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After a period in which many companies experimented with decentralizing their information systems (IS) organization, companies are now consolidating data centers, giving central IS staffs more authority, and establishing companywide standards and procedures. The result is a hybrid organizational model that allows companies to benefit from the cost savings and control that centralization provided but with the user-responsiveness and flexibility that decentralizing permits.

Motorola began a program of skills training in 1980 to teach its work force statistical process control and other quality improvements techniques. After many problems, Motorola changed the program from a narrow emphasis on specific techniques to one including everything from reading and English comprehension to graduate work in computer-integrated manufacturing. The company forged partnerships with local schools and colleges to provide elementary education as well as business courses. The result is Motorola University. McKinsey Award Winner.

Attention to how much CEOs are paid diverts public attention from how they are paid. A statistical analysis of executive compensation concludes that top executives are not receiving record salaries and bonuses; annual changes in executive compensation do not reflect changes in corporate performance; and with respect to pay for performance, CEO compensation is getting worse. Compensation policy not only shapes how top executives behave, it also helps determine the kind of executives an organization attracts. Boards of directors must reform their compensation practices and adopt systems that reward outstanding performance and penalize poor performance.

The ability to commercialize technology is linked to competitive leadership in a variety of markets, such as copiers, computers, automobiles, and pharmaceuticals. Leaders like Canon, Xerox, and Hewlett-Packard describe their approaches to commercialization in similar terms: they treat commercialization as a system and apply to it the same discipline they use in manufacturing; they make it a priority, state it in terms of measurable goals, build cross-functional skills, and encourage aggressive action.

A company's competitiveness derives from its core competencies and core products. Core competence is the collective learning in the organization, especially the capacity to coordinate diverse production skills and integrate streams of technologies. First companies must identify core competencies, which provide potential access to a wide variety of markets, make a contribution to the customer benefits of the product, and are difficult for competitors to imitate. Next companies must reorganize to learn from alliances and focus on internal development. McKinsey Award Winner.

The economics of serving on the board of a publicly held corporation are fundamentally off balance. The risk to a director's time, money, and reputation is far greater than the rewards. No matter how conscientious directors are, shareholders can easily file frivolous lawsuits against them. Resolving a lawsuit saps a director's time and money; settling one appears to be an admission of guilt and is a black mark on his or her reputation. The boards of public companies should be more like those in LBOs or venture capital situations, where directors have a big financial stake in the company and thus the incentive to make it successful.

A new kind of marketing data enable managers to measure incremental sales of a product due to advertising and promotion. Single-source data correlate actual consumer purchases with corresponding television advertising or promotion events. Single-source data challenge much of the conventional wisdom on advertising. To take advantage of the data, managers must continually examine the appropriate balance between advertising and promotion.

Four concepts--statistical quality control, the new manufacturing accounting, the "flotilla" organization of the manufacturing process, and systems design--are transforming manufacturing theory. This new theory sees the factory as little more than a wide place in the stream of producing value, rather than as a collection of machines isolated from the rest of the business. Manufacturing and business decisions are one and the same. Though these concepts represent different constituencies with different agendas, together they are reconciling classic conflicts of twentieth century mass production.

A study of 25 auto-parts salespeople comparing behavior with performance indicates that: top performers focus the conversation on the catalog and sample boards, weak performers allow customers to control the talk; strong performers waste little time waiting for the customer's attention, weak performers are willing to wait for the customer. Most important, strong performers do not take refuge in the notion that some days are good and some are bad and nothing can be done about the bad. They shrug off a string of unsuccessful calls and continue calling. Sales managers should not try to hire only those who will become top performers, rather they must nurture their salespeople with potential.

Chairman and CEO Alain Gomez discusses Thomson, the French leader in TVs and related products since its 1987 acquisition of the GE/RCA consumer electronics business. In order to overtake Asian competitors European companies must consolidate through acquisitions or ventures. Thomson has expanded market share through acquisitions and has backed joint ventures with competitors to gain access to critical technologies; invested heavily in its own R&D; and participated in European R&D consortia. Cultural diversity is one asset that both Europe and the U.S. must learn to leverage more aggressively. It is also time to rethink old assumptions about markets, states, and economic success.

The old models of computer-based competition no longer apply. The new era is driven by the greatest upheaval in computer technology since the earliest days of the industry. The game is shifting from who can build the newest proprietary electronic tools to who can use and modify available tools more effectively. In terms of competitiveness, it is increasingly difficult for computerized distribution systems to bind customers to products. The future of electronic distribution is in neutral electronic markets that sell products from different vendors and make their data available to all.

Strategy making has changed. No longer is the carefully conducted industry analysis or deliberate strategic plan a guarantee of success. Speed matters. A strategy that takes too long to formulate is at least as ineffective as the wrong strategy. But how do decision makers, make fast, yet high-quality, strategic choices? This article describes the powerful tactics that fast decision makers use. They maintain constant watch over real-time operating information and rely on quick, comparative analysis to speed cognitive processing. They favor approaches to conflict resolution that are rapid and yet maintain group cohesion. Finally, their reliance on the private advice of experienced counselors and on integration with other decisions bolster their confidence to decide quickly in the face of big stakes and high uncertainty.

Over the last decade, power in the retailing of packaged goods has shifted from manufacturers to wholesalers and sellers. One result has been an increase in consumer and trade promotion. But many trade promotion practices are costly to manufacturers, retailers, and eventually consumers. The authors single out forward buying in the grocery trade and offer evidence of the costs of this practice to the distribution system as a whole. They suggest a policy called "everyday low purchase price", designed to smooth the peaks and valleys of demand and reduce the costs of distribution.

Large managerial enterprises have been the engines of growth and innovation in modern economies for more than a century. This essay lays out the logic and the nature of the competitive battles that ensue once an industry has been transformed by a first-mover company (companies defined by their large-scale investments in production, marketing, and management). History's lessons are clear: first movers quickly dominate their industries and continue to do so for decades. Those who fail to invest cannot compete--internationally or at home.

An interview with the founder and CEO of Raychem Corp., Paul M. Cook. Raychem's strategy since its founding has been to master a set of core technologies and to create thousands of proprietary products based on those technologies. Cook offers his ideas on innovation and encouraging corporate creativity.

Shareholder value analysis (SVA) is the subject of much debate. Some managers herald it as a great contribution to corporate planning; others say it is too restrictive, too easily manipulated, or too dependent on subjective forecasts. The shortcoming is not in the technique itself but in the way companies apply it. SVA can lead managers astray in three ways: by undervaluing a strategy, by overvaluing a strategy, or by excluding strategy alternatives.

CEOs must spend a certain amount of their time in the trenches, to learn first-hand how the business is going. Time spent on the road with the sales force is especially valuable. Executives learn whether the sales team knows its prospects and sets reasonable expectations; how much the salespeople know about the product, particularly in ways that differentiate it from the competition; whether the sellers keep abreast of changes in customers' businesses; and if the salespeople feel they have a stake in the business.

This hypothetical case, set in 1995, excerpts part of Dominion-Swann (DS) Industries' employee handbook. In 1990 DS implemented a personnel program using the latest advances in surveillance technology and subliminal persuasion to increase productivity and sales. Joseph Moderow, senior vice president and general counsel, UPS; Shoshana Zuboff, associate professor, Harvard Business School; Bill Howard, vice president of information technology, Bechtel Corp.; and Karen Nussbaum, executive director of 9 to 5, National Association of Working Women, discuss DS's use of technology to support and control employees.

What do managers do? A study of five CEOs and studies of managers conclude that managerial work involves interpersonal roles, informational roles, and decisional roles. These roles require developing peer relationships, carrying out negotiations, motivating subordinates, resolving conflicts, establishing information networks, making decisions with little or ambiguous information, and allocating resources. This article includes a commentary by the author outlining his perspective 15 years after the original publication of the article. McKinsey Award Winner.

A four-year, ten-nation study of the patterns of competitive success in leading countries concludes that companies achieve competitive advantage through acts of innovation. A nation's capacity to innovate is affected by four broad attributes, the "diamond" of national advantage: 1) factor conditions; 2) demand conditions; 3) related and supporting industries; and 4) firm strategy, structure, and rivalry. Based on this analysis, government and companies should act as catalysts and challengers, but not get directly involved in competition.