Publications
The New M&A Playbook
| Authors: | Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck |
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| Publication: | Harvard Business Review 89, no. 3 (March 2011) |
Abstract
Companies spend more than $2 trillion on acquisitions every year, yet the M&A failure rate is between 70% and 90%. Executives can dramatically increase their odds of success, the authors argue, if they understand how to select targets, how much to pay for them, and whether and how to integrate them. The most common reasons for making an acquisition include holding on to a premium position or cutting costs. But to realize those benefits, the acquirer needs to achieve economies of scale by absorbing the target's resources into its operations. CEOs, who are often unrealistic about the performance boost from such acquisitions, must be sure not to pay too much for them. A less-familiar reason for making an acquisition is to fundamentally change a company's growth trajectory. In those deals, the acquirer uses the target's business model as a platform for growth. Because the business models with the most transformative potential are often disruptive, they can be difficult to evaluate, and CEOs often believe that such acquisitions are overpriced. In fact, however, those are the ones that can pay off spectacularly.
Read the paper: http://hbr.org/2011/03/the-big-idea-the-new-ma-playbook/ar/1
Mindful Leadership
| Author: | William W. George |
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| Publication: | The European Financial Review (November-December 2010) |
An abstract is unavailable at this time.
Read the paper: http://www.billgeorge.org/page/mindful-leadership-compassion-contemplation-and-meditation-develop-effective-leaders
The New Path to the C-Suite
| Authors: | Boris L. Groysberg, Kevin Kelly, and Bryan MacDonald |
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| Publication: | Harvard Business Review 89, no. 3 (March 2011) |
Abstract
Job requirements at the top of corporations have changed. Companies have come to expect much more from their C-level executives, who need new and different skills to deal with today's business realities. Exactly what abilities do firms want in their leaders-now and in the future? By examining hundreds of job profiles developed by executive-search firm Heidrick & Struggles and interviewing numerous senior managers, the authors have identified some clear trends. One strikingly consistent finding is that today, technical and functional expertise matters less at the top than business acumen and "soft" leadership skills do. Members of senior management now have more in common with their peers than with the people they manage. To thrive at the C-level, you must be a strong communicator, a collaborator, and a strategic thinker. You need a global mind-set and will be expected to offer your CEO deep insights on key business decisions. This article explores those developments in more detail and explains other findings about the latest requirements in each of seven C-level jobs: CIO, chief marketing and sales officer, CFO, general counsel, chief supply-chain management officer, chief human resources officer, and CEO. It offers a road map for ambitious managers who want to know which skills they should focus on developing in order to rise up the chain of command.
Read the paper: http://hbr.org/2011/03/the-new-path-to-the-c-suite/ar/1
An Angel Investor with an Agenda
| Authors: | Regina E. Herzlinger and Beatriz Muñoz-Seca |
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| Publication: | Harvard Business Review 89, no. 3 (March 2011) |
An abstract is unavailable at this time.
Read the paper: http://hbr.org/2011/03/hbr-case-study-an-angel-investor-with-an-agenda/ar/1
Zoom In, Zoom Out
| Author: | Rosabeth Moss Kanter |
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| Publication: | Harvard Business Review 89, no. 3 (March 2011) |
Abstract
Zoom buttons on digital devices let us examine images from many viewpoints. They also provide an apt metaphor for modes of strategic thinking. Some people prefer to see things up close, others from afar. Both perspectives have virtues. But they should not be fixed positions, says Harvard Business School's Kanter. To get a complete picture, leaders need to zoom in and zoom out. A close-in perspective is often found in relationship-intensive settings. It brings details into sharp focus and makes opportunities look large and compelling. But it can have significant downsides. Leaders who prefer to zoom in tend to create policies and systems that depend too much on politics and favors. They can focus too closely on personal status and on turf protection. And they often miss the big picture. When leaders zoom out, they can see events in context and as examples of general trends. They are able to make decisions based on principles. Yet a far-out perspective also has traps. Leaders can be so high above the fray that they don't recognize emerging threats. Having zoomed out to examine all possible routes, they may fail to notice when the moment is right for action on one path. They may also seem too remote and aloof to their staffs. The best leaders can zoom in to examine problems and then zoom out to look for patterns and causes. They don't divide the world into extremes—idiosyncratic or structural, situational or strategic, emotional or contextual. The point is not to choose one over the other but to learn to move across a continuum of perspectives.
Read the paper: http://hbr.org/2011/03/managing-yourself-zoom-in-zoom-out/ar/1
'Bricks and Clicks': The Impact of Product Returns on the Strategies of Multichannel Retailers
| Authors: | Elie Ofek, Zsolt Katona, and Miklos Sarvary |
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| Publication: | Marketing Science 30, no. 1 (January-February 2011) |
Abstract
The Internet has increased the flexibility of retailers, allowing them to operate an online arm in addition to their physical stores. The online channel offers potential benefits in selling to customer segments that value the convenience of online shopping, but it also raises new challenges. These include the higher likelihood of costly product returns when customers' ability to "touch and feel" products is important in determining fit. We study competing retailers that can operate dual channels ("bricks and clicks") and examine how pricing strategies and physical store assistance levels change as a result of the additional Internet outlet. A central result we obtain is that when differentiation among competing retailers is not too high, having an online channel can actually increase investment in store assistance levels (e.g., greater shelf display, more-qualified sales staff, floor samples) and decrease profits. Consequently, when the decision to open an Internet channel is endogenized, there can exist an asymmetric equilibrium where only one retailer elects to operate an online arm but earns lower profits than its bricks-only rival. We also characterize equilibria where firms open an online channel, even though consumers only use it for research and learning purposes but buy in stores. A number of extensions are discussed, including retail settings where firms carry multiple product categories, shipping and handling costs, and the role of store assistance in impacting consumer perceived benefits.
The Short Life of Online Sales Leads
| Authors: | James B. Oldroyd, Kristina McElheran, and David Elkington |
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| Publication: | Harvard Business Review 89, no. 3 (March 2011) |
An abstract is unavailable at this time.
Read the paper: http://hbr.org/2011/03/the-short-life-of-online-sales-leads/ar/1
Working Papers
Rational Preference for Smaller Menus: Variability in Menu-setting Ability and 401(k) Plans
| Authors: | David Goldreich and Hanna Halaburda |
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Abstract
The economic literature on choice focuses on individuals' decisions when faced with a given menu. However, the menu itself is often the result of preselection by a menu setter. We develop a model to study the relation between the ability of the menu setter and the size and quality of the menu. We show that when the cost of increasing the size of the menu is sufficiently small, low-ability menu setters optimally offer more items in the menu than high-ability menu setters. Nevertheless, the menu optimally offered by high-ability menu setters remains superior to the menu optimally offered by low-ability menu setters. This results in a negative relation between menu size and menu quality, i.e., a smaller menu is better than a larger menu. We illustrate this result empirically in the context of 401(k) plans, where we show a negative relation between the number of the investment choices in the 401(k) plan and the quality of optimal portfolio achievable given those investment choices.
Download the paper: http://www.hbs.edu/research/pdf/11-086.pdf
When Power Makes Others Speechless: The Negative Impact of Leader Power on Team Performance
| Authors: | Leigh Plunkett Tost, Francesca Gino, and Richard P. Larrick |
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Abstract
We examine the impact of subjective power on leadership behavior and demonstrate that the psychological effect of power on leaders spills over to impact team effectiveness. Specifically, drawing from the approach/inhibition theory of power, power-devaluation theory, and organizational research on the antecedents of employee voice, we argue that a leader's experience of heightened power produces verbal dominance, which reduces perceptions of leader openness and team open communication. Consequently, there is a negative effect of leader power on team performance. Three studies find consistent support for this argument. The implications for theory and practice are discussed.
Download the paper: http://www.hbs.edu/research/pdf/11-087.pdf
Cases & Course Materials
Online Marketing at Big Skinny
Benjamin Edelman and Scott Duke Kominers
Harvard Business School Case 911-033
Describes a wallet maker's application of seven Internet marketing technologies: display ads, algorithmic search, sponsored search, social media, interactive content, online distributors, and A/B testing. Provides concise introductions to the key features of each technology and asks which forms of online marketing the company should prioritize in the future. Discusses similarities and differences between online and off-line marketing, as well as issues of marketing campaign evaluation.
Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/911033-PDF-ENG
Sidoti & Company: Launching a Micro-Cap Product
Boris Groysberg, Paul M. Healy, and Sarah L. Abbott
Harvard Business School Case 411-072
It is 2010 and Sidoti & Company, a New York-based brokerage firm specializing in small capitalization stocks, has just launched a new product—micro-cap stock research. The firm has hired a group of five analysts who will produce written research reports on micro-cap stocks, that is, publicly traded stocks with a market capitalization of less than $250 million. Peter Sidoti, Sidoti & Company's founder and CEO, knows that there is demand for this product. However, he is not entirely certain how this new business will function, both with respect to how the product is distributed and to how Sidoti & Company will get compensated for it. The case discusses Sidoti & Company's business model and how the new business fits with, and differs from, that model. It discusses the challenges Sidoti faces in making this new business a success.
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http://cb.hbsp.harvard.edu/cb/product/411072-PDF-ENG
Oriflame S.A. (A)
David F. Hawkins, Karol Misztal, and Daniela Beyersdorfer
Harvard Business School Case 111-050
A direct-selling cosmetics company involved in emerging markets exhibits significant foreign exchange risk exposure and profitability swings in the wake of the 2008 financial crisis. Students must review the company's use of derivative instruments and other hedging techniques to establish whether it pursues the right FX risk mitigation strategy.
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http://cb.hbsp.harvard.edu/cb/product/111050-PDF-ENG
Oriflame S.A. (B)
David F. Hawkins, Karol Misztal
Harvard Business School Supplement 111-051
Exercise for recording derivative hedging transactions, accompanied by a technical note on IFRS derivative accounting.
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http://cb.hbsp.harvard.edu/cb/product/111051-PDF-ENG
Oriflame S.A. (C)
David F. Hawkins, Karol Misztal
Harvard Business School Supplement 111-052
Notes from Oriflame's 2009 annual report relevant to the assessment of the monetary impact of Oriflame's FX risk-management actions.
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http://cb.hbsp.harvard.edu/cb/product/111052-PDF-ENG
The Pecora Hearings
David A. Moss, Cole Bolton, and Eugene Kintgen
Harvard Business School Case 711-046
In 1932, in the depths of the Great Depression, the Senate Banking Committee began a much-publicized investigation of the nation's financial sector. The hearings, which came to be known as the Pecora hearings after the Banking Committee's lead counsel Ferdinand Pecora, revealed how the country's most respected financial institutions knowingly misled investors as to the desirability of certain securities, engaged in irresponsible investment behavior, and offered privileges to insiders not afforded to ordinary investors. During the famous "Hundred Day" congressional session that began his presidency, Roosevelt signed two bills meant to prevent some of these abuses, but he also believed that the government should play a more active role in the financial system by regulating national securities exchanges. In February 1934, the president urged Congress to enact such legislation, prompting the introduction of a bill entitled the Securities Exchange Act, which would force all securities exchanges to register with the Federal Trade Commission, would curtail the size of loans that could be advanced to securities investors, and would ban a number of practices (such as short-selling) that were thought to facilitate stock manipulation. Additionally, the legislation would require that all companies with exchange-listed securities publish detailed business reports as frequently as the FTC desired. Wall Street, represented in particular by New York Stock Exchange (NYSE) President Richard Whitney, took a strong position against the Securities Exchange Act. Whitney was ultimately summoned to testify during the congressional hearings on the Securities Exchange Act in late February 1934. Would he be able to convince lawmakers to take a different course, or would his arguments fail to win over those who believed that strict regulations were exactly what financial markets required following the Great Crash?
Purchase this case:
http://cb.hbsp.harvard.edu/cb/product/711046-PDF-ENG
Triple Point Technology
Richard S. Ruback and Royce Yudkoff
Harvard Business School Case 211-057
The founding CEO of Triple Point Technology, Peter Armstrong, was considering the sale of the company. The company specialized in providing its clients with software used for transaction processing and risk management in various commodity markets. Triple Point Technology had grown substantially in its 13 years of existence and was a potential source of significant wealth for its owners. The sale was prompted by a co-founder who wanted to sell his share of the business. The case explores the rationale for owners to monetize at least a portion of their company's value and the sales process. Additionally, it compares two different offers from the perspective of the company's executives that will have a significant continuing interest in it.
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http://cb.hbsp.harvard.edu/cb/product/211057-PDF-ENG
An Intern's Dilemma
Sandra J. Sucher and Matthew Preble
Harvard Business School Case 611-041
HBS student is asked to misrepresent himself during the course of his summer internship by his employer in order to obtain data from industry competitors.
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http://cb.hbsp.harvard.edu/cb/product/611041-PDF-ENG
European Union: The Road to Lisbon
Gunnar Trumbull and Diane Choi
Harvard Business School Case 711-032
In 2010, the European Union faces the challenges of the global financial crisis. With 27 member states, each facing different challenges, can new EU institutions respond effectively? Will its new currency, the euro, survive?
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http://cb.hbsp.harvard.edu/cb/product/711032-PDF-ENG