Rotman Management Magazine Greatest Hits | 2022

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The Magazine of the Rotman School of Management UNIVERSITY OF TORONTO 2022

How COVID Has Changed Consumers Strategic Foresight: Think Like a Futurist


The Secrets to Amazon’s Success
Power: What You Need to Know


Why It’s Everyone’s Business

Rotman Professor Tiziana Casciaro shares insights from her new book, Power, For All: How It Really Works and Why It’s Everyone’s Business.

You open your book by stating that “power is misunderstood.” Describe what you call the three pernicious fallacies about power.

My co-author [Harvard Business School Professor] Julie Bat tilana and I have conducted extensive research on power and change around the world, and on this journey, we have found strikingly common misconceptions in how people think about power. The fist myth is that power is a ‘thing’ that someone pos sesses, and that there are special traits that give power to some people and not to others. The reality is that power is always rel ative: You can have great influence in one relationship and be completely dependent in another.

Second, power and authority are not the same. When we ask people to think about individuals who they consider power ful, the vast majority mention those high up in a formal hierar chy, whether it be CEOs, world leaders or bosses of different stripes. But authority is no guarantee of power, and nor do you need to be high in a hierarchy to have power. For example, in our research we have found that the most effective changemak ers in organizations are not necessarily the people at the top,

but instead those whom others go to for advice.

The third fallacy — and perhaps the most common one — is that power is somehow ‘dirty business’ and should be avoided so you don’t get sullied by it. But contrary to popular belief, power isn’t intrinsically good or bad, and it doesn’t have to be acquired via manipulation or cruelty. These misconceptions are harmful because they prevent us from understanding how power works in our lives — and make us less likely to identify, prevent or stop abuses of power that threaten our freedom and well-being.

What, then, is power made of?

Power is the ability to influence behaviour, and what allows one person or group to influence another is control over access to resources that the other party values. So, you have power over someone if you can provide them with resources that they value and that they cannot obtain easily from somebody else. Con versely, someone has power over you if they can give you access to resources that you value and if you don’t have many alterna tives for accessing those resources.

Power in a relationship is always made up of four elements: (1)the resources that another party values, and (2) how easily they can come up with alternative ways to get them; (3) the re sources that you value, and (4) how easily you can get those re sources from an alternative source.

Once you understand that these are the fundamentals of power in any relationship, you will see that power is always rela tive: You can have a resource that is a great value to one person (giving you power over them) but is irrelevant to somebody else, depriving you of influence on that person’s behaviour. And power is also always relational, in the sense that it’s not enough to figue out how much someone depends on you; you must also consider how much you depend on them in turn, because power flows in both directions in every relationship.

You have come up with a framework for shifting the balance of power. Please share its key principles. The beauty of the four elements of power is that they identify four strategies for rebalancing power in any relationship. The strategies in our framework are attraction, consolidation, with drawal and expansion. I’ll describe each.

Attraction has to do with the fist element of power in the relationship, which is the value of your resources in the eyes of the other party. To increase your power over them, one thing you can do is to increase their interest in the resources you have to offer. Any good salesperson or marketer knows that you can change how people perceive the value of a resource so that they become more interested in it, and if they’re interested in it, you have more leverage over them.

The second strategy, consolidation, concerns reducing the other party’s alternatives to access those resources. Given a re source that the other party is interested in, you want to coalesce with other providers of this resource, so that you become hard to replace, collectively. This is the strategy used by workers when they unionize, for example. The whole idea of forming a union is to make many alternatives just one. Cartels are also an example of consolidation. If you want access to oil and gas, a cartel like OPEC constrains your alternatives, giving greater leverage to the cartel.

The third strategy is withdrawal, which entails decreasing your interest in the resources that the other party has to offer. For instance, over time France freed itself from its dependence

on oil-producing countries by switching to nuclear power as its primary source of energy. Finally, there is the strategy of expan sion, whereby you create more alternatives for getting access to the resource you want so you don’t have to depend on any one of them. Securing an external job offer, for example, makes you less dependent on your current employer.

These four strategies apply to organizations competing in an industry as much as they apply to an individual negotiating conditions of employment or to a group seeking large-scale so cial change. Just as the fundamentals of power are universal, so the four strategies to rebalance power are applicable everywhere.

You believe grasping the dynamics of power is critical, not just for achieving our personal objectives, but for shaping our collective future. What are the most important things to un derstand about power with respect to the latter?

If you take seriously the idea that power comes from control over access to valued resources, you realize that this access is very un equally distributed, depending on the environment in which you operate. If you are a young woman in certain parts of the world, you need to fighttooth and nail, and even risk your life, for the right to go to school — something inconceivable for a young girl in a country like Canada. The resources you have access to in your personal life are entirely dependent on the environment in which you are embedded.

Similarly, your country’s system of government will have an outsized impact on your ability to shape the collective future of your family, your community and the direction of your career. If you will live in an autocracy, your voice will be silenced when ever it is in disagreement with the people who hold the reins of power. If you live in a democracy, you have a much better chance of voicing your point of view, even though such freedoms are al ways threatened and need to be guarded fiecely. Consider the ongoing struggle in the United States to limit the right to vote of certain communities.

All in all, your personal power and the career opportunities you have access to change dramatically, not just based on your tal ent and determination, but also based on the political, economic and environmental structures that constrain and/or enable you. That’s why it is impossible to understand your own power with out understanding how the overall system around you functions, and how power is distributed within it. In the book, we chose not

Rotman Management Fall 2021
The most effective changemakers in organizations are not necessarily the people at the top.

to confineourselves to the analysis of power in the organizations where many people work or in their professions and industries. We have chosen to link power dynamics to the macro dynamics in society, because the two are intertwined and you must under stand both in order to navigate power in your personal life — and to be an engaged and informed citizen.

As you indicated earlier, in organizations, some people have a lot more power than their title suggests, while others have less. How does this happen?

This has to do with the misconception that power and author ity are one and the same. People in organizations have authority based on their rank in the formal hierarchy, and this allows them to issue orders and make decisions. But while authority lets you demand compliance, it can never command commitment, unless it provides people access to resources they value

There are ways other than formal rank to gain control over valued resources in an organization. One has to do with the role you play in the organization regardless of hierarchical level. When your role is essential to the functioning of the organiza tion, you gain power because you control access to something that people value deeply.

A classic study conducted by French sociologist Michel Crozier illustrates this point. Crozier visited a tobacco plant in France and observed that the foremen — who had formal au thority — were actually not the ones with the most influence. The group that had much more sway were the employees responsible for machine maintenance: The machinery would break down periodically and interrupt production, which impacted every worker in the plant, because they were paid based on their pro ductivity.

To retain their control over this highly valued resource, the maintenance personnel chose not to codify any of the instruc tions to repair machinery, so that when something went wrong, everyone was dependent on them to fixit. This control over the most valuable resource in the plant gave maintenance personnel outsized power compared to people of higher rank. So, playing a role that is critical to the survival and thriving of an organization allows you to exercise influence.

The other source of power that we explore in detail in the book is the informal networks that develop within a company. Any formal organizational chart tells only half the story about

who has power. Behind every chart there is always an informal network that is determined by people’s discretion in choosing who they want to talk to and who they want to share informa tion with. People who are prominent in this network gain access to — and often control — highly prized resources such as knowl edge about opportunities, giving them influence even when their formal rank is not particularly high.

There is therefore a fundamental difference between for mal authority and the many informal ways in which people gain control over resources that are of great value in an environment. That, at the end of the day, is what gives you power.

Describe the critical roles of humility and empathy in wielding organizational power. Power is essential to taking charge and leading change in organi zations, but it makes you vulnerable to two insidious traps: hubris and self-focus. These traps can not only erode your own effec tiveness but also undermine your team’s. Effectively exercising power while avoiding its pitfalls depends on nurturing humility as an antidote to hubris and cultivating empathy as an antidote to self-focus. In the book (and in our article in the September 2021 issue of Harvard Business Review), we detail the many ways any one in a position of power can develop humility and empathy in themselves and in their colleagues.

Consider empathy. Far from being a fied quantity that can not be changed, empathy is up to us to cultivate, and the develop ment of empathy requires us moving past a view of ourselves as independent from others to a view of us as interdependent with others. Once you recognize that we’re all interconnected and that our actions have ripple effects on other people, you become much more interested in their perspective, and this allows you to empa thize with their situation.

We detail many ways you can accomplish this expansion of your empathy in both your personal and professional life. One is to ask people — especially people in managerial positions — to work for an extended period in lower-level roles in your orga nization or industry. Many companies do this. We know of one that asks new managers to work as a call-centre agent for eight months before they start in their management role — the idea be ing that you become much more aware of what it means to work in lower-level roles and understand life from the perspective of others who have less privileged positions.

By cultivating humility and empathy and implementing organizational structures that ensure true power-sharing and accountability, we can avoid the twin pitfalls of hubris and selffocus. Leaders who do so will boost their own effectiveness and facilitate exceptional performance from their teams.

Can you think of an example in today’s world where you see power being used in an optimal way?

We see examples of power being used for good all the time! Re member that power is exercised whenever you give someone ac cess to resources they value. What people value varies tremen dously, and if you use your power to give people access to positive resources — such as a feeling of achievement, a sense of belong ing, autonomy or of being a good, moral person — that can really make power a force for good.

In the book we tell many of these stories. One is about an alumnus of the Rotman School who took a job right after finih ing his MBA as a strategic advisor to call centres in a large orga nization. As you might imagine, call centres are not necessarily great places to work. The agents are often subjected to customers who call not because they’re delighted about your service but be cause they are irritated or frustrated by it in some way. The con versations are often fraught, and morale can be quite low.

That’s exactly what this newly minted MBA found when he started in this role, and what we describe is how — with zero formal authority over the call-centre managers or agents — he dramatically improved the work environment and the lives of the agents. This was a perfect example of working really hard — and really smart — to identify what people value and using your power to deliver the resources they need most.

In just six months of working with these folks and support ing them, this one person doubled the performance of the call centre and, more importantly, greatly increased the agents’ feel ings of empowerment, autonomy and job satisfaction. These are big impacts that can change people’s work and life for the bet ter. So, absolutely, power can be a force for good. This is true of a single individual taking the initiative to help other people, and it also extends to large movements that gain and use power to create positive social change.

For readers who want to be part of the solution of achieving ‘power for all’, what is the firt step?

The fist step to achieving power for all is for each one of us to un derstand how power works. Only when we dispel our misconcep tions and see through its inner workings will we be able to engage with it appropriately and see that ‘power for all’ is essential for a healthy society.

What we explain in the book is that power concentrations and vast power imbalances have terribly detrimental effects on people individually and on society at large. A few people benefi greatly from a massive power advantages, at least in the short run, but the prosperity and the health of our social systems is deeply damaged by persistent power imbalances where some people have it all and the vast majority have little or nothing.

Our book is not only an invitation to everybody to under stand and engage with power so they don’t feel jostled by the politics of the workplace; it is also an invitation for us all to re alize something extremely important: Only when we become aware of our interdependence with each other and the political, economic and natural systems around us can we stop extreme inequality from damaging the well-being of so many — and de stroying our ecosystems in the process. Armed with this under standing, we have a chance to live on this planet in harmony and accomplish great things together.

Rotman Management Fall 2021
Power concentrations and imbalances have terribly detrimental effects on people and on society at large.
Tiziana Casciaro is the Marcel Desautels Chair in Integrative Thinking and a Professor of Organizational Behaviour at the Rotman School of Management. She is the co-author, with Harvard Professor Julie Battilana, of Power for All: How It Really Works and Why It’s Everyone’s Business (Simon & Schuster, August 31, 2021).

Q &A

You and your co-author spent a combined 27 years working at Amazon, sharing founder JeffBezos’ conviction that the long-term interests of shareholders are perfectly aligned with the interests of customers. Please unpack that belief for us.

It’s more than just a belief — it’s an unshakeable conviction that is embedded into the company’s thinking and behav iour. The idea is that if you constantly focus on addressing customer needs and solving their problems, things will work out over the long term for your company. Amazon’s suc cess proves that when you have customers’ best interests in mind, they reward you with trust and ongoing business over a lengthy period of time.

Some leaders think that if you adopt this kind of longterm mindset, it will take too long to get where you want to go, but Amazon’s experience has been just the opposite. There are less ‘zigs’ and ‘zags’ focusing on short-term needs that don’t actually accrue long-term value. If you’re focused on hitting a quarterly number and you’re throwing together a promotion, typically you’re pulling demand from a future period into a current period and not really creating anything new. So on the fist day of the new quarter, you’re back to where you started from. If you had devoted those resources instead to building value over time, the results will accrue in this quarter and the next quarter.
An ‘Amazonian for life’ distills the key principles that have made Amazon so astronomically successful.
Interview by Karen Christensen QUESTIONS FOR Colin Bryar, Amazonian and Co-author, Working Backwards

It has been said that the Amazon culture consists of four things. Please summarize them.

At a conference many years ago, someone asked JeffBezos what Amazon’s culture was all about. He said, “Really, it’s four things.” The fist element is a complete customer obses sion instead of an obsession with competitors. The second is a willingness to think long-term, with a longer investment horizon than most of Amazon’s peers. Third is an eagerness to invent, which, it is recognized, goes hand in hand with a certain degree of failure. And the fourth aspect is taking pride in operational excellence. That is particularly impor tant, because much of what a particular team does is not seen by anyone outside of the team — so everyone needs to get all the little details right, throughout the company.

Amazon takes a rather unique approach to hiring. Please describe it.

The company’s ‘bar-raiser’ process is a data-driven exercise that has four key elements to it. First of all, going into an in terview, the interviewers know exactly what data they need to collect from the candidate. Amazon has 14 officia‘lead ership principles’, and each interviewer is assigned to cover offtwo or three of them. Their task is to gather data in those specificareas. To achieve this, they use a technique called ‘behavioural interviewing’, which involves asking about the candidate’s past performance. Research shows past behav iour to be the best predictor of future performance. Then, with the data they collect in the interview, they ‘map’ the candidate’s past behaviour to the 14 Amazon leadership principles.

The second key to this approach is that there are pro cesses in place to remove bias from the interviewing pro cess. After the interview, each interviewer has to write a verbatim account of the interview. They can’t compare notes with other interviewers or discuss the candidate with anyone until they have written out that feedback and in cluded an indication about whether they would like to hire the candidate or not. This prevents the, ‘Hey, this candidate

was great, you have to go in there and sell this person on the job.’ Everyone has to go in and objectively obtain specific information.

The third piece of it is that candidates for a particular role see all of the same interviewers. Given the process, by definitio, no one interviewer is going to have a com plete set of information about the candidate. They are only tasked with getting a couple of slices of the candidate’s pro fie to create a larger map tied to the leadership principles.

Lastly, there is a specificrole involved called ‘the bar raiser.’ This appointed individual is assigned to every inter viewing process and is typically not part of the chain of com mand of the hiring structure. As a result, they have much less bias as to whether a candidate gets hired or not. ‘Ur gency bias’ is a major issue in hiring. People think to them selves, ‘I need to hire three people quickly or my team won’t get our work done for this quarter.’ The bar raiser doesn’t have to worry about that. Their job is to make sure that the candidate who comes on board has met — or raised — the overall hiring bar. The bar raiser has veto power, even over the hiring manager: If they don’t feel the candidate meets the Amazon bar, they can exercise veto power and the per son is not hired. In practice, this veto power rarely gets used.

In the post-interview debriefs, the bar raiser walks the hiring team through the hiring process. Everyone reads all of the feedback, which is a great way to learn about tech niques that other interviewers use to obtain pertinent infor mation about candidates. Like any good process, this one is simple and can be easily taught. And the best part is, the more you do it, the better the process gets.

Another of Amazon’s leadership principles is ‘working backwards’ from the desired customer experience. What does that look like?

This is the process Amazon uses to vet ideas and decide whether to turn them into a product or new feature for cus tomers. At its heart, the working-backwards process is about starting from the customer experience and working back

Rotman Management Fall 2021

from that. It sounds simple, but it’s actually very different from the way most organizations make go/no-go decisions about moving forward with ideas. A lot of organizations use something like a SWOT analysis, asking ‘What are our strengths? What are our weaknesses? What are the oppor tunities and threats we face? What are our competitors do ing? One word that is not even mentioned in all of that is customer. So, Amazon threw that approach out the window and said, ‘We are going to — front and centre — make sure that the customer is involved in this vetting process from the moment an idea comes up.’

The tool that Amazon uses with customers in the working-backwards process is a written document called the PRFAQ, which is short for ‘press release and frequently asked questions.’ When a team has an idea, the fist thing it does is write a one-page press release about it. Having only one page forces them to focus on the issue at hand. The press release has to clearly state what customer prob lem they are trying to solve, and it has explain to the cus tomer what the solution is. Then, they have to tell the cus tomer why this is a worthwhile product or feature for them to investigate and either use or buy. If the team is not satis fied— if this document doesn’t make them want to run out and get the product or use the service — they go back and rewrite the press release. Working backwards is an itera tive process.

Once the team has a press release that everyone is sat isfiedwith, they move on to the frequently asked questions document. There are two components to this: an external FAQ and an internal FAQ. The external one includes ques tions and answers that explain to people outside of the com pany about this new feature or service, how much it costs, why anyone should change their behaviour and use it and how is it going to make their life better.

The internal FAQs are all the tough questions around bringing the new feature or service to market. Things like, can we build this with materials less than $150? Are we go ing to build our own sales force for this or partner with an

external sales force? Again, this is an iterative process, and once the team agrees on the document, the whole package is presented to the leadership team. If they findthe team hasn’t asked all the tough questions, they are sent back to do a rewrite.

Very few ideas make it through this process on the fist round. But once all the requirements are met, then and only then can the project be greenlit and the resources allocated to move it forward.

Amazonians are not fond of PowerPoint decks or large, lengthy meetings. What are they replaced with? They are replaced with ‘narratives’, which are essentially memos of six pages or less. For a standard one-hour meet ing, six pages is the maximum length for a narrative. Ama zon stopped using slides in 2004 as an experiment for meet ings where teams would come in to present to Jeffand his senior management team. Slides can be used if you’re talk ing to a large audience in an auditorium, but for decisionmaking processes, or where you’re getting a group together to communicate an idea, they use the narrative concept ver sus slides.

Jeffhas said this was one of the best decisions Amazon ever made. Written narratives allow the reader to gain a deep understanding of complex issues to make better informed decisions. How do they achieve that? First, they force the writer, or the writing team (because it’s usually more than one person writing it) to clarify and synthesize their idea and present the story arc and all the information in a cohesive format. It’s much harder to write a six-page narrative than a slide deck, and you can’t just whip it together the night before. You have to go through multiple drafts, send it out to the team and get feedback until you crystalize your thinking.

The second advantage of this approach is that it makes the ideas matter, versus the presentation itself. You often hear people say, ‘Wow, that presenter was so engaging’ or ‘That was so boring!’ At the end of the day, customers don’t

care about any of that. They care that companies make the right decisions to provide products or services that make their lives easier.

As a result of this approach, ‘presentation bias’ is re moved from the equation. You can avoid having a very charismatic presenter with a so-so idea convince a group of people to make a decision the company probably should not make; or on the flipside, you can avoid missing out on a great idea described by an awful presenter. You can also convey multi-causal arguments better in a narrative than in a linear slide format. Amazon has found that this approach allows people to absorb about 10 times more information for the same unit-of-time investment.

Since leaving Amazon, you have introduced some of its tools and frameworks into other organizations. Which are at the top of the list?

For smaller organizations, it is very important to get your own leadership principles defined,because that really deter mines how people are going to make tough decisions when you’re not in the room. I always tell organizations that don’t have any definedprinciples to get some. You have to defin who you are and how you are going to operate in the world.

The second thing is to implement a hiring process that enables you to bring people on to reinforce those principles. If you have a five-person company and you want to grow to 50, you need to ensure that you are bringing on people who will reinforce your principles, or your company is going to change. You have to work really hard to get the culture you want.

For larger organizations, there are good lessons to be learned from Amazon’s operating cadence in terms of focusing on input metrics versus output metrics and the working-backwards process. Those really change the ways that companies build and introduce new products and how they look at managing businesses, both in the short term — where the details matter — and over the long term, where you’re creating customer value.

Overall, I really believe Amazon has advanced the fild of management science in terms of best practices for build ing and running an innovative organization. Taken togeth er, the processes we’ve talked about — from the bar-raiser process to linking everything to definedleadership princi ples — are things that every organization, small or large, can learn from.

Rotman Management Fall 2021
Colin Bryar is the former Technical Advisor to Jeff Bzos, co-author of Working Backwards: Insights, Stories and Secrets from Inside Amazon (St. Martin’s Press, 2021) and the co-founder of Working Backwards LLC.

Thought Leader Interview:

Dambisa Moyo

Even before COVID-19 hit, there was evidence that globaliza tion was unravelling. Please describe the scenario and how the pandemic has affected it.

In the aftermath of the 2008 financialcrisis and before CO VID-19, slowing growth and declining economic standards led governments around the world onto a path of deglobalization. Facing growing populist pressure, many adopted protection ist policies they hoped would shield their industries and work ers. Growth in trade stalled or declined for some countries and we started to see more regionalization and balkanization. Some even broke away from global trading blocs. Brexit is one exam ple, and President Trump’s‘America First’ campaign is another Today, the world is even more ‘every nation for itself’ than before the pandemic. As global growth remains weak, countries are focused on making sure that their own economies and people get access not only to economic growth, but also to vaccines, and this mindset does not bode well for globalization. Even if the U.S. is back on its feet economically and health-wise by the end of this year, the estimates are that countries like India will only reach herd immunity in 2023. This suggests that aspects of trade and

the movement of people through global travel will remain stalled for years to come.

Against this backdrop, there is evidence that the five pillars of globalization are under threat: trade in goods and services; capital flows that drive, fund and fuel cross-border foreign direct investment (FDI); immigration; a commitment to global rules and standards; and the stature of multilateral institutions such as the World Bank and the International Monetary Fund. It is reasonable to assume that the post-pandemic era will be charac terized by further steps towards deglobalization, as protection ism becomes entrenched across the five pillars.

Talk a bit more about how threats to globalization’s fie pillars are materializing.

The World Trade Organization has partly blamed slowing growth since 2018 on new tariffsand retaliatory measures, not ing that global trade growth has flatlined in the past decade at around three per cent. Global trade treaties are moving towards more bilateral or regional negotiations and less multilateralism. For example, on the back of Brexit, the UK is in negotiations

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A board member for 3M and Chevron shares insights about the state of globalization and economic growth — and explains why China is the antidote to deglobalization.

independently with the U.S. and Japan; and the Trans Pacific Partnership has created a selective agreement for preferential trade access by 11 countries, including Canada.

Global capital flows are also being disrupted. We have seen capital controls increase as countries began to hold on to capital and limit the amount that flowed across borders. FDI fell for three consecutive years, from US$2 trillion in 2016 to US$1.3 tril lion in 2018. Capital flows to developing nations have also de clined on the back of the pandemic in terms of FDI. More than US$83 billion flowed out o f emerging market debt and equity investments during March of 2020.

Immigration has become a hot-button issue, making it hard er to hire the talent to support economic growth. An anti-immi gration stance has led to policies such as Trump’s ‘Buy American and Hire American’ executive order, which restricted the entry of highly skilled workers into the U.S. In Europe, anti-immigration sentiment contributed to Brexit, and rising populism has fuelled a marked change across the political spectrum, with a swing to ward leaders who favour closed borders. As protectionism takes hold, employers everywhere will face hurdles recruiting staff from the global talent pool.

With respect to global rules and standards, there has been a notable decline in government commitment to these, placing the spread and transfer of the best ideas across the world — which are key to productivity — at risk. As China emerges as the leader in technology, leading the race in terms of facial recognition and some other aspects of AI, we are seeing a breakdown in global standards around intellectual property.

If you are looking for evidence of the breakdown in global cooperation, look no further than COVID-19. Not only do we see a split across developed and developing as well as democratic and non-democratic countries, but also within democratic countries, we have seen very differenta pproachest o pandemic response and vaccine rollout. As we speak, Toronto is still in partial lockdown, along with France, while places like

the U.S. and the UK are opening up. There is no coordination whatsoever happening, challenging any semblance of global cooperation.

McKinsey has predicted that global growth rates over the next 50 years will be only half of those seen in the previous 50.What are the implications for today’s leaders?

I know there are people who would adamantly argue against it, but in my view, we absolutely need economic growth, for three reasons. First, without it, we will see a breakdown in human progress and a loss of living-standard improvements. Second, there is considerable research showing that without economic growth, you cannot sustain a middle class, and without a middle class, political rights are negatively affected and the democratic process suffers.

The third aspect is that without economic growth, we would findourselves in a world without innovation. There would be no R&D and the proverbial GDP pie would start to shrink, meaning governments would have to rely much more on redistribution. A no-growth world would be incredibly challenging to the key pil lars of our society: healthcare, education and the environment. In a world where people are living hand-to-mouth and are chal lenged in terms of opportunities for progress, our ability to re duce political clashes and factions would also be reduced.

Nobody wants to get to that point, and as a result, leaders should be focused on three key drivers of economic growth. The fist is capital, such as infrastructure. The U.S. is currently graded D+ by the American Society of Civil Engineers. That is not good enough. We need roads, we need digitization, and we need ports and airports to drive economic growth. The fact that capital is currently weak and declining works against this.

The second aspect is human capital, both in terms of the quality and the quantity of labour in the workforce. Without investments in quality education, we will continue to see a drag on growth. The third aspect is productivity, which explains about

Rotman Management Fall 2021
As protectionism takes hold, employers will face hurdles recruiting staff from the global talent pool.

60 per cent of why one country grows while another does not. Over the last 10 years, we’ve seen productivity decline across many economies — particularly developed ones, but also devel oping ones.

Given the amount and quality of technology we now have access to, this last aspect is a puzzle. If you think about it, produc tivity is just ‘how much output you can produce’ — and we should be able to produce signifiantly more in an era of advanced tech nology. Yet we have seen an enormous drag on productivity.

All three of these engines of growth need to be fiing on all cylinders in order to drive growth. Our public policy and private sector leaders need to be investing with these three drivers in mind in order to support and drive global growth in the years ahead.

Despite this rather gloomy scenario, you believe fortunes will still be made. How?

First, investors and asset allocators need to sharpen their exist ing portfolios and skew allocations to company stocks that will benefitin a more deglobalized world (and remove stocks that will struggle in this environment). Second, they should scale back al locations to geographic regions that depend on globalization, and therefore will be economically challenged in a more siloed world — in particular, emerging markets. And third, they should gain exposure to regions that will excel even in a deglobalized world — such as the U.S. and China, (although the latter to a lesser degree, given its dependence on food and mineral imports.)

In sum, those who are picking stocks need to ask how those stocks will react to the weakening of each of the five pillars of globalization I touched on earlier. For example, with respect to rising trade protectionism, what are the impacts of broken-down supply chains and the growing scrutiny around where a company produces and sells its goods?

Another aspect to portfolio shaping is a more thematic real location of capital, away from areas predisposed to benefitfrom

globalization. In this light, the emerging market (EM) asset class is a signifiant exposure to reconsider because developing mar kets usually have relied on the pillars of globalization for growth, including FDI and trade. Unsurprisingly, EM fundamentals were already weakening prior to the pandemic. In 2020, Brazil’s GDP contracted by three per cent; South Africa’s by eight per cent; and Russia’s by six per cent. Overall, the MSCI Emerging Market Index has returned annualized average returns of just 2.5 per cent compared with the 13.6 per cent average of the S&P 500 since the start of 2010.

You believe investors should embrace three opportunities in particular. What are they?

I take a very simple approach to this: What do I know will be true in the next 50 years? One thing I know for certain is that China is going to be a big part of the global growth recovery. This is an economy that was the largest in the world a couple of centuries ago. It made mistakes along the way, but it is back on track now, with signifiant government support and strong infrastructure, including investments in digitization. According to JP Morgan Asset Management, China’s equities are projected to deliver close to double-digit annual returns over the next 10 to 15 years.

As a sidebar, U.S. pension funds and portfolio managers only have about two-per-cent exposure to China. China today is where the U.S. was in 1950, with respect to having an array of eco nomic profitto come in terms of its population size, government support and ongoing economic growth.

The second major area of opportunity is not surprising: technology. We have seen technology do miraculous things al ready in terms of how we engage in social platforms and how consumers shop, with the dominance of companies like Amazon and out of China. But we have yet to see the fullscale throttle of what technology can do to disrupt and enhance the delivery and quality of public goods like healthcare and education. There is a lot of effort in the pipeline at the moment

that has yet to materialize. The ability to generate vaccines like Pfize-Biontech is just one example of what is possible here. Going forward, technology in the realm of public goods is going to be an enormous piece of the puzzle with respect to economic growth.

The third area investors need to pay close attention to is the energy transition. Today, even with all the progress that has been made in the last few decades, there are still 1.5 billion people on the planet without access to cost-effective and reliable energy. This is a huge drag on economic progress — and human progress more generally. I believe the investments and innova tion that will occur around the energy transition and fighting climate change will be truly transformative in the years to come. I fully expect to see enormous returns in this arena.

You have warned of the emerging threat of a ‘splinternet’. Please explain.

This is the idea that over the next 10 years, we are going to have two competing technology platforms: One led by the U.S., which is the one we all rely on today, and another led by China. If this materializes, it will impact how companies and individuals com municate, how we transfer money, and how we think about tech nology in general. If your company operates in both the U.S. and China, for example, you will have no choice but to work with two completely different technology platforms.

On that note, Chinese corporate profis could rise by 18.8 per cent in 2021——up from 10.5 per cent in 2020——while Western firms’ growth will pale in comparison. How has China achieved this in the midst of a pandemic?

There are two aspects driving this amazing uptick in multiples and attraction towards the Chinese market. First, its population is becoming more educated and it is increasingly consumerbased, demanding all manner of goods and services — much like consumers in the West. At the same time, people are also looking

for reliable food and water, they’re seeking energy solutions, and Chinese companies are looking for minerals. They’re building houses and plumbing and road networks, and everyone wants access to reliable telecommunications and phones. There will be a huge demand for goods and services of all types in China going forward.

The other issue is government support. Like the U.S. govern ment in the 1950s, the Chinese government is a key driver of the country’ economic success. It is making enormous bets on tech nology, and it has been a big supporter of real estate as well as its many state-owned enterprises. China remains best positioned to survive and thrive in a globalized world — more so than most emerging and even developed-market economies. In this regard, investing in China can be seen as an antidote to deglobalization.

Looking ahead, you believe the risk of a K-shaped recovery is rising. Please explain. Much has been said about the possible alphabet soup of eco nomic recovery post-COVID: will it be L, U, V or W-shaped? Rel atively little attention has been paid to the threat of a K-shaped recovery — one that would exacerbate inequality — and how the private sector can combat this.

Corporate leaders and investors are being called upon to halt the increase in inequality and to take steps to reverse it. There are three things they should consider: Managing an orderly transi tion to automation and the new division of labour between hu mans and machines; improving worker terms and conditions; and allocating capital in ways that are aligned with broader soci etal goals and long-term sustainable growth.

Going forward, you believe corporations need to take mean ingful action in areas that have conventionally been under the purview of government. Ideally, how will this unfold?

It is already unfolding. If you look back to 10 years ago, there was a very clear delineation between what companies did and

Rotman Management Fall 2021
We are in the midst of an existential crisis for corporations: Either they fall in line with these new demands, or they will cease to exist.

what governments did: Corporations were focused on achieving shareholder value and delivering their goods and services. Any thing they did in terms of corporate social responsibility was seen as quite separate from that.

Over the past decade, we have seen a push to integrate a lot of those social initiatives within organizations. Education, sensi tivities around race and gender, concerns about the climate — all are becoming part and parcel of how companies do business on a day-to-day basis. For example, corporations can (and should) work with under-represented and minority communities, not only by ramping up efforts to recruit them and offer scholarships, but also by prioritizing efforts to diversify their suppliers, pension advisors and the legal and accounting firmsthat support their op erations.

This is an evolving area, but the cultural frontier for corpora tions is definiely changing. Companies are increasingly making decisions in areas from data privacy to gun control. Even when government does not explicitly opine through public policy, we are seeing business leaders step up and make decisions to out right ban the production or sale of certain products or take ag gressive stances around hiring.

Are you optimistic that leaders can handle this massive chal lenge?

Frankly, they don’t have an option. We are in the midst of an ex istential crisis for corporations: Either they fall in line with these new demands, or they will cease to exist. Everyone from regula tors to employees to worker advocacy groups to customers and investors are demanding these changes.

The notion that companies are only responsible for their shareholders has become archaic. This was confirmedby the Business Roundtable’s statement in 2019 that “companies should serve not only their shareholders, but also deliver value to their customers, invest in employees, deal fairly with suppliers and support the communities in which they operate.” I strongly

believe that this will continue to be the fundamental view ex pressed by a wide range of stakeholders — including investors. If this pandemic has taught us anything, it’s that we all have a vested interest in ensuring society continues to progress.

Dambisa Moyo is an economist and best-selling author who sits on the boards of 3M and Chevron Corporation and has been named to TIME magazine’s list of the 100 Most Influential People in the World. Her fifth anad atest book is How Boards Work: And How They Can Work Better in a Chaotic World (Basic Books, 2021).


Before your imagination can be harnessed, it must be ignited. Strengthening your capacity to see, comprehend and interpret surprises will set you on the path.

EVERY IMAGINATIVE EFFORT BEGINS with a mental spark. Financial pi oneer Omar Selim’s spark came from an unexpected source: his teenage children. Selim, who was Barclays head of global mar kets for institutional clients at the time, was preparing for a trip the following day to Johannesburg. At dinner, he and his children talked about work and life, what matters and what doesn’t. “Okay, so you’re going to flythere tomorrow, stay in a five-star hotel, give a speech, which probably nobody really cares about,” they said. “And this is the path you’ve chosen to dedicate your life to?”

As Selim told us, this blunt exchange with his children actu ally triggered his imagination, throwing everything into question. And this trigger coincided with a situation at work that gave him a lot of time to think. Barclays had sold its investment manage ment arm to BlackRock, with a non-compete agreement, which meant that Selim and his team, who remained at Barclays, were not allowed to do any asset management.

Selim read and thought deeply about sustainability and how

finane might be transformed by non-financialdata and machine learning. Catalyzed by the conversation with his children, he re thought the institution he wanted to work for, putting together a mental model for a new kind of asset management business. Eventually, he set up Arabesque, the world’s fist asset manage ment firmdriven by artificialintelligence and environmental, social and governance metrics.

In this article we will share some insights for sparking your own imagination and that of your team, putting your organiza tion on the path to value creation.

What Inspires Imagination?

Small surprises — like receiving an unexpected e-mail — hap pen all the time. But the surprises relevant to imagination are the ones that seduce us away from routine thinking and lead us to rethink deeply and inventively. In particular, three types of sur prises can inspire imagination:

ACCIDENTS events or consequences that are incidental or irrel evant to what we are trying to achieve;

ANOMALIES — parts of a situation, story or dataset that are out of the ordinary; and

ANALOGIES — parallels we notice between concepts or experienc es, which suggest new possibilities.

However, for any of these types of surprises to impact us, our minds must be prepared. Plenty of things pass us by every day, but to spark imagination we need to notice them (the cogni tive aspect) and care about them (the emotional aspect). If Selim had not cared about reforming finane, he wouldn’t have started Arabesque. Equally, if he had not noticed how machine learning was impacting other businesses, he would not have had a stock of mental models to draw on in rethinking how an asset manage ment fim could work. The more we commit to caring and no ticing, the more we create the mental context for encountering imagination-provoking surprise.

There are two key manifestations of caring: via aggravations or aspirations. Aggravations or frustrations drive us to change or escape from something, while aspirations drive us to bring some thing we want or believe in into being. Aggravations and aspira tions can enable us to notice things on three levels: by seeing, comprehending and interpreting. Let’s take a closer look at each.

STAGE 1: Seeing

Seeing entails taking in new information. If we don’t do this, we won’t encounter any kind of surprise. If we’re stuck doing only routine things every day, not having interesting conversations or exposing ourselves to new social or geographical environments, we get stuck in ‘informational oblivion’. Following are three ac tions related to seeing that can help you use your imagination more frequently.

MAKE TIME FOR REFLECTION. Given the amount of pressure they face, business leaders need to work hard to protect time for re flection. Inspiration for imagination often comes when we are reflecting: relaxing, with no pressure from urgent tasks.

It may be no accident that people often get inspired in the bath or shower, because they tend to dampen our figh-or-flight nervous system in favour of the ‘rest-and-digest system’. Omar Selim told us that inspiration often happens for him in this con text: “I get most of my ideas while showering in the morning. I feel inspired when the temperature around me is just right; I relax and I’m not bothered by anything.”

In the early days of Merrill Lynch, founder Charles Merrill wrote to his business partner Winthrop Smith about the impor tance of taking time to reflect: “You and George Hyslop [a partner in the fir] and I should never be so busy that we can’t set aside at least one hour each day to quiet, thoughtful study and discussion of our basic principles, as contrasted with current operations.”

Imagination requires blocks of time with low external de mands. Warren Buffett famously schedules time for a ‘haircut’ in his diary, which is actually code for him to sit in a room and reflect. We need time to think about our aspirations and aggrava tions and follow our curiosity rather than a deadline. Some ways to do this include:

• Taking a few deep breaths in and a few longer breaths out

• Taking time over a meal to rest, mentally digest and reflect

• Listening to or playing music

• Going for a walk without your phone

PAY ATTENTION TO FRUSTRATIONS. If they don’t emotionally over whelm us, aggravations or frustrations can help us care about what we notice. In 2008, MBA student Shelby Clark was cycling to pick up a Zipcar he had rented. As he told us: “I got stuck in a snowstorm. I was biking through the snow, grumbling the whole way, thinking: ‘Why am I passing all these parked cars, to get to a car? Why can’t I get in that car? Or that car?’”

This was the imagination-triggering event for Clark. A row of unused, parked cars wouldn’t surprise most of us. But driven by his frustration, it stood out for him, prompting him to chal lenge the existing mental model of private transportation and kicking offcounterfactual thinking that led him to found Turo, the world’s fist private-car-sharing company.

The idea for genetic testing company 23andMe was also inspired by frustration. Founder Anne Wojcicki had spent 10 years working in healthcare investing. At a conference about in surance reimbursement, she remembers thinking: All these peo ple are here just to figue out how to optimize billing. “I realized, I’m done. At that moment it became clear that the system is never going to change from within.”

This frustration was a potent emotion, but it took a triggering event for Wojcicki to come up with a better alternative. “There was a very specificevent where I was at a dinner with a scientist,” she recalled. “We were saying, ‘Theoretically, if you had all the world’s data and genetic information, couldn’t you solve a lot of problems?’ And the conclusion was yes — you could revolutionize healthcare.”

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By taking our frustrations seriously, we prepare our minds to imagine our way out of them.

This conversation inspired her to begin imagining a new business, a path that eventually led to a genetic testing company with a multibillion-dollar valuation. By taking our aggravations seriously, we prepare our minds to imagine our way out of frus trations.

ENGAGE WITH OTHERNESS. To engender surprise, you not only have to care, you have to be in a position to notice imagination-pro voking things. The most basic way to do this is to get out of the (metaphorical) house and seek the unfamiliar.

As a company grows, more mental space gets taken up with internal requirements: ‘What should I say to the board?’ ‘How should I write this review?’ Like a sphere, the volume of a growing corporation grows faster than the area exposed on the surface. On the inside, familiar processes and scripts come to dominate, shielding us from unexpected and potentially inspiring external interactions.

University of Chicago Sociologist Ronald Burt studied the origins of ideas within companies and found that people who had more exposure to the outside had better ideas. When his study asked inward-facing managers at an electronics company for their ideas, they often produced the “classic lament from bureaucrats: ‘we need people to adhere more consistently to agreed-upon processes.’” In contrast, what might seem to be a routine role produced imaginative thinking: “Better ideas came from the purchasing managers, whose work brought them into contact with other companies.”

Selim of Arabesque described how he tries to break his team’s routines while travelling, to seek encounters that might prompt imagination: We all fly economy and take public transport in diffrent coun tries. Not to save money, but to get out there and have some chance encounters — sitting next to a lady on the train in India who is going to talk to you about her kids, or whatever it may be. When I’m visiting a new city, I always try to find a meal for un der $10. It takes me to some fascinating places and gets my mind working — dealing with places, people, or ways of doing things that are not what I see every day. This often sparks new thoughts.

STAGE 2: Comprehending

Comprehending demands processing something we see to un derstand it. We might be exposed to new information, but unless we say, “Wait, that is an interesting anomaly. Let’s think about that,” or “Why do you think we got that accidental result? Isn’t that curious?” then we are not using our brains. If we don’t put

in the time or effort to process what we see, we are in ‘computa tional oblivion’. Following are two ways to enhance your ability to comprehend surprises.

REFLECT ON ACCIDENTS. Accidents are the incidental results of our actions or things we bump into while trying to do something else. These are the surprises that come out of left fild, unrelated to the mental model we are working with.

Tim O’Reilly, founder of O’Reilly Media and a leading thinker in Silicon Valley, emphasized to us the importance of be ing open to what might arrive from outside your mental model: “Think of imagination as a process of letting go of what you know, experiencing life fresh. The world is infinie. We experi ence only part of what is out there, and then, we attach labels to our experience. But people get stuck on the labels.”

The classic business example of this is the story of Viagra. Originally developed as a heart medication by Pfize , research ers noticed a side effect in a completely different area of the body. This would have been easy to dismiss as a useless side effect, giv en that the researchers’ minds were focused on heart conditions. However, they thought about the accident and connected it with an aspiration from a different medical fild: addressing erectile problems. They allowed themselves to be led down this unex pected path, and Viagra eventually became one of Pfier’s most successful products.

INVESTIGATE ANOMALIES. If an accident is something outside the mental model you are working with, an anomaly is a violation of the expectations that a familiar mental model is giving you. It takes effort to notice this dissonance, to realize that the explana tions your mental model suggests are misleading or wrong. As philosopher John Armstrong noted to us: “We’re actually quite slow to notice new pieces of information. We’re invested in the models we currently have — of a company, of another person or of how things work. And that emotional familiarity is something we can be very reluctant to give up.”

One example of successful anomaly investigation comes from a Boston Consulting Group (BCG) project with a U.S. company that makes diagnostic machines for hospitals. The prevailing mental model of this business was to invest in sales people and save money on technicians. During the project, one executive noticed that the company was selling more machines in Manhattan. This was a crucial moment. It would have been possible to see this but resort to the explanation from the pre vailing mental model: The sales team there must be better.

How the Imagination Machine Works


However, the leaders pushed further, and in digging deeper, they discovered an additional anomaly: Manhattan was the only re gion that assigned on-site technicians. The reason for this was that managers didn’t want engineers wasting paid hours in New York traffi it was more efficiento appoint on-site engineers.

The surprise in this case came from connecting the two anomalies. As the team noted, “Constant contact with the tech nician bred close relationships with the users of the equipment, and the service engineers developed an in-depth understanding of customer needs. Technicians had become the company’s most productive salespeople.”

This surprise kicked offmuch counterfactual thinking. The leaders imagined a new business model with technicians at the centre. They invested in data gathering from technicians and lines of communication between sales and engineering. It as signed on-site engineers elsewhere. The result was an additional eight points of market share and a boost to its margins of 25 per cent. We are used to pattern recognition, but the skill of anomaly (or pattern-break) recognition is just as important in business.

STAGE 3: Interpreting

The deepest stage of noticing, interpreting entails connecting — noticing the ramifications of one piece of information for oth ers. Think of the difference between you and a trained biologist walking through a forest. Where you see simply a leaf, they notice

the early appearance of a rare tree at an unusual elevation, imply ing a changing climate, which has implications for the forest as a whole. Their biological worldview allows them to make more connections. If we can’t draw on a rich conceptual inner world made up of deep and varied worldviews, we are in ‘conceptual oblivion’.

Following are two ways to increase your ability to interpret what you see and comprehend.

DRAW ANALOGIES. Drawing analogies entails taking some element you have comprehended in one area and importing it into an other. Using analogies can be a powerful trigger for imagination in business. As noted earlier, the inspiration for car-sharing com pany Turo came when Shelby Clark drew an analogy:

I had just come out of a really amazing meeting at Kiva, a peerto-peer microfinance lending platform, when I made a mental connection between Kiva and Zipcar. It came together quickly in my head: The limitation of Zipcar was that there weren’t enough cars. Whereas in reality, especially in America, we have a lot of cars. There is no shortage of cars. The problem is that we don’t use them well. So a peer-to-peer marketplace would bring people together and solve that problem.

Venture capitalist Bill Janeway also kick-started his imagina tion with an analogy during the dot-com bubble burst in the early 2000s. As he said, “I wrote my PhD thesis on the stock market between 1929 and 1931. So in 1999, I had in my mind that stock price chart of RCA between 1926 and ’32 — and if you put that next to the stock price chart of Veritas between 1996 and ’02, they are identical.” He told us that seeing this analogy triggered him to adjust his mental model of what could lie ahead and to anticipate the burst of the dot-com bubble.

To ‘mine’ an analogy, use the following process:

STEP 1: CONNECT. Identify mental models connected to what you are considering. To draw this connection, describe the features of what you are considering in a more general way. For example,

Rotman Management Winter 2022
Interpreting Seeing Aggravations Aspirations Comprehending Noticing Caring Surprise

Test Your Organization’s Imagination Machine

Never (1)

Rarely or less than once a year


Sometimes or once a month to once a year


Usually or once a week to once a month (4)

Always or more often than weekly (5)

Employees at our firm mae time for quiet reflection

People in our firm find inventive ways to address problems and frustrations.

The business gives employees regular opportunities to encounter enriching, thought-provoking things outside the firm and its regular clients.

Employees notice, report and discuss interesting accidental or unexpected outcomes of initiatives or analysis.

If people in our firm find an unexpected opportunity, they explore how to act on it.

Our business regularly looks for and analyzes anomalies in granular data.

People in our firm use surprising analogies and perspectives in presentations.

Related Action

Make time for reflection

Pay attention to frustrations

Engage with others

Reflect o accidents

Reflect o accidents

Investigate anomalies Draw on analogies


After you have added up your total, score your current situation: 31-35, excellent; 21-30, good; 11-20, moderate; 0-10, poor.


say you are looking for analogies around real estate agents. Real estate agents help people choose houses. This is one instance of the general idea of giving guidance. To findinteresting connec tions, ask: Where else does giving guidance occur? Counselling, advice columns, IKEA furniture manuals, teaching, and so on.

STEP 2: SELECT. Choose a concept from a new mental model to im port. For example, you might select the concept of emotional un derstanding from counselling (that counsellors learn the unique psychology of their clients). Or the concept of mentoring from teaching (that teachers relate to their students over time to help them develop).

STEP 3: INJECT. Now explore injecting this foreign concept into the mental model of the original thing. Asking ‘what if’ ques tions can help prompt your imagination here. What if real es tate agents became like counsellors in terms of understanding the emotions of their clients? What if estate agents became like

mentors, helping us develop our homes?

Going through this process can offer surprising suggestions that inspire us to start thinking imaginatively, exploring mental models of things that do not yet exist.

LEARN NEW WORLDVIEWS. To increase surprise, you can also learn new worldviews: systems of concepts and mental models that provide different ways of interpreting the world. New world views can create surprise when brought up against familiar information. For example, if you hired the manager of a For mula One technical crew for your logistics team, they might make some interesting observations because they notice things through the lens of high-intensity racing.

Janeway argues for the value of humanities-based world views, from philosophy, history and literature, to enrich the busi ness mind. By living mentally in alternative worlds — scholastic debates in medieval Europe, the life of an aristocrat in 19thcentury South America, or philosophical thought experiments —

he believes we can see with a deeper understanding, allowing us to notice more patterns and anomalies. As he told us:

We can learn a lot about the emotional elements of financial market behaviour from the humanities. A prime example is Anthony Trollope’s classic novel, The Way We Live Now It traces an extreme speculative bubble on the London Stock Exchange in the 1870s, promoted by a plausible con man and driven by waves of investors drawn into the fraud until — ulti mately and necessarily — the bubble bursts. Our recent history replicates the phenomenon with extraordinary precision, from Enron through Theranos and on to Wirecard.

Janeway reflected on his humanities education: “I think this background has given me a number of really unfair benefitsand advantages as an investor: to be able to have useful, speculative conversations, assess unusual ideas, think about alternative fu tures.”

Our advice: Pick a few new worldviews to immerse yourself in. They could be from different disciplines, like Engineering, Theology or Psychology; from writers with distinctive ways of seeing, like authors of science fictionor heroic novels; or from distant places or times that had ways of interpreting that seem strange to us. The point is to enrich your stock of worldviews to draw upon when observing.

In closing

At the root of all innovation lies imagination. Corporations have harnessed it to change the world radically in many areas: medicine, consumer goods, transport, finane, agriculture, en tertainment, communications. As indicated herein, exercising imagination is not only about individual creativity; it is also about how minds can interact, creating collective imagination and momentum to turn ideas into new realities. And today, we need organizational leaders to embrace this challenge more than ever.

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Martin Reeves is a Senior Partner with the Boston Consulting Group and Chairman of the BCG Henderson Institute. Dr. Jack Fuller is a former BCG consultant and the founder of Casati Health. They are the co-authors of The Imagination Machine: How to Spark New Ideas and Create Your Company’s Future (Harvard Business Review Press, 2021.)

The Art of D isruptive Conversations

I was doing a trade, and something didn’t feel quite right about it.” , who was work-

time, told me. “It turned out I had lost on the order of tens of thousands of dollars, which wasn’t a huge amount of money for

The thing is, it was something only Chris knew about. What would you do next? Pretend nothing happened and hope no one noticed? Blame someone else? “After a little while, I went to my manager and brought his attention to it.” Chris owned up to his mistake and then waited for the other shoe to drop. That’s not what happened.

“I received feedback from a number of very senior pened. They came up to me and said, ‘Hey, it’s so great you were open about your mistake.’ I have never received more praise in my life.” When Chris admitted his costly mistake and his bosses thanked him for it, both employee and employer came out of it in a better place. “It totally cemented my belief in that form of open, honest culture.”

That isn’t always how things play out. The challenge for leaders is to make an experience like Chris’s the norm. It’s not just about changing the way we view mistakes. There is a larger challenge here: How do you create a culture for em-

ployees that is psychologically safe?

Harvard Business School Professor Amy Edmondson coined the term. When I spoke to her recently, she explained: “Psychological safety is the belief that you can bring your full self to work. Quite simply, it’s the perception that you can speak up with ideas, questions and concerns, or ask for help and people won’t embarrass you for it.”

There are two key components of psychological safety, she says: respect and trust. “Trust is the belief that someone has your back and won’t act in a way that harms you. And respect is the appreciation for who someone is.” Amy is re-

know the core elements of successful medical teams. making the fewest mistakes. But the data showed that the better-performing teams reported actually more mistakes, not fewer. “The more I thought about it, the more it occurred to me that maybe better teams don’t just make more mistakes, they’re more willing to talk about them, for the express purpose of catching and correcting future mistakes before anyone is harmed.”

With actual lives at risk, the importance of fostering this kind of open communication may seem obvious, but how vitech company?
FACULTY F OC US So nia Kang, C anada Res ea rch Chair in Ide ntity, Di versity an d Incl us io n

Teams th at h ave l ow p sychologi c al safet y a re mu c h l ess c apable of t ackling compl ex p roblems .

This was something Google years ago when it launched Project Aristotle — a massive study of 180 of its own teams to determine the key elements of really successful teams. is a people scientist who worked there at the time. “In the beginning, people expected that it was about team composition. They thought an algorithm for the perfect team might be, ‘get an engineer, a PhD, some diversity of gender and race, and voila: the perfect team’.”

didn’t matter as much as how the team operated. Psycholog-

not afraid to make a mistake, the team can learn. And learning is what ultimately leads to high performance over time.”

response had been, ‘I can’t believe you made that mistake; don’t ever do that again’,” he never would have shared another mistake or concern. That early positive experience really stuck with him. No longer a trader, Chris is now a consultant and speaker. He co-authored a book with Rotman School Professor Andràs Tilcsik called Meltdown: Why Our Systems Fail and What We Can Do About It , about open communication.

If being transparent with each other at work can do this much good, colleagues develop a mutual sense of trust

performing team, why isn’t psychological safety happening everywhere, all the time? Because people are complicated For prehistoric humans, survival depended on developing strong social bonds and sticking together in groups for safety and shared resources like food and shelter. To this day, that motivates us to behave in line with what the group expects and try to maintain status by coming across as competent and reliable. It’s also one of the reasons why we don’t always communicate openly about problems or concerns.

Edmondson says this fear goes beyond not just being able to deal with mistakes. “It turns out that interpersonal

hija c k’: Wh en the amygdala gets tr ig ger ed, we freeze. We’re not going to say, ‘Oh, look, I made a mistake. I need help’. We default to hiding those things because we’re afraid. And it literally narrows our brain’s ability to engage in analytic thinking and problem solving.”

“Teams that have low psychological safety are much

vulnerable at work. “That stance of, ‘I know what I’m doing’, even if you don’t, you can get away with for a while in your career. But you will get to a point where the problem is hard enough and it involves so many other people that you can no

It isn’t just our own fears that we need to address; we also have to navigate the threat and fear responses of every other person on our team. Individual employees aren’t exactly sitting around discussing how to up their psychological safety game. But there are things you can do to help lay the groundwork for a culture of healthy communication.

“The power of any given individual in helping alter the work environment, I think, is very great,” says Edmondson. One of the simple things that anyone can do is ask their colleagues a genuine question. For example, ‘What thoughts do you have about this project?’ “That’s not a yes or no question — it gives people room to respond. The beauty of asking a good question is that in that moment, you are automatically giving people a small, safe space to respond. You have explicitly said, ‘I’m interested in what you have to say ’.”

Psychological safety also requires humility. “Anytime someone genuinely says, ‘I don’t know’, it makes the world a tiny bit more psychologically safe for others. That phrase is an expression of vulnerability, and by saying it, you’re inherently giving other people permission to say it, as well.”

As you try to change the way you relate to your colleagues, it’s also a good idea to check in on how you relate

safety. Kim Scott explains how to build healthy work relationships in her book, Radical Candor: How to Get What You Want by Saying What You Mean

Rotman Management Winter 2022

radical candor with someone who has the power to not pay you a bonus or to fire you,” she says.

What exactly is radical candor? “When you show some one that you care about them, and at the same time, you challenge them directly when you see them making a mis take, that’s radical candor,” she says. It’s about communicat ing honestly, but in an empathetic way. It’s about challeng ing directly, which is the honesty part, and caring personally, which is the empathy part.

The tricky thing, Scott says, is that you really need to take time to gauge how your message is landing for the other person and be ready to adjust. “This requires active listen ing, kindness and some emotional intelligence, which is the ability to look for and understand someone’s emotional state — while still challenging directly with specific feedback.”

Scott says 85 per cent of our radical candour mistakes occur when we show that we care personally, but we’re so concerned about not hurting someone’s feelings, we fail to tell them something they’d be better offknowing. She calls this ‘ruinous empathy’, and it happens when our desire not to hurt the other person’s feelings stops us from speaking up about something that need to change. The problem is, who ever it was that needed that feedback misses out on the op portunity to learn something.

What if someone gives you feedback, but you don’t agree with it? How do you respond without alienating your co-worker or boss?

“First of all, whatever the person said, you can prob ably agree with at least five per cent of it. So focus on that five per cent and say, ‘I totally agree with that and I’m go ing to work on it’. Then say, ‘As for the rest of it, I need to think more about it. Is it okay if I get back to you?’ Then, you must get back to them within a day or two and offer a reasonable explanation for why you disagree — especially if this is someone you work with regularly.”

Believe it or not, bosses are often afraid of their em ployees, says Scott. “They’re afraid to say what they really think, because they’re afraid they’ll demoralize people or that they’ll quit.” Getting everyone on the same page with radical candor can be increasingly challenging as compa

nies become more and more diverse across gender, race, age and many other demographic lines. The people you work for and with may not understand your identity or your lived experience, and you might not understand theirs. And that lack of understanding can lead to a lot of silence on both ends.

As much as you can practice the personal elements of psychological safety, beyond a certain point, it’ll be diffilt to change the larger organizational culture if your boss isn’t invested in the same thing.

Edmondson notes that one can, and should, ask things like, ‘How will I be able to contribute to this project? Are you interested in me bringing in new ideas?’ She also recom mends asking for stories of how people in the organization have made a positive difference in the past and changed how things unfolded in some way. “And if there are no stories like that for people to tell,” she notes, “you might want to run for the hills.”

Sonia Kang is the Canada Research Chair in Identity, Diversity and Inclusion at the University of Toronto and Associate Professor of Organizational Behaviour and HR Management at the University of Toronto Mississauga, with a cross-appointment to the Rotman School of Management. She is U of T Mississauga’s special adviser on anti-racism and equity. This article has been adapted from her podcast, For the Love of Work, which is made possible by Rogers and is available wherever podcasts are heard.
‘Ruinous empathy’ happens when our desire not to hurt another person’s feelings stops us from speaking up.


Last March, it became clear to CDL leaders that honouring their mission would mean redeploying their resources to focus on the global crisis.

IMAGINE A WORLD where a wristband alerts industrial workers whenever someone is less than two metres away from them; where a pay-as-you-go app for small medical providers in subSaharan Africa identifis patients who are susceptible to serious COVID-19 complications; and where modular off-grid facilities can be rapidly deployed for housing, health and educational purposes anywhere in the world.

You don’t have to imagine such a world, thanks to the Cre ative Destruction Lab (CDL).

“Novel crises require novel responses, and novel responses require innovation — often predicated on insights from sci ence.” That according to CDL founder Ajay Agrawal, who is the Geoffey Taber Chair in Entrepreneurship and Innovation at the Rotman School of Management and whose team has been on the front lines of developing solutions to help the world recover from COVID-19.

CDL’s stated mission — pre-pandemic — was “to accelerate the commercialization of science for the betterment of human kind.” And it was well on its way when COVID-19 shut down most of the world last March. “In the early days of the pandemic,

it occurred to us that honouring our mission would mean rede ploying our resources to focus on this global crisis by applying the CDL model and community to rapidly translate science into solutions,” he says.

What CDL does well — arguably better than anyone else — is accelerate the commercialization of new ideas. And with the fist global pandemic in a century on the horizon, the world sorely needed them. “With COVID-19, we had a novel crisis on our hands that nobody had faced before,” says Agrawal. “Ex perts in Public Health had seen pandemics before, but not with such a broad economic impact. Suddenly, we were faced with a problem that nobody knew how to solve.”

CDL had been designed to take ideas — many of which emerge from university labs around the world — and commer cialize them. A team of scientists in Toronto or San Francisco would come up with an innovation with commercial potential, but they had no idea how to turn it into a product. Enter CDL. Through its network of mentors — some of the world’s most successful tech entrepreneurs, inventors, scientists and investors — it provides the support required to bring the product to market.

“We realized at the outset that we were going to need sci ence-based solutions to beat this pandemic,” says Mara Leder man, Site Lead atCDL Toronto and a Professor of Strategic Man agement at the Rotman School. “But we knew that traditionally, there was a very long and challenging path from innovation to commercialized solution.” The CDL Team looked at each other one day in early March and said, ‘Hey, this is what we’re good at!’

“It seemed obvious that we should bring our ‘machinery’ to bear on this problem with a dedicated program,” says Lederman. “In a sense, we’ve been developing the ‘muscle’ to do this for a long time. When something like this happens, it’s like you are called upon to step up.”

Eureka: It’s an Information Problem

In the early weeks of the pandemic, virtually everyone was talk ing about four things: shortages of personal protective equip ment (PPE) and how to produce more of it; ventilator shortages; findingtreatments for COVID-19; and producing a vaccine. The CDL team chose not to focus on any of these things — for two reasons.

“First, other people were already focusing on them — and doing a great job,” says Lederman. “We also knew that vaccines and treatments would likely take signifiantly longer, and that those solutions would not likely come from start-ups.”

The second reason was that the team approached the prob lem differently. “Our approach was motivated by my Rotman colleague (and CDL Chief Economist) Joshua Gans. Early on, he said to us, ‘Wait a minute, what we have here isn’t just a health crisis or an economic crisis — it’s an information crisis’.” CO VID-19 is caused by a virus, he explained, but the pandemic is caused by a lack of good information. “At its core, a pandemic is essentially an information problem: How can we figue out who has it?”

This insight not only formed the basis for Gans’s book (The Pandemic Information Gap: The Brutal Economics of COVID-19), it would be embraced as the over-arching principle by the CDL Recovery program going forward. “As Joshua argues in his book, when we don’t know who is infected, we have to act as if every one is infected. The vast majority of people weren’t getting sick and they still aren’t,” says Lederman. “When we close the economy and send everyone home, it’s not because we think

most people are sick. Even early on, we knew that less than one per cent of people were sick. The problem was, we didn’t know who the sick people were.”

In short, we had a health problem that didn’t have any solu tions yet, and that health problem created an information prob lem. If we could actively manage the information problem — by figuing out who was infected and with whom they have had con tact — we could suppress the virus and get the economy back up and running sooner rather than later.

Information-based solutions would involve predicting who is infectious and who is immune and developing tools to leverage this information. For example, if the system detects that some one in an office has an elevated temperature, security would be notifiedto direct that individual to a testing station for further examination.

Most of the solutions we have been using to date are what CDL calls ‘always-on solutions’: ‘Everyone must stay at home’ or ‘Let’s surround our workers with plexiglass’. “These are entirely un-innovative solutions,” says Lederman. “They are the blunt est form of measure — and the most costly, in terms of economic impact.”

She notes that shutting down businesses for months at a time was costing the economy trillions of dollars per day. “That’s where we wanted to have an impact. Nobody else was focusing on this, and we knew information-based solutions would enable us to begin to reopen the economy.”

Seizing the Moment

By the time the pandemic hit, the CDL had already grown to of fer 15 streams for start-ups around the world, ranging from Space to Health, operating in four countries at nine sites globally. For the fist time in its history, it decided to move away from its tra ditional location-based programming and designed CDL Recov ery to run globally.

This new format meant two things: The new program could draw on mentors from all of its sites; and it would operate with a much more compressed timeline than the regular program. “We weren’t sure what to expect when we put the call out to our network of mentors,” says Agrawal. “Summer was on the hori zon, and we were asking them to volunteer their time on this. But we felt like we had a world-class community who knew how

Rotman Management Spring 2021
“When something like this happens, it’s like you are called upon to step up.”

to get things done, so we gave it a shot.”

The team was blown away by the response: More than 400 mentors stepped forward. Some came from health-related filds, but they also heard from people like Rhiannon Davies, whose background is in supply chain and food; Mark Evans, a finane leader who previously ran capital markets at Goldman Sachs; and Inmar Givoni, the former Director of Engineering at Uber All came forward because they had expertise in commercializing innovation and they shared a deep desire to seek solutions to the pandemic.

Another mentor who responded was Laura Rosella, the Canada Research Chair in Population Health Analytics and Director of the Epidemiology Program at the University of To ronto’s Dalla Lana School of Public Health. Rosella had been in volved with the CDL since the fall of 2019 as a mentor. “My area of expertise is health data analytics and population health, so I had advised several start-ups in the Health stream. The differ ence with CDL Recovery was, given my expertise, my input was relevant to many of the companies that were accepted into the program.”

With a leadership structure and mentors in place, applica tions from start-ups quickly rolled in from around the world be fore an initial cohort of 99 ventures was selected to move through the program. Virtual meetings started early in the morning in Toronto — early afternoon at CDL Oxford and CDL Paris, very early morning for CDL Vancouver participants — and sleepdeprived start-up leaders from as far away as New Zealand were starting their day at 2 or 3 a.m.

Once a company made it past the intake stage, it went through up to four rounds of sessions which operated much like regular CDL sessions: There were small group meetings with mentors where objectives were discussed and set, and progress tracked. At the end of the fist round of sessions, mentors de liberated to ensure that only the strongest concepts progressed to the next round. Because these sessions were held every four weeks as opposed to the regular program’s every eight, the time frame was cut in half. In the end, of the 90 start-ups accepted into CDL Recovery, 28 graduated in August [see full list of alum ni on page 10].

This, in itself, was a massive accomplishment, generating 28 new world-changing products and services within a six-month

period. But the story doesn’t end there. What most of these en trepreneurs didn’t know was that, behind the scenes, another ground-breaking initiative was taking off within CL.

Getting Canadians Back to Work

As the CDL Recovery program progressed, its leaders agreed that part of the focus had to be placed on findingsolutions to get Canadians back to work. But how?

The truth is, universities are great at problem solving, but they’re not very good at executing; and corporations are often good at executing, but they often don’t have much of a muscle for innovation outside of their specificexpertise. “We didn’t know the minute details of what the sub-problems and issues were for companies in terms of getting people back to work, so we asked, ‘who would know?,” says Agrawal.

“The answer was, the CEOs of large corporations like Air Canada, Magna and Rogers, who would have to put thou sands of people back to work.” So, he invited them — along with an impressive cadre of talent from diverse filds from business (Loblaw Executive Chair Galen Weston) to global affairs (Munk School Founding Director Janice Stein) to the arts (legendary author Margaret Atwood and opera singer Measha Brueggergosman) to consulting (McKinsey Global Head Kevin Sneader) to form the CDL Vision Council.

The Vison Council would focus specifially on findin back-to-work solutions. “Initially, the goal was for the Council to identify the discrete problems to be solved by businesses in getting people back to work, so we could throw those problems over the wall for the entrepreneurs to tackle,” says Agrawal. But in its very fist session, Margaret Atwood asked the group a key question: Why can’t we create a simple test for COVID-19, simi lar to a pregnancy test?

“We all agreed that early detection of infectiousness was the key to stopping the spread of COVID-19 and reopening the econ omy — and that rapid testing could be a huge part of the solution,” says Agrawal. By their fourth meeting in August, the CEOs on the Vision Council said, ‘Let’s stop talking about this and do it’.

The CDL agreed to oversee the initiative, on three con ditions: the project had to make good business sense for the companies involved — it couldn’t be viewed as ‘charity’ — be cause CDL would ask for a signifiant time commitment from

key talent at each company; member companies would share their learnings and data with other member companies (rapid learning was the main motivation for doing this as a collective rather than individually); and after the member companies incurred the time and expense of solving the key problems (supply chain, regulatory compliance, implementation), they would give away the blueprints to the solution for free — includ ing to their competitors.

With all parties aligned, the CDL Rapid Screening Con sortium was born.

A Powerful Partnership

The world is an increasingly complex place and different orga nizations are designed to solve different types of problems, says Agrawal: “For-profitcompanies produce goods and services, and their focus is generally to provide as desirable a product as

they can and make a profi. It has become fashionable for people to turn their noses up at profits,but they are actually really im portant, because they drive efficiency and innation.”

Universities have a different but complementary set of strengths, he notes. “These are magical places where people are incented to create and develop ideas. It doesn’t matter if nobody needs them right away. Rather than being motivated by profi, academics are motivated by curiosity and tackling tough prob lems that may help the world progress in important ways.”

That’s why this partnership made so much sense. “We were able to pull together people who had developed a muscle for solving novel problems, but didn’t know how to execute; and pair them with people who didn’t have the muscle for that kind of innovation, but knew how to execute at scale. Whether their business focused on air travel, groceries, or auto parts, they had something important in common: They wanted to get their

The following, 28 ventures have graduated from the CDL Recovery program.

AccuroLab has developed a service that acts as an intermediary between cellphone users and Trusted Health Organization (THO) sources, allowing users to assess the accuracy of incoming text messages related to COVID-19.

Altis Labs helps pharmaceutical companies and hospitals accelerate therapeutic R&D and guide personalized treatment by predicting patient outcomes from radiological imaging. As COVID-19 spread, Altis expanded its technology to predict outcomes of patients with pulmonary infections, allowing hospi tals to better manage their resources.

Avro Life Science develops skin patches that administer generic drugs through the skin and eliminate the need for oral medication. Their first product—an allergy patch—helps children avoid the side effects of taking oral medication, including trouble swallowing.

BioXplor is developing an AI- and network-based drug-discovery platform for pharma and biotech, which will prioritize drug combi nations for complex diseases. In response to the pandemic, it has positioned the platform for antiviral and anti-inflammatory CO VID-19 drug combinations, which it will leverage to build a pipeline of biotech and academic partners and clients.

Careteam ’s virtual-care collaboration platform facilitates a continuum of care planning and enables healthcare providers, patients and families to act as a team. The platform offers inte grated care plans that can be personalized and shared, enabling healthcare providers to manage COVID-19 patients remotely while continuing the delivery of needed care.

Crowdless is a mobile app that helps people avoid queues and crowds. The app provides real-time and predicted information on how busy venues are, so people can shop at the least-busy hours. This helps the public meet social-distancing standards during COVID-19 while also allowing commercial partners to reduce the amount of time that stores are over capacity.

Rotman Management Spring 2021
CDL generated 28 world-changing products within a six-month timeframe.
CDL Recovery Alumni

companies back to pre-pandemic levels of activity,” he says.

As the epidemiologist in the group, Laura Rosella’s role was to make sure that whatever was being proposed lined up with Canada’s public health response. “We didn’t want to create any additional risk,” she notes. “We wanted to complement all of the other great work that was going on.”

“In the end, the government can’t be expected to do every thing for us. They are working hard to support testing and vac cinations; and they have hospitals, long-term care, and schools to worry about.” The workplace setting is a completely different context, she says. “The government just couldn’t take on the op erational aspects of different types of workplaces. These com panies were willing to do the heavy lifting in terms of thinking through all the minute details.”

As indicated, the Consortium’s solution is all about deploy ing rapid tests, not producing them (although some CDL Recov

ery start-ups do produce COVID-19 testing products). Health Canada approved the tests used in the program, similar to the approach with vaccines, and distributes them to the provinces. “We made the decision early on to go right to Health Canada and say, ‘If there are screens available that you want to test in pilot settings, this could be the mechanism to do that’,” says Agrawal.

The rapid-screening protocols developed by the Consor tium will support Canada’s management of COVID-19 in two key ways. First, by developing operational knowledge and an implementation strategy for testing. Each consortium member has provided a dedicated workforce pool to implement pilot pro grams. Second, by reducing the load on healthcare systems, al lowing them to focus their screening efforts on infected people.

The 12 Consortium members are: Air Canada, Canadian Pension Plan Investment Board, Genpact, Loblaw, Magna,

En Carta is developing a rapid and reliable test for COVID-19. The test is paper-based and seeks to address the dual problem of short supplies for traditional testing methods and the high cost of these tests. The initial technology was validated in 2019 with the Zika virus and has been adapted for COVID-19.

Gradient Ascent ’s product, Greeter, is a health and safety solu tion to improve compliance outcomes, such as wearing personal protective equipment (PPE) and maintaining social distancing. It uses computer vision and AI to monitor compliance and issue an audio-visual alert when an individual is not wearing PPE.

Grapheal is developing a disposable, low-cost and rapid diagnostic test enabling multi-strain screening in saliva with an antibody-sensitized sensor coupled to a smartphone app.

Gray Oncology Solutions helps oncology centres optimize resource allocation to reach their maximum treatment capacity at a high quality of care. It is developing AI-guided algorithms to create a virtual model of oncology centres, which can predict

the distribution of new patient arrivals, the time required to treat them and perform scheduling—all of which can help reduce the impact of the pandemic on over-capacity healthcare systems.

Hutano Diagnostics is developing MediLego LFD, a rapid lateral flow device for COVID-19 based on proprietary ‘aptamers’ that detect the virus 10 minutes after a saliva test or nasal/throat swab. The test will be used in conjunction with a smartphone, cloud database and Bluetooth to automate result interpretation, data collection and contact tracing.

Ilara Health is a secure digital web/mobile app platform that brings diagnostic support and essential tests to small medical providers across peri-urban sub-Saharan Africa. Its COVID-19 Readiness Package helps identify patients who are most suscep tible to serious COVID-19 complications and can play a crucial role in patient triage at the primary-care level.

LumineSense is designing a rapid autonomous ultraviolet (UV) disinfection system for confined, high-traffic public
continued on page 12

MDA, Maple Leaf Sports Entertainment (MLSE), Nutrien, Rogers Communications, Scotiabank, Shoppers Drug Mart and Suncor Energy.

The rapid-testing rollout began at Rogers, Air Canada, Sun cor and MLSE in January 2021, under the leadership of retired military General Chuck Lamarre and a former commander of Britain’s joint forces command, Sir Chris Deverell

The Vision Council recognized early on that small busi nesses would be equally interested in rolling out regular rapid testing for their employees. “The goal was always to make sure that this initiative has broad impact,” says Rosella. “We’re fi uring out how this can work in workplace settings, period.”

“Of course, businesses are not the only places where rapid screening is useful, but this is the area we decided to focus our efforts on. The idea of translating the learnings to small busi nesses that may not have the capacity in-house to set up such a system was raised early on, and we all agreed that this should be part of the program,” says Rosella.

The Consortium approached this as an operational prob lem, she says. “Different screening technologies will come and go, but creating a system that ensures regular screening — that was our goal.”

As word spread about the Consortium’s activities, the team received several o ffers from other countries to join in. Were they tempted? “Not at all,” says Rosella. “Working in multiple

spaces like gyms and elevators. The LumineSense light source will include sensors to guarantee sufficient and effective disinfection.

Mediphage Bioceuticals is developing next-generation genetics medicines that are safer, customizable, and redosable.

MEMOTEXT is building RapidResponse, a digital communica tion tool that automates outreach, screening, and mental health follow-ups for students and teachers.

Metabolic Insights has developed a point-of-care device that analyzes saliva and other body fluids for peptides (and thus health-related biomarkers) in less than 10 minutes. It is repur posing its salivary insulin device to detect the SARS-CoV-2 spike protein in saliva, which could be used for daily screening by physicians, pharmacies, employers or airports, as well as for at-home diagnosis.

MyBubble is a social-distancing radar that measures and gamifies users’ social distancing and hygiene practices in the workplace.

nanopathdx has developed a testing platform that can detect multiple viral RNA targets directly from a nasal swab within minutes, instead of hours.

Pngme is a data platform that aggregates financial data on individuals and micro-, small- and medium-sized enterprises (MSMEs) for financial institutions (e.g. banks and mobile money operators). It enables financial institutions in emerging markets to onboard, approve credit applications and offer products digitally without meeting in person. The company is currently working towards an open banking revolution in Africa.

ProbiusDx has developed an analytical platform that brings the unique integration of multiscale biological information to identify small and large molecules, enabling broad-spectrum and efficient longitudinal studies for preclinical therapeutic discovery and validation.

Provision Analytics provides fruit and vegetable processors a food-safety and traceability solution to reduce food loss. Its core software is being applied to trace and monitor COVID-19 symptoms among workers to help essential food facilities stay open and safe. The venture will be ramping up its sales activities

Rotman Management Spring 2021
CDL Recovery Alumni (cont’d) The Rapid Screening Consortium is using tests produced by Abbott Panbio and others to get workplaces up and running again.

countries would have spread this initiative too thin and limited our ability to have an impact in Canada. We were determined to make a difference in our own country fist and foremost,” she says.

In closing

In addition to demonstrating the value of partnerships between universities, business and government, CDL Recovery and the Rapid Screening Consortium have made another thing clear. For many of the participants, a key takeaway has been how im portant it is to include multiple perspectives on an issue.

“As a scientist and public health expert, I bring a lot to the table,” says Rosella, “but economists, operations experts, entre preneurs and artists have a distinct way of thinking about things that made me think differently and check my assumptions on several occasions.” Of course, in the context of a public health emergency, progress is tricky because no one wants to make the wrong choice. But at the same time, no one knows what the right

choice is, because everyone is learning as they go. That’s where courage of conviction comes in.

A Moonshot can be definedas ‘an audacious ambition that is firmlyfocused on the future, the art of possibility, and what could be rather than what is. Based on that definitio, CDL defi nitely has at least one moonshot on its hands. And with former Astronaut Chris Hadfield on board as a CDL Fellow, it is well on its way to shaping our recovery.

Ajay Agrawal is the founder and Academic Director of the Creative Destruction Lab (CDL), Geoffey Taber Chair in Entrepreneur ship and Innovation, and Professor of Strategic Management at the Rotman School of Manage ment. Mara Lederman is Site Lead at CDL Toronto and a Pro fessor of Strategic Management at the Rotman School. Laura Rosella is an Associate Professor in the Dalla Lana School of Public Health at the University of Toronto, where she holds the Canada Research Chair in Population Health Analytics.

to get its platform into more food-processing facilities in Canada and the U.S.

Proxxi has developed a wearable wristband to protect workers from electricity. It repurposed its core product into a COVID-19 workplace distance and contact-tracing wristband that vibrates to notify wearers that another band is within six feet (two metres).

SensorUp provides an open interface that enables interoper ability, analytics and device management across different IoT sensor systems. The company’s founder is an editor of the IoT cloud API standard that will be endorsed as a national IoT stan dard by governments around the world.

Tenera Care is a hardware and software monitoring and analyt ics platform that has developed a wearable technology (bracelet, pendant or clip-on) to accurately pinpoint a user’s location within a care facility. The system enables contact tracing by detecting who someone has interacted with, at what distance, in what loca tion, and for how long.

TestCard is a smartphone app that can read a variety of diagnos tic tests quickly, easily and from a user’s home via their camera

phone. A user does a finger-prick blood test and the TestCard app can let the user know if they have tested positive for COVID-19 within minutes.

VivaVax has developed an antiviral coating material called ShieldAV that can eliminate microbes/viruses within 30 minutes of contact and can last on surfaces such as glass, plastics, metals, ceramic, and textiles for five years indoors and three years outdoors.

WarnerPatch (formerly M2JN) has developed a non-invasive chip sensor that can be embedded in a non-invasive IoT medical device, allowing continuous measurement of tissue health to provide information on respiratory distress episodes.

Worldchanging Ventures is developing modular, rapidly deployable facilities for housing, health and educational purposes. The team has pivoted its current offering away from rapidly deployable field hospitals and towards modular sustainable housing.

Q &A

How do you define a ‘nt positive’ business? A net positive business is one that improves the well-being of every stakeholder it touches, at every level — through its products, its value chain, its operations and its work on so cial issues. For the last 50 years, the private sector has em braced an obsession with short-term profits and shareholder primacy, and the results have been extreme. Unfortunately, nobody is going to come along and save us: As my co-author Andrew Winston and I say in the book, “We broke it, and now we have to own it.” Business leaders are now respon sible not just to their own companies and investors, but to all of society.

Looking ahead, one thing is certain: Taking steps to mitigate the damage will be cheaper than dealing with the consequences of not acting. This is a journey that every busi ness must join, led by a clear North Star: To align with our fellow human beings and the planet earth.

Is net positive the same as ‘net zero’? It’s actually much broader. Being ‘carbon positive’ or ‘car bon negative’ (confusingly, they mean the same thing) is one element of addressing climate change, but it doesn’t ful ly address the action that is required. That approach avoids real responsibility: Buy some carbon offets and you can claim your business is net positive. We don’t see offetting as the goal in the long term. Net positive is about your total
The man the FT called “The standout CEO of the past decade” shares insights for becoming ‘net positive’.
Interview by Karen Christensen
QUESTIONS FOR Paul Polman, Former CEO of Unilever and Co-author, Net Positive

5 Steps to Net Positivity

Five core operating principles will take company performance to a new level and reshape the role of their business in society.

1. Ownership of all impacts and consequences, intended or not. 2. Operating for the long-term benefit of business and society. 3. Creating positive returns for all stakeholders. 4. Driving shareholder value as a result , not a goal. 5. Partnering to drive systemic change.

handprint on the world — not just your carbon footprint. In addition to dealing with the ‘E’ aspects of ESG efforts like wastewater, sustainable sourcing and biodiversity, it also deals with the social aspects of ESG, like human rights, liv ing wages and diversity and inclusion. Achieving ‘net posi tive’ entails answering a very simple question: Is the world better off ecause your company is in it?

Are big corporations moving in the right direction?

There are lots of companies moving in the right direction be cause many leaders have caught on to these issues and rec ognize what is needed. But few of them are doing it holisti cally. You have to be consistent in all aspects of running your business in order to have credibility with your employees, your stakeholders and everyone else. That’s why we wrote the book.

Recent examples of net positive actions abound. Mi crosoft has made a commitment to pay back its carbon emissions going all the way back to 1975; Walmart has made a commitment to restore 50 million acres of land and one million square miles of oceans to enable regenerative agriculture; and in the fashion industry, 70 CEOs are col lectively moving to regenerative cotton and internalizing biodiversity. I could go on.

Many alumni of the Rotman School work in financialser vices and consulting. Can these industries become net positive?

Absolutely. Financial services and consulting companies are not resource intensive — except for human resources, obviously. But they have an enormous handprint in society because of the many high-profie clients they deal with. For them, being net positive means picking the right clients — and helping them be net positive. Some professional ser vices companies take on any client they can get, and as a re sult they end up dealing with issues like corruption in South Africa and opioid production in America. Taking on clients that actively want to defend fossil fuels is not a smart thing to do anymore — and it doesn’t help you attract the right people, either.

If you work in financialservices, you can join the NetZero Alliance of Asset Owners, which is committed to decarbonized portfolios. You can ask the right questions at shareholder meetings — questions about corruption, labour standards and carbon plans, for instance. And you can play a big role in standard setting. Senior people in these industries are often in a position to influence governments and others to move to broader frameworks. The good news is that some of the big consulting firms,like the Boston Consulting Group, are starting to make these commitments.

Can you talk a bit about the role of partnerships in achieving net positivity?

For a long time, corporate strategy has focused on the inside of companies: what capabilities you have and how to build strategies and tactics out from there. But that inside-out view is only one part of the equation. The most critical element of the net positive mindset is understanding the world’s needs — which requires an outside-in perspective.

The easy efficiencis can be achieved quickly — and they remain critical — but leaders will soon discover how many things they cannot do alone. Transformative change requires broad partnerships. The key challenges we face — to make our economies work for everyone, not just a few; to decarbonize the world; to live in harmony with nature and protect biodiversity — these are monumental challenges. Leaders have to demonstrate that they’re open to working with others, not just commanding from behind a desk.

Rotman Management Winter 2022
For financial services and consulting companies, being net positive means picking the right clients.


The United Nations Sustainable Development Goals

GOAL 1: End poverty in all its forms, everywhere


GOAL 3: Ensure healthy lives and promote well-being for all at all ages

GOAL 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

GOAL 5: Achieve gender equality and empower all women and girls

GOAL 6: Ensure availability and sustainable management of water and sanitation for all

GOAL 7: Ensure access to affordable, reliable, sustainable and modern energy for all

GOAL 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

GOAL 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Nowhere is the need for collaboration more urgent than in battling climate change. All large companies are now working to cut their direct and indirect (from the elec tric grid) carbon emissions — which is classified as Scope 1 and Scope 2 by the Greenhouse Gas Protocol. But the real breakthroughs will come from assuming responsibility for — and teaming up to tackle — supplier and customer emissions, which are referred to as Scope 3. In most industries, Scope 3 makes up the large majority of value chain emissions.

How should leaders go about forming these partnerships and alliances?

Because it uses a multi-stakeholder model, a net positive company will inherently look for alliances within its ecosys tem of players with shared interests. This network should

GOAL 10: Reduce inequality within and among countries

GOAL 11: Make cities and human settlements inclusive, safe, resilient and sustainable

GOAL 12: Ensure sustainable consumption and production patterns

GOAL 13: Take urgent action to combat climate change and its impacts

GOAL 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development

GOAL 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt land degradation and biodiversity loss

GOAL 16: Promote peaceful and inclusive societies, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

GOAL 17: Strengthen the means of implementation and re vitalize the global partnership for sustainable development

grow to include peers, suppliers, NGOs and governments. It’s not just that some issues are hard to solve alone; it’s that our challenges are so intertwined, it’s impossible to work on one problem at a time. Partnerships will inevitably overlap, forcing systems thinking. The Sustainable Development Goals (SDGs, above) are deliberately designed to interact and reinforce one another. Without partnering, which is the 17th SDG, achieving the other 16 goals will be impossible. Any company that fails to participate in partnerships for the common good is destined to become a dinosaur.

You write that in this quest, “technology is mostly on our side.” Tell us what you mean by that. Technology is doing a lot of good. In 2014, the Internation al Energy Agency forecasted that solar would hit $0.05 per
in big data processing, GPS modelling, drone-based aerial photography and many more can help solve our big problems.
2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture

kilowatt-hour by 2050, but this was achieved 30 years faster, in 2020. Over the last 10 years, the costs of solar and wind power have plummeted by 90 and 70 per cent, respectively. Renewables are now, on average, cheaper to build than all other forms of electricity. Battery prices have also dropped quickly, accelerating the electric vehicle market. Most major automakers have committed to phasing out gas and diesel and going all-electric. For example, GM plans to do so by 2035 and Honda by 2022 in the EU market. And Daimler has stopped all R&D in internal combustion engines. Mov ing quickly to renewable energy and electric fleets has be come a no-brainer.

It’s not just clean technology making transformative change: Revolutions in big data, GPS modelling, dronebased aerial photography, robotics, computer vision, AI and many more are powering the Fourth Industrial Revo lution. These new tools can help solve our big problems. In our food system, ‘precision agriculture’ is greatly reducing waste as seeds, water, fertilizer and pesticides are placed exactly where they’re needed; modern Deere tractors have become rolling AI-driven computers; and companies such as Schneider Electric are offering advanced building man agement systems that can slash energy waste. The technolo gies and know-how to build smarter homes, grids, cities and food and transportation systems are at our fingertips. And access to technology — specifically mobile — is proving to reduce inequality and extreme poverty.

However, technology also has a dark side: The infor mation bubbles that social media creates are breeding hate, misinformation and the opposite of the solidarity we need to tackle our shared challenges. The big tech companies should take a broader view of their impacts on the world and take responsibility for them. That type of ownership is a core at tribute of net positive businesses.

For leaders who want their companies to be net positive, what is the firt step?

The fact is, there can be no systemic change without organi zational change, and there can be no organizational change without individual change. So it all begins with a leader’s own awareness. Some executives think long-term planning

has become useless in our fast-changing world, with sud den shocks like pandemics. But companies can and should stretch their thinking by using tools like scenario planning. The point is not to develop a detailed strategy for the next 10 or 20 years; it’s to think about who you are. Which personal and corporate values do you hold that will never change? Why do you exist, and how can you help to build a thriving world? In short, what is your purpose? Not only is this im portant, it will pay off: Just Capital did a study recently and found that companies with a clear purpose had a 30 per cent higher shareholder return over the last four years than their peer group.

My advice is, familiarize yourself with the United Na tions’ Sustainable Development Goals and figure out what they mean for your business and the environment you op erate in. Then, link these ideas to your organization’s pur pose and take steps to bring that purpose to life. And always remember the net positive mantra: is the world better off because your company is in it?

Paul Polman is the co-author of Net Positive: How Courageous Companies Thrive By Giving More Than They Take (Harvard Business Review Press, 2021) and Co-Founder and Chair of Imagine, a B-Corp promoting the implementation of the United Nations Sustainable Development goals. He is also Chair of the International Chamber of Commerce and Vice Chair of the UN Global Compact. As Unilever’s CEO for ten years, he demonstrated that a long-term, multi-stakeholder model goes hand-inhand with excellent financial performance. The Financial Times named him “The standout CEO of the past decade.”

Rotman Management Winter 2022
Renewables are now, on average, cheaper to build than all other forms of electricity.


COVID-19 pandemic,

AS I WRITE THIS, early in 2021, it’s fair to say that the global eco nomic outlook seems more stable than it was last March amid the COVID-19 pandemic: Vaccines are gradually being made avail able around the world, central banks have brought stability and liquidity to global markets, and governments worldwide have in troduced some of the largest fical stimulus packages in modern history.

And yet, tremendous uncertainty persists, The strength of the global economic recovery depends on the speed at which COVID-19 vaccines can be distributed, and the scope for further fical spending depends on the outcome of delicate political ne gotiations in each country. Meanwhile, the resilience we’re seeing in the financialmarkets may be limited by when investors believe central banks might start to roll-back quantitative easing (QE).

What, then, constitutes a reasonable base case for 2021? Our outlook comprises four key themes: a year of two halves; a Kshaped recovery; a temporary spike in inflation; and the contin ued search for yield. Within this very reasonable consensus, and, dare we say it, uninspired base case, we findourselves monitor ing a number of non-standard themes and ideas — macro disrup tors that were either borne out of — or came into prominence as a result of — the COVID-19 outbreak. Although we’re confient about our forecast, we also ex pect the way markets think about the macro environment to shift away from traditional premises and gravitate towards nascent and unconventional macro trends in 2021. While these ‘new nor mal’ ideas may not be directly investable just yet, they are areas that we expect to devote special time and attention to this year.
As we begin to emerge from the
seven ‘new normal’ ideas merit the attention of investors.

MACRO DISRUPTOR 1: Monetary and fisal policy coordination and the blurring of policy roles. The simultaneous implementation of both monetary policy and fical policy stimulus in 2020 has been cheered as a successful example of coordinated policy. It likely saved the global econo my from a persistent depression and should no doubt be lauded; however, this coordination on a multitude of levels is, in our view, also blurring the line of central bank independence and the tradi tional roles and goals of each type of policy.

Primarily, the extent of central bank purchases of govern ment bonds — particularly those issued after March 2020 — and the share of the government bond market held by central banks is eye-catching and has generated discussions about whether cen tral banks have been financing overnment debt. While we don’t necessarily agree with that view, it is clear to us that the amount of government debt issued has been facilitated by historically low interest-rate policy that most central banks are committed to maintaining. It is also clear that government dependence on low rates and QE programs will add more fuel to the ongoing discus sion about debt monetization and modern monetary theory as well as common trade ideas associated with them, such as infla tion protection and yield curve steepeners.

Meanwhile, central banks have stepped up their research ef forts on topics beyond their typical scope, including income in equality, climate change and digital currency transfers. Notably, the U.S. Federal Reserve’s (Fed’s) transition to average inflation

targeting will give the central bank more flexibility to address varied issues because the new framework allows for an over shoot of inflationary pressures when the economy runs hot. The appointment of former Fed Chair Janet Yellen as U.S. Treasury secretary is also likely to strengthen the interaction and applica tion of both forms of policies.

Crucially, we believe the cross-pollination of goals and focus between fical and monetary policy suggests central banks could be motivated to keep interest rates very low as they tackle issues beyond inflation. It also implies that global money supply could continue to expand and that government debt and deficitswill be persistent. This may seem subtle but, in our view, the develop ment could affect many macro areas and interact in unexpected ways with other emerging macro disruptors.

MACRO DISRUPTOR 2: A growing thirst for alternative in vestments, including cryptocurrencies.

The ‘search for yield’ — an increased risk taking in exchange for higher expected return during periods with relatively low interest rates — has been an important strategic investment theme for us over the past several years and informs our asset allocation per spective. Massive central bank balance sheet expansion and the surge in government debt/deficitwill likely encourage investors to venture further into alternative asset classes. While it is likely that investors will increasingly focus on traditional alternative as sets such as private assets, emerging markets and infrastructure

Rotman Management Spring 2021
Central banks have stepped up their research efforts on income inequality, climate change and digital currency transfers.

Four Themes for 2021

A Year of Two Halves (for most developed economies)

• H1 carries downside risk to the macro environment, defined by weak demand and persistent supply disruptions

The K-Shaped Recovery Continues

• Manufacturing and global trade levels are likely to re sume to pre-COVID-19 levels in H1, even as the services sector remains depressed; in H2, services to play catch-up

Inflation Fears

The Search for Yield Continues

• A temporary spike in inflation in the United States in Q2 to as high as 3%—driven by base effects, a weaker U.S. dollar and higher commodity prices—should fade in H2 back toward 2%

• Extraordinary policy support, both fiscal and monetary, is likely to continue for some time (with China being the only major exception)

• H2 carries upside risks as the economy reacceler ates sharply off the back of pent-up demand,inventory rebuilds and aggressive stimulus programs

• Manufacturing-based econo mies (e.g., Asia) are likely to continue to outperform on a macro level

• A disconnect between stock markets, which are typically biased towards the manufac turing and technology sec tors, and the real economy should persist

• Price levels are unlikely to surge in the rest of the world, and structural pressures on inflation are likely to persist

• As fiscal spending rises, so will government issuance, particularly at the long end, potentially driving up longterm rates and steepening the yield curve

and agriculture funds, we believe there will also be a growing de mand for assets whose value cannot be distorted by central bank purchases, specifially those that may be subject to less regula tion and taxation, since governments may be seeking additional revenue to fund expected future deficits

Against this backdrop, cryptocurrencies will likely be viewed as an alternative investment that offers a solution to investor fears that ongoing extraordinary policy support could lead to resource misallocation. This doesn’t necessarily imply that investments in cryptocurrencies are appropriate, but it does suggest that cryptoassets such as bitcoin will increasingly become a standard point of reference for investors and policy makers alike.

MACRO DISRUPTOR 3: A shift away from traditional data, including GDP and CPI, pivoting towards private and alter native data.

In 2020, economists and investors alike were forced to eschew traditional economic indicators as they raced to understand how

the pandemic was affecting the economy. Indeed, traditional data sets — most of which are lagging indicators — proved to be too lagged and distorted to be meaningful in a rapidly changing environment. Wild swings in traditional data points didn’t help — the month-over-month, year-over-year changes were of such a huge magnitude that the extent to which they missed expec tations was borderline irrelevant. Crucially, swings in widely monitored headline data contained precious little insight to ex plain the massive disruptions that were taking place in the real economy.

To compensate for that, we turned to new, seemingly un orthodox and, occasionally, private sector data such as OpenT able restaurant reservations, Google’s mobility indexes and cross-border visitor arrival data for a read on the economy. These aren’t without faults, but they proved to be useful — timely, nu anced and ultimately highly correlated with the traditional monthly data points we had grown so accustomed to.

We believe investors will continue to demand more timely data that can provide an instant read on economic conditions,
Source: Manulife Investment Management, as of December 2020. Projections or other forward-looking statements regarding future events and expectations are only current as of the date indicated. There is no assurance that such events will occur.

and this private sector data will become a critical building block of macro views from here on. We also expect markets to have more muted reactions to traditional economic data releases than they might have historically. In other words, investors have identi fiedthe need for new informational tools in a post-COVID-19 landscape that can enable them to understand the macroeco nomic environment better and stay ahead of the markets.

MACRO DISRUPTOR 4: Central bank digital currencies will receive more attention.

We suspect central banks will intensify existing efforts to better understand digital currencies, specifially central bank digital currencies (CBDCs), which refer to the system in which a digi tal currency is distributed, one that’s backed and controlled by central banks (i.e. it doesn’t rely on blockchain technology

and isn’t a cryptocurrency). The construction of a CBDC system could take many forms, but the idea is often associated with the concept of a ‘digital wallet’ held by end users, which could in clude households or businesses.

While the idea might seem far-fetched, central banks are already immersed in the research: At least 36 central banks have published on the subject, and we expect work in this area to intensify. In our view, the ongoing cross-collaboration be tween the world’s largest central banks and the Bank for In ternational Settlements to develop common foundational principles and core features of a CBDC could be seen as a sign of things to come. Interestingly, China has already trialed a cen tral bank-backed digital yuan.

CBDCs would — in theory — improve the effectiveness and transmission of monetary policy by targeting money to those

Right now, every company in the world is facing the same question: What’s going to happen when this pandemic is over? Over the last several months, we’ve been working with manage ment teams in a variety of sectors, including retail, entertainment, finance and healthcare, to develop a plan for what comes next. What we’ve learned is that conventional strategic thinking hasn’t helped these companies to plan for the ‘next normal’. Instead, the best answers have come from a hybrid approach: One that combines traditional business strategy with the latest thinking from social science and innovation theory.

Ultimately, planning for a post-pandemic world means answering three questions.

How does your business really make money? Many com panies haven’t taken the time to articulate their critical strategic differentiators or map out how money, goods and information flow from their suppliers to their consumers.

Who do you depend on to drive the business? Define your

most important stakeholders and their behaviours that affect your business model.

What will people’s behaviour look like after the pandemic? Even though the pandemic is temporary, it’s lasting long enough to turn temporary behaviours into structural shifts. At the end of the crisis, some things will return to the way they were, some things will look very different, and some things will simply not come back. The trick is to figure out which is which.

To help shed some light on this last question, we’ve identified three categories of stakeholder behaviours to evaluate:

• Sustained behaviours are activities that are likely to return to their pre-crisis state virtually unchanged. For instance, people stopped staying in hotels in the months after 9/11, but that behaviour eventually returned to pre-9/11 levels. Hoteliers just needed to find ways to hold on in the meantime.

Rotman Management Spring 2021
COVID-19 has turned the spotlight on the extent of racial, gender and wealth inequalities.
Your Post-COVID Business Plan by Dev Patnaik, Michelle Loret de Mola and Brady Bates

who most need it, as opposed to the indirect nature of QE (and potentially free central banks from worrying about the asset bubbles QE may or may not create). Crucially, CBDCs could en able the disbursement of ‘helicopter money’ should it be neces sary. They aren’t, however, without major obstacles — they run the risk of disintermediating banks, a development that could have important consequences. But as the effectiveness of mone tary policy hits its limits — particularly at a time when policymak ers are looking for ways to target inequalities more effectively — CBDCs could be the logical next step.

MACRO DISRUPTOR 5: An accelerated focus on ESG investing that expands into the macro universe. This could well be the year that environmental, social, and gov ernance (ESG) factors extend their reach into the broader mac

ro universe. For one, we expect investors who are increasingly ESG aware to move beyond examining how individual compa nies are tackling these issues and focus on how economies are approaching sustainability, equality and diversity challenges. This will likely create additional pressure on governments — and central bankers — to focus on topics such as climate change and how to transition to a low-carbon environment.

In a sense, the current macro backdrop should incentivize policymakers to do so. Interest rates are low, and the general view is that higher government spending is appropriate at this moment in time. This will likely accelerate the development of financialinstruments that are designed to support broad econo my transitions, such as green bonds, and have important impli cations for fical spending, monetary policy decisions and, from an investment perspective, asset allocation.

• Transformed behaviours are activities that are likely to return after the crisis, albeit with fundamental changes. After 9/11, people stopped flying on planes. When they started flying again, the need for stricter security proto cols at airports was clear. Airports began to make massive investments in security technology that they had been previously slow to make. This had a major positive effect on the businesses of security system manufacturers.

• Collapsed behaviours are activities that are likely to cease altogether or be replaced by alternatives. After 9/11, travellers could no longer take beverages past the TSA check point. If you owned a coffee shop outside of that point, all of a sudden, your customers just stopped buying their coffee or water as they arrived at the airport. Today, you won’t find as many beverage shops outside of TSA check points.

At first glance, it can seem impossible to forecast how behaviours

will change. Fortunately, we can draw on decades of research on habit formation, technology adoption and Behavioural Economics to make reasonable predictions on what will happen next. We’ve identified four factors to help you evaluate how behaviours might change for your stakeholders:

1. Mechanics. Is the behaviour a habit or has it been somehow disrupted? Being part of a routine increases the likelihood that the behaviour will continue. Importantly, studies of habit forma tion suggest that time spent doing a behaviour isn’t the critical factor in determining whether it gets embedded; it’s the number of times you do it. For example, after analyzing its order data, a home delivery company discovered that it took four deliver ies to make a customer for life. Completing three orders wasn’t enough. And five orders provided no additional adherence. Ask yourself:

• Sustained behaviour: Are the mechanics of the behaviour engrained in daily habits, routines or rituals?
continued on page 82

MACRO DISRUPTOR 6: Labour market scarring.

With COVID-19 vaccines already being distributed and unem ployment rates having bounced offhistoric lows, it’s tempting to think that life could return to normal in short order. While that is true for many pockets of the economy, the full picture is more complex.

One area that bears careful monitoring is the relatively substantial drop in the labour force participation rate (LFPR) in many countries that occurred in 2020, which points to potential longer-term scarring of the labour market. Major central banks have extensively studied the concept of hysteresis, or the persis tent economic harm, particularly among disadvantaged groups.

Research suggests that falls in LFPR in industrial econo mies after severe economic downturns can last for up to a de cade. Crucially, an economy’s long-term potential growth rate is

deeply tied to its LFPR. Notably, structurally declining LFPR is often cited as a key reason why interest rates have declined. If the labour market shock of 2020 persists over the coming years, it’s likely that interest rates will remain lower than they would have pre-COVID-19, even if most of the broader economy appears to have healed.

MACRO DISRUPTOR 7: Populism and the demand for redis tributive policies.

As economists and strategists, we typically shy away from politi cal analysis at all costs. But as we head into 2021, it appears to us that few are paying attention to the risks of a surge in the populist movement. In our view, there is scope for the movement to grow, particularly since COVID-19 turned the spotlight on the extent of racial, gender and wealth inequalities that were somehow

• Transformed behaviour: Have people been forced to alter the mechanics or stop the behaviour altogether?

• Collapsed behaviour: Are the mechanics of the behaviour foreign, complicated or difficult?

2. Motivators. Does continuing this behaviour provide signifi cant psychological or financial benefit? For example, staying at home during the pandemic has reminded us of just how much we miss other people. And while we may be reluctant to eat in restaurants right now, the positive psychological benefits of going out to eat with friends increases the likelihood that we haven’t seen the last of people dining out. As one might imagine, psychological studies show that intrinsic rewards can be far more impactful than a purely monetary return. Ask yourself:

• Sustained behaviour: Is the behaviour driven by psycho logical or financial benefits?

• Transformed behaviour: Have these benefits shifted?

• Collapsed behaviour : Are the benefits of the previous behaviour ungratifying or dangerous? Do they come at a new cost?

3. Pressures. Human beings are herd animals, and we like to do what everyone else in the herd is doing. For example, if ev eryone else is speeding on the highway, we speed up, too. That, of course, changes when we see flashing lights in our rear-view mirror: Social pressures give way to an authority figure. When evaluating a behaviour, examine who’s telling people to keep doing it. Ask yourself:

• Sustained behaviour: Are there authoritative or social forces driving the behaviour?

• Transformed behaviour: Are people getting mixed messages about continuing the behaviour?

• Collapsed behaviour: Are there authoritative or social deterrents to the behaviour?

4. Alternatives to the behaviour. People will abandon a behaviour if there’s a better way to do it, but shifting to the new behaviour needs to be relatively painless. Importantly, technol ogy adoption theory suggests that the alternative needs to already be in use by early adopters. For example, Zoom wasn’t invented during the pandemic. It was already being used by a group of loyal fans when the pandemic hit. Ask yourself:

Rotman Management Spring 2021
Creating Your Post-COVID Business Plan (cont’d)

hidden in plain sight. Pressure to address this imbalance will likely grow. In Europe, we’re keeping an eye on the upcoming German federal election in September, along with the Italian and French elections of 2022, during which populist parties could win a bigger share of the electorate’s vote. But Europe isn’t alone — we believe demands for redistributive policies will grow in many major economies, with implications for the size, scope and effectiveness of fical policy.

In closing

The list of possible macro disruptors may seem long, but it could yet grow. We’re also keeping an eye on seemingly innocuous trends — such as the expected rise in mergers and acquisitions and initial public offerings, the shift from the millennial con sumer to the Generation Z consumer, and likely disruptions in

healthcare and education — that could have important implica tions for worker mobility, cost of living and inflation.

While the bulk of investor focus in 2021 will be on a return to our previous way of life, we believe it is even more important to probe beneath the surface, which, in many ways, will look very different than it did before COVID-19.

• Sustained behaviour: Are there a lack of viable alterna tives or substitutes to the behaviour?

• Transformed behaviour: Are there viable alternative solutions that meet the needs of the behaviour?

• Collapsed behaviour: Are there viable alternative activi ties that meet the needs of the behaviour?

One by one, take a look at each stakeholder and the critical behaviours that drive your business. Do you have reason to believe that this behaviour will continue? Or does your analysis suggest that it just might fall away? In that case, it’s time to come up with a plan.

You might find that you’re left with a few behaviours that are difficult to forecast. For example, will your customers shop in-store as a way of bonding with their children? Will domestic travel spike in popularity compared to international travel? In those cases, imagine what the company might do to suc ceed no matter whether the behaviour sustains, transforms or collapses. By wargaming different scenarios and adding in the known behaviours, you can develop a playbook to adapt regardless of what comes to pass.

The brain gets foggy when we grapple with great uncertainty.

We may feel like it’s impossible to plan for the future, and we forget that things can quickly change. In this moment, it’s critical to adapt a mindset of learning and discovery. Rather than trying to answer questions that don’t matter, we can rely on the wellresearched theories that have mapped behaviour change over long periods of time. And we can play out multiple scenarios so we’re ready regardless of the outcome. With that, it’s possible to come up with a radical plan that may even unlock a new era of growth in a post-COVID world.
Frances Donald is Chief Economist and Head of Macroeco nomic Strategy at Manulife Investment Management. She spoke at the Rotman MBA Student Conference, Managing the Pandemic Economy, in early February. Dev Patnaik is the CEO of Jump Associates and an Adjunct Professor of Mechanical Engineering at Stanford University. Michelle Loret de Mola and Brady Bates are Directors of Strategy at Jump Associates. This article originally appeared at

How ‘CovH anxiety’ Has Affected Employees

The COVID-19 pandemic has projected humanity into an unprecedented era characterized by feelings of helplessness and loss of control. While it is too early to robustly understand the impact of the virus on longterm psychological outcomes, healthcare professionals have already noted a marked increase in anxiety due to the uncer tainty brought about by COVID-19.

However, we have little understanding of how employ ees’ COVID-19 health anxiety (‘CovH anxiety’) — feelings of fear and apprehension about having or contracting CO VID-19 — has spilled over to affect their work- and home-re lated behaviours. In recent research co-authored with Nitya Chawla from Texas A&M University, we tested a model in dicating how CovH anxiety impacts work, home and health outcomes. In this article, we will summarize our findins.

CovH Anxiety’s Impact on Work, Home and Health Outcomes

Grounded in the literature on health anxiety, the concept of CovH anxiety holds that threatening events — such as a global pandemic — trigger high levels of anxiety. Research indicates that feelings of anxiety trigger defense mecha nisms in the form of a ‘fightor fligh’ response that is aimed at escaping the threat: The fightresponse is triggered when a threat is deemed surmountable, while the flightresponse is triggered when it is believed that the threat is diffilt to overcome. The COVID-19 pandemic has been likely to prompt a flightresponse, given that it presented an imme diate threat, it was unclear how long it would persist and there were a multitude of unanswered questions regarding its impact.

Research indicates that situations that elicit threat motivate people to reduce the expression of their emotions through ‘emotion suppression’ — a form of coping that is

Rotman Management Fall 2021
FACULTY FOCUS John Trougakos + Julie McCarthy, Professors of Organizational Behaviour, Rotman School

used to regulate emotions after they have been generated. Professor McCarthy and I expected that the affective reac tion to the pandemic (i.e., CovH anxiety) would trigger cop ing in the form of emotion suppression.

Research across several disciplines supported this hy pothesis. Emotion regulation research has found a positive relationship between measures of stress, anxiety, aggres sion and negative affect (emotion) on the one hand, and suppression-based emotion regulation on the other. Other studies indicate that anxiety and negative emotions lead to subsequent emotion suppression.

Furthermore, in clinical psychology, ‘withdrawal strat egies’ have been commonly observed among individuals with clinical levels of anxiety, and there is evidence that breast cancer patients with high levels of negative emotions use coping strategies focused on disengagement.

When individuals engage in emotion suppression, they are stiflingthe experience of their emotions and denying them an outlet. Not surprisingly, this type of regulation has been found to be maladaptive, particularly when people are faced with challenging situations. Rather than aiding the individual in coping, emotion suppression tends to exacer bate distress and lead to lower physical and psychological well-being.

We theorized that emotion suppression is detrimental to need fulfillmentin three key work-related areas: compe tence, relatedness and autonomy. A healthy fulfillmentof these needs leads to a number of positive professional, so cial and health-related outcomes. Let’s take a closer look at our hypotheses in each area:

COMPETENCE. The depleting nature of emotion suppression is driven by the increased cognitive load resulting from try ing to deal with the underlying emotions being suppressed. We posited that this impairs constructive thought processe

ses, problem solving, memory and information recall, re sulting in a reduction in individuals’ efficacy beliefs about performing a variety of tasks.

RELATEDNESS. We felt that emotion suppression would also impact individuals’ relatedness needs by inhibiting social functioning and positive interpersonal experiences. For example, the use of emotion suppression has been linked to diminished recall of social information, lower commu nication effectiveness and social functioning, and reduced rapport between interaction partners. Suppression is also related to increased social avoidance behaviours, negative partner perceptions and increased hostility.

AUTONOMY. Finally, we felt that emotion suppression would lead to a decreased sense of autonomy. Emotion suppres sion is an inhibitory state in which people do not display their inner feelings, suggesting that suppression does not reflect autonomous behavior. Supporting this logic, schol ars have proposed that emotion suppression impairs peo ple’s sense of autonomy as they are unable to express genu ine emotions and thus experience a loss of control.

In line with past work, we expected decreased psycho logical need fulfillmentto be critical not just in influenc ing individuals’ work effectiveness but their home experi ences and health outcomes, as well. With respect to the work domain, a lack of need fulfillmentis likely to impede job effectiveness, particularly with regards to competence needs. Feelings of competence entail ‘succeeding at op timally challenging tasks and being able to attain desired outcomes.’

For employees working during the pandemic, goal progress has been an important indicator of work suc cess because formal performance metrics may have been unclear during this unprecedented time. Goal progress
Withdrawal strategies have been observed among individuals with clinical levels of anxiety.

reflects employee perceptions of whether they have been able to meet work goals. The more competent a person feels, the more likely they will strive to meet their goals. Thus, need fulfillment hould facilitate goal progress.

During the early stages of the pandemic, people were largely cut off fom members of their social network outside of their immediate households. As such, the primary outlet for social engagement for many people was their own fam ily. ‘Family engagement’ reflects the extent to which indi viduals’ direct attention to, and are absorbed in, their family, and it represented a critical outcome for people during the pandemic.

Past research indicates that psychological need fulfil ment can increase relationship commitment and warmth toward partners. Moreover, need fulfillmenthas been re lated to reduced hostile behaviours in family relationships. It facilitates more open, understanding and less aggressive responses during family conflicts

When individuals’ needs are being met, they are also less likely to alienate themselves from family or engage in family conflic. Thus, we expected psychological need fulfi ment to be positively related to employees’ family engage ment. Finally, we built on past research demonstrating that need fulfillmentplays a critical role in influencing individu als’ health by examining psychosomatic complaints as a core outcome, which is an important physical indicator of wellbeing. According to researchers, the satisfaction of autono my needs is energizing and promotes health and well-being, while lack of need satisfaction contributes to pathology and ‘ill-being’.

‘Problem-focused strategies’ are attempts to moderate the negative effects of a signifiant stressor. In the midst of the pandemic, handwashing was one of the most common forms of problem-focused coping. Given that proper hand washing kills the virus, it provides individuals with a mecha nism to cope with the threat of COVID-19. This is important because anxiety typically triggers a loss of control, which can be alleviated by engaging in proactive forms of coping —

such as handwashing — aimed at minimizing the threat. As a result, we posited that handwashing frequency may buffer the impact of CovH anxiety.

To summarize, we predicted the following: That psy chological need fulfillmentis associated with (a) greater goal progress at work (b) greater family engagement and (c) lower somatic health complaints.

Our Research

To test the impact of CovH anxiety on employees, we began recruiting study participants during the week that social distancing measures were fist implemented in Canada. In an effort to obtain employees from a diverse range of indus tries, we posted advertisements on several social network ing sites, including LinkedIn, Facebook and Twitter. To qualify for the study, participants had to be employed and work at least 20 hrs per week.

Within the advertisement was a link to a survey, which included a measure of CovH anxiety. The remaining three surveys were each sent approximately one week apart in an effort to reduce concerns tied to common method biases. Participants received a link to each survey via e-mail on Fri day at noon and had until the following Monday at noon to complete it. At Time 2, participants rated their emotion sup pression and handwashing habits. At Time 3, they complet ed the measure of psychological need fulfillmen. At Time 4, we assessed participants’ behaviours across the work and home domains, as well as psychosomatic health complaints.

Our finalsample consisted of 503 participants. They were predominantly female (63.2%), Caucasian (74.6%) and full-time employees (89.7%). On average, participants were 36.8 years old and employed in their current organiza tion for 6.3 years.

FINDING #1: We predicted that CovH anxiety would positively relate to emotion suppression, and we found a signifiant positive effect of CovH anxiety on suppression. Important ly, this effect held even after controlling for trait anxiety,

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When an individual’s work needs are being met, they are less likely to engage in family conflict.

suggesting anxiety relating to a specificsituation (COV ID-19) has unique effects on suppression.

FINDING #2: We also proposed that emotion suppression neg atively relates to psychological need fulfillmen, and our results provided support for this hypothesis. We found a negative effect of emotion suppression on psychological need fulfillmen.

FINDING #3: Consistent with our third hypothesis, psycho logical need fulfillmentwas positively associated with goal progress and family engagement but negatively related to somatic health complaints.

FINDING #4: Our fourth hypothesis theorized that CovH anxi ety would have serial indirect effects on the behavioural cri teria via emotion suppression and need fulfillmen. CovH anxiety had a negative indirect effect on goal progress and family engagement via suppression and need fulfillmen. In contrast, it had a positive indirect effect on somatic health complaints.

FINDING #5: Our finalhypothesis proposed a moderating ef fect of handwashing frequency on the relationship between CovH anxiety and emotion suppression. We found a signifi cant interaction effect of CovH anxiety and handwashing frequency on emotion suppression. The relationship be tween CovH anxiety and emotion suppression was signifi cant and positive when handwashing frequency was lower, but not when the frequency was higher.

KEY TAKEAWAYS: Individuals with greater CovH anxiety suf fered from reduced work effectiveness (i.e., lower goal prog ress), lower family engagement and greater somatic health complaints due to their lack of psychological need fulfil ment as a result of suppressed emotions. In addition, proac tive coping mechanisms — such as handwashing frequency — buffered individuals from suppressing their emotions.

In closing

Our study speaks powerfully to the experiences of employ ees during the COVID-19 crisis. CovH anxiety has had sig nifiant implications for work effectiveness, family engage ment and personal health.

Our work also demonstrates that in the face of an un precedented threat, problem-focused coping in the form of a simple behavior such as handwashing can help mitigate the impact of the situation-specificanxiety. We are not sug gesting that handwashing is a universal coping mechanism that will work across a variety of threat situations. Rather, we highlight the importance of engaging in appropriate coping behaviours relevant to the situation individuals are dealing with.

While there is still much to be understood about the impact of the pandemic on employees and organizations, our research offers critical insights into people’s experiences during the initial phases of this crisis and is a step towards understanding the work-, home- and health-related implica tions of this unprecedented situation.

John Trougakos is an Associate Professor of Organizational Behaviour and HR Management in the Department of Management, University of Toronto Scarborough, with a cross-appointment to the Rotman School of Management. Julie McCarthy is a Professor of Organizational Behaviour and HR Management in the Department of Management, University of Toronto Scarborough, with a cross appointment to the Rotman School of Management. This article summarizes their paper, “Working in a Pandemic: Exploring the Impact of COVID-19 Anxiety on Work, Family and Health Outcomes”, co-authored with Professor Nitya Chawla from Texas A&M University, which was published in the Journal of Applied Psychology.

Managing Mental Health: A Behavioural Approach

Mental health policy needs to start embracing models and frameworks from other disciplines — in particular, the field of Behavioural Science.

WORKING FROM HOME and staying home all day long. Staring at screens. The blurring of work-life boundaries. Inability to meet up with friends and family. Anxiety about one’s future and fina cial worries. Uncertainty about when — or if — we will ever return to normalcy. Worries that anxiety is a sign of personal weakness. These are just some of the issues facing citizens around the world during the COVID-19 pandemic.

There is little doubt about the massive scale of mental health challenges brought by the pandemic. Unfortunately, mental health was already a looming crisis before the pandemic, ac counting for 22.8 per cent of the global burden of disease. CO VID-19 has only accelerated the rate at which this parallel crisis has taken root in our society.

As mental health policy experts and healthcare strategists develop plans to deal with this, we call for a radical rethink of how to help people with their mental well-being. The ongoing conversation in the health policy community in Canada and elsewhere revolves around the need to improve access to mental health services. These conversations often culminate in a call for additional resources — training more providers, scaling up ser vice delivery, and improving the quality and quantity of services offered. In particular, there has been a fair bit of work focused

on developing new treatments and therapies, investing in larger programs and policies, designing innovative delivery methods, and increasing the number of clinics, clinicians, and services with an effort to reach a larger percentage of the population. These efforts focus on the supply side of the equation and are consistent with a quote by Ralph Waldo Emerson: “Build a better mousetrap, and the world will beat a path to your door.” This loosely translates to the idea that if we build better products and services, people will automatically flock to consume them. However, as one of us argued in a recent book (The Last Mile by Dilip Soman), the ‘better mousetrap’ argument is fallacious because the builders of the new mousetrap haven’t thought of: a) whether the value they see in the new product is shared by potential customers; b) what frictions might prevent the conversion of latent demand into actual demand; and c) how best to solve ‘last-mile issues’ in communicating the value and facilitating the uptake of the product.

Our collective efforts in mental health care might be falling prey to a similar fallacy. While the work and investment in mental

Unfortunately, culturally-responsive mental health services are rare.

health infrastructure is laudable, there remains a need to take a broader view of the concept of improving access. Specificlly, we must ensure that we do not ignore the demand side of the equation.

For one thing, it is important to identify ‘latent demand’, specifi ally among citizens who fail to access services even when they would benefi from treatment. Many people with serious mental illnesses who don’t seek help show up when in a crisis that could have been prevented — increasing the stress associ ated with emergency visits and the high cost of hospitalization.

By attending to the demand side, we can increase the ability of citizens to make informed choices for help-seeking. In order to achieve this, our mental health infrastructure must be designed with human fallibilities in mind and there must be minimal fric tions that impede access to the appropriate service. In this article, we offer a new framework for matching demand with supply in the realm of mental health.

The Mental Health Marketplace

Like any other market, the market for mental health services will be best served when there is a match between demand and sup ply. This matching should occur not only for the volume of ser vices sought and delivered, but across geographies and hetero geneous groups. Obviously, different sub-segments of a diverse population — ethnic minorities, Indigenous Canadians, low-in come consumers and other underrepresented groups — will re quire different volumes and types of support and services need to be culturally responsive to be effective.

At the most basic level, the matching process must attend to structural factors that pose barriers to mental health service use. For example, we must help individuals with minimal fluency in the officia languages to be aware that services are delivered in their languages; and for Indigenous people, there is a need to decolonize mental health services and to recognize Indigenous healing traditions. Unfortunately, culturally responsive mental health services are rare.

Two main challenges exist for matching demand with sup ply. First, there is a need for market development. We must work to convert ‘latent users’ into actual users by designing interven tions to ensure that citizens access mental health services at the earliest signs of need, before a crisis occurs. Second, a number of

people who recognize the need for services do not access them because of frictions, including complexity of information, clunky processes, lack of access or emotional barriers such as stigma. We must clear these frictions, or, as behavioural scientists say, ‘clear the sludge’. Let’s take a closer look at these challenges.

Challenge 1: Market Development

The act of market development refers to the processes of edu cating, preparing and organizing the potential marketplace for a new product or service. Traditionally, this includes the develop ment of retail outlets, the communication and education of the value of the product to its potential customers, and the facilita tion of sales transactions. The market development for mental health services is no different.

As with many other domains, the principle of ‘A stitch in time saves nine’ also applies to mental health. People that might benefitfrom accessing services often are unsure that they need it, and therefore procrastinate until they are in crisis. Therefore, one important objective of market development is to encour age people to start accessing services during the early signs of a problem.

Unlike physical health, mental health issues are typically hard to recognize at an early stage. Physical illnesses are pre ceded by symptoms such as headaches, muscle aches or fevers that people readily recognize. With mental health, these symp toms are typically more ambiguous and not as easy to identify.

For example, if a person experiences stress or anxiety, should they attribute it to a health issue or simply to being unusually busy? Most people do not have the expertise or ex perience in recognizing mental health problems and may eas ily misattribute symptoms of psychological distress to external circumstances. Additionally, our society has historically tended to conflate some common symptoms with idiosyncratic or dys functional behaviours. Given these challenges, it is easy to see why people procrastinate in accessing services.

There will likely be a further delay in accessing mental health services for the most vulnerable populations if they must choose between treating physical versus mental health prob lems. People with financialburdens, who live in diffilt-to-ac cess areas or do not have paid sick leave have fewer resources to deal with health issues. In the face of constraints, more salient

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and visible physical health challenges might get precedence over more ambiguous and invisible mental health issues, es pecially for individuals who believe psychological distress will disappear over time without intervention.

The behavioural sciences offer two potential ways to miti gate these problems.

STATUS QUO BIAS: The fist relates to the ‘status quo bias’ — the tendency to speak to default options. A default choice is a choice that people implicitly make if they do nothing. For example, many people choose not to open retirement accounts, get an annual health checkup or consult with their wealth managers because each of these choices involves effort. However, chang ing the default (without imposing any restrictions on choice) has dramatic effects on outcomes. For example, randomly as signing an annual checkup appointment but giving people the option to reschedule has been shown to increase the likelihood that people will get a checkup. Likewise, defaulting people into opening retirement accounts but allowing them to close the ac count later increases savings behaviour.

A similar change in defaults for mental health could have positive impacts. Starting from elementary and high schools, we must build a culture in which people are aware of the high prevalence of mental illness (about one in five Canadians expe riences mental illness in a given year) and are comfortable with identifying and addressing mental-health challenges. And just as we routinely recommended annual health checkups, we also need to routinely recommend mental health checkups as a de fault.

Many people with mental illness have problems with moti vation and behaviour. When someone experiences depression, they are often lethargic and unmotivated, whereas experiences with mania are often accompanied by engagement in risky be haviour and impaired judgment. Both extremes are related to lower motivations for help-seeking. Therefore, changing the default will likely have a positive outcome for helping people spot challenges early, and will go a long way in reducing the stigma associated with mental health.

DEVELOP A CONSUMPTION VOCABULARY: A second concept that has value in market development is that of a ‘consumption vocabu

lary’. In the domain of products and services, researchers have shown that the provision of a consumption vocabulary — labels to describe why people like particular products and services — improve the learning of those products and therefore the will ingness to engage more with that product category.

Consider, for example, product categories like wine. People often know when they like a particular bottle of wine, but they are unable to articulate why. Giving such consumers labels (in dicators of, body, sweetness, acidity) helps them better under stand their preference and also engage more to experiment and refinetheir tastes. A similar approach could be of utility in the area of mental health.

Most individuals are unaware of different forms of mental health challenges. In their minds, anxiety, stress and depression are all part of the same large category of mental illness. Giving people labels to attach to discrete symptoms can help them com municate how they feel in a nuanced fashion, thereby allowing them to recognize the challenges and increase their confience to speak about these issues with service providers.

Modern-day marketing also effectively harnesses the pow er of social norms, influencers and word of mouth. In a digital era, many people only share highly curated images of them selves. For such individuals, it is particularly important to cul tivate a culture of openness and self-reflection about mental health challenges.

There are also some who share openly about their emotions and daily experiences. Educating citizens to learn to identify symptoms in others is particularly valuable for early interven tion for this group, as mental health challenges reduce cogni tive bandwidth, which may make accurate self-evaluation diffi cult. It can be extremely helpful to have a trusted friend, family member or confiante identify signs of distress, reach out and suggest seeking treatment.

Challenge 2: Eliminate Frictions

Even after solving the problem of converting latent demand into actual demand, Sludge can prevent people from accessing a service Sludge is often not intentional, but is a bit like weeds in a garden: Both are initially diffilt to spot, need constant clearing up, and ignoring them can result in rampant and uncontrolled growth. Following are four categories of sludge to look out for.

CHOICE OVERLOAD. A focus on the supply-side has produced thou sands of available options for individuals seeking help. However, users often do not know which services can best address their needs. Individuals in distress with limited cognitive bandwidth and motivation may findit diffilt to search for and evaluate their options. This state of ‘choice overload’ may lead people to defer making a choice and not seek help at all. Health benefits providers can help their policyholders overcome this obstacle by presenting a tailored list of eligible services, such as a network of eligible therapists and counsellors in a policyholder’s area based on client preferences (e.g. cultural needs).

FRAGMENTED SYSTEMS. When a person has to seek services from two or more providers, care is often not coordinated. A counsel lor might recommend consulting for pharmacological interven tion to client, but a consultation for medication must be com pleted with a physician. At this point, it is not only up to the client to seek the physician but also to keep both providers updated regarding any changes in symptoms, side effects or dosages. An other example may be an escalation of illness severity, whereby a client must seek in-patient care but must provide their own clinical history.

EXCESSIVE PAPERWORK. Another common source of sludge is ex cessive paperwork. Some plans require a formal diagnosis or a prescription from a physician. For example, Ontario’s Bounce Back coaching program — which connects users to a virtual therapist — requires users to enter their primary care provider’s billing number and professional ID. This can lead to procrastina tion and raises inequity concerns for individuals without a family physician. Furthermore, perceived stigma may also prevent in dividuals from contacting their care provider to register for this program. Policymakers should identify similar process frictions and streamline the steps involved for registering in their pro grams to improve ease of access and increase uptake.

STIGMA. Seeking help usually involves interacting with a health care provider, which may be diffilt for a person if they perceive stigma from the provider, especially if they are already part of an ethnic or racialized minority. Stigma often leads to the avoid ance of clinics or other public places where people might be

labelled. Policymakers should ensure that individuals at risk or with mild symptoms can self-refer to an appropriate low-inten sity service. This would allow them to avoid any potential stigma and make them more likely to access those services, thereby pre venting further deterioration, and help close the mental health gap for minority groups.

The Way Forward

As indicated herein, we must think about mental health in much the same way as we think about developing any other market place. How can we accomplish this? We have five recommenda tions.

1. IMPROVE COORDINATION AND OVERSIGHT. Many inefficiencs and lack of market development arise due to a lack of co ordination in the delivery of mental health services across the nation and across multiple entities. If we had a compre hensive strategy for mental health and resources devoted to market development and sludge-reduction efforts, as well as processes for sharing resources across organizations and provinces, we might move towards reducing some of the identified inefficiens.

2. EMBRACE DIGITAL SOLUTIONS. Digital tools can overcome many of the structural barriers presented by traditional inperson services, including lack of access, long wait times and stigma. Self-guided digital solutions are suitable for individuals with mild symptoms or those at risk of devel oping mental illnesses and have been shown to produce modest improvements while protecting the individual from further deterioration. Such solutions might also help to overcome stigma, as individuals do not have to disclose their condition for self-guided treatments. Therapist-guid ed solutions can be even more effective than self-guided approaches and as effective as traditional in-person ser vices. Therapist-assisted digital solutions may also reduce stigma by removing the individual from the physical pres ence of the therapist.

3. INCREASE MENTAL HEALTH LITERACY. Campaigns can increase population-level recognition of mental illness and improve

Rotman Management Spring 2021
Most individuals are unaware of different forms of mental health challenges.

understanding of the benefitsof treatment. They can also reduce stigma by normalizing mental illness as a common phenomenon that most people will experience in their lifetime and which can be improved with treatment. Cam paigns that inform individuals of prevalence and highlight the biological, psychological and social factors contribut ing to mental illness can also reduce self-blame and stigma. Using a bio-psychosocial model reframes mental illness as a social issue rather than locating the responsibility within the individual. Mental health literacy campaigns can also instill hope by including examples of individuals with men tal illness who are living successful lives post-treatment, motivating consumers to act. Furthermore, by improving mental health literacy at an early age, we can normalize the idea of regular mental health checkups as part of everyone’s regular default routine.

4. REDUCE SLUDGE As indicated, sludge-reduction efforts can make it easier for people to seek help. Because vulnerable individuals might not know they need help, governments should make validated screening instruments widely avail able to help citizens determine whether they could benefi from support. Self-administered web-based tools could be completed regularly to help care providers monitor any changes in a patient’s health. Learning from past research, health benefitproviders could also automatically assign their policyholders to the next available appointment with an eligible service providing the appropriate level of care, providing an option to reschedule or select a different pro vider. Finally, as health benefitsproviders are responsible for monitoring service usage, they are in an ideal position to coordinate such services to enable the integrated and seam less delivery of care.

5. EMBRACE SOCIAL MEDIA TOOLS. Despite the fact that social me dia has been blamed for a variety of mental health problems, it can also be of help in several ways. We know that people tend to look to other people who are similar to themselves or to social influencers (rather than experts) for advice and information. As a result, campaigns by prominent social per sonalities (both in the physical world, within communities,

and on social media) advocating for mental wellness and encour aging help-seeking could be beneficial. In an online context, machine learning algorithms could also help to identify patterns of posting that are indicative of particular problems, and peers (both online and in the community) could be trained to identify patterns of behaviour that signal the need for intervention.

In closing

With the wide variety of technological tools available today, there are clearly many different fronts on which to fightthe mental wellness battle. Our roadmap is not meant to be comprehensive, but our point is simple: In order to win this battle, we need to do more than simply deploy more resources. By embracing lessons learned from the Behavioural Sciences and attending to the de mand side of the equation, we can increase citizens’ ability to make informed choices for help-seeking — and improve the col lective well-being of our society.

Renante Rondina (UofT PhD in Psychology ‘19) is a Post-Doctoral Fellow at Behavioural Economics in Action at Rotman (BEAR).

Cindy Quan is a PhD Candidate in Psychol ogy at the University of Victoria and a former research assistant at BEAR. Dilip Soman holds the Canada Research Chair in Behavioural Science and Economics, is a Professor of Marketing at the Rotman School and is the founding director of BEAR. He is the author of The Last Mile: Creating Social and Economic Value from Behavioural Insights (Rotman-UTP Publishing, 2015) and co-edited The Behaviourally-Informed Organization (Rotman-UTP 2021)

Q &A

A few years back, you discovered what you consider to be the scariest scientificresult you have ever encountered. What did you find My team and I were studying Twitter and all of the verifie true and false news stories that had spread on the platform over a decade, from its inception in 2006 to 2017. The scary findingwas that false news travelled farther, faster, deeper and more broadly than the truth in every category of infor mation that we studied — sometimes by an order of magni tude. That is what led me to focus my research on what I call the Hype Machine.

How do you definethe Hype Machine—and why is it more relevant now than ever?

The Hype Machine is the social media industrial complex, which consists of all the various platforms — from Twitter to Facebook, Snapchat, Linkedin, Instagram and so on — along with the third-party companies that support this ecosystem. I call it the Hype Machine because it is designed
A scientist, entrepreneur and investor describes how social media is disrupting our democracy, our economy and our health—and how we must adapt.
by Karen Christensen
QUESTIONS FOR Sinan Aral, Director, MIT Initiative on the Digital Economy and author, The Hype Machine

to hype us up and engage us in order to provide opportuni ties for advertisers to persuade us with their advertising.

This massive machine is run by algorithms that opti mize human engagement by taking into consideration a vast amount of information that determines, in large part, who we friend, what we read, the types of information we’re exposed to — even who we date. Romantic matches created by algorithms surpassed those created by more tra ditional methods way back in 2013. To say that all of this is having a profound effect on the evolution of human society is an understatement.

There are a couple of reasons why the Hype Machine is more relevant now than ever. Throughout the global pan demic, we have spent time online like never before. These companies have been breaking records day after day as people shelter in place and rely upon them to gain access to meaningful human connection, news and life-saving health information. The pandemic has only served to ac celerate our reliance on digital technologies.

You have called fake news a public health crisis—and you believe it is about to get worse. Please explain. It’s a public health crisis because there is a tremendous amount of misinformation out there about COVID-19, and as a result, we are seeing vaccine hesitancy increase. This was actually foreshadowed a couple of years ago by misin formation about the measles vaccine. Measles was eradi cated in the U.S. in the year 2000. In 2010, there were only

63 cases in the entire country, but in 2019, there were 1,250 cases in just the fist six months, and that was directly relat ed to messages promoted by anti-vaccination groups online and elsewhere. The outbreaks of 2019 were concentrated in tight-knit communities like Rockland County, New York, and Clark County, Washington; if you look at the Facebook ads for anti-vaccine content during that time, you will see that they were concentrated in exactly these tight-knit com munities.

Unfortunately, all of this is about to get worse because the technologies for creating false information are acceler ating at an unprecedented rate. We have the rise of ‘deep fake’ audio and video, which essentially create very con vincing content that is becoming ubiquitous and pervasive. You may have seen the recent deepfake of Tom Cruise, which was incredibly well done. I predict that these tech nologies are going to get better and better at fooling us, and they’re going to become more democratized so that any one can produce them at very little cost. Together, these two things will create a new wave of misinformation that is potentially more persuasive than the textual misinforma tion we’ve seen in the past.

Three technologies make the Hype Machine possible. Please summarize them.

The technology trifecta that makes the Hype Machine possi ble is the combination of digital/social networks themselves; the digital interconnections of humanity created by these

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Fake news is a public health crisis. There is a tremendous amount of misinformation out there about COVID-19.

platforms, combined with machine-learning algorithms that direct the flow of information over the network; and finall, smartphones, which make all of this ubiquitously available to us throughout our daily lives, 24 hours a day, while simul taneously collecting information about our location, our be haviours, perceptions, interests, and our likes and dislikes on an unprecedented scale. These three technologies have converged to enable the rise of the Hype Machine over the last decade.

Readers of a certain age will remember the advertising slogan from the 1980s, ‘This is your brain on drugs’. What does our brain on social media look like?

One key aspect of this is the social brain hypothesis, which is the leading theory for why human brains are so big rela tive to our body weight, and why our neocortex ratio is so big compared to the rest of the brain. Cognitive scientists believe that in large part, this is because we evolved to be the most social species on the plant. We evolved to process social signals from our fellow human beings, and that evolu tion made us ripe for these technologies. We’re constantly in real-time touch with millions of social signals that other people are putting out on social media every day. In this con text, the meteoric rise of social media is no surprise, because it was like tossing a lit match into a pool of gasoline.

The second part of this is the dopamine-reward system that these platforms have been designed to engage with. Whenever we get comments, likes or shares on our con

tent, we receive a hit of dopamine that keep us coming back for more. When Sean Parker was interviewed a few years ago, he said, “We actually designed Facebook to take ad vantage of the dopamine-reward cycle.” That’s why it’s so psychologically addictive. Social media messages are also delivered on a ‘variable-reinforcement’ schedule, meaning they can come at any time, so we are always thinking about them.

Successful digital marketing remains a puzzle for many organizations. Can you share a few tips from your research?

The key to good digital and social media marketing is rigor ously measuring return on investment (ROI). And the key to doing that is separating correlation from causation. When I’m teaching a class, on day one I ask my students, “What if I gave you a pamphlet advertising this class as you walked in today day, and then I asked you, ‘what is the conversion rate of that pamphlet’? The obvious answer is 100 per cent, because 100 per cent of the people who saw it are taking the class. Then I ask them, “How much did that advertising pamphlet change your behaviour?” and they resoundingly say ‘not at all’ — because they had already decided to take the class. That is the difference between an ad being corre lated with the behaviour you are trying to encourage versus the causal effect of that ad changing behaviour. Figuring out that difference is the key to rigorously measuring ROI, which is the key to succeeding with digital marketing.
The meteoric rise of social media is no surprise, because it was like tossing a lit match into a pool of gasoline.

Digital marketing, fist and foremost, is about behav iour change. We can use it to get people out to vote, to get people vaccinated, or to encourage people to take HIV tests. Like any sort of process or technology, it depends on how you use it. I do believe that while digital marketing is a tre mendously powerful tool, most organizations aren’t doing it right. I am on a mission to study, through science, how to do it right — and educate business leaders.

Some people are calling for banning political advertising on social media and prohibiting the use of social media for people under the age of 18. What is your reaction to such recommendations?

I’m a big fan of living in a free society, so I’m not a fan of banning things. That approach doesn’t typically work, nor is it in line with a free and open society. I try to take a more nuanced approach and apply scientificrigour to solutionoriented policy suggestions, like interoperability and data portability legislation, which are designed to ensure com petition. I also support new federal privacy legislation and policy suggestions for stemming the spread of falsity and protecting our elections from manipulation. But I don’t think we need to impose draconian policies.

We’ve learned over time that living in a free society is great for innovation, it’s great for democracy and it’s great for the marketplace of ideas. We must make sure not to cur tail any of that in our effort to solve the social media crisis — which, however, is a crisis that needs to be solved.

For those who want to be part of the solution, how can we start building a healthier social ecosystem?

I have identifiedfour levers that we have at our dis posal: money, code, norms and laws. Money is the business models of the social platforms; code is the design of the platforms and their algorithms; laws are officiaregulation around the Hype Machine; and norms involve how we use these technologies in our daily lives. A couple of norms that individuals can use to effect change in their own lives are, for instance, scheduling social media use so that you block offtime to use it at a certain time each day and turning your notifiations o ff. We need to proactively step away from social media on a regular basis. That’s a new habit for all of us to strive for.

Sinan Aral is the David Austin Professor of Management, Marketing, IT and Data Science at MIT’s Sloan School of Management, Director of the MIT Initiative on the Digital Economy and a founding partner at Manifest Capital. He is the author of The Hype Machine: How Social Media Disrupts Our Elections, Our Economy, and Our Health — and How We Must Adapt (Currency, 2020)

Rotman Management Fall 2021
We need to proactively step away from social media on a regular basis. That’s a new habit for all of us to strive for.


There is still a lot of confusion around terms like cryptocurrency and blockchain. Can you provide a quick primer?

A cryptocurrency is a digital or virtual currency that is secured by cryptography — which makes it nearly impossible to coun terfeit. ‘Cryptos’ allow for secure online payments that are de nominated in terms of virtual ‘tokens’, holding the promise of making it easy to transfer funds directly between two parties without the need for a trusted third party like a bank or credit card company. Unlike traditional currency, cryptos are gener ally not issued by any central authority, rendering them theo retically immune to government interference or manipulation.

Blockchains are an essential component of many crypto currencies. These are cryptographically protected distributed ledgers made up of ‘blocks’ that contain transaction history. As the blockchain grows longer and longer, it becomes increas ingly diffilt to alter older transactions, ensuring the integrity of transactional data.

There are two main types of cryptocurrencies. The fist are essentially tokens or ‘digital stickers’ that run on a platform. The only thing that can be done with them is to shift them around. Examples include Bitcoin, Dogecoin and Litecoin

The second type of cryptocurrency is used as a built-in pay ment and rewards system for blockchain networks. In return for using these tokens, you receive a computational service. An

example of this is Ethereum, which is a decentralized, opensource blockchain. Ether is the native cryptocurrency of this platform, and after Bitcoin, it is the second-largest cryptocur rency by market capitalization.

Not everyone is a fan of cryptocurrency. Many believe that its value is merely based on the opinion of others. How do you react to this view?

I’m not a fan of Bitcoin or the other digital stickers, either. No one can truthfully say that they have any intrinsic value other than what people are willing to pay for them. However, you can make a much stronger case for the cryptocurrency that is used in Ethereum, because it can be used to obtain computational ser vices. And in the future, when you move to the so-called Proof of Stake system, you can potentially receive rewards based on your holdings. So down the road, cash flows could emanate from some of these tokens.

How are Bitcoin and other cryptocurrencies used?

A cryptocurrency ‘wallet’ stores private and public keys, which are necessary to send and receive coins. There are hardware, software and paper wallets. Hardware and paper wallets are typ ically considered more secure than software wallets, although there are pros and cons associated with each.
Finance Professor Andreas Park discusses
the pros and cons of Bitcoin and other ‘cryptos’ and explains where opportunities lie within the realm of digital currency.

Some merchants accept Bitcoin and other cryptocurren cies directly from a user’s wallet. Even though some of them have very high prices, they are divisible into very small fractions. Bitcoin, for example, is divisible down to a ‘satoshi’, which rep resents 0.00000001 of one Bitcoin. Some companies have cre ated ATMs where you can use U.S. dollars and other traditional currencies to buy Bitcoin and sell them to get cash. There are also companies that have created debit and credit cards where you can convert Bitcoin or other cryptocurrencies into dollars and use them just like you would any other payment card. But in all hon esty, Bitcoin itself is used mainly for speculation. The set of use cases is limited. Blockchain networks like Ethereum and others, however, provide a host of functionality that many companies— particularly start-ups — are embracing.

Tesla has invested US$1.5 billion in Bitcoin. It recently ditched Bitcoin payments, but at press time, remains its second-larg est corporate holder. Is this a smart move?

If I was a shareholder of Tesla, I would be very annoyed, be cause I bought shares of an electric car manufacturer, and now it is making investments on my behalf. If I wanted exposure to Bitcoin, I would buy Bitcoin. I don’t need the car company that I invested in doing that. Of course, it’s good for Bitcoin, because over the last year we’ve seen a lot of institutional money flow into it, which makes people believe that it’s not going to drop to zero overnight. In my mind, Elon Musk should be focusing on his business and not on playing with his investors’ money.

Huge companies like Microsoft and Coca-Cola are also em bracing cryptocurrencies. Should all businesses be doing this?

I think businesses should definiely consider what services and benefitsthey can obtain from blockchain technology. The way to think about a blockchain is that it is a common resource for value transfers. What that means is, you can use blockchains to con duct transactions, foreign exchange operations, escrow, trading,

Generations of Finance and Economics students have learned about fiat currencies—government-issued currencies that are not backed by a physical commodity such as gold or silver, but rather, by the government that issues them. There are currently around 180 such currencies in the global marketplace, including the U.S. and Canadian dollars, the euro and the Chinese yuan.

With fiat currencies, the country’s central bank guarantees the currency’s value: A $100-bank note is backed by the central bank’s promise to pay 100 dollars to the bearer. But cryptocur rencies are very different—and their proponents believe that this difference is what justifies their utility.

Digital currencies are not regulated by any central bank, or for that matter, by any authority whatsoever. They do away with so-called intermediaries—despite the fact that in the real world, it is these very intermediaries that infuse confidence in a currency as a method of payment. Cryptocurrencies don’t fit the definitions of ‘money’, ‘asset’ or ‘investment instrument’. Instead, they can be exchanged on a peer-to-peer network with transac tions recorded on blockchain technology.

Currency plays a vital role in every nation’s external trade. According to the U.S. Treasury Department , if any country deliberately influences the exchange rate to gain an unfair competitive advantage over other exporters, it amounts to cur

rency manipulation. For example, a government may attempt to keep its currency weaker than the U.S. dollar, making its exports cheaper for overseas buyers. In August 2019, the U.S. accused China of being a currency manipulator, using the yuan to gain an unfair advantage in trade. If predictions come true and cryptocurrencies become universally accepted in global trade, currency manipulation will become a thing of the past.

During recessionary phases, countries print money to infuse liquidity into the market. When a nation’s currency falls against the U.S. dollar, the central bank starts selling dollars to support the local currency. The fact that no one authority regulates cryptocurrencies makes them invulnerable to manipu lation—but it also means that if the global economy falls into a recession, crypto cannot be printed (or in this case, mined) to infuse liquidity in an economy, nor can it be purchased or sold to support any other currency.

Following are some other reasons to be cautious about cryptocurrency.

EXTREME VOLATILITY IS THE NORM. In April 2021, the total market value of digital currencies breached the US$2-trillion mark, with Bitcoin—the most popular cryptocurrency—accounting for over 50 per cent. At that time, the price of one Bitcoin token more

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Deconstructing the Digital Goldrush by Kunal Sawhney

or bidding for contracts. There are many things you can organize using these joint networks. And clearly, massive value can come from working on common platforms — as we have seen with the Internet.

The Internet is really a large open infrastructure, and it’s obviously very valuable for the exchange of information. Block chain networks are essentially trying to be the same thing for val ue transfers. If you can organize major portions of your supply chain or your accounting system with these open networks, that could potentially be very valuable, because you could save costs and make payments more efficienand transparent. In my view, the most valuable aspect of all of this is the common network and its functionality.

Your Rotman colleague, Finance Professor Lisa Kramer, recently said that it’s unwise for businesses to accept cryptocurrencies in exchange for goods and services. Do you agree?

I think it’s unwise for any business not to accept a proposed

means of payment, because in doing so, a deal could fall through.

At the same time, if you do decide to accept cryptocurrencies in some form, you should do it smartly. For instance, Paypal offers a service for people to pay with cryptocurrencies, but the mer chant actually receives fit currencies, so it is not exposed to the crypto risk.

If you think about it, Canadian businesses have accepted U.S. dollars for a long time, even though U.S. currency is not legal tender in Canada. So if you can finda way to accept cryptocurren cies and make a deal happen where otherwise it wouldn’t hap pen, why not? Having said that, Lisa is absolutely right in saying that businesses, especially small ones, should not hold cryptocur rencies. So there is a smart way to do it and a not-so-smart way.

What about the big banks? Do you foresee a day when cryptocurrency is integrated into our financial ystem?

There are certainly big questions around the banks, with dif ferent entities offering different services nipping at their heels.

than doubled on a year-to-date basis, breaching US$60,000 at one point.

Whereas a 15 to 20 per cent rise or fall in prices has become the new normal in the crypto space, such fluctuations would signal a market crash or a record bull run in the stock market space. Figure One (on page 74) depicts the volatility of Bitcoin in recent months.

In May 2021, the frenzy around cryptos compelled the S&P Dow Jones to launch new indices to track the move ment in prices of the currencies underpinning them. In April 2021, Canada approved three Ethereum exchange traded funds (ETFs)—a move that followed approval of the world’s first Bitcoin ETF two months earlier. These ETFs invest directly in physically settled digital currencies instead of futures or derivatives. These ETFs bestow validity to the ‘reimagined’ currencies, allowing investors a safe path to invest in cryptos apart from directly buying or selling them via exchanges like Coinbase , Kraken and Binance

THERE ARE NO CHECKS AND BALANCES. The ‘positive’ features of digital currencies are also the areas of concern. When cur rencies were introduced in the days of kingdoms with rulers, there were no central banks to exercise oversight. Questions

arose as to how much money should be minted or printed? Will the same minted coin be acceptable tomorrow in case the kingdom sees a change of sovereignty? Which authority will be answerable for any disturbances? The doubts never allowed those copper and gold coins to become sustainable. Checks and balances were not a want; they were a need.

Multilateral organizations, including the World Trade Or ganization , the World Bank , the International Monetary Fund , the G7 and the United Nations owe their existence to this need. The world, torn after devastating wars, needed eco nomic, financial, legal, political and social stability. Oversight authorities bring transparency and predictability to any field. Thanks to them, one knows where to report a theft, where to report financial fraud, or where to report misguiding state ments in an IPO prospectus. But at least for now, such checks and balances are non-existent in the crypto world.

The glittering world of digital currencies, where crypto exchange platforms such as Nasdaq -listed Coinbase and news sites like CoinDesk outshine their traditional market peers, is a world of many ‘ifs’. For instance, what if a multibil lionaire, who recently called a digital currency ‘the future of transactions’, calls it a not-as-promising asset than some other new entrant?
continued on page 72

As indicated, I see Blockchain networks as a common infrastruc ture that allow value transfers across a wide spectrum. At the moment, our financialinfrastructure is extremely siloed. The payment network is prohibitively slow: If you send money from a savings account at CIBC to an investment account at TD, it takes at least two days for the funds to arrive. That makes no sense in the modern world, when everything else is instantaneous.

With a blockchain, you could trade assets on different plat forms. Say you want to buy some options on the Montreal Exchange and stocks on the Toronto Stock Exchange. They all live on different ledgers, so it’s a really complicated process to reconcile all of that. And God forbid if you want to do anything across borders. If a common resource was available for all of these transactions, it would be very valuable. Imagine if all se curities could live on a common platform and be pooled. That would be extremely valuable for the functioning of markets.

Conceptually, there are huge potential efficiencgains and cost savings if this is deployed properly.

The big question is, If the world moves to an open platform, what will be the role of banks? Bank leaders need to think care fully about this. It’s not so much a question of how they can in tegrate blockchain into their current processes; it’s more about what role banks will play if and when the world moves in this direction.What new products can they offer and what would become redundant? How can they ensure their relevance and survival?

Will we start to see large enterprises hiring talent that specializes in this area?

Yes. First of all, because new services will emerge. If we move to decentralized platforms — which I hope we will, because there is value in doing that — then new service providers will emerge

A LACK OF UTILITY. Factories produce goods that have or can have demand in the market. This demand is a product of the utility of that good. Price is a factor of the cost of production and demand and supply forces. More demand and less supply results in a price increase. This statement holds some value in the case of cryptocurrencies, too. From multibillionaires to large portfolio investors, the demand for cryptocurrencies is relatively high. Supply depends on the complex mining process. Prices, as a result of these forces, have breached many unthinkable targets. Do cryptos have any true utility? The answer may lie in some distant future.

HIGH ELECTRICITY CONSUMPTION. A sizeable portion of the world’s energy generation capacity still comes from power stations using coal as fuel. Annual electricity consumed for cryptocurrency mining dwarfs the total energy consumption of countries like Argentina.

Experts say this indefensible electricity consumption might be the straw that breaks the camel’s back. Similarly, investing in other valuable resources in the crypto space, from human capital to costs involved in setting up new indices and trading platforms, is irrational until digital currencies prove their utility.

NO INVESTOR PROTECTION. Traditional investment instruments include shares of corporations, fixed deposits with banks and so on. The common thread is an underlying entity that lends cred ibility to the instrument. Stocks represent a company that under takes an economic activity to generate profit. Authorities like the Canadian Securities Administrators (CSA) or the U.S, Secu rities and Exchange Commission (SEC) work to prevent any unscrupulous act by an entity listed on the exchange. Deposits with banks, too, have an element of trustworthiness, given that these financial institutions are the backbone of any economy.

Cryptocurrencies are not like any of these investment instruments. Investments in these digital currencies have indeed generated millions in profits, but investing in this ‘new and reimagined’ currency is laden with excessive risks. In May 2019, hackers stole US$41 million worth of Bitcoin in a cyber heist from crypto exchange Binance . The exchange “begged for users’ understanding”, but there was no authority like the CSA or the SEC to step in to ensure investor protection.

So, why are cryptocurrencies so popular? Enter the con cept of marketing. Marketing is a powerful tool to drive demand and, thereby, the price of any entity. In the age of digital mar keting, a single tweet from a multibillionaire CEO can boost or decrease the market value of anything, including cryptocurrency.

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Clearly, massive value can come from working on common platforms — as we have seen with the Internet.
The Digital Goldrush: A Cautionary Tale (cont’d)

to help firmsnavigate the system. And of course, you will need people in your finane or accounting department who are able to interface with these service providers and understand what is going on. There are signifiant opportunities on the horizon that will require lots of learning and re-learning for the organizations that embrace these opportunities.

It has been said that China is currently developing its own digi tal currency. What are the implications of this?

Central-bank-issued digital currencies are an emerging issue and a completely different beast from cryptocurrencies. Central-bankissued currencies are digital representations of fit currencies — government money — and we will definiely see them proliferate in the future. China is basically developing a digital representa tion of the yuan that lives on a particular network.

Remember, China is light years ahead of the West in terms

of digital payments with Alipay and WeChat Pay. Those two apps alone make up 90 per cent of its payments market. They are extremely efficienand user friendly, which will make it diffilt for the digital yuan to compete directly with them. As a result, China will likely apply some form of pressure for people to use it or for Tencent and Ant Group to include it in their ser vices. Personally, I am concerned about the power that Tencent and Ant Group can amass with the payments data that they collect. Currency and Banking Databases also raise a lot of questions about privacy of information and the stability of banks when people move deposits into central bank digital cur rencies. At the same time, existing electronic bank payments are also very expensive for consumers and merchants. There is a very strong case that people should have an option to partici pate in the digital economy. All of this is a huge area of interest these days.

From Reddit to Twitter , social media platforms are shaping investors’ sentiments like never before. Elon Musk ’s tweets in May 2021 favouring Dogecoin over Bitcoin led the former’s price to surge and the latter’s to crash. What if more countries like Turkey crack down on cryptocurrencies? What if more crypto exchanges like Turkey’s Vebitcoin and Thodex suddenly go offline and cease all trading? What if India bans cryptocurrencies? There are many more such questions.

Powerful marketing strategies and creative promotional campaigns can infuse believability in superficial concepts. For example, Ponzi schemes rely solely on marketing and brand building. And when multimillionaires and large corporates lend a hand to these campaigns, there is no stopping the stampede of FOMO investors. The game completely changes when retail investors enter the scene. Such investors don’t have a lot at stake individually. However, together as a segment, they risk the most. Seasoned investors are well aware of the underlying risks in marketing-backed instruments, and hence, they hedge such positions.

The popularity of cryptocurrencies is similar. Investors are rushing to add them to their portfolios, and some are making profits. But all such gains are a product of further bets by some new investors at an enhanced price (i.e. greater fool theory.)

Capital, however, is a limited resource. Governments need to fund their welfare schemes and private players cannot bet indefinitely on cryptos. One can buy a digital currency for, say, $1; another can buy it for $2, allowing a dollar in profit to the first buyer. But unless subsequent buyers find some utility that justifies a price tag above $2, the entire scheme loses steam.

The global economy is currently reeling from many factors, including trade wars, geopolitical tensions and the COVID-19 pandemic. If we were in the midst of a boom period, deploying massive resources to a yet-unproven technology might be jus tifiable. But with governments finding it difficult to maintain fis cal prudence due to increased spending on welfare programs and limited private investment scope, resources going towards the crypto space call for greater scrutiny at this time.
Kunal Sawhney is the founder and CEO of Kalkine Media, which provides a holistic view of stock investment recommendations to retail investors with respect to financial erformance, strat egy and industry catalysts. Based in Sydney, Australia, he is featured regularly on Sky Business, CNBC and Australian Financial Review

Six-Month Trading Chart of Bitcoin Fund (QBTC)

70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 0.00 14-11-2020 14-12-2020

BTC Price In USD 14-03-2021 14-04-2021 14-05-2021

14-01-2021 14-02-2021

Timeline: 14 Nov. 2020 to 14 May 2021

Open (QBTC=)

High (QBTC=) Low (QBTC=) Last (QBTC=)

Source: Kalkine Media

You serve as a mentor for the Creative Destruction Lab’s Blockchain Stream. How is the stream unfolding so far? The Blockchain Stream at CDL Toronto brings together expe rienced entrepreneurs, economists and active investors to help scale ventures based on technologies underpinned by, or core to the advancement of, blockchain technology. The start-ups attend an intensive two-week virtual ‘crypto-economics bootcamp’ in July, instructed by industry and academic leaders in blockchain and crypto-economics, followed by five objective-setting ses sions between October and the following June.

The stream has been active for three years now, and it’s been fascinating to see it evolve. When it fist started, there was a lot of skepticism around blockchain. People really didn’t know what to make of it. In the second year, it got pretty depressing, because we were in the midst of a ‘crypto winter’. Everyone was asking, ‘Is this going to go anywhere?’ But since the fall of 2020, there has been enormous excitement about the blockchain movement, in particular about the area of decentralized finane and about the ventures themselves. CDL participants aren’t really interested in crypto prices and all the hype. Nobody is working on Bitcoin or, God forbid, Dogecoin. Our CDL participants are doing seri ous work to advance the fild and they (and I!) are more excited about the blockchain functionalities that are becoming available and the opportunities that they are unlocking.

What does a typical start-up look like in this stream?

There is such a wide variety. To give you an idea, here are some examples of alumni of the program: AdHash is a proto col for trading advertising placements via real-time bidding; Biconomy is an application programming interface that enables decentralized apps (dapps) to improve the speed of transaction completion and end-user experience; Carbon Block is a hard ware and software solution to produce verifiedcarbon credits; and Lake Project’s portfolio recommendation engine makes investing in digital assets simple, building diversifiedportfolios for users and automatically rebalancing them based on market trends. That is a sample of what we have seen so far. But the innovation has just begun.

Andreas Park is a Professor of Finance at the University of Toronto, appointed to the Rotman School of Management and the Department of Management at UTM. He is the Research Director at FinHub, Rotman’s Financial Innovation Lab, the co-founder of the LedgerHub, the University’s blockchain research lab, a lab economist for blockchain at the Creative Destruction Lab, the economic advisor to Conflux Network, and a consultant to the OSC and IIROC. He recently co-authored a design proposal for a central-bank issued digital currency, commissioned by the Bank of Canada.

Rotman Management Fall 2021

Q &A

How would you describe the billion-dollar ‘diversity business’?

In writing the book (Diversity Inc.), I wanted to explore the tension between the constant rhetoric about diversity and the billions of dollars that are spent annually on consultants and anti-bias training — and the fact that most of these or ganizations barely move the needle when it comes to hiring people of colour. Whether it’s creative filds like fashion and Hollywood, academia, law or business, people of colour re main radically under-represented in every influential fild. They make up close to 40 per cent of the U.S. population, but they are in the single digits in most influential filds.

Why are some of the fieldsthat should be the most pro gressive not making any headway? That was actually one of the surprises of my research. The creative and cultural filds — museums, Hollywood, fash ion — that position themselves as being the most socially progressive are among the least diverse. Corporate Amer ica has made far greater strides than any of these filds. It still has problems, particularly in the upper echelons of leadership, but it is far more diverse. That’s because, fist of all, there are many more jobs to fill,so there is greater competition and they really want to get ‘the best of the best’. And secondly, they often have structures in place like anti-nepotism clauses, which force them to reach outside

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A journalist, academic and author explains why the ‘diversity business’ isn’t working, and how to turn it around.
Interview by Sonia Kang
QUESTIONS FOR Pamela Newkirk, New York University Professor and Author, Diversity Inc.

of their tiny sphere of influence. Because we live in such a rigorously segregated society, people are still generally hir ing who they know and who their friends know — and these spheres of influence often exclude people of colour.

Until recently, lots of people in the U.S. insisted that race was no longer a concern. In fact, many argued that we lived in a post-race society. If there is one silver lining from the unrest that erupted after the tragic killing of George Floyd, it is that fewer people now deny just how deeply embedded these issues are in our country. Their blinders were ripped off, and finall, we’re all on the same page.

How can we have these conversations in a meaningful way at work?

If there is one key takeaway from my book, it is that corporate leaders have to move beyond the focus on ‘changing hearts and minds’ that most anti-bias training is set up to do — and has been proven not to do. Study after study shows that this type of training does not move the needle. Ironically, antibias training has been shown to polarize the workplace and make it even more resistant to diversity.

We need to move past those attempts to real interven tions. The only real answer to the discomfort with diversity is diversity. The fact is, due to the racially segregated nature of society, people don’t have a comfort level with people outside of their own social sphere. Only by having greater exposure to different types of people will we gain that com fort level, and that’s why diversity itself is the answer. And it’s well worth doing: All of the studies show that diversity improves innovation and can improve your bottom line. It’s also the right thing to do. We live in a diverse society and we cannot normalize the exclusion of 40 per cent of the popula tion from all of these filds. There is no justifiation for that.

Are there companies that are doing this right?

I’ve studied Coca-Cola and what it did in the five-year pe riod after it settled a landmark discrimination lawsuit. What it took to move the needle on racial diversity there was three things: leadership, intention and accountability. They began by assessing every data point around every single employee, from salaries to bonuses, to promotions to hiring. They also looked at every title and every action concerning each em ployee across racial and gender lines. By assessing where certain types of people were clustered and where people

were under-represented, they were able to get a very clear picture of where bias had metastasized inside the company. Once they had a clear picture, they turned their atten tion to disrupting these patterns of bias before they could metastasize. So before they offered someone a job, they would make sure that the candidate pool was sufficientldi verse. They would look at the salary offered, to ensure it was in line with other people working in that type or role. Over the course of five years of rigorous analysis and intervention, they were able to create a far more diverse workplace.

What key lessons can be learned from Coca-Cola?

I think too many institutions are proceeding as if diversity is going to just going to happen organically — when in fact, it only happens if you really pay attention to your practices. We all know that unconscious bias exists within each of us. We can train people for the next 40 years, but it will still ex ist. If you look instead at how it manifests, and then disrupt the patterns and practices before they metastasize, you can actually do something about it.

I also write about Google, which has spent more than $100 million per year on diversity initiatives year after year — yet people of colour, particularly Blacks and Hispanics, remain in the single digits. When you look at tech roles in general, it’s like three or four per cent people of colour, and the only way to change this is with very intentional practices and interventions. Another overlooked strategy is some thing every company can do: mentoring. Because of the dis comfort many people feel around race, people of colour are often left to figue things out on their own. You need to put structures in place so that every employee who wants it — no matter what their race or gender—can be mentored.

People often talk about these problems as being a ‘pipe line issue’, but I believe many organizations just don’t know how to recruit. Would you agree? That’s a big part of it. The question is, can we incentivize increasing diversity? Can we use bonuses? Could we incen tivize it in the same way we incentivize improving our bot tom line or innovation efforts? I’m hoping that the events of the past year will prompt senior leaders to do something differently. They are under greater scrutiny than ever as people become sensitized to the ‘drive-by diversity strate gies’ that continue to fail.
We cannot normalize the exclusion of 40 per cent of the population from so many fields.

Last summer, we saw numerous Fortune 500 CEOs issue statements that Black Lives Matter — something that was unthinkable when I sat down to write Diversity Inc. But these are still just words; the proof will be in the pudding. One thing that encourages me is that young people seem to be much more selective these days about the organiza tions they choose to align themselves with. So if you want the best and brightest working for you, this is something you must take action on.

After George Floyd’s murder, there was a lot of talk last summer about ‘defunding the police’. If you could ‘defund diversity’, where would you re-allocate the funds? I would put the funding towards actually diversifying the workplace. Imagine if a company like Google — or another tech company with billions of dollars — invested in the ac tual pipeline itself by putting money into under-resourced urban schools that are hungering for the technology and programs that kids in better-resourced communities take for granted? We know that 25 per cent of Bachelor’s degrees are awarded to Black and Latino students for Engineering, Computer Science and other STEM subjects; imagine if big tech companies invested in those particular kids and their future success? I think that would make a world of differ ence, rather than using the money to try to change the hearts and minds of people who already work at Google. I just don’t see how that will ever result in a more diverse workplace.

Last year, Russell Reynolds did a survey of Fortune 500 Chief Diversity Officers, and it found that only 35 per cent of these executives had access to employee metrics for their companies. They can’t yet do the kind of assessment and intervention that happened at Coca-Cola, because they can’t even see where the problems are. If you can’t see it, how can you fixit? Many of the CDOs in that survey said they did not have the support or resources that they needed to be successful. The people in these roles are among the most marginalized on the executive team. Unless you have leadership that is actually invested in your success, this is not going to work. This has to be an all-hands-on-deck project.

For leaders across industries, social pressure to do the right thing is increasing. Is that part of the answer? Any optimism I had last summer with the outpouring from corporate leaders was tempered by the manner in which

many of them pledged millions of dollars to civil rights organizations — as if the problem could be fied outside of their workplaces and it wasn’t right in front of them. Civil rights organizations only respond to bias after it manifests. These problems exist within these institutions. This is a problem crying out for leadership.

Can managers who are early in their careers be part of the solution?

There is always something you can do, but you can only be so successful without senior leadership behind you. Strate gies middle managers can embrace include mentoring the people who are already in their space and keeping lists of the candidates who apply for jobs in their area. But at the end of the day, if this is not considered a core value and part of your organizations mission, you will just spin your wheels, because it won’t rise to a level of change that only leadership can bring to fruition.

Pamela Newkirk is a Professor of Journalism at the Arthur L. Carter Journalism Institute at New York University. Her latest book is Diversity Inc.: The Fight for Racial Equality in the Workplace (Bold Type Books, 2020). Sonia Kang is the Canada Research Chair in Identity, Diversity and Inclusion, Associate Professor of Organizational Behaviour at the Rotman School of Management and Chief Scientist at Behavioural Economics in Action at Rotman (BEAR).

Rotman Management Spring 2021
Ironically, anti-bias training has been shown to polarize some workplaces.
Social Impact DIVERSITY INCLUSION SHOP LOCAL SLOW FASHION reduce reuse elcycer Purchase Power

LIFE, REIMAGINED: How COVID-19 Has Changed Consumers

OVER THE PAST 18 MONTHS, a majority of consumers — across back grounds, demographics and geographies — have reimagined their values and purpose. They have made a consequential shift to focusing on what matters most for them in life — and their mo tivations for what and how they buy are, accordingly, meaning fully different.

Our research into these changes reveals an enormous new ‘white space’ in which brands must differentiate themselves anew to survive and discover new paths to growth. Consumers will leave brands that don’t recognize their new priorities—and they will pay more for those that do. It’s time to ask: What will motivate consumers to stay? What will motivate them to pay?

The pandemic compelled consumers — en masse — to shift their expectations more rapidly and completely than we’ve seen at any other time in history. Specifially, as COVID-19 impacted populations country by country, individuals looked inward, el evating concepts of relationships and responsibility, and re-eval uated their priorities. Suddenly, they were seeing themselves and

the world in a different light. Signifiant numbers of them are now applying these new mindsets to where, what and how they buy. Through their purchase choices, they are purposefully seek ing to influence their communities and the environment, and to confirm hw they see themselves in the world.

Accenture’s survey of more than 25,000 consumers across 22 countries, with follow-up focus groups in five countries, bears this out: A full 50 per cent of consumers, globally, and 44 per cent in Canada, say that the pandemic caused them to rethink their personal purpose and re-evaluate what’s important to them in life. Globally, 42 per cent say the pandemic made them realize they need to focus on others more than themselves (39 per cent in Canada).

These consumers — we call them ‘the Reimagined’ — are changing their buying habits accordingly across all 14 industries we covered. In doing so, they are creating immense opportu nities for companies that respond by resetting strategies and new standards for meeting and exceeding their expectations.
Global consumers have new motivations beyond price and quality. They are ready to abandon brands that don’t support their reimagined values — and spend more on those that do.

Our research revealed preferences that are powerful enough to drive both brand switching (‘should I stay?’) and willingness to spend more (‘would I pay?’).

Just 17 per cent of consumers — those we call ‘the Tradition al’ — said they were unchanged by the pandemic (20 per cent in Canada). Thirty-three percent have mindsets that are still evolv ing (35 per cent in Canada), but many of them are shifting as well, and — coupled with the Reimagined — represent an opportunity for companies to capture signifiant market share.

Reimagined Consumers: Who Are They?

What stands out most about the Reimagined is not what makes them different, but what makes them the same. Our survey cap tured insights about age, gender, location, employment, income, life changes and other demographic information. We discovered that the Reimagined don’t have discernible — or presumptive — demographic distinctions. They are, in fact, a generally heterog enous group.

In fact, although everyone, everywhere, had their own deeply personal experience and reaction to the pandemic, these consumers have mainstreamed purchasing considerations that were once peripheral and confinedto demographic subsets. In the recent past, for example, it was younger consumers, for the most part, who expected a brand’s larger purpose to align with their outlook on life. A broad group of consumers now seeks that connection.

While price and quality have long been — and remain — the dominant motivations in consumers’ decision-making, they have lessened in influence among Reimagined consumers. Among this group, 66 per cent said they now expect brands to take more responsibility in motivating them to live by their values and to make them feel more relevant in the world, versus 16% of Tradi tional consumers.

We see this not just as a pandemic effect, but as an inevitable long-term consequence of the shift to digital technologies in forming and enabling purchases — accelerated by the pandemic. Consider how easily and quickly consumers can check prices on the internet and get a strong sense of the quality of an offering through recommendations and reviews. Multiple platforms such as Amazon and Google have built this process into the fabric of consumers’ lives. When the pandemic elevated digital shop ping to daily necessities of life, the ability to immediately cross-

reference price (comparison shop) and quality (ratings/reviews) impacted everyone and leveled most playing filds. As a result, these determinants have become easy-to-check table stakes — still crucial, but not necessarily differentiators. Other motiva tions, by contrast, now stack more powerfully:

HEALTH AND SAFETY. Consumers are asking: Are you keeping me and my neighbours safe? What about your employees? After more than a year of social distancing, constant handwashing and wearing masks everywhere, consumers are highly attuned to the health and safety of every experience. The fact is, people everywhere have become safety-obsessed. Sixty-three percent of the Reimagined think it’s crucial that companies/brands actively promote healthy practices, versus 32 per cent of the Traditional. The Reimagined indicate that this priority will not go away after the pandemic is over: They want to be confient that every busi ness will strive to be part of a health-oriented ecosystem that can overlay their lives. Indeed, companies are increasingly evaluat ed by third parties on their consumer health and safety policies and initiatives. Ipsos, for example, a market research company based in Paris, started a Consumer Health & Safety Index that measures how effectively retailers are delivering on consumer needs around health and safety issues. At the time of this writ ing, the index ranked Whole Foods and Costco at the top for demonstrating near universal compliance with health and safety protocols.

Across the 14 industries we covered, we found that a major ity of the Reimagined — and even a sizable portion of Traditional consumers — would either pay more for or switch to another brand if their health and safety needs were not addressed. For instance, for travel, retail, healthcare and consumer electronics retailers, more than 45 per cent of the Reimagined would pay ex tra for health and safety-related experiences. And 68 per cent of the Reimagined would switch travel brands if they felt health and safety were lacking.

At a country level, our data revealed that consumers in cer tain countries had a higher-than-average bias toward health and safety motivators — including Japan, China, India, Singapore and the UAE. “After the test of the pandemic, it proved that health is the most important thing. Only with a healthy body can we take care of our family better and work harder,” said one Chinese con sumer, while a U.S. consumer told us, “Health and safety should

Rotman Management Winter 2022
Increasingly, companies must use the same strategies to attract consumers as they use to attract employees.

always be front of mind — for your health today and in the future.”

SERVICE AND PERSONAL CARE. Do you remember me? Are you mak ing my experience with your brand as personal as it can be? Are you there for me when I need you? Seventy-two percent of the Reimagined expect the companies they’re doing business with to understand how their needs and objectives changed during this time of disruption, and to address those new needs, versus 27 per cent of the Traditional. Along with increased online shopping, consumers expect more interaction with customer service. They would like to see faster response times and more respect for and attention to their individual needs or concerns.

More than half of the Reimagined say they would switch brands if a brand doesn’t create clear and easy options for con tacting customer service or provide clear responses about ser vice levels related to pandemic or economic/societal issues. We found this to be true for automotive dealers, banks, consumer goods, consumer electronics providers, healthcare providers, fied (broadband) service providers, property and casualty insur ance, retailers and travel companies. At a country level, we found that the Reimagined in Spain, the U.S., Canada, Australia, Ire land and Brazil put the strongest weight on service.

EASE AND CONVENIENCE. Are you meeting me where I am, in the digital world, the physical world, and through a blend of the two? And are you able to deliver what I need, when I need it, across all channels? As the pandemic forced many transactions online and compelled companies to adjust how transactions are conducted in person, the common denominator was usefulness. But con sumer expectations are not going to retreat to a previous state. They now seek ‘everywhere commerce’, where transactions need not start and end in the same place, or on the same medium. “[I want] more time to spend on other things than shopping,” said one representative UK consumer.

Insights from our focus groups revealed that, in store, con sumers seek the same prices and deals they would get online, as well as contactless payment, ‘click and collect’ options, speedy home delivery, longer return windows and easier returns, and improved self-check-out methods. They also seek more, and eas ily available, background information on the products in front of them, including product reviews and source information.

Online, consumers want the ease of purchasing on a device and picking up in-store: They expect better (virtual) services to help them ‘try on’ or test products; better insight into product quality; more personalized, thorough, and faster service; and faster delivery.

For retailers, a substantial 57 per cent of the Reimagined said they would switch retailers if they were not offered new, fast and flexible delivery options such as click-and-collect and curbside pickup. Notably, almost half (48%) of the Traditional agreed.

In the healthcare industry, we found that the Reimagined also appreciate the convenience of virtual health appointments, with 51 per cent saying they would change providers if online appointments were not offered instead of physical visits, when appropriate. The Reimagined in Finland, Denmark and Norway prioritized ease and convenience factors more than in other countries.

Product origin. What about the environment, and societal and corporate responsibility? Can you help me make sustain able choices? Can you help me support my local community? Our focus groups confirmedconsumers increasingly want to know what goes into a product, how it’s produced and how far it’s been transported. Bringing this information to bear on a purchase decision helps enable them to support sustainability and care for their communities.

Seventy-six per cent of the Reimagined are attracted to do ing business with brands that source services and materials in highly ethical ways — versus 52 per cent of the Traditional. We also found that 65 per cent of the Reimagined are attracted to doing business with brands that are environment-friendly, pro vide credible ‘green’ credentials for products/services, minimize harm to the environment and/or invest in sustainability — versus 29 per cent of the Traditional.

In consumer electronics, as many as 59 per cent of the Rei magined said they would switch to another provider to get the most sustainable product, such as a refurbished device or one with lower power consumption. We found that Reimagined Con sumers in India, the UAE and China placed the greatest weight on these motivators.

TRUST AND REPUTATION. Can I trust you to do the right thing for me and not just for your business? Can I trust you to be who you say you are and stand for the things you say you stand for? The

Reimagined want to see that companies stood for something during the pandemic, that they are clear about how they want to contribute to society, and that they treat their employees well.

Consumers want to avoid residual guilt about a purchase — any purchase — and accordingly, they are looking for signs that the company they are buying from has integrity and is aligned with their own values and (new) priorities. “Pollution-free, or ganic and healthy raw materials are more important,” said one Chinese consumer.

Across more than half of the industries we covered, a ma jority of the Reimagined said they would switch providers if the providers did not take visible actions to have a positive societal impact. Nearly half (46%) of the Reimagined say they would pay more to support a retail brand that takes these visible actions. In the travel and life insurance industries, ‘strong ethical val ues’ were either the top or second strongest motivator or loyalty driver among Reimagined consumers. The Reimagined in Singa pore and China place the greatest weight on trust and reputation factors as purchasing motivators.

How Should Companies Respond?

Companies have stretched to meet the needs of consumers over the course of the pandemic, at great and likely unsustainable cost. They will need to assess the permanence of the new experi ences and concessions they’ve offered, as what has been learned by customers over the course of the pandemic may not easily be unlearned. This requires a mindset characterized by ‘the 4Rs’:

REENGINEER. Companies should retain and reengineer these of ferings to make them financially sustainable or they risk losing customers. Expectations around these offerings have likely be come the ‘new normal,’ so brands need to reeingineer them into the realm of affordability to protect their existing customers and attract new ones.

RETHINK. Companies should consider rolling back and potentially re-deploying these investments elsewhere because they seem to have limited perceived value, less differentiation and minimal risk if offloaded. These represent experiences and concessions that may be less meaningful in a post-pandemic world.

REIMAGINE. Companies should invest in scaling and innovating

these offerings as they create the opportunity to drive true differ entiation. It is here companies will findthe most white space to monetize, attract new consumers and create new value streams.

RECALIBRATE. As existing consumers may be willing to pay more in this category, companies should consider creating a premium tier of services to unlock new revenue streams. Some of these may be more experimental offerings that consumers are willing to pay extra for but that do not have broad enough appeal to drive switching.

To drive growth, companies must reimagine their entire business through the lens of experience. This entails the follow ing four principles:

INVEST CONTINUOUSLY TO UNDERSTAND YOUR CUSTOMERS’ EVOLVING MINDSETS. Never has research and the insights it provides been more important. As a full 50% of consumers have materially changed their decision-making motivations, whatever you used to know about your customers is out of date at best — and wrong at worst. If you haven’t yet become a listening organization, that is highly and visibly engaged with your customers every day, now is the time to do so. If you don’t know where to start, start with your employees. No one knows your brand better. These people have chosen to spend their lives helping to build your brand — and remember, they are consumers, too.

REIMAGINE THE EXPERIENCES YOUR COMPANY DELIVERS TO MEET RISING MOTIVATIONS WITH SPEED, AGILITY AND INNOVATION. Customers have never been more open to embracing new experiences and form ing new habits. Now is the time to leapfrog traditional best prac tices and truly differentiate yourself in the industry.

STRUCTURE THE ENTIRE ORGANIZATION TO CREATE EXPERIENCES THAT CAPTURE CONSUMERS’ EVOLVING DEMANDS ACROSS ALL ASPECTS OF OP ERATIONS. Engage marketing, sales, innovation, R&D, customer service — everyone who is expected to deliver on these experi ences must see and understand these new motivations.

EVOLVE YOUR BUSINESS MODEL. As brands emerge from the pan demic, moving out of pilot mode might require a new business model with better pricing, different distribution channels or new revenue streams. Any of these paths will likely require companies

Rotman Management Winter 2022
The Reimagined Consumer wants companies to be clear about how they will contribute to society.

to align technology, data and talent into one system. An evolved business model will allow brands to continuously improve ex periences and give customers exactly what they desire without sacrificing profitable growth.

Following are some exemplars of this new mindset:

• IKEA planning studios is using small-format physical stores to engage and motivate people who are looking to furnish their homes but would rather buy their furniture online and have it de livered. Retail experiences need not start and finish in the same place.

• Mercury Insurance now offers homeowner insurance poli cyholders a DIY inspection tool using an advanced AI assistant. Homeowners inspect their own properties and can access guid ance, as needed, for a contactless experience.

• Ralph Lauren has launched a “revolutionary” new dyeing platform the company believes will lead to the world’s first scal able zero wastewater cotton dyeing system. This ‘Colour on De mand’ system consists of a variety of technologies designed to enable the recycling and reuse of all water from the dyeing pro cess. The company aims to use it for more than 80 per cent of its solid cotton products by 2025.

• British supermarket chain Asda Stores has rolled out a hightech solution for cleaning shopping carts: They pass through a machine that sprays electrostatically-charged mist of anti-micro bial liquid on each one in 15 seconds.

• Auto manufacturer MG Motor India partnered with Singa pore-based Medklinn, a company focused on developing ad vanced air and surface sterilizing technologies, to develop an HVAC system-based way to deliver a cleaner, safer in-car experi ence.

• By offering customers free in-home consultations about which products are best for their individual circumstances and home environments, Best Buy has become a trusted advisor, enhanc ing its ability to compete with major online retailers. The service facilitates long-term customer relationships while also support ing a smoother sales process. As a result, it is luring customers away from other online options and positioning itself as a trust worthy, more personal brand.

• L’Oreal’s Haircolour Concierge has leveraged text and video chat with live experts and virtual try-on tools to enable

customers to colour their hair at home with confidence. The company launched this ‘24/7 hair colour platform’ in response to a 40 per cent increase in hair colour inquiries to their consumer care centre over the past year.

In closing

An enormous white space is opening up in which brands can bundle motivators to carve out new identities and discover new, high-potential paths to market leadership. Our research clearly indicates that there has been an acceleration away from price and quality as the sole, dominant arbiters of choice. Of course, they remain crucially important; but a wider set of motivations have potential as greater influences and differentiators for at least half of all consumers — with many more likely to follow suit.

We believe sustainability is the new digital: It will create the most powerful force of change in our generation, transforming how we live and work and driving new value and growth. As in dicated herein, integrating sustainability into everything you do means meaningfully redefining how you think, create and mea sure impact.
Gregor Barry is Managing Director and Accenture Interactive Lead in Canada.

Q &A

You have said that despite efforts to make innovation a common practice, corporate innovation remains a paradox. How so?

Very few leaders would deny the importance of innovation. And yet, there is still nothing harder than trying to innovate within a large corporation. The issue is that many estab lished companies are trapped by their previous success in a manner that limits their capacity to innovate.

A classic example is Steve Ballmer, the former CEO of Microsoft. When Apple introduced the fist iPhone in 2007, his response was as follows: “There is no chance that the iPhone is going to get any signifiant market share!”

Leadership teams in successful companies essentially be come ‘climate change deniers’: They can see the changes happening around them in the business world, yet they deny those changes’ relevance to their company. And this denial tends to be strongest when the ‘weather’ is good and the
innovation expert who has advised American Express, The World Bank and Unilever describes how to tackle the innovation paradox.
Interview by Karen Christensen QUESTIONS FOR Tendayi Viki, Corporate Innovation Expert and Author, Pirates in the Navy

focus is squarely on highly profitble products. The hubris that comes with that success creates dangerous blind spots.

The paradox you mention is that the activities required to maintain and increase your current success are in direct conflictwith the activities required to explore, test and em brace new forms of value creation. As a result, if you are a corporate innovator, you are working within a machine that is not designed to support your mindset or your work. You are likely to be facing headwinds from day one.

What has to happen for internal innovators to become ‘pirates in the navy’?

Steve Jobs coined that term. Faced with the choice of start ing a company or joining a large corporation, he believed that it was “more fun to be a pirate than to join the navy.”

But for innovators inside established companies, making a distinction between being a pirate and joining the navy is a fallacy. If you are going to succeed as a corporate innovator, you can’t have an antagonistic view of the orderly, rulesbased organization you work for (‘the navy’). You have to figue out a way to become a pirate within the navy.

You often see corporate structures overpowering human capabilities for innovation. Which structures and processes are at the top of the list?

When I go in to an organization, I always start by asking this question: If ‘Sarah’ — one of your most creative, innovative employees — had an idea that she wanted to work on that the company had never tried before, what hoops would she have to jump through to move forward? I have everyone write down a list of what exactly would have to occur for Sarah to proceed.

Two barriers are always at the top of the list. The fist is finane. We have structured our corporate processes so that if you want finane to provide you with resources to try anything new, you have to promise them a signifiant return upfront. Finance departments are very rarely comfortable making bets.

The second barrier is legal and compliance. Job one for this department is making sure the company doesn’t get sued. And what is most likely to get your company sued?

That new VP who is trying out all sorts of new things that might or might not work out. So, the department starts to build constraints around people’s ability to create minimal ly viable versions of new products, constraints around the ability to interact directly with prospective customers and constraints around what you can and cannot promise.

You have said the goal of corporate innovation should not be to come up with great new ideas for products and services. What should it be?

The ultimate goal of innovation is not ideation, it is the cre ation of new value for human beings, for organizations and for society overall. Of course, better products and new ideas are a big part of that equation, but the focus should be on taking ideas and transforming them into value propositions that resonate with your customers.

Once an organization chooses the path of transformative innovation, what are the three human barriers they need to look out for?

It is very diffilt to create transformative innovation be cause human beings have a strong built-in tendency for inertia. That’s the fist human barrier. Most people want things to stay the way they are. Unless there is some crisis, they won’t want to change. The second barrier is doubt. In novation requires accepting failure, and as those failures mount, lots of people start to become doubtful. The third barrier is cynicism. When people say things like, ‘I always knew this wasn’t going to work,’ that attitude is like a rotten apple that poisons innovation.

You have found that profiable business models share four characteristics. Please summarize them.

In order to build something innovative, the innovation team must address four things: feasibility, desirability, vi ability and adaptability. That entails answering four sets of questions. The fist is, ‘Can this be done?’ Is it feasible? Of course, even if you can technically do something, if nobody wants it, it doesn’t matter. So, the second important ques tion is, ‘Is there anyone out there who wants this?’ Who are the prospective customers? What are their jobs-to-be-done,

Rotman Management Fall 2021
The focus should be on taking ideas and transforming them into value propositions.

and how does this innovation address those jobs?

Once you figue out that the innovation is feasible (it can be done), and desirable (somebody wants it), the next question is, ‘Can this be done profitbly?’ It is possible to create new offerings that people want, but lose money do ing it. Nobody wants to go down that road. Once you de termine that something is feasible, desirable and viable, the only question that remains is, ‘Can we scale it?’ Is it adapt able to the environment, to competition, to regulation, etc. As an innovator, your job is to be able to provide answers to these questions for everything you are working on.

What is ‘innovation accounting,’ and how does it work? Executing on existing business models can mostly be man aged using traditional methods such as cost optimization and operational effectiveness, and success can be measured using traditional metrics such as profi, ROI and net present value. In contrast, searching — as renegade pirates do — has to be managed using start-up methodologies such as design thinking, customer development and experimentation. Success in this arena cannot be measured with traditional tools. It entails examining how well your innovation team is doing in their search for profitble new business models.

The fist thing traditional finane departments have to embrace is that it is next to impossible — especially if you’re working on the transformative side of innovation — to promise returns on day one. Innovation accounting entails asking an entirely different set of questions. Things like, how many experiments did the team run? What evidence do they have that the price point in correct? Have they test ed the cost structures?

When managing innovation, different tools are need ed. One of these is ‘incremental investing,’ where funding is allotted based on the innovation stage of the product. This approach is based on Dave McClure’s Moneyball for Startups. I propose three sets of innovation KPIs. The fist is ‘re porting KPIs.’ These focus on the ideas that product teams are generating, the experiments they are running and the progress they are making on the road from ideation to scale. For example, how many assumptions have been tested and validated?

The second metric I propose is ‘governance KPIs.’ These focus on helping your company make informed in vestment decisions based on evidence and innovation stage. For instance, how close are the teams to findingprod uct-market fi? The third tool is ‘global KPIs.’ These focus on helping your company examine the overall performance of their investment in innovation in the context of the larger business (e.g. per cent of revenue in the last three years). Innovation accounting is ultimately about answering one question: How close is this team to findinga business model that works?

How has the pandemic affected innovation in organiza tions?

I have been really disappointed with some of the conversa tions I have been having around post-pandemic business. I think people are asking the wrong questions. A lot of them are asking about whether the changes we’ve seen due to the pandemic are going to stay with us going forward — things like remote working and restaurant meal delivery. These are fair questions to ask, because we want some of these things to last.

Actually, the more fundamental question to ask is this: How is it possible that we were able to respond so quickly to the pandemic, that we quickly set up remote working, we quickly found a new business model, we quickly pivoted — whatever the case may be.

What specificthings did you do to get to these inno vations, and how can you keep doing that after the pan demic? So many organizations learned how quickly they could change their approach if there was enough pressure involved. Going forward, this mindset should be built into the way they work.

Your goal is to make entrepreneurship an officiafunction within every large organization. Tell us more. At its core, the entrepreneurship function would be respon sible for ensuring that the company innovates on a con tinuous basis. More specifially, it would be responsible for helping the company develop its strategic guidance, man agement systems and toolbox for innovation.
‘Innovation accounting’ entails asking an entirely different set of questions.

A Repeatable Process for Corporate Innovation

To be effective, the repeatable process you design should accomplish the following:

Remove obstacles: By doing discovery work and starting small, you will have developed an understand ing of what is getting in the way of innovation inside your company. The process you design should, at a minimum, remove obstacles such as lack of leadership support, a demand for long business cases and unrealistic ROI expectations. The impact of annual budget cycles should be minimized.

Provide incremental resources: Teams need protected funding for innovation. You need to design a process that describes how this funding will be released to innovation teams incrementally. Small amounts of money can be released for intrapreneurs to test their ideas through experiments with customers. These funds should be released without the need for a long business case. If intrapreneurs show progress towards a profitable business model from their experiments, more funding can be released to them.

Provide guidance: The process you design also needs to provide clear guidance on how to get the funding for innovation. What types of ideas is the company looking to invest in? What amounts of budget and resources are available? How are intrapreneurs expected to use those resources? What are the expectations for running experi ments? What are the success criteria for receiving the next incremental batch of funding?

Set out the right expectations: Innovation is often stifled by leaders who ask the wrong questions at the wrong time. The innovation process you design should guide leaders on how to set the right expectations. For each stage of the innovation process, leaders should be asking the right questions. For example, during the early stages, they should not be asking about future revenue. Rather, they should be asking about risky assumptions and what the team is doing to test these.

A company’s culture is determined by what it celebrates, rewards and/or punishes. Creating an innovation culture that recognizes failure as a key part of learning is the job of the entrepreneurship function. This function also needs to create tools that help leaders make decisions about what to do with successful start-ups within the company. Should you scale them internally? Do you need to create a new division? Should you sell them or shut them down?

Once such management systems are in place, the en trepreneurship function is then responsible for maintaining and continuously improving the process and tools.

For leaders who want to embrace this mindset, what are the firt steps?

For innovation to be part of your culture, you have to create a context in which winning ideas can emerge. I am remind ed of a great quote I heard recently: When a flower fails to bloom, you don’t blame the flower. Instead, you look at the garden, examine the soil and try to figue out what is stop ping the flower from blooming.

It’s the same with innovation. Leaders often complain about how their team can’t seem to come up with new ideas. But instead of just saying, ‘Give me 10 new ideas by the end of the month,’ they need to start thinking about the ‘soil’ in which people are working, and whether it is conducive to in novation. I always ask them, What enablers of innovation do you have in place? Which innovation blockers and barriers exist, and how can you remove them? Answering these ques tions is the fist step towards creating a healthy innovation ecosystem.

Tendayi Viki is an Associate Partner at Strategyzer, where he has advised American Express, The World Bank and Unilever. He is the author of Pirates in the Navy: How Innovators Lead Transformation (Unbound, 2020) and co-author of The Corporate Startup: How Estab lished Companies Can Develop Successful Innovation Ecosystems (Valkme dianet, 2017), which won the Chartered Management Institute’s Book of the Year Award for Innovation and Entrepreneurship. Thinkers50 has nominated him for its Innovation Award and calls him “an emerging thinker to watch.”

Rotman Magazine Fall 2021

Disrupting the Disruptor: An Equity Lens on Artificial Intelligence

ARTIFICIAL INTELLIGENCE (AI) describes machines that can simulate some forms of human intelligence. Some conceptualizations of AI refer to machines that act indistinguishably from humans, while others focus more on ‘machine learning’ that can identify patterns, achieve an optimized outcome to a given problem, and/ or make predictions and decisions based on prior information.

To achieve these goals, AI uses algorithms that ‘learn’ from large data sets and adjust and improve over time based on new data. While not a new concept, AI is increasingly embedded in people’s lives and will only become more pervasive.

Organizations across many sectors use AI for a variety of purposes: hiring employees, performing surgeries, tutoring school subjects, making decisions about criminal sentencing, making lending decisions, automating driving, and predicting where crime will occur, to name a few. AI is also used to make recommendations for what people watch on television or the mu sic they listen to; to select which advertisements to show users on social media; and to display results on online search engines.

It would be difficult to find a field today where AI is not in volved in some respect. It has become so ubiquitous that some researchers have suggested it is a new type of infrastructure. Rather than being physical and visible like roads, AI is often in

visible, but it is nevertheless a moderator of social relations and organizational practices and actions — including the distribution of power.

Social relations and values have long been reflected and reproduced in technology, and AI is no exception. But this also means that the enduring bias, discrimination and inequality that are deeply rooted in society may also be deeply rooted in this technology.

In 2020 and 2021, the economic impact of the COVID-19 pandemic was felt most acutely by groups who were already marginalized, particularly women, racialized communities and those experiencing low income. Researchers and policy analysts have suggested that recovery policies must be especially attuned to these groups to prevent rising inequality.

Understanding the impacts of AI on the economy and so ciety in Canada — especially in the context of the economic downturn caused by the COVID-19 pandemic — means under standing its impacts on marginalized groups. AI can potentially be used innovatively to generate outcomes that benefit diverse communities. However, research has also shown that a focus on equitable AI for organizations and policymakers is necessary to mitigate harm.
Business leaders, policymakers and researchers must work together to prevent the reinforcement of inequality through technology.

The Potential of AI

AI has the potential to improve outcomes for people across all sectors. Ideally it removes the possible impacts of human error by making accurate predictions and assisting humans with decision-making. For example, in workplaces, AI used in hiring could reduce human bias in finding the best candidate for a position; used in healthcare, it can help diagnose diseases and identify treatments; for financial institutions, it can predict the likelihood of people defaulting on mortgages.

The prediction power of AI is significant considering that humans’ predictions and decisions are clouded by cognitive and other biases. People often do not fully understand why they make certain predictions, and their intuition can be impacted by their prior experiences or opinions. As researchers have noted, statistical prediction techniques as undertaken using AI tend to outperform prediction that is undertaken by humans with ex pertise and experience. Human prediction and decision-making is often opaque — it is difficult to understand and probe the various factors that influence people. Human decision-making is also hard to audit. To the extent that algorithms can be audited and changed, AI could be a tool for mitigating discrimination, bias, and other forms of marginalization.

For example, an algorithmic tool used by Allegheny County’s Office of Children, Youth and Families in Pennsylvania aims to predict children’s risk of harm that call screeners may be unable to do as quickly and accurately, thus better directing resources to high-risk cases. As reported by The New York Times, the tool has increased the rate at which high-risk calls are addressed and reduced the percentage of low-risk cases being needlessly investigated.

But societal inequality can be and is replicated in AI as with all technologies, and mitigating these impacts can be challeng ing. For example, the Allegheny County risk assessment tool has been critiqued for disproportionately impacting poor families: the algorithm uses poverty as an indicator of high risk for ne glect and abuse, when this is in fact an unfair assumption.

Power relations and inequality embedded in society shape the data that are inputs to algorithms, the algorithms themselves, and the way algorithms are used. This means that the transformative potential of AI comes with significant risks and challenges, many of which researchers and advocates are currently working to address.

AI and Inequity

Following are some examples of the ways in which AI systems can reproduce existing biases and marginalization.

BIASES AND GAPS IN DATA. Because bias and inequality exist across all levels of society, it follows that the data on which some AI

is built contains such biases, which AI may then reproduce. At tention to the reproduction of gender or racial or other forms of discrimination through AI is not new, yet it remains a persistent challenge. In 2015, Amazon developed a now-defunct AI re cruiting system that was found to have eliminated some women from candidacy, based on previous hiring patterns in which men dominated. The same issues have occurred for racial gaps in data. In healthcare, an AI system used for detecting cancerous skin lesions was trained on a database containing mostly lightskinned populations, rendering it less likely to screen accurately for those with darker skin.

Recently, researchers identified how AI facial recogni tion software from IBM, Microsoft and Face++ is less accu rate for darker-skinned subjects and especially darker-skinned women, leading to a higher likelihood of their misclassification when compared to white men. Again, this came about because the data on which they were trained did not have diverse racial and gender representation. Depending on what purposes facial recognition software is used for, this error could reinforce the surveillance and mistaken identification of racialized people, and especially racialized women.

AI is also used by the public sector in areas such as polic ing. A recent study showed that several police jurisdictions in the U.S. are using racially-biased data for predictive policing systems. The data are biased because of historical over-policing of minority communities, and this bias in turn led to biased pre dictions about who will commit crimes and where they will be committed. This could thus reinforce the targeting of these mi nority communities. This type of algorithmic policing is also be ing developed or used by police forces across Canada as well as in airports, alongside surveillance technology that collects and monitors people’s data online or from images.

REINFORCEMENT OF STEREOTYPES AND MARGINALIZATION. Harms through AI not only come about through problematic datasets but also in the way organizations have often unintentionally designed and used it to reinforce stereotypes, marginalization, and erasure of certain groups. For instance, AI-powered facial analysis software has been used to propagate the false idea that people with certain facial features are prone to criminality, and that the software can identify these people. This opens danger ous possibilities for racialized communities who are already stereotyped. Researchers have further pointed to how common portrayals of AI — such as stock images and other representa tions of robots and robotics — tend to be racialized as white with Eurocentric appearances and voices. This reproduces concep tions of intelligence, professionalism, and power as being asso ciated with whiteness.

Another example is that AI-powered digital assistants, such

Rotman Management Winter 2022

as Amazon’s Alexa, Apple’s Siri, and Microsoft’s Cortana are named and gendered as women. Researchers have discussed how the gendering of this technology reaffirms the gender divi sion of labour, where women are placed in caregiving and ser vice roles. These feminized digital assistants act as both assis tants and companions, ensuring users’ well-being in a friendly and empathizing manner, further entrenching stereotypes about women in subordination.

In some cases, the reinforcement of stereotypes through AI is explicitly tied to profits. A recent independent audit of Face book’s algorithmic advertising delivery of job ads found that it perpetuates gendered job segregation based on current gender distributions in different job categories (e.g., a job ad for car sales associates was shown to more men than women, while the opposite was true for an ad for jewelry sales associates.) In theory, developers could adjust the ad delivery algorithm to compensate for data biases or could remove algorithmic deliv ery from job ads altogether. However, this would come in con flict with the technology companies’ short-term profit motives, which are based on clicks on ads. Thus, addressing these biases will require leadership commitment to making change.

AI and Values

The questions are: Which social values should be written into machines? Who decides? How should it be done? And how can makers and users of AI be held accountable?

A lack of transparency for the public and a lack of account ability of those developing and implementing AI can pose trou bling scenarios for equity. Another influence is that AI is often created by companies that are not representative of marginal ized groups and do not have their needs in mind.

‘Teaching’ fairness and equity to algorithms is challenging because these are highly complex concepts that must be some how articulated to a machine. How can algorithms be trained to adhere to social norms and values, many of which involve intricate structures such as law or culture? As researchers have asked, can we program AI such that taking certain wrongful ac tions would impose costs on it — just as humans avoid certain actions to avoid social penalties such as shame or guilt? Others have suggested that ‘supervising algorithms’ can act as ‘moral compasses’, monitoring for bias and changing algorithms ac cordingly. But which values should be prioritized, and in which cases?

There may also be trade-offs with accuracy when program ming such values into AI. For instance, an algorithm making predictions about who will default on a credit loan would have to be explicitly programmed to reduce racial disproportionality, but this could result in less accurate predictions. Yet, not doing so would reinforce inequity, considering histories of disenfran

chisement and oppression that have led to increased rates of poverty and financial insecurity for racialized communities.

This brings about the question as to whether AI use should be limited and where, as well as whether humans making the same decisions and predictions are more or less likely to per petuate bias. Engaging with these problems and connecting AI to social and historical contexts is essential as AI becomes ever more ubiquitous.

AI and Diversity

Increased representation of marginalized groups in AI develop ment could lead to more equitable outcomes. While there are few studies on the impacts of diverse teams on creating more equitable products specifically, across a variety of sectors there are examples of teams led by women, racialized peoples, and other marginalized groups who have created products and ser vices that are purposely inclusive.

For instance, Fenty Beauty, a cosmetics company found ed by Barbadian pop star Rihanna, creates makeup shades for those with darker skin tones who have often been excluded from cosmetic lines; and AccessNow, an app made by a founder with a disability, Maayan Ziv, indicates to users the accessibility of different locations in a central information source. In the case of AI, products that have been tested and created by a homogenous group logically may not take others’ needs or perspectives into account. If a racially diverse team was working on facial recog nition software, one can imagine they would have been likely to notice the potential for race-based misclassification.

Around the world, women and especially racialized wom en continue to be under-represented in computer science and computer engineering fields. Globally, only 22 per cent of AI professionals are women. In Canada — despite a relatively high concentration of AI professionals compared to other countries — just 24 per cent are women. Just 15 per cent of AI research staff at Facebook are women, and only 10 per cent at Google. Further, only 2.5 per cent of Google’s full-time workers are Black, as are four per cent of Microsoft’s.

In December 2020, Dr. Timnit Gebru, who was a leading AI research scientist at Google, made media headlines when she was fired for a paper she wrote on risks and harms of language models (i.e., AI trained on text data). Some have shown that her firing revealed abusive tactics, including gaslighting, dismissal and discrediting — tactics that are commonly used against Black women who aim to advance justice, not only in technology but across society.

Addressing Biased Data

AI functions by ‘learning’ from data sets: Algorithms are created to mine data, analyze it, identify patterns and make

predictions. Datasets may come from any number of sources in cluding books, photos, health data, government agency data, or Facebook profiles. Societal biases and inequality are often em bedded in such data, and AI will not promulgate social values such as fairness unless it is directly programmed to do so. Thus, if an AI hiring system is based on previous hiring data where few women were hired historically, the algorithm will perpetu ate this pattern.

On the other hand, data may also be biased due to omis sions. Datasets may omit entire populations who do not have in ternet histories or social media presence, credit card histories, or electronic health records, leading to skewed results. Those omitted are often racialized communities, people with low so cioeconomic status, and others on the margins.

Ensuring fairness in the data used for AI is a complex prob lem considering how inequality and inequity influence people’s lives in complex and overlapping ways. It is not effective to simply remove variables such as gender and race to avoid dis crimination by algorithms, because proxy variables may end up creating the same impacts.

Recently, Apple’s credit card was in the news because its algorithm appeared to give lower credit limits to women than men, even in the case of a woman and a man who were mar ried and sharing assets. Initially, Apple and its banking part ners said the results could not be biased because gender was not a variable in the algorithm, and that the credit scoring was ‘gender blind’. Ultimately, while an investigation into the Apple Card concluded it did not discriminate against women, experts noted that creating a gender-blind algorithm would not prevent gender discrimination from happening inadvertently.

Ensuring Accountability

Research suggests that, in general, there is a lack of account ability to people who are being harmed by AI systems. That is, the scope of AI’s impacts as well as who is responsible for creat ing and mitigating them is often unclear. This suggests the need for more assessments and audits on what AI-driven products and services mean for people, including evaluations on how fair they are.

The first challenge for accountability is transparency. There is often a lack of transparency around AI systems’ pur poses, their algorithms, and the data they use. This is some times called the ‘black box’ problem, where the inscrutability of these systems can prevent public understanding of risks and impacts. If people are not aware of how algorithms are being used on them, it is not possible to question or change their predictions and decisions. Even when AI is used by the public sector for processes as wide-ranging as surveillance and immi gration decisions, the public may not have knowledge or owner-

ship of it. As such, some researchers have proposed complete transparency of AI, where algorithms and/or data as well as the results they are aiming to achieve are made available for pub lic scrutiny. Helping the public understand how algorithms and AI are influencing their lives can be a step towards mitigating potentially harmful outcomes.

At the same time, there are debates around how transpar ent AI systems can feasibly be. Some researchers suggest that requiring such transparency would stifle the ability for com panies to innovate because intellectual property would not be protected. Further, since algorithmic code is generally inscru table for the average person, transparency may not necessarily increase people’s trust of AI nor decrease its harms. Software is also proprietary, and transparency may not be possible for secu rity, safety, or legal reasons.

Finally, governments or companies using algorithms may not want to share them for fear that people will figure out how to circumvent them or manipulate outcomes. Thus, transparency to benefit the public will need to be balanced with the benefits of intellectual property and innovation.

The second challenge for accountability is a lack of ap propriate governance structures. Researchers are currently working on designing governance structures and auditing pro cedures that can be put in place within technology companies that explicitly evaluate an AI system in terms of social benefits and values. Even though many companies may already conduct audits on their AI, they are unregulated and not standardized, making it hard for users to assure any results of the audits are used to improve algorithms.

Further, third-party researchers conducting audits tend to face many challenges: companies such as Google and Facebook create barriers to outside audits by prohibiting creating fake profiles for research purposes and often do not make neces sary data available. Providing such access involves a balance of privacy and auditability. Third-party auditing is also costly and involves substantial time and effort.

Some researchers have proposed that there should be regulatory mechanisms ensuring companies and governments are held accountable for unfair and unjust impacts. If a law or policy were in place such that those who created and owned al gorithms were held directly responsible for its outcomes, this might help ensure that AI is developed with ex ante consider ations of its social impacts, rather than through ex post efforts to address harms after they occur.

Following are three areas where progress can be made to wards ensuring equitable AI.

REGULATION AND POLICY. It is widely recognized that governments have some catching up to do to ensure AI is developed and used

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in a way that reduces harm for marginalized groups. To establish greater accountability, new policies or laws could ensure that it is clear who created, owns and controls AI, thus attributing re sponsibility where there currently is little. Others have suggested that audits and impact assessments of AI should be mandatory and undertaken before and during AI implementation. Further, although there are debates around transparency, standard pro cesses of ‘explainability’ can still be put in place so that organiza tions provide justifications for decisions made about and by AI (including its purpose, design, and datasets) and disclose risks, such as through public records and published reports.

Some advocates have recommended a comprehensive global framework that would broadly govern AI use, similar to those of universal human rights from the United Nations. In the U.S., the Algorithmic Accountability Act was introduced in 2019, proposing that large companies must evaluate their algorithms for bias and the risks they pose to users. In 2021, the EU created a proposal for an Artificial Intelligence Act, the first ever legal framework on AI.

Canada is in the process of developing its own policies and frameworks. Following a $125 million investment in a Pan- Ca nadian Artificial Intelligence Strategy in 2017, the federal gov ernment developed a Directive on Automated Decision-Making and a public Algorithmic Impact Assessment. It further created an Advisory Council on Artificial Intelligence in 2019, although this council has been critiqued for lack of representation of ra cialized and other marginalized groups. The Office of the Priva cy Commissioner of Canada has also recently made recommen dations for updating the Personal Information Protection and Electronic Documents Act to better regulate AI, and in Ontario at the time of writing, public consultations are underway to cre ate a provincial Trustworthy Artificial Intelligence Framework. The effects of these policy efforts for fairness, transparency and accountability are yet to be seen.

INDUSTRY STANDARDS. Beyond regulation, advocates are work ing towards AI that prioritizes social considerations instead of discovering and addressing problems after the fact. Indeed, AI can be developed to align with the goals of reducing systemic inequality and inequity, but as mentioned earlier it is not an easy task to program the complex norms and values into AI that humans understand when they are making predictions and decisions.

Another question arises from this challenge: If such AI has not yet been robustly developed, what are the circumstances in which AI should not be used, and what are the best alternatives? This also becomes a moral question involving trade-offs and values. Purposely aligning AI with social values means organi zations may have to prioritize equity and other social consider

ations over profit or efficiency. Such a shift may require signifi cant time and money, such as the costs of conducting research on social impacts or the potential revenue losses from not imple menting new AI due to ethical reasons. Thus, there is a need for industry cooperation and collective action involving the estab lishment of standards, so that safe and responsible AI becomes accepted as a norm.

REPRESENTATION. The lack of representation of marginalized communities in the development of technology could be miti gated through more equitable hiring and promotions. There have been many studies on solutions for making workplaces more inclusive to women and racialized groups. These include being more flexible to workers who need to prioritize caregiv ing (usually women); transforming non-inclusive hiring and re cruiting practices that favour certain candidates (such as young men or people who have trained in elite schools); and working towards anti-racist and anti-sexist policies and culture. Schools teaching STEM can also usefully transform their cultures, as studies have shown that young women may be treated poorly by their male classmates in Engineering and made to feel like they don’t belong there.

In closing

While AI has the potential to better many lives, it can also lead to significant harms. This is an important moment for leaders, policymakers and researchers to prevent the reinforcement of inequality and inequity through technology. Solutions will in volve a combination of regulation and policy, new research to wards fairer AI, shifting norms around who develops and makes decisions about AI, and ensuring accountability towards those who are most impacted.

One thing is certain: Without concerted efforts, the rein forcement of systemic bias and discrimination will continue to perpetuate through technology systems that are quickly becom ing ubiquitous.
Carmina Ravanera is a Research Associate at the Institute for Gender and the Economy (GATE) at the Rotman School of Management. Sarah Kaplan is Founding Director of GATE, Distinguished Professor of Gender & the Economy and Professor of Strategic Management at the Rotman School. They are co-authors of “An Equity Lens on Artificial Intelligence”, the GATE report from which this article has been adapted. The complete report is available online.
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Four Steps to Sustainable Business Model Innovation

Companies like 3M, BASF and PepsiCo prove that it is possible to create social and business value with one business model.

EVERY DAY, it seems there is another announcement about com panies making climate commitments, asset managers outlining their plans for environmental, social and governance (ESG) in tegration, or regulators proposing new disclosures or extending producers’ responsibilities. Corporate coalitions like the World Economic Forum International Business Council and the Business Roundtable endorse a more stakeholder-inclusive corporate capitalism. Meanwhile, industry coalitions are work ing to solve their members’ shared sustainability challenges and employees and consumers are calling on companies to take en vironmental and social challenges seriously.

Clearly, we have entered a new era for business, one in which sustaining competitive advantage requires companies to trans form their business models for sustainability. Company leaders need a broader, more systemic understanding of these dynamic sustainability challenges and the ways that their companies can play a part in addressing them. Fortunately, as some farsighted businesses are discovering, the most powerful opportunities for profitable innovation are embedded in these same challenges.

Consider three examples. Telenor is the leading Norwegian mobile operator. In 2008, having entered Pakistan three years earlier, it joined forces with the microfinance bank Tameer. With support from the Bill and Melinda Gates Foundation, the

International Finance Corporation (IFC) and the Consulta tive Group to Assist the Poor (CGAP), it launched a new ser vice called Easypaisa, providing mobile-based financial services to the unbanked and under-banked. By the end of 2019, Telenor Microfinance Bank boasted the largest branchless banking ser vice in Pakistan, growing its Easypaisa mobile wallet user base to 6.4 million, its depositor base to 17 million, and the transactions volume through its agent network to approximately US$6 bil lion. This service has significantly advanced financial inclusion in Pakistan and established Telenor as a major telecom enter prise there.

Or consider Ajinomoto, a global food and biotech com pany based in Japan that produces seasonings, sweeteners and pharmaceuticals. As part of its 2030 vision and growth strategy to “help one billion people worldwide lead a healthier life,” the company is exploring a new “personalized nutrition for health” business. Combining its core nutrition expertise and new tech nology, it aims to provide customers with digitally enabled diag nostics, analytics and product recommendations. These would guide people towards, for instance, the kind of well-balanced amino acid intake that boosts cognitive and physiological func tions and helps prevent aging-related diseases like dementia — a prominent societal issue in Japan.

A third example is IndigoAg, a U.S.-based agricultural tech nology start-up that was valued at $1.4 billion in 2017. In 2019, the company launched a service called Indigo Carbon to help incentivize farmers to remove carbon from the atmosphere and sequester it in their soil. The service provides technologies and recommendations for regenerative agriculture practices. The ul timate goal is to pay farmers for each tonne of carbon captured and then sell certifications to companies looking to offset their carbon footprints. By supporting a transparent carbon-credit marketplace, Indigo Carbon creates benefits for all participants: farmers, the companies buying the offsets, the planet and its own business.

What do these three companies have in common? Regard less of industry, geography or size, they (and dozens of others like them) are creating innovative business models — building on and expanding beyond their core assets and capabilities — to address significant environmental and societal challenges in their local contexts.

In our research, we have studied more than 100 cases of companies that are practising what we call Sustainable Business Model Innovation, or SBM-I. We have found that the most ad vanced of these companies combine environmental, societal and financial priorities to reimagine their core business models and even shift the boundaries of competition.

One might expect these frontrunners to consist mainly of smaller enterprises, branded through their visible social or envi ronmental missions. But most of them are actually global corpo rations that have gradually developed new business models that create both sustainability and long-term competitive advantage.

The core practice for SBM-I is an iterative innovation cycle, shown in FigureOne (next page). With each round, the company gains scale, experience and market presence for its initiative, reinforcing both the business advantage and the environmental and societal benefits generated. Let’s take a closer look at each step in the cycle.

STEP 1: Expand the Business Canvas

To bring this cycle to life in your company, the first step is to de velop a rich understanding of the broader stakeholder ecosystem in which you operate and of the environmental and societal is sues and trends that might affect this ecosystem. As part of this

diagnosis, you should explore the potential impacts of ecosystem dynamics and issues on your business model. This will allow you to identify a range of business vulnerabilities and opportunities tied to environmental and societal issues. Some of these are good starting points for focused SBM-I. Specifically, we recommend the following:

• EXPAND THE BUSINESS CANVAS BY MAPPING THE WIDER ECOSYSTEM OF STAKEHOLDERS AND SOCIETAL ISSUES IN WHICH THE BUSINESS OPERATES. Ask yourself: Who are the key stakeholders in our system? What are the material environmental and societal issues and trends? How do stakeholders and environmental and societal issues directly or indirectly impact all the differ ent parts of the business model?

•STRESS-TEST THE BUSINESS MODEL (CURRENT OR POTENTIAL) WITHIN THIS BROADER MAP. How do stakeholder dynamics and environmental and societal issues constrain or hold back your business model? Where do limitations in the system create vulnerabilities?

•EXTRAPOLATE TRENDS AND BUILD MATERIALITY SCENARIOS. Look at today’s environmental and societal trends and think about how they might evolve over time. In addition, build sce narios to envision completely different, more extreme ver sions of the future (as opposed to linearly projecting trends) to stretch your thinking. And then, under these scenarios, ask yourself: How might environmental and societal issues change over time? How might stakeholders’ perceptions of and attitudes towards those issues shift? What would be the effects on the system map and the business model?

•EXPLORE SCALING UP THE BUSINESS. Imagine the business model at different scales of activity. Suppose your business grew three- or fivefold over the next few years. Where might breaking points or opportunities arise? What happens to the externalities the business creates? How do risks and oppor tunities change?


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A Structured Innovation Cycle

Expand the Business Canvas

Understand the broader context using systems thinking and stakeholder discovery.

Stress-test your business model using trends analysis and scenarios to identify vulnerabilities and opportunities.

Scale the Initiative

Pilot and scale quickly to broaden the business model’s impact and value.

Set new industry norms, reshape stakeholder dynamics, and set new boundaries for competition.

Sustainable Business Model Innovation (SBMI)

Link to Drivers of Value and Advantage

Innovate for a Resilient Business Model

Develop business model concepts that generate demonstrable environmental and societal benefits. Leverage the seven archetypes of SBM-I. (see page 42.)

Test and refine the business model to explicity connect the creation of environmental and societal benefits to the creation of business value and competitive advantage.

Source: BCG analysis.


action or innovation could alter stakeholder dynamics, posi tively impact environmental or societal issues, reduce the vulnerabilities of the business model, or even create new value-creation opportunities.

Look for difficulties, gaps and risks to arise from the analysis. For example, your company’s own lines of business might contribute to the environmental or societal issue and impact the growth of the business. Also, don’t just rely on your own thinking: Cultivate outsiders who can provide complementary and thought-provok ing perspectives.

In a recent interview, Christine Rodwell, former vice presi dent of business development cities at Veolia, explained that “to walk the talk on sustainability, companies need to listen to their external stakeholders. They should create a committee of criti cal friends (across public, social and academic sectors) who will challenge them and advise them to develop business solutions that create meaningful environmental and societal benefits.”

To understand what expanding a business canvas looks like in practice, consider the hypothetical example of a consumer packaged goods (CPG) manufacturing company engaged in a re al-world dilemma: The toxic effect of plastic packaging on natu ral habitats — particularly in the world’s oceans. About 18 billion pounds of plastic waste enter the world’s oceans each year — the

equivalent of five grocery bags of trash on every foot of coastline. Plastic pollution causes extensive damage to life on land and at sea, including toxic contamination, strangulation, blockage of digestive passages and endocrine-related reproductive problems for people as well as animals.

As industrial leaders in this field know all too well, the com plexities of gathering, cleaning, sorting, recycling and reusing plastics have made it costly and difficult to address this issue. Companies that step forward with effective and financiallyviable solutions will not only gain enormous goodwill but build high-growth businesses.

STEP 2: Innovate for a Resilient Business Model

The first step in the cycle will have led you to identify the oppor tunity spaces that hold potential for both financial returns and societal value. You must then transform your business model — or imagine an entirely new one — so that you can seize these op portunities. In this second step, you innovate and develop new aspects of that new business model. You are seeking to bypass current constraints, break trade-offs, deploy technological ad vances and perhaps integrate activities that were previously kept separate. You should ideate a new business model to integrate and reinforce both business advantage and environmental and societal benefits.

In related research, we introduced and defined seven arche typal business models that optimize for both societal and busi ness value. Here we illustrate how they might apply to the plastics waste challenge.

• OWN THE ORIGINS. Change production inputs to generate soci etal and environmental benefits. For instance, HP is work ing with waste collectors in a partnership with the First Mile Coalition in Haiti. HP has invested $2 million in a local facility to produce clean, high-quality recycled plastics that can then be used as input in an array of its personal comput er products and ink cartridges, reducing their environmen tal footprint. Four years after its launch in 2016, the program had already diverted approximately 1.7 million pounds (771 metric tons) of plastic materials (equivalent to more than 60 million plastic bottles) from waterways and oceans and cre ated income opportunities for 1,100 Haitians (with 1,000 more expected in coming years). Thanks to this and other efforts, HP boasted the world’s most sustainable PC portfo lio in May 2020. This included the HP Elite Dragonfly — the first PC manufactured with ocean-bound plastic.

•OWN THE WHOLE CYCLE. Create environmental and societal impact by influencing the product usage cycle from cradle to grave. Since the 1990s, Grupo AIEn, a leader in home cleaning products based in Monterrey, has invested and scaled up its in-house plastic recycling operations to become one of the largest plastic recyclers in Mexico. The company now operates 30 routes and 6,200 collection points, recy cling more than 50,000 tons of PET and HDPE per year. This business expansion has given AlEn an exclusive supply of recycled plastics, enabling it to create distinctive, greener packaging at a relatively stable cost.

• EXPAND SOCIETAL VALUE. Expand the environmental and soci etal value of products and services and capture value in pric ing, market share and loyalty. In 2018, PepsiCo acquired SodaStream, the world’s leading at-home sparkling water maker. Building on this technology, PepsiCo has begun to bring packaging-free, customizable beverages to workplac es, college campuses and airports. This new business posi tions PepsiCo to win in the increasingly personalized bever age market and to save an estimated 67 billion single-use plastic bottles by 2025.

• EXPAND VALUE CHAINS. Innovate by layering onto the business ecosystems of customers or of partners in other industries. In Chile, Algramo’s innovative bulk distribution system re places single-use plastic with radio frequency identification (RFID)-equipped reusable containers. Since 2013, the startup has scaled up its business by partnering with more than 2,000 family-owned stores across Santiago. They dispense affordable food and staple products ‘al gramo’ (Spanish for ‘by the gram’) and reward customers for reusing contain ers. Algramo’s model not only helps the environment but also benefits the urban poor, who previously had to pay high prices for small quantities of products in wasteful, individu ally wrapped packets.

• RELOCALIZE AND REGIONALIZE. Shorten and reconfigure global value chains to bring societal benefits closer to home. In Brazil, BASF has developed a solution to a local issue: waste certificate fraud. Some collectors and recyclers claim cred its for recycled materials that they didn’t actually process or that aren’t actually recycled. Partnering with Kryha, a digital blockchain studio, and Recicleiros, an NGO that supports waste collectors and their cooperatives, BASF de veloped an online platform called ReciChain that enables accurate and secured data tracking throughout the recy cling value chain, to improve the quality of operations and guarantee the validity of manufacturers’ certificates and claims.

• ENERGIZE THE BRAND. Encode, promote and monetize the full environmental and societal value of products and services, and use that leverage to engage customers in novel ways. In 2019, 3M released the latest version of its Thinsulate insu lation product, offering “100 per cent recycled featherless insulation” made from recycled plastic bottles. Building on this accomplishment, 3M worked with the high-end apparel brand Askov Finlayson to create “the world’s first climatepositive parka.”

•BUILD ACROSS SECTORS. Create new business models in col laboration with government and non-profit organizations, particularly in rapidly developing economies, to improve the business ecosystem and societal proposition. Together, SC Johnson and the social enterprise Plastic Bank have opened nine recycling centres in Indonesia to collect and

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recycle plastic before it reaches the ocean. This partnership also plays an important societal role, helping families in im poverished areas who collect plastic waste by buying it at a premium from them. In 2019, the partnership announced a ground-breaking, three-year deal to create 509 plastic collection points, including locations in Thailand, the Phil ippines, Vietnam and Brazil. In aggregate, these points are expected to collect 30,000 metric tons of plastic over three years — the equivalent of stopping 1.5 billion plastic bottles from entering waterways and the ocean. On the business side, this collaboration will secure a steady supply of highquality recycled plastics and help SC Johnson meet its 2025 packaging goals.

These seven archetypes can be starting points for develop ing your own business model innovation. Adapt them or combine several together to develop a more comprehensive solution to en vironmental and societal issues relevant to your enterprise.

STEP 3: Link to Drivers of Value and Competitive Advantage

In the third stage of the cycle, test, iterate and refine your busi ness model ideas or concepts (from the second step) to ensure that they will yield the environmental and societal benefits in tended and that the benefits will translate into value and advan tage for your company. A business with weak profit margins can not invest in innovation to amplify and scale environmental and societal benefits. The objective of this step is to keep assessing and reengineering the business model, so that it continually im proves the resilience of the business and the benefits to society. The following questions can help you navigate this part of the process:

1.Can the new business model scale effectively? Can it be replicated across all your business units or the markets you serve, without diminishing returns?

2. Will the business model differentiate your brand or product and make it more competitive in the marketplace?

3.Will it reduce the risk of commoditization by being hard for others to imitate? Will its distinctiveness help you retain some control over pricing?

4. Can it leverage network effects? For example, can it attract the kinds of customers and suppliers that make other cus tomers feel compelled to join?

5.Does the business model harness business ecosystems —

including the larger industry, the value chain and everyone who interacts with your products, services and practices — for advantage and sustainability?

6. Does the business model naturally create meaningful envi ronmental and societal benefits?

7.Will the environmental and societal benefits remain dura ble against changing trends over time, even as the business model scales up?

8. Does the business model increase returns to shareholders as well? Are the financial benefits linked to the environmental and societal benefits in some significant way?

9. Finally, does the model animate your company’s purpose? Does it boost engagement and loyalty between the company and its employees, customers, investors and other stake holders?

Among the frontrunners in our sample, 90 per cent scored ‘high’ on at least five of these nine attributes, as opposed to only 30 per cent in the other groups.

STEP 4: Scale the Initiative

The full potential value of sustainable business model innova tion is achieved only when the new business model is brought to scale, engaging people within the company, across the supply chain, in the company’s networks and in its ecosystems to ex pand impact and advantage. To accomplish this, companies can leverage three enablers.

First, partnerships with other organizations, within or across industries or sectors, can help a company pool resources, fill capability gaps and unlock new markets. Almost 90 per cent of the frontrunners have broadened their efforts this way. Second, digital technology (leveraged by 80 per cent of the frontrunners) can help create new distribution channels that reach previously unserved or underserved populations at a fraction of the cost of their predecessors. Third, companies that adopt SBM-I tend to develop cultures and leadership values that attract and engage people inside and outside their boundaries. Indeed, all of the frontrunners explicitly mention the environmental and societal impact they seek to deliver in their vision, purpose or mission statements.

Consider the example of BIMA, a mission-driven provider of mobile-delivered health and insurance services that started operations in Ghana in 2010. Its innovative digital technology platform and its partnership model (which comprises telecom

providers, mobile money providers and insurance underwriters) have enabled it to rapidly scale its innovative business model. BIMA now provides affordable, easy-to-manage life and health insurance to more than 35 million low-income customers across 10 emerging economies, providing access to its services through mobile phones. Many of its customers earn less than $10 a day and about 75 per cent of them are obtaining insurance for the first time in their lives. These societal benefits are at the core of BI MA’s strategy and mission: The company’s website says explicitly that its “purpose is to protect the future of every family.”

In closing

The four-step innovation cycle we describe herein offers com panies a way to systematically integrate and solve for social and business value with one business model. Most of the compa nies that begin this journey are already skilled at optimizing for

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Why India is a Critical Market for Digital

IF YOU ARE A DIGITAL FIRM with global ambi tions, hurry up and figure out your India strategy, if you haven’t already. Or risk losing access to one of the world’s most attractive digital markets.

At the height of the COVID-19 lock down, Facebook’s Mark Zuckerberg struck a deal to invest US$5.7 billion for a 9.99 per cent stake in Reliance Jio, the three-year-old telecom company owned by India’s richest man, Mukesh Ambani. It was Facebook’s biggest deal since acquiring WhatsApp in 2014. Reliance Jio was barely prof itable, yet the announcement boosted Facebook’s valuation on Wall Street by eight per cent, or $40 billion. Why?

Because India is a strategic market for digital firms. Facebook is already the most popular social network in the country; WhatsApp has five times as many users in India as in the U.S. (390 million vs. 75 million), and the country is Instagram’s most important market outside the U.S. But Facebook wants to do even more in India. For example, with Reliance’s help, it may be able to diversify into new services, such as e-commerce or ‘digital wallets’ — businesses that have eluded it elsewhere. So, Zuckerberg acted swiftly and decisively.

Other digital firms should take a lesson from Face book’s approach. Following are five reasons why India is too big of an opportunity to let slide.

#1: INDIA IS A MEGA-MARKET. The first reason is obvious. Inter net businesses depend on eyeballs (for ad revenues) and us ers (for transactions). With 1.3 billion people, India has a lot to offer on both fronts. India has 750 million Internet users, which is almost three times the number in the U.S. (275 mil lion), and over 500 million smartphone users. Yet about half of all Indians are still offline. Similarly, e-commerce is grow ing at 25 to 30 per cent each year but still accounts for less than five per cent of retail sales. The digital opportunity in India is huge — and will get a whole lot bigger, especially in a post-COVID-19 world.

#2: INDIA IS OPEN TO FOREIGN FIRMS. Even though India is a large market with a strong ecosystem of local entrepreneurs, tech nical talent, and venture funding, it has welcomed foreign digital firms for many years. India’s foreign direct invest ment policy focused for years on traditional products and services, with relatively few restrictions on digital busi nesses. China is the most attractive digital market outside

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POINT OF VIEW Ravi Ramamurti, Professor of International Business, Northeastern University

the U.S., and certainly among the BRIC nations, but no U.S. digital firm has gained traction there, for well-known rea sons. The list of U.S. casualties in China includes Amazon, eBay, Google, YouTube, Facebook, Instagram, WhatsApp, Netflix, Twitter, Uber — and most recently, Yahoo.

In India, most of these companies have thrived and are leaders in their segments. Google and YouTube, like Face book, have been in India almost from their birth. Google dominates search, and the Android operating system is used by three-quarters of Indian phones. After failing in Brazil, Russia and China, Amazon entered India in 2013, with Jeff Bezos vowing to invest US$5 billion to win there; he com mitted another $1 billion in January 2020. Amazon’s chief rival in India is local startup Flipkart, which was gobbled up by Walmart in 2018 for $16 billion, making it Walmart’s big gest-ever acquisition. Justifying the investment, Walmart’s CEO observed: “When you step back and look….at all of the countries — their size, their growth rate, their potential — there just aren’t opportunities like the one we are looking at.” Netflix has 75 million U.S. subscribers, but it is aiming for 100 million in India. Its main rival in India is another U.S. company, Hotstar, owned by Disney. And Uber claims to have more than half the Indian ridesharing market.

Russia, like China, has developed local champions in most digital businesses: Yandex rules in search, video and ridesharing; VKontakte in social networking; and Ulmart and Ozon in e-commerce. Even in Brazil, which is a smaller market than India, regional firms dominate e-commerce (Mercado Libre), digital wallets (RecargaPay) and ride sharing (99, since bought by China’s Didi). India is the only digital mega-market in which U.S. players have had free play in almost every segment.

#3: INDIA HAS THE WORLD’S CHEAPEST DATA PLANS. A third reason for India’s allure is not widely appreciated: it has some of the world’s cheapest data plans. In 2020, the cost per gigabyte (GB) of data was under $0.10, which was about one fortieth of rates in the U.S., and much lower than most other emerg ing economies. Cheap data is the oxygen that fuels demand for digital services, and as a result, Indians have become data gluttons. In 2019, they downloaded more apps than us

ers in any other country. Their per-capita data consumption is comparable to that of Americans, who are 20 times richer. Even if prices drift upward in the future, as they have begun to do in 2021, they are likely to be quite cheap by inter national standards. High per-capita consumption multiplied by a large population means India is a great market for test ing new products and practicing accelerated innovation.

#4: INDIA IS A LABORATORY FOR REVERSE INNOVATION. The fourth reason to embrace India is that it’s a wonderful laboratory for reverse innovation. India is full of constraints, and con straints breed innovations that can be leveraged there and globally. For instance, many Indians access the Internet us ing inexpensive feature phones and smartphones, and con nect through undependable 2G or 3G networks. This has led Uber, YouTube, Spotify, LinkedIn, Tinder and others to produce Lite apps that don’t hog a phone’s memory or the network’s bandwidth. “We are adapting technology for In dia and not expecting Indians to adapt to our technology,” says a senior Google executive. While many Indians speak English, most don’t, so Facebook and WhatsApp are avail able in many of the country’s 22 official languages. The In dian system of street addresses is inaccurate and confusing, Flipkart’s CEO Kalyan Krishnamurthy told me, so it has manually geotagged the locations of its customers. Indians use many more two-wheelers than cars, so in India Google Maps also provides directions for two-wheelers. And so on. The point is that many innovations developed for India can be leveraged in other emerging markets — and, sometimes, even in developed-country markets.

Being in India also allows you to leverage the country’s technical talent. Many digital firms have large R&D teams in India working on both global and local projects. Stronger legal protections for intellectual property than in China has made India a more attractive location for R&D activities.

#5: A CHANCE TO MATCH CHINA’S SCALE. The fifth reason to be in India is also easy to overlook. China is the only country, besides the U.S., that is home to digital behemoths. Chi nese firms like Alibaba or TikTok have made inroads into the U.S., but the U.S.-China tech war has dimmed their
Netflix has 75 million U.S. subscribers, but it is aiming for 100 million in India.

long-term prospects there. With China closed to U.S. digi tal giants and the U.S. closed (or closing) to Chinese digital giants, India is a prize that firms in both countries covet.

As things stand, American firms have a distinct edge in India. Chinese digital champions were late movers in India, because they spent several years building dominant posi tions in China. Their India investments began only around 2015. Since then, a few have made bold moves; for example, Alibaba group’s investment of $680 million in India’s digital payments firm, Paytm, or TikTok’s acquisition of over 120 million users in a matter of months. But most Chinese in vestors took a low-profile approach, such as owning minor ity stakes in existing Indian companies or start-ups. Chinese cellphones accounted for two-thirds of all mobile phones sold in India and encouraged the downloading of Chinese apps, which by 2019 accounted for half of all apps used by Indians. But according to a report by Gateway House, Chi nese investment in Indian tech companies by 2019 was only about $6.2 billion, a fraction of the investment by U.S. digital giants in India.

Moreover, Chinese prospects in India were dealt a death blow in June 2020, when the Indian government abruptly banned 59 Chinese apps temporarily — including TikTok and WeChat — on national security grounds, as rela tions between the two countries chilled. In September 2020, the government banned another 118 Chinese apps, includ ing games popular with millions of users. These develop ments have given U.S. digital firms a golden opportunity to use India to match or exceed the global scale of their Chinese rivals, who operate in a home market with three times as many smartphones as the U.S.

In closing

Time may be running out for Western digital giants to get their act together in India, which has started to rethink its digital policies. The government is realizing belatedly that data is a precious resource, and is tightening rules about data storage and privacy. It has realized that digital businesses have national security implications.

There is also some angst that a country with India’s market size and talent has not produced any digital giants of

its own, as it did in the IT and software industries. Walmart may have paid a fortune for Flipkart, but that deal valued Flipkart at less than five per cent of Alibaba’s valuation at the time. Going forward, local companies like Reliance Jio may get preferential treatment, if the Indian government decides to nurture its own national champions. Maybe that’s why Facebook was in a hurry to conclude its deal with Reliance Jio.

The lesson in all this for Western digital firms? Like Facebook, they must figure out how to leverage India in their global strategy and move quickly — or risk missing out on a highly strategic market.

Rotman Management Winter 2022
Cheap data is the oxygen that fuels demand for digital services, and Indians have become data gluttons.
Ravi Ramamurti is University Distinguished Professor of International Business and Strategy, and Director of the Center for Emerging Markets at Northeastern University in Boston.

Strategic Foresight: How to Think Like a Futurist

THE 1920S BEGAN IN CHAOS. Cataclysmic disruption resulting from World War 1 and the Spanish flu shuttered businesses and pro voked xenophobia. Technological marvels like the radio, refrig erator, vacuum cleaner, moving assembly line and electronic power transmission generated new growth, even as the wealth gap widened. More than two-thirds of Americans survived on wages too low to sustain everyday living. The pace of scientifi innovation — the discovery of insulin, the fist modern antibi otics, and insights into theoretical physics and the structure of atoms — forced people to reconsider many of their cherished beliefs.

The sheer scale of change and the great uncertainty that came with it produced two factions: Those who wanted to re verse time and return the world to ‘normal’; and those who embraced the chaos, faced forward and got busy building the future. As COVID-19 and extreme weather events continue to test our collective resilience, it is diffilt not to see striking par

allels to our modern world. Exponential technologies — artificial intelligence, synthetic biology, autonomous robots, and mis sions to space — are challenging our assumptions about human potential. Under lockdown, we’ve learned how to work from our kitchen tables, lead from our spare rooms, and support each other from afar.

The disruption has only just begun. But armed with the benefitof both hindsight and strategic foresight, we can choose a path of reinvention. In this article I will share some tools and principles for confronting deep uncertainty, adapting to it — and thriving.

The Macro Forces Shaping our World

My colleagues at the Institute for the Future and I are closely tracking 11 macro forces that no single entity has control over, but that will play a critical role in how our collective future de velops. These factors broadly in fluence business, governing
Navigating the chaos that characterizes periods of rapid change demands tools that prepare your organization for an uncertain future.

and society; they can skew positive, neutral and negative; and developments within each area will impact the world we live in going forward (see sidebar.)

With so much for leaders to monitor on an ongoing basis, it is critical to understand the difference between signals and trends. Following are some principles that can be useful in this regard.

A weak signal can be defined as

• A small innovation, incremental development, R&D ad vancement, or other minor development that has the potential to grow as it matures;

• A new technology development that has not yet entered the mainstream, or a new market strategy, product or service

The 11 Macro Forces Shaping Our Future

Wealth Distribution. The distribution of income across a population’s households, the concentration of assets in various communities, the ability for individuals to move up from their existing financial circumstances, and the gap between the top and bottom brackets within an economy.

Education. Access to quality primary, secondary and postsecondary education; workforce training; trade apprenticeships; certification programs; the ways in which people learn and the tools they use; and what people are interested in studying.

Infrastructure. The physical, organizational and digital struc tures needed for society to operate — from bridges to power grids, roads to Wi-Fi towers — and the ways an infrastructure of a city, state or country might impact another’s.

Government. Local, state, national and international governing bodies; their planning cycles; their elections; and their regulatory decisions.

Geopolitics. The relationships among the leaders, militaries and governments of different countries, and the risk faced by investors, companies and elected leaders in response to regula tory, economic or military actions.

Economy. Shifts in standard macroeconomic and microeco nomic factors.

entering a non-competitive space;

• Evidence of an existing thing becoming obsolete, or evidence of a novel thing emerging; or

• A recently revealed problem or state of affairs that does not di rectly or immediately impact your business.

A strong signal can be defined as

• A bigger innovation, signifiant development or R&D advance ment, or other big development that is maturing;

• A new market technology, strategy, product or service entering a competitive space, where others are likely to follow fast;

• Factors that challenge current beliefs or assumptions and have the momentum to mature or grow fast; or

• Obvious advance-warning indicators.

Public Health. Changes to the health and behaviour of a community’s population in response to lifestyles, popular culture, disease, government regulation, warfare or religious beliefs.

Demographics. Observing how birth and death rates, in come, population density, human migration, disease and other dynamics are shifting communities.

Environment. Changes to the natural world or to specific geographic areas, including extreme weather events, climate fluctuations, rising sea levels, drought and high or low tem peratures. We include agricultural production in this category.

Media and Telecommunications. All of the ways we send and receive information and learn about the world. These include social networks, news organizations, digital platforms, video streaming services, gaming and eSports systems, 5G and the boundless other methods for connecting with each other.

Technology. We view technology not as an isolated source of macro change, but rather as the connective tissue linking business, government and society. For this reason, we always look for emerging tech developments — as well as signals — within the other 10 sources of change.

Rotman Management Fall 2021
A trend emerges when one or more of the 11 macro forces intersects with a signal.

When one or more of the 11 macro forces intersects with a signal, a trend emerges. Trends represent collisions of new develop ments, and they do not necessarily follow a linear path from the fringe to the mainstream. Six key factors indicate that you are dealing with a trend, and they are represented by the CIPHER acronym:

Contradictions are examples that demonstrate opposing or in congruous forces at play simultaneously.

Inflections are occurrences that mark a major turning point or establish a new paradigm.

Practices are emerging behaviours that are becoming more pro nounced or gaining in popularity.

Hacks are inventive, unintended uses for tools, technologies and systems.

Extremes are instances of technologies or concepts being pushed to new limits that might change the nature of their use.

Rarities are exactly that: rare and unusual events and phenom ena. When we see them, we should pay close attention to their influence.

It can be challenging to distinguish between something that is ‘trendy’ (i.e. a fad that will come and go) and a genuine longitu dinal trend that will have signifiant lasting impact on the world — and on your organization. One way to distinguish between the two is to confirmwhether the event in question meets most of the four laws of tech trends:

1. Tech trends are driven by primary forces of change and by our basic human needs;

2. Tech trends are timely, but they persist in the wake of new de velopments;

3. Tech trends represent the convergence of weak and strong signals over time; and

4. Tech trends evolve as they emerge.

Unlike true trends that meet the above criteria, trendy phenom ena (or fads) are much more transient: They appear suddenly, capture our attention and distract us with intense possibilities

— only to burn out just as quickly as they arrived. Fads tend to move along a common cycle: From insider discovery, to trend ing on social networks, to influencer bragging, media hysteria and mainstream acceptance — until we are disillusioned be cause the fad never meets our broader expectations.

Tools of the Trade

Now is not the time to throw up our hands, declare that it’s all too overwhelming, and wait for the ‘new normal’ to arrive. Our new normal has arrived, and it is continuous disruption. Going forward we can’t sit passively and allow change to ‘happen to us’ without any of our direct involvement. It’s time to sort out the signals and create your organization’s vision, make strategic decisions, prioritize your technology investments and create the tactical actions that will carry you forward.

As part of our efforts to make strategic foresight a wide spread capability within organizations, I will now share five tools that we use regularly in our work with clients.

FRINGE SKETCHING. A Fringe Sketch is usually our fist step in look ing for emerging signals and trends. Put simply, it is a network map connecting signals to one or more of the 11 macro forces. We build the sketch using a digital whiteboard and add data sources, images, videos and other relevant bits of information to the map as we go.

We begin by adding a wide array of relevant idea ‘nodes’ to the sketch, which can include the following: concisely described current events; emerging tech trends; societal phenomena; and additional questions. Then, we draw lines between each node, connecting those that are most closely related. This process takes the form of an active brainstorm, with thoughts flowing freely and most, if not all of them, making it into the sketch. We keep at this until we have a signifiant number of ideas on the board, each forming a node and spawning its own sub-nodes in a multilayered web of information.

The end result is a map of direct and orthogonal relation ships between diverse technological and cultural phenomena, all with the central topic as their nucleus. This collection of structured data can then be analyzed to reveal unexpected in teractions and surface over-arching trends that are likely to play a role in the future.

ESCALATION TRIGGERS. Recognizing signals and trends isn’t use ful within an organization unless strategic action of some kind
Our new normal has arrived, and it is continuous disruption.



Data, Evidence and Certainty



12-24 months 2-5 years 5-10 years 10+ years

Example time ranges

FIGURE ONE is taken. We findthat teams sometimes have a diffilt time aligning on which trends to share with senior executives — and when. To assist with this, we often create an ‘Escalation Triggers Matrix’, to help them determine when they should take action, when a strategic decision is needed, and when to simply con tinue monitoring a signal or trend. With each new signal discov ered, they can refer to this matrix to determine which of three categories it fitsinto: ongoing monitoring; decision required; or action required. If the answer to the following questions is pre dominantly Yes, they know when to escalate the signal to other departments, executive teams, or the board of directors.

Ongoing monitoring criteria: Is there clear potential for fi nancial, operational or market disruption? Has interest about the topic arisen from within your organization? Is more time needed?

Decision criteria: Is there high potential impact? Can the event definiely cause disruption to your business model? Does it embody financial,operational or market risk? Does it have mean ingful impact on your brand positioning? Is it tied to an existing strategic initiative? Does it involve pending regulation? Is there strong interest from within your organization?

Action criteria: Is an inflection point imminent? Is there an immediate opportunity for one of your competitors? Is it impact

ing your partners? Is there is great internal momentum/support in your organization?

THE TIME CONE. For any given uncertainty about the future — whether it falls into the category of risk, opportunity or growth — it’s best to think in the short and long term simultaneously. As you think about the future, you can build a ‘time cone’ with four distinct, broadening categories: tactics, strategic planning, vision and systems-level evolution.

A Time Cone (see Figure One) shows how the range of pos sible paths forward expands as you look further into the future and the availability of current, reliable and actionable data de creases. Timelines are useful for tracking the progress of a project towards a finie goal, but for an organization faced with a broad range of potential futures, you need to factor in uncertainty.

The time span of the cone is modulated to suit different fore sight projects, and foreseeable waypoints can be plotted directly onto the framework. We sometimes also map trends on the Time Cone to gain deeper insights into how they could impact an or ganization. We begin by definingthe cone’s edge using highly probable events for which there is already data or evidence. The amount of time varies for every project, organization and indus try. In the Time Cone graphic presented here, we’ve used 12 to

The Time Cone
Rotman Management Fall 2021

COVID -19 leads to a reduction in the

Existential Risk

COVID -19 leads to faster workforce automation and a sharp reduction in jobs. Threatens global economy.

labour supply

Near-Term Opportunity

Cloud robotics and Al-in-the Cloud are used at scale in 2021

COVID -19 reveals cracks in our global supply chains. Eventually shifts manufacturing away from traditional companies and countries to new tech-savvy entrants.

Long-Term Risk

COVID -19 reveals new insights to workforce automation, affords some time to prepare for significant labour disruptions. Every company has access to intelligent robotics applications at scale. Reveals new partnership and business opportu nity in sectors impacted by COVID -19.

Long-Term Opportunity

COVID -19 does not lead to a reduction in the labour supply

Cloud robotics and Al-in-the Cloud are tested in 2021

24 months as a place to start. Because we can identify trends and probable events (both within a company and external to it), the kind of planning that can be done here is tactical in nature, and the corresponding actions could include things like redesigning products or identifying and targeting a new customer segment.

At this point in the process, we are a little less certain of out comes, because we’re looking at the next 24 months to five years. This area should be most familiar to strategy officers and their teams: We’re describing traditional strategy and the direction the organization will take. Our actions include definingpriori ties, setting resource allocation, making any personnel changes needed and the like.

In our experience, lots of teams get stuck cycling between strategy and tactics, and that makes their organization vulner able to disruption. If you aren’t simultaneously articulating your vision and a systems-level evolution, another organization just might drag you into its version of the future.

SCENARIOS. Widely used in the consulting world, scenarios are narrative snapshots that describe a series of possible futures. They require teams to confront their cherished beliefs, develop shared visions, sharpen their focus and refinetheir expectations. Scenarios do not attempt to predict the future; instead, they seek

to reduce uncertainty and surprises so that better decisions can be made in the present. Done well, scenarios can inform which actions should be taken to shape the future.

For organizations new to the realm of strategic foresight, we have adapted the traditional SWOT analysis as a way to frame scenarios. Because this framework is already known to most organizations, it reduces some of the frustration that can be as sociated with data-rich scenarios. SWOT stands for Strengths, Weaknesses, Opportunities and Threats, each of which occupies a quadrant, and the quadrants are further classifiedas internal versus external to the organization, and as favourable or adverse.

A completed SWOT matrix (see Figure Two) helps teams develop the components to include in their scenarios. The ‘opti mistic scenario’ will describe a future in which teams capitalize on their strengths and seize the opportunities identified,while a ‘catastrophic scenario’ will describe a future in which the weak nesses they have identifiedare exploited or prevent them from succeeding, and the threats they surfaced are actualized.

In our work we use a 2x2 matrix to rapidly prototype sce narios — short but detailed narratives describing plausible out comes of high-impact, high-uncertainty events. We begin with a prioritized list of signals and trends. Then we generate an additional list of uncertainties using STEEPLE factors: Social/
A Sample Modified SWOT Analysis

Demographic, Technological, Economic, Environmental, Politi cal, Legal and Ethical. Then we add in additional uncertainties that intrigue us and may relate to our current project. We write uncertainties along opposite axes to explore what scenario might emerge. Quadrants reflect the signals, trends, STEEPLE factors and other curiosities we’re exploring. In each quadrant, we answer ‘What if these two factors are present?’ and continue probing until we have a short but deep story. We finih with a headline describing that future state. As a last step, we label each quadrant using one of six categories — near-term op portunity, long-term opportunity, near-term risk, long-term risk, neutral, and existential risk — to help us prioritize the quadrant for the next phase of our scenarios work.

ASSUMPTIONS VS. KNOWLEDGE. This is a tool we use to check our instinctive cognitive biases. ‘AvK’ can be used any time an asser tion is made to determine whether a statement is based on fact or feeling. On one end of the spectrum are Assumptions — pure hunches that are not supported by any substantial data, and on the other end is Knowledge — declarations made with ample evi dence from multiple sources to back them up. With two interme diate steps along the spectrum — ‘limited evidence or insight but still signifiant uncertainty’ and ‘meaningful corroborating data or models, but still some doubt’ — this scale is a great way to keep sentimental bias from clouding your strategy. For leaders interested in developing strategic foresight on their team, the following questions are a good place to start:

• What are some plausible deep (20+ years), long-range (10+ years) and near-term (2+ years) futures for us?

• What narrative scenarios describe these futures?

• What is happening outside of our industry that we should be monitoring?

• What companies, start-ups and partners might make up our future value-creation network?

• Which tech trends should we be monitoring closely? When should we act?

• How can we reduce uncertainty about our future?

• How can we build an early warning system to see the next disruptive events?

• Given all of the above, what new products or services should we consider creating?

In closing

As indicated herein, strategic foresight uses quantitative and qualitative data, frameworks and tools to build plausible visions of the future so that leaders can make informed decisions today. And the results speak for themselves: Our research shows that companies with a dedicated strategic foresight methodology and resources outperform the average by 33 per cent on profitbility and outgrow their competitors by 200 per cent.

Accounting data, competitor intelligence and consumer research covering near-term needs can be accurate and useful in the present, but they are often unreliable predictors of the future. Likewise, presumptions that the future will merely be a continuation of the present fail to accommodate the chaos, un certainty and disequilibrium that develop during periods of rap id change. As we collectively face an uncertain future, only one thing is certain: Those who are prepared for the journey ahead will fare the best.

Amy Webb is an Adjunct Professor at New York University’s Stern School of Business, the founder and CEO of the Future Today Institute, and a Visiting Fellow at Oxford’s SAID School of Business. She is the author of three books, most recently The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity (PublicAffairs, 2020). The Future Today Institute’s 14th annual Tech Trends Report for 2021 is available online.

Rotman Management Fall 2021
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