Knowledge that Transforms

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How Should Board Directors Evaluate Themselves

MIT Sloan Management Review 2005
In a recent survey, 72% of board directors indicated that their performance ought to be evaluated. Yet only 21% of the boards of public companies actually conduct such assessments. Part of the problem is that organizations often don?t know how best to implement a board self-evaluation procedure, so many simply avoid the practice. Others have implemented the process only to become frustrated because it took so much time and produced so few results. To investigate the different self-evaluation practices used, the authors studied eight boards that have engaged in the process for at least two annual cycles. They found two high-level variables in the protocol for self-evaluations: the structure of the data-collection methodology (low versus high) and the confidentiality of data (unimportant versus important). These dimensions define quadrants of four different approaches to self-evaluation: informal, legalistic, trusting and systematic. Each approach has important implications for a company?s board rating, directors and officers insurance and various other issues.

The chaining face of corporate boards

MIT Sloan Management Review 2005
This article describes a modification of the conventional membrane crystallization technique in which a membrane is used to dose the solvent/antisolvent composition to generate supersaturation and induce crystallization in a drug solution. Two operative configurations are proposed: (a) solvent/antisolvent demixing crystallization, where the solvent is removed in at higher flow rate than the antisolvent so that phase inversion promotes supersaturation and (b) antisolvent addition, in which the antisolvent is dosed into the crystallizing drug solution. In both cases, solvent/antisolvent migration occurs in vapor phase and it is controlled by the porous membrane structure, acting on the operative process parameters. This mechanism is different than that observed when forcing the liquid phases through the pores and the more finely controllable supersaturated environment would generate crystals with the desired characteristics. Two organic molecules of relevant industrial implication, like paracetamol and glycine, were used to test the new systems. Experiments demonstrated that, by using antisolvent membrane crystallization in both configurations, accurate control of solution composition at the crystallization point has been achieved with effects on crystals morphology.

Information failures and organizational disasters

MIT Sloan Management Review 2005
Merck?s recent withdrawal of the arthritis drug Vioxx from the market and the warning signs leading up to the crisis are emblematic of how organizational disasters often incubate over long periods of time. The author asserts that organizational disasters can often be foreseen, but warning signs sometimes go unheeded for various reasons: Signals are not read properly because they seem consistent with organizational beliefs (as in the Enron collapse); signals are noticed but not acted upon (as in the failure of Barings Bank); or no one in an organization has the full range of information to see the situation as a whole (as in the recall of millions of Firestone ATX tires from drivers of Ford Explorers). The author presents several strategies that organizations can employ to help guard against such negligence. Employees must be aware of how biases affect judgment in crucial situations, and tendencies toward groupthink and group polarization must be controlled. In addition, companies must cultivate an information culture that not only recognizes and responds to unexpected warnings but also helps companies recover. Most important, ongoing conversations about safety and risk, backed by the will to act, are crucial to mitigating trouble and to helping organizations more easily recover from difficult situations.

Automated Decision Making Comes of Age

MIT Sloan Management Review 2005
Futurists have long anticipated the day when computers would relieve managers and professionals of the need to make certain types of decisions. But for a variety of reasons - including management skepticism and concerns about solution complexity - automated decision making has been slow to materialize. Automated decision making is finally coming of age, the authors argue, and the new generation of applications differs substantially from prior decision-support systems. Today's applications are easier to create and manage than earlier systems. Rather than require people to identify the problems or to initiate the analysis, companies typically embed decision-making capabilities in the normal flow of work. Those systems then sense online data, apply codified knowledge or logic, and make decisions - all with minimal amounts of human intervention. They can help businesses generate decisions that are more consistent than those made by people, and they can help managers move quickly from insight to decision to action. This can help companies reduce labor costs, leverage scarce expertise, improve quality, enforce policies and respond to customers. As automating decisions becomes more feasible, organizations need to think about which decisions have to be made by people and which can be computerized.

Getting new hires up to speed quickly

MIT Sloan Management Review 2005
How do managers and companies quickly transform new hires into productive employees, a process called on-boarding? The authors contend that companies that are more successful at rapid on-boarding tend to use a relational approach, helping newcomers to rapidly establish a broad network of relationships with coworkers that they can tap to obtain the information they need to become productive. Most organizations realize the importance of integrating new employees, but many fail in this regard, often because of five pervasive myths about the process: (1) the best newcomers can fend for themselves, (2) a massive information dump allows newcomers to obtain what they need, (3) cursory introductions are all that's needed, (4) first assignments should be small, compact and quickly achievable, and (5) mentors are best for getting newcomers integrated. Because of those misconceptions, managers will frequently rely on certain taken-for-granted practices that can actually hinder new employees from becoming productive.

The Keys to Rethinking Corporate Philanthropy

MIT Sloan Management Review 2005
The FIGO Committee Report on the FIGO 2000 staging for gestational trophoblastic disease included criteria for the diagnosis of gestational trophoblastic neoplasia (GTN). It recommended investigative tools for diagnosing metastases. Anatomical and prognostic indicators were combined into a stage : risk score to stratify patients into low and high-risk groups. This is the first staging system to incorporate inclusive criteria that are likely to be adopted universally. The diagnostic evaluation of GTN is presented. The rationale of using the various investigative tools is discussed. The problem of measuring human chorionic gonadotrophin (hCG) levels using commercial kits and the phenomenon of 'phantom hCG' is explored. The use of single agent chemotherapy for low-risk disease versus multi-agent chemotherapy for high-risk disease is discussed. Controversies regarding when to stop chemotherapy are explored with a view to minimizing the short and long-term toxicity, in particular the small risk of developing a second malignancy. Recommendations for the follow up of patients after chemotherapy with particular reference to contraceptive advice and future pregnancies are discussed in the light of current evidence.

The end of corporate computing

MIT Sloan Management Review 2005
Information technology is undergoing an inexorable shift from being an asset that companies own ? in the form of computers, software and myriad related components ? to being a service that they purchase from utility providers. Three technological advances are enabling this change: virtualization, grid computing and Web services. Virtualization erases the differences between proprietary computing platforms, enabling applications designed to run on one operating system to be deployed elsewhere. Grid computing allows large numbers of hardware components, such as servers or disk drives, to effectively act as a single device, pooling their capacity and allocating it automatically to different jobs. Web services standardize the interfaces between applications, turning them into modules that can be assembled and disassembled easily. The resulting industry will likely have three major components. At the center will be the IT utilities themselves ? big companies that will maintain core computing resources in central plants and distribute them to end users. Serving the utilities will be a diverse array of component suppliers ? the makers of computers, storage units, networking gear, operating and utility software, and applications. And finally, large network operators will maintain the ultrahigh-capacity data-communication lines needed for the system to work. IT?s shift from an in-house capital asset to a centralized utility service will overturn strategic and operating assumptions, alter industrial economics, upset markets and pose daunting challenges to every user and vendor. The history of the commercial application of IT has been characterized by astounding leaps, but nothing that has come before ? not even the introduction of the personal computer or the opening of the Internet ? will match the upheaval that lies just over the horizon.

The Strategic Communication Imperative

MIT Sloan Management Review 2005
The authors contend that a number of factors, both external and internal, are increasingly necessitating a strategic approach to corporate communications. Yet, despite regulatory imperatives, organizational complexities and a growing need for companies to increase their credibility with their various constituencies, many companies still take a tactical, short-term approach to communication that is not only nonstrategic but may, in fact, be inconsistent with the corporate strategy or even impede it. The authors conducted more than 50 interviews with CEOs, CFOs and heads of corporate communications and investor relations at companies that represent the state of the art in corporate communications (Dell, FedEx and Pepsi), companies that have faced and survived major crises (Cendant, Knight Trading and Textron), and some that are great corporate communicators but not usually recognized for their efforts (Cognex, Infosys, Jet Blue, the New York Times Co. and Playboy Enterprises). They also included a pharmaceutical company (GlaxoSmithKline), given the formidable communications issues in that industry. On the basis of that research, the authors offer best-practice lessons and a framework to enable executives to think carefully about their organization?s objectives for each specific communication, determine which constituencies are critical to meeting that objective and understand what kinds of messages to deliver through which channel.