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How Unicorns Grow
Start-ups seem to be getting bigger faster than ever--Uber is just one example of today's "unicorns," or private, venture-backed companies valued at a billion dollars or more. But is that really true, and does rapid growth lead to greater long-term success? Researchers at the Silicon Valley consultancy Play Bigger examined these questions and came up with some intriguing findings. Among them: Today's start-ups are growing about twice as fast as those founded a decade ago (as measured by market capitalization). However, there's no relationship between amount raised prior to IPO and growth in market cap afterwards. Age at IPO does seem to be predictive--companies that go public between the ages of six and 10 years generate 95% of all value created post-IPO. And most value creation comes from "category kings"-- companies, such as Facebook and LinkedIn, that carve out entirely new, winner-take-all niches. Tech start-ups are in a race to define new product categories, and in recent years the pace has quickened. Simply raising more money isn't enough to win the race--and going public too early or too late may limit success. Even for unicorns, the path forward is challenging. -
How to Make Extreme Numbers Resonate
Here are three examples of visualizations that can help viewers grasp colossally large or infinitesimally small numbers. -
Team Building in the Cafeteria
Many companies go to extraordinary lengths to build bonds among workers, often to no avail: Think of trust falls, a frequently mocked symbol of wrongheaded attempts to create intimacy among workers. New research suggests there's a better way, and it's pretty simple: Encourage teams to eat together. Cornell University's Kevin Kniffin and colleagues researched meal preparation practices among firefighters in one U.S. city and identified significant positive correlations between eating together and team performance. Cooperative behavior, for example, was about twice as high among team members that ate with one another. Companies can take advantage of these findings by investing in such things as onsite cafeterias, encouraging team leaders to organize lunches, and including meal preparation activities in offsites. This reprint includes three additional Idea Watch articles. "How to Prevent Overbilling" presents research showing that simply changing how you ask vendors to account for their work--focusing on units rather than overall price--encourages more-ethical behavior. "What Makes a Start-Up an Employer of Choice?" examines how six nonfinancial attributes, such as office location and founder qualifications, influence the appeal of new ventures for prospective employees. "Straight Talk About Pay" is a visual depiction of people's perceptions about their compensation. Most people have no idea whether or not it's fair--and that has a big effect on how long they stay in their jobs. -
Resource Management a la Ancien Regime
Maps from the Kress Collection at HBS's Baker Library depict historical efforts to regulate France's forests for ship timber. -
Smarter, Smaller, Safer Robots
A new generation of adaptive robots are creating new efficiencies for manufacturers and changing how companies build things, including factory floors themselves. And the robots are far more collaborative than their predecessors, enhancing engagement and job satisfaction among their human colleagues. New research headed by MIT's Julie Shah highlights the advantages of the new robots, showing that they have made manufacturing automation a less extreme commitment than it once was and offering a glimpse into the gains that will come when the new machines are paired with high performers. This reprint contains three additional Idea Watch articles. "Exploiting the 'Mobile Internet Gap'" is a visual representation of the rapid growth of digital private equity investment in countries where lots of people have cell phones but few of those phones have internet access--yet. "Do Regulators Go Easier on Socially Responsible Firms?" describes research showing that investing in CSR may be rewarded with leniency by regulators in the event of bribery violations. "'Inoculate' Buyers Against Disappointment" examines research demonstrating that instilling positive feelings about a company and then mildly challenging those feelings can shore up customer satisfaction if service breakdowns occur. -
How Machines Learn (And You Win)
A decision tree demonstrates how one cable company might spot service defectors early. -
When Platforms Attack
Amazon began life as an online bookseller, of course, but now there are few products you can't buy on the site. New research led by HBS's Feng Zhu investigates a common worry of Amazon's third-party sellers: What happens when, instead of just matching buyers and sellers, the platform decides to offer competing products itself? Zhu's team examined 164,000 products sold exclusively by third parties and found that 10 months later, Amazon had begun directly selling items in 3% of those product categories. Further, the items sold directly by Amazon often became the default option in search results. The team recommends that sellers using the Amazon platform take some defensive steps: They can reduce the odds of Amazon's entering the market by signing exclusive deals with suppliers (or manufacturing some products themselves) and focusing on a large selection of niche products rather than widely popular items. This reprint contains three additional Idea Watch articles. "Do CMOs Really Add Value?" looks at extensive new research aimed at providing a once-and-for-all answer to this persistent question (the conclusion, in brief: Yes). "The Wrong Way to Reduce Churn" describes a study of a wireless communication firm whose seemingly customer-friendly outreach effort--offering overspending consumers a better plan--backfired and cost it customers, and offers some theories as to why. And "Quitting Time" is a visual depiction of when employees in a million-person sample left their companies--showing that in today's candidate-driven job market, people move on surprisingly soon. -
Enlightened Farming
Agricultural inventions from 18th-century noble estates in France, including a wheat thresher, a tree transporter, and an incubation shed for chicken eggs. -
Luxury Branding Below the Radar
"Inconspicuous consumption"--elite consumers' affinity for discreet rather than traditionally branded luxuries--has become a global phenomenon. Work by researchers at Royal Holloway, University of London and elsewhere has identified two best practices that can help companies get out in front of the trend. Firms can redesign offerings to be less conspicuous; Louis Vuitton, Michael Kors, Tesla, and Audi, for example, have begun downsizing or even hiding their logos, while Tiffany has dropped the spelled-out brand name from its fashion jewelry line in favor of a simple "T." Companies can also rebrand around experience, artistry, or utility. For instance, Daimler still markets the Mercedes line in China but has also launched the subtler, all-electric Denza brand there; the hotel chain Jumeirah markets the unique qualities of each of its properties. This reprint contains three additional Idea Watch articles. "The Sorry State of Nonprofit Boards" is a visual presentation of survey results from nearly 1,000 nonprofit directors. Among the findings are that directors lack critical skills, boards lack formal processes, and upheaval is common. "What Your Firm Can Learn from Coworking Spaces" looks at new research showing that people thrive in shared office spaces, and why. "CEO Pay Can Drive Consumers' Decisions" describes experiments showing that people are more willing to buy from companies with CEO-to-worker pay ratios close to what they deem is fair. -
Why Some Videos Go Viral
A viral video is every marketer's dream. Social viewers--people who watch shared content rather than videos they've found by browsing--are far more likely to buy a product and recommend it to others. But it remains a mystery to most companies why some videos catch fire and others just sputter out. Unruly, a marketing technology company, offers an answer. Its analysis of 430 billion video views and 100,000 consumer data points reveals the two most powerful drivers of viral success: psychological response (how the content makes you feel) and social motivation (why you want to share it). -
How to Live with Risks
For years "risk management" has been characterized chiefly by caution--preventing the business from doing things that would create exposure. Although this has undoubtedly saved dollars and headaches, it's also led to slower growth, lower margins, and less innovation. New research from CEB shows that the best companies are rethinking their approach. Instead of simply trying to eliminate or reduce risk, managers are implementing three best practices: striking a balance between risk and reward; focusing on decisions, not process; and making employees the first line of defense. This reprint contains three additional Idea Watch articles. "First, the Pain" shows that for many companies that refocus their structures on customer segments rather than products, gains materialize only after two or three years of turmoil and losses. "For Founders, Preparation Trumps Passion" describes a series of studies revealing that although entrepreneurs see their enthusiasm as key to success, results depend much more on how well they have developed their ideas. "Strong Brands, Weak Pay" discusses new research showing that companies with well-known brands pay their top executives significantly less, suggesting that HR departments could leverage brand strength as they do other benefits when recruiting employees and negotiating pay. -
Market Indicators
Hand signals from a 16th-century mathematics textbook and exchange-rate "currents" from 18th-century Italian ports were just two of the innovations that lubricated the gears of preindustrial European commerce. -
To Innovate Better, Find Divergent Thinkers
When researchers asked carpenters, roofers, and in-line skaters how to improve safety gear for all three activities, each group turned out to be significantly better at thinking of novel solutions for the fields other than its own. Studies like this one demonstrate the value of accessing expertise from "analogous fields"--areas that seem different on the surface but are similar on a deep structural level. This piece shows how to find the far-flung experts who can jump-start your search for breakthrough ideas. This reprint contains two additional Idea Watch articles. "Global Growth, Paltry Returns" describes new research showing that many international expansions fail to deliver consistent and sizable profits and that companies are often better off growing locally. "When to Forget the Rearview Mirror" examines a study of forecasts in the music business, showing that in creative, volatile fields, historical data often impairs people's ability to interpret contextual data and make sound predictions. -
Beware Spurious Correlations
Charts that show a close correlation are often relying on a visual parlor trick. Tyler Vigen, a Harvard Law student, makes fun of them on his website. -
Tesla's Not as Disruptive as You Might Think
An investor in the electric car company Tesla recently issued a friendly challenge to HBS professor Clayton Christensen, the father of the theory of disruptive innovation: Does Tesla represent a new model of disruption, in which products start at the high end and move down? Christensen's research associates investigated by posing five questions used to evaluate disruptive innovations, concluding that Tesla is actually a classic sustaining innovation--a product that offers incrementally better performance at a higher price. But the research did point to something that could disrupt the auto industry. "Neighborhood electric vehicles"--low-speed vehicles that resemble souped-up golf carts--are adding some features of automobiles and could, the team believes, eventually steal significant market share. This reprint contains three additional Idea Watch articles. "Why Job Postings Don't Equal Jobs" visually depicts hires and postings for select industries, showing that in some (typically tech and other white-color industries) there are many more postings than actual jobs, while in others (typically low-skill, blue-collar roles) the pattern is reversed--meaning that this economic indicator is a poor proxy. "How Power-Hungry Bosses Keep Their Power" describes insecure managers who tend to isolate subordinates for fear of being challenged and suggests how companies can curb this tendency. "Financial Rewards Can Spur Innovation" highlights research showing that the right incentives can boost creative, conceptual work. -
Leadership Across Cultures
Bridging cultural differences demands exceptional emotional intelligence. This chart shows the percentage of leaders in each of seven global regions--the U.S., the Middle East, India, Latin America, sub-Saharan Africa, Europe, and China--who demonstrated strength in a range of hard and soft skills, according to a study by YSC, a corporate psychology consultancy. -
Measuring the Return on Character
We're never surprised to hear about unethical executives whose lapses eventually ruin their careers and companies. But is the opposite true? Do highly principled leaders and their organizations perform especially well? The answer is yes, according to new research by the leadership consultancy KRW International. CEOs whose employees gave them high marks on four key traits--integrity, responsibility, forgiveness, and compassion--had an average return on assets that was nearly five times as much as what CEOs with low character ratings had. This article describes the research findings and offers recommendations for how leaders can increase their self-awareness and overcome character deficits--for the benefit of their careers, their employees, and, it's now clear, their companies, too. This reprint contains three additional Idea Watch articles. "How Consumers Understand (and Misunderstand) Pricing Cues" describes research into how retailers unwittingly send misleading signals about whether they are high- or low-priced--something they need to understand and manage in order to compete. "Connected Cities Are Economically Healthy Cities" discusses a study showing a correlation between an area's average number of LinkedIn connections per user and its job growth. "Hello? Anyone in HQ Listening?" visually depicts several specific factors responsible for dissatisfaction and high turnover among Asian executives of Western multinationals, suggesting that parent companies needn't take a fatalistic view of this pervasive problem after all. -
The World of Business, 16th-Century Style
An elaborate engraving by the Swiss artist Jost Amman in 1585 depicts scenes from the mercantile economy in Northern Europe, revealing the variety of forces that can bring success or failure to a business. -
The Science of Sensory Marketing
The past year has brought a rush of interest among academics in how sensory inputs influence consumers on deep, non-conscious levels--and companies are starting to put these findings to use. One example is Dunkin' Donuts: In a highly successful campaign in Korea, an atomizer released a coffee aroma in public buses whenever the company jingle was played, increasing visits and sales in nearby stores. Another is BMW, which mikes engine sounds through a car's audio system in order to enhance the sporty feel. Every consumer company, experts say, should be thinking about how to use the senses to create and intensify brand personalities. This reprint contains two additional Idea Watch articles. "Not As Global As We Think" provides visual depictions of "connectedness" on individual country and aggregate levels, revealing that the world is not flat after all. "Why a Dutiful Spouse Can Boost Your Career" describes a new study showing that employment outcomes--income, number of promotions, and job satisfaction--are boosted by having a conscientious spouse. -
Stuff: When Less Is More
Today we use far fewer materials to get the same things done--manufacture a PC, for instance, or produce a ton of steel. But with that efficiency has come an exponential increase in overall demand for resources.