Management scholars have often argued that trust plays a key role in economic exchanges, particularly when one or another party is subject to the risk of opportunistic behavior and incomplete monitoring or when problems due to moral hazard or asymmetric information arise. These conditions are almost always present in the case of corporate alliances and joint ventures. However, one attribute of relationships--"relational quality"--is fundamental to the maintenance of good working conditions in two-party alliances where past experience and the shadow of the future play important roles. Relying on a growing body of theory and a number of case studies, the authors develop a framework for thinking about trust in dynamic and practical terms. They also provide recommendations for managing relational quality in alliances as a strategy for enhancing value.
Strategic alliances continue to be important tools of competitive strategy. However, many alliances do not achieve their partners' collaborative objectives and are terminated prematurely. As a result, alliances are often described as inherently unstable organizational forms that are subject to high rates of failure. In addition to the problems associated with not achieving collaborative objectives, a related issue has received limited attention. Although alliances are prone to failure, there are numerous examples of strategic alliances that continue for years despite failing to accomplish partner objectives. This article examines such strategic alliances. However, it does not focus on why failure occurs, but on the variables that contribute to firms' persistence with failing alliances. It also provides measures that can effectively counter persistence.
In the late 1990s, the World Bank and the International Monetary Fund, under heavy pressure to find ways to relieve developing countries of large volumes of accumulated public debt, devise a way they believe offers a way to link such debt relief with their long-term goal of decreasing world poverty. Aid allowing for reduction in debt would be linked to the development of a so-called Poverty Reduction Strategy Plan (PRSP), a blueprint for how nations would use the financial resources freed by debt relief both to increase economic growth and to decrease the number of persons in poverty. This case focuses on the development of such a plan in the West African country of Mauritania, a predominantly desert nation twice the size of France with a population of just 2.6 million. Specifically, the case describes the challenges faced by the government team charged with development of the PRSP as it grapples with a mandate that the plan be developed through a process of thorough public participation. Only recently democratic, and with a long history of military rule and ethnic and racial conflict, Mauritania posed difficult challenges for those seeking to involve the public. Although a wave of non-government organizations had developed in the 1990s, not all were considered either representative or legitimate. HKS Case Number 1623.0
Speed kills: That's the disturbing conclusion of a new study of companies that pioneer markets. Learn why the venerated concept of first-mover advantage may be just an illusion.
If you could move your company's headquarters anywhere in the world, where would you go? How would you narrow the possibilities? Here's what's involved in relocating a $51 billion company.
According to new research, the way deadlines are set has a profound effect on the degree to which workers procrastinate and even on the quality of their work.
The answer is probably "yes." Managers often unintentionally sap their businesses' profits by ignoring the complexities of pricing. Find out what they're doing wrong.
This is an MIT Sloan Management Review article. Partnering with outsiders to speed innovation is increasingly the norm among high-tech companies. Then why are so many organizations still struggling to make such efforts work? The answer, say MIT Sloan School professor of management Edward B. Roberts and management consultant Wenyun Kathy Liu, is that all too often companies choose collaborative strategies without first considering what stage in the technology life cycle a given technology has entered--and which type of partnership is suited best to that stage. There are four phases in the life cycle of a technology (the fluid, the transitional, the mature, and the discontinuities), and, depending on where a particular technology is at the moment, only certain external partnerships facilitate speedy development. That reality presents a challenge for managers: Each product a company is juggling may be in a different phase, and because the partnerships developed for one phase of one technology could eventually serve a different purpose in another phase of another technology, all partnerships must be handled with care. Companies are more inclined to form alliances as the technology becomes better defined and as competitive pressure increases. In broadening past research (on the technology life cycle's effect on internal product development) to encompass the externally focused technology life cycle, the authors also have underscored the growing complexity of achieving business success. The implication for management in high-tech industries is that leaders need to excel at multitasking, thinking laterally, thinking creatively, and networking with individuals in various related industries. But all that starts with understanding the technology life cycle and what it means for outsourcing innovation.
It is now recognized that new venture start-ups can offer a career choice that is a little sexier, a little wilder, and in the long run equally lucrative, to the consulting or banking jobs that typically dominate post-MBA career paths. The FrogPubs case describes two entrepreneurial bad boys who ten years ago chose a different path, forming a partnership to develop their own, traditional business start-up. In the case, the two entrepreneurs discuss the thrills and chills involved in writing and implementing their business plan, as well as the lessons they learned while building their successful business brick by brick. The case study is organized in a way that allows discussion based on natural focus points ranging from potential bankruptcy in the early days, to later issues of personnel management, joint-venture partnership and protecting and exploiting a unique but maturing business concept. Please visit the dedicated case website to access case videos and other support material.
iMotors was an online used car retailer. Its business model reconfigured the industry value chain and allowed it to create significant new value for consumers. The case highlights the tension between value creation and value appropriation, limits to growth and the importance of establishing legitimacy in creating new categories. It also raises the question of the sustainability of competitive advantage.
The idea that the introduction or expansion of urban light rail systems could ease traffic congestion and air pollution has caught the imagination of many in American cities in recent decades. Yet, at the same time, questions about the efficiency and benefits of rail, compared with other transportation systems, have also arisen. This series of cases describes a long-running political and analytic battle in Seattle between rail transit proponents-including some of its leading planners and citizens-and opponents who believe the costs of a proposed new system, to be financed through a $3.9 billion bond package, will exceed its benefits.
During his first three years as CEO, Lloyd Byrne transformed Bretplex from an uninspired family-controlled company in the machine tool business into a midsize industrial conglomerate. Sales doubled, market value tripled, the company's management team grew stronger, and the board's makeup was enhanced by the appointment of several glamorous nonexecutive directors. After that strong beginning, however, Bretplex's previously unstoppable growth ground to a halt. The turning point was the company's acquisition of Hazlemere Measures, a British equipment manufacturer. The price of the acquisition had been bid up by an aggressive competitor, and the market believed Bretplex paid too much. Soon, other acquisitions were being examined. Worse, the company began missing its revenue estimates and revised them downward only as reporting dates drew near. More uncertainty emerged when Laura Barrington, the manager of an activist shareholder fund, began asking whether Lloyd had what it would take to lead the company to recovery. Board members Harriet Poole, a CEO herself, and Jefferson Souza, a strategy guru, debate solutions for Bretplex. If the company fires Lloyd, Jefferson says, the market will think the company is serious about getting its house in order, and Barrington and the fund will probably back off. Harriet, distracted by events at her own company, fears that it will be highly disruptive for Bretplex to lose its much-admired leader and, possibly, some of its senior managers. She is inclined to stick with a restructuring plan just approved by the board.
The Himalayas are one of nature's most demanding classrooms, but they can teach us important principles about taking charge of our followers--and our own egos. In this article, Wharton professor Michael Useem recounts the experiences of MBA graduates and midcareer executives who took part in a leadership program on the lower slopes of Mount Everest. Conceived to heighten participants' appreciation of what leadership is all about, the program transforms abstract concepts into practice: Not only do people learn from the historical expeditions of others, they also gain insights from their own unfolding experiences. Through hiking some 80 miles over rough terrain, the participants learned about their own limitations--one CEO grappled with the decision to turn back when others feared the altitude had become too much for him--and about the value of communication: what to do when several team members are unaccounted for as night falls. The team also learned from those they met along the path to Everest's base camp. They benefited from rare encounters, such as a private audience with the reincarnate lama, the spiritual leader for the region's largely Buddhist population, and a discussion with a passing hiker who had been part of the harrowing Everest expedition described in the best-seller Into Thin Air. During the journey, four essential principles emerged: Leaders should be led by the group's needs; inaction can sometimes be the most difficult--but wisest--action; if your words don't stick, you haven't spoken; and leading upward can feel wrong even when it's right. Through compelling stories of the trekkers' triumphs and miscalculations, the author sheds new light on several central management principles.
To move forward, society needs geniuses--those rare individuals whose flashes of insight and imagination change the way we live and see the world. Traditionally, we look for them in the arts and sciences, but geniuses appear in many guises. They can be engineers, designers, analysts, and even managers. Yet for all their creative energy, geniuses don't always make the best employees, colleagues, or bosses. They are notoriously prickly people, and they can be fiercely individualistic. Moreover, they can be surprisingly fragile. They frequently act with flamboyance, but inside they are deeply vulnerable. To understand how a manager might approach the challenges of genius, HBR senior editor Diane L. Coutu recently talked with choreographer and dancer Mark Morris. A MacArthur Fellowship winner, Morris has created some of modern dance's most enduring works, and his dance group is widely considered to be the most exciting company in the business. Morris' work with live music requires that he manage the genius of sopranos and virtuoso conductors who collaborate with his dance troupe. That makes him uniquely suited to discuss the realities of living with genius--from the inside as well as the outside. In this article, Morris discusses the roots of creativity, the truth about prima donnas, the dangers of living with mediocrity, and his drive toward authenticity. He also offers his candid opinion on geniuses: "These people are up against their own egos; that's why they're so delicate or flamboyant or insecure. Those qualities all amount to the same thing: vulnerability." To work with people effectively, he says, you must be completely honest: "Real artists or geniuses...especially need the truth. They're not fooled by false praise and empty encouragement."
If leadership, at its most basic, consists of getting things done through others, then persuasion is one of the leader's essential tools. Many executives have assumed that this tool is beyond their grasp, available only to the charismatic and the eloquent. Over the past several decades, though, experimental psychologists have learned which methods reliably lead people to concede, comply, or change. Their research shows that persuasion is governed by several principles that can be taught and applied. The first principle is that people are more likely to follow someone who is similar to them than someone who is not. Wise managers, then, enlist peers to help make their cases. Second, people are more willing to cooperate with those who are not only like them but who like them, as well. So it's worth the time to uncover real similarities and offer genuine praise. Third, experiments confirm the intuitive truth that people tend to treat you the way you treat them. It's sound policy to do a favor before seeking one. Fourth, individuals are more likely to keep promises they make voluntarily and explicitly. The message for managers here is to get commitments in writing. Fifth, studies show that people really do defer to experts. So before they attempt to exert influence, executives should take pains to establish their own expertise and not assume that it's self-evident. Finally, people want more of a commodity when it's scarce; it follows, then, that exclusive information is more persuasive than widely available data. By mastering these principles--and, the author stresses, using them judiciously and ethically--executives can learn the elusive art of capturing an audience, swaying the undecided, and converting the opposition.