First Look

April 23, 2013

Online Privacy And Business Strategy

Microsoft recently debuted its hard-hitting "Scroogled" advertising campaign that questions (although not by name) Google's policies toward sharing consumer information with advertisers. A new working paper, Competing with Privacy, suggests that issues facing companies, consumers, and regulators at the intersection of personal privacy and marketing are on the upswing. "Our findings are particularly relevant to the business models of Internet firms and contribute to inform the regulatory debate on consumer privacy," write authors Ramon Casadesus-Masanell and Andres Hervas-Drane.

Sudden Resignations A Blip Or Bad Omen?

The executive team at Silicon Valley startup CloudFlare considers the sudden resignation of five employees over a three-month period. "Was this natural attrition for a high-tech venture with a staff of 35 experiencing explosive growth, or were the resignations symptomatic of bigger issues with CloudFlare's culture and management processes?" asks the case, "CloudFlare, Inc.: Running Hot?" The case, written by Thomas R. Eisenmann and Alex Godden, offers first-person accounts explaining the resignations and asks whether CloudFlare's cofounders should take corrective actions.

When It All Starts To Unravel

The new case "Family Matters at ProLab" is a riveting exploration into the mind of a founder-CEO dealing with a looming bankruptcy. Written by Noam Wasserman and Yael Braid, the case deals with the personal as well as legal issues faced by CEO Hillary Mallow, who needs to act immediately but isn't sure where to begin. "With her company at stake and personal relationships on the line, Hillary must scramble to resolve the complicated mess that could mean the end of her company, or worse."

— Sean Silverthorne


  • 2006
  • University of Chicago Press

Manufacturing Morals: The Values of Silence in Business School Education

By: Anteby, Michel

Abstract—Corporate accountability is never far from the front page, and Harvard Business School trains many future business leaders. But how does HBS formally and informally ensure its members embrace proper business standards? Relying on his faculty experience, Michel Anteby takes readers inside the School to draw vivid parallels between the socialization of faculty and of students. In an era when many organizations are focused on principles of responsibility, HBS has long tried to promote better business standards. Anteby's rich account reveals the surprising role of silence in HBS's process of codifying morals and values. As he describes, specifics are often left unspoken; for example, teaching notes given to faculty provide much guidance on how to teach but are largely silent on what to teach. Manufacturing Morals demonstrates how faculty and students are exposed to a system that operates on open-ended directives that require significant decision making on the part of those involved, with little overt guidance from the hierarchy. Anteby suggests that this model-which tolerates moral complexity-is perhaps one of the few that can adapt and endure over time. Manufacturing Morals is a perceptive must-read for anyone looking for insight into the moral decision making of today's business leaders and those influenced by or working for them.

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  • 2006
  • Harvard Business Review

Using the Crowd as an Innovation Partner

By: Boudreau, Kevin J., and Karim R. Lakhani

Abstract—No abstract available.

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  • 2006
  • The Small Worlds of Corporate Governance

The Small Worlds of Business Groups: Liberalization and Network Dynamics

By: Brookfield, Jon, Sea-Jin Chang, Israel Drori, Shmuel Ellis, Sergio G. Lazzarini, Jordan I. Siegel, and Juan Pablo von Bernath Bardina

Abstract—The financial crisis of 2008 laid bare the hidden network of relationships in corporate governance: who owes what to whom, who will stand by whom in times of crisis, what governs the provision of credit when no one seems to have credit. This book maps the influence of these types of economic and social networks-communities of agents (people or firms) and the ties among them-on corporate behavior and governance. The empirically rich studies in the book are largely concerned with mechanisms for the emergence of governance networks rather than with what determines the best outcomes. The chapters identify "structural breaks"-privatization, for example, or globalization-and assess why powerful actors across countries behaved similarly or differently in terms of network properties and corporate governance.

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  • 2006
  • MIT Sloan Management Review

Experiments in Open Innovation at Harvard Medical School

By: Guinan, Eva C., Kevin J. Boudreau, and Karim R. Lakhani

Abstract—Harvard Medical School seems an unlikely organization to open up its innovation process. By most measures, the more than 20,000 faculty, research staff, and graduate students affiliated with Harvard Medical School are already world class and at the top of the medical research game, with approximately $1.4 billion in annual funding from the U.S. National Institutes of Health (NIH). But in February 2010, Drew Faust, president of Harvard University, sent an email invitation to all faculty, staff, and students at the university (more than 40,000 individuals) encouraging them to participate in an ideas challenge that Harvard Medical School had launched to generate research topics in Type 1 diabetes. Eventually, the challenge was shared with more than 250,000 invitees, resulting in 150 research ideas and hypotheses. The goal of opening up idea generation and disaggregating the different stages of the research process was to expand the number and range of people who might participate. Today, seven teams of multi-disciplinary researchers are working on the resulting potential breakthrough ideas. In this article, we describe how leaders of Harvard Catalyst, an organization whose mission is to drive therapies from the lab to patients' bedsides faster and to do so by working across the many silos of Harvard Medical School, chose to implement principles of open and distributed innovation.


Working Papers

Competing with Privacy

By: Casadesus-Masanell, Ramon, and Andres Hervas-Drane

Abstract—We analyze the implications of consumer privacy for competition in the marketplace. We consider a market where firms set prices and disclosure levels for consumer information, and consumers observe both before deciding which firm to patronize and how much information to provide it with. The provision and disclosure of information presents tradeoffs for all market participants. Consumers benefit from providing information to the firm, as this increases the utility they derive from the service, but they incur disutility from information disclosure. This, in turn, benefits the firm providing an additional source of revenue but reduces consumer demand for the service. We characterize equilibrium information provision, disclosure levels, and prices as a function of the consumer population's valuation for the service and show that competition has three main effects on the marketplace. First, competition drives the provision of services with a low level of disclosure. Second, competition ensures that services with a high level of disclosure subsidize consumers. And third, higher competition intensity tends to increase the volume of consumer information disclosed by firms. Our findings are particularly relevant to the business models of Internet firms and contribute to inform the regulatory debate on consumer privacy.

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Abstract—Claims that the VAT facilitates tax enforcement by generating paper trails on transactions between firms contributed to widespread VAT adoption worldwide, but there is surprisingly little evidence. This paper analyzes the role of third-party information for VAT enforcement through two randomized experiments among over 400,000 Chilean firms. Announcing additional monitoring has less impact on transactions that are subject to a paper trail, indicating the paper trail's preventive deterrence effect. This leads to strong enforcement spillovers up the VAT chain. These findings confirm that when taking evasion into account, significant differences emerge between otherwise equivalent forms of taxation.

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Abstract—In this paper, we integrate research on role-based coordination with concepts adapted from the team effectiveness literature to theorize how team scaffolds enable effective coordination among people who do not work together regularly. We argue that role-based coordination among relative strangers can be interpersonally challenging and propose that team scaffolds (minimal team structures that bound groups of roles) may provide occupants with a temporary shared in-group that facilitates interaction. We develop and test these ideas in a multi-method field study of a hospital emergency department that introduced minimal team structures that we refer to as team scaffolds. We adapt network methods to compare coordination patterns before and after team scaffolds were implemented. Our results show that the team scaffolds improved performance, in part by reducing the number of partners with whom each role occupant coordinated. We then analyze qualitative interview data to theorize the social experience of working in team scaffolds. We find that the minimal team structures provided a kind of social scaffolding that facilitated group-level coordination between roles. The temporary shared in-group that emerged in the team scaffolds supported a sense of belonging, reduced interpersonal risk, and led individuals to expect account-giving behavior from other roles. Our study contributes to research on role-based coordination, team and organizational boundaries, and team size.

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Cases & Course Materials

  • Harvard Business School Case 711-031

Debt and Development in Jamaica

This case describes the economic development problems faced by the small Caribbean-island country of Jamaica over most of the past half-century. The Jamaican economy showed relatively strong growth in the 1960s but stagnated in the 1970s. By the end of that decade, Jamaica was forced to turn to the International Monetary Fund (IMF) for balance-of-payments support. Over the 1980s and early 1990s, the unpopular policy conditions associated with IMF loan programs made the Fund a lightning rod for criticism over Jamaica's lack of economic progress. Jamaicans celebrated the end of IMF borrowing in the mid-1990s, but a severe financial crisis later that decade created a new layer of economic problems. In 2010, in the context of the global economic downturn, Jamaica once again returned to the IMF for financing support. This case allows students to explore the complicated economic difficulties faced by Jamaica, which remains burdened by a self-reinforcing set of interrelated factors, including high public debt, a sluggish private sector, an inefficient public sector, poverty, and crime, among others.

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  • Harvard Business School Case 813-145

CloudFlare, Inc.: Running Hot?

In July 2012, the cofounders of CloudFlare, a Silicon Valley startup that protects websites and accelerates their traffic, are considering the implications of five employees' resignations over the prior three months. Was this natural attrition for a high-tech venture with a staff of 35 experiencing explosive growth, or were the resignations symptomatic of bigger issues with CloudFlare's culture and management processes? After describing CloudFlare's early history, business model, organization structure, and human resources policies, the case presents first-person accounts from employees regarding their reasons for resigning, and then asks whether CloudFlare's cofounders should take any corrective actions.

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Course overview of "The Entrepreneurial Manager."

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  • Harvard Business School Case 113-057

Boston Children's Hospital: Measuring Patient Costs (V)

No abstract available.

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  • Harvard Business School Case 813-147

Affinity Labs, Inc.

In November 2006, Chris Michel left, which he founded in 1999, to start Affinity Labs, a global network of online communities. That month, Michel raised a Series A round of venture funding and established a partnership with Monster, to which he had sold Within its first year of operations, Affinity Labs launched eight vertical portals including PoliceLink, NursingLink, TechCommunity, and IndiaOn. While the company was well ahead of its original plan to release four portals in 2007, Michel still faced a number of challenges. He had learned a great deal from and Affinity Labs' first launches, but in the case of each new community was faced with how best to construct the vertical and attract a sufficiently large audience. While the model seemed highly scalable because each vertical used the same core technology, every sector had its unique features. In the fall of 2007, executives from Monster opened up a dialogue with Michel about selling the company or expanding their relationship. Michel wondered if the time was right to sell or if he should grow Affinity Labs further with the hope of creating a company that could command the high valuations seen recently by a number of social networking concerns.

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  • Harvard Business School Case 613-079

The LEGO Group: Publish or Protect?

Senior managers at the LEGO Group are faced with a quandary: Should they patent inventions coming out of their manufacturing process development work, should they keep them as trade secrets, or should they publish them so that they would go into the public domain and nobody else could patent them? They wish to preserve their freedom to practice, but they are very concerned about competitors' ability to benefit from LEGO Group's R&D investments or alternately interfere with its freedom to operate. The case frames important intellectual property issues around appropriability and strategy.

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  • Harvard Business School Case 813-130

Family Matters at ProLab

Hillary Mallow, founder-CEO of ProLab, learns that her health-services company is two months shy of bankruptcy. She needs to act-immediately-but isn't sure where to begin. Prolab's client list and geographic presence have grown steadily over the years, so the recent downturn is quite unexpected. Most worrisome, ProLab's executive team is in major trouble; contentiousness has developed between Hillary's husband, ProLab's CFO, and Hillary's business partner, ProLab's COO, which now threatens to envelop everyone else. With her company at stake and personal relationships on the line, Hillary must scramble to resolve the complicated mess that could mean the end of her company, or worse.

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  • Harvard Business School Case 713-042

Privatization of the Power Sector in Nigeria (A)

In spite of its abundant energy resources, Nigeria in 2012 had one of the lowest levels of energy use in the world. Self-generation of power from costly generators was double that of grid-supplied electricity. The history of its power sector was one of inefficient monopolies, missteps, and corruption. But a wholesale change to the market, designed under reformist President Obasanjo and pushed forward by President Jonathan, promised greater efficiencies and investment guided by private-sector principles including widespread privatization, pricing reforms, and reliance on firms to produce and distribute the electricity. Power producer firms on the sideline needed to decide whether they wanted to be a part of this new market.

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