Strategy Forum / Panelist

Melissa Schilling

Leonard N. Stern School of Business

New York University

United States

Professor Schilling’s research focuses on innovation and strategy in high-tech industries, such as smartphones, video games, pharmaceuticals, biotechnology, electric vehicles, and renewable energies. She is particularly interested in platform dynamics, networks, creativity, and breakthrough innovation. Her textbook, Strategic Management of Technological Innovation (now in its seventh edition), is the No. 1 innovation strategy text in the world.

Voting History

Statement Response
BP’s decision to dial back plans for cutting oil and gas production shows that short-term financial performance pressure will make it difficult for many firms to transition their strategies toward more sustainable business models. Strongly agree “This is the classic problem of an incumbent firm not switching to a better (newer) technology because of sources of inertia, including sunk costs. In the short run, it is more profitable for firms such as BP to harvest the value of their existing investments in fossil fuels, even if they know that future disruption is inevitable. Large companies like BP have many stakeholders to serve, and it’s hard for them to transition to other, more sustainable technologies that in the short run are either more expensive or have less capacity. But in the long run, they switch or die.”
The use of generative AI will restore competition in search. Strongly agree “Absolutely! Whereas Google appeared to have a nearly unassailable position in search just a few months ago, now it is abundantly clear that generative AI is going to be a game changer for search, and we are likely to see a big battle unfold for dominance. Anyone who has experimented with ChatGPT likely instantly realizes how much better it could make search. Suddenly we will go from a list of websites to a crafted answer to our question. Personally, I will be happier when the crafted answer comes hyperlinked to legitimate sites, but there is no doubt that this now gives Bing and others an opportunity to knock Google from its throne.”
Artificial intelligence is reducing wasteful holiday giving (i.e., deadweight loss) by helping online retailers to better match people to presents. Strongly disagree “This statement piqued my curiosity, so I went to Amazon and typed “gifts for me” to see what the Amazon AI recommender would suggest. The suggestions were hilarious, and too lewd to describe in SMR, but at least I now have an amusing story to tell around the holiday dinner table.”
Charging for user verification will lead to increased user engagement and trust on Twitter. Agree “I do believe that having account IDs be verified for authenticity would increase trust and valuable engagement; however, I do not believe that should be in the form of a monthly subscription. The charge should be a one-time fee that offsets the cost of the service taking steps to verify that you are who you say you are on Twitter. Paying a subscription feels too much like paying for status, when what we want is something that any reputable social platform ought to want: authenticity and protection from spoofing. In fact, I’d make everyone on the platform pay a one-time charge — something like $39.95 — and provide a strong form of identification. I think advertisers would also value those eyeballs a lot more highly if they knew those eyeballs had been authenticated.”
Corporate investments in diversity, equity, and inclusion should be expected to generate a monetary return on investment. Disagree “Corporate investments in diversity, equity, and inclusion should be expected as table stakes for community membership. They will yield returns in goodwill, which may generate monetary rewards, but monetary rewards should not be the objective or criteria in making them. Like any long-term and qualitative benefits, analysis of monetary return will underestimate them and lead to underinvestment.”
Online education and specialized degrees will supplant the traditional two-year full-time MBA.  Strongly disagree “Online education and specialized degree programs will definitely take part of the market for the traditional MBA, but I don’t think they will ever take the entire market. “Online” and “specialized” need to be addressed separately. First, online will not completely displace in-person because many of the benefits of the MBA program (networking, recruiting, interesting social experiences) are vastly better in person than online. We are finding that students want some of their classes online, but not all of them. The bigger threat is specialized degree programs. In theory, there could be a specialized degree program to meet any student’s needs, but in practice, the generalist nature of the traditional MBA serves many people well — particularly those interested in being managers.”
Blockchain is more likely to be a sustaining innovation than a disruptive innovation in the financial sector. Agree “It will be a bit of both because blockchain enables us to change (a) how we maintain ledgers and (b) how we provide trust and accountability between parties to a transaction. The large incumbents in the financial sector have competencies in both these things, plus competency in allocating financial resources across investments. Being good at maintaining ledgers is a commodity, but the ability to ensure trust and accountability while competently investing the resources is both valuable and hard to imitate well. Blockchain may disrupt the former but not the latter. Thus, I think financial sector incumbents will adopt it, and those who are exceptional at financial asset allocation will find it a useful tool. Those that excel only at maintaining ledgers and providing trust will be disrupted.”
The field of strategic management has overlooked the role of corporate purpose in driving business performance. Agree “Many businesses are formed for purposes other than simply profit, and this sense of purpose both attracts committed employees and inspires great effort and innovation. Sometimes this great effort and innovation leads to great financial performance outcomes, and sometimes it leads to great nonfinancial performance outcomes, or both. It’s a shame that the field of strategy pays little attention to nonfinancial performance outcomes; we prefer to focus on financial outcomes for simplicity and ease of comparison across a wide range of firms, but it limits our perspective and insight.”
The COVID-19 pandemic has permanently changed how companies should think about business strategy. Strongly agree “There are two primary ways in which the COVID-19 pandemic should permanently change business strategy: (1) The role of standardized hours and colocation. The response to the pandemic has shown us that we can (and should) be much more flexible in thinking about how, where, and when we work together. This can open up a lot of opportunity for efficiencies, better environmental sustainability, and greater employee welfare. (2) Supply chain resilience. A lot of companies learned the hard way that their supply chains were not as robust as they should be. This should provoke companies to invest more thought and resources into ensuring multiple sources of supply and larger inventory buffers. At a minimum, it probably highlights the risks of Just-in-Time (JIT) inventory management.”
The COVID-19 pandemic will lead companies to relocate infrastructure and employees away from dense urban locations. Strongly agree “Many companies and their employees have experienced significant loss and disruption from COVID-19; some portion of those will make major changes to lessen the likelihood of that happening again.”
U.S. regulations have been rolled back in a number of areas, including emissions standards and clean water. Companies will decide to voluntarily adhere to rules that closely resemble the original standards. Strongly disagree “Some well-established firms that have already invested in the equipment and processes to adhere to the original standards will, but many will not. Regulations exist precisely because most firms don’t voluntarily self-regulate.”
In the next decade, we will see the first sustainably profitable private commercial activities in space. Strongly disagree “I disagree with the first part of the statement as there are already dozens of companies profitably and sustainably launching or operating satellites, which is a commercial operation in space.”
Introducing 5G networks 3-5 years ahead of other countries will give Chinese firms an advantage. Agree “Access to 5G infrastructure and customers on 5G connections will enable Chinese firms to develop a wide range of products and services that will be more advanced than those in countries without 5G. There will be second-mover advantages for the other countries, but it could still take a while to catch up.”
The increase in stock market volatility that began in 2018 will last for another three to five years. Neither agree nor disagree “Three to five years out is a long window to make predictions about the stock market. There are plenty of drivers of volatility we could consider, but it is still difficult to predict with any certainty.”
A hard Brexit will have a significant negative impact on many businesses, even if they do not have a U.K. or European presence. Strongly agree “A hard Brexit is going to be disruptive to a wide range of value chains, and those value chains extend well beyond the U.K. The economy is a tightly interdependent ecosystem. To consider the full impact, we have to look up and down the supply and distribution channels and consider who else they are connected to. Consumer spending power in the U.K. will also be affected.”
In the next five years, the blockchain will have a transformative effect on finance in emerging markets. Neither agree nor disagree “I think we are in an era of design substitution in financial technology. I think we will definitely see transformative changes, but it’s too soon to know whether those changes will be in the form of blockchain.”
Amazon’s new $15 per hour minimum wage will force other companies to follow suit. Strongly disagree “First, Amazon is not the largest employer in any state (Walmart, by contrast, is the largest employer in 22 states). Second, Amazon’s employment is geographically consolidated in each market, which means it doesn’t really compete for employees against more decentralized employers like Walmart, other retail, fast food chains, etc.”
Restrictions on skilled immigration will cause US firms to to shift more operations overseas. Agree “It will definitely increase labor costs and create skilled labor scarcity in some industries. For some firms, the efficient option will be to create (or expand) operations outside of the U.S.”
Uber has to develop self-driving cars in the next 10 years in order to remain viable. Disagree “(a) Technologies that require multiple stakeholders to cooperate (e.g., manufacturers, regulators, insurers, customers) can take a long time to diffuse, and (b) Uber doesn’t have to do the development.”
A trade war will be more disruptive to business than to consumers. Strongly agree “Firms often face switching costs to change suppliers (e.g., specialized components, contracting costs, etc.) Consumers usually have multiple alternatives and lower switching costs.”