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Summer 2013
Volume 54, Issue # 4

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Capturing the Value of Synchronized Innovation

  • Research Feature
  • Read Time: 21 min 

How can companies coordinate their product development efforts? Research by Jason P. Davis (MIT Sloan School of Management) shows that synchronization can take three forms: proactive planning with partner organizations; reactive action to signals by other companies; or combining these two in a hybrid. Each approach has its own implementation costs and challenges. Moreover, the network of relationships that already exist within an industry affects how quickly synchrony emerges.

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Free Article

The Executive’s Role in Social Business

  • Research Feature
  • Read Time: 17 min 

A majority of respondents to a survey by MIT Sloan Management Review and Deloitte say that their companies’ social capabilities are at an early stage of developing social capabilities. However, executives are increasingly recognizing the value of social business to their organizations, and a majority of C-suite respondents believe that social business represents an opportunity to fundamentally change the way work gets done.

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Navigating the Politics and Emotions of Change

  • Research Feature
  • Read Time: 12 min 

Skepticism, fear and panic can wreak havoc on any change process. But proactively addressing these types of feelings can ease resistance and disengagement. Research shows that executives can successfully initiate change initiatives by mapping the political landscape to identify the key stakeholders who will be affected by the change and the key influencers within each stakeholder group. They should also involve influential early adopters and engage with skeptics.

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Why Making Money Is Not Enough

  • Opinion & Analysis
  • Read Time: 3 min 

The authors, who include Ratan Tata, the former chairman of the Tata Group, argue that that “it is possible to build and lead companies that retain a deeper purpose.” Tata calls for companies to launch “corporate lifeboats” — such as new business experiments in next-generation clean technologies and serious business initiatives in the underserved space at the “base of the pyramid” — to transform their operations for sustainability.

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How to Overcome a Power Deficit

  • Research Feature
  • Read Time: 25 min 

Many factors can cause a talented executive to be ignored or sidelined within an organization. “The fact that I was right didn’t matter,” said one manager whose recommendations went unheeded. “What I hadn’t done was build sufficient internal credibility.” Fortunately, power deficits in legitimacy, critical resources and/or networks can almost always be overcome. Research looking at 179 executives found two basic strategies that worked: “playing the game” more effectively or ”changing the game.”

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The Trouble With Stock Compensation

  • Research Highlight
  • Read Time: 5 min 

Research suggests that paying outside board members with equity grants leads to companies with less socially responsible behavior. That’s the conclusion of Yuval Deutsch and Mike Valente (both of Schulich School of Business, York University), who looked at social performance ratings and director compensation data for more than 1,100 U.S. public companies between 1998 and 2006. “Our findings suggest that there is a need to investigate more creative compensation arrangements,” they write.

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Analyzing Performance in Service Organizations

  • Research Feature
  • Read Time: 16 min 

We can’t always trust our intuition about how employees will perform. Intuition can be misleading, or just plain wrong. So a growing number of savvy service businesses have investigated the use of a sophisticated linear programming technique called DEA, or data envelopment analysis. Authors H. David Sherman and Joe Zhu, who call DEA “balanced benchmarking,” write that the technique helps companies locate best practices not visible through other management methodologies.

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The Dangers of Disgruntled Ex-Employees

  • Research Highlight
  • Read Time: 6 min 

A study of professional soccer players found that players who left a team on bad terms subsequently played unusually well against that team. This phenomenon, known as the “Immutable Law of the Ex,” demonstrates the power of a person fueled by anger and pressure to prove new loyalty. The findings are relevant to other settings in which organizational performance relies strongly on individual contributions. Employers can prevent employees from wanting to strike back by being sensitive to morale.

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Designing Trustworthy Organizations

  • Research Feature
  • Read Time: 15 min 

A lot of the literature about trust supports commonsense notions for individual leaders. But building organizational trust turns out to be different from building interpersonal trust — and less intuitive. “A new model is required to understand how to manage trust in large, complex organizations operating in highly diverse global environments,” write the authors. Once trust is broken, repair requires understanding the systemic causes of the failure and confronting deeply embedded mindsets.

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Choosing the Right Eco-Label for Your Product

  • Research Highlight
  • Read Time: 7 min 

With over 435 eco-label programs worldwide, how can companies avoid betting on the wrong one? Authors Magali A. Delmas (UCLA Anderson School of Management), Nicholas Nairn-Birch (U.S. Environmental Protection Agency) and Michaela Balzarova (Lincoln University) detail a three-part framework for companies to use. The framework evaluates eco-labels along three dimensions: consumer understanding and awareness, consumer confidence and willingness to pay.

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How to Drive Customer Satisfaction

  • Research Highlight
  • Read Time: 9 min 

There are six significant drivers of customer satisfaction for companies to pay attention to: adaptability, commitment to customers, connection with other customers, product assortment, easy transactions and appealing environment. A Trader Joe’s grocery store, for instance, carries about 4,000 items, compared to 50,000 in a typical store. Less is better: Items are chosen to match the demographic and psychographic profiles of Trader Joe’s customers, and provide the assortment customers want.

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Free Article

From the Editor: Creating and Leading Change

  • Opinion & Analysis
  • Read Time: 2 min 

Consumers are driving change for retailers. As the new article “Competing in the Age of Omnichannel Retailing” notes, “Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing.” Meanwhile, “The Executive’s Role in Social Business” notes that while C-suite executives see social business as an opportunity, they are having a hard time turning that potential into reality.

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Can High-Frequency Trading Drive the Stock Market Off a Cliff?

  • Research Highlight
  • Read Time: 7 min 

Much of the time, high-frequency trading firms play a benign role in financial markets. These firms use fully automated computer systems to buy and sell stocks very rapidly, making thin profits by being ahead of human orders.

But in a nervous market with downward price pressure, high-frequency trading can create fierce volatility. A computer simulation of high-frequency trading behavior showed that a complex system “may turn into an unfamiliar monster when an invisible tipping point is passed.”

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Competing in the Age of Omnichannel Retailing

  • Research Feature
  • Read Time: 17 min 

Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing, enabling retailers to interact with consumers through multiple touch points and expose them to a rich blend of offline sensory information and online content. In response to these changes, retailers and their supply-chain partners will need to rethink their competitive strategies.

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How Caesars Entertainment Is Betting on Sustainability

  • Research Feature
  • Read Time: 30 min 

Caesars Entertainment uses a scorecard to guide managers in its sustainability efforts. Developing the right scorecard took time, but it gave corporate managers an opening for sustainability discussions. Numbers also showed that the more information hotel and casino guests had about the things the company was doing to reduce energy consumption, recycle waste and rebuild the local community, the better they felt about the company — and the more inclined they were to visit again.