In this installment of Organizational Performance, we draw attention to two types of shareholders that tend to push executive decision-making in different directions. Quality shareholders (QSs) invest in a small number of companies and hold their shares over time. QSs offer patient capital that allows executives to focus on building and sustaining competitive advantages. Transient institutional investors (TIIs) hold dispersed shareholdings across a wide array of companies and frequently trade in and out of any given stock. TIIs impose pressure on quarterly earnings reports that induce managerial myopia and inhibit strategic thinking. We consider the influence of these investors on how many consumers are harmed before a defective product is pulled from the market. The good news is that for every 1% increase in QS shareholding, prerecall consumer harm decreases by 2%. Unfortunately, for the same amount of increase in TII shareholding, prerecall consumer harm increases by 6%-a frightening prospect. The case of product recalls draws the difference between QSs and TIIs into stark contrast. In response, we offer practical recommendations to assist managers in navigating these two types of powerful institutional investors.
With the enactment of the long-awaited U.S. security-based crowdfunding regulations in May 2016, early-stage private companies can utilize regulatory crowdfunding to raise funds on digital platforms via multiple nonaccredited investors. To protect such small microinvestors and maintain market efficiency, the Securities and Exchange Commission (SEC) requires extensive disclosure information in filings. However, with many ventures being new, small, or lacking in experience, there has been little practical guidance on best practices for navigating such disclosures-particularly to enhance funding prospects. We aim to address this gap by focusing on two crucial aspects of disclosures: financial reporting and the disclosure narrative. We draw on extant research in the field and outline the best disclosure practices for potential regulatory crowdfunding issuers based on signaling theory and institutional theory. Our recommendations offer a simple but practical guide to SEC financial reporting and disclosures for successful regulatory crowdfunding.
This case describes how Boston Medical Center, a hospital and safety net organization, changed its strategic approach to health equity after realizing that previous efforts were not sufficient to address the health disparities among their patients. In 2021, the Health Equity Accelerator was formed to coordinate this strategic approach, which adopted race-based disparities as their primary focus. Over three years the Accelerator demonstrated impressive reductions in racial and ethnic disparities in health outcomes among pregnant women and patients with diabetes. These results reinforced their drive to scale their innovative approach, and set an example for other institutions nationwide. However, scaling presented significant challenges: balancing replicable and standardized "off the shelf" solutions with distributing a "methodology" to enable other institutions to identify their own solutions to inequities in their patient population.
Monosha Biotech (MB), a social start-up in Baruipur, West Bengal, India, was founded in 2017 to tackle a significant public health issue: snakebites. India had the highest number of snakebite fatalities globally, and the efficacy of anti-snake venom (ASVs) varied significantly depending on the snake's location. As the prominent snake-venom manufacturer was headquartered in southern India, the existing ASVs had been customized to provide optimal effectiveness in the southern part of the country, and this left individuals in other regions across the country exposed and in danger when they suffered snake bites, consequently adding to the high fatality rate. MB started commercial snake-venom production in 2021, after getting all the necessary clearance and approval from the authorities. Despite the company's commercial success, in 2023, the company's founders had concerns about the future of their market expansion, particularly regarding the company's scalability and potential for continued growth. Their task was difficult, as they had to confront two significant challenges. First, how could they create an authentic brand with the company's vision, mission, and value proposition as a social enterprise in mind? Second, what alternative for expansion in the anti-snake-venom market would be suitable to ensure further growth?
Although the term 'Generative AI' (GenAI) is widely recognized, its practical application in daily workflows has yet to be understood. This exercise introduces students to GenAI tools, demonstrating how they can be seamlessly integrated into professional work practices to co-invent, analyze data, generate images, summarize text, etc. The exercise guides students through developing a fictional snack company, showcasing the versatility of GenAI in tasks such as market analysis, brand development, and the formulation of marketing strategies. The exercise culminates with students creating a comprehensive design document and presentation that can be used to pitch to investors. Key takeaways include understanding how GenAI works, incorporating AI into developing and launching a new product, and offering valuable lessons on AI's potential and limitations in the modern workplace.
After retiring from a long and successful career in financial auditing, Linda McGill looked forward to the prospect of joining a board. She felt the time was right to leverage the breadth of her experience while fulfilling one of her long-term goals. Though somewhat of a stretch, the thought of helping to guide a complex, multinational listed company was particularly exciting, given not only the scale of the responsibility, but also the potential prominence and financial upside it could bring her. At the same time, Linda also considered an invitation to join the board of a midsize, PE-backed family company she had worked closely with in the past. Though appreciative for the offer, she was aware that the company was facing ongoing challenges that might require a serious time commitment from her to address. How would Linda weigh the tradeoffs of her options?
The 2023 release of live-action film Barbie, and its accompanying marketing blitz, incited a worldwide Barbie craze. Suddenly Barbie was everywhere, a celebrated icon reinstated at the forefront of cultural conversation. This goodwill stood in contrast to decades of criticism of the Barbie brand. Although proponents celebrated Barbie for her promise to "inspire the limitless potential in every girl," detractors felt that the doll promoted a narrow beauty standard and perpetuated gender stereotypes. Past efforts to diversify the Barbie doll had met mixed reactions. Did the movie's superlative success mean that Barbie's dark days of controversy were behind her? In a fast-changing, turbulent industry, Mattel executives need to decide how to sustain Barbie's positive momentum, and whether the strategy can be replicated across other brands in Mattel's portfolio.
Happiness Capital is a global venture capital firm within the hundred-year-old Lee Kum Kee Group with a mission to bring happiness to the community and the world through venture investments. As the founding Lee family progressed into the fifth generation, it wanted to diversify into a business that would also benefit the society, and impact investing emerged as an answer as it was a cause that resonated across different generations of the family. Happiness Capital undertook the pioneering initiative to co-create the "Happiness Return Framework" together with industry experts, addressing the issue of impact measurements often encountered in impact investing. The case examines how Happiness Capital defines and measures happiness with its proprietary "Happiness Return Framework," as well as examining its investment strategies, process, performance, risk management, organization and governance.
Inclusive leadership is at the heart of what former AT&T CEO Anne Chow calls 'leading bigger.' While a commitment to diversity, equity and inclusion is important, she argues that it is not enough. Inclusion, as she defines it, is not just about people. It can also relate to the work itself-through, for instance, taking in larger datasets and more viewpoints for better decision-making. And it can encompass the workplace, more agilely addressing where, when and how we work to support the needs of the business and its people in any given moment. In this article she provides a playbook for 'leading bigger'-and enabling your organization to thrive.
Historically, organizations have viewed exploration and exploitation as two distinct paths to innovation. But in our digital-driven era, this view is outdated. They describe recent research showing that some companies are working together to invent innovations further from the customer and compete on activities closer to the customer. They call the amalgamation of these two approaches coopetition. In this article they show that to succeed in the digital era, both digital and legacy incumbents must practice 'innovation ambidexterity,' refining existing competencies while exploring new avenues. By embedding coopetition into their DNA, companies can leverage both digital technologies and strategic partnerships.
Too often, efforts to innovate fall short within organizations. The good news is that, whether the focus is on new products, services, processes or business models, Generative AI (GenAI) can enhance and challenge the work of teams across all phases of the innovation cycle. GenAI's most obvious contribution thus far has been in idea generation and validation-the divergence and convergence phases of innovation. Yet the authors show that it can play an even more important role in helping leaders confront and update the strategic assumptions at the foundation of their strategies-what they call the 'doubt phase' of the cycle. They show that GenAI's role in innovation is not to take humans out of the creative process, just to make them better at it by pointing out old assumptions that box them in and stymie the quest for true innovation.
There is one thing that virtually every organization-whether it's a bank, a tech start-up or a hospital-has in common: a desire to reach its full innovative potential. The question is, how is this achieved? In this article-an excerpt from his book, The Management of Innovation-the author shares eight of the most important elements and principles for leaders to consider when aiming to optimize innovation for their organization. The first four relate to the use of intellectual property (IP) for effective management of the technologies developed by an organization; while the other four focus on the drivers of innovation both inside and outside of a firm.
Day after day, we observe people doing the same things in the same ways. As a result, we expect people to wear shoes on their feet and gloves on their hands; to eat ice cream with a spoon, not a fork; and to sit at the front when they drive and the back when they don't. When we observe things over and over, our mind stops register¬ing the action and responding. There is no 'surprise' signal to make us think, 'Hey, maybe we could do things differently?' The author argues that even minor changes have the power to trigger 'dishabituation' by signaling that a new situation needs to be navigated. As a result, people are more likely to rethink the status quo. He provides insights for increasing creative thinking in organizations by inducing small changes to routines and environments.
Two brothers who founded a successful company in Côte d'Ivoire must make a decision about how to bring their daughter and niece-educated in Paris and currently working there-into the family business, a company founded in 1988 and now one of West Africa's most successful conglomerates. She has surprised them with an ultimatum: She will come back, but only as COO, in charge of some grand expansion plans. Two experts-both with deep expertise in African family businesses-offer their advice in accompanying commentaries.
In 2008 Abbott introduced a revolutionary new device, FreeStyle Navigator, designed to improve the lives of the world's more than 500 million diabetes patients by offering continuous glucose monitoring with technology that could translate an electrochemical signal from the body into precise, real-time data. Doctors and patients who tried the device appreciated it-but it was bulky, hard to manufacture, and expensive. And without widespread adoption, it wouldn't have the hoped-for impact. Abbott's leaders soon realized that they needed to go back to the drawing board. Four years later they launched FreeStyle Libre, a reimagined continuous glucose monitoring (CGM) system in which an even smaller sensor applied to a patient's arm sends data directly to a smartphone app every minute. It is now used by millions globally, and by the end of 2024 it will have generated more than $6 billion in revenue, making it one of the most successful medical devices-as measured by usage and sales-in history. The pivot from the Navigator to the Libre was a deeply consequential decision for Abbott, and others can learn from the principles the company's leaders followed to arrive at and then execute on that choice.
Generative artificial intelligence (gen AI) has the potential to radically alter how business is conducted, and there's no doubt that it will create a lot of value. Companies have used it to identify entirely new product opportunities and business models; to automate routine decisions, freeing humans to focus on decisions that involve ethical trade-offs, empathy, or imagination; to deliver customized professional services formerly available only to the wealthy; and to develop and communicate product and other recommendations to customers faster, more cheaply, and more informatively than was possible with human-driven processes. But, the authors ask, will companies be able to leverage gen AI to build a competitive advantage? The answer, they argue in this article, is no-unless you already have a competitive advantage that rivals cannot replicate using AI. Then the technology may serve to amplify the value you derive from that advantage.
When considering internal data or the results of a study, often business leaders either take the evidence presented as gospel or dismiss it altogether. Both approaches are misguided. What leaders need to do instead is conduct rigorous discussions that assess any findings and whether they apply to the situation in question. Such conversations should explore the internal validity of any analysis (whether it accurately answers the question) as well as its external validity (the extent to which results can be generalized from one context to another). To avoid missteps, you need to separate causation from correlation and control for confounding factors. You should examine the sample size and setting of the research and the period over which it was conducted. You must ensure that you're measuring an outcome that really matters instead of one that is simply easy to measure. And you need to look for-or undertake-other research that might confirm or contradict the evidence. By employing a systematic approach to the collection and interpretation of information, you can more effectively reap the benefits of the ever-increasing mountain of external and internal data and make better decisions.
Many experts are urging established companies to radically innovate-and disrupt themselves before someone else does. The trouble is, large firms aren't designed for moon shots. Their owners don't like the risks and won't kill the goose that lays the golden egg. As a result, all too often they end up defaulting to incremental innovation. But there is a solution: Incumbents can partner with entrepreneurial start-ups or with intrapreneurs that have ideas for breakthrough products. By doing that, they can leverage their significant resources while increasing the odds that those ideas will take off. This approach does require careful management, however. Drawing on the experiences of more than a dozen large multinationals, including Atlas Copco, Enel, and Epiroc, this article outlines a three-stage innovation process for incumbents to follow: First, set up numerous projects with multiple partners, nurturing them until their chances of success become clear. Next, once a venture has a breakthrough, gradually increase your commitment and help it remove roadblocks. Finally, when its business model is viable and it has a critical mass of customers, rapidly mobilize the resources it needs to scale up quickly.