Information Technology →
- 08 Apr 2015
- What Do You Think?
Are Technology Companies Ripe for Disruption?
SUMMING UP Jim Heskett's readers discuss the fate of tech companies that continue to stuff their products with unwanted bells and whistles. What do YOU think? Open for comment; 0 Comments.
- 02 Feb 2015
- Research & Ideas
Disruptors Sell What Customers Want and Let Competitors Sell What They Don’t
By "decoupling" activities that consumers value from the ones they don't, enterprising digital startups are wreaking havoc on established firms. Thales Teixeira discusses his research on the second wave of Internet disruption. Open for comment; 0 Comments.
- 31 Jul 2014
- Research & Ideas
A Scholarly Crowd Explores Crowdsourcing
At the Open and User Innovation Workshop, several hundred researchers discussed their work on innovation contests, user-led product improvements, and the biases of crowds. Closed for comment; 0 Comments.
- 10 Apr 2013
- Research & Ideas
Learning Curve: Making the Most of Outsourcing
Companies that view outsourcing as an easy way to offload commodity work are missing powerful improvements to be gained by working closely with service providers, says Professor Robert S. Huckman. Open for comment; 0 Comments.
- 02 Apr 2013
- Working Paper Summaries
Monitoring and the Portability of Soft Information
This study examines the "portability" of soft information within a decentralized financial institution. Using a unique dataset on loans from a large credit union and employees' notes summarizing their interactions with borrowers, the authors provide new insights on the portability of soft information within organizations, focusing in particular on an internal monitoring system used at this field site which, in effect, acts as a central repository of soft information gathered in the course of interactions between employees and customers. Contrary to the prevailing view that soft information lacks portability, results provide evidence that the "stock" of soft information accumulated in this system has persistent effects on the lending decisions of employees. Overall, findings indicate that the centralization of soft information acquired in past borrower-employee interactions can enable organizations to separate this informational asset from individual employees to facilitate future loan decisions. These results suggest that centralized information technology can alleviate the well-documented barriers of transmitting soft information consistent with economic theories on the role of centralization of information as a complement to decentralized decision-making. Key concepts include: Portability of information means the extent to which it can be stored for, communicated to, and used over time and by employees other than those that originally acquired or produced the information. Internal centralized information systems can facilitate the transmission of soft information across employees in different branches. Findings complement the literature on the role of information systems as a means of improving information processing and coordinating decentralized decision-making within financial institutions. Closed for comment; 0 Comments.
- 25 Oct 2012
- Research & Ideas
10 Reasons Customers Might Resist Windows 8
Has Microsoft become too innovative? Professor Rosabeth Moss Kanter, a leader in the field of change management, discusses reasons that people might not rush to embrace Windows 8. Closed for comment; 0 Comments.
- 15 Oct 2012
- Research & Ideas
Why Business IT Innovation is so Difficult
If done right, IT has the potential to completely transform business by flattening hierarchies, shrinking supply chains, and speeding communications, says professor Kristina Steffenson McElheran. Why, then, do so many companies get it wrong? Closed for comment; 0 Comments.
- 21 Jun 2012
- Working Paper Summaries
Information Technology and Boundary of the Firm: Evidence from Plant-Level Data
It has long been believed that information technology (IT) has the potential to shift the boundaries surrounding where production takes place. Specifically, networked IT investments are supposed to reduce costs of monitoring behavior of internal and external partners, thereby improving incentives and reducing the risk of opportunistic behavior. Networked IT can also reduce costs of coordinating economic activity within and between firms. This study, by Chris Forman and Kristina McElheran, explores how IT investments influence vertical integration in supply chain relationships. Key concepts include: The adoption of supplier-focused IT has an economically and statistically significant negative impact on the percentage of downstream within-firm transfers. Somewhat surprisingly, adoption of customer-focused IT has no significant effect on the percentage of downstream transfers. Adoption of supplier-focused IT has the largest impact on within-firm transfers when adopted in conjunction with customer-focused IT. Closed for comment; 0 Comments.
- 12 Mar 2012
- Research & Ideas
Crowded at the Top: The Rise of the Functional Manager
It's not lonely at the top anymore—today's CEO has an average of 10 direct reports, according to new research by Julie M. Wulf, Maria Guadalupe, and Hongyi Li. Thank a dramatic increase in the number of "functional" managers for crowding in the C-suite. Key concepts include: The number of managers reporting directly to the CEO has doubled, from an average of 5 direct reports in 1986 to an average of 10 today. In 2008, companies averaged 2.9 general managers, compared with 1.6 in 1986, according to data from several surveys. The average number of functional managers reporting directly to the CEO increased much more dramatically, from 3.1 in the late 1980s to 6.7 in 2008. Two main factors have driven the C-suite sea change: an overall increase in IT investments and an overall decrease in firm diversification. As hierarchical flattening occurs, companies are pushing some decisions toward the top, casting doubt on the common idea that firms flatten in order to push ideas down the organization. Closed for comment; 0 Comments.
- 19 Jul 2011
- Working Paper Summaries
Signaling to Partially Informed Investors in the Newsvendor Model
Why might firms make operational decisions that purposefully do not maximize expected profits? This model looks at the question by developing scenarios using the example of inventory management in the face of an external investor. The research was conducted by Vishal Gaur of Cornell University, Richard Lai of the University of Pennsylvania, and Ananth Raman and William Schmidt of Harvard Business School. Key concepts include: Companies face pressure from external investors that leads them to make suboptimal operations decisions. This pressure arises from three forces: a strong prior belief that firms are of a "low" type (one with a low quality investment opportunity), an inability for firms to mitigate the information asymmetry regarding their actual type, and an emphasis on short-term valuation. Surprisingly, this scenario includes instances in which a firm with a high quality investment opportunity finds it attractive to underinvest. There have been relatively few applications of signaling games in the operations management literature and this model provides an important application of signaling game theory to the problem of inventory management in the face of an external investor. The researchers find several real-life examples in which firms faced pressure to underinvest, and how the firms chose to deal with those situations. One example is the decision by French upscale beauty brand Clarins Group to go private in 2008. The move relieved management of shareholder pressure for short-term profits and allowed them to pursue longer-term opportunities that eventually paid off. The model can be effectively applied regardless of whether the decision is about inventory or some other type of capacity investment, including plant expansions, capital expenditures, and contracting for production inputs. Closed for comment; 0 Comments.
- 01 Nov 2010
- Research & Ideas
How IT Shapes Top-Down and Bottom-Up Decision Making
What determines whether decisions happen on the bottom, middle, or top rung of the corporate ladder? New research from professor Raffaella Sadun finds that the answer often lies in the technology that a company deploys. Key concepts include: Enterprise Resource Planning software is a decentralizing technology: It provides information that enables lower-level managers to make more decisions without consulting their superiors. By the same token, Computer-Assisted Design and Computer-Assisted Manufacturing software creates a situation in which the plant worker needs less access to superiors in order to make a decision. The better the data network, the easier it is for workers to lean on superiors and rely on them to make decisions. It's also easier for executives to micromanage and keep all the decisions in the corporate office. Trust is also a key factor in determining whether decisions are centralized at headquarters or decentralized at the local level. Research finds that the average level of trust of a multinational's home country tends to influence the level of decentralization in that company. Open for comment; 0 Comments.
- 28 Oct 2010
- Working Paper Summaries
The Distinct Effects of Information Technology and Communication Technology on Firm Organization
At what point in the corporate food chain are big decisions made? It depends on technology, according to new research, which finds that information-based software will help to push decisions further down the corporate ladder, whereas communication technologies will push decisions up to the top. Research was conducted by Nicholas Bloom of Stanford University; Assistant Professor Raffaella Sadun of Harvard Business School; and Luis Garicano and John Van Reenen of the London School of Economics. Key concepts include: Enterprise Resource Planning software is a decentralizing technology: It provides information that enables lower-level managers to make more decisions without consulting their superiors. By the same token, Computer Assisted Design software creates a situation in which the worker needs less access to superiors in order to make a decision. On the other hand, the better the data network, the easier it is for workers to communicate with their superiors and to rely on them to make decisions. Closed for comment; 0 Comments.
- 04 Mar 2010
- Working Paper Summaries
The Determinants of Individual Performance and Collective Value in Private-Collective Software Innovation
Why do people expend personal time and effort toward creating a public good? Over the past decade, collaborative, community-based approaches to developing knowledge-intensive products like encyclopediae, music, and software have gained prominence in both practice and scholarly analysis. "Open source software development," for example, is distinguished by self-selection of distributed participants into tasks, free revealing of knowledge, collective creation of shared software artifacts, and participants' ability to generate new innovations by reinterpreting and repurposing knowledge and artifacts created by others. The MathWorks' Ned Gulley and HBS professor Karim R. Lakhani study the determinants of individual performance and collective value in software innovation by analyzing 11 programming competitions that mimic the working of the open source software community. Key concepts include: Knowledge creation and reuse are important dual goals of social systems organized to collectively solve technical problems. Collective value relies on the ability of others to understand and comprehend the design structure of knowledge to enable reuse. Thus deviations from commonly understood rules of practice, while beneficial to the individual innovator, impede adoption by others. Although free riding is a concern in most collective systems, innovators need to realize that the value of the reuse of their work by others depends as much on the new knowledge they create as on the old knowledge they borrow. Closed for comment; 0 Comments.
- 11 Feb 2010
- Working Paper Summaries
The Architecture of Complex Systems: Do Core-periphery Structures Dominate?
All complex systems can be divided into a nested hierarchy of subsystems. However, not all these subsystems are of equal importance: Some subsystems are core to system performance, whereas others are only peripheral. In this study, HBS professor Carliss Y. Baldwin and coauthors developed methods to detect the core components in a complex software system, establish whether these systems possess a core-periphery structure, and measure important elements of these structures. The general patterns highlight the difficulties a system architect faces in designing and managing such systems. Results represent a first step in establishing stylized facts about the structure of real-world systems. Key concepts include: Core-periphery structures dominate the sample, with 75-80 percent of systems in the sample possessing such a structure. It is significant that a substantial number of systems lack such a structure. This implies that a considerable amount of managerial discretion exists when choosing the "best" architecture for a system. Variations in system structure can be explained, in part, by the different models of development used to develop systems. Legacy code is rarely rewritten, but instead forms a platform upon which new systems are built. With such an approach, today's developers bear the consequences of design decisions made long ago. Closed for comment; 0 Comments.
- 22 Jan 2010
- Working Paper Summaries
Competing Ad Auctions
Joining ad platforms can attract substantial regulatory attention: In November 2008, the Department of Justice planned to file antitrust charges to stop the proposed Google-Yahoo transaction. More recently, in September 2009, the Department of Justice sought additional information from Microsoft and Yahoo about their proposed partnership. At first glance it might seem paradoxical to claim that the Google-Yahoo transaction is undesirable, for advertisers and for the economy as a whole, while the Microsoft-Yahoo transaction offers net benefits. But that conclusion is entirely possible. HBS professor Benjamin G. Edelman and doctoral candidates Itai Ashlagi and Hoan Soo Lee explore competition among ad platforms that offer search engine advertising services. In addition, the authors evaluate possible transactions among ad platforms—building tools to predict which transactions improve welfare and which impede it. Key concepts include: Participation costs exist and matter, affecting bidders' decisions about which ad platforms to use, and changing the welfare consequences of mergers or joins among platforms. By creating a joined ad platform of larger size than Microsoft or Yahoo alone, the transaction lets advertisers spread participation costs over a larger purchase, making it worthwhile for small to midsize advertisers to sign up with the joined Microsoft-Yahoo platform even though they do not use Microsoft or Yahoo separately. Preventing a competing platform from attracting advertisers reduces the quality of that competing platform (fewer ads yielding an inferior match with users' searches), cuts that platform's revenue (impeding future investment), and generally hinders that platform's efforts at growth. Closed for comment; 0 Comments.
- 14 Jan 2010
- Working Paper Summaries
Optimal Auction Design and Equilibrium Selection in Sponsored Search Auctions
Reserve prices may have an important impact on search advertising marketplaces. But the effect of reserve prices can be opaque, particularly because it is not always straightforward to compare "before" and "after" conditions. HBS professor Benjamin G. Edelman and Yahoo's Michael Schwarz use a pair of mathematical models to predict responses to reserve prices and understand which advertisers end up paying more. Key concepts include: A search engine's optimal reserve price is independent of the number of bidders and also independent of the rate at which click-through rate declines over positions. Most incremental revenue from setting reserve price optimally comes from the indirect effects on high bidders—not from the low bidder's direct effect, nor from indirect effects on other low bidders. This result may appear counter-intuitive because top bidders' large valuations place them, in an important sense, "furthest from" the reserve price. Closed for comment; 0 Comments.
- 11 Jan 2010
- Research & Ideas
Mixing Open Source and Proprietary Software Strategies
Open source and proprietary software development used to be competing strategies. Now software firms are experimenting with strategies that mix the two models. Researcher Gaston Llanes discusses recent research into these "mixed source" strategies. Key concepts include: Software companies are taking a "best of both worlds" approach by creating products that use a combination of OS and proprietary software code. The researchers wanted to get a clearer sense of when a profit-maximizing firm should adopt a mixed-source business model and what that model might look like under different circumstances. Results indicate recurring patterns and strategies that managers can take into consideration when setting strategy. Closed for comment; 0 Comments.
- 11 May 2009
- Research & Ideas
The IT Leader’s Hero Quest
Think you could be CIO? Jim Barton is a savvy manager but an IT newbie when he's promoted into the hot seat as chief information officer in The Adventures of an IT Leader, a novel by HBS professors Robert D. Austin and Richard L. Nolan and coauthor Shannon O'Donnell. Can Barton navigate his strange new world quickly enough? Q&A with the authors, and book excerpt. Key concepts include: The role of CIO is one of the most volatile, high-turnover jobs in business. Why? The driving cause is more than rapid change in IT. Rather, IT is at the crossroads of major organizational change. Barton soon realizes that IT-specific knowledge is not a key to success. Instead, he must take care to collaborate equally with the senior management team and his own staff. Like Barton, today's senior executives are continuously confronted with situations with multiple uncertainties, needing collaboration and input from experts who may know more than they do about the specifics. Closed for comment; 0 Comments.
- 16 Apr 2009
- Working Paper Summaries
Gray Markets and Multinational Transfer Pricing
Gray market goods are brand-name products that are initially sold into a designated market but then resold through unofficial channels into a different market. Gray markets can arise when transaction and search costs are low enough to allow products to "leak" from one market segment back into another. Examples of industries with active gray markets include pharmaceuticals, automobiles, and electronics. Understandably, reactions to gray market encroachment are mixed. On the one hand, consumer advocates and governments have applauded the increasing role that gray markets have played in improving competition for domestic goods. On the other hand, multinationals have decried the increasing role of gray markets in the economy, with an estimated $40 billion in cannibalized sales resulting from gray markets in the information technology sector alone. This study investigates the optimal price of a multinational's internal transfers and the consequences of regulations mandating arm's-length transfer pricing. Key concepts include: A shift to arm's-length transfer pricing erodes domestic consumer surplus by making the gray market less competitive domestically. In the presence of a gray market, the transfer price that maximizes a multinational's profits may also be the same one that maximizes the social welfare of the domestic economy that houses it. Arm's-length standard enforcement efforts targeting multinationals that observe little product leakage from foreign markets or that operate in domestic markets that are sufficiently competitive may lead to net welfare gains for the domestic economy. At the same time, focusing arm's-length standard enforcement efforts on multinationals that work in industries where gray markets provide the only means of domestic competition may make the domestic economy worse off. Closed for comment; 0 Comments.
What Happened to the ‘Innovation, Disruption, Technology’ Dividend?
SUMMING UP. Jim Heskett’s readers are divided on whether we are seeing productivity dividends from the latest round of technological innovation. Open for comment; 0 Comments.