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Health care reform in the United States is on a collision course with economic reality. Most proposals focus on measures that will produce one-time cost savings by eliminating waste and inefficiency. But the right question to ask is how to achieve dramatic and sustained cost reductions over time. What will it take to foster entirely new approaches to disease prevention and treatment, whole new ways to deliver services, and more cost-effective facilities? The answer lies in the powerful lessons business has learned over the past two decades about the imperatives of competition. In industry after industry, the underlying dynamic is the same: competition compels companies to deliver constantly increasing value to customers.

Virtually everyone agrees that the old covenant between employer and employee--under which companies offered at least a measure of job security in exchange for adequate performance and some exhibition of loyalty--is dead. Some management thinkers argue that instead of the traditional focus on employment, the focus should now be on employability. That means having the competitive skills required to find work, when you need it, wherever you can find it. Some companies, such as Apple Computer, Sun Microsystems, Raychem Corp., and 3Com Corp., are already moving in this direction. And from the progress they've made so far, the authors have been able to discern basic ingredients all programs should include and pitfalls to avoid. The company that embraces career resilience will have a huge strategic advantage. By encouraging people to grow, to change, and to learn, it will do those things better itself.

Responding to environmental problems has always been a no-win proposition for managers, report Noah Walley and Bard Whitehead in "It's Not Easy Being Green" (May-June 1994). Help the environment and hurt your own business, or irreparably harm your business while protecting the earth. Recently, however, a new common wisdom has emerged that promises the ultimate reconciliation of environmental and economic concerns. Being green is no longer a cost of doing business; it is a catalyst for constant innovation, new market opportunity, and wealth creation. This new vision sounds great, yet it is highly unrealistic. Environmental costs are skyrocketing at most companies, with little chance of economic payback in sight. Given this reality, should "win-win" solutions be the foundation of a company's environmental strategy? In this issue's Perspectives section, twelve experts assess both viewpoints.

This is an MIT Sloan Management Review article. Conventional approaches to decision making focus on generating and evaluating alternatives. According to the author, however, alternatives are relevant only as means to achieve values. Values, not alternatives, should be the primary focus of decision making. Describes "value-focused thinking," which involves clearly defining and structuring your fundamental values in terms of objectives and using these objectives to guide and integrate decision making. Presents techniques for creating better alternatives for your decision problems and for identifying more appealing decision opportunities than those that confront you. Relevant both to organizational and personal decisions, these ideas are illustrated by their application at Conflict Management, Inc.

This is an MIT Sloan Management Review article. By strategically outsourcing and emphasizing a company's core competencies, managers can leverage their firms' skills and resources for increased competitiveness. The authors suggest ways to determine what those core competencies are and which activities are better performed externally. They assess the relative costs and risks of "making" or "buying" and present methods for containing risks while enjoying the benefits of their dual approach.

Market-driven firms stand out in their ability to continuously anticipate market opportunities and respond before their competitors. The market learning processes in these firms are distinguished by: open-minded inquiry based on the belief that all decisions are made from the market back; widespread information distribution that ensures that relevant facts are available when needed; mutually informed mental models that guide interpretation and ensure that everyone pays attention to the essence and potential of the information; and an accessible memory of what has been learned. However, mastery of all the steps in the learning process is rare. Most firms suffer disabilities at one or more stages. Overcoming these learning disabilities and enhancing market learning competency is an important management challenge.

In the 1980s, experts and executives alike heralded alternative dispute resolution (ADR) as a sensible, cost-effective way to keep corporations out of court and away from the kind of litigation that devastates winners almost as much as losers. But the great hopes for ADR faded quickly. What characterizes ineffective ADR? An emphasis on winning at any price, a lack of commitment to ADR on the part of both top-level management and company counsel, and the misconception that ADR is not really that different from litigation. But some companies are using ADR effectively--lowering costs, resolving disputes rapidly, and preserving business relationships. Few companies have made the commitment to ADR more effectively than NCR. In addition to boosting the commitment of top management to ADR, NCR has defined a number of goals to be pursued in the event of disputes.

Faced with an unprecedented number and variety of products on the market, managers are finding it more difficult to predict demand and plan production and orders accordingly. As a result, inaccurate forecasts are increasing and, along with them, the costs of those errors. A new approach to the entire forecasting, planning, and production process, accurate response entails first figuring out what forecasters can and cannot predict well. Then supply chains must be made fast and flexible so that managers can postpone decisions about their most unpredictable items until they have some market signals--like early-season sales results--to help correctly match supply with demand. Accurate response enables companies to use the power of flexible manufacturing and shorter cycle time much more effectively.

In his first six months as head of strategic planning for the Knoxville Co., Dan Richards was a whirlwind of efficiency. His work habits and enthusiasm were contagious; morale at Knoxville had improved markedly since his arrival. Almost overnight, however, Dan's performance waned. Over the next few weeks, his behavior continued to worsen. When finally confronted, Dan told the CEO that he needed to take some time off. Later, Dan's wife called to explain that Dan was a diagnosed manic-depressive and had checked into a mental hospital explaining, "The doctor thinks he'll be back to work in a month." But would a month be long enough? The CEO wasn't sure Dan should return at all. Five commentators offer general advice about managing mental illness in the workplace.

Many managers fail to realize that traditional measures, which focus on results, may help them keep score on the performance of their businesses but do not help a multifunctional team monitor the activities or capabilities that enable it to perform a given process. Nor do such results measures tell team members what they must do to improve their performance. Senior managers play an important role in helping teams develop performance measures by dictating strategic goals, ensuring that each team understands how it fits into those goals, and training a team to devise its own measures. But managers must never make the mistake of thinking that they know what is best for the team.

Transforming inefficient bureaucracies into dynamic, customer-oriented organizations is challenging under any circumstances. It is particularly daunting when revamping an enterprise as vast and multidimensional as the federal government. Many argue that it can't be done. David Osborne disagrees. Coauthor of Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector and senior advisor to the Clinton Administration, Osborne believes that change at the federal level is not only possible but also inevitable. In fact, many of the tools used to improve the performance of companies--worker empowerment, internal competition, and measurement--can be marshaled to "reinvent" the federal government. Reinvention is not about cutting waste or finding fraud. Its about restructuring and replacing large, centralized command-and-control bureaucracies with decentralized, entrepreneurial, customer-driven agencies that are pushed by competition and accountable for the results they deliver.

The Outward Bound raft trip in 1977 was meant to build better teamwork and teach the art and techniques of survival under difficult conditions. Over the week that followed, the five people on Raft No. 4 created a supportive atmosphere. Everyone was required to take a turn at the helm, a challenge that the men embraced but that the women tried to avoid and then carried out badly. On the fifth day, with one of the women at the rudder, the raft overturned in a rapids. The dunking was a narrow escape for them all, and from then on, only men took the helm. It was only when the trip was over that the author began to realize what really lay behind Raft No. 4's accident. The men had unconsciously worked together to hold on to their power, building on the women's individual doubts about their own capacities for leadership. The author draws parallels with the gender rivalries that keep women from rising to positions of power within organizations. The author and three women--including one of the two women on Raft No. 4--comment on whether and how circumstances have changed since HBR first published this article 17 years ago.

Forced to explain why businesses should continue to give money away while laying off workers, contributions managers in hundreds of companies have come up with an approach that ties corporate giving directly to strategy. In those companies, philanthropic and business units have joined forces to develop philanthropic strategies that give their companies a powerful competitive edge. The new corporate philanthropy encourages companies to play a leadership role in social problem solving by funding initiatives that incorporate the best thinking of governments and nonprofit institutions. The new approach to philanthropy is best illustrated by the AT&T Foundation, which has set up a dynamic relationship with the company's business units to support social causes while advancing AT&T's business goals.

Responding to environmental problems has always been a no-win proposition for managers. Help the environment and hurt your own business, or irreparably harm your business while damaging the earth. Recently, however, a new common wisdom has emerged that promises the ultimate reconciliation of environmental and economic concerns. The proponents of this new popular wisdom cite a mounting body of "win-win" projects that benefit the environment and create financial value. In this new world, managers might redesign a product so that it uses fewer environmentally harmful or resource-depleting raw materials--an effort that if successful could result in considerable cuts in direct manufacturing costs and inventory savings. This new vision sounds good, yet it is highly unrealistic.

This is an MIT Sloan Management Review article. Chief information officers have the difficult job of running a function that uses a lot of resources but offers little measurable evidence of its value. To make the information systems department an asset to their companies--and to keep their jobs--CIOs should think of their work as adding value in certain key areas. Accordingly, CEOs can take a number of steps to aid a CIO's efforts. Based on studies of information systems leaders in 60 organizations, this article presents a portrait of successful CIOs and the CEOs who support them.

However popular comprehensive research and planning may be in some business arenas, they don't suit the fast-moving environment of start-ups. Entrepreneurs must move quickly or opportunity may no longer exist. Theirs is a world of ingenuity, spontaneity, and hustle. Profitable survival requires an edge derived from some combination of a creative idea and a superior capacity for execution. Research on more than 200 thriving ventures reveals four helpful guidelines for aspiring founders. First, effective entrepreneurs screen out unpromising ideas as early as possible, and they accomplish this through judgment and reflection, not gathering lots of data. Next, they assess realistically their financial situation, personal preferences, and goals for the venture. To conserve time and money, successful new founders also minimize the resources they devote to researching ideas. And, unlike managers in big corporations, entrepreneurs don't need all the answers to act.

IT specialists often promise that technology will serve as a catalyst for change. But, as the author points out, it is a promise that usually goes unfulfilled. IT managers put too much emphasis on hardware and not enough emphasis on the soft science of how people actually share information. Too many managers still believe that, once the right technology is in place, appropriate information sharing will follow. To achieve its promise IT needs to take a human-centered approach. Looking at companies that have successfully addressed this problem--like Symantec Corp., Chemical Bank, Hallmark Cards, and Rank Xerox, U.K.--the author directly addresses how to rebuild an organization's information culture and how to get beyond the technologies to changing people's behaviors.

New Age entrepreneurs are redefining the way business is conducted, placing environmental and moral needs and job satisfaction at or near the top of the corporate mission. Today's company is a place where managers encourage employees to do community work on office time and where everyone creates products that they themselves love. This view of work may seem overly idealistic to many, but New Age ideals are growing in popularity among today's workers whose futures seem increasingly uncertain in the wake of layoffs and restructurings. While the founders of companies like Tom's of Maine or The Body Shop believe they are making the world a better place, writers like Paul Hawken and Charles Handy have discovered a more pragmatic use of New Age ideals, as a way for business people to think about their organizations.

Ethics is as much an organizational as a personal issue. Managers who fail to provide leadership and institute systems that facilitate ethical conduct share responsibility with those who knowingly benefit from corporate misdeeds. Executives who ignore ethics run the risk of personal and corporate liability. In addition, they deprive their organizations of the benefits available under new federal guidelines that recognize for the first time the organizational and managerial roots of unlawful conduct and base fines partly on the extent to which companies have taken steps to prevent that misconduct. An integrity-based approach to ethics management combines a concern for the law with an emphasis on managerial responsibility for ethical behavior. When integrated into the day-to-day operations of a company, such strategies can help prevent damaging ethical lapses, while tapping into powerful human impulses for moral thought and action.

As a manager and executive with Johns-Manville, Bill Sells witnessed one of the greatest management blunders of the twentieth century. This blunder was denial, and in the end it took thousands of lives, destroyed an industry, and wiped out as much as 98% of stockholder equity. From today's perspective, it hardly matters what and when Manville knew about asbestos. Modern liability standards seem to hold that the company should have known. When the author was promoted to head Manville's fiberglass division, with asbestos virutally banned, fiberglass had become its chief source of revenue. When fiberglass too came under suspicion as a health hazard, the author used the lessons he had learned in asbestos to implement a policy of product stewardship; intensive workplace monitoring; full disclosure; assiduous communication with customers, workers, regulators, and the media; and an active scientific research program. Studies now indicate that fiberglass is safe. Sales and profits indicate that product stewardship is a source of competitive advantage.