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Syndication has long been a fundamental organizing principle in the entertainment world, but it's been rare elsewhere in business. The fixed physical assets and slow-moving information that characterized the industrial economy made it difficult, if not impossible, to create the kind of fluid networks that are essential for syndication. But with the rise of the information economy, flexible business networks are not only becoming possible, they're becoming essential. As a result, syndication is moving from business's periphery to its center. Within a syndication network there are three roles that businesses can play. Originators create original content, which encompasses everything from entertainment programming to products to business processes. Syndicators package that content, often integrating it with content from other originators. Distributors deliver the content to consumers. A company can play a single role, or it can play two or three roles simultaneously. Syndication requires businesses to rethink their strategies and relationships in radical ways. Because a company's success hinges on its connections to other companies, it can no longer view its core capabilities as secrets to protect. Instead, it needs to see them as products to sell. FedEx, for example, is succeeding by distributing its sophisticated package-tracking capability to other companies on the Internet. Syndication promises to change the nature of business. As this new way of doing business takes hold, companies may look the same as before to their customers, but behind the scenes they will be in constant flux, melding with one another in ever-changing, self-organizing networks.

The announcement in January of the merger between America Online and Time Warner marked the convergence of the two most important business trends of the last five years--the rise of the Internet and the resurgence of mergers and acquisitions. M&A activity is at a fever pitch, spurred in large part by the breathtaking influx of capital into the Internet space. And all signs indicate the trend will only accelerate. Against this background, an impressive group of experienced deal makers came together to share their experiences of what makes mergers work. They were assembled in Scottsdale, Arizona, under the auspices of the M&A Group, a professional society formed in 1999 for CEOs interested in M&A as a business strategy. Participants included top executives from Internet start-ups like Teligent; venture capital firms like Baroda Ventures; financial institutions like Merrill Lynch and PricewaterhouseCoopers; and major corporations like Allstate, Tyco International, SmithKline Beecham, Rohm and Haas, VF, Crown Cork & Seal, and Hughes Space and Communications. The spirited and surprisingly frank discussion cut a wide swath, considering issues such as whether most mergers fail to pan out as well as expected, how to increase the odds of success, the nuts and bolts of the integration process, the trade-offs between acquiring a company and growing from within, the importance of cultural issues, and why anyone would want to be on the board of a merged company.

The bright line that once distinguished the dot-com from the incumbent is rapidly fading. Success in the new economy will go to those who can execute clicks-and-mortar strategies that bridge the physical and virtual worlds. But how executives forge such strategies is under considerable debate. Despite the obvious benefits that integration offers--cross-promotion, shared information, purchasing leverage, distribution economies, and the like--many executives now assume that Internet businesses have to be separate to thrive. They believe that the very nature of traditional business--its protectiveness of current customers, its fear of cannibalization, its general myopia--will smother any Internet initiative. Authors Ranjay Gulati and Jason Garino contend that executives don't have to make an either-or choice when it comes to their clicks-and-mortar strategies. The question isn't, "Should we develop our Internet channel in-house or launch a spin-off?" but rather, "What degree of integration makes sense for our company?" To determine the best level of integration for their companies, executives should examine four business dimensions: brand, management, operations, and equity. Drawing on the experiences of three established retailers--Office Depot, KB Toys, and Rite Aid--the authors show the spectrum of strategies available and discuss the trade-offs involved in each choice. By thinking carefully about which aspects of a business to integrate and which to keep distinct, companies can tailor their clicks-and-mortar strategy to their own particular market and competitive situation, dramatically increasing their odds of e-business success.

Most companies have only been able to sell goods in one way. Now, with the Internet, a single site can offer many different transaction methods.

The world's largest oil-service company has revolutionized the way it buys supplies: instead of a central purchasing office, its e-procurement system lets employees buy goods from their desktops.

Retailers have long assumed that bigger is better: megastores mean broader product selection and lower operating costs. But by networking smaller stores, retailers can replicate big-store advantages and offer shoppers greater convenience.

Many companies view the Internet as a self-service channel; they let customers help themselves. But self-service can frustrate customers. Smart players use technology to do more for the customer.

When Biogen received approval for a breakthrough drug for treating multiple sclerosis, it had to quickly get the product to market. So it circumvented the traditional supply chain and joined with partners to become a virtual manufacturer.

The drivers of customer satisfaction vary greatly from country to country. But traditional customer surveys rarely uncover those variations. Now there's a better way.

Private venture capital casts a long shadow over corporate ventures, in part because they compete for the same entrepreneurial talent. Corporate venturing may improve its performance by emulating certain practices of private venture capital but will never achieve the structures that private venture capital can create. Instead, the design principles for corporate ventures should embrace potential structural advantages of corporate venturing and leverage those advantages. These potential advantages include: an indefinite time horizon, the ability to commit very large sums of capital, the ability to coordinate complementarities with non-tradable corporate assets, and the ability to retain greater group and organizational learning from failed venture experiences. Lucent's New Ventures Group adopts many useful practices of private venture capital, but retains some of the potential structural advantages of venturing within an established firm.

This article examines the current and medium-term future impact of Internet-based sales on the physical retail store format. The web-based retail sector currently has a minimal financial effect on physical-based retail. The evolution of e-retail sales will likely mimic that of the catalogue industry in terms of ultimate market share potential. Certain categories of goods (travel, computers, electronic services, books, toys, and sporting goods) lend themselves more readily to shopping by computer and, therefore, are more susceptible to e-based competition. However, with Internet commerce firm profit forecasts still in the distant future, cutthroat price competition, and distribution and tactility constraints, e-retail will continue to present a relatively minor risk to experience-oriented and non-commodity physical retailers.

This article describes the contrasting systems of coordination and control at American and Southwest Airlines. Contrary to popular belief, the best way to achieve coordination in high velocity settings like the airline industry is not to create a flat organization based on performance measurement and little supervision. Rather it is better to build an organization based on cross-functional accountability to diffuse blame, with adequate supervisory staffing to provide coaching and feedback. Coordination benefits from strengthening this role of supervisors while weakening the role of accountability and performance measurement.

To develop and sustain competitive advantage, companies must begin thinking about strategy in a more integrated way. First, strategies must be comprehensive: they need to have clear direction and a coherent product-market focus, and they must be supported by incisive operating capabilities and resources and robust organization cultures. Second, strategies must align these dimensions and their subcomponents and ensure that each is well adapted to the competitive environment. Third, all of the elements of strategy need to be orchestrated around a powerful core theme. This article shows how managers can develop each of these aspects of strategic integration.

This is an MIT Sloan Management Review article. Project failure in the information technology area is a costly problem, and troubled projects are not uncommon. Executives become so strongly wedded to a particular project, technology, or process that they persist in committing their companies, continuing to pour in more resources. Escalation of commitment to a failing course of action is particularly common in technologically sophisticated projects with a strong IT component. There is little research on de-escalation, or the process of breaking the cycle of escalating commitment to a failing course of action. Through de-escalation, managers may successfully turn around or sensibly abandon troubled projects. During the past eight years, the authors examined more than 40 cases of IT project escalation. The authors present a process framework for de-escalation. The framework reveals that de-escalation is a four-stage process: problem recognition, re-examination of the prior course of action, the search for an alternative course of action, and implementation of an exit strategy. To show its general applicability, the authors apply the framework to a well-documented case study of de-escalation: the London Stock Exchange's Taurus system. The authors offer a set of recommendations for disengaging from a failing course of action.

Offers a framework and set of conceptual ideas to guide firms in approaching the strategic challenge of casting their business lines overseas and building global presence: How should a multiproduct firm choose the product line to launch it into the global market? What factors make some markets more strategic than others? What should companies consider in determining the right mode of entry? How should the enterprise transplant the corporate DNA as it enters new markets? What approaches should it use to win the local battle? How rapidly should a company expand globally? Becoming global is never a precise result of a grand design, but it would be naive to view it as a sequence of incremental, ad hoc, opportunistic, and random moves. The wisest approach would be one of directed opportunism within a broad direction set by a systematic framework.

The received wisdom--which many practitioners rigidly follow--assumes that competitiveness in a global economy requires companies to focus on core competencies, reduce their number of suppliers, and develop strong partner relationships built on shared information and trust with the remaining suppliers. But interviews with leading practitioners indicate that blind adherence to this three-step approach trivializes the issue and may be bad medicine. We provide a simple guideline for choosing the appropriate relationship for each supplier. An important consideration is whether the supplier relationship aims at cost reduction or value-added benefits for the customer, or both. The appropriate relationship could be one of competitive tension, cooperative partnership, or strategic alliance. In this study, the firms with successful outsourcing strategies began with well-developed and rigorous technological forecasts. Otherwise, strategic outsourcing will be filled with many blind avenues and deeply regretted decisions.

After his first year at MIT's Sloan School, Jonathan Seelig left to cofound Akamai Technologies. He reflects on his transition from the university to the Internet economy.

When Starbucks made coffee hip, its success set off a chain reaction of innovation that boosted the whole category's profits. New research shows the same phenomenon at work in other markets, but the effect can work in reverse as well.

The state of the art in auctions is not on the Web--it's in the venerable flower auction halls of Holland, where over 30 million flowers change hands in 60,000 transactions every day.

Data show that the top-selling drugs today are not the products of breakthrough science. That's why drug companies need to learn the lessons of marketing that consumer-goods manufacturers know so well.