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For most of the last 50 years, technology knew its place. It's very different today. Technology is not only ubiquitous but has become highly intrusive as well. On the Internet, people invent imaginary identities in virtual chat rooms. Children are growing up with interactive toy animals. If we want to be sure we'll like who we've become in 50 years, we need to take a closer look at the psychological effects of current and future technologies. The smartest people in technology have already started. Universities like MIT and Caltech have been pouring millions of dollars into researching what happens when technology and humanity meet. To learn more about this research, HBR senior editor Diane L. Coutu spoke with one of the field's most distinguished scholars--Sherry Turkle, MIT's Abby Rockefeller Mauze Professor in the Program in Science, Technology, and Society and the author of Life on the Screen, which explores how the Internet is changing the way we define ourselves. In a conversation with Coutu, Turkle discusses the psychological dynamics that can develop between people and their high-tech toys, describes ways in which machines might substitute for managers, and explains how technology is redefining what it means to be human. She warns that relatively small differences in technology design can have disproportionate effects on how humans relate to technology, to one another, and to themselves.

In less turbulent times, executives had the luxury of assuming that business models were more or less immortal. Companies always had to work to get better, but they seldom had to get different--not at their core, not in their essence. Today, getting different is the imperative. It's the challenge facing Coca-Cola as it struggles to raise its "share of throat" in noncarbonated beverages. It's the task that bedevils McDonald's as it tries to restart its growth in a burger-weary world. It's the hurdle for Sun Microsystems as it searches for ways to protect its high-margin server business from the Linux onslaught. Continued success no longer hinges on momentum. Rather, it rides on resilience--on the ability to dynamically reinvent business models and strategies as circumstances change. Strategic resilience is not about responding to a onetime crisis or rebounding from a setback. It's about continually anticipating and adjusting to deep, secular trends that can permanently impair the earning power of a core business. To achieve strategic resilience, companies will have to overcome the cognitive challenge of eliminating denial, nostalgia, and arrogance; the strategic challenge of learning how to create a wealth of small tactical experiments; the political challenge of reallocating financial and human resources to where they can earn the best returns; and the ideological challenge of learning that strategic renewal is as important as optimization.

Theory often gets a bum rap among managers because it's associated with the word "theoretical," which connotes "impractical." But it shouldn't. Because experience is solely about the past, solid theories are the only way managers can plan future actions with any degree of confidence. The key word here is "solid." Gravity is a solid theory. As such, it lets us predict that if we step off a cliff we will fall, without actually having to do so. But business literature is replete with theories that don't seem to work in practice or actually contradict each other. How can a manager tell a good business theory from a bad one? The first step is to understand how good theories are built. They develop in stages: gathering data, organizing it into categories, highlighting significant differences, then making generalizations explaining what causes what, under which circumstances. For instance, professor Ananth Raman and his colleagues collected data showing that bar code-scanning systems generated notoriously inaccurate inventory records. These observations led them to classify the types of errors the scanning systems produced and the types of shops in which those errors most often occurred. Recently, some of Raman's doctoral students worked as clerks to see exactly what kinds of behavior cause the errors. From this foundation, a solid theory predicting under which circumstances bar code systems work and don't work is beginning to emerge. Once we forgo one-size-fits-all explanations and insist that a theory describes the circumstances under which it does and doesn't work, we can bring predictable success to the world of management.

Reprint: R0309E Despite companies' almost fanatical worship of innovation, most new products don't generate money. That's because executives don't realize that the approach they take to commercializing a new product is as important as the innovation itself. Different approaches can generate very different levels of profit. Companies tend to favor one of three different innovation approaches, each with its own investment profile, profitability pattern, risk profile, and skill requirements. Most organizations are instinctively integrators: They manage all the steps needed to take a product to market themselves. Organizations can also choose to be orchestrators: They focus on some parts of the commercialization process and depend on partners to manage the rest. And finally, companies can be licensers: They sell or license a new product or idea to another organization that handles the commercialization process. Different innovations require different approaches. Selecting the most suitable approach, the authors' research found, often yields two or three times the profits of the least optimal approach. Yet companies tend to rely only on the mode most familiar to them. Executives would do better to take several different factors into account before deciding which tack to take, including the industry they're trying to enter, the specific characteristics of the innovation, and the risks involved in taking the product to market. By doing so, companies can match the approach to the opportunity and reap the maximum profit. Choosing the wrong approach, like Polaroid did, for example, can lead to the failure of both the product and the company. Optimizing their approaches, as Whirlpool has done, helps ensure that companies' innovations make money.

The business world is rife with metaphors these days, as managers look to other disciplines for insights into their own challenges. And metaphors can--despite their somewhat flaky image--be powerful catalysts for generating new business strategies. But metaphors are often improperly used, their potential left unrealized. We tend to look for reassuring parallels in business metaphors instead of troubling differences, the author contends. In fact, using metaphors to come up with new strategic perspectives begins to work only when the metaphors themselves don't work, or at least don't seem to. Consider the following case. An insurance company's corporate headquarters put together a team of experts to discuss ways the firm might respond to the challenges of conducting business via the Internet. Once the team drafted a master plan, the idea was that it would be promulgated to the individual agents and offices of this widely dispersed organization. In a meeting with the company's top managers, the author talked about Charles Darwin's conceptual breakthrough in formulating the principles of evolution. As his overview of Darwin's theories about variation and natural selection gave way to questions, a heretical notion took shape: Those far-flung agents' offices, instead of being strategic liabilities in a suddenly virtual age, might instead be the mechanism for achieving an incremental but powerful corporate transformation in response to the changing business environment. But it was only when the evolutionary metaphor began to break down--when the elements of Darwin's theory clearly were at odds with the besieged insurance company's situation--that real strategic insight occurred.

For most of the items they buy, consumers don't have an accurate sense of what the price should be. Research shows that consumers' knowledge of the market is so far from perfect that it hardly deserves to be called "knowledge" at all. Yet, people happily buy products every day. Is this because they don't care what kind of deal they're getting? No. Remarkably, it's because they rely on retailers to tell them whether they're getting a good price. In subtle and not-so-subtle ways, retailers send signals to customers, telling them whether a given price is relatively high or low. In this article, the authors review several common pricing cues retailers use--"sale" signs, prices that end in 9, signpost items, and price-matching guarantees. They also offer some surprising facts about how--and how well--those cues work. For instance, the authors' tests of several mail-order catalogs reveal that including the word "sale" beside a price can increase demand by more than 50%. The practice of using a 9 at the end of a price to denote a bargain is so common, you'd think customers would be numb to it. Yet, in a study the authors did involving a women's clothing catalog, they increased demand by a third just by changing the price of a dress from $34 to $39. Pricing cues are powerful tools for guiding customers' purchasing decisions, but they must be applied judiciously. Used inappropriately, the cues may breach customers' trust, reduce brand equity, and give rise to lawsuits.

Big projects fail at an astonishing rate--more than half the time, by some estimates. It's not hard to understand why. Complicated long-term projects are customarily developed by a series of teams working along parallel tracks. If managers fail to anticipate everything that might fall through the cracks, those tracks will not converge successfully at the end to reach the goal. Take a companywide CRM project. Traditionally, one team might analyze customers, another select the software, a third develop training programs, and so forth. When the project is finally complete, though, it may turn out that the salespeople won't enter in the requisite data because they don't understand why they need to. There is a way to uncover unanticipated problems while the project is still in development. The key is to inject into the overall plan a series of miniprojects, or "rapid-results initiatives," that each have as their goal a miniature version of the overall goal. In the CRM project, a single team might be charged with increasing the revenues of one sales group in one region by 25% within four months. To reach that goal, team members would have to draw on the work of all the parallel teams. But in just four months, they would discover the salespeople's resistance and probably other unforeseen issues, such as, perhaps, the need to divvy up commissions for joint-selling efforts. The World Bank has used rapid-results initiatives to great effect to keep a sweeping 16-year project on track and deliver visible results years ahead of schedule.

Coming up with creative ideas is easy; selling them to strangers is hard. Entrepreneurs, sales executives, and marketing managers often go to great lengths to demonstrate how their new concepts are practical and profitable--only to be rejected by corporate decision makers who don't seem to understand the value of the ideas. Why does this happen? Having studied Hollywood executives who assess screenplay pitches, the author says the person on the receiving end--the "catcher"--tends to gauge the pitcher's creativity as well as the proposal itself. An impression of the pitcher's ability to come up with workable ideas can quickly and permanently overshadow the catcher's feelings about an idea's worth. To determine whether these observations apply to business settings beyond Hollywood, the author attended product design, marketing, and venture-capital pitch sessions and conducted interviews with executives responsible for judging new ideas. The results in those environments were similar to her observations in Hollywood, she says. Catchers subconsciously categorize successful pitchers as showrunners (smooth and professional), artists (quirky and unpolished), or neophytes (inexperienced and naive). The research also reveals that catchers tend to respond well when they believe they are participating in an idea's development. As Oscar-winning writer, director, and producer Oliver Stone puts it, screenwriters pitching an idea should "pull back and project what he needs onto your idea in order to make the story whole for him." By finding ways to give your catchers a chance to shine, you sell yourself as a likable collaborator.

For all the talk about global organizations and executives, there's no definitive answer to the question of what we really mean by "global." A presence in multiple countries? Cultural adaptability? A multilingual top team? We asked four CEOs and the head of an international recruiting agency--HSBC's Stephen Green, Schering-Plough's Fred Hassan, GE's Jeffrey Immelt, Flextronics' Michael Marks, and Egon Zehnder's Daniel Meiland--to tell us what they think. They share some common ground. They all agree, for example, that the shift from a local to a global marketplace is irreversible and gaining momentum. "We're losing sight of the reality of globalization. But we should pay attention, because national barriers are quickly coming down," Daniel Meiland says. "If you look ahead five or 10 years, the people with the top jobs in large corporations...will be those who have lived in several cultures and who can converse in at least two languages." But the CEOs also disagree on many issues--on the importance of overseas assignments, for instance, and on the degree to which you need to adhere to local cultural norms. Some believe strongly that the global leader should, as a prerequisite to the job, live and work in other countries. The executives' essays capture views that are as diverse and multidimensional as the companies they lead.

More than 100 miles from Bangalore, India, there's a rural area called Kuppam where one in three citizens is illiterate, more than half of the households have no electricity, and there's a high rate of AIDS. It's exactly this challenging atmosphere that prompted Hewlett-Packard to choose Kuppam as one of its first "i-communities" initiatives. Through the program, HP creates public-private partnerships to accelerate economic development through the application of technology while simultaneously opening new markets and developing new products and services. HP brings to these initiatives the management disciplines of a successful technology business. For example, it unearths customer needs using an iterative cycle that involves prototyping products and services and then closely observing residents' experiences with them. It fields a diversely talented team that brings many skills to the initiative. It takes a systems approach, simultaneously examining all the elements that must come together to create a working solution to a given problem. It establishes a "leading platform" on which other players--companies, nonprofits, and government agencies--can build technologies and applications. Practices like these help ensure that HP's investment yields real, sustainable results for the community in question. But HP also sees returns to its own business. In Kuppam, the company is discovering the need for (and developing) new products like a solar-powered digital camera, with printer, that fits in a backpack. By engaging the community and its leaders and working with them to design valuable new tools and capabilities, HP is gaining the knowledge it needs to be a stronger competitor in other developing regions.

Abraham Lincoln would have well understood the challenges facing many modern emerging nations. In Lincoln's America, as in many developing nations today, sweeping economic change threatened older industries, traditional ways of living, and social and national cohesion by exposing economies and societies to new and powerful competitive forces. Yet even in the midst of the brutal and expensive American Civil war--and in part because of it--Lincoln and the Republican Congress enacted bold legislation that helped create a huge national market, a strong and unified economy governed by national institutions, and a rising middle class of businessmen and property owners. Figuring out how to maximize the benefits of globalization while minimizing its disruptions is a formidable challenge for policy makers. How do you expand opportunities for the talented and the lucky while making sure the rest of society doesn't fall behind? It may be helpful to look at the principles that informed the policies that Lincoln and the Republican Congress instituted after they came to power in 1861: Facilitate the upward mobility of low- and middle-income groups to give them a significant stake in the country, emphasize the good of the national economy over regional interests, affirm the need for sound government institutions to temper the dynamics of the free enterprise system, tailor policies to the national situation, and realize that a period of turmoil may present a unique opportunity for reform. These principles drove the reforms that helped Americans cope with and benefit from rapid technological advances and the fast integration of the American economy in the 19th century. They may be instructive to today's policy makers who are struggling to help their own citizens integrate into the fast-changing global economy of the 21st century.

On January 1, 1995, representatives from 76 countries signed the World Trade Organization (WTO) charter, which for years had been part of a temporary trade agreement. The WTO's emergence as a fully empowered supranational body seemed to reflect the triumph of what the first President Bush had described as the "new world order." That order was based on two assumptions: that a healthy economy and a sound financial system make for political stability and that countries in business together do not fight each other. The number one priority of U.S. foreign policy was, thus, to encourage the former Communist countries of Europe and the developing nations in Latin America, Asia, and Africa to adopt business-friendly policies. Private capital would flow from the developed world into these countries, creating economic growth. It sounded too good to be true and so it proved. The new world order of Bush pere and his successor, Bill Clinton, has been replaced by the new world disorder of Bush fils. Under the second Bush's administration, the economic and political rationale behind the Washington consensus of the 1990s has unraveled, forcing a radical change in our perceptions of which countries are safe for business. Negotiating this new environment will require companies to evaluate political events more rigorously and more carefully assess the links between political, economic, and financial risk factors. With careful analysis, business leaders can increase their companies' visibility and better respond to the uncertainties of the new world disorder.

Driven by ideology, religion, and mistrust, the world seems more fragmented than at any time since, arguably, World War II. But however deep the political divisions, business operations continue to span the globe, and executives still have to figure out how to run them efficiently and well. In "What Is a Global Manager?" (first published in September/October 1992), business professors Christopher Bartlett and Sumantra Ghoshal lay out a model for a management structure that balances the local, regional, and global demands placed on companies operating across the world's many borders. In the volatile world of transnational corporations, there is no such thing as a "universal" global manager, the authors say. Rather, there are three groups of specialists: business managers, country managers, and functional managers. And there are the top executives at corporate headquarters who manage the complex interactions between the three--and can identify and develop the talented executives that a successful transnational requires. This kind of organizational structure characterizes a transnational rather than an old-line multinational, international, or global company. Transnationals integrate assets, resources, and diverse people in operating units around the world. Through a flexible management process, in which business, country, and functional managers form a triad of different perspectives that balance one another, transnational companies can build three strategic capabilities: global-scale efficiency and competitiveness; national-level responsiveness and flexibility; and cross-market capacity to leverage learning on a worldwide basis. Through a close look at the successful careers of Leif Johansson of Electrolux, Howard Gottlieb of NEC, and Wahib Zaki of Procter & Gamble, the authors illustrate the skills that each managerial specialist requires.

As they search for growth, multinational corporations will have no choice but to compete in the big emerging markets of China, India, Indonesia, and Brazil. Although it is still common to question how such corporations will change life in those markets, Western executives would be smart to turn the question around and ask how multinationals themselves will be transformed by these markets. To be successful, MNCs will have to rethink every element of their business models, the authors assert in this seminal HBR article from 1998. During the first wave of market entry in the 1980s, multinationals operated with what might be termed an imperialist mind-set, assuming that the emerging markets would merely be new markets for their old products. But this mind-set limited their success: What is truly big and emerging in countries like China and India is a new consumer base comprising hundreds of millions of people. To tap into this huge opportunity, MNCs need to ask themselves five basic questions: Who is in the emerging middle class in these countries? How do the distribution networks operate? What mix of local and global leadership do you need to foster business opportunities? Should you adopt a consistent strategy for all of your business units within one country? Should you take on local partners? The transformation that multinational corporations must undergo is not cosmetic--simply developing greater sensitivity to local cultures will not do the trick, the authors say. To compete in the big emerging markets, multinationals must reconfigure their resources, rethink their cost structures, redesign their product development processes, and challenge their assumptions about who their top-level managers should be.

More and more small and midsize companies are joining corporate giants in striving to exploit international growth markets. At the same time, civic leaders worry about their communities' economic future in light of the impact of global forces on the operation and survival of businesses. How can communities retain local vitality yet still link their businesses to the global economy? Harvard professor Rosabeth Moss Kanter addresses that question in this classic HBR article, originally published in 1995. To avoid a clash between international economic interests and local political interests, globalizing businesses must learn how to be responsive to the communities in which they operate, Kanter says. And communities must determine how to create a civic culture that will attract and retain footloose companies. The author surveyed five U.S. regions with direct connections to the global economy--Boston, Cleveland, Miami, Seattle, and the Spartanburg-Greenville region of South Carolina--to determine their business and civic leaders' strategies for improving their constituents' quality of life. She identified ways in which the global economy can work locally by capitalizing on the resources that distinguish one place from another. Kanter argues that regions can invest in capabilities that connect their local populations to the global economy in one of three ways: as thinkers, makers, or traders.

Many managers face increasing calls to invest corporate resources in charitable causes. How should executives balance a firm's very real economic imperative to maximize profitability with its hypothetical moral imperative to improve society? To provide one answer, the author draws on his experience as president of an economic-development company, IBEC. Viewing profit as "an essential discipline and measurer of economic success" but not "the sole corporate goal," the company actively invested in social programs that met four criteria: They served a need of the local population; they required innovative approaches; they made sense on economic grounds; and they respected the social norms of the community. Such civic-minded efforts, the author argues in this prescient 1971 HBR article, not only improve people's lives but also create the foundation for more affluent and dynamic markets--markets that ultimately produce greater profits for business. For example, one of IBEC's earliest ventures was directed toward solving Venezuela's problems in retail food marketing. Many important items were unavailable at the small stores where people shopped. So in 1949, working with local partners, IBEC opened a supermarket. Supermarkets soon changed the food-buying habits of the nation, and the initiative helped alter patterns of food distribution and created the reliable demand needed to establish a host of local suppliers. Return on IBEC's investment, and that of its local partners, was most satisfactory, the author reports. The road to meeting a public need--especially a major one--is rarely easy, the author says. But if management sizes up the need well, there is a good chance its new venture will survive under adversity.

Unleashing free-market democracy in developing countries breeds ethnic hatred and instability--yet that's the very prescription wealthy democracies have promoted for healing the ills of underdevelopment. One solution is to give poor majorities a stake in local corporations and capital markets.

It's only a matter of time before some company becomes the Enron of human rights abuse, warns the general counsel in this fictional memo to the CEO. Activist U.S. courts are accepting more and more human rights claims against the business practices of global firms in developing countries. Companies should take steps now to avoid ugly and costly legal battles.

Iqbal Quadir, the founder of Bangladesh's GrameenPhone, discusses the failure of foreign aid to rescue moribund third-world economies and the need to empower local entrepreneurs. The most important feature of his company, he explains, isn't the phone system itself but the microloans that mobilize an army of individual entrepreneurs to meet an unsatisfied need profitably.

What became of the golden age of global marketing? Where are the multinational companies churning out standardized products for a world of voracious consumers? A global economic slump and mounting anti-American sentiment put an end to that party. But the multinationals' retreat to local harbors may leave them ill prepared for what's about to happen.