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#10 JUNE-AUG 2023

INCLUSIVE LEADERSHIP

SCENARIO CLOSING THE PLANNING GENDER GAP

AI: OPPORTUNITIES AND DANGER

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FOLLOW THE FIVE Cs RACIAL EQUITY – GETTING IT RIGHT

CREATING SYNERGY FROM DIVERSITY THE RISE OF THE ‘DESI’ CEOs

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[ Foreword ]

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Take a deep dive and refresh your thinking

earning to be an inclusive leader is a lifelong project.

Growing up in India – with degrees in engineering and management, much like the two Desi CEOs interviewed in this issue of I

by IMD – I was aware of how inequity can be piled up as with the caste system and the imperative for diversity. I “woke up” to the limitations of my worldview with a failing grade in my first graduate essay at Vanderbilt.

The professor excoriated me for the use of words such as “mankind”. I was puzzled.

My fellow student Mary Watson compassionately explained to me the biases that are embedded in language and took me along to a Gloria Steinem book signing. Fast forward a few decades, and I’ve been subject – in a very welcome way, I must say – to boot camps on various aspects of intersectionality by my teenage daughter, who is now herself off to college.

It’s always great to have a deep dive when you want a quick refresher or when you’re just wading into a topic of interest. If that topic is “inclusive leadership”, you are in luck because this issue of I by IMD provides just such a deep dive. We have a great mix of articles – easy-to-use frameworks, tested tools, expert opinion, and sound advice – that will quickly get you up to speed.

Illustration: Jörn Kaspuhl

IMD professor Alyson Meister opens with a case study of Wonya Lucas, the CEO of Hallmark Media, to walk us through a simple, insightful, and actionable framework for becoming a more inclusive leader.

How do you know if your organization is doing well in fostering inclusiveness? Silke Muenster and Alexander Fleishmann suggest a simple question: “Would employees recommend your firm as an inclusive place to work?" They describe the development of the inclusiveness Net Promoter Score (iNPS), its pilot implementation, and its embedding at Philip Morris International. Clearly, a “next practice” tool that other organizations can learn from.

Shereen Daniels, an expert on systemic racism, explains the crucial difference between racial equality and racial equity. Our new

columnist Shelley Zalis, founder and CEO of The Female Quotient, provides practical advice on how leaders can rewire their organizations to make them more inclusive.

In their insightful article on how to be inclusive by design, Professor Vanessa Patrick and Senior Lecturer Candice Hollenbeck note the trap of designing for the “target market” that is often full of taken-for-granted assumptions that can be self-defeating.

They advocate focusing on the “edge customer” – someone overlooked or invisible in the marketplace – just as OXO did in designing kitchen tools for arthritic seniors that led to solutions that appeal to the broadest possible market.

Once you’ve had your deep dive into inclusive leadership, you might want to explore the other features in this issue.

Generative artificial intelligence (AI) is another topic of focus.

IMD professor Amit Joshi provides insights on how organizations should be thinking about deploying generative AI. Jérôme Duberry of the Geneva Graduate Institute notes in his article that diversifying the data engineers working on AI is a key imperative.

And IMD professor Öykü Işık cautions businesses to ensure that ethical considerations guide their use of this new technology.

Our regular columnist Jerry Davis provides an insightful look into the fallacy of counting the countable with outdated tools. Many devices for making sense of contemporary organizations and industries, he notes, date from the Great Depression and so it is about time that a new information infrastructure is put in place to make organizations more transparent and accountable. ■ Happy diving!

Anand Narasimhan, Dean of Research June-Aug 2023 • I by IMD 1

[ CONTENTS ] 04 [ In good company ]

It’s time to create better data maps to navigate our increasingly complex technology-driven business world, argues Jerry Davis.

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#10 JUNE-AUG 2023

[ Inclusive leadership ]

How do you become a truly inclusive leader? What action must you take and what are the traps to avoid?

Our 38-page special report guides you through the complexities of diversity, equity, and inclusion.

FOLLOW THE FIVE Cs RACIAL EQUITY – GETTING IT RIGHT CREATING SYNERGY FROM DIVERSITY THE RISE OF THE ‘DESI’ CEOs

ibyimd.org 10_IMD_2023_Edition_10_JUNE_2023_COVER_Final_Eyes.indd 5

05.06.23 09:11

Cover picture: Unsplash

07 Alyson Meister, Professor of Leadership and Organizational Behavior at IMD, explains the importance of what she calls the ‘five Cs’ of inclusive leadership.

11 The Inclusion Net Promoter Score, developed by IMD, is a simple but effective tool to measure your organization’s progress in becoming more inclusive. Alexander Fleischmann explains how it works and talks to Silke Muenster, Chief Diversity Officer at Philip Morris International, about her company’s success in using it.

16 Leaders must acknowledge and act decisively to dismantle the apparatus of systemic racism that still plagues organizations, writes Shereen Daniels.

19 Leaders need to come from more diverse backgrounds if we are to achieve equity in the workplace, Black Lives Matter co-founder Ayọ Tometi tells Martina Fuchs.

2 I by IMD • June-Aug 2023

21 Don’t sideline older workers, writes

28 There are clear benefits for companies

George Kohlrieser, because combining

that embrace the principles of inclusive design.

Vanessa Patrick and Candice Hollenbeck offer a step-by-step framework to ensure your products and services meet the needs of all consumers.

22 Vanessa Moungar, Chief Diversity and

32 Banning salary histories may not help level the playing field between men and women.

It’s time for organizations to take bolder action on pay, argues Raina Brands.

25 Rather than focusing on our return on investment, let’s focus on a return on inclusion, says new columnist Shelley Zalis.

35 Corinne Post and Jordan Borisuk explode

26 The I reader offers a wide range of

36 Business leaders of Indian origin

their wisdom and experience with the skills and agility of younger people is a winning combination.

Inclusion Officer at LVMH, tells Heather Cairns-Lee how luxury brands can ‘walk the talk’ when it comes to LGBTQ+.

books recommendations by IMD professors to help you get a deeper understanding of the issues surrounding inclusion.

27 Be inspired by some pearls of wisdom taken from a book of quotations compiled

by IMD’s Dominique Turpin.

some common myths surrounding gender equity.

are starting to make a real mark globally.

Anand Narasimhan examines the reasons

behind the rise of the ‘Desi CEOs’.

42 Daan van Knippenberg explains why it’s im-

portant to allow your teams to ‘agree to disagree’ if you want to create synergy from diversity.

Illustration: Jörn Kaspuhl (2), Photos: Laurence Griffiths - The FA/The FA via Getty Images, O'Shea Tometi

INCLUSIVE LEADERSHIP

SCENARIO CLOSING THE PLANNING GENDER GAP

AI: OPPORTUNITIES AND DANGER

20 CHF

44 [ Leadership challenge ]

In an I by IMD interview, Ukrainian human rights lawyer Oleksandra Matviichuk implores business leaders to stop taking their democratic freedoms for granted and to look beyond the blind pursuit of profit.

46 [ AI report ]

How can executives leverage generative AI tools without overshooting or falling foul of the pitfalls?

Amit Joshi offers expert guidance.

48 Öykü Işık suggests four ways to ensure that

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your AI products and tools are ethical.

50 We need to ensure that the introduction of

AI benefits us all, and the risks do not undermine our rights and freedoms, argues Jérôme Duberry.

53 [ Conversation piece ]

Olympian Rebecca Wardell tells Heather Cairns-Lee how a 20,000 km bike ride taught her the importance of setting goals, teamwork, and managing her mindset.

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Photos: Wikipedia, Fenty Beauty, Hallmark Media, Sergei Gapon/AFP via Getty Images

[ Business ethics ] 56 In the age of social media, Michael Skapinker

explores how organizations can manage the tension between freedom of expression and corporate interests and values.

[ CEO dialogue ] 58 Mostafa Terrab, CEO and Chairman of the

Moroccan fertilizer group OCP, explains to IMD President Jean-François Manzoni why he believes people are the company’s most valuable resource.

62 [ World view ]

Japan’s in need of another economic miracle.

Radical changes are needed if it is to avoid a downward spiral, argues Arturo Bris.

44 64 [ Human resources ]

Christian Schmeichel, Chief Future of Work

28 70 [ The forecaster ]

Officer at the business software group SAP, explains to Anand Narasimhan what his company’s experience can teach others.

The best ‘future-ready’ companies are always poised to pivot quickly to take advantage of the latest trends, writes Howard Yu.

68 [ Sustainability ]

72 [ Preview ]

Organizations need to take actions on both strategic and leadership dimensions of sustainability transformations to achieve impact, say James Henderson, Julia Binder, and Knut Haanaes.

Join us in September when I by IMD will offer insights and analysis on how leaders can create sustainable organizations to succeed in turbulent times.

June-Aug 2023 • I by IMD 3

[ In good company ]

The perils of navigating the economy using out-of-date maps Outdated tools make it hard to answer even basic economic questions, much less create thoughtful policy, argues Jerry Davis. It’s time to create a better data architecture for mapping our increasingly complex technology-driven business world

What happens when the tools and categories you use for your map no longer work? For much of the 20th century, you could reasonably describe the US economy using a simple set of nested categories; industries consisted of firms that operated establishments (factories, offices, stores) staffed by employees who engaged in occupations.

Today, not so much: when crypto exchange Coinbase went public in 2021, its prospectus noted that it did not have a physical headquarters for its (minuscule) workforce because it was a remote-first company, and declared its industry to be “business services, not elsewhere classified”.

We still use tools created during the Great Depression to map an economy in which work-from-home contractors directed by placeless “algos” contribute to virtual goods sold on global app stores.

Our outdated tools make it hard to answer even basic questions, much less create thoughtful policy. It’s time to create a better data architecture for mapping the 21st century economy – particularly when it comes to employment.

4 I by IMD • June-Aug 2023

Seeing like a state

Twenty five years ago, Yale’s James C Scott published a remarkable book, Seeing Like a State: How Certain Schemes to Improve the Human Condition have Failed. The book described high modernism, where governments aim to make societies more legible and easier to manage by imposing simplified categories on a complex world. States like to have a synoptic view – like a London Underground map – and often seek to impose a map that does not fit.

Sometimes these mapping efforts are benign – say, naming roads and numbering houses that make it easier to deliver mail. Other efforts to impose a map have been disastrous, from “urban renewal” that bulldozed thriving neighborhoods for highways to Stalin’s forced collectivization.

Scott describes an early version of high modernism with the birth of German forestry science in the 18th century. One of the important sources of royal wealth was ownership of forests, and forestry science was developed to help estimate how much board wood and cord wood could be produced each year. The forest contained much beyond this, but monarchs were most concerned with the revenue-producing parts of their holdings, and not so much the flowers, fruits, shrubs, mushrooms, and rodents. Of course, a forest would be a lot more efficient if it included only cash crops like Norway spruce or Scotch pine, planted in even rows and columns – easier to plant, manage, harvest, and count.

On the other hand, a monocrop production forest is far more susceptible to disease and blight, which provides a telling analogy for other high modernist efforts.

Illustration: Jörn Kaspuhl

I

t is hard to know where you are going if you don’t have a decent map – either a physical map, or a mental map based on experience. First-time visitors to London can be forgiven for wondering why there are so many “High Streets” in the same city, or how they wound up in Westminster or St John’s Wood when they thought they were in London. The London Tube map – stylized, simplified, and necessarily inaccurate – turns out to be an indispensable guide for getting around a charmingly idiosyncratic city.

Human cognition at Walmart vs Amazon

Those who design our world often aim to make it legible and easy to navigate. A typical Walmart store contains 142,000 different products on its shelves, and yet most shoppers can find what they are looking for thanks to the intuitive layout of the store, with different sections for dairy products, men’s clothing, sporting goods, electronics, and so on. This is high modernism in action.

Contrast this with an Amazon warehouse, which is a riot of items with no obvious categorization in place. As Amazon describes it: “Instead of storing items as a retail store would – electronics on one aisle, books on another – all of the inventory at Amazon fulfillment centers is stowed randomly. Yellow-tiered ‘pods’ stack bins full of unrelated items, all of them tracked by computers. This counterintuitive method makes it easier for associates to quickly pick and pack a wide variety of products.”

Information and communication technologies (ICTs) mean that the warehouse doesn’t need a map readable by humans. Technology has made a map superfluous – as if the German production forest had lapsed back into a jungle.

Mapping the economy

The same process has happened to the economy as ICTs reshuffle the basic categories we use to create our economic maps. Government efforts to map American industries date back to the Napoleonic Wars and the initiation of a census of manufacturing establishments. But our contemporary mapping system was created during the Great Depression, when the need for actionable data to guide economic policy was evident.

For information about corporations, the big breakthrough was the passage of the Securities Exchange Act of 1934, which created the Securities and Exchange Commission (SEC) and empowered it to require listed corporations to disclose balance sheets and income statements annually to investors and the broader public – the origin of the Form 10K we all know and love today. Three years later, the Central Statistical Board launched a committee to create a system of industry categories, which led to the creation of the Standard Industrial Classification (SIC) system, launched in 1939 and updated regularly until 1987. The same year, the US Employment Service published the first Dictionary of Occupational Titles (DOT), classifying occupations based on extensive fieldwork.

might imagine that these companies are in the restaurant industry, or at least restaurant-adjacent. But Compustat classifies them as “Web Search Portals and All Other Information Services”, where they join Bumble (dating), Qualtrics (online surveys), and Buzzfeed (viral content – don’t ask).

Meanwhile, Apple is “Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing”, Netflix is “Video Tape and Disc Rental”, and Amazon is “Electronic Shopping and Mail-Order Houses”. Not exactly wrong, but not very helpful either.

‘We still use tools created during the Great Depression to map an economy in which workfrom-home contractors directed by placeless ‘algos’ contribute to virtual goods sold on global app stores’ Tech firms, particularly platforms, just don’t fit the category schemes of the SIC and NAICS system, and “platform” is not really an industry. Basic ideas like industry concentration don’t scan for these companies – they are clearly upending how competition works, but not in ways contemplated by our old system.

Work and employment

The difficulty is especially acute when it comes to employment. We know surprisingly little about the American workforce. Companies that list shares on the stock market have to disclose a vast catalog of financial information every year, detailed in income statements, balance sheets, letters from management, and endless footnotes. What do they tell you about the people who work there (and who are not top executives or board members)? Until recently, two things: how many employees they have in total, and how many are union members. In recent years, we also got to know what the median annual compensation was (on the proxy statement), and a bit about the company’s employment philosophy (in a mostly uninformative section of the annual report called “Human Capital”).

The SIC system was replaced by the North American Industry Classification System (NAICS) in 1997, although SIC codes are still in wide use today. The DOT was replaced by the Occupational Information Network (O*NET) in 1998. But despite valiant efforts to stay up to date, there are some basic ontological issues with our categories. Moreover, the fact that several diverse and often uncoordinated government agencies are responsible for collecting, cataloging, and sharing economic data means that standardization is often low.

What if you wanted to know how many contractors and temporary workers are retained by the company? No dice. In 2019, it was revealed that Alphabet had substantially more temps, vendors, and contractors (TVCs) than employees, but this information only came out due to a leak. Given the minuscule (reported) workforces of younger tech companies, it’s a safe bet that large sections of the tech economy’s employment are effectively invisible. How about turnover rates, investments in training, or safety records? Nope. Without a mandate, we have no real way to find out.

What, exactly, is an “industry” today? DoorDash is a food delivery platform that dispatches drivers, and Olo is an online ordering and payment platform that conveys orders for dine-in and takeout customers. You

Of course, the COVID-19 pandemic and the large-scale move to workfrom-home has encouraged more companies to consider switching even more work from employees to contractors, and the revolution under-» June-Aug 2023 • I by IMD 5

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