Indholdsfortegnelse for Winter 2018 i Rotman Management

IN THE MODERN ECONOMY, there are two traditional drivers of production: increases in capital investment and labour. However, the decades-long ability of these drivers to propel economic progress in most developed countries is on the cusp of a massive change. With the recent convergence of a transformative set of technologies, economies are entering a new era in which artificial intelligence (AI) has the potential to overcome the physical limitations of capital and labour and open up new sources of value and growth. AI is, without question, the single most disruptive technology the world has experienced since the Industrial Revolution. In this article we will discuss some of the implications, challenges and opportunities of this new fact of economic life. A New Factor of Production For three decades, rates of gross…

The jobs people want to get done can be both functional and emotional in nature. Which should innovators focus on first? The first step is to design a product that satisfies one or more functional jobs in a superior way. But if you can also appeal to your customers’ emotional needs, you can create a breakthrough success. When Apple paid $3.2 billion to buy Beats Electronics in 2014, critics complained about the inferior quality of Beats’ headphones. But, despite competing against technically-superior products from Bose, Sennheiser and JBL, Beats earned a 40 per cent market share after just four years. Why? Because the company addresses emotional jobs. From the beginning, Beats focused on getting its product into as many music videos, locker rooms and runway shoots as possible, so that…

Glenda Crisp Senior Vice President and Chief Data Officer, TD Bank Group + Connie Bonello Associate Partner, Financial Services, IBM Canada IN MOST OF TODAY’S ORGANIZATIONS, data underpins every transaction, operation and interaction. And yet, the ability to extract its value and convert it into actionable business insights remains elusive to many. Based on our experience, the management, care, protection — in short, the governance of data — forms the foundation that enables powerful data-driven insights to emerge. Data governance addresses some fundamental questions: Where is our information? What data is critical? How can we get at it when we need it, in the form we need it in? Can we trust it? And, How do we manage it? Four years ago, the emerging consensus within TD Bank Group was…

Early in my career, when I was working at Trilogy Software, one of my fellow managers was never at his desk. When I did see him, he seemed to be doing really random things — talking to one person, going for coffee with another, or just standing around looking at people. And yet, his teams performed excellently. I wondered if luck had bestowed upon him a pack of A-players — enabling him to get by doing nothing as a manager. For a while, I believed he was hopeless; but then I discovered something powerful: This individual spent all of his time helping people. Those ostensibly random activities I had noted were his way of unblocking his team and paving their way to success. I soon changed my own behaviour and…

HARDLY A DAY GOES BY WITHOUT the announcement of a promising new frontier for Artificial Intelligence (AI). From fintech to edtech, what was once fantastically improbable is becoming a commercial reality. At the same time, corporate investments in Big Data and the dividends they yield in terms of consumer insights are trumpeted on a daily basis. Oddly, we don’t hear much about the demand created by this rising ‘supply’: In a world of Big Data and AI, the demand for sound and distributed judgment is increasing. ‘Qualitative judgment’ — the ability to make a decision based on a personal interpretation of the context and available facts — has never been more important. In this article I will exlain why judgment has become so important, and how to go about enabling…

There are two widely-recognized routes to innovation: incremental improvement and revolutionary disruption. Describe what you call ‘The Third Way’. These two traditional types of innovation are still really important: We should always be thinking about how to improve our products and services for current customers; and we should also be thinking about the big disruptive forces in our industry and society, and how to embrace them. But innovation leaders need a more complete tool box than just a hammer and a screwdriver. As I looked around, I noticed some companies doing things that didn’t fall neatly under either incremental or radical innovation. This was a different approach, whereby you surround your product with complementary innovations that make the core product even more valuable. If your core product is no longer…

THE HUMAN MIND is highly adaptive, constantly adjusting itself to situational demands. Situations that tap into our motives are particularly effective at getting the mind going. For example, if your selfesteem or moral standing is threatened, a host of mental mechanisms kick in to defend your sense of competence and integrity. A growing body of research examines the surprising power of subtle physical states to shift the mental processes underlying our ‘motivated cognition’. Motivated cognition refers to the influence of our motives on various types of thought processes, such as memory, information processing, reasoning, judgment and decision making — all of which have significant effects on people in the workplace. In this article I will summarize four themes from my recent research in an effort to help leaders understand that…

You believe that the world of leadership has hit an inflection point. How so? As useful as popular mental models and heuristics are, machine models now outstrip human performance in about half of the portfolio of cognitive tasks. Going forward, we will be able to beat machine models less and less often — except in the realms of imagination, creativity, problem-solving and some kinds of reasoning. Enter the ‘mathematical corporation’. How do you define this new type of organization? In the past couple of years, there have been major advances in machine learning, bringing massive new potential across industries. The mathematical corporation is a term that describes how organizations will need to operate in the future, to embrace these advances. Simply put, machine intelligence — built on data science —…

Highlights of Winter 2018 January 19, 8:00-9:00am Speaker: Daniel Pink, Author Topic:When: The Scientific Secrets of Perfect Timing (Riverhead, Jan. 9, 2018) January 31, 12:00-1:00pm Speaker: Adam Grant, Steinberg Professor of Management & Professor of Psychology, Wharton; Fellow, Martin Prosperity Institute at Rotman; Author Topic: Option B: Facing Adversity, Building Resilience, and Finding Joy (with Sheryl Sandberg, Knopf, 2017) February 6, 5:00-6:00pm Speaker: Gretchen Rubin, Author Topic: The Four Tendencies: The Indispensable Personality Profiles That Reveal How to Make Your Life Better (Harmony, 2017) February 14, 8:00-9:00am Speaker: Edward Luce, Chief U.S. Commentator & Columnist, Financial Times; Author Topic: The Retreat of Western Liberalism (Atlantic Monthly Press, 2017) February 26, 8:00-9:00am Speaker: Cass Sunstein, University Professor, Harvard; Author Topic: #Republic: Divided Democracy in the Age of Social Media (Princeton, 2017) February 28, 5;30-6:30pm Speaker:Daniel Coyle,…

IN THE FIELD OF MANAGEMENT, the term ‘moonshot’ has emerged to describe a breakthrough goal on a five-to ten-year horizon into the future. The idea is that a moonshot represents a goal so compelling that it motivates virtually all stakeholders to strive toward its achievement — despite the difficulty and complexity of the path to success. In Silicon Valley, the term is reserved for only the most important innovations: The microprocessor was a moonshot, as was the first personal computer (the Apple II), the World Wide Web and Apple’s iPhone. Google has famously invested more than $800 million in moonshots like autonomous vehicles, creating tens of billions of dollars of market value for the company. The question is: Can an established organization that has been successful in a legacy business…

We hear so much about artificial intelligence (AI) these days, but many leaders are at different levels in terms of understanding what it means for business. What do they need to know? MICHAEL ZERBS: First of all, I want to be clear about something: AI is already here. You are using AI whenever you type a message on your iPhone and a word gets auto-completed; whenever you type a word into a search engine and it magically completes itself; and whenever you use Google Translate. These are all AI applications, and they share two key characteristics. In each case, it’s about a machine/agent perceiving its environment. If it were a real, natural intelligence such as you perceiving the environment, that would entail using your eyes and ears; but because it’s…

IN THE LEGO MOVIE, there is a joke that always makes Jørgen Vig Knudstorp laugh. The hero of the movie, a mini-figure named Emmett, is admiring Batman’s awesome plane. “Could you make one of these in orange?” Emmett asks. “I only work in black,” Batman growls back. “And sometimes, very, very dark grey.” Given Batman’s well-known penchant for all things dark, it’s a funny line to comic book fans. But for Knudstorp, the lanky, bearded, bespectacled CEO of the LEGO Group, it’s funny for a whole other reason. “When I became CEO, I was this young, former McKinsey consultant — you know, Mr. Business,” Knudstorp says. He was the first outsider, and the first person outside the family, to run the Danish toy company in its 80-year history. His daunting…

When you joined the Estée Lauder Companies, its market cap was $6 billion; today, it is $35 billion. How did you accomplish this feat? First of all, it was a team effort. When I arrived in 2009, William Lauder said to me, “Don’t give me any solutions right away; just listen, understand — and then create.” The fact is, he set me up for success. He designed this corporation so that each of our brands is run independently, with each brand president responsible for his or her brand, P&L and strategy. We don’t have a central CMO making decisions for multiple brands, and in my view, that kind of focus provides a competitive advantage. Prestige beauty — and our company, in particular — is closely connected to fashion and the…

WHY ARE SOME FIRMS SO ADEPT at anticipating and exploiting the opportunities created by technology and rapid change, while others struggle to keep up — or worse, go out of business? We believe the answer is linked to the concept of ‘dynamic capabilities’. Developed by Haas School of Business Professor David Teece and his colleagues, this framework shows that three dynamic capabilities — sensing, seizing and transforming — enable firms to sense opportunities sooner than their rivals, seize them more effectively, and support the organizational transformation that this entails. In this article, we will describe how we have advanced Dynamic Capabilities Theory by adding sub-capabilities to the framework. We will also show how leaders can make smart choices about which capabilities to develop in order to thrive in an era…

Anyone who knows the story of Apple knows that it was built on insights rather than analytics. Steve Jobs was actually highly resistant to quantitative research. When Jobs returned to Apple in 1997, it was a mess. In his absence, the emphasis had been on developing more and more products. Apple was even selling printers in partnership with Hewlett Packard — and making next-to-no money on them. Resistant to quantitative research, Jobs used his judgment to quickly cut the numbers of models and products. He then drew a simple two-by-two diagram and told his colleagues that Apple needed to have one product in each quadrant. As indicated by the Apple story, the capability to generate and apply insights and qualitative judgments to innovation is a key competitive advantage — or…

“AND THE WINNER IS…” said Warren Beatty as he handed the envelope to Faye Dunaway, “La La Land!” It was a moment that would define the Academy Awards ceremony in 2017, because the winner of the Best Picture award was not La La Land, but the breakthrough movie Moonlight. Instead of celebrating the achievement of an African American-centred film about discrimination along multiple dimensions, the Oscars had become a farce. The scene was like a nightmare sequence, specifically for one firm: PricewaterhouseCoopers. For decades, its accountants had been charged with keeping the list of Oscar winners safe and secret, to be revealed at precisely the right moment. Every year, the two accountants given this important task were shown on television, purposely nerdy, purposely boring. Their job was to remain boring.…

You have closely studied the companies you call ‘The Four’—Google, Apple, Facebook and Amazon. Which do you predict will become the world’s first trillion-dollar company? Most people would put their money on Apple, because it’s the closest to that valuation at the moment, but I actually think it’s going to be Amazon. To date, The Four have mostly gone after befuddled prey within their respective sectors; but over the last 24 months, they’ve started to encroach on each other’s territory. And, in every instance where there has been an overlap of competition, Amazon has beat the others. Take the case of search. Some people describe Amazon as ‘a search engine with a warehouse attached to it’. So, despite the fact that it is Google’s largest customer, it also competes with…

What is ‘Frugal Innovation’, and why did you decide to write a book about it? My co-author, Jaideep Prabhu, and I wrote a previous book in 2012, called Jugaad Innovation, based on the quick and flexible innovation we were seeing in emerging markets like India, Africa and China. These are places where people have big problems but very limited resources, and that combination leads to improvisation and frugality that generate ultraaffordable solutions. For example, $1,500 heart surgery, a $2,000 car, a $200 home solar system and a $100 schoolin- a-box. Jugaad is a Hindi word meaning, ‘the ability to improvise a clever solution’ in adverse conditions. It’s basically the ‘MacGyver spirit.’ Our research indicated that this clever ability to do more with less was also highly relevant in the West.…

ASK ANY LEADER TODAY, and they will tell you that innovation is a top priority for their enterprise. In the words of Cisco’s John Chambers: “Disrupt yourself, or be disrupted.” To quote from PwC’s 2017 CEO Survey report, innovation is the most direct path to keeping an organization’s offerings fresh and disrupting the status quo. And as that report notes, innovation thrives when exploration is stimulated, rather than suppressed. Enter Design Thinking — today’s popular route to exploring new humancentered offerings. The concept of Design Thinking is not new — and it wasn’t invented by design firms. Pioneers like Herbert Simon, Robert McKim and Brian Lawson explored this topic as early as 1969. In the last two decades, Design Thinking has been resurgent, popularized by thought leaders like [former Rotman…

Describe what happens at the Creative Destruction Lab (CDL). The CDL is a seed-stage program for massively scalable sciencebased companies. Some start-ups come from the University of Toronto community, but we now also receive applications from Europe, the U.S. (including Silicon Valley), Israel and Asia. We launched the program in September 2012, and each autumn since, we’ve admitted a new cohort of start-ups into the program. Most companies that we admit have developed a working prototype or proof of concept. The most common type of founder is a recently graduated PhD in Engineering or Computer Science who has spent several years working on a problem and has invented something at the frontier of their field. The program does not guarantee financing, but the majority of companies that succeed raise capital…

ANYTIME A START-UP RAISES A LOT OF CAPITAL or an interesting product takes off, the Internet is abuzz with how that company or product is disrupting its industry. But as Clayton Christensen — the Harvard Business School professor who coined the term ‘disruptive innovation’ — has explained, the term ‘disruption’ is often misunderstood and misused. It’s about more than just someone shaking up an industry. While it might seem trivial to argue the theory’s precise definition, being able to spot the true markers of disruption enables companies to proactively capitalize on potentially game-changing areas of opportunity. With that in mind, it’s important to recognize that being able to spot opportunity is only part of the battle. To take advantage of these openings, companies need to design solutions that satisfy real…

DIGITAL TRANSFORMATION IS A HUGE BUZZWORD these days — but the fact is, it’s not a new topic. More than 30 years ago, Harvard Business School Professor Michael Porter wrote about how information technology (IT) would transform competitive advantage. Professor Porter saw what was happening with the democratization of IT, and predicted that this new ‘IT layer’ of every organization would transform business, enabling information flow to scale in ways that were not possible before. Professor Porter was right: Thanks to technology, today’s companies can reach around the globe to find customers in new markets, and IT has become the ‘binding glue’ underpinning all sorts of traditional-style industrial growth. However, when we talk about digital transformation today, there is much more to the story. Today, we have Amazon, the biggest…

THE NEWS IS BOTH DISCOURAGING AND ENCOURAGING for today’s would-be entrepreneurs. First the bad news: Nine out of 10 start-ups fail. But, on the really bright side, as technology continues to evolve, virtually everything is open to better ways of doing things. As a result, PayPal co-founder Peter Thiel advises would-be entrepreneurs to ask a simple but powerful question: What valuable company is nobody building? Of course, answering that question requires a lot of hard work. Just ask Daniel Debow (Rotman JD/MBA ’00). Back in 2007, Debow was at the office sorting through his mail when he saw an invitation to yet another high-tech conference. Instead of tossing it in his circular file, he took the time to read the details: MESH (‘Canada’s Web Conference’) was to be held in…

IN 2013, THE GENERAL MANAGER OF L’HÔTEL QUÉBEC filed a lawsuit against a guest who had posted a review on TripAdvisor, stating that he had encountered bedbugs while staying there. The hotel did not dispute that there were bedbugs, but argued that the incident was a one-off and claimed $95,000 for reputation damage and lost profits. Concerned about the reputational damage caused by negative reviews, a group of hoteliers in the UK discussed bringing legal action against TripAdvisor for what they regarded as unfair and incorrect reviews. Service providers often suspect that such reviews have been written by rivals or disgruntled ex-employees. Indeed, an executive with the France-based hotel chain Accor admitted to posting five-star reviews for Accor properties and negative reviews about rival hotels. The reputational stakes are enormous…

You have said that, at its best, design creates relationships between people and technologies. Please explain. When I use the term ‘technologies’, I mean anything that is constructed by human beings — whether it’s an iPod, an automobile, a rapid transit system, or an organization’s methods of communication. Herbert Simon said that whenever we shape the world to meet our needs, we are designing. For better or worse, we also shape nature to meet our needs. In each case, by better understanding the needs of those you are trying to serve — and expressing those needs in the form of insights that you develop and prototype — you can end up with new and powerful choices. The issue is, we don’t always get to the shaping part as early as…

What does it mean for a business to exist in the age of Uber? In essence, it means that change can come from anywhere, that it is often technology-driven, and that it often necessitates a new business model. This is what we are seeing, over and over again. The good news is, because change can come from anywhere, it can also come from you — from your colleagues, your organization or your network. As a result, each of us can ‘own’ this age of disruption — as much as anyone who tries to disrupt us. You have said that a version of Moore’s Law will soon apply to the speed of change in the global business environment. Please explain. For those who don’t know, Gordon Moore was one of the…

MANY DAY-TO-DAY workplace activities are characterized by ‘hierarchical structure’. For example, the lean-manufacturing system categorizes all components involved into clearly-defined categories, so that workers can easily distinguish between items and use the correct components on manufacturing lines. In many cases, information is also highly structured in the workplace. Since employees are clustered around jobs and roles, both explicit information (as compiled in a job manual) and implicit information (which is implied or understood by the worker) are categorized by job function. Without disputing the recognized benefits of hierarchical structure, I recently conducted research with Rotman PhD Candidate Yeun Joon Kim to determine if such structure might also come with a high cost: reduced creativity. For our work, we defined creativity as ‘combinations of information that are both novel and useful’.…

You head up the Ontario Securities Commission’s new Office of the Whistleblower. What is its mission? The program is primarily an investor protection policy aimed at serious securities misconduct. This misconduct can be difficult to detect without the assistance of a knowledgeable whistleblower. The earlier we know about misconduct, the more protective orders we can issue, the greater our ability to minimize harm to investors and, therefore, the stronger the deterrent message. We did extensive research on programs in Canada and around the world, including the Securities and Exchange Commission’s (SEC) program in the U.S. We then designed a program specific to Ontario’s needs that not only offers excellent incentives for whistleblowers to come forward and report misconduct, but also offers important protective measures for them. A recent SEC study…

AN UNPRECEDENTED — and massively overdue — wave of innovation in the higher education industry is about to be unleashed, and it will bring unprecedented disruption to the field. The waves of digitalization of content, connectivity and interactions that have disrupted the media, retail, travel, entertainment, publishing, manufacturing and financial industries are about to strike the higher education industry, presenting a massive opportunity for the redesign of a field whose practices have remained unchanged since the early 1000s. This is not a typo: Early Renaissance paintings depicting classrooms and historical accounts of learning practices both indicate that the basic choreography of content, context, learner-teacher interactions, and structured drilling and quizzing as a prerequisite to certification have not changed for more than 1,000 years. The lecture-problemsrecitation- exam format — canonized by…