Organizations are facing tremendous external and internal pressures that will redefine the way they conduct business and satisfy customer and employee needs. Externally, customers are becoming more demanding, requiring customized offerings, faster response times and world class service and quality levels. As market and technological barriers fall, companies are becoming increasingly global in scope. Competition is intensifying requiring organizations to find new and innovative ways of serving their customers and creating sustainable advantages. Internally, increased employee diversity and expectations, and changing values are also creating pressure on companies to adopt new ways to organize themselves.

Verifone Inc., L.L. Bean, Inc., Restoration Company and Canberra Industries, provide good examples of companies who have developed a different way to conduct their businesses, adapting to both external and internal pressures. In doing so, they have achieved market leadership in their industries.

We have identified a number of common characteristics that we believe are key to their success and will certainly define the leading organizations of the future:

• Flexibility: these companies excel at adapting their business processes to provide customized solutions to their customers in a efficient and timely manner. For example, Canberra adapts its design and manufacturing processes to satisfy the specific business and regulatory requirements of its worldwide customer base.

• Investing in employees: these companies recognize that human resources are their most important asset. Following this argument, these companies are investing heavily in the training and development of their employees, empowering them, and giving them more control over their work. As an example, L.L. Bean embarked in a total quality initiative to maximize customer satisfaction by totally involving people in improving the way work was done.

• Organizational structure: these companies have discovered that maintaining a networked, virtual organization is the most efficient and cost effective way to operate while achieving maximum flexibility and responsiveness. The Restoration Company created a instant 3,400-person organization to respond to the massive cleaning requirements of the World Trade Center bombing. L.L. Bean hires around 2,500 employees during peak seasons to satisfy additional volume requirements. Verifone's network of 2,800 employees worldwide allows them to develop software round the clock, significantly reducing response time.

Generally, we have found that coordinating activities among the various stakeholders -customers, employees, remote teams, subsidiaries, management, and others - has become a critical aspect for realizing flexibility and managing a virtual and networked organization. In addition, innovations in information technology are being used as an enabler for coordination.