First Look

Abstract—Machiavelli famously wrote, "There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things." That's what this book is about—innovation far more audacious than a new way to find a restaurant or a smart phone you can wear on your wrist. Amy C. Edmondson and Susan Salter Reynolds explore large-scale systemic innovation that calls for "big teaming": intense collaboration between professions and industries with completely different mindsets. To explore the kind of leadership required to build the future, Edmondson and Reynolds tell the story of an award-winning "smart city" start-up launched with the ambitious goal of creating a showcase high-tech city from scratch. The collaboration brought together software entrepreneurs, real estate developers, city government officials, architects, builders, and technology corporations. Taking a close look at the work, norms, and values in each of these professional domains, readers gain insight into why teaming across fields is so challenging, and what leaders can do to help.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50682

Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51004

Abstract—There is relatively little prior evidence on the potential impact of rank and file employees on financial reporting choices outside union negotiations. We contribute to the literature by providing new evidence that firms appear to manage long-run earnings upward in order to manage employee perceptions of employment security. In particular, we exploit exogenous state-level changes in unemployment insurance benefits and test for partial unwinding of prior upward earnings management when benefits increase. An increase in unemployment benefits makes unemployment relatively less costly and reduces employees' unemployment risk, thereby reducing firms' upward earnings management incentives. Consistent with the hypothesis, we find a significant reduction in abnormal accruals, increased recognition of special items and write downs, and greater downward restatement likelihood following an increase in state-level unemployment benefits. Cross-sectional tests suggest greater unwinding of prior upward earnings management when other upward earnings management incentives are weak and when unemployment risk is a relatively more important determinant of firms' labor costs. Collectively the results provide new evidence of the impact of rank and file employees on firms' financial reporting choices.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49026

Abstract—This paper explores how firms within the audience measurement industry, specifically its radio and television markets, have navigated myriad market and nonmarket challenges. The market strategies and the nonmarket forces that constrain those strategies are largely defined by two features: the delineation of its geographic markets by political boundaries and markets that have natural monopoly characteristics. While the pre-monopoly stage or periods of competition may be comparatively short lived, they are still telling. Monopolists undertake market strategies designed to ensure that they are not supplanted and nonmarket actions geared to avoiding undesirable constraints and reputational damage. Depending on their legal and regulatory environment, customers of the measurement services have used both market and nonmarket actions to mitigate the market power of the audience measurement firms. This paper focuses primarily on the U.S. radio and television audience measurement markets that Arbitron and Nielsen, respectively, have dominated for decades. Non-U.S. markets, which frequently feature America’s foremost firms, illustrate alternatives to America’s largely laissez-faire approach.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51000

Abstract—Despite our optimistic belief that we would behave honestly when facing the temptation to act unethically, we often cross ethical boundaries. This paper explores one possibility for why people engage in unethical behavior over time by suggesting that memory for their past unethical actions is impaired. We propose that after engaging in unethical behavior, individuals’ memory of their actions becomes more obfuscated over time due to the psychological distress and discomfort such misdeeds cause. In nine studies (N = 2,109), we show that engaging in unethical behavior produces changes in memory, such that memories of unethical actions are gradually less clear and vivid than memories of ethical actions or other types of actions that are either positive or negative in valence. We term this memory obfuscation of one’s unethical acts over time “unethical amnesia.” Due to unethical amnesia, people are more likely to act dishonestly repeatedly over time.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51005

Abstract—Leaders face a multitude of strategic paradoxes—contradictory pressures that are too often viewed as “either/or” choices. There are innovation paradoxes, in which the pursuit of new offerings and processes conflicts with the mandate to sustain the tried and true. There are globalization paradoxes, which involve tensions between local imperatives and boundary-crossing integration. And there are obligation paradoxes, when the goal of maximizing profits for shareholders clashes with the desire to generate benefits for a broader group of stakeholders. The authors argue that organizational success depends on simultaneously addressing such conflicting demands, not choosing between them. Leaders need to become comfortable with multiple truths and inconsistency. They need to assume that resources are ample rather than scarce. And they need to embrace change instead of seeking stability. All of this will help organizations reach a state of dynamic equilibrium, wherein paradoxes don’t impede progress—they spur it. And the way to tap the potential of paradox is to both separate and connect opposing forces: Managers must pull apart the organization’s goals and value each of them individually, while also finding linkages and synergies across goals.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50994

Abstract—In 2012 U.S. corporations spent $164.2 billion on training and education. Overwhelming evidence and experience shows, however, that most companies are unable to transfer employee learning into changes in individual and organization behavior or improved financial performance. Put simply, companies are not getting the return they expect on their investment in training and education. By investing in training that is not likely to yield a good return, senior executives and their HR professionals are complicit in what we have come to call the "great training robbery."

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=50953

In spring 2015, Dollar General's CEO Rick Dreiling was looking ahead to retiring at year's end but worried about ensuring continued growth for the company he had built since 2008 into a market leader in the U.S. discount retail world. Dollar General operated over 11,500 stores in 40 states at the start of 2015 but had recently been rebuffed in a tender offer for its leading rival, Family Dollar. Though Dollar General had held talks with Family Dollar as early as 2013, Family Dollar shareholders chose to ignore Dollar General's more lucrative tender offer and the urging of several activist investors and sold their firm to the smaller Dollar Tree chain. Dreiling could not help but revisit some of the key decisions he and the rest of the board had made in their pursuit of Family Dollar. From a governance perspective, he was confident that the Dollar General board had fulfilled its duty to shareholders during the bidding process despite Family Dollar's decision to sell to Dollar Tree. From a strategic perspective, he wondered whether Family Dollar had been the right competitor to buy.

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