MIT Sloan Management Review Spring 2014

RECENTLY, I FOUND myself stuck in a customer-service maze. You’ve probably been in a similar situation at some point — lost in a company’s customer-support phone menu, trying to reach an actual human. In this case, it struck me as ironic that soon after I was warned to expect long hold times to reach a human operator, a cheerful digitized voice assured me that “the voice of the customer is very important” at that company. The recording also announced that some callers would be selected to complete a customer survey. But the company probably wouldn’t have wanted to hear my views at that moment. However, that experience — a frustrating interaction with a company’s customer-service system that included a recorded message telling me how important customers are — brought to mind some…

Sustainability’s Next Frontier Some companies are addressing important social and environmental issues, while for many others, there’s a disconnect between thought and action in this arena. That’s according to a recent report on sustainability activity by MIT Sloan Management Review and the Boston Consulting Group. Companies that “walk the talk” focus heavily on five fronts: sustainability strategy, business case, measurement, business model innovation and leadership commitment. For them, addressing significant sustainability issues has become a core strategic imperative and a way to mitigate threats — as well as a way to identify new opportunities. Read the report here: sloanreview.mit.edu/projects/sustainabilitys-next-frontier The Nine Elements of Digital Transformation In-depth research with executives at a wide range of companies shows how managers can use technology to redefine their businesses. In an essay excerpted and adapted from their…

“Traditional organizational silos often make it impossible to pursue synergistic public-private value creation within a company’s established functional or divisional boundaries.” (From Zimmermann et al., “Creating Societal Benefits and Corporate Profits,” page 18.) “ High customer-satisfaction ratings are typically treated by managers as being universally good for business. Our findings indicate, however, that the benefits are not nearly so clear-cut.” (From Keiningham et al., “The High Price of Customer Satisfaction,” page 37.) “There are two specific challenges to behavior analysis in global organizations such as shared services centers. The impersonal, remote nature of many of the exchanges and the high volume of interactions make it extremely difficult.” (From Gloor and Giacomelli, “Reading Global Clients’ Signals,” page 23.) “ Managers often give undue weight to recent incidents and information that is readily available.” (From…

Mark Zuckerberg, Facebook’s founder and CEO, captured the attention of the media when he wore a hooded sweatshirt when meeting with investors before his company’s initial public offering. While his appearance before professionally dressed bankers and investors left some observers thinking the young entrepreneur’s nonconforming dress style was a sign of disrespect, it signaled confidence to others. When and why does nonconformity in appearance lead others to make positive rather than negative inferences about an individual? We examined this question and identified conditions under which observers attribute enhanced status and competence to a person whose appearance does not conform to the norm for a particular setting. Our studies explored various environments and populations, from business executives to shop assistants at high-end boutiques in Milan, Italy. (Detailed findings from our research will…

Over the last three decades, organizations have eliminated millions of jobs in an effort to increase efficiencies and ensure survival. As the economy has emerged from the last economic downturn, managers are once again reflecting on how they managed downsizing during the downturn. Recently, we asked 30 North American human resource executives about their experiences conducting white-collar layoffs not based on seniority — and found that many believed their organizations had made some serious mistakes. More than one-third of the executives we interviewed thought that their companies should have let more people go, and almost one-third thought they should have laid off fewer people. In addition, nearly one-third of the executives thought their companies terminated the wrong person at least 20% of the time, and approximately an additional quarter indicated that…

Many companies compete on the basis of low prices. Price wars, however, represent a fundamentally different dynamic than simply trying to get an edge on price. They begin when competitors aggressively and repeatedly set prices below established levels. In some cases, companies that initiate price wars engage in self-destructive behavior, which leads to downward pricing spirals that alter industry structures. In theory, as Meghan R. Busse of Northwestern University’s Kellogg School has shown, there are no winners in price wars: The losers are often forced out of business, and the survivors have been known to suffer a long-term squeeze in profitability. In studying price wars that took place between 1980 and 2013 in industries including airlines, telecoms and financial services, I saw that price wars were invariably linked with serious drops…