MIT Sloan Management Review

WITH ALL OF THE ESCALATing challenges confronting business leaders today, it’s not surprising that some established businesses are choosing to retrench and trying to operate in ways that have worked for them in the past. Everyone back in the office. Top-down management. A singular focus on the bottom line and hitting those quarterly targets. The way to maintain equilibrium while moving forward through turbulence is not to stand fixed and rigid but to adapt and adjust while keeping sight of and rallying the team around the organization’s greater purpose. Leading today is more challenging, more nuanced, and more rewarding than ever. Organizational structure is one area that is ripe for adaptation. In “Rethinking Hierarchy,” Nicolai J. Foss and Peter G. Klein argue that managerial authority and hierarchy are still necessary for large…

Subscriptions have all the hallmarks of a can’t-miss revenue model. Customers love how they lower their barriers to access, while companies embrace their simplicity and ease of communication. Investors prize them because they generate more predictable long-term revenue flows than conventional one-off transaction models. Proponents of the so-called subscription economy — a term coined by the CEO of platform provider Zuora — argue that customers are better served by subscription experiences built around services than by static offerings or a single product. Software giant SAP asserts that a subscription model shortens time to market and speeds delivery of services to customers, in addition to accelerating cash collection and enabling businesses to define and modify pricing models.¹ Two unanticipated risks, however, currently threaten to undermine these vendor advantages as well as the premise…

In January, the U.S. Federal Trade Commission proposed a ban on noncompete clauses in employment contracts. In addition to barring new noncompete agreements with employees and independent contractors, the rule would require employers to rescind existing ones. To understand what a federal ban could mean for workers and businesses, why it’s facing opposition, and how employers can prepare, we spoke with Evan Starr, an associate professor of management who studies noncompetes at the University of Maryland’s Robert H. Smith School of Business. This interview has been edited for length and clarity. MIT Sloan Management Review: How widespread are noncompete clauses, and who is subject to them? Evan Starr: Surveys show that between 50% and 60% of firms use noncompetes for at least some workers, and about 30% of firms use them for all…

Debates over the trade-offs of remote work arrangements have tended to focus on challenges related to maintaining worker productivity, building company culture, and upholding boundaries between work and home. Now, employers are faced with an additional challenge: complying with a growing set of regulatory frameworks governing remote work. For most workers, working from home was once a seasonal perk or a special arrangement their employer offered. Now, what started as an emergency response to the COVID-19 pandemic has become routine. Between 2019 and 2021, the number of people working primarily from home increased from 5.7% to 17.95% of all workers in the United States and from 14.6% to 24.4% in Europe. With new data showing that remote work could save companies up to $10,600 per employee annually, and major employers such as…

Many leaders are spending an increasingly large share of their time worrying about their organization’s reputation. Companies are under closer scrutiny than ever from employees, shareholders, unions, the media, and activists, who are ready to pass judgment on corporate actions and impacts, especially regarding societal and environmental issues. This has left some leaders struggling to figure out how to build and maintain a positive reputation in the eyes of their key stakeholders. In a world where social media in particular rapidly fuels narratives that organizations can’t control, it can be hard to believe that at one time, businesses could simply release some positive information about themselves to distract stakeholders from negative news. This was once a standard public relations practice, and even fairly recently some companies have continued to make pro-social…

Retail executives love the lack of friction in online shopping that makes it fast and easy for customers to complete a purchase, and promising free returns is part of that. But the costs of those returns add up: Of the approximately $1.29 trillion in U.S. online retail sales in 2022, it’s estimated that $212 billion worth of goods — 16.4% of sales — were sent back. While that represents a reprieve for retailers from 2021, when the rate shot up to 20%, returns are up still significantly, from just 10.6% in 2020. It’s putting e-commerce executives under pressure to lower these unsustainable numbers. The managers we work with on fulfillment strategies keep coming back to two less-obvious, intertwined questions regarding product returns: Does the current common strategy of putting the lion’s…