First Look

September 4, 2018

Of special interest among new research papers, case studies, articles, and books released this week by Harvard Business School faculty:

Tough negotiators do better

Negotiators may wonder whether it's more beneficial to be warm and friendly or tough and firm during talks with the opposing side. Based on both field and lab experiments, Francesca Gino, Michael H. Yeomans, and colleagues say in a recent Management Science article that negotiators with a tough communication style have stronger economic outcomes. Communicating Warmth in Distributive Negotiations is Surprisingly Counter-productive.

How to foster creativity in the workplace

As companies face rapid technological change and global competition, business leaders should consider the factors that either inhibit or help encourage creativity. Teresa M. Amabile and colleagues have contributed a chapter to the new book Individual Creativity in the Workplace, which looks at the motivators for individual creativity, as well as how teams and leadership styles impact creativity. An Integrated Model of Dynamic Problem Solving within Organizational Constraints.

The pros and cons of a long drug approval process

In the early 1960s, scores of pregnant mothers took the drug thalidomide, which was later found to cause health problems in babies. The US Congress significantly reformed the country’s drug approval process, but as a result, many good drugs face delays in coming to market. In a new case study, Joshua Lev Krieger, Tom Nicholas, and Matthew Preble discuss the balance between consumer protection and access to life-saving drugs. The 'Wonder Drug' That Killed Babies.

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

— Dina Gerdeman
  • 2018
  • Individual Creativity in the Workplace

An Integrated Model of Dynamic Problem Solving within Organizational Constraints

By: Cromwell, Johnathan R., Teresa M. Amabile, and Jean-François Harvey

Abstract—Rapid technological change, global competition, and economic uncertainty have all contributed to organizations seeking to improve creativity and innovation. Researchers and businesses want to know what factors facilitate or inhibit creativity in a variety of organizational settings. Individual Creativity in the Workplace identifies those factors, including what motivational and cognitive factors influence individual creativity, as well as the contextual factors that impact creativity such as teams and leadership. The book takes research findings out of the lab and provides examples of these findings put to use in real world organizations.

Publisher's link:

  • August 23, 2018
  • NEJM Catalyst

Using a New EHR System to Increase Patient Engagement, Improve Efficiency, and Decrease Cost

By: French, Katy, Barbra Bryce Speer, Alexis B. Guzman, Tayab Andrabi, Iris Recinos, Keith A. Shook, James R. Incalcaterra, John C. Frenzel, and Thomas W. Feeley

Abstract—Patients and providers are frustrated with seemingly endless data entry. We used our patients’ vested interest in their own health care by actively engaging them in the entry of their own medical information into the EHR. Prior to the implementation of the new EHR we to developed an electronic version of a patient questionnaire that had been designed and vetted by a group of subspecialty experts. We integrated that survey into our EHR. To assess the effects of our new EHR system and the new process flow for patients, we utilized time-driven activity-based costing (TDABC). One year after the implementation of the new system, TDABC analysis demonstrated cost savings of 19% and a 10-minute decrease in provider data-entry time. Any EHR system that allows the patient to input data is useful in that it can save patients and providers time and frustration, can allow for advanced care planning, and can help to ensure transparency of patient information throughout the institution.

Publisher's link:

  • September–October 2018
  • Harvard Business Review

The Business Case for Curiosity

By: Gino, Francesca

Abstract—Although leaders might say they value inquisitive minds, in reality most stifle curiosity, fearing it will increase risk and inefficiency. Harvard Business School’s Francesca Gino elaborates on the benefits of and common barriers to curiosity in the workplace and offers five strategies for bolstering it. Leaders should hire for curiosity, model inquisitiveness, emphasize learning goals, let workers explore and broaden their interests, and have “Why?” “What if…?” and How might we…?” days. Doing so will help their organizations adapt to uncertain market conditions and external pressures and boost the business’s success.

Publisher's link:

  • in press
  • Management Science

Communicating Warmth in Distributive Negotiations is Surprisingly Counter-productive

By: Jeong, M., J. Minson, M. Yeomans, and F. Gino

Abstract—When entering into a negotiation, individuals have the choice to enact a variety of communication styles. We test the differential impact of being “warm and friendly” versus “tough and firm” in a distributive negotiation, when first offers are held constant and concession patterns are tracked. We train a natural language processing algorithm to precisely quantify the difference between how people enact warm versus tough communication styles. We find that the two styles differ primarily in length and their expressions of politeness (Study 1). Negotiators with a tough communication style achieved better economic outcomes than negotiators with a warm communication style, both in a field experiment (Study 2) and in a laboratory experiment (Study 3). This was driven by the fact that offers delivered in tough language elicited more favorable counteroffers. We further find that the counterparts of warm versus tough negotiators did not report different levels of satisfaction or enjoyment of their interactions (Study 3). Finally, in Study 4 we document that individuals’ lay beliefs are in direct opposition to our findings: participants believe that authors of warmly worded negotiation offers will be better liked and will achieve better economic outcomes.

Publisher's link:

  • September–October 2018
  • Harvard Business Review

Navigating Talent Hot Spots

By: Kerr, William R.

Abstract—Innovation clusters like San Francisco and Boston have long had an outsize impact on the global economy, and their influence keeps growing. In 2017, for instance, America’s ten largest tech hubs accounted for 58% of U.S. patents. Globally, cities such as Tokyo, Paris, Beijing, Shenzhen, and Seoul produced a similar proportion. The increased geographic concentration of innovation activity poses a challenge for firms based in suburban industrial parks. To stay relevant, they need to tap into urban hotbeds, but setting up operations there can be extremely expensive. In his work on global talent flows, Harvard Business School’s Kerr has seen organizations try three solutions: At one extreme, they can relocate their headquarters to a hub, as GE recently did (but make them much smaller). A less expensive strategy is to create an innovation lab or corporate outpost in a talent cluster, as Walmart did with Walmart Labs. The most conservative strategy is to run executive retreats and immersions in talent clusters—a tactic Vodafone uses effectively. These three options aren’t mutually exclusive. Given the need to stay in touch with multiple clusters, companies may want to try them all. Each one involves substantial risks that executives must manage. But together they offer a good playbook to firms that are finding themselves outside the action as the clout of a handful of cities grows.

Publisher's link:

  • forthcoming
  • Marketing Science

U-Shaped Conformity in Online Social Networks

By: Sun, Monic, Michael Zhang, and Feng Zhu

Abstract—We explore how people balance their needs to belong and to be different from their friends by studying their choices of a virtual-house wall color on a leading Chinese social-networking site. The setting enables us to randomize both the popular color and the adoption rate at the individual level so that our experimental design minimizes informational social influence, homophily, and group-identity signaling to the general public. We find that there exists significant social influence within a user’s friend circles. While learning about the most popular color among a user’s friends generally increases the likelihood for the user to adopt that color, conformity first decreases and then increases with the adoption rate of that choice, which ranges from 50% to 100%. In addition, users who are minority, newer, or of lower social-economic status are more likely to conform upon learning about the popular choice. Our findings are consistent with optimal distinctiveness and middle-status conformity theories and have implications for designing normative marketing campaigns.

Publisher's link:

  • June 2018
  • Academy of Management Journal

Does 'Could' Lead to Good? On the Road to Moral Insight

By: Zhang, Ting, Francesca Gino, and Joshua D. Margolis

Abstract—Dilemmas featuring competing moral imperatives are prevalent in organizations and are difficult to resolve. Whereas prior research has focused on how individuals adjudicate among these moral imperatives, we study the factors that influence when individuals find solutions that fall outside of the salient options presented. In particular, we study moral insight, or the discovery of solutions, other than selecting one of the competing moral imperatives over another, that honor both competing imperatives or resolve the tension among them. Although individuals intuitively consider the question “What should I do?” when contemplating moral dilemmas, we find that prompting people to consider “What could I do?” helps them generate moral insight. Together, these studies point toward the conditions that enable moral insight and important practical implications.

Publisher's link:

  • Harvard Business School Case 318-143

Renegotiating NAFTA

January 1, 2019 marked the 25th anniversary of the North American Free Trade Agreement (NAFTA). Twenty-five years after the landmark trade pact was signed by the United States, Canada, and Mexico, considerable debate surrounded it. Trade and trade agreements were a focal point of the 2016 U.S. presidential election. NAFTA came into effect on January 1, 1994, after being backed by the Republican administration of U.S. President George H. W. Bush and the Democratic administration of U.S. President Bill Clinton during its implementation. It created the largest free trade area in the world at the time. Since implementation, total trade between NAFTA countries grew 280%; in comparison while trade to non-NAFTA partners grew by 195%. Critics of NAFTA claimed that it had contributed to a loss of manufacturing jobs to Mexico, increased inequality in all countries, and undercut environmental laws. Those who supported NAFTA, however, noted that in addition to trade, output, and overall employment, investment among the three nations increased, and productivity also grew. Furthermore, the agreement led to lower prices. By 2018, all countries experienced low unemployment rates. With changes in NAFTA looming, many questioned whether the accord had brought more benefits than costs to its signatories. Could the costs be minimized under a new agreement without reducing the benefits? Did buying local goods help create the most jobs in a country? What was the role of business? Everyone wondered what the potential ramifications of the new NAFTA, or lack of, would be.

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Beth Wozniak, President of Honeywell Environmental and Combustion Controls (ECC) at Honeywell International Inc., spun around in her office chair, reflecting about how the classic, mature thermostat industry was rapidly evolving. In February 2014, Google paid $3.2 billion to acquire Nest Labs, a new startup whose goal was to reinvent unloved home devices, such as thermostats and smoke alarms. Their smart thermostats posed a threat to the traditional thermostat business, and it was essential that Honeywell determine the best way to respond. In addition to selling thermostats, Nest had ambitious plans to facilitate connections between Nest and other companies, making it easier for consumers to save money and energy. Many companies were developing smart, connected products that could be controlled remotely. But who really wanted to check ten different apps to make sure the heat was down, the doors were locked, and the lights were turned off? The Internet of Things (IoT) redefined the potential of industries, allowing a company that created a smart, connected product to develop an entire system of products that worked together. How would Honeywell, the mature, industrial company in a basic, mechanical business, compete with the new startup bought by Google and developing its own ecosystem—notably giving away thermostats to Airbnb in return for selling data to utilities?

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  • Harvard Business School Case 719-411

Edward Jones: Implementing the Solutions Approach

In 2017 Edward Jones, the largest brokerage firm in the U.S., is deciding whether and how to implement a new "solutions" business model to replace its traditional "product" or "transactional" approach. Many of the required changes appeared to violate some of the tradeoffs that had made the previous approach successful. Was this the right way forward for Edward Jones? Where did this leave the classic strategy with its reliance on the one financial advisor office as the sole channel of distribution?

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When Jamie Dimon took over as CEO of JPMorgan Chase & Co. (JPMorgan Chase) in 2005, he reaffirmed the commitment to pursue a "universal bank" strategy—providing a full range of products and services to both retail and wholesale clients. Yet the merits of the universal bank had long been disputed. After 2008, the financial crisis and subsequent Great Recession damaged many global and domestic financial services firms. While the government bailed out universal banks and monoline financial institutions alike, both governments and the public clamored for action against banks they deemed "too big to fail." Regulators around the world stepped in to increase capital requirements while the U.S. government passed the Dodd-Frank bill, which improved transparency and accountability, and, with the Volcker Rule, limited banks' ability to pursue proprietary trading. In response, many financial institutions reduced their scope and reshaped their portfolios. In this context, JPMorgan Chase, the largest bank in the U.S. by assets since 2011, which had successfully weathered the financial crisis in part due to the benefits of diversification, emerged with a "fortress balance sheet" and an improved position in the banking league tables. Nevertheless, the bank faced pressure from many directions, including large civil fines to settle, analysts' arguments about its "conglomerate discount," and regulation that penalized size, interconnectedness, and complexity. Despite the pressure, Jamie Dimon remained vocal in advocating for the value of a broad scope, large scale financial services firm. However, questions remained about the optimal scope of the bank and how JPMorgan Chase could best allocate resources across its diverse lines of business in the face of new regulations designed to limit size and complexity.

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  • Harvard Business School Case 619-013

Leading Open Innovation at BT

This case focuses on the genesis and development of the open innovation unit at BT, the strategic value of the unit, and its operating model. As the business environment becomes increasingly dynamic and firms are pressured to achieve faster innovation rates, there may be accompanying shifts in the way they pursue innovation. This case illustrates the challenges that this poses to large corporations as well as the key activities the open innovation unit engages in to deal with them. In particular, it must manage relationships with various stakeholders to leverage the value of matching external ideas and technologies with internal resources and capabilities. The case poses the question: Should the open innovation unit fully incubate some ideas, instead of always seeking partnership with commitment from a customer-facing unit?

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  • Harvard Business School Case 219-009

Project Helios: Harvesting the Sun

Aware of the impact that modern society was having on the environment, Ashley Telkes had always tried to be cognizant of her own impact on the environment and to take reasonable steps to mitigate her own effects. Having already implemented a number of passive measures to minimize her “carbon footprint,” Telkes must now confront the bigger decision of whether or not to invest in solar panels to generate electricity for her home. Although pre-disposed to pursue environmentally friendly alternatives, the project entailed significant up-front expenses and Telkes could not afford to make a poor financial decision. Telkes must assess the financial merits of the project, as well as understand the regulatory and technological risks associated with going forward or choosing to delay.

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  • Harvard Business School Case 818-044

The 'Wonder Drug' That Killed Babies

In the early 1960s, a popular drug taken by patients worldwide for a range of maladies was found to cause severe birth defects and other health problems in babies born to mothers who had taken it during a certain stage of fetal development. As many as 10,000 children may have been affected. Just a handful of these children were born in the U.S., where safety concerns were raised by Dr. Frances Oldham Kelsey, the medical officer handling the thalidomide application at the U.S. Food and Drug Administration. However, the company hoping to distribute the product in the U.S. had already given away thousands of pills for doctors to run clinical trials. Once the full extent of the global thalidomide crisis became generally known, the U.S. Congress significantly reformed the country’s drug approval process to ensure that all new products were both safe and effective. It subsequently became much more arduous for pharmaceutical firms to bring new drugs to market. Some critics therefore argued that the new regulations were actually detrimental, as they prevented or delayed good drugs from coming to market. What was the right balance between consumer protection and access to potentially life-saving drugs?

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No abstract available.

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