Duke professor and alumnus extract business knowledge from baseball

DURHAM, N.C. –-  Baseball fans who trumpet or bemoan their teams’ deals seem to always assign credit for the brilliant move, or blame for the lousy decision, to the team’s General Manager. Likewise, investors and industry watchers look first to a company’s Chief Executive Officer whenever they assign praise or blame for a decision.

But professors Will Mitchell of The Fuqua School of Business and Jeff Barden of the University of Washington (a graduate of Duke’s Ph.D. program) have recently demonstrated that traditional understanding of a GM’s role in his team’s trade decisions may be flawed. In their analysis of the 1,657 Major League trades that occurred between 1985 and 2003, Barden and Mitchell found that teams’ prior experiences working and trading together were more predictive of future trades than General Managers’ experiences working together. Barden and Mitchell’s paper was published in the December 2007 Academy of Management Journal .

What’s most important, they say, is not that a GM or CEO have all of the answers all of the time, but that they create a strong team of people who can gather and assess the information that the senior leaders need to make good decisions. Indeed, this may be one of the most important skills for a senior leader. In order to succeed, a leader must be able to build a strong organization instead of simply stepping in and immediately making drastic changes based solely on their own experience and gut sense. 

To learn more about strategy research at Fuqua, visit the Strategy area Web site .

Duke study finds that physicians invent nearly 20% of new medical devices.

DURHAM, N.C. –-Congress and other policy makers are considering an increase in the oversight of physicians’ relationships with medical device firms, but new research from Duke University’s Fuqua School of Business suggests that greater regulation could stifle the development of new medical devices.

Duke Professors Aaron Chatterji, Kira Fabrizio, Will Mitchell and Kevin Schulman used physician data from the American Medical Association Physician Masterfile and patent listings from the National Bureau of Economic Research to determine the extent to which physicians are inventors of medical devices used in patient care and the relative importance of their inventions. The team’s findings appear in the November issue of Health Affairs.

The group found that physicians were listed as the inventors of nearly 20 percent of the 20,000 medical devices patented in the United States between 1990 and 1996, and that 60 percent of physician-inventors work in private practice, not an academic medical setting. “This is clear, quantitative evidence that doctors are a driving force behind a significant portion of the new medical devices developed each year,” Mitchell said.

The Duke team also investigated the importance of patents held by physicians relative to other patents. To quantify importance, the researchers counted the number of later patents that cited physicians’ patents (indicating that the later technology was somehow influenced by the original invention). The team also considered the range of technological areas influenced by the original patents.

Physician patents received an average of 15.2 citations per patent, compared with 12.7 for other patents, and were also cited in a wider range of other patents.

“Researchers have estimated that each citation represents $1 million in value for the patent-holding firm," Chatterji said. "Therefore, the number of citations received by physician patents is a significant indicator of the potential value of physician-invented products.”

One argument for physician involvement in device development relates to physicians’ role in the innovation process. “Doctors who are closest to patient needs frequently have the best ideas regarding how to solve clinical problems and know the most about needs for product modifications and new products,” Fabrizio said.

“None of this changes the fact that we should still be concerned about the nature of physicians’ ties to companies that develop and market medical devices," Schulman said. "No one wants physicians’ decisions about patient care to be influenced by potential financial gain. However, these results suggest that we should not institute absolute barriers to physician involvement in device development activities and that balancing patient interests and the need for innovation may be a more complex task than has been previously recognized.”

There was no external funding for this research, and a full disclosure of Kevin Schulman's financial relationships can be found here.

DURHAM, N.C. -- Chief marketing officers in the United States are increasingly optimistic about the economy and their customers' purchasing activities, and are embracing the power of social media as they seek to promote their brands and attract new customers.
 
These are some of the results of the August 2009 CMO Survey, conducted by professor Christine Moorman of Duke University's Fuqua School of Business in conjunction with the American Marketing Association. The survey results reflect the responses of 511 top marketing executives of U.S. companies who were polled during the last two weeks of July.
 
Overall, 59 percent of marketers are more optimistic about the U.S. economy than they were just one quarter ago. They also report improved expectations for revenue growth, with 47 percent feeling more optimistic about prospects for revenue from end customers and 39 percent more optimistic about revenue from channel partners (who resell products to end customers) than they were just three months ago.
 
Marketers anticipate an acceleration in customer activity over the next year, with 48 percent expecting an increase in purchase volume, 44 percent looking forward to customers buying more related products and services and 35 percent predicting an increase in new customers entering the market.
 
The recessionary belt-tightening is not over, however. Price remains the most frequently reported top priority for customers, with 34 percent of top marketers ranking it as their customers' top priority, followed by trusting relationships with companies (20 percent) and superior product quality (19 percent).
 
"These results indicate that marketers believe the tide had begun to turn," Moorman said. "However, they are clearly aware that the recession has caused customers to become more price sensitive and companies are wisely keeping that in mind as they make product and marketing decisions."
 
Marketers continue to report a shift in spending away from traditional advertising (with a planned overall decrease of 8 percent) and toward Internet marketing, where they expect to increase investments by 10 percent. They report plans to increase spending on social media efforts by more than 300 percent in the next five years, increasing their marketing budget allocations for social media from 3.5 percent to 13.7 percent over the next five years. Social networking (65 percent), video and photosharing (52 percent) and blogging (50 percent) dominated firms' social media patterns. Survey respondents report the five most frequently reported uses for social media tactics are brand building, customer acquisition, new product introductions, customer retention and market research.
 
CMOs report plans to increase spending on marketing consulting services by 1 percent (compared to February 2009 plans to reduce consulting spending by 5 percent) and a slight uptick (from 2 percent to 3 percent) in planned spending on marketing research and intelligence. Marketing hiring is flat except in the Business-to-Business Services (+3.5 percent) and Business-to-Customer Product (+1.6 percent) sectors.
 
"When we last polled these companies in February, they were cutting back on all but the most critical functions," Moorman said. "The positive change in spending on market research and consulting services indicates that they are making preparations for future growth in the market."
 
The survey also asked top marketers to identify firms across all business sectors that they regarded as having exceptional marketing capabilities. The most frequently cited firms, which will receive the August 2009 "CMO Survey Award for Marketing Excellence," were Apple Inc. and The Procter & Gamble Company.
 
"These firms are consistently recognized by their peers for excellence in marketing," Moorman said. "Moreover, they have not sat still through this tough economic period. Instead, they have upped the ante on their value propositions by innovating and getting closer to their customers."
 
Other key findings of the CMO Survey include:
 
-- Russia and Eastern Europe are the regions where marketers expect the most future growth to occur, with significant decreases in opportunities in Canada, Mexico and Western Europe.
 
-- CMOs expect the majority of firm growth to occur internally, with 70 percent of growth spending allocated to internal growth strategies, 13 percent to partnerships, 10 percent to acquisitions and 7 percent to licensing.
-- Despite economic pressures, there has been little turnover in CMO positions this year; top marketers report having been in their positions for an average of 4.3 years -- unchanged from February.