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Though many have been reluctant to admit it, few would deny that we have entered an economic slowdown. With three main fronts to deal with - oil at record highs, rising prices of commodities and a financial market rocked by the mortgage meltdown - the question is no longer whether we are in a crisis, but rather, until when. While this mystery is being solved, IESE Insight ponders whether it is possible to learn from market changes and, moreover, how knowledge is accumulated by companies and the people inside them. According to experts who gathered this month at the FUR conference on risk and decision theory, our economic behavior, in financial markets as in everyday life, is strongly marked by irrationality and bias perception. Far from learning lessons from previous decisions, individuals - and, hence, markets - let themselves be guided by misleading mentalities of "I knew it all along." We're living with the results.
IESE Prof. Xavier Vives has carried out in-depth research on the impact that information has on markets. His latest book, Information and Learning in Markets: The Impact of Market Microstructure, analyzes how information flows in markets and if the markets really do learn. The book presents a set of models used to evaluate market-information accumulation mechanisms in different environments, such as the stock market and auctions. From another perspective, Prof. Rafael Andreu has studied the learning capacity of organizations as a competitive weapon. His research reveals the paradox that most knowledge management initiatives are disconnected from the knowledge that is truly differentiating for the company. This edition of IESE Insight also explores other aspects of learning, talent and information management. These aspects include the new batch of Generation Y youth who have entered the workforce in recent years; the speed with which large and small companies adopt information technologies; and the need to convert products into services in order to grow in a saturated market. Although these are just small contributions to the larger field of management, they have the virtue of reminding us that, nowadays, it is not possible to manage companies without a constant learning attitude. IESE Insight will be back in September with new - and we hope stimulating - ideas. Have a great summer!
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Economics |
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The Wisdom - or Folly - of Following the Market Crowd |
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| Xavier Vives |
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Is there inherent wisdom in the way stock prices rise or fall, in one stock's popularity over another? If enough traders seem to be making a certain decision, is it wise to follow suit? How smart is the market, anyway? These are all questions faced by investors and economists alike, all of whom stand to benefit from understanding how, exactly, the market works. Does the market skillfully gather information and reflect the wisdom of the crowd? Or does irrational behavior mar the possibility of learning anything from the market? In Information and Learning in Markets: The Impact of Market Microstructure, Xavier Vives analyzes how information works in a marketplace - and whether markets do indeed aggregate information effectively. 
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Organizations and People |
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Generation Y: Attracting and Managing the Millennials |
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| Pilar García-Lombardía, Guido Stein, José Ramón Pin |
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| "You'll have an important job title with a lot of responsibility. You'll be paid well, but of course that may mean putting in long hours. We offer an excellent career track, with stock options and a good pension plan for when you retire..." If you've ever used words like these to recruit a member of Generation Y, you've chosen the wrong strategy. What young Gen Y-ers want most is job flexibility and work/life balance. In "Políticas para dirigir a los nuevos profesionales. Motivaciones y valores de la Generación Y" ("Policies for Managing the New Professionals: Motivations and Values of Generation Y"), researcher Pilar García Lombardía and IESE professors Guido Stein and José Ramón Pin suggest ways of attracting these employees and, most importantly, how to integrate them with staff whose ages span more than 40 years.
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Service and Operations Management |
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Success of Alliance Depends on Point of View |
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| Joan Jané, Alejandro Lago, Beuhla D`Souza |
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| There are two sides to every story, and in logistics alliances, as in any marriage, there is often a clash of perceptions. Both parties may view the alliance as successful but for different reasons, as each party tends to evaluate performance mainly from one's own point of view. The poor level of understanding among parties can be quite disturbing, given the long-term nature of these relationships. The paper "The Effectiveness of Logistics Alliances" looks beyond the idealistic notion of a long-term logistics partnership as a one-headed harmonious relationship.
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Knowledge and Information |
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Knowledge and Competitive Advantage: What CEOs Say and What Firms Do |
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| Rafael Andreu, Joan Baiget, Agustí Canals |
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| CEOs do believe that knowledge can indeed heighten competitive advantage - particularly if that knowledge is of a certain kind. Preliminary findings from a study of Spanish firms, by IESE's Rafael Andreu along with Joan Baiget and Agustí Canals, confirm this. Yet at the same time, the authors discover a paradox: the majority of the so-called "knowledge management initiatives" deployed by firms do not seem especially well-geared toward actually harnessing firm-specific knowledge. Knowing is one thing, doing is another.
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Corporate Social Responsibility |
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Private Funding of Culture: For Love or Money |
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| Antonio Argandoña |
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| Imagine being charged to borrow a book from the library or to admire a public sculpture. As most people see it, cultural and artistic goods belong to everyone and should be available to anyone who wishes to enjoy them. Nevertheless, maintaining and producing an exhibition, a concert or a festival requires funds, which many people are not prepared to provide. In "La empresa y la promoción de la cultura" ("Companies and the Promotion of Culture"), IESE Prof. Antonio Argandoña considers some of the ways that private companies are taking responsibility for and participating in the funding of culture as part of their broader social remit. Why would a business engage in such worthy activities?
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E-Business |
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Two Speeds for Adopting ICT in Spanish Companies |
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| Sandra Sieber, Josep Valor |
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| The adoption of technology by Spanish companies is progressing at a steady rate, although large companies are moving ahead faster than small- and medium-sized firms. For the second edition of the BIT (Business Information Technologies) study, IESE professors Sandra Sieber and Josep Valor surveyed CIOs and department heads in charge of information systems. If the forecasts of survey respondents turn out to be accurate, this imbalance will be gradually reduced up until 2010 as SMEs adopt more sophisticated technologies. (Audio included)
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Leadership, Strategy and Change |
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From Products to Services, a Risky But Necessary Move |
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| Philip G. Moscoso, Alejandro Lago |
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| Expanding from products to services is perhaps one of the main business trends of the past 10 years. For companies, whether industrial or consumer oriented, to include services in their offer means not only added sales, but also better margins, more customized solutions and differentiation from the competition deriving from countries where labor costs are low. Nevertheless, business practice shows that along with its considerable appeal, this strategic move also implies an equally high risk factor. Companies looking to offer services must also develop an adequate strategic plan in terms of goals, value proposition, market segments and sources of competitive advantage. These elements, in turn, are the foundation for an adequate organizational and operational design for these new services, and an important second pitfall in this type of expansion.
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Leadership, Strategy and Change |
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Being a Good Public Speaker Takes Practice |
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| Brian O'C. Leggett, Ricardo Velilla |
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| "A man of extraordinary strength and intelligence may never be more than a failure in society if he doesn't know how to speak in public," noted the writer William Channing in the 19th century. Two centuries later, knowing how to speak in public is a skill increasingly valued in the workplace. The ability to change public perception through a persuasive presentation is considered one of the keys to success in any job. Still, when faced with having to speak in public, many managers panic. You may not be a born public speaker, but as IESE's Brian O'Connor Leggett and Ricardo Velilla assure us in their new book, public speaking is, in fact, something one can learn, and they suggest some tips for successful presentations.
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Corporate Governance |
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Family-owned Business, A Role Model of Values |
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| Josep Tàpies, John Ward |
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| Companies capable of balancing financial and organizational targets with social responsibilities are fast becoming business role models. Family-owned businesses are clear examples of companies that have achieved this status, as highlighted in the book Family Values and Value Creation: The Fostering of Enduring Values Within Family-Owned Businesses, co-edited by Josep Tàpies (IESE) and John L. Ward (Kellogg). The book's 11 chapters, each penned by various authors of worldwide acclaim in the field of family-owned business, analyze the values and culture that lead to long-term success.
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