Mastercard, the global payments company, is known as a leader in privacy by design; senior leaders promote data responsibility and employees follow strict ethical guidelines and robust frameworks to manage and protect data. The company views AI as a significant part of its strategy going forward, using it to fight fraud, improve the consumer payment experience, increase efficiencies and decrease costs in back-end systems. When Mastercard created its AI Garage in 2018, its vision was to become an AI powerhouse. Realizing the special attention AI development efforts need, several leaders in the organization co-created the AI Governance Council and a framework to structure the company's approach to governing AI. The application of this framework led to several significant decisions, including walking away from two acquisitions. Mastercard believes that the combination of a solid Privacy by Design process and additional governance specific to AI - "the AI governance framework" - is the right approach for the long term to maintain consumer trust. Yet, while being a trusted guardian of data with this robust AI governance framework, Mastercard also faces the costs of its high accountability stance - forcing it to make appropriate organizational and managerial choices as well as ensuring that AI governance does not result in a reduction in innovation. The speed of AI integration and need for ethics in data practices will only increase. What does this mean for Mastercard's business model, profitability and innovation capabilities in the future?
Spotify Technology S.A. (Spotify) was facing significant problems with public relations due to artists’ claims of poor treatment. They had accused Spotify of underpaying artists, obscuring its business practices, and being overly litigious. The objections reached a critical point with a union of creatives, the Union of Musicians and Allied Workers (UMAW), submitting a petition to Spotify and on March 15, 2021, protesting at its global offices. Spotify management must decide how to navigate this issue.
Based in southern Germany, Richard Henkel GmbH was a manufacturing firm focused on its triple-bottom line rather than on its sales turnover. Driven by its sustainability ethos in both its products and its manufacturing processes, it saw itself as a champion of a post-growth, sustainable economy. The case pivots on co-managing director Susanne Henkel’s decision concerning a lucrative sales order: the order would place significant stress on its existing steady-state manufacturing operations and potentially compromise its sustainability performance. In deciding whether to accept the order, Henkel had to confront a pivotal question: How much growth was necessary and sustainable, and how much was too much?
This case focuses on the challenges of incentivizing innovation within Moog, an engineering company based in New York state that designs and builds guidance systems for space, air, and land-based travel. The case enables students to grapple with the challenges of using compensation to motivate and incentivize employees to create commercially successful innovations. Thick culture motivates employees to innovate in unique ways that money cannot. Students analyze the ways in which Moog's unique culture and current incentive systems successfully, and unsuccessfully, drive innovation, considering Moog's specific challenge of commercializing and scaling innovations. Throughout the discussion, students will understand the ways in which incentivizing innovation is a structurally challenging problem within large companies. Incentivizing innovation differs from incentivizing other types of performance, and students should realize that money alone cannot drive innovation because of the challenges of measuring performance, especially given the long time horizons and the fact that innovation necessarily involves risk and uncertainty.
Amit Kasliwal was a participant of the Post Graduate Program for Executives at the Indian Institute of Management, Ahmedabad in 2013 when he came up with an idea of a tea-brewing machine. Kasliwal conducted a survey to understand the tea-brewing machine industry and needs of the market and subsequently started working on prototypes for the same. He formally set up his company in 2015 and started developing a Minimum Viable Prototype (MVP). Joined by co-founders Harvinder Rajput and Saurabh Borah, he branded his prototypes as MyT Brewer. In December 2016, the start-up ran out of resources. The dilemma for Kasliwal and his team was whether to continue working on an improved prototype or enter the market.
Kasliwal and his team had been working on prototypes for a tea-brewing machine since 2013. After running out of funds, they decide to introduce the latest prototype in the market and test it for user experience. After receiving feedback from customers and observing them interact with the machine, they started designing an improved product. They faced the dilemma about the best way to go about growing their revenues.
New research based on MIT SMR's Culture 500 and employees' Glassdoor ratings of their employers identifies the five most common elements of toxic workplace cultures as disrespectful, noninclusive, unethical, cutthroat, and abusive. The authors discuss how unhealthy work environments negatively affect both employees and their employers and how organizations stand to benefit when they identify and address toxic elements in their cultures.
Based in southern Germany, Richard Henkel GmbH was a manufacturing firm focused on its triple-bottom line rather than on its sales turnover. Driven by its sustainability ethos in both its products and its manufacturing processes, it saw itself as a champion of a post-growth, sustainable economy. The case pivots on co-managing director Susanne Henkel's decision concerning a lucrative sales order: the order would place significant stress on its existing steady-state manufacturing operations and potentially compromise its sustainability performance. In deciding whether to accept the order, Henkel had to confront a pivotal question: How much growth was necessary and sustainable, and how much was too much?
NorLand Limited (NorLand) was a construction company based in British Columbia, Canada, with operations in Alberta, British Columbia, Quebec, and the United States. Having grown primarily by acquisition, the company was moving toward an ambitious goal: to achieve CA$500 million in revenues and CA$50 million in net operating income (NOI) by 2025-the 500-50-25 goal. The main questions facing Dave Reynolds, NorLand's chief executive officer (CEO), and his leadership team revolved around not only expanding the business to achieve this target but doing so sustainably, while giving NorLand's business units the latitude and freedom that had drawn them to join NorLand in the first place.
In September of 2017, CavinKare Private Limited was faced with a tough decision about how to continue its growth in the personal care products industry. The company had been successful in the hair colour market in India, particularly in the southern regions of the country. CavinKare's success was largely due to their focus on research and development and innovation. The hair colour market showed room for growth, and CavinKare wanted to make sure that they capitalized on its potential. There were three options before the company: stay with their existing products and markets, expand their existing products into new markets, or create innovative new products. To make the decision, CavinKare had to consider many factors, including consumer behaviour, new product development, marketing strategies, and trade partnerships. Only by considering all of these things together would the company have an answer to its question: what was the best option for growth?
Environmental racism describes the unequal burden of environmental hazards placed on disadvantaged communities through systems, policies, and practices. In such a situation, these people disproportionately live close to sources of toxic waste-what are referred to as Locally Unwanted Land Uses (LULUs) such as sewage works, mines, landfills, power stations, major roads, and other emitters of airborne, earth, and water pollution-and suffer from greater rates of health problems, as a result. More than a quarter of Marathon Petroleum's 13 refineries are located in minority-majority communities. Marathon Petroleum's Detroit refinery is located in the ZIP code 48217, where around 80% of residents are Black, 12% are Hispanic, and over 40% are considered to be in poverty. These residents also have higher rates of asthma, heart diseases, and lung cancer than in most other ZIP codes in Michigan. This case places students in the role of fictional character Riley Novak, Marathon Petroleum's chief environmental officer, to examine the company's history with environmental racism, especially in Detroit, and the proposed solution-the Property Purchase Program.
Nicole Blank has bootstrapped her functional beverage company, Sunomi Switchel, to contracts with leading grocery retailers. She is now faced with a series of choices for if and how to continue to grow the business.
LooksRare launched a decentralized and anonymous organization to compete against NFT marketplace leader OpenSea. By launching its own cryptocurrency, LooksRare attempted to lure users with a digital rewards program. The nature of the organization and its business model, however, brought challenges that are unique to the blockchain industry.
Bail funds, organizations that collect money to post bail for community members who are eligible for cash bail to stay out of jail until the time of their trial, have grown throughout US history, buoyed by major civil rights events such as the Red Scares, Civil Rights movements, Vietnam War Protests, among others. Given the volume of potential community members who would benefit from bail fund assistance and the plethora of defendant information required to process the bail payments, such funds like the Springfield Bail Fund face a logistical and management challenge.
Bail funds, organizations that collect money to post bail for community members who are eligible for cash bail to stay out of jail until the time of their trial, have grown throughout US history, buoyed by major civil rights events such as the Red Scares, Civil Rights movements, Vietnam War Protests, among others. Given the volume of potential community members who would benefit from bail fund assistance and the plethora of defendant information required to process the bail payments, such funds like the Springfield Bail Fund face a logistical and management challenge.
CEO pay has gone through remarkable changes over the past two decades. The most striking new features have been the increased use of stock options in the early 2000s, and of restricted stock since then. Both forms of stock-based compensation are intended to resolve the agency problem that occurs when CEOs do not act in the best interests of stockholders, but each has its advantages and limitations. In this instalment of Organizational Performance, we discuss the history of their use and similarities and differences between the two, and argue that both are often overused. Bonuses based on strategic goals, on the other hand, may be underused. We conclude with a contextual approach to guide boards of directors in making choices among the forms of CEO compensation--stock options, restricted stock, salary, and bonus--to incentivize CEOs to work toward maximizing organizational performance. Briefly, stock options are most appropriate for growth firms, and restricted stock for stable firms. Both forms of stock-based compensation are more appropriate for new than for long-tenured CEOs.
Humility has attracted increasing attention in discussions of leadership given the positive effects that humble leaders can have on team and firm performance. In spite of what we know about the favorable outcomes of leader humility, we do not know much about how personality influences humble behaviors. How is leader humility related to personality? How can leaders develop humility? In this article, we look at how the personality factors of Conscientiousness, Agreeableness, Neuroticism, Openness to Experience, and Extraversion lead to specific humble behaviors: self-awareness, appreciation of others, low self-focus, teachability, and self-transcendent pursuits. We find that the personality mix of Conscientiousness, Agreeableness, and Openness to Experience form a substantial base for developing leader humility. At the same time, a humble leader can be an introvert or an extrovert, and can demonstrate different degrees of emotional stability. We offer recommendations and a behavioral inventory of leader humility that can be used by leaders and by organizations to recruit for and promote humility, to engage in behavioral modeling and coaching, and to create interventions to develop leader humility.
Recognizing, enhancing, and appreciating positive experiences in our lives, also known as savoring, has many benefits. Research on savoring suggests that practicing savoring is linked to positive outcomes, such as increased happiness and general well-being. Organizations should be aware of the positive implications of practicing savoring and should seek to develop savoring norms, as this can contribute to organizational success. This article discusses the savoring of positive experiences and its application in the workplace. Specifically, this article will provide an overview of strategies aimed at enhancing savoring, as well as past research findings that highlight the utility of these strategies. Different barriers and solutions to savoring are discussed, in addition to the importance of the context in cultivating savoring norms in the workplace.
Expenditure on product placement has grown faster (170%) than on advertising (15%) over the past 10 years, but some evidence suggests that the return on investment has been declining. For the well-known, fast-moving consumer goods/consumer-packaged goods (FMCG/CPG) food brands typically placed in local TV programmingd--the context of this article--the management problem of overfocusing on brand exposure hinders gaining brand choice, the ultimate strategic goal of marketing. Managers' preconditioning, ease of measuring, and assumptions about the value of exposure contribute to their subtle placements becoming blatant or in other problems, as when other promotional devices, like a television commercial or program sponsorships billboard, get bundled into the same TV episode as the company's own product placement. The higher brand exposure gained can evoke negative mental outcomes in consumers, weakening influences on brand choice. An experiment with a large sample of grocery shoppers supports such an outcome. More strategic value can also be gained from product placements in general by their use longitudinally, in-between campaigns of TV commercials, as an instructive tool and through normalizing a brand's role in a consumer's life. We provide eight checkpoints for marketers to consider when planning to use product placement to gain value for their brands.