- 24 Jul 2007
- First Look
- 23 Jul 2007
- Research & Ideas
HBS Cases: How Wikipedia Works (or Doesn’t)
For HBS professor Andrew McAfee, Wikipedia is a surprisingly high-quality product. But when his concept of "Enterprise 2.0" turned up on the online encyclopedia one day—and was recommended for deletion—McAfee and colleague Karim R. Lakhani knew they had the makings of an insightful case study on collaboration and governance in the digital world. Key concepts include: Despite thousands of participants, Wikipedia operates under a very ornate and well-defined structure of participation that enables them to produce a highly regarded online encyclopedia. A group of people in the Wikipedia world characterized as "exclusionists" could dampen user enthusiasm by increasing barriers to acceptance of Wikipedia articles. Knowledge-sharing technologies such as wikis are coming into increasing use in the corporate world, but companies must understand that a top-down approach to administering them will lead to certain extinction. Closed for comment; 0 Comments.
- 19 Jul 2007
- Research & Ideas
Podcast: Rupert Murdoch and the Wall Street Journal
Media baron Rupert Murdoch's bid to acquire Dow Jones and the Wall Street Journal is one step closer to fruition. In this interview, Professor Bharat N. Anand discusses the proposed deal and pressures facing the newspaper business. Closed for comment; 0 Comments.
- 17 Jul 2007
- First Look
- 16 Jul 2007
- Research & Ideas
Understanding the ‘Want’ vs. ’Should’ Decision
Pizza or salad? Consumers use different approaches to buying things they want (pizza) versus items they should buy (salad). In their research on online grocery-buying habits and DVD rentals, Harvard Business School's Katy Milkman and Todd Rogers, along with Professor Max Bazerman, provide insights on the want-should conflict and the implications for managers in areas such as demand forecasting, consumer spending habits, and effective store layout. Key concepts include: People often behave as if they possess multiple selves with different, competing interests—the "want-self" versus the "should-self." The want-self demands instant gratification while the should-self looks to longer-term interest. Online grocery shoppers order healthier groceries when ordering for delivery in the distant future (i.e., 5 days from now) than when ordering for delivery tomorrow. Grocery stores that locate the produce section ("should" buy) near the entrance have this figured out. Online and catalogue retailers should anticipate that the further in advance of delivery an order is placed, the less a customer is likely to spend. Closed for comment; 0 Comments.
- 13 Jul 2007
- Working Paper Summaries
Economic Catastrophe Bonds
Pooling economic assets into large portfolios and tranching them into sequential cash-flow claims has become a big business, generating record profits for both the Wall Street originators and the agencies that rate these securities. This paper by business economics doctoral student Jakub Jurek and HBS professors Joshua Coval and Erik Stafford investigates the pricing and risks of instruments created as a result of recent structured finance activities. It demonstrates that senior collateralized debt obligation (CDO) tranches have significantly different systematic risk exposures than their credit rating-matched, single-name counterparts, and should therefore command different risk premia. Key concepts include: Investors in senior CDO tranches are grossly undercompensated for the highly systematic nature of the risks they bear. An investor willing to assume the economic risks inherent in senior CDO tranches can, with equivalent economic exposure, earn roughly 3 times more compensation by writing out-of-the-money put spreads on the market. Credit rating agencies do not provide customers with adequate information for pricing. They are willing to certify senior CDO tranches as "safe" when, from an asset pricing perspective, they are quite the opposite. Closed for comment; 0 Comments.
- 12 Jul 2007
- Working Paper Summaries
Toward a Theory of Behavioral Operations
Research in psychology over the past several decades teaches us that behavioral biases and cognitive limits are not just "noise"; they systematically affect (and often distort) people's judgment and decision making. Despite such advances, however, most scholarly research in operations management still assumes that agents—be they decision makers, problem solvers, implementers, workers, or customers—either are fully rational or can be induced to behave rationally, usually with economic incentives. This paper builds on earlier studies to explore the theoretical and practical implications of incorporating behavioral and cognitive factors into operations management models. It then points to fruitful areas for future research. Key concepts include: A behavioral approach to operations management can lead to a better understanding of underlying drivers of operating systems performance and also to a better understanding of puzzling "pathologies" such as excess inventory, late product development projects, and overcommitment to research and development projects. A behavioral perspective can lead to better identification of appropriate management interventions. Closed for comment; 0 Comments.
- 11 Jul 2007
- Working Paper Summaries
Managing Proprietary and Shared Platforms: A Life-Cycle View
The challenges facing platform managers vary systematically depending on (1) whether the platform is proprietary or shared and (2) the stage of platform development. This article summarizes the results of a multiyear research project on platform strategies, including interviews with 30 companies. It describes 3 stages of the platform life cycle—platform design, network mobilization, and platform maturity—and reviews in depth the strategic decisions and management issues for each stage. Key concepts include: As proprietary platforms mature, broad forces at work often open them up to new partners. Once network mobilization winds down, sponsors of a proprietary platform frequently license additional providers to serve market segments with diverse needs. These new providers will seek a say in the platform's direction. As shared platforms mature, their renewal may hinge on partners ceding power to a central authority that can set priorities and settle disputes over who will provide next-generation technologies. Over time, forces will tend to push both proprietary and shared platforms toward hybrid licensing forms, typified by central control over platform technology and shared responsibility for serving users. Closed for comment; 0 Comments.
- 10 Jul 2007
- Working Paper Summaries
The Persuasive Appeal of Stigma
Are minority groups more persuasive when their conversations with majority groups are conducted face-to-face? Interracial interactions are among the most perilous social occasions in contemporary America, full of opportunities for things to go awry. People in stigmatized groups, for instance, may worry that members of majority groups hold prejudiced attitudes that can lead to discriminatory or offensive behavior. Members of majority groups, for their part, may fear coming across as biased or racist. While psychology has traditionally explored the damaging effects of such interactions on social exchange, new findings contribute to the growing recognition that stigma may be a two-sided construct, marked with a host of costs but occasional benefits. This study demonstrates the persuasive power of stigmatized individuals and shows how self-presentational concerns may change attitudes. Key concepts include: During face-to-face interactions, stigmatized minorities may sometimes have an edge in persuading majority group members. The stigma of being labeled racist may in some situations be potent enough to promote an ironic power reversal. While whites may assume the more solicitous role typically associated with stigmatized minorities, it is important to add that the discomfort that accompanies such efforts may simply pose yet another problem for members of stigmatized groups to manage. This research underscores the need to examine social interactions around stigma in real-world contexts, from organizations to interpersonal relationships. Closed for comment; 0 Comments.
- 10 Jul 2007
- Working Paper Summaries
Platform Envelopment
Established platform providers can be difficult to displace. This paper explores a path to platform leadership change that does not rely on breakthrough innovation or Schumpeterian creative destruction: a phenomenon the authors call "platform envelopment." In practical terms, envelopment entails one platform provider adding another platform's functionality to its own, and then offering a multiplatform bundle. Eisenmann and his colleagues describe a variety of envelopment attacks based on the relationship between the attacker's platform and its target's, and then discuss the economic and strategic motivations for each attack type. Key concepts include: Envelopment is a powerful force shaping platform evolution. Well-established incumbents that otherwise are sheltered from entry by standalone rivals, due to strong network effects and high switching costs, may be vulnerable to envelopment. A conglomeration attack means that platforms are functionally unrelated but may share common users and components. In such an attack, bundling can yield significant economies of scope. Example: Apple iPhone bundling smart phone with iPod. With an intermodal attack, the platforms are weak substitutes, and the attacker may neutralize an emerging competitive threat. Example: Blockbuster bundling DVD-by-mail service with store rentals. With a foreclosure attack, the platforms are complements. If envelopment reduces the appeal of a standalone provider's crucial complement, the attacker may strengthen its position vis-à-vis rivals in its core market. Example: Microsoft bundling Media Player with its Windows operating system. Closed for comment; 0 Comments.
- 10 Jul 2007
- What Do You Think?
How Much of Leadership Is About Control, Delegation, or Theater?
Forum now closed. Summing up the many responses, Jim Heskett says that the mix of control, delegation, and theater employed by successful leaders depends on timing and circumstances. "The strongest messages I received were that if leadership involves control, it is only over setting an organization's course and priorities." Closed for comment; 0 Comments.
- 09 Jul 2007
- Research & Ideas
Five Steps to Better Family Negotiations
Family relationships are complicated, even more so when your uncle, mother, or daughter is your business partner. Harvard Business School's John A. Davis and Deepak Malhotra outline 5 ways to analyze and improve dealmaking and dispute resolution while protecting family ties. Closed for comment; 0 Comments.
- 29 Jun 2007
- First Look
- 28 Jun 2007
- Working Paper Summaries
Film Rentals and Procrastination: A Study of Intertemporal Reversals in Preferences and Intrapersonal Conflict
Throughout our lives, we face many choices between activities we know we should do and those we want to do. Examples of such choices include whether or not to visit the gym, to smoke, to order a greasy pizza or a healthy salad for lunch, and to watch an action-packed blockbuster or a history documentary on Saturday night. Using data on consumption decisions over time from an Australian online DVD rental company, this paper investigates how and why individuals make systematically different decisions when their choices will take effect in the present versus the future. Key concepts include: The more "should watch" characteristics and the fewer "want to watch" characteristics a DVD has, the longer an individual will postpone watching that DVD. Companies that loan goods to consumers and are interested in predicting return times may be better able to forecast borrowing times based on the extent to which the items are "should" or "want" goods. Consumers may be better able to take steps that curb impulsive behavior. Closed for comment; 0 Comments.
- 28 Jun 2007
- Working Paper Summaries
Alignment in Cross-Functional and Cross-Firm Supply Chain Planning
Organizational behavior has become an increasingly important aspect of operations management. In this paper, alignment refers to an organization's sales and manufacturing groups working toward the same target for the sales of a particular product. What are the best conditions in supply chain planning for alignment across functions and across the firm? Kraiselburd and Watson push the frontier of theory with their use of mathematical modeling and game theory. They show that seemingly behavioral and psychological effects may still occur if both parties are rational profit maximizers in an economic sense. Key concepts include: Alignment can be achieved even if incentives are misaligned. The communication structure often determines whether or not alignment occurs. The key to alignment is less how each function is rewarded (i.e., transfer prices) but rather what each function knows about the other function's beliefs. Any effort to increase knowledge of each other's perspective, especially the final perspective, will improve the changes of alignment even if there is no change in incentives. Closed for comment; 0 Comments.
- 27 Jun 2007
- Lessons from the Classroom
Learning to Make the Move to CEO
Even experienced managers need to learn more if they hope to ascend to the C-Suite. In a program created by Harvard Business School Executive Education, participants learn new techniques and perspectives not only from faculty but from their cohorts as well. Closed for comment; 0 Comments.
- 26 Jun 2007
- Working Paper Summaries
Contracting in the Self-reporting Economy
Intellectual property can be used by its owner directly, licensed to a third party for a fixed royalty, or licensed to a third party for a variable royalty. The variable royalty arrangement depends on self-reporting by the licensee, which in turn induces demand for auditing by the licensor. This research studies a setting with the following features: a production cost advantage on the part of the outside party that creates gains from licensing; a limited liability constraint that prevents the licensee from owing more royalties than the gross profits of licensing the intellectual property and prevents the licensor from capturing all of the economic surplus via a fixed royalty agreement; and accounting and auditing costs that reduce the benefits of a variable royalty agreement. Key concepts include: The owner of intellectual property will enter into a variable royalty agreement with an outside party if—and only if—the accounting and auditing costs are sufficiently low. With higher cost levels, the owner will use the property directly if the owner can do so profitably. Otherwise, the owner will prefer to license the property in exchange for a fixed royalty. The expected aggregate accounting system and audit costs are minimized when the licensor can compel the licensee to bear the audit costs in case underreporting is detected. Internal control provisions within the Sarbanes-Oxley Act make variable royalty arrangements based on self-reporting and auditing relatively more attractive than such arrangements prior to Sarbanes-Oxley. Sarbanes-Oxley effectively lowers the licensor's audit costs even though the licensor must audit all low reports, because auditing all low reports deters the licensee from underreporting in the first place. Closed for comment; 0 Comments.
- 26 Jun 2007
- First Look
- 25 Jun 2007
- Research & Ideas
HBS Cases: Beauty Entrepreneur Madam Walker
She may have been the first self-made African American millionaire. Born of emancipated slaves, Madam C.J. Walker traveled from the cotton fields to business fame as a purveyor of hair-care products that offered beauty and dignity. Harvard Business School's Nancy F. Koehn and Katherine Miller explain what motivated her triumph. Closed for comment; 0 Comments.
The Evolution of Apple
Apple's continuing development from computer maker to consumer electronics pioneer is rich material in a number of Harvard Business School classrooms. Professor David Yoffie discusses his latest case study of Apple, the 5th update in 14 years, which challenges students to think strategically about Apple's successes and failures in the past, and opportunities and challenges in the future. Key concepts include: Apple has an undeniable hit with the iPod, yet faces the question of whether the growth of that business and Apple overall can be sustained. Looking at Apple through the lens of the company's previous chief executives gives students insights into why Apple lost its way after Steve Jobs left the company. Student opinion of Apple tends to be excessively positive or excessively negative, depending on the company's current fortunes. Closed for comment; 0 Comments.