Innholdsfortegnelse for Spring 2018 i Rotman Management

Figuring out what consumers truly value is no easy feat. Describe how your work on ‘the elements of value’ began. Eric Almquist: A few years ago, after doing hundreds of consumer studies for our clients over three decades, we realized that we had some very powerful intel about what people value. Initially, we used our research to identify 24 elements of value in the consumer arena — but we suspected there were more. So, in 2015, we did some new qualitative research, talking to consumers directly about why they purchased a particular product. We really probed people, to get down to the fundamentals. If someone said, ‘I use Bank X because it’s convenient’, we would ask, ‘What does convenience mean to you?’ We did this repeatedly to get down to…

IN THE NOT-TOO-DISTANT PAST, the term ‘consumer’ triggered images of people in brick-and-mortar stores, touching products, physically making comparisons and receiving face-to-face assistance. Back then, product and price comparisons entailed physical transportation costs, and the act of purchasing often involved waiting in queues and using payment mechanisms such as cheques or cash. To state the obvious, the shopping experience has dramatically changed. Consumers everywhere are embracing ecommerce options and expanding the variety of products they purchase online. At the same time, the in-store shopping experience now includes elements of technology — either offered by the retailer (in-store shopping kiosks or information display screens) or by third parties (recommendation apps or product-comparison tools). Today’s omni-channel reality is evident well beyond the retail sector. Banks, credit card companies and insurance providers are…

BACK IN THE 1980S, if you wanted to book a flight from New York to London, you would contact a travel agent, who would check availability, present options, receive your instructions, and then finally make a reservation. Today, you are likely to go online and book directly with the airline. What has happened here is a process known as disintermediation. The travel agent as an intermediary is no longer needed. This does not mean that there is no need whatsoever for intermediaries in the travel industry. Online services such as Expedia and Travelocity have sprung up to assist when customers want to quickly compare prices between airlines or hotels. However, the nature of the intermediaries in the travel business has changed dramatically, and human involvement has largely disappeared. The creation…

IMPACT INVESTMENTS — those that seek a specific social or environmental impact alongside financial returns — continue to grow rapidly. Early movers such as niche firms and foundations have blazed the trail, but as investor interest grows, larger investment management firms — including large institutional investors—are building capacity in this area. However, like cryptocurrencies and AI, impact investments add variables that don’t easily fit with more conservative investment management theories and practices. So, where might investors start in this nascent market? In a world of low interest rates, high prices for many traditional investments, and the increasing willingness of institutional investors to explore alternatives, could real assets—investments in real estate or infrastructure projects — be a starting place to try out impact investing? The answer is Yes. But first, a…

According to a recent survey, 85 per cent of financial advisors in the U.S. are using social media for business. As a direct result of social media use, these ‘social advisors’ gained new clients resulting in nearly $5 million in average asset gain. For these advisors, social media is no longer an option, but a proven tool that is being used to gain new business and to build closer relationships with clients. Are you ready to step off the sidelines and become a ‘social advisor’ to build your business? Following are 10 tips to help you use social media effectively. 1. Understand your company’s social media policy. Make sure you understand your corporate policy. Contact your compliance department with questions; speak with colleagues; and participate in any training that may…

IN OCTOBER 2005, General Motors and the United Auto Workers reached a compromise to reduce GM cash outlays on healthcare benefits for active and retired personnel by an estimated $1 billion. The agreement was hailed as a victory for both parties because it would lower the company’s costs while preserving jobs. But the seeds of GM’s demise had already been sown. In that same year, its annual report had warned investors that escalating healthcare costs were an existential threat: Healthcare in the United States is one of our biggest competitive challenges, and if we do not make progress on structurally fixing this issue, it could be a long-term threat to our company. In 2005, GM was challenged with the compound impact of escalating healthcare cost rates and falling discount rates…

A couple of years ago, as an executive with one of the big banks, you were involved in the Rotman School’s study of Canadian women as a consumer group in financial services. What were the key findings? The first is that the financial industry — despite good intentions — is still underserving female investors. And secondly, female investors want an investing experience that is differentiated from that of men — and the solution to that problem is simpler than anyone might think. The women in the study told us that it isn’t about different products or big marketing campaigns targeting them — it’s about talking to them about their finances in ways that matter to them. We also found that in some areas of banking, there were no gender differentiators…

IN MY OBSERVATIONS OVER THE YEARS, it is clear that many negotiators want to avoid losing, win big and come out strong. I get this. There’s a feeling of security that these words conjure up. In any kind of competition where there’s a winner and a loser, people want to be the winner. Alas, it is these very thoughts that can make the most experienced negotiator susceptible to poor judgment. Based on a program of research that spans a decade, I would advise people to adopt a different mindset when they negotiate by becoming a ‘prospecting negotiator’. The concept of being a prospecting negotiator reviews a fundamental shift in the negotiator’s mindset. The term ‘prospecting’ evokes images of 1800s California and the Klondike gold rushes. In each case, people set…

IN AN ATTEMPT TO DEFINE the exponential change that is re-framing our traditional operating systems and social structures, sociologist Ziauddin Sardar coined the phrase ‘Postnormal Times’. Based on the concept of postnormal science — in which facts and values are constantly in flux — Sardar’s framework captures the unique aspects of the ambiguous and shifting world in which we find ourselves. The ideas that have historically guided us — hierarchical structures, top-down governance, segmented industries, intellectual property, personal ownership, etc. — are becoming increasingly irrelevant. To thrive, modern organizations must cultivate and embrace new pathways to value creation that align with the characteristics of a Postnormal Age characterized by chaos, complexity and contradiction. The Industrial Revolution certainly brought about many wonderful advancements in human development: The introduction of machine tools…

EVERYONE HAS HAD — or will soon have — an AI moment. We have grown accustomed to a media saturated with stories of new technologies that will change our lives. We are so used to the constant drumbeat of technology news that we numbly recite that ‘the only thing immune to change is change itself’. Until we have our AI moment. Then we realize that this technology is different. Some computer scientists experienced their AI moment in 2012, when a student team from the University of Toronto delivered such an impressive win in the visual object-recognition competition ImageNet that the following year, all top finalists used the then-novel ‘deep learning’ approach to compete. These scientists recognized that object recognition is more than just a game; it actually enables machines to…

• Cheques and credit cards will largely disappear. Mobile wallets on smartphones and wearables will become the norm.• Biometrics will be used to make payments more secure.• Some central banks will choose to switch from paper to digital currencies, and transacting in digital currencies will become more widespread.• Machine learning will be able to undertake many tasks such as credit assessment and fraud detection much better than human beings.• Record keeping will be more secure and faster using blockchains and other distributed ledger technologies (DLTs).• Crowdfunding and P2P lending will become more widely used. Some of today’s large banks will find it necessary to offer these services.…

Should institutional investors consider impact investments in real assets? We have spent a fair bit of time speaking with — and frankly, educating — institutional investors on investing in affordable housing, specifically because it should be one of the easy ways for them to have an impact and to continue to earn market rate risk-adjusted returns. With regards to the pension funds, you could also make the case that investing in affordable housing has a positive impact on the underlying beneficiaries (teachers, firefighters, police, etc.), whereas continuing to push the market higher on multi-family rental and condo development projects actually raises housing costs and erodes the real income of the underlying beneficiaries and their communities and clients. What makes real assets attractive as an impact investment? What are the challenges?…

IN HIS 1930 ESSAY, “Economic Possibilities for Our Grandchildren”, John Maynard Keynes foretold a future of ‘technological unemployment’ and 15-hour workweeks. We have long since given up on early 20th-century utopian visions of a leisure society in which machines do everything for us; but there is no question that what we actually do these days is changing fast — and will continue to change. The biggest challenge in understanding the future of work comes in surfacing the implications for three broad constituencies: individuals, employers, and social and governmental institutions. Unless all three are aligned in their understanding and actions to address emerging opportunities and challenges, the road ahead will be bumpy, at best. The good news is that if our organizational leaders understand more fully how the complex landscape of…

What are ‘value patterns’, and what do they indicate? This is a way of describing a company’s ‘starting position’ — its investment thesis. Value patterns reflect a company’s business model economics (gross margins, R&D intensity, capital intensity), growth exposure, investor expectations and riskiness. Within a given industry like retail, for example, investors tend to think about the trends and challenges all retailers are facing. But individual companies within a sector can have very different profiles — or value patterns — depending on their individual context. For instance, retailers include ‘early-stage, high-growth, competitively-advantaged’ formats that just need some time to expand their footprint (like Ulta Salon, the popular chain of beauty shops); and at the other extreme, ‘over-capitalized, disadvantaged, late-in-lifecycle’ companies (like Sears) that are dealing more with contraction and restructuring…

After several years at the Conference Board of Canada, you recently left that role to take on a new challenge in the U.S. What prompted this career change? I loved my job, which involved working on innovation policy for healthcare — but after 10 years in the same role, I needed a new challenge. For me, the role at Medtronic has been a great transition: I still get to work on healthcare policy, but this is an opportunity to do so from a private-sector perspective. It is also allowing me to build up my knowledge and skills by working on these issues more globally, which has been wonderful. Broadly speaking, would you say the challenges you face in this role are similar or different from those you faced before? I…

THE VAST MAJORITY OF EMPLOYEES come to work to do a good job and do their best to add value in their assigned roles. When they don’t — as eminent scholar W. Edwards Deming repeatedly pointed out — it is usually due to a failure of the management system, not the people. Poorly designed processes and inadequate (if not actively harmful) management systems prevent workers from creating the value that companies need and customers expect. Nowhere is this truth more evident than in the remarkable turnaround at NUMMI, the joint venture between Toyota and General Motors at GM’s Fremont plant in 1984. At the time, the Fremont workforce was considered to be GM’s worst. Workers regularly went on strike; they spent more time filing grievances than building cars; they even…

What is the Social Progress Imperative? It started back in 2009, at a meeting of one of the Global Agenda Councils at the World Economic Forum. Michael Bishop of The Economist threw out an idea to the group: The WEF had already had a significant impact on the world from an economic perspective, in terms of helping countries increase their GDP per capita; shouldn’t there be a way to measure social progress as well — progress that drives not GDP, but social well-being? People loved the idea, and a founding group was quickly formed, including our current chairman, Brizio Biondi-Morra. Shortly thereafter, I was asked to come on board to lead the development of the conceptual framework for measuring social progress and the research effort. Social progress has become an…

Sarah Kaplan: I wanted to have this conversation because I believe it’s really important to have men directly involved in achieving gender equality. Both of you have long been champions of diversity, and I am curious as to why. A major survey of executives recently suggested that a substantial proportion of men believe there is too much attention placed on diversity in organizations. My question is, why would any organization want to invest in inclusion? Kevin Lobo: Whenever I give a talk at my company, I start off with a business case for diversity and inclusion. To me, it seems so obvious, but I feel like I have to repeat it anyway. Stryker is a medical device company: We manufacture products. But essentially, every successful business is always about talent.…

GLOBAL CORPORATIONS. Governments. Charitable foundations. Social innovation start-ups. Elementary schools. These are just some of the diverse types of organizations that have embraced Design Thinking. Amongst other outcomes, we have seen it help impoverished farmers adopt new practices in Mexico; keep atrisk California teenagers in school; reduce the frequency of mental health emergencies in Australia; and help manufacturers and government regulators in Washington find common ground on medical-device standards. In much the same way that the arrival of Total Quality Management (TQM) revolutionized the way organizations thought about quality, Design Thinking has the potential to revolutionize the way we think about — and practice — innovation. In Quality 1.0 (‘quality assurance’), quality was seen as the domain of a small group of experts. In Quality 2.0, it became everyone’s job,…

IN RECENT YEARS, artificial intelligence (AI) has left the machine room and entered the world of mainstream business. Today’s AI algorithms already support remarkably-accurate machine sight, hearing and speech, and can access global repositories of information. Thanks to deep learning and other advanced techniques, a staggering level of growth in data, and continuing advances in raw processing power, AI performance continues to improve, leading to an explosion in AI-enabled business applications. As always, this new era will have winners and losers. But our research suggests that if current patterns continue, the separation between the two could be especially dramatic and unforgiving. In this article we will offer practical guidance for introducing and spreading AI within large organizations. Artificial Intelligence in Action Despite the increase in AI-enabled business applications, significant adoption…

INVESTORS HAVE LONG RELIED on information intermediaries — from financial analysts and advisors to the business press, credit rating agencies, short sellers and auditors — to acquire timely and value-relevant information regarding the prospects of stocks. However, the past decade has witnessed an explosion in new sources of information that are easily accessible to capital market participants. With the rise of the Internet, individual investors are increasingly relying on each other as peer-to-peer sources of information. The early days of the Internet saw the rise of financial websites such as Yahoo! Finance, Motley Fool and Raging Bull. More recently, individual investors have shared information and opinion through portals such as SeekingAlpha. However, by far, the biggest revolution in the dissemination of information on the Internet has been the advent of…

All companies strive for profitable growth, but you believe it eludes many for a common reason. What is it? In my 25 years of researching this topic and working with clients, one theme has come up again and again: complexity. In my view, complexity is the silent killer of growth, and it operates at many levels. For instance, over time you can accumulate too many businesses, projects or assets. LEGO got into a lot of trouble 15 years ago by doing just that, and it had to strip all the complexity out and return to its core. It has since enjoyed a great resurgence. Complexity can also come into the design of your products or services, via the number of options offered. There are great examples of start-ups going into…

What options are currently available to someone who wants to invest some of their hard-earned money? Today’s investors have a number of choices. First, they can open up a discretionary account, where they give their money to a fund manager who makes the decisions for them. They would just have to fill out a form, indicating their objectives and risk tolerance, and would then trust the fund manager to make decisions accordingly. They could also invest in a ‘pooled fund’ like Gluskin Sheff or Leith Wheeler, or deal with a full-service broker. That’s the standard approach that I grew up with: You open up a brokerage account and either pay the broker a fee or a commission; then they deal with an investment advisor who makes recommendations, which you ratify.…

JUST ABOUT EVERY ORGANIZATION professes to be customer-focused. The question is, would their customers agree? While most have developed clear strategies related to marketing, product development and other business functions, very few have taken the time to create a well-formulated customer strategy to address the development of deep connections with customers. In today’s omni-channel environment, such a strategy is increasingly essential to an enterprise’s long-term success. The challenge for every organization is to understand how to create value in the mind of the customer — how to make your offering ‘worth it’, not just in terms of price, but also with respect to time, effort and other intangibles. Furthermore, customers seek value in what a product enables them to achieve — often realizing value two or three steps removed from…

How do you define ‘onlyness’? The word actually doesn’t appear in the English dictionary, but I would argue that it should. Simply put, it means that anyone’s — and quite possibly everyone’s — ideas matter. The genesis of the word starts with the fact that You are standing in a spot in the world that only You stand in. It is a function of your history and experience, and from this spot where only You stand, You offer a distinct point of view, unique insights — and even groundbreaking ideas. The second aspect of onlyness is that today, thanks to network connectedness, we can scale and realize our ideas, bypassing the people and systems that traditionally filtered them out. As a result, every one of us has the power to…

HISTORICALLY, MARKETING has been based on an ‘Industrial Age’ approach. Marketers saw what they believed to be a customer need, developed a product bearing what they considered to be ‘value’, and then tried to find buyers seeking that value. This ‘supply-chain’ approach required the manufacturer to sell what had been produced, because ‘economies of scale’ required more of that same product to be made to optimize profits. The inherent assumption in this approach is that sufficient value has been built into the product for the buyer to extract, justifying the asking price. In an age of product development and increasing consumer demand, this approach worked — in many cases, magnificently. Witness the growth of the automobile industry, telecommunications, household products, airlines, television and broadcasting, hotels, computers and a host of…

Highlights May 2, 8:00am-6:00pm Machine Learning FinTech Conference II at Rotman May 14, 12:00-1:00pm Speaker: Andrew Keen, Tech Entrepreneur; Author Topic: How to Fix the Future (Atlantic Monthly Press, 2018) May 16, 5:30-6:30pm Topic: “Understanding Booms and Busts in Housing Markets” 4 Speakers: Thomas Davidoff, Associate Professor in Real Estate Finance & Director - UBC Centre for Urban Economics & Real Estate, Sauder Lu Han, Petro-Canada Associate Professor of Economic Analysis & Policy and Research Fellow – Centre for Real Estate, Rotman Cynthia Holmes, Associate Professor and Chair - Real Estate Management Department, Rogers School of Management, Ryerson William Strange, SmartCentres Chair of Real Estate & Professor of Economic Analysis & Policy, Rotman Moderator: Janet McFarland, Real Estate Reporter, The Globe and Mail May 23, 5:00-6:00pm 2 Speakers: Jacqueline Carter, North…