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Karan Girotra Karl Ulrich Christian Terwiesch with its own filtration system. Their ideas were then evaluated by independent reviewers. The reviewers rated the ideas produced via the hybrid process as 30 percent bet- ter than those produced by the team process. Moreover, stu- dents presented three times as many ideas using the hybrid meth- od than they did using the team method— meaning that a hybrid approach to brainstorming increases both the quality and quantity of ideas. The authors cite several reasons for these results. In group settings, people may censor themselves more or may be distracted by excessive conversation. Group settings also may encourage some people to become passive and let others do the talking. Or, a group may collectively latch on to one idea too quickly, so that better ideas are never heard. The hybrid process, on the other hand, allows all team members to think of anything and everything. It also gives them the opportunity to present their ideas completely before a review process begins. In the study, the authors admit that their experiments had limi- tations—for instance, while the participants were coached in the idea-generation process, they did not have much time to get to know each other or develop "collective experience," as they would in many real-world work settings. The authors also suggest that not all employees may be cut out for the brainstorming process. "An optimal process may be to first screen the pool of individuals for the highest performers and then employ only them in subsequent idea generation efforts," the authors conclude in their study. They note that this idea could be a subject for future research. Their paper "Idea Generation and the Quality of the Best Idea" appeared in the April 2010 issue of Management Science. It is available online at knowledge.wharton.upenn. edu/papers/download/051210_ Terwiesch_Ulrich_Creativity.pdf. Computer-Driven Trading Improves Liquidity Three researchers have examined how computer-driven market trading based on algorithmic formulas affects market efficiency. They find that such high-speed trading improves market liquidity and makes stock prices more reflective of supply and demand. The research was conducted by Terrence Hendershott, an associate professor at the Haas School of Busi- ness at the University of California, Berkeley; Charles Jones, professor of economics and finance at the Colum- bia University Graduate School of Business in New York; and Albert Menkveld, associate professor of finance at Vrije Universiteit Amster- dam in the Netherlands. The three looked specifically at algorithmic trading (AT), which they define as "the use of computer algo- rithms to automatically make certain trading decisions, submit orders, and manage those orders after submis- sion." They examined the growth of AT and the liquidity trends in the New York Stock Exchange between February 2001 and December 2005. The researchers chose that time frame because of a change in the NYSE's trading practices in 2003. That change sped up how fast data was delivered to market participants. The upgrade and increased algorith- mic trading were introduced across stocks over time, allowing later affect- ed stocks to act as a control group. As the use of AT increased dur- ing the time frame of the study, so did market liquidity. The authors suggest that AT lowers the cost of trading and narrows the spread between the stock's bid and ask price. It also reduces trade-related discovery—in other words, market activity more truly reflects actual supply and demand. Their paper "Does Algorithmic Trading Improve Liquidity?" is forth- coming in the Journal of Finance. The study is also available at faculty. haas.berkeley.edu/hender/Algo.pdf. The Risk of Innovation Innovation can be a boon to the economy, but it's a boon that may be unequally shared among different generations of workers. While innovation may drive profits for newer companies and younger workers, it can put older companies and workers at a disadvantage. Authors of the paper "The Demographics of Innovation and Asset Returns" find that inno- vation can increase competition, reduce profits of existing businesses, and erode the human capital of older workers who are generally less BizEd JULY/AUGUST 2010 53