Scientists as workaholics…

In the article below, Wired reports on a study of when researchers download articles (middle of the night? Yep! Weekends? Yep!) and concludes that scientists are workaholics. The article also opines that it is the intense competition and stress of the scientists’ jobs that cause them to engage in such obviously self-destructive behavior. I think they could have the causal mechanism wrong here. I believe many researchers work at odd hours, at least in part, because they find it pleasurable — not because of external pressure. People end up in these fields (and successful in these fields) because studying something is what they like to do and are good at. Information technology just enables them to more liberally indulge in this rewarding (and rewarded) behavior.

I was scolded just last weekend for the fact that I almost never read fiction anymore. I was afraid to admit that I am often too busy on non-fiction endeavors — like  an internet scavenger hunt to figure out just why lobsters maintain telomerase activation throughout their lives, and may thus have a potential lifespan of…wait for it…FOREVER. That is seriously cool — how could a Grisham novel ever compete? But I might be biased because I like researching things, at any hour of the day. If you’re reading this, I bet you do too.


Kill Patents, Save Innovation?

The patent system is “a real chaos”. Its faults were laid bare yesterday in an extensive New York Times article, which quickly reached the “most emailed list” (The Patent, Used as a Sword; and see Melissa Schilling’s review). But the same article also hedged by reminding us “patents are vitally important to protecting intellectual property”. But is intellectual property really essential for innovation? For an answer, look just a little past commercial software and you will see vast open collaboration without patents or copyright. Wikipedia, an open initiative, answers many of our questions. Open source software such as Linux and Android power most commercial websites and mobile devices, respectively. In myriad forums, mailing lists and online communities, users contribute reviews, provide solutions, and share tips with others. Science has been progressing by enlisting thousands of volunteers to classify celestial objects and decipher planetary images. Innovation without patents is real. Researchers estimate that open collaboration and user innovation bring more innovation than than the patented kind. Our legal and commercial system can do more to encourage it.

“Patents as Swords”? — More like Patents as Bombs

A great New York Times article this morning (link below) details ways in which the patent system gets used as both an offensive and defensive weapon, with billions of dollars of collateral damage to start-ups, consumers (see the “patent tax”), and innovation in general. The victim in the opening Vignette (Vlingo, a voice-recognition software start-up) might have been saved by a simple change in the rules: make the losers of patent lawsuits pay the legal costs of the winner. It turns out that it’s rather easy to kill small firms (or force them to sell to you) by launching a patent lawsuit against them that bleeds them dry with legal fees. You don’t have to win — you just have to force them to fight until they no longer have any money.  Vlingo ultimately won the patent lawsuit that had been filed by a much larger rival, but had to loot its own meager coffers to pay the legal fees of doing so. Vlingo slumped home with its patent lawsuit victory and shut its doors for good. If losers of such battles paid the legal fees of winners, such fights might both be less common, and less likely to be fatal.

The article also points out that software patents have proven particularly dangerous because they are prone to protecting vague claims like “a software algorithm for calculating online prices,” thereby granting the patent holder vast tracks of technological real estate. An interesting talk by Tilo Peters at the Strategic Management Society conference yesterday points to another useful tool for rationalizing some of this misuse of the patent system: Strategic disclosure. If, for example, you decided to publish a manifesto about all of the things you might do with software in the reasonable future (remember patents have a “usefulness” condition so you’re not allowed to claim something deemed non-feasible), you might be able to essentially proclaim that technological territory as unpatentable. It wouldn’t prevent competitors from developing in those areas, but it could keep them from patenting in those areas. In essence, it transforms a space in which property rights may be allocated into one in which property rights may not. I’ve left out some details but you get the idea.

Now it occurs to me that a fair amount of strategic disclosure in the smart phone space took place in the form of Star Trek episodes. I’m going to go look for references to prior art…

-Melissa Schilling

A Bad Day at the Lectern

Ever teach one of those classes where you’re off a beat, forget points you want to make, and ramble a little bit? Maybe your preparation wasn’t up to its usual standard. Fortunately, there isn’t an opponent in the room compounding the problem by trying to make you look bad. Barack Obama did not have that luxury tonight.

I had fun watching the president’s discomfiture, but I sure wish Romney had a better five points on the economy and that he would explain why cutting the growth of entitlements is not an optional choice. (Although his Spain remark wasn’t bad.)

Is the Resource-Based View (RBV) Useful? Yes.

I am visiting Lund University this week – and they have conclusively shown that the Resource Based View indeed is useful.  Useful for what?  As a door stop to their conference room.  (I also sent the proof/picture to Jay, one of the originators of the theory.)

Alex Tabarrok’s Patent Policy napkin

Alex Tabarrok's Patent Policy napkin

Alex Tabarrok’s pictorial commentary on patent policy, drawn on a napkin, posits that the current patent system is somewhat too strong and thereby decreases innovation (the link to his original post is below). I have to say, however, that I don’t think patent strength is the problem. The problem is that the growth in patent applications over the last two decades has vastly exceeded the growth in resources available to the patent office, resulting in 1) long delays between patent application and granting (which can render patents completely pointless in fast moving industries), and 2) inadequate ability to examine the patent applications for novelty, usefulness and non-obviousness. This lowers the value of good patents (because they aren’t granted quick enough or may be fallaciously challenged) and increases the likelihood of bad patents being granted. As a result, for many individuals and firms, the expected net gains from manipulating the patent system for the purposes of extortion (hostage taking, patent trolling) now exceeds the expected net gains from using the patent system to actually innovate.

It’s difficult to assess how patent strength affects innovation without first making sure that patents are being granted and used the way the system had originally intended.

Alex Tabarrok’s original post can be found here:

Fallacious Reasoning on Clean Coal

Over at the Atlantic, Jordan Weissmann argues that the Obama administration’s claim to be pursuing an “all of the above” energy strategy is unrealistic because the EPA’s new CO2 emission rules will make traditional coal plants untenable while “clean coal” technology is uneconomical relative to natural gas. Fine.

But Weissmann goes on to argue that the reason why clean coal R&D is a big waste of money is because of the lack of a cap-and-trade policy that would put a price on CO2 emissions. That’s dead wrong. With a price for carbon dioxide, just as with the EPA’s technology or emissions standards, power producers would look for the cheapest alternative to coal. That would be natural gas (given the same forecasts Weissmann relies on). So the clean-coal subsidies are unlikely to pay off regardless of what kind of policy we pursue, be it a CO2 tax, cap and trade, or emissions or technology standards for power plants. Cheaper is cheaper. It’s amazing how often people fail to grasp principles of competitive advantage.

(We could, of course, come up with a convoluted policy to keep coal miners employed, similar to how the 1977 amendments to the Clean Air Act were set up to penalize low-sulphur Western coal so as to keep Eastern mines open, but I’m hopeful that we can avoid that kind of perversity this time. If you see laws or regulations that punish natural gas use in electric power, though, you’ll know my hopes have gone unfulfilled.)

Why Small is Not Always Beautiful

We love small businesses. We love entrepreneurs. Do we love them too much? The Economist thinks that this may be the case, reminding us that our liking may have more to do with ideology (or self-adulation) than with economic reality.

Small is not Beautiful: Why small firms are less wonderful than you think

Motivation Trumps IQ. What now?

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 »

Healthcare Price Control Shuffle…

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 »

What’s an Academic Fraud?

I recently discovered I am an academic fraud. Now, I am sure there must be people out there whose immediate response is “of course you are”, “knew it” or “I am not surprised”, but I was. 

Admittedly, what amounts to fraud when publishing as an academic isn’t always entirely clear to me – which, to some,will probably suffice to consider me suspect already (if not guilty-till-proven-innocent). I do get the extremes: If one writes up a truly new academic study giving the full account of the research underlying it, it ain’t fraud. If you make up the data – emulating the now infamous Diederik Stapel – it is. But sometimes in between, I am not always sure… Let me give you a few potential examples.

  • Earlier this month, at the Editorial Board Meeting of the Academy of Management Journal, the editor reported that the journal would now start screening every submitted article for plagiarism. The software turns up whether parts of the text have been copied from earlier publications, including articles by the same author (in a case of self-plagiarism). After this, a fellow board member asked “can we access the same software to pre-screen our own articles before submitting them?” There wasn’t a murmur or hint of discontent in the room following this question, but I found it strange and uneasy. If you copy a piece of text, then pre-screen it and the software tells you you would be found out, you rewrite it a bit plugging in a few synonyms here and there and then it is ok and no longer considered fraud and plagiarism?!
  • Geert Hofstede, one of the most highly cited social scientists ever (citations are considered a signal of “impact” in our academic world, and I seem to remember him once telling me that he had more citations than Karl Marx…), became famous for developing dimensions of national cultural differences. He published these dimensions left-right-and-centre – in academic journals, magazines and books – which greatly contributed to their and his exposure. He nowadays would be covered in tar and feathers and chased out of the ivory tower for self-plagiarism?
  • Situation A: PhD student A copies a paragraph leading up to one of his hypotheses from a working paper by someone else he found on the web, without citation. Situation B: PhD student B copies a summary of a previously published academic article from a third, published paper that summarised the same article. Situation C: likewise, but with a citation to that third article, but no quotation marks. Situation D: likewise, but with citation and quotation marks. Who should get kicked out of the programme? At London Business School we have already dealt with situations A and B (the students were chased out), and D of course, but I am left wondering what we’d do in situation C.
  • An academic – and an obvious fan of the Matthew Effect – buys 20,000 followers on Twitter. Yes, if you didn’t know, buying (fake) twitter followers is possible and easy. In fact, yesterday, I learned it is as cheap as chips. Yesterday, the Sunday Times covered the tale of an aspiring English celebrity who bought about 20,000 followers on Twitter to boost her profile. It just cost her a few hundred pounds/dollars. And, in fact, it sort of worked; she did raise her profile. But when she was found out – which isn’t actually that easy – she was ridiculed and quickly chased back to the dubious and crowded ranks of the British B-celebrities. But what would we do? How would we react to an academic buying 20,000 “followers”? Tar and feathers or applause for bringing the Matthew Effect to practice?

I am – apparently – a shameless self-plagiarising fraud because I sometimes get approached by business magazines who say “we read your blog post X and would like to republish it in our magazine”. And if they’re half decent (even by business magazine standards), I tend to say “yes”… In fact, I sometimes make the suggestion myself; when some magazine asks me “would you like to write an article on X for our wonderful magazine?” I usually say “no (way), but chapter X from my book would suit you well. Feel free to republish that”. Some acknowledge it was previously published; some don’t.

And, frankly, I don’t really care, and I will probably do it again. If it is my work, my copy-right, the magazine is fully aware of it, and it doesn’t harm the reader (they will know if they’ve seen it before, and otherwise they probably didn’t, or they might suffer from an enviable dose of business magazine amnesia), I won’t fear or dodge the tar and feathers. In fact, who knows, you may have read this very same post before!

Strategic renewal through franchisee innovation?

Entertaining story of how the Applebee’s restaurant chain is trying to improve asset utilization by adding late-night karaoke and G-rated cut-loose partying to its traditional family-friendly but competitively besieged regular-hours dining experience. The impetus for this innovation appears to have been franchisees who went to their privately-held franchisor and asked for permission to experiment, which was enthusiastically granted.

My favorite part of this story is the superhero-like switch from regular-hours Applebee’s to creature of the night “bee’s” with the “Apple” part of the electric sign turned off, the lights switched from green to white, and the space cleared for dancing and DJs. My second-favorite part is the image of some naive soul coming in for a snack after 10:00PM–“oh, look honey, Applebee’s is still open; let’s get some pie”–and being confronted with hard-partying suburbanites belting out Foreigner tunes and dancing drunkenly. They’re going to have some delicate marketing and branding issues going forward, but it’s hard not to cheer for the entrepreneurial spirit displayed. After all,  there are suburban archipelagoes of shopping centers where the only late-night place to go out will be “bee’s.”

Organization design: articles and videos

Nicolai’s post at O&M made me aware of a new journal, Journal of Organization Design.  I definitely think org design deserves to experience a renaissance/comeback, so I welcome a journal dedicated to the topic. (Though, I do think we have far too many journals in strategy/management – many of them are of suspect quality.)

 I just now checked out the web site of the journal and they have some killer features, including short videos of the authors describing their papers:

I like the video feature.  Nice.

Am I missing something?

I just came across this item from WSJ online: Best Buy Founder Gets Green Light to Pursue Buyout. I’ve long been a Best Buy customer — it is typically my go-to store for need-it-right-now purchases of not-too-exotic electronics items. Lately, the firm has been having financial trouble, consistent with the now-familiar story of bricks-and-mortar succumbing to online competition.

What’s interesting is that Richard Schulze (the original founder of 46 years ago) is considering buying back the company as part of a turnaround effort. This is interesting because, as a strategy scholar, I cannot help but wonder what, exactly, he thinks he can do to return the firm to health that couldn’t be done without him. According to this article, his plan is: cut prices to be competitive with online retailers like, improve the customer experience, and avoid cost reductions. Am I missing something or does this sound akin to making up for negative margins with increased volume?

Stay tuned.

Twittering Strategy Profs

For those of you who also follow twitter, LDRLB, an “online think tank that shares insights from research on leadership, innovation, and strategy” has just posted a list of Top Professors on Twitter. The categories are Leadership, Innovation, and Strategy (15 profs in each category). Good lists — all good folks with thoughtful views on the world of strategy. Nice to see a number of StrategyProfs bloggers listed.

A Fly in the Ointment…

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 »


How to Write a Malcolm Gladwell Book. Would most recently graduated MBAs get the joke?

Strategic Human Capital Paradoxes…

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 »

Good analysis: Exactly How Screwed Is PayPal? (Hint: Very)


The anti-platform?

There is now a large stream of scholarly literature on “platforms” – loosely, third-party services designed to bring transacting parties together. and eBay are obvious examples. Broadly interpreted, so are services like online dating sites (see the work by Hanna Halaburda and colleagues).

With this in mind, I came across the following article: Ghostery: A Web tracking blocker that actually helps the ad industry | VentureBeat. Ghostery is an app offered by the advertising technology company Evidon. The app is used by privacy-conscious web surfers to block web tracking services. When a new tracker attempts to install a tracking cookie on a browser sporting Ghostery, the tracker is blocked and Ghostery sends the tracker information back to Evidon to be added to the company's database of web trackers, which improves the quality of the app.

The interesting twist in the business model is that Evidon then turns around and licenses its tracker database to the very ad networks its app is designed to block. In fact, says Evidon CEO Scott Meyer, “When a new web tracker comes on the scene, they often want to be listed in Ghostery. It’s proof that they’ve arrived and have influence.”

So, what do we call a service that helps side A avoid side B while helping side B pursue side A? Seems as if this phenomenon should have its own, suitably clever-yet-scholarly term.