- 15 Feb 2012
- Working Paper Summaries
Learning from My Success and From Others’ Failure: Evidence from Minimally Invasive Cardiac Surgery
The importance of failure in the learning process is well recognized. In organizations as work grows increasingly fragmented—more specialized and divided into smaller tasks—the role of individuals in organizational learning becomes more important. This paper examines how individuals learn directly from their own past experience, and indirectly from the past experience of others. Focusing on one particular performance outcome, the quality of surgeries, findings indicate that individuals learn the most from their own successes and the failures of others, possibly because in both cases they attribute the outcomes to internal rather than external factors. This research has implications for healthcare and organizations more generally. Research by KC Diwas, Bradley R. Staats, and Francesca Gino. Key concepts include: Individuals learn more from their own success than from their own failure or from the success of others. The failure of others has a greater learning effect on individual performance than does others' successful experience. Certain types of experience help to make individuals more open to learning from their own failures. Individuals may be more open to reflect on their own failures and learn from them when they have greater experience with success. Seeing failures in others makes failure not only more acceptable, but it also makes one's own failure less threatening to one's own identity. In addition, the failure of others provides valuable knowledge that can be used for ongoing problem solving. Organizations may need to find other ways to make their members feel capable and interpret failures in ways that do not threaten their self-image. Closed for comment; 0 Comments.
- 07 Dec 2011
- Research & Ideas
Are Creative People More Dishonest?
In a series of studies, Francesca Gino and Dan Ariely found that inherently creative people tend to cheat more than noncreative people. Furthermore, they showed that inducing creative behavior tends to induce unethical behavior. It's a sobering thought in a corporate culture that champions out-of-the-box thinking. Closed for comment; 0 Comments.
- 01 Dec 2011
- What Do You Think?
Thinking Slow: An Argument for Bureaucracy?
Summing Up Readers of Jim Heskett's column this month offer guidelines for when to think fast and when to think slow, from author Daniel Kahneman's book, Thinking, Fast and Slow. Open for comment; 0 Comments.
- 23 Nov 2011
- Working Paper Summaries
The Organization of Firms Across Countries
Economists have been paying increasing attention to the role that culture plays in a firm's overall performance. This paper focuses on how trust—a key cultural factor—affects firms' decision-making process, size, and productivity. Research was conducted by Nicholas Bloom of Stanford University, Rafaella Sadun of the Harvard Business School, and John Van Reenen of the London School of Economics. Key concepts include: If a firm is headquartered in a country where trust is prevalent (such as Sweden), it is much more likely to decentralize its decision making than if it is headquartered in a country in which trust is rarer (such as India). In short, higher trust leads to more decentralization. Trust also enables a firm to hire a large number of plant managers, because the CEO will feel comfortable delegating decisions to their direct reports without spending too much time on supervision. Thus, higher trust increases firm size. Higher trust increases the marginal value of information technology's effect on productivity. Closed for comment; 0 Comments.
- 06 Oct 2011
- What Do You Think?
How Will the ‘Moneyball Generation’ Influence Management?
Sum-up Nontraditional performance measures, as highlighted in the movie 'Moneyball', will become an increasingly important part of the young manager's toolkit, Jim Heskett's readers say. Closed for comment; 0 Comments.
- 06 Sep 2011
- Research & Ideas
Cheese Moving: Effecting Change Rather Than Accepting It
In his new business fable, I Moved Your Cheese, Professor Deepak Malhotra challenges the idea that change is simply something we must anticipate, tolerate, and accept. Instead, the book teaches readers that success often lies in first questioning changes in the workplace and, if necessary, in effecting new changes ourselves. Q&A plus book excerpt. Closed for comment; 0 Comments.
- 04 Aug 2011
- What Do You Think?
How Dangerous Is Common Sense to Managers?
Forum Closed Summing Up: Is experience really the best teacher? Sure—when not much is on the line, according to readers commenting on Professor Jim Heskett's column on common sense. Closed for comment; 0 Comments.
- 28 Apr 2011
- Working Paper Summaries
When Smaller Menus are Better: Variability in Menu-Setting Ability and 401(k) Plans
Economists love menus, which can be used to help understand people's choices. For example, do we prefer more choices (larger menu) or fewer (shorter menu)? But the menu itself has to be pre-selected. Research by David Goldreich (Rotman School of Management, University of Toronto) and Hanna Halaburda (Harvard Business School) focuses on the menu setter's decisions about what to include, and how large a menu to construct in the context of 401(k) plan choices. Key concepts include: When the cost of increasing the size of a menu is sufficiently small, a low-ability, or less skilled, menu setter will offer more items in the menu than a high-ability menu setter, who will be more discriminate in deciding which menu items to include. Combining the two results leads to a negative relation between menu size and menu quality: Larger menus are worse. This counterintuitive finding follows from the fact that the smaller menu set by the high-ability menu setter is not a subset of the larger menu set by the low-ability menu setter. One must be aware of the role played by menu setters in designing the menu offered to individuals. An unskilled menu setter may offer many choices, but the quality of those choices may be inferior. Closed for comment; 0 Comments.
- 20 Apr 2011
- Research & Ideas
Blind Spots: We’re Not as Ethical as We Think
Even when we think we are making principled decisions, recent research reveals we are not as ethical as we would like to believe. Professor Max H. Bazerman discusses his new book, Blind Spots: Why We Fail to Do What's Right and What to Do about It. Plus: Book excerpt. Key concepts include: Good people do bad things without being aware that they are doing anything wrong. Motivational blindness is the tendency to not notice the unethical actions of others when it is against our own best interests to notice. The "want" self—that part of us that behaves according to self-interest and, often, without regard for moral principles—is silent during the planning stage of a decision but typically emerges and dominates at the time of the decision. Organizations can monitor how they are creating institutions, structures, and incentives that increase the likelihood of unethical actions, while individuals can "precommit" to intended ethical choices. Closed for comment; 0 Comments.
- 19 Apr 2011
- Working Paper Summaries
Top Executive Background and Financial Reporting Choice: The Case of Goodwill Impairment
In the management literature, some theories hold that corporate actions and strategic choices can be partially predicted by knowing the functional background of executives. The authors provide evidence on how CEOs and CFOs who were former investment bankers, auditors, and private equity/venture capital executives managed decisions around goodwill impairments (essentially goodwill charge-offs)—a complex accounting choice involving a high degree of managerial discretion. Research by HBS professor Francois Brochet and doctoral candidate Kyle Welch. Key concepts include: Results of the research suggest that executive functional background is a significant explanatory factor of goodwill impairment reporting, and that its effect is better understood in the context of upper echelons theory and agency theory. The results can help researchers explore the role of the individual manager in explaining financial reporting choices and also help them to control for executive-level characteristics when investigating determinants of goodwill impairments. Since executive background is an actionable variable for corporate boards, a better understanding of its role in executives' financial reporting choices can be informative to those who monitor executive reporting. Closed for comment; 0 Comments.
- 08 Apr 2011
- Working Paper Summaries
Delay as Agenda Setting
A common business (and life) practice involves delaying a decision in order to avoid immediate commitment. James J. Anton (Fuqua School of Business) and Dennis A. Yao (HBS) discuss ways in which delaying or, alternatively, speeding up commitment can be a valuable tactic, how these tactics influence the actions of other decision makers, and ways in which such actions affect other decisions. Changing the speed at which a decision is made affects how others allocate resources to influence how that and other decisions will eventually be made. The researchers identify two tactics associated with changing decision speed: "pinning" and "focusing." Key concepts include: Commitment-avoiding can be a valuable tactic in that delaying a decision will greatly affect the actions of other decision makers-including both allies and rivals. Pinning involves taking actions that "pin" a rival decision maker's resources to one decision, thus reducing the rival's influence on other decisions. Focusing involves speeding up a decision, which frees up an ally's resources for use on other decisions. Closed for comment; 0 Comments.
- 31 Mar 2011
- Working Paper Summaries
What Do CEOs Do?
If time is money, as the old adage goes, then a CEO's schedule is especially important to a firm's financial success. This raises a fair question: What do CEOs do all day? To that end, researchers followed the activities of 94 CEOs in Italy over the course of a pre-specified week, enlisting the CEOs' personal assistants to track their bosses' activities with time-use diaries. Research was conducted by Raffaella Sadun of Harvard Business School, Luigi Guiso of the European University Institute, and Oriana Bandiera and Andrea Prat of the London School of Economics. Key concepts include: Compared with CEOs who work shorter hours overall, CEOs with longer workdays tend to devote more time meeting with other employees within the company and less time meeting with outsiders. The better the firm's governance structure, the more likely it is that a CEO will spend more time meeting with insiders than outsiders. The findings show a strong correlation between hours worked and productivity—a 2.14 percentage point increase in productivity for every one percentage point increase in hours worked. That positive correlation is driven entirely by the time a CEO spends with company insiders. Time spent with insiders is correlated with profits; time spent with outsiders is not. A possible interpretation is that spending time with outsiders might be more beneficial to the CEO than to the firm. Closed for comment; 0 Comments.
- 21 Mar 2011
- Research & Ideas
Are We Thinking Too Little, or Too Much?
In the course of making a decision, managers often err in one of two directions—either overanalyzing a situation or forgoing all the relevant information and simply going with their gut. HBS marketing professor Michael I. Norton discusses the potential pitfalls of thinking too much or thinking too little. Closed for comment; 0 Comments.
- 07 Mar 2011
- Research & Ideas
Why Companies Fail—and How Their Founders Can Bounce Back
Leading a doomed company can often help a career by providing experience, insight, and contacts that lead to new opportunities, says professor Shikhar Ghosh. Closed for comment; 0 Comments.
- 16 Feb 2011
- Working Paper Summaries
Naivete and Cynicism in Negotiations and Other Competitive Contexts
In business and in life, it's important to strike a smart balance between naïveté and cynicism. Act too naïvely, and someone is bound to take advantage of you. Skew cynical, and you may miss out on new opportunities with good people. This paper discusses the decision errors inherent in leaning too far in either direction. Research was conducted by Chia-Jung Tsay, Lisa. L. Shu, and Max H. Bazerman of Harvard Business School. Key concepts include: Naïveté is more than a glut of trust. More broadly, naïve behavior refers to a failure to make the best decision, due to a lack of consideration of other people's strategic and behavioral perspectives. We are likely to make naïve decisions when we don't think through the likely future decisions of other parties. A cynic, on the other hand, may avoid a business transaction due to an assumption that the seller's self-interested motives will be harmful to him or her-even if logic shows that the deal would likely benefit both parties. When people withhold from trusting others, they usually lack opportunities to learn whether their trust would have reaped rewards. But when they offer their trust and are subsequently burned, they learn hard lessons about trust. This unbalanced feedback breeds cynicism. In laboratory studies, the best negotiators were those who had a tendency to think about the perspectives of others. However, most people lack sufficient perspective-taking ability. The researchers suggest that training mechanisms should be developed to increase that ability. Closed for comment; 0 Comments.
- 02 Dec 2010
- What Do You Think?
Making Right Choices: Art or Science?
Summing Up Is choice an art or science? Jim Heskett's readers wonder whether the question is the right one to ask. (Online forum has closed; next forum opens January 6.) Closed for comment; 0 Comments.
- 22 Nov 2010
- Research & Ideas
Seven Strategy Questions: A Simple Approach for Better Execution
Successful business strategy lies not in having all the right answers, but rather in asking the right questions, says Harvard Business School professor Robert Simons. In an excerpt from his book Seven Strategy Questions, Simons explains how managers can make smarter choices. Closed for comment; 0 Comments.
- 02 Nov 2010
- Working Paper Summaries
Making the Numbers? ‘Short Termism’ & the Puzzle of Only Occasional Disaster
Executives at public companies are always under pressure to "meet the numbers" each quarter, often so much so that they sacrifice long-term investments in order to make everything look rosy in the short term. In this paper, Harvard Business School professor Rebecca M. Henderson and Sloan School of Management professor Nelson P. Repenning set out to reconcile the apparently contradictory strategies of short-term results and long-term investments. Key concepts include: The capability of a company is similar to that of stock, in that managers cannot influence it directly but can only control its rate of change. A company's tendency to focus almost solely on short-term earnings can have very different consequences depending on how close a firm's capability is to a critical "tipping threshold". Above this threshold, focusing on short-term earnings has little effect on long-term performance. Below it, the firm's performance may begin to spiral downward. Closed for comment; 0 Comments.
- 06 Oct 2010
- Research & Ideas
John Kotter: Four Ways to Kill a Good Idea
Every visionary knows the frustration of pitching a great idea, only to see it killed by naysayers, say HBS professor emeritus John P. Kotter and University of British Columbia professor Lorne A. Whitehead. In an excerpt from their new book, Buy-IN: Saving Your Good Idea from Getting Shot Down, the authors reveal strategies used by your critics—and how to defend against them. Key concepts include: Fear mongering involves creating infectious anxiety, scaring others into believing that a good idea is far too risky to pursue. Death by delay entails stalling an idea with never-ending questions, straw polls, and meetings—until the idea eventually loses momentum and peters out. Confusion consists of peppering a conversation with a stream of irrelevant facts and convoluted questions, making it nearly impossible for the innovator to keep the discussion on track. Ridicule is a direct attack on the character of the person who proposed the idea, creating indirect doubts about the idea itself. Closed for comment; 0 Comments.
When Performance Trumps Gender Bias: Joint versus Separate Evaluation
Gender-based discrimination in hiring, promotion, and job assignments is difficult to overcome. This paper suggests a new intervention aimed at avoiding biased assessments: an "evaluation nudge," in which employees are evaluated jointly rather than separately regarding their future performance. While joint evaluation is common for most hiring decisions, especially at the lower levels, it is rarely used when job assignments and promotions are being considered. The research shows that a joint-evaluation mode succeeds in helping employers choose based on past performance, irrespective of an employee's gender and the implicit stereotypes the employer may hold. While it is not always feasible to bundle promotion decisions and explicitly compare candidates, the research suggests that, whenever possible, joint evaluation would increase both efficiency and equality. Findings have implications for organizations that want to decrease the likelihood that hiring, promotion, and job-assignment decisions will be based on irrelevant criteria triggered by stereotypes. Key concepts include: In addition to being a profit-maximizing decision procedure, joint evaluation is also a fair mechanism, as it encourages judgments based on people's performance rather than their demographic characteristics. In experiments, employers tasked to choose an employee for future performance were influenced by the candidate's gender in cases where candidates were evaluated separately. In contrast, in joint evaluation, gender was irrelevant. Employers were significantly more likely to choose the higher- rather than the lower-performing employee. Companies concerned about discrimination in these phases of employment might choose to review how, for example, career-relevant jobs are assigned and how promotion decisions are made. Closed for comment; 0 Comments.