Harvard Business Review March/April 2019

FINANCIAL PERFORMANCE SHOULD no longer be the sole pursuit of the corporation. Companies are being pushed to consider the interests of all their stakeholders—including employees, customers, and the community—not just those of their shareholders. Of course, some leaders have long embraced the idea of doing well by doing good. But making that idea a reality has proved challenging. Though rare, companies that have managed to create both financial and social value do exist: Patagonia and Grameen Bank are two that come quickly to mind. There’s no magic to this feat, say Julie Battilana, Anne-Claire Pache, Metin Sengul, and Marissa Kimsey, who have been studying social businesses for more than a decade. In “The Dual-Purpose Playbook” (page 124) they argue that the organizations that pull this off build a commitment to creating…

Adam Brandenburger, a professor at NYU’s Stern School of Business, has always sought ways to help people think differently. His work in game theory (with Harborne Stuart) redefined basic notions of value and added value, and his book Co-opetition (with Barry Nalebuff) used that framework to explore how businesses can grow the pie using complementary relationships. His article in this issue builds on recent work (with Jeff Lehman) on creative thinking—another effort to help people “change the game.” Kieran Setiya focuses on ethics and related questions about human agency and knowledge. Setiya spent much of his career writing academic books and essays, but lately he has turned to the social applications of philosophy. He teaches a course at MIT, where he is a professor of philosophy, on the ethics of climate…

WHEN ATHLETES WANT to improve, they typically spend hours reviewing video of their performance. In the white-collar workplace, it’s hard to get such vivid feedback. But in recent years researchers have learned to mine a unique set of data that serves as a slow-motion replay of how an organization and its people function: the company’s e-mail, which shows who talked with whom, why, how, and how often. Academics call this kind of investigation social network analysis. It has largely focused on internal communications aimed at learning how colleagues can collaborate most effectively. A new study uses e-mail analysis for a different purpose: to examine how employees interact with clients. Organizations can learn what patterns and behaviors affect client satisfaction and use the results to coach employees on more-effective communications. The researchers…

Gianni Giacomelli leads innovation at Genpact, the digital transformation professional services firm where the study described in this article was conducted. He recently spoke with HBR about the research and the company’s response. Edited excerpts follow. Why study Genpact’s use of e-mail? Our company is large and distributed—we have 80,000 employees across numerous time zones. It’s very hard to do synchronous communications. That makes e-mail important. It’s a representative sample of employees’ interactions. How did you share the monthly analysis with your employees? We have many groups of up to 500 employees each serving a single client. We took the analysis to two people in each group: the operational leader, who oversees the work, and the business leader, who oversees the P&L for the entire industry vertical. In the first few meetings…

Every first-year accounting student learns this lesson: As a firm’s sales grow, its costs per unit should decrease, because fixed costs and overhead are spread across a larger number of units—a phenomenon known as efficiencies of scale. Countless business plans and investment proposals hinge on this assumption and the corollary that profit margins will grow as sales increase. But are these assumptions an accounting fiction? A new study suggests that’s the case. Researchers examined four large data sets—two involving U.S. companies, one involving European firms, and one that included global companies, amounting to thousands of firms in all—to learn how costs-to-sales ratios and profit margins changed as firms grew. They found that costs and profits rose in close proportion to sales increases, without the marginal improvement the accounting theories predict. This…

Even as companies increasingly look to big data to inform judgments, they often assume that individuals won’t do so—that people are wary of algorithms and want machine-generated advice to have a human touch. Think of the virtual assistants Siri and Alexa and the degree to which they have been anthropomorphized, to name just two examples. New research questions the received wisdom that people distrust algorithms—and finds that it is largely mistaken. In a series of six studies, 1,260 online participants were asked to make predictions on topics ranging from hit song rankings to online daters’ compatibility. They then received advice, couched as coming from either a person or an algorithm, and given the chance to revise their predictions. They relied more heavily on the advice when they believed it was generated…