Taking Action on Climate Change, and More – Boston News
Let’s explore some of the most interesting stories that have emerged from Boston business schools this week.
This Tool is Pushing People to Take Action on Climate Change – MIT Sloan Newsroom
New research from MIT Sloan Professor and Sustainability Initiative Director John Sterman finds that the role-play simulation World Climate, in which “participants take on the role of delegates to the UN climate change summits, and negotiate face-to-face with other participants to reach a climate change agreement,” might assist the powers that be understand and inspire environmental change.
Sterman and his co-authors write, “The results indicate that World Climate offers a climate change communication tool that enables people to learn and feel for themselves, which together have the potential to motivate action informed by science.”
“Research shows that showing people research doesn’t work. World Climate not only boosts people’s knowledge of climate change and increases the urgency they feel, but also generates gains in hope.”
You can read the full article here.
The Legacy of Boaty McBoatface: Beware of Customers Who Vote – HBS Working Knowledge
Harvard Business School Professors Michael Norton and Leslie John recently co-authored a new working paper about the pitfalls of crowdsourced naming competitions. Case in point: Boaty McBoatface, the winning entry for the National Environmental Research Council’s online voting poll to name the agency’s new research vessel.
When NERC overruled ‘Boaty McBoatface,’ there was massive public backlash. Professor Norton explains, “When firms conduct online polls, people frequently submit ridiculous entries; and with social media, those entries will go viral. But even when firms never guarantee that consumers will choose the winner, consumers infer an implicit contract and are upset when that contract is violated.”
The researchers incorporated the NERC case study into its research as a compelling example of how companies can potentially violate consumer trust in crowdsourced polls, according to John. “It’s offensive because consumers feel as though the firm broke the contract.”
In 2016, the National Environmental Research Council conducted a public poll to name its vessel. The winner, infamously, was Boaty McBoatface, but the council renamed it to the RRS Sir David Attenborough.
Norton and John offer a number of options that allow companies to safeguard against potential fallout from “off-the-wall choices” by being “very explicit about how they will consider the voice of consumers before the vote begins.”
The researchers also advise “pre-selecting acceptable outcomes on which consumers can vote, culling options from consumer suggestions without publicizing the actual number of votes for each, [or] setting up some kind of screening process, by which only actual customers can vote, but giving out a voting code attached to products.”
You can read more from Norton and John here.
From Building on Bones to Building on Blockchains: D’Amore-McKim Students Experience Russia – DMSB Blog
Marina Hess DMSB21 and Anya Losik COS21 pose at the border between Europe and Asia
The D’Amore-McKim School of Business at Northeastern University recently profiled 16 students who took part in a month-long Russian study abroad trip entitled “Driving Growth in Russia: From Building on Bones to Building on Blockchains.”
Yuan Vu Dinh Van (DMSB ’21) broke down the major takeaways from the cross-country excursion.
“By visiting Russia, I was able to see a different way of doing business compared to the model used in the U.S. Business in Russia seems to be conducted similarly to that of Ecuador, as only the people with the contacts and the money succeed in business, while in the U.S. it is easier for anyone to do that.”
Van adds, “I also learned about different ways to manage people, as Russian employees often prefer to be given orders and don’t have as much freedom as U.S. employees typically have in regards to the decision making. It really opened my mind to how important the role culture plays in doing business in different countries.”
You can read more from the interview here.
Working Harder, Amazon Wages, and More – Boston News
Let’s explore some of the most interesting stories that have emerged from Boston business schools this week.
Knowing What Your Boss Earns Can Make You Work Harder – Harvard Business Week
In new research co-authored by HBS’s Zoë B. Cullen and UCLA’s Ricardo Perez-Truglia, it was discovered that “knowledge of managerial compensation seemed to coax more effort out of workers, [but] the exact opposite [is true] when employees learned what peers were making.”
“How Much Does Your Boss Make? The Effects of Salary Comparisons” finds that “these externalities can have important implications for the provision of incentives within the firm and for pay transparency.”
According to the Harvard Business Week article, the paper could have significant ramifications in terms of how companies “rethink the equity of their own compensation plans and the level of salary transparency they wish to maintain.”
You can read the full HBW article here.
What’s Behind Amazon’s Wage Hike? – MIT Sloan Newsroom
At a moment where Amazon has received intense criticism of its “labor practices and low wages” exemplified by Senator Bernie Sanders’ Stop BEZOS Act, the e-commerce behemoth recently announced that its minimum wage for all U.S. employees will be $15 per hour, effective November 1.
MIT Sloan Associate Professor of Operations Management and Good Jobs Institute founder Zeynep Ton explains the political strategy behind Amazon’s decision.
In addition to Amazon’s desire to position itself as a “worker-friendly company,” Ton explains, “a lot of retailers are finding it difficult to attract people, especially going into the holiday season. [Outlets like] Macy’s and Target are looking to hire tens of thousands, and it’s going to be harder for them now. They’ll have to up their game, not just for the holidays but in general.”
Amazon Founder, Chairman, and Chief Executive Officer Jeff Bezos, the world’s richest man, has become part of the focus on Amazon’s questionable business practices in recent years.
Ton adds, “The investors are very different, and their tolerance for low profitability is much lower for general retailers than for Amazon. It’ll be challenging for other companies, and I hope they start to look for ways to make their people central to their success.”
You can read more about the move from Amazon here.
Why Aren’t Companies Getting Better At Breakthrough Innovation? – Babson Thought & Action
For their new book, Beyond the Champion: Institutionalizing Innovation Through People, Babson College F.W. Olin Graduate School of Business professors Gina Colarelli O’Connor, Andrew Corbett, and Lois Peters posit that “looking to grow and succeed, getting better at innovation is a constant, nagging, and critically important challenge.” Beyond the Champion offers a blueprint for organizational change.
In an excerpt from the book, the authors write:
“Strategic innovation is a “team sport”: it’s so big that no one person has the skill set to do it all. Individuals want defined roles that allow them to take advantage of their innovative strengths—roles that give them some autonomy while still providing guidance for where they should invest their energies. The passion model is great, but it’s not enough in a large, established company.”
You can read the full Babson Thought & Action article here.
The Politics of Purchases, Grocery Chain Rebuilds, and More – Boston News
Let’s explore some of the most interesting stories that have emerged from Boston business schools this week.
Why U.S. Grocery Chains Need More (and Better) Store-Brand Products – Harvard Business Review
Harvard Business Review recently revealed new insights into how store-brand products enable grocers to carve out a niche for themselves among more established competitors.
According to writers Marcel Corstjens and Rajiv Lal, “private-label products are essential to the profit margins of hard discounters,” like Wal-Mart, which typically sell 90 percent private-label goods compared to 15-51 percent of ordinary grocery stores, depending on where you are in the world. “Hard discounters win by only stocking products with a very high rotation.”
The two point to the miraculous feat of French supermarkets, which regained a significant market share after stores began “offering affordable goods of reasonable quality.”
In order for U.S. grocers to compete with hard discounters, the article notes that they “will have to offer private-label goods of the “right” quality at the “right” price. No easy feat, indeed.
You can read more from Corstjens and Lal here.
How Going Out Can Spur Outside-the-Box Thinking – MIT Sloan Newsroom
New research from MIT Sloan Assistant Professor of Work and Organization Studies Jackson Lu finds that people who have “had a close friendship or romantic relationship with a person from a culture drastically different from [their] own tend to exhibit higher creativity, innovation, and entrepreneurship.”
“‘Going Out’ of the Box: Close Intercultural Friendships and Romantic Relationships Spark Creativity, Workplace Innovation, and Entrepreneurship” suggests that “people cannot simply ‘collect’ intercultural relationships at a superficial level, but instead must engage in cultural learning at a deep level.”
Lu writes:
“When in an intercultural relationship, an individual should not eschew cultural differences but rather embrace them, because such differences enable one to discern and learn the underlying assumptions and values of both the foreign culture and the home culture. Without close social interactions, it can be difficult for individuals to juxtapose and synthesize different cultural perspectives to achieve cultural learning and produce creative insights.”
You can check out the rest of the article here.
How We Play Politics in the Store Aisles – Carroll School News
In a new Journal of Consumer Research study, Carroll Assistant Professor of Marketing Nailya Ordabayeva finds that “conservatives buy products they believe will signal their own superiority (big-name brands, high price tags) while liberals buy products they hope will show their uniqueness (unconventional colors or design).”
Ordabayeva’s research has “startling implications regarding the extent of our national polarization,” suggesting that people are paying very close attention to taglines like Mercedes’ “A Class Ahead” and Apple’s “Think Different.”
Professor Ordabayeva’s research finds that conservative and liberal Americans have decidedly different buying patterns, with conservatives favoring well-known brands and liberals opting for more creative choices.
“Better or Different? How Political Ideology Shapes Preferences for Differentiation in the Social Hierarchy,” can be found here and check out the rest of the entry on Carroll School News here.
MIT Talks About Nike’s Kaepernick Gamble
Shortly after sports manufacturing giant decided to bring the continually Colin Kaepernick, conversation surrounding the company exploded. For many, the move came off as a huge gamble. MIT Sloan argues, however, that it was all about brand authenticity.
In a recent piece published by the MIT Sloan Newsroom, Senior Lecturer and Research Scientist Renée Gosline, says, “It’s hall-of-fame-level type advertising. Not to mention the signal it sends given the current climate.”
“People think branding or marketing is to sell the most amount of products to the greatest number of people. Perhaps if you’re thinking widgets,” she says. “But in actuality in order for a brand to be really enduring, it has to have a point of view, it has to have a personality, it has to have authenticity. By definition then, it needs to take a stand, and some stands are less controversial than others. But it needs to stand for something.”
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Fellow MIT Sloan Senior Lecturer and former ESPN Director of Social Media Marketing Ben Shields also adds, “The timing is obviously a well-intentioned decision, and it also reflects a need for marketing campaigns in today’s network culture, to get people talking. That’s precisely what this campaign is designed to do.”
One day after the announcement, which was made during the same year that Nike agreed to an eight-year deal to make the NFL’s uniforms, generated an estimated $43 million in exposure, according to Apex Marketing Group. Part of that, potentially, lends itself to the vagueness of the messaging.
Sharmila Chatterjee, a Senior Lecturer in Marketing at MIT Sloan, also adds, “Nike wants to support ‘be who you want to be, just do it,’ if that is the interpretation it is taking, then Kaepernick connotes that. If Nike wants to support that cause, i.e., ‘stand by your convictions’ cause, there’s a brand fit and authenticity here. By doing this there’s a way to increase the brand credibility of Nike. There’s a match here, it just so happens that in this case the actions of the celebrity or the spokesperson, is emotionally charged.”
On how this could potentially look down the road, Gosline seems optimistic, arguing that “history has a tendency to sanitize activists.”
“People forget that at the moment, they were raked across the coals. I think you might find this is what is going to happen with Colin Kaepernick in this particular case.”
You can read more about the advertisement reaction here and check out the aforementioned ad below.
Analyzing Credit, Bargain Hunting and Harvard, and More – Boston News
Let’s explore some of the most interesting stories that have emerged from Boston business schools this week.
What an MIT Professor Learned Analyzing 1 Million Credit Card Offers – MIT Sloan Newsroom
MIT Sloan Professor of Finance Antoinette Schoar used her appearance on Sloan’s “Data Made to Matter” podcast to discuss what analyzing one million credit card offers revealed.
“What we seemed to find in our study is that the [credit card] offers that are offered to less educated people rely in their pricing much more on these additional fees. Late fees, over limit fees, maybe default APRs that switch on once you’ve had a default,” she says on the podcast.
Schoar adds, “While people that are more educated, their cards seem to rely much more on the quite straightforward features, like they are paying an annual fee, and they’re paying an interest rate, but they are relying much less on these late fees and over limit fees.”
She also offers this takeaway for consumers:
“The more companies can model our behavioral biases, the more they can use them in extracting rents from us or catching us in moments when we’re inattentive or when we are not necessarily focused enough on choosing the right credit card, the right mortgage, or any of these products.”
You can read the full article here.
Bargain Hunters Beware: A Store’s ‘Original Price’ Might Not Be After All – Harvard Business Week
In a new working paper, Donald Ngwe, a Harvard Business School Assistant Professor, found that the “original price” many retail stores advertise in relation to an item’s hot bargain rate is often completely made up. In fact, the practice is much “more common than shoppers might realize.”
Ngwe says, “They never even tried to sell the product at that price. Consumers could never have bought that product at that price even if they tried.”
On Amazon, for instance, he notes that almost every item has a “struck-out price, but if you look at the policy behind that price, it’s incredibly vague. This makes me think that the fake prices are working to mislead the customers who know the brand the least, and who have the least information about the brand, into making a decision they would not have made otherwise.”
Ngwe’s research found that if customers “were given verifiably fake prices,” it actually does not change people’s “evaluation of quality” since we have gotten so used to the practice.
He concludes, “My results show that customers don’t see through the ruse. Even in outlet stores where they might expect some level of false discounting, they are still very influenced by these signals.”
You can read Ngwe’s paper Fake Discounts Drive Real Revenues in Retail here or the original HBW article here.
From Sheet Music to Spreadsheets – Sawyer Business School Blog
Sawyer Business School recently profiled Craig Pellet, MST ’18, a classically trained composer who ended up with a career at Boston firm Back Bay, from a Craigslist ad he answered on a whim.
Ten years after joining the firm, Pellett feels he had a number of major gaps that made it difficult to “solve client issues” so he decided to pursue Sawyer’s Master of Science in Taxation degree to “give [him] better tools to approach every problem.”
Craig Pellet, Sawyer Business School, MST ’18 / Photo via suffolk.edu
“Music teaches you how to practice, be committed, and be focused. It puts you in the mind-set: I want to get good at this, but it’s going to take me 10 years. So it’s time to start chipping away at it,” Pellett tells the Sawyer blog.
Pellett ended up working with his tax policy instructor Professor Michaele Morrow on a research paper that explored the notion of eliminating S-corporations to make taxation more fair. Morrow described Pellett’s notion as “pretty radical.”
“I somewhat believed him but wanted to really see. So I asked him to run the numbers. Turns out, he was right.”
Their paper was recently published in trade publication Tax Notes.
You can read the full interview with Pellett here.
MIT Sloan Introduces New “Blockchain and Money” Class
A decade ago, only a few people knew what blockchain was. Now, blockchain is a practical part of the financial sector with tremendous potential for transformation. That’s why this fall, MIT’s Gary Gensler, a Senior Lecturer and Senior Advisor with the MIT Media Lab, will teach a new course entitled “Blockchain and Money.”
The new course at MIT Sloan will show students how to use blockchain technology, covering fundamentals such as distributed ledgers and smart contacts. In addition, the course will offer real-world examples that cover global issues including regulatory concerns.
“This technology has real potential as a catalyst for change in the world of finance and the broader economy,” Gensler said in a recent MIT news story. “I view the course as one piece of the broader ecosystem at MIT where people can explore blockchain technology and its real-life possibilities.”
About the Blockchain and Money Course
The 12-week “Blockchain and Money” course will be valuable not only for entrepreneurs interested in initial coin offerings, but also for students who are just curious about the intricacies of blockchain. The course will be broken down into two parts:
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Part One: The Foundation of Blockchain
The first part of the course will offer an in-depth look at the history of bitcoin and other cryptocurrencies. Then, Gensler will dive into smart contracts in open-sourced and private applications alongside distributed ledgers, which he feels are critical pieces of blockchain technology. The class will also examine numerous policy issues arising from this technology.
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Part Two: Practical Applications in the Financial Sector
The second part of the course will focus on real-world application of theory. Gensler calls it a “real how-to course.” Mainly, students will focus on blockchain applications in the financial industry. The goal is to get them to think creatively about blockchain application and devise their own original blockchain opportunities.
The finishing touches of the syllabus are still being put together, but Gensler has already secured a few exceptional guest speakers to come in and talk, including crypto expert Christian Catalini and Jeff Sprecher, CEO of Intercontinental Exchange and Chairman of the New York Stock Exchange.
