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.

April 16

A world-class restaurant at one-third the price

Ristorante D'O, a high-end gourmand eatery located near Milan, Italy, has a unique business model among Michelin starred restaurants. It sells meals at prices almost a third less than competitors—and has an 18-month waiting list. Its secret? A series of smart, waste-reducing choices regarding menu, meal design, service process, layout, and reservation process. "The deeper issue in the case," write authors Gary P. Pisano, Alessandro Di Fiore, Elena Corsi, and Elisa Farri, "concerns how businesses based on the creative talent of an individual (like Chef Oldani) can grow, without losing what makes them special." Purchase the case, "Chef Davide Oldani and Ristorante D'O."

A history of Wall Street equity analysts

Perhaps no single group of people has as much effect on the fortunes made and lost on Wall Street as equity analysts. In the forthcoming book Wall Street Research: Past, Present, and Future, authors Boris Groysberg and Paul M. Healy, explore their power and turbulent history. "Our research tells a fascinating story of an industry that has proved remarkably resilient in resolving economic and regulatory challenges," the authors write. "It provides practitioners and scholars with a deeper understanding of the forces that have shaped the industry and accounted for its resilience and how these are likely to influence its future." The book is being published by Stanford University Press.

Barnes & Noble meet the e-book

The strategic considerations of bookseller Barnes & Noble as it runs head-on into the digital publishing age is the subject of a new case, "Barnes & Noble: Managing the E-Book Revolution." The case, which was written using public source material, "allows students to probe the dynamics of platform-based industries, as well as what happens in traditional industries when attacked by new competitors adopting new digital technologies." The case was written by Alan MacCormack, Brian Kimball Dunn, and Chris F. Kemerer.

 

Publications

  • 2006
  • Stanford University Press

Wall Street Research: Past, Present, and Future

By: Groysberg, Boris, and Paul M. Healy

Abstract—Wall Street equity analysts provide research products and services on publicly traded companies to institutional and retail investors to help them make more profitable investment decisions. During the last ten years, Wall Street research has been battered by a series of shocks. As concerns over conflicts of interest mounted, the integrity of research output was questioned, leading to transformative regulatory changes. New technologies emerged to democratize information and change the way that stocks are traded, threatening the industry's product and business model. There were upheavals and stagnation in established core financial markets such as the U.S., Japan, and Western Europe. And burgeoning new markets in countries such as China and India raised potential challenges to the dominance of leading firms. Our research tells a fascinating story of an industry that has proved remarkably resilient in resolving economic and regulatory challenges. It provides practitioners and scholars with a deeper understanding of the forces that have shaped the industry and accounted for its resilience and how these are likely to influence its future.

Publisher's link: http://www.sup.org/book.cgi?id=22872

  • 2006
  • John Wiley & Sons

Venture Capital & Private Equity: A Casebook

By: Lerner, Josh, Felda Hardymon, and Ann Leamon

Abstract—Venture Capital & Private Equity: A Casebook, 5th edition provides an understanding of the ways in which private equity groups work. The casebook builds an understanding of the key distinctions in the industry and reviews and applies key ideas of corporate finance. The 5th edition continues to explore a wide variety of valuation approaches, from techniques widely used in practice to methods less frequently seen in practice today but likely to be increasingly important in the future years.

Publisher's link: http://www.wiley.com/WileyCDA/WileyTitle/productCd-EHEP002072.html

  • 2006
  • Journal of Personality and Social Psychology

Prosocial Spending and Well-Being: Cross-Cultural Evidence for a Psychological Universal

By: Aknin, Lara B., Christopher P. Barrington-Leigh, Elizabeth W. Dunn, John F. Helliwell, Justine Burns, Robert Biswas-Diener, Imelda Kemeza, Paul Nyende, Claire E. Ashton-James, and Michael I. Norton

Abstract—This research provides the first support for a possible psychological universal: human beings around the world derive emotional benefits from using their financial resources to help others (prosocial spending). In Study 1, survey data from 136 countries were examined and showed that prosocial spending is associated with greater happiness around the world, in poor and rich countries alike. To test for causality, in Studies 2a and 2b, we used experimental methodology, demonstrating that recalling a past instance of prosocial spending has a causal impact on happiness across countries that differ greatly in terms of wealth (Canada, Uganda, and India). Finally, in Study 3, participants in Canada and South Africa randomly assigned to buy items for charity reported higher levels of positive affect than participants assigned to buy the same items for themselves, even when this prosocial spending did not provide an opportunity to build or strengthen social ties. Our findings suggest that the reward experienced from helping others may be deeply ingrained in human nature, emerging in diverse cultural and economic contexts.

Publisher's link: http://www.people.hbs.edu/mnorton/aknin%20et%20al%202013.pdf

  • 2006
  • American Economic Review

A Note on Fairness and Redistribution

By: Di Tella, Rafael, and Juan Dubra

Abstract—In an influential paper, Alesina and Angeletos (2005)-henceforth, AA-argued that a preference for fairness could lead two identical societies to choose different economic systems. In particular, two equilibria might arise: one with low taxes and a belief that the income-generating process is "fair" because effort is important (an "American" equilibrium) and another with high taxes and the belief that the process is "unfair" because luck prevails. Piketty (1995) had shown that a similar pattern could arise from standard preferences if initial beliefs about the relative importance of effort and luck in generating income differed across the two societies, while Benabou and Tirole (2006) study this issue using more realistic preferences (Buera, Monge-Naranjo, and Primiceri [2011] discuss the evolution of beliefs about economic systems). A key contribution of AA is to obtain these two equilibria from identical societies assuming agents prefer outcomes that are fair, an important modification because fairness considerations seem central in the demand for redistribution, and because in several settings (as in some ultimatum games) such preferences for fairness can lead to large (material) inefficiencies. In this note we report a difficulty we encountered when interpreting the results in AA: we find multiplicity (and demand for redistribution) even if luck plays no role. In other words, there is multiplicity even if the equilibrium tax rate is independent of the signal-to-noise ratio (a quantity that expresses how important effort is, relative to luck, in the determination of income). This conflicts with the notion that the signal-to-noise ratio plays a central role in generating multiplicity with AA preferences for fairness.

 

Cases & Course Materials

On July 17, 2009, Zappos.com, a privately held online retailer of shoes, clothing, and other soft-line retail categories, learned that Amazon.com, a $19 billion multinational online retailer, had won its Board of Directors' approval to offer to merge the two companies. Amazon had been courting Zappos since 2005, hoping a merger would enable Amazon to expand and strengthen its market share in soft-line retail categories. While Amazon's interest intrigued Zappos' senior executives, they had not felt the time was right-until now. Amazon's offer-10 million shares of stock (valued at $807 million), $40 million in cash, restricted stock units for Zappos' employees, and a promise that Zappos could operate as an independent subsidiary-was on the table. Zappos' financial advisor, Morgan Stanley, estimated the future equity value of an IPO to be between $650 million and $905 million; this estimate skewed the Amazon offer-at least in financial terms-toward the high end of Zappos' estimated market value. Hsieh and Lin, Zappos' CEO and COO, respectively, knew that much of Zappos' growth, and hence its value, had been due to the company's strong culture and obsessive emphasis on customer service. In 2009, they were focusing on the three C's-clothing, customer service, and company culture-the keys to the company's continued growth. Hsieh and Lin had only a few days to consider whether to recommend the merger to Zappos' board at their July 21 meeting.

Purchase this case:
http://hbr.org/search/612701/0

  • Harvard Business School Case 413-094

Beth Stewart: Navigating the Boardroom

After rising through the ranks of Corporate America, Beth Stewart has become a corporate director on the board of General Growth Properties. Stewart is struggling with how to address her mounting concerns over the financial health of the growing, large, publicly traded real estate investment trust (REIT) to her fellow board members and company management. The case explores interpersonal communications, influencing one's peers, leadership style, and board dynamics. The case also chronicles Stewart's career progression focusing on different stages including work/life choices she made as a wife and mother of five children.

Purchase this case:
http://hbr.org/search/413094-PDF-ENG

  • Harvard Business School Case 113-114

Corporate Solutions at Jones Lang LaSalle (2001) (A)

This case describes the strategic and organizational challenges that Jones Lang LaSalle (JLL) faced at the turn of the millennium. Until then, JLL sold piecemeal commercial real estate services to its corporate clients, who maintained relationships with a variety of vendors. In 2000, JLL's large corporate clients started globalizing their activities and seeking to outsource their real estate needs. They were looking for integrated solutions delivered through a single point of contact, and they cut their providers to a few strategic vendors. JLL's organizational structure, configured around largely autonomous service lines, was not well suited to supporting the development of integrated services. Executive Peter Barge is put in charge of a new team, called Corporate Solutions, whose mission was to draw connections between the service lines in order to foster integration. How should Barge structure Corporate Solutions to make sure it succeeds in its mission? And how should he configure the group's ties to the service lines to ensure their collaboration? The retention of JLL's most profitable clients was at stake. This case is the first in a case series that comprises cases B, C, and D, and collectively covers JLL's evolution between the years 1999 and 2012.

Purchase this case:
http://hbr.org/search/113114-PDF-ENG

  • Harvard Business School Case 113-115

Integrated Services at Jones Lang LaSalle (2005) (B)

This case describes the strategic and organizational challenges that Jones Lang LaSalle (JLL) faced between 2001 and 2005. Faced with the need to deliver integrated services to corporate clients in 2001, JLL created Corporate Solutions, a group that aimed to draw connections between JLL's semi-autonomous service lines. Despite initial success, by 2005 the group was finding it challenging to foster integration. Account managers and service line leaders clashed as decision-making power, pay and incentives, and clout were altered and redistributed. JLL realized that its organizational structure was hindering the firm in achieving key strategic goals, such as rapid scalability of corporate accounts and effective local market penetration. America's CEO Peter Roberts outlines the alternatives JLL's top management analyzed as they considered how to move the organization forward. This case is the second in a case series that also comprises cases A, C, and D, and collectively covers JLL's evolution between the years 1999 and 2012.

Purchase this case:
http://hbr.org/search/113115-PDF-ENG

This case describes the strategic and organizational challenges that Jones Lang LaSalle (JLL) faced between 2005 and 2008. Having dismantled its long-standing service-line-oriented structure, JLL created two interdependent groups: Accounts and Markets. Accounts housed account managers who served JLL's corporate clients. Markets housed brokers specialized in a certain geography. JLL helped drive integration between Accounts and Markets by emphasizing work at the "intersections" between both groups, i.e., instances that required combining both groups' resources. By 2008, however, JLL was facing challenges associated with harnessing the potential of this new structure. There was more growth that could be obtained from penetrating local markets, and top management wondered how to best strengthen their brokerage team. The acquisition of Spaulding and Slye, a renowned Boston-based firm, provided instant growth in some key markets, but organic growth was harder to achieve. While the industry paid brokers with a commission model, JLL did so with a salary and bonus model that aligned well with JLL's culture but proved unattractive to new recruits. America's CEO Peter Roberts outlines the alternatives JLL analyzed as they considered how to strengthen the organization while maintaining its values and integrity. This case is the third in a case series that also comprises cases A, B, and D, and collectively covers JLL's evolution between the years 1999 and 2012.

Purchase this case:
http://hbr.org/search/113116-PDF-ENG

This case describes the strategic and organizational challenges that Jones Lang LaSalle (JLL) faced between 2008 and 2012. In 2008, in order to strengthen the firm's brokerage team, JLL merged with The Staubach Company, a real estate services provider with a first-rate brokerage team and great cultural fit with JLL. Staubach paid its brokers with a commission model, which accelerated JLL's decision to let go of its long-standing salary and bonus approach. The merger also surfaced two interesting business opportunities. First, local brokers were now empowered and motivated to open up their client relationships to the rest of the company, growing their business from just local transactions to the full array of services JLL provided. Second, local brokers became aware of a great number of mid-sized clients whose real estate needs were not as sophisticated as those of large corporate accounts but who required multi-service solutions in selected geographies. JLL thus created a group called Markets Corporate Solutions, which specifically targeted mid-sized clients. Toward 2012, with its organizational structure expanding to tackle opportunities for multiple types of clients in a myriad of geographies, JLL was facing challenges associated with managing internal and external complexity. America's CEO Peter Roberts outlines the opportunities and challenges that lied ahead for JLL. This is the final case in a series that also comprises cases A, B, and C, and collectively covers JLL's evolution between the years 1999 and 2012.

Purchase this case:
http://hbr.org/search/113117-PDF-ENG

  • Harvard Business School Case 813-097

New Enterprise Associates

NEA was established in 1977 and subsequently morphed into one of the largest venture capital firms in the world. Despite its size and significance, some other firms established during the same era, such as Kleiner-Perkins and Sequoia (both were established in 1972), are arguably better known. No venture firm, however, can parallel NEA in terms of its scale and its commitment to organizational and operational innovation. From early on, the founders predicted that NEA would grow in size and significance, but the challenges associated with achieving these goals were formidable. How could NEA scale and generate favorable returns from a large capital base for its Limited Partners (LPs)? How could General Partners (GPs) be integrated and incentivized? How could the bicoastal structure be sustained over the long run?

Purchase this case:
http://hbr.org/search/813097-PDF-ENG

  • Harvard Business School Case 813-138

Arthur Rock

Arthur Rock was known as one of the country's first venture capitalists and was instrumental in launching major Silicon Valley firms, such as Fairchild Semiconductor, Intel Corporation, Apple Computer, Inc., Scientific Data Systems, and Teledyne Incorporated. He was the first venture capitalist to be featured on the cover of Time magazine. Rock was adamant that his success was due to luck and being in the right place at the right time. Others argued differently, emphasizing in particular his unique style of investing and his focus on selecting the right people. Was this a case of luck or a classic example of the principle: back the right people?

Purchase this case:
http://hbr.org/search/813138-PDF-ENG

  • Harvard Business School Case 113-015

Goldman Sachs: Stay with Fair Value Accounting? (A)

No abstract available.

Purchase this case:
http://hbr.org/search/113015-PDF-ENG

  • Harvard Business School Case 813-152

Cost of Capital Problems

No abstract available.

Purchase this case:
http://hbr.org/search/813152-PDF-ENG

  • Harvard Business School Case 613-073

Barnes & Noble: Managing the E-Book Revolution

The case describes competition in the market for E-Books and Barnes & Noble's strategy in this industry. As a traditional retailer, B&N was challenged by the introduction of digital technologies that allow books to be published, distributed, and sold to consumers electronically. New competitors like Amazon and Apple attacked the traditional industry structure, creating many uncertainties over the long-term viability of traditional retailers. Amid this uncertainty, B&N must decide how to compete, in terms of both devices that can read E-Books, as well as standards for their distribution. Should they create a separate digital business, centered around their "Nook" E-Book reader, or maintain an integrated strategy? And how should they think about the fragmented standards for distributing E-Books? The case allows students to probe the dynamics of platform-based industries, as well as what happens in traditional industries when attacked by new competitors adopting new digital technologies. It is developed using public source material.

Purchase this case:
http://hbr.org/search/613073-PDF-ENG

  • Harvard Business School Case 813-140

18 Months in a Startup: Zaggora.com

The founders of Zaggora reflected back on a tumultuous year and a half in which they had generated, from just $40,000 in personal savings, a multi-million dollar sportswear enterprise selling Hotpants to women. These were hotpants not of the 1960s hipster variety, but instead the first sportswear product of the new brand Zaggora that was made with a specially developed multi-ply fabric technology that heated up during a workout. While the founders had faced several challenges, including averting bankruptcy, now they faced an equally difficult time ahead. Should they grow the enterprise by continuing with their current bootstrapped online approach, or attempt to get their product into retail stores? Should they continue to self-finance and keep control, or cede some control by taking on venture capital funding?

Purchase this case:
http://hbr.org/search/813140-PDF-ENG

  • Harvard Business School Case 813-098

The Origins and Development of Silicon Valley

On October 1, 1891, as Senator Leland Stanford cut the ribbon at the ceremony gifting 8,000-acres of his Palo Alto, California, stock farm to a new, 559-student university bearing his name and seeking to produce "useful" in addition to "cultured" graduates, the majority of onlookers were orange groves and wildflowers. There was, as Gertrude Stein would remark of nearby Bay Area city, Oakland, nearly 50 years later, almost "no there, there." That is, it was a place with little social depth, identity, or culture. But over time, the region became synonymous with a culture of entrepreneurialism and developed into the most significant innovation hotspot in the world. What factors, if any, made what was to become known as "Silicon Valley" unique? Will Silicon Valley remain a vibrant community of technological innovation and economic growth, or will it decline like other previously thriving U.S. regions?

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http://hbr.org/search/813098-PDF-ENG

  • Harvard Business School Case 613-080

Chef Davide Oldani and Ristorante D'O

This case examines the unique business model of Ristorante D'O, a high end gourmand restaurant located near Milan, Italy. Founded by Chef, Davide Oldani, D'O offers meals at approximately one-third the price of other Michelin starred restaurants. Oldani has made this business model profitable by making a conscious set of operating strategy choices (menu, meal design, service process, lay-out, reservation process) that reduce waste and inefficiency, while preserving quality. The case enables students to understand how cost-quality trade-offs can be altered through creative operating strategies, and sufficient data are available to analyze the operating model in depth. A second focal point of the case concerns Oldani's choices for growth. The wait list for D'O is currently 18 months. He can presumably open another D'O at a different location. At the time of the case, however, he is considering opening a new restaurant in the same vicinity as D'O that would operate at an even lower price point. Case debate can center around whether this new restaurant format makes sense from a strategic point of view, and, in particular, whether the capabilities and know-how acquired in operating D'O are applicable to the new restaurant. The deeper issue in the case concerns how businesses based on the creative talent of an individual (like Chef Oldani) can grow, without losing what makes them special.

Purchase this case:
http://hbr.org/search/613080-PDF-ENG

  • Harvard Business School Case 213-024

Porto Adriatico

In March 2012, Jack Dawkins is in the early stages of leading the development of an old navy yard in Croatia into a mixed-use waterfront community of residences, hotel rooms, shops and dining. Catering to those arriving by superyachts and other leisure boats, and set amongst dramatic coastline, the project would transform the region. Coordinating the many stakeholders in a new country, Jack has to decide the best way to navigate the development risks and whether the project really makes sense as proposed, in more ways than one.

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http://hbr.org/search/213024-PDF-ENG