Rory M. McDonald

Rory M. McDonald

Thai-Hi T. Lee (MBA 1985) Associate Professor of Business Administration

Thai-Hi T. Lee (MBA 1985) Associate Professor of Business Administration

Technology and Operations Management
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Rory M. McDonald
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(617) 496-6938
Featured Work Publications Research Summary Teaching Awards & Honors

Rory McDonald is an Associate Professor of Business Administration in the Technology and Operations Management Unit. He teaches Building and Sustaining a Successful Enterprise (BSSE) in the MBA elective curriculum and previously taught the Technology and Operations Management course in the MBA required curriculum. In 2016, he was named one of the world’s top 40 business school professors under 40 by Poets and Quants.

Professor McDonald’s research focuses on how firms compete and innovate effectively in new technology-enabled markets. Drawing on a mix of in-depth fieldwork and archival data, he studies how executives develop viable strategies in these contexts and how they obtain resources that improve their chances of success. For his research on entrepreneurial firms, Professor McDonald received both the Kauffman Foundation Junior Faculty Fellowship in Entrepreneurship as well as the Kauffman Foundation Dissertation Fellowship. He was also a finalist for best dissertation award in business policy and strategy by the Academy of Management.

Professor McDonald received his PhD in Management Science and Engineering from the Stanford Technology Ventures Program. He also holds an MBA from the Stanford Graduate School of Business, an MA in economic sociology from Stanford University, as well as two engineering degrees from the University of South Florida. Before joining Harvard, he was on the faculty of the University of Texas at Austin where he received the CBA Foundation Teaching award. McDonald is on the board of YCG Funds, an Austin-based mutual fund company, and is an advisor to several startups.

Professor McDonald and his wife Anne live in Sudbury, MA with their four children. They are active in their church and enjoy a variety of family activities.

Featured Work
The New Market Conundrum

Brand-new markets are like the wormholes of science fiction, where the usual rules of time and space do not apply. When a market has just been born, the forces of competition there are constantly in flux, it's unclear who your customers really are, and conventional strategies just don't make sense. How then can you navigate this constantly shifting terrain? Over the past few years, we have interviewed entrepreneurs and corporate innovators in new fields such as genomics, augmented reality, and fintech. We discovered that the most successful ones practice something called "parallel play," exploring and testing the world the way preschoolers do. Instead of trying to differentiate their businesses, they observe what others in the market are doing and borrow ideas. After relentless experimentation, they commit to a single template for creating value. But rather than quickly optimizing that template, they leave it partially undetermined and pause, watch, and wait. As they gather serendipitous insights and the market begins to settle, they refine their models bit by bit.

HBR: The New-Market Conundrum 
Research: Parallel Play: Startups, Nascent Markets, and the Effective Design of a Business Model 
Research: Life in the Fast Lane: Origins of Competitive Interaction in New vs. Established Markets

When It's Time to Pivot, What's Your Story?
How to Sell Stakeholders on a New Strategy

To succeed, a new company must rally investors, staff, customers, and the media around a good story. But often that narrative turns out to be wrong, and entrepreneurs realize they need to change direction. How that shift is communicated can have a huge impact on a venture's future. Through extensive research with founders, innovation chiefs, analysts, and journalists, we have identified stratagems for maintaining stakeholder support during pivots. Early on, entrepreneurs should avoid a focus on overly specific solutions and instead present the big picture. When changing course, they can then signal continuity by explaining how the new plan fits with the original vision. Once the reboot has happened, it's critical to be conciliatory and empathetic to stakeholders who may feel abandoned. Employees and customers are far more willing to remain loyal if given guidance about how they'll be affected and if leaders seem to genuinely care about their situation.

HBR: When It’s Time to Pivot 
Research: Pivoting Isn’t Enough? Managing Strategic Reorientation in New Ventures 

How Would-Be Category Kings Become Commoners

Category creation is the holy grail in business, but more often than not, the very companies that establish lucrative new markets don't end up being the category kings. Why? Many executives undermine their own ventures standing by misinterpreting and misfiring on strategies considered fundamental to creating new categories. Here, the authors spell out three common mistakes that turn would-be kings into commoners in the categories they create.

SMR: Category Kings
Research: Category Kings or Commoners? Market-Shaping and its Consequences in Nascent Categories 
Research: Shaping Nascent Industries: Innovation Strategy and Regulatory Uncertainty in Personal Genomics 

Running a Consumer Fintech Startup within Goldman Sachs
Cold Call Podcast

Marcus by Goldman Sachs marked a dramatic shift for the 150-year-old financial institution, which historically had served only businesses and the wealthiest people. The fintech startup operated within Goldman Sachs, offering unsecured personal loans for the mass market, high-yield deposits, and a credit card in partnership with Apple. Harvard Business School professor Rory McDonald discusses the challenges of launching and operating a startup within an established company in his case, “Marcus by Goldman Sachs.”

Running a Customer Fintech Startup with Goldman Sachs 

What is Disruptive Innovation?

For the past 20 years, the theory of disruptive innovation has been enormously influential in business circles and a powerful tool for predicting which industry entrants will succeed. Unfortunately, the theory has also been widely misunderstood, and the "disruptive" label has been applied too carelessly anytime a market newcomer shakes up well-established incumbents. In this article, Clayton Christensen, Michael Raynor, and Rory McDonald correct some of the misinformation, describe how the thinking on the subject has evolved, and discuss the utility of the theory. They start by clarifying what classic disruption entails--a small enterprise targeting overlooked customers with a novel but modest offering and gradually moving upmarket to challenge the industry leaders. They point out that Uber, commonly hailed as a disrupter, doesn't actually fit the mold, and they explain that if managers don't understand the nuances of disruption theory or apply its tenets correctly, they may not make the right strategic choices. Common mistakes, the authors say, include failing to view disruption as a gradual process (which may lead incumbents to ignore significant threats) and blindly accepting the "Disrupt or be disrupted" mantra (which may lead incumbents to jeopardize their core business as they try to defend against disruptive competitors). The authors acknowledge that disruption theory has certain limitations. But they are confident that as research continues, the theory's explanatory and predictive powers will only improve.

HBR: What is Disruptive Innovation?
Journal Articles
Working Papers
Cases and Teaching Materials
Research Summary
Overview
Professor McDonald studies how firms successfully navigate new markets. He examines how widely accepted strategic prescriptions can actually undermine managers’ attempts to develop a viable business model or stake out a defining new market position, and considers the important role played by entrepreneurial resource providers in these processes. Empirically, he relies on a complementary range of methodologies – in some instances solving problems deductively through quantitative analysis of archival data, complemented by fieldwork while in other instances adopting an inductive approach that draws on structured interviews and field research to generate new insights.
Competing in New Markets

Strategic advisors counsel managers to conduct a thorough competitive analysis emphasizing key points of differentiation. But for new markets, Professor McDonald’s research suggests that reports of the threat posed by similar rivals may be greatly exaggerated, and managers may be well-advised to focus on substitutes, using rivals as mere stepping stones to speed their own progression and keep costs low. Similarly, while popular media accounts laud market ‘evangelists’ who open up new market space through symbolic acts of persuasion, McDonalds’s research argues that successful innovation in new markets resembles problem-solving more than missionary work, and suggests that managers may be better off riding the coattails of these hardworking evangelists to establish a defining position in the new market.

Entrepreneurial Resources

Mounting evidence suggests that ventures’ early relationships are critical for their success by helping overcome initial resource constraints, improve internal operations, and gain access to diverse audiences such as potential investors, the media, and customers. But which providers should managers engage? In collaboration with researchers at London Business School, Columbia, and the University of Washington, Professor McDonald examines the value created (and sometimes destroyed) by venture capitalists, super angels, and other resource providers.

Teaching
Overview
Technology and Operations – MBA Required Curriculum This course enables students to develop the skills and concepts needed to ensure the ongoing contribution of a firm's operations to its competitive position. It helps them to understand the complex processes underlying the development and manufacture of products as well as the creation and delivery of services. http://www.hbs.edu/faculty/units/tom/Pages/curriculum.aspx
Awards & Honors
Winner of the 2019 Past Chairs' Emerging Scholar Award from the Technology and Innovation Management (TIM) Division of the Academy of Management.
Won the 2017 Wyss Award for Excellence in Doctoral Student Mentoring.
Included as one of the “40 Under 40 Most Outstanding MBA Professors” by Poets & Quants in 2016.
Finalist for the 2016 Wyss Award for Excellence in Doctoral Student Mentoring.
Recipient of a 2014 Kauffman Foundation Junior Faculty Fellowship in Entrepreneurship Research.
Finalist for the 2013 Wiley Blackwell Outstanding Dissertation Award from the Academy of Management, Business Policy and Strategy Division for his dissertation entitled, “Competition and Strategic Interaction in New Markets” (Stanford University, 2012).
Winner of the 2013 Trammell/CBA Foundation Teaching Award for Assistant Professors at the University of Texas at Austin, McCombs School of Business.
Received a 2010-2011 Gerald J. Lieberman Fellowship from Stanford University.
Received a 2008-2010 National Defense Science & Engineering Graduate Fellowship.
Received a 2009-2010 Kauffman Foundation Dissertation Fellowship.
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