Killer Strategies That Make Shareholders Rich

Fortune, June 23, 1997, pp 70-84

" Between 1986 and 1996, just 17 companies of the FORTUNE 1,000 grew total shareholder return by 35% or more per year. Their secret? When you dig into the workings of these wealth creators, you find that most managed to grow their return rates by radically changing the basis of competition in their industries. They either invented totally new industries or completely reinvented existing industries... Taking risks, breaking the rules, and being a maverick have always been important, but today they are more crucial than ever... Unless today s established corporations learn to reinvent themselves and their industries, much of the new wealth will be created by newcomers."

The Next Best Thing to Free Money Fortune, July 7, 1997, pp 52-62

" Stock options, and the belief that they may someday be worth a lot of money, make it far easier than it used to be to start and build a company... A uniquely American phenomenon, the options culture helps explain why more than 400 public companies have sprung up in Silicon Valley, and why another 148 startups there got venture-capital backing in the first quarter of this year alone."

Brain Power: Who Owns It... How They Profit From It

Stewart, Thomas A. Stewart, Thomas A. Fortune, March 17, 1997 pp 105-110

Corporate America is now built on intellectual capital rather than bricks and mortar... This change upsets the nature and governance of corporations.

Operations of U.S. Multinational Companies: Preliminary Results from the 1994 Benchmark Survey Mataloni, Raymond J., Jr. Mahnaz Fahim-Nader. Survey of Current Business, vol. 76, no. 12, December 1996, pp. 11-39

U.S. multinational companies invest in foreign production primarily for sale in markets near the production sites -- not for cheap labor or for access to natural resources or for export back to the United States. Nearly 70% of their foreign affiliates' output of goods and services was produced in the wealthy countries of Europe and the Pacific. U.S. multinational companies account for a large share of U.S. trade -- 66% of goods exports and 38% of goods imports in 1994 -- but less than in 1982, when they accounted for 77% of goods exports and 50% of goods imports. From 1982 to 1994, the foreign affiliates' share of U.S. multinational companies' output rose from 37 to 46% their share of employment rose from 21 to 23 percent.

The Porter Prescription

Goozner, Merill (Chicago Tribune) Goozner, Merill (Chicago Tribune) The American Prospect, May-June 1998, pp 80-87

" Michael Porter, management consultant extraordinaire, has now brought his theory of competitive advantage to the inner city. Bold new ideas -- or an old elixir in a new bottle?"

International Business: The New Bottom Line

Kogut, Bruce (University of Pennsylvania's Wharton School of Business)

Foreign Policy, no. 110, Spring 1998, pp. 152-165

The globalization of markets, and rapid changes in economic and political systems, have forced scholars to rethink the meaning of international business concepts like location, comparative advantage and transmission of knowledge among countries. Today, international business focuses on the ability of managers to direct and organize people despite large variations in their national origins and culture within the boundaries of a single multinational firm.

New Thinking on Business Strategy

The Washington Quarterly, Winter 1998, pp 157-205

" As the world forges ahead in its historical transformation from an industry-based to a knowledge-focused era, the context of business strategy and management is changing rapidly and fundamentally." This file contains four articles: What Should Policymakers Know about Economic Complexity by Steven Durlauf (University of Wisconsin) The Rise of a New Corporate Form by James M. Moore (Geopartners Research, Inc.) Waking Up to the New Era of Hypercompetition by Richard A. D'Aveni (Dartmouth College) The Living Company: A Recipe for Success in the New Economy by Arie de Geus.

Increasing Returns: Competing for Customers in the Global Market

Vandermerwe, Sandra. Vandermerwe, Sandra. Journal of World Business, vol. 32, no. 4, Winter 1997, pp. 333-350

The author discusses how successful modern corporations such as Xerox, IBM, Citibank and Price Waterhouse are implementing " increasing returns" management strategies in lieu of the industrial-age " diminishing returns" model. Enterprises based on increasing returns focus on long-term corporate growth, developing enduring relationships with customers, and creating new " market spaces" that emphasize value-added services (i.e., " document management," " global networking capability," and " global financial management" ). According to Vandermerwe, increasing returns is an essential, competitive strategy for all global manufacturing and service corporations, not only high-tech firms.

Is Foreign Infrastructure Investment Still Risky?

Wells, Louis T. Harvard Business School) Gleason, Eric S. Harvard Business Review, September/October 1995, pp 44-55

" Have conditions changed enough to justify U.S. and foreign utilities, equipment builders, engineering and construction companies, and other investors spending billions of dollars in what was formerly such a risky business? How can investors manage these risks?"

Growing More by Doing Less. Nation's Business, December 1995. pp 18-24

Outsourcing portions of the manufacturing or production process-- or a company's administrative activities -- is becoming an increasingly popular and profitable way to do business, especially for small firms. As author Dale Buss relates, business owners say outsourcing, which involves contracting out activities to other companies, reduces personnel turnover because they can avoid the cycle of hiring people for every company function when business is good, having to shed them when times are bad, and then trying to rebuild when business picks up again. And it brings them in touch with high-quality potential employees.

The Big Business of Business Ethics

Across the Board, May 1997, pp 23-29

" Trying to solve its ethical crisis, U.S. business has turned to ethics testing and training -- in short, vetting employees for virtue. But is any of it changing the way companies and businesspeople actually act?"

The Evolution of Business'Role in Society

Sehti, S. Prakash Steidlmeier, Paul Business and Society Review, Summer 1995, pp 9-12

" The corporation cannot confine its role to responding to societal goals advocated by other groups. As a dominant institution in society, it must assume its rightful place and contribute to the articulation of the public agenda itself."

Over the Edge National Journal, May 3, 1997, pp 870-873

" Although the America economy has been chugging along nicely, personal bankruptcies jumped a whopping 22% last year. Are reckless consumers taking advantage of outdated bankruptcy laws? Or are greedy creditors too free with their money?"

International Cooperation Against Corruption

Klitgarrd, Robert (RAND graduate school) Klitgarrd, Robert (RAND graduate school) Finance & Development, March 1998, pp. 3-6

When corruption becomes systematic, fighting it " requires administering a shock" that goes beyond traditional liberal economic policies. The author urges governments to establish national coordinating bodies along with citizens' oversight boards to devise strategies against corruption and to identify major offenders -- in Klitgarrd's words, " a few big fish" -- whose cases can be prosecuted quickly. International cooperation also can engender both the will to fight corruption and the capability to do so. He proposes regional studies of sectors prone to corruption and potential remedial measures.

The New Corporate Philanthropy

CQ Researcher, February 27, 1998, pp 169-191

" As print and TV ads frequently boast, corporate America takes pride in supporting worthy causes, from fighting breast cancer to feeding the hungry. Indeed, American firms donated $8.5 billion in cash and products in 1996, making them the most charitable in the world. Yet the percentage of corporate earnings set aside for philanthropy has fallen steadily for the past ten years, even as corporate profits have tripled."

Rethinking Assumptions Behind Corporate Governance.

Blair, Margaret M. (The Brookings Institution) Challenge, November/December 1995. Pp 12-17

" Maximizing shareholder wealth has increasingly become the most important objective of corporate management, especially in an age of aggressive corporate acquisitions and the rising power of institutional investors. Is there a theoretical economic case for ranking worker welfare alongside shareholder rights? This economist definitely thinks so."

U.S. and Foreign Productivity and Unit Labor Costs

Monthly Labor Review, February 1997, pp 26-35

" Between 1979 and 1995, output per hour in U.S. manufacturing grew at a slower rate than in several other countries, but modest growth in hourly compensation helped the United States to restrain growth in unit labor costs relative to its foreign competitors."

Managing Our Way to Higher Service-Sector Productivity

Van Biema, Michael Greenwald, Bruce Van Biema, Michael Greenwald, Bruce Harvard Business Review, July/August 1997, pp 87-95

What s preventing a productivity revival in the U.S. economy? Clearly not the manufacturing sector, which has rebounded since the early 1980s. The service sector, on the other hand, has seen productivity growth stagnate. Why? " Several incomplete explanations have been offered and have resulted, in our view, in some serious misconceptions. We hope to show their limitations here and present a new explanation that lays the blame in two places: the ineffectiveness of many U.S. business managers at improving productivity and the inherent complexity of the sector itself. A management-based approach to improving the service sector s productivity offers hope for a rapid and significant turnaround of the sector s productivity growth rate."

Is a Productivity Revolution Under Way in the United States?

Oliner, Stephen D. And William L. Wascher (Federal Reserve System) Challenge, November/December 1995, pp 18-30

" Despite all the discussion about a productivity revolution in America, two economists examine the data thoroughly and can't

find one. They then explain why so many analysts have exaggerated the likelihood that rapid productivity growth has returned."

Corporate Surveys Can't Find a Productivity Revolution,

Challenge, November/December 1995, pp 31-34

" Surveys by the American Management Association show that corporate downsizing, restructuring, and other organizational changes are not working as well as managers had expected.Entrenched corporate cultures and management inattention may be the main reasons."

Productivity to the Rescue.

Business Week, October 9, 1996, pp 134-146

" A few years ago, it looked as if the U.S. might join Britain and Austria-Hungary on the list of has-been economies. But thanks to a remarkable upsurge in productivity, Corporate America has risen from the ashes -- and U.S. companies have regained the edge over their global rivals... For U.S. workers, the productivity payoff is on the horizon."

Compétitivité américaine: Council on Competitiveness. 86p http://www.compete.org/bookstore/book_index.html

Michael E. Porter (Harvard Business School) and Debra van Opstal

U.S. Competitiveness 2001 takes a fresh look at U.S. economic performance from 1985-2000: what drove U.S. prosperity, where economic performance fell short and why U.S. leadership will be challenged. The report lays out national priorities to sustain America's competitive advantage.

Six Dangerous Myths About Pay

Pfeffer, Jeffrey Pfeffer, Jeffrey Harvard Business Review, May-June 1998, pp 108-119

" Every day, executives are bombarded with advice about pay. Unfortunately, much of that advice is wrong. The author exposes six particularly costly myths about the role of compensation in today's workplace... Companies that have successfully transcended the myths about pay know pay cannot substitute for a working environment high on trust, fun, and meaningful work."

The Alternative Workplace: Changing Where and How People Work

Apgar, Mahlon Apgar, Mahlon Harvard Business Review, May-June 1998, pp 121-136

" From sharing desks to telecommuting, more employees than ever before are working in nontraditional ways, and organizations are beginning to reap the benefits."

Are you Ready for Electronic Partnering?

Inc. Technology, November 14, 1995, pp. 43-51

Many large companies are forcing their suppliers to abandon telephones, the mails and fax machines and go on-line for ordering and invoicing. In this article, several small-scale entrepreneurs relate how electronic data interchange (EDI) systems, which hook computers together via telephone lines to swap information, have impacted their businesses. The author notes that for growing companies, being prepared to utilize EDI can make the difference between being a coveted electronic partner with a larger company and being an EDI casualty.

Reinventing the Store.

Business Week, November 27, 1995, pp 84-96

" Brutal forces are fast driving out the slow and the inefficient in supermarkers, hardware stores, and car dealerships. Meanwhile, new retail formats are springing up, from vast megastores to tiny one-product kiosks."

The Future of Services.

American Demographics, November 1995, pp 30-47

" Business that provide services are the biggest and brightest part of the economy. This article uncovers the best markets for growth, productivity, and choice among services firms. We chart recent trends in automotive, personal, recreation, lodging,health care, legal, professional, and business services for all metropolitan areas. The future depends on technology, niche marketing, and customer service."

" It could turn trading floors around the world into a bunch of theme restaurants," claims long-time Wall Street analyst Junius W. Peake. The object of such vivid imagery is Durango, Colorado- based Optimark, which will soon debut on the Pacific exchange, the third largest stock exchange in the United States. Optimark will use computers to match profiles of buyers and sellers of a given stock, instantaneously making the best possible match. Optimark's founders hope to use the same technique to create electronic commerce markets for any tradable commodity, from airline tickets to concert seats. Will Optimark revolutionize both electronic commerce and stock trading?

The Scary Rise of Internet Stock Scams

Brooker, Katrina. Fortune, vol. 138, no. 8, October 26, 1998, pp. 187-202

Brooker reports on the explosive increase in Internet stock scams and describes prominent cases the U.S. Securities and Exchange Commission (SEC) has investigated since establishing its online investor hotline in 1996. The author explains that while the types of cyber stock scams, such as Ponzi and " pump and dump" schemes are neither particularly new or clever, the Internet's speed, low cost, and anonymity have " definitely made the business of fraud far more efficient." According to John Stark, the head of the SEC's Internet Enforcement unit, the Internet is a " double-edged sword" for cyberscamsters because it allows regulators to search for and find these criminals just as easily as online investors can.

How Venture Capital Works

Zider, Bob Harvard Business Review, vol. 76, no. 6, November-December 1998, pp. 131-139

Zider, president of a firm that raises money for developing new technology for commercial use, aims to correct what he views as mistaken impressions about the venture capital industry. First, he notes, venture capitalists spend very little money investing in basic research and development, which is funded primarily by government and industry. When some new company begins to commercialize its innovation, venture capitalists step in and provide short-term, high-interest loans for manufacturing, marketing, and selling the product. The author debunks the myth that these investors pursue good people and good ideas. Rather, they look for good industries on the rise. While they expect most of their investments to barely break even or to fail, venture capitalists anticipate earning high returns from the handful of investments that really take off.

The World's Most Admired Companies

Fortune, vol. 138, no. 8, October 26, 1998, pp. 206-226

In summarizing the results of the 1998 FORTUNE and Hay Group survey of the world's most admired companies, international reporter Jeremy Kahn writes that this year's winners are in the forefront of creating truly multinational corporations with workforces and corporate cultures that reflect the diversity of the markets in which they operate. He highlights several of the long-term business strategies that have enabled these corporations to weather the global economic crisis. Kahn also notes that these all-star companies have achieved the right management focus by selecting senior executives from international divisions and diverse national backgrounds.

The Four Faces of Corporate Citizenship

Carroll, Archie B (University of Georgia) Business and Society Review, no. 100/101, September 1998, pp. 1-7

To qualify as good corporate citizens, companies have to go beyond making money. They also have to obey the law, behave according to high ethical standards, and engage in philanthropy. The author says the Clinton Administration has made a start at promoting corporate citizenship by creating the Ron Brown Award. Carroll notes that the Ron Brown Award winners are selected for their family-friendly policies which involve the relationship between companies and their employees. He suggests that this notion of good corporate citizenship needs to be broadened to take into consideration the interests of the investors, consumers, and communities in which the companies operate.

The Dawn of the E-lance Economy

Malone, Thomas W. Laubacher, Robert J. Harvard Business Review, September/October 1998, pp 144-152

" What if all businesses were like the movie business -- collections of free-lancers joining together to produce a product and then disbanding when the job is done? The Internet is starting to make that vision possible, raising the possibility that large companies -- and the managers who run them -- will be rendered obsolete."