Dialogue Review Issue7 March 2015 by LID Business Media

Leadership 56

MAR/MAY 2015 | dialoguereview.com

The blueprint for sculpting your senior management team Special report 62

Exclusive coverage from leading thinkers at the Drucker Forum Interview 68

Change maker Nilofer Merchant heralds a workplace revolution

Your health: a double-edged sword For every medical breakthrough there is a new global health challenge, and the impact will be felt by business leaders PAGE 28 Work imitating art? 74

alternative investment 80

StRategic thinking 87

global “WARNING” 94

London’s V&A Museum holds business and innovation stories for creative minds

We invest in crowdfunding, giving financial power to the people

Just as the market landscape changes, so must our ideas about strategic leadership

Sustainability strategy: CSR experts debate the risks posed by the environment

Immediate impact, growing advantage. At A.T. Kearney, we pride ourselves on our uniquely collegial culture and care passionately about our work and our people. We offer our clients a range of global capabilities anchored in our heritage of essential rightness. The same promise we make to our clientsâ&#x20AC;&#x201D;immediate impact, growing advantageâ&#x20AC;&#x201D;we offer to our people. Working together, we drive immediate results and help build lasting, transformational advantage. Consulting Magazine has recently named A.T. Kearney as one of the Best Firms to Work For 2014 and honored the firm with an Achievement Award for Excellence in Diversity. For more information about A.T. Kearney and to read some of our latest thinking, please visit www.atkearney.com.

A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.

contents/FOCUS

Revolutionizing medicine through technology

With adequate support from governments, innovation in technology has the potential to solve global health problems

Leading Alzheimer’s expert Murali Doraiswamy discusses the latest breakthroughs in the battle to defeat the disease

A focus on cognitive health could make a tangible difference to the workplace of the future

Defusing the dementia time bomb in the workplace

Battling Alzheimer’s disease to protect productivity

Trust me, I’m a drugs company In an exclusive interview, David Epstein, division head of Novartis Pharma urges drug companies to become more transparent and collaborative

Incentives to cure Ebola

David Ridley, faculty director of Health Sector Management at Duke University on accelerating the pace of medical breakthoughs

Dialogue | Mar/May 2015

Comfortable being uncomfortable What are the lessons business leaders can learn from the accelerating change in the global healthcare arena?

contents/FEATURES

We asked a group of CEOs to share their secrets on managing egos and nurturing collaboration within the C-suite

David Woods reports exclusively from the 2014 Global Peter Drucker Forum, with insights from Clayton Christensen, Gary Hamel, Rita Gunther McGrath and Tamara Erickson

Sculpting the senior management team

Nilofer Merchant

The “Jane Bond” of innovation takes time out from writing her book, to discuss her concept of Onlyness and what it means for businesses and individuals

The great transformation

Creative perspectives

The simple act of looking at things differently can lead to innovative ways of thinking and working, so we have journeyed to find inspiration in London’s iconic V&A Museum

Crowdfunding

Financing projects via crowdfunding involves choosing the right model, researching competitors, planning a campaign and keeping your crowd enthused

Strategic leadership

The changing market landscape reflects a shift from earlier eras, yet much of leadership thinking is steeped in industrial era ideas. Just as the market landscape has changed, so must leadership practices

Environmental risk

In the December issue of Dialogue, we reported that environmental risks were the most worrying to leaders. Two leading environmental thinkers repond to the issue through social media

Dialogue | Mar/May 2015

ership,

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Editor’s letter

Michael Canning

When business problems can be identified with analytics, creative solutions can be proposed. But data is much more than just a ‘shiny new toy’ heralded at HR conferences

At the start of a new tax year, we take stock of the global business stories hitting the front pages of the international press

Books & apps

This issue our expert reviewers give their thoughts on MY STEAM the latest books on ENGINE IS communication, BROKEN organizational development and visual thinking

DR MARK POWELL + JONATHAN GIFFORD

AN INSPIRATIONAL MANIFESTO FOR COMPANIES TO MODERNIZE AND PREPARE FOR BUSINESS IN THE 21ST CENTURY

“This book is full of passion and offers important messages on organizational change through building an extraordinary culture that will drive long-term success. My Steam Engine is Broken provides a map for executives seeking to lead their organizations through the challenges of today and tomorrow.” Johan C. Aurik, Managing Partner and Chairman of the Board, A.T. Kearney “This book is not for the faint-hearted. It is no less than a Luddite charter, promoting the complete destruction of traditional command and control structures as a necessary precursor to embedding the creativity, innovation and connectivity required in organizations suited to the new age of ideas. Bracing stuff!” Peter Rawlins, Founder, Rawlins Strategy Consulting and former Chief Executive, London Stock Exchange “This is a book that calls on leaders to put on their overalls, roll up their sleeves and start loosening the bolts of their organizations. It’s a book that invites bravery and imagination to rethink organizations in a way that will make them fit for the future and fit, crucially, for the most talented young people to join and thrive in.” Tracey Camilleri, Associate Fellow, programme director, The Oxford Strategic Leadership Programme, Saïd Business School, University of Oxford “In order to create the workplaces that make the most of the human capacity to learn and create, we have to abandon command and control management. This change will require a leap of faith, jumping from the familiar practices that we know don’t work to a world of uncertainty and experimentation. Leaping into uncertainty is never easy, but if enough people jump, more will follow.” Karen Phelan, management consultant and author of I’m Sorry I Broke Your Company

My Steam Engine is Broken is an important management book to help companies and managers achieve future success. It comes with a strong warning about the urgent need for change – but also with practical solutions to help companies transform into 21st-century organizations – and is packed with original research and interviews with companies and their leaders. £16.99 IN UK ONLY

Dave Ulrich

Our regular columnist looks at the comparison between workplace collaboration and choreographing a flash mob

The state of the global economy

The typical structure of today’s corporate organization was essentially invented in the 19th century and based deliberately on the military’s “command and control” model and on the hierarchical pyramid of the Catholic Church. As such, it is outmoded and not equipped to deliver corporate success in the 21st century.

My Steam Engine is Broken calls on a fresh generation of organizational leaders to stop trying to fix a broken and outmoded structure, and to create new, successful working structures that work with, not against, people’s natural modes of behaviour. The authors explore the way in which the Steam Engine organizational model is no longer offering job satisfaction to its members precisely (and paradoxically) because members are not being enabled, and are often being prevented, from delivering what the organization most needs from them: self-direction, innovation, leadership and heartfelt commitment.

Taking the

organization from the industrial era to the age of ideas

05/11/2014 11:09

Dialogue | Mar/May 2015

Spark!

Game Changers; female leaders; business lessons from Coco Chanel; Richard Branson on the power of mentoring; and financial predictions for the 2015 economy

David Woods examines the inextricable link between the health of populations and the wealth of nations

DR MARK POWELL + JONATHAN GIFFORD

ford

MY STEAM ENGINE IS BROKEN

ner firm ociate ity ere ship

contents/OPINION&REGULARS

William Cohen

One of Peter Drucker’s first students explains why personal integrity should be something every manager has, because without it a leader has no legitimacy to lead

Your Dialogue

Why managers should get away from the herd mentality; The ‘why’ of a brand is more important than the ‘what’; and is ‘not knowing’ the healthiest attitude for business leaders?

Vietnam

Karina Robinson

Remembered for its extended periods of social and diplomatic turbulence, Vietnam’s recent exponential growth has postitioned it as one of the 11 most promising emerging markets

Big corporations are sitting on massive piles of cash and rather than returning the spoils to investors, it’s high time employers invested in their people, increasing consumption and prosperity

GAME CHANGERS DON’T FIT IN BOXES eg.1 NEWS HEADLINES NEW TECHNOLOGY DISRUPTING TRADITIONAL BUSINESS GLOBAL ECONOMY DEMANDS A DIVERSE AND FLEXIBLE WORKFORCE

Where are our Game Changers?

We have NO box to put them in

COMPETENCY FRAMEWORK EXPERIENCE QUALIFICATIONS

CEO | G. CHANGER

COMPETENCIES

Visit www.eg1.co.uk for a copy of ‘The DNA of a Game Changer Report 2015’

MAR/MAY 2015

contributors

David Ridley David Ridley is the Dr and Mrs Frank A Riddick Associate Professor of the Practice of Business and Economics. He is also the Faculty Director of the Health Sector Management program at Duke University’s Fuqua School of Business. In his research, David examines innovation, location, and pricing, especially in healthcare. To encourage innovation in medicines for neglected diseases, David, with Henry Grabowski and Jeffrey Moe, proposed a priority review voucher prize. The prize became law in 2007. David teaches courses on healthcare, economics, and strategy.

Chris lowney Chris Lowney chairs the board of Catholic Health Initiatives, one of the US’s largest healthcare/ hospital systems with some $ 19 billion in assets. He is a one-time Jesuit seminarian who served as a Managing Director of J.P. Morgan & Co in New York, Tokyo, Singapore and London until leaving the firm in 2001. He is the author of four books. was named a finalist for a 2003 Book of the Year Award from ForeWord magazine and has been translated into 11 languages. His latest work, Pope Francis: Why He Leads the Way He Leads, has been called, “an invaluable gift,” and “a book for the ages.”

Murali doraiswamy Murali Doraiswamy is Professor of Psychiatry and Medicine at Duke University and a leading neuroscience researcher at the Duke Institute for Brain Sciences. He directs a clinical trials unit focused on healthy aging, cognitive enhancement and mental wellbeing. Dr Doraiswamy serves on the World Economic Forum’s Global Agenda Council for Brain Research and as the brain health adviser for AARP. He is co-author of The Alzheimer’s Action Plan. Dr Doraiswamy frequently lectures on neuroscience applications for businesses and leadership.

nilofer merchant Nilofer Merchant has been nicknamed “The Jane Bond of Innovation” because of her ability to guide companies through impossible odds. She has launched more than 100 products, netting $18B in sales. She’s worked for companies like Apple, and Autodesk, and start-ups in the early, early days of the Web. CNBC has called Nilofer a visionary. Her ideas are shaping the future of many organizations. Thinkers 50 shortlisted her in 2013 as a “Future Thinker” one should pay attention to…and she was named the #1 person most likely to influence the future of management.

Chris buckingham Chris Buckingham is a crowdfunding researcher, who has worked on wide-ranging campaigns related to everything from the arts to zoos. He has contributed to more than £2 million worth of crowdfunding activity and is in the process of publishing the first book to cover all five models in the ecosystem. With a background in the management of the creative and cultural industries, he was one of the early users of crowdfunding and still finds the sector fascinating as more applications and models emerge. He lectures at Winchester School of Art and University of Winchester on this, and related topics.

jeff kuhn Dr Jeffrey Kuhn is the founder and CEO of GrowthLeaders, a global strategy and leadership development consultancy that develops strategic leaders with the mindsets and capabilities to transform the enterprise and unlock market growth. He is an acclaimed author, business advisor, and speaker. He consults with senior business leaders worldwide to elevate their thinking during times of transformation and capitalize on emerging growth opportunities. He is the author of the forthcoming book Beyond the Mirage: Escaping the Trap of Today to Create the Growth of Tomorrow.

Dialogue | Mar/May 2015

EDITOR’S LETTER

David Woods

Editor-IN-CHIEF

Health versus wealth Have you accidentally started flicking through the wrong journal? Surely you wanted to read about business and not healthcare. What does healthcare have to do with business leadership? Do I, the editor, in fact, need to see a doctor, for somehow commissioning six features on illnesses, health policy, pharmaceuticals and eldercare? What could a wide and general topic such healthcare possibly have to do with your business and profit margins? Read on, because the two are inextricably linked. Business leaders frequently talk about health. “Healthy business”; “a healthy economic outlook”; or a “healthy attitude to management” - so much so it’s almost become a cliché. Economists regularly question which country is the ‘sick man of Europe’ (it’s looking like France this month...). We talked about the global recession, comparing it to a pandemic. But the role that health plays in business is much more than just the source of unorginal metaphors. In tangible terms, our globally-connected business world not only spreads financial epidemics but real diseases. Ebola has made global news as the disease spreads in West Africa and beyond, but behind the headlines, chronic health issues such as diabetes are increasingly putting pressure on publicly-funded (or employer-funded) health schemes. There has been a resurgence in developed countries of diseases like measles and influenza because of controversy over the safety and efficacy of innoculations such as the triple MMR vaccination. These diseases seriously afflict less developed nations. And while patients in emerging markets face exorbitent costs for drugs, in developed countries there is danger of antibiotics resistance due to over-prescribing - people are wrongly demanding penicillin for colds and flu, which are caused by viruses. These issues impact your aging workforce in so many ways: stress, absence, health insurance costs, preventing international assignments. I could go on and that’s before I even start to talk about the role of the Fortune 500 pharmaceutical companies and the healthcare providers such as the NHS in the UK that employ the same number of people as the population of some countries. The people in your organizations; the talented individuals who could grow your business and cure the ‘economic illness’ the world faces, care more about physical health than a business prognosis. According to pollsters ICM, ahead of the UK’s general election this year, UK voters (31%) rated healthcare as their priority in deciding who to vote for in the election, over jobs and wages (14%), education (8%) and the government deficit (8%) @davidpaulwoods david.woods@lidpublishing.com

The health of our industries is dependant on the health of our global population. Health is intrinsically linked to wealth.

Dialogue | Mar/May 2015

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93% of businesses say mentoring can help them succeed Sage In the December 2014 issue of Dialogue we revealed the findings of our groundbreaking survey into Game Changers in association with global consultancy eg1. The findings delved into the psyche of the people set to reinvent the workplace of the future. It ascertained three common characteristics of Game Changers. Game Changers have a genuine belief in their ideas and will not be knocked off-course until they are able to make a difference; they do not tend to push for their own personal gain because they have a belief and need to make a change and pursue an idea for the greater good of their organization; and they are different from leaders as they focus on the power of the idea and the leader is about the power of the individual. Since the launch of the findings, national and international newspapers and magazines have picked up the results, leading to a global dialogue on the topic. To read the full report of the qualitative and quantitative study, visit http://dialoguereview.com/ download-dna-game-changer-report/

Leadership and learning are indispensible to each other John F Kennedy

82%

of senior leaders think executive use of social media helps establish industry leadership Think Progress

Women own more than 9.1 million US firms, which employ nearly 7.9 million people and generate $1.4 trillion in sales, according to statistics from a 2014 Womenable report commissioned by American Express OPEN Women entrepreneurs have come a long way since 1975 when a group of women entrepreneurs in Washington DC, joined together to remove obstacles and create opportunities for other women entrepreneurs across the country, forming the National Association of Women Business Owners (NAWBO), which celebrates its milestone 40th anniversary in 2015. Founding President Susan Hagar said at the time: “Get a seat at the table or build your own table, and make sure to include other women at that table.” Today, NAWBO has 60 chapters and more than 5,000 members nationwide to help women entrepreneurs of all sizes and sectors to grow to the next level.

87% of the world’s working population are disengaged Gallup

Earlier this year, Dialogue was the media partner for Virgin Limited Edition and Purple Cubed’s Mentoring Matters event at The Kensington Roof Gardens in London Launching the event, Virgin’s CEO Richard Click here to watch the Branson, video of the Mentoring Matters event, with explained how exclusive insight from the spirit of Richard Branson mentoring should be embedded within UK businesses. He said: “The missing link between a promising business person and a successful one [in my opinion] is mentoring. It is something very close to my heart [but] giving people advice on how they can best achieve their goals is often over looked in businesses.”

+ WATCH THE VIDEO

Jo Harley, managing director of Purple Cubed, added: “Despite Sir Richard’s comments, mentoring is still underutilized in organisations with just 22% of UK businesses offering some sort of mentoring opportunity for their people. A shortage of information on the subject, as well as misconceptions around time and resource, are viewed as a barrier to adoption. However with 98% of employees believing mentoring is necessary for career progression; it’s time employers move this low-cost development tool up the priority list.”

Without leadership, command is a hollow experience

Eric Shinseki, former chief of staff at the US Army

To watch some videos from the event, visit: www. dialoguereview.com/ dialoguetv

Pivotal role of Future Leaders According to PwC’s 2014 report, “Next Generation Diversity: developing tomorrow’s leaders”, millennial women, born between 1980 and 1995, are more highly educated and are entering the workforce in larger numbers than ever before. They have high expectations both of themselves and their employers. They expect to be able to live balanced lives and will actively seek international assignments. Moreover, if the prediction in another PwC report: 2013 Chief Executive Study: Women CEOs of the last 10 years is correct, then, by 2040 women will make up about a third of new CEO appointments. Millennial women (currently aged 20-35) are therefore critical to female progress. The younger ones will become these CEOs, the older ones will develop them. Women in the City’s Future Leaders Award plays a pivotal role in identifying these women, raising their profile and giving them a platform from which to effect change. This year Women in the City introduced a new Award to join its long-established Woman of Achievement and Future Leaders Awards. The “Encouraging Equality” award, developed in partnership with Women in Facilities Management, was launched in response to the 2015 International Women’s Day theme “Equality for women is progress for all”. Recognizing male gender diversity champions, the award finalists and winner will be announced in early May shortly after nominations open for this year’s Future Leaders Award. Last year 100 women were nominated. Ten candidates were interviewed with the winner chosen from five finalists. Now in its 6th year, this year’s Finalists and Winner will be announced at The Future Leaders Symposium held on July 10 2015, when attendees will hear from a panel of four experts speaking on the topic of The Digital Leader.

Dialogue is pleased to announce two additions to its editorial board. Irene Dorner, former CEO of HSBC and Tom Albanese, CEO of Vedanta Resources, will join the steering committee for Dialogue’s editorial progress with immediate effect. The board meets twice every year to decide topics for coverage in the journal, to continue to inspire and challenge leaders the world over. Liz Mellon, chairman of the editorial board, said: “I am delighted that Irene Dorner and Tom Albanese have agreed to join the Editorial Board. They observe and act in the global business world first hand as CEOs of two of the world’s largest companies. The insight and experience they bring will be invaluable in continuing to steer Dialogue towards discourse around critical topics of importance to us all.” If you would be interested in joining the Dialogue editorial board, drop us a line at your.dialogue@lidpublishing.com

“Anyone can hold the helm when the sea is calm” Latin writer

The most courageous act is still to think for yourself. Aloud. Coco Chanel

45%

of global business leaders believe there are five or fewer Game Changers in their organization

As a marathon runner, I’ve always loved a challenge. The bar I set for myself and my team is high. Deloitte explicitly links the firm’s business success with wider social progress. It is one of the ways we attract and retain the best talent – our people find a deeper sense of purpose and meaning in what they do Cindy Hook, on being appointed CEO of Deloitte. She is the first woman to take the helm of the ‘big four’ accounting firm.

Dialogue/eg1 research

CFOs have a relatively optimistic view of the current state of the US economy while having a pessimistic view of the global economy, according to the CFO Alliance Its 2015 Sentiment Report of 605 CFOs revealed that 61% of respondents characterize the current state of the US economy as strong, in stark contrast to December 2013 when almost 70% of 2014 CFO Sentiment Study respondents characterized the state of the US economy, going into 2014, as weak. But more than 70% characterize the state of the Global Economy as weak.  But CFOs were more optimistic about the the industries in which their companies operate, as well as the expectations of their own company’s financial performance in 2015.

Just under two thirds (64%) categorize the current state of the industries in which they operate as strong and 79% expect to see higher top line revenue in 2015 – up from the 66% who reported anticipated higher revenues in last year’s survey. Two thirds expect to see higher earnings in 2015.

opinion

From collaboration to choreography

C Michael Canning CEO, Duke Corporate Education

ompanies comfortable working within an ecosystem of collaborative partners are positioning themselves to offer customers greater flexibility and value. The deal between Apple and IBM to collaborate on the next generation of enterprise apps was the biggest story of 2014 for the tech world, according to mobile analyst Horace Dediu. By joining forces, Apple and IBM can energize IBM software and iPad sales but also the entire enterprise software market, as reported by AW Kosner on Forbes.com (December 2014). We see similar examples in our work with companies which need to expand globally through joint ventures or partnerships in emerging markets. Collaborating with organizations with different cultures and operating models, over which you have little direct control, is set to become a key strategic capability. Add to this the move to open-source problemsolving and innovation, and it is clear that today’s world requires looser boundaries and closer collaboration. In the past, many organizations moved to a matrix to better position themselves for opportunities and customer solutions; decades later, they are still trying to figure out why it “isn’t working”. CEOs discuss how their companies have “perfected the art of working in silos.” Leaders point out that collaboration across business units remains challenging because people are not properly incentivized and no single business unit will bear the burden of investing in collaboration. As leaders, we know collaboration is essential. So, why is it still hard for us to achieve? Leadership expert Mario Moussa, co-author of The Art of Woo (2008), shared with me his take: First, everyone has their own goals, which promote focus but also tunnel-vision and blind spots to situational opportunities. Second, everyone suffers from ego-centric bias, assuming others are like them, when perspectives and preferences vary. Each of us pursues our particular ends, resulting in “disconnect”. Third, people inhabit “micro-cultures.”

A finance executive speaks a distinct language, exhibits distinct behaviours, and is motivated by distinct values, as do marketing executives, scientists, and engineers. We not only have to learn to adapt to other country’s cultures, but also to departmental ones. Finally, people are reluctant to speak their mind. It’s almost impossible to achieve a frank discussion, with egos left at the door, because people fear retribution or looking stupid. Challenges are personal as well as structural. It is tough to rewire ourselves, especially when our old ways have led to personal success. And working collaboratively is difficult because we come from different cultures, generations, genders, and approach problems with our own default thinking. It is unconscious and insidious, as Sheila Heen, co-author of Thanks for the Feedback (2014), explains. We need to look with fresh eyes to notice how things really work, and find opportunities in our differences. The importance of collaboration, and the scale at which it must be achieved, has increased as we’ve moved from matrix to eco-system. We are just beginning to work with firms to develop a meta-capability we call “choreography”. In practice, this “dance-writing” requires fresh ways of influencing which rely on a deep appreciation of context and the ability to bring together and energize collectives that reside outside the leader’s sphere of direct control. This is more akin to choreographing a flash mob than a ballet; many diverse individuals tune in to one another through an emerging design and real-time collaboration. It becomes more complex as the number and diversity of the players go up, but the concept is that, through the principles and frame of choreography, leaders overcome some of their own stumbling blocks and harness and direct the energy of collectives to achieve better results at scale. As the scale of the challenge shifts from matrix to eco-system, we must move from collaboration to choreography. To keep pace we, as leaders, must move faster, push ourselves harder to overcome obstacles, and develop new habits.

Dialogue | Mar/May 2015

We hope you’re enjoying this issue of We are continually looking at efficient and original ways to improve your reading experience of the journal. This year, we have made some innovative changes to our website www.dialoguereview.com, which will make it easier for you to find the articles and issues that are of most interest to you, access or download them quickly and allow you to share the thoughts of our world class authors with colleagues and contacts.

Access Dialogue on website: You can now access the digital version of Dialogue easily from our ‘Archive’ tab. Find this under ‘The Journal’ section of the homepage. When you click through, simply select the device on which you would like to view the publication, follow the simple instructions and enjoy.

No fuss: once you have entered your email to download an issue, we will never ask you to do so again, making downloading future issues a quick and straightforward process. This means you can access new and old issues just by the a click of a mouse.

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‘Sharing is caring’: If you enjoy social media, you can easily let your community know what you’re reading. The website is packed with links to various social media platforms so you can be the one to spark the global dialogue on the issues we discuss.

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Get online; get social; get involved; it’s your Dialogue

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OPINION

Analyzing the analytics agenda

A Dave Ulrich Rensis Likert Professor at the University of Michigan and partner at the RBL Group

t every HR conference during the past year, the importance of analytics has taken centre stage. Many hope analytics will be a “shiny new toy” that will vault HR professionals into their desired strategic role. Nobody can disagree with the concept of using data-based decision-making. But let me contribute a few thoughts on what is needed for HR analytics to become integral to HR’s value-adding contribution to talent, leadership, and capability. First, collect data about data. I was at a conference recently where a presenter stated that, without better data, HR was aimless. I asked him: “What data do you have that shows that data improves HR decision-making?” He was advocating, hypocritically, for better use of data, without supporting data. Proponents of HR analytics should conduct analysis to show HR decision-making is improved with analytics.

Quantitative statistics do not tell the full story Second, effective analytics does not start with data but with a clear description of a phenomenon. In HR, this is how to help an organization succeed through its talent (people), leadership, and capability (culture). When statistics became a popular science in the 1930s, a criticism was “dust bowl empiricism” where datasets were analyzed using statistics, without theory. Scholars learned that theory should drive data, not the other way around. Today, The Cloud and big data provide another level of information, but increase the danger of returning to dust bowl empiricism. HR’s ‘theory’ is the business challenge of delivering talent, leadership, and capability. Without a deep appreciation of these business issues, HR professionals may collect data that is not relevant. In one case, a team

Dialogue | Mar/May 2015

of HR analysts created a model that predicted, with high accuracy, which senior managers were at risk of leaving. But regrettable losses within the company were less than 2% and turnover of key talent was not within the top five business priorities. Realizing the value of analytics requires understanding of the business context and the choices in which HR can intervene to drive value. Analytics is not an end in itself. Third, recognize that there are many forms of data. Data found in spreadsheets can be analyzed statistically to discover correlations, paths, and patterns. But qualitative insights can be equally valuable. Empirical analysis solves puzzles; qualitative observations deal with mysteries. Both are viable targets of HR analytics. Puzzle-solving requires becoming an analyst who scrutinizes data to find trends; mystery-investigation requires becoming an anthropologist who observes what is not obvious and asks questions about what might be missing. The latter should anticipate what might happen in future, not validate and replicate what has already happened. Finally, HR analytics cannot be isolated within HR; customers want integrated solutions. HR is becoming more connected to marketing, finance, information, and other functions and HR analytics should become part of an integrated solution to solve business problems. When business problems can be identified, creative solutions may be proposed and, through collaborative analytics, more granular, solution-orientated information generated. HR analytics offers the prospect of HR becoming a discipline with an equal voice in business dialogues; dialogues in which our involvement was unimaginable 15 years ago. But, for this voice to be credible, HR professionals must develop a deep understanding of business so they can address and solve relevant problems. Let’s bring to the table rigorous analytical insights about talent, leadership, and capability, and do so in the right way.

INFOGRAPHICS

The state of the global economy at the dawn of the new financial year

Japan

s you read this, the popping of champagne corks ringing in 2015 will probably be a distant memory and colleagues and acquaintances might just have stopped wishing you ‘happy new year’. New year’s resolutions are a thing of the past for most people as well. But at the start of a new tax year from April, here’s our round up of the business and international relations stories making headlines in the global press, which will provide you with some some food for thought in coming up with your new tax year resolutions...

Japan could see some “concrete movement” in its real economy in 2015, an economic adviser to Japanese Prime Minister Shinzō Abe said in January, adding that inflation expectations have been rising under the Bank of Japan’s monetary stimulus. The Japanese economy will show a powerful upward trend this year, added Etsuro Honda, a University of Shizuoka professor and a prominent outside architect of Abe’s reflationary policies. The real GDP growth rate was likely to turn positive sometime in the first half of this year, he said. Bank of Japan has set an 2% inflation goal, which is predicted to be realized in early 2016.

source: Biznews.com

Dialogue | Mar/May 2015

INFOGRAPHICS

Egypt

first class

The UK’s recovery is secure and will continue at a good pace in 2015 even if growth is likely to be a bit weaker than 2014, economists predicted in one of their most optimistic assessments since the financial crisis. Of 90 economists surveyed by The Financial Times, 77 thought that “decent” expansion rates would endure another year with only 10 expecting a slowdown to a “disappointing pace of growth”.

In a bid to refloat Egypt’s economy, its president Abdul Fattah el-Sisi is building a second Suez Canal. Officials say it will double the capacity of the existing waterway and almost triple revenues in less than 10 years, from $5.3bn (£3.5bn) in 2014 to $13.2bn in 2023.

source: Suez Source: Financial Times Annual Survey of Economists

$8.5bn raised for canal

Canal Authority

expansion project

China The global economy, slowed by stagnation in Europe and Japan, is being further hampered by China’s decelerating growth. The Chinese economy grew 7.4% in 2014, its weakest performance in nearly a quarter-century. And its growth is forecast to slow even more over the next two years. (source: Yahoo)

Dialogue | Mar/May 2015

$13.2bn projected revenue by 2023 (up from $5.3bn)

! 19

INFOGRAPHICS

Brazil Soccer’s world governing body FIFA has set up a $100 million World Cup Legacy Fund for Brazil, aimed at sports facilities, youth and women’s football, as well as medical and health projects. FIFA President Sepp Blatter pledged, two years ago, to invest some of the revenue from the 2014 World Cup into grassroots programs in the South American country, which spent approximately $15 billion organizing the World Cup. Spending on the Rio de Janeiro 2016 Olympics is expected to top $15 billion. source: Business Insider

Greece A demonstration was held outside the Acropolis Museum in Athens in January to demand the return of the Parthenon Marbles, also known as the Elgin Marbles, from the British Museum in London. The sculptures, which used to adorn the Parthenon Temple for 2,000 years, were removed in the early 19th century by the 7th Earl of Elgin, Britain’s ambassador to the Ottoman Empire at the time. Greece has fought for generations to have the marbles returned and the candle-lit vigil included politicians from all sides. Source: Euronews

The US

More than a quarter (26.9%) of the words in the 2015 State of the Union address by US president Barack Obama, were dedicated to the topic of foreign policy.

By contrast, he only devoted 13.9% of his first official State of the Union address in 2010 to that topic.

In the wake of the 9/11 terrorist attacks, George W. Bush dedicated 74.3% of his first official State of the Union address in 2002 to foreign policy.

Jeffrey Cohen’s 1995 study of Cold War State of the Union addresses found that, on average, presidents spent 40% of their addresses on foreign policy.

source: The Washington Post

20 Dialogue | Mar/May 2015

INFOGRAPHICS

Germany Ten years ago, Germany was often called “the sick man of Europe” because of its failure to adjust successfully to external challenges. Today, in a slow-growth, high-unemployment European continent, Germany’s economic performance stands out. The results are even starker for youth unemployment, which in Germany is 7.4% compared with more than 25% in France and more than 43% in Italy. The average youth unemployment rate across the EU is more than 20%. source: The Australian

Singapore Singaporeans young and old must take care of one another and not allow the generation gap to cause friction, according to Prime Minister Lee Hsien Loong. Citing a trend of poor relations between the elderly and the younger generation in Japan, he said this serves as a “cautionary tale”. Japan is grappling with a rapidly aging population. One in four Japanese are aged 65 and older. In Singapore, the ratio rose from one in nine last year to one in eight this year. “Japan’s young people are unhappy they have to pay for pensions and medical care for the elderly, at the expense of their own financial security,” said Lee. source: singapolitics.sg

+43%

+25%

Average youth unemployment rate across the EU

+20% +7.4%

India India ranks 85 out of 178 countries on the global Corruption Perception Index this year. India has marginally improved its ranking on the global Index this year, on the back of prosecutions of high-level officials and hope that the new leadership will reduce corruption, Transparency International said on Wednesday morning.

India’s two-point improvement (on a total possible score of 100) did not count as a “significant change” unlike that in countries like Egypt, Jordan and Afghanistan. With a score of 36, India now ranks 85 out of 178 countries, with countries such as Sri Lanka, Thailand and Burkina Faso for company. Denmark ranks first, as it did in 2013, while Somalia and North Korea share the bottom spot. India is ranked better than all its South Asian neighbours except Bhutan. Source: The Hundu

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LEADERSHIP FOR WHAT’S NEXT Duke Corporate Education (Duke CE) is a top global provider of learning and development solutions. We are redefining education in order to help companies around the world achieve lasting results. In today’s unpredictable, volatile and interconnected world, we believe that leaders are the greatest levers for positive change. As the very foundations of organizational stability are being shaken, business challenges are becoming more fundamentally human. Companies are continuously reorienting to new business models, value propositions, and key capabilities required for success. As they do so, they are learning that leadership is more important than ever before.

We get leaders ready for what’s next.

www.dukece.com

GUEST opinion

The power of

personal integrity William A Cohen

eter Drucker felt that personal integrity should be a part of everything a manager does, and that without it, a leader has no legitimacy to lead. Personal integrity frequently plays a major role in a professional becoming a leader, it is important as a basis for all of Drucker’s views on leadership and management. I used to tell the following story, about myself, in the third person using the fictitious name “Herb”: As a new US Air Force lieutenant, I served as a navigator on a B-52 nuclear bomber. Among my responsibilities was the programming and launch of

illustration: Ben Tallon

Although followers will forgive a leader much, they will never forgive them a lack of integrity the two air-to-ground “cruise” missiles called “hound dogs.” The missiles were new and there were still many problems with them and few had much success in simulated launches and graded impacts. For a few months, these simulated launches didn’t count. But once they did, they would have a

major effect. Those who achieved good scores were promoted. Those who did not were held back. Now let’s talk about “Herb”. Herb’s five crewmates were all far more experienced than he was. They were more senior in rank and were combat veterans of both the Second World War and the Korean War. Herb was fresh out of flying school. He had never been in combat, nor even served on an aircrew before. The period of learning had expired. While on alert, Herb’s aircraft commander called the crew together. “When we fly our first training mission after alert, we will have missiles that will actually count for the first time,” he said. “We’re not going to debate this. We’re going to cheat to make sure we get reliable scores. All I want to know is how to do this.” The senior navigator who was also the bombardier responded: “That’s easy,” he said. “Don’t follow the missile needle. I’ll figure out an adjustment for the ballistics, and I’ll “bomb” the target using my radar. All you have to do is to follow the bombsight’s needle. The radar site that scores impact will not know that we’re actually bombing the

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GUEST opinion

target. No one will know.” Herb was shocked. He had been taught that you do not lie, cheat, or steal, or tolerate anyone that does. Some classmates terminated their own careers for the ideal of honour and integrity. Honour and integrity were considered more important than success, and were not to be compromised, under any circumstances. After a week of ground alert, Herb’s crew had three days’ rest. These were stressful for Herb. He was new to the crew and the squadron, but he had heard rumours that cheating sometimes occurred. Now he was being ordered to do it with the very missiles with which he had been entrusted. He talked it over with other more experienced officers. They advised him not to “rock the boat”. They told Herb this sort of thing happened. If he refused to do this, they said, it would likely end his career. Herb had worked long and hard to join the air force. He had studied hard for an appointment to West Point and, with difficulty, managed to graduate. Herb had spent a year in navigation school, six months in bombardier school, attended survival training, and completed several months of B-52 flying training. It had taken six years altogether. How could he let it all slip away for this “small act” which was apparently generally accepted? When Herb’s crew met to plan the mission, he asked to speak to his aircraft commander privately. Herb told him: “If you want to cheat, that’s up to you. But find a new navigator, because I’m not going to do it.” Herb’s commander was furious. Herb was left literally shaking in his boots, thinking that his hard-won career was at an end. After trying unsuccessfully to convince Herb to cheat, his commander slammed the door and left. Herb knew of no other profession that he could take up to support his family, and there was a recession, so jobs were

The missiles were reliable. Herb didn’t know if he were skilled, lucky, or whether his more experienced crewmates had found a way to fool him and cheat anyway. One thing Herb did know. He knew how far he would go for what he believed to be right. He would go all the way. Out of 200 officers in his squadron, Herb was one of only three to become a general. I believe what Herb, or rather I, did then helped me immensely over the years and it still affects my actions today. Had it ended my career then and there, it still would have been worth it for this priceless knowledge about myself. Over the years, I have worked with many leaders within, and outside of, the military. Some have demonstrated great personal integrity and gone on to great things. Others have demonstrated integrity and it has cost them their careers. And yes, some people without an ounce of integrity have been promoted. But as I’ve heard Drucker say, although followers will forgive a leader much, they will never forgive them a lack of integrity. In the words of William Shakespeare (from Hamlet): “This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.”

Integrity is a basis for all Drucker’s views on leadership

Dialogue | Mar/May 2015

US Airforce lieutenant William ‘Herb’ Cohen

scarce. The commercial airlines had long since stopped using navigators, so even this wasn’t an option. An hour or so later, Herb’s commander was still angry when he said he wanted to speak to Herb again, alone. But he conceded, “We’ll do it your way. Though those missiles better be reliable.” “I’ll do everything possible to make them so, but I won’t cheat,” responded Herb.

William Cohen was Peter Drucker’s his first executive PhD graduate of the program he developed. His books have been published 23 languages. Five of his books distributed to universities throughout China and Hong Kong. As a speaker, Cohen has spoken on five continents, and executives from more than 50 foreign countries have attended.

COUNTRY FOCUS: VIETNAM

Vietnam: Exotic growth

Vietnam

Population:

89.7

million (UN, 2012)

Capital:

Hanoi

Vietnamese

...Area:

sq miles

(329,247 sq kM)

Major languages:

127,123

Vietnam

Major RELIGION:

Life expectancy:

73 years

ontinuing our investigations into the Next 11 emerging economies, our journey this month takes us to the Asian Nation of Vietnam. Having been part of Imperial China for more than a millennium, Vietnam became independent in AD 938. The country expanded into Southeast Asia, until the Indochina Peninsula until it was colonized by the French in the 19th century. The country faced more than 100 years of ongoing conflict, which culminated in the Vietnam War. The war ended with a North Vietnamese victory in 1975. Vietnam was then unified under a communist government but remained impoverished and politically isolated. In 1986, the government initiated a series of economic and political reforms which began Vietnamâ&#x20AC;&#x2122;s path towards integration into the world economy and, in 2011, it had the highest Global Growth Generators Index among 11 major economies. However, the country still experiences high levels of income inequality, disparities in access to healthcare, and a lack of gender equality.

77 years Buddhism

source: UN

Vietnam has made significant advances in the development of robots, such as the TOPIO humanoid model.

GNI per capita:

US $1,730 source: World Bank, 2013

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COUNTRY FOCUS: VIETNAM

Vietnam

Timeline Vietnam is now one of Asia’s most open economies: two-way trade was valued at around 160% of GDP in 2006, more than twice the contemporary ratio for China and over four times the ratio for India

source: Vietnam Vrooooom, CNN

The socialist-orientated market economy is the official title given to the current economic system in the Socialist Republic of Vietnam. It is described as a multi-sectoral market economy orientated towards the eventual and long-term development of socialism where the state sector plays a decisive role in directing economic development source: Michael Karadjis. “Socialism and the market: China and Vietnam compared” (2013)

1858 French colonial rule begins. 1950 Democratic Republic of Vietnam is recognized by China and USSR. 1954 Vietnam is split into North and South at Geneva conference.

1957 Beginning of Communist insurgency in the South. 1963 US enters Vietnam War.

1973 Ceasefire agreement in Paris, US troop pull-out completed by March. 1976 Socialist Republic of Vietnam proclaimed. 1994 US lifts its 30-year trade embargo. 1995 Vietnam and US restore full diplomatic relations. Vietnam becomes full member of Association of Southeast Asian Nations (Asean). 1998 Economic growth slumps in the wake of the Asian financial crisis. 2004 First US commercial flight since the end of the Vietnam War touches down in Ho Chi Minh City. 2007 Government approves a $33bn plan to build a high-speed rail link between Hanoi and Ho Chi Minh City in the south. 2008 Vietnam launches first communications satellite from French Guiana.

Vietnam’s rapid growth from the extreme poverty of 1986 has given rise to western consumerist habits, especially among the new rich of Vietnam, opening the gap of social inequality and increasing inflation to 12%, after it had recovered to 4%.

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2012 Vietnam surpasses Brazil to become the world’s largest coffee exporter. 2013 Economy grows by 5.14% in first three-quarters of year, marking return to growth after years of stagnation. Source: BBC

focus Revolutionizing medicine through technology Battling Alzheimerâ&#x20AC;&#x2122;s to protect health text and productivity Defusing the dementia time bomb in the workplace Trust me, Iâ&#x20AC;&#x2122;m a drugs company Creating market incentives to conquer Ebola Becoming comfortable with being uncomfortable

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focus

A Healthy outlook? It sometimes feels as if every medical breakthrough brings with it unwanted side effects for global health. Life-threatening illnesses such as polio are arguably a thing of the past. People live longer but an aging population, brings with it a growth in dementia cases. And as new drugs have been developed to make conditions like HIV almost as manageable as diabetes, the antibiotics we depend on to treat illnesses are becoming ineffective. Who will solve the healthcare problems facing the world? Governments? Pharmaceutical companies? Cinicians? Employers? Over the next few pages a cross section of the worldâ&#x20AC;&#x2122;s leading doctors, campaigners, pharmaceutical business brains and commentators address these challenges.

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Revolutionizing medicine through technology With adequate support from governments, innovation in technology will fast-track individualized treatment for inherited diseases, gather vital health data, prevent, track and manage future pandemics and solve global health problems, writes Vivek Wadhwa. Illustration: AndrĂŠ Bergamin

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Hardly a week goes by without the announcement of a major scientific breakthrough in healthcare technology or genomics, but my prediction is that 2015 will be the year in which technology takes baby steps towards transforming medicine. The technologies that make this possible are advancing at exponential rates; their power and performance are increasing dramatically even as their prices fall and footprints shrink. For example, a year ago, an edition of The New England Journal of Medicine (March 6, 2014) detailed how human cells can be genetically engineered to make them resistant to the virus that causes AIDS. A week earlier, the journal published a finding that analyzing fetal DNA in a pregnant woman’s blood was a more accurate, and less intrusive, way of screening for Down’s syndrome and other chromosomal disorders than methods such as ultrasound imaging and blood tests.

Genome analysis is already being used to guide the treatment of cancers of the brain and the breast. And early triumphs are being seen with rare inherited diseases, which together afflict more than 25 million people in the US. Genomic strategies, driven by the plummeting cost of genome sequencing, have led to the identification of the genomic defects for more than 5,000 of the inherited diseases caused by mutations in a proteinencoding gene. An intense four-year research programme (costing more than $400 million) at the Center for Mendelian Genomics, is working to find the genomic cause of the remaining 2,000– 4,000 rare genetic diseases. We may be predisposed to certain diseases because of our genes, but it is not only genes that determine our health. It is also our lifestyle, habits, and environment. These may cause genes to be switched on and off and even altered. There is still a lot to be understood about what

Governments need to keep investing in research

technology for healthcare Here are some of the technologies that entrepreneurs can build; their development and roll-out needs to be accelerated: 1. Patient identification and tracking systems. Just as marketers are using social media, mobile phone logs, and search data to keep track of people and send them targeted advertisements, technology can be developed to track the spread of disease and identify patients. It can keep track of who has been in contact with whom, ask how they are doing, and monitor their movement. 2. Education and communication. Mobile apps can help guide public health measures, educate patients, and provide guidance to care givers on prevention and cure. Billions of people worldwide now have mobile phones. Soon they will have internetconnected smartphones that can display video and run artificial intelligence–based apps. Just as the XPRIZE Foundation launched a $15 million prize for a digital tutor that can educate a child — without a teacher — to read, write and perform arithmetic, Silicon Valley can create technologies that provide accurate and timely information to people who are closest to the frontlines of pandemics. 3. Better and faster detection. Sensors and microfluidic-based devices can facilitate the rapid testing of disease at the point of care. Orasure Technologies,

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for example, has rapid diagnostic tests to screen for HIV and HCV and is currently exploring the feasibility of developing one for Ebola as well. BioFire Diagnostics and Nanologix are adapting their existing blood and respiratory products to test for infectious disease. These companies will benefit from an emergency-use authorization that the FDA recently issued which allows them to test their technologies in the field. Nanobiosym is developing one of the most promising technologies of all — a product called Gene-Radar, a portable nanotechnology platform that can rapidly and accurately detect genetic fingerprints from any biological organism. Anita Goel, Nanobiosym founder and chief executive, believes that technologies such as this will provide the best hope for addressing global pandemics. 4. Big data analysis. Just as airlines mine travel data to predict which flights are going to be full and to set airfares, data scientists can mine travel, epidemic, and passenger-load data to determine the probability of a passenger’s being a disease carrier. If we know that flight X has Y% of passengers from affected countries in West Africa, for example, we can use these data to better predict the spread of the epidemic and to determine where to focus efforts around containment, prevention, and treatment.

was once-called “junk DNA” — which is now known to contain important control mechanisms over the bits we recognize as genes. And then there is the microbiome – an ecosystem of micro-organisms that live on, and in, the human body. So a lot more data are needed and much more research and analysis needs to be done. The good news is that other technologies are also rapidly progressing which will facilitate this. With the cost of genome sequencing dropping to affordable levels, there will soon be genome

data available for millions of people. Additionally, the smartphones we carry are capturing information about our lifestyle and habits, location, and activity levels. Wearable medical devices, which many companies are developing, will record our vital signs such as temperature, blood oxygenation, and heart rhythm. When you combine these data, you gain the ability to analyze swiftly the correlation between our genome, habits, and disease—exactly what is needed to develop individualized treatments for disease.

CASE STUDY Kanav Kahol, an assistant professor in the School of Biological and Health Systems Engineering in Arizona State University returned home from the US to New Delhi, India, in 2011. Kahol noted that despite the similarities between most medical devices in terms of their computer displays and circuits, their packaging made them unduly complex and difficult for anyone but highly skilled practitioners to use. In addition, they were incredibly expensive, costing tens of thousands of dollars each. He knew that the sensors in these devices were commonly available and inexpensive, usually costing only a few dollars. He believed he could connect these to a common computer platform and use computer tablets to display diagnostic information, thereby reducing the cost of the medical equipment. He also wanted to repackage the sensor data to make them intelligible to technicians with basic medical training — the frontline health workers who do the tasks of physicians in places where doctors are in short supply. Kahol and his Indian engineering team built a prototype device called the Swasthya Slate (“Health Tablet”) in less than three months, for a cost of $11,000. This used an off-the-shelf Android tablet and incorporated a four-lead ECG, medical thermometer, water-quality meter, and heart rate monitor. They enhanced this with a 12-lead ECG and sensors for blood pressure, blood sugar, heart rate, blood haemoglobin, and urine protein and glucose. In June 2012, they sent this device to 80 medical labs for testing, which reported that it was as accurate as the medical equipment they used — but suitable for remote and rural areas, because it was built for rugged conditions. By January 2013, Kahol’s team had incorporated 33 diagnostic tests, including HIV, syphilis, pulse oximetry, and troponin (relating to heart attack) into the Swasthya Slate and reduced its cost to $800 per unit. They also built a variety of artificial intelligence–based apps for health workers and started testing these in India. In Muktsar Punjab, the number of antenatal care visits increased from 0.8 to 4.1 per mother after the Swasthya was deployed there. The blood pressure and urine protein sensors allowed for the diagnosis of preeclampsia, which

is responsible for 15% of maternal mortality in India. A year earlier, a total of 250 mothers had been screened for preeclampsia, and 10 had been confirmed to be preeclampsic. Because the detection was very late in the pregnancy, eight of these mothers died. After the introduction of the Swasthya Slate, 1,000 mothers were screened during their third trimester, of whom 120 were detected to have preeclampsia. All were given the necessary care, and there were no fatalities. In March 2014, the Indian government started a pilot of 4,250 Swasthya Slates in six districts of Jammu and Kashmir, which has a population of 2.5 million. Antenatal testing, which often took 14 days because previously mothers had to travel for different diagnostic tests, was done in 45 minutes in a single clinic. The proportion of the time health workers spent on administrative paperwork, recording data from tests and filling out forms, was reduced from 54% to 8% of their working day. Thousands of people had access to previously unavailable care. Kahol believes, in high volumes, the Swasthya Slate can be produced for just $150 per unit. This will make a difference in the developing world, where the ratio of doctors to patients is often as low as 1:50,000 instead of the 1:1,000 the World Health Organization recommends. Such health kits will allow doctors to diagnose and advise patients remotely, through telemedicine, which is enabled by using Skype and Facetime. If patients can take regular tests in the comfort of their own homes and upload data to the Cloud, it will dramatically increase the quality of healthcare they receive and reduce its cost. Continuous monitoring of health data by artificial intelligence-based apps will enable the prevention of disease, especially lifestyle diseases such as Type 2 diabetes and cardiovascular illness. However, disappointingly the Swasthya Slate is not FDA-approved and may never be. The bureaucracy and time delays for testing sensor-based medical devices often discourage medical innovation in the US. Instead, the device will have been tested by tens of millions of people abroad before finding its way to the US. The results and data will speak for themselves.

Dialogue | Mar/May 2015

With access to health data from millions of of $25 million to the Centers for Disease Control patients, technology companies will be able Foundation to help fight Ebola, following an to take on and transform the pharmaceutical outbreak in West Africa in December 2013. industry, which works on limited clinical trial data He noted at the time that the Ebola epidemic and sometimes chooses to ignore information had already infected 8,400 people and could that does not suit it. These data can be infect one million people or more if not used to analyze accurately the mediaddressed immediately. cations patients have taken, to deterZuckerberg’s involvement was an mine which truly had a positive effect; important step forward for the techwhich simply created adverse reactions nology industry, and may help curtail and new ailments; and which did both. this ongoing health disaster, which This is the same type of data analhad killed more than 8,000 people by READ MORE ysis that is conducted on social media January 2015. streams and shopping and online But it is a prelude to a future Click here to read browsing data by Silicon Valley start-ups in which humanity is so tightly more content and marketers. In other words, we human connected that local disease outbreaks by Vivek Wadhwa beings have become data and software occur frequently and spread globally on the topic and entrepreneurs can now do the work within hours, to become epidemics and of healthcare of pharmaceutical companies and medical pandemics. In addition to existing diseases technology research labs. such as Ebola, there will be new, human Governments need to keep investing inventions. Advances in biological engineering in the types of basic research that led to are making it possible to create deadly new viruses genome sequencing and the internet itself. and to modify and “weaponize” exiting pathogens. Such technologies often take decades to bear It isn’t just governments and terrorists who will fruit and there are many disappointments and do this; high-school children may inadvertently failures along the way. There is also much more perform the wrong synthetic biology experiment. basic research to be done in genomics, that Students are already building biological systems entrepreneurs can’t do themselves. and operating them in living cells. Reducing red tape to support technological We need to be prepared for this scary future, innovation is vital, for example, in improving access and Silicon Valley needs to take the lead in develto diagnostic testing, as the case study (page 32) oping technologies to track, prevent and manage demonstrates. These are the types of innovation pandemics. It also needs to work with scientists to that we will increasingly see from entrepreneurs develop cures. It now has the ability to do all this. from all over the world. They will take advantage Advancing technologies are surely creating of technologies such as computing, sensors, artinew risks, but at the same time they are making ficial intelligence, networks, and synthetic biology it possible for entrepreneurs to do what only — all of which are advancing at exponential rates governments and big research labs could do and are available globally. The capabilities of these before: solve global problems. No doubt many technologies are increasing as their other businesses will enter this field and accelprices fall. Our smartphones now erate the rate of medical breakthroughs. This have greater computing power means that medicine will, within a few years, start than did the Cray superadvancing at the same pace as the internet and computers of yesteryear. software. Ultimately, we will see a revolution in Sensors such as accelerhealth care. ometers, gyroscopes, and blood-oxygen meters are now tiny microchips that l Vivek Wadhwa is vice president cost pennies. of research and innovation at Technology also Singularity University, fellow at Stanford has an important role University and director at the Center to play in tracking for Entrepreneurship and Research and managing future Commercialization at Duke University. He is disease outbreaks and author of Economist Book of the year 2012, The preventing pandemics. Immigrant Exodus: Why America Is Losing the Facebook founder Global Race to Capture Entrepreneurial Talent Mark Zuckerberg last year and in 2013, TIME Magazine named him one of announced a donation the 40 most influential minds in tech.

Dialogue | Mar/May 2015

focus Revolutionizing medicine through technology Battling Alzheimer’s to protect health text and productivity Defusing the dementia time bomb in the workplace Trust me, I’m a drugs company Creating market incentives to conquer Ebola Becoming comfortable with being uncomfortable

Battling Alzheimer’s to protect health and productivity Murali Doraiswamy, a leading physician-neuroscientist at the Duke Institute for Brain Sciences, discusses the latest breakthroughs and why business leaders and governments have a compelling shared reason to act on the threat posed by Alzheimer’s disease. Illustration: André Bergamin

Dialogue | Mar/May 2015

The size of the threat Alzheimer’s disease was first described pathologically just over 100 years ago, but today it has become one of the most feared and costly diseases worldwide, affecting the very fabric of society from family wellbeing, to worker productivity, to national budgets. Recent findings that Alzheimer’s may start decades before full-fledged symptoms manifest raise issues about the type of screening and care companies must offer for their workforce. In an era in which the demand for knowledge workers is ever increasing, we are faced with the growing epidemic of an incurable disease that destroys higher cognitive abilities. Business leaders and governments now have a shared reason to pay attention to this threat. At the turn of the 20th century, infectious diseases posed the biggest threat to mankind but now, according to a World Health Organization (WHO) report in 2012, more people worldwide (some 68%) will die with non-communicable diseases (NCDs). While much of the focus over the past few decades has been on NCDs such as heart disease, cancer or diabetes, Alzheimer’s disease has now sharply risen in importance – indeed some evidence suggests that heart disease and diabetes may also be risks for Alzheimer’s. There are an estimated 44 million cases of Alzheimer’s worldwide, according to an updated version of the 2012 report by WHO and Alzheimer’s Disease International (ADI) – but this could be an underestimate since there have been fewer surveys in China, India or Africa. According to the report, 7.7 million new cases of dementia are thought to occur each year, implying that there is a new case of dementia somewhere in the world every four seconds. Old age is the biggest risk for Alzheimer’s, and barring a new cure, because of the ageing of the world population, the total number of cases worldwide may triple to 135 million by 2050. Indeed, the growth in longevity (along with increased recognition that severe memory loss is not normal) is the main reason for the rapid rise in cases of Alzheimer’s over the past 100 years. Twice as many women than men have Alzheimer’s - perhaps because they live longer, but there could also be other reasons. Besides age, the other big risk factor for Alzheimer’s is family history. The average middleaged person’s risk of getting Alzheimer’s (at least in the Western world) is about one in 10 – and if one has a father or mother with late-onset Alzheimer’s,

the risk is tripled (about 30% - high but still not 100%). The role of lifestyle is raised by interesting cross-cultural studies. African-Americans living in the US may have much higher rates of Alzheimer’s than Africans living in Nigeria, and second generation Japanese-Americans living in Hawaii may have higher rates than those living in Japan, suggesting that lifestyle (for example, diet) or environmental factors play a role. Alzheimer’s rates in Latin America appear comparable to those in Europe; rates in India appear to be half those in Europe suggesting again a possible role for genetic or dietary factors (for example, curry). Regardless of these ethnic differences, the biggest increase is projected to occur in middle and low income countries, simply because of population growth. A study in the medical journal The Lancet has reported that, in China, there has been a 46% increase in dementia rates between 1990 and 2010. Indeed, some 47% of all new cases of Alzheimer’s today occur in Asia, followed by Europe (30%) and North America (11%). Likewise, the number of older people who rely on others for care may also quadruple in many low and middle income countries over the next 40 years, with much of this due to Alzheimer’s disease. These projections should be of great concern to corporations in emerging nations, since these workers and health systems have fewer resources to deal with them.

Alzheimer’s destroys the brain continuously over decades

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Cost of Alzheimer’s Both public health budgets and corporations will face challenges as a result of Alzheimer’s. According to the ADI, total worldwide costs were estimated to be approximately $605 billion per year in 2012 or about 1% of the entire world’s GDP – an amount that is larger than the GDPs of all but the top 17 most developed countries in the world. Increasingly, Alzheimer’s is being diagnosed in people in their 50s and early 60s, when people are at their career peak, posing issues to corporations regarding their ability to work and cost of care. Adult children who are care givers face raised stress and increased vulnerability to a range of diseases which directly impact on their work productivity. In coming decades, especially in nations such as India and China, care giving burden is predicted to become a huge source of productivity loss among workers. And in addition to monetary costs, Alzheimer’s causes immeasurable personal suffering to individuals and families – one reason

what is Alzheimer’s? Dementia is an umbrella term used to refer to a decline in cognitive and functional ability – a change from a prior normal state. There are dozens of causes for dementia such as Alzheimer’s disease, vascular dementia (due to strokes), normal pressure hydrocephalus (fluid build up in brain), Parkinson’s dementia and alcohol dementia (excess drinking for years). Alzheimer’s is the most common cause of dementia in the elderly, accounting for more than half of all cases. Some causes of memory loss can be reversible (for example, memory problems due to depression), and that is why it is so important for an early and accurate diagnosis to be made.

Amyvid PET scans showing brain amyloid plaque deposits (red and yellow) in a person with Alzheimer’s disease (left panel). Right panel shows a healthy person.

why it has become the most dreaded disease (perhaps only second to Ebola).

they are performing memory tests). Lastly, we and others have begun testing a brain scan that can visualize the build up of nerve cell tangles (another Prevention or cure? kind of Alzheimer’s pathology). The good news is that over the past few decades, Advances in genetics also allow us to study we have gained fundamental insights into the inherited risks. About 25% of all Caucasians and Alzheimer’s disease timeline and likely Latinos, are born with a gene called Apolipoprotein causes, although we still don’t know E4 (inherited from their parents). Not only does the exact cause. With the help of new this gene triple a person’s risk of developing brain scans and spinal fluid tests, it Alzheimer’s but it also triggers the earlier has become apparent that what we build of Alzheimer pathology in the brain. used to call Alzheimer’s disease (when This link was discovered by a Duke someone developed memory loss research team lead by Dr Allen Roses. WATCH THE VIDEO and problems in functioning) is actuIt is notable that the rates of this gene Murali Doraiswamy on ally a late stage of a process that begins appear to be slightly lower in some what neuroscience silently in midlife – in our 50s and 60s. Asian groups. Approximately 2-3% is teaching us about Several new technologies have helped of people inherit other deadly genes yoga and what yoga us better understand the Alzheimer’s that lead to early onset Alzheimer’s is teaching us about brain. One is a new type of brain scan which can strike people even in their 30s neuroscience called amyloid PET scan which can now and 40s. detect the hallmark plaques of Alzheimer’s Based on these new findings, doctors have in a living person. In one national trial that come up with new criteria dividing Alzheimer’s was led by my group, about 30% of normal into three stages. The first and earliest stage is middle-aged people studied with this PET pre-clinical Alzheimer’s - people with normal scan showed “silent” build-up of amyloid memory who have silent build-up of Alzheimer plaques in the brain. And when followed up pathology (plaques or shrinkage detected by brain over the subsequent three years, plaque posiscans or spinal taps). The middle stage is termed tive individuals with mild memory complaints mild cognitive impairment (MCI) in which people developed full blown Alzheimer’s at three times show mild memory loss and have Alzheimer’s the rate of those without such brain plaque buildpathology but are still able to function normally. up. (Amyloid plaque is different from the plaque in These two groups are of interest for prevention one’s heart or teeth). trials to enable people to preserve independent Another technique called Volumetric MRI functioning. The third stage is termed “dementia scan now allows scientists to measure the due to Alzheimer’s” when functioning is impaired. size and shape of the brain’s memory centre – These developments are highly relevant for hippocampus – whose destruction leads to subsecorporations. If some 20-30% of cognitively quent memory loss in Alzheimer’s. In addition, our normal people in their 50s and 60s already have group at Duke is developing a novel blood test for silent plaque build-up affecting their brains and predicting Alzheimer’s, as well as a “brain treadmill cognitive circuits, this implies that more than test” (where people undergo a special scan while 100 million people worldwide may meet criteria

Dialogue | Mar/May 2015

for pre-clinical Alzheimer’s. Furthermore, many corporate leaders, including almost all CEOs and political leaders, are in this age group (not to mention senior airline pilots). Should such individuals be monitored more closely? Should their work assignments be changed if they start developing MCI? Will company health insurance premiums jump based on how many at risk individuals are employed? These are thorny questions that we cannot yet answer. At present, there is no predictive test that is 100% accurate, and hence we cannot predict who will develop Alzheimer’s with certainty. Besides, not everyone with pre-clinical disease will develop Alzheimer’s, so doctors are being careful not to extend these criteria to clinical practice until more research is done to finetune the criteria and ethical and legal implications. But because medical practice varies widely and changes rapidly, companies and individuals should stay abreast of these developments. At present, I don’t recommend people being tested for pre-clinical disease.

Top strategies to keep your brain healthy: 1. Vital numbers: monitor your body weight, blood pressure, cholesterol and sugar levels regularly and keep them as normal as possible to minimize your risk for strokes, heart disease and diabetes. Studies find strong links between vascular risks and Alzheimer’s disease. 2. Exercise: Regular (four to five times a week for 30 minutes) aerobic activities, such as walking, may reduce risk for dementia by keeping the brain’s blood vessels healthy, boosting nerve growth chemicals and slowing age-related brain shrinkage. 3. Sleep. Seven hours of sleep a night is ideal for a middle-aged person. Studies suggest that sleep is when the body clears excess Alzheimer’s plaque build-up. Sleep deprivation impairs memory. 4. Mental activity. Continuing educational courses, pursuing new and challenging activities in depth, and being passionate about learning new things can build cognitive reserve. Adult brains can grow new nerve cell connections and some age-related cognitive losses may be reduced by brain training. Developing a greater cognitive reserve might help to buffer against dementia pathology. 5. Stress reduction. Long-standing stress, anxiety, and depression impair our attention and ability to form strong memories. Holidays, walks in nature, meditation, having a strong support network and spending time with loved ones are some ways to

Dialogue | Mar/May 2015

combat excess stress. 6. Heart healthy diet.Follow a heart healthy diet such as a Mediterranean diet but heed the old Okinawan saying “Hara Hachi Bu” – eat only until you are 80% full; drink alcohol in moderation (not until you cannot remember what happened the previous night). Curry may help the brain (due to turmeric). 7. Avoid head injury, for example when cycling, by wearing helmets. 8. Social network. Having a wide circle of friends from many different fields may be protective for the brain. The size of our amygdala (a brain centre related to memory and emotion regulation) is correlated with our social network size. People who are socially isolated have a greater risk for dementia. There is no proven magic bullet but these strategies may help reduce your risk. In fact, most people with Alzheimer’s disease that I see in my clinic are very fit and have led healthy lives. The old saying, “Genetics loads the gun, lifestyle pulls the trigger” is probably apt here and genetics and lifestyle seem to interact in different people in different ways. ● These tips are adapted from Dr Doraiswamy’s book, The Alzheimer’s Action Plan

Because Alzheimer’s destroys the brain continuously over decades, early diagnosis is essential for better planning and treatment development. A combination of a good history from a person and family, and simple tests of memory and functioning are the starting point. Doctors also do a clinical exam plus run blood tests and brain scans to rule out other causes, such as tumours, infections, or strokes. Common causes like thyroid or vitamin deficiencies and depression must be looked for, since treatment can often reverse the memory problems. Meanwhile, there is also progress on the prevention front. Regular exercise, staying heart healthy (by keeping one’s weight, blood pressure, cholesterol and sugar in check), and staying socially and mentally active, may help protect our brains against dementia – so these are things all of us can do right away since they may also protect us from heart disease and stroke. Low fat diets such as Mediterranean diets and turmeric in Asian curry may be protective for the brain. There are several treatments on the market today (for example, donepezil, rivastigmine) which can be prescribed to Alzheimer’s patients with dementia which offer modest symptomatic benefits (though these don’t work for prevention). Care giver support has a hugely beneficial effect on both the patient and the care giver. In the coming five to 10 years, we will have the results from several clinical trials testing a variety of preventive strategies such as drugs boosting brain memory chemicals, drugs targeting buildup of nerve cell tangles, aerobic exercise, different types of diet, gene therapy to boost nerve growth factor, as well as novel brain devices to stimulate the brain’s memory circuits. So the odds are quite good that we will have one or more new treatments in the near future.

For example, companies can partner with local chapters of Alzheimer’s advocacy groups or local universities to facilitate research. Corporate education could include annual modules on the latest developments in brain health (such as links between heart health and brain health) and care giving (such as links between care giving stress and health). And wellness programmes can include brain health exercises. Women bear a disproportionate share of the disease and care burden - the massive urbanization is likely to lead to further geographic splintering of the family unit. Offering work flexibility for women caring for a loved one (to allow her to take breaks from ongoing stress) and paid day care for patients (much like many companies provide for children) are some options that could offer respite to employees juggling work and care giving. At a national and international level, we need greater investment in health education, routine preventive medical care (especially for heart diseases, hypertension and diabetes which are all linked to dementia) and greater access to care options for the family. The good news again is that there is greater recognition of the threat of Alzheimer’s now than ever before. Many countries/continents, such as the US (BRAIN initiative), Europe (Human Brain Project) and China (Brainnetome project), have initiated ambitious brain research projects to unlock the mysteries of the brain which, in turn, will hopefully transform our fight against this devastating disease.

The care giving burden is predicted to become a huge source of productivity loss

How should corporations and nations react? Companies tend to assume that Alzheimer’s disease is mostly a problem for retired people and hence it has been less of a focus than, say, heart disease. But the time has come for them to be proactive rather than reactive. The Global CEO Initiative on Alzheimer’s Disease (CEOi) is one example of how companies can join together to help fight the threat at a national level, but smaller companies can also do things at a local level.

l Murali Doraiswamy is Professor of Psychiatry and Medicine at Duke University and a leading neuroscience researcher at the Duke Institute for Brain Sciences. He directs a clinical trials unit focused on healthy ageing, cognitive enhancement and mental wellbeing. Dr Doraiswamy serves on the World Economic Forum’s Global Agenda Council for Brain Research and as the brain health adviser for AARP. He is co-author of The Alzheimer’s Action Plan. Dr Doraiswamy frequently lectures on neuroscience applications for businesses and leadership. Further Reading Dementia: a public health priority, WHO and ADI, 2012

Dialogue | Mar/May 2015

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Defusing the dementia time bomb in the workplace Keiron Sparrowhawk, investigates the difference that a focus on cognitive health could make to the workplace of the future Illustration: André Bergamin

It may seem odd to think about dementia in the context of the workplace. First, dementia only affects older people, doesn’t it? Second, we definitely don’t talk about mental health at work. In fact, there are good reasons for considering the impact of dementia on the workforce. Business leaders need to start a revolution because the earlier dementia is confronted, the more easily it can be tackled. The workplace is a great place to start. Businesses are increasingly aware that employees’ mental fitness is as important as their physical fitness. It is estimated that one in six people will suffer from a mental health problem during their working life and the cost to UK businesses alone is estimated to amount to £26 billion annually. The total cost to the UK economy is £70 billion (4.5% of GDP according to the Organisation for Economic Co-operation and Development Mental Health and Work: UK report, 2014), with 160 million working days lost due to poor mental health, as highlighted in the Confederation of British Industry Absence and Workplace Health Survey, 2013. Given the potential economic burden of dementia, it makes perfect sense to talk about it in relation to the workplace. Health experts have known for some time that the brain can

regenerate itself, but it also degenerates as a result of mental illnesses such as dementia. However, this neurodegeneration and the signs of dementia occur at a much younger age than experts originally thought. Dementia represents a decline in mental ability, which affects memory, thinking, problem-solving, concentration and perception. Memory is often the domain that people recognize as failing in dementia, but it isn’t the only domain affected and often not the first. Other domains deteriorate and the signs show in our work. Colleagues may notice that we are slower, less decisive; that we avoid decisions and change. We might uncharacteristically blow our top or no longer socialize. These can be the early signs of dementia or other mental illnesses. PREVENT (2012) is a study led by Imperial College London, looking for the early signs of Alzheimer’s, a form of dementia, in individuals at high, medium or low risk of developing it. Researchers are targeting individuals as young as 30 years of age because the signs of dementia may occur that early, according to the Alzheimer’s Society. So if dementia affects people of working age, why don’t we consider dementia in the workplace? This is where the second compelling reason to act kicks in. Despite the available data,

Businesses are increasingly aware that mental fitness is as important as physical fitness

Dialogue | Mar/May 2015

we don’t talk about it because of the stigma, as evidenced in a report published by The Sainsbury Centre for Mental Health in 2007, which outlined the business case for mental health provision in the workplace. The challenge with “mental health” is that most people consider themselves either “sane” or “mentally ill”, even though this paradigm doesn’t make sense. If you consider your physical health, nobody is either zero or 100% fit. So why shouldn’t mental health be viewed in the same way? We need a new way to talk about mental health. The answer is “cognitive health”, our ability to think, learn, respond and remember. HR departments have begun to invest in comprehensive wellbeing packages to address this. Supporting cognitive health makes sense because it helps employees build stress resilience and limits the related burden of low productivity, absenteeism and replacement costs. How can we measure cognitive health? Psychometric tests, such as MyCQ are used to measure cognitive health. The legitimacy of MyCQ is based on more than 200 years of neuropsychological, experimental research which started in 1869 when Franciscus Donders became the first scientist to measure reaction time in a laboratory. Initially, experts administered psychometric tests using paper, pencil and stopwatch and they took hours to complete. By contrast, MyCQ is a compact suite of online tests that has been developed to allow cognitive health to be measured without supervision in less than 15 minutes.

Dialogue | Mar/May 2015

Thousands of people have taken MyCQ, providing a fantastic insight into the cognitive health (mental health) of the population. As with physical health, no one is zero or 100%. Everyone has the ability to move up and down the MyCQ scale, to improve their cognitive health, through interventions or changes in lifestyles or their environment. MyCQ measures cognitive health across five key domains and all are important in the workplace. The five are: ll Attention, our ability to concentrate, to focus on the important aspects of work and not be distracted ll Psychomotor speed, to respond with speed and precision, to be credible ll Episodic memory, to recall and use wisdom relevant to current situations ll Working memory, to use our short-term memory to comprehend and calculate, to make decisions ll Executive function, to plan and make strategies, to find better ways of doing things and not get stuck in a rut Poor cognitive health could be a sign of dementia or another mental health disorder. Measuring cognitive health can screen for the problems and monitor cognitive health over

measuring staff cognitive health and putting in place interventions to build cognitive resilience. That would be good for us, our families and the companies in which we work.

● Keiron Sparrowhawk is founder and CEO of MyCognition, an organization focused on developing applied cognitive games with the potential to support learning and cognitive enhancement in children and students, rescue cognitive decline in medical conditions, and enhance brain performance in business.

Further Reading: Mental Health and Work: UK, OECD, (2014) Fit For Purpose: Absence and Workplace Survey, CBI (2013)

time. Measuring cognition can also point scientists - and employers - in a more healthy direction. It’s never too late to adopt good habits and build more resilREAD MORE ient cognitive health. Some positive habits may come as no surprise, Find out more such as improving diet, exercizing and about Keiron quitting smoking. Adopting better Sparrowhawk’s sleep patterns, drinking alcohol in work here moderation, avoiding non-prescription drugs and finding time to relax also help. But, in addition, targeted cognitive health training games can be used alongside these interventions to bring about greater benefits. Measuring cognitive health also enables individuals to discuss their mental health with one another and to examine disorders like dementia in a more enlightened way. It’s easier to talk about cognitive health when we realize that we all have strengths and we all have domains that can be improved. People can talk about their cognitive health in the same way as their physical health, which is a healthy habit in itself. The conclusion to all these observations is proof that dementia is relevant to the workplace. Employers can start to address its impact by

The PREVENT study: a prospective cohort study to identify mid-life biomarkers of late-onset Alzheimer’s disease, CW Ritchie, K Ritchie, BMJ Open (2012) 2 Mental Health at Work. Developing the business case The Sainsbury Centre for Mental Health, 2007. On the speed of mental processes, F C Donders, In W. G. Koster (Ed.), Attention and Performance II. Acta Psychologica (1869) 30, 412-431.

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Trust me, I’m a drugs company

Trust me, I’m a drugs company Creating market incentives to conquer Ebola Becoming comfortable with being uncomfortable

Pharmaceutical companies must become more transparent and collaborative if they are to enhance their reputation, earn the trust of patients and improve global healthcare, says David Epstein, division head of Novartis Pharmaceuticals. Liz Mellon reports. Illustration: André Bergamin

Dialogue | Mar/May 2015

The world of medicine is evolving rapidly. Every day seems to bring an announcement of another breakthrough. In the final two months of 2014 alone, came news in the global press of the development of a blood test for Alzheimer’s disease; a study showing that HIV’s ability to cause AIDS is weakening over time; and a drug that, when combined with statins, can reduce adult cholesterol levels to that of a baby. Yet in an age in which the expectations of both patients and healthcare professionals are increasing, and modern medicine is able to replace worn-out core organs as a result of genetic engineering, the reputation of the pharmaceutical industry is faltering.

Reputation Consider any global ranking, from Gallup, Harris, the Reputation Institute or The Financial Times, and with one or two exceptions, pharmaceutical companies do not feature in the top 50. The experts who have made a career from the daily pursuit of ways to extend life and safeguard our health, rarely get a positive mention among the online retailers and luxury goods companies that the public favours. Why is this? David Epstein, division head of Novartis Pharmaceuticals suggests his industry needs to do more to earn people’s trust:“Pharma is in the lower quartile of industry reputation because people don’t trust us,” he acknowledges. “We are not transparent and need to be a lot more open, to support medics, patients and carers to take more informed choices.” Historically, there has been an air of mystery surrounding the medical profession and the drugs that accompany it. As recently as 20 years ago, the doctor was a patriarchal figure of authority who would take a patient history, diagnose symptoms, pronounce a verdict and issue a prescription for the drugs to be taken. Patients were probably no more compliant then than they are today, but they rarely questioned the doctor’s diagnosis. Today, we live in a very different world, in which anyone can search the internet for advice on the symptoms they are experiencing and reach their own clinical diagnoses. Consumers are also more aware of the cost of drugs and worry more about how overstretched government budgets can continue to underwrite healthcare. And in many emerging nations, there is only patchy or inadequate provision for publicly provided healthcare; if you don’t have the money, you don’t receive treatment.

We are not transparent and need to be a lot more open

Dialogue | Mar/May 2015

The public wants new and improved drugs, but it wants them cheap. Generally, consumers have come to believe that the prices charged by pharmaceutial companies are exorbitant and overlook their huge expenditure on research and development, with no guarantee of a successful outcome. How can these divergent requirements be reconciled? Epstein believes that knowledge is power. He explains: “Pharmaceutical companies need to bring people in so that they can understand what is known and what is not known and can comprehend more about how drugs are developed. We’re not producing standard widgets. One person’s health and reaction to a drug can vary so much from the next person’s. Our products can extend life and improve quality of life, so we need to make sure that our consumers are much better informed.”

Transparency A move towards greater transparency is the key theme of a statement Novartis Pharma released in February 2014. This set out an ongoing commitment to increased transparency around clinical trial results. Specifically, researchers were to be given access to patient-level data (subject to guidelines around patient confidentiality), on the proviso that they offered easier-to-understand consumer language and greater interpretation, from the end of 2014. Additionally, Novartis committed to releasing clinical trial results within one year of their being conducted; the negative results as well as the positive ones. (It’s not always so easy to get hold of the negative results). Epstein explains why Novartis’ leadership team thinks this is important. “Drug trial results can be dense, so we want to make them easier to understand and more user-friendly,” he says. “Our aim is to educate people, not to obscure the truth. No-one wants to take medicine unless they need to and certainly no-one volunteers to go to hospital. No drug is risk-free and because people are individuals, some side effects are idiosyncratic. Searching online doesn’t always give you accurate data either. “We know more about the drugs that we trial than anyone else, so we want to be helpful in the way that we inform and educate people.” The objective seems simple – to make the company carrying out the clinical trials the first port of call for finding important and honest data, rather than a last resort, because of its use of

Novartis Novartis has set itself the mission of providing innovative healthcare solutions that address the evolving needs of patients and societies. With its HQ in Basel, Switzerland, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines, over-thecounter and animal health products. Novartis is the only global company with leading positions in these areas. In 2013, the group achieved net sales of $57.9

obscure medical terminology and the public’s belief that it will put a gloss on the results. But in practice this is difficult to achieve. The pharmacuticals marketplace can be punitive and a lessthan-optimal result from a clinical trial has historically meant a drop in the company’s share price. Epstein is resolute: “What we all want is a better quality of life and more precious moments with our loved ones. We need to move the industry from selling pills to selling outcomes. If you go to a restaurant and the meal is bad, you don’t expect to pay, so why should people pay for drugs that don’t work? We need to offer effective drugs that achieve measurable targets, like fewer relapses or less time in hospital,” he says. Essentially, Novartis seems to be moving towards a new business model based on payment by results. The focus moves from income to outcomes.

Better clinical trials One means of providing patients with the outcomes they desire, is to understand substantially more about the drugs being produced. Because of this, the other area in which Novartis Pharma is pushing for change is in clinical trials, taking a three-pronged approach. The first “prong” revolves around providing early access to trial results for patients with life-threatening diseases. Where early trial results are positive, the question is being asked: “Why wait five to seven years for regulatory approval of the ‘perfect’ drug?” If the patient can have access to early results from

billion, while R&D throughout the group amounted to approximately $9.9 billion ($ 9.6 billion excluding impairment and amortization charges). Novartis Group companies employ approximately 133,000 full-time-equivalent associates and sell products in more than 150 countries around the world. Novartis Pharma, one of Novartis’ five business segments supported by its research organization, the Novartis Institutes for BioMedical Research (NIBR), employs 56,000 people in 80 countries.

clinical trials on drugs that could prove life-saving, they can make their own informed choice about whether or not to wait for further evidence of efficacy. This is part of Novartis Pharma’s aim to put the patient at the centre of everything it does – in this case, by putting decisions, and thus control, back into the hands of the patient. The second “prong” is focused on drug trials themselves. There has been a lot of recent media coverage about whether or not it is ethical to divide patients into two groups and give one of the groups a new drug to trial, and the other group a placebo. The dilemma is that, in order to conduct a rigorous clinical trial, the drug being tested needs to be compared with a placebo, or a cheaper generic drug. Despite patient concerns about placebo-based trials, the reimbursement mechanisms of some governments (for example, in Germany) pay more for placebo-based trials. The fact that some governments skew research through incentives is largely unknown outside the industry and is another area in which greater transparency would lead to more informed choices and control for patients. Epstein believes that one way to side-step such dilemmas is increased use of big data: “Clinical trials are often based on a few thousand people, which is really too small a sample. We want Real World Evidence on what happens to a wider base of patients across the spectrum, including rare side effects and the possibility of offering individualized dosage levels,” he says “To achieve this, we are building the capability to harness information from a much wider

If we get it right, the income will follow

Dialogue | Mar/May 2015

database. We are collecting data from medical centres, which often don’t share what they know with each other, and having it analyzed by smart bio-statisticians. For example, we can chase useful correlations in a broad set of data from diabetic patients, which can lead to new avenues for informed research.” From an industry perspective, this seems counter-intuitive, in that big data takes a lot of effort to collect, doesn’t affect a company’s share price and, in fact, may lead to it selling fewer drugs. From the patient’s point of view, however, it makes all the sense in the world. Epstein confirms this. “Our aspiration is becoming the best by winning for patients worldwide. So it’s our obligation to think ‘patient first, income second’. We want to make a difference. If we get it right, the income will follow anyway. I believe this, but more importantly, so does my board, my chairman and my executive team.” The third “prong” of reform was the subject of another Novartis Pharma statement, in July 2014. The company published renewed ethical guidelines for supporting Investigator Initiated Trials (IITs). These are essentially third party trials that need to be, and need to be seen to be, independent and transparent, with no hidden funding from pharmaceutical companies, or secretive results. If IITs can achieve these guidelines, they become an important extended force for improved clinical trials, independent from, but supported by, the drugs industry.

Digital medicine Another important element of Novartis’ drive to put the patient at the centre of everything it does is the development of digital

What do the analysts think of Novartis Pharma? If a company pursues an aspiration that only it shares, it is closer to an hallucination than a vision. So what do the analysts think of Novartis Pharma’s journey towards patient centricity?

Morgan Stanley has upgraded Novartis to equalweight (from underweight) because of productivity gains offsetting generic pressure on margins.

Dialogue looked at views from Jefferies, which put Pfizer and Novartis as their top two picks for 2015.

Exane BNP gives Novartis an “outperform” rating based on their transformation potential, simplifying the business and advancing the pipeline.

Novartis because of positive earnings momentum, strong cost management and delivery of late-stage R&D assets (LCZ696, Secukinumab and Relaxin).

So while the analysts find different reasons for their ratings, they support David Epstein’s view that Novartis Pharma is moving in the right direction.

Dialogue | Mar/May 2015

tools. One big challenge faced by the healthcare industry is to encourage patients to take their drugs responsibly. But a second challenge is to gain an early indication of how the drugs are working. Epstein puts it succinctly: “If you end up in the emergency room, you have a six-fold increase in the chance of dying within six months. So we need to do everything possible to keep the patient out of the emergency room.” One way to do this will be enhanced patient monitoring using digital tools. It could be as simple as answering five questions every day on a smartphone. The answers would be fed directly into a central server which could analyze them and flag when a new intervention might be needed – before the patient ends up as an emergency.

All change All these factors taken together imply a big change for the pharmaceuticals industry. It will need to develop fresh capabilities, for example, analyzing bio-algorithms and “just-intime” digital data, and new mindsets, such as a focus on patients rather than on profits and government payment incentive systems. Epstein hopes this will be the case. He explains: “We are shortly going to publish a new declaration of what patients can expect from us – a public charter to which we will be held accountable. Our job is to put our own house in order and then hope the industry will come with us. None of us can do this alone. Healthcare is expensive, because of waste; medicines are ill-targeted and patients are non-compliant. Regulators want to wait for the perfect drug rather than move faster, when any help is better than none where lives are at risk. “People are dying in poorer countries because they live on a dollar a day and cannot afford drugs, but if the industry gives away drugs in poor countries, the rich countries’ governments, who can afford to pay, demand discounts we can’t afford. The only way to provide improved care for patients is for governments, regulators, payers, physicians, patients and the pharma industry to collaborate.” It also means big changes for each individual drug company which chooses

to go down the same path as Novartis. Epstein outlines a little of the journey that Novartis Pharma has been on under his leadership for the past five years. “When meeting patients, I have had people jump off examination tables and hug me when they find out I work for Novartis. That’s what’s important, that we have a vision to change their world for the better,” he says. “At Novartis Pharma, we hire people with the passion and desire to do what’s right for patients. We strive to take managerial decisions that are aligned with our aspiration, even if it costs us money. “My executive team will collaborate to deliver on our forthcoming Patient Declaration, which will be pretty much all we’ll talk about for the next couple of years. Our company is growing and will become bigger, but we’ll have smaller work units focused on disease areas, so that people will feel ownership of what they do. We will build new capabilities, like digital medicine expertise and we’ll continue to launch great new medicines. Above all, we will seek to be part of the solution, not part of the problem. We don’t want people taking drugs forever; we want patients feeling better.”

We know more about the drugs we trial than anyone else

● David Epstein has been division Head, Novartis Pharmaceuticals, since 2010. He is also a member of the executive committee of the company.

Dialogue | Mar/May 2015

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Creating market incentives to conquer Ebola

Trust me, I’m a drugs company Creating market incentives to conquer Ebola Becoming comfortable with being uncomfortable

David Ridley, faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business, talks to David Woods about the need to enhance the priority review voucher system and accelerate the pace of medical breakthroughs. Illustration: André Bergamin

Dialogue | Mar/May 2015

Ebola: a disease that had, at the time of publishing, killed more than 8,000 people in West Africa and sickened more than 21,000 people in eight countries, during an outbreak that first occurred in December 2013. It has sent panic ricocheting through the developed world, and left the planet’s leading medical experts scrambling to control the epidemic, as occurrences are now being recorded in the US, Spain and, the UK. But according to David Ridley, faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business, Ebola is a disease that has been largely ignored by drug companies, when it comes to developing treatments, vaccinations - or even a cure because there’s little profit potential for a drug that primarily treats people in poor countries. In spite of this, hope of a breakthrough could be in sight after US president Barack Obama signed a bill into law allowing any pharmaceutical or biotechnology company that successfully develops a product to treat the Ebola virus to obtain a special voucher worth hundreds of millions of dollars. This comes as a result of a law that offers financial incentives to drug makers to develop treatments for 16 other neglected diseases. In 2006, Ridley, along with his colleagues Jeff Moe and Henry Grabowski proposed, in a paper for the Journal of Health Affairs, that a voucher incentive be created to encourage investment in neglected diseases. After Health Affairs published the paper, Ridley presented the idea at the National Press Club and a reporter for Congressional Quarterly told him that Senator Brownback (R-KS) would be interested. A followup meeting was held with Senator Brownback, who partnered with Senator Brown (D-OH) to draft an amendment; this passed through Congress and was made into law by the then US president George W Bush. The law created the priority review voucher which is awarded by the Food and Drug Administration (FDA). The developer of a drug for a neglected disease will receive faster review for that drug, as well as a bonus priority review voucher (PRV) that they can sell. These changes provide a greater reward for developing drugs for diseases such as dengue and leishmaniasis. Ebola was not initially on this list because it was not a public health emergency when the law passed in 2007, but as Obama’s December 2014 signature shows, things have changed and the bill has been passed accordingly.

Ridley tells Dialogue: “Under the voucher programme, the developer of a novel drug for a neglected disease receives an expedited, sixmonth review at the FDA, as well as a bonus priority review voucher that can be sold to another company for use on a different drug. Vouchers were sold in 2014, one for $67.5 million and another for $125 million.” In 2008, business magnate Bill Gates even discussed the programme in his keynote to the World Economic Forum, saying: “Some of the highest-leverage work that government can do is to set policy and disburse funds in ways that create market incentives for business activity that improves the lives of the poor. Any drug company that develops a new treatment for a neglected disease like malaria or tuberculosis can get priority review from the Food and Drug Administration for another product they’ve made. If you develop a new drug for malaria, your profitable cholesterol-lowering drug could go on the market a year earlier. This priority review could be worth hundreds of millions of dollars.” And Congress’s change to the programme in December 2014 means multiple transfers of the voucher are now allowed and the time required for notifying the FDA of the intention to use a voucher has been reduced from one year in advance to 90 days. But despite the breakthrough last year, as well as an extension of the voucher scheme to incentivize pharmaceutical companies to develop drugs for rare paediatric diseases in 2010, Ridley explains he would like to see more done to develop the programme. He adds: “Members of Congress are currently considering the 21st Century Cures Initiative, which aims to accelerate the pace of medical breakthroughs. Fixes to the voucher law could - and should - be a major component of the initiative. “To improve on the voucher programme, Congress should add other infectious diseases for which the burden of disease is great and the profit potential small. Chagas disease is one example, which killed an estimated 8,000 people in 2012, mostly in Central and South America. However, the voucher should not be extended to treatments for diseases with large commercial potential. “There was much debate about whether HIV and AIDS should be added to the list because the burden is so high,” says Ridley. “But there are many people in rich countries suffering from HIV/

The voucher system was designed to help the poor

Dialogue | Mar/May 2015

Priority Review Vouchers The priority review voucher (PRV) was based on a 2006 paper by Ridley et al and became law in 2007. Under the law, a developer of a treatment for a neglected or rare paediatric disease receives a voucher for priority review from the FDA to be used with a product of its choice or sold to another developer. Priority review means that the FDA aims to render a decision in six months, compared with 10 months for a standard review, although it often takes even longer. The median difference in recent years was about seven months, according to a paper by Grabowski et al in 2009. The PRV is intended to reduce two types of inefficiency. First, the PRV speeds approval of potential blockbuster therapies in the US, gaining US patients access to these treatments more quickly. Second, the PRV motivates development of more treatments for neglected diseases. By moving one drug to faster review, there is the potential to slow other drugs. To provide the FDA with more resources and mitigate this cost, the PRV holder must pay the FDA an additional user fee ($2,562,000 in fiscal year 2015). The PRV is transferable. To be eligible for a PRV, the drug or vaccine must satisfy at least four criteria. 1. Treat one of the following diseases: ll Blinding trachoma ll Buruli ulcer

AIDS, so the sales potential is high. Furthermore, too many vouchers for too many diseases will reduce their value, and in turn, reduce the incentives for drug companies.” “Another improvement would be to refund the voucher if the drug wins priority review on its own merits. This would encourage drug companies to apply the voucher to their novel therapies without the concern of wasting a voucher.” “Also, Congress should increase patient access to drugs for neglected diseases. For example, Congress could require the company earning the voucher to report on affordability of its neglecteddisease drug. And manufacturers should consider licensing the drug to generic manufacturers in poorer countries.” Ridley is clear on his reasoning for pushing for these changes and amends to the current legislation, believing the “global village” should be working together on healthcare technology and public health improvements. A 2012 paper in the UK medical journal

ll Cholera ll Dengue ll Dracunculiasis ll Fascioliasis ll Filoviruses (including Ebola) (added in 2014) ll Human African trypanosomiasis ll Leishmaniasis ll Leprosy ll Lymphatic filariasis ll Malaria ll Onchocerciasis ll Schistosomiasis ll Soil transmitted helminthiasis ll Tuberculosis ll Yaws ll A rare paediatric disease (added in 2012) 2. Be a new drug application (NDA). 3. Be a new molecular entity (NME) or new chemical entity (NCE). It must contain no active ingredient (including any ester or salt of the active ingredient) that has been approved in any other application. 4. Offer major advances in treatment, or provide treatment where no adequate therapy exists, thus earning priority review on its own merit. (In other words, to win a bonus priority review, the treatment must first get its own priority review).

+ WATCH THE VIDEO David Ridley explains more about The Priority Review Voucher

Dialogue | Mar/May 2015

The Lancet even argued for a similar programme to be extended to the European Union. Ridley and Alfonso Calles Sánchez proposed an EU voucher that would provide priority regulatory review through the European Medicines Agency, as well as accelerated pricing and reimbursement decisions by EU member states. Ridley admits that an EU voucher might still be years away. Europe adopted the Orphan Drug Act only 15 years after its introduction to the US. So is it true, then, that the only way to incentivize pharmaceutical companies to work to develop medicines to save lives, and potentially prevent global epidemics, is with financial incentives that generate profits for them? Ridley takes a pragmatic view. “People in drug companies fundamentally want to improve the health of the world,” he says. “But they have shareholders to satisfy. I think it’s unlikely that they will “get rich” from the PRV programme – they would have to be able to generate billions of dollars from this. But the PRV programme could give those companies millions of dollars that would cover a chunk of the research and development invested in these drugs. This would give pharma firms the opportunity to do good in the world without having to justify a significant cost to shareholders.” But from a business perspective, Ridley is confident about the knock on benefits that these schemes could have, for both small pharmaceutical companies that could sell the PRVs and also pharmaceutical companies operating in the developing world. “I’m optimistic about healthcare in emerging and developing markets in the short-to -medium term,” he tells Dialogue. “Countries like India, China, and South Africa are growing richer and as people get richer they invest more in their own health. Major drug companies see emerging markets as an opportunity for growth, especially since the US’, Europe’s and Japan’s pharmaceutical markets are stagnating. “Growth in emerging markets is good for us in richer countries, because knowledge and innovation spill across markets and borders. India, for example, has imaging technologies that are high quality and low cost and could be used around the world. “Even innovations like drugs for neglected diseases could benefit people in richer countries. The world is becoming flatter as tourists and business people carry knowledge, but also infectious

Tourists and business people carry knowledge, but also infectious diseases

Dialogue | Mar/May 2015

diseases. Furthermore, with global warming, the southern US and Europe could become more vulnerable to neglected tropical diseases. “The voucher programme was designed to help the poor, but in the future we might find that the new drugs are beneficial for those of us in richer countries. These illnesses are beginning to have more of an impact on us.”

● David Ridley is the Dr and Mrs Frank A Riddick Associate Professor of the Practice of Business and Economics. He is also the faculty director of the Health Sector Management program at Duke University’s Fuqua School of Business. In his research, David examines innovation, location, and pricing, especially in healthcare. To encourage innovation in medicines for neglected diseases, David, with Henry Grabowski and Jeffrey Moe, proposed a priority review voucher prize. The prize became law in 2007. David teaches courses on health care, economics, and strategy. Further Reading: Making a Difference - The Global Ebola Response: Outlook 2015, Global Ebola Response Information Centre Developing drugs for developing countries, David B Ridley, Henry G Grabowski Jeffrey L Moe, (2006), Health Affairs: 25 (2), 313 -342

Becoming comfortable with being uncomfortable Chris Lowney considers the lessons business leaders can learn from change in the health arena. Illustration: AndrĂŠ Bergamin

Dialogue | Mar/May 2015

I once visited the US Marines’ Officer Candidate School, where would-be leaders wade through snake-infested swamps and negotiate punishing obstacle courses, while suffering sleep deprivation and their trainers’ harangues. The brutal regimen helps sort the weaker candidates from those with the resilience and courage to lead. But what else does it do? I asked the colonel what skills he was trying to develop in these officer candidates. He thought for just a moment, then looked at me, “The main thing I’m trying to do here is to get these guys comfortable with being uncomfortable.” As soon as I heard it, I thought, “This guy just gave me a metaphor for 21st century leadership, in pretty much any industry, but most certainly in healthcare.” Beyond the literal discomfort of dodging bullets, combat zones are uncomfortable in many other ways: officers must make important decisions with imperfect information; the environment is complex, rapidly changing, and prone to unpleasant surprises; no-one can predict even the near-term future with complete confidence. Those uncomfortable circumstances should sound familiar to today’s healthcare leaders. Granted, no one is firing bullets at us. But we are living in an exceedingly complex, rapidly changing, uncertain environment. Too much is happening all at once: massive technology investments, merger or partnership discussions, ventures into fields beyond our traditional core businesses, and efficiency projects. Reimbursement and payment models are changing, as is the fundamental business model: from treating people in hospital to keeping them out of hospital. Each organization must chart its unique path forward: there is no surefire formula for success that can be copied from one organization and pasted into another. I have no doubt that healthcare is changing in directions that will vastly improve care quality, outcomes, and value for millions of Americans. But getting from here to there is a tough and challenging journey. So, like the Marines, we in healthcare need to identify those who are comfortable with being uncomfortable, who can lead through a changing, uncertain environment. Doing so requires any number of skills and qualities, notably among them the alchemy of judgment and courage. The complex choices that face us can seldom be resolved simply by consulting a neatly arrayed row of numbers on a spreadsheet; rather, leaders must exercise judgment as they weigh financial considerations, a sense of mission, educated guesses

about how healthcare is evolving, and other factors. Then we need the courage to lead, the willingness to envision and commit to a course of action when the future is not 100% clear (and the humility to re-assess our chosen course if events don’t unfold as we had anticipated). Without courage, managers can become paralyzed. Intimidated by the uncertain environment and fearful of making mistakes, they initiate only halfmeasures, never fully committing themselves to one direction or another and leaving their organizations unprepared for whatever future may unfold. But without good judgment, the opposite may occur: brave-but-rash managers blunder in, pursuing a faddish new strategy without really understanding its implications and appropriateness for their organization’s particular context. Few things are as important for board members, C-suite executives, and HR professionals as identifying successors who are capable of guiding our organizations forward. We typically identify these high potential future leaders by looking for intelligence, professional knowledge, commitment to mission, and proven track record. But all those attributes, while necessary for leadership, are no longer sufficient. We also need to determine who has judgment and courage, who is comfortable being uncomfortable, and it is tough to assess that quality. The Marines know it is important and strive to find, or inculcate, it in candidates. We in healthcare only “kind of know that it’s sort of becoming important”, but, for the most part, we have little clue how to assess it. I am not suggesting we subject healthcare’s high potential future leaders to midnight crawls through snake-infested swamps (fun though that might be to watch). But boards and management teams ought to ask themselves: “Have we explicitly identified good judgment and courage amid uncertainty as a vital leadership trait? Can we say whether and how our executives have exhibited this quality in their careers so far? Are we testing our future leaders by giving them projects or assignments that are well beyond their comfort zones and therefore test their ability to lead amid complexity, uncertainty, and rapid change?” By grappling with those three questions, organizations improve their chances of thriving amid the uncomfortable environment that leaders confront in 21st century healthcare.

Each organization must chart its unique path forward

Dialogue | Mar/May 2015

● Chris Lowney was investment banking managing director at JP Morgan. He chairs the board of CHI, a hospital system that is equivalent to a Fortune 250 company, with $13 billion in annual revenue, 90 hospitals, and 85,000 staff.

leadership development

Building and sculpting a world-class senior management team

Dialogue | Mar/May 2015

leadership development

Encouraging cohesion, cascading strategy and nurturing talent are just some of the complex challenges faced by leaders of senior teams. Liz Mellon and David Woods seek advice from five global CEOs on how to develop and maintain a dream team at the highest level. Illustration: Phil Hackett

Irene Dorner, former CEO, HSBC It is not possible for any leader, CEO or otherwise, to lead a successful team unless they know enough about each individual to understand what makes them tick and how to get the best out of everyone. This means devoting enough time to getting to know each individual on a personal level, to ensure you recognize their values, their preferences and so on. My method is to have frequent and regular team meetings to track progress and air issues, but also to hold a regular individual monthly meeting with each person on the leadership team for specific issues and for building the relationship. These meetings should not be cancelled, even if they are short, and my door is always open for immediate, more urgent issues. A CEO is the champion of her or his people. A champion must facilitate the success and the development of those for whom they are responsible. It is a sin for someone not to realize their potential and a sin for a CEO not to create an environment in which this can occur. A CEO does not have to like a person (although that helps) and it is actually quite difficult for a CEO to have genuine personal friends on a team. It is, however, imperative that a CEO offers the same assistance/ coaching to all, without favour; but (and it is a big but) each person will require something different. Working out who needs what, and giving it, is the crux of building a successful and effective senior team.

Dialogue | Mar/May 2015

Every employee from the most senior to the most junior must have a personal development plan. In the case of the most senior, it is usually inappropriate to try to offer training and development related directly to their business or products as the assumption is that they are competent, otherwise they would not have got the job.

Most senior leaders benefit from external coaching Irene Dorner

Most senior leaders benefit from external coaching or mentoring, sometimes on very specific areas of improvement. Some senior people require a surprising amount of “tender loving care” and the CEO must decide if the investment of the time and effort is worth the return, in terms of performance and outcome. The offer of assistance is usually most welcome as it shows that the CEO has been watching, is acting in their role as “peoples’ champion” and has taken sufficient personal interest in the individual to be able to help. The biggest leaps forward that I have taken in my career have been

as a result of coaching interventions, and having learned this from personal experience, I have always offered coaching to those who report to me directly, when appropriate, and it has rarely been anything other than a huge success. Interestingly, if someone refuses interventions and does not co-operate properly with an external coach in a safe environment, it speaks volumes about them. Strategies are not “once and done”. To keep them alive and understood in an organization requires constant repetition and communication by CEO and senior management, so everyone does have to be “on the same page”. Any hint that someone is nodding agreement but not taking action, must be acted upon immediately. The debates normally take place around the “how” and not the “what”. I insist, and make it an annual objective, for each team member to visit the others’ operations and also global operations, whether they lead businesses or functions. I also insist upon regular “show and tell” sessions from each head to the whole team. This is the most difficult area to “police” because people become immersed in their own issues and find it hard to make time to visit others, but this is how you build an enterprise-wide mindset in the senior team.

Carole Woodhead, CEO, Hermes UK The best senior management teams are made up of a diverse range of personalities and levels of ego and

leadership development

it is my job to manage this. I make it very clear that I am only interested in fact-based debate and have little patience with overly emotional discussions that are selfserving rather than for the good of the business. That said, I am quick to acknowledge and reward achievement. I also promote a “work hard, play hard” culture with regular social events where team members can get to know one another as I find this helps things gel in the boardroom. Every year, we have at least two strategy days which are held off-site where we agree on threeto-five areas of focus for the business that year, taking into account any customer feedback and market intelligence. These sessions are managed by an independent facilitator and we actively debate and discuss these issues until everyone is in agreement. These objectives are reviewed throughout the year to ensure they are still relevant and are being delivered. Every director receives a list of written objectives, which is reviewed and refreshed regularly. Their performance is rated against these objectives, which is also tied to monetary incentives. We have fortnightly trading meetings with detailed minutes. I also have a “random minute generator” where I will pick a few items from the previous meeting’s notes and ask the relevant directors for an update out of the blue. Finally, I attend each director’s team meeting at least once a year so I can see first-hand how they are directing their team and driving implementation. We operate a “country before club” ethos which means I expect each of my team members to put the overall business priorities ahead of any departmental issues. Therefore, it is vital that they have a strong understanding of the big picture and not just their area of responsibility. To help facilitate this,

help develop certain areas. We also have a number of group opportunities such as our Top Executive Development programme, which is designed to nurture talent within the business.

Jayne Archbold, CEO of Mid-Market Europe at Sage and CEO of Sage ERP X3 worldwide

There will be some big personalities in any executive team Julia Meighan

I insist that they make regular operational visits, which I believe are vital and motivational for the team. I expect every member of my team to have those skills, regardless of their role within the business and we have a number of initiatives in place to help. First, we make it very clear what we expect great leadership to look like with our Hermes Leadership Framework which lists the seven key areas. Each director’s performance is regularly reviewed against this list, and where we identify areas for improvement, we take the relevant action. This might involve additional training, and in some cases, we are happy to fund external mentors to

As a leadership team, first we ensure we understand what we need to achieve globally, and then we cascade this to our divisions. We look at all factors, both internal and external, and agree on key aspects affecting our teams. Typically, we then run a series of workshops across the business to gain feedback and finally agree on a plan. We communicate what we expect from people and always get feedback, then consolidate and test this via a cross section of people from various areas of the business. Next, we communicate the plan to the whole business, and this is key: we communicate our plan and our progress and where we have been successful. Teamwork is key to the effective running of the company. Some leaders don’t know how to manage the egos on their team. For me, ego management is about being really clear on decision-making rights, and making sure you have the right flows of information and communication within the business. You have to spend time making sure you have that clarity, so everyone one knows they are responsible for what, and their accountability, and the decisions they can make without reference up the chain of command. That is what real empowerment is about. Sharing and listening are essential. If people feel part of the organization this drives accountability and engagement. Get to know your people, understand them and how to get the best out of them. Talent

Dialogue | Mar/May 2015

leadership development

planning and giving people opportunities pays dividends. Employees should understand what the organization’s objectives are and how that translates to each of them. What you get then, is everybody working towards that goal in a small way – which can be supported with a reward system. Goals have to be measurable, simple and transparent. People want to feel they are contributing and are part of the wider organization. Leaders need to communicate the company vision, what they are trying to achieve, to ensure that everybody connects with that at an individual level. Formal and informal communication flows must be available and genuinely two-way. Give people the opportunity to contribute and feel part of what the company is achieving. The vital thing is to have variation and to tailor the channel of communication to the message. The first golden rule would be: don’t do it all by email. A second would be: don’t assume that everybody has heard the communication in the way that you want, or gets it the first time. The line manager of a failing employee has to take accountability for dealing with the latter’s learning and development. They need to be having honest conversations and providing fact-based, data-rich feedback on what’s not going well and where the areas of improvement might be. Line managers need to come up with realistic timescales for people to improve and receive feedback, and if it does not work, then line managers should receive support from the HR department for the process of managing the person to improvement, or potentially an exit. The line manager must

Dialogue | Mar/May 2015

be accountable for developing that person, help correct action if it’s not on track, and if it’s still not working, it is up to them to have tough conversations and develop an action plan.

Goals have to be simple, measurable and transparent Jayne Archbold

Martina Milburn, CEO, Prince’s Trust Focusing on four-to-five strategic imperatives is vital – mission creep sounds the death knell for projects and organizations alike. At the Prince’s Trust we have an exhaustive process to ensure that we are on target to achieve our central mission. We gather information from frontline staff, the wider leadership team and all stakeholders, including volunteers and disadvantaged young people. We also look at macro trends, especially political, and the funding environment. Once the strategy is agreed by senior management, we publish it and this guides us for three years. Alignment is incredibly important and we achieve this by being absolutely clear about what is at the heart of the Prince’s Trust – the desire to make a significant

difference to the lives of disadvantaged young people. If whatever we are considering is not on track to deliver this, then we don’t do it. My team of eight people, and the wider leadership team of 25, knows that it is there to lead the organization and we can only do this effectively if we work together to deliver our central mission. There are certain core practices that enable alignment. First, my team members represent the whole organization, not just their function, when we take decisions. Being an enterprise-wide leader is a criterion for joining the top team. Second, we performance manage everyone against our values, which are defined in behavioural terms, and my team members have coaches to help them achieve this. They also coach one another. Third, my team meets weekly, as well as for a whole day once a month. These meetings are mandatory and members have to explain to me personally if they cannot attend. Of course, we are all human and we all have egos – but we are all committed to the heart of the organization and align around it. Setting a strategy is one thing, delivering it is quite another. We work very hard to keep information flowing up and down the organization so we know if and where we might be getting stuck. We have 1,200 staff working in nine geographical areas, so my team and I undertake nine staff days a year, one in each of the areas, talking about how and why we need to work together to achieve our mission and prevent a young person failing. I have a quarterly open web chat where I spend 90 minutes answering questions, which is a great way of unearthing trends or general concerns. We also specify which team briefings can be done by email and which must be conducted face-to-face so that critical issues can be aired. I, and each of my senior team members, also spend one-to-two days a year individually shadowing a

leadership development

local manager just to listen to them. It is my mantra that we must keep in touch with what is really going on in the organization and be able to differentiate between someone having a bad day and an issue of broader concern that affects many people. It’s not always the big stuff that sets you back – we recently cut the mileage allowance too deeply and this was causing real challenges for people. I need to understand what Mr Smith in the Newcastle office is really thinking, just as much as what my team thinks, if we are to succeed together.

Julia Meighan, CEO of specialist corporate and marketing communications recruiter, VMA Group I think the best way to focus the executive team members is to remove them from the business to discuss strategies and plans. It’s all too easy to get caught up in day-to-day activity, so discussions away from the business are crucial. For example, at VMA Group, our executives spend a weekend away every year, solely dedicated to determining key strategies for growth. We use tried-and-tested methods which include producing an in-depth SWOT analysis to identify the biggest opportunities for growth and the barriers to company success. We also model hypothetical scenarios, including brainstorming sessions where we ask ourselves, “If we could build the business from scratch what would we want it to look like?” This exercise is central to the continued success of VMA Group; however, it is important to add that these objectives are monitored and reviewed quarterly, so the business can remain agile and responsive to external economic factors. Leaders are naturally confident people, so there will be some big personalities in any executive team. In order to manage egos, we ensure that all practices have plain objectives and clear strategies in place defining how

these are to be achieved. Success is very much aligned with business objectives, which makes any conversation with the leadership team completely transparent and much easier to negotiate. The only situations in which egos can be really challenging are when someone is not aligned with the company objectives and resists efforts to bring them into line. In these extremely rare situations, sometimes you just need to clarify what is expected of the individual, and continue with performance manage-

We operate a ‘country before club’ ethos Carole Woodhead

ment processes where necessary. Agreeing results-orientated key performance indicators (KPI) is critical. We empower the management team to set their own KPIs and we then ensure these are matched to the business growth strategy. In this way, members are driving their own activity and are more motivated to succeed. Also, management rewards are based on achieving results which further ensures objectives are met. Getting the whole executive team involved in developing strategic objectives ensures commitment to plans. At VMA Group, we are committed to being collaborative, so much so, that it is one of our five key values. Global collaboration is fundamental to our success, and as a result, our leadership team lives and breathes this value. Some members of

the leadership team have been here for more than ten years, and this longevity of employment really helps us instill our values in the new hires. As you would expect from a recruitment firm, our interview processes are quite stringent, and we make sure that the personal values and ambitions of potential recruits are aligned with the business before hiring. Once they are in the organization, all new staff are put through a rigorous “on-boarding” programme with ongoing training and professional development to match individual needs. Continuous personal development underpins the ethos of the business and we are committed to constant training for all employees at all levels. For the executive team in particular, we have a leadership development programme that supports business growth and provides a mix of both internal and external training and mentoring. We also work with the UK government’s Growth Accelerator Scheme to equip the executive team with the skills to improve continuously as professionals, and ultimately to get the best out of their teams. In an industry in which ‘people skills’ are vital, we really invest in employee development – without the best people, we won’t succeed.

Dialogue | Mar/May 2015

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PETER DRUCKER FORUM

+ WATCH THE VIDEO Click here for a video showing more highlights of the 6th annual Drucker Forum

Achieving the great transformation to business growth How can business leaders worldwide manage their way to prosperity? David Woods reports from the 6th annual Peter Drucker Forum. Images: courtesy of the peter drucker society

Dialogue | Mar/May 2015

PETER DRUCKER FORUM

n November 2014, a group of the world’s leading business, management and leadership practitioners and thinkers gathered in Vienna for the 6th annual Peter Drucker Forum. Over two days, delegates debated the “great transformation” needed to transition our struggling economies into sustained, ethical and dynamic growth. As media partner, Dialogue has published an extended write up of the entire forum, which will be available at www.dialoguereview.com from April 2015, but the following pages contain the personal highlights of the conference for some of the leaders who were there.

Rita Gunther McGrath, associate professor of management at Columbia Business School I’d like to summarize my contribution to this forum with one word: agenda. I would like to recommend to you to start with your agenda. I mean that incredibly literally. Here’s the exercise: take the last three or four meetings where you’ve got together to discuss important stuff. Write an agenda, print it out and highlight on that agenda all the places where you actually talked about the thing you thought was important enough to have a meeting about. I had a meeting when we were hoping to talk about innovation, but it was number 18 on the agenda, right next to “material data sheet update”. What does that tell you? It tells you it’s quite literally not at the top of the agenda. Innovation should be number one, two or three on every agenda. Then move on. If you want a new way of working, start there. If you do this highlighter exercise on your own life and your own calendar, I think you’ll be shocked by how little time you’re spending on the

Dialogue | Mar/May 2015

things that are important to you. Start there because your people will want to know “do you mean what you say?” They will figure out what’s important to senior people in their organization. Allocate your time in proportion to what’s important.

Nilofer Merchant, lecturer at Stanford University and professor at Santa Clara University Five frogs are sitting on a log – one decides to jump. How many are left on the log? Five – deciding to jump is not the same as jumping.

I think we need a new science: complexity science Fredmund Malik

We can sit at a conference like this and hear so many ideas and it would be easy to go back to work and do nothing. One moment of this conference really touched me. It was when Clay Christensen said capital should be invested in people. I have never heard that before. We don’t understand how these metrics work. Only 5% of any workforce knows the strategy of their firm. If we were going to build a new building we would have scaffolding for how to do this – we don’t understand metrics of investing in people and talent. If we had that, we would have a management and leadership argument to go forward.

It’s stupid to talk about engagement but not capture information about potential and capacity. We are not measuring how a person’s full potential can come to bear. When it comes to the economy I think we are remodelling a house and trying to do as little as possible. I think it’s time we built a whole new house.

Fredmund Malik, Founder, owner and chairman, Malik Management Institute, St Gallen I am an Austrian entrepreneur of a medium-sized organization of 5,000 people. The EU stands out for its complexity and unmanageability. If you look at this enormous complexity, it’s not that bad but we have to change it. We have 26 legal languages in this strange construction. Think of translation costs alone. The probability of making mistakes in translation makes it almost impossible to communicate. It will have to change. I think we need a new science: complexity science. Mid-sized businesses are the backbone of European economies; 90% of organizations in Europe do not care about stock exchanges but are selffinanced on equity. We call them SMEs but this is a misnomer because size is not what is important. I call them entrepreneurially-managed enterprises. They are managed for the long term – for generations. They’re running their organizations differently. They don’t need sustainability because it is already part of their organizations. What is the minimum we need to earn to stay in business? We need to redefine capitalism. Capitalism is not the business of making profit, but staying in business. Capitalism comes not from banks and stock exchanges, but from satisfied customers; giving as many people as possible meaning in their lives.

PETER DRUCKER FORUM

We can’t go to one end or the other – we can’t leave people in their natural state or drive them to an artificial state. We need to prepare people to be the best they can be and nurture a culture of honesty.

Martin Wolf, chief economics commentator, The Financial Times

Roger Martin, Academic director, Martin Property Institute, Rotman School of Management I am motivated to think about the nature of the old and what happens when we try to make people into “non-peoply kinds of people”. I would say people are social creatures who get enormous meaning from their social structures; they’re deeply emotional and much of their emotion is subconscious. They’re optimistic; they’re spiritual; they need to tell stories about themselves and their challenges, such as limited self-control.

Out of this natural state, society has grown some good things that help us with self-control – legal and social structures, for example, help us co-ordinate things. Pharmaceuticals help us control nature. To say that we should somehow keep people in their “natural state” is not right. There are good infringements on the natural state that make for a better society. However, in many ways things that make us less human are deeply problematic for the economy. Management has brought structure to organizations, making us think that the need is financial compensation and this doesn’t help people be people. This is unnatural and there are better incentives in more abstract goals. There are anti-social structures such as cultures where employees are disposable.

There’s a wonderful atmosphere when people are thrilled and enthralled by questions that, quite literally, I never think about. I’ve learned more in this conference than anyone here. Over the next year or two I will work out what it means. I have some thoughts that occur to me and they are a little provocative. A clear feature of a lot of what I’ve heard here is that “the future is always better than the past and today”. My response is “not necessarily”. I don’t think the new dynamic corporation that removes people after three years is best. I think about little issues such as the fact that we have all this technology, but the developed countries’ productivity growth is the slowest it’s been since the Second World War. We have radical increases in inequality characterized by income and ‘gentrifitocracies’. In all the discussions about motivation I haven’t heard what managers pay themselves.

Dialogue | Mar/May 2015

PETER DRUCKER FORUM

We are living through a prolonged slump and US performance is the worst it has been since the 1930s. There is no sign this is going to change. These are systemic failures that cannot be solved by individual firms or their managers and they can only be solved by changing systems and we can only change systems by changing ideas. I didn’t hear enough of that in this conference. If you look at rates of economic growth in developed countries, unemployment and stability, it’s quite easy to argue that the ‘1950s and 1960s were better than today. Even when great ideas are out there for change, people haven’t internalized them.

Dov Seidman, founder and CEO of LRN In each pause we hear the call. Over the past two days [at this conference] we have paused. Only humans have a pause button and when we pause we can imagine our future, we can reconnect with what matters, we can re-connect to our values and I cannot think of a more important time than now, to learn to pause and inspire others to pause, think and become more conscious. In the pause, we looked back. I think keeping Drucker’s enduring principles in mind, but bringing them forward in an innovative and enduring way, is an important call in this community. I’m not interested in Capitalism 2.0 or 3.0. I’m interested in going back to Capitalism 1.0: Adam Smith and The Wealth of Nations. Smith never even used the word “capitalism’” but talked about a system of liberties. I’m not interested in reforming, resetting or rebooting, which I hear after every boom, bust and crisis. Reform is more about keeping things the way they are with some changes. When you pause, you can rethink and we need to have the courage to rethink our definitions of leadership,

Dialogue | Mar/May 2015

margins and management. How do we see the world? Let’s rethink society because Peter Drucker said you can’t have a healthy business in a sick society. I think if we’re honest, transformation is difficult and scary – but the only way to deal with difficult things is to ask difficult questions.

We are living through a prolonged slump Martin Wolf

There is one last thing I want to offer that all humans can do. Only humans can handle journeys. Life goes up and down – health, friendships, relationships; hang in there and be resilient. Business, as it stands, is not a journey. We have got into the habit of trying to control the future through analytics, and business has a tendency to focus on the linear. I think there is a lack of honesty. Journeys can be relentless; they have resilience; you can pivot to where you’re going and experiment. I would urge leaders to frame the picture as a journey. The most important journey is the inner journey – who we are; what we stand for. I choose optimism over pessimism.

Marc Merrill, president and cofounder of Riot Games I would like to quote Peter Drucker, where he says: “We now accept as a fact that learning is a lifelong process of keeping abreast of change and the

most pressing task is teaching people how to learn.” We have to learn how to learn and acknowledge things we don’t know. This is an experience outside of the other conferences I attend and I have enjoyed hearing everyone’s perspectives. It’s important for us, as a society, to engage in these types of discussion. I thought it might be useful to talk a little bit about how my company is structured. Our philosophy is like a triangle, with leadership at the top and structure underneath it. Culture is extremely important; it should be the rubber band or membrane that wraps around an organization. Culture is the most important element because a weak culture will mean the organization will drift apart over time if people don’t understand the value of what they are doing. A strong culture helps people understand and is a selfcorrecting mechanism. One thing we focus on is really nailing culture.

Herminia Ibarra, professor of leadership and learning and professor of organizational behaviour at INSEAD I love the idea of culture as a rubber band. It connects very nicely to another “takeaway”: freedom from, and freedom to. When it comes to business transformation, we have to ask what we want to scale. Do we want some tweaks on basic assumptions? Do we want to remodel the house or build a new house? That debate is still not clear. I thought it was different to hear the contrast of views in terms of how much is really possible within the system that exists. Is management the victim of external forces? Is the firm no longer interesting? Organizations have become the middle manager on a societal scale. Organizations are necessary; they are

PETER DRUCKER FORUM

desirable. But how can you make them more apt? I think it is system perspective, which requires a new and different set of ideas. I think some of the ideas we have about leadership are ripe for rethinking. But how can we start moving these ideas from ecosystems to systems that can architect and build that bridge for us?

Tamara Erickson, executive fellow at London Business School and founder and CEO of Tammy Erickson Associates We’ve all come here with some very different hats on, from big organizations and small, to wrestle with the interesting word “transformation”. But we are not gelling on the question, “Is transformation something we all need to do?” I’m here to tell you that it is. One of the oldest maxims that I hold, is that form needs to follow function. The function that organizations had 100 years ago was that they were trying to turn cottage industries into those that could develop scale. I would argue that the kind of organizations we built were brilliant and perfectly well designed to perform those functions. You would come up with the same things. But hierarchy and specialization is not the primary function of organizations today. Whether you want to call it “collaboration” or “leveraging intelligence”, that is the primary function of the organizations that will be iconic in the century we live in. We have a challenge regarding career paths; metrics and so on. I would love to measure whether or not every role in every company was filled by a person qualified to do that job. That’s what I would like to know before I invested. If we look at the kinds of organizational change, we see that we need different performance management

structures and different metrics, but most importantly, we need different leaders. We need leaders who can create a context for adults. I would like to suggest a call to action that you think about these things. You need to think about a role around building collaborative capacity and ensure that the right people know each other. Get people to talk. Think about being a provocateur. Think about a sense of ‘glue’. If you have a great culture, it absolutely serves as the filter you need to weed out the stuff that won’t work for your organization.

Leadership has never mattered as much as it does now Gary Hamel

You have to ask great questions. As leaders we need to think of ourselves as teachers to help our organizations learn some of these transformative skills.

Gary Hamel, management expert, consultant, MIX cofounder and professor at London Business School In all my writing and all my speaking, I very rarely talk about leadership. But maybe I should. Leadership has never mattered as much as it does now, but around the world, leaders seem so inadequate when it comes to the challenges they are facing. Somehow they come up short. I don’t think the problem is with leaders but the role has become too complex for

individuals. How can ordinary people lead extraordinary organizations? Very few of us have the instincts of Steve Jobs or Desmond Tutu. Great leaders are rare. Transformation has little to do with leadership development, but has more to do with creating opportunities for natural leaders. What do you think about when someone says “leadership”? If you only think about the top team, you will underexploit a lot of leadership capacity in your organization. There will always be hierarchies. Your leadership is a reciprocal of your followership on the web and I think this is how it should be in every organization. When people are incompetent, they should be voted off. This is working at scale in some amazing organizations. People are losing faith because they are losing share of voice. Power should move up, not down. People who have power are good at getting more of it. The financial crisis was caused because of a system of the elite, by the elite, for the elite. How can you have trust in a system where your share of voice is going down? If you approach a task with a contrarian spirit, with humility and compassion, you can do amazing things that will shock and surprise you and you will leave the world a better place. That’s my hope for this conference.

Clayton Christensen, professor of business administration at Harvard Business School A number of years ago, I co-authored a book about improving our schools. My co-author attended and spoke at a conference on the topic. Jeb Bush was there – at the time he was governor of Florida. He took my co-author aside and asked him about his PowerPoint

Dialogue | Mar/May 2015

PETER DRUCKER FORUM

We have to learn how to learn Marc Merrill

slide on child-centric learning, which helps teachers teach better, because they teach children in the way that is most applicable to them. Jeb Bush asked if he could use the slide from the presentation. My co-author asked if he could have three slides in return. Jeb Bush was a good friend of the governors of West Virginia and North Carolina and these governors were giving keynotes and they wanted to borrow slides as well. Eventually they decided to standardize their language and their slides. They ended up speaking the same language over and over again. That’s how I feel now. My goodness, we have great ideas! I’m not sure I can replicate what everybody has said at this conference because there were so many great ideas. But let’s take the

Dialogue | Mar/May 2015

best of our ideas, our language, our ways of communicating and expand the breadth of ideas. Then we can standardize. If we focus and clarify we will have impact. In Jewish tradition, at main meals it is customary to set a place for Elijah to remind people to think about what he stood for. As leaders, if we come together, we should set a place at the table for Peter Drucker. He has given us great ideas and great language. He gave so much that we can use to focus on what we are trying to do.

I am so optimistic because I just don’t think the best products, processes and services have been developed yet. We have an opportunity to focus our capabilities. I think that when you see someone underperforming, or screwing up on occasion it’s because they don’t want to succeed but most of the time it’s because they don’t know how to lead. We have a lot of people here trying to figure it out. We have a great message and we need to focus the message to help these people.

interview

Dialogue | Mar/May 2015

interview

Challenging the status quo in business Nicknamed “the Jane Bond of Innovation” Nilofer Merchant talks to David Woods about her concept of Onlyness and how, in the social era, the power in business will shift from companies and institutions to networks of connected individuals Illustration: BEN TALLON

hat does it mean to be empowered? What, in fact, is power? And are the people who have the most power in business, the right people to have it? Nilofer Merchant’s work is set to answer these questions and while her research is groundbreaking, what makes it unique, challenging and game-changing, is that she’s asking people around the world for their stories. Merchant identified a notable shift in the notion of value creation in the social era. In her 2013 book 11 Rules for Creating Value in the Social Era, she argues two points. The first is that value creation has shifted away from organizations to individuals; that “connected people can now do what once only large organizations could”. The second point is that advantage in this social era comes from the ability to tap into the varied talents latent in each and every one of us.

Dialogue | Mar/May 2015

Her next step is to find real people who are doing this in reality, tapping into this talent, and to tell their stories. She explains: “There are so many challenges in the world - from saving our environment, to addressing patriarchy, to keeping the web open and free, to reforming education to

Networks are the new companies

be relevant for the 21st century, reinventing healthcare, and so on,” she says. “The stories of people around the world who have set their minds on addressing these seemingly impossible challenges are the ones I’m chasing. Most of us long to make a dent in the universe, to leave a world that’s different and better than the one we were born into.

+ WATCH THE VIDEO Highlights from Nilofer’s famous ‘Got a meeting? Take a walk’ TedEx talk

“We need to unite in a common cause and march in the same direction.” Merchant is a lecturer at Stanford University and a professor of management at Santa Clare University. She has gone from working in admin to being a CEO and a board member of a NASDAQ-traded company during her 20-year career, attracting monikers such as “the Jane Bond of Innovation” along the way for her ability to guide Fortune 500 and startup companies through impossible odds. Companies she has worked for include Apple (with Steve Jobs) and Autodesk, as well as start-ups in the early days of the internet. Merchant is one of the few people who can say she has fought a competitive battle against Microsoft (for Symantec’s Anti-Virus $2.1B annual business) and won. Dialogue caught up with her in December 2014, when she was working on her forthcoming book, due to be published in 2016. She explains: “Onlyness: Make Your Ideas Powerful Enough to Dent the World will show how anyone can make a real dent in the world without the backing of powerful people or

interview

Nilofer Merchant on Onlyness “Each of us is standing in a spot in the world in which only we stand. It’s a function of our history and experiences, visions and hopes. This is Onlyness. And it’s this spot in the world, this place, that grounds us in our ability to create value. We see things no-one else sees, we have ideas no-one else has, and with that we bring our own sense of how to dent the world. Today, in the social era, connected people can do what, once, only large organizations could do. And it starts first by being deeply connected in your Onlyness and then finding others with whom to make those ideas powerful enough to dent the world. Onlyness is the one thing that only that particular individual can bring to a situation. It includes the journey and passions of each human. Onlyness is fundamentally about honouring each person: first, as we view ourselves and second as we are valued. Each of us is standing in a spot that no one else occupies. That unique point of view is born of our accumulated experience, perspective, and vision. Some of those experiences are not as ‘perfect’ as we might want, but even those experiences are a source for what you create. For example, the person whose younger sibling has a disease might grow up to work in medicine to find the cure. The person who is obsessed with beautiful details might end up caring about industrial design and reinvent how we all use technology. The person

who has grown up under oppression might end up advocating freedom of speech and thus advance the condition of his country. This individual Onlyness is the fuel of vast creativity, innovation, and adaptability. Someone can be (for example) the only woman in a crowd, but this is not her Onlyness. In this case, she is unique because of the context. Onlyness may be present in that story, but Onlyness is not a relative thing. It is more about what makes that person unique as a result of their own story, or their ‘through-line’ of their own story, their own narrative. I am trying to point out the inherent source of each person. Embracing Onlyness means that, as contributors, we must embrace our history, not deny it. This includes both our ‘dark’ and our ‘light’ sides. Because when we deny our history, vision, perspective, we are also denying a unique point of view, that which only we can bring to the situation. Each Onlyness is essential for solving new problems, as well as for finding new solutions to old problems. Without it, people are simply cogs in a machine – dispensable and undervalued – and we’re back to the 800-pound gorilla approach in organizations (and our economy). With it, gazelles [employees, community members, and partners] are singularly unique and able to contribute meaningfully.”

Onlyness is a compulsion that will light up the world

belonging to an organization… By tapping into their deepest passions, enlisting allies, and galvanizing others to act as one. While it references social technologies, the point is not the tools but how people get things done.” So Merchant has taken the brave step of writing a blog in tandem with the book, where she is putting the ideas she intends to discuss to her followers. She plans to translate these into case studies and real life examples for the book.

It’s a risky and unusual strategy for any author, not least one with a reputation to uphold, but this quirky and original style of leadership thinking has become Merchant’s trademark. She delves deeper: “Short of being some singular giant like Steve Jobs, or

Nelson Mandela, the only way until recently, that we could pursue this goal consciously and systematically has been by joining an institution – a company, the military, the government, or the Church – and rising in its ranks until we acquired sufficient power to bend it to our purposes. The only problem: by the time we get the power, assuming we get it at all, we’ve probably lost the fire. Or bought into the status quo.

Dialogue | Mar/May 2015

interview

Most of us long to make a dent in the universe

“The internet has eliminated many barriers of geography, cost, and time. Today, connected people can do what, once, only large organizations could do. Networks are the new companies, the new way of getting things done. While it hasn’t changed all power or given you a blank permission slip of access to get things done, it’s certainly made more things possible, to anyone. This is much more than an exciting or trendy management concept, according to Merchant. She warns that Onlyness will not be a “nice to have” in the modern workplace, it will be a business imperative if our economies are to survive. Her concept of Onlyness refers to each person’s unique position and perspective in the world; each of us is standing in a spot that no one else occupies, she points out, and this individuality can be exploited. (See box, page 58) “Businesses are failing because the people running them don’t think differently,” she tells Dialogue. “They think in terms of money, organization and capital. But if they were to think about the seven billion people in the world and the latent talent that is there – this could be a real changer. “If someone is in charge of a business, why would they want things to change? Why would they give up their position? They own the house. But what if that house were a bad piece of property? It’s time to build a bigger house and to invite more people in. This is a tectonic shift – creating value by giving power to new people. “The ‘old guard’ won’t be in power forever. An old school way of thinking

Dialogue | Mar/May 2015

is to fight for everything you’ve got. To me this resembles the old view of the Divine Right of Kings. Kings believed they had the right to autocratic power until revolutions came across the world and overruled them. I believe the same will happen in business. In the modern Divine Right of Business Leaders, the power will shift away from the elite and bring with it massive change.” The reformations in Europe starting in 1517, or the global age of revolution from 1789, were major tectonic shifts that diminished the control that religion had over the world and the power autocratic monarchs exercised over their subjects. These revolutions and reformations culminated in the industrial revolution of the 19th century, which arguably created the blueprint for our modern workplaces. Together, these revolutions and reformations changed the face of modern societies, and historians writing about them often describe the reformer Martin Luther as the

“spark in a powder keg” that led to the reformation in 1517. Merchant agrees that we are operating in a “21st century powder keg” and a new spark is needed to ignite the change management for which “thinkers” consistently call,. “The time for navalgazing is over,” she asserts. “We have to act out passions before we can truly believe in them. Our histories, experiences, visions and hopes pull the strings that lead to our adventures. “And like giving birth to a baby, the ideas we have are born of us – but we have to allow them to go out into the world. Academics are awarded for their stature, but people have grown to want to become more important as individuals than the ideas they have. Really, the important thing should be getting an idea over the line. “We can all lead,” she muses. “A study from The University of Illinois asked if leaders are born or made and discovered that only 30% of what makes a leader is genetic and the remaining 70% comes from life experience. The door is starting to open. Authority can come from an idea rather than an individual, but it does matter who is at the table in a creative, knowledge economy. Not everyone is a creative source.” Individuals who are afraid to embrace their Onlyness could risk being left behind when the forecast change does occur. Merchant explains: “If you don’t embrace your Onlyness, you will be alone. Those who try too hard to ‘fit in’ will end up lonely. The secret to Onlyness is to stop trying to fit in

interview

Nilofer Merchant Nilofer Merchant is bestselling author on innovation and collaboration, a TED speaker, and a business leader with 20 years of experience. She has made a career out of asking people to act differently. Merchant has personally launched more than 100 products that have netted $18 billion. Merchant’s book, 11 Rules for Creating Value in the #SocialEra, was named by Fast Company as one of the Best Business Books of 2012. It follows her previous bestselling book on collaborative work, The New How; it shows how to close the proverbial “Air Sandwich” gap between strategy and execution. In 2013, Merchant received the Thinkers50 Future Thinker Award. Her business experience ranges from working with Steve Jobs at Apple and advising the C-Suites of GE, IBM, Logitech and m ore. Corporations such as Symantec, Yahoo, Google, and many others have also turned to her for guidance on the social era, how to design product strategies, enter markets, defend against competitors, and optimize revenues. As a speaker, Merchant has headlined alongside Malcolm Gladwell, Simon Sinek, Arianna Huffington, author Margaret Atwood, and other inspirational individuals. She has also delivered for clients such as ICBI Fund Forum, Credit Union Executives Society, Symantec, and AT Kearney. Her famed TED Talk, titled, “Got A Meeting? Take A Walk” has been viewed online by 1.5 million people to date. The talk posits that “sitting is the new smoking,” and encourages sedentary office workers to be both healthy and productive by walking, rather than sitting, at meetings.

and stand up and be brave. Onlyness is a compulsion that will light up the world.” The important underlying premise of Onlyness is that it is part of a group that’s not ‘listed’. For instance, LGBT people, women, or people of colour are told what they care about in terms of society’s norms. Onlyness allows these people – or any people – to stand in their own strength. In the past, women have had to sacrifice their femininity in order to get ahead in the workplace. But now things that are seen as ‘feminine’ traits, such as empathy, are seen as an asset. “It took me 13 years to complete my education and I tend not to mention

my school. I didn’t go to an Ivy League school and it seemed that my education didn’t count as much as that of some others. This transformed my point of view. But education is an ‘entrance’. I’ve met people who have been told they are not smart – whom I would not have met had I not gone to the school I did. These are people who have had to work harder and not give up.” Closing our conversation with a call to Dialogue readers, Merchant concludes: “If you are interested in how the least powerful among us can

Each of us is standing in a spot that no one else occupies

earn a seat at the table, join in. I’m hoping you can help me to find the people, to learn from them, and with any luck, tell their stories well so we can all learn, together. If we’re going to navigate and thrive in these modern times, the social era, we’re going to have to find the trailblazers among us.” Join Dialogue and Nilofer Merchant in bringing Onlyness to the world. Visit www.nilofermerchant.com for more information.

Dialogue | Mar/May 2015

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creativity

Look

at this image. Just look… Stay with it a bit longer… Let the thoughts and connections play… … now what if I were to tell you this was the scene of a crime? © Victoria and Albert Museum, London

What images are now emerging in your mind?

Dialogue | Mar/May 2015

creativity

Reframing our perspectives

creative to be more

The simple act of looking at things differently can lead to innovative ways of thinking and working, writes James Wilson

The question on the left, is what Martin Barnes, the V&A’s senior curator of photographs, asked me as we were taking a walk around the museum. Barnes is a renowned expert in his field, a highly intelligent man, diplomatic and polite, but, as I often find with experts, someone whose expertise brings an authority in relation to which I feel quite inferior. This sets up a barrier to connection. Having had a number of these “walk and talks” with him and feeling that we had not properly connected, I was struggling. So, I asked him to “show me some photographs”. He seemed to open up immediately, in the comfort of employing his own focus and intelligence, and we began to talk more freely, openly and constructively. The photograph on the left is not, in fact, of a crime scene. It is one of

Dialogue | Mar/May 2015

Creativity underpins innovation, solves problems, opens up new vistas.

a series taken by the French photographer Eugène Atget between 1897 and the 1920s as part of a project to record “old Paris” driven by the disappearance of buildings as schemes of

+ read more

Find out more about some of the stunning collections housed in London’s V&A Museum

modernization swept the city. And, as Barnes told me, it was the philosopher Walter Benjamin who noticed “how these images operated beyond their ostensible purpose, appearing unintentionally, but uncannily, like the ‘scene of a crime’”. What I noticed, however, was how the simple invitation “show me some photographs” and the act of looking at something together, had completely changed our conversation, and with that, the thinking we could do together. What is it about walking, talking and looking at things that changes the conversation? How is it different from our usual ways of working? And what’s the point? I’d like to share three stories about objects that might shed some light on these questions and why I use this as a consulting practice.

creativity

Reframing “That’s interesting,” she said,i pointing to a vase.i

“But that one…,” she tailedi off, indicating a vase of ai very different shape.i

Harriet Cunningham is a writer. If you knew her, you would realize she is a natural writer. She is the sort of person who, as a child, you would suspect might have disappeared for an hour and come back having written a short novel about animals in her notebook. She is a copywriter and music critic. Cunningham is extremely proficient in taking the thoughts of a director and turning them into 25 words summing up a new opera production. As a critic, she can communicate a concert - the quality of the music and the performance and the experience of the event - in 200 words, to a tight deadline. When we met at the V&A, she was struggling with the prospect of a Doctoral thesis. Her research topic is the Dartington International Summer School, an influential festival that, for more than 60 years, has hosted many of the leading figures in modern classical music. She was in London to look at archives, interview people and gather data. As we walked, she grappled with the idea of producing 50,000 words. “So, how are you starting?” I asked. “I’ve sent them a plan - it follows the chronology of the festivals, maybe with interviews in between, every 10 years or so.” “And how is that for you?” “I’m not used to so many words. It’s such a huge subject. The plan does not say what I want it to. It does the job for the university but it doesn’t do it for me.” “OK. Well let’s just walk and see what we notice.” “That’s interesting,” she said, pointing to a vase (pictured top left). “What is it about the vase that you are noticing?” “It doesn’t look like a vase. It’s not supposed to look that way.” “But that one…,” she tailed off, indicating a vase of a very different shape (pictured bottom left). “Looks like a vase?” I prompted. “No. It looks like the shape inside a vase.” I paused and then said: “Let me summarize. The first vase doesn’t

look like a vase should look. And the second vase looks how the space inside a vase should look. So, there’s something about space and shape. Can you tell me a bit more?” She smiled: “It suddenly reminds me of a fantastic concert I saw at Dartington. It was a performance by one of the composition students. He did two pieces. One was The Note between the Spaces and the other, The Space between the Notes. “The first piece was really sparse,” she explained, miming a finger playing a note on a piano. She paused and waited, then mimed a different note being played. “The Spaces between the Notes was a really heavy piece, like musical concrete.” She mimed banging both her arms on a keyboards, paused, then banged again. ”It was brilliant!” She was animated now, remembering, her hands and body replaying the piece silently, but communicating volumes. “So can you make that connection between the music and the two vases you just noticed?” I asked. “It’s something about space. But I can’t get my head around all those words I have to write.” “OK, let’s reflect a bit. You’ve written a plan for your thesis and it doesn’t seem to ‘fit’. It’s like the shovel vase - it is a vase, but it doesn’t ‘feel’ right. What does have more resonance for you is the other vase which looks like the space inside a vase. The two pieces of music are a perfect illustration of this relationship - the space and the notes inside and around each other. The thesis structure you have doesn’t match the space inside. “So, what if you try to craft that space rather than the structure? Start from a moment or an artefact - perhaps an object, maybe a piece of music, or a performance - and tell its story. And see how it starts to fill the space in between your thesis plan. What space will you be left with? Think of another artefact and tell that story. And another, and another. And now how will your plan look? What shape will it be? Will it fit? Will it look right? What will have changed for you?” We paused and let these new

Dialogue | Mar/May 2015

creativity

thoughts settle. In the gardens at Dartington, carved into a piece of stone set into a low wall, is a quote from William Blake: “To see a world in a grain of sand And Heaven in wild Flower Hold infinity in the palms of your hand And eternity in an hour.” The act of creation - finding the notes between the moments of silence, or shaping clay to hold a vase-shaped space - is a paradoxical activity. Writing about them can be just as tricky - an act of creation in itself, one that must hold gently the space the music or the vase has made in our lives.

Alongside Reading Dialogue’s Risk issue (September 2014), I was struck by how easily business leaders can become polarized. In terms of risk, we talk of hard risk and soft risk. And we cast our perspective as either mitigation or as appetite. The binary nature of organizational life is writ large – “you’re either with us or against us”, “on the bus or left behind”, “us and them”, “profit or loss”, “success or failure”. In the creative and cultural sector there

Dialogue | Mar/May 2015

The Negative Bowl offers common ground on which to build, and the possibility of a third perspective, or a fourth or fifth

is a demarcation between creative and non-creative. The usual way in which we conduct our communication does nothing to help. Meetings are often face-to-face, across a table, emails fly back and forth, decisions are yes/ no, do we/don’t we. We have to “draw the line somewhere”. I would argue that since the adoption of personal computing in the ‘80s, binary is now as ingrained in the way we live as in the way we work. Computers work by deciding “yes or no?” millions, if not billions, of times every moment. There is no middle ground, no “maybe”, just a finer and finer degree of “yes ... or no?” One or the other, not both. In traditional change theory, Kurt Lewin’s force field analysis sets up negotiation as a battle to change another person’s intention or view to your own and so align the energies. How does one break this pattern? The physical act of walking with another person around the galleries at the V&A is not an “either/or” activity. The museum has more than seven miles of galleries and there are endless numbers of routes you can

take. Most importantly, it is almost impossible to do this face-to-face. One of you wouldn’t be able to see where you were going, raising the risk of bumping into an object or a display case. This active form of engaging is about being alongside. You walk alongside one another, and this means you are looking in the same direction, and you are moving in the same direction.This is a change in the normal working perspective. You are both coming from the same place, you are standing on the same ground. When either of you notices an object, you are regarding it from the same physical perspective. Of course, you will see different things in the object in front of you but you are starting from the same place, and in the act of exploring these differences, you are making meaning together. An object that demonstrates this concept physically is Ane Christensen’s bowl (pictured above). This bowl is the first of Ane Christensen’s Negative series. Simply by cutting away the metal with a piercing saw she has created a threedimensional optical illusion on an

creativity

otherwise plain, functional bowl. The piece is made from a single sheet of copper. You may not see it in the photograph, but standing in front of the bowl in its case at the V&A, you notice how the box appears and disappears as you move around it. I took Steve Chapman, chief adventurer at Can Scorpions Smoke, to see it and we spent a few moments finding just the right spot to stand and look. The box suddenly, yet gently, appeared. It was a quiet, shared moment of joint observation, seeing the same thing. And then it changed as we started to find new views, sharing our discoveries, creating new meaning together. Playing with perspective helped Steve and me to reflect on the usual way meetings are constructed. We noticed that most of the meeting spaces we encounter in offices are “stuck”. The tables are fixed and can’t

be moved or removed. The chairs in meeting rooms don’t tend to have wheels on them, so once you’ve sat down it’s very difficult to change position. Why do we have wheelie chairs to work on our own at our desks, but not in our “meeting” rooms? In physical terms, if we were to put the bowl on the table during a meeting, only a few people would “see” it. The meeting would have “failed” most of the participants. In psychological terms, the usual way we meet and work is designed against movement, collaboration and agreement. And I would suggest it fails us. Lewin’s force field supports the zero sum nature of much of our business lives. The Negative Bowl offers common ground on which to build, and the possibility of a third perspective, or a fourth or fifth; in fact, as many perspectives as we are prepared to discover.

Navigation Looking at objects is not a substitute for doing business. Metaphor can act as a way of looking, not necessarily as a way of doing. General Semantics scholar Alfred Korzybski famously stated: “The map is not the territory”, to highlight how we allow ourselves to confuse an image with reality. This idea is neatly demonstrated by what we think of as the London Underground Map. Harry Beck, who created the iconic design, was keen to point out that this was not a map, but a diagram. It does not show the territory (underground or otherwise); it is not accurate in terms of terrain or proximity. Johnson, Riddle & Co’s “map” (below) was an attempt to provide a more geographical representation. Even so, it’s still not the territory. You may notice that the Metropolitan line (marked red on this map) has been flattened, in order for it to fit into the

Johnson, Riddle & Co 1909

Dialogue | Mar/May 2015

creativity

space available and allow room for the text box. Harry Beck’s original image is a diagram of connectivity. It is a practical illustration of how to use the network of connected lines to make one’s way from one station to another. You then have to “emerge” into the territory. It provides a shorthand. It is a partial, but pragmatic, view. Consider the organization chart – we use these diagrams to provide a navigational tool for our view of the organizations in which we work. Usually pyramid-like, they give us an overview of the power structure and the hierarchical relationships. The organization chart is a shorthand, a simplification. The larger our organization is, the further we want to drill down, the more detail we wish to provide, the more complicated the chart becomes. Complicated refers to construction - tab A slots into tab B. And it’s also about comprehension. The Boeing 747 is a very complicated structure. However, we can still understand it by looking at the manual, at the build plan, a schematic. Organizations are complex. Complexity is about relationships. Adrian Mclean, in his latest book Leadership & Cultural Webs in Organisations: Weavers’ Tales, reminds us how a spider spins a web of sticky threads in order to catch its prey. However, not every thread is sticky. Only the spider knows which threads are, and which are not, sticky and is therefore able to navigate its way around without getting stuck. I have a colleague, who, for a time, worked on the reception desk at the V&A. Because he is personable, he knows everyone at every level. He knows about their jobs, their work, and their families. Former directors and trustees of the V&A know him. Hence, when you want something done, you ask him. He knows who to ask. He knows the subtext of the organisation. He knows the short cuts. He knows which lines are sticky and which are not. If we were to plot the real connections, the shortcuts, the ways to “get

Dialogue | Mar/May 2015

things done around here”, our chart would begin to resemble a map of international flight routes – a dynamic picture, firework-like, of the number of connections. These are lines of relation, rather than authority. They are active. They are moving. An organization chart is a static construction; an organization is active, living. Just like the tube map, the organization chart gives us an idea of where things might be. If we want to find something, we need to come out from underground, walk about and make connections.

The binary nature of modern life is writ large. What’s the point? In these stories, we have seen how noticing something “not quite right” helped a writer to reframe her perspective on her Doctoral proposal (for which one could read annual report, international strategy, speech to the shareholders and so on). We have found out that walking together fundamentally changes the way in which we look at things, and ultimately how we work together. We have found a different way to consider organizations, seeing them as a complex system of connections and relationships rather than a transport map. “So what’s the point?” you may wonder. The point, I believe, is difference. To get a better appreciation of difference, we need to connect two great thinkers to create an answer. In 1979, anthropologist Gregory Bateson stated that information is “news of difference”. As animals, we are hardwired to notice difference. It is how we survive - we look for difference in the environment. “Is it safe? Is

it dangerous?” As human beings, we are particularly adept at comparing these differences and making connections. We do it in our business life when we analyse a spreadsheet, write a profit forecast, update the risk register. McGilchrist (2009) added that “creativity requires the ability to make associations between widely different ideas and concepts” and furthermore that “creativity depends on the union of things that are also maintained separately.” Walking together, noticing difference, particularly if done at the V&A, produces those widely different ideas and concepts. In a rapidly changing world, one which is becoming increasingly complex, we need creativity more than ever before, to find new answers to new problems, to make sense of the slew of data in which we are swimming. Creativity underpins innovation, creativity solves problems, opens up new vistas, new ways of working, new products. The approach that we have been sharing cuts through the usual way of thinking. It discovers new images, new ideas and concepts. It demands that you see difference and that you regard things differently. More than that, it encourages you to appreciate difference, to seek it out, hold it, store it, use it to create new thinking. So let’s go back to that first photograph... Look at it... Stay with it.... What’s the difference you see now?

l James Wilson is an OD consultant at the Victoria & Albert Museum. He is director of the V&A Innovative Management & Leadership programme.

further reading Mind and Nature, a necessary unity, G Bateson (1979), Hampton Press The Master and his Emissary, I McGilchrist (2009), Yale University Press Leadership & Cultural Webs in Organisations: Weavers Tales. A. McLean (2014) Emerald Group Publishing Ltd

ALTERNATIVE FINANCE

Financial power to the people + read more Find out more about crowdfunding and how it could impact your business

Financing projects via crowdfunding involves choosing the right model, researching competitors, planning your campaign and keeping your crowd enthused and updated, writes Chris Buckingham. Illustration: shutterstock/laura hawkins

rowdfunding is a very generic term but there are two distinct “paths” to the concept; consumer lending (where consumers raise debt for things like a car) and project finance (where people raise funds for all sorts of projects). It becomes confusing as each path also has its own set of “models” that hang like fruit beneath it (see figure 1 overleaf): I am going to concentrate on the project finance path on the right-hand

Each crowdfunding path has its own set of models side of the diagram, but before I do, it’s important to explain the personal finance path and models first. There are three models in this path:

Long - which is debt taken and lent for longer periods of time (typically three-to-five years), where the capital is paid back with high street bank equivalent rates of interest. Long+ - a hybrid model where lenders can lend for longer periods of time but they are lending to very high risk individuals and so the rates reflect this and are very high. Really this is a fusion of long and short models. Short - is payday or vulture lending, typically for very short terms at very high rates of interest. Without getting into the ethics of

Dialogue | Mar/May 2015

ALTERNATIVE FINANCE

the short model it should be noted that the two main platforms (the Lending Well and Piggy Bank) are not presently accepting further funds from the public. Let’s now leave the personal finance path and turn to the project finance path. I use the term “project” rather than “entrepreneurial” or “business” path as there is an issue of sustainability in these projects. Some (about 20% of my clients) are creating a short-term project that is ephemeral in nature. In other words, it is a shortlived artistic or community-based project that exists to achieve some localised goal and then ends. The intention for the management behind these projects is not to be the next Dyson or Facebook but rather to create some form of value for their (often local) network. The term project

Dialogue | Mar/May 2015

then becomes all encapsulating in that it also includes bigger projects looking to raise serious amounts of cash as well as these local causes with a much smaller scale. For ease of use I also use the acronym DREIM to help remember the models in the project finance path, this stands for: Donation - straightforward philanthropy Reward - where funders receive a gift for their financial input Equity - shares are now offered for the crowd’s financial input Interest - the raising of debt by established firms (often with security) Mixed - which is often a blend of reward with equity or interest. Motivations change in each of the DREIM models and this is important

if you are considering crowdfunding your project. Choosing the model that is right for your project is not that easy - and there are many factors to consider before a decision is made. These relate to the business model, the value that management can offer the crowd through their crowdfunding activities, and the perceptions that the crowd is likely to have of the project. To give a clear example, I recently helped an engineer successfully raise funds to enable the tooling and build of a unique outdoor product. The initial consultation was to see if the management behind the product could use the reward model and thus avoid having to lose a degree of control through giving away equity. The interest model was not an option as they had been trading less than two years (a standard requirement) and they

ALTERNATIVE FINANCE

CROWDFUNDING

Personal Finance

Long

Project Finance

Long +

Donation

Reward

Equity

Interest

Short

Mixed

Figure 1: Crowdfunding paths and models

were also reluctant to offer personal guarantees. The donation model was not an option either as they were a limited partnership and not a charity or community interest company (some platforms also accept cooperatives). So the reward model was the most attractive model to the management team. Having eliminated the other models, the next step was to audit the reward platforms (the websites offering this service) and look at the other crowdfunding campaigns that were active on these platforms. The questions I needed to address were: Was there a similar product on the platform? Was it succeeding? For how long had it been campaigning? When did it launch (seasonality)?

Some clients are creating a short-term project that is ephemeral How much was it trying to raise? What gifts was it offering? How was the campaign structured (for example, video, updates, use of social media)? Which platform had it used? By recording as much of this information as possible we were able, pretty quickly, to eliminate some of

the smaller platforms and start to focus our research on the most likely platforms that would lead to the project reaching it’s funding target. These targets, of course, vary from campaign to campaign. Some crowdfunding campaigns are only seeking a very small amount (my lowest campaign has been for £300) while others are seeking a great deal more (my highest so far has been £1.6 million). Note too, that I use the term “campaign” to talk about crowdfunding activities. This is because what management is really doing, when it attempts to crowdfund a project, is asking the crowd for permission to create the vision it is proposing. I call this ‘crowdconsent’, because the crowd is being asked to give its consent to the creation of the vision.

Dialogue | Mar/May 2015

ALTERNATIVE FINANCE

The activities that are involved in any campaign are pretty much standard across the different models. These involve: Video - a presentation of the product and the team Main page pitch - the text that will present the product and the team The promise - this could be the gift in the reward model, the share class in equity or the level of interest tolerance in the interest model Updates - these are in the form of responses to questions from the crowd or progress reports or appreciation to the crowd for its financial input These four areas need careful planning long before you launch. Standard practice is to start the planning at least eight weeks prior to launch. Failure is still common in crowdfunding (nearly 60% in some estimates) so putting as much as possible of the planning and strategy in place before you launch is vital. This should also include attracting high net worth investors. The more money the management can attract early in the campaign, the better. Levels of pre-crowdfunding investment range from 15% to 40% - but the reality is the more money that has been promised to the campaign by members of your personal and professional network before launching, the better. The reason for this is that it acts as a motivator for the crowd. Members of the crowd have their own subjective perceptions and make their own judgments about the campaign. Each member of the crowd will possess separate bits of information they have managed to glean from the wording in the video, of the accounts or the

Dialogue | Mar/May 2015

business plan or from any other piece of the puzzle they have scrutinized. So by getting investors involved nice and early, the management team is sending a signal to the crowd that says: “Hey, look at us, we must have something good here as we already have £X invested.” This is echoed in the need for updates and keeping the crowd informed about what’s

Early investors act as a motivator for the crowd going on with the project. While the campaign is running, it is essential that management keep the crowd informed through regular contact (at least three times a week). This contact can be via the platform itself (in the case of the reward model, these are called updates and are often comments made by the crowd; in the equity and interest models they are more likely to be questions posed directly to the management team) or through other external social media channels such as Facebook, Twitter and LinkedIn. These points of contact are important as they enable issues and concerns the crowd may have to be addressed. For example, a very early campaign on which I was working, was raising debt, using the interest model. The company launched the campaign and all was progressing as expected

when, on day three, a question from the crowd was addressed directly to one of the directors of the company. The question was: “How strong is your relationship with your spouse?” At first glance, this question may seem a really odd thing for someone considering an investment in the company to ask. But what this member of the crowd had spotted was the £50,000 that had been leant to the company within the past 12 months. Suddenly, the relevance of the question becomes very clear. But this also raises another important point regarding addressing questions or providing updates about the project. It must be remembered that although the question has been asked by a specific person and the response is addressed to this one specific person - the response is open for scrutiny by the crowd. Care must be taken to craft a response or make an update that is relevant and balanced, so as not to offend or make claims that are false. l Chris Buckingham is a crowdfunding researcher, who has worked on wide-ranging campaigns related to everything from the arts to zoos. He has contributed to more than £2 million worth of crowdfunding activity and is in the process of publishing the first book to cover all five models in the ecosystem. With a background in the management of the creative and cultural industries, he was one of the early users of crowdfunding and still finds the sector fascinating as more applications and models emerge. He lectures at Winchester School of Art and University of Winchester on this, and related topics.

The Crowd Has Spoken

To celebrate the launch of Chris Buckingham’s latest title, Crowdfunding Intelligence, on May 28 in central London, we will be hosting CrowdNexus, a full day of engaging thought leadership, changeprovoking panel discussions and interactive workshops. You will have the unique opportunity to learn from, and network with, the very best thinkers in the crowdfunding world, to discuss your own campaigns and walk away with some valuable insights and practical applications.

We will be discussing:

Transmedia Storytelling: Bringing Crowdfunding Stories to Life Robert Pratten

Creative Crowdfunding: The ‘Other Side’ of Crowdfunding

Crowdfunding: Raising the Next Billion

Chris Buckingham

Babou Olengha Aaby

CrowdFunding = People + Change

The State of Crowdfunding: 2015 and Beyond

Madi Sharma

Epi Ludvik Nekaj

Join the very best crowdfunding experts, campaigners and entrepreneurs at this exclusive one-day event.

2015 Speakers Include: Anastasia Emmanuel – UK Hardware, Tech & Design, Indiegogo Epi Ludvik Nekaj – CEO & Founder, Crowdsourcing Week Babou Olengha-Aaby – CEO & Founder, Mums Mean Business Robert Pratten - CEO & Founder, Conductrr Madi Sharma – UK Member, The European Economic & Social Committee Chris Buckingham – Author, University Lecturer & Founder, Minivation Plus many more…

Want to find out more?

Get in touch to request your invitation to this premier gathering of crowdfunding experts and inspirational thought leaders.

Email: niki.mullin@lidpublishing.com Visit: www.crowdfundingintelligenceproject.com Call: +44(0) 77 649 895 99

CONVERGE • CONNECT • COLLABORATE

What do you aspire to? Are you a strategic thinker? A life-long learner? A leader in your business community?

You belong at SLF Become a part of our vibrant cross-industry community of leaders, innovators and change makers. Check out our exciting lineup of speakers, programmes, partner events, special offers! Visit slftoronto.com or scan this code to join our mailing list:

GUEST OPINION

Jeffrey Kuhn Founder and CEO, GrowthLeaders®

Conventional thinkers need not apply

early 20 years ago, strategy guru CK Prahalad suggested that established firms were not resource-bound, but rather were ‘imagination-bound’. Fast-forward two decades and little has changed. Incumbent firms continue to place an inordinate emphasis on defending and extending today’s core business, at the expense of creating tomorrow’s exciting growth platforms that transform the lives of customers and create new markets. Despite the sluggish economic recovery that continues to plague much of the world, industries are maturing and morphing at unprecedented rates. The industrial era paradigm of building a Maginot Line around a business and defending it has become untenable in many sectors, as barriers to entry fall and competitive arenas become saturated with fast followers and brazen imitators. The very notion of sustainable competitive advantage—once considered the Holy Grail of strategy—is being called into question by business researchers and practitioners alike. Precedent and incumbency are no longer guarantees of future market leadership. Research conducted by the Deloitte Center for the Edge indicates that, over the past 55 years, the average company tenure on the S&P 500 has declined from 61 years to 18 years. Furthermore, the rate at which companies have lost their leadership position in a given industry has risen 39% . Storied brands like Kodak and Sears are being supplanted by 20th century firms such as Google, Netflix, Amazon

Dialogue | Mar/May 2015

and Facebook. Well-funded startups such as Uber and Airbnb—paragons of the “sharing” economy—are blazing new socioeconomic trails and upending traditional industry structures in previously unimaginable ways. Droves of Davids are nibbling away at the market share of the industrial Goliaths.

Well-funded start-ups are blazing new socioeconomic trails For established enterprises, times of transformation require new ways of thinking and leading. Strategic leaders are needed to navigate uncharted waters; recognize market patterns earlier and better than competitors; conceive new business models; and capture emerging growth opportunities. What do I mean by strategic leadership? You have heard this term before, but perhaps are not quite sure what it means, or what it looks like. In simple terms, strategic leadership resides at the intersection of strategy and leadership. It’s a form of leadership that is future-orientated and broad in scope. It emphasizes building the organizational capabilities and culture that strengthen a firm’s competiveness and its ability to create customer and economic value on a continual basis.

Strategic leaders embody a language and lens distinct from that of operational managers; it’s a language and lens of creating long-term value, unlocking new market growth, extending the frontiers of innovation, and fostering organizational renewal. It’s a language of growth and increase, rather than cost-cutting and downsizing. By virtue of their size and complexity, established organizations tend to have an abundance of operational managers who toil on the Sisyphean treadmill of faster, better, and cheaper. But these organizations are short of strategic leaders with the foresight, imagination, emotional energy and edge to create the markets, businesses, and industries of the future. Operational effectiveness is paramount to business success, but being a cost leader alone won’t generate the level of growth needed to achieve market leadership today and spawn growth platforms tomorrow. Continuous improvement must be combined with continuous growth. Organizations come alive when the conversation shifts from operational effectiveness to growth and renewal. Strategic leaders lead with big ideas, energize the organization, and create the DNA of innovation and growth in their businesses. Today’s changing market landscape reflects a qualitative shift from earlier eras, yet much of our thinking about leadership is steeped in industrial era paradigms and practices. Just as the market landscape has changed, so must our thinking about leadership.

REVIEWS

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s on organizational ve long-term success. seeking to lead their tomorrow.” Board, A.T. Kearney

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oll up their sleeves and hat invites bravery and em fit for the future and n and thrive in.” he Oxford Strategic rsity of Oxford

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Taking the Organization from the Industrial Era to the Age of Ideas Dr Mark Powell and Jonathan Gifford

the age of ideas

LID Publishing

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05/11/2014 11:09

From the title, it’s pretty obvious that this business book focuses on bringing organizations out of the dark ages and into the 21st century. The premise is that organizations are entities which take their structure from industrialization; command and control structures that are, according to the authors, without change, going to ‘..fail – suddenly and in large numbers’. Scary stuff. Mark Powell and Jonathan Gifford take 10 key “paradoxes” that are preventing organisations from succeeding and, using thought leaders, real business examples and innovators, they illustrate ways in which businesses can work towards thriving in the ‘age of ideas’. The book is set out into 10 clear chapters with a summary after each, making it really easy to read. There are also many contributors and stories which engage the reader and demonstrate how to work on each of the ten areas in isolation or as part of a slow but steady movement towards change. The overarching theme is letting go of control. Trusting the people who work within the business to do what they are employed to do; though this is not, by any means, a new theme with generational theory already bearing this out. However what the book does is identify where businesses are going wrong and although stating what may seem obvious at first read, I had a few ‘light bulb’

thoughts which I would look to implement immediately. The only negative I have is that, unfortunately, there are not many people who can instigate these ideas. Ironically, if the reader is in an organization which really requires this change, they would be unlikely to get any of these ideas into the boardroom. Instead it is one for forward-thinking entrepreneurs and leaders who have a desire to shake things up; recognizing that the culture of an organization comes from the people within, not from a plaque on the wall of head office. It is a shame that when an organization is starting to fail, people become more controlling and not less so and so this book must act as a wakeup call for anyone with a growing workforce to stop, take time out and think about how their actions are influencing the next generation of leaders. The authors assert that this isn’t a “one size fits all” book and I would agree that any change has to be well thought out and suited to the particular workplace. It is certainly a book to generate thinking and ideas, not a manual of ‘how to’, and has some very inspiring stories of organizations that are already taking the next step towards the “age of ideas”. Jo Harley, managing director, Purple Cubed

Dialogue | Mar/May 2015

REVIEWS

Discovery path: ADAPTABILITY Adaptability is the new strategy. All success is successful adaptation. All failure is a failure to adapt. Adaptability is the powerful difference between adapting to cope and adapting to find success, victory and happiness for all of us. This discovery pathway was created by Dr Max Mckeown the author of The Strategy Book, winner of the Commuter Read at the Chartered Management Institute Book of the Year 2013 and Amazon’s Best Business

The Art of War for Small Business Defeat the Competition and Dominate the Market with the Masterful Strategies of Sun Tzu Becky Sheetz-Runkle Chapter 4. The Art of War for Small Business If you’re running a small business, you may find this brief reading especially relevant. Drawing on principles from Sun Tzu’s The Art of War, the author provides examples of leaders who realized the course they were on needed to change, and suggests tactics to ensure your change strategy is a success.

Future Work Changing Organizational Culture for the New World of Work Alison Maitland and Peter Thompson Chapter 10 Making it happen yourself This chapter from Future Work provides practical case studies and suggestions to help you recognize when to adapt and how to do it successfully, whether you’re an individual contributor or a leader.

101 Leadership Actions for Managing Change in The 21st Century Ollie Malone Chapter 3: Prepare Early “A a significant part of the leader’s success is based on his or her ability to maintain the organization’s results during times of change, preparation— mentally and otherwise—becomes critical. There is no substitute for good preparation, and there are few

Books of 2012. He is also author of The Innovation Book, Adaptability: The Art of Winning in an Age of Uncertainty, and four other books. He works as a strategic coach with Fortune 100 companies and is also a popular keynote speaker at conferences worldwide. See more at: https://bluebottlebiz.com/book/why-adaptabilityshould-be-your-top-job-skill#sthash.g85t8qia.dpuf

antidotes for poor preparation.” Speaking now specifically of organizational change, Chapter 3 of this book from Ollie Malone calls out why preparing for any adaptation process is paramount to its success. You’ll find here a step-by-step process to prepare yourself and your organization for immediate and future changes.

Adaptability The Art of Winning in an Age of Uncertainty Max McKeon Chapter 5. Adaptability Finally, it’s important to remember that a failed adaptation, or a failed change management process, should not stop you from continuing to identify and seize opportunities to adapt. Here I illustrate why companies who learned from their failures were ultimately able to move on to subsequent, successful adaptations.

Adaptability The Art of Winning in an Age of Uncertainty Max McKeon Introduction: in search of adaptability What does it mean to adapt as an individual or as an organization, and how can we ensure the result of any deliberate adaptation is an improvement from the status quo? This introduction sets the stage for understanding how to adapt in a way that is effective and brings positive impact. Learn the three steps to ensure deliberate adaptation works, and gain a glimpse into what it takes to move from the recognition that you need to adapt, to successful adaptation.

See more at: www.bluebottlebiz.com

Dialogue | Mar/May 2015

REVIEWS REVIEWS

back to the future HEALTH – BLUE BOTTLE BIZ’S TOP FIVE

Pharmacy on a Bicycle Eric Bing, Marc J. Epstein Berrett-Koehler Publishers

Traditional pathways to delivering healthcare to the poor are failing. Bing and Epstein show how micro-innovations at the level of care is the way to end grim health statistics. This is a book about solutions. What works may come from governments, NGOs, businesses, or donors. All are part of the solution and all have a role to play.

Management Design Managing People and Organizations in Turbulent Times Lukas Michel LID Publishing

Culture and Climate in Health Care Organizations Jeffrey Braithwaite, Paula Hyde, Catherine Pope Palgrave Macmillan

This book showcases international research on health care organizations. It presents diverse approaches to studying differing health settings. Chapters look at topics such as organizational change, attitudes of clinical professions, how teams work and where conflict occurs.

Handbook of Health Economics

Mark V. Pauly, Thomas G McGuire, Pedro Pita Barros Elsevier

What new theories, evidence, and policies have shaped health economics in the 21st century? Editors assemble the expertise of leading authorities in this survey of substantive issues. The book covers developments in health economics and equity in healthcare.

Improving Health Care Safety and Quality Judith Healy Ashgate

Responding to hospital scandals and accounts of unintended harm to patients, this author draws on her experience of analyzing the health systems of over a dozen countries and examines whether greater regulation has increased patient safety and health quality.

The American Health Care Paradox Bradley, Elizabeth H PublicAffairs

This book shows how and why the US healthcare “system” developed as it did; examine the constraints on, and possibilities for, reform; and profile inspiring initiatives from around the world.

In turbulent times, management needs greater vision and so I picked Lukas Michel’s latest title, Management Design, on that basis. Similar to the author’s previous book, The Performance Triangle, which was written and published in 2013, Michel’s follow-up promises management to presented as a system through a combination of graphics and text. In this case, the book didn’t disappoint. Its quirky square shape and illustrations, diagrams and photography on almost every page makes it not only an interesting read but also a lovely addition to a manager’s coffee table. In summary, the book has been created to help business leaders and entrepreneurs think through their options and devise a style of management to support the needs of their organization, support their talent and build foundational capabilities to help their company thrive. On the management side, it does offer a good basis; investigating topics such as change, agility, resilience, culture and organizational challenges. Management models such as this are valuable because they enable line managers to think and make decisions easily and then act in line with organizational objectives. The book does suggest actionable guidelines for the reader to put the lessons and exercises into the context of their own roles. It contains several takeaways on how to manage time, focus attention and release productive energy; all of which are critical when times are tough. Finally, it suggests what the author describes as a “change road map” on how to enact the principles of ‘management design’. From my perspective, I would recommend the book at an operational level of management as the visuals and size of the book have made it feel more like a business textbook than a readable leadership piece. Eugenio Pirri, VP, people & organizational development the Dorchester Collection

Dialogue | Mar/May 2015

REVIEWS

The Art of Business Communication

apps apps for leaders: ASANA

How to use pictures, charts and graphics to make your message stick Graham Shaw Pearson

Work without email? Surely this is the thing of unicorns and pixie dust. Not with the Asana app. (https://app.asana.com/) As the old adage goes, a picture is worth a thousand words, and so I chose Graham Shaw’s book, The Art of Business Communication, to better understand how the use of pictures could engage those within the workplace. Initially I struggled to get to grips with the book; the first few pages use a tone reminiscent of my school teacher explaining how to draw in art class. However as the book promises to offer a “winning formula for making business communication fun and engaging” in a simple manner, I persevered. On this point the book succeeds. Shaw’s use of big text, short paragraphs, bullet points and, of course, drawings make it a straightforward read. It is very practical and there are many easy-to-replicate techniques which encourage readers to move away from heavy text and incorporate visuals into their delivery. There is even a handy visual toolkit at the end of the book, ideal for those who require a little inspiration when preparing their communications. Specifically written for business professionals; this is the perfect “dip in and out” read for those who are required to make presentations, sales pitches or deliver training sessions. It encourages you to stop and think before preparing your delivery; identifying where you can use an image to depict your message. Because of this, the order of the book is particularly useful, with the chapters walking you through preparing a communication - from understanding what you’re really trying to say, attaching meaning and knowing the right type of visual to use, through to choosing the perfect equipment for your delivery, adopting the right tone and how body language affects the impact of the drawings. Is it a groundbreaking book in the communications space? Well no, however it doesn’t pretend to be. Instead, it’s a title where you don’t need to be Picasso in order to be more creative with your communications. And so, for that reason, I would recommend it as one to keep on your desk for some quick inspiration the next time you need to make sure your message really sticks. Steve Rockey, HR Consultant to the service industry

Dialogue | Mar/May 2015

Set up workspaces, projects, tasks and subtasks. Assign tasks, create a calendar view of “to-do” lists and a red/amber/green dashboard view of all work. Attach files from cloud or server drives. Keep up-todate with work projects without asking colleagues for updates. All this can be done without ever sending an email to each other about it. Comments, “likes” and messages can be sent to people all through this “open” working environment, so there is no need to clog up busy email inboxes . The app works on smartphones, tablets, Google Chrome browser extensions and the internet and everything seamlessly synchronizes so you’re on top of the game. So: • No more panicked emails to team members : “where are we with X project?” • Shared working on projects wherever you are via whatever device is your preference • Invite people in; allocate them tasks and roles and create your team virtually around projects leaving you to spend time before or during working on the relationships and human factors • Conducive to Scrum and Agile methodologies so can be worked into sprints and product development cycles. Asana is revolutionizing the way I work, with a team of collaborators across the world and has allowed me to work so far this year with a zero inbox. Not only is it efficient, but it is less stressful and an email killer. It even comes with videos to show you how to use it. The future workspace, right here, right now. Asana. l Perry Timms is an independent HR/OD practitioner, writer and speaker, and is CIPD adviser on social media & engagement. Follow him on twitter @PerryTimms

REVIEWS REVIEWS

back to the futurE

apps for leaders: The business model canvas

Getting Things Done David Allen David Allen’s 2001 classic Getting Things Done suggests it is possible to have an overwhelming number of things to do and still function productively. His suggestions include: 1. You should only have one filing system. 2. Turn your in-tray upside down and work on the principle of First In First Out (FIFO), not LIFO (Last In First Out), as many people do. 3. Use a five-stage system: collect, process, organize, review, do. 4. Do it, delegate it, or defer it. 5. Nothing should take more than two minutes, nor go back into your in-tray. Allen says the four crucial factors are context, time, energy and priority. We should all be able to review our tasks in relation to these four factors, sort through them, and get them done effectively. There is also a model for reviewing your work, using an aerospace analogy: 50,000+ feet: life 40,000 feet: three- to five-year vision 30,000 feet: one- to two-year goals 20,000 feet: areas of responsibility 10,000 feet: current projects Runway: current actions The key to being relentlessly effective is to concentrate only on the next physical action required to move forward. If you have problems with organization and getting things done, this book could sort you out. The more relaxed you are, the more effective you will be. Applied to all parts of your life and not necessarily the most urgent bits. The book contains lots of inspirational quotes: “This constant preoccupation with all the things we have to do is the single largest consumer of time and energy.” “Blessed are the flexible, for they shall not be bent out of shape.” “Everything should be made as simple as possible, but not simpler.” “I am rather like a mosquito in a nudist camp. I know what I want to do, but I don’t know where to begin.” “The middle of every project looks like a disaster.” “There are risks and costs to a program of action, but they are far less than the long-range costs of comfortable inaction.” Its essential message is to do fewer things, only do the right things, and take less time doing them. Kevin Duncan is a business author. His blog greatesthitsblog.com summarizes 200 important books. Contact him on kevinduncanexpertadvice@gmail.com

At Cognify, we create apps for the workplace, which is why we recognize that innovation is fraught with risk. To counter, we have adopted the Business Model Canvas within our business so that we can assess whether our creations will be both effective for our customers and financially sustainable. The Business Model Canvas is a widely prasticed template which uses the nine blocks of a traditional business model - customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure. The app version follows the same methodology; enabling business leaders, embarking on new initiatives, to sketch out their business ideas. They do so by populating the nine blocks using virtual sticky notes. Users can create and rearrange ideas in each of the blocks to form a robust and cohesive model to test their theory. You can build your model automatically and share via email to get input from others or export as a jpeg to include in presentations. The app also has a calculator with the basic mechanics of a spreadsheet containing 12 revenue and cost formulas to test the profitability of your ideas. Additionally, it produces a quick report and breakdowns by offer, customer segments, and costs. With its simple layout and navigation, the app is very easy to use. It also offers clear support features so that users can get the best out of it. We particularly like the learning centre which connects to up-todate videos. While, for an app, it’s on the expensive side, we believe it’s well worth the investment for any business taking project development or innovation seriously. The Business Model Canvas is available on iPad for $29.99 l Tim Hall is director at specialist gamification company, Cognify

Dialogue | Mar/May 2015

GlobalWarning are you talking and acting on environmental risk?

why does incorporating environmental risk management matter to stakeholders/ shareholders?

@Dr_ChrisWedding Those 350 investors want carbon pricing + end to fossil fuel subsidies #GlobalWarningHour Companies know it matters and 5,000 issue annual sustainability reports. 66% of the Fortune Global 500 issue #sustainability reports per EY #GlobalWarningHour Consider @BurtsBees as example - it matters to their customers #GlobalWarningHour

ADMITTEDLY, THERE ARE MANY CHALLENGES IN EXECUTING SUSTAINABILITY INITIATIVES. WHAT ARE YOUR TIPS FOR BEST PRACTICE AND VALUE CREATION?

@Dr_ChrisWedding Think about brand value: Millward Brown estimates that the value... of the 100 strongest global brands exceeds $2.9 trillion #GlobalWarningHour

@Dr_ChrisWedding Consider employee health and productivity... #GlobalWarningHour Bank of America did this to build one of worldâ&#x20AC;&#x2122;s greenest skyscrapers #GlobalWarningHour

Dialogue | Mar/May 2015

Following our risk management issue in September 2014, where you told us that you felt ‘environmental risk’ posed the greatest risk to international business; we wanted to ignite a global dialogue on this topic... We asked two CSR professionals to join us for the discussion: Daniel Vermeer: PhD, executive director at the Center for Energy, Development and the Global Environment (EDGE), Duke University and Dr Christopher Wedding: the CEO of g-bit.com, a market intelligence company and CEO of IronOak Innovations.

why do you think certain companies are so adverse to incorporating environmental risk management strategies still?

@Daniel_Vermeer: #1 reason: Many see sustainability as a cost center #GlobalWarningHour #2: Over-focused on shortterm issues – don’t consider long-term shifts in market #GlobalWarningHour #3: Complexity – env factors complex, interacting, mix of slow unfolding, punctuated with rapid step change #GlobalWarningHour

where can companies begin in assessing their environmental risk?

@Daniel_Vermeer Ask your people – many things known in the company that are not known by the company. #GlobalWarningHour Make sure env risks are accounted for in company’s ERM systems - cannot be isolated. #GlobalWarningHour

@Daniel_Vermeer Think about the whole value chain – where are the weak links in your supply networks? #GlobalWarningHour

Check out our website for the full discussion:

www.dialoguereview.com/global-warning-hour Dialogue | Mar/May 2015

Your

Edited by Kyomi Wade

your.dialogue@lidpublishing.com

@dialoguetweets

The Dialogue Review

www.dialoguereview.com

www.youtube.com

www.facebook.com/dialoguereview

DorchesterCollection @ DC_Careers

VP People & Organisational Development @ eugeniopirri spoke to @DialogueTweets about integrating #GenZ into #business http://ow.ly/GObjj Robotic Indust Assoc @ RIA_robotics

Nice blog by @ robatkinsonitif ‘Embracing the rise of the machines’ http:// dialoguereview.com/ embracing-the-riseof-the-machines/ … via @DialogueTweets

Pia June Jørgensen @ Piajunedaugaard

RT @DialogueTweets: Want to remain relevant in the ‘#Social Age’ as a #leader? Follow these 3 steps. http://ow.ly/FBIqB #DialogueTalk Dialogue @Dialoguetweets

“For #GenZ, motivations can change almost daily” - @eugeniopirri VC, @DC_LuxuryHotels http://ow.ly/GNhOp

Get online; get social; get involved

ON THE WEBSITE: Why managers should move away from ‘herd mentality’ Gavin Best, director of interim management at Veredus Leaders and managers arguably face greater challenges now than ever before. We are all operating in what has been coined a volatile, uncertain, complex and ambiguous environment. It’s almost impossible to know which direction a business will take in the near, let alone the more distant, future or what external influences will change corporate strategy. It’s understandable that many turn to their peers for guidance and best practice examples when making potentially difficult decisions. But is this really the right approach? This concept is something many commentators refer to as the ‘herdmentality’. Put simply, this is the idea that people in senior positions accept conventional wisdom in the belief that if everyone else at the same level is doing the same thing, then it must be the right approach. However, I’m sure many of you reading this might be thinking that this is absurd; after all, as an executive you will always make an informed decision that takes account of all influencing factors. I want to point out, though, that this herd mentality is in fact ingrained, not just at the top, but right across the human race. Indeed, historical research has demonstrated that we are all more inclined to follow our peer group. Just take the infamous experiment by psychologist Stanley Milgram at Yale University, in which a group of individuals passively accepted the need to administer what, in appearance, was a dangerous electric shock to a fellow participant. While the individual was an actor, the rest of the group was unaware of this

at the time. Despite the victim’s distress, each participant followed the lead of the others throughout the experiment. Read the full article at www.dialoguereview.com

Not Knowing – A new leadership paradigm Steven D’Souza and Diana Renner “We are called upon to do something new, to confront a no man’s land, to push into a forest where there are no well-worn paths and from which no one has returned to guide us… To live into the future means to leap into the unknown, and this requires a degree of courage for which there is no immediate precedent and which few people realise.” Rollo May from The Courage to Create Although more than 20 years old, the above words written by American existential psychologist Rollo May are more relevant today than ever. We find ourselves increasingly confronted by complex challenges that we cannot even fully describe, let alone solve. The leadership terrain is constantly shifting. There are no well-worn paths we can tread and no guides to show us the way. In the dynamic complexity and interconnection of the world in which we live, no easy answers are possible. Our confidence and competence are tested every day. At the edge of the unknown we confront our own uncertainties, fears and anxieties. For many of us, facing the unknown is painful. We are neurologically hard-wired to be comfortable in the familiar. In this new space we may feel groundless, embarrassed, perhaps even ashamed or angry that we cannot crack the problem, keep up with the pace, or “go back to the way it was”. Read the full article at www.dialoguereview.com

Dialogue | Mar/May 2015

YOUR DIALOGUE

Why brands should know their why Anthony Ryman, managing director of Grow Qatar shares insight into why “the why” is so important for brands. Starting a business is a most exciting (and frightening) activity, akin to bringing a baby into the world. You have to nurture it, feed it, be patient with it and teach it how to survive on this planet and develop a character and personality designed to add value, impress and find its rightful place in society. A baby has your DNA, so it is imbued with a set of characteristics upon which he/she can build while developing their own way of being. A product or service, especially something new, designed by you, doesn’t have these and yet, one could argue, that the character and

personality of your product – how it communicates and what it stands for – is what is going to make it stand out as a great brand, or just an ordinary brand. So what is a brand? And why is it important? Wally Olins said that brand is the greatest gift that commerce ever gave to culture. Why is this? Brand has become a shorthand for how we, as individuals, express and communicate who we are and to what we aspire. The products we buy and the services we use – and how we use them, help to define us as personalities and communicate on a deeper level so that others can approach us as being part of their tribe of people who love Apple or Montblanc or BMWs.

Based on retweets, comments and reposts, here’s readers’ favourite leadership quote from www.dialoguereview.com:

“To handle yourself, use your head; to handle others, use your heart.” Eleanor Roosevelt http://dialoguereview.com/ #leadership

Read the full article at

> COMING UP NEXT MONTH: Globalization: Is it a force for good or for evil? Dialogue IS BROUGHT TO YOU BY... editorial board

editorial

Dr Liz Mellon

David Woods

chairman

EditoR

Tom Albanese

Laura Hawkins

CEO Vedanta Resources

Michael Canning CEO, Duke corporate education

Irene Dorner Former president and CEO, HSBC US

Professor Pedro Nueno

MAR/MAY 2015

art director

Sarah Wild copy editor

Kyomi Wade Social and community manager

President, china europe international business school

Karina Robinson Founding Principal, Robinson Hambro

David Woods editor

Management Martin Liu Publisher

Niki Mullin

Copyright 2015 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN: 2053-4361 Printed by Pensord, www.pensord.co.uk

BUSINESS DEVELOPMENT manager niki.mullin@lidpublishing.com

Dialogue | Mar/May 2015

the last word

“It’s high time

we invested in people”

Karina Robinson Founding partner, Robinson Hambro, and former senior editor of The Banker

illustration: Ben Tallon

fter the financial crisis of 2008 and its fallout, the gloomy forecast was that globalization would be under threat, with protectionist policies leading to ever higher tariff barriers and ultimately a dire trade situation similar to that of the years between the first and second World Wars. However, physical goods have not been the target, nor foreign direct investment (FDI) - witness grateful European governments selling a host of companies to the Chinese. It has, however, impacted the availability of capital, as banks retreat to their home markets and to servicing multinationals. The category that has been most affected by the crisis is people, or what economists call “labour”. For those left behind by globalization, bereft of skills and insecure, and others who are uncomfortable in a multiracial, multinational world, blaming ‘immigrants’ for flooding the labour market, and depriving local people of local jobs, is an easy option. They no longer need hide their opinions, but are warmly embraced by single issue political parties such as the UK Independence Party (UKIP), France’s National Front or the Dutch Freedom Party. Prejudice is fuelled, in the West, by fear of extreme Islamic terrorism. We now expect atrocities in our midst; incidents such as the al-Qaeda attack on the offices of weekly satirical newspaper Charlie Hebdo in Paris in January. We

are not surprised to hear of radicalized Europe-born Muslims defecting to Syria to fight for the Islamic State. Yet acts of terrorism are not new. Not that long ago, ETA in Spain, the Red Brigades in Italy, Baader-Meinhof in Germany and the IRA in the UK were active. Their activities came to an end and, in some way that we cannot yet envisage, so will these attacks from extreme Islam. Meanwhile, it is undeniable that inequality in the West has increased as asset prices have risen faster than GDP and wages. Even if it is a more nuanced situation than French economist Thomas Piketty argued in his influential 2013 book, Capital in the Twenty-First Century, the perception of inequality exists within society at large. For too many years now, companies have used the excuse of global competition and economic stagnation to freeze or cut salaries. Piketty showed that there had been a decline in the real US minimum wage. A year ago, it was 28% below its 1969 peak at purchasing power parity. In the UK, real take-home pay is set to continue lagging behind pre-crisis levels into 2017, according to the EY (formerly Ernst & Young) Item Club. This has knock-on effects for consumer spending. Big corporations are sitting on massive piles of cash. The S&P 500 minus financials, in essence the US corporate sector, is sitting on cash balances of $1.37 trillion, compared to $600 billion in 2007.

So is much of the European blue chip sector. Governor of the Bank of England Mark Carney, calls those funds “dead money”. Investors debate whether it will be spent on investments or returning money to them, via dividends and share buybacks. In fact, those funds need to be shared with workers. Wages need to rise. An increase in economic prosperity for those with non-transferable skills will create a feel-good factor. It will help undermine the appeal of the political parties whose main messages are hate. It will lead to increased consumption. It will undermine the politics of envy. And it will be a worthwhile weapon in the multi-faceted fight against Islamic extremism and its dire consequences.

Dialogue | Mar/May 2015

The advancement of economic growth is dependent on a diverse and equal workplace. Itâ&#x20AC;&#x2122;s time to rise to the challenge and step up to the plate. Through engaging editorial by some of the most original thinkers in the world, LID Publishingâ&#x20AC;&#x2122;s series of books will look at gender equality, board diversity, female leadership and building the female talent pipeline in a groundbreaking and compelling way; not mourning the continued lack of gender diversity across the world, but celebrating the innovations and successes that women bring to businesses, large or small, and looking forward to the ongoing development of genuine equality across the global business village.

LID Publishing is proud to unveil , a thought provoking campaign to inspire female leaders now and in the future.

For more information and to download our free eBook report One Billion Reasons For Change, featuring some of the global leading thinkers on the topic of female leadership, courtesy of Dialogue, visit www.womentobusiness.com

Or contact Stephanie Staal, series editor stephanie.staal@lidpublishing.com For information sponsorship opportunities, contact Niki Mullin, business development manager Niki.mullin@lidpublishing.com