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6 new business insights from MIT Sloan Management Review

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No one knows your strategy — even your top leaders Strategic priorities are the guideposts of a company, but what happens when the managers tasked with implementing those priorities can’t even name one of them?

New research from MIT Sloan senior lecturer Donald Sull and his co-researchers finds that of 124 organizations surveyed, only 28 percent of the executives and middle managers tasked with strategy execution could list three of their company’s priorities.

While the kneejerk reaction at similar companies might be to reinforce existing corporate communication to the workforce, Sull and his co-researchers suggest a different three-step approach: Acknowledge you have a problem, get leadership in agreement on those priorities, and then ensure that strategic alignment stays consistent — especially between leaders and the people who report directly to them.

The new digital mandate: Cultivate dissatisfaction Customer satisfaction is an important revenue driver, but when it comes to employee happiness, you might be better off aiming for the opposite. 

George Westerman, a principal research scientist with the MIT Initiative on the Digital Economy, recently proposed that dissatisfaction in a company can lead to innovation.But it had better be the right kind of dissatisfaction: the kind that questions the status quo.If you want to foster that form of dissatisfaction, Westerman writes, support and communicate with dissatisfied employees. Leaders should challenge their teams to find problems, and while it’s good to celebrate progress, always be looking for more improvements.

Cultivate the kind of dissatisfaction that questions the status quo.

 

The hybrid trap: Why most efforts to bridge old and new technology miss the mark

A company’s leadership team might want to embrace new technologies, but there’s an important difference between having a feeling about and fully adopting the latest thing.James Utterback, MIT Sloan professor of management and innovation, and his co-authors warn against what they call the “hybrid trap.”While some companies know they want to become early adopters of new technologies, they don’t have the vision or commitment to become leaders of that new technology. Instead, they form “hybrid products that combine elements of the old and the new.”

But this puts the company in a weak position, the authors write. When the rest of the market finally starts to use and embrace the new technology, that company now must play catch-up.  

Unpacking the AI-productivity paradox Electricity. Internal combustion. Now, artificial intelligence.MIT Sloan professor Erik Brynjolfsson, and co-researchers including MIT Sloan PhD candidate Daniel Rock, proposed that artificial intelligence could be this lifetime’s “general purpose technology.”

That might seem contradictory to declining productivity growth, they write, but history has shown that general purpose technologies often inspire “numerous complementary co-inventions.”

“Importantly these co-inventions took years or even decades to materialize and only then did productivity improve significantly,” the researchers write. 

The end of scale We know the ending to the parable of David and Goliath, but Hemant Taneja, a lecturer at MIT, and MIT Sloan SM ’99, and his co-author suggest three ways big corporations might still have the upper hand if they can be flexible and fast moving.First, a large company must become a platform. For example, a large electric company can transform its grid system to support smaller energy companies.

Large companies should also focus their products to one specific area of the market, rather than try to spread themselves too thin. It is OK, however, to bundle products that are tailored to their customers.

In a similar vein, Taneja advises that large companies should make each of their many customers “feel like a market of one.” 

 

Pass the word: Peer influence has big impact on online market dynamics

Peer pressure might seem more at home in a middle or high school, but new research from MIT Sloan professor Alex “Sandy” Pentland, director of MIT’s Human Dynamics Laboratory, shows it’s also alive in well in some online markets.

Pentland and his co-authors based their study on a six-month online test in which cryptocurrency traders used bots to make more than 100,000 trades, each worth less than one cent. The result: “traders are very susceptible to peer influence.”

“By simulating market bubbles, we demonstrated that even trades worth just fractions of a penny can influence the nature of other, much larger trades,” Pentland writes. “For online market designers, the message is that even minor changes in the systems that affect individual and collective behavior can have major social and economic impact.”

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