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Background Note for product #CB0261 and CB0262.

This note provides an overview of how psychological principles may be used as part of a seller's pricing strategy. The note defines the concept of psychological pricing and explains the motivations for firms to engage in it. Prominent practices and tactics, with detailed reference to the psychological and behavioral principles at play, are featured. Numerous examples are given to illustrate the material covered. The note also highlights several concerns companies might have in employing psychological pricing techniques, along with thoughts on how to mitigate or counter these reservations.

Boards of directors have important responsibilities in the context of top management succession processes. However, their role has not been sufficiently studied in the setting of family-controlled firms. Meanwhile, family executives often play a major role in the performance of family firms. In fact, replacing those family managers has important implications and needs to be treated as a priority by boards of directors. In this industry note, we explore the unique challenges that succession processes pose for the boards of family firms. We conclude that boards of directors should be particularly conscious of the need for planning, coordinating, and overseeing succession processes to meet both the business challenges and the controlling family's expectations.

This technical note introduces the concept of applying subtractive thinking to problem-solving. The essential work of almost any employee in an organization is to solve problems and make something better. And more often than not, the tendency is to add to what currently exists, not take something away. This note shares obstacles to the use of subtractive ideas for transformations and changes, as well as the advantages of removing complexity. It offers an overview of the problem-solving process, from mental representation of the initial situation, through brainstorming possible transformations, to conceiving of various goals.

This note describes some of the most significant agricultural innovations in the Netherlands, their drivers, environmental performance implications, some challenges facing the sector, and the potential replicability of these innovations to other contexts.

Generative AI refers to a type of artificial intelligence (AI) that can create new content (e.g., text, image, or audio) in response to a prompt from a user. ChatGPT, Bard, and Claude are examples of text generating AIs, and DALL-E, Midjourney, and Stable Diffusion are examples of the image-generating variety. During training, a generative AI learns the underlying structure of the desired output by absorbing a mass of relevant data - all of the books in the public domain, for example, or petabytes of text scraped from across the internet. Once trained, generative AIs work by creating outputs that recreate, with calculated variation, the underlying patterns learned in training. In 2023, all these types of generative AI were created in a similar process. At the core of any generative AI system is the model, a mathematical representation of patterns that forms the basis of 'knowledge' for the system. The structure of the model is determined by its architecture, the theoretical organization of parameters in an artificial neural networks that the system uses to generate its outputs. To learn, the model relies on a mountain of training data, a collection of examples relevant to the task the model is being trained to perform. During an initial pre-training process, the model learns to adjust its parameter-weights (assumed by the architecture), improving its prediction quality with many iterations over time; that model is further refined through a fine-tuning process. Training an AI system requires specialized hardware, like GPUs in data centers, that consume enormous amounts of electricity to handle heavy and massively-parallel computational loads.

The Internet of Things (IoT) can be generally explained as a network of objects that collect data regarding their surroundings and transfer it across the internet to various systems. While the addition of more information can improve a business's data-driven decision-making, should all businesses invest in IoT? This technical note explores IoT technologies, discusses how it is being used in industry, brings up some advantages and disadvantages, offers examples and applications, and investigates how it might fit into a firm's digital strategy.

A digital twin can be described as a digital model of a real object. But what makes it different from a prototype? How are digital twins being used in business settings outside manufacturing? How do they relate to machine learning and augmented reality? When digital twins meet their fullest potential, they enable businesses to optimize operations by managing their assets more efficiently, generating higher productivity, and reducing costs. This technical note discusses some potential benefits and drawbacks of digital twins; offers examples in aviation, car manufacturing, and agriculture; and helps managers identify where implementing the technology may be useful.

This technical note explores how the macroeconomy affects businesses and individuals in everyday life, from pricing to job prospects to investing. Students of macroeconomics will gain insight into the benefits and usefulness of their studies both while in school and beyond.

Transportation plays a key role in Canada's economy. The principal objective of this note is to provide a Canadian perspective on transportation. The first part deals with Canada's transportation network, providing an overview of the transportation services sector and the economic importance of transportation. The second section examines the role of government in Canada's transportation sector, including government policy. The third section describes the characteristics of each of the six main modes of transportation: air, rail, truck, marine, pipeline, and intermodal. The final section addresses the key challenges facing the Canadian transportation sector, including environmental and safety issues.

This note offers a comprehensive exposition to subscription revenue models and aims to explain their recent rise. It covers the advantages to firms of employing a subscription-based approach to monetization (as opposed to "one-off" upfront payment), as well as the benefits to consumers from the arrangement. The note further provides a typology of the different subscription models used in practice, and outlines the various considerations involved in designing an effective subscription service. Also covered are the key performance indicators (KPIs) and metrics companies should use in order to track the performance of the subscription design they have elected to follow. Lastly, common challenges firms may face when implementing a subscription model are highlighted. The note is replete with examples that illustrate the concepts and ideas presented.

This note can be used in any case class. A strong analysis should be followed by a solid action plan. Unfortunately, a lot of action plans are not worthy of the solution they are meant to support because they are vague and open-ended. A beautiful action plan is specific and clear, with lots of detail. This note offers careful instruction on how to build a beautiful action plan. For instance, action plan builders should ensure the action plan flows from the analysis; be specific, especially in the early stages; make steps realistic; plan on overcoming natural resistance to change; state and justify assumptions; address the short and long term; define critical steps; and outline ways to measure progress. Examples of good and poor plans are included.

This note can be used in any case class. A strong analysis should be followed by a solid action plan. Unfortunately, a lot of action plans are not worthy of the solution they are meant to support because they are vague and open-ended. A beautiful action plan is specific and clear, with lots of detail. This note offers careful instruction on how to build a beautiful action plan. For instance, action plan builders should ensure the action plan flows from the analysis; be specific, especially in the early stages; make steps realistic; plan on overcoming natural resistance to change; state and justify assumptions; address the short and long term; define critical steps; and outline ways to measure progress. Examples of good and poor plans are included.

This technical note provides a compiled 2022 annual report for the United States of America, consolidated for the public and private sectors. It includes financial statements, accompanying notes, discussion and analysis, and a summary of risk factors. An introductory section specifies the report's overarching purpose, as well as describing the role of accounting more generally for any defined entity. This annual report is designed to enable access to objective and transparent financial information about the United States within a single document. It can serve as a bridge to a candid and complete conversation about the nation's economic and financial condition. The summary is a descriptive work, not theoretical. To increase accessibility, effort was made where possible to present and describe information in layman's terms and language.

Logistic regression is a modeling technique often used to predict a binary variable-a variable coded as 1 if an event of interest occurs (e.g., a borrower defaults on a loan) and coded as 0 otherwise. This note details how logistic regression applies the logistic function to generate a probability forecast for a binary event. It also includes an example of how to fit a logistic regression model to loan default data using StatTools (an Excel add-in). The StatTools output is then used to predict a loan's default as a function of the borrower's credit score.

Many factors influence corporate governance in a family firm, the most prevalent form of business entity in Latin America. National culture affects a family firm's societal values, as well as economic, political, and legal systems of governance. Normative behaviour and expectations are also key factors that affect both individual and organizational norms. The firm's characteristics are another major source of influence. In addition to these major factors, various other variables play a role on shaping the firm's corporate governance, including family unity, patriarchal expectations, and inclusivity of the family definition. All of these factors can influence the numerous decisions that family businesses make in regard to their corporate governance, which makes it impossible to apply one approach for all family firms in Latin America. Each organization's board of directors may have specific characteristics that require different mechanisms to make effective governance decisions. This technical note discusses an evolutionary pattern of corporate governance, rather than a single approach, that could be effectively applied to the decision-making board of a family firm in Latin America.

Implicitly or explicitly, product-development teams in digital spaces will go through a process of gathering and employing data to help them create and iterate upon a user experience that invites high engagement. An important part of gathering this data is having actual users test the product, but in order to learn what testable criteria constitute successful user behaviors, managers and teams can employ user stories, testable micronarratives about user experience. User stories give managers and teams important tools they can use to focus their observations, bring actionable ideas, and facilitate productive work on development-ready designs. In particular, they can give general managers a focal point for their work on continuous design and a way to prioritize with purpose as they decide on a backlog for development, iteration to iteration. This technical note takes readers on a deep dive into user stories as they apply to continuous design, prototyping, usability testing, and analytics. It explores how managers and teams can create, refine, and prioritize them to help create the best possible user experience within the products they are designing.

This note provides a comprehensive exposition to the topic of dynamic pricing (whereby the fee customers are charged is time-dependent). It covers the motivation for firms to engage in dynamic pricing, provides a typology of the main formats dynamic pricing can take, and is replete with examples that showcase how dynamic pricing is implemented in practice. The connection between dynamic pricing and price discrimination, as well as algorithmic pricing, is also presented. The note further highlights potential pitfalls firms might experience when running dynamic pricing schemes and offers ways for them to avoid or mitigate those risks.

The course overview note for the elective course Mastering Consulting and Advisory Skills (MCAS).