First Look

Abstract—What’s the best way to change your life? Change how you think, says marketing guru Gerald Zaltman. While most of us are accustomed to self-improvement via physical exercise or dieting, we often overlook our most powerful tool for effecting change: our own thoughts. Through a variety of exercises called Think Keys, Zaltman guides the reader through the mind’s most important unconscious and conscious dynamics. Zaltman has used these techniques with executives from around the world and at the Harvard Business School to teach people how to think better. Now he brings his time-tested toolbox to all readers who have an interest in unlocking their own potential. With insightful observations, thought-provoking questions, and curiosity-stoking content, Unlocked is the go-to 2018 book that is certain to change your life.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=54720

Abstract—Background: Frontline staff are well positioned to conceive improvement opportunities based on first-hand knowledge of what works and does not work. The innovation contest may be a relevant and useful vehicle to elicit staff ideas. However, the success of the contest likely depends on perceived organizational support for learning; when staff believe that support for learning-oriented culture, practices, and leadership is low, they may be less willing or able to share ideas. Purpose: We examined how staff perception of organizational support for learning affected contest participation, which comprised ideation and evaluation of submitted ideas. Methodology/Approach: The contest held in a hospital cardiac center invited all clinicians and support staff (n = 1,400) to participate. We used the 27-item Learning Organization Survey to measure staff perception of learning-oriented environment, practices and processes, and leadership. Results: Seventy-two frontline staff submitted 138 ideas addressing wide-ranging issues including patient experience, cost of care, workflow, utilization, and access. Two hundred forty-five participated in evaluation. Supportive learning environment predicted participation in ideation and idea evaluation. Perceptions of insufficient experimentation with new ways of working also predicted participation. Conclusion: The contest enabled frontline staff to share input and assess input shared by other staff. Our findings indicate that the contest may serve as a fruitful outlet through which frontline staff can share and learn new ideas, especially for those who feel safe to speak up and believe that new ideas are not tested frequently enough. Practice Implications: The contest’s potential to decentralize innovation may be greater under stronger learning orientation. A highly visible intervention, like the innovation contest, has both benefits and risks. Our findings suggest benefits such as increased engagement with work and community as well as risks such as discontent that could arise if staff suggestions are not acted upon or if there is no desired change after the contest.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=54708

Abstract—We study how digital service firms can develop an active customer base, focusing on two questions. First, how does the way that customers use the service postadoption to meet their own needs (personal usage) and to interact with one another (social usage) vary across customer acquisition methods? Second, how do firm-to-customer and customer-to-customer communications promote different types of usage? We study these questions using two data sets and by developing a multivariate hierarchical Poisson hidden Markov model (HMM), which fits the data significantly better than univariate and latent class approaches. We indeed find that postadoption behavior varies depending on customer acquisition method and dynamic states. At the total usage level, in one context (an annotation and note-taking service), customers who heard about the service through search and mass-invite exhibited significantly higher usage compared to those who joined through word of mouth (WOM); whereas in another context (a cloud-based file storage service), customers who joined through WOM referrals tended to exhibit higher usage. Yet, examining how routes of adoption relate to specific types of behavior, personal versus social usages, reveals a more nuanced picture. Furthermore, in both contexts, communications postadoption influenced engagement, albeit in different ways. Firm-to-customer communications, through company posts to Twitter and blog entries, had varying effects on customer behavior and in some cases led to lower personal and/or social usage; however, customer-to-customer communications tended to increase personal-use engagement across latent states and in both data sets. The findings suggest that firms offering digital services should pay attention to how the mode of customer acquisition is related to subsequent usage intensity, accounting for both personal and social activity, and encourage customers to interact with each other postadoption.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54735

Abstract—Recent studies find that female-led ventures are penalized relative to male-led ventures due to role incongruity, or a perceived “lack of fit,” between female stereotypes and expected personal qualities of business entrepreneurs. We examine whether social impact framing that emphasizes a venture’s social-environmental welfare benefits, which research has shown to elicit stereotypically feminine attributions of warmth, diminishes these penalties. We initially investigate this proposition in a field study of evaluations of early-stage ventures and find evidence of lessened gender penalties for female-led ventures that are presented using a social impact frame. In a second study, we experimentally validate this effect and show that it is mediated by the effect of social impact framing on perceptions of the entrepreneur’s warmth. The effect of social impact frames on venture evaluations did not apply to men, was not due to perceptions of increased competence, and was not conditional on the gender of evaluators. Taken together, our findings demonstrate that social impact framing increases attributions of warmth for all entrepreneurs but with positive consequences on business evaluation only for female-led ventures, for which increased perceptions of warmth attenuate female entrepreneurs’ gender role incongruity.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54067

Abstract—This book is a major contribution to the study of political economy. With chapters ranging from the origins of political economy to its most exciting research fields, this handbook provides a reassessment of political economy as it stands today, while boldly gesturing to where it might head in the future. This handbook transcends the received dichotomy between political economy as an application of rational choice theory or as the study of the causes of societies’ material welfare, outlining a broader field of study that encompasses those traditions. This book will be essential reading for academics, researchers, students, and anyone looking for a comprehensive reassessment of political economy.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54712

Abstract—Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists as well as markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy as well as the design of markets for kidney transplants in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54727

Abstract—Organizational scholars have long underscored the positive consequences of trust, yet trust can also have dysfunctional effects if it is not placed wisely. Though much research has examined conditions that increase individuals’ tendencies to trust others, we know very little about the circumstances under which individuals are likely to make more accurate trust decisions (i.e., neither misplace their trust nor refrain from trusting when doing so would have been beneficial), especially when they must do so rapidly and in the absence of an exchange history. Put simply, we have little understanding of what drives the accuracy of swift trust judgments. Building on relevant literatures, we propose that short episodes of prior interpersonal contact with a partner can increase the accuracy of swift trust decisions. Across two experimental studies, we demonstrate that brief interpersonal contact leads trustors to both (a) become more accurate in their trust decisions and (b) engage in other-focused perspective taking, which mediates the effect of interpersonal contact on trust accuracy. We then show that it is specifically because of verbal cues, rather than visual cues, that brief interpersonal contact enables other-focused perspective taking and, in turn, trust accuracy (Study 3). We contribute to the literature on trust by examining trust accuracy (rather than mere trust levels), identifying the significant role of brief interpersonal contact, and revealing other-focused perspective taking as a key mechanism in accurate swift trust decisions.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54709

Abstract—This paper conducts a theoretical and empirical investigation of global portfolio diversification for long-horizon investors in the presence of permanent cash flow shocks and transitory discount rate shocks to asset prices and returns. An increase in the cross-country correlations of cash flow shocks raises the risk of a globally diversified portfolio at all horizons. By contrast, an increase in the cross-country correlations of discount rate shocks has a muted effect on portfolio risk at long horizons and does not diminish the benefits of global portfolio diversification to long-term investors. Empirically, we find that increased correlations of discount rate shocks resulting from financial globalization appear to be the main driver of an estimated secular increase in the cross-country correlations of both stock and bond returns since the late 1990s. Increased correlations of inflation shocks are also an important source of the shift in bond correlations. By contrast, we don’t find evidence of an increase in the cross-country correlations of equity cash flow news or stock market volatility shocks. Our findings imply that the benefits of global equity diversification have not declined for long horizon investors despite the secular increase in global stock correlations, while the benefits of global bond diversification have declined.

Download working paper: https://www.hbs.edu/faculty/Pages/item.aspx?num=52494

No abstract available.

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Snap, the disappearing message app, went public at $17 per share on March 2, 2017, making its two 20-something founders the youngest self-made billionaires in the country. Over the next three weeks, 14 analysts made investment recommendations on Snap: two with buy recommendations, six with holds, and six with sells. When the “IPO quiet period” expired three weeks later, 16 more analysts—who worked at firms that were underwriters for the IPO—issued recommendations: 10 with buy and six with hold, with price targets ranging from $21 to $31 compared to a market price of $23. Elizabeth Kemp, the portfolio manager of a long-only technology fund at Sand Hill Road Capital, had bought 500,000 shares at the IPO price and had to decide whether to harvest her gain or to double down and buy more shares.

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Analyzes Snap’s value and analyst recommendations following the events described in the (A) case.

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Analyzes Snap’s value and analyst recommendations following the events described in the (B) case.

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In March 2017, Jason Blum, the founder and chief executive officer of film and television production company Blumhouse Productions, has another blockbuster on his hands with the movie Get Out, produced for just $4.5 million. Remarkable returns for its micro-budget films were nothing new for Blumhouse. In fact, in recent years, Blum and his team were responsible for more such outsized successes than any other producer, especially in the horror genre. The company’s approach to moviemaking is quite different from that of the major studios: it is not afraid to bet on projects that other studios have passed on, it pays its key cast and crew members the minimum salary stipulated by industry unions and only pays out sizeable bonuses if a movie’s box-office reaches certain levels, it gives its directors a great deal of creative control, and it decides on a film’s release strategy only once the first cut is ready. Has Blum discovered a robust formula for success in the film business? And is his approach sustainable, even as other players in Hollywood might seek to copy Blumhouse’s strategy?

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This case explores the strategy of OCP Group, the 95% state-owned Moroccan firm charged with managing the North African country’s vast reserves of phosphate. Phosphate was one of the most vital macronutrients for plant health, along with nitrogen and potassium, and Morocco had about 75% of known worldwide reserves. In 2017, under the leadership of Dr. Mostafa Terrab, OCP was halfway through a $20 billion industrial transformation program aimed at increasing its industrial capacity, improving cost efficiencies, and boosting long-term competitiveness. The program involved moving OCP beyond mining and exporting raw phosphate rock—its traditional focus, which it performed at a relatively low cost—towards greater production of phosphoric acid and finished fertilizer products. In the next phase of the program, OCP planned to ramp up its focus on fertilizer production, especially for markets in Africa, where fertilizer was historically underutilized. Terrab and his team saw an opportunity to nurture and meet fertilizer demand by creating products tailored to the needs of African farmers. This case provides background on Morocco, the fertilizer industry, and OCP Group’s past, current, and envisioned strategy and operations. With this context, students are invited to consider how aggressively OCP Group should pursue downstream integration (and specifically its Africa strategy), as well as how OCP can best leverage its competitive advantages and utilize Morocco’s phosphate reserves to its—and Morocco’s—benefit.

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Being an entrepreneur was a childhood dream for Falguni Nayar. The opportunity to build Nykaa.com, a woman-centered business, with a multi-brand retail format in the beauty and wellness space, and the fact that she was doing it with her daughter Adwaita (HBS MBA 2013) made it both exciting and meaningful. Still, she was the founder and with that came control over the most important decisions. While she sought advice from many people, Nykaa, like Adwaita, was her baby. How should she structure the organization and the team to best deliver the results she wanted?

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No abstract available.

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The case opens with Said Darwazah, chairman and CEO of Hikma Pharmaceuticals, the multinational generics company, anticipating the company’s 2017 AGM and reflecting on changes made over the previous year to address concerns expressed by proxy advisors and some shareholders about Hikma’s reliance on a combined chairman/CEO position, the long tenure of some directors, and the company’s approach to executive pay. The case describes Hikma’s origins as a Jordanian pharma company founded by Darwazah’s father in 1978 and traces the evolution of its governance as a private family company, then as a publicly traded company listed on the London Stock Exchange in 2005, and finally as a member of the FTSE 100, beginning in March 2015. Ahead of the 2017 AGM, Darwazah is confident that shareholders will approve changes made to the company’s executive incentive plan (EIP) and steps taken to accelerate the turnover of long-serving directors, but he wonders how much longer the company will be able to continue with a combined chairman/CEO and, more generally, how to marry the high level of governance expected by shareholders with the entrepreneurial spirit that had driven Hikma’s growth and development.

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In 2015, activist hedge fund Sachem Head Capital, led by founder Scott Ferguson, launched an activist campaign at computer aided design (CAD) software maker Autodesk. The activist campaign, waged mainly in private, was over Autodesk's lackluster financial performance, with Ferguson thinking that Autodesk's performance could improve with better cost management. Facing a proxy contest, Autodesk added Ferguson and two others to its board in exchange for a standstill agreement. Following two years of significantly improved performance, Ferguson eventually stepped down when longtime Autodesk CEO Carl Bass announced his retirement in February 2017. The case illustrates how even companies with stellar products can underperform and how benchmarking and financial analysis can help identify drivers of firm performance. The case describes how boards and investors can engage to improve governance and ultimately achieve sustainable performance objectives.

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No abstract available.

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