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Historically, the decision over whether or not to consolidate was guided by bright-line rules, which outlined the minimum percentage of ownership required in a subsidiary for it to be considered controlled by a reporting entity and thus included in the consolidated financial statements (CFSs). Today, U.S. GAAP and IFRS use a principles-based approach, which is guided by the concept of control to determine whether a subsidiary is to be consolidated in the CFSs. In this context, a debate exists between managers and auditors about which subsidiaries should be consolidated. To deepen our understanding of how managers and auditors grapple with consolidation decisions, we interviewed several CFOs and audit partners to determine if they are anchored to legalistic mechanisms or if, instead, they are strategically developing ways to support the consolidation decision. Based on our interviews, we find that opportunistic transactions-criticized at the time of the rules-based approach-still exist due to the search for legalistic mechanisms that protect underlying choices influenced by economic incentives. Such results are crucial for analysts and investors to properly interpret consolidated financial performance.

Since the late 1990s, executives have been warned that explosive company growth is essential to producing superior financial performance. For executives who recognize that this contention accurately describes their situation and want to upgrade their competitive capabilities, the challenge is planning to grow fast while understanding and avoiding the risk of fast failure. In this article, we identify promising competitive strategies by studying businesses that have sought high-growth and succeeded in achieving it. The dataset consists of the fastest growing new ventures in the U.S. as selected for the Inc. 500. The results of a quantitative and qualitative analysis show that these businesses rely on different combinations of attributes related to advanced technology, market aggressiveness, and functional excellence. We discuss 12 of these attributes and look at the demographic characteristics of the Inc. 500 and their implications for new venture creation.

A decade ago, we published an article in Business Horizons about the challenges and opportunities of social media with a call to action: "Users of the world, unite!" To celebrate its anniversary, we look at artificial intelligence and the need to create the rules necessary for peaceful coexistence between humanity and AI. Hence, we now are urging: "Rulers of the world, unite!" In this article, we outline six debates surrounding AI in areas like artificial superintelligence, geographical progress, and robotics; in doing so, we shed light on what is fact and what is Utopia. Then, using the PESTEL framework, we talk about the six dilemmas of AI and its potential threat and use. Finally, we provide six directions on the future of AI regarding its requirements and expectations, looking at enforcement, employment, ethics, education, entente, and evolution. Understanding AI's potential future will enable governments, corporations, and societies at large (i.e., the rulers of this world) to prepare for its challenges and opportunities. Then, we can avoid a scenario in which we return in 10 years to write the article: "Dreamers of the world, unite!"

This article explores how an organization can use its history to define and deliver its corporate brand strategy. We specifically look at Adidas, which, having rejected its history at one stage, rediscovered and used the philosophy and ideas of its founder to provide direction for the future, legitimate strategic choices, and enrich the corporate brand. Through analysis of material evidence and interviews with senior and long-serving employees, we conceptualize the way Adidas developed a systematic approach to the use of history in its corporate brand strategy by creating the means to uncover, remember, curate, and then embed it. Combining the lessons of the Adidas case with evidence from other cases in which history was used to refocus and revitalize corporate brands, we deliver key recommendations for managers.

Even though they have gotten better at meeting the iron triangle of cost, time, and scope, many projects still do not achieve the strategic benefits-especially those that are nonmonetary-desired in most contemporary projects. Given that no one is specifically accountable for delivering these benefits, it should be no surprise that these projects are largely unsuccessful. We consider multiple possible candidates for this role of accountability-the CEO, the project manager, the sponsor, and the program manager-and find none of them acceptable, thereby necessitating the formalization of a new role: a project owner. The project owner would be accountable for delivering the strategic benefits desired from each project. In this article, we describe the responsibilities of the project owner at each phase of the project, the sources for candidates to fulfill this role, and the training needed for project owners to find success. We conclude with a case study of an organization that has taken this route and discuss the advantages and challenges that resulted from its strategic organizational change initiative.

This research examines current applications and potential capabilities of a wide array of social media applications such as Facebook, Twitter, LinkedIn, and others within the context of B2B supply chain operations. Specifically, we use social media affordances (SMA) as a framework to explore how social media is used in B2B supply chain settings. We report finding based on a survey of 209 professionals in supply chain areas. These findings include the extent to which social media and different social media tools are used in B2B supply chain operations, the impact of company size on social media use, the areas in which social media is used, the perceptions of social media, and other relevant issues such as social media policy and security. Based on these findings, this study provides a discussion regarding the current and future use of social media in B2B supply chain operations.

Big data analytics have transformed research in many fields, including the business areas of marketing, accounting and finance, and supply chain management. Yet, the discussion surrounding big data analytics in human resource management has primarily focused on job candidate screenings. In this article, we consider how significant strategic human capital questions can be addressed with big data analytics, enabling HR to enhance overall firm performance. We also examine how new data sources that help assess workforce performance in real time can assist in the identification and development of the knowledge stars that contribute to firm performance disproportionately as well as help reinforce firm capabilities. But in order for big data analytics to be successful in the HR field, regulatory and ethical challenges must also be addressed; these include privacy concerns and, in Europe, the General Data Protection Regulation (GDPR). We conclude by discussing how big data analytics can facilitate strategic change within HR and the organization as a whole.

Modern economies are characterized by the rising role of nonmarket actors (e.g., regulatory agencies, social activists, labor unions, media) that are gaining influence over the behavior of for-profit firms. These nonmarket stakeholders use their clout over industry players to impose innovations that require costly changes in business practices or technological trajectories while lacking firm-level economic justification. How should a company respond when it is pressured to adopt a new practice or change its products, while the economic calculations suggest that this is going to be a pure cost? Our study suggests alternative strategic responses to imposed innovation pressures and explores the factors determining the choice of an optimal strategy. Grounding the argument on the outside-in approach to pursuing imposed innovations, we propose a framework of organizational responses to external pressures to innovate, with varying degrees of firm engagement and different levels of cooperation with other industry actors. We also present a decision tree approach, allowing organizational decision makers to analyze the contextual determinants and ultimately arrive at the most appropriate, context-determined strategy.

Today's disruptive innovations are driving the creation of numerous billion-dollar startups. Venture capitalists focus on these potentially disruptive technology startups and fund them furiously, advancing their speed of growth. The idea is to scale fast and seek huge returns for investors. Terms that define this type of aggressive scaling have recently developed in Silicon Valley. Unicorn is defined as a venture with a value of $1 billion while a decacorn describes startups with a value of $10 billion. Another recent term is blitzscaling: funding a venture for extremely fast growth and prioritizing speed over efficiency in an environment of uncertainty. While blitzscaling is being used heavily by investors in Silicon Valley, we look at exactly what comprises this new phenomenon and how it is used in practice. We examine the concept, its stages, and its prevalence before reviewing the different examples of how the strategy has been implemented for success (the good), cases of its failure in practice (the bad), and the extreme cases of ethical compromise by ventures (the ugly). From these cases, we draw specific lessons that if understood and appropriately addressed would help new ventures effectively implement the strategy.

Business models and business model innovation-and particularly their opportunities-have been a popular topic recently, but we find the extant literature on the subject lacking. The risk and uncertainty aspect typical of business models has not been sufficiently addressed. We draw upon the existing literature and triangulate results with an extensive expert group interview to identify 28 risk and uncertainty factors, creating a checklist that can be used as the first step in an integrative business model risk management process for existing and new iterations. With an established process for managing and identifying risk in business models, managers can make more conscious and well-informed decisions.

The advent of design thinking as a tool for innovation has led to its adoption in a range of organizations. While proponents of design thinking continue to focus on the principles and practices of their method, little is known on the organizational conditions required for design thinking to attain a long-term impact. This article explores seven empirical case studies to identify the conditions required in organizations seeking to integrate design. It identifies four conditions-strategic vision, facilities, cultural capital, and directives-and examines their relationships.

This article aims to help organizations invest wisely in virtual competence by first explaining how this requires the development of three capabilities: virtual self-efficacy, virtual social skill, and virtual media skill. It then highlights concrete actions that managers can take to help ensure that virtual work meets its potential in their organizations. One key finding in the authors’ research is that people develop virtual competence through experience gained at home as well as in the workplace. Their research indicates that the level of virtual competence that exists today is insufficient for the large-scale adoption of virtual work. The authors’ research suggests taking the following steps to develop employees’ skills: First, assess the current state of each employee’s virtual competence. Second, assess the technology toolkit and media available to employees and make changes to support their work. Third, cultivate social interactions. Fourth, provide formal opportunities to help employees learn virtual media and social skills. Finally, assist employees in using both personal and social learning strategies. Social self-regulated learning strategies contribute to learner satisfaction, but not skill development; and personal self-regulated learning strategies have the opposite effect. To keep employees happy while also ensuring learning outcomes, managers should note that online learning needs to provide both social and personal modes of activities.

We all occasionally hear comments potentially driven by intolerance or bias. They often come without warning, sometimes from someone you really like. This article is about how to react. Research suggests that managers and employees alike are often loath to tackle uncomfortable topics. However, when formal company programs discourage bias, but everyday interactions allow or even encourage it, bias lives on. The good news is that the small everyday moments of potential intolerance are wonderful opportunities to tackle the problem of bias and discrimination in the workplace. What we are calling for is engagement, which doesn’t involve shaming or blaming. The goal is one of perspective-taking, which can make a difference without creating conflict. Engaging can have a positive impact in terms of cultivating empathy, increasing understanding, fostering speaker insight, and setting an example for bystanders. While formal training programs that address equity, diversity, and inclusion issues are helpful, they rarely have the reach required to fight intolerance where it breeds—at the micro level. Workplaces that are effective at micro-level engagement may get fewer complaints about bias. In addition, when employees feel psychologically safe and valued, they are more likely to share their thoughts and idea, which can lead to higher levels of productivity, innovation, and adaptability.

According to the authors’ experience as consultants with Kearney’s Proposition and Customer Experience Labs, companies frequently fall prey to a costly fallacy—the notion of an “average” customer. But the reality is that some 20 per cent of an institution’s customers typically contribute around 80 per cent of total value. To get the most out of existing customer pools, companies should consider adopting a value-based customer segmentation approach, which provides a quick yet robust method to identify future customer value while enabling companies to develop better growth, retention, and customer maintenance initiatives. The authors identify the following three dimensions that create customer value characteristics: a) client demographics and financial status; b) product usage, measured in both diversity and depth; and c) future potential, or expected changes in future net worth and/or usage. Value-based segmentation can help move customers who are part of the 80 per cent that bring in only 20 per cent of a company’s business into the smaller grouping that provides significant value. When the future value potential of an existing pool of customers is uncovered using value-based segmentation, businesses can make major strides toward providing truly differentiated offerings to this key asset. Properly leveraging the new insights obtained through such an effort can help to develop emotional connections via targeted marketing efforts that increase customer loyalty and boost their value to the business over time.

Innovations in digital technologies, lightweight materials, sustainable energy sources, and social trends like carsharing and ridesharing are converging to create an unprecedented level of connected and, eventually, autonomous mobility solutions that will revolutionize personal transportation. This innovation is ushering in a new ecosystem of mobility experiences, which will potentially play a much bigger role than brands when it comes to determining who wins the race to dominate mobility markets. Digitalization offers a seamless platform of services to provide mobility on demand, such as Uber. Vehicle manufacturers like Ford, Tesla, and Mercedes-Benz are adding smart product functionality to their cars while seeking business models that turn their smart products into services. The future of mobility depends on a congruence of technology and digitalization on a platform, seamlessly integrating safety, energy, data processing, decision making, and real-time cloud connectivity with infrastructure and on-demand services. Success in launching digital mobility experiences requires integrating digital mobility products and services; capturing and analyzing personal data using digital replicas (twins); getting data privacy and data governance right; and the balancing of personalization and the centralization of the value proposition to create economies of scale. Challenges include policy and technology uncertainty, value chain complexity, infrastructure needs, and regulatory standards and acceptance.

Organizational leaders are increasingly turning to design approaches as a panacea for uncertainty and disruption. However, frictions between design and typical engineering and management practices make integrating design into organizations difficult. To do this well, it is necessary to foster the coevolution of two types of design capabilities: deep expertise in design practices and wide understanding, application, and scaffolds of design. Underestimating the coevolution leads to three typical "pitfalls" that can limit the effectiveness of investments in design. This article examines each of these tensions in the context of large technology companies and presents practical recommendations on how to avoid them.

When it comes to separating the roles of company CEO and board chair, many arguments—both for and against activist calls to do so—have been made. Arguments against the idea generally insist that separating the roles adds complexity to running a business by creating two armed camps with blurred responsibilities. Meanwhile, arguments in favour of separation tend to highlight numerous benefits, including improved executive oversight, diversity of thinking, and financial savings. The authors of this article argue that governance improvements alone justify separating the CEO and board chair functions. As investment industry professionals at one of Europe’s largest asset managers, they have long been concerned by a worrying pattern of companies only splitting these functions after a scandal. Separating the roles of CEO and board chair doesn’t just reduce costs along with the risks of bad behaviour—it can help companies achieve and maintain profitability, mitigate challenges, and focus on growth to create long-term value—even in times of crisis. The authors’ approach in advocating for better governance measures is twofold. On the one hand, they want to guide companies toward more responsible and sustainable behaviours; and on the other, they are acting out of self-interest to protect their shareholders as asset managers because they believe creating a more sustainable capitalist system is in the best interest of all investors.

When it comes to how decision makers understand problems, Nietzsche’s insights are as valuable to executives today as any lesson offered by modern business schools.

For people who aspire to drive change, studying the impact that character had on RBG’s judgment is as important as replicating her commitment and competence

New research shows that market leadership is increasingly temporary. Just 17% of companies are able to significantly outperform their industry average for five years. The ones that do continually find new sources of competitive advantage by reinventing their businesses and adapting to evolving market conditions. Their example offers lessons for leadership teams trying to fight the relentless pull to the mean.