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Many companies prefer employees with deep motivation, strong commitment, unquestioned loyalty and widely shared values. But the author says that employing such highly involved people can have serious drawbacks for the company. For starters, deeply motivated people can be a challenge for management because they tend to interpret organizational purposes in their own way, sometimes substituting their own purposes for the company objectives without even realizing it. Deeply motivated individuals are also likely to display strong resentment when the organization fails to fulfill the needs or desires they are so imbued with. Not surprisingly, deeply motivated people are not easy to get along with: They don't comply with rules or policies that they don't fully respect; they believe they should have a say in almost everything; and they tend to behave like the owners they are not (but wish they were). Similarly, people who are strongly committed are likely to develop excessive confidence in the face of difficulties. They can be blind to warning signs, which can lead to excessive delays in corrective actions. Strongly committed people are also prone to believing that the end justifies the means, which can lead to unethical behavior. Given such drawbacks, the author contends that companies might be better off with employees who have a moderate -- instead of excessive -- level of motivation, commitment and loyalty.

Brands are an indispensable part of modern business. That is true in large measure because of a brand's remarkable efficiency in "aggregating" consumers -- reaching large numbers of people with a promise to deliver a clearly stated benefit that sets it apart from competitors. But the information revolution is undermining the logic of aggregation, the very source of brand power. In fact, it is becoming evident that in an information-rich environment, consumer disaggregation is vastly more efficient and profitable than aggregation. Using customized publications, e-mail, direct mail, Web sites and call centers that are based on a common platform of consumer information, companies are demonstrating that they can effectively and efficiently drive consumer behavior through two-way communications. Common underlying databases ensure that each interaction is personalized, regardless of the channel through which it occurs. And each interaction with the consumer builds the consumer database further, making future interactions even richer. The implications of the information revolution for the role of brands in business are far-reaching. Many of the strategic and tactical tasks entrusted to brands can now be performed better, less expensively and more profitably at the level of consumer segments. And companies' brand-centric structures are not suited to marketing initiatives that are based on reaching segments or individuals. Given this changed environment, the author calls on companies to rethink three core areas of brand management: the consumer relationship, the channel relationship and the organization of brand management. To support his case, he draws on detailed examples involving Kraft, Procter & ; Gamble and Tesco.

The health care system in the United States is in crisis, and the implications for businesses and their employees are profound. As employers struggle with unrelenting double-digit health-insurance cost increases, some firms have decided to drop coverage entirely, and many others have shifted costs to employees. Meanwhile, the quality of the health care being paid for by companies and their workers remains highly uneven. On its own, business cannot solve the health care crisis in all its aspects, but that doesn't mean it can't do a lot to improve the system. Some companies are taking more active control over the issue and getting better results on both cost and quality. To learn from such companies and from those who influence and deliver health care services, the authors conducted in-depth interviews with thought leaders in business, health care and related sectors. The overriding lesson from their research: Companies must build bridges to other players in the system to address the systemic problems that transcend even the most powerful corporations. They propose a partnership-based health care agenda for business that will benefit not only companies and employees but also health care overall by strengthening the market mechanism and encouraging fruitful collaboration.

Food giant Kellogg Co. struggled throughout the 1990s, as both the stature of its legendary brands and its profit margins declined. A noted business journalist describes how the appointment of Carlos Gutierrez as CEO and the loss of market leadership to General Mills Inc. in 1999 forced Kellogg to establish a more meaningful, sustainable profit-oriented focus in recent years and outlines Kellogg's ambitious program of change. New business models emphasized value (rather than volume) growth and encouraged stronger cash flow. Realism was restored to financial forecasts, brand unit operations more closely integrated and employee compensation tied directly to business unit performance. New product launch documents stopped evaluating margins by volume alone, and innovation specialists were encouraged to add value-added touches to existing brands. As a result of this change in strategy, says the author, Kellogg's fortunes have improved dramatically. New product launches based on existing products have done well. And the company is better able to access its healthy food roots by playing up the health benefits of key products. Most importantly, says the author, a return to strong profitable growth and increasing market confidence in the company serves as further evidence of the strategy's success.

For a firm to succeed over the long term it needs to master both adaptability and alignment -- an attribute sometimes referred to as ambidexterity. The concept is alluring, but the evidence suggests that most companies have struggled to apply it. The standard approach has been to create separate structures for different types of activities. But separation can also lead to isolation, and many R&;D and business development groups have failed because of their lack of linkages to the core businesses. In an attempt to shed new light on the discussion, the authors develop and explore their concept of contextual ambidexterity, which calls for individual employees to make choices between alignment-oriented and adaptation-oriented activities in the context of their day-to-day work. The authors introduce this as a complementary concept to traditional structural ambidexterity. By means of their survey- and interview-based research -- which took place over a three-year period and involved 4,195 respondents across 41 business units in 10 multinational firms -- the authors identify the four behaviors displayed by ambidextrous individuals, each of which involves taking independent, adaptive action in the service of overall company goals. They then present a framework for describing and analyzing which organizational contexts encourage or discourage such behaviors. They link organizational context to ambidexterity and, in turn, ambidexterity to high performance. Finally, the authors describe how companies such as Nokia, Ericsson, Oracle and Renault have been able to create such high performance contexts, and they offer managers guidance on how to create them in their own companies.

Every industry leader lives in fear of the low-end competitor -- a company offering much lower prices for a seemingly similar product. The vast majority of such low-end companies fall into one of four types: strippers, predators, reformers and transformers. Each of those is defined by the functionality of product and the convenience of purchase. Strippers, for instance, typically enter a market with a bare-bones offering, reduced in function and usually in convenience. Industry leaders have significant advantages for combating low-end competition, but they often hesitate because they're afraid their actions will adversely affect their current profit margins. The answer, then, is to find the response that is most likely to restore market calm in the least disruptive way. An industry leader could choose to ride out the challenge by ignoring, blocking or acquiring the low-end competitor. Or it could decide to strengthen its own value proposition by adding new price points, increasing its level of benefits or dropping its prices. Such tactics can be effective in the short term, but the industry leader also needs to consider strategic retreat, particularly when certain conditions make future low-end challenges inevitable.

Traditional models for developing and managing corporate portfolios are based on financial frameworks, business synergies or leveraging core competencies into related businesses. In this article, the author goes beyond those traditional approaches and offers an alternative & #8212; the corporate sphere of influence. Like nations, says the author, companies build spheres of influence that protect their cores, project their power outward to weaken rivals and prepare the way for future moves. By recognizing the strategic purpose of each part of the portfolio, the sphere of influence model focuses attention on the company’s overall strategy, including how it wants to structure the division of product and geographic markets in an industry, which threats it will address or ignore, and how the company’s portfolio enhances or detracts from its competitive or alliance strategy. Thinking in terms of building a sphere of influence forces managers to draw together corporate- and business-level strategic analyses that are often treated as separate. The corporate-level concern about where to fight and the business-level concern about with whom and how to fight are brought together into a coherent view. In this article, the author defines the components of a sphere of influence and explains how senior executives can use his framework to assess their company’s current sphere and map their desired one. Then he offers examples of how companies have managed their spheres. He draws examples from a wide range of industries and companies, including Microsoft, Procter & ; Gamble, Johnson & ; Johnson, Anheuser-Busch, Nokia, Harley-Davidson and Mexican cement company CEMEX. For an extended discussion of how companies can leverage their spheres of influence to support their overall grand strategy, see “The Balance of Power,” by Richard D’Aveni (MIT Sloan Management Review 45, no. 4 [2004]: 46a-46i).

Deep discounting strategies provide decidedly mixed long-term benefits.

According to conventional wisdom, businesses must offer something unique in order to compete successfully; the rub is that this task is becoming more difficult as products and services become more similar. The only solutions, this line of thinking continues, are to differentiate your offerings through branding and the communication of emotional values or to completely change your industry’s rules. While there is some truth in each of those assertions, the authors believe they have been overstated and overgeneralized and have distracted firms from listening to their customers and consistently delivering on the basics. They conclude that what customers want is not more differentiation but products and services that are simply better at providing generic “category benefits”– those routine benefits customers expect to get when they make a purchase. Failure at this, they contend, is one of the prime contributors to today’s continuing high levels of customer dissatisfaction. The good news is that this dilemma presents a low-risk, high-return opportunity for most businesses & #8212; provided top executives buck the conventional wisdom and rethink what people really want from a product or service.

A study reveals how rating agencies weigh governance factors.