Publications

It is common in business analyses to invoke different efficiencies generated by scale. Growth is associated with declining average costs/sales and rising profit margins. Factors cited include the relatively fixed nature of some costs, increased bargaining power, and network effects. We investigate how different cost lines evolve for a sample of US firms after their IPO. To our surprise, costs/sales do not generally decline and margins do not increase, even during the early years when growth is highest. We observe similar results for other samples of domestic and overseas firms, both public and private. We explore possible explanations for our results and discuss implications, especially for cost allocation and financial projections.

Gardner Denver, an equipment manufacturing company, was acquired by private equity firm KKR in 2013 for $3.9 billion. Under the leadership of Pete Stavros, KKR's head of the Industrials group, and Vicente Reynal, appointed CEO in 2015, the company saw improved operational momentum despite initial challenges like low employee engagement and declining revenue.

Gardner Denver's method of operation under KKR emphasized broad-based employee ownership, which was championed by Stavros. This program proposed granting substantial equity stakes across all global employees, aiming to enhance engagement and performance by aligning employee interests with organizational success.

The dilemma Gardner Denver faces revolves around the implementation of this equity program as the company prepared to go public in mid-2017. The board, including both KKR and non-KKR executives, needed to evaluate the benefits and limitations of distributing approximately $110 million in equity to 6,100 employees worldwide. Key concerns included determining the impact on the company's new shareholders, the optimal implementation strategy across its multiple global locations, the cultural shifts necessary to support the program, and achieving sufficient operational improvement to offset the dilution caused by this equity distribution.

An anonymous survey of employees across the Yale Medicine and Yale New Haven Health system at the time of FDA approval of the Pfizer-BioNTech vaccine used sentiment analysis to estimate the prevalence of and underlying reasons for Covid-19 vaccine hesitancy. Overall, 1 in 6 health care workers expressed reluctance to getting the vaccine in the first wave. Yale identified 15 themes describing reasons for this reluctance and found positive and negative sentiments underlying many of them. They propose strategies for messaging to mitigate vaccine hesitancy among these groups.

Hirtle Callahan, founded in 1988 by Jonathan Hirtle, is a prominent investment management firm known for its pioneering role in the outsourced chief investment office (OCIO) model. This model primarily serves college endowments, foundations, and wealthy families by managing their investments with a deeply client-centric approach. The firm's founder emphasized the significance of managing clients' funds effectively to generate meaningful societal impacts through research, scholarship, and security.

In 2019, Stephen Vaccaro joined Hirtle Callahan as the director of private equity (PE), tasked with increasing the firm's PE market value from $1 billion to approximately $3 billion. This strategic shift involved reallocating the firm's assets under management (AUM) towards private equity, raising PE's proportion in the portfolio from 6% to 18% of the total $17 billion AUM.

The dilemma Hirtle Callahan faces stems from this significant reallocation towards PE. Despite the higher PE returns over the past decade, many clients were hesitant to embrace these changes due to concerns about liquidity, fees, market conditions, and monitoring environmental, social, and governance (ESG) factors. Additionally, the firm's various client segments, particularly smaller endowments, required substantial reorientation and education to understand and accept the new investment targets.

Intercorp is one of Peru's largest conglomerates, encompassing over 35 businesses across diverse sectors such as banking, education, healthcare, retail, and real estate, employing over 80,000 individuals. Within this framework, La Victoria functions as Intercorp's innovation lab, initially inspired by IDEO's collaborative design philosophy. Established in 2014, the lab began by supporting Intercorp's various business ventures through product and service innovations. However, its role evolved, becoming a platform for impactful journeys from pipeline discovery to implementation, no longer just responding to business briefs but fostering a culture of design thinking and prototyping across Intercorp, significantly contributing to the conglomerate's digital transformation efforts.

La Victoria faces several challenges. First, there's the question of its evolving mission. Should the lab maintain its adaptive approach or develop more specialized expertise? Some argue for a focus on resolving short-term business challenges, while others advocate exploring beyond mainstream projects. Additionally, the lab grapples with how to demonstrate its value to Intercorp's holding company amid its free-funded model. Encouraging business leaders to adopt a forward-thinking, user-centered approach remains crucial, but there's a tension between creative exploration and practical implementation needs. Lastly, balancing resource allocation and project prioritization, especially when identifying and developing promising ventures, poses an ongoing strategic dilemma.