Ones You Might Have Missed…
We are republishing the 10 most-discussed Knowledge@Wharton articles from 2008. In our reader comments section, you never hesitate to tell us — or each other — what you think, and we are extremely grateful to have such an engaged audience. We look forward to providing you with more articles from around our global network when we return January 7. Until then, we hope you have a restful and peaceful holiday.
In their book, Turning Learning Right Side Up: Putting Education Back on Track, authors Russell L. Ackoff and Daniel Greenberg point out that today’s education system is seriously flawed — it focuses on teaching rather than learning. “Why should children — or adults — be asked to do something computers and related equipment can do much better than they can?” the authors ask in an excerpt from the book. “Why doesn’t education focus on what humans can do better than the machines and instruments they create?”
Executives at AIG, Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac may have ignored or failed to see the level of risk their companies were taking on in a crusade to enhance results and their own compensation, according to Wharton faculty and industry analysts. In some cases, the management crisis was fueled by managers simply choosing not to lead.
Casual observers may have concluded that Google’s introduction this week of its ‘Chrome’ web browser was a direct assault on the dominance of Microsoft’s Explorer. But Wharton professors David Hsu and Kevin Werbach see a longer-term strategy at work.
Hardly a day goes by without yet another twist or turn in the credit crisis that has engulfed the U.S. financial system for more than a year. Media reports suggest that the world’s biggest financial institutions have absorbed more than $300 billion in asset write-downs and credit losses even as home foreclosures are at record high levels and Wall Street has laid off thousands of employees. While much of the discussion about the crisis has focused on its causes and the need for regulatory reform, former Wharton dean Russell Palmer, author of a new book, Ultimate Leadership, writes that the situation offers an opportunity to learn crucial lessons about leadership.
The rescues, bankruptcies and dizzying write-downs for Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, AIG and other giants of international finance signal a reckoning for Wall Street wizards who engineered the ongoing credit crisis with opaque securities based on risky subprime home loans and the assumption that housing prices would never decline, according to a panel of Wharton professors. The flood of bad debt, they add, won’t subside anytime soon.
Gasoline at more than $4 a gallon has proved to be the price point at which U.S. consumers make big changes in their driving habits. With SUVs and pickups suddenly out of favor in the world’s biggest automobile market, Asian manufacturers who invested heavily in fuel-saving technologies — and European car makers who sell to markets where expensive gas is nothing new — are better positioned to meet new consumer demands. Just how dire is the situation for U.S. auto manufacturers and is there any relief in sight?
Just a year ago, ethanol was the renewable fuel of the moment. Derived mostly from corn grown in America’s heartland, it was promoted as a home-grown ticket to energy independence for the U.S. and other oil-importing nations. Today, however, ethanol’s prospects look somewhat cloudy. Critics around the world are crying foul over rising food prices, while others say that it takes more resources to create ethanol than the alternative fuel provides. According to experts at Wharton and elsewhere, ethanol underscores the hazards involved in the development of any new energy source, where failure to understand the broader impact of production can result in unintended consequences.
Rather than hire experienced people from outside, many companies might be better off training fresh recruits with little experience in the industry. That approach can give the firm more control over how the new workers adapt to their employer’s corporate strategy and culture, according to a research paper by Wharton management professor Nancy Rothbard titled, “Unpacking Prior Experience: How Career History Affects Job Performance.”
A government plan to rescue the U.S. automobile industry with $14 billion in emergency loans to General Motors and Chrysler was approved by the House of Representatives late on December 10, but the proposal continued to face stiff opposition from Senate Republicans. While the lifeline loans would give the Detroit automakers some breathing room, legislators and auto executives remain under enormous pressure to come up with a plan to resolve the industry’s deep structural and management problems. Wharton faculty and other experts discuss the merits of the bailout proposal and what the potential alternative — bankruptcy — could mean.
President-elect Barack Obama must lead a nation mired in a worsening recession and burdened by the costs, both financial and human, of two wars and rising debt. Wharton faculty offer some counterintuitive advice: Now may be the time for the government to spend a lot of money.