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The current economic crisis is real. Or is it the widespread public fear that there is an economic crisis that is real? Perception, these days, is the new reality. Increasingly managers must navigate a shifting business landscape that plays with our perceptions as much as an eye-crossing Escher print. This month we have numerous examples of something not being what it seems once you dig deeper. Take the stock market: What's being said in the larger world does influence a trader's perception of how an asset will perform. And trader perceptions, once formed, then affect the market. Same goes for institutional investors. Despite indicators that the Central Eastern European region is a ripe VC/PE market, investors remain wary because of perceived concerns, though as our study points out, "it's not clear whether this perception is based on an accurate view or just insufficient knowledge about the actual situation." In European banking, a perceived plethora of choice masks very little choice for consumers. The financial sector, that supposed bastion of long hours, stress and sexism, turns out to be one of the most flexible when it comes to offering employees, especially women, ways of reconciling their work with their personal life (in Spain, at least). The inexorable offshoring of Information Systems is another area where alarmist myths sometimes overshadow reality. Understanding the power of perception can be leveraged to your advantage, as marketing experts have long known. Creating buzz about a business can double value in the long term, proving yet again the impact of image in defining a version of reality. How else could one explain, as another paper does, how customers can still feel they have had a good experience even after being put on hold or waiting in line for 100 hours - as some people did to buy an iPhone last summer? Even time can be bent by perception - with or without the promise of an iPhone! Lest there be any doubt that "perception is king," just consider the other big story dominating headlines apart from the current economic crisis: the U.S. presidential election. Brian Leggett analyzes the speeches of nine orators to suggest some public-speaking tips for tongue-tied managers - because in an image-driven world, how you say it is as important as what you say.
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Marketing |
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You Just Made Your Customer Wait, So Why Is He Happy? |
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| Gabriel R. Bitran, Juan Carlos Ferrer, Paulo Rocha e Oliveira |
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Customers are routinely made to wait for a service: at the bank, in a restaurant, on the phone, in an airport. Often the length of wait time is unavoidable and the general belief is that the longer the wait, the unhappier the customer. In turn, profits are negatively affected. Or are they? In "Managing Customer Experiences," IESE's Paulo Rocha e Oliveira and professors Gabriel R. Bitran and Juan-Carlos Ferrer set out to prove that it's a mistake to assume that longer wait times have a negative impact on revenue. Recent findings point to factors that can positively affect the consumer's perception of wait time and lead to increased profits. 
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Finance |
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What Policymakers Can Do to Overcome CEE Investor Fears |
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| Alexander Peter Groh, Heinrich Liechtenstein, Miguel Ángel Canela |
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| The countries of Central Eastern Europe (CEE) should be highly attractive to institutional investors in Venture Capital and Private Equity Limited Partnerships. After all, the region is booming: The level of education is high, institutional structures are working, policies promote innovation and growth estimates rise above the European average. Yet, the supply of risk capital to the region remains surprisingly low. Seeking to unfold this mystery is the paper "Limited Partners' Perceptions of the Central Eastern European Venture Capital and Private Equity Market" by Alexander P. Groh, Heinrich Liechtenstein and Miguel A. Canela, which concludes that it's all about investor perceptions.
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E-Business |
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Europe Slower To Answer iPhone Call |
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| Sandra Sieber, Josep Valor, Jordan Mitchell |
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| Phones were ringing off the hook when Apple launched its iPhone in the United States last summer. A record-breaking one million units were sold in 74 days - it took the iPod nearly two years to hit the million mark. This nifty new gadget, combining a phone, web and iPod into one handy device, appeared every bit as revolutionary as Steve Jobs promised it would be, not least for the unprecedented revenue-sharing deal that Apple brokered with mobile carriers. Yet the iPhone's arrival in Europe a few months later has not rung quite so many bells. Indeed, as a new IESE study of the iPhone case reveals, there are several fundamental flaws to resolve before Europe takes the call.
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Corporate Governance |
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7 Keys to Get the Auto Industry Running Again |
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| Pedro Nueno |
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| The automobile industry is full of paradoxes: such few companies, yet still incapable of defending margins; once a model of business administration, now mired in mismanagement scandals; at the cutting-edge of innovation, yet so poor at communicating the usefulness and efficiency of its technologies. These are just a few of the observations that IESE Prof. Pedro Nueno makes in his paper, "La gestión en el sector de la automoción: Reflexiones y prácticas para el buen gobierno" ("Management in the Auto Industry: Observations and Practices for Good Governance"). In it, he makes several recommendations for the industry to run itself properly and regain its former prestige.
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Finance |
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Traders and the Whims of Market Fortune |
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| Giovanni Cespa, Xavier Vives |
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| When traders invest in assets, how do they form their performance expectations? Do they rely on dreams, roll the dice, listen to the rumor mill, or simply trust their own judgment? Though traders' behavior may seem mysterious to outsiders, the truth is that a major factor in forming expectations is public information - what's being said in the larger world that affects a trader's perception of how an asset will perform. That said, are traders' expectations, once formed, an accurate reflection of what will happen in the markets? The interplay of prices, information and expectations is complex and ever-changing. In "Dynamic Trading and Asset Prices: Keynes vs. Hayek," professors Giovanni Cespa and Xavier Vives explore two competing theories of asset pricing and the role public information plays in the stock market.
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Marketing |
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Buzz Is Better For Bottom Line |
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| Julián Villanueva, Shijin Yoo, Dominique M. Hanssens |
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| The answer to the question "How did you hear about us?" offers startling insights into how people become customers, and whether or not they will remain so. When companies fish for clients, they generally rely on two types of bait: word of mouth and marketing. Though marketing methods such as print and broadcast advertisements and direct mail add more short-term value, it is word of mouth - creating a buzz about a business - that works best for the long haul. A new paper on customer acquisition and customer equity growth by Julian Villanueva, Shijin Yoo and Dominique M. Hanssens explains why word-of-mouth methods - including referrals and mentions in magazines and newspapers - add nearly twice the value over the long term.
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Knowledge and Information |
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No Loss for Words With These Speaking Tips |
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| Brian O'C. Leggett |
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| There are few better occasions to review speech-making skills than in this election year, when U.S. presidential hopefuls sound off from their respective soapboxes. A CEO can glean some public-speaking do's and don'ts from these endless rounds of sometimes visionary, sometimes vainglorious speeches. Whether it's convincing a board to green light some investment, or coaxing more productivity from workers, there's no doubt that persuasive speeches play a pivotal role in corporate strategy. In "Introduction to Corporate Speech Making," IESE Prof. Brian Leggett analyzes nine different speeches, revealing how eloquent leaders can craft powerful discourses that make a difference.
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Marketing |
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E.U. Banks Keep Their Customers - But Why? |
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| José Manuel Campa, Julio García Cobos |
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European banking entities offer a multitude of products, from current accounts to seemingly unrelated health insurance. Proof of the miracle of economies of scale and scope, you might say, but many consumers would beg to differ. All that choice can sometimes obscure pricing, making shopping around for the best deal no easy task. In fact, almost 40 percent of British bank customers in one recent survey felt there was no real choice. To explore this, IESE Prof. José Manuel Campa, the Grupo Santander Chair of Financial Institutions and Corporate Governance, teamed up with Julio García Cobos, of the economics consultancy PQAxis, to analyze competition between banking entities in E.U. member states.
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E-Business |
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Four Keys To Combat Myths About IS Offshoring |
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| Rudy Hirschheim, Claudia Loebbecke, Mike Newman, Josep Valor |
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| Information Systems (IS) are being outsourced at a speed that's alarming to IS professionals. With so much IS work going abroad, it seems as if the field is disappearing in developed countries altogether. Or is it? In "Offshoring and Its Implications for the Information Systems Discipline: Where Perception Meets Reality," several professors including Josep Valor of IESE explore the widespread beliefs about where the IS field is headed, and they propose what IS professionals can do to bolster the field and attract new talent.
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Organizations and People |
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Financial Sector: Work-Family Balance Leader |
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| Nuria Chinchilla, Consuelo León, Ivonne Arciniega |
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| Imagine a company that cared not only about your professional development, but your personal well-being too; that offered benefits such as life or accident insurance, health care for immediate family members and a flexible work schedule, in addition to your salary. Such companies exist, particularly in the financial sector, according to a sector-specific study on work-family conciliation issues carried out by IESE and Fundación Alares.
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