are well respected at the office--until they have children, finds law professor Joan C. Williams.

You can overdo feedback, HR professor Alain Gosselin's field research reveals.

Humorist and Clinton speechwriter Mark Katz reveals the awesome power of self-deprecation.

CEO Herb Baum thinks R&D is not the same as innovation, and he thinks innovation should be everyone's business at Dial.

This is an MIT Sloan Management Review article. For many years, multinational corporations could compete successfully by exploiting scale and scope economies or by taking advantage of imperfections in the world's goods, labor, and capital markets. But these ways of competing are no longer as profitable as they once were. In most industries, multinationals no longer compete primarily with companies whose boundaries are confined to a single nation. Rather, they go head-to-head with a handful of other giants. Against such global competitors, it is hard to sustain an advantage based on traditional economies of scale and scope. MNCs must seek new sources of competitive advantage. Whereas multinationals in the past realized economies of scope principally by utilizing physical assets and exploiting a companywide brand, the new economies of scope are based on the ability of business units, subsidiaries, and functional departments within the company to collaborate successfully by sharing knowledge and jointly developing new products and services. Collaboration can be an MNC's source of competitive advantage because it does not occur automatically--far from it. Indeed, several barriers impede collaboration within complex multiunit organizations. To overcome those barriers, companies will have to develop distinct organizing capabilities that cannot be easily imitated. The authors develop a framework that links managerial action, barriers to interunit collaboration, and value creation in MNCs to help managers understand how collaborative advantage can work. The framework conceptualizes collaboration as a set of management levers that reduce four specific barriers to collaboration, leading in turn to several types of value creation.

This is an MIT Sloan Management Review article. Brands are an indispensable part of modern business. That is true in large measure because of a brand's remarkable efficiency in "aggregating" consumers--reaching large numbers of people with a promise to deliver a clearly stated benefit that sets it apart from competitors. But the information revolution is undermining the logic of aggregation, the very source of brand power. In fact, it is becoming evident that in an information-rich environment, consumer disaggregation is vastly more efficient and profitable than aggregation. Using customized publications, e-mail, direct mail, Web sites, and call centers that are based on a common platform of consumer information, companies are demonstrating that they can effectively and efficiently drive consumer behavior through two-way communications. Common underlying databases ensure that each interaction is personalized, regardless of the channel through which it occurs. And each interaction with the consumer builds the consumer database further, making future interactions even richer. The implications of the information revolution for the role of brands in business are far-reaching. Many of the strategic and tactical tasks entrusted to brands can now be performed better, less expensively, and more profitably at the level of consumer segments. And companies' brand-centric structures are not suited to marketing initiatives that are based on reaching segments or individuals. Given this changed environment, the author calls on companies to rethink three core areas of brand management: the consumer relationship, the channel relationship, and the organization of brand management. He draws on detailed examples involving Kraft, Procter & Gamble, and Tesco.

This is an MIT Sloan Management Review article. Although large-scale risks such as war, terrorism, and natural disaster garner media attention, it is the everyday, small-scale risks associated with opacity--a lack of transparency in countries' legal, economic, regulatory, and governance structures--that can confound global investment and commerce. The authors offer new research that identifies the causes and measures the effects of this phenomenon across 48 countries. The research draws upon 65 objective variables from 41 sources, including the World Bank, the International Monetary Fund, the International Securities Services Association, the "International Country Risk Guide," and country regulators. The authors' methodology projects which aspects of a country's economy carry the greatest risk and then, by assessing and comparing the costs of those risks on a country-by-country basis, they create an overall Opacity Index. Next, they correlate the Opacity Index to a variety of other indicators, including a country's income level, economic development and foreign investment, entrepreneurship, and access to capital and lending and equity markets. The authors conclude that opacity strongly correlates overall with slower growth and less foreign direct investment in nearly all markets, and they suggest how information about opacity and its contributing factors can enhance both managerial and national policy decisions alike.

This is an MIT Sloan Management Review article. Companies tend to assume that little can be done to reduce product costs once a design is set. This belief has shaped many cost management programs across diverse products' life cycles. Because of it, firms often focus on cost reduction during the design phase and cost containment during manufacturing. But are much of a product's costs truly locked in during design? Recent research suggests otherwise. In an extensive field study at the consumer products division of Olympus Optical Co. Ltd., the authors found that the company is able to obtain significant cost reductions in manufacturing. Indeed, the research demonstrated that costs can be aggressively managed throughout the product life cycle. Furthermore, the authors found that Olympus Optical applies various cost management techniques in an integrated manner, with the outputs of some techniques acting as inputs to others, thereby increasing the program's overall effectiveness. The observations suggest that companies competing aggressively on cost might consider adopting some form of an integrated cost management program that spans the entire product life cycle.

This is an MIT Sloan Management Review article. Natural disasters, labor disputes, terrorism, and more mundane risks can seriously disrupt or delay the flow of material, information, and cash through an organization's supply chain. The authors assert that how well a company fares against such threats depends on its level of preparedness and the type of disruption. Each supply chain risk--forecasts, information systems, intellectual property, procurement, inventory, and capacity--has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs, or both, managers need to tailor proven risk-reduction strategies to their organizations. Managing supply chain risk is difficult, however. Dell, Toyota, Motorola, and other leading manufacturers excel at identifying and neutralizing supply chain risks through a delicate balancing act: keeping inventory, capacity, and related elements at appropriate levels across the entire supply chain in a rapidly changing environment. Organizations can prepare for or avoid delays by "smart sizing" their capacity and inventory. The manager serves as a kind of financial portfolio manager, seeking to achieve the highest achievable profits (reward) for varying levels of supply chain risk. The authors recommend a powerful "What if?" team exercise called "stress testing" to identify potentially weak links in the supply chain. Armed with this shared understanding, companies can then select the best mitigation strategy.