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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.

Many companies organize employees into self-managing teams that are basically left to run themselves with some guidance from an external leader. In fact, comprehensive surveys report that 79% of companies in the Fortune 1,000 currently deploy such “empowered,” “self-directed” or “autonomous” teams. Because of their widespread use, much research has been devoted to understanding how best to set up self-managing teams to maximize their effectiveness. Interestingly, though, relatively little attention has been paid to the leaders who must oversee such working groups. At first, it seems contradictory: Why should a self-managing team require any leadership at all? But the authors’ research has shown that self-managing teams require a particular kind of leadership. Specifically, the external leaders who contribute most to their team’s success tend to excel at one skill: managing the boundary between the team and the larger organization. That process requires specific behaviors that can be grouped into four basic functions: (1) moving back and forth between the team and the broader organization to build relationships, (2) scouting necessary information, (3) persuading the team and outside constituents to support one another, and (4) empowering team members.

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.

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.

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.

The reason most organizations struggle to demonstrate business gains from information-technology investments is that their IT portfolio management (ITPM) is inadequate. Research at 130 companies, including Harrah's Entertainment, Waste Management and Blue Cross Blue Shield, shows that only 17% are at the advanced, or synchronized, stage of ITPM. Scrutiny of that 17% reveals best practices for successfully aligning IT with strategic goals. The key to bridging the business-technology divide and improving results is early communication. Not only must senior business managers understand more about how IT affects both strategy and the bottom line, CIOs need to learn to communicate the vision, strategies and goals of the IT organization in terms non-IT executives can understand. The most effective partnerships studied were those in which the CIO took initiative in discussing ITPM with business leaders and eventually transferred accountability to them. The most successful practitioners obtained cost savings of up to 40% of pre-ITPM budgets, better alignment between IT spending and business objectives, and greater central coordination of IT investments across the organization. By following certain specific steps to establish or upgrade ITPM and by benchmarking against synchronized companies, large organizations can make IT an integral part of their competitive advantage.

In the late 1990s, companies often bought huge quantities of IT for reasons that had nothing to do with their business models or long-term strategies. There was a “follow the pack” approach to IT investment that continues, to a lesser degree, today. For managers seeking to break away from fear-driven IT investment, the author suggests that they consider the operations of Inditex Group, a clothing manufacturer and retailer based in northwestern Spain and best known for its Zara stores. Although few would think first of this industry or region in a search for IT leaders, Inditex’s experience demonstrates that it is possible to select, adopt and leverage IT masterfully while spending very little on it. Inditex has higher operating profit and much better recent stock-price performance than any of its competitors, and the author believes that there is a direct connection between its financial performance and its IT excellence. For managers weary of me-too IT investment, he lays out the five general principles that underlie Inditex’s approach to technology spending.

In recent years, a "postcompany" school of business experts has argued that leaps in information technology have made possible a new world of seamless collaboration among businesses, one that will bring enormous gains in efficiency and flexibility. Indeed, the experts counsel, executives should look for opportunities to tear down the "walls" around their organizations, merging their companies into amorphous "enterprise networks" or "business webs." The author concedes that the universal IT infrastructure that has been developed over the past decade does create pressures to homogenize business processes and organizations. But he warns that it is dangerous for companies to assume that the "death of distance" brought about by new communications technologies will mean the death of the company. New technologies will never conquer cutthroat competition, and managers need to be wary of alliances, outsourcing contracts and specialization initiatives that foreclose opportunities for advantage and put long-term profitability at risk. Companies will always need the walls they have so carefully erected over the years to protect their advantages.

Offshoring, the increasingly common practice among U.S. and European companies of migrating business processes overseas to India, the Philippines, Ireland, China and elsewhere, is often seen as a negative phenomenon that suppresses domestic job markets. On the contrary, says the author, offshoring is a critical component of next-generation business design, a dynamic process of continually identifying how to deliver superior value to customers and shareholders. Companies such as General Electric, Intel, J.P. Morgan Chase, Allstate, Prudential, Dell, Cisco and Motorola have all adopted it in some form as they shift their managerial frames of reference toward the requirements of the global-network era. Companies would do well, the author advises, to think rationally -- not emotionally -- about offshoring's relevant issues: What are their core competencies? What form of governance is optimal? How will work will be distributed and integrated?