With 35% annual growth and sales of $100 million in 2005, Burt's Bees' executives credit business intelligence with playing a critical role in the natural cosmetics and personal care company's ability to absorb a sudden uptick in business.

The company, which makes more than 130 products, last year signed distribution contracts with national chains CVS and Walgreens. The deal represents a major break from previous distribution channels, which were predominantly specialty health-food stores, college bookstores, and online E-tailers. As the company grew, senior management and the board of directors were demanding more sophisticated reporting packages, says Ted Hein, director of BI. Dubbed Honeycomb-The Bee's Eye View, the company's BI dashboard built by Business Objects lets executives query data using different dimensions and lets execs forecast by customer, channel, and SKU. Prior to BI, Hein says, many business processes were ad hoc and based on subjective intuition rather than quantitative facts. This year, Burt's will focus its BI initiatives on internal operations. — Patricia Brown

M&A Cautionary Tales

Acquiring smaller firms for innovation purposes can backfire. In a study of business-acquisition strategies adopted in the tech-boom era, Saikat Chaudhuri, associate professor of management at the University of Pennsylvania's Wharton School, found some buyers unprepared for the complexities. "Buying companies with early-stage products and entering uncertain markets had substantially adverse effects," Chaudhuri says.

Chaudhuri cites Cisco Systems, with its acquisition of 70 companies between 1992 and 2000, as the poster child for the pitfalls of this strategy. While Cisco succeeded when acquiring older, more process-oriented firms, it failed when attempting to target a new technology market, he says.

With M&A activity picking up, Chaudhuri advises caution: "Delaying an acquisition will drive up the costs," he says, "but fully understanding the inherent challenges is worth the payoff." — Derek Top