Harvard Business Review January - February 2017

You’ve probably noticed that the magazine you’re holding is different from the HBR you’re accustomed to. It contains more articles, and its look and feel are more luxurious. Our design team, led by creative director James de Vries, has done a great job of injecting new elegance and energy into our pages. What hasn’t changed is our depth and rigor, which you’ll see on full display in the expanded menu of features. The main article in the Spotlight package presents a new theory of strategy: While some scholars maintain that today’s fast-changing marketplace makes any competitive advantage unsustainable, former Procter & Gamble CEO A.G. Lafley and Rotman professor Roger Martin argue that sustained performance is indeed obtainable. Achieving what they call cumulative advantage depends not on driving customer loyalty but on…

“I got an MBA so that I could create wealth and employment in my home continent,” says Efosa Ojomo, a native of Nigeria. Ojomo and coauthors Clayton Christensen and Derek van Bever studied the obstacles to doing business in Africa—and startups that succeeded nonetheless. Addressing the needs of the poor, they found, can create billion-dollar companies and spur development. “If I was despondent about Africa’s future before,” says Ojomo, “I am no longer.” The central theory of this issue’s Spotlight feature had its genesis in A.G. Lafley’s work to revive Cincinnati’s city center. The former P&G chairman and CEO realized that cities need to offer attractive experiences that can turn into habits. The more that people come to a place, the more they get used to coming, and the easier it…

Many Fortune 500 companies have ditched formal reviews. But without them, performance evaluation becomes a black box. Ratings still exist—employees just can’t see them. They’re done subjectively, behind the scenes, without input from the people being assessed. That’s why Facebook is keeping performance evaluations—to help ensure fairness, transparency, and talent development. The authors of this article, who include leaders from Facebook, argue that building a culture that recognizes and rewards growth will mitigate the risks of reviews and is more constructive than eliminating them. Thank you for the insight into how Facebook handles performance management. I could not agree more that ratings still exist, even if reviews have been replaced by instant and continual feedback. The latter in most cases builds not a quantitative view of performance but a qualitative one.…

SHARE THIS ARTICLE. HBR LINK MAKES IT EASY. SEE PAGE 16 FOR INSTRUCTIONS. Most organizations use customer surveys to measure satisfaction, pinpoint areas for improvement, or simply allow disgruntled patrons to vent. The approach is framed by a pessimistic mindset—one focused on problems. “Customers have been conditioned to always look for what’s wrong,” says Sterling Bone, an associate marketing professor at Utah State’s Huntsman School of Business. Indeed, the vast majority of research on customer service deals with “service recovery”—how to react when a customer complains. During a Bible study course nearly a decade ago, Bone found himself reflecting on the power of gratitude, and he began wondering what would happen if that emotion was incorporated into customer surveys. What if instead of asking customers what had gone wrong, companies asked…

Populist politicians rail against immigrants as a threat to the U.S. economy, but new research shows that foreign-born workers are important contributors to new-business creation. Although immigrants constitute just 15% of the workforce, they account for 27% of entrepreneurs—a number that’s risen sharply since the mid-1990s. Although immigrant-run start-ups fail at a faster rate than native-founded firms, those that survive show faster employment and payroll growth. The research also reveals that people who immigrated as children launch larger, more successful firms than other immigrants do. Why are nonnative entrepreneurs so successful? Researchers say that possible factors include a high tolerance for risk, the industry and geographic settings in which immigrant entrepreneurs launch, and the skills and ethnic social networks needed to navigate those settings. ADDING RECOMMENDATIONS FOR SIMILAR ITEMS TO PRODUCT…

COMPUTER-DRIVEN ALGORITHMS are becoming adept at making decisions and offering forecasts—in fact, their assessments are frequently better than those of humans. Despite clear evidence of this superiority, studies have shown that people often opt to rely on their own judgment instead. That’s especially true of those who have had some experience with algorithms and have found them to be imperfect. Researchers call this “algorithm aversion.” A new study explores one way to reduce this aversion: Let people tinker with the machine’s results. “The benefits [of] getting people to use the algorithm may outweigh the costs associated with degrading the algorithm’s performance,” the researchers theorized, reasoning that even a slightly flawed math-driven decision was likely to be more accurate than a human’s prediction. To test the theory, the researchers conducted a series of…