Harvard Business Review December 2016

Digital marketplaces have the potential to reduce discrimination. Indeed, on early platforms—think eBay circa 1999—transactions were anonymous. But as marketplaces evolved, they began including identifying information, such as names and photos. On Uber, Airbnb, and a host of other platforms, it’s immediately clear whether you’re black or white, male or female—and those details may affect the prices you pay as a buyer and command as a seller or even whether you can do business at all. That’s the disturbing conclusion of recent research by Harvard Business School’s Michael Luca and two HBS colleagues, Benjamin Edelman and Daniel Svirsky. They found that on Airbnb, requests from guests with black-sounding names were 16% less likely to be accepted than those from guests with white-sounding names. Airbnb isn’t the only platform touched by discrimination;…

Leemore Dafny’s affinity for science and medicine was clear by the third grade, when she borrowed a chromatograph from her dad’s laboratory for a science fair project. She considered going into medicine but early on was detoured by a “riveting” intro economics course taught by Martin Feldstein, a chief adviser to Ronald Reagan. Feldstein urged her to get an advanced degree, and after a stint at McKinsey, she headed to MIT for a PhD in economics. As a scholar and a government economist, Dafny has been instrumental in shaping policies to drive innovation and efficiency in health care. Her article with Thomas Lee on health care competition appears on page 76. Moving from his native Sydney to Los Angeles profoundly affected how George Byrne approached photography. “What I see and feel…

Organizations want consistency. Yet judgments can vary a great deal from one individual to the next, even when people are in the same role and supposedly following the same guidelines. This variability in decision making is called noise, and it’s surprisingly costly to companies. The authors explain how to assess noise within an organization and remedy it. The most radical approach is to replace human judgment with algorithms, which return the same output for any given input. One needs to distinguish between high-frequency decisions (such as credit approvals and complaint resolutions) and low-frequency decisions (such as which platform to base a product on and what company to acquire). With recurring decisions, the data required to develop and validate algorithms may be available, but rare decisions can involve a degree of uncertainty…

It’s one of those stats that’s constantly thrown around at conferences: 80% of the companies that existed before 1980 are no longer around—and another 17% probably won’t be here in five years. Dartmouth professor Vijay Govindarajan heard versions of this so often that he eventually began using it himself—even though he didn’t know whether it was accurate or, if it was, why it was true. So he and his colleague Anup Srivastava decided to take a rigorous look at corporate longevity. Prior researchers had examined survival rates of the Fortune 500 and the S&P 500 firms, but the Dartmouth professors cast a wider net, including all 29,688 companies that listed on U.S. stock markets from 1960 to 2009. (They reasoned that the Fortune 500 and the S&P 500 represent only very…

Vibhu Mittal has experienced the challenge of creating competitive advantage from two distinct vantage points. During nine years as a senior scientist at Google, he helped a dominant technology company strengthen its position; and in the past seven years, while leading a series of education technology start-ups (he’s currently the CEO of Edmodo), he worked to disrupt incumbents. He spoke with HBR about Silicon Valley’s evolving view of creative destruction. Edited excerpts follow. Has it become more difficult to create competitive advantage? Absolutely. The analogy I make is to open-source software. Companies used to do proprietary stuff, and they tended to innovate slowly. Today companies are willing to talk about their innovations more openly and to post code and have thousands of people look at it so that they can modify it,…

Forty percent of college students don’t know what a consulting firm does—and of those who do, 35% learned it from entertainment sources such as the Showtime series House of Lies. “WHERE THEY’RE GOING, THEY DON’T WANT ROADMAPS: GAUGING COLLEGE STUDENTS’ PERCEPTIONS OF CONSULTING CAREERS,” BY WALKER SANDS COMMUNICATIONS What’s the best way to get companies to minimize carbon emissions? One solution is to impose taxes or regulations. But a new study by researchers from the University of Chicago and the London School of Economics examines a different technique: the use of low-cost monitoring, goals, and incentives to encourage employees to voluntarily cut back on energy use. The researchers worked with Virgin Atlantic Airways, using data on the firm’s 335 captains during more than 40,000 flights. After looking at pilot behavior to establish baselines,…