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.

July 22, 2008

"Is denial a problem for you? Yes, it is. If you are running a company at the top of your industry, now is the time to ask whether you are on the right path," says business historian and HBS professor Richard S. Tedlow. Writing in the July-August issue of Harvard Business Review, Tedlow explains how denial and the refusal to adapt to changing customer demand has hobbled the U.S. automobile industry.

Ford is a sad example. Henry Ford steadfastly ignored all evidence that customers would not long be satisfied with the Model T, and that a new vehicle should be developed and introduced. But Ford and the U.S. auto business are not alone. "Denial has involved many other issues as well, from ignoring external forces such as technological innovation and demographic change to overestimating a company's own capabilities and resources," writes Tedlow in HBR.

This week also sees faculty working papers for download, and a case study of Unilever as it redefined what it meant to be a multinational—one with a common management culture yet local autonomy.

 

Working Papers

Fixing Market Failures or Fixing Elections? Agricultural Credit in India

Abstract

This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5-10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in non-election years, or in private bank lending. I show capture is costly: elections affect loan repayment, and election year credit booms do not measurably affect agricultural output.

Download the paper: http://www.hbs.edu/research/facpubs/workingpapers/papers0809.html#wp09-001

Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?

Abstract

In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower-interest rates and lower-quality intermediation and may have slowed employment gains in trade and services. Development lending goals were met, but these had no impact on the real economy.

Download the paper: http://www.hbs.edu/research/facpubs/workingpapers/papers0809.html#wp09-002f

Boundaries Need Not Be Barriers: Leading Collaboration among Groups in Decentralized Organizations (revised)

Abstract

No abstract is available at this time.

Download the paper: http://www.hbs.edu/research/pdf/07-090.pdf

Team Familiarity, Role Experience, and Performance: Evidence from Indian Software Services (revised)

Abstract

Much of the literature on team learning views experience as a unidimensional concept captured by the cumulative production volume of, or the number of projects completed by, a team. Implicit in this approach is the assumption that teams are stable in their membership and internal organization. In practice, however, such stability is rare, as the composition and structure of teams often changes over time or between projects. In this paper, we use detailed data from an Indian software services firm to examine how such changes may affect the accumulation of experience within, and the performance of, teams. We find that the level of team familiarity (i.e., the average number of times that each member has worked with every other member of the team) has a significant positive effect on performance, but we observe that conventional measures of the experience of individual team members (e.g., years at the firm) are not consistently related to performance. We do find, however, that the role experience of individuals in a team (i.e., years in a given role within a team) is associated with better team performance. Our results offer an approach for capturing the experience held by fluid teams and highlight the need to study context-specific measures of experience, including role experience. In addition, our findings provide insight into how the interactions of team members may contribute to the development of broader firm capabilities.

Download the paper: http://www.hbs.edu/research/pdf/08-019.pdf

How Can Decision Making Be Improved? (revised)

Abstract

text

Download the paper: http://www.hbs.edu/research/pdf/08-102.pdf

Improving Infant Mortality Rates: The Impact of Front-line Staff Collaboration on Neonatal Care (revised)

Abstract

Front-line staff possess immense functional and experiential knowledge from which their organizations can benefit. This premise has led to widespread promotion of collaboration—among front-line staff and between staff and managers—as a strategy to integrate front-line staff knowledge for performance improvement. Collaboration refers to individuals working together to achieve a common goal via information-sharing, joint decision-making, and coordination of activities. In contrast to prior work, we distinguish forms of collaboration by three organizational goals—unit management, routine production, and process improvement—and examine whether collaboration for these different goals has different effects on performance. This paper reports on a longitudinal study of 23 neonatal intensive care units (NICUs) in a structured, quality-improvement program. We test the relationship between collaboration within the NICU and improvement in patient outcomes, as measured by risk-adjusted infant mortality (n=1061). The effects of collaboration vary by goal. Collaboration in unit management increases the chance of mortality, while collaboration in routine production and in process improvement is associated with a reduced chance of mortality. The implications of these findings for research on organizational learning, human resource management and operations management are discussed.

Download the paper: http://www.hbs.edu/research/pdf/08-002.pdf

Lean Principles, Learning, and Software Production: Evidence from Indian Software Services (revised)

Abstract

This paper examines how a company sets out to build an operations-based advantage. In particular, we investigate the implementation of a lean operating system at an Indian software services firm. By studying the attempted introduction and impact of lean management techniques in a non-manufacturing setting we move beyond the artifacts and gain insight into the principles that may lead to improved performance. Combining a detailed case study and empirical analysis we document the internal processes that the lean initiative influences. We find that lean projects perform better than the non-lean projects in our sample in many, but not all cases. Building on this result we see that the impact of the techniques on problem solving, coordination, and standardization of work improve the way that the firm learns as well as its productivity. We also gain insight into what elements do not translate well from manufacturing and what challenges exist in a unique setting, such as this.

Download the paper: http://www.hbs.edu/research/pdf/08-001.pdf

 

Cases & Course Materials

New Schools for New Orleans 2008

Harvard Business School Case 308-074

Founded in the wake of Hurricane Katrina as a catalyst for the transformation of the public education system in New Orleans, President Sarah Usdin and CEO Matt Candler must adapt their strategy to respond to a continuously shifting local context. By 2008, conditions on the ground begin to stabilize, creating a new set of challenges in realizing the organization's vision to provide excellent public schools for every child in New Orleans.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=308074

Shoppers' Stop Group (SSG)

Harvard Business School Case 508-017

As B.S. Nagesh thumbed through the 2006-2007 Annual Report for Shoppers' Stop Group (SSG), action shots of healthy-looking people dressed in the latest fashions amid the words "Redefining Retail" brought a smile to his face. As managing director of SSG—a Rs 8.9 billion ($206 million) company in 2007 which included 23 department stores and a new hypermarket—Nagesh was proud of the way the company had taken retail from its roots in simple transactions to a complete "experience" defined by the luxurious ambiance, food, events and educated staff in SSG's retail outlets throughout India. The company's success led to an initial public offering in May 2005. SSG's parent company, the K. Raheja Corporation, and its affiliated companies held 66% of SSG's shares.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=508017

Unilever as a 'Multi-local Multinational' 1945-1979

Harvard Business School Case 808-025

Explores the opportunities and threats to Unilever's global business in 1978 based on the commercial and political challenges faced by three of its subsidiaries, Lever Brothers in the United States, Hindustan Lever in India, and United Africa Company in West Africa. Management faced several problems: criticism of multinational companies, anti-trust legislation, expropriations, and rising competition from international and local rivals. Focuses on developing a new global strategy for a company that placed a premium on a consensual management style and local autonomy.

Purchase this case:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=808025

 

Publications

Team Familiarity, Role Experience, and Performance: Evidence from Indian Software Services

Abstract

Much of the literature on team learning views experience as a unidimensional concept captured by the cumulative production volume of, or the number of projects completed by, a team. Implicit in this approach is the assumption that teams are stable in their membership and internal organization. In practice, however, such stability is rare, as the composition and structure of teams often changes over time or between projects. In this paper, we use detailed data from an Indian software services firm to examine how such changes may affect the accumulation of experience within, and the performance of, teams. We find that the level of team familiarity (i.e., the average number of times that each member has worked with every other member of the team) has a significant positive effect on performance, but we observe that conventional measures of the experience of individual team members (e.g., years at the firm) are not consistently related to performance. We do find, however, that the role experience of individuals in a team (i.e., years in a given role within a team) is associated with better team performance. Our results offer an approach for capturing the experience held by fluid teams and highlight the need to study context-specific measures of experience, including role experience. In addition, our findings provide insight into how the interactions of team members may contribute to the development of broader firm capabilities.

Credit-reporting Agencies in Argentina: A Historical Exploration of Information Sharing Mechanisms in Credit Markets, 1892-c.1935

Abstract

During the last decades, economic theory has devoted considerable attention to the role of information asymmetry in credit markets and problems connected with this phenomenon. However, institutional aspects—particularly, how information is gathered and shared—have not been studied as thoroughly. Only recently has research been conducted on the origins of credit-reporting agencies and on the different responses lenders designed to minimize the impact of information asymmetries. As far as Latin America is concerned, there is no previous historical research available. In that sense, this paper aims to depict some of the mechanisms used within the Argentine business community at the beginning of the twentieth century to generate and disclose information about borrowers, with particular emphasis on Argentina's first credit-reporting agencies.

Governance, Development and the American Way

Abstract

No abstract is available at this time.

Unconventional Insights for Managing Stakeholder Trust

Abstract

No abstract is available at this time.

Download the paper: http://sloanreview.mit.edu/smr/issue/2008/summer/13/

Leaders in Denial

Abstract

Henry Ford's stubborn refusal to admit the changeability of consumer demand allowed Chrysler and GM to horn in on his market. Half a century later the whole U.S. auto industry made the same mistake: Enter the Japanese. But denial comes in many forms, as Sears, Digital Equipment, and Bear Stearns can attest.

Heart of Darkness: Business Tokens of the Congo (Part 1)

Abstract

Few numismatic fields are as unexplored as the tokens of what was once the Belgian Congo. Although the head (and "extra-wife") tokens have been thoroughly cataloged, I have found only one very early and incomplete attempt, by Mahieu in the 1920s, to report other tokens from this vast territory. Most of the tokens in this article that have not been previously listed were obtained in markets in Kinshasa between 2000 and 2005. Given the poor communications and regional violence, tokens from the eastern and even central part of the Congo were unlikely to appear in this western-located city. Probably many more tokens were issued in association with the Congo's important mines and plantations. This "Part I" article should serve as a start for the development of a "Part II" with a more complete list and history of issuing companies. Until then, the tokens of the former Belgian Congo and its independent successor states remain largely in darkness.

The Sure Thing That Flopped

Abstract

Tibal Fisher made a fortune selling trendy, inexpensive home furnishings to baby boomers. With that generation beginning to enter its sixties, he sees a huge opportunity in products for aging consumers. Focus groups and surveys confirm strong market demand for such items, and the media love the idea. So why is TF's NextStage, his new line of stores for older consumers, a disaster? Four experts comment on this fictional case study in R0807A and R0807Z. Donna J. Sturgess, global head of innovation for GlaxoSmithKline, thinks Tibal's research missed the subconscious associations in customers' minds—the deep metaphors that reveal people's true feelings about products. The solution: Find ways to generate positive emotional associations, as GSK has done with its weight-loss product. Alex Lee, president of household-products maker OXO International, says consumers are attracted by brands they associate with the type of people they'd like to be—not the type they are. TF's NextStage must avoid trying to get customers to "act their age" and using labels and positioning that call attention to their senior status. Yoshinori Fujikawa, a professor at Hitotsubashi University in Tokyo, says certain businesses—those led by executives with a talent for sensing what their customers want—can forgo deep research into customers' feelings, at least in the short-term. But over the long-term, firms need to have an organizational capability to create a systematic method for discovering what's going on in customers' minds. Lewis Carbone, CEO of market research firm Experience Engineering, points out that customers often are unable to articulate their deepest feelings. That's why companies need to go to the trouble to work with them one-on-one to find out what's driving them toward—or away from—a brand.