Articles

Corporate boards in the United States have recently been on the hot seat. Stimulated by high-profile scandals, investor dissatisfaction with board performance and questions about the level of executive compensation, regulators have introduced significant reforms in the rules that govern boards. But will such reforms actually contribute to the effectiveness of boards? A real danger exists that the mandated changes not only will fail to enhance how companies are governed but also could possibly lead to a number of negative unintended consequences. To investigate such issues, the authors conducted a study that compared the board practices and effectiveness of Fortune 1000 companies in 1998 versus 2003. They looked specifically at three areas: board leadership, the conditions governing board membership, and the performance evaluations of boards, individual board members and CEOs. The results have helped to determine which practices in those three areas are actually related to overall board performance.

Most startup companies today consider overseas expansion from their inception. Yet, says the author, entrepreneurs and their managers often underestimate the cost of expansion and lack a clear conceptual framework for it. On the basis of studying 50 entrepreneurial ventures in more than 20 countries, he concludes that such ventures follow a variety of different expansion paths. The most successful are those that best manage the constant tensions between resources and opportunities, each of which run the gamut from purely local to worldwide. He offers a framework that defines the choices a venture has at its inception and throughout its life, then shows how the framework can be used to assess and direct a venture and mitigate developing tensions by anticipating a variety of strategic, financial, organizational and regulatory factors. This is illustrated with case examples of a software company that took a balanced or “diagonal” path (the most common), an air-freight delivery service that progressed from pursuing local opportunities with local resources to pursuing cross-border opportunities with local resources, and a consumer-loan provider that began by pursuing a local opportunity with local resources, then added cross-border resources. Other examples include London-based fashion e-tailer Boo.com, Boston-based Internet Securities Inc. and the Georgian Glass and Mineral Water Co. in the Republic of Georgia.

A business case for sustainability requires more difficult change than most are ready to consider.

As companies struggle to enable long-distance collaboration, technology becomes key to keeping virtual teams working together. However, some tools work better than others. Managers seek solutions that provide the benefits of face-to-face contact without the expense or disruption. The authors bring together the latest research developments in virtual-team communication, discussing the trend toward the establishment of "virtual workspaces" that enable teams to communicate through the use of complex technologies -- such as virtual whiteboards, collaborative document editors and instant messaging -- helping team members to work in tandem more effectively. They detail the need for managers to tailor the use of each technology to the type of team and activity, and the benefits of virtual workspaces.

Leadership and management innovation must drive a comprehensive ethos of excellence.

Just as the Internet and the World Wide Web led to a huge change in how people interact with distant applications, so the Internet and Web services hold out the promise of drastically changing how distant applications interact with each other. But how real is this promise? If information systems could look for and find each other, share data and execute business processes, all with no (or very little) human involvement, the business world would likely be quite transformed. The author concludes, however, that Web services will not create this world, nor will any technology on the horizon. Web services, he argues, will be highly useful, but not quickly or obviously disruptive; in fact, they will reinforce existing relationships rather than catalyze new ones. What's more, the application-integration challenges that remain unaddressed by Web services are the really difficult ones that can only be overcome by the work of managers and leaders, not technologists or consortia. The author's themes are illustrated by an extended example drawn from his case study of IBM's EMEA (Europe, Middle East and Africa) organization, which has been working with independent distributors in several countries to automate the ordering of midrange computing systems. The case provides a close look at an effort to go beyond the capabilities of previous B2B technologies to build agreements and standards for application-application interactions where none previously had existed.

Companies tend to assume that little can be done to reduce product costs once a design is set. This belief has shaped many cost-management programs across diverse products' life cycles. Because of it, firms will often focus on cost reduction during the design phase and cost containment during manufacturing. But are much of a product's costs truly locked in during design? Recent research suggests otherwise. In an extensive field study at the consumer-products division of Olympus Optical Co. Ltd., the authors found that the company is able to obtain significant cost reductions in manufacturing. Indeed, the research has demonstrated that costs can be aggressively managed throughout the product life cycle. Furthermore, the authors found that Olympus Optical applies various cost-management techniques in an integrated manner with the outputs of some techniques acting as inputs to others, thereby increasing the program's overall effectiveness. The observations suggest that companies competing aggressively on cost might consider adopting some form of an integrated cost-management program that spans the entire product life cycle.

Lack of communication among colleagues in the workplace is a widespread problem. Many companies struggle with the "silo syndrome" -- employees from different departments tend to keep to themselves, leading to inefficiencies and missed opportunities, particularly those that would arise from chance encounters among people who don't, but should, know each other. The author asserts that two parallel paradigm shifts are helping to change that. The first is a movement from desktop to mobile computing. The second is the move from individual to "social" software, here defined as programs that enable a group of people to accomplish common goals. Together, they say, the two trends have the potential to dramatically transform the ways in which companies conduct business. Toward that end, the author and his colleagues have developed a new technology that could help facilitate greater workplace collaboration. The technology, known as "Serendipity," is a yet to be commercialized mobile-phone application, intended to extend (rather than supplant) existing enterprise-communication and knowledge-management systems by untethering them from the desktop so that they can be used in social situations where they might be most beneficial: near the water cooler, in the hallway, around the coffee machine. Serendipity relies on Bluetooth, a low-power radiofrequency protocol designed primarily to enable wireless headsets or laptops to connect to mobile phones. A byproduct of that functionality, however, is that Bluetooth devices are aware of one another, which essentially turns them into short-range beacons, each with its own unique ID. In this article, the author explains how Serendipity works and discusses a number of the potential business applications that could arise from its ability to study, track and, perhaps most importantly, predict the dynamics of a social network. He also discusses some of the privacy issues and necessary safeguards -- such as opt-in methodologies -- that would have to be associated with such applications.

Green marketing has not lived up to the hopes and dreams of many managers and activists. Although public opinion polls consistently show that consumers would prefer to choose a green product over one that is less friendly to the environment when all other things are equal, those "other things" are rarely equal in the minds of consumers. For example, when consumers are forced to make trade-offs between product attributes or helping the environment, the environment almost never wins. And hopes for green products also have been hurt by the perception that such products are of lower quality or don't really deliver on their environmental promises. And yet the news isn't all bad, as the growing number of people willing to pay a premium for green products -- from organic foods to energy-efficient appliances -- attests. How, then, should companies handle the dilemmas associated with green marketing? They must always keep in mind that consumers are unlikely to compromise on traditional product attributes, such as convenience, availability, price, quality and performance. It's even more important to realize, however, that there is no single green-marketing strategy that is right for every company. The authors suggest that companies should follow one of four strategies, depending on market and competitive conditions, from the relatively passive and silent "lean green" approach to the more aggressive and visible "extreme green" approach -- with "defensive green" and "shaded green" in between. Managers who understand these strategies and the underlying reasoning behind them will be better prepared to help their companies benefit from an environmentally friendly approach to marketing.

In recent years, gray markets -- in which a firm's products are sold or resold through unauthorized dealers -- have become ubiquitous. They exist for tangible products (lumber and electronic components) and intangibles (broadcast signals, IPOs); for massive goods (automobiles and heavy construction equipment) and for light, easily shipped products (watches and cosmetics); for the mundane (health and beauty aids) and the life saving (prescription drugs). Gray markets aren't going away soon. Although they ebb and flow as exchange rates, price differentials and supply conditions change, surveys confirm the increasing incidence and scope of gray markets. In many situations, their sales outstrip authorized sales. An inability to compete with gray markets can wreak havoc on firms and industries. Unfortunately, because it is so hard to get data on gray-market activity and what firms are doing to deal with it, there is little published guidance to help managers. The sale of legitimate products in the wrong place or in the wrong channel poses unique problems to companies, but there are unique solutions that can successfully manage them. Describing several examples that show the scope and complexity of the gray-market problem, the authors explain how managers can apply a framework based on sensing, speed and severity in order to manage it. They also point out scenarios in which gray markets actually help and should be tolerated.