First Look

November 20, 2007

A new case profiles the journey of One Laptop Per Child (OLPC), an effort spearheaded by Nicholas Negroponte, co-founder of the cutting-edge Media Lab at MIT, to introduce $100 laptops to schoolchildren in developing countries. The concept of one laptop per child, and a nonprofit organization to make it happen, were launched with great optimism and media fanfare four years ago. Since then, however, the laptop's obstacles have been as political and sociological as they have been technological. The goal of One Laptop Per Child is making some headway, but has yet to become a reality: Cellphone use had risen dramatically and may mark a more promising route for educational technology, and other low-cost computers are making inroads, notably Intel's Classmate laptop. As the case notes, "Given the evolving competitive landscape, observers wondered if time had come for OLPC to rethink its strategy and mission." Also available this week among other cases and publications: an article comparing the regulatory environment for pharmaceuticals in the United States and Europe. The upshot: Europe's main concern is price controls and competition, while the United States focuses most on regulatory procedures and drug safety. As HBS professor Arthur Daemmrich reflects on lessons for the United States, "The path ahead requires better targeting of therapeutics, innovation in the use of both quantified results and patient case histories in regulatory decisions, and a renewed focus by industry, regulators, and physicians on the diversity of patients' experiences with medicines."
— Martha Lagace

Working Papers

None this week



Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?


In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower interest rates and lower quality intermediation and may have slowed employment gains in trade and services. Development lending goals were met, but these had no real impact. Finally, competition with private banks provided some discipline to nationalized banks.

Pharmaceutical Regulation in the United States and Europe

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Design, Meanings, and Radical Innovation: A Meta-model and a Research Agenda


Recent studies on design management have helped us to better comprehend how companies can apply design to get closer to users and better understand their needs; an approach usually referred to as "user-centered design." Yet, analysis of design-intensive manufacturers such as Alessi, Artemide and other leading Italian firms, show that their innovation process hardly starts from a close observation of user needs and requirements. Rather, they follow a different strategy that we call "design-driven innovation." This strategy aims at radically changing the emotional and symbolic content of products, i.e., their meanings and languages, through a deep understanding of broader changes in society, culture and technology. Rather than being pulled by user requirements, design-driven innovation is pushed by a firm's vision about possible new product meanings and languages that could diffuse in society.

Design-driven innovation, that plays such a crucial role in the innovation strategy of design-intensive firms, has still remained largely unexplored. This article aims at providing a possible direction to fill this empty spot in innovation management literature.

In particular, first we propose a meta-model for investigation of design-driven innovation. In this meta-model a manufacturer's ability to understand, anticipate and influence emergence of new product meanings is built by leveraging on external interpreters (designers, firms in other industries, suppliers, schools, artists, the media, etc…) who share its same problem: to understand the evolution of socio-cultural models, and propose new visions and meanings. Managing design-driven innovation therefore implies to manage the interaction with these interpreters, in order to access, share and internalize knowledge on product languages and influence shifts in socio-cultural models.

Second, we propose a possible direction to scientifically investigate the management of this networked and collective research process. In particular we show that the process of creating breakthrough innovations of meanings partially mirrors the process of creating breakthrough technological innovations. Studies of design-driven innovation may therefore benefit significantly from the existing body of theories in the field of technology management. The analysis of the analogies between these two types of radical innovations (of meanings and technologies) allow to set a research agenda for exploration of design-driven innovation, a relevant as well as underinvestigated phenomenon.


Cases & Course Materials

Colgate Max Fresh: Global Brand Roll-Out

Harvard Business School Case 508-009

In February 2005, Nigel Burton, in his third year as president of global oral care at Colgate-Palmolive Company (CP), had every reason to feel optimistic. Worldwide market shares were strong and Colgate Max Fresh (CMF), a new toothpaste that had helped drive Colgate to a record value share in the important U.S. market, was in the global pipeline for 2005. Burton had on his desk the proposed marketing launch plans for CMF in China and Mexico. Each plan sought to maximize the business potential in the local market. Burton had to assess the plans from a global perspective.

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The Hertz Corporation (A)

Harvard Business School Case 208-030

Examines the leveraged buyout of Hertz in 2005, a complex, high-profile deal and a good example of cutting-edge practice in private equity. The first of a two-part series on the Hertz LBO, adopts the perspective of Clayton, Dubilier & Rice, the leader of a private equity consortium bidding to buy Hertz from Ford in an auction. Set at the final round of the auction, the immediate problem for the consortium is how much to raise its previous bid. A reasonable bid must be based upon how much value the private equity consortium can create through improvements in Hertz's global operations on the one hand, and a more efficient capital structure on the other. Presents detailed descriptive information on both topics, but does not include detailed financial projections, which must be formulated by students or supplied, for discussion purposes, by the instructor.

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The Hertz Corporation (B)

Harvard Business School Supplement 208-031

Supplement to the (A) case.

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Marketing the "$100 PC" (A)

Harvard Business School Case 508-024

In 2002, Professor Nicholas Negroponte, a successful venture capitalist, author, and co-founder and chairman emeritus of the Massachusetts Institute of Technology (MIT) Media Lab, announced his intention to build a PC so cheap as to make it possible to provide Internet- and multimedia-capable machines to millions of children in developing countries. The concept—subsequently often referred to as the "$100 PC"—was launched at the Media Lab in 2003 before being spun into a separate nonprofit association, One Laptop Per Child (OLPC), founded by Negroponte in January 2005. At the time skeptics, including technology industry leaders, argued that it simply could not be done. Through innovative design and technology, Negroponte and his team proved them wrong but struggled to sell the concept and the machines to the world's education ministries, who would be purchasing the laptops for their school-age children. Furthermore, by 2007, many other low-cost PC options had emerged and OLPC had not started shipping yet, leading some observers to wonder if the non-profit should reconsider its strategy and options.

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Marketing the "$100 PC" (B)

Harvard Business School Supplement 508-032

Supplements the (A) case.

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TiVo 2007: DVRs and Beyond

Harvard Business School Case 708-401

Tom Rogers, CEO of TiVo, had placed multiple strategic bets on his company. In September 2007, that strategy was due for a major test. TiVo was a maker of digital video recorder (DVR) products and a distributor of DVR technology. Rogers believed that macro-trends in the home entertainment industry—the convergence of standard television with the delivery of video content via broadband Internet, and the related crisis faced by companies whose business models relied on TV advertising—played to TiVo's unique strengths. Leadership in DVR technology and a TV-centric user interface arguably positioned TiVo to become something more than a consumer electronics company. That was Roger's big bet. Implementing it required making six other bets: continuing to sell stand-alone DVRs in the retail market, despite rapidly eroding market share; distributing TiVo service in partnership with cable and satellite TV providers (which also functioned as TiVo's chief competitors in the DVR market); developing a platform for DVR-based advertising; entering the audience research business; leveraging TiVo's intellectual property both through litigation and in the marketplace; and expanding into non-U.S. markets. In late 2007, a pivotal new product, a major distribution deal with cable operator Comcast, and a key intellectual property lawsuit were all reaching points of critical impact.

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