Indholdsfortegnelse for Winter 2019 i Rotman Management

Sustainable competitive advantage sounds like a good thing to most people—but you believe companies need to stop basing their strategies on it and embrace a new strategic logic. Please explain. The high degree of change in today’s environment means that organizations have to adapt their strategy to new situations much more frequently than ever before. Historically, the preoccupation in strategy has been with seeking a long-term competitive advantage that is not easily duplicable by others in an industry, but we must all accept that this is an age of transient advantage. Previously, the sequencing has been: Identify a unique position in an attractive industry, throw up entry barriers like crazy, and then devote the rest of your efforts towards exploiting that position. In more and more areas of the economy,…

AUTONOMOUS VEHICLES (AVs) are widely expected to radically change mobility patterns and improve the efficiency of our transportation systems. The highest level of automation that is currently being tested allows for vehicles to travel without a human on board. This concept opens up abundant opportunities in the transportation industry, but it also has implications for road capacity — both positive and negative. As a result of the predicted benefits of AVs — which include smoother traffic and improved safety — more than 50 cities worldwide have committed to deploying them in the near future, and another 27 are preparing for automation by undertaking surveys of regulatory, planning and governance issues raised by these vehicles. Not surprisingly, the private sector is actively pursuing vehicle automation. By now, most car manufacturers have…

AUTOMATION AND ARTIFICIAL INTELLIGENCE are transforming businesses and will contribute significantly to economic growth via contributions to productivity. These technologies will transform the very nature of ‘work’ and the workplace itself. Machines will be able to carry out more of the tasks done by humans, complement the work that humans do, and even perform some tasks that go beyond what humans can do. As a result, some occupations will decline, others will grow, and many more will change. While we believe there will be enough work to go around (barring extreme scenarios), society will need to grapple with significant workforce transitions and dislocation. Workers will need to acquire new skills and adapt to the increasingly capable machines alongside them in the workplace. They may have to move from declining occupations…

WHEN BUSINESS LEADERS are quizzed about what it takes to succeed today, they tend to suggest the usual suspects. Innovation is one constant refrain. But, look around. While radical innovation is a common aspiration, incremental innovation is the more frequent reality. Very few products or services are truly innovative. Is leadership to blame? Harvard Professor Rakesh Khurana estimates that anywhere from 30 to 40 per cent of the performance of a company is attributable to ‘industry effects’; 10 to 20 per cent to cyclical economic changes; and perhaps 10 per cent to the CEO. Our experience suggests this is a maximum figure rather than a mean. Originality is similarly over-rated. Research by Costas Markides and Paul Geroski of the London Business School highlights the myth of the importance of being…

WITH THE DRAGON’S DEN EPISODE about to air, Natalie Cartwright sits on edge. She isn’t nervous about her performance with the Dragons; the filming went well, and she was comfortable on stage. Instead, she’s worried that she and her co-founder, Jake Tyler, are the only people in the room of 40 employees, friends and investors who know that their company is on the verge of collapse. Payso, their free mobile app that sends money between friends, has only a few weeks of cash left in the bank. Natalie and Jake shot the episode a year earlier, when Payso was on an upswing. And since their contract with the CBC had prohibited them from disclosing whether they had taken financing from the Dragons, they decided to throw a party at their…

Most of us cannot fathom the profound changes that are at our doorstep. Following are just some of the disruptions that will transform the nature of innovation and breakthroughs in today’s organizations. Post Citizenship.. Today’s landscape of megacities, hyper mobility and digital economies is driving the move to ‘global citizenship’. As experts have noted, the adage that “geography is destiny” is giving way to the idea that “connectivity is destiny.” In this new world, nationality and citizenship no longer determine economic and social success. Digital Values. Traditionally, values have been created and passed along through families, communities and associations. However, the rise of the Internet is changing the way values are formed, disseminated and adopted, and the landscape of the digital environment is even fostering new ideals that may or…

Why is it important for every Western businessperson to be familiar with Alibaba’s business model? Alibaba’s business model provides key insights into the future of strategy. The sources of competitive advantage have shifted dramatically, and companies need a new strategic approach that fits into an era where networks and data dominate. For us, strategy is no longer about analysis and planning; it is a process of real-time experimentation and customer engagement. Going forward, a big challenge for leaders will be to delegate more and more work to machines — especially in routine operational decisions — so that people are freed up to become more creative and innovative. Is Alibaba China’s version of Amazon? Definitely not. Alibaba first grabbed global attention with the biggest-ever initial public offering on September 19, 2014,…

1. Customer Experience: Inspire additional purchases and advocacy 2. Customer Base Penetration: Sell more existing products to existing customers 3. Market Accelleration: Expand into new markets with existing products 4. Product Expansion: Sell new products to existing customers 5. Customer and Product Diversification: Sell new products to new customers 6. Optimize Sales: Streamline sales efforts to increase productivity 7. Churn (Minimize Defection): Retain more customers 8. Partnerships: Leverage third-party alliances, channels and ecosystems (sales, go-to-market) 9. Co-Opetition: Cooperate with a market or industry competitor (product development, IP sharing) 10. Unconventional Strategies: Disrupt current thinking about how to grow…

1. Know what you do know and what you do not know. Understand the limits of your knowledge. Recognize the preferences and biases inherent in your worldview that can affect your judgment about the results you expect. Resist predicting outcomes based on limited evidence. Gather all relevant information before you take action. 2. Take risks incrementally. When exploring a new venture, a new market or a new product, minimize risks by making a small initial investment and evaluating the idea at successive stages in the development process. Consider it an experiment. Build a prototype, test the market and collect information. Then decide if the idea is worth investing in further. 3. Beware of confirmation bias. Your extremely positive self-image may lead you to favour information that confirms your beliefs and…

IN THE FACE OF INDUSTRY DISRUPTION, business leaders often present themselves with a false choice: Should they cling to the stability of their legacy business and risk missing new opportunities? Or should they abandon the legacy model in a proactive dash for the new? Finding the right balance between these two extremes has become one of the central leadership challenges of our time. The companies that thrive amidst disruption are able to shift with speed and confidence into new markets and activities — constantly re-inventing themselves in an effort to make their business relevant to the future. However, in a recent Accenture survey of 1,440 C-level executives, we found that only six per cent of companies have embraced this challenge decisively. For the other 94 per cent, common factors that…

Recent progress in machine learning has significantly advanced the field of AI. Please describe the current environment and where you see it heading. In the past decade, artificial intelligence has advanced markedly. With advances in machine learning — particularly ‘deep learning’ and ‘reinforcement learning’ — AI has conquered image recognition, language translation and games such as Go. Of course, this raises the usual questions with regard to the impact of such technologies on human productivity. People want to know, will AI mostly substitute or complement humans in the workforce? In a recent paper, my colleagues and I present a simple model to address precisely what new advances in AI have generated in a technological sense, and we apply it to task production. In so doing, we are able to provide…

FOR THE PAST DECADE, my focus as a scholar and consultant has been on corporate innovation. In particular, I’ve been studying the effects of asking new questions in start-ups and established organizations. Twenty-five years ago, my very first conversation with Clayton Christensen — the Harvard professor who gained fame for his theory of disruptive innovation—focused on what causes people to ask the right questions. Our collaborations since—which include co-authoring The Innovator’s DNA — have only sharpened my appreciation for the critical role that questions play in breakthroughs. If you trace the origin of any creative breakthrough, it is possible to find the point where someone changed the question. Questions can do amazing things: Knock down the walls that have been constraining a problem-solver’s thinking; remove one or more of the…

In recent years, the automotive industry has been intensely discussing four disruptive and mutually reinforcing trends: autonomous driving, connectivity, electrification and shared mobility. These ‘ACES’ trends are expected to fuel growth within the market for mobility, change the rules of the sector, and lead to a shift from traditional to disruptive technologies and innovative business models. Artificial intelligence is a key technology for all four ACES trends. Autonomous driving, for example, relies inherently on AI because it is the only technology that enables the reliable, real-time recognition of objects around the vehicle. For the other three trends, AI creates numerous opportunities to reduce costs, improve operations and generate new revenue streams. For shared mobility services, AI can, for example, help to optimize pricing by predicting and matching supply and demand.…

IN A WORLD OF HUSTLE AND BUSTLE, switching back and forth between tasks has become the default lifestyle — and work style — for many. Bombarded with emails, phone calls and meetings, employees constantly shift their attention from one task to another. The propensity to ‘task-switch’ now emerges as early as adolescence: The average 7TH to 12TH grader estimates spending 60 per cent of the time they set aside for homework switching between homework and other activities such as email and instant messaging. Not surprisingly, the increasing prevalence of task switching has prompted research into its psychological consequences. To date, research has revealed that switching tasks increases our susceptibility to distraction, facilitates error-making, diminishes learning and heightens social anxiety. While these studies unveil some of the negative consequences of task…

GIVEN ITS COMBINED IMPACT on economic development and human health, few would argue that the healthcare sector is the most important industry in the world. Together, the annual economic impact of the hospital, healthcare professional, assisted living and commercial sectors totals multiple trillions of dollars, accounting for more than 10 per cent of global gross domestic product. In the U.S., Canada and other countries, the sector is the number one or number two employer, and it is marked by ongoing innovation: Seven of Fast Company’s top 25 innovators in 2018 — Apple, Amazon, CVS, AliveCor, Novartis, OneOme and Peloton — have active health or healthcare programs that, among many others, are helping to grow economies around the world. Looking beyond economic impact, healthcare in almost all countries has made amazing…

We expect the following behavioural design principles to become commonplace as human augmentation takes hold. 1. Designing for cognitive biases: Behavioural Economics will inform successful design for human augmentation technologies. Designers may need to include design elements that provide choice and user control, for example. Marketers could frame these designs by emphasizing what users lose by failing to adopt new technologies (leveraging the bias of loss aversion). Similarly, they could incorporate messaging on adoption rates by others in the community to encourage uptake (social norms). 2. Differentiating for social contexts: Since users endow anthropomorphic products with human-like attributes, these products exist in specific social contexts. Developers will need to design differently for each context. For instance, users might prefer that homecare robots assisting them with bathing be less lifelike than…

Adaptable Products. Algorithms cannot iterate without the products—the online consumer interface that delivers customer experience directly while gathering consumer feedback to adjust algorithm models. Google’s search bar is a classic example of product design. Customers enter keywords into a simple bar and then immediately see the product—the search result page. Google puts tremendous resources into designing this product so that customers can find what they want in less time and with less effort. Datafication and Live Data. The starting point for the smart system that underlies MYBanks microloans is capturing business problems in digital form. How should offline business activities be rendered into data? Beyond simple operations and sales metrics, which present numbers that are easily digitized, other valuable questions can be answered through the use of more indirect data…

How do you define social entrepreneurship? I like the definition given by Nobel Peace Prize winner Muhhamad Yunus, who founded Grameen Bank: Social entrepreneurship is a form of entrepreneurship that seeks to create organizations that serve a social purpose while still being able to cover costs from operations. However, this classic view of social entrepreneurship is limited, because it sees financial profit maximization and social profit maximization as opposites. My research builds a more nuanced view of social entrepreneurship — one where financial profit maximization and social profit maximization are not at odds. There are many opportunities to harness technology and operational innovations to enable organizations to pursue both, simultaneously. Many of these opportunities lie at the base of the pyramid — a term that denotes the poorest consumers in…

You have said that digital transformation is actually not about technology. Please explain. It’s really about change — and technology is just one aspect of that change. Before the internet, businesses operated primarily in a physical world of place, but today, all industries are shifting towards a world of digital space. Every organization must examine how it will move from place to space and engage its customers digitally. This will require new kinds of skills, resources and capabilities. In the end, the question is not, ‘What kind of technology do we need?’ but, ‘What makes our enterprise great, and how can we use digital to optimize that?’ You have found that digital disruption comes in three varieties. Please describe them. The first type of disruption happens when a new entrant—typically…

How do you define ‘rebel talent’? Rebels get a bad rap. We mostly think of them as contrarians — colleagues, friends and family members who complicate seemingly straightforward decisions and disagree when everyone else agrees. But rebels also change the world with their unconventional outlooks. In an environment that is demanding more and more innovation and reinvention, we can learn a lot from them. I spent over a decade studying rebels at organizations around the world, from high-end boutiques in Italy’s fashion capital, to the world’s best restaurant, to a thriving fast-food chain, to an award-winning computer animation studio. From an early age, we are taught to follow the rules, and the pressure to fit in only increases over time. But when we mindlessly accept norms rather than questioning and…

Autonomous Put simply, autonomy means that an AI construct doesn’t need help from people. Driverless cars illustrate the term in varying degrees. Level four autonomy represents a vehicle that doesn’t need a human inside of it to operate at full capacity. If we ever have a vehicle that can operate without a driver, and also doesn’t need to connect to any grid, server, GPS, or other external source in order to function, it will have reached level five autonomy. Anything beyond that would be called ‘sentient’, and despite the leaps that have been made in the field of AI, the singularity (an event representing an AI that becomes self-aware) is purely theoretical at this point. Algorithm The most important part of AI is the algorithm. These are math formulas and/or…

How do you define a ‘catalytic question’? Like a catalyst in a chemical process, some questions knock down barriers, open up new spaces and send energy down more productive pathways. In this case, though, the barriers are often mental ones — assumptions that have become outdated or mindsets that have framed a problem in a certain way. If your eyes widen a bit when a question comes at you, that’s a sign that it’s catalytic. Mine did, for example, when I heard about how Andreas Heineke founded Dialogue in the Dark, an amazing experience in which sighted people are plunged into darkness and led through complex settings by guides who are expert in helping them — because they are blind. People trying to place others with disabilities in jobs always…

VERY FEW COMPANIES excel at innovation and efficiency at the same time. Of the 2,500 public companies we recently analyzed, just two per cent consistently outperform their peers on both growth and profitability during good and bad times. These ‘2% companies’, as we call them, are able to renew themselves in large part by driving exploration and exploitation simultaneously. Being excellent at both exploration (the quest for new ideas and innovation) and exploitation (operational efficiency) is particularly challenging because these activities pull a company in different directions. They require different skills, different approaches to performance management, and an ability to drive success with different time perspectives. Each is also a potential trap in its own way: Pursuing too much innovation tempts companies to seek further change before they see the…

IN FEBRUARY 2011, IBM made a deep impression on the American public when its super-computer Watson beat human contestants in the popular game show Jeopardy! About 15 million viewers watched live as Watson triumphed over former champions Ken Jennings and Brad Rutter. It was an episode that made clear in the public mind that machine learning could go beyond the single-minded focus of number crunching. At the end of the two-day Jeopardy! tournament, Watson had amassed $77,147 in prize money — more than three times the amount its human opponents had accumulated. Jennings, who had won more than 50 straight matches previously, came in second, just ahead of Rutter. “Just as factory jobs were eliminated in the 20th century by new assembly-line robots, Brad and I were the first knowledge-industry…

In our work teaching innovation and entrepreneurship to students at the University of Sydney Business School and the California College of the Arts, we focus on four cognitive acts that comprise ‘design cognition’ — the type of thinking that fuels opportunity identification and formation. Understanding and embracing them can help to demystify the genius of the entrepreneur and bring more innovation to organizations. 1. Framing. In entrepreneurship as in design, every situation has a ‘problem frame’ and a ‘solution frame’. Each frame explains your point of view on the situation. For example, is the situation of single-passenger vehicles on congested freeways one of productivity or personal safety? Framing and re-framing aim to establish alternative ways of interpreting situations in accordance with differing perspectives on its various dimensions. In our experience,…

PARI AWAKENS IN LONDON to the smell of waffles hot from her kitchen’s 3D printer. Her virtual personal assistant, Martin, says good morning and mentions that it’s cold outside. He tells her that he’s purchased the sweater she’s been admiring and it has just been drone-delivered. After she gets dressed, her driverless taxi arrives. During the commute, she enjoys a virtual-reality (VR) call with her husband, who is travelling overseas. When Pari arrives at her shared office space, she is notified that three different companies have requisitioned the services of the freelance collective to which she belongs. One request originated in China and has already been translated. On her way home after work, Pari’s implanted microchip alerts Martin to a high cholesterol reading. Martin announces that he has booked an…

Super Consumers will communicate with markets, companies, governments and each other in a very different environment than exists today. • Voice will drive interactions. Super consumers will be largely liberated from keyboards, screens, taps and swipes. While text will still have a place, voice will be the predominant means of future interaction among consumers and companies, given that it is a natural and faster communication mode for human beings. • Machines will augment human decision-making. Virtual digital assistants will play multiple roles in people’s personal and professional lives as concierges, executive assistants, coaches and the like. Imbued with emotional awareness, these assistants will know their human owners profoundly as individuals and will make decisions on behalf of those they serve. • Access to technology will be ever-present. Enabled by an…

How would you define ‘Growth IQ’? Growth IQ is a holistic approach to finding the path to growth for an organization, based on three inputs: the market context, the right combination of elements and the sequencing of your actions. Your context includes current social and economic conditions, your existing product portfolio and the competitive landscape. The right combination is about selecting key actions and initiatives that — when done together — will positively influence outcomes; and sequencing is the act of assigning priority, order and timing to those actions. A company might try to duplicate the visible elements of a rival’s growth strategy, but it is rarely able to figure out the combination and sequencing that led it to succeed. You have identified 10 paths to growth — three of…

Tell us about your work at the Wharton School’s Neuroscience Initiative. Our lab tries to understand how the brain makes decisions and motivates behaviour. We use an array of techniques, including psychophysics, intracranial recordings, brain stimulation, pharmacology, eye tracking, pupillometry, brain imaging, genomics, and epigenomics to answer these questions. An important goal is to translate some of these techniques into wearable devices that will allow us to take neuroscience into both natural and consumer environments. We believe these new areas of exploration can be translated to improve business, drive new discoveries and applications, and enhance the education of future leaders at the nexus of business and brain science. Neuroscience research has provided some important insights about innovative thinking. Please explain. Over the past decade or so, we have discovered that…

THESE DAYS, if something is said to be ‘disruptive’, we assume that it is highly innovative and therefore good — although industry incumbents might disagree. But when it comes to an organization’s internal operations, disruption can be very bad, both for the business and for employees. Taiichi Ohno, one of the fathers of the Toyota production system, described three manufacturing ‘evils’ that every company should avoid: mura (unevenness), muri (overburden) and muda (waste). Not surprisingly, the three are interrelated: unevennness is often a cause of overburden, which leads to much of the waste that companies are so eager to eliminate. Unevenness in any aspect of a business — customer demand, process time, quality of raw materials, staffing, etc. — results in overburdening some resources at the expense of others, or…

1. Seek out the new. It’s important to break away from routine and find inspiration in unlikely places. For business leaders, this could mean introducing employees to things that aren’t obviously related to the organization. 2. Encourage constructive dissent. We often seek out the opinions most likely to match ours, but rebels fight that instinct, finding ways to encourage conflict and disagreement. 3. Open conversations, don’t close them. Rebels are willing to keep an open mind. 4. Reveal yourself – and reflect. Rebel leaders focus on their strengths, but are honest about their weaknesses and make an effort to be mindful of both. 5. Learn everything – then forget everything. Successful rebels understand the importance of mastering the fundamentals of their industry, but never become slaves to the rules. 6.…