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  • Demystifying AI: What Digital Transformation Leaders Can Teach You about Realistic Artificial Intelligence

    Recent years have seen a reemergence of interest in artificial intelligence (AI) among both managers and academics. Driven by technological advances and public interest, AI is considered by some as an unprecedented revolutionary technology with the potential to transform humanity. But, at this stage, managers are left with little empirical advice on how to prepare and use AI in their firm's operations. Based on case studies and the results of two global surveys among senior managers across industries, this article shows that AI is typically implemented and used with other advanced digital technologies in firms' digital transformation projects. The digital transformation projects in which AI is deployed are mostly in support of firms' existing businesses, thereby demystifying some of the transformative claims made about AI. This article then presents a framework for successfully implementing AI in the context of digital transformation, offering specific guidance in the areas of data, intelligence, being grounded, integrated, teaming, agility, and leadership.
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  • Artificial Intelligence in Human Resources Management: Challenges and a Path Forward

    There is a substantial gap between the promise and reality of artificial intelligence in human resource (HR) management. This article identifies four challenges in using data science techniques for HR tasks: complexity of HR phenomena, constraints imposed by small data sets, accountability questions associated with fairness and other ethical and legal constraints, and possible adverse employee reactions to management decisions via data-based algorithms. It then proposes practical responses to these challenges based on three overlapping principles-causal reasoning, randomization and experiments, and employee contribution-that would be both economically efficient and socially appropriate for using data science in the management of employees.
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  • Organizational Decision-Making Structures in the Age of Artificial Intelligence

    How does organizational decision-making change with the advent of artificial intelligence (AI)-based decision-making algorithms? This article identifies the idiosyncrasies of human and AI-based decision making along five key contingency factors: specificity of the decision search space, interpretability of the decision-making process and outcome, size of the alternative set, decision-making speed, and replicability. Based on a comparison of human and AI-based decision making along these dimensions, the article builds a novel framework outlining how both modes of decision making may be combined to optimally benefit the quality of organizational decision making. The framework presents three structural categories in which decisions of organizational members can be combined with AI-based decisions: full human to AI delegation; hybrid-human-to-AI and AI-to-human-sequential decision making; and aggregated human-AI decision making.
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  • Is it U.S. GAAP or IFRS? Understanding How R&D Costs Affect Ratio Analysis

    While financial reporting standards under U.S. GAAP and IFRS are fundamentally similar, differences do exist that may affect our analysis of company financial statements. This is particularly true when comparing a U.S. company following U.S. GAAP to a firm that uses IFRS. To illustrate, we compare research and development (R&D) accounting methods under both sets of standards and illustrate how they affect the analysis of financial results of firms in a specific industry-automotive manufacturers. Our results provide insight into settings in which differences in R&D accounting may have the greatest impact on financial analysis.
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  • Transforming a Traditional Research Organization through Public Entrepreneurship

    Public entrepreneurship is much like its private sector counterpart; however, public entrepreneurs face additional challenges due to weaker competitive forces in the public as compared to private sector, with objectives that often are poorly defined and performance that is difficult to measure. Despite the impact on public good, how to enact changes successfully in public sector organizations to be more entrepreneurial is poorly understood. This article summarizes current research on public entrepreneurship and presents a detailed case study of a successful entrepreneurial change in a public sector organization. A five-step change process used to enhance entrepreneurial behaviors was implemented in a public sector organization and the qualitative and quantitative results demonstrated substantial performance improvements over 4 years (i.e., quantitative performance in some areas was more than 10 times greater). We explain key steps that produced successful outcomes and how to avoid common challenges in the implementation of ongoing entrepreneurial behaviors in public sector contexts.
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  • Introducing a 'Stop-doing' Culture: How to Free your Organization from Rigidity

    Individuals and organizations cannot learn perpetually. Managers should be aware that unlearning becomes necessary to discard obsolete and outdated mental models, assumptions, behaviors, or routines. We investigated new product development teams and interviewed change consultants to explore the phenomenon of unlearning in real-life contexts. We particularly focus on examples of cases in which these steps have been used and implemented successfully. In order to make room for new knowledge and foster innovations more efficiently, we identify and suggest four critical steps managers can introduce to help their employees unlearn: creating situational awareness, providing islands of temporal and spatial freedom, encouraging an error-forgiving and stop-doing culture, and reducing the influence of old knowledge over time. Fostering unlearning can prevent rigidity and stagnation while opening up room for innovation. This article adds an important practical dimension to the mainly theoretical ideas in the field of unlearning and provides strong implications for managers and other practitioners.
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  • In the Trenches: Making Your Work Meetings a Success

    Managing meetings effectively is vital in the fast-paced, complex environment of the modern workplace. However, direct scholarly attention to work meetings is still limited, making an understanding of what makes meetings successful elusive. In this article, we examine the particulars of successful and unsuccessful meetings from a participant's perspective. Employing a conceptual mapping approach, we analyze open-ended statements collected from meeting participants to identify three broad themes associated with meeting success: (1) participant learning and development; (2) the coordination of performance, including the creation of links between meeting episodes; (3) and the development of common understanding and alignment among attendees. By more fully taking these themes into account, managers can be better equipped to design, organize, and manage their work meetings successfully.
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  • Collaborative Business Models: Aligning and Operationalizing Alliances

    It is not unusual for companies to generate substantial revenue through alliances. However, alliance failure rates are high, leaving much revenue at risk and value unrealized. The big challenge facing managers is to align company interests with alliance interests. Such alignment can only be achieved when executives pay considerable attention to building the right collaborative business model. In this article, we synthesize the insights of the existing literature to arrive at three collaborative business models-sharing, specialization, and allocation-that managers can use to address the specific requirements of their alliances. Because the literature provides limited insight into how to operationalize these models, we highlight what managers need to focus on when operationalizing each of these models. We find that the choice for an overall business model is relatively straightforward in most cases but that operationalization of business models requires more complex combinations of management techniques. Finally, we show how the three collaborative business models can be combined to build hybrid models
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  • The Macro Problem of Microtransactions: The Self-regulatory Challenges of Video Game Loot Boxes

    The video game industry has ignited a global controversy surrounding microtransactions in gaming, especially the use of loot boxes: randomized rewards with potential real-world value. Consumers and legislators are calling for the regulation of these revenue models on the grounds that they are unfair, predatory, or could be considered gambling. This article examines the controversy from a management perspective. First, I introduce current regulatory responses to the controversy and what they mean for business practices. Then, I explain ongoing industry-level and firm-level attempts to self-regulate as a way to placate consumers and governments. These tactics highlight a wide range of broader strategies that game developers and other stakeholders can pursue in order to improve customer relations and, more publicly, signal their commitment to self-regulation and avoiding consumer harm. These practices can be applied more broadly to firms that offer controversial products or services that do not yet fit within current regulatory frameworks.
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  • Internationalization of Emerging-Economy New Ventures: The Role of Within-Country Differences

    New ventures are increasingly internationalizing from emerging economies, but the role of their home country and any associated within-country regional differences are not well understood. In this article, we look at a new venture in China and how its headquartered region promotes its internationalization. We present empirical evidence that shows the interrelatedness between a venture's region and internationalization: When institutional development in a region is strong, the impact of foreign firm presence on venture internationalization becomes even stronger. We discuss implications for managers of multinational enterprises and new ventures operating in emerging economies as well as policymakers in these economies.
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  • The Double-Edged Impact of Social Media on Online Trading: Opportunities, Threats, and Recommendations for Organizations

    While we understand well how social media channels sway consumers, there is little understanding of their influence on online trading behavior. We argue that social media are creating a new class of self-directed online traders by simultaneously encouraging and biasing trading decisions. Through an empirical study, we show that heavy social media users are more likely to engage in online trading but are largely affected by online herding behavior, and are four times more likely to blindly follow other traders. Bloggers, influencers, social network contacts, and social media news shape these users' online trading behaviors. As online traders influenced by social media are unlikely to receive adequate returns, companies face an ethical dilemma: They could leverage social media to efficiently access funds but they risk inappropriately exploiting the inexperience of online traders biased by social media. We offer a set of nine practical recommendations for organizations to respond to these new challenges.
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  • Robust Services: People or Processes?

    Service systems are inherently subject to variability, whether through customers, service providers, suppliers, or unexpected events. Yet, customers demand excellence and consistency regardless of this variability. In general, there are two ways to handle this variability: with people or with processes. We use the concept of robustness to describe these two approaches and address when one or the other might be appropriate and discuss how and why one might transition from one approach to the other. The relationship between robust people and robust processes within a system can inform and build upon one another in a cycle that mirrors that of continuous improvement. Investing in this cycle can help an organization move toward a system that relies more on robust processes and less on hiring and training robust people, allowing the organization to be scalable while simultaneously creating new opportunities for incumbent robust people.
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  • Strategic Initiative Portfolios: How to Manage Strategic Challenges Better than One at a Time

    In many firms, strategic initiatives lead to frustration rather than performance improvements and strategic renewal. One frequently overlooked key to driving value through strategic initiatives lies in shifting the focus from launching disconnected individual strategic initiatives to managing an integrated portfolio of initiatives. This article identifies five key management practices that allow firms to address obstacles to effective initiative management and to enhance value creation through the deliberate management of initiative portfolios.
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  • Muddling Through Cybersecurity: Insightsfrom the U.S. Healthcare Industry

    The U.S. healthcare sector is inadequately prepared to deal with the reality of cyber threats. The increasing use of smart medical equipment and mobile devices is making healthcare organizations more susceptible to ransomware and other types of malware. The size and complexity of operations, coupled with the presence of numerous legacy and incompatible systems, make it difficult to implement effective cybersecurity measures. The daunting nature of the problem often results in an if-it-ain't-broke-don't-fix-it stance among senior healthcare leaders. The preponderance of healthcare related laws, compliance regulations, and security guidance frameworks serve to complicate the cybersecurity challenge further and too often results in senior leadership assuming a state of blissful ignorance. This study sheds light on the key factors contributing to the chaotic state of affairs and presents a roadmap to a more deliberate and proactive approach to cybersecurity risk management.
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  • The Disintegration of Lean Manufacturing and Lean Management

    Lean management-in manufacturing, supply chains, healthcare, services-has lost its way. Telling evidence of lean's dissolution shows up for inventory-intensive organizations in the form of worsening inventory numbers. My research of financial records of more than 1,500 global companies over 15 years shows growing inventories since the turn of the 21st century. Reduction of inventory is a concrete and visual marker of leanness and quicker customer response, while inventory growth is one of the more salient factors that degrades financial health. As to what has gone wrong with lean, the answer is nearly everything: ambiguous terms and concepts, trivializing the essence, botching the basics, going through the motions, analysis paralysis, puffery masking action, abetting organizational silos, discontinuity, and losing interest. This article addresses these in more specific terms with reference to key outcome measures, especially those most customer-relevant.
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  • Match Group's CEO on Innovating in a Fast-Changing Industry

    When the author began working at Match, in the mid-2000s, online dating often required monthly fees and endless patience. It was mostly done by middle-aged people sitting at PCs who scrolled through profiles and waited for responses. If they found and connected with someone, they'd often claim they "met through friends" to avoid the stigma that online dating carried. Since then, significant industrywide shifts in technology and business models have completely changed how people use Match products. Now online dating is done via apps on mobile phones; it has moved from monthly subscriptions to a "freemium" pricing model; and it has been embraced by people in their twenties, who are the dominant users of Tinder and similar brands. Mandy Ginsberg describes what it's like to lead in an industry with such fast innovation cycles and discusses incorporating full-motion video into dating apps--part of an effort to predict whether sparks ignited online will persist as chemistry in real life.
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  • Building the AI-Powered Organization

    Artificial intelligence seems to be on the brink of a boom. It's now guiding decisions on everything from crop harvests to bank loans, and uses like totally automated customer service are on the horizon. Indeed, McKinsey estimates that AI will add $13 trillion to the global economy in the next decade. Yet companies are struggling to scale up their AI efforts. Most have run only ad hoc projects or applied AI in just a single business process. In surveys of thousands of executives and work with hundreds of clients, McKinsey has identified how firms can capture the full AI opportunity. The key is to understand the organizational and cultural barriers AI initiatives face and work to lower them. That means shifting workers away from traditional mindsets, like relying on top-down decision making, which often run counter to those needed for AI. Leaders can also set up AI projects for success by conveying their urgency and benefits; investing heavily in AI education and adoption; and accounting for the company's AI maturity, business complexity, and innovation pace when deciding how work should be organized.
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  • Nimble Leadership

    Nobody really recommends command-and-control leadership anymore. But no fully formed alternative has emerged. So mature companies often struggle to balance the need for innovation with the need for discipline. The authors studied two exceptions: the new-product-development stars PARC and W.L. Gore. Both companies, they learned, have three distinct types of leaders. "Entrepreneurial leaders," found at lower levels, create new products and services and move their firms into unexplored territory. "Enabling leaders," in the middle, make sure the entrepreneurs have the resources they need. And "architecting leaders," near the top, monitor culture, high-level strategy, and structure. This system allows both companies to be self-managing to a surprising degree. Employees choose their work assignments and dream up new projects, whose success rests on colleagues' volunteering to join in--making the companies collective prediction markets. And the mechanisms that enable self-management also balance freedom and control: The companies function efficiently and exploit new opportunities even as they minimize rules.
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  • The Soul of a Start-up

    There's an essential, intangible "something" in start-ups--an energy, a soul. It inspires enthusiasm and fosters a sense of deep connection and mutual purpose. While this spirit persists, engagement is high and businesses keep their edge. But all too often, companies lose their souls as they mature. Firms add new systems and structures and bring in experienced professionals--and in the process somehow crush their original energizing spirit. In research into more than a dozen fast-growth ventures and 200-plus interviews with founders and executives, the author has discovered how firms can overcome this problem. His work shows that there are three crucial dimensions to a start-up's soul: business intent, or a loftier reason for being; unusually close customer connections; and an employee experience characterized by autonomy and creativity--by "voice" and "choice." All three provide meaning to stakeholders. Drawing on the experiences of Netflix, Warby Parker, Study Sapuri, and others, this article describes how sizable companies can still protect and nurture the three elements. Doing that is the secret to staying great as you grow.
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  • Digital Doesn't Have to Be Disruptive

    Managers struggle to understand what digital transformation actually means for them in terms of which opportunities to pursue and which initiatives to prioritize. It's not surprising that many of them expect it to involve a radical disruption of the business, huge new investments in technology, a complete switch from physical to virtual channels, and the acquisition of tech start-ups. To be sure, in some cases such a paradigm shift is involved. But the authors' research and work suggest that wholesale disruption is often quite unnecessary. Some companies have successfully responded to the digital challenge by making major changes to their manufacturing processes, distribution channels, or business models, but many others have fared equally well using a more incremental approach that leaves the core value proposition and supply chain essentially unchanged.
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