First Look

Abstract—The toughest calls managers have to make come in situations when they have worked hard to gather the facts and have done the best analysis they can, but they still don’t know what to do. Then judgment—a fusion of thinking, feelings, experience, imagination, and character—becomes critical. The author offers five practical questions to improve your odds of making sound judgments: What are the net, net consequences of all my options? What are my core obligations? What will work in the world as it is? Who are we? What can I live with? All five questions must be answered. According to the author, “Each question is an important voice in the centuries-long conversation about what counts as a sound decision regarding a hard problem with high stakes for other people.” If you work through these questions, you’ll know that you’ve approached the problem in the right way—not just as a good manager but as a thoughtful human being.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51554

Abstract—In legal disputes, contested insurance claims, and similarly adversarial negotiations, one party is likely to open with an inflated claim or a lowball offer. And if the other side’s position is unreasonable, it may make little sense to be reasonable yourself. But if everyone routinely came to a dispute with a realistic starting position, the offers would be more or less aligned, and any negotiation that followed would most likely be relatively civil, speedy, and fair. How can a negotiator who wants to be fair from the start ensure that his or her counterpart will be reasonable as well? The authors propose the final-offer arbitration challenge, which leverages an approach first applied in labor negotiations in the 1960s. You can employ this tactic by opening with a demonstrably fair offer and then—if the other party is unreasonable—extending a challenge to take the competing offers to an arbitrator who must choose one or the other rather than a compromise between them (the usual outcome of conventional arbitration). The authors describe how AIG used the approach and how other companies can begin to adopt it.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51074

Abstract—Many experiments have found that participants take more investment risk if they see returns less frequently, see portfolio-level returns (rather than each individual asset’s returns), or see long-horizon (rather than one-year) historical return distributions. In contrast, we find that such information aggregation treatments do not affect total equity investment when we make the investment environment more realistic than in prior experiments. Previously documented aggregation effects are not robust to changes in the risky asset’s return distribution or the introduction of a multi-day delay between portfolio choice and return realizations.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51573

Abstract—Across eight experiments, we demonstrate that humor can influence status, but attempting to use humor is risky. The successful use of humor can increase status in both new and existing relationships, but unsuccessful humor attempts (e.g., inappropriate jokes) can harm status. The relationship between the successful use of humor and status is mediated by perceptions of confidence and competence. The successful use of humor signals confidence and competence, which in turn increases the joke teller’s status. Interestingly, telling both appropriate and inappropriate jokes, regardless of the outcome, signals confidence. Although signaling confidence typically increases status, telling inappropriate jokes signals low competence and the combined effect of high confidence and low competence harms status. Rather than conceptualizing humor as a frivolous or ancillary behavior, we argue that humor plays a fundamental role in shaping interpersonal perceptions and hierarchies within groups.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51589

Abstract—Firms have never known more about their customers, but their innovation processes remain hit-or-miss. Why? According to Christensen and his coauthors, product developers focus too much on building customer profiles and looking for correlations in data. To create offerings that people truly want to buy, firms instead need to home in on the job the customer is trying to get done. Some jobs are little (pass the time); some are big (find a more fulfilling career). When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, we’ll hire it again. If it does a crummy job, we “fire” it and look for something else to solve the problem. Jobs are multifaceted. They’re never simply about function; they have powerful social and emotional dimensions. And the circumstances in which customers try to do them are more critical than any buyer characteristics. Consider the experiences of condo developers targeting retirees who wanted to downsize their homes. Sales were weak until the developers realized their business was not construction but transitioning lives. Instead of adding more features to the condos, they created services assisting buyers with the move and with their decisions about what to keep and to discard. Sales took off. The key to successful innovation is identifying jobs that are poorly performed in customers’ lives and then designing products, experiences, and processes around those jobs.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51553

Abstract—Executives with scandal-tainted companies on their résumés pay a penalty on the job market, even if they clearly had nothing to do with the trouble. Because the scandal effect is lasting, a company you left long ago could have an impact on your current and future job mobility, not to mention your compensation. Overall, executives who suffer from the effect are paid nearly 4% less than their peers. You can’t control this risk, the authors write, but you can and should plan for it. They offer three steps to help you survive a corporate scandal. 1. Be forthright. Transparency and full disclosure are key to overcoming the stigma. Executive recruiters, who do due diligence on candidates, can help you create a full, clear, and succinct narrative for hiring managers. 2. “Borrow” reputation and legitimacy from others in your network, establishing innocence by association. Executive search firms can also act as references and sponsors. 3. Take a “rehab job,” one at which you so clearly excel that it creates a persuasive story to compete with the scandal narrative.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51509

Abstract—This article examines why organic agriculture and food consumption developed more strongly in some countries than others between the 1970s and the 2000s. The focus is the limited growth of the New Zealand organic sector, which contrasts with countries such as Denmark, which were similar in size and shared significant export agribusiness sectors, but whose organic food sector became significantly larger. While the power of incumbent vested interests and unsupportive public policies emerge as major explanatory factors, the article argues that the long-established national image of New Zealand as a clean and green country may have been the major constraint.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51580