First Look

First Look summarizes new working papers, case studies, and publications produced by Harvard Business School faculty. Readers receive early knowledge of cutting-edge ideas before they enter the mainstream of business practice. For complete details on faculty research, see our Working Papers section.

December 12, 2006

Hiring a star from a competitor is great, but hiring an entire star team is even better. In a new Harvard Business Review article for purchase, Assistant Professor Boris Groysberg and Research Associate Robin Abrahams describe the "lift out" phenomenon—how expanding companies take in an entire team that has already worked well together elsewhere and can quickly adapt to a new challenge. The trend is particularly prevalent in professional services such as law, advertising, investment banking, consulting, general management, and medicine. Groysberg and Abraham also delve into the dos and don'ts of hiring high-profile teams based on their study of more than forty such groups. "Regardless of industry, nationality, or size of the team, a successful lift out unfolds over four consecutive, interdependent stages that must be meticulously managed," they write. These stages are courtship, leadership integration, operational integration, and full cultural integration.

Other faculty work released in the past week includes Harvard Business Review reports by Clay Christensen and colleagues on "Disruptive Innovation for Social Change" and Michael Porter and consultant Mark R. Kramer on aligning strategy with social responsibility goals. In new case studies, faculty look at Shinsei Bank and global law firm DLA Piper, among other management topics.

 

Working Papers

None available this week

 

Cases & Course Materials

Analyzing Work Groups

Harvard Business School Note 407-032

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=407032

Ayala Corp

Harvard Business School Case 207-041

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=207041

Clinical Change at Intermountain Healthcare

Harvard Business School Case 607-023

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=607023

DLA Piper: Becoming a Global Firm

Harvard Business School Case 407-057

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=407057

Factors That Influence Cross-Border Equity Investment

Harvard Business School Note 107-020

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=107020

A Framework for Pursuing Diversity in the Workplace

Harvard Business School Case 407-029

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=407029

Information Technology and Innovation at Shinsei Bank

Harvard Business School Case 607-010

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=607010

Note on Health Savings Accounts, Flexible Spending Accounts, and Health Reimbursement Account Vendors

Harvard Business School Note 307-034

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=307034

The Venture Capital Valuation Problem Set

Harvard Business School Exercise 807-036

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=807036

 

Publications

Disruptive Innovation for Social Change

Abstract

Countries, organizations, and individuals around the globe spend aggressively to solve social problems, but these efforts often fail to deliver. Misdirected investment is the primary reason for that failure. Most of the money earmarked for social initiatives goes to organizations that are structured to support specific groups of recipients, often with sophisticated solutions. Such organizations rarely reach the broader populations that could be served by simpler alternatives. There is, however, an effective way to get to those underserved populations. The authors call it "catalytic innovation." Based on Clayton Christensen's disruptive-innovation model, catalytic innovations challenge organizational incumbents by offering simpler, good-enough solutions aimed at underserved groups. Unlike disruptive innovations, though, catalytic innovations are focused on creating social change. Catalytic innovators are defined by five distinct qualities. First, they create social change through scaling and replication. Second, they meet a need that is either overserved (that is, the existing solution is more complex than necessary for many people) or not served at all. Third, the products and services they offer are simpler and cheaper than alternatives, but recipients view them as good enough. Fourth, they bring in resources in ways that initially seem unattractive to incumbents. And fifth, they are often ignored, put down, or even discouraged by existing organizations, which don't see the catalytic innovators' solutions as viable. As the authors show through examples in health care, education, and economic development, both nonprofit and for-profit groups are finding ways to create catalytic innovation that drives social change.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0612E

Why Do Firms Hold So Much Cash? A Tax-Based Explanation

Abstract

U.S. corporations hold significant amounts of cash on their balance sheets, and these cash holdings have been justified in the existing empirical literature by transaction costs and precautionary motives. An additional explanation, considered in this study, is that U.S. multinational firms hold cash in their foreign subsidiaries because of the tax costs associated with repatriating foreign income. Consistent with this hypothesis, firms that face higher repatriation tax burdens hold higher levels of cash, hold this cash abroad, and hold this cash in affiliates that trigger high tax costs when repatriating earnings. Estimates indicate that a one standard deviation increase in the tax burden from repatriating foreign income is associated with a 7.9 percent increase in the ratio of cash to net assets. In addition, certain firms, specifically those that are less financially constrained domestically and those that are more technology intensive, exhibit a higher sensitivity of affiliate cash holdings to repatriation tax burdens.

Lift Outs: How to Acquire a High-Functioning Team

Abstract

More and more, expanding companies are hiring high-functioning groups of people who have been working together effectively within one company and can rapidly come up to speed in a new environment. These lifted-out teams don't need to get acquainted with one another or to establish shared values, mutual accountability, or group norms; their long-standing relationships and trust help them make an impact very quickly. Of course, the process is not without risks: A failed lift out can lead to loss of money, opportunity, credibility, and even native talent. Boris Groysberg and Robin Abrahams studied more than forty high-profile moves and interviewed team leaders in multiple industries and countries to examine the risks and opportunities that lift outs present. They concluded that, regardless of industry, nationality, or size of the team, a successful lift out unfolds over four consecutive, interdependent stages that must be meticulously managed. In the courtship stage, the hiring company and the leader of the targeted team determine whether the proposed move is, in fact, a good idea, and then define their business goals and discuss strategies. At the same time, the team leader discusses the potential move with the other members of his or her group to assess their level of interest and prepare them for the change. The second stage involves the integration of the team leader with the new company's top leadership. This part of the process ensures the team's access to senior executives—the most important factor in a lift out's success. Operational integration is the focus of the third stage. Ideally, teams will start out working with the same or similar clients, vendors, and industry standards. The fourth stage entails full cultural integration. To succeed, the lifted-out team members must be willing to re-earn credibility by proving their value and winning their new colleagues' trust.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0612J

L'innovazione nella grande impresa: l'esperienza della Unilever dal 1960 al 1990

Abstract

No abstract available.

The End of Nationality? Global Firms and 'Borderless Worlds'

Abstract

This article provides a historical perspective to current debates whether large global firms are becoming "stateless" and whether this is a historically new phenomenon. It shows that a great deal of international business in the nineteenth century was not easily fitted into national categories. The place of registration, the nationality of shareholders, and the nationality of management could and quite often did point in different directions. During the twentieth century such "cosmopolitan capitalism" was replaced by sharper national identities. However the interwar disintegration of the international economy led to the subsidiaries of multinationals taking on stronger local identities and becoming "hybrids". Over the past two decades, as the pace of globalization quickened, ambiguities increased again, especially if the focus is the "nationality" of products and services. Yet ownership, location and geography still matter enormously in global business.

Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility

Abstract

Governments, activists, and the media have become adept at holding companies to account for the social consequences of their actions. In response, corporate social responsibility (CSR) has emerged as an inescapable priority for business leaders in every country. Frequently, though, CSR efforts are counterproductive, for two reasons. First, they pit business against society, when in reality the two are interdependent. Second, they pressure companies to think of corporate social responsibility in generic ways instead of in the way most appropriate to their individual strategies. The fact is, the prevailing approaches to CSR are so disconnected from strategy as to obscure many great opportunities for companies to benefit society. What a terrible waste. If corporations were to analyze their opportunities for social responsibility using the same frameworks that guide their core business choices, they would discover, as Whole Foods Market, Toyota, and Volvo have done, that CSR can be much more than a cost, a constraint, or a charitable deed—it can be a potent source of innovation and competitive advantage. In this article, Michael Porter and Mark Kramer propose a fundamentally new way to look at the relationship between business and society that does not treat corporate growth and social welfare as a zero-sum game. They introduce a framework that individual companies can use to identify the social consequences of their actions; to discover opportunities to benefit society and themselves by strengthening the competitive context in which they operate; to determine which CSR initiatives they should address; and to find the most effective ways of doing so. Perceiving social responsibility as an opportunity rather than as damage control or a PR campaign requires dramatically different thinking—a mind-set, the authors warn, that will become increasingly important to competitive success.

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http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0612D

Repugnance as a Constraint on Markets

Abstract

This essay examines how repugnance sometimes constrains what transactions and markets we see. When my colleagues and I have helped design markets and allocation procedures, we have often found that distaste for certain kinds of transactions is a real constraint, every bit as real as the constraints imposed by technology or by the requirements of incentives and efficiency. I'll first consider a range of examples, from slavery and indentured servitude (which once were not as repugnant as they now are) to lending money for interest (which used to be widely repugnant and is now not), and from bans on eating horse meat in California to bans on dwarf tossing in France. An example of special interest will be the widespread laws against the buying and selling of organs for transplantation. The historical record suggests that while repugnance can change over time, change can be quite slow.