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Preparing for opportunities and cultivating change

  • Gerard Seijts and Chris Chan
  • |
  • Mar 19, 2019
Preparing for opportunities and cultivating change

In September 2018, we took our global discussion of disruption to Hong Kong, where we held a series of three discussions with several dozen leaders from the local business community. Participants included bankers, retailers, technologists, human resource specialists, and representatives from the real estate, insurance, and civil-service sectors. In each session, we had three questions: What kinds of disruptions are you seeing? What are you doing about them? What should Ivey do to prepare future leaders for disruption? In this second session, our discussion turned to coping with artificial intelligence and opportunities to head off disruption and cultivate change.

The pros and cons of data and artificial intelligence

The smartphone is a seemingly humble but highly disruptive force. Participants discussed how it is transforming every industry. Industries have the opportunity and the obligation to capture and store data and use it to build context into interactions with their consumers. Hotels, airlines, banks, and financial services groups have to get better at processing and using information.

This led naturally to a discussion of the broader implications of artificial intelligence (AI). Some fund managers today are using satellite imagery (largely automated) to determine how full shopping carts exiting Walmart are, or how much ore bulk carriers are transporting. They can then make investments based on that information.

But the rising tide of data has created countervailing currents. When people are confronted with too much information, they can become distrustful of the data and the institutions behind it. Many companies take advantage of that distrust by forging direct relationships with their end-customers, thereby bypassing and obsoleting the middlemen who used to mediate their distribution channels.

Regulations and policies at play

Several participants said governments are the biggest disruptors in Asian countries. They regulate everything from recycling to the location of factories and the energy source that will power those factories. Privacy issues are also disrupting established ways of doing business.  One participant put it this way:

“Every country has a slightly different framework for dealing with privacy. Depending on how many jurisdictions your company is working, that can add massive complexity to running a business.”

The younger generation’s needs and desires also create, and call for, disruptions. Thanks in part to government policies that promote entrepreneurship and business startups, few young people today are interested in working in a factory. This reinforces economic imperatives to automate factories, which means many production jobs that might still be performed by humans are now being turned over to robots. Participants discussed the concept of “universal basic income,” perhaps implemented through cash grants or negative incomes taxes. This idea is now being discussed in the Nordic countries, Canada, and elsewhere.

Opportunities abound

When discussing what incumbents are currently doing to head off disruption, we determined some prescriptions. Participants agreed companies need to continue to serve and delight their customers and help them access services the way they want. But they also should invest aggressively in the new technologies that will come to bear on their industries, exhibit humility, and be open to opportunity.

“That snotty-nosed kid that was knocking on their door five years ago now runs a billion-dollar business,” said one participant. “The arrogance of the established companies – the arrogance that comes from being big – lost them their path forward.”

Migrating from product-centric to customer-centric is one prescription. One banker said this transformation demands new kinds of talent acquisition and retention. We must find new ways to appeal to Generation X-ers and Millennials and help existing middle managers manage these new kinds of talent.

“Going forward, our product manager has to become more of a journey manager, right?”

One retailer said his company – with some 2,500 retail outlets – had adopted a Right Side/Left Side model for managing investments and change. The right side is the traditional core business, which operates by the standard playbook. The left side comprises a Sustainability and Innovation Centre, into which are funneled investments for the future.

“In our company, the Sustainability and Innovation Centre is where all those creative young people are working, trying to create new channels, experiences, and brands,” he said.

Cultivating change

Achieving such changes requires major cultural shifts, which in turn requires constant exhortation from senior management. One participant related how her company had built change and innovation into its formal annual review process, requiring employees to spend between five- and seven-per-cent of their time on innovative initiatives.

Another participant warned people are resistant to change so management needs to preach all the time.

Participants agreed leaders at all levels to engage in deep critical thinking, even as they are being bombarded with information.

“Our best performers are great listeners who take what they hear and then think really deeply about it. They give the challenge in front of them their undivided attention,” said one participant. “Never underestimate the ability to focus and concentrate.”

The case for curriculum changes

Opinions differed on the issue of what business schools in general, and Ivey in particular, should be doing to prepare future leaders for disruptions.

One participant said business schools today are better at feeding people into large, multinational corporations than developing entrepreneurs. He suggested a curriculum with short, sharp modules of instruction, with students stepping in and out of the workplace for focused learning.

Others countered the sustained immersion at Ivey and other leading business schools fosters exactly the kinds of skills that were discussed earlier in the conversation: strong communication skills, active listening, critical thinking, and deep analysis.

“I think these are the same qualities that good leaders need regardless of what their environment is,” said one participant.

Most agreed there needs to be a constant infusion of new cases in the curriculum.

“You can’t have a 10-year-old case about a toaster manufacturer,” said one entrepreneur. “Nobody wants to build a toaster business, right?”

Students also need to be challenged, especially in the realm of values and decision-making.

“If you have the power, you have to be prepared to use it, and use it ethically,” said one participant.

Another participant argued that universities should collaborate more closely with companies, to the point of grading companies on their performance in various critical realms.

“It wouldn’t be easy. But wouldn’t it be important?,” he said.