Why raising retail pay is good for the Gap — Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

From Harvard Business Review

Gap announced last week that it would increase its hourly minimum wage to $9 this year and $10 next year. Naturally, President Obama applauded the decision, which was in line with his own push to raise the minimum wage. But what Gap is after is not greater fairness or less income inequality. According to the chain’s CEO, Glenn Murphy, the reason for this move is that Gap implemented a“reserve-in-store” program 18 months ago, meaning that customers can order a product online and then pick it up at a particular store. Gap realizes that this program won’t work without skilled, motivated, and loyal employees.

This is hardly a surprise to me. Remember Borders bookstores? Almost 15 years ago, I studied Borders as it was trying to integrate its online store with its physical stores. Borders had great technology to tell online customers which book was available at which store. But there was a fatal hitch: the inventory data was not reliable. The system would tell a customer a book was in the store, but no one could find it. This happened 18% of the time! That’s way too many customers to let down and, in fact, Borders had to give up on the idea. Eventually, it went out of business.

Why were so many products not where they belonged? I found that stores that had fewer employees, less training, and more turnover had more of this problem. By going cheap on labor expenses, Borders made it hard to act on a strategic opportunity.

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Meet the woman helping to save us from a global chocolate drought — Shayna Harris

Image Credit: Mars.com

The Sustainability Initiative at MIT Sloan fosters a community of innovators for sustainability among students and alumni. Take Shayna Harris, who is the cocoa sustainability manager for Mars Global Chocolate, for instance. Her job—which involves travelling to cocoa farms throughout Indonesia and Africa—helps farmers to increase their yields, which both boosts the global supply of cocoa and lifts people out of poverty. Shayna recently blogged about her job at Bloomberg Businessweek.– Jason Jay, Director, Sustainability Initiative at MIT Sloan

From Bloomberg Businessweek

A public service announcement to chocolate lovers: The world is facing a severe cocoa shortage by the year 2020. A deficit of this magnitude threatens the future of desserts and tasty snacks everywhere. Imagine a life without M&Ms, Snickers, and Dove Bars. Bleak, right?

All kidding and product placement aside (full disclosure: I’ve worked for Mars Global Chocolate since graduating from MIT Sloan School of Management three years ago), this is serious business. The chocolate industry continues to grow, but today’s cocoa farmers don’t have access to the training and tools they need to boost productivity and meet future demand.

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The importance of being boring — Simon Johnson

MIT Sloan Prof. Simon Johnson

From Business Day

The International Monetary Fund is an immensely useful organization, able to deliver substantial amounts of financial and technical assistance at short notice to almost any place in the world. It also has the great advantage of almost always being perceived as incredibly boring.

Unfortunately for the IMF, it now needs a slightly higher public profile to convince the US Congress to agree to some important reforms. The Ukrainian crisis may prove helpful, though that appears less likely now – which may be a good thing to the extent that one unintended consequence could be a loan to Ukraine that is larger than it really needs.

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How millions of people can help solve climate change — Thomas W. Malone, Robert Laubacher and Laur Fisher

Image credit: PBS

Image credit: PBS

From PBS NOVA Next

If there ever was a problem that’s hard to solve, it’s climate change. It’s a complex challenge requiring more expertise than any one person can possess—in-depth knowledge of the physics of the upper atmosphere, a firm grasp on the economics of technological innovation, and a thorough understanding of the psychology of human behavior change. What’s more, top-down approaches that have been tried for decades—like efforts to pass national legislation and to negotiate international agreements—while important, haven’t yet produced the kind of change scientists say is needed to avert climate change’s potential consequences.

But there’s at least one reason for optimism. We now have a new—and potentially more effective—way of solving complex global challenges: online crowdsourcing.

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The problem with online ratings — Sinan Aral

MIT Sloan Associate Professor Sinan Aral

MIT Sloan Associate Professor Sinan Aral

From MIT Sloan Management Review

Studies show that online ratings are one of the most trusted sources of consumer confidence in e-commerce decisions. But recent research suggests that they are systematically biased and easily manipulated.

A few months ago, I stopped in for a quick bite to eat at Dojo, a restaurant in New York City’s Greenwich Village. I had an idea of what I thought of the place. Of course I did — I ate there and experienced it for myself. The food was okay. The service was okay. On average, it was average.

So I went to rate the restaurant on Yelp with a strong idea of the star rating I would give it. I logged in, navigated to the page and clicked the button to write the review. I saw that, immediately to the right of where I would “click to rate,” a Yelp user named Shar H. was waxing poetic about Dojo’s “fresh and amazing, sweet and tart ginger dressing” — right under her bright red five-star rating.

I couldn’t help but be moved. I had thought the place deserved a three, but Shar had a point: As she put it, “the prices here are amazing!”

Her review moved me. And I gave the place a four.

As it turns out, my behavior is not uncommon. In fact, this type of social influence is dramatically biasing online ratings — one of the most trusted sources of consumer confidence in e-commerce decisions.

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