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In nearly half a century of literature on corporate strategy, the term has become more complicated and fractured. There are now at least 10 separate schools of thought regarding strategy, and more than a dozen common definitions of the term. To clarify and deepen our understanding of corporate strategy, the author suggests general guidelines that set the boundaries of the discipline and highlight its specifics in order to facilitate future executive decisions. The author argues that strategy comprises three objectives: creating value, handling imitation and shaping a perimeter. The ability to sustain value creation, whether from the customer's or the shareholder's perspective, is the ultimate goal of any strategy. Concepts such as benchmarking, differentiation, core competencies, unique resources, institutionalism and competitive rivalry are all connected with the ability to prevent, implement or leverage imitation. Decisions about diversification, outsourcing, vertical integration, internationalization and positioning are all linked with the search for a profitable perimeter.

Despite the importance of management innovation, it is poorly understood and usually not systematically fostered. To research the process, the authors first conducted an historical analysis of more than 100 management innovations that took place over 130 years. Then they studied 11 recent cases of management innovation, in most cases interviewing one or more of the key innovators. The research revealed that, compared with the process of technological innovation, management innovation tends to be more diffuse and gradual. It typically follows four stages. The first stage is some type of dissatisfaction with the status quo, such as a crisis or strategic threat. That stage is followed by inspiration from other sources. The third stage is the invention of the management innovation itself. While most innovators identified a precipitating event that preceded the innovation, such as a challenge from a boss or a new assignment, few recalled a distinct "eureka moment"when the innovation occurred. The fourth stage is validation, both internally and through external sources such as academics, consultants, media organizations or industry associations.

Successful companies recognize that information technology can fundamentally alter the very nature of work. Such a transformation, however, often requires that an organization rethink its corporate strategy and remake its basic structure and processes. The authors, drawing on interviews with Schneider International as part of MIT's Management in the 1990s Research Program, show that the benefits to organizations are related to the extent that organizations adapt their internal structures, processes and culture to extract the greatest value from technology. Although IT has enabled the growth of new companies and even entire industries, these technologies have also transformed the opportunities and challenges facing established manufacturing and service firms. This article examines Schneider's implementation of technologies such as GPS and satellite tracking not only to improve dispatch but also to provide value to customer service such as pinpointing delivery times, driver availability and the ability to alter delivery pickup and drop-off locations. The authors demonstrate that if organizations invest in complementary assets (people skills, new organizational structures and new work processes) to support their IT, they can transform services into products that will evolve into yet more new services, creating a virtual spiral with enormous competitive advantages.

AåÊframework called the "innovation radar" can help companiesåÊidentify opportunities for innovation.

Service businesses now make up about 70% of the aggregate production and employment in the OECD nations, yet true innovation is rare in the service sector. Many companies incrementally improve their offerings, but few succeed in creating service innovations that launch new markets or reshape existing ones. The premise of this article is that by thinking about a service in terms of its core benefits and the separability of its use from its production, managers can more easily see how to outinnovate their competitors. Before they can do so, though, they must understand the different types of market-creating service innovations as well as the factors that enable them. The authors introduce and describe a two-by-two matrix whose taxonomy helps managers think strategically about service innovations that can create new markets. The dimensions of the matrix refer to the type of benefit offered and the degree of service separability. The article references best-practices examples including Enterprise Rent-A-Car, FedEx, eBay, Starbucks, Cirque du Soleil, Google, Southwest Airlines, Walgreens, Netflix and Barnes & Noble to illuminate each of the four cells of the matrix and explain the value to managers of understanding the dynamics of the cell that is most applicable to their service innovation efforts.

Despite considerable research on customer retention and word-of-mouth referrals, it has always been difficult quantifying their contributions to the bottom line. Using a metric known as "net promoter score," the author believes firms can now measure the dollar value of customers based on satisfaction levels. The author administered a survey designed to assess customer relationships to thousands of customers in six industries. He determined that customers tend to cluster into one of three categories: promoters, passives and detractors. Promoters represent more than 80% of the positive referrals a company receives, while detractors represent more than 80% of the negative word-of-mouth. NPS is determined by subtracting the percentage of detractors from the percentage of promoters. Using this data, a firm can quantify the value of a customer by tracking five categories: retention rate, profit margins, spending, cost efficiencies and word-of-mouth. The firm can then use NPS to make strategic decisions by targeting its efforts to leverage the most value for its customer service dollar. For instance, American Express targets its promoters with premium credit cards in an effort to increase profitability, and GE sends cross-functional teams to its detractors in order to prevent the spread of negative word-of-mouth.

Although most U.S. businesspeople know better than to sit down with competitors to fix prices or divide markets, they can still violate antitrust rulings. Increasingly, the government agencies that enforce antitrust laws are scrutinizing organizations' marketing, and shifts in practices in the early 2000s have reinvigorated enforcement activity. Understanding what behavior raises antitrust flags is critical for companies with dominant market share in one or more product categories. There has been increasing scrutiny of shelf-slotting practices and category management in the retail sector, for example. In this article, the authors take managers through the process of determining antitrust violation and then lay out five important cases in which practices that seemed to fit with competitive norms or with good citizenship, in fact, were ruled to be breaches of antitrust law -- in some cases, with momentous penalties. The article goes on to describe a sampling of the tactics that can help to temper competitiveness with caution. It concludes that a fundamental requirement is for managers to begin looking at their competitive tactics -- and at the business strategies and processes that support those tactics -- through the eyes of antitrust regulators.

The authors contend that a number of factors, both external and internal, are increasingly necessitating a strategic approach to corporate communications. Yet, despite regulatory imperatives, organizational complexities and a growing need for companies to increase their credibility with their various constituencies, many companies still take a tactical, short-term approach to communication that is not only nonstrategic but may, in fact, be inconsistent with the corporate strategy or even impede it. The authors conducted more than 50 interviews with CEOs, CFOs and heads of corporate communications and investor relations at companies that represent the state of the art in corporate communications (Dell, FedEx and PepsiCo), companies that have faced and survived major crises (Cendant, Knight Trading and Textron), and some that are great corporate communicators but not usually recognized for their efforts (Cognex, Infosys, Jet Blue, the New York Times Co. and Playboy Enterprises). They also included a pharmaceutical company (GlaxoSmithKline), given the formidable communications issues in that industry. On the basis of that research, the authors offer best practice lessons and a framework to enable executives to think carefully about their organization’s objectives for each specific communication, determine which constituencies are critical to meeting that objective and understand what kinds of messages to deliver through which channel.

Board directors for U.S. corporations have been facing an increasing number of demands. At the same time, the pool of available candidates to fill such positions has been shrinking. Given these realities, companies looking to fill board openings should consider a new type of director: well-established professionals who devote all of their work, time and energies to corporate board activities. Professional board directors might come from a variety of backgrounds, but they will likely be drawn from one of three categories. The first group is senior managers in midcareer. These executives have considerable experience (20-plus years) but prefer using their knowledge and experience in a less operational and more consultative manner. The second group is executives 10 years senior to those in the first category. (Thus, they would typically have 30-plus years of experience.) Tired of senior-management stresses yet having sufficient financial resources, individuals in this group might view board positions as a prelude to retirement. The third category comprises former senior partners in national accounting firms with 30-plus years of experience in audit and internal control functions. Although their career experiences will not be as broad as that of many other senior executives, individuals in this category would be ideal to chair the corporate audit or compensation committees. The author contends that candidates from the three categories -- in addition to another group made up of retired senior managers -- could greatly alleviate the growing shortage of qualified board directors.

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.