NPR reports that geneticists have crossed a line that has been considered taboo: They changed human DNA in a way that can be passed down to future generations. The researchers at Oregon Health & Science University say they took the step to try to prevent women from giving birth to babies with genetic diseases.
Applied to such health issues, over a long haul, it could make richer nations genetically predisposed to better health. Stronger health, in turn, may create economic opportunities that might not otherwise exist. One can imagine that this could widen existing gaps between emerging economies where such technologies are less likely to be applied. Of course, it may also exacerbate such gaps within wealthy nations where income inequality is already a hot-button issue.
This assumes all that the technology is not applied to more controversial traits like enhancing intelligence (which we can’t even measure very well much less identify a gene that would have such an effect).
It’s election time and the end of conference season, I suppose.
But isn’t it always the conference season? The AoM deadline is around the corner and it’s probably a good time to plan for the year ahead. A while back, Teppo posted about which are the best strategy conferences. This generated some nice discussion but this might be a good time to return to the question. However, rather than stating my opinion, in the spirit of the election season, let me put the question to you in the poll below. (you can see the results after you vote. Note that the order is randomized)
An article in the current edition of the Economist describes Alfred Marshall’s original observation of geographic clusters of activities. They describe four main logics for clustering:
First, some may depend on natural resources, such as a coalfield or a harbour. Second, a concentration of firms creates a pool of specialised labour that benefits both workers and employers: the former are likely to find jobs and the latter are likely to find staff. Third, subsidiary trades spring up to supply specialised inputs. Fourth, ideas spill over from one firm to the next, as Marshall observed.
However, there are also costs to being in a cluster such as higher rent or transportation costs associated with distances to customers or suppliers. The burst of communications and computing power should make it easier since natural resources are less important and workers can live farther away from their offices.
It hasn’t worked this way. Pools of human capital continue to drive clustering as people prefer to work near where they live. Very small distances can make a big difference. The article goes on to describe clusters within clusters in the Bay area for specialized knowledge.
An article recently posted in Slate reviews research showing that a significant portion of the variation in IQ tests is attributable to motivation rather than ability. In one striking study researchers measured the children’s IQ and split them into High, Average, and Low groups. They reran the test offering the low group an M&M for every correct answer. As a result of this simple incentive, the low group’s score went from 79 to 97 – on par with the average group.
Ok, so incentives work. Perhaps not a big surprise on many levels.
On the other hand, there is a large OB/HRM literature invested in the conclusion that performance increases are associated with hiring employees with a higher IQ. The assumption there is that IQ measures ability as opposed to motivation.
This raises a critical question for strategy scholars. Is motivation an immutable attribute of human capital Read the rest of this entry »
Romney and Ryan have incorrectly characterized Obamacare as a “Raid on Medicare” and news organizations and the Obama campaign have fired back that is it actually a program to reduce healthcare costs — an important achievement of the administration. This whole discussion misses the fundamental point that $716 billion in savings would be the result of mandated price controls. Given that this is a major intervention, it is important to understand how these altered incentives will affect the U.S. healthcare system.
Medicare currently pays providers 30% less than private insurers and Obamacare will further reduce that to save $716 billion in payments to providers (hospitals, doctors, etc.). At the same time, broader coverage (another goal of the new law) will undoubtedly increase demand for services. How will these effects play out?
We already know that some providers are less willing to accept Medicare Read the rest of this entry »
An article in today’s New York Times highlights a dramatic increase in the price of generic ointments over the last few years — generics have gone up 6 to 7 times their 2008 prices. Here is a chart showing the climb in prices for a few products. Before you say, this is clearly fallout from the new healthcare law, the article doesn’t point to any change in legislation covering ointments. In fact, there is a certain amount of puzzlement over why prices have gone up so much.
They note that doctors are not price sensitive when they write prescriptions and patients do what doctors recommend — that’s nothing new.
It turns out that regulation for generic skin treatments is more stringent than other generics because they must demonstrate that products are absorbed as well as the original treatments. This, more costly process creates higher entry barriers for generic ointments Read the rest of this entry »
For a PDW, I was asked to develop a short list of paradoxes linked to the strategic human capital (spoiler alert for those of you planning to be at the session at 8am on Friday). I’m sure some of them would not surprise you in the least. Others might spur some discussion though. Here is the short list:
- Rent from human capital may not show up in profitability
- “Who” is a firm?
- Firm-specificity isn’t as important as we might think
- HR Departments may not matter much
- High performance work systems don’t tell us much about such advantages
Rent. The first point is what you would expect from me so let me dismiss it quickly. Obviously, if rent is linked to human capital, some portion of it is likely to be captured by people. Nuff said.
Who is a firm? A sharp distinction is made between hiring on the spot market and an internal labor market. Rightly so. However, one might think that once labor is “internal” such people are part of the firm. Read the rest of this entry »
Some of you may remember Mason Carpenter’s old teaching web page with experiential exercises, videos, and other tips for teaching strategy. I’ve repackaged his content, added some of my own materials, and it can now be found at:
A quick tip is that you can now sort the resources by topic (click the category list on the right). I included the most common broad topics in a core strategy course so this should get you to something useful quickly. Probably most importantly, there is a mechanism so people can submit new tools and comment on exiting tools to keep the site fresh.
To give you a feel for it, here are links to a few exercises and resources that you might find particularly useful:
- Global Alliance Game (focus is on the search for complementarities and hazards in negotiating to take advantage of them).
- Read the rest of this entry »
I’m reporting from another great ACAC conference. This conference featured retrospectives marking the 30 year anniversaries for Nelson and Winter’s book and Lippman and Rumelt’s article. Kudos to Bill and the organizing committee for putting it together.
A starting similarity in the two is that they were both directly intended to influence conversations in economics and both missed their marks. For example, about 1% of the cites for Lippman and Rumelt were in top Econ journals – despite the fact that the article appeared in the Bell Journal of Economics. Lippman & Rumelt recorded a video specifically for the occasion Read the rest of this entry »
The current issue of McKinsey Quarterly features an interesting article on firms crowd-sourcing strategy formulation. This is another way that technology may shake up the strategy field (See also Mike’s discussion of the MBA bubble). The article describes examples in a variety of companies. Some, like Wikimedia and Redhat aren’t much of a surprise given their open innovation focus. However, we should probably take notice when more traditional companies (like 3M, HCL Technologies, and Rite-Solutions) use social media in this way. For example, Rite-Solutions, a software provider for the US Navy, defense contractors and fire departments, created an internal market for strategic initiatives:
Would-be entrepreneurs at Rite-Solutions can launch “IPOs” by preparing an Expect-Us (rather than a prospectus)—a document that outlines the value creation potential of the new idea … Each new stock debuts at $10, and every employee gets $10,000 in play money to invest in the virtual idea market and thereby establish a personal intellectual portfolio Read the rest of this entry »
I read about Microsoft’s acquisition of patents from AOL with some interest. They note that this reflects a price of $1.3M/patent and compare it to other recent escalations in the IP arms race. Analysts estimate that Google only paid $400k/patent in the $12B acquisition of Motorola Mobility. Nortel patents recently went for about $750k each. Of course, given the wide variance in the value of a patent, clearly the average is not particularly informative — it treats all of these patents as homogeneous which is certainly not the case. Nevertheless, the escalating prices do suggest that the arms race is unlikely to create much value for the firms (and certainly not for consumers).
However, buried in the stories is another rather interesting observation – some of the key players earn more from selling rivals’ handsets than their own. Read the rest of this entry »
Glenn Hoetker recently gave me the opportunity to consider what new contributions the field of psychology could offer to the strategy literature (see the description here). The video illustrates how behavior often depends more on perception than on reality — does it matter if the steering wheel is attached or not if the other driver acts as if it is? Often, researchers are interested in organizational outcomes and theorize that the underlying behaviors are driven by objective reality. What research opportunities are highlighted as we take seriously the subjective nature of our most central constructs?
In this installment, we explore the question, “what is a firm?” This is so taken for granted in the field that most of you will probably stop reading here. Read the rest of this entry »
Last week there was a very useful WSJ article reporting on an analysis of the supplier relationships at the core of the new iPhone 4S (here … while it lasts). This seems like a nice mini-case analysis to see how our theories seem to explain actual outcomes.
They note that Qualcomm “is the big winner” because it is supplying a suite of chips that adds up to $15 per phone. Intel is a loser because it acquired Infineon and then those chips were dropped from the product.
Samsung lost out on the memory chips to its Korean rival Hynix — a surprise since Samsung is known to have a more reliable product. However, interestingly, Samsung did retain its role as the manufacturer of Apple’s proprietary A5 processor which provides the iPhone 4S and the iPad 2 with the bulk of its computing power.
Teppo recently asked us whether the fundamental questions of strategy have changed since Rumelt, Schendel & Teece’s classic work. Relatedly, Mike wondered if strategy has lost sight of foundational questions and is now ceding territory to Economists.
One critical shift has been away from corporate strategy (multi-business firms and M&A). To an extent, this was fueled by debates over whether industry matters (see classic articles by Rumelt and McGahan and Porter) as well as the rise of the resource-based view. Lost in the shuffle were the prospects for corporate strategy research…
This has practical implications. I’m about to begin a module on corporate strategy (can you tell it’s my teaching semester) and this question looms large. I need to justify to my students why, given miniscule corporate effects, I am spending so much time on this topic. I think it points to a fundamental flaw in the way some of this research has been interpreted. Read the rest of this entry »
An awkward silence enveloped the class.
I had just announced that: 1) my pairings would replace the project teams they had chosen, 2) I would choose which cases they needed to write up, and 3) that one additional case write-up would be required for each team. All of these changes were justified with clear pedagogical goals.
One student looked particularly disturbed. I called on her — “Lisa, you look uncomfortable, is everything ok?”
“Well actually, it doesn’t seem fair that we have organized our teams and even started to work on cases and now we have to go back to square one.” I could feel the floodgates opening. For the next 10 minutes, students questioned the need for change and offered alternatives to achieve similar objectives. I found out later one had planned to complain to the Dean. Read the rest of this entry »