Innholdsfortegnelse for Fall 2009 i Rotman Management

IMAGINE A WORLD WHERE EVERYONE took full responsibility for their actions, where people did what they said they would do, and where it was commonplace to look beyond our personal goals to consider those of our communities, our organizations and the world at large. A cursory look around today’s environment indicates that we are far from reaching such a utopian state of accountability. Accountability entails a level of ownership that involves a) making, b) keeping and c) proactively answering for personal commitments. Simply put, when someone is accountable, he or she can be counted on to complete their duties or responsibilities with a high level of quality, based on clearly-defined expectations. Almost by definition, accountability is an emotionally-charged word, as it often arises when there is discontent and is frequently…

There is some confusion between the terms integrity, morality and ethics. How do you differentiate them? These three phenomena are widely understood to provide standards of ‘correct’ behaviour, but people generally get them mixed up. The primary differentiation I make between them is to distinguish integrity from morality and ethics. Integrity is a purely positive proposition. It has nothing to do with good vs. bad. Think for a moment about the Law of Gravity: there is no such thing as ‘good’ or ‘bad’ gravity; like integrity, it just ‘is’. Morality and ethics, on the other hand, are normative concepts in that they deal with matters of good or bad, right vs. wrong. Morality refers to a society’s standards of right and wrong behaviour for individuals and groups within that society,…

WITHOUT REALIZING IT, managers delegate unethical behaviour to people in their organization on a regular basis. Think about it: this occurs whenever someone tells their subordinates to ‘do whatever it takes’ to achieve production or sales goals, leaving open the possibility of aggressive or even unethical tactics; it happens when companies outsource production to offshore subcontractors that are inexpensive because they are less constrained by costly labour and environmental standards; and it happens when partners at accounting firms remind junior auditors about the importance of retaining a client that has inappropriate accounting practices. In these and countless other situations, individuals are motivated to overlook the problematic ethical implications of other people’s behaviour. The result: in recent years, scandals have cost the owners, investors, and employees of firms such as Enron,…

A NURSE WORKING THE NIGHT SHIFT in a busy urban hospital makes her evening rounds – reviewing patients’ treatment plans, taking temperatures and administering medications. She notices that the dosage for one of the patient’s meds seems a bit high. Fleetingly, she considers calling the doctor at home to check the order. Just as fleetingly, she recalls the doctor’s disparaging comments about her abilities the last time she called. All but certain that the dose is in fact fine (the patient has an unusual condition and is on an experimental protocol, justifying the high dose), she pulls the drug from the supply cabinet and heads for the patient’s bed. In the nurse’s hesitation and almost imperceptible decision not to call the physician, she has implicitly considered – and effectively discounted…

WITH MANY STILL REELING from the ripple effects of the global financial crisis, it has become abundantly clear that the institutions of the financial markets and the principles and ethics of business are fundamental to economic success. Recovering from this systemic failure and ensuring that it never repeats itself will require new thinking about the types of institutions on which a successful economy depends, and more importantly, on the relationships between those institutions. Our aim here is not to lay out a detailed framework for bank solvency, accounting regulation or corporate governance. Rather, it is to clarify the principles on which any responsible market system will rest, and how these might be applied. It is also to suggest various actions that market participants can take to prevent similar disasters. In…

You created the Designers Accord, a sort of Kyoto Treaty for designers. What led to this, and what are your hopes for it? In July of 2007 I wrote an article called “The Designer’s Dilemma,” which I published online. In it, I talked about how in this time of environmental and social crisis, designers had become paralyzed, and hadn’t taken certain actions that I felt were both appropriate and necessary. I was speaking very much from my own feelings of personal frustration, about the limitations I was experiencing as a designer who did not possess the knowledge required to have well-informed conversations with my clients around issues of sustainability. I wrote the article in response to a sort of ‘tyranny of the iPod.’ Because of various market and cultural conditions,…

One of your 14 ‘basic principles of leadership’ is integrity, which seems to be in short supply these days. How can it be restored? The foundation for leadership is integrity, so when it’s gone, we are in big trouble. One of the principal reasons this has happened is that people have said to themselves, “Well, that’s the way it is done,” or at least “That’s the way we do it here.” We have to change that. If our students are going into a culture that says, “the way to do things is to lie or cheat,” something is very wrong. They should be leaving our schools understanding what normal and ethical business practices are, so if they get into a tricky situation, they know how to react. The thing that…

We’re hearing a lot these days about stock market analysts and the accuracy of their recommendations. What factors come into play when it comes to picking stocks? This issue was big during the tech bubble at the beginning of this decade, and it has resurfaced again with the latest economic downturn. During the tech bubble, analysts had strong ‘buy’ recommendations on companies that quickly proved to be unprofitable. Their failure to exercise good judgement led to a raft of new regulation being applied to the industry, both in the U.S. and internationally. Two of my recent papers, coauthored with Ran Barniv (Kent State), Mark Myring (Ball State) and Wayne Thomas (Oklahoma) analyze how analysts go about making recommendations, how these recommendations map onto future stock returns, how regulations affect the…

You once said, “I think I know what causes corporate ethical disasters, and it’s not what many people believe.” Please explain. Lots of people think more compliance, training and rules will succeed in creating a more ethical environment, but decades of evidence suggests that is not the case. When I testified in the Senate during the Sarbanes-Oxley hearings, I had to remind senators that virtually all the corporations that fell from grace – the Enrons, WorldComs and Tycos – had sophisticated compliance programs and codes of ethics in place. In fact, Jeffrey Skilling was widely regarded as the man who beefed up compliance at Enron. Far more important in causing such problems are failures in the areas of leadership, corporate culture and systems – particularly reward systems. This is true…

VISITORS TO INFOSYS TECHNOLOGIES’ headquarters in Bangalore, India, are often struck by the contrast between the pristine streets of the company’s ‘campus’ and the ramshackle roads lying just beyond. The discrepancy, which points to the gap between India’s private sector growth and its lagging public infrastructure, helped inspire Nandan Nilekani, co-chairman and co-founder of Infosys, to write Imagining India: The Idea of a Nation Renewed (Penguin, 2009). On May 4, he visited the Rotman School to discuss his thoughts on India’s economic future with Dean Roger Martin, as part of the ongoing International Business Experts Speaker Series. India has undergone a remarkable economic transformation since 1991, when the government embarked on an ambitious program of fiscal reform: the economy has grown at an average rate of eight or nine per…

‘CSR’ has long been poorly defined, without widely accepted, actionable tools. The Virtue Matrix aims to clear the muddy waters. TAKE A SEAT IN ANY BOARDROOM or MBA classroom and eventually, the underlying mantra will emerge: “the business of business is business.” So said Milton Friedman in 1960. And so it has been. In sum, Friedman and his Shareholder Value Theory acolytes argued that a company’s sole responsibility is to maximize the return to its shareholders. The company holds no additional responsibility to society at large; instead, its goal is to drive value – as measured by stock price and dividends – ever upwards. This pervasive view has been inculcated in business schools and enacted in the real world, informing everything from financial market regulations to stock incentive plans. Unfortunately,…

1. “Integrity is a virtue” For most people and organizations, integrity exists as a virtue rather than as a necessary condition for performance. When held as a virtue rather than as a factor of production, integrity is easily sacrificed when it appears that a person or organization must do so to succeed. For many people, virtue is valued only to the degree that it engenders the admiration of others, and as such it is easily sacrificed especially when it would not be noticed or can be rationalized. Sacrificing integrity as a virtue seems no different than sacrificing courteousness, or new sinks in the men’s room. 2. Self deception about being out-of-integrity People are mostly unaware that they have not kept their word. All they see is the ‘reason’, rationalization or…

ETHICAL STANDARDS ARE DERIVED from socially-agreed upon principles and values and vary across institutions and national cultures. Ethical decision making can thus be understood as a problem of social judgment – of determining where the majority of others stand on issues of moral concern. For example, within organizations, employees are motivated to appear ethical in the eyes of their peers and often rely on judgments of ‘what others would do’ to guide their decision making. As a result, having an accurate view of others’ moral positions is critical. But can individuals accurately judge others’ opinions on matters of ethics In this article we will show that the tendency to project our opinions can alter our views about what others think is ethical, in some cases giving us a sense of…

Alan Hassenfeld Chairman, Executive Committee, Hasbro Inc. Our Approach to CSR: For Hasbro, the relation between business and society is seamless. All of our success is due to children and families, so we recognize that we have an obligation and a debt to repay. One of our most important stakeholders is the communities that we live and breathe in. The more we do for them in terms of education and health, the more we will attract and keep good people. If you build a children’s hospital in the community you live in, you’ve filled a void and you’re helping to create the future. If you can’t explain the importance of that to a shareholder, you shouldn’t be running a company. I think of it as ‘cultivating the field’ – cultivating…

How do you define a social network? The conventional definition is ‘a collection of individuals’, but the key element is the specific ties between those individuals. Networks are composed of ‘nodes’ (people) and ‘edges’, or the ties between them, and what distinguishes a network from an ordinary group is these ties. People are embedded in complex social networks involving their friends, family, co-workers, and neighbours, and through those individuals, in turn, to their friends, family, co-workers, and neighbours, and thence on outwards, endlessly, into a vast fabric of humanity. This sort of structural perspective is crucial for a better understanding of medicine and public health. Everything from information to behaviour to germs flows through these networks, but this is rarely taken into account by policy makers or even by entities…

For Design Firm Adopters: 1. Publicly declare participation in the Designers Accord. 2. Initiate a dialogue about environmental and social impact and sustainable alternatives with each and every client. Rework client contracts to favour environmentally and socially responsible design and work processes. Provide strategic and material alternatives for sustainable design. 3. Undertake a program to educate your teams about sustainability and sustainable design. 4. Consider your ethical footprint. Begin by measuring the carbon/greenhouse gas footprint of your firm, and pledge to reduce it annually. 5. Advance the understanding of environmental and social issues from a design perspective by actively contributing to the communal knowledge base for sustainable design. For Corporate Adopters: 1. Publicly declare participation in the Designers Accord. 2. Provide strategic and material alternatives for sustainable design of products…

1. A leader at all times must embody personal integrity, which is the foundation of leadership. Followers want to believe that their leader is unshakably fair in public and in private. 2. A leader applies basically the same principles of leadership regardless of context, but the style of execution is very different in different contexts. That is, execution in leadership is to a great extent about context. 3. In normal times, a leader should make faster progress taking opportunities that are ready for change rather than trying to take on areas that the leader knows will be more resisted. Later these resistance areas could be more conducive to change. 4. In times of crisis, a leader must step out ahead of the followers and make difficult decisions without consensus and…

THERE IS WIDESPREAD CONCERN about declining savings rates among consumers. Indeed, the problem defies boundaries, ranging from sophisticated western economies with a high prevalence of consumer credit to more traditional economies in rural areas of the developing world, where banking infrastructure is almost nonexistent. Record numbers of personal bankruptcies and delinquencies have been reported in North America, while observers have commented that the rural markets of India and China will only emerge as a force if these consumers learn how to manage their money. Washington University’s Amar Cheema and I recently set out to study one particular approach to personal money management: earmarking money. The term ‘earmarking’ is typically used to describe the labeling of funds for a specific use. However, it often describes a more specific practice, in which…

WHEN HE WAS STILL IN HIS THIRTIES, Doug Steiner, chairman and CEO of Perimeter Financial Corp. and columnist for The Globe and Mail’s Report on Business magazine, left a lucrative position with RBC Capital to start his own company. Now in his fifties, the self-described ‘serial entrepreneur’ has five business ventures and a lifetime of lessons under his belt. On March 31, he shared his wisdom on success, wealth and happiness in a presentation at the Rotman School titled, “The Culture of Business: Sales, Sociability, and Subjective Well-Being.” Steiner pointed out that the overarching career goal adopted by many MBAs – to achieve financial security in the shortest time possible – is not a sure path to happiness. He cited a research study from the UK that suggested the connection…

Pearson International Airport – Nov. 20, 2008, 11:00 AM In grade seven, my class had a school trip to Kearney, a campsite near Algonquin Park. For many of us, this was our first trip away from home by ourselves, and the mood on the bus was full of anticipation, excitement and anxiety. The main topic on the bus was what everyone would do when they got to Kearney: would there be campfires (yes), marshmallows (no), hikes (yes) and canoes (no)? As I sit in the boarding area waiting to board our first-leg flight to Chicago, the atmosphere makes me feel like a kid again. Some of my classmates had trouble sleeping the night before and are now drinking copious amounts of coffee to stay awake, while others are gathered around…

Rotman Alumni Network Fall 2009 – and the alumni population keeps on growing – with over 400 additions this past convocation. Congratulations and welcome! On the very same day, our 11th annual Life-Long Learning day took place and was a tremendous success. The 12th edition, scheduled for end of May 2010 promises to be even bigger and better. Many classes, especially the “honoured years,” celebrated class reunions throughout the spring and summer months (send along your reunion stories and pictures any time of year – they are always welcome.) And of course the next issue will, as always, have room for your stories about your jobs, travels, families, pets, reunions. Send in your next Class Note now, while we’re all thinking of them. That’s staying accountable. -Jack A taste of…

By your own account, the financial crisis has reached a critical point. How did this happen? What we are seeing is the culmination of economic imbalances, a succession of financial bubbles and crises that have been building for years. This was all complicated by undue faith in ‘financial engineering’, which attempted to rely on mathematical models to measure and control risks in markets that respond to human and not physical phenomena. As a result, confidence in financial management has been badly eroded. On the bright side, there is good reason to believe that the means are available to turn the tide. There is clear recognition that the problem is international, and global coordination and cooperation is both necessary and underway. The days of finger pointing are over, and the groundwork…

FROM ADAM SMITH TO MODERN TIMES, economists have recognized and explored implications of the idea that human beings care deeply about how we compare to others. The concept of ‘mattering maps’ captures this insight. As Rebecca Goldstein expresses it in the novel from which we adopt the term: The map is a projection of its inhabitants’ perceptions. A person’s location on it is determined by what matters to him: the kind of mattering that produces his perceptions of people, of himself and others; of who are the nobodies and who the somebodies; who the deprived and who the gifted; who the better-never-born and who the heroes. One and the same person can appear differently when viewed from different positions. In principle, there is a mattering map for each person, each…

ACCOUNTABILITY HAS BECOME a major buzzword of late, cited to be at the core of market meltdowns and revivals, and one of the basic buildings blocks of successful businesses. As a result, it has become a topic of investigation by a large coterie of consultants, social scientists and practitioners. Break the riddle of accountability, the thinking goes, and you will have solved one of the thorniest issues in modern business. In spite of the intellectual cornucopia developing around accountability – from pay-for-performance to management by objectives to self-discovery and ‘empowerment’ in its various guises – we are no closer to solving the fundamental problem than we were when Plato transcribed Socrates’ sallies in the Agora. This, I argue, is because most of the proposed approaches focus narrowly on tasks, responsibilities,…

IN CASE ANYONE HASN’T NOTICED, we are in the midst of a tectonicplate movement in the financial world that is shaking the ‘real’ world quite dramatically. The purpose of this article is not to review the causes or longevity of the current situation, but to explore the curiosity that in the world of publicly-traded companies, boards of directors have let society down. And it isn’t the first time. If we go back to the bursting of the South Sea bubble in London in 1720, we can record the first time shareholders bellowed this refrain: “Where were the directors?” Following the collapse of the Great South Seas Corporation (and many other companies also publicly traded at that time) Alexander Pope wrote a sonnet that began: At length corruption, like a general…

Clearly, we are in the midst of an economic crisis, but are we also in the midst of an ethics crisis? I certainly would, because at the heart of this crisis lies a failure of accountability and responsibility. People have been acting as if the consequences of the risks they were taking belonged to somebody else, not to them. This was particularly damaging in the way mortgages were securitized and then passed on and sold. Everybody in the chain knew that once they sold them, it was no longer their responsibility, so nobody had an incentive to verify the quality of what they were selling. In 1997, you edited one of the first-ever books on the psychology of business ethics. What is the biggest change in this field since the…

SUDDENLY, EVERYONE IS ‘GREEN’: it’s a topic at dinner parties, fuel for water-cooler debates and an emerging component of personal style. A quick scan of leading business publications demonstrates that being green has caught on in the corporate world, as well. But is all this chatter really a win for sustainability, or is it simply the latest marketing ploy by smart executives? One thing is certain: The efforts of Al Gore, the Discovery Channel and others have fostered an unprecedented affection for our planet over the last few years. Consumer awareness has gone up accordingly, and the market has answered with products and services that feature sustainability as a differentiator. From buildings and houses to cars, clothing, furniture, light bulbs, food and cleaning supplies, virtually every category of consumption has…

IT IS ALMOST IMPOSSIBLE to open a newspaper or turn on a TV these days without being exposed to a report of dishonest behaviour of one type or another. The business arena is particularly susceptible: the largest contribution to dishonesty comes from employee theft and fraud, which has been estimated at $600 billion per year in the U.S. alone – an amount almost twice the market capitalization of General Electric. Rooted in the philosophy of Thomas Hobbes, Adam Smith and the standard economic model of rational human behaviour is the belief that ‘people carry out dishonest acts consciously and deliberatively by trading off the expected external benefits and costs of the dishonest act’. According to this perspective, people would consider three factors as they pass a gas station: the expected…

TONE AT THE TOP! THE FISH ROTS AT THE HEAD! Such popular maxims reflect the widely-held belief that the leaders of an organization are responsible for instigating and sustaining a corporate culture that encourages employees to behave ethically. Most corporate ethics initiatives therefore start with an effort to secure board and executive commitment to the proposed program. Once its captains are aware of the ethical risks their organization faces, the thinking goes, the corporate ship will retrieve its moral compass. The overhaul of an organizational culture is therefore largely seen as a top-down affair, with leadership setting the tone, implementing initiatives and leading by example. That high-level individuals play an important role in articulating priorities and shaping the sensibilities of employees is not to be disputed. However, if the role…

THE ACADEMIC DIRECTOR of the Desautels Centre for Integrative Thinking at the Rotman School of Management has been named the Marcel Desautels Professor of Integrative Thinking. Mihnea Moldoveanu, who joined the Rotman School in 1999, has been an associate professor of Strategic Management since July, 2005. Dr. Marcel Desautels is the president and CEO of the Canadian Credit Management Foundation. Well known for his support of Canadian post-secondary education, to date he has given an extraordinary $41 million to the Rotman School. His earlier donations founded the Desautels Centre and support student scholarships. “Mihnea is doing a remarkable job,” he says. “The Professorship could not have gone to a more deserving person. Mihnea, along with Dean Roger Martin, has been key to the development of Integrative Thinking, which has become…

Thomas Sears (MBA ’88) Chairman and CEO, Royal Bank of Canada Insurance Company Ltd. (Barbados) Lives and works in: Bridgetown, Barbados BEST THING ABOUT MY JOB: The international nature of our business. Our clients and markets are global, requiring me to be on top of global markets, international business issues and emerging trends. There are no dull days. MY BIGGEST CHALLENGE: Making it all look effortless. When you work in the international arena, there are many moving parts, cultural differences and stakeholder needs. Everyone thinks they understand ‘your world’ but very few actually do. Meeting all of the business objectives is easy, but acting as the link between cultures, personalities and agendas can be a challenge. MOST IMPORTANT SKILL FOR MY JOB: Leadership. Managers might ‘do things right’ but leadership…

September 9, 6:00-8:00pm Rotman Expansion Groundbreaking Celebration September 14, 5:00-7:00pm Women and Leadership Series Speaker: Irene Rosenfeld, Chair and CEO, Kraft Foods, Inc September 21, 5:30-7:30pm, Winnipeg Canadian Business History Series Speaker: Joe Martin, Director, Canadian Business History Program @ Rotman; Author, “Relentless Change: A Casebook for the Study of Canadian Business History” September 22, 5:00-7:00pm Design Thinking Series Speaker:August de los Reyes, Principal Design Director, Microsoft Surface September 24, 4:00-6:00pm Women and Leadership Series Speaker: Sylvia Ann Hewlett, Founding President, Center for Work-Life Policy; Author, “Top Talent: Keeping Performance Up When Business is Down” September 29, 5:00-7:00pm Canadian Business History Series Speaker: Joe Martin, Director, Canadian Business History Program @ Rotman; Author, “Relentless Change: A Casebook for the Study of Canadian Business History” September 30, 5:00-6:15pm Innovation in Business…