MIT Sloan Management Review

Companies should focus less on marketplace premiums for their innovations and more on opportunistically exploiting subsidies for innovations. Thus Microsoft‘s Windows 95 development effectively garnered a $900 million subsidy by drawing upon a valuable technical population to test and help improve the system. An innovation subsidy, says the author, is individuals‘ and institutions‘ cost-effective bartering of resources to reduce risk.

In a world of commoditized products, companies are turning to service offerings for growth. The key to success involves redefining markets in terms of customer activities and outcomes, not products and services.

Companies that actively manage a wide range of sustainability indicators are better able to create long-term value for all stakeholders.

The product-development process is often seen as an undependable “black box” that rarely produces results that exceed business expectations. With an approach called “net present value, risk-adjusted,” the author offers an operational framework of quantitative tools that can be integrated into existing stage-gate methodologies to create a risk-adjusted NPV that considers the impacts of product portfolio, user needs, and technical and marketing risks.

In 1988, I was wandering the floor of Comdex, the computer industry’s enormous annual trade show and could feel a palpable sense of anxiety among the throngs of participants.

Traditional strategic planning draws from forecasts of parameters like market growth, prices, exchange rates, and input costs that managers are unable to predict five or 10 years in advance with any accuracy. The author discusses a strategy that embodies a coherent portfolio of options, sketches a process managers can use to develop this kind of strategy, and explains how planning and management opportunism can reinforce each other.

Together, suppliers organized to save Toyota from a devastating crisis that threatened to halt operations for weeks.

How firms can overcome the obstacles to strategic innovation and break the rules of the game in their industry.

Should a financial firm absorb risk or transfer it? How can it mitigate risk? And how actively should it manage risk?

Simulation tools can help family and nonfamily business leaders link their thinking to their feelings, strategic plans to relationships, and issues of strategy and stewardship to ownership.

Are strategic takeovers, which are generally friendly transactions involving stock and firms in overlapping businesses, more profitable than financial deals, which are usually hostile transactions involving cash and firms in unrelated businesses?

Audit failures rarely result from the deliberate collusion of auditors with clients. Instead, auditors may find it psychologically impossible to remain impartial and objective.

A combination of temporary conditions such as environmental factors or price cuts may permanently affect a company’s market share. What causes the phenomenon of hysteresis in marketing? Can companies predict and take advantage of this effect? Equally important, can they avoid becoming its victims?

The persistent U.S. trade imbalance may have two causes: a declining manufacturing base and the shift of the U.S. economy toward services. Correcting the imbalance will require a substantial commitment to expand America’s manufacturing base.

Information technology implementation in organizations has gone from automating back-office clerks to supporting the complex tasks of autonomous knowledge workers.

Superstition has always had a big impact on human behavior, sometimes yielding macroeconomic effects for even the most industrialized societies. An example of the effects of superstition is the rate of Japanese births from 1960 to 1990 (see Figure 1). A general, steady decline is evident in recent decades.

IBM is making a comeback. Although many observers had counted the company out — “It’s a dinosaur, an implosion, a wreck,” various commentators said — its revival was probable, even predictable, because cycles of decline and revitalization have been the company’s pattern through many decades.P

When Eastman Kodak turned over the bulk of its IT operations to three outsourcing partners in 1989, outsourcing was a $4 billion a year business.1 Today, that number has grown to nearly $40 billion a year, according to the estimates of industry watchers Frost & Sullivan.

While outsourcing IT has been a trend in the 1990s, it is not a new phenomenon. For example, systems development has been sourced from outside through application packages or software houses for many years.

How can managers improve the ethical quality of their decisions and ensure that their decisions will not backfire? The authors discuss three types of theories that will help executives understand how they make the judgments on which they base their decisions. By understanding those theories, they can learn how to make better, more ethical decisions.