Indholdsfortegnelse for Fall 2012 i Rotman Management

THE FALLOUT FROM THE GLOBAL FINANCIAL CRISIS is but one of the challenges facing today’s leaders. Through a combination of misaligned priorities, allegiance to worn-out models – and plain old-fashioned greed – an environment has been created where many people expect the worst from leaders – and too often, they get it. The result: trust in institutions and the people who lead them is at an all-time low. In the 2012 Edelman Trust Barometer, the general public’s trust in business fell to its lowest level ever: 47 per cent globally. The least-trusted industries? Financial services, followed closely by banks. Not surprisingly, the situation is much worse in the U.S.: the 2012 Chicago Booth/Kellogg Financial Trust Index found that only 23 per cent of Americans trust their financial system. Clearly, business…

THE TITLE OF FORMER U.S. TREASURY SECRETARY Henry Paulson’s book On the Brink puts it rather succinctly: between 2007 and 2009, the global economy really did nearly collapse. What has become known as the global financial crisis (GFC) is the worst such crisis since the Great Depression. The International Monetary Fund (IMF) estimates that it destroyed US$4.1 trillion worth of wealth worldwide: hundreds of firms – from titans of Wall Street to small family businesses dependent on suddenly cash-starved customers – were wiped out. Thousands lost their jobs, pensions, savings and homes. Not surprisingly, the GFC profoundly shook society’s trust in financial institutions – a major issue that must be dealt with if they are to thrive going forward. As Lloyd Blankfein, CEO of Goldman Sachs, said while testifying in…

WEALTHY PEOPLE DON’T JUST HAVE BETTER TOYS; they have better nutrition and better medical care, more free time and more meaningful labour – more of just about every ingredient in the recipe for a happy life. And yet research consistently shows that they aren’t much happier than those who have less. If money can buy happiness, then why doesn’t it? We believe it is because people don’t spend it right. Most people don’t know the basic scientific facts about happiness – what brings it and what sustains it, so they don’t know how to use their money to acquire it. As a result, money is an opportunity for happiness that is routinely squandered, because the things people think will make them happy often don’t. In this article we will provide…

ACADEMICS AND PRACTITIONERS alike have written extensively on the nature of innovation in recent years. While traditional approaches have focussed on harnessing creativity by loosening constraints and reducing the costs of failure, recently there has been a focus on what is called ‘frugal innovation’. This style of innovation – which is popular in India and other countries in the global south – is characterized by solutions that are low-cost, robust, easy to use, efficient and targeted at large populations. Solutions based on frugal innovation often address challenges faced by citizens of emerging economies, including chronic poverty, climate change, energy dependency, and eroding health and welfare. Growing global awareness of these challenges and the creative deployment of resources aimed at resolving them have contributed to a new transnational development agenda for…

IT IS LATE AND IT IS COLD. I am bone-weary after traveling 24 hours by car, plane, and finally train; all I want to do now is go to bed. But I didn’t come all the way to rural southwest France to sleep. Suddenly, someone yells my name in gravel-accented English. “Ee-la-ree, Ee-la-ree, come! Ze truck has arrived!” It is at once an order and an invitation. What else can I do? I am off into a damp and moonless night. The pigs had gone to the abattoir two days earlier; tonight, hundreds of pounds of bristling vitality return as neatly halved carcasses. Huge and intimidating, each carcass is far heavier and taller than I. The pigs are unloaded, one by one, bridged across the shoulders of two men dressed…

THERE IS NO DOUBT that capitalism is under serious pressure at the moment. The good news is that we capitalists can respond well to a bit of pressure, and now is the time to re–imagine what this system can do. There is a growing craving for somebody, somewhere, to focus on public goods. There is a certain loss of confidence in the state to protect public goods – particularly those that sit beyond national borders. Climate change is perhaps the ultimate example of this, but there are many others that are also tremendously complex, such as the collapse of fisheries and the depletion of other resources that support the economic system upon which we depend. As I think about my own experience in building enterprises to deal with some of…

IF WE’VE LEARNED ANYTHING over the past decade, it’s that the complexity of our times requires a new form of leadership at board, executive, and public policy tables. Because 21st-century challenges defy straightforward analysis and predictable solutions, they also defy the idea of leaders as ‘all-knowing decision-makers’. Successfully tackling these challenges requires the kind of thinking that emerges only from high-quality discussion. The problem is, high-quality discussion does not come naturally to people, and conversations that address complexity are not self-generating. Today’s leaders, therefore, need to be competent – if not expert – in the fine art of facilitating productive discussions. Too often, leaders default to consensus as an indicator of good decisions and to ending meetings on-time as an indicator of efficiency. But premature consensus and being ahead of…

IN BOTH THE POPULAR PRESS and the academic literature, emotional intelligence (‘EI’) has been overwhelmingly classified as a positive entity. In his best-selling book on the topic, Daniel Goleman proclaimed that “there is an old-fashioned word for the body of skills that emotional intelligence represents: character – the psychological muscle that moral conduct requires.” In this vein, scholars have explored links between EI and ‘pro-social’ behaviour, which is defined as actions that benefit others and enhance their welfare. What they have found is that individuals who score high on measures of EI criticize others less and act less aggressively relative to those with lower scores. In other studies, individuals skilled at recognizing and labeling emotions were found to be more cooperative, and individuals skilled at regulating or controlling emotion helped…

Fall 2012 A New Era Begins for Rotman Students A NEW ERA FOR THE ROTMAN SCHOOL HAS BEGUN: on May 7th, Associate Professor of Strategy Sarah Kaplan was the first member of the Rotman faculty to teach a class in the School’s new state-of-the-art building. The official grand opening celebration was held on September 5. “Our new classrooms are state of the art, but the biggest difference is all the other facilities that are available for our students", says Prof. Kaplan. These include 72 break-out rooms, each equipped with video and computer screens, video editing facilities, and a television studio. "The tools they have at their fingertips are amazing, and I can’t wait to see what they do with them.” Prof. Kaplan holds a PhD in Management from MIT’s Sloan…

WHILE UNCERTAINTY IS RAMPANT in today’s economy, one thing is clear: public policy to increase innovation is generally not working. Governments and companies across the developed world obsess about spurring innovation, lavishing time, attention and money on developing and implementing innovation policy. Their overwhelming fear is that rapidly-developing economies will copy anything they can and produce it at a much more attractive cost. As a result, the only way forward is to continually innovate. Yet these well-intentioned efforts have produced little in the way of productivity gains. A major part of the problem is that most governments and companies have designed strategies and policies to boost invention, not innovation. These are two different entities, and public policy must recognize this distinction if it is to foster the innovation we need…

IN THE LATE SPRING OF 1905, an utterly frustrated 26-year old Albert Einstein decided to pour his heart out to his friend and fellow Swiss Patent Office worker, Michele Besso. Einstein revealed the puzzle he had been wrestling with for the last decade: either James Maxwell or Isaac Newton had to be wrong – but he couldn’t figure out which was the case. Both were pillars of modern Physics, but in his mind they were completely incompatible. Einstein laid out the issue to Besso: the intricacies of Maxwell’s theory about light travelling at a constant speed contradicted Newton’s concept of absolute space and time. He talked for hours, until he once again surrendered to the problem – completely exhausted, both mentally and physically – whereupon he announced his defeat and…

While we agree with Professor Dunn et al that correcting how we spend our money can lead us closer to the Holy Grail of happiness, we also believe that we might get even further along the path by considering our other principle resource: time. Following are five principles for happiness-maximizing ways to spend your time. 1. Spend your time with the right people. There is a clear relationship between happiness and the amount of satisfaction a person derives from a leisure experience, and social leisure activities contribute more to happiness than solitary ones. Furthermore, people who frequently engage in social activities experience higher levels of happiness than those who do so less often, and being with others typically improves the quality of an experience, whereas being alone makes most people…

WHEN ROSARIA WALKED THROUGH the doors of IDEO’s Palo Alto studio on her lunch break, she was juggling several ‘smart’ devices. A 20-something paralegal with multiple family commitments, she depended on these devices to manage a slew of daily commitments as efficiently as she could. When we met her, Rosario was also running a small event-planning business on the side and scheduling appointments for her sister, her husband and other family members. While she used her work computer just for work, she used emerging technology to stay connected throughout the day and was always on the lookout for the next device that could help her stay on top of business and family commitments. Was socially-connected, hyper-efficient Rosaria an ‘outlier’ – was she unique among early adopters of new mobile technology?…

LIFE HAS SEEMED EFFORTLESS IN OUR TIMES for one simple reason: we have been mindlessly spending our natural endowment as if we’d won the lottery. Since 1960, both global consumption and metals production have grown six-fold; oil consumption, eightfold. Meanwhile, human population and water consumption have doubled. In 2008 alone, global consumers bought 69 million vehicles, 85 million refrigerators, 297 million computers, and 1.2 billion mobile cell phones. How can this excessive economic paradigm possibly survive in an age of dwindling resources? Renowned physicist and systems thinker Donella Meadows believed that sweeping change always involves the scrapping of one paradigm and putting another paradigm into service. “In a single individual, this can happen in a millisecond,” she wrote. “All it takes is a click in the mind, a new way…

In The Wide Lens, you write that innovation is a problem for everyone because it is held up as the solution to everything. Why is there so much hype about innovation and why does it so rarely live up to expectations? I’m not sure how much is explicit hype as opposed to just hope. Innovation basically means, ‘we’ll do something different and things will improve.’ But the problem is that those are two different statements. Doing something different doesn’t necessarily mean that the effect will be better. What we know is that to do anything different takes a lot of work; and even so, hard work doesn’t guarantee success. Oftentimes you think you have a great idea and you start investing in bringing that change about only to find that,…

Self-control of one form or another is a challenge for most people. Describe the basics of this age-old conflict. Self-control dilemmas typically involve trying to resist something that is immediately tempting, but that we know is not good for us in the long-term. For example, say you need to lose some weight, but you really feel like eating that piece of chocolate cake on the buffet: you are fully aware that doing so conflicts with your long-term goal and that you should restrain yourself; but will you? Self-control dilemmas also arise in situations where we have to undergo immediate pain or discomfort to achieve a long-term benefit. For instance, everyone knows we should be saving our money for the future, yet we still go shopping, and despite our best intentions…

ON JANUARY 9, 2007 THE WORLD woke up to a memorable headline: ‘Apple Reinvents the Phone with iPhone 1.’ In a battery of announcements, Steve Jobs introduced a new device that combined three products – a mobile phone, a widescreen iPod with touch controls, and a breakthrough Internet communications device with desktop-class e-mail, Web browsing, searching and maps—into one small and lightweight handheld device. This was both a software and a hardware feat, and announced a new era in the interaction between user and display based devices. “iPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone,” said Jobs. “We are all born with the ultimate pointing device—our fingers—and iPhone uses them to create the most revolutionary user interface since the mouse.”…

Complete details are available at rotman.utoronto.ca/events September 6, 5:00-6:00pm, Toronto Social Media Experts Speaker Series @ Rotman 2 Debaters: Andrew Keen, Internet Entrepreneur; Host of “Keen On”; CNN Columnist; Author, Digital Vertigo: How Today’s Social Revolution Is Dividing, Diminishing and Disorienting Us (St. Martin’s, May 2012) and Cult of the Amateur Don Tapscott, Chairman, Moxie Insight; Adjunct Professor, Rotman; Author of 14 book including Macrowikinnomics: Rebooting Business and the World (Portfolio, 2010) Moderator: Matt Galloway, Host – Metro Morning, CBC Radio 1 Toronto Topic: The Effects of Today’s Online Social Revolution September 10, 5:00-6:15pm, Toronto Strategy Experts Speaker Series @ Rotman 2 Speakers: Chris Zook, Partner and Co-Head – Strategy Practice, Bain & Company; Author, Repeatability: Build Enduring Businesses for a World of Constant Change (HBR Press, Mach 2012), Profit…

You have said that an ‘enormous vacuum’ exists in leadership today. Please explain. I refer to the last 10 years as ‘leadership’s lost decade’. It all started with Enron and Worldcom, two of the first large companies to have, shall we say, ‘ethical lapses’; then we hit the crisis of 2008, where countless leaders seemingly put their heads down and focused on personal gain, not bothering to think about the bigger picture. As a result of all this, public trust in business is at its lowest level in 50 years; and in business, trust is everything. I think a lot of the bad behaviour emerged from having the wrong definition of leadership – an image of the all-powerful leader at the top of an organization, and a top-down, hierarchical approach.…

THE MEDIA IS FILLED WITH TALES TALES of all the bad things that happen – criminal acts, disasters both man-made and natural, wrongdoing by government officials and businesses. The assumption seems to be that tragedy attracts more interest than good news, and perhaps even more so when the world around us is marked by uncertainty. Indeed, the global financial crisis seems to have made this tendency to dwell on unpleasant happenings even more pronounced. As seemingly-invincible companies folded and government bailouts became necessary, the focus on disaster seemed never-ending. Unfortunately, this focus on unpleasantness has not abated, even as signs of a revival have emerged. What has been ignored is that, while most companies are still feeling the pain of the global financial crisis, another view of the world of…

WHEN YOU CONSIDER THE BASE RATES, the very act of starting a business seems like an irrationally risky thing to do for an expected ‘value maximizer’. Sixty-five per cent of seed-round startups in North America never make it to the next level of funding; just 12 per cent end up successfully delivering a product or service; and only five per cent end up with some kind of ‘liquidity event’ – venture capital speak for selling the equity of the founding shareholders to a third party – and that includes ‘fire-sales’ in which most of the value of the initial investment is lost, which make up the bulk of that five per cent. Less than 0.01 per cent end up in an IPO – the marquee ‘exit’ in the entrepreneurial field,…

FOR ALL THE BENEFITS of the information technology and communications revolution, it has a well-known dark side: information overload and its close cousin, attention fragmentation. These scourges hit senior executives particularly hard because they so badly need uninterrupted time to synthesize information from many different sources, reflect on its implications for the organization, apply judgment, make tradeoffs, and arrive at good decisions. The importance of reserving chunks of time for refection – and the difficulty of doing so – have been themes in management writing for decades. Look no further than Peter Drucker’s 1967 classic, The Effective Executive, which emphasized that “most of the tasks of the executive require, for minimum effectiveness, a fairly large quantum of time.” Drucker’s solutions for fragmented executives – reserve large blocks of time on…

You recently said that “There are no longer any great jobs where someone tells you precisely what to do.” What are the implications for today’s workers? The fact is that today, any type of work that can be done ‘by the book’ can easily be moved to someone who will do it for less. And companies have to find ways to do this, because the competition is doing the same thing – there is this ‘race to the bottom’ going on. What this means to the modern worker is one of two things: either you need to accept the fact that you are part of the race to the bottom – which isn’t good, because you just might win; or you need to do work that cannot be written down…

Technology and information overload have led to a ‘distraction epidemic’ that rivals the obesity epidemic in its pervasiveness. Please describe the situation. Most of us are chronically over-scheduled, surrounded by stimuli and highly reactive to our many devices – all of which overwhelms the ‘radar’ in our brains that detects and sorts all of these inputs. The prefrontal cortex – the front of the brain – is in charge of managing incoming stimuli and dealing with distractions, keeping us ‘on task’ and making good choices. It is described as ‘the CEO’ of the brain – the domain responsible for ‘executive function’. When the prefrontal cortex is overloaded, it is very difficult to remain calm and to focus on the task at hand. As a result, many of us are struggling…

AS JOHN KOTTER NOTED IN 1995 – and countless studies have since confirmed – roughly three-quarters of change efforts fail. Why the abysmal record? Because all too often, leaders execute the plan, but ignore the people. Senior leaders may be committed to the change, but the rest of the organization is often ‘compliant’, at best. The more strongly change efforts are imposed from above, the faster individual disengagement and organizational inertia drain away implementation energy. The good news is, there is a better way. The key to successful implementation of structural change lies in taking a collaborative approach to organization design. This means directly involving the people most affected by the change – inviting them into the process and giving them a meaningful role in crafting the solution. Involvement leads…

ALMOST 70 PER CENT OF THE WORLD now uses mobile phones; everywhere you turn, someone is using one to talk, text or send photos. The explosive growth in the use of these devices has resulted in an exponential increase in opportunities for social interaction, creating chances to establish and develop personal relationships with friends and strangers alike. One might expect that increased opportunities to connect via mobile technology would result in a corresponding increase in concern for others. Anecdotal evidence of such a phenomenon is evident in the positive response to recent donation campaigns to aid disaster victims in Japan and Haiti, whereby donations were solicited and accepted via mobile phones. The possibility of increased concern for others, in the context of a more interconnected society suggests important benefits for…