First Look

Abstract—Although tractors are now used in nearly every agricultural field operation and in the production of nearly all crops, they first developed with much more limited application. Early diffusion was accordingly rapid in these narrower applications but limited in scope until tractor technology generalized. The sequence of diffusion is consistent with a model of research and development (R&D) in specific- versus general-purpose attributes and with other historical examples, suggesting that the key to understanding technology diffusion lies not only in explaining the number of different users but also in explaining the number of different uses.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=54543

Abstract—Over the past few years, there has been a significant increase in the number of initiatives seeking to mobilize investor voice towards positive social impact. In this paper, I provide a framework outlining the role of investors as stewards of the commons. While companies are increasingly addressing environmental and social issues that also improve their economic value, for some of these issues individual company action is costly. At the same time, for a further subset of those issues, company action coupled with collaboration between companies is value enhancing. However, collaboration between companies is notoriously difficult and fragile requiring commitment mechanisms. I suggest that a small set of large institutional investors, importantly, but not exclusively, index and quasi-index investors, could provide this commitment mechanism. Common ownership of competitors within industries and long-time horizons in ownership of shares are key characteristics for investors that could act as stewards of the commons. Social pressure fueled by socially responsible investment funds and nonprofit organizations as well as customer pressure from individual investors are critical in mitigating free-rider problems among asset managers and sustaining engagement practices. Finally, I explore the limits and anticompetitive concerns to the theory of change presented here.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=54599

Abstract—We use an experiment to show that employers prefer to hire male over female workers for a male-typed task even when they have identical resumes. Using a novel control condition, we document that this discrimination is not specific to gender and is instead driven by beliefs. Employers are simply less willing to hire a worker from a group that performs worse on average, even when this group is instead defined by birth month, a non-stereotypical characteristic. A reluctance to discriminate emerges if workers share the gender or birth month of the worker from the worse-performing group, but even then, a small “excuse" counters this reluctance. Thus, our evidence points to an important role for beliefs in explaining gender discrimination.

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Abstract—A common critique of models of mistaken beliefs is that people should recognize their error after observations they thought were unlikely. This paper develops a framework for assessing when a given error is likely to be discovered, in the sense that the error-maker will deem her mistaken theory implausible. The central premise of our approach is that people channel their attention through the lens of their mistaken theory, meaning a person may ignore or discard information her mistaken theory leads her to consider unimportant. We propose solution concepts embedding such channeled attention that predict when a mistaken theory will persist in the long run even with negligible costs of attention, and we use this framework to study the “attentional stability” of common errors and psychological biases. While many costly errors are prone to persist, in some situations a person will recognize her mistakes via “incidental learning”: when the data she values, given her mistaken theory, happen to also tell her how unlikely her theory is. We investigate which combinations of errors, situations, and preferences tend to induce such incidental learning vs. factors that render erroneous beliefs stable. We show, for example, that a person may never realize her self-control problem even when it leads to damaging behavior and may never notice the correlation in others’ advice even when that failure leads her to follow repetitive advice too much. More generally, we show that for every error there exists an environment where the error persists and is costly. Uncertainty about the optimal action paves the way for incidental learning, while being dogmatic creates a barrier.

Download working paper: https://www.hbs.edu/faculty/Pages/item.aspx?num=54567

The case opens in November 2015, after the Turkish military’s shooting down of a Russian military airplane over the Turkish-Syrian border. The incident threatened to undermine the countries’ political and economic ties, and starting from late 2015, the dialogue between Ankara and Moscow was suspended for several months. The case explores the initial steps toward rapprochement in June 2016. The central dilemma is this: whether in light of the existing uncertainties companies operating in both countries can resume their investments and commercial activities, or should decisions be put on hold? What is the best strategy during such turbulent times? Can companies bet that a reunion would last?

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The June 2017 news that e-commerce giant Amazon was paying $13.7 billion for organic supermarket chain Whole Foods precipitated a broad sell-off in the shares of grocery retailers and suppliers. Behind the precipitous declines lay recognition that Amazon’s bold move into brick and mortar assets offered transformational opportunities. Amazon could gain expertise in perishable product sales and procurement, plus access to 30 million well-off shoppers and 463 grocery stores in key U.S. markets. Whole Foods could absorb Amazon’s technology and process expertise to modernize and reduce its operating costs, which were among the highest in the industry. For grocery retailers and suppliers, the deal portended increased competitive pressures in a saturated market. As 2018 dawned, all parties were assessing the deal’s implications. Had the stock market overreacted to news of the deal? Why was Amazon buying Whole Foods? What were the long-term implications of the deal for the food value chain?

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No abstract available.

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This case examines Blue Haven Initiative (BHI), an impact investing fund and family office, and one of its investments, PEGAfrica (PEG). BHI founder Liesel Pritzker Simmons’ motivations for using her family wealth to start a family office focused on impact investing, as well as BHI’s approach and strategy, including direct and indirect investments, fund manager selection, total returns, sourcing and due diligence of direct investments, and other aspects. The case explores a specific investment decision in depth. In May 2017, Pritzker Simmons and BHI Director of Private Investments Lauren Cochran were considering whether to invest an additional $1 million in PEG’s upcoming $5 million Series B round, at a $20 million pre-money valuation. PEG offered pay-as-you-go (PAYG) financing plans that allowed customers to make small payments via mobile money to pay off financing for the solar equipment over time. The case details PEG’s business model, growth strategy, financial structure, and the landscape of investment capital in West Africa during the time of the case.

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In December 2014, Dr. Anthony Furlan, chair of the Department of Neurology at University Hospitals Cleveland Medical Center (UH), faced a mandate from the hospital’s executive leadership team. Specifically, all UH departments were directed to take steps within six months to reduce the waiting time for outpatient appointments—measured as the time to first available outpatient appointment—to no more than 15 days. For Furlan and his colleagues in neurology, achieving this target was a significant challenge, as the department’s current time to first available appointment was 93 days. The case considers several alternatives for reducing waiting time in outpatient neurology without increasing the total clinical staff. The case allows students to evaluate opportunities for expanding the effective capacity of a complex service operation and to understand the tradeoffs between customer service and labor utilization.

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CEO Zhang Ruimin must plan how to accelerate the growth of self-managed microenterprises. Platforms were Haier’s business platforms operating in five major sectors: white goods transformation, investment and incubation, financial holdings, real estate, and cultural industry. Platform owners incubated microenterprises on their platforms with the resources Haier had, but they were not the supervisors of microenterprises. His goal was to tear down the walls between the organization, shortening the time the company took to respond to users’ needs, with the ultimate goal of “zero distance” between employees and users. Haier had engaged in a series of organizational changes since 2005, the most recent of which started in 2012. His latest experimentation was turning Haier into a platform for entrepreneurship. Employees and those outside Haier could set up microenterprises on Haier’s platforms. Zhang thought Haier was on the right track, but the model had to prove itself in practice. He set a timetable: the microenterprises must reach the tipping point by September 20, 2018, which meant the microenterprise would have become a platform to which all resource providers would flock and stay loyal. There was no precedent of transformation like this anywhere. Would Haier succeed? What could Haier do to push the microenterprises to get to the tipping point?

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The founding team at ScoreBig, an event ticketing company, is on the verge of a public launch of their product. The company has made great progress in negotiating access to tickets, designing its interface, and building a proprietary architecture. For consumers, ScoreBig offered the opportunity to buy tickets at below face value. For event managers, ScoreBig helped solve the problem of filling empty seats and recruiting new customers in a way that did not harm other forms of ticket sales. ScoreBig has raised over $20 million in three rounds of financing.

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Recruit Holdings, an advertising media, staffing, and business support conglomerate was founded in 1960 by Hiromasa Ezoe. Recruit was built on the principle that the company should add value to society. To do this, it hired young and talented employees and created a culture of self-efficacy. In the late 1980s, Recruit hit rough waters. First, Ezoe sold 2.8 million shares in a Recruit subsidiary before it went public to 76 Japanese leaders in politics, business, and media. The "Recruit Scandal," as it was called, resulted in the resignation of Prime Minister Noburu Takeshita and his entire cabinet. A few years later, Recruit was mired in debt with interest payments of 65 billion yen when its annual income was only 62 billion yen. In the early ‘90s, the development of the Internet cut into Recruit’s core businesses, which were paper-based advertising. Yet by 2017, Recruit was a global conglomerate with $16 billion in sales. This case examines Recruit’s unique corporate culture that helped it survive a scandal so large it became a staple in Japanese textbooks, as well as Recruit’s subsequent globalization.

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Sony used to be synonymous with "innovation" and "cool products." The case reveals how the company lost its edge and describes the leadership initiatives to restore its former glory. In 2012, Kazuo (Kaz) Hirai becomes CEO and successfully transforms Sony, including a relentless focus on differentiation through "wow" products instead of chasing scale. How should he organize and manage the company's response to digital opportunities, such as virtual reality, that could affect the company's entire value chain?

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Challenges related to managing religion in the workplace are on the rise, as are religious discrimination claims and monetary settlements, in the United States and around the world. This case examines two incidents of alleged religious discrimination that made their way to the U.S. Supreme Court, allowing students to explore the limits on the degree to which business owners and leaders can express their values through their companies’ operations and the extent to which companies should provide reasonable accommodation for employee faith practices.

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This case provides a brief update on Facebook's acquisition of WhatsApp.

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