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- 14 Jan 2015
- Research & Ideas
Thriving in the Turbulence of Emerging Markets
Entrepreneurs in developing market economies face special management challenges. Company leaders in India, Turkey, and Africa discuss their experiences with Harvard Business School's Creating Emerging Markets project. Open for comment; 0 Comments.
- 13 Mar 2014
- Research & Ideas
Can We Get To Where We Need To Go?
America's infrastructure woes and how to fix them were front and center at the recent summit, America on the Move: Transportation and Infrastructure for the 21st Century, led by Rosabeth Moss Kanter. Open for comment; 0 Comments.
- 12 Feb 2014
- Working Paper Summaries
Management Practices, Relational Contracts, and the Decline of General Motors
What led to General Motors' decline? Long regarded as one of the best managed and most successful firms in the world, its share of the US market fell from 62.6 to 19.8 percent between 1980 and 2009, and in 2009 the firm went bankrupt. The authors argue that the conventional explanations for GM's decline are seriously incomplete. They discuss a number of causes for the firm's difficulties, and make the case that one of the reasons that GM began to struggle was because rival Toyota's practices were rooted in the widespread deployment of effective relational contracts--agreements based on subjective measures of performance that could neither be fully specified beforehand nor verified after the fact and that were thus enforced by the shadow of the future. GM's history, organizational structure, and managerial practices made it very difficult to maintain these kinds of agreements either within the firm or between the firm and its suppliers. The authors also argue that at least two aspects of GM's experience seem common to a wide range of firms. First, past success often led to extended periods of denial: Indeed a pattern of denial following extended success appears to be a worldwide phenomenon. Second, many large American manufacturers had difficulty adopting the bundle of practices pioneered by firms like Toyota. The paper concludes by discussing the implications of this history for efforts to revive American manufacturing. Key concepts include: Public support for economic growth has usually focused on the diffusion of technology-based insights. Learning more about when (and what type of) relational contracts are likely to be valuable may be just as important. For General Motors, the historical success of the firm led its senior managers to deny and/or misperceive the nature of the threat presented by Japanese competition for much of the 1970s and 1980s. GM faced difficulties in the 1990s once the firm had made the decision to adopt Toyota's managerial practices. It took time for GM to understand exactly what Toyota was doing. Then problems in building new relational contracts greatly slowed GM's efforts to respond effectively, either through innovation or by imitating Toyota's efforts. Closed for comment; 0 Comments.
- 13 Nov 2013
- Research & Ideas
Should Men’s Products Fear a Woman’s Touch?
Recent research shows that loyal customers often get upset when a brand associated with men expands to include products perceived as feminine. Senior Lecturer Jill J. Avery discusses the problem of "gender contamination." Closed for comment; 0 Comments.
- 24 Jul 2013
- Op-Ed
Detroit Files for Bankruptcy: HBS Faculty Weigh In
After a long period of economic decline, the city of Detroit filed for bankruptcy protection last week. John Macomber, Robert Pozen, Eric Werker, and Benjamin Kennedy offer their views on some down-the-road scenarios. Closed for comment; 0 Comments.
- 04 Mar 2013
- Lessons from the Classroom
Lessons from Running GM’s OnStar
Before teaching at Harvard Business School, Chet Huber ran the General Motors telematics subsidiary OnStar. Huber discusses how the lessons he learned in the field mesh with the lessons he teaches to students. Open for comment; 0 Comments.
- 11 Jun 2012
- Research & Ideas
When Business Competition Harms Society
In highly competitive markets, many firms are likely to bend the rules if doing so will keep their customers from leaving for a rival, according to new research by professor Michael W. Toffel and colleagues. Case in point: service stations that cheat on auto emissions testing. Key concepts include: Vehicle owners are less likely to return to a service facility that has failed their vehicle in an auto emissions test. Vehicles were much more likely to pass the test if they were tested at a facility that was located near a competitor. Managers should be aware that fostering a culture of intense competition may instead induce unethical behavior. Closed for comment; 0 Comments.
- 08 Mar 2012
- Working Paper Summaries
Customer-Driven Misconduct: How Competition Corrupts Business Practices
Competition is typically thought to generate many positive outcomes including lower prices and higher productivity. But competition can also lead firms to increase quality for their customers in ways that are both illegal and socially costly. This paper examines the impact of competition on the vehicle emissions testing market, and finds that firm misconduct increases with competitive pressure and the threat of losing customers to rival firms. These results have serious implications for policy makers and managers. This paper is among the first to empirically demonstrate that increased competition can motivate firms to provide illicit quality to avoid losing business. Key concepts include: Firms seeking to enforce legal and ethical conduct among managers and employees must be especially vigilant when operating in highly competitive markets. Increased competition within markets may encourage competitors to cross legal boundaries in ways that threaten the profits of legally compliant firms. In the absence of effective monitoring by government institutions, firms may benefit from privately monitoring their competitors' behavior to ensure that rivals do not maintain a competitive advantage through illicit actions. Policy makers must carefully consider the optimal market structure for industries in which illicit actions yield cost reductions or are demanded by customers. While competition may yield lower prices and better choice for customers, it may also bring the increased social costs of illegal behavior by firms. Since managers may be under considerable pressure to cross legal and ethical lines when market competition is high, avoiding government sanctions requires top managers and owners to strengthen monitoring and governance mechanisms to ensure legal compliance. Managers must understand that government policy, firm decisions, or exogenous factors that increase market rivalry may necessitate the monitoring of competitors' behavior. The failure to do so may allow these rivals to gain advantage through illicit strategies, particularly under institutional regimes where regulatory monitoring or enforcement is weak. Closed for comment; 0 Comments.
- 31 May 2011
- Research & Ideas
Japan Disaster Shakes Up Supply-Chain Strategies
The recent natural disaster in Japan brought to light the fragile nature of the global supply chain. Professor Willy Shih discusses how companies should be thinking about their supply-chain strategy now. Closed for comment; 0 Comments.
- 18 Nov 2010
- Research & Ideas
GM’s IPO: Back to the Future
General Motors reaches a milestone this week as it presents an initial public offering. HBS faculty discuss issues facing the automaker's revival. Closed for comment; 0 Comments.
- 12 Jul 2010
- Research & Ideas
Rocket Science Retailing: A Practical Guide
How can retailers make the most of cutting-edge developments and emerging technologies? Book excerpt plus Q&A with HBS professor Ananth Raman, coauthor with Wharton professor Marshall Fisher of The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance. Key concepts include: Retailers can better identify and exploit hidden opportunities in the data they generate. Integrating new analytics within retail organizations is not easy. Raman outlines the typical barriers and a path to overcome them. Incentives must be aligned within organizations and in the supply chain. The first step is to identify the behavior you want to induce. To attract and retain the best employees, successful retailers empower them in specific ways. Closed for comment; 0 Comments.
- 29 Mar 2010
- Research & Ideas
Ruthlessly Realistic: How CEOs Must Overcome Denial
Even the best leaders can be in denial—about trouble inside the organization, about onrushing competitors, about changing consumer behavior. Harvard Business School professor Richard S. Tedlow looks at history and discusses how executives can acknowledge and deal with reality. Plus: Book excerpt. Key concepts include: Denial is the unwillingness to acknowledge and deal with reality. What is different today is that the cost of denial has become so high. Being ruthlessly realistic with oneself is one of the greatest challenges for any CEO. Closed for comment; 0 Comments.
- 01 Mar 2010
- Op-Ed
A Golden Opportunity for Ford and GM
With Toyota caught in a downshift, competitors should make aggressive moves to capitalize, says HBS professor Bill George. For starters, they need to improve their auto lineups for the long term. He explains how Ford and GM can best navigate the industry landscape ahead. Key concepts include: For U.S. automakers to accelerate production while Toyota remains wounded is not a long-term strategy for success. The companies should cut costs while simultaneously transforming their organizations and revamping product lineups. Ford and GM could secure market share gains by investing windfall profits into making products more competitive for the next decade. In this regard, Ford has the jump on GM. Chrysler is missing a golden opportunity to revamp, reposition, and reorganize. Closed for comment; 0 Comments.
- 22 Feb 2010
- Op-Ed
Tragedy at Toyota: How Not to Lead in Crisis
"Toyota can only regain its footing by transforming itself from top to bottom to deliver the highest quality automobiles," says HBS professor Bill George of the beleaguered automobile company that in recent months has recalled 8 million vehicles. He offers seven recommendations for restoring consumer confidence in the safety and quality behind the storied brand. Key concepts include: Toyota Motor Corporation's problem is first and foremost a leadership crisis. It needs a credible leader with a strong, cohesive plan. Competitors Ford and GM are working to regain the market share they have lost to Toyota. Rather than blame floor mats and panicky drivers, as Toyota did when complaints first arose, it should have acknowledged that its vaunted quality system failed. Toyota should seize the opportunity to make radical changes to renew the company and restore consumers' trust. Closed for comment; 0 Comments.
- 27 Aug 2009
- Working Paper Summaries
Measuring and Understanding Hierarchy as an Architectural Element in Industry Sectors
In an industry setting, classic supply chains display strict hierarchy, whereas clusters of firms have linkages going in many different directions. Previous theory has often assumed the existence of the hierarchical relationships among firms, and empirical industry studies tend to focus on a single-layer industry, or a two-layer structure comprising buyers and suppliers. And yet, some industries have a multilayer structure with a multistep supply chain. Others comprise a cluster of complementary firms producing different parts of a large system. HBS professor Carliss Y. Baldwin and colleagues use network analysis to study multilayer industries both empirically (in the case of Japan) and theoretically and to explore how industries are organized at the sector level in an attempt to reveal the underlying rules that determine how industry architectures form and change. Key concepts include: Empirical analysis shows that the automotive sector in Japan exhibits a significantly higher degree of hierarchy and higher transaction breadth (average number of customers per firm) than the electronics sector. The degree of hierarchy in an industry sector may be traced back to fundamental properties of the underlying technologies. This research helps points the way to new approaches for understanding industry architectures and the factors that influence the architecture of industry sectors. Closed for comment; 0 Comments.
- 26 Aug 2009
- Op-Ed
Where Cash for Clunkers Ran Off the Road
Marketing professor John Quelch says the federal government's "Cash for Clunkers" program was poorly run and failed to meet its main objectives, proving again the government has no business trying to shape consumer behavior. Join the discussion. Key concepts include: Cash for Clunkers was an unjustifiable drain on American taxpayers. The promotion stole largely from future sales with taxpayers subsidizing over half a million new car sales that would have occurred anyway. The federal government has no experience in such initiatives and proved itself incapable of forecasting demand associated with different incentive levels. Administration expenses might well reach 10 percent of total program costs. Closed for comment; 0 Comments.
- 15 Jun 2009
- Research & Ideas
GM: What Went Wrong and What’s Next
For decades, General Motors reigned as the king of automakers. What went wrong? We asked HBS faculty to reflect on the wrong turns and missed opportunities of the former industry leader, and to suggest ideas for recovery. Closed for comment; 0 Comments.
- 01 Jun 2009
- Lessons from the Classroom
The Challenges of Investing in Science-Based Innovation
Smart science-based businesses view today's economic turmoil as an opportunity to stoke up research and innovation for long-term competitive advantage, says professor Vicki L. Sato. How about your business? Key concepts include: Companies with highly differentiated products will be able to weather this storm, and come out the other side stronger. Innovation management challenges fall across several key areas, including strategy, organizational design, decision-making, and resource allocation. Different situations will require different business decisions—investing in R&D isn't always the right path to take. Closed for comment; 0 Comments.
- 30 Apr 2008
- Sharpening Your Skills
Sharpening Your Skills: Brand Management
Should I trust my brand to a sports endorser? Does B2B branding work? What does mystery writer James Patterson know about branding that I don't? Here are some recent Working Knowledge articles on issues that keep brand managers up at night. Closed for comment; 0 Comments.
Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning
Dealers who need to price idiosyncratic products--like houses, artwork, and used cars--often struggle with a lack of information about the demand for their specific items. Analyzing sales data from the used-car retail market, the authors of this paper develop a model of dynamic pricing for idiosyncratic products, showing that seller learning has an impact on pricing dynamics through a rich set of mechanisms. Overall, findings suggest a potentially high return to taking a more serious information-based approach to pricing idiosyncratic products.