Home > Articles > Business & Management

Introduction to Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation

We focus on process: “how” we’re doing the job. And we forget about the bigger issue: “what” we’re doing and “why” we’re doing it. That’s why we’re leaving so much value on the table. In Rethink, business architect Ric Merrifield exposes this problem with vivid examples and introduces breakthrough techniques for overcoming it.
This chapter is from the book


This book had its genesis around the turn of the millennium. At the time, many large companies were adopting two kinds of software programs that transformed the way businesses were run. Customer relationship management (CRM) software measured and controlled contacts with customers from marketing, through sales, and into support and other services. Enterprise resource planning (ERP) software helped manage inventory, logistics, accounting, and virtually every other aspect of an organization.

We at Microsoft were aware that the CRM and ERP programs were coloring companies’ decisions about which computer systems to buy—and there we were sitting on the sidelines. So we decided to create our own business application software. There was one small problem: We lacked in-depth knowledge of our potential customers’ operations.

The team that was assembled to explore this terra incognita suggested the creation of a detailed map of a hypothetical company’s essential business activities. It began with an outline of an archetypal business’ five top activities—or as we initially called them, “capabilities”—that included the following:

  1. Create Products and Services
  2. Generate Demand
  3. Deliver Products and Services
  4. Plan and Manage the Business
  5. Manage Collaboration

The more the team examined these high-level capabilities, the more it saw them as overall categories encompassing hundreds of lesser, though still vital, capabilities that it set down in descending order. Under “Generate Demand,” for example, were listed several major capabilities, including “Market Products and Services,” which, in turn, sat atop a group of capabilities that included “Manage Marketing”—and so it went.

Eventually, the team had a list of literally hundreds of universal capabilities that covered about 80 percent of all business activities and constituted an entire nomenclature for every company anywhere on earth. When presented in map form, the list filled a six-by-six-foot poster that, ironically, looked like a giant blowup of a computer chip. It described not just a company, but the workings of everything and everyone connected with the business.

The map served admirably as a means of orienting Microsoft salespeople to the complex operations of potential customers. But it also took on a life of its own.

It turned out that the map, tailored to take into account the differences between industries, gave the company leaders we called on a unique overview of their operations. Laying out their capabilities in discrete, interconnected chunks—LEGO bricks, if you will—made it much simpler for them to spot and eliminate duplications and determine which elements of their operations to keep and which to outsource or automate.

In what proved to be a happy coincidence, the map emerged just as two major developments—Web 2.0 and service-oriented architecture (SOA)—were starting to revolutionize business management. The advent of Web 2.0 helped the Internet evolve from a mere collection of Web sites to a complete computing platform. Now, we could create Web-based software applications and operate them for our customers. Companies communicated and shifted work as never before. At the same time, SOA was beginning to gain momentum, making it possible to see the relationships between and among the hundreds of capabilities within a company—and with its suppliers and customers as well. Suddenly, business leaders could automate, share, outsource, even sell one or another element of their operations without going through the messy analytics of interfaces and integration.

The power of the map, the third piece of the puzzle, was now even more of a boon to business performance. It provided the words to cut through the proprietary languages that are so pervasive at many companies (ours included), and it served to fully unlock the potential of SOA and the Internet.

Since its first appearance, the map has grown and evolved. The master list of typical capabilities, for example, has been substantially expanded. Beyond that, the basic concept of a capability has been enlarged and made part of the overarching new approach to management that is the topic of this book. These ideas received their first public airing in a June 2008 Harvard Business Review article written by the author of this book together with Jack Calhoun of Accelare and Dennis Stevens of Synaptus.

And as the approach has evolved, the term “capability” has been more precisely refined. Now the focus is on the desired outcomes of an activity—what it does as opposed to how it is done. So instead of speaking of capabilities in the pages ahead, they are referred to as “whats.” The distinction is important, particularly because management theory in recent decades has focused so strongly on how-oriented programs such as reengineering and Six Sigma. It has also helped make the approach basic enough to be understood and applied by employees at every level of a company.

Microsoft’s product philosophy has undergone a major evolution as well. Today, we view the future of our corporate customers as being tied to the interaction of local software and Internet services; the architectural-design power of SOA is wedded to the managerial power of Web-based software-as-a-service (SaaS). We call the combination Software Plus Services, or S+S.

Information technology, per se, does not receive a great deal of attention in this book. That’s because IT is a means to an end rather than an end in and of itself—a “how” rather than a “what”—and this book is essentially about helping leaders to better comprehend and manage their “whats.” From a Microsoft point of view, that is a devoutly wished-for consummation, because if our customers don’t know what their companies require, we have a hard time helping them decide how best to get there.

As these words are being written, the economic climate in the United States has taken a distinctly worrisome turn. A recession represents yet another challenge for business leaders already facing cruel competition, globalization, and the vagaries of ever more fickle and demanding customers. This book offers a new, yet proven, approach that has enabled many companies to achieve vastly greater efficiency and flexibility. May it do the same for you, too.

Ron Markezich, Corporate Vice President, Microsoft Online Services

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020