MIT Sloan Management Review

From the editor: Reflections on rethinking your business — and other insights contained in this issue.

Too many executives confuse what an innovation is with what an innovation would do for them if they had one. The solution? Think of innovation as an if-then argument.

Customer-oriented companies pride themselves on understanding the marketplace and integrating the best ideas into future products. But what would it be like if you found that you had hundreds, if not thousands, of knowledgeable users ready and eager to spend nights and weekends acting as extensions of your research and development department? For the Lego Group, the Danish maker of children’s creative construction toys, this close bond with the user community is not a pipe dream but a reality.

In industrial sectors such as consulting, advertising, filmmaking, software, architecture, engineering and construction, most individual businesses, by definition, are “project-based firms.” This article proposes the term “baronies” to describe the organizational units that direct the projects within project-based firms, and highlights the roles that barons play in three basic types of project-based firms: dominions, tight federations and loose federations.

Good leaders make their work look easy. But the reality is that most have had to work hard on themselves — by managing or compensating for potentially career-limiting traits. To grow as an executive, you need to recognize and manage your strongest tendencies.

Most strategy making begins in the wrong place. Many companies rely on frameworks and models from the strategist’s toolbox, including industry analysis, market segmentation, benchmarking and outsourcing. As a result, they short-circuit the real work of strategy and miss out on finding new insights into the preferences or behaviors of current or potential customers. Few companies develop original strategies by formulating hypotheses and then testing them in a competitive setting.

Companies are increasingly turning toward business model innovation as an alternative or complement to product or process innovation. Changes to business model design can be subtle; even when they might not have the potential to disrupt an industry, they can still yield important benefits to the innovator. The article offers a number of examples of business model innovation and poses six questions for executives to consider when thinking about business model innovation.

Companies that are able to radically change their entrenched ways of doing things and then reclaim leading positions in their industries are the exception rather than the rule. Even less common are companies able to anticipate a new set of requirements and mobilize the internal and external resources necessary to meet them. The article focuses on three companies that transformed themselves and compares them with three other companies from similar industries that hadn’t been required to make a dramatic shift.

The current balkanized approach to measuring patent quality is not serving the users of the world’s patent systems.

Faced with the need to educate themselves quickly about a foreign market, companies employ a variety of approaches to learning. New research offers insights into choosing the best approach for your circumstances.

At too many large companies, corporate functions like HR and IT don’t get enough strategic direction from the CEO. Four basic steps can help.

New research finds that investments companies make in information technology increase profitability and sales more than investments in advertising or R&D do.

The article offers four recommendations for an effective “network orchestration” strategy, bringing together local and global innovation partners in emerging markets. Multinationals should extend innovation partnerships beyond the usual channel partners by engaging key community stakeholders such as government bodies, universities and NGOs; engage innovation partners strategically with a larger purpose; trust but verify in a transparent manner; and designate local partner network managers.