Innholdsfortegnelse for Spring 2019 i Rotman Management

A: ATTENTION – Make it relevant, seize attention and plan for inattention Attention is the window of the mind. However, attention is scarce, easily distracted, quickly overwhelmed and subject to switching costs. Practitioners will often find that attentional issues have been overlooked in the design and implementation of traditional public policies. For this reason, when practitioners find a behavioural problem with attentional issues, it may prove more effective to design policy interventions that are more relevant, seize attention and, if this is not possible, think about how to plan for inattention. B: BELIEF FORMATION – Guide search, make inferences intuitive and support judgment While there is no such thing as too much information in a traditional public policy perspective, information overload has become a serious problem for the people inhabiting…

Dolly Chugh Associate Professor, Management and Organizations, Stern School of Business, New York University; author, The Person You Mean to Be: How Good People Fight Bias (HarperBusiness, 2018) ONE CONCEPT THAT I DISCUSS in my work is ‘ordinary privilege’. Think about an aspect of your identity that you rarely have to think about. For example, as a straight woman, I can go for months without ever thinking about that, because I am not discriminated against or put in danger due to homophobia and bigotry. I chat freely about my husband at work, my medical benefits are never in question, and being legally married was never something I had to fight for. That part of your identity is what I call ordinary privilege, and we can extrapolate this to different contexts.…

THE OPTIMAL ALLOCATION OF RESOURCES across agents is critical for economic outcomes, both at the level of the individual firm and of the entire economy. And yet, achieving this has proven elusive. An ongoing debate revolves around the claim that male managers obtain more resources than their female counterparts — a pattern labelled ‘the gender gap’. Many attempts to narrow the gender gap — ranging from greater disclosure to governance rules — assume that it reflects the personal bias of senior decision-makers, in particular CEOs. However, this premise has been difficult to test because it would entail eliciting CEO preferences and making a reliable connection between resource allocations and subsequent outcomes. We recently set out to tackle this challenge by studying and comparing two things: the personal backgrounds of CEOs…

I WOULD LIKE TO BEGIN THIS ARTICLE with a thought exercise. Think about something that you consider to be a constant in your life. It could be related to your business or your personal life, but it should be something that you almost take for granted because you know it’s always going to be there. Now imagine that you wake up tomorrow morning, grab your device to read the headlines, and this ‘constant’ has totally vanished from the world. It’s gone. Poof. And without it, there will be something very different about your day today. What does this little exercise do to you? Does it excite you? Does it instill panic? One thing is certain: This is happening more and more, and the examples span industries. I myself have seen…

1. What is our motivation for AI? Is it aligned with the best long-term interests of humanity? 2. What are our own biases? What ideas, experiences and values have we failed to include in our tribe? Who have we overlooked? 3. Have we included people unlike ourselves for the purpose of making the future of AI better? 4. How are the technological, economic and social implications of AI understood by those involved in its creation? 5. What fundamental rights should we have to interrogate the data sets, algorithms and processes being used to make decisions on our behalf? 6. When and why do those in AI’s tribes feel that it is their responsibility to address the social implications of AI? 7. Does the leadership of our organization and our AI…

Karen Christensen: How do you define a psychologically safe workplace? Amy Edmondson: Psychological safety is the belief that the environment is safe for interpersonal risk taking. In a psychologically-safe workplace, people know that their voice is both welcomed and expected. They know that they won’t be penalized for speaking up with work-relevant content of any kind — even if it entails bad news, a request for help or an admission of error. You have found that even in strong corporate cultures, pockets of both high and low psychological safety tend to exist. Why does that happen? AE: I think it’s because psychological safety is fundamentally an attribute of work groups — any interdependent unit that works together over time. The interpersonal climate in these groups is a very ‘local’ phenomenon:…

FOCUS #1: Improve access to capital. Consistently, women receive six to seven per cent of available venture capital, and the story is even worse for women of colour. The problem is not restricted to the U.S. The data indicates a $320 billion gap in terms of funding for small and medium-sized enterprises (SMEs) who have a woman on their founding team. We refer to this as ‘capital punishment’, and as a result of it, the World Bank and other developmental finance institutions have started to proactively move capital in this direction. Not surprisingly, as a result of the reality faced by women entrepreneurs, the goals in this arena are very conservative: We are hopeful that by 2025, one-quarter of all venture deals in the U.S. will have at least one…

Change is one of the few constants for every organization today. What are some of the key challenges it presents? One of the challenges — especially for organizations that have been successful — is just that: they have been successful. They’ve learned certain routines and they continue to go back to them. As a result, they engage only in incremental change. That works well when the world itself is changing incrementally, but in many industries today, that is not the case. As a result, we’ve got to un-learn what has worked for us in the past, and that requires developing new mental models and an understanding of how the world works — how all the pieces fit together. The core of the challenge is getting away from a mindset of…

BIAS 1: LOSS AVERSION. Some investors focus more on losing money even if the rest of their portfolio is up. This can result in your clients either taking on too much risk to recover losses or seeking an overly conservative investment strategy. Solution: Risk tolerance questionnaires can help you gather information about your client’s ability to deal with losses. Focusing on your clients’ investment goals can help manage risk without succumbing to the fear of loss. BIAS 2: DECISION FRAMING. Framing impacts decisions based on how information is presented. How a question is presented, the language used and amount of information can cause an investor to change their decision. Solutions: 1. Choice architecture: The order and layout of the options presented influences decision making. Simplify the presentation of options to…

OVEREATING, UNDER-SAVING, over-borrowing and under-exercising are just a few of the short-sighted behaviours that we are often guilty of. Now the bad news: Acting in our own long-term interest is only getting more and more difficult. Why? Because our world has become more hostile to our ability to make decisions. It is a world in which everyone wants something from us — our money, our attention, our time — and they are armed not with guns, but with our vices. Adding to the challenge is the sad fact that the way we have designed the world around us does not help us fight temptation or think long term. In fact, if an alien were to observe the way we have designed the world, the only sensible conclusion would be that…

Increasing economic inequality has emerged as one of the defining issues of our time. Describe how it is affecting people. Inequality polarizes populations and concentrates power, threatening social stability and democracy in both direct and subtle ways. Oxfam recently reported that 42 individuals now have the same wealth as the bottom 50 per cent of the world’s population. Furthermore, 82 per cent of all economic growth created in 2017 went to the richest one per cent of the population, while the poorest 50 per cent saw no increase at all. In the U.S., things have been even more extreme, with 95 per cent of the income growth between 2009 and 2012 going to the wealthiest one per cent. The U.S. is not even the most unequal country: Chile and Mexico…

WHILE THEY GO ABOUT THINGS in very different ways, at their core, every organization is actually in the same business: behaviour change. Whether it is a for-profit firm encouraging consumers to switch to its product; a government agency trying to get citizens to pay taxes on time; or a health agency interested in improving the consumption of medication, behaviour-change challenges abound. Many organizations struggle to make behaviour change happen due to a fundamental empathy gap. ‘Econs’ — as depicted in Economics textbooks — are hypothetical individuals who have well-defined preferences, are able to accurately predict the future consequences of their actions, have immense computational abilities and are unfazed by emotion. Humans, on the other hand, are cognitively lazy, impulsive, emotional and computationally constrained. The empathy gap occurs when organizations design…

How do you define a 360˚ Corporation? Nine years ago, I created a course at the Rotman School called “Corporation 360°”, because I wanted to take a hard look at the stakeholders that surround companies from every direction — all 360 degrees. Since then, my students and I have been thinking a lot about the role of the corporation in society, and what companies can do to deal with the trade-offs created by stakeholder needs that conflict with their bottom line. The fact is, meeting stakeholder demands requires actions that might compromise profits. Things like improving worker conditions, investing in environmental advances, creating talent pipelines for marginalized communities and putting an end to polluting activities are costly endeavours, in terms of time and money and in terms of organizational disruption.…

WHILE WE SELDOM THINK ABOUT IT, our life outcomes are powerfully determined by seemingly trivial, repeated acts. Our health, for example, depends on thousands of daily choices — to eat well and exercise regularly, to avoid smoking, and to take medications as prescribed. And yet, 40 per cent of premature deaths each year result from suboptimal behaviour in this domain: Tobacco is responsible for 435,000 of those deaths, while poor diet and physical inactivity account for 400,000. Cardiovascular disease — the leading cause of mortality — is largely treatable with anti-hypertensive medicines; but just one year after receiving a prescription, only about half of patients are still taking their medication as directed. Our bad habits run the gamit from health to personal finances. One in three American families has no…

ARTIFICIAL INTELLIGENCE (AI) TECHNOLOGIES have advanced rapidly in recent years, and as the technology continues to improve, it will very likely have a substantial impact on the economy with respect to productivity, growth, inequality, market power, innovation and employment. As a result, governments and organizations around the world have dedicated substantial resources to investing in the technology and preparing for its impact. Pessimistic views of AI’s impact on society are widespread. Public figures including Elon Musk and the late Stephen Hawking have warned that AI could lead to a handful of companies dominating society, few jobs for humans and increasing inequality. Vladimir Putin ominously predicted, ‘Whoever becomes the leader in this sphere will become the ruler of the world’. Among economists, Robert Gordon has a different view. Rather than worrying…

Resistance to change manifests itself in many ways, from foot-dragging and inertia to petty sabotage to outright rebellion. The best tool for leaders of change is to understand the universal sources of resistance in each situation and then strategize around them. Here are seven that I’ve found to be very common. Loss of control. Change interferes with autonomy and can make people feel that they’ve lost control over their territory. It’s not just political, as in ‘who has the power?’ Our sense of self-determination is often the first thing to go when faced with a potential change coming from someone else. Smart leaders leave room for those affected by change to make choices. They invite others into the planning, giving them ownership. Excess uncertainty. If change feels like walking off…

NUDGING HAS RIGHTFULLY EARNED ITS PLACE in public policy as an effective, efficient and relatively low-cost lever for addressing knotty challenges grounded in very human ‘irrational’ behaviour: Which message will encourage citizens to get out the vote or pay their taxes on time? What mix of social norms, commitment devices and prompts increases medication adherence? These kinds of behavioural interventions are primarily designed to achieve efficiency and cost savings within current processes and structures, through solutions to known, discrete behavioural challenges. Think of it as ‘process improvement’, nudge-style. Life, however, is full of complexity and adaptation that can’t be tested with a randomized control trial. While field experiments and pre-tests can bring us closer to the intricacies of real life, nudging’s natural habitat of well-defined, present-tense inputs and processes may…

Eileen Fisher is among the leaders who calls herself a ‘don’t knower’. She began her celebrated clothing brand in 1984 at the age of 34, when she didn’t know how to sew and knew very little about fashion or business. Today, her company operates nearly 70 retail stores, generating between $400 and $500 million in revenue annually. Among the things Fisher does know is what it’s like to feel unsafe to speak up. In school, she felt that speaking up meant risking criticism, humiliation and embarrassment; consequently, she felt it was “safer to say nothing than to figure out what you think and what you want to say.” Perhaps that’s why she has so consciously and carefully created an environment where employees feel safe speaking their minds. As a leader,…

How do you define a ‘challenge culture’—and why is it so important to have one? In a challenge culture, people are encouraged — even expected — to question the status quo and push back on long-held assumptions. Employees are not afraid to speak up or to question their bosses and peers, and they feel confident that they won’t face repercussions if they do. In today’s world, such a culture is essential to every organization’s survival. Only through questioning, pushback and debate can you remain relevant. Many people view ‘challenge’ as a negative word. What do you say to them? That is true, and it’s the reason I always put the term together with ‘culture’. In a challenge culture, questioning someone is intended to be a positive thing and discourse is…

What is a CAVE person? The acronym stands for Citizens Against Virtually Everything. It’s a term I first heard in the 1990s while consulting with a group of supervisors at a manufacturing plant. Metaphorically, it refers to people who resist any kind of change. These people bypass the ‘wait and see how it goes’ step and position themselves right away as anti-change advocates. As employees, they can have a toxic effect, poisoning the attitudes of co-workers and building a wall of resistance. For a change program to succeed, leaders have to address them and neutralize their negativity. What lies at the root of all the negativity towards change? For lots of people, change is something to be feared. The good news is, I have found that if it is well…

Describe the ‘modes of masculinity’ that have been at the heart of President Trump’s rise to power in the U.S. In recent years we have been witnessing a sense of entitlement among white American men — especially working-class evangelical Christians. These men have been asserting a brand of masculinity that they feel has been under attack for the past 40 years, as we have seen increasing gains socially, legally and in terms of policy for groups that were historically disenfranchised. While many people understand these gains as necessary improvements towards equality, this group of men has experienced them as an attack on their traditional role in society. I call it ‘the gender of Trumpism’. You have said that for these men, certain global economic shifts have been particularly painful. Please…

In a recent presentation you said: “I live in a world that wasn’t built for me.” What you did you mean by that? Basically, the world we live in — and most of the products and technology that we use — are built with a specific user in mind: The able-bodied individual. When I’m traveling or navigating physical environments, I am constantly encountering barriers because city planners or designers didn’t prioritize the inclusivity of these spaces for everyone. For example, I’ve seen elevators that are not designed to accommodate a wheelchair user because they’re either so tiny that I can’t even fit in or the buttons are so high that I can’t reach them. I always think, ‘How did someone believe that this was the right way to design this?’…

What are the most common misunderstandings you see in how organizations approach gender inclusion? The thing that comes to mind is the idea that you can accomplish transgender inclusion as a one-time deal. It has to be an ongoing process of introspection, and the organization has to be committed to evolving and changing over time. The other thing is that many people think it’s about assimilating into what they already have in place, in terms of structure. Though some trans people will be able to — and want to — assimilate into that structure, there are a lots who won’t want to or can’t, for a variety of reasons. That’s why the assimilation and accommodation strategy is a very limited one. One of your popular workshops——The Gender Audit——has helped organizations,…

1. PEOPLE ARE ONLY RATIONAL TO A CERTAIN EXTENT. We often assume—sometimes implicitly—that people balance the pros and cons and assess risks on the basis of all the available information, and thereby make well-considered and consistent choices. The behavioural sciences teach us that the choices people make are only rational to a limited extent. One example of this is that people are more sensitive to a loss than to a gain. As a result, they put in more effort and take greater risks to avoid loss than to win the same amount. People also follow certain rules of thumb or shortcuts in processing information. One example of this is the availability heuristic: for events that we can recall more easily—for example because they were distinctive or emotional or recently in…

THE POWER AND PULL OF THE MAJORITY is all around us, even if we are unaware of its potential influence. We may believe that we generally ‘think for ourselves’ and are persuaded only by strong arguments; but the fact is, when faced with the opinions of others, we often agree without a good argument — or any argument at all. We can even lose sight of what we believe in. Books like The Wisdom of Crowds have reinforced the assumption that ‘the truth lies in numbers’. The book properly points out the value of judgments by ‘the many’ and their superiority over the judgments of experts. What may be lost on the reader, however, is that the majority opinion is superior only in certain circumstances. Accuracy is more likely found…

Present-bias, or the tendency to over-weigh immediate gratification while under-weighing the long-term implications of a choice, is responsible for many errors in judgment. Specifically, present-biased thinking has been blamed for societal problems ranging from obesity to under-saving for retirement. Following are a series of nudges designed to promote future-focused thinking in order to reduce the pernicious effects of near-sightedness. CHOOSE IN ADVANCE. One means of reducing biases related to near-sightedness is prompting individuals to make decisions well in advance of the moment when those decisions will take effect. This strategy is impactful because of people’s tendency to make less impulsive, more reasoned decisions when contemplating the future than the present. Choosing in advance has been shown to increase support for wise policies requiring sacrifices, to increase charitable giving, to contribute…

AROUND THE WORLD, a growing number of organizations are embracing behavioural insights to design and enhance their products, policies and services. The challenge is this: Their leaders and workers are human, too, and are therefore influenced by the same heuristics and biases that they are attempting to address in others. In our work we have identified three core activities of policymaking and strategy-making in any industry: noticing, deliberating and executing. In this article we will focus on the first two stages — noticing and deliberating — and discuss some of the most important behavioural insights that have been discovered to date in each category. CORE ACTIVITY 1: Noticing Noticing involves the varied ways that information and ideas enter the agenda for organizations. Two of the most significant areas of bias…

Karen Christensen: You have said that the future of AI is being built “by a relatively few like-minded people within small, insulated groups.” Why is that such a big problem? Amy Webb: In any field, if you have a homogenous group of people making decisions that are intended to benefit everyone, you end up with a narrow interpretation of both the future itself and the best way to move forward. When we’re talking about a transformational technology like AI, it involves systems that will be making decisions on behalf of everyone, so it follows that a lot of people are going to be left out of those decisions. The way that these systems behave and make decisions and choices is going to exclude a lot of people. What is an…

Delicious, perfectly portioned and ready-to-cook meals delivered to your doorstep. Easy-to-use tools to significantly increase your retirement savings. Systems for de-biasing your hiring process. These ideas might seem unrelated, but in fact they are tied together by a common thread: they were all made possible by insights from behavioural science. Such innovations are possible when behavioural science is applied to companies’ three primary functions: • creating the best product or service;• reaching users who want that product or service; and• managing an efficient and ethical organization. In each of these processes, smart companies are infusing behavioural science to improve their bottom lines. It only took Blue Apron about three years to join the ranks of the rarefied, so-called ‘unicorns’ — start-ups valued at over a billion dollars. Driving this success…

IMAGINE A WORLD WHERE EVERY LEADER in every organization takes concrete steps to address the issue of gender inequality. That’s the world that Sarah Kaplan, founding director of the Institute for Gender and the Economy at the Rotman School of Management, is working towards with her team. When asked what it will take to fix the current situation — in which only 22 per cent of senior executives are female (many fewer are CEOs) and only six to seven per cent of venture capital funding goes to woman-owned businesses — Prof. Kaplan has a one-word answer: innovation. It will be next to impossible, she says, to make any further progress if we continue to do the same old things within the same old system. “We need to approach diversity —…

1. Do people fear they will be fired if they challenge the status quo or question ideas or plans too forcefully or too often? 2. Have you defined and distributed the ground rules for civil dialogue in your organization? 3. What qualitative skills are most important to your culture and business? How do you foster and encourage them? 4. Do you value listening? Do you practice listening skills? 5. Have you established channels and venues that provide regular opportunities for people to pose questions and make challenges to others at every level, including their bosses? 6. Are your people able to challenge their peers and colleagues? How? 7. Does the core management team consist of people who will challenge and question each other? Do they have a diversity of viewpoints…

Why is it such a great time to be a cognitive scientist right now? More than ever, people are talking about how the brain works, and everyone wants to understand how to change behaviour. As a result, the inner workings of the brain are no longer the purview of those trained in Neuroscience. Terms that were once considered esoteric, like amygdala and prefrontal cortex have become as commonplace as inflation and sustainability. Put simply, cognitive science has become accessible. This is a beautiful moment in time where the bridge between academia and the private sector is stronger than ever — where we can translate a theoretical understanding of the nuances of human behaviour into implementable solutions that influence how our society operates. As a scientist, it doesn’t get any better…

FOR YEARS, sustainability professionals — and the academics who study their work — have been answering some tough questions. Is there a business case? (Yes). Can we determine which social and environmental issues are most important to our business? (Yes). Is it possible to measure and report on sustainability practices credibly? (Yes). Can we deliver value to business and society? (Yes). Simply put, the evidence shows that companies generally perform better if they’re more sustainable. However, despite this progress, many sustainability professionals still struggle to access budgets internally — in particular, long-term funding for big, multi-year projects. The fact is that they may know where they want to go, but they’re short on capital — the fuel needed to achieve greater social and environmental benefit. In our research and consulting…

Describe how mindsets affect our everyday behaviour. Mindsets are our fundamental understanding of how human attributes like intelligence and personality work. The specific mindsets that I study fall along two dimensions. The first is ‘malleability’ — whether people believe that things like intelligence and personality are stable or fluid. Stanford Professor Carol Dweck’s terms for this are a ‘fixed mindset’ vs. a ‘growth mindset’. The second dimension of mindsets that I study involves how people think potential is distributed across the general population — whether they believe high levels of potential are constrained among a select few or are distributed more widely. How might mindsets explain why some people are more likely to confront everyday prejudice in the workplace? In my research with Prof. Dweck on mindsets and confronting overtly-biased…

TALL POPPY SYNDROME (TPS) is a term referring to flowers that grow higher than those around them and as a result, are cut down to size. Apparently, this is a fitting analogy for the Canadian workplace. A recent study by Thomson Reuters, Canadian HR Reporter, Viewpoint Leadership and Women of Influence reveals the true scope of the issue of women being ‘cut down’ at work — and the results should be a wake-up call for companies across the country. The Tallest Poppy report shows, in unprecedented detail, that many women are suffering severe psychological and emotional damage from their treatment in the workplace. The data is deeply troubling: Of the 1,501 respondents, 87.3 per cent felt that their achievements at work were undermined by colleagues or superiors. Respondents came from…