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Innovation is typically a group effort, but how exactly do researchers collaborate with one another to innovate? To answer this question, the authors compiled a dataset identifying all co-authorship relationships of U.S. patent inventors from 1975 through 1999. That dataset revealed that the social network of innovators is a "small world," with various clusters of people interconnected by different "gatekeepers," individuals who bridge one group with another. Historically, engineers and scientists tended to work within local clusters of collaboration that were isolated within a company. Recently, though, people have become increasingly mobile, changing jobs with greater frequency, and these formerly isolated clusters have begun to interconnect into larger networks through which information flows more freely between companies. Such environments provide both strategic opportunity and potential threat: They can increase creativity within a company, but they also aid in the diffusion of creative knowledge to other firms through personnel and knowledge transfer. The trick, then, is to manage innovation in ways that exploit the opportunities while minimizing the risks.

It is common for senior managers to look for meaningful correlations within their businesses -- for example, to search for the most direct drivers of profitability. However, managers often overreach, overstating relationships that are tenuous at best or may not even exist. In support of this view, the authors, who are consultants in the area of customer loyalty, cite their own recent investigation into common beliefs about customer loyalty (that is, "It costs more to acquire a customer than to retain a customer"), many of which proved to be unfounded. In general, the authors argue, professional managers are too willing to suspend disbelief about cause-and-effect relationships. They allow biases toward a specific business outcome to shape their interpretation of causes and effects. The authors refer to this phenomenon as management teleology. The tendency to hold onto the most rewarding view of events, the authors offer, is not unique to managers. However, when managers substitute beliefs for knowledge and don't acknowledge the leap, they put their businesses at risk. New management ideas will always challenge current practices. But before managers embrace new ways of approaching problems, they should require a higher level of analytic rigor. They need to cultivate the habit of questioning the underlying assumptions of their own views, and be open to ideas that come from the outside.

Which jobs are good candidates for global disaggregation?

The colonization of American manufacturing by distributors has pushed U.S. companies overseas.

The author re-examines the role of IT as a commodity and considers whether IT can still be used to provide strategic advantage. In discussing regulation, outsourcing relationships and corporate dependence on IT, this article further clarifies the argument that IT will soon be handled by larger corporate utilities. While agreeing that most IT functions can be outsourced to utility-style providers, the article suggests that in-house corporate computing can still provide a strategic advantage. By examining failed IT outsourcing relationships, the author identifies key aspects of IT, including auditing and reporting procedures and customer-facing resources that are too important to a firm's success to outsource. The author argues that to better exploit these advantages, managers should embrace the fact that IT is no different than any other corporate function, instead of placing it in its own silo separate from other business practices. Only then will the real commoditization of IT be complete and the long-promised benefits be seen.

When one company acquires another, executives have 10 distinct options for the corporate rebranding.

INTELLIGENCE: New developments, research and ideas in management

You must tell your strategy story to reach four different audiences.

When employees leave an organization, they depart with more than what they know; they also leave with critical knowledge about who they know. Thus, the departure of key people can significantly affect the relationship structure and consequent functioning of an organization. In particular, companies should be aware of the unique knowledge held by three important types of employees: "central connectors" (those who are regularly asked for help, typically because they have a high level of expertise in one or more areas), "brokers" (those who act as bridges across subgroups) and "peripheral players" (those who reside on the boundaries of a network but could still possess valuable niche expertise and outside knowledge). Departure of an employee who filled any one of these roles presents knowledge-loss risks that need to be addressed. The departure of a handful of key brokers, for example, could fracture the social network of an organization into isolated subgroups. Thus companies need to take various measures to (1) identify key knowledge vulnerabilities by virtue of both what a person knows and how that individual's departure will affect a network and (2) address specific knowledge-loss issues based on the different roles that employees play in the network.

Checks and balances, competitive elections and term limits could improve corporate oversight.