Category: Faculty in the News
In the real world, Kant can’t help (but here’s what does)
Kabrina Chang understands that no amount exposure to the subject of ethics will deter future Bernie Madoffs. Businesspeople aren’t likely to draw on some long-ago class for guidance, she admits. But Chang also understands that in order to produce socially responsible leaders, ethics must hold a place in management education.
The assistant professor of business law and ethics writes in Bloomberg Businessweek that a more comprehensive approach to the subject of ethics must be taken—an approach that doesn’t attempt to turn students into moralists like Kant, but one that gives students practical techniques for resisting pressure. Chang spotlights the School’s own approach to integrating ethics into education:
Our focus at Boston University School of Management is not to provide the final word on right and wrong. Nor are we trying to turn students into moral philosophers, though they are exposed to the major schools of ethical reasoning from Aristotle to Kant to Jeremey Bentham and John Rawls. What we are trying to do is provide undergraduate and graduate students with ethical frameworks they can use in decision-making—the tools needed to recognize and consider the ethical dimensions of decisions—just as we provide them with the tools for doing strategy or finance.
The first management class all undergraduates must take is Business, Society, and Ethics, where they initially encounter ethical frameworks in the context of global management and the complicated analysis necessary for making appropriate decisions. An ethical framework is a decision-making model. For example, Bentham’s Utilitarianism tells us to make decisions that benefit the greatest good.
We are looking at how best to integrate ethics into all required courses. Specific business disciplines will immerse students in the kinds of dilemmas that are likely to arise. For example, in marketing classes students may be asked to decide how to market a snack product for children as all-natural when it is actually not healthy because it is high in sugar. Though many professors have explored ethics in these classes, the approach has been uncoordinated. We believe that the consistency provided by common decision-making tools and language will create an indelible educational experience.
Read the full piece here.
Fournier outlines steps to getting more value out of social media brand-chatter
Last month, Susan Fournier, Questrom Professor in Management and professor of marketing, advised marketers in the Harvard Business Review: Think like an anthropologist. Instead of breaking down big data into percentages and meaningless numbers, tap into social media chatter to get a real glimpse into how consumers are living and thinking. A single comment or photo posted about a company’s product can impact its consumer knowledge and its profitability—don’t ignore it.
In a follow-up to her piece on this anthropological approach to big data, Fournier, once again in collaboration with Bob Rietveld, managing director and cofounder of Oxyme, delves deeper into the value of social listening and offers further instruction: Think like a market researcher. The information gained from social listening can be as robust a source of strategic inspiration as any must-have diagnostics on the dashboard, the pair writes. Not to mention, social listening is inexpensive and efficient, because surveying is unnecessary: unsolicited comments from consumers are already out there, awaiting analysis.
Fournier and Rietveld outline four steps to getting more value out of social media brand-chatter:
Make sure the quality of your social-listening data is good.
Like all data, the information you glean from social media should be subject to market-research protocols for reliability and validity. Ask the same kinds of tough questions you’d ask about any research project. Are the data drawn from the entire social-media landscape? Is the sampling of comments statistically sound? Is the system of data classification, in terms of topics, themes, and sentiments, accurate? Does your automated coding allow for idiomatic meanings, as in “This brand is the s—t”? The insights you get from social media are only as good as the data set you create.
Don’t make your social-media data stand alone.
Information from social listening must be correlated with other streams of data that the company is using. For example, in an analysis we performed for a transport company, we found that complaints shared on daily Twitter feeds tracked 90% with the content of customer-service comments registered by phone or mail. Linkages like this go a long way toward speeding the adoption of social-media data as a valid strategic-insight source.
Think about “impact” and not just ROI.
Marketing managers tend to take too narrow a view of social listening, seeing it merely as a way to measure the return on investment of specific marketing campaigns. For example, an electric-toothbrush maker that had launched a campaign to woo “non-electric” brushers was dismayed to learn that the resulting burst of social-media activity came mostly from existing users. It branded the campaign a flop and moved on.
In so doing, the company overlooked the value of what it had found on social-media sites. Users were sharing positive stories, advocating electric brushing, and in some cases expressing their love of the company’s brand. The company was getting a rare unfiltered look at how consumers were living the impact of the company’s strategies and brands.
Be sure your social-listening analyses make their way out of the marketing-research department
and into the wider organization, including leadership circles. Don’t let the information stay bottled up in the departments that collected and “own” the data. That means establishing a common analytical currency and language throughout the company so that managers can take action and be held accountable. One company we worked with created a Center for Digital Excellence to coordinate data on a vast brand portfolio. The company tied the digital indicators to bonus compensations, signaling C-level commitment to the program. It’s that kind of high-level integration that enables companies to focus efforts and resources effectively, creating value for the firm.
View the full piece here.
Real value is created through meaningful innovation and adoption—not from smoke and mirror deception
Mark T. Williams, Boston University School of Management executive-in-residence and master lecturer of finance, warns against the peer-to-peer electronic payment network Bitcoin in a wide range of media commentary, arguing that investors across the globe should steer clear of this “dangerous speculative bubble” and its “get-rich-quick mindset.”
Excerpts from Williams’s commentary for WBUR (Dec. 5, 2013):
Bitcoin is not a futuristic currency but a speculative mania. Greed is pushing prices skyward but fear will quickly bring those same prices crashing back to earth. Investors need to separate the promising technological innovation of digital currency from the Bitcoin Ponzi scheme that will harm those that fail to exit before the bottom falls out.
Bitcoin is another example of “market innovation” that deserves closer scrutiny from the Securities and Exchange Commission. SEC Chairman Mary Jo White has said virtual currency itself may not be considered a “security,” but interest issued or returns gained by it likely would be and therefore subject to regulation. Federal Reserve Chairman Ben Bernanke told Congress that the Fed “does not necessarily have authority to directly supervise or regulate these innovations.” And the Justice Department says Bitcoin is legal, but that doesn’t mean it is adequately market tested, investment safe and ready to be a global currency.
Bitcoin is not a currency with intrinsic value but a hyper bubble fueled by a get-rich-quick mindset.
Excerpts from The Washington Post blog “The Switch” (Dec. 10. 2013):
In recent weeks, some Bitcoin critics have been rethinking their initial Bitcoin skepticism. But others are as convinced as ever that the cryptocurrency is doomed. One of the harshest critics is Mark Williams, who teaches finance at the Boston University School of Management. He predicts that in the first half of 2014, bitcoins will lose almost 99 percent of their value, falling below $10.
Timothy B. Lee: What informs your thinking about the future of Bitcoin?
Mark Williams: I used to be the senior vice president of a commodity trading firm in Boston. I’m very familiar with commodity prices with high volatility. For example, energy prices would have swings of 400 to 500 percent in a year. That’s significant price movement.
But Bitcoin is in a universe of its own. Right now Bitcoin is looking at price movements as high as 8000 percent since January. It moved from $13 per bitcoin to a high of $1200. So what we see then is considerable risk associated with Bitcoin.
At least with a commodity like power, natural gas or oil, there’s an underlying value. That product can be used for something. With Bitcoin, it’s a virtual commodity, so there’s no backing. In essence, Bitcoin is worth something as long as you or I are willing to sell things for it. But if you say I’d rather have $1,000 than a bitcoin, Bitcoin is going to drop like a rock.
Excerpt from Williams’s interview on “Bitcoin’s future in Europe and the US” for The Voice of Russia (Dec. 20, 2013):
Bitcoin…has too much movement to be used as a medium of exchange….With any currency, you have to have trust in that currency, and you have to have stability….In the last two weeks, we’ve seen a drop of almost 50%. It’s almost like a roller-coaster out of control.
The CEO need not worry about what she posts online—but you do
Businesswoman Randi Zuckerberg, sister of Facebook founder Mark Zuckerberg, is advising professionals to stop pretending that they can separate their personal life from their work life and simply share it all on social networks. Easy for you to say, Boston University School of Management assistant professor of business law and ethics Kabrina Chang tells the founder and CEO of Zuckerberg Media. Could Ms. Zuckerberg potentially lose customers or respect because of something she posted online? Of course. But could she get fired for it? No way. That’s the difference between Ms. Zuckerberg and the general workforce, and that’s where Chang steps in to ask: Should we take Ms. Zuckerberg’s advice? Advice that’s given from a “lofty perch”?
The fact is that the vast majority of the workforce could get fired for what they post online. My research shows that not only are employers looking at what we do online, but they are also using that information in job decisions.
Is that fair? Maybe. Maybe Not. But it’s the workplace reality in this Internet and smartphone age. Is it legal? Usually. Courts in general treat online activities as if they were taking place in person. So that photo of you holding your gun and a beer, or crossing the marathon finish line, or of your darling’s First Communion or Bat Mitzvah are fair game. While there are federal and state discrimination and disability laws prohibiting using certain protected categories in any employment decision, once someone sees a picture it’s hard to disentangle that image from other qualifying factors.
There are some laws that can help employees. For example, the Stored Communications Act bars unauthorized access to stored electronic communications. This might be useful if someone surreptitiously uses your password to look at your Facebook page, but it won’t help when your Facebook friend at work shares your photo with the boss.
Progress has been made to address the growing trend of employers asking job applicants and employees for their Facebook passwords. Thirteen states have passed laws prohibiting employers from asking for this information. This signals to me a public need for protection and the fact that at least some employees are unwilling to share all of the details of their personal lives with their bosses.
Read the full piece here.
Srinivasan on effective subject lines in email marketing
Email marketing is a key strategy for retailers looking to spread the word about holiday shopping deals. But not just any email, Erika Morphy writes in CRM Buyer—mobile email. A full 48 percent of email is now opened on a mobile device, according to Ashley Twist, senior innovation strategist of mobility at Engauge. Now more than ever, consumers are using their mobile devices in stores for last-minute product research, including email offers from local merchants, the pieces notes.
In order to provide a high-quality mobile experience for consumers, marketers must be familiar with the best practices in mobile email marketing, particularly with crafting an effective subject line, on which Boston University School of Management professor of marketing Shuba Srinivasan weighs in:
“Subject lines make the first impression,” Boston University professor Shuba Srinivasan told CRM Buyer. “They need to be inviting enough to not give away the whole email, concise enough that they fit on the screen of all devices and clear enough that people know why you’re sending an email.”
Read the full piece here.
Engaging in social business means you’re damned if you do, and damned if you don’t
Should managers friend employees on Facebook or connect with them on LinkedIn? What are the legal implications of making these connections—or not? Boston University School of Management assistant professor of business law and ethics Kabrina Chang, along with Gerald C. Kane, associate professor of information systems at the Carroll School of Management at Boston College, poses these questions in a piece for MIT Sloan Management Review, in which she and Kane outline several key legal considerations for managers. Social business is a rapidly emerging and expanding phenomenon, creating unique situations unforeseen by our current legal system, the pair writes. Is your company prepared?
Excerpts from MIT Sloan Management Review:
Damned if you don’t.
One potential risk involves “negligent hiring.” An injured third party could sue a company for hiring a dysfunctional employee if that dysfunction was evident on social media platforms and would have been readily apparent through a cursory search. In fact, the easier it is to search, the greater the legal burden to do so. Although there is no case law on this issue yet, it is a real business risk.
Damned if you do.
Even when managers legitimately access information on social media sites, they must be careful about how they act on that information. For example, managers open themselves up for discrimination lawsuits if they discover protected information about their employees. In TerVeer v Library of Congress (2012), an employee filed suit against his employer, claiming a manager harassed and ultimately fired him after surmising the employee was gay when the employee “liked” a pro-gay parenting page online (the case is still pending).
What’s a manager to do?
One solution is to develop an official online policy for employees. Only 33% of businesses have such a policy, but they can provide valuable guidance for employees and managers regarding acceptable online behaviors. These policies must be crafted carefully, however, as the NLRB found that one such policy established by Costco was overly broad and placed unreasonable restrictions on employee behavior. And, as the survey pointed out, employees must be trained in how to follow the policy.
Hire a third-party vendor to assist with legal issues raised by social business. Companies such as Social Intelligence and Reppify search online information and provide reports on job applicants that are scrubbed of any protected information. Others, like Hearsay Social, assist with compliance issues raised by social business in regulated industries, such as finance and healthcare.
Read the full piece here.
To Understand Consumer Data, Think Like an Anthropologist
Harvard Business Review featured a piece from Questrom Professor in Management Susan Fournier and Bob Rietveld, managing director and cofounder of Netherlands-based marketing analytics firm Oxyme, in which the two write that the meaning within consumer data lies with social media, such as pictures and comments on products, not with percentages. Focusing on social-media chatter can have a profound impact on a firm’s consumer knowledge and, consequently, its profitability. Unfortunately, the piece notes, many people in business don’t appreciate the value of that chatter. Rather than treat consumer comments as noise, use social media as a glimpse into the consumer’s life and discover how he or she is really living. In other words, think like an anthropologist.
“Sure, sure,” the numbers-oriented marketing executives may say. Social listening is great for “exploratory” research, but only as a precursor to “real” research that will determine the truth of what’s being said online. What’s needed, they’ll tell you, is broad-based consumer research using representative samples and adequate sample sizes.
Querying a representative sample is great for testing a hypothesis or finding a statistical relationship between known concepts. But often, in marketing, you’re dealing with multiple unknowns. Social listening doesn’t presuppose anything. It has no constraints. Although qualitative information won’t give you a simple equation or statistic that you can show the CEO, it can provide answers to questions you didn’t even know you had.
And comments from a non-representative sample can be highly illuminating. For example, in tech markets, think of the users who regularly post to discussion groups focused on tech products. These knowledgeable netizens provide critical knowledge about product uptake and issues around quality or perception. The same can be said of fan groups and user groups in a variety of fields.
An important player in the electric-shaver category discovered this. Before the launch of a high-end shaver that was to be priced at more than $500 and was encased in brushed aluminum, an Australian retailer posted pictures and specifications of the product online. Almost immediately, consumers began commenting about the product’s “plastic aesthetic” and “cheap look and feel.” The manufacturer took prompt action, posting a new photo series highlighting the quality manufacturing process and construction, neutralizing the negative sentiment spreading online.
Successfully disseminating the results of social listening requires skill at seeing stories and developing insights from messy data. It also requires a penchant for simplicity.
Read the full piece here.
Those early-bird sales that drive consumers wild on Black Friday? They just got earlier. A number of large retailers will now open at 6 p.m. Thanksgiving night, offering doorbuster deals like never before. Though the announcement has received some backlash on social media, as well as some retailers announcing that they will remain closed on Thanksgiving in order to give their employees the entire holiday off, there is still strong consumer interest in starting the shopping rush on Thursday.
Professor Voices, a timely collection of newsworthy commentary and analysis from Boston University faculty and experts, asked associate professor of marketing Barbara Bickart, “Is Thursday really the new (Black) Friday or is it just a marketing gimmick?” An authority on consumer decision-making processes, Bickart explains what shopping on Thanksgiving says about retailers and consumers alike, and the potential economic impact.
Professor Voices: What does it say about the retailers that will open for sales Thanksgiving night?
Barbara Bickart: The Black Friday weekend is so important for retailers and the competition for consumers is so fierce that retailers are willing to do whatever is necessary to gain market share and sales. Retailers believe that if competitors are opening earlier and offering more deals, they could lose out. The possibility of being a consumer’s first choice for holiday shopping has a large potential payoff that outweighs the possible risks associated with backlash, particularly when there are six fewer shopping days before Christmas this year. Some stores, like Walmart, are starting Black Friday a week early, both in the store and online. It is clearly competitive forces and the desire to at least meet or beat the competition that is driving these decisions and the Black Friday “creep.”
PV: What does it say about the consumers who will go shopping Thanksgiving night?
BB: There could be different reasons that consumers shop on Thanksgiving night. Probably most important, many consumers look forward to the deals on Black Friday. The earlier start to shopping could be very enticing for these deal-seeking consumers, who are motivated by the thrill of finding a bargain. In addition, many consumers are likely to believe that if they don’t shop on Thanksgiving night, they will miss out on the deals. This idea that deals are “scarce” is a big motivator for shoppers to get to the stores early and make purchases. Finally, there may be a group of consumers who enjoy the ritual of shopping on Black Friday and see the earlier time as a way to expand the ritual. It also may feel less hectic and stressful to shop on Thanksgiving night, compared to the early morning hours of Black Friday.
PV: Are retailers really offering better deals on Thanksgiving night than on Black Friday or is it just a marketing tool to get shoppers in the door?
BB: It is my understanding that the deals on Thanksgiving will actually be better than those on Black Friday. Retailers may feel that consumers need an extra incentive to push away from the table on Thanksgiving evening and head out to the mall. Retailers are also making these deals seem less risky—for example, by guaranteeing that customers shopping on Thanksgiving will receive the product on deal before Christmas, even if it sells out that night. Retailers need to convince consumers that shopping on Thanksgiving is worth the time, effort and disruption to the holiday, so at least until the shopping ritual is established I would expect the Thanksgiving deals to be better than those on Black Friday.
Read the full Q&A here.
Assistant professor speaks on reviewer dishonesty
BU Today spotlighted assistant professor of marketing Georgios Zervas regarding his research that found Yelp to be steeped in fake reviews (at least 16 percent). The piece notes that, following New York attorney general Eric Schneiderman’s recent Operation Clean Turf initiative that uncovered manipulation in the reputation management industry, Zervas’ study elicited a response from Yelp’s vice president for communications and public affairs on the site’s official blog. The study “confirms something we have long known: businesses that don’t have a good reputation online will try to create one by submitting phony reviews,” the response reads. Senior writer Susan Seligson spoke with Zervas about the study he coauthored, Yelp’s impact on businesses, and how consumers can be more critical of online reviews.
BU Today: Did you discover anything particularly surprising in your study?
Zervas: One thing that was slightly surprising, not so much to me but to most people, is the proportion of suspected fake reviews that Yelp removes—approximately one quarter of all reviews submitted to Yelp are not published. That’s about 10 million reviews.
What are some of the concerns your study raises?
The main concern is for firms like Yelp and TripAdvisor. Platforms that crowd-source reviews rely on the integrity of these reviews, and fraudulent reviews pose a major threat to their trustworthiness. Furthermore, consumers should be concerned that fake reviews are leading them to suboptimal choices, and businesses should be aware that some negative reviews might come from their competitors.
How much of an impact do sites like Yelp have on a business?
My coauthor Michael Luca did a great study on this and found that having an extra star on Yelp causes the revenue of a business to rise by 5 to 10 percent, so there’s a direct connection between Yelp ratings and a business’ bottom line.
How can consumers view these sites more critically?
I think there are many signals on Yelp that consumers can combine to make up their minds. The way I use Yelp is, I read individual reviews, trying to be aware not just of whether they’re fake, but beyond that, whether they come from consumers who are like myself. There are plenty of biases in reviews besides their being fake or real. The other thing I look at is the number of reviews a business has. I have a lot more faith in a business with 3½ stars and 100 reviews than I do in one with 4 stars and just 3 or 4 reviews. That’s common sense. Also, when available, you can use sites, like Expedia, that allow consumers to review a business only once it’s confirmed that they are paying customers.
Read the full conversation here.
Professor blogs: airline mergers are inevitable
Associate professor of strategy and innovation Samina Karim contributed a piece to Reuters‘ opinion page “The Great Debate,” in which she explains why the current American Airlines/US Airways merger talks will eventually culminate in a deal. The merger has been delayed due to the ongoing antitrust trial led by the Department of Justice (D.O.J.), which is concerned, from a consumer-interest standpoint, that the resulting airline would have too much market power in its locations. However, Karim uses examples of merger deals in both the music and wireless-operator industries to illustrate her point that, despite said concerns, the consolidation of these two airlines is only a matter of time.
Excerpts from Reuters:
Back in 2012, the music industry consolidated from four big players to three as EMI was split up. Its music business went to Vivendi’s Universal Music Group and its publishing business to Sony/ATV. In this deal, similar concerns of market power led the European Commission to stipulate that Universal had to sell a third of EMI’s assets. And that deal went through.
Meantime, ending in a different fate in 2011, AT&T finally admitted defeat in its attempted bid for T-Mobile. It would have consolidated the cohort of this nation’s cellular operators from four to three. In this latter case, the firms were up against both the D.O.J. and the Federal Communications Commission.
So why are airline mergers inevitable? It’s because, in many ways, the passenger airline industry is more like the music industry than the wireless-operator industry.
In both airlines and music there is a long history of prolific entry of new rivals (such as regional carriers and private labels), and successful ones either grow or get gobbled up by the larger players. Think about it. Most of us have heard the names of smaller music labels but many may not be as aware of the dynamic market of regional, non-legacy carriers. Next time you fly check out the “operated by” field on your ticket and start tracking how many different “operators” you’ve experienced in your travels.
In general, large players are faced with competition by the focused, agile, competitive, smaller players and some of these large players don’t fare well (e.g. American Airlines, EMI, T-Mobile). The usual reaction from Strategy 101 is to try to achieve economies of scale and increase market power. So, voila, with airlines we see consolidation and mergers (e.g. Delta’s merger with Northwest and United’s merger with Continental, and there are plenty of smaller ones).
Read the full blog post here.