Most organizations focus considerable time and energy on reducing operating costs as a way to attain marketplace advantage. This strategy was not inappropriate in the past. To be competitive in the future, however, focus must be placed on other issues, not just cost reduction. The near future will be dominated by service industries, knowledge management, and virtual partnerships, with production optimization and flexibility, innovation, and strong partnerships defining those organizations that attain competitive advantage. Competitive advantage will reside in clarifying the vision and strategic plan, reviewing and redesigning work processes to optimize resources and value-added work, and creating change-ready environments and empowered workforces.