B-School Bulletin: Cyberterrorism, Beer & CEO Activism

What Are The Limits Of CEO Activism?

News from HBS

“A series of recent events triggered the question at the top of this column. They began with a statement by President Trump suggesting that ‘both sides’ — one group that included neo-Nazis and the KKK and another group of counter-protesters — were to blame for the violence, injuries, and deaths on or near the University of Virginia campus last month. This prompted Merck CEO Kenneth Frazier to resign from the president’s American Manufacturing Council, citing the president’s failure to condemn ‘hatred, bigotry and group supremacy.’ Frazier’s action triggered a mass exodus of other CEOs from two business advisory groups created by the president.

“One of the responsibilities of a CEO is to determine the degree to which personal identification, and by extension the organization’s identification, with social issues is appropriate. Of course, all major business organizations participate in lobbying activities through an association or by other means. It is pretty much assumed. CEO ‘activism’ — taking a public stand or action for or against a social issue — is something else.”

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Business Students Produce Luxury Bottle-Opening Wallet

News from University of Michigan Ross School of Business

“Just in time for tailgate season, a new product has arrived at the University of Michigan’s campus: the Bois. The Bois is a luxury bottle-opening wallet — founders Ken Kernen and Philip Ruffini call it the first of its kind.

“Business students Kernen, a sophomore, and Ruffini, a junior, met through the Delta Upsilon fraternity but have become better friends through their shared interests in e-commerce businesses and enrollment in Ross School of Business.”

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Most Companies Have Big Gaps Between AI Ambition And Execution, Sloan Study Finds

News from MIT Sloan School of Management

“More than three-quarters of business executives expect artificial intelligence (AI) to create competitive advantage or new lines of business for their companies, but only about one in five companies has incorporated artificial intelligence in someofferings or processes today, and only one in 20 companies has extensively incorporated AI into its current offerings or processes. Less than 40% of all companies have an AI strategy in place, and while the largest companies — those with 100,000 employees or more — are the most likely to have an AI strategy, only half do have one.

“The yawning gaps between current reality and expectations for the next five years were revealed in a global survey of more than 3,000 business executives, managers, and analysts in 112 countries and 21 industries, the results of which are being released today in a new research report, Reshaping Business with Artificial Intelligence: Closing the Gap Between Ambition and Action, by MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG).”

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Share Buybacks Are Corporate Suicide

News from INSEAD

“The revival of supply-side economics, exacerbated by the election of U.S. President Donald Trump and his promises of pro-business reforms, is doing little to increase the rate of economic growth and improve returns for long-term investors, such as pension funds. In fact, the current management love affair with share buybacks is having quite the opposite effect.

“At first glance, stock buybacks may seem a good way to enhance value for the shareholders. By reducing the number of shares outstanding, firms can hike up their earnings per share and inflate share price, to the benefit of hedge funds and other short-term investors. Other winners are top corporate managers who are allocated a large proportion of their pay through stock-based instruments and receive bonuses triggered by a rise in the share price. If things look solid, long-term investors may have no problem with this, but what if the money spent on buybacks is money that would otherwise be spent on new product development and innovation? Worse, what if that money is borrowed?”

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Harvard Business School Announces Forward Fellowship

News from HBS

“Beginning with the HBS MBA Class of 2020, Harvard Business School will award a new Forward Fellowship to support MBA students from lower-income backgrounds to ensure that students from all socioeconomic walks of life continue to be part of the rich diversity that fuels the HBS community and the case-method classroom.

“The fellowship is designed specifically for students who carry significant financial burdens or obligations as a result of their family background and circumstances. Awards will range from $10,000 to $20,000 in each year a student applies, above and beyond the need-based aid that the School offers.”

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