Managing the Future

Kevin Lewis

May 17, 2022

Virtual communication curbs creative idea generation
Melanie Brucks & Jonathan Levav
Nature, 5 May 2022, Pages 108-112

COVID-19 accelerated a decade-long shift to remote work by normalizing working from home on a large scale. Indeed, 75% of US employees in a 2021 survey reported a personal preference for working remotely at least one day per week, and studies estimate that 20% of US workdays will take place at home after the pandemic ends. Here we examine how this shift away from in-person interaction affects innovation, which relies on collaborative idea generation as the foundation of commercial and scientific progress. In a laboratory study and a field experiment across five countries (in Europe, the Middle East and South Asia), we show that videoconferencing inhibits the production of creative ideas. By contrast, when it comes to selecting which idea to pursue, we find no evidence that videoconferencing groups are less effective (and preliminary evidence that they may be more effective) than in-person groups. Departing from previous theories that focus on how oral and written technologies limit the synchronicity and extent of information exchanged, we find that our effects are driven by differences in the physical nature of videoconferencing and in-person interactions. Specifically, using eye-gaze and recall measures, as well as latent semantic analysis, we demonstrate that videoconferencing hampers idea generation because it focuses communicators on a screen, which prompts a narrower cognitive focus. Our results suggest that virtual interaction comes with a cognitive cost for creative idea generation. 

The Worst-First Heuristic: How Decision Makers Manage Conjunctive Risk
Joshua Lewis, Daniel Feiler & Ron Adner
Management Science, forthcoming

Many important managerial outcomes hinge on the co-occurrence of multiple uncertain events, a situation termed conjunctive risk. Whereas past literature has addressed the psychology of choosing to enter situations with conjunctive risk, this article elucidates a novel way in which the psychology of managing conjunctive risk is importantly distinct. We examine a case in which there are two independent events, one is currently less likely than the other, both are required for overall success, and the decision maker must evaluate opportunities to increase the chance of the less-likely or more-likely requirement. We introduce the hypothesis of a worst-first heuristic. Decision makers intuitively evaluate improvements in conjunctive risk according to their impact on the biggest barrier to success, the least likely of the required events. We find evidence for such a worst-first heuristic across nine experiments (n = 3,653, including samples from the United States and United Kingdom in Studies 1-5 and Studies S1-S3 in the online supplement, as well as a sample of managers in Study 6). Participants invest more to improve chances of less-likely requirements than more-likely requirements, even when the latter improvements have at least as much impact on the aggregate chance of success. Moreover, we find that decision makers exhibit this behavior particularly when managing conjunctive risk, as doing so makes them attend to which threat is the worst. Conversely, they do not appear to exhibit the behavior when making formally equivalent decisions about choosing between conjunctive risks. This bias toward underinvesting in stronger-links holds important implications for decision making in contexts subject to conjunctive risk - both managerial and societal. 

All Runs Are Created Equal: Labor Market Efficiency in Major League Baseball
Ryan Pinheiro & Stefan Szymanski
Journal of Sports Economics, forthcoming

Moneyball (Lewis, 2003) claimed that data analytics enabled savvy operators to exploit inefficiencies in the market for baseball players. The economic analysis of Hakes and Sauer (2006) appeared to show that the publication of Moneyball represented a watershed, after which inefficiencies had been competed away. In both cases analysis focused on composite statistics such as on base percentage (OBP) and slugging percentage (SLG). This paper relies on a more structural approach, associated with the statistical analysis of Lindsey (1963) which identifies the run value of each individual event in a game. Using a dataset of every event in every game from 1996 to 2015, we show that run value of each event can be accurately calculated, as can the run value contribution of each player. We show that the compensation of free agents reliably reflects the run value contribution of each player, regardless of the source of those contributions (walks, singles, and home runs). We find this was true both before and after the publication of Moneyball, suggesting that the labor market for batters in Major League Baseball operated efficiently across our entire sample period. 

Rise of the machines: Delegating decisions to autonomous AI
Cindy Candrian & Anne Scherer
Computers in Human Behavior, forthcoming

Delegation is an important part of organizational success and can be used to overcome personal shortcomings and draw upon the expertise and abilities of others. However, delegation comes with risks and uncertainties, as it entails a transfer of power and loss of control. Indeed, research has documented that people tend to under-delegate to other humans, often leading to poor decisions and ultimately negative economic consequences. Today, however, people are faced with a new delegation choice: Artificial Intelligence (AI). Fueled by Big Data, AI is rapidly becoming more intelligent and frequently outperforming human forecasters and decision-makers. Given this evolution of computational autonomy, researchers need to revisit the hows and whys of decision delegation and clarify not only whether people are willing to cede control to AI agents but also whether AI can reduce the under-delegation that is especially pronounced when people are faced with decisions that spur a high desire for control. By linking research on decision delegation, social risk, and control premium to the emerging field of trust in AI, we propose and find that people prefer to delegate decisions to AI as compared to human agents, especially when decisions entail losses (Studies 1-3). Results further illuminate the underlying psychological process involved (Study 1 and 2) and show that process transparency increases delegation to humans but not to AI (Study 3). These findings have important implications for research on trust in AI and the applicability of autonomous AI systems for managers and decision makers. 

Strategic Restraint: Why Companies Do Not Use Noncompete Agreements When They Can?
Martin Ganco et al.
University of Wisconsin Working Paper, March 2022 

Extant work in strategic management has focused on the role of various legal levers when managing human capital. Companies use such levers to improve employee retention and prevent leakage of knowledge to rivals. Specifically, noncompete agreements (NCAs), contracts that prevent employees from joining competitors, have received much of the attention in the literature. NCAs have been conceptualized as being advantageous to employer firms and the implicit assumption is that firms use NCAs when they can. However, most workers in the US are not bound by an NCA. We develop a theoretical framework explaining that firms experience both costs and benefits associated with the use of restrictive practices such as the NCAs and that these costs and benefits may vary even for rivals within the same industry. Utilizing a unique survey dataset developed in collaboration with, we examine the heterogeneity in the firms' actual use of NCAs conditional on industry and state. We find that the nonuse of NCAs is more common among firms that rely more heavily on talent relative to rivals and are also not industry leaders, and such firms are more likely not to use NCAs to attract skilled employees. The study provides evidence that some firms may differentiate strategically by opting out of using restrictive practices toward human capital, even when such practices are legal and used by competing firms. 

When Funders Aren't Customers: Reputation Management and Capability Underinvestment in Multiaudience Organizations
David Keith et al.
Organization Science, forthcoming

In contrast with for-profit companies, many "multiaudience" organizations, such as universities, hospitals, and nonprofits, receive revenues not just from customers but from third-party funders. This distinction is most stark in donative nonprofits that receive all of their funding from noncustomers and have long been perceived to underperform because of persistent underinvestment in organizational capabilities. In this paper, we explore how the need to manage funder perceptions influences how managers allocate resources to investment in organizational capabilities versus programmatic spending. We develop a model of capability dynamics based on fieldwork with six nonprofit organizations that incorporates the mechanism of reputation management. We argue that difficulties communicating the impact of nonprofits to donors often leads managers to instead focus on the amount of work being done, creating a bias toward programmatic spending. Analyzing our model, we show that a capability tipping threshold exists: for nonprofits with low capabilities, it is boundedly rational for managers to underinvest in organizational capabilities in order to manage donor perceptions even when this practice is known to limit performance. Our findings suggest that building high-performance nonprofits requires coordinated action between managers and donors to allow capability investments to accumulate. Counterintuitively, deliberately restraining programmatic expenditure (i.e., serving fewer recipients) while the organization builds its capabilities may be the best strategy for nonprofits to achieve sustained high performance and impact in the long run. 

Brokered Careers: The Role of Search Firms in Managerial Career Mobility
Matthew Bidwell, Kira Choi & Isabel Fernandez-Mateo
ILR Review, forthcoming

The authors explore how career paths are shaped by the involvement of search firms in hiring. Drawing on theories of market intermediation, they argue that search firms constrain horizontal moves across functions and industries by favoring workers from within the same function and industry as the role being filled. Using survey data on 1,342 job moves undertaken by 816 MBA alumni, the authors find that individuals who move jobs through a search firm experience lower horizontal mobility than those who move through other means. Findings also suggest that these results are not driven by firms' decisions to use a search firm to fill the job. Supplementary analyses show no evidence that the job matches that are formed using search firms result in a better fit between workers and employers. Overall, the findings point to the significant institutional role search firms play in managerial careers. 

Brokers in Disguise: The Joint Effect of Actual Brokerage and Socially Perceived Brokerage on Network Advantage
Alessandro Iorio
Administrative Science Quarterly, forthcoming

Interpersonal networks can be conceptualized not only as actual social structures surrounding individuals but also as cognitive social structures stemming from individuals' perceptions of those relationships. Yet most research on social networks adopts either a structural or a perceptual perspective. In this article, I blend these two traditions to examine how actual and perceptual brokerage jointly determine innovation performance. I hypothesize that while actual brokerage benefits individuals by exposing them to nonredundant information, socially perceived brokerage - being perceived to bridge groups regardless of one's actual network configuration - may trigger skepticism of brokers' motives that could hinder their ability to innovate. Thus I argue that others' perceptions of a focal actor's brokerage opportunities constitute a critical contingency underlying network advantage. Using a multimethod approach, including a field study in a global consulting firm and a preregistered experiment, I find that individuals spanning structural holes achieve higher innovation performance when their colleagues perceive them to have closed rather than open networks, and that trust is the underlying mechanism driving this effect. Integrating insights from cognitive social structures into structural holes theory, this study illustrates the importance of considering both structural and perceptual mechanisms in modeling how individuals reap the benefits of brokerage. 

The Effect of Formal Time Allocations on Learning Trajectories and Performance
Kenneth Goh, Colin Fisher & Amy Sommer
Small Group Research, forthcoming

How do formal time allocations in teams affect team learning trajectories and performance? We argue that allocating more time for transition phases induces steeper learning trajectories that engender a positive group atmosphere, which in turn improves team performance by improving coordination quality. We tested our hypotheses in a laboratory experiment in which teams worked on a creative design task over multiple iterations. Using a latent growth modeling approach, we found that teams with shorter action and longer transition phases during prototyping had lower initial performance but steeper learning trajectories, which indirectly led to better final team performance.


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