Carolyn Geason-Beissel/MIT SMR | Getty Images We like customers and have spent most of our careers studying them. In our research, teaching, and consulting projects, we have repeatedly urged executives to listen to their customers.1 However, we have come to realize an uncomfortable truth: Some customers are just not good for you and will ruin your business. Hence, you would be better off “firing” them. Firing any customer goes against much of the prevailing wisdom in marketing and business. According to legendary business guru Peter Drucker, the purpose of any business is to create and keep a ..read more

For the second year in a row, MIT Sloan Management Review and Boston Consulting Group have assembled an international panel of AI experts to help us understand how responsible artificial intelligence (RAI) is being implemented across organizations worldwide. For our final question in this year’s research cycle, we asked our academic and practitioner panelists to respond to this provocation: As the business community becomes more aware of AI’s risks, companies are making adequate investments in RAI. While their reasons vary, most panelists recognize that RAI investments are falling short of wha ..read more

Annalisa Grassano Touted as one remedy to the gender wage gap, pay transparency laws are increasingly being rolled out across the United States at the state and local levels. Nine states — including New York, as of September — are currently regulating some aspect of pay disclosure. The National Women’s Law Center reports that altogether, more than one-quarter of U.S. employees live in a location where pay information is regulated. By and large, pay transparency regulations have emphasized disclosing a salary range for advertised positions and internal opportunities for advancement. These laws ..read more

Neil Webb/theispot.com The Research The authors conducted research into the state of counterfeiting from 2017 through early 2020. Funding was provided by CAPS Research, a joint venture of Arizona State University and the Institute for Supply Management. During the discovery phase, they ran an in-person workshop and attended the October 2017 annual strategic summit of the Center for Anti-Counterfeiting and Product Protection of Michigan State University. The authors conducted individual interviews with more than 20 subject-matter experts in 2017 and 2018. The authors also conducted in-depth s ..read more

Carlo Giambarresi/theispot.com Are stock buybacks as bad as they’re made out to be? The ubiquitous corporate practice of repurchasing shares has been the focus of much political and media scrutiny. The federal Inflation Reduction Act of 2022 included a 1% excise tax on repurchases (which President Biden has proposed increasing to 4% in his 2024 budget). In addition, senior Democrats have shown interest in barring executives from selling shares for three years after a repurchase, the federal government has suggested that companies that give up buybacks will receive preferential treatment, and ..read more

Predictive Models Can Lose the Plot. Here’s How to Keep Them on Track. Vern L. Glaser, Omid Omidvar, and Mehdi Safavi Key Insight: When algorithms aren’t updated to account for changes in the environment, they deliver poor-quality predictions. Top Takeaways: AI models designed to dynamically account for new circumstances don’t always do so effectively. This scenario, called algorithmic inertia, can result in poor guidance and flawed decisions. The authors explored the causes and consequences of algorithmic inertia by investigating credit-ratings agency Moody’s and its use of algorithmic model ..read more

Simon Prades The Research The authors undertook a holistic study of enterprise resilience that began with the extraction of corporate risk factors from two decades of 10-Ks filed by S&P 500 companies, investment analyst reports, and academic databases. They organized the risks into a value-centric framework composed of eight functions and 99 major risk categories; they then cross-linked the categories and functions with input from risk experts and leaders in 10 economic sectors and 26 industries to create a quantitative risk network. They also analyzed cybersecurity risk acknowledgment i ..read more

Daniel Hertzberg/theispot.com When Southwest Airlines suffered a post-holiday meltdown in December 2022, the trigger was a bout of adverse weather. But the storm hit Southwest harder than it did most airlines. The company’s outdated computer systems collapsed, and years of underinvestment in technology, particularly staff scheduling systems, led to more than 16,700 flight cancellations over the holiday travel period. Amid the chaos, an executive’s memo demanding proof of illness for the use of any sick days indicated a lack of trust in employees. The scenario contrasts starkly with what the c ..read more

Daniel Zender/theispot.com Subscriptions have all the hallmarks of a can’t-miss revenue model. Customers love how they lower their barriers to access, while companies embrace their simplicity and ease of communication. Investors prize them because they generate more predictable long-term revenue flows than conventional one-off transaction models. Proponents of the so-called subscription economy — a term coined by the CEO of platform provider Zuora — argue that customers are better served by subscription experiences built around services than by static offerings or a single product. Software g ..read more

Carolyn Geason-Beissel/MIT SMR | Getty Images If 2021 was the year ESG became mainstream in the financial world, then 2022 was the year things got bumpier. And everything around ESG points to 2023 being even more intense. Before diving into why, let’s define terms. ESG is not sustainability. ESG — the acronym stands for environmental, social, and governance — has been mostly focused on screening companies as investments, largely by understanding how a business is affected by environmental and social issues (with an additional focus on whether a company has good governance in place to manage t ..read more