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Percy Barnevik, president and CEO of ABB Asea Brown Boveri, is moving more aggressively than any CEO in Europe, perhaps in the world, to build the new model of competitive enterprise: an organization that combines global scale and world-class technology with deep roots in local markets. He offers a detailed guide to the theory and practice of building a "multidomestic" enterprise. He describes ABB's matrix system and a new breed of global managers.

The 20 largest U.S. pension funds hold 10% of the equity capital of the largest U.S. companies, and, in total, pension funds have assets worth $2.5 trillion. They have grown to the extent that they must now address two issues: for what should corporate management be held accountable, and how should accountability be structured? Some answers can be found by looking at Germany and Japan, where ownership is even more concentrated than in the United States. These countries define performance results by maximizing the wealth-producing capacity of the enterprise.

During the next decade, computers and televisions will give way to "telecomputers" that will not only receive but also store, manipulate, create, and transmit digital video programming. These technologies will transform business. But this vision is being held back by the telecommunications infrastructure, which is not keeping up with the power of computers. The solution is a system of fiber-optic cables reaching every home and business in the country. Business must push for a new regulatory climate that will allow these new technologies to proliferate.

A growing imbalance between the world's labor supply and demand is driving the globalization of labor. While the developed world accounts for most of the world's gross domestic product, its share of the world work force is shrinking. Meanwhile, in the developing countries, the size and educational level of the work force is quickly rising. Developing nations that combine their young, educated workers with investor-friendly policies, and industrial countries that keep barriers to immigration low, will benefit from the new global work force.

Global negotiations are increasingly between the people of the United States and global managers, rather than between American companies and foreign nations. These global managers are supranational corporate players who have no particular allegiance to any one nation. The United States is disadvantaged in negotiations because states and cities bid against each other, permitting global managers to play us off against ourselves. To remedy the situation, Reich suggests the creation of a U.S. Investment Representative and a GATT for Direct Investment.

This article, first published in 1974, answers one of management's most important questions: Why do so few organizations reach their productivity potential? The author answers that most executives fail to establish expectations of performance improvement in ways that get results. To set high goals that employees respond to and are accountable for, managers must invest their own time and energy. The first step is to set a modest, measurable goal concerning an important organizational problem. If this goal is met, management uses the success as a springboard for more ambitious demands.

Shrinking revenues and taxpayer uprisings that threatened the town of Madison, Wisconsin's financial security led the author, during his six years as mayor, to introduce W. Edwards Deming's business quality concepts to city government. He learned that, like problems in business, problems in government are more likely to lie in flawed systems than in flawed workers, and that empowered frontline employees generate more improvements than management can.

A division manager must decide whether to fight 11% across-the-board personnel cuts or, if he is to go along with the decision, how to implement the layoffs in his division. He receives conflicting advice from his vice presidents: one suggests he make up a new cost-cutting plan that will help the company while not hurting his division; the other wants him to support the downsizing decision wholeheartedly.

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More and more managers today are changing their company's performance measurement systems to track nonfinancial metrics like quality, customer satisfaction, innovation, and market share. They believe these measures reflect a company's economic condition and growth prospects better than its reported earnings do. New technologies and more sophisticated databases have made the change to nonfinancial performance measurement systems possible and economically feasible.

The Plane Truth, a newspaper started by a group of flight attendants at the struggling Century Airlines, was considered one of the successes of the company's Century Spirit change program. With time, though, the Plane Truth began to run articles critical of management and of other work groups. Worried the paper was sabotaging the Spirit program, the president asked the human resources director to cancel it. Experts on organizational change and motivation analyze the situation.

How can manufacturing companies streamline processes to shrink the all-important time-to-market span? How can managers and team members learn useful lessons from past efforts? Getting R&D, manufacturing, and marketing to communicate is still the biggest hurdle. The Return Map answers these challenges by providing a graphic way to bring all functions together, first for estimating costs and time, then for tracking projects as they evolve.

Today technology is creating greater customer choice, and choice is altering the marketplace. Six principles define the new marketing: marketing is a way of doing business that pervades the entire company; companies must dispel their limiting market-share mentality; programmable technology promises to open up almost limitless choice for customers; a feedback loop is making advertising's one-way communication obsolete; the line between services and products is eroding; and the marriage of marketing and technology is inevitable.

Transforming Bell Atlantic from a bureaucratic, monopolistic company into an efficient entrepreneurial competitor meant creating a new mind-set and sense of teamwork for each employee. Raymond Smith credits his company's successful change to behavior established through the Bell Atlantic Way -- an improvement program stressing teamwork and accountability.

Many companies have embraced the Just-In-Time manufacturing method because of the zeal with which its successes were reported. But JIT is a simple idea, and therefore often complicated to implement. In its pure form, JIT emphasizes low cost, high quality, and the consolidation of the product line--a smaller number of products and fewer options. It does not mean recklessly slashing inventories without having inventory buffers in place.

Faced with changing markets and tougher competition, more companies realize that they must transform how they function. Although senior managers understand the necessity of change, they often misunderstand what it takes to bring it about. They assume that corporate renewal is the product of companywide change programs--and that to transform employee behavior, they must alter a company's formal structure. Change programs are, in fact, the greatest obstacles to successful revitalization, and formal structure is the last thing a company should change, not the first.

The management at Trail Manufacturing was so excited about installing new flexible machining equipment in their factory that they neglected to guage the impact it would have on the workers who actually ran the machines. Mike Trail, the company's owner and president, is torn between his chief engineer who encourages radical changes, and his machinists who believe the company is making a huge mistake. Four experts in operations management comment on the choices Trail must consider.

Products with integrity perform superbly, provide good value, and satisfy customer's expectations in every respect, including such intangibles as their look and feel. The most successful development organizations appoint a "heavyweight" product manager to guide the creation of a strong product concept. This person ensures that a product concept both satisfies potential customers' wants and needs and is completely embodied in a product's details.

Companies are creating new hybrid marketing systems that promise to become the dominant marketing design. These systems offer greater coverage and reduced costs, but they are also hard to manage. Managers can make the task easier with a "hybrid grid," a map that illustrates the combination of channels and tasks that will optimize cost and coverage. Another tool, a marketing and sales productivity (MSP) system, can help managers create customized channels and service for specific customer segments.

John S. Reed, chairman and CEO of Citicorp, has a clear ambition: to create the world's first truly global financial institution. Citicorp's scale may make it the only U.S. bank with the potential to do this. Still, its precarious balance sheet constrains flexibility and growth. Reed proposes a radical restructuring of international banking: "Imagine a scenario in which 10 or 12 international banks, much like the 5 or 6 giant oil companies, share the capital and risk associated with different parts of the business."