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Some authors, and even some popular journals, have noted examples of the radical new organizational forms now emerging. This article illuminates the technological and services bases of these changes -- and examines how to manage them successfully. (Its companion article is "Technology in Services: Rethinking Strategic Focus" by J. B. Quinn, T.L. Doorley and P.C. Paquette; Sloan Management Review 31, no. 2 [1990]: 79-87.) Both articles build on the authors' earlier works published by Sloan Management Review, Scientific American, and the National Academy Press.

Besides the changes in organizational strategy described in the companion article, new service technologies also dictate substantive changes in strategic structures and strategic thinking. These include defining each value-creation activity as a service, asking in each case whether the company can perform that service better than anyone else in the world, and outsourcing or eliminating the activity if the answer to the question is "no." This article discusses how firms can best perform that analysis and implement the strategy that emerges from their analysis. (Its companion article is "Technology in Services: Rethinking Strategic Focus" by J. B. Quinn, T. L. Doorley and P. C. Paquette; Sloan Management Review 31, no. 2 [1990]: 67-78.)

International businesses faced new strategic challenges in the 1980s. Corporations that had once succeeded with relatively one-dimensional strategies -- efficiency, responsiveness, or ability to exploit learning -- were forced to broaden their outlook. Successful "transnational" corporations integrated all three of those characteristics. They did so by building on the strengths -- but accepting the limitations -- of their administrative heritages. This is the first of two articles; the second will describe how actual companies made that transition.