Bryant Collegiate Entrepreneurs Organization (CEO) Video

I'm very proud to serve as the CEO club adviser here on campus.   In this video, the club makes its case for National CEO chapter of the year in advance of the national conference in Orlando, Florida later this month.

Amazon Opens Brick-and-Mortar Store

The Wall Street Journal reports today that Amazon will open its first brick-and-mortar store in Manhattan.  Here's the description of the first site:

Amazon’s space at 7 West 34th St., across from the Empire State Building in Midtown, would function as a mini warehouse, with limited inventory for same-day delivery within New York, product returns and exchanges, and pickups of online orders. The Manhattan location is meant primarily to be a place for customers to pick up orders they’ve made online, but will also serve as a distribution center for couriers and likely one day will feature Amazon devices like Kindle e-readers, Fire smartphones and Fire TV set-top boxes, according to people familiar with the company’s thinking.

What do we make of this move?  As an experiment, it may serve a very useful purpose.  Innovative companies test ideas and conduct well-designed experiments frequently.  They recognize that such experiments may fail, in the sense that they do not achieve desired business results.  However, they view them as successful if tons of learning emerges from these tests.  Could this site in Manhattan drive a great deal of learning and innovation at Amazon?  Definitely.   However, the logic of a major brick-and-mortar expansion at Amazon escapes me.  Leasing incredibly expensive space in the middle of Manhattan to serve as a place for customers to pick up online orders does not seem to make economic sense.   If the store is meant to be a flagship, focused on providing a fun and engaging retail experience for showcasing the firm's digital products, then one might be able to make a case for it.  Of course, a "flagship" strategy would entail a very limited number of brick-and-mortar locations. Does Amazon need such flagship locations to build the brand and sell more digital devices?  It does not seem so; they already have a strong brand and have achieved great success with the Kindle.   Is the brick-and-mortar location all about same-day delivery?  Well, one could achieve that without leasing high-priced retail space on 34th Street in Manhattan.  It will be interesting to see how this experiment evolves, and to understand precisely what Amazon's aims are with this brick-and-mortar strategy.   

Tim Cook: Intuition's Role in Decision-Making Processes

The Dangers of Multitasking

Travis Bradberry, author of the bestselling book Emotional Intelligence 2.0, has a great post over at the Forbes website about multitasking.  Bradberry reviews the research on multitasking and concludes that it can very detrimental.   He notes that Stanford's Clifford Nass, Eyal Ophir, and Anthony Wagner conducted research showing that, "Multitasking is less productive than doing a single thing at a time."  Moreover, the notion that some people are simply great at multitasking appears to be false.  Bradberry explains, "They found that heavy multitaskers—those who multitask a lot and feel that it boosts their performance—were actually worse at multitasking than those who like to do a single thing at a time."  The article also cites recent research showing differences in the brain for those people who engage in a great deal of multitasking.   Bradberry suggests that those changes in the brain may even reduce an individual's emotional intelligence.   That last point is purely speculation, but the overall point is clear:  multitasking may be having an adverse effect on employee performance in many organizations. 

Breaking Up Isn't So Hard to Do

HP announced yesterday that it would be splitting into two companies.  One will focus on personal computers and printers, while the other will focus on computer hardware, software, and services.  Interestingly, this breakup represents the second split for HP in its history.  In 1999, HP spun off its measurement instruments business as Agilent Technologies.  Could the deal increase shareholder value?  Perhaps, as it has become increasingly difficult to argue that the synergies between the two sides of HP are significant enough to outweigh the costs associated with managing and integrating such a large, bureaucratic, and highly complex organization.  Of course, the deal also opens up the possibility that one or both of the new entities could be takeover targets.  Here in Massachusetts, we have been reading rumors about EMC exploring talks with HP about a merger.  The breakup at HP probably makes such a deal more likely.   Of course, it's not entirely clear why or how a merger would be beneficial.  While some synergies might exist, again the key question is whether the benefits outweigh the costs associated with integrating such large, complex organizations. 

Beyond this particular deal, the Wall Street Journal reports that, "Corporations around the world have sold or spun off $1.6 trillion worth of subsidiaries and business lines so far this year, just behind 2007’s record-setting pace, according to data provider Dealogic."   We have seen some high-profile moves by diversified firms to become more focused.    GE sold its appliance business.   Gannett announced  a split into two entities, one focused on newspaper publishing and the other on television broadcasting.  Other firms, such as Pepsi, face pressure from activist investors to break up.  What's behind these moves?  The Wall Street Journal cites research showing that U.S. conglomerates tend to under-perform more focused firms:  "Shares of North American conglomerates underperformed their more focused rivals by 11.4% on average from 2000 to 2010, according to a study from Anil Shivdasani, a finance professor at the University of North Carolina Kenan-Flagler Business School... Professor Shivdasani said Monday the data remained similar through the end of last year."

This research has been well known for many years though. Why the pickup in breakups lately?  I think several reasons may exist.  First, economic growth has been very low in this "recovery."  As a result, many firms have businesses in mature markets that are struggling to find ways to grow revenue.   Without sales growth to help drive share prices upward, they are looking for other ways to create value for investors.  Second, a new class of activist investors has become very vocal and has challenged the diversification strategies of many of these large firms.   Third, more investors have begun to question the economies of scale and scope rationale behind these large firms.  They are wondering if, in fact, these organizations are experiencing significant diseconomies of scale and scope. Finally, investors have become quite concerned that CEOs are cross-subsidizing extensively, milking cash cows to fund other initiatives.  Such practices used to be quite commonplace and accepted, but increasingly, they are being challenged.  These investors would rather see the CEOs return cash to shareholders from mature units, and let the newer, higher growth entities seek capital directly from the markets. 

Maximize vs. Satisfice: How Do You Decide?

What type of decision-maker are you? Do you examine all the options exhaustively, hoping to find the absolutely best alternative?  Do you carefully compare the pros and cons of a wide range of options before making a decision?  Or, do you search until you find an option that is satisfactory, and then choose that one even if it is not perfect or completely optimal?    Nobel winner Herbert Simon described these two patterns of decision-making decades ago.  He called them "maximizing" vs. "satisficing" behaviors.  

In today's Wall Street Journal, Elizabeth Bernstein examines these two strategies.  She describes the research of Swarthmore Professor Barry Schwartz.  Here's an excerpt:

In a study published in 2006 in the journal Psychological Science, Dr. Schwartz and colleagues followed 548 job-seeking college seniors at 11 schools from October through their graduation in June.  Across the board, they found that the maximizers landed better jobs. Their starting salaries were, on average, 20% higher than those of the satisficers, but they felt worse about their jobs.

Bernstein describes how maximizers often find themselves less content than satisficers.  Why might that be?  The exhaustive search and comparison of many alternatives often opens the door for feelings of regret once a decision has been made.  Did I make the right call?  Should I have chosen another option?  Did I consider the right variables and attributes?   Satisficers may not experience those feelings to the same extent.  Does this mean that we should not examine options carefully? I don't think so, but it does mean that we have to watch out for feelings of discontent in the immediate aftermath of a tough decision.  Moreover, we have to be cognizant of the fact that we might be on a team with people how tend to have the opposite decision-making pattern.  

Leaders, Power, and Perspective-Taking

Adam Galinksy, Joe Magee, Diana Rus, Naomi Rothman, and Andrew Todd have published a new paper titled “Acceleration With Steering: The Synergistic Benefits of Combining Power and Perspective-Taking.”   Leaders need a certain amount of power to get things done.  However, the research shows that leaders can be more effective if they have both power AND what they call perspective-taking.  In other words, can leaders put themselves in others' shoes so that they can see how those individuals view particular issues and situations?  

Of course, as many leaders accumulate power, sometimes it's difficult for them see the world as others do.  You "forget" what it was like when you were in their position.  You become isolated from the day-to-day work.   You interact most frequently with other senior executives, who often see the world much as you do.  Some leaders simply hire folks who think just like they do. 

Generate Multiple Frames to Make Better Decisions

How you frame a situation helps to determine the types of options you consider and the ultimate decision that you make.   By frame, I mean the way that you characterize a situation.  We face a complex and messy reality.  We simplify those situations by adopting mental models and frameworks.  Those frames can be powerful in helping us make sense of that messy reality.  However, how you frame a situation can constrict the range of alternative solutions that you generate and analyze.  To broaden the range of alternatives generated, managers should seek to frame situations in multiple ways.  For example, suppose that a firm has experienced high employee turnover.   A leader may frame the situation as an incentive problem.  However, that framing would focus his or her team on potential solutions such as changes in compensation.   A better approach would be for the leader to offer multiple frames of the situation.  He or she might ask: We might say that we have a turnover problem, or perhaps we might cast the issue as a talent management problem.  In other words, we don't simply have a talent retention issue... perhaps we have a recruitment challenge, a development problem, etc.   Framing the problem in a broader way might lead to a very different type of discussion.  If you are in a situation where you feel that the range of options being considered is particularly narrow, consider reframing the problem. 

Think Your Idea is Great? Go for a Walk!

University of Texas Professor Art Markman has a great article on idea generation over at Fast Company's website this week.   Markman describes the "high" that people often feel at the end of an idea generation session.   He argues that we should be careful about that positive emotional rush that we feel in that moment.  Markman explains:

Unfortunately, some amount of the strong positive feeling you are having in that moment is a result of the idea generation process itself. Completing a goal makes you feel good, and coming up with a potential solution to a hard problem makes you feel good. In addition, positive social interactions make you feel good, and group idea generation fits that bill. Finally, research demonstrates that fast thinking makes you feel good. When the ideas are flying around the room, there is a lot of fast thinking going on.So, the entire setting of idea generation creates lots of positive feeling. Then, everyone looks around the room for the source of that feeling. And they settle on the idea you just created as a team. In that moment, that idea is not just good, it is the best idea ever. 

 How do you avoid a rush to judgment?  How can you protect yourself against falling head over heels for your idea a bit too quickly?  Markman argues that it's a good idea to step back for a bit.  Go for a walk, he says.  Take some time to go do something else, and then return to your idea.  See how it looks after you have slept on it.  Don't let yourself get caught up in the emotions of the idea generation process itself.  That seems like terrific advice to me!

Trustworthy Leaders

What do trustworthy leaders do? How do they build trust?  Stanford's Roderick Kramer has been studying this topic for many years.  Here are a few of his key findings, described in more depth in this article from the Stanford Business School research website:

1. They project confidence, competence, and benevolence.  In other words, they have the experience and the capabilities required to do the job.  Moreover, they are trying to do what's best for the firm as a whole rather than pursuing their own self-interest at the expense of others.


2.  They define roles and responsibilities clearly.   Kramer says, "“When people know what they’re supposed to do, and they know what other people are supposed to do, then they trust that system of roles to work.”

3.  They share the credit and take the blame.   Taking responsibility proves to be very important.  Trustworthy leaders do not throw others under the bus.  They also talk in terms of "we" when discussing major accomplishments, rather than "I did this" or "I achieved that."

4.  They tell it straight, particularly when a crisis occurs. They do not try to cover things up.  Instead, they acknowledge mistakes, and they commit to preventing problems from happening again.  

The Downside of Strategy Agility

Words and concepts such as "strategic agility" or "adaptive strategy" have become all the rage in recent years.  People argue that strategies must be dynamic given the turbulent world in which firms must compete.  A recent article on Kellogg Insights offers a word of caution for those focused on adaptation and dynamism in their competitive strategy.  The article focuses on the research of Kellogg Professor Tom Hubbard, Paul Leinwand - a senior partner with Strategy&, and Cesare Mainardi - CEO of Strategy&. 

Mainardi explains, "“Everybody’s talking about dynamic strategy, agility, and chasing opportunity.  That’s all well and good. But if you aren’t operating from a base of who you are, you will likely not realize what the real risks you’re facing are because you aren’t focused on your core strengths, and therefore you will be less clear-minded about how best to respond.”

Hubbard argues that many company growth strategies follow the "let a thousand flowers bloom" philosophy.  In other words, plant a bunch of seeds, and hope that few of them flourish.  Hubbard explains that this type of growth initiative can lead to a highly incoherent strategy.  Firms need to understand who they are, as well as what their distinctive, scalable capabilities are.

Finally, Hubbard emphasizes that profits alone do not justify the existence of a business within a corporate portfolio.  You have to ask the question:  Does it fit given the capabilities that you have?  Can you sell the business at a higher value than the present value of future profits that you can generate from that unit?  

I could not agree more with this article's main message.   Too many firms, starved for growth, simply plant a wide variety of seeds without focusing on coherence.  They focus on the size of the market opportunity rather than thinking about fit.  They see profits, and they use those to justify having a new venture in the portfolio, rather than thinking about whether that unit could generate higher returns as part of some other firm's portfolio.   

Grade Inflation

Economist Justin Wolfers tweeted out this chart yesterday regarding grade inflation at Ivy League colleges.  What a wonderful world in which everyone is exceptional!

Résumé Mistakes

What are some the classic mistakes that job hunters make on résumés?  Laszlo Bock, SVP of People Operations at Google, has posted a good article on LinkedIn with the top five common mistakes that he has seen.  It's a good list.  Here are Bock's top five, with some commentary from me:

1. Typos

I would expand his point to include grammatical errors, particularly on the cover letters that accompany résumés.  Poor writing plagues many cover letters.   Examples of writing deficiencies include:  overly complex sentences, improper use of commas and conjunctions, far too much use of the passive voice, and poor paragraph construction.  The list could go on! 

2.  Length

As Bock says, you should be aiming to land a first round interview, not to tell your life story.  You can expand the story during the interviews.  Focus on getting your foot in the door.

3.  Formatting

Bock recommends saving the document as a PDF since other formats can become troublesome as they are passed electronically across various platforms and devices.  Good advice!  He also argues that it should be a clean, easy-to-read document.  I would emphasize the need for plenty of white space.    You do not to jam every inch of the page with words.

4.  Confidential Information

Bock uses the example of a consultant who clearly reveals the names of clients.   Many consulting firms have confidentiality policies.  If an applicant breaks their current or past employer's confidentiality policy, that's a major problem.  

5.  Lying

Lying on résumés appears to occur quite often.  We have just seen a senior executive at Wal-Mart who lost his job due to a lie about his educational background.  We've seen CEOs lose their jobs over these types of lies.  I think the harder-to-detect lies are even more common, specifically exaggerating job responsibilities and accomplishments.  I also think that résumés sometimes fail to give proper credit to those who helped an individual achieve certain goals at a prior employer.  Was it a team effort?  Does the résumé reflect the fact that a team achieved the goal, not just that individual?  Not giving others proper credit seems to be a major issue in the job application process. 

When is grit beneficial, and when is it not?

Angela Duckworth has been of the leading researchers on the topic of "grit" - something she defines as "perseverance and passion for long-term goals.”  She has found that grit can be a powerful predictor of academic achievement.   In short, she argues that academic achievement is not just a matter of raw intellect; grit matters a great deal. 

Now Magdalena Grohman, a faculty member at the University of Texas at Dallas, has questioned whether grit may be as powerful a predictor of creative achievement.   According to Grohman, "These are 'no results' that we are actually excited about. Creative achievement and grit, intellectual creativity and grit, everyday creativity and grit: no effects whatsoever."   She found that "openness to new experiences" did help creativity, but grit apparently did not.  Similarly, Yale's Zorana Pringle conducted a study in which she asked students to evaluate their peers in terms of the generation of creative and original ideas.  Grit scores did not correlate with high peer evaluations on creativity.  Grohman speculates that grit may be very useful in structured environments and tasks, but perhaps is less useful to individuals when they are embarking on ill-structured, creative endeavors.  More research certainly will be done in this area to explore this rather interesting set of new findings.

Experts Buy Private Label

Bart J. Bronnenberg, Jean-Pierre Dubé, Matthew Gentzkow, and Jesse M. Shapiro recently published a working paper titled, "Do Pharmacists Buy Bayer?  Informed Shoppers and the Brand Premium?"  Here's an excerpt from the abstract of their paper:

In a detailed case study of headache remedies we find that more informed consumers are less likely to pay extra to buy national brands, with pharmacists choosing them over store brands only 9 percent of the time, compared to 26 percent of the time for the average consumer. In a similar case study of pantry staples such as salt and sugar, we show that chefs devote 12 percentage points less of their purchases to national brands than demographically similar non-chefs.

Private label products certainly have taken a much larger share in many categories over the past decade.  Nevertheless, the scholars still found this "brand premium" effect, particularly for non-experts.  As private label products continue to rise in quality and availability though, we should expect more people to act like the informed consumers in this study.  Consider, for instance, the success of firms such as Trader Joe's and Aldi, both able to persuade consumers that private label products can deliver solid quality.  

Brainwriting: How to Run a Better Idea Generation Session

Check out Northwestern Professor Leigh Thompson on the brainwriting technique:


Kellogg - Animation - Final for Site

Five Classic Competitive Strategy Mistakes

Based on my experience, here are five business strategy mistakes that organizations often make:

1.  Focusing on market share extensively, while not thinking enough about how to drive product category growth - as a result, they miss chances to grow the pie for all

 2.  Paying too little attention to a maturing core business while focusing effort on growth into new markets, resulting in further erosion of the core

3.  Overestimating economies of scale and scope - and forgetting that diseconomies of scale and scope can become substantial

4.  Benchmarking rivals and then imitating one particular activity or capability, while not realizing that the rival's competitive advantage comes from how that activity fits tightly into a broader, integrated system of activities

5.  Resorting prematurely to price as a competitive weapon - not being creative enough to think about other ways to attract customers, deepen their relationship with existing customers, and grow an entire category

Does Apple Spend Enough on R&D?

Matt Kramer published an article in USA Today this week titled, "7 Companies Outspend Apple on Innovation."  Kramer noted that Apple ranked behind seven other prominent technology companies in terms of R&D spending.  Moreover, Apple ranked 95th  among the S&P 500 in terms of R&D as a percentage of sales.  He found that quite surprising.  Kramer ends the article by saying, "But with the iPad getting stale, and competition in the smartphone arena kicking up, investors might wonder if Apple might need to pick up its R&D game."  The article caught my eye because a great deal of academic research shows that R&D spending is not strongly correlated with successful new product development.  It's not just how much you spend; it's how you spend it!   Kramer's article is thought-provoking, but it would have made for a much stronger piece if he included the research findings about the connection between R&D spending and firm performance.  

Fast Company article: Embracing Failure

Rachel Gillett has written an article for Fast Company titled, "What The Hype Behind Embracing Failure Is Really All About."  She has included several of my comments. The article examines the popularity of the concept of "tolerating failure" - is it overdone? Is it a fad?  What's the true meaning of the concept of embracing failure?  Here is the link to the article. 

Are Smaller Boards More Effective?

The Wall Street Journal reported last week on a new study conducted by GMI Ratings for the newspaper.  The study examined boards of directions, and it took a look at the link between board size and performance.  Here is a summary of the findings:

Among companies with a market capitalization of at least $10 billion, typically those with the smallest boards produced substantially better shareholder returns over a three-year period between the spring of 2011 and 2014 when compared with companies with the biggest boards, the GMI analysis of nearly 400 companies showed.  Companies with small boards outperformed their peers by 8.5 percentage points, while those with large boards underperformed peers by 10.85 percentage points. The smallest board averaged 9.5 members, compared with 14 for the biggest. The average size was 11.2 directors for all companies studied, GMI said.

What are the advantages of smaller boards? Why might they perform more effectively? Here are a few potential reasons cited in the Wall Street Journal article:

• Decisions can be made more quickly with a smaller team. It can be more nimble.
• Each person is more likely to be fully committed, prepared, and engaged. There's less likelihood of free riders on a small board.
• People are more likely to be candid in a more intimate atmosphere than on a large board.
• A small board can dig into an issue in much more depth. On a large board, you may have a tendency to deal superficially with issues rather than really "getting your hands dirty."

I would add one other reason. We already know that teams tend to focus their discussion on information commonly held by all participants, and they don't spend enough time on information held privately by one or a few members. That challenge becomes even more pronounced as a team becomes larger. Therefore, a smaller board benefits from a higher likelihood that information and expertise from all members will be shared and discussed.

Stihl: Making Tradeoffs

Great firms make tradeoffs; they choose what not to do.   One key tradeoff that firms make is about the channels through which they decide to sell their products.  Premium brands often make an explicit choice to restrict distribution of their products, so as to maintain service quality and preserve the reputation of their brand.  As an example, consider Stihl.  They are quite blunt about their strategic choice to only sell their products through licensed dealers and not through big box retailers such as Home Depot, Lowe's, or Wal-Mart.  Here's an except from their Canadian website:

We can give you over 1,000 reasons - our legion of independent STIHL Dealers nationwide. We count on them every day and so can you. To give you product demonstrations, straight talk and genuine advice about STIHL products. To offer fast and expert on-site service. And to stand behind every product we carry, always fully assembled. You see, we won't sell you a STIHL in a box, not even a big one.

In addition, here's an advertisement that they ran several years ago.  

First Movers Don't Always Have the Advantage

Many entrepreneurs fall into the trap of believing that being the first mover always conveys a formidable advantage.  The first mover myth trips up many business people. Who was the first player in social media?  Not Facebook.  It was Friendster.  Who was the first mover in the browser market?  Netscape.  Who was first in search?  Not Google.   According to Kellogg Insights, “One study showed, in fact, that pioneers were more successful than late movers in just 15 of 50 product categories.”  

What are the key sources of first mover advantage?  If substantial economies of scale, network effects, and a powerful learning curve exist, then first movers have an advantage.  However, there's downside to being the first mover.   Being the pioneer in a new market can be expensive and challenging.  You make all the mistakes that a pioneer is likely to make.  Others watch and learn from your errors, and then they leapfrog past you.  At the same time, entrepreneurs who move first can then get stuck in the sunk cost trap.  They can become resistant to adapting their strategy that enabled them to gain some initial traction.  Fast followers then pass them by.   Entrepreneurs need to look carefully at a particular market and understand that simply being the first mover may not convey substantial advantage and protect them from competitive threats.

The Everything Store: Interesting Read

Several weeks ago I finished reading Brad Stone's book, The Everything Store: Jeff Bezos and the Age of Amazon.   The book generated some controversy when MacKenzie Bezos (Jeff's wife) posted a scathing review on the Amazon site.  She claims that the book contains a number of factual inaccuracies.  Her real concern, though, is that the book does not always paint a very flattering picture of Jeff Bezos.  Nevertheless, I found the book to be interesting, and I read it with the understanding that it may not be a completely accurate picture (as is true of many of these types of books).  Here's an interview with the author on CBS: 

A Few Nuggets of Advice for College Students at the Start of the New Year

As students arrive on college campuses throughout the country this time of year, I would like to share a few words of advice.  I hope that students, particularly first-year students, find these comments useful.

1. Ideas don't sink in through the process of re-reading the book and your notes.  You need to actively work with the material.  Writing is much more useful than reading in this regard.  When studying, try writing a synthesis of your notes.  Boil the extensive notes down to a 5-10 page outline of the course, and then to a 1 page outline.   This process will enable you to synthesize and integrate what you have learned.  If applicable, do practice problems as a means of studying.  Practice beats reading notes any day of the week. 
2. Go to class!  It's so easy to skip class when you are tired.  However, going to class is more than half the battle. You will find it so much easier to excel if you aren't trying to make up for absences. 
3. Find a mentor.  I'm not talking about going to office hours just to try to improve your grade.  I'm talking about a true mentor, someone can offer you guidance about your studies as well as your career.  Use that person as a sounding board.   In your early days at college, you should begin trying to identify who that mentor might be.
4. Explore topics beyond your area of specialization.  Take courses in multiple domains, and broaden your knowledge.  Many creative ideas come from the process of reaching outside one's area of expertise.   Thus, building a broad knowledge base is important.  Moreover, you will be much more interesting at dinner if you can have a conversation that spans many topics.  You'll find that ability to be an important life skill!
5. Find opportunities to develop as a leader.  Those opportunities typically come outside the classroom. The primary way to become a better leader is to practice.  Thus, seeking out opportunities to lead groups, student organizations, and the like is crucial. 

Why We Don't Seek Advice, but We Should!

When you face a difficult situation at work, do you seek advice from others?   Do you consult with them before making a decision?   Alison Brooks, Francesca Gino, and Maurice Schweitzer have written a new working paper about the process of seeking advice from others.  These scholars found that many individuals do not seek advice from others, because they do not want to look incompetent or incapable.  They fear that others will perceive advice-seeking as a sign of weakness.  Brooks, Gino, and Schweitzer then asked:  What do others think of you when you seek advice from others?  How do you they actually perceive you?  They found that people tend to view advice-seekers as more competent than those who do not garner input and counsel from others.  The scholars refined these findings further by examining the situations in which people view advice-seekers most favorably.  They found that we have a more favorable view of advice-seekers when the situation is difficult (as opposed to simple), and when people consult with experts (rather than non-experts).  Perhaps most interestingly, an individual has a more favorable view of an advice-seeker when that person came to him or her for that counsel, rather than going to others.  Aha!  So, what really impresses us is when others somehow think we are important/knowledgeable/wise.  That should not surprise us at all!

Social Media and the Reluctance to Speak Up

The New York Times reported this week that Pew Research and scholars at Rutgers University have published a study on the so-called "spiral of silence."  That phrase refers to the tendency people have to not discuss their political views in public because they fear a clash of opinion with close friends, work colleagues, etc.   Keith Hampton and his co-authors examined whether the "spiral of silence" applied in the world of social media.  In other words, does social media help stimulate debates about public policy issues?   They examined the behavior of 1,801 adults with regard to one major news story: National Security Agency contractor Edward Snowden's disclosures about surveillance programs in the United States.   The scholars discovered a discussion about this controversial public policy issue was less likely to occur via social media than in person.  Moreover, the individuals who were reluctant to discuss the issue in-person with others did not view social media sites such as Twitter and Facebook as better places to share their views. They also were reluctant to speak up via social media.  The people who do share their views tended to be those who have a strong belief that their friends and followers on social media are like-minded on these public policy issues.  Of course, the study only examined one public policy issue, but the findings should cause us to think about social media's effect on public debate.  To the extent that discussion occurs via these platforms, is it often simply a dialogue among like-minded people?  

Do We Favor Quick Decisive Leaders and Penalize Slower, Deliberative Thinkers?

Stanford Professor Zakary Tormala, doctoral student Daniella Kupor, HBS Professor Michael Norton, and Kellogg Professor Derek Rucker have conducted some new research about how we react to the decision processes of others.  They asked the question:  Do we favor those who we perceive as quick decisive leaders and form less favorable impressions of those who engage in a slow, deliberative thought process?  Their research suggests that the answer is not black and white. Our impressions depend upon the situation.  If someone faces a very challenging decision, then we look for and are impressed by a thoughtful, comprehensive decision-making process.  On the other hand, if someone faces a very easy choice, then we think less favorably of that person if he or she labors over the decision.  In short, we want to see people match the comprehensiveness of the decision process with the complexity of the situation.   The Stanford story about this research summarizes the main conclusion as follows: "In general, people seem to be less drawn to and less open to being influenced by individuals who overthink small decisions or 'underthink' big ones." 

Should Burger King Acquire Tim Horton's? Does This Deal Make Sense?

The Wall Street Journal reports that Burger King is pondering an acquisition of Canadian coffee/donut chain Tim Horton's.   The newspaper reports that the firms may be pursuing "a so-called tax inversion and move the hamburger seller's base to Canada."   Recently, tax inversions have been on the rise, as firms establish headquarters overseas in an attempt to lower their overall tax burden.   The newspaper reports, "A move by Burger King to seal one is sure to intensify criticism of them, since it is such a well-known and distinctly American brand."  I found that sentence particularly funny, given that Burger King has been owned by a foreign company in the past!  Diageo, the UK-based producer of alcoholic beverages such as Guinness, Smirnoff, and Johnnie Walker, owned Burger King until 2002. 

Putting aside the political debate about tax inversions, let's take a look at whether this deal makes strategic sense.   Are there sufficient synergies to justify a deal between Burger King and Tim Horton's?  I'm skeptical.  Why?  For years, Wendy's - a primary competitor to Burger King - owned the Tim Horton's chain.  Under investor pressure, they ultimately divested the coffee/donut chain.  Why?  Investors argued that the sum of the parts exceeded the whole.  In other words, Tim Horton's was more valuable on its own than as a part of Wendy's.  Given that history, what makes us think that Tim Horton's will now be more valuable as part of Burger King than it is on its own?   I believe that management at Burger King will have to make this case to persuade investors and other analysts/observers that this deal makes sense. 

Do Good, Be Happy... with a Caveat

In this article, Stanford University reports on a stream of scholarly work that shows how acts of kindness toward others enhances personal happiness.  Stanford Professor Jennifer Aaker calls it the "helper's high."  Her recent research, with Melanie Rudd and Michael Norton, examines how to optimize that "helper's high."  Their work shows that setting concrete philanthropic goals works much more effectively than establishing abstract objectives. Aaker explains, "This insight is important because nearly all of us are trying to make other people in our lives happy. Parents often say they just want their kids to be happy. Equally common is a desire to make our partners, family members, and friends happy, but few of us know exactly how to bring happiness to the people in our lives. Our new research sheds light on what we can do.”

The researchers examined this issue of concrete vs. abstract goals with a simple experiment.  They gave experimental subjects $5 Amazon gift cards in exchange for the performance of an act of kindness.  One-half of the subjects were asked to make someone else happy; the others were asked to try to make someone smile.  The former represents an abstract goal; the latter serves as a more concrete objective.  Those asked to make someone else smile indicated they experienced more personal happiness than those instructed to make someone happy. It did not matter what method any of the subjects used to try to make others happy or to make others smile. 

Speaking of how performing acts of kindness can make you happier, check out this story about "paying it forward" at Starbucks:

Adaptation in Global Strategy

We've been discussing different types of globalization strategy with my students here in France.  We read Pankaj Ghemawat's classic article in which he discusses three different types of global strategy: adaptation, aggregation, and arbitrage.  Adaptation is when firms modify their strategies and products/services as they move to different markets around the world.   Aggregation is when firms standardize their products/services, striving to exploit global economies of scale.  Arbitrage is when firms try to take advantage of factor market differences across nations, so that they can achieve cost efficiencies (e.g., outsourcing to low cost labor nations).   Ghemawat argues that firms must choose which of these strategies will be their priority.  He also argues that it's difficult to pursue all three strategies with equal emphasis, as these distinct strategies require quite different organizational structures and processes.  

We compared two interesting case studies this week in class.  On Wednesday we examined L'Oreal, a French company that has expanded successfully across the world.  L'Oreal has pursued an aggregation strategy, selling a product developed in one nation across many markets around the world... while marketing it often quite explicitly with the home nation branding and positioning. For instance, L'Oreal acquired the Maybelline brand and sold it through an "American beauty" positioning in markets around the world.  Likewise, the sold the L'Oreal brand with a positioning of "Parisian or French beauty" across the world.  By contrast, Thursday's case focused on a firm that has emphasized adaptation in its global strategy.  We analyzed how Canadian-based hotel firm Four Seasons came to Paris.  They had to adapt in order to succeed in the French market. 

I see two lessons from this interesting comparison between L'Oreal and Four Seasons.  First, Four Seasons did indeed adapt, yet they were quite explicit about the core practices and values that would remain constant.  That enabled them to protect their brand and their organizational culture.  Before firms embark on global adaptation strategies, I believe that it's quite useful to outline explicitly what the "non-negotiables" are... i.e., what are the core standards and values that will be applied globally.  That helps protect the brand, and it minimizes conflict between the home office and the local country managers, since everyone understands what the core beliefs are.  

Second, I think the L'Oreal case illustrates that certain products are more conducive to an aggregation strategy.  In other words, some products don't need to be adapted substantially when sold around the world.  In fact, global consumers don't want the product to be adapted.   For instance, consumers around the world want to buy French luxury goods, Heineken beer, etc.    The country of origin conveys a premium image that enables the firm to sell their goods globally at a premium price.  Some other goods and services simply are not conducive to such global expansion.  They require adaptation; firms have no choice.  Many food categories, for instance, fall into this category.  

Ice Bucket Challenge

My students and I have taken the Ice Bucket Challenge.   We are here in Aix-en-Provence, and we took the challenge right on the street amidst a number of perplexed folks on the street!   We are very proud to support the ALS Association and encourage others to donate as well.

Does Certain Music Make Us Feel Powerful and Act Differently as a Result?

Dennis Hsu, Li Huang, Loran Nordgren, Derek D. Rucker and Adam D. Galinskyhave conducted some interesting new research regarding the impact that music has on our behavior.  According to Kellogg Insights, the key research question that these scholars asked was: "Could listening to the right kind of music—even in the background—make us feel more powerful and in control?"  The scholars conducted several experimental studies to try to answer this question.  The researchers first had a set of subjects rate different songs with regard to how powerful, dominant, and determined they felt when listening to that particular music.  For instance, the famous Queen song, We Will Rock You, was rated very highly... it made most subjects feel powerful.   Then they conducted studies using the music that subjects had rated as either high-power or low-power songs. 

For instance, Professor Derek Rucker noted, “One thing we know from prior research is that people who feel powerful tend to make the first offer in negotiations. Essentially, power is a propensity to act, to take charge of the situation."   One of these experimental studies indeed showed that people listening to a "high-power playlist" indicated that they would prefer to go first in a debate more often than those who listened to a "low-power playlist."  

In sum, music - even in the background - does affect how we feel, and it may affect how we behave in crucial situations.   It can have a significant effect on our feelings of psychological empowerment.  So, what song do you want to play next time you have to enter a crucial meeting or negotiation at work?  

Do You Understand the Non-Economic Motives of Your Competitors?

Sun Tzu once wrote, "It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle."  Understanding your competitors is crucial to success in business.  Firms rightfully spend a great deal of time analyzing the competition.  In many cases, though, they assume that the competition is completely "rational" i.e. that the firm is purely pursuing profit maximization as its objective.  That's a mistake.   Organizations are not black boxes.  They are made up of people, and those people have a range of motives.  They are not simply motivated by profits.   You have to ask yourself:  Who is the chief executive?  Who are the owners of the firm?  Is a family involved?  How do these people find satisfaction?  What are their goals and aspirations?  In short, you have to probe so as to understand the full range of motivations that may be shaping their behavior.  In so doing, you can better understand how your competition is acting in the marketplace. 

I am reminded of the importance of understanding non-economic motives because my students and I spent the day studying the wine industry.  We discussed my case on Robert Mondavi and the Wine Industry this morning, and then we visited Chateau La Coste here in Provence this afternoon.  In the wine industry, many vineyard owners are clearly motivated by factors beyond profit maximization.  Think about the wealthy people with success in other fields who have entered the wine business (Francis Ford Coppola, Greg Norman, etc.) 

Chateau La Coste offered us a terrific tour; they were wonderful hosts.  The winery is an interesting example of varied motivations.  The winery is hundreds of years old, but a decade ago, it was acquired by an Irish property developer named Patrick McMillen, a friend of U2 lead singer Bono.  He's invested to build an amazing new wine production facility.  He's brought in designers and architects such as Frank Gehry, Tadao Ando, and Jean Nouvel to create an incredible new venue at the vineyard.  He's brought in an amazing art collection.  Is McMillen simply interested in profits?  Perhaps, but it sure seems that he has aspirations of creating something quite special in Provence, with an interest in something other than purely maximizing return on investment.  Other industries exhibit these types of dynamics as well, but wine certainly is a good example.  Wineries can be tough economic propositions, as it takes years to yield a return on your investment in land, vines, equipment, etc.  Yet, people do invest in vineyards and wineries for a variety of reasons.  Know thy enemy - that's the key lesson.  However, knowing your enemy means not just treating that organization as a black box interested in optimizing its bottom line.  Think about the humans leading the enterprise and seek to understand their goals and aspirations. 

The Value of Internships

Students in college often fret over landing that attractive internship over the summer.  Should they worry so much about internships?  Or, should college students be content with a decent job as a waiter or waitress over the summer?   Business Week's data from its undergraduate business school rankings survey indicates that they should be working hard to land that internship.  The magazine reports that, "Overall, 75 percent of students said they had an internship. Of those, 61 percent had a job offer in hand by the winter of their senior year, compared with 28 percent of students without an internship."  It appears that internships matter a great deal in certain industries, such as banking and consulting.   Overall, though, they are valuable regardless of what field you choose.  I know that many firms recruiting here at Bryant University do much of their hiring through their internship program.  Their goal, in fact, is to fill most of their openings through hiring of summer interns who performed very well.   They prefer that mode of hiring to the usual process of interviewing seniors who are approaching commencement. 

The Outcome Bias

Andrew O’Connell's brief blog post on HBR this week highlights research by three BYU professors - Lars Lefgren, Brennan Platt, and Joseph Price.   These three economists have written about the outcome bias, an important cognitive bias that impairs our ability to make good decisions.   According to Jonathan Baron and John Hershey, the outcome bias refers to the tendency of people to "take outcomes into account in a way that is irrelevant to the true quality of the decision."   In other words, you should not judge the quality of a decision simply based on an evaluation of the result, yet people do.  You should examine whether a choice was the best possible course of action given the information available at the time, and given the uncertainty in the situation.  Yet, we don't look back at how the decision was made in many cases.  We simply judge the result.  

Professors Lefgren, Platt, and Price explore the outcome bias by looking at the decision-making processes of professional basketball coaches.  These scholars report, "We find they [basketball coaches] are more likely to revise their strategy after a loss than a win—even for narrow losses, which are uninformative about team effectiveness. This increased strategy revision following a loss occurs even when a loss was expected and even when failure is due to factors beyond the team's control."   

Of course, the outcome bias works the other way as well.  How many times do we conclude that we made a good decision simply because a positive result was achieved?   Perhaps the positive outcome occurred despite the fact that made a poor choice.  Perhaps luck played a role.  We tend to downplay those possibilities, and we attribute the good result to our wise choice.  As a Navy Seal once told me, "The minute we forget that luck may have played a role in our most recent success is the minute when we enhance our risk of dying on the next mission." 

Do You Have Any Questions For Me? Tackling This Key Job Interview Question

You are attending a job interview, and you are asked: "Do you have any questions for me?"  What should you say?   You really should have four objectives in mind when formulating your questions.  First, you should pose inquiries that demonstrate you have done your homework about the company.  Show that you have investigated the company's history, strategy, products, culture, and performance.  Doing your homework means going beyond Google searches and the 10K report.   It means visiting the company's stores, talking to a current employee, and/or testing out a firm's products or services.   Second, you should avoid questions that clearly could be answered through such homework.   Asking a question whose answer can readily be found on the web is a signal that you have not done your homework properly.   Third, ask a question or two that enables the interviewer to talk about their own experiences.   Let's face it... people like to talk about themselves.  Ask them why they chose to join the firm, or how the firm has helped them develop and enhance key skills.  Finally, and perhaps most importantly, you have an opportunity to learn whether this company is truly a fit for you.   Here you want to learn more about the organization's culture, beyond the statement of values that you may have found on the website. 

How can you learn more about a company's culture?  Jason Hanold has posted an article on LinkedIn that articulates two good follow-up questions, beyond simply asking an interviewer to describe the culture in general terms. 

1. “When thinking about your best of the best talent - the most distinctive people at all levels of the organization - are there three or four traits that they share?” (Three to four traits in common well above all other traits)
2. “Has anyone who possessed those most admired traits ever failed, and if so, why?”

With this brief primer, hopefully you are more prepared to tackle the question: "Do you have any questions for me?"   If readers have other ideas as to how to address this interview question, I would love to hear them.  

How Entrepreneurs Can Recover From Failure

Vivian Giang has written an interesting story for Fast Company about how entrepreneurs can recover from failed startup experiences.   She interviews Steve Blank, among others.  Blank is a serial entrepreneur who now teaches at Stanford.   Blank talks about the importance of giving yourself "time to grieve" when you have been part of a failed startup.  You don't want to rush into the next startup.  You need time to go through the natural emotional reactions and to experience the grief, denial, anger, and depression that might come with a failure.   Then, you need to truly reflect on what you have learned and identify how you want to change your behavior moving forward.   Only when you have moved past the emotionally difficult stage, and moved through the reflection and learning stage, are you ready for another venture.  It seems like terrific advice.  I would argue that it's good advice not simply for entrepreneurs.  Anyone experiencing a failure would benefit from Blank's advice.

Market Basket and the Benefits of Low Employee Turnover

As the crisis at Massachusetts-based supermarket Market Basket rages on, it's worth noting that Consumer Reports just ranked the retailer as one of the top 10 supermarkets in the United States.  I also found an article this week on Boston.com quite interesting, because it explored the question of how Market Basket could keep prices so low while offering employees compensation and benefits that exceeded those provided by rivals in the industry.  The article, by Adam Vaccaro, cites low employee turnover as one key to the firm's success.  I thought that I would do a bit of research on the economic cost of high turnover.  I went to the Hay Group's website, since that firm has done a great deal of research on issues related to employee compensation.   The Hay Group examined the economic benefit of having a highly engaged workforce coupled with low employee turnover (the two obviously are related... if you have high engagement, you are likely to have low turnover).  Here is what they found:

Similarly companies with high levels of engagement show turnover rates at 40 percent lower than companies with low levels of engagement. However, companies that both engage and enable employees demonstrate a total reduction in voluntary turnover of 54 percent... For an organization with 20,000 employees and an annual voluntary turnover rate of eight percent, the cost of turnover is approximately $56 million (assuming an average salary of $35,000). Reducing the voluntary turnover rate by 40 percent would yield annual savings of $22.4 million. But reductions in turnover through high levels of engagement and enablement would yield savings of over $30 million annually, a difference of more than $7.5 million.  

The Hay Group research also shows that highly engaged employees are likely to far more productive.  As a result, the firm achieves substantial additional economic benefits.  What can firms do with these economic gains from the combination of high engagement, low turnover, and high productivity?   Certainly, they can pile up healthy profits.  However, in the case of a firm such as Market Basket, it appears that they were able to share that economic value with customers and employees as well.  Employees received solid compensation and benefits, while customers enjoyed low prices.  Of course, all of these gains are at risk if the Board cannot move to resolve the leadership crisis at the firm.  As of now, the workers are standing strong in support of their former CEO.  The Board continues to examine a potential sale, either to that former CEO or to another party.  

Weird Al: How Many Buzzwords Can You Cite In Four Minutes?

Thanks to Bryant University mascot Tupper the Bulldog for sending me this video via Twitter.  Weird Al Yankovic (remember him) has a new album that is immensely popular right now.  In this song, he pokes fun at corporate life, with all of its jargon and cliches. 

Do Entrepreneurs Do Better In Their Second Attempt at a New Venture?

Francine Lafontaine and Kathryn Shaw have conducted an interesting new study regarding entrepreneurship.   They chose to study whether entrepreneurs who failed in their first new venture did better the second time around.   The scholars examined retail entrepreneurs in Texas from 1990 to 2011.  Here is a summary of their findings, from an article by Allison Schrager in Business Week:

Over the 21-year-period, 2.4 million retail businesses opened and 2.2 million closed. Three out of every four were founded by first-time business owners.  Lafontaine and Shaw found that the Texas retailers were less successful than the national average for small businesses: One in four closed after a year; half after two. What happened next was telling. Of the first-time entrepreneurs whose businesses closed quickly, the overwhelming majority—71 percent—didn’t bother to try again. But the tenacious 29 percent who did were more likely to be successful the second, third, and even tenth time around. Somewhat paradoxically, their success rate increased with their number of past failures.

Interestingly, the article points out that these findings stand in stark contrast to the findings of a study conducted in the UK by Deniz Ucbasaran, Paul Westhead, and Mike Wright.   They found that serial entrepreneurs have a hard time learning from failure, though they note that people working on several ventures at the same time appear to be more successful .  Here is their explanation:

Psychological research suggests that strong emotions often prompt people to blame others or external events rather than themselves so that they can maintain some semblance of self-esteem and a sense of control. This “attributional bias” appears to make serial entrepreneurs less capable of learning from failure than portfolio entrepreneurs, whose attachment is spread among multiple initiatives.

What do we make of these contrasting findings?  I'm not sure, though I would note that the new study on Texas entrepreneurs has a much larger sample size, and it does not rely on self-reported data from surveys.  The new study also controls for industry and type of entrepreneurs (mostly mom and pop retail stores).   Does the type of venture matter?   Perhaps that may be the reason, but more research will be needed in this area.

Jimmy Kimmel's Hilarious Apple Smart Watch Prank

Irrationality in the Airline Business

This Wall Street Journal headline did not shock me today, even though it speaks to an incredibly irrational set of behaviors:  "New Startup Airlines Crowd the Skies."   The article describes how a number of new players ("a flock of startups") are entering the airline industry, including a firm that has brought the People's Express brand back to life.  

Why do I say that the headline describes irrational behavior?  Consider the following important fact: for over one hundred years, the airline industry has been one of the least profitable markets on earth.  Richard Branson once joked that it was actually quite easy to become a millionaire; all you had to do was begin as a billionaire and then enter the airline industry!   Look back at the leading players in the industry in the 1970s and 1980s.   Most of them either no longer exist, or they have experienced a Chapter 11 reorganization at one point or another.  For those familiar with Michael Porter's five forces framework, a quick analysis shows that the industry is terrible along each dimension.   In short, the industry structure is incredibly unattractive.   

Why, then, are firms continuing to enter this industry?  Yes, the barriers to entry are quite low, but why enter if the likelihood of success is so low?   I think it comes down to the fact flying has always had a special allure.  Succeed, even for just a brief time, and you can become a celebrity.  Think about the famous names throughout the industry's history:  Howard Hughes, Juan Trippe, Richard Branson, Herb Kelleher, Michael O'Leary, Freddie Lake, and Don Burr.  Just take a look at the quote that ends the Wall Street Journal article today: 

"It's a high-profile, sexy business," says Henry Harteveldt of Atmosphere Research Group, a travel research firm. "And if you keep a lid on costs, have the right strategy, aircraft and managers, you can make money." What's more, the U.S. needs more airline competition, he says. The problem is: "the best markets are spoken for." 

There you have it.  It's sexy.  It's high-profile.  You can become a celebrity CEO if you succeed, or you can hob nob with CEOs who already are celebrities.  Unfortunately, many entrepreneurs in this industry forget one key lesson that I always teach my students when we study industry structure:  sexy industries are not always very profitable. 

Effective Listening Skills

The Wall Street Journal has a very good article today about listening skills.  The article highlights factors that detract from effective listening and offers tips for becoming a better listener.  What are some traps to avoid?

1.  Don't begin formulating your response when the other party has just begun talking.
2.  Don't filter what you are hearing based on pre-existing  views you may have.
3.  Don't multi-task.

What can you to improve?  First, you can write down questions you would like to ask before a meeting takes place.  Second, offer subtle signs (non-verbals) to demonstrate that you appreciate what the other party is saying.  Third, repeat what you think you have heard and ask for confirmation that you have interpreted them correctly.  Fourth, take notes to keep yourself focused.  Fifth, maintain eye contact.  Finally, set a goal of what percentage of time you plan to listen vs talk during a meeting.

Employee Revolt at Market Basket

While I'm here in Tokyo this week, I've been intrigued by what's happening back home in Massaschusetts.  A massive employee revolt is occurring at a supermarket chain called Market Basket.  This family-owned regional chain competes as an effective low cost player and has a devoted customer following.  The CEO has just been fired by the Board.  Here's the interesting part.  He's been fired by his cousin, who took control of the Board last year, and with whom he has feuded for years.  The Board hired two non-family members to run the company.  What happened next is fascinating.  The employees (non-union by the way, and incredibly loyal) revolted!  They have protested publicly.  Store shelves are bare in some instances.  Politicians are supporting the workers.  The employees object for three reasons.  They know the company is profitable, and thus do not understand the firing.  In addition, the fired CEO treated them well in terms of pay and benefits.  Finally, they have great personal admiration for the fired CEO.  The company has responded by dismissing managers who have led the protests.  

What do I take away from this rare situation?   First, every CEO should wish that his or her employees would stand up so forcefully for them even at great personal risk.  What a statement about the leadership provided by the fired CEO, as well as his treatment of the employees!  Second, the Board has badly miscalculated by firing managers who objected to the CEO's dismissal.  It only added fuel to the fire.  Third, it really demonstrates the value of culture as a source of competitive advantage.  One of the greatest assets a firm can have is devoted and highly productive employees who share common values.  That culture has enabled Market Basket to outperform much larger players such as Shaw's in the marketplace.  The Board has failed to understand the true "gold" that they have here.  Fourth, employee loyalty is so rare in retail, yet these employees rarely left.  Turnover was quite low compared to other supermarkets.  The cost of turnover in retail can be incredibly high.  Again, the Board failed to see the key source of competitive advantage here.  Finally, this case shows how social media can fuel a raid and massive backlash.  It has enabled customers to show their support and to spread the employees' message.  The Board is losing the PR battle because it has no counter to this wave of support via social media. 

Do You Pre-crastinate?

Yes, you read that correctly.  I'm not talking about procrastination, something at which many of us excel.  I'm speaking about a different type of behavior described in a new study by Penn St. scholars David Rosenbaum, Lanyun Gong, and Cory Adam Potts.   The New York Times reported on their research this weekend.    These scholars define pre-crastination as "the hastening of subgoal completion, even at the expense of extra physical effort."   What might that look like?  Well, you may be working from home on an important project, perhaps to write a complex report about some research you have been doing for work.   However, before sitting down to tackle this challenging project, you scratch a few other smaller items off of your to-do list, such as cleaning the kitchen, doing laundry, etc.   

Why do people tackle these smaller items first?   According to the article, "People are seeking ways to limit the burden to their 'working memory,' a critical but highly limited mental resource that people use to perform immediate tasks... In essence, they were freeing their brains to focus on other potential tasks."   That sounds like a good strategy, right?  Well, by now, you can see the risks with this to-do list strategy to limit the burden on our working memory.   As Alan Pastel of UCLA notes in the article, "“People who are checking things off the list all the time might look like they’re getting stuff done, but they’re not getting the big stuff done.” Yes, I've definitely fall into that trap. 

Fox, Time Warner, and the Perils of Vertical Integration

The news broke this week about a possible Fox takeover of Time Warner.   As you read these reports, you may have noticed many of the key arguments for why this deal would make sense, i.e. powerful synergies exist between the two media/entertainment companies.  However, yesterday's Wall Street Journal featured a terrific article examining the perils of vertical integration with respect to this  deal.   Note that Time Warner is a major producer of television shows, which it sells to various broadcast networks.    Fox, of course, owns a major television network (and a variety of cable channels).  Warner Brothers is one of the only major TV studios not connected to a major broadcast network (Sony is another).  In the article,  Time Warner CEO Jeff Bewkes says, " Being the leading independent supplier to all the broadcast networks makes us the preferred home to the top writers and producers on TV which, in turn, makes us indispensable to those networks."  Lee Dinstman, a partner at the Agency for the Performing Arts, explained, "The fact that [Warner] has the freedom to take a creative idea to the proper home, instead of just selling to a captive network, can be incredibly attractive." 

What happens if the two firms merge?  Will the loss of independence hurt the Warner production studios?  Put yourself in the position of a programming chief at one of the other major broadcast networks.  When Warner Brothers studios comes pitching a new TV show, what will you think?  You might wonder:  "If it's such a great show, why is it now being broadcast on Fox?"   You may conclude that Warner Brothers is trying to push lower quality shows out to your network.  Note that many firms are vertically integrated in the industry.   Many of the in-house studios at other firms place most of their shows on their own networks. For instance, the article notes that Fox studios has 18 shows on major networks at this time; 14 of them are on the Fox network, while only 4 have been sold to other networks.   Is that because it's the most profitable decision, or is it because other networks are reluctant to buy from the competition?   That, in a nutshell, is one of the perils of vertical integration.  A firm such as Warner Brothers ends up competing with its own customers, creating some challenging conflicts of interest. 

Active Copers Make Effective Leaders

Leslie Pratch is a clinical psychologist who has evaluated many candidates for senior executive positions at large companies.  She argues that one trait distinguishes the successful candidates from others who do not fare well.   She argues that effective leaders are adept at "active coping."  What does she mean by that?   According to this article in Fortune, "By active coping, Pratch means the ability to adapt creatively and effectively to challenges and change. An active coper quickly recovers from setbacks, opens up to the people around her and is aware of her own motivations, strengths and shortcomings."    What is a sure sign that someone is not an effective active coper?   Pratch argues that we should beware of narcissists (no surprise there!).   Narcissists are not very self-aware, and therefore, they struggle to cope with ambiguity and challenges to their authority or expertise.  I think the concept sounds interesting and quite reasonable.  Having said that, I am always highly skeptical of individuals who try to boil success and failure down to one trait or one causal factor.  That's far too simplistic.  

Does Thinking Quantitatively Cause Us to be More Selfish, More Unethical?

Scholars Long Wang, Chen-Bo Zhong and Keith Murnighan have conducted new research examining the link between a "calculative mindset" and selfish/unethical behavior.  They used the ultimatum game and the dictator game to conduct their studies.  These two exercises often used in business schools to teach basic principles of game theory.   They split study participants into two groups.    In the control condition, participants were primed by reading a historical account of the industrial evolution.  In the experimental condition, participants were primed by reading a tutorial about net present value analysis.   What did the scholars find?   The participants who examined the net present value tutorial acted more selfishly, and they lied more often during these games than those who read about the history of the industrial revolution.  In other words, those primed to think quantitatively tended to act more selfishly and unethically.   The scholars argue that the calculative mindset is not problematic in and of itself, but it becomes dangerous when it comes to dominate people's thinking.  They also point out that business schools often emphasize the calculative mindset a great deal.  They should question the impact of asking students to think quantitatively so often. 

How to Give a Better Speech or Presentation

Lisa Evans has a great article at Fast Company about how to deliver a better speech.  Her essay is titled, "4 Common Vocal Mistakes Leaders Make."   She describes the following four errors:

1.  They lack passion for their own ideas.  They don't sound energetic and engaged.  If you don't care deeply about your ideas, why should the audience care?

2.  They speak in long rambling paragraphs.   They forget to speak in concise sentences, with breaks to enable the audience members to process what they are hearing.  

3.  They are monotone.  They don't use intonation to help emphasize key points, capture the audience's attention, and stimulate questions.  

4.  They fail to practice and then to listen to themselves speaking.   Therefore, they have no idea whether they are delivering their message effectively.   

I would add a fifth key error that leaders often make.  Many leaders fail to use stories to communicate their key message.  They rely on numbers, facts, and statistics.   However, research shows that storytelling is much more effective when trying to influence and persuade.   

Poor Disaster Preparation: Three Mental Biases

Wharton marketing professor Robert Meyer and his co-authors on several studies have explored the reasons why individuals and organizations fail to prepare adequately for major disasters such as hurricanes.  They argue that three mental biases impair our ability to project the likelihood and negative impact of a looming disaster appropriately.   Here's Meyer describing the findings:

 Basically, what we found over a number of years and using a combination of field surveys and working with people in laboratories, is that effectively, people are subject to three major biases. One is, simply put, that there is a tendency to under-appreciate the future or under-consider the future, or future consequences. A second thing is that people are too quick to forget the past, or too slow to remember the negative events that have happened in the past. The third one is that if in doubt, what often happens is that people will follow the advice of other people who are no less prone to those sorts of mistakes than they are.

I believe similar biases explain why many firms fail to prepare adequately for major disasters of all kinds, not simply natural disasters.   By making executives aware of these biases, perhaps firms can do a better job of preparing for events that could impact their operations in a significant way.  

Stephen Colbert on the Amazon vs. Hachette Battle

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College Factual Ranks Bryant University College of Business Among Top 10 Undergrad Programs in Nation

The USA Today reported on Wednesday, July 2nd that College Factual ranked Bryant University's College of  Business as one of the top 10 undergraduate business schools in the country.   For a detailed description of College Factual's methodology, click here.  In the article, USA Today wrote: 

If you’re looking for a deeply personalized undergraduate degree, Bryant is for you. There are no lecture halls and no teaching assistants at Bryant, so you actually get to know your professors. The business school also offers an MBA program that lets you specialize in a global field of study within business.

I'm very proud of the strides we have made in recent years here at Bryant.  We have built a strong undergraduate business program now being recognized by multiple publications and rankings.   Business Week surveyed employers earlier this year, and we ranked #18 in the country in the employer survey.   US News cited Bryant as the #2 up and coming university in the northeast.   Now we have been cited by College Factual as a top 10 undergraduate business program.  Why are we being recognized so prominently on these lists?  I believe that it is because we prepare our graduates well for the workplace, and our graduates get good jobs.  How do we achieve strong placement results?  We don't simply sit in the ivory tower.  We offer an applied education, in which students learn by doing.  They work on projects throughout their four years here that provide them actual experience doing the type of work that employers will expect them to do.  We have partnered with terrific employers to provide students with these applied learning opportunities in our curriculum. 

Experts vs. Crowds: A Study of Kickstarter

Kickstarter is a crowdfunding platform, in which individuals can solicit funding for creative projects from others around the world.   Recently, Wharton's Ethan R. Mollick and Harvard's Ramana Nanda conducted a study comparing the crowd's judgment (via Kickstarter) with expert evaluations of the same creative projects. The scholars collected a random sample of 120 theater projects aiming to solicit at least $10,000 in funds via Kickstarter.   Of the projects, 60 failed to meet their fundraising goal, 40 just met their goal, and 20 exceeded their goal.   The researchers also assembled a panel of 30 theater experts to evaluate these 120 projects.   Then they compared the experts' judgments with the crowdfunding results via Kickstarter.  

What did they find?   The crowd and experts made remarkably similar decisions with regard to these 120 projects, i.e. there is a strong correlation between the expert rankings and the results achieved on Kickstarter (in terms of whether or not a project met its fundraising goal.   Despite the high correlation, the experts and the crowd naturally do not always agree.  Most of the disagreements occur in situations where the crowd chose to fund a proejct, but the experts did not rate it very highly.  The authors' findings suggest that some people may have better networks that they can tap into to fund projects, and there may be an art to fundraising via Kickstarter that some individuals have mastered more than others.

Finally, the scholars examined the actual results of the funded projects.   They examined whether projects came in under budget, whether organizations continued to operate in the long run, and other measures of success of these theater projects.   They found "no quantitative or qualitative differences between projects funded by the crowd alone, and those that were selected by both the crowd and experts." 

Older CEOs More Likely to Sell Publicly Traded Companies

Stanford's Dirk Jenter and and Dartmouth's Katharina Lewellen have conducted a new study about corporate takeovers.   The two scholars examined more than 9,000 publicly traded American companies over a nearly twenty year period.   They found that companies with older CEOs tended to receive more successful takeover bids.   In fact, CEOs ages 64-66 experienced a 32% increase in successful takeover bids relative to CEOs ages 59-63.  Note that the shareholders did just as well in the deals that occurred for both age groups.  Thus, older CEOs are not accepting lower quality deals.  However, they are doing many more deals.  We should not be surprised, of course.  Younger CEOs still have more years left in their working lives, and they know that selling their companies probably means the loss of their positions.  The key question is:  Are younger CEOs spurning potentially good deals, or are we simply seeing more acquirers focus on companies with older CEOs because they know that those executives are more likely to sell?