Publications
- June 2015
- Perspectives on Psychological Science
Three Principles to REVISE People's Unethical Behavior
Abstract— Dishonesty and unethical behavior are widespread in the public and private sectors and cause immense annual losses. For instance, estimates of U.S. annual losses indicate $1 trillion paid in bribes, $270 billion lost due to unreported income, as well as $42 billion lost in retail due to shoplifting and employee theft. In this article we draw on insights from the growing fields of moral psychology and behavioral ethics to present a 3-principle framework we call REVISE. This framework classifies forces that affect dishonesty into three main categories and then redirects those forces to encourage moral behavior. The first principle, Reminding, emphasizes the effectiveness of subtle cues that increase the salience of morality and decrease people's ability to justify dishonesty. The second principle, Visibility, aims to restrict anonymity, prompt peer monitoring, and elicit responsible norms. The third principle, Self-Engagement, increases motivation to maintain a positive self-perception as a moral person and helps bridge the gap between people's moral values and their actual behavior. Combined, the REVISE framework guides the design of policy interventions to defeat dishonesty.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49229
- June 2015
- International Journal of Sales Transformation
Aligning Strategy and Sales
Abstract— Much current opinion asserts that strategy is less important (and may, in fact, be an impediment) in an era of constant change. This publication discusses why claims about business change are often overstated and misunderstood, why strategy is even more important as markets and buying processes change, and key levers for linking strategy and selling behaviors.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49188
Abstract— It is difficult for people to implement what they don't understand. Yet, research indicates that, on average, more than 50% of employees in organizations say they do not understand their organization's strategy. Further, the percentage of people reporting ignorance of their firm's strategy increases the closer one gets to the customer in responses from sales and service personnel. This article outlines the issues and explains why withholding information about strategy for competitive reasons often results in greater risk for the business.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49214
Working Papers
Lifting the Veil: The Benefits of Cost Transparency
Abstract— A firm's costs are typically tightly guarded secrets. However, across a field study and six laboratory experiments, we identify when and why firms benefit from revealing unit cost information to consumers. A natural field experiment conducted with an online retailer suggests that cost transparency boosts sales. Six subsequent controlled lab experiments replicate this basic effect (Studies 2-6) and provide evidence for why it occurs: just as interpersonal disclosure of intimate information increases attraction, cost transparency by a firm increases brand attraction, in turn boosting consumer purchase interest. This relationship persists even after controlling for perceptions of price fairness and product quality (Study 3). Study 4 suggests that the beneficial effect of cost transparency holds when firms spend more on "less desirable" costs relative to "more desirable" costs. Studies 5-6 show that the effect of cost transparency weakens when high profit margins are made salient. Finally, Study 7 shows that the beneficial effect reverses (i.e., cost transparency backfires) when it is revealed that a firm's profit margins are high relative to those of its competitors.
Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=48019
Paying Up for Fair Pay: Consumers Prefer Firms with Lower CEO-to-Worker Pay Ratios
Abstract— Prior research examining consumer expectations of equity and price fairness has not addressed wage fairness, as measured by a firm's pay ratio. Pending legislation will require American public companies to disclose the pay ratio of CEO wage to the average employee's wage. Our six studies show that pay ratio disclosure affects purchase intention of consumers via perceptions of wage fairness. The disclosure of a retailer's high pay ratio (e.g., 1000 to 1) reduces purchase intention relative to firms with lower ratios (e.g., 5 to 1 or 60 to 1, Studies 1A, 1B, and 1C). Lower pay ratios improve consumer perceptions across a range of products at different price points (Studies 2A and 2B), increase consumer ratings of both firm warmth and firm competence (Study 3), and enhance perceptions of Democrats and Independents without alienating Republican consumers (Study 4). A firm with a high ratio must offer a 50% price discount to garner consumer impressions as favorable as a firm that charges full price but features a lower ratio (Study 5).
Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49226
Cases & Course Materials
- Harvard Business School Case 315-030
The Emergence of M&A in Microfinance
Mibanco, a microfinance icon, is for sale, and Edyficar, owned by Banco del Credito (BCP), Peru's largest bank, is evaluating its acquisition. Until recently, such a transaction would have been fanciful given Mibanco's preeminent role in Peruvian microfinance, which has made it the country's fifth largest bank. The case examines why Mibanco is on the block, while also relating the evolution of Edyficar and its own acquisition by BCP several years earlier. Percy Urteaga, Edyficar's CEO, and Gianfranco Ferrari, the chair of his board and senior BCP executive, must decide whether to go forward and, if so, at what price.
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- Harvard Business School Case 915-027
Resuscitating Monitter
After a Twitter API change and policy change block his fledgling startup, solo entrepreneur Alex Holt evaluates his options. Should he double-down with a major investment in new servers, rewriting his app from scratch, and charging users for a service that he had prided himself on offering free? Or give up and admit defeat? Was there any middle ground?
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- Harvard Business School Case 815-067
Quincy Apparel (A)
Quincy Apparel designs, manufactures, and sells work apparel for young professional women that offers the fit and feel of high-end brands at a lower price. In late 2012, Quincy's cofounders are debating how to approach a crucial board meeting. Their seed-stage startup is running low on cash; to survive, they will need more capital, probably in the form of a bridge loan from existing investors, who will attend the board meeting. Quincy's sales have been strong, but due to the company's novel sizing scheme, which provides more measurement dimensions than typical women's clothing, inventory is high and operations are complex. Operational challenges have made it difficult to consistently deliver better fit, and merchandise return rates are high. With more time and capital, the cofounders are confident they can resolve operational problems. But will they be able to persuade investors to provide more capital?
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- Harvard Business School Case 815-095
Quincy Apparel (B)
The (B) case provides post-mortem analysis from Quincy's cofounders on why their startup failed and what they could have done differently. Explanations for failure focus on Quincy's ambitious value proposition and resulting operational challenges, cofounder conflict, poor approaches to hiring and motivating employees, a dysfunctional relationship with lead investors, and shortcomings in Quincy's go-to-market plan.
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- Harvard Business School Case 515-050
Colgate-Palmolive Company: Marketing Anti-Cavity Toothpaste
In October 2013, Colgate-Palmolive Company, the world's leading oral care company, was about to launch its new Colgate® Maximum Cavity Protection™ plus Sugar Acid Neutralizer™ toothpaste in Brazil. The oral care category accounted for 46% of Colgate's $17.4 billion sales worldwide in 2013. The new toothpaste was clinically proven to reduce and prevent cavities more effectively than toothpaste with the same level of fluoride alone. All major industry players, including Procter & Gamble, GlaxoSmithKline, and Colgate itself, had long ago launched products with the maximum amount of fluoride allowed by health authorities. Yet caries remained a significant threat to public health in many countries, both developing and developed. As Suzan Harrison, Colgate's president of Oral Care, prepared to launch CMCP+SAN in Brazil, the world's third largest oral care market, her executive team was divided over the product's positioning and pricing. Should it be positioned as a basic product to maximize reach for its health benefits or as a premium product for consumers who sought superior cavity protection?
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- Harvard Business School Case 515-052
Philips Healthcare: Marketing the HealthSuite Digital Platform
In June 2014, leading healthcare and consumer technology company Royal Philips (Philips) announced its HealthSuite Digital Platform to house healthcare data and enable applications used by physicians and patients. Philips had strong equity in the healthcare technology space due to its extensive portfolio of medical devices and related software sold primarily to hospitals. Philips designed the first two apps for the platform (eCareCoordinator and eCareCompanion) in-house, but it planned to open it up to third-party developers who would create an array of health-focused apps. Healthcare had long lagged behind other industries in adoption of technology as well as patient-relationship management. However, many health players had recently increased investment in new infrastructure and data analytics. Would the new Philips HealthSuite Digital Platform find success in the rapidly evolving industry?
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- Harvard Business School Case 715-047
Korea
South Korea's economic success and its transition from authoritarianism to democracy teach important lessons in national strategy and political economy. Now, though, its famous chaebols may need reform, the population is aging, and relations with the North are as tense as ever. What should the country's leaders do?
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- Harvard Business School Case 315-002
Nokia's Bridge Program: Redesigning Layoffs (A)
"Not another Bochum." Nokia Board Chairman Jorma Ollila was clear in the goals he set for the 2011 restructuring that Nokia's new CEO, Stephen Elop, had decided was necessary to address the dramatically changed competitive environment the company faced in smartphones and mobile phones. The strategy shift would include transitioning Nokia's phone operating system to Microsoft Windows and closing phone R&D centers and factories in 13 countries, with layoffs that would eventually impact 18,000 employees. Yet with several important R&D projects still under development, and capacity needed in factories for many more months, Nokia's board and leaders wanted to avoid the mistakes the company had made in a plant shutdown in Bochum, Germany, in 2008. EVP of Corporate Relations and Responsibility Esko Aho was mandated to develop a "Nokia way" to implement the restructuring that would reflect the company's values and allow them to maintain morale and commitment among the employees who would eventually lose their jobs. The case describes the development of Nokia's "Bridge" program, a comprehensive approach to helping employees find new employment opportunities and to replacing jobs in communities where Nokia had been a major employer. The case challenges students to make decisions such as when and how to tell employees about a layoff, how to manage local government leaders, and what support to provide in 13 different countries, each with its own legal and regulatory environment, cultural norms, and expectations and needs of employees and local communities.
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- Harvard Business School Case 315-003
Nokia's Bridge Program: Outcome and Results (B)
Nokia's leaders reflect on the Bridge program, lessons learned during its implementation, and the business benefits it brought to the company. Nokia's Bridge program resulted in 60% of employees knowing their next step the day they exited the firm. It also helped employees start 1,000 new companies and replaced jobs in communities where Nokia was a major employer. One-third of all mobile phone sales between 2011 and 2012 came from new products that were developed at R&D sites and manufactured at factories that were to be closed down or downsized as part of the restructuring.
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