Innholdsfortegnelse for Spring 2014 i Rotman Management

PRICELESS MARKET THINKING PERMEATES OUR LIVES so much that we barely notice it anymore. Everywhere we look, we are confronted by the notion that money and the things it can buy will solve our problems and change our lives for the better. But the fact is, many of life’s greatest treasures cannot be purchased: health, integrity, trust and creativity, to name just a few. Back in the 18th century, Adam Smith was baffled by a ‘paradox of value’ that remains true today: we can easily get by — and even thrive — without diamonds, but we cannot exist without water. Yet the marketplace puts a much higher value on diamonds. Although mostly unpriced, water is actually one of the most valuable things in the world, and it serves as a…

Integrity is a factor of production that is as important to success in all aspects of life as knowledge, technology and human capital. IN RECENT YEARS we have witnessed an endless stream of valuedestroying behaviour by individuals and organizations in the financial world. The persistence of these scandals — in spite of efforts to curtail them — is, we believe, strong evidence that the prevailing paradigm of financial economics requires transformation. In this article we will propose an addition to the generally accepted financial economics paradigm — one that reveals the actual source of these scandals and explains why the best efforts of regulatory agencies and legal authorities have so far failed to stem the tide of value-destroying behaviour. We will argue that the core issue at hand is the…

BY NOW, IT HAS BEEN WELL ESTABLISHED that our mental models, or mindsets, determine the way we see the world, make decisions and behave. To begin, I would ask that you identify your own mental models of the role of Marketing by rating each element below on a 10-point scale, where 10 is ‘I completely agree’ and 1 is, ‘I completely disagree’. A successful marketing strategy demands the following: 1. Control over my branding strategy: ______ 2. A focus on targeting my heavy users: ______ 3. An effective CRM system: ______ 4. Focusing on each of the ‘4Ps’: ______ 5. Understanding the ‘3Cs’: ______ 6. Understanding the consumer purchase funnel: ______ 7. Centering the strategy on a benefits-based positioning supported by product features: ______ 8. Basing the strategy on insights…

THERE WAS A TIME, NOT THAT LONG AGO, when numbercrunching, static business models and top-down management were key elements of organizational intelligence. These days, alongside ongoing innovation and distributed leadership, storytelling sits near the top of the list. Management luminaries such as Jack Welch and John Seely Brown are among the growing number of leaders who advocate harnessing the power of story. Their advice: if you value excellence, leadership, cooperation, competitiveness and creativity in your company, it’s time to get busy honing your storytelling skills. Why has an age-old narrative pastime upstaged our more analytic business faculties? Because storytelling meets a fundamental human need: the need to describe human experience in a way that is causal, memorable, engaging and believable. In fact, our minds have evolved to embrace just that,…

How do you define the term ‘marketization’, and why should we be worried about it? In recent decades we’ve been in the grip of market faith which says that markets are the primary instrument for achieving the public good, and this assumption has gone largely unquestioned in the past 30 years. As a result, we have drifted from being a market economy to being a market society. The difference is that a market economy is a valuable and effective tool for organizing productive activity. A market society, on the other hand, is a place where everything is up for sale. It’s a way of life in which money and market values begin to dominate every aspect of life — from family life and personal relationships to health, education, civic life…

You refer to yourself as a ‘social marketer’. What is the difference between traditional marketing and social marketing? Social marketing involves the application of commercial marketing techniques to the planning, execution and evaluation of programs designed to influence the voluntary behaviour of a target audience in order to enhance its well-being. The main difference between this and traditional marketing is the goal: usually the end goal is monetary profit for a company; but social marketing seeks individual and collective well-being as the outcome. The other key difference is the voluntary aspect of it. Social marketers face ‘negative demand’ for what we are offering: we are trying to encourage people to recycle, to save money and to exercise. We can’t use pricing as a vehicle to influence the audience, because most…

Your research looks at how we go about making purchasing decisions. What aspects of this do you study? I’m interested in how we make a decision to buy something or not, and what makes us behave in ways that are deemed irrational based on standard economic assumptions. I basically question whether people have a good idea of how much they value the items they are thinking of purchasing. One thing you have studied is ‘context-dependent preferences’. Please explain this term. Let’s say you want to buy a bread maker. There are two types that you like, but you are having trouble deciding. One is super high-end — great on every dimension, but also very expensive; and the other is very low in price, but offers a much smaller set of…

THE DUTCH HAVE BEEN THOUGHT LEADERS in the design and management of collective pension systems for a long time. Their collectivity origins reach way back to the ‘Polder Model’, which reflects a special sort of Dutch solidarity forged by working together for centuries to keep the sea at bay. But after the dot.com bubble more than a decade ago, pension regulator Dirk Witteveen declared that, without major reforms, the Dutch pension system could end up under water, too. Despite strong protests at the time, stronger funding rules were instituted, and it seemed that the system was healthy once again. Until the global financial crisis struck in 2008. The crisis raised even more fundamental questions about the 21st century sustainability of the Dutch system — and for that matter, of every…

Giving Children The Right to Play CHILDREN IN A VILLAGE in Uganda run, dodge, and squeal with delight as they play a game of tag. There’s more afoot here than an ordinary childhood game. Two kids who are ‘it’ buzz like mosquitoes. Other children, when they get tagged by one of that pair, pretend to suffer from the aches and fever of malaria. It doesn’t take long before the ‘mosquitoes’ win. Then an adult on the sidelines introduces a new rule: When a mosquito approaches, children can put up their hands to mime the act of holding up a bed net. With a net in place, they can’t get tagged. This version of the game ends without any children getting ‘infected.’ The leader now has a perfect opening to reinforce…

Complete details are available at rotman.utoronto.ca/events May 5, 5:00-6:00pm, Toronto Big Data Experts Speaker Series @ Rotman Speaker: Kevin Chan, Director - Data Analysis, Customer Analysis & Modeling, Capital One Canada Topic: Data: From Boring to Sexy and Beyond May 6, 2:00-5:00pm, Toronto DemoCampUofT 2014 @ Rotman Synopsis: This event will begin with presentations by current cohort members of the Creative Destruction Lab @ Rotman and new applicants to the Lab. These will be followed by exhibits and networking with UofT’s most promising startups, researchers and entrepreneurially-inclined individuals. May 7, 5:00-6:00pm, Toronto Canadian Business History Speaker Series @ Rotman 3 Panelists: Nicholas Le Pan, former Superintendent of Financial Institutions (2001 to 2006); former Deputy Superintendent of Financial Institutions (1995 to 2001) Chair, Canadian Public Accountability Board; Corporate Director, CIBC Hon.…

Disruptive models of health care are emerging in developing countries, and it’s just a matter of time before they spread to more resource-rich settings. FOR GENERATIONS, the model for receiving health care services in the developed world has been pretty straightforward: you arrive at a clinic, register your insurance at the front desk, and wait; then a nurse or aide ushers you into a sterile room, takes your vital signs, and hands you an ill-fitting paper gown. Some minutes later, a doctor in a white coat enters the room, asks questions for 10 minutes or so, and conducts a brief physical examination. The doctor issues a diagnosis, writes a prescription, and sends you off to purchase medication at a local pharmacy. You are one of 40 patients the doctor will…

When factual knowledge is exposed to the animating force of imagination, business ‘doers’ can become creative ‘dreamers’. IN PERIODS OF GREAT CHANGE like the one we’re living through right now, one of the most important skills to possess is imagination. It’s what enables us to invent new business models, create differentiated brands, and reframe a growing number of wicked problems as opportunities. Understanding how the imagination works — and thrives — is therefore a key task for today’s leaders. It turns out that when people talk about ‘dreaming up’ an idea, they’re not far from the truth: imagination has been closely linked to dream states. When they studied the brains of jazz musicians during improvisation, neuroscientists Charles Limb and Allen Braun found a “disassociated pattern of activity in the prefrontal…

ON HER SUBWAY RIDE TO WORK, Xia Tong — who doesn’t even like the taste of coffee — clutches a Starbucks cup, purchased from the outlet that just opened beside the subway entrance near her apartment. She boards the train, and the liquid gradually cools over the course of the 25-minute ride. By the time she walks into her office in a Shanghai high-rise and sets the cup down on her desk, its contents are room temperature. A few hours later, she will pour the untouched beverage down the drain. When the popular coffee purveyor entered China in 2000, it was not uncommon for white collar workers like Xia — who don’t drink coffee nor can handle caffeine — to purchase a cup of Starbucks on their way into work.…

Integrating Design Thinking with Systems Thinking: David Labistour You’ve been a strong proponent of design throughout your career. How has it influenced the way you lead at MEC? Design has always been my paradigm of choice: everything I do is about placing the user first and focusing on a desired outcome or ‘future state’ for that user. For me, things like hierarchical systems and processes are a ‘means to this end’ as opposed to an end in themselves. Over the past five years, Mountain Equipment Co-op has evolved considerably, and we have re-visited the very purpose of the organization. All of this was driven by what’s happening in the Canadian landscape: demographics, urbanization, how people are approaching leisure, and how technology is changing communication, particularly for young people. When you…

In your 17-year career at Oracle, you observed the best leaders around you, and found that they fell into two categories: geniuses and ‘genius makers’. Please explain the difference. Oracle has always been known for hiring really smart people. But when I looked around at my colleagues, I noticed that some of them didn’t behave that way around certain leaders. Somehow, these leaders seemed to shut down peoples’ intelligence, while others seemed to amplify it. I came to call the leaders who shut it down ‘diminishers’, and the ones that amplified it ‘multipliers’. Not only were these individuals smart and capable themselves, they were able to bring out the smarts and capability in everyone around them. As I studied the differences between these two types of leaders, I found that…

An insider’s take on an iconic advertising campaign: priceless. MasterCard’s Priceless campaign has been, in a word, priceless for your company in terms of branding. Why has its message resonated so strongly with consumers? For a couple reasons. First of all, the campaign is based on a fundamental human truth, which is the fact that some things in life are simply priceless. From the start, it has really respected — and reflected — peoples’ prioritizations in life and had that human truth embedded in it. The fact is, the biggest brands are owned by consumers nowadays. The other thing that has made the campaign so successful is that the concept translates incredibly well globally. It is the most translated campaign in corporate history, having appeared in over 130 markets. It’s…

“DON’T BUY THIS JACKET.” It was a strange marketing slogan for a clothing retailer. Stranger still was that it appeared in a full page advertisement in the New York Times on the busiest shopping day of the year. Patagonia’s attempt to dissuade customers from purchasing items from its stock carried a counterintuitive message: the company wanted its customers to be content with older or worn items, and to think twice before purchasing new clothes. By making such a visible statement, Patagonia extended its reputation as a leader in paying due attention to a growing trend: conscientious consumerism. Consumers the world over are rethinking how and what they buy. They’re moving away from purely economic concepts of value towards a more complete notion of value, one that’s as much social and…

The UCLA professor of Medicine and author talks about the need to curb our overactive survival instincts. You begin your book with a quote from Darwin: “It is not the strongest of the species that survives, nor the most intelligent... It is the one that is most adaptable to change.” Explain the role of adaptability in modern life. As a species, we are constantly exposed to stress. Countless times a day, we hear people say, “I’m really stressed out, really anxious.” Some people manage it well, and others, not so well. What is actually going on in the brain is a fear response — the essence of our evolutionary survival mechanism. Simply put, stress is a response to fear, and those who manage it the best will ultimately be more…

Paolo Delano (MBA ’09) uBusiness Analyst, Konverge Digital Solutions Corporation Lives in: Toronto Works in: Toronto and Mexico City BEST THING ABOUT MY JOB: IT matters. MY BIGGEST CHALLENGE: I spend too much time on the details. MOST IMPORTANT SKILLS FOR MY JOB: Listening to my clients and looking at the big picture. PROUDEST MOMENT: Completing the Escape from Alcatraz Triathlon. THE WORD THAT BEST DESCRIBES ME: Diligent. HOW I RELAX: Playing sports. MOST IMPORTANT THING MY MBA TAUGHT ME: How to be clear and compelling when delivering my message. WORDS OF WISDOM: If it’s not life threatening, then it is not that important. Jason Herod (EMBA ‘11) President and General Manager, Alcon, Czech Republic & Slovakia Lives and works in: Prague, Czech Republic BEST THING ABOUT MY JOB: I…

The global managing director of McKinsey & Company talks about his firm’s focus on talent, the increasing demand for work-life balance, and his involvement in tackling one of the world’s most wicked problems: water scarcity. A recent Economist article indicates that the global consulting industry is going ‘gangbusters’ at the moment, with double-digit growth amidst all the economic doom and gloom. Why is this? I think it’s because we are in a period of profound change — and I actually believe that this will continue for the next 20 to 30 years. There are five particular megatrends that are converging to great effect. The first is the re-rise of Asia and Africa’s emergence: 2.2 billion people will join the middle class in Asia and Africa in the next 15 to…

Fast-growth markets present specific challenges for small and medium-sized players, but they can be surmounted by embracing five practices. WHILE GLOBAL TRADE was taking off over the past decade, a not-so funny thing happened: Canada’s export performance flat-lined. This is very bad news, because with its small domestic economy, Canada depends on trade to bolster its living standards. As the Bank of Canada and others have shown, this poor performance is due to Canadian companies being overexposed to slow-growth markets and underexposed to faster-growing emerging markets. Contrary to common wisdom, Canada’s small and medium-sized businesses are actually leading the way in diversifying exports to non-U.S. markets, especially to fast-growth markets: small companies have accounted for almost all of Canada’s export growth in markets like Thailand, India, Singapore, Hong Kong and…

THIRTY YEARS AGO, capitalism seemed untouchable. But with the rampant growth of income inequality, expanding carbon footprints and pervasive corporate scandals, things look very different today. Critiques of capitalism articulated by social movements such as Occupy Wall Street have been widely legitimated, and this ideological shift has propelled migration towards what we call ‘connected consumption’. If the watchword of global capitalism is greed, as declared back in the 1980s by Wall Street’s Gordon Gecko, the mantra we are hearing more and more these days is share — as in sharing one’s car, one’s home, one’s food and one’s time. These practices—once unthinkable in a middle class obsessed with privacy, acquisition and protection of property — are creating what Forbes has called ‘an economic revolution’, as millions of people embrace new…

WHEN LEADERS THINK about improving feedback in their organizations, they tend to identify two avenues: setting up and executing sound performance management systems, and helping people improve their feedback-giving skills. While both are important, we have found that the way one receives feedback is actually the most important variable in determining the value of a performance conversation. The fact is, you can be the most skillful feedback giver on the planet, but at the end of the day, the receiver is in charge of what they ‘let in’ and whether they choose to change. A skillful and thoughtful receiver can draw value out of any feedback — even if it is poorly delivered. By becoming a skillful receiver of feedback, you can achieve three important benefits: 1. TAKE CHARGE OF…

In 2012 you were appointed to the U.S. Federal Reserve’s Model Validation Council. Tell us about the Council’s work. Following the financial crisis, lots of legislative changes were made in the U.S. to increase supervision of the banks. This included the Dodd-Frank Act, which stated that the most systemically-risky banks — i.e. the 20 largest ones — would now have to undergo ‘stress tests’ on an annual basis. Here’s how it works: each year, the Federal Reserve Board puts together a hypothetical future path for the macro economy. It’s not a projection of what they really believe will occur, but instead, a conception of what could happen ‘if things got really bad’. They project forward nine quarters into the future, and each of the 20 biggest banks has to assess…

THE PHRASE “What gets measured gets managed” has been attributed, in various forms, to Tom Peters, Peter Drucker, and even Lord Kelvin. While the phrase’s origin may be murky, the underlying idea has tremendous power for leaders. Without measures, organizations face a nearly impossible task in coordinating efforts or assessing progress. So, the question we face is not whether to measure, but rather what to measure and how. Unfortunately, most current measurement approaches are far too narrow to provide useful guidance. Relentless pressure from shareholders and analysts has contributed to a management fixation on near-term financial performance. But this is just one output measure, and not a particularly useful or actionable indicator, because it’s a ‘trailing indicator’ — a measure of what happened that doesn’t always help you understand how…

The New York Times best-selling author of The Happiness Project explains how we can influence our own happiness. On paper, you appear to have it all: health, family, career; what made you decide to embark on a ‘happiness project’? I do have a lot to be happy about, but one day I realized that I wasn’t as happy as I should be. I found myself getting annoyed by lots of little things, and I was complaining a lot more than I should. I wanted to be more grateful and appreciative for the everyday, and to set higher standards for myself. Research shows that so many positive outcomes emerge from happiness: happy people are more productive, more altruistic, more creative, more likeable and physically healthier. So I decided to dedicate an…

Bank of Canada Veteran Named Dean of Rotman School In December, Tiff Macklem, a leader in national and international financial systems, was named the new dean of the Rotman School of Management. “I am thrilled to be joining the University of Toronto and Rotman, both of which are renowned for excellence in Canada and around the world,” said Macklem. “This new role will allow me to bring together my public policy and research experience to support students and promote the world-leading thinking that takes place at Rotman.” Macklem was previously senior deputy governor of the Bank of Canada, sharing responsibility with the governor and four deputy governors for monetary policy and the Bank’s role in promoting financial stability. In that role, he was also the Bank’s chief operating officer and…

After a long hard winter in most northern climes, Spring 2014 is finally here. Class Reunions are coming up soon, so all of you in the class years -4 and -9, congratulations! If you haven’t heard anything about your reunion, and/or want to help get one going — please contact Michelle Perrotta at: michelle.perrotta@rotman.utoronto.ca. And another Spring tradition: our annual Life-Long Learning conference is scheduled for Friday, May 30, titled “Thinking About Thinking”. See the back cover for details. By next issue, Class Notes will have a brand new home! We’re moving to an online forum — password protected — inside our Rotman Connect alumni portal. Please visit often: rotmanconnect.com, and share your stories and photos liberally. See you online! – Jack. ALL PROGRAMS 1954 IN MEMORIAM: Henry Conner Armstrong…