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Large corporations and small start-ups are not mutually exclusive organizational forms. Rather, they exist symbiotically, each requiring and drawing on the unique capacities of the other.

When entrepreneurs become chief executives, they frequently face challenges unlike any they've faced before. To fill the gaps in their experience, many are turning to CEO peer groups.

Many consumer goods manufacturers believe that superstore retailers are bad for their business and a scourge on their brands. But some manufacturers have turned relationships with megaretailers into a competitive advantage.

More and more, the task of the HR department is one of identifying and articulating primary strategic values of the corporate culture. As an example, Texas Instruments shelved its cumbersome approach to updating HR policy and switched to a system that allowed the rapid response needed in a fast-changing environment. In companies with a strongly articulated value-based culture, the challenge is to apply that culture to the formulation of specific HR policies. Doing so requires that HR policies be examined for relevance to the current business environment, connection to strategic goals, adaptability to changing circumstances, applicability across the firm's theater of operations, familiarity to employees, ease of interpretation and application, specification of the bounds of acceptable employee behavior, and extent of commitment to policies by employees. The process of designing HR policies in a value-based culture is illustrated by the experiences of Texas Instruments, Bell Atlantic, and Unisys.

A cornerstone of manufacturing practice has been to separate complex tasks into simple ones for economies of scale, and service industry practice has followed a variation of this principle by splitting up high and low customer contact activities to cut costs. Low-contact activities are removed from front office jobs, standardized, and centralized in some remote back office to achieve scale economies. Here, the authors question this principle; the choice of how to organize back office work carries strategic implications. Their model provides four approaches illustrating different strategies, based on data from a study of retail bank lending operations and using examples from other service industries. The decoupling of front- and back-office operations hinges not only on cost but whether the service firm's strategy is one of cost leadership, dedicated service, premium service, or cheap convenience. Each distinct strategy poses a different set of trade-offs and important managerial issues. Decoupling can be eschewed to decrease costs, or embraced to enhance responsiveness in the front office.

A number of models have attempted to prescribe how companies should internationalize. Here, the best of these models is synthesized in a "Way Station" approach. It is tempting to take the "Low Road" (short-term, low-cost) approach in planning the trip, selecting the mode of transport, dealing with road blocks, and making a commitment. But success is most often achieved by taking the High Road. The Low Road is defined by relying on anecdotal evidence, responding only to immediate markets, exporting labor to low-cost markets, choosing markets based solely on cultural similarities, not exerting ownership control, relying on a few obvious customers, reacting to challenges with untested responses, falling into price wars instead of competing on value, and not investing in the venture as part of a global portfolio. The High Road, by contrast, emphasizes thorough market research, anticipating future customers and their needs, leading with strengths, defining success broadly, maintaining more than 50% control, diversifying the customer base, taking a long-term view, treating the new foreign venture as an integral piece of global strategy, and capitalizing on new technology in the foreign venture by feeding it back into domestic operation. Even smaller firms can take the High Road.

The head of the U.S. patent office explains the myths and realities of patenting business methods and suggests that these ownership claims actually boost innovation by forcing ideas to go public.

Computer simulations help companies determine how they'll optimize their use of the billions of software agents--shopbots and pricebots--that will increasingly become part of the Internet economy.

Here's a primer on XML, an Internet technology that's helping to shape the future of e-business.

Traditionally, complex business structures in the Chinese market have kept foreign companies out. Now, with Kodak leading the way, corporate structures from the West are gaining acceptance and are providing a way for China to let foreign companies in through the back door.

How would your company fare in the Business Olympics? An INSEAD professor and his students assess the "corporate fitness" of the largest firms in Europe and the United States and map out which companies and industries are likely to take the gold.

Internet entrepreneur Martin Varsavsky applies what he does best--building high-tech companies--to improving education in Argentina.

Change or perish is a corporate truism, but so is its unhappy corollary: many companies change and perish. The process of change can tear an organization apart. Drawing on his research over ten years, the author suggests that companies alternate major change initiatives with carefully paced periods of smaller, organic change, using processes he calls tinkering and kludging (kludging is tinkering on a large scale). The result is dynamic stability, which allows change without fatal pain. Citing examples from General Electric to Barnesandnoble.com, the author describes dynamic stability as a process of continual but relatively small reconfigurations of existing practices and business models rather than the creation of new ones. As they tinker and kludge, successful companies would be wise to follow these four guidelines: reward shameless borrowing; appoint a chief memory officer who can help the company avoid making the same old mistakes; tinker and kludge internally before searching for solutions externally; and hire generalists, because generalists tend to be more adept at tinkering and kludging. As a paradigm of successful pacing, the author cites the efforts of Lou Gerstner at IBM, American Express Travel Related Services, and RJR Nabisco.

Fire fighting is an old, familiar way of doing business, especially when developing new products and ramping up manufacturing. But fire fighting consumes an organization's resources and damages productivity. What factors underlie this destructive pattern? Fire fighting derives from what seems like a reasonable set of rules--investigate all problems, for example, or assign the most difficult problems to your best troubleshooter. Ultimately, however, fire-fighting organizations fail to solve problems adequately and forgo so many opportunities that overall performance plummets. Some companies never fight fires, even though they have just as much work and just as many resource constraints as other companies do. They have strong problem-solving cultures. They don't tackle a problem unless they're committed to understanding its root cause and finding a valid solution. And they don't reward fire-fighting behavior. Transforming a fire-fighting organization into a problem-solving one is not easy. But there are tactical, strategic, and cultural methods for pulling your company out of fire-fighting mode.

The current high level of venture capital investment is driving enormous innovation in business. About 40% of the growth in the U.S. GDP is coming out of the tech sector, and most of that can be traced to the vibrancy of entrepreneurial initiatives, according to accomplished entrepreneur and venture capitalist Vinod Khosla. But in a wide-ranging interview, Khosla says greed is at a high level, too, and he's concerned about its effect on entrepreneurs and their infant businesses. Today, an entrepreneur with a plan for a new business can get funded within a week. But the entrepreneur doesn't get an honest, painstaking critique. The weaknesses of the plan are often ignored. The result is that great ideas don't reach their full potential. Khosla touches on the qualities required of today's entrepreneurs and the difficulties that established companies face in adapting to the Internet. He also offers some of his secrets for finding and exploiting the biggest new technologies.

Despite all the data that retailers and e-tailers can now gather about point-of-purchase information, buying patterns, and customer tastes, they still haven't figured out how to offer the right product, in the right place, at the right time, for the right price. But some retailers are moving profitably toward what the authors call "rocket science retailing"--a blend of traditional forecasting systems, which are largely based on the gut feel of employees, with the prowess of information technology. The authors recently finished surveying 32 retail companies in which they tracked practices and progress in four areas critical to rocket science retailing: demand forecasting, supply-chain speed, inventory planning, and data gathering and organization. In this article, the authors look at some companies that have excelled in those four areas and offer some valuable advice for other businesses seeking retailing perfection. In particular, the authors emphasize the need to monitor crucial metrics such as forecast accuracy, early sales data, and stockouts--information that will help retailers determine when to tweak their supply-chain processes to get the right products to stores at just the right time.

The almost universal belief among executives today is that bigger is better: companies are entering into huge, pricey cross-border mergers at an unprecedented rate. Common wisdom is that industries will become more concentrated as they become more global. In this article, the authors debunk the myth of increased concentration; the perceived links between the globalization of an industry and the concentration of that industry are weak. Empirical research shows that global--or globalizing--industries have actually been marked by steady decreases in concentration since World War II. The authors present the biases that managers often have about consolidation and offer alternative strategies to pursuing the big M&A deal. There are better, more profitable ways of dealing with globalization than relentless expansion, they say. Those strategies include buying up cast-off assets from merging rivals; focusing more on domestic or regional growth rather than on global expansion; taking advantage of merging rivals' weakened market position during integration and launching an aggressive marketing campaign; and building alliances with other companies rather than buying them up.

In the early 1990s, IBM was a has-been. Fujitsu, Digital Equipment, and Compaq were hammering down its hardware margins. EDS and Andersen Consulting were stealing the hearts of CIOs. Intel and Microsoft were running away with PC profits. Today, Big Blue is back on top, a leader in e-business services. This is the story of how the company, which had lagged behind every computer trend since the mainframe, caught the Internet wave. Much of the credit for the turnaround goes to a small band of activists who built a bonfire under IBM's rather broad behind. Together, building simultaneously from the top and the bottom of the organization through an ever-widening grassroots coalition of technicians and executives, they put IBM on the Web and morphed it into an e-business powerhouse. People who want to foment similarly successful insurrections can learn a lot from their example.

Thanks to the development of the Kyoto Protocol--an international plan to limit carbon dioxide and other so-called greenhouse gases in the atmosphere--global warming is beginning to assume a prominent position on the agendas of business executives. Although weather patterns aren't going to change overnight, new regulations designed to curb climate change may themselves disrupt the flow of business. Faced with such a complex problem, however, many executives have wondered where to begin. A sensible way to start is by taking a close look at the risks--and the inevitable opportunities--associated with shifts in the weather, potential regulatory changes, and the battle over public opinion. Forward-looking companies in a range of industries, from energy to insurance to automobiles, are already seeking ways to mitigate the effects of the weather on their operations, shape any regulatory regime that governments may devise, and inform the public about their efforts to reduce the problems associated with climate change. Companies that calculate the risks and opportunities effectively--as they would for any other part of the business--will be able to make wise investments that allow them to survive the coming storms.

In the rush to build Internet businesses, many executives mistakenly concentrate all their attention on attracting customers rather than retaining them. But chief executives at the cutting edge of e-commerce--from eBay's Meg Whitman to Vanguard's Jack Brennan--know that customer loyalty is an economic necessity: acquiring customers on the Internet is very expensive, and unless customers stick around and make lots of repeat purchases, profits will remain elusive. For the past two years, the authors have studied e-loyalty. Contrary to the popular perception that on-line customers are fickle by nature, they found that most of today's on-line consumers exhibit a clear proclivity toward loyalty, and Web technologies, if used correctly, reinforce that inherent loyalty. In this article, the authors explain the enormous advantages of retaining on-line buyers. They also describe what Grainger, Dell, America Online, and other Internet leaders are doing to gain their customers' trust and earn their loyalty. By encouraging repeat purchases among a core of profitable customers, companies can initiate a spiral of economic advantages. This loyalty effect enables them to compensate their employees more generously, provide investors with superior cash flows, and reinvest more aggressively to further enhance the value delivered to customers.