- 23 Jul 2009
- Working Paper Summaries
Informed and Interconnected: A Manifesto for Smarter Cities
To make our cities and communities smarter, we must become a little smarter ourselves, seeking information and an agenda to forge connections enabling collaboration, according to HBS professor Rosabeth Moss Kanter and IBM's Stanley S. Litow. Their vision is that someday soon, leaders will combine technological capabilities and social innovation to help produce a smarter world. That world will be seen on the ground in smarter cities composed of smarter communities that support the well-being of all citizens. This paper outlines eight challenges facing cities and the communities they encompass, based on experience in the United States. Kanter and Litow provide examples of practices and programs led by both government and nonprofit organizations, many technology-enabled, that point the way to solutions, and they conclude with a call for leaders to embrace an agenda for change. Key concepts include: The need for a new approach to U.S. communities is an urgent imperative because of the biggest global economic crisis since the Great Depression. Significant barriers to solving urban problems include geographic sprawl, residential mobility, the location of jobs, the lack of overarching strategic impact goals, weakened civic leadership, and social isolation. By examining each barrier in turn (and the ways they reinforce each other), it is possible to see the opportunities for significant transformation if communities could become "smarter," with technology helping spread information and facilitate interconnections. Closed for comment; 0 Comments.
- 22 Jul 2009
- Working Paper Summaries
Reputation and Competition: Evidence from the Credit Rating Industry
Credit ratings are a key aspect of the financial system. The quality of these ratings is certainly sustained in part by the reputational concerns of rating agencies, whose paying customers have no inherent interest in the quality of ratings. Competition in this industry has been increasing, and there have been calls for yet more competition. Whether competition will reduce quality or improve it is not yet clear. HBS professor Bo Becker and Washington University in St. Louis professor Todd Milbourn test these conflicting predictions in the ratings industry. Their evidence is more or less consistent with a reduction in credit rating quality as Fitch increased its market presence. Their empirical findings suggest that the system will work better when competition is not too severe. These results have potential policy implications. Key concepts include: Competition is associated with "friendlier" ratings. For regulators, it is worth considering that increasing competition in the ratings industry involves the risk of impairing the reputational mechanism that underlies the provision of good quality ratings. For bond markets, it is clear that relying on third party ratings paid for by issuers is not a system without risks. Closed for comment; 0 Comments.
- 21 Jul 2009
- First Look
- 21 Jul 2009
- Research Event
Business Summit: Managing Human Capital—Global Trends and Challenges
Human capital needed for globalization is lacking. Progress is required in important areas such as elevating more women to leadership positions, according to panelists at the HBS Business Summit. Closed for comment; 0 Comments.
- 20 Jul 2009
- Research & Ideas
Markets or Communities? The Best Ways to Manage Outside Innovation
No one organization can monopolize knowledge in any given field. That's why modern companies must develop a new expertise: the ability to attract novel solutions to difficult or unanticipated problems from outside sources around the world. A conversation with Harvard Business School professor Karim R. Lakhani on the keys to managing distributed innovation. Key concepts include: Many organizations find they cannot monopolize knowledge in any given field of endeavor. Firms need to consider three key factors in deciding to pursue either a community- or market-based external innovation model. Successful models developed by Apple, InnoCentive, SAP, and TopCoder create incentives for many entrants to generate a variety of products and services on a platform. The firm's role is to define the boundaries of the platform and then encourage entry and innovation by outsiders. Closed for comment; 0 Comments.
- 17 Jul 2009
- Research Event
Business Summit: Ethics in Globalization
It is impossible to regulate against greed and ethical shortcomings. What can be done is to force greater transparency and accountability. Closed for comment; 0 Comments.
- 16 Jul 2009
- Working Paper Summaries
Principles that Matter: Sustaining Software Innovation from the Client to the Web
Despite the current strength and promise of the Internet software market, the future pace of growth and innovation is not assured. The principles of choice, opportunity, and interoperability were important in the growth of PC software and in the overall health of the information technology ecosystem, and these same principles will shape competition in Internet software, according to HBS professor Marco Iansiti. Given the unprecedented speed at which this industry is developing, consumers and the industry should watch carefully as different companies compete. Choice, opportunity, and interoperability should serve as an important lens, particularly when focused on companies with especially large footprints in the new markets. Key concepts include: Successful technology companies should not forget that innovation and growth in the technology sector is dependent on promoting a thriving ecosystem of complementary and interdependent products. The competitive principles of choice, opportunity, and interoperability are important in Internet software, because of the increased variety of possible software and hardware combinations and the increased interdependency in the applications and services they deliver. Closed for comment; 0 Comments.
- 15 Jul 2009
- Working Paper Summaries
Policy Bundling to Overcome Loss Aversion: A Method for Improving Legislative Outcomes
Citizens hope their elected representatives will pass legislation that creates net gains that outweigh net harms—in other words, legislation that has positive expected value for society. However, economist Joseph Stiglitz has noted that legislators often fail to pass such legislation, even when its net positive expected value is highly significant. The psychology and economics literature suggests that legislators face an uphill battle when proposing legislation that has both costs and benefits due to the power of loss aversion, a cognitive bias that has been found to cause individuals to dramatically overweight losses relative to gains. Here the authors propose and test a new type of policy bundling technique in which related bills that have both costs and benefits are combined in a way that reduces the harmful effects of loss aversion. Key concepts include: Because losses loom larger than gains psychologically, policies that would create net benefits for society but that would also involve costs may frequently be defeated. This policy bundling technique has the potential to help citizens and legislators who are struggling to pass legislation with salient costs that are outweighed by important benefits. While the behavioral decision research literature has shown it is difficult to fully de-bias human judgment, recent research suggests it is possible to design decision-making contexts in ways that lead to wiser choices. Closed for comment; 0 Comments.
- 14 Jul 2009
- First Look
- 14 Jul 2009
- Research & Ideas
Business Summit: China in the Global Economy
While the global economic downturn will affect China's exports, the domestic economy is expected to remain strong, agreed panelists at the HBS Business Summit. Closed for comment; 0 Comments.
- 13 Jul 2009
- Research & Ideas
Diagnosing the Public Health Care Alternative
With deep experience in health insurance reform, HBS faculty describe how improved competition in insurance plans could improve value for patients. Professors Regina E. Herzlinger, Robert Huckman, and Michael E. Porter take the pulse of a debate. Key concepts include: "A government market with an underpriced Medicare would likely lead to the death of private-sector markets and products," say Professor Regina E. Herzlinger and coauthor Tom Coburn (R-OK). Patients would like the option of a public insurance plan, according to Professor Robert Huckman. Competition among insurers should be based on improving patients' health outcomes achieved per dollar spent, writes Professor Michael E. Porter. Closed for comment; 0 Comments.
- 10 Jul 2009
- Research Event
Business Summit: The Coming World Oil Crisis
Without enormous changes the world faces an imminent oil crisis—and there are no silver bullet solutions. People must wake up to the sobering ramifications of peak oil, which may be the defining issue of this century. Closed for comment; 0 Comments.
- 09 Jul 2009
- Working Paper Summaries
Performance Pressure as a Double-Edged Sword: Enhancing Team Motivation While Undermining the Use of Team Knowledge
Why do teams often fail to use their knowledge resources effectively even after they have correctly identified the experts among them? Project teams are a prominent feature of the knowledge-based economy, and member expertise has long been recognized as an important resource that can greatly affect team performance, but only to the extent that it is accurately recognized and used to accomplish the objective. The step between recognizing others' expertise and then actually applying it to achieve a collective outcome, however, is highly problematic: Even when individuals know who holds relevant task expertise, they are often unwilling or unable to give the experts appropriate influence over the group process and outcomes. HBS professor Heidi K. Gardner takes a multidisciplinary approach to develop theory explaining how interpersonal dynamics in teams affect members' use of each other's distinct knowledge, ultimately leading to differential performance outcomes. Key concepts include: Teams facing significant performance pressures tend to default to high-status members at the expense of using team members with deep knowledge of the client, with detrimental effects on team performance. The more important the project, the less effective the team: Excessive performance pressure results in the team reverting to less effective ways of divvying up influence over its end product, in turn leading to lower performance ratings for the whole team. Team process is important in enabling organizations to harness knowledge resources for the benefit of maintaining strong relations with their clients. Closed for comment; 0 Comments.
- 08 Jul 2009
- Working Paper Summaries
Truth in Giving: Experimental Evidence on the Welfare Effects of Informed Giving to the Poor
It is often difficult for donors to predict the value of charitable giving because they know little about the persons who receive their help. While there is substantial evidence that individuals use information about recipients to decide how generous a donation to make, we know surprisingly little about how much donors care to help their preferred types. To start closing this gap, HBS professor Felix Oberholzer-Gee and Carnegie Mellon University coauthor Christina Fong study transfers of income to real-world poor people in the context of experimental games. Their findings have implications for governments and nongovernmental organizations that seek to increase the financial and political support for wealth transfer programs. Key concepts include: From a government and NGO perspective, it is important to produce credible signals about deservedness that are hard to ignore. There is clear evidence that a significant group of donors is willing to invest resources to achieve a distribution of income that better matches its preferences. Facing a deserving person without much "moral wiggle room" to justify self-interested decisions leads to increased donations to the poor. Closed for comment; 0 Comments.
- 07 Jul 2009
- First Look
- 07 Jul 2009
- Research Event
Business Summit: Historical Roots of Globalization
In this breakout session, panelists shared insights, informed by history, of the convergence that globalization promotes. Closed for comment; 0 Comments.
- 06 Jul 2009
- What Do You Think?
Are You Ready to Manage in an Irrational World?
It is becoming clear that human behavior is much less rational than we assumed, says HBS professor Jim Heskett. Judging from replies to this month's question, there are many nuances to managing in an irrational world. (Online forum now closed. Next forum begins August 7.) Closed for comment; 0 Comments.
- 06 Jul 2009
- Research & Ideas
Conducting Layoffs: ’Necessary Evils’ at Work
"The core challenge for everyone who performs necessary evils comes from having to do two seemingly contradictory things at once: be compassionate and be direct," say Joshua D. Margolis of Harvard Business School and Andrew L. Molinsky of Brandeis University International Business School. Their research sheds light on best practices—typically overlooked—for the well-being of those who carry out these emotionally difficult tasks. Q&A Key concepts include: Most managers who conduct layoffs feel a mix of emotions that may catch them by surprise: sympathy, sadness, guilt, shame, anxiety, and perhaps anger. Best practice for managers includes understanding yourself and recognizing your limitations. Recognize ahead of time the emotional cocktail that you will likely experience when performing a layoff, say the researchers. Companies should focus not only on getting the task done and on ensuring the well-being of victims, but also on the well-being of those who perform the layoff. Conduct training beforehand; have pairs or teams perform the tasks together; provide a good physical environment in a nonpublic, quiet area of the organization; and later allow those who carried out the layoffs to decompress and debrief. Closed for comment; 0 Comments.
- 02 Jul 2009
- Research Event
Business Summit: The Role of Social Entrepreneurship in Transforming American Public Education
Amid formidable barriers, a set of passionate social entrepreneurs are disrupting the status quo in education with innovative and effective approaches that are producing measurable results. The challenge now is to build support so these solutions can be applied elsewhere. Closed for comment; 0 Comments.
Business Summit: Business Education in the 21st Century
Business schools are innovating and experimenting to change the MBA experience, and to help business education regain its relevance and value. Along with a changing curricula, programs are attempting to make the learning experience more interactive, engaging, global, and experiential. Closed for comment; 0 Comments.