The View from Harvard Business

Fortune magazine last week named Steve Jobs CEO of the Decade. It was not a tough decision apparently. In Fortune’s also-in-the-running list were several CEOs who are in prison (Bernie Madoff, Jeff Skilling), another who was in prison (Martha Stewart) and several more who are not known as CEOs (Warren Buffett).

So Steve gets the nod. What I most enjoyed about this largely puff package, however, was a sidebar penned by Harvard Business School historian Nancy Koehn, who sizes up Jobs’ legacy. She says he will most be remembered as an entrepreneur (not so much as an executive), along the likes of Josiah Wedgwood, John D. Rockefeller, Andrew Carnegie, Henry Ford and Estée Lauder.

“Each of these people — and especially Steve Jobs — has been defined by the intense drive, unflagging curiosity, and keen commercial imagination that have allowed them to see products and industries and possibilities that might be. Each of these individuals has also been extremely hardworking, demanding of themselves and others. All have been compelled more by the significance of their own vision than by their doubts.”

• Like  Lauder, Jobs has a talent for making, packaging, and marketing products that everyday consumers want.
• Like Carnegie, Jobs is one of the most hands-on executives in business.
• Like Rockefeller and Wedgwood, Jobs grew up in a time of tremendous social and technological upheaval, but understood the importance of the moment and the opportunities presented.

Do you agree that Jobs belongs in the pantheon of great business leaders who helped define our times?

Society has legitimate research needs for human cadavers. Scientists use them for studying disease. Medical students and emergency workers use bodies or parts of bodies for training.

But there are so many taboos around the selling of human bodies, not to mention laws, that we suffer a cadaver shortage. Normally, capitalism would encourage providers to step forward and fill this demand with offerings based on prices established by a market. But we as a society are understandably squeamish about the idea of anatomical parts as commodities.

Not that some businesses aren’t trying. A few entrepreneurial ventures have started up over the last decade to meet the need, acting as matchmakers between donors and health care providers. But these firms are paid service fees, not prices set by a market.

Harvard Business School professor Michel Anteby, whose research dwells in moral gray zones, says that at the least we need analysis and discussion in this arena to inform political debate. As he frames the issue:

“Greater availability of cadavers for medical science could accelerate the quality of medical training and procedures — a fact most users recognize. Nonetheless, how much trust can be put in markets to ensure these outcomes? How should a donor decide between two donation options? What are the logics of such a decision? What does competition for whole-body donations look like? How might this impact other donations? More importantly, perhaps, should programs compete for donations? All these questions require empirical examination.”

Read Anteby’s though-provoking piece on HBS Working Knowledge, A Market for Human Cadavers in All But Name. BTW, a post I wrote on Anteby’s gray zone work was one of my most popular (and controversial.)

What do you think? Are there some places where market solutions are just inappropriate? Are we ready to think about selling Aunt Tilly’s remains to the highest bidder?

Harvard Business School is one of the first top business schools to add a consumer finance course to its offerings.

Ironically, as course instructor Peter Tufano points out, the typical HBS MBA would have analyzed financial statements from hundreds of companies, but never studied the financial records of even a single household. The disconnect: consumer spending drives the economy, and households account for $61 trillion in assets.

That was remedied when Tufano introduced the course earlier this year, co-teaching with Harvard Law professor Howell E. Jackson.

“We begin by having them analyze real numbers for real household budgets,” Tufano says in this interview with the HBS Alumni Bulletin. “We also bring in concepts from behavioral economics, psychology more broadly, and sociology. We have cases and materials that are at the household level, because we think that before you can discuss business practice or public policy, you must first understand households.”

Students also learn about the institutions that serve consumers including banks, insurance companies and credit card issuers. They design a budget for an average Boston family, figuring expenses for food, transportation and insurance.

Tufano hopes to build a field of academic study around the consumer. In an article in the current issue of Harvard Business Review, written with Annamaria Lusardi, Tufano suggests that companies should help employees achieve a basic level of financial literacy, such as understanding how debt works.

“Piling up credit card debt at rates of 18% or higher while investing a small fraction of weekly pay into a 401(k) may not be the best way for an employee to achieve financial well-being.”

If you were going to teach MBAs the basics about how consumers save and spend, where would you begin?

(Dollars and cents image by Mr VJ Tod, CC 2.0)

Last week we received more than 150 comments on our post about Sylvia Ann Hewlett’s research, which shows that women are twice as likely as men to consider leaving their jobs. Our post on how to fix the problem shared advice and insight from BNET readers. This week, Hewlett follows up with a guest post.

The reader response to “Why Are Women So Unhappy at Work” is both heartening and disturbing. It’s great that so many of BNET’s female members are engaged and looking to improve the workplace. But, I’m sad that so many of you are unhappy — and some at the hands of other women. Tough times, as we have seen, bring out the worst in people. Between waves of layoffs and evaporating job opportunities, we’re in a climate that naturally breeds competition. So how much of this destructive behavior is from men — and how much is from other women?

My conversations with women in preparation for my new book Top Talent: Keeping Performance Up When Business Is Down revealed that many felt they needed to protect themselves against a sisterhood of back-stabbers who, instead of helping build one another’s careers, deliberately derail them by withholding information, limiting access to important committees, sabotaging promotions or blocking the way to higher-ups. A recent study by the Workplace Bullying Institute found that female bullies are alive and kicking — and more than 70 percent of the time they’re aiming their pointy-toed shoes at other women.

I’ve certainly seen some bad behavior in these bad times — from both sexes. But recently, I’ve seen women helping women in ways that are more than just heartening: I’m convinced these women are part of a new way of networking. Today’s professional Gen X and Y women think the previous generation didn’t ask for help often enough: As pioneers, they couldn’t afford to appear weak; as outliers, they weren’t part of the “Old Boys” network; and even though “Old Girls” networks existed, they tended to be exclusive, growing out of sororities, college alumnae associations, Junior Leagues and similar groups limited by socio-economic barriers.

One way today’s women are correcting this problem is by building unexpected alliances. Rather than hire a career coach, many women who are looking for more from their careers are creating a personal board of directors: a diverse group of professional women from any sector who many not be your best friends but who can provide a fresh perspective on your strengths, values, goals, options, and next steps.

I’d be curious to hear more from female readers about their experiences, both good and bad, with other women in the workplace. Have you experienced bullying by another female in the workplace? What are some examples? And what are some positive ways you have seen women helping one another?

Image courtesy sylviaannhewlett.com

American’s are now buying what they can afford, not what they want.

And that has significant implications for anyone in retail. For most market segments, it no longer pays to cater to the wishes, dreams and aspirations of your customers. You need to convince them that what you offer delivers fundamental value in today’s challenged economy.

For proof that the habits of the American buying public has changed, check out this Washington Post piece, For Gun-Shy Consumers, Debit Is Replacing Credit. The bottom line: Consumers have replaced credit cards with debit cards, essentially cash. Visa reports that for the first time in its history spending on debit cards exceeds spending on credit cards.

If you are a business built to compete in a credit card economy, in markets such as furniture and jewelry where buyers traditionally used credit to fund purchases, you’re probably hurting.

And it might be a long time, if ever, before we feel comfortable ringing up higher credit card balances at 18% interest.

Retailers are responding by experimenting.

• Some have reintroduced the concept of layaway, whereby the store will hold an item for the customers as he pays a little each month toward the full price.
• Try before you buy is another tactic. For a limited time General Motors is allowing car buyers to return the vehicle within 60 days after purchase.
• Companies are building consumer loyalty through increased customer service and rewards programs.

What are you doing to address ypur customers who don’t carry credit cards anymore?

Some startling research, at least to this male, reports that women are twice as likely as men to be considering leaving their jobs. According to Sylvia Ann Hewlett, founding president of the Center for Work-Life Policy:

“We found that in the wake of last year’s financial crash, high-powered women were more than twice as likely as men — 84 percent compared with 40 percent — to be seriously thinking jumping ship. And when the head and heart are out the door, the rest of the body is sure to follow.”

So smart companies such as Intel are aggressively acting to retain their female employees by offering career workshops, skill-building classes and courses on managing in a diverse workplace.

Read Hewlett’s post on Harvard Business Review, Are Your Best Female Employees a Flight Risk?

Unfortunately, Hewlett doesn’t answer my burning question? Why are women more likely than men to consider jumping ship? Certainly there are career opportunity questions. If women believe they don’t have as good a chance as their male colleagues of advancing, of course they should be considering options.

But a 2x factor suggests something much more deep seeded. Something about the nature of work in the modern company. What’s your take?

If you were creating a company from the ground up with an explicit goal of attracting, rewarding and best utilizing the talents of female employees, how would that company look different than today’s traditional firm? Yes, having a female CEO would be a nice start. What else?

At the toy store, what do you do  when confronted with an empty space where your child’s most desired gift was to be?

You are likely to buy something else, an item you previously wouldn’t have purchased.

“When one product is sold out, customers have the perception that an available product might also sell out if they don’t buy it now. It creates a sense of immediacy, which is a perfectly rational thought process, so the customer buys the other product.”

That is how professor Paul Messinger at the University of Alberta School of Business explained recent research to CNN.

Companies such as Apple have understood this phenomenon for awhile. They even deliberately create scarcity, initial product shortages, to drive up excitement and news stories, according to Harvard Business School marketing professor John Quelch.

Writing on the topic on HBS Working Knowledge, Quelch observes:

Creating the illusion of scarcity can be a smart marketing strategy. And even if you’re in the unfortunate position of experiencing very real scarcity, there are tactics you can employ to minimize the brand damage and even profit from the error.

This approach flies in the face of traditional marketing advice, which urges that the right product at the right price be within easy reach of purchasers. And certainly in a recession you don’t want to make it more difficult for buyers to complete a transaction, right?

Or wrong? How are you creating excitement around your offerings. Is that empty space on your shelves a good thing?

(Shelf image by quinn.anya. CC 2.0)

Even though I’ve heard him say it before, the words from Harvard Business School professor Clayton Christensen always bring me up short.

Speaking to a group of health care professionals recently, Christensen said:

“Competition doesn’t drive prices down.”

In fact, he said prices increase 8 or 9 percent a year in industries characterized by sustained innovation. Think of universities, where student fees climb year after year even though competition is fierce. That’s because, to compete, these schools have to build ever better athletic facilities, food services and other costly upgrades, all of which drive up their costs.

So what drives prices down? Those of you familiar with Christensen’s work know the answer: disruptive innovation. Essentially, the process whereby an upstart can win away customers from established industry leaders with a product or service that fills the customer’s basic needs in a simpler way and at a much lower price. PCs disrupted the minicomputer business, Japanese car makers disrupted Detroit, and now Korean automakers are disrupting Japan.

Health Care Debate

This theory provides an interesting lens through which to view proposed solutions to escalating prices that rely on the introduction of more competition.

The Obama administration’s proposal for the “public option,” essentially a government-operated health care program to compete with the private sector, will not meet its goal of controlling prices if it simply sustains competition, according to Christensen’s theory (He did not address this issue specifically in the talk I saw).   The public plan would have to fundamentally disrupt the current model in areas including patient information technology, payment, service delivery, and regulation to be successful in its goal.

What’s your opinion on this issue of competition versus disruption in setting prices? Can you think of examples where industry prices dropped dramatically without a disruptive innovation at the heart of things?

“Humans are masters of lying and self-deception.”

So begins a research paper from Harvard Business School with the equally provocative title, I read Playboy for the Articles: Justifying and Rationalizing Questionable Preferences. It looks at the lengths people will go to justify their own immoral or questionable behavior, to the point of forgetting they even committed the offensive behavior.

No, there are no pictures in this study by Zoë Chance and Michael I. Norton. So why else might a business person be interested in the findings?

• If you are a woman, such justifications can result in you not being selected for a job over a male, even though you are clearly the superior candidate.
• Ditto if you are a person of color.
• If you are a manager, you might be making a choice that is bad for your company or your career, i.e., “I hired my son because he is more qualified.”

The paper touches briefly on how such behavior can be reduced, but there are no magic answers. Removing ambiguity from situations can help guide people to the “correct” decision. So can holding people accountable for decisions by making them explain their rationale.

But in general, we are much too devious to even see our justifications in the first place, so preventing them is difficult.

Are you ready to come clean and share your own whopper justifications with our reading audience?

Economists, academics and business leaders are increasingly warning that America’s love affair with outsourcing manufacturing to cheaper labor in other countries is weakening the U.S. in fundamental ways. I wrote about this trend a few months ago in We Are Paying the Price for Outsourcing Manufacturing.

Now Business Week has taken up the cry this month in Can the Future be Built in America?

The good news, according to reporter Pete Engardio, is that the U.S. is a hub of  research and development in hot innovation areas such as fuel cells and flexible display screens. The bad part is we can’t build our way out of a paper bag:

“Unless the U.S. can magically resurrect its manufacturing base, the good-paying jobs from these breakthroughs will be offshore. Cheap Asian labor has little to do with it. Unlike other industries that fled to low-cost offshore havens, these emerging tech goods are made on highly automated production lines. The problem is, the U.S. is losing its lead in large-scale high-tech manufacturing.”

This penalty is not just fewer jobs, or us losing the ability to make things and learn from that experience. It’s also adding to the country’s balance of trade deficit. Harvard Business School professor Willy C. Shih reports that in 2000 the U.S. exported $29 billion more high-tech products than it imported. But, “owing to a legacy of underinvestment in manufacturing,” that surplus had turned into a $54 billion trade deficit.

What’s Next?

The interesting question is what we can do about the situation. Despite growing reluctance for government intervention in private enterprise, an Uncle Sam solution may be the best way to catalyze a rebirth in manufacturing through tax incentives or even outright federal investments.

President Obama started to address this issue last week with the appointment of top Treasury official Ron Bloom to oversee an effort to revitalize American manufacturing.

What’s your opinion? Should government get behind a push to reclaim our manufacturing smarts? How important is this problem when stacked up against health care, financial regulation and other pressing issues of the day?

(Manufacturing plant image by erix!, CC 2.0)