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User innovation communities present a great advantage over manufacturer-centered development systems.

The external environment for innovation is an important driver, and industrial clusters offer special advantages.

As bricks-and-mortar companies battle Internet upstarts, some succeed in harnessing the Web to better serve consumers, generate profits and increase market share. Meanwhile others never get their e-business initiatives off the ground. What differentiates the "leaders" from the "laggards"? Leslie Willcocks, who is professor of information management and e-business at the Warwick Business School, University of Warwick, United Kingdom, and Robert Plant, an associate professor of computer information systems at the University of Miami, conducted a year-long research project and interviewed more than 130 executives in 58 established business-to-consumer (B2C) corporations spanning three continents and a range of industries. They have created a new framework for e-business, which explains strategies that have worked for traditional companies. The framework shows that "laggard" organizations typically lack a clear business model to govern their use of Web technologies, becoming mired in debates about the relevance of Web technology itself or spending vast sums on brand building without delivering on the promises their brand conveys. "Leading" organizations tie e-business to their bottom lines by following a distinctive path. Although these companies may start with the idea of achieving technology leadership, they shift attention to brand building and/or customer service and concentrate on generating profitable market share and differentiating the company from competitors. These e-business leaders share certain characteristics: They integrate Web technologies into the core business; they use information gathered via the Internet to gain insight into their customers; they augment their service; they focus on customers and marketing; and they adapt to the constantly changing Internet marketplace. All have identified ways of using Web technologies for competitive advantage and seek ways to sustain that advantage by focusing on brand, size and customer relationships as well as differentiation. Increasingly, companies trying to enter the field of B2C e-business will discover what leading organizations already know: E-infrastructure is a boardroom investment and ownership issue that is central to executing sustainable, anticipatory performance.

Strategies to tackle some of the overlooked costs of outsourcing.

Integrating design and manufacturing helps, but only if the & #x0201C;fit” is right.

In many ways, the industrial age has been an era of harvesting natural and social capital in order to create financial and productive capital. So far, the New Economy looks more like the next wave of the industrial era than a truly postindustrial one. Why should we care? Because, say the authors, the basic development patterns of the industrial era are not sustainable. In the face of this challenge, organizational-learning expert Peter Senge and former Volvo and IKEA senior executive Goran Carstedt hail the emergence of a new environmentalism driven by innovation, not regulation & #8212; radical new technologies, products, processes and business models. They describe how more and more companies are recognizing the business opportunities that a focus on sustainability creates. Such a shift in thinking is already evident in many companies and industries. Xerox employed “zero-waste-to-landfill” engineering to develop its 90% remanufacturable Document Centre 265 copier. Interface Inc. is no longer just a maker of commercial carpet tiles, but now & #8212; as a provider of “floor-covering services” & #8212; leases products and later recycles them completely. Such companies are applying learning-organization principles to create sustainable business models. Simultaneously, they become inspirational, energetic places to work, where even relationships with customers and suppliers improve. Nonetheless, ecoefficiency alone will not create a truly postindustrial age. Ecoefficiency gains are laudable but dangerously incomplete, say the authors, as is any strategy that fails to consider how the economic system affects the larger ecological and social systems within which it resides. Only a more integrated view will enable companies to innovate for long-term profitability and sustainability. Industrial-age systems follow a linear flow of extract, produce, sell, use, discard: the “take-make-waste” approach to economic growth. A systemic approach would reduce all sources of waste: from production, use and disposal. How can managers adapt? In stark contrast to industrial-age, command-and-control management methods are the three core competencies that learning organizations must master to profit from sustainability. First, they must encourage systemic thinking so that they can sense the emerging future. Second, they must convene strategic conversations with investors, customers, suppliers and even competitors to build the trust needed to change outmoded mental models about what business success is. Finally, they must take the lead in reshaping economic, political and societal forces that stymie change. True learning organizations stand out by championing business models that foster sustainable growth. According to Senge and Carstedt, no time in history has afforded greater possibilities for a collective change in direction.

Warren Bennis and a panel of experts in leadership development discuss the “legitimization of doubt.”

Most corporate executives are by now convinced that the scale and pervasiveness of technological change requires a fundamental review of business strategy. Web-based technology is creating opportunities to rethink business models, processes and relationships along the whole length of the supply chain. Successful e-strategies translate established strategic concepts into contexts in which they previously were not economically viable. For example, in the 1960s and 1970s IBM won the loyalty of major corporate customers through highly paid account executives who provided so-called relationship management. Today that same concept -- now technologically based -- is being deployed to tailor support to individual consumers. But there is still enormous uncertainty within the business community about the future shape of e-business -- as evidenced by the mood swings of the financial markets and the faltering fortunes of even the icons of the New Economy. The sheer scope of potential change presents some challenges: How can executives make sense of the burgeoning e-business ideas, and where does strategic analysis begin? Behind the new e-business language, how new are the strategic concepts? And what form will a company's strategic e-opportunity take? As a platform for answering those questions and exploring the new strategic landscape, author David Feeny constructs a coherent map of the e-opportunity. He identifies three layers of e-opportunity, or domains, that exist within operations, marketing and customer service. In each domain, technology may enable a radical new vision of what a business can accomplish. Although every business should be considering opportunities across all three domains, the potential significance of each domain and of individual ideas within it will vary widely across industry sectors and businesses.

Because software is an increasingly pervasive part of the New Economy, delegating decisions about its development to technical staff can be risky for executives. Today's general manager needs to have a good grasp of the most effective methods for developing and deploying software products and services throughout the organization. So what is the best approach to software development? Recent research from Harvard Business School professor Alan MacCormack and colleagues proves a theory about software development that has been gaining adherents for some time: The best process is an evolutionary one. Focusing on the area of Internet-software development, the researchers uncovered four practices that lead to success: an early release of the evolving product design to customers, daily incorporation of new software code and rapid feedback on design changes, a team with broad-based experience of shipping multiple projects, and major investments in the design of the product architecture. Among the development projects cited are Linux, the poster child of the open-source movement, and Internet Explorer 3.0. Commenting on the latter, a project in which Microsoft came from behind with a product equal to Netscape's, a team member declared, "If someone asked what the most successful aspect of [Internet Explorer 3.0] was, I would say it was the job we did in componentizing the product." The new research supports componentizing. Getting a low-functionality version of the product into customers' hands at the earliest opportunity was shown to improve quality dramatically. The research also demonstrates that although age doesn't count, experience still does. The more projects shipped, the more capable a programmer becomes. But in environments with rapidly changing markets and technologies, the usefulness of the evolutionary model extends beyond developing software. By dividing tasks into microprojects, a company can tailor the model to reflect any context. Traditional market research has limited value in the uncertain context of the Internet-software industry, and short microprojects are called for, with an early working version for feedback on the product concept. In more-mature environments, however, companies can specify more of the product design upfront, use longer microprojects and develop greater functionality before feedback is needed. Flexibility is key. Thus, an evolutionary-delivery model represents a transcendent process for managing the development of all types of software, with the details tailored to reflect each project's unique challenges.

To grow steadily and avoid stagnation, a company must learn how to scale up and extend its business, lengthen its expansion phase, and accumulate and apply new knowledge to products and markets faster than competitors. Managers can't leave growth to chance. They need a plan that renders consistent sales growth over the long term -- one that captures management's vision for expansion and that addresses the product and market combinations the company intends to pursue, the size it hopes to achieve in a particular time frame and the know-how and organizational structures needed. Such planning has an internal focus. It aims to help a company exert more control over its own fate as it rises to external challenges. Three thriving companies demonstrate three different strategies in action. The Netscape experience shows how a company can scale up -- do more of what it already does well. Netscape went from $80 million in sales in 1995, its first full year of operation, to $500 million just three years later. IKEA used duplication -- repeated the business model in new regions. Established in 1954 as a small domestic furniture manufacturer and retailer in Sweden, by 1999 IKEA had 50,000 employees and a presence in 25 countries. As the authors explain in depth, IKEA's success is tied to the way it manages and transfers knowledge. SAP's growth strategy is an example of granulation -- growing select business units. SAP started with a basic enterprise-resource-planning system, then moved to multiple products for e-commerce and Internet activities. Using one product as a platform, it began allowing customers to fine-tune virtually any resource-planning system. The authors emphasize the importance of combining strategies for growth with explicit strategies for learning. Companies must decide what kind of growth strategy they want to pursue, given their capabilities and market opportunities. They must then make the strategy work by changing their structure and processes in a way that lets them acquire or create specific knowledge about new technologies, customers and industries. The integration of growth strategies and learning strategies is at the heart of success.