THINKING FORWARD – Ideas for your work from MIT Sloan School of Management

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Ideas for your work from
MIT Sloan School of Management | Office of Communications

+ THREE INSIGHTS FOR THE WEEK
February 21 – February 27, 2021

1. The process of creative brainstorming is tethered to one central commandment: Do not criticize.

But does that rule hold true? Jared Curhan, an assistant professor at MIT Sloan and faculty director of MIT’s Behavioral Research Lab, devised a pair of experiments to explore the question.

Curhan and co-researchers Tatiana Labuzova and Aditi Mehta recruited people to brainstorm ideas for an MIT-sponsored construction project in Cambridge, Massachusetts with multiple engaged stakeholders.

Roughly half of the brainstorming groups were asked not to criticize others’ ideas, while the other half was encouraged to do so. Groups were further split into cooperative and competitive conditions, with the competitive group charged with both generating ideas and then ranking them.

The researchers later replicated these conditions in a more controlled laboratory setting. In both cases, they found that when the setting is cooperative, criticism can boost creativity; in competitive or adversarial settings, criticism should be prohibited.

The results can be of use to brainstorm facilitators. “You might give the parties a reminder like, ‘I just want to reiterate that we’re on the same team, and that we all benefit if this project succeeds,’” Curhan said. “That way everybody’s fates are cooperatively aligned.”

2. Indexed mutual funds don’t buy initial public offerings, but MIT senior lecturer Robert Pozen thinks they should  — under certain conditions.

In 2020, IPOs jumped during the initial day of trading by 36% on average; yet index funds waited to buy IPO stocks until near the date on which they were added to the relevant index — when prices typically surge in anticipation of a barrage of purchases.

In a recent MarketWatch op-ed, Pozen, a former president of Fidelity Investments, argued that indexed mutual funds and exchange-traded funds can buy IPOs earlier. “The greatest return could be realized by buying IPOs at the initial offering price and holding them through the index-inclusion date,” Pozen wrote.

In addressing the risk that an IPO doesn’t get added to the index, Pozen proposed that mutual funds early-buy only those offerings that are large relative to the size of the Russell 1000 Index, which includes 92% of the total market capitalization of all listed stocks in the U.S. equity market.

“Although there is a modest risk that such IPOs will not subsequently be included in that index, the excess returns from this strategy outweigh the risks,” Pozen wrote.

3. Lauren Hoops-Schmieg doesn’t golf or gamble  which was a challenge working in an industry where informal networking happened on the back nine or during business trips to Las Vegas. “The expectation was that if you wanted to be on that [promotion] track, you had to participate,” said Hoops-Schmieg, who was pregnant with her second child at the time.

So Hoops-Schmieg switched to the nonprofit sector — she is currently executive director of Hill House, a nonprofit community center in Boston — and returned to school, earning an Executive MBA from MIT Sloan.

“I vowed that should I ever get to a position of power — the place where I can make it better for women in their late 20s through 40s to balance a family with their career — that I would pay it forward and make it easier for them,” she said in a recent Q&A.

Hill House has implemented an open leave policy, provided flexible work-from-home options even pre-pandemic, and extended six-week paid paternity leave. “We want fathers to be able to support their wives in their careers and also to understand firsthand the balance that is necessary for raising a family,” she said.

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