In today's business environment, innovation seems to be the one thing that nobody can get enough of. Nevertheless, is there really an automatic link between technological innovation and increased profitability? And if not, do we know what factors determine when technological innovation will be translated into money in the bank? In their working paper, "What Do We Really Know about When Technological Innovation Improves Performance (and When it Does Not)?" IESE Professor, Joan E. Ricart and PhD student Tunji Adegbesan examine what we know and what we don't know about when technological innovation is likely to improve the bottom line. Their review highlights the need for an improved understanding of this critical issue.

What do most companies do when their formula for success has stalled? Many leap into new markets or consider risky mergers. But rarely do such moves pay off. Instead, we find that companies choosing instead to mine their hidden assets - assets they already possess but have failed to tap for maximum growth potential - can go from unsustainable to unstoppable growth.

Celebrated by Peter Drucker as a key influence, Walther Rathenau deserves to be remembered as a major figure in pre-War Germany.

Facing massive brain drain from the retirement of a third of its workforce, Tennessee Valley Authority generated a knowledge-retention network to conserve its intellectual capital.

Leading companies are increasingly seeking high performance by treating each employee as a workforce of one. The author has identified four techniques an organization can use to tailor human capital management practices and policies to individual employees. This research note explores the technique of segmentation, which breaks down the monolithic conception of a workforce into more granular, meaningful parts. The author examines several types of segmentation schemes that organizations may employ, including those based on value, role, age, personality and location.

It's every executive's worst nightmare: You wake up one day to find that a competitor is selling a product much like yours at a much lower price. Matching the lower price would devastate your profit margins, but ignoring the low-price gambit may prompt your customers to flee. Don't panic. Taking on a low-price competitor requires a careful rethinking of how your company does business. To start, read our Crash Course on "How to Beat a Lower-Priced Competitor" to learn about the strategies that will make your product more valuable to buyers. We've also summarized the wisdom of five strategy gurus so you'll have additional ideas on how to combat low-cost competition. To hear from managers on the front lines, we interviewed executives from Time Inc. and Sony to find out how they stay ahead of their low-cost rivals. Lastly, we looked at how some products compete effectively against low-price equivalents by raising prices and heading upmarket.

In this manifesto, Matthew Kelly warns of the high price of turnover. Sure, we all know that losing employees costs money, but lost opportunity is often an incalculable cost. Many pundits and business owners blame employees, thinking they are uncommitted. But, Kelly argues, people leave their jobs because there is a disconnect between the work that they are doing and the dreams for their future. And it is up to managers to help reconnect their employees to their dreams.

The open source model can play an important role in innovation, but know its limitations.

Ratings of corporations' environmental activities and capabilities influence billions of dollars of "socially responsible" investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings-those of Kinder, Lydenberg, Domini Research & Analytics (KLD)-provide transparency about past and likely future environmental performance. We find KLD "concern" ratings to be fairly good summaries of past environmental performance. In addition, firms with more KLD concerns have slightly, but statistically significantly, more pollution and regulatory compliance violations in later years. KLD environmental strengths, in contrast, do not accurately predict pollution levels or compliance violations. Moreover, we find evidence that KLD's ratings are not optimally using publicly available data. We discuss the implications of our findings for advocates and opponents of corporate social responsibility as well as for studies that relate social responsibility ratings to financial performance.

General managers in charge of new product launches may face a number of vexing questions: Why were we beaten in the market by competitors with inferior technology? Why are our newly commercialized technologies producing weaker than expected financial results? Why do our technology successes seem increasingly fleeting?

The classic dynamic at work here is the failure to jointly design the product and the business. Successful businesses address customers' underlying economics and decisionmaking processes, not just their technical requirements. The key to commercial success lies in understanding these customer requirements as well as industry dynamics in order to design the business as shrewdly as you design the product.

Services are more difficult to measure and monitor than manufacturing processes are but executives can rein in variance and boost productivity-if they implement rigorous metrics.

It's hard enough to turn around a failing company. Try steering a successful one into the headwind of elective change. Naysayers and obstructionists will land all around you. Yet companies that don't understand how fragile their success is will lose it soon enough. In a constantly changing world, a turnaround strategy must always be in play. This article spells out the five rules of engagement that are needed to produce the kind of success that has staying power.

A divergence of interests between a company's shareholders and executives is at the root of the "agency problem." No issue illuminates just how acute the problem is than executive compensation. Who's right and what's fair compensation. Managers with CalPERS, one of the vocal and visible institutional shareholders, have developed a model that will reveal if a certain executive compensation is warranted or not.

Editor's Note: my criticism of this model is that is uses an unstated assumption that there are at least some companies under examination which are compensating their executives appropriately - an assumption I don't necessarily share but in any event is not discussed by the authors...

Your product may be good, but will it spark a conversation?

Ever since Activity-Based Costing turned out not to be as easy as A-B-C, businesses have longed for a simpler costing model. Time-Driven Activity-Based Costing may be the answer.

FinanceProfessor.com has a post (with link) about an important finance paper which potentially explains "a host of puzzles."

Why do people choose one thing over another? And why do they stop choosing something at all? Over time, cravings, habits and over-saturation make some things appealing and others less so. Economists have attempted to predict consumer choice by applying a "discounted utility model," which aims to account for how people's habits and preferences change. In "Predicting Utility Under Satiation and Habituation," Professors Manuel Baucells and Rakesh K. Sarin modify the model and show how the important factors of "satiation" and "habituation" affect the often ethereal phenomenon of consumer choice.

What does the net price per each individual product look like over time at your company? If it is not going up, the business is headed for trouble.

The easy days of the pure SBU are gone as the world continues to turn into a modular one of cross-unit synergies, outsourcing and strategic alliances. This rotation means more companies must perform a balancing act-breaking apart value chains while still making sure the new interfaces fit with the corporate strategy.

Most companies fail to add value to their business units. Typically, they end up choosing between improving performance vertically, by giving their business units greater autonomy, or doing so horizontally, by increasing centralization. To achieve greater performance, managers should focus on strengthening their company's diagonal value.

Fred Wilson blogs about how VC funds distribute returns to limited partners, in particular looking at the issue of whether it is better to distribute stock or cash.

In this issue of Spotlight, Edward de Bono talks to editor Sarah Powell about the development, application and impact of his ideas about thinking and creativity.

Innovation can be measured in many different ways, but the surest indicator of success is cash payback to your company's bottomline. There are 4 "S factors" to getting the job done right: startup costs, speed to market, scale to volume, and support costs.

There's a better way to find and hire the very best employees.

Guy Kawasaki interviews Tim Berry, president of Palo Alto Software, the principal creator of Business Plan Pro, about business plans and business planning.