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In This Issue

(originally published by Booz & Company)
More than two decades have passed since Alvin Toffler warned us in his book, "Future Shock," that change would soon be the norm and that its pace was accelerating. Since then, Mr. Toffler's predictions have, if anything, proved to be too conservative. The world is wired together, information passes from place to place in less than a heartbeat and business is global.

Ideas are also global and no single company, institution or school can any longer maintain a monopoly on knowledge or creativity.

That fact was borne out recently when I visited in Bombay withKeshub Mahindra, chairman of Mahindra & Mahindra and the subject of this issue's Thought Leader interview. As I wandered through the streets of Bombay, I went into bookstores that had in their windows the latest works by the world's best-known management and strategy thinkers. The books of Rosabeth Moss Kanter, Charles Handy, Michael Porter, C.K. Prahalad and Gary Hamel, Christopher Bartlett and Sumantra Ghosal, Tom Peters, Peter Drucker, John Kao and many others were all in evidence. At Mahindra & Mahindra, the 10th-largest company in India and one of the subcontinent's largest vehicle manufacturers, managers frequently discuss the works of their favorite business thinkers over meals and over the company's E-mail system. Mr. Mahindra, at 72, often participates in the discussions.

The point of this is that the world as a whole is not only generating information as never before--which is what Mr. Toffler predicted--it is also learning as never before.

Because competition is so fierce and the rules of the game are changing so rapidly, everything must be subjected to fresh thought. In this issue, Albert J. Viscio and Bruce A. Pasternack, both of Booz-Allen & Hamilton, describe their research program, which is aimed at rethinking the business model. In their article, "Toward a New Business Model," the authors note the intense changes with which businesses must contend and they ask whether the current business model, now more than a century old, is up to the task.

Not only are businesses changing, but so are markets. In "Whither Germany? Whither Europe?" Norbert Walter, chief economist at the powerful Deutsche Bank, argues that Germany, once the economic engine of Europe, is now the brake. The reason for the change has to do with Germany's massive social welfare costs and its rigid labor system. According to Professor Walter, Germany, which has been a leader in the movement to create the European Monetary Union, with its single currency and Frankfurt-based central bank, may have difficulty reaching the EMU's target criteria as outlined in the Maastricht Treaty. If that happens, he argues, European economic integration could be delayed by a decade.

Change also occurs on the micro level, as evidenced by the re-engineering collaboration between Booz-Allen & Hamilton and Corning Incorporated. In "Partnering for Results: A Case Study of Re-engineering, the Corning Way," Roger G. Ackerman, now Corning's chairman and C.E.O., and Gary L. Neilson, from Booz-Allen, explain how objectives were set and decisions were made in a major re-engineering program that produced dramatic results. Though the program, Corning Competes, has been written about in other business publications, this article enables the participants themselves to tell the story. It is the inside view of a major change effort at a major global company.

With the pace of change accelerating, as Mr. Toffler has written, it is difficult to set strategy. Often, as Henry Mintzberg, the management theorist, has written, the process devolves into something rigid, lifeless and flat. Is there a better way? According to John E. Treat, George E. Thibault and Amy Asin, of Booz-Allen, there is. That way is called wargaming and it draws heavily upon the methods used by the military to cope with the rapidly changing conditions of the battlefield. Wargaming, applied to business, enables companies to test their assumptions about competition in fluid conditions that resemble real life. By playing out these games, companies can design strategies that are able to evolve with the changing nature of the environment.

Not all change is good. Some great companies lose their position over time. A quick scan of today's Fortune 500 list, compared with the same list compiled a decade ago, makes that point evident. In "Why Bad Things Happen to Good Companies," Benson P. Shapiro, of the Harvard Business School, Adrian J. Slywotzky, of Corporate Decisions Inc., and Richard S. Tedlow, of the Harvard Business School, explain the concept they call value migration. As this process proceeds, the authors argue, the organization goes through a period of denial, self-deception and disavowal. Each step along this downward spiral makes the return less certain. In a forthcoming issue of Strategy & Business, the authors will offer their advice about how to stop "bad things from happening to good companies."

If change is the battlefield, then the new science of complexity may offer clues as to how to mount the attack. According to David Berreby, an award-winning science writer, companies are learning to use the latest thinking in biology to map processes and manage outcomes. In this article, the author discusses business issues with the scientists at the Sante Fe Institute and offers new insight into how to think about problems.

Best practices are often talked about, but what are they really? To find out, Strategy & Business sent Lawrence M. Fisher, a writer for The New York Times, to Novell Inc. to study how that company manages its resellers. What he returned with has much that other businesses can learn from.

Also in this issue, book reviews, noteworthy quotes, cartoons, briefs and Frank V. Cespedes, of the Center for Executive Development, on the marketing gearbox.

Joel Kurtzman, Editor

Joel Kurtzman,

Joel Kurtzman is editor-in-chief of Strategy+Business.

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