Management Tools 2011

An Executive’s Guide

Darrell K. Rigby

Management Tools 2011
An Executive’s Guide

Darrell K. Rigby www.bain.com

2011 All rights reserved. Inc. MA 02116 . 131 Dartmouth Street Boston. Published by: Bain & Company. No part of this book may be reproduced in any form or by any means without permission in writing from Bain & Company.Copyright © Bain & Company. Inc.

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....................................................12 Related topics: • Management by Objectives • Mission and Vision Statements • Pay for Performance • Strategic Balance Sheet Benchmarking................20 Related topics: • Core Capabilities • Key Success Factors Customer Relationship Management ................................................................22 Related topics: • Collaborative Commerce • Customer Retention • Customer Segmentation • Customer Surveys • Loyalty Management Tools Customer Segmentation ............................14 Related topics: • Best Demonstrated Practices • Competitor Profiles Business Process Reengineering.................................................................................................................................................................................Table of Contents Preface ......................24 Related topics: • Customer Surveys • Market Segmentation • One-to-One Marketing 6 ...................................................................................................................................................10 Balanced Scorecard ................................16 Related topics: • Cycle-Time Reduction • Horizontal Organizations • Overhead-Value Analysis • Process Redesign Change Management Programs ............................................................................................................................18 Related topics: • Cultural Transformation • Organizational Change • Process Redesign Core Competencies ...........

.................32 Related topics: • Groupware • Intellectual Capital Management • Learning Organization • Managing Innovation Mergers and Acquisitions ....................26 Related topics: • Governance Roles • Job Descriptions • Organization Design Downsizing...........30 Related topics: • Risk Governance • Scenario and Contingency Planning • Strategic Planning • Supply Chain Management Knowledge Management .....................................................................................................................................................................34 Related topics: • Merger Integration Teams • Strategic Alliances Mission and Vision Statements ...........................................................................28 Related topics: • Layoffs • Reengineering • Rightsizing Enterprise Risk Management ............................................................36 Related topics: • Corporate Values Statements • Cultural Transformation • Strategic Planning Open Innovation................................................................................................................................................38 Related topics: • Collaborative Innovation • Crowdsourcing • New Product Development • Open-Market Innovation 7 ...........................................................................................Decision Rights Tools ..........

.................................Table of Contents continued Outsourcing ................................................................46 Related topics: • Customer and Employee Surveys • Customer Loyalty and Retention • Customer Relationship Management • Net Promoter® Scores • Revenue Enhancement Scenario and Contingency Planning...........................44 Related topics: • Computer-Aided Design • Design Thinking • Discovery-Driven Innovation • Managing Innovation Satisfaction and Loyalty Management ................................................................................50 Related topics: • Joint Ventures • Offshoring • Outsourcing • Performance Improvement • Strategic Partnerships 8 ......................................42 Related topics: • Demand-Based Management • Pricing Strategy • Revenue Enhancement Rapid Prototyping ......................................................................................................................................................................................................40 Related topics: • Collaborative Commerce • Core Capabilities • Offshoring • Strategic Alliances • Value-Chain Analysis Price Optimization Models ............................48 Related topics: • Crisis Management • Disaster Recovery • Groupthink • Real-Options Analysis • Simulation Models Shared Service Centers ...............

...........................................52 Related topics: • Blogs • Multimedia Chat Rooms • Online Communities • Social Gaming Networks Strategic Alliances..................................................................................................................................................................Social Media Programs .................................62 Author Index ...........................................................................................56 Related topics: • Core Competencies • Mission and Vision Statements • Scenario and Contingency Planning Supply Chain Management .............................................................................................................................................54 Related topics: • Corporate Venturing • Joint Ventures • Value-Managed Relationships • Virtual Organizations Strategic Planning................................58 Related topics: • Borderless Corporation • Collaborative Commerce • Value-Chain Analysis Total Quality Management ............................................................................................60 Related topics: • Continuous Improvement • Malcolm Baldrige National Quality Award • Quality Assurance • Six Sigma Subject Index ........................65 9 ...

executives must be more knowledgeable than ever as they sort through the options and select the right management tools for their companies. The current environment of globalization and economic turbulence has increased the challenges executives face and. at the right time. products and services—and result in superior performance and profits. Our objective was to provide managers with: • An understanding of how their current application of these tools and subsequent results compare with those of other organizations across industries and around the globe. the need to find the right tools to meet these challenges.Preface Over the past three decades. we’ve conducted research to identify 25 of the most popular and pertinent management tools. innovate. management tools have become a common part of executives’ lives. We also conduct one-on-one follow-up interviews to learn the circumstances in which each tool is most likely to produce the desired results. The secret is not in discovering one magic device. Every year or two since. we’ve defined the tools and how they are used. in the right way. In the absence of objective data. implement and integrate the optimal tools to improve their company’s performance. The selection process itself can be as complicated as the business issues they need to solve. To do this successfully. executives have looked for tools to help them. increase efficiencies or plan for the future. 10 . They must choose the tools that will best help them make the business decisions that lead to enhanced processes. improve quality. therefore. but in learning which mechanism to use. and how and when to use it. Successful use of such tools requires an understanding of the strengths and weaknesses of each tool as well as an ability to creatively integrate the right tools. select. To help inform managers about the tools available to them. in 1993 Bain & Company launched a multiyear research project to gather facts about the use and performance of management tools. In this guide. groundless hype makes choosing and using management tools a dangerous game of chance. We determine through our research the extent to which each tool is being deployed and its rate of success. • The information they need to identify. Whether trying to boost revenues.

• No tool is a cure-all. effectiveness. • Many executives have serious concerns about how their organizations gather customer insights and manage decision making. Social Media has grown rapidly and we look forward to understanding how companies are using it. MA 02116 tel: 617 572 2771 fax: 617 572 2427 email: darrell. Detailed results from the 2009 Management Tools & Trends survey are available at www. and whether they believe it is an effective business tool for improving results. Survey results may be obtained by contacting: Darrell Rigby. Director Bain & Company.com/tools. 131 Dartmouth Street. The insights from this year’s global survey and field interviews will be published separately. Our efforts to understand the continually evolving management tools landscape have led us to add four new tools to this year’s guide: Change Management Programs. We also found other important trends from the 2009 survey: • Nearly all executives believe innovation is vital to their company’s success. • Managers who switch from tool to tool undermine employees’ confidence. Rapid Prototyping and Social Media Programs. • Management tools are much more effective when they are part of a major organizational effort.Over time. We hope that you will find this reference guide a useful tool in itself. Inc. but few feel they have learned to harness its power effectively. Enterprise Risk Management. but the rates of usage. but managers may find them more relevant in the current economic environment. Boston. ease of implementation. Among them: • Overall satisfaction with tools is moderately positive. Change Management Programs and Enterprise Risk Management are not new tools. • Decision makers achieve better results by championing realistic strategies and viewing tools simply as a means to a strategic goal. our research has provided a number of important insights.bain.com 11 .rigby@bain. strengths and weaknesses vary widely.

customer satisfaction measures. • Ensure companywide acceptance of the measures. employee performance).g. managers should: • Articulate the business’s vision and strategy. • Create appropriate budgeting. • Internal business process performance (productivity rates. • Collect and analyze performance data and compare actual results with desired performance. turnover. communication and reward systems. • Establish objectives that support the business’s vision and strategy. innovation. return on capital. 12 . financial performance.Balanced Scorecard Related topics • • • • Management by Objectives Mission and Vision Statements Pay for Performance Strategic Balance Sheet Description A Balanced Scorecard defines what management means by “performance” and measures whether management is achieving desired results.. customer loyalty). The Balanced Scorecard translates Mission and Vision Statements into a comprehensive set of objectives and performance measures that can be quantified and appraised. employee suggestions. • Employee performance (morale. • Identify the performance categories that best link the business’s vision and strategy to its results (e. establishing both short-term milestones and long-term targets. timeliness). tracking. • Develop effective measures and meaningful standards. quality measures. • Take action to close unfavorable gaps. use of best demonstrated practices). cash flow). • Innovation performance (percent of revenue from new products. earnings. • Customer value performance (market share. operations. rate of improvement index). knowledge. Methodology To construct and implement a Balanced Scorecard. These measures typically include the following categories of performance: • Financial performance (revenues.

Paul R. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Robert S. Norton.. Kaplan. • Track the key elements of the business strategy. 2002 to present (bimonthly). • Compare performance of geographically diverse business units. July 2005. 71–79. “The Balanced Scorecard: Measures That Drive Performance. 190–203. Norton. Kaplan. 13 . 2d ed. Kaplan. 2006.” Harvard Business Review. • Link strategic objectives to long-term targets and annual budgets. • Incorporate strategic objectives into resource allocation processes. 2004. and Jean-François Manzoni. Harvard Business School Press. and David P. • Increase companywide understanding of the corporate vision and strategy. Harvard Business School Press. and David P. Marc. John Wiley & Sons. Kaplan. • Facilitate organizational change. Norton.” Harvard Business Review. John Wiley & Sons. Niven. Harvard Business School Press. “Harvard Business Review Balanced Scorecard Report... Robert S. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. 2000. Balanced Scorecard Diagnostics: Maintaining Maximum Performance. pp. Niven.Common uses A Balanced Scorecard is used to: • Clarify or update a business’s strategy. 2005. 2006. April 1998. Robert S.. and David P. Robert S. Selected references Epstein. Paul R. Norton. and David P. “Implementing Corporate Strategy: From Tableaux de Bord to Balanced Scorecards. pp.” European Management Journal. Alignment: Using the Balanced Scorecard to Create Corporate Synergies.

• Understand relative cost position. Methodology Common uses Companies use Benchmarking to: • Improve performance. Benchmarking reveals a company’s relative cost position and identifies opportunities for improvement. Companies then improve their performance by tailoring and incorporating these best practices into their own operations—not by imitating. 14 . Managers compare the performance of their products or processes externally with those of competitors and best-in-class companies and internally with other operations within their own firms that perform similar activities. but by innovating. Identify the key performance metrics. service or process to benchmark. • Increase the rate of organizational learning. setting reasonable goals and ensuring companywide acceptance. Benchmarking involves the following steps: • • • • • • Select a product. Choose companies or internal areas to benchmark.Benchmarking Related topics Description • Best Demonstrated Practices • Competitor Profiles Benchmarking improves performance by identifying and applying best demonstrated practices to operations and sales. Analyze the data and identify opportunities for improvement. Collect data on performance and practices. • Gain strategic advantage. Benchmarking identifies methods of improving operational efficiency and product design. The objective of Benchmarking is to find examples of superior performance and to understand the processes and practices driving that performance. Benchmarking brings new ideas into the company and facilitates experience sharing. Adapt and implement the best practices. Benchmarking helps companies focus on capabilities critical to building strategic advantage.

Robert C. 2006. pp. and Christie Nordhielm.” Harvard Business Review. 1994. 2001. Mohamed. pp.Selected references American Productivity and Quality Center. American Society for Quality. Jerker. English. Camp. 1999. April 2005. Boxwell. “Creative Benchmarking. Managing by Measuring: How to Improve Your Organization’s Performance Through Effective Benchmarking. September 2003.apqc. Dawn. Reider. ButterworthHeinemann. Denrell. “Is Your Benchmarking Doing the Right Work?” Harvard Management Update. Mardi. American Productivity and Quality Center. Jr. The Complete Benchmarking Implementation Guide: Total Benchmarking Management. James. Productivity Press. 1995. Benchmarking for Best Practice: Continuous Learning Through Sustainable Innovation.” Harvard Business Review. Benchmarking: A Guide for Your Journey to Best-Practice Processes. Camp. 1996. Mark T. November/December 2000. Bogan. McGraw-Hill. 1–4. H. Christopher E. Zairi. Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. Benchmarking for Competitive Advantage. Robert C. John Wiley & Sons. Iacobucci.. www. 24–25. “Selection Bias and the Perils of Benchmarking. Business Process Benchmarking: Finding and Implementing Best Practices. 114–119. and Michael J. Rob. 2000. McGraw-Hill. 15 . 1998. AMACOM. Lisa Higgins. Czarnecki. Chris Gardner.org. Harrington. David. and Cynthia Raybourn. pp. Robert J. Benchmarking for Best Practices: Winning Through Innovative Adaptation. Stauffer. Coers. McGraw-Hill.. 1994. Benchmarking Strategies: A Tool for Profit Improvement.

Second. Workers gain responsibility for their output and can measure their performance based on prompt feedback. they use technology to improve data dissemination and decision making. 16 . • Rethink basic organizational and people issues. Methodology Common uses Companies use Business Process Reengineering to improve performance substantially on key processes that impact customers. • Redesign core processes. Business Process Reengineering is a dramatic change initiative that contains five major steps. cycle times and quality. Business Process Reengineering reduces costs and cycle times by eliminating unproductive activities and the employees who perform them. Managers should: • Refocus company values on customer needs. accelerates information flows and eliminates the errors and rework caused by multiple handoffs. Business Process Reengineering can: • Reduce costs and cycle time. companies start with a blank sheet of paper and rethink existing processes to deliver more value to the customer. They typically adopt a new value system that places increased emphasis on customer needs. often using information technology to enable improvements. In Business Process Reengineering.Business Process Reengineering Related topics • • • • Cycle-Time Reduction Horizontal Organizations Overhead-Value Analysis Process Redesign Description Business Process Reengineering involves the radical redesign of core business processes to achieve dramatic improvements in productivity. Business Process Reengineering improves quality by reducing the fragmentation of work and establishing clear ownership of processes. Companies reduce organizational layers and eliminate unproductive activities in two key areas. • Reorganize a business into cross-functional teams with end-to-end responsibility for a process. • Improve business processes across the organization. they redesign functional organizations into cross-functional teams. • Improve quality. First. Reorganization by teams decreases the need for management layers.

revised and updated. “Reengineering Tries a Comeback— This Time for Growth. 17 . Gene. Technology and Application. 1995. and Judy Wade. James. and Manuj K.” Harvard Business Review. Beyond Reengineering: How the ProcessCentered Organization Is Changing Our Work and Lives. Michael. 1997. 1997. Thomas H. Reengineering Management: The Mandate for New Leadership. Sandberg.” Harvard Management Update. 2003. Jim Rosenthal. Kirsten D. Carr. Complexity. Hall.Selected references Al-Mashari. 119–131. Best Practices in Reengineering: What Works and What Doesn’t in the Reengineering Process.” Journal of Operations Management. 1992. Davenport. “How to Make Reengineering Really Work. and Other Business Realities. Johansson. Evolution. 2002. and Mohamed Zairi. August 1997. Process Innovation: Reengineering Work Through Information Technology. and Henry J. and James Champy.. 1995. Jossey-Bass. Method. The New Project Management: Tools for an Age of Rapid Change. Not Just Cost Savings. November/December 1993. pp. Harvard Business School Press. Davidson. December 2001. Majed. Hammer. Frame. 437–455. Champy. Harvard Business School Press. Michael. pp. Varun. “Business Process Reengineering: A Survey of International Experience. Reengineering the Corporation: A Manifesto for Business Revolution. Peter G. Grover. Hammer. November 2001.W. HarperCollins. Collins. pp. McGraw-Hill. Malhotra. 193–213. “Business Process Reengineering: A Tutorial on the Concept. HarperBusiness. J. Zahir Irani. pp. 3–6.” Business Process Management Journal. David K. The Process Edge: Creating Value Where It Counts. Keen.

showing where and when trouble is likely to occur and laying out a strategy for mitigating risks and monitoring progress. • Repeatedly communicate simple. companies enlist multiple sponsors to provide all individuals with access to—and the influence of—a sponsor. implementing the initiatives as seamlessly as possible and generating a repeatable model for ensuring continued success in future change efforts. – Reorganize around decision making. generating organizational buy-in. • Continuously monitor progress. leaders alter communication frequency and methods to manage how a shaken workforce perceives and reacts to information: – Ensure sponsorship throughout the organization. • Identify and overcome barriers to change. Companies develop a system for identifying. Companies identify employees most impacted and also work to predict.Change Management Programs Related topics • Cultural Transformation • Organizational Change • Process Redesign Description Change Management Programs enable companies to control the installation of new processes to improve the realization of business benefits. A Change Management Program allows leaders to help people succeed. non-negotiable goals and designing incentives to ensure these goals are met. measure and manage the risk of change. powerful messages to employees. Methodology 18 . To allow sponsorship to reach all levels of an organization. Change Management Programs require managers to: • Focus on results. making and executing the most important decisions. Maintain a goal-oriented mindset by establishing clear. Companies follow through and monitor the progress of each change initiative to tell if it is following the intended path or veering off course. These programs involve devising change initiatives. In times of change.

Cohen. • Align and focus an organization when going through a major turnaround. John P. Built to Change: How to Achieve Sustained Organizational Effectiveness. and Christopher P. Timothy R. John P. Clark. 2000. Kotter.. customer preferences.Common uses Companies use a Change Management Program to: • Implement major strategic initiatives to adapt to changes in markets. Berrett-Koehler Publishers. • Implement new process initiatives. Harvard Business Press. 2006. 1996. Selected references Axelrod. 2006. EPIC Change: How to Lead Change in the Global Age. Edward E. and Dan S. technologies or the competition’s strategic plans. Harvard Business Review on Leading Through Change. 19 . Jossey-Bass. Harvard Business Press. Harvard Business Press. Worley. 2008. III. Jossey-Bass. Terms of Engagement: Changing the Way We Change Organizations. The Heart of Change: Real-Life Stories of How People Change Their Organizations. Richard H. 2002. Lawler. Harvard Business School. Kotter. Leading Change.

• Outsource or divest noncore capabilities to free up resources that can be used to deepen core capabilities. Core Competencies also contribute substantially to the benefits a company’s products offer customers. • Develop an understanding of what capabilities its customers truly value. acquisitions and licensing arrangements that will further build the organization’s strengths in core areas. and invest accordingly to develop and sustain valued strengths. To develop Core Competencies a company must: • Isolate its key abilities and hone them into organizationwide strengths. • Encourage communication and involvement in core capability development across the organization. The litmus test of a Core Competency? It’s hard for competitors to copy or procure. • Compare itself with other companies with the same skills to ensure that it is developing unique capabilities. Methodology Common uses Core Competencies capture the collective learning in an organization. particularly of how to coordinate diverse production skills and integrate multiple technologies. • Pursue alliances. Such a Core Competency creates sustainable competitive advantage for a company and helps it branch into a wide variety of related markets. It embodies an organization’s collective learning. • Create an organizational road map that sets goals for competence building.Core Competencies Related topics Description • Core Capabilities • Key Success Factors A Core Competency is a deep proficiency that enables a company to deliver unique value to customers. They can be used to: • Design competitive positions and strategies that capitalize on corporate strengths. Understanding Core Competencies allows companies to invest in the strengths that differentiate them and set strategies that unify their entire organization. • Preserve core strengths even as management expands and redefines the business. 20 .

K. May 1990.. 47–50. pp. and Gary Hamel. and Kathleen Sommers-Luch. “How to Link Strategic Vision to Core Capabilities. Campbell. Prahalad. and C. Chris. pp.” Harvard Business Review.” Harvard Business Review. “Back Where We Belong. • Decide where to allocate resources. Hamel. pp. “Competency Models Develop Top Performance. Critelli.” Harvard Business Review. Intelligent Enterprise. Summer 1994. and Frederick G. Anders. “The Core Competence of the Corporation. 1997. 79–91. C.” Sloan Management Review. Zook. July 2006. Hilmer. April 2007. • Integrate the use of technology in carrying out business processes.• Unify the company across business units and functional units. • Enhance image and build customer loyalty. Quinn. 66–75. divestment and partnering decisions. Strategic Management and Core Competencies: Theory and Applications. • Widen the domain in which the company innovates. • Make outsourcing. pp. 47–54. Quinn.H. James Brian. Selected references Alai. and spawn new products and services. Michael J. James Brian. Quorum Books. pp. David. Paul J. International Thompson Business Press. • Invent new markets and quickly enter emerging markets. May 2005. Harvard Business School Press. 21 . Gary.” T + D. 43–45. pp. 67–81. 2002. Core Competency Based Strategy. “Finding Your Next Core Business. Competing for the Future. • Help employees understand management’s priorities. Free Press.K. Schoemaker. 1992. Fall 1992. Drejer. and improve the transfer of knowledge and skills among them. “Strategic Outsourcing.” Sloan Management Review. Diana Kramer. and Richard Montier. Prahalad. Andrew. 1994.

Information gathered through CRM programs often generates solutions to problems outside a company’s marketing functions. • Select the appropriate technology platform. Aggressively monitor participation of key personnel in the CRM program.Customer Relationship Management Related topics • • • • • Collaborative Commerce Customer Loyalty and Management Tools Customer Retention Customer Segmentation Customer Surveys Description Customer Relationship Management (CRM) is a process companies use to understand their customer groups and respond quickly—and at times. In addition. put measurement systems in place to track the Methodology 22 . Assess whether the benefits of the CRM information outweigh the expense involved. • Evaluate whether—and what kind of—CRM data can fix those pain points. Many companies have discovered that realigning the organization away from product groups and toward a customer-centered structure improves the success of CRM. instantly—to shifting customer desires. Calculate the value that such information would bring the company. such as supply chain management and new product development. CRM data also provide companies with important new insights into customers’ needs and behaviors. • Design incentive programs to ensure that personnel are encouraged to participate in the CRM program. where solutions would lead to superior financial rewards and competitive advantage. and calculate the cost of implementing it and training employees to use it. • Measure CRM progress and impact. CRM requires managers to: • Start by defining strategic “pain points” in the customer relationship cycle. These are problems that have a large impact on customer satisfaction and loyalty. allowing them to tailor products to targeted customer segments. CRM technology allows firms to collect and manage large amounts of customer data and then carry out strategies based on that information. Data collected through focused CRM initiatives help firms solve specific problems throughout their customer relationship cycle—the chain of activities from the initial targeting of customers to efforts to win them back for more.

. George S. and Werner Reinartz. Kumar. “Avoid the Four Perils of CRM. 1996. July/August 2004. and redirect spending accordingly. with Thomas Teal. February 2002. The CRM Handbook: A Business Guide to Customer Relationship Management. 2001. • Increase sales by systematically identifying and managing sales leads. Fred Reichheld.. Customer Relationship Management: A Databased Approach. Once the data are collected. Darrell K. Reichheld. 118–129. pp. • Design effective customer service programs. John Wiley & Sons. and Phil Schefter. Reichheld. Jill. Addison-Wesley Publishing Company. Rigby. The Loyalty Effect: The Hidden Force Behind Growth. • Improve customer retention. • Accurately gauge the return on individual promotional programs and the effect of integrated marketing activities. in real time if necessary.” Harvard Business Review. Day. “CRM Done Right. pp. Rigby. 23 Selected references . pp. V. “Which Way Should You Grow?” Harvard Business Review. Fred. • Generate more reliable sales forecasts. increasing their effectiveness. 24–26. Darrell K. 2005.. Harvard Business School Press. • Feed data on customer preferences and problems to product designers. Harvard Business School Press. Fred. • Enable sales reps to see the financial impact of different product configurations before they set prices. 2001. Common uses Companies can wield CRM to: • Gather market research on customers. November 2004. and Dianne Ledingham. 101–109.” Harvard Business Review. share the information widely with employees to encourage further participation in the program. Loyalty Rules! How Leaders Build Lasting Relationships in the Digital Age. and Lasting Value. Dyche. • Coordinate information quickly between sales staff and customer support reps.improvement in customer profitability with the use of CRM. Profits.

24 . A company can use Customer Segmentation as the principal basis for allocating resources to product development. This prioritization can help companies develop marketing campaigns and pricing strategies to extract maximum value from both high. Establish appropriate service options. service and delivery programs. their past behaviors or their demographic profiles. • Target segments according to their profit potential and the company’s ability to serve them in a proprietary way.and low-profit customers.Customer Segmentation Related topics Description • Customer Surveys • Market Segmentation • One-to-One Marketing Customer Segmentation is the subdivision of a market into discrete customer groups that share similar characteristics. • Measure performance of each segment and adjust the segmentation approach over time as market conditions change decision making throughout the organization. Customer Segmentation is most effective when a company tailors offerings to segments that are the most profitable and serves them with distinct competitive advantages. marketing and distribution programs to match the needs of each target segment. Companies that identify underserved segments can then outperform the competition by developing uniquely appealing products and services. • Determine the profit potential of each segment by analyzing the revenue and cost impacts of serving each segment. Methodology Common uses Companies can use Customer Segmentation to: • • • • Prioritize new product development efforts. service. Customer Segmentation requires managers to: • Divide the market into meaningful and measurable segments according to customers’ needs. • Invest resources to tailor product. marketing. Develop customized marketing programs. Customer Segmentation can be a powerful means to identify unmet customer needs. Choose specific product features.

Market Segmentation: How to Do It. 2004. October 2008. Gerald Berstell. and James Allen. How to Profit From It. Scott D.” MIT Sloan Management Review. Planning. 122–131. Theodore. 1996. Spring 2007. Butterworth-Heinemann. Selected references Christensen. “The Incumbent’s Advantage. American Marketing Association. Free Press. pp. Rob. Malcolm. Steve. 1994. Ian C. Prentice Hall Press. pp. Marketing Management: Analysis. Levitt. Segmentation and Positioning for Strategic Marketing Decisions. James H. “Rediscovering Market Segmentation. Philip. Implementation and Control. Markey.” Harvard Business Review. Don. 1999. February 2006. “Renewing Market Segmentation: Some New Tools to Correct Old Problems. 1986.. Free Press. and David Meer. Daniel. and Martha Rogers. “Finding the Right Job for Your Product. 111–121. McDonald. and Ian Dunbar. • Determine appropriate product pricing. MacMillan. 3–6. 1996. Cohen. Peppers. and Denise Nitterhouse.• Design an optimal distribution strategy. 595–612. Gale.” Harvard Management Update. Bradley T. Managing Customer Value: Creating Quality and Service That Customers Can See. The One to One Future: Building Relationships One Customer at a Time.” ESOMAR 2002 Congress Proceedings. Gerard du Toit. 38–47. Yankelovich.” Harvard Business Review. Kotler.. ESOMAR. and Larry Selden. pp. pp. 25 . Anthony. The Marketing Imagination. pp. Currency/ Doubleday. November 2006. Myers. Clayton M. and Paul Markowitz. “Find Your Sweet Spot.

g. and then recommend a decision or action. • Each decision has one individual who leads the process to develop a recommendation. otherwise they undermine speed and authority. These assignments should factor in the following: • Each decision should have only one Decider with singlepoint accountability. • Agree roles should be used sparingly. • Input: Inputers combine facts and judgment to provide input into a recommendation. Each person involved in the decision-making process should be assigned one of the five decision-making roles: • Recommend: Recommenders gather and assess the relevant facts. typically only in extraordinary circumstances (e. • Decide: Deciders make the ultimate decision and commit the organization to action. regulatory or legal issues). obtaining input from appropriate parties.Decision Rights Tools Related topics Description • Governance Roles • Job Descriptions • Organization Design Decision Rights Tools help companies to organize their decision making and execution by setting clear roles and accountabilities and by giving all those involved a sense of ownership of decisions: when to provide input. who should follow through and what is beyond their scope. Clear decision rights allow companies to cut through the complexity often clouding today’s global structures by ensuring that critical decisions are made promptly and well and result in effective actions. experience or access to resources that are so important for a good decision that it would be irresponsible for the decision maker not to seek their input. • Input roles should be assigned only to those with knowledge.. factoring in all relevant input. 26 Methodology . • Perform: Performers are accountable for making a decision happen once it’s been made. • Agree: Agreers formally approve a recommendation and can delay it if more work is required.

• Make faster decisions resulting in faster operational performance (e. Blenko. and different functions.. Karla L. pp.g. • Provide a common vocabulary to discuss decisions in a constructive manner across units. Roberto.” Harvard Business Review. such as those that often occur between the center versus business units. “What You Don’t Know About Making Decisions. Gary L. pp. June 2008. September 2001. “The Secrets to Successful Strategy Execution. C Mankins and Paul Rogers. pp. Rogers. David A. Common uses Decision Rights Tools allow companies to: • Eliminate decision bottlenecks. Marica. and Elizabeth Powers. 117–122. • Create a healthy debate on critical decisions. “Who Has the D? How Clear Decision Roles Enhance Organizational Performance. 108–116. but through processes that feel productive. Selected references 27 . June 2010. 2010. • Make higher-quality decisions.” Harvard Business Review. Martin. etc. and Michael A. “Make Better Decisions. November 2009. Michael C. pp.” Harvard Business Review. identify implementation issues and enable upfront planning. international roll out.• Consider soliciting input from those with perform roles in order to engage early.” Harvard Business Review. Mankins and Paul Rogers.” Harvard Business Review. with minimal frustration. 61–70. product development. pp. January 2006..). Marcia. Paul. Blenko. Harvard Business Press. • Have agility and flexibility in decision making and execution to respond to dynamic circumstances. Garvin. Thomas H. 55–62.. “The Decision Driven Organization. Davenport. global versus regional versus local units. and Marcia Blenko. Neilson. Decide & Deliver: Five Steps to Breakthrough Performance in Your Organization. 53–61. Michael.

Skillful downsizing should help a company emerge from challenging economic conditions in stronger shape. the ultimate goal should be to eliminate nonessential company resources while minimizing the negative impact on the remaining organization. In 2007. When downsizing proves unavoidable. Managers must calculate the present value of all costs and benefits associated with the cuts.Downsizing Related topics Description • Layoffs • Reengineering • Rightsizing In the face of slowing or declining sales. Successful downsizing requires managers to: • Evaluate the overall impact of downsizing. Investing in areas customers care about—while competitors are cutting back—helps position the company to take or sustain the lead once conditions 28 Methodology . according to the Bureau of Labor Statistics). lower employee productivity due to disorder or talent loss. restricted overtime hours. nearly one million employees lost their jobs in a mass layoff (50-plus employees) in the United States (an average of 180 workers in approximately 5. unpaid vacations and temporary plant closures. The number of layoff events in the United States in September 2008 was the highest since September 2001. Companies must be careful to avoid sending the wrong messages to employees. companies often downsize their employee base as a means of cutting costs to boost profitability. shareholders and the media. it often produces unintended side effects. Although downsizing is effective for significant cost reduction. including severance packages. The total cost of downsizing—including both financial and non-financial costs—must be taken into account.300 separate events. future rightsizing hiring costs and an inability to capitalize quickly on opportunities when the economy improves. Creative efforts to avoid downsizing include hiring freezes. such as damaged employee morale. eventual rehiring expenses. poor public relations. Downsizing can be effective if implemented appropriately. salary cuts or freezes. shortened workweeks. future rightsizing costs and the lost opportunity costs associated with not having the appropriate manpower to accelerate out of the downturn.

51. The value created from downsizing should exceed the cost of lower employee morale and potential damage to the company’s reputation. Resizing the Organization: Managing Layoffs. Acquisitions. “Keeping Your Headcount When All About You Are Losing Theirs.. Free Press. Carter. Pfeiffer.” Sloan Management Review. Divestitures. Common uses • Reduce costs. Winter 1998. 2. • Signal that the company is taking proactive steps to adjust to changing business needs. and Joao Baptista. and Closings. Charlie O. • Develop a smooth downsizing process. Blackwell. 259–276. Spreitzer. No.improve. and Aneil K. John Wiley & Sons. Kenneth P. 83–95. • Take advantage of cost synergies after a merger. Mishra. De Meuse. Nyberg. and Anthony J. 1995. Charging Back Up the Hill: Workplace Recovery After Mergers. 1999. Cooper.” Academy of Management Journal. The Organization in Crisis: Downsizing. pp. Burke. Dwight L. pp. Vol. • Release the least-productive resources. Selected references 29 . It is crucial that managers invest aggressively in upfront planning for the job cuts. 2008. “Preserving Employees Morale During Downsizing. 2003. Mitchell Lee. Restructuring. and Mitchell Lee Marks. Tony... Mishra.. Other important activities are training managers to conduct layoffs and assisting former employees in their job searches. Gretchen M. Cary L. • Rightsize resources relative to market demand. Gertz. 2000. Marks. and Downsizings. A company typically forms a committee to determine the appropriate level of downsizing and creates a process that takes into account the best interests of the company and the shareholders. The Aftermath of Reengineering: Downsizing and Corporate Performance. Karen E. Trevor.. and Privatization. 2002. and Ronald J. Grow to Be Great: Breaking the Downsizing Cycle. Haworth Press.

ERM examines decisions through a risk lens. • Line managers embed risk management principles into everyday business decisions and activities. • The risk organization. strategic. all parts of the organization contribute vital perspectives: • Senior executives determine the level of risk a company is willing to take. ERM considers everything from credit risk to operational and supply chain risk. in cooperation with line managers. Companies are using the tool to take a more valuefocused (rather than loss-focused) approach to risk management amid increasing volatility and uncertainty. They express their risk appetite in concrete terms such as earnings volatility and potential losses of capital. financial and operational risks) on the organization. continuously examines the potential impact of various risks (e. • Managers separate risk-taking and risk-monitoring responsibilities to avoid potential conflicts of interest.Enterprise Risk Management Related topics • • • • Risk Governance Scenario and Contingency Planning Strategic Planning Supply Chain Management Description Enterprise Risk Management (ERM) is an approach to making strategic and business decisions after considering major risks and opportunities.g. ERM now is also used to help companies decide between alternative business lines and strategic growth options. business. To build an Enterprise Risk Management system. They decide whether to avoid the exposure completely. equity or assets.. Methodology 30 . effectively mitigate it (for example. identifying creative approaches to succeed in a world of uncertainty. Originally focused simply on managing the losses and downside. through a transfer to another party) or use the company risk insight and risk management capabilities as an opportunity to generate extra profit from the exposure.

Goldstein. Formalize risk governance. The Black Swan: The Impact of the Highly Improbable. Simkins (eds). 2009. Determine which opportunities are worth pursuing. January 2009. “The Six Mistakes Executives Make in Risk Management. Lam.” Harvard Business Review. and Stephen Wagner. 2010. Allow regulators and debt-rating agencies to analyze a company’s risk management processes. Mark L. Frigo. Taleb.Common uses Companies use Enterprise Risk Management to: • • • • • Take a proactive approach to protecting assets and organizations. 2008. Fundamentals of Enterprise Risk Management: How Top Companies Assess Risk. Enterprise Risk Management: From Incentives to Controls. Hubbard. Wiley. Wiley. John. 2003. “Strategic Risk Management: The New Core Competency. http://hbr. James. Daniel G. 2010. The Failure of Risk Management: Why It’s Broken and How to Fix It. AMACOM. Enterprise Risk Management: A Methodology for Achieving Strategic Objectives.” Harvard Business Review. Optimize returns on capital. Frederick. Douglas W. Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives. 2009. John J. 78–81. Selected references Fraser. Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise. Manage Exposure. pp. and Betty J. Taleb. Nassim Nicholas. October 2009. and Mark W. 31 . Hampton. Spitznagel.org. Wiley. and Seize Opportunity. 2007. Random House. Funston. Nassim N. Gregory.. Monahan. Wiley. Wiley.

It increases the generation of useful.Knowledge Management Related topics • • • • Groupware Intellectual Capital Management Learning Organization Managing Innovation Description Knowledge Management develops systems and processes to acquire and share intellectual assets. • Improve and accelerate the dissemination of knowledge throughout the organization. 32 . Knowledge Management seeks to accumulate intellectual capital that will create unique core competencies and lead to superior results. In addition. actionable and meaningful information and seeks to increase both individual and team learning. Knowledge Management requires managers to: • Catalog and evaluate the organization’s current knowledge base. Methodology Common uses Companies use Knowledge Management to: • Improve the cost and quality of existing products or services. • Encourage faster and even more profitable innovation of new products. • Codify new knowledge and turn it into tools and information that will improve both product innovation and overall profitability. This intellectual capital is the key that will give the company a competitive advantage with its targeted customers. • Assess the impact of such systems on leadership. culture and hiring practices. Knowledge Management maintains that successful businesses are a collection not of products but of distinctive knowledge bases. • Strengthen and extend current competencies through intellectual asset management. • Invest in systems and processes to accelerate the accumulation of knowledge. • Apply new knowledge to improve behaviors. • Determine which competencies will be key to future success and what base of knowledge is needed to build a sustainable leadership position therein. it can maximize the value of an organization’s intellectual base across diverse functions and disparate locations.

The Fifth Discipline: The Art and Practice of the Learning Organization. Kurt Matzler. Currency/Doubleday. Snyder.. Intelligent Enterprise. 2005. 2002. Knowledge Management in Theory and Practice. Ichijo. Working Knowledge: How Organizations Manage What They Know. Kamiz.. Jones. Quinn. Butterworth-Heinemann. Butterworth-Heinemann. Thomas H. 2010. Knowledge Management. Oxford University Press. Harvard Business School Press. Davenport. 2005.). and Ikujiro Nonaka. Todd R. Etienne.. revised. 1998. Carl. Organizing Business Knowledge: The MIT Process Handbook. Malone. Chris. Thomas A.. and Yukika Awazu. Knowledge Creation and Management: New Challenges for Managers. James Brian. Peter M. Palgrave Macmillan. and George A. Free Press. Currency. Firestone. Butterworth-Heinemann. Birgit. Kevin Crowston. 2d ed. McElroy. Joseph M. 2006. Richard McDermott. Learning to Fly: Practical Lessons from One of the World’s Leading Knowledge Companies.).Selected references Collison. Engaged Knowledge Management: Engagement with New Realities. Introduction to Knowledge Management: KM in Business. Thomas W. Kevin C. and Laurence Prusak. Desouza. The Future of Knowledge Management. 2006. and Geoff Parcell. Kazuo. Stewart. Frappaolo. and Hans Hinterhuber (eds. 2003. Capstone Publishing. 2006. and Thomas P. Harvard Business School Press. 2003. The Learning Layer: Building the Next Level of Intellect in Your Organization. 2005. Wenger. Cultivating Communities of Practice. Palgrave Macmillan. 2006. 1992. Senge. MIT Press. 1997. Dalkir. and Mark W. Groff. Herman (eds. Palgrave Macmillan. Key Issues in the New Knowledge Management. 2d ed. 33 . 2003. Steven D. Flinn. Renzl.. and William M. Capstone. Intellectual Capital: The New Wealth of Organizations.

Acquisitions occur when a larger company takes over a smaller one. A merger is considered a success if it increases shareholder value faster than if the companies had remained separate. Because corporate takeovers and mergers can reduce competition. acquirers need to perform rigorous due diligence—a review of the targeted company’s assets and performance history—before the purchase to verify the company’s standalone value and unmask problems that could jeopardize the outcome. Most mergers and acquisitions are friendly. and trimming the workforce. • Customizing the integration plan to address specific challenges: Act quickly to capture economies of scale. a merger typically involves two relative equals joining forces and creating a new company. Methodology Common uses Mergers are used to increase shareholder value by: • Reducing costs by combining departments and operations. redefine a business model and sacrifice speed to get the model right. the merged company should be operating and contributing value. • Aggressively implement the integration plan: by Day 100.Mergers and Acquisitions Related topics Description • Merger Integration Teams • Strategic Alliances Over the past decade. but a hostile takeover occurs when the acquirer bypasses the board of the targeted company and purchases a majority of the company’s stock on the open market. • Designing the new organization and operating plan. Mergers and Acquisitions (M&As) have reached unprecedented levels as companies use corporate financing strategies to maximize shareholder value and create a competitive advantage. they are heavily regulated. Successful integration requires understanding how to make trade-offs between speed and careful planning and involves: • Setting integration priorities based on the merger’s strategic rationale and goals. often requiring government approval. To increase chances of the deal’s success. • Articulating and communicating the deal’s vision by merger leaders. such as understanding brand positioning and product growth opportunities. 34 .

• Increasing revenue by absorbing a major competitor and winning more market share; • Cross-selling products or services; • Creating tax savings when a profitable company buys a money-loser; • Diversifying to stabilize earning results and boost investor confidence.

Selected references

Bruner, Robert F., and Joseph R. Perella. Applied Mergers and Acquisitions. Wiley Finance, 2004. Frankel, Michael E.S. Mergers and Acquisitions Basics: The Key Steps of Acquisitions, Divestitures, and Investments. John Wiley & Sons, 2005. Gaughan, Patrick A. Mergers: What Can Go Wrong and How to Prevent It. John Wiley & Sons, 2005. Gole, William J., and Paul J. Hilger. Corporate Divestitures: A Mergers and Acquisitions Best Practices Guide. John Wiley & Sons, 2008. Harding, David, and Sam Rovit. Mastering the Merger: Four Critical Decisions That Make or Break the Deal. Harvard Business School Publishing Corporation, 2004. Harding, David, Sam Rovit, and Alistair Corbett. “Avoid Merger Meltdown: Lessons from Mergers and Acquisitions Leaders.” Strategy & Innovation, September 15, 2004, pp. 3–5. Kanter, Rosabeth Moss. “Mergers That Stick.” Harvard Business Review, October 2009, pp. 121–125. Lajoux, Alexandra Reed, and Charles M. Elson. The Art of M&A Due Diligence: Navigating Critical Steps and Uncovering Crucial Data, 2d ed. McGraw-Hill, 2010. Lovallo, Dan, Patrick Viguerie, Robert Uhlaner, and John Horn. “Deals Without Delusions.” Harvard Business Review, December 2007, pp. 92–99. Miller, Edwin L. Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide. Wiley, 2008. Rosenbaum, Joshua, Joshua Pearl and Joseph R. Perella. Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions. Wiley, 2009. Schweiger, David M. M&A Integration: A Framework for Executives and Managers. McGraw-Hill, 2002.

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Mission and Vision Statements
Related topics Description
• Corporate Values Statements • Cultural Transformation • Strategic Planning A Mission Statement defines the company’s business, its objectives and its approach to reach those objectives. A Vision Statement describes the desired future position of the company. Elements of Mission and Vision Statements are often combined to provide a statement of the company’s purposes, goals and values. However, sometimes the two terms are used interchangeably. Typically, senior managers will write the company’s overall Mission and Vision Statements. Other managers at different levels may write statements for their particular divisions or business units. The development process requires managers to: • Clearly identify the corporate culture, values, strategy and view of the future by interviewing employees, suppliers and customers; • Address the commitment the firm has to its key stakeholders, including customers, employees, shareholders and communities; • Ensure that the objectives are measurable, the approach is actionable and the vision is achievable; • Communicate the message in clear, simple and precise language; • Develop buy-in and support throughout the organization.

Methodology

Common uses

Mission and Vision Statements are commonly used to: Internally • Guide management’s thinking on strategic issues, especially during times of significant change; • Help define performance standards; • Inspire employees to work more productively by providing focus and common goals; • Guide employee decision making; • Help establish a framework for ethical behavior.

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Externally • Enlist external support; • Create closer linkages and better communication with customers, suppliers and alliance partners; • Serve as a public relations tool.

Selected references

Abrahams, Jeffrey. The Mission Statement Book: 301 Corporate Mission Statements from America’s Top Companies. Ten Speed Press, 2004. Collins, Jim, and Jerry I. Porras. “Building Your Company’s Vision.” Harvard Business Review, September/October 1996, pp. 65–77. Collins, Jim, and Jerry I. Porras. Built to Last: Successful Habits of Visionary Companies. Collins Business, 2004. Horan, James T. The One Page Business Plan: Start with a Vision, Build a Company! One Page Business Plan Company, 1998. Jones, Patricia, and Larry Kahaner. Say It and Live It: The 50 Corporate Mission Statements That Hit the Mark. Currency/Doubleday, 1995. Kotter, John P. “Leading Change: Why Transformation Efforts Fail.” Harvard Business Review, March/April 1995, pp. 59–67. Kotter, John P., and James L. Heskett. Corporate Culture and Performance. Free Press, 1992. Nanus, Burt. Visionary Leadership. Jossey-Bass, 1995. O’Hallaron, Richard, and David O’Hallaron. The Mission Primer: Four Steps to an Effective Mission Statement. Mission Incorporated, 2000. Raynor, Michael E. “That Vision Thing: Do We Need It?” Long Range Planning, June 1998, pp. 368–376. Wall, Bob, Mark R. Sobol, and Robert S. Solum. The MissionDriven Organization. Prima Publishing, 1999. Zimmerman, John, with Benjamin Tregoe. The Culture of Success: Building a Sustained Competitive Advantage by Living Your Corporate Beliefs. McGraw-Hill, 1997.

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Gain access to valuable new ideas. Ideas also are exported to businesses that can put them to better use. quality and cost of innovation. Establish incentives and processes to assess objectively the fair market value of innovations. raise additional cash and strengthen relationships with trading partners. This approach allows the business to refocus its own innovation resources where it has clear competitive advantages. joint ventures. • Promote faster. vendors and even competitors—Open Innovation enables the laws of comparative advantage to drive the efficient allocation of R&D resources. higher-quality ideas from a wide array of world-class experts to improve the speed. • Increase innovation imports. licensing and strategic alliances. Open Innovation requires companies to: • Focus resources on its core innovation advantages. complement core innovation advantages. • Improve the circulation of innovation ideas. advancing new ideas through the use of tools such as partnerships. • Decide quickly and efficiently whether to buy or sell patents and other intellectual capital. By reaching beyond corporate borders. Allocate resources to the opportunities with the best potential to strengthen the core businesses. • Maximize the productivity of new product development without increasing R&D budgets. Methodology Common uses Companies use Open Innovation to: • Clarify core competencies. Develop information systems to capture insights. • Increase innovation exports. By collaborating with outsiders—including customers. a company can import lowercost. improve the company’s collaborative abilities and build its reputation as an innovative partner. 38 . reduce R&D risks and raise the returns on innovation capital. Carefully structure joint ventures and strategic alliances to protect the company’s rights.Open Innovation Related topics Description • • • • Collaborative Innovation Crowdsourcing New Product Development Open-Market Innovation Open Innovation applies the principles of free trade to innovation. higher-quality innovations. minimize duplicative efforts and advance teamwork.

Sirkka Jarvenpaa. and Mohanbir Sawhney. pp. Anchor. and Ian C. Satish. “Productive Friction: How Difficult Business Partnerships Can Accelerate Innovation. Garman. October 2002. Open Business Models: How to Thrive in the New Innovation Landscape. “How Open Innovation Can Help You Cope in Lean Times. Christian and Karl Ulrich. Raynor. Henry W. The Global Brain: Your Roadmap for Innovating Faster and Smarter in a Networked World. March 2006. and John Seely Brown. Surowiecki. Rigby. and Chris Zook. Henry William. February 2005. 43–49. and Nabil Sakkab.K. C. Innovation Tournaments: Creating and Selecting Exceptional Opportunities. Chesbrough. The Future of Competition: Co-Creating Unique Value with Customers. and Andrew R. Harvard Business School Press. 39 . 2009. 68–76. Larry. Prahalad. 2003.” MIT Sloan Management Review. “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation. pp. 2006. James.. “Manage CustomerCentric Innovation—Systematically. Hagel. Davenport.Selected references Chesbrough. “Toward an Innovation Sourcing Strategy. 2003. 2004. Wharton School Publishing. 82–91. pp. Harvard Business School Press. 80–89. The Wisdom of Crowds. Christensen. Terwiesch. Nambisan. Jane C. Henry William. and Thomas H. 58–66. Clayton M. December 2009. Chesbrough. pp.. pp. Harvard Business School Press. Summer 2003. “Open-Market Innovation. 2007..” Harvard Business Review.” Harvard Business Review. April 2006. John. Huston. 108–116. Selden. and Venkat Ramaswamy. Harvard Business School Press. III.” Harvard Business Review. and Michael E.” Harvard Business Review. 2005. pp.. Linder.” Harvard Business Review. Open Innovation: The New Imperative for Creating and Profiting from Technology. Darrell K. Harvard Business School Press. Larry. MacMillan. The Innovator’s Solution: Creating and Sustaining Successful Growth.

a company can access the state of the art in all of its business activities without having to master each one internally. Outsourcing likely offers cost advantages if a vendor can realize economies of scale. • Choose an Outsourcing partner and contract the relationship. • Evaluate the financial impact of Outsourcing. Many companies find that Outsourcing reduces cost and improves performance of the activity. Third parties that specialize in an activity are likely to be lower cost and more effective. In most cases. given their focus and scale. The contract should include clearly established performance guidelines and measures. • Assess the nonfinancial costs and advantages of Outsourcing. Benefits include the ability to leverage the outside expertise of a specialized outsourcer and the freeing up of resources devoted to noncore business activities. Managers will also want to qualitatively assess the benefits and risks of Outsourcing. take the following steps: • Determine whether the activity to outsource is a core competency. When Outsourcing. A key risk is the growing dependence a company might place on an outsourcer. Through Outsourcing. Contracting third parties enables a company to focus its efforts on its core competencies. thus limiting future flexibility.Outsourcing Related topics • • • • • Collaborative Commerce Core Capabilities Offshoring Strategic Alliances Value-Chain Analysis Description When Outsourcing. A complete financial analysis should include the impact of increased flexibility and productivity or decreased time to market. Methodology 40 . a company uses third parties to perform noncore business activities. it is unwise to outsource something that creates a unique competitive advantage. Candidates should be qualified and selected according to both their demonstrated effectiveness and their ability to work collaboratively.

and Karl B. McGraw-Hill.. 132–139. Manrodt. Marcia. “Outsourcing Innovation: The New Engine of Growth. Vitasek. 2010. Inc. and Scott Wilson. Instill operational discipline. capital and time—to focus on core competencies. James Brian. 2006. Vashistha. Smartsourcing: Driving Innovation and Growth Through Outsourcing. Challenges. 13–28. Mivar Press. Robert E. 2009. “Strategic Sourcing: From Periphery to the Core. AMACOM. and Opportunities. Robinson. The Outsourcing Institute. Kevin Desouza.com. Selected references Brown. The Services Shift: Seizing the Ultimate Offshore Opportunity. Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiatives. FT Press. and Stephen Phillips. Atul. Increase manufacturing productivity and flexibility. particularly under uncertainty. and Carlo Bonifazi. and Suresh Sharma.Common uses Companies use Outsourcing to: • • • • • Reduce operating costs. and Ajay Sharma.” Sloan Management Review. Encourage use of best demonstrated practices for internal activities. 2006. www. Power.. February 2005. 2006. 41 . pp. 2005. Global Outsourcing: Executing an Onshore.. Maurice. Gottfredson.. Mark J. Douglas. The Outsourcing Handbook: How to Implement a Successful Outsourcing Process. Thomas M. Leverage the expertise and innovation of specialized firms. Koulopoulos. Kennedy. and Tom Roloff. Rudy Puryear.” Harvard Business Review. Mark. Kogan Page. pp. • Release resources—people. and Avinash Vashistha. Vested Outsourcing: Five Rules That Will Transform Outsourcing. Palgrave Macmillan. Mike Ledyard. Ravi Kalakota. Nearshore or Offshore Strategy.outsourcing. Platinum Press. Kate. Summer 2000. 1999. Quinn. The Offshore Nation: Strategies for Success in Global Outsourcing and Offshoring. 2005. John Wiley & Sons. The Black Book of Outsourcing: How to Manage the Changes. Greaver. • Avoid capital investment.

the company’s prices and promotions. product availability. The modeling allows companies to use pricing as a powerful profit lever. develop pricing and promotion strategies. modeling results and insights helps to forecast demand. and tactics that manage all elements impacting profitability. • Clarify the business’s value proposition and set strategic rules to guide the modeling process. competitors’ prices. Practitioners should: • Select the preferred optimization model and determine desired outputs and required inputs. then combine that data with information on costs and inventory levels to recommend prices that will improve profits. • Load. Price Optimization Models can be used to tailor pricing for customer segments by simulating how targeted customers will respond to price changes with data-driven scenarios. which often is underdeveloped. control inventory levels and improve customer satisfaction. Price Optimization Models should factor in three critical pricing elements: pricing strategy. Methodology 42 . economic conditions. the value of the product to both buyer and seller.Price Optimization Models Related topics Description • Demand-Based Management • Pricing Strategy • Revenue Enhancement Price Optimization Models are mathematical programs that calculate how demand varies at different price levels. run and revise the model. • Collect historical data. Given the complexity of pricing thousands of items in highly dynamic market conditions. seasonal conditions and fixed and variable cost details. • Monitor results and upgrade data input to continuously improve modeling accuracy. including product volumes. • Establish decision-making processes that incorporate modeling results without alienating key decision makers.

Palgrave Macmillan. Reed. 2006. and John Hogan. products bundled together in special promotions and loss leaders. Six Sigma Pricing: Improving Pricing Operations to Increase Profits. Pricing and Revenue Optimization.. Robert. pp. Boyd. ManMohan S. John Wiley & Sons. specialty retailers and mass merchants. 2005. Selected references Baker. hotels. Theodore. promotional pricing and markdown (or discount) pricing: • Initial price optimization works well for companies with a stable base of long life-cycle products—grocery stores. Kinni. 2008. and Navdeep S. 4th ed. FT Press. Thomas T. Andrew. Prentice Hall. Nagle. Holden. Pricing With Confidence: 10 Ways to Stop Leaving Money on the Table. and Mark Burton. • Markdown optimization helps businesses selling short lifecycle products subject to fashion trends and seasonality— airlines. Wiley. 4–6. Sodhi. 2007. 43 . office-supply stores and commodities manufacturers. “Setting the Right Prices At the Right Time. • Promotional price optimization helps set temporary prices to spur sales of items with long lifecycles—newly introduced products. 2007.Common uses Price Optimization Models help businesses determine initial pricing. The Future of Pricing: How Airline Ticket Pricing Has Inspired a Revolution. Sodhi. E. drug chains. Stanford Business Books. Ronald J. Phillips. 2005.. December 2003. Pricing on Purpose: Creating and Capturing Value. The Strategy and Tactics of Pricing: A Guide to Growing More Profitably.” Harvard Management Update.

consider adding new features suggested by customers and continuously improve the prototype with repeated testing to improve quality and features. Methodology 44 . reducing postlaunch risks that the new product fails to meet customer needs. • Test. more effective and lower-cost method of designing and testing an innovation hypothesis before the product launch. Instead of the traditional approach—building expensive. It creates real-world tests by quickly putting models in front of customers and then making improvements based on their responses. nearly complete archetypes before testing them with customers— Rapid Prototyping uses digital simulations and simple models to test customer reactions quickly and inexpensively. The methodology reduces the design cycle time and enables multiple tests on a design with less expense. • Design the fastest.Rapid Prototyping Related topics • • • • Computer-Aided Design Design Thinking Discovery-Driven Innovation Managing Innovation Description Rapid Prototyping is a faster. their reactions generate useful information that can be rapidly incorporated in the product’s design. accelerating an innovation’s time to market. • Determine what hypotheses must be tested before making substantial investments. Because the models give customers more of a real-world experience. lowest-cost methods for testing hypotheses. learn and modify. development teams should: • Identify the most important and risky elements of an innovation project. Redesign prototypes based on customer reactions. To build a Rapid Prototype system.

” Harvard Business Review. Stefan. 2006. 2009. Harvard Business School Press. Alan. pp. Wiley. Rapid Manufacturing: An Industrial Revolution for the Digital Age. Selected references Brown. 45 . CRC Press. McGrath. 74–81.” MIT Sloan Management Review. Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity. Hopkinson. “Customers as Innovators: A New Way to Create Value. MacCormack. 84–92. pp. freeing up development teams to conduct testing that’s more thorough and to explore more ideas. April 2002. 2007. Thomke. Rapid Prototyping and Engineering Applications: A Toolbox for Prototype Development. MacMillan. Tim. and Eric von Hippel. and Philip Dickens. Winter 2001. Rita Gunther. helping to ensure that a product is delivered on time and on budget. “Product-Development Practices That Work: How Internet Companies Build Software. June 2008. Richard Hague. Liou. “Design Thinking. • Reduce risks of failing to meet customer needs by incorporating customer feedback early in the product development cycle. 75–84.” Harvard Business Review. pp. and Ian C. • Lower innovation costs with less costly prototypes. Frank W.Common uses Rapid Prototyping is used to: • Speed innovation through real-world testing before the product launch. Neil.

• Reach out to investors and suppliers to learn what drives their loyalty. Methodology Net Promoter® is a registered trademark of Bain & Company. Fred Reichheld and Satmetrix Systems. planning and budgeting systems. and track them rigorously. Loyalty programs measure and track the loyalty of those groups. Satisfaction and Loyalty Management quantifiably links financial results to changes in retention rates. Inc. The most effective approaches distinguish mere satisfaction from true loyalty. such as high service fees and discounts given only to new customers. diagnose the root causes of defection among them and develop ways not only to boost their allegiance but turn them into advocates for the company. they ask current customers how likely they would be to recommend the company to a friend or a colleague. • Revise policies that drive short-term results at the expense of long-term loyalty. maintaining that even small shifts in retention can yield significant changes in company profit performance and growth. • Develop new programs to reduce customer and employee churn rates. • Systematically communicate survey feedback throughout the organization. • Build loyalty and retention targets into the company’s incentive. • Identify the few dimensions of performance that matter most to customers and employees. and frontline employees whether they believe the organization deserves their loyalty. 46 . employees and investors.. • Benchmark current loyalty levels against those of competitors. A comprehensive Satisfaction and Loyalty Management program requires companies to: • Regularly assess current loyalty levels through surveys and behavioral data. Inc.Satisfaction and Loyalty Management Related topics • • • • • Customer and Employee Surveys Customer Loyalty and Retention Customer Relationship Management Net Promoter® Scores Revenue Enhancement Description Loyalty Management tools grow a business’s revenues and profits by improving retention among its customers.

pp. • Improve long-term financial performance and shareholder value. Reichheld. 47 . pp. 4–12.” Optimize. Matthew. Brooks. Fred. 32–42. 73–78. and capture a larger share of their business. • Generate sales growth by increasing referrals from customers and employees. July/August 2010. pp. and Dr. “The Value of Loyalty.” Harvard Business Review. Reichheld. 116–122. Loyalty Rules: How Today’s Leaders Build Lasting Relationships. Dixon. pp. Selected references Dinsdale. • Strategically align the interests and energies of employees. Winter 2006.” Harvard Business Review. and decrease recruitment and training costs. Jossey-Bass.Common uses Well-executed Satisfaction and Loyalty Management programs enable companies to: • Build lasting relationships with customers who contribute the most to profitability. Reichheld. V. Owen. “How Valuable Is Word of Mouth. “The Microeconomics of Customer Relationships.” Harvard Business Review. The Ultimate Question. and Nicholas Toman. suppliers and investors in a self-reinforcing cycle. Richard. 139–146. “Stop Trying to Delight Your Customers. • Improve productivity. July 2002. Fred. Scoring Points: How Tesco Continues to Win Customer Loyalty. J. knowledge and relationships are essential to superior performance. Werner. customers. Kumar. 2008. Jim Taylor. December 2003. Terry Hunt. pp. J. and Laura L. and Robert P. Reichheld. Kogan Page. pp. Humby. • Attract and retain employees whose skills. “The Mismanagement of Customer Loyalty. “The One Number You Need to Grow. Andrew Peterson. Kumar.. Leone. October 2007. 46–54. Reinartz. Karen Freeman. Harvard Business School Press. and Tim Phillips. Answering the Ultimate Question: How Net Promoter Can Transform Your Business. 2008. April 2003. Fred. Harvard Business School Press. Fred. and V.” MIT Sloan Management Review. 2006. Scott. Clive. 2d ed.” Harvard Business Review. 2003.

• Identify the current assumptions and thought processes of key decision makers. shared experience. • Turn long-range planning into a vital. • Be prepared to change course if necessary. • Develop action plans based on either the most promising solutions or the most desirable outcome the company seeks. • Identify key levers that can influence the company’s future course. yet plausible. scenarios. • Develop a clearer view of the future. • Incorporate globalization and change management into strategic analysis. Methodology Common uses By using Scenario and Contingency Planning. managers can brainstorm together and challenge their assumptions in a nonthreatening. 48 . • Monitor events as they unfold to test the company’s strategic direction. a company can: • Achieve a higher degree of organizational learning. By raising and testing various “what-if” scenarios. • Create varied. Scenario and Contingency Planning allows management to pressure-test plans and forecasts and equips the company to handle the unexpected. Scenario and contingency plans avoid the dangers of simplistic. one-dimensional or linear thinking. • Test the impact of key variables in each scenario. Contingency Planning assesses what effect sudden market changes or business disruptions might have on a company and devises strategies to deal with them. Key steps in a Scenario and Contingency Planning process are: • Choose a time frame to explore. hypothetical environment before they decide on a certain course of action. • Raise and challenge both implicit and widely held beliefs and assumptions about the business and its strategic direction. It examines the outcomes a company might expect under a variety of operating strategies and economic conditions.Scenario and Contingency Planning Related topics • • • • • Crisis Management Disaster Recovery Groupthink Real-Options Analysis Simulation Models Description Scenario Planning allows executives to explore and prepare for several alternative futures.

. Pfeiffer. Applied Strategic Planning: An Introduction. 49 . and How to Prevent Them. Selsky. Kees. and Christopher W. 139–150. Schwartz. January 1. 633–647. Timothy N. Wack. Goodstein. Leonard D. Rafael. Nolan. Fahey.” Sloan Management Review. “Scenarios: Shooting the Rapids. 2005. John Wiley & Sons. Currency/Doubleday. 2d ed. George Burt. November 2003. Scenarios: The Art of Strategic Conversation. 2008. and Theo Postma. Liam. Handfield. The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company. and Kees van der Heijden. Randall (eds. Schoemaker. pp. George Cairns. John Wiley & Sons. Robert B. Jennifer Blackhurst. Debra. pp. Kees. 2010. “18 Ways to Guard Against Disruption. 46–53. pp. 2002. 20–21. Scenario Planning: The Link Between Future and Strategy. Leonard. Harvard Business School Press. Craighead. 25–40. and Jeanette Goodstein. 2006. Peter. 2009. Paul J. Elkins. John Wiley & Sons. Predictable Surprises: The Disasters You Should Have Seen Coming. pp. Fuld. Winter 1995. Business Planning in Turbulent Times: New Methods for Applying Scenarios.Selected references Bazerman. November/December 1985. Max H. Scenario Planning: Managing for the Future.. Gill. 2d ed. “Be Prepared. 1997. 2005. The Sixth Sense: Accelerating Organizational Learning with Scenarios. and Robert M. Watkins. Ramirez. and Michael D. Pierre.” European Management Journal. Lindgren. John W. 2004. 1996. 2d ed. Mats. “Scenario Planning: A Tool for Strategic Thinking.). John Wiley & Sons. van der Heijden.” Harvard Business Review. and Hans Bandhold. Bood. pp.H. Ron Bradfield. van der Heijden.” Harvard Business Review. and George Wright. Robert.” Supply Chain Management Review. Ringland. Earthscan Publications. “Strategic Learning with Scenarios. Learning from the Future: Competitive Foresight Scenarios. 2d ed. Palgrave Macmillan. December 1997.

Because of the need of every corporate department for finance and human services. Despite the success of Shared Service Centers. some SSC pioneers are moving to variations on the model: outsourcing back-office operations to a third-party provider. Many of the savings come from standardizing technology and processes on a national and regional basis. companies can eliminate redundant activities and improve efficiency. • Reengineer systems: The first cost savings usually come from reduced headcounts and redesigned processes. services and customer satisfaction. making it easier to provide support for multiple business units.Shared Service Centers Related topics • • • • • Joint Ventures Offshoring Outsourcing Performance Improvement Strategic Partnerships Description Shared Service Centers (SSCs) reduce costs by consolidating one or more back-office operations used by multiple divisions of the same company—such as finance. these functions offer a common opportunity for an SSC model. • Win buy-in from departments that will use SSC. By creating a standalone or semi-autonomous Shared Service Center. • Communicate clear vision and early successes by top management. reduce personnel and improve the speed and quality of service. information technology. customer service and human resources—into a shared operation. Methodology 50 . A successful move to a Shared Service Center model requires a carefully planned and managed transition. The transition should: • Standardize processes before the shift. and consolidating and moving SSCs to countries with lower labor costs. • Consolidate processes and people without losing key employees and disrupting services.

1999. Robert E. Shared Services: Mining for Corporate Gold. Lusk. Daniel C. • Freeing up employees to spend more time and resources on their core jobs. Harmer. “Shared Services: Getting it Right.. 2005. Gower Publishing Limited. Dunleavy. Peter A. and Martin Fahy. Kris. Financial Times Management. 51 . Donniel S. Robert Cooke. Shared Services: Adding Value to the Business Units. Shared Service Centres: Delivering Value from Effective Finance and Business Processes. Tom Olavi. and Tony Williams. John Wiley & Sons. Quinn. • Capturing economies of scale. Selected references Bangemann. 2000. FT Press. 2003. Schulman.. they also help companies respond to the marketplace and pursue rapid growth strategies by: • Delivering higher-quality service and improved customer satisfaction.com. Bergeron. 2003.Common uses Shared Service Centers are used not only to improve cost savings. http://www. Bryan. Reilly.misweb. Gower Publishing Limited. • Increasing standardization and use of leading-edge technologies. Kennedy. and Ajay Sharma. and Andrew Kris. 2009.” MIS Magazine. Andrew. • Enabling rapid integration of new acquisitions. Melchior. Shared Services: A Manager’s Journey. John Wiley & Sons. John Wiley & Sons. 2003. Barbara. How to Get Best Value from HR: The Shared Services Option. Jr. and James S. Financial Times Prentice Hall. Tham.. • Providing flexibility to add quickly new business units and expand geographically. 2008. February 2005. Essentials of Shared Services. The Services Shift: Seizing the Ultimate Offshore Opportunity. Shared Services in Finance and Accounting. John R. Martin J.. Irene.

• Promote the new tools. Prioritize the four primary purposes and determine which Social Media tools to apply to which purposes in collaboration with which partners. • Develop testing and learning capabilities. Use customer feedback to improve services and increase loyalty. Develop insights into customer behaviors and needs with research and analytics. • Decide which additional tools are most valuable. Methodology 52 . friends. commerce (selling products directly and getting referrals).Social Media Programs Related topics • • • • Blogs Multimedia Chat Rooms Online Communities Social Gaming Networks Description Social Media Programs allow individuals and organizations to interact with their employees. To use Social Media effectively. Social Media is rapidly changing and is used for four primary purposes: communication (driving awareness. collaboration (sharing ideas and getting feedback) and communities (fostering connection with the company and within customer and employee groups). employees and other targeted audiences. Determine what they are saying about you. sharing content and providing customer service). make purchases or receive advice from the company about using the product. Raise awareness of new tools with customers. • Integrate targeted messages. • Deploy Social Media tools across all aspects of the customer experience. customers and partners electronically across a range of devices. managers need to take the following steps: • Understand what Social Media tools your customers are using. Social Media options include everything from online community pages and micro-blogging platforms to company-operated websites and forums to social gaming. Ensure that Social Media methods and messages are consistent with the company’s brand positioning and other marketing campaigns. Attract and retain customers by allowing them to share and rate new products.

Israel. Obtain referrals. pp. Shel. 2010. McGraw-Hill. Sell products. Harvard Business Press. Chris and Julien Smith. and Ed Moran. 2009. Communicate with customers and employees.” Harvard Business Review. July/August 2010. Francois. Selected references Bernoff. Groundswell: Winning in a World Transformed by Social Technologies. Josh. and Shel Israel. Improve Reputation. Wiley. and Earn Trust. and Ted Schadler. Sterne. Share ideas. Charlene. “Empowered. 53 . Jim. Brian. Twitterville: How Businesses Can Thrive in the New Global Neighborhoods. Social Media Metrics: How to Measure and Optimize Your Marketing Investment. The Hyper-Social Organization: Eclipse Your Competition by Leveraging Social Media. Wiley. 2010. Generate product awareness. 94–101. Solicit feedback. Robert. Brogan. Portfolio. Wiley. Li. Trust Agents: Using the Web to Build Influence. Gossieaux. 2006. and Josh Bernoff.Common uses • • • • • • • • Strengthen branding. 2008. 2010. Wiley. Naked Conversations: How Blogs Are Changing the Way Businesses Talk with Customers. Engage: The Complete Guide for Brands and Businesses to Build. Scoble. and Measure Success in the New Web. Solis. Cultivate. Build communities. 2010.

• Improve research and development efforts. 54 . • Evaluate and select potential partners based on the level of synergy and the ability of the firms to work together. suppliers. gain entry to new markets. Methodology Common uses Strategic Alliances are formed to: • Reduce costs through economies of scale or increased knowledge. competitors. • Inhibit competitors. Selected references Armstrong. universities or divisions of government. companies can improve competitive positioning. • Enter new markets. Through Strategic Alliances. Harvard Business School Press.Strategic Alliances Related topics • • • • Corporate Venturing Joint Ventures Value-Managed Relationships Virtual Organizations Description Strategic Alliances are agreements among firms in which each commits resources to achieve a common set of objectives. • Increase access to new technology. March 1997. companies should: • Define their business vision and strategy in order to understand how an alliance fits their objectives.. • Negotiate and implement a formal agreement that includes systems to monitor performance. Companies may form Strategic Alliances with a wide variety of players: customers. • Improve quality. Arthur G. • Reduce cycle time. • Develop a working relationship and mutual recognition of opportunities with the prospective partner. Net Gain: Expanding Markets Through Virtual Communities. supplement critical skills and share the risk or cost of major development projects. and John Hagel III. To form a Strategic Alliance.

Shenkar. Jeffrey H. Rigby. Robert S. Prashant Kale. Oded. Strategic Alliances: Three Ways to Make Them Work. 14–19. Jordan D. October 2002. Steinhilber. and Implement Successful Alliances. David P. and Robin W. 2005. Leading and Managing Strategic Alliances.” Harvard Business Review. and Harbir Singh.. and Harbir Singh. and Jeffrey J.” MIT Sloan Management Review. pp. Jeffrey H. Kaplan. pp. March 2006.. Segil. Rosabeth M. Trusted Partners: How Companies Build Mutual Trust and Win Together.” Directors and Boards. Prashant Kale. July 2004. Develop. 108–115. Kuglin. 2002. pp. January 2010. July/August 1994. 96–108. Norton. Sage Publications. Harvard Business School Press. Free Press. 126–133. Dyer.T. Buchanan. Wen-Long. American Management Association.Chang.).” Harvard Business Review.. Darrell K. and Jasmine Yi-Hsuan Hsin. “Collaborative Advantage: The Art of Alliances. pp. Darrell K. Steve. 1998. AMACOM. Harvard Business School Press. 37–43. and Bjarne Rugelsjoen. “The Study of the Motivation and Performance of the Incubators’ Strategic Alliances: Strategic Groups Perspective. pp. 80–89. Alliance Advantage. pp. 2008.. “Putting More Strategy into Strategic Alliances. “When to Ally and When to Acquire. Doz. 2004.. Winter 1994. Lewis.” Harvard Business Review. Reuer (eds. Handbook of Strategic Alliances. “Managing Alliances with the Balanced Scorecard. Yves L. “How to Make Strategic Alliances Work.” Journal of American Academy of Business. Measuring the Value of Partnering: How to Use Metrics to Plan. Fred A. Building.. and Gary Hamel. Larraine. 55 . Summer 2001. pp. and Chris Zook. Rigby. Dyer. 114–120. March 2000.” Harvard Business Review. “Open-Market Innovation. with Jeff Hook. Kanter..

• Establish supportive organizational structures. • Monitor performance. • Prepare programs. • Define stakeholder expectations and establish clear and compelling objectives for the business. vision and fundamental values.Strategic Planning Related topics Description • Core Competencies • Mission and Vision Statements • Scenario and Contingency Planning Strategic Planning is a comprehensive process for determining what a business should become and how it can best achieve that goal. information and control systems and hiring and training systems. • Identify and evaluate alternative strategies. • Analyze the company’s strengths and weaknesses relative to competitors and determine which elements of the value chain the company should make versus buy. decision processes. It appraises the full potential of a business and explicitly links the business’s objectives to the actions and resources required to achieve them. • Encourage fact-based discussions of politically sensitive issues. • Target potential business arenas and explore each market for emerging threats and opportunities. • Understand the current and future priorities of targeted customer segments. Methodology Common uses Strategic Planning processes are often implemented to: • Change the direction and performance of a business. 56 . • Develop an advantageous business model that will profitably differentiate the company from its competitors. Strategic Planning offers a systematic process to ask and answer the most critical questions confronting a management team—especially large. policies and plans to implement the strategy. • Allocate resources to develop critical capabilities. A successful Strategic Planning process should: • Describe the organization’s mission. • Plan for and respond to contingencies or environmental changes. irrevocable resource commitment decisions.

Porter. Lawrence G. Mankins. 58–65. Selected references Collis. Making Strategy Work: Leading Effective Execution and Change.” Harvard Business Review. “Stop Wasting Valuable Time. Free Press. 1994. Andrew Campbell. and Marcus Alexander. November/December 1996. Prahalad. Goold. and Steve Schaubert. Drucker. pp. Porter. Free Press. Gary. 1994. Mark. 2008. pp. September 2004. Michael E. Managing in a Time of Great Change. Michael. “Can You Say What Your Strategy Is?” Harvard Business Review. Joseph Lampel. Henry. Hamel. Peter F. Hrebiniak. John Wiley & Sons. Competitive Strategy: Techniques for Analyzing Industries and Competitors. Corporate-Level Strategy: Creating Value in the Multibusiness Company. Gottfredson. Planners. April 2008. Michael E. Mintzberg. 61–78. Collins Business. Harvard Business Press.K.. 1998. 2009. Mintzberg. Michael C. and C. Strategy Safari: A Guided Tour Through The Wilds of Strategic Management. “What Is Strategy?” Harvard Business Review. Rukstad. Daniel J.• Create a common framework for decision making in the organization. 2005. and Bruce Ahlstrand. The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning. Breakthrough Imperative: How the Best Managers Get Outstanding Results. Competing for the Future. Wharton School Publishing. and Michael G. Harvard Business School Press. Henry. 57 . 82–90. Free Press. pp. 1998. • Train managers to develop better information to make better decisions. 1994. • Increase confidence in the business’s direction. • Set a proper context for budget decisions and performance evaluations. Plans.

up-to-date knowledge of demand forecasts. It leverages the core competencies of each player. cuts cycle times and involves customers more deeply in the Supply Chain Management process. Managers learn to treat former adversaries as valuable partners. customers. The approach often relies on technology to enable seamless exchanges of information. This stage often leads to longer-term commitments with preferred partners. and so on—involved in meeting a customer’s needs. reduces inventory levels. goods and services across organizational boundaries. production schedules.Supply Chain Management Related topics Description • Borderless Corporation • Collaborative Commerce • Value-Chain Analysis Supply Chain Management synchronizes the efforts of all parties— suppliers. • Stage IV identifies and implements radical ideas to transform the supply chain completely and deliver customer value in unprecedented ways. The goal is to establish such strong bonds of communication and trust among all parties that they can effectively function as one unit. dealers. • Stage III expands efforts to manage the supply chain as one overall process rather than dozens of independent functions. improves forecasting. automates information exchange. • Stage II increases the exchange of information. distributors. Companies typically implement Supply Chain Management in four stages: • Stage I seeks to increase the level of trust among vital links in the supply chain. inventory levels. fully aligned to streamline business processes and achieve total customer satisfaction. manufacturers. It forges much closer relationships among all links in the value chain in order to deliver the right products to the right places at the right times for the right costs. It creates more accurate. delivery dates and other data that could help supply chain partners improve performance. Methodology 58 . eliminates unproductive activities. capacity utilization. changes management processes and incentive systems.

2d ed. including justin-time (JIT) inventories. Harvard Business Review on Supply Chain Management. Edward. pp.” Harvard Business Review. better and less expensively. October 2004. Marshall. Michael H. Auerbach. supplier consolidation and globalization. Narayanan. pp. November 2004. Strategic Supply Management: Creating the Next Source of Competitive Advantage. 2007. outsourcing of noncore activities. Harvard Business Press. The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance. 2006. 2006.. Ross Publishing.Common uses Recognizing that value is leaking out of the supply chain. 94–102. Wiley. Lean Six Sigma for Supply Chain Management. Robert J. managers turn to Supply Chain Management to help them deliver products and services faster. Harvard Business School Press. 2006. Selected references Ayers. Essentials of Supply Chain Management. McGraw-Hill Professional. and Ananth Raman. Handbook of Supply Chain Management. 2006. James B. 2010. 2001. V. Trent. Supply Chain Management capitalizes on many trends that have changed worldwide business practices. electronic data interchange (EDI). Hugos. Slone. 114–121. McGraw-Hill. Fisher. Martin. 149. J. and Ananth Raman. James. Reuben E.” Harvard Business Review. “Leading a Supply Chain Turnaround. 59 . but that only limited improvement can be achieved by any single company. “Aligning Incentives in Supply Chains. Frazelle. Supply Chain Strategy.G. 2d ed.

• Encourage management to lead by example. Increase competitive advantage. Lower scrap and rework costs. customer satisfaction and profits. • Develop feedback mechanisms to ensure continuous improvement. • Design products and services that cost-effectively meet or exceed those needs. TQM programs require managers to: Assess customer requirements • Understand present and future customer needs. Deliver quality • Identify the key problem areas in the process and work on them until they approach zero-defect levels. Decrease time-to-market cycles. • Develop effective measures of product and service quality. Decrease customer service problems. In order to succeed. Methodology Common uses TQM improves profitability by focusing on quality improvement and addressing associated challenges within an organization. Improve product reliability. This creates a virtuous cycle of continuous improvement that boosts production. • Promote a zero-defect philosophy across all activities. • Train employees to use the new processes. • Create incentives linked to quality goals. TQM then aims to produce these specifications with zero defects. 60 .Total Quality Management Related topics • • • • Continuous Improvement Malcolm Baldrige National Quality Award Quality Assurance Six Sigma Description Total Quality Management (TQM) is a systematic approach to quality improvement that marries product and service specifications to customer performance. TQM can be used to: • • • • • • Increase productivity.

www. Feigenbaum. Dahlgaard. Quality Management: Introduction to Total Quality Management for Production.gov/baldrige Walton. Free Press. 1991. Camison.Selected references Besterfield. Deming. 1986. 2002. 4th ed.” International Journal of Technology Management.. Random House. 1994. 25–35. Grant. Rami Shani. Armand V. 1998. and R. pp. Free Press. Prentice Hall. Fundamentals of Total Quality Management. Choi. and Orlando C. and Services. pp. Behling. Prentice Hall. 3d ed. 479–493. Juran on Quality by Design: The Next Steps for Planning Quality into Goods and Services. Perigree. Carol Besterfield-Michna. Winter 1994. Quality. Kaizen: The Key to Japan’s Competitive Success. and Ghopal K. David L.” Sloan Management Review. February 1997. Routledge.M. Processing. Gale.. 2009. Total Quality Control. Robert M. Imai. 16. “TQM’s Challenge to Management Theory and Practice. Total Quality Management. J. Juran. 2005. Bradley T. Productivity. Vol. MIT Press. 61 .” Academy of Management Executive. Masaaki. Krishnan. 1982. 37–47. “Top Managers and TQM Success: One More Look After All These Years. McGraw-Hill. Managing Customer Value: Creating Quality and Service That Customers Can See. and Stanley B.. Thomas Y. Dale H. and Mary Besterfield-Sacre. Glen Besterfield. and Competitive Position. Mary. Goetsch. The Deming Management Method. pp. “Total Quality Management and Cultural Change: A Model of Organizational Development. Jens J. Davis. 1986. Kai Kristensen. 1992. Malcolm Baldrige National Quality Award.nist. 6th ed.. Khanji. Cesar. No. 4/5/6. Edwards. W..

24 Collaborative Innovation See Open Innovation. 48 Enterprise Risk Management. 46 C Customer Retention See Customer Relationship Management. 14 Best Demonstrated Practices See Benchmarking. 52 Customer and Employee Surveys See Satisfaction and Loyalty Management. 16 Customer Relationship Management. 48 Discovery-Driven Innovation See Rapid Prototyping. 18 See Mission and Vision Statements. 14 Cultural Transformation See Change Management Programs. 44 Core Competencies. 26 Demand Based Management See Price Optimization Models. 30 62 . 36 Blogs See Social Media Programs. 20 See also Strategic Planning. 30 Decision Rights Tools. 22 See Customer Segmentation. 38 Cycle Time Reduction See Business Process Reengineering. 54 E Crisis Management See Scenario and Contingency Planning. 20 See Outsourcing. 12 Benchmarking. 40 See Supply Chain Management. 46 Business Process Reengineering. 36 Corporate Venturing See Strategic Alliances. 16 Competitor Profiles See Benchmarking. 60 Design Thinking See Rapid Prototyping. 14 Computer-Aided Design See Rapid Prototyping. 18 Collaborative Commerce See Customer Relationship Management. 58 Customer Segmentation. 58 Customer Loyalty and Retention See Satisfaction and Loyalty Management. 44 D Contingency Planning See Enterprise Risk Management. 44 Core Capabilities See Core Competencies. 22 See Outsourcing. 24 See also Customer Relationship Management. 28 Corporate Values Statements See Mission and Vision Statements. 22 Customer Surveys See Customer Relationship Management. 56 Downsizing. 22 Change Management Programs. 22 See also Satisfaction and Loyalty Management. 42 Continuous Improvement See Total Quality Management.Subject Index B Crowdsourcing See Open Innovation. 38 Balanced Scorecard. 46 Borderless Corporation See Supply Chain Management. 40 Disaster Recovery See Scenario and Contingency Planning.

22 See Satisfaction and Loyalty Management. 34 Mission and Vision Statements. 56 J Job Descriptions See Decision Rights Tools. 28 See Outsourcing. 50 See Strategic Alliances. 52 Loyalty Management Tools See Customer Relationship Management. 16 See also Knowledge Management. 32 Intellectual Capital Management Mergers and Acquisitions. 38 Open Market Innovation See Open Innovation. 24 Learning Organization See Knowledge Management. 26 M Malcolm Baldrige National Quality Award See Total Quality Management. 40 Market Segmentation See Customer Segmentation. 48 Management by Objectives See Balanced Scorecard. 46 K New Product Development See Open Innovation.G Governance Roles See Decision Rights Tools. 50 One to One Marketing See Customer Segmentation. 36 See also Balanced Scorecard. 40 See Shared Service Centers. 24 Merger Integration Teams See Mergers and Acquisitions. 32 See Rapid Prototyping. 38 See Core Competencies. 12 See also Strategic Planning. 32 Managing Innovation H I Horizontal Organizations See Business Process Reengineering. 26 Multimedia Chat Rooms See Social Media Programs. 32 See also Rapid Prototyping. 46 Open Innovation. 54 N Net Promoter® Scores See Satisfaction and Loyalty Management. 32 Online Communities See Social Media Programs. 20 Key Success Factors Knowledge Management. 38 63 . 34 See Knowledge Management. 52 Joint Ventures See Shared Service Centers. 12 See Knowledge Management. 44 Groupware See Knowledge Management. 60 Groupthink See Scenario and Contingency Planning. 32 O Offshoring L Layoffs See Downsizing.

40 See also Shared Service Centers. 42 See Satisfaction and Loyalty Management. 50 Simulation Models See Scenario and Contingency Planning. 50 Overhead Value Analysis See Business Process Reengineering. 30 Rapid Prototyping. 60 Supply Chain Management. 26 S Organizational Change See Change Management Programs. 36 Quality Assurance See Total Quality Management. 54 See also Mergers and Acquisitions. 44 Real Options Analysis See Scenario and Contingency Planning. 56 Outsourcing.Subject Index continued Organization Design See Decision Rights Tools. 48 See also Enterprise Risk Management. 58 Revenue Enhancement See Price Optimization Models. 56 See also Enterprise Risk Management. 54 Risk Governance See Enterprise Risk Management. 30 See also Strategic Planning. 42 Pricing Strategy See Price Optimization Models. 52 Performance Improvement See Shared Service Centers. 54 Rightsizing See Downsizing. 58 See also Enterprise Risk Management. 16 Shared Service Centers. 16 See Change Management Programs. 60 Pay for Performance See Balanced Scorecard. 40 Price Optimization Models. 30 See also Mission and Vision Statements. 12 Social Gaming Networks See Social Media Programs. 50 Social Media Programs. 60 Reengineering See Downsizing. 42 Strategic Balance Sheet See Balanced Scorecard. 52 Strategic Alliances. 18 Satisfaction and Loyalty Management. 48 T Total Quality Management. 30 64 . 12 Process Redesign See Business Process Reengineering. 18 Strategic Partnerships See Shared Service Centers. 50 Q R Strategic Planning. 46 Scenario and Contingency Planning. 46 Value Managed Relationships See Strategic Alliances. 28 Virtual Organizations See Strategic Alliances. 40 See Supply Chain Management. 48 P Six Sigma See Total Quality Management. 34 See also Outsourcing. 28 V Value Chain Analysis See Outsourcing.

61 Camp. Carol. 57 Carr.. 43 C Cairns. Clayton M. Jens J. George. Mark T. 61 Bergeron. Carlo. 29 Deming. Yukika. 17 Anthony. Steve. 25 Collins.. 35 D Dahlgaard. Michael J. James. George. 53 Berstell. Tim. Bryan.. Joao. Ron.. David K. Hans. 25 Besterfield.. Andrew. 39 Brown. 33 Cooke. Alistair. 29 Champy. 23 De Meuse. Jeffrey. W. Orlando C. Stanley B. Robert. Kenneth P. 19 Coers. 25. 17 Carter. 61 Christensen... 39 Davis. 61 Besterfield-Sacre.. 61 Besterfield. Cary L. 49 Brogan. 15 Cohen. 55 Burke.. 57 Collison. 27. John Seely. 43 Bradfield. Majed. Robert C. Jim.. Robin W. 19 Cohen. 19 Ayers. James. 49 Bangemann. Dale H. 54 Awazu. 49 Camison. 15 Campbell... Richard H. E. Timothy R. Chris. 33 Davenport... Andrew. Jerker. 15 Boyd. Arthur G... 15 B Baker. Tony. 43 Bandhold. Jennifer. Ronald J. 37 Collis. Robert J. Mark. Marcus. Marcia. 41 Brown. 37 Ahlstrand. 33. 29 Bazerman. 51 Cooper. Christopher E. 57 Alai. Robert F. Chris. 61 Dalkir. Thomas H. 21. Gerald. 39 Choi. Wen-Long.Author Index A Abrahams. Jr. 49 Boxwell... 29 Burt.. 49 Blenko. Thomas Y. Kevin. James B. Douglas. Henry William. 53 Brooks. 21 Alexander. Daniel J. 33 Axelrod.. Josh. 27 Bogan. 51 Bernoff. 41 Bood. 57 Allen. 59 Buchanan. Bruce.. Robert. Laura L. 17 Chang. 49 Behling. George S. Mardi.. 51 Baptista. 35 Craighead. Scott D.. 21 Crowston. Edwards. 15 Bonifazi. Ph. 15 65 . Christopher W. 39 Clark. 49 Critelli.. Ronald J... Max H. 17. Cesar..D. 47 Brown.. 25 Armstrong. 61 Blackhurst. David. 61 Besterfield-Michna. 49 Burton. 61 Denrell. 33 Czarnecki.T. 25 Al-Mashari. 55 Chesbrough. Kamiz. Tom Olavi.. Mary. 45 Bruner. 61 Day. Dan S.. Glen. 29 Corbett.

54 Hague.. Yves L. Steven D. 21 Hinterhuber.. Michael J. 33 Holden... 49 Harding. Larry. 29 Goetsch. 35 Harmer. 57 du Toit. 15 Herman. J. 31 Hugos. 35 Hrebiniak. 57 Gossieaux. 47 Frigo.. Lawrence G. 45 Hall. Gene. Reed. 41 Dickens. 33 Fisher. Varun. Jeanette..S. 57 Grant.. 45 Horan. 41. Armand V... 17 Frankel. Patrick A. 49 Goold. John J. 15 Hilger... Jill. Chris. 51 Feigenbaum. Todd R. Matthew. 43 Hook. Joseph M. 59 Humby. Davidson. Bradley T. Gary. Neil. 17 E Elkins... Carl.. 35 Goodstein. Jeff.. Peter F. Mark. 27 Gaughan. 13 H Hagel. 35 Hilmer. Frederick G. 21. 61 Firestone. David A. 61 Gardner. 39 66 . 33. Charles M. 15 Garman.Author Index continued Desouza. Michael E. 39. James T. III. 37 Higgins. 31 G Gale.. 47 Doz.. Leonard. 51 Dyche.. Martin. Clive.. Hans.. 35 Frappaolo. Terry... Lisa. Ian. 43 Hogan.. 49 Elson. 17 Hamel. David L. 31 Gole.. James. 35 English. 45 Dinsdale. Francois. Michael. Gerard. Debra. 33 Grover. 39 F Fahey.. John. George A. 57 Hsin. Paul J. Marshall. Robert B. 17 Hampton. Jeffrey H. Dwight L. Anders. 35 Gertz. 41 Groff. Liam. 31 Handfield. Jasmine Yi-Hsuan. 61 Goldstein. 21 Drucker... Andrew R. 37 Horn. Philip. Michael. Edward. Kevin C. 51 Harrington. 47 Hunt. 55 Drejer. Robert M. 49 Funston. 25. James L. John R. John. 55 Hubbard. 61 Greaver.. 15 Epstein.. 55 Hopkinson. 49 Fahy. John.. 33 Frame.. Scott. Mark L. Richard. 55. 33 Fraser. Michael H. Maurice. 59 Freeman. Leonard D. John. 57 Hammer. Douglas W. David. 33 Heskett. 55 Garvin. William J. Daniel G. H. 31 Fuld.. 47 Huston. Marc. 25 Dunleavy. 23 Dyer. 31 Frazelle. J. 25 Dunbar. Martin J. 59 Flinn. 49 Goodstein.. Frederick. 47 Dixon. 53 Gottfredson. Karen..

Theodore. 47 L Lajoux. 53 Linder. 25 Markowitz. 55 Li. 25 K Kahaner. 17 Jones. Patricia. 53 Myers. 25 McElroy... Jr. Karl B.. 47 Levitt. Malcolm. 37 Jones. 61 Irani. 51 Khanji. John P. 33 McDermott. 55 Keen. 21 Moran..M. Manuj K. 29 Martin. 51 Krishnan. 51 M MacCormack. 23 Ledyard.. Ian C. Mike.. 25 Melchior. 17 Malone..W. Rita Gunther. 45 Meer. Mark W. Mats... Paul. Diana. 31 Montier. 23. Thomas W. 57 Manrodt. 45 Malhotra. 41 Manzoni. Frank W.. III. James.. 25. 61 Kristensen. 45 MacMillan.. Robert S.. 33 McGrath. 13 Markey. 33 Mankins. Rob. 41... Thomas P.I Iacobucci. James. V. Thomas M. 35 Lam. 27 Matzler. Robert E. Theodore. Jane C. 57 Mishra. Henry J.. Richard. 25 Marks. 41 Kale. 25 Kotter. 17 Israel.. Masaaki. Alan.. Jean-François. 39. 59 Martin. 21 Kris. 29 Monahan. 13. 29 Mishra. Kai. Alexandra Reed.. 41 Leone. Gregory. 19.. Larry. Michael C. R. Kurt. 39 Johansson. 17 Kennedy. 37 Kalakota. 39 Lindgren. Charlene. Kazuo.. Richard.... Aneil K. 55 Kaplan. Ed. Sirkka. Robert P. Jordan D. Joseph. Fred A. Mitchell Lee. 33 McDonald. 35. Philip. 61 Kinni.. Ravi. 31 Lampel. Zahir. Karla L. Dan.. 55 Kanter. J.. James S. Shel. Dianne. 37 Koulopoulos. 61 Ledingham. Prashant. Daniel C. 25 Lewis.. 33 Imai. 35 Lusk.. 43 Kotler. Peter G. James H. Karen E. 27. Henry. 57 Lawler. 51 Miller. Ghopal K. 61 Kuglin.. 35 Mintzberg.. Edwin L. 19 67 . 49 Liou. 33 Juran. Rosabeth Moss. 45 Lovallo. 55 Kumar. Andrew. 15 Ichijo.. Edward E. 41 Kramer. David. Dawn. 53 J Jarvenpaa.

37. 39 Schadler. 41 S Sakkab. 37 O’Hallaron.. 37 Porter. 13 Nolan. 41 Powers. Elizabeth. Barbara. 39. 49 Schulman. Mark J.. Marcia. 49 Randall. 39 Nanus. Joseph R. Robert M. David. Joshua. C. Sam. 15 Norton..K. V.. 15 Reilly. Nabil. Joshua.. 33 Reuer.. Darrell K. Laurence. 49 Raybourn. Gill.. 47 P Parcell.. 29 Q Quinn. 15 Raynor. 17 Rovit. 35 Rosenthal. 49 Power. Burt. L. 35 Peterson. 49 Roberto. 41 R Raman. J. 47 Porras. Werner. 39 Ramirez. 55 Nyberg. 35 Rugelsjoen. 25 Rogers. 23.H. 47 Reider. 57 Schefter. 37 Narayanan. 35 Peppers.. Timothy N. Satish. 13. Jeffrey J. 27 Roloff.. 51 Reinartz.. 55 Rigby. 57 Postma. Michael E. Bjarne.. 55 Ringland. 47 Phillips. Martha. Cynthia. Venkat. 37 Owen. 43 Nambisan. 47 Renzl. Ted. Donniel S. 57 Prusak. 21. 23 Schoemaker. 21. 23.. Jerry I. Richard.. David P. 41 Rogers. Denise. Mohanbir. 25 Niven. Jim. 55 Rukstad. 53 Schaubert. Peter A. Tom. Fred. 59 Neilson. Phil. Paul.. Birgit. 39 Reichheld. Michael A. Geoff. 41 Phillips. Stephen.. 41 Rosenbaum. 21.. Rob.. Steve. Rafael. 33 Nordhielm. 59 Ramaswamy. Michael E. Robert. Anthony J. Thomas T.. 57 O O’Hallaron. 33 Pearl. Ananth. 39. Michael G. Tim. Rudy. Gary. Richard. 43 Phillips. 39 Sandberg. 49 Nonaka. 25 Perella.. 33. Ikujiro. 27 Nitterhouse.Author Index continued N Nagle. Paul J. 51 68 . 51 Quinn. 17 Sawhney. Andrew. Paul R. 23. Don.. 27 Prahalad.. James Brian. Theo. Christie. 33 Puryear. Kirsten D.G. 27 Robinson.

Peter M.. William M. 59 Trevor. Stefan. 17 Zimmerman. Benjamin. Robert S.. 61 Watkins. Larry. 41 Shenkar. Reuben E. Robert. 49 T Taleb..Schwartz. Navdeep S. 29 Stauffer. Suresh. Julien. Tony. Kathleen.. Stephen.. John W. 37 Sodhi. Thomas. 55 69 . Christopher P. Kees. David. 39 V van der Heijden. Thomas A. 51 Wilson.. Brian. Oded. 61 Sharma. 41 von Hippel.. 37 Walton. 31 Teal. Charlie O.. Gretchen M. 35 Ulrich. 51 Thomke.. 15 Steinhilber.. 15. Mark W. Bob. 33 Shani.. 47 Tregoe. Mohamed. 21 Spitznagel. 49 Schweiger. Mark R. 53 Segil. Karl. Christian. 23 Terwiesch. 49 Wenger. 41. Steve. 49 Senge.. Kate. 49 Wade. 31 Wall. 43 Solis. 37 Sommers-Luch. Avinash. 59 Smith. Michael D. 43 Sodhi. Nicholas. Daniel. Peter. Robert J. George. 31 Spreitzer. 35 Scoble. 25 Z Zairi. Atul. Robert.. 37 Trent. 37 Zook. Harbir. Larraine. 25. 39. 19 Wright. Etienne. 31 Singh. ManMohan S. Irene. 35 Vitasek. 41 Viguerie. 41 Vashistha. 53 Stewart. 41 Worley. 33 Sobol. Pierre. James. Eric. 33 Surowiecki. 21. Rami. 53 Snyder. 55 Sterne... Chris. Jim. Judy. Scott. 45 W Wack. Mary. 55 Simkins. Ajay. 39 U Uhlaner. Nassim Nicholas. 55 Selden.. 33 Williams. 39 Selsky. 29 Y Yankelovich.. 39 Tham. 51 Sharma. 17 Wagner. John. 55 Slone. Patrick. 45 Toman. 53 Solum. Betty J. David M. 49 Vashistha.

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