While geographic co-location has obvious benefits for firm innovation, it can also have serious drawbacks.

HBS professor Juan Alcácer and Ross School of Business professor Minyuan Zhao explore how firms tap into the rich resources of technology clusters while protecting the value of their innovations. To understand R&D dynamics in a cluster, the scholars argue, we must recognize that a firm located in a particular cluster may also be part of an extended network, with its operations strategically integrated across multiple locations and multiple business lines.

Key concepts include:
* When surrounded by direct competitors, the technology leaders in a cluster favor technologies that can be quickly developed internally, and more of their R&D projects involve researchers from other locations, particularly from primary R&D sites.

* Internal linkages across a firm protect firm knowledge from appropriation not only in countries where intellectual property rights protection is weak, but also in risky competitive environments in general.

The full article is avilable via: my dowload site

or http://www.hbs.edu/research/pdf/10-064.pdf

Repulisched with permission of HBS Working Knowledeg

Works on the subject of leadership weigh down bookstore shelves the world over. Tomes tell you how to be a 30-second manager, how to inspire your employees like Churchill, and the three keys to "strength-based leadership."

Everyone has been writing about leadership, in fact, except the people you would expect to be most active in the field: scholars.

"If we look at the leading research universities and at the business schools within them, the topic of leadership has been actually given fairly short shrift," says Harvard Business School professor Rakesh Khurana.

The Handbook of Leadership Theory and Practice, recently published by Harvard Business Press, aims to give the topic its intellectual due. Edited by Khurana and Nitin Nohria, who will become the new Dean of Harvard Business School on July 1, 2010, the Handbook brings together critical writings by some of the world's foremost scholars in fields ranging from psychology to economics, sociology, and history.

"Leadership is based on complex phenomena." -Rakesh Khurana

As Khurana explains below, leadership—what it means, why it matters—is an exciting and an increasingly urgent area of scholarly inquiry. But it wasn't always so. Vexing problems we experience in business and society may be due in part to the neglect of leadership studies in the academy for many years.

"If we had to characterize the path of work on leadership, it has been a lot like the metaphor of a blind man and an elephant. Until recently, leadership was the elephant, and there were a lot of blind people identifying different parts," says Khurana.

"What we tried to incorporate in the Handbook of Leadership Theory and Practice is how each different perspective illuminates key elements such as similarities and differences in leadership across task, culture, and identity. We don't offer a simple answer. Like any complex phenomena, scholars are in the earliest stages of beginning to understand the complexities of leadership.

"What we think we have done in this book is set the foundation for hopefully a long-term, programmatic approach to looking at the phenomena of leadership."

Republished with permission of HBS Working Knowledge

Toyota's ever-widening problems are a tragic case study in how not to lead in crisis.

Under the media spotlight, Toyota CEO Akio Toyoda, grandson of the founder, went into hiding and sent American CEO Jim Lentz to make apologies. (Editor's note: Toyoda has agreed to appear before a Congressional inquiry this week.) Meanwhile, he let serious product quality issues spiral out of control by understating safety risks and product problems. This left the media, politicians, and consumers to dictate the conversation, while Toyota fumbled the responses.

Disingenuous quasi-apologies and disjointed plans for resolution have been Toyota's substitute for crisis response. As accounts pour in about declining quality, the company parades out relatively unknown mid-level managers to quell the firestorm.

It won't work. "You live by the sword; you die by the sword." Toyota's weapon of choice has always been quality, a competitive advantage that prompted many Americans to stop buying GM and Ford brands. Toyota can only regain its footing by transforming itself from top to bottom to deliver the highest quality automobiles.

When terrorists laced Tylenol capsules with cyanide in the mid-1980s, Johnson & Johnson CEO Jim Burke understood his company credo challenged him to put the needs of customers first. Although J&J was not responsible for these problems, Burke nevertheless recalled every Tylenol product from the market.

This is not a crisis of faulty brakes and accelerators, but a leadership crisis. During Chrysler's 1980s crisis, CEO Lee Iacocca took charge, restoring consumer trust and prosperity. When General Motors emerged from bankruptcy last summer, Chairman Ed Whitacre became the trustworthy, determined face of the company's comeback.

Toyota needs a credible leader with a strong, cohesive plan. Mr. Toyoda is anything but. His uninspired words of optimism from Davos only unnerved customers and U.S. regulators. Meanwhile, Ford and GM are working hard to regain the market share they lost at Toyota's expense.

How can Akio Toyoda get Toyota back on track? I offer recommendations based on my recent book, 7 Lessons for Leading in Crisis.

1: Face reality, starting with yourself. Faced with multiple reports of accidents from sticking accelerators, Toyota blamed the problems on stuck floor mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted quality system failed. CEO Toyoda should take personal responsibility by saying that he pushed too hard for growth and neglected quality. By admitting his errors, he gives every Toyota employee permission to acknowledge mistakes and to get on with correcting them, instead of denying reality.

2: Don't be Atlas; get the world off your shoulders. Toyoda cannot expect to solve problems of this magnitude himself. Instead, he needs a crisis team reporting directly to him, working 24/7 to get problems fixed—permanently. He also needs outside counsel, as he appears to be listening only to insiders who are defensive about criticism. He should add the world's top quality experts to his fix-it team and listen carefully to their advice.

3: Dig deep for the root cause. When Toyota's problems first surfaced, the company blamed a symptom—loose floor mats—and exonerated the accelerators. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.

4: Get ready for the long haul. These problems won't just fade away. In fact, they are likely to get worse before getting better. Just as the seeds were sown over the past ten years by placing growth ahead of customer concerns and quality, digging deep into problems will likely uncover more quality concerns that will take years to resolve. Toyota must invest heavily in corrective actions while its sales shrink and profits implode, requiring major cash resources until its reputation can be restored.

5: Never waste a good crisis. For all the pain Toyota is experiencing, this crisis provides a unique opportunity to make fundamental changes required to restore Toyota quality. The crisis is melting away the denial and resistance that existed in recent years. Employees are ready for new direction, and they are willing to make radical changes to renew the company. With Toyoda's leadership, Toyota automobiles can be restored to the world's highest quality.

6: You're in the spotlight: follow True North. In a crisis, people insist on hearing from the leader. Akio Toyoda can't send out public relations specialists or his American executives to explain what happened. Having lost sight of his company's True North—its values and principles—Toyoda must come out of hiding, take personal responsibility, and subject himself to intense questioning by regulators and the media. Then he should make a personal commitment to every Toyota customer to repair the damage, including buying back defective cars.

7: Go on offense; focus on winning now. Coming out of this crisis, the market will never look the same. GM and Ford are rapidly regaining market share, while the confidence of Toyota's loyal customers is badly shaken. Toyota cannot wait until all its quality problems are resolved. It must play defense and offense simultaneously. To win, Toyota has to offer advanced features and superior quality, better value for consumers, greater safety, and improved fuel efficiency.

This is a challenging menu, and this crisis is the true test of Akio Toyoda's leadership. Is Toyota up to these challenges? I believe this is a great company that will resurrect its reputation and restore its leadership.

Author: William George
Bill George is a Professor of Management Practice, Henry B. Arthur Fellow of Ethics, at Harvard Business School.

* More Working Knowledge from William W. George
* William W. George - Faculty Research Page

republisched with permission of HBS Working Knowledge

Can you out-negotiate Wal-Mart? Can women overcome gender stereotypes to win equitable pay? Recent research from Harvard Business School looks at important factors to consider before sitting down at the bargaining table.

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.
Questions to be Answered:

* How is negotiation evolving?
* How important are opening talks in determining a negotiation's outcome?
* Can you win against a non-negotiable partner?
* How can women negotiate past gender stereotypes?

How is negotiation evolving?

The New Deal: Negotiauctions

Whether negotiating to purchase a company or a house, dealmaking is becoming more complex. Harvard Business School professor Guhan Subramanian sees a new form arising, part negotiation, part auction. Call it the negotiauction. Here's how to play the game. Key concepts include:

* In a negotiauction, the rules are never perfectly pinned down, which creates both opportunities and challenges.
* The three common negotiauction moves are set-up, rearranging, and shut-down.
* Negotiauctions help in the current economic downturn by providing a more nuanced mechanism and better outcome for both parties.

How important are opening talks in determining a negotiation's outcome?

Walking the Talk in Multiparty Bargaining: An Experimental Investigation

At the onset of negotiation in multiparty talks, the dominant logic in discussions—be it fairness or competition—strongly influences the equality of payoffs even in complex, full-information multiparty bargaining. Research in this working paper by HBS professor Kathleen L. McGinn and coauthors Katherine L. Milkman and Markus Nöth add critical insights to our understanding of the role of communication in multiparty bargaining. Key concepts include:

* In multiparty bargaining, as in two-party bargaining, communication may work in part through social awareness and in part by allowing players to threaten to walk away.
* Communicating the willingness to walk away, in conjunction with loss aversion by stronger players, may help weaker players convince stronger players to move toward a more equal split of the available surplus, but it also permits strong players to threaten weak players.
* In a competitive, multiparty game, communication may play a more nuanced role than observed in simpler bargaining contexts.

Can you win against a non-negotiable partner?

What happens when you encounter a company with a great deal of power, like Wal-Mart, that is also the ultimate non-negotiable partner? A series of Harvard Business School cases by James Sebenius and Ellen Knebel explore successful deal-making strategies. From the HBS Alumni Bulletin. Key concepts include:

* Driving a mutually agreeable deal with a large company such as Wal-Mart means price alone can't be the centerpiece of the interaction.

Publisched with permission of HBS Working Knowledge

Subject matter: self management
Author: Dr Chris Johnstone
Publisher: Permanent Publications, May 2010

Find Your Power describes how to strengthen your ability to bring about positive change, both in your life and our world. Drawing on insights from addictions recovery, positive psychology, storytelling and holistic science, it includes proven strategies for improving mood, building strengths and increasing effectiveness.

The first part of the book introduces motivational enhancement tools that help you become clearer about your direction and more inspired to move that way.

The second part offers tools for getting through blocks by looking at creative problem solving strategies, ways of dealing with fear and methods for transforming crisis or failure into turning points.

The third part explores how to keep yourself going in the marathon of longer term change by strengthening support around you, tapping into purposes bigger than yourself and making what you do more enjoyable.

The tools described can be used for any kind of change, from tackling depression and improving your life through to addressing world issues like peak oil and climate change.

Reviews of the book:

“I have read many, many books relating to the concepts of personal power/change, and I think this is by far the most helpful and useful”.
Patricia Gaya Wicks, Lecturer in Leadership Studies, University of Exeter.

"Have you ever been told: ‘You can't change it, you just have to accept it’? This book turns that view on its head. Chris Johnstone focuses on helping people access their own motivational force; redesigning elements of the way that they think so they are not held back; integrating positive visionary thinking, planning, doing and reviewing; and developing trust and confidence in oneself.
I wholeheartedly recommend this book.”
Richard Velleman, Professor of Mental Health Research, University of Bath

“You are going to love this book. It is fun and encouraging as well as being full of good tips and activities. It brings the complex notion of personal power to life, offers insight into our errors as a species and invites a sense of soul and purpose to our journey. I can't recommend it more highly."
Jane Reed, Senior Lecturer, Institute of Education, University of London

“Simple to use but powerful in effect, this is a remarkable book”
Dr Kathleen Sullivan, Consultant to the United Nations, New York

“Building resilience” conversation about Dr. Johnstone’s new book

About Chris Johnstone:

Chris Johnstone is a medical doctor, addictions specialist and empowerment coach with over twenty years experience of training people in the skills and strengths of positive change.

He qualified in medicine, with distinction, in 1986, after a first degree specializing in psychology. In 1989, he made international headlines when he launched a ground-breaking legal action challenging the long working hours of doctors. Although initially dismissed as a no-hoper in law, after six years and ten court hearings, he eventually won his case.

The experience that you could defy pessimism and bring about a successful outcome, even if this initially seemed unlikely, stimulated an enduring interest in the psychology of breakthroughs. He trained in a wide range of approaches to facilitating change, including humanistic psychology, motivational interviewing, positive psychology, family therapy, groupwork and systemic interventions with organisations. Applying these approaches in the addictions field and in his training work, he further refined the tools he presents in this book.


Key messages from the interview:

In a deep crisis we will get hits and we have to accept these hits as emotional bruises and need to take care of them just like we do with a physical bruise.

We can prepare ourselves better for future crisis and rough times through a kind of scenario planning where we think through various scenarios and prepare our responses.

We can use a method which Chris calls the SSRI approach. He uses this in analogy with the drugs containing SSRI (Selective Serotonin Reuptake Inhibitors, a group of drugs that include Prozac) which are the most commonly prescribed anti-depressants. In his approach this means: Strategies, Strengths, Resources and Insights. Have your strategies thought through, focus on your strengths, be conscious of the resources you have available, and gain insights through using contacts.
He emphasizes that such self-help processes can also have a powerful anti-depressant effect which has been demonstrated in various research studies.

Right now a lot of leaders have been through and are emerging from a major crisis. Considering how the global situation looked from the outset it was not clear how or if at all companies would survive and with them their employees including their leaders.
To emerge from any crisis stronger than we went into, as leaders, we need to focus on three factors in ourselves to gain or regain additional strength:

• Connect to our inner foundations,
• unearth our strong value base and
• build enhanced resilience.

Before jumping right into what these mean let us first explore what factors are at play in a crisis, externally and internally, and what their effects are on us as leaders.

The biggest effects stem from things happening ‘close to home’: Job’s news in the company, drastic cuts in budgets and job losses amongst friends around us have the potential to stoke the inner unrest and create subliminal stress. In addition, the impact of a crisis has on us is also influenced by the media even if our direct environment has not (yet) been affected by it. Journalists tend to look for the biggest most dramatic stories available and sometimes paint exaggerated pictures. Even if we are aware of such tendencies it will still affect us subconsciously. In some of us those external factors meet internal ones which in combination increase inner unrest and stress further. Internal factors can also be enhanced by challenging self beliefs, mental models questioning our leadership or real limitations of our ability to deal with uncertainty and the unknown. Not all of us are born to be deep sea explorers.
As an effect, our ability to remain decisive and show strong leadership may be significantly impaired by all the stress triggered by these internal and external factors. Yet, in a crisis more than usual we as leaders are expected to be decisive and demonstrate strong leadership.
So, how can we strengthen ourselves or those leaders who report to us in troubled times? As mentioned in the beginning; there are three factors which can help enormously in such situations:

1. Connect to our inner foundations

We can achieve this by better understanding our personal foundations and what they are based on. Do we know what is really important to us? Not just right now, but what is important to give our life a deeper meaning? When we are clear on this part, we need to refresh our awareness of our real strengths. Too often, under stress we may get logged into thoughts about our weaknesses. And yet, we are much better off focusing on our strengths and use these to help us getting on top of things. Both combined allow us to draw much more energy from these deep roots to enhance our ability to act and lead.

2. Unearth our strong value base

Our personal values are our inner compass for life guiding us to achieve what is really important to us. Creating or renewing a strong base of shared values can help us and those working with us feeling much more aligned and supported when things are getting tough. We can enhance such awareness through conscious communication about our values and their importance for us as guidance. We can pay attention when making decisions to honor our values and demonstrate clear alignment.

3. Build enhanced resilience

This is the top factor of all three. Having said this, resilience cannot exist sustainably without the two aspects mentioned above. For resilience to grow it needs deep foundations in ourselves and a strong value base as a kind of nourishment. What does this mean, one may ask? Let’s use the analogy of a tree where almost the same amount of roots is developed underground as the amount of branches and twigs visible above. Only healthy trees with such a balance between roots and branches can weather almost any storm. How deep do our roots reach? The deeper they are the more they can help us keeping inner calm, no matter what.
How to enhance our resilience further is subject of an interview with Chris Johnstone who published a book on the subject. This will also be presented in this news segment