- 2019
- New York: PublicAffairs
Creative Construction: The DNA of Sustained Innovation
Abstract— Creative Construction tackles the myth that larger enterprises are inherently incapable of transformative innovation and are doomed to be disrupted by nimble start-ups. If larger enterprises seem incapable of transformative innovation, it is due to how we design and manage them, rather than anything inherent in their scale. In fact, Creative Construction argues, if used properly, scale can be an asset, rather than a liability, when it comes to innovation. However, to leverage the advantages of scale for innovation, companies need the right combination of strategy, systems, and culture. Based on more than three decades of the Pisano's research, teaching, and experience, Creative Construction offers a set of principles that will lead readers to rethink many long-held beliefs about innovation.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55477
- November–December 2018
- Organization Science
Slack Time and Innovation
Abstract— Traditional innovation models assume that new ideas are developed up to the point where the benefit of the marginal project is just equal to the cost. Because labor is a key input to innovation when the opportunity cost of time is lower, such as during school breaks or time off from work, we find that such models predict the number of ideas developed will be greater, but the average quality will be lower due to the lower expected value of marginal ideas. However, we posit that slack time such as school breaks may be qualitatively different than work time because contiguous blocks may be particularly beneficial for working on complex projects. We present a model incorporating this idea that predicts that although more ideas will be produced during slack time, they will have higher average complexity and perhaps even higher average value. Using data on 165,410 projects posted on Kickstarter (2009–2015), we report findings consistent with the model's predictions.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54314
- January–February 2019
- Harvard Business Review
Cracking Frontier Markets
Abstract— With emerging-market giants such as Brazil, Russia, India, and China experiencing slowdowns, investors, entrepreneurs, and multinationals are looking elsewhere. They’ve been eyeing frontier economies such as Nigeria and Pakistan with great interest—and enormous trepidation. Can one find serious growth opportunities amid extreme poverty and a lack of infrastructure and institutions? The answer, the authors argue, is yes. The key lies in market-creating innovations: products and services that speak to unmet local needs, create local jobs, and scale up quickly. Examples include MicroEnsure, which has made insurance affordable for 56 million people in emerging economies, and Galanz, which has brought microwave ovens to millions of Chinese consumers previously considered too poor to buy such an appliance. What’s more, the essentials of development can be “pulled in” by market-creating innovators—and over time, governments and financial institutions tend to offer their support.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55515
- January–February 2019
- Harvard Business Review
What Does Your Corporate Brand Stand For?
Abstract— While most firms are adept at defining product brands, they’re less sure-footed with their corporate brands. What exactly does a parent company’s name represent, and how is it perceived in the marketplace? A strong corporate identity provides direction and purpose, boosts the standing of products, aids in recruiting, and shores up a firm’s reputation. To help organizations define theirs, the authors have devised a tool called the corporate brand identity matrix. It guides teams through an examination of the nine components of corporate identity, which include mission, culture, relationships, and core values and promises. Often that exercise reveals broken links between the elements that executives need to align and strengthen. This article describes how companies have used the matrix to clarify their relationships with daughter brands, retool their identities to support new businesses, revamp their overall image, evaluate targets for acquisition, and more.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55514
- January–February 2019
- Harvard Business Review
The Hard Truth About Innovative Cultures
Abstract— Innovative cultures are generally depicted as pretty fun. They’re characterized by a tolerance for failure and a willingness to experiment. They’re seen as being psychologically safe, highly collaborative, and nonhierarchical. And research suggests that these behaviors translate into better innovative performance. But despite the fact that innovative cultures are desirable, and that most leaders claim to understand what they entail, they are hard to create and sustain. That’s because the easy-to-like behaviors that get so much attention are only one side of the coin. They must be counterbalanced by some tougher and frankly less fun behaviors: an intolerance for incompetence, rigorous discipline, brutal candor, a high level of individual accountability, and strong leadership. Unless the tensions created by this paradox are carefully managed, attempts to create an innovative culture will fail.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55513
- forthcoming
- Organization Science
Head, Heart or Hands: How Do Employees Respond to a Radical Global Language Change Over Time?
Abstract— To understand how recipients respond to radical change over time across cognitive, affective, and behavioral dimensions, we conducted a longitudinal study of a mandated language change at a Chilean subsidiary of a large U.S. multinational organization. The engineering-focused subsidiary aiming to facilitate cross-border interactions embedded language acquisition experts to transition all employees from Spanish to English full time. We gathered survey data and objective fluency scores from the language change recipients at five points over a period of two years. Using variable and person-centered exploratory analyses, our results suggest that recipients’ negative affective responses to the language change precede their cognitive responses or self-efficacy, predicting their current language learning. Further, we find that recipients’ cognitive and affective responses over time differentially influence two future behavioral outcomes: intention to leave the organization and willingness to adopt the change. While cognitive rather than affective responses over time drive recipients’ intentions to leave, affective responses influence recipients’ willingness to adopt English. Finally, we show that change recipients followed three trajectories of cognitive responses and two trajectories of affective responses over time. We discuss theoretical and practical implications to the literature on organizational change, emotions, and language in global organizations.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55473
Abstract— This paper reviews, discusses, and expands the “core guidance” definition of strategy as “the smallest set of choices to optimally guide (or force) other choices.” It first discusses what this definition contributes to the existing proposed definitions. It then considers the extension of this definition to the context of competitive interactions: whether the definition makes sense in that context and what it implies for decisions to be strategic in such context. As part of this analysis, it also uses the definition to explore a new issue: why quantity-based competitive moves might be more strategic than price-based moves.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55474
- in press
- Journal of Experimental Social Psychology
A Counterfeit Competence: After Threat, Cheating Boosts One's Self-Image
Abstract— In six studies, we show that after experiencing a threat to their abilities, individuals who misrepresent their performance as better than it actually is boost their feelings of competence. We situate these findings in the literature on self-protection. We show that this “counterfeit competence” effect holds when threat is measured (Study 1), manipulated (Study 2), and when the opportunity to cheat is randomly assigned (Study 3). We extend our findings to a workplace context, showing that threatened individuals who lie on a job application feel more capable than those who report them honestly (Study 4). Finally, consistent with the argument that counterfeit competence is driven by self-protection, we find individuals do not predict they would experience such a boost (Study 5) and that cheating after threat offers benefits similar to those provided by other established methods of self-protection (Study 6). Together, our findings suggest that, after threat, misrepresenting one’s performance can function as a mechanism that helps to restore positive self-evaluations about one’s capabilities.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=55479
- January–February 2019
- Harvard Business Review
Why Some Platforms Thrive and Others Don’t
Abstract— In the digital economy, scale is no guarantee of continued success. After all, the same factors that help an online platform expand quickly—such as the low cost of adding new customers—work for challengers too. What, then, allows platforms to fight off rivals and grow profits? Their ability to manage five aspects of the networks they’re embedded in:
- network effects, in which users attract more users
- clustering, or fragmentation into many local markets
- the risk of disintermediation, wherein users bypass a hub and connect directly
- vulnerability to multi-homing, which happens when users form ties with two or more competing platforms
- network bridging, which allows platforms to leverage users and data from one network in another network
When entrepreneurs are evaluating a digital platform business, they should look at these dynamics—and the feasibility of improving them—to get a more realistic picture of its long-term prospects.
Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55510
Financial Development and Technology Diffusion
Abstract— We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 17 countries, from 1870 to 2000. We find that greater depth in financial markets leads to faster technology diffusion for more capital-intensive technologies but only in periods closer to the invention of the technology. In fact, we find no differential effect of financial depth on the diffusion of capital-intensive technologies in the late stages of diffusion or in late adopters. Our results are consistent with a view that local financial markets play a critical role in facilitating the process of experimentation that is required for the initial commercialization and diffusion of technologies.
A New Categorization of the U.S. Economy: The Role of Supply Chain Industries in Innovation and Economic Performance
Abstract— An active debate has centered on the importance of manufacturing for driving innovation in the U.S. economy. This paper proposes an alternative framework that focuses on the role of suppliers of goods and services (the “supply chain economy”) in national performance. Conceptually, suppliers have three attributes that make them important for innovation: they produce specialized inputs, have more downstream links with other industries, and benefit especially from co-locating with their customers creating externalities. Using the 2002 Benchmark Input-Output Accounts, we estimate a new industry categorization that separates supply chain (SC) industries (i.e., those that sell primarily to businesses or government) from business-to-consumer (B2C) industries (i.e., those that sell primarily to consumers). We find that the supply chain economy is a distinct and large segment of the economy and includes manufacturers and primarily service providers. SC industries, especially traded services, have higher average wages than B2C industries. The supply chain economy also has a higher degree of innovative capacity as reflected by a much larger intensity of STEM jobs (especially in traded services) and the concentration of the majority of patents (especially in manufacturing). We also offer evidence that the suppliers’ conceptual attributes are higher for SC industries, which is consistent with their greater innovative activity. Finally, we find that employment in the economy has evolved from manufacturing into two distinct types of services from 1998 to 2015: SC Traded Services (with the highest STEM intensity and wages) versus B2C Main Street Services (with the lowest STEM intensity and wages).
Corporate Sustainability: A Strategy?
Abstract— We explore the extent of adopting sustainability practices over time and the implications for firm performance. We find that for almost all industries, sustainability practices converge within an industry over time, implying that they spread as common practices. We also find that the extent of convergence across industries is associated with the adoption of sustainability by the industry’s market leaders and the relative importance of environmental and social issues compared to governance issues. Further, we distinguish between a set of sustainability practices on which companies converge within an industry, which we term “common practices,” and a set on which they do not, which we term “strategic.” We subsequently explore performance implications and find that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and expectations of future performance as reflected in price to book valuation multiples, whereas the adoption of common sustainability practices is reliably correlated only with expectations of future performance. Overall, we provide evidence about the role of sustainability as a long-term corporate strategy and as a common practice.
Download working paper: https://www.hbs.edu/faculty/Pages/item.aspx?num=55493
Marketplace Scalability and Strategic Use of Platform Investment
Abstract— The scalability of a marketplace depends on the operations of the marketplace platform as well as its sellers’ cost structures and capacities. When fixed costs of entry are high, sellers with small capacities may be deterred from entering the market because of their inability to leverage economies of scale. In this study, we explore one strategy that a marketplace platform can use to enhance its scalability: providing an ancillary service to sellers to reduce their fixed costs. In our model, a platform can choose whether and when to provide this service to sellers. When the platform provides the service, it encourages the entry of small sellers. However, it diminishes large sellers’ incentives to make their own investment, thus reducing their potential output. When the output reduction by the large sellers is substantial, the platform may not want to provide the ancillary service even if it could do so at no cost. To encourage entry while mitigating output reduction, the platform may choose to strategically delay providing the service.
Coordination Frictions in Venture Capital Syndicates
Abstract— An extensive literature on venture capital has studied asymmetric information and agency problems between investors and entrepreneurs, examining how separating entrepreneurs from the investor can create frictions that might inhibit the funding of good projects. It has largely abstracted away from the fact that a startup typically does not have just one investor, but several VCs that come together in a syndicate to finance a venture. In this chapter, we therefore argue for an expansion of the standard perspective to also include frictions within VC syndicates. Put differently, what are the frictions that arise from the fact that there is not just one investor for each venture but several investors with different incentives, objectives, and cash flow rights who nevertheless need to collaborate to help make the venture a success? We outline the ways in which these coordination frictions manifest themselves, describe the underlying drivers, and document several contractual solutions used by VCs to mitigate their effects. We believe that this broader perspective provides several promising avenues for future research.
Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=52558
Network Structures and Entry into Platform Markets
Abstract— While some platform markets exhibit strongly interconnected network structures in which a buyer is interested in purchasing services from most providers, many platform markets consist of local clusters in which a buyer is primarily interested in purchasing services from providers within the same cluster. We examine how network structures affect interactions between an incumbent platform serving multiple markets and an entrant platform seeking to enter one of these markets. We find that having more mobile buyers, which increases interconnectivity among markets, reduces the incumbent’s incentive to fight and increases the entrant’s incentive to expand. Incumbent profits increase with interconnectivity. When advertising is inexpensive and mobile buyers consume in both local markets and the markets they visit, greater interconnectivity increases the entrant’s profit, thus encouraging entry.
- Harvard Business School Case 218-090
The Fidelity Growth Company Fund
No abstract available.
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- Harvard Business School Case 418-050
Big Apple Circus: Time to Fold the Tent?
By 2016, the Big Apple Circus has weathered many storms in its 38 seasons as one of the most well-known New York City nonprofits. Will Weiss, the executive director, has witnessed his share of chaos during four years at Big Apple. After a slight resurgence following the precipitous drop in ticket sales during the financial crisis, the operating health and finances of the Circus are growing more tenuous each year. Big Apple Circus is on the brink and Will Weiss must determine if there is a way forward.
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- Harvard Business School Case 819-021
THE VELUX FOUNDATIONS: Selecting Impact Funds
After much internal debate, THE VELUX FOUNDATIONS of Denmark have decided to allocate a small percentage of their investment portfolio to impact investments. Cambridge Associates, one of the leading investment advisory firms in the world, has been engaged to assist them in developing and implementing an “impact strategy.” VELUX only invests in funds (as opposed to direct investments) and must now decide on fund selection criteria and on specific fund investment options that have been presented to them.
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- Harvard Business School Case 519-051
Kodak: The Rebirth of an Iconic Brand
Following its re-emergence from bankruptcy protection in 2014, the marketing team at Kodak has been charged with tripling brand value with consumers, with little marketing budget. The case focuses on the strategies used by senior Kodak marketers Steven Overman and Dany Atkins to leverage the brand’s heritage for innovation and creativity with existing and new audiences. With few resources other than heritage, Overman and Atkins have focused on making Kodak “cool” through partnerships with a range of brands targeting younger users while also reinforcing the brand’s historic links with the motion picture industry and benefitting from the so-called “analog revival.” The case explores issues of cultural branding, focusing on how relevance can be built through connections to crowd cultures, communities, and other brands to build a platform for growth and revitalization.
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