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Despite lip service paid to the idea that employees are a company’s greatest asset, too often they are sacrificed in the name of cutting costs and boosting efficiency. But that does not have to be the case. Intensive research by Boston Consulting Group’s Morten Hansen and Michael Deimler reveals that the Internet technology that brought us B2B and B2C is now bringing us B2E: business-to-employee management. By cultivating employees the way it cultivates customers, a company can develop a more satisfied, more productive work force, achieve greater productivity, cut costs and beat its competitors. Hansen and Deimler identify three components in a comprehensive B2E program: online business processes, online people management and online services to the company community. The mode of delivery is the integrated enterprise portal, which provides employees with the tools they need to access information and services at a single location. When business processes are moved online, both the company and its employees gain benefits springing from reduced interaction efforts. Flight crew at Delta Air Lines, for example, bid for shifts and receive their schedules online, which saves the company time and is more convenient for the employees. Online people management is driven by self-service and mass customization: Employees can manage their own training, tailor their own health-care packages and take care of introductory human-resources formalities online. Online community services are driven by the somewhat counterintuitive notion that allowing employees to accomplish certain personal business online at work will make them more productive. The online marketplace offered by Coca-Cola Co. is popular with employees and management alike. To design a successful enterprise portal, companies should follow the model of the online store: Supply features that customers (in this case, employees) want first, and then add features that the company wants the employees to use. Building a portal can be expensive, and it requires a high level of expertise, but the results can transform the company.

What do managers and executives believe and feel about workplace spirituality or assessments of its purported benefits? In this article, the authors present the results of a two-year empirical study based on face-to-face interviews and questionnaires. Participants differentiated strongly between religion and spirituality, viewing religion as a highly inappropriate form of expression and spirituality as a highly appropriate subject for the workplace. Most believed strongly that organizations must harness the immense spiritual energy within each person in order to produce world-class products and services. Meaning and purpose on the job are imparted by (ranked from highest to lowest in importance): (1) "the ability to realize my full potential as a person"; (2) being associated with a good organization or an ethical organization; (3) interesting work; (4) making money; (5) having good colleagues and serving humankind; (6) service to future generations; and (7) "service to my immediate community." Beyond a certain threshold, the authors point out, pay ceases to be the most important factor in work life, and higher needs prevail; the desire for "self-actualization" becomes paramount. The authors observed five basic designs or models in which organizations are religious or spiritual: -- The religious-based organization may be positive toward religion and spirituality or positive toward religion and negative toward spirituality. -- The evolutionary organization begins as strongly associated or identified with a particular religion and moves toward a more ecumenical position. -- The recovering organization adopts the principles of Alcoholics Anonymous as a way to foster spirituality. -- The socially responsible organization is led by someone guided by strong spiritual principles or values that are applied directly to the business for the betterment of society. -- The values-based organization is guided by general philosophical principles or values that are not aligned or associated with a particular religion or even with spirituality. -- Characterized by the underlying principle of hope, the models appear to have been precipitated by a critical event that caused intense difficulties for the company founders, heads, or the entire organization. All incorporate a principle or mechanism for limiting greed -- both the unlimited accumulation of money and the unrestrained pursuit of power. With a few notable exceptions, people who consider their organizations as being spiritual also see them as better than their less spiritual counterparts.

To survive today, firms must become adept at developing products that deliver the quality and functionality that customers demand while generating the desired profits. To ensure that products are sufficiently profitable when launched, many firms subject them to target costing, a profit management technique. The authors studied the mature, highly effective target costing systems of seven Japanese companies and documented their costing procedures. Although practices differ among these firms, the authors identified an underlying generic approach for implementing target costing systems. A highly disciplined process, effective target costing comprises the following facets that the authors discuss in detail: -- Market-driven costing consists of three companywide tasks -- setting the company's long-term sales and profit objectives, structuring product lines to achieve maximum profitability, and establishing a product's target selling price -- and two steps applicable to new products -- setting a target profit margin consistent with the company's long-term profit objectives and computing the product's allowable cost (by subtracting the target profit margin from the target selling price). -- Product-level target costing comprises setting a reasonably achievable product-level target cost, imposing discipline upon the development process to attain the target cost (whenever feasible), and achieving the cost goal without sacrificing functionality and quality (primarily through value engineering and other engineering-based cost reduction techniques). -- Component-level target costing includes decomposing the product-level target cost to the major functions or subassemblies (e.g., in a car, the engine, transmission, cooling system, air conditioning system, and audio system), setting component-level target costs, and managing suppliers (clearly conveying to them the competitive cost pressures facing the lean enterprise). The cardinal rule of the companies studied is: "Never exceed the target cost." They enforce this rule in three ways -- by offsetting design improvements that result in increased costs with savings elsewhere in the design, by not launching products that exceed the target cost, and by carefully managing the transition to manufacturing in order to achieve the target cost.

Firms can derive significant benefits from consciously, proactively, and aggressively managing their explicit and explicable knowledge, which many consider the most important factor of production in the knowledge economy. Doing this in a coherent manner requires aligning a firm's organizational and technical resources and capabilities with its knowledge strategy. However, appropriately explicating tacit knowledge so it can be efficiently and meaningfully shared and reapplied -- especially outside the originating community -- is one of the least understood aspects of knowledge management. This suggests a more fundamental challenge, namely, determining which knowledge an organization should make explicit and which it should leave tacit -- a balance that can affect competitive performance. The management of explicit knowledge utilizes four primary resources that the author details: repositories of explicit knowledge; refineries for accumulating, refining, managing, and distributing the knowledge; organization roles to execute and manage the refining process; and information technologies to support the repositories and processes. On the basis of this concept of knowledge management architecture, a firm can segment knowledge processing into two broad classes: integrative and interactive -- each addressing different knowledge management objectives. Together, these approaches provide a broad set of knowledge-processing capabilities. They support well-structured repositories for managing explicit knowledge, while enabling interaction to integrate tacit knowledge. The author presents two case studies of managing explicit knowledge. One is an example of an integrative architecture for the electronic publishing of knowledge gleaned by industry research analysts. The second illustrates the effective use of an interactive architecture for discussion forums to support servicing customers. Zack also discusses several key issues about the broader organizational context for knowledge management, the design and management of knowledge-processing applications, and the benefits that must accrue to be successful. In summary, organizations that are managing knowledge effectively (1) understand their strategic knowledge requirements, (2) devise a knowledge strategy appropriate to their business strategy, and (3) implement an organizational and technical architecture appropriate to the firm's knowledge-processing needs.

Processes to solidify and streamline supplier-customer relationships can result in mutually beneficial commercial success.

A survey on supplier relationships administered to 447 managers from the major U.S. and Japanese automobile manufacturers showed that these firms do not manage primarily by strategic partnerships, but instead participate in various types of relationships. The author proposes and empirically validates a framework for managing a portfolio of relationships that will help senior managers answer two key questions: Which governance structure or relational design should a firm choose under certain external contingencies? What is the appropriate way to manage each type of relationship? The survey examined the specific investment of buyers and suppliers from both national samples in four types of relationships: strategic partnership, market exchange, captive buyer, and captive supplier. Interestingly, the level of investment made by either party in every type of relationship significantly correlated with practices commonly associated with strategic partnerships, such as long-term relationships, mutual trust, cooperation, and wide-scope relationships that include multiple components. No one type of buyer-supplier relationship & #8212; not even the strategic partnership & #8212; was inherently superior, which suggests that each can be well or poorly managed. Firms successfully manage supply chains by matching relationship type to specific product, market, and supplier conditions and by adopting an appropriate management approach for each type of relationship. Findings also countered the popular belief that Japanese firms tend to manage their suppliers using highly dedicated relationships or strategic partnerships. They appear to conduct business with a smaller ratio of strategic partnerships than is commonly believed (19 percent of the sample) and to extensively use market-exchange relationships (31 percent) & #8212; a practice usually associated with Western manufacturers. The author provides a contextual profile of product and market conditions most conducive to each type of relationship and discusses the management features common to the best performers in each category. By consciously and systematically matching the design of each relationship to its external context, product executives can stifle the urge to join the sweeping fad of strategic partnerships and avoid underdesigning and overdesigning external relationships.

Today's knowledge and service-based economy presents opportunities for well-run companies to increase profits through strategic outsourcing.

Smart markets, or markets defined by frequent turnover in the general stock of knowledge or information embodied in products and possessed by competitors and consumers, are based on new kinds of products, competitors, and customers. As a result, companies seek to understand the degree to which their own capabilities and motivations as information-processing "organisms" are crucial in enabling them to extract maximum value from their customer information assets. Firms that have gained a significant competitive advantage are distinguished by their ability to see beyond their IT infrastructure and view information itself as the core asset and the management of information as the company's main priority. Understanding how consumers are adapting their behavior to the demands of an increasingly information-intensive environment has been a starting point for companies that have achieved success in smart markets. By observing the activities of these firms across industries, it is possible to identify generic strategies and develop a preliminary taxonomy, or categorization scheme, that can be used to compare and contrast them. The placement of individual strategies within a conceptual framework guides managers in making customer-management decisions. The organizing tool, or asset around which the full range of strategies is based, is the customer information file (CIF) -- a single virtual database that captures all relevant information about a firm's customers. Underlying the notion of the CIF as the key asset is the assumption that the firm's operational goal is to maximize communication with its customers -- to look for every opportunity to "talk" with them. After all, the data collected from these interactions are the raw material from which companies craft their information-intensive strategies. A company thus sets as its main objective the maximizing of returns to the CIF. It then chooses any one of several strategies to accomplish that objective. This approach represents a shift in performance goals. In particular, concepts such as profitability or market share per product are being replaced with concepts such as profitability per customer (sometimes referred to as "lifetime value of a customer") or customer share (the total share of a customer's purchases in a broadly defined product category).