RAPINOE
#01 March 2021
IMPACT
LEADING EDGE ADAPT AND SURVIVE
MANAGING CHANGE
DISRUPTION DRIVES INNOVATION
HOLLYWOOD V STREAMING ENCOURAGE FAILURE
TRUST YOUR TEAM
FUTURE TRENDS
INTEGRITY
EMBRACE REBELLION
ibyimd.org
Live. Learn. Play. It’s go time. Time to get yourself out of bed and get going, because the day belongs to those who claim it. It’s go time. Time to live, love, learn, teach, work and play on SA’s Bozza Network. It’s go time. Time to rewrite your story, stake your claim, or start that start-up. Time to slay, make your moves, and add your own unique flavour to the world. It’s go time. The time for waiting is over. The time for going is here.
*Based on MyBroadband 2020
[ Foreword ]
Welcome
O
n these pages, we intend to challenge prevailing assumptions, conventional wisdom, and business as usual. We also hope to inspire through portraits of extraordinary leaders, accounts of innovation and change, and breakthrough ideas. And we are doing this not for intellectual gratification, but rather with a relentless focus on impact, providing you, our readers, with actionable ideas and insights that help you transform organizations and contribute to society. There is no shortage of magazines for managers and leaders. How is I by IMD different, you might ask. Like our Swiss home, we encourage vigorous debate, a diversity of viewpoints, unyielding pragmatism, and a truly global reach. We don’t expect you to agree with everything you will read – in fact, if you do, we will have failed.
Illustration: Jörn Kaspuhl
Each quarterly issue will have a thematic focus. In this inaugural edition, a variety of contributors examine how the entertainment industry has fared during the pandemic. Our next issue will put a spotlight on mental health, wellbeing, and the science of stress, not merely as societal issues but as managerial challenges in the workplace. Leadership is about we and good business is about you. So, why the name I for our magazine? Because even the best teams and organizations rely on individuals to take bold action. Our cover star, Megan Rapinoe, assumed personal responsibility and took a knee in support of Black Lives Matter when doing so could have ended her career, as it did in fact for fellow athlete Colin Kapernick. That her actions have been embraced, and that they furthered her fame, should not detract from her courage.
But I is about more than individuals. Indeed, when my colleague Paul Strebel, an educator extraordinaire who has molded thousands of leaders over his illustrious career, speaks to newly recruited IMD faculty, as he does every year, he frames the magic that happens in an IMD classroom around five Is – interactive, international, integrative, innovative, and impactful. I by IMD packages that magic and brings it to you here, and via our interactive community online at ibyimd.org, where we will integrate theory and practice, passionately celebrate innovation, and above all focus relentlessly on impact – impact on you, your organization, and on society. We publish this inaugural issue almost exactly a year after much of the world went on lockdown. It has been a year of unspeakable hardship – over 2.5 million lives lost, hundreds of thousands of businesses destroyed, countless livelihoods upended, and still no return to normal in sight. Yet it has also been a year of unprecedented scientific achievement, solidarity both small and large, and wholly unexpected and quite radical innovation in the way we live, work, learn, shop, produce, serve our customers, and look after one another. We commence the analysis and debate over the short- and longterm implications of these changes in this issue, and they will feature prominently on these pages for quite a while.
David Bach, Dean of Innovation at IMD
March 2021 • I by IMD 1
[ CONTENTS ]
06
04 [ In good company ]
Big or loud? Jerry Davis explains why we need new ways to define corporate power.
06 [ Conversation piece ]
The recently appointed director of the Van Gogh Museum in Amsterdam, Emilie Gordenker, reveals how she found the positives in the pandemic to bring about change.
13 [ World view ]
Authoritarian regimes fared much better economically than liberal democracies during this year of lockdown. Arturo Bris sifts the evidence.
24 [ The number crunch ] 16 [ In profile ]
After developing a computer that defeated a world chess champion, Demis Hassabis is now using AI to tackle some of the biggest challenges in health.
18 [ In the mind’s eye ]
Charisma is not the most important quality when it comes to being an effective leader, says George Kohlrieser.
19 [ Cover story ]
46 2 I by IMD • March 2021
Radical protest was always the kiss of death for a sports personality, but now it can be a big money earner as major sponsors get on board.
COVID-19 devastated the sports industry, but a deep dive into the data reveals how some big-money leagues fared better than others.
31 [ The motivator ]
Yacht racer turned businessman, Mark Turner, explains why it is important to encourage failure in your team.
34 [ In focus ]
The Hollywood movie industry is in a tough battle with streaming rivals. Our blockbuster analysis examines what happens next.
40 [ New frontiers ]
The gaming industry is on a winning streak, thanks to lockdown. However, the rapid growth has also brought serious challenges.
46 [ The leading edge ]
Iris Zemzoum moved halfway round the world to take up a senior management position, but she tells how quarantine and three young children added extra challenges.
Photos: Glenn Copus, Steffen Höft, Van Gogh Museum, Amsterdam (Vincent van Gogh Foundation)
16
48 [ Managing change ]
Family businesses have traditionally found the necessary resilience to survive tough times, but the current crisis has tested even the strongest among them. We examine what needs to be done.
52 [ The big idea ]
Young people in Africa have lacked the educational opportunities to make it in the world of tech. Lindiwe Matlali is on a quest to change perceptions and broaden horizons.
62
55 [ The forecaster ]
Howard Yu takes the first of a regular look at the business trends and changes likely to arrive in the next few months. Think of it as a crystal ball in the boardroom.
Photos: Ainhoa Sanchez/Volvo AB, Ina Fassbender, John M. Lund Photography Inc via Getty Images (2), Illustration: Jörn Kaspuhl , Cover: Gareth Cattermole - FIFA/FIFA via Getty Images
58 [ Office life ]
31
Alyson Meister uses the latest research to tackle workbased problems in her regular series The Help Desk.
19
58 59 [ Thought experiments ]
In the post-pandemic world, every business sector will have a role to play in keeping us healthy, according to the latest research.
62 [ Counterpoint ]
The masters of Silicon Valley should not be judge and jury when it comes to free speech, argues Josef Joffe.
48 March 2021 • I by IMD 3
[ In good company ]
Big or loud? We need new ways to define where the power lies Tiny Denmark's largest company is as big as any non-state enterprise in China, while global 'giant' Netflix has fewer than 10,000 employees worldwide. The old corporate giants are like dinosaurs waiting to be wiped out by the nimble new beasts in the jungle, argues Jerry Davis
But what exactly is big about big business? Is Zoom a big business? Since the start of the pandemic, Zoom has been inescapable in the daily life of business and education, far outstripping competitors like Microsoft Teams, Google Meet, Facebook Messenger or Skype. Yet according to Zoom’s 2020 annual report, it had only 2,532 employees globally. How about Netflix? Also pervasive and even more global, with offices in 59 countries; yet Netflix has just 9,400 full-time employees. Perhaps “big” has outlived its usefulness as a metaphor for business. In the 21st century, size per se may be a less important source of power than the ability to project. Let’s call it loud business. When it comes to the corporation, there are many ways to be big: revenues, assets, profits, employees, market capitalization. Although these were highly correlated during the industrial era, they are increasingly divergent today. The table shows the five biggest employers in each of eight countries according to a 2020 study by Aseem Sinha and myself. Several things jump out immediately. We might have expected that the size of the biggest private companies would be proportional to the size of the country: giant countries such as China and India and Brazil would host giant domestic companies, whereas tiny countries, Denmark for example, would have tiny local companies. But that’s not the case. In fact, the biggest 4 I by IMD • March 2021
company based in Denmark is slightly bigger than those in China and India. (To be clear, the employment figures are global; ISS does not employ 10% of Denmark’s population. And the organizational boundaries of state-owned enterprises in China are complicated.) Countries differ dramatically in their ability to grow giant companies. We might also expect that the biggest local companies would be in the same industries around the world, but that is also not the case. India’s biggest businesses are in IT services. Germany’s are manufacturers. America’s are in retail. In lower income countries, banks are often among the biggest domestic employers, but there are also big local companies in meat (Brazil), cement (Nigeria), and instant noodles (Indonesia). Why is “big business” so different around the world? Consider an analogy: suppose we had asked what were the five biggest native mammal species in each country or the five tallest tree species. To understand them, we would turn to the features of soil and climate and geology and the other species in the ecosystem that enable large animal and plant species to thrive. Business also requires an ecosystem to support it. Creating an organization requires capital, labor, supplies, distribution, and methods of management within the enterprise. Crucially, the markets for each of these factors inherently depend on a country’s domestic institutions. Most countries in the world did not have a functioning domestic stock exchange before 2000, so if your business required a lot of capital to grow, you either needed rich friends or amiable bankers. If your business model relies on skilled coders, it helps to have a strong university system to prepare the labor force. A country’s product market regulation will grow different kinds of businesses depending on whether its priority is encouraging competition at home or breeding national champions for export markets. In combination, these factors will shape what kinds of
Illustration: Jörn Kaspuhl
P
opulist movements around the world are challenging the power of Big Business. The left sees monopolists overtaking industry after industry and crushing competition, while the right is incensed by tech giants exercising arbitrary control over political speech ‒ for instance, by de-platforming disfavored political leaders and their followers. Either way, the diagnosis is clear: when it comes to business, big is bad.
business grow big and how big they grow. In short, the national ecosystem shapes the kinds of big firms we see. But there is more: over the past three decades, each of the core factor markets in the business ecosystem have been transformed by information and communication technologies (ICTs). In the US, this has taken the form of financialization (a shift to market-based financing over bank-based lending across the value chain), Nikefication (outsourcing non-core aspects of business), Uberization (the use of non-employee contractors), and the advent of Amazon and others for distribution. If you want to start a business in the US today, all the components are available online, at least in principle, and it is possible to recruit capital, labor and supplies from around the globe. Consider this as the corporate equivalent of the meteor that changed the climate and killed off the dinosaurs: when core elements of the ecosystem change, then old species are wiped out and new ones arise. This also means that the sources of corporate power are different. In the last century power came from being big. Today being big is not necessarily an advantage and may be a disadvantage. Instead, the new source of power is being a gatekeeper, a term of art that figures centrally in the EC’s proposed Digital Markets Act. Cristina Caffara and Fiona Scott Morton define a gatekeeper as “an intermediary who essentially controls access to critical constituencies on either side of a platform that cannot be reached otherwise, and as a result can engage in conduct and impose rules that counterparties cannot avoid”. That is, the source of a gatekeeper’s power is not being big but being central in networks terms; standing between. And as Caffara and Scott Morton point out, being a “gatekeeper” depends crucially on a company’s
business model. Broadly, there are ad-funded digital platforms (Facebook, Twitter); matchmaking or marketplace platforms (Amazon, Uber, Airbnb); and operating system ecosystems (Apple’s Appstore; Android; Amazon Web Services). These provide different potential sources of power. Combined with our prior discussion of corporate ecosystems, this suggests that the biggest source of corporate power today is being a gatekeeper for one of the core business factor markets: capital, labor, supplies or distribution. Consider the reliance of Netflix on Amazon Web Services. According to the latest Netflix annual report: “Currently, we run the vast majority of our computing on AWS.” And the IPO prospectus for Doordash states: “We primarily rely on Amazon Web Services to deliver our services to users on our platform, and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, and results of operations.” Similarly, right-wing social media platform Parler disappeared for more than a month when AWS cut off its contract. This gives us a new perspective on corporate power. While Walmart might be big, Amazon is loud. ■ Jerry Davis is the Gilbert and Ruth Whitaker Professor of Business Administration and Professor of Sociology at the University of Michigan’s Ross School of Business and is a Fellow at Stanford University’s Center for Advanced Study in the Behavioral Sciences. He has published widely in management, sociology and finance and his current book project examines corporate power in the 21st century, and how to tame it.
Five biggest employers in countries large and small Brazil
China
JBS
230
BRF
108
ltau Unibanco
100
Banco Bradesco
99
Banco do Brasil
96
Graphic: Theresa Schwietzer
India
PetroChina Agricultural Bank of China Industrial and Commercial Bank China Petroleum and Chemical Ping An Insurance
Denmark
Germany
Figures in thousands
476
ISS
486
Volkswagen
665
473
Moller – Maersk
84
Deutsche Post
547
453
DSV
61
Robert Bosch
410
423
Carlsberg
41
Lidl GMBH
390
376
Danish Crown
23
Siemens
379
Indonesia
Nigeria
US
(employees)
Banking Manufacturing Retail Information Tech Construction
Tata Consultancy Services
450
Astra International
226
Dangote Cement
17
Walmart
2200
Quess Corp.
318
91
United Bank for Africa
13
Amazon.com
798
Cognizant Tech Solutions
lndofood Sukses Makmur
281
Bank Rakyat
60
Julius Berger
12
495
State Bank of India
257
Sumber Alfaria Trijaya
United Parcel Services
52
FBN Holdings
9
Kroger
453
Food processing
Infosys
228
Bank Mandiri
39
Flour Mills of Nigeria 7
Home Depot
416
Other
Petroleum Transport
March 2021 • I by IMD 5
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