Innholdsfortegnelse for Spring 2009 i Rotman Management

 WILLIAM SHAKESPEARE. HENRY FORD. WALT DISNEY. MARTHA GRAHAM. MARSHALL MCLUHAN. What these individuals have in common – apart from being exemplary integrative thinkers – is staying power. Not only did they reach the apex of their domain by developing unique models of excellence, they remained there through thick and thin, and their legacies outlive them. Imagine that it is the year 2409, and a product that you created in 2009 is still being used by 50 per cent of consumers in the marketplace. Many would argue that such staying power is impossible; but a glance at our cover image reveals that it is not. William Shakespeare wrote his plays some 400 years ago, but today, he is the author of fully half of all live English theatre being performed in…

WHEN DUTCH DRUGMAKER ORGANON INTERNATIONAL INC. was conducting clinical trials for a new antihistamine, the secretary in charge of registering the trial volunteers for their medical checkups noticed something curious: some of the volunteers were unusually cheerful. An extraneous observation, perhaps, but one that she felt was worth sharing with those running the trial. The researchers dug deeper, only to discover that all of the giddy participants were in the group taking the drug. Ultimately, the drug proved unsuccessful as an allergy-fighter; but by then they knew what they had on their hands: a highly-effective treatment for depression. Marketed as Tolvon, the drug turned out to be very successful, but it never would have materialized if not for an employee who was trained to pay close attention to details and…

 WHEN INDIVIDUALS, GROUPS AND NATIONS are as interdependent as they have become in today’s world, mutual cooperation can lead to significant mutual benefits. Indeed, to survive and thrive, organizations depend on people to cooperate with each other. Cooperation entails risk, however, because acting selfishly often provides short-term payoffs that can prove tempting to people. For example, if everyone in your group pays their fair share of a restaurant bill, no one goes away upset. But if one of the diners tries to gain an advantage by paying less of the tip or ‘forgetting’ about the tax, those who are stuck carrying the load will go away with a bad taste in their mouths, no matter how good the food was. The same is true for team projects: they can be…

If we are mark’d to die, we are enow To do our country loss; and if to live, The fewer men, the greater share of honour. God’s will! I pray thee, wish not one man more. Rather proclaim it, Westmoreland, through my host, That he which hath no stomach to this fight, Let him depart; his passport shall be made, And crowns for convoy put into his purse; We would not die in that man’s company That fears his fellowship to die with us. This day is call’d the feast of Crispian. He that outlives this day, and comes safe home, Will stand a tip-toe when this day is nam’d, And rouse him at the name of Crispian. He that shall live this day, and see old age, Will yearly…

 ROGER MARTIN: In Outliers: The Story of Success, you argue that if we want to understand why some people thrive and others don’t, we should spend the bulk of our time looking around the individual – at such things as their family, their birthplace, even their birth date. How do early advantages and disadvantages play into one’s ultimate success? MALCOLM GLADWELL:Think about it this way: there are four boxes. First, there are advantages that are advantages: your parents are educated and they pass on to you a belief in meaningful work – in the idea that if you apply yourself, you’ll get something back from the world. Then there are advantages that are actually disadvantages: if our parents were billionaires, for example, the two of us probably wouldn’t be up…

Your Blue Ocean Strategy book and concept – which encourage firms to stop fighting their rivals in ‘bloody-red oceans’ for a shrinking pool of profits and instead create ‘blue oceans’ of uncontested market space – has been wildly popular. How does the current finance crisis affect this theory? In the past few months, the impact of the financial crisis has been felt around the globe. The turmoil has been eroding business confidence, contracting both investments and consumer spending, and increasingly trapping the real economy into recession. As we know, a recession or depression is typically marked by a decline in overall demand, which will further exacerbate the situations of companies that are already facing intense competition and shrinking profit margins. Under such conditions, competing within a contracting market and dividing…

Studies indicate that mental illness and/or substance abuse affect up to 25 per cent of people of working age. What are some of the most common mental health issues in the workplace? We need to decipher between mental health issues, which affect everyone, and mental health disorders, which affect about one in five people in the workforce at any one time. Conditions such as stress and burnout are mental health issues that can result in emotional exhaustion, lowered productivity and feelings of depersonalization. Research indicates that 25 per cent of North American workers feel anxious most days in a week and 44 per cent are anxious about losing their jobs. Furthermore, 40 per cent of job turnover is due to stress, and 25 per cent of workers perceive work as…

Over the past century, many of the structures that provide meaning in our lives and a sense of belonging have deteriorated. What are the repercussions for business? Actually, life at work itself is one of the structures that has changed significantly over the past 30-odd years. For most people, work no longer provides the same kind of structure and point of reference that it used to. The idea of ‘a job for life’ is long gone, and uncertainty is now a constant companion at work. In terms of the consequences for business, people have realized that companies will not look after them anymore, so they do so themselves. This means that loyalty – particularly amongst knowledge workers – is to the self, not to the organization. As a consequence, companies…

 CARLSON COMPANIES, the Minneapolis-based hotel, marketing, restaurant and travel conglomerate, has won acclaim for its efforts to promote equity and diversity, especially on behalf of working mothers and minority employees. On Jan. 20, Chairman and CEO Marilyn Carlson Nelson spoke about the personal values that have shaped her leadership style in a presentation titled, “How We Lead Matters,” sponsored by the Women Presidents’ Organization and the Rotman Initiative for Women in Business. Carlson Nelson’s emphasis on equity and consensus building differs widely from the ‘command and control’ tactics favoured by her father, Curtis Carlson, who founded the company and served as its CEO until his daughter took over in 1999. Curtis was less than enthusiastic when, in a company meeting in the 1980s, Marilyn suggested forming a special council where…

 IMPACT CONSULTING, the Rotman School’s boutique consulting firm run by second- year MBA students, has welcomed five new partners. The consultants will serve as managing partners of the firm and will be overseen by an advisory board of prominent Rotman faculty and industry experts. Alison Loat has also been named the newest member of the Impact Advisory Board. With prior experience at McKinsey & Company and having been named to Maclean’s list of Canada’s ‘Top 25 Under 30’, she is currently a Fellow with the University of Toronto’s School of Public Policy and Governance as well as an instructor at Rotman. Other Advisory Board members include Ajay Agrawal, Peter Munk Professor of Entrepreneurship at Rotman; Brendan Calder, chair of Rotman’s Desautels Centre for Integrative Thinking; and Dean Roger Martin. Impact…

 WHAT IS A CEO TO DO about increasing expectations that companies help solve the world’s social and environmental problems? Now there’s a practical toolkit to help executives answer this difficult question. The AIC Institute for Corporate Citizenship at the Rotman School has released the “What’s a CEO to do? Toolkit,” a real-world guide that helps business leaders understand and prioritize key social and environmental issues and identify opportunities as well as potential risks. The Toolkit expands on the work of Dean Roger Martin, who in 2002 penned the seminal article, “The Virtue Matrix,” for Harvard Business Review. Authored by Rod Lohin, executive director, and Alison Kemper, research officer of the AIC Institute, the Toolkit links Martin’s theoretical framework with a real-life case: the development of a global corporate responsibility strategy…

Munir Merali (MBA ’96) Resident Representative, Aga Khan Development Network Lives in: Dushanbe, Tajikistan and Divonne les Bains, France Works in: Dushanbe BEST THING ABOUT MY JOB: Meeting and working with many diverse and interesting people and organizations. MY BIGGEST CHALLENGE: Developing and implementing long-term development strategies and investments in the midst of geo-political issues and current global economic uncertainties. MOST IMPORTANT SKILLS FOR MY JOB: Interpersonal communications and management. PROUDESTMOMENT: Opening one of the bridges at Ishkashim on the Pyanj River connecting Tajikistan and Afghanistan. THE WORD THATBESTDESCRIBES ME: Empathetic. HOWI RELAX:We have started a tennis club in Dushanbe for the diplomatic community. On average I play two to three times a week. MOST IMPORTANT THING MY MBA TAUGHT ME:You are as good as your weakest link. WORDS OF…

 WHAT DOES IT TAKE TO HAVE STAYING POWER in today’s global economy – to not only survive, but prosper and thrive? It’s a question that has grown all the more pressing of late, as we’ve watched once-mighty companies like Merrill Lynch and AIG falter and crumble. Indeed, the carnage in the financial sector (and in our own retirement accounts) has lead to much navel gazing, as myriad theories are bandied about to explain the root cause. While examining lending provisions, banking regulations and derivatives structures can provide insight into the specifics of the crash, focusing our attention on the intricacies of the sub-prime mortgage market and asset-backed securities obscures the real lesson. We would do far better to look not just at 2008, but at the recent market swings versus…

 LIKE MOST MANAGERS, you probably have some ideas about how to grow your organization. You may even suspect that one or two of them could turn into something big. Unfortunately, you don’t have the data to prove that any of your ideas will be needle-movers, and the numbers guys insist on proof before any corporate support can come your way. A believer surrounded by professional doubters, you spend your time trying to convince them, while the window of opportunity closes. If this sounds familiar, you are caught in ‘growth gridlock’ – a frustrating place where the corporate entrepreneur’s optimism and need for speed collide with the organization’s skepticism and need for control. The executives at headquarters demand growth, but don’t give you the tools to enable it. If you manage…

 RECENT ECONOMIC TURMOIL HAS FORCED COMPANIES around the globe to re-evaluate their core business strategies. In order to thrive – indeed, to survive – organizations have to carefully consider how to remain relevant going forward. The power shift from companies to consumers in recent years has been undeniable. Globalization and the Internet have killed our affair with the mass economy – with mass production, mass markets and mass marketing. The consumer-driven world of segmented media and markets that has emerged calls for new terms of engagement. It seems like just yesterday that a successful, sustainable business was a one-size-fits-all, mega-hit brand that could be efficiently replicated around the world. Think Starbucks: Wall Street sang its praises and shares rose from $11.06 in 2000 to $35.42 in 2006. But somewhere between…

 IN 1986, MANAGER JACK STACK AND 12 CO-WORKERS staged a successful buyout of Springfield Remanufacturing Center from its parent company, International Harvester. The engine rebuilder had been losing money to the tune of $2 million a year, and Stack and his team believed that they could revive the moribund unit. Realizing the need to make massive operational changes, they revamped SRC’s system for financial reporting and decision making, and in the process, they helped spawn a management revolution: open-book management. Stack and his colleagues realized that the only way to successfully make a multitude of changes quickly was to enlist the help of every single person in the company. Every employee needed to think and act like an owner. They needed to understand the business consequences of their actions…

Your latest book is about a new movement called ‘libertarian paternalism’. Please define this term. The idea is that in many circumstances, it is possible to create situations in which people are more likely to make good choices by ‘nudging’ them, as we call it, without forcing anybody to do anything. The paternalism part is that we can help people make better choices according to their own desires and wishes; and the libertarian part is that we leave them free to choose. What is a ‘choice architect’? A choice architect is anyone who influences the environment in which people choose. So think about the person who designs the menu for a restaurant. If you leave aside the actual items the restaurant serves, there are still lots of decisions to make:…

We are in the midst of the toughest down-cycle in a generation. How is top talent dealing with it? Not well. Last year we found that 36 per cent of top-tier workers reported high levels of anxiety; 12 months later, the number had jumped to 89 per cent. Alot of people with top credentials are feeling very destabilized, and job insecurity is huge. We’ve had so many rounds of RIFs (‘reductions in the force’ – the Wall Street lingo for mass layoffs), but I think it’s the repeated rounds that cause so much anxiety. Even if you survived the last one, will you survive the next? Another big issue is loss of income. Bonuses are down more than 50 per cent, and in the financial services industry, a person’s bonus…

How do you define a ‘follower’? Followers can be defined by their rank – for example, subordinates who have less power, authority and influence; or they can be defined by their behaviour – people who go along with what someone else wants or intends. In general, rank and behaviour coincide, but sometimes, those ranked as superiors follow and those ranked as subordinates lead. For example, President George W. Bush was portrayed repeatedly, especially with regard to the war in Iraq, as Vice President Dick Cheney’s puppet; Cheney’s lower rank nothwithstanding, he was seen as pulling the strings. For the purposes of my research, I define followers by rank. Voters can be followers, employees can be followers; to me, the word is simply the plain-English opposite of the word leader. You…

High prices can actually motivate consumers to buy. Why is this? Let me explain this with a true story. Afew years ago, a friend of mine who owned a jewellery store called me to describe a curious set of events. At her store in Arizona she had a fine set of Native Indian turquoise jewellery that was selling slowly, which surprised her since the jewellery represented good value for the price. After trying a variety of options – moving the jewellery to a more central area of the store, asking her sales people to bring attention to the pieces – she scribbled a note to her head sales person just before leaving for an out-of-town trip. The note said, “Change the price of everything in this showcase to times 1/2.”…

 IN ITS 2004 REPORT, U.S. think-tank The National Intelligence Council described India as “the critical global swing state of the 21st century.” It was a remarkable declaration for a nation that, just a few years earlier, was considered an economic and political lightweight, in the same class as its much-smaller neighbour Pakistan. On December 4, 2008, Edward Luce, Washington bureau chief and former South Asia bureau chief of the Financial Times, visited the Rotman School to discuss “The Strange Rise of Modern India” as part of the International Business Experts Speaker Series. Drawing from his book In Spite of the Gods: The Strange Rise of Modern India (Little, Brown, 2006), Luce described India’s amazing transformation from backwater to global player. From the 1940s to the 1970s, as the economy languished…

 “THE STANDARD APPROACH TO INNOVATION is to take something and add to it,” says Shlomo Maital, one of the world’s leading experts on innovation management. “Think instead of the simplicity principle, and how you can use the powerful ‘minus sign’ to make your life richer and more meaningful.” On January 5, Maital, academic director and professor emeritus of the Technion Institute of Management in Israel, visited the Rotman School as part of the ongoing Rotman Design Thinking Speaker Series. The idea of applying a ‘less is more’ approach to management dates back to the 1950s, when the late Peter Drucker suggested that to build a better business, leaders must first jettison those aspects of the organization that are not working. “In business, as in society, birth without death means overcrowding…

 ROTMAN MAGAZINE has partnered with Harvard Business Publishing (HBP) to sell its content on the HBPWebsite for the global business community, harvardbusiness.org. In addition, the academic community can now create course packages that include Rotman articles at hbsp.harvard.edu/educators. Feature articles from the past five years (and forthcoming issues) will be searchable by keyword and sold for US$6.95 on the site, with an academic discount of US$3.95. The Rotman School will receive a portion of the profits. “This partnership will not only provide a new revenue source for our School – which is in the midst of a $200-million fundraising campaign – it will further enhance our reputation for offering the latest in business thinking,” says Editor-in-Chief Karen Christensen. Rotman is only the fifth business journal – and the first Canadian…

The long winter is over. It’s a time of re-birth, and so it is fitting that a new batch of alumni will be convocating soon, over 400 of them, including the first-ever class of Master of Finance grads. Life-Long Learning Day (June 12) is just around the corner, and it’s our 11th Annual conference: now that’s staying power! The next issue of Rotman will, as always, have room for your stories about your jobs, travels, families and reunions, so send in your next Class Note now, while it’s top of mind. Thanks. – Jack MBA / MCOM / DBA Full & Part-Time 1953 T. Christie Arnold recently retired from the boards of Ashbury College (Ottawa) and its foundation. Upon retirement, Mr. Arnold was elected a Life Governor of the College.…

How did growing up in Plains, Georgia shape the person you have become? I come from a long line of farmers, reaching back more than 300 years. As a child I worked alongside my father and our sharecroppers growing peanuts, cotton, sugarcane and corn. The roots of my ambition lay in my desire to leave Plains and go off and do something different. Nobody in my family had ever finished high school before me, and my daddy made it clear that he wanted me to get a college education. That desire was planted in me by the time I was six years old. When the time came, it was during the Depression, and college was financially impossible. The only two free colleges in America at the time were military ones…

 THE GLOBAL FINANCIAL CRISIS OF 2008 represents one of the best possible examples of the dangers posed by narrow mental models. Before the crisis, many people, including top regulators and senior financial executives, either failed to make sense of what was happening or chose to ignore it because of the profit opportunities. Some of the most basic assumptions implicit in the prevailing worldview before the collapse – such as ever-rising home prices and stock markets – were patently false, but the mindset was so powerful that by and large, objections were not raised. Some people did see what was coming. In 2003, Warren  Buffet, relying on his tried-and-tested mental models, called complex instruments such as credit default swaps “financial weapons of mass destruction”; and in 2004, NYU Economics Professor Nouriel…

Shakespeare wrote Henry V (and most of his other works) around 1600. Today, 400 years later, half of all English theatre being performed in the world at any one time is his. How do you explain his remarkable staying power? The reason Shakespeare is timeless is that, in the words of the preeminent Shakesperean scholar Harold Bloom, he “invented the human” in literature. Shakespeare wasn’t very interested in ‘what will happen next?’ He was more interested in why is this going to happen? His plays plumb the mysteries of humanity – why we sometimes do great things and other times knowingly do bad things. That’s an incredibly universal and timeless theme, and he had a magical gift for providing deep insights in very few words. He could get right…

How do you define the term ‘iconoclast’? Iconoclasts are people who manage to achieve things that others say can’t be done. In doing so, they overcome mental barriers that stop most of us cold. My definition implies that these people are different from the rest of us, and they are, but more precisely, their brains are different. Until Walt Disney came along, cartoons were only used as advertisements between movies. His great insight was to recognize that cartoons could actually be the main form of entertainment. This insight, which came to him as he was working in animated advertising, was the key to his success, more than any other personal asset or quality he possessed. By all accounts, Disney was a difficult person to work with, but on the strength…

In your research you have found that judgment regularly trumps experience. In fact, you call judgment ‘the core of exemplary leadership’. Please explain. Last November, The Wall Street Journal published an article that I wrote with Noel Tichy. Hillary Clinton and Barack Obama had just taken their gloves off and were really punching hard at each other – she emphasizing his lack of experience, he emphasizing her bad judgment, especially on Iraq. I wrote this article not really knowing who I was for or against. I titled the piece “Experience versus Judgment,” but the Journal changed it to “Judgment Trumps Experience,” which shows that there was a leaning in the article that even I wasn’t aware of. Of course, experience is extremely important. It has been said that in order…

How common is workplace anxiety, and why is it increasingly prevalent? The phenomenon of workplace anxiety is quite common. Recent statistics show that as many as 40 per cent of employees are reporting high levels of stress and anxiety at work. There is also evidence that anxiety is on the rise in the general population. One reason for this is increasing global economic uncertainty, which is making the workplace even more competitive, and making people concerned about keeping their jobs. At the same time, our consumer-driven society places emphasis on acquiring material goods such as cars, homes and clothing, thus increasing pressure to climb the corporate ladder in order to acquire such commodities. Another factor is the decrease in separation between work and family life. It is now common for…

Most organizations focus on incentives like compensation and promotions to keep their most valued workers. What role do emotional factors play in employee retention? Rational factors such as compensation are important when it comes to retention, but it takes much more than money to motivate people. Research shows that right brain-oriented emotional factors such as how people feel about their day-today tasks, their co-workers and their organization’s identity are on average four times as important as rational factors when it comes to inspiring people to give their best effort. No individual or organization can thrive for long without meeting these emotional needs. The great leaders that I studied for my book created ‘connection cultures’ that met the emotional needs of the people they lead. What I found remarkable is that…

 FOUR ROTMAN FACULTY MEMBERS have been named the recipients of the 2008 Roger Martin and Nancy Lang Awards for Excellence in Research and Teaching. The Awards recognize and encourage excellence in the research and teaching activities of Rotman faculty members. Sharing the award for research were Avi Goldfarb, an associate professor of Marketing, and Olav Sorenson, who holds the Jeffrey S. Skoll Chair in Technical Innovation and Entrepreneurship and is also a professor of Strategic Management. Joan Kitunen, a senior lecturer in Accounting, and John Oesch, an assistant professor of Organizational Behaviour, were co-recipients of the award for teaching. Prof. Goldfarb received his PhD from Northwestern in 2002 and his B.A.H from Queen’s in 1997. His research explores the impact of information technology on marketing, on universities and on the…

 SAS INC., THE BUSINESS ANALYTICS SOFTWARE COMPANY based in Cary, North Carolina, has enjoyed an unbroken record of revenue growth since its founding in 1976. One of the world’s largest privately-held companies, SAS is renowned for a corporate culture that has made it a fixture on lists of ‘top employers’ and ‘best places to work’. On March 4, founder, chair and CEO Jim Goodnight discussed his company’s formula for success in a conversation led by Professor Richard Florida, director of the Martin Prosperity Institute. SAS is headquartered in a campus-like setting of landscaped gardens and jogging paths, where an employee can visit a doctor, take a class, visit a child in daycare and even get a haircut without stepping outside of the workplace. The company’s unusual culture dates back to…

 ONCE NAMED as one of the top-20 ‘Builders and Titans’ of the 20th century by Time Magazine, Walt Disney (1901-1966) was a visionary with staying power who dedicated his life to the pursuit of entertaining and educating the public. Disney assumed many roles over his 45-year career: cartoonist, filmmaker, technological innovator, TV celebrity, Hollywood studio mogul, and realestate tycoon. While his story is one of entrepreneurial success, success never came easily to him. More than once, Disney drove his company to the brink of bankruptcy in pursuit of technological innovation and product perfection. Among bankers and competitors, he earned a reputation for being reckless, difficult and irresponsible. Part of this came from his unique view of risk and return, which defied the short-term outlook of his investors. Throughout his difficulties,…