Knowledge@Wharton
Sun Apr 24 04:47:47 EDT 2011
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Nassim Taleb on Living with Black Swans - Nassim Taleb is a literary essayist, hedge fund manager, derivatives trader and professor of risk engineering at The Polytechnic Institute of New York University. But he is best known these days as the author of The Black Swan: The Impact of the Highly Improbable. During a recent visit to Wharton as part of The Goldstone Forum, he spoke with Wharton finance professor Richard Herring -- who taught Taleb when he was a Wharton MBA student -- about events in the Middle East, the oil supply, investing in options, the U.S. economy, the dollar, health care and of course, black swans.

Former Random House CEO Alberto Vitale: 'Paper Books Will Evolve into More Precious Products' - Alberto Vitale was running Bantam Books, the world leader in paperbacks, when the Newhouse family recruited him to become the COO of Random House. In that role, and later as the CEO of one of the world's top publishing firms, Vitale oversaw huge changes in the publishing industry. In this interview with Stephen J. Kobrin, publisher and executive director of Wharton Digital Press, and Knowledge@Wharton, Vitale discusses the rise of digital publishing, the future of bookstores and the globalization of copyright, among other issues.

Nickeled and Dimed: Is It Possible to 'Over-fee' Consumers? - When a business faces extra costs or other hits to the bottom line, these costs are often passed on to the consumer. Increasingly, in industries such as financial services and the airlines, the hits take the form of ancillary fees. And in some cases, the charges are for services that were once free, such as checking baggage on a flight or opening a checking account. Yet businesses that impose fees need to tread carefully, experts say, because customers will quickly revolt if the extra costs are perceived to be unreasonable.

Incentive or Gift? How Perception of Employee Stock Options Affects Performance - The basic theory of why companies issue stock options to their employees is fairly simple: Profit from exercising those options creates what employers hope is an incentive that will motivate employees. But new research by Wharton professor Peter Cappelli and senior fellow Martin J. Conyon finds that the practice only impacts employee performance when workers earn a sizable payoff from exercising their stock options. Even then, the employees view the options not as an incentive, but as a gift they feel compelled to repay by working harder.

Back to the Future: Will Rising Commodities Prices Create a New 'Inflation Generation'? - Commodities prices are surging -- from oil to cotton to grains to gold. These higher costs pose challenges for companies in industries like apparel, food retailing and appliances as they try to pass on price increases without alienating consumers. At the same time, higher commodities prices raise the specter of a spike in inflation down the road, a major concern for policymakers and the Federal Reserve.

'The Democratization of Fashion': William Fung and Vera Wang on the Implications of Going Global - As retailers face greater pressure to sell more products, expand into new markets and streamline production, the fashion industry is feeling the heat. Designer Vera Wang, for example, is trying to turn her business into one that is widely known and widely worn. William Fung, managing director of Hong Kong-based trading company Li & Fung, is trying to stay ahead of new complexity in the production process. Both Wang and Fung discussed ongoing challenges in the fashion industry during a recent presentation at Wharton.

Another Tech Bubble? Separating the Froth from the Facts - Valuations are growing aggressively for Facebook, Groupon and a handful of other social media darlings. But does that growth signal the coming of another tech bubble? Not necessarily, say Wharton faculty and other experts, who note that the main issues are the extent to which these valuations are supported by real staying power, and whether or not these companies are having an undue influence across the tech landscape.

The Ouster of Muhammad Yunus: Can Politics Destroy Grameen Bank? - "Dismissed." A single word from Bangladesh's highest court ended a bitter legal battle that has grabbed world attention. The loser in this case: Muhammad Yunus, the 70-year-old Nobel Peace Prize laureate and founder of Grameen Bank, the groundbreaking Bangladeshi microfinance institution he is no longer allowed to run. But as with many of the highs and lows of microfinance, there is much more than meets the eye to this boardroom shakeout.

When to Gamble -- and When to Fold? Innovation Strategies for a New Economy - The difficult economy has cast a spotlight for inventive companies on the notion of innovation portfolios. At a recent conference sponsored by Wharton's Mack Center for Technological Innovation, speakers discussed how firms are re-evaluating not just how much to spend on research and development, but also how to strike a better balance between long-term, high-risk projects and more incremental efforts.

The Problem with Financial Incentives -- and What to Do About It - Bonuses and stock options often improve performance. But they can also lead to unethical behavior, fuel turnover and foster envy and discontent. In this opinion piece, Wharton management professors Adam Grant and Jitendra Singh argue that it is time to cut back on money as a chief motivational force in business. Instead, they say, employers should pay greater attention to intrinsic motivation. That means designing jobs that provide opportunities to make choices, develop skills, do work that matters and build meaningful interpersonal connections.

In the Health Care Sector, Who Should Choose Which Treatment Is Best? - Each day, workers in the health care field debate the most reliable course of action for treating a particular ailment. As part of U.S. health care reform, new emphasis is being placed on comparative effectiveness research (CER), which pits remedies against one another to determine which is best. A new paper by Wharton professor Scott Harrington warns that the government should avoid developing a monopoly on CER, and offers suggestions for sparking interest from private sector researchers.

Building a Brand on the Smell of Mom's Kitchen: How Panera Found Success in a Down Economy - Replete with comfortable chairs, free wi-fi and the smell of freshly-baked bread, Panera is not your average fast food joint. The company is one of the fastest-growing chains in the U.S., with 1,420 stores and a roughly $3 billion market capitalization. During the depths of the downturn, when most companies contracted, Panera grew in size and profits. The reason for Panera's success is simple, experts say: The chain has pursued a niche strategy, differentiating itself as a fast food restaurant that serves healthy, tasty, affordable food in a community-minded atmosphere.

Is Google Stuck in 'Perpetual Beta'? - Last month, Motorola's Xoom tablet launched on the Verizon Wireless network. Soon after, complaints began to surface that the tablet's operating system -- designed by Google -- was prone to crashes when running third party applications. Experts say that while Google's typical strategy of launching new products, and then perfecting them according to user feedback, might work for Gmail and other online products, it doesn't translate well to hardware-based devices like smartphones. In fact, this "perpetual beta" mode, they say, might become a handicap as the search giant moves into new markets.

Keeping Its Distance: Can the Fed Be Effective, Innovative -- and Independent? - The U.S. Federal Reserve Bank played a central role in mounting a response to the financial crisis of 2008. Battling unprecedented disasters, the Fed responded with what experts describe as creative, even heroic, measures. But in the wake of that crisis, the Fed faces new challenges, including an increasingly critical Congress, at a time when the central bank's responsibilities have expanded in significant ways. Observers question whether the Fed can continue to effectively monitor the financial landscape while also keeping clear of the politicians in Washington.

From Virtual Barnyards to Real Dollars: Andrew Trader on Zynga, 'Gamification' and the Power of Analytics - By combining the might of Facebook with the narrative element of experiential computer games like Oregon Trail or The Sims, social gaming developer Zynga was able to become one of the fastest-growing companies on the Internet. Andrew Trader was a member of Zynga's founding team in 2007, and until last year served as executive vice president of sales and business development. Now an entrepreneur-in-residence at Maveron, a venture capital firm, Trader recently talked to Knowledge@Wharton about Zynga's success and the rise of social gaming.

One Woman's Advice to Another: It's Always Time to Speak Your Mind - While women have indeed come a long way since earning the right to vote in 1920, they still have not achieved wage and income equity compared with their male counterparts, notes a government report released this month. The reason, according to a series of speakers and panelists at the recent Wharton Women in Business Alumnae Conference 2011, is that women still need to assert themselves more when establishing work relationships, seeking sponsors, trying to make their presence -- and contributions -- known, or negotiating for a raise. As one speaker noted: "Women don't ask."

U.S. Energy Policy after Japan: If Not Nuclear, Then What? - As the crisis at Japan's crippled Fukushima Daiichi plant continues to unfold, every bit of news that trickles out deepens the debate about nuclear energy. Anti-nuclear activists point to smoldering reactors and radioactive drinking water; others say the fact that the aging plant survived the earthquake and tsunami without greater damage signals its ability to withstand major disruptions. At issue is whether the expansion of nuclear power in the U.S. gets a green, red or yellow light.

Acxiom's Tim Suther on Winning in the New ‘Marketing Democracy’ -

Imagine for a moment that you moved to a new home located right next door to a train station. It's noisy at first. But after a while, you get used to the noise and barely notice it. That notion “is exactly how consumers feel about marketing and advertising -- as if it's not even there," said Tim Suther, chief marketing officer of Acxiom, the world's largest processor of consumer data. Such consumer numbness has profound consequences, according to Suther, who outlined strategies for "smart marketing" during a speech at a recent Wharton Marketing Conference.