Innholdsfortegnelse for Winter 2012 i Rotman Management

Open BEFORE HE RODE OFF INTO THE SUNSET after a decade with Google last April, Senior VP of Product Development Jonathan Rosenberg wrote a seminal blog entry that has come to be known as the company’s ‘Openness Manifesto’. In it, he declared: “We believe that open systems win. They lead to more innovation, value and freedom of choice for consumers, and a vibrant and competitive ecosystem for business.” Rosenberg went on to predict that “The future of government is transparency; the future of commerce is information symmetry; the future of culture is freedom; the future of science and medicine is collaboration; the future of entertainment is participation; and each of these futures depends on open systems.” While some were quick to point out that Google doesn’t entirely live up to…

1968 ARPANET is founded. The precursor to the Internet, it allows researchers to share code and information. 1969 Ken Thompson, researcher at Bell Labs, writes the first version of Unix. 1979 AT&T announces plans to commercialize Unix. 1983 Richard Stallman establishes the Free Software Foundation at MIT. The project to construct an operating system based on Unix but for which the source code is freely available, begins. Stallman also establishes the idea of the General Public License (GPL). 1987 Andrew Tanenbaum releases Minix, a version of Unix for the PC, Mac, Amiga and Atari ST. Source code included. 1989 Michael Tiemann (now Red Hat Vice President, Open Source Affairs) co-founds Cygnus Solutions, the first business to provide custom engineering and support services for free software. 1991 Linus Torvalds releases the…

IN 2008, GOOGLE ACCOMPLISHED A RARE FEAT: perched in the lofty ranks of Fortune magazine’s ‘five most admired companies in America’, it also ranked among the top five of the magazine’s ‘best companies to work for’. Media accounts made the 10-year-old Internet powerhouse seem like an employees’ paradise – albeit one that relied on fabulous wealth: world-class chefs served up three free meals a day in several distinct cafes spread across the two dozen buildings of the Google campus; hourly shuttles with Wi-Fi access transported employees, free of charge, between Mountain View and San Francisco; ping-pong games enlivened work days and dogs tagged by their owners’ sides. How could other companies possibly aspire to this double nirvana of business success and employee delight? Our research shows how, and it has…

Illustration by Hennie Haworth OUR TOUGH ECONOMIC TIMES have hit traditional retailers hard, particularly in North America. Circuit City and Borders have filed for bankruptcy; Ann Taylor and Home Depot have closed hundreds of stores; and American Apparel is reportedly millions of dollars in the red, to name but a few. The official reasons for these failures range from overly-aggressive expansion strategies to unfortunate investment decisions – but, in reality, a big driver of this retail upheaval is old-fashioned belt-tightening. Financial uncertainty is prompting consumers to change their buying behaviours. Enabled by new technologies, shoppers are now using mobile phones to comparison shop on the fly, access in-the-moment promotions, and consult friends or family before buying anything. As the ways in which people make purchase decisions multiply, retailers of all…

PERHAPS YOU’VE SEEN the video clip making the rounds. Three conference-goers visiting Bellevue, Washington, take a wrong turn just after midnight en route to their hotel. They switch on the rental car’s GPS, enter their destination, and follow the machine’s soothing instructions – right down a boat-launch ramp to the bottom of a Puget Sound tributary. Nobody gets hurt, and the local television affiliate runs the story as a gag. Lt. Eric Keenan of the Bellevue Fire Department wryly remarks on the scene’s sitcom potential: “I don’t know why they wouldn’t question driving into a puddle that doesn’t seem to end.” It’s a good point: Why wouldn’t they question it? Before you answer, take a moment to hold in your mind the image of the submerged Mercedes SUV, deep under…

Recruitment Through social media peer groups on sites such as Facebook, Twitter and LinkedIn, employees can access more information to assess candidates for a vacant post. By encouraging employees to connect with their peer groups, companies will find recruiting not only an easier and cheaper task, but one that more often leads to a successful long-term hire. Customer Relationships Externally-networked companies better understand what their customers want and forge a dialogue with them throughout a product’s life span. Building strong links with customers via social media can also sharpen a company’s innovation and product development processes by allowing new ideas to be explored and tried out directly with customers. Channeling the Best Expertise Sites such as LinkedIn and Twitter enable employees to draw on intellectual capital from both within and,…

Q&A You believe that innovating in today’s environment demands being open. Please explain. The new motivation for being open is a reaction to an earlier period where companies relied on innovation through vertical integration. From the laboratory bench all the way through to the market, everything was done within a company’s four walls. Openness entails making much greater use of ideas and technologies from outside of your walls, and equally, allowing your ideas to be shared with others. In an open innovation model, firms use both internal and external sources of knowledge to turn new ideas into commercial products and services that can have internal or external routes to market. These routes depend on the firm’s business model: projects that fit the current business model flow through internal channels, while…

Q&A The executive director of the Institute for the Future discusses ‘the era of the amplified individual’ and the mirror-like effects of digital technologies. Today’s organizations have access to tools that enable people to aggregate resources and collaborate outside the boundaries of the organization. Describe some of the pros and cons of this ‘open’ environment. The most obvious pro is the fact that people can do previously-unimaginable things, which only large organizations with lots of resources could do at one time. For example, one of my colleagues started a project called Global Lives, which is documenting the lives of people in 10 different locations around the world, creating 24-hour-a-day video diaries. This colleague had been studying overseas and he realized that people in the U.S. don’t have any idea how…

HOW OPEN IS TOO OPEN? IN TODAY’S ECONOMY, most business leaders recognize how important it is for companies to be open and transparent – or at least, to appear to be. Unfortunately, such openness can expose a company to significant risks via information loss, and as a result, every organization must carefully consider the tradeoffs as it goes about setting its own particular level of openness. My main areas of research are global competitiveness and information security. Although at first glance these topics might seem unrelated, in fact they are not: in an increasingly information-based economy, intellectual property and knowledge are the very foundations of organizational value, and by extension, of a country’s global competitiveness; and knowledge cannot survive as a source of competitive advantage without an ability to protect…

A TOTAL OF 12 APPOINTMENTS were made to the Rotman faculty for the 2011-12 academic year, in the areas of Strategic Management, Marketing, Accounting, Organizational Behaviour and Human Resources, and Finance. “These appointments will strengthen our teaching capabilities in all of the programs we offer and will further enhance our already outstanding track record in academic research,” says Joel Baum, Associate Dean, Faculty and professor of Strategic Management. Joshua Gans joins the School as the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship and a professor of Strategic Management. Previously he was at the Melbourne Business School and his teaching and research interests include applied game theory, network and digital market strategy, and the economics of innovation and science. As announced in our fall issue, Will Mitchell will be…

THE STUDY OF INNOVATION took a giant global step forward on October 5 with the launch of the India Innovation Institute at the University of Toronto – a joint venture of the Munk School of Global Affairs and the Rotman School of Management. “The India Innovation Institute is designed to be a hub for researchers across the university and around the world,” said Professor Janice Stein, director of the Munk School, which will house the institute. “It will bring together faculty and students who are looking at problems of innovation in which India is engaged –and that’s innovation across the spectrum: innovation in technology, innovation in service, innovation in process and social innovation.” India is a leading global innovator, and by 2050 it is expected to be the fifth-largest economy…

THE ARGUMENT GOES SOMETHING LIKE THIS: the business world has become increasingly fast-changing, complicated and unpredictable. The new normal is – to borrow a phrase from the U.S. military – a ‘VUCA’ environment: it is volatile, uncertain, complex and ambiguous. In such a world, we are told, it is futile to plan or to attempt to design strategy. Rather, strategy should be emergent: firms should monitor their environment and react quickly to whatever comes up, and the sum of these reactions is the emergent strategy. Furthermore, in an increasingly interconnected world, notions of competition are outmoded; the new game is about cooperation, not about creating winning strategies. This is the increasingly popular view of the state of strategy today. I respectfully beg to differ. Not with the notion that we…

THE TERM ‘OPEN’ IS RICH WITH MEANING and positive connotations. Amongst other things, it is associated with candor, freedom, flexibility, expansiveness, engagement, sharing and access. However, it is not an adjective that has traditionally been used to describe organizations. Words like insular, bureaucratic, hierarchical, secretive and closed often apply much better. Recently, the smartest organizations have been rethinking what it means to be open. In this article I will argue that there are three particular dimensions of openness that really matter in the business arena. These three dimensions are related, but very different. Let’s examine each in turn. Dimension #1: The Increasingly Transparent Corporation A decade ago, I conducted a multi-million dollar research project on the topic of transparency with my collaborator David Ticoll. We argued that transparency was good…

IN MARCH 2008, Dave Carroll, a musician from Halifax, Canada and his band, the Sons of Maxwell, traveled from Halifax to Nebraska via O’Hare airport in Chicago. What occurred on the journey became the subject of outrage and amusement, and transformed Carroll from country singer to customer service guru. In Carroll’s own words, here’s what happened: “We were traveling to Nebraska for a one-week tour and my $3,500 Taylor guitar was witnessed being thrown by United Airlines baggage handlers in Chicago. I discovered later that it was severely damaged. They didn’t deny the experience occurred, but for nine months the various people I communicated with put the responsibility on everyone other than themselves, and finally said they would do nothing to compensate me for my loss. So I promised the…

PROSPEROUS AND GROWTH-ORIENTED small and medium-sized enterprises (SMEs) – generally defined as firms with fewer than 500 employees – are vital to an economy’s health. In the case of Canadian SMEs, because the domestic market for goods and services is relatively small, the most promising growth opportunities tend to lie in foreign markets. But doing business in foreign markets can be both difficult and costly, and as a result, most SMEs choose to operate domestically. What factors would enable these firms to take greater advantage of the significant opportunities in global digital markets, and what challenges can they anticipate when they do so? In search of answers, we recently interviewed eight Canadian entrepreneurs who have increased their firms’ international sales through digital markets. It is our hope that this article…

One of the greatest challenges facing decision makers in an increasingly complex world is something few of us ever consider: Human Physiology. Evolution has designed us to draw conclusions as quickly as possible. Our internal operating system strives for speedy closure on problems – a biological mechanism that is perfectly tuned to the ‘fight-or-flight’ challenges that generations of our ancestors faced. While we may intellectually appreciate the benefits of being open-minded, our own biology undermines our efforts: it’s more important for us to feel right, than it is to be right. Only the calm feeling of ‘knowing’ can extinguish the tension of ‘not knowing’. In our hurry to replace tension with calm, we typically accept the first reasonable interpretation that arises, thereby rejecting alternative interpretations – including the ones we…

WHEN ELLEN KULLMAN BECAME DuPont’s 19th chief executive in January 2009 and its chairman later that year, she immediately began championing ‘market-driven science’–using DuPont’s research capabilities and innovation power to focus on the needs of the world’s growth markets. By doing that, she is continuing the company’s evolution from a chemical producer over the last century to an organization with a much larger portfolio of activities that now includes agriculture, nutrition, health, biotechnology and engineered materials. The company’s recent $6 billion acquisition of Danisco, a Danish producer of nutrition and health-related products and enzymes, is based on the understanding that with a growing population, the market for nutritional products, food and health-related products will continue to grow. DuPont is also a formidable player in new and innovative markets like solar…

Q&A We’ve all heard of black markets, but ‘grey markets’ now cost companies billions in sales each year. How do you define this term, and which product categories does it affect most? David Soberman: Grey markets occur when a product is designed and destined for a particular market, and an intermediary known as a ‘grey marketer’ brings that product to a second market to sell it for less than its list price in that second market. In contrast to black marketing, which involves counterfeit or illegal goods, grey marketing is completely legal. In some cases, scarcity drives this behaviour. For example, when the iPhone was first launched, there were shortages in the UK, so people were bringing iPhones in from other markets. But scarcity-driven grey marketing is really an aberration.…

Q&A You have said that we aren’t far off from an economic environment where the majority of transactions are digitally-driven. What are the implications for organizations? The key implication is that, regardless of industry, there is no such thing as an ‘offline business’ anymore. Every organization must think of itself as a digital business and have an effective digital strategy in place. The days of ignoring the Internet and continuing with the status quo are gone. Describe the difference between users and customers, and why this distinction is so important. In our research, my colleagues and I have found that the companies that are most effective in this new digital economy are those who prioritize users – which is quite a different ballgame from the customer-centric model of the past.…

THE ‘UNSTRUCTURED INFORMATION’ MOST BUSINESSES MISS OUT ON Based in India, Tata Consultancy Services is one of the major IT companies in Asia. From your perspective, how has the capture and use of information changed over the past couple of years? What are the trends? I see two things changing. The first is the realization that there is more information outside of the structured rows and columns of databases that enterprises have traditionally looked to as their primary sources of information. The rise of ‘unstructured information’, of that part of the puzzle, is really huge in the last couple of years. The second thing is that it’s becoming more and more evident to enterprises that the social Web actually does make sense for businesses. Because more information lies outside the…

IN NOVEMBER, two members of the faculty at the Rotman School of Management were named to the list of the top 50 management thinkers in the world at an awards ceremony held in London. Dean Roger Martin placed sixth on the list while Adjunct Professor Don Tapscott came in at ninth. Martin was cited for being a “champion of Integrative Thinking”, as well as for his latest book, Fixing the Game: Bubbles, Crashes and What Capitalism Can Learn From the NFL (Harvard Business Review Press, 2011), which rails against the wrong-headed decoupling of the ‘real’ market (the business of designing, making and selling products and services) from the ‘expectations’ market (the business of trading stocks, options and complex derivatives.) The Thinkers50 is a bi-annual ranking of global business thinkers, developed…

A FELLOWSHIP IN MEMORY OF John A. Tory has been established at the Rotman School of Management with a $180,000 commitment from Thomson Reuters. The annual fellowship will provide a $40,000 award to a Full-Time MBA student. The recipient will also have the opportunity to participate in a competitive 10-week paid internship in the Summer Associates Program at Thomson Reuters prior to their last year of study. “John Tory was an optimist who believed the future yields untold promise. In his honour, we are pleased to partner with the University of Toronto to support the next generation of business leaders, consistent with John’s legacy of passion and curiosity for all facets of business combined with his unparalleled grace, integrity, humility and work ethic,” said David Thomson, chairman of Thomson Reuters.…

In 1991 you were a student at the University of Helsinki and a self-taught hacker. What got you thinking about creating a new operating system? It wasn’t really a conscious decision; it was more a confluence of factors. Part of it was simply that I was interested in operating systems and had been working on low-level issues for a long time. I’d been doing assembly language programming and messing around with device drivers with my previous machine – a Sinclair QL that had very little support in Finland. So although I was only 21, I had something of a background for it. Another thing was that I wanted to run Unix on my newly-acquired PC, so rather than running DOS and Windows, I had gotten Minix for my machine, which…

You believe that a new culture of openness has come about because of three key trends. What are they? Charlene Li: The first is that the sheer number of people online continues to multiply. Two billion people worldwide are now active on the Internet, and the amount of time they are spending there and the type of things they are doing are also multiplying. The second trend is the widespread use of ‘social’ sites like Facebook and YouTube. When people go online, they spend a disproportionate amount of time consuming content that they, or people like them, have created; there is an identity associated with these interactions – a real person with a profile, a reputation and a history. The third trend is the rise of sharing. In the past,…

OPENNESS HAS BECOME A MEGA-TREND for innovation and the topic du jour for organizations of all kinds. Granted, it has been on the agenda ever since Henry Chesbrough’s seminal Open Innovation came out in 2003 [see interview, page 82], and since then, others have elaborated on the concept from different perspectives. However, little has been said about what this ‘new openness’ means for the realm of design. In this article I will reframe openness from a design perspective. My interest in this topic was piqued by a particularly powerful phrase coined by salesforce.com’s Chief Scientist JP Rangaswami, who stated in a recent presentation that we now need to “design for the loss of control.” His point – made at last year’s Enterprise 2.0 conference in Boston – was IT-specific, arguing…

When your target market is online, rich opportunities exist for developing ‘online brand communities’. Online markets provide customers with diverse opportunities to interact with a company’s products and services: they can participate in online forums sponsored by the company; create YouTube videos that show the products they love or hate; Tweet about the company; participate in a company-sponsored fan page on Facebook; or set up their own Web site to praise or complain about the company. In particular, businesses targeting mothers have embraced online brand communities. ECHOage targets mothers who want their children to have meaningful birthdays. The owners have discovered that community members are interested in stories about other community members, so part of their Web site allows people to share stories. They also change the content of their…

CORPORATE BUREAUCRACIES ARE ON THEIR WAY TO EXTINCTION. A new organizational form is emerging that will break down walls and bring people together, and in doing so, capture new opportunities and develop innovative solutions. This statement – repeated often as Web 2.0 evangelists preach that corporate adoption of social media tools will trigger an e-ruption of creativity, innovation and productivity in the workplace – was actually made just over 40 years ago by Alvin Toffler in his groundbreaking book, Future Shock. In the intervening decades, one thought leader after another has made similar predictions. Toffler’s forecasts – about how information technology would soon revolutionize knowledge management in organization – never lived up to their hype in the 1970s or 80s. That, however, didn’t stop Jim Maxmin, CEO of Thorn EMI,…

Q&A More than 50 years ago, one of Marshall McLuhan’s predictions was that the world would become ‘a tightly-networked global village marked by the return of tribalism’. Some would say he’s not that far off. Do you think anything about today’s environment would surprise him? I certainly think McLuhan would be amazed by the fact that our telephones are now used more for exchanging text messages than voice messages, because he very much believed that electronic media would herald the end of the era of the written word and that we would move into a world of oral communication and rich images. While he was very prescient in many ways, there is a lot about today’s world that doesn’t quite fit with his predictions. You have said that a technology’s…

Q&A You have compared modern organizations to dinosaurs due to their failure to embrace the digital tools that you believe "are driving human evolution.” Please explain. If you look at where the average organization is in terms of its digital evolution, many are stuck in a kind of a ‘Jurassic’ state. Organizations used to be early adopters, but that’s not the case anymore. The first time you interacted with Microsoft or had an e-mail address was probably inside of some type of organization, but something happened when technology quite suddenly became mobile and social: most organizations completely closed off to it. As a result, a worrisome gap has emerged between where society is digitally and where organizations are, and we have to be very cognizant about closing that gap. The…

Q&A Standard & Poor’s decision last summer to downgrade the U.S. credit rating can be seen as a warning that politics still trumps rationality in Washington. To what extent do you view the current phase of the economic crisis as a political crisis rather than a financial one? There are two issues. First, technically we haven’t left the financial crisis behind, because banks in the U.S. remain very much overburdened with foreclosures and delinquent loans – and the same is true to some degree in Europe, as well. Second, at a time when economic growth is treading water, we have layered-on a political crisis, which leaves the economy south of the border particularly vulnerable. Basically, it will be affected by anything that heightens market uncertainty, depresses confidence or dampens growth…

Q&A What led Cisco to embrace a new approach to leadership? A few years ago, our growth was slowing and efforts to find new markets outside of our core business had mixed results. Our CEO John Chambers decided to abandon the traditional command-and-control management structure for a more collaborative model built upon a series of boards and councils. The company needed leaders who were capable of thinking about Cisco’s growth and development as a whole – rather than focusing on the next great product that their unit would deliver. The goal was to ‘flatten’ the organization and keep us agile and much closer to our customers by bringing together our best people from around the globe to solve key problems. Not surprisingly, this initiative didn’t go over well with some…

A SCHOLARSHIP HAS BEEN ESTABLISHED at the Rotman School in memory of Brad Griffiths (BCom ’79) by the friends, family and colleagues of the Toronto financier. Griffiths was a fixture of the investment banking and energy industries in Canada for more than 30 years. He passed away suddenly last July in a boating accident. The Bradley David Griffiths Memorial Scholarship will be awarded annually to an MBA student at the Rotman School with a background or interest in pursuing a career in finance, investment banking or energy. “This scholarship will be a fitting tribute to a man who was not only a leader in the field of finance but a valued mentor to countless people. Brad would be gratified to know that he will continue to have an impact on…

January 10, 5:00–6:15pm, Toronto Retail Experts Speaker Series Speaker: Walter Robb, Co-Chief Executive Officer, Whole Foods Market, Inc. Topic: “How ‘Conscious Capitalism’ Is More Than Just a Phrase at Whole Foods” January 11, 5:00–6:10pm, Toronto Rotman Master of Finance Speaker Series Speaker: Alex Jurshevski, Founder and Managing Partner, Recovery Partners Topic: Fixing the Global Debt Crisis Through Restructuring Not Bailouts January 12, 5:00–6:00pm, Toronto Design Thinking Experts Speaker Series Speaker: Alex Ryan, Associate, Booz Allen Hamilton and Assistant Professor – Design Faculty, U.S. Army School of Advanced Military Studies Topic: Design Thinking in Military Strategy and Operations January 17, 5:00–6:00pm, Toronto Marketing Experts Speaker Series Speaker: David Burgos, Head – Multicultural Practice, Millward Brown (New York) Topic: Marketing to the New Majority: Strategies for a Diverse World January 18, 5:00–6:15pm,…