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Roger Martin: Becoming an Integrative Thinker

Thought Leader Interview: C.K. Prahalad

Marshall Goldsmith: The Success Delusion

The Magazine of the Rotman School of Management / Fall 2007

The Quest

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The Quest Fall 2007

4 Becoming an Integrative Thinker by Roger Martin 38 The Success Delusion by Marshall Goldsmith

Integrative thinkers share some common traits in their personal knowledge systems related to their stance, tools and experiences.
14 Beyond Money: Toward an Economy of Well-Being by Edward Diener and Martin Seligman

The more successful you become, the more likely it is that you will experience the success delusion: I behave this way; I am successful; therefore, I am successful because I behave this way. Wrong!

Economic measures alone cannot account for a societys quality of life. It is time to place them within an overarching framework of well-being.
20 The Dangerous Allure of the 70Hour Workweek by Karen Christensen

14 24 30

42 Avoiding Ethical Danger Zones by Max Bazerman, David Missick and Lisa Stewart

Managers can use three pillars quality, breadth and honesty to develop an optimal framework for ethical decision-making.
48 Dishonesty and its Policy Implications by Nina Mazar and Dan Ariely

Sylvia Ann Hewlett explains why management must think carefully about the behaviours it encourages and rewards.
24 Success Built to Last: Creating a Life That Matters by Jerry Porras, Stewart Emery and Mark Thompson

The typical approach to reducing dishonesty involves increasing the probability of being caught and the magnitude of punishment. A psychologically-based approach may be more effective.
54 How Industries Change by Anita McGahan

Y ou dont have to make a career out of everything that is meaningful to you, but you do need to nd a place for everything that is meaningful to you. Heres how enduringly-successful people do it.
30 The Moral Consequences of Group Identity by Chen-Bo Zhong, Gillian Ku, Robert Lount and Keith Murnighan

Industries evolve along four distinct trajectories, and your rms performance can be signicantly bolstered if you understand which one yours is on.
60 The Laws of Simplicity: An Interview with John Maeda by Karen Christensen

Being part of a group presents some specic ethical challenges.

The renowned designer, artist and computer scientist explains why simplicity has become such a valued commodity.

Idea Exchange
The content of our lives is limited by the amount of information we can process. In this sense attention, or psychic energy is a precious resource.
Mihaly Csikszentmihalyi, p.68

In Every Issue
3 From the Dean 10 Thought Leader Interview: C.K. Prahalad 35 Founding Partners Corner: Colin le Duc 104 News Briefs 108 Alumni Proles 110 Alumni Capsules 112 Class Notes 125 Upcoming Events

64 80

64 The Big Picture: Jeffrey Sachs 68 Questions for: Mihaly Csiksczentmihalyi 71 Questions for: Darrel Rhea 74 Faculty Focus: Stphane Ct 77 Questions for: Robin Sharma 80 Questions for: Laura Nash 83 Questions for: Mark Albion 86 Point of View: Nancy Rothbard, Katherine Phillips and Tracy Dumas 89 Questions for: Robert Sutton 92 Faculty Focus: Ole-Kristian Hope 95 Point of View: Rose Patten 98 Questions for: David Miller 101Questions for: Charles Arntzen

Rotman Magazine, Fall 2007 Rotman magazine is published three times per year for alumni and friends of the Joseph L. Rotman School of Management, University of Toronto. Subscriptions are available for CAD$110 per year. To subscribe, go to Editor Karen Christensen ( Contributors Steve Arenburg, Stphane Ct, Ole-Kristian Hope, Roger Martin, Nina Mazar, Anita McGahan, Ken McGufn, Jack Thompson, Stephen Watt, Chen-Bo Zhong Design Underline Studio Inc. Cover Corbis Images Rotman Magazine is printed by Harmony Printing on chlorine-free bleached pulp paper with vegetable-based ink, and is 100 per cent recyclable.

Copyright 2007. All rights reserved. To submit a change of address, please contact us at Rotman Magazine, Joseph L. Rotman School of Management, 105 St. George Street, Toronto, on m5s 3e6 Tel: 416-978-0240 Fax: 416-978-1373 E-mail: Web:

It is a tragic and outdated perspective to think that the values we choose to live by must be set aside while we work.
From the Dean:

Roger Martin
areas. I show how each of us can begin the journey towards Becoming an Integrative Thinker on page 4. Our choices clearly affect our own well-being, but they also have a direct effect on others, and they collectively affect the society we live in. On page 14, Ed Diener and Martin Seligman argue that business must start taking an interest in well-being as a mechanism for economic growth, in Beyond Money: Toward an Economy of Well-Being. Balance isnt just an issue of time, its about living your values by aligning your behaviour with what you believe is really important. On page 20, Sylvia Ann Hewlett of the Center for Work-Life Policy discusses The Dangerous Allure of the 70-Hour Workweek. The basic model for lasting success is built on knowing what behaviours you want from yourself, those around you, and your organization, and aligning all the signals and incentives youre sending throughout the system. Jerry Porras, co-author of Built to Last, and his co-authors describe the importance of combining meaning, thought and action for Success Built to Last, on page 24. Elsewhere in this issue, we feature an interview with celebrated author and strategist C.K. Prahalad on page 10; MITs John Maeda talks about The Laws of Simplicity on page 60; and starting on page 63, our Idea Exchange section features 15 thought leaders including Jeffrey Sachs of Columbia Universitys Earth Institute, Laura Nash of the Business Roundtable Institute for Corporate Ethics, and Rotman professors Ole-Kristian Hope and Stphane Ct. Leonardo da Vinci once said that the secret to his genius was connessione the ability to keep the small details in balance with the larger picture, both in his paintings and in his life. Like Leonardo, the most successful people today are those who have found their own true path. How do you want to live your life, in and out of work? Thats the question everyone seeking a sense of balance should be asking. I encourage those who are grappling with this question to see the workplace as an ideal setting for personal growth and transformation. When you treat your job as your lifes work, you interact with clients, co-workers and customers in such a way that you enrich yourself and all of those who come in contact with you. Each of us has it within us to embrace a meaningful journey by integrating our personal and professional lives in ways that make a lasting difference. When you do that, you have the potential to create an organization and a legacy that can serve the world long after youre gone. In the end, thats why were all here: to make a dent in the universe. Make yours a deep one.
Rotman Magazine Fall 2007 / 3

The Quest
IN THE WESTERN WORLD, when we talk about growth or development, we are typically thinking about the distribution and ow of money. A nations progress is still most commonly measured in terms of GDP, which until recently, has routinely been assumed to be a reliable proxy for quality of life. However, the sobering truth is that while the production of goods and services has increased exponentially over the past 50 years, measures of life satisfaction have remained stagnant. Clearly, money and material goods are not enough to make us feel satised with life. The time is ripe for a redenition of personal success. What does success mean these days? While there is no simple answer, one thing is certain: the people who are the most inspiring to be around are those who are leading satisfying lives. They may not be the wealthiest people you know, but they are true to themselves: they have found a balance, not between life and work, but between being and doing. One of the most important life-planning activities you can engage in is nding your own denition or model of success. Whether you know it or not, you are likely already following a model of career and life success: the question is whether it is your own, or one you inherited from family, society or other outside forces. It is a tragic and outdated perspective to think that the values we choose to live by must be set aside while we work. Work is a creative canvas. As much as any artists paintbrush, its the way we leave our mark on the world. In this issue of Rotman, we delve into the inner workings of the various quests that each of us is on: for success, happiness, meaning, growth, understanding all the elements of a life well-lived. Integrative thinkers are some of the most successful individuals around. Like the rest of us, they use mental models to make sense of the world, but their thinking shares a common pattern, and their behaviour differs from that of non-integrative thinkers in three key

Integrative thinkers share some common traits related to their stance, tools and experiences, which is good news for those of us who aspire to attain their level of decision-making prowess.


By Roger Martin


OVER THE PAST SIX YEARS, the Rotman Schools Integrative Thinking Seminar Series has hosted a variety of renowned CEOs and thought leaders everyone from Jack Welch to Michael Dell to A.G. Laey. My goal when we started the Series was to try to gure out how these highlysuccessful people think. I was looking for patterns: I wanted to know, what was the thinking that led them to the doing? Was there a common pattern to their mental models? It turns out that there is, and the fact that their thinking patterns can be dened is good news for all of us, as it means that we, too, can learn to become integrative thinkers. It all begins with mental models. Although were usually unaware of it, each of us uses models in our thinking. Its how we make sense of the world. As MITs John Sterman explained early in the Series, we think that what we see is what really is; but in fact, what we see is based on our mental models, and thus we suffer from nave realism: our models become indistinguishable from reality, and what constitutes reality differs from person to person. The result? Model clash the most important challenge faced by modern managers.

2. The second step is Causality. How do we make sense of what

we see? What sort of relations do we believe exist between the various pieces of the puzzle? 3. The third [newly-named] step is Architecture, during which an overall model is constructed, based on what we have arrived at in the rst two steps. 4. The nal step is Resolution: what is our decision based on our reasoning? Integrative thinkers approach each of these steps in a very specic way: they consider more features of the problem as salient to its resolution; they consider multi-directional and non-linear causality between the salient features; they are able to keep the big picture in mind while they work on the individual parts of the problem; and they nd creative resolutions to the tensions inherent in the problems architecture. The interesting part is that everyone builds their understanding of the world around them in a similar manner, either implicitly or explicitly following steps one through four to construct their mental models. The result is clashing realities: those who dont agree with our model are seen as either uninformed (stupid) or ill-intentioned (evil), which creates tension, conict and impasse. There are two ways to deal with model clash. The rst is to fear and avoid it to basically deny its existence. This results in pursuing ones own model as if others dont exist, attempting to crush other models, or caving into the models of others to avoid the inherent conict. The second, far superior approach is to seek out and leverage model clash. Those who choose this option actually
Rotman Magazine Fall 2007 / 5

The Four Steps of Decision Making

After studying the thinkers featured in the Series to date, I recently revised my model for decision making, which still consists of four steps: 1. The rst step is Salience what do we choose to pay attention to, and what not? In this initial step, we decide what features are relevant to our decision.

those who dont agree with our model are seen as either uninformed or ill-intentioned, which creates tension, conict and impasse. The pervasiveness of such clashing realities makes reacting to model clash the single most-important challenge facing managers today.

sions, you need to acquire more tools in business management. So you return to university to take an MBA, after which you alter your stance to see yourself as a business-oriented engineer.
The Knowledge Systems of Integrative Thinkers

By studying some of the worlds most successful individuals, I have concluded that integrative thinkers have a different combination of stance, tools and experience than non-integrative thinkers. Their stance is different in six ways: Nature of their world:
1. They recognize that existing models do not equal reality; 2. They seek out model clash and leverage opposing models; 3.

They believe that better models always exist that cannot be seen; Their role in it:

enjoy the tension that model clash entails. They say to themselves, That is so cool: what did that person see that I didnt see? How on earth did she get to that resolution? Scenario two is the source of the greatest insights and resolutions. It is where the highly-successful leaders reside, and its where we should all aim to be. However, we cant get there without seriously contemplating the opposing models we are facing, and combining insights from them to form new models. As the speakers in the IT Series have shown us, there is never a situation where a better model cannot be built.
Personal Knowledge Systems

4. They believe that they are capable of nding a better model; 5. They are willing and enthusiastic about wading into complex-

ity; and
6. They give themselves the time to create; they arent rushed to

nd the answer to a problem. I got to see two great examples of the productive stance in action recently at Design Indaba in Cape Town, South Africa. Billed as the worlds biggest design conference, it was indeed a massive affair, with more than 1,500 delegates, a separate conference room of young designers listening via closed-circuit TV, and a terric array of presenters from around the world. The roster included graphic designers, product designers, and architects; a futurist and a cartoonist; an artist, musician, and ideologue (that would be former Roxy Music keyboardist and u2 producer Brian Eno); and a couple of academics, including an MIT scientist and this lonely business school dean. The real hits of the conference, from my perspective, were also the two oldest speakers: Milton Glaser and Massimo Vignelli, both designers in their 70s who launched their careers in the 1950s, together representing more than a century of design insight. Both have contributed an impressive legacy of design icons to the world. Glasers I New York logo is often referred to as the most frequently imitated logo design in human history, and his design for New York magazine became the model for city-based periodicals everywhere. The W ashington Post, Paris Match, and dozens of other leading publications around the world owe their looks to him. Vignelli, meanwhile, created the iconic New York subway system signage and map, the timeless American Airlines logo, and the corporate identity (logos, packaging, etc.) for Bloomingdales and Benetton, to name a few. Given the massive success of both designers, perhaps its not surprising that their presentations were so compelling. Yet theyre both well past normal retirement age, and shared the roster with

Our journey in life is a search for answers to problems big and small. For each of us, the answers we come up with depend on the mental models we form based on our personal knowledge system, which is made up of three elements: your stance is your answer to, who am I in the world, and what am I trying to accomplish? Next, with what tools and models do you organize your thinking and understand the world? And lastly, with what experiences do you build your repertoire of sensitivities and skills? The three aspects of our knowledge system are interdependent: our stance inuences and guides which tools we use, which inuences and guides the experiences we garner, which builds our repertoire of skills. Our experiences further inuence the tools that we work on acquiring, and the tools we acquire alter and guide our stance how we view ourselves. For example, if you see yourself as someone who would like to build computer equipment i.e. your stance is that of a budding computer engineer you are likely to attempt to acquire computer engineering skills by taking a degree in Computer Engineering. With such a stance and these tools in hand, you will likely gain some experience building computers. However, as you acquire these experiences, you may nd that the business decisions that dene your working context are made elsewhere, and you may decide that in order to be able to inuence those deci6 / Rotman Magazine Fall 2007

A Model of Decision Making

Figure 1

The Practices of Integrative Thinkers

Figure 2


What features do I see as important?


More features of the problem are considered salient


How do I make sense of what I see?


Multi-directional and non-linear causality considered

What tasks will I do in what order?

Whole visualized while working on individual parts

How will I know when I am done or not?

Search for creative resolutions of tensions

numerous designers in the prime of their careers who could, and perhaps should, have been doing better work. Vignelli presented his work in ve-year increments starting with 1955 to 1960 (a period in which I was born!), but his post-2000 work was, if anything, more impressive than any previous period. And Glaser, who provided for each delegate a copy of his new We are all Africans poster (a protest of international inaction to the situation in Darfur), is still swinging for the fences and connecting. From their talks, and from a long conversation with Vignelli, I came to believe that the key to both mens success lay in their fundamental stances, which exhibited the six elements described earlier.
1.They recognize that existing models do not equal reality

Rather, they see the benets of such conict and ambiguity in spurring their creative juices. Glaser illustrated this using Da Vincis Last Supper, which can be seen simultaneously as an attempt by the artist to portray betrayalor redemption. Which is it? Both, argued Glaser, and to him the harnessing of that ambiguity is the key to the power of this masterpiece. Ambiguity drives the brain into action, he noted. Vignelli spoke of the value and importance of considering both the singularity of identity and multiplicity of diversity, even though theyre directly in conict.
3. They believe that better models always exist that cannot be seen

By not confusing what they presently see with reality, they dont see the present state of a thing as immutable. As Glaser rmly argued: Everything we see, we actually construct it is our image of the thing. For Vignelli, the absence of something doesnt mean it cant exist just that it hasnt been designed yet.
2. They seek out model clash and leverage opposing models

Neither is fooled into believing that nothing better exists than what they can see today. Both repeatedly afrmed that they believe that theres always a better design out there a model that better manages the inherent conict and ambiguity while remaining, in Vignellis words, visually powerful, intellectually elegant, and above all, timeless.
4. They believe that they are capable of nding a better model

These two design masters lack any fear of the ambiguity thats created by models or concepts that conict with one another.

When they look at our world one in which models clash, ambiguity reigns and better models wait to be constructed they see a
Rotman Magazine Fall 2007 / 7

Integrative thinkers go beyond declarative reasoning to embrace abductive logic the logic of what might be in order to generate creative new solutions.

3. They

believe that no better model could exist, because they are looking at reality;

Their role in it: They believe that where opposing views exist, one must be crushed; 5. They believe they must simplify and specialize to avoid unnecessary complexity; and 6. They believe that they must always act quickly and decisively.

A Positive or Negative Spiral

central role for themselves in it. They are the ones who can, should, and in fact will nd a design solution that meets their high standards. As Vignelli stated matter-of-factly: If you cant nd it: design it! This was not egotistical bragging, but rather a solemn statement of what he sees as his job in life.
5. They are willing and enthusiastic about wading into complexity

Both Vignelli and Glaser show a complete lack of concern about wading into the necessary complexities that one must grapple with before coming to an elegant design resolution. Glaser atly states that design is hard work, but at the same time, he shows nothing but joy for it. Vignelli looks forward to the creative impetus of a tricky design challenge: You can only design when you need something.
6. They give themselves the time to create

Finally, they refuse to rush to choose one side or the other of the conict inherent in their task, or to race through the difculties without giving themselves a chance to develop new and better insights. Rather, they are comfortable taking the time necessary to come up with a great design solution. Glaser implores us to leave things fuzzy at the beginning, and argues that one problem with the use of computers in design is that computers make closure happen too soon. In stark contrast to integrative thinkers like Glaser and Vignelli, conventional thinkers exhibit the following six alternative aspects of stance: Nature of their world:
1. They believe that they see and understand the true reality of

It is quite easy to see how the six elements of stance personied by Glaser and Vignelli lead to a positive spiral of tool acquisition and experience deepening. A person with such a stance naturally develops tools for handling ambiguity, complexity and conicting models, and is inclined to garner experiences that deepen skill and sensitivity. These experiences reinforce and deepen the productive view of seeing the world as full of ambiguous and conicting models that can be leveraged for insights that can then be used to create wonderful new designs. In turn, the stance encourages the development of still-better tools and the acquisition of deeper experiences. Thats why the Glasers and Vignellis of the world seem to keep getting better and better instead of fading away. However, for anyone with the conventional unproductive stance, the acquisition of tools for handling ambiguity and complexity would be seen as a colossal waste of time. Instead, high value tools would be those for crushing opposing models, simplifying away complexity, making quick decisions and then sticking to them. The rst step in achieving the integrative thinkers stance is to imagine the possibility that the six dimensions listed above are true. But this stance can only be maintained if you have the tools and experiences to back it up. There are three key tools used by integrative thinkers:
1. Generative Reasoning rather than solely Declarative Reasoning


a given situation; Views that oppose theirs are not reality, and are therefore wrong;

The most common form of reasoning in business is declarative reasoning, which declares whether a proposition is true or false. The tools for declarative reasoning are deductive logic (the logic of what must be) and inductive logic (the logic of what is operative). Integrative thinkers go beyond declarative reasoning to embrace abductive logic the logic of what might be in order to generate creative new solutions, which is why I call the combination of deductive, inductive and abductive logic generative reasoning. Vignelli and Glaser show clear evidence of using the Generative Reasoning tool. Vignelli in particular warned against using only inductive logic: in his view, utilizing quantitative market research, an inductive logic tool, had led him almost exclusively to big design mistakes. Instead, he urged going beyond market research to imagine better design solutions.

8 / Rotman Magazine Fall 2007

2. Causal Modeling rather than Conventional Wisdom

Rather than simply employing the tool of conventional wisdom based on what Ive seen before, this is how x relates to y integrative thinkers use the more sophisticated tool of causal modeling. They ask: Under what conditions does x cause y? What is the driving force fuelling this causal relationship? And what are the mechanisms underlying it? Their goal is to build more sophisticated and creative solutions with more robust model-building. Glaser in particular stressed the importance in his work of patiently building understanding of a situation and not quickly coming to the conclusion that he was right and had gured out all the causal relationships. His approach to the Causal Modeling tool related nicely to his stance of giving himself time to work through the fuzzy situations he faces.
3. Assertive Inquiry rather than reliance on Advocacy

Becoming an Integrative Thinker

Figure 3

The Stance: 1) Existing models reality 2) Leverage opposing models 3) Better models exist 4) I can nd a better model 5) I wade into complexity 6) I give myself time to create


Inform The Tools: 1) Generative Reasoning 2) Causal Modeling 3) Assertive Inquiry


Those who rely on advocacy assume, I know best; I must get others to agree with me so we can move forward; the only reasons others dont agree is that they are uninformed or ill-intentioned. Hence they simply advocate their existing point of view, attempting to ensure it prevails, unchanged. The tool of Assertive Inquiry holds that, I have a view worth hearing, but I may be missing something, so I will enquire into the views of others, seek to understand them, and consider alternatives. This type of inquiry opens up a dialogue between the opposing models, enabling the integrative thinker to see what is good about the other model, and what parts of it are worth integrating to produce a superior model. Both Vignelli and Glaser were striking and impressive with respect to this tool. Of all speakers at the conference, they had the greatest moral authority to simply advocate their points of view as correct based on their experience and track records of success. Instead, they were highly contemplative and spoke at length about their mistakes, and the ways they had learned from others. The nal piece of the personal knowledge system puzzle is experiences. The key for integrative thinkers is to accumulate experiences that both deepen their mastery and nurture their originality; conventional experiences attend to one or the other, but not both. Mastery without originality becomes rote, and in due course becomes a cul-de-sac. Originality without mastery is shallow, if not aky. Mastery, however, provides the foundation for great originality, while originality establishes new foundations on top of which greater mastery can be built. More than anything, Vignelli and Glaser illustrated the power of experiences that combine mastery and originality. Between the two of them, they have accumulated over a century of professional experiences. Each has established mastery in a number of domains. However, each has also managed to combine that with persistent originality. Vignelli was particularly interesting on this point as he showed a chair that he reprised 20 years later when he discovered materials and techniques that could be applied to the task in new

Inform Experiences: 1) Deepening Mastery 2) Nurturing Originality



ways. Not satised with his mastery of the existing design, he dove enthusiastically into the task of exploring a new design.
In closing

Is it easy to become an integrative thinker? No, but it is doable. My advice is to take baby steps by starting a positive reinforcing spiral and letting it accelerate to your benet. Experiment by adopting some of the six stances described here. Then, try out one of the three tools Ive outlined. And seek out one or two experiences that both deepen your mastery and nurture your originality. Over time not overnight, but slowly your thinking will improve. And as you improve, you will nd the spiral will gain a momentum of its own. Such is the journey and destination that is Integrative Thinking.

Roger Martin is dean and professor of Strategic Management

at the Rotman School and chair of Ontarios Task Force on Competitiveness, Productivity and Economic Progress. His second book, The Opposable Mind: How Succesful Leaders Win Through Integrative Thinking, will be published by Harvard Business School Press in December.
Rotman Magazine Fall 2007 / 9

The renowned strategist and author on the merits of micronance, confronting our biases, and how outsourcing is really about importing innovation.

Thought Leader Interview:

C.K. Prahalad
By Karen Christensen
Upon viewing images of metropolitan India, many people are struck by the jarring images of poverty. Instead, you see a beehive of entrepreneurialism and creativity. What are you seeing that most of us miss?

The difference lies in trying to go one step beyond the obvious. The fact that poverty exists, we can all plainly see, but if you are curious, you ask yourself, how are these people able to survive? What are they doing to keep themselves alive? The best way to describe it is a sort of childlike curiosity, but with a business focus. Once you ask yourself these questions, you begin to see aspects of their lives that arent readily apparent the entrepreneurial talent, the energy, the persistence and the hopes that these people have that are otherwise masked. The real trick for business people is to ask themselves, how can I connect with people who are so utterly unlike me? They appear so different, but at the same time, they can teach us a lot.
In The Fortune at the Bottom of the Pyramid, you and your coauthor argue that there is $13 trillion in untapped purchasing power within impoverished countries. Since the books release [in 2004], have rms begun to grasp these opportunities?

Business Review [February 2007] that looks at co-creating businesses with civil society. This will lead to a new social compact for business. The real question is: how is the private sector looking at this picture? I believe that multinational companies are shifting dramatically. Whether it is Microsoft, Intel, Unilever, Procter & Gamble, Nestl or Danone all of them are experimenting, some vigorously, and all of them believe that this market is critical to their future. So yes, there is a signicant amount of discussion and experimentation going on. In the next ve or six years, I dont think we will still be discussing the bottom of the pyramid (BOP) as some strange concept; rather, there will be a discussion about how we can build new business models and creative solutions for a fundamentally new category of global consumers.
Some people argue that in general, markets for selling to the poor do not involve signicant economies of scale. How then, can companies make a prot from the BOP?

Yes, in fact, Im pleased to say that the developmental agencies the World Bank, the International Finance Corporation and the United Nations Development Programme have all basically accepted our thesis that the private sector can make a signicant difference in eradicating poverty. In addition, the social sector and NGOs are increasingly being less adversarial and more collaborative about our idea. I recently co-authored an article in Harvard
10 / Rotman Magazine Fall 2007

Actually, the exact opposite is true: when you have ve billion poor people, that is very large scale. The problem is not volume, its margins: the real question is how to build business models that are totally scalable at low cost and low-capital intensity, and that is a very different question. The volume is there, and theres tremendous opportunity if you can manage your cost structures right. My prescription has always been this: dont start from a position of cost+prot=price; start from price-prot=cost. That means you start with affordable prices for the poor, but with world-class products not luxury products, but the same standards that you or I

I choose to use the word consumer because consumers are given dignity and choice, and the biggest problem of poverty is a lack of dignity and choice.

would enjoy. And then you must be protable, so therefore price minus prot equals to the challenge cost, and you have the ability to experiment not just with technologies, but with business models. One great example is pre-paid cards for cellphones, which allow people to access phones without necessarily having a home address.
Your critics argue that rather than viewing the poor as consumers, we should focus on their role as producers that we should emphasize buying from them, rather than selling to them. How do you respond to this?

that you and I buy. In the U.S. alone, the poverty penalty is about $65 billion. This is not my work, its the work of the Brookings Institution, which released a report about two months ago. So the book doesnt just talk about the poor as consumers, it looks at them as both micro-consumers and micro-producers; and its not just about consumption, its about increasing incomes.
How important is micronance [the practice of providing nancial services such as microcredit, microsavings and microinsurance to the poor] to eradicating poverty?

Obviously these people didnt read the book. I choose to use the word consumer because consumers are given dignity and choice, and the biggest problem of poverty is a lack of dignity and choice. Also, there are some very interesting examples of increasing livelihoods in the book: we look at subsistent farmers being connected through a new logistics and information highway by ITC eChoupal in both national and global markets; and we talk about EID Parry and Amul, both of which are increasing livelihoods in a variety of ways. But a more interesting, somewhat nuanced argument which some people dont get is that our goal is to increase both livelihoods and incomes: if a poor person is going to borrow money from a local money-lender at 500 per cent interest, and your rm is able to provide funds for him at 20 per cent interest through a micronance vehicle or a bank, ask yourself the question, have you increased this persons income or not? He or she is going to borrow the money either way for her daughters wedding, or because someone is sick in the family so the choices are, 500 per cent vs. 20 per cent? That is as good as increasing income, as far as Im concerned. One of the more counter-intuitive examples is that high-quality products and services provided by the organized private sector are increasing incomes. I use the term poverty penalty in the book: this is the fact that poor people pay signicantly more for everything
12 / Rotman Magazine Fall 2007

I think it represents a very good start, but micronance by itself is not good enough. You need to put other elements into place, and one of them is access to markets for these people. Micronance can make them entrepreneurs, but an entrepreneur is unlikely to succeed unless they can nd a market. And Im not just talking about local handicrafts; even if you own a few buffalos, and you want to sell their milk, you need access to refrigeration and to a logistical framework, etc. So micronance is a good start, but other pieces need to be added to the puzzle to create success.
You have said that poor nations are incubating new business models that will transform the competitive landscape of entire global industries. With their limited resources, how are they able to do this?

Their limited resources are the very reason they are able to do this. When people have limited resources, they are forced to create fundamentally new innovations in order to get things done. For as long as you have high aspirations and low resources, you will be innovative. The very essence of entrepreneurship is a designed mismatch between aspiration and resources. And thats exactly what is happening in poor countries. They cannot throw money at a problem, so they have to throw creativity at it.

When people have limited resources, they are forced to create new innovations to get things done. The essence of entrepreneurship is a designed mismatch between aspiration and resources.

Bangalores Narayana Hrudayalaya Hospital charges a at fee of $1,500 for heart bypass surgery that costs 50 times as much in the U.S. and insures 2.5 million people against serious illness for 11 cents each per month. Despite this, the Hospital is highly profitable. What can Western health care learn from this model?

A lot of people think it is just cost arbitrage, but I think it is actually innovation arbitrage. These people have fundamentally changed the way heart surgery is done. Their work processes are very different from those in North America: they leverage talent very differently, and they have been able to leverage capital more effectively. They run all their equipment 24/7, and their physicians are highly specialized to the point where individuals only specialize in certain types of heart surgery. They are not general cardiac surgeons, and they can afford to do that because of huge volume. These surgeons do 25 operations per day many times more than a Toronto or New York hospital would do; and in doing so, they become world-class specialists. They are also developing lots of cutting-edge, low-cost equipment. Most of the equipment used in medicine today is relatively old: CAT scans, X-ray machines, echocardiograms, EKG machines these are all old technologies. What they are doing at Narayana is adding new software to these old machines and building new capabilities onto them.
You have said that outsourcing isnt about exporting jobs; its about importing innovation. Please explain.

world, are going to win. Access to talent and innovation is the spirit of the next round of global competition. If you start with this premise, outsourcing is just a manifestation of the search for speed, innovation, quality, and at the same time, the added benet of lower cost. Many companies went into it for cost reasons, but they are now realizing that the real reason to outsource is talent and innovation.
You are known for forcing managers to shake free of their dominant logic. How do you go about this, and why is it so important?

If you want to keep your company competitive, managers cannot be xated in old ways of thinking. It is important to be able to change our mental models, so that our map changes. Otherwise, we will be driving around with an old map, which isnt very smart. I basically force managers to look at opportunities, and show them that there are many ways to do the same thing. I show them role models, and most importantly, how to amplify weak signals. The goal is for people to understand that there can be a different way, and forcing them to confront their own biases. For example, to return to the imagery in your rst question, when I go to India I see the entrepreneurial drive of the poor, but others dont see it. The key is to get people to recognize what they see and, more importantly, what they dont see, and why.

People tend to believe that countries compete: countries dont compete, companies compete. Motorola competes with Nokia; Nokia competes with Samsung. We need to ask ourselves, how does a company become more competitive? The answer is, they seek out the best talent and are always looking to improve speed, cost and creativity. If that is what the game is all about, then the companies that are able to access these things, anywhere in the

C.K. Prahalad is the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan Ross School of Business and a globally-recognized consultant whose client list includes AT&T, Citicorp and Unilever. He is the best-selling author of The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Prots (Wharton School Publishing, 2006) and coauthor of The Future of Competition: Co-Creating Unique V alue with Customers (Harvard Business School Press, 2004). BusinessWeek has said that he may well be the most inuential thinker on business strategy today.

Rotman Magazine Fall 2007 / 13


Policy decisions at the organizational, corporate and governmental levels should be more heavily inuenced by considerations related to well-being peoples sense of purpose and satisfaction with their lives.

by Ed Diener and Martin Seligman


increasingly involved in the economies of developed nations, virtually all of which now have systems for measuring national production and consumption. Economics plays a central role in policy decisions because it is widely assumed that money increases well-being. However, distressingly large and measurable slippages between economic indicators and well-being have emerged in recent years, indicating that well-being itself needs to be assessed more directly. Since World War II there has been a dramatic divergence between real income (after taxes and ination) and life satisfaction in the United States, and a similar pattern can be seen in the data from other nations. Even more disparity shows up when ill-being measures are considered: depression rates have increased 10-fold over the same 50-year period, and rates of anxiety are also rising. Its not that well-being isnt in demand: most people rank happiness and satisfaction ahead of money as a life goal, and the purpose of the production of goods and services and of policies in areas such as education, health, the environment and welfare is to increase well-being. If well-being is the common desired outcome, it follows directly that society should measure it to provide a common metric for evaluating policies. It is high time that we developed a system of well-being indicators not to supplant economic indicators, but to supplement and enhance their value by placing them within an overarching framework of well-being.

Dening Well-Being

Modern economics grew as a handmaiden to the industrial revolution, and together they produced an explosion in the production of goods and services. Since the time of Adam Smiths Wealth of Nations, governments have taken an active role in steering economies, for example, by adopting monetary controls, employment and wage laws, trade tariffs, banking and investment laws, antitrust laws, and income taxes. At the time, a concern with economic issues was understandably primary: meeting simple human needs for food, shelter, and clothing was not assured, and satisfying these needs moved in lockstep with better economics. However, subsequent industrial developments made these goods and services widely available. Because goods and services are plentiful and simple needs are largely satised in modern societies, people today have the luxury of refocusing their attention on attaining the good life a life that is enjoyable, meaningful, engaging, and fullling and using economic and other policies in its service. Well-being includes all of the evaluations, both cognitive and affective, that people make of their lives and components of their lives. It includes pleasure, engagement, and meaning:
Pleasure is characterized by positive moods and positive emotions. Pleasant emotions signify to the individual that events and circumstances are desirable, and unpleasant emotions signify
Rotman Magazine Fall 2007 / 15

that they are undesirable. Engagement involves absorption and what is sometimes referred to as ow: focused attention on what one is doing (e.g., being one with the music). Meaning is a larger judgment of belonging to and serving something larger than the self. Societal well-being is currently assessed by broad, global questions asking people how happy and satised they are overall, how satised they are with domains of life such as marriage and work, and how much they trust others. We propose that a national index should employ these same questions, but supplement them with questions targeted at specific aspects of well-being, such as engagement at work, stress due to commuting, levels of depression, and trust in neighbours. In addition, we propose that this indicator system include both a panel component (assessing the same group of individuals repeatedly over time) and an intensive experiencesampling component (assessing individuals on a daily basis for a week or two.) Thus, we are proposing a national system that is much broader and deeper than the current surveys being used, which base their ndings on just a few global items.
Sources of Well-Being

We will now review ve major domains of life that have a signicant impact on well-being, each of which reveals weaknesses in solelyeconomic indicators, and each of which should be addressed in a national system of well-being indicators.
1. Societal Characteristics

Political characteristics such as democratic institutions, govern-

mental effectiveness, and stability are all substantially related to individual well-being, as are nationwide patterns such as low divorce rates, high rates of membership in voluntary organizations, and high levels of trust. Stable political organization might be even more crucial to well-being in the short run than democratic governance. When the former Soviet bloc nations, once stable dictatorships, became unstable democracies, their well-being dropped substantially. In the 1990s, out of 68 societies, Russia, Georgia, Armenia, Ukraine, and Moldavia had the lowest enjoyment of life, from 3.0 to 4.2 on a scale from 1 to 10, suggesting that instability is a source of suffering. In Bowling Alone, Robert Putnam suggests that people prosper in neighbourhoods and societies where social capital is high that is, where people trust one another and are mutually helpful. Putnam reviewed evidence showing that communities with high rates of volunteer activity, club membership, church membership, and social entertaining (all thought to be indirect manifestations of social capital) all had higher well-being than communities that were low in these characteristics. Religious people tend on average to experience greater wellbeing than non-religious people. One study showed that life satisfaction is higher the more frequently people attend church, and that people with religious beliefs report more life satisfaction than those who say they are atheists. Across nations, a higher rate of belief in God is associated with higher average life satisfaction and a lower rate of suicide. The wealth of a nation substantially correlates with wellbeing, although there is little effect once income reaches a moderate level. Across nations, there are diminishing returns for increasing wealth above U.S. $10,000 per capita income; above

U.S. Gross National Product (GNP) and Mean Life Satisfaction from 1947 to 1998

Figure 1

Life Satisfaction for Various Groups

Figure 2
Rating 5.8 5.8 5.8 5.7 5.6 5.6 4.9 4.6 2.9 2.9

30 Life Satisfaction (scale from 0 to 10)

Adjusted GNP in thousands Life Satisfaction




Mean life satisfaction = 7.2

Group Forbes Magazines richest Americans Pennsylvania Amish Inughuit (Inuit people in northern Greenland) African Maasai Swedish sample International college student sample (47 nations) Illinois Amish Calcutta slum dwellers Fresno, California homeless Calcutta pavement dwellers (homeless)

Adjusted GNP in thousands

1940 1950



1980 1990 2000

Note: Respondents indicated their agreement with the statement Y ou are satised with your life. Using a scale form 1 (complete disagreement) to 7 (complete agreement).

16 / Rotman Magazine Fall 2007

poor people. Rising aspirations seem to nullify that level, there are virtually no increases or The wealth of a only about 70 per cent of increased income. only small increases in well-being. Moreover, nation substantially Second, happy people tend to earn higher health, quality of government, and human correlates with wellincomes than unhappy people. Finally, income rights all correlate with national wealth, and being, although there might correlate with well-being insofar as basic when these variables are statistically conis little effect once needs are fullled, and this explanation is consotrolled, the effect of income on national income reaches a nant with the evidence showing much stronger well-being becomes non-signicant. moderate level. effects of income in poorer than in wealthier income Ination is a negative predictor of the wellgroups. In sum, income historically a good surrogate being of nations: low ination predicts satisfaction when basic needs were unmet is clearly now a weak surrowith the governing party, and high unemployment predicts the ill-being of nations. Effective and trustworthy governance gate for well-being in wealthy nations. also correlates with the well-being of nations, and these effects are over-and-above those of democracy. When there is low corruption 3. Productivity and effective rule of law, people report greater life satisfaction. In an economy focused on life satisfaction, work would no longer Freedom has also been found to have a substantial relation to wellbe considered something to be endured in order to obtain income, being: economic freedom had a stronger effect on well-being in but rather would be considered a potentially-rewarding experience poor nations than in wealthy ones, whereas political freedom was in its own right. Research shows that job satisfaction and positive mood at work more important in wealthier nations than in poor nations. both contribute to the productivity of organizations. Happy employees are better organizational citizens: they change jobs less 2. Personal Income frequently and they shirk responsibility less. The costs of unhappy Although high personal income is widely associated with well-being, workers to economic productivity are enormous. Policies aimed at the relation between these two variables is intricate. The context in producing a happier workforce make sense both because they can which income is experienced, including ideology and peoples enhance well-being in an important realm of life and because they material desires and values, moderates its effects. Individuals may can increase economic productivity and protability. achieve higher happiness for themselves by earning higher incomes, The relation between job satisfaction and organizational citiwhen they move upward relative to their material desires and relative zenship can be sizable: the more satised employees are, the more to others. However, as everyones income rises in afuent societies, rising income does not seem to provide a well-being dividend. practical, helpful, and friendly they are. Many possible causes of The detrimental effects of materialism have been documentworker well-being have been investigated, and a host of factors ed: lower self-esteem and greater narcissism, greater amounts of have been implicated, from low noise levels to positive behaviours social comparison, less empathy, less intrinsic motivation and of the supervisor. These factors are summarized in Figure 3. more conictual relationships. In Figure 2, we present data on the Studies indicate that job satisfaction depends not on absolute life satisfaction of a number of groups. Respondents from the Forbes list of the 400 richest Americans are relatively high in wellbeing, yet the Maasai of East Africa are almost equally satised. The Maasai are a traditional herding people who have no electricity or running water, and live in huts made from dung. These results Characteristics of Rewarding Jobs Figure 3 thus underscore the fact that luxury is not necessary for high wellbeing. Slum dwellers in Calcutta are less satised with their lives, Opportunity for personal control although still above the neutral point on the rating scale, perhaps Opportunity for using skills sustained by the pleasures of family, religion, and work. In contrast, Variety of tasks homeless people in Fresno, California, report very low levels of Physical security Supportive supervisor well-being. We speculate that meeting ones physical needs and Respect and high status ones desires might be the crucial moderator of the effects of Interpersonal contact income on well-being. What is clear is that income per se does not Good pay and fringe benets directly drive well-being. Clear requirements and information on how to meet them What might explain these ndings? First, although peoples material desires seem to catch up to their incomes and cancel the benets of higher incomes to some degree, it appears that wealthier individuals have a smaller gap between income and desires than do
Rotman Magazine Fall 2007 / 17

Being married and having contact pay, but on pay relative to other workers with the 5. Social Relationships with ones children same education and job classication. Peoples Numerous studies support the fact that people and siblings is a satisfaction with their incomes depends also on need supportive, positive relationships and signicant predictor the incomes of others in their organization and in social belonging to sustain well-being. As a of life satisfaction, their occupation. result, frequency of participating in social activias is congeniality Job satisfaction can be enhanced in a variety ties is associated with greater happiness, better and organizational of ways, including ex-time, on-site day-care functioning, and lower mortality in the elderly. membership. facilities, plans for allowing employees to work at In our own study of very happy people, we found home, employee stock options, and generous famithat every single respondent in our happiest group ly-leave policies. Similarly, training supervisors to give reported excellent social relationships. People experience appropriate praise and feedback, facilitating friendships on the job, more positive emotions when they are with others than when they and providing the tools workers need are likely to enhance job satare alone: both extraverts and introverts experience a higher isfaction, as is selecting workers so that their personality amount of pleasant emotions in social situations. characteristics, strengths, and interests t the job. Social and community service have been shown to have a strong relation with life satisfaction, so its no surprise that people high in life satisfaction are more likely than others to be 4. Health community volunteers. Older adults participation in communiStudies conrm that happy people behave in healthier ways than ty service and other social activities has also been shown to be unhappy people. For example, individuals who report high wellassociated with greater life satisfaction particularly when these being exercise more and engage in more physical activity than individuals were no longer working. In addition, being married those who report low well-being. and having contact with ones children and siblings is a signiOptimism has been associated with longevity in several studies. cant predictor of life satisfaction, as is congeniality and In a Mayo Clinic study, optimistic patients lived about eight years organizational membership. longer on average than pessimistic patients; and in another study, Not only does companionship predict more positive outcomes, hope was associated with increased survival time in cancer patients. but lack of it predicts diverse problems. One study found that both Optimism has also consistently been found to predict outcomes in men and women with more friends had lower levels of mental discardiovascular disease. For example, greater optimism is associated tress than those with fewer friends. Elderly individuals who do not with lowered reports of symptoms of angina in cardiac patients, as well as greater longevity and lowered rates of non-fatal heart attacks. have condants or companions report lower well-being than those In a longitudinal study, researchers found that people with an optiwho do, even when demographic, health, and economic factors are mistic explanatory style had better pulmonary function than people controlled. Social isolation correlates substantially with low wellwith a more pessimistic style, and showed a slower decline in health being. Loneliness stems from a lack of condants and friends, and over an eight-year period. in turn increases the risk of psychological problems, physical impairment, and low life satisfaction. Mental health is equally signicant to well-being. In stark conMarriage serves as a major vehicle for companionship in trast to the improvement in economic statistics over the past 50 Western societies, and marital dissolution is usually accompanied years, there is strong evidence that the incidence of depression has by emotional turmoil, depression, hostility, and loneliness, even when increased enormously over the same period. Sadly, it is young people the marriage has become unhappy. Mental-hospital admissions are who are now particularly at risk. Forty years ago, the average age for highest in separated and divorced individuals, intermediate in the the rst episode of depression was 29.5, and depression was unusual unmarried, and lowest in married individuals. Happily-married in adolescence. Now it typically attacks its victims for the rst time individuals are less likely to have physical health problems or psywhen they are teenagers. The high percentage of youth experiencchological difculties than unmarried persons, and mortality rates ing severe depression at such a young age is surprising and are consistently higher for widowed, single, and divorced individuals dismaying. Depression tends to recur, and a rst onset during the teen years typically results in several more episodes in a lifetime. than for married people. In general then, positive states of well-being correlate with better We believe that social skills should be a standard component physical health and conversely, negative emotions often predict of primary and secondary education. School curricula should explicitly educate young people about the importance of longworse health outcomes. Economic statistics alone completely fail lasting social relationships. Given that not every student will enter to capture the decrease in well-being caused by physical and mental a traditional marriage, education about how to develop and nurdisorders, which is particularly signicant because mental disorders ture supportive and intimate relationships in general is an have increased substantially over the same period that developed educational imperative. economies have tripled.
18 / Rotman Magazine Fall 2007

Measuring Well-Being

We are proposing the development of a full-scale set of measures that will be sensitive to changes of well-being and ill-being in the ve major domains of life, as well as narrower measures of trust, stress, meaning, and other components of well-being. Such a set of indicators would:

Well-being is not a panacea that will in itself solve all of the worlds problems.

Include questions that are relevant to policy; Broadly and representatively sample various stakeholder groups in a nation; Include measures of broad facets of well-being, such as life satisfaction, having purpose and meaning in life, trust, engagement, depression, and positive and negative emotions; Include narrower well-being measures related to different aspects of life, such as work, health, family, community, and leisure; Include permanent measures that are used in all samples, as well as topical measures and samples that focus on specic current policy issues; Include in-depth measures over time on sub-samples in order to measure experience as it occurs and not rely on peoples recall of that experience; and Track sub-samples longitudinally to provide a better understanding of changes across time. There is no doubt that such a system will be costly to implement. The cost, however, is tiny compared with that of the economic measures that have been shown to be glaringly inadequate as measures of developed nations quality of life. Despite the costs, the benets promise to be enormous, and will include policy changes that over time will increase the well-being of the majority of citizens. Well-being measures will provide critical information needed by leaders, as well as by citizens, to make informed choices in a truly wealthy society. When people evaluate different possible courses of action at the individual, corporate, and governmental levels these measures will add a perspective that is not being captured by existing indicators.
In closing

play important roles. Well-being is not a panacea that will in itself solve all of the worlds problems. Even if it becomes the dominant paradigm one day, it must be supplemented by other values. In addition, people must be socialized for humane values in order for the well-being economy to become a desirable concept. We have reviewed several of the factors that lead to well-being to frequent pleasant emotions and engagement, to nding meaning and satisfaction in life, and to low levels of stress and depression. Our ndings suggest the following partial formula for achieving it:
1. Live in a democratic and stable society that provides material resources to meet needs; 2. Have supportive friends and family; 3. Have rewarding and engaging work and an adequate income; 4. Be reasonably healthy and have treatment available in case of mental problems; 5. Have important goals related to ones values; 6. Have a philosophy or religion that provides guidance, purpose, and meaning to ones life.

Economic indicators have for the most part served society well. However, they have glaring shortcomings as approximations of collective human well-being. We are now in a position to begin to assess well-being directly via a system of national measures that would supplement economic measures. We feel that these measures should become the central ones, and that economic indices are best understood in their relation to enhancing well-being. It is high time to grant well-being a prominent place in policy discussions.

Ed Diener is the Alumni Distinguished Professor of Psychology

It is not yet clear to people how to achieve greater life satisfaction. When asked what would improve the quality of their lives, the most frequent response people give is higher income. Until there are concrete and proven steps toward non-economic aims, people are unlikely to abandon the dominant economic paradigm. Psychology will play a central role in developing a measure of national well-being. Both scientists and practitioners will be required to determine how to rigorously assess it and how to intervene to change it. Other behavioural sciences, such as Sociology, Anthropology, Economics and Neuroscience will also

at the University of Illinois. The founding editor of Perspectives on Psychological Science, he is the author of Culture and Subjective WellBeing (MIT Press, 2003), and is listed as one of the most highlycited psychologists by the Institute of Scientic Information. Martin Seligman, a founder of the eld of Positive Psychology, is the Robert A. Fox Leadership Professor of Psychology at the University of Pennsylvania. The founding editor-in-chief of Prevention and Treatment Magazine, he is the author of What You Can Change and What You Cant: The Complete Guide to Successful Self-Improvement (Vintage, 2007) and Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulllment (Free Press, 2004).
This is a condensed excerpt from a report originally published in Psychological Science in the Public Interest, a journal of the Association for Psychological Science. The full report is available online at journals.

Rotman Magazine Fall 2007 / 19

An Interview with Sylvia Ann Hewlett by Karen Christensen


Extreme jobs and creeping non-choice are taking over our lives. Sylvia Ann Hewlett explains.

Successful professionals are working harder than ever before, leading you to coin the term extreme jobs. How do you dene an extreme job?

My colleagues and I have come up with ten types of performance pressures that are typical of extreme jobs. They range from 24/7 client demands, to working in multiple time zones, to increased mentoring responsibilities. If you are experiencing at least ve of these pressures and you work more than 60 hours per week, you have what we classify as an extreme job. Were not talking about run-of-the-mill long hours here: our denition goes to the heart of the performance pressures involved. Its the intensity of these jobs that makes them extreme. The fact that your boss can get to you at 8:00 a.m. on a Sunday morning or 10:00 p.m. on a Friday night means that theres now a kind of continual nature to the work pressure people are feeling.
One might imagine that extreme jobs would lead to burned-out, bitter professionals; but you have found that this is not the case. Why is that?

of self-actualization in their work, who feel really stimulated by being global players. However, that doesnt mean they know how to strike a balance: among the extreme-jobs crowd, 42 per cent take ten or fewer vacation days per year, and 55 per cent claim they have had to cancel vacation plans regularly. But they are clear that no one is forcing them to do this: the long hours and months without breaks are discretionary. One reason for this is that the workplace has become the social centre for many people. When your best friends and most stimulating encounters are at the ofce as is increasingly the case the prospect of working late into the night becomes much less onerous.
You believe that such all-consuming careers present dangers, not only to individuals but to society. How so?

One of the biggest surprises in my research was that, in a survey of large global companies, 76 per cent of extreme workers said that they absolutely love their jobs: they adore the challenges they face every day. They feel that theyre making a difference and stretching their minds. So there is a thread of really good news: despite the pressures, there is a marked exhilaration to these extreme professional lives. These are knowledge workers who nd a large measure

As households and families are starved of time, they become progressively less appealing, and both men and women begin to avoid going home. As a result, for many professionals, home and work now have reversed roles, with the former becoming a source of stress and guilt, and the latter a haven of sorts. If youre spending 73 hours a week at work, its obviously where a lot of your prime energy and attention is going. When you come in late at night, all thats there to greet you is an empty refrigerator and a resentful teenager, so the odds are that you will start avoiding home even more. Suddenly, ne-tuning that PowerPoint presentation for tomorrows meeting or having one last round of negotiations might be what you choose to do, because at least theres something self-fullling about those activities. Work becomes a comfort zone
Rotman Magazine Fall 2007 / 21

Work can become a comfort zone of sorts, while the truly challenging stuff is happening at home.

of sorts, while the truly challenging stuff is happening at home. The impact on employers and on companies is also very real. We have found that, for instance, the ight risk amongst these professionals is quite high: over 50 per cent of the men and 80 per cent of these women have one foot out the door, because they just dont feel that they can sustain these jobs for more than one more year. So we have a sort of revolving door of over-burdened workers.
Your research shows that 80 per cent of extreme job holders are men. Why are there so few women on the fast track?

Its precisely because women tend to value relationships more and see themselves as the keeper of relationships, so they are reluctant

to jump into jobs that require 73 hours a week. They are also more readily opting out of these jobs because they see that the costs in terms of family life and private life are signicant, and they wont tolerate these costs as readily as men. The story with regard to children is particularly powerful: 30 to 40 per cent of extreme workers nd that their kids arent doing very well; they are under-performing in school, eating lots of junk food, and watching too much television. Typically, men dont blame themselves for this: they think theres a bunch of stuff going on peer pressure, society, who knows what. Women, on the other hand, tend to draw a straight line between anything that is going wrong in their childs life and their own work schedule, so they blame themselves. In most cases, its the impact on children of these extreme jobs that is a main driver of women opting out of them.
At mid-life, between one third and one-half of all successful career women do not have children. You have said that these women have not made a choice, but a creeping non-choice. Please explain.

The Elements of Extremity

Figure 1

You have an extreme job if you work for 60 hours or more per week, are a high earner, and hold a position with at least ve of the following characteristics: 1. Unpredictable ow of work 2. Fast-paced work under tight deadlines 3. Inordinate scope of responsibility that amounts to more than one job 4. Work-related events outside regular work hours 5. Availability to clients 24/7 6. Responsibility for prot and loss 7. Responsibility for mentoring and recruiting 8. Large amount of travel 9. Large number of direct reports 10. Physical presence at workplace at least ten hours a day Surveys of high-earning professionals reveal that the four characteristics thought to create the most pressure are: unpredictability (cited by 91 per cent of respondants); fast pace with tight deadlines (86 per cent); work-related events outside business hours (66 per cent); and 24/7 client demands (61 per cent.)

What I have found is that ambitious career women, particularly those in sectors that demand extreme hours, often delay marriage and childbearing. Its hard enough to nd time to wash your hair, let alone date if youre involved in one of these high-pressure careers. Then, when they hit 34 or 35 and theyve achieved the rst rungs of their careers quite successfully, they turn around and say to themselves, Its time to nd a loving partner and form a family. Of course, the marriage market at age 35 is much more problematic for women, because unfortunately, at that point a lot of men are looking for younger women. Its denitely not impossible, but the odds of nding a partner are much slimmer than they were at age 25. Its also true that many of these women are looking for men who are as welleducated and as high-performing as they are, and that group is pretty slim to start with. If they were looking at a range of socioeconomic possibilities, they would have a wider set of choices. Those who do get married later on and then decide to have kids face a whole other set of challenges. You can spend a ton of money on fertility treatments, but having a child at age 38 or 40 is actually quite difcult. Only about 10 per cent of 40-year old women who attempt such treatments succeed in getting pregnant and having a child. So if they postpone marriage and children, many end up not forming families. Obviously, they nd lots of other ways to feed their souls Im not trying to say that these disappointments are

22 / Rotman Magazine Fall 2007

worn on their sleeves or anything; but there is this storyline going on, with ambitious career women disproportionately ending up childless and unmarried much more so than is true of their male peers, because men at age 40 with very successful careers have lots of choices in terms of mates, and obviously their fertility issues are not nearly as time-bound as those for women. So its a bit unfair.
Even high-achieving women who are married continue to carry the lions share of domestic responsibilities: only nine per cent of husbands assume primary responsibility for meal preparation and ve per cent for cleaning; and only nine per cent take time off from work when a child is sick. Whatever happened to Womens Lib?

Why Do You Do It?

Figure 2

Holders of extreme jobs answered the question, What are the main reasons you love your job? Multiple responses were allowed.



52% 43% 43% 28% 37% 42% 23% 30%

I agree that this is very distressing data. I think we all had high hopes in the 1970s, as we made our task lists every Sunday night and divvied-up the chores, that things would be different today. In my own household weve made some progress Ive certainly taught my sons how to do their own laundry but the reality is that women pick up about two-thirds of both home-care and child-care. And now for more bad news: they also pick up a majority share of elder-care responsibilities. That is the elephant in the living room right now, because obviously, with our parents living much longer, that set of responsibilities can go on for quite some time. So its not just about child-care: elder-care is also affecting men and women in very different ways.
Are you surprised that men dont pitch-in more in the homestead?

Stimulating/ High-quality Challenging colleagues gives me an adrenaline rush Men Women

High compensation

Receive recognition for work

Power/ status

I think there is a lot of structural stuff going on here. Large groups of women leave the workforce temporarily to have children, and many others are working part-time or ex-time, and these kinds of career interruptions tend to push couples in the direction of a traditional division of labour. Say you take a time-out between the ages of 32 and 35, and then you re-enter the workforce; the odds are that youve just done something quite dramatic to the division of labour in your home, because during those years you were not earning money and your husband was, and he was probably advancing in his career and paying 100 per cent of the mortgage. These discontinuities and nonlinearities in womens lives often provoke a return to a division of labour that can be very hard to dislodge. So I think there are structural things happening to exacerbate it, but there are also issues of consciousness and equity involved here.
You have found that nearly all women who leave the workforce to have children want to return to their careers (93 per cent), which means employers face a major opportunity to tap into their talents. How would you suggest they approach this complicated issue?

the world: in the U.S., 55 per cent of college degrees now go to women, and in the Health Sciences, 78.5 per cent of graduate degrees now go to women. If you combine that with the upcoming workforce shortages due to baby busts and retiring Baby Boomers, you see that on the supply side and on the demand side, its just a very different equation. These converging forces are causing employers to take this very seriously.
Overall, what advice do you have for leaders in high-performance cultures?

First of all, they must realize that, given todays demographic shifts, they have no choice but to gure out how to retain women. If you look at the stats on college graduates worldwide, only 17 per cent of them are white males. Everyone else is either a women or a multicultural person, and both of these groups have big family responsibilities. Obviously, you cant limit yourself to 17 per cent of the talent pipeline. That would ensure your competitive failure. So the demographics are on womens side for the rst time, and theres also a growing achievement gap between women and men. Women are out-performing men in tertiary education right across

The good news is that many companies are encouraging more work-life balance, and a few even go to some lengths to ensure that the policies theyve put on paper are reected in reality. For every company that does that, however, there are others afraid of creating a work atmosphere that is unattractive to A players. If an effort to establish a more measured work style means that extreme achievement will no longer be rewarded, they reason, some extreme workers will seek opportunities with rms more likely to appreciate their contributions. Some organizations certain management consulting and investment banking rms come to mind attract talent in the rst place with their famously-tough environments. Their leaders should take note, however: the attributes that give a workplace an advantage in recruiting and retention can change dramatically over time. Senior executives must think carefully about the work behaviours they are rewarding, encouraging or requiring. The signals they send will determine whether jobs become extreme, and if so, whether they remain exhilarating or simply become exhausting.
Sylvia Ann Hewlett is the founding president of the Center for Work-Life Policy, a New-Y ork based non-prot organization that seeks to enhance work-life balance. She is also director of the Gender and Policy Program at Columbia Universitys School of International and Public Affairs. Her books include Off-Ramps and On-Ramps: Keeping Talented Women on the Road to Success (Harvard Business School Press, 2007) and Creating a Life (named by BusinessWeek as one of the top ten books of 2002).

Rotman Magazine Fall 2007 / 23

by Jerry Porras, Stewart Emery and Mark Thompson

Success built to last: Creating a life that matters

Creating a life that matters is what everybody wants. Heres how enduringlysuccessful people go about it.

he term success means many things to many people, but if our conversations with over 200 individuals who have made a difference in their elds has taught us anything, it is this: success in the long run has less to do with nding the best idea or business model than it does with discovering what matters to us as individuals. Extraordinary people, teams and organizations are simply ordinary people doing extraordinary things that matter to them. Enduringly-successful people those who dene their own success and have achieved lasting impact in their eld for at least 20 years do what they do because they want to build a meaningful life. These Builders, as we call them, feel compelled to create something new or better that will endure throughout their lifetime and ourish well beyond. The dictionary denition of success is not what these people are after: impressive achievement, especially the attainment of fame, wealth or power. Notice that nowhere in this widely-accepted

denition do you nd any reference to meaning, fulllment, happiness or lasting relationships. No mention of feeling fully alive while engaged and connected with a calling that matters to you. No thoughts about creating a legacy of service to the world. Yet those are all realities that people who have lasting success say they value most in life and work. For Builders, the real denition of success is a life and work that brings personal fulllment and lasting relationships and makes a difference in the world in which they live. The question is why the rest of us tolerate any other denition. Folks who chase a fantastic but vain hope for fame, wealth, and power for its own sake may even achieve it, only to become miserable people. Not that there is anything wrong with that, as Jerry Seinfeld would say, but we think that the current denition of success is a potentially-toxic prescription for your life and work. It is a description that makes you feel more like a failure than a success if its the standard against which all meaning in your life is measured. Sure, you might be a little strange if you did not enjoy the
Rotman Magazine Fall 2007 / 25

impressive achievement of something that you planned or intended. But when you talk with Builders, you will hear that wealth, fame and power are not actually goals or accomplishments for most of them. Money and recognition are external factors outcomes of working passionately on something they consider a personal cause or calling.
Abandoning Popular Delusions

When you feel pressure to pursue the elusive outcomes of traditional success, its often driven by the burden of making a living, pleasing others or achieving status. Ironically, it appears that success often will fade, vanish or become the dungeon of your soul unless it is not your primary objective. Builders tell us that when success just means wealth, fame and power, it doesnt last and it isnt satisfying. Instead, people who seek to build long-term success by their own denition insist that success may never come without a compelling personal commitment to something you care about and would be willing to do with or without wealth, fame, power or public acceptance. In reality, most Builders are hailed as leaders in their eld usually long after they commit to their calling or to a particular way of living in the world that holds special meaning to them. The mainstream media stories about successful people along with wishful thinking about instant gratication or a magic pill for success may make it seem as if they were overnight successes, but it rarely happens that way. Builders mostly toil with every ounce of their energy and persistence, with heart and soul, for their whole lives. They become lovers of an idea they are passionate about for years and years creating something that continually seduces them into obsessing over every detail, losing track of the passage of time. In a real sense, its something that theyd be willing to do for free, for its own sake. Quincy Jones wouldnt give up music if it wasnt popular, nor would Nelson Mandela rest until apartheid was crushed. Its hard to retire from an obsession. Jack Welch is no more likely to stop teaching his brand of business than Maya Angelou is likely to stop writing poetry or teaching. They do it because it matters to them.
Searching for Meaning

term, and why its tough to keep a career on track for decades. It may be why Hollywood celebrity becomes synonymous with short-term relationships and long-term addictions. You read about these folks all the time in People Magazine and the W all Street Journal the lifestyles of the rich, the famous and the unbelievably disappointed. These are the people who so many of us aspire to be, and yet even these idols nd themselves incomplete, feeling much less excited than when they had nothing but the promise of their imagined future. You either know a person like this, or you are one. To avoid this poignant dilemma, be careful what you wish for. When achievement for you or your organization comes without meaning, it doesnt last. Builders experience a success that does not leave them half full, as can often be the case for those who pursue only material treasures or other short-term measures instead of their own internal denition of lasting fulllment.
The Essential Elements of Success Built to Last

Too many people at some point in their lives set goals and go on to achieve them, often brilliantly, only to nd that they are mysteriously disappointed, empty and unhappy. Could this be why, despite acquiring material luxuries undreamed of even a few decades ago, there is a rising epidemic of clinical depression and suicide among the wealthiest citizens in America, China and other rapidly growing economies? The World Health Organization predicts that depression will be the second leading cause of disability by 2020 a prediction that is, well, depressing. How is it possible to achieve the very denition of success and yet nd happiness so eeting? Builders say its a simple matter of being cheated by the absence of knowing what really matters to you in your life, not just for today, but for the long term. This is why people who win the lottery have such a terrible track record of staying happy or sober two years later. Its also one of the reasons why nine out of ten start-up companies fail to sustain themselves for the long
26 / Rotman Magazine Fall 2007

In hundreds of interviews, we learned that Builders nd lasting success when three essential elements come into alignment in their lives and work. The rst element is Meaning. What you do must matter deeply to you in a way that you as an individual dene meaning. Its something that youre so passionate about that you lose all track of time when you do it. Its something that you are willing to recruit other people to, but will do it despite criticism and perhaps even secretly do it for free. In fact, you could not be paid to not do it. Success is about building lasting relationships and serving others, said Azim Premji, chairman of Wipro in India. He took the reins of the Bangalore-based rm at age 21 when his father died, then turned it from a edgling hydrogenated cooking fat producer into an almost $2-billion information technology services company. When it comes to creating lasting success in your life and career, Premji asked, Dont you think that building a meaningful lasting relationship with yourself about what matters to you is a good place to start? The second element is a highly-developed sense of accountability, audacity, passion and responsible optimism. We call it ThoughtStyle. In an interview back before his famous ad campaign, Steve Jobs told us that enduringly successful people think different. They have a talent, yes, and perhaps some even have a genius. But they also have a ThoughtStyle that supports their special accomplishments. As Gerard Kleisterlee put it, When you can organize your thinking around creating real value, and your thoughts remain focused on what is important to creating that value despite all the incoming distractions, crisis and complexity crashing down all around youthen youre really lucky because you have a sustainable model for your work and your life. Kleisterlee is chairman, president, and CEO of Royal Philips Electronics in the Netherlands, with over 160,000 employees in 60 countries and 2005 sales of more than $37 billion. The third element is ActionStyle. Enduringly-successful people nd effective ways to take action. This is hardly mind-blowing news, but there is more to ActionStyle than rst meets the eye. Many Builders told us about times in their lives when they had a clear sense of meaning, but found it almost impossible to make things happen to turn meaning and thought into action. Be thoughtful about meaning, but dont let that paralyze you.

When you envision something that is meaningful to you that seems to be ideal or perhaps even perfect, sometimes its like a beautiful pastry too lovely to ruin by eating it, says Alice Waters, the restaurateur and pioneer in organic cooking who, through an initiative called the Edible Schoolyard, is determined to change the world, one mouthful at a time. Anyone who has a perfect picture in his or her head of what must be done and what matters also knows that the results of acting on that idea might never be as perfect as that image in their mind, Waters said. The reason this happens is because moving from thought to action puts idealism and beauty at risk as your dream might lose something in the translation! Ultimately, its about the pleasure of work itself weve almost completely forgotten about that. The quality of loving the work is one of the most important values that we can bring to people, Waters said with an appreciative eye on the talented chefs who were passionately tossing, chopping and stirring lunch in her award-winning restaurant, Chez Pannise. They looked like sculptors as they arranged individual masterpieces on each plate. Do it because its worth doing even if you cant quite make it as perfect as your original fantasy, says Jack Jia, who grew up with nothing but a head full of dreams in Chengdu in Chinas Sichuan Province. Today, hes a serial entrepreneur, president of the Hua Yuan Science and Technology Association, and founder and CEO of Baynote. If you refuse to do something you believe in, your mind will never leave you alone. It just will torment you. If it really matters, you might as well get on with it despite the problems that will occur when you take on a new challenge. Any new beginning, anything creative, will get messy in parts, he said. If you do it with your eyes wide open, with discipline, it will only get better when you do it more. Without discipline, some overly-ambitious folks encounter the opposite problem all action and no meaning cautions Singapore-based entrepreneur and government advisor, Peng Ong. People who nd action irresistible for its own sake often discover theyre taking the wrong hill. Youve got to get yourself and your team all on the same page about what success will require of you. Think about what matters and the people you are serving rst. Then, organize your thoughts and creativity around that to make it happen. Taking action without stopping rst to determine what you hold meaningful is a big reason things dont last. Builders use a special goal-setting process and even encourage contention to help them achieve those aspirations.
Three Simple (But Not Easy) Pieces

Three Simple (But Not Easy) Pieces

Figure 1





In our research we discovered that when aligned, these three elements an individually-defined Meaning, a creative ThoughtStyle, and an effective ActionStyle form the foundation on which you can build and sustain the experience of success. One way to remember these elements is to think of them as the three primary colors of success built to last. When you overlap the primary colors of red, blue, and green, what do you get? A bright, white light. If there is a right target to go after, this is it. Builders dont seek goals for their own sake; they nd something that holds great meaning for them rst, so meaning is on top, informing the rest of the model. Builders manage their thoughts in ways that keep

them on track and then take relentless action in pursuit of what matters to them (meaning). The great opportunity in life and work is to make that target in the center as big as possible by bringing all three circles together and increasing the degree of overlap. Become consciously aware of what matters to you and then rally your thought and action to support your denition of meaning. That is what we call alignment. As these elements come together to constitute a single target of white light, it gets easier to hit the mark in your life and actually experience success that lasts. Of course, this is a simple model for a very complex and often challenging process. The greater tendency is for these three circles to drift apart wildly out of sync. Without continuous effort, many forces at work and at home make it difcult to keep the alignment together. Much is said today about the importance of loving what you do, but most people simply dont buy it. Sure, it would be nice to do what you love, but as a practical matter, most people dont feel they can afford such a luxury. For many, doing something that really matters to them would be a sentimental fantasy based on wishful thinking. Listen up heres some really bad news: its dangerous not to do what you love. The harsh truth is that if you dont love what youre doing, youll lose to someone who does! For every person who is half-hearted about their work or relationships, there is someone else who loves what theyre half-hearted about. This person will work harder and longer. They will outrun you. Although it might feel safer to hang onto an old role, youll nd your energy is depleted and, miraculously, youll be the rst in line for the layoffs when they come. You may have noticed that we now live in a global economy where job security is a contradiction in terms. All you have is your personal capital, and were not talking about your money: its your talents, skills, relationships and enthusiasm. Making success last takes a level of tenacity and passion that only love can sustain. Without it, youll collapse under the weight of the hardship that you are bound to encounter.
Rotman Magazine Fall 2007 / 27

Your co-workers or competitors who love their work try harder, move faster, and, frankly, get better opportunities to move up and contribute than people who only do things for a living.

Making a life is as important as making a living. This is not an either-or decision: builders do both. You will hear this from most everyone who has enjoyed lasting success: entrepreneurs, government and religious leaders, artists and educators, single parents, social workers, Academy Award winners, carpenters, store managers, and billionaires. You will hear it from the most hard-boiled military generals and tough business guys like Larry Bossidy, author of a warmand-fuzzy-sounding book called Execution: The Discipline of Getting Things Done. Bossidy has never been accused of being touchy-feely. On a bitter cold, clear day in Connecticut, we huddled in the tough-minded retired CEOs home ofce built in a converted barn near a frozen pond, where we talked for hours about success and leadership. When we threw the L word at him, the steely-eyed former CEO didnt flinch. Its a competitive imperative, he insisted. Only by loving what you do will you actually do more and do it better than the person sitting next to you. If you dont, well then, well nd someone who does. Warren Buffett loved his work long before he had two pennies to rub together. Today, he is one of the richest men on Earth. Y ou know, they say that success is getting what you want and happiness is wanting what you get, he said. Well, I dont know which one applies in this case. But I do know that I wouldnt be doing anything else. I always worry about people who say, Y ou know, Im going to do this for ten years. I really dont like it very well, but Ill do ten more years of this and I mean, thats a little like saving up sex for your old age. Not a very good idea, Buffett laughed. I tap dance to work and I get down there and I think Im supposed to lie on my back and paint the ceiling, or something, like Michelangelo, I mean, thats the way I feel. And it doesnt diminish. Its tremendous fun. The research libraries are lled with studies that conrm that love is not just a warm and fuzzy topic. Passionate people spend twice as much time thinking about what theyve accomplished, how doable the task ahead is, and how capable they are of it. Your co-workers or competitors who love their work try harder, try more things, move faster, come up with more great ideas, and, frankly, get better opportunities to move up and contribute more than people who only do things for a living. The job of leadership today is not just to make money, its to make meaning, says John Seely Brown, who presided over research for two decades at Xerox Park. Talented people are looking
28 / Rotman Magazine Fall 2007

for organizations that offer not only money, but spiritual goals that energize, that resonate with the personal values of the people who work there, the kind of mission that offers people a chance to do work that makes a difference. Be warned: the relentless irritation of not loving what you do makes you a pain to be around and has been clinically proven to chip away at your health. We spend our health building our wealth, says author and nancial advisor Robert Kiyosaki, paraphrasing the old proverb. Then we desperately spend our wealth to hang onto our remaining health. After several successful, but unrelated, entrepreneurial stints, Kiyosaki changed careers again at nearly age 50 to write his rst book, Rich Dad, Poor Dad, which has sold more than 17 million copies. Wouldnt it be better to do what we love in the rst place so we dont bankrupt our well-being in a vain attempt to earn our way to freedom? Frances Hesselbein, chairman and founding president of the Leader to Leader Institute, formerly the Peter F. Drucker Foundation, is best known for her leadership work with large organizations, universities, the U.S. Military, and her 13 years as CEO of the Girl Scouts of the United States of America. Like most Builders, she believes that there is a powerful synergy when you combine service to others with passion for your own work. We are called to do what we do, and when we respond to that invitation, it is never a job, it is joy and fulllment. Serving others is part of the how to be character of a great leader.
In closing

Built to Last (Harper Collins, 1997) revealed that a core ideology in other words, a set of core values and an enduring purpose beats most any great idea for building visionary companies. Our research for that book conrmed that starting out with ideological clarity matters even more than how good or bad the original product or service is. The same holds true for your career and your life. If this seems like an unreasonably high standard, remember that most new ventures fail and life isnt fair. Builders have unreasonably high standards that give them the edge to last and prosper. Whether theyre running a household or a company or a country, they come to the conclusion that doing something that matters to them is a dream worth their life.
Jerry Porras is the Lane Professor of Organizational Behaviour and

Change, Emeritus and director of the Leading and Managing Change Executive Program at Stanfords Graduate School of Business. The co-author of Built to Last: Successful Habits of Visionary Companies, his latest book is Success Built to Last: Creating a Life that Matters (Wharton School Publishing, 2006), from which this article was excerpted. Stewart Emery is considered one of the fathers of the Human Potential Movement and the author of The Owners Manual for Your Life (BookSurge 2006) and the co-author of Success Built to Last. As a consultant, he asked questions that led MasterCard to its legendary Priceless campaign. Mark Thompson is an executive coach and advisor, and co-author of Success Built to Last. He was listed by Forbes Magazine as one of Americas top venture investors with the Midas touch.

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By Chen-Bo Zhong, Gillian Ku, Robert Lount, Jr. and Keith Murnighan


Many modern organizations take great pride in the ethical standards they espouse. Unfortunately, such codes of conduct are not very effective in preventing unethical behaviour.
IT HAS BECOME ALL-TOO-APPARENT IN RECENT YEARS that when faced with tough decisions, managers often act in accordance with their vested self-interest. What is less understood is that in many social situations, self-interest is channeled into a group or a societys interests, which leads to a considerable change in our interpretations of ethics or morality. Executives involved in the Enron scandal, for

instance, emphasized the signicant inuence of their being a team player as a cause of a series of immoral acts that harmed the interests of shareholders and the general public. Research to date suggests conicting logics as to whether groups are more or less ethical than individuals. On the one hand, groups include individuals with diverse perspectives, increasing the

30 / Rotman Magazine Fall 2007

likelihood that at least one person will have a heightened moral awareness, which can then lead to an increase in the ethicality of group decisions; on the other hand, group members may dene themselves as an in-group, with anyone not in the group becoming an out-group, making less-ethical behaviour toward the out-group more easily justiable. We believe that self-interest impedes ethical decision making by exerting different inuences at different stages of decision making. In some of these stages, the inuence of self-interest can be overcome by groups, while in others, the presence of a group can accentuate the inuence of self-interest. The most widely-accepted model of ethical decision making was developed by James Rest, whose Four Component Model of Moral Behaviour consists of the following steps:
1. Recognizing the moral issue 2. Making a moral judgment 3. Making a moral decision 4. Taking moral action

In Rests model, each component in the process is conceptually distinct: success in one stage does not imply success in any other stage because the four stages are inuenced by a variety of different factors. We will now look at how self-interest and group context are affected in each of the four stages.
1. Recognition of Moral Issues

When individuals are confronted with decisions that activate self-interested motives, they may be less aware of the moral consequences of their acts. Providing extrinsic motivations such as monetary incentives for morally-desirable activities reduces intrinsic motivation in these activities, leading to decreased moral action. For example, people become less willing to donate blood when they perceive that their contribution is driven by monetary compensation rather than by charitable intentions. One reason this occurs is because extrinsic rewards make self-interest salient and crowd out intrinsic motivation. Thus, when decisions have moral consequences, salient self-interest may prevent people from recognizing the moral implications of their decisions. A goal-shielding mechanism has been proposed that also supports the notion that salient self-interest can crowd out moral awareness. In this framework, when a primary goal is activated, it tends to reduce the salience of other goals, blocking their inuence on decisions. This goal-shielding process may be facilitated when the primary goal is consistent with an individuals personal goals. Thus, when self-interest is present and salient, preserving or promoting self-interest becomes the primary goal, preventing individuals from seeing other goals such as maintaining fairness or considering the welfare of others. A group context can inuence the relationship between selfinterest and moral awareness in two ways. First, the simple activation of a group or social identity can switch a persons focus from self32 / Rotman Magazine Fall 2007

interest to their groups interests, creating the possibility of in-group bias: studies have shown that individuals with salient group identities are likely to favour their in-group members, sometimes sacricing their own interests to do so. These departures from strict self-interest do not guarantee ethical action, however, because individuals who identify with their in-group often act against outsiders. Similarly, people are most inclined toward unethical action when they act to support themselves and their group members. In fact, individuals who are committed to group goals may be as blind to the potential moral pitfalls in their decisions as individuals who are absorbed by their own self-interest. To the extent that selfinterest is incorporated into and replaced by in-group interest, we expect that both crowding out and goal-shielding mechanisms decrease the likelihood that an individual will see the moral implications of their decisions. Second, although group members various perspectives can increase the probability that moral dimensions will be explicitly discussed, this advantage may depend heavily on a specic groups composition. Even if diverse perspectives surface, they can easily get lost in group discussions. Empirical studies have shown that groups are more likely to not discuss unique knowledge when that knowledge is controversial. Thus, the presence of a group may not necessarily increase moral awareness because self-interest may be served by the groups interests and diverse perspectives can be lost in group discussions. This suggests that when groups can further group members selfinterest, moral awareness and ethical decisions may be less likely. On the bright side, such a pessimistic view of groups may only be likely when self-interest and group action are both linked and salient. When self-interest can be separated from group processes, groups may be more morally aware and ethical.
2. Making a Moral Judgment

Self-interest can also inuence moral judgment. Moral judgments have been shown to follow a cognitive moral developmental process ranging from the pre-conventional (characterized by a concern for the physical or hedonistic consequences of actions); to the conventional (characterized by a concern for the maintenance of role expectations, relationships, and the social system); and the post conventional (characterized by a concern for individual rights and abstract ethical principles). Individuals achieve superior moral or ethical judgment when they progress to post-conventional concerns. Although individuals are capable of higher-level moral reasoning, they often reason at moral development levels that are lower than the maximum, which suggests that the presence of self-interest can lead to a shift in their moral focus. In other words, post conventional reasoning, i.e., concerns for individual rights and abstract ethical principles, does not preclude lower level, pre-conventional or conventional reasoning. Even though Enron executives may have been able to reason at the post-conventional level, they relied heavily on conventional reasoning and emphasized the importance of fullling role expec-

tations as a team player when they made corporate decisions that were morally lacking. This kind of convenient moral compromising allows individuals to self-justify unethical actions. Ultimately, any unethical decision that involves self-interest can be justied using pre-conventional moral reasoning, that is, acting against ones interests is unnatural. This kind of logic has received social conrmation, in some cultures. Rather than viewing the cognitive moral development system as unidirectional (from lower to higher level reasoning), we believe that individuals are able, sometimes motivated by self-interest, to move between different levels of reasoning. Group interaction can, however, attenuate the impact of selfinterest on moral judgment. Groups that mix individuals at different stages of moral development have been shown to induce more moral behaviour, even by group members who had not progressed far on the moral development stages. Furthermore, cooperatively-oriented others can successfully persuade competitively-oriented partners to be cooperative rather than competitive in their interactions.
3. Making a Moral Decision

If individuals identities and self-interests are intimately tied to their in-group, they are likely to be relatively unaware of the consequences of their actions on the out-group.

Individuals who face a conict between self-interest and a moral choice often realize the moral implications of their actions. However, knowing whats right does not necessarily lead to corresponding intent. Moral Approbation Theory suggests that individuals rely on the opinions of reference groups when they make decisions. Thus, individuals may judge an act to be immoral but still engage in it if everyone else in their reference group is behaving the same way. Decisions in groups diffuse the responsibility of immoral acts, at least in terms of the actors perceptions. An extreme example is mob behaviour, in which the anonymity of a group can lead people to engage in unethical acts that they would otherwise avoid. Indeed, the social support from a single ally may be sufcient to increase the likelihood of unethical behaviour. Thus, groups can exacerbate the temptation of self-interest by providing social support for unethical behaviours and diffusing responsibilities.
4. Taking Moral Action

feel anger and indignation, they fail to consider that feelings of fear may prevail in cases of actual harassment. Numerous other explanations have been posited to explain individuals inaccurate forecasts. For instance, we often have difculties correctly envisioning future situations. Although we consider nearby events in realistic terms, carefully matching predictions with our abilities to fulll these predictions, higher-level construals that centre around social desirability reign for more distal events. Alternatively, when we have little experience with a future situation, we may apply an inappropriate theory to predict our behaviour and feelings. Individuals making moral decisions may make similar mispredictions. Their actions may deviate from their moral intentions because they underestimate the temptation of self-interest and overestimate their ability to regulate their moral actions. Thus, because individuals fail to accurately predict their future emotions and behaviour, our best intentions may fail to translate into our best actions. When we consider inaccurate forecasts, it is unclear what will happen in a group. On one hand, a group may help us to more completely envision a moral situation that we are unfamiliar with, thereby improving the accuracy of our predictions. On the other hand, the presence of in-group members may result in impressionmanagement concerns and particularly-inaccurate moral forecasts.
The In-Group/Out-Group Divide

Even when individuals understand and acknowledge moral intent, their intentions may not translate into behaviour. The literature on affective and behavioural forecasting indicates that individuals are particularly inaccurate predictors of their future emotions and their future behaviour. For instance, although academics anticipated feeling miserable about being denied tenure, when actually faced with the event, they did not react as negatively as they originally anticipated. The common tendency to be affected by egocentric biases allows individuals to feel holier than thou, believing that they will act more charitably than they actually do. Women tend to report that they will directly confront a harasser when asked about hypothetical harassment scenarios. In reality, however, they often fail to voice their concerns when they have been harassed. Such behavioural mispredictions may be driven by affective mispredictions although women predict that they will

When the in-group/out-group divide is salient, individuals can serve their own interests by competing with their out-group. History has often documented how a strong in-group identity can exacerbate the wrongdoing that is inappropriately attributed to an out-group (e.g., Nazi Germany and the Second World War.) Religious and ethnic conicts that have given a new and depressing meaning to the word cleansing provide numerous modern-day examples of the potential enormity of in-group vs. out-group conict. To say that these events exemplify unethical decisions represents a serious understatement. If individuals identities and self-interests are intimately tied to their in-group, they are likely to be relatively unaware of the consequences of their actions on the out-group. Indeed, consideration of the moral consequences of a decision for out-group members may be quite rare. Further, individuals may receive considerable social support from their in-group members with respect to moral intent: if all
Rotman Magazine Fall 2007 / 33

Unethical actors often claim that their compatriots should share not only in their fortunes, but also in their misfortunes.

asking them to share in the blame for their own unethical acts or they can actively choose against the groups interests when their self-interest is sufciently strong.
In Closing

in-group members subscribe to their joint group interests, actions that violate the interests of out-group members can be easily justied. Thus, a consideration of the impact of self-interest on Rests four moral stages suggests that out-groups may be treated unethically. Since in-group members are more psychologically proximal than out-group members, the concept of moral intensity predicts that individuals should be more morally aware of issues involving in-group members than those involving out-group members. If the self and in-group members are psychologically connected, moral awareness of in-group members should be high, suggesting that moral behaviour will be particularly likely towards in-group members. However, the differences between an individuals self-identity and the identity that he or she derives from in-group members provide an opportunity for self-interest and in-group interests to diverge. Thus, individuals may not act in their in-groups interests when their own self-interest conicts or when they have already engaged in an unethical act. In the former case, individuals whose self-interest and ingroups interests are both salient face a difcult dilemma, i.e., a choice between the self and the in-group. These choices are necessarily interdependent because choosing one rather than the other can immediately inuence the other: choosing the self can alienate the group; choosing the group can increase mutual commitment among the groups members. Departures from in-group memberships provide a behavioural indication, that self-interest dominates an individuals valuation of their in-group interests. Acting for the group rather than the self similarly indicates that self-interests are not primary in this particular case. In the latter case, if individuals have acted unethically, they can lay off some of the responsibility for their actions by claiming that their underlying motivations originated within their in-group. Ironically, although sharing responsibility for unjust acts with a random person is unlikely, individuals can share injurious responsibilities amongst the group members by broadly justifying their acts as socially determined because of the collective nature of in-groups. It is not rare, for instance, for unethical actors to claim that their compatriots should share not only in their fortunes, but also in their misfortunes. By appropriating the norm of fairness, individuals who want to diffuse their culpability can use their in-group membership to help them avoid seeing themselves as immoral. The interplay of interests between the self, the in-group, and the out-group provides a number of possible outcomes to any ethical decision-making process. Individuals can choose to favour themselves or their in-group; they are much less likely to favour their out-groups. In addition, they can disfavour their in-group by either
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We concede that self-interest has an evolutionary advantage over ethics and morality. When in conict with ethical principles, both self-interest and in-group interests are the enemy of ethical decision making. Organizations that can establish social support for moral action; espouse wide-ranging consideration of the moral consequences of individual and group decisions; and emphasize the need for moral awareness, judgment, intent and action may be able to collectively benet from a reduction in unethical actions. Given the salience and strength of self-interest, team and organizational leaders must work hard to provide the kinds of supportive, ethical structures that will allow ethical decision making to ourish. Broadening the basis for evaluations to the performance of all related work groups and the organization in general might also help align incentives more effectively and blunt the immediate and potent impact of unitary self-interest. In addition, unethical actions may be curbed if it is made clear that acting unethically for the sake of the group is unacceptable. In an era of expanding technology and the ability to interact electronically rather than personally, we fear that the expanding social distance between group and organizational members will contribute to an undermining of the chances for ethical decision making. Instead, we may need to revert to bubba psychology, i.e., what we learned from our grandmothers. In other words, we must inculcate a strong moral conscience, and this must come early long before individuals become members of formal, complex organizations. We encourage rms to select moral torch-bearers and, given their potential for extended impact, distribute them carefully throughout the organization. These individuals will require sufcient formal support so that their unnatural stance can be personally heard in all of an organizations groups. Without this kind of personal inuence, self-interest becomes a solution that is far too easy. The institutionalization of internal moral compasses is a tall order for any team or organization. It is also one that requires relentless attention and consistent support from management. An awareness of moral consequences is insufcient to generate ethical actions. It appears, in the end, that morality requires individual, group and organizational support to succeed.

Chen-Bo Zhong is an assistant professor of Organizational Behaviour at the Rotman School of Management. Gillian Ku is an assistant professor of Organizational Behaviour at the London Business School. Robert B. Lount, Jr. is an assistant professor of Management and Human Resources at the Fisher College of Business. Keith Murnighan is a Harold H. Hines Jr. Distinguished Professor of Management and Organizations at the Kellogg School of Management.

This is an excerpt of a chapter from Research on Managing Groups and Teams, Volume 8 (Elsevier, 2006).

Founding Partners Corner:

Colin le Duc

Generation Investment Management founding partner Colin le Duc talks about the real needs of consumers, the gap between GDP per capita and life satisfaction, and our collective progress on addressing climate change.
Interview by Karen Christensen

Describe Generation Investment Managements philosophy.

Our fundamental philosophy is twofold: that investment results are maximized by adopting a long-term investment horizon, because the majority of a companys value is determined by its ability to generate cash-ow over the longterm; and that sustainability issues can impact a companys ability to generate those returns and therefore must be fully integrated with rigorous fundamental equity analysis to achieve optimal long-term results. A big part of our challenge is the ght against short-termism in the capital markets. The sustainability research we do is really an analysis of the shareholder implications of long-term environmental as well as social and geo-political change. Investors often pay insufcient attention to issues that are really important for the long-term, such as climate change, and we

believe our analysis of these longer term trends gives us a competitive advantage. By seeking companies focused on long-term value creation, we hope to invest in rms that are part of the solution to global challenges.
Climate change is one of your key areas of focus. Describe how business will be affected by climate change.

Business will be impacted in some very profound ways. Climate change is a material sustainability challenge for many industries, but it also presents incredible opportunities. The solar and wind industries are two fairly obvious examples, but there are also opportunities in building efciency. Companies that tackle sustainable design, architecture and control systems are another part of the solution. Our belief is that rms that are preparing for a carbonconstrained world will be at a competitive advantage. This is true
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Colin le Duc is one of six founding partners and head of research at Generation Investment Management LLP, whose chairman (and founding partner) is the Honourable Al Gore.

in the industrial sector, the utility sector, auto and mining, and in some aspects of the nancial sector as well. So climate change does really have a profound impact more material in some than others on almost every sector of the global economy.
Have we made any real progress in addressing climate change?

The good news is that right this minute, we have the ability to solve a good portion of the climate change issue just by virtue of the technologies that we already have. Obviously, we hope that over time, more new technologies will be developed. In terms of using alternative resources such as wind and solar, I think were getting there pretty rapidly, and in terms of building efciency, there will be huge opportunities for various aspects of industry that are involved in building systems that are just smarter and more energyefcient. In simplistic terms, the climate change issue is really about cars, coal and buildings, and we have opportunities in all of these areas that can help to deal with it right now.
According to BusinessWeek, 80 per cent of CEOs believe that climate change is a potential risk, but only 40 per cent are doing something about it. Why are CEOs and people in general so complacent about this issue?

how you would use your human capital during those periods, as well as security concerns. We view pandemics as a systemic difculty that companies really need to be aware of. Again, many excellent companies are coming to that conclusion perhaps the Avian Flu was a wake-up call for some, but a number of them have also been dealing quite expertly with HIV-AIDS. If youre doing business in certain areas it is really important for investors to understand how you feel about these issues, especially in the BRIC countries.
In The Fortune at the Bottom of the Pyramid, C.K. Prahalad argues that there is $13 trillion in untapped market opportunity in the poorest regions of the world. How is Generation approaching this?

We have found that the very best CEOs actually do take this seriously, not just in the context of risk to the planet but in risk to their bottom line and to their shareholders. Having said that, the failure to correctly understand climate risk is a huge danger for many businesses. Creating innovate strategies for efciency for better environmental performance will become a real competitive advantage, and we believe that people will see that over time. We have already seen the discussion change fairly dramatically over the past year-and-a-half in terms of the understanding of the people at the highest levels of corporations. An awful lot of good work is being done, and those that seize it will ultimately gain that competitive advantage we talked about.
Another area of focus for your rm is pandemics, including HIV/AIDS, which you believe have the ability to erode the stable operating environment for business over a long-term horizon. Please explain.

We agree that the base of the pyramid is really interesting in a number of ways, and C.K. Prahalad and Stuart Hart have led the way in understanding the tremendous opportunities in these markets. But we think that there are two things to look at here. First, we are beginning to see some very interesting direct opportunities for companies. The large multinational corporations are experimenting and looking to nd the models that can work and be sustainable over time. Its not an easy thing to master, but we have condence that over the next ve to 10 years, a number of large corporations will nd and benet from these opportunities, and that it will begin to be signicant in terms of revenue. Particularly in the nancial area, opportunities exist right this minute, and were looking at these closely. We also view this in the sense that the base of the pyramid provides an important lens on the quality of a rms management and how it is going to exercise leadership and innovate. If you are dealing in poor areas, such as Africa and Asia, it is an important component of your business to understand what is meant by the base of the pyramid. If you dont, that should give investors pause as to the quality of your rms management. In the end there are two opposing risks in addressing the worlds poorest markets: the rst is not doing anything and missing out on the growth opportunities; the second is getting it wrong and suffering reputational damage, or worse, negatively impacting vulnerable communities.
Generation has identied a progress gap between GDP growth and life satisfaction at the top of the pyramid. Please explain this.

We have studied the investment implications of pandemics in the BRIC countries [Brazil, Russia, India and China], and our view is that pandemics, which include HIV-AIDS and Avian Flu, can have a profound impact on the erosion of a stable operating system for businesses in the countries in which they exist. There are obviously signicant impacts at the macro level to the GDP of these countries, but there are also huge impacts in the disruption of dayto-day services and what it would do to issues such as poverty, and
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The sad truth is that despite 50 years of economic growth in developed countries, the gap between economic prosperity and personal well-being has actually widened. Society is undergoing a fundamental shift from material want to meaning want, with ever large numbers of people reasonably secure in terms of living standards, but feeling they lack signicance in their lives. The conscious

consumer market is already a $250 billion market, growing at double digits. And changing consumer values are mirrored by changing employee expectations. The good news for business is that companies through the work they do, the products they sell and the way they treat their staff have opportunities to address the real needs of their employees, customers and communities, and in so doing, create enduring value. As an example, if you are a petroleum engineer and you just graduated with your masters degree, would you want to join a company that understands what the climate change challenges are, or one that basically denies that climate change issues exist? Or, if youre coming out of school and want to work in marketing in a retail company that, say, deals with food, would you want to work for one that is sort of on the cutting-edge on nutrition issues and is taking a look at the obesity issue and trying to work on it, or would you want to be part of a company that basically ignores these issues? I think the answers are pretty clear, and the best companies are attempting to create that kind of environment so that their employees can be productive and innovative.
You note that while companies are responsible for some of the drivers of the progress gap, they can also be part of the solution. How so?

Sample Investment Ideas

Figure 1

Industrial sector: green buildings, ecosystem restoration, climate change mitigation, products to manage energy consumption and reduce environmental impact, hybrid technology, renewables (wind, solar, biofuels, hydrogen) Financial sector: community banks, housing lending/affordable mortgage products, educational loans, health insurance and savings products, philanthropic nancial services Consumer sector: leisure, food safety, organic/fair trade, sustainable agriculture, energy efciency in the home, shifting demographics, conscious consumerism and post materialism, products with enhanced social utility Health Care sector: healthy lifestyles, alternative medicine, preventative health care, genetic testing, life-saving drugs and devices Tech/Telecom: functionality over features, clean and green design, products that knit closer ties across communities, remote services/ education, open source, control of content, wireless connectivity, harnessing the power of online communities

The concept of social capital is one way of exploring the gap between economic growth and well-being. Social capital refers to the institutions, norms and networks that enable collective action, or as some put it, the social glue that binds a group together. Fundamentally, social capital is about engagement. We must nd ways to reverse the trend of dis-engagement that is leaving people at home, alone, consuming materialism at an increasingly dissatisfying rate. Companies play a key role here, because the most common context for engagement is ones work. Its where most of us spend the majority of our time, and therefore fulllment at work can deliver broader social benets by combating social isolation, depression, even crime. Another part of the solution is trust. Even if the norms and networks in a society are clearly articulated, they only function if community members trust they will be upheld. Low trust means higher cost for security, more checks and balances, more enforcement and more propagation of laws and codes. The price of all of this is forgone investments in other priorities such as health or education, and fewer freedoms to exercise independent judgment.
Your rm has uncovered four real needs of todays consumers that suggest areas where companies can deliver enduring value. What are they?

volunteering.) Third is the need for connectivity, meaning and relationships. Personal relationships are one of the most important aspects of well-being. They link us to a sense of higher purpose. However, research suggests we are spending too much time increasing our economic wealth, rather than fostering these crucial relationships. For companies, it is no longer enough to create a product or service that is reasonably priced and adequately functional. Consumers are demanding something more such as spirituality or emotion as they seek fewer and deeper connections through the products and services they buy. The fourth need is a secure and healthy environment. In the face of sustained environmental degradation, the consumer complacency of the last 40 years may be dissipating. The link between an unhealthy environment and the health of its inhabitants is nally being internalized. For example, the life expectancy in China has gone down over the last three years, predominantly because of air and water pollution.
Describe how common purpose relates to your work.

The rst need is simplicity. Our economic system thrives on yearover-year increases in personal consumption, which can secure business growth, but also encourages customers to consume more, even if it is better for them to consume less. The second need is quality leisure. The category of recreation and leisure industries now accounts for a larger share of GDP than petroleum and utility industries. Companies that can free up time for people are extremely valuable, as are those that can get people to use that free time for self-actualization (travel, social activities, family time,

If we accept that progress has lagged GDP and that there is market demand for improvement, then we face both a social and a market opportunity. Richard Layard argues in his book Happiness that a society cannot ourish without some sense of shared purpose. Social capital is enhanced when people feel they have a role in society. In the past few years, events like the Asian tsunami and September 11th may have started to shake the global indifference much of the world has experienced since World War II. People are looking for meaningful ways to connect with causes rather than continue in a conspiracy of silence. By combining common purpose and a thirst for meaning, we can redene the concept of growth.
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THE HIGHER WE MOVE UP the organizational ladder, the more those around us let us know how wonderful we are. One night over dinner, I listened as a seasoned military leader shared his wisdom with an eager, newly-minted general. Recently, have you started to notice that when you tell jokes, everyone erupts into laughter, and that when you say something wise, everyone nods their heads in solemn agreement? The new general replied, Why, yes, I have. The older general laughed and continued, Let me help you: you arent that funny, and you arent that smart. Its only that star on your shoulder. Dont ever let it go to your head. While our belief in ourselves helps us to become successful, it can also make it very difcult for us to change. As the older general noted, the truth is that we often arent as funny or as smart as we might think. The good news is, we can all get better at what we do if we are willing to take a hard look at ourselves. By understanding why changing behaviour can be so difcult, we can increase the likelihood of making the changes we need to make, and become even more successful.

Why We Resist Change

An insurance company ran an ad some years ago showing a powerful grizzly in the middle of a roaring stream, with his neck extended to the limit, jaws wide open and teeth aring. The bear was about to clamp on an unsuspecting salmon jumping up stream. The headline read, You probably feel like the bear. Wed like to suggest that you are the salmon. The ad was designed to sell disability insurance, but it struck me as a powerful statement about how we all delude ourselves about our achievements, our status and our contributions. We often overestimate our contribution to a project, and exaggerate our projects impact on protability by discounting real and hidden costs. Many of our delusions can come from our association with success, not failure. Since we get positive reinforcement from our past successes, we think that they are predictive of great things to come in our future. The fact that successful people tend to be delusional isnt all bad. Our belief in our own wonderfulness gives us condence. Even though we are not as good as we think we are, this condence

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The more successful we become, the more positive reinforcement we get, and the more likely we are to experience the success delusion: I behave this way. I am successful. Therefore, I must be successful because I behave this way. Wrong!
By Marshall Goldsmith

actually helps us be better than we would become if we did not believe in ourselves. The most realistic people in the world are not delusional: they are depressed! Although our self-condent delusions can help us achieve, they also make it difcult for us to change. In fact, when others suggest that we may need to change, we may view them with unadulterated bafement. Its an interesting three-part response. First we are convinced that the other party is confused. They are misinformed, and they just dont know what they are talking about. They must have us mixed up with someone who truly does need to change. Second, as it dawns upon us that the other party is not confused maybe their information about our perceived shortcomings is accurate we go into denial mode. This criticism may be correct, but it cant be that important or else we wouldnt be so successful. Finally, when all else fails, we may attack the other party. We discredit the messenger. Why is a winner like me, we conclude, listening to a loser like you? These are just a few of our initial responses to what we dont

want to hear denial mechanisms. Couple this with the very positive interpretation that successful people assign to (a) their past performance, (b) their ability to inuence their success (as opposed to just being lucky), (c) their optimistic belief that their success will continue in the future, and (d) their over-stated sense of control over their own destiny (as opposed to being controlled by external forces), and you have a volatile cocktail of resistance to change. Following are four common beliefs of highly-successful people, along with the implications of these beliefs both positive and negative.
Belief #1: I Have Succeeded

Successful people have one consistent idea coursing through their veins and brains: I have succeeded. I have succeeded. I have succeeded. This strong belief in our past success gives us faith to take the risks needed for our future success. You may not think that this applies to you, but look closely. How do you have the condence to wake up in the morning and
Rotman Magazine Fall 2007 / 39

Successful people literally believe that through the sheer force of their personality, talent and brainpower, they can steer a situation in their direction.
charge into work, lled with optimism and eagerness to compete? Its not because you are reminding yourself of the screw-ups you have created and the failures you have endured. On the contrary, its because you edit out failures and choose to run the highlight reel of your successes. If youre like the successful people I know, youre focused on the positives, calling up mental images when you were the star, dazzled everyone and came out on top. When our actions lead to a happy ending and make us look good, we love to replay them for ourselves. When achievement is the result of a team effort, we tend to over-estimate our contribution to the nal victory. I once asked three business partners to estimate their individual contribution to the partnerships prots. Not surprisingly, the sum of their answers amounted to over 150 per cent of the actual prot. Each partner thought that she was contributing more than half. Successful people consistently over-rate themselves relative to their peers. Doctors may be the most delusional. I once told a group of doctors that my extensive research had conclusively proven that half of all doctors had graduated in the bottom half of their medical school class. Two of them insisted that this was impossible!
Belief #2: I Can Succeed

my successful friends, they insisted that my good fortune was really a deserved payoff for years of hard work and dedication. This was a classic successful persons response. Successful people tend to believe that good fortune is earned through an individuals motivation and ability, even when it is not. Of course, this belief makes about as much sense as inheriting money and believing that you are a self-made man. If you are born on third base, you shouldnt think you hit a triple. Successful people often believe that there is a causal link between what they have done and the results that follow, even when no link exists.
Belief #3: I Will Succeed

Successful people believe that they have the capability to have a positive inuence on the world and to make desirable things happen. Its not quite like a carnival magic act where the mentalist moves objects on a table with her mind, but its close. Successful people literally believe that through the sheer force of their personality, talent and brainpower, they can steer a situation in their direction. Its the reason why some people raise their hand when the boss asks for volunteers, and others cower in the corner, praying that they wont be noticed. People who believe they can succeed see opportunities, where others see threats. They are not afraid of uncertainty or ambiguity, they embrace it. Given the choice, they bet on themselves. Successful people have a high internal locus of control. In other words, they do not feel like victims of fate. They see their success as a function of their own motivation and ability, not luck, random chance or fate. They carry this belief even when luck does play a crucial role in their success. Several years ago, six of my partners wanted to get involved in a very large deal. Since I was the senior partner, they needed my approval. I was dead set against the deal and told them that it was idiotic. I nally agreed, but reluctantly. Seven years later my personal return from their idiotic investment exceeded seven digits to the left of the decimal. There was no way to credit my windfall other than to pure, dumb luck. When I told this story to some of
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Successful people tend to be optimists. Anyone who has ever been in sales knows that if you believe you will succeed you might not, but if you dont believe that you will succeed you wont. Optimists tend to chronically over-commit. Why? Because we believe that we will do more than we actually can do. It can be extremely difcult for an ambitious person, with an I will succeed attitude to say no to desirable opportunities. The huge majority of leaders that I work with today feel as busy or busier than they have ever felt in their lives. They are not so busy because they are losers. They are so busy because they are winners they are drowning in a sea of opportunity. Imagine: you do something wonderful at work. Suddenly, lots of people want to associate themselves with your success. They think, quite logically, that since you pulled off a miracle once, you can do it again, this time for them. Opportunities are thrust upon you at a pace you have never seen before. Since you believe, I will succeed, it is hard to say no. However, if youre not careful, you can get overwhelmed, and that which brought about your rise will bring about your fall. This I will succeed belief can sabotage our chances for success when it is time for us to change behaviour. I make no apology for the fact that Im obsessed about following up with my clients to see if they actually use what I teach them and achieve positive changes in behaviour. Almost every participant who attends my leadership training program intends to apply what has been learned back at work. Most do, and they get better, but many do absolutely nothing and might as well have spent their time watching sit-coms. When I ask the do-nothings, Why didnt you actually implement the behavioural changes that you said you would?, by far the most common response is, I meant to, but just didnt have the time to get to it. In other words, they were over-committed. They sincerely believed that they would get to it later, but later never came. Our excessive optimism and resulting over-commitment can be as serious an obstacle to change as our denial of negative feedback or our belief that our aws are actually the cause of our success.
Belief #4: I Choose to Succeed

Successful people believe that they are doing what they choose to do because they choose to do it. They have a high need for selfdetermination: when we do what we choose to do, we are committed. When we do what we have to do, we are compliant. Take teaching. Some teachers choose their profession, and love to teach, while others just do it to make a living. The best teachers

are clearly the former. They are committed to their students rather than being controlled by external forces (their pay cheque). Successful people have a unique distaste for feeling controlled or manipulated. They dont stumble on success; they choose it. Unfortunately, getting successful people to say, I choose to change is not easy. It means turning that muscular commitment on its head. The more we believe that our behaviour is a result of our own choices and commitments, the less likely we are to want to change that same behaviour. One of the best-researched principles in psychology is cognitive dissonance, which refers to the disconnect between what we want believe and what we actually experience in the world. The underlying theory is simple: the more we are committed to believing that something is true, the less likely we are to believe that its opposite is true, even in the face of clear evidence that shows we are wrong. Cognitive dissonance is the reason successful people dont buckle and waver when times get tough. But this same principle can work against them when the time comes to change course. Sometimes it is important for even the most successful people to quit doing something that isnt working, but it is extremely difcult for winners to quit.
The Superstition Trap

The four beliefs described above lter through us and create in us something that we dont want to believe about ourselves: our success delusion is actually a form of superstition. Who, me? you say. I am an educated and logical person. I am not superstitious. That may be true for childish superstitions such as bad luck ensuing from walking under a ladder, or letting a black cat cross our path. Y et to a degree, were all superstitious. In many cases, the higher we climb the organizational totem pole, the more superstitious we become. Psychologically speaking, superstitious behaviour comes from the belief that a specic activity that is followed by positive reinforcement is actually the cause of that positive reinforcement. The activity may be functional or not that is, it may affect someone or something else or it may be self-contained and pointless, but if something good happens after we do it, we make a connection. Superstition is the confusion between correlation and causality. Psychologist B. F. Skinner showed how hungry pigeons would repeat meaningless twitches when the twitches, by pure chance, were followed by random small pellets of food. In much the same way, successful leaders can repeat dysfunctional behaviour when that behaviour is followed by large pellets of money, even if the behaviour has no connection with the results that led to the windfall. One of my greatest challenges is helping leaders see how their confusion of because of and in spite of behaviour can lead to the superstition trap.
Achieving Positive Change

for years? The former is because of behaviour, the latter in spite of. The rst step in achieving positive change in your behaviour is to realize that it is inherently difcult for successful leaders to change, for all the reasons discussed above. Realize, however, that the same beliefs that have helped you get to where you are may be holding you back from where you want to go. My personal coaching clients are all either CEOs or people who have the potential to become CEOs in major corporations. I dont get paid if they dont achieve positive, measurable change, not as judged by themselves, but by their key stakeholders. These executives are brilliant individuals who have achieved amazing success and want to get even better at what they do. Even with all of this motivation and ability, every one of them will verify that changing behaviour is far from easy. How can you achieve positive change? Get in the habit of asking the key people in your life how you can improve. Recruit them in helping you get from where you are (which can be a pretty great place) to where you want to be (which can be even better). Realize that your rst inclination when people point out your areas for improvement may well be to believe that they are wrong or confused. Accept the fact that your belief in your previous success and your contribution to your teams success is probably over-stated. Give them the benet of the doubt. Be open to the fact that they may well be right and you may well be the one who is confused. Face the reality that you are only going to change what you choose to change, and that the motivation and commitment to change has to come from inside of you. Finally, watch out for over-commitment. Keep the change process positive, simple, focused and fast. Realize that your natural inclination will be to think that you can do more than you actually will do. In the past I suggested that leaders pick one to three areas for behavioural change. That was when I was young and idealistic. I now suggest that leaders pick one key behaviour and choose to get better at that. Continue to follow-up with the people that you respect, and you can keep on getting better. One of my clients, George Borst, CEO of Toyota Financial Services, was very successful in changing the behaviour that he picked for improvement: becoming a more effective coach. As we reviewed the positive results from his co-workers, he had a great realization: If I am going to keep improving as a leader, I am going to have to work on this stuff for the rest of my life! As that wise older General noted, as you move up the ranks and get that star, dont let it go to your head. Every promotion can make it harder to change. Always balance the condence that got you here to where you are today with the humility required to get you there to where you have the potential to go.

Few of us are immune to the success delusion. Pick one of your own quirky or unattractive behaviours something that you know is annoying to friends, family or co-workers. Now ask yourself: do I continue to do this because I think it is somehow associated with the good things that have happened to me? Examine it more closely. Does this behaviour help you achieve results, or is it one of those irrational superstitious beliefs that have been controlling your life

Marshall Goldsmith is the author of What Got You Here Wont Get You There: How Successful People Become Even More Successful (Hyperion, 2007) and the founder of Marshall Goldsmith Partners LLC. The American Management Association named him one of 50 thought leaders who have most inuenced the eld of management over the last four decades, and Forbes named him as one of the worlds ve most-respected executive coaches.

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Managers can use three pillars quality, breadth and honesty to develop an optimal framework for ethical decision-making.
by Max Bazerman, David Messick and Lisa Stewart Illustration by Ben Weeks

1. Quality

odays business leaders regularly face complex ethical challenges that impact themselves, their businesses, and other stakeholders. Unfortunately, they often unconsciously make decisions using underlying principles that predispose them to biases and errors in judgment. By recognizing some of these challenges, they can learn to avoid ethical danger zones and become more effective leaders. Developing a framework to improve ethical decision making entails a focus on three key areas: quality, breadth, and honesty. We will address each in turn.

To increase the quality of the decisions they make, managers must collect and consider all potentially-meaningful facts regarding the decisions consequences. This process requires recognizing potential risks, making accurate judgments of the risks associated with the strategies, and being aware of the psychological biases of decision making. Following are a few underlying principles that can impact the quality of a decision.
Ethnocentrism and Stereotypes

Given our increasingly global context, it is more important than

ever to be tolerant of individual differences in custom, practice, and style. Ethnocentrism is the view that our ways of doing things are better and that other approaches are in some way inferior. Ones own group or society seems normal, while another might seem peculiar. The implicit notion is that what is normal for us is preferable in general, and what is unfamiliar is less good. In an ethnocentric view, our groups views and values become the bar against which others are measured. The same actions by ones own group and by another group might be described using language that is descriptively comparable, yet, nevertheless, implies a negative bias toward the other. We describe ourselves as being devoted, diligent, and proud; others we may describe as being cliquish, unwavering, and egotistical. A managers ethnocentrism amplies differences between groups and cultures, increasing the risk that he or she will fail to make decisions that are ethically sound. Ethnocentrism is as much about giving special assistance to us or in-group favoritism, as it is about treating other groups negatively. For example, in mortgage lending, more minority than white applicants are turned down for loans, even after accounting for income differences, job stability, credit records, and other creditworthiness indicators. Mortgage lenders, however, claim to be equitable across racial groups. In-group favouritism suggests that the variance may not be due to cases involving the denial of qualied
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Figure 1
Quality: Vigorously seeking and accurately considering all potentially-relevant information about a decisions consequences. Breadth: Taking into account possible outcomes for all stakeholders, even those who are less obvious. Honesty: Maintaining integrity in all aspects of business, including decision making.

minority applications so much as in the approval of loans to questionably qualied white applicants. For lenders seeking to ensure equitable treatment, a review of minority loan applications that had been rejected would not detect the problem, because the pool of qualied minorities whose applications are rejected is not the site of discrimination. Instead, the lender must review questionably-qualied white applications to see if in-group favouritism exists. If it does, this will be indicated by a greater percentage of questionably-qualied white applicants receiving loans than their minority counterparts with similar qualications. Managers would improve the quality of decision-making by using this example to consider potentially-faulty assumptions in their own organizations and industries. People also often have unconscious prejudices, or stereotypes, about people who differ from us with regard to sex, nationality, race, and occupation. Managers who depend on stereotypes instead of facts about individuals are more likely to make decisions that are less fair, less correct, and perhaps less in line with the law. Companies need to embrace proactive strategies and policies for keeping such biases out of the decision-making process, such as reiterating to employees that they will not be tolerated within the organization, and approving equal-opportunity principles that are enforced. Leading companies in this area look beyond compliance measures and have gured out the value proposition of how increased workforce diversity leads to competitive advantages.
Perception of Cause


Managers must often look beyond the obvious causes and collect relevant data to determine the roots of a problem or situation. Our understanding of causality in part determines how we assess moral responsibility and whom we blame or laud an individual, an organization or a policy for a particular result. We often forget, however, even under the most transparent circumstances, causation is multifaceted and difcult to determine. When the result is an unpleasant one, any consequent disputes typically revolve around different interpretations of causation. Several years ago, more than 180 people drowned off the coast of Belgium when the ferry Herald of Free Enterprise (the Herald), which took cars from the Belgian port of Zeebrugge to Dover, England, sank in calm conditions shortly after its departure. The Herald went down because water owed into the bow doors
44 / Rotman Magazine Fall 2007

through which cars were loaded onto the ship. Tragically, these doors had been left open and the assistant bosun the crew member responsible for shutting them was asleep when the ship left port. The Herald did not have an automated system to alert other crew members when the bow doors were open or closed, even though the captain had recommended that such a system be installed. Since the rst mate was charged with monitoring the bow doors closing, the company felt that such a system was not required. In this instance, however, the rst mate was covering other duties related to a staff shortage, and he did not check to make sure that the doors were closed. Also, there was a negative check system from an electrical switch that was off when the bow gate was down so when he did not get a signal, the captain assumed this meant that everything was in order for the launch. In reality, the bulb was burned out so, although there was no signal, it was due to a completely different and unanticipated reason. The Herald was 20 minutes behind schedule when it left Zeebrugge and to make up the time, the captain decided not to pump out additional ballast the ship had taken on in order to load cars on its upper deck. This extra ballast caused the Herald to create a bow wave as it moved out of the harbor, allowing water to ow into the open bow doors, which would have been several meters above sea level without the added weight.
Focus on People

In determining the cause of this accident, whom should we blame? The list of potential culprits includes the captain, the sleeping assistant bosun, the rst mate, the executive who thought warning lights unnecessary, the individual who designed the negative check



While we tend to view human beings as causal agents, we need to recognize that systems and environments can either limit or multiply human error, which is bound to occur.

system, or the owners who did not properly staff the Herald. In assessing blame, most people tend to blame a person. Even when intricate technologies are involved (as is the case with the Herald), we nd it simpler to blame individuals since, with hindsight, we can easily imagine how they could have acted differently to prevent a given disaster. We can easily imagine an assistant bosun who stayed awake, a rst mate who made sure the bow doors were closed, and a captain who pumped out the extra ballast even though it would make it difcult for the ship to stay on schedule. We have a harder time imagining the Herald being equipped with different systems and protocols and are less likely to see these as having caused the ships sinking. If the Herald had warning lights to indicate the bow doors were open, it would not have left until they were closed. If a positive check system had been in place where there would be a signal needed to inform the captain that the doors had been closed the captain would have known that the doors were open. Human error arises within systems that differ greatly with regard to how proactive they are for preventing errors from being

made. While we tend to view human beings as causal agents, we need to recognize that systems and environments can either limit or multiply human error, which is bound to occur. From a strategic perspective, what is the simpler change to make adding warning lights or increasing employee alertness? To counteract the tendency to simply blame a person, managers should thoughtfully consider all possibilities including systems, procedures and environments to diagnose a situation and make decisions.
2. Breadth

While quality entails assessing a decisions full range of consequences, breadth requires that we account for the potential effects on all stakeholders. Using moral imagination to look beyond the direct and obvious impact of a specic decision, managers should make an effort to imagine other possible moral implications for additional stakeholders, maintaining openness to things they may not have considered. Executives must often judge the risks associated with particular strategies, outlining and assessing the range of likely outcomes. In


Figure 2

Take into account possible outcomes for all stakeholders
Potential Hazards Ignoring low-probability events Ignoring that the public will nd out Discounting the future Avoiding Danger Zones Compile list of potential stakeholders Evaluation from stakeholders perspective Be appropriately transparent Consider future consequences

Figure 3

Seek all relevent information about a decisions consequences QUALITY

Potential Hazards Ethonocentrism Stereotypes Faulty perceptions of cause Avoiding Danger Zones Use quantitative processes Have explicit corporate policies Dig deeply for root of problem



Rotman Magazine Fall 2007 / 45




We often give shorter shrift to issues that will face us in the future than we do to those with more immediate consequences, neglecting the fact that the impact of our decisions tends to grow over time.

order to make this process simpler to manage, they often curtail the range of possible outcomes that they consider. Ignoring some potential outcomes, however, can lead to various biases including ignoring low-probability events, ignoring the possibility that the public will nd out, and discounting the future.
Ignoring Low-Probability Events

Dr. Barry Maron of Abbott Northwestern Hospital in Minneapolis stated, it is a statistical argument that has little to do with real people. The importance of this information was insufciently appreciated. The point for managers is certainly not that low-probability events should drive decision-making, but rather that such events should be appropriately considered in the process.
Discounting the Future

Sometimes we avoid facing the possibility of troubling risks if we believe there is a potential for a signicant gain. For example, managers might ignore or underestimate the potential impact of a aw in a hot new product which is expected to have a dramatic impact on the rms prots. In March 2005, a 21-year-old Minnesota college student died when his heart debrillator failed to work properly. The New York Times reported in May 2005 that for three years, Guidant Corporation had knowingly withheld information from doctors about a malfunction affecting a small number of their debrillator products. Although the malfunctioning debrillator had a reported failure incidence rate of only 0.07 per cent, as

Keep honesty central in all aspects of business QUALITY

Figure 4

Potential Hazards Overcondence Self-deception Untrustworthiness of human memory Avoiding Danger Zones Follow your conscience Attempt to disprove assumptions Challenge what you think you know Keep detailed records and benchmark

We often give shorter shrift to issues that will face us in the future than we do to those with more immediate consequences, neglecting the fact that the impact of our decisions tends to grow over time. Managers who do not deal with the issue of the distribution of consequences over time will not understand why they have not been more successful, and they may face accusations that they exploited the present at the expense of the future. The bias toward discounting the future is of relevance to the United States budget decit, decaying urban centers, and global climate change. To avoid using psychological techniques for simplifying consequences, rst, develop a list of the stakeholders. One way to identify these groups is to develop a transparent decision-making process that invites stakeholder participation, including potential critics. Access to public information will differ according to stakeholder group, so a manager using this technique risks overlooking key stakeholders. Another possible approach is to invite select stakeholder representatives to be a part of the decision-making team. It is important for managers to think broadly when identifying these representatives. Potential critics may read openness as a sign that your rm has nothing to hide, nor to fear. In the past, for example, Nike was widely criticized on sweatshop labour issues. In 2005, the company adopted a stakeholder transparency approach by releasing a comprehensive company social performance report with detailed information about their factories and suppliers from around the world. Once stakeholders have been identied, the next task is to assess and judge the potential impact of a decision from the stakeholders perspectives. Executives who make socially-responsible decisions tend to view their rm in the wider community context, recognizing that the rm impacts this group. If the community opposes a company practice, it is a much better strategy to deal with this transparently, rather than being publicly ambushed by the other party at a later date. Information technology has empowered

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Managers should imagine whether their stakeholders with the most to lose would accept the reasons for their actions. If not, they may be approaching an ethical danger zone.

small groups to quickly muster strong opposition toward a corporate policy or decision in ways that were previously not possible. Finally, executives must recognize that their decisions impact the future as well the present. They must protect vital social and natural resources for future generations, while managing their rms, forgoing the appeal of privileging their own generations over future generations. Current generations should try to leave future generations with a better situation than what they inherited, and not with the bill for their own activities.
3. Honesty

Known by many different names integrity, ones North Star or moral compass honesty must be central in all aspects of business, including decision making. Managers not only need to be truthful with other people, they must also be critical of and honest with themselves. Most executives are overly certain of their knowledge. Academic surveys that ask people to respond to fact-based questions and then ask respondents to predict whether their answers are true, show that peoples judgments of their accuracy far exceed the actual number of questions they answer correctly. People who answer a sizeable set of two-option questions and claim a 75 per cent accuracy rate tend to give the correct response only 60 per cent of the time. When respondents predict 100 per cent accuracy, commonly they tend to have the correct answer in 85 per cent of the cases. Overcondence, coupled with other biases, is a harmful blind spot to making decisions that are rational and ethical, as it often leads to policies based on information that is not accurate. These policies may prove harmful to the executives making the decision and to others whom the decision affects. People who are overcondent in their own knowledge and understanding of a state of affairs will forgo a search for more and better information. Even managers who recognize that more or better information is needed may seek that information in a way that is slanted toward afrming their existing beliefs. Erroneous views of the self such as overcondence are most problematic when managers see themselves as above the normal rules, codes and obligations. If a successful manager or executive holds himself above conventional ethics, he may only follow selfimposed rules that others might view as self-serving. He may see his valuable contribution to the rm as a valid excuse for inating

an expense account or using company resources for personal benet. He might justify deceiving shareholders or employees by altering nancial reports to achieve important nancial gains on their behalf. Finally, he may do something immoral or illegal, convinced that he will never be caught. The biases that lead managers to self-deception and overcondence can also allow them to trick themselves into justifying false answers to hypothetical tests. Managers should, therefore, imagine whether their stakeholders would accept their ideas or decisions. In particular, they should ask whether the people with the most to lose would accept the reasons for their actions. If not, they may be approaching an ethical danger zone. To combat overcondence, managers should consider ways in which their decision or assumption might be wrong, or assign someone to scrutinize a decision for false assumptions and optimistic projections.
In closing

The right thing to do is not always a clear choice, and it is often not the opposite of the wrong thing to do. Unethical behaviour in organizations is commonly affected by psychological tendencies that create undesirable biased behaviour. By identifying and confronting the biases outlined here, managers can make more rational and ethical decisions and increase the likelihood of success for the organizations they lead.

Max Bazerman is the Jesse Isidor Straus Professor of Business Administration at Harvard Business School. He is the author, co-author, or co-editor of 11 books. David Messick is the Morris and Alice Kaplan Professor of Ethics and Decision in Management at the Kellogg School of Management. He is an academic advisor with the Business Roundtable Institute for Corporate Ethics. Lisa Stewart is program manager at the Business Roundtable Institute for Corporate Ethics. Prior to joining the Institute, she planned and managed executive education programs at the Darden Graduate School of Business, University of Virginia.

This article is an excerpt of a Bridge Paper published by the Business Roundtable Institute for Corporate Ethics, an independent entity established in partnership with Business Roundtable an association of 160 CEOs from leading companies to renew and enhance the link between ethical behaviour and business practice. For the complete paper, visit

Rotman Magazine Fall 2007 / 47


The typical approach to reducing dishonesty increasing the probability of being caught or the magnitude of punishment doesnt always work. A psychologically-focused approach may be more effective. By Nina Mazar and Dan Ariely
and not just in the business arena. More and more citizens and consumers also behave in ways that are ethically questionable, and cheating on exams in schools has reached epidemic proportions in virtually all Western countries. In a recent survey conducted by Accenture on insurance fraud, approximately 25 per cent of American adults approved of overstating the value of claims to insurance companies, and more than 10 per cent indicated that submitting insurance claims for items that were not lost or damaged or for treatments that were not provided is acceptable. According to Accentures press release, the Insurance Services Ofce estimates that the cost of fraud in the U.S. property and casualty industry is approximately 10 per cent of total claims payments, or $24 billion annually. Similar incidents of consumer fraud can be found in the retail

industry. According to the National Retail Federation, wardrobing the return of used clothing was estimated to cost approximately $16 billion in 2002. Another domain that is central to consumers unethical behaviour involves intellectual property theft, such as music, lm, and software piracy. Although the standards and morals linked to such behaviours are not yet well established, it is clear that the economic implications of these endeavors are large. As the Ofce of the U.S. Trade Representative estimated, intellectual property theft worldwide costs companies at least $250 billion a year, a staggering statistic considering that the copyright industries make up approximately six per cent of the U.S. gross domestic product ($626 billion) and employ four per cent of the workforce. Perhaps the largest contribution to consumer dishonesty comes from tax deception, including issues such as omitting income and inating deductions. A recent Internal Revenue
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Expected Benefits of Dishonesty and Propensity for Dishonesty According to External Rewards Theory

Figure 1

External Reward (Positive-Negative Reward)

improving consumer identiability, and increasing the number of litigations. Evidence for the number of litigations was reported in a recent article at, stating that music industry lawsuits against individuals have been ineffective at cutting peer-to-peer music swapping. Although the industry measures seem to have contributed to an increased awareness of copyright laws and lawsuit campaigns, people seem relatively unintimidated by them. An April 2004 survey revealed that 88 per cent of children between the ages of eight and 18 understood that peer-to-peer music downloading is illegal, but despite this, 56 per cent admitted to continuing the practice. There are two possible approaches for understanding and limiting future dishonesty. The widely-accepted External Rewards Theory assumes that the current strategies being used are correct, but that they are not practiced sufciently or with sufcient force. With this approach, the two major variables the probability of being caught and the magnitude of punishment should increase, thus reducing or eliminating dishonesty. At the extreme, this would mean cutting off the right arm for minor crimes and cutting more important organs for more severe crimes. The second approach the one we will argue for here questions whether the typical path is the correct one, or whether a psychologically-based approach may be more effective.
Economic vs. Psychological Theories

Degree of Dishonesty

Service (IRS) study based on special audits of randomly-selected individual income tax returns for the 2001 tax year estimates that the tax gap the difference between what the IRS estimates taxpayers should pay and what they actually pay is somewhere between $312 billion and $353 billion annually. These numbers translate into an overall non-compliance rate of 15 to 16.6 per cent.
Curbing Dishonesty

As the damages from dishonesty to societys welfare become more apparent, substantial sums are being invested in special task forces, programs and laws to ght dishonest behaviour. Unfortunately, little progress has been made. For example, although the IRS is ramping up its audits on high-income taxpayers and corporations, focusing more attention on abusive shelters, and launching more criminal investigations, the overall tax gap has not changed much. As IRS ofcials publicly state, too many audits result in no change in the amount of taxes paid. These large and expensive efforts for increased compliance seem to be a huge waste of time and money for both the taxpayer and the IRS. Similar disappointing results can be observed in anti-piracy measures, such as investing in technologies for better copy protection of CDs and DVDs, blocking unauthorized downloads,
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Standard economic theory views the individual as a rational, selsh being who is interested only in maximizing his or her own payoffs. This rational individual knows what he or she wants (and does not want) and is able to perform corresponding trade-offs to select the option that is expected to deliver the greatest positive surplus. From this perspective, the decision to be honest depends solely on the expected external benets (e.g., more money, a better position) and expected external costs (e.g., paying a ne, losing a job) to the individual. The higher the external rewards from being dishonest, the higher is the extent to which an individual engages in dishonest behaviour (see Figure 1). Such a cost-benet trade-off means that decisions about honesty are like every other decision that individuals face. Because this view has been adopted in general, and in legal theorizing in particular, efforts to limit dishonesty have assumed that the only ways to make progress are restricted to the external costs and benets of a dishonest act. The ensuing emphasis on the pervasiveness of police force and magnitude of punishment are the two simplest ways to manipulate these external costs. In contrast to the classic economic perspective, there is ample evidence from different academic elds such as Psychology, Sociology, Anthropology, Behavioural and Experimental Economics, Neuroeconomics and Neuroscience that in addition to external-reward mechanisms,

internal-reward mechanisms also exist, and these exert signicant inuence on peoples decisions. Psychology has long argued on behalf of internal-reward mechanisms. Most notably, Sigmund Freud and colleagues lectured extensively about the superego the part of the self that represents societys moral norms and values, which the individual internalizes during the course of his or her early life. The superego acts as an internal judge, rewarding or punishing the individual depending on compliance with these norms and values. Economists such as Ernst Fehr and James Andreoni have repeatedly demonstrated altruism and reciprocity in social dilemma games, and recent ndings from Neuroscience and Neuroeconomics provide further credence for the existence of internalized-reward mechanisms, pointing to the specic brain structure that might be implicated in their activation. Several studies have identied certain regions in the brain to represent a pleasure center that can be activated through different forms of rewards. For example, people show significantly increased brain activity in this area during the anticipation of monetary gains, pleasant tastes, or beautiful faces. These same brain regions are also activated in anticipation of satisfying social outcomes. One study showed how the striatum lit up when people rewarded cooperators, and another reported similar findings when people punished defectors. Together, these studies suggest that people feel good about complying with internalized social norms and values; that is, someone who cooperates should be rewarded, and someone who defects should be punished to reestablish socially-desirable behaviour. Objective self-awareness represents attention directed inward that induces self-evaluation in relation to standards that are salient or accessible in the immediate situation, which in turn increases motivation to meet those standards. Particular situations, such as being in front of a real or implied audience, being individualized, standing in front of a mirror, or writing short stories about oneself can increase an individuals awareness of him- or herself as an object in the world. When awareness of the self is increased, people are also more likely to be aware of discrepancies between how they want to view themselves (the ideal self) and how they actually behave. Given this tension and the discomfort it can create, people who are aware of it might work actively to reduce this discrepancy by either shifting attention away from the self or changing their behaviour to act more in accordance with their ideal self. In the domain of deception, this means that higher self-awareness might lead to more honest behaviour. An added complexity in the study of (dis)honesty comes from the idea of self-deception. In general, self-deception represents a biased, self-serving information ow within an individual an active but unconscious misrepresentation of reality to the conscious mind. Although it seems to be a paradox that a person could deceive himor herself, casual observation suggests that people are effective in maintaining unrealistically-positive views of themselves, often upholding beliefs in their intelligence, competence, and moral worth in the face of foolish, incompetent, and immoral behaviour.
Developing Policy Guidelines for Reducing Dishonesty

depends upon an analysis of what is driving the deceit in a particular situation. We believe that there are four general drivers of dishonesty: 1. lower external costs and relatively higher benets of deception; 2. lack of social norms, which results in a weak internal reward mechanism; 3. lack of self-awareness, which primes the activation of the internal reward mechanism; and 4. self-deception. We will now elaborate on how each of these translates into different approaches for curbing dishonesty.
1. When dishonest behaviour is caused by external rewards

Making the right policy recommendations to decrease dishonesty

If the cause for deception lies solely in greater external benets than costs, the solution is simple: the costs for dishonest actions must be greater than their expected benets. This can be achieved by increasing either the probability of being caught or the severity of the punishment. Thus, if the cause of dishonesty is based solely on an imbalance of external costs and benets, the standard legal approach of controlling the external costs is appropriate. This theory implies that it is appropriate to introduce governmental task forces, such as the Department of Justices task force on intellectual property, which, among other combat strategies, invests in increasing the number of specially-trained prosecutors. The same is true for the IRSs increase in audits and the music industrys aggressive increase in ling lawsuits against individual deceivers. Even if the cause for deception is related to the cost-benet analysis, there might be ways to increase the effectiveness and efciency of measures to combat dishonest behaviours. For example, if the probability of being caught and the magnitude of punishment are evaluated differently and research suggests that the probability of punishment is more important than increasing the severity of the punishment it might be best to allocate efforts accordingly. However, even if legislators decide to invest more effort in the probability of detection and decrease the magnitude of punishment (e.g., moving from a $500 ne for not stopping at a stop sign with 10 per cent probability of being caught to a $100 ne with a 50 per cent probability of being caught), there is still the question of what is the optimal probability for deterrence. Informing the question of what is the optimal probability for deterrence?, research suggests that the best approach is eliminating altogether the probability of being caught, that is, moving to nonprobabilistic punishments. The main argument here is that events that have low probability are unlikely to occur (by denition) and thus can have a perverse effect on learning, such that people who violate the rule and are not caught receive a positive reward for the violation, which causes them to underestimate the probability of being caught and, over time, increases their tendency to behave in this undesired way. According to this perspective, a person who expects that driving through a red light would involve a $500 ne in ve per cent of the cases is more likely to drive through it than a person who has the same expected value but with certainty of being caught (i.e., a
Rotman Magazine Fall 2007 / 51


of internal reward mechanisms that society could develop or not develop is particularly important if we consider the likely possibility that this process might have a critical period in which younger people are much more sensitive to such inuences, and that when the critical age is reached, these mechanisms remain relatively stable for the rest of their lives. Given the higher sensitivity of younger adults to social inuence and advertising, society might want to place careful boundaries for the development of such socially-based internal representations by different interested parties, such as religious, nancial and social institutions.
3. When dishonest behaviour is caused by a lack of self-awareness

denite $25 ne). More important, over time, the person in the probabilistic punishment setting is going to discount the probability of the punishment further (as long as he or she is not caught), which in turn will lead to an even greater tendency for violation. Eliminating the probabilistic component from all undesirable behaviours is impossible, but it is clear that there are some cases (e.g., driving through an intersection at a red light) in which this is possible and desirable.
2. When dishonest behaviour is caused by a lack of internalized social norms

If the reason for dishonest actions lies in a lack of internalized social norms, our primary recommendation would be to invest in educational efforts and socialization to increase the strength of the internal-reward mechanism. The key questions in this context are, how can this best be done, and is there a critical age period for the internalization of such mechanisms (as in language and visual development)? Educational efforts can be integrated in schools, social clubs, or religious institutions. Another possibility that is increasingly exercised by the government and the music, lm, and software industries is to feature public messages in an attempt to build a social norm so that a particular type of behaviour (e.g., illegally downloading music or movies) becomes socially undesirable and frowned upon. Other efforts could illustrate how such acts can hurt the rank-and-le workers, not just the big corporations, by reducing their job security or pay. When the effects of such efforts on the development of socially-based internal reward mechanisms are understood, it is important to go a step further and ask what the limits of such efforts should be, and whether society should allow all ideologies to participate in the creation of such internal rewards (e.g., what about racial prejudices or particular cults?) The question about the types
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If dishonest behaviour occurs not because of a lack of social norms but simply because of a lack of self-awareness and, thus, the degree to which internalized social norms are activated, it is important to make use of contextual cues that increase awareness when deception is about to happen namely, at the point of temptation. For example, the IRS could slightly change its forms by making them more personal, or by asking people to sign something like an honour code before they begin lling out the forms. Another possibility worth trying might be to include a survey that asks tax payers questions such as how much they care about their country, how important honesty was to their parents, how many people they think lie on their taxes, or what the typical prole is of tax deceivers. The consideration of internal rewards also suggests that the Theory of Optimal Punishment (optimal punishment trades off the benets of deterrence and the cost of punishing innocent people) should be reconsidered with these inputs in mind. If the punishment magnitude is determined in a way that makes the costs slightly higher than the benets, and if these costs also include internal costs, the optimal punishment will be lower by that amount. For example, if the expected benefit for a particular crime is Y and the internal reward for honesty is X, the standard rational model would prescribe a punishment with an expected magnitude of (Y), whereas the model that includes internal rewards would prescribe (Y) + X. The complexity is that not everyone has the same level of internal-reward mechanisms, and to the degree that these are unobservable, it is difcult to assess the true level of optimal punishment. Conversely, signs of repeated criminal behaviour, for example, can be taken as an indication for a lower level of internal reward mechanisms, causing the magnitude of X to be updated as lower. This type of framework, in which X is an individual variable, has the potential to help build a theory of repeated punishment with the same desired principles of optimal punishment but with more effectiveness. Currently, repeated crime is punished more severely, such as in Californias three-strikes-and-youre-out approach, but there is no theory or logical guideline for the magnitude of these policies.
4. When dishonest behaviour is caused by self-deception

This type of dishonesty is hands-down the most difcult to ght, because self-deception due to a self-serving bias is very robust. Several studies have shown that paying people to be more realistic in their view, making people write essays that argue the other

sides point of view, or educating people about the self-serving bias are not very successful in de-biasing people. Therefore, the most successful way to ght self-deception might be to eliminate the incentives that spawn the bias and simply eliminate the situations that can give rise to this type of behaviour. For example, experts have argued that if deceptive audits by accounting professionals are mainly due to self-deception, it might be more effective to pass laws or enforce standards among the accounting profession that bar auditors from offering both consulting and tax services to clients, prohibit hiring accountants through clients, and allow only limited-time contracts. As these examples show, ghting dishonesty caused by self-deception requires serious interventions that substantially limit the freedom and self-determination of people in certain situations.
In closing

dishonesty is also inuenced by internal reward mechanisms, and that such mechanisms should be taken into account when considering effective measures for limiting dishonesty in daily life. A psychological approach for reducing dishonesty would be based on increasing the long-term effectiveness of internal rewards (through education), increasing the short-term effectiveness of internal rewards (via contextual cues), or eliminating the possibility of dishonest acts when the cause could be attributed to self-deception. As the role of internal rewards is better understood, both preventions and punishments of dishonesty can be made more effective.

There is no question that dishonesty is, and will continue to be, prevalent in everyday life. The standard economic perspective considers one cause for dishonesty external reward mechanisms and thus emphasizes the probability of being caught and the magnitude of punishment as the sole ways to overcome it. In contrast, the psychological perspective we present here suggests that

Nina Mazar recently joined the Rotman faculty as an assistant professor of Marketing. Before that she spent several years as a post-doctoral associate and lecturer at MITs Sloan School of Management. Dan Ariely is a professor of Behavioural Economics at Duke Universitys Fuqua School of Business, and author of Predictably Irrational: The Hidden Forces that Shape Our Decisions (Harper, forthcoming).

This is an excerpt from a paper recently published in the Journal of Public Policy & Marketing.

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Rotman Magazine Fall 2007 / 53

Industries evolve along four distinct trajectories, and a rms performance can be signicantly bolstered if its leaders understand which one their industry is on.

by Anita McGahan

54 / Rotman Magazine Fall 2007

hy is it that managers so often misread clues and arrive at false conclusions about protable opportunities for their organizations? In many cases, the problem is a lack of understanding about the organizations industry structure. If you understand the nature of change in your industry, you can determine which strategies are most likely to succeed and which may backre. Such knowledge is not always easy to come by. To truly understand where your industry is headed, you have to shut out the noise from the popular business press and the pressure of immediate competitive threats to take a longer-term look at the context in which you do business. In my research I have found that industries evolve along four distinct trajectories, and a rms strategy cannot succeed unless it is aligned with the boundaries dened by the industrys change trajectory. Many companies have incurred losses because they tried to innovate outside of those boundaries. One of the most famous examples is Xerox, which is legendary for its innovations and for its struggle to harvest prots from them. By the mid 1980s, the copier manufacturing industry had matured around a business model that emphasized creative hit products. Meanwhile, the personal computing industry was in its infancy, and even though Xerox PARC had pioneered PC inventions such as the graphical user interface and the mouse, the company was unable to make inroads in this burgeoning industry that required an entirely new set of business activities. The four trajectories described here are dened by two types of threats of obsolescence. The rst is a threat to the industrys core activities the activities that have historically generated prots for the industry. Core activities are threatened when they become less relevant to suppliers and customers because of some new, outside alternative. In the auto industry, for example, many dealerships are nding that their traditional sales activities are less valued by consumers, who are going online for data on the characteristics, performance, and prices of the cars they want. The second type of threat is to the industrys core assets the

resources, knowledge, and brand capital that have historically made the organization unique. Core assets are threatened if they fail to generate value as they once did. In the pharmaceutical industry, for instance, blockbuster drugs are constantly under threat as patents expire and new drugs are developed. I will now describe the four types of industry change in depth.
1. Radical Change

Radical change occurs when an industrys core assets and core activities are both threatened with obsolescence. This trajectory is closest to the concept of disruptive change dened by Harvards Clayton Christensen. Under this scenario, the knowledge and brand capital built up in the industry erode, and so do customer and supplier relationships. During the 1980s and 1990s, an estimated 19 per cent of U.S. industries went through some stage of radical change. A good example is the travel business. Agencies core activities and assets came under re as the airlines implemented systems to enhance direct price competition (such as SABRE and other reservations systems) and as the agencies clients turned to Web-enabled systems (such as Expedia, Orbitz, and Travelocity) that offered new value (online monitoring of available ights and fares, for instance). Radical industry evolution is relatively unusual. It normally occurs following the mass introduction of some new technology. It can also happen when there are regulatory changes (as in the longhaul, trunk-route airline industry of the 1970s, for example) or simply because of changes in taste (U.S. consumers retreat from cigarettes over the past 20 years, for instance). An industry on a radical change trajectory is entirely transformed but not overnight. It usually takes decades for change to become clear and play out. The end result is a completely recongured and usually diminished industry. The overnight letter-delivery business is currently in the early phases of a radical transformation that began about ten years ago. As Internet usage has become more prevalent, e-mail has loomed as a threat to this industry. Y et business is still thriving, because the threat is still in its infancy. That is part of the good news associated with radical transformation: industries undergoing it often remain protable for a long
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time, especially if the companies in these industries scale back their commitments accordingly. Businesses also have time to develop strategic options that can be exercised in the future if they recognize the trajectory they are on early enough. For example, Federal Expresss acquisition of Kinkos will help FedEx create deeper relationships with small and midsize businesses that need document storage, management, and dissemination services. The only reasonable approach to radical change is to focus on the endgame and its implications for your companys current strategy. Exiting isnt the sole option; sometimes a few survivors can sustain protable positions after others leave the industry. The computer mainframe business, for example, is still quite large despite the threat from PC and workstation manufacturers. To consider the best strategy when your industry is on a radical change trajectory, look at your productivity gures, the pace and timing of the transition in the industry, and buyers switching costs. Early-moving companies might employ a staggered strategy pursuing incremental improvements to established businesses activities and conducting selective experiments in developing new assets. That is how encyclopedia companies responded to the radical threat that online search engines posed: they experimented with new electronic products and services while creating new distribution channels, marketing their existing products aggressively, and updating their inventory management systems. Historically, many organizations confronted with radical change have abandoned their established positions and moved into emerging lines of business incurring enormous risk in the process. Several typewriter makers, for instance, attempted to enter the PC manufacturing business only to cut short their efforts as the demands of the emerging industry became clearer (IBM succeeded with this strategy, but its success in the PC industry was closely related to its experience in other areas of computing). The alternative reinvesting in the established industry is also risky, because it commits the rm to an approach that may become unprotable. Companies dealing with radical transformation must accept the inevitability of the change and chart a course that maximizes returns without accelerating commitment to the troubled business much easier said than done.
2. Intermediating Change

Intermediating change occurs when core activities are threatened with obsolescence while core assets retain their capacity to
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create value. Sothebys, for instance, is as good as it ever was at assessing ne works of art, but, because of the technology that made eBay possible, the auction houses matchmaking activity no longer creates as much value. The challenge under intermediating change is to nd ways to preserve knowledge, brand capital, and other valuable assets while fundamentally changing relationships with customers and suppliers. During the 1980s and 90s, approximately 32 per cent of U.S. industries went through some form of intermediating change. Intermediating change typically occurs when buyers and suppliers have new options because they have gained unprecedented access to information. The core activities of industries on an intermediating change trajectory are threatened, but their core assets knowledge, brand capital, patents, or even specialized factory equipment retain most of their value if they are used in new ways. In effect, industries are on an intermediating change trajectory when their business activities for dealing in both downstream and upstream markets are simultaneously threatened. Intermediating change is occurring in auto dealerships, for example, for a number of reasons. First, traditional auto sales activities are becoming less relevant because of the Internet and because vehicles now last so long that consumers buy cars less frequently. Second, car manufacturers are seeking closer relationships with drivers and, as a result, are starting to share the management of customer relations with their dealers; in some cases, theyre trying to take over customer relations completely. Finally, individual dealers are losing control of inventory management as IT and sophisticated nancing create economies of scope that can be exploited only by larger, integrated companies. Managing a company in an industry that is experiencing intermediating change is extraordinarily difcult. Of all the change trajectories described in this article, this one is perhaps the most challenging because companies must simultaneously preserve their valuable assets and restructure their key relationships. Executives tend to underestimate the threat to their core activities by assuming that long-time customers are still satised and that old supplier relationships are still relevant. In reality, these relationships have probably become fragile. The value of core assets often escalates, which compounds managers confusion. For example, auction houses initially had a urry of heightened interest in their accumulated appraisal experience because eBay had created so much excitement about auctioning.

Identifying your industrys evolutionary trajectory on the y is difcult. To ensure accuracy, your analysis must be focused and systematic.

During periods of intermediating change, pressure in the industry tends to build until it hits a breaking point, and then relationships break down dramatically, only to be temporarily reconstituted until the cycle is repeated. Consider large brokerage rms. They had long confronted criticism about conicts of interest in their analyst organizations. But the straws that broke the camels back were the recent market downturn and accounting scandals both of which were tied to fundamental changes in the information available to investors and companies seeking investment capital. The core assets in investment brokerage including the systems for evaluating securities and for processing trades retained their value, yet old relationships no longer offered the same opportunities to generate prots. Companies facing intermediating change must nd unconventional ways to extract value from their core resources. They may diversify by entering a new business or even a new industry. Or they may sell off assets or services to former competitors. In the music industry, for instance, recording companies are beginning to sell their services la carte to aspiring musicians, rather than make huge investments in the artists up front and incur all the costs of artist development (radio promotions, choreography, and image management, among other expenses). The customer and the activities have changed, but the core resource the recording companies ability to develop new artists retains its value. In another example, some traditional auctioneers, threatened by eBay, have capitalized on their appraisal expertise online; for a fee, they will certify the value of the wares being exchanged on the Internet. By reconguring old assets in new ways, these companies are dealing effectively with intermediation. Initial returns under this change trajectory may be relatively high and then drop dramatically only to recover temporarily. The recording companies prots, for example, have been volatile as they adapt to intermediation with varying levels of success. A plateau in performance can create the illusion that reinvestment in the businessas-usual is a good idea. But organizations that recognize the trajectory their industry is on can turn relatively calm periods into opportunities for strategic transformation.
3. Creative Change

Creative change occurs when core assets are under threat but core activities are stable. This means that companies must continually nd ways to restore their assets while protecting ongoing customer

and supplier relationships; think of movie studios churning out new lms or oil companies mining for new wells. About six per cent of all industries are on a creative change trajectory. In industries on a creative change trajectory, relationships with customers and suppliers are generally stable, but assets turn over constantly. The lm production industry is a good example. Larger production companies enjoy ongoing relationships with actors, agents, theatre owners, and cable television executives. Within this network, they produce and distribute new lms all the time. This combination of unstable assets (new lms) and stable relationships (with buyers and suppliers) makes it possible to deliver superior performance over the long term. Indeed, the top companies in creative change industries usually retain their standing for long periods. Other industries evolving on creative trajectories include pharmaceuticals, oil and gas exploration, and prepackaged software. In pharmaceuticals, companies research, develop, and test new drugs and then use their administrative and marketing skills to commercialize them. In oil and gas exploration, companies manage their portfolios of exploration ventures and maintain relationships with refineries and distributors. In the prepackaged software industry, developers create and test multiple applications in the hopes that one or more will become a killer app. By applying wellhoned user-testing and marketing skills, the industry leaders perpetuate their success. The creative change trajectory, like the intermediating trajectory, has not been studied extensively. It is easy to mistake it for radical change, despite the stability of relationships within the network. When this mistake is made, companies can overreact and neglect important relationships that are critical to their protability. For example, some pharmaceutical companies became so focused on emerging methods of drug discovery that they invested capital exclusively in new research relationships and did not develop appropriate sales forces in new markets. Innovation under creative change occurs in ts and starts. Although there are several long-standing formulas for making hit movies, for example, occasionally a new genre or technical approach to lmmaking emerges. Similarly, companies in the pharmaceutical industry have been experimenting with new methods of drug discovery over the last 15 years. Despite these changes, the companies that lead these industries are not new entrants. They have retained their strength by capitalizing on their networks of relationships. There are many ways for companies in an industry on a creative
Rotman Magazine Fall 2007 / 57

Progressive evolution is like creative evolution in that buyers, suppliers, and the industrys incumbents have incentives to preserve the status quo.

change trajectory to generate strong returns on invested capital. For instance, the leading companies in these industries tend to spread the risk of new-project development over a portfolio of initiatives. As a result, their returns are less volatile than those of smaller competitors. Other tactics include outsourcing project management and development tasks.
4. Progressive Change

Successful companies in progressive-change industries tend to be viewed by the nancial community as minimally risky, with the potential for only moderate returns. Over the long run, though, these companies can actually create very large total returns for investors: Money magazine has reported that the two companies that had generated the greatest total return to shareholders during the magazines 25-year history were none other than Wal-Mart and Southwest.
Which Trajectory Are You On?

Progressive evolution is like creative evolution in that buyers, suppliers, and the industrys incumbents have incentives to preserve the status quo. The difference is that core assets are not threatened with obsolescence under progressive change, so industries on this trajectory are more stable than those on a creative change trajectory. Todays discount retailing, long-haul trucking, and commercial airline industries are evolving in this way. Progressive evolution is most similar to the kind of change that Christensen refers to as sustaining. Progress occurs, and technology can have an enormous impact, but it happens within the existing framework of the business. Core resources tend to appreciate rather than depreciate over time. Progressive change doesnt mean that change is minor or even that it is slow. Over time, incremental changes can lead to major improvements and major changes. Think of what has happened in discount retailing over the last ten years. Wal-Marts cumulative impact has been extraordinary, and the company has developed unprecedented clout. But the retailer developed that advantage by deepening existing customer and supplier relationships, not by seeking out entirely new ones. The most protable strategies in progressive change industries generally involve carving out distinct positions based on geographic, technical, or marketing expertise. The goal is to build resources and capabilities steadily and incrementally. Companies rarely get into brinkmanship or eyeball-to-eyeball competition, and they dont have to put large amounts of capital at risk before learning whether an innovation creates value. Instead, their performance depends on their quick responses to feedback. Southwest Airlines, for instance, tests new ight routes but isnt afraid to pull out if a route ultimately doesnt work under the companys approach to air travel.
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Identifying your industrys evolutionary trajectory on the y is difcult. To ensure accuracy, your analysis must be focused and systematic. I suggest the following four steps: 1. Dene your industry. You can begin by identifying the companies in your industry that share common buyers and suppliers. Many economists use a ve per cent rule to assess whether the commonality is sufcient to qualify the rms as direct competitors: if a ve per cent price uctuation by one company causes customers or suppliers to switch to another company, the businesses qualify as direct competitors. When a group of companies intend to appeal to the same buyers and rely on the same suppliers, you have additional evidence that they are direct competitors. And when companies use similar technologies to create value, it is likely that they qualify as direct competitors. 2. Dene the industrys core assets and activities. Here is an easy way to test whether something is core: if it were eradicated today, would prots be lower a year from now, despite efforts to work around whats missing? If the answer is yes, then it denitely qualies. In the auctioneering industry, for example, the capacity to evaluate works of art is a core activity. In the soft-drink industry, Coca-Colas brand is a core asset. The disappearance of either of these capabilities would seriously damage protability in their respective industries.
3. Determine whether the core assets and activities are threatened with obsolescence. To qualify, the threat must make

core assets and activities potentially irrelevant to protability. It must be signicant enough to jeopardize the survival of at least one industry leader and widespread enough to inuence every company

in the industry. Once you know whether core activities and assets are threatened, you can identify which of the four trajectories applies to the industry you are studying. 4. Evaluate the phase of the evolutionary trajectory. This step is important. Industry change generally takes place over a long period, and the options for dealing with change typically drop off sharply through each phase. It is essential to note that an industry generally evolves along just one trajectory at a time. It almost always starts out on either a progressive or creative trajectory because, collectively, companies in the industry cant capture value without a clear model for organizing their core activities. Over time, the industry may feel pressure to change these activities driven by, for example, customer demands and new technologies. The threat of obsolescence can catapult the industry onto either a radical or an intermediating trajectory. As the industry restructures its core activities and assets, the threat of obsolescence may fade, marking the transition back to a progressive or creative trajectory. A company that has survived these transitions can sometimes retain protability, although it almost always must operate at a smaller scale and with a very different approach. Industries do not shift their trajectories very often. None that I have studied has shifted between evolutionary paths more than once in ten years, so it is a good bet that a given industry has been on a single trajectory for at least a few years. And while it is sometimes possible for individual companies to inuence the trajectory

of an entire industry, the effort required is almost always too great to be worthwhile, and failure can be devastating to a companys protability or even its survival.
In closing

To get out from under industry threats, your organization must cultivate a deep understanding of how industry changes will unfold over time. How will buyer and seller relationships be affected? And are intangible assets like brand capital and knowledge capital truly adaptable across industries? The four trajectories outlined herein can help you anticipate how change will unfold in your industry, and how to take advantage of opportunities as they emerge. The work of systematically analyzing your industrys business environment is not easy, but the payoff is great: better strategic decision-making.

Anita McGahan recently joined the Rotman School as

a professor of Strategic Management. Previously, she was a visiting professor at London Business School and a professor at Boston Universitys School of Management and Harvard Business School. She is the chair of the Academy of Managements Business Policy and Strategy Division.

This article is excerpted from How Industries Change, originally published in Harvard Business Review.

R O T M A N A L U M N I R E U N I O N G A L A You are invited to celebrate your Reunion in style at the Four Seasons Hotel on May 29, 2008.
PLACE DA TE TIME COST F o u r S e a s o n s H o t e l , 2 1 A v e n u e R o a d , To r o n t o Thursday May 29, 2008 Dinner: 7:00 8:30 p.m. Dancing: 8:30 11:00 p.m. Dr ess code: elegant $185 per person, open to all Rotman alumni and guests

There will be a special reception before dinner in honour of the classes of 68, 88, 98, and 03 to celebrate their 40-year, 20-year, 10-year and 5-year Reunions. I n v i t a t i o n s w i l l f o l l o w. H o p e t o s e e y o u i n M a y ! For more information, including how to get involved with your class, please contact Michelle Zathureczky, manager volunteers and reunion coordinator, at or 416.946.3665. Or visit our website at

S AV E T H E D A T E ! S T AY C O N N E C T E D !
Rotman Magazine Fall 2007 / 59

Photos left to right: John Hryniuk, Waleed Qirbi (MBA 01)


by Karen Christensen

The world-renowned graphic designer, visual artist, and computer scientist, who was named by Esquire magazine as one of the 21 most important people for the 21st century, talks about simplicity, complexity, and the downsides of CC-ing.
Todays marketplace abounds with promises of simplicity. Why has it become such a valued entity?

We are at a tipping point right now where complexity has overrun our world, and in such an environment, greater simplicity signies greater sanity. People are rebelling against technology thats too complicated DVD players with too many menus and software accompanied by 75-page manuals. The iPods clean lines made simplicity hip, but at the same time, we often nd ourselves caught in the simplicity paradox: we want something thats simple and easy to use, but we also want it to do all sorts of complex things. Thats why its important to nd a balance between simplicity and
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complexity between how simple can you make it? and how complex does it have to be? In business, technology and design, improved doesnt always mean adding more; in many cases, it involves less. The hunt is denitely on for simpler, more efcient ways to move the economy forward.
In 2004, you started the MIT SIMPLICITY Consortium. What is its mandate?

SIMPLICITY is a design-oriented program of the MIT Media Lab aimed at redening our relationship with technology in our daily lives. Our mission is to dene the business value of simplicity

in communication, health care and play. We focus on developing designs that are simpler to understand, easier to use, and, ultimately, more enjoyable. Simplicity is a quality that not only evokes passionate loyalty for a product, but also has become a key strategic tool for businesses to confront their own intrinsic complexities. Were working with some high-prole corporate partners, including Time Inc., Lego, AARP, and Samsung, and together we are trying to understand what simplicity is, and how to implement it in business. For example, how can an online newspaper deliver the stories we want in a quick and easy-to-read format? And how can older citizens get more involved with technology? The vision of SIMPLICITY is one in which simple does not equal cheap or single-function, but rather elegance and ease of use. Were dreaming up devices that give us joy rather than feelings of inadequacy.
Are some companies better than others at addressing simplicity?

computer interfaces. The menu bar at the top of the screen hides the functionality of the application. The computer has an innite capacity to hide in order to create the illusion of simplicity. As features go into hiding and products shrink, it becomes ever-more necessary to embed the object with a sense of the value that is lost after hide and shrink. Consumers will only be drawn to a smaller, less functional product if they perceive it to be more valuable than a bigger version, so the perception of quality becomes a critical factor. Embodying quality is primarily a business decision, more than one of design or technology. The quality can be actual, as embodied by better materials and craftsmanship; or it can be perceived, as portrayed in a thoughtful marketing campaign. Exactly where to invest in real or perceived quality to get maximum return is a question with no single denitive answer. SHE requires that design, technology and business work together to realize the nal decisions that will lead to how much reduction in a product is tolerable in the marketplace.
You describe the designers approach in shorthand as relatetranslate-surprise! Please describe it.

Denitely. For example, Dutch conglomerate Philips leads in this area with its utter devotion to realizing sense and simplicity. A few years ago I was invited to join their Simplicity Advisory Board. I initially thought this was merely a branding effort, but I soon understood that their plan was to reorganize not only all of their product lines, but also their entire set of business practices around simplicity.
You have said that reaching an ideal state of simplicity can be truly complex, and that simplicity and complexity actually need each other. Please explain.

Nobody wants to eat only dessert; and by the same token, nobody wants to have only simplicity. Without the counterpoint of complexity, we could not recognize simplicity when we see it. The more complexity there is in the marketplace, the more something simpler stands out. And because technology will only continue to grow in complexity, there is a clear economic benet to adopting a strategy of simplicity to help set your product apart. We always want what we dont have: right now we want simplicity because we have so much complexity; but once we succeed in making things simpler again, were going to want complexity back. This is something very human, and its wonderful, actually.
One of your rst laws of simplicity is Shrink, Hide, Embody (SHE). Please explain it.

All design starts by leveraging the human instinct to relate, followed by translating that relationship into a tangible object or service, and then ideally adding a little surprise at the end to make the audiences efforts worthwhile. When youre trying to relate an object to your world, you have to give it some kind of reference, some kind of gateway to understanding, and then you have to translate it into something real to make the abstract into something more concrete. If you just did that, it wouldnt be very interesting, so you also want to add some special surprise; a cherry on the top. A more rational, typically German approach to design will diligently relate and translate, but will not necessarily warrant the surprise ending: a Braun shaver works perfectly, period. Contemporary British design, on the other hand, can be characterized as being heavy on the surprise factor, as evidenced by Apples innovative designs led by Briton Jonathan Ive. And the intensely pleasurable quality of Italian design drives the inversion to surprisetranslate-relate, such as Studio65s sofa inspired by a womans lips.
Describe the importance of hearing the beat of simplicity and complexity in everything we experience in life.

The simplest way to achieve simplicity is through thoughtful reduction. When in doubt, just remove. But be careful what you remove! True simplication is only realized when it is possible to reduce a systems functionality without signicant penalty. When everything that can be removed is gone, a second batter of methods can be employed; thats where SHE comes in. The rst step is Shrink: when a small, unassuming object exceeds our expectations, we are not only surprised, but pleased. A steady stream of core technologies such as nanotechnology will make things even smaller. When all features that can be removed have been, and a product has been made slim, light and small, its time for the second step: Hide the complexity through bruteforce methods. There is no better example of this than todays

When youre stuck in a tense moment, all you can hear is your own racing heart. Im a big believer in stepping back, so you can see what the bigger trends are. Notice simplicity when you see it, and notice complexity when you see it. Listening to your market like this isnt as easy as it sounds. Its very easy to get stuck in the moment, both in business and in your personal life. Consider in one day, if the sequence of events you experience occurs in the following pattern: complexity, complexity, complexity, complexity, complexity, complexity, complexity, simplicity. Simplicity becomes salvation. I recall walking through the snow in the middle of the night through my quiet neighborhood only to hear my own breathing and footsteps. Crunch, crunch crunch. The combination of a silent night and my advancement to middle age forced the rhetorical question, How many more years might I experience a peaceful winter evening
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like this? I am now more careful to feel the precious rhythm of each year of life. I hear the beat of simplicity and complexity quite clearly in everything that I experience.
Narrowness and focus mean essentially the same thing, but the former has a negative connotation while the latter has a positive one. Describe the difference.

What are some easy ways to simplify our work lives?

I was once advised by my teacher Nicholas Negroponte to become a light bulb instead of a laser beam, at a time in my career when I was all about focus. His point was that you can either brighten a single point with laser precision, or else use the same light to illuminate everything around you. Striving for excellence usually entails the sacrice of everything in the background for the sake of attending to the all-important foreground. I took Negropontes challenge as a greater goal of nding the meaning of everything around me, instead of just what I directly face. What lies in the periphery of simplicity is denitely not peripheral. We focus so much on the thing that we want to design, or achieve, but we lose touch with the fact that the whole ecosystem around it matters, too. Look at the iPod: people think its so important, but the object itself doesnt really matter its the software ecosystem that it lives in, the whole iTunes world that is built around it that is selling the iPod. Being attuned to what surrounds us in the ambient environment can sometimes help us better manage whats immediately in front of us.
We have all heard that form follows function; but you say that feeling follows form; how so?

Heres an example. I recently realized how much simpler my life would be if I no longer received messages that are CCed to me. My New Years resolution for 2007 was to CC less. How does this benet mankind and myself? First of all, it means Im wasting less bytes out there it makes me digitally green, if there is such a thing. Secondly, it saves me from the endless game of CC add-ons; like a cheapo sock in the dryer that picks up lint every cycle, an e-mail that is riddled with CCs quickly becomes fraught with ugly loose ends. Thirdly, it extends my 2004 resolution to never use BCC (which Im proud to say I have accomplished.) The danger of BCC [blind carbon copy, whereby you send the message secretly to some people, unbeknownst to the main recipients] is getting people caught into the poisonous reply-to-all on the receiving end of a BCC. I quickly delete any BCCed e-mail I receive, and also write to the sender that I am not in the practice of BCCing. Finally, by sending an e-mail without a CC, it expresses to the recipient(s) in clearest terms that I care about a specic issue that affects specic people. And I dont need an audience to ratify that clearest expression of attention.
MIT is known as a magnet for overachievers. Whats it like trying to achieve simplicity in such an environment?

Form follows function is a very confusing phrase that is used in design a great deal. It means that every function has a natural form; pricking something requires having a shape like a fork; so we have to be rational, and make the right object for the right function. But in a sense, every form creates feeling in us, too; every object we see elicits some kind of reaction, and in a sense its that reaction itself that drives the purchase, and the desire. So the feeling around the form is probably even more important than the function sometimes, because if its strong enough, youll overcome any obstacles to get it.
You say you see evidence of people pressing the mute button on emotion every day. Please explain.

Being at MIT is kind of like subjecting yourself to a daily ritual of personal inadequacy. You didnt know that? or Of course you read XYZOverachievers are an aggressive lot. Survival of the ttest governs that the person that can pull three all-nighters in a row shall one day rule the world. Thankfully, we know that in the real world, this is not the case. We all know that working hard does not always equate to working well. I read somewhere that your reaction time improves by 89 per cent after youve returned from a real (i.e. unplugged) vacation. I could certainly use that 89 per cent right now! But in order to get it, I need to commit to temporarily underachieving by taking some time off work. To work hard is good; but to take a rest once in a while is crucial.
Being constantly busy has become an epidemic. Whats the best way to deal with this reality of 21st century life?

Paradoxically, the basic challenge in our high-communication society is being able to communicate. We have so many ways to talk to people, but we dont have world peace yet. Its very strange. We have this thing called a Blackberry, which sends us messages within seconds, and we feel we have to reply to them immediately. Were sort of stuck in this reply mode, which can never get very deep. Even in a world with instant messaging, its important to be open to the emotions, not just the raw information stream itself. At the same time, emotional intelligence is now considered an important facet of leadership. The expression of emotion is no longer considered a weakness, but a desirable human trait. Our society, systems and artifacts require active engagement in care, attention and feeling. The business value may not be immediately apparent; but the fulllment from living a meaningful life is the ROE (Return on Emotion).
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A while back I experienced the busiest week of my life. Theres good busy, and theres bad busy; but this week qualied as worst busy. I was talking with my colleague David Mindell about it, and he shared with me his three secrets to life: 1. Take 24 uninterrupted hours of rest per week. 2. Dont travel too much for work, as it wastes too much time. 3. Say no to meetings. Often. I reected on his rules, and quickly realized that I constantly break all three of them. But this seems like a simple algorithm for living a better life.

John Maeda is the E. Rudge and Nancy Allen Professor of Media Arts & Sciences at the Massachusetts Institute of Technology and associate director of research at MITs Media Lab. He is the author of three books, including The Laws of Simplicity (MIT Press, 2006) and Creative Code: Aesthetics & Computation (MIT Press, 2004).

Idea Exchange

The person who tries to achieve everything ultimately achieves nothing. So getting to extraordinary in business is all about developing clarity in terms of your plans and your strategic outcomes.
Robin Sharma

Jeffrey Sachs
on how universities can help end poverty

64 68 Mihaly Csiksczentmihalyi
on achieving ow

71 Darryl Rhea
Stephane Cote
on expressing anger in the workplace on becoming your greatest self

on experiential marketing

74 Robin Sharma 77
Laura Nash
on when to say enough

80 83 Mark Albion Nancy Rothbard, Katherine 86 Phillips and Tracy Dumas

on values-based businesses on managing multiple roles

Robert Sutton
on workplace behaviour

89 92 95 Rose Patten 98 David Miller

on talent management on spirituality in the workplace

Ole-Kristian Hope
on empire building and rm disclosure

Charles Arntzen
on food as vaccine



The Big Picture

Jeffrey Sachs


UNIVERSITIES ARE SPECIAL institutions in that their mandate does not have to end with research and teaching: by denition, they can do things that other organizations cannot. Consulting rms, prot-maximizing rms and the international institutions may also have access to vast reserves of knowledge, but they are driven by boards of governors reecting geopolitical and/or shareholder interests. As a result, universities have a unique role to play in development work, with untold potential benets for research, students, and their stature on the world stage. At universities, structure and roles should follow the worlds most pressing problems. Some of these problems lie within disciplines, while other do not. In my own career, it has turned out that the problems I am most interested in do not

fall neatly within disciplines, and as a result, much of what Ive been doing for 15 years now first at Harvard and now at Columbia is to work on building interdisciplinary efforts. This is something all universities need to do, because many of todays biggest problems cannot conceivably be solved without an interdisciplinary approach. One example is economic development. We dont dare leave the solution to this to an Economics department! That would be hopeless, believe me: I worked in one for 25 years, and there is no way in the world that such a department could ever solve the problems of poverty on its own. However, when economists work together with policy experts, public health specialists, agronomists, climatologists, soil scientists, hydrologists and engineers, what they can achieve is absolutely phenomenal.

64 / Rotman Magazine Fall 2007

We need to form partnerships with the universities in countries affected by extreme poverty. Theres a lot of knowledge in our part of the world that would be very helpful to them, and vice versa.

I am very privileged to head such a cross-disciplinary research institute. The Earth Institute is quite a unique undertaking, bringing together the Earth Sciences, Engineering, Public Health, Ecology, Economics, Political Science and other social sciences. We are working together, which is not the norm in cross-disciplinary work, because we are driven by the urgency of the overarching problems of sustainable development. It will always be important to have theory and academic pursuits within every university, but in certain elds it is also extremely important to be out there on the ground. Most Economics departments and I only pick on them because I know them so well do not understand that eld work is not just a side interest. Telling an Economics student to write a dissertation based only on a dataset from Nigeria is like training a medical doctor without ever making him see a patient. We should never have students write dissertations on countries that they have not visited or worked in. Doing so entails a terrible intellectual lapse. We also need to be forming partnerships with the universities in countries affected by extreme poverty. We need to build bridges between us and them, because theres a lot of knowledge here in our part of the world that would be very helpful to them, and vice versa. If were studying globalization and we all have to be doing that in the 21st century we should be more formally connected with universities in the places we are studying. Classes and lectures should be shared via video conferencing with foreign institutions. For a lecture on China, a Chinese academic at Tsinghua University could give the lecture one week, and the American professor could give the next

lecture on another topic. We should all be thinking about ways to truly partner with universities in other countries. Global institutions like the International Monetary Fund and the World Bank cannot mobilize good science. Few scientists want to work at the World Bank, except on a shortterm basis, because its not a scientic institution its a bank. Most scientists do their work in the private sector, but these rms typically cannot do the kinds of good works in the world that universities can do, because they have a nancial stake in their contracts. Universities also have conflicts in much of what they do, but there are fewer direct, nancial conicts than in almost any other type of institution. The IMF and the World Bank are also essentially run by the U.S. government and a few other rich country governments, and they are politicized through and through, so that their advice can never be truly balanced. NGOs are wonderful institutions, but they typically lack the knowledge and expertise to be able to meet the more complex challenges. As a result, universities now have roles to play beyond our borders. At a time when 85 per cent of the worlds population lives in so-called developing countries, and about one-sixth of the world is ghting every day for survival, it is simply ludicrous to talk about development economics as just one of the courses you take in Economics. The whole discipline should be called Development Economics, with just one course on highincome economies, which only represent another sixth of the worlds population. Make no mistake, extreme poverty is not the poverty we know in North America, which is awful, unjustied and remediable; but we eliminated extreme poverty decades ago.
Rotman Magazine Fall 2007 / 65

Students are coming forward by the hundreds, because this is what they want to do with their lives. They want to do something meaningful. They want to solve real problems.

Extreme poverty means that you could die tomorrow because you are too poor to stay alive. You could get a simple infection, which requires three days of treatment with an off-patent antibiotic, but you cant afford it, because it costs a dollar and you have zero in your pocket. Or, theres no clinic within 20 miles of your village; or youre not sleeping under an insecticide-treated bed net; or theres no safe drinking water anywhere nearby, so youre constantly ingesting pathogens, and your children are carrying worms their whole lives, from their earliest days. It is reasonable to say that perhaps one to 1.5 billion people are in this situation in the world. It is also reasonable to estimate that about 10 million people die each year from poverty many of them are children and, in recent years, young adults, because of AIDS. They die because they cannot get the basics to stay alive. As a development specialist, my view is that this is anachronistic: that is how life was one hundred years ago. Weve made a lot of progress: development has reached ve-sixths of the people on the planet and has lifted them out of extreme poverty. Mercifully, for our generation, that includes most of China, and soon will include most of India. So were getting down to the narrow numbers, where you could realistically aspire to ending this phase of economic history. The parts of the world that have not yet been reached include, of course, most of sub-Saharan Africa, parts of our own continent especially the Andean region and much of central Asia, which is also one of the most economically-isolated regions in the world, because of heavy transport costs to places like Afghanistan, Tajikistan, Mongolia and so on. I believe that universities can play a huge role in ending extreme poverty in these parts of the world. The Earth Institute is in a particularly wonderful position, as a neighbour of the United Nations. Personally, I get to wear two hats: one is as Special Advisor to the UN Secretary-General, and one as director of The Earth Institute. In the process, my colleagues and I have learned a great deal from one another. Ive learned how soil nutrients work and how land that is farmed year after year without fertilizer becomes nutrient-depleted. I have to go out and see these things, because I cant gure them out via pure theory. I never learned anything like this in Economics, because I never had a serious course about agronomy and agro66 / Rotman Magazine Fall 2007

ecological systems and how they differ around the world. The Earth Institute, on the other hand, has a tropical agriculture unit that is deeply involved in our poverty reduction work. We have a malariology unit engaged in stopping the spread of a disease that is almost entirely treatable and largely preventable, and yet will claim the lives of approximately three million children this year. The situation is perverse in many ways, but one of the perversions is that the United States government has not seen t to help impoverished people, who have no resources, gain access to simple technologies like longlasting, insecticide-treated bed nets. It has tried to sell the nets at a discount to people who have no money. Both policy and science expertise are required to understand this problem. Malariologists can explain the technical options, and how to organize a country like Tanzania to tackle the disease. You need the economist to understand the issues that are blocking the solution, whether theyre matters of logistics, procurement, or underlying nance issues. You need a team to be able to address the many aspects of the problem. Despite our efforts, the unfortunate truth is that were just skimming the surface. We attended a UN World Summit last September, where we drafted much of the section on development, and now I ght every day to try to make any of those words into something real. It is not easy, especially with the particular administration we have in the U.S. right now. But its never easy here, because not enough people are paying attention to these problems, and neither are our universities. I have seen rst-hand how thrilling it is to make inroads, and how colleagues in all of these vital disciplines are lining up to get involved right now. They see issues that are deeply challenging intellectually, pose some very profound operational assistance questions, and are also just about as moving as can be. Because of the power of these issues, were nding that the Earth Institute is not just a bunch of scientists put together who dont necessarily want to talk to one another. Rather, it is now an extremely vibrant place that people are ocking to and asking, What is our piece of this growing puzzle? Students are coming forward by the hundreds, because this is what they want to do with their lives. They want to do something meaningful. They want to solve real problems. They

In Medicine, knowing the whole ecology of illness is critical. The same thing is true with development. If we dont understand the history, the transport costs, the disease epidemiology, the hydrology, the soils, were never going to get it.

want to learn the techniques to do it. They want to apprentice. I am well-versed in negotiating policy documents, or in translating an IMF program into something that is halfway sensible, at least Id like to think, and I have a good record of it. If I have students at my side, this is the only way theyre ever going to see this through, because you need an apprenticeship to learn these skills. Its too complex and too amorphous to put into a textbook. It requires learning by doing. By putting all those pieces together working across disciplines, working abroad, solving problems in the world we are seeing that the result is an incredible gift for the university. One of the things Im going to do is invite any university that wants to be part of our project to be part of it. Because this is the way students are going to understand the reality on the ground. What they see is amazing: they come to understand the hydrological cycle by trying to see how a community can have enough water; they come to understanding the nutrient cycle, the nitrogen cycle and the Anopheles-Plasmodium cycle. You see it by doing it, and if youre doing development, youd better be where it needs to be done. Im pushing a concept called Clinical Economics, and Ive given you all of its basic ingredients. My wife is a clinician. Shes also a public health specialist. I watched her for 20 years take a history of a patient, when somebody called with a fever. Its really quite a remarkable thing to watch a skilled clinician at work. The logic of the questions, the way you just ask questions, the way you drill down in a systematic algorithm, because youve got to ask certain questions rst, because if the answers yes, youve got to get them to the hospital before you ask the next question. But if the answers no, you continue down the decision tree in a very systematic way. You know that if a patient presents with fever there are 1,001 possible underlying etiologies, and its your job to gure out which one is at work. If youre doing it by phone on the initial call in the middle of the night, you have to triage or separate out the emergencies from the non-emergencies. You have to gure out whether this is something that can wait until the morning. You have to know the whole family history, because you have to understand whether that mother, say, normally reacts that way or not. So many times, my wife would say, this

woman is not normally so nervous. Something is seriously wrong. Boom: its meningitis, or another similarly urgent problem. Knowing the whole ecology of illness is critical. The same thing is true with development. If we dont understand the history, the transport costs, the disease epidemiology, the hydrology, the soils, were never going to get it. Were not training our students in this way, because we dont have clinical hospitals next door like the medical students do. So we dont actually have the possibility to develop an apprenticeship model given the way our universities are structured right now. But whats worse is that my colleagues in mainstream Economics departments dont even know this is an issue. They think theyre training people to write more journal articles, rather than training people to solve problems. And 99 per cent of what we ought to be doing is solving problems, and the other one per cent of what we do should be to help solve more problems in the future. Those of us in academia should not simply be a selfreplicating group thats isolated from the outside world. I believe we need Clinical Economics in my eld, and we need clinical practice in general. Its really a brilliant insight that was new to the United States in 1920. It is a revolution that the Rockefeller Foundation, among others, helped to install and instill: having a clinical hospital alongside the teaching, and having a teaching hospital alongside the medical school. As universities, I think this is the practitioner strategy that we ought to have and get out into the world. Its a wonderful thing to take part in solving the worlds problems, and each of us can play a role that strengthens every aspect of what were already doing in our professional, scholarly, teaching and personal lives. I urge you to bring your talents to the table and join us.

Jeffrey Sachs is the Quetelet Professor of Sustainable Development, Professor of Health Policy and Management, and director of The Earth Institute at Columbia University. The author of The End of Poverty (Penguin, 2006), he is also Special Advisor to United Nations Secretary-General Ban Ki-Moon and president and co-founder of Millennium Promise Alliance, a non-prot aimed at ending extreme global poverty.

For more, visit and

Rotman Magazine Fall 2007 / 67


Questions for:
Milhaly Csikszentmihalyi

68 / Rotman Magazine Fall 2007

Describe the state of being that you call ow.

The renowned psychologist on subjective well-being, material vs. transcendent goals, and achieving ow.
Interview by Karen Christensen

Flow is a state of consciousness that occurs when the task at hand draws a person in with its complexity to such an extent that they are completely involved in it. People in this state concentrate to the point that they forget their problems, they forget time, and there is no distinction between self and environment. When experiencing ow, people feel strong, alert, in effortless control, unselfconscious and at the peak of their abilities. Athletes sometimes call it being in the zone, and artists feel it when they play music or paint, but it is also reported in workplace settings by people who really like to do something and are able to perform it well. Researchers have interviewed close to 10,000 people around the world from women who weave tapestries in the highlands of Borneo to meditating monks in Europe, and the ow state experienced by individuals is very similar across the board.
Is ow accessible to everyone?

To achieve ow, all you have to be capable of is expressing your strengths in an activity that is goal connected. Surveys show that 15 per cent of people say they have never experienced it, while 15 to 20 per cent say they experience it every day. The rest lie somewhere in between. In a sense, ow is what drives the human need for going beyond what we have. We are a species that has been blessed by a kind of thirst for pushing the envelope. Most other species seem content when their basic needs are met: they have eaten, and they can rest now. Thats it. But in our nervous system, an association has been made between pleasure and challenge, and so we are always looking for new challenges.
Describe the difference between pleasure and enjoyment.

Enjoyment is something that comes about when you are stretching yourself somehow and trying to accomplish something that requires skill. This often leads to ow, because ow depends on the ability to focus on an activity while doing your best at it. Some people might call this pleasure, but I prefer to call it enjoyment, because it is quite different from the pleasure you get from satisfying a physical need, such as eating something when youre hungry, or closing your eyes when you are very tired. Doing that doesnt require you to draw particularly on any kind of skill you just repeat the desired activity and get to the resulting state. Whereas with enjoyment, you actually grow in the process. One reason that many people are unhappy today is because pleasure has begun to rule their lives, rather than enjoyment.

One reason that many people are unhappy today is because pleasure has begun to rule their lives, rather than enjoyment.

Subjective well-being (SWB) is a eld of Psychology that attempts to understand peoples evaluations of their lives. In your view, what are the ingredients for SWB?

reason for living are not going to grow beyond what their genes have programmed them to desire.
You have said that it is possible to be involved in an ostensibly materialist activity such as business, and yet pursue primarily transcendent aims. Please explain.

The part that I have studied is the ow experience, which I believe is a very important ingredient in SWB. In order to experience ow, you must have enough peace of mind that you are not worried about the bare necessities of life. If you are too worried about your survival or safety, then its hard to lose yourself in an activity that produces ow. Generally speaking, you need to have a certain level of comfort or physical wellbeing to get to ow although its not absolutely necessary: people in some terrible circumstances (war, abusive relationships) can still enjoy a ow experience, but by and large, the subjective well-being it can produce is more likely to occur when our basic necessities are taken care of. Pleasure by itself does not bring happiness: it is eeting, and unlike enjoyment, it does not produce complexity or growth. To achieve subjective well-being, you have to nd ow in activities that you nd meaningful that have signicance beyond the activity itself. Y ou can also experience ow on its own by playing golf or tennis, or reading a great book but in the end, these things are not enough to give meaning to your life.
Describe the difference between material goals and transcendent goals.

Most business leaders who are widely respected do what they do in part because they think it will improve either the wellbeing of society in one form or another, either by making lives more safe, comfortable, enjoyable, or because they feel they work for a more just social system. They also have concern for nature or the planet as part of what they are doing. You can work at something apparently neutral and yet do it for the purpose of actually going beyond material goals. So in a sense, the material goals are at the service of others either ideas, values or people. For example, the founder of the outdoors equipmentmaker Patagonia, Yvon Choinard, says the companys mission is to use business to nd solutions to the environmental crisis. Hes not just in business to make a product, but to change the way other companies operate.
What is psychological capital, and how is it formed?

Material goals are goals that people seek in order to make their lives more comfortable, which is usually done by accumulating material objects or the kind of safeguards or bank accounts that make your life materially more secure, but they dont extend beyond your own life and your own comfort. In contrast, transcendent goals are those where people use some of their psychic energy to reach outside of their own needs and invest in another system, becoming a stakeholder in an entity larger than the self. Transcendent goals are those where people realize that they are part of something larger, whether it be a human group or nature, or some more cosmic entity to which they belong, and when they try to advance the goals of these entities, they feel that their life extends beyond their own physical existence and becomes part of something greater. Curiosity, empathy, generosity, responsibility and charity are some ways that transcendent goals are manifested. When a person cannot build a self based on ow, he or she will try to build a self with the help of material goals and pleasure. There is nothing wrong with seeking pleasure in material goals, but individuals for whom it becomes the main

The content of life is limited by the amount of information we can process through attention. In this sense attention, or psychic energy, is a precious resource. Like all resources, it can be used for different purposes: it can be invested in activities that provide immediate gratication or future benets, or it can be wasted doing things that are neither enjoyable nor conducive to personal growth. When it is used for the former, it becomes psychological capital. While pleasurable activities are easier and more attractive, the attention consumed by them does not provide any greater future returns. On the other hand, the effort spent in learning to play a guitar, or a new language, or sport, or in helping others, does tend to bring greater returns in the future. We get more enjoyment from life as a result of learning new skills and perceiving new opportunities. Im currently working on this topic with one of my colleagues, trying to gure out how to measure psychological capital, and I think well have some interesting ndings in the coming months.
Tell us about your ndings on teenagers and happiness.

We found that the social structure of time has a great impact on teenagers happiness. The early part of the weekend, with its freedom from work or school, is experienced as liberating. During the weekdays, the rst part of the day, spent at work or
Rotman Magazine Fall 2007 / 69

How does it feel to be in the flow?

Figure 1

1. Completely involved, focused, concentrating either because of innate curiosity or as the result of training. 2. Sense of ecstasy of being outside everyday reality. 3. Great inner clarity knowing what needs to be done and how well it is going. 4. Knowing the activity is doable that your skills are adequate, and feeling neither anxious or bored. 5. Sense of serenity no worries about self, feeling of growing beyond the boundaries of ego afterwards, feeling of transcending ego in ways not thought possible. 6. Timelessness thoroughly focused on present, dont notice time passing. 7. Intrinsic motivation whatever produces ow becomes its own reward.

or you may feel imprisoned by the demands of your job. You may nd it difcult to develop sensitivity to anything around you. If thats the case, it restricts a persons well-being. This doesnt have to happen of course, but it often does. We have found, for instance, that the teenage children of wealthy parents who live in the suburbs, where both parents work and come home tired, do not prosper too much. They tend to be bored and unhappy, because they dont have the kind of interactions that show them that they are appreciated and supported by their parents. The parents think that giving their children expensive cars or travel will compensate for the lack of attention they get; but attention contributes more to well-being than material things do.
You believe there are three types of calling that motivate good business leaders and serve as principles of good business. What are they?

school, tends to be less happy, except for a peak at lunchtime, followed by higher reports of happiness in the afternoon when one is free again. Of the ten main activities that teenagers do during the week which include everything from watching TV to talking with friends to doing household chores the highest level of happiness is reported when talking with friends, and the lowest when doing school-related homework. Some of the happiest experiences reported in the active leisure category are sports, music and visual art. Y outh experience the lowest levels of happiness when they are alone, while being with friends corresponds to the highest level. Being with parents is at the average for happiness, but slightly lower than being with a sibling. Overall, happiness decreases through the teenage years, reaching its lowest point by age 16, and then shows a small recovery by age 18. Contrary to what one might expect, the amount of time spent in school-related activities during the week is positively related to happiness, indicating that those teens who study more are in fact happier, even though studying is lower in happiness than most other activities. In short, teenagers are happiest when they are in situations of relative freedom, in the company of age-mates, able to engage in ow activities that stretch their skills and make them feel alive and proud.
Wealthy people are generally thought to be happier than the poor, but research shows that this is not the case. Why is that?

First, one has to respect the traditions of ones profession the history of how it evolved. Modern doctors are still repeating the Hippocratic Oath, which is almost 3,000 years old, to remind them of what a good healer must do. This regard for the tradition of a profession is very important to safeguarding good work. The second principle is a continuous striving for excellence. That means not starting to slack off just because you have achieved a certain level of status or high performance; you have to keep doing your best, which means adapting to change and being aware of new opportunities. The third principle of good business is a concern for a wider circle of responsibilities not only to your employees but to customers, shareholders, the community in which you work, and eventually, to the planet. People who do good work in business are very aware of how important it is for them not to ignore these three principles.
What can organizations do to foster ow in the workplace?

There are several things they can do. They can pay attention to how their employees experience their jobs, ensuring that the challenges of the job are well-matched to the strengths of the person. They can also ensure that all supervisors and heads of units are aware that if they want their subordinates to perform well, they have to present them with very clear goals and provide immediate feedback. Having these elements in place virtually guarantees that workers will experience ow more readily and become more committed to their jobs. Improved morale and productivity are likely to follow.

Subjective well-being cannot be predicted on the basis of objective circumstances. In order to preserve or acquire wealth, you have to devote a great deal of your energies to the pursuit of material goals, and you may end up not having any energy left to develop more transcendent goals; as a result, you may begin to be unable to relate to your family, or your children,
70 / Rotman Magazine Fall 2007

Mihaly Csikszentmihalyi is the C.S. and D.J. Davidson Professor of Psychology and Management at the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University, where he is director of the Quality of Life Research Center. One of the worlds most widely-cited psychologists, he has devoted his career to studying optimal human functioning.


Questions for:
Darrel Rhea

Louis Cheskin established the eld of experiential marketing in the 1940s (and helped invent such icons as the Marlboro Man, the Gerber Baby and McDonalds golden arches). What is his legacy for your rm?

The CEO of Cheskin talks about the evolution of experiential marketing and how design has transformed our world.
Interview by Stephen Watt

Dr. Cheskins legacy has gone far beyond our rm; he exerted a great inuence on the development of the elds of marketing, design and consumer research. He was obsessed with understanding the relationship people have with products and services, observing the subtleties of these relationships through rigorous research, and with using design thinking and tools to create value for them as humans. In an era when marketing focused on persuasion and the tactics of creating demand, Cheskin was always focused on the deeper emotional meanings underlying our behaviours and their ability to forge lasting relationships. That was a radical notion during the rst several decades of marketing practice. The culture of our team today is solidly grounded in this legacy. We believe that the most efcient and sustainable way to generate revenue growth is to focus on creating real value for human beings. The only way to do this effectively is to develop deep empathy and unparalleled insights around what truly serves customers. That reverence for the person we are designing experiences for is something we never lose.
Have enough rms adopted this focus?

While leading-edge practitioners have been steadily moving toward a customer-centric model, its authentic use is still rare, even after 60 years since Cheskin started advocating for it. It is amazing that despite all the rhetoric, the overwhelming majority of innovation programs are still technology-driven, operationally-driven or engineering-driven. Design is used to enhance the product, not to inspire its creation, and research is used to validate it, not to provide context and generate better concepts.
Is there something that prevents companies from adopting a more user-centered approach to design and development?

Most organizations are set up to innovate incrementally. They are focused on evolving their current products and services and are deeply rooted in a historical perspective. When you think you already know your customer (because, after all, they are buying your products) and you are in a renement mode, you tend to rely on your technical prowess. The idea of investing in
Rotman Magazine Fall 2007 / 71

The opportunity is to generate passionate loyalty by connecting with consumers in an authentic, transparent way that resonates deeply with their values as people.

insights that might force you to radically change your product or reconsider your business model isnt attractive. As a result, rms under-invest in user research, and end up putting out a me-too product that the market doesnt get excited about. Next time around, they are even more gun shy. They take the valueengineering approach to eliminate risk, trying to Six Sigma their way to new concepts that provide functionality but no emotional connection to users. People start thinking that innovation work should be delegated to someone else while they focus on prots. Sound familiar? Its a terrible, but common, cycle.
Its generally true that CEOs will only buy into a strategy whose results they can quantify. How can designers better communicate their value?

While there is a great deal of evidence of the ROI of userbased design in innovation, the majority of designers havent learned to frame their value in those terms. Designers need to have a laser-beam focus on creating measurable business results. The days of hiring design consultants based on awards given to them by their peers is over. In fact, most products that win design awards fail in the marketplace. The biggest challenge, however, is to overcome executive managements limited view of what design is. If they think of it at all, they tend to think of design as decoration.
How do you respond to those who view design in terms of just creating aesthetically-pleasing objects?

people to buy products. Advertising was about making them appealing, and design supported efforts to motivate purchase. Design was often very supercial then (think of the tail ns on cars of the 1950s). As the marketplace became more sophisticated in the 60s and 70s, marketing was required to create the right product. Having functional products was the price of entry, so marketing and design started to lead product development and innovation. We moved from emphasizing features to benets. In the 80s and 90s, it became all about creating the right promise, and branding dominated. Design became focused on eliciting emotional responses. Then the big shift happened. With the Internet and tech boom, businesses were no longer in control of their brand image. Customers were buying online, listening more to other customers opinions through web sites and blogs. We now had to design a whole product experience that included the conversations happening out there in the market. Design emerged as a holistic practice that has had to help answer why to design, who to design for, what to design, how to design it, how to evaluate it, and how to orchestrate the whole productrealization process.
In Making Meaning, you argue that consumers now look to companies to provide meaningful experiences from their products and services. Does this imply the next evolution of customer-based innovation?

The eld of design has transformed our world dramatically. Y es, 50 years ago, design was decorative, and then later evolved to providing functionality. But today it includes a broad range of practice areas that impact our entire experience as human beings. Design and design thinking offer business a way of bringing forth new worlds. In todays context, design is a process for planning, conceiving and making products and services that deliver compelling experiences. It is an engine for driving innovation and change in markets and is a key competitive weapon.
What changed in the business world to cause this transformation?

I see the eld of design paralleling the emergence of marketing. Before there was a field of marketing, business was very production-centric. Success was about creating supply; it was a build it and they will come world. Once we had a market with greater competition, the emphasis shifted to creating demand. Thats where marketing and design emerged to get
72 / Rotman Magazine Fall 2007

I think it does, and there is a shift happening in culture that represents both an opportunity and a threat. The opportunity is to generate passionate loyalty by connecting with consumers in an authentic, transparent way that resonates deeply with their values as people. The threat is for those brands that might work ne but can be easily displaced or substituted with products that work just as well. While the eld has been focused on managing and designing experiences, it hasnt been as concerned about what creates a great experience. We all have products that we love, that reinforce our values as people. Those products like the iPod, the Mini, Starbucks, TiVo become part of the stories of our lives, and we eagerly share those stories with our acquaintances. Our objective in design should be to blow the socks off of customers, to make products they love. That kind of connection isnt about price/value, elegant functionality, or even a visceral emotional response. Thats the price of entry. It is now about creating something meaningful.

Executives need to be accountable for creating the maximum levels of value possible for customers and forming sustainable relationships with them built on delivering meaning in an authentic way.

Give an example of a company that has reaped the rewards of providing such experiences to their customers.

Method is a start-up that bases its cleaning products business on delivering meaning to customers. Its remarkable that they chose to start a business out of their garage in an extremely competitive and mature category dominated with global power houses like P&G, Unilever and Clorox. If there ever was a David versus Goliath story, this is it. The company was started by two young guys who had a clear idea of a specic segment of the market they wanted to address, and were aware of their shifting attitudes toward cleaning. There is a segment of people who dont necessarily think of cleaning as a chore, but more of an expression of their love for their home. Its more about home-grooming than cleaning efcacy. While the big players focus on stronger harsh chemicals and fragrances, Method appeals to those looking for gentle beauty and environmental sensitivity. Method reinforces this in the design of its products, packaging, operations and communications, in a systematic and holistic way. They understand they are not selling chemicals or disinfectant they are selling freedom from worry and beauty for your home. They arent selling a consumer product they are providing a way for customers to reduce their environmental impact, to protect helpless animals from testing, and to feel connected to a community that shares their values. Basically they are creating a movement by using meaning as their platform for innovation. The result? Many customers who discover the values of the brand become loyal advocates, spreading their enthusiasm by word-of-mouth. Now this start-up has rapid growth, healthy margins, and distribution in Wal-Mart, Target, grocery and chain drugstores. The only question remaining is who among the big players will buy them.
How do you address the human or cultural aspects of innovation?

criteria. We then need to make sure that the creative work actually addresses the business objectives, that we stay focused and relevant. And we need to protect and nurture the people and process so it doesnt get shut down prematurely. Lastly, we need to sell the value of the innovation work to the internal culture. If they dont embrace the change, the system will chip away at the innovation until it conforms to the status quo. This means a communication plan needs to be in place that is sensitive to the needs of different audiences. And it needs active support from leadership.
I notice how everything you just said points to senior managements accountability for innovation.

Expecting dramatic innovation to reliably bubble up from the middle of your company is very risky. Innovation is mission critical, so when executives delegate it, or depend on institutionalizing it, we can predict that their products, services and brands wont truly be innovative. Executives need to be accountable for creating the maximum levels of value possible for customers, to form a sustainable relationship with them built on delivering meaning in an authentic way.
Youve spent 25 years on the front lines of innovation with some of the worlds top corporations. What do you know today that you didnt know when you started out?

First, I work to get alignment among senior management on what business result they want from innovation. Whether it is a board or executive committee or business unit team, there is almost never a shared vision about innovation because people arent used to designing their future together. If you dont have a clear articulation of the success criteria for investing in innovation outcomes, youre dead in the water. Next we make sure resources are commensurate with the scope of managements objectives, and that there is a clear, coherent innovation process in place to deliver on that success

I have been privileged to be involved with so many great organizations and marketing challenges, and I hope I have learned a lot. The thing that sticks out most is that, for most organizations, innovation is an unnatural act: people naturally resist change, so innovation is very unsettling. Organizations will literally choose death before changing unless leadership enrolls them, or their survival is directly at stake. As a result, successful innovation is as much about cultural change management as nding the big creative ideas. Discovering opportunities and translating them into viable concepts is actually the easy part. Getting organizations to embrace change and shift their actions to bring that new product or service to market is where the breakdown occurs.

Darrel Rhea is CEO of Cheskin, a leading innovation consulting rm. In addition to his work in executive coaching and training for global organizations, his leverage of research for user-based design has inuenced thousands of products, services and brands for the worlds leading corporations. Rhea is co-author of Making Meaning: How Successful Businesses Deliver Meaningful Customer Experiences (New Riders, 2006).

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Faculty Focus:
Stphane Ct


with an angry co-worker, studies show that they tend to develop a negative impression of them, become angry themselves, and be unwilling to interact with that co-worker again. However, studies to date have produced inconsistent ndings concerning the effects of anger on negotiation behaviour specically, the demands and concessions that are made during negotiation. On the one hand, there is evidence that negotiators become more competitive and demand more value against angry opponents than against non-emotional or happy ones. One study found that negotiators were less likely to make concessions and to accept the offers of opponents who displayed negative rather than positive emotions; while another showed that parties in online dispute resolution negotiations responded competitively to their opponents expressions of anger, thereby reducing the likelihood of a settlement. On the other hand, there is evidence that negotiators can also become more cooperative and concede more value to angry as opposed to non-emotional or happy adversaries. In one study, participants made larger concessions to an angry opponent because they believed that the angry opponent had more ambitious negotiation goals; and in another, participants conceded more to angry counterparts because they perceived them to be tougher.
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These inconsistent ndings suggest that moderating factors determine how negotiators respond to opponents expressions of anger. The Dual-Process Model that I developed with Gerben Van Kleef of the University of Amsterdam predicts whether parties in conict will respond to opponents expressions of anger by conceding (and claiming low value) or by competing (and claiming high value). Our model specically proposes that (1) the power of the negotiators and (2) the appropriateness of the display of anger must be considered jointly to fully understand the interpersonal effects of anger in conict and negotiation, because these factors interact with each other to determine the resulting behaviour.
The Effects of Power on Responses to Anger

Power has considerable implications for how people feel, think, and act in social situations. As such, it inuences how disputing parties approach negotiations and, more specically, how they respond to opponents expressions of anger during negotiations. Individuals with low power tend to lack resources such as money, knowledge, and social support. The Approach/Inhibition Theory of power, developed by Dacher Keltner from the University of California at Berkeley and his colleagues, proposes that low power restricts the range of an individuals behaviour. This is because individuals recognize that only a limited set of behaviours will provide them with access to resources. For instance, students who lack financial resources to conduct independent research may work on research initiated by their advisors as opposed to the topic of their choice in order to access resources. The association between low power and inhibited behaviour is supported by evidence that low-power individuals hesitate when they speak and limit the expression of their ideas and their emotions. In negotiations, individuals with low power tend to lack favourable alternatives to a settlement. Consistent with Approach/Inhibition Theory, they should feel constrained to act in ways that will increase the likelihood of any settlement, because any settlement is typically better than an impasse. Conceding value should increase the likelihood of a settlement by rendering it more attractive to the opponent. In addition, any signal that an impasse is particularly likely such as displays of anger by the opponent should enhance concessions by low-power negotiators. Anger generally intimidates and persuades others, and

People tend to engage in aggressive and retaliatory behaviour when they feel they are being unfairly treated.

accordingly, negotiation opponents who display anger are perceived to be tough and to have ambitious goals. This suggests that low-power negotiators may be particularly likely to believe that an impasse will occur and, in turn, exhibit constrained conceding behaviour when opponents express anger. Lowpower negotiators should not modify their behaviour depending on the characteristics of the anger displayed by an opponent, such as its appropriateness. Instead, to maximize their outcomes, they should strategically concede to an angry opponent even when his or her anger is inappropriate, because retaliating constitutes a potentially-costly course of action. In contrast, individuals with high power tend to possess abundant resources. The Approach/Inhibition Theory proposes that high power liberates a persons behaviour because sufcient resources should typically be maintained regardless of how one behaves. For instance, supervisors may make unreasonable requests to subordinates while retaining their resources. This proposition is supported by evidence that individuals with high power tend to act at will without interference or fear of future negative consequences. For instance, high power individuals are more likely than their counterparts to fully express their ideas and their emotions and to eliminate distractions while working. In negotiations, high-power individuals tend to possess attractive alternatives to a settlement and can turn to another alternative in the case of an impasse. Thus, consistent with Approach/Inhibition Theory, they should have the luxury of modifying their behaviour and being competitive if they feel compelled to do so. We propose that the appropriateness of opponents expressions of anger is a key determinant of high power negotiators degree of competitiveness. The context may render the expression of anger more or less appropriate. An appropriate expression of emotion is one that is correct for the situation and in correct proportion to the evoking circumstances. A display of anger by an employee who receives a lower bonus than a colleague who has objectively performed worse would be relatively appropriate; conversely, a display of anger by a manager in an organization where such displays are discouraged would be deemed inappropriate. The appropriateness of an opponents expressions of anger may have important effects on the behaviour of high-power negotiators because it may be related to experiences of procedural justice (the fairness of how outcomes are decided) and

interactional justice (the fairness of how people are treated). Individuals tend to experience procedural injustice when others decide outcomes in ways that are unethical or inconsistent with expectations or norms and interactional injustice when others show little respect and sensitivity. Inappropriate displays of anger may trigger feelings of procedural injustice because they may be perceived as unethical and exploitative tactics to try to gain an unfair advantage. People tend to engage in aggressive and retaliatory behaviour when they feel unfairly treated. Perceptions of unjust treatment are associated with feelings of anger and hostility and a wide range of undesirable behaviours such as lowered organizational citizenship behaviour, sabotage, theft, aggression and other forms of retaliation. In addition, appraisal theories of emotion have identied perceived injustice as one of the most potent antecedents of hostile and aggressive behaviour. In sum, the behaviour of high-power negotiators should vary as a function of the appropriateness of opponents expressions of anger. High-power negotiators are likely to retaliate by making high demands when they observe inappropriate displays of anger because these displays trigger desires to retaliate. They may also experience little injustice and hence retaliate to a smaller degree when they deem their opponents displays of anger appropriate. The behaviour of low-power negotiators, however, is not likely to vary as a function of the appropriateness of an opponents expressions of anger. Instead, these negotiators should concede even when the anger expressed is deemed to be inappropriate.
Testing the Dual Process Model

Prof. Van Kleef and I recently conducted studies to explore the circumstances under which expressing anger during conict helps, by extracting concessions from opponents, and when it hurts, by eliciting competition. We hypothesized that negotiators with low power would concede to any display of anger because they largely depend on their counterpart for their outcomes. We predicted that negotiators with high power, on the other hand, would place higher demands when opponents displayed inappropriate anger because they have the luxury of varying their behaviour as they wish, and inappropriate anger triggers greater desires to retaliate. We tested these propositions in two experiments involving a scenario and a computer-mediated negotiation. As predicted,
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Our results show that anger can have different consequences in different contexts and in people with different levels of power.

participants with low power did not respond any differently to appropriate and inappropriate anger, and they demanded less from angry opponents than from non-emotional ones, regardless of whether the expression of anger was inappropriate. High power negotiators, in contrast, responded differently to appropriate and inappropriate anger: high power negotiators who were confronted with an angry opponent made signicantly larger demands when the opponents expression of anger was inappropriate than when it was appropriate. We also found direct support for the role of the desire to retaliate: inappropriate expressions of anger elicited a stronger desire to retaliate than appropriate expressions of anger in all negotiators. However, the desire to retaliate predicted competitive behaviour in negotiators with high power but not in negotiators with low power. High power negotiators who wanted to retaliate did; but low power negotiators who wanted to retaliate did not. These results are consistent with our Dual-Process Model because they suggest that negotiators with high power have the luxury of being intransigent when the opponent displays inappropriate anger as opposed to appropriate anger or no emotion. Negotiators with low power, in contrast, adopt a strategic route and concede to angry opponents regardless of whether the anger is appropriate or not.
Implications for Managers

degree of power into account. High power individuals may benet from displaying any type of anger because their counterparts must strategically respond to such displays by conceding. Low power negotiators, however, do not benet from displaying anger. At best, their high power counterparts may ignore their displays of anger if they deem them appropriate. At worst, their high power counterparts may retaliate against their displays of anger if they deem them inappropriate. Our ndings also speak to the role of anger in leadership, suggesting that subordinates may give in to leaders who express anger even when that anger is inappropriate. As such, our model may enhance understanding of why some leaders behave unethically. Such leaders often rely on their subordinates cooperation to achieve their aims, and may potentially garner this cooperation by expressing anger.

Our model and ndings reconcile inconsistent past results concerning the consequences of expressing anger during conict and negotiation. Some studies had found that negotiators concede to angry opponents, whereas others found that negotiators retaliate against angry opponents. Our model species when negotiators concede, when they retaliate, and when they remain relatively unaffected by opponents expressions of anger. Evolutionary theories posit that emotions evolved to provide information to others about ones goals, intentions, and attitudes in ways that help guide others behaviours. Accordingly, researchers have studied how expressions of emotions inuence others attitudes and behaviours. Our results show that the same emotion, anger, can acquire a different meaning and, in turn, have different consequences in different contexts and in people with different levels of power. Our model and findings imply that to understand how employees behave during conict, managers should take their
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Our Dual-Process Model indicates that expressing anger in conict either helps or hurts, depending on two factors: the appropriateness of the expressions of anger and the power of those who observe them. Negotiators with low power concede to any expression of anger, regardless of whether they deem it to be appropriate, and despite the fact that they may want to retaliate. In contrast, high-power negotiators faced with an inappropriately-angry opponent will experience a desire to retaliate and, in turn, exhibit competitive behaviour. Thus, if one has low power, it hurts to express anger at a more powerful counterpart, who may perceive the anger as inappropriate. Our ndings provide important insight into the dynamics of anger in conict by showing when expressions of anger encourage conict resolution by eliciting concessions and when they promote conict escalation by triggering competitive behaviour.

Stphane Ct is an assistant professor of Organizational Behaviour at the

Rotman School of Management. He received the Roger Martin and Nancy Lang Award for Excellence in Research in 2006. This award is presented annually by the Dean and his wife to encourage faculty excellence in research and teaching.
The preceeding is an excerpt from a paper Prof. Ct co-authored with Gerben Van Kleef of the University of Amsterdam, which is forthcoming in the Journal of Applied Psychology. For a copy of the complete paper, e-mail


Questions for:
Robin Sharma

The author of The Monk Who Sold His Ferrari talks about the importance of recognizing our limiting beliefs, and how to become your greatest self.
Interview by Karen Christensen

In your latest book, The Greatness Guide, you write, We see the world not as it is, but as we are. Please explain.

We all see the world through a stained glass window of sorts in other words, through a personal context that is made up of our beliefs, our limiting assumptions, our hopes, fears and experiences. What one person sees as adversity, another can see as an opportunity, based on how he or she views the world. In many ways, what leadership is about is developing an awareness of how we process the world around us. As we begin to see our limiting beliefs more clearly, we can step outside of them and make better choices that create better organizations and better results.
You have said that an extraordinary life contains two key elements: success and signicance. Please discuss.

Success is about living life on your own terms. I recently spoke at a leadership conference for British Petroleum in Singapore, and one of the leaders there said that the three hallmarks of
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As we begin to see our limiting beliefs more clearly, we can step outside of them and make better choices that create better organizations and better results.

ultimately achieves nothing. So getting to extraordinary in business is all about developing clarity in terms of your plans and your strategic outcomes. Clarity precedes mastery, so once youre really clear on whats most important and where you want to be in the future, focus requires that you say no to things that are unimportant. Confucius said it nicely: the person who chases two rabbits catches neither. We live in a world where theres never been so much noise and so many distractions. Leadership is about cutting out that noise so that you can remain passionately focused on what is most important.
You believe it is important to lead without title. What do you mean by that?

world-class leaders are humility, risk-taking and authenticity. I agree. To me, success is really about being authentic, being comfortable in your own skin and running your own race. Leadership isnt a popularity contest, its really about doing whats right. Signicance is equally, if not more, important. The best leaders and the best business people are walking, talking value creators, and ultimately, what gives us the most fulllment and satisfaction is the difference we make and the value we create. When I was growing up, my father said to me, Robin, when you were born, you cried while the world rejoiced; live your life in such a way that when you die, the world cries while you rejoice. Leadership is about having an impact. Its about inuencing and being signicant through the work we do and the legacy we leave behind.
You have worked closely with business superstars and rms like IBM, FedEx and Nike. What common traits have you observed in their quest for sustainable success?

The single most important competitive advantage for any organization is growing and developing leaders throughout the organization faster than the competition. Leadership is not the sole domain of a CEO or a manager: it is a behaviour rather than a position, and it can be shown by someone working on the front-lines as well as someone working in the C-suite. Lead without title is really a reminder to people of the imperative that everyone throughout an organization should be demonstrating leadership qualities like wowing customers, being innovative, taking personal responsibility for results, managing change and being inspirational to others.
What is next-level greatness (NLG), and how can each of us dene it?

The best in business are all big dreamers. They love to play with possibilities, and when people laugh at them or discourage them, that only makes them want to go further with even more commitment. Secondly, they are incredibly persistent. They just dont give up, because they refuse to lose. Thirdly, theyre innovators, so theyre always pushing the envelope. Fourthly, they take a lot of risks, and they understand that the greatest risk in business is not taking any risks. Fifth, theyre all about people, because they recognize that success in business is all about relationships. And sixth, they are very focused. The late-great Peter Drucker said it very well when he said, there is nothing so useless as doing efciently that which should not be done at all. The best in business have an extraordinary level of focus that allows them to say no to things that are unimportant.
You believe that time is our most precious commodity, and that there is huge value in getting good at saying no.

One thing that most of us dont spend enough time doing is thinking, and if we dont spend the time thinking and reecting on whats most important and what our values and key objectives are, then we can spend our whole careers climbing the wrong mountain. So nding your NLG is really about discovering how you can create the most value and realize your potential as a leader. I like to say that the top of one mountain is really the bottom of the next: as we get to our goals, its really important to keep on raising our standards so that we keep on out-performing who we used to be.
In The Monk Who Sold His Ferrari you write: If you care for your mind and cultivate it like a fertile garden, it will blossom far beyond your expectations. What steps can we take to cultivate a thriving garden?

The truth is, the person who tries to achieve everything

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Well, our environment shapes our thinking, so the rst thing I would say is that if you want to be world-class, ensure that your environment is world-class. Read great business books, read the great autobiographies, read the great works of literature. Secondly, have world-class conversations. In the Greatness Guide, I say drink coffee with Gandhi, because reading is really nothing more than having a conversation with the author. So not only read great books, but talk to the people whose lives you want to be living someday. No matter how successful you are and no matter what level youre at within an organization, nd a mentor. Find people who you want to model in your career, and make the time to talk to them on a regular basis. Their stardust will rub off on you.

You also warn against the tyranny of impoverished thinking. Please dene this.

We live in a world and in a business world where there has never been so much opportunity, and yet its too easy to be seduced into focusing on what is not working, and on the challenges and the relentless change that each of us faces every day. World-class leaders tend to focus on what is going well, because they know that what we focus on will grow in our life. If we keep focusing on new ways to innovate and out-perform who we used to be, we will be fuelled by an energy that will get us to personal and professional success.
What advice do you have for people who aim to be their greatest self, personally and professionally?

I would say, rst of all, that planning is incredibly important. It sounds obvious, but most people spend more time planning their summer vacations than they do planning their careers and their lives. Again, clarity precedes mastery. So take the time to articulate a plan for yourself and your career one year out, three years out, ve years out and ten years out. Secondly, get to know what philosophy you want to live by. Get to know your values and priorities, because with better awareness of those, you can make better choices, and better choices will create better results. Number three, start your day with a onehour holy hour. This is where you think about your leadership

impact, and about how you will govern your day. This is the time to read the great books and get inspired, and to take care of your health (because whats the point of being the richest person in the graveyard?) Taking that one hour at the beginning of each day will cascade and create a positive force throughout the rest of your day. The fourth thing I would say is, always go the extra mile. It sounds like a clich but its true: the harder you work, the luckier you get. Getting to extraordinary results takes sacrices: it takes lots of hard work and entails wowing all of your stakeholders. The nal thing I would say is, take risks. When were at the end of our careers and we reect on our lives, what lls us with great regret are not the opportunities and risks we took, but all the opportunities we failed to seize and the things we didnt do. So its really important to take risks, to stretch ourselves each day, and to run towards our fears rather than running away from them, because the fears we dont climb over ultimately become our walls.
Canadian leadership consultant Robin Sharma gave up a successful law career to become a best-selling author. The CEO of Sharma Leadership International has written eight books, which have been published in 33 languages. They include his latest, The Greatness Guide (HarperCollins, 2006), The Saint, the Surfer and the CEO (Hay House, 2003) and The Monk Who Sold His Ferrari (HarperCollins, 1994), which is the fth best-selling book in Israels publishing history and has been on Indias top ten list for two years.




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Questions for:
Laura Nash

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You have done extensive research on high achievers. What are some of the biggest misconceptions about success?

Success is clearly about more than making money; but its not just about achieving happiness, either. You can have wealth and pleasure and still feel dissatised on many fronts. Laura Nash explains.
Interview by Karen Christensen

I think the biggest misconception is that success and achievement in one area will get you everything that success is like a silver bullet. For instance, there is a widespread belief that the acquisition of power and money can buy happiness, but that just isnt true. Getting caught in a never-ending cycle of achievement can actually hurt you if you dont also develop an ability to put things down and focus on other aspects of your life that may need immediate attention. Those things can include everything from the need to rest and recuperate, to being there for others so that your family and friends dont experience a meltdown while youre on your path to success. Very few people imagine that they really want success at the expense of the people they love or of their own happiness and health, but that requires actively paying attention to your entire emotional pallet and relationships. Doing this actually gets you more satisfaction and energy to accomplish things.
In Just Enough, you and your co-author [Howard Stevenson] dene success as composed of four elements. Please describe them briey.

We found that success is made up of four things: happiness, achievement, signicance and legacy. Happiness is about enjoyment and relaxing the feelings of pleasure and contentment in and about your life. Achievement is about winning, getting, doing, acquiring and dominating. Signicance is an interesting mix of self-oriented and other-oriented emotions, such as empathy, caring and contribution, all of which involve connections to a social environment but you still exercise choice over whom you care about and what you choose to contribute to. This fullls our deep needs for belonging and bonding. The nal one, legacy, was a real surprise to us. It wasnt about being remembered because you were the biggest or the best; it was about carrying things forward, of participating in the continuance of something you value and dont want to see disappear from the world. This can become a very satisfying activity that helps people achieve balance in their lives. These four categories form the basic structure of what people are trying to establish through the pursuit and enjoyment of success: take away one of them and the resulting prole seems to have something essential missing. The high achievers we studied not only recognized these multiple goals in their work and life, they managed to retain a deep sense of commitment to all of them over time. They have an ability to

Weve ratcheted up our measures of what constitutes a successful experience to an extreme level, and people are exhausted by it.
be extremely focused short-term and yet be decisive about when they need to switch attention to another target. This requires having a big picture and pacing yourself. One of the primary techniques of pacing is the ability to put one thing down and switch your focus not to yet another achievement task, but to another category of the good life that satises different emotions. The trick is to be aware of the potential meaning of your goals. Say you know you need a break from work: you can take up y shing and turn it into the work of becoming a world-class sherman, or join a youth program that teaches kids to y sh and appreciate nature. Only you know which will give you more of a sense of accomplishment, but real achievers know how to scan a larger world of choices for themselves and have the courage to vary the path of their lives.
What is your advice for people who feel overwhelmed by their quest for success?

the world that excites you?, they might answer, Well, I love nature. My question for them would be, why dont you go outside right now and take a walk? If you cant do that, how will you be able to say enough four years from now? The people who are able to stay the course for multiple achievements actually know how to give themselves breaks constantly. In the course of an hour, they might tell a joke or two, or stop working and walk around to chat socially with their colleagues for a bit. Winston Churchill and Teddy Roosevelt, two incredibly energetic leaders, were perhaps the most famous nappers in history. People like them have an uncanny ability to put things down and then pick them up again. Their calm in the midst of a storm actually makes them better leaders. This is what we call success intelligence when people really know how to balance the four areas of success.
You have said that success requires a recognition of our limitations. How so?

The rst thing Id say is to take it on in small pieces. People tend to be so overwhelmed by the number of things theyre comparing themselves to that they become either overly anxious, or they choose to focus on just one aspect of success. Both of these are ineffective ways to go after what really satises you, which requires achieving on multiple levels.
Describe the role of time-outs in achieving happiness.

We tend to think that the way to get to happiness is to control our environment: If I could just buy that Porsche, I know I would be happy. But in fact, the high you get from that Porsche is often quite temporary. Researchers have discovered that happiness is a quickly fading emotion. One example is money: we know that up to a point, money helps people to be happier, but after that, its diminishing returns more money does not make you happier. Happiness also has an element of letting go of ego and the dominance that ego strives for our control over the world. That kind of letting go allows for surprise, it allows for release. It gives you almost a relief from yourself and ironically, this is the best path to creativity. If you believe that success is about delaying happiness while you go about achieving, and that the nal point of success should be to put aside all effort and lead a happy life, you are unlikely to achieve real success or happiness. We often hear people say things like, Im going to work really hard to make lots of money, and four years from now, Im going to retire and travel around the world. Four years is a long time to wait to be happy. If you asked that person, What is it about going around

Its easy to take an overly-idealistic view of what success looks like. I call it the maximized model. In these mental models, people expect to have genius solutions to everything: they compare themselves to the ideal professional chef, the supertasteful, or the perfect parent. Many kids today dont just play soccer, they have professional coaches. Weve ratcheted up our measures of what constitutes a successful experience to an extreme level, and people are exhausted by it. Nobody can accomplish all these things, and unfortunately, what follows is the tyranny of never enough. People say to themselves, if I dont go for the max, Im a loser; I must be insufciently motivated. They fail to listen to what they really want to do if that involves a target that is less than what the world views as the best. What theyre not discounting from this view is that extreme motivation tends to invite extreme burnout unless you are pathologically insensitive to the need to be there for others. So you have to look at the whole picture, long-term, and know how to say, thats enough for today.
Talk a bit about the dangers of maximization.

The main danger of maximization constantly going for the most or the best is that it always sounds so attractive, particularly when the media is always trying to sell us on the newest and best. Im not saying excellence isnt a good thing. When you talk to people whove had great achievements, being the best frequently is their model and does motivate them. But there are reasons for caution here. Best implies a comparison
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Being the best implies a comparison to something out there, and in todays world, out there has become a larger-than-life playing eld.
the list beyond 400. Even if that isnt your goal, the escalation of what we compare ourselves to and the increasing dangers in the world have, I think, upped the stress level for many people. Theres still a widespread sense that whatever youre attending to, its never enough: theres something else that you could and therefore should be attending to. The impulse after 9/11 was, I need to focus on what matters most, whether it be the security of the country or being with your family. But people are still having an enormous amount of trouble saying, This is enough money for me to be making now I need to give myself some time. Were still struggling with that. Our culture is desperately in need of better understanding the word enough: it is still equated with mediocrity, quitting, and giving up, but thats not what enough is about. Its about leading a life thats truly fullling, and that requires having a concrete vision of what is really right for you and the difference you want to make in the world.
You recently left Harvard Business School to pursue a new career path, joining the Business Roundtable Institute for Corporate Ethics. What led you to join the Roundtables advisory board, and how are things progressing?

to something out there, and in todays world, out there has become a larger-than-life playing eld. Everyone is exposed to everything every windfall on the stock market, every child athlete, every great deal, every purchase by the super wealthy. To achieve on different goals, you have to moderate your comparisons to peak performance in some area. You cant be a perfect parent, always there for your child, and away from home ve days a week; and you cant be operating at 110 per cent 24/7 and expect to feel truly satised by work. People who try to motivate that approach in their employees end up with employees who are simply disguising the fact that theyre sapped of energy. We create a mythology of super-heroic effort that is inspiring in its place, but not very helpful in dealing with everyday reality. Think about it: if you aim for less-than-professional soccer performance in your six year-old, have you ruined her life? Of course not! But we operate as if thats the unbreakable rule of every activity. The people we interviewed were extremely high achievers, but they were able to moderate themselves consistently. They had an adaptiveness that said, Im going to take a risk here and do what is not the peak expectation. Ill let my kid gure things out on his own. Ill leave some money on the table so that other employees get their share. Today there seems to be shame in not getting as much as you can for yourself. Call it a culture of greed, but its a personal philosophy, too. It is a terrible leadership model, but it is a direct result of maximized thinking. Another danger of maximization can be a kind of moral breakdown, because when you constantly tell yourself its a no limits world, the best way to perform is with no limits, and you quickly get to no rules; your performance slips and you start taking take short-cuts. And we all know where that leads.
September 11th was supposed to have engendered a new spirit of self-examination about whats really important in life. What has been the outcome of this mass reection, if any?

There is some wonderful research being done through BRTI. Ed Friedman of the Darden School and I are spearheading a new study on The Dynamics of Trust jointly with the Arthur Paige Society. We think theres a lot to be learned about how corporations approach a relationship of trust with stakeholders, and that theres a lot of new thinking that should be shared. So Im positive about the progress were making. At the same time, I dont think were going to see the scandals go away. If anything, there are more corners to hide in than ever, given our global economy, and that will endanger public condence that business will choose to do the right thing, however you dene that. Whats so good about the Roundtable is that its pulling together people with different perspectives and experiences to share knowledge, rather than creating and disseminating a kind of defensive posture on business ethics. Having said that, weve got lots of work ahead of us.

Not much, frankly. I think were still overwhelmed by a pervasive demand for limitless energy: growth, performance, money, wealth these measures have only escalated over the last ve years. Todays Forbes 400 has no millionaires on it: theyre all billionaires, and they had to expand the number of people on
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Laura Nash serves on the Advisory Council for the Business Roundtable Institute for Corporate Ethics at the Darden School of Business, University of Virginia, and is an executive fellow at the Center for Business Ethics at Bentley College. She is the author of Just Enough: Tools for Creating Success in Your Work and Life (Wiley, 2004), and was on the faculty of Harvard Business School from 2001 to 2006.


Questions for:
Mark Albion

The saviour of business school souls discusses values-based businesses and his quest to uplift the human spirit.
Interview by Stephen Watt

While still in your thirties, you gave up a teaching post at Harvard Business School to bring the gospel of personal integrity to 125 business schools (including the Rotman School) on ve continents. What inspired you to pursue such an unusual path?

Id like to say I was inspired by some great calling, but I was really motivated to start this journey by the pain expressed by some of my students when I was a professor, and by my own frustration at not being able to help them. They wanted meaningful work, and they wanted to see more social and economic justice in the world, and so did I. It seemed there was a hole in our collective soul, if you will, that had to be lled. Many of my students were interested in creating a better world, but they also didnt want to spend their life working for peanuts. In the 1980s, this kind of thinking was not part of the business school culture. Students from top business schools, particularly women, wrote to tell me that they felt like they
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We all want to lead a meaningful life and that comes from being part of something bigger a bigger story than one life, one person, one family.
were the only ones who cared about anything but making money. They felt so alone, and yet I knew that even then, many if not most of my students also cared about making a difference. However, as I said, business as a force for social betterment was not part of classroom discussions yet, or even allowable within the culture of a business school. At the same time, I was feeling many of the same frustrations in my own job. While well paid, I didnt feel that I was helping my students do much more than make more money. I, too, was exemplifying those same values in my corporate work outside of the classroom. I knew I needed a change, a platform other than that of a business school professor, to address this issue for MBA candidates around the world, and for myself.
Your books have charted on the New York Times non-ction bestseller lists; BusinessWeek has called you the saviour of business school souls. What is it about your message that resonates so well?

other. Today, thankfully, my e-mail box is still full, but nowadays its more about helping people network and making it easier for them to make what is still an unusual decision at most business schools (though becoming less so exponentially since 2006.) Its great to see that most schools are changing course work and supporting these paths; now we just need to change the business school culture from competitive taking to collaborative giving.
Describe Net Impact and how it ts into your vision of a values-based business.

Hopefully people understand that that quote, the saviour of b-school souls, was meant to be tongue-in-cheek! We all dream of noble purposes, we all want to lead a meaningful life and know that the meaning comes from being part of something bigger a bigger story than one life, one person, one family. At the same time, were worried about disappointing our parents, and looking smaller in the eyes of our peers. I interviewed a 104-year-old, and asked her what the best thing about being 104 was. She replied, No peer pressure. Not so for the rest of us! We all feel a lot of social pressure, and while we want to make a difference, we also want all these material things. Were afraid to not take the highest-paying job out of school, the one that pays off all our loans and sets us on a golden path toward upward mobility. Deep down though, we know theres something missing from this model of success. You need to ask yourself regularly, How do I measure success? What does it look like operationally? Youll nd the answer is that personal fulllment lies much more in our common humanity than in personal opportunity. We know that life is not about how much you get and accumulate; its a lot more about how much you give away. And thats when we really feel good about what were doing and who we are. Smarts are good, but its really about kindness, about how we treat each other. All I do in my work is give MBAs permission to be who they really want to be. Theres a quote I once heard: Were all angels with one wing, able to y only when we embrace each
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When I founded Net Impact in 1993, the vision was simple: I wanted to have MBAs use their lucky lottery tickets to make the world a better place. Net Impact is a decentralized network run by its student members, who are interested in using their skills and the power of business to create a more just and sustainable world. It develops leaders who are interested in the environmental and social impact of their actions as well as the nancial impact. It is a safe environment where MBA candidates, graduates and business professionals can come together to support each other, help each other nd jobs, learn from experts in the eld and bring exciting new models of responsible leadership into companies around the world. Last year I visited 45 or so NI chapters, and its just amazing what a 15-person board at UCLA or 12 board members at McGill are able to accomplish. Each chapter, organized by school or city, can grow organically in its own way, but always in concert with the core purpose of Net Impact: to develop socially-conscious business leaders who are changing the way we do business. Net Impact is one part of a three-part strategy a small group of us co-created in 1989 at Social Venture Network, the premier organization for socially-conscious entrepreneurs, investors and visionaries. We wanted to rst link current business school students together with an organization where they could discuss these issues, learn, launch and regenerate their careers. The next initiative was to start our own business schools with this collaborative culture, where social and environmental concerns are part of the DNA of the school. Social Venture Network (SVN) founders Gifford and Libba Pinchot launched Bainbridge Graduate Institute in 2001 to start that process. And third, we hope to endow chaired professors in the eld once the academic research accumulates, so that professors can get tenured in these elds.
While many people would like their work to serve the common good, combining prot with purpose is not easy. What are

some tips for getting started on putting your values to work?

My rst tip would be to buy my book True to Yourself [laughing], since all proceeds go to SVN for outreach programs. In the book, I present ve best practices to address the question of how to turn your values into value. The short version is this: Start now, dont wait. There are always yes, buts, there are always ways of living a deferred life plan, but be careful of taking that route. One of our students once said to Warren Buffett, I want to go out and make a lot of money, and then Im going to really serve the common good, to which Mr. Buffett replied, Sounds to me like youre saving sex for old age. Very simply, you have to know what your values are. We all have different things that are important to us. Once you know them, you can think about putting your values to work. And lastly, put together a good set of business arguments and a business process by which you can make it happen. That might be within a company, with your own company, a not-for-prot or a for-prot. The point is to nd the most effective vehicle to meet that social challenge. A dozen years ago I was working at Kinkos, and we were the least environmentally-responsible document-reproduction company. A team of MBAs from California universities did a research project on environmental sustainability, with hard numbers showing how Kinkos could cut costs and increase revenue. A few years later, Kinkos was number one in terms of environmental responsibility. Today, for example, there are strong economic arguments for companies to lower their output of carbon dioxide that students can make use of. That is why the time is now to change our business models.
Recently, even global giants like Wal-Mart have shown interest in sustainability, social responsibility and protecting the environment. If their interest is genuine, arent big companies risking trouble by losing sight of the bottom line?

efforts are directly affecting the short-term and long-term protability of the company. I am proud to say that Ive been told that much of the Wal-Mart greening efforts are the results of hard work by three of our young Net Impact MBAs, all under the age of 30. That said, remember that these efforts to be a better citizen or more environmentally responsible are being done in a way that assures that doing good leads to doing well. It is a business decision, not a sudden change in corporate commitment to the bottom line. Corporations big and small are very responsive to what their stakeholders want. If stakeholder interests change, so will these programs.
What are you questing for in business and life, and who are your heroes who serve as role models in bringing you there?

Theyre just as focused on the bottom line as ever. When you look at the cost/benets analysis, the global economics of being a protable business have changed. These social and environmental programs are sources of innovation the big word in business today as well as vehicles for reducing costs and increasing corporate reputation as perceived by all stakeholders. The three most highly-respected companies on the Fortune 500 list are Wal-Mart, GE and Toyota, all noted for their greening programs. As former GE CEO Jack Welch said in the 1990s, A leaders job is to increase company reputation and productivity, and reduce the possibility of regulation. These

If were talking about having a meaningful life, the point is really to love and be loved. What else does it mean to be human? We can dene love in terms of being needed and needing, and having those needs fullled. Think about the famous survey which asked people what they fear: the number three fear is death, number two is public speaking, and number one is not living a meaningful life. So the quest is really to nd meaning, to say my life counts and I was important in the lives of others. My heroes developed a platform of wealth and inuence, and used that platform for common good. Most notable are people like Arthur Ashe, Muhammad Ali, Shirley Temple Black, Robert Redford and Oprah Winfrey. I have also known many women who have dedicated their lives to raising their children, often as single parents and through difcult times. Finally, many Net Impact MBAs over the past 15 years have inspired me through their faith, determination and courage by showing me that what I thought wasnt possible is possible. Many members of this next generation are already inspirational heroes of mine. They are teaching us another way to think about how we live and work, that business can uplift the human spirit and alleviate poverty and suffering in our world. What better quest is there than that?

Mark Albion is a social entrepreneur who has co-founded seven organizations, including Net Impact, a global network of MBA students and professionals committed to using the power of business to create a better world. He is the author of True to Yourself: Leading a V alued-Based Business (BerrettKoehler, 2006), Making a Life, Making A Living: Reclaiming Your Purpose and Passion in Business and in Life (Business Plus, 2000), and a monthly newsletter at

Rotman Magazine Fall 2007 / 85


Point of View:
Nancy Rothbard, Katherine Phillips and Tracy Dumas



roles and identities has long been a concern for working professionals, and with the erosion of the notion of work and non-work as separate worlds, it has become increasingly salient. As organizations attempt to attract and maintain a committed and productive workforce, they have introduced policies and practices designed to help people balance their work and non-work lives. However, as they move toward incorporating more work-life policies, rms must recognize that a given policy may not be benecial to all employees and may even have drawbacks for some.
Integration vs. Segmentation

Boundary Theory examines the ways individuals erect mental fences around roles such as work and family, focusing on the temporal and spatial boundaries between roles and how they are enacted. The ways that boundaries are enacted may differ greatly; some people tend to keep roles such as work and family separate, whereas others allow them to be intermingled. These approaches are referred to as the segmentation and integration of work and non-work roles. Segmentation refers to the separation, whereas integration refers to the overlap between work and non-work time, artifacts, and activities. For example,
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whereas those who integrate more (integrators) might display pictures of children prominently in their ofces, those who segment more (segmentors) would be less likely to do so. Likewise, whereas integrators might take extra work home, segmentors would be more likely to complete extra work only in the workplace. It is important to note that integration and segmentation lie on a continuum: instances of complete segmentation or integration are rare, and peoples desires for integration or segmentation also lie on a continuum. Both integration and segmentation are viable ways to actively cope with work and non-work role demands. The primary objective of individuals in choosing one or the other is to minimize the difculty of enacting both home and work roles. Employees might desire greater integration because blurring role boundaries allows them to accommodate multiple identities and constituencies in the workplace, thus helping to resolve some of the tension arising from holding multiple roles. Moreover, greater integration provides exibility and enables employees to cope with the multiple demands in their lives by allowing them to deal with problems in any domain. Also, integration reduces the effort needed to transition back and forth between roles. Alternatively, employees might desire greater segmentation because it allows them to preserve and develop their non-work lives more fully. Keeping role identities separate may render individuals less susceptible to stress, depression and extreme

psychological mood swings. Greater segmentation may buffer employees against the spillover of negative emotions and experiences from one domain to the other. Moreover, greater segmentation reduces interruptions, allowing people to focus more exclusively on the salient role. Finally, employees may want to segment home and work to cope with differing expectations or norms for behaviour in the two domains. Just as individuals have varying desires along this continuum, organizational policies may differentially foster more or less integration or segmentation of work and family domains. As stated earlier, individuals choose integration or segmentation strategies with the intent of minimizing the difculties of multiple-role enactment. Similarly, organizational work-family policies are adopted to address the challenges of enacting work and family roles. Some organizational policies may help individuals to strengthen or reinforce boundaries between work and non-work roles, whereas others may help weaken the boundaries between these roles.
Work-Family Issues

Some organizational policies help individuals strengthen or reinforce boundaries between work and non-work roles, whereas others weaken the boundaries between these roles.

Onsite childcare and ex time address two of the most prominent work-family issues in organizations: dependent care and scheduling. We view onsite childcare as more integrating than a traditional childcare arrangement such as a nanny or an offsite day care center. On the part of the organization, offering onsite childcare represents a blurring of the organizational boundary through a formal incorporation of the employees family. On the part of the individual, onsite childcare is a more integrating policy because it allows employees to interact with their children at the workplace and also possibly combine commuting time with family time. Flex time has been characterized as a more segmenting policy along the integration-segmentation continuum, because it promotes impermeable temporal and spatial boundaries between work and non-work roles, enabling employees to establish a non-traditional schedule for when they start and stop work. Aextime policy, therefore, is an example of temporal structuring in organizations, intended to remove overlap in work and non-work activities in a way that reinforces boundaries and reduces non-work intrusion on work life and work intrusion on non-work life. For instance, employees might use extime to modify their work day, working from 7 am until 3 pm, allowing them to escape from the workplace to be at home with their young child during the afternoon. Not only is ex time a more segmenting policy than the previous example of onsite childcare, it is clearly closer to the segmentation end of the continuum than most organizational responses to employees work-family issues such as onsite work-family counselors, telecommuting and ex place. Moreover, because ex time reinforces boundaries between roles, it may be even more segmenting than traditional work arrangements, which are subject to a natural overlap between

work and non-work responsibilities. The director of work-life initiatives at one organization we studied raised an important reason for why managers might encourage ex time, explaining that in traditional work arrangements that do not allow access to ex time, interruptions and overlap often occur. She stated that, ex time really helps reduce the three-oclock syndrome, a phenomenon that occurs typically at three oclock, when moms tend to phone home to check in on their school-aged kids. Separating work and family roles can be valued by the organization because it helps to reduce such distractions.
Person-Organization Fit

Organization-t research suggests that when employees values are congruent with those of the organization such that the organization fullls the needs or desires of the individual, greater satisfaction and commitment can result. Indeed, the degree of congruence between the employees and organizations values can be a better predictor of satisfaction and commitment than either the employees or organizations characteristics alone. Human resource policies and systems can communicate an organizations values to current and potential employees, who use this information in assessing their t with the organization. However, the matching process does not end with the applicants selection into the organization. Once a person joins the organization, a mist may still occur for a number of reasons: organizational policies and values might change, individuals life circumstances and thus desires might change, or policies and values might not be implemented in uniform ways throughout the organization. Thus, congruence is important both in the attraction and retention of employees. Employee job satisfaction and organizational commitment are key constructs in organizational research, and particularly in t research. Whereas job satisfaction captures employees affective orientation toward specic job and task characteristics, organizational commitment captures a broader assessment of the organization, and the extent to which the employee identies with and seeks to be involved in the organization. Organizational commitment is more stable over time than job satisfaction, but both are important constructs. For example,
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Integrating policies such as onsite childcare and gym and concierge facilities have become increasingly popular as mechanisms for tapping into an employees full potential.

although job satisfaction and organizational commitment are both important predictors of voluntary turnover, absenteeism, pro-social behaviours and productivity, research has found that job satisfaction and organizational commitment affect these organizational variables differently. Specically, commitment is more strongly related to turnover, whereas satisfaction is more closely related to absenteeism and performance. We expect that employees who want greater segmentation between work and non-work roles, and who have greater access to an organizational policy that promotes integration such as onsite childcare, will be less satised and committed because this policy is incongruent with their desires. Greater perceived access to onsite childcare may evoke more discussion of family issues in the workplace. However, this increased awareness of family in the workplace may bring up issues that segmentors may want to keep separate from their work role. Segmentors aim to reinforce boundaries so as to reduce interruptions and intrusions from family on work. Moreover, they may even see work as an escape from home. Because they desire to keep work and family separate, an integrative policy that reduces boundaries and promotes bringing the family in would be inconsistent with their desires. This inconsistency may prompt segmentors to feel lower satisfaction and commitment to the organization. In contrast, employees who desire greater integration will experience greater satisfaction and commitment when they perceive greater access to onsite childcare. In this case, the desires of the individuals and the values represented by the policies are congruent. Conversely, employees who want greater segmentation and have greater access to an organizational policy that promotes such segmentation (i.e., ex time) will experience greater satisfaction and commitment to the organization because such a policy is congruent with their desires. When individuals desire segmentation, they want to reinforce the boundary between their work and non-work roles, keeping them distinct and minimizing the blurring of the two roles. Because ex time is a policy that reinforces the temporal and spatial boundary between work and non-work roles, it is congruent with desires for greater segmentation. The opposite is also true: individuals who desire greater integration exhibit less satisfaction and commitment when they perceive greater access to ex time, because integrators want to combine their work and family roles. As such they may see a
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policy that promotes segmentation as one that devalues an important aspect of their lives and discourages behaviour that they might want to exhibit (e.g., talking about, calling, or visiting their children during the day). This incongruence may lead integrators to feel less satised and committed to the organization. Overall, those who desire more integration are more satised and committed to the organization than those who desire more segmentation. This is consistent with research that has found that integration strategies are associated with lower role conict. Related research has found that role identity moderates the relationship between boundary management strategies and role conict, nding that individuals who have high identication with one role experience less role conict when integrating than when segmenting.
Organizational Implications

Modern organizations are moving away from the traditional segmenting institutions they once were, which left the individual with few choices for how to manage their multiple roles and the work-home boundary. Integrating policies such as onsite childcare and gym and concierge facilities have become increasingly popular as mechanisms for tapping into the full potential of the employee. These policies are consistent with the goal of many organizations to maximize employee productivity by encouraging people to stay at the workplace longer. Although these policies and practices may increase some individuals satisfaction and commitment by helping them actively manage the boundary between their work and nonwork roles, greater access to such integrating policies may have drawbacks for some. Desire for segmentation (or integration) is an individual value on which t perceptions can be based. Therefore, under circumstances where there is a mismatch, more policies may not always be better in terms of satisfaction and commitment, and may even lead to negative outcomes for some employees. Firms must recognize the diversity of their employees desires for integration or segmentation. If they better match their structures, policies, and practices with employees desires, employee satisfaction and commitment can increase. Organizations face a tough task: they must pay attention not only to the policies they provide, but also to the values they are communicating to employees through these policies. To manage the diversity of employee desires, rms must foster a culture of respect where diversity of work-family desires is recognized and organizational representatives strive to help each employee meet his or her individual needs.
Nancy Rothbard is an assistant professor of Management at the Wharton School of Business. Katherine Phillips is an associate professor of

Management and Organizations at the Kellogg School of Management.

Tracy Dumas is a visiting assistant professor of Organization and

Management at the Goizueta Business School, and an assistant professor of Organizational Sciences at George Washington University.


Questions for:
Robert Sutton

The Stanford professor and author on the dangers of power and how to ban jerks from the workplace.
Interview by Karen Christensen

Research shows that todays workplaces are plagued by behaviour that leaves people feeling demeaned and threatened. What is going on?

I dont think this is anything new. Whenever you put people into positions of power, unfortunately these things happen. Studies show that when someone is granted power, they become more focused on satisfying their own needs and less focused on the people around them, and they start to believe that the rules dont apply to them. This has always been the case, but it may be getting worse because of the long hours many people are working these days. A survey just came out that showed one in every two employees has experienced an abusive supervisor, so its pretty widespread.
Is management a natural breeding ground for bad behaviour?

I wouldnt want to blame business managers specically, because anytime you put someone in a position of power in any arena, theres a danger that it will happen. And when you pump people up about how important and powerful they are, you can make things worse.
Describe some common bad behaviours.

Theres a whole range of them I list 12 in the book, but other researchers have listed as many as 60 different ways that workplace abuse can occur. It ranges from subtle things like glaring at people, excluding them from conversations, and treating them like theyre invisible, to more extreme things like yelling
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Refusing to be a jerk is not the same as choosing to be a wimp. In fact, some of the most effective organizations I know actually have a lot of friction in them.

or swearing at them. But the denition I prefer is the general notion of leaving other people feeling consistently demeaned and de-energized. There are many ways to go about this kind of dirty work, but that is the consistent end result.
What is the difference between a temporary jerk and a certied jerk?

understood that I still care about you, and you know that. That is much different than a person being demeaning and not even realizing it or worse, doing it on purpose, because they view it as the most effective way to get ahead. And that is actually the case in some dysfunctional organizations.
How can rms avoid hiring these people?

All of us, under certain conditions, are capable of losing it and being nasty. Theres a guy named Lars Dalgaard, who is CEO of a company called SuccessFactors. He did something very interesting recently. This company is one of the fastest-growing software companies in the world its small, but its growing like crazy. Anyway, Lars lost his temper in a meeting of about eight of his colleagues, and rather than ignore the incident, he sent out an apology to the entire team. He told me he had no choice but to do this, because they have the no asshole rule in effect. So Lars was a temporary asshole. Then of course there are certied jerks who behave this way consistently across places and times. Lars story indicates for me a progressive culture that encourages you to be civilized, and makes it both necessary and possible for you to ask for forgiveness.
Despite your campaign against jerks, you are not against friction in organizations.

I talk about Southwest Airlines in the book, and how they try to screen people for attitude; and SuccessFactors goes so far as to have people sign a contract saying they will not behave like an asshole. So some companies have actual HR practices in place to try and screen them out. Leading design rm IDEO is another rm that pays attention to this. They hire a lot of Stanford students, who arent exactly modest individuals. Of course, it helps that their founder David Kelley is so nice its ridiculous; but youve got to watch out for it everywhere.
Are we teaching MBAs to handle these scenarios?

Refusing to be a jerk is not the same as choosing to be a wimp. In fact, some of the most effective organizations I know actually have a lot of friction in them. The difference is that if it spills over too often into personal conict and demeaning people, it becomes disruptive. Theres a large academic literature that shows that when people ght in an atmosphere of mutual respect, organizations and teams, in particular are more creative and productive.
Explain what good conict looks like.

Ive taught loads of management students at Stanford, as well as lots of MBA students who take classes at Stanfords Design School, and I actually think that we are teaching students how to ght productively. We do lots of intense group work, and the truth is, they blow it sometimes. Those of us that run the D-School, we have our moments too, where we veer off into destructive conict; for me thats just part of the ability to be a constructive member of a group. As we move to doing more and more team-based stuff, we are starting to teach this, but its a huge challenge when youre dealing with people from vastly different backgrounds.
How can we stop our inner jerk from getting out on a regular basis?

Its where you argue over ideas, and ght in an atmosphere of mutual respect. So you might say, I think that idea is wrong, rather than, you are a complete idiot. If you do say something personal, it must be in the context of a relationship where its
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The core idea here is taken from the literature on emotional contagion, which is that human emotions are incredibly contagious including acting like a demeaning jerk. Thats why my main advice is to try to resist it in the beginning. Its hard, though. At one of our local companies, which I wont name, people get a good job offer from them, and they say to

themselves, I wont become like them Ill get some great experience and leave pretty soon. But psychologically, its hard not to be affected by it.
Most managers have been in a situation where someone says something that makes their blood boil. How do you suggest handling this?

Describe Harvard Business Reviews reaction to The No Asshole Rule.

Sometimes you just have to pretend youre not there, and not let it touch your soul. One woman told me that she refers to the training she was given for white-water rafting: she was instructed to relax, put her feet in front of her, and let her legs bounce off the rocks. So when things get really bad, she puts her legs out in front of her under the table. Thats her coping mechanism. Another thing you can do if youre in one of these situations is to document whats happening, and try to get other people who are victims to document it as well. In one case, an animal control ofcer with the government wrote to me about how she and some colleagues were being abused by a peer, and their boss refused to do anything about it. So they brought him all these signed diaries she called them the asshole diaries that detailed everything that the perpetrator had done. The offender mysteriously disappeared a few days later she went on leave, and was not to be seen again. Thats a great case of banding together and ghting back against assholes.

Every February, HBR publishes a list of the years top 20 or so breakthrough ideas. I actually dont think this is a breakthrough idea at all, but nonetheless, Julia Kirby from HBR did. She wrote to me last year to ask if I had any interesting new ideas, and I told her, I do have one, but you wont print it, because its not breakthrough, and its got a dirty word in it. But I was wrong: HBR included it on its list of breakthrough ideas for 2007 printing the a-word in its entirety. This week it was even in Time magazine; I was sure they would sensor it. Not everyone is as open-minded, though: The New York Times and The W all Street Journal both refused to print the word. Ive seen everything from a__hole to a#@hole. Those keyboard symbols on top of the numbers are getting a good workout in some places.

Robert Sutton is the author of The No Asshole Rule (Warner Business

Books, 2007) and a professor of Management Science and Engineering at Stanford, where he is co-founder of the Center for Work, Technology, and Organization, a co-founder of the Stanford Technology Ventures Program, and a co-founder and active member of the Hasso Plattner Institute of Design at Stanford. His blog is located at

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Rotman Magazine Fall 2007 / 91


Faculty Focus:
Ole-Kristian Hope


that managers allocations of resources are not always efcient and can even destroy investor value. As early as 1911, Joseph Schumpeter referred to managers as empire builders. Excessive growth and excessive investment are two forms that empire building may take on. It has become one of the mainstays of the literature on corporate governance that executives will likely turn into empire builders if they are not reined in by some tight form of governance. Why do managers behave in this way? Because increasing rm size (or diversifying operations) can serve their private interests in various ways. Motivations for the construction of empires presumably reflect executives hunger for status, power, compensation, and prestige. Empire building, then, stems from differences in preferences between the board of directors (representing investors) and executives, in conjunction with lack of observability, a typical moral hazard problem. Agency Theory describes the natural conict that exists between shareholders and managers, whereby problems may arise because individuals choose actions to maximize their own
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utility. The result is that managers sometimes do not act in the best interest of shareholders. One means to resolve this conict is through monitoring, and one obvious monitoring system is nancial disclosures by rms. To the extent that disclosures serve as a monitoring mechanism, managers are disciplined to act in the best interest of shareholders. However, when disclosure quality is reduced, the agency-cost hypothesis predicts that managers can make selfmaximizing decisions. These sub-optimal decisions include empire building, which decreases operating performance and reduces firm value. Managers are able to behave this way because investors are less capable of linking managerial decisions to firm performance when the quality of monitoring mechanisms is reduced.
Exhibit A: Geographic Earnings


My colleague Wayne Thomas and I recently tested the agency-cost hypothesis in the context of rms decisions on whether to disclose geographic earnings in their annual report following the adoption of Statement of Financial Accounting Standards No. 131 (SFAS 131). Geographic earnings represent the operating performance of a multinational company in a particular foreign country (e.g., Mexico) or geographic region (e.g., East Asia). Prior to SFAS 131, geographic earnings were a required disclosure for all multinational companies. However, SFAS 131 eliminates this disclosure requirement for most firms (but maintains the requirement for disclosure of geographic sales to external customers and long-lived assets). When operating segments are dened on any basis other than geographic area, geographic earnings are no longer required to be disclosed, and most rms opt not to disclose. This potentially hinders the ability of shareholders to monitor managerial actions related to foreign operations, as risk and growth opportunities vary considerably around the world. If non-disclosure reduces monitoring of managerial actions, then we expect to observe managerial empire building, reduced performance of foreign operations, and an overall reduction in rm value. While rms provide a variety of nancial disclosures, testing the agency-cost hypothesis in the context of non-disclosure of geographic earnings is particularly advantageous for several reasons. First, as mentioned, rms have the option of not disclosing geographic earnings following the adoption of SFAS 131. This provides an opportunity to construct a changes-over-

time test of firm performance. Firm performance when all rms disclose geographic earnings (pre-SFAS 131 period) can be compared to rm performance when only some rms disclose (post-SFAS 131 period). Second, approximately 74 per cent of rms sampled no longer disclose geographic earnings following adoption of SFAS 131. Thus, one can compare rm performance for a group of disclosers versus a group of non-disclosers in the pre-and post-SFAS 131 periods. Most mandated disclosure changes affect all rms in the same way at the same point in time, making cross-sectional tests difcult. The ability to provide difference-in-differences tests (i.e., cross-sectional comparisons in the pre- versus postSFAS 131 periods) allows us to control for numerous extraneous factors that could affect rm performance. A third advantage of focusing on this element of disclosure is that one can compare the performance of foreign operations with domestic operations within the same rm. Presumably, the decision to disclose or not disclose geographic earnings relates only to foreign operations. If disclosure decisions affect agency costs and therefore rm performance, we would expect nondisclosure of geographic earnings to have an impact only on foreign operations. The ability to test the impact of disclosure on one component of rm performance (foreign operations) while controlling for another (domestic operations) provides a within-rm control that increases reliability of conclusions by controlling for a number of unmeasurable rm characteristics.
Prior Research

In a widely cited article, Michael Jensen presented a Free Cash Flow Theory, whereby rms with high free cash ows and low investment opportunities have incentives to grow beyond their optimal size. By growing the rm, managers gain by increasing the resources under their control, increasing their prestige, and possibly their compensation (since compensation is often tied to sales growth, rm size and diversication). In a similar vein, researchers presented a theory of managerialism, whereby managers have incentives to grow the rm beyond its optimal size because this decreases their unemployment risk, creates additional middle manager promotions, and makes the manager more indispensable to the rm. Investors seek high-quality disclosures which reduce information asymmetries between investors and managers (and among informed and uninformed market participants), and better disclosures improve shareholders ability to relate managerial decisions to rm performance. The relation between disclosure quality and monitoring ability may also apply to corporate boards. A recent example is a letter from the International Corporate Governance Network to the International Accounting Standards Board (dated February 15, 2006) states that, Without appropriate information, outside investors may not be able to fulll their role as monitors of corporate affairs. Voluntary disclosures, such as disclosure of geographic earnings after the implementation of SFAS 131, can play an important role in stewardship. As Philip Berger and Rebecca Hann state, Segment protability is likely the most valuable

piece of information managers might wish to withhold from competitors and investors. Managers face agency costs of segment disclosure if the revelation of a segment that earns low abnormal prots reveals unresolved agency problems and ultimately leads to heightened external monitoring. They also state that in studying managers motives to withhold segment data, one needs to consider not only what managers want to hide, but also what they can hide. Several studies provide evidence of the higher information asymmetry associated with foreign operations compared to domestic operations. For example, managers can grow the rm (via sales or assets) by moving into unprotable or less profitable foreign markets. While the rm grows, managers are not required to disclose reduced prots of the foreign segments. As rms are still required by SEC Regulation 210.4-08(h) to disclose total foreign (and total domestic) income, these prots can be aggregated into a total foreign income number. While total foreign prots will decline, it is not possible for investors to determine whether lower prots occur as a result of existing foreign operations or as a result of managerial decisions related to expanding foreign operations. In other words, non-disclosure makes it more difcult for investors to hold managers accountable for segment-specic decisions. Thus, non-disclosure of geographic earnings allows managers to expand their rm with less accountability, leading to higher growth in foreign sales, lower foreign protability, and lower rm value. Variables other than sales growth could also be used as measures of empire building, including changes in total assets, total capital expenditures, or total expenditures for R&D and acquisitions. However, because we examined disclosure related only to a portion of the firm (i.e., foreign operations), we chose foreign sales growth as a our measure of foreign empire building. In addition to being a useful measure of empire building, foreign sales growth also has the advantage of being readily available on Compustat, our source for segment data. SFAS 131 does not require disclosure of capital expenditure, depreciation, or number of employees by geographic area for most rms, making these data largely unavailable. In addition, SFAS 131 changes the requirement (from SFAS 14) that rms no longer report total assets by geographic area, but now must report long-lived assets by geographic area. However, Compustat provides data only for total assets by geographic area. If the rm reports long-lived assets but not total assets (in accordance with SFAS 131), then Compustat reports missing geographic asset data for that rm. We consider growth in foreign longlived assets as a sensitivity analysis, and results are consistent.
Our Findings

Prof. Thomas and I sampled rms that have extensive foreign operations, with foreign sales on average being almost 37 per cent of total sales in the post-SFAS 131 period (as compared to ten percent for the full Compustat population). Thus, rm performance should be particularly sensitive to disclosure decisions related to foreign operations. Firm performance is not likely to
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Until now, there has been little empirical evidence on the relation between nancial disclosure and managers propensity to over-invest.

be as sensitive to disclosures related to domestic operations. Information related to domestic operations is much more widely available from alternative sources for most rms and easier to process. Thus, our tests of the impact of geographic earnings disclosure on the performance of foreign operations provided a strong setting for testing the agency-cost hypothesis. Consistent with the predictions of the agency-cost hypothesis, we found that non-disclosure of geographic earnings is associated with a signicant increase in foreign sales growth and a signicant decrease in foreign prot margin. In other words, as the ability of shareholders to monitor managers diminishes because of non-disclosure of geographic earnings, managers are more willing to expand their international operations (i.e., build an empire), even though such actions lead to lower rm performance. We also found that overall rm values of non-disclosers are signicantly lower than those of disclosers in the post-SFAS 131 period. The lower rm value is consistent with investors detecting the value reducing decisions of managers of non-disclosing rms. Since we controlled for domestic performance in these tests, we attribute the lower rm values of non-disclosers to foreign operations. We nd no evidence of differences in rm values in the year prior to adoption of SFAS 131. Importantly, we did not nd a similar pattern in rm performance for domestic operations in the post-SFAS 131 period or for foreign operations in the pre-SFAS 131 period. Firms that do not disclose geographic earnings following adoption of SFAS 131 do not have greater domestic sales growth or lower domestic prot margins in the post-SFAS 131 period. In addition, during the pre-SFAS 131 period, rms that will eventually decide not to disclose geographic earnings do not have greater foreign sales growth or lower foreign prot margins than do rms that will continue to disclose geographic earnings. These results suggest that differences in the hypothesized direction occur only for foreign operations and only in the post-SFAS 131 period. This increases our confidence that results relate to their hypothesized effect and not to some overall rm characteristic associated with rm performance and the decision to disclose geographic earnings. As an additional sensitivity test, we examined whether the lower performance of non-disclosing rms was expected prior to the adoption of SFAS 131. One may consider that managers make disclosure decisions based on expected performance rather than causality running in the opposite direction (i.e., current disclosure decisions affecting future rm performance). We tested this in three ways. First, we compared annual
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stock returns of disclosers and non-disclosers in each year of the pre-SFAS 131 sample period. To the extent that prices lead reported accounting performance, returns in the years just prior to the adoption of SFAS 131 would be lower for rms expected to perform more poorly in future years. We nd no evidence that investors expected the lower performance of non-disclosers. Second, we examined analysts one-year, two-year, and long-term forecasts of earnings growth just prior to adoption of SFAS 131. If analysts expect rm performance to be lower for non-disclosing rms, then this should be revealed in their publicly issued forecasts. We nd no evidence that this is the case. Analysts forecasts of growth in earnings are approximately equal for the two groups of rms. Third, similar to analyst forecasts, we examined management forecasts of growth in earnings for a restricted sample of rms that have data available. We detect no signicant difference in management expectations between eventual disclosers and non-disclosers. Thus, based on the results for the expectations of investors, analysts, and management, we conclude that our results are not driven by prior expectations of differential future operating performance. Overall, our results were consistent with the agency-cost hypothesis. Our additional tests for post-SFAS 131 domestic operating performance, pre-SFAS 131 foreign operating performance, and expected performance by investors, analysts, and management increase our condence in the conclusions.
In closing

When left unmonitored, managers will sometimes make decisions to maximize their own utility, potentially reducing shareholder value. An important function of nancial disclosures is to provide shareholders with a mechanism by which to monitor the activities of managers, and to prevent behaviour such as empire building. Until now, there has been little empirical evidence on the relation between nancial disclosure and managers propensity to over-invest. Our ndings indicate that non-disclosure of geographic earnings is associated with higher foreign sales growth and a decrease in foreign prot margin. As monitoring is reduced, managers are more willing to expand international operations even though it leads to lower protability. In conjunction with the lower protability, we also note that rm values are consistently lower for firms that no longer disclose geographic earnings. This is consistent with investors perceiving these managerial actions as value reducing as well. Overall, our results are consistent with the agency-cost hypothesis and the important role of nancial disclosures in monitoring the activities of managers.
Ole-Kristian Hope is the Deloitte Professor of Accounting and an associate professor of Accounting at the Rotman School of Management. He has won several international awards for his research on nancial reporting and disclosure, valuation, international accounting, nancial analysts, and auditor independence. The preceeding is an excerpt from a paper he co-authored with Wayne Thomas, who holds the John T. Steed Chair In Accounting at the University of Oklahoma. For a complete copy of the paper, e-mail


Point of View:
Rose Patten


IN A BUSINESS ENVIRONMENT where the war for talent will only continue to intensify, effective talent management has become a business imperative. Indeed, it is arguably the single most critical driver of a rms future competitiveness. As the make up of Canadas labour force continues to evolve, organizations of all sizes are recognizing the need to adapt to new realities. In the very near future, the bulk of growth in the North American labour force will be from immigration. Employers will have to seek out the best candidates from a much more diverse pool of available labour. There is also a dramatic shift in labour force demographics underway. For example, it is projected that by 2050, 46.6 per cent of the American labour force will be comprised of people of colour, and in Canada, by 2017, visible minorities will comprise at least 21 per cent of the labour force. Another growing source of talented employees will be the Aboriginal population, which overall, is much younger than the general Canadian population and is increasingly achieving post-secondary level education.

Baby Boomers with signicant experience and institutional knowledge are beginning to retire in increasing numbers, which in turn is leading to the promotion of more Generation X workers into critical leadership positions. At the same time, 5.6 million Generation Y workers are starting to enter the workforce, while many older workers are continuing to work much longer than they used to. The BMO Retirement Trends Study, conducted by Ipsos Reid in 2005, showed that one-third of retirees surveyed were still working or were self-employed, while more than half of all pre-retirees expect to be working at least part-time in retirement. The net result of these converging demographic realities is that the workforce of tomorrow will look signicantly different than todays. Those who plan for this now and adapt to these changes will reap the rewards.
Old Paradigms Just Wont Do

The ability to effectively tap into the new pools of talent will become increasingly crucial. While it is common for rms to
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While the changing demographics of the labour market have become obvious to most of us, what is often not as recognizable is the risk inherent in not taking a proactive, deliberate approach to talent management and succession planning.

take a strategic and purposeful approach to nancial capital management, the same focus and discipline must now also be applied to the management of another critical asset: human capital. A systematic approach to the management of human capital includes not only acquiring talent with the right skills, but building leadership strength and having succession capability in place. In particular, companies need to focus on leadership development and succession with the goal of ensuring the identication and development of the leadership capabilities for the needs of the business today, and those required to meet the future needs of the company. The onus is on human resources leaders, in partnership with business leaders. The traditional just-in-time mindset needs to change dramatically to embrace a more analytical, proactive approach to identifying talent requirements, acquiring and deploying the right talent, skills/leadership development, and retention strategies The new strategies that are emerging along these four dimensions make up the foundations of a new paradigm of managing human capital.
A New Paradigm Emerges

One of the most common pitfalls to systemic workforce planning is insufcient management attention on two related fronts. The rst is the tendency to assume that the current job prole is ne for the replacement candidate, without paying adequate attention to the changing business environment. The second is the lack of management priority on forecasting
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future requirements, by bringing together business trends with the available talent supply to construct a more realistic workforce forecast. Adapting to the new multicultural and multigenerational workforce begins with more innovative and exible stafng models, both for acquiring talent and retaining it. Beyond the more familiar focus on advertising and recruiting, other recruitment strategies that must be deployed include building community partnerships, selecting the best from university/ college programs, and leveraging current employee referral systems. As well, employers need to focus on developing creative and exible work arrangements to ensure the needs of future employees are met. To gain a better understanding of diverse communities and their recruitment potential, companies can consider forming partnerships with community and government agencies along with other companies active in their sector. For example, to further our goal of increasing Aboriginal representation at the bank, BMO has been working collaboratively with representatives from other financial institutions and Indian and Northern Affairs Canada, to encourage Aboriginal participation in careers in the nancial services industry. Meetings have taken place with members of the community to discuss career opportunities and how the nancial services industry can better meet the needs of Aboriginal candidates. Creating opportunities through education is another way to start the recruitment process earlier, and gets students thinking about the careers available to them. This can go beyond bursaries and scholarships. For instance two years ago, BMO Capital Markets created a unique program called Equity through Education, which was designed to support members of the four designated groups dened by The Employment Equity Act [women, visible minorities, people with disabilities and Aboriginal people] with educational opportunities. Working with internal employee groups is another important way for organizations to facilitate the recruitment process within targeted communities. Through forums on diversity and afnity groups, companies can increase awareness of internal and external barriers facing employees from every part of their workforce. Employees act as sounding boards and can make inroads into the community through their own networks. Organizations can also hold events celebrating events such as Black History Month or International Day of Disabled Persons in which all employees can share and learn about one another. When looking at retaining or recruiting individuals from

the mature workforce demographic, employers must consider tailoring the employment offer and reward systems to meet this groups unique needs. A one-size-ts-all approach wont work here. This group may require offers of part-time employment or utilizing exible work arrangements. However, efforts spent on this are priceless: the transfer of knowledge and deep experience from this source of candidates can effectively augment talent requirements while enabling advancement and career opportunities for others.
Formal Talent Development at BMO

When looking at retaining or recruiting individuals from the mature workforce demographic, employers must consider tailoring their reward systems to meet this groups unique needs.

Training and development is one of the most important factors in attracting and retaining top talent, and will become increasingly important for companies in meeting the expectations of Generation Y. Unfortunately, for many organizations, development strategies are often the weakest part of a talent management system. At BMO, we approach training and development in three ways. The rst is relationship/interaction-based and focuses on areas such as performance feedback, informal mentoring, and personal coaching. This can involve third-party assessments, developmental coaching and in some cases, engagement of a professional coach to work on areas that have been identied for development. A pitfall in this area is that significant reliance is placed (by the nature of this being relationshipbased) on the skills of individual managers. While some managers are excellent at coaching and having developmental conversations, for some, it is just not a strength. In this case, human resources must play an important role in equipping managers of people to have better performance and development conversations with their direct reports. The second category of development at BMO is experiencebased (on the job) and considerable time and effort is deployed in order to ensure we match the right talent to the right roles at the right time. Examples of this experiential learning include: placement in roles that are a stretch; transfers between staff and line positions; increasing exposure to the senior executive committees; taking on specic short-term projects; and being selected to lead a company-wide initiative or create a new business. The challenges organizations may face when it comes to experiential development occur when the future business requirements were not well dened, or the assessment of strengths or skill gaps was supercial. Effective succession planning, as mentioned previously, can prevent this. The third category is formal education or training interventions/forums. Once again, the key to developing talent,

enhancing leadership bench strength, and increasing succession capability is to ensure that the assessment of talent is rigorous and specic. At BMO we place a strong emphasis on learning and development through our own in-house corporate university. While not many organizations have such a resource, training programs can be offered that focus on broad leadership training as well as specialized programs to develop and enhance core capabilities. This can range from a focus on sales and service to a focus on human resources training. One nal area that organizations must consider when they are trying to mitigate the risks of the impending labour shortage is how to retain and engage their current talent. The rst step to ensuring an engaged and productive workforce is to have a regular feedback mechanism in place to understand the concerns of employees i.e. the employee voice. At BMO, we place a tremendous focus on our Annual Employee Survey, which provides us with continuous feedback on how we are doing as an employer and how things are actually playing out for employees in their work groups. While the changing demographics of the labour market have become obvious to most of us, what is often not as recognizable is the risk inherent in not having in place a proactive, deliberate approach to talent management and succession planning. By unwittingly or stubbornly sticking to old paradigms, companies are putting their future at risk. Taking a more strategic and deliberate approach to embracing the new multicultural, multigenerational workforce allows a rm to position itself for future growth, to avoid being trippedup by talent shortages, and to gain a competitive advantage in meeting the needs of an equally-changing customer base.
Rose Patten is senior executive vice president, head of human resources

and senior leadership advisor at BMO Financial Group. She is also chair of the University of Torontos Governing Council.
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Questions for:
David Miller

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You had a successful career as a senior executive working for companies like IBM and HSBC before attending the seminary, becoming a Presbyterian minister, and now teaching at Yale. What led you to pursue such an unusual path?

The director of Yales Center for Faith and Culture talks about spirituality in the workplace and how to approach it.
Interview by Stephen Watt

I wish I could tell you a dramatic story like the one about Saul on the road to Damascus getting blinded and having a powerful conversion experience. As it was, my faith had always been an important part of my life. While living and working in London, I started having increased interest in deeper theological questions. After about 18 months of prayer and reection, I came to experience what is many refer to as a calling. That is, I discerned that God was calling me into a new eld and a new chapter in my life. I cant tell you how much this came as a surprise to me to discover this calling to study theology. I loved what I was doing in the business world, and felt great satisfaction from my work: I was also at a level for my age where I was making more money than I ever dreamed of. But as this calling became clear to me, I realized my new direction would center around answering one main question, What on earth does my faith tradition, and others, have to do with life in the marketplace? Can ones faith tradition be a constructive resource for engaging the challenging issues that one faces in the marketplace?
The business world is largely a secular world; even business ethics are usually studied from a secular perspective. What do corporations have to gain from making room for spirituality in the workplace?

While the business world is largely secular and rightly so the people who populate it, from secretaries to CEOs, are not. Statistically, some 90 per cent of people are in some ways spiritual, with some sense of a higher power or intelligence: lets call it God. You have this odd situation where business is secular, but the people who comprise business are spiritual. For many decades, there was a model in Western business where faith was a private and personal matter, and you shut that part of yourself down when you got to the ofce. Indeed, I would agree that faith is personal, but what were learning is that faith has public ramications. It shapes how you see the world and how we make sense of the worlds complicated patterns. For many people, its the ultimate source of their ethics, how they make decisions and determine the difference between right and wrong, good and bad. Henry Ford is reported to have said, All I want is a pair of hands on the factory line why is it that I get the whole person? Now business leaders realize that we dont just want employees

hands. We want their whole being; their full creativity and passion. Y ou want people to be engaged. As such, companies have put in place a whole number of benet packages, from day care to yoga lessons. They realize that when they can pay money to help people take care of other parts of their lives, theyre getting healthier and happier, more productive and engaged employees.
The trend in the 20th century was toward secularization and afrming the divide between church and civil society. Now the tide may be shifting in the other direction. What social factors do you see contributing to this change?

evolve as society continues to become more multicultural?

The best sociologists of religion in the 60s and 70s said the world is becoming secular and religion is essentially dying. We realize now that they were wrong. One reason may be the natural instinct of the human spirit or soul to say, No, I have a yearning to incorporate the spiritual into my life, and I refuse to compartmentalize my faith, only to trot it out on my day of worship. One other factor of whats going on is a generational one. If you grew up in the Depression, you werent worried about trying to self-actualize; you just wanted a job that would put food on the table. Nowadays, employees representing three or four generations show up at the ofce every day. You have a few remaining members of the Veterans generation, as well as the Baby Boomers, the Gen Xers and the Millenials. The younger you go in that age group, the more insistent people become about wanting to be treated as a whole person, and not have to privatize parts of themselves. Starting with the Baby Boomers, they want to nd meaning and purpose in their work. They want their personal values to t with the companies values, They want to live a holistic, integrated life; unlike the those who came before them, they refuse to live a compartmentalized life. People arent embarrassed about their gender, sexual identity or race. Theyre proud of who they are. Since 9/11 and the Danish cartoon scandal, you cant help but realize that, like it or not, religion plays a role in modern life. If you look at Africa, Latin America, Asia, religion is thriving and growing. There are other religious traditions that the West isnt so familiar with, like Islam, whose teachings accent that their faith is meant to engage all of life, not just when during worship or prayer. Of course, Judaism and Christianity teach the same thing, but each tradition manifests this concept of integration in different ways in society in general, and in the workplace in particular.
Most ofces close for Christmas and Easter, but not for Eid or Diwali. How will the discussion on faith in the workplace

Well see an interesting tension, but Id like to think that common sense will prevail. In countries that have a historic majority religion prole such as the United States or Canada, where Christianity is the statistical majority religion and part of the cultural heritage there will be somewhat of a blurred line between a religious and a federal or secular holiday. And yet theres also a need to honour and respect different religious traditions. Those in the majority religious tradition shouldnt have to be in denial about who they are, and should be able to say Merry Christmas and so forth. On the other hand, they need to be mindful that not everyone theyre talking to is going to be Christian. There also has to be new awareness and appreciation of other major religious holidays. Letting employees use optional holiday days or personal time is one sensible way to show respect for minority religious traditions. Different parts of the country will solve the problem in different ways. Its one thing if your company is located in an area with a very homogenous religious prole; its another if your company is located in, say, New York City, where youll have a whole plethora of religions represented. Its an opportunity for companies to show respect for different traditions, but each company will nd its own solution.
It seems that management risks opening a can of worms by inviting a discussion on faith issues. How do you avoid creating a hostile work environment where some people feel excluded?

Youre not opening a can of worms: the can is already open! Theres already a powerful phenomenon, a movement whereby people want to live an integrated life, and that includes faith at work. Leadership therefore has a number of options. One is to be in denial, to leave it alone and hope it doesnt blow up in your face, although inevitably it will. Another option is to say, This is happening anyway, so lets gure out how to harness the energy and good instincts that come out of spirituality, and at the same time, develop policies and practices that help us avoid the risks and downsides. Consider what happened in the civil rights movement, when society struggled with the issue of bringing blacks into the work place, and not treating them prejudicially. That was a deeply emotional and difcult time, but companies that tackled the issue have borne fruit from it. In like fashion, companies have thrived over time who addressed other taboo or deeply personal and emotional issues, such as treating women or gays and lesbians equally, or by providing family-friendly policies.
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Statistically, 90 per cent of people are in some way spiritual, with a sense of a higher power: lets call it God. So you have this odd situation where business is secular, but the people who comprise it are spiritual.
MBA programs. Before they jump in, they might want to take some counsel or advice. What I typically advise companies to do is to put together some sort of a task force of people from different levels, and ideally, different religious traditions. Every corporate culture is different, and theres not a one size ts all solution. Take some of your best and brightest people, representing different views, and give them a ninety day target to consider the question, What would being faith-friendly look like in our company, with our culture and our DNA? Probably a number of wonderful commonsense ideas will come forward. Here are some of the ideas that usually result. Just as companies are getting used to providing vegetarian meals, its not a huge step forward to begin having kosher or halal food to tend to Jewish and Muslim needs. Y ou can show more attentiveness to scheduling of major meetings to make sure youre not booking on major religious holidays. Y ou might put up a religious calendar on your website somewhere to be alerted to those. Some companies are creating meditation or prayer rooms, and not just for Muslim employees who may have an expectation that theyll pray ve times a day, but also for non-Muslims who are simply looking for a quiet place to pray, reect quietly, or meditate. Many companies already have things like Gay Pride Month or Black History Month, which create teaching moments where certain questions will come forth. Theres no reason why you couldnt feature different religions in different months, with overviews on what this group is and historically what they believe. What companies will usually nd is that people breathe a sigh of relief that the elephant in the room is finally being talked about, and that theyre being given some guidance on how to carry themselves. Inevitably youre going to stub your toe you are going to make mistakes, and get some push back and confusion here and there but part of good leadership is tackling these thorny issues, and turning a potential problem into a competitive advantage.

I recommend that companies engage the question. If they ignore it, someone else is going to drive the agenda, and its only a matter of time before a lawsuit occurs. Chances are the lawsuit is not going to be from someone upset that theres an overzealous Christian or Muslim proselytizing. Its more likely going to be from a minority religious tradition seeking certain accommodation rights that management doesnt understand, doesnt care about and doesnt handle well. In my experience, embracing this topic helps protect the minority religions rather than hurting them.
Whats the difference between faith-based and faithfriendly?

Many non-prots and registered charities who provide various social services are faith-based, and I think thats a ne thing for society. But I dont think that for-prot companies in North America ought to be faith-based. By denition, that would privilege one faith tradition over another. That could be at a minimum awkward, and at a maximum, probably illegal. So whats the alternative? Thats where I propose this language of faith-friendly. A company that is faith-friendly recognizes that the vast majority of people care, however privately or publicly, about their faith. A faith-friendly company welcomes people of all faith traditions to the table; all are treated with dignity and respect. If your Christian employees want to reserve a room for Bible study, go for it. And when another group, such as Mormons or Muslims, asks to do the same thing, they need to be shown the same respect. It takes a lot of the fear and concern away when people realize that faith-friendly means creating an even playing eld.
What sort of steps can management take to make their workplace faith-friendly? What are some steps to avoid?

Most CEOs and heads of HR didnt study these issues in their

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David Miller is Executive Director of the Yale Center for Faith and Culture at Yale Divinity School and assistant professor of Business Ethics. He also leads the Centers Ethics and Spirituality in the Workplace program and teaches business ethics at Yale Divinity School and Yale School of Management. He regularly advised Fortune 500 companies on ethics and faith issues and is the author of God at Work: The History and Promise of the Faith at Work Movement (Oxford University Press, 2007).


Questions for:
Charles Arntzen

The founder of the University of Arizonas Biodesign Institute on the role of plants in achieving affordable public health.
Interview by Stephen Watt

The Biodesign Institute brings together different elds of research to tackle serious threats to our health, environment and security. How easy has it been to get the various disciplines to work together?

Resources are always a key factor. In 2000, we were very fortunate to receive a new source of funding to attract key people to our activities. The other, single-most important factor was the leadership at the University of Arizona. We had a new president, Michael Crow, who advocated for non-traditional approaches to tackling major issues. The goal of the new institute was to create a horizontal work space where people with disparate interests could come together in one facility and have the opportunity to interact. The president emphasized that there had to be a goal at the end of the day, and that is to benet society. As founding director of the institute, I worked with an architect to design a research building that promotes collaboration through the use of open space. There is a four-storey
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Our goal is to study concepts from nature, to learn from biological systems, and use that information for practical purposes.

atrium in the centre of the building, surrounded on one side by ofces, all with open windows, and on the other side a laboratory, also with open windows. As people move through the building, they are visible to their colleagues, and you can continually see the activities that are going on within the institute. There is an open ow of space and an open ow of people within this space. Anticipating change was part of the design of the institute, and encouraging evolution and rapid change has become a mantra of what weve been trying to achieve.
Infectious diseases cause 35 per cent of deaths worldwide, and are the worlds biggest killer of children and young adults. Now, thanks to plant biotechnology, theres a possibility that vaccines can be produced at lower costs, and delivered orally rather than by needle. How close are we to such a breakthrough?

And we have a technology that can be implemented in the developing world.

Are these advances being implemented yet?

Clearly, preventing infectious disease is a key step toward global stability and economic sustainability. Many of the longstanding infectious diseases are still with us, and we face new threats from antibiotic resistance and the outbreak of diseases that we havent figured out how to control. Other potential challenges are arising as population density increases and large portions of the population move into cities, where disease spreads very rapidly. As we began creating the Biodesign Institute, we had a strong interest in global public health, but recognized that there were already some strong powerhouses in this arena. We decided that our biggest opportunity was to create and exploit new technology to treat and prevent infectious and chronic disease. Our goal is to study concepts from nature, to learn from biological systems, and use that information for practical purposes. We have recruited people with a reputation for excellence in new technologies, particularly for vaccines. My own area of expertise is plant biology, and my colleagues and I are aiming to fuse the cost efciencies of agriculture, and to some extent food processing, to meet the demand for low-cost pharmaceuticals. We are developing a new manufacturing system for vaccines and other protein drugs, using plants instead of mammalian cells in expensive fermenters. Abig part of our effort has been to reduce the cost of making oral vaccines. Over the past 15 years, weve demonstrated in principle at least that we can produce a number of active vaccines for which the manufacturing costs are dramatically lower than traditional means.
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What Ive learned over the years is that to change even one aspect of the introduction of a new vaccine or pharmaceutical is difcult, but to try to tackle new manufacturing systems, change the means of delivery, and change the site of manufacture in this case, to the developing world is an awful lot more complex than I had anticipated. In the future, I see an increasing recognition of the need for public/private partnerships to move these technologies forward. The creation of new means of delivering and manufacturing pharmaceuticals is probably not going to occur in the U.S. or Europe, its going to occur in the developing world. A multitude of smaller companies is already changing the way that research and product delivery are being done in countries like India, South Korea, Brazil and Indonesia. These non-traditional companies are looking for new niches of product development to serve their own populations. They are not focusing only on two to three billion dollar markets, like some of the big pharmaceutical companies. They have a different business strategy that is more consistent with the types of technology were developing.
Your institute recently embarked on an international collaboration with a peer institute in Switzerland to ramp up the production pipeline of HIV vaccines. What other initiatives do you see potentially achieving dramatic results in the future?

We have a very active program underway in developing DNA vaccines for chronic diseases, particularly cancer. This is an area that is just now gaining momentum as genomics and proteomics become useful tools in the pharmaceutical industry. Were also making major steps forward in long-term collaborations in food safety, where were using our skills in diagnostics and infectious diseases to come up with early signals of potential dangers within foods. Also promising are our efforts, funded by the Bill and Melinda Gates Foundation, to develop an inuenza vaccination. My colleague Dr. Roy Curtiss has very innovative ideas for a new strategy for making anti-pneumonia vaccines. Because of the collaborative network hes established, were

Rather than taking multiple years and hundreds of millions of dollars to build a fermentation facility to make a new vaccine, we simply plant seeds.

going to see a large number of initiatives in this area coming out of our institute.
The institute has also been exploring ways to make vaccines and medicines to reduce the threat of biowarfare agents. Please explain.

Our group, in particular the vaccine group, has received funding from the National Institutes of Health and the Army. For public health security, we need to have a stockpile of antibiotics and vaccines for some of the worst threats that bioterrorism might use. Traditional pharmaceutical industries have really not come into play to make, for example, an Ebola vaccine, for very understandable reasons: we hope that there will never be a market for such a vaccine. Therefore the military has stepped in to establish partnerships with academia, small biotech companies and some larger companies to develop lowcost, scaleable technologies that could very quickly produce a stockpile of a new vaccines if a threat arose. Green plants happen to t very nicely in that strategy. We have focused on the use of plant viruses as gene-delivery vectors: you simply drop your gene into a viral vector, infect the plants, and within ten to 20 days, the plant turns into a manufacturing vessel that cranks out protein pharmaceuticals. Rather than taking multiple years and hundreds of millions of dollars to build a fermentation facility to make a new vaccine, we simply plant seeds. The military has recognized the cost advantages and particularly the scalability of growing plants. We could ramp up manufacturing by simply building more greenhouses. The military is providing us with genuine support to advance our core technology and our understanding of what plants can do. They are particularly helping us develop the downstream processing steps to purify our material and nd our way through the regulatory system. If we can manufacture an Ebola vaccine, then we do the same with a malaria or HIV vaccine, once we learn how to produce one.
In addition to your academic work, youve served as a research director for Dupont and as president and CEO of Boyce Thompson Institute. What role is there for private corporations to help bring research discoveries to fruition?

that it has not used for commercial products. Ive found Dupont to be particularly useful and helpful in providing access to technologies that are not in their business arena. This is also a company that learned early on how to protect its inventions through the patent process, and it has taught me why we should protect technology in order to provide a prot incentive to move products forward. The prot incentive applies equally to small, emerging companies: having a way to insure your return on investment is essential. The Boyce Thompson Institute is a not-for-prot corporation afliated with Cornell University. It is supported by the State of New Y ork and is a wonderful example of a public/private partnership. A not-for-prot research institute has a particularly unique place in the U.S. because they can hone in on a specic issue, bringing together some of the very best experts in the world to interact on a narrowly-defined topic. Unlike our Biodesign Institute, where were trying to tackle broad global issues, the Boyce Thompson Institute brings together a tight group of experts to focus on plant biology. .
What sort of vision of a better world inspires your work?

A continual improvement in global public health is absolutely essential for peace and economic sustainability on a global basis. With the advent of modern medicine, especially antibiotics and vaccines, in the last half century, much of the worlds leadership became complacent about public health. HIV has brought our attention back to the fact that the spread of disease can destabilize economies and political structures around the world. My quest and my vision is to keep emphasizing technology solutions for affordable public health. If I had one simple goal, it would be to allow manufacturing of new pharmaceuticals in the developing world, where that manufacturing creates jobs, establishes a viable enterprise and becomes part of the economic fabric. I believe if global public health is incorporated into the economic well-being of a society, rather than being dependent on philanthropy, we will have a much more stable global public health system.
Charles Arntzen holds the Florence Ely Nelson Presidential Endowed

As a large company as, in fact, a collection of very large companies Dupont has a number of technologies on the shelf

Chair and is a Regents Professor at Arizona State University. The founding director of the universitys Biodesign Institute, he has served as chairman of the National Biotechnology Police Board of the National Institutes of Health, and as chairman of the National Research Councils Committee on Biobased Industrial Products.
Rotman Magazine Fall 2007 / 103

News Briefs
FALL 2007

Achieving Sustainable Growth Through Innovation

SUCCESSFUL INNOVATION DOESNT COME from inventing a gimmicky new product or service. It comes from guring out what people really need, and using a creative vision to answer that need, says Dev Patnaik, principal and founder of Jump Associates, a design strategy and product planning rm based in San Mateo, California. On April 5, Patnaik shared his insights on growth strategy in a talk entitled New Opportunity Development Emerge, Reframe, Connect, part of the Rotman Design Thinking Speaker Series. Companies often nd themselves trying to impact what the future looks like, identifying the kinds of goods or services that may generate long-term revenue. Yet for most rms, a single breakout product is seldom able to provide a sustainable advantage in the market. The most successful offerings are the ones that become part of customers daily lives, Patnaik explains. Fifteen to twenty years ago, the Segway motorized scooter was supposed to revolutionize transportation. Starbucks, on the other hand, looked like an ordinary retailer that sold overpriced coffee. Yet which would you rather have invested in today? Working with clients like Nike, HP and Target, Jump focuses on developing new opportunities, not just new products. In the rst step in Jumps opportunity- development process, dubbed the emerge stage, participants are encouraged to look at many different sources of information to produce a big picture of where the company is heading. Think inductively, not deductively, Patnaik advises. Start with a lot of little what if? pictures and let the patterns emerge. The second reframe stage draws upon disciplines like sociology and anthropology to create profound insights into customers habits, wants and needs. Finally, in the connect stage, customer insights are translated into clear and realistic mandates for design. How can we nd new ways to connect with people? Patnaik asks. If you are successful in answering

Dev Patnaik

that question, people will come back to you over and over again because what you do resonates with them. Such an exercise in reimagining the future requires a healthy appetite for risk, since there is no way to know where the process will lead. Starting with the end in mind is a good way to kill the game, says Patnaik. Companies must also devise a exible implementation plan that makes room for setbacks along the way. Create a roadmap thats built to learn, since statistically, many business initiatives do end in failure. Even the most brilliant business plan or product idea will go off the rails without support from employees. Incentives and metrics are key to motivating success. People are not dumb. They perform to what you measure them on, says Patnaik. Before you start the process, ask yourself: What kind of innovation do I want? And what am I willing to do for that innovation? Reward your staff for taking risks, so that everyone is making better decisions. With proper planning, companies can enjoy a behavioural shift toward creativity and risk taking, resulting in a corporate culture where innovation is an everyday phenomenon. BY STEPHEN WATT

104 / Rotman Magazine Fall 2007

Creative Class Thought Leader Joins Rotman Faculty


of the creative class has been lauded by Harvard Business Review as a major breakthrough idea has joined the faculty of the Rotman School of Management: Richard Florida will be a professor of Business Economics and Richard Florida the academic director of the newlyestablished Martin-Lang Prosperity Institute at the Rotman School. Prof. Florida is well known for his work on economic competitiveness, demographic trends, and cultural and technological innovation. In the last five years, he has penned two bestsellers, The Rise of the Creative Class and The Flight of the Creative Class, which launched an intellectual revolution that has changed the way companies, nations, and communities compete and thrive.

The Prosperity Institute, a $120-million project, was made possible by a cornerstone $50-million donation to the Rotman School by the Province of Ontario and a $10-million gift to name the Institute from Sandra and Joseph Rotman. The Institute will take an integrative approach to the study and creation of jurisdictional advantage. Currently, the study of how jurisdictions such as provinces become magnets for companies to start-up, locate and grow, and for talent to study, live and work, has been fragmented across many diverse elds. Over the past decade, the Rotman School has assembled the largest academic research group in Canada dedicated to the study of jurisdictional advantage and prosperity. In addition to his academic role at the Rotman School, Prof. Florida is the founder of the Creative Class Group, a global think tank, based in Washington, DC. Previously he was the Hirst Professor of Public Policy at George Mason University and a senior scientist with the Gallup Organization. He taught for nearly two decades at Carnegie Mellon University and has been a visiting professor at MIT and Harvard Universitys Kennedy School of Government. He earned his bachelors from Rutgers College and his Ph.D. from Columbia University. BY KEN McGUFFIN

Carving Out a New Career Path

CAREER VOLATILITY has become a fact of life for many professionals: the average MBA graduate will change professions two or three times, and work at six companies before retirement. Still, carving out a new path at work remains an often anxious and unsetHerminia Ibarra tling experience, and many are turning to coaches and career counselors for help. One unusual approach to professional development is offered by Herminia Ibarra, INSEADs Chaired Professor of Organizational Behaviour and author of Working Identity: Unconventional Strategies for Reinventing Your Career (Harvard Business School Press, 2003). On April 16, she presented tips for successful career reinvention as part of the ongoing Rotman Integrative Thinking Seminar Series. In the course of her research, rst as a full professor at Harvard and now at INSEAD, Ibarra has come across many mid-career professionals who are at a crossroads, stuck in jobs theyve lost passion for but unsure what to do next. If youre an educated professional, youre probably used to doing things in a goal-oriented, orderly way, and career reinvention doesnt lend itself to this kind of process. It can seem very unpleasant and chaotic. For those faced with career uncertainty, traditional executive coaching might appear to make things worse, not better.

Career counselors tell us that successful career change happens in a linear process: you begin with rst knowing what you want to do, then use that knowledge to guide your actions toward the one right job, says Ibarra. Unfortunately, real life doesnt work that way. Based on her in-depth research of professionals in transition, Ibarra advises an approach that makes room for experimentation. Her three-part process of career change includes trying out new professional activities, connecting with new social networks, and working and re-working the story we tell ourselves and others about who we are. How do I know what I want to do if I havent done it yet? Ibarra asks. There is no one true self, waiting to be discovered. Each of us has many selves, some more developed than others, that depend on us to actualize them. Adding to the challenge, those close to the professional in transition may be less- than supportive during the period of indecision. Most people have someone close to them telling them they must be crazy, theyre taking too much of a risk, says Ibarra. This is why its important to develop a new narrative that makes sense to others (and yourself) about why the change is necessary, and to expand your circle of friends and contacts. Says Ibarra: Get out of your usual network, not just for release but for support, to meet people who are in the realms to which you aspire. The result, while challenging and long in duration (the average career change takes an average of three years to complete) is almost always worth it. Ask yourself, Do I want to be doing this in ten years? If the answer is no, its time to think about making a move. BY STEPHEN WATT
Rotman Magazine Fall 2007 / 105


News Briefs
Global Pension Research Projects Announced by ICPM

Centre for Pension Management (ICPM) has awarded $300,000 in funding to ve research projects that will examine various aspects of pension fund management, governance, investment, and implementation. ICPM issued an international Call for Papers in Paul Halpern May 2006 to solicit proposals from individuals and organizations. Under the direction of Rotman Prof. Paul Halpern, chair of the Research Committee, five projects were selected for funding. Researchers of the selected projects represent ve countries and a wide range of expertise in pension research. The funding will be spread over two scal years. Danyelle Guyatt of the University of Bath is researching Identifying and Mobilizing Win-Win Opportunities for Collaboration Amongst Pension Fund Institutions and Their Agents. The team of Mariassunta Giannetti, Stockholm School of Economics; and Luc Laeven of the International Monetary

Fund, representing Sweden and the United States, are researching Pension Reforms, Ownership Structure and Corporate Governance: Evidence From Sweden. A project on Public Pension Governance, Contracting Relationships and Performance, is underway by Joel Harper of Oklahoma State University. The team consisting of Michael Brandt, Duke University; Ralph Koijen, Tilburg University and Netspar (The Netherlands); and Jules van Binsbergen of Duke University is researching Optimal Decentralized Asset Management for Asset Liability Management. Finally, the team consisting of Giovanna Nicodano, Maela Giofr, and Carolina Fugazza at the Center for Research on Pensions and Welfare Policies (CeRP, Turin, Italy) are researching The Role of Occupational Pension Funds in Hedging Background Risk? A Normative Approach in an International Framework. The Rotman International Centre for Pension Management is striving to become a global catalyst for improving pension management. It sponsors research and fosters dialogue that focuses on building better pension deals, better pension fund organizations, and better pension legislation and regulation. In addition, the centre looks for opportunities to raise pensions-related content in undergraduate, graduate, and executive programs at the Rotman School and other education-oriented forums. Further details on the International Centre for Pension Management, including its research program, are available online at: . BY KEN MCGUFFIN

Rotman Provides Bridge-toBusiness for Undergrads

FOR THE SECOND CONSECUTIVE SUMMER, a program at the Rotman School has equipped undergraduate Arts and Science students with the skills they need to succeed in their rst jobs. Rotman Bridge to Business (B2B) is a month-long intensive program that provides participants with knowledge of fundamental business, management and people skills that will serve them throughout their careers. Unlike traditional undergraduate learning models, there is little lecture time, with the focus placed on group work, experiential-learning sessions, and peer and mentor feedback. Designed and taught by Rotman faculty, Bridge to Business also brings guest speakers and advisors from the world of business into the classroom. The program, for those who are entering or have completed the nal year of an undergraduate Arts & Science degree, ran from June 4 to 29. A blend of the critical thinking and writing skills taught in the undergraduate arts and science programs combined with the business skills gained in our program creates a highly attractive and well-prepared candidate for many employers,

106 / Rotman Magazine Fall 2007

Making the Best of a Fossil Fuel Future

THE RECENT DEBATE ON climate change generally assumes the need for humanity to wean itself from fossil fuels in order to prevent further global warming. Not the case, says researcher Mark Jaccard, who makes the case that signicant fossil fuel use and climate protection can co-exist without harming economic growth. Jaccard is professor of resource and environmental management at Simon Fraser University and author of Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy (Cambridge University Press, 2006), winner of the Donner Prize for the years best work on public policy. Jaccard presented his controversial and compelling ndings at a March 29 session of the Rotman Public Policy Speaker Series. Jaccard began his lecture by quoting some of the more pessimistic prophets of the environmental movement. The one argument is that were depleting our resources without anything to replace them: were running out, he says. The other argument, ironically, is that were not running out fast enough. The problem with this doom-and-gloom approach, says Jaccard, is that it is unable to present any workable solutions. Hydrogen, often touted as an environmentally-friendly replacement for oil, is a non-starter: Hydrogen is not found readily in nature, but is a secondary source of energy, like electricity, he says. Its something wed have to produce, and at great expense. Without the hydrogen economy as a possibility, were left with the usual sources of primary energy: nuclear, fossil fuels and renewables, each of which comes with signicant

environmental and economic costs. In the course of his research, Jaccard has come to the view that there are sufcient supplies of fossil fuels to last for at least another century. There are also technologies available to ensure that our continued use of fossil fuels does not come at a steep envi- Mark Jaccard ronmental cost. The technologies to create zero-emission fossil fuels already exist, he says. These technologies make possible both emission reduction and energy efciency, and can be applied at each point in the energy chain. The question of how to shape policy to encourage these greener technologies lies at the centre of Jaccards Donnerprize winning treatise, as well as his upcoming book, Hot Air: Meeting Canadas Climate Change Challenge (Douglas Gibson Books, 2007), co-authored with Jeffrey Simpson and Nic Rivers. Jaccard is a strong supporter of market-driven solutions, such as creating an auction for emissions, rather than setting environmental targets or offering subsidies that favour a particular energy source. Without policies that no longer allow us to use the atmosphere as a free waste receptacle, were just pretending to act, he says. Our policy should focus on emission reduction and the protection of land and water. As for the best type of energy to use, lets focus on emissions reductions and let the market decide. BY STEPHEN WATT

says Rotman Prof. Joseph DCruz, academic director of Bridge to Business. Last years offering was an overwhelming success, both for students and employers. The inaugural class of 57 in June 2006 drew students from across Canada and as far away as the United Kingdom. University of Toronto graduate Ashutosh Jha readily admits that he didnt know what went on in business schools before he enrolled in the program. He found that it cleared up the mystery surrounding courses like Marketing and Accounting by going through the basics. We learned, for example, that marketing isnt done by intuition that there is logic behind it, says Jha, who is currently employed as a business systems analyst at Mayon Technologies Inc. These are things that as a non-business student, you dont realize. With the training provided by the B2B program, graduates are able to understand the bigger picture of any company, adds Jha. We can work towards strategic goals while understanding where the other departments are coming from. Tonika Morgan, a project manager with the Jane/Finch

Community and Family Centre in Toronto, took a different path before arriving in the program. A mature student, she had always worked while attending classes at Ryerson University in Toronto. You need some sort of business sense to work with non-profit organizations, says Morgan who started at the Centre as a youth program coordinator. Currently she is responsible for program coordination, strategic planning and resource development as well as managing the projects nances and promotional work. I was pushed to see how fast I could learn things and apply them, she says of the programs intensive month-long schedule. In addition, Bridge to Business helped Morgan hone the people skills that she uses to manage her team of volunteers. It was a professional kind of relationship building that Id never had to do before, she says. Complete program information, including scholarship opportunities, is available online at:

Rotman Magazine Fall 2007 / 107


Alumni Prole
Johann Koss (MBA 04)
The president and CEO of Right To Play and four-time Olympic gold medalist became involved in the non-prot organization after visiting the African country of Eritrea, where he was profoundly moved by the plight of its children.

Interview by Jennifer Hildebrandt

What led you to create Right To Play?

Seeing how destructive poverty, disease and war have been to children in countries like Eritrea, I wanted to create an organization whose goals included harnessing the best practices of sport (optimism, respect, compassion, courage and leadership) to empower these children to build healthier communities. For example, our SportHealth program teaches the importance of vaccinations, as well as prevention of TB, Malaria and HIV/AIDS.
Are there any links between your skills as an Olympic Athlete and those required to run Right To Play?

The main challenge will be achieving the scalability required to reach these children. We are doing the math right now on the number of people we will have to recruit locally, and the number of training sessions needed. Our ability to recruit and retain people in the eld will be a big challenge, along with the usual nancial constraints. We have great nance people who keep us on track, but at times it is difcult to anticipate the timing and amount of funding required ahead of time.
As a social entrepreneur, do you have any advice for people who are seeking a meaningful quest for their organizations?

Id say two things: dare to think big, and get started now. Whether you are a social entrepreneur or a traditional entrepreneur, the critical driver is to create your purpose. Look at the founders of Google, Larry Page and Sergey Brin. They didnt talk about creating a ten-billion dollar business in the beginning. They were driven and motivated by starting a search engine that would be the best in the world. Y our purpose needs to be broader than a return on investment, because you will be putting so much time and energy into your venture.
You are also on the board of MOT (Courage), which mobilizes athletes in the fight against drugs and doping; Time Magazine has named you One of 100 Future Leaders of Tomorrow; and last year the World Economic Forum named you a Young Global Leader. If you have any downtime, what do you enjoy doing?

Perseverance is one of the most transferable traits I know of. As an athlete and social entrepreneur, I have used the relentless pursuit of my goals and the ability to transform my mistakes into learning experiences. The two other traits that I have taken from my life as an athlete are the ability to set high goals and teamwork. Teamwork is not usually associated with speed skating, but while you compete as an individual, you are also part of a bigger entity. My teammates and I worked off of each others successes, and that has given me an appreciation for harnessing my colleagues skills to benet the whole organization.
In the aftermath of your [Executive] MBA, has your strategic and operational vision changed for Right To Play?

Its very important for me to have regular downtime, which usually includes running or watching movies. On my holidays I like to go to the mountains to ski or hike. In the spring I visited Selkirk, B.C. to back-country ski.
How does it feel to know that Right To Play is making a difference to the worlds most marginalized children?

The changes are more related to Right To Plays growth as an organization. As CEO, you are responsible for everything in principle, but you cant do everything. As we grow, one of our challenges has been to move from a structure of doing everything to one of dened roles. Its challenging to keep people motivated through these kind of changes.
You have said that Right To Play is on a quest to help ve million children by 2012. What are some of the challenges to reaching this goal?
108 / Rotman Magazine Fall 2007

What motivates me and I think, many of our staff is seeing the impact of programs such as Play to Learn in Rwanda, Benin, Mali and Ghana, where we work with partner organizations and teachers to address educational challenges such as school retention, quality of learning resources, gender equality and inclusion, as well as effective HIV/AIDS prevention. Catching a childs smile or hearing them tell us how a program has changed their life, family, community, or even how they believe in themselves, is incredibly satisfying, and lies at the heart of our mission.

Katherine Magee (MBA 00)

Founder, Greenopolis

Interview by Stephen Watt

After working more than 15 years in strategic marketing and communications, you created a new company, Greenopolis. Describe how that happened.

Although my background is in small business and start-ups, I went the corporate route after Rotman, and ended up running the national marketing department for a large investment management company. After six years in that environment, I was ready for a change. I knew that I wanted to go back to my roots, but wasnt quite sure what form that would take. So in early 2006, I quit my job and went to Johannesburg for a few months to do volunteer work with CIDA City Campus (the free university for blacks in Africa), then returned to Toronto with a completely open mind, lots of questions, and really only knowing that whatever I did had to have some social impact. Following up on a long-term interest, I started to do my own research into the green area, and became overwhelmed with the sheer volume of information out there, primarily delivered by people preaching from their soap boxes or full of scary statistics with no practical solutions. As friends started to call me for information and resources, I realized that there was a business opportunity to make it easier for busy Canadians to live a greener life. So many of us know we could be doing more, but were too busy to do the research or were simply paralyzed about where to start. So we provide the practical ideas, solutions and resources to help out.
What is the best thing about your job?

to-day aspects of running the business. This is also a challenge as I dont have a partner to bounce long-term ideas and strategies off. I love working independently, but the ofce wall isnt always the best partner for brainstorming about future growth of the company.
What are you questing for in life?

Im questing to build a life that allows me to connect more meaningfully with the world around me, on my terms. Ideally, I will nd a way to contribute to society, make a decent living, have autonomy over my schedule, stress and life, and continually be challenged with new ideas and experiences.
Whats the biggest personal or professional risk youve ever taken?

Although I am a big believer in taking calculated risks throughout your life we only go around once, so might as well make the most of it the biggest risk so far has probably been quitting the corporate world without a clear idea about what my next steps looked like. But I have absolutely no regrets; its been a fabulous journey so far. I have learned over time that what seems like a massive risk at the time usually turns out to be the rst step in discovering new opportunities, experiences and takes you in unimaginable directions. Its simply a matter of creating the right environment to nurture the opportunities.
What is your fondest memory of your Rotman MBA experience?

Not having worn a suit in over a year! Seriously, the best thing is that Im having fun and learning new things every day. No day is boring: if I am having a block on writing and research, I can work on sales or accounting. And the people I get to meet are amazing. I dont know if its because I am now dealing primarily in the green and entrepreneurial sector, but as a whole, the people I deal with are positive, engaged, committed, collaborative and inclusive. It is inspiring and motivating work.
What is your greatest challenge?

The incredible people I met, worked with and interacted with, the fellow students, faculty and other staff around Rotman, many of whom I still see on a regular basis. I also have to say that the summer I spent working with Impact Consulting was truly amazing: I gained experience in running my own business within a partnership, built condence and experience in selling myself, and learned how to work effectively with a great deal of ambiguity.
What do you do for fun?

The biggest challenge is nding the time to focus on longerterm strategy. Despite best intentions to spend time thinking about the long term goals of the company, it is easy to get caught up in the reactive side of things, dealing with the day-

Though my fun time has denitely decreased since launching Greenopolis in early 2007, I love traveling or planning the next adventure, shopping at Kensington Market for good food to cook and enjoy, training for the next half-marathon, volunteering with Rotman NeXus and the Toronto Public Library, photography, trying to squeeze in time to read, seeing the latest movies and just hanging out with friends.
Rotman Magazine Fall 2007 / 109


Alumni Capsules

Kathy Butler (MBA 96) Managing Director, Investment Banking, CIBC World Markets Lives and works in: Vancouver, British Columbia


clients. Time manage-


Open-minded. hiking and playing with Clara. MOST IMPORTANT THING MY MBA TAUGHT ME: Where to nd information when you need it. I still recall that for a team project, we tried all sources to conduct our research, including internet, newspapers, industry research, interviewing with industry insiders, etc. WORDS OF WISDOM: Never give up. Keep trying. SOME OF THE THINGS IM QUESTING FOR IN MY LIFE: The meaning of life, internal peace and perfection.

Financial analysis, project management, communication. PROUDEST MOMENT: My promotion to Managing Director. Energetic. (In a previous life) sold my car, kept the car loan, and used the money to travel to Europe. HOW I RELAX: Playing at the playground or the beach with my family, spending time in Whistler. MOST IMPORTANT THING MY MBA TAUGHT ME: Team work. WORDS OF WISDOM: Treat people with kindness and respect. SOME OF THE THINGS IM QUESTING FOR: A balanced life and a healthy, happy family.

Cynthia Lam (MBA 93) Director of Compliance, Bloomberg Tradebook Hong Kong Ltd. Lives and works in: Hong Kong, China

Alex Wang (MBA 00) Director, Investment, Private Wealth Management, Canadian Imperial Bank of Commerce Lives and works in: Hong Kong, China

Interacting with portfolio managers and hedge fund managers on investment ideas and market trends. MY BIGGEST CHALLENGE: Ensuring investment execution is smooth and cost-effective (operations, systems

and trading).
MOST IMPORTANT SKILL(S) FOR MY JOB: In-depth understanding of capital markets and investment products. PROUDEST MOMENT: When daughter Clara was born four years ago, which immediately promoted me to the position of a father (not an easy job)!

BEST THING ABOUT MY JOB: It ts my character. What better than to be paid for acting in accordance to my conscience? MY BIGGEST CHALLENGE: Compliance is not just about rules and regulation, its about people. Changing peoples attitudes to build a more compliant culture is an ongoing challenge. MOST IMPORTANT SKILL(S) FOR MY JOB: Listening. PROUDEST MOMENT: Being twice elected to represent the securities industry on the Hong Kong Securities Institute (HKSI)s board as its youngest elected and female director. THE WORD THAT BEST DESCRIBES ME: Persistent. HOW I RELAX: Thai boxing and golng. MOST IMPORTANT THING MY MBA TAUGHT ME: There is no boundary to learning, and one should strive to keep up-to-date. I am pursuing my doctoral thesis in corporate governance and hope to graduate with a DBA at the Hong Kong Polytechnic University later this year (2007). WORDS OF WISDOM: The role of compliance is like that of a company doctor: prevention is better than a cure. If the company does fall ill, I advise on remedial solutions, working in partnership with regulators to minimize reputation risk and impact. SOME OF THE THINGS IM QUESTING FOR IN MY LIFE: To stay healthy, learn new things, strengthen my social network, good food and travel.

110 / Rotman Magazine Fall 2007

Christina Best (MBA 85) Vice President and Director International Human Resources, Legg Mason Inc. Lives in: Washington, D.C. Works in: Baltimore, Maryland
BEST THING ABOUT MY JOB: The work international merger integration work. MY BIGGEST CHALLENGE: Doing the morning school run and then driving the I95 at 85 miles an hour to make it to my rst meeting on time. MOST IMPORTANT SKILL(S) FOR MY JOB:

BBQ and beer on the deck or world travel (for vacation, not work). MOST IMPORTANT THING MY MBA TAUGHT ME: Business Statistics... never thought I would ever say that, but its the most valuable tool that I continue to use. WORDS OF WISDOM: There are three Ks in life: LucK, RisK, and WorK. You need to have a bit of luck sometimes to get the opportunity, but then you have to take the risk of going for it, and nally work like hell to make it a success. All three are required. SOME OF THE THINGS IM QUESTING FOR IN MY LIFE: I want to hire an architect to build my dream house some day. The question is, which country is home?

Experience in working cross cultures the EU, Asia Pacic and Latin America PROUDEST MOMENT: When my daughter was born. She is amazing. THE WORDS THAT BEST DESCRIBE ME: Unusual. HOW I RELAX: Walk the dog, yoga, talk to my kids and hug my husband (not in that order). MOST IMPORTANT THING MY MBA TAUGHT ME: I am never as good as I can be. Keep learning, keep trying. WORDS OF WISDOM: Life can be like an order at the Zen Pizzeria: Make me one with everything.

Ryan Lavallee (MBA 06) Attorney (private practice) and equity partner of various investment partnerships Lives and works in: London, U.K.

Trevor Rodriguez (MBA 97) Director of Commercial Sales, Cisco Services Lives in: London, England

BEST THING ABOUT MY JOB: Visiting new countries and working with different cultures. MY BIGGEST CHALLENGE: Being on the road so much makes work-life balance a challenge. MOST IMPORTANT SKILL(S) FOR MY JOB:

Communication and relationship building are key to doing business in many parts of the world. PROUDEST MOMENT: When my staff in Asia Pacic collected funds and gave me a Y ou are the Best Award. Totally unexpected. THE WORD THAT BEST DESCRIBES ME: Improviser. THE MOST INNOVATIVE THING IVE EVER DONE IS: Built a completely new support model for the Nippon Telephone and Telegraph network.

Intellectual demands, crafting my own ceiling, no entrenched interests, no progressimpeding pride, minimal conformity. MY BIGGEST CHALLENGE: Balancing risk, liquidity, and prot potential in the context of ambiguous information. MOST IMPORTANT SKILLS FOR MY JOB: Patience, enjoyment of risk, intrinsic motivation to learn, the capability to integrate multiple dimensions into the decision-making process, and the ability to create clarity and dene concrete variables from ambiguous information. PROUDEST MOMENT: Hopping on a plane to emigrate from North America. THE WORD THAT BEST DESCRIBES ME: Dynamic. THE MOST INNOVATIVE THING IVE EVER DONE IS: Persevering with a complex career path outside the traditional graduate recruitment system. HOW I RELAX: Enjoying a bottle of Super Tuscan, preferably in Tuscany. MOST IMPORTANT THING MY MBA TAUGHT ME: The decision to pursue one benecial course costs the opportunity to pursue others. WORDS OF WISDOM: Wealth is not his that has it, but his that enjoys it.
Rotman Magazine Fall 2007 / 111

Class Notes
Editor Jack Thompson

Reunion and Life-Long Learning are over for another year, but these events are already on the calendar for May 30-31, 2008 its never too early to save the date. There are lots of stories from reunion in this section as well as elsewhere in this issue. Thanks go to the Class Champions and their committees for all the hard work! Another feature this issue is The Class of 2007 has left the building a whole new crop of alumni in the workplace. If we missed you, please send us an update! Nows the time to start writing YOUR Class Note for the next issue, titled Thinking about Thinking, which will hit your mailbox early in the new year. Keep them coming! Jack
MBA / MCOM / DBA Full & Part-Time
Charles Yeates graduated as a mechanical engineer

in 1948 and then completed his MCom in 55 on a part time basis. I enjoyed management work in a wide range of consumer products companies before switching to project development assignments, and retired in 1992. Since then, I have relished the adventures and sport of soaring motorless aircraft in various countries making lots of friends virtually around the world. The attached photo shows Kris and me in Narromine, NSW, Australia last January. No need to settle down, eh?

Belgian Chamber of Commerce to expand the presence of other European Chambers of Commerce in Japan would be benecial. After the start of the Belgian-Luxembourg Chamber of Commerce in Japan in 1980, this led also to the founding of the European Business Council in Japan. I have always been a rm promoter of such volunteer business efforts to cultivate a better business climate and remain very thankful for all the efforts extended by local foreign business community. I regret that at graduation there was not yet a doctorate program, and naturally the integrative thinking courses had not yet been created. However, I appreciate very much the good advice which was given to pursue further studies in the States and at Columbia University Graduate School of Business; the international climate was a ne continuation of what I had experienced in Toronto.

MBA Class Champion: Cam Fellman

MBA Class Champion Gary Halpenny

MBA Class Champion: Len Brooks

Bob Paus writes, When I enjoyed my 80th birth-

Ray Cornbill is director of health services research at Mount Sinai Medical School and academic codirector of the MBA and MD-MBA programs at the Medical School and The Zicklin School of Baruch College. Formerly the USA National rugby team coach, Ray now coaches other coaches across the country.

day last year with a vow to nally retire from active duty, the challenge ahead had not yet been faced seriously. Many times before, when talks of retirement came up, my pronouncements to younger staff were: One has to cultivate some quiet hobbies next to the strenuous ones that are necessary to keep the body in shape. The quieter hobbies are there to keep the mind expanding and focusing after the challenges of business life are no more. My former two retirements in 1987 and 1992 were really trial runs, but I nally graduated from business at the end of March 2006 after having established in 2000 the Japan Branch ofce of Materialise N.V., a Belgian software development company for the production of prototypes in manufacturing and medical fields. My previous business relations with other mainly European expatriates, who were struggling with adapting to the Japanese way of doing business, convinced me and some close Belgian friends that the establishment of a
112 / Rotman Magazine Fall 2007

Following a 35-year management consulting career with KPMG and predecessor firms, Ken Koehler and wife Barbara have relocated to their Ontario cottage-country lakeside retirement home that they personally designed and built during the 1980s. As President of the Huntsville Chapter of the Barbershop Harmony Society, Ken is combining a life-long passion for music and travel participating in chorus and quartet performances across Muskoka and travelling throughout North America by recreational vehicle to the Societys Annual International Conventions. Carol and Bob Biely have lived on Salt Spring Island for the past 10 years. I am still doing a bit of work, acting as project manager for two small commercial waterfront projects in Steveston, which is at the mouth of the Fraser River in the City of Richmond. We enjoy the slow pace of life on Salt Spring. Carol has become very involved in a couple of non-prot societies, and we spend a lot of time working in the garden, weather permitting, and enjoy many visitors each year. In 2005 we were fortunate in having Howie Hunter, Mike Bunga, Henry Mansika and their spouses drop in. It was great to see some of our old classmates. I could not attend the reunion, but I am looking forward to hearing about it. Peter Breikss is a computer trainer on cruise ships, along with his wife Myrna of 39 years. See Myrnas blog at Peter also works for his son Chris Breikss company, 6S Marketing Inc., doing web site promotion with SEO/SEM and ppc techniques. See the company web site at Dr. Karlina Breikss is the mother of Peter and Myrnas grandchild, Amalia, who is now 4 years old. All were expecting the arrival of Karlis second baby in earlyApril 2007. Peter sends a warm greeting to all Class of 67 alumni. Jerry Dermer writes, Following graduation from

MBA/Mcom Full- and Part-Time / Class Notes

McGill in Mechanical Engineering in 1964, I went to work for the Ford Motor Company in Windsor. I began my MBA studies at U of T in 1965, graduating in 1967. From 1967 to 1969 I attended the University of Illinois, graduating with a Ph.D. degree. I returned to teach at the U of T business school in 1969. From 1972 to 1974 I was a visiting professor at MIT; I left U of T in 1979 following a squabble about promotion and went to teach at the York business school, where I have been ever since. During my career I carried out considerable consulting and extensive executive teaching. Having reached the age of 65 I plan to keep teaching for two more years before retiring. William Hewitt was born in Orillia and graduated from Orillia and District Collegiate & Vocational Institute (1959) and the University of Toronto (B.A 1963 and MBA 1967). In 1973, he qualied for a Chartered Financial Analyst (CFA) designation and currently is a financial and investment consultant, after a career in industry and nancial services with various responsibilities. He currently holds Directorships at U of T Asset Management Corporation, Univ. of Western Ontarios Investment Advisory Board, Shiplake Investments, Amaulico Inc., and Cervus Financial. Bills career included positions at Scotia Cassels, Sun Life, Imperial Oil, Allpak Products and Bache & Co. (now Prudential Bache). Interests include involvement with many and varied causes including the Gardiner Museum of Ceramic Art, Victoria University at U of T, St. Georges United Church and others. Bill has two children. Upon graduation, Howard Hunter joined the Marketing Department of Imperial Oil in Toronto, working primarily on the financial feasibility of proposed new products and services, as well as the strategic plan for the service station business. In 1973 he left Imperial Oil and joined the Finance area in the TorontoDominion Bank where he spent the remaining 28 years before retiring in 2002. During this time, Howard acquired his CMA designation (1979) and undertook increasing levels of responsibility in the many Finance functions within the Bank. This included the implementation of the GST requirements in 1990 (organized chaos with too many meetings and trips to Ottawa) and, prior to retirement, the planning and management reporting function for what is now known as TD Canada Trust, a business segment comprising of over 40 separate businesses. Howard has one daughter, Victoria, from a previous marriage. Victoria is a Queens nursing graduate, currently studying Mandarin in Kunming, China, with plans to continue her pediatric nursing career. Howard is married to Mary Turner, a recently retired nurse. He has three siblings, all living in the Toronto area, as do most of their respective families. This extended family along with step-children, and step-grandchildren also in Toronto, have kept Howard and Mary busy with numerous family occasions over the years where good wine, laughter and good times make for lasting memories. After being initiated into sailing dinghies at military college, Howard decided to take up sailing after leaving the serv-

ices in 1965. This led him to acquire several boats over the next 30 years, and the building of two cottages on the Muskoka lakes. Trying to teach several of our classmates in the summer of 67 the finer techniques of sailing a dingy was an interesting experience. Not to be forgotten is the participation of 14 classmates in the 119 Investments Club, which over 36 years met all its original objectives of firstly have fun, then education, then make a prot. Included in the fun part was the Muskoka Boat Float during the first five years after graduation which was attending by many of our classmates until babies interrupted. Since high school, Howard has always had an interest in photography, and especially bird photography in later years. This interest led him into birding where he and Mary are now actively involved most of the year traveling throughout southern Ontario (where Howard can usually direct you to the nearest Tim Hortons for sustenance). There have been several North American trips as well as travel to Costa Rica, the Galapagos, Ecuador, the British Isles, the Lesser Antilles (6 islands and 10 airports in 12 days), and Namibia and Botswana in pursuit of that elusive bird. Both Howard and Mary are currently in good health, and are enjoying their retirement, with plans for more travel in the future, including France this year. David McKeown writes,Following graduation in 1967, I joined Imperial Oil Ltd. at its head ofce in Toronto where I worked in Marketing Research and then in Business Development. My next employer was Canadian Gypsum Company Limited, where I held senior nancial management positions. In 1976, I was recruited to join Dome Petroleum Ltd. in Calgary. At Dome, I held positions in Corporate Planning and Financial Planning. In 1983 I was recruited to join Denison Mines in Toronto. Our visit to Toronto only lasted until the following year, when we moved to Vancouver and I worked for two private companies and did some consulting with fellow classmate, Peter Breikss. In 1987, I accepted an offer to return to Calgary to be part of forming a new investment dealer which became Rogers & Partners Securities Inc. I was the CFO plus the head of corporate finance. After we sold that company in 2001, I joined Union Securities Ltd., a national investment dealer with head office in Vancouver and 26 ofces across Canada plus an ofce in London, England. I hold the position of senior vice president, corporate nance. Lynn and I were married in August 1967 and are looking forward to celebrating our 40th anniversary with family and friends later this year. We have two sons, Michael and Donald. Mike graduated with a degree in Theatre Arts and English Literature from Kings College in Halifax. After his graduation, he worked in Switzerland, England and Toronto, returning to Calgary in early 2005. He is currently working as a producer for the breakfast show for CITY TV. Mike is engaged and will be married on August 31st , 2007. Don graduated with a degree in Kinesiology from the University of

Calgary and is currently completing a second degree in Sociology and Psychology. His goal is to go into medicine. Lynn worked as a high school teacher in Toronto after we were married. After our boys were in school, she joined me at Rogers & Partners Securities where she was the Executive Assistant. In this capacity, she ran the ofce and generally did everything that my partner and I didnt (or couldnt) do. After taking time off for knee surgery, Lynn returned to work as the Parish Administrator for St. Stephens Anglican Church in mid-town Calgary. She and I are both active in our church, St. Peters Anglican Church. Each of us, in turn, has served on Vestry and been the Rectors Warden. I have been a Lay Reader for the past 14 years and a member (and twice Chairman) of the Finance Committee. Both of us enjoy singing in the choir. We have no immediate plans to retire. Our plan is to continue working and to take more vacations. I may be reached at:

MBA Class Champion: George Hayhurst Lawrence Lederman is now retired from the Canadian Foreign Service. His last assignments were Ambassador to Chile (1997-2000) Chief of Protocol for Canada (1993/1997) and Peacekeeeping (OSCE Monitor Mission 1992Macedonia) and in 2002 he received the Canadian Peacekeeping Medal for his work in Macedonia. He is now retired, and in 2006 was named a Distinguished Senior Fellow at the Norman Paterson School of International Affairs at Carleton University in Ottawa, where he lectures to foreign diplomats on protocol and organizing of visits. He is also a consultant working in the private sector. Dwayne Wright spent 33 years in the Canadian Foreign Service, with postings in The Hague, Lagos, New Delhi, Rome, and New York City. In 2001, he left government to become the Executive Director of the Trade Facilitation Ofce Canada (TFOC), a not-for-prot organization providing exporter training and assistance to exporters in developing countries. Now six years later, he is striking out on his own to become a consultant in international trade and development. On the volunteer front, he is on the Board of Ottawa Salus, a not-for-prot social housing agency providing supportive housing to individuals recovering from serious mental illness. Oh, and he is (nally) going to take up golf and maybe buy a motorcycle.

Ron Bannerman retired at the end of June following a 36-year career with the Canadian Medical Association, where he was vice president and secretary for the Associations group of nancial subsidiary companies, which includes MD Management Limited, a successful financial products and services company primarily serving Canadian physicians and their families. Ron plans to continue to live in Ottawa and can be reached at
Rotman Magazine Fall 2007 / 113

Class Notes / MBA/Mcom Full- and Part-Time

MBA Class Champion: Charles Johnston

George Parker

MBA Class Champion: Hank Bulmash

exist, and any alumni who may be interested in investing or finding out more should make contact.

Sybil Levine has launched,

MBA Co-Class Champions: Susan Frank
Robert Johnston

Chuck Johnston sent along a picture from his classs annual golf tournament, held May 28th at the Beverly Golf & Country Club in Ancaster. Back row (L to R): Charles Johnston, Dennis Schwartrz, Mark Cooper, Peter Legault, Bruce Ferguson, Ron Baker, Professor Paul Halpern. Front row: Bill Hellings, Mike Farley, Goro Hirasowa. Chuck reminds his class of the annual Xmas lunch, scheduled for December 6th.

MBA Class Champion: Chris Ward Stephan Wasylko has just completed a four-year posting at the U.S. Embassy in UK and is being reassigned to the position of Minister Counselor for Commercial Affairs at the U.S. Embassy in Ottawa in July. This will be somewhat of a homecoming for Stephan and his wife Carol, after two earlier tours of duty in Vancouver (1989-1992) and Toronto (1995-2000) with their two children, Nadya and Alexander. Stephan looks forward to working with U.S. and Canadian companies and his fellow Rotman alumni, to ensure that our bilateral trade and investment relations continue to grow and prosper.

Canadas most comprehensive events web site, with over 150 categories in close to 500 cities and towns. In true MBA style, the company is positioned as a customized events information resource which white labels event information to web sites and other information platforms. Unlike a babys gestation period of nine months, this took almost two years to birth. With a huge outreach program to event holders, they hope to have hundreds of events submitted to the site weekly. Sybil finds time to communicate with friends in various parts of the world, which should contribute signicantly to her sites international trafc gures. She also hopes to get to some of the 10,000 events she has listed. Jim Martin is vice president and CFO of Cruickshank Construction Limited in Kingston, ON.

MBA Class Champion Lorn Kutner

MBA Class Champion: Jane Gertner Bruno Kristensen is president of Danbro Investments Limited in West Vancouver. Michael Younger reports from the leafy elds of St Andrews, Fife, that far from being asleep on the job, he is very excited about the prospects for his Noteables adventure known as Young & Merry. New York based coventure partner Merry Miller has quit her full time job as executive producer at the Learning Annex (she also produces Joel Siegels Meet the Directors and Stars TV series ) and is now full time working towards building a great future in entertainment with The Noteables as the base. So convinced are we of its potential, that others are scrambling to come aboard offering their services for a mere token (artists from Disney etc.) So keep your eyes pinned to various childrens TV channels as sure as can be, the Noteables are on their way to teach music to kids age three up in a fun way. But wait, what about those 3-d hooks that are invading the world, you may ask? No problem, they keep leaving the garage by the ton and arriving from China by the ton at keener prices than ever. How can it be true? Well the great Lee Valley Tools can testify to their enduring nature. A smart new Bronze Age version of the 3-dhook has come on board and promises to be a real winner! Luke Higgins is general manager for OAO UCAR Grat, in Moscow.

MBA Full-Time Class Champion: Frank Hall

MBA Class Champion Judy McCreery

MBA Class Champion: Jake McArthur

MBA Class Champion:
114 / Rotman Magazine Fall 2007 Peggy Belanger returned to P&G headquarters in Cincinnati after ve years working in Venezuela as advertising development director for Latin America. Her new job is global director and team leader for the advertising development innovation group, with personal focus on the future of communication and organization redesign. She is still happily married and her daughter graduated cum laude from University of Virginia with a Masters degree in Art History next step is doctorate. While in Latin America, Peggy and her hubby developed a great love for the Caribbean and Amazonian tribes, and bought an apartment in Key Biscayne for easy access to these experiences. At her thirtieth MBA reunion, no one could nd her, since her long black hair is gone, replaced by short blonde! Time goes on! Arnold De Four is vice president, commercial at the National Gas Company of Trinidad & Tobago Ltd (NGC). Been with NGC for some time now lets just say that when I joined my oldest daughter (of three) was just a wish, and now she is about to graduate from New College. Anyway my company (and I hope I have contributed) has been very inuential in making tiny Trinidad & Tobago a world-scale player in the natural gas industry petrochemicals, LNG and metals. Its considered a true success story. Opportunities Ilan Levy is a seasoned coach, consultant, executive and entrepreneur with over 25 years experience and expertise, including Ideas in Action (IIA) from 2001 to present, with clients in the software, environmental controls (removal of noxious gases), publishing (directories), retail and the creative media industries. He is also the founder of Camilion Solutions Inc., where he was president & CEO until 2001. While at Camilion he obtained over $5 million in venture capital nancing and developed and mentored an effective executive group and a team that grew to 34 staff. The company is now a software provider to leading insurance companies in the world. His coaching pitch? What is your dream of making a difference in the world? What brings you joy and a sense of aliveness? How fully do you express your values and wisdom? What are you tolerating? Where are you procrastinating? What would be lost if you did not follow your dream? I am looking for people who care about these questions. As a coach, committed to helping people reach their full potential, I know that coaching can have a powerful transformational impact on both individuals and groups. As I complete my Co-Active Coach certication I am looking for up to 10 new clients to work with, at a discounted rate. Preference will be given to those able and willing to make a six-month commitment. These clients will benefit not only from our work together but also by getting feedback from some of the most masterful coaches in the world. Most coaching sessions are over the phone so busy

MBA/Mcom Full- and Part-Time / Class Notes

schedules, geography and travel are not barriers. If you or anyone you know is interested, I would be happy to offer a complimentary phone coaching session to nd out if this is a good t and to answer any questions. Can coaching help you to realize your dreams and change the world? The best way to nd out is to experience the power of coaching for yourself. Send me an email at Orest Romanish is the manager, gas and electricity marketing for Northland Power in Toronto.

Ron Cuperfain is an experienced executive-search

MBA Full-Time Class Champion: William Molson

MBA Full-Time Class Champion: Danny Chau
MBA Part-Time Class Champion: Michael Hale Niall Hamilton is senior vice president at Wachovia Capital Finance Corp. (Canada) in Toronto.

Lai Ki Mok is product developer at Loblaw Brands

Limited in Brampton.

MBA Full-Time Class Champion: Gerald Legrove
MBA Part-Time Class Champion: Daniel Eng Robin Pond is a partner with Morneau Sobeco, a Canadian actuarial and benets consulting rm. In September, he will have 2 sons at U of T: Simon, a senior in Archeology, and Adrian, a freshman in Civil Engineering. Scott White is a partner with Murray & Company in Toronto.

MBA Class Champion: Roy Turunen

Irv Handler became a proud

grandfather for the rst time in November 2006. His granddaughter, Scarlett, lives with her parents in Cape Town, South Africa. Judy Kan is senior VP, real estate for CHIP REIT in Toronto.

consultant and researcher for middle and senior management professionals. His expertise lies in the area of identifying and recruiting potential candidates with both the right technical expertise as well as the t with client organizations. Search mandates span a wide range of industries and functional specializations. Prior to his founding RE:Search Associates, Ron held management positions in retail and service companies. Ron has worked in the areas of nance, operations and strategic planning, as well as on several signicant projects to identify new market opportunities. These include setting up a Total Quality Management Measurement practice for an existing market research consulting rm; and for a U.S.-based Employee Assistance Program provider, Ron spearheaded their entry into the Canadian marketplace, initially analysing the sector and competitors, then opening and running the Canadian ofce. He has spent time on the human resource side, recruiting and training key staff in the retail/franchise sector. He has also consulted to clients in the nancial services, real estate development, health care, and manufacturing sectors. Ron lives in Toronto with his wife and two children. Tom Sears and his wife Jessica have been in Barbados for ve years, where he is CEO of RBCs reinsurance operations. Tom has been running international businesses for RBC for nearly 15 years and says his Rotman MBA prepared him for the unexpected. As a self proclaimed perpetual student of international business, this year Tom started working on his Doctorate in international business at St. Gallen University. In his volunteer time, he is president of the Barbados International Business Association, and past president of the Barbados International Insurance Association. Tom is a member of Barbados Deputy Prime Ministers Joint Policy Advisory Board, and serves on the Board of the Barbados International Business Promotional Corporation. He was recently appointed a Councilor of the Royal Commonwealth Society. Over the past year, Tom has been working closely with Rotman Professor Walid Hejazi on researching the benefits of trade flows between Canada and Barbados, which has uncovered new and important ndings on Canadas global competitiveness. He is also working with other Rotman leaders to explore opportunities between Rotman and the University of West Indies in Barbados. Tom is a recipient of the U of Ts Arbor Award for volunteerism.

has returned to La-Z-Boy Incorporated as Vice President and Chief Marketing Ofcer. Collier initially joined La-ZBoy in 2002 as Vice President, Marketing for LaZ-Boy Residential, and was named Chief Marketing Ofcer in 2004. He left the company in 2005 to join Select Comfort Corporation as its Chief Marketing Officer. As Chief Marketing Ofcer for La-Z-Boy, Collier will be responsible for coordinating all La-Z-Boy brand initiatives, including positioning throughout the corporation, globally and across the La-Z-Boy Furniture Galleries(R) system. He will also have primary responsibility for marketing in the companys Residential Division. Collier stated, I am excited to be returning to the La-Z-Boy team and am eager to tackle the new challenges this position will bring as La-Z-Boy continues to go through its own series of changes in what continues to be a very dynamic industry. Before joining La-Z-Boy in 2002, Collier was senior vice president of marketing and product management for Iomega Corporation, a manufacturer and marketer of computer peripherals based in Roy, Utah. He also had responsibility for Iomegas European and Asian operations. Previously, Doug was general manager of ttings and director of marketing and e-business at NIBCO, a privately held manufacturer of flow control products located in Elkhart, Indiana. He also spent several years in product management and business development with Whirlpool and GE Canada in the US, Canada and Europe. Collier earned his Bachelor of Science degree at the University of Manitoba in Winnipeg, MB, in addition to his Rotman MBA.
Doug Collier

MBA Part-Time Class Champion: Steve Rosen Chester Ho is the company secretary for Ho Chi & Co. Ltd., in Kowloon, Hong Kong. Scotia Capital has appointed James McLeod to the position of managing director and head of institutional equities. In this new position, James will be responsible for enhancing Scotia Capitals Global Capital Markets growth platform through his leadership of the rms Institutional Equity Sales, Trading and Research departments. He joined Scotia Capital in Toronto, 2003, following several years of experience as an equity analyst and research director. Most recently as head of equity research, he was responsible for leading the management and strategic direction of the department. James holds an LLB from Osgoode Hall Law School in addition to his MBA and is a CFA charter holder.

MBA Full-Time Co-Class Champions: David Pyper

MBA Full-Time Class Champion: David Littlejohn

MBA Class Champion: Grace Cheung
Maria Milanetti
MBA Part-Time Class Champion: Pamela Kanter
MBA Part-Time Class Champion: John Harris Michael Glenday is area operations manager (WiMAX) for Motorola in Arlington Heights, IL.
Rotman Magazine Fall 2007 / 115

Class Notes / MBA/Mcom Full- and Part-Time

Joanne Hillion is national director of sales for Schick Canada, a division of Energizer Canada. Joanne says hello to everyone from the 1991 graduating class. Jenny Ho has been settled in Brisbane, Australia since 2004, working for Suncorp. She sends her best wishes and would love to hear from her classmates. The picture below was taken at a fundraising BBQ Sausage Sizzle with her Suncorp colleagues.

Dr. Liang Hsuan Chen is one of two recipients of this

MBA Class Champion: Blair Kingsland Karen Harbin is vice president of marketing for Bell Vanguard Inc. in Toronto. David Miller has accepted the position of president and chief operating officer of NGRAIN Corporation in Vancouver, BC. Having been at NGRAIN from its inception in 2001 through to late 2004, he returns after a short two-year mandate with Engenuity in Montreal (recently acquired by CAE). NGRAIN is focused on 3D visualization technologies for the aerospace, defense and discrete manufacturing industries. With respect to my new Vancouver-based employment, I began commuting from Montreal in April, and my family, Janet (Steinberg) Miller class of 1993, and two children Julia (9) and Joey (7), will be moving to Vancouver in August. I just attended my 15-year reunion and was pleased to re-connect with a few of my former classmates both at the event, and after for an impromptu Thirsty Thursday at the Duke Heather
Broughton, Blair Kingsland, Peter Vesely, Vern Yu, Drew Basek, Graham Donald, Karen Harbin, Judy Leck, Vanessa Beresford, and Dan Kelly. Colin Rice is a senior managing

consultant with IBM Canada in the Organizational Strategy and Change practice, specializing in bank transformation and core bank implementations. Stephen Rogers is vice president and portfolio manager at Mavrix Fund Management in Toronto.

years Alice L. Beeman Research Awards in Communications and Marketing for Educational Advancement. She will receive the award in July at the annual summit from the Council for Advancement and Support of Education (CASE) a non-prot international organization based in Washington DC. The award is for her thesis titled, Choosing Canadian Graduate Schools from Afar: East Asian Students Perspectives. Dr. Chen is a lecturer in accounting at the University of Toronto at Scarborough. She serves as an elected member of the Certied General Accountants of Ontario (CGAO) Board of Governors. Lindsey Cruickshanks has been living and working in Amsterdam for the past 11 years, where she is a manager at Ernst & Young Tax Advisers, specializing in Indirect Tax (VAT) relating to international supply chains and ERP systems. Her partner, Bjrn Utpott, is a design architect. Lindsey is a member of the European Professional Womens Network (EPWN) and is organizing a panel discussion on Sustainability in 2008. She would be pleased to hear from any Rotman alumni visiting Amsterdam and is very interested in expanding her contact with fellow Canadians located in Europe. Angelo Lai has been working in Beijing for the past three years. Like many rapidly-growing metropolitan areas of the world, Beijing promises much business and cultural excitement while also inheriting pollution and trafc chaos. Construction and renovations are now everywhere in this 500-year old capital city that is preparing for the 2008 Olympics. Summer comes very fast by the desert rim. Rain (and snow) is much welcomed for the moisture, the river and a breath of non-dusty air. Angelo welcomes U of T alumni who want to understand a bit more about life in Beijing. Ron Thomson has stepped down from his positions as treasurer and as director of publications at the Pontical Institute of Mediaeval Studies. He will have a one-year sabbatical and will then take early retirement. Ron plans to work mainly on his long-term research project to establish the Latin text of a major treatise on astrolabes in the Middle Ages. He expects to spend most winters at his home in Portugal, but will return to Toronto in the summers (in time for the annual class meeting in May at the Duke of York).

Renee, 2. She sends a big hello to all her classmates and promises to get to the Duke one of these times (its a long way from Gatineau!) Jo-anne Marr is living in Oakville, has a two-year old daughter (Leyla) and is working in Richmond Hill as the vice president of programs at York Central Hospital. Life is busy, but Im looking forward to staying in touch with classmates. John Selles is director of operations for Quest Software, based in Orange County CA, managing resource allocations and business process for R&D and sales. He had been performing a similar role for his previous employer, Sitraka Software, when it was acquired by Quest in 2002. Now he gets to commute once or twice a month to CA. He is still an active member of the U of T Triathlon club, and has been placing top ve in his age group in races. He was recently shocked to see that his youngest child (Jesse) would next year be studying in the same faculty and building in Waterloo where he did his undergraduate degree 30 years ago. He may be even more shocked (and pleased) to see the same son head to Rotman in a few years! Darlene Varaleau continues to assist the transportation industry to improve fuel efficiency and reduce greenhouse gases through her company Power Projects Inc. In her spare time she is studying shamanism and credits her expanding magical powers to Mayor Millers enthusiasm for Torontos Green Fleet program and the future greening of the Toronto Police eet.

MBA Full-Time Co-Class Champions: Christine Wong
Suzanne Wilcox
MBA Part-Time Class Champion: Daisy Azer
Neeraj Jain is CEO of


MBA Full-Time Class Champion: Nick Strube

MBA Full-Time Class Champion: Daniel Lin Perry Lau is group treasurer for Esquel Enterprises Limited in Hong Kong.
MBA Part-Time Class Champion: Darlene Varaleau

MBA Full-Time Class Champion: Glenn Asano
Alison Foley Howard is a business and software Glenn Asano is managing director, Asia Pacic for Transform People International in Hong Kong.
116 / Rotman Magazine Fall 2007

consultant and previous business owner, currently between jobs/businesses and looking for opportunities. In the interim, she is spending more time with her two girls, Brietta, 4 and

Avnan Electro Inc., a designer and manufacturer of electronic controls. Along with double-digit growth in the business, Neeraj has seen double-digit growth at home with a daughter and a son being born in the past 2.5 years. The family is moving to Oakville in the fall and is planning a month-long trip to India in the winter. Bryan Klompas is vice president of analysis and planning for MyTravel North America, the corporate brand for popular travel businesses such as Sunquest Vacations, ALBATours, and others. Bryan and his wife Leah are now the proud parents of four children baby Ruth was the latest addition in December

MBA/Mcom Full- and Part-Time / Class Notes

2006. Bryan would love to hear from fellow graduates of the Class of 96. James Merkur is a principal of Genuity Capital Markets in Toronto.

MBA Full-Time Class Champion: Burke Malin
MBA Part-Time Class Champion: Nancy Crump
James Appleyard is a princi-

marketing consulting through her company, Mitchell Westlake, which celebrated its fifth anniversary this year. Michael Pos is a senior associate with Booz Allen Hamilton in London (UK). Caterina Prato is an associate portfolio manager at AGF in Toronto. George Zivic is the founding partner of Almanac Capital Management LP, a New York and Cayman-based commodity investment company. George and his wife Robyn live with daughter Hudson in Manhattan.

back and has been on some very interesting projects. Outside of work, she is the co-chair of the Board of Pride Toronto until 2008, and this role is keeping her extremely busy! So busy, in fact, that she has stepped down from her role on the Rotman Alumni Board; however she hopes to resume that role in 2008. Anyone wishing to contact Lenore can do so at Mike Vanderburgh is now the managing director of Newport Investment Counsel Inc. in Toronto.

pal with Artez Interactive, a fundraising software rm operating internationally, and an assistant professor of Management at the University of Toronto, Mississauga. He also serves as vice-chair of the Canadian Merit Scholarship Foundation and is a Trustee of Trinity College. He and Tamara Rebanks have three young children: Cordelia (3) and twins Sebastian & Titus. Lynne Bridgman is taking a leave of absence from the Royal Bank and moving to Beijing, China with her husband Ian and two kids (Erica, 8 and Jamie, 6). Ian has been transferred for 18 months with Home Depot and Lynne is looking forward to travelling and discovering a new culture. She had a great time at the 10 year reunion and enjoyed reconnecting with old friends. Mary Desjardins is director of marketing for Travelex Commercial Foreign Exchange in Toronto. Michael Held is president of Toronto-based LifeSpeak Inc. (, which is dedicated to bringing in Canadas acclaimed parenting, eldercare, health and well-being experts (e.g., Dr. Jeremy Friedman, the chief of paediatric medicine at the Hospital for Sick Children) to our clients workplaces to ensure that they have engaged, resilient and productive employees. Given the demanding requirements of todays world-class organizations, the Parents At Work, Generations At Work, and Vitality At Work programs provide employees with valuable information, tips and strategies to improve their worklife balance by addressing the life part of the equation.Our clients include a number of leading professional service firms (e.g., Accenture, Ernst & Young, Borden Ladner Gervais, Blake, Cassels & Graydon, Fraser Milner Casgrain, and BDO Dunwoody) as well as a number of leading organizations from a large cross-section of industries (e.g., Suncor, The Globe and Mail, Research In Motion, CIBC Mellon, Motorola, PetroCanada, GlaxoSmithKline, Eli Lilly, Pzer, Kraft and Amgen) and the public sector (e.g., The Hospital for Sick Children, Bow Valley College). We are currently offering our programming in Vancouver, Calgary, Toronto, Montreal, Ottawa and Edmonton. Erin Mitchell is operating a bed and breakfast in Niagara-on-the-Lake, Ontario with her husband. Rotman alumni are invited to ask about special rates and to visit for more information. Erin continues to offer

MBA Class Champion: Mari Iromoto

MBA Class Champion: Mitchell Radowitz Neil Aubuchon is the marketing director for Eli Lillys Operations in Australia. He is enjoying his job immensely as he has recently picked up responsibility for Six Sigma and the introduction of CRM both challenging initiatives! The Aubuchon family is absolutely loving Australia. They have already spent some time at both the Great Barrier Reef and Ayers Rock. The Fireworks in Sydney Harbour at New Years was truly amazing. This Christmas the family will be making a 12-day trip to New Zealand. Neil sends best wishes to all the class of 98. He hopes to make it to Toronto in the not-too-distant future in order to catch up with old friends. Daniel Kolber is director of asset management at Retrocom Mid-Market REIT in Toronto. Eric Moncik is a partner at Blake, Cassels & Graydon LLP in Toronto. His practice focuses primarily on public and private nancings, and mergers and acquisitions. He also provides ongoing advice on general securities and corporate law matters to a variety of issuer clients.

MBA Full-Time Co-Class Champions: Lenore Macadam
Aran Hamilton Ruta Benjamin has recently taken on the role of HR project manager with Hewlett-Packard Canada, in Mississauga. Boris Illetschko and his wife Ana are thrilled by the arrival of their rst baby boy, Adrian Leo. He is half-Argentinean and half-Austrian and was born in Dusseldorf, Germany on the 12th of May 2007. Boris is a Principal with German management consulting rm Management Engineers based in Dusseldorf. During the last seven years he has been responsible for performance improvement and restructuring projects for clients from the automotive, electronics and utility industries throughout Western Europe. Paul Kapsos recently joined the Canada Pension Plan Investment Board as a portfolio manager in relationship investments. Lenore MacAdam is back at MRSI Consulting ( She is enjoying being Anita (Lopez) Davis and Bryan welcomed their third child, James Gregory Lopez Davis on October 19, 2006. Craziness prevails in the Davis household, but a happy place it is! In a moment of weakness, Anita agreed to relocate the family to New York for a few years. Theyll be living just outside NYC in the suburbs known as Westchester County. The big move takes place in the summer of 2007. If youre ever in the area, drop us a line at: Muhammad Asfandyar Janjua is a consultant with Michael Page International in Toronto. Manoj Srivastava is manager, service requests at the Ministry of Community and Social Services. I am often asked if my MBA is of any use in the public sector and my answer is that the concepts remain the same though we may use different terms: for example, Prots become Outcomes and Market Share becomes Reach. Sanchuan Wang writes, After four years with Kimberly-Clark in Toronto, I returned to China in 2004. After spending one year with the CocaCola Company, I switched to CCCIL, one of the largest bottlers, now fully owned by Coca-Cola. As the group director of channel marketing, I travel quite a bit as the company owns 10 bottling operations across China. Id like to say a big HI to the Class of 2000, and encourage anyone who is coming to China to give me a shout.

MBA Full-Time Class Champion: Daniel Zinman
MBA Part-Time Co-Class Champions: Lisa Sansom
Walter Sophia Jennifer Cheung is group category advisor for Newell Rubbermaid, in their Wal-Mart Canada division, located in Mississauga. Leslie Gage is the director of marketing for Smucker Foods of Canada, which owns such well known brands as Smuckers jams and jellies, Bicks pickles and Robin Hood our. In March, she and her husband welcomed their rst child,
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Avalyn, to the family. Joanna Rotenberg is happy to report she is still married (to Andrew Armstrong), and is still at McKinsey & Company, though now in the role of Associate Principal. Lisa Sansom is working at Queens University as an organizational development specialist. Her skills in conducting and analyzing employee engagement surveys are being put to good use, as well as her interests in change management, leadership development, workplace competencies and all those other good OD tools and methods. Lisa is also earning her coaching certication as the validation of several years of coaching experience, and is looking forward to the day when she can proudly claim her certied coach status. Daniel Sonshine is a principal with TorQuest Partners, a mid-market private equity firm in Toronto. In March, he and Shelley welcomed their second daughter, Sarah Amanda. Michael Starogiannis is vice president of investor relations at First Canadian Capital in Toronto. Michael Vanderkaden is director of finance for Filogix LP in Toronto.

the MaRS South Tower, one year ago. Recruitment of 50 scientists and their teams is in progress. Projects in development include a provincewide cancer cohort study, the 1mm cancer challenge (early diagnosis), cancer stem cells, genomics, health services research and high impact clinical trials. Jane is busy establishing administrative and operational infrastructure for this institute. Daughter Charley is now 11 years old and still willing to travel abroad, spent a month in Europe last summer, including two weeks on Crete (see photo). The 2002 Reunion was an excellent time; I encourage my classmates to come out for Life-Long Learning May 30, 2008 - We hope to see you all there!

MBA Full-Time Class Champion: Pamela Beigel
MBA Part-Time Co-Class Champions: Jennifer Chan

MBA Full-Time Class Champion Rizwan Suleiman
Rajesh Dixit
MBA Part-Time Class Champion: Jay Nicholson Lekan Adetunji recently moved from Ontarios Ministry of Finance to Ontario Power Generation. Gregory Cheung is director of global capital markets for Scotia Capital in Toronto. Jean-Christophe Depraetere (JC) is a director of business management for the finance group at CIBC. Outside of work, he and Aurelie enjoy busy-but-paradoxically reenergizing family time with Sylvain and Louis, their two sons. Frank Massey and wife Nargis have two boys: Ryan born on March 10, 2005 and Eric born exactly two years later! Hows that for timing? Brian Rowe is director of economic capital, portfolio credit risk at Sun Life Financial in Toronto. Ellen Sun is director of treasury and risk management at CIBC in Toronto. After several years at Fasken Martineau, Jeanette Teh is starting her second year as in-house counsel at Bell Canada where she is enjoying a commercial and IT law practice. Jeanette is busy preparing for her wedding this September to Michael Todd (an engineer at MDS Sciex), their honeymoon to Vietnam and Malaysia (where she grew up and where most of her relatives live), while also looking for a new house. Jeanette invites her old classmates to drop her a line at Jeff Torkin is an associate in the Urban Mixed Use Group at Extell Development Company in New Y ork. Jane van Alphen joined the Ontario Institute for Cancer Research, a new institute funded by the Ministry of Research and Innovation located in
118 / Rotman Magazine Fall 2007 Debbie Lai is a senior consultant with Deloitte in Vancouver. Ryan Spong is the principal at Main Street Advisors, a boutique corporate nance rm in Vancouver, BC. The firm raises money for publicly-traded companies and aids in the startup and bringing-to-market of private companies. Since inception, MSA has raised more than $15 million CDN in the public market. Ryan is also the CFO of Rain Resources, a junior resource company, due to go public this summer. In the past year, he also started a privately-held concrete design company, Raincity Rock & Waterscapes, Ltd. ( with his childhood friends. Ryan is engaged to be married on July 28th, 2007 in Pemberton, BC, and is currently renovating a 1905 heritage home in Vancouver, BC, where he lives with his ance, Chloe, and pooch, Gucci.

MBA Full-Time Class Champion: Maya Lange
MBA Part-Time Class Champion: Steven Lane Tony Cancelliere is a consultant with MRSI Consulting in Toronto. Alain Tai-Ming Chow is an IT manager at the City of Mississauga, one of the best-managed municipalities in the Greater Toronto Area. He was recently promoted and relocated to City Hall and is now responsible for city-wide IT systems development, implementation and maintenance. This includes a TXM TAX Management System, SAP R/3 Enterprise Resource Planning System, SirsiDynix Library System and Giro Hastus Transit Suites. Alain is also a director on the board of the Tri-Committee, an organization

with a goal of promoting and implementing synergistic IT and engineering systems. Tim Ferris has recently started is own business: Average Joe Sports Club ( The business runs co-ed, recreational sports leagues for adults and corporate events in Burlington and Oakville, Ontario. This business is the perfect intersection of Tims love for sports and his entrepreneurial spirit. He is currently living with his girlfriend, Morgan Hill (MBA 05), in the Danforth and Pape area of Toronto. Brad Freelan is a lawyer with Fasken Martineau in Toronto. Sung Kang is a marketing manager at General Mills in Mississauga. Sam Ling writes, Hi all! It has been almost three years since our organicbased business (ieh! Canada Corp.) opened its doors in Southeast Asia. Where did the time go? Its been a jam-packed year, both personally (eight new puppies, two kittens, and seven turtles) and professionally (two new distributors). My wife Ratna and I have spent our time mixing our business trips with some much needed R&R (continuing our eco-tourism adventures in Malaysias the Pinnacles (pictured above), Thailands Tiger Temple, and Indonesias Mount Bromo and Krakatoa). This July well be in Northern Thailand and then in September, Hong Kong, a sentimental moment for both of us as we have not been back since my memorable MBA exchange semester of 2004. In the past 12 months weve established major agriculture distributor links in Malaysia and Indonesia. One piece of obvious wisdom, business is not just about building relationshipsits about building genuine relationships. Fortunately, Ratna is the social-guru in the family. What else is new? Well, we started a small strawberry farm in 2006, and are opening another six-hectare farm area this summer. If all goes well, well be launching a new organic fruit and vegetable brand (the name is still a secret) and begin supplying by early 2008. Canada is on our schedule for late November. Its been a long wait, but nally, a snowy Christmas for us! I hope all of my past classmates and friends (and their families) are doing well wherever you are. Please let us know how youre doing! or Manoj Mehta is a product manager at TD Canada Trust in Toronto. David Stewart and his wife Jennifer are pleased to announce the birth of their daughter, Alexa Ann Stewart, born in Boston MA, April 1st at 6:27am weighing a respectable 7lb - 5oz (3.317 kg). Both mom and baby are doing well. She is a feisty little one and so far has managed to keep mom and dad up every night. Curt VanWalleghem is a manager at Deloitte &

MBA/Mcom Full- and Part-Time / Class Notes

Touche in their Corporate Strategy Consulting practice. He and wife Cara will be moving to Oakville this August. George Wong is manager of service marketing for Bell Canada in Toronto. James Jian Yu is an associate with TD Securities in Toronto. Michael Huashen Yu has relocated to Hong Kong, where he is working as a fixed income credit analyst at INVESCO HK Limited. Qing Jiang Zeng is a nancial analyst at Ontario Teachers Pension Plan in Toronto.

MBA Part-Time Class Champion: Ushnish Sengupta

MBA Full-Time Co-Class Champions: Fiona Cunningham

Tanbir Grover
MBA Part-Time Class Champion: Bob Kapur Vivek Belgaumkar is a consultant with BearingPoint in Victoria, BC. Joshua Blinick is president of Bidiyook Technologies in Toronto. Louis Cho is manager, corporate affairs for Bell Canada in Toronto. Karim Keshavjee and his wife Zahra recently visited Jordan and Egypt. Zahra was collecting data for her PhD thesis, after which they vacationed in the area, visiting the Dead Sea, Petra (pictured), the Pyramids and the Aswan High Dam. They also took a cruise on the Nile. Karim recently promoted himself to the position of CEO in compensation for taking a pay cut: the company is expanding and he now has 2.5 people working for InfoClin. Yousaf Siddique is a nancial analyst at Merrill Lynch Canada in Toronto. Richard Son is an intern with First Private Investment Management in Frankfurt. Ian Stewart is commercialization manager with the Life Sciences Practice at The Innovations Group, University of Toronto. Giovanni Strazzullo is a manager in the Project Finance and PPP practice at Pricewaterhouse Coopers LLP in Toronto. Amar Vyas is working with WestLB AG in London, England. Allen Zhou is the senior production and sourcing manager, Olympics for Hudsons Bay Company in Brampton.

MBA Full-Time Co-Class Champions: Bill Fox
Paul Nagpal
Paul Forma
Shruti Owerie Ateet Agarwal is an equity research associate at CIBC World Markets in Toronto. He sends best wishes to the Class of 06 and looks forward to seeing some (if not all!) of you soon. Despite loving his job as a marketing analyst for Home Depot Supply, Nelson Amaral and his wife and two children, Declan and Rhianne are moving to Minnesota so that he can pursue a PhD in Marketing at the Carlson School of Management (University of Minnesota). Nelson will miss the MBA class reunions and is hoping to see everyone during one of his summer breaks. Saju Bhaskaran is a strategy and process specialist at Allianz of America, a holding company for Allianz Groups Insurance businesses in North America. He continues to live in San Francisco. Emvibe, a business venture founded by Saju and a friend, is continuing to grow slowly but steadily. In May 2007, Saju got married to Susan. I hope the rest of the class is doing great. Best wishes to all. Ben Bjarnason is the senior Sarbanes-Oxley manager at HSBC in London, UK. I-Sin (Sandy) Chang is a senior analyst for University Health Network in Toronto. Rob Chang recently rejoined the buy side by accepting an analyst position at Middleeld Capital. Rob continues to coach dragon boat racing and is currently working towards qualifying for the Club Crew World Championships in Malaysia. Sarah Coad is an associate with Sidley Austin LLP in New York City, Robert Dias is an associate with Goldman Sachs in New York. Kevin Douglas has moved to Vancouver to join Future Shop as a national retail process manager. He is responsible for improving the execution of Future Shops sales events (e.g., their weekly yer), improving productivity relating to their merchandising, developing contests for their store associates to encourage sales increases, and furthering the leadership of Future Shops management teams. Alex Fuentes recently contributed an article to BusinessWeek for its Day in the Life series. Following is an excerpt (for the entire article, please visit: 07/bs20070604_367722.htm) I am the business development manager for Bullfrog Power, Ontarios first 100 per cent green electricity retailer. We sell electricity to midsize and large businesses in Ontario, with customers ranging from the band The Tragically Hip to eBay Canada. My role is to develop sales strategies for large accounts, perform analyses of prospective consumers for sales leads, and gather market information to aid in customer marketing and other areas, among other responsibilities. Were a startup company based in Toronto, and Im one of the companys 20 employees. I received my MBA from Rotman School of Management in

2006. The best way to get your foot in the door in this industry is to follow your passion. It takes a certain type of individual to t in at Bullfrog. A passion for the environment will get you into the right network of contacts and closer to where you want to be. Having a balanced mix of technical and soft skills is also important. I have also found that emotional intelligence, or the ability to read people and situations, is also extremely valuable. I was able to land my job at Bullfrog by communicating my passion for green business with every person I met. My network of contacts took over from there, and I was lucky enough to secure a meeting with the president. I joined the ranks of the bullfrogpowered shortly thereafter. It could easily be argued that an MBA is not required for a traditional sales role; the role of business development manager at Bullfrog is anything but traditional. I would argue that working effectively in the area of sustainable or green business requires a number of unique skills. First and foremost is an understanding and appreciation of the environmental and social issues a sustainable business must address as part of its unwritten social and environmental contract with society. I gained this understanding through my MBA volunteer work with Rotman Net Impact and my learning from Dean Roger Martins virtue matrix. Second, understanding how a green power purchase can add value to a client requires an understanding of business strategy, marketing, and operations. Lastly, selling green power requires the ability to communicate and think at a top managers level. In addition to the obvious environmental benets associated with choosing renewable electricity, a green power purchase adds signicant brand value. As a result, green power purchasing decisions are made by C-level executives with ownership of the brand. If I could go back to B-school and take more courses, I would take Government Relations and Cooperative Strategy. The impact of government measures on the development of renewable energy and the electricity market is an important factor that affects Bullfrog Powers business model. Wind power production incentives at the federal level, generation subsidies at the provincial level, and project approvals at the municipal level all have an impact on the economics of our business. Understanding the decision-making processes of government at all levels and its interaction with business is an asset. For a small and growing company, the ability to determine whether, when, and how to execute cooperative strategies as part of your businesss overall strategic plan adds signicant value. William Hui is an associate at Deutsche Bank Global Banking in Hong Kong, where his primary responsibility is to facilitate M&A deal processes and assist in structuring transactions in the Asia Pacic region. Tahir Janmohamed is a senior consultant in the Strategy and Change division of IBM Canada, with a specialization in technology strategy. Since joining IBM, his projects have been focused within the financial services sector - working with the largest Caribbean bank
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in Trinidad, one of North Americas largest property and casualty insurance firms, and one of Canadas largest tax/advisory/audit firms. Keeping up with his tradition of travelling, he recently returned from a voyage to South America - tackling the Inca Trail to Machu Picchu, camping in the Amazon, and horseback riding in the Chilean Andes. Tahir always loves to hear about what his fellow classmates are up to: drop him a line at Justin Klein is the Tide brand manager for Procter & Gamble Canada. He was recently promoted from the brand manager position on Bounce to his new role on Tide, the companys number one brand. Young Kwon is a home appliance assistant product manager for Samsung Electronics Canada, responsible for managing the home appliance line-up and product mix of Samsung appliances in Canada, and frequently communicating with the Samsung head ofce in South Korea to ensure the relevant products are launched in a timely fashion in Canada. Romit Malhotra loves living on Yonge Street: he lived at Bloor/Yonge while in school, Sheppard/Yonge after and was recently introduced to suburbia in Newmarket yes, still on Yonge Street. Hes trying to get used to mowing the lawn, waving at the neighbours, and the xed GO train timings. At work, Romit is back in downtown Toronto after spending six months in Hamilton with CIBC Commercial Banking. Driving 150+ kms everyday wasnt easy but was well worth it. He is now with the mid-market Leveraged Finance group trying to digest the fact that Mezzanine [debt] is not just a floor in between two main oors of a structure. He hopes to start bumping into his Rotman friends in the downtown food courts again. Khurram Malik is an equity research associate at Westwind Partners Inc. in Toronto. Michael Martin is an associate with RBC Capital Markets in Calgary. Gary Mcdonald is a senior consultant for Carpedia International in Oakville. Natasha Parekh is living in London (UK) and working for Goldman Sachs as a senior analyst. Uttam Purushottam is an associate, solutions and consulting, with Infosys Technologies in Bangalore. Tracy Schmitt says, Hi Gang! Hope all are well! Im still living in Toronto no longer working at Air Canada. My new fabulous career is as a corporate trainer at Shoppers Drug Mart Very Happy Feel free to drop me a line Vivek Selot is an associate with FlatWorld Capital in New York City. Sunita Singh is a medical affairs associate with Hoffmann-La Roche in Mississauga. Crystal Wong is manager of business development at SOTI Inc in Mississauga.


Rotman MBA graduates of 2007 are out in the real world now. Heres where some of them have landed.
Ahmed Abouel Kheir FedEx Canada Parul Agarwal Campbell Alliance Cansel Akyol Yavuz Bell Canada Karim Alidina RBC Financial Group Firas Al-Nasseri Nortel Networks Hedi Amous SmartCentres Anurag Arora inCode Wireless Ellie Avishai Rotman School of Management Natasha Bagchi CIBC Sunil Balki Kraft Canada Inc. Chris Beltgens Tristone Capital Chris Blumas Morningstar Canada Charanpal Brar Capital One Roberto Bucciarelli Deloitte Chris Buck Northern Nanotechnologies Francois Cartier Direct Energy Cristina Ceron Alcan Aditya Chityala CIBC AJ Choudhry BMO Financial Group Andrew Clareld-Henry Davies, Ward Phillips & Vineberg John Cole UBS Carla Corral Frito Lay Jon Coyne Iovate Health Sciences Nasuh Damer Capital One Michael Dary Accenture Crawford Dedman Ontario Ministry of Education Alfonso Esparza OANDA Tomas Fieg CIBC Jason Galbraith Latham & Watkins LLP Rachel Gillespie Scotia Capital Mariano Gimenez Uriburu RBC Capital Markets Max Goldstein Bain & Company John Graydon Scotia Capital Kanishk Gupta CIBC Sameer Gupta IBM Canada Jordan Hague RBC Capital Markets Timothy Hanlon RBC Financial Group Avery Haw TD Canada Trust Bryan Herskovits RBC Financial Group Ron Ho Navtel Communications Inc Gary Hum PricewaterhouseCoopers Mary Hum PricewaterhouseCoopers Sameer Jain IBI Group Lisa Jazwinski Bacardi Bobby Kalsi Westwind Partners Inc Anna Karasik Deloitte Avi Khullar Deloitte & Touche Katharine Kim CIBC Takashi Kitamura ORIX Corporation Jennifer Kline Travelers Insurance Halyna Kosyura The Boston Consulting Group Dilip Krishna A. T. Kearney David Lambie TD Asset Management Vikram Latawa Deloitte Martin Lau Manulife Financial Gina Lavarello CIBC Timothy Lee Dundee Securities Leo Leung Manulife Financial Bill Li Scotiabank Gina Lin CIBC Peter Lizon Edenbrook Hill Capital Sonya Lockyer Deloitte Dusan Lovren RPO Management Consultants Michelle Lozano RBC Capital Markets William Lumsden National Bank Financial Sanjay Luthra RBC Financial Group Edward Lynch RBC Financial Group Shouyi Ma Nortel Networks Sabrina Machel GlaxoSmithKline Sherwin Mah Sears Canada Paul Malin Self-Employed Dejan Mancic Bell Canada Naveed Masood Baxter Healthcare Robert McKee BMO Financial Group Kevin Mei CIBC Augustin Milandu Microsoft Canada Rik Muilwijk Navis Capital Saurabh Mukhi RPO Management Consultants Esteban Munoz Hakspiel Scotiabank Chokks Natarajan Capgemini Canada Erum Naz Colgate-Palmolive Eric Nie KPMG LLP Leily Omoumi Scotia Capital Arturo Ortega Campos CIBC Patrick Pagtakhan SmartCentres Shal Patel BMO Capital Markets Carla Pennano Accenture Manuel Perez Palacios Alcan Melanie Perry CIBC Leila Peyravan Kingwest Capital Anthony Pittiglio RBC Financial Group Jonathan Polak Perimeter Financial Corp.

120 / Rotman Magazine Fall 2007

Executive MBA / Class Notes

Class Champion: Bob White

Class Champion: Vitor Fonseca

Courtney Price McCain Foods, USA Abhijit Rawal Deloitte Salima Rawji SmartCentres Maria Restrepo CIBC Katherine Rivington Edgestone Capital Syed Rizvi CIBC Dan Rollins UBS Vikas Sahunja CIBC Sean Samieian Infosys Consulting Mohit Saxena BMO Financial Group Anuradha Sethuraghavan CIBC Ketan Shah TD Bank Financial Group Shyam Shankar CIBC Aneesh Shrivastava IBM Canada Michael Simone SmartCentres Pratima Singh Bell Canada Carey Squires TD Securities Blendian Stefani SmartCentres Andrew Stronach Mercer Hussein Sunderji RBC Capital Markets Omair Syed Telus Kim Tack Bell Canada Kevin Taylor Deloitte David Teng IBM Canada Alexis Thomas IBM Canada Roger Thompson IBM Canada Fernando Tizon TD Securities Ron Tsang AGF Funds Ronnie Varghese A. T. Kearney Michael Wasylynchuk BMO Capital Markets Yair Weisblum Accenture Kathleen Wheelihan CIBC Margaret Wong Kraft Canada Dennis Woo Deloitte Zhen Xiang Scotiabank Jad Yaghi Monitor Rina Yoo BMO Capital Markets Michael Zimerman BMO Capital Markets Co-Class Champions: Peter Murphy
Bill Brown

Class Champion: Jeffrey.Wayne David Lynch is finally back in Canada after seven years of international work. Returning to Ottawa, David has retired from the corporate rat race and started his own consultancy firm: The Fios Group. TFG is focused on helping early stage high-tech companies accelerate their growth. He offers market analysis, competitive analysis, market denition, aligning products to markets, and the creation of sales tools. He is also working with a couple of analyst groups doing market analysis for them, and in time hopes to close the circle by offering services to the VC community as well (although he is still trying to gure out what these should be). David sends his best to all his class mates, and looks forward to actually being able to attend this years reunion!

Carol Panasiuk was named the Canadian Public

Class of 2007 Graduate Student Giving:

The Rotman School would like to thank the following individuals for their generous contributions: Patrice Bansa, Kelly Gauthier,
Rachel Linda Gillespie, Hongyuan Jing, Jonathon Kimball, Augustin Diakiesse Milandu, Ketankumar Shah, Omair Syed and Michael Anthony Tedesco.

Relations Society (Toronto)s Public Relations Professional of the Year on April 25, 2007. Carol is the executive vice president and general manager of Cohn & Wolfe, a fullservice public relations agency based in Toronto, which she founded in 1989. In the photo, left to right, are: John Challinor, director of communications, Jamieson Laboratories; Carol Panasiuk, executive vice president and general manager, Cohn & Wolfe; Jacqui dEon, chief communications officer, Deloitte & Touche LLP, and Luc Beauregard, chairman, RES PUBLICA Consulting Group Inc.

note, below). Ashley obtained his degree in Organization and Management from Capella University School of Business in Minneapolis. The targeted population for his quantitative study was the PMI Southern Ontario Chapters 3800+ members of PMP professionals. Sue Beamish hosted the evening. With the market at an all time high and a quorum present, the decision was made to liquidate the holdings of the Sky Blue Investment Group after 14 years. Now the group is wondering when and where they will meet next! In the photo, clockwise are: Sue Beamish, Brian Howe, Alex Harvey (now retired), Ross Richardson, Gail Garland (who has a big birthday coming up this year), Ashley Pereira, PhD and Denis Hanson. The photographer was Sheila Woodcock (who is loving it down east in NS). Ashley Pereira recently completed his Ph.D. from Capella Universities School of Business. His thesis was titled, Dominant Holland Code Typology among Project Management Professionals; Practitioner-Environment Congruence and Job Satisfaction. His research was targeted on PMIs largest chapter in Canada with over 4000 members. His journey began in 2002 while continuing full time his key role as senior engineering leader, defense and space at Honeywell International. During this time he also obtained his Six Sigma black belt and led a U.S. patent for a software product. Im still winding down and the cabernet helps each day...but more importantly, Janina and the boys (Michael and Andrew) want more of my home projects are coming fast and furious. They keep reminding me that unlike Scotty from Star Trek, I should have no problem delivering and performing miracles after all I am now not just an engineer but also a doctor!. He recently added a full hybrid golf set to his collection. Yes, after a bit of a layoff, an equipment change was nally necessary. So whats next for him? Completing the premier JSF Fighter Project for the U.S. Joint Forces while considering part-time teaching opportunities. Ashley is a conrmed believer of stretch goals and can be reached at

Class Champion: Andy Hofmann

Class Champion: Andrew Stewart On Thursday, May 31, eight members of EMBA 1993 gathered to celebrate Ashley Pereiras successful defense of his PhD thesis (see Ashleys Dave Codack writes: After eight years and two startups, I spent the next two years as president and COO of a medium sized TSX-listed video
Rotman Magazine Fall 2007 / 121

Class Notes / Executive MBA

surveillance company. I have recently gone back to the big corporate world within technology, working as head of end-user services for CIBC. My most prized accomplishment to date, however, is being a father again of River Cassius Codack, who is 18 months old (see picture). It is hard for even me to imagine that there is a 30-year spread between River and his oldest sibling. Yes, this is the last one well, eh, I am pretty sure it is.

Ltd. is one of Canadas leading providers of advanced information technology, products, services and business consulting expertise, employing approximately 20,000 people across the country. Brent Kay is general manager of Western Arctic Business Development Services in Inuvik, NWT.

Co-Class Champions: Steve Doede
Desmond Preudhomme

Class Champion: John Ramdeen Petra Cooper launched Fifth Town Artisan Cheese in 2005. The company is in the process of building Platinum LEED certied artisan cheese making facility in Prince Edward County. Petra is also co-founder and chair of the now-141-member Ontario Cheese Society and Slow Food Convivium Leader in Prince Edward County.

Co-Class Champions: Jon Waisberg
Carmine Domanico Munir Merali is the resident representative of the Aga Khan Development Network (AKDN) in Tajikistan. In his diplomatic capacity, Munir is responsible for the overall program development and relationship management of all AKDN stakeholders in Tajikistan and the region. He sends his best wishes to all his classmates and invites them to visit Central Asia in particular, the Pamirs (pictured above).

Class Champion: Jennifer Hill

Class Champion: Ashok Sharma Margaret Hudsons Burnbrae Farms is the winner of the 2007 Canadian Grand Prix Healthy Innovation New Product Award. This years Grand Prix Gala Awards Ceremony took place at the end of May in Ottawa at the Canadian Council of Grocery Distributors Annual Conference. This is the 12th nomination and 9th award that Burnbrae has won in the last 10 years. One product, Naturegg Break Free, which won an award for the Dairy products category as well as the All Canadian New Product of the Year Award in 1999, was the subject of my marketing project when I did my EMBA with Rotman. This project basically taught me about marketing and launched our company into starting to market our eggs to consumers. Since then, we have overhauled the egg category and effectively value added what was a commodity based section. We have improved the health of Canadians along the way, as 18 per cent of Canadian consumers are now purchasing omega3 eggs (ours and others), which means that they have more than doubled their omega-3 consumption and, more importantly, have provided their children with elevated levels of DHA omega-3, an important nutrient in brain development. This is a product that I launched in 1996 for our company (many others have a similar product). This penetration level of a specialty product is not bad when you consider that the egg category is one of the largest categories in the grocery store. In the photo: Margaret Hudson, vice president of sales and marketing and co-owner, with Joe Hudson, chairman, CEO, and co-founder. Jeff Lowe is the president of Carina Energy Inc., in Toronto.

Trivaris a commercialization capital company that invests in and develops early stage ventures. And when I say early stage, Im not kidding around. We go where angels fear to tread - taking nascent ideas all the way to scalable businesses where more traditional nancing models apply. Our role is to take product ideas with commercial potential, turn them into real products that customers will actually pay for, and then build a sustainable and scalable business model around them. In the early days, this involves a lot of heavy lifting, but slowly we wean the companies off of us so they can stand and grow on their own. Our model is very different than traditional angel or venture capital investing, but so far things are going great. Today we operate and manage seven companies in two different categories visual information systems (VIS) and information and communications technologies (ICT). The companies range in maturity from mere ideas barely off the lab bench to multi-million dollar revenue companies that are leaders in their respective industries. In May, we celebrated our rst exit. Trivaris is also highly involved in the community as we have begun to take a leadership role in fostering and improving the culture of commerce and innovation within the golden horseshoe area. Altogether, this is the most fun I have ever had in my career. Every day I am exposed to new business and technology ideas, new market challenges and amazing people with incredible passion.

Co-Class Champions: Ken Hagerman
Gary Ryan David Doyle is vice president, marketing for Philips Lifeline in Toronto.

Class Champion: Cheryl Paradowski Bonnie Cartwright is now the president of Extrusion Tooling Solutions in Markham.

2003 (EMBA19)
Class Champion: Jennifer Figueira

Co-Class Champions: Jennifer McGill-Canu Anne Berend is vice president of human resources for IBM Canada, Ltd., responsible for building strategic, national HR programs and policies that are designed to drive growth in IBM Canadas business. She leads a team of HR professionals focused on total compensation, talent, learning, leadership development, diversity, workforce relations and employee engagement. Anne provides business direction to HR leaders across the company, including Sales and Distribution, Global Technology Services, Global Business Solutions, the Software Group Lab and IBMs Bromont manufacturing facility. IBM Canada
122 / Rotman Magazine Fall 2007
Bruce Lawson

2003 (EMBA 20)

Co-Class Champions: Andrew Jenkins Ty Shattuck writes, It has been two years now since I left my VP position at L3 Communications to try my hand at being an entrepreneur. Working at L3 and Wescam before that was great, and I learned a tremendous amount. But working for a multi-billion dollar, U.S. conglomerate where most decisions have to be vetted by New York has itsumm . creative limitations. In May 2005, I ventured out with a couple of partners to start a company called
Maria Lundin David Basskin now has a late-night gig as host of Stolen Moments on JAZZ.FM91, Canadas premier jazz station. Join David every Saturday night from Midnight to 3:00 A.M. as he plays great jazz and reads from fascinating jazz criticism and history. David continues, during

OMNIUM / GEMBA (Global Executive MBA) / Class Notes

daylight hours, as president of the Canadian Musical Reproduction Rights Agency Ltd., Canadas largest music licensing agency. Scot Hutchinson recently started a new job at Hydro One Inc. as the planning manager of the Head Office Program and Workforce Management group in grid operations. Hes really enjoying the new challenges and opportunities, and even the daily GO train commute! Frank Ye is now working at Shanghai Automotive Industry Corporation (Group), one of the three biggest automotive groups in China. My daughter, Elisabeth, is now 22 months old, a very cute little girl. The photo is of my family recently at Hannan Baoao resort.

2006 (EMBA24)
Co-Class Champions: Elizabeth Duffy-MacLean
Linda Jussaume Lili Asgar is senior relationship manager for Warrilow and Company in Toronto. Paul Javadi is sales and operations manager at Brains II in Markham. Derek Leno is general manager, operations for Bell Canada in Toronto.

2006 (EMBA25)
Class Champion: Rob Ljubisic

Co-Class Champions: Fariba Anderson

2007 (EMBA 26)

Class Champion: Serge Messerlian
Paul McKernan Jonathan Soon-Shiong is head of strategy & corporate development at Metroland Media Group Ltd, Canadas leading community media business. Jonathan and his wife Betsey recently gave birth to another baby girl, Ella Hailey.

2005 (EMBA22)
Class Champion: Michele Henry Pierre Noriega has 12 years of experience in the banking industry and has held various positions in risk management and corporate banking in Colombia, Mexico and Canada with ING and RBC. He holds a degree in Industrial Engineering from Universidad de los Andes in Bogot, Colombia and is a vice president with Asset Based Finance in RBC Capital Markets in Toronto. He is married to Claudia and has a son, Toms. Weijian Mao is the senior financial director of Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), the largest auto component company in China. The total annual volume of vehicles produced in China is supposed to hit 17 million before 2017. Weijian just got married recently and his gorgeous bride, Stella, is also an alumna of U of T (Master of Chemical Engineering). The couple is now planning to have a baby in time for the 2008 Beijing Olympics. The dream of the Mao family is to go to visit Toronto and the Rockies together in the near future. Mao (I like to be called Mao because it is really a great surname in China) sends all his best wishes to the EMBA 22 troops! Janey Shin is a Six Sigma Black Belt at Eli Lilly Canada in Toronto.

OMNIUM / GEMBA (Global Executive MBA)

Class Champion: Lan Nguyen

with Peter Tsui (HK) and O Taeg Shim (Korea) both EMBA99 graduates. Bernhard Fuereder is an independent fine art consultant in Austria. He is married with two daughters, 21 months and four months old, and is very interested in a 2009 reunion. Hans-Ulrich Hartenstein continues to work in the environmental industry out of North Carolina, traveling whenever possible to Germany. He is the driving force behind the regular Musketeer reunions. Rainer Hofling is leaving Teufelberger to become vice president of AgroLinz Melamin International GmbH (50 per cent owned by the OMV group in Linz) in August. AMI upgrades natural gas into high value agricultural and industrial raw materials. The companys main products are melamine and plant nutrients. AMI is the European market leader for melamine and is number two globally. Roland Konrad became managing director of Teufelberger Seil GesmbH (at, go to rope) in early 2006. The company produces and sells steel wire ropes, mainly for cranes and ropeways. Rolands company employees some 180 people and belongs to the privately-owned Teufelberger Group. It produces at two sites in Austria and sells worldwide also into the U.S. and Canada. Roland says the new job is fun because the business is going quite well and the environment is o.k., although its challenging. Ascan Moeller reports the birth of a son in March 2007 and that all is well again in Hamburg, now that his son is sleeping more comfortably. While continuing to establish business in the Middle East, Alaa Serry has developed a new nancial services tool that is now in the pilot stage at one of Canadas banks.

Class Champion: Nancy Dudgeon

Class Champion: Jim Coutts

2005 (EMBA23)
Co-Class Champions: Karen Sparks
Joyce Rankin GEMBA99 is beginning to plan its 2009 10 year reunion! Jim Coutts is president of Global Remittance Network Inc., a nancial service software start up in Toronto. GRNs platform automates all manual legacy payment and expense management processes, linking them to the ERP accounting and banking systems. Jim and wife Dr. Lyn Sharratt are now grandparents: son Robert and wife Sarah who live in London (UK) had Robbie in January 2007. Jim, who is currently Chairman of the Rotman Alumni Board, and Lyn recently returned from Hong Kong, China and Korea where they met Andrea Abt has returned to Munich to join the Siemens Group, Siemens IT Services and Solutions as the commercial head of the Division Service Industry. Andrea and her husband continue to live near Lindau, Lake Constance. Marious Roco Nasirpour is president of Marco Construction, which builds schools in L.A. and San Diego area. Our family nally moved back to California after having our second son (Marco) born in Toronto. I send my best wishes to GEMBA and EMBA graduates of 2000 and hope to see some of you here in Carlsbad, California in the very near future.

Co-Class Champions: Margaret Evered
Renald Hennig

Rotman Magazine Fall 2007 / 123

Class Notes / MBA (Accounting) / Master of Management & Professional Accounting

Co-Class Champions: Manfred Koo
Petra Cerhan

Co-Class Champions: Michal Berman
Susanne Justen Jag Parhar is a business analyst with IBM Global Services in Toronto. Stacey Petersen assumed a new role at RBC in November 2006 as senior manager, private client strategy and brand for RBCs Global Private Banking division. This new role allows her to put her Global EMBA to work given its international scope and frankly, makes for some great travel opportunities! Next year is the ve-year reunion everyone... what country will we decide to meet in?

great challenge as I will move from a specialized staff function to the business where I will be more involved in our growth initiatives in China. Although controlling is a new eld for me, I am looking forward to expanding my horizons and tackling the bread-and-butter business of nance and accounting. While I have decided to stay in the ABB family, I thanks all of you who assisted me in recent months by providing leads. Sometimes the grass only seems to be greener on the other side of the fence. I wish you and your families all the best and I always enjoy hearing from you.


Class Champion Chris Hind

Co-Class Champions Vanessa Blumer

Co-Class Champions: Dirk Lohmann
Blake Langill
Simardeep Gill
Janet Scarpelli

Co-Class Champions: Ralf Martinelli
Brent Furneaux

Class Champion: Cecilia Mueller-Chen Alexander Ernst writes: As you know our family grew some weeks ago and we have almost reached the size of a hockey team. I made a professional change back in March of this year; Im still in the chemical industry, but in a different segment. For those who are interested in learning about the company (my picture is on page 46) or are considering investment opportunities, we just published our FY2006/7 results ( Susanne Haselbauer recently moved to Munich. I started my new job at Allianz in March. This new challenge comprehends the development and implementation of Allianz Groups banking strategy worldwide, which includes but is not limited to Dresdner Bank. Do you remember the session we had here in Munich about the impacts of population development on the insurance business? These are my new colleagues who focus on insurance business. The Banking division I work for is still small only ve people. We have identified 45 countries with expansion potential, which means much work ahead! I hope you and your families are well. Please call me if you plan to visit Munich! It will be my pleasure to show you together with Christian, who is more experienced in this region the best beergardens! Cyril Scholer writes: I am delighted to announce that I will be staying a bit longer in the Middle Kingdom. I have accepted a new position at ABB as division controller for our robotics business in China; I will be located in Shanghai. This is a
124 / Rotman Magazine Fall 2007 Jean-Marc Haeusler works as medical director in UCB, a biopharmaceutical company. His move to Atlanta went well, and he is enjoying his stay in the U.S. In February 2007, the Haeusler family welcomed Annia, their rst child. She has a wonderful personality, and Jean-Marc is enjoying her very much! Steffen Jaeckle is the sales and marketing director of Frei skincare located in Germany. He started his career at Procter & Gamble. Steffan has one daughter, Catharina Chiara (12). Rolf Leutwiler has taken on a new position at Holcim Ltd. in Switzerland as senior group consultant in the Value Management area. Rolf also became engaged to Verena, who many of his class mates know from the China module. Rolf sends best wishes to the Class 07!

Class Champion Melody Tien Grewal

Class Champion Jamie Ferguson Dave Mun is equity research analyst with RBC Capital Markets in Toronto.

Class Champion: Elaine Ilavsky Keith Wong is a manager with Deloitte & Touche in Toronto.

Class Champion: Ali Spinner (Charyk)

Jessie Jing Shao is an associate with Scotiabank in


Class Champions ensure their class remains active and vibrant long after graduation and bring the Rotman School and its graduates closer together. They help organize reunions, promote events, and keep track of their classmates activities for inclusion in the Class Notes section of Rotman magazine. To represent your graduating class, contact the Rotman Alumni Ofce at (416) 978-0240, or via e-mail at

Upcoming Events
Complete details are available at

September 2007
September 11, 8:00-9:15am The Business of Green Speaker Series @ Rotman Speaker: Ron Dembo, Founder and CEO, Zerofootprint Topic: Everything You Wanted to Know About Carbon Offsets But Were Afraid to Ask September 26, 8:00-9:15am Rotman Design Thinking Speaker Series Speaker: Tony Golsby-Smith, Founder and CEO, 2nd Road (Australia) Topic: How Design Thinking Offers Strategy a New Toolkit

October 16, 5:00-6:15pm Rotman Design Thinking Speaker Series Speaker: Katie Taylor, President and Chief Operating Ofcer, Four Seasons Hotels Inc. Topic: Strategic Design Thinking A Case Study for Being the Leader in All of Our Markets October 29, 5:00-6:15pm Rotman Board Effectiveness Speaker Series Speaker: Richard Haskayne, former Chairman and CEO of Home Oil, TransCanada Pipelines, MacMillan Bloedel, and Fording Inc. Topic: Northern Tigers: Building Ethical Canadian Corporate Champions

October 2007 November 2007

October 2, 5:00-6:15pm Rotman Corporate Citizenship Speaker Series Speaker: Greg Dees, Professor of the Practice of Social Entrepreneurship and Nonprot Management, Fuqua School of Business, Duke University Topic: Taking Social Entrepreneurship Seriously October 9, 4:30-6:15pm annual World Mental Health Day Forum @ Rotman Topic: A Managers Guide to Substance Abuse and its Impact on the Workplace October 9, 5:30-8:00pm (London, UK) Rotman Finance Speaker Series Topic: What is Really Happening in Private Equity Panelists: Andrew Claerhout, Director, Teachers Private Capital, Conor Kehoe, Co-Leader Private Equity Practice, McKinsey & Co., Carl Parker, Partner, Permira Advisers LLP October 10, 8:00am-Noon Design, Productivity and Innovation Workshop Speakers: Eugene Kohn, Chairman, Kohn Pedersen Fox Architects (New York City), Steve McConnell, Managing Partner, NBBJ Architects (Seattle), Roger Martin, Dean and Professor of Strategic Management, Rotman School October 11, 5:30-7;00pm annual Rotman MBA Student Awards Ceremony November 29, 5:00-6:15pm Rotman Risk Management Speaker Series Speaker: Adrian Slywotzky, Director, Oliver Wyman, Author Topic: The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs

May 2008
May 29, 6:00-11:00pm Rotman Alumni Reunion Gala Place: Four Seasons Hotel Toronto Details: 6:00-7:00pm, reception in honour of the MBA classes of 68, 88, 98 and 03 to celebrate their 40-year, 20-year, 10-year and 5year Reunions, 7:00-8:30pm, dinner, open to all Rotman alumni and guests, 8:30-11:00pm, dancing May 30, 8:30am-4:30pm 10th annual Rotman Life-Long Learning Conference Topic: Thinking About Thinking Place: Four Seasons Hotel Toronto Speakers: Dan Ariely, Professor of Behavioral Economics, Fuqua School of Business and Author, Malcolm Gladwell, Staff Writer, The New Yorker Magazine and Author, Roger Martin, Dean and Professor of Strategic Management, Rotman School and Author, Anita McGahan, Professor of Strategic Management, Rotman School and Author, Jane Fulton Suri, Co-Chief Creative Ofcer and Director, Human Factors Team, IDEO and Author, Gerald Zaltman, Professor Emeritus of Marketing, Harvard Business School and Author

Rotman Magazine Fall 2007 / 125

Thinking About Thinking

10th Annual Rotman Life-Long Learning Conference

Register now for our 10th Annual Rotman Life-Long Learning Conference on May 30. The theme is Thinking About Thinking. Were pleased to offer:
Conference Chairman: Roger Martin, Dean and Professor, Rotman School of Management and Author, The Opposable Mind: How Successful Leaders Win Through Integrative Thinking (Dec 2007) and The Responsibility Virus: How Control Freaks, Shrinking Violets and the Rest of Us Can Harness the Power of True Partnership The Power of Thinking Without Thinking Malcolm Gladwell, Staff Writer, The New Yorker Magazine and Author, Blink: The Power of Thinking Without Thinking and The Tipping Point Observations on Our Thoughtless Acts Jane Fulton Suri, Co-Chief Creative Ofcer and Director, Human Factors Team, IDEO and Author, Thoughtless Acts?: Observations on Intuitive Design Think Deep: Navigating the Unconscious Mind Gerald Zaltman, Professor Emeritus, Harvard Business School and Author, How Customers Think: Essential Insights into the Mind of the Market and Think Deep: How Metaphors Play in the Unconscious Minds of Consumers (March 2008)

Friday, May 30, 2008 Four Seasons Hotel Toronto

Thinking About Your Firms Performance When Youre Thinking Anita McGahan, Professor of Strategic Management, Rotman School of Management and Author, How Industries Evolve: Principles for Achieving and Sustaining Superior Performance Predictably Irrational: The Hidden Forces That Shape Our Decisions Dan Ariely, Professor of Behavioural Economics, Fuqua School of Business, Duke University and Author, Predictably Irrational: The Hidden Forces That Shape Our Decisions (Feb 2008)

Conrm your attendance today by registering at We look forward to seeing you on May 30th!

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