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Jack Welch was the CEO of General Electric from 1981 to 2001. Under his leadership the GE stock went up by 4,000 per cent, making it the most valuable company in the world. Fortune named him the ‘Manager of the Century’ in 1999

Suzy Welch is a former editor of Harvard Business Review. She is also the co-author of Jack Welch’s latest book Winning

You can e-mail Jack and Suzy Welch questions at winning@nytimes.com

(Please include your name, occupation, city and country)

At my old company, we did everything to retain customers: built dedicated facilities, designed innovative packaging, offered aggressive pricing and delivered quality second-to-none. Still, a few major accounts dumped us. Is costumer loyalty dead?
– Carl Warren, Ridgefield, CT

Not dead, but different. Time was, you could earn a customer's loyalty with tickets to a big game, a Disney World vacation or even a nice dinner a few times a year. And you could pretty much keep that loyalty with what used to be called belly-to-belly selling, or put less graphically, relationship building.

You'd listen to your customers' dreams and worries, visit them to see how your product fit their needs and troubleshoot their problems. In more competitive situations, you'd add the sort of extra manufacturing and design services you mention in your letter. And, usually, such partnering was enough to keep customers in the fold. Yes, price mattered in those halcyon days. Sometimes it mattered a lot. We're only talking about, say, ten years ago. But it never mattered like it matters in today's fierce economy. The Internet, in particular, has made pricing transparent and purchasing global. And as a result, as you have so painfully discovered, it is increasingly becoming a buyer's world.
But we're not ready to bury customer loyalty, only to redefine it from a transaction to a two-way street.

With the transaction approach to loyalty, you give your customers competitive pricing, high quality and excellent service. They give you repeat business in return. It's a nice deal...until someone comes along with slightly better pricing, quality or service. Then it's ground zero again as you try to win your customer back, almost as if you've never met before.

With the two-way-street approach to loyalty, you and your customers don't have a deal as much as you have mutual dedication. Because you, the seller, are not delivering on just price, quality and service. You are demonstrating intense loyalty to your customer by giving him a comprehensive, inimitable way to win. Better productivity. Faster throughput. Lower inventory. More innovative products.

You are delivering something – anything – that makes you indispensable to your customer's success in the marketplace. Then, and only then, will you get complete loyalty in return. Now, you may be thinking, "We did that! We built dedicated plants. We designed special packaging." To which we would ask: But did those services fundamentally change the game for your customers? Did they allow your customers, for instance, to expand into profitable new markets or catapult old competitors? It seems unlikely; how could they have walked away?

They couldn't have. Modern loyalty, then, ultimately comes down to that old saying: "What goes around comes around." The more fervently committed you are to making your customers win big in the long haul – not just meeting their immediate demands – the more fervently committed they will be to you. That's a hard order, of course.

But given the direction of the ever more competitive global economy, a two-way street approach to customer loyalty is the only road to take.

What are the characteristics of a good company ‘university?’
– Vladamir Glazunov, Moscow

Your question, of course, mainly applies to large companies, as most other organisations do not have luxury of affording an in-house learning centre. Effective management development programmes can provide a real competitive advantage. They tend to attract the best kind of people during hiring and, for those already on board, can turn high-potentials into high performers. Note the word ‘effective’, however. Because corporate universities too often are not.

The most common reason is that companies bring in outside ‘actors’ to do the teaching – typically business school professors and consultants. Talk about undermining the process.

You want your own managers in front of every class, demonstrating for employees what success thinks and acts like in your organisation. That's motivating – and it can also provide a heck of a lot of growth for the managers temporarily donning professorial robes. In-house universities fail for a second, more insidious reason: they become warehouses – a polite word for ‘dumping grounds’ for employees who can be spared for a few weeks.

That happens, of course, because few managers like being parted with their productive employees. The antidote is to make sure managers understand, and abide by the fact, that the in-house development programme is a reward for superior performance. Only the best get selected to go – and the company's leaders and HR people pick them.

If you're part of a diversified company, when do you give up hope on fixing a broken business?
– Ron Adner, Fontainebleau, France

Many big companies hold onto failing businesses for all kinds of reasons: sentimental value, false hope and culture, to name just three. For many decades in Japan, every business was treated like a shrine – untouchable. Similarly, citing tradition, Pan Am sold off its profitable hotels in the mid-1980s and kept its struggling airline business. We all know the end of that story. By 1991, Pan American World Airways fell apart.

In most cases, though, inertia stops companies from letting go of broken companies. It's just so hard to sell an old operation – and so messy. After all, getting rid of a fixer-upper takes patience and often the willingness to take a loss. Who has the time or wherewithal for that? Which is why letting go of a business has to be a corporate discipline for it to happen at all. Companies should only keep trying to fix businesses as long as they serve a strategic purpose. And they should face reality and ‘give up hope’, as you put it, as soon as they don't.

Look, there will always be times when companies will pour money into a floundering business to establish a position in a developing country. Similarly, a fundamental belief in an emergent technology often means years of struggle before achieving profitability. In such cases, you have to hang on. Your strategy depends on it. But prolonged attempts to fix a business where that purpose is gone rarely make sense.

Without corporate life support – which peripheral businesses usually don't get, for the obvious reasons – such businesses have no option but to fend for themselves. It's a slow death for everyone involved. How much better, then, to give your people their best hope for a better future. The company buying your ‘failure’ usually has grand plans for its resurrection. Fight your inertia, and let them go for it.

Why do so many companies not address cross-cultural differences in a merger until it's too late?
– Karen Fenner, Camden, NJ

Because you can't number-crunch culture. Financial analysis is almost always where merger evaluations begin, along with some level of strategic analysis. If those assessments seem positive, then a cultural comparison of merging companies might take place. We say might because by the time a merger starts to appear attractive, deal heat has already started to creep in. And with it, the ability to back away starts to creep out.

Now, you would think with all the merger-and-acquisition activity in recent years that companies would have figured out how to not succumb to deal heat. Some have; many haven't. Too often deal heat is inexorable, especially if there are other contenders in the ring.

One result is the sin you describe: a disregard for the cross-cultural differences between merging companies. But in the mad dash to the finish line, lots of other M&A mistakes get made.

Perhaps the most painful to observe, not to mention live through, is the Reverse Hostage Syndrome, which happens when an acquirer wants a deal so badly he ends up making concessions that are regrettable at best and destructive at worst. In many Reverse Hostage situations, the buyer gives up so much in order to seal a deal that ultimately the acquired company can't really be considered acquired at all. It's still calling all its own shots – from its strategy, to its staffing decisions, to its operational practices, to its core values.

As for relations with the new owner, Reverse Hostage businesses tend to act like they belong to a separate country, and a hostile one at that. They rebuff any suggestions for change with brush-offs like, "You don't understand this industry. Just leave us alone and you'll get your earnings at the end of the quarter." No wonder most owners in Reverse Hostage situations are left to wonder, "Why did I pay all that money for nothing?" A classic case of the Reverse Hostage Syndrome, in fact, is playing out right now at the headquarters of Boston Scientific Corp.

It began in 2004, when the company paid US$742mn plus some earn-out opportunities to acquire Advanced Bionics, a California company that makes implantable electronic devices to restore the hearing and pump pain medications through the blood system. At the time of the purchase, Advanced Bionics was losing money, but Boston Scientific was convinced that the business had the potential to deliver outsized returns and play a major role in its future success.

And may be someday it will. But right now Advanced Bionics and Boston Scientific are slugging it out in federal court. At the heart of the case is a concession made during negotiations.

Alfred Mann, the owner of Advanced Bionics, insisted on staying on as the leader of his company. An overheated Boston Scientific said "Yes." May be its senior executives thought Mann, who is now 81, would retire soon. May be they thought he would let Boston Scientific have a say in the business' management. Or may be they thought Mann would lead the business to profitability. Unfortunately, none of those things happened.

And so last July, Boston Scientific asked Mann to resign, saying he was resisting the changes necessary to make Advanced Bionics a moneymaking enterprise. Mann refuted the claim and refused to leave, saying his contract allowed him to run Advanced Bionics for as long as he wished. A fed-eral judge agreed with him – a decision that is now out on appeal. We certainly don't know enough about this case to know which side is right or wrong. But we do know that the Reverse Hostage Syndrome is never worth the price.

If you can't buy a company on your terms, fight the burning desire to forge ahead, or at least build in some kind of protection.