Creating a Culture How to Win Fixing Tech’s LEADERSHIP LESSONS FROM

of Innovation in the 2020s Gender Gap GOOGLE, FACEBOOK, TELUS

PAGES 6, 40, 46 PAGE 16 PAGE 54 & MORE PAGES 34, 88, 112

MANAGEMENT
The Magazine of the Rotman School of Management
UNIVERSITY OF TORONTO
FALL 2019
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FALL 2019: SECRETS OF THE BEST LEADERS

Reshma Saujani, pictured at right, is leading the movement to inspire, educate and equip young women with
the computing skills to pursue 21st-century opportunities. After beginning her career as an attorney and activist,
she founded Girls Who Code, a non-profit organization working to close the gender gap in technology and change
the image of what a programmer looks like. Her approach is proving powerful: Girls Who Code alumni are choosing
to major in Computer Science or related fields at a rate 15 times the national U.S. average.

Features

6 16 22
Does Innovation Cause Winning the 20s: A Leadership Management: So Much
Inequality? Agenda for the Next Decade More Than a Science
by Joshua Gans and Andrew Leigh by Richard Lesser, Martin Reeves , by Roger Martin and Tony Golsby-Smith
It turns out, new technology can Ryoji Kimura and Kevin Whitake Is it right to equate intellectual rigour
worsen inequality. The challenge What will it take to win in the 2020s? with data analysis? If the answer is
for leaders is to ensure that the fruits Amongst other things, a dedication to no, then how should managers arrive
of growth are available to all. creating both financial and social value. at their decisions?
 28 40 46
Dare to Lead: Brave Work. Tough Sensing From Within: Equality=Innovation:
Conversations. Whole Hearts. The Insight-Driven Organization How to Create a Culture
by Brené Brown by Alessandro Di Fiore That Drives Innovation
When we dare to lead, we don’t pretend The best way to detect, define by Ellyn J. Shook and Julie Sweet
to have all the answers; we don’t hoard and share customer insights is Are you ready to build a culture of
power; and we don’t avoid difficult hiding in plain sight: Your own equality where people can thrive and
conversations. Here’s what we do do. employees can help you create create? By embracing three principles,
an insight-driven organization. your organization will be primed to
be more innovative than ever before.

54 60 68
Fixing Tech’s Gender Gap: Introducing the Needs- Act, Don’t React: A Leader’s
The Bravery Mindset Adaptive Consumer Guide to Cybersecurity
by Alison Beard by Claire Tsai by Michael Parent, Greg Murray
Something seems to be holding The smartest companies are and David R. Beatty
women back from many of today’s anticipating 12 particular ‘shopper If it hasn’t happened yet, it is
most interesting and lucrative jobs. journeys’ and engineering their only a matter of time before your
Reshma Saujani is determined user experiences accordingly. organization has a ‘cyber incident’.
to change that. Are you prepared?

EDITOR’S NOTE:
CORRECTION
In our winter 2019 issue, we featured
an excerpt from In Defense of Trou-
74 80 blemakers: The Power of Dissent in
The Next Frontier in Cultivating an Un-Stuck Mind: Life and Business by University of
Healthcare Innovation Four Steps to New Insights
California, Berkeley Professor
by Kyle Schruder by Jay Cone
Charlan Nemeth. Finchwood Capital
Two leading healthcare innovators The questions leaders ask often Senior Analyst Brendan Nemeth’s
describe the next big area ripe undermine their desire to find novel name was erroneously omitted from
for innovation in their industry: and comprehensive solutions.
the excerpt. The Editor regrets this
home care. Here’s how to counter this tendency.
error and our digital edition has
been corrected.
 Rotman Management
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FROM THE EDITOR Karen Christensen

Secrets of
the Best Leaders

THE STATE OF LEADERSHIP has been in the spotlight in recent years, consumer-facing companies are learning how to anticipate 12
for good reason. With employee engagement at an all-time low, particular ‘shopper journeys’ — and engineering their customer
the 2019 Edelman Trust Barometer once again demonstrated experiences accordingly.
a serious crisis of confidence in institutional leaders to help us Elsewhere in this issue, we feature Thought Leader Inter-
navigate our turbulent world. views with renowned innovation expert Clayton Christensen
However, this year there was a surprising bright side for or- (page 12) and Google Chairman John Hennessy (page 34). In
ganizational leaders: Globally, 76 per cent of people trust ‘My our Idea Exchange, Facebook executive Julie Zhuo shares her
Employer’ to do what is right — significantly more than business definition of strategic leadership on page 88; London Business
in general (56 per cent), government (48 per cent), the media (47 School’s Lynda Gratton looks at how the new 100-year life is
per cent) and NGOs (57 per cent). And where trust grows, en- affecting organizations on page 100; and Gallup’s Jim Harter
gagement and value creation are never far behind. describes some of the differences between great jobs and lousy
What exactly is driving increasing trust in employers? It’s ones on page 124. We also feature the research findings of Rot-
not simply operational excellence or decisions that impact jobs. man faculty members Tiziana Casciaro (page 91), Jacob Hirsch
An organization’s contributions to society, its values and its vi- (page 97) and Aida Wahid (page 109).
sion for the future all outweighed operational decisions in terms The late great Peter F. Drucker once said that “Leader-
of earning trust. Senior leaders, in particular, should take note: ship is an achievement of trust.” As indicated in this issue, a
76 per cent of survey respondents expect CEOs to take a stand on new employee-employer contract is emerging that is predicated
challenging issues like immigration, diversity and inclusion. on leading change, empowering employees and caring for the
In this issue of Rotman Management we will highlight some communities in which you operate. The latest report from Edel-
of the mindsets and approaches that the very best leaders are em- man proves that the critical work of building a better future
bracing to create value for both their stakeholders and for society. for all begins in a place that we are all very familiar with: the
We kick the issue off on page 6 with Does Innovation Cause In- workplace.
equality?, an excerpt from Rotman Professor Joshua Gans and
Andrew Leigh’s new book, where they show that innovation is
playing a role in increasing societal inequality — and that leaders
have a critical role to play in stemming the effects.
It is increasingly clear that there are plenty of upsides to cre-
ating a culture of equality — both in society and in organizations.
On page 48, Accenture’s Ellyn Shook and Julie Sweet provide
evidence that a culture of equality makes an organization more
innovative. Karen Christensen, Editor-in-Chief
On page 60, Rotman Professor Claire Tsai shares find- [email protected]
ings from her latest research, which indicates that the smartest Twitter: @RotmanMgmtMag

rotmanmagazine.ca / 5
 Does
Innovation
Cause
Inequality?
New technology can worsen inequality, which in turn
can create a backlash against innovation.
by Joshua Gans and Andrew Leigh

THREE TECH GIANTS — Google, Apple and Facebook — are head- The same forces are also squeezing out affordable city
quartered in the heart of Silicon Valley, an hour or two south of homes, making it harder for people on modest incomes to buy or
San Francisco. The area is deep suburbia, and as such, isn’t at- rent in popular places. The average Manhattan apartment now
tractive to younger people with highly prized technical skills. As a rents for over $40,000 per year — slightly above the average
result, many programmers live in San Francisco or Oakland and disposable income per person in the U.S. As urban studies theo-
make a daily trek along Highways 101 or 280. rist Richard Florida has pointed out, “Techies and tech startups
Given that technology workers were already putting in long are just the latest players in a much longer running battle over
hours, it didn’t take long for their employers to step up and make urban space.”
this commuting time productive: They established their own The tripling of San Francisco rents over the past generation
private bus system, with comfortable seats, Wi-Fi and access has priced out many locals. But other locals benefit from the in-
to drinks. And in the process, those buses became a symbol. In flux of new arrivals. Old neighbourhoods were upgraded. New
2014, buses carrying tech workers were blocked by angry locals. buildings were created. Restaurants and cafés are booming. A
Protesters in Oakland threw rocks at them. bike store owner in Oakland who used to literally watch tum-
The protesters were pointing the finger at the impact that bleweeds go by claimed, “Now I’ve got people walking in every
Silicon Valley’s most successful companies were having on hous- few minutes.”
ing costs in the Bay Area. Those gleaming private buses were like Seen in this way, those bus protests look like familiar com-
a finger in the eye to locals now struggling to pay the rent. Many plaints about progress. This, in turn, spurred anger from the rich.
San Francisco tenants would probably have foregone the access One of the most vocal on this topic was Paul Graham, co-found-
to the world’s information that Google gave them in exchange for er of Y Combinator, the world’s most successful start-up accel-
being able to pay 1990s rents again. erator program. Each year, Y Combinator selects over a hundred

rotmanmagazine.ca / 7
 From airbags to vaccines, innovation has the potential to create jobs,
expand choices and improve the quality of life for everyone.

(mostly) young entrepreneurs to put through a three-month Start-ups do not arise uniformly across locations. The past
program designed to turn their ideas into start-ups by offering half century has taught us that they tend to cluster together. MIT
funding (in return for an equity stake) and mentorship. Out of its researchers Jorge Guzman and Scott Stern demonstrated this
program has emerged a network of thousands of entrepreneurial recently by developing a set of factors that could predict suc-
successes including Dropbox, Zenefits, Instacart and Airbnb. cess among newly formed start-ups, including whether the firm
This track record made Graham sensitive to arguments re- was incorporated, whether it held some patents, and even the
garding how innovation in Silicon Valley might be generating in- length of its name (start-ups with shorter names tend to perform
equality. As he put it, “I’ve become an expert on how to increase better). Armed with that, Guzman and Stern could then look
economic inequality, and I’ve spent the past decade working at businesses established more recently to project their growth
hard to do it. Not just by helping the 2,400 founders Y Combi- potential.
nator has funded. I’ve also written essays encouraging people to They did so and then mapped it, and what they found is that
increase economic inequality and giving them detailed instruc- Silicon Valley lit up like a Christmas tree. Other bright spots in-
tions showing how.” cluded Kendall Square in Cambridge, Massachusetts, and Silicon
It should not be surprising that if this is your view of yourself Beach in West Los Angeles. Moreover, for Silicon Valley, they did
in the world, when you see people attacking economic inequality, not find that all the recent start-up activity was in the traditional
you will get defensive. And that is precisely what Graham pro- South Bay. Indeed, much of it was now located in San Francisco
ceeded to do: defend inequality. He argued that his activities will itself. Companies like Twitter had set up there, and employees
make people rich, and if you want to stop that, then you will get who loved the Golden City could now walk to work.
less start-up activity and innovation. What this meant is that start-ups were more likely to be in
At first blush, this might seem to have a certain logic, but re- some places than others. It also meant that economists could see
member that people can get rich without increasing inequality. whether inequality followed suit. The University of Toronto’s
To take the simplest example, if a poor person enters Y Combina- Astrid Marinoni matched the location of high-growth start-ups
tor and moves into the middle class, inequality falls. Even if that in California with local measures of income inequality. Across
isn’t happening, it is possible that the entrepreneur’s innovations the state, she found that places with more start-ups also have
may improve well-being more broadly. For instance, the social more inequality. The association was even stronger when look-
entrepreneurs who created GiveWell have helped direct billions ing at measures that considered commuting patterns.
of dollars of philanthropy into more effective charities, thereby This raises a puzzle: If entrepreneurial innovation is increas-
reducing poverty across the globe. There is no iron law that says a ing inequality, what is getting in the way of broader benefits?
start-up needs to benefit the rich more than the poor. Are there ‘choke points’ that prevent everyone from sharing the
From airbags to vaccines, innovation has the potential to spoils?
create jobs, expand choices and improve the quality of life for ev-
eryone. Another benefit comes from process innovation, which Exploring the Choke Points
has the potential to drive down prices — making technologies Trademark law has an odd quirk: New companies can register
that were once accessible only to the super-rich available to all. their names so that others can’t use them. But if your company’s
While there ought to be no trade-off involved, it is entirely name becomes so common that people start associating it with a
possible that something is getting in the way and choking off the whole product category, you can lose the trademark. Once upon
mechanisms by which everyone benefits. Let’s dig a bit deeper a time, kleenex, yo-yo, cellophane, aspirin and escalator referred
into the particular type of innovation that occurs in Silicon Val- to specific products. They suffered ‘genericide’, though, and
ley: start-up innovation. What we call ‘start-ups’ are not simply courts stripped away their trademarks.
new businesses. A defining feature of start-up businesses is that In 2017, a federal appeals court considered whether the same
they are geared towards growth. Those businesses end up creat- fate should befall Google. Pointing to a song in which rapper T-
ing jobs, and can end up generating lots of wealth for their found- Pain says “Google my name,” the plaintiffs argued that googling
ers (and investors). had become a generic term for internet search. Just as we might

8 / Rotman Management Fall 2019

say ‘I’m going to take an aspirin’ before popping an ibuprofen, Trickle Down?
the litigants suggested that people might say ‘I’ll just google it’ One intriguing study by London Business School’s Simcha
before plugging their search into Yahoo! Barkai looks at the evolution of profits in non-financial cor-
Although the court sided with Google, the case was a power- porations over the past generation. In the mid-1980s, profits
ful illustration of the search engine’s market dominance. In the were less than five per cent of the gross value added. By the
U.S., 88 per cent of internet searches are done on Google. The mid-2010s, profits had risen to over 15 per cent. This increase
next closest rival, Bing, has just six per cent of the search market, in profits equates to over $1 trillion annually. Falling competi-
followed by Yahoo! at four per cent and DuckDuckGo at one tion and rising markups have delivered a profit tsunami to U.S.
per cent. shareholders.
Part of the problem is that there are massive returns to be- But wait, don’t profits flow through to families? Or as Repub-
ing ‘the best’. If you’re a consumer choosing a free product, who lican presidential hopeful Mitt Romney shouted to a heckler,
wants to use the second-best social network, the second-best “Corporations are people, my friend. Everything corporations
search engine or the second-best shopping marketplace? In tra- earn ultimately goes to people. Where do you think it goes?”
ditional industries, powerful firms sometimes amassed market Let’s take a moment to explore ‘the Romney critique’. If
share by making it hard for customers to switch. For firms such stock ownership and consumption were evenly distributed across
as Google and Amazon, it is the very ease with which customers the population, then rising profits would have minimal impact on
can switch that has allowed them to dominate their industries. inequality. People might frown at having to overpay for an air-
Even when competitors can offer a lower price, they may still line ticket, but they’d soon start smiling when they realized that
struggle to compete in markets where network effects matter. If they held shares in the airline. Higher dividends and capital gains
you’re buying a cell phone, there is an advantage in going with would largely compensate for higher prices.
the company that has the largest coverage; and if you’re select- It turns out, however, that the typical shareholder is a good
ing a gaming console, you’ll want one with plenty of great games. deal better off than the typical consumer. The top fifth of the U.S.
Within the U.S., frontier firms are increasingly dominant. population accounts for 39 per cent of the consumption, but holds
Analyzing the share of sales accounted for by the largest four 89 per cent of the shares. By shifting money from consumers to
firms, one study found that from 1982 to 2012, the market share shareholders, excess markups effectively channel resources from
of the largest four firms rose from 38 to 43 per cent in manufac- the poor to the rich. Market power might be one reason for the
turing and from 15 to 30 per cent in retail trade. Research by The growth in inequality.
Economist concluded that since the 1990s, two-thirds of U.S. in- Where market power raises the ‘creation price’, it might
dustries have become more concentrated. serve as a valuable incentive to innovate. But as the OECD has
As the top firms have increased their market share, their shown, market power often exists because of unreasonable bar-
profits have grown dramatically. In the 1960s and 1970s, the top riers that stand in the way of new firms. In other cases, consum-
tenth of firms earned an annual return on capital of around 20 per ers are paying higher prices because dominant firms are using
cent. By the late 1990s, this had risen to 40 per cent. Today, the their muscle to protect their position in the market.
top tenth of firms earn an annual return on capital of around 100 Being big doesn’t make you a bully, but it is hard to twist
per cent. These frontier firms are pulling away from the rest. In arms if you are scrawny. Companies with high market shares
the 1990s, their return on capital was three times larger than the have a greater motivation and capacity to engage in anti-com-
median firm. Now it’s eight times larger. petitive conduct, such as predatory pricing, bid rigging, dividing
When economists see firms making an annual return on cap- territories, price fixing and boycotting.
ital of 100 per cent — and doing so consistently — we are inclined What about the impact of market concentration on work-
to think that the firm might be enjoying economic ‘rents’. This is ers? For the lucky few who work at frontier firms, there is some
a term that we use to describe profits that are above what would evidence that fatter profits have translated into healthier pay-
be needed to justify investments or efforts. It is also a significant cheques. While executives have done better than those on the
clue as to where the value from new innovation is ending up. shop floor, there does seem to be a firm-wide effect. As one study

rotmanmagazine.ca / 9
 Where market concentration goes up, the share of income
going to workers goes down.

sums up the result, ‘It’s where you work’. In companies where The Perils of Common Ownership
managers earn more, janitors also tend to get higher wages. Another driver of rising market concentration is common owner-
But it isn’t enough to look at how the wage bill is divided up ship. Suppose that you and I each own companies that are duk-
across the workforce. We also need to step back and consider the ing it out for market share. You have an incentive to lure away
impact of market power on the total wage bill. One of the striking my customers, and I have an incentive to lure away yours. Now
trends over the past generation has been the steady decline in the suppose that we each own half of the two companies. In this
share of national income going to workers. In the 1970s, workers case, there’s a much weaker incentive to engage in a price war.
received around 64 cents out of every dollar of national income. Because we jointly own them, we’ll both be better off if our two
By the 2010s, this had fallen to 58 cents to the dollar. companies collude to drive up prices.
The falling labour share is a worldwide phenomenon. Over Alongside the increase in market concentration, there has
the past generation, the labour share has also fallen in China, Ja- been an increase in common ownership. Compared with a gen-
pan, Germany, Austria, Spain and Australia. Globally, the share eration ago, shareholders are more likely to own multiple com-
of income going to employees has fallen by four to six percentage peting firms than just one. And again, technology has played a
points since 1970. central role.
Underlying the fall in the labour share appears to be a rise To see what’s going on here, we need to take a brief detour
in market concentration. Looking across industries, firms and into the world of stock market investing. In the past, almost all
countries, MIT’s David Autor and co-authors document a clear investors were persuaded by the arguments of active managers,
pattern: Where market concentration goes up, the share of in- who told them that the ‘smart’ approach was to pay experts to
come going to workers goes down. An increasing number of pick the best portfolio of stocks. The lure of beating the market
industries are ‘winner-take-most’ sectors, in which one or two was seductive: Why settle for average?
large players rule the roost. When this happens, the labour share Eventually, however, it became clear that most actively
tends to decline. managed funds weren’t beating the stock market. In fact, once
Technology is at the heart of these changes. Autor et al. dem- their fat fees had been deducted, they were underperforming
onstrate that industries that produce more patents (a common, the stock index. Armed with this realization, economist John
though imperfect, measure of technical change) tend to have Bogle founded Vanguard in 1974, and started the first index
seen a larger increase in market concentration. They point out a fund the following year. Initially derided as ‘unAmerican’, it
number of different ways that these ‘superstar firms’ have ben- was dubbed ‘Bogle’s Folly’. Attacking Vanguard, a competitor’s
efited from technological change. As the internet has made price flyer asked rhetorically, “Who wants to be operated on by an
comparison easier, consumers tend to shift toward the cheapest average surgeon, be advised by an average lawyer, or be an aver-
product. ‘Network effects’ benefit firms that have strong online age registered representative, or do anything no better or worse
networks (think Facebook and Snapchat) or physical networks than average?”
(think Uber and FedEx). It wasn’t until the 1990s when index funds took off, rising
With cash-rich balance sheets, the biggest technology com- over the course of the decade from two to 13 per cent of the mar-
panies have been quick to buy potential rivals. Among Google’s ket. In 2005, Nobel laureate Paul Samuelson ranked “this Bogle
many acquisitions are Waze, YouTube and Nest. Facebook has invention” along with the invention of the wheel, the alphabet
bought Instagram, Oculus VR and WhatsApp. Amazon has and Gutenberg’s printing press. Today, index investors account
acquired Audible, Zappos and Whole Foods. The rapid pace for more than one-third of the market. Even the world’s most
of mergers has led some critics to ask whether antitrust law was successful investor, Warren Buffett, has written that “a low-cost
right to move away from a structuralist approach and its focus on fund is the most sensible equity investment for the great majority
entry barriers. Driven by Chicago school economists in the late of investors.”
1970s and early 1980s, this movement had a powerful influence The concept of buying the index is straightforward: You
on the federal government’s merger guidelines and the U.S. Su- simply own a portfolio of shares that mirrors the stock ex-
preme Court’s interpretation of antitrust law. change. So if Apple comprises three per cent of the market, it will

10 / Rotman Management Fall 2019

comprise three per cent of your index fund. This simplicity In closing
means that investors end up flocking to the index fund with the Economists often refer to ‘skill-biased technological change’ as a
lowest management fees. As a result, scale is critical in index in- driver of inequality. What we mean is that new innovations tend
vesting. Once a firm has set up the infrastructure to run a fund, to advantage the ‘haves’ more than the ‘have-nots’. In late 18th-
the additional cost of investing another million dollars is almost century Britain, the steam engine was a greater boon to the wag-
zero. So the more money they attract, the smaller the percent- es of technically capable workers than unskilled labourers. Simi-
age they need to charge in order to cover their costs. New index larly, new innovations today are likely to be more advantageous
investment funds typically don’t face explicit barriers to entry; to college graduates than to those who didn’t finish high school.
their problem is that they just can’t get their costs low enough to The bottom line is that new technology can worsen inequal-
compete with the titans. ity, which in turn can create a backlash against innovation. To
As a result, index funds are one of the most concentrated make sure the innovation engine keeps humming, it is vital for
sectors in the economy. Between them, BlackRock, Vanguard leaders to ensure that the fruits of growth are available to all.
and State Street comprise 83 per cent of the U.S. market and
run the world’s 50 largest funds. Investors benefit from bargain-
basement management fees, which would be a pure social gain
if the rise of index fund behemoths didn’t create other prob-
lems.
Which brings us back to common ownership. For nine out
of ten of the top 500 firms in the U.S., the trio of BlackRock, Van-
guard and State Street constitute the largest shareholder. These
firms may be fighting among themselves to attract customers
into their index funds. But as shareholders, they have a power-
ful incentive not to encourage companies to fight to the death.
Owning the index is a smart investment decision for most indi-
viduals to make. When you own the index, though, you have a
stake in multiple competing companies. The impact on competi-
tion is akin to what might happen if sports fans jettisoned their
favourite team and began barracking for all teams in the tourna-
ment, in proportion to their win-loss ratio. Collectively, low-cost
index funds have acted to reduce the competitive pressures in
the U.S. economy.
Looking at the airline industry, one study found that rising
common ownership has increased prices by as much as one-
tenth. Another explored common ownership in the banking sec-
tor, and found that its growth has led to customers paying higher
fees and getting a lower return on their bank deposits. The larg- Joshua Gans holds the Jeffrey S. Skoll Chair
in Technical Innovation and Entrepreneurship
est banks in the U.S. — Bank of America, Citigroup, JPMorgan
and is a Professor of Strategic Management
Chase, PNC Financial, U.S. Bancorp and Wells Fargo — all and Chief Economist at the Creative Destruc-
count among their five-largest shareholders the trio of Black- tion Lab at the Rotman School of Manage-
Rock, Vanguard and State Street. ment (with a cross-appointment to the University of Toronto’s Department of
Economics). Andrew Leigh is an Australian politician and former professor
Technology put a turbocharger under the hood of the world’s of Economics at the Australian National University. They are the co-authors
biggest index funds. But in turn, those index funds risk becoming of Innovation + Equality: How to Create a Future That Is More Star Trek Than
an anti-competitive force in the economy. Terminator (MIT Press, 2019), from which this has been adapted.

rotmanmagazine.ca / 11
 The world’s foremost authority on disruptive innovation
shares some ideas from his latest book.

Thought Leader Interview:

Clayton Christensen
by Clifford Maxwell and Karen Christensen

In your research on the path to prosperity, you and your col- century. The firm estimated roughly one million. By 2000, there
leagues found that most innovations target the ‘consumption were close to one billion mobile phones. That indicates the po-
economy’, ignoring the significant opportunities that exist in tential in the non-consumption economy.
the ‘non-consumption economy’. Please explain. Focusing on non-consumption provides what we believe to

PORTRAIT BY SUSAN HINOJOSA ([email protected])

The consumption economy is made up of customers who have the be the best opportunity to ignite new growth engines for compa-
income, time and expertise to purchase and use existing prod- nies. In turn, these new growth engines help communities pro-
ucts or services in a market. Most businesses, therefore, invest vide jobs and income, both of which ultimately help people make
in innovations that target these consumers. As a result, the mar- progress in their lives.
ket for these consumers is already mostly defined. When you
already know who your customers are, it’s relatively easy to see Two schools of thought have dominated the theory of eco-
potential for growth. nomic growth over the past half-century, but you are propos-
Non-consumers, as their name implies, consist of individu- ing a third. Please explain.
als who, for some reason, are not able to purchase and use a prod- The first and predominant philosophy — associated with Paul
uct or service, and who may not even be able to tell you exactly Romer, co-recipient of the 2019 Nobel Prize in Economics, and
what they need. In almost every economy, non-consumption others — holds that ideas drive economic growth. Because ideas,
outweighs consumption — so innovation that targets non-con- once produced, can be copied and shared with minimal cost (so
sumption holds immense promise for growth. the story goes), they can fuel sustained economic growth in ways
For example, in the late 1980s, AT&T commissioned a that are not possible for other factors of production.
prominent consulting firm to conduct a study estimating the The second school of thought acknowledges that ideas may
number of mobile phone users there would be at the turn of the be the seeds of growth but points out that such seeds cannot,

12 / Rotman Management Fall 2019

 Someone, somewhere, is going without because they either don’t have
the money, time, access or skill to use a current solution.

and will not, grow in poor soil. The most fertile soil for growth With market-creating innovations, the market for the product
is quality institutions — the lack of which is the ultimate limiting or service does not yet exist. How can an organization know if
factor in most places. This refers to a nation’s ‘soft’ infrastruc- there actually is a market?
ture and includes entities that make up the financial, judicial, The key to identifying the potential for a new market is to look for
legal, political and even some social systems. Institutions can be non-consumption. And to identify non-consumption, it’s helpful
formal (nation-states, schools, hospitals) or informal (structures to examine barriers to consumption. Someone, somewhere, is
of authority that derive from custom and culture rather than going without because they either don’t have the money, time,
laws and policies). This line of argument has been so persua- access or skill to use a current solution. Once you have on the
sive that some international organizations, such as the United right lens to see non-consumption, you then need to pair it with
Nations and the World Bank, collectively spend billions of a deeper understanding of the ‘jobs to be done’ and the struggles
dollars trying to help people in poor countries develop new insti- people face to make progress in their life. Until you understand
tutions or fix existing ones. the job that potential customers are trying to get done, in all its
Both of these perspectives have evident merit — indeed, rich complexity and nuance, you can never be certain that your
they are historically linked. Economies expanded at a snail’s pace innovation will be successful or that you’ll be creating a vibrant
globally until the 18th-century Age of Enlightenment, when the new market.
simultaneous emergence of scientific methods and procedures
of modern democracy propelled humanity into an era of learning Describe the difference between ‘push’ and ‘pull’ strategies—
and discovery far beyond any previously known. and why pushing doesn’t always work in developing countries.
So, which is it: Do ideas or institutions fundamentally drive Poverty is painful, and almost always shows itself as a lack of
long-term economic growth? My colleagues and I propose that necessities — food, sanitation, safe water, education, infrastruc-
the most accurate and useful answer to this question is, in fact, ture and public services. As such, it is reasonable to understand
neither. We propose a third driver: market-creating innovation. that, for decades, many in the development community have
executed a push strategy, which is to provide the essential re-
How do you define ‘market-creating innovation’ ? sources that countries lack in order to solve particular prob-
A market-creating innovation does what its name implies: it cre- lems. While well intentioned, push strategies don’t often take
ates a new market. But not just any new market — a new market root within an economy or a community. A pull strategy, on the
for people for whom existing products were neither affordable other hand, is based on the notion that when there is a strong
nor accessible for a variety of reasons. These innovations trans- and growing market within a region, that market will ‘pull in’
form complicated and expensive products into ones that are so the resources it needs to survive and thrive. And in many devel-
much more affordable and accessible that many more people oping markets, this ends up including things like roads, educa-
are able to buy and use them. For example, computers are ubiq- tion, sanitation and other infrastructure. Once those things are
uitous today — most of us have them in our pockets. But that successfully pulled into a community, they have a much higher
wasn’t the case 60 years ago in the age of mainframe computers. likelihood of serving as a sustainable foundation for prosperity
The personal computer was a market-creating innovation that because the surrounding market demands them.
made computing simple and affordable. It reduced the cost of
owning a computer from two million dollars to two thousand. What is one of your favourite examples of how market-creat-
Armed with the understanding that there is vast opportunity ing innovation can transform an economy?
in creating businesses that target non-consumption, innovators Tolaram, the Nigerian company that started making a 20-cent
can spot a struggle and conceive of a future that is different from pack of instant noodles, is a powerful example. Indomie noodles
the past. This is how the seeds of prosperity get planted. can be cooked in less than three minutes and, when combined

14 / Rotman Management Fall 2019

with an egg, can be a nutritious, low-cost meal. This product which is essential for investing in a company’s future. Efficiency
created a very vibrant market for millions of Nigerians who innovations, while good for the productivity of an organization,
struggled to afford a decent meal, and forced Tolaram to make are not always good for existing employees. Think of all the plants
long-term investments in the country in order to see that market that have shut down or have been relocated due to outsourcing.
grow. Since 1988, Tolaram has invested more than $350 million By themselves, efficiency innovations tend not to create jobs or
to create tens of thousands of jobs, developed a logistics com- lead to sustainable growth.
pany, and built infrastructure including electricity, sewage and
water treatment facilities. Tolaram has built educational institu- What will it take to encourage more market-creating innova-
tions, funded community organization programs, and has taken tion?
a lead role in developing a $1.5 billion public-private partnership Companies need to be patient for growth when investing in
to build and operate the new Lekki deep-water port in the state market-creating innovations. Because they are targeted at non-
of Lagos, Nigeria’s commercial capital. This company has shown consumption and often require new value networks and business
that out of very little, the birth of a market can create benefits models, these innovations need both time and capital in order
that lead to sustainable development. to grow. But as we’ve seen in countries around the world, these
innovations are growth engines not just for a company or an en-
The second type of innovation you write about is ‘sustaining trepreneur, but for an entire region.
innovation’. What does that look like?
Sustaining innovations make good products better. Most innova- What is your advice for readers who would like to pursue mar-
tion you see today is sustaining in nature, and consist of products ket-creating innovation?
that are sold for more money and at higher margins. Sustaining The key is to stay relentlessly focused on making products and
innovations are important for companies and countries to re- services so affordable and accessible that millions of people can
main competitive, but they have a very different impact on an access what was previously inaccessible to them. Already we
economy than market-creating innovations. When you decide have seen innovators offering heart surgery for less than $2,000,
to sustain your current business in a mature market, you rarely life insurance targeted at the world’s most at-risk populations
need to build new sales, distribution, marketing and manufac- and transportation options for a fraction of the cost of main-
turing engines. As a result, when compared with market-creating stream vehicles. If you stay focused on serving non-consumers
innovations, sustaining innovations don’t generally have as sig- with affordable solutions, opportunity will be vast. Market-
nificant impact on job creation, profit generation or changing the creating innovations can begin to solve many of our world’s big-
culture of a region. gest problems, and in the process they can ignite the economic
engine of many countries struggling to prosper.
The third type of innovation you discuss in the book is ‘effi-
ciency innovations’. What do these entail, and why are they so
attractive to companies?
Efficiency innovations enable companies to do more with fewer
resources. In other words, as companies squeeze as much as
possible from existing and newly acquired resources, their un- Clayton Christensen is the Kim B. Clark Professor of Business Administra-
derlying business model and the customers they are targeting tion at Harvard Business School. His most recent book is The Prosperity
Paradox: How Innovation Can Lift Nations Out of Poverty (HarperBusiness
with their products remain the same. These innovations are
2019), co-authored with Efosa Ojomo and Karen Dillon. He has been
crucial for the viability of companies as industries become more named the world’s most influential management thinker by the UK-based
crowded and competitive, and they generate free cash flow Thinkers50.

rotmanmagazine.ca / 15
 WINNING
THE ‘20s:
A Leadership Agenda
for the Next Decade
What will it take to win in the 2020s? Among other things,
leaders must make learning, imagination and ecosystems
part of their ongoing strategy.
by Richard Lesser, Martin Reeves, Ryoji Kimura and Kevin Whitaker

THE WINNERS IN BUSINESS have shifted markedly in the last de- 1. Master the new logic of competition;
cade. When the 2010s began, the world’s ten most valuable 2. Design the organization of the future;
public companies by market capitalization were based in five 3. Apply the science of organizational change;
countries, only two of them were in the tech sector, and none 4. Achieve innovation and resilience through diversity; and
was worth more than US$ 400 billion. Today, all of the top ten 5. Optimize for both social and business value.
are in the U.S. and China, the majority are tech companies,
and some — at least temporarily — have surpassed US$ 1 trillion In this article we will do a deep dive on the first imperative: Mas-
in value. tering the new logic of competition. For details on the other four
Given the relentlessness of change on multiple dimensions, imperatives,visitbcg.com/en-ca/featured-insights/winning-the-
the keys to success are likely to be just as different over the next 20s/overview.aspx.
ten years. What will it take to win in the next decade? The Bos-
ton Consulting Group recently released a series called “Win- Mastering the New Logic of Competition
ning the 20s”, in which we present five imperatives for the next Internet and mobile technology ushered in the Information Age,
decade for organizations of all shapes and sizes: profoundly affecting technology-intensive and consumer-facing

rotmanmagazine.ca / 17
 The emerging wave of technology is poised to turn every
business into an information business.

industries such as electronics, communications, entertainment Most of today’s incumbents — designed for relatively stable,
and retail. But the emerging wave of technology — including AI, classical business environments — are not well adapted for this
sensors and the Internet of Things (IoT) — is poised to turn every more dynamic environment. Therefore, today’s leaders need to
business into an information business. The combination of an fundamentally reinvent the organizational model in order to be-
exponential increase in data, better tools to mine insights from come future winners.
that data, and a fast-changing business environment means that
companies will increasingly need to — and be able to — compete Based on our research, following are five principles for mastering
on the rate of learning. the new logic of competition.
Instead of the ‘economies of scale’ that today’s leaders grew
up with — based on a predictable reduction of marginal produc- PRINCIPLE 1: COMPETE ON THE RATE OF LEARNING. Learning has long
tion costs across a relatively uniform offering — tomorrow’s lead- been considered important in business. As Bruce Henderson,
ers will pursue ‘economies of learning’, based on identifying and BCG’s founder, observed more than 50 years ago, companies can
fulfilling each customer’s changing needs by leveraging data generally reduce their marginal production costs at a predict-
and technology. able rate as their cumulative experience grows. But in traditional
The arenas of competition will also look different in the models of learning, the knowledge that matters — learning how
2020s, requiring new perspectives and capabilities. The familiar to make one product or execute one process more efficiently — is
picture of a small number of companies producing a common static and enduring. Going forward, it will instead be necessary
end product and competing within well-defined industry bound- to build organizational capabilities for dynamic learning — learn-
aries will be replaced by one where competition and collabora- ing how to do new things, and ‘learning how to learn’ by leverag-
tion occur within and between ‘ecosystems’. Because ecosystems ing new technology.
are fluid and dynamic, and not perfectly controllable even by the Today, artificial intelligence, sensors and digital platforms
orchestrator, companies will need to be much more externally have already increased the opportunity for learning more ef-
oriented, to deploy influence indirectly through platforms and fectively — but competing on the rate of learning will become a
marketplaces, and to co-evolve with ecosystem partners. necessity in the 2020s. The dynamic, uncertain business envi-
Orchestrators of ecosystems will be able to leverage the as- ronment will require companies to focus more on discovery and
sets of other participants, and as such, ecosystem-based compe- adaptation rather than only on forecasting and planning.
tition tends to have a winner-take-all nature. These factors are Companies will therefore increasingly adopt and expand
already causing rapidly rising valuations relative to tangible as- their use of AI, raising the competitive bar for learning. And the
sets for the top companies, as well as an increasing gap between benefits will generate a ‘data flywheel’ effect — companies that
the profitability of high and low performers. But there is not yet learn faster will have better offerings, attracting more custom-
any playbook for how to harness this premium. Practice is racing ers and more data, further increasing their ability to learn. For
ahead of theory, and pioneers who can crack the code on ecosys- example, Netflix’s algorithms take in behavioural data from
tems will be greatly advantaged. the company’s video streaming platform and automatically
Finally, companies will increasingly compete on resilience. provide dynamic, personalized recommendations for each user.
Accelerating technological change, political gridlock, a shift- This improves the product, keeping more users on the plat-
ing geopolitical power map, the increased scrutiny of business, form for longer — generating even more data to further fuel the
and the polarization of society all point to an era of protracted learning cycle.
uncertainty in which corporate life cycles are likely to contin- However, there is an enormous gap between the traditional
ue shrinking. Companies will therefore need to worry not only challenge of learning to improve a static process and the new
about the competitiveness of their immediate game, but also imperative to continuously learn new things throughout the or-
about the durability of that game and their ability to weather ganization. Therefore, successfully competing on learning will
unanticipated shocks. require more than simply plugging AI into today’s processes

18 / Rotman Management Fall 2019

 How Netflix Leverages Data

Number of % of streams originating

subscribers (millions) from AI recommendation
150 118 80
100
75
50 24
0 70
2011 More Users 2017 2011 More Effective 2017
(more data) Algorithms
Avg. usage per
subscriber (hours/yr)
654
600

400
310

200
2011 Better Customer 2017
Experience

Sources: Company reports: Wired; Business Insider;

BCG Henderson Institute analysis.

FIGURE ONE

and structures. Instead, companies will need to: and Lyft rely heavily on ‘gig economy’ workers who are not direct
employees but rather temporary freelancers. Ecosystems also
• Pursue a digital agenda that embraces all modes of tech- blur industry boundaries. For instance, automotive ecosystems
nology relevant to learning — including sensors, platforms, include not just traditional suppliers but also connectivity, soft-
algorithms, data and automated decision making. ware and cloud storage providers. And they blur the distinction
• Connect them in integrated learning architectures that can between collaborators and competitors. Amazon and third-par-
learn at the speed of data rather than being gated by slower ty merchants have a symbiotic relationship, while the company
hierarchical decision making. competes with those merchants by selling private-label brands.
• Develop business models that are able to act on dynamic, A few digital giants have demonstrated that successfully or-
personalized customer insights. chestrating ecosystems can yield outsized returns. Indeed, many
of the largest and most profitable companies in the world are eco-
PRINCIPLE 2: COMPETE IN ECOSYSTEMS. Classical models of competi- system-based businesses. One example is Alibaba, which leads
tion assume that discrete companies make similar products and China’s massive e-commerce market, not by fulfilling most func-
compete within clearly delineated industries. But technology tions directly but by building platforms that connect manufac-
has dramatically reduced communication and transaction costs, turers, logistics providers, marketers and other relevant service
weakening the logic for combining many activities inside a few providers with one another and with end users. By decentralizing
vertically integrated firms. At the same time, uncertainty and business activities across large groups of firms or individuals, the
disruption require individual firms to be more adaptable, and Alibaba ecosystem is rapidly adaptive to consumers’ needs and
they make business environments increasingly shapeable. Com- also highly scalable — resulting in 44 per cent annualized rev-
panies now have opportunities to influence the development of enue growth for the company in the past five years.
the market in their favour, but they can do this only by coordi- The playbook for emulating these ecosystem pioneers has
nating with other stakeholders. not yet been fully codified, but a few imperatives are becoming
As a result of these forces, new industrial architectures are clear:
emerging based on the coordination of ecosystems — complex, • Adopt a fundamentally different perspective toward strate-
semi-fluid networks of companies that challenge several tradi- gy, based on embracing principles like external orientation,
tional business assumptions. Ecosystems blur the boundaries common platforms, co-evolution, emergence and indirect
of the company. For example, platform businesses such as Uber monetization.

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 Young Tech Companies Were the Biggest Winners of the 2010s

Demographics of the Top Ten Global Companies by Market Capitalization

Primary Sector Median Comapany Age

70%
? 57 ?
34
20%

2010 2019 2029 2010 2019 2029

Financials Materials Consumer Staples

Healthcare Energy Technology

Source: BCG Henderson Institute analysis.

Note: Based on market capitalization at the beginning of year.

FIGURE TWO

• Determine what role your company can play in your ecosys- into every piece of John Deere equipment over time,” said John
tem or ecosystems. Not all companies can be the orchestra- Stone, the senior vice president for Deere’s Intelligent Solu-
tor. tions Group.
• Ensure that your company creates value for the ecosystem These trends point to a new battle between younger digital
broadly, not just for itself. natives and traditional physical incumbents. But unlike in the
past decade, in which upstarts unseated many legacy leaders
PRINCIPLE 3: COMPETE IN THE PHYSICAL AND THE DIGITAL WORLD. To- with purely digital models, the next round is likely to be a more
day’s most valuable and fastest-growing businesses are dispro- balanced contest. Technology companies no longer have a lim-
portionately young technology companies, which operate eco- itless social licence; in the next decade, they will have to navi-
systems that are predominantly digital. But the low-hanging gate thorny issues like user trust, data privacy and regulation,
digital fruits in consumer services, including retail, information which will likely be even more critical in the context of hybrid
and entertainment, seem to have been plucked. New opportuni- competition. And incumbents will still have to fight against in-
ties are likely to come increasingly from digitizing the physical stitutional inertia and the long odds of disruption, but they will
world, enabled by the rapid development and penetration of AI be able to better leverage existing relationships and expertise
and the Internet of Things (IoI). This will increasingly bring tech in the physical world. Therefore, the next wave of ‘natural se-
companies into areas — such as B2B and businesses involving lection’ in business is likely to test both digital natives and in-
long-lived and specialized assets — that are still dominated by cumbents — and winners could emerge from either group.
older incumbent firms. What will make the difference? To succeed in hybrid com-
Early signs of ‘hybrid’ competition at the physical-digital petition, companies will need to:
intersection are already emerging, with Digital giants moving • Build strong relationships with actors on both sides of the
into physical sectors. For example, Amazon has opened new ecosystem — customers and suppliers.
retail stores in addition to its acquisition of Whole Foods, while • Rethink existing business models in order to win the battle
Google has entered automotive and transportation through for new hybrid markets.
its Waymo subsidiary. Meanwhile, incumbent companies are • Adopt good practices for governance of data and algorithms
furiously pursuing digitization. For example, John Deere has to preserve users’ trust.
invested heavily in IoT technology by adding connected sen-
sors to its tractors and other equipment. The company collects Companies can no longer
PRINCIPLE 4: COMPETE ON IMAGINATION.
and analyzes data from each machine, using the insights to expect to succeed by leaning predominantly on their existing
provide updates to its equipment or suggestions to users. “Our business models. Long-run economic growth rates have declined
roadmap is calling for machine learning and AI to find their way in many economies, and demographics point to a continuation

20 / Rotman Management Fall 2019

of that pattern. Competitive success has become less permanent continue to challenge governments’ ability to effectively respond
over time. At the same time, markets are increasingly shapeable, to national or global risks.
increasing the potential reward for innovation. As a result, the Under such conditions, it will become even more difficult
ability to generate new ideas is more important than ever. to rely on forecasts and plans. Business leaders will need to con-
However, creating new ideas is challenging for many com- sider the larger picture, including economic, social, political and
panies. Inertia increases with age and scale, making it harder ecological dimensions, making sure their companies can endure
to create and harness new ideas. Our analysis of companies in the face of unanticipated shocks. In other words, businesses
around the world shows that older and larger firms have less will effectively need to compete on resilience.
vitality and less capacity for sustainable growth and reinven- Building resilience is often at odds with traditional manage-
tion. To date, business and managerial theory has emphasized a ment goals like efficiency and short-run financial maximization.
‘mechanical’ view — dominated by easily measurable variables But to sustainably thrive in uncertain environments, companies
like efficiency and financial outcomes — rather than focusing on must make resilience an explicit priority. Here’s how:
how to create new ideas. • Prepare for a range of scenarios to ensure that strategy is
To overcome these challenges, companies need to learn how robust and risks are survivable.
to compete on imagination, which lies upstream of innovation: • Build an adaptive organization that can rapidly adjust to
In order to realize new possibilities, we first need inspiration new circumstances — for example, by constantly experi-
(a reason to see things differently), and then imagination (the menting to identify new options.
ability to identify possibilities that are not currently the case • Proactively contribute to collective action on the biggest
but could be). Imagination is a uniquely human capability — issues facing global economies and societies, in order to
artificial intelligence today can only make sense of correlative maintain a social license to operate.
patterns in existing data. As machines automate an increasing
share of routine tasks, individual managers will need to focus on In closing
imagination to stay relevant and make an impact. As if winning in the present weren’t challenging enough, the
more essential task for leaders has always been winning in the
How can companies compete on imagination? future. Our fast-changing world will continue to test status quo
• Focus on anomalies, accidents and analogies, rather than assumptions, making it critical for leaders to look ahead and
averages, in order to spark inspiration. develop an agenda for succeeding in the coming decade. In
• Enable the open spread and competition of ideas — for this excerpt from our Winning the 20s series, we have provided
example, by limiting hierarchy and empowering employees a starting point for that journey by addressing some of the
to experiment and make imaginative proposals. thinking and mindsets that will be required to master the new
• Become a ‘playful corporation’ that is able to effortlessly ex- logic of competition.
plore new possibilities.

PRINCIPLE 5: COMPETE ON RESILIENCE. Looking ahead to the 2020s,

uncertainty is high on many fronts. Technological change is dis-
rupting businesses and bringing new social, political and eco-
logical questions to the forefront. Economic institutions are un-
der threat from social divisions and political gridlock. Society is Richard Lesser is President and CEO of
increasingly questioning the inclusivity of growth and the future the Boston Consulting Group. Martin Reeves
of work. And planetary risks such as climate change are more is Senior Partner and Managing Director in
BCG’s New York City office and Director of
salient than ever.
the BCG Henderson Institute. He tweets
Furthermore, deep-seated structural forces indicate that @MartinKReeves. Ryoji Kimura is a Senior
this period of elevated uncertainty is likely to persist. Techno- Partner and Managing Director at BCG and
logical progress will not abate; the rise of China as an economic Global Leader of the firm’s Corporate Finance
& Strategy Practice. Kevin Whitaker is an
power will continue to challenge international institutions; de- Economist at the BCG Henderson Institute.
mographic trends point toward an era of lower global growth, To read the complete Winning the 20s series, visit www.bcg.com/featured-
which will further strain societies; and social polarization will insights/winning-the-20s/overview.aspx

rotmanmagazine.ca / 21
 MANAGEMENT:
So Much More
Than a Science
Is it right to equate intellectual rigour with data analysis?
If the answer is no — as we suggest in this article — then how should
managers arrive at their decisions?
by Roger Martin and Tony Golsby-Smith

UNDERLYING THE PRACTICE and study of management is the belief Is Business Really a Science?
that it is a science and that business decisions must be driven by What we think of as science began with Aristotle, who as a stu-
rigorous analysis of data. The explosion of big data has only rein- dent of Plato was the first to write about cause and effect and the
forced this idea. In a recent EY survey, 81 per cent of executives methodology for demonstrating it. This made ‘demonstration’,
said they believed that “data should be at the heart of all deci- or proof, the goal of science and the final criterion for ‘truth’. As
sion-making,” leading EY to proclaim that “big data can elimi- such, Aristotle was the originator of the approach to scientific ex-
nate reliance on ‘gut feel’ decision-making.” ploration, which Galileo, Bacon, Descartes and Newton would
Many managers find this notion appealing. But is it true that formalize as ‘the scientific method’ 2,000 years later.
management is a science? And is it right to equate intellectual It’s hard to overestimate the impact of science on society.
rigour with data analysis? If the answers to those questions are The scientific discoveries of the Enlightenment — deeply rooted
no and no — as we suggest in the following pages — then how in the Aristotelian methodology — led to the Industrial Revolu-
should managers arrive at their decisions? tion and the global economic progress that followed. Science
In this article we will set out an alternative approach for solved problems and made the world a better place. Small won-
strategy-making and innovation — one that relies less on data der that we came to regard great scientists like Einstein as latter-
analysis and more on imagination, experimentation and com- day saints. And even smaller wonder that we came to view the
munication. But first let’s take a look back at where — or rather scientific method as a template for other forms of inquiry and to
with whom — science started. speak of ‘social sciences’ rather than ‘social studies’.

rotmanmagazine.ca / 23
 You can’t chart a course for the future or bring
about change merely by analyzing history.

But Aristotle might question whether we’ve allowed our ap- ence. You need to ask, Is this situation dominated by possibility
plication of the scientific method to go too far. In defining his (that is, things we can alter for the better) or by necessity (ele-
approach, he set clear boundaries around what it should be used ments we cannot change)?
for, which was understanding natural phenomena that “cannot Suppose you plan to build a bottling line for plastic bottles
be other than they are.” Why does the sun rise every day? Why do of springwater. The standard way to set one up is to take ‘forms’
lunar eclipses happen when they do? And why do objects always (miniature thick plastic tubes), heat them, use air pressure to
fall to the ground? These things are beyond the control of any hu- mould them to full bottle size, cool them until they’re rigid, and
man, and science is the study of what makes them occur. finally, fill them with water. Thousands of bottling lines around
However, Aristotle never claimed that all events were inevi- the world are configured this way.
table. To the contrary, he believed in free will and the power of Some of this cannot be other than it is: How hot the form
human agency to make choices that can radically change situ- has to be to stretch; the amount of air pressure required to mould
ations. In other words, a great many things in the world can be the bottle; how fast the bottle can be cooled; how quickly the
other than they are. “Most of the things about which we make water can fill the bottle. These are determined by the laws of
decisions, and into which we therefore inquire, present us with thermodynamics and gravity — which executives cannot do a
alternative possibilities. All our actions have a contingent char- thing to change. Still, there is an awful lot that can change. While
acter; hardly any of them are determined by necessity,” he wrote. the laws of science govern each step, the steps themselves don’t
Aristotle believed that this realm of possibilities was driven not have to follow the sequence that has dominated bottling for de-
by scientific analysis but by human invention and persuasion. cades. A company called LiquiForm demonstrated that after
We think this is particularly true when it comes to decisions asking, ‘Why can’t we combine two steps into one by forming the
about business strategy and innovation. You can’t chart a course bottle with pressure from the liquid we’re putting into it, rather
for the future or bring about change merely by analyzing history. than using air?’ And that idea turned out to be utterly doable.
We would suggest, for instance, that the behaviour of customers Executives need to deconstruct every decision-making situ-
will never be transformed by a product whose design is based ation into can and cannot parts and then test their logic. If the
on an analysis of their past behaviour. initial hypothesis is that an element can’t be changed, the execu-
Transforming customer habits and experiences is precisely tive needs to ask which laws of nature suggest this. If the ratio-
what great business innovations do. Steve Jobs, Steve Wozniak nale for cannot is compelling, then the best approach is to apply
and other computing pioneers created brand-new devices that a methodology that will optimize the status quo. In these cases,
revolutionized how people interacted and did business. The let science be the master and use its toolkits of data and analytics
railroad, the motor car and the telephone all introduced enor- to drive choices.
mous behavioural and social shifts that an analysis of prior data In a similar way, executives need to test the logic behind
could not have predicted. To be sure, innovators often incorpo- classifying elements as ‘cans’. What suggests that behaviours or
rate scientific discoveries in their creations, but their real ge- outcomes can be different from what they have been? If the sup-
nius lies in their ability to imagine products or processes that porting rationale is strong enough, let design and imagination be
simply never existed before. the co-masters and use analytics in their service.
It is important to realize that the presence of data is not suf-
Can or Cannot? ficient proof that outcomes cannot be different. Data is not logic.
Most situations in life involve some elements that you can change In fact, many of the most lucrative business moves come from
and some that you cannot. The critical skill is spotting the differ- bucking the evidence. LEGO chairman Jørgen Vig Knudstorp

24 / Rotman Management Fall 2019

offers a case in point. Back in 2008, when he was the company’s and believed that the strategic challenge was figuring out how to
CEO, its data suggested that girls were much less interested in persuade donors to increase the percentage allocated to indirect
its toy bricks than boys were: 85 per cent of LEGO players were costs. It was considered a given that donors perceived indirect
boys, and every attempt to attract more girls had failed. Many costs to be a necessary evil that diverted resources away from
of the firm’s managers, therefore, believed that girls were inher- end beneficiaries.
ently less likely to play with the bricks. They saw this as a cannot We got the firm’s partners to test that belief by listening to
situation; but Knudstorp did not. The problem, he thought, was what donors said about costs rather than selling donors a story
that LEGO had not yet figured out how to get girls to play with about the need to raise reimbursement rates. What the partners
construction toys. His hunch was borne out with the launch of the heard surprised them. Far from being blind to the starvation cy-
successful LEGO Friends line, in 2012. cle, donors hated it and understood their own role in causing it.
The LEGO case illustrates that data is no more than evi- The problem was that they didn’t trust their grantees to manage
dence, and it is not always obvious what it is evidence of. More- indirect costs. Once the partners were liberated from their false
over, the absence of data does not preclude possibility. If you belief, they soon came up with a wide range of process-oriented
are talking about new outcomes and behaviours, then naturally solutions that could help non-profits build their competence at
there is no prior evidence. A truly rigorous thinker, therefore, cost management and earn their donors’ confidence.
considers not only what the data suggests, but also what could Although listening to and empathizing with stakeholders
happen within the bounds of possibility. And that requires the might not seem as rigorous or systematic as analyzing data from
exercise of imagination — a very different process from analysis. a formal survey, it is in fact a tried-and-true method of gleaning
insights that is familiar to anthropologists, ethnographers, so-
Breaking the Frame ciologists, psychologists and other social scientists. Many busi-
The status quo often appears to be the only way things can be — ness leaders — particularly those who apply design thinking and
a perception that is hard to shake. As a result, the imagination other user-centric approaches to innovation — recognize the im-
of new possibilities first requires an act of un-framing. portance of qualitative, observational research in understanding
We recently came across a good example of the status quo human behaviour. At LEGO, for example, Knudstorp’s initial
trap while advising a consulting firm whose clients are non-profit questioning of gender assumptions triggered four years of eth-
organizations. The latter face a ‘starvation cycle’, in which they nographic studies that led to the discovery that ‘girls are more
get generously funded for the direct costs of specific programs interested in collaborative play than boys are’, which suggested
but struggle to get support for their indirect costs. A large pri- that a collaborative construction toy could appeal to them.
vate foundation, for instance, may fully fund the expansion of Powerful tool though it is, ethnographic research is no more
a charity’s successful Latin American girls’ education program than the starting point for a new frame. Ultimately, you have to
to sub-Saharan Africa, yet underwrite only a small fraction of chart out what could be and get people on board with that vision.
the associated operational overhead as well as the cost of de- To do that, you need to create a new narrative that displaces the
veloping the program in the first place. This is because donors old frame that has confined people.
typically set low and arbitrary levels for indirect costs — usually
allowing only 10 to 15 per cent of grants to go toward them, Why Metaphors Matter
even though the true indirect costs make up 40 to 60 per cent of We all know that good stories are anchored by powerful meta-
the total tab for most programs. phors. As Aristotle once observed, “Ordinary words convey only
The consulting firm accepted this framing of the problem what we know already; it is from metaphor that we can best get

rotmanmagazine.ca / 25
 When people link unrelated concepts, product innovations often result.

hold of something fresh.” In fact, he believed that a command tor Dean Kamen and hyped as the next big thing, was financed
of metaphor was the key to rhetorical success: “To be a master by hundreds of millions in venture capital. Although it’s a bril-
of metaphor is the greatest thing by far. It is a sign of genius,” he liant application of advanced technology, hardly anyone uses it.
wrote. Many rationalizations can be made for its failure — the high price
It is perhaps ironic that this proposition about an unscientific point, the regulatory restrictions — but we would argue that a key
construct has been scientifically confirmed. Research in cogni- reason is that the Segway is analogous with absolutely nothing at
tive science has demonstrated that the core engine of creative all. It is a little wheeled platform on which you stand upright and
synthesis is ‘associative fluency’—the mental ability to connect largely motionless while moving forward. People couldn’t relate
two concepts that are not usually linked and to forge them into a to it. You don’t sit, as you do in a car, or pedal, as you do on a bi-
new idea. The more diverse the concepts, the more powerful the cycle, or steer it with handles, as you do a motorcycle.
creative association and the more novel the new idea. Think of the last time you saw a Segway in use. You probably
With a new metaphor, you compare two things that aren’t thought the rider looked laughably geeky on the contraption. Our
usually connected. For instance, when Hamlet says to Rosen- minds don’t take to the Segway because there is no positive expe-
crantz, “Denmark’s a prison,” he is associating two elements rience to compare it to.
in an unusual way. Rosencrantz knows what ‘Denmark’ means,
and he knows what ‘a prison’ is. However, Hamlet presents a new Choosing the Right Narrative
concept to him that is neither the Denmark he knows nor the When you’re facing decisions in the realm of possibilities, it’s
prisons he knows. This third element is the novel idea or creative useful to come up with three or four compelling narratives, each
synthesis produced by the unusual combination. with a strong metaphor, and then put them through a testing pro-
When people link unrelated concepts, product innovations cess that will help you reach consensus around which one is best.
often result. Samuel Colt developed the revolving bullet cham- What does that entail? In the cannot world, careful analysis of
ber for his famous pistol after working on a ship as a young man data leads to the optimal decision. But in the can world, where we
and becoming fascinated by the vessel’s wheel and the way it are seeking to bring something into existence, there is no data to
could spin or be locked by means of a clutch. A Swiss engineer analyze. To evaluate your options, you need to do the following:
was inspired to create the hook-and-loop model of Velcro after
walking in the mountains and noticing the extraordinary adhe- 1. CLARIFY THE CONDITIONS. While we have no way of proving that
sive qualities of burrs that stuck to his clothing. a proposed change will have the desired effect, we can specify
Metaphor also aids the adoption of an innovation by help- what would have to be true about the world for it to work. By con-
ing consumers understand and relate to it. The automobile, for sidering this rather than debating what is true about the world as
instance, was initially described as ‘a horseless carriage’, the mo- it is, innovators can work their way toward a consensus. The idea
torcycle as ‘a bicycle with a motor’ and the snowboard was simply is to have the group agree on whether it can make most of those
‘a skateboard for the snow’. The very first step in the evolution conditions a reality — and will take responsibility for doing so.
that has made the smartphone a ubiquitous and essential device This was the approach pursued many years ago by a lead-
was the launch in 1999 of Research in Motion’s BlackBerry 850, ing office furniture company that had developed a new chair.
which was sold as ‘a pager that could also receive and send e- Although it was designed to be radically superior to anything
mails’ — a comforting metaphor for initial users. else on the market, the chair was expensive to make and would
One needs only to look at the failure of the Segway to see need to be sold at twice an office chair’s typical price. The quan-
how much harder it is to devise a compelling narrative without titative market research showed that customers reacted tepidly
a good metaphor. The machine, developed by superstar inven- to the new product. Rather than giving up, the company asked

26 / Rotman Management Fall 2019

what would have to be true to move customers from indiffer- any of our competitors.
ence to passion. It concluded that if customers actually tried the But when we use science in contexts in which things can be
chair, they would experience its breakthrough performance and other than they are, we inadvertently convince ourselves that
become enthusiastic advocates. The company went to market change is not possible. Only when it is too late will we realize
with a launch strategy based on a customer trial process, and the that an insurgent has demonstrated to our former customers that
chair has since become the world’s most profitable and popular things indeed can be different. That is the steep price of applying
office chair. analytics to the entire business world rather than just to the ap-
propriate parts of it.
2. CREATE NEW DATA. The approach to experimentation in the can
world is fundamentally different from the one in the cannot
world. In the cannot world, the task is to access and compile the
relevant data. Sometimes that involves simply looking it up —
from a table in the Bureau of Labour Statistics database, for ex-
ample. Other times, it means engaging in an effort to uncover it
— such as through a survey. You may also have to apply accepted
statistical tests to determine whether the data gathered demon-
strates that the proposition — say, that consumers prefer longer
product life to greater product functionality—is true or false.
In the can world, the relevant data doesn’t exist because the
future hasn’t happened yet. You have to create the data by pro-
totyping — giving users something they haven’t seen before and
observing and recording their reactions. If users don’t respond
as you expected, you plumb for insights into how the prototype
could be improved — and then repeat the process until you have
generated data that demonstrates your innovation will succeed.
Of course, some prototyped ideas are just plain bad. That’s
why it’s important to nurture multiple narratives. If you develop
a clear view of ‘what would have to be true’ for each and conduct
prototyping exercises for all of them, consensus will emerge
about which narrative is most compelling in action. And involve-
ment in the process will help the team get ready to assume re-
sponsibility for putting the chosen narrative into effect. Roger L. Martin is the former Dean of the
Rotman School of Management (1998-2013)
and is currently ranked as the world’s top
In closing management thinker by the UK-based
The fact that scientific analysis of data has made the world a bet- Thinkers50. His most recent book is Creating
ter place does not mean that it should drive every business de- Great Choices: A Leader’s Guide to Integrative Thinking (HBR Press, 2017), co-
authored with Jennifer Riel. Tony Golsby-Smith is the CEO and founder of
cision. When we face a context in which things cannot be other
Second Road, a consulting firm based in Sydney, Australia that is now part
than they are, we can and should use the scientific method to un- of Accenture Strategy. ©Harvard Business Publishing; all rights reserved.
derstand that immutable world faster and more thoroughly than Reprinted with permission.

rotmanmagazine.ca / 27
 Dare to Lead:
Brave Work.
Tough Conversations.
Whole Hearts.
Courage has been an aspirational leadership skill for
as long as there have been leaders. Yet we haven’t made much
progress in developing it.
by Brené Brown

OVER THE PAST FIVE YEARS, I’ve transitioned from research profes- age to develop that potential. From corporations, non-profits
sor to research professor and founder and CEO. The first hard and public sector organizations to governments, activist groups,
and humbling lesson? Regardless of the complexity of the con- schools and faith communities, we desperately need more lead-
cepts, studying leadership is way easier than leading. ers who are committed to courageous, wholehearted leadership
When I think about my personal experiences with leading and who are self-aware enough to lead from their hearts.
over the past few years, the only endeavours that have required
the same level of self-awareness and equally high-level ‘comms What Stands in the Way Becomes the Way
plans’ are being married for 24 years and parenting. And that’s We started our interviews with senior leaders with one question:
saying something. I completely underestimated the pull on my What, if anything, about the way people are leading today needs
emotional bandwidth, the sheer determination it takes to stay to change in order for leaders to be successful in a complex, rap-
calm under pressure, and the weight of continuous problem solv- idly changing environment where we’re faced with seemingly
ing and decision making. Oh, yeah — and the sleepless nights. intractable challenges and an insatiable demand for innovation?
My quasi-selfish goal in writing my most recent book — There was one answer across the board: We need braver leaders
Dare to Lead — is this: I want to live in a world with braver, bolder and more courageous cultures.
leaders, and I want to be able to pass that kind of world on to my When we followed up to understand the specific ‘why’
children. behind the call for braver leadership, the research took a criti-
I define a leader as anyone who takes responsibility for find- cal turn. There wasn’t just one answer. There were close to 50
ing the potential in people and processes, and who has the cour- answers, and many of them weren’t intuitively connected to

rotmanmagazine.ca / 29
 A cultural norm of ‘nice and polite’ is often leveraged
as an excuse to avoid tough conversations.

courage. Leaders talked about everything from critical thinking son, there was saturation across the data that the consequence
and the ability to synthesize and analyze information to building is a lack of clarity, diminishing trust and engagement, and an
trust, rethinking educational systems, inspiring innovation, find- increase in problematic behaviour, including passive-aggressive
ing common political ground amid growing polarization, making behaviour, talking behind people’s backs, pervasive back-chan-
tough decisions, and the importance of empathy and relationship- nel communication (or ‘the meeting after the meeting’), gossip
building in the context of machine learning and artificial intelli- and the ‘dirty yes’ (when I say yes to your face and then no behind
gence. We kept peeling the metaphorical onion by asking: Can your back).
you break down the specific skills that you believe underpin brave
leadership? 2. Rather than spending a reasonable amount of time proac-
I was surprised by how much the research participants strug- tively acknowledging and addressing the fears and feelings that
gled to answer this question. Just under half of the leaders we show up during change and upheaval, we spend an unreasonable
interviewed initially talked about courage as a personality trait, amount of time managing problematic behaviours.
not a skill. They typically approached the question about specific
skills with a ‘Well, you either have it or you don’t’ answer. We 3. Diminishing trust caused by a lack of connection and empathy.
stayed curious and kept pushing for observable behaviours: What
does it look like if you have it? 4. Not enough people are taking smart risks or creating and shar-
Just over 80 per cent of the leaders, including those who be- ing bold ideas to meet changing demands and the insatiable
lieved that courage is behavioural, couldn’t identify the specific need for innovation. When people are afraid of being put down
skills; however, they could immediately and passionately talk or ridiculed for trying something and failing, or even for putting
about problematic behaviours and cultural norms that corrode forward a radical new idea, the best you can expect is status quo
trust and courage. Luckily, the idea of ‘starting where people are’ and groupthink.
is a tenet of both grounded theory research and social work, and
it’s exactly what I do. As much time as I spend trying to under- 5. We get stuck and defined by setbacks, disappointments and
stand the way, I spend ten times as much researching what gets failures, so instead of spending resources on clean-up to ensure
in the way. that consumers, stakeholders or internal processes are made
For example, I didn’t set out to study shame; I wanted to un- whole, we are spending too much time and energy reassuring
derstand connection and empathy. But if you don’t understand team members who are questioning their contribution and value.
how shame can unravel connection in a split second, you don’t
really get connection. I didn’t set out to study vulnerability; it 6. Too much shame and blame, not enough accountability and
just happens to be the big barrier to almost everything we want learning.
from our lives, especially courage. As Marcus Aurelius taught
us, “What stands in the way becomes the way.” 7. People are opting out of vital conversations about diversity
Here are the ten behaviours and cultural issues that leaders and inclusivity because they fear looking wrong, saying some-
identified as getting in the way in organizations everywhere: thing wrong or being wrong. Choosing our own comfort over
hard conversations is the epitome of privilege, and it corrodes
1. We avoid tough conversations, including giving honest, pro- trust and moves us away from meaningful and lasting change.
ductive feedback. Some leaders attributed this to a lack of cour-
age, others to a lack of skills and shockingly, more than half 8. When something goes wrong, individuals and teams are rush-
talked about a cultural norm of ‘nice and polite’ that’s leveraged ing into ineffective or unsustainable solutions rather than stay-
as an excuse to avoid tough conversations. Whatever the rea- ing with problem identification and solving. When we fix the

30 / Rotman Management Fall 2019

wrong thing for the wrong reason, the same problems continue to identification and solving, to take a break and circle back when
surface. It’s costly and demoralizing. necessary, to be fearless in owning our parts and, as psycholo-
gist Harriet Lerner teaches, to listen with the same passion
9. Organizational values are gauzy and assessed in terms of as- with which we want to be heard. More than anything else, when
pirations rather than actual behaviours that can be taught, mea- someone says, ‘Let’s rumble’, it cues me to show up with an
sured and evaluated. open heart and mind so we can serve the work and each other,
not our egos.
10. Perfectionism and fear are keeping people from learning and Our research led to a very clear, very hopeful finding: Cour-
growing. age is a collection of four skill sets that can be taught, observed
and measured. The four skill sets are:
I think most of us can look at this list and quickly recognize not • Rumbling with vulnerability
only the challenges in our organizations, but our own internal • Living into our values
struggles to show up and lead through discomfort. These may be • Braving trust
work behaviours and organizational culture concerns, but what • Learning to rise
underlies all of them are deeply human issues.
After finding the roadblocks, our job was to identify the spe- The foundational skill of courage-building is the willingness and
cific courage-building skill sets that people need to address these ability to rumble with vulnerability. Without this core skill, the
problems. We conducted more interviews, developed instru- other three skill sets are impossible to put into practice. Con-
ments, and tested them with MBA and EMBA students enrolled sider this carefully: Our ability to be daring leaders will never be
at the Jones Graduate School of Business at Rice University, the greater than our capacity for vulnerability. Once we start to build
Kellogg School of Management at Northwestern and the Whar- vulnerability skills, we can start to develop the other skill sets. My
ton School at the University of Pennsylvania. We worked until we goal is to give you language and specifics on the tools, practices,
found the answers. Then we tested it, improved it and tested it and behaviours that are critical for building the muscle memory
again. Here’s what we learned. for living these concepts.
We’ve now tested this approach in more than 50 organiza-
1. YOU CAN’T GET TO COURAGE WITHOUT RUMBLING WITH VULNERABILITY. tions and with approximately 10,000 individuals who are learn-
EMBRACE THE SUCK. ing these skills on their own or in teams. From the Gates Foun-
At the heart of daring leadership is a deeply human truth that is dation to Shell, from small family-owned businesses to Fortune
rarely acknowledged, especially at work: Courage and fear are 50 companies, to multiple branches of the U.S. military, we have
not mutually exclusive. Most of us feel brave and afraid at the found this process to have significant positive impact, not just on
exact same time. We feel vulnerable. Sometimes all day long. the way leaders show up with their teams, but also on how their
When we’re pulled between our fear and our call to courage, we teams perform.
need shared language, skills, tools and daily practices that can
support us through the rumble. 2. SELF-AWARENESS AND SELF-LOVE MATTER. WHO WE ARE IS HOW WE
The word rumble has become more than just a weird West LEAD.
Side Story way to say, ‘Let’s have a real conversation, even if it’s So often we think of courage as an inherent trait; however, it is
tough’. It’s become a serious intention and a behavioural cue less about who people are and more about how they behave and
or reminder. A rumble is a discussion, conversation or meeting show up in difficult situations. Fear is the emotion at the centre
defined by a commitment to lean into vulnerability, to stay curi- of that list of problematic behaviours and culture issues — it’s
ous and generous, to stick with the messy middle of problem precisely what you’d expect to find as the underlying barrier to

rotmanmagazine.ca / 31
 Deconstructing Vulnerability

The courage to be vulnerable is not about winning or losing.

It’s about having the courage to show up when you can’t
control the outcome. We’ve asked thousands of people to
describe vulnerability to us over the years, and these are a
few of the answers that directly pierce the emotion: the first
date after my divorce; talking about race with my team; try-
ing to get pregnant after my second miscarriage; starting my
own business; watching my child leave for college; apologiz-
ing to a colleague about how I spoke to him in a meeting;
waiting for the doctor to call back; giving feedback; getting
feedback.
Across all of our data, there’s not a shred of empiri-
cal evidence that vulnerability is weakness. Are vulnerable
experiences easy? No. Can they make us feel anxious and If we want people to fully show up, to bring their whole selves,
uncertain? Yes. Do they make us want to self-protect? including their unarmoured, whole hearts — so that we can in-
Always. Does showing up for these experiences with a whole novate, solve problems, and serve people — we have to be vigilant
heart and no armour require courage? Absolutely. about creating a culture in which people feel safe, seen, heard
Here’s a mandate by which I live: If you are not in the and respected.
arena getting your ass kicked on occasion, I’m not interested
in or open to your feedback. There are a million cheap seats The data made clear that care and connection are irreduc-
in the world today filled with people who will never be brave ible requirements for wholehearted, productive relationships
with their lives but who will spend every ounce of energy between leaders and team members. This means that if we do
they have hurling advice and judgment at those who dare not have a sense of caring toward someone we lead and/or we
greatly. Their only contributions are criticism, cynicism and don’t feel connected to that person, we have two options: De-
fearmongering. If you’re criticizing from a place where you’re
not also putting yourself on the line, I’m not interested in velop the caring and connection or find a leader who’s a better
what you have to say. fit. There’s no shame in this — we’ve all experienced the kind of
We have to avoid the cheap-seats feedback and stay disconnection that doesn’t get better despite our strongest ef-
armour-free. The research participants who do both of those forts. Understanding that commitment to care and connection
well have one hack in common: Get clear on whose opinions is the minimum threshold, we need real courage to recognize
of you matter.
when we can’t fully serve the people we lead.
Given the reality of the world we live in today, that means
leaders — you and I — must create and hold spaces that rise to
a higher standard of behaviour than what we experience in the
news, on TV, and in the streets. And for many, the culture at work
courage. However, all of the daring leaders we interviewed talked may even need to be better than what they experience in their
about experiencing many types of fear on a regular basis, which own home. Sometimes leadership strategies make us better part-
means that feeling fear is not the barrier. ners and parents.
The true underlying obstacle to brave leadership is how we As I often tell teachers — some of our most important lead-
respond to our fear. The real barrier to daring leadership is our ers — we can’t always ask our students to take off the armour at
armour — the thoughts, emotions, and behaviours that we use to home, or even on their way to school, because their emotional
protect ourselves when we aren’t willing and able to rumble with and physical safety may require self-protection. But what we can
vulnerability. Practising self-compassion and having patience do, and what we are ethically called to do, is create a space in our
with ourselves are essential in this process. schools and classrooms where all students can walk in and, for
that day or hour, take off the crushing weight of their armour,
3. COURAGE IS CONTAGIOUS. To scale daring leadership and build hang it on a rack, and open their heart to truly being seen.
courage in teams and organizations, we have to cultivate a cul- We must be guardians of a space that allows students to
ture in which brave work, tough conversations and whole hearts breathe and be curious and explore the world and be who they
are the expectation, and armour is not necessary or rewarded. are without suffocation. They deserve one place where they can

32 / Rotman Management Fall 2019

rumble with vulnerability and where their hearts can exhale. skills in leaders, because we don’t dig into the humanity of this
And what I know from the research is that we should never un- work — it’s too messy. It’s much easier to talk about what we
derestimate the benefit to a child of having a place to belong — want and need than it is to talk about the fears, feelings and
even one — where they can take off their armour. It can and often scarcity (the belief that there’s not enough) that get in the way
does change the trajectory of their life. of achieving all of it.
If the culture in our school, organization, place of worship, Basically, and perhaps ironically, we don’t have the courage
or even family requires armour because of issues like racism, for real talk about courage. But it’s time. And if you want to call
classism, sexism, or any manifestation of fear-based leadership, these ‘soft skills’ after you’ve tried putting them into practice —
we can’t expect wholehearted engagement. Likewise, when our go for it. I dare you. Until then, find a home for your armour, and
organization rewards armouring behaviours like blaming, sham- I’ll see you in the arena.
ing, cynicism, perfectionism and emotional stoicism, we can’t
expect innovative work. You can’t fully grow and contribute be-
hind armour. It takes a massive amount of energy just to carry
it around — sometimes it takes all of our energy.
The most powerful part of this process for us was seeing a
list of behaviours emerge that are not ‘hardwired’. Everything
I’ve been talking about is teachable, observable and measurable,
whether you’re 14 or 40. For the research participants who were
initially convinced that courage is determined by genetic destiny,
the interview process alone proved to be a catalyst for change.
One leader told me, “I’m in my late fifties and it wasn’t un-
til today that I realized I was taught every single one of these
behaviours growing up — by either my parents or my coaches.
Dr. Brené Brown holds the Huffington Foundation-Brené
When I get down to the nitty-gritty, I can almost remember each
Brown Endowed Chair at the Graduate College of Social
lesson — how and when I learned it. We could and should be Work, University of Houston. The author of five #1 New York
teaching this to everyone.” This conversation was an important Times bestsellers, The Gifts of Imperfection, Daring Greatly,
reminder to me that time can wear down our memories of tough Rising Strong, Braving the Wilderness, and her latest book,
Dare to Lead, which is the culmination of a seven-year study
lessons until what was once a difficult learning fades into ‘This
on courage and leadership. Brené’s TED talk, “The Power of
is just who I am as a person’. Vulnerability” is one of the top five most viewed TED talks ever, with over
35 million views. She is also the first researcher to have a filmed talk on Netflix.
In closing The Call to Courage special debuted on the streaming service in April 2019.
The skill sets that make up courage are not new; they’ve been From the book Dare to Lead by Brené Brown. Copyright © 2018 by Brené Brown.
aspirational leadership skills for as long as there have been Published by Random House, an imprint and division of Penguin Random House
leaders. Yet we haven’t made great progress in developing these LLC. Reprinted with permission. All rights reserved.

rotmanmagazine.ca / 33
 The man who has been called ‘The Godfather of
Silicon Valley’ describes the key tenets of his leadership
style — and why Google is so successful.

Thought Leader Interview:

John Hennessy
by Karen Christensen

Google co-founder Larry Page has described Alphabet as sify and grow — not just via acquisitions, but to have an organic
“a collection of companies.” What does that entail at the growth strategy to accompany that.

PORTRAIT BY SUSAN HINOJOSA ([email protected])

moment?
Our current holdings vary from things that are very much in Google has promised to bring the benefits of artificial intelli-
a state of early development — mostly inside our R&D facility, gence (AI) to everyone around the globe. That is a bold prom-
Google X — and companies that are further along, like Waymo ise; how are you going about it?
(our self-driving technology development company) and Verily It is a huge undertaking, and we’re going about it with a two-
(which focuses on healthcare and disease prevention research). pronged strategy. First, by investing in and developing the fun-
Both of these are beginning to deliver products to market and damental technology. The AI breakthrough is basically about
moving from the initial research prototype phase into the prod- five years old, so we’re still early on in terms of developing the
uct phase. basic technology. Strategy one is to continue to develop that. The
We were motivated to do the restructuring in 2015 because second part is to broaden and explore the set of applications that
we felt that one of the key challenges successful companies face, this technology could be applied to, and we’re beginning to see
as they go into their second and third decade, is to diversify the some really interesting things emerge. Self-driving cars are one
suite of products they offer. The mainline product — in our case, important application, but the possibilities around healthcare —
Google Search — and the things supporting it can undermine from quicker diagnosis to the reading of X-rays, EKGs and other
your ability to build out new product lines. The whole focus be- complex data — that’s where we’re going to see some amazing
hind Alphabet and Google X was to enable the company to diver- early advances.

34 / Rotman Management Fall 2019

 Bias is a very important issue, and there are
two key types that we are looking out for.

Another application we’re excited about is the use of AI your second product. That’s really all that first product does
and machine learning to reduce power consumption inside our for you.
Google data centres. That would not have been possible with-
out AI and machine learning, but with it, we’ve been able to In an industry marked by the mindset, ‘Unless you are break-
achieve a significant reduction in power consumption. ing stuff, you are not moving fast enough’, you believe that
humility is one of the most important leadership characteris-
A lot of people are concerned that the algorithms and data tics. Why is it so important?
sets themselves — which AI relies on — often reflect and It’s important for two reasons. First, you are never going to be the
reinforce biases. Is this on your radar? smartest person in the room on all subjects. You have your exper-
Absolutely. Bias is a very important issue, and there are two key tise, of course, but if you’re in a leadership position and you’ve
types that we are looking out for. One is bias that is inherently in got a great team, that team very likely has more depth of knowl-
the algorithm. For example, if you had data that was classifying edge in many areas. Humility means being comfortable asking
a group of people’s ability to do a certain task, and the data had others for their opinion — and sometimes, asking for help.
a certain distribution, but the machine learning system you built The second thing is, humility allows you to admit when
to predict other peoples’ capabilities either exaggerated their you make a mistake. We all make mistakes; no one is perfect,
ability or reduced their ability, we would say there is a bias in the and having humility enables you to say, Hey, I was totally wrong
algorithm. Bias in the underlying data itself is the second issue about this. Say someone on your team comes forward and says,
we are looking at. This means asking, What might be biased in ‘That was a big mistake’. It’s very easy — if you’ve got a big ego
the data itself as a result of the way it was collected or random- — to just gloss over it or ignore it. But if you’re humble, you say
ized? Does it accurately reflect the population being looked at, to yourself, ‘You know what? Maybe this person is right’. Humil-
or not? This is going to be a more difficult problem to deal with. ity is fundamental to enabling you to recover from mistakes.

You have said that one of the early lessons you learned as an You have touched on the fact that Steve Jobs actually didn’t
entrepreneur is that ‘Success is often as dangerous as fail- care about being liked by his colleagues, and therefore, he
ure’. Please explain. was often brutally honest with people. Is that a good way to
There are two parts to that. First of all, with early success it’s very lead?
easy to get a swelled head — and think you have some extraordi- Steve Jobs was sui generis. There has never been anyone with that
nary ability. If you were lucky enough, as an entrepreneur, to get combination of talent and position. Because he literally saved
your first company to a successful liquidation event — whether Apple, he had tremendous respect inside the company. In all
it be an IPO or an acquisition — without any significant bumps my years in Silicon Valley, I have never seen a CEO who could
in the road, it’s easy to inflate your notion of how successful command that kind of respect, personal loyalty and admiration.
you’re going to be. That also means that you won’t be prepared Having said that, most of us would not want to use his methods,
for the inevitable difficulties that eventually arise. because most of us want people to like us. To Steve, that just
With my first start-up, we had an early, very committed wasn’t important. What was important to him was building the
customer, and we expanded way too fast. We let the success go greatest product that he could possibly build — and if that meant
to our heads; we thought, ‘Okay, we’ve got that one, we can get alienating some people, so be it. But I think for most people,
a lot more’. But it actually took a lot longer to get that customer that would be extremely uncomfortable.
to deliver our product to their channels, and as a result, it took
longer to get our second customer and our third customer. We One of the ground rules that you always set for your teams
had to do a complete reset. That was a great lesson on not letting is that tough questions aren’t just allowed, they are encour-
early success go to your head. What I tell young entrepreneurs aged — and indeed, they’re necessary. Why is this so impor-
is, build your first product, and if it’s successful, you get to build tant?

36 / Rotman Management Fall 2019

In the strategic planning process, whenever you’re heading in a reflected in Google’s celebrated home page, which could eas-
new direction, early on, it’s always just a vision. Then it slowly ily have been sold to advertisers, but was instead stripped down
begins to coalesce — and that is the point at which you should to simply asking the user to plug in their search terms. That de-
start asking some really hard questions, to see whether you’ve cision, in conjunction with a better search algorithm, enabled
missed something fundamental or omitted something that is Google to capture much of the search industry.
critical to success. As a leader, you need to get comfortable with
people asking really tough questions. When a team is afraid to As a leader, what are some of the key lessons you’ve learned
ask hard questions, that’s when mistakes are made. about creating an environment that continues to be innova-
tive over time?
Having witnessed so much of it over the years, what have you In my experience, innovation is about people, and the job of the
found to be the best approach to innovation? leader, first and foremost, is to recruit the best people you can
One of Steve Jobs’s core philosophies was that he never asked his — people who are willing to think beyond the status quo. When
customers what they wanted, because it wasn’t their job to invent Larry and Sergey first started working on web search, a lot of
the future. That was his job, and we saw this approach manifest- us said, ‘Guys, we already have Infoseek and AltaVista’; they
ed with the iPhone. I’m not sure anyone knew how much they looked pretty good to us, because our basis for comparison was
wanted a smartphone until they held one in their hands. Remem- the pre-Internet days with no search engines. But as indicated,
ber, cell phones and handheld personal assistants both existed to Larry and Sergey, those early efforts did not look very good at
already, and many people had one or both devices. Jobs put them all. They believed whole heartedly that they could do better.
together in one device, and suddenly everyone had to have one. Having people who are unwilling to accept the status quo
This is a hallmark of the very best innovation. and who think differently is critical. Then, your job as a leader is
I was lucky to have seen some of the first demonstrations of to enable them to prosper and see their ideas through. That is the
Yahoo and Google, and both were true ‘Aha!’ moments for me; key to keeping the innovation engine alive.
Yahoo because it showed me that the World Wide Web would
not just help scientists and technologists communicate, it would You have said that, in every profession, “as you climb higher
transform all of our lives; and Google because I saw a much im- in position, facts and data decrease in importance.” For an
proved search engine with a much better algorithm than any- AI-driven company like Alphabet, that seems a bit counter-
thing in the marketplace. With all of these products, we never intuitive.
realized we needed them until we had them; and now we can’t It is a bit counterintuitive, but it is many of the easiest decisions
live without them. that can be made with facts, figures and data. In any organiza-
tion with a hierarchical structure, all of the easy decisions get
Why has Google been so mind-blowingly successful? made lower down in the hierarchy, and the decisions that filter
Before Google we had AltaVista, which was a pretty good search up to the top are the hardest ones. These decisions are never
engine. But when two Stanford students — Sergey Brin and Lar- black and white. Certainly, you’re going to want to use whatever
ry Page — looked at it with youthful eyes, they saw a massive data you have at hand, but you’re also going to have to use some
opportunity. With a new algorithm and a near obsession with qualitative aspects and gut instinct, and think about things like
getting the right result, they created a significantly improved unintended consequences and societal reaction, both of which
solution. Joining in their effort, Google CEO Eric Schmidt un- are unquantifiable.
derstood the importance of creating user trust, which would The facts and figures don’t ever go away — and they can
distinguish Google’s search engine from others. In particular, certainly screen out some alternatives and amplify the value of
Google chose to drive search results on the basis of user inter- others — but in the end, people skills and whether or not you
est — not advertiser interest. The search drove the ad selection, can execute in a particular direction become the keys to great
not vice versa. This same transparency and trustworthiness is leadership.

rotmanmagazine.ca / 37
 The job of the leader, first and foremost, is to recruit people
who are willing to think beyond the status quo.

I’m sure you’re familiar with Larry Fink’s letters to CEOs. In his now, and the breakthroughs that have occurred in recent years
most recent one, he says that, “Purpose isn’t merely a tagline, are truly unrivalled. This technology provides an opportunity
it has to be part of the fundamental reason for being.” Does to revolutionize so many things. In the near-term, one of the
Alphabet embrace this mindset? things I’m most excited by is what Waymo’s doing with self-driv-
Oh, 100 per cent. Larry talks about creating value for stakehold- ing cars. The number of people who get killed in road accidents
ers, and I love the fact that he chose the term stakeholders instead in the U.S. and Canada — and around the world — is staggering,
of shareholders. Of course, shareholders are stakeholders, but and we now have a technology that will dramatically reduce
they’re not the only ones. In a company like Alphabet, our cus- road accidents. It will also reduce the problems associated with
tomers around the world are stakeholders in our future success, people driving under the influence and older people driving. We
as are our employees and members of the communities in which are going to be able to save tons of lives. This technology is very
we operate. Of course, so are our shareholders, but Mr. Fink has close to broad deployment, and I believe it will improve our so-
a view that companies need to remember that they are serving ciety and our world.
their shareholders by also serving their other stakeholders.
This mindset requires taking a bit of a longer-term vision Last summer Sidewalk Labs, a division of Alphabet, and Wa-
than just thinking about the next quarterly earnings, or even an- terfront Toronto announced a partnership in which Sidewalk
nual earnings — and that is one of the things that Larry and Ser- will invest US$ 50 million in Quayside, a 12-acre district on the
gey — from the beginning — have emphasized in their own letter waterfront. This is the first such project for Alphabet. What
to shareholders. Quite frankly, I think the world would be much drew you to Toronto, and what can we expect?
better off if all corporations did that. Of course, that decision was a management one, but my un-
derstanding is that Toronto was attractive because it is such a
Google has faced some major challenges of late with respect modern and diverse city with great educational institutions that
to personal conduct, diversity and inclusion. How are you thinks boldly about its future — and the future of cities.
dealing with that on a company-wide basis?
We’re dealing with it by trying to make improvements to our Any parting advice for young would-be entrepreneurs?
processes and the way we handle things. We’re trying to be as I can’t tell you how many times I’ve had the same conversation
transparent as possible for a company with 100,000 employ- with young people: The student opens with, ‘I want to create a
ees, which obviously is a big challenge. And we’re trying to make start-up’. I ask them to tell me about their technology and they
some reforms and ensure that we continue to have more diverse answer, ‘Well, I don’t have it yet, but I really want to do a start-
leadership, including on our Board. These things are critical to up!’ I remind them that great start-ups begin with great new tech-
trying to reform a culture. nology — or at least novel applications, such as eBay, Airbnb or
The challenge companies often face in these situations is Uber. Innovation presents great opportunities for smart entre-
they can’t — for lots of complicated legal reasons — talk about preneurs; not the other way around!
all the details of these instances when they blow up. What you
have to do is go back and look at your policies and procedures and
say, ‘Do we need to change these things to make things more fair
for our employees and to engage them better?’ That’s what we’ve
been doing at Google.

With projects under way from drones to healthcare and ev-

erything in between, which Alphabet initiative are you most
John Hennessy is the Chairman of Alphabet Inc., Google’s parent company,
excited about at the moment?
and author of Leading Matters: Lessons From My Journey (Stanford Business
I’m really excited about the future of artificial intelligence. I’ve Books, 2018). He is one of the founders of MIPS Computer Systems and
been in the high-tech computer science area for 40-plus years Atheros, and served as the tenth President of Stanford University.

38 / Rotman Management Fall 2019

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 SENSING FROM
WITHIN:
THE INSIGHT-DRIVEN
ORGANIZATION
The best way to detect, define and share customer
insights is hiding in plain sight.
by Alessandro Di Fiore

NOT THAT LONG AGO, traders used Reuters or Dow Jones Teler- source market research. That’s because to be effective, a deep
ate to gather information and then grabbed paper, a pencil and strategic understanding of the business is required. Behavioural
a calculator to run analytics and make their decisions. A then- neuroscience studies demonstrate that creativity at the indi-
little-known financier named Michael Bloomberg observed vidual level is the result of three factors: motivation, divergent
this activity daily and noticed multiple frustrations on the part of thinking and experience. Familiarity with the subject matter is
traders. Before long, he concluded that the providers of financial essential to the creative process. So, if you are looking for power-
information also needed to offer easy-to-digest analytics to help ful customer insights, who better to run customer explorations
users make sense of all the data. This simple insight would spawn than your own managers and employees?
a world-renowned business. Today, Bloomberg has 19,000 em- In today’s information-saturated environment, your own
ployees in 176 locations worldwide. employees can — and increasingly must — act as market research-
The origins of Bloomberg and other corporate success sto- ers, transforming your company into what I call an insight-driven
ries highlight a critical managerial lesson: In many cases, search- organization. The key question is how to go about this. How can
ing for customer insights in order to use them to develop unique you design and build an insight-driven organization that is able
and winning products and services is not a data-crunching to use employees as sensors of customer insights?
game. Hundreds of pages of customer satisfaction surveys and I first touched on this topic in my article “The Democrati-
traditional quantitative market research could not have revealed zation of Judgment”, which appeared in the winter 2017 issue of
the opportunity Bloomberg saw and seized. He simply observed Rotman Management. Since then, I have applied my ideas at large
the reality before him and acted. Of course, quantitative mar- companies and road-tested a framework to support business
ket research and analytics are important and useful. But, when leaders on their implementation journeys. Based on this work
it comes to creating breakthrough new products and business I have identified a process for achieving ‘inside-out’ customer-
models, qualitative input is uniquely powerful. insight generation. In this article I will describe these steps —
Another critical lesson for leaders is that when they are look- which in practice, are not necessarily sequential — and show how
ing for powerful customer insights, they cannot afford to out- to transform your company into an insight-driven organization.

rotmanmagazine.ca / 41
 Your employees can—and increasingly must—
act as market researchers.

1. IDENTIFY YOUR SENSORS lives. For example, while visiting urban consumers in China, a
At Intuit, the principle of broadening and pushing down respon- few employees observed that grease build-up in kitchens was a
sibility in order to generate customer insights is applied to an very common issue due to tight spaces and high heat. Such qual-
extreme. Everyone — senior leaders, managers and employees ititative input, documented with photos and videos, is stored and
(independently from their functional responsibility and hierar- shared with product development teams and brand teams. Sales
chical role) — is asked to get out in the field for a few hours each and marketing people at Unilever also act as market researchers,
month. These regular explorations, probes and observations of ready to spot insights thanks to their training on customer explo-
customers have provided input into new products and improve- ration and digital technology tools.
ments to existing ones.
Alternatively, some companies focus on their salesforce or Following are the key questions to cover in step two:
technical support teams in the field, while others focus on the • Is there an insight methodology used elsewhere that can
contact centre or the merchandising team. Every business is dif- provide an inspirational and practical foundation to start
ferent, but carefully identifying employees who can serve as on- from?
going sensors is the starting point. • How can it be customized and adapted to your company’s
business and culture?
Following are the key questions to address in step one: • How can you disseminate the methods for employees in
• Who will be your sensors? Which functions should be in- ways that are easy to understand and useful?
volved? • How can you scale training efficiently across the targeted
• Once the functions to be targeted are chosen, should every- designated sensor functions?
one or a sub-group of people within the function be charged • Which digital tools can further enable sensors in their cus-
with generating customer insights? tomer-insight generation tasks?
• What is the right profile and attitude of an employee acting • Who will be responsible for curating the methods and
as a sensor? knowledge over time and for delivering of training?
• Will the time spent on customer-insight generation be vol-
untary or mandated? 3. DEVELOP AN INSIGHT-GENERATION PROCESS
Promising insights don’t turn into successful businesses on their
2. DEVELOP NEW TOOLS TO TRAIN YOUR SENSORS own. You can train the best insight generators, but you must also
Today, no skill is more critical than the ability to explore and un- be able to leverage their insights. Without a systematic process in
derstand your customers’ needs. At Intuit, this skill is dissemi- place, you will not realize optimal value. The trouble is that most
nated throughout the company’s managers and employees via its organizations do not have such a process. Indeed, our research
Design for Delight training program. A similarly named centre of suggests that only 15 to 20 per cent of companies have something
excellence — which also delivers the training — has the respon- that resembles an insight-generation process.
sibility for designing and customizing methods for customer- Some readers might be thinking, ‘Our market research is
insight generation that fit with the company’s business, context done externally; why should we care about this?’ The traditional
and culture. approach is for companies to create a briefing; ask two or three
Unilever leverages new tools to enable its workforce to keep market research agencies to make a pitch; pick a winner; execute
a regular eye on the market. With an in-house app installed on a contract; and wait for the agency to report back. When the re-
their devices, Unilever employees can capture insights about port arrives, leaders figure out if any decision or action should be
consumer needs and the role of Unilever products in their daily taken. What could be wrong with this approach?

42 / Rotman Management Fall 2019

 First of all, this externalized model is slow, because it usu- 4. MAKE TIME AND SPACE AVAILABLE
ally takes two or three months to get any results. It also requires Some customer insights are bottom-up and spontaneous. For
significant funding, procurement resources, legal contracting example, a sales rep trained on simple customer probing tech-
and a number of other aspects that limit its use to a few times niques might have an insight for potentially improving the func-
per year. tionality of your product. In this case, the sales rep might have
This externalized model is starkly different from that of an taken the initiative to spend an extra 15 minutes during one of
insight-driven organization, where insights are generated daily. their regular visits to a customer.
That’s because your own employees are serving as constant sen- Alternatively, someone at the company, for example, a
sors, uncovering data, findings and insights in a continuous flow. global brand manager, creates a briefing of a small number of
Global swimwear leader Arena has institutionalized an hypotheses to test and asks sales reps and technical support
insight-generation process that is seamlessly integrated with its people to run customer explorations to check these points. Sen-
new product development process. Arena leverages its sales reps sors, properly trained, run these explorations and turn insights
around the globe to generate customer insights. Each individu- back to the brand manager. It is also timely, as the system can
al is trained to use their smartphones and a simple app to post be used by a central person briefing the sensors to test selected
pictures, videos, comments and insights on a daily basis. The hypotheses in days.
company’s central design function moderates the discussion and In both scenarios — spontaneous or prompted — employ-
organizes the data points, eventually developing new hypotheses ees identified as sensors need to dedicate time and space to the
and asking for further probing. Finally, key validated insights task of customer-insight generation. To be clear, this task is in
are channelled to the product development team for new product addition to their regular job. For example, sales reps have tar-
collections. gets and a job description that is all about selling; why would
In some cases, the collected insights have been instrumen- they dedicate time to insight-generation tasks that are not part
tal in generating completely new products. For example, Arena of their job description?
identified ‘beginners’ who went to the pool a few times and then This is a very real concern, and unless properly addressed,
gave up as an interesting non-customer segment to explore. Ob- can kill any possibility of internally-generated customer in-
servations and probes run by sales reps at swimming pools gen- sights. That is why organizations need to formalize time and
erated a key insight: Breathing is perhaps the biggest challenge space in the job description of the targeted sensors and provide
for novice swimmers. Poor breathing creates problems with ex- incentives for executing these additional tasks. The main job of
ecuting strokes, making it harder to move comfortably in the wa- a sales rep, for example, is still to sell, so any request on their
ter. It turns out that this is one of the most common reasons that time for capturing insight should be realistic and limited to a few
novices give up learning how to swim and turn to other fitness hours per month.
activities. To fully embed customer explorations in the organization,
This insight led Arena to develop a new device called the Intuit has routinized the practice in the job descriptions of both
Freestyle Breather, a pair of plastic ‘fins’ that can be attached to managers and employees. Each person at Intuit must spend a
most goggles. The Freestyle Breather has three main functions: few hours per month interacting with customers. While man-
It facilitates inhalation by enhancing the bow wave, making datory because it is part of the job description, at Intuit this has
it easier to breathe into the air pocket; it secures inhalation by become ingrained in the company culture.
protecting the mouth and nose from splashes and water drops; Institutionalizing customer explorations in job descriptions
and it reduces over rotation of the head and body because swim- can be useful not only for large companies, but also for small
mers feel less anxiety and risk of breathing water. businesses. At Davide Oldani’s Michelin-starred restaurant

rotmanmagazine.ca / 43
 Sensing From Within: A Framework

• Identify the individuals or groups that

will act as sensors in the field
• Assess capabilities and constraints

1
Identify Sensors

• Allocate time and space, 4 • Scout best practice methods

define rewards 2 • Customize, standardize and
Make
• Codify these new activities Time Design document in a user-friendly
as part of job descriptions Methods manner
and
• Design reward systems and • Train sensors extensively
Space
to boost the activities Available Train
over time

3
Develop Insight-
Generation Process

• Define the entire process to pick and nurture insights

• Integrate your insight generation, marketing and innovation process
• Define support technology tools and integration

FIGURE ONE

D’O in Milan, there are no professional waiters. Although it may sors? If yes, how can you revise such targets and goals in a
sound strange for a high-end gourmet restaurant, the practice of fair way?
waiting tables has been routinized in the job description of the • How can you change the job description and reward system
cooks. With weekly turns, the cooks take orders directly from of the targeted sensors to incentivize the time spent on in-
clients, establish communication with them and learn about sight generation and its effectiveness?
their needs in the context of use. If you think about it, cooks are • How can you make generated insights fully transparent and
better positioned than waiters to passionately explain the menu create social visibility and reward for most active sensors?
and understand the evolving needs of customers. These insights
are then transferred into the menu innovation session that is Based on best practices, I have designed a blueprint of the in-
held every season. sight-generation process (see Figure One). To kick-start your
own customized insight-generation process, ask yourself the
Following are the key questions to address in step four: following questions:
• How much time per month is realistic for each of the tar-
geted sensor groups to spend on insight generation? • Who will be responsible for gathering customer insights
• Is there any trade-off between the time spent on insight and translating them into clustered online conversations?
generation and pre-existing targets and goals of the sen- • How can we integrate the newly created insight-generation

44 / Rotman Management Fall 2019

 The Insight- Driven Organization

Our research shows that companies moving toward the upper right — taking responsibility for insight generation to the widest pos-
sible level and standardizing learning and practices across the organization — excel at insight generation and qualitative judgments.

High Only for Professionals

STANDARDIZATION OF LEARNING

Community of Explorers
• Responsibility for insights lies with a single • Responsibility for insights spans across
group of experts (e.g. Market Research) groups and is pushed down in the
organization
AND PRACTICES

• Tools and practices are highly standardized

• Practices and tools are standardized to
maximize effectiveness and replicability

Schumpeter’s Bias Creative Chaos

• Limited attention on the issue, nothing is • Leadership and culture foster individual
standardized initiatives

• All is left to the individual initiative and talent • All this energy is not maximized through
standard practices and processes
Low Wide
Narrow

RESPONSIBILITY FOR CUSTOMER INSIGHTS

FIGURE TWO

process with our product development and marketing pro- In this era of big data, big qualitative insights remain a
cesses? powerful competitive weapon. And for once, getting an edge
• Who will be responsible for storing and curating the library on your competitors doesn’t come at a price: Every one of your
of insights for current and future needs? employees already has a smartphone or tablet, and once trained,
• How will we set up timing and frequency (rhythm) in the your ‘sensors’ will be able to carry out ethnographic research
insight-generation activity of our sensors? and customer probes at nearly zero cost. Only one question
• How will we integrate the digital tools/devices supporting remains: Why wait?
these new processes with other company systems?
• Which metrics and goals will apply at each stage?

In closing
Canvassing the thoughts, fears and experiences of customers
with your own managers and employees has three key advantag- Alessandro Di Fiore is the Founder and CEO of the European
Centre for Strategic Innovation (ECSI) and ECSI Consulting
es: The ‘researcher’ knows the subject matter; he or she can be
(www.ecsi-consulting.com).
more creative than an outsider about designing the experience;
and untold market research budget dollars can be saved.

rotmanmagazine.ca / 45
 Equality=Innovation:
How a Culture
of Equality Drives
Innovation
Are you ready to build a culture of equality where people can
thrive and create? By embracing three principles, your organization
will be primed to be more innovative than ever before.
by Ellyn J. Shook and Julie Sweet

IT IS WELL DOCUMENTED that in this age of widespread disruption, industries and all countries. In fact, we found that the innovation
companies must innovate continuously, creating new markets, mindset is six times higher in the most-equal cultures than in the
experiences, products, services, content or processes. So, what least-equal ones.
can leaders do to encourage innovation? It’s about more than Innovation also equals economic potential. Among the more
recruiting the brightest minds. While having the best talent is than 18,000 employees in 27 countries surveyed, we found that
clearly an asset, people need the right culture in order to flourish. people are more willing and able to innovate in faster-growing
We have found that a culture of equality — the same kind of economies and in geographies with higher labour-productivity
workplace environment that helps everyone advance to higher growth. And the stakes are enormous: We calculate that global
positions — is a powerful multiplier of innovation and growth. gross domestic product would increase by up to US$ 8 trillion by
This means that building a culture of equality is not just an ethi- 2028 if the innovation mindset in all countries was raised by 10
cal imperative, it is also a business priority. Put simply, if organi- per cent.
zations want to thrive, they have to ‘get to equal’. No matter who or where they are, if people feel a sense of
The power of a workplace culture of equality to drive em- belonging and are valued by their employer for their unique con-
ployees’ innovation mindset — their willingness and ability to in- tributions, perspectives and circumstances, they will be empow-
novate — is strong. In our research, it had more impact than age ered to innovate more.
or gender and led to an increase in the innovation mindset in all Innovation mindset is a new way to measure an individual’s

rotmanmagazine.ca / 47
 Building a culture of equality is not just an ethical imperative,
it is a business priority.

ability and willingness to innovate. It is enabled by six key ele- ENCOURAGE RISK-TAKING.Ensure that employees know they have
ments: the freedom to experiment and help them learn from their fail-
ures.
PURPOSE: Alignment around and support for the purpose of the
organization. SET UP TO INNOVATE. Design-in the necessary time, space, resource
RESOURCES: Having the tools, time and incentives necessary to and technologies needed to innovate and continually encourage
innovate. and reward innovation.
COLLABORATION: Working with other departments or in fluid,
cross-functional teams. MAKE LEADERS ACCOUNTABLE. Track progress, make leaders ac-
AUTONOMY: Being shown a clear mandate for change — and being countable.
trusted to follow through.
INSPIRATION: Tapping into inspiration from beyond the organiza- PILLAR 2: EMPOWERING ENVIRONMENT
tion. Training, greater flexibility and commitment to work-life bal-
EXPERIMENTATION: Experimenting with new ideas quickly without ance are the most powerful drivers of an innovation mindset.
fear of failure. This area is where there is the greatest opportunity for impact, as
it accounts for 70 per cent of innovation mindset gains. Employ-
We recently surveyed employees about their experience with ees are empowered by a shared sense of purpose, paired with au-
these six elements in the workplace, asking them about the ex- tonomy, which helps them reach their individual potential. Here
tent to which ‘I am encouraged to look for inspiration outside my are four characteristics of an empowering environment.
organization’ (Inspiration) or ‘The purpose of the organization
makes me proud to work here’ (Purpose). The more strongly a BE CLEAR ON PURPOSE. Ensure that employees know the purpose of
person agreed that these elements applied, the higher their in- the organization and how their work aligns with it.
novation mindset score.
Using an econometric model, we were then able to show FIERCELY PROMOTE FLEXIBLE WORKING. Have the leadership team set
how an innovation mindset would change if people worked in a a positive example around work-life balance. Use technology to
more-equal culture. Our finding: As a culture improves with re- enable people to have more say over where, when and how they
spect to equality, the innovation mindset improves. Indeed, we work.
found that for every 10 per cent improvement in culture factors,
innovation mindset increased by 10.6 per cent. These improve- TRAIN EFFECTIVELY. Offer employees engaging and flexible training
ments are underpinned by three pillars of a culture of equality: programs so they can acquire skills for the future.
bold leadership, an empowering environment and comprehen-
sive action. We will describe each in turn. LET PEOPLE BE THEMSELVES.Don’t ask them to conform when it
comes to appearance; encourage inclusion in every way.
PILLAR 1: BOLD LEADERSHIP
Culture starts at the top. Setting and publishing diversity targets, PILLAR 3: COMPREHENSIVE ACTION
holding the leadership team accountable and measuring prog- Forward-looking policies and practices are important, but they
ress are critical steps. Leaders must give employees the resources must also be evenly accessible to all, to ensure that individu-
they need to innovate and the freedom to fail. Here are four ways als or groups don’t feel singled out or held back. When employ-
to achieve this. ees are inspired by those inside and outside the organization,
their commitment to living the company’s core values, and for
PRIORITIZE DIVERSITY AND EQUALITY. Establish diversity, equal pay collaborating with one another, grows. Here are four ways to
and advancement goals. achieve this.

48 / Rotman Management Fall 2019

 A Culture of Equality: The 40 Factors

Based on Accenture research, the following three pillars and • Employees trust that the organization pays women and men
40 factors characterize a culture of equality. equally for the same work
• The proportion of women in senior leadership has increased
Bold Leadership over the last five years
• Gender diversity is a priority for management • The organization is fully committed to hiring, advancing and
• A diversity target or goal is shared outside the organization retaining women
• The organization clearly states gender pay gap goals and • Progress has been made in improving gender equality in
ambitions senior leadership
• Progress on gender diversity is measured and shared with • There is a clear maternity policy in place
employees • Women are encouraged to take maternity leave
• Leaders are held accountable for improving gender diversity • Men are encouraged to take parental leave
• A diversity target or goal is shared inside the organization • There is a clear parental policy in place
• The leadership team is diverse • The organization hires people from a variety of backgrounds
• Leaders take action to get more women into senior roles
Empowering Environment • Employees have the freedom to be themselves at work
• Employees have never been asked to change their appear- • Leadership has a positive attitude toward failure
ance to conform to company culture • Leaders set a positive example around work-life balance
• Employees have the freedom to be creative and innovative • Networking events with company leaders take place during
• Virtual/remote working is widely available and is common office hours
practice • Employees can decline a request to work late without nega-
• The organization provides training to keep its employees’ tive consequences
skills relevant • Employees can decline a request to attend early morning/
• Employees can avoid overseas or long-distance travel via late-evening meetings without negative consequences
virtual meetings • Sexual discrimination/harassment is not tolerated
• Employees can work from home on a day when they have a • The company has made demonstrable progress in reducing
personal commitment tolerance of sex discrimination and gender-biased language
• Employees are comfortable reporting sexual discrimination/ • Company training times and formats are flexible
harassment incidents to the company • Supervisors respond favourably to flexible working requests
• Employees feel trusted and are given responsibility • The organization respects employees’ needs to balance work
with other commitments
Comprehensive Action • The organization has made progress on building a workplace
• Progress has been made in attracting, retaining and advanc- where no one feels excluded
ing women
• The company has a women’s network open only to women
• The company has a women’s network that is open to both
women and men

SEND A LOUD AND BROAD SIGNAL. For example, encourage all new Leading the Way: The Exemplars
parents — not just birth mothers — to take leave. One example of a company committed to — and benefiting from
— a culture of equality is Mastercard. Its stock soared over 35 per
CROSS-TRAIN AND REARRANGE TEAMS. Use work rotations, tempo- cent last year, and the company is growing rapidly as it ushers
rary assignments or horizontal career moves to give people op- in a cashless society. “Diversity is built into the core of what we
portunities to grow skills and to share knowledge across the or- do,” says President and CEO Ajay Banga. Indeed, the company
ganization. boasts twice the number of women in leadership as other compa-
nies in the S&P 500.
USE NETWORKS. Encourage collaboration and support through net- “We’re in an industry where technology and innovation flow
works for your employees. around you all the time. If you surround yourself with people
who look like you, walk like you, talk like you, went to the same
LOOK OUTWARD. Bring the outside in. Encourage people to develop schools as you and had the same experiences, you’ll have the very
external networks and partnerships and to attend events where same blind spots as them. You’ll miss the same trends, curves in
they meet others and hear new ideas. the road and opportunities.”

rotmanmagazine.ca / 49
If you surround yourself with people who look like you and have
had the same experiences, you will all have the same blind spots.

Employees in the Most-Equal Cultures

See Fewer Barriers to Innovating

40% 21% 7%
Even companies that have some, but not most, of the cul-
Most Equal Typical Least Equal ture-of-equality factors can gain a great deal from being more
like the best: An innovation mindset is twice as high in the most-
Percentage of respondents who answered “Nothing stops me equal companies than in typical ones. This is a powerful incentive
from innovating”. for these organizations to take the leap from ‘OK’ to ‘truly equal’.
What else do employees in the most-equal cultures have in
FIGURE ONE
common with one another? For one thing, they see fewer barriers
to innovating at work. And they’re also less afraid to fail.
Culture’s power to unleash innovation is blind to industry,
country and various workforce demographics. Among those
surveyed, people across all genders, sexual identities, ages and
ethnicities show a stronger innovation mindset in more-equal
Banga cultivates a diverse workforce, but he’s also looking workplace cultures. Against every factor we tested, culture wins.
for something he calls ‘a high D.Q.’ — decency quotient. For him,
decency is about being there for employees and engendering Diversity Is a Building Block: Equality Is a Multiplier
trust among them. Trust, he believes, breeds innovation: “If you Organizations know that fostering diversity — the extent to
want things to happen, everyone has got to be open and trusting.” which members of a company’s workforce, including the lead-
The CEO stresses that a company-wide effort and shared ership team, differ from each other in terms of age, ability, eth-
sense of purpose have helped Mastercard thrive as a more-equal nicity, gender, gender identity or expression, religion or sexual
culture and as a corporation. The company is currently inno- orientation — is important. Diversity remains a critical building
vating in the area of financial inclusion, helping to provide ac- block to unleashing innovation.
cess and tools to two billion people in the world without a bank However, a culture of equality is the essential multiplier to
account. “We’ve reached 380 million people as of now. I think maximize innovation. While the impact of diversity factors alone
we have a line of sight to 500 million,” Banga says. “The idea is on innovation mindset is significant, it is much higher when
to make it happen everywhere, from Africa to Brazil to Eastern combined with a culture of equality. In the most-equal and di-
Europe.” verse cultures, innovation mindset is 11 times greater than in the
It’s a business priority that is perfectly aligned with, and least-equal and diverse cultures. In a culture of equality, people
driven by, Mastercard’s culture of equality. When the right tone is are truly valued for their differences and free to be who they are.
set from the top and everyone in an organization is empowered, They’re not just there to check a box — they’re empowered to
trusted and armed with a mission, together they can unlock un- contribute.
precedented opportunity. One of Procter & Gamble’s priorities is creating a cul-
Banga’s leadership philosophy is validated by new Accenture ture that empowers all employees to perform at their peak. To
research: When employees work in more-equal cultures, they are achieve this, P&G leadership has rolled out programs dedicated
much more likely to have an innovation mindset. In fact, an in- to achieving equal representation by women at every level and
novation mindset is six times higher in the most-equal cultures arming employees with the skills and experiences they need to
vs. the least-equal ones. bring disruptive ideas to the table. These include their Women’s

50 / Rotman Management Fall 2019

 Impact of the Top 10 Workplace Culture Factors on an Innovation Mindset

8 of the 10 strongest drivers are about empowerment

The organization provides training to keep its

employees’ skills relevant
Virtual/remote working is widely available
and is common practice

Company training times and formats are flexible

Supervisors respond favourably to flexible

working requests
Employees have the freedom to be
creative and innovative
Leaders set a positive example around
work-life balance
The organization has made progress on building a
workplace where no one feels excluded
Participation in women’s networks is open to
both men and women
The organization respects employees’ needs to
balance work with other commitments

Leadership team is diverse

0 1 2 3 4 5 6 7 8 9 10

Percentage improvement in innovation mindset.

FIGURE TWO

Accelerator Program and Athena in Action — initiatives that en- ally, its Emerging Leaders program has rapidly accelerated the
gage high-potential women at critical career points to prepare advancement of women and minorities to senior leadership posi-
them for senior roles. tions. Marriott continues to reshape travel and leisure and attract
Additionally, the company’s Intentionally Inclusive Leader- the next generation of travellers by launching new brands, creat-
ship Training program teaches employees how to identify and ing tech-centric guest experiences and fostering unique partner-
overcome bias. As one of the world’s largest advertisers, P&G ships, including one with Alibaba in China.
also leverages its voice in advertising and media to tackle bias, Elsewhere, over the past five years, Microsoft has set about
spark conversations and promote equality through campaigns reinventing itself and is once again one of the most valuable com-
such as Always #LikeAGirl, Ariel #ShareTheLoad and Gillette’s panies in the world today. This re-emergence has manifested in
We Believe. different ways, including a strategic shift toward cloud comput-
Marriott International is another company that takes ing. But this resurgence would not be occurring if it weren’t for
equality seriously. Its deep commitment to the professional the strength of its evolving culture, which underpins everything
development of its diverse employee population has allowed it the company is doing today. This cultural evolution is grounded
to put innovation at the centre of its growth strategy. The com- in the fundamental belief that inclusion throughout the organiza-
pany has launched Voyage Global Leadership Development — tion — from executives and managers to employees around the
an award-winning program offering resources and support for world — is table stakes for innovation. It means that every em-
future company leaders across Marriott’s hotel brands. Addition- ployee is enabled to be their best self at work and apply a growth

rotmanmagazine.ca / 51
 New from Rotman-UTP mindset to help Microsoft be more responsive to the needs
of both customers and employees.
This can be seen in everything from the company’s
‘core priority’ on inclusion for all employees; to posters
and signage that encourage people to invite in new ideas
and foster creativity; to Microsoft’s ‘Outside In’ program,
in which luminaries and thought leaders from all walks of
life are invited to the company’s Redmond campus to meet
with employees; to a monthly all-company Q&A with CEO
Satya Nadella and his leadership team.
Employees are encouraged to take an active role —
working with their managers — to chart the career path that
is right for them, and managers in turn are given tools and
training that help them be better leaders for their teams.
This evolving culture can perhaps best be seen during Mi-
crosoft’s One Week event, when employees from around
the world come together each July for a week of collabo-
ration, partnership and learning opportunities. The event
is highlighted by a three-day Hackathon where thousands
of employees work on small teams creating new technol-
ogy solutions and products — many of which are designed
for social good.
Microsoft’s shift from a ‘know it all’ culture to a ‘learn
it all’ culture has invited an entirely new world of potential
for the company, producing game-changing innovations
and a more empathetic workplace. From its augmented re-
ality HoloLens to artificial intelligence for the visually im-
paired, Microsoft is making the world a better place, but it
started by making Microsoft a better company first.

In closing
Are you ready to build a culture of equality where people
can thrive and create? As a starting point, you should have
an inclusion and diversity (I&D) strategy in place — one
that is aligned with your overall business plan. This strat-
“…a trenchant and egy will form a critical foundation on which leaders can
realistic assessment take action and drive progress. Then it’s time to embrace
the three pillars of a culture of equality. As indicated here-
of China’s dynamic in, by fostering bold leadership, an empowering environ-
ment and comprehensive action, your organization will be
evolution…” primed to be more innovative than ever before.

– Paul Evans, University of British Columbia

@utpress Ellyn J. Shook is Chief Leadership &

Human Resources Officer at
Accenture. Julie Sweet is Chief
Executive Officer North America at
utorontopress.com
Accenture. Their complete report,
“Equality=Innovation: Creating a Culture That Drives Innovation”
is available online.
 LIE #3
THE BEST
COMPANIES
CASCADE GOALS*
In this provocative and inspiring book, strengths
guru and bestselling author Marcus Buckingham and
Cisco leadership and team intelligence head Ashley
Goodall show that there are some big lies and faulty
assumptions running through our organizational
lives—causing dysfunction and frustration.
Based on data and stories of real leaders in the
trenches, Nine Lies About Work reveals the powerful
truths that really motivate leaders and teams and
inspire them to do great work.
*TRUTH #3: THE BEST COMPANIES CASCADE MEANING

JOIN THE DISCUSSION hbr.org/freethinkingleader

AVAILABLE AT HBR.ORG AND WHEREVER BOOKS ARE SOLD hbr.org/books

 FIXING TECH’S
GENDER GAP:
The Bravery Mindset

Something still seems to be holding women back

from many of today’s most interesting and lucrative jobs.
Reshma Saujani is determined to change that.
Interview by Alison Beard

ALISON BEARD: Why do you think it has been such a hurdle gets an answer wrong, instead of saying, ‘Wait, let me try that
to get young girls and women pursuing careers in Computer again’, she often goes straight to ‘I’m not smart’.
Science? Just look at Mark Zuckerberg. He was a sophomore when
RESHMA SAUJANI: There have always been women in technol- he dropped out of Harvard to start Facebook. He could have
ogy and computing, but things started to change in the 1980s. totally failed — but he just went for it. It’s such a white guy thing
At the time, if you walked into any computer science classroom to do. It took me 33 years to figure out that brown girls can do
it would have been 40 per cent girls and 60 per cent boys — white-guy things, too.
very close to parity. But then those numbers started trickling to
where we are now, which is less than 20 per cent — and I believe What are some of the specific strategies that have worked
it’s because of our culture. for the girls in your program — and for you in your own life?
In the 1980s we saw the birth of the ‘brogrammer’ in films I was that girl. I was the perfect immigrant daughter. I went to
like Weird Science and Revenge of the Nerds. And when you asked all the right schools and worked at all the right places. But then I
girls, ‘What does a computer scientist look like?’, it looked like a woke up at the age of 33, miserable, and I didn’t understand why
dude with a hoodie sitting in a basement somewhere. You can’t I thought if I did everything right, I would be happy.
be what you cannot see. We created this caricature of what it The thing with perfectionism is that it’s not only creating
looked like to be a computer scientist, and girls just didn’t see a leadership gap, it is also causing a happiness gap. Women are
themselves in it. twice as likely to be depressed as men are. So many women are
I also think a lot of it has to do with the way we raise our unsatisfied with their lives. They’ve missed opportunities be-
kids. We raise girls to be perfect and we raise boys to be brave. cause they don’t think they’re smart enough or perfect enough or
Early on, girls start believing that they are either good at some- ready. As women we let many of our great ideas die on the vine.
thing or bad at something. For every single one of us, math is We see other people pursuing our dreams and we sit there full of
not immediately easy; it’s annoying and challenging. But if a girl regret and envy, and that creates anxiety and unhappiness.

rotmanmagazine.ca / 55
 It took me 33 years to figure out that brown
girls can do white-guy things, too.

In my own life, when I ran for Congress and lost — and it I was talking to a Mechanical Engineering teacher recently
didn’t break me — that was a real eye opener. I realized, Oh my and he said, “Before I even put the assignment on the board, the
goodness, I can try things and fail and actually be happier! What? guys are raising their hands, like, ‘I know the answer!’” He tells
So I started exercising my ‘bravery muscle’ every day. them, “You don’t even know what the question is yet!” You see
One thing I do is, I practise imperfection. If you ever get an this sort of thing playing out at work all the time.
email from me, it probably has 10 typos and it definitely doesn’t Part of it is, you don’t have to get an A+ at work. There’s a
make much sense. When I say to women, ‘Practise imperfection; big difference between excellence and perfection. I’m not telling
send an email with a typo in it’, I literally hear a collective gasp. women not to be excellent. You should be excellent, but that
But think about how much time we spend writing and rewriting means enjoying the journey; it’s not all about the outcome. The
texts and emails, when we could be doing other things. So, go point about practising doing something you suck at is, it prepares
ahead: Send out an email with a typo in it! you for work, because you realize that you don’t have to be perfect
Secondly, on a regular basis, do something that you really to lead.
suck at. Not for the sake of getting better at it, but for the sake
of being mediocre. For me, that thing is surfing. I can’t swim; Your program has been running for some time now and has
surfboards are super heavy; and I don’t like the water. Yet I make served so many young girls. What kind of outcomes are you
myself go surfing on a regular basis. I barely get up on the board, seeing?
but let me tell you, when I walk off the beach, I feel great: I’m Our alumni are going on to major in Computer Science at 15 times
standing taller and I feel like I can do anything. the national average. The black and Latina alumni are going on to
The third thing is to just take one step. The truth is, I had major in Computer Science at 16 times the national average. If
no business starting Girls Who Code. I didn’t even know how to you walk into any computer science department in the country,
code myself. But I had an idea, and I was really passionate about it is full of our alumni. So, I have no doubt that we will close the
it. So, I took one step: I went out and bought the URL. gender gap in terms of the pipeline. Now the work that needs to
be done is to make sure that companies will actually hire these
How can we put your advice into practise at work? young women.
Stanford’s Carol Dweck has this amazing quote: “If life were The other thing for me is, this goes way beyond coding.
one long middle school, girls would run the world.” But it’s not. When you think about the numbers of women in STEM who will
The fact is, the thing that works best in the workplace is brav- drop out, even when they declare Computer Science a major, it’s
ery, not perfection. So, all that time you spend waiting to be the almost 50 per cent. The number of women who will leave a tech-
perfect leader, a bunch of guys are just passing you by, getting nology company within the first three years is also high.
promotion after promotion. The first thing I would say in terms
of practising imperfection is, raise your hand for the next assign- How much of this should be ‘on us’ in terms of trying to be
ment that you may not feel prepared to do. Don’t wait until you more brave and how much should be ‘on’ our educational sys-
feel 100 per cent ready. tem and employers to change the way they do business?
I see this happen with the women I work with all the time. I believe that girls are born brave, and that it’s our culture that
I’ll say, ‘Why don’t you take on this project, or do that thing?’ And makes them feel like they have to be perfect. We’re up against a
they’ll say, ‘Let me go home and think about it’. I already know lot, and some of this stuff is very unintentional. I think when par-
what’s going to happen: They’re going to go home and figure out ents are immediately wanting to protect and coddle their girls,
all the reasons why they should say No. And in the meantime, the they think they’re building confidence. So, when Mom’s taking
guys are knocking down my door asking to run Human Resourc- you out of gymnastics because you can’t do a cartwheel and
es, even if they know nothing about HR. you’re coming home crying every day, and she’s putting you into

56 / Rotman Management Fall 2019

Girl Who Code is already making strides in the U.S., with alumnni going on to major in Computer Science at 15 times the national average.

swimming because she wants you to feel good, she’s doing that women and their male allies are saying, ‘You know what? Enough
because she loves you. I think in many ways, the way that we’ve is enough’. When we think about bravery in the workplace, we
been parenting our girls has just been wrong. Instead of putting tend to see it on the big stage. Whether it is women running for
them in a cocoon of bubble wrap, we have to teach them how to president, or women taking down powerful men like Harvey
be brave and how to fail. Weinstein.
The onus is on us as parents, as educators, as aunts and We first have to learn everyday bravery. How do we stop
uncles. Look, I think workplaces have to figure out how they too silencing ourselves? Whether we get cut off in line when we’re
can reward women for imperfection and failure. I ask men all the getting a cup of coffee and we apologize; or we’re in a meeting
time, What is your role in building a bravery movement? How are and we don’t say what we want to say because we’re waiting to
you going to be an ally who encourages women to be more brave ask the perfect question; or we don’t raise our hand for an assign-
and to take risks? And when you do offer a woman a promotion ment because we don’t think we know exactly how to do it, so
and she turns it down, now you know that maybe it’s not because why bother to even try? It’s that everyday bravery conditioning
she doesn’t want it, she just feels like she may not be ready. What that we have to learn in order to really take down the bro cultures.
is your role in lifting her up?
You actually wrote a response to that Google memo. What
So much has been written about the ‘bro culture’ in tech, and were some of your key points?
we all heard about that infamous Google memo. Can a group of We’ve heard it said over and over that women’s brains are wired
brave women really change that culture from the bottom up? differently. I still hear it all the time: ‘Girls just don’t want to
Yes. I see it with my girls already. They’re banding together and learn how to code’. The time has come to put those arguments
standing up for themselves and they’re speaking out against to an end. We have to stand up and talk about what was really at
micro-aggressions. You see it in the Google walkout; powerful stake in that memo. The thing about Silicon Valley is, it pretends

rotmanmagazine.ca / 57
 I always tell young women, “Raise your hand for the next
assignment that you may not feel prepared to do”.

I started making a list, because it became one name, two

The Gender Gap in Computing is Getting Worse names, 50 names, 100 names. And trust me, when Reshma
Women Computer Scientists makes a list, it’s not good for anybody! I was like, Something’s
not right here. We started surveying our girls and we found that
there are real cultural problems in these companies that need to
change. For one, you can’t have all-male interview panels. That
is something that we can and should quickly fix. We also have to
stop asking women or men or people of colour questions in in-
terviews that make them feel ‘small’. And most of all, we have
to stop hiring ourselves and think about retraining almost at the
1995 2017 2027 base level; not just an hour session on micro-aggressions or un-
conscious racism. This runs deep, and we have to treat it that way.
37% 24% 22% Look, nobody gives up power willingly, and that’s ultimately
what we are talking about right now. Letting women and people
In 1995, 37% of computer scientists were women. Today, it’s
of colour through the gates means giving up power.
only 24%. If we do nothing, by 2027 the number of women
in computing will decrease to just 22%.
What do you say to organizations that push back and say,
FIGURE ONE ‘Well, we do have gender diversity because our entire HR
department is female’, or ‘Our entire marketing department
is female’. Why is it so important to have balance across the
board and particularly in STEM?
Automation is changing everything about the way we live and
work, and whether its artificial intelligence or data science, every
day that goes by, women are being left behind. One of my stu-
dents was telling me a story about Alexa and Google Home. She
was saying they are being used by men to lock out their spouses
in instances of domestic violence. Of course, when you have
to be meritocratic. They pretend to say, ‘Everybody can partici- mostly male engineers building products, they’re not going to be
pate’ — but it’s simply not true. In many ways the Valley has lost thinking about that, are they? There are so many instances where
its way. If we want to be a place where ‘All nerds are welcomed’, artificial intelligence and data sensors are quite frankly biased,
then let’s really make all nerds welcome. sexist and racist. We need to be sitting around the table—and not
just in marketing. We have got to be sitting around the table in
What is your biggest frustration with how tech companies are every department.
approaching diversity?
It bothers me that we continue to talk about this like it’s a pipe- When you decided to start Girls Who Code, did you get any
line problem. A few years ago, as our girls got older and started pushback along the lines of, ‘Why isn’t this for all underprivi-
applying for technical internships in their junior and senior year, leged kids who code?’
I started getting emails from them saying, ‘Reshma, I have a 4.0 I got more pushback like, ‘Why aren’t you starting Boys Who
at Stanford, but I applied to Company X and I didn’t even get an Code?’ Or, ‘Don’t you think girls’ brains are built a bit different-
interview!’ ly?’ My model is to have half girls that are under the poverty line

58 / Rotman Management Fall 2019

and half girls that are black and Latina. So, if you walk into any
The Gender Gap in Computing is Getting Worse
Girls Who Code classroom, it looks like an American classroom
should look. Today’s classrooms are incredibly segregated, but
when you walk into ours, there are black girls, brown girls, gay

Enrolled in U.S. Computing Programs

girls, trans and Muslim girls, and many of them have never actu-

% of Female Students Interested/

ally met someone who didn’t look like them. So, they’re not only 66%
learning about each other, they’re going to be building future
companies together. To me, that is the future. I strongly feel that
we need to be bringing girls together from all walks of life.

What is the hardest part of your job, day in and day out?
I’m really impatient about solving this problem. I also get really
32%
scared at how quickly automation is happening. I’ve been an ac-
tivist on women’s issues since I was 13 years old. I’m 43 now, and 4%
when I look at the leadership numbers, it’s gotten a little better,
but not as much as it needs to. As indicated, some of this stuff is 6-12 13-17 College
well within our control. Age Year-old Girls Year-old Girls Freshman
I silence myself all the time, and then I go home and rumi-
nate about it. Why did I apologize for that? Why didn’t I…? This While girls’ participation in Computer Science ebbs over time,
morning something happened and a bunch of us all stood up for the biggest drop-off happens between the ages of 13 and 17.
ourselves, and I was so proud, because not every moment is that
FIGURE TWO
moment. Things are changing, but even in my own life, I still
have a lot of work to do. I just want to be really clear about one
thing: If we practise everyday bravery, things will change. I truly
believe that.
My parting advice for readers is this: Don’t let our girls play
it safe. Don’t let them limit themselves to the things they’re best
at, or the things they think they should do. Push them to be brave.
Push them to take risks. And reward them for trying.

Reshma Saujani is an American lawyer, politician, active

angel investor and the founder and CEO of Girls Who Code.
She is the author of Brave, Not Perfect (Currency, 2019). This
article has been adapted from a podcast hosted by Alison
Beard. Reprinted with permission. Copyright 2019 by Harvard
Business Publishing; all rights reserved. For more, visit www.HBR.org/
podcasts.

rotmanmagazine.ca / 59
 Introducing
THE NEEDS-
ADAPTIVE
CONSUMER
The smartest companies are antipating 12 particular ‘shopper
journeys’ and designing their user experiences accordingly.
by Claire Tsai

WHEN DO CONSUMERS DECIDE TO BUY SOMETHING? Why and how do Lifestyle changes. Not only do new forms of entertainment now
they shop in the first place? Over the past 20 years, a number of compete with shopping as a recreational activity and for spend-
macro shifts have disrupted the retailing industry and changed ing dollars, consumers’ lives have also become significantly more
the way that companies need to think about shoppers. These hectic. Rapid globalization has accelerated information trans-
changes have drastically altered shopping patterns and buying mission, internationalized consumers’ tastes and preferences,
decisions — presenting new opportunities and challenges for and accentuated the power of social influence in shopping be-
marketers to persuade consumers to spend money and encour- haviour.
age repeat purchases. In particular, four categories of emergent
change have impacted the shopping landscape: Technological changes. Technological advancements (e.g. the
Internet, mobile technologies, social media, shopper-facing
Knowledge changes. Consumers are more knowledgeable technologies) have provided new ways and channels for consum-
about offerings in the marketplace today, and have convenient ers to shop (e.g. showrooming, webrooming), and for researchers
and uninterrupted access to a diverse range of information to capture valuable data about how consumers shop.
sources about brands and products. This gives them the ability to
make more informed decisions. In many cases, consumers may Structural changes. Product assortments and brand availability
be more well-informed about new products and pricing than the have also seen tremendous expansion. Furthermore, the recent
retailers’ own sales personnel. surge in omni-channel retailing has fundamentally changed how

rotmanmagazine.ca / 61
 The Needs-Adaptive Shopper Journey Model

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tive and behavioural states that a shopper can experience dur-

ing a shopping journey. The core states (recognize need/want;
awareness; search; evaluation; decision; purchase; use; and post-
FIGURE ONE
use evaluation) can be traced to the Howard-Sheth model of
buyer behaviour, which shows that consumers progress sequen-
tially through these states when making major buying decisions.
However, our proposed framework includes a number of addi-
retailers develop and execute their marketing strategies and how tional states that address today’s diverse shopper journeys:
consumers shop, making it necessary for consumers to consider
the choice of product, brands and channels simultaneously. • The explore and browse states capture the significant role
My colleagues and I recently got together to develop a re- played by consumerism in everyday activities and the fact
vised framework to serve as a guide for thinking about how con- that much of knowledge acquisition and interaction with
sumers shop today. To develop our framework, we established products and services occurs without clear purchase intent.
a set of general guiding principles. First, we recognized that • Intrigue reflects a heightened level of curiosity about a
shopping today does not always adhere to a linear process, as as- facet of the consumer’s shopping experience and may be
sumed by the traditional ‘purchase funnel’ model. Instead, shop- a function of the consumer’s chronic tendency or a partic-
pers switch back and forth between states, and these inter-state ular contextual factor such as a novel product or atypical
transitions depend on a host of factors — particularly the primary display.
motivation(s) of the shopper in undertaking the journey. There- • The wait state indicates that consumers may choose to
fore, we conceptualize a shopper’s journey as a ‘configuration of withdraw into a state of inactivity prior to moving to a more
states’, rather than a sequence of steps or stages. active stage such as purchase or use, or be forced to do so
Second, instead of focusing on retailer interests and busi- because the retailer’s delivery processes entail delay.
ness profits, we believe it is just as important — if not more so • Increasingly important are the advocate/critique and share
— to shine the light on shopper goals and well-being. While prior states involving active contributions by consumers in so-
models have largely assumed a one-size-fits-all shopping pro- cial venues to engage others in their shopping journeys. For
cess, in our work, we consider shoppers’ goals and motivations instance, consumers may describe a particularly enjoyable
explicitly in shaping their shopping journeys. Third, we note that dining experience on a Facebook group, post a scathing
ancillary contextual factors, such as social influence and the re- product review on a retailer’s site or attend a sample sale
tailer’s actions and strategies, could affect the journey through with close friends.
the cognitive and behavioural states consumers experience • Finally, we also include the validate state, wherein consum-
while shopping. ers seek confirmation from other sources for their choices,

62 / Rotman Management Fall 2019

 Shopping today does not always adhere to a linear process.

actions or stated opinions, and the withdraw state mark- factors can produce a major influence on a consumer’s shopping
ing the end of consumers’ interactions with the product or process and eventual purchases. The accelerating growth of
brand. social media has further accentuated the strength of social in-
fluence on how consumers shop and what they purchase. For
Our model also includes four groups of factors that influence a example, research shows that men (but not women) spend more
consumer’s shopping process: when they shop with a friend and explain this effect using agen-
cy-communion theory.
SHOPPER PSYCHOLOGY. Consumers may experience different cog-
nitive and behavioural states during the shopping process, driven TECHNOLOGY. Technology has injected substantial changes into
by either their specific goals prior to shopping or motivations how consumers shop, not only through availability of multiple
triggered in real time by situational factors within the shopping channels (e.g. brick-and-mortar, online, mobile), but also by
environment. Furthermore, these goals and motivations can be transforming shoppers’ in-store experience. Kiosks and self-
moderated by shoppers’ chronic dispositions and other psycho- service checkout systems within a physical store, Internet of
logical factors. For example, consumers who enter a store with a Things (IoT) technologies such as sensors, beacons and mobile
concrete shopping goal (e.g. ‘to buy a tuna sandwich’ vs. ‘to buy devices to allow location-sensitive in-store marketing communi-
something for lunch’) are less influenced by in-store promotions cations, artificial intelligence and machine learning for market
and less likely to browse and buy impulsively. As another exam- research to enhance personalization in shopping, and avatars,
ple, shoppers’ psychological needs can affect the amount of time virtual or augmented reality in online and mobile stores to de-
that consumers spend in different shopping channels (e.g. brick- liver an immersive virtual shopping experience are all examples
and-mortar vs. online) and their interest in purchasing different of technology’s influences on the shopping process.
types of products (e.g. utilitarian vs. hedonic).
The 12 Shopper Journey Archetypes
FIRM/RETAILER ACTIONS. Companies can take specific marketing To illustrate the applications of our model, we developed 12
actions or implement particular strategies — with regard to mar- shopper journey archetypes that we believe capture the most
keting mix elements (price, product, place or promotion) such typical shopping episodes commonly experienced by modern
as availability of different shopping channels, consumer touch- consumers.
points or aspects of the in-store environment — that impact how
shoppers think, feel and behave during the shopping process. For 1. THE CLASSIC JOURNEY. This shopper journey describes a linear
example, a recent study by Inmar, Inc. shows that among the shopping process, characterized by an initial awareness or iden-
69 per cent of shoppers who made shopping lists before visiting tification of a need (or needs), the consideration of different
a physical store, 41 per cent used coupons to do so. This may brands or product options, and the eventual choice and purchase
affect their in-store shopping behaviour. Likewise, conducting of one particular brand or product. This journey is often regard-
taste tests in a grocery store has been found to increase purchases ed as the presumed standard way in which consumers shop. The
of private labels over national brands. classic journey archetype was selected as the primary journey
by the greatest proportion of participants (70.7 per cent) in our
PEER-TO-PEER/SOCIAL. Whether it is one’s shopping companion(s), survey. As exemplified in the traditional purchase funnel model,
the sales staff, or the mere presence of other shoppers, social this journey includes most of the steps in the standard shopping

rotmanmagazine.ca / 63
 Social media has further accentuated the strength of social
influence on how consumers shop and what they purchase.

process, from initial awareness to post-use product evaluation. the end of it. Rather, consumers undertake this journey simply
These states are typically traversed in a linear fashion, progress- because they find shopping intrinsically enjoyable and hedoni-
ing from one state to the next as the shopper converges on a par- cally gratifying. This journey was relatively common in our study:
ticular brand or product to purchase. Despite the growing inci- 18.7 per cent of participants linked their reported journey to this
dence of other shopper journeys, the classic journey is still very archetype. It was associated with three shopping motivations:
prevalent today. It includes consumers’ first-time purchase of a adventure shopping, social shopping and gratification shopping.
‘high-involvement product’ (e.g. furniture for a new apartment).
5. THE ROUTINIZED HABIT JOURNEY. This shopper journey is essen-
2. THE REQUIRED JOURNEY. This shopper journey is typically regard- tially a habitual routine that consumers undertake periodically.
ed as essential for the purchase of necessary, utilitarian items. It A canonical example is the weekly grocery shopping trip, often
could also arise because of a role that the shopper plays in life. accompanied by a detailed shopping list. This shopper journey
Examples include buying office supplies for one’s workplace, archetype was relatively common (18.3 per cent of participants
renting equipment or buying party items for a wedding celebra- associated their described journey with this archetype). The
tion. As highlighted by these examples, such a journey can be routinized habit journey is characterized by consumers’ aware-
undertaken on either a periodic basis or an ad hoc basis. In our ness and recognition of a need, which then triggers purchase and
survey, 36.1 per cent of participants associated their described product usage. Given the routinized nature of this journey com-
journey with this archetype. pared to others, consumers engaging in it are considerably less
‘intrigued’ and less likely to explore, browse or evaluate other op-
3. THE OPPORTUNISTIC JOURNEY. This journey is motivated by partic- tions before purchase, and subsequent to purchase, less likely to
ular opportunities arising from the external environment, such advocate/critique or share their consumption experience of the
as a sales promotion or the launch of limited-edition products, purchased product.
and it is characterized by a state of awareness leading consumers
to feel intrigued or excited. The opportunistic journey may not be 6. THE JOINT JOURNEY. The joint shopper journey is undertaken in
preceded by any concrete buying goals. It may be driven by the close consultation with one or more fellow shoppers (e.g. a sig-
desire to acquire transaction utility through enjoying price dis- nificant other), such that the eventual buying decision is made by
counts or being the first (or among a few) to own a product. For a group rather than a sole shopper. We distinguish this journey
instance, the ability to save money through price discounts could from the outsourced journey and the social network journey to
drive unplanned stockpiling. Among our study participants, 25.3 highlight the high involvement, collaborative shopping and deci-
per cent linked their shopping journey to this archetype. sion making it entails, such as when buying a big-ticket item (e.g.
an expensive car) or an item for joint consumption (e.g. a vacation
4. THE ENTERTAINMENT JOURNEY. The entertainment journey is un- package). Like the outsourced journey archetype, the joint jour-
dertaken primarily for hedonic, recreational purposes. It may not ney was characterized by motivations of social shopping and role
necessarily be driven by the onset of negative feelings and the shopping. However, participants associated their elicited journey
desire to repair these feelings, as in the case of the retail therapy with this journey archetype over four times as often. Compared
journey which is motivated by the desire to repair negative emo- to other archetypes, this journey is characterized by consumers’
tions (as discussed in greater detail later). Moreover, consumers tendency to engage in shared consumption, advocate/critique
may or may not have concrete goals before embarking on this their consumption experience of the purchased product, and
shopper journey (#10), and they may not make any purchases by validate their purchase with the joint decision-maker(s).

64 / Rotman Management Fall 2019

7. THE IMPULSIVE JOURNEY. This journey is typically initiated with- affective states than when making a purchase for oneself, such as
out any particular shopping goal or purchase intent, but often buying food for lunch. Moreover, some research has suggested
results in impulse or unplanned purchases. Much research has that consumers often feel happier spending money on others
attempted to uncover the antecedents of impulse buying and than on themselves, suggesting that this shopper journey may
unplanned purchases, so as to better understand the moments also carry retail therapy benefits. This journey archetype was
within the shopping process and contextual circumstances under associated with motivations of role shopping and 8.2 per cent
which shoppers are most vulnerable to marketing influence. In of our respondents linked their elicited journey to this journey
our study, 11.2 per cent of respondents linked their elicited jour- archetype.
ney to the impulsive journey archetype; not surprisingly, this
archetype was associated with motivations of gratification shop- 10. THE RETAIL THERAPY JOURNEY. This shopper journey is motivated
ping. Similar to the entertainment journey, it is characterized by the desire to feel better after experiencing negative emotions.
by a higher degree of intrigue and exploration during shopping; Experimental findings suggested that shopping can be effective
however, it is also more likely to result in an eventual purchase, in inducing positive affect, regardless of whether any purchase is
and less likely to involve consumers’ sharing their shopping/con- made. Shoppers often seek something to purchase for self-grat-
sumption experience with others. ification, or may engage in mere browsing or window shopping
without any intention to purchase, so as to distract themselves
8. THE LEARNING JOURNEY. The learning journey is driven by the from the negative feelings or immerse themselves within the
desire to learn about trends and changes in the marketplace such arousing visual displays in the shopping environment. In the lat-
as what brands, products and stores are newly available, and ter case, the available product offerings may induce shoppers to
which ones are popular. The acquisition of such knowledge is it- make a purchase, which in turn attenuates the negative mood. In
self an end goal in this shopper journey, and consumers typically our study, 8.0 per cent of participants linked their recalled jour-
do not have any specific purchase goals in mind. However, unlike ney to this archetype. The retail therapy journey is associated
the required journey or the routinized habit journey, consum- with the lowest degree of price sensitivity, low time pressure and
ers may have a more exploratory mindset in a learning journey high intrinsic motivation.
and thus be more susceptible to impulse purchase. In our survey,
9.8 per cent of participants associated with this learning journey 11. THE SOCIAL NETWORK JOURNEY. This shopper journey typically
archetype. The learning journey was characterized by motiva- arises from interactions or transactions of consumers with others
tions of adventure shopping and social shopping. In this journey, within their own or other existing social networks. The acceler-
consumers are intrigued by the available products or brands and ating adoption of social media accompanied by a growing reli-
are also more likely to evaluate them so as to form an opinion ance on user-generated (vs. market-generated) content has not
about them, when compared to other types of shopper journeys. only reduced interpersonal distance but also spurred the growth
Consequently, consumers may advocate/critique products in of this shopper journey, as consumers acquire value such as en-
front of others. tertainment, information and interaction through social media.
A widely popular form of social-network shopping is peer-to-
9. THE GIFTING JOURNEY. This shopper journey is motivated by the peer shopping where consumers shop through platforms such as
need or desire to buy a gift for others. Although one might deem Craigslist, Nextdoor and eBay and engage in buying and selling
this journey as a special case of the classic journey, the socially with strangers. In the social network journey, peer-to-peer shar-
driven goal of gifting brings with it a different set of cognitive and ing is a central aspect of the shopping experience. Within their

rotmanmagazine.ca / 65
 Recognizing the multiplicity of consumer journeys creates
endless opportunities for retailers to add value.

own social networks, consumers may share their initial product er to complete a classic journey. On the other hand, consumers
awareness and needs, invite comments from friends and family who are in a routinized habit journey may be ideal candidates
regarding items in their shopping cart or ‘saved’ list, seek advice to transition to an outsourced journey, again facilitated by the
during product evaluation, and ultimately display their purchase retailer. One thing is certain: Recognizing the multiplicity of
and post-consumption evaluations through online reviews. This consumer journeys creates endless opportunities for retailers to
journey is associated with browsing and is perceived as discre- add value.
tionary with no specific goal. Only 3.8 per cent of our participants
associated their described journey with this shopper journey
archetype.

12. THE OUTSOURCED JOURNEY. The outsourced journey typically

involves delegation of a portion (e.g. product recommendation)
or the entire shopping process to someone else, such as a close
friend or family member, a domestic helper, a personal shopper
or even a voice activated virtual assistant. In many such cases,
shopping is regarded as a necessary chore, a laborious activity
that one is happy to pass on to someone else. In some cases, how-
ever, one may do this purely out of convenience, time constraints
or a desire to seek and rely on an expert’s opinion regarding what
to buy. With the shrinkage of leisure time for many shoppers and
the availability of other new forms of recreation, we expect this
journey to become increasingly prevalent. At the moment, how-
ever, it was the one least associated with participants’ elicited
journey and was characterized by motivations of role shopping
and social shopping.

In closing
Claire Tsai is an Associate Professor of Marketing at the Rot-
With consumer well-being at its core, our model has the flexibil- man School of Management and a co-founder of Behavioural
ity to adapt to the evolving retailing landscape, characterized by Economics in Action at Rotman (BEAR). This article summa-
significant ongoing knowledge, lifestyle, technological and struc- rizes her co-authored paper, “From Browsing to Buying and
Beyond: The Needs-Adaptive Shopper Journey Model”, co-
tural changes.
authored with Leonard Lee (National University of Singapore), Jeffrey Inman
We encourage companies to begin to anticipate particu- (University of Pittsburgh), Jennifer Argo (University of Alberta), Tim Böttger
lar shopper journeys and, accordingly, engineer appropriate (University of St. Gallen), Utpal Dholakia and Ajay Kalra (Rice University),
shopping experiences for consumers. For instance, a retailer Timothy Gilbride (University of Notre Dame), Koert van Ittersum (University
of Groningen), Barbara Kahn (University of Pennsylvania), Donald Lehmann
who recognizes that a consumer has just completed a learning (Columbia University), Leigh M. McAlister (University of Texas at Austin) and
journey (e.g. searching the retailer’s site and ordering a sample) Venkatesh Shankar (Texas A&M University). The complete paper is available
may want to follow-up with the necessary tools for the consum- for download at SSRN.com

66 / Rotman Management Fall 2019

Anticipate, adapt
and succeed

Rotman’s Strategy &

Innovation program.
Develop a systematic
approach to driving
strategic innovation
in just three days.

Questions? Talk to us.

416-978-8815
[email protected] rotmanexecutive.com
ACT,
DON’T REACT:
A LEADER’S
GUIDE TO
CYBERSECURITY
It is only a matter of time before your organization
has a ‘cyber incident’. Are you prepared?
by Michael Parent, Greg Murray and David R. Beatty

IF IT HASN’T HAPPENED YET, it is only a matter of time before your be directly and significantly involved. However, while every
organization has a ‘cyber incident’. In 2019, when replaced if as board receives regular briefings on the state of their organiza-
the guiding principle. The FBI estimates that a cyber incident tion’s cyber-readiness and resilience, very few are ready to ap-
will occur every 14 seconds this year, so as you read this, it’s likely propriately respond and act when a cyber incident occurs. In
that nearly 100 incidents will take place, ranging from minor, ac- this article we will describe the varied nature of cyber threats
cidental disclosures of sensitive information to a major theft of and provide advice for how management and boards of direc-
data and other valuable assets by criminals, state-sponsored ac- tors can deal with them.
tors, or terrorists.
What makes the effects of cyber incidents so insidious are The Nature and Extent of Cyber Threats
their velocity and visibility. Cyber crises unfold in a matter of Cyber threats are the result of three interrelated characteristics:
minutes — hours at best, and they evolve not only at lightning those who engage in cyber attacks, or the Threat Actors; or the
speed, but in the public eye. The consequences usually span the value they expect to extract from the Targets they attack; and
breadth and width of the organization and well beyond, involv- the ‘Attack Vectors’ they will use to attack your organization
ing suppliers, customers and communities. The impact may take (see Figure One).
weeks or months to mitigate. Historically, many incidents have
led to hugely negative impacts on brands and reputations, reduc- 1. Threat Actors
ing enterprise value. While the nature and extent of threat actors is both vast and
Because cyber incidents are potentially enterprise-value growing, it is nonetheless possible to categorize them based on
destroying, in most cases, a company’s board of directors will their skill set and the potential severity of harm they could do.

rotmanmagazine.ca / 69
 A Perfect Storm for Cyber Threats

Threat Attack
Actors Vectors

As indicated in Figure Two, we propose a hierarchy or pyramid

of such actors.
The bottom layer consists of nuisance actors — so-called
‘script kiddies’. The name is deliberately pejorative, as these are
low-skilled, metaphorically unwashed adolescents launching
Vulnerable
denial-of-service scripts or other such primitive attacks. When
Targets asked why they do these things, most will likely reply, ‘Because
we can, and because we get to brag about it’. Nevertheless script
kiddies can directly cause brand damage and/or customer data
record loss, as seen in the Canadian impact from the Heartbleed
incident last year, in which a 19-year-old hacker breached the
FIGURE ONE
Canada Revenue Agency’s database and extracted SIN num-
bers and other information.
The next two layers are populated with threat actors who at-
A Perfect Storm for Cyber Threats tack for profit, not just fun: criminals and organized crime (OC).
The main vehicle is a variant on traditional blackmail plays. Typi-
cal attacks are aimed at disrupting operations and receiving pay-
ment to not do so repeatedly. These attacks also include data
theft: stealing customer data, credit cards and/or other sensitive
APTs information with some market value. For example, recent attacks
on the airline industry saw customers’ usernames and passwords
for sale on the dark web for $2 to $5 each.
Terrorists What criminals do for themselves, organized crime does for
others. ‘Crime as a service’ or CaaS (a deliberately close acro-
nym to SaaS — Software as a Service), and PhaaS — Phishing as
Organized Crime a Service, offer other criminals the opportunity to rent or buy
scripts or even bot (robot) networks to use in launching their own
attacks, like last year’s attack on Internet security company Dyn.
Criminals At the top of the pyramid are those who would truly do
lasting and substantial harm. Terrorists use the dark web to
transfer money, intelligence and other resources to cells world-
wide. They engage in hacking not only to disrupt (‘electronic
Script Kiddies warfare’), but to surreptitiously seek intelligence on assets
and infrastructures to target in physical attacks to further their
causes.
‘Advanced Persistent Threats’, or APTs is the term used to
FIGURE TWO
describe nation-state sponsored hacking. The focus is mainly
on three countries: The Democratic People’s Republic of Korea
(i.e. North Korea), Russia and the People’s Republic of China

70 / Rotman Management Fall 2019

 What Motivates Threat Actors?

Criminologists, law enforcement officials, psychologists and

criminal profilers have long recognized four main motivations
for criminal behavior. Described using the acronym MICE,
they are:

MONEY. Crimes committed for profit, pure and simple.

This may include extraction of valuable data for re-selling
on the black market, identity theft, blackmail or extortion.

IDEOLOGY. Crimes committed for political or other deeply-

held beliefs. This might include ‘hacktivism’ or targeting an
(PRC). All three have been linked and allegedly continue to enterprise because of a deeply held belief that disagrees
actively engage in theft and disruption, up to and including with the enterprise’s activities, politically-motivated hack-
possible manipulation of elections. According to former FBI ing such as the manipulation of elections, or on an individual
Director James Comey, their acts represent the single-largest level, righting a perceived wrong by attacking its perpetrator.
theft in U.S. history.
COMPROMISE. Crimes committed by individuals who
2. Vulnerable Targets believe they have no choice as a result of blackmail, or
threats against themselves or their families.
If you have data, you are a potential target. The motivations
of threat actors have a direct influence on the types of organi-
EGO. When early hackers were asked why they did so, many
zations they target and for what purpose. While threat actors responded ‘Because we can’. They also told researchers that
target different organizations depending on their intended mali- they did so mainly to brag to others in the hacking community,
cious outcomes, one common driver is that they all possess data. gaining social capital and a positive reputation as a result.
Whether an organization holds government secrets, customer
information, personal health information (PHI), credit cards
and/or banking-related information, it is a target.
Historically, threat actors have targeted a single organiza- work to carefully obliterate any tracks of who the attackers were
tion type such as a retailer for credit card information or a hospi- and what they did, making attribution — and prosecution — of
tal / health system for personal health information. But in recent the crime nearly impossible.
years, threat actors have evolved to a cross-industry integrated
targeting approach (CITTA). This change in organization target How to Prepare for a Cyber Breach
acquisition has broadened the scope of potential organizations More than 100 years ago, Louis Pasteur stated that “Chance fa-
targeted by threat actors. As a result, every executive and board vours the prepared mind,” and in the cyber realm, there could
member must now consider the organization they govern to be be no truer statement. No organization is exempt: every single
a target, and prepare for a cyber breach. one will experience a cyber breach at some point. As individu-
als, we have all experienced a cyber breach already — whether or
3. Attack Vectors not we are aware of it. Preparing for this inevitability within an
The growth in the number of cyber attacks — and more signifi- organization involves four steps:
cantly, in the sophistication of those attacks — has been exponen-
tial (see sidebar for examples). This landscape is continuously STEP ONE: Organize
evolving, and in the time between writing and publishing this When management detects a value-diminishing cyber breach, as
article, new vectors will have assuredly emerged. indicated, the Board must be alerted. But should the full Board
Most attacks today are customized to your particular organi- be involved? The Audit Committee? A Risk subcommittee? Or-
zation. Attackers divide themselves according to specializations. ganizations are evenly split on this issue, with roughly half deal-
One team, for example, may conduct reconnaissance on targets, ing with cyber issues through their Audit Committee, and half
while another team considers avenues to break through an orga- providing reports to the full Board.
nization’s cybersecurity (e.g. breach the firewall). A third team
could assess the value of what the target possesses, while a fourth STEP TWO: Assess Your Value
team plans to exfiltrate or extract the valuables — customer data This can be seen as an assessment of the ‘crown jewels’ from the
records, for example. A fifth and final team remains in your net- threat actor’s perspective. Threat actors may be able to monetize

rotmanmagazine.ca / 71
their efforts by extracting value from your organization in differ- tabletop exercise at least annually, in order to understand how
ent ways than you might anticipate. Remember, their skills are breaches unfold and how to respond.
constantly evolving and improving.
Finally, three formal reports should be produced on an annual
STEP THREE: Create a Cyber Breach Playbook (CBP) basis:
There are a vast number of cyber-breach checklists, published
by many consulting, trade and other organizations. It can — and 1. A complete, detailed Business Continuity Plan (BCP);
does — feel overwhelming, even to those who are experienced in 2. A complete, detailed Incident Response Plan (IRP); and
the space. At a minimum, an up-to-date Cyber Breach Playbook 3. A complete, detailed Disaster Recovery Plan (DRP).
should include:
When a Breach Occurs
• A current listing and critical assessment of the key data re- What should a leadership team do in the moment when a cyber
sources possessed, processed and passed on by the organi- breach has been discovered? Three questions must be answered
zation, its strategic value and the organizational and legal immediately:
impacts of breach or theft;
• A hierarchical list of potential threat actors and attack vec- IS THIS A CYBER EVENT OR AN INCIDENT? The difference might seem
tors (specific or relevant to your industry and organization); minor, and the terms are often used interchangeably, but this is
• Detailed responses (lists and processes) for each type of at- important, inasmuch as the former — an event — might not be
tack (categorized by the levels of the organization); and material, whereas the latter always is.
• An up-to-date contact list of internal and external personnel An Event is an interruption, such as a system crash, a sys-
(vendors, suppliers, law enforcement), with clear and con- tem error (not producing a given report, for example), or even a
cise decision rules on whom to contact when, with what in- user losing or forgetting their password (leading to a password
formation and how (this includes alternative contact meth- reset). Events are common and aside from inconvenience are
ods if the main one, e-mail, for example, is disabled in the typically inconsequential. An incident, on the other hand, is a
attack). tangible compromise of the organization’s cyber security. Inci-
dents may be intentional or unintentional but result in the or-
STEP FOUR: Monitor and Continuously Review ganization’s data assets being temporarily or even permanently
Management must provide a quarterly summary of the major compromised.
breaches in your industry and adjacent industries. Following are
some sample questions: HOW SEVERE IS THIS INCIDENT? Incidents range in severity from
unauthorized network access with no data loss, all the way
• How often does management train via ‘tabletop’ exercises? through to massive data theft. A properly structured Cyber
• What scenarios are they using? Breach Playbook will take not only the severity, but also the po-
• Do the scenarios align to the crown jewels from the threat tential negative organizational impact(s) into account. These
actors’ perspectives? potential impact levels (i.e. significant customer record loss,
• Who from the organization, its vendors and third-party advi- public brand damage, third party supplier law suits) should then
sors should participate? help inform the Board ‘s view of the sufficiency of management’s
response to the incident.
Quarterly meetings, in camera, with the Chief Information Se-
curity Officer (CISO) will provide an unfiltered perspective of the WHAT WILL BE THE BOARD’S ROLE? When an incident occurs, a Board
threats facing the organization and its cybersecurity prepared- should more fully engage, to provide enhanced oversight of
ness. Finally, the Board itself should participate in a cyber breach management’s actions. These could include hiring an external

72 / Rotman Management Fall 2019

 Five Common Attack Vectors

Stitching whatever data is of value to them and/or their customers on the

In these instances, an airline, a telecommunications company dark web—as described in the Targets section.
and a retailer are all targeted together to attain a more ‘com-
prehensive’ data set. Using a technique called ‘stitching’, threat Credential Stuffing
actors integrate the records from all three cyber breaches, such In this attack type, threat actors seek to steal usernames and
that they have a richer view of an individual. This ‘stitched’ infor- passwords by breaching Internet-facing websites and/or mobile
mation can then be used to socially engineer banks, insurance apps. The threat actors will trade or purchase tens of thou-
companies, governments and other organizations, allowing the sands of usernames and passwords off the dark web. They will
threat actors to monetize their cyber breaches. then use botnets to send these usernames and passwords to
attempt to login to your organization’s website. The goal here is
Botnets to get a handful of legitimate usernames and passwords. The
Threat actors breach ‘common’ computers so that they can threat actors can then seek to gain further access in order to
‘enslave’ them into what is commonly referred to as a botnet. steal additional customer records. This attack type has been
A botnet is simply a collection of computers that has been com- used successfully by threat actors across many industries in
promised by threat actors. The threat actors use the computers recent years.
themselves to attack organizations or rent them out to others.
Cryptojacking
Phishing / Smishing Finally, in some cases, it’s not only the data, but the actual
A threat actor will acquire or rent a ‘botnet’ (compromised servers or hardware that threat actors want, in order to mine
computers). Typically, these botnets will be used to send fake cryptocurrency. Cybercurrencies like Bitcoin are mined by solv-
emails (phishing) or text messages (smishing) to the targeted ing highly complex algorithms, or mathematical riddles. Some
organization or individual. The emails/texts look real and are criminals, instead of investing in their own processors, take
designed well — please reset your password, you have a de- yours over, and use unused server capacity to run algorithms
livery, etc. The threat actor’s objective is simple: Get someone in the background. While you may not notice this initially, it can
to click a link embedded in the message to infect the targeted eventually lead to a degradation of service, and even early
organization. With that simple click or tap, the threat actors/ physical depletion of the equipment.
bad guys are in; from there, the threat actors will look to steal

cyber advisor reporting directly to the Board, in camera meet- Boards are critical components in an organization’s cyber-
ings with the Chief Information Officer (CIO) and Chief Infor- readiness and cyber-breach responses. Their preparedness will
mation Security Officer (CISO) or requesting management en- ensure that the negative effects of a breach are minimized,
gage and provide a third-party report on the matter. and that the organization not only recovers, but survives and
Large organizations typically have pre-existing third-party thrives.
relationships established to assist management with a cyber
breach incident, whereas smaller organizations tend to engage
third parties on an ad hoc basis. In the latter case, the Board Michael Parent is a Professor at the Segal
Graduate School, Beedie School of Business,
should ensure that management has done due diligence on po-
Simon Fraser University. He is the Academic
tential third-party agents so that they are ready to rapidly engage Director for the Vancouver cohort of the Insti-
one when an incident occurs. tute of Corporate Directors’ (ICD’s) Directors
Education Program, and teaches the ICD’s IT and Cybersecu-
rity Risk session nationally. Greg Murray is Vice President of
In closing
Information Security and Chief Information Security Officer
As indicated herein, cybersecurity is a rapidly evolving disci- at Rogers and Director in Residence, IT and Cybersecurity, at
pline. The actors that purport to do harm are innumerable, and the Rotman School of Management. David R. Beatty, C.M.,
their threats are constantly evolving. This demands vigilance and O.B.E., is Academic Director of the David and Sharon Johnston Centre for
Corporate Governance Innovation and a Professor of Strategic Management
an understanding of the ever-changing threat landscape. Aware- at the Rotman School of Management. He has served on 35 boards and has
ness must be combined with organizational preparedness to suc- been Chair of eight publicly-traded companies. He currently serves as a Direc-
cessfully navigate the challenges of a cyber breach. tor of FirstService Corporation, Walter Energy and Canada Steamships Lines.

rotmanmagazine.ca / 73
 THE NEXT
FRONTIER IN
HEALTHCARE
INNOVATION
Two leading healthcare innovators explain why home care
is the next area ripe for innovation.
by Kyle Schruder

BY ALL MEASURES, the home is the future of healthcare. Not only To better understand this shifting landscape, I recently sat
will more people receive care in their homes, but many medical down with Canadian healthcare innovators Zayna Khayat and
procedures that have historically been carried out in institutional Chris Ferguson to ask what’s in store for the future of home
settings will be administered in patients’ living rooms. This shift care and what people inside and outside of the healthcare sector
is being accelerated by improvements to automation and arti- should be aware of. Following are the hightlights of our conver-
ficial intelligence (AI) such as chatbots, enabling the notion of sation.
‘care anywhere’ in Canada and across the globe.
The growing appetite for home care is a response to three Why is home care the next frontier in healthcare innovation,
main drivers: increasing access problems (wait times), growing and what forces are shaping this future?
patient and family expectations (choice, convenience, quality) Zayna Khayat: The future of healthcare is much less centred on
and society’s inability (or unwillingness) to continue to pay for institutions. It is rapidly becoming decentralized, dematerial-
the costs of delivering healthcare in formal institutions, which ized, demonetized — and, ultimately, democratized. It will be
are being outstripped by demand. more continuous, more integrated. As healthcare becomes more
As of 2016, nearly 730,000 Ontarians were receiving home data-driven, it is also becoming more personalized and proac-
care services, 63 per cent of whom were over the age of 65. The tive and less reactive. Technology is enabling many these chang-
market for home care services administered by the private and es, but healthcare innovation does not start with technology.
public sectors will only continue to expand as the number of The word I use to encapsulate this shift is the ‘homespital’—
older adults and people with multiple complex medical and so- which is about the fact that most of what’s done in a formal in-
cial needs grows. For example, by 2041, the number of seniors stitutional setting could be done in the home. Other often-used
aged 65 and over in Ontario is expected to double from 2.3 mil- terms are ‘hospital-to-home’, the ‘house-spital’ and ‘the dehos-
lion to 4.6 million. pitalization of healthcare’. Let’s say you’ve had a C-section or

rotmanmagazine.ca / 75
 Traditional, analog diagnostic medicine will soon seem crude.

cardiac surgery. Traditionally you would have been in the hos- proteome (the structure and physiological expression of your
pital for a few days of recovery. Now, instead of spending those protein complement), physiome (your functional physiology as
days in the hospital, you are discharged within a few hours of sur- measured by your fitness tracker, for instance), exposome (all
gery, and the remaining care is completed at home. your environmental exposures), anatome (from your imaging
The homespital model requires seamless, timely and fric- data) and more.
tionless communication between the different people involved in Algorithms will support clinicians in intelligently decoding
keeping the client healthy at home. Virtual care and remote mon- your symptoms and will make a recommendation to you and/or
itoring are two essential digital tools that support this activity. At your formal provider about what might be going on. Traditional,
SE Health, we’re looking at all kinds of homespital use cases, analog diagnostic medicine will soon seem crude. With pinpoint
including virtual reality (VR) as a digital therapeutic for pain re- accuracy, for instance, we will be able to anticipate a schizo-
lief in palliative care, AI-powered text- or voice-based chatbots to phrenic episode, a suicide risk or hypoglycemic episode. This
support caregivers and seniors in their homes, and remote blood new paradigm of medicine is called ‘predictalytics’.
pressure monitoring wearables.
The homespital will help to alleviate the mounting phe- CF: At the Hospital for Sick Children in Toronto, doctors and
nomenon of ‘hallway medicine’. The term ‘bed-blockers’ is nurses are already using this approach in the pediatric ICU. They
sometimes used to describe people using hospital services and can now predict when a baby is crashing before it happens be-
beds who could often be taken care of at home. We estimate cause they have collected enough data over time and can com-
that 30 to 40 per cent of bed-blockers could be shifted to home pare that data to what’s happening with other patients in the ICU.
care. And some hospitals estimate that up to 70 per cent of what
is being done in clinical institutions today could actually be ZK: My former boss in the Netherlands, Lucien Engelen, re-
done in the home. cently wrote a book called Augmented Healthcare that captures
this movement brilliantly. He tells a joke that goes something
Chris Ferguson: Increasingly, people will be taking ownership like this: You’re at your house, you hear a knock on the door, and
of their health and well-being, and that’s important, because it it’s an ambulance. The paramedics say, ‘We’re here to pick you
means they can avoid getting sick in the first place. There is much up for your heart attack!’ Of course, you’re wondering, ‘What
more awareness today around the fact that wellness is partly the heart attack?’ Their reply: ‘The one you’re about to have!’ It’s a
responsibility of the individual. real Minority Report moment.

You mentioned that healthcare is becoming more data driven. Can you discuss the economics of this new healthcare mod-
Can you talk a bit about the implications of this? el?
ZK: In the not-too-distant future, the data patterns from your ZK: Labour and capital have historically been the economic driv-
‘digital exhaust’ — including biomarkers such as your voice, your ers of healthcare, forming the basis of an industry that hasn’t
facial expressions, the words you speak or text, your walking ca- changed for decades. But that’s all changing. I’ll give you an ex-
dence, etc. — will be compared to peer-matched patterns from ample: When we sequenced the human genome, it took 15 years,
global datasets in order to predict and prevent illness. and cost $3 billion back in 2001. Now, with technology, it takes a
The information contained in traditional medical records single day and costs about $200. By next year, it will cost $35 and
will soon make up only a fraction of a percentage of the total will take hours or minutes.
data stack used by you and your ‘circle of care’ to make deci- A colleague of mine half joked that it will soon cost more
sions about your health. The new data stack will include ele- to flush your toilet than to sequence your DNA. The service
ments that are generated largely outside of formal medicine associated with scraping your cheek cells, putting the swab
today, such as your sociograph (a chart of your social media in an envelope, mailing it and running the sample on an Illu-
activity) and all your various ‘omes’ — genome, microbiome, mina sequencer is no longer the main focus of the business

76 / Rotman Management Fall 2019

model. Now the sustainable business model is about how to use helped us land on some actionable, concrete ideas. Identifying
the data that is generated by this process. the connections between the front of the house (the front lines)
and the back of the house (back office) was also very insightful.
CF: And I would say, again: It’s not just that that information is Two of our front-line home care workers (Personal Support
now available to healthcare practitioners and the healthcare in- Workers, or PSWs) were active on the team. They provided tons
dustry, which is super valuable for all the reasons you’ve men- of insight at every stage, validating ideas and making sure we
tioned. It’s also that people have access to that information, so were on the right track. The framework Bridgeable used allowed
they can make more informed health decisions. Historically, the us to leverage our PSWs’ expertise and get to the heart of what
power dynamic has been that your doctor tells you what to do; they really need to do their work with effectively, efficiently and
but increasingly, people have control. with the joy and grace they need and deserve.
Scheduling of home visits is one example Bridgeable helped
Speaking of technology and society, can you touch on the us with enormously. There’s so much more going on than just a
convergence of technology and the human factor in home better scheduling tool or platform, and that’s the beauty of a ser-
care? vice design approach: It highlights the connections among differ-
ZK: To be clear, when we’re talking about home care, we are talk- ent systems, people and environments.
ing about people who require physical healthcare services. Pa-
tients still need humans to dress wounds, manage their IVs and CF: Reframing the problem was key. It wasn’t only about fixing
be there to help integrate ‘life sucks disease’ into the care plan. scheduling, which is a persistent problem within home care. It
Our discussion so far has been about moving these services out was just as much about designing a seamless front-to-back cli-
of institutions and into the home setting. However, unlike in a ent experience. Scheduling is part of the challenge, but it’s just
hospital setting, it’s not possible to have staff in a sick person’s one touchpoint that interfaces between the back office and the
home 24 hours a day — the economics just don’t work, and most front-line clients.
clients wouldn’t want that anyway. Even if you could achieve it,
that human would not be able to integrate the multiple streams of Having experienced the service design approach firsthand,
information as effectively or as fast as a machine can. So emerg- what unique perspective does it bring to the challenges faced
ing technologies are about augmenting the physical presence — in home care?
not about taking the humanity out of healthcare. CF: Service design allows you to zoom out and take a look at
I call this shift ‘digical’ because it integrates ‘cold’ technol- what’s happening at a systems level — and then, zoom in to
ogy with ‘warm’ care in a seamless physical and digital interplay. different parts of the system to better understand what’s hap-
My view is that embedding these technologies of augmentation pening on the human scale. For instance, it was only once we
will actually increase the humanity of healthcare, because it will mapped the experience of delivering and receiving home care
free up precious time and energy for caregivers to do the impor- that we were able to identify where there were issues in the end-
tant things that only humans can do. This will allow us to meet to-end experience.
the increase in demand for home care and deliver the high-inten- Service design is part of a great methodology for asking
sity care that people need, want and expect. questions, such as: How do experiences hold up over time and
across different channels, in different spaces and places (e.g. the
In the summer of 2018, SE Health partnered with Bridgeable Internet versus in person)? Using tools such as experience map-
to improve the home care experience for older adults. What ping and service blueprinting, combined with iterative prototyp-
valuable innovations do you think that project produced? ing, allows us to take a more systemic view of things. This was
ZK: For our team, it helped knowing that Bridgeable was always helpful to us because healthcare — and home care specifically
many steps ahead of us in the process. As messy and amorphous — tends to be siloed, with each department working in isolation,
as the design problem seemed, Bridgeable brought clarity and making collaboration between system actors difficult.

rotmanmagazine.ca / 77
 Using tools such as experience mapping and service blueprinting
allows us to take a systemic view of things.

Zayna, in 2017 you were Innovation Sherpa in Chief at the quickly than most of the world. If we don’t fix our healthcare sys-
REshape Health Innovation Centre in the Netherlands, where tem, we won’t be able to afford to live here anymore.’ And that
you worked on several Dutch healthcare innovation initia- was the driver for change. In Canada, so much of our economy
tives. I know that you came away with some amazing insights is selling raw materials to the U.S. that we often fail to recognize
that are inspiring your work here in Canada. Can you talk that we have a real lack of innovation here.
about that a little?
ZK: The Netherlands is a small country (17 million people and ZK: My major focus over the next three to four years is to bring
small in geographic size), bordered by multiple EU countries in- concepts from the Buurtzorg model to Canada. In 2017, SE
cluding Germany, the largest country by population in the Eu- Health created the HOPE model, based on Buurtzorg, and did
ropean Union. By default, the Dutch as a society are scrappy, an initial validation test with 50 clients with complex challenges
pragmatic, and they hustle. I believe that these mindsets are in an urban centre in Ontario. We are seeing good results and
also indicative of how they approach healthcare innovation. have learned a lot. A key metric was the joy of our nurses. They
They don’t form a committee to have a task force to make a said things like, ‘This is why I came into this profession’. This year
report of recommendations, and then years later, nothing gets we will embark on a major program supported by a sizable grant
implemented. to build an institute to train people on this model. Introducing
Are their problems in healthcare the same as ours? Pretty this alternative model into the current fee-for-service transac-
much. But they’re being strategic and bold about tackling those tional paradigm constitutes innovation on many levels—system
problems. Whether you’re a nurse in a hospital or a policymaker change, organizational innovation, operational innovation, care
in the health ministry, you don’t feel like your precious energy model innovation and policy innovation.
and talent is being wasted on trivial initiatives and projects that
create churn and spin. I was delighted to be immersed in that en-
vironment for a whole year.
For example, the world is learning a lot about the Dutch home
care model that was pioneered about a decade ago: Buurtzorg is
an innovative organizational model that shifts power to the front
lines and away from central agencies and management. Cells
of six to 10 nurses get attached to a community and they self-
schedule visits to the home. They decide and adjust care plans in
real time. It’s basically a 10,000-person healthcare organization
with no management. This model of care is working. It’s lower
cost, it produces better outcomes, and, most importantly, the
staff and clients love it. The model is spreading like wildfire —
to Germany, Denmark, Sweden, Taipei, UK and about a dozen
other countries. Zayna Khayat is Future Strategist at SE
Health, where her team is helping to reimag-
ine how older adults can receive care at
CF: Europe is definitely ahead of us. I remember the first time home in Canada. She is an alumna of the
I went to Helsinki. I met with people who were doing really in- MaRS Discovery District and teaches in
teresting projects and saw amazing Scandinavian examples of the Health Sector Strategy stream at the Rotman School of Management.
Chris Ferguson is the founder of Bridgeable, Canada’s leading service design
design being applied to healthcare. I was expecting a utopian ap- firm, and is a co-founder of Service Design Canada, a professional association
proach — they’re big thinkers — and then I saw that they were committed to promoting the practice of service design. He also teaches
brutally pragmatic. They said: ‘In Finland we’re aging more design at the Rotman School of Management.

78 / Rotman Management Fall 2019

Pick up the pace.
Gain new insights.
Grow as a leader.
Extend your network.
Fast-track your career.
All in just 13 months.

Dr. Jennifer Poh, mba ’19

Clinical Director, Pharmacy Services,
rotman.utoronto.ca/EMBA Mohawk Medbuy Corporation
 Cultivating
an Unstuck
Mind:
Four Steps to
New Insights
When it comes to problem-solving, the questions
we ask often undermine our desire to uncover novel insights.
Here’s how to counter this tendency.
by Jay Gordon Cone

THIRTY YEARS OF RESEARCH and practice have led me to a conclu- Sadly, I don’t have to imagine the situation, because I am the
sion that sums up my approach to organizational problem solv- father who took the picture. Allow me to highlight a few features
ing: The questions people ask about situations they want to of the scene: Note that the basin is stained with mascara goo; and
change reveal a lot about what they are thinking and feeling. a random role of toilet paper is positioned near a dangerously hot
This insight about the relationship between what people electric hair device. Before I go on, let me confess that the daugh-
ask and how they frame a situation has not only informed my ap- ter who owns the array of toiletries and cosmetics in this photo is
proach to working with leaders, it has inspired me to develop a now an adult and has moved out of the house. This has become
framework for recognizing and avoiding ‘thinking traps’. somebody else’s problem.
In the last several years, I have been collecting the ques- After the initial emotional reaction, I thought to myself:
tions leaders ask about situations that have them ‘stuck’. In some How can we get our daughter to keep her bathroom clean and or-
cases they are experiencing a persistent and intractable problem; ganized? I’m certainly not the first parent to pose such a question,
in others they are facing a daunting opportunity and don’t know nor will I be the last. Some of you who can relate to my situation
where to begin. I have found that in most cases, leaders get stuck may feel compelled to answer the question with ideas or advice
because they focus their attention — and the attention of their based on your own experience. Perhaps a clever solution eluded
organization — on answering the wrong questions. my wife and me. More likely, we felt stuck because we had un-
Let me start with an example. Imagine a father walking into consciously fallen prey to a thinking trap. Had we understood at
his teenage daughter’s bathroom and encountering the scene the time that our thoughts and feelings about the situation mani-
pictured on page 82. fested as a counterproductive question, we might have spent

rotmanmagazine.ca / 81
 the heart of the matter? Maybe the truth is that line leaders feel
overly regulated when they involve support functions so they in-
tentionally work around them. A lot of unproductive work gets
generated when people rush off to solve the wrong problem.

TRAP 2: THE LURE OF THE FALSE DICHOTOMY. False-dichotomy ques-

tions contain either/or assumptions, which means the question
gets framed to limit (sometimes intentionally) answers to one of
two opposing options. In reality, options are rarely if ever, mutu-
ally exclusive. False dichotomies have rhetorical impact, but al-
most always contain a logical fallacy. Imagine the politician who
declares, ‘Either vote in favour of this legislation or condemn this
The scene that spawned the author’s interest in ‘thinking traps’.
country to a future of lawless anarchy.’
Here’s a false dichotomy question that lured another leader
into a thinking trap: Should we bring in someone from outside
the company to head up the marketing department or promote
someone from within? Are those really the only two alternatives?
more time reframing our understanding of the situation and less What if she hired someone from the outside to become a chief
time implementing ineffective solutions. of staff to support and mentor an internal hire that runs the de-
partment?
Quicksand Questions
I refer to questions that lure us into thinking traps as ‘quicksand TRAP 3: THE GET-THEM-TO-CHANGE LURE. Sometimes when we feel
questions’. With these questions, the more we focus on answering stuck and can’t control all the variables influencing our dissatis-
the question, the more stuck we become. For the last few years, fying situation, we assign blame. If only our suppliers would lower
as I’ve asked leaders to describe their most persistent problems their prices. If only our employees would act with greater account-
in the form of a question, I have noticed distinctive patterns in ability. If only our sales people would forecast the pipeline more accu-
the questions they start with — patterns that undermine their de- rately. In some respects the ‘get-them-to-change lure’ is a special
sire to find novel, comprehensive and widely accepted solutions. case of the lure of the veiled solution, where the solution is for the
Following are four common traps I have observed. identified group or individual to change their behaviour.
I worked with a leader of an insurance company who had
TRAP 1: THE LURE OF THE VEILED SOLUTION. Organizational leaders been assigned the goal of increasing sales of bundled insur-
are expected to have a point of view about any and all situations. ance products. He initiated a number of projects with the task
They also have a bias for action. We shouldn’t be surprised, then, of finding answers to the question, How do we get our insurance
that when feeling stuck or challenged by a complex situation, agents to cross-sell our products? When we accept a ‘get-them-
leaders quickly form opinions and then set about implementing to-change’ framing of a dilemma, we end up thinking of people
their conclusions. The urge to ‘fix things’ often shows up in the as automatons. Solving our problem becomes an exercise in fig-
way we pose a question about a situation we want to change. uring out the programming required to alter behaviours we find
For example, when confronted with complaints that busi- sub-optimal or troublesome.
ness support functions (e.g. Human Resources, IT) feel left out
and underutilized, one leader I worked with described his prob- TRAP 4: THE LURE OF THE DISTORTED SCOPE.The scope of a question
lem as: How do we improve communication between line lead- can be either too narrow or too broad. When we experience a
ers and their support functions? This question includes a point problem in a specific way, we may arbitrarily narrow our focus. I
of view about how to respond to complaints about feeling left have worked with a number of HR leaders who have been asked
out and underutilized; but is a lack of communication really at to respond to disturbing trends in their employee engagement

82 / Rotman Management Fall 2019

 The Unstuck Minds Compass: 4 Types of Inquiry

O N TEXTUAL
C
What’s
changing?
surveys. Let’s say a survey shows a decline in scores related to

E
‘trust in leadership’. We could be limiting ourselves by asking the

R AT I V
C R E AT I V E
too-narrow question, How do we improve the trust scores on our
engagement survey? Alternatively, we could err in the other di- How Who
rection by asking the overly broad question, How do we improve might we needs
define our

LABO
trust around here? The first question focuses our attention on the what?
challenge?
survey itself rather than the purpose of the survey; while the sec-
ond question gives us no place to start.

CO
The Unstuck Minds Compass What’s keeping
In my work with clients over the years I have used a number of things in place?
thinking systems to make sense of complex and uncertain situa-
tions. Each prioritizes different factors when choosing a path to-
ward a desired future. Rather than treating each as a competing
C R I T I CA L
system of thought, I wondered: Could these models be combined
to help organizational leaders who feel stuck?
The result is the Unstuck Minds Compass (see Figure One),
FIGURE ONE
which synthesizes four well-researched thinking systems: strate-
gic thinking, systems thinking, social network theory and design
thinking. The compass has four dimensions: Contextual Inquiry, I can take an aspirin to get rid of a headache, but if the headache
Critical Inquiry, Collaborative Inquiry and Creative Inquiry. Let’s consistently returns I look for patterns. Critical inquiry suggests
take a look at the compass’s four dimensions. I analyze patterns to discover interconnections that don’t reveal
themselves when I focus on the consequences rather than the
1. CONTEXTUAL INQUIRY: TO REDUCE THE RISK OF MISSING SOMETHING causes. Perhaps I discover that I get a headache whenever I go
IMPORTANT out for a steak dinner, and every time I go out for a steak dinner, I
Contextual inquiry is about zooming out. Contextual inquiry drink a glass of red wine. Critical inquiry helps me uncover an al-
points us toward the environment and asks us to consider influ- lergy to the tannins in red wine. Sometimes we get stuck because
ences, trends and future scenarios all of which are outside of our we solve for the symptoms rather than the underlying structures
direct control and may nevertheless be at work altering the rules or fixed mindsets.
of the game. Sometimes we get stuck because external condi-
tions are changing, yet our routines remain the same. The advice 3. COLLABORATIVE INQUIRY: TO MAKE IT EASIER FOR PEOPLE TO TAKE
offered by Finish architect Eliel Saarinen beautifully describes CONCERTED ACTION
the importance of studying the environment when solving a Collaborative inquiry orients our attention toward the social rela-
problem, “Always design a thing by considering it in its next larg- tionships that comprise an organization as well as the thoughts,
er context — a chair in a room, a room in a house, a house in an feeling and mindsets that fuel the influence of social relation-
environment, an environment in a city plan.” If you have a ‘chair’ ships. We prefer to focus on and manage inputs and outputs;
dilemma, contextual inquiry suggests you consider the ‘room.’ If they are easier to see and easier to measure. Relationships and
you have a ‘room’ dilemma, contextual inquiry suggests that you attitudes may be difficult to measure, but no one who has spent
consider the ‘house,’ and so on. any time in an organization would deny their importance. Tra-
ditionally, we map relationships by charting functions, roles and
2. CRITICAL INQUIRY: TO AVOID SOLVING THE WRONG PROBLEM reporting hierarchies, but sometime we get stuck because we
If contextual inquiry is about zooming out, critical inquiry is misinterpret the thoughts and feelings of individuals and under-
about zooming in. Critical inquiry points us toward the systems estimate the power of informal relationships not represented on
and structures below the surface of how we perceive a problem. the organizational chart.

rotmanmagazine.ca / 83
 Combining the Four Thinking Systems

Dimension Thinking System Benefit

Contextual Inquiry Strategic Thinking Reduces the risk of missing something important

Critical Inquiry System Thinking Avoids solving the wrong problem

Collaborative Inquiry Social Network Theory Makes it easier for people to take concerted action

Creative Inquiry Design Thinking Increases the novelty of our options

FIGURE TWO

4. CREATIVE INQUIRY: TO INCREASE THE NOVELTY OF OUR OPTIONS At a minimum, the question was too narrow and implied a limit-
Creative inquiry points us away from solutions that represent ing set of solutions. If focusing on program re-design for virtual
reengineered improvements to the status quo. Creative inquiry delivery creates wasted effort, then what question should guide
asks us to question our assumptions and iterate by trial and error. our efforts?
Improving the status quo yields efficiency, quality and productiv- The four dimensions of the Unstuck Mind Compass can be
ity gains that are predictable and definable. However, an exclu- used sequentially to surface new information, formulate new in-
sive focus on improving the status quo presumes that the existing sights, and in the end, find a new question that invites new op-
business model and methods continue to have value. tions. Here’s how we used it to handle the situation described
Apart from the dampening effect on innovation, there is an- above.
other consequence of making productivity and quality the prime
directives. Leaders unwilling to adopt a creative inquiry strate- Contextual Inquiry: What’s changing? In the case of virtual
gy meet new ideas with questions about feasibility (how would learning, we might notice the upsurge in online learning options.
that work?) and viability (can it be profitably sustained?) rather For example, I can fix my own toilet by watching a YouTube vid-
than asking about who will benefit, what need does it meet and eo and I can learn screenwriting from Academy Award winner
how will we learn our way toward a commercial solution. Con- Aaron Sorkin at MasterClass.com. So, what’s changing? I can
sequently, new ideas end up looking like variations on the status now learn what I want, when I want and in the way I want. I can
quo because they are the most defensible, not because they are learn online by myself or with my team. I can even have a remote
the most promising. Sometimes we get stuck because we pre- coach observe me or listen in as I conduct a meeting and give me
maturely insist on making a business case before we get inspired feedback at my convenience or intervene in the moment with a
about meeting a hidden need. private chat.

Using the Compass to Find a Better Solution Critical Inquiry: What’s holding us back? In the case of virtual
Until recently, the firm I work for conducted our work in various learning, we might discover that our default business model re-
rooms around the world where people had gathered to learn, volves around the design and delivery of workshops — and that
connect and solve problems. In the last few years, many of our we presume that our value proposition gets delivered in the form
clients have told us that they no longer intend to bring people to- of programs. Furthermore, the people who buy our programs are
gether for learning experiences. Instead, they want to bring the rarely the people who will learn from us, the so-called ‘partici-
learning to their employees, through web-enabled collaboration pants’. Traditionally our success has resulted from transforma-
platforms like WebEx®, Zoom® and Adobe Connect®. tional experiences created by expert consultants teaching practi-
At first, we found ourselves asking the question, How do we cal tools to participants who form significant relationships with
re-design our programs so they can be delivered virtually? Fair- each other as they learn together. We have been most successful
ly quickly it became clear that our framing of the situation was when a participant becomes a buyer or someone who influences
holding us back; we had posed ourselves a quicksand question. a buyer.

84 / Rotman Management Fall 2019

Collaborative Inquiry: Who needs what? In the case of virtu- 1. How might we help people in organizations develop their
al learning, we could focus our efforts to meet the needs of our leadership skills while they work?
learning population (i.e. organizational leaders); we could focus 2. How might we help leaders access tools and expertise when
our efforts on meeting the needs of our primary client (most of- they need it most?
ten an internal organizational development consultant or talent 3. How might we help our clients create transformative expe-
development leader); or we could focus our efforts on meeting riences that enhance and sustain cross-boundary collabora-
the needs of our own consultants. We don’t have to limit our ef- tion?
forts to one group or the other, but each group will have distinc-
tive and potentially contrasting needs. In closing
For the purposes of the example, let’s focus on organiza- You can develop your question-formation acumen by learning
tional leaders who will benefit from learning our tools, but may about your tendencies when feeling stuck. When first encoun-
no longer have an opportunity to attend multi-day, in-person tering a complex challenge, do you want information about the
workshops. What do they need? Through collaborative inquiry, big picture (contextual inquiry) or data about the nature of the
we might learn that leaders prefer to develop skills while getting problem (critical inquiry)? Should you seek out the perspectives
their work done. They like practical tools that can be learned of others (collaborative inquiry) or start by questioning the as-
just before being applied. We might also learn that leaders value sumptions behind the framing of the challenge (creative inqui-
problem solving with their peers and building their network. The ry)? Diversifying your approach could help you become more
more profound the experiences they share with peers, the stron- adaptable and less likely to get stuck.
ger the network. Or, we might learn that leaders seek out oppor- Just imagine how the tone of the conversation at our dinner
tunities to connect with senior executives who often sponsor and table shifted when we moved from ‘How can we get our daugh-
make appearances at learning events. ter to clean her bathroom?’ to ‘How can we reduce the amount
of nagging at home?’ In the end, thinking traps not only prevent
Creative Inquiry: What question(s) will guide our path for- progress, they can isolate and divide us. The four types of inquiry
ward? Creative inquiry builds on the information and insights discussed herein can make all the difference
developed by the first three steps while recognizing and avoid-
ing the thinking traps hiding behind the initial framing of the
problem or opportunity. The output of the creative inquiry con-
versation is a new question. The Unstuck Minds Method favours
‘guiding questions’ over mission or purpose statements. That’s
because a mission suggests ‘a task to be accomplished’; and once
accomplished, the mission ends. If conditions change, the mis-
sion may need to be abandoned. A guiding question, on the other
hand, allows for a variety of answers and can more easily adapt to
changing conditions.
In the case of virtual learning, contextual inquiry helped
us identify trends in learning and critical inquiry identified our
assumptions about selling programs and identified important
distinctions between the buyer and the learner. Collaborative in-
quiry helped us develop empathy for the learner by focusing on
their needs, not ours. We have come to realize that traditional,
multi-day leadership development workshops meet a variety of
needs. Participants not only get their learning needs met, they
also get a variety of social connection needs met.
We can now transform our quicksand question: How do we Jay Gordon Cone, PhD, is a Senior Consultant with Interac-
tion Associates and the Founder of Unstuck Minds. For more
re-design our programs so they can be delivered virtually? While
about his work, read his blog at www.unstuckminds.org
there is no one right way to reorient our approach, three guiding
questions based on three distinct needs suggest themselves:

rotmanmagazine.ca / 85
Make your move.
Master the fundamentals.
Expand your knowledge.
Broaden your horizons.
Transform your future.
In the heart of the city.

Sarah Badun, mba ’19

Consultant,
rotman.utoronto.ca/MBA Bain & Company
Idea Exchange
88 JULIE ZHUO on becoming a more strategic leader

91 TIZIANA CASCIARO on networking to create value

94 MICHAEL CHERNY an emerging leader’s mindset

97 JACOB HIRSCH on the roots of unethical behaviour

100 LYNDA GRATTON on The 100 Year Life

103 ASHLEY GOODALL on the biggest lies about work

106 PAMELA WINSOR on value creation in healthcare

109 AIDA SIJAMIC WAHID on the benefits of board diversity

112 S. MANDEL + A. KUMAR on growing communities of practice

115 DANIEL MARKOVITZ on a new model of accountability

118 SUNNY BONNELL on personality traits that lead to success

121 CRAIG DOWDEN on the practice of positive leadership

124 JIM HARTER on designing great jobs

 POINT OF VIEW Julie Zhuo, VP of Product Design, Facebook

How to Become
a More Strategic
Leader

MY CAREER AT FACEBOOKstarted in 2006 as I tried to do as many of these things as I could. I brain-

its first intern. Three years later, I became stormed. I wrote epic, sweeping documents. I familiarized
a rookie manager at the age of 25. Today, myself with the language of KPIs and measurements. Before
I manage an organization of hundreds of each new task, I gave myself a mental check. This, I thought,
people. This journey has brought countless must be strategizing.
new challenges, mistakes and lessons. Unfortunately, I was doing the equivalent of strumming
One of my key areas of growth as a manager has been a guitar and assuming I was making music. The core prob-
strategy. As I progressed in my career, I knew that there was lem was that I didn’t really understand what strategy was.
an expectation that the work I did would become increas- Because nobody had ever explained it to me, I figured that
ingly ‘strategic’. But what did that really mean? This is what I being strategic simply meant engaging in high-level product
used to think it meant: and business discussions.
• Setting metric goals. What a strategy actually entails is a set of actions de-
• Thinking outside the box to come up with new ideas. signed to achieve a particular objective. It’s like a route de-
• Working harder and motivating others to work harder. signed to get you from point A to point B. Now, there are
• Writing long documents. many routes you can take, so a more interesting question
• Creating frameworks. is, What makes for a good strategy? For that, I subscribe to
• Drawing graphs on a whiteboard. UCLA Professor Richard Rumelt’s definition: “A good

88 / Rotman Management Fall 2019

 If you don’t know what core problem you’re trying to solve,
it doesn’t help to brainstorm a bunch of solutions.

strategy is a set of actions that is credible, coherent, and • Creating frameworks. Frameworks can help to explain
focused on overcoming the biggest hurdle(s) in achieving a concepts, but they are not a plan. Having good frameworks
particular objective.” is like having a clear map: you still need to chart a path.
• Drawing graphs on the whiteboard. It may look impres-
Let’s begin by breaking this down into discrete parts: sive, but it’s a classic bad strategy: a lot of jargon and a lack
of real substance.
• Achieving a particular objective: It should be very clear
what success looks like. So now that we know what to avoid, or at least scrutinize,
• Set of actions: There must be a concrete plan. the question remains: What should you do if you want to
• Credible and coherent: The plan needs to make sense be more strategic? By investing more time in the following
and hold up under scrutiny without any conflicting compo- three tasks, new and experienced managers alike can be-
nents. come better strategic leaders.
• Focused on overcoming the biggest hurdle(s): There
should be a clear diagnosis of the biggest problems to be PRINCIPLE 1: Understand which problem you’re looking
solved, and the plan should focus resources on overcoming to solve, for which group of people.
them. Imagine that you’re looking to ‘transform the future of trans-
portation’. What should you do? If your instinct is to start
Given the above, let’s revisit my original list of so-called stra- throwing out ideas — flying cars! Ubers with Eames chairs!
tegic actions: Hyperloop to L.A. in 2.2! — compose yourself.
Do you understand the problems with transportation
• Setting metric goals. This is certainly a part of strategy, today? Maybe you do. It isn’t hard to come up with a list be-
but it isn’t enough. You also need a credible plan. Saying cause there are a lot of them — traffic, affordability, safety,
‘Our strategy is to set more aggressive goals’ is the equiva- pollution, boredom. The list goes on. Now here’s the hard
lent of writing bigger cheques and not having a bank ac- part: What is the relative importance of each of those prob-
count tied to them. lems? Which ones matter a lot, and which matter a little? For
• Coming up with new ideas. If you don’t know the core whom do these problems matter? This leads us to our next
problem you’re trying to solve, it doesn’t help to brain- area of inquiry and action steps.
storm a bunch of solutions.
• Working harder (and motivating others to work hard- UNDERSTAND THE ECOSYSTEM AROUND THE PROBLEM. Problems
er). Working hard is great, but don’t confuse motion with don’t exist in a vacuum. There are likely many other people
progress. Working harder when your team or goals are not out there who are also obsessed with solving any given is-
aligned with a solid strategy will not solve your problems. sue. How are they approaching it? What’s being done well
• Writing long documents. This could be strategic, but it and done poorly? Which groups of people are being ignored?
depends on the content. Beware of long, sprawling direc- Are there opportunities for a better approach? It’s silly to
tives. Good strategies are usually simple, because describ- start inventing with a blank slate. Understanding a problem
ing and executing a highly complex plan across dozens or well means also understanding your competition and the
hundreds of people doesn’t tend to work well. systems around which the problem exists. Do your research:

rotmanmagazine.ca / 89
 Imagine that your team is wildly successful in three years.
What does that look like?

competitive analyses, jobs to be done, audience segmenta- Except... Don’t be Amy and Bob. Time, energy, and
tion, market sizing, etc. This work is what creates confidence attention are not free. Remember that a good strategy is
in future ideas and what gives you a framework to evaluate focused. Focus is a strategic advantage that lets you move
them. faster on what matters most. That’s why a tiny start-up with
dozens of employees can win against a company of hun-
UNDERSTAND WHICH PROBLEMS SUIT YOUR UNIQUE STRENGTHS dreds or thousands. The more your plans get watered down
AND WEAKNESSES. You can’t solve every problem equally well. trying to do lots of things, the less likely you are to have a
Which problems can your team solve better than anyone competitive advantage. Either X is more important, or Y is.
else? What are you or your team really good at? And what are If you can’t figure it out, do more research to better un-
your weak points? derstand the problem. The question to ask isn’t, ‘What more
can we do to win?’ or ‘How can we make sure none of the
PRINCIPLE 2: Create alignment around what ‘wild suc- things we’re juggling are failing?’ Instead, ask ‘What are the
cess’ would look like. one, two, or three most important things we must do, and
This sounds obvious, but can be hard to do in practice. As how can we ensure those go spectacularly?’
a litmus test, imagine that your team is wildly successful in I tell my team that when the discussion becomes,
three years. What would that look like? Write down your an- ‘Should we ship this mediocre thing, or should we spend
swer. Now, turn to your neighbour and ask them the same additional time that we don’t have to make it better?’ the
question. When you compare your answers, how similar or battle has already been lost. The thing we failed to do weeks
different are they? or months ago was to cut our scope aggressively enough.
They shouldn’t be different. You both work on the same Either a feature or initiative matters — in which case, make
team. And yet, there are plenty of reasons why they might it great — or it doesn’t. And if not, don’t work on it in the
differ. You might care about multiple outcomes. You might first place.
track many goals. Which ones matter the most? What hap- Over the course of your career, you may fall into the
pens if they conflict with one another? And how does the trap of ‘being strategic’ in the wrong way — and that’s okay.
success of your organization’s mission or the success of your The important thing is to continuously learn from challeng-
business factor in? If the answer isn’t clear to all team mem- es, stay engaged with your team and reports, and invest the
bers, there’s work to be done. time in overcoming your biggest hurdles.

PRINCIPLE 3. Prioritize. And cut.

Prioritizing is really hard, because most of us hate saying
no. Imagine this scenario: Amy and Bob are debating which
features to include in their next product launch. Amy thinks
doing X is most important, while Bob disagrees and wants to
Julie Zhuo (@joulee) is Vice President of Product Design at Facebook
do Y. What’s the easy out? Doing both X and Y, of course. No
and author of The Making of a Manager (Portfolio, 2019). (c) MIT Sloan
one’s feelings get hurt, and they get to have their cake and Management Review. All rights reserved. Distributed by Tribune
eat it, too. Content Agency, LLC.

90 / Rotman Management Fall 2019

FACULTY FOCUS Tiziana Casciaro, Professor of Organizational Behaviour, Rotman School of Management

Networking:
What Leaders
Need to Know
Interview by Karen Christensen

You have said that networks matter to The formal design of an organization is a top-down
outcomes that are important for both idea that says, ‘You and I are supposed to work together, and
individuals and organizations. How so? therefore we will be placed in the same department’. But the
The easiest way to think about it is that reality is that it is very difficult to predict each and every in-
nobody can do it alone. We are no longer teraction that a job will require, and as a result, people have
able to perform our complicated, inter- to take their destiny into their own hands and build informal
dependent jobs by ourselves. It’s not like being a cobbler in networks to get things done. In many cases, it’s not clear
the olden days, with a workshop where make shoes alone. from the formal structure that ‘this is the right person for you
Today, there are only small pockets in organizations where to contact’ — but it very well might be, and so, off you go. You
people can work in isolation. For the most part, we need oth- call the person or email them and start to build a relationship
ers for knowledge, resources, and access to opportunities. in a more emergent rather than official kind of way. We have
Internal and external networks are critical for carrying found that only about 50 per cent of the actions workers take
out any kind of job today. The whole point of having orga- in relation to communicating with others are part of an orga-
nizations in the first place is to have people with different nization’s formal design. The rest is discretionary.
competencies and expertise come together to pursue some-
thing collectively important that they could never achieve In your research, you have found that people have very
on their own. different feelings about social networking and profes-
sional networking.
Talk a bit more about how these networks contribute to They do, and it all has to do with the process of building re-
making us effective in the workplace. lationships. We often think of networking as a purposeful
It’s a question of moving away from what the formal design process of going out there, making contacts and nurturing
of an organization tells us about ‘who has what I need to those relationships. The point we have highlighted in our
get the job done?’ It’s about figuring out informally what the research is that when you make connections socially, that
right channels are for us to access the resources we need. type of a relationship is assumed to be neutral. If you do me

rotmanmagazine.ca / 91
 Powerful people who leverage social media tools
can actually shape how people think.

a favour, because we’re friends, I will be there for you when street. It’s important to take steps to make the experience a
the time comes. There is an unspoken assumption of reci- two-way street for lower-power individuals. One way to do
procity and mutuality, which makes people feel good about that is to help those with less power re-think what people
these relationships. That’s because we tend to feel more find valuable. Too often, we think narrowly about what we
morally ‘worthy’ when we engage in actions that are intend- can offer — the material resources, the money, the access
ed to benefit other people versus ourselves. to certain networks. But many other resources are valuable
Professional connections — the ones we build on pur- even to the higher-ups — reputation, belonging, a higher
pose in order to get our job done — are much harder to purpose, and an understanding of technologies and gen-
conceptualize and justify as being altruistically motivated. erational trends that they might have grown disconnected
You build these connections for yourself, basically, and as from. By thinking broadly about what you can offer, you can
humans, whenever we have a selfish motivation, we feel make networking more positive for those who are coming
morally ‘iffy’. That’s where our feelings of discomfort with from a position of disadvantage.
networking come from. When you hear someone say, ‘I
hate networking; it’s such a chore’, what they mean is not How has social media impacted networks?
that they find it unpleasant or stressful. They find it mor- In many ways, it’s is a double-edged sword. When you look
ally compromising because it’s a question of putting one’s at how it’s been used to mobilize action, it has clearly made
self interest ahead of any kind of higher purpose. And that it very easy to leverage huge networks. With the click of a
makes most of us feel yucky. mouse, you can access hundreds, even millions of people,
In truth, we are self-serving and self-interested all the depending on your followership you have. However, in our
time, but it’s a question of being able to tell yourself a story research we are finding that to be effective you need to
about your own behaviour. For instance, I will be more likely match this incredible access to people around the world with
to enjoy work-related networking when I feel like I have a lot some more traditional orchestration of action behind the
to give. Likewise, if I network on behalf of others—for a team scenes. You can really shape how people think and go about
member or a relative — the ‘dirtiness’ around networking is their day-to-day; but for that to be sustainable, it has to be
lessened, because an altruistic motive is triggered. At least backed up by an organized structure.
in my self-justification of the behaviour. Take the Women’s March a few years ago: Look at how
easily women all around North America — and the world —
Should people who are in positions of power feel com- mobilized when Donald Trump was elected. It only took a
pelled to network, as a way of giving back? few days to put it together and make it happen. But the piece
Absolutely. That is actually the best way to make network- that really got traction was the one that supported the elec-
ing not only productive, but energizing. When you do it with tion of women into positions of political power. That’s what
the purpose of advancing a collective objective or to lift up can happen when you couple the power of social media with
someone in your sphere of influence, network building be- a sustainable network or institutional powers that are well-
comes a highly positive experience. established. That’s how you get traction in the long run.
At the end of the day, it’s the people who don’t have as Powerful people who leverage social media tools can
much power who need to network the most — yet they are actually shape how people think. When it comes to the
the ones who are least likely to do it, because they feel mor- counterpart to that — whereby grassroots people push back
ally questionable about the process. For them, it’s a one-way on people with power — we are finding that it’s very easy to

92 / Rotman Management Fall 2019

 Setting up pathways to facilitate network
access for everyone is very important.

agitate and shake things up, but much harder to propose behaviour: We gravitate to people who look and sound like
new ways of doing business and be taken seriously along- us, because we understand them better and we believe they
side the established institutions. Those things still require understand us.
old-fashioned methods, like organization.
Are networks working against diversity and inclusion?
In general, are people leveraging their networks effec- Should we be forcing ourselves to ‘branch out’?
tively? Definitely, and that is why we need leaders, in particular, to
When I started studying this topic in the mid-1990s, a lot of create a context in which people can connect on a more level
people didn’t even know what a network was, and the idea of playing field. Relying on people to do that on their own initia-
social networks had not yet emerged. Nowadays, people are tive is not enough. Leaders have to create a context in which
very conscious that, without relationships, nothing happens. it’s possible for people who don’t naturally engage with net-
I should say that, while we might not have called them working in a comfortable way to have opportunities to do so.
‘networks’, there’s plenty of evidence that we’ve always done We need more programs for women, minorities, and
these things. Great salespeople, for instance, have always people who don’t have networks at their fingertips, to help
had tremendous networks. It’s just human nature to seek out them interact systematically. Setting up pathways to facili-
people to help you get things done. Technology has changed tate network access for everyone is very important.
the scope significantly so that we can now leverage much
more diverse networks, potentially. But the downside of this
is that we see lots of ‘echo chambers’. The gravitational pull
towards people similar to us is still a major determinant of
our networks. When people talk about polarization in the
political or economic sense, it is partly fueled by the fact
that, in theory, we could have networks that are profoundly
diverse; however, that’s not always the case. We all have the
potential for much more diversity in our networks.

What differences between men and women have you

noted in terms of networking?
While we don’t build networks differently, men and women
— in positions of leadership, in particular — are perceived
differently, and that does shape the kinds of networks that
they are able to build. The other thing that makes a huge
Tiziana Casciaro is a Professor of Organizational Behaviour at the
difference is the availability of men and women in different Rotman School of Management and holds the Jim Fisher Professorship
pockets of professional life. If I want to network with pow- in Leadership Development at the University of Toronto. Her forthcom-
erful people, and I look up at the totem pole in many envi- ing book, co-authored with Julie Battilana, is tentively titled The Truth
About Power. It will be published in Spring 2021. Prof. Casciaro was
ronments, I will find more men than women. Women also
named to the Radar List of the 30 management thinkers in the world
tend to network better with other women, and men with most likely to shape the future of how organizations are managed and
other men — which takes us back to the basics of human led by the UK-based Thinkers50.

rotmanmagazine.ca / 93
 QUESTIONS FOR Michael Cherny (Rotman Commerce ‘11) , Chief of Staff, Deloitte

Q
&A
You are known as a champion of workplace inclusivity.
For anyone who still needs to be convinced, why is it so
important?
This is something I’ve always been passionate about, even
before it was part of my job description. There are two things
in particular that really resonate with me and that I believe
will resonate with others.
The first is the concept of ‘brain space’. If you think of
our brains as computers, we all have 100 per cent capacity
to work with. About 20 per cent of our brain power goes into
basic, automatic functions like eating, sleeping, and physi-
An award-winning young cal coordination, which leaves 80 per cent for everything
leader and board member else. Imagine taking about 50 per cent of that away with
endless self-questioning about things like, ‘Can I be myself
describes what true at work without getting fired?’ ‘How can I find time to go to
inclusivity looks like. the bathroom in the food court (because I can’t go in the of-
fice)?’ ‘Should I wear this outfit, or will it be too provocative?’
Interview by Karen Christensen These are just a few examples.
As someone who recently came out as trans — in Janu-
ary of 2019 , on my birthday — I know first-hand what it’s like
to have so much of your brain space taken up. We often hear
the phrase, ‘Bring your authentic self to work’, and for me,
that has translated into reclaiming some of my brain space
so I can use it to be creative and innovative at work and con-
nect with those around me, without fear or over-thinking.

94 / Rotman Management Fall 2019

 It is at the intersection of lived experiences—both personal and
professional—that the greatest conversations take place.

I now bring all of myself to work and use much more brain my cottage and the front gate was frozen shut. I tried using
power in constructive ways — and I’ve seen the impact of sheer strength for about five minutes, but I quickly realized
that on my ability to add value. Inclusivity in every aspect that I needed to think of something else. I thought about
is important, because it allows each of us to maximize our it carefully and asked myself, ‘What does innovation look
effort. like in this instance?’. I figured out that loosening one of the
The second key point around workplace inclusivity is screws on the hinge might work; and sure enough, it did. It’s
diversity of thought. When we talk about inclusion, it is of- about bringing that mindset to everything you do.
ten about external things like race and gender. The inclu-
sion that I champion is not a check-box exercise to make Your company’s service areas range from Audit and Risk
sure we’ve got ‘the rainbow’ in the room; it is one where the Advisory to Legal and Tax. In your experience, which area
intersections of identity that each person carries with them faces the biggest challenges in terms of inclusivity?
every day are celebrated. Every person has a different set of I wouldn’t differentiate within Deloitte, just as I wouldn’t
identities, whether they be visible or not, and I want those differentiate between companies. All of corporate Canada —
identities to be welcomed, explored, and empowered. That including Deloitte — has to work to raise the bar. We all play
way, when we sit down and try to solve the world’s most a role, and we need collective ambition and accountability
complex problems, we are truly bringing diversity of thought to make change. The challenge that everyone faces is to be
to the conversation. In experience, it is at the intersection mindful. No one sets out saying, ‘I’m not going to be inclu-
of lived experiences — both personal and professional — sive today’. In Canada — and I can say this with certainty,
that the greatest solutions, the greatest thought and the having come out in recent months — we have an accepting
greatest conversations take place. culture, for the most part. We have protection under our
laws that provides some space to engage in meaningful dia-
In your current role, part of your mandate is to drive in- logue. The challenge is that we all have thousands of com-
novation. How do you go about that? peting demands on a daily basis, so we rely on shortcuts to
Innovation isn’t something you can cook up in a lab, assign a get us through our day.
leader to, and call it a day. To me, innovation is a way of life; The tide is turning on this, and it will continue to turn,
it’s a way of looking at every interaction, every question, and because the status quo is not the future. As mindsets con-
challenging that. I personally challenge myself every day to tinue to adjust and embrace new thinking, we will see some
be innovative in my thinking. I don’t want to ever be com- really meaningful change. It’s not as easy as saying, ‘Our
placent about the way things are. A phrase that people often mandate as a company is to be inclusive’. Just as innovation
hear me say is, ‘There has got to be a better way’. The chal- is a lifestyle and mindset, so is inclusivity.
lenge we face is that innovation doesn’t always look sexy or Emerging technology is complicating matters around
cool. Sometimes it’s as simple as a checklist; sometimes it is inclusivity. We all know that AI is gaining acceptance in
a robot that talks and dances and looks awesome; and some- many industries, and that it all depends on data. A common
times it’s about standardizing things in a way that unlocks phrase these days is, ‘garbage in and garbage out’, as in, the
other innovation. results depend on what you put in and how that data has been
There are so many different types of innovation; it’s collected. I attended the United Nations Women’s Forum
really about having a mindset that you bring with you every- for the Economy and Society last year, and this was high on
where you go. For example, this past weekend, I arrived at the agenda. We’ve spoken a lot about it at Deloitte, too. We

rotmanmagazine.ca / 95
 A phrase that people often hear me say is,
‘There has got to be a better way’.

need to come to terms with the fact that biases can and do tern: a trail of engaging, challenging roles. I love using my
exist in AI solutions. We need to think very carefully about brain and tapping into the fire inside me to make an impact
inclusivity as we design and implement these solutions. It’s — that’s what gets me up each day. I truly don’t know where
so easy to just focus on ‘build, build, build’ — but there is my career will take me, but I do know that I will always have
a real possibility that we aren’t building inclusive solutions. to be passionate about what I’m doing, making an impact
on the world around me and using my brain to its fullest.
Deloitte has released its own Gender Transitioning
Guidelines. How did this come about, and why is it so Ten years from now, what will social progress look like?
important to have such guidelines? That is the billion-dollar question, but a simple way to put
That came out about three years ago, and I was lucky it is this: Social progress will mean that each and every in-
enough to be involved in the project early on. I’ve always dividual out there will have more brain space. We’ll never
been a huge advocate of the guidelines, and I share them get to a place where people aren’t over-thinking things and
with whoever is interested, not just internally but with oth- the world is 100 per cent accepting. There will always be
er organizations. Put simply, the guidelines were created to challenges and barriers, but with progress, the amount of
help our firm have these conversations. As someone who time that so many people spend worrying about their race,
has personally transitioned, I know how exhausting it can gender, and sexual orientation will be reduced significantly
be to have to figure out all the answers on your own. — and used for more productive things.
There are two ways to proceed: you can create inclusive
spaces and then invite trans and gender-diverse people into
them, or you can hire diverse individuals and then try to
make the space inclusive. Having guidelines is a great way
to create that inclusive space first. If you have a Pride flag
hanging in your office and someone comes in for an inter-
view, they automatically know it is an inclusive space. That
is a simple visible way to create a safe space for people, so
they can focus on the task at hand.

What exactly does a Chief of Staff do these days?

No two days are alike. It’s really about considering every-
thing under the sun that is required to run a business, from
strategy and operations to talent management. I work with
different teams, looking at everything from our partner pipe-
line to our client portfolio, to planning for next year to how
we are engaging our people. I do everything I can to support
the leadership that I work with. I also act as a sounding board
Michael Cherny (Rotman Commerce ‘11) is Chief of Staff at Deloitte
and a strategic advisor on how we can run our business bet-
Canada. He recently received the Emerging Leader Award from the
ter and smarter into the future and not be reactive. Chartered Professional Accountants of Ontario (CPA Ontario). The
award recognizes exceptional achievement by CPAs under age 34 who
You are so young to have accomplished so much. What are regarded by their peers as leaders committed to innovation, impact-
ful contribution and social responsibility. Michael currently serves on
lies ahead for you?
the board of The 519 and supports CPA Ontario’s Pride involvement,
Just as my current role didn’t exist before me, I don’t think having previously served on multiple non-profit boards and volunteered
my next one does, either. But if I look behind me, I see a pat- with Pride Toronto, Start Proud, and the Ten Oaks Project.

96 / Rotman Management Fall 2019

FACULTY FOCUS Jacob Hirsch, Professor of Organizational Behaviour, Rotman School of Management

Avoiding the Downside

of Value Maximization
Interview by Karen Christenesen.

On a daily basis, we are confronted with your actions — especially if you have broken a rule that is
opportunities for both ethical and un- highly valued by a group that you belong to. These feel-
ethical behaviour. What leads people to ings of guilt contribute to a negative self-image, which
choose one over the other? carries a psychological toll. Most of us want to believe that
The major model of human decision- we are good people, but when you really scrutinize your
making that has driven the social sciences own actions, you may be confronted with the possibility
is ‘utility maximization’, a.k.a: value maximization. Every- that you’re not so good after all. Most of us try to work to
thing we do in life involves an attempt to maximize value, avoid that feeling.
whatever value means for us in that particular moment. My The good news is that, all things being equal, if an un-
co-authors Jackson Lu (MIT Sloan) and Adam Galinsky ethical approach and an ethical approach are both perceived
(Columbia) and I have argued that whenever you face a con- as adding the same amount of value, people tend to stick
flict between an ethical action and an unethical one, you do with the ethical route.
an intuitive ‘cost benefit analysis’. Your brain tries to figure
out, ‘What will the outcome be if I cheat in this situation? You have argued that by increasing rewards for high per-
And what will it be if I don’t cheat?’ formance, leaders might actually be motivating unethical
When you’re in a situation where cheating will produce behaviour. How so?
the most value from your perspective, breaking the rules can The nature of goal-directed behaviour is such that whenever
seem like the best strategy. That’s what people feel when a goal becomes more highly valuable to you, your motiva-
they actually engage in unethical actions — that it made the tion to achieve it increases. This notion is a core component
most sense to break the rules at the time in order to maxi- of performance-based compensation systems and motiva-
mize their sense of value. tional strategies: Give people significant rewards and incen-
tives for doing well, and they will perform better.
Given that, as you indicate, unethical shortcuts are often This is true to a large extent, but there is a problem with
more effective at bringing about desired outcomes, why it: You might also be increasing the likelihood that people
does anyone restrict themselves to ethical behaviour? will take an unethical route to achieve their goals. Take the
The main reason is that there is always risk involved in un- recent college-admissions scandal in the U.S. as an exam-
ethical conduct. If there were not, we would all be unethi- ple: If it were true that ‘everyone gets into college anyway’,
cal all the time — and society would completely break down. then the stakes would have been low, and there would have
The most obvious risk is that you might get caught, and if been little incentive to behave unethically. Lori Loughlin
you do, the negative consequences often outweigh the po- (and the other parents charged) would have been unlikely
tential benefits you expected. to concoct an elaborate scheme to try to get their kids into
That is an example of an extrinsic cost, but there are a particular college. But when the stakes are high — if there
also intrinsic costs to unethical conduct: Even if you don’t is a perception that, if you don’t get into an elite school,
get caught, you might feel really guilty and awful about your child’s future is in question — all of a sudden, this is a

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 Moral Utility Theory

Expectation of Anticipated Anticipated

Success by Warm-Glow Pride
Ethical Means Altruism

+ +
Subjective Expected Utility
of Ethical Behaviour -
Personal Utility of Outcome Decision to Engage in
Goals (Reward Value) Unethical Behaviour

Subjective Expected Utility

of Unethical Behaviour
+
- -
Expectation of
Success by Anticipated Anticipated
Unethical Means Punishment Guilt

FIGURE ONE

high-stakes challenge, and people are willing to cast aside When you’re in a situation where you don’t have those
any rules that interfere with the achievement of that goal. kinds of costs — for example, if you don’t feel guilty about
Whenever the incentives for goal attainment outweigh the something because it’s perceived as normative (‘Hey, every-
potential costs of breaking the rules, we are likely to see a one is doing it!’) and you perceive a low likelihood of getting
spike in unethical behaviour. caught and the magnitude of potential punishment seems
low, then effectively, there is nothing stopping you from
Tell us more about the ‘negative utilities’, or downsides, breaking the rules in pursuit of your goals.
of unethical conduct.
The negative utilities are the personal costs that you are like- On the flip side, what are some of the ‘positive utilities’ of
ly to experience if you engage in unethical actions, and they ethical conduct?
can be separated into extrinsic and intrinsic costs. Extrinsic These are the unique gains in personal value or satisfaction
costs reflect the social and economic consequences of being that come from doing the right thing. One aspect of this is
caught, which mainly involve different forms of punishment ‘warm glow altruism’ — the good vibes you feel when you
— ranging from hefty fines to jail time, loss of reputation, do something nice for another person, and this is actually a
and being cast out from your social community. very strong motivator for our behaviour. Humans can be a
As depicted in Dostoyevsky’s Crime and Punishment, very compassionate species, and research shows that one of
intrinsic costs reflect the unpleasant thoughts and feelings the best ways to ensure our happiness is to do nice things for
that come with the violation of moral rules, even in the ab- others. Likewise, people who do ethical things actually enjoy
sence of being caught. Feelings of guilt are among the most it; they feel the personal value of being a good person, which
powerful of these costs: People who are more prone to feel- you will never feel if you go the unethical route.
ing guilty are less likely to engage in unethical conduct be- Another aspect of this is the pride that comes from
cause they know that the emotional toll will be considerable, having done something that was difficult, but nonetheless,
which effects their intuitive calculus about how to behave. doable. Achievement is a great motivator. If you cheat your

98 / Rotman Management Fall 2019

way to the top, you’re never going to feel an authentic sense However, the people in the middle have to continu-
of pride and accomplishment from your efforts. ally alternate between states. When they interact with se-
nior executives, they have to adopt a relatively low-power,
Factors that increase the value of a particular goal in- deferential state; then, they have to turn around and adopt a
clude incentives, framing, and mindsets. Can these be high-power role in dealing with their team. These rapid and
designed to motivate ethical behaviour? persistent transitions lead to a lot of uncertainty, because
I think they can be. If you think about human needs — all of there are lingering effects to the social roles that we adopt.
the things that bring value to us as humans, that make us feel When a manager is in a low-power situation and walks
both good and bad — and then examine a particular context, into a conference room where she has to take on a high-
you can figure out where people are going to be pulled as a power state, the sudden role transition can be mentally and
result of the incentives. physically taxing. That’s because the habits and behavioural
Nowadays, there is a lot of emphasis on job design and tendencies that are associated with high-and low-power
choice architecture — proactively ‘framing’ an environment roles often conflict with each other, creating a state of be-
to elicit the desired behaviour — and I believe the same goes havioral inhibition and uncertainty. Basically, your brain has
for ethical behaviour. You can have an environment that, to quickly figure out the right way to act instead of relying
in some ways, is designed (whether intentionally or not) to on habitual patterns, and this can be emotionally exhaust-
push people down an unethical path — for example, by mak- ing. It produces a lot of anxiety and uncertainty in middle
ing the likelihood of being caught or punished very low, but managers. There can be physical effects, cognitive effects,
the rewards for success very high. In these cases, people are emotional effects, and mental-health effects.
effectively being incentivized towards unethical conduct.
The more you can ‘tilt’ the motivational balance away from You and your co-author have come up with some ways to
the unethical path — for example, by framing strategic goals ease this burden on middle managers. Please describe a
in terms of prosocial outcomes or taking pride in one’s work couple of them.
— that can shift people’s intuitive calculus, and they will One is very straightforward: Do not micromanage your mid-
start to find more value in the ethical path. dle managers! Constant intervening and micromanaging
from above can actually disrupt the capacity of middle man-
In other research, you have found that middle managers agers to enact high-power roles, which is critical for them to
face some unique psychological pressures. Please ex- perform their job effectively.
plain. Another suggestion is to examine the workflow of mid-
Most of the existing research on social hierarchy and the dle managers and eliminate unnecessary shifts in relative
psychological effects of power has focused only on high- power. If a manager constantly has meetings where they
power and low-power states — contrasting the experiences meet with subordinates, and later on the same day, they
of people at the top and the bottom of an organization. But meet with super-ordinates, that can really exaggerate the
of course there are many people who spend their lives in the strain. The more you have to go back and forth between dif-
middle. My co-author Eric Anicich (USC Marshall) and I ferent social roles and mindsets, the harder it is to integrate
have argued that there is something psychologically unique them and feel like you have a clear sense of what is expected
about these positions. We call it ‘vertical code-switching’. of you. And in extreme cases, this can lead to burnout.
The idea is that when you’re at the top of a hierarchy,
almost everyone you interact with has less power than you.
You are continuously in a high-power role, and this defines
your outlook, your social interactions, and what types of
behaviours are expected of you. The same goes for people
at the bottom. If you’re at the low end of a hierarchy, you’re
mostly interacting with people with more power than you, so Jacob Hirsh is an Assistant Professor of Organizational Behaviour &
you have to adopt a deferential attitude across almost all of HR Management at the Rotman School of Management and the Insti-
your interactions. tute for Management & Innovation, University of Toronto, Mississauga.

rotmanmagazine.ca / 99
 QUESTIONS FOR Lynda Gratton, Professor of Management Practice, London Business School

Q
&A
You believe we are in the midst of an “extraordinary tran-
sition” that will culminate in a social and economic revo-
lution. Please describe it.
There are some enormously important trends happening
in the world right now, but the ones I focus on in my work
are the impact of technology and social and demographic
trends. Take, for example, the evolution of the family unit,
where the changing roles of men and women are rewriting
some of the fundamental rules of how we live our lives and,
indeed, how we work.

What is a ‘multi-staged life’—and what will it mean to

make the most of one?
One of the old rules of the game was the idea of a three-
stage life, which involved full-time education, full-time
work and then full-time retirement. But if the assumption
A renowned organizational is that many people will live to be 100, they are probably
theorist talks about going to be working until their mid-70s — and that three-
stage model begins to look really inflexible.
some of the implications We are seeing the emergence of what my co-author
of a 100-year life. Andrew Scott and I call a ‘multi-stage’ life, in which educa-
tion becomes a factor throughout your life, not just during
Interview by Karen Christensen your youth; work becomes an activity well into your 70s and
80s; and retirement is no longer simply allocated to the end
of life. For example, why not take a ‘gap year’ when you’re
40, rather than a whole bunch of gap years at age 65?
In addition to these shifts, a whole slew of new life
stages are emerging. Lots of people are starting businesses
at various stages of their lives or spending a good chunk
of time in a ‘portfolio stage’, which involves a mix of pro-

100 / Rotman Management Fall 2019

 As a result of the new ‘multi-stage life’, corporations
are going to have to become much more flexible.

bono work and paid work. We are becoming more like ex- is productivity: Can I carry on learning? Can I carry on build-
plorers — taking the time to learn about ourselves and ing my reputation? Can I carry on working with peers and
explore what is meaningful to us. colleagues who can help me increase my knowledge base?
The second intangible is vitality, which overlaps with health:
In this emerging environment, you write that “re-creation Am I doing enough exercise? Am I sleeping? Vitality also has
will be more important than recreation.” Please explain. a social aspect — being in loving relationships and having
Back when work was largely physical, recreation was really friendships that make you feel valued and happy.
important, because people needed time to get over the sheer The third is rather a new intangible asset class that we
physicality of their work. But most of us don’t have that sort call the ‘transformational asset’. Have you built-in the capac-
of job now. Today, we want to be productive, healthy, and ity to change over this long life? Do you understand yourself
happy until we hit the one-century mark, and that means well enough to know how you’re going to have to change,
we’ll need to re-create ourselves a few times — who we are, and have you built sufficiently diverse networks that encour-
what we do, what our networks and relationships are, and age the development of other ‘possible selves’?
what our work involves. By the way, there is actually very little empirical evi-
dence for the way many people divide up today’s genera-
Describe what you have called “the coming HR battle.” tional cohorts. There is this idea that Gen X is very different
The challenge for human resources is that the three-stage from Gen Y, which is very different from Millennials, who
life was easy to ‘bake into’ HR practices and processes. are different from the Baby Boomers. The fact is, most hu-
Why? Because age equaled stage: If someone was 24, they mans want the exact same things, at any age: meaningful,
were in Stage 1; if they were 40, they were in Stage 2; if they decent work, good colleagues, and some sort of flexibility
were 65, they retired. But as indicated, each of is going to with respect to how they spend their time. All generational
approach a multi-stage life in a unique way — so there will stereotypes do is mask these fundamental human needs.
no longer be a ‘lock step’ of everyone moving through life
together. You might be 30 and still in full-time education, or You write that as healthy life spans extend, the nuclear
50 and enjoying a gap year away from work. As a result, cor- family will become less and less central. How so?
porations are going to have to become much more flexible. In addition to work, social trends are also changing the way
that households function. For instance, technology is freeing
As people grow older, many focus on tangible assets like women from domestic labour. When I say technology, we
money. But you argue that certain ‘intangible’ assets will mostly think about iPhones. But actually, the technologies
become even more important as we age. Please explain. that made some of the most significant impacts on our lives
In our former, relatively short lifespan, the role of the sec- are washing machines, cleaning tools, and delivery services
ond stage of life was to save up enough money for retire- that bring us food and groceries at any time that we could
ment. But when you pivot to a longer, multi-staged life, the possibly want them. As a result, in reality, domestic labour
focus shifts to intangible assets.The first of these intangibles is no longer a central task in most people’s lives.

rotmanmagazine.ca / 101
 People really want some autonomy over
the when aspect of their work.

Freed from domestic drudgery, women work outside of in their company who value something highly that might not
the home more than ever before. They might not be achiev- necessarily be important at all to the company’s leadership.
ing as many senior-management roles as they should, but For example, one of the areas that I write about fre-
they’re certainly in the workforce. The gender pay gap is quently is paternity leave. An older leader might say to him-
lowering, too, which means that the old family design of self, ‘I didn’t take any paternity leave myself ’, but for an in-
‘economic specialization’ — whereby the man had a paid creasing number of young men, this is a very important part
career and the woman had a caring job — is becoming the of their working lives. More than ever, fathers want to spend
minority. quality time with their kids, and they often have a partner
The fact is, many different types of family structures who is working, so they can afford to do it.
are emerging. One is the dual-career family, in which both One of the big mistakes you can make right now as a
adults work outside of the home; another features the man leader is to have stereotypical views about what a family is,
looking after the children; and yet another common mod- what people want from their work, and what it means to age
el is the single-parent household. Then there are families — all of which are changing rapidly.
like mine: I’ve remarried and I now have stepchildren and
a blended family. There are also more and more multi-
generational households, which exist because parents
and grandparents are living longer. Family structures are
becoming very complex, and employers need to be empa-
thetic about that.

What does all of this mean for organizations?

For the last decade, I have directed a research consortium
called The Future of Work Research Consortium, which
has been examining how companies are adapting to these
trends. We are seeing real changes, particularly in the up-
tick of flexibility practices. Organizations are realizing that
people really value having some autonomy over when they
work. We’ve known for a while that they appreciate auton-
omy about where they work — in the office or at home. But
today, people really want some autonomy over the when
aspect of their work. We’re now seeing many companies —
particularly human capital companies like consulting and
technology firms, where people are the key asset — offer-
ing time- and location-flexible work as a way to encourage
people to join them and ensure retention.
Leaders really need to focus on each person they lead Lynda Gratton is a Professor of Management Practice at London
as an individual and try to understand them in terms of their Business School. Her most recent book — co-authored with Andrew
unique identity, rather than making assumptions. Of course, Scott — is The 100-Year Life: Living and Working in an Age of Longevity
(Bloomsbury Press, 2016). Recognized by the Thinkers50 listing of
in general, corporate practices inevitably lag behind what in-
the world’s most influential management thinkers, since 2008 she has
dividuals want. That is not a recent phenomenon, but it does led the Future of Work Research Consortium, which brings together
mean that leaders have to be aware that there will be people executives from more than 100 leading companies.

102 / Rotman Management Fall 2019

QUESTIONS FOR Ashley Goodall, SVP of Leadership and Team Intelligence, Cisco

Q You have said that for leaders, having a great plan in

place is no longer the route to success. What is the bet-
ter approach?
The problem with plans in today’s world is that, by the
time you’ve figured out how to put them into action, the

&A
world has already moved on — and you’re addressing the re-
cent past rather than the future. A better approach is to share
as much real-time information about the world as possible
by building what we call ‘intelligence systems’ throughout
your organization, so that people are aware of what is going
on around them, know what other teams are up to, and can
chart the best course to success.
In addition to building intelligence systems, leaders
must be really, really clear about what the team and the or-
ganization are trying to achieve. If people have these two
ingredients, they usually come up with the best course of
action.

One of the ‘lies about work’ you write about is that ‘peo-
ple care about which company they work for’. You believe
they care much more about something else. Please ex-
plain.
A senior leader The idea that we care which company we work for rests on
at Cisco talks about the notion that the experience of a company is uniform. But
if you measure peoples’ experience inside a particular orga-
some of the biggest nization, you will quickly find that there is enormous varia-
misconceptions tion. Some are having an amazing experience and others
are having a not-so-amazing experience. This is what drives
about the modern workplace. some critical outcomes: Whether people stay with the com-
pany or leave, whether they’re productive or not, and wheth-
Interview by Karen Christensen
er they’re engaged or not.
This variety in experience exists, for the most part, not
at the company level but at the team level. An as a result,
what people really care about is which team they’re on. All of
the talk about ‘organizational culture’ actually misses this.
We’re not saying that you shouldn’t talk about what your

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 Meetings should be used to share real-time
intelligence about the world.

GreatTeam Performance = Individuals What gets shared on these calls?

Answering YES to These Statements: On our call this past week, we discussed the latest learning
plans for each of Cisco’s main business units and reviewed,
1. I am really enthusiastic about my company’s mission. for five minutes at a time, three new programs that are in
2. I clearly understand what is expected of me. development. Because these calls are so frequent, the infor-
mation is always current. In this case, we were talking about
3. I am surrounded by people who share my values.
developments in each of these areas that had occurred in the
4. I get to use my strengths every day. last few days.
5. My teammates have my back.
6. I know I will be recognized for excellent work. You write that a great way to ruin someone’s day is to fill
7. I have great confidence in my company’s future. it with meetings. What should people be doing instead?
8. In my work, I am always challenged to grow. The reason most people don’t like meetings is that many of
them are not very useful. If you think about the classic meet-
ing, there is an agenda, and each person presents for 15 or 20
minutes on what they’re up to. You sit and watch the slides
roll by, and people read out the words that they’ve written
company stands for, but a much more productive focus is to on the slides. It’s not particularly interactive, and it doesn’t
think about what is the experience of our teams and how can necessarily help you do your job any better.
we optimize that? The goal should be to create more teams I’m not arguing for fewer meetings necessarily, but I am
like your very best teams. arguing for better meetings — meetings wherein we tell one
another what’s going on in the world. If you take a page out
On that note, how can team leaders create an ‘intelli- of Stan McChrystal’s book, you would say a really compel-
gence system’ for their reports? ling meeting is a five-minute update on what I see going on
The first step is to recognize that the risk of not sharing around me right now that other people might find useful;
information is far greater than the risk of sharing as much and then you give people a chance to ask questions. If there
information as possible; yet, this is something many leaders are no questions, you move on. It’s all about using meetings
struggle with. On the scale of a company like Cisco — with to share real-time intelligence.
70-some thousand people globally — the challenge is to fig- The other type of meeting is the one I touched on ear-
ure out what information to supply to each team so that ev- lier — the Weekly Check-in, which is a one-on-one meet-
eryone understands the world they are operating in. ing of a team leader and a team member, where the team
We have a story in the book about now-retired U.S. member basically says, ‘Here’s what’s going on in my world
Army four-star general Stan McChrystal. When he was right now, and here’s where I need your help or input.’ This
leading the Joint Special Operations Command in Iraq, it ensures that you both agree on what the individual is go-
took him a while to get his intelligence system up and run- ing to do in the next few days, and it creates another type of
ning. At first, people didn’t think it would be useful, but he intelligence system. In my own experience, these check-ins
stuck with it and told everyone, ‘We are going to share real- are the glue of a high-performing team.
time intelligence with one another, every single day. Anyone
who wants to join the call is welcome to, and everyone can Why is it wrong to evaluate people based on goals that
ask questions’. have been set?
On my own team, I have a weekly call with every person There are a few problems with goal-setting, but one of the
in my part of the organization, and other leaders do pretty key ones is that it’s impossible to set goals for different peo-
much the same thing. It takes a while to get this up and run- ple that are equally challenging. There is no practical way
ning, because pure transparency isn’t a muscle that people to give you and me a goal that is just as difficult for me to
are used to flexing. But once you get it going, you won’t ever achieve, given who I am, as it is for you to achieve, based
want to go back — at least in my experience. on who you are. As a result, using goals to track progress or

104 / Rotman Management Fall 2019

 By dividing people into ‘high-potential’ and ‘no-potential’,
we are creating haves and have-nots in our companies.

measure people, as many companies do today, can’t work.

And beyond that, there’s plenty of evidence that goals set for The Nine Biggest Lies About Work
you by someone else don’t actually produce greater perfor-
mance. 1. People care which company they work for.
There is only one good kind of goal, and that’s a goal 2. The best plan wins.
that you set for yourself voluntarily, like ‘I am going to write 3. The best companies cascade goals.
a book’, or, ‘I’m going to write a magazine article’. These are 4. The best people are well-rounded.
good goals because they come from within, they express as- 5. People need feedback.
pects of who you are as a person, and they help you focus
6. People can reliably rate other people.
your energy. Unfortunately, most goals in large organiza-
tions look nothing like that. 7. People have potential.
8. Work-life balance matters most.
If the best people aren’t well-rounded (see Lie Number 9. Leadership is a ‘thing’.
4), what are they?
-From Nine Lies About Work: A Freethinking Leader’s Guide
The best people are actually really ‘spiky’. If you study ex- to the Real World (Harvard Business Review Press, 2019)
cellence, you don’t see people who are good at everything
that a theoretical model says you need to be good at to do a
particular job. What you see is people who have figured out
what they have going for them and have honed that to make quality in human beings, you will find that there is none. This
it really powerful and value-adding. mysterious quality that we’re always trying to find in people
In the real world, excellence isn’t the process of adding is a creature of our own invention.
ability where we have no ability; it’s the process of adding Secondly, even if potential did exist, we can’t mea-
impact where we already have ability. In the book, we talk sure it. At the moment, we measure it by rating people on
about Lionel Messi and his amazing left foot. He didn’t it, which is a very dangerous way to measure anything. The
get to be the greatest soccer player of all time by trying to fact that potential doesn’t exist and we can’t measure it that
become well-rounded and working really hard on his right should be enough reason not to focus on it. But actually,
foot. He focused on his left foot, and he turned that ability the most toxic result of dividing people into high-potential
into amazing impact by working really hard, such that when and no-potential is that we are creating haves and have-nots
he steps onto a field, the opposition knows he’s going to play in our companies. We’re creating groups of people who get
left-footed because that’s all he ever does — and they still all the attention, opportunities and promotions; and at the
can’t stop him. same time, we’re creating low-potentials and no-potentials,
There are many other examples where someone is re- who we have for all intents and purposes cast aside.
ally, really good at something, having honed it for their ca- The findings from Neuroscience show that our brains
reer, and that is their secret sauce, if you like — that’s how continue to grow throughout our whole lives and there-
they make their mark in the world. What you almost never fore, the question isn’t, ‘Can this person grow or not?’ It is,
see when you study excellence is well-roundedness. ‘Where will this individual grow the most quickly and pow-
erfully?’ The idea of potential steers us away from asking
Most companies go to great lengths to identify high- that question.
potential employees, but you don’t think leaders should
view people in terms of potential. Please explain why.
The idea about potential is that some people have this magic
concoction of traits going on so that we can parachute them
Ashley Goodall is the Senior Vice President of Leadership and Team
into any situation and they will necessarily do better than Intelligence at Cisco and the co-author of Nine Lies About Work:
other people. They will grow faster, learn faster, and create A Freethinking Leader’s Guide to the Real World (Harvard Business
impact faster. But if you look for evidence of this generalized Review Press, 2019).

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 QUESTIONS FOR Pamela Winsor, Former Chief Marketing Officer, Medtronic Canada

Q
&A An industry veteran
discusses the biggest
opportunities for health-
care innovation.
You worked as a leader on the front lines in healthcare for
more than 20 years. In your view, what is the industry’s
greatest challenge?
One of the greatest healthcare challenges is leading transfor-
mation within a culture that has been pretty static for the last
20 years, and within an operational conundrum that doesn’t
have a lot of slack to innovate or learn how to do things dif-
ferently. Both culturally and operationally, there are barriers
to positive change.

Canada currently ranks 9th out of 34 OECD countries in

terms of ‘healthcare outcomes’, and 10th in terms of ‘ac-
cess’. Is our system still world-class?
It is not, and I believe these rankings are a call to action. One
of the key issues is our wait times. There are major variations
in wait times for different surgeries. Outcomes are another
Interview by Karen Christensen issue. We do hip and knee surgeries very well, but we really
don’t follow through on what happened with the patient fol-
lowing the surgery: What were his or her social, physical,
and mental outcomes as a result of that surgery? We’re not
capturing the outcomes that matter to patients. And a third
reason for the ranking is that access to general physicians is
still not where it should be. These are all things that should
concern consumers and healthcare leaders.

106 / Rotman Management Fall 2019

 AI can address many issues; but only if we have the right data.

You have said that improving the situation entails ‘remov- that would help the overall flow of integrated patient care.
ing the waste’ and using the newly freed-up space differ- For example, instead of a patient staying at the hospital for
ently. What would this entail? four days after cardiac surgery, we could send them home
Don Berwick is a thought leader in the healthcare arena two- or three days post-op, with some outstanding homec-
who headed up the Institute for Healthcare Improvement are. That would lead to significant savings and overall de-
(IHI) for many years. He has been closely followed by our creased wait times.
academic hospitals in Canada — in fact, the IHI has pro-
vided ongoing training to many Canadian healthcare execu- Can innovation and, in particular, AI address some of
tives. Dr. Berwick has shared that in the U.S., 30 to 40 per these issues?
cent of healthcare spending is waste. In Canada, because Absolutely, but only if we have the connectivity required to
we’ve been more frugal with our public system, maybe it’s capture the right data. Again, a big issue for Canada is that
a bit lower — let’s say, it’s around 20 per cent waste. But that we don’t have integrated, easily accessible data. I’m sure that
works out to $42 billion. in our operating rooms, there are still nurses who capture
The analogy I like to use is to think about your closet. If their activity on Excel spreadsheets, and that spreadsheet is
you pull everything out and put back in only the items you re- not connected to any database. We aren’t capturing the data
ally need, you’re going to create a lot more space, and you’re required to create artificial intelligence. My watch does this
going to have an opportunity to bring in some new items every day: It gives me a nudge saying, ‘It’s time to go for a
that updates your wardrobes. Within healthcare, we should walk’. It’s monitoring me, and at the same time, it’s connect-
be doing this all the time — taking away some of the waste ed to Apple, which is monitoring millions of people like me
in terms of outdated processes and technology and adding and capturing data about our behaviour. We just don’t have
technological advances. For example, why is it that, if three that IT integration in healthcare. The vast majority of data is
people cancel their procedure in a day, the clinic shuts down still collected manually.
at 2:30 pm, rather than having three people waiting on-call
to fill those spaces right away? Even hair salons do that. Data issues aside, why does it take so long to get innova-
There are so many simple solutions and processes that can tions to market in the healthcare arena?
be scaled across multiple systems. In Canada, we have 15 different healthcare systems, and
they all have different governance and approval models.
In your view, what is the greatest opportunity for value As a result, once a company gets approval for a technology
creation at the moment? or a new drug, they have to go province-by-province to get
I think there is great opportunity within our emergency it approved via a ‘health-technology assessment’. Some of
rooms. I worked in this environment for eight years, and that will be done generically, from one province to another,
even back then, we saw lots of people with simple issues who but sometimes provinces will ask for their own health tech-
did not need to be in the ER. Many things can, and should, nology assessment. That really slows timely access.
be dealt with by a GP. Then there are the funding issues. For the last five or
In my view, the biggest opportunity is to make access to six years, there has been no new funding for healthcare,
family physicians 24/7. That would help to keep the emer- and that means organizations have to find the funding from
gency room just for acute episodes, like a heart attack or within. If they’re going to fund, for example, a new tech-
stroke, and acute care. In my mind, this is the biggest area nology like a stent retriever for use in stroke victims, they
of improvement where we can add value quickly. Then, if basically have to flip the funding from one area to another.
we can get patients on the other end out of hospital faster, Stent retrievers remove blood clots in minutes, and I think

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 most healthcare leaders actually get how much cost can be outcomes. This differs from the traditional fee-for-service
avoided when we do that, but no one rewards them for mak- approach, in which providers are paid based on the quantity
ing these decisions. of services they deliver.
As this model is embraced, innovation at companies
Tell us a bit more about the stent retriever, which is a like Medtronic will continue, but innovators will have to rec-
prime adoption case study for a game-changing technol- ognize that they can’t just keep throwing new technologies
ogy. at the healthcare system without being able to show their
Solitaire is a stent retriever that has the ability to go into an value. Going forward, the position of healthcare organiza-
artery and, within 90 seconds, locate and remove a clot. It tions is going to be, ‘We won’t pay for this product until we
basically goes in, wraps itself around each side of the clot, know for sure that it will create value’. The good news is that,
harnesses it, and pulls it out. The tool also has a little suc- increasingly, companies like Medtronic are happy to be paid
tion device that sucks out all the micro-pieces of blood, so based on outcomes and patient experience.
that the patient doesn’t have any mini-strokes. The individ-
ual is awake during the procedure, and very quickly feels the
outcome.
This is just an example of something that is both life-
altering and system-altering. It’s a must-have technology.
However, Medtronic’s data shows that out of 10 people who
should get this done today, only five or six will get access to
it. We still have a long way to go to make access tenable for
all Canadians.

You believe patients and their advocates should make

more specific demands of caregivers. What would that
look like?
As people become better educated about their health, I think
we’re going to see a lot more of this. I’m a Baby Boomer my-
self, and my peers are very health-conscious and educated.
Neverthelss, I always say, the minute you put on a green or
blue Johnny coat and lay on a stretcher, make sure you’ve
got an advocate standing over you. It is so important to have
someone who can ask questions and challenge what is be-
ing said and done on your behalf. I think the Baby Boom-
ers will be very demanding, number one, because they are
doing their own research and demanding improved access
and care. If they don’t get it, many will seek out private care,
which we’ve already started to see.

Are you hopeful that things will improve in the Canadian

system? Pamela Winsor recently retired from her role as Senior Director,
Definitely, particularly due to the rise of ‘value-based Stakeholder Engagement, Value-Based Healthcare & Chief Marketing
Officer at Medtronic Canada. The one-time emergency-room nurse
healthcare’. That is the new healthcare delivery model that
is a graduate of The Judy Project, a program at the Rotman School of
is increasingly being adopted, whereby providers — includ- Management that is designed to support and prepare women as they
ing hospitals and physicians — are paid based on patient ascend into executive leadership.

108 / Rotman Management Fall 2019

FACULTY FOCUS Aida Sijamic Wahid, Professor of Accounting, Rotman School of Management

Links Between
Gender Diversity
and Board Conduct
Interview by Manini Sheker

In 2001, Enron filed for bankruptcy af- avoid conflict or because they actually do have very similar
ter it was revealed that it had concealed views, and they want to get things done and over with.
large debts, giving investors a false im- All of this left many of us asking, ‘What can be done
age of the company. How did Enron’s col- so that boards in general are not subject to groupthink? If
lapse provide the impetus for scrutiniz- boards had directors that were different along some key
ing the conduct of boards and corporate dimensions, perhaps we would get better outcomes?’ This
governance in general? prompted me to examine whether certain demographic
When the Enron fiasco happened, people really started characteristics lead to better governance outcomes.
asking, ‘Where was the board? How did it allow this to hap-
pen?’ People were really surprised that the board did not Why is it so valuable to have a board that is diverse in
notice problems, and I think that prompted those interested terms of gender?
in the collapse to examine what was going on at the board Research shows that when group members are similar along
level in general. any key dimension, this correlates with the way they think.
Some people who analyzed the conduct of the Enron So, to the extent that there is no gender diversity on a board,
board concluded that it was complacent, and that it did not chances are that there will be less diversity of opinion and
bother to question much of what was going on. There was that people won’t engage in vigorous debates or question
talk about ‘groupthink’ — the phenomenon where group things.
members accept conclusions and come to decisions fairly The other reason why gender diversity is really impor-
quickly, without much debate or challenge of the prevailing tant is that 50 per cent of the population is female, and in
opinions. This can happen because group members want to many companies, half of the employees, customers and

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 It’s diversity of perspective that matters. We need diversity
along many dimensions, and gender is just one of them.

other stakeholders are female. This raises the question of no worse off, in terms of governance outcomes, by having
how a board can make well-informed decisions if there is more diverse boards.
no one representing voices of half of the stakeholders.
You make an interesting observation in your paper that
How does the gender diversity of a board affect the qual- boards with more than one female director outperform
ity of financial reporting and the likelihood of financial boards with only one female director, but boards with
misconduct? more than two female directors do not exhibit incremen-
My research suggests that when boards do have female di- tal improvements in performance. Why is that?
rectors, they tend to have better financial reporting qual- The reason that boards with female directors perform better
ity and also engage in less financial misconduct. When we is likely not due to the fact that women are better along some
looked at a firm with at least one female director and com- particular dimension; if that were the case, we would expect
pared its results in a given year to its results in the closest that every additional woman that is added to a board would
year without any female directors on the board — holding provide incremental benefit. On the other hand, if boards
other firms characteristics constant — we found that the with female directors perform better because gender diver-
quality of financial reporting was better in the years with fe- sity changes board dynamics, as I suspect, then adding some
male directors on the board. women to a board will be sufficient to change the board dy-
namic. But adding additional women after that might not
Why do boards with female directors fare better? actually have any incremental benefit, either because the
I cannot conclusively answer that, but I have explored some dynamics have already changed, or because it may take
widely held beliefs about why this is the case. I examined, away from the benefit provided by other forms of diversity.
for instance, whether differences in expertise, indepen- We would not be better off having all female boards — it’s di-
dence or diligence between male and female directors make versity of perspective that matters. We need diversity along
any difference, and I found that those do not seem to be the many dimensions, and gender is just one of them.
essential explanatory factors. This leads me to believe that
the benefits of having female directors come from the fact Entrusting power to a diverse set of people does not
that their presence changes the dynamics of a board — the necessarily ensure that the best decisions will be made.
way the board members interact with each other, ask ques- Would you agree?
tions and engage in discussions. Yes. Studies show that diverse groups have a harder time
reaching consensus because everyone has an opinion, so
Does the positive effect of the presence of female direc- coming to a decision can be harder. Anecdotally, I have seen
tors on financial reporting hold equally for other gover- this on some boards, too. It often leads to longer meetings
nance-related tasks? and circular discussions. But at a minimum, having diverse
My study focuses only on the financial reporting side, but representation allows for people to say, ‘Hey, you haven’t
other studies have looked at other governance tasks, and thought about this’ or, ‘What if we think about this issue in
some have found that having female directors leads to bet- this particular way?’ It provides the ability to look at things
ter outcomes. It seems certain that, at a minimum, firms are from different perspectives, and if you don’t have that, you

110 / Rotman Management Fall 2019

 If a company wants to hire the best female talent, it must credibly
signal to the marketplace that it has their best interests in mind.

are more likely to have blind spots and to miss things that It definitely can, especially when it comes to employees.
are really critical. Many firms talk about diversity, but unless they can demon-
strate their commitment by providing actual pathways for
Would you say that gender diversity matters more in their employees to rise to leadership roles, it’s nothing more
firms with weak governance structures? than cheap talk. And employees are smart enough to figure
Several studies show that diversity, at least in terms of gen- that out. You can talk about your commitment to fostering
der, does matter more in poorly-governed firms. If firms are a culture where women are supported and enabled to reach
already well-governed, perhaps having diversity of opinion the top, but if there is nobody at the top who looks like them,
does not matter as much; deliberations will happen no mat- how credible is that?
ter what, because the executives and directors truly care In many cases, especially in service industries like law
about the firm outcomes. However, in my research, I docu- and consulting, firms are desperate to make it to all the lists
ment the benefit to both types of firms — those that are poor- of ‘Best Employers for Women’. But if you look at their ex-
ly governed and those that are well-governed. ecutive boards or their practice leaders, it is hard to find even
a single woman in the most important roles. If you want to
Corporate psychologist Jason Schultz points out that hire the best new female associates, you must credibly signal
“Just as character matters in people, it also matters in to them that you have their best interests in mind and that
organizations.” Is there a moral case to be made for ad- you are committed to fostering an environment where they
vocating for the importance of diversity in corporate gov- can succeed. Actions speak louder than words.
ernance?
I believe so. Sometimes people make too much of the
economic case for diversity, and I understand where that
comes from. At the same time, however, as long as there
are no negative consequences economically to having di-
versity, the economic argument should really be mute.
There should not be a burden of proof that ‘diversity im-
proves firm performance’ before we start advocating for it.
We are not making firms any worse off by advocating for
diverse boards; that is fairly certain from the research. We
are not hiring underqualified candidates just to meet some
diversity quota. To the extent that there is no downside to
diversifying boards, then it does become a moral argument
that it is ‘the right thing to do’.

How might diversity in leadership and governance in-

Aida Sijamic Wahid is an Assistant Professor of Accounting at the
crease trust among the communities and employees that Rotman School of Management, the University of Toronto, Mississauga
a firm serves? and the U of T’s Institute for Management and Innovation.

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 QUESTIONS FOR Shawn Mandel and Andrew Kumar, Digital Transformation Experts

Q
&A
According to the SAP Digital Transformation Executive
Study, 80 per cent of companies that have embraced
digital transformation have experienced increased prof-
itability. So why have only 21 per cent of companies com-
pleted their digital transformation?
Shawn Mandel: I don’t know if ‘completed’ is the right word,
because you’re never really done on this journey. There are
significant milestones along the way, but in a large enter-
prise, this is a very complex task: You’re trying to deliver
excellent outcomes to your customers while, at the same
time, growing and building your digital capabilities, evolv-
ing with the technology and shifting your processes and
your culture. It is extremely challenging to orchestrate all of
that at once.

Andrew Kumar: The lens we use is that it’s not about hit-
Two digital leaders ting a grand-slam; we feel like we’re consistently hitting sin-
describe how ‘communi- gles, because in some cases you’re orchestrating hundreds
of micro-activities. Having them all come together seam-
ties of practice’ can lessly is the larger goal. And in terms of companies that have
tansform a company. achieved this, I think the number is more like one per cent.

Interview by Karen Christensen TELUS tackled this huge challenge seven years ago by
starting an in-house incubator, TELUS Digital. Could you
talk about its mandate and how it has progressed?
SM: Our mandate was to be fully transparent and do a 180
on how big, traditional companies build products for their
customers. The tradiotional approach was for big companies
to spend millions of dollars in total secrecy, building new ca-
pabilities for customers over a period of 12 to 18 months. But

112 / Rotman Management Fall 2019

 Communities of practice allow team members with diverse
expertise to come together in a scalable way.

we felt that was the old way of working. The initial idea was In essence, we’re bringing together groups of individu-
not only to rebuild TELUS.com, but also the underpinnings als who share similar interests and complementary skills
of it, including the platform, the technology, the processes within a common location. This becomes important for an
and ways of working. enterprise like TELUS, where there are multiples offices and
some team members are completely remote. For example,
Can you talk a bit about how you’ve gone about creating both our Toronto and Vancouver design chapters consist of
a digital culture that your entire organization is eager to designers, developers, and UX experts, led by a practice lead
get behind? (a senior expert).
SM: Initially, TELUS Digital was 20 people, but today it is Through ‘guilds’, these experts develop a cadence to
a combined workforce of 450. When you’re practicing that meet and collaborate on challenges, share best practices,
scale of distributed software development and dealing with or dedicate the time to learn (from peers or speakers). It is
so many scientists, designers, developers, product owners important to note that guilds are open meetings that anyone
— and just the nature of the composition of the team — you can join if they’re curious about that area. By using tools like
need a step change in how team members engage with each Google Meet and Meetups, this invitation can be extended
other. to team members across TELUS, as well as vendors and
We are big believers in community, distributed soft- partners working with us. This allows for greater collabora-
ware and empowering the general managers that run our tion and problem solving across multiple chapters and even
teams with all the tools and processes required to be suc- tribes, as different experts can attend guilds to offer new per-
cessful. But that also means that we put team members spectives rather than having teams working in silos.
like data scientists and developers under business leaders There are currently eight communities of practice in
— some of whom have more technical acumen than oth- place. Our developers have something called Technology
ers. The reality is, if you’re an automation engineer, you’re Forum. Eighty to 90 people will show up to those meetings:
probably not going to get all of the learning you desire from managers, directors, designers. It’s an open-door policy,
your business leader. That’s why we created ‘communities so everyone is welcome, and we have a great collaboration
of practice’ that allow team members with diverse expertise space in our building where we facilitate these events. The
to come together in a scalable way. opendoor means that lots of passionate team members from
all over the company can learn what’s happening with the
AK: What sets us apart is how we engage people and carve latest and greatest technology, what tools we’re adopting,
out space for our team members to step forward and build and what we’ve just released. We also use these opportuni-
their expertise. We wanted to make time for them to get to- ties to celebrate successes and do demonstrations of work-
gether and start self-assembling and pushing their craft to ing software.
the next level. Our SEO [search engine optimization] community of
practice is one of the new and exciting ones that is work-
What exactly is a community of practice, and how does ing to increase the level of fluency on how to write content,
it work? structure our technology, and make sure that our products
AK: Communities of practice are groups of people within the get in front of our customers.
organization who share a concern or passion for something
they do and learn how to do it better by interacting regular- SM: SEO is an interesting one because it’s so multidisci-
ly. They come together without hierarchy in order to learn plinary. There are people with a solid acumen around search-
about their area of focus. These groups are non-hierarchical, engine optimization, but there are also content specialists,
voluntary, and long-term. They focus on how to accomplish designers and developers. Just as digital transformation is
tasks, rather than what you deliver. a team sport, SEO is a bit of a team sport as well.

rotmanmagazine.ca / 113
 It is our job as leaders to create an environment that enables
people to network and communicate with each other.

We’ve actually created a pretty sophisticated practice What are you most proud of with respect to your com-
around SEO, and the results are amazing. Year over year, munities of practice?
we’ve seen a 25 per cent increase in organic traffic to our AK: We have something called Digital Platform Ambassa-
website. That’s millions and millions of users. If we had to dors, which are like embedded advocates across the digital
pay for that outcome, it would have cost $7 to $8 million; practice that push for consistency and reuse and share prac-
yet it was a group of three internal people that delivered tices. I think that’s probably one of the coolest things we’ve
it. That’s a great example of how bringing people together done. These people build a lot of standard components that
across multiple disciplines can deliver significant impact a bunch of our different teams use frequently. I think we can
without tons of resources. step back as leaders and say that we have created an envi-
ronment with effective guard rails that allows people to do
AK: Some of the other communities of practice include ac- innovative things in pursuit of significant outcomes. And all
cessibility, design, and product management. We run 50 of that has been very impactful for our customers.
to 60 events monthly to galvanize and rally people around
these causes. SM: Let’s be very clear: There are days when sustaining these
levels of activity with such a large team feels next to impos-
SM: Importantly, these communities transcend specific sible. I want to make sure readers understand that building
practices. We have a community of practice around diversity up this ‘muscle’ is the easy part; it’s sustaining it over time
and inclusion, for instance, with a bunch of very passion- that is difficult. However, we can say from experience that
ate team members who are, obviously, focused on making it’s well worth all the effort.
TELUS very inclusive and diverse. It’s a very organic group
that meets frequently and spends time and energy working
with the broader organization — and even the external com-
munity — to make our workplace more inclusive.

Do people feel left out if they’re not part of these com-

munities of practice? How do you deal with that?
AK: We view participating in these communities as being
part of owning and managing your career. Our job as leaders
is to create an environment that enables people to be suc-
cessful and allows them to network and communicate with
each other. As indicated, we never exclude people. We actu-
ally encourage people to participate, both within digital and
outside of digital.

SM: Anyone can join any meeting they want. You have to
own it, though. I’m not going to tap you on the shoulder and
tell you to go — you have to take the initiative. We’re trying
to create an incredible place for people to grow their career Shawn Mandel is the former Chief Digital Officer at TELUS, a national
and get lots of variety. One of the great things about work- telecommunications company that provides a wide range of telecommu-
nications products and services including internet access, voice, enter-
ing here is that you can stay within the confines of your team
tainment, healthcare, video and IPTV television. Andrew Kumar is Head
and culture, but you can also get lots of varied experience of Product Development and Digital Platforms at TELUS. For more on
because there are so many different things happening. the company’s digital transformation journey, visit Labs.TELUS.com.

114 / Rotman Management Fall 2019

POINT OF VIEW Daniel Markovitz, Consultant and Author

Flipping Accountability
on its Head

HARD-CHARGING LEADERS often boast that at often does) create friction and resentment between organi-
their companies, ‘We hold people account- zational layers.
able’. Success, they argue, comes from this When core processes fail to deliver, executives typically
culture of accountability. demand explanations and look to assign blame, all in the
This phrase is surely one of the most name of accountability. Worse, when there is a major down-
overused — and frankly, insulting — addi- turn, lower-level workers are often laid off while executives
tions to the business jargon in recent years. The implication keep their jobs — and sometimes even receive bonuses for
that employees won’t do their jobs properly unless manage- successfully reducing costs. This dynamic — where subordi-
ment checks their work for quality — and punishes them if nates are accountable to their leaders — permeates organiza-
they fail to deliver — demeans both workers’ professional- tions at all levels.
ism and integrity. In addition, the negativity baked into this Contrast this practice with the model typically em-
paradigm is astonishing: No one talks about holding people braced in Japan, where in most public companies, the execu-
accountable when they believe they do their jobs well. tives are the first group to take pay cuts and even resign when
Obviously, employees at all levels — supervisors, man- results are poor. What if we took their lead and reversed the
agers and executives included — need to perform well for a vector of accountability? What if we asked leaders to be ac-
company to thrive. But the best leaders don’t focus solely on countable to their subordinates? That is what the best lead-
the accountability of lower-level employees; they view ac- ers do, and it’s evident in organizations that adhere to lean
countability as a two-way street. production principles.
The traditional view, which I call the ‘vector of ac- Reversing the vector of accountability means holding
countability’, always points upwards, from the front lines to leaders accountable for the performance of their subor-
leadership. This is a one-way relationship, from the bottom dinates. It is their job to coach, mentor, and develop their
of the org chart to the top, with each level being judged by teams — and to deliver results. Gary Convis, former execu-
the people above them. As such, it has the potential to (and tive vice president and managing officer at Toyota (the first

rotmanmagazine.ca / 115
 What if we asked leaders to be accountable
to their subordinates?

non-Japanese to hold that position) and author of The Toyota Perhaps most importantly, going to the gemba helps
Way to Lean Leadership, explains that Toyota believes indi- leaders see that results are the outcome of the entire sys-
vidual success can only happen within the team: tem, not simply a function of the individual. W.Edwards
Deming’s System of Profound Knowledge stresses that
This deep belief is built into the promotion process most problems are a result of poorly designed systems, not
(which focuses heavily on team behaviour) and into in- a lack of individual effort or attention. As he wrote in Out of
centives for performance (where individual incentives the Crisis:
are one small component, while team-based incentives
based on the performance of the unit or company pre- I should estimate that in my experience, most troubles
dominate). and most possibilities for improvement add up to the
proportions something like this:
The psychological implications of this reversal are profound.
All organizations are comprised of intricate webs of human • 94 per cent belongs to the system (i.e. Is the responsi-
relationships, and for those relationships to be healthy and bility of management)
successful, there needs to be some degree of symmetry. • Six per cent other
Demanding that lower-level staff be accountable to leaders
without a corresponding accountability of leaders to lower- Of course, plenty of leaders visit the shop floor or the teller’s
level staff is a recipe for unhealthy, weak relationships, low window on occasion. However, following the precept of
morale, and disengaged employees. what Tom Peters called MBWA (Management By Walk-
Indeed, according to Gallup’s State of the Global Work- ing Around), these visits tend to be haphazard and oppor-
place report, 87 per cent of employees worldwide are either tunistic, rather than planned. Average leaders will go to the
‘disengaged’ or ‘actively disengaged’ at work — a stunning gemba when there’s a major problem or when they have a bit
(and depressing) figure. Reversing the vector of accountabil- of free time, but it’s not baked into their daily schedules as a
ity brings balance to the interpersonal relationships in an firm promise to their teams. By contrast, the best leaders in-
organization. While I’m not an industrial psychologist, it’s sist on visiting the gemba everyday. It’s not something that’s
hard to imagine that this kind of shift in mindset and incen- simply nice to do; it’s part of how they manage themselves
tives wouldn’t improve those scores. and their teams — with rigour, discipline, and commitment.
Lean leaders constantly talk about the necessity of ‘go- When a leader makes a commitment to go to the gemba
ing to the gemba’. Gemba — a Japanese word meaning ‘real every day to learn what her people are doing and what ob-
place’, refers to the place where the work actually gets done. stacles they are facing, she becomes accountable to her team
In a bank, that could be the teller’s window, or the mortgage for performance — and the vector of accountability flips (see
approval department. In a hospital, it could be the operating Figure Two).
room, the emergency department, or a nurse’s station. In a
manufacturing facility, it’s the shop floor. In short, the gemba Varsity Facility Services, a U.S.-based provider of janito-
is wherever the work that we’re studying gets done. It is not rial services to corporations, goes one step further to make
the CEO’s office or the executive conference room. this reversal of accountability explicit. Managers’ schedules
The best leaders spend considerable time ‘going to are posted right out in the open, visible to the entire com-
the gemba’ as a way of reversing the vector of accountabil- pany. When a manager completes his or her front-line visit,
ity. They know that they need to see for themselves what’s their team checks the box or flips a card from red to green
happening, so that they can truly understand it. Only with to show that they did, in fact, fulfill their commitment. If
this knowledge can they provide the necessary coaching and there are too many red marks, the next level of leadership
teaching to their team. The gemba is also the best place to gets involved to correct the problem. At Varsity, it’s the work-
conduct that coaching, since it’s the home of both the pro- ers who validate the managers’ completion of their standard
cess and the worker. work. In short, they hold their leaders accountable.

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 The Vector of Accountability The New Model

Traditional Accountability Accountability with Leader Best Practices

You You

Your Team Your Team

FIGURE ONE FIGURE TWO

In the 1970s, management thinker Robert Greenleaf them accountable — to flip the vector of accountability — by
coined the expression ‘servant leadership’ to describe a going to the gemba, making their commitment to the team
model of leadership in which the titular head of an organi- visible, and letting workers grade them on how well they ful-
zation dedicates himself to the growth and development of fill those commitments.
others who are below him on an organizational chart. The While there is clearly room for variation and improvisa-
managerial practice of visiting the place where the work tion with this approach — and there must be, given the vari-
is done embodies the concept of servant leadership: The ability in an executive’s job — there are just as clearly best
executive isn’t pulling front-line employees to her walnut- practices governing how she should spend her time, with
paneled, carpeted office for conversations; rather she is ample theory and practice to support those habits.
going to the workers’ territory, to learn with her own eyes Here’s a challenge to all leaders reading this: Start-
and ears what’s happening, and to coach them in their own ing tomorrow, let your team hold you accountable for a
environment. change.
Servant leadership is now a fairly widely accepted mind-
set. You’d be hard-pressed to find any leader who would
publicly state that they hold their position due to a modern
version of the divine right of kings — that the hundreds or
thousands of workers who toil at their companies do so sim-
ply to enrich the CEO. The language of this millennium is
that of the leader whose responsibility is to serve sharehold- Regular contributor Daniel Markovitz is the author of Building the Fit
ers and employees. Organization: Six Core Principles for Making Your Company Stronger, Faster
and More Competitive and the Founding Principal of Markovitz Consult-
The issue is, daily actions don’t necessarily support this
ing, based near San Francisco. His clients include Clif Bar & Co., Pfizer,
claim. As indicated herein, the best leaders put teeth in their Stanford Law School, Microsoft, and New York Presbyterian Hospital.
adherence to servant leadership by allowing workers to hold He blogs at markovitzconsulting.com/blog.

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 QUESTIONS FOR Sunny Bonnell, Entrepreneur and Author

Q
&A A highly successful
entrepreneur argues
that when it comes
to powerful leadership,
You have said that “success is no longer the purview of
the Harvard MBA graduate.” Who is it the purview of?
At one time, leadership always had to be earned, but in
my personal experience, I’ve discovered that it can also be
taken. You don’t have to have a degree, a fancy title or tons
of money to be a leader — you can just act. Technology has
been a big factor in this. Many young leaders are emerging
‘Rare Breeds’ rule. because of the ability to take their iPhone, shoot stories, and
launch movements online. You don’t need permission to
Interview by Karen Christensen
lead anymore.
For my co-author Ashleigh Hansberger and I, the the-
sis behind our book [Rare Breed: A Guide to Success for the
Defiant, Dangerous and Different] is that in order to achieve
stand-out success, you need to own who you are. You should
make decisions in life by turning your vices into virtues.

118 / Rotman Management Fall 2019

 Rare Breeds squeeze every ounce of talent out of
themselves and everyone around them.

What exactly is a ‘Rare Breed’? against us, but that fired us up and made us work even hard-
Rare Breeds are the leaders, entrepreneurs and high achiev- er. Within two years, we had a stack of accolades and global
ers who get what they want by realizing visions that seem out- press, and were attracting clients from around the world.
landish to the rest of the world. They will sacrifice everything
and stop at nothing. They are rebellious thinkers, relentless In the book you write: “[Number of] times we got fired for
perfectionists, weirdoes, and often spellbinding leaders. the exact reason we were hired? Twenty.” Please explain.
They squeeze every ounce of talent from themselves and One of the biggest lessons we learned early on was that
everybody around them, until one day, their potential is re- thinking differently comes with a heavy price. As we began
alized, and they change the world. to gain traction and garner awards, a lot of more established
Rare Breeds have always been with us: Joan of Arc brands were very attracted to our unorthodox approach and
was a Rare Breed — so were Mozart, Orson Welles, Len- started to seek us out.
ny Bruce, and Maya Angelou. These people unsentimen- Being different was the reason they wanted to hire us,
tally tore down the conventions of their chosen fields and but it was also the reason we got fired sometimes — because
transformed them with their talent and vision. Today, Rare of our bold ideas. People might say they want something dif-
Breeds include Tomi Adeyemi, the 25-year-old author of ferent, but as your ideas go up the chain of command, they
the best-selling fantasy Children of Blood and Bone, who has often get crushed by status-quo thinking. Many leaders can
shown young writers of colour that there is a place for them talk a good game and say, ‘We need some rebellious think-
in the lily-white world of swords and sorcery. So is Malala ing in our company’, but they don’t really want outliers, be-
Yousafzai, the Pakistani activist and winner of the Nobel cause outliers cause disruption.
Peace Prize who didn’t let a round of bullets shoot down her We went on a lot of disappointing journeys before we
vision of a world where all girls can learn and lead. discovered that these companies had some very poor lead-
What separates Rare Breeds from everyone else is one ership at the helm. The fact that their brand was struggling
simple truth: While others may suppress their quirky, odd- was just a result of that bad leadership. Now we focus only
ball, pain-in-the-ass qualities, Rare Breeds lean into theirs. on working with leaders and innovators who aren’t afraid to
They celebrate them and ‘let them off the leash’, break some challenge the status quo.
of the windows of conventional wisdom and run like hooli-
gans through the corridors of entrenched power. In a world Over the past 15 years you have helped hundreds of lead-
that wants to own you, owning yourself in this way can hurt ers unlock their company’s potential by tapping into what
like hell. The Rare Breed life is not easy. Not everyone is cut makes them unique. How do you isolate that?
out for it. The fact is, whether it be a company or an individual, we
rarely give ourselves permission to ask, Who am I? What do
Describe the early days for the branding agency you co- I believe in? What makes me me? We spend so much of our
founded (Motto)? lives pretending to be something else. Sometimes a com-
Ashleigh and I were 20-something women who dropped out pany approaches Motto and wants to be rebellious, when
of college to start a branding agency with no experience and they aren’t rebellious at all. They are afraid to truly own
$250 to our names. Everyone said we’d fail. On top of that, who they are.
we were in a small, conservative South Carolina town that We help brands and leaders shift their mindset towards
was locked down by two or three huge agencies that had far radical differentiation. We like to take companies on a jour-
more money and way more power.The odds were stacked ney of self-discovery, to get to their essential DNA, because

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 Whether it be a company or an individual, we rarely give ourselves
permission to ask, Who am I? What do I believe in?

The Seven Traits of Rare Breeds

1. REBELLIOUS: Rare Breeds hurl themselves against

the walls of business-as-usual to see what breaks. We attract these companies because every brand needs to
2. AUDACIOUS: Rare Breeds see realities other people move forward and future-proof itself. Relevancy matters —
can’t see and have the nerve to try to bring them into be- a lot — and your brand is your competitive edge.
ing, even when everyone else says they are impossible. We’ve cut our teeth on helping disruptors bring their
brand to market in radical ways. But we also know what it
3. OBSESSED: Perfectionism isn’t a bug for Rare takes for a more established business to be resilient and stay
Breeds; it’s their operating system. They’re all-in, always
on, 24/7. Sketching at breakfast, practicing pitch lines relevant amidst the changing tides. Our job is to help brands
in the shower, waking up with insane ideas at 4 a.m. figure out what it takes to be a Rare Breed in their industry —
the ‘one and only’ in a category filled with sameness.
4. HOT-BLOODED: Rare Breeds come to the table
with fire and fury that put others to shame. On an individual level, what is it about Rare Breeds that
5. WEIRD: Rare Breeds are strange. Know who else makes them such amazing leaders?
is strange? Astronauts. Poets. Nobel laureates. Artists. Rare Breeds don’t have jobs, they have callings. They carve
Inventors. Everyone who dares to do what makes us out a lane and reach the top not in spite of who they are, but
laugh, cry, swoon, or gasp in awe. because of who they are. These are individuals who think
“Six impossible things before breakfast” isn’t just a quote
6. HYPNOTIC: Rare Breeds are spell-binding orators
and seducers, conductors capable of leading the from Through the Looking Glass — it’s a business plan. They
orchestra of people around them and inspiring others think in ways that other people don’t.
to fulfill their potential. Like I said earlier, you don’t have to be in the corner
office to be a Rare Breed. As Martin Luther King Jr. once
7. EMOTIONAL: Rare Breeds feel things deeply and said, “If you’re going to be a street sweeper, you should be
trust their guts. They channel their emotions and show
up with empathy, kindness, and intuition. the very best street sweeper who ever lived”. People who do
that, at any level, are Rare Breeds. All you need to do is think,
act and tap into your potential.

every company — and every leader — has their own unique

essence. It’s our job to codify that uniqueness into real busi-
ness results.

Your work can be seen in Starbucks, Target, Walmart,

Whole Foods, CVS, and more, and your clients include
20th Century Fox, the NFL, USA Today and Hershey’s.
That’s a roster most companies dream of. How did you
woo them all?
They actually came looking for us, seeking innovative think-
Sunny Bonnell is the CEO and Co-founder of Motto, one of the top
ing and inspiring design. Over time, Motto has cracked branding and digital agencies in the U.S. and the co-author of Rare Breed:
the code on helping brands find their one-of-a-kindness. Success for the Defiant, Dangerous and Different (HarperOne, 2019).
Ashleigh and I see what brands can be, not what they are.
120 / Rotman Management Fall 2019
QUESTIONS FOR Craig Dowden, Executive Coach and Author

Q Great leadership is surprisingly rare. Why is that?

While there are plenty of well-intentioned individuals in
leadership roles, they face a few key challenges. The first is

&A
time pressure. Research shows that when we’re under time
pressure, we become anxious and stressed, and our empathy
dampens. When leaders get stressed out they can become
incredibly self-focused and lose sight of how their behaviour
is impacting the people around them.
The second challenge involves the impact of power.
We’ve all heard the expression that ‘absolute power corrupts
absolutely’, and based on the evidence, it’s clear that power
does impact how we behave. Leaders often have one rule for
themselves and another rule for other people; when some-
one else does something questionable, they see it as unethi-
cal and inappropriate; yet when they do it, they rationalize
it away.
A third challenge involves the self-serving bias. If you
ask someone, ‘Are you a positive leader?’, the vast majority
of people will say ‘Yes’. And yet if you look at the research
from Gallup and other sources, the primary reason people
A psychologist and execu- leave organizations is because of poor leadership.
tive coach describes the
You have developed a framework for ‘Positive Leader-
value of humility — and ship’ with six pillars. The first pillar is self-awareness.
what else it takes to be What does this look like and how can it be achieved?
The question at the core of self-awareness is this: Do you
a Positive Leader. have an accurate sense of who you are and how other people
perceive you? Self-awareness provides a critical leadership
Interview by Karen Christensen
advantage: Research shows that it leads to improved finan-
cial performance, higher levels of personal and professional
success and greater job fit and organizational success.
Most of us assume that our motivations are clear to the
people around us, and that our behaviour is understood ac-
cordingly. But that is often not the case. We are all naturally

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 When leaders get stressed out, they often lose sight of how
their behaviour impacts the people around them.

biased toward our own opinions and behaviours, which can This is not just happening in meetings: Even when
make self-reflection a challenging undertaking. Therefore, people are speaking with one another face-to-face, they are
an effective strategy for overcoming our own bias is to seek often texting. These are profound forms of disrespect that
information outside of ourselves. impact performance and motivation. Research shows that
I advise leaders to start by saying to their people, ‘I want when we work in an uncivil environment, our performance,
to perform at my best and ensure that I’m supporting you in our willingness to collaborate, and our ability to be creative
the best way possible so that you can perform at a high level. decline significantly. There is also evidence that uncivil
If I’m not delivering that to you, then I’m letting you down.’ workplaces affect our physical health. They put us at an el-
Then, open up the doors to feedback through informal con- evated risk for coronary heart disease and heart attacks.
versations, personality assessments, or a 360-degree assess-
ment. There are plenty of tools available that provide insight Moving on to your third pillar, what does humble leader-
into whether our intentions are having the desired impacts. ship look like, and why is it so powerful?
The analogy is that humble leaders play more for the logo on
Your second pillar of positive leadership is civility. What the front of the jersey than for the name on the back. Their
are some of the most common forms of incivility dis- behaviour is about larger collective purpose more than it is
played by leaders? about positioning them for success. Not surprisingly, this ap-
There is evidence that incivility in our workplaces is increas- proach drives enhanced engagement.
ing at an alarming rate. People often think about the extreme Research shows that humble leaders make better qual-
forms of incivility — throwing a chair, slamming a door or ity decisions because they don’t let their egos get in the way.
swearing at someone. As a result, more minor forms of in- One of my favourite studies is around sunk costs. Essential-
civility are seen as insignificant; but they are not. ‘Small ly, when we make decisions, people tend to go ‘all in’. When
actions’ can have profound impact. The most common are the data comes back and looks bad, if I made the decision,
things like interrupting someone, being condescending or I find it really tough to pull the plug, because I feel like I’m
ignoring emails, opinions and voicemail. going to look incompetent or stupid. There was a terrific
Cellphones have also become a key challenge in organi- study done that looked at problematic bank loans. When
zations. People are constantly on their phones in meetings, they brought in a fresh group of managers to look at those
and this is an incredible form of disruption and disrespect. If loans, they were significantly more likely to pull the plug and
I’m speaking and you’re looking at your phone, guess how I stop the loan than those who had initially arranged for them
interpret that? You’re not interested; you’re not listening; there in the first place — all because of ego.
is something more important than I am. And guess what hap- How can we be humble leaders? One key way is to spot-
pens when I stop speaking and you start? I do the same thing. light other people’s strengths and contributions. When you
In organizations today, everybody wants to look busy. do that, it really empowers people. They don’t feel threat-
So if you’re on your phone and I’m not, maybe I’m not busy ened or scared about doing well in the organization, which
enough; maybe I’m slacking off. You can create a really frees them up to unlock their talent and potential. Further-
negative atmosphere where people are constantly on their more, when people see that it’s more about collective pur-
phones. They’re disconnected from what’s happening in pose and achievement, they are much more inclined to want
meetings, which raises a really interesting question: How to follow you as a leader. One thing you can do is, when-
much value are they providing to that meeting? Also, their ever possible, invite key people from your team — or better
behaviour ends up distracting other people around the table. yet, your entire team — to present results from your area to
There’s so much scattered attention and disrespect that, senior leaders. Even if you can just get permission for them
once again, it creates a highly fragmented workplace. to sit in on the meeting and not say anything, that is a great

122 / Rotman Management Fall 2019

 If I’m speaking and you’re looking at your phone,
guess how I interpret that? You’re not interested.

The Six Pillars of Positive Leadership

1. Self-Awareness: It is only through knowing who we

are and how we come across to others that we can capi-
talize on our strengths, identify our weaknesses, manage
gesture, as they will get to see the impact of their work.
our blind spots, and take appropriate action.
Another thing you can do to display humility is to ad-
mit your mistakes. Legendary executive coach Marshall 2. Civility: No matter where we sit in an organization,
Goldsmith taught me that you can’t possibly expect peo- we look up to understand how to behave. Civility may
ple to take responsibility for their actions if you don’t take be defined as ‘politeness and courtesy in behaviour and
speech, and it is a necessary ingredient of growth and
responsibility for yours. In one study, when leaders were
success.
asked, ‘Do you frequently or always apologize when it’s
warranted?’, 89 per cent said yes. But when employees were 3. Humility: This means being aware of our strengths
asked the same question, only 19 per cent said their leaders while simultaneously recognizing that we do not have
‘always’ or ‘frequently’ apologize. Not surprisingly, leaders all the answers, and that we are willing to ask others for
their knowledge and perspective. Although it may seem
are afraid to do that because they don’t want to look weak
counterintuitive, humility is the very act that inspires
or incompetent. This is a huge opportunity for leaders to in- confidence about our capacity to lead.
crease engagement.
In my coaching practice, senior leaders often say to 4. Focus on the Positive: When we are in a positive
me, ‘I wish my team exhibited more accountability; I wish frame of mind, research suggests we interact with our
environment more effectively, as we look for opportuni-
they would self-mange more and take responsibility’. But if
ties to ‘broaden and build’. In looking toward the future
you are sidestepping responsibility on a regular basis, guess with a positive frame of mind, a company is more likely
what the impact is on other people? They learn, ‘Oh, I see: to be innovative and challenge the status quo.
To get ahead, I have to deny, deny, deny and deflect, de-
flect, deflect; if I were to take responsibility, it would be a 5. Meaning and Purpose: The most important driver of
employee engagement is ‘the opportunity to do mean-
career killer’.
ingful work’. Essentially, this means making a contribu-
tion to something above and beyond ourselves. If team
What is the first step to becoming a positive leader? members feel their work is pointless, they quickly lose
The good news is that positive leadership is a skill that can enthusiasm—and eventually leave.
be learned, regardless of age, experience or position. I would
6. Empathy: This has been identified by many leading
advise people to start by focusing on increasing their own
experts as the single most important skill to develop be-
self-awareness. Seek out specific and candid feedback from cause it generates a level of interpersonal understanding
your team, your colleagues, your supervisors and your cli- and acceptance that we, as humans, crave. Empathy
ents and stakeholders about how you are doing and how you allows us to step outside of ourselves and not only see
can continue to improve. By asking the people around you situations through another’s eyes, but understand things
from their point of view.
for feedback, you are also showing respect, as you are letting
them know that you value their opinions and that you are se-
rious about improving, both as a leader and as a person.
Clients I have worked with are often surprised at how
good it feels to put these pillars into practice — and how ef-
fective they are at improving their relationships and perfor-
mance. Their teams trust and respect them more as a result
of their openness and commitment to improving their lead-
ership approach. In the end, positive leadership is about liv-
Craig Dowden, PhD, is a certified positive psychology coach, a Forbes-
ing the example, and knowing that, in doing good, you will Speaker on Positive Leadership and the author of Do Good To Lead Well:
always lead well. The Science and Practice of Positive Leadership (Forbes Books, 2019).

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 QUESTIONS FOR Jim Harter, Chief Scientist, Gallup and Author

Q
&A
As part of its largest global study ever, Gallup recently
discovered that people the world over want one thing in
life more than anything else. What is it?
This was one of our most surprising findings ever: What ev-
eryone wants more than anything is a good job, which Gallup
defines as 30+ hours per week for a paycheque from an orga-
nization. It’s even better to have a great job, which means two
things: A job where they get a chance to really connect with a
higher purpose and where they get to use their strengths on
a regular basis. I think the reason people want this so much
right now is that there is so much overlap between work and
our personal life today. Work regularly spills over into the
Gallup’s Chief Scientist rest of our life, and the rest of our life comes with us to work
reveals what everyone to a greater extent than ever.
wants more than anything Tell us more about the key differences between great
else in life. jobs and lousy jobs.
As indicated, a great job is one where you can use your
Interview by Karen Christensen unique strengths on a daily basis. But the real conduit to
that is having a great manager. Great managers take steps
to develop their people based on the individual’s particular
strengths — rather than focusing on improving their weak-
nesses. In short, having a great job means doing what you
do best every day, having a manager who encourages your
development in that area, and having great colleagues that
support you and move you in the right direction.

124 / Rotman Management Fall 2019

 A lousy job, on the other hand, is one where you work in helping people see where they’re headed in the organiza-
for someone who is an expert on your weaknesses. Of tion, what their role could be, and what their development
course, we all need to know what we’re good and bad at, path is.
and to continually refine our skills over time. But a lousy
job is one where your manager thinks mostly about your Talk a bit about performance reviews and some of the
weaknesses and doesn’t know much about how to develop common issues with them.
your strengths. This is another area where performance management has
gone off the rails. Most organizations still have an annual re-
You have stated that while workplaces have been going view process, often, people are surprised by their rating, be-
through unprecedented change, “the practice of man- cause there hasn’t been an ongoing conversation about their
agement has been stuck in time for more than 30 years.” performance throughout the year. It’s tempting to blame the
That seems harsh. review process itself, but performance ratings and reviews
First, the good news: the science of management has ad- can actually be effective if we understand some of the biases
vanced significantly over the past few decades. There have involved and try to correct for them.
been significant inroads in our understanding of what pre- The fact is, we all bring our own idiosyncrasies to work
dicts high engagement and high performance at work. The with us, and they come into play when we rate other people.
problem lies with execution: Globally, we’re still only getting We fall prey to common biases such as the ‘halo effect’,
about 15 per cent efficiency out of the workforce. In the U.S., whereby if someone performs really well in one area, we
it’s closer to 34 per cent, but overall, only about 15 per cent carry that over to the other areas they’re being rated on. If
of workers feel involved and enthusiastic about their work. we don’t have enough information to go on, we might also
The reason for my bold observation is this lack of en- use the ‘middle default’, whereby we default to giving some-
gagement. Billions of dollars are spent every year on perfor- one a ‘satisfactory’ rating. Another major issue is that some
mance management and manager development, while few managers are more lenient, and others are far more strict
managers strongly agree they are learning, growing, and de- with their ratings.
veloping. There’s a big disconnect there, and a lack of align- We need to develop systems that correct for all of these
ment between the development programs being provided biases, or at least reduce them, so that the whole account-
and what people are actually experiencing. ability piece is perceived as fair by the individual. When that
I actually believe this failure to maximize human po- happens, employee motivation will be improve.
tential is the greatest defect in modern management. Man-
agement programs are well intended, but I think many have You have discussed the importance of using analytics-
gone off track because they’ve started out with the wrong as- driven evidence when making hiring decisions. What
sumption: ‘If we can get everyone to develop the same set of type of data should be used?
competencies, we will get every manager to a high-level of My colleague Frank Schmidt is one of the leading organi-
performance’. That just isn’t realistic. If, instead, the starting zational psychologists of the past several decades, and he
point was, ‘Let’s get to know the true strengths of each indi- recently conducted a 100-year study of different selection
vidual, and develop them based on those strengths so that techniques. We reviewed his work and our own research at
they can create greater managerial impact, that would be a Gallup, and we were able to identify four criteria for success-
much more efficient path. ful analytics-driven approaches to hiring.
The number-one reason people change jobs nowadays The first is to have a good process for accounting for
is a lack of career progress. People need to be able to see an individual’s past achievements and experience. Past per-
their future opportunities. Today, just about everyone who formance is still a great predictor of future performance.
changes jobs also changes companies, and that is unfortu- Second, there are scientific methods available to capture
nate. It means that there is a huge opportunity for organiza- innate human tendencies that align with job demands. But
tions to be selecting and training managers to be successful first, you have to understand what the job demands. Say for

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 Young employees want jobs where they can continuously
develop and see a future for themselves.

a manager, an important job demand will be their ability to and see a future for themselves. They don’t just want a boss;
work well with other people. We can now measure the indi- they want someone who coaches them towards developing
vidual’s innate tendencies scientifically and predict whether their strengths. They don’t just want an annual review, they
they will be successful in the role. want to have ongoing conversations so that they can contin-
Third, most organizations still conduct job interviews. ually improve and get feedback on how they’re doing. And
One way to reduce the biases I touched on earlier is to con- they don’t want a manager who fixates on their weaknesses:
duct multiple interviews. When you have different people They want a leader who is focused on their strengths and
interviewing the same candidate, the research shows that helps them leverage appropriately.
you can average-out some of those idiosyncratic biases that Above all, people want a great job. Work and life are
we all bring to the table. Combining the impressions of mul- more blended than ever, and people see their work as part
tiple people is important. of their identity.
Fourth, I would argue we should start internships even
earlier than college, so that young people can get some work Gallup found that the manager or team leader accounts
experience, starting in high school. That would require or- for 70 per cent of the variance in team engagement.
ganizations to partner with educational institutions and What concrete steps can a leader take to improve en-
be more intentional about giving people experiences that gagement, starting tomorrow?
align with their aspirations. This would help young people First, get to know your own strengths, and get to know the
know whether they actually enjoy the work in practice, even strengths of each of the people you oversee. That is a foun-
though it might look good on the surface. It would also help dational step that makes everything else more efficient.
the organization capture some valuable information about Think of it as a shortcut to great management.
how the young person works in a live setting and in ‘under- Second, make sure you set very clear expectations and
fire’ situations. involve people in setting their goals. That is often over-
As an example, we can give people valuable experienc- looked, and it has a big effect in terms of engagement.
es working with others before they’re put into management Third, don’t think about feedback as consisting of an
roles. We can observe how effectively they work with teams annual review process; make it an ongoing process. If you
— and begin anticipating who should be in these roles. get to the review process and your employee seems sur-
These are all examples of how organizations could be prised, you probably haven’t had those ongoing conversa-
a lot more systematic about how they collect what we call tions effectively to develop and re-prioritize what they’re
‘game film’ on individuals. Athletic organizations do this re- working on.
ally well. They capture footage from actual sporting events Then, finally, have an accountability system in place
and use rating systems on people before they select them for that is achievement-oriented and aligned with each person’s
an interview. It’s not a perfect approach, but it can be effec- future development. Highly-engaged employees want ac-
tive in the workplace. countability, because it helps them see how they’re doing
relative to others in an equitable way. Acting on our findings
What do CEOs and CHROs need to know about attracting is critical for HR leaders, because today, your ‘employment
what you call ‘the new workforce’? brand’ spreads very quickly.
First, they need to be aware of what the new workforce
expects at work. Young workers don’t just want to come to
work for a paycheque. Of course, pay is important, but they
really want to be connected to a purpose. They want to know
that their work is important, and see how it’s important in
Jim Harter, PhD, is Chief Scientist of Workplace Management and Well-
the context of the broader organization.
Being for Gallup’s workplace management practice and co-author of It’s
These young employees aren’t just pursuing satisfying the Manager: Gallup Finds That the Quality of Managers is the Single Biggest
work, they want a job where they can continuously develop Factor in your Organization’s Long-Term Success (Gallup Press, 2019).

126 / Rotman Management Fall 2019

Where’s the risk?
Practical knowledge.
Innovative approaches.
Effective communications.
Real-world experience.
All in 10 intensive months.

Jie (Jacky) Chen, mfrm ’17

Investment Risk Analyst,
rotman.utoronto.ca/MFRM OP Trust
Learn from
the best
Each year, the Rotman School of Management
hosts almost 100 public talks by bestselling
authors, executives and other thought leaders.

Highlights
september 4, 5:00-6:00 pm october 16, 6:00-7:00 pm
Rebecca Fannin Jamil Zaki
Journalist, Media Entrepreneur; Author Professor of Psychology, Stanford University; Director, Stanford Social
Topic: Tech Titans of China: How China’s Tech Sector is Challenging the World Neuroscience Lab; Author
by Innovating Faster, Working Harder, and Going Global (Nicholas Brealey, Topic: The War for Kindness: Building Empathy in a Fractured World
September 2, 2019) (Crown, 2019)

september 25, 5:00-6:00 pm october 23, 12:00-1:00 pm

Wendy Dobson Meik Wiking
Co-Director – Rotman Institute for International Business CEO, Happiness Research Institute; New York Times Bestselling Author
and Professor Emerita, Rotman; Author Topic: The Art of Making Memories: How to Create and Remember Happy
Topic: Living with China: A Middle Power Finds Its Way (Rotman-UTP Moments (Penguin, October 1, 2019)
Publishing, September 21, 2019)
october 24, 8:30 am-6:00 pm
september 26, 5:00-6:00 pm
5th Annual Rotman Conference on
Sarah Kaplan Machine Learning and the Market for
Director and Professor - Institute for Gender and the Economy, Distinguished
Professor of Gender and the Economy and Professor of Strategic Intelligence
Management, Rotman; Author
Topic: The 360° Corporation: From Stakeholder Trade-Offs october 28, 5:00-6:00 pm
to Transformation (Stanford Business Books, September 3, 2019) Joshua Gans
Jeffrey S. Skoll Chair of Technological Innovation and Entrepreneurship,
october 1, 8:00-9:00 am Professor of Strategic Management and Chief Economist - Creative
Malcolm Gladwell Destruction Lab, Rotman; Author
Staff Writer, The New Yorker; Host, Revisionist History podcast; Topic: Innovation + Equality: How to Create a Future That Is More Star Trek
#1 New York Times Bestselling Author Than Terminator (by J. Gans & A. Leigh, MIT Press, October 4, 2019)
Topic: Talking to Strangers: What We Should Know about the People We Don’t
Know (Little, Brown and Company, September 10, 2019) october 29, 5:00-6:00 pm

october 1, 5:00-6:00 pm
Rory Sutherland
Vice Chairman, Ogilvy; Columnist, The Spectator magazine; Author
Brian Gunia Topic: Alchemy: The Dark Art and Curious Science of Creating Magic in
Associate Professor, Carey Business School, Johns Hopkins University; Author Brands, Business, and Life (William Morrow, 2019)
Topic: The Bartering Mindset: A Mostly Forgotten Framework for Mastering
Your Next Negotiation (Rotman – UTP Publishing, 2019)

october 15, 5:00-6:00 pm

Jeremy Miller
Brand Strategist and Founder, Sticky Branding; Author
Topic: Brand New Name: A Proven, Step-by-Step Process to Create an
Unforgettable Brand Name (Page Two Books, October 8, 2019)

Never miss an event

Sign up to be notified about upcoming
events at www.rotman.utoronto.ca/events
 The MIT Press

Economist Joshua Gans and policy

maker Andrew Leigh make the
case that pursuing innovation does
not mean giving up on equality—
precisely the opposite. In this book,
they outline ways that society can
become both more entrepreneurial
and more egalitarian.

“Gans and Leigh provide a clear, cogent

blueprint for a future of widely shared
prosperity. Every policymaker and
citizen should read it.”
—Erik Brynjolfsson, co-author of
The Second Machine Age

“Is inequality really the price we have

to pay for innovation? In this hugely
enjoyable book Gans and Leigh make
a strong case for believing that we don’t
have to make this tradeoff—that we
can have both a bigger cake and a more
equitable division of the slices.”
—Rebecca Henderson, John and
Natty McArthur University Professor,
Harvard University

mitpress.mit.edu
Leaders
Wanted

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and your organization.

Rotman Executive Programs is ready

to help you take the next step in your
career. Rotman Alumni receive a 25%
discount on eligible programs.

Questions? Talk to us.

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[email protected] rotmanexecutive.com