First Look

June 3, 2014

Don't Schedule Your Next Illness For July

For teaching hospitals, July can be a complex month as experienced residents leave for their careers and an inexperinced cohort takes up their duties. A working paper by Robert S. Huckman, Hummy Song, and Jason R. Barro—Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals—finds the turnover has real consequences for patients in terms of longer hospital stays and even higher mortality rates.

Behold The Extreme Customer

Most market research, a new teaching note points out, focuses on average customers. But what can we learn by studying the "extreme customer?" such as "product category virgins, customers with constraints, and lovers, haters, and opt-outers," ask authors Jill Avery and Michael I. Norton. "This note outlines a process for studying extreme consumers—consumers who fall in both tails of a normal distribution of customers—with needs, behaviors, attitudes, and emotions atypical of the average customer."

America Not Ranked High For Social Progress

Americans may think of themselves as leaders on social issues such as education, access to information, and personal rights, but a new report from the Social Progress Index ranks the United States at number 16 out of 132 countries. According to Harvard Professor Michael E. Porter, a leader of the organization, US leadership in this area has been surpassed by a number of nations. "To keep up and to widen social progress to more and more citizens takes a determined effort and US progress has slowed."

— Sean Silverthorne


  • August 2013
  • University of Chicago Press

Innovation Policy and the Economy

By: Lerner, Josh, and Scott Stern

Abstract—No abstract available.

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  • August 2013
  • Innovation Policy and the Economy

Clusters of Entrepreneurship and Innovation

By: Chatterji, Aaron, Edward Glaeser, and William R. Kerr

Abstract—This chapter reviews recent academic work on the spatial concentration of entrepreneurship and innovation in the United States. We discuss rationales for the agglomeration of these activities and the economic consequences of clusters. We identify and discuss policies that are being pursued in the United States to encourage local entrepreneurship and innovation. While arguments exist for and against policy support of entrepreneurial clusters, our understanding of what works and how it works is quite limited. The best path forward involves extensive experimentation and careful evaluation.

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  • August 2013
  • Advances in Strategic Management

The Effect of Institutional Factors on the Value of Corporate Diversification

By: Kuppuswamy, Venkat, George Serafeim, and Belén Villalonga

Abstract—Using a large sample of diversified firms from 38 countries we investigate the influence of several national-level institutional factors or "institutional voids" on the value of corporate diversification. Specifically, we explore whether the presence of frictions in a country's capital markets, labor markets, and product markets affect the excess value of diversified firms. We find that the value of diversified firms relative to their single-segment peers is higher in countries with less efficient capital and labor markets but find no evidence that product market efficiency affects the relative value of diversification. These results provide support for the theory of internal capital markets that argues that internal capital allocation would be relatively more beneficial in the presence of frictions in the external capital markets. In addition, the results show that diversification can be beneficial in the presence of frictions in the labor market.

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Working Papers

Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals

By: Huckman, Robert S., Hummy Song, and Jason R. Barro

Abstract—We consider the impact of cohort turnover-the planned simultaneous exit of a large number of experienced employees and a similarly sized entry of new workers-on productivity in the context of teaching hospitals. Specifically, we examine the impact of the annual July turnover of residents in American teaching hospitals on levels of resource utilization and quality relative to a control group of non-teaching hospitals. We find that, despite the anticipated nature of the cohort turnover and the supervisory structures that exist in teaching hospitals, this annual cohort turnover results in increased resource utilization (i.e., longer length of hospital stay) for both minor and major teaching hospitals and decreased quality (i.e., higher mortality rates) for major teaching hospitals. Particularly in major teaching hospitals, we find evidence of a gradual trend of decreasing performance that begins several months before the actual cohort turnover and may result from a transition of responsibilities at major teaching hospitals in anticipation of the cohort turnover.

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Cases & Course Materials

In 2010, Experience! The Finger Lakes (ExperienceFLX), a tour operator offering guided tours and concierge services in the Finger Lakes region of New York State, was at a crossroads. The business was poised for growth, and its owners, Laura and Alan Falk, were considering signing a deal with Groupon, the online coupon firm, to see if a Groupon deal would help the ExperienceFLX bring in new customers. While the prospect of marketing ExperienceFLX's business to a new customer base through Groupon was very appealing, the Falks found that designing a deal that met Groupon's requirements while still allowing ExperienceFLX to make money and without endangering their relationships with area winery partners was a real challenge. The Falks had to decide whether a Groupon deal worked well for them, and if so, how to manage Groupon redemptions by their customers in a way that made financial sense.

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  • Harvard Business School Case 314-086

Learning From Extreme Consumers

Traditional market research methods focus on understanding the average experiences of average consumers. This focus leads to gaps in our knowledge of consumer behavior and often fails to uncover insights that can drive revolutionary, rather than evolutionary, innovation. This note outlines a process for studying extreme consumers-consumers who fall in both tails of a normal distribution of customers-with needs, behaviors, attitudes, and emotions atypical of the average customer. Different tactics for leveraging the power of the fringe, product category virgins, customers with constraints, and lovers, haters, and opt-outers are presented.

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  • Harvard Business School Case 814-051

Yahoo: Both Sides of the Stamped Deal

In 2012, Marissa Mayer became the CEO of Yahoo!, a tech giant with a tumultuous past. When Mayer tries to reinvigorate the company, she hires Jacqueline Reses, who has a private equity background, to head both human resources and mergers and acquisitions (M&A). As part of Mayer's turnaround strategy, Reses looks to build a mobile technology product development team by executing an "acquisition-hire" (i.e., "acqui-hire") to acquire New York City-based start-up Stamped, a mobile application company launched by former Google employees Robby Stein and Bart Stein. Without an M&A team that is fully staffed and before new acquisition processes have been formalized, Reses must decide whether acquiring Stamped is a wise strategy. The case also considers the perspective of Robby and Bart and explores if selling Stamped to Yahoo! and transitioning the Stamped team into Yahoo!'s mobile product development team is the right exit strategy for their start-up.

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  • Harvard Business School Case 214-084

School Specialty, Inc.

Set in 2013, School Specialty was a financially troubled supplier of educational products to primary and secondary schools in the United States. The company planned to file Chapter 11 in order to address its excessive debt load but needed to arrange debtor in possession financing to provide liquidity while in bankruptcy. The company has received a financing proposal from its existing term loan lender that includes some aggressive and unusual features. This includes the requirement that, immediately upon filing for Chapter 11, School Specialty undertake to sell its assets under Section 363 of the U.S. Bankruptcy Code. The company must decide whether to accept this proposal, and what other options may be available.

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  • Harvard Business School Case 314-003

Cancer Treatment Centers of America (B)

This case provides differing viewpoints on the for-profit status, patient-admission practices, and outcomes-reporting efforts of Cancer Treatment Centers of America (CTCA), a private, for-profit hospital chain focused on cancer care.

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This overview describes how the United States funds and finances infrastructure investment to maintain its economic competitiveness. It considers the roles of taxpayers, users, government allocators and lenders, and private investors in the infrastructure funding system and shows that there are creative tools that can be used. It focuses on five major areas: the problematic state of fuel taxes; the increasing promise of user fees; innovations in debt financing; the challenges of privatization; and the promise (and challenges) of public-private partnerships, with particular attention to a model project in Miami, the Port Tunnel. The overview concludes with a call for cross-sector coalitions to develop strategies with long-term impact goals and short-term visible improvements for users.

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