The Low-Risk Anomaly: Implications for Investment, Asset Allocation, and Corporate Finance
Malcolm P. Baker (PhDBE 2000), Robert G. Kirby Professor of Business Administration
One of the basic principles of finance is that, in competitive and efficient markets, investors earn higher average returns only by taking greater risks. Asset classes follow this pattern: Stocks have returned more than bonds, and bonds have returned more than cash. But within the stock market, the pattern is reversed. Low-risk stocks, whether measured by volatility or market beta, have outperformed high-risk stocks, on average, in 80 years of US stock market history and in 30 years of international data. Drawing on his research, Professor Baker will describe the behavioral and institutional explanations for this anomaly and discuss the potential implications for investment, asset allocation, and corporate finance.
Behavioral Insights to Be a More Effective Organization
Max H. Bazerman, Jesse Isidor Straus Professor of Business Administration
The growth of behavioral economics, decision research, controlled field experiments, and nudging has created a new set of levers for executives to create more effective organizations. HBS, and Harvard more broadly, is at the center of this revolution. As cochair of Harvard’s Behavioral Insights Group (along with Professor Iris Bohnet), Professor Bazerman helps organize the dozens of Harvard researchers working in this area and coordinates with emerging Behavioral Insights Teams around the globe. This talk will give an overview of Harvard’s role in this field and offer a number of specific examples that may be useful to executives attending the session.
The Next Harvard: Planning for Transformation
Angela Quinn Crispi (MBA 1990), Executive Dean for Administration; Andrew F. O’Brien, Chief of Operations
Harvard and HBS are undertaking one of the largest real estate developments in the City of Boston. This interactive discussion will showcase these evolving plans. Learn how Harvard’s vision for Allston will create a campus of the next century, putting HBS, long recognized as one of the most renowned campuses in higher education, at the center of the University’s master plan. Hear how the HBS campus has evolved over the past five years and which innovations are planned for the next five as it designs the campus of the future.
Terror at the Taj Bombay: Customer-Centric Leadership
Rohit Deshpandé, Sebastian S. Kresge Professor of Marketing
Join a case discussion about the bravery and resourcefulness shown by the rank-and-file employees of the Taj Mahal Palace and Tower luxury hotel during the terrorist attacks that took place in Mumbai, India, on November 26, 2008. Excerpts from the “Terror at the Taj” multimedia case will be shown during the session, featuring video interviews with hotel staff and executives combined with security footage of the attack, which create a documentary-like account of the events that took place. The case also covers the hotel’s history, its approach to training, and the “guest is God” philosophy inherent in Indian culture. Why did the Taj employees stay at their posts, jeopardizing their safety in order to save hotel guests? And is this level of loyalty and dedication something that can be replicated and scaled elsewhere? Note: The Terror at the Taj Bombay case discussion will be based on a video case shown live in the classroom; no pre-reading or viewing is required.
Teaming across Industries
Amy C. Edmondson, Novartis Professor of Leadership and Management
This session will review research on the interpersonal dynamics that affect organizational learning. Teaming—the dynamic interactions through which interdependent work is carried out—emphasizes the action rather than the structures of teamwork. This perspective on organizational learning emerged through field research in settings ranging from the front lines of health care delivery to the Space Shuttle program at NASA to the management conference room. It emphasizes the debilitating effects of interpersonal fear and examines the role of leadership in counteracting these effects.
The Future of Private Equity and Venture Capital: Hope or Hype?
Josh Lerner (PMD 62, 1991), Jacob H. Schiff Professor of Investment Banking
Both the buyout and venture capital industries face unprecedented challenges today. After an orgy of investments in the mid-2000s, private equity funds suffered a hangover of epic proportions. In recent quarters, however, the portfolios of the private equity funds have recovered in a manner that has surprised even the most optimistic observers. Meanwhile, venture capital, after a prolonged drought, has experienced new life—and even the repeat of bubble-like behavior, according to some observers. But all is not rosy: many of the investors on which these funds have traditionally depended, such as endowments and pensions, have increasingly looked to bypass funds and to instead pursue direct investments into private firms. This talk will explore this unsettled and often mysterious territory and offer some surprising predictions about the future of these sectors.
Family Feud at Market Basket
Jay W. Lorsch, Louis E. Kirstein Professor of Human Relations
During the summer of 2014, a boardroom conflict at Market Basket, a chain of New England supermarkets, exploded into public view after CEO Arthur T. Demoulas was fired by the board, led by his archnemesis and cousin, Arthur S. Demoulas. His dismissal set off protests throughout the organization, by employees who saw Arthur S. and his side of the family as “greedy corporate sharks” more concerned about their own wealth than the welfare of employees and customers. Each day brought new headlines and TV updates. Because of the high-profile nature of the crisis, the actions by the board of directors were being carefully scrutinized, and directors were under increasing pressure to get Market Basket back on track. Professor Lorsch will explore what caused this Greek tragedy to unfold in Boston, how the board and management reacted, and what the lessons are for company boards.
Consumers, Corporations, and Public Health: The Case of 23andMe
John A. Quelch (DBA 1977), Charles Edward Wilson Professor of Business Administration
In November 2013, the Food and Drug Administration sent a strongly worded cease and desist letter to 23andMe, a pioneer in direct-to-consumer genetic testing. The case is a metaphor for the increasing tension between public-health regulators and innovative entrepreneurs. As they contend with ever-escalating health-care costs (now 18 percent of U.S. GDP), consumers are encouraged to take more responsibility for their own health. But public-health officials are concerned about the quality of the information consumers may purchase and the possibility that they may act on the information in ways that do themselves more harm than good. The 23andMe case is one of many in Professor Quelch’s new course, Consumers, Corporations, and Public Health, that is offered jointly to MPH and MBA students.
The Market for Smaller Firms
Richard S. Ruback, Willard Prescott Smith Professor of Corporate Finance; Royce G. Yudkoff (MBA 1980), Senior Lecturer of Business Administration
Smaller firms sell for substantially lower multiples than larger firms in similar businesses. These smaller firms—with transaction values below $10 million—typically sell for four times EBITDA, multiples that are half to a third as large as those for comparable larger companies. These low multiples seem to provide enormous opportunities for potential buyers. The magic of small-firm investing is surely these low multiples. This talk will offer some thoughts about the market for smaller firms and the dynamics that result in the low multiples for smaller firms.
The Basis for Optimism
William A. Sahlman (MBA 1975), Dimitri V. D'Arbeloff - MBA Class of 1955 Professor of Business Administration and Senior Associate Dean for External Relations
This talk focuses on the challenges confronting the United States and other countries and the entrepreneurial actors who are hard at work finding solutions. If K‒12 education is failing in the United States, entrepreneurs are designing new systems that are less costly and more effective. If climate change threatens life as we know it, entrepreneurs are searching for scalable, clean, low-cost alternatives to hydrocarbons. This is the basic duality participants will discuss.
Real Estate and Capital Markets
Arthur I. Segel, Poorvu Family Professor of Management Practice;
Charles F. Wu, Senior Lecturer of Business Administration
Participate in a discussion on real estate valuation and the capital markets today, using a short case involving New York City, which will be handed out in class (no pre-reading required). Professor Segel will also provide a brief update on current real estate programming for MBA students.
What It Takes to BE(come) a World-Class Leader: Authentic Leader(ship) Development
Scott A. Snook (MBA 1987), MBA Class of 1958 Senior Lecturer of Business Administration
This session will be an interactive discussion that draws on Senior Lecturer Snook’s 30-plus years of experience as a leader, teacher, and researcher. Using a series of short video vignettes and personal stories, Snook will argue that success is as much about who you are as it is about what you know and what you can do. Drawing from the emerging fields of positive psychology and authentic leader development, Snook will demonstrate the potential of this novel approach by introducing participants to a wide range of interesting characters, including the Happy Greeter, General Norman Schwarzkopf, Simon Cowell, and Michael Jordan. Based on his experience teaching the highly popular HBS course Authentic Leadership Development, Snook will lead participants through a reflective exercise designed to help them experience what it feels like to actually BE(come) more authentic.
Wealth Management in the 21st Century
Luis M. Viceira, George E. Bates Professor
With more than $15 trillion in assets under management, the U.S. retail wealth management industry is the largest of its kind in the world and one of the most highly competitive and innovative. Recent demographic, cultural, and industry trends are transforming the wealth management business. This talk will explore these trends, how the traditional wealth management business is responding to them, and how new business models are emerging and disrupting traditional firms.
The Roots of the Debate over Tax Reform
Matthew C. Weinzierl, Associate Professor of Business Administration
Fundamental tax reform is overdue in the United States. While the outlines of a compromise seem clear, agreement remains elusive. Associate Professor Weinzierl studies the roots of this stalemate, and in this interactive discussion, participants will explore some of the underlying tensions driving the current debate. They may even come to appreciate the other side of the debate a bit better.
Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs
David B. Yoffie, Max and Doris Starr Professor of International Business Administration
Bill Gates, Andy Grove, and Steve Jobs were masters of strategy, who led Microsoft, Intel, and Apple to become the world’s most valuable companies during their tenures. Based on more than 20 years of research, Professor Yoffie argues that these three CEOs shared a powerful, common approach to strategy, which he describes through five rules: (1) look forward and then reason back; (2) make big bets but without betting the company; (3) build platforms and ecosystems rather than just stand-alone products; (4) exploit both leverage and power, or “judo” and “sumo” tactics; and (5) drive execution by shaping the organization around the CEO’s “personal anchor.” This session is based on Professor Yoffie’s book Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs, coauthored with Michael Cusumano (Harper Collins).