How long are you willing to wait in line for a meal at your favorite restaurant? Would you be willing to pay $30 to skip the line? How about $10?

Most people wouldn’t feel comfortable slipping money to a maître d’ at a restaurant to jump the queue, but a new app is testing whether patrons would be willing to donate the same amount of money to charity in order to be seated faster.

CharityWait is a feature from the restaurant hosting service app SmartLine that sets aside a few tables each night at restaurants that are designated “CharityWait tables”, making them available to parties who donate on a first-come, first-served basis. This way, not only can patrons avoid the wait, but there is also a reduced social stigma against paying to jump the line since the money goes to charity.

This strategy of allocating tables based on price, instead of the more typical restaurant seating model where tables are allocated through a queue system, is an interesting concept. In this scenario, all customers who are willing to wait in line will eventually get a table. However, customers who are willing to pay the fee will get seated faster.

This new app lets you skip to the front of the line at your favorite restaurant: http://t.co/08uCKw2gbc pic.twitter.com/7uXl7rKSkr

— Eater (@Eater) August 1, 2015

It may be too early to say if this two-pronged approach will be a success in the restaurant industry, but other businesses have used it with good results. Take, for instance, Disneyland. You can pay the standard admission price and get access to all the park’s attractions. However, in order to experience everything, you’d have to stand in lines - lots of lines. But, by paying extra for Disney FASTPASS Service, you can bypass the queue and greatly reduce your wait time between rides.

Pricing allocation isn’t always popular, though. A good example is Uber, the car service app that connects users and drivers with the touch of a button. It is often praised by its users as a cheaper, more convenient alternative to taxis, but frequently draws criticism for its use of surge pricing. This practice incentivizes more drivers to come online and pick up fares when demand for rides is at its highest, like during rush hour, a blizzard, or after a sporting event gets out, by raising ride prices exponentially.  

Uber introduced surge pricing during the Sydney hostage siege, then quickly backtracked http://t.co/NcaBxgSbzm

— Mashable (@mashable) December 16, 2014

Despite its clear purpose and seemingly sound economic model, this form of price allocation tends to leave a bad taste in peoples’ mouths. But what if Uber didn’t gouge prices and supply was kept constant in the face of increased demand? The users willing to pay for faster service would still be left waiting in the queue.

What do you think – will CharityWait do for the restaurant industry what the FASTPASS did for Disneyland? Or will it be like Uber and face allegations of price gouging?

 

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Want to hone your business skills to help you advance in your career and feel more confident contributing to conversations about finance, economics, and business analytics?

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On Monday, Google announced the formation of a new parent company, Alphabet, which will serve as the umbrella for all of its business units. 

Google has clearly recognized that several of its business units are fundamentally different in nature, with each requiring a different management of its resources, processes, and profit formulas (“RPP”). Perhaps Alphabet will bring the autonomy that these individual units need, and therefore, empower these units to manage their own disruptive paths.

Managing several different innovative and disruptive businesses is a common challenge that many organizations face. Too often, organizations try to nurture an emerging business alongside a core business, and the results can be disastrous. 

In order to grow and thrive, disruptive businesses must be given the opportunity to develop their own resources, processes, and profit formula. Each business unit needs to feel free to make the best decisions for their own situation.

For more on Google's restructuring and the formation of Alphabet, check out the following articles:

• Google Goal in Restructuring as Alphabet: Autonomy
  via the New York Times
• What is Alphabet, Google's new company?
  via Business Insider
• Google Launches New Parent Company Called Alphabet
  via National Public Radio

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Interested in learning more about how to position your company to avoid disruption and harness new growth opportunities in an interactive, online class?

Think SoulCycle’s secret to success is all loud music and loads of sweat? Think again.

With an 85% loyalty rate among its riders, SoulCycle is a prime example of a company that’s perfectly nailed its customers’ “job to be done,” built all the right experiences around that "job", and then let its marketing and branding follow suit. In doing so, the company elevated itself into a “purpose brand," resonating with consumers and turning one-time riders into “soul” advocates.

A look at SoulCycle, by the numbers, as it preps for its IPO http://t.co/PAbDd2X2fi pic.twitter.com/Yyw4JwWAH6

— ForbesInvesting (@ForbesInvestor) July 31, 2015

The jobs-to-be-done framework was developed by Harvard Business School Professor Clayton Christensen to explain why people make the consumption choices they do. What makes this idea so powerful is that the job to be done pinpoints exactly what actually causes consumers to purchase one particular product or service over another under a given circumstance.

Consider for a moment what job health consumers are really trying to solve: most health clubs and fitness studios would probably tell you that it’s to get more fit. Sure, this may be true. However, it's not the full story. For some consumers, gyms are “hired" for their social and emotional aspects - the feeling of being a part of something bigger, or of having that moment of catharsis when you know you've pushed yourself to the limit. When viewed in this context, it may not just be another gym you are competing with to fulfill this job; alternatives might include running a marathon, joining a book group with friends, or even a night out at the club.

SoulCycle wants to change your life...and file for an IPO http://t.co/SDRpxHHAgi pic.twitter.com/EmV6uMifDe

— CNNMoney Investing (@CNNMoneyInvest) July 31, 2015

In discovering this job to be done, SoulCycle was able to tailor its product in an entirely differentiated way and then integrate all the right experiences around it. From the moment of check-in until the end of the ride, the SoulCycle experience is designed to deliver on aspects of community, atmosphere, emotion, storytelling, and most of all, being part of a movement that is bigger than yourself (not to mention providing a pretty darn good workout).

To learn more about jobs to be done, and how to get more customers to hire your product or service, check out HBX Disruptive Strategy.

Haven’t we learned by now? You simply should not lie about any numbers that appear on your financial statements. Even if you somehow manage to get away with it in the short run, the truth will eventually come out. And when it does, the implications will be far, far worse than whatever deficiency you were initially trying to cover.

Take for instance Toshiba, the 140-year-old Japanese tech giant, that recently came under fire for overstating revenues by approximately $1.2 billion over the course of five years. Since the news broke, stock prices have dropped by more than 30%, and eight of the company’s senior executives, including CEO Hisao Tanaka, have resigned.

So why didn’t Toshiba learn from other companies like Enron, Tyco, or Adelphia that have gone through similar scandals in the past? Why did they feel such pressure to overstate profits?

Toshiba CEO resigns over $1.2 billion accounting scandal: http://t.co/MEeKD1aXSo via @sophia_yan pic.twitter.com/Y7h9qTR5kB

— CNNMoney (@CNNMoney) July 21, 2015

As any basic accounting class will tell you, one of the most common ways to evaluate a company is by its profitability: stakeholders use profit margin to evaluate a company’s ability to turn sales into net income, which is important for a variety of reasons. Potential stock owners want to make sure the profit margin is high in order to receive the greatest possible dividends, while lending institutions evaluate profit margin to determine their chance of being paid back on a loan.

This logic is pretty straightforward, but what else could be making senior executives want to overstate profits? There are a plethora of reasons, but it’s important to note that more often than not, executive compensation is tied to profits.

Apart from the sheer size of the cover-up, perhaps most newsworthy aspect of the Toshiba scandal is the attention being given to overall corporate governance practices (or lack thereof) in Japan. Internal controls, external auditing, and non-biased boards are not commonly found, but it seemed like Japan was making a move in the right direction when Prime Minister Shinzo Abe established a rudimentary corporate governance code a couple of months ago. Now many are wondering if this move was a "too little, too late" situation. It will be interesting to see how the governance landscape in Japan changes as the Toshiba scandal turns more and more company stakeholders into financial detectives.

Toshiba scandal sheds harsh light on Japan's corporate governance http://t.co/RreAMF72Jv

— Guardian Australia (@GuardianAus) July 21, 2015

A word of caution—enhanced corporate governance has its advantages and disadvantages, and just as Toshiba should have learned from the actions of executives in the American scandals of 2001, it should also study the effects. The introduction of Sarbanes-Oxley in 2002 greatly improved governance in America, but misstatements still occur. It seems that people will always find a loophole. Additionally, some would argue that the costs of compliance have changed the landscape of business, with more companies choosing not to ‘go public’ or changing from public to private in order to avoid the expenditures.

Will Toshiba be able to recover? How will Corporate Governance evolve in Japan?

Price goes up, and demand goes down. It’s one of the most fundamental relationships in economics. If the price of a cup of coffee increases, demand for coffee, all else equal, will fall. For example, if your regular Starbucks drink order were to double in price overnight, you might reconsider indulging in your daily fix of caffeine.

But does this inverse relationship between price and quantity demanded always hold? No - and for many reasons.

Anyone who has taken Econ 101 can cite some famous exceptions to the so-called “law” of a downward-sloping demand curve. For example, demand for a luxury good, like a sports car, might actually be greater with a higher price. For some car buffs, a high price may be a signal of superior quality, and more Lamborghinis would be demanded the steeper the price tag.

On the flipside, demand for some other goods (so-called “Giffen” goods, named after Scottish economist Robert Giffen), may fall with price. When the price of a cheap commodity, such as rice, falls, the average shopper might feel just a little bit wealthier and buy the quinoa this week instead.

So that's how it works with consumer goods - but what about services? That's a trickier question and yet an even more important one to answer.

As workers throughout many cities in the U.S. and Europe continue to demand a higher minimum wage (many protestors in America are looking to double the $7.50 base wage), the question of whether the law of demand applies to labor markets is becoming increasingly important to politicians, policymakers, and businesses.

A business perspective

How can we think about this issue of higher wages from the point of view of a firm, or a manager? And what conclusions can we draw for our business?

Let’s first look at it from a purely economic perspective: In theory, a hike of the federally-required minimum wage should depress the demand for labor. If companies must pay each worker more, the law of demand predicts that they will hire fewer workers. The minimum wage sets a floor under which businesses and potential employees cannot contract, even if both sides are willing. Based on price alone, the number of jobs available to all in the labor force should theoretically fall.

If that's the case, nationwide cries for better compensation for minimum wage earners would then only benefit those employees who still have jobs after the policy change. Less-skilled workers, whose hourly output may be valued by companies at less than $15, might be laid off, and those who are already out of work may find it even harder to get a job.

Businesses are getting steamrolled on the minimum wage. Here’s why. http://t.co/pMIR2MIM67

— Washington Post (@washingtonpost) July 25, 2015

What’s more, as technology becomes more sophisticated, it becomes increasingly more attractive for firms to switch from humans to labor substitutes such as robots, drones, and self-service machines. A construction worker or maid, whose skills are hard to imitate, may still be able to find a job at a higher minimum wage. A permanently pricier cashier or secretary with little experience might not. Increasing the costs of workers would very likely expedite the process of automation (which is already moving forward at a staggering pace).

Fewer people working and greater incentives to invest in job-stealing cyborgs... economically at least, it appears to be an inappropriate moment to be raising the price of workers.

Is it that simple?

However, as we saw in the case of goods, economics is often far from cut and dry. True, an increase in the price of labor may decrease firms’ demand for workers—but again, we must add that pesky “ceteris paribus” or “all else equal” clause to the end of any conclusion we can draw. That is, a minimum wage boost would decrease the demand for workers, assuming the policy change affects nothing else. Yet this is not often the case; other variables may matter. And these variables may matter a lot for your business.

For example, maybe an increase in wages would boost employee morale and actually increase productivity, creating more value for your company. Or maybe better-paid employees value their jobs more, and staff turnover is reduced because of the change. Any number of factors could play a role and, indeed, managers must take into account more than just the cost of a worker before deciding to hire or fire.

VIDEO: Seattle restaurant that raised minimum wage to $15 ahead of schedule reports success: http://t.co/zDCFFauNLG

— The Associated Press (@AP) July 31, 2015

The law of demand, and more generally the field of economics, is often far more nebulous than textbooks make it out to be. Will an increase in wages be beneficial to the cities and countries that are considering such a measure? It's hard to tell. But, for managers and policymakers, a basic understanding of economics can provide a useful framework for making decisions and understanding the possible impacts of such a change. 

What do you think will happen?

We asked our HBX CORe credential holders what advice they would share with incoming students to help you better prepare for CORe and position yourself for success in the program. Here's what they had to say:

 

1. Don't Procrastinate!

This is, by far, the biggest tip from our ambassadors. CORe is a rigorous, time-intensive program. Make it a priority and manage your time well so you can get the most out of the course. 

 

  

2. Take Good Notes

Break out the ol' pen and paper (or an online tool like Evernote) - these notes will help you retain more of what you're learning and make your life easier when taking quizzes or studying for the final exam.

3. Be Social

A huge benefit of CORe is the ability to learn from and interact with a cohort of really engaged peers. To get the most out of the program, you should ask and answer questions regularly, participate in discussions, and get to know your fellow students. 

 

 

4. Get Real 

CORe teaches business concepts by using real-world examples so you can really understand why they are important. By paying attention to the world around you and looking for examples of the concepts you've studied, you will retain more of what you're learning and hone your skills.

5. Slow and Steady

Did we mention the importance of time managment? Many of you are juggling jobs, internships, school, friends, vacations, and more, so it's crucial that you plan ahead and block out some time for your CORe coursework each week.

 

6. Enjoy It

Just because you're working hard doesn't mean you can't have fun!

 

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