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How sure are you sure that you are directing your own behavior? Or are your actions a product of a context that has been carefully shaped by data, analysis, and code?
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With analytics as a hammer, so many questions can start to look like nails. It is difficult for organizations to know what to do. But the “should” in “What should we do?” goes beyond just selecting what to hammer on for maximum insight. Companies need to pay attention to the ways in which the possibilities that analytical abilities create involve responsibilities as well.
Secrets may be an unexpected casualty of increasing analytical prowess — just ask Volkswagen. Companies often have information they’d rather keep under wraps; sometimes it’s innocuous, like the timing of a new product launch, but other times it’s embarrassing details about unethical or even criminal behavior. But as data analytics becomes more broadly available, the chances of keeping secrets out of public view grow slimmer every day. Will this result in a change in how companies do business?
This year’s winning article is “Combining Purpose With Profits,” by Julian Birkinshaw, Nicolai J. Foss, and Siegwart Lindenberg. The authors examine a familiar question for managers: How can the tension between purpose and profits be best managed? The article explores the kinds of structures companies need to pursue “pro-social” goals. The Beckhard Prize is awarded annually to the authors of the most outstanding MIT SMR article on planned change and organizational development.
Corporate Social Responsibility “is fraught with contradictions, subject to political challenges and demands deep commitment,” argue José Carlos Marques and Henry Mintzberg. Responsible corporate behavior, they write, isn’t simply “doing well by doing good.” Instead, six changes need to be considered, within and beyond our private institutions. These changes include fostering ethical judgment within the enterprise, rethinking compensation and acknowledging the benefits of regulation.
Is your company focused on creating value — or on siphoning it off from others? Capturing value from other stakeholders by manipulating the competitive market process to the company’s advantage exposes a company to reputational or legal risks. It also can undermine corporate values. Value extraction is typically easier than developing a competitive advantage through ongoing value creation. Companies can get hooked on the practice, to the detriment of real value creation.
It’s an old idea: If you want to build a company that truly motivates its employees, it has to have a sense of purpose. A sense of purpose that transcends making money can motivate employees. But to sustain both a sense of purpose and a solid level of profitability over time, companies need to pay attention to several fundamental organizing principles, including the need for support systems that reinforce goals.
Many customers are simply not profitable. Letting them go is one option, but so is trying to train them out of expensive behavior. Options suggested by Jiwoong Shin and K. Sudhir, both of Yale School of Management, include reducing services to unprofitable customers and educating them to use less costly service channels. “We recognize the mix of concerns, both ethical and practical, that swirl around firing customers,” write Shin and Sudhir. “We advocate firing customers only as a last resort.”
Public perceptions of corporate irresponsibility are shaped in subjective, yet predictable, ways. “People like tidy stories with a clear villain,” write Nathan T. Washburn of Thunderbird School of Global Management and Donald Lange of the W.P. Carey School of Business at Arizona State University. “We lose interest when there are too many factors, extra complexity or too much ambiguity.” That means that powerful negative images can be hard to respond to.
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.
Everyone has experienced the frustration of having to repeat voice commands multiple times before finally asking to speak to a service representative. Many large companies have become so focused on optimizing their business processes and systems that they have become all too willing to forget about cultivating emotional connections with customers. But in order to detect and respond to shifting customer needs, companies need to show more, not less, empathy with their customers.
In their forthcoming book, Kord Davis and Doug Patterson argue that there isn’t yet an ethical framework or common vocabulary for having productive discussions around the ethical use of big data.
”As long as we cheat by only a little bit, we can benefit from cheating and still view ourselves as marvelous human beings,” writes behavioral economist Dan Ariely in his new book “The (Honest) Truth About Dishonesty: How We Lie To Everyone — Especially Ourselves.”
Trying to create reporting standards that integrate environmental, social and governance performance along with financial information is “fraught with conflict” and an “almost political adjudication process,” says Harvard Business School’s Robert Eccles. That’s why he loves it.
As SAP’s first-ever chief sustainability officer, Peter Graf was prepared to lay out the business case for sustainability to stakeholders and customers of every kind. But he had to make the case to SAP’s own board of directors first.
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