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Which features give customers the most bang for the buck?

Many companies have supply chains that are global. They start with the sourcing of components and raw materials from around the world, then move their basic manufacturing to low-cost locations overseas. But few organizations have innovation processes that are equally global. That is, rarely do businesses have innovation activities that integrate distinctive knowledge from around the world as effectively as global supply chains integrate far-flung sources of raw materials, labor, components and services. But some companies & #8212; Nokia, Airbus, SAP and Starbucks, among them & #8212; have managed to assemble an integrated “innovation chain” that is truly global. They have been able to implement a process for innovating that transcends local clusters and national boundaries, becoming what the authors call “metanational innovators.” This process requires three steps: prospecting (finding relevant pockets of knowledge from around the world), assessing (deciding on the optimal “footprint” for a particular innovation) and mobilizing (using cost-effective mechanisms to move distant knowledge without degrading it).When done properly, metanational innovation can provide companies with a powerful new source of competitive advantage: more, higher-value innovation at lower cost.

Getting more value from knowledge & #8212; especially from a firm’s own hard-won knowledge & #8212; is one of the central challenges facing companies today. Many organizations have approached this problem in recent years by making big investments in IT systems, but the payoff has often been disappointing. Companies would do better to emulate the innovative giants of the Internet & #8212; Google, eBay and Amazon & #8212; whose success has in part derived from their ability to make it easy for customers to find what they are looking for, to browse for products and services, and to evaluate potential purchases. These are exactly the things that are hard to do in most companies. That is, employees find that it is not intuitive to search for information in company repositories; they cannot easily browse within categories of knowledge; and they are not given the context they need in order to evaluate the quality of the knowledge they do find. The authors assert that if organizations apply the basic, proven approaches of the Internet success stories to capture the attention of their employees, they should be able to improve their ROI on sunk IT costs, while increasing knowledge-worker productivity.

As China prepared to enter the World Trade Organization in 2001, many multinationals planned to invest new billions in operations there. But their ambitious growth plans must be viewed with caution. Experienced multinationals have long been aware of the challenges, summed up by the adage that in China "everything is possible, but nothing is easy." But few predicted the most formidable obstacle to success: the emergence of tough competition from local Chinese players. The authors' research over the past five years reveals that while market dominance by local champions is not universal, it's becoming more frequent. Multinationals must face the fact that the competitive edge that is potentially available to them from superior technologies, products and systems will be blunted unless they build stronger local competencies. Specifically, they explain that multinationals must show a new determination to master the complexities of distribution, sales and service in China's secondary cities and rural heartland, and to learn how to more sensitively adapt products, processes and marketing messages to the peculiarities of the Chinese market.

A corporate sphere of influence is not just a platform for a company’s offensive or defensive initiatives. It is the basis upon which the company builds market power over rivals so it can maneuver freely without fear of retaliation.

The authors argue that contemporary management education does a disservice by standardizing content, focusing on business functions (instead of managing practices) and training specialists (rather than general managers). Working with several major international universities, the authors have developed a vision of management education that grounds MBA programs in practical experiences, shared insights and reflection. They suggest that management education be limited to working managers nominated by their companies, thus allowing them to apply their knowledge directly and immediately to actual management practice. They assert that business schools must make management education more directly applicable to a manager's own experiences, shaping the curriculum through interaction between instructor and student. They also recommend that managers be encouraged to share with their work colleagues specific lessons derived from their education. The goal of this reshaping of management education, say the authors, is for business schools to fully integrate experience, theory and reflection, encouraging managers to incorporate this philosophy directly into the daily functioning of their workplaces.

Without analysis there can be no useful insight.

Groups devoted to learning must take steps to avoid stagnation.

More than 15 years ago, Peter Drucker heralded the beginning of the knowledge era. Since then, companies have made many attempts to leverage what they know and to increase their workers' productivity. To bring together vast amounts of explicit knowledge, they have invested large sums in content repositories; to help people track down others with tacit expertise, they have experimented with open offices, mobile technologies and online directories. Much of this has been a waste of resources. In fact, five years ago Drucker likened our current understanding of knowledge- worker productivity to our understanding of manual-labor productivity in 1900. Translation: We've got a long way to go. To reorient managers more fruitfully, SMR asked three leading management thinkers to explain what we've learned and how we can do better in the future. For Hammer, the focus should be not on the worker but on work processes and eliminating non-value-adding work. Leonard contends that companies should foster master-apprentice relationships to get the most out of their knowledge. And Davenport urges companies not just to experiment with ways of improving knowledge-worker productivity (as many already do), but to carefully measure the results of their experiments in order to learn what works and what doesn't.

Today's managers acknowledge the importance of customer focus. Yet the costly customer efforts they usually implement rarely bring the promised gains. The reason? A superficial understanding of what customer focus really means. True customer focus involves comprehensive organizational change. As Baxter Healthcare, LexisNexis, IBM and BP are learning, the kind of customer focus that creates an advantage competitors have great difficulty copying calls for companywide transformation. The author's in-depth research over many years shows how 10 breakthroughs in thinking, remarkably consistent across industries, improve growth and profitability more effectively than customer-relationship-management software, loyalty programs or satisfaction surveys. She describes how, for example, the manager of Baxter Healthcare Corp. Germany got employees thinking of themselves as doing postoperative "home-recovery enhancement" instead of merely providing postoperative nutritional products to hospitals--and how that ultimately led to Baxter becoming indispensable to customers. When deep customer focus gets rooted in employee behavior, people at all levels become innovators.