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.

June 24

Behind the wheel (or not) of the Google car

Google's car lacks three things most drivers find essential: a gas pedal, brake, and steering wheel. But the car drives itself, so hop on in. "Google Car," a new case by Karim Lakhani and colleagues, follows the company's management team as it makes decisions about how and what to invest in the product.

Using "scaffolds" to improve team performance

Melissa Valentine and Amy C. Edmondson investigate how two seemingly opposite types of work groups—one based on individual role players, the other on teams—can be combined with the use of organizational "scaffolds." Their working paper is titled, Team Scaffolds: How Meso-Level Structures Support Role-based Coordination in Temporary Groups.

Helping the stock market value a business correctly

In the case "Managing Change at Axis Bank," Paul M. Healy and Rachna Tahilyani are in the mind of bank CEO Shikha Sharma. Despite many improvements, the market is undervaluing the bank compared to its largest rivals. What can Sharma and her team do to ensure a correct valuation?

 

Publications

  • August 2013
  • Harvard Business Review Press

Collective Genius: The Art and Practice of Leading Innovation

By: Hill, Linda A., Greg Brandeau, Emily Truelove, and Kent Lineback

Abstract—Why can some organizations innovate time and again, while most cannot? You might think the key to innovation is attracting exceptional creative talent. Or making the right investments. Or breaking down organizational silos. All of these things may help-but there's only one way to ensure sustained innovation: you need to lead it-and with a special kind of leadership. Collective Genius shows you how. Preeminent leadership scholar Linda Hill, along with former Pixar tech wizard Greg Brandeau, MIT researcher Emily Truelove, and Being the Boss coauthor Kent Lineback, found among leaders a widely shared, and mistaken, assumption: that a "good" leader in all other respects would also be an effective leader of innovation. The truth is, leading innovation takes a distinctive kind of leadership, one that unleashes and harnesses the "collective genius" of the people in the organization. Using vivid stories of individual leaders at companies like Volkswagen, Google, eBay, and Pfizer, as well as nonprofits and international government agencies, the authors show how successful leaders of innovation don't create a vision and try to make innovation happen themselves. Rather, they create and sustain a culture where innovation is allowed to happen again and again-an environment where people are both willing and able to do the hard work that innovative problem solving requires. Collective Genius will not only inspire you; it will give you the concrete, practical guidance you need to build innovation into the fabric of your business.

Publisher's link: http://hbr.org/product/collective-genius-the-art-and-practice-of-leading-innovation/an/13296E-KND-ENG?referral=01240

  • August 2013
  • Harvard Business Law Review

Sovereign Debt Restructuring: Evaluating the Impact of the Argentina Ruling

By: Alfaro, Laura

Abstract—Recent rulings in the ongoing litigation over the pari passu clause in Argentinian sovereign debt instruments have generated considerable controversy. Some official-sector participants and academic articles have suggested that the rulings will disrupt or impede future sovereign debt restructurings by encouraging holdout creditors to litigate for full payment instead of participating in negotiated exchange offers. This paper critically examines this claim and argues that the incentives for holdout litigation are limited because of (1) significant constraints on creditor litigation, (2) substantial economic and reputational costs associated with such litigation, and (3) the availability of contractual provisions and negotiating strategies that mitigate the debtor's collective action problems. It also argues that the fact-specific equitable remedy in the Argentina case was narrowly tailored to Argentina's unprecedented disregard for court opinions and for international norms of negotiating sovereign debt restructurings and is therefore unlikely to be used in future debt restructurings.

Publisher's link: http://www.hbs.edu/faculty/Publication%20Files/Sovereign%20Debt%20Restructuring20140609_48fe54c9-3d37-45ab-bc6f-70515c6acf92.pdf

  • August 2013
  • Journal of Law & Economics

Deregulation, Misallocation, and Size: Evidence from India

By: Alfaro, Laura, and Anusha Chari

Abstract—This paper examines the impact of the deregulation of compulsory industrial licensing in India on firm size dynamics and reallocation of resources within industries. Following deregulation, resource misallocation declines, and the left-hand tail of the firm size distribution thickens significantly, suggesting increased entry by small firms. However, the dominance and growth of large incumbents remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly non-linear. The reallocation of market shares toward a small number of large firms and a large number of small firms is characterized as the "shrinking middle" in Indian manufacturing. Small- and medium-sized firms may continue to face constraints in their attempts to grow.

  • August 2013
  • Mind, Work, and Life: A Festschrift on the Occasion of Howard Gardner's 70th Birthday

Big C, Little C, Howard, and Me: Approaches to Understanding Creativity

By: Amabile, Teresa M.

Abstract—No abstract available.

Publisher's link: http://howardgardner.com/2014/05/27/mind-work-and-life/

  • August 2013
  • Journal of Political Economy

Poultry in Motion: A Study of International Trade Finance Practices

By: Antrās, Pol, and C. Fritz Foley

Abstract—This paper analyzes the financing terms that support international trade and sheds light on how these terms shape the impact of economic shocks on trade. Analysis of transaction-level data from a U.S.-based exporter of frozen and refrigerated food products, primarily poultry, reveals broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the choice of trade finance terms is shaped by the risk that an importer defaults on an exporter and by the possibility that an exporter does not deliver goods as specified in the contract. The empirical results indicate that cash in advance and open account terms are much more commonly used than letter of credit and documentary collection terms. Transactions are more likely to occur on cash in advance or letter of credit terms when the importer is located in a country with weak contractual enforcement. As an importer develops a relationship with the exporter, transactions are less likely to occur on terms that require prepayment. During the recent crisis, the exporter was more likely to demand cash in advance terms when transacting with new customers, and customers that traded on cash in advance and letter of credit terms prior to the crisis decreased their purchases by 17.3% more than other customers. The model illustrates that these findings can be rationalized if (i) misbehavior on the part of the exporter is of little concern to importers, and (ii) local banks in importing countries are more effective than the exporter in pursuing financial claims against importers.

Publisher's link: http://www.people.hbs.edu/ffoley/PIMAp.pdf

  • August 2013
  • American Economic Journal: Microeconomics

Pricing and Efficiency in the Market for IP Addresses

By: Edelman, Benjamin, and Michael Schwarz

Abstract—We consider market rules for transferring IP addresses, numeric identifiers required by all computers connected to the Internet. Transfers usefully move resources from lowest- to highest-valuation networks, but transfers tend to cause socially costly growth in the Internet's routing table. We propose a market rule that avoids excessive trading and comes close to achieving social efficiency. We argue that this rule is feasible despite the limited powers of central authorities. We also offer a framework for reasoning about future prices of IP addresses and then explore the role of rentals in sharing information about the value of IP address and assuring allocative efficiency.

Publisher's link: http://www.benedelman.org/publications/ipmarkets-2014-04-15.pdf

  • August 2013
  • Leading Sustainable Change: An Organizational Perspective

Staying the Same While Changing: Organizational Identity in the Face of Environmental Challenges

By: Glynn, Mary Ann, Christi Lockwood, and Ryan Raffaelli

Abstract—We explore the role of organizational identity in the adoption of new sustainability practices, focusing on how identity functions as a driver of (or sometimes a drag on) adoption. Drawing on illustrations from the U.S. hotel industry, we examine how sustainability practices diffused across firms. Focusing on two exemplar hotels, we show sustainability is not only "what we do" as an organization, but also "who we are." We discuss avenues for future research on sustainability from an identity perspective and reflect on implications for practice.

Publisher's link: http://ukcatalogue.oup.com/product/9780198704072.do

  • August 2013
  • Journal of Service Management

Notes from the Search for Deep Indicators in Services

By: Heskett, James L.

Abstract—Much of the research in the service sector over the last four decades has concerned itself with the search for deep indicators that explain service performance. This paper provides a brief retrospective of some of this research and illustrates the directions that this work will take in the future through the vehicle of a field study conducted by the author. The study concluded that culture-based on measures, among other things, of trust, employee commitment, and "ownership" behaviors of both employees and clients-could explain and be used to predict up to half of the difference in operating income between agency offices of a global service provider. The paper calls for care but less caution if research in service management is to be advanced more rapidly and made more relevant for practitioners.

Publisher's link: http://dx.doi.org/10.1108/JOSM-04-2014-0105

  • August 2013
  • Harvard Business Review

Collective Genius

By: Hill, Linda A., Greg Brandeau, Emily Truelove, and Kent Lineback

Abstract—Competitiveness depends in great part on the ability to innovate. The perennial challenge, then, is to build an organization capable of innovating again and again. Traditional, direction-setting leadership can work well when the solution to a problem is known and straightforward. But if the problem calls for a truly original response, no one can decide in advance what that response should be. So the role of a leader of innovation is not to set a vision and motivate others to follow it. It's to create a community that is willing and able to innovate.

Publisher's link: http://hbr.org/2014/06/collective-genius/ar/1

  • August 2013
  • Journal of Political Economy

Standard Essential Patents

By: Lerner, Josh, and Jean Tirole

Abstract—A major policy issue in standard setting is that patents that are ex-ante not that important may, by being included into the standard, become standard-essential patents (SEPs). In an attempt to curb the monopoly power that they create, most standard-setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms. Such commitments unsurprisingly are conducive to intense litigation activity. This paper builds a framework for the analysis of SEPs, identifies several types of inefficiencies attached to the lack of price commitment, shows how structured price commitments restore competition, and analyzes whether price commitments are likely to emerge in the marketplace.

 

Working Papers

Abstract—Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.

Download working paper: http://ssrn.com/abstract=2451036

Abstract—We use official data and standard optimal tax conditions to infer the positive and normative judgments implicit in U.S. tax policy since 1979. We find that explanations within this framework for the time path of U.S. policy require central parameters of the model, namely the elasticity of taxable income or the marginal social welfare weights on top earners, to take unconventional values. We use inferred social preferences to provide novel estimates of the welfare costs of unequal growth and recessions and find that they are sensitive to the assumed distortionary costs of taxation and the year from which preferences are derived. We explore several possible explanations for our findings with available data.

Download working paper: http://ssrn.com/abstract=2448954

Abstract—This paper shows how meso-level structures support effective coordination in temporary groups. Prior research on coordination in temporary groups describes how roles encode individual responsibilities so that coordination between relative strangers is possible. We extend this research by introducing key tenets from team effectiveness research to theorize when role-based coordination might be more or less effective. We develop these ideas in a multi-method study of a hospital emergency department (ED) redesign. Before the redesign, people coordinated in ad-hoc groupings, which provided flexibility because any nurse could work with any doctor, but these groupings were limited in effectiveness because people were not accountable to each other for progress, did not have shared understanding of their work, and faced interpersonal risks when reaching out to other roles. The redesign introduced new meso-level structures that bounded a set of roles (rather than a set of specific individuals, as in a team) and gave them collective responsibility for a whole task. We conceptualized the meso-level structures as team scaffolds and found that they embodied the logic of both role and team structures. The team scaffolds enabled small group interactions to take the form of an actual team process with team-level prioritizing, updating, and helping, based on new-found accountability, overlapping representations of work, and belonging-despite the lack of stable team composition. Quantitative data revealed changes to the coordination patterns in the ED (captured through a two-mode network) after the team scaffolds were implemented and showed a 40% improvement in patient throughput time.

Download working paper: http://ssrn.com/abstract=1987724

 

Cases & Course Materials

Mobile broadband carriers provide network access to the Internet for a range of devices (typically portable or mobile), including consumer devices such as smartphones, tablets and E-Readers, but also a host of new emerging devices. Mobile broadband networks enable data to travel in packets over telecommunication (telecom) companies' wireless (or cellular) networks. The number of worldwide mobile cellular subscriptions reached 6 billion in 2011, reflecting a penetration rate of 87%. This note provides some industry context for the advent and opportunities associated with mobile broadband.

Purchase this case:
http://hbr.org/product/mobile-broadband-and-the-telecommunications-industry-in-2011/an/814009-PDF-ENG

  • Harvard Business School Case 314-103

The Novartis Malaria Initiative

The Novartis Malaria Initiative was designed, as a result of a precedent-setting agreement with the World Health Organization in 2001, to provide a breakthrough treatment for malaria-"at no profit"-for public health systems. What had begun as an exemplary act of corporate responsibility had succeeded beyond any expectations. In 2012, for the second year in a row, Novartis had manufactured and distributed over 100 million units of the anti-malarial drug CoartemŪ. But with the significantly increased volumes came increased costs, bringing into question the sustainability of the program. In 2013, Dr. Linus Igwemezie, executive vice president and head of the Novartis Malaria Initiative, reflected on the evolution of the program and the way forward. His goal was to expand access to Coartem in the private sector through a low-margin, high-volume social business model to eventually enable the Malaria Initiative to break even and become financially sustainable. Was this the right strategy?

Purchase this case:
http://hbr.org/product/the-novartis-malaria-initiative/an/314103-PDF-ENG

  • Harvard Business School Case 114-082

Managing Change at Axis Bank (A)

Axis Bank is India's third largest private sector bank. In April 2009, Shikha Sharma, an outsider, was appointed as its CEO. She took over from a person who had overseen ten years of rapid growth at the bank. The selection of an outsider as the new CEO surprised many inside and outside the bank. Sharma changed the bank's hierarchical culture, strengthened the core team by appointing new talent where needed, sought to build its core processes and infrastructure, and filled several gaps in its business portfolio. Despite these changes, the stock market continues to undervalue Axis Bank compared with its chief rivals. In light of this, Axis Bank needs to figure out what more it needs to do to ensure that the market values the franchise correctly.

Purchase this case:
http://hbr.org/product/managing-change-at-axis-bank-a/an/114082-PDF-ENG

  • Harvard Business School Case 514-019

Making stickK Stick: The Business of Behavioral Economics

stickK.com, a website that uses behavioral economics to help users achieve their goals, must choose between a direct-to-consumer or business-to-business model. The case includes a discussion of how principles of behavioral economics can be used to influence behavior, and how an understanding of behavioral economics can inform managerial decisions about product adoption and diffusion.

Purchase this case:
http://hbr.org/product/making-stickk-stick-the-business-of-behavioral-economics/an/514019-PDF-ENG

In 1985, Don St. Pierre Sr. became president of Beijing Jeep, the troubled joint venture between American Motors Corporation and the Chinese government to build Jeep Cherokees in China. Just over a decade later in 1996, leveraging contacts from his time in the automotive industry, he founded ASC Fine Wines with his son, Don Jr. Despite many challenges, from building a distribution network from the ground up to Chinese customs throwing Don Jr. in prison, the St. Pierres prevailed, and ASC was standing tall as China's number-one fine wine importer by volume and value in 2013. ASC had developed a reputation for quality of product and service, beating out the competition of private wine importers and state-owned enterprises. What lessons had this father-son team learned in their 20 years of doing business in China? Would ASC make the transition from being a family-run business to a part of Suntory Holdings and still thrive? Could ASC under its leadership continue to adapt to the changing market for fine wine in China?

Purchase this case:
http://hbr.org/product/from-beijing-jeep-to-asc-fine-wines-the-story-of-an-american-family-business-in-china/an/314053-PDF-ENG

  • Harvard Business School Case 614-022

Google Car

By 2013, Google, while not a traditional manufacturer of automobiles, had invested millions of dollars in its self-driving cars, which had logged over 500,000 miles of testing. The Google management team faced several questions. Should Google continue to invest in the technology behind self-driving cars? How could Google's core software-based and search business benefit from self-driving car technology? As large auto manufacturers began to invest in automotive technology themselves, could Google compete? Was this investment of time and resources worth it for Google?

Purchase this case:
http://hbr.org/product/google-car/an/614022-PDF-ENG

  • Harvard Business School Case 814-052

Venture Capital Investment in the Clean Energy Sector

In this note, we examine the extent to which venture capital is adequately positioned for the rapid commercialization of clean energy technologies in the United States. The need for a revolution in clean energy is driven not just by environmental consequences of energy use, but also by the need for energy security, to address growing concerns about a crisis in the balance of payments, and as a potentially important source of domestic jobs. Our premise in this note is that a key aspect of such widespread change is that these issues cannot be "solved" by a single technology. Rather, technological changes will have to be pervasive and will require a whole range of different products and processes to come to market. Some of the technological progress will come from incremental innovations that do not depend on venture capital.

Purchase this case:
http://hbr.org/product/venture-capital-investment-in-the-clean-energy-sector/an/814052-PDF-ENG