First Look

January 10, 2017

Among the highlights included in new research papers, case studies, articles, and books released this week by Harvard Business School faculty:

Is a work break better when it’s unexpected?

Do work breaks rejuvenate employees to become more productive or have the opposite effect by diverting their attention from the task at hand? “We evaluate the effects of two types of breaks (expected versus unexpected), and two distinct forms of unexpected breaks, and find that unexpected breaks can, under certain conditions, yield immediate post-break performance increases,” according to new research by Francesca Gino and colleagues. The paper is titled The Microstructure of Work: How Unexpected Breaks Let You Rest, but Not Lose Focus.

Learning from Henry Kissinger the negotiator

A new book by James K. Sebenius and colleagues looks at the deal-making prowess of Henry Kissinger. Kissinger the Negotiator: Lessons from Dealmaking at the Highest Level pursues questions including: How did he do these deals? What strategies and tactics worked and what failed? Why and under what conditions? What ethical challenges did this approach present? Is there an underlying logic and method to his approach that, well beyond the diplomacy of the 1970s, offers practical guidance for meeting today’s negotiation challenges—from diplomacy to business, finance, and law? The book is forthcoming from HarperCollins.

The intellectual history of disruptive innovation theory

Clayton Christensen, the father of disruptive innovation theory, says the concept “has gained currency among managers even while core concepts remain misunderstood.” In the new working paper Disruptive Innovation: Intellectual History and Future Paths, Christensen, Rory McDonald, Elizabeth J. Altman, and Jonathan Palmer explore the theory’s intellectual history and propose several new topic areas for exploration.

A complete list of new research and publications from Harvard Business School faculty follows.

— Sean Silverthorne
 
  • forthcoming
  • HarperCollins

Kissinger the Negotiator: Lessons from Dealmaking at the Highest Level

By: Sebenius, James K., R. Nicholas Burns, and Robert H. Mnookin (with a forward by Henry A. Kissinger)

Abstract—As professors and practitioners with careers devoted to negotiation, we are often asked “Who are the world’s best negotiators? What makes them effective?” Inevitably Henry Kissinger’s name comes up as an elite, if controversial, negotiator from whom we can learn a great deal. At a time of rancorous divisions in American society, he helped to forge pathbreaking Asian, Soviet, and Middle Eastern agreements. These include the opening to China after decades of mutual hostility with the United States; détente and the first nuclear arms control treaty with the Soviets at the height of the Cold War; the Paris peace treaty with the North Vietnamese after years of bitter conflict; as well as Egyptian and Syrian disengagement accords with Israel following their 1973 war. Along with diverse political leaders, diplomats, and business executives, every U.S. President since John F. Kennedy—including President-elect Donald Trump in 2016—has sought Kissinger’s counsel. His geopolitical insights into foreign policy, statecraft, and world order have been widely discussed. Yet surprisingly, until this book, his impressive achievements as a negotiator have escaped systematic analysis. While specific cases have been examined in depth, no serious cross-cutting study of Kissinger’s overall approach has extracted its lessons for today’s negotiators. We have extensively interviewed Henry Kissinger about his most difficult negotiations. We studied his writings and those of many others who have analyzed these episodes. This has provided this book with valuable answers to several questions: How did he do these deals? What strategies and tactics worked and what failed? Why and under what conditions? What ethical challenges does this approach present? Is there an underlying logic and method to his approach that, well beyond the diplomacy of the 1970s, offers practical guidance for meeting today’s negotiation challenges—from diplomacy to business, finance, and law? Though Henry Kissinger is a controversial figure who played key roles in policies still marked by contention, our purpose in this book is neither to judge the man nor to set the historical record straight. Rather, by plumbing a career of extraordinary effectiveness, we have sought to learn as much as possible, extracting useful insights into the art and science of negotiation from Kissinger’s dealmaking at the highest level.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52060

  • forthcoming
  • Negotiation Journal

BATNAs in Negotiation: Common Errors and Three Kinds of 'No'

By: Sebenius, James K.

Abstract—The Best Alternative To a Negotiated Agreement (“BATNA”) concept in negotiation has proved to be immensely useful. It is widely accepted that a more attractive BATNA (“walkaway option”) often increases one’s bargaining power. A minimally necessary condition for an agreement to be mutually acceptable is that each side prefers the deal to its BATNA. Thus, how well each party’s BATNA serves its interests determines whether a zone of possible agreement even exists and, if it does, where the zone is located. In tandem with its value in practice, BATNA has become a wildly successful acronym (with over 17 million Google entries). Yet the initial characterization of this concept in Getting to Yes (Fisher, Ury, and Patton, 1991) along with many later interpretations can be problematic, limiting, and even misleading in at least three ways that this article analyzes and illustrates. First, early characterizations could be easily read to imply that one’s BATNA could not itself be a negotiated agreement. Second, and more seriously, common descriptions of one’s BATNA as the “best outside option, independent of the other side” needlessly limit its applicability, especially in the many bargaining relationships where BATNAs are inherently interdependent. Third, BATNAs are often mistakenly described mainly as “last resorts” relevant only in case of impasse or “if the other side is more powerful.” While savvy negotiators and analysts generally avoid these pitfalls, the less sophisticated can go astray. Robust correctives to these misimpressions are offered and related to three different kinds of “no” in negotiation: a “tactical no,” a “no to re-set” that permits moves to favorably alter the underlying setup, and a “final no.”

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=52029

Disruptive Innovation: Intellectual History and Future Paths

By: Christensen, Clayton M., Rory McDonald, Elizabeth J. Altman, and Jonathan Palmer

Abstract—The concept of disruptive innovation has gained currency among managers even while core concepts remain misunderstood. Likewise, foundational research on disruption has produced extensive citations and provoked vibrant debates, but empirical research in management has not kept pace. Such inconsistencies warrant deeper reflection and provide the impetus for evaluating research on disruptive innovation in management and strategy. We trace disruptive innovation theory’s intellectual history, noting both how core principles have crystallized through a process of anomaly-seeking research and how it has evolved from a technology change framework to a more expansive, causal theory of innovation and competitive response. The assessment reveals that while the phenomenon of disruption has not changed, our understanding has as the theory developed and was refined. Finally, to reinvigorate academic interest in disruptive innovation, we propose several new topic areas—performance trajectories, response strategies and hybrids, platform businesses, and innovation metrics—to guide subsequent empirical work.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=52068

The Microstructure of Work: How Unexpected Breaks Let You Rest, but Not Lose Focus

By: Pendem, Pradeep, Paul Green, Bradley R. Staats, and Francesca Gino

Abstract—How best to structure the work day is an important operational question for organizations. A key structural consideration is the effective use of breaks from work. Breaks serve the critical purpose of allowing employees to recharge, but in the short term, translate to a loss of time that usually leads to reduced productivity. We evaluate the effects of two types of breaks (expected versus unexpected), and two distinct forms of unexpected breaks, and find that unexpected breaks can, under certain conditions, yield immediate post-break performance increases. We test our hypotheses using productivity data from 212 fruit harvesters collected over one harvesting season yielding nearly 250,000 truckloads of fruit harvested over the course of 9,832 shifts. We provide a conceptual laboratory replication of these findings, showing that unexpected breaks lead to increased performance when they allow people to maintain attention on the focal task. Our results suggest that the characteristics of a break can lead the break to be experienced as an interruption, with all consequent negative outcomes, or as a rejuvenating experience, with positive post-break consequences.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=52074

  • Harvard Business School Case 316-134

HourlyNerd

HourlyNerd, a two-sided marketplace platform for matching freelance consultants with small companies looking for help, struggles to define a growth plan for the future. The company, started as a class project in HBS' FIELD 3 course, is assessing three growth paths: shifting its target from small- and medium-sized businesses to enterprise customers, expanding into new verticals to become the Amazon of freelance labor, and transforming its business model from a marketplace to software-as-a-service (SaaS). Each of the three paths was risky and required financial and human resource investment. Could and should the fledgling startup change its business model? Could it fundamentally change the way companies purchased consulting services? Or, should the founders play it safe by remaining focused on executing their original business model—a proven winner?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/316134-PDF-ENG

  • Harvard Business School Case 517-016

Angie's List: Ratings Pioneer Turns 20

In 1995, before people “googled” or “yelped,” Angela Hicks (HBS, 2000) was establishing her Angie’s List as a pioneer in the accumulation and dissemination of consumer rating information. Hicks focused on the home repair and maintenance market and, as she put it, “particularly on high cost of failure situations where good information on potential service providers is correspondingly of high value.” Angie's List had a paid subscription model as it charged “members” for access to the information they collectively provided on service providers.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/517016-PDF-ENG

  • Harvard Business School Case 817-028

Innovating Beyond Ochsner

The Ochsner Health System has developed a proprietary software tool designed to treat hypertension. Built into the system’s electronic medical records, the Hypertension Digital Medicine program allows patients to record their blood pressure at home and share readings with their medical providers in real time. A year and a half after launching the program, the health system’s internal startup, innovationOchsner, has gathered promising clinical results and validation from the medical community. The case explores the challenges Ochsner faces in scaling and disseminating the program to other healthcare providers.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/817028-PDF-ENG

  • Harvard Business School Case 315-087

CV Ingenuity (B)

A medical device startup seeks to complete its clinical trials with very little startup funding and a small staff when compared to its competitors.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/315087-PDF-ENG

  • Harvard Business School Case 617-009

uberPOOL

This case describes Uber's uberPOOL service, which let multiple Uber users who were headed in the same direction share a ride and pay substantially lower fares.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/617009-PDF-ENG

  • Harvard Business School Case 217-035

Partners Group: Ain't No Mountain High Enough

Partners Group (PG), a Swiss-based PE manager, initiated a series of strategic shifts and evolved from a predominately fund-of-funds manager into a large, multi-asset class PE firm focused on direct investments. PG was the first PE firm to go public in 2006. A number of large U.S.-based private equity firms followed to create a new category of firms: public private equity firms (PPEs). PG’s results were superlative (565% since inception total return and 22% annual compounded growth) versus the U.S.-based PPEs performance over the same time of 76% to 18%. PG’s multiple was 22x versus its PPE peer group of 8x. PG had the lowest value of AUM yet had the second largest market capitalization behind Blackstone. Why? PG had differing management practices: (i) compensation practices, (ii) corporate governance structure, (iii) accounting policies, and (iv) source of revenues. PG historically had a low percentage of its revenues derived from carried interest payments (less than 10%) while the U.S. PPEs had a significantly higher percentage (on average 50%). Should PG do more direct investments and have more of its revenues come from carried interests? This could conceivably jeopardize its trading multiple and its stock price. Should PG risk changing its business model or proceed with confidence?

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/217035-PDF-ENG

  • Harvard Business School Case 517-070

Access Health CT: Marketing Affordable Care (B)

Supplements the (A) case.

Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/517070-PDF-ENG