The Magazine of the Rotman School of Management

Winter 2007

What’s
Next?

Designing the Thinker

of the Future
Also, Jeanne Liedtka,
Russell Ackoff, and The End
of Exponential Growth
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Contents
Winter 2007
Features
4 Designing the Thinker of the Future
Yesterday’s approaches to problem solving are incapable of solving tomorrow’s problems.The high-
value decision maker of the future will be characterized by a capacity for Integrative Thinking.
By Roger Martin and Mihnea Moldoveanu
10 Thought Leader Interview: Janice Gross Stein
The renowned conflict management expert discusses why the UN is not equipped to solve the
world’s problems, and why she is optimistic about our collective future. By Karen Christensen
14 Peripheral Vision: Detecting Weak Signals That Can Make or Break your Company
Wharton Professor George Day discusses the importance of developing periphery-scanning
capabilities to deal with an increasingly complex world. By Karen Christensen
18 The End of Exponential Growth:Why (Real) Growth May End Soon
Manydrivers of growth are showing signs of saturation; and that’s not necessarily bad news,
because a continuation of recent growth would exceed the earth’s ability to support human
civilization. By Robert Ayres

24 Time for Design

Cities, systems, structures, and strategies all face the same need to combine
expertise, insight, engagement, and adaptation. It’s high time to confront the
tensions of design. By Jeanne Liedtka and Henry Mintzberg
32 The Mega-Community Manifesto
Together, public, private and civil leaders must face the problems that none
can solve alone. By Mark Gerencser, Fernando Napolitano and ReginaldVan Lee
40 Neuroeconomics
‘Neuroeconomics’ uses knowledge about brain mechanisms to inform
economic theory, opening up the ‘black box’ of the brain, much as
organizational economics opened up the theory of the firm. By George Lowenstein,
Colin Camerer and Drazen Prelec

48 The Evolution of Harassment in the Workplace

A subtle form of harassment has emerged in some modern workplaces that creates a hostile
environment for women who don’t adhere to ‘gender ideals’. By Jennifer Berdahl
52 The China Rip Tide: Threat or Opportunity?
Focusing on reducing time and variability in the China-anchored supply chains serving North America
and Europe can help companies build competitive advantage. By George Stalk Jr. and Kevin Waddell
60 Enterprise 2.0: The Dawn of Emergent Collaboration
‘Enterprise 2.0’ technologies have the potential to usher in a new era by making both the practices
of knowledge work and its outputs more visible within an organization. By Andrew McAfee
64 Bank Reform in China:What it Means for the World
Bank reform presents a unique and crucial challenge within China’s ambitious economic transition
from central planning to a market economy. By Donald Brean

Rotman Magazine Winter 2007 • 1

Rotman Magazine Winter 2007
Departments
Editor:
Karen Christensen
christen@rotman.utoronto.ca 3 From the Dean
Contributors:
30 CEOs Corner: Colin Angle
Belmira Amaral, Keith Ambachtsheer, Pankaj
Aggarwal, Steve Arenburg, Jennifer Berdahl,
37 The Big Picture: Howard Gardner
Donald Brean, Eric Kirzner, Sharmista Law,
Roger Martin, Ken McGuffin, Mihnea
45 Questions For: Alvin Toffler
Moldoveanu, Catherine Riddell, George Stalk,
Jr., Jack Thompson, Stephen Watt
57 Point of View: Russell Ackoff
69 Faculty Focus: Keith Ambachtsheer
Design:
Ove Design & Communications Ltd. 72 Faculty Focus: Eric Kirzner
Cover:
74 Questions For: Chris Anderson
Corbis Images 76 Questions For: Alan Blinder
Copyright 2007. All rights reserved. 78 Questions For: Ronald Burt
Rotman magazine is published three times
per year for alumni and friends of the
80 Faculty Focus: Pankaj Aggarwal and
Sharmistha Law
Joseph L. Rotman School of Management, p.30
University of Toronto. 82 Point of View: Benjamin Friedman
Subscriptions are available for 84 Point of View: The Task Force to
$99 per year.To subscribe, go to Modernize Securities
www.rotman.utoronto.ca/subscribe Legislation in Canada

To submit a change of address, 87 News Briefs

please contact us at:
Rotman Magazine
94 Alumni Profiles
Joseph L. Rotman School of Management
105 St. George Street
96 Alumni Capsules p.74
Toronto, ON M5S 3E6
Tel: 416-978-0240 Fax: 416-978-1373
100 Class Notes
E-mail: alumni@rotman.utoronto.ca
Web: www.rotman.utoronto.ca
120 Upcoming Events

p.94

2 • Rotman Magazine Winter

Fall/Winter
2007 2006
From the Dean: Roger Martin
What’s Next?
It is difficult to make predictions, especially
about the future. But despite Yogi Berra’s
famed assertion, humankind maintains
an obsessive urge to look beyond the pres-
ent in the hope of controlling events
in days to come. We devote much of our
economy to forecasting of all kinds, and
as the modern landscape has evolved, busi-
ness has increasingly used management
science and information technology in an
attempt to generate predictable outcomes
– or ‘reliability’.
Despite these costly initiatives, there is
little evidence that the ability of today’s
organizations to accurately understand the
world and predict the future has increased
one iota. With or without our efforts, the
future will emerge from the turbulent inter-
play of a variety of forces: unprecedented
growth in human knowledge, technology
that borders on the inconceivable, accel-
erated social evolution, advances in
biotechnology, and an increasingly connected
world, to name but a few.
We need to stop thinking about ‘the
future’ as something that comes from the
past, and to realize that the forces bringing
about change right now are so great that it’s
useless to make simple extrapolations. To
quote Marshall McLuhan, “Our Age of
Anxiety is, in great part, the result of try-
ing to do today’s jobs with yesterday’s
tools.” Our collective ability to thrive in the
future depends not only on how well we
continue to learn, but also on how well we
are able to unlearn – to banish old mindsets
and create new, more powerful models to
deal with our increasingly complex world.
In this issue, we aim to help equip our read-
ers to face the challenges and opportunities
that we will all confront in the months and
years ahead.
What will the optimal problem solvers
of the future look like? A few characteris-
tics stand out: they will have to turn their
backs on formulaic approaches, consider a
greater number of variables than ever
before, and examine non-linear relation-
ships between variables. On page 4,
Desautels Centre for Integrative Thinking
Director Mihnea Moldoveanu and I
discuss the resulting importance of ‘big
mindedness’, ‘nimble mindedness’ and
‘tough mindedness’, in Designing the
Thinker of the Future.
One of the University’s – and the
world’s – great thinkers, renowned conflict
management expert Janice Gross Stein
explains why the United Nations cannot
solve today’s global problems, the role of
government in uncertain times, and why she
is hopeful about our collective future, in our
Thought Leader Interview, on page 10.
It appears ever-more likely that we
will face a future of increasing scarcity,
growing environmental degradation, and
widening disparities between the devel-
oped and developing world. However,
according to INSEAD’s Robert Ayres, the
continuation of growth would be much
worse, because it would far exceed the
earth’s ability to support civilization based
on our current lifestyles. The End of
Exponential Growth is on page 18.
A recognition of the value of the
designer’s approach to solving problems
– the integrative way of thinking and
problem-solving – is increasingly taking
hold in business, and the Rotman School
is proud to be at the forefront of this dia-
logue. On page 24, McGill Professor
Henry Mintzberg and Rotman regular
Jeanne Liedtka discuss why now is the
Time for Design.
Also in this issue, Wharton Professor
George Day describes the importance of
‘scanning’ the periphery of our environment
on page 14; Harvard’s Howard Gardner
describes ‘the five minds of the future’ on
page 37; renowned futurist Alvin Toffler
discusses ‘third-wave wealth’ on page 45;
Rotman’s Keith Ambachtsheer explains
Why We Need a Pension Revolution
on page 69; and Rotman Professor Eric
Kirzner gives his views on the future of
Finance on page 72.
Try as they might, organizations will
never be able to foretell the future. Rather
than wasting their efforts on chasing pre-
dictable results, they should focus more
on employing the vision, judgment and
insight of their human capital. As author
William Gibson once said, “The future is
already here; it’s just unevenly distrib-
uted”.The trick is knowing where to look,
what to look for, and who to talk to.
At the Rotman School, we believe that
each of us has the power to shape the world
for the better. The future doesn’t just hap-
pen: people help create it through their
actions – or inaction – day in and day out.
We invite you to join us on our continuing
quest to develop a new way to think –
about business, and about the world.
Rotman Magazine Winter 2007 • 3
Designing the

THINKER
of the
of the
by Roger Martin and Mihnea Moldoveanu
FUTURE
Yesterday’s approaches to problem solving won’t cut it
in tomorrow’s complex environment. The high-value
decision maker of the future will be characterized by a
capacity for Integrative Thinking .
Current approaches to business education
are based on a model that has become
increasingly incapable of bridging the gap
between the problem solving means of the
past and the complex problems of the
immediate future.A new model is needed –
one that turns its back on formulaic
approaches to solving problems and
acknowledges the vital role of integration
in modern business, stressing the virtues of
‘nimble mindedness’, ‘big mindedness’ and
‘tough mindedness’ over the seductive trap
of narrow perfectionism.
The high-value decision maker of the
future will be a manager of complex inter-
actions who faces a multitude of inputs on
a daily basis – different value systems, ways
of knowing, ways of acting and relating,
ways of managing, and ways of choosing
between them. In the midst of this cacoph-
ony, decision makers will be called upon to
internalize the clash among multiple mod-
els of the world and resolve it productively.
The skills required to accomplish this
are ‘tacit’, in that they are not explicit in
the same way that the skills of a computer
programmer, a production line manager or
a chief development engineer are. They
cannot be represented by adherence to a set
of rules that can be put together into algo-
rithms that automatically turn certain inputs
TM Integrative Thinking is a trademark of the Rotman School of Management.
TM
into certain outputs. Unlike many skills of
the industrial age, they cannot be automated.
There are two ways to interpret the
‘tacit-ness’ of these skills. The first is to
resign ourselves to the notion that they can
never be made explicit, and can therefore
never be developed or selected for. An
alternative approach – the one we are pur-
suing at the Rotman School – is to attempt
to make progress on identifying and devel-
oping the tacit skills that make a difference
to the solution of ‘wicked problems’ –
multi-layered problems with no definitive
formulation or solution.
The Role of Integration
Let us consider a typical example of the
high-value decision maker in action: a gen-
eral manager at a telecommunications
equipment firm attempting to bring to
market a new cellular voice/database sta-
tion.The manager must motivate, monitor,
coordinate and negotiate with experts with
varied disciplinary backgrounds, who gen-
erate arguments patterned on the
underlying logics of different basic sci-
ences, each based not only on a different
vocabulary, but also on different standards
of argumentation. An argument about ‘the
optimality of a queuing process’, for exam-
ple, will have different standards than an
Roger Martin Mihnea Moldoveanu
argument about ‘market timing’, and will
rely on a different combination of analytical
and empirical reasoning.
Moreover, different domains of
expertise are embedded in different modes
of inference and different logics. Through
the medium of our manager, the logic used
by the system architect must be brought
into dialogue with the languages of the pro-
grammer and the network theorist; and the
logics of the marketer and the product line
manager must be brought into dialogue
with the logic of the hardware engineer.
Successful integration is essential to
our manager, both for building credibility
and legitimacy around her arguments and
actions, and also for successfully monitor-
ing and sanctioning the tasks and auditing
the arguments of the contributors. The
value of this decision maker to the organi-
zation increases exponentially with her
ability to successfully resolve the fundamental
model clashes, tensions, and incongruencies
that emerge among contributors.
Two features of the integrative function
are apparent from this discussion. First,
integration is inevitable.Whether it actively
sets out to or not, every organization as
a whole does achieve some level of integra-
tion among different knowledge bases,
ways of acting, knowing, communicating,
Rotman Magazine Winter 2007 • 5
representing, and so forth, in the sense that
any global outcome brings together the
chain of activities of the firm. Bankruptcy,
for instance, is an integrative outcome: inte-
gration of all of the causal chains making up
the organization takes place – even though
nobody sets out to make it happen. The
question that we are concerned with sur-
rounds the quality of the integration: a given
manager becomes a high-value decision
maker by making the reality of integration
happen more successfully.
Second, the integration function cannot
be outsourced, because the result of out-
sourcing it would be a loss of the full benefit
associated with it. Because much of the inte-
gration function occurs in the tacit-skill
domain, it would have to be somehow dupli-
cated inside the organization after it has
been carried out by an external agent – pre-
cisely what integration is not amenable to.
A Sketch of Integrative Thinking
Integrative Thinking can be defined as “the
ability to think and act responsibly and
responsively in the face of multiple and
possibly-conflicting models of oneself, oth-
ers, and the world.” The successful
integrative thinker creates value through
the creative resolution of tensions between
such models, interacting with self, others
and the world successfully in predicaments
that are unstructured, ambiguous and com-
plex, calling for the integration of disparate
knowledge structures and behavioural pat-
terns into a single action plan.
At the opposite end of the spectrum
is the cognitive narrowing of managerial
predicaments along ‘disciplinary’ lines
of thought via the use of pre-existing
models, which epitomizes a patently
non-integrative way of being. ‘Narrow
perfectionism’ entails narrowing the defi-
nition of the task at hand to the point that
‘perfection’ is guaranteed; cause-and-
effect relationships are simplified to the
point that actions produce a guaranteed
result. For instance, rather than a clerk
defining the desired outcome as ‘a satisfied
customer’, she defines the outcome as ‘a
customer interaction in which each step
of the prescribed procedure was dutifully
followed’. If customers disappear because
of indifferent service and the store goes
out of business, in her mind, it isn’t
6 • Rotman Magazine Winter 2007
because of her error, but rather, exoge-
nous factors beyond her control.
The integrative ‘way of being’ is char-
acterized by the successful resolution of
tensions between the need, on the one
hand, to learn and adapt and, on the other
hand, to act decisively and purposefully. A
working model for an integrative way of
being is one predicated on the ability to
consider more salient variables in a decision
process; the ability to internalize and concep-
tualize non-linearly-structured relationships
between the salient variables; the ability to
maintain a view of the whole problem while
working on the individual parts; and the
ability to harmonize and synthesize alterna-
tive standpoints rather than choose between
them, all the while retaining the ability to act
decisively and punctually.
Following are some real-life strategic res-
olutions that exemplify the integrative skill:
• Isadore Sharp created the Four Seasons
Hotels and Resorts experience in
response to the seemingly irreconcilable
tension between the need to provide the
intimacy and comfort of a small motel
with the range of amenities and services
and attending economies of scale of a
large hotel by designing, rapidly
prototyping and perfecting the medium-
sized, service-oriented luxury hotel with
intimacy and amenities funded by a
massive end-customer price premium.
• Herb Kelleher made Southwest
Airlines into the short-haul, point-to-
point frequent departure airline of choice
for leisure and business travelers in
response to an articulated aim to
simultaneously become both the lowest-
cost and highest-profit airline in North
America and the highest employee-
satisfaction airline in North America, a
vision that incorporates multiple goals
that one usually thinks of necessarily
trading off against one another.
• Jack Welch resolved the tension
between embedding stretch goals in
General Electric and keeping budget-
ing and planning meetings efficient and
productive by de-linking discussions of
executives’ hopes and dreams from con-
versations about budget.
• Richard Currie created the President’s
Choice high-end private label products
for Loblaws as a way of resolving the
conflict between the goals of providing
both low prices for consumers and high
profit margins for Loblaws.
• Moses Znaimer made Citytv into the
‘quintessentially local’ television station –
a globally-licensed concept successfully
replicated in 22 other countries, as a way
of providing a strategy that is responsive
to both the globalization of the media
business and the yearning of viewers for
local feel and content.
The New Managerial Virtues
If it is the case that Integrative Thinking is
an essential component of the mix of tacit
skills that will drive value creation in the
21st century, then it makes sense to ask,
‘what are the new managerial virtues that we
should aim to cultivate and develop, and,
how are we currently equipped to do so?’
We believe that there are three such virtues.
The productive resolution of seem-
ingly intractable tensions must be rooted in
the recognition of different ways of think-
ing and acting. The ‘local television station’
that Znaimer envisioned is a ‘micro-world’
– a community of practice and discourse –
that is radically and fundamentally different
from the cosmopolitan station – another
such micro-world.They entail different pat-
terns of interaction, different capital
budgeting constraints, different organiza-
tional rule sets, and different inter-
organizational network structures. Znaimer
therefore had to possess the nimble-mind-
edness to understand different micro-worlds
in their ‘radical other-ness’, and to mentally
‘walk around’ in them in order to internal-
ize just how deep the tension between them
really is.
Once the tension between micro
worlds has been understood, the integrator
requires the big-mindedness to simultane-
ously behold the competing models, while
retaining the ability to function. Her mind
must contain the radical other-ness of sev-
eral different possible worlds that are in
tension with one another, without falling
into paralysis.
Subsequently turning the new insight
into action – embodying the idea, produc-
ing the revolutionary behaviour – requires
tough-mindedness – the willingness of
the high-value decision maker to ‘try out
behaviour’ and allow her ideas to die in her
stead if they are found to be wanting.
The Outdated Model: Business School 1.0
While the skills we describe here are not
currently being widely trained or culti-
vated, we believe that business academics
are equipped to develop such virtues in
MBA students. The tools are already in
place; but business scholarship and teaching
must be understood in a new light in order
to bring about such change.
A sketch of ‘Business School 1.0’ –
which originated with the inception of for-
mal business education in the early 20th
century – reveals an organization of teach-
ing and research that mimics the functional
structure of the business organization.
There are ‘problems of production’, ‘prob-
Integrative Thinking calls for the
integration of disparate knowledge
structures and behavioural patterns
into a single action plan.
lems of accounting’, and ‘problems of
finance’ to be handled by methods specific
to each individual problem area.
Within this model, business academics
research in narrow fields and create models
for understanding their particular area. In
general, this involves research in one field
(often a narrowly-defined sub-field) and no
attempt to link their models with models
outside of the field. Faculty then teach their
models to students, who are predisposed to
embrace the narrow perspective they are
taught. Each silo conjointly develops ‘rules
of thumb’ for adequate contributions to
classroom and scholarly discussions and ‘laws
of business’ that are sometimes used to but-
tress the rules of thumb in question.
True tension has little opportunity to
flourish in this setting. In particular, there is
no room for the simultaneous understand-
ing of multiple conflicting cognitive models
or images of the organization, the manager,
or society at large; tensions among alterna-
tive ways of creating knowledge, validating
belief or auditing theoretical claims; or the
deployment of multiple logics and modes
of reasoning. These missing elements are
the core characteristics of ‘model clash’ –
the very clash that is so prevalent in the
business world, where predicaments do not
come packaged as specialized problem
statements, and it is up to the high-value
decision maker to choose between radically
different approaches.
A New Way to Teach
There are encouraging signs in the world of
modern business education – ‘Business
School 2.0’ – that, together, amount to the
seeds of a new way of teaching and
researching. The traditional silos are now
buttressed by basic social sciences such as
economics, psychology and sociology, cre-
ating a foundation for carrying out
dialogues that transcend the boundaries of
narrowly-defined disciplines.
These dialogues, and the research that
they are generating, have brought into
sharp relief the depth and quality of the
tensions between alternative models of
humans and organizations, and as a result, a
‘fabric’ for training integrative thinkers
exists. New disciplines such as behavioural
finance, behavioural economics, and even
‘organizational neuro-psycho-socio-eco-
nomics’ are now taking root in business
schools, a hopeful sign that the inner work-
ings of the mind are now being considered
in a business context.
We are faced, then, with a significant
opportunity for momentous change in the
MBA that makes use of a lot of good work
and resources currently in the toolbox of
business schools:
1. We can exploit the increased plural-
ism and widening dialogue that has
emerged around the business school to
design educational experiences that
develop big and nimble minds, used to
seeing situations through multiple lenses.
By exposing students to the fundamental
tensions that arise in attempts to explain,
predict, shape or justify human behav-
iour, the rich background of situational
detail that is kept hidden by traditional
approaches is freed up, resulting in an
‘augmentation’ of the mind that increases
the competence of the decision maker to
deal with radical conflict.
2. We can harness the new emphasis on the
use of knowledge as a ‘design tool’ to cre-
ate experiences that allow the ‘thinkers of
the future’ room to experiment with ideas
in action – to ‘live it’, imprinting on them
the mental habits of the tireless designer of
experiments for answering questions about
human behaviour: the tricks that get her to
produce the right effects; the obsessiveness
over the ‘demand characteristic’ of the
experimental design; and the recklessness
of the questioning of the original insight.
Rather than conveying ‘strategic frame-
works’, we can teach a basic repertoire of
skills that can be deployed to create new
models for new situations.
3. We can develop tough-mindedness by
fostering the ‘falsificationist’ approach of
scientific inquiry – whereby individuals
design tests of the effectiveness of their
strategies aimed at disconfirming or falsify-
ing, rather than confirming them. This will
help to cultivate an awareness of the fallibil-
ity of human enterprise, a willingness to
walk on the ‘uncomfortable side’, and occa-
sionally, to let go of our cherished ideas in
the pursuit of new, more powerful models.
Teaching Tacit Skills
An approach that holds promise for the
development of the skills we describe is the
‘practicum’. The format of a practicum is
patterned on a combination of the musical
‘master class’ and the psychotherapeutic
training session. In the former, the student
attempts to come to a better, deeper
understanding of the score and of her own
performative capabilities with regards to
the score. The purpose of the instructor is
to guide the process of forming and shaping
this understanding, offering suggestions for
improvement and criticisms, but leaving
ultimate decision rights firmly in the hands
of the student. Similarly, the psychothera-
peutic training session allows the trainee
the latitude to experiment with different
modes of being relative to a situation in
which she has a complex goal, and gives her
the benefit of feedback about the products,
processes and procedures that she designs
and enacts.
At the Rotman School, we have put
this thinking into action with the introduc-
tion of the Integrative Thinking Practicum,
a program comprised of three modules
and designed to expose students to new
knowledge and provide them the opportu-
nity to choose how to practice with and
use it. Piloted as an elective course for
first-year students in 2004-05 and 2005-
06, it has become part of the required
first-year curriculum for the 2006-07 aca-
demic year.
The first module aims to teach stu-
dents to become creators and developers of
models of human and organizational behav-
iour, to encourage model making and
model shaping, rather than ‘model taking’.
Students are introduced to a basic reper-
toire of cognitive tools that can be deployed
to build detailed models of actual human
and social processes. They are taught to
view model building as a way of (a) solving
problems that do not come pre-packaged in
a disciplinary language and (b) as a way of
understanding others’ representations of
the problem at hand.This module also chal-
lenges students to conceptualize the
models that are already embedded in the
way they speak and think, and to ‘re-for-
mat’ them for greater efficacy.
The second module attempts to
develop experimentalists and falsification-
ists. Students are encouraged to see their
world as an ‘experimental playground’ – as
a sequence of experiments designed to test
their hypotheses, designed explicitly to put
those hypotheses in danger. Secondly, this
module helps students understand the
8 • Rotman Magazine Winter 2007
counter-productive justificationist approach
to hypothesis-testing that seeks confirming
data and avoids seeing or considering dis-
confirming data. Instead, they are given the
opportunity to practice falsificationist
approaches whereby they ‘stress-test’ their
beliefs by seeking out disconfirming data
that may provide insight into how to
improve their models and beliefs.
The third module aims to stimulate and
develop the design capability of the ‘social
engineer’ in the trainee, by getting students
The Integrative Thinking Practicum seeks
to build sound ‘modeling engines’ in the
minds of our students.
to reverse-engineer and re-engineer their
own behaviour according to their aims. The
basis of this module is close self-observation
and analysis in controlled settings, followed
by opportunities to take on new ways of
interacting that are guided by a higher-level
goal. Defensive interpersonal communica-
tion strategies, for instance, become subjects
for behavioural re-engineering.
At its core, the Integrative Thinking
Practicum seeks to build sound ‘modeling
engines’ in the minds of students, equipping
them with the mental tools required to build
models that capture the complicated, mul-
tifaceted and multidirectional causal
relationships between the many salient vari-
ables inherent in modern business problems.
In addition, it employs basic models from the
social sciences as ‘engineering tools’ aimed at
designing more successful behaviours and
lenses for re-formatting and re-engineering
the participant’s own behaviour.
In Closing
We currently face a disruptive opportunity
in the market for managers: the growing
demand for high-value decision makers
who can successfully manage interactions
across multiple conceptual and behav-
ioural domains.
The goal of attempting to decipher and
teach the new skills described here is to
bridge the ‘ingenuity gap’ identified by
some as the real limit to human develop-
ment: the negative differential between the
supply and demand of ideas that solve the
social, economic, technical, and moral
problems that we, collectively, have cre-
ated. We believe that the answer to the
ingenuity gap may be that it is not a quan-
titative, but a qualitative one: not a
‘know-what’ gap in numbers of ideas or
other purely cognitive objects, but rather a
gap in ‘know how to’ – in the cognitive
skills required to bridge between fact and
value, thinking and action, different modes
of thinking; different logics; and different
forms of life.
Integrative Thinking stands not as an
enemy to the disciplines, on whose shoul-
ders it can be seen to squarely rest, but
rather as a constructive challenge to pro-
duce more adaptive-reasoning patterns,
more valuable instruments of prediction,
and a more inclusive approach to inter-dis-
ciplinary dialogue. We believe that the
ability to control cognitive processes can be
developed through targeted interventions
and training programs, and that Integrative
Thinking is an essential component of the
mix of tacit skills that will drive value cre-
ation in the 21st century.
Designing and educating the thinker of
the future requires business educators to
become ‘intellectual entrepreneurs’,
experimenting with the educational expe-
rience itself to develop a new way to think,
leaving behind the outdated model that has
stultified business education for some time.
And even though the work ahead for the
prospecting of Integrative Thinking is stren-
uous, there is little double that it is worth
undertaking. For who else will solve the
problems of the future for us?
Roger Martin is dean and professor of Strategic Manage-
ment at the Rotman School. He is also director of the
School’s AIC Institute for Corporate Citizenship and the
author of The ResponsibilityVirus: How Control Freaks, Shrinking
Violets – And the Rest of Us – Can Harness the Power of True Part-
nership (Basic Books, 2002). His next book, on Integrative
Thinking, will be published in fall 2007. Mihnea
Moldoveanu is director of the Desautels Centre for Integra-
tive Thinking and an associate professor of Strategic
Management at the Rotman School. He is the author of Mas-
ter Passions: Emotion, Narrative and the Development of Culture,
with Nitin Nohria (MIT Press, 2002).
 Are your people ready?

Where do new products come from? How about new services? Or new and better ways
of working? A people-ready business has the answer: It’s people, empowered by the
right software. Software that streamlines the creative process, organizes the production
process, and connects people who have ideas with people who can manufacture, distribute,
and sell them. That’s the foundation of a successful business. A people-ready business.
SM
Microsoft.® Software for the people-ready business. microsoft.ca/peopleready

In a business,
ROI stands for “return on imagination.”
© 2006 Microsoft Corporation. All rights reserved. Microsoft and Your potential. Our passion. are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.
Thought
Leader
Interview:
Janice Gross Stein
by Karen Christensen
The University Professor and renowned
conflict management expert discusses
why the UN can’t solve today’s global
problems, the role of government in
uncertain times, and why she is hopeful
Photo: John Hryniuk

about our collective future.

Karen Christensen: In your recent paper,
“Late For a Very Important Date: The
United Nations in Wonderland,” you say
the UN is lagging in addressing some
key issues. Please explain.
Janice Gross Stein: If you think of the
United Nations as the steel framework of
the global architecture that will shape the
21st century, it is currently not adequate to
the task. That’s not to say the UN isn’t doing
some very important things right as we shift
toward a more flexible global architecture:
the Secretary General has been instrumental
in pushing to break down and reach across
the silos. For instance, the UN has put
together the Global Compact, which is a
group of corporate leaders that have come
together with the UN, NGOs and others to
look at how to build horizontal networks
across pre-existing silos to address some of
our biggest global problems.That’s an exam-
ple of the kind of flexible architecture that
we need to move forward in the future.
Another example: the Secretary
General has convened a dialogue that brings
all the world’s great religions together to
work with UN staff.They will be looking at
how many of the issues that are roiling
global politics are framed by religious
thinking, and at how religious thinking can
contribute to reframing those issues so that
they become more tractable. It’s difficult to
think of another arena where these kinds of
conversations are taking place. What these
examples tell us is how badly we need more
flexible architecture. What we need is
‘pods’ that can swing in and out as they are
needed, bringing institutional leaders from
around the world and from different
sectors of society together.
Where is the scaffolding of the UN
woefully inadequate? Institutions cannot
withstand today’s stress tests when they
remain locked into existing and entrenched
patterns of authority, where people feel
that they can only report up and manage
down. Unfortunately, that is the case in
many UN institutions; its capacities to lead
and to manage do not meet current global
standards. The common response is that
this is because ‘the UN is an
intergovernmental institution, so the
leadership doesn’t have the flexibility or
the autonomy to manage up to current
standards.’ That may be true in part, but
so what? If, when we leave nationally-
regulated systems and scale up, we leave
our best standards behind, the quality of
global institutions is very fragile. This
clearly cannot be the platform on which we
build for the next century. Compare that to
leadership in the corporate sector, where
the best examples are also living and
working in an environment with multi-
stakeholders, yet they are managing up to
and beyond the best standards in that
environment. This is a challenge that
international civil servants must meet if we
are to build the kind of flexible global
architecture we need.
Institutions cannot withstand today’s
stress tests when they remain locked
into existing and entrenched patterns
of authority.
KC: You note in your paper that the UN’s
failures on the security front are particu-
larly worrisome.
JGS: A high degree of anxiety has become
a global phenomenon. Why is anxiety
higher now than it was even a decade ago?
In large part, I suspect it’s because the
issues that are most frightening to people
today are relatively faceless. It’s not that the
threats themselves are graver than they
were before, but because they emanate
from people that cannot be identified, who
are not institutionalized within familiar
structures. The Soviet Union had a far
greater capacity to wreak havoc in a deep
way than most of the groups operating
today. But we could put a face on Soviet
leaders, and we knew where the Soviet
Union was on the map, and that made it
less frightening. It’s a ubiquitous human
phenomenon that when we can identify
something, it becomes less frightening. So
it’s not entirely reasonable that the level of
anxiety is as high as it is. It’s understand-
able, but not reasonable.
KC: Even given the recent foiled terrorist
plot in London?
JGS: Yes. We could have had 10 airplanes
blown up over the Atlantic, and that is a
particularly awful proposition for most
people, because almost everyone flies. We
can all identify with those passengers who
would have lost their lives. But the scale of
that threat is much less serious than AIDS,
and people in North America and Europe
aren’t as frightened of AIDS (although they
certainly are in Africa and India and China,
even Russia). We don’t identify with AIDS
patients, we don’t say, ‘there but for the
grace of God go I’.Terrorism in the air is so
visible, so dramatic, so random, and also so
familiar that it makes all of us feel extraor-
dinarily vulnerable, where we haven’t felt
vulnerable before. It is this heightened
sense of personal vulnerability that creates
the level of anxiety.
A second issue is that the language of
threat and security has become a dominant
language worldwide. The menu of threats
has expanded, so then the menu of security
has also expanded, to include almost
everything. We face the threat of global
warming, as the consequences of how
we’ve been living for the last 200 years
become apparent; and there are new
threats to global public health.The menu of
threats has grown, and the search for
security has consequently become much
wider.At times, the sense of threat feels all-
Rotman Magazine Winter 2007 • 11
encompassing to people. The world feels
like a more frightening place than ever, and
that’s because we’re all over the world now
in ways that we weren’t before. The
language of fear is also a seductive one for
political leaders seeking to mobilize energy
and resources.
KC: What do you see as the biggest
challenge for global citizens over the
next 20 years?
JGS: There’s a serious lag between most of
our institutions and the capacity to come
together to make policy to deal with chal-
lenges and respond to changes in the
environment. We need to find that global
‘material’ – and I mean material in a very
practical way – that will be flexible
enough so that it can expand and contract
under different conditions. So much of
what we have built is rigid and inflexible;
it isn’t responsive enough to the environ-
ment in which we find ourselves.We must
make our institutions more flexible, by
figuring out which parts of the ‘steel scaf-
folding’ we need to curve. We still need
the steel – we need the institutions, and
we need them in all three sectors – the
corporate, the public, and the voluntary
sectors. We will always need an institu-
tional infrastructure: nothing can be
accomplished without it. But institutions
have to be at least as enabling as they are
constraining, and many of our global insti-
tutions constrain much more than they
enable. How do we build a more flexible
architecture? This question becomes even
more difficult to answer as we begin to
appreciate that we can’t mass produce
this ‘material’. There is no single formula
that is going to work everywhere.
KC: What are some of the overall themes
you see making a big impact globally?
JGS: What we’re seeing globally are two
processes working together: miniaturiza-
tion and fragmentation. Miniaturization is
very familiar to most of us. We know it
largely through technology: things are get-
ting smaller and smaller, and yet more and
more powerful. In a world in which tech-
nology miniaturizes size and magnifies
power, authority, leadership and initiative
12 • Rotman Magazine Winter 2007
devolve downwards. Militias can now fire
lethal missiles from a shoulder-held posi-
tion. You likely have a camera in your cell
phone, so surveillance moves way down, to
allow widespread surveillance from below.
Technology leads; it doesn’t determine, but
it certainly enables the global phenomenon
of pushing decision-making down, and flat-
tening it out. And the result is that many of
the agglomerates become fragmented.
Think about a large global corporation.
The most successful, at the same time as they
retain central corporate decision making to
steer the organization, have moved to adapt
by flattening decision making out in large
portions of their structure.
We need to do the same with our
institutional infrastructure. We need a
central capacity to steer, but a flexible
architecture that enables many to decide
when, how, and where to row. Corporate
managers who have achieved this balance
can help us understand and model this
problem.The big challenge is that authority
is fragmenting, miniaturization is occurring
in society as well as in technology, and
therefore, decision making is being driven
down and out, so that decisions are made in
multiple centres. At the same time, we
need the capacity to make those big,
authoritative decisions that set the course
and steer.At the Rotman School, you might
say it’s about getting the ‘design’ right, the
right combination of disciplined creativity;
I think about it as architecture, as building
Dealing with uncertainty has become
the defining question for all sectors
of society.
an architecture that’s flexible, that sways in
high winds, that withstands the shocks of
earthquakes, but that is anchored firmly in
the society that it simultaneously reflects
and seeks to change.
KC: Is there any sector out there that is
coping well with the need for flexible
architecture?
JGS:I look to where the comprehension is
way ahead of the curve, and that’s in the
arts – particularly the visual arts and archi-
tecture.We need to try to understand much
of what they’re telling us, because they really
are already ‘there’, and it’s where we all
need to go.There’s a great deal of alignment
between what Roger [Martin] talks about
when he speaks of design thinking and what
I’m saying. The design literature tells us a
part of what we need to know, but not all.
It says that we need to move back and
expand the range of options that we think
about, to move away from defined solu-
tions, and to think about non-obvious
answers. If we can shift the problem, we’re
going to create a whole lot more space for
interesting and non-obvious answers. And
that, I think, is a key part of what we need
to do. But beyond that, we need to design
more fluid structures. If our structures are
not fluid enough, we’re going to replace the
existing traps with new traps that we con-
struct for the next generation.
KC: The rampant uncertainty in the
global economy obviously presents key
challenges for today’s leaders. How does
one lead in this environment?
JGS: First, we must distinguish between
uncertainty and risk. Education is very
good at helping people think through risk,
because it’s knowable to some degree.
Uncertainty is much more difficult to
think through. Dealing with uncertainty
has become the defining question for all
sectors of society.There are several strate-
gies one can use. First and most important
is to recognize that uncertainty is a funda-
mental part of the environment in which
we live. When we frame problems and
begin to lay out alternatives, we need to
leave space at the table for what we cannot
– with any reasonable confidence –
expect.And if we define our environments
that way, we will leave resources free
enough and fluid enough in the certain
expectation that we will confront the
unexpected within the lifespan of the proj-
ect that we’re working on. And that itself
changes everything – it changes what we
do, the way we build, the way we allocate,
the way we construct relationships with
people. A more positive way to put it is
that we’re not leaving enough room for
innovation. We talk about innovation all
the time, but when you actually look at the
structures we’re building, in the education
sector, the corporate sector, or the volun-
tary sector, generally, we’re not making
enough space for innovation.
We also need to create the kind of
networks that pull in leaders from all
sectors. Some of the most interesting work
is being done today by these kinds of
networks. There is a recognition that no
one sector of society has the complete
toolkit – whether it’s an intellectual,
creative, analytic or a managerial toolkit –
KC: What is government’s role in all
of this?
JGS: To be fair, government should lag
somewhat behind the other two sectors,
because it represents our insulation against
uncertainty.What if we, the average citizens,
get it wrong? Because we are at the edge,
hopefully innovating, experimenting, and
building flexible architecture, we will make
mistakes. In that sense, it’s fair to look at
government as our collective ‘insurance pol-
icy’ when some of us get it wrong. But only
up to a point: when government becomes
the obstacle to creating the types of architec-
ture I’m describing, that’s a serious
problem. Government speaks a great deal
today about innovation, R&D, investment,
and cutting-edge strategies to bring products
to the marketplace. Improved productivity
and commercialization are crucial, we’re

No one sector of society has the complete

toolkit – whether it’s an intellectual,
creative, or managerial toolkit – to drive the
process from beginning to end.
to drive the process from beginning to end,
especially when the challenges are large.
It’s by bringing together leaders from
different sectors that we get some of our
most interesting results.
Finally, we need to be more welcoming
of friction. Personally and professionally,
people need a much higher tolerance for
messiness and fractiousness. Our reflexive
response, in an age of uncertainty, is to try
to put things neatly into boxes, and to label
them on flow charts, to preserve the
illusion of control. Leaders, especially in
our open and democratic societies,
justifiably worry that when we sidestep
process, we often go wrong, and there is
some truth to that. That truth underpins
the rule of law in our democratic system.
But there is another truth, and that is that
when we step outside of process, we get
some of our most creative ideas, elegant
designs, and flexible solutions. We need to
balance the two, and I suspect that we are
currently over-weighted in one direction.
told, to Canada’s future prosperity. If gov-
ernments are serious – if they’re prepared to
walk the walk rather than simply talk the talk
– they need to open up spaces for Canadians
to truly engage in the ways that we have been
talking about.
KC: What global development are you
most excited about?
JGS: The bright light that I continue to see
is the young people that I meet here at the
University, who are wonderfully intolerant
of authority structures. They came of age
with the World Wide Web, and they’re used
to navigating in a world where they go
where they want to look for what they
need. They have a capacity to move at a
much quicker speed than previous genera-
tions, and a highly-sophisticated ability to
detect ‘canned’ or prepackaged solutions.
They are much more willing to take risks,
more open to the world, and much more
flexible in the way they think about their
own personal futures. As this generation
moves into the marketplace, into govern-
ment and into the voluntary sector (and
they will be drawn to the voluntary sector,
because it’s the most fluid), they simply are
not going to put up with the rigid struc-
tures that characterize so many institutions.
When they get frustrated, they’re going to
move laterally to create a more fluid archi-
tecture in a networked world.
The question is: can the rest of
us adapt to the fluidity of architecture
that sways in the wind, or are we going to
be left behind in structures that break
when the shocks come, at an ever-quick-
ening pace?
Janice Gross Stein is the Belzberg Professor of Conflict
Management in the department of Political Science at the
University of Toronto and director of the University’s Munk
Centre for International Studies. The University Professor
has authored over 80 books, chapters and articles on intel-
ligence, international security, negotiation processes,
peace-making, and public policy. She currently serves as
vice chair of the Advisory Board to the Minister of Defence
and as a member of the board of CARE Canada.

Rotman Magazine Winter 2007 • 13

PERIPHERAL
VISION
Detecting Weak Signals That Can
Make or Break Your Company
An Interview with George Day
The Wharton professor and author discusses the
importance of developing our ‘peripheral vision’
to deal with an increasingly complex world.

Rotman Magazine Winter 2007 • 15

Karen Christensen: Describe the metaphor
of ‘peripheral vision’ as it applies to
business.
George Day: About 95 per cent of all the
sensors in our eyes are devoted to periph-
eral vision (the so-called ‘rod cells’), while
the remaining five per cent (‘cone cells’)
are used in focal vision.The rod cells allow
us to detect motion, colour, and of course,
the periphery. The two things that struck
[my co-author and I] about this were that,
The periphery in the organizational sense
is that ‘fuzzy zone’ way on the outside
of a firm’s collective vision.
on one hand, most organizations flip that
ratio, so that most of their sensing
resources are devoted to focal vision: they
focus on current markets, products, and
competitors, and very little is devoted to
the periphery. The other thing that struck
us about the metaphor was the notion that
you can develop your peripheral vision –
there are ways of improving it, not the least
of which is exercise. For example, people
can increase their peripheral vision from
180 degrees – 90 degrees on either side –
to 190 degrees, just through exercise. And
of course, you can improve your overall
vision in lots of ways: you can wear glasses,
replace lenses, have Lasik surgery; it’s really
quite amazing what you can do when you
put your mind to improving your capacity
for peripheral vision. So it’s a nice
metaphor, and people get it – they under-
stand that the periphery in the
organizational sense is that ‘fuzzy zone’ way
on the outside of a firm’s collective vision.
KC: Are some people naturally better
equipped to notice important signals?
GD: Yes and no. We found that in virtually
all cases, somewhere within the organiza-
tion, there was someone who knew about a
past ‘surprise’, because they saw it in their
periphery.They might have been associated
with the firm as a distributor, a regional
sales manager, or a technologist, but the
problem was – and this is the heart of the
16 • Rotman Magazine Winter 2007
issue we’re trying to deal with – senior
management didn’t know that they knew
about this particular surprise, and they didn’t
know that senior management needed to
know about it. The crux is that organiza-
tions lack this capacity – the sensing ability
– to bring signals out of the periphery and
attend to them.The problem is that there’s
a lot of noise that buries and confounds the
interesting information from the weak sig-
nals. So, in technical terms, there’s a really
poor ‘signal-to-noise ratio’.
KC: You believe that a capacity for periph-
eral vision is not only crucial to a firm’s
success, but to its survival. Please explain.
GD: It’s crucial because so many of today’s
opportunities and threats emerge from the
periphery, so if you can see these things
sooner, you can act on them in a mindful
fashion. The issue is, can you act on it
sooner than the competition? Many of these
things take long periods of time to develop;
acting on an important signal could entail a
technology transfer, a shift in the market,
or an emerging segment.The smart compa-
nies with strong peripheral vision spot the
signal earlier, and they prepare themselves
for it.They put capabilities into place – they
may not ‘jump right in’ and act on it, but
when it happens, they’ll be ready, because
they’re monitoring the situation.
One of the tools we find particularly
helpful is ‘scenario analysis’ – creating
alternative scenarios to cue yourself to crit-
ical events that might happen, or trends that
might be developing. We’re talking about a
zone of high uncertainty here, where
you’re not sure how something is going to
play itself out. So the [seven-step] process
we came up in the book is not just about
sensing the weak signals, or even acting on
them: we found the biggest problem was
getting the signal to the right person, and
having them interpret it properly. Then,
from there, taking appropriate action –
which may be no action at all, because you
may conclude that, for the time being,
you’ll just keep an eye on the situation.
KC: Can you give an example of a costly
lack of peripheral vision?
GD: One example I found intriguing was a
client of mine, who ran into huge problems
with the European reduction of hazardous
substances regulations.These require organ-
izations to take dramatic steps to eliminate
things like mercury and lead, and to provide
abilities to recycle. His company was totally
blindsided by this; they had all sorts of prod-
ucts in development, and they had to pull
them all back. It cost them millions. But it
turned out that some of the technicians in
his company were well aware of these
emerging issues; they just didn’t know who
to talk to about it, and they didn’t appreci-
ate the significance of the information. We
find this time and time again: your sales
manager in Asia Pacific might hear a rumor
about a potential competitor; but does she
know who to talk to, or how important it is?
And when senior management finally hears
about this weak signal, will they appreciate
its significance?
KC: What is ‘the vigilance gap’?
GD: This is the gap between the need for
peripheral vision and the capacity for it.And
sadly, this gap is actually growing, because
the need for peripheral vision is driven by
complexity and volatility in markets, which
raise uncertainty. If you think about the
environment of organizations, it’s frag-
menting in many ways; there are all sorts of
new segments, many more competitors,
lots of new technologies, so you have a vastly
more complex, fast-changing environment.
Just imagine that you’re a medical device
company: you’ve got regulators to consider,
you have to worry about public opinion
(which has been quite negative of late), you
have the physician community to keep track
of, dozens of technologies are changing
daily, and managers come from all over the
place – not only related industries, but from
other geographies. That’s just one industry
where the periphery is getting vastly more
complex by the day, and this is driving the
increasing need for peripheral vision. But
the capacity is nowhere near keeping up.
KC: Give us an example of great
peripheral vision.
GD: One that most people can relate to is
the situation that we found with the low-
carb diet phenomenon. Back in early 2004,
there was great interest in Atkins-type
low-carb diets. Our data showed that nine
per cent of adult Americans were on some
version of this diet. It turns out that this
was an opportunity that had been foreseen
as early as the 1980s; in fact, the Atkins diet
book was on the New York Times bestseller
list from 1997-2002. Yet only one major
company that we found really saw that and
acted on it, and that was Anheuser-
Busch, which launched Michelob Ultra in
September 2002. This product was very
well received, and it fit the market trend
beautifully. In speaking to them about this,
Anheuser-Busch had been aware of this
trend since the 1980s, and had been moni-
toring it carefully, developing products,
and just waiting for it to take off. And in
2001, they judged that it was time to
move. Most of the rest of the beer indus-
try, notably Coors, was a full two years
behind them, and this was critical: by the
time Coors came out with a product, it
was a miserable failure, because the trend
had collapsed. Most people were off the
diet by then. Anheuser’s ability to see
things sooner is what made this success
possible. It’s not about forecasting, or hav-
ing a better crystal ball, it’s about being
sensible about monitoring and picking up
signals, understanding their implications
earlier, and taking the right actions at the
right time.
KC: You have said that “to see every-
thing is to see nothing.” But isn’t a ‘big
picture’ perspective a good thing?
GD: Yes, but there are limits. As I men-
tioned earlier, we have found that in
virtually all cases, there was someone who
knew about that critical piece of informa-
tion, but they didn’t know that they needed
to know it. So an organization has to know
where to be looking at things really closely.
Of course, you pay a certain amount of
attention to all aspects of the periphery, but
there are some places you really have to
focus your attention. It could be a potential
new competitor who has a disruptive tech-
nology, for instance. We’re not suggesting
that you don’t keep your antennae up – all
good managers need to do that – but that in
fact you’re very active about it, rather than
reactive, which means scanning everything
loosely out there. People need to be much
more active in the way they go about scan-
ning, actively asking questions. If I’m in
nano-technology, for example, and I’m
launching a new product, I had better be
very mindful of the disastrous experience
of genetically-modified organisms in
Europe, because there are a lot of parallels
between nano-based products and GMOs.
Some of the best companies in nano-tech-
nology understand this, and have focused
their scanning on it. That’s just one way to
look at the periphery.
KC: How can an organization get started
on developing better scanning capabilities?
GD: The departure point for an improve- iting their network of contacts and connec-
ment program is leadership.We studied 170 tions to fairly familiar settings. Contrast
companies in depth, and we found that if you that with the vigilant leader, who is very
don’t have curious or vigilant leadership that externally oriented, seeks a lot of differ-
wants to learn about the periphery, nothing ent perspectives, and networks broadly in
much else is going to happen. So the culture social and professional settings. This makes
is very important; if it’s closed and inward- a huge difference.Vigilant leaders also have
looking, you’ve got a problem. Another great strategic foresight – they actually
aspect is knowledge systems for detecting embrace uncertainty and have an ability to
and sharing weak signals. How you’re organ- probe for second-order effects. They work
ized is important, too – you could have task with much longer time horizons, and they
forces, outlooks, scouting parties – all sorts are more willing to take time to explore
of things can be put into place. the periphery, so they create some ‘slack’
Vigilant leaders actually embrace
uncertainty and have an ability to
probe for second-order effects.
As we looked at companies with supe- around that. Unfortunately, most heads of
rior vs. deficient capabilities on all these major corporations today tend to be more
dimensions, what overrode everything was like operating managers. That’s why work-
the vigilance of the leadership.There’s a big ing on this capability is so important.
difference between ‘vigilant leaders’ and
‘operating managers’. The operating man- George Day is the Geoffrey Boisi Professor and a professor
of Marketing at the Wharton School at the University of
ager is very focused on the here and now, Pennsylvania, where he is co-director of the Mack Center
on the current situation, and making the for Technological Innovation and director of the Emerging
numbers. They tend to be looking at the Technologies Management Research Program. He is the co-
author, with Paul Schoemaker, of Peripheral Vision: Detecting
world from the inside-out, and are fairly theWeak Signals ThatWill Make or BreakYour Company (Harvard
closed in terms of listening to outliers, lim- Business School Press, 2006).
Rotman Magazine Winter 2007 • 17
THE END
OF EXPONENTIAL GROWTH:

Why (Real) Growth May End Soon

by Robert Ayres
A continuation of growth, as experienced in the 20 th century,
would far exceed the earth’s ability to support human
civilization based on current lifestyles.
Exponential economic growth in the west-
ern world began in the late 18th century and
has continued, more or less unabated, until
the present. However, anyone who believes
the future will be a straightforward continu-
ation of the past needs to address the fact
that a number of drivers of past growth in
industrialized countries are showing signs of
saturation or exhaustion, including:
1. Division of labour (job specialization), as
emphasized long ago by Adam Smith;
2. International trade, insofar as it allows
economies of scale and international
division of labour;
3. Saving and investing (the traditional
driver of growth);
4. Monetization of formerly unpaid
domestic and agricultural labour;
5. Borrowing from the future (by creating
new forms of unsecured credit in
massive amounts);
6. Extraction of high quality natural
resources; and
7. Increasing the technological efficiency
of converting resource inputs into ‘use-
ful work’ and power.
The first four trends have been largely
completed in the industrial world,
though they are barely beginning in many
third-world countries. The benefits of
scale from international trade have prob-
ably peaked, and saving from current
surplus and investing is quite out of fash-
ion, notably in the U.S. Asian countries
still do it, but the U.S. essentially stopped
saving in the 1990s and is currently ‘dis-
saving’ – living on capital, or on money
borrowed from others.
‘Borrowing from the future’ means bor-
rowing on the basis of expectations of future
income.The sale of equity shares is an exam-
ple; unsecured credit cards are another; and
over lending by central banks (as in post-war
Japan) is still another.A more subtle form of
this involves borrowing from other coun-
tries by running a trade deficit.
The U.S. now has a huge and growing
trade deficit, entirely financed by foreign
investment in U.S. government securities
by exporting countries. The deficit cur-
rently approaches $800 billion, or seven
per cent of the U.S. GDP, and absorbs close
to three quarters of the savings of the rest
of the world. This is unsustainable. Policy-
makers hope for a ‘soft landing’, but that
would require a return to the sort of policies
that resulted in a large budgetary surplus
during the Clinton administration –
including much higher taxes and sharply-
reduced military spending. Given the
significant deterioration in U.S. economic
strength since the 1990s, it would probably
also require a gradual devaluation of the dol-
lar, significant energy conservation policies
and other policies to encourage domestic
investment rather than capital export.
The alternative – a ‘hard landing’ –
would include a sudden devaluation of the
dollar, a sharp increase in U.S. inflation, a
sharp devaluation of U.S. bond prices, and
a deep recession. Foreign creditors would
see their dollar reserves cut in value at the
same time as their U.S. export markets
dried up, and a worldwide depression
would likely follow.
Borrowing from nature by exploiting
non-renewable resources is actually more
like theft, because there is no possibility of
Robert Ayres
repayment. We are running out of a num-
ber of high-quality resources (topsoil, fresh
water, fish, virgin forests, oil and gas, and
toxic waste assimilation capability) to
exploit.The fact that global reserves of eas-
ily-recoverable petroleum, natural gas, and
high quality metal ores are also finite
merely adds to the problem. Competition
for land, water, fisheries and energy
resources is already creating violent con-
flicts in some parts of the world, much of it
disguised as ethnic or religious in nature.
This leaves item number seven as the
only viable driver of future economic
growth. The technological efficiency of
converting raw materials (and fuels) into
useful work and power increased enor-
mously during the 19th century and the
first half of the 20th century, resulting in
cost and price reductions, not only for pri-
mary energy, but also for all energy-related
products and services. In fact, virtually all
products and services are dependent on
energy – or energy as converted to ‘useful
work’ – to some degree. This long-term
trend has enabled the substitution of
machines, powered by cheap fossil fuels,
for human and animal labour. It has also
facilitated large-scale industrial processes,
together with their economies of scale and
experience, which further cut costs and
prices. These cost-price reductions trig-
gered increased demand, thanks to price
elasticity, and increased demand yields still
further economies of scale and experience.
Sources of primary energy (crude oil,
gas, hydroelectricity, etc.) are no longer
getting cheaper. Higher energy prices may
alleviate scarcity by reducing consumption,
but they also inhibit economic growth.
Rotman Magazine Winter 2007 • 19
Moreover, the rate of increase in the effi-
ciency of energy conversion in industrial
societies has slowed down significantly.
The slowdown in technological
progress in the energy conversion domain
seems to be due to a combination of
exhaustion of the easiest options, institu-
tional sclerosis, and inappropriate
regulation favouring established monopo-
lies (especially in electric power
distribution) and inhibiting innovation.
The implications of a significant U.S.
slowdown or extended depression,
accompanied by inflation, are frightening.
Another more illuminating way of look-
ing at future prospects is by representing
technological progress as ‘exergy’ [the
energy available to do useful work] conver-
sion efficiency, in the form of an experience
curve. It is evident that the period of rapid
improvement is far behind us. Barring a
miracle (i.e. a scientific breakthrough of
huge proportions, or a radical change in
government policy), only further slow-
down can be expected in the future.
Implications for Growth
What does this slowdown imply for eco-
nomic growth? If growth is automatic and
What Will Life Look Like in 2100?
• Energy consumption in the U.S. and
Western Europe will have to be signifi-
cantly decreased, which will require even
more draconian cuts in the consumption
of liquid hydrocarbon fuels. This pre-
cludes any vision of a private jet or
several large SUV’s in every garage. And
air travel will be even more expensive
and less pleasant than it is today.
• Electric power will be plentiful and
affordable. Most energy-consuming activi-
ties will be in the form of electricity; some
will be transmitted by microwaves from
20 • Rotman Magazine Winter 2007
exponential, as assumed by contemporary
growth theory, it means little or nothing.
However, if one of the main drivers of eco-
nomic growth over the past century has
been a growing supply of useful work, at
cheaper prices, then the continued slow-
down in efficiency gains means a gradual
future slowdown in economic growth.
Information technology has exemplified
the feedback cycle: costs have fallen, prices
have followed, and demand has risen in con-
sequence. But IT is not the panacea for the
economy as a whole, unless it results in dra-
matically lower costs and increased demand
for all of the other tangible goods and serv-
ices that society needs. Up until now, the
applications of IT (outside of its own sector)
seem to be eliminating more jobs than they
create, but without significant correspon-
ding impacts on consumer demand for
really new and attractive products and serv-
ices that would create more jobs.
Taken together, all of these phenomena
suggest that U.S. economic growth is
almost certainly decelerating, and could
soon cease altogether.The implications of a
the surface of the moon, or from orbiting
solar satellites. Nuclear power will have a
significant role, but so will hydroelectric
power, wind power, tidal power, terres-
trial PV on roofs, coal gasification (for
hydrogen) and alcohol fuels obtained by
genetically-engineered enzymes from
waste biomass, especially lignin wastes.
• Private automobiles will be smaller and
more fuel efficient– partly because fami-
lies will be smaller – but the average
private vehicle of 2100 will not be radi-
cally different in appearance or
significant U.S. slowdown or extended
depression, accompanied by inflation, are
frightening.We saw a preview of the impact
of ‘stagflation’ in the late 1970s. In that case,
the ‘cure’ was a sharp increase in interest
rates, deliberately engineered by then-Fed-
eral Reserve Chairman Paul Volcker,
followed by a long decrease in oil prices
from the 1980 peak. Of course, one adverse
consequence of the period of low oil prices
in the late 1980s and early 90s was that
investment in finding new oil and gas
resources, as well as alternative technolo-
gies, slowed.
The current problem is at least partly
due to lack of investment in production and
refining capacity. On the other hand, the
high oil prices of today also reflect political
instability in the Middle East and, at
another level, the fact that new discoveries
have consistently failed to replace current
consumption in the quarter century since
1980. And indeed, the gap is growing. The
cost of finding new reserves is rising rap-
idly, even as demand from China and India
is also rising rapidly.
Recent price declines suggest that imme-
diate worries were exaggerated, but the next
time, we may not be so lucky. Oil prices will
not drop much more until demand drops,
and that would happen only in the event of a
major recession or depression. But the
resulting drop in oil prices, even by a factor
of two from present levels, is unlikely to be
performance from the best that can be
envisioned today. Light metals (possibly
even magnesium), fiberglass and com-
posites will largely replace iron and steel
in the body an chassis. Electric motors in
the wheels will provide the motive
power, and fuel cells will (most proba-
bly) provide the energy. Hydrogen
production (by micro-organisms or elec-
trolysis) and storage will replace the
present system of hydrocarbon-based
propulsion power for vehicles like taxis
or buses, operating strictly within
densely populated urban areas.
enough to re-start rapid global economic
growth along the current trajectory. The
existing sources of cheap oil will soon show
clear signs of exhaustion, and the ‘unconven-
tional’ sources touted by optimists require
huge capital investment. Capital outflows
from the industrialized world for non-
energy development such as urban
infrastructure will inevitably slow down.
Recent rapid Chinese growth has been
financed largely by foreign investment and
exports, mainly to the U.S. A collapse of
the U.S. economy would have disastrous
effects on China (not to mention other
exporting countries). Sudden or even rapid
dollar devaluation would cut exports, and
cut the financial assets of Chinese banks,
many of which are already overloaded with
non-performing assets. The impact on
China might not be limited to economic
distress. If, as usual, the worst pain is felt by
those at the bottom of the ladder (i.e. rural
peasants), there could be violent repercus-
sions.There are already hints of trouble.
For industry, lower growth (or no
growth) means reduced future profit
expectations and lower stock and share
prices. Insurance companies will get into
trouble.The so-called ‘wealth effect’, oper-
ating in reverse, will cut the consumption
of other goods and services, especially
housing and tourism, which in turn will
reduce employment and income, especially
in places and countries that depend on vis-
• Fresh potable water will no longer be
free or unmetered in most places. New
technology will enable cities to treat and
recycle sewage water to a level of quality
higher than natural ground water offers
today. It will take many decades before
the public is willing to accept recycled
water on tap, even though astronauts do
it routinely. However the current fad for
bottled ‘natural’ spring water is likely to
peak and decline before 2100.
• The declining global population will be
reasonably well fed, though on a much
itors. Incidentally, energy consumption will
also decline, along with declines in long-
distance tourism. If this happens too
quickly, it could trigger a wave of bank-
ruptcies among energy producers who bet
on a continuation of high prices, as well as
major economic problems for petroleum-
exporting countries.
The basic problem is that, just as growth
in a feedback system drives more growth,
similarly, decline begets decline. If the growth
engine goes into reverse, there may be no
bottom to the depression, except through the
intervention of exogenous events, such as
war. Unfortunately, a wider war for
resources, pitting the Judeo-Christian West
against an increasingly fundamentalist Islam,
seems ever-more plausible.
By 2100, huge numbers of people will
have been displaced from low-lying areas
by rising sea levels and natural disasters.
The Quest for Sustainability by 2100
To be sustainable, the world must be
peaceful and secure under the rule of law.
U.S. power is declining, and world peace
will not be achieved by a ‘Pax Americana’;
nor can it be imposed and enforced by any
other single country. It will require some
form of world government, global law and
less animal-based diet than the rich
countries enjoy today. This shift will
occur spontaneously, thanks to both
health concerns and environmental fac-
tors. Most agriculture will be devoted
to food for humans and not for animals.
Grain-fed beef, in particular, will
become much more expensive, fol-
lowed by pork. Non-farmed fish will
also be an expensive luxury, as ocean-
fishing rights are privatized, regulated
and closely monitored by satellites.
‘Fish farming’ will expand to fill the
gap, however, and the environmental
police power, which means an end to the
present system of 150 countries each with
‘absolute sovereignty’. The creation of the
European Union offers a possible model
for other groupings.
Sustainability by 2100 also implies an end
to further environmental degradation. But
that does not mean that today’s environmen-
tal resources – notably climate, forests, soils
and bio-diversity – can be preserved, any
more than population growth can be stopped
overnight. One positive factor is that global
population may peak and begin to fall as early
as the middle of the present century, pro-
vided human life-spans do not dramatically
increase in the meantime. AIDS, declining
male fertility and easy contraception are fac-
tors, but the basic reason is that, in an
urbanized society with rising living standards,
having children will increasingly be viewed as
an expensive luxury.
Environmental problems in 2100 will
certainly be far more severe and obvious
than they are today. Deforestation will
have added more carbon dioxide to the
atmosphere, and exposed more of the soil
impact will be better controlled than it
is today.
• Education, entertainment, the arts,
health care, environmental protection,
and security services will be by far the
largest employers. Manufacturing will be
largely robotic or automated, and almost
totally controlled by computers. Con-
struction will also be largely robotic,
using prefabricated components. Design,
marketing, maintenance, repairs, renova-
tion, recycling and waste disposal will
continue to employ human workers.
Rotman Magazine Winter 2007 • 21
surface to direct heating by the sun’s rays,
especially in the tropics. Global warming
will have raised average global tempera-
tures by several (three to six) degrees
Celsius, and more in the far north. Conse-
quently, much of the frozen permafrost in
Alaska, northern Canada and Siberia will
have melted, releasing methane into the
atmosphere that will accelerate the global
warming process.
The Arctic Ocean will have lost its ice
cover, resulting in a further reduction in
global albedo [the proportion of light or
radiation reflected by a surface] and a fur-
ther acceleration of the warming process.
Much of the Antarctic ice that is currently
resting on the sea bottom will have floated
away and broken up. Depending on how fast
this happens, the sea level will have risen by
at least half a meter, and possibly two or
three meters, rendering many low-lying
islands and coastal regions uninhabitable.
Hurricanes and typhoons will continue to be
ever-more frequent and powerful as ocean
surface temperatures rise.
By 2100, huge numbers of people will
have been displaced from low-lying areas
by rising sea levels and natural disasters –
particularly in South Asia and East Asia,
but also in other fertile estuaries, such as
the Nile, the Amazon and the Mississippi
Deltas. Northwest Europe will be hard-
pressed to protect itself from the rising
seas, and much of Florida, the Gulf Coast
and the barrier islands off the East coast of
the U.S. (including Long Island) will be
flooded unless vast dike-building projects
are initiated almost immediately. Only the
Dutch seem to have grasped the enormity
of the problem. Those who survive storm
and flood disasters will have become
refugees. Resettlement will be a major
challenge, especially in Asia.
Much arable land in low-lying regions
will be flooded, or subject to flooding dur-
ing frequent storms, and most of the
remaining good farmland is already occu-
pied. Hence there are only two possible
destinations for the refugees: most will end
up in Asian cities, but the other possibility
is large-scale reclamation and resettlement
of deserts. There are plenty of deserts in
the world that were once fertile and could
be again. However, reclamation will
require large quantities of fresh water, and
22 • Rotman Magazine Winter 2007
fresh water is already scarce. It is also
energy (exergy) intensive.
One of the conditions for sustainabil-
ity by 2100 is that a great deal of fresh
water will have to be transported by canal
or pipeline from areas with excess rainfall
– such as southern China, southern India,
Bangladesh or northern Australia – to
areas with too little rain, such as northern
China, Rajasthan and the Indus valley or
central Australia. Irrigating bigger areas,
like the Sahara, will be a much more diffi-
cult task, requiring either pipelines from
the Niger River, or very large desalination
plants located on Mediterranean or
Atlantic coast. The interior of Australia
could be irrigated by a combination of
canals (from the north) and desalination
plants. A global water distribution system
will have to be built, eventually.
Energy Sources of the Future
Well before the year 2100, the vexing
problem of medium-to large scale energy
storage, for which rechargeable batteries
are the only current (and unsatisfactory)
answer, can probably be solved. There are
at least two possible technical solutions.
The first is by means of magnetically levi-
tated high-speed flywheels, buried for
safety in reinforced concrete under-
ground vaults. The other solution, better
suited to small scale and local users,
would be in superconducting magnetic
fields, using newly-developed quaternary
ceramic or even organic superconductors,
cooled by liquid nitrogen. Superconduct-
ing magnet storage would be well-suited
to store energy from wind turbines
located (for instance) on remote mines,
farms or pipelines.
An international electric power grid is
also part of the solution. Power will have
to be transported from areas with surplus
generating capacity, such as the Andean
headwaters of the Amazon and the
Himalayas, to the big cities on the plain
where most consumers (and industries)
are located.
Adaptation and mitigation (such as
dam and dike construction) will require
major investments, probably comparable
in magnitude to those currently devoted
to military power.These projects will not
only be costly, they will require interna-
tional cooperation. Virtually all of the
major investments needed will not gener-
ate high returns, at least in the early
years, and will require significant public-
sector financing.
In closing
Will a low-energy, low-growth future
mean ‘freezing in the dark’, as nuclear
power advocates 30 years ago accused anti-
nuclear activists of proposing? The answer
is ‘maybe’. In a worst-case scenario of con-
flict and chaos, the future might be
something like that. But much better
options surely exist. Technology is not the
obstacle, but neither is it the panacea. The
current political-economic malaise is
reversible, if the approaching crisis is rec-
ognized for what it is, and if appropriate
actions are taken.
What actions? In my view, the first and
most important of the needed actions is
to end the war in Iraq and to enforce (if
necessary) a two-state solution for the
Palestinian conflict. Beyond that, we must
address the linked problems of energy
availability and economic development in
the poor countries. Last, but not least, we
must acknowledge and reverse the degra-
dation of the environment and the
changing climate.
All of the above presupposes a funda-
mental change in the ‘received wisdom’ of
those who walk in the corridors of power.
For instance, it is high time to recognize that
the War on Terror cannot be won by military
means.Armies cannot make peace; they gen-
erally only make matters worse. Similarly,
though all religions preach peace, religious
fanatics of all faiths tend to practice the
opposite. Fanaticism itself is the enemy.
Policing is necessary, but not sufficient. Edu-
cation is crucial, but also insufficient. Peace
can be achieved only by promoting economic
development, with emphasis on eliminating
poverty, under international law, and accom-
panied by a clear and constant message of
religious tolerance.
Robert Ayres is the Novartis Professor (Emeritus) of Eco-
nomics and Political Science and Technology Management at
INSEAD and an Institute Scholar at the International Insti-
tute for Applied Systems Analysis (IIASA) in Austria.Trained
as a theoretical physicist, he has dedicated his career to
studying technological change, energy, environment and
resource economics and ‘industrial ecology’ – a field he pio-
neered. He can be reached at robert.ayres@insead.edu
 E X PA N D I N G P E R S P E C T I V E S I S E VE R Y T H I N G
Executive Programs at the Rotman School
embody innovation and drive, with programs
designed to challenge and enhance the skills of
today’s business leaders.
The result is more than simply a business school.
It’s a thinking environment. It’s a training ground
for business leaders. It’s an energizing community
where dynamic people come together to
develop creative business solutions.
FOR INFORMATION ON THESE OR OTHER PROGRAMS:
E-mail: execed @ rotman.utoronto.ca
Web site: www.rotmanexecutive.com
Telephone: 416.978. 4441
UPCOMING PROGRAMS:
Financial Literacy for Directors and Executives
March 2 – 4, 2007 in Toronto
Governance Essentials Program
March 4 – 6, 2007 in Calgary
May 6 – 8, 2007 in Toronto
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Begins March 5, 2007 in Toronto
Directors Education Program
Begins March 30, 2007 in Vancouver
Begins June 11, 2007 in Toronto
Police Leadership Program
April 9 – 28, 2007 in Toronto
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for Executive Women
April 15 – 20, 2007 in Toronto
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April 23 – 25, 2007 in Toronto
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Begins May 1, 2007 in Toronto
Customized Corporate Programs
These programs deliver intense, action-oriented learning on
leadership, organizational change, finance and other business
issues, and are tailored to the specific needs of organizations.
 TIME
for
DESIGN
by Jeanne Liedtka and Henry Mintzberg

Jeanne Liedtka Henry Mintzberg
Nearly 40 years ago, Nobel Laureate in
Economic Sciences Herbert Simon
argued that, “everyone designs who devises
courses of action aimed at changing exist-
ing situations into preferred ones. Design,
so construed, is the core of all professional
training: architecture, business, education,
law, and medicine are all centrally con-
cerned with the process of design.”
Given the widespread attention given
to design in the business press over the
past two years, it appears the time has
finally come when the business world is
taking this message seriously.Yet design is
hardly the core of any current manage-
ment training – or its practice. In fact, it’s
not clear that we even agree on what
design means. As two business academics
long interested in this topic, our purpose
here is to show the robustness of the
notion of design; to examine the various
forms ‘designing’ takes; and to explore its
potential for helping people manage
more effectively.
The Terminology of Design
Design is both a noun and a verb.As a noun,
it refers to an outcome, and some are supe-
rior to others. To appreciate the difference
between great and mediocre design, con-
sider a comparison of the Golden Gate and
San Francisco Bay bridges. Both offer reli-
able transport across the water separating
San Francisco and its neighbours – but the
similarity ends there. The Golden Gate
enthralls, sweeps, and symbolizes, inspir-
ing art, music, and myth. The San
Francisco Bay Bridge, meanwhile, merely
gets the job done. Does this difference
matter? We believe that it does – and that
business has much to learn from this ‘tale of
two bridges’.
Functionality is an insufficient pre-
condition for a great design. The personal
objects that people cherish do more than
Cities, buildings, products, services, systems, and
strategies all face the same need to combine expertise,
insight, engagement, and adaptation. It’s time
to confront the tensions of design.
just work, they share a number of other
characteristics: they seem simple but com-
plete to their users; they contain nothing
extraneous, yet lack nothing important;
they engage at an emotional level; beyond
their ability to serve function without fan-
fare, they hook their users in an almost
sensual way; and finally, great designs man-
age to be simultaneously enduring and
innovative. They connect to the past with a
reassuring familiarity, while surprising
users with their inventiveness.
The important lessons of ‘design as a
noun’ turn out to be reassuringly straight-
forward: if you want great designs, seek
simplicity, emotional engagement, and that
sweet spot between the familiar and the
new. And, of course, do the job well. And
yet, if it’s all that obvious, why are we sur-
rounded by so many mediocre designs?
That brings us to the tricky part:
design as a verb. Like most things that are
hard to do, this is where the competitive
advantage lies. Better designing – of prod-
ucts, organizations, strategies – holds the
key to unlocking the real potential of
design for business. The basic attributes of
successful designing are well-recognized:
the process is synthetic, future-focused,
hypothesis-driven, and opportunistic. It
involves observation, the use of frame-
works, and prototyping. But peel back from
these high-altitude accounts, and you will
find that the particulars of designing
involve varying approaches.
Consider the revolutionary architec-
tural and social experiment of Brasilia,
the most completely-planned city of the
modernist movement. Rising from the
largely uninhabited central plateau of Brazil
in the 1950s and designed in exacting detail
to be ‘the model city of the future’, it
anchors a position at one extreme of design
approaches, whereby the designer is evi-
dent, declaring his or her intentions,
resisting compromise, and imposing his or
her will on users.
At the other extreme are the lovely vil-
lages perchés (perched villages) of Provence.
Evolving over time and through the partici-
pation of many, the hand of any single
designer seems hardly visible. Yet these vil-
lages retain a sense of symmetry and
coherence that suggests intention and con-
scious forethought – no less so than Brasilia.
Exploring the design continuum from
the stark, fixed, and imposed, to the
adapted, fluid, and evolving allows us to
develop a deeper understanding of what con-
stitutes ‘design as a verb’, and sets up an
examination of the challenges of designing
for business. To explore their range, we
describe four disparate approaches to design.
The Formulaic Approach: Brasilia
First, we return to Brasilia, where the
design tensions were resolved by coming
down heavily in favour of the designer’s
global knowledge and expertise, a con-
trolled process, and a fixed design.
Architect Oskar Niemeyer used estab-
lished techniques and official principles to
reach what he considered to be an optimal
answer. We use the term ‘formulaic’ to
describe this approach.
For modernist architects, the crises of
the highly-industrialized cities of the world
were reflected in their traffic, congestion,
and poor standards of living. Only ‘total
planning’, they believed, could resolve
these problems. By creating a new kind of
city, Brasilia’s designers set out to create a
new kind of society, using architecture as an
instrument of change. The modernist prin-
ciples driving design included the
organization of the city into separate zones
for work, living, and recreation; the
replacement of traditional streets with
high-speed one-way avenues radiating out
from the center; and the creation of
Rotman Magazine Winter 2007 • 25
superquandra – large apartment complexes
containing standardized family units
intended to break down traditional socioe-
conomic barriers. The resulting design is
specified by a set of pre-existing principles,
rather than emerging from a more open-
ended process of experimentation.
Brasilia’s design consciously resists
attempts at adaptation, rather than encour-
aging them. It is meant to stay true to what
it is – a ‘model’ city.
Rotman’s Design Studio Opens
Its Doors to New Learning
The Rotman School’s own ‘business design
studio’ is now officially open for learning
and innovation. This past summer, we
opened designworks™, the activity hub
of the School’s design initiative. Part of the
Desautels Centre for Integrative
Thinking™, the design initiative repre-
sents an important component in the
teaching and practice of integrative think-
ing, as inspired by the world of design. Our
mission: to design original business thinkers.
As a first step in a series of initiatives,
we piloted a Design Fellowship Program to
serve as the first comprehensive prototype
for applying design principles and practices
to real-world projects.The Program proved
to be invaluable across a number of fronts.
It not only helped to formulate and ‘test
drive’ the methods and tools for business
design, but also validated the uniqueness of
our approach to Business Design™ as a
means of generating breakthrough, yet
viable solutions. It also gave us the experi-
ence we needed to expand the program
into a year-long practicum.And, most impor-
tantly, it inspired a multitude of additional
opportunities to build more design-related
content into the Rotman School’s MBA and
Executive Education offerings.
Background & Overview
The program was driven out of the Rotman
designworks™ studio in collaboration
with the Ontario College of Art and
Design. Our ambition was to create a
26 • Rotman Magazine Winter 2007
The Visionary Approach: IKEA
Consider the pronounced similarities and
differences between the above process
and the story of Ingvar Kamprad and
his creation, IKEA. Kamprad’s personal
ethic of thrift and simplicity provided
the underlying values behind IKEA’s
defining intention: “To create a better
everyday life for the many by offering a
wide range of well-designed, functional
home furnishing products at prices so low
unique internship program that would feed
curriculum development for Rotman pro-
grams and provide a valuable experience
for students interested in innovation
through design.
• The Idea: An intense, 12-week program
that provides students from leading aca-
demic institutions in the fields of design,
engineering, and business with an oppor-
tunity to apply their learning and skills to
important real-world innovation opportu-
nities in a multi-disciplinary collaboration
that leverages design principles and
methodologies.
• The Goal: To develop design solutions
that provide human and/or social value,
showcase breakthrough design thinking,
and are commercially unique and viable.
• The Projects: Two projects were
assigned: one for an established healthcare
corporation, Medtronic, and the other a
start-up charitable foundation, Firefly,
dedicated to fighting neurodegenerative
disease through research and education.
• The Student Cast: Program candidates
were selected from a large pool of tal-
ented applicants, based not only on their
credentials and passion for ‘design think-
ing’, but also their special interests and
unique backgrounds to ensure a diversity
of skills and perspectives. A total of five
Rotman students (three with engineer-
ing credentials, including one from the
Jeffrey Skoll BASc/MBA program) and
that as many people as possible will be
able to afford them.”
In the IKEA story, we observe a more
organic design process at work. Kamprad
was more the visionary than the expert,
more attuned to learning and adapting
than to knowing and controlling. In a
sense, he had no choice – he started with-
out the power of bulldozers or a body of
principles. He had, at best, the equivalent
of a small number of people with shovels
by Heather Fraser
four OCAD students were assigned
among the two projects.
• The Faculty Cast: Under my leadership,
the faculty included Rotman Associate
Professor of Marketing Mengze Shi and
OCAD’s Industrial Design Chair Jules
Goss. Other experts, drawn from acade-
mia and industry, were engaged
throughout, offering guidance and inspira-
tion throughout the process.
• The Structure: The 12-week program
built off of designworks’ ‘Three gears
of design’ [user understanding, ideation
and prototyping, and business design],
expanded into a comprehensive project
framework. A combination of lectures,
workshops, and coaching sessions served
to provide guidance to the process.
• The Program: Beginning with a client
‘open brief’ that set a vision and an innova-
tion opportunity for the project, the groups
embarked on a series of steps revolving
around the ‘three gears of design’. A deep
understanding of the consumer target was
the most critical point of departure. Using
ethnographic tools and methods taught by
an expert in the field (Natasha Schleich
of Plunkett Communications), groups
engaged in a variety of exploratory
research that uncovered core (and unartic-
ulated) user needs. Using the identified
needs as our criteria for innovation, the
group then developed a wide range of con-
ceptual prototypes (products, services,
spaces, etc.) to openly address possibilities.
and only a general notion of what they
were setting out to build. And so he
adapted to the constraints he could not
eliminate. Nearly every element of IKEA’s
now legendary business model – show-
rooms and catalogs in tandem, knockdown
furniture in flat parcels, massive stores
readily accessibly by automobile, and cus-
tomer pick-up and assembly – emerged
over time as responses to urgent problems
that the struggling furniture company
Employing a variety of prototyping tools –
ranging from storytelling to scenario plan-
ning – helped them express ideas in more
tangible forms, giving students the means
to more productive dialogue with clients
and user-solicited input. The final, refined
concepts were translated into a viable inte-
grated business model. At the end of the
program, students delivered a complete
and actionable ‘design solution’ for each
project, including a full ethnographic
report on target insights and needs, a wide
range of concepts and prototypes, and a
comprehensive and breakthrough strategic
plan and business model.
The Results
The students involved grew from an ‘inte-
grative learning experience’ that applied a
combination of strong principles, practical
tools and methods along with a style of
working that was highly collaborative, non-
linear (despite the prescribed process) and
continuously iterative – all of which pushed
them outside of their comfort zones, to lev-
els of stellar performance and output.
For the Firefly project, students
created a distinctive and scalable strategic
blueprint for a foundation with high ambi-
tions for making a meaningful impact on
neurodegenerative disease on a long-term and
global basis. Response from the scientific,
business and social community has been very
positive, and the foundation went ‘live’ on
November 27th with fireflyresearch.org.
faced. “Regard every problem as a possibil-
ity,” was Kamprad’s mantra.
Interestingly, the IKEA story also shares
some characteristics of Brasilia. Both are
intensely possibility-driven, with the
designer’s hand evident and dramatic. Yet
Kamprad’s visionary design process parts
company with formulaic design by relying
upon personal creativity, rather than formu-
laic technique, affording less control but
more responsiveness to opportunity. The
Heather Fraser, top row centre, in white, with the first group of Rotman designworks students.
On the Medtronic project, the client
had this to say: “The Rotman/OCAD team
combined customer insights with penetrat-
ing business-model analysis and design
processes, to provide us with several objec-
tive, actionable recommendations which
we are determined to implement.”
The initiative’s most important stake-
holders – the pilot ‘graduates’ themselves –
learned a lot. Said one, “Learning the design
methodology opened up my eyes to a new
form of analysis.The user-driven framework
we created began with a motivating ques-
tion, created answers to those questions
which were backed up by insights, then took
those insights to form strategies, and finally
formed our tactics and plan of attack from all
of this.” Said another, “I learned the value of
a deep user understanding and cross-func-
tional teams, as well as the value of models
and creating visual aids that you need to con-
stantly rethink and rework.”
Where from here?
In September of 2006, the Rotman School
added its first design-based course to the
MBA Program: “Design Practicum: The
resulting design is never really fixed; it is
meant to be flexible and adaptive. The falli-
ble person – the visionary – takes over from
the ostensibly infallible technique, enhanc-
ing the potential to experiment and learn.
The Conversational Approach: Seaside
This approach opens up the design process
– making it a conversation among many
people, all of whom should be recognized
as designers. Two of today’s leading
New Product and Services Lab” is now
available as a Marketing elective to second-
year MBA students. This full-year course
revolves around the three pillars of design
thinking: deep consumer understanding,
rapid prototyping of concepts that address a
consumer need, and business design that
makes the concept viable in a strategically-
sustainable way. Students, paired with
OCAD Industrial Design graduate stu-
dents, are partnered with clients in order
to develop solutions to large-scale, actual
innovation challenges they are facing.
We have also begun a number of Exec-
utive Education and workshop initiatives,
and are exploring research and develop-
mental programs both within Rotman and
in collaboration with other leading educa-
tional institutions. These initiatives have all
been enthusiastically received by both stu-
dents and industry, indicating a need – and
appetite – for a new way of thinking about
the links between design and business.
Heather Fraser is director of design initiatives at the Rot-
man School of Management and an adjunct professor in the
School’s Desautels Centre for Integrative Thinking. She can
be reached at heather.fraser@rotman.utoronto.ca
Rotman Magazine Winter 2007 • 27
proponents of involvement in the design
process are Andrea Duaney and Eliza-
beth Plater-Zyberk, founders of New
Urbanism. Their first and best-recog-
nized project, designed more than 20
years ago, was Seaside, Florida, an 80-
acre beachfront town on the Gulf of
Mexico. Architecture Week called it “one of
the most influential design paradigms of
its era”; and Newsweek, “the most influen-
tial resort community since Versailles.”
What distinguishes New Urbanism
from other architectural approaches is
not only a different set of principles, but
also its insistence on wide participation in
designing, through the use of a process
called a charrette. In the words of Duaney
and Plater-Zyberk, “The charrette brings
together all interested parties who are
invited to offer direction and feedback
while the plan is being created. It pro-
vides a forum for ideas and offers the
Successful leaders in both management
and the physical fields of design seem to
have an innate sense of when to allow
flexibility into the conversation.
unique advantage of giving immediate
feedback to the designers while giving
mutual authorship to the plan by all those
who participate.” By convening a conver-
sation that puts the entire system in the
room, the architects control the bound-
aries, but not the conversation itself.
Those involved are not merely consulted;
they are engaged, and they become
members of the design team. Put differ-
ently, all kinds of ‘quiet designers’ enter
the process – bringing with them their
local knowledge.
With the Seaside charrette, the archi-
tects created a context in which experts and
users learned together, and out of which
the design appeared. This process can be
admittedly chaotic, which must be toler-
ated if creativity and consensus are to
emerge. Like Brasilia, however, the design
itself is eventually fixed. The charrette
ends, and our quiet designers go home.
Designing stops and construction starts.
28 • Rotman Magazine Winter 2007
The Evolving Approach: Linux
In this approach, designing in the tradi-
tional sense – as practiced by identified
designers at specific points in time and
resulting in fixed designs – disappears. We
now enter the world of evolving, or never-
ending design, not by experts, but by
communities in the course of living their
collective lives.
This evolutionary design is found in the
Linux operating system and the open
source software process it pioneered. Linux
is being designed with almost continuous
adaptation in mind. In recounting the story
of its origins, software designer Eric Ray-
mond opens with a question: “Who would
have thought that a world-class operating
system could coalesce as if by magic out of
part-time hacking by several thousand
developers scattered all over the planet,
connected only by the tenuous strands of
the Internet?”
Linux’s success challenged many of the
basic premises of traditional software
design – foremost among them, that large
projects need to be built like Gothic cathe-
drals, carefully controlled by a small band
of experts who specify every detail and
release their design to users only upon
completion. Linus Torvald, the originator
of Linux, created this revolution by starting
with a basic scaffolding offered by another
programmer, sharing the source code, and
inviting anyone interested to participate.
He released revisions early and often, and
above all, treated users as co-developers,
building a “self-correcting system of selfish
agents” whose pace of ongoing improve-
ment was unprecedented. “The closed-
source world cannot win an evolutionary
arms race with open-source communities
that can put orders of magnitude more
skill time into a problem,” Raymond
observed, because “given enough eyeballs,
all bugs are shallow.”
Like Duaney and Plater-Zyberg, Tor-
vald leads the conversation rather than
writes the code. The ‘community’ does the
designing, and designers and users become
almost indistinguishable.
Lessons for Business
The four approaches outlined above reveal
some of the core tensions of design and the
various trade-offs that each approach
makes. Following are four core tensions
that hold valuable lessons for organizations.
1. Who drives the design?
Who should drive the design? The expert
who knows better, who has the global,
explicit knowledge, or the user who under-
stands better, who has the local, tacit
understanding?
The paradox around deciding who
designs involves the apparent trade-off
between a reliance on experts and visionar-
ies capable of radically innovative – but
potentially difficult to implement – solu-
tions versus a reliance on users with a
tendency to produce ‘me-too’ designs that
they enthusiastically execute.
Designer-dominated processes can
have a clear advantage when it comes to
producing designs characterized by radical
change. The creation of Brasilia, for
instance, was an audacious feat – it is
unlikely that engaging a community of
potential users would have produced such a
futuristic model city. As users, most of us
crave familiarity, not novelty; radical
designs alienate us.
But at what cost do we exclude user
involvement? The extent to which Brasilia
actually achieved its designers’ ambitions is
mixed. The standardization intended to
produce equality produced, for many, a
feeling of anonymity instead. In place of
gaining an enriched community, many resi-
dents felt a loss of privacy. Instead of
appreciating the orderliness of the space,
they missed the messiness of street life.
Despite the homogeneity of the superquan-
dra, the old class distinctions remain. The
risks of a design process that relies too
heavily on experts are evident here.
If this is reminiscent of strategic plan-
ning in business, that is because formulaic
design has been the corporate world’s pre-
ferred approach. This approach, with its
emphasis on the designer’s worldview and its
disconnection from local knowledge, repre-
sents the yang of designing. It is ambitious,
aggressive, and intrusive. It relies on tech-
niques and information that, if inaccurate,
can be fatal. Its detachment from users – the
people who must live with the design – is a
potentially fatal flaw.Yet it is capable of great
change if the bulldozers are powerful enough
and the terrain is reasonably predictable.
To succeed at significant change, either
the formulaic or visionary designer must
persuade users to accept a radical design, or
conversational and evolving designing must
engage users in ways that generate more-inno-
vative designs. Designers who persuade others
offer novelty and familiarity in tandem because
they understand how users see the world.
2. How does the designing happen?
This involves the tension between control-
ling a design process to achieve coherence
and order versus opening up the conversa-
Business leaders seeking better design
thinking should pay careful attention to
the challenges of preventing premature
consensus emerging in the face of fear of
chaos, and of maintaining the fluidity that
is a prerequisite for breakthrough designs.
Architect Frank Gehry notes that clients
are rarely comfortable with the indeter-
minacy of an iterative process; they almost
always push hard to fix the design and ‘end
the uncertainty’. Conversational design
challenges leaders in ways that formulaic
and visionary design do not. Business
cultures that center on hierarchy, expedi-
ency, and authoritarian leadership get in
the way of good conversations. We all
know about opportunities that exist in the
white spaces between divisions, regions,
and functions of every company; what
we do not know is how to tap these
opportunities. Recognizing the role of
conversations in exploring new possibili-
ties can produce dramatic innovation.
understand the problem until after the
first time you implement a solution. If you
want to get it right, be ready to start over
at least once.”
In closing
Design is not just a metaphor for management,
but, as Simon said, the very essence of it.
Cities, products, services, systems,
structures, and strategies all face the same
need to combine expertise, insight, engage-
ment, and adaptation. To design, and to
manage in general, is not to resolve the ten-
sions among different needs so much as to
function within them. To appreciate this
will be to get more of those great designs
that so enhance our daily lives.
Jeanne Liedtka is executive director of The Batten Insti-
tute and the Johnson and Higgins Professor of Business
Administration at the University of Virginia’s Darden
School of Business. Henry Mintzberg is the Cleghorn Pro-
fessor of Management Studies at McGill University.This is
an excerpt of an article that appeared recently in the
Design Management Review, a publication of the Design
Management Institute.

The key is to get the basics right so that

the specifics can be easily changed.
tion and risking some ‘messiness’ to achieve
creativity and broader involvement. The
inclusion of non-experts brings valuable
ownership and local knowledge, but may
also bring chaos and mediocre solutions.
Getting more innovative thinking from users
themselves is how this tension is resolved.
Successful leaders in both manage-
ment and the physical fields of design seem
to have an innate sense of when to allow
flexibility into the conversation, when to
tap the group’s potential for creating bet-
ter solutions, as well as when to abandon
the search for consensus to interject
order from above. They have no formulas
– just an acute sense of the particular,
the potential, and the possible.These lead-
ers/designers seem able to give up enough
control to find creativity without losing
coherence. Kamprad’s vision seems exem-
plary in its capacity to hold tight and let
loose at the same time, in order to engage
the collective creativity of the company’s
employees and customers.There are enor-
mous opportunities to bring this kind of
conversational design into business.
3. When is the designing ‘finished’?
The world does not stand still, but designs
must – at least for a time: buildings have to
be built, products brought to market,
strategies implemented, and structures
established. The dilemma in each case is
how designs can be built to adapt, yet pre-
serve their integrity. In other words, how
can designing deal with change and conti-
nuity concurrently?
Former Intel chief Andy Grove has
said that his firm’s strategy process evolved
in alternating cycles of chaos and single-
minded focus – sometimes adapting,
sometimes closing. Companies that do
nothing but change – constantly reorganiz-
ing, always envisioning some new strategy
or other, bringing in yet another team of
change consultants – never reach closure,
and so are no better off than companies that
never change. Even the most evolving
designs have to be fixed for a time.
The key, we believe, is to get the
basics right so that the specifics can easily
be changed. As Raymond observed about
software design, “You often don’t really
CEOs Corner: Colin Angle
Keeping Up With
the Jetsons
Robotics pioneer Colin Angle has seen the future, and it is one in which
robots make life easier for humans – in some cases, even saving lives.
Karen Christensen: Early in the robotics
industry, there was a clear idea of what
robots would look like. You and your
team chose to think about things in an
entirely different way. Describe your
approach.
Colin Angle: The traditional way people
thought robots would look was wildly
impractical. Robots shouldn’t look like
people, because building people is incredi-
bly complex. We chose to look at robots
from a functional perspective. What we do
is think about what we want the robot to
do, and then create a design that is unmer-
cifully optimized towards doing just that
job. Our Roomba Vacuuming Robot, for
instance, is incredibly small and light. It can
go under things, and you can easily pick it
up. If we’d built a large walking robot, it
just wouldn’t have the ability to cover the
area that Roomba can, and it would be
heavy and dangerous. So we’re all about
‘function first’. We believe that should be
the driver.
It’s hard to imagine anything more
rewarding than a robot that saves a life.
KC: The Roomba has been a major success
for iRobot, with two million units shipped
to date. During its development, you had
to make some trade-offs in order to keep
it affordable. Talk a bit about this process.
CA: We had previously designed some toys
with Hasbro and some professional clean-
ing equipment with Johnson Wax
30 • Rotman Magazine Winter 2007
Professional. On the latter project, we
learned exactly what was necessary to
clean. The Roomba was never meant to be
some kind of fad or gadget – it was always
meant to be a serious cleaning appliance. So
we knew where we couldn’t compromise.
And from our experience with consumer
toys, we learned that if you didn’t start
thinking about cost immediately, right at
the beginning of the project, you would
make decisions that would ultimately drive
the price point into wildly unrealistic
places.This affected the types of sensors we
have on Roomba: as a result, there are no
cameras on it, and there’s no sonar.We had
to solve the challenge of the robot not get-
ting stuck and covering the entire room
from a very different approach. Mechani-
cally, we had to assume that the robot
didn’t know where it was; so we did things
like making it round, so that regardless of
where it went, it could always turn around
and leave, so it couldn’t get trapped. We
made the decision to make it only go for-
ward. We placed a bumper on the front of
it, so that regardless of where it went, the
bumper would be triggered. We resolved
some very hard robotic challenges through
clever mechanical design, and then used
sensors to detect edges of stairs or obsta-
cles, where mechanics alone wouldn’t have
solved it.Throughout the process, we were
very careful about where we allowed our-
selves to add cost.
KC: You have been somewhat critical of
the robotics industry for lagging in
viable product creation. Where do you
see the industry heading?
CA: One problem is that people some-
times look at us and decide that we’ve
already created all of the viable products,
and that’s not a particularly imaginative
view of the world. But the industry is
absolutely heading to a better place.
Because of iRobot’s success, more money
is coming into the space, and the opportu-
nity to invest in practical robots is
becoming more of a real opportunity for
entrepreneurs than ever before. Better
companies that are looking at more prac-
tical applications are beginning to emerge.
For example, robots are now being used in
hospitals, to allow doctors to see and
examine patients remotely and things like
that, so I do see headway and momentum
building. To some extent, the robots for
entertainment and brand building are the
robots of the last decade. Robots that
deliver value are now the focus.
One key challenge for our industry is
that building a robot is a very complex,
time-consuming task. A certain degree of
time has to pass for it to happen. These
new companies, with their new ideas and
focus on the practical, need to be given
the resources and time for the fruits of
their labour to be realized. But I think it
will snowball – and as soon as there is
more than one example of a venture-
backed robot company providing good
returns for investors, we’ll see even
more entrepreneurs and resources going
into the space.
KC: Today there are more than 700 of
iRobot’s PackBot Tactical Mobile Robots
at work in Iraq and Afghanistan, which
have performed thousands of missions.
Your firm has been credited with saving
soldiers’ lives. How has this initiative
affected your company’s future?
Our future is based on continuing to
attract people who want to be part
of this new industry – and part of
changing the world.
CA: iRobot is not a typical company in
search of profits; we’re really a company on
a mission to change the world by bringing
this new industry into existence. And that
can be a very challenging and trying job
some days. But when you get a postcard
from a soldier on the front lines in Iraq,
who saw his buddy’s life saved, or had his
own life saved, you realize that you really
are making a difference. And personally,
that gives me the motivation to make it
through the tough days. Right now, with
our [November 2005] IPO and lots of
enthusiasm about the industry, it’s easier to
get excited than ever before. But we’ve
been at this for 16 years now, with more
challenges than success; all along the way,
seeing our products actually getting used
and helping has been the driver that’s moti-
vated me to keep at it.As for our company’s
future, as I said, our vision and mission –
and the reason people come to work here –
is all about creating robots that make a dif-
ference in people’s lives. Our turnover rate
is extremely low – below four per cent.
We’re not a company that is all about Fris-
bee games and stationary lap pools. It’s
about getting job satisfaction from taking
on very hard jobs and succeeding at devel-
oping products that can get out there and
make a difference. It’s a wonderful, exciting
environment, and our future is based on
continuing to attract people who want to
be part of this new industry – and part of
changing the world.
KC: You have said that ‘elder care’ is the
ultimate ‘killer application’ for robotics.
How so?
CA: The challenge is twofold.The first part
is that the infrastructure for decentralized
care for our elderly – nursing homes and
the like – is in decline. The average age of
nurses is well over 50 at this point; these
facilities are chronically under-staffed, and
there are fewer and fewer of them. That
sounds bad enough – but then you com-
pound it with the reality that the number of
people in the U.S. over the age of 65 is
going to double over the next decade, and
you can really see that we are headed for
trouble. The challenge that we all have to
face is, what are we going to do about it?
To me, there’s an obvious answer, and
that is to give aging seniors what they want.
For the most part, that’s to live independ-
ently in their homes for as long as possible.
And robots are going to be a huge part of
enabling that future.The iRobot Roomba is
commonly purchased by people who don’t
want to vacuum anymore, or who just can’t
do it anymore, so to some degree, we’re
already in the elder care business by making
homes better able to take care of them-
selves. Over time, we’ll see more capable
robots, not just focused on the home but
also on the occupants of the home, trying
to decrease isolation, trying to allow doc-
tors and nurses to check up on patients in a
way that maintains the dignity and privacy
of the patient. And potentially, even further
out, robots that can help elders who start
to lose the ability to get around – to take
showers or go to the bathroom on their
own – giving them an opportunity to inter-
act with a robot instead of a person, so they
have control over their ability to do these
things. I think that will be a great thing, and
that it’s very necessary.
KC: Which iRobot project are you most
excited about right now, and why?
CA: It’s a difficult choice, because you can
hear my enthusiasm about the need to solve
the eldercare problem, and that means tak-
ing the next steps with the homecare
robots; but at the same time, it’s hard to see
anything more rewarding than a robot that
saves a life. So I don’t have any problems
getting excited about our company’s future
and its product lines. I feel blessed and
lucky to be part of an organization that is
truly out there to do good.
Colin Angle is the co-founder and CEO of iRobot. He was
named one of Fortune Small Business Magazine’s Best Bosses,
and in 2003, was awarded the Ernst and Young New Eng-
land ‘Entrepreneurs of the Year Award’ along with iRobot
co-founder Helen Greiner.
Rotman Magazine Winter 2007 • 31
 THE

ME
Community Manifesto
by Mark Gerencser, Fernando Napolitano and Reginald Van Lee

Together, public, private and civil

leaders must confront the problems
that none can solve alone.

Mark Gerencser Fernando Napolitano Reginald Van Lee

32 • Rotman Magazine Winter 2007

GA
Leaders no longer express as much confi-
dence about the future as they once did.
When they speak candidly, it often sounds
as if they feel trapped in quicksand, unable
to move forward easily. The methods and
tools that helped them succeed in the past
no longer work, and the challenges they
face – such as global competitiveness,
health and environmental risks, and inade-
quate infrastructure – can no longer be
solved by their organizations alone.
“Everybody is frozen,” says American
Express chairman and CEO Kenneth
Chenault. “What has not kept pace in the
business world is an understanding of how
the uncertainty of the geopolitical environ-
ment has impacted business.” The ability to
seize opportunities often depends on unfa-
miliar and unpredictable factors, such as
the reputation of the company and its grasp
of changing trends.
Meanwhile, governments, which were
previously relied upon to manage society’s
problems, can no longer spend or regulate
their way into requisite solutions. “In the
past, corporations could depend on the fact
that government defined the answers,” says
Stephen Merrill, former governor of
New Hampshire and currently president
of Bingham Consulting Group LLC.
But now, he says, business leaders are
afraid that “government doesn’t even
understand the questions.”
Moreover, there is a subtle but
detectable waning of confidence within the
public sector as governments around the
world find themselves accountable for
issues without easy answers: the changing
role of the military; new economic uncer-
tainties as emerging and established
industries compete; and rising costs of
health care. These problems often occur at
an unprecedented and almost incompre-
hensibly vast scale.
Non-governmental organizations
(NGOs), for their part, are finding that
although expanding communications and
the Internet have given them more voice
than ever before, the demand for their
work has increased commensurately, com-
petition for funding has escalated, and they
no longer understand constituents’ needs as
easily as they used to. “We’ve had blinders
on,” says Paul Leonard, the former CEO
of Habitat for Humanity Interna-
tional. “We need to change course, to
become more of a partner and a player; more
Rotman Magazine Winter 2007 • 33
knowledgeable about the large systems
that exist and the role we can play in them.”
The root cause of the challenges con-
fronting these leaders is complexity: the
growing density of linkages among people,
organizations, and issues all across the
world. Because people communicate so
easily across national and organizational
boundaries, the conventional managerial
decision-making style – in which a boss
exercises decision rights or delegates them
to subordinates – is no longer adequate.
Solutions require multi-organizational
systems that are larger and more oriented
to multilateral action than conventional
cross-sector approaches are. In such sys-
tems, the most successful leaders are those
who understand how to intervene and
influence others in a larger system that they
do not control. We call this type of larger
system a ‘megacommunity’.
A megacommunity is a larger ongoing
sphere of interest, where governments,
corporations, NGOs, and others intersect
over time.
Three-Sector Intersection
A megacommunity is a public sphere in
which organizations and people deliber-
ately join together around a compelling
issue of mutual importance, following a set
of practices and principles that make it eas-
ier for them to achieve results. Like a
business environment, a megacommunity
contains organizations that sometimes com-
pete and sometimes collaborate. But a
megacommunity is not a public–private part-
nership, which is typically an alliance focused
on a relatively narrow purpose; it is a larger
ongoing sphere of interest, where govern-
ments, corporations, NGOs, and others
intersect over time. The participants remain
interdependent because their common inter-
est compels them to work together, even
though they might not see or describe their
mutual problem in the same way.
We chose the term megacommunity to
reflect such a sphere’s character as a gather-
ing place for organizations. We see these
communities emerging in many locations,
reflecting the evolution of long-standing
34 • Rotman Magazine Winter 2007
communitarian and democratic traditions,
and also the changing character of today’s
business and political environments. Exam-
ples of megacommunities range from
planet-wide systems, such as the community
of corporations, governments, and NGOs
concerned with rain forest management and
conservation, to local enterprise-related
civic/business environments, such as the
New York City neighborhood affected by the
Harlem Small Business Initiative.
Whatever the scale and scope, all mega-
communities have two things in common.
The first is a connection to globalization. As
technology has allowed the instantaneous
transfer of money, images, ideas, and people
around the world, ‘local’ communities are
neither constrained nor protected by the
age-old boundaries of geography and
demography. A vendor in a remote village in
Costa Rica or India is bound, through com-
munication, trade, and an increasing number
of common interests, with an urban resident
of Paris or Hong Kong.
The current wave of globalization
involves a permanent structural change in
many of the institutions of the world.
Nations and companies alike have undergone
an irreversible shift toward what manage-
ment theorist Charles Hampden-Turner
calls ‘universalism’. They move away from
reliance on connections and loyalty (typical
of societies with selective law enforcement)
and toward such principles as merit and uni-
versal law. This kind of shift makes even
formerly-closed societies more open to out-
side influence, and thus more powerful. But
it also makes them more vulnerable, particu-
larly to the problem of economic ‘winners
and losers’, in which the benefits of global-
ization are not evenly spread.
The megacommunity concept repre-
sents a movement toward sustainable
globalization, in which contact with the
outside world, instead of draining jobs and
making a local system vulnerable,
strengthens long-term quality of life, eco-
nomic vitality, and community health. In
other words, megacommunities provide
leverage for retaining local identity while
creating a viable middle class and compet-
ing on the global playing field.
The second common feature of mega-
communities is a recognition of the changing
nature of effective leadership. In the past, a
problem like managing regional land use
would have fallen to a government body.
Now, much of the work will be done by lead-
ers of a group of separate but interdependent
organizations. Fortunately, the skills and
techniques of megacommunity leadership
appear to be transferable, whether the scope
of action is a city neighborhood, a regional
watershed, a continent, or the globe.
Exhibit A: Enel SpA
Organizations that avoid megacommunity
engagement do so increasingly at their
peril, and at the peril of the communities
they operate in. Consider the case of a proj-
ect in Brindisi, Italy, initiated by Enel SpA.
Italy’s leading utility provider, Enel is a par-
tially-privatized company; the government
owns about 31 per cent of the stock. In the
early 2000s, Enel attempted to diversify its
sources of energy by joining forces with the
UK company British Gas (BG) to build a
terminal for regasifying liquefied natural
gas in Brindisi, an economically-depressed
area on the heel of Italy’s boot. The com-
pany expected the project to be greeted
with popular support: it would have pro-
vided 1,000 jobs during its three years of
planned construction and 250 permanent
new jobs in the region. Enel and BG were
careful to fulfill all the legal requirements
necessary for starting the project.
Soon after the project began, environ-
mental activists published a paper
highlighting its danger to the health and
security of the local population. This trig-
gered a much larger protest, amplified by
the local press into a broad and persistent
national issue. In October 2003, a civil
petition with more than 10,000 signatures
brought the first official halt to the project.
In July 2005, more than 8,000 protesters
took to the streets, shouting, “We must save
Brindisi!” A few weeks later, construction
was entirely shut down. Although Italy’s
Supreme Court stepped in and construc-
tion began again four months later, Enel felt
the need to withdraw from the venture, sell-
ing its 50 per cent investment back to BG.
Although this episode is not yet con-
cluded and BG still hopes to build the
terminal, the outcome leaves Enel and BG
still dangerously dependent on Russian and
North African natural gas pipelines, which
rely on oil cartels for supply. In addition,
the two companies are less cost competi-
tive, the shareholders get lower returns,
customers pay higher prices for natural gas,
and those 250 new jobs are in jeopardy.
What could Enel and BG have done
differently? They could have explicitly
assessed the overall socioeconomic and cul-
tural environment in which they were about
to operate. Rather than letting the govern-
ment stand in for them in addressing the
misgivings of the public, they could have
engaged the local government and civil soci-
ety, and made a proactive case in both arenas
for the common goals and benefits of Brin-
disi development. In short, they could have
taken the kinds of megacommunity meas-
ures that Enel is beginning to put into
practice in the projects it initiates today.
Exhibit B: Harlem Small Business Initiative
Potential megacommunities exist in areas
as varied as health care, transportation,
public safety, and the environment. When
enough leaders and organizations become
conscious of their interdependence and
reach out to one another accordingly,
something shifts in the capabilities of the
community. Instead of continuing to fight
each other or ceding authority to some
governmental or quasi-governmental body,
leaders come together as equals to develop
a plan of action. Like a stone rolling down a
hill, the community converts its potential
energy into kinetic motion.
One such example is the Harlem Small
Business Initiative. In late 2001, a series of
large chain retailers announced plans to open
stores in New York neighborhoods. A num-
ber of Harlem small-business owners,
fearing the impact of this kind of competi-
tion on their long-standing customer base,
approached President Bill Clinton, who
had recently set up offices for his new
William J. Clinton Foundation in this
uptown Manhattan locale, known globally as
a center of African-American culture. Presi-
dent Clinton suggested that they make the
existing Harlem businesses more competi-
tive and capable. To foster this, he suggested
that the owners should create a new kind of
partnership with not-for-profit status, call-
ing on a wide range of organizations to help.
The Harlem Small Business Initiative
pulled in a large number of groups, including
the office of Harlem’s U.S. Congressman,
Charles Rangel; the Greater Harlem
Chamber of Commerce; the Harlem
Business Alliance; the Harlem Friends
(a group of small businesses and citizens); the
National Black MBA Association; New
York University’s Stern School of Busi-
ness; and our management consulting firm,
Booz Allen Hamilton. These were not
figurehead groups or silent sponsors; each
invested a great deal of time, effort, and cre-
ativity in the project. But none was “in
charge,” nor did the groups take orders from
the Harlem Small Business Initiative. Instead,
they worked out a way to participate
together, defining mutual goals and then
playing their parts individually.
A 22-month program was launched in
mid-2002, focusing on 10 local businesses,
including a plumber’s storefront, a florist, a
dentist’s office, and a yoga center.The busi-
ness owners loved their work and managed
their businesses reasonably well, but they
might typically keep their receipts in shoe-
boxes or let their phones go unanswered.
As a result they were highly vulnerable to
competition from more organized retailers
with national brand names.
Congressman Rangel’s office and the var-
ious local business alliances helped the other
Initiative participants understand the fabric of
the community and the value of these small
businesses as both employers and vendors.
The MBA students and volunteer accountants
and management consultants taught business
methods and marketing approaches.
The result was wildly successful.
Though some large chain retailers, includ-
ing Starbucks, Disney, and Old Navy,
have entered Harlem, the Initiative is cred-
ited with helping to keep the original
neighborhood vibrant, and an impressive
number of the small businesses served by the
Initiative doubled revenues and increased
profitability within less than two years.
In an earlier era, this initiative might
have ended up managed by one of the three
sectors: a redevelopment agency, a neigh-
borhood organization, or perhaps a
business-funded partnership with a public-
or civil-sector organization. It would not
have brought people together across all three
sectors and, most likely, the results would
have been limited by the skills and experi-
ence of the few participating organizations.
Megacommunities in Practice
The following four elements are universal
to effective megacommunity leadership.
1. Start with understanding. Minister of
foreign affairs George Yong-Boon Yeo of
the government of Singapore advises CEOs
launching ventures in his region to “adopt
the attitude of a student, and not be too
quick to preach. If you think you are there
to teach before you have learned, you will
fail.”The same is true of all potential mega-
community leaders. Most know how to
sense the needs of their own organizations,
but the environment of sustainable global-
ization requires leaders to tune their
antennae more broadly, picking up subtle
signals from the world outside.
Leaders engaged with a problem might
begin by identifying the potential mega-
community with questions like these:
What problems are we dealing with?
Why can’t we solve them within our walls,
and what other organizations are affected
by the same issues?
What is the appropriate scale of this
megacommunity? Have we involved
enough of the necessary players and stake-
holders to create a critical mass for dealing
with the issues?
How do the entities interact? How do
their interests and actions affect one
another? How do their perceptions of my
organization affect the way they operate?
2. Exert strong leadership and presence.
In business, government, and NGOs, it is
important for a chief executive or minister
to be outspoken and explicit. Each leader
has a case to make to others; and each will
have to explain and support the megacom-
munity’s priorities to others within his or
her organization. A corporate CEO, for
example, must be able to convince boards
and employees to take more responsibility
for forms of accountability besides short-
Rotman Magazine Winter 2007 • 35
term profits. A government agency leader
must be able to endorse measures that meet
the needs of businesses and civil society.
And leaders of all three sectors must be
able to stay the course and make a long-
term commitment.
Leaders in a megacommunity function
most effectively in a listening, learning,
understanding mode. They must be pre-
pared to view other sectors as potential
resources and partners, instead of adver-
saries, and understand the growing
permeability of boundaries between sec-
tors. Says Minister Yeo of Singapore, “The
most important first step is understanding
the nature of the participants. Each is com-
plex and has a deep nature which you
cannot completely change.”
3. Design and customize cross-sector
engagement. The design of conversations
depends on the culture and predisposition of
each megacommunity. Specific events might
include full-scale forums where all the par-
ticipants come together for a day or two, or
cascading dialogues in which small groups
take on pieces of the puzzle.Agendas need to
be both specific in content and relatively
unstructured in scope, with plenty of infor-
mal time in which people can speak openly.
Participation in megacommunities
poses different challenges for each
of the three sectors.
Such conversations may seem unfamil-
iar at first, and many business and
government leaders employ specialists to
conduct and manage them. Cultural and
language differences exist not just across
geographic distance, but among the pub-
lic, private, and civil spheres. A word like
profit can connote “resources for invest-
ment” to business people and “exploitation”
to a government minister or long-standing
NGO executive, and a word like bureau-
cracy can be a positive, negative, or
value-neutral term.
Participants gradually bridge such
boundaries by learning, as dialogue expert
William Isaacs has suggested, to ‘sus-
pend’ their assumptions – not to mask
them, but to voice them dispassionately
36 • Rotman Magazine Winter 2007
and allow them to be visible to all, as if sus-
pended on a platform in the middle of the
room. Conversations should be conducted
among all levels of participating organiza-
tions, starting with the top leaders but
including middle-rank managers and
employees, who should be given the time
to work on collaborative projects with
their counterparts from other groups.
4. Launch experiments, learn from them,
and monitor progress. The initiators of a
megacommunity need to develop their own
model of effective action. In other con-
texts, cross-sector collaboration is often
plagued by a lowering of standards; partici-
pants bring less rigor to the process than
they would in an internal project. But in an
effective megacommunity endeavor, there
is explicit agreement up front on what par-
ticipants hope to accomplish, what they
expect to see, and how they will judge suc-
cess. A leader should ask his or her fellow
leaders: If we do the right thing, what kinds
of indicators might we expect to see? Will
we see improvements in water quality? In
levels of community engagement? It is also
very helpful, after an action, for partici-
pants to reflect together on the results and
how they might have done better.
The Infrastructure of the Future
Participation in megacommunities poses
different challenges for each of the three sec-
tors. Business leaders will have to align the
imperatives of the outside world with their
immediate agendas (such as profitability and
shareholder returns). Corporate leaders will
learn to explain to shareholders and stock
analysts the ways in which a commitment to
a megacommunity – for example, helping to
build managerial capabilities among the
schools and NGOs with which they work –
is essential for realizing the company’s finan-
cial priorities. Farsighted companies learned
long ago to develop better capacity for man-
agement along their supply chain; now they
will be called to do the same with their
megacommunity partners.
Businesses in sectors that have a great
effect on the community at large – such as
energy, transportation, and media – may
find themselves asked to join in conceiving
and creating the infrastructure of the
future. This is a rare opportunity for them
to not just comply with the public interest,
but lead it. However, such an undertaking
will also require a ‘listening and learning’
orientation, and a kind of humility that is
very different from the high-flying business
ethic we saw in the last decade.
Politicians and public-sector leaders
must learn to acknowledge the fact that
even if they think they have all the answers
to a problem, they cannot fully control the
solution. It has become fashionable in many
circles to argue against government, but
government still retains the role of mediat-
ing between the mercantile fallout of
globalization (the fluctuations of prices and
currencies) and the population’s need for
stability and security. It is thus in everyone’s
best interest to have an effective, capable,
and enlightened public sector.
Many leaders of NGOs have spent
years trying to be heard, and they now
have unprecedented voice and influence: it
is NGOs that often set the terms of public
debate in both government and business
spheres. For example, concerns about land
mine safety, child and sweatshop labor, and
government misappropriation of private
land went largely unheard until NGOs
took up those causes. But NGOs still have
constrained financial resources, limited
staff, and little or no direct control over
regulation and markets. They can gain
influence only through engagement with
the other two sectors.
As part of a megacommunity, all three
sectors are in an excellent position to have
a real and lasting effect on large and com-
plex problems.Will leaders be able to take
up the challenge and produce the results
that the world needs? Experience suggests
that they can; and we believe they will.
Mark Gerencser is managing director of global govern-
ment markets with Booz Allen Hamilton (BAH) in
McLean,Virginia. Fernando Napolitano is a vice president
with BAH in Rome and managing director of the firm’s
Italian office. He is also a board member of Enel SpA.
Reginald Van Lee is a senior vice president with BAH in
New York, where he co-leads the firm’s not-for-profit sec-
tor initiatives.This is a condensed version of an article that
appeared in the fall 2006 edition of Strategy + Business.
The Big Picture: Howard Gardner
The Five Minds of
the Future
Five minds will lead the way in the uncertain world that is our future.The melding
of these minds within an individual’s skin is the ultimate challenge for each of us.
At the start of the third millennium, we are
well attuned to considerations of ‘the
future’. In conceptualizing the future, I
refer to trends whose existence is widely
acknowledged: the increasing power of sci-
ence and technology, the interconnectedness
of the world in economic, cultural, and
social terms, and the incessant circulation
and intermingling of human beings of
diverse backgrounds and aspirations.
As one who has participated in discus-
sions of the future all over the world, I can
attest that belief in the power of education
– for good or for ill – is ubiquitous. We
have little difficulty in seeing education as
an enterprise – indeed, the enterprise –
for shaping the mind of the future. The
question then becomes, ‘What kind of
minds should we be cultivating?’ Five
types stand out as being particularly
urgent at the present time.
1. The Disciplined Mind
The word ‘discipline’ has two distinct con-
notations. First, we speak of the mind as
having mastered one or more disciplines –
arts, professions, or scholarly pursuits. By
rough estimates, it takes approximately a
decade for an individual to learn a discipline
well enough so that they can be considered
an expert or master. Perhaps at one time, an
individual could rest on her laurels once
such disciplinary mastery had been
achieved. No longer! Disciplines themselves
now change, ambient conditions change, as
do the demands on individuals who have
achieved the initial mastery.
As a result, ‘experts’ must continue to
educate themselves over succeeding decades.
Such hewing of expertise can only be done if
Photo: J. Gardner
an individual possesses discipline – in the sec-
ond sense of the word.That is, one needs to
continually practice in a disciplined way to
remain at the top of one’s game.The need to
master a ‘way of thinking’ applies to the
entire range of workers – whether it be
lawyers, engineers, crafts persons, or busi-
ness professionals involved personnel,
marketing, sales, or management. Such edu-
cation may include formal classes or may
occur on the job, explicitly or implicitly.
Nowadays, the mastery of more than
one discipline is at a premium. We value
those who are interdisciplinary, multi-disci-
plinary, or trans-disciplinary. But these
claims must be cashed in. We would not
value a bilingual person unless he or she can
speak more than one language, and by the
same token, the claim of ‘pluri-disciplinar-
ity’ only makes sense if a person has
genuinely mastered more than one disci-
pline and can integrate them. For most of
us, the attainment of ‘multiple perspec-
tives’ is a more reasonable goal.
2. The Synthesizing Mind
Nobel Laureate in Physics Murray
Gell-Mann, an avowed multi-disciplinar-
ian, has made an intriguing claim about
our times. He asserts that in the 21st cen-
tury, the most valued mind will be the
synthesizing mind: the mind that can sur-
vey a wide range of sources, decide what is
important and worth paying attention to,
and then put this information together in
ways that make sense.
Gell-Mann is on to something impor-
tant. Information has never been in short
supply. But with the advent of new technolo-
gies and media, most notably the Internet,
vast, seemingly indigestible amounts of infor-
mation now deluge us around the clock.
Shrewd triage becomes an imperative. Those
who can synthesize well for themselves will
rise to the top of their pack; and those whose
syntheses make sense to others will be invalu-
able teachers, communicators, and leaders.
Let’s take an example from business.
Suppose you are an executive and your
firm is considering the acquisition of a
new company in an area that seems
important, but about which you and your
immediate associates know little. Your
goal is to acquire enough information so
that you and your Board can make a judi-
cious decision, and you need to do so in
the next two months.The place to begin is
with any existing synthesis: fetch it,
devour it, evaluate it. If none exists, you
turn to the most knowledgeable individu-
als and ask them to provide the basic
information requisite to synthesis. Given
this initial input, you then decide what
information seems adequate and where
important additional data are required.
At the same time, you need to decide
on the form and format of the ultimate
synthesis: a written narrative, an oral pres-
entation, a set of scenarios, a set of charts
and graphs, perhaps a discussion of pros and
cons leading to a final judgment.At last, the
actual work of synthesis begins in earnest.
New information must be acquired,
probed, evaluated, or sidelined. The new
information needs to be fit, if possible, into
the initial synthesis; and where fit is lack-
ing, mutual adjustments must be made.
Constant reflection is the order of the day.
At some point before the final synthe-
sis is due, a proto-synthesis should be
Rotman Magazine Winter 2007 • 37
developed.This interim version needs to be
tested with the most knowledgeable audi-
ence of associates, preferably an audience
that is critical and constructive. To the
extent that time and resources are avail-
able, more than one trial run is desirable.
But ultimately, there arrives a moment of
truth, at which point the best possible syn-
thesis must suffice.
What kind of mind is needed to guide
this synthesis? Clearly, though the individual
should have a home area of expertise, he or
she cannot conceivably be an expert of every
relevant discipline. As compensation, the syn-
thesizer must know enough about the
requisite disciplines to be able to make judg-
ments about whom and what to trust – or to
The ‘synthesizer’ must always keep her
eyes on the big picture, while making
sure that adequate details are secured
and arranged in useful ways.
identify individuals who can help make that
determination.The synthesizer must also have
a sense of the relevant forms and formats for
the synthesis, being prepared to alter when
possible, or advisable, but to make a final
commitment as the deadline approaches.
The synthesizer must always keep her
eyes on the big picture, while making sure
that adequate details are secured and
arranged in useful ways.This is a tall order,
but it is quite possible that certain individ-
uals are blessed with a ‘searchlight
intelligence’ – the capacity to look widely
and to monitor constantly, thus making
sure that nothing vital is missing; and that
they also have the capacity to value the
complementary ‘laser intelligence’ that has
fully mastered a specific discipline. Such
individuals should be identified and cher-
ished. It is crucial that we determine how
to nurture synthesizing capacities more
widely, since they are likely to remain at a
premium in the coming era.
3. The Creating Mind
In our time, nearly every practice that is
well understood will be automated. Mas-
tery of existing disciplines will be
necessary, but not sufficient.The creating
38 • Rotman Magazine Winter 2007
mind forges new ground. In our society,
we have come to value those individuals
who keep casting about for new ideas and
practices, monitoring their successes, and
so on. And we give special honour to
those rare individuals whose innovations
actually change the practices of their
peers – in my trade, we call these individ-
uals ‘Big C’ creators.
As a student of creativity, I had long
assumed that creating was primarily a cog-
nitive feat – having the requisite knowledge
and the apposite cognitive processes. But I
have come to believe that personality and
temperament are equally, and perhaps even
more important for the would-be creator.
More than willing, the creator must be
eager to take chances, to venture into the
unknown, to fall flat on her face, and then,
smiling, pick herself up and once more
throw herself into the fray. Even when suc-
cessful, the creator does not rest on her
laurels. She is motivated again to venture
into the unknown and to risk failure,
buoyed by the hope that another break-
through may be in the offing.
It is important to ascertain the relation
among the three kinds of minds introduced
thus far. Clearly, synthesizing is not possible
without some mastery of constituent disci-
plines – and perhaps there is, or will be, a
discipline of synthesizing, quite apart from
such established disciplines as mathemat-
ics, mime, or management. I would
suggest that creation is unlikely to emerge
in the absence of some disciplinary mas-
tery, and, perhaps, some capacity to
synthesize as well.
4. The Respectful Mind
Almost from the start, infants are alert to
other human beings. The attachment link
between parent (typically mother) and
child is predisposed to develop through-
out the early months of life; and the
nature and strength of that bond in turn
determines much about the capacity of
individuals to form relationships with oth-
ers throughout life.
Of equal potency is the young
human’s capacity to distinguish among
individuals, and among groups of individ-
uals. We are wired to make such
distinctions readily; indeed our survival
depends upon our ability to distinguish
among those who would help and nourish
us, and those who might do us harm. But
the messages in our particular environ-
ment determine how we will label
particular individuals or groups. Our own
experiences, and the attitudes displayed by
the peers and elders to whom we are clos-
est, determine whether we like, admire,
or respect certain individuals and groups;
or whether, on the contrary, we come to
shun, fear, or even hate these individuals.
We live in an era when nearly every
individual is likely to encounter thousands
of individuals personally, and when billions
of people have the option of traveling
abroad or of encountering individuals from
remote cultures through visual or digital
media. A person possessed of a respectful
mind welcomes this exposure to diverse
persons and groups. A truly cosmopolitan
individual gives others the benefit of doubt;
displays initial trust; tries to form links;
avoids prejudicial judgments.
The threats to respect are intolerance
and prejudice, what in the worst case forms
into individual, state, or stateless terror-
ism. A prejudiced person has preconceived
ideas about individuals and groups, and
resists bracketing those preconceptions. An
intolerant person has a very low threshold
for unfamiliarity; the default assumption is
that ‘strange is bad’. It is not easy to come
to respect others whom you have feared,
distrusted, or disliked.Yet, in an intercon-
nected world, such a potential for growth,
for freshly-forged or freshly-renewed
respect, is crucial.
5. The Ethical Mind
An ethical stance is in no way antithetical to
a respectful one, but it involves a much
more sophisticated stance toward individu-
als and groups. A person possessed of an
ethical mind is able to think of himself
abstractly: he is able to ask, “What kind of a
person do I want to be? What kind of a
worker do I want to be? What kind of a cit-
izen do I want to be?”
Going beyond the posing of such ques-
tions, the person is able to think about
herself in a universalistic manner: “What
would the world be like, if all persons
behaved the way that I do, if all workers in
my profession took the stance that I have, if
all citizens in my region or my world car-
ried out their roles in the way that I do?”
Such conceptualization involves a recogni-
tion of rights and responsibilities attendant
to each role. And crucially, the ethical indi-
vidual behaves in accordance with the
answers that she has forged, even when such
behaviors clash with her own self interest.
My own insights into the ethical mind
come from a dozen years of study of profes-
sionals who are seeking to do good work –
work that is excellent, engaging, and ethical
(see www.goodworkproject.org). Deter-
mining what is ethical is not always easy, and
can prove especially challenging during
times, like our own, when conditions are
changing very quickly, and when market
forces are powerful and unmitigated. Even
when one has determined the proper
course, it is not always easy to behave in an
ethical manner; and that is particularly so
Individuals must reflect on the role of
each of these minds in the workplace,
at home, in the community, and in the
wider world.
when one is highly ambitious, when others
appear to be cutting corners, when different
interest groups demand contradictory things
from workers, when the ethical course is
less clear than one might like, and when
such a course runs against one’s immediate
self interest.
It is so much easier, and much more
natural, to develop an ethical mind when
one inhabits an ethical environment. But
such an environment is neither necessary
nor sufficient. Crucial contributions are
made by the atmosphere at one’s first places
of work: how do the adults in power behave,
what are the beliefs and behaviours of one’s
peers, and, perhaps above all, what happens
when there are clear ethical deviations, and
– more happily if less frequently – when an
individual or a group behaves in an ethically
exemplary fashion? Education in ethics may
not begin as early as education for respect;
but neither ‘curriculum’ ever ends.
Given the high standards necessary for
an ethical mind, examples of failures
abound. It is not difficult to recognize
behaviours that are strictly illegal – like
theft or fraud – or obviously unethical – the
journalist who publishes a story that he
knows is not true, the geneticist who over-
looks data that run counter to her
hypothesis. In each case, the ethical mind
must go through the exercise of identifying
the kind of individual one wants to be. And
when one’s own words and behaviours run
counter to that idealization, one must take
corrective action. I would add that as one
gets older, it does not suffice simply to keep
one’s own ethical house in order. One
acquires a responsibility over the broader
realm of which one is a member. And so,
for example, an individual journalist or
geneticist may behave in an ethical manner;
but if her peers are failing to do so, the
aging worker should assume responsibility
for the health of the domain. I denote such
individuals as ‘trustees’: veterans who are
widely respected, deemed to be disinter-
ested, and dedicated to the health of the
domain. To quote the French playwright
Jean-Baptiste Molière, “we are respon-
sible not only for what we do but for what
we don’t do.”
In closing
There is no strict hierarchy among the five
minds of the future, such that one should be
cultivated before the others. Yet a certain
rhythm does exist. One needs a certain
amount of discipline – in both senses of the
term – before one can undertake a reason-
able synthesis; and if the synthesis involves
more than one discipline, then each of the
constituent disciplines needs to be culti-
vated. By the same token, any genuinely-
creative activity presupposes a certain
discipline mastery. And while prowess at
synthesizing may be unnecessary, nearly all
creative breakthroughs – whether in the
arts, politics, scholarship or corporate life –
are to some extent dependent on provi-
sional syntheses. Still, too much discipline
clashes with creativity; and those who excel
at syntheses are less likely to affect the most
radical creative breakthroughs.
In the end it is desirable for each per-
son to have achieved aspects of all five
minds for the future. Such a personal inte-
gration is most likely to occur if individuals
are raised in environments where all five
kinds of minds are exhibited and valued. So
much the better, if there are role models –
parents, teachers, supervisors – who dis-
play aspects of discipline, synthesis,
creation, respect, and ethics on a regular
basis. In addition to embodying these kinds
of minds, the best educators at school or
work can provide support, advice, coaching
which will help to inculcate discipline,
encourage synthesis, prod creativity, foster
respect, and encourage an ethical stance.
No one can compel the cultivation and
integration of the five minds. Each individ-
ual, of their own volition, must come to
believe that the minds are important and
merit the investment of significant amounts
of time and resources, and that they are
worthy of continuing nurturance, even
when external supports have faded. The
individual must reflect on the role of each of
these minds at work, in a favored avocation,
at home, in the community, and in the wider
world. The individual must be aware that
sometimes these minds will find themselves
in tension with one another, and that any res-
olution will be purchased at some cost.
As I have mentioned, in the future, the
mind that is likely to be at greatest pre-
mium is the synthesizing mind. And so it is
perhaps fitting that the melding of the
minds within each individual’s skin is the
ultimate challenge of personal synthesis.
Copyright Howard Gardner, 2007. All rights reserved.
Howard Gardner is the Hobbs Professor of Cognition and
Education at the Harvard Graduate School of Education. He
is the author of many books in psychology, education, and
policy, including, Changing Minds: The Art and Science of
Changing our own and Other People’s Minds (Basic Books 2004).
In 2007, Five Minds for the Future will be published by Har-
vard Business School Press.
Rotman Magazine Winter 2007 • 39
‘Neuroeconomics’ uses knowledge about brain
mechanisms to inform economic theory, opening
up the ‘black box’ of the brain.
by George Lowenstein, Colin Camerer and Drazen Prelec
The foundations of economic theory were
constructed assuming that details about the
functioning of the brain – the ultimate
‘black box’ – would never be known. This
pessimism was expressed by economist
William Stanley Jevons in 1871: “I hes-
itate to say that men will ever have the
means of measuring directly the feelings of
the human heart. It is from the quantitative
effects of these feelings that we must esti-
mate their comparative amounts.”
In the last two decades, however,
behavioural economics (the importation of
40 • Rotman Magazine Winter 2007
NEURO
How Neuroscience
ideas from psychology to economics) has
become a prominent fixture on the intel-
lectual landscape, and has, in turn spawned
the new field of ‘neuroeconomics’. Impor-
tant insights are now emerging that prove
Jevons’ pessimism wrong: the study of the
brain and nervous system is beginning to
allow for direct measurement of thoughts
and feelings; and this, in turn, is challeng-
ing our understanding of the relation
between mind and action, leading to new
theoretical constructs and calling old ones
into question.
Automatic and Emotional Processing
The standard economic theory of ‘con-
strained utility maximization’ is often
interpreted as a model of deliberation – a
balancing of the costs and benefits of dif-
ferent options, as might characterize
complex decisions like planning for retire-
ment or buying a house.While not denying
that deliberation is part of human decision
making, neuroscience research points out
two generic inadequacies of this approach:
the important roles of automatic and emo-
tional processing.
ECONOMICS
Can Inform Economics
First, much of the brain is constructed
to support ‘automatic processes’, which are
faster than conscious deliberations and
occur with little or no awareness. Because
people have little or no introspective access
to these processes or volitional control over
them, and these processes were evolved to
solve problems of evolutionary importance
rather than to respect logical dicta, the
behaviour they generate need not conform
to normative axioms of inference and choice
– and hence cannot be adequately repre-
sented by the usual maximization models.
Lorem ipsum dolor sit amet, coneste
sectetuer adipiscing, parum ipsum.
Second, our behaviour is often strongly
influenced by finely-tuned affective (i.e.
emotional) systems whose basic design is
common to humans and many animals.
These systems are essential for daily func-
tioning, as revealed by the fact that when
affective systems are damaged or perturbed
– by brain damage, stress, imbalances in
neurotransmitters, or alcohol – the delib-
erative system generally caves in, and poor
long-term decisions result.
Human behaviour emerges from the
interplay between controlled and automatic
systems on the one hand, and cognitive and
affective systems on the other. Our goal here
is to show that drawing these distinctions
helps to make sense of a wide range of eco-
nomic phenomena that are difficult to
explain in conventional terms.
Controlled vs. Automatic Processes
Controlled processes use step-by-step
logic or computations, tend to be invoked
deliberately by the individual when he or
she encounters a challenge or surprise,
and are often associated with a subjective
Rotman Magazine Winter 2007 • 41
feeling of effort. People can typically pro- ancient Greeks and earlier.The distinguish-
vide a good introspective account of ing features of affective processing are
controlled processes; if asked how they somewhat counterintuitive. Most people
solved a math problem or chose a new car, undoubtedly associate affect with ‘feeling
they can often recall the considerations states’, and indeed, most affect states do
and the steps leading up to the choice. produce feeling states when they reach a
Standard tools of economics, such as deci- threshold level of intensity. However, most
sion trees and dynamic programming, can affect probably operates below the thresh-
be viewed as stylized representations of old of conscious awareness.
controlled processes. For most researchers, the central fea-
Automatic processes are the opposite ture of affect is not the feeling states
on each of these dimensions: they operate associated with it, but its role in human
in parallel, are not accessible to conscious- motivation. All affects have ‘valence’ –
ness, and are relatively effortless. Because they are either positive or negative
they are not accessible to consciousness, (though some complex emotions, such as
people often have surprisingly little insight ‘bittersweet’, can be a combination.)
into why automatic choices or judgments Many also carry ‘action tendencies’. For
Figure One: A Two-Dimesional Characterization of Neural Functioning
Cognitive Affective
Controlled Processes serial
effortful
evoked deliberately I II
good introspective access
Automatic Processes parallel
effortless
reflexive
III IV
no introspective access
were made. A face is perceived as ‘attrac- instance, anger motivates us to aggress,
tive’ or a verbal remark as ‘sarcastic’ pain to take steps to ease the pain, fear to
automatically and effortlessly. It is only escape, and so on. Affective processes
later that the controlled system may reflect address ‘go/no-go’ questions that motivate
on the judgment and attempt to substanti- approach or avoidance behaviour. Cogni-
ate it logically. tive processes, in contrast, are those that
Automatic processes – whether cogni- answer true/false questions.
tive or affective – are the default mode of
brain operation: they whir along all the A Fourfold Classification of
time, even while we dream, constituting Neural Processes
most of the electrochemical activity in the In combination, the two dimensions
brain. Controlled processes occur at special described above define four quadrants of
moments when automatic processes the brain, as shown in Figure One. Quad-
become ‘interrupted’, which happens rant I is in charge when you deliberate
when a person encounters unexpected about whether to refinance your house,
events, experiences strong visceral states, poring over present-value calculations;
or is presented with some kind of explicit Quadrant II is the rarest in pure form; it is
challenge in the form of a novel decision or used by ‘method actors’ who imagine pre-
other type of problem. vious emotional experiences to fool
audiences into thinking they are experienc-
Cognitive vs. Affective Processes ing those emotions; Quadrant III governs
The second distinction to be made is the movement of your hand as you return
between affective and cognitive processes. serve; and Quadrant IV makes you jump
Such a distinction is pervasive in contem- when somebody says ‘Boo’!
porary psychology and neuroscience, and Consider what happens when a party
has a historical lineage going back to the host approaches you with a plate of sushi:
42 • Rotman Magazine Winter 2007
Quadrant III:Your first task is to fig-
ure out what is on the plate. The occipital
cortex in the back of the brain is the first on
the scene, drawing in signals from your eyes
via your optic nerves. It decodes the sushi
into primitive patterns such as lines and
corners then uses a ‘cascading process’ to
discern larger shapes. Further downstream,
in the inferior temporal visual cortex, this
information becomes integrated with
stored representations of objects, which
permits you to recognize the objects on
the plate as sushi. This latter process is
extraordinarily complicated (and has
proved difficult for artificial intelligence
researchers to recreate in computers)
because objects can take so many forms,
orientations, and sizes.
Quadrant IV: This is where affect
enters the picture. Neurons in the inferior
temporal visual cortex are sensitive only to
the identity of an object; they don’t tell you
whether it will taste good. Outputs of the
inferior temporal visual cortex as well as
outputs from other sensory systems feed
into the orbitofrontal cortex to determine
the ‘reward value’ of the recognized object.
This is a highly-particular representation.
In economic terms, what is represented is
neither pure information (i.e., that this is
sushi) nor pure utility (i.e., that it is some-
thing I like) but rather a fusion of
information and utility. It is as if certain
neurons in the orbitofrontal cortex are say-
ing, “this is sushi and I want it.”
The reward value of sushi depends in
turn on many factors. First, there is your
personal history with sushi. If you got sick
on sushi in the past, you will have an uncon-
scious and automatic aversion to it. Second,
the reward value of the sushi will depend
on your current level of hunger; people can
eat almost anything – grass, bugs, human
flesh – if they are hungry enough. The
orbitofrontal cortex and a subcortical
region called the hypothalamus are sensi-
tive to your level of hunger. Neurons in
these regions fire more rapidly at the sight
or taste of food when you are hungry, and
fire less rapidly when you are not hungry.
Quadrants I and II: Processing
often ends before Quadrants I and II go to
work. If you are hungry, and like sushi,
your motor cortex will guide your arm to
reach for the sushi and you will eat it, draw-
ing on automatic Quadrant III (reaching)
and IV (taste and enjoyment) processes.
Under some circumstances, however,
higher-level processing may enter the
picture. If you saw a recent documentary
on the risks of eating raw fish, you may
recoil; or if you dislike sushi but anticipate
disappointment in the eyes of your host,
who made it herself, you’ll eat it anyway
(or pick it up and hide it in a napkin when
she turns around.) These explicit thoughts
involve anticipated feelings (your own and
the host’s) and draw on explicit memories
from a part of the brain called the hip-
pocampus, inputs from the affective system
(sometimes referred to as the ‘limbic sys-
tem’), and anticipation (planning) from the
prefrontal cortex.
People are good at persuading them-
selves that what they would like to
happen is what will happen.
Although it is useful to distinguish
between cognitive and affective processes,
and between controlled and automatic
processes, most judgments and behaviours
result from interactions between them.
Many decision-making disorders may orig-
inate in an improper division of labour
between the quadrants. For instance, the
decisions of an impulsive individual are
excessively influenced by external stimuli,
pressures, and demands. Such a person may
not be able to give a more satisfying expla-
nation of an action except that he ‘felt like it’.
Affect can also distort cognitive judg-
ments. For example, emotions affect our
perceptions of risks – anger makes people
less threatened by risks, and sadness makes
them more threatened. Emotions also create
‘motivated cognition’– people are good at
persuading themselves that what they
would like to happen is what will happen.
Quack remedies for hopeful sick people,
and get-rich-quick scams are undoubtedly
aided by the human propensity for wishful
thinking.Wishful thinking may also explain
high rates of new business failure, trading in
financial markets, under-saving, and low
rates of investment in education.
When it comes to spending money or
delaying gratification, taking or avoiding
risks, and behaving kindly or nastily toward
other people, people often find themselves
of two minds; our affective systems drive us
in one direction, and cognitive delibera-
tions in another. For instance, we find
ourselves almost compulsively eating our
children’s left-over Halloween candy, while
obsessing about how to lose the extra 10
pounds; or gambling recklessly at the
casino, even as a small voice in our head
tells us to stop.
The extent of collaboration and com-
petition between cognitive and affective
systems, and the outcome of conflict
when it occurs, depends critically on the
intensity of affect. At low levels of inten-
sity, affect appears to play a largely
‘advisory’ role.A number of theories posit
that emotions carry information that peo-
ple use as an input into the decisions they
face. The best-developed of these
approaches is ‘affect-as-information the-
ory’: at intermediate levels of intensity,
people begin to become conscious of con-
flicts between cognitive and affective
inputs. It is at such intermediate levels of
intensity that one observes the types of
efforts at self-control that have received so
much attention in the literature.
Finally, at even greater levels of inten-
sity, affect can be so powerful as to virtually
preclude decision making. No one ‘decides’
to fall asleep at the wheel, but many people
do. Under the influence of intense affective
motivation, people often report themselves
as being ‘out of control’ or ‘acting against
their own self-interest’. As Rita Carter
writes in Mapping the Mind, “where thought
conflicts with emotion, the latter is
designed by the neural circuitry in our
brains to win.”
Sense-making is an important form of
interaction between Quadrant I and the
other quadrants.The brain’s powerful drive
toward sense-making leads us to strive to
interpret our own behaviour. Since Quad-
rant I often does not have conscious access
to activity in the other quadrants, it is per-
haps not surprising that it tends to
over-attribute behaviour to itself. Even
though much of the brain’s activity is ‘cog-
nitively inaccessible,’ we have the illusion
that we are able to make sense of it, and we
tend to make sense of it in terms of Quad-
rant I processes.
General Implications for Economics
Neuroscience can point out commonalities
between categories that had been viewed as
distinct. One example of this with impor-
tant implications is the utility for money.
The canonical economic model assumes
that the utility for money is indirect – i.e.,
that money is a mere counter, only valued
for the goods and services it can procure.
Thus, standard economics would view, say,
the pleasure from food and the ‘pleasure’
from obtaining money as two totally differ-
ent phenomena. Neural evidence suggests,
however, that the same reward circuitry of
the brain in the midbrain is activated for a
wide variety of different reinforcers,
including attractive faces, sports cars,
drugs, and money.
The idea that many rewards are
processed similarly in the brain has impor-
tant implications for economics, which
assumes that the marginal utility of money
depends on what money buys. For exam-
ple, compensation of top business
executives skyrocketed in the 1990s.While
improvements in linking performance to
pay and social comparison undoubtedly
explain part of the growth, one of the puz-
zles is why executives need so much
money. However, if abstract money
rewards fire dopamine neurons, as addic-
tive drugs do, then larger and larger money
rewards become desirable even if the
money won’t actually be used to purchase
pleasure-producing consumption.
If gaining money provides direct
pleasure, then the experience of parting
with it is probably painful. While there is
no direct evidence of this, the assumption
that paying hurts can explain many market
phenomena which are otherwise puzzling.
An example is the effects of payment-
neutral pricing schemes on choices.
Rotman Magazine Winter 2007 • 43
Companies often go to great lengths to dis-
guise payments, or reduce their pain.
Consumers appear to oversubscribe to flat-
rate payment plans, e.g., for utilities,
telephone services and health clubs. A flat-
rate plan eliminates marginal costs, and
allows consumers to enjoy the service
without thinking about the marginal cost.
Similarly, travel plans are often sold as
packages, making it impossible to compute
the cost of the individual components
Emotional reactions to risk can help to
explain risk-seeking as well as risk-aversion.
(hotel, food, transportation). Often com-
ponents of the package are presented as
‘free’ (like Microsoft’s internet browser)
even though the claim is meaningless from
an economic standpoint, given that the
package is presented on a take-it-or-leave-
it basis. One can interpret the appeal of
ad-hoc currencies, such as frequent-flyer
miles, or chips in casinos, as an attempt to
reduce the pain-of-payment. The ad-hoc
currency feels like ‘play money,’ and spend-
ing it does not seem to exact the same
psychic cost.
Specific Applications
Both collaboration and competition
between affect and cognition, and between
controlled and automatic processes, can
also be seen in the domain of decision mak-
ing under risk and uncertainty. The
expected utility model views decision mak-
ing under uncertainty as a tradeoff of utility
under different states of nature – i.e., dif-
ferent possible scenarios. But, much as they
do toward delayed outcomes, people react
to risks at two different levels. On the one
hand, as posited by traditional economic
theories and consistent with Quadrant I of
Figure One, people do attempt to evalu-
ate the objective level of risk that different
hazards could pose. On the other hand, and
consistent with Quadrant IV, people also
react to risks at an emotional level, and
these emotional reactions can powerfully
influence their behaviour.
The existence of separate affective and
cognitive systems that respond differently
to risks is most salient when the two sys-
44 • Rotman Magazine Winter 2007
tems clash. People are often ‘of two minds’
when it comes to risks: we drive when we
know at a cognitive level that it is safer to
fly; we fear terrorism, when red meat poses
a much greater risk of mortality; and, when
it comes to getting up to speak at the
podium, or taking an important exam, our
deliberative self uses diverse tactics to get
us to take risks, or to perform in the face of
risks, that our visceral self would much
prefer to avoid.
Fear unleashes preprogrammed
sequences of behaviour that aren’t always
beneficial. Thus, when fear becomes too
intense it can produce counter-productive
responses such as freezing, panicking, or
‘dry-mouth’ when speaking in public.The
fact that people pay for therapy to deal
with their fears, and take drugs (including
alcohol) to overcome them, can be viewed
as further ‘evidence’ that people, or more
accurately, people’s deliberative selves,
are not at peace with their visceral reac-
tions to risks.
Emotional reactions to risk can help to
explain risk-seeking as well as risk-aversion.
Thus, when gambling is pleasurable, a model
that incorporates affect naturally predicts
that people will be risk-seeking and that self-
control will be required to rein-in
risk-taking. Indeed, about one per cent of the
people who gamble are diagnosed as ‘patho-
logical’: they report losing control and
harming their personal relationships by gam-
bling. Standard economic explanations for
gambling, such as- convex utility for money,
don’t help explain why some gamblers binge
and don’t usefully inform policies to regulate
the availability of gambling.
Neuroscience may help. Pathological
gamblers tend to be overwhelmingly
male, and tend to also drink, smoke, and
use drugs much more frequently than
average. Genetic evidence shows that a
certain gene that causes gamblers to seek
ever-larger thrills to get modest jolts of
pleasure is more likely to be present in
pathological gamblers than in ‘normal’
people. One study shows tentatively that
treatment with a drug that blocks the
operation of opiate receptors in the brain
reduces the urge to gamble. The same
drug has been used to successfully treat
compulsive shopping.
Conclusions
In many areas of economics there are basic
constructs at the heart of current debates
which can be usefully thought of as ‘neural
processes’, and studied using the tools of
neuroscience. Finance is a field awash in
literally millions of observations of daily
price movements. Despite having wide-
spread access to extensive data, after
decades of careful research there is no
agreed-upon theory of why stock prices
fluctuate, why people trade, and why there
are so many actively-managed mutual
funds, despite their poor performance.
Perhaps knowing more about the basic
neural mechanisms that underlie fear and
greed, conformity, wishful thinking,
sense-making of random series, and per-
ceptions of expertise can help explain
these puzzles.
Although we have focused here on
applications of neuroscience to econom-
ics, intellectual trade could also flow in
the opposite direction. Even simple ideas
in economics could be useful for inform-
ing neuroscience and shifting the nature
of the questions that are asked. For
instance, neuroscientists do not under-
stand how the brain allocates resources
that are essentially fixed, such as blood
flow and attention. An ‘economic model’
of the brain could help neuroscientists
comprehend how various brain systems
interact and allocate scarce brain
resources. Simple concepts in economics
like mechanisms for rationing under
scarcity, and general versus partial equi-
librium responses to shocks, could help
neuroscientists understand how the
diverse specialized systems that make up
the brain interact.
George Loewenstein is an economist teaching in the
Department of Social and Decision Sciences at Carnegie-
Mellon University. Colin Camerer is the Rea and Lela
Axline Professor of Business Economics at the California
Institute of Technology. Drazen Prelec is a professor of Man-
agement Science at MIT’s Sloan School of Management.
This is an excerpt of an article that recently appeared in the
Journal of Economic Literature. For a copy of the complete
paper, e-mail christen@rotman.utoronto.ca
Questions for: Alvin Toffler
The renowned futurist and author, who Accenture has named the third most-
influential voice among business leaders (behind Bill Gates and the late Peter
Drucker) talks about the revolutionary form of wealth that will transform our
lives, our organizations, and the world.
Karen Christensen: You believe that we
are in the midst of the world’s third
major ‘wealth wave’ (following the
agrarian and industrialization waves.)
Describe it for us.
Alvin Toffler: From the 1960s onwards, a
new set of rules began to emerge in the
developed economies – new forms of eco-
nomic activity and wealth creation, based
not on physical labour and assembly lines,
but on knowledge. And this was truly revo-
lutionary – at least as revolutionary as the
Industrial Revolution had been three cen-
turies earlier. Where the ‘second-wave’ or
industrial wealth system brought massifica-
tion, the emerging third-wave wealth
system de-massifies production, markets
and society and makes knowledge its central
resource. As a resource, knowledge is
totally different from the other resources
economists have studied before. To begin
with, it’s intangible, and it’s not depletable:
the more we use it, the more we can create.
Such intangible functions as financing,
designing, planning, researching, market-
ing, distributing, managing, and servicing
are frequently more difficult and costly than
‘muscle work’, but they add more value and
generate more profits. The fact that knowl-
edge is inherently inexhaustible knocks a
gigantic hole in the economics that grew
out of the industrial era. And, by and large,
our economists haven’t caught up with this
yet (though many are working on it.) The
still-emergent third-wave wealth system
promises to make the amount of value pro-
duced by all its forerunner systems look
minute by comparison. But most of the dis-
cussions of economics we hear today are
still a discussion of the money economy in
Industrial Age terms.
KC: You believe this Third-Wave wealth
has the potential to increase not only
monetary wealth, but human wealth as
well. How so?
AT: We are accustomed to thinking about
the economy in terms of monetary
exchange: people buy and sell, they invest
and save, and it’s all a matter of the move-
ment of money. But we now need to leap
ahead in our understanding of economic
activity and realize that a great deal of value
is created in a non-monetary economy that
exists alongside the monetary economy.
[My wife and co-author] Heidi and I call it
the ‘prosumer economy’, and it involves a
big jump in our conception of economics,
because it’s not all based on money any-
more: what we now have is a wealth system
in which a part of it is still the money econ-
omy, but the other part is the non-monetary
economy, in which many of the things peo-
ple do for themselves or others, without
being paid, have a major impact on the
money economy – an impact that conven-
tional economists largely ignore.
KC: What do you mean by ‘prosumer’?
AT: There are several ways that people enter
the money economy: you can acquire or
create something saleable, and sell it for
money; you can get a job and a paycheque;
you can steal; or you can inherit some
money. These are the key entry points. In
contrast, there are literally thousands of
‘ways in’ to the non-money economy, and
they are open to everyone. When, as indi-
viduals or groups, we both produce and
consume our own output, we are ‘prosum-
ing’. If we bake a pie and also eat it, we are
prosumers; but the purpose of baking it
might be to share it with family, friends or
the community, without expecting money
in return. Given the shrinkage of the world
due to advances in transportation, commu-
nications and IT, the notion of prosuming
can even include unpaid work that creates
value to share with strangers half a world
away. All wealth systems have a prosumer
sector, because many of our highly-personal
needs and wants aren’t supplied in the mar-
ketplace, or are too expensive, or because
we actually enjoy prosuming.
KC: Can you give a couple of examples
of prosumerism in action?
AT: One famous example is Linux: a
young fellow in Finland is sitting at his
desk, and he isn’t happy with the software
he’s using for his job. He decides he can
create a better operating system; and on
his own, without quitting his job, and
purely for his own satisfaction, he creates
Linux – the renowned open-source sys-
tem. He puts it out on the Web, and
hundreds, if not thousands of volunteer
programmers are invited to make it bet-
ter, to add functions, etc. All of this is
done for free – outside of the money
Rotman Magazine Winter 2007 • 45
economy, yet it sends shivers through
Microsoft, because many governments
decide to use this system instead of theirs.
Linux was created by prosumers, and
even though it was created in prosumer
part of the wealth system, it has had a
multi-billion dollar effect on the money
economy. That’s just one example.
Another form of prosuming involves the
volunteer work that people do in their
communities and across oceans, such as
the economic wealth that was created by
people who helped out after the Tsunami
in Asia. There are many forms of unpaid
activity that create value. The prosumer
economy encompasses some of the most
important things we do today. And even
though it receives little attention from
most economists, the worldwide money
economy they monitor couldn’t survive
for 10 minutes without it.
KC: How so?
AT: At the most basic level, it’s because
every single day, some part of the work-
force retires or dies, and has to be replaced;
one generation moves in as another exits
the ranks. This explains why the money
economy depends so completely on the
most elemental form of prosuming: parent-
ing. You don’t get paid for raising your
children, but where would tomorrow’s
money system be without them? Someday
– if the economy ever attains the science-
fictional capacity to operate without
people, or humans attain immortality –
parenting may become economically
unnecessary. But until then, at the deepest
level, production is life-and-death depend-
ent on the unpaid exertions of billions of
parent prosumers.
KC: What is the difference between ‘fun-
damentals’ and ‘deep fundamentals’?
AT: When you listen to the continual chat-
ter on TV and in the press about the
economy, everybody seems to be talking
about ‘fundamentals’ – things like ‘low
inflation’ and ‘sound credit quality’. You
hear people say, “The fundamentals of this
company are good, and the fundamentals of
that company are bad.” But when you start
looking for a definition of these ‘funda-
46 • Rotman Magazine Winter 2007
mentals’, you get lost in a maze of com-
peting definitions.What if, by focusing on
these things, we miss some things that are
even more important? What if all such fac-
tors actually depend on a deeper set of
forces? If you look at history, we’ve gone
from hunting and gathering to agrarian,
peasant economies, to industrial
economies, to the knowledge economy; the
key question is, are there fundamentals that
are common to all of these? The answer is
yes, and it’s a much different list from the
ones people are always talking about. For
instance, clearly, every one of these
economies – from the birth of the human
race onwards – has had to deal with the
biosphere. Whether you were going out to
hunt and gather or you were planning a
new mining operation, you had to worry
about the physical environment around
you. No matter which economy or wealth
system you’re talking about, you also had to
deal with energy to create wealth, and you
Unless it is completely transformed,
education will become the greatest weight
on the back of the economy of the future.
needed to deal with time: when are the ani-
mals you are hunting going to turn up to
get some water? These are just a few of a
long list of deep fundamentals that we’ve
always had to deal with – the ‘givens’ of
wealth creation. In our book, we single out
three that have particular impact on the
emergent economy of the future: the first
is how we deal with time; second is space
or geography; and third is how we
deal with knowledge itself. These are
the most important deep fundamentals
going forward.
KC: How will the Third Wave affect jobs?
AT: The ‘job’ is only one way of packaging
work. As the knowledge-based wealth sys-
tem unfolds, we may well move into a
future in which more people ‘work’, but
fewer hold ‘jobs’, as such.And the nature of
our work will change, because skills now
become obsolete at a rapid pace, meaning
we’ll have to continually learn new skills to
accomplish changing tasks.
KC: What are the implications for spe-
cialists in any field?
AT: The more refined and specialized tasks
become, the harder and more expensive
it becomes to integrate them – especially
in an innovation-driven economy. At
some point, the costs of integration may
exceed the value of such super-specializa-
tion. Narrowly-focused specialists may be
good at incremental innovation, but
breakthrough innovation is most often
the product of temporary teams whose
members cross disciplinary boundaries –
and breakthroughs in every field are
increasingly blurring those very bound-
aries. The new wealth system demands a
complete shake-up in the way these
increasingly-temporary skill sets are
organized for increasingly temporary
purposes throughout the economy. Noth-
ing is more deeply fundamental to the
creation of wealth.
KC: Talk a bit about the dangers of
‘obsoledge’.
AT: In the past, most industrialists,
investors and business people didn’t have to
concern themselves with the kind of issues
that knowledge now presents. For exam-
ple, how much of the decision making in
your company (or your university, or your
hospital) is actually based on obsolete infor-
mation? In the previous ages, change was
very slow, so people didn’t have to worry
about the obsolescence of their knowledge
supply.Today, more and more of yesterday’s
knowledge is obsolete, and tomorrow,
what we know will be different, so we have
to pay much more attention to the tempo-
ral aspect of knowledge, and its continued
relevance. We call obsolete knowledge
‘obsoledge’, and it’s definitely something
to watch out for.
KC: Tell us a bit about the ‘clash of
speeds’ and how it affects economic
development.
AT: Nations all over the world are strug-
gling, at different rates of speed, to build
advanced wealth systems. What most
business, political and civil leaders have
not yet clearly understood is a simple
fact: an advanced wealth system needs an
advanced society, for every system for the
creation of wealth is a product of the soci-
ety in which it is embedded. If a country
manages to speed up its economic
advance, but leaves its key institutions
behind, it will eventually limit its poten-
tial to create wealth.Today’s industrial-age
bureaucracies are slowing the move
toward a more advanced, knowledge-
based system for creating wealth. This is
true of China’s state-owned enterprises
and of France’s ingrown, elitist ministries
and universities. It is also true of the
U.S., in particular, in the inability of the
U.S. Securities and Exchange Com-
mission to cope with the skyrocketing
speed and complexity of the private-
sector financial institutions it is supposed
to regulate.
KC: What’s the biggest mistake being
made by our institutions?
AT: Bureaucratic institutions in both the
private and public sector break up knowl-
edge and its components, storing and
processing them in separate compart-
ments, or ‘stovepipes’. Over time, these
stovepipes multiply, as ever-more narrow
specialization increases the number of
uncrossable boundaries. This makes it
extremely difficult to cope with fast-
changing new problems requiring
knowledge that falls beyond artificial
departmental borders.To complicate mat-
ters, guarding each stovepipe is an
executive whose power is enhanced by
control over data, information and knowl-
edge, and who has little incentive to share
it. Yet as industrial-age boundaries break
down, it is only by sharing that important
problems can be solved.
KC: Will all the big institutions (the UN,
World Bank, IMF, etc.) wither away under
the dynamic new system you describe?
AT: They will either wither away or sim-
ply implode. Major components of the
UN in its present form are corrupt and
unworkable. In Washington, the Federal
Integrative
Emergency Management Agency
(FEMA) imploded during the aftermath
Thinking : ™
of Hurricane Katrina. And this is going to
continue to happen, because the institu- Learning How to
tions we’ve developed to work very well Think to Win
during the industrial era of mass produc-
tion are increasingly incapable of a) 9 th Annual Rotman Life-Long
keeping up with the speed of change, and Learning Conference
b) keeping up with the complexity of June 1, 2007
change.These institutions have become so
Toronto, Ontario
complex and interconnected that they are
less and less functional. They can’t deal
rapidly with the kinds of decisions that We are pleased to offer the
need to be made. The worst example of following presentations:
this is our schools. We have companies
“The Wealth of Knowledge:
that are driven by change, struggling to
Intellectual Capital and the 21st
keep up with it or die; on the other hand,
Century Organization”
they are dependent on tomorrow’s work-
Thomas Stewart, Editor,
force, which today is learning in schools Harvard Business Review
that change glacially, if at all. So they’re
not prepared for the high-velocity world, “Five Minds for the Future: the
and are actually being made incompetent Cognitive Abilities that will Command
by the schools. Unless it is completely a Premium in the Years Ahead”
transformed, education will become the Howard Gardner, Hobbs
greatest weight on the back of the econ- Professor of Cognition and e
m
omy of the future. a to co
Education, Harvard dGraduate
h
widt
School of Education
KC: Do you agree with Stephen Hawk-
umn
Col the Thinker of the Future”
“Designing
ing’s assertion that we need to start Mihnea Moldoveanu, Associate
making other planets habitable in Professor of Strategic Manage-
order to preserve the future of the ment and Director, Desautels
human race? Centre for Integrative Thinking™,
Rotman School
AT: Yes, I do. If we go forward 1,000 years “Reinventing Yourself through Mindful
– assuming the human race is still here – Learning and Creativity”
what will we be remembered for? No one Ellen Langer, Professor of
will remember Iraq, or George Bush (Jr. Psychology, Harvard University
or Sr.), or most of the things we obsess
about today. But there is only one thing that “Think Again: How Today’s Greatest
they will surely remember: that ours was Business Leaders Think to Win”
the first generation in history in which Roger Martin, Dean and Premier’s
Research Chair in Productivity
human beings actually left the planet, went
and Competitiveness and Director,
into space, and began to create wealth
AIC Institute for Corporate
there. That is a historical event that is
Citizenship, Rotman School
unmatched by most of what we pay atten-
tion to. All of us – individuals, organizations Confirm your attendance
and governments alike – face the wildest,
TODAY by registering at:
fastest ride into the future of any genera-
www.rotman.utoronto.ca/events
tion. When all is said, it’s a fantastic
moment to be alive.
Alvin Toffler is the best-selling author of Future Shock, The
Third Wave, and most recently, Revolutionary Wealth (Knopf,
2006), all co-written with his wife, Heidi Toffler.
Rotman Magazine Winter 2007 • 47
The Evolution of
HARASSMENT
in the Workplace
Once thought to be based on sexual desire, a subtler form of
harassment has emerged in modern workplaces that creates a
hostile environment for women who don’t meet gender ideals.
by Jennifer Berdahl
The first type of sexual harassment to be
widely recognized was quid-pro-quo
harassment, in most cases originating
from a male boss toward a female subor-
dinate. The courts assumed that harassers
were motivated by sexual desire for their
targets, and scientific theories of harass-
ment shared this assumption. For
example, the ‘natural/biological model’
proposed that sexual harassment results
from natural and inevitable feelings of
sexual desire expressed primarily by men
toward women due to inherent sex drives
and functions; and ‘power models’
viewed harassment as resulting from the
fact that men’s economic power over
women enables them to exploit and
coerce women sexually.
This original prototype of sexual
harassment implies that the most frequent
targets of such harassment would be indi-
viduals who meet gender ideals, which
involve both physical and personality char-
acteristics. I suggest that in the modern
workplace, just the opposite is true: the
most common form of sexual harassment
today is ‘gender harassment’, a form of
hostile-environment harassment that
appears to be motivated by hostility
toward those who violate gender ideals,
rather than by desire for those who meet
them. I suggest that what appear to be sex-
ually motivated forms of harassment, like
unwanted sexual attention and pressure,
share a desire to put those who ‘step out of
place’ back into it.
The Role of Gender Ideals
‘Gender ideals’ capture what is considered
most desirable in men and in women, and
include both physical and personality
characteristics. Personality characteristics
considered most desirable in men include
assertiveness, independence, and domi-
nance, while those considered most
desirable in women include modesty, def-
erence, and warmth.
If mostly men harass mostly women
due to differences in biology, power, or
social roles, then women who meet femi-
nine ideals should be sexually harassed the
most. However, the most recent evidence
suggests that gender harassment against
women is primarily targeted at those who
violate such gender ideals.
One example includes an assertive
female police officer and bodybuilder who
was subjected to sexually-explicit materials
and found a soiled condom and sanitary
napkin in her mailbox at work. Another
includes the famous case of Price Waterhouse
vs. Hopkins, in which an outspoken and
extremely high-performing woman in a
male-dominated professional accounting
office was denied partnership and
instructed to learn how to “walk, talk and
dress more femininely, wear make-up, have
her hair styled, and wear jewelry.”This case
led some to propose that this kind of sex
discrimination is motivated by a desire to
punish women who do not conform to pre-
scriptive sex stereotypes, or to beliefs
about how women should behave.
‘Hostile-environment harassment’
does not involve trying to establish sexual
or romantic relations with a target, but
rather makes a target feel unwelcome in the
workplace, based on their gender. Also
called ‘gender harassment’ or ‘sexual hostil-
ity’, this form of harassment is now the
most common type in evidence in modern
workplaces. Gender harassment under-
mines, humiliates, or rejects a target based
on gender with sexual and sexist remarks,
jokes, materials, or pranks.
A recent experiment provides com-
pelling evidence of this phenomenon.
Using a computer paradigm, researchers
had men receive an electronic communica-
tion from a purported interaction partner.
Half of the men received a message from a
woman who said she was studying econom-
ics, intended to become a bank manager,
thought women were as capable as men,
and participated in a union that defended
women’s rights. The other half of the men
received a message from a woman who said
she was studying education, intended to
become an elementary school teacher to
allow time for family and children, and
chose not to become a lawyer because the
job is more appropriate for men and she is
afraid to compete with men. Men had the
option of sending a variety of images to
their interaction partner in reply, and were
more likely to send offensive pornography
to the woman who expressed nontradi-
tional beliefs and career ambitions than to
the woman who expressed traditional ones.
Rotman Magazine Winter 2007 • 49

The rationale provided by these
researchers for why men gender-harass
non-traditional women is that men are
motivated to derogate women when they
experience a threat to their male identity.
Women threaten male identity when they
blur distinctions between men and women
and thereby challenge the legitimacy of
Women in male-dominated occupations
are sexually harassed more than women
in balanced or in female-dominated ones.
these distinctions and the status they confer
men.The fictitious women in the computer
paradigm experiments represent archetyp-
ical cases of gender role conformists and
violators. Men who endorsed gender role
distinctions and who were strongly male
identified were more likely than other men
to gender harass the nontraditional woman
and to report an enhanced sense of male
identity after doing so.
‘Sexual approach’ forms of harass-
ment derogate women as well. Sexually
objectifying a woman treats her as a
means-to-a-sexual-end and deprecates her
status at work, especially in the socio-his-
torical context of widespread sexual
exploitation and violence against women.
Unwanted sexual attention, repeated
requests for dates, and sexual coercion are
ways of derogating women in addition to
gender harassment.Viewed in this way, it is
not surprising that gender and sexual
approach forms of harassment are highly
empirically related. Given this, it seems
reasonable to propose they share a common
motive. After all, men with relatively sexist
attitudes are not only more likely to gender-
harass women but to sexually exploit them as
well. Sexual approach forms of harassment
may appear to be sexually motivated, but may
be more basically motivated by a desire to
derogate the target of harassment, especially
a woman who steps out of ‘place’.
50 • Rotman Magazine Winter 2007
My Research
In recent studies, I set out to test whether
sexual harassment is most frequently tar-
geted at women who violate prescriptive
gender roles in the 21st century workplace.
That is, whether women who have charac-
teristics or engage in behaviour considered
more desirable for men than for women
experience more sexual harassment than
other women and men.
Consistent with my hypothesis,
research shows that women in male-domi-
nated occupations, especially those in
male-dominated work contexts, are sexu-
ally harassed more than women in balanced
or in female-dominated ones. This would
also be the case, however, if men are more
sexually aggressive than women, sexual
harassment is driven by sexual desire, and
women who meet gender ideals are sexu-
ally harassed the most.
To test whether sexual harassment is
targeted more at women who violate gen-
der ideals, it is necessary to compare
women who differ in their conformity to
these ideals in the same context. My studies
tested whether sexual harassment generally
is targeted at women who violate gender
ideals, and whether it is targeted at women
who violate gender ideals in more subtle
ways than their expressed career ambitions
and attitudes about women’s rights. I exam-
ined sexual harassment as traditionally
construed to include sexual approach
forms of harassment like unwanted sexual
attention and sexual coercion, and studied
how actual women’s experiences of sexual
harassment in their real lives and places of
employment relate to women’s personality
gender violations.
Gender ideals, or beliefs about how
men and women should think, feel, and
behave, are captured by ‘prescriptive sex
stereotypes’. These are likely to differ
somewhat across contexts, but there is
much commonality in feminine and mascu-
line ideals across a wide range of
environments. The best known and most
widely-used measure of gender ideals for
personality is the Bem Sex Role Inven-
tory.The ‘BSRI’ was created by identifying
personality characteristics considered more
desirable for men than for women, and
characteristics considered more desirable
for women than for men. The former cap-
ture ‘masculine’ ideals and include acting
like a leader and being assertive, ambitious,
dominant, and independent.The latter cap-
ture ‘feminine’ ideals and include being
affectionate, compassionate, gentle, warm,
and sensitive to the needs of others.
Despite being developed over 30 years
ago, recent studies show the BSRI contin-
ues to capture masculine and feminine
ideals in modern society.
The three studies I conducted used the
BSRI to test my prediction that women
with relatively masculine personalities are
more likely to experience sexual harass-
ment. I began with a study of upper-level
undergraduates, because sexual harassment
occurs in a variety of domains, including
schools. A second study tested whether
women who have relatively masculine per-
sonalities are more likely than others to
negatively evaluate the same potentially-
harassing behaviours, to see if this might
explain the results of my first study. My
third study tested whether results for the
first study generalize to workplace settings
by examining the sexual harassment expe-
riences of employees at work.
The women in my studies experienced
more sexual harassment than the men, not
because they experienced sexual behaviours
more often, but because they evaluated
these behaviours more negatively, consistent
with prior research. This points to the
importance of measuring how a respondent
evaluated an experience before determining
if it was harassment. Women with relatively
masculine personalities, regardless of how
feminine their personalities also were, expe-
rienced significantly more sexual
harassment than others. This did not appear
to be due to differences in evaluation of the
behaviours: women with masculine person-
alities evaluated the behaviours the same as
other women.
It is possible, however, that women with
relatively masculine personalities actually
experience fewer sexually harassing behav-
iours than other women, but are more likely
to recall them. This is similar to the ‘whiner
hypothesis’, which posits that surveys over-
estimate harassment because respondents
‘whine’ about minor events. While research
refutes this hypothesis, it is likely to be put
forth as an explanation for why women with
relatively masculine personalities are more
likely than others to report sexual harass-
ment. It is possible that women who defy
gender roles may be more likely to question,
be bothered by, and therefore remember
behaviour based on these roles, such as sex-
ually objectifying women.
In my second study, rather than recall-
ing their past experiences (which may
involve biases based on sensitivity to these
experiences), respondents evaluated iden-
tical hypothetical experiences. If relatively
masculine women are more negatively
sensitive to potentially-sexually-harassing
behaviours, they should evaluate these
experiences more negatively.
This study demonstrated that women
who describe their personalities in relatively
masculine terms are no more likely than
others to negatively evaluate potentially sex-
Acting like ‘one of the boys’ may not be
the best strategy for women who want to
succeed in male-dominated occupations.
ually harassing events. This suggests that the
reason relatively masculine women experi-
enced the most sexual harassment in Study 1
is probably not due to an enhanced likeli-
hood on their part to view these
experiences negatively, but instead reflects
an actual likelihood for them to experience
more sexual harassment.
My third study largely replicated the
results of the first in a workplace setting.As
in Study 1, men experienced more sexual
behaviours than women, but men tended
to enjoy these experiences and women
did not. Women who worked in male-
dominated jobs at male-dominated manu-
facturing plants were more likely to
experience sexual harassment than their
male counterparts in those jobs and than
men and women in female-dominated jobs
at female-dominated community service
centers. Women in these male-dominated
contexts with relatively masculine per-
sonalities experienced the most sexual
harassment. In other words, the more
women deviated from traditional gender
roles – by occupying a ‘man’s’ job or hav-
ing a ‘masculine’ personality – the more
they were targeted for sexual harassment.
Though having a masculine personality
would seem to help employees fit into
male-dominated work environments, hav-
ing such a personality appears to have
hurt the women in this study.
Implications for Managers
My research provides the first systematic
evidence that in the modern workplace,
women who violate feminine ideals are
most likely to be sexually harassed in their
social and working lives. If sexual harass-
ment is seen as a pervasive mechanism for
punishing gender role violators and
thereby a way to enforce different stan-
dards of behaviour in women and men,
then it serves as a basic means for creating
different terms and conditions of employ-
ment based on sex.
Rather than ask if a perpetrator was
sexually motivated, or if the behaviour
was sexual in content to determine
whether it constitutes sexual harassment,
this perspective suggests instead that we
ask whether an individual of one sex
would have been harassed for having the
same characteristics and behaving in the
same way as an individual of the other sex.
Furthermore, it suggests that policy and
research on sexual harassment should
move beyond focusing on sexual motives
and behaviours to include other forms of
behaviour that derogate individuals based
on sex.
Discrimination does not have to be
targeted at all members of a group to sub-
ordinate the group as a whole: not all
women, or even most, need to be treated
poorly in an organization for that organi-
zation to discriminate against women. If
some women are singled out for discrimi-
nation because they fail to conform to
gender norms – norms that reinforce sex
differences and inequality – then enforc-
ing gender norms by punishing those who
violate them enforces gender inequality.
If women who are outspoken at work are
harassed, but their outspoken male col-
leagues and their other female colleagues
are not, then a double standard exists in
that organization that serves to reinforce
women’s subordinate status to men
within it.
My research highlights the double-
bind faced by women in male-dominated
workplaces, who are likely to be dismissed
and disrespected if they are feminine, but
who are likely to be scorned and disliked
if they are masculine. Acting like ‘one of
the boys’ by being assertive and ‘leader-
like’ may not be the best strategy for
women who wish to succeed in male-
dominated occupations, but it is not clear
which strategy is best. Regardless of how
‘warm’ or ‘feminine’ a woman was in
these studies, she was harassed more if she
was also dominant or otherwise mascu-
line. If being dominant and masculine is
what it takes to succeed in male-domi-
nated occupations, it appears that women
face two undesirable choices: to not have
what it takes, or to have it but face an
upward battle of harassment.
In the end, the onus should not be on
victims to avoid sexual discrimination,
but on those in charge to create struc-
tures and incentives that prevent it. Rather
than attempting to ‘sculp’ potential vic-
tims so they might avoid harassment, a
better solution is to focus on systemic
means of discouraging such bias. Employ-
ers should focus on eliminating different
treatment, standards, and status between
male and female employees. Organiza-
tional policies should focus not on
banning sexual behaviour per se, but on
creating respectful work environments
that do not subject men and women in the
same positions or with the same charac-
teristics and personality styles to different
forms of treatment.
Jennifer Berdahl is an assistant professor of Organizational
Behaviour at the Rotman School.The paper on which this arti-
cle is based is forthcoming in the Journal of Applied Psychology.
Rotman Magazine Winter 2007 • 51
THE CHINA RIP TIDE:
THREAT OR OPPORTUNITY ?
Profiting from the Growing
Supply-Chain Bottleneck
By George Stalk Jr. and Kevin Waddell

A focus on reducing time and variability in the
China-anchored supply chains serving North
America and Europe can help companies build
competitive advantage.
George Stalk Jr. Kevin Waddell
Surface freight from Asia to the west coast
of North America and to Europe is growing
at an explosive rate, while port and surface-
transport capacities are not. As a result,
North American ports and rail systems are
beginning to choke, and delays and uncer-
tainties are increasing.
Freight demand on the North Ameri-
can west coast has been growing at a rate
equivalent to one Port of Vancouver per
year, and a rapid expansion of port and rail
capacity will be difficult, given formidable
environmental resistance and political pres-
sures. Although the problem is not as acute
in Europe, plans are ostensibly in place to
add significant port capacity there over the

52 • Rotman Magazine Winter 2007


next six to eight years. Nevertheless, the
conditions we describe here are going to
get far worse before they start getting better.
The port and rail systems of the North
American west coast are implementing
changes, but these are not likely to meet
the growing demand, for many reasons.The
most significant is that each of the North
American participants in the China-
anchored supply chains has a narrow view
of its role and a limited notion of the end-
to-end potential for improvement. The
changes being made or contemplated
reflect this narrow focus: they are incre-
mental, and their effects will be swept aside
by the bigger forces of the China ‘rip tide’.
By George Stalk Jr. and Kevin Waddell
In Western Europe, capacity utilization
in the major ports is running between 90
and 95 per cent, which allows little margin
to absorb the variability inherent in over-
seas shipping. During the summer of 2004,
a spike in demand caught operators off-
guard, resulting in long delays for
unloading container ship; some were even
turned away from ports such as Antwerp.
Operators dealt with the problem by
adding equipment, hiring dockworkers,
and improving scheduling, but such meas-
ures only buy time in the near term.
Although the planned capacity additions are
significant, it would take only one or two
expansions to come on late or not at all for
European ports to be unable to support the
surge from Asia.A study by Drewry Ship-
ping Consultants shows that actual
capacity added is usually about a third of
what is proposed, and it typically becomes
available at least four years later than origi-
nally planned.
In North America, the supply chain
bottleneck is beginning to affect the per-
formance of manufacturing and retailing
companies that rely on surface logistics to
get their goods from Asia to the heartland.
But few executives at retail or durable-
goods companies understand the
magnitude of the challenge being forced on
them, and even fewer are investing against
Rotman Magazine Winter 2007 • 53
the phenomenon to reduce costs and create
competitive advantage. One exception is
Nike.The Financial Times recently reported
that the company had joined other big
importers in the Waterfront Coalition, an
organization set up to lobby for more fund-
ing and political support for infrastructure
improvements.
We believe that a firm focus on reduc-
ing time and variability in the China-
anchored supply chains serving North
America and Europe can help companies
dramatically reduce their costs, improve
their margins, and build competitive
advantage. We also believe that North
American and European companies should
be looking closer to home (to Mexico,
Central America, and South America for
U.S. companies and to Central and Eastern
Europe for Western European companies),
where the cost-of-labour penalty (relative
to labour rates in China) is more than com-
pensated for by superior supply-chain
performance that is significantly less vari-
able and virtually unaffected by port and
surface-capacity constraints.
In their rush to source from China, many
companies are blindly walking into a
strategic trap.
A Cross-Functional Challenge
Retailers live or die by a simple creed:
stock products that sell, and don’t stock
products that don’t sell. As North Ameri-
can and European companies source more
of their goods from China, the risk of get-
ting this wrong increases dramatically. The
effects show more in the economic profits
than in the accounting profits. Accounting
profits capture Generally Accepted
Accounting Principle (GAAP) costs, rev-
enues and losses. Economic profits capture
the hidden costs of lengthening supply
chains: increased inventories, overproduc-
tion and underproduction, write-downs of
excess inventories, and most important,
lost margins from stockouts. In reality,
accounting profits may be positive while
economic profits are not. Economic profits
can be the source of insight for creating
competitive advantage.
54 • Rotman Magazine Winter 2007
Some executives may be tempted to
stop reading here and pass this article on to
their logistics people.That would be a huge
mistake, because the actions required to
turn the threat of the China rip tide into an
opportunity are cross-functional, come
together at the very top of the company,
and require strategic choices, investments
and initiatives.
So what can companies do, aside from
nothing? They can retreat by bringing man-
ufacturing home. They can adapt by
building landside capability in ports not-yet
congested in order to sidestep the problem.
Or they can be still more creative and com-
petitive by doing one of the following:
1. They can aggressively manage their
China-based supply chain, looking for ways
to squeeze time from it that competitors
haven’t identified or exploited.
2. They can explore alternatives that will
minimize adverse supply-chain effects,
including options – such as increased use of
air freight – that may appear costly but may
actually lower overall expenditures by
reducing hidden costs.
3. They can invest in premiums and capa-
bilities. Premiums are the extra payments
required to get substantially enhanced per-
formance by means of preferred treatment
from ground, sea and air shippers, port
services, and other suppliers. Investments
in capabilities enable companies to be bet-
ter than competitors at managing their
business in spite of the problems on the
North American west coast. These initia-
tives can include cross-docking, facilitated
portside handling, and “track and trace”
capabilities to keep boxes moving.
4. They can diversify supply with multiple
suppliers and supply points or produce
domestically for critical components and
products, accepting higher production
costs as a tradeoff for lower stockouts and
supply-chain costs.
Firms that make creative investments
like these will benefit enormously, change
the dynamics of their industry, and open a
competitive gap that will complement and
enhance advantages founded on merchan-
dising and store management. The China
rip tide presents a major strategic challenge
that many companies are not dealing with
explicitly because they underestimate the
importance of fast, effective supply chains.
Most know that supply chain management
is important, but they underestimate the
magnitude – and the impact on profitability
– of the hidden costs of longer supply
chains, reduced flexibility, and lost gross
margin from missed sales and write-downs.
And rarely do executives think of supply
chain investments as an outright source of
competitive advantage.
In their rush to source from China,
many companies are blindly walking into a
strategic trap. The trap is thinking that
sourcing from China will result in lower
product costs, when in reality the supply
chain dynamics will, in many cases, drive
up overall costs and reduce profitability,
thereby creating an opening for a competi-
tor. The first company to see and correct
the strategic error of sourcing from China
without an appropriate investment in sup-
ply chain dynamics to minimize costs will
seal the fate of its competitors.
Effects on the China Cost Advantage
The growing imbalance in supply and
demand in Pacific container shipping can
be captured in one statistic: over the next
several years, close to 100 new container-
loading berths will be built in China, each
with a lift capacity of about half a million TEU
(twenty-foot equivalent units) per year. Most
of the containers used in North America and
Europe are around 40 feet long, making them
equal to two TEU. Over the next several
years, no more than five new berths are
planned for the west coast of North America.
Imports from China to North America
are growing at 18 per cent per year in value
and at 12 per cent per year in number of
containers. It is hard to imagine anything
short of a global catastrophe altering this
trend. At some point this year or next, the
ports on the west coast of North America
are expected to reach their combined con-
tainer-unloading capacity. Many have plans
for expansion to levels approaching those
of Asian ports. The expansion would come
either from an increase in dockside foot-
print at current levels of container
lift capacity, as indicated in the ports’ mas-
ter plans, or from significantly improved
lift productivities.
The footprint expansion is doubtful.
Local communities consider container
ports to be polluters, noisy contributors to
road and rail congestion, and just plain
ugly. Less-threatening business expansions
have been stymied by complaints like these.
Productivity improvements would require
a breakthrough in labor-management rela-
tions – unlikely in an environment defined
by a long history of discord.
Either a footprint expansion or a dra-
matic increase in productivity would push
off the day of reckoning for three to five
years. If some miraculous combination of
modern management techniques, good
labour relations and political astuteness
were to achieve both the footprint expan-
sion and the productivity improvements,
the day of reckoning would be postponed
for eight to nine years at current container-
import growth rates and volumes – a
miracle that is very unlikely to occur.
Potential Solutions
Two potential solutions exist for North
America, one for the medium term and one
for the longer term. The medium-term
answer is the development of a port in British
Columbia. The Port of Prince Rupert
(PPR), just south of the Alaska-Canada bor-
der, is the northernmost deep-water port in
North America that does not freeze, and it is
1,000 miles [over 1,600 kilometers] closer
to Shanghai than Los Angeles-Long Beach.
Unfortunately, PPR will take a long time to
develop as environmental and political
issues are worked through, and is likely to
remain a ‘backup’ port for Vancouver for the
foreseeable future.
The longer-term solution may be in
Mexico. A number of sites exist that could
be developed into a large-scale deep-
water port. Roads and rail lines into
Arizona or Texas would need to be built,
and the entire project, optimistically,
would take about ten years and $10 bil-
lion. Although more expensive to develop
than PPR, a new Mexican port is a very
realistic possibility, if only because some-
thing must be done, because Canada is
unlikely to get organized to pick up its
PPR option, and because the Chinese are
growing impatient.
Unfortunately, neither port nor rail
expansion is likely to happen soon. Compa-
nies are going to have to fend for themselves.
Direct and Indirect Supply-Chain Costs
of China Sourcing
Companies that source manufactured
goods in China do so because of the attrac-
tive production costs and their influence on
gross margins. But unit product cost (UPC)
is only one part of a very complex picture
to consider in outsourcing.As supply chains
lengthen, they incur direct, indirect, and
hidden costs.
The ‘cross over’ point where China is
no longer the anchor for low-cost supply
chains is near.
Direct and indirect costs include ship-
ping, nesting and de-nesting of containers
at both ends of the ocean pipeline, inven-
tory storage, handling, procurement,
insurance, and overall financing. Hidden
costs are more difficult to identify and
quantify.These are the costs that arise from
the dynamics of the supply chain. The
longer it takes to move a product from
point A to point B, the more difficult it is to
manage the chain without fluctuations,
which creates cost. Typically, a very small-
but-unanticipated change in demand at
point B can produce a change in demand at
point A that is three to five times greater.
Another hidden cost is the expense of
flushing defective inventory from the sup-
ply chain. Costs must be incurred not only
to remove the defective inventory but also
to produce additional goods to meet back
orders and current demand – further
straining factories – and to physically
replace the marred goods with new prod-
uct throughout the chain.
As it takes longer for containers to
move through ports, further hidden costs
are created, including the overtime costs
that frequently arise from idled ships, unre-
liable portside loading and unloading, and
overburdened rail-transport services.There
are also the costs of rerouting shipments to
other ports – in the case of the North
American west coast, to the east coast and
the Gulf of Mexico.
As all of these contribute to
increased transit times and greater vari-
bilty, the ‘cross over’ point where China is
no longer the anchor for low-cost supply
chains is near. We estimate that many
companies booking positive accounting
profits today are actually running negative
economic profits.The higher the gross mar-
gin and the greater the variability of
demand, the more likely the cross-over point
has been reached and passed. The opportu-
nity is near for companies to increase
competitiveness by sourcing closer to home
(Mexico or Eastern Europe), investing in
vastly-improved time performance, and
exploiting the ignorance of the phenomenon
that their competitors may have.
What Companies Should Be Doing
Everyone rushing to source from China
can’t be wrong. However, some companies
are having second thoughts about their
China-sourcing strategies, and are either
reworking their North American logistics
networks or even retreating from China:
• Wal-Mart has built a 1.3-million-
square-foot warehouse near the Port of
Savannah, Georgia, and will open an $80
million distribution center near Hous-
ton, diversifying from Pacific ports;
• The Home Depot has built a 1.4-mil-
lion-square-foot facility in Savannah;
• Toyota and Nissan are considering a
plan to move more imports through
Mexican ports;
• Red Bull has diverted all inbound
shipments from southern to northern
California ports and is redistributing
products to local markets in southern
California as needed; and
• Kodiak is bringing its boot manufactur-
ing back to North America.
Rotman Magazine Winter 2007 • 55
So what can companies do? They need to be
very aggressive in managing their China-
based supply chains, looking for ways to
squeeze time from them that competitors
haven’t identified. And how can they do that?
By assessing all their operations and processes
anew and by adopting many of the recom-
mendations we offer below for newcomers.
For companies that haven’t yet sourced from
China, we recommend the following steps:
• Reduce minimum-production-order
quantities and reduce cycle times as
quickly and as much as possible;
• Refrain from sourcing or manufacturing
in China until management fully under-
stands the dynamics of the supply chains;
• Create an integrated or a semi-inte-
grated information flow within the
company’s existing supply chain;
• Conduct in-depth examinations of buy-
ing practices and management of
supplier relationships at all levels of the
supply chain in order to identify areas
where hidden costs could arise and to
prevent their occurrence;
• Segment the demand chain on the basis
of order predictability and demand
volatility so that components with the
highest gross margins and the most
volatile demand get the fastest handling;
and For European companies, carefully
evaluate the unique opportunity to source
from Central and Eastern Europe, where
labor savings are almost as significant as
in China and the supply chain penalty is
relatively small.
If a company does decide to source from or
manufacture in China, it should explore
alternatives that will minimize adverse sup-
ply-chain effects, including options that
might appear costly at first, but may result
in overall lower costs.These include:
• Use air freight for products with the
highest margins and volatility;
• Insist on point-to-point ocean shipping.
To reduce costs, shipping companies
build larger and larger container carri-
ers, which must then be scheduled to call
on multiple ports. Shipping products on
a vessel that has your destination as its
last port of call can add weeks – and
great variability – to transit times; and
• Develop better relationships with trans-
portation providers. This could mean
identifying and paying shippers for pref-
erential treatment. In ‘hot hatching’, for
example, you offer a premium to a ship-
per that will load your goods onto its
vessel last and unload them first.
All these initiatives require investment in
one of two forms: in premiums or in capa-
bilities. As noted above, premiums are the
extra payments required to get substan-
tially-enhanced performance and
preferred treatment from suppliers like
ground, sea and air shippers and port
services. Companies can get results by
forcing suppliers to compete on service in
return for premiums. Investments in
capabilities, which tend to be a good deal
harder to discern and carry out, include
accelerating the flow and interpretation of
information; developing designs that
enable final assembly to take place close to
the point of final demand, thereby mini-
mizing the time and cost effects of long
supply chains; learning to source, manu-
facture, launch and withdraw products
more effectively; and exploiting new con-
cepts for fast freight.
Identifying these investment opportu-
nities requires exhaustive analysis of costs,
revenues, and lost margins in today’s end-
to-end supply chains. Companies need to
ask,What if? And they need to explore their
answers thoroughly for each and every
white space before deciding that no addi-
tional investment in premiums and
capabilities is likely to produce further
improvement.They must be especially alert
to the subtle-but-important system effects
of investing at one part of the chain to affect
performance at another.
In closing
The current problems of sourcing in China
represent a giant non-tariff trade barrier,
and the situation is likely to get worse
before it gets better. Politicians throughout
the U.S. and Canada will dither and debate
until the options for alleviating the port
bottlenecks have vanished.
Companies will do what they can, but
a single corporation can do little to solve
the broader problem. An increasingly-frus-
trated China, which has the most to lose
from this de facto trade barrier, may under-
take a major initiative, such as developing a
new port on the west coast of Mexico. Any
such effort would take years to have an
effect, but the possibility is real.
Whether your company is operating
and selling from Europe or North America,
it will not be easy to get your own situation
right. Winning will require creativity and
insight into customer behaviour, as well as
segmented options, detailed cost analysis
and the kind of management that will strike
many executive teams as an out-of-body
experience. Yet the problem is severe
enough that someone out there is undoubt-
edly trying to do something about it. That
someone had better be you.
George Stalk Jr. is a senior vice president and director in the
Toronto office of The Boston Consulting Group and an
adjunct professor of Strategic Management at the Rotman
School. Kevin Waddell is a vice president and director in
BCG’s Warsaw office.
Point of View: Russell Ackoff
Preparing for the Future
Through Idealized Design
As the rate of change in the environment
continually increases, along with its com-
plexity, accurate forecasting becomes more
and more difficult and less and less likely.
But the difficulties involved in predicting
the future do not remove the need to take
it into account. How then, should the
future be taken into account?
One widespread approach to dealing
with the future involves strategic planning.
In my research I have found that there are
three common approaches to such plan-
ning. The first is reactivism. Reactive
planners find the solution to their organiza-
tional problems in solutions that have
worked in the past.They are often nostalgic
about the past state of their organizations
and speak about ‘the good old days’.
The second approach is inactivism.
Inactive, or conservative, planners are satis-
fied with the way things are and hope that
their present problems will simply go away
if they do nothing.
The third approach is preactivism. Pre-
active planners do not look to the past or
present for the solution to their problems
but believe that the future can be better
than the present. For them, the future is an
opportunity for improvement to be
exploited. The weakness in this third
approach is in predicting what the future
will be.Any prediction of the future ensures
a poor outcome. These approaches some-
times work, but more often they do not.
Visionary planners have developed a
fourth approach that results in what I call
idealized design. These interactive planners
reject the approaches of the other three
types.They plan backward from where they
want to be to where they are now; and they
plan not for the future, but for what they
want their organizations to be at the pres-
ent time. In so doing, interactive managers
prepare their organizations for success in
the unknowable future.
Anticipating the Future
Assumptions about the future differ qualita-
tively from forecasts. Forecasts are about
probable futures; assumptions are about possi-
ble futures. We carry spare tires in our cars
despite the fact that we do not forecast hav-
ing a flat tire on our next trip. In fact, if
anything, we forecast that we will not have a
flat tire on our next trip. But we assume a flat
tire is possible, however unlikely it may be.
Assumed futures can be taken care of
in two different ways. First, there is contin-
gency planning.When there are a relatively
few and explicitly-describable possible
futures, planners can prepare plans for each
possibility. This is called contingency plan-
ning.Then, when the truth about the future
is known, the appropriate plan can be
invoked. For example, an oil company can
develop exploration plans based on the
price of oil increasing, staying the same, or
declining. When it is apparent how the
price is moving, they can quickly move to
the appropriate plan already developed.
The way of dealing with more contin-
gencies than can be planned for separately
is to design into the organization or institu-
tion enough flexibility and responsiveness
so that it can change rapidly and effectively
to meet whatever it encounters. Automo-
bile manufacturers cannot accurately
predict customer demand for all possible
models, colours, and accessory packages.
However, the best automakers have solved
this problem by designing production lines
that allow them to build different models
and colours on the same production line as
customer demand requires. Some manufac-
turers in a number of industries have cre-
ated such flexible production facilities that
they can customize each individual product
based on an order just received. Boeing
aircraft and Dell computers are examples.
It is obvious that an additional benefit of
such a system is that it allows for a rapid
inventory turn and minimum idle capital.
The Benefits of Idealized Design
Interactive planners plan backward from
where they want to be to where they are
now. They plan not for the future, but for
what they want their organizations to be at
the present time. In so doing, however, they
prepare their organizations for success in
the unknowable future. Such ‘idealized
design’ has a number of beneficial effects
on those who engage in it and on their
organizations, as follows.
1. It promotes understanding
There is no better way to gain an under-
standing of something than by designing it.
Designing something as simple as a door
handle on a car requires the designer to
understand how the human hand grasps a
handle and then turns (or pulls) so that the
design produces a comfortable and func-
tional handle.
Furthermore, in the design process,
one is forced to consider the assumptions
on which the design is based.This consider-
ation frequently reveals the irrationality of
some of the features of the existing object
and allows for their replacement. For
example, in nearly all men’s stores, cloth-
ing is arranged by type; a section for suits,
another for overcoats, another for shirts,
and so on. When a group of male planners
engaged in an idealized redesign of a men’s
store, it became apparent to them that this
Rotman Magazine Winter 2007 • 57
arrangement was for the convenience of
those who run the store, not its customers.
They found that a far better arrangement
for customers was to arrange the garments
by size, not type of clothing, putting all the
suits, coats, shirts, and so on in the same
place so that each shopper – small,
medium, or large – could find everything
he might want in one place. Bookstores
have always known this and arrange books
by subject (because most browsers know
what interests them, even if they do not
know which books are available).
2. It transforms the concept of feasibility
The principal obstruction to what we want
most is ourselves. The great American
philosopher Pogo recognized this in his clas-
sic observation that “We have met the enemy,
and he is us.” Our tendency, however, when
we stand where we are and look toward what
we want, is to see all kinds of obstructions
imposed from without.When we change our
point of view and look backward at where
we are from where we want to be, in many
cases the obstructions disappear.
Banking is a good example.Years ago,
banks employed many tellers who han-
dled transactions with customers. They
received deposits and filled out deposit
slips, cashed checks, and entered interest
in savings passbooks. Bankers had to hire
legions of tellers as their business grew.
However, a few visionary bankers asked
themselves what would be the ‘ideal
bank’. They concluded that it would have
few – perhaps no – tellers and would
process all the same transactions. This
vision led them to create automatic teller
machines that allowed customers to do the
work rather than the tellers. In turn, this
led to online banking, where customers do
not even have to go to the bank to manage
their accounts. The obstruction bankers
thought they faced – how to find and pay
all those tellers – disappeared when they
realized that banks could operate just as
well with a decreasing number of tellers.
Although some customers complained
about this change, many more were
pleased at not having to stand in line wait-
ing to be helped by a human being.
3. It simplifies the planning process
Planning backward from where one wants
to be reduces the number of alternatives
that must be considered when making a
choice of how to get there. It simplifies
the planning process considerably.
An organizational example of simplifi-
cation – requiring the details of planning
backward and forward – is too long for our
purposes here. So we offer instead an
example drawn from a tennis tournament
that nicely encapsulates how working back-
ward greatly simplifies idealized design. If
64 players enter a tennis tournament, how
many matches must be played to determine
the winner? This is not hard to determine.
There will be 32 matches in the first round,
then 16, 8, 4, 2, and 1, successively. Added
together, these equal 63 matches. However,
if we start at the end and ask “How many
losers would there have to be?” the answer
is obviously 63, and no arithmetic is
required. The advantage of working back-
ward is even more apparent if we start with
a number of players that is not a power of
2, say 57. The arithmetic now becomes

R E U N I O N 2 O O 7 M AY 31
This year is a milestone for you — a reunion year for you and your classmates.
Milestone years include 1952, 1957, 1962, 1967, 1972, 1977, 1982, 1987, 1992, 1997, and 2002.
(Full-time MBA, Part-time MBA, EMBAs, GEMBAs or MMPAs, you’re all included!)

You’re invited to a special celebration on Thursday, May 31, 2007 at the Joseph L. Rotman School of Management.
Cocktails followed by a Class Dinner.
$135 per person.

Invitation will follow. Hope to see you in May!

For more information, including how to register or how to get involved with your class, please contact Michelle Zathureczky, manager volunteers and
reunion coordinator, at michelle.zathureczky@rotman.utoronto.ca or 416.946.3665. Or visit our website at www.rotman.utoronto.ca/alumni/reunion.

S AV E T H E D A T E ! S T AY C O N N E C T E D !

58 • Rotman Magazine Winter 2007

 Figure One
complicated because some players must be
exempted from the first round to make the
number of players left after that round a
power of 2. If we work backward, however,
it is apparent that there must be 56 losers;
hence this number of matches.
4. It enhances creativity
Human creativity is as old as humankind,
but it was not very long ago that we
began to understand what it is. We
believe that it is a three-step process.
First, it requires that we identify a self-
imposed constraint, an assumption that
we make consciously or unconsciously
that limits the number of alternatives we
consider. Second, we must deny or elim-
inate that assumption as too limiting.
Third, we must then explore the conse-
quences of this denial.
These steps are conspicuous in solv-
ing a puzzle (because a puzzle is a
problem we cannot solve if we make an
incorrect assumption). When the solu-
tion to a puzzle we have not been able to
solve is revealed to us, we want to kick
ourselves because we realize that we
were the obstruction between the puzzle
and its solution. For example, consider
the following puzzle that most of us were
confronted with as youngsters (see
Figure One.)
Once presented with the above, you
are asked to place a pen or pencil on one
of the dots and, without lifting the pen or
pencil from the paper, draw four straight
lines that cover all nine dots. This cannot
be done unless you deny an assumption of
which you may not be conscious: that you
cannot draw the lines outside the bound-
aries of the square formed by the nine
dots. If you are not told that you can draw
outside the boundaries, however, you must
take it that you can. And when this
assumption is put to rest, the solution is
relatively easy.
Furthermore, other possible solutions
exist when all assumptions are ignored. If
you fold the paper a certain way, the nine
dots can be covered with one line using a
felt-tip pen. An eight-year-old watching
adults trying to solve this puzzle asked why
they did not get a “great big fat pen that
covered all the dots and just go blop.” No
constraints were imposed on the size of
the pen used.
Creativity flows from this process.
5. It facilitates implementation
A major reason most plans are not fully
implemented is that those people responsible
for implementing it have no sense of owner-
ship of it. This leads to resentment and
subversion of its implementation. Idealized
design, however, requires the participation of
everyone who will be affected by it. There-
fore, ownership of the resulting plan is widely
spread among those who must implement it.
This avoids resistance and subversion. Imple-
mentation of a design and plan based on it is
usually carried out enthusiastically by those
who had a hand in preparing it.
In the real world, some of the gaps
between idealized design and today’s reality
can be filled, and some cannot. Without
idealized design, however, most projects
that seem impossible today will not be real-
ized tomorrow.
Russell Ackoff is the Anheuser-Busch Professor Emeritus of
Management Science at the Wharton School, University of
Pennsylvania. This is a partial excerpt from his latest book,
Idealized Design: Creating an Organization’s Future (Wharton
School Publishing, 2006), co-authored with Jason Magidson
and Herbert Addison.
Rotman Magazine Winter 2007 • 59
 ENTERPRISE 2.0:
The Dawn of
Emergent Collaboration

60 • Rotman Magazine Winter 2007

‘Enterprise 2.0’ technologies have the potential to usher in a new
era by making both the practices of knowledge work and its
outputs more visible within an organization.
By Andrew McAfee
Most of the information technologies that
knowledge workers currently use for com-
munication fall into two categories. The
first comprises channels – such as e-mail and
person-to-person instant messaging –
where digital information can be created
and distributed by anyone. With channels,
the degree of commonality of the informa-
tion is low. For instance, even if everyone’s
e-mail sits on the same server, it’s only
viewable by the few people who are part of
the thread.
The second category includes platforms
like intranets, corporate Web sites and
information portals.These are, in a way, the
opposite of channels in that their content is
generated, or at least approved, by a small
group, but then is widely visible – produc-
tion is centralized and commonality is high.
Knowledge management (‘KM’) sys-
tems have tried to have it both ways. They
have sought to elicit tacit knowledge, best
practices, and relevant experience from
people throughout a company and to put
this information in a widely available data-
base. It seems appropriate now, however, to
refer to KM systems in the past tense: they
didn’t even show up in a recently published
survey of the media used by knowledge
workers.This survey, conducted by knowl-
edge researcher Thomas Davenport,
shows that channels are used more than
platforms, and this is to be expected.
Knowledge workers are paid to produce,
not to browse their intranet, so it makes
sense for them to heavily use the tools that
let them generate information.
So what’s wrong with the status quo?
One problem is that many users aren’t
happy with the channels and platforms
available to them. Davenport found that
while all knowledge workers surveyed used
e-mail, 26 per cent felt that it was overused
in their organizations, 21 per cent felt over-
whelmed by it, and 15 per cent felt that it
actually diminished their productivity. And
in a survey by Forrester Research, only
44 per cent of respondents agreed that it
was easy to find what they were looking for
on their intranet.
A second, more fundamental problem
is that current technologies for knowledge
workers aren’t doing a good job of captur-
ing their knowledge. As Davenport puts it,
“The dream that knowledge itself –
unstructured, textual knowledge – could
be easily captured, shared, and applied to
knowledge work has not been fully real-
ized. Progress is being made, but it’s taken
much longer than anyone expected.”
In the practice of doing their jobs,
knowledge workers use channels all the
time and frequently visit both internal and
external platforms (intranet and Internet).
The channels, however, can’t be accessed or
searched by anyone else, and visits to plat-
forms leave no traces of the user.
Furthermore, only a small percentage of
most people’s output winds up on a com-
mon platform. Thus, the channels and
platforms in use aren’t much good at pro-
viding answers to such questions as, ‘What
is the right way to approach this analysis?
Does a template exist for it? Who’s working
on a similar problem right now? When our
Brazilian operation reorganized last year,
who were the key people? What are the hot
topics in our R&D department these days?’
Andrew McAfee
Indeed, it’s probably safe to say that
within most companies, most knowledge
work practices and output are invisible to
most people. The good news is that new
platforms have appeared that focus not on
capturing knowledge itself, but rather on the
practices and output of knowledge workers.
Enterprise 2.0’s Blank ‘SLATES’
New digital platforms for generating, shar-
ing and refining information are already
popular on the Internet, where they’re col-
lectively labeled ‘Web 2.0’ technologies. I
use the term ‘Enterprise 2.0’ to focus only
on those platforms that companies can buy
or build in order to make visible the practices
and outputs of their knowledge workers.The
acronym ‘SLATES’ indicates the six compo-
nents of Enterprise 2.0 technologies:
Search. For any information platform
to be valuable, its users must be able to find
what they are looking for. Intranet page lay-
outs and navigation aids can help with this,
but users are increasingly bypassing these in
favor of keyword searches. It might seem
that orderly intranets maintained by a pro-
fessional staff would be easier to search
than the huge, dynamic, uncoordinated
Internet, but this is not the case. In the For-
rester survey, less than half of respondents
reported that it was easy for them to find
what they were looking for on their
intranets.A 2005 study by the Pew Internet
& American Life Project, on the other
hand, found that 87 per cent of Internet
searchers report having successful search
experiences most of the time. The second
element in the SLATES infrastructure helps
explain this surprising difference.
Rotman Magazine Winter 2007 • 61
Links. Google made a huge leap forward
in Internet search quality by taking advan-
tage of the information contained in links
between Web pages. Links are an excellent
guide to what’s important and provide
structure to online content. In this struc-
ture, the ‘best’ pages are the ones that are
most-frequently linked to. Search technol-
ogy like Google’s works best when there’s a
dense link structure that changes over time
and reflects the opinions of many people.
This is the case on the Internet, but not on
most of today’s intranets, where links are
made only by the relatively small internal
Web development group. In order for this
to change within companies, many people
have to be given the ability to build links.
The most straightforward way to accom-
plish this is to let the intranet be built by a
large group rather than a small one.
Authoring. Internet blogs and
Wikipedia have shown that many people
have a desire to author – to write for a
broad audience. As wiki inventor Ward
Cunningham recalls, “I wanted to stroke
that story-telling nature in all of us. I
wanted people who wouldn’t normally
author to find it comfortable authoring, so
that there stood a chance of us discovering
the structure of what they had to say.” Cun-
ningham’s point is not that there are a lot of
undiscovered Shakespeares out there,
but that most people have something to
contribute, whether it’s knowledge,
insight, experience, a comment, a fact, an
edit, a link, and so on, and authorship is a
way to elicit these contributions. Blogs let
people author individually, and wikis enable
group authorship. Content on blogs is
cumulative (individual posts and responses
to them accumulate over time), while on
wikis it’s iterative (people undo and redo
each other’s work). When authoring tools
are deployed and used within a company,
the intranet platform shifts from being the
creation of a few to being the constantly
updated, interlinked work of many. Evi-
dence from Wikipedia shows that group
authorship can lead to convergent, high-
quality content.
Tags. The Forrester survey revealed
that after better searching mechanisms,
what experienced users wanted most from
their companies’ intranets was better cate-
gorization of content. Some sites on the
62 • Rotman Magazine Winter 2007
Web aggregate large amounts of content,
then outsource the work of categorization
to their users by letting them attach ‘tags’ –
simple, one-word descriptions. These sites
– such as Flickr for photos, Technorati
for blogs and del.icio.us for Web site
bookmarks – don’t try to impose an up-
In addition to building folksonomies,
tags provide a way to keep track of the
platforms visited by knowledge workers.
front categorization scheme; they instead
let one emerge over time as a result of
users’ actions. The categorization system
that emerges from tagging is called a ‘folk-
sonomy’ (a categorization system developed
over time by ‘folks’).
A folksonomy is in some ways the
opposite of a taxonomy, which is an up-front
categorization scheme developed by an
expert. Folksonomies have some disadvan-
tages relative to taxonomies: they’re not
usually multilevel, for one thing, and they
can be redundant. Their main advantage is
that they reflect the information structures
and relationships that people actually use,
instead of the ones that were planned for
them in advance. In addition to building
folksonomies, tags provide a way to keep
track of the platforms visited by knowledge
workers. Imagine a tool like del.icio.us
deployed within an enterprise: employees
could use it to keep track of useful intranet
and Internet pages they’ve consulted, and
to assign tags to these pages as reminders of
content. They also could see which other
employees are using the same tags, and
what sites they’ve visited. As a result, pat-
terns and processes in knowledge work
would become more visible.
Extensions. Moderately ‘smart’ com-
puters take tagging one step further by
automating some of the work of categoriza-
tion and pattern matching. They use
algorithms to say to users, “If you liked
that, then by extension you’ll like this.”
Amazon’s recommendations were an
early example of the use of extensions on
the Web.To see another example, download
the browser toolbar available from stum-
bleupon.com. With it, users simply
select a topic they’re interested in, then
click the ‘stumble’ button.They’re taken to
a Web site on that topic. If they like it, they
click a ‘thumbs-up’ button on the toolbar; if
not, they click a ‘thumbsdown’ button.
They then ‘stumble’ on to another site.
Over time, StumbleUpon matches prefer-
ences to send users only to sites they’ll like.
It’s surprising how quickly, and how well,
this simple system works. It reasons by
extension, and hones in on user tastes with
great speed.
Signals. Even with powerful tools to
search and categorize platform content, a
user can easily feel overwhelmed. New
content is added so often that it can become
a full-time job just to check for updates on
all sites of interest.The final element of the
SLATES infrastructure is technology to sig-
nal users when new content of interest
appears. Signals can come as e-mail alerts,
but these contribute to overloaded inboxes
and may be treated like spam.A novel tech-
nology called RSS (which usually refers to
‘really simple syndication’) provides
another solution. Authors such as bloggers
use RSS to generate a short notice each
time they add new content – usually con-
sisting of a headline that is also a link back
to the full content. Software for users
called ‘aggregators’ periodically queries
sites of interest for new notices, downloads
them, puts them in order and displays their
headlines. With RSS, users no longer have
to surf constantly to check for changes;
they instead simply consult their aggrega-
tors, click on headlines of interest and are
taken to the new content.
Enterprise 2.0 Ground Rules
As technologists build Enterprise 2.0 tech-
nologies that incorporate the SLATES
components, they seem to be following
two intelligent ground rules. First, they’re
making sure their offerings are easy to use.
With current tools, authoring, linking and
tagging can all be done with nothing more
than a Web browser, a few clicks, and some
typing. No HTML skills are required. It
seems reasonable to assume that anyone
who can compose e-mail and search the Web
can use all of the technologies described in
this article with little or no training.
Second, the technologists of Enter-
prise 2.0 are trying hard not to impose on
users any preconceived notions about how
work should proceed or how output should
be categorized or structured. Instead,
they’re building tools that let these aspects
of knowledge work emerge.
This is a profound shift. Most current
platforms, such as knowledge management
systems, information portals, intranets and
workflow applications, are highly struc-
tured from the start, and users have little
opportunity to influence the structure.
Wiki inventor Cunningham highlights an
important shortcoming of this approach:
“For questions like,‘What’s going on in the
project?’, we could design a database. But
whatever fields we put in the database
would turn out to be what’s not important
about what’s going on in the project,
because what’s important about the project
is the stuff you don’t anticipate.”
Wikis and blogs start as blank pages,
and folksonomies begin when users start
entering tags. After using them for a while,
the degree of structure and lack of flexibil-
ity in other platforms can begin to seem
strange. It also starts to seem odd that com-
panies and technologists ever proposed
highly structured KM systems to capture
highly unstructured knowledge work.
Their different approaches to struc-
ture, however, do not mean that
Enterprise 2.0 technologies are incompat-
ible with older ones.They can be added to
the channels and platforms already in
place. In addition, existing channels and
platforms can be enhanced by adding dis-
crete SLATES components. Many e-mail
clients, for example, now have the ability
to receive RSS signals. In other words,
technologies that let users build structure
over time can coexist peacefully with
those that define it up front.
The technologies discussed here have
the potential to let an intranet become
what the Internet already is: an online plat-
form with a constantly changing structure
built by distributed, autonomous and
largely self-interested peers. On this plat-
form, authoring creates content; links and
tags knit it together; and search, exten-
sions, tags and signals make emergent
structures and patterns in the content visi-
ble, and help people stay on top of it all.
Enterprise 2.0 technologies are sub-
ject to network effects; as more people
engage in authoring, linking and tagging,
the emergent structure becomes increas-
ingly fine-grained. This suggests an
intriguing possibility: it has historically
been the case that as organizations grow, it
becomes more and more difficult for peo-
ple within them to find a particular
information resource – a person, a fact, a
piece of knowledge or expertise. Enter-
prise 2.0 technologies, however, can be a
force in the opposite direction. They can
make large organizations in some ways
more searchable, analyzable and navigable
than smaller ones, and make it easier for
people to find precisely what they’re look-
ing for. The new technologies certainly
don’t overcome all the dysfunctions of
corporate scale, but they might be able to
address some of them.
Challenges for Managers
Even if managers and technologists do
everything correctly when initiating
Enterprise 2.0 technologies within their
companies, two potential threats remain.
The first is that busy knowledge workers
won’t use the new technologies, despite
training and prodding. Most people who
use the Internet today aren’t bloggers,
wikipedians or taggers. They don’t help
produce the platform – they just use it.Will
the situation be any different on company
intranets? It’s simply too soon to tell.
The second threat is that knowledge
workers might use Enterprise 2.0 tech-
nologies exactly as intended, but this may
lead to unintended outcomes. Intranets
today reflect one viewpoint – that of man-
agement – and are not platforms for dissent
or debate. After blogs, wikis and other
voice-giving technologies appear, this will
change. However, the question remains:
will the change be welcomed?
Management scholar Chris Argyris
has noted a distinction between people’s
espoused theories and their theories-in-use. An
espoused theory, for example, might be,
“I’m sincerely interested in learning,
improvement and empowerment. I want to
give the people in my organization all the
tools they need to interact.” Argyris found,
though, that most people’s theory-in-use is
driven by (among other things) the need to
remain in unilateral control and the desire
to suppress negative feelings.When the two
theories come into conflict, the theory-in-
use usually wins, which helps explain why
so many corporate empowerment initia-
tives fail, or at least disappoint.
It’s easy to see how these insights apply
to Enterprise 2.0 technologies.These tools
reduce management’s ability to exert uni-
lateral control and will be used to express
some level of negativity. Do a company’s
leaders really want this to happen? Will
they be able to resist the temptation to
silence dissent? What will happen, for
example, the first time someone points out
in their blog that an important project is
behind schedule or that corners are being
cut? What will happen if the content on the
new platform is uncomfortable for power-
ful people within a company?
Because no one’s in charge of the Inter-
net, no one can shut it down when it veers in
directions they find uncomfortable. But a
company’s Enterprise 2.0 technologies can be
shut down. They also can be influenced by
people in authority – bosses can exert all
kinds of subtle and not-so-subtle leverage
over online content. This means that leaders
have to play a delicate role, and one that
changes over time, if they want Enterprise 2.0
technologies to succeed. They have to at first
encourage and stimulate use of the new tools,
and then refrain from intervening too often or
with too heavy a hand. If they fail at either of
these roles – if they’re too light at first or too
heavy later on – their company is liable to
wind up with only a few online newsletters
and whiteboards, used for prosaic purposes.
Enterprise 2.0 technologies have the
potential to usher in a new era by making
both the practices of knowledge work and its
outputs more visible. Because of the chal-
lenges these technologies bring with them,
there will be significant differences in com-
panies’ abilities to exploit them. Because of
the opportunities the technologies bring,
these differences will matter a great deal.
Andrew McAfee is an associate professor with the Technology
and Operations Management Unit at Harvard Business School.
This article originally appeared in the MIT Sloan Management
Review. Read his blog at http://blog.hbs.edu/faculty/amcafee
Rotman Magazine Winter 2007 • 63
BANK REFORM
IN CHINA:
What it means
for the world by Donald Brean

“Let the dragon sleep,” Napoleon famously remarked

on China in 1803, “for when she awakes, she will shake
the world.” By all accounts, China is now wide awake,
and economic tremors are being felt around the globe.

A combination of sheer size and spectacular
growth has China on course to become the
world’s largest economy by 2020, and it is
already the world’s second-largest recipient
of foreign direct investment, behind the
U.S. With foreign exchange reserves
approaching one trillion dollars, China’s
ability and willingness to accumulate a
‘paper fortune’ has allowed industrial
nations, including Canada, to enjoy non-
inflationary consumption. U.S. interest
rates and interest rates related to U.S.
rates, such as Canada’s, have been lower
than they otherwise would have been over
the past several years because China is a
major provider of credit. It is a curiosity of
international finance that a country with a
per capita GDP of $1,500 lends a trillion
dollars to the rest of the world.
For most of the modern reform period
that now approaches 30 years, China has
moved steadily and successfully toward
functioning markets – markets for agricul-
ture, for goods for domestic consumption
and for export, for labour, and for capital.
However, this deliberate move to markets
has not been accompanied by similarly
serious reform of its banking system,
which has continued as a state-run plan-
financing mechanism with a bias toward
state-owned enterprise.
In this article, I look at what continued
weakness and inefficiency in banking could
mean for the sustainability of China’s eco-
nomic modernization.
An Unbalanced Financial System
The most striking feature of China’s financial
system is the sheer dominance of banking.The
problem is not that China’s banking is precar-
ious, but rather that it is inefficient and
incapable of doing all that could reasonably be
expected of banking in this emerging indus-
trial society. It will take some time to rid the
system of fundamental inefficiencies, but the
reform process is well underway. Meanwhile,
however, China suffers capital misallocation,
poor risk management, and weak linkages in
macro-monetary mechanisms. Addressing the
shortcomings could create enormous value
for its economy: the McKinsey Global
Institute estimates that reforming China’s
financial system could boost GDP by more
than $320 billion annually.
Figure One illustrates this point by
means of comparison of the proportional
shares of four major components in the
financial system in China and in 12 other
countries. Based on 2005 statistics, 72 per
cent of finance in China – industrial plus
consumer finance – is bank lending. No
other country is even close to this figure.

Rotman Magazine Winter 2007 • 65

 Figure Two highlights the fact that the
Figure One: Bank Sector Dominates China’s Financial System banking sector in China is large relative to
(Financial stock components, percent 2005)
the size of its economy, disproportionately
so compared to other countries. Bank assets
15 19
22 25 are 160 per cent the size of China’s GDP. In
30 27
33 35 34
8 40 Canada, for example, the corresponding
12 43
5 7 55
4 9 60 figure is 75 per cent.
1
11 There are two primary reasons for the
21 29
21 34
35
overwhelming size of China’s banking sector.
11 30 13 19 35 First is the huge flow of savings from individ-
11 8 11 11
14 uals that end up as bank deposits; the other is
1
72 KEY the even-larger volume of corporate deposits.
11 12
46 45 43 Equity In the absence of a developed system of collat-
37 36 35 33 33 Corporate Debt
32 30 eral, Chinese corporations are often obliged
21 19 Government Debt
to keep cash on deposit as partial collateral for
Bank Lending
loans, which in turn raises the deposits-to-
na

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loans ratio and reduces the efficiency of bank

re

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ai

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th

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on

lending for industrial investment.

Ph

Si
So

Source: McKinsey Global Institute, Global Financial Stock Database, 2006
Since banking is proportionally big in China,
the other components are accordingly small.
In China's overall financial picture, gov-
ernment debt is proportionately much smaller
than in most other countries. Government
debt in advanced financial systems is useful as
a source of liquidity and as the generator of
“reference” interest rates used to price bonds.
Non-bank corporate debt (bonds) in
China is also relatively small. China’s bond
market, from investment bankers to bond
rating agencies and trading institutions, is
substantially undeveloped. Likewise, the 15
per cent share in the form of equity is small
by international standards.
Figure Two: Bank System Size, Select Countries
(Total bank assets in proportion to GDP, 2005)
160
145
120 119
107
97
80 78 77 75
na
The United States represents the other
end of the spectrum, although not neces-
sarily a financial structure that China
aspires to. The U.S., of course, typifies a
financial system that has depth, liquidity,
effective regulation and technical sophisti-
cation.Whereas the U.S. economy is about
50 per cent larger than China’s (12 trillion
dollars versus eight trillion), total finance
in the U.S. is ten times total finance in
China. Meanwhile bank lending in America
is only 19 per cent of finance. Equity
finance plays a substantially larger role in
the US as it does in most English-speaking
nations.
75
68
55
51 48 47
35 32
Some corporations also have excess capi-
tal that they keep in bank deposits because they
cannot find attractive investment opportuni-
ties, and because the alternative – paying out
profits to shareholders – is not an established
practice, especially as many corporations are
state-owned. In addition, some companies hold
high levels of bank deposits because of lack of
commercial paper and other debt securities to
fund their liquidity needs, and because pay-
ment system inefficiencies prevent large
companies with many branches from optimiz-
ing cash management nationally.
The most significant implication of the
dominance of the banking sector in China’s
financial structure is that other modes of
finance are undeveloped, including its bond
market and stock or equities market.The eco-
nomic attraction of securities markets is that
they are more flexible and more financially
innovative than bank lending.To the extent that
the function of finance is to facilitate the flow
of funds from savers to investors while allocat-
ing risk and putting a ‘price’ on risk across the
full spectrum, liquid securities markets have
distinct operational advantages over banks.
However, disintermediation – from
banking to securities markets – is a complex
process of institution-building along with the
development of laws and regulation. It
would seem that in financial-sector reform,
China, for now, is directing most effort to
bank reform, with the development of secu-

M an

ng ia

T UK

Re d

uth lic

a
C US

ilip a

s
nd

M le
ico

il

rities markets playing a lesser role.

ne

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Unfortunately, such priorities have negative

uth

Ph
Si

ch

So
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implications for incentives to develop the

C

Source: McKinsey Global Institute, Global Financial Stock Database, 2006

sorts of financial instruments and markets

66 • Rotman Magazine Winter 2007

that are central to risk management, includ-
ing futures and forwards, options and
derivatives as well securitization and other
forms of financial engineering. This in turn
has implications for the cost of capital for
industry and hence for economic growth.
The fact that China’s financial structure
is currently dominated by banking has impor-
tant implications for whether its financial
system is likely to continue as such, and even-
tually emerge into a bank-centric model of
industrial finance of the sort typically associ-
ated with Germany or Japan. Bank-centric
Bank-centric finance contrasts with the
so-called ‘Anglo-American model,’ with
its foundation in securities markets and a
lesser role for banks.
finance is in contrast to the so-called ‘Anglo-
American’ model, with its foundation in
securities markets and a lesser role for banks.
China seems to be flirting with an approach
that is closer to the bank-centric system.
Goldsmith’s Law
A disturbing recurrence in economic devel-
opment dubbed ‘Goldsmith’s Law’ relates
financial fragility and economic instability.
A Backgrounder on Banking in China
Prior to opening up to the rest of the world,
China’s banking system consisted of only
one financial institution: the People’s
Bank of China (PBC). What eventually
came to be called the ‘first stage’ of bank
reform took root in the early 1980s with the
creation of a two-tier system. The PBC
became the central bank; the Industrial
and Commercial Bank of China
(ICBC) was carved out of the PBC and,
together with the China Construction
Bank (CCB), Bank of China (BOC) and
the Agricultural Bank of China (ABC),
the four so-called specialized banks became
the second tier of the system.The ‘big four’
banks were 100 per cent state-owned as, for
all practical purposes, they are to this day. In
Goldsmith’s unsettling finding is that, in
most cases, economic transition from heavy-
handed statism to a decentralized market
economy and a burst of extraordinary
growth sooner or later comes crashing down
in a financial crisis. Weak financial institu-
tions, inexperienced central banking,
inefficient intermediation, volatility in mon-
etary aggregates, lack of confidence, and the
spectre of capital flight combine to under-
mine and destroy hard-won economic gains.
Inflation, soaring interest rates, mounting
bad loans, internal runs on banks and exter-
nal runs on the currency that torpedo the
exchange rate – these make up a destructive
turbulence that is the dark side of economic
growth built on a shaky financial structure.
China may yet defy Goldsmith’s Law.
The boom-bust cycles have diminished
amplitude. Inflation is low. The currency is
strong. Exports are booming.Tax revenue is
rising. Meanwhile, as far as banking itself is
concerned, albeit relatively late in the pro-
the early stage of reform the specialized
banks were allowed very little scope to
extend commercial or consumer credit.
The second stage in developing a mar-
ket-oriented banking system in China
began in 1994, when the big-four banks
were relieved of their role in ‘policy lend-
ing’ that characterized the banking regime
in the era of comprehensive central plan-
ning. That function was assigned to three
‘policy banks’ under the direct jurisdiction
of the State Council:
1. Agricultural Development Bank
of China (ADBC) took over the policy
lending role of the ABC. ADBC provides
loans for the purchase, transport, market-
ing and reserves of selected agricultural
gram, China is engaged in a broad campaign
of financial institution-building.
A few uniquely-Chinese factors may
explain economic gains achieved without
sophisticated finance. First is the ‘population
dividend’ that China seems to be enjoying.
People born in the 1950s and 1960s are the
backbone of the Chinese economy: it has an
exceptionally high ratio of young working
people to retirees. The financial implication
is an extraordinarily-high national rate of
‘deposit’ or savings that flow directly into
the banking system: China’s savings rate is
close to 45 per cent of income.
Second, the opening up of China to
international trade and foreign investment
has attracted huge inflows of foreign direct
investment that augment internally gener-
ated investment. On average over recent
years 60 per cent of foreign direct invest-
ment from OECD nations to non-OECD
nations flows to China. Multinational corpo-
rations generally have well-honed financial
relations with the global banking system and
hence the production efficiency of foreign
investment in China is unlikely to be com-
promised by financial weakness in China.
Finally, China’s monetary policy seems
to shrewdly compensate for structural prob-
lems in finance. The high savings ratio
mentioned above belies a disappointingly low
rate of transference of savings to investment
products (grain, oil, cotton, meat, sugar,
tobacco and wool) and loans for enterprises
involved in processing. It takes deposits
from publicly-owned entities and manages
their international transactions.
2. China Development Bank (CDB)
took over the policy lending role of the
CCB and, to a lesser extent, the ICBC
(inasmuch as the latter was never a major
state-directed lender).The China Develop-
ment Bank is responsible for financing
public-sector investment in support of
national economic development and strate-
gic structural readjustment.
3. Export-Import Bank of China
(EXIM) took over the policy-lending role
from the BOC, especially the trade financing
Continued on page 68
Rotman Magazine Winter 2007 • 67
indicating that the banking system in China is
woefully inept in its intermediation function.
At the same time, China’s money “velocity” –
a standard measure of the efficiency of
money circulation, for instance from savings
to investment – is exceptionally low. If veloc-
ity is low and pools of cash are stagnating, the
compensating monetary policy is to inject
more cash into the system. In fact in China
“M2” (circulating cash plus bank demand
deposits) is 150 percent of GDP which is
high by international standards (in the US
M2 is 70 percent of GDP).
Is a debilitating financial crisis in China
a serious risk? The answer is that China has
both the policy insight and the wherewithal
to act early and forcefully to any threat of
financial instability. In global finance, a tril-
lion dollars of foreign exchange buys a lot
of strength and credibility.
Implications of Bank Reform
Continued balanced growth for China will
require an increasingly-sound financial sys-
tem. The most important consequences of
its forthcoming banking and financial sec-
tor reform are:
1. Improved intermediation between sav-
ings and investment – the asset allocation
issue. Indeed, the fundamental function of
finance and financial institutions is to chan-
nel savings to their most efficient use.
2. Enhanced effectiveness of monetary
policy that operates through interest rates.
This crucial macroeconomic dimension of
Continued from page 67
function, inter-bank transactions. EXIM
provides guarantees and concessional loans
for firms involved in international trade
and investment.
China’s policy banks fund themselves
primarily through bond issues. They accept
few deposits, and those that they do accept
are exclusively from state-owned institu-
tions.The combined assets of the three policy
banks have grown rapidly, and now comprise
about 10 per cent of total banking lending,
which bears evidence of the continued pres-
ence of state-directed commercial finance.
In 1995, the Commercial Bank Law was
promulgated, recognizing the status of state-
owned specialized banks as commercial banks
operating according to market-based bank-
ing principles of capital-adequacy, prudence,
68 • Rotman Magazine Winter 2007
financial sector reform will enable China to
rely more on monetary policy, and with
greater effect, for stabilization.
3. Increased capacity to manage the internal-
external balance involving trade surpluses and
capital flows. While these are appropriately a
later-stage concerns in comprehensive eco-
nomic reform, there is increasing urgency for
China to relax its constraints on the Capital
Account and the currency. Efficiently func-
tioning financial institutions are crucial.
4. Relief of pressure on financial institutions
to carry out economic functions that are more
appropriately done through the fiscal system.
Financial institutions in China – especially
banks – face almost confiscatory taxation.
Especially in the intermediate stages of
reform, banks were under substantial pres-
sure to support inefficient state-owned
enterprise, since dismantling them would
have caused social pain and dislocation.
Finance experts want to believe that a prop-
erly-functioning financial system is crucial to
balanced, market-driven growth. However,
we know that for several years now, China
has been able to generate substantial eco-
nomic growth despite its under-developed (if
not downright dysfunctional) system. The
reasons for this are fascinating, but they are
neither permanent not recurring: for exam-
ple, the ‘demographic dividend’, with its low
ratio of workers-to-retirees; China’s extraor-
dinarily high rate of savings; shrewd
monetary policy that compensated for ineffi-
profitability, risk recognition, liquidity and
responsibility for own profit and loss.
Despite the law, government intervention –
such as tight restrictions on banks’ deposit
and lending rates of interest – continued to
constrain the fledgling commercial banks’
discretion with regard to business decisions.
While ostensibly pushing China’s
banking system to be market-driven and
market-reliant, the second stage of the
reform process continued to be bureaucrat-
ically managed from the top. At this point,
a proper banking regulatory agency had not
been established. In 1997, the Central
Committee of the Communist Party
and the State Council held the first
National Financial Operations Conference
and introduced several important measures
cient intermediation; and massive inflows of
foreign direct investment.
Bank reform presents a unique and
crucial challenge within China’s ambitious
economic transition from central planning
to a market economy. Banking is much
more institutionally dependent than any
comparable facet of reform. In this respect
we have seen that China has been cautious
and flexible in the process of developing
laws, regulations, interventions and in set-
ting the speed of implementation.
The international financial community is
fond of citing the collapse of communism as
a significant turning point in the evolution of
today’s global economy. Perhaps, but that
seriously confuses the China case, as China is
still very much under one-party rule. A mar-
ket system is not a political system.
Nevertheless, the implications of rising living
standards within an increasingly market-ori-
ented economy are overwhelmingly
favourable to the world’s long-term interest
in the development of a more pluralistic
political system in China. As was true in the
case of Taiwan from the 1950s onward, a rap-
idly modernizing economy is likely to
generate growing pressure for political
change, away for one-part authoritarian rule.
The world will watch with great
attention.
Donald Brean is a professor of Finance and Business Eco-
nomics at the Rotman School.This is an excerpt of a paper
prepared for the Asia Pacific Foundation. For a copy of the
complete paper, e-mail christen@rotman.utoronto.ca
to accelerate the reforms. First, the govern-
ment issued RMB 270 billion (US$33
billion) in special government bonds to
recapitalize the big-four state-owned com-
mercial banks. Second, new regulations
abolished the credit quota policy (by which
the commercial banks had quotas imposed
on them concerning to whom and how
much they could lend) and, instead, allowed
banks to adopt asset-liability management.
Finally, in a dramatic and significant step
that marks the transition from the second to
the third stage of banking reform, the central
government transferred RMB 1.4 trillion
(US$ 170 billion) in non-performing loans
from the books of the state-owned commer-
cial banks to new entities dubbed ‘asset
management companies’.
Faculty Focus: Keith Ambachtsheer
Why We Need a
Pension Revolution
There is now a broad consensus that the workplace pension systems in most of the
developed world are sick, and that they will require strong medicine if they are to
generate adequate pensions for workers in the years ahead.
Leading spokespersons of the business,
labour, government, and professional com-
munities in North America, Europe, and
the Pacific Rim have all been voicing simi-
lar concerns about workplace pension
coverage, adequacy, and security in their
respective countries.The proportion of the
workforce covered by pension plans is too
low; many pension arrangements will not
produce adequate pensions; corporate
employers are closing their traditional
defined benefit (DB) plans; and many of the
DB plans that remain now have insufficient
assets to cover their liabilities.
The Trouble with DB Plans
Just as there is a consensus that workplace
pension systems around the world are sick,
so are there strong views on what the cure
is. Some commentators argue the answer
lies in reversing the decline in the use of DB
plans, where pensions are based on a specific
pension crediting formula and years of serv-
ice. DB plan enthusiasts point out that
widespread adoption of this form of pension
arrangement would cure the workplace pen-
sion systems’ coverage, adequacy, and
security ills in one fell swoop.While I agree
with the consensus that the globe’s work-
place pension systems are seriously ill, I
disagree that the cure lies in placing a DB
chicken in every worker’s pension pot.Why?
Because workplace-based DB plans suffer
from a fatal flaw.These plans socialize risk-
bearing without clarity about how and by
whom the very material risks embedded in
DB arrangements are borne. Game-theo-
rist John Nash taught us decades ago that
such fuzzy ‘contracts’ will eventually dete-
riorate into adversarial win-lose games.
So we should not be surprised that
when financial surpluses appear on DB
plan balance sheets, there are fights about
who ‘owns’ them. In corporate contexts,
the surpluses of the 1990s led to contri-
bution holidays decided unilaterally by
employers, and to surplus ownership dis-
putes between plan members and
corporations, with regulators and even
the courts having to step in to arbitrate
these tiffs. When surpluses turn to
deficits in times of financial distress, plan
members duke it out with corporate
bond and shareholders about how the
financial pain should be allocated. The
recent United Airlines saga offered a
classic example of this kind of financial
fist fight. Since operating under Chapter
Having benefited nicely from the earlier
surpluses, today’s pensioners now smartly
load the current financial shortfall on the
backs of younger and future teachers
and taxpayers.
11 since late 2002, there have been a
number of pensions-related law suits and
legal actions involving the UAL unions,
the corporation and its management, the
Pension Benefits Guaranty Corpora-
tion (PBGC), and the U.S. Department
of Labour.
The adversarial ‘win-lose’ element
embedded in DB plan architecture gener-
ally surfaces more subtly in public sector
contexts, with current generations of tax-
payers and public servants quietly
skimming off surpluses at the expense of
future generations. A good example was
the easy decision by the teachers’ federa-
tion and the provincial government of
Ontario to ‘spend’ the teachers’ pension
plan surpluses of the 1990s on better pen-
sions and lower contributions. At the end
of 2005, despite relatively good invest-
ment results, the plan reported a material
$32B balance sheet deficit. So what to do
now? Again, game theory predicts the out-
come: raise the contribution rate from 16
per cent of pay to 22 per cent of pay,
while leaving the final earnings-based,
fully-indexed pension formula in tact. So,
having benefited nicely from the earlier
surpluses, today’s pensioners and older
workers now smartly load the current
financial shortfall on the backs of younger
and future teachers and taxpayers.
Beneath all these game theory-based
actions lies the common thread that col-
lective risk-bearing arrangements such as
DB plans do not eliminate risk. They
merely offer opportunities to shift it from
the strong to the weak.
Rotman Magazine Winter 2007 • 69
DC Plans Are Not the Answer Either
If not DB chickens, what should we stuff in
the pension pots of workers around the
world? There are strongly-held views that
defined contribution (DC) plans are the
answer. Here employers and workers make
contributions into employee pension accu-
mulation accounts, with employees
typically allocating contributions among a
dozen or even more investment options,
and withdrawing the accumulated lump
sum upon retirement. It is certainly true
that DC arrangements eliminate most of
the DB plan ambiguity about risk-bearing
and asset ownership.
However, research findings indicate
that the typical DC plan has three serious
flaws of its own. First, behavioural finance
research confirms that most people are hes-
itant, inconsistent, even irrational planners
and decision-makers regarding their own
financial future. Second, informational
asymmetry and misaligned interests vis à vis
the global for-profit financial services
industry drive a material wedge between
workers and the retirement money they do
accumulate. The result is that many work-
ers pay too much for retirement-related
financial services in relation to their true
economic value. These excessive fees paid
over a working lifetime are another impor-
tant factor why so many workers with DC
plans are under-achieving their pension
goals. The third DC plan flaw is that these
arrangements leave plan members bearing
the full burden of longevity risk. Surely we
should not expose the many millions of
retirees around the world to the material
risk of outliving their money.
TOPS: The Optimal Pension System
So if broad workforce coverage with either
traditional DB or DC plans is not the best
cure for the world’s workplace pension sys-
tem ills, what is? Well, we know that on the
one hand, any lasting cure must avoid the
collective risk-bearing traps that eventually
turn traditional DB plans into ‘Musical
Chairs’ risk-shifting games, or in extreme
cases, multi-stakeholder financial fist fights.
On the other hand, the cure must also effec-
tively deal with the human foibles, agency,
and longevity risk baggage attached to tradi-
tional DC arrangements. Let’s call the lasting
cure TOPS:The Optimal Pension System.
70 • Rotman Magazine Winter 2007
TOPS addresses the human foibles
problems through automatically enrolling
workers into pension plans, employing
‘auto-pilot’ mechanisms to dynamically
adjust individual contribution rates over
time, tying the optimal investment policy
for individual participants to their age, and
possibly even suggesting deferment of
retiring if necessary, all with the goal of
delivering a target pension within reason-
able bounds. The point of the ‘auto-pilot’
mechanisms is that these adjustments to
contribution rates and investment policies
are made automatically over time, without
requiring any intervention by TOPS partic-
Many workers pay too much for retire-
ment-related financial services in relation
to their true economic value.
ipants unless they specifically choose to
intervene. Similarly, TOPS deals with
longevity risk by including the purchase of
deferred life-annuities over time as part of
the ‘auto-pilot’ investment policy design.
As the annuity portfolio is priced and man-
aged in accordance with standard insurance
principles, there will be no fist fights over
the ownership of any balance sheet sur-
pluses or deficits. Measured in life-time
consumption utility/welfare terms, TOPS-
type pension arrangements not only
outscore traditional DC arrangements, but
their traditional DB counterparts as well.
Arms-Length, Expert Pension Co-ops
Saying is one thing, doing another. To
improve workplace pension systems
around the globe, optimal pension
arrangements must not only be designed,
but also effectively implemented. To
address the already-noted agency and
informational asymmetry issues embedded
in many current pension delivery arrange-
ments, TOPS systems must be run by
arms-length, expert pension co-ops. Only
this type of delivery arrangement has a rea-
sonable chance to overcome the inherent
conflicts and too-high costs many pension
plan sponsors and the for-profit financial
services industry bring to the table. This
arms-length, expert pension co-op con-
cept was a critical element of Peter
Drucker’s vision of the ideal workplace
pension system set out in his 1976 book
The Unseen Revolution: How Pension Fund
Socialism Came To America. Drucker astutely
recognized that if pension funds were mere
captives of their plan sponsor or of for-
profit financial intermediaries, they were
unlikely to play the critically important
role in launching and sustaining the work-
place pension revolution he envisioned.
Instead of being captives, pension delivery
institutions needed to be set up with the
sole mandate to create value for plan par-
ticipants, and so attain the necessary
‘legitimacy’ to be successful.
Achieving this mandate has profound
organizational design implications. Scale is
one critical element. Without significant
scale, pension organizations can neither
achieve the economies required to operate
at low unit costs, nor afford to hire the
expertise required to run the pension
‘business’ based on sound governance
principles and practices. A key success fac-
tor for pension funds is to manage from
the inside out, rather than being managed
by external agents from the outside in for
their own purposes.
An important implication of this ‘man-
age from the inside out’ imperative is for
expert pension co-ops to operate with
investment beliefs that are relevant,
research-based and responsive to new
information and insights. Based on
observed behaviour, the investment beliefs
of most of the globe’s pension funds still
cannot pass this important test. Instead, the
beliefs of many funds continue to be based
on historical rules of thumb, anecdotes and
conformity to the conventional wisdom of
the day. Not surprisingly, such second-hand
beliefs suit the financial services industry
far better than it does pension fund benefi-
ciaries. Expert pension co-ops are
revolutionaries in the sense that they have
thrown off the chains of conventional wis-
dom. They have adopted a culture that
permits them to develop their own invest-
ment and skill beliefs from first principles,
and modify these beliefs over time with the
best and newest available research results.
TOPS Tipping Points
If TOPS, with its auto-pilot and expert co-
op features, is such a great idea, why don’t
TOPS-type pension arrangements exist
already? But they do! A good example is
TIAA-CREF, the $350B retirement sys-
tem for over three million current and
retired U.S. college education and research
employees, and in which Peter Drucker
himself was an enthusiastic participant for
many years. Through worklife-long
employer-employee contributions as high
as 18 per cent of pay, millions of TIAA-
CREF participants have converted
sufficient pension capital into life annuities
to live comfortably the rest of their lives,
decade after decade. Founded through an
Andrew Carnegie grant in 1918, it may
well be the most successful workplace pen-
sion plan of all time. By mandating that all
workers participate in a workplace pension
plan, the Dutch and the Australians have
become highly motivated to build effective
TOPS-type pension arrangements based on
industry and regional affiliations, and they
are becoming increasingly successful at it.
Having said this, TOPS-type pension
arrangements are still more the exception
than the rule around the world.Why?
Public policy neglect is one reason.
Dutch and the Australian politicians have
been astute to exploit the benefits of manda-
tory participation in fully-funded workplace
pension plans. Because of 100 per cent
workplace coverage and reasonable pension
adequacy, there is no longer a need to
finance and maintain large national
unfunded Pillar #1 pay-go social safety nets.
Also, because everyone has to play,
much greater national attention is focused
on such issues as optimal pension plan
design and implementation. So TOPS-type
solutions naturally emerge, stabilizing life-
time consumption patterns across the
economy, while at the same time creating
a new class of independent, wealth-creat-
ing, long-horizon investors. North
Americans have hardly begun to talk about
the pros and cons of mandatory, or at least
broadly-based ‘auto-enrolment’ workplace
pension strategies. Which brings me to
another reason for current ‘too little
TOPS’ condition in most of the developed
world: a systemic failure to apply integra-
tive design thinking to solving pension
problems. It has been sad experience to
watch some of the finest minds in global
pensiondom earnestly attempt to ‘fix’ DB
plans so that these arrangements will
become not only manageable and sustain-
able, but wildly popular as well. It is hard
to imagine a more futile exercise. Simi-
larly, it has been frustrating listening to,
and reading pension debates framed in an
‘either DB or DC’ context. The ‘neither
DB nor DC’ answer to the globe’s pension
ills seems to be a difficult concept for most
pension people to grasp.
The beliefs of many funds continue to
be based on historical rules of thumb,
anecdotes and conformity to the conven-
tional wisdom of the day.
Having said that, the British have
shown some recent signs of life. A commis-
sion was formed two years ago by HM
Treasury to assess the status of workplace
pensions in the UK, and to recommend
measures to improve the system. The
Turner Pensions Commission tabled its
final report and recommendations in
November 2005. Its most important rec-
ommendation by far was to auto-enroll
(with an ‘opt-out’ clause) the entire UK
workforce not already covered by a work-
place pension plan, in a National Pension
Savings Scheme (NPSS) with a minimum
eight per cent contribution rate.The Com-
mission estimates that lifetime NPSS
participation, plus the basic Pillar #1 state
pension, would provide the median British
worker with a 50 per cent income replace-
ment rate upon retirement. The NPSS
would adopt many of the TOPS principles
set out above. For example, the Commis-
sion recommends auto-pilot mechanisms
to implement a life-cycle investment policy
and to convert retirement savings into life
annuities. It also recommends that the
NPSS be implemented by one or more
arms-length, expert pension co-ops. A sub-
sequent White Paper issued by HM Trea-
sury in May 2006 suggests that the key
Turner recommendations are on their way
to becoming government policy.
A Final Note of Optimism
In conclusion, a final note of optimism.The
winning conditions for a successful global
workplace pension revolution have never
been more favourable than today.There is a
growing consensus across the globe that
something must be done about pensions.
The Dutch and the Australians have already
demonstrated the societal value of broad-
based workplace pension plan participation.
The British are seriously considering it.
TOPS, the optimal pension system, has
already been invented and successfully
road-tested. Across the globe, it could be
adopted at the national level, at regional
levels, at an industry-by-industry level, or
at the individual employer level. What we
need now is leadership that will make Peter
Drucker’s 30-year old vision of a workplace
pension revolution a reality at last. We
could leave him no finer legacy.
Keith Ambachtsheer is director of the Rotman International
Centre for Pension Management and an adjunct professor of
Finance at the Rotman School. This article is adapted from
the lead-chapter of his new book Pension Revolution: A Solu-
tion to the Pensions Crisis (John Wiley & Sons, 2007).
Rotman Magazine Winter 2007 • 71
Faculty Focus: Eric Kirzner
The Future for Investors
Professor Eric Kirzner talks about the balanced fund of the future,
and why growth doesn’t guarantee returns.
Karen Christensen: “The balanced fund
of the future will have more high-yield
products and more hedge funds.” Agree
or disagree?
Eric Kirzner: I agree. It may also have more
private equity, and some real estate funds.
The basic paradigm of treasury bills, stocks
and bonds comprising a portfolio is changing.
We learned something from the 2000-2002
crash, and that is that a totally public equity-
centric portfolio may not be the best thing,
and having some assets in your portfolio that
have little or no correlation with basic stocks
and bonds is a good thing. Hedge funds don’t
yet exist in a format for retail investors, and
the whole notion of ‘what a hedge fund is’ is
still evolving. There are lots of things out
there that call themselves hedge funds that
are not hedge funds. I would like to see hedge
funds become widely available to retail
investors, and I hope that develops.Typically,
demand does create its own supply, so we’ll
see if that happens. As for high-yield prod-
ucts, we already see it – there are a ton of
income trusts out there. But investors have to
understand the risks related to these prod-
ucts: there’s no free lunch. You don’t
suddenly shift your portfolio from a safe
three-or-four per cent return in government
bonds to a nine or 10 per cent-return income
trust and call it a day. These products have
much higher risk than bonds. But overall,
we’re starting to see new, broader versions of
diversification at the pension plan and institu-
tional-investment level, and that this is slowly
seeping over – as it should – into the retail
investor level.
KC: Oil prices are on many people’s
minds. What’s your take on this sector’s
72 • Rotman Magazine Winter 2007
impact on the overall economy in forth-
coming months?
EK: This is a very interesting investment
issue. We’ve gone through this remarkable
bull market in commodities – in particular,
in energy in Canada in the past few years –
and it’s made a lot of people a lot of money.
Unfortunately, in the last few weeks [as at
September 2006], people have lost a great
deal of money – in some cases, as much as
they’d made. The issue is that in the short
term, it’s impossible to predict which way
energy prices will go; and in the long term,
You would certainly want to have some
energy stock exposure in a well-diversi-
fied portfolio: I highly recommend it.
we’ve got some issues that are very impor-
tant in terms of developing countries and
limited supplies that really make the case for
energy quite bullish in the long run.You cer-
tainly would want to have some energy stock
exposure in a well-diversified portfolio, and
I highly recommend it. But over-concentra-
tion in any one sector is very dangerous, as
the past few weeks have indicated. Investors
are seeing a level of volatility that some are
not prepared for, underscoring the danger
of over-concentration.
KC: To what degree should investors
embrace foreign stocks, including those
of emerging markets?
EK: I’m certainly not the first to say it, but
I’ve always argued that portfolios should be
global. When I started writing about this 25
years ago, the opportunities were much
scarcer than they are today. Nowadays, you
can invest in just about anything you want.
Emerging markets represent a suitable allo-
cation for investors, though typically for
most, it would be a pretty small percentage
– I wouldn’t expect to see more than five
per cent for a retail investor, and even that’s
a bit high.There’s no reason why it shouldn’t
be there, though. The whole idea is to cap-
ture the various cycles, not to try and guess
when something is going to move or isn’t –
to have exposure to all the cycles. I should
add that the definition of ‘emerging mar-
kets’ varies considerably: if you look at
Morgan Stanley Capital International
Index of emerging markets, they’ve got
countries like Mexico and Brazil on the list; I
wouldn’t put these in the ‘emerging’ cate-
gory – I consider them developed markets.
But overall, it’s the same old story. There is
absolutely no reason to avoid emerging mar-
kets, and there is every reason to include
them in a portfolio.
KC: In The Future for Investors, Wharton’s
Jeremy Seigel concludes that growth
does not guarantee returns. Does this
surprise you?
EK: It’s interesting.Although his frame of ref-
erence is different, in some ways, there is a
parallel with value investing. Value investors
are very skeptical about growth prospects
within companies. They pay great attention
to the quality of current earnings, and the
quality of assets, and take a healthy skepti-
cism towards growth prospects. If you’re
going to use a valuation model that includes
a significant component for future and con-
tinuing growth, in the value investing world,
you’re only able to do that if you are con-
vinced that the company has a ‘protected
franchise’.That is, that it can sustain growth
for a long period into the future via either a
‘granted franchise’ – a copyright or patent –
or an ‘inherent franchise’ – such as superior
brand recognition or brand loyalty. A classic
example is the Coke-Pepsi control of the
soft drink market. We’ve seen all sorts of
competitors over the years, but nobody’s
been able to penetrate that duopoly.That’s an
example of a ‘protected franchise’; so if you
look at growth prospects for a company like
Coke, you can easily believe in its longer-
term prospects. Some companies have
experienced super-normal growth over
short time periods; but unless it can be
shown that there are high barriers to entry to
other firms, that shouldn’t be considered as
part of the valuation equation.
KC: The upcoming mass retirement of
Baby Boomers brings with it the shifting
priorities of aging investors. What over-
all market effects do you foresee?
EK: This is a classic question, and a very
important one. On the one hand, there is the
knee-jerk reaction: ‘huge numbers of people
will suddenly start selling all their stocks at
the same time’. First of all, investors have
learned that simply cashing out of stocks at a
certain time in life isn’t the right thing to do.
If you’ve amassed a certain amount of wealth,
and you want to ensure that you’re going to
live comfortably, and not outlive your
money, or if you’re concerned about estate
planning, you won’t necessarily move out of
equities.You might lighten your equity hold-
ings over time, but you shouldn’t wake up at
age 65 and say, ‘it’s time to get out of stocks
and into bonds’. Having said that, there will be
shifting patterns. And of course, you’ve got
younger investors who are learning earlier
about the value of long-term portfolio build-
ing, so there are more and more investors
coming into the market. I’d be more con-
cerned, actually, about the housing market.
Suppose a whole bunch of Baby Boomers
reach a stage where they really can’t afford to
keep their homes; their house likely represents
a huge percentage of their asset mix. Just look
at your own situation: your principal residence
is probably worth much more than your
investment portfolio. If Baby Boomers can’t
afford to keep their high priced homes in the
future, we could very well see a major impact
on the housing market. And it could have
implications for the ability of seniors to sustain
themselves (particularly in a low interest rate
environment.) So I’m more concerned about
an environment with volatility in housing
prices, coupled with low interest rates.
There is absolutely no reason to avoid
emerging markets, and there is every
reason to include them in a portfolio.
KC: Algorithmic trading has been a
transformative development in the past
five years. Some say it will continue to
grow and change the nature of market
activity. Do you agree?
EK: There is no doubt that we are starting to
see some very sophisticated systems being
used, and some are quite useful for certain
types of institutional trading. But there’s a
negative side effect as well.Take momentum
trading, for instance. Some research indi-
cates that there can be great success with
momentum trading, while some shows quite
the opposite. I don’t have any problem with
institutional traders getting involved with
highly-sophisticated trading strategies, but
what you don’t want to see is these strate-
gies starting to dictate market movements.
Providing liquidity to the marketplace is
valuable, but patterns can start to develop if
there’s enough trading taking place, which
can have an influence on the marketplace;
and that isn’t necessarily a valuable thing. So
anything that expands a trader’s ability to do
what they do is valuable, but there can be
some significant side effects.
KC: Many investors are looking to increase
their exposure to emerging industries such
as biotech, nanotech, and ‘green’ technol-
ogy. What’s your advice for them?
EK: You certainly want to have a portfolio
that has some exposure to biotech. With all
the active research taking place, break-
throughs are being made in treating diseases
like diabetes and arthritis, and companies
that capture that are going to do very, very
well. So biotech is certainly a sector that I
would expect a sophisticated investor to
have some exposure to. As for ‘green tech-
nologies’, a few years back, I was doing
some analysis on ‘ethical investment funds’.
I found that these funds were actually doing
better than people expected, which sur-
prised me, because if you’ve got a fund with
limitations on what it can invest in, you’d
expect it to perform less well than one with-
out such constraints. I subsequently realized
that what I was picking up was that many of
these funds are actually sector-type invest-
ments and technology funds; one class, in
fact, of so-called ethical funds invests in
environmental cleanup type companies, and
those companies are tech companies, which
do well in a tech-type market. So this is an
area that also belongs in a portfolio. But I
would add socially responsible investing is
not easy to define; funds that automatically
exclude tobacco and arms manufacturers
are pretty straightforward, but many firms
are in a more grey area. Christian Scientists,
for instance, would say that medical research
is unethical; others of course would say that
it’s highly ethical and important, so it all
depends on how you look at it. My job is to
inform investors that socially-responsible
investing exists. If they want to get involved
in it and take possibly lower returns, it’s up
to them; but it doesn’t mean that I support
it myself. I’m glad to see these funds out
there, because anything that expands your
investing opportunities is a good thing.
Eric Kirzner (MBA ‘70) is the John H.Watson Chair in Value
Investing at the Rotman School, where he has taught Finance
since1989. He is the best-selling author, with Gordon Pape,
of The Buyer’s Guide to Mutual Funds series (2001-2004) and
ProtectYour Nest Egg, with R. Croft (CanWest, 2006).
Rotman Magazine Winter 2007 • 73
Questions for: Chris Anderson
The editor-in-chief of Wired magazine and author of The Long Tail:
Why the Future of Business is Selling Less of More talks about the end of
the era of the blockbuster monopoly, and how companies can prosper
in a niche-based culture.
Stephen Watt: What is the theory of the
Long Tail?
Chris Anderson: The theory of the Long Tail
is that our culture and economy is increas-
ingly shifting away from a focus on a
relatively small number of hits – mainstream
products and markets – at the head of the
demand curve and toward a huge number of
niches in the tail.The term refers specifically
to a sales chart which shows a standard
demand curve that could apply to any indus-
try, from entertainment to hard goods [see
chart].The vertical axis is sales; the horizon-
tal is products. The red part of the curve is
the hits, which have dominated our markets
and culture for most of the last century.The
orange part is the non-hits, or niches, which
is where the new growth is coming from
now and in the future.
Traditional retail economics dictate that
stores only stock the likely hits, because shelf
space is expensive. But online retailers from
Amazon to iTunes can stock virtually
everything, and the number of available
niche products outnumber the hits by several
orders of magnitude. The same is true for
video not available on broadcast television on
any given day, and songs not played on radio.
When consumers are offered infinite
choice, the true shape of demand is
revealed. And it turns out to be less hit-cen-
tric than we thought. The Long Tail book is
about the big-picture consequence of this:
how our economy and culture is shifting
from mass markets to millions of niches. It
chronicles the effect of the technologies that
have made it easier for consumers to find
74 • Rotman Magazine Winter 2007
and buy niche products, thanks to the “infi-
nite shelf-space effect”: the new distribution
mechanisms, from digital downloading to
peer-to-peer markets, that break through
the bottlenecks of broadcast, and traditional
bricks and mortar retail.
SW: The tracking of top-seller lists is a
national obsession. Each year it seems a
new Hollywood movie breaks into the
top ten of the highest grossing films of
all time; radio continues to be dominated
by pop music; recent titles like The Da
Vinci Code and Harry Potter are some of
the bestselling books in history. And yet
you argue that the era of the blockbuster
is coming to an end. Please explain.
CA: What is coming to an end is not the era
of the blockbuster so much as the era of the
blockbuster monopoly. The economic con-
straints and requirements of traditional
distribution, be it shelf space, channels or sta-
tions, all work best with blockbusters. As a
result, the controllers of those channels need
to be very discriminating about what gets out
there, and tend to cut things off pretty
quickly after a certain level of popularity. It’s
the new markets that I talk about, the ones
that have nearly unlimited shelf space or
much cheaper distribution methods. These
don’t have to be as discriminating and can
offer vastly increased choice and variety. As a
result, the blockbusters have to compete on
the stage with millions of non-blockbuster
products, and you see the demand shifting to
a more diffuse, shared, distributed market
between blockbusters and niche markets.
SW: A recent issue of Fortune Magazine
proposes a series of new rules by which
corporate America should do business,
including “find a niche, create something
new” instead of the old emphasis on
dominating your market. What are some
other ways a firm can survive and flour-
ish in an era of Long Tail economics?
CA: In my book, I articulate a number of
rules, which fall into two main categories.
One is to make everything available. In other
words, don’t pre-judge or over-discriminate
as to what you put out there. Don’t do the
usual huge amounts of research, planning and
culling of products to only select the ones that
will be popular, partly because you’ll never
know, and also partly because there is demand
for things that aren’t one-size-fits-all. There’s
more and more niche demand, not only for
different products but for variations of differ-
ent products. You can get outside the
one-size-fits-all and find success with a prod-
uct that has some resonance with the outside
world, or is discovered by an influential opin-
ion-maker who kicks off the word-of-mouth
machine.We now see that increasingly in the
music and entertainment industry, as well as
in television. People are being creative not
just by releasing the main product but
through all the ancillary products. For exam-
ple, in television you have the outtakes, the
production diaries, the short form, the long
form, the compiled form, the archives – these
are all examples of putting it all out there and
letting the marketplace sort it out.
The second big lesson is the “help me
find it” lesson, which is the huge impor-
tance of filters, search recommendations
and other kinds of clever ways to package
and sort products so that interested con-
sumers can find them.
SW: Discuss some recent success stories
of companies that understand the new
cultural and commercial landscape, and
have made the most of it.
CA: The obvious examples are Amazon,
iTunes, YouTube and MySpace, but
pretty much any successful web-based
company out there is aggregating content
or benefiting from user-created content.
Looking outside of Internet businesses and
digital economies, there are interesting
examples such as Anheuser-Busch Long
Tail Libations. [Beer giant Anheuser-Busch
recently created a new division called Long
Tail Libations to find more niche alcohol
products to supplement the company’s bet-
ter-known brands.] The long tail of beer is
micro-brews: niche beer, craft beer,
regional beer.What’s the economic enabler
of a longer tail of beer? It turns out that
innovations in the supply chain have
allowed companies to place more products
on the shelf, basically doubling the number
of goods on supermarket shelves over the
past 15 years. As a result, you can go fur-
ther down the tail even in traditional hard
goods and packaged goods.
What we’re now seeing is there is more
demand for non-mainstream products, and
that applies to beer. It’s now economically
efficient to take regional beers and distrib-
The New Marketplace
ute them nationally, to take microbrews and
put them on supermarket shelves. Anheuser
Bush was in somewhat of an unusual posi-
tion of being able to control the supply
chain well enough that it can get those
micro-brews out there.
SW: Is there a danger of some companies
developing a monopolistic or oligarchic
power over the Long Tail economy?
CA: Right now we have a long tail of produc-
ers, and a long tail of consumers with much
more choice out there, but a short head of
aggregators in some of these spaces: iTunes
and Amazon being two good examples of par-
ticularly dominant web properties. My
expectation, however, is that this is just an
early-days phenomenon. These are one-size-
fits-all markets that benefit hugely from
critical mass but suffer some inflexibility with
their presentation.You have an analogy in the
form of Google. Google is the dominant
search space, or so it seems. But the reality is
there are many kinds of search. Google dom-
inates the canonical search, but there’s also
video search, blog search, maps, books, aca-
demic papers and other types of search such
as vertical search, and it turns out that Google
doesn’t dominate most of them. For exam-
ple, YouTube dominates video search and
Technorati dominates blog search.What is
developing is a long tail of search engines
where each one is focused on a niche subset of
the search audience, and we now find compe-
tition in that space. You don’t find that one
company dominates the whole thing.
I suspect the same is going to happen
in music, and it’s easy to imagine it would
happen in book sales as well. iTunes domi-
nates music but it has a very ‘popular music’
approach. The way it presents music is at
the lowest common denominator of meta-
data, which includes artist, album and
track, and sometimes label and release
date. That works okay for pop, though it’s
really quite inappropriate for classical
music, where you would want to know
the composer, conductor and lead soloist.
For jazz, individual performers are in
many cases more important than the
band. You may also want to know the
name of the label, which in some
instances is important and in many others
is not. All of this suggests there’s demand
for a niche music service for classical and
another for jazz. One day soon there may
develop a long tail of vertical aggregators
that specialize in one form of music that
isn’t for everybody, but is presented per-
fectly for a particular market segment.
Obviously they all need to work together
in some way, to combine vertical with
canonical searches, but that’s already
underway with services that are starting
to gain traction, and I suspect we will see
more competition in the aggregator space
just as we have seen in the search space.
When it comes to search, consumers
switch easily and there seems to be no nat-
ural lock-in. There were search
monopolies before Google, and there will
be search monopolies after Google. In
music as well, we’re in early days. iTunes
has somewhat of a natural monopoly
because of its link with the iPod, but ten
years from now, there will be other music
players and other music systems. It’s not as
if customers are unable to leave.These are
ephemeral markets. Unless these music
libraries that people have invested in are
truly unconvertible, people might easily
switch to another system.
SW: Stepping a few years into the future,
what might a thoroughly fragmented,
niche-based culture look like?
CA: Wouldn’t that pretty much look like
the Net? Just talk to anyone under the age
of 25 and you’ll discover they already live
in that world.
Rotman Magazine Winter 2007 • 75
Questions for: Alan Blinder
The former member of President Clinton’s Council of Economic
Advisors talks about the differences between politics and academia,
the U.S. debt situation, and why offshoring has the potential to
be a highly disruptive force.
Stephen Watt: You are a regular com-
mentator on CNN, CNBC, Bloomberg TV
and PBS’s Nightly Business Report. Why
do you feel it’s important to share your
insights with such a broad audience?
Alan Blinder: If you think of yourself as
an educator, as many professors do,
there’s an educational role that goes
beyond the classroom. And that’s espe-
cially true if you’re involved in a
discipline like economics, which is inte-
gral to a lot of public policy decisions.
The only way we’re going to get better
policy decisions is with a public that is
better educated on economic matters. It’s
part of the job description.
SW: In 1993, you took a break from aca-
demia to serve in the U.S. government,
first as a member of the President’s Coun-
cil of Economic Advisers, and then as vice
chairman of the Board of Governors of
the Federal Reserve. Not many academics
have had a chance to shape policy in such
a direct way. Discuss that experience.
AB: The world of the White House is as dif-
ferent from academia as night from day.The
pace is incredible, and there’s never enough
time to actually think things through. In aca-
demia, we pride ourselves on the Robert
Mondavi principle: don’t release any idea
until its time, until you’ve thought it
through and got it right.You don’t have that
luxury while working in the political mael-
strom. The Federal Reserve operates at a
much more deliberate pace. It’s more like
76 • Rotman Magazine Winter 2007
academia than the Council of Economic
Advisers, which ironically has a false repu-
tation as being an outpost of academia
within the government. If you look at those
who populate the Council, they are mostly
from academia; but they’re not performing
like academics when they’re on the job.
SW: The Bush administration has a
record of both mammoth tax cuts and
record spending. Vice-President Dick
Cheney has claimed, citing the Reagan
tax cuts in the early 80s, that deficits
don’t really matter. Do you agree?
The incredible amounts of borrowing
from abroad that we’re being forced
to do will eventually lead to a time of
reckoning, in which the U.S. dollar
falls quite substantially.
AB: No. There are reams of evidence and
lots of theory suggesting that higher deficits
– or rather, higher ratios of debt to GDP –
push interests rates higher and crowd out
investment. The problem right now is that
this force has been overwhelmed by other
forces that are keeping long term interest
rates in the United States low, so low that it’s
difficult to make that case for people who
don’t have deep training in economics.With a
long term bond rate of 4.5 per cent, it’s hard
to demonstrate that these horrible deficits are
pushing up interest rates. That’s one of the
reasons for lack of progress on the problem.
Things look like they’re going too well.
SW: Canada’s economy, like that of
many countries, is highly dependent on the
U.S. economy. What are some possible
consequences for world markets if U.S.
economic policy continues on its cur-
rent path?
AB: The incredible amounts of borrowing
from abroad that we’re being forced to do
– in part because of the budget deficit, but
also because we don’t save enough at the
household level – will eventually lead to a
time of reckoning, in which the U.S. dollar
falls quite substantially. If our exchange rate
falls, some other exchange rates must rise.
There are several obvious candidates, and
Canada is one of them. If Canada is already
uncomfortable with the current dollar-to-
dollar exchange rate, you will be even more
uncomfortable when the two currencies
are at parity.There will be significant impli-
cations for Canada’s ability to export.
SW: You’ve spoken about the United
States’ dependence on China, which has
a pattern of financing the U.S. debt by
buying up American-dollar assets. Is the
U.S. making a mistake by trusting its eco-
nomic vitality to such an uncertain ally?
AB: The U.S. is making a big mistake, both
for our own welfare and the welfare of the
world, by sucking up so much of the
world’s capital through our budget deficits
and our lack of personal saving. However,
given that we’re doing that, I don’t think
it’s a mistake to be borrowing it from
abroad in general. After all, what’s the
alternative? Vastly higher interest rates for
the U.S. People do fret a lot about China’s
attitudes toward the United States and its
political stability, but I think the Chinese
are too smart to bite off their noses to spite
their faces. It is not in China’s interest to
see the value of the U.S. dollar plummet,
nor to see U.S. interest rates skyrocket.
Because it’s in their self-interest, they will
probably be a relatively reliable lender.
SW: Under Alan Greenspan, the Federal
Reserve managed to both fight inflation
and spare the U.S. from a serious reces-
sion for 18 years. His successor, Ben
Bernanke, appears committed to a similar
strategy for the central bank. Is it possible
that American financial markets have
seen the end of the boom-and-bust cycle?
AB: We have definitely not seen the end of
boom and bust cycles. It wasn’t so long ago,
under the chairmanship of Alan
Greenspan, that we had an incredible boom
and bust cycle in the stock market. We may
have a boom and bust cycle in the bond mar-
ket in store for the U.S., and we may also be
heading into trouble in terms of real estate
finance or even in a market such as deriva-
tives. We’ve had boom and bust cycles in
financial markets as long as we’ve had finan-
cial markets, and they’re not going away.
SW: House prices in major markets
around the world are coming off an all-
time high. Some economists (like Yale’s
Robert Schiller) believe that we’re wit-
nessing another era of ‘irrational
exuberance’, and that stock markets
around the world will soon pay the
price. What do you think?
It is not in China’s interest to see the
value of the U.S. dollar plummet,
nor to see U.S. interest rates skyrocket.
AB: I don’t see a gigantic hazard to the
stock market from the housing market,
although certain stocks, such as those of
home builders and lumber companies,
could suffer in the future. The big unan-
swered question is how far housing prices
are going to fall, if indeed they’re going to
fall at all. The history of the U.S. suggests
that, in terms of the national average, we
never see falling house prices for a pro-
tracted period of time. It remains to be
seen if we’ll have a worse experience in the
next year or two than we’ve had in the past.
SW: Why is protectionism currently so
popular across the political spectrum?
AB: I wish I could answer that question.
It’s one of the great failures of econo-
mists, who for 200 years have been trying
to teach the virtues of free trade, and yet
the lesson doesn’t sink in. We have some
idea about the answer.Trade liberalization
provides small benefits to millions and
millions of people, who don’t attribute
the lower prices they are paying to trade;
they think that’s just the way it is. But the
costs of trade liberalization tend to be
concentrated. You could put your textile
industry out of business by trade liberal-
ization, and people in that industry, both
the owners and the workers, will tend to
exercise their political voice. That’s cer-
tainly part of the reason for the
protectionist attitudes that we see in so
many countries, but I don’t think it
explains the whole thing.
SW: There’s a lot of talk about the
exporting of North American jobs, and
the potentially disruptive effects of off-
shoring on wealthy countries. Is
offshoring the impending catastrophe it
is sometimes said to be, or should gov-
ernments take a more laissez-faire
approach and let the forces of interna-
tional trade run their course?
AB: I’d like to take a position somewhere in
the middle. I don’t think offshoring is an
impending catastrophe: as has been
remarked upon by many economists, it’s a
form of trade, and trade is beneficial to
both countries involved. But that doesn’t
mean it’s beneficial to each individual.
When it comes to service jobs, which are
the majority of jobs in rich countries like
Canada and the U.S., offshoring has the
potential to be a highly disruptive force,
putting a lot of people out of work. It’s fine
for economists to say, “They’ll find employ-
ment elsewhere.” And it’s true, eventually
they will. But there could be a lot of disrup-
tion, dislocation, and personal heartache if
we don’t prepare ourselves for this future
better than we’re doing right now.
Alan Blinder is the Gordon Rentschler Memorial Profes-
sor of Economics at Princeton University and co-director
of Princeton’s Center for Economic Policy Studies, which
he founded in 1990. He served on the White House
Council of Economic Advisers from 1993 to 1994, and as
vice chairman of the Board of Governors of the Federal
Reserve from 1994 to 1996. He is the author or co-
author of 17 books, including Economics: Principles and
Policy (with William J. Baumol), now in its 10th edition.
Rotman Magazine Winter 2007 • 77
Questions for: Ronald Burt
The University of Chicago professor and social capital expert
discusses structural holes, how creativity is an ‘import-export
game’, and why bridge-builders profit the most from crossing
organizational borders.
Stephen Watt: Social capital is a widely-
applied term in business, sociology and
political science. Why is it such a produc-
tive and important concept?
Ronald Burt: As the world globalized over
the last 20 to 30 years, the era of the ‘local
monopoly’ came to an end.As strong players
in local markets confronted competitors in
other local markets, margins started to thin,
and companies were forced to remove layers
of bureaucracy to cut costs. One result is
that people have become the authors of their
own jobs. This has always been true of the
top layers of organizations, but over the last
decade or so, the trend has penetrated deep
into the middle ranks. Large swaths of an
organization now consist of people trying to
figure out how to do their jobs.
In such circumstances, employees
often lack the resources they need, and are
instead required to negotiate with others to
get work done. Suddenly, informal rela-
tions among employees – not who they
answer to, but rather, who they trust, who
they rely on, who they discuss things with
casually – are key to the operation of a
firm. Social capital is about competitive
advantage in informal relationships, and it
became a vital success factor in the latter
half of the 20th century.
SW: What are ‘structural holes’, and
how can employees use them to gain
competitive advantage?
RB: People often think of advantage in net-
works in terms of being connected to
78 • Rotman Magazine Winter 2007
powerful people. But when it comes to cre-
ating value, the advantage lies with people
who are connected to those who aren’t
themselves connected.These disconnects –
between people not already talking to one
another or coordinating with one another –
are called holes in the social structure of
information flow. More simply, they’re
called structural holes. And your value in a
network depends on your access to struc-
tural holes. If everyone you know knows
one other, you have no social capital,
because you’re not in a position to create
new connections. Holes are in fact essential
to the division of labour. According to the
division of labour, we each specialize in our
particular field, and thereby ignore a lot of
activity, which greatly simplifies life in the
The people who connect across knowl-
edge gaps have a competitive advantage,
because they see fresh combinations and
alternative ways of doing business.
network. Yet at the same time that these
disconnects are useful for efficiency, they
blind us to new opportunities, which is
where brokerage becomes valuable. The
people who connect across knowledge gaps
have a competitive advantage, because they
see fresh combinations and alternative ways
of doing business. That’s why we pay them
more, we promote them more quickly, and
we give them higher valuations.
That is the theoretical foundation for
why [Rotman Dean] Roger Martin’s con-
cept of Integrative Thinking is so important.
Integrative thinking, by definition, pushes
people into the unknown so they bridge the
gaps that other people see as barriers to
knowledge. The curriculum that is being
developed at the Rotman School will create
a competitive advantage for MBA students
because they will be better able to recognize
opportunities in the market as they develop.
SW: You have said that creativity is an
import-export game, not a creation
game. If the most original and effective
ideas are more often borrowed than
created, how can companies foster
innovation?
RB: We all specialize, for reasons of effi-
ciency and productivity, and are often
blind to good ideas that occur in other
places. When someone brings us a good
idea, it’s typically something that person
has seen elsewhere. But we don’t think
about where that person has gone to find
the idea; instead we think, ‘My goodness,
what a brilliant person!’ Value is created
by translating an idea discovered else-
where into the local jargon, so that it’s
easy to digest. And in that translation is
the act of creativity.
Because of patent law, which exists to
protect intellectual capital, we often think
the value of an idea lies in its creation.Yet
the value of an idea lies in the audience, not
its source, and one idea can be ‘created’
many, many times. Creativity exists in a
chain: an idea comes from this group and
goes to that group, and that group then car-
ries it over to another group. An idea is a
multiple sequence of creative acts. This is
important because it means that creativity
isn’t just the domain of brilliant people, it’s
also the domain of average people who
travel to other groups.The simplest way to
feel creative is to find people more ignorant
than you. Nobody knows that better than
academics, who are constantly in the busi-
ness of reading widely, coming up with
ideas, then shipping them to groups
unaware of the ideas.
An organization can promote creativ-
ity by facilitating different ways of seeing
things. Jean-Rene Fourtou, while he
was CEO of the chemical firm Rhone-
Poulenc, was once asked, “Why is it that
your chemists come up with so many lead-
ing ideas?” His reply was brilliant: “I
manage le vide” – the emptiness.That is, he
manages groups, keeps them apart, then
brings them back together after they’ve
developed different ideas. Jack Welch
referred to this notion as ‘integrative diver-
sity’: maintaining our diversity, our
segregated silos, but then creating value
from judicious integration. New ideas are
borne when we confront contradiction.
This is a concept that is easily grasped but
harder to implement. Usually we manage
for the efficiency of tight coordination.
SW: What’s the function of gossip and
the sharing of secrets in the workplace?
Is gossiping on the job good or bad for a
company?
RB: Gossip has obvious negative connota-
tions, but people often overlook the
incredibly positive ones, which include
gains in productivity. The way you govern
a group in an informal organization is
through network closure: you encourage
the people that you talk to also talk to one
another. The members of your team will
then start to measure themselves against
each other: ‘Who’s putting in hours? Who
best gets the idea?’ People don’t want to
lose the reputation they’ve developed, so
they try to conform to the group norm.
The lubricant that makes the system work
is gossip. By gossiping to one another, peo-
ple are drawn into alignment by
identifying and celebrating heroes, and
denouncing villains. This is classic village
When a person bridges across silos,
the organization benefits; but the people
who gain the most are those who
build the bridges, because they do their
jobs better.
politics.Think of grandma’s village, where
everyone knew what everyone else was
doing, and people were relatively careful
about what they did. Gossip is the founda-
tion for the dramatic productivity
improvements we’ve seen in team-based
manufacturing and product work. The
downside is, as people gossip, they drive
the grey out of things. You see this in the
search for the ‘CEO hero’ who will some-
how save us from all our problems. At the
other extreme, people who make a mis-
take can quickly turn into villains, and be
driven out of the organization. So while
the positive side of gossip is enhanced pro-
ductivity, the downside is group-think,
stereotyping, and once again, reinforcing
our blindness to new opportunities.
SW: What kind of encouragement can an
organization provide to get an employee
to interact with people outside their very
narrow functional group?
RB: Organizations often talk about the
value of cooperation across silos for the
company. They say that as a citizen of the
organization, employees should collabo-
rate across silos and help people in other
groups. This argument usually creates
resistance: ‘I’m not paid to collaborate,
I’m paid to do my job’ – which fundamen-
tally misses the point. When a person
bridges across silos, yes, the organization
benefits. However, the people who gain
the most are the ones who build those
bridges, because they do their job better.
To do state-of-the-art work in your
assigned area, you need to build ties to
monitor what’s happening in other organi-
zations and in other parts of your
organization. And this is the best way for a
company to frame the discussion.
SW: What’s next on your research
agenda?
RB: I recently completed a project in
which I found that brokerage benefits are
not transferable; you have to be personally
involved in integrative thinking to obtain
the career benefits associated with it. Fol-
lowing that, I looked at the psychology of
brokerage, and discovered that brokers are
more emotional in their pitches than are
the people working strictly inside the net-
work. The brokers aren’t just more
positive or more negative: they are both.
Brokers cast a wide emotional aperture
through which they can reach a general
audience. I’m now working on a book
called Bent Preferences, which examines how
our position in the social structure distorts
how we see things, so that two people
looking at the same object will see very
different opportunities. It’s fascinating
research, involving integrative thinking at
the intersection of economics, psychology,
and sociology.
Ronald Burt is the Hobart Williams Professor of Sociology
and Strategy at the University of Chicago Graduate School
of Business. He is the author of Brokerage and Closure: An
Introduction to Social Capital (Oxford University Press,
2005) and Structural Holes:The Social Structure of Competition
(Harvard University Press, 1992). A fellow of the American
Academy of Arts and Sciences, he has taught at University
of California, Berkeley, Columbia and INSEAD.
Rotman Magazine Winter 2007 • 79
Faculty Focus: Pankaj Aggarwal and
Sharmistha Law
Our Complicated
Relationships with Brands
Social psychology research has shown that
the nature of the relationship between indi-
viduals influences the information that each
pays attention to, and the resulting evalua-
tion each makes of the other. For example,
the existence of a ‘positive bias’ in a roman-
tic relationship can lead people to turn
their partner’s faults into virtues. Such rela-
tionship biases are of interest to marketers
because consumers have been known to
cross the threshold of commercial transac-
tions, ‘bringing a brand alive’ by giving it
quasi-human qualities.
A broad spectrum of social relation-
ships has been shown to describe
consumers’ interactions with brands,
including ‘best friends’, ‘flings’, ‘arranged
marriages’, and ‘committed partnerships’.
Given that consumers sometimes relate to
brands in ways that mirror their relation-
ships with people, we hypothesize that
relationship norms active (or salient) at the
time of consumer-brand interactions will
be a key determinant of the information-
processing strategy adopted by a consumer.
The Role of Relationship Norms
The two types of relationships of interest
here are exchange relationships and commu-
nal relationships. Exchange relationships
are those in which people give benefits to
others in order to get back a comparable
benefit, such as a relationship between
business partners. In these relationships,
people are concerned with how much they
receive in exchange for how much they
give; and they like to share rewards in pro-
portion to their inputs.
Conversely, communal relationships are
those in which people take care of others’
needs and have a genuine concern for their
well-being, such as relationships with friends
80 • Rotman Magazine Winter 2007
Pankaj Aggarwal
and family members. In such relationships,
people take a perspective that transcends an
emphasis on self-interest alone, keeping
track of their partner’s needs.
We believe that consumers use rela-
tionship norms as a lens to evaluate brands,
and that their attitudes and response to a
brand are mediated by these relationship
norms. Therefore, individuals in a commu-
nal relationship focus on different aspects
of brand information than individuals in an
exchange relationship.
The norms of a communal relationship
make individuals more likely to process
brand information at a higher level of
abstraction. People in an exchange relation-
ship, on the other hand, are more likely to
keep track of their partner’s inputs or con-
tributions to the interaction, rather than
their partner’s needs. In a consumer-brand
context, we would expect this focus on
inputs and outcomes in an exchange relation-
ship to translate into attention to
‘nitty-gritty’ details about the brand,
prompting greater attention to detailed,
item-specific information, since that is the
only way consumers can track the ‘balance’
of what they get for what they pay.
In contrast, since consumers in a com-
munal relationship with a brand do not
look for an immediate quid pro quo, they
will attend more to information about the
overall brand benefits, and evaluate brand
attributes more holistically. For example,
some Volkswagen Beetle owners have
been known not only to name their cars,
but also to pat them as a sign of affection.
For these car owners, evaluating the value
of their Volkswagon on attributes like fuel
efficiency or horse power might seem less
appropriate than merely assessing if it is
‘fun’ or not.
Sharmistha Law
On the other hand, when ascertaining
the value of a Toyota Corolla, the same
consumer may perceive the purchase more
like an investment, and hence be more
likely to take into account each specific
attribute like the gas mileage or turning
radius. In other words, while an exchange
relationship is expected to promote a close
scrutiny of brand attributes, a communal
relationship should engender a more
abstract level of brand cognitions.
Our research
We conducted three studies to test the
effect of ‘relationship type’ on the pro-
cessing of brand information. Prior work
on the cognitive representation of con-
cepts suggests that a hierarchy of
representation exists for most concepts.
The ‘basic level’ is the one that is easiest to
access and use, and has the greatest
amount of feature-related information
(e.g., a chair). Going from a specific to a
more general representation involves
moving up the hierarchy to the next level
(e.g., furniture). Conversely, one can also
move down the level of hierarchy and
make the information even more specific
(e.g., a garden chair).
Depending on the context, consumers
have been found to recognize product fea-
tures at different levels of abstraction. For
example, one study found that the degree
of comparability between alternatives
influences the level of abstraction used:
things that look relatively dissimilar at a
specific feature level start to appear more
similar at a broader, overall level of com-
parison. For example, alternatives like ‘a
television’ and ‘a stereo’, which cannot be
compared in terms of specific features
(since they have few specific features, such
as screen size, in common) can be com-
pared in terms of more abstract attributes,
since they have more such features in com-
mon (e.g., enjoyment or status). Attributes
can be thought of as lying on a continuum
going from the concrete to the abstract,
and people can move up or down this con-
tinuum depending on the context.
In our first study, the context of a
product extension was used to examine
whether the type of relationship norm
(communal vs. exchange) influences the
level of abstraction at which consumers
process the proposed product extension,
and their consequent evaluation of the
extension. Our logic is that when the
norms of a communal relationship are
salient, people will process information at
a higher level of abstraction, perceiving
even the farthest extensions as being simi-
lar to the original product category, and
hence will evaluate these extensions rela-
tively positively.
Conversely, when the norms of an
exchange relationship are salient, people
will process brand information at a much
lower level of abstraction, likely perceiving
greater dissimilarities between the proposed
far product extension and the original cate-
gory, and hence will be less likely to evaluate
such product extensions positively.
Our results indicate that relationship
norms do indeed moderate the degree to
which far product extensions are seen as
similar to the original product.We propose
that when presented with both abstract as
well as more specific (or concrete) infor-
mation about a brand, individuals in a
communal relationship condition will
overwhelmingly encode the abstract infor-
mation, whereas those in an exchange
relationship condition would attend rela-
tively more to the concrete brand
information. We tested this specifically in
our second study by presenting concrete
and abstract information to participants
and comparing their recall and recognition
for each type of information, depending
upon the relationship type.
Interestingly, relative to participants in
the communal condition, we found that those
in the exchange condition showed higher
recognition rates for correct concrete brand
information, and lower rates of acceptance of
incorrect concrete brand information.
We expect that communal participants’
focus on encoding abstract brand informa-
tion facilitates their accurate recognition of
this information, as well as endorsement of
plausible inferences, and that exchange
participants’ access to concrete brand
information allows them to generate both
appropriate abstract brand information and
plausible inferences, thereby obscuring any
recognition advantages the communal par-
ticipants may have had.
Consistent with previous research on
memory, which suggests that it takes longer to
retrieve general information about objects
than to retrieve specific facts, participants in
both communal and exchange conditions took
longer to respond to questions concerning
abstract brand information relative to those
pertaining to concrete brand information.
Our results demonstrate that con-
sumers in a communal situation have faster
access to both correct abstract brand infor-
mation and plausible inferences, suggesting
that they particularly attend to and elabo-
rate on brand information presented at a
higher level of abstraction. On the other
hand, consumers in an exchange situation
apparently need to construct the abstract
or general brand information by relying on
We would advise managers to highlight
different brand features depending on
the type of consumer-brand relationship
fostered by their product.
their knowledge of concrete information.
Our third study replicated the main
findings of these two studies. In this last
study, we compared the degree of abstract-
ness of features across the two relationships
spontaneously reported by consumers who
were considering buying a product.
Together, these findings support the overall
premise that brand-related information is
processed at a broad overall level in a com-
munal relationship, compared to an
exchange relationship, in which it is
processed at a much more detailed level.
Our results lead us to propose ‘rela-
tionship type’ as a moderating variable in a
consumer’s choice of information-pro-
cessing strategy. Our research makes two
important contributions to the field. First,
our understanding of how consumers
interact with brands is amplified with the
demonstration that different relationship
types are associated with alternative pro-
cessing strategies. This provides deeper
insight into why different consumers
respond in distinct ways to the same brand
information, depending on their specific
relationship with that brand.
Implications for Managers
Our findings can be extended to help man-
agers make more effective marketing-mix
decisions. For example, managers might be
well advised to highlight different brand
features, or gainfully extend a brand name
to different products, depending on the
type of consumer-brand relationship.
Furthermore, the type of relationship
might also influence consumers’ response
to a brand’s pricing structure: consumers
with an exchange brand relationship may
prefer an itemized pay-as-you-go pricing
policy to keep track of specific input-out-
put trade-offs, while those with a
communal relationship may be more will-
ing to accept a lump-sum price.
This research has critical implications
not just for academics and managers, but
also for people in their everyday interac-
tions. Relationship type is a key factor in
influencing which information is high-
lighted when we interact with both brands
and individuals. In fact, if people under-
stand how others evaluate them and what
type of features are considered relevant,
they might be able to ensure not only con-
tinuous, smooth and more efficient
interactions, but also longer and more
meaningful relationships.
Pankaj Aggarwal is an assistant professor of Marketing and
Sharmistha Law is an associate professor of Marketing at the
Rotman School of Management.
Rotman Magazine Winter 2007 • 81
Point of View: Benjamin Friedman
The Moral Consequences
of Economic Growth
The following is an excerpt from Benjamin Friedman’s
October presentation in the Rotman Corporate Citizenship
Speaker Series, sponsored by the AIC Institute for
Corporate Citizenship.
The subject I’d like to address is best
framed as a question: why does economic
performance matter? If Canada or the U.S.
had a business recession next year, the aver-
age person’s income would go down only
about two per cent, and the whole activity
would last maybe 15 months at most. Why
do we care about that?
For about three fourths of the world’s
population, the answer is both immediate
and obvious. Across a very broad swath of
the world’s income distribution, improve-
ments in people’s living standards, as
measured by per capita incomes, translate
immediately and directly into improve-
ments in the very basics of human
existence: measures such as how long peo-
ple live, the diseases they suffer from, the
number of their children to die as infants,
and so on.
However, the relationships between
material living standards in the aggregate
and the human basics have pretty well
played out by the time a country gets to an
average living standard of, say, half of
Canada’s. For example, Portugal has a
standard of living, as measured by per
capita income, that’s somewhat better
than half of Canada’s. Yet the Portuguese
live just as long as Canadians, they suffer
from the same diseases, their infant mor-
tality rate is about the same as Canada’s
(and better than that of the U.S., which is
an embarrassment for us Americans). So for
those of us who are fortunate in countries
that have achieved a certain basic standard
of living, the question remains: why do we
care about economic performance? At
82 • Rotman Magazine Winter 2007
Photo: J.D. Sloan
our level of affluence, what difference
does it make?
The answer is not just about human
basics. It’s about the political, the social and
ultimately – to use a term, quite deliber-
ately, from the Enlightenment – the moral
character of a society. My hypothesis is
that when the broad bulk of a society’s cit-
izens is moving forward in its material
standard of living, and when it has some
Any time a society’s citizens lose
the sense that they’re gaining in
their material living standard, that
society will undergo periods of
rigidification, often with disastrous
economic consequences.
ground for confidence that it will continue
to enjoy material progress in the future,
that society will likely make progress in
dimensions of life that are positive in
moral terms.
One such moral dimension is open-
ness of opportunity. A key test for any
society by Enlightenment standards is
whether those young people who get
ahead are merely the sons and daughters of
those who already occupy the highest posi-
tions in the society, or whether
opportunities are made more broadly
available. Another moral dimension is tol-
erance – tolerance toward those who are
different from the majority, because of
race, background or religion, for example.
A third dimension is that of fairness in
society. In any society, there will be those
who will not find themselves taking advan-
tage of the available opportunities, either
because the opportunities aren’t perfect,
or because such people simply lack ability,
or suffer from what economists call labour
market luck.
My theory is that when the bulk of
the society’s citizens is enjoying a continu-
ally improved standard of living, the
society is not only more able to afford to
be generous in providing for the disadvan-
taged, but is more likely to do so.The final
dimension is democracy, and the creation
or strengthening of democratic institu-
tions. Here again, the sense of forward
progress in the material realm is one of
the key pre-conditions for a society to
achieve progress in the democratic politi-
cal realm. The converse is also true. Any
time a society’s citizens lose the sense that
they’re gaining in their material living
standard, history suggests that society will
then undergo periods of rigidification and
retrenchment, often with quite disastrous
economic consequences.
There are a number of important
implications of this hypothesis. The good
news is that all sorts of countries in the
developing world do not have to wait until
they achieve Western standards of living
before they can democratize and liberalize.
Consider the example of South Korea.
Beginning around 1960, and over a period
For five of the last six years, median
income in the U.S. has gone down.
of about 25 years, South Korea went from
being a poor, agricultural country, ruled by
a one party military dictatorship, to a well-
functioning electoral democracy, with
a standard of living of about one third
of America’s.
Another example is China. During
the most recent quarter century, China
has mounted the most rapid, sustained
economic growth in the world, enjoying
a growth rate of around seven per cent
after inflation in per capita terms. During
that time, China has seen a rapid expan-
sion of economic rights, and the
development of local democracy. The
Chinese have genuinely contested elec-
tions at the village level, and in a country
with more than 700,000 villages, this is
not a small matter. Nationally, China
remains what South Korea was half a
century ago: a one party military dicta-
torship. However, if the Chinese can
sustain the same level of economic
growth, I am optimistic that they too will
be able to liberalize and democratize.
The second implication is a more
sobering one, especially for Americans.
For five of the last six years, median
income in the U.S. – the income of the
person right at the middle of the income
distribution – has gone down.While GDP
has increased by a modest two-and-three-
quarters per cent per annum, largely due
to technological innovations, the growth is
benefiting a small portion of the popula-
tion: the large bulk of people are not
benefiting at all.
If the U.S. continues along that tra- economic growth, most obviously envi-
jectory, it’s likely to see the reemergence ronmental problems, to which we have
of the kind of pathologies that occur come to attach a moral overtone.The stan-
whenever the bulk of a society’s citizens dard conversation about economic growth
loses the sense that it is getting ahead. It’s is now one in which wholly material posi-
no coincidence that immigration is such a tives are weighed against wholly moral
hot topic in American newspapers today. negatives. People ask themselves: am I
Historically, why did anti-immigrant sen- someone who mostly cares about material
timent fade after the Civil War, only to things, in which case I’m supposed to be
return in the 1880s and 1890s, and again for growth, or am I someone who is also
in the 1920s? It would be foolish to pre- sensitive to the moral dimensions of soci-
tend that every twist and turn in ety, in which case I’m supposed to be
against growth.
This view of the growth question –
trading off wholly material advantages
versus wholly moral advantages – is a
wrong characterization of the issue. If it’s
true that economic growth brings
American attitudes toward immigrants improvements in fairness, tolerance and
was narrowly or deterministically driven democracy, then bringing that awareness
by the ebb and flow of prosperity versus into our public conversation will not only
stagnation. However, whether the subject achieve better factual and intellectual
is immigration, racism, religious preju- accuracy, but will make it possible for us
dice, generosity toward the poor, or even to move forward in a direction that is
the most basic aspects of our democratic more likely to deliver pro-growth poli-
institutions – such as when women and cies, for the benefit of all.
blacks achieved the right to vote – you
cannot look at the historical record with- Benjamin Friedman is the Maier Professor of Political
Economy and former chairman of the Department of
out coming away with a strong sense that Economics at Harvard University and the author of The
the underlying economics played an Moral Consequences of Economic Growth (Knopf, 2005). He
important role. was the 2005 recipient of the John R. Commons Award,
presented in recognition of achievements and service to
The third implication regards public the economics profession.
policy. One frequently hears among
economists that in matters of economic
growth, the best stance for public policy
is simply to stand back and let the market
run its course. Let all the families decide
on an individual basis how much they
would like to save, and let all the busi-
nesses decide how much they would like
to invest. However, economic growth
provides benefits such as tolerance,
democracy and fairness that we don’t
price on the market. As a result, there is
a positive role for public policy to stimu-
late the rate of economic growth to be
faster than what it would be if left to the
market’s own devices. We certainly have
no lack of policy devices at our disposal
that would simultaneously enhance the
growth and help deliver up a fair society.
The last implication regards the char-
acter of our public conversation. In recent
years, we have become increasingly aware
of the various drawbacks associated with
Rotman Magazine Winter 2007 • 83
Point of View:
The Democratization of Information
While the models used in the economics and
finance literature generally paint the typical
retail investor as someone with unlimited
cerebral capacity who is able to consider all
relevant information, filter out all that is
irrelevant, and measure the motives of all
parties prior to making an investment deci-
sion, the typical investor, understandably,
falls well short of this ideal. Instead, he or
she is limited by the standard foibles that are
present in all of us to varying degrees: short
attention span, inattention to detail,
dependence on potentially suboptimal pre-
dispositions, overconfidence, biases and
emotion, to name a few.
Much of the information that is
required to be disclosed under securities
laws is difficult to digest and, arguably, has
the tendency to reinforce an investor’s
shortcomings rather than helping to over-
come them.While research indicates that a
The Task Force questioned whether the
delivery of disclosure documents to
investors, even by electronic means,
makes sense.
surprisingly high percentage of investors
consult an issuer’s prospectus prior to mak-
ing a decision to invest in the primary
market, the dense legal and technical lan-
guage, small print, prevalence of jargon,
and volume of information presented easily
results in information overload.
So, how does one make disclosure
more effective? Obviously, there is no per-
fect answer, but three components of
effective disclosure are:
1. identification of appropriate disclo-
sure items;
84 • Rotman Magazine Winter 2007
2. communicating the information in a
way that facilitates the third compo-
nent; which is,
3. understanding what is disclosed.
The Task Force believes that the second
component, the method by which informa-
tion is communicated, is the key starting
point in ensuring effective disclosure.
A Way Forward – Access Equals Delivery
Bearing in mind the strength of SEDAR as
a free, publicly-accessible full record of all
of the disclosure documents required to be
filed by a reporting issuer under Canadian
securities laws, as well as the very tenta-
tive move towards permitting full
electronic delivery of disclosure docu-
ments, the Task Force set about
determining the most effective and mod-
ern method of delivery.
The starting point was, of course, the
investor. Focusing on retail investors for the
moment, it would seem that investors can
largely be divided into a) those who are (or
believe they are) sufficiently financially lit-
erate (for the sake of convenience we call
them ‘Independent Retail Clients’ or IRCs)
and do not need, or choose not to make use
of, a registered financial adviser, and b)
those who use a registered financial adviser
(‘Dependent Retail Clients’ or DRCs).
Then there is the question of e-literacy –
the basic ability to use the Internet. Intu-
itively, IRCs are in all probability e-literate
users of the Internet and, in all likelihood,
the majority conduct their trading through
internet brokerage accounts. Of course,
some may not be e-literate, but it is hard to
assume that this group is significant in size.
With regard to DRCs, the percentage who
are e-literate will logically be smaller, but
nonetheless high – Statistics Canada
reported in 2004 that 64 per cent of house-
holds in Canada have at least one member
who uses the internet, with 65 per cent of
regular users having a high-speed connection.
Research commissioned by the Task
Force indicates that retail investors are gen-
erally receptive to receiving disclosure
information only in electronic form, with
between 54 and 67 per cent (depending on
the type of information being disclosed)
expressing comfort with receiving infor-
mation only in electronic format.
With these factors in mind, the Task
Force questioned whether it continues to
make sense to burden the disclosure system
with the requirement of delivery by paper
and, taking it one step further, whether the
delivery of disclosure documents to investors,
even by electronic means, makes sense.
Within the realm of securities regulation,
‘access equals delivery’ means, quite simply,
that the regulatory requirement to deliver a
disclosure document to an investor will be sat-
isfied by the investor being able to access that
document using the Internet. For example,
under such a model, the posting of a disclosure
document on SEDAR would satisfy both the
filing and delivery requirements imposed by
securities laws. As noted above, SEDAR’s free
accessibility and its function as a central repos-
itory of disclosure documents makes it the
obvious foundation for this model.
The access-equals-delivery model gains
additional credence when one considers the
differences in information delivery between
investors in the primary and secondary mar-
kets. While it is necessary to deliver a
preliminary prospectus and (final) prospec-
tus to an investor in the primary market
before an investor makes an investment in
securities, an investor who is considering
making or disposing of an investment in a
security in the secondary market receives his
information through his own intervention –
accessing it himself.There is no requirement
for an issuer to deliver to secondary-market
participants a copy of its annual information
form, or copies of material change reports.
Since secondary-market trading represents
something like 95 per cent of aggregate
trading in Canadian markets, it is time for a
similar ‘access is adequate disclosure’ regime
to apply to documents designed for primary
market transactions.
The research which we have commis-
sioned suggests that a significant issue in
shifting to the access-equals-delivery model is
to get the consent of investors to information
being made available to them in electronic
form. Our view is that this hurdle should be
removed, not jumped. Consent should be
implied in the decision to invest in a system
where ‘access equals delivery’ is the accepted
medium of information dissemination.
There are potential ramifications for
such a recommendation in the area of share-
holder meetings, for example. Issuers must,
of course, notify shareholders that a meeting
has been called. This can be accomplished
either by way of a postcard-sized notice of
availability of electronic proxy materials (as
is contemplated in the U.S.) or by notice in
the public media. The details of the manner
by which effective notice may be given will
require resolution. However, we do not
believe that it is necessary for shareholders
to have a right to paper meeting materials if
they are available electronically.
The Democratization of Information
The constraints of paper disclosure – its
static presentation of data and its two-
dimensional nature – can be overcome
with fully-electronic disclosure that takes
full advantage of the latest advances in
technology.The goal, of course, is to make
disclosure more effective, by making
it more appealing, less intimidating and
more understandable.
How can this be done? One idea that has
met with a great deal of enthusiasm has been
the United States Securities Exchange
Commission’s voluntary program for
reporting financial information using Exten-
sible Business Reporting Language (XBRL),
which allows for the ‘tagging’ of data items
in a disclosure document, i.e., information is
embedded in the text of a document which
allows it to be identified by the computer.
For example, the general and administrative
expense line in a balance sheet would have its
own unique ‘tag’. The tagging is done
according to agreed taxonomies to allow
items in the disclosure to be identified in the
same way. When this is done computers can
recognize particular items of data, such as
the general and administrative expense line
in a balance sheet, analyze it, store it,
exchange it with other computers, compare
it, all in a manner that is chosen by the par-
ticular user. In other words, the data ‘comes
alive’ for the user.
A move to fully-electronic disclosure
will also facilitate the ‘layering’ of informa-
tion within a disclosure document. As we
have noted, the common problems with
existing forms of disclosure are volume and
density. ‘Layered’ electronic disclosure
would, in layer one, present a basic summary
of the information to be communicated to
the investor.The reader would then have the
option to click on a piece of information that
is of particular interest and enter additional
layers, each with an increased level of detail.
An additional advantage of electronic layer-
ing will be the ability to ‘pull’ information
from existing data sources. For example, an
Annual Information Form filed pursuant to a
reporting issuer’s continuous disclosure obli-
gations could ‘pull’ the issuer’s financial
results from its annual and quarterly finan-
cial statements.
A New Paradigm for Electronic
Disclosure: MERIT
‘MERIT’ (Model for Effective Regulatory
Information Transfer) was conceived by the
Task Force with the vision of making public
company disclosure more inviting, more
accessible and thereby more effective. It
entails a potential presentation of disclo-
sure information in a web-browser. The
assumption is that a consumer has asked for
the disclosure information for a particular
company online, from either the corporate
Web site or from a service such as SEDAR.
The information was then downloaded and
presented within the browser with the
MERIT navigation, and the underlying data
was tagged in XBRL.
MERIT is based on, and extended
from, XBRL, which provides a standard
framework for business information
through the use of meta-data, so that busi-
ness information can be broken down into
agreed-upon concepts. The MERIT system
would render an XBRL document instance
of tagged information, making it viewable –
creating the actual business documents of
regulatory disclosure. XBRL provides a way
to define the atomized business concepts of
disclosure; MERIT combines those facts
and structures them into readable docu-
ments that make them consumable.
Documents based on a system like
MERIT can look just like their paper-based
counter-parts, but they are so much more.
The first hurdle faced by a disclosure docu-
ment is to present the disclosure in a way
which invites the potential reader to ‘dive
in’. MERIT does this by creating a naviga-
tion interface that will facilitate quick
discovery of key business facts. The infor-
mation is presented in a way which not only
serves the interests of the casual reader but
of the more sophisticated analyst – both the
complex and the basic business facts of an
enterprise will be much easier to find with
such a navigation interface.
Because MERIT produced documents
would have the XBRL tagging embedded
in them, consumers of this information
could easily compare business facts within
and across companies, throughout history,
and quickly find the information they
need. For a demo of MERIT, visit
www.ida.ca/Meritdemo/demoindex.html.
MERIT is not a complete taxonomy of
all disclosure, nor does it describe the stor-
age, transfer and rendering of all aspects of
corporate information – it is merely pro-
duced to show how something like this
could be created with full stakeholder input.
Advantages for investors under a sys-
tem like MERIT include:
• Fuller, and More Efficient Disclo-
sure: A more complete, accurate, timely
and primarily accessible disclosure – pre-
sented in a way that facilitates investor
Rotman Magazine Winter 2007 • 85
 review at their chosen depth. Removing
the printing and delivery cycle should help
to ensure that it is available sooner, as well.
• Investor Due Diligence:The vast major-
ity of companies do not have institutional or
analytical coverage, which increases the
burden on investors to do more of their
own due diligence. A system like MERIT
helps them do this more effectively.
• Investor Education: All of the above
will improve the potential for market
participants to become better educated
on their investment decisions and the
companies they choose. The corollary is
that better educated investors will make
the market more efficient, and poten-
tially improve the valuations of
companies who participate in such trans-
parent disclosure.
Advantages for corporate executives under
a system like MERIT include:
• Efficiency: When systems are integrated
with a structured framework like XBRL,
human resources within the enterprise
are freed to perform greater value-added
tasks. The routine task can be automated,
and software can be created to crunch
through information and only raise alarms
for human intervention when there are
exceptions rather than the routine. Time
and costs associated with the creation of
disclosure can also be saved.
• Reduced Cost: Removing the cost bur-
den associated with printing and delivery
provides concrete, tangible and measura-
ble savings to all companies. Companies
will need to reinvest some of those savings
into designing and creating better and
more illuminating ways to present disclo-
sure information to all stakeholders, but
overall costs should still be reduced.
• More Time: For analysis and decision
making by enabling companies to auto-
mate inefficient manual information
gathering and consolidation tasks. The
primary challenge with producing
reports and analysis is that the data
needed to produce these items is locked
in documents, and the data relies on
those documents to give it context. To
use data locked in a document or
spreadsheet, it must be manually
entered, copied, and may need to be
recalculated. XBRL helps to mitigate
this burden.
In Closing
Most Canadians are aware that they must
take more responsibility for their future
and retirement – this is a global phenome-
non in Western countries.The main goal of
the regulatory system must be to foster and
mandate a disclosure system that leads to
better-informed consumers, and better-
informed advisers of those consumers.
One of the easiest ways to help nurture
this is to bring business disclosure into the 21st
century, using the tools and technologies avail-
able to us. If the regulatory community acts
decisively in these areas, Canada can be a world
leader in full and transparent business disclo-
sure for all of its stakeholders.This will result in
far more efficient and fair markets, improve val-
uations,moreforeign investment, and a robust
capital framework that benefits all Canadians.
This is a real opportunity for Canada
to step up.
This is an excerpt from Canada Steps Up, the final report of
the Task Force to Modernize Securities Legislation in Canada.
The University of Toronto’s Capital Markets Institute (CMI)
served as the Research Director for the Task Force. Paul
Halpern,TSX Chair in Capital Markets at the Rotman School
and Director of the CMI, and Poonan Puri, Associate Profes-
sor of Law at Osgoode Hall Law School, were research
directors. For the full report, visit www.tfmsl.ca.

There’s one thing we would

like to make perfectly clear:
Your desk. Telephone: (416) 978-1912
Fax: (416) 978-1920
Whether you need company profiles, media scans, infosolutions@rotman.utoronto.ca
industry statistics, financial data or articles on www.rotman.utoronto.ca/bic/infosolutions

the latest management trends — if it exists, our

professional research staff will find it. Call or email
us for your free estimate, confidentiality guaranteed.

Rotman alumni are entitled to a 20% discount on research fees.

86 • Rotman Magazine Winter 2007

 News Briefs
Cultivating Africa’s Passion
“The problems in sub-Saharan Africa seem
so entrenched and impossible – but they’re
not; they are entirely solvable,” said Taddy
Blecher in his second appearance in the
Rotman Corporate Citizenship Speaker Series on
September 14th. Blecher speaks from
experience: he is the co-founder and CEO
of CIDA (Community and Individual
Development Association) City Cam-
pus, the first tuition-free higher education
institution in South Africa. Rotman faculty,
staff and students gathered to hear his pow-
erful insights on non-profit management,
leadership and international development.
Formerly a senior project leader with
the international strategic management con-
sulting firm Monitor Company, Blecher
helped found CIDA in 2000 to help tackle
some of the problems that plague South
Africa, such as AIDS, crime, poverty and the
overarching tragedy of wasted human
potential. “Africa has been treated as the
‘basket case’ of the world,” says Blecher.
“But the best way to change Africa is not
through handouts, but through investing in
Africans.Teach people how to create wealth,
and you help them to help themselves.”
CIDA started back in 2000 with no
government support, teachers, buildings or
equipment: students were taught to type on
Rotman Professor Honoured by Papua New Guinea
Photo: John Hryniuk
photocopies of a computer keyboard.
“When I met Michael Dell, I joked with
him that he would never make a computer
as thin and light-weight as ours.” From
these humble beginnings, the school has
made great strides. Last year, CDI’s 2,500
Photo: Stephen Watt
graduates – who paid only about US$70
tuition a year for their studies – earned
about US$14 million, an extraordinary
return on investment. The school keeps
costs down by requiring students to lend a
hand with student recruitment, construc-
tion and administrative work. “This has
created an enormous sense of ownership in
the students, a sense of self-belief,” says
Blecher. “One of the biggest challenges we
have in South Africa since apartheid is get-
ting people to believe in themselves again.”
Success breeds success, and CIDA has
attracted investment from philanthropists
like Sir Richard Branson and Oprah
Winfrey, and companies such as Daimler-
Chrysler, Dell and Microsoft. Their
donations have helped endow the school with
resources and facilities to match its outsized
ambitions. “When it began, CIDA was the
laughing stock of the educational commu-
nity,” said Blecher. “We just really wanted to
prove it was possible to do things differently.”
The next challenge for Blecher is to
In September, Rotman Professor David
Beatty was awarded a 30th Indepen-
dence Anniversary Medal in recognition
of his continuing services to the nation of
Papua New Guinea. He was presented with
the Award by Grand Chief Sir Michael
Thomas Somare, Prime Minister of Papua
New Guinea, during a ceremony held at the
United Nations in New York City, mark-
ing the independence of Papua New Guinea.
From 1973 to 1977, Prof. Beatty served as
Director of the Central Planning Office and
Economic Advisor to the Prime Minister in
Taddy Blecher
replicate the success of CIDA by organizing
free universities throughout South Africa,
and eventually, in nearby countries such as
Angola, Lesotho, Malawi, Mozambique,
Namibia and Zimbabwe. He’s most excited
about a new model of education that he calls
‘university in a box’. The model involves
acquiring a parcel of land on the outskirts of
a city, and establishing a campus that
becomes a knowledge hub and micro-econ-
omy for the surrounding area. Businesses
run from campus provide training opportu-
nities for students and allow the school to
pay for itself. “We don’t solve problems by
throwing money at them,” Blecher states. “It
is by cultivating passion, intelligence and
creativity that we create lasting change.”
by Stephen Watt
Papua New Guinea during the transition of
the country from colonial status to self-gov-
ernment and Independence. He currently
serves as the Honourary Consul to Canada
for the Government of Papua New Guinea.
This was Prof. Beatty’s third honour from
Papua New Guinea, as he is also the recipi-
ent of an Independence Medal in 1974 and
was made an Officer of the Most Excellent
Order of the British Empire by her Majesty
Queen Elizabeth II in a ceremony at
Buckingham Palace in London, UK in 1993.
by Ken McGuffin
Rotman Magazine Winter 2007 • 87
News Briefs
Rotman Prof.Wins HP Technology for
Teaching Higher Education Grant
A Rotman professor known for his use of
technology in the classroom has won a
2006 HP Technology for Teaching
Higher Education Grant valued at
more than CAD $80,000. The grant, part
of the HP Technology for Teaching
Initiative, is designed to improve student
success and engage faculty through the
innovative deployment of mobile technol-
ogy in the classroom.
Jan Mahrt-Smith, an assistant pro-
fessor of Finance, plans to redesign the
Finance course in the first year of the
Rotman MBA program using HP mobile
technology. The grant includes HP wire-
less equipment for use by students and
faculty. The equipment includes wireless
HP tablet PCs, a portable digital projec-
tor, and associated equipment. The tablet
PCs are lightweight laptop computers
that allow pen-based input. Prof. Mahrt-
Smith will also receive a stipend for his
work on the project and will also attend
the annual Worldwide HP Technology for
Teaching Higher Education conference in
early 2007. Profs. Uli Menzefricke and
Rotman School Introduces Interactive Trader Simulation Platform
A breakthrough tool in trading education,
the Rotman Interactive Trader (RIT)
platform, has been launched by the Rotman
School’s state of the art Financial Research
and Trading Lab (FRTL).
Developed at the School, the software
creates a real-time trading environment
where participants are presented with chal-
lenging situations that are designed to teach
different types of investment, trading, and
hedging strategies in a hands-on manner.
The software supports equity, fixed
income, and derivatives products and has
been designed to function on either a local
university network or via the Internet.
“The RIT is a cornerstone of our
dynamic learning facility, which enables stu-
dents to apply, critically examine, and
develop what they have learned in the class-
88 • Rotman Magazine Winter 2007
Photo: Ken McGuffin
David Dunne, co-directors of the Rot-
man Teaching Effectiveness Centre
and Larry Harrison, director, Informa-
tion Technology at Rotman, contributed
to the project proposal.
“The HP Technology for Teaching ini-
tiative focuses on transforming teaching
and learning through technology,” said
Lynn Anderson,Vice President, Market-
ing and Alliances, HP Canada. “By
integrating mobile technology in meaning-
ful ways into their classrooms, instructors
can increase student achievement and
interest and prepare them for greater suc-
cess in the competitive global workforce.”
Since 2004, HP has committed US
$36 million in Technology for Teaching
grants to more than 650 schools world-
wide to support its broader education goal
of transforming teaching and learning
through the integration of technology. In
Canada, this is the first year of the Technol-
ogy for Teaching Higher Education grant
program, and HP received many high-cal-
ibre applications. More information about
the 2006 HP Technology for Teaching pro-
room using applications and information that
they will find in the workplace. The RIT
trading cases are a prime example of our
learning-by-doing approach,” says Prof. Tom
McCurdy, the FRTL's founding academic
director and co-author of the trading cases.
A prototype of RIT was introduced
last February at the Rotman Interna-
tional Trading Competition (RITC)
where over 150 students from 36 schools
competed for over $15,000 in prizes. “The
software performed flawlessly,” says Kevin
Mak, competition manager and chief
architect of RIT. “At the open and close of
trading, we had upwards to 50 trades per
second being processed by the system.”
Trading labs such as the FRTL at Rot-
man have been one of the focal points for
development at North American business
Christianne Banfield of HP Canada with
Prof. Mahrt-Smith
gram and grant recipients is available at
www.hp.com/go/hpteach.
Prof. Mahrt-Smith joined the Rotman
School as an assistant professor of Finance in
2002. He has taught in the School’s MBA
and PhD programs, including the first-year
Finance course in the two-year MBA pro-
gram, winning several teaching awards for
his work, including the 2005 Roger Mar-
tin and Nancy Lang Award for
Excellence in Teaching. He is also at the
forefront of bringing innovate technological
teaching tools to the classroom, and is well
known for his regular participation in stu-
dent activities such as MBA Orientation and
fundraising events. Prof. Mahrt-Smith has
written in academic journals on the areas of
corporate finance, agency theory and appli-
cations of asset-pricing and option-pricing.
by Ken McGuffin
schools. The Rotman Interactive Trader is a
response to the overwhelming demand for
more educational tools for these unique set-
tings. Rotman Interactive Trader is available
to academic and private institutions on an
annual software lease basis. For more infor-
mation. visit http://rit.rotman.utoronto.ca
by Ken McGuffin
Tata Veteran Focuses on
Building Knowledge in India
Integrative thinking, characterized by the
ability to create novel solutions in the face
of seemingly intractable challenges, finds an
impressive champion in Dr. Faqir Chand
Kohli, commonly known as the father of
India’s IT industry. Former vice-chairman
of Tata Consultancy Services (TCS),
Dr. Kohli shared his thoughts on the chal-
lenges of creating an creating, nurturing
and growing India's software industry in a
session of the Rotman Integrative Thinking™
Speaker Series on October 5.
Born in Peshawar, Pakistan, Kohli joined
TCS in 1969, after receiving engineering
degrees at Queen’s University and MIT. In
his three decades at TCS, he transformed it
from a 10-person operation to Asia's largest
IT consulting, services and business-process
outsourcing organization, with 80,000
employees working in India and around the
world. The company’s phenomenal growth
was achieved despite early resistance from
the Indian government, which viewed com-
puter technology as irrelevant to the needs
of the nation’s largely rural, impoverished
As Canadian as Hockey and Beer
Ron Joyce (pictured above) helped build
Tim Hortons into one of Canada’s most
successful home-grown companies, earn-
ing over a billion dollars a year, and
boasting a brand as integral to our national
culture as hockey and beer – and yet his
name is often overshadowed by that of the
Photo: Stephen Watt
population. In 1974, when TCS won a con-
tract to design software for Burroughs, the
American-based computer manufacturer,
the actual computer model that the software
was intended for had yet to be cleared for
import into India.Without the ability to test
their software, Dr. Kohli’s team had to rely
on a significant degree of guesswork, and yet
the software, once delivered, worked almost
flawlessly, and the contract led to dozens
more with Burroughs and other firms.
Dr. Kohli credits his own personal
resourcefulness on an ability to “learn how
to learn,” developed during his days as a
university student. In his efforts to build
TCS into an IT giant, he has been aided by
the natural strengths of the Indian popula-
tion: “We Indians not only speak English,
we can think in English,” he says.The agrar-
ian bias of the Indian economy has also
proved to be a surprising blessing. “We
missed out on the industrial revolution, so
we lacked the constraints of that revolu-
tion, namely the mechanical mindset,” says
Dr. Kohli. “Information technology, above
restaurant’s famous co-founder and name-
sake.To help set the record straight, Joyce
recently published a book with author
Robert Thompson, titled Always Fresh:
The Untold Story of Tim Hortons by the Man
Who Created a Canadian Empire (Harper-
Collins, 2006). On October 11, Joyce sat
down with Prof. David Beatty in Rot-
man’s Fleck Atrium before an audience of
Rotman students, faculty, alumni and
friends to discuss the book and the trans-
formation of Tim Hortons from a small
town restaurant into the billion dollar
enterprise it is today.
Joyce left his home in Tatamagouche,
Nova Scotia, at the age of 15 and served as
a sailor with the Royal Canadian Navy in
Korea, and as a police officer in Hamilton,
Ontario, before trying his hand as a fran-
Dr. Faqir Chand Kahli
all, demands the capability to think clearly,
which we have in abundance.”
Since officially stepping down as chair-
man of TCS in 2000, Dr. Kohli has focused
on advancing engineering education in
India. With the Indian Institute of Technol-
ogy, Bombay, and India’s Ministry of
Information Technology, he initiated a proj-
ect to graduate 3,000 microelectronic
engineers annually at the master’s level. He
has also promoted efforts to produce
affordable computers and open source soft-
ware in Indian languages, to help spread the
benefits of the technological revolution as
widely as possible. His current brainchild is
to use computer aided sounds and images
to impart basic literacy, particularly to illit-
erate adults, in a matter of months. “Your
education never ceases,” says Dr. Kohli. “If
one has learned how to build knowledge,
one will never become obsolete.”
by Stephen Watt
chise owner of a local Dairy Queen. He
came to know Tim Horton, the NHL
player, as an occasional patron of his Hamil-
ton donut shop, and became an investor in
the business in 1965. Following Horton’s
death in a tragic automobile accident in
1974, Joyce purchased Horton’s share of
the partnership from his widow, and suc-
cessfully franchised the company over the
next two decades. In 1995, with more than
1,000 Tim Hortons restaurants in opera-
tion, Joyce sold the chain to Wendy’s
Restaurants, led by his golfing buddy
Dave Thomas, in a deal that made Joyce a
billionaire and the largest shareholder of
the burger chain.
Explaining the phenomenal success of
Tim Hortons, Joyce spoke of the company’s
business philosophy, which puts the needs
Continued on page 90
Rotman Magazine Winter 2007 • 89
News Briefs
The Costco Story
In the world of retail, making your cus-
tomers feel insecure can be a good thing,
according to Louise Wendling. “Our cus-
tomers learn pretty quickly that if they see
something they like in one of our ware-
houses, they have to buy it right away,
because it won’t be there when they come
back.” That’s just one of the tips Costco’s
senior vice president and general manager,
eastern Canada region, shared with the
crowd in the inaugural Rotman Merchandising
Experts Speakers Series on September 28th.
To hear Wendling tell it, the Costco
story is one of a simple concept with excel-
lent execution. “In a nutshell, we offer
goods and services at the lowest possible
price in order to give small and medium-
sized business owners volume-buying
power from which individual consumers
can also benefit.”
Founded by James Sinegal and Jeffrey
Brotman, Costco opened its first warehouse
in Seattle in 1983. Sinegal had started out
working for Sol Price at Price Club
(which Price founded in 1976), and the
Costco business model was similar to Price
Clubs’: both charged a membership fee and
catered primarily to small-business owners,
carrying quality, brand name merchandise at
substantially lower prices than are found at
conventional sources. Price Club and Costco
merged in 1993, and the company’s name
was changed to Costco Wholesale in 1997.
Today, Costco employs about 118,000
full- and part-time employees at its 483 loca-
tions: 354 in the U.S. and Puerto Rico, 68 in
Canada, 29 in Mexico, 18 in the UK, five in
Continued from page 89
of franchise owners front and centre. “Con-
trary to a lot of the major franchise
systems, I always considered my customers
to be the store owners themselves.” Under
Joyce’s leadership, the company developed
a central distribution system that provided
store owners with product at significant
savings. The distribution system “worked
out for everyone,” says Joyce, “and it
became an integral part of what made this
company great.”
90 • Rotman Magazine Winter 2007
South Korea, five in Japan, and four in Taiwan.
“We do $60 billion per year in sales in the
U.S. and $9 billion in Canada,” says Wendling,
“and we now have six million Canadian card-
holders, and 47 million worldwide.”
While Wal-Mart is renowned for its
Photo: Ken McGuffin
low ‘SG&A’ [selling, general and adminis-
trative expenses], Costco’s is actually
significantly lower, she says. “Our SG&A
is 9.74 per cent, while theirs is 17.97.
And that’s not a result of us paying low
wages to our employees. After four years
on the job, our cashiers make $50,000,
plus bonuses; and all Costco employees
get benefits and pension, which we pay
for entirely.”
Costco’s business is driven by knowl-
edge of its customer, she says. “Our
customers have high disposable incomes, and
they demand high quality. A vendor might
offer us imitation-crystal vases for a great
price – but we wouldn’t be interested,
because we know that our customer wouldn’t
be interested.”
Look around a Costco warehouse, and
you’ll find all categories of goods, but very
little choice within each, she notes. “We focus
on having very low SKUs [the total number of
separate products in a store]. We only have
3,900, while The Bay, for instance, has one
million. Our buyers’ choices are tougher, so
that our customers’ choices are easier. If a
particular buyer goes over their SKU limit, I
immediately ask them why.”
The right price is another key to
Costco’s philosophy, she adds. “We don’t
have ‘loss leaders’ [whereby a retailer sells a
Still, it’s one thing to establish a thriv-
ing chain, and quite another to turn that
chain into a national icon. Joyce believes
that Tim Hortons has benefited from a
longstanding strategy to focus on smaller
markets: “We decided, early on, to domi-
nate the industry in each small town,” he
states. “When young people migrate to the
major centres, they bring their loyalty
with them, and think of Tim Hortons as a
place like home.” It’s also possible that
Rotman Professor George Fleishman with
Louise Weldman.
product below cost, but jacks up the price
of other items significantly to make up for
it.] And in addition, we never go above a 14
per cent margin. For us, the ‘right price’
must meet these two rules.” A shopper may
find peanut butter for 10 to 20 cents
cheaper somewhere else, she says, but if
they look closely, “they will see that the
vanilla (or another product) costs double
what it costs here.”
“Instead of asking, ‘how much can we
sell this item for?’, we ask, ‘how little can
we sell this for?’ Maximizing volume is our
goal. For instance, we recently dropped the
price of our cheesecake by $2, and sales
increased by 60 per cent.”
Future plans for Costco include gas sta-
tions, travel, cars and liquor. “One key
challenge we face is keeping the government
out of our business,” says Wendling. “Maybe
the government should try modeling its
organization on ours. If they did, I’m pretty
sure we wouldn’t be paying such high taxes!”
by Karen Christensen
Joyce’s own passion for the business has
rubbed off onto the nation as a whole. “I’m
very fortunate. I fell in love with the
industry. I lived and breathed it,” he says. “I
don’t know anyone who’s passionate about
what they do who isn’t successful. There
are so many opportunities for entrepre-
neurship in this country. If you’re creative,
innovative and stay ahead of everybody
else, you’ll never go wrong.”
by Stephen Watt
Volunteers Recognized for Commitment to Rotman
In September, eight of the Rotman School’s top volunteers were honoured for their outstanding personal service to the University of
Toronto at the 17th annual Arbor Awards.The 2006 recipients are:

Geoffrey Beattie, President, The Woodbridge Company Ltd.

Geoffrey Beattie is a long-time member of the Dean’s Advisory Board, generously contributing his time, boundless energy
and expertise to the School. Geoff has also helped guide and mentor students through the MBA Candidates Mentorship pro-
gram run by the School’s Corporate Connections Centre.

Purdy Crawford, Counsel, Osler, Hoskin & Harcourt LLP

Over the past two years, Purdy Crawford has devoted much of his time to the Director’s Education Program (DEP), a joint ini-
tiative between the Rotman School of Management and the Institute of Corporate Directors (ICD). In addition to his role as
a Fellow at the Institute, Purdy has served as the program’s Executive-in-Residence and been a keynote speaker at a number
of School events.

Dr. Tony Fell, Chair, RBC Capital Markets

As a donor to the L.R.Wilson/R.J. Currie Chair in Canadian Business History and a member of the Canadian Business
History Advisory Board, Tony has had a significant impact in the development of the nation’s first course in Canadian
Business History. As a guest speaker,Tony has provided the students with valuable advice and guidance.

Anne-Mette de Place Filippini, Vice President and Portfolio Manager, AIC Ltd.
For more than five years, Anne-Mette has helped lead the School’s fundraising campaign as a member of the Campaign
Committee and the Rotman Advancement Board. In addition to being an active volunteer, Anne-Mette has been very
involved in helping develop the curriculum for the Canadian Business History Course. She has participated in the
course as a guest lecturer and has co-authored a case study with Professor Joe Martin.

Mary Hallward, Executive Vice President, Director and Chief Risk Officer, McLean Budden
Mary is a proven leader in fundraising for the Rotman School.As a loyal and generous donor to the School and the Uni-
versity, she is also an active member of the Rotman Vision Fund Committee. Mary has been a driving force in helping
the school to become a leader in annual alumni giving.

Delaine Hampton, Director, Consumer & Market Knowledge, Procter & Gamble
As a long-time member of the Marketing Advisory Board, Delaine has generously volunteered her time and energy in
helping design a truly integrative Marketing curriculum at the Rotman School. She has also participated in a num-
ber of School events as a guest speaker and presenter and has always been willing to offer her expertise to faculty,
staff and students.

Andrea Rudnick, Vice President, Dundee Securities Corp.

Andrea is a long-standing member of the Rotman Alumni Board and has provided sage advice and direction in helping Rot-
man grow its alumni programming. Andrea helped spearhead Rotman’s successful new monthly networking events and is
a loyal supporter of the annual Rotman Vision Fund.

Bill Young, President, Bealight Foundation

Bill continues to show his commitment to the University through his exceptional work at the Rotman School.Through
the Bealight Foundation he established the MBA Fellowship for Social Entrepreneurs, and serves on its selection committee.
Bill has also committed a generous amount of time to mentoring the fellowship recipients during their time at Rotman
and beyond.
by Catherine Riddell

Rotman Magazine Winter 2007 • 91

News Briefs
Dean Named to Inaugural Premier’s Research Chair
Last September, the Ontario Government
announced that it was investing $3 million
to establish the University of Toronto’s first
Premier’s Research Chair at the Rotman
School, to be held by Dean Roger Martin.
“The selection of Roger Martin to this
important position supports the McGuinty
government’s commitment to innovation and
increasing Ontario’s global competitiveness,”
said Ontario Minister of Economic Develop-
ment and Trade Sandra Pupatello. “With
this investment, we are taking steps to
develop Ontario into a leading jurisdiction,
which will mean greater opportunities for
Ontario families in the future.”
In total, the government is spending
$31 million to establish Research Chairs at
selected universities. “Our government is
committed to research and innovation, so
that everyone in Ontario has a fair shot
at success and more opportunities to
build a better life for themselves and
their families,” Ontario Premier and Minis-
ter of Research and Innovation Dalton
Building Diverse
Workplaces
On November 6, “Building Diverse
Workplaces: Models for Successful
Inclusion of LGBT Employees” drew a
full audience to the Fleck Atrium for a dis-
cussion of sexual diversity in the workplace.
Four panellists, including Susan Black, a
consultant and former head of Catalyst
Consultants, gathered to discuss the
opportunities available to companies that
create a welcoming work environment for
employees identifying as lesbian, gay, bisex-
ual or transgendered. “Companies are more
effective in generating revenue if their
employee base reflects their customer base,”
said Black. “They also enjoy better business
outcomes – with more innovation and cre-
ativity, and less group think – when the
workplace is diverse.”
In the war for talent, companies seeking
to attract and retain top employees must vie
to prove their socially conscious credentials.
92 • Rotman Magazine Winter 2007
McGuinty said. “Our collective devotion
to research and innovation will lead to
exciting new products and services, which
Photo: John Hryniuk
will in turn, create wealth, raise our stan-
dard of living and enhance our shared
quality of life. Roger Martin, as Chair, will
bring ideas to the table that will help
improve Ontario’s productivity and com-
petitiveness.”
In addition to his role as Dean of the
Rotman School, Martin is also Chair of the
Ontario Task Force on Competitive-
ness, Productivity and Economic
Progress. The Premier’s Research Chair
will reside within the Rotman School and
will be separate but complementary to the
Task Force.
In November, the Task Force released its
Fifth Annual Report which calls for an invig-
orated debate on the importance of the
prosperity agenda. Ontario’s economy is one
of the world’s most successful; and most signs
reinforce this. But it is not meeting its full
potential, and the province’s GDP per capita
From left, David Rayside, Susan Ursel, Susan Black and Brad Salavich.
“Your approach to LGBT issues is a bench-
mark, an indicator that you are a progressive
employer,” said Brad Salavich, LGBT pro-
gram manager for global workforce diversity
at IBM. Susan Ursel, an employment
equity lawyer, agreed, calling ‘queer
employees’ the “canaries in the coal mine”,
whose experiences on the job, positive or
negative, are indicative of a company’s atti-
tude toward workers of all stripes.
In Canada, employee groups and
labour unions have been active in promot-
ing a social agenda. “Employers have had to
address harassment based on gender or sex-
is now $6,100, or 12.4 per cent, behind the
median of its 16 peer jurisdictions.
“We are calling for a shifting of our
overall attitude from collective complacency
to a shared determination to close the pros-
perity gap,” says Martin. “If party platforms
over the past few elections are any guide to
public attitudes, it’s clear that issues related
to our competiveness, productivity, and
prosperity are not seen as centrally impor-
tant to the public. We need to raise the
volume on these issues.”
The complete report is available at
www.competeprosper.ca
by Ken McGuffin
uality, or face the legal consequences,”
stated David Rayside, head of U of T’s
Sexual Diversity Studies. While grassroots
activism is important, cultural change must
also be promoted at senior levels if it is to
succeed. “Managers will get on board if
they see a business benefit,” argued Black.
“You need to sell [sexual diversity] as not
just an equity or a legal issue, but as a busi-
ness issue. If you can bring all your
identities to work, you’re going to be more
engaged and more productive, and the
company will reap the rewards.”
by Stephen Watt
 Investment Fund Creates New Opportunities for MBA Students
Rotman students interested in a career in
funds management will gain not only the
theoretical background in value investing,
but also practical experience investing ‘real
money’, thanks to a generous $1 million
gift from John Watson, (BCom ‘66, MBA
‘67), founding partner of Sprucegrove
Investment Management Ltd.
The gift will provide students with the
first opportunity in the School’s history to
work with a live portfolio. This is Watson’s
second first-of-its kind gift to the Rotman
School: in 2003, he provided funds to
establish the John H. Watson Chair in
Value Investing, the first Chair in Canada
established to focus specifically on Value
Investing, which involves the search for
companies whose share prices are under-
valued. This ‘bargain-hunter’s’ approach to
selecting stocks assesses a company’s intrin-
sic value using a series of defined
quantitative and qualitative assessments.
“This is a fantastic opportunity for the
students and really changes things,” says
Finance Professor Eric Kirzner, holder
of the John H. Watson Chair in Value
Investing. “It will be interesting to see how
their investment strategies change when
they know they are working with real
Live@Rotman: Mavericks at Work
Bill Taylor, co-founding editor of Fast Com-
pany magazine and New York Times columnist
(above, left), visited the Rotman School on
October 18th along with Rob McEwan,
93 • Rotman Magazine Winter 2007
money. They will learn so much more
working with a real money portfolio – and
that experience will set them apart when
they graduate.”
Prof. Kirzner teaches Rotman’s sec-
ond-year course in Value Investing, a course
made possible by Watson’s 2003 gift. The
course, which has a hands-on approach,
divides students into teams that provide
investment advice to a client. In the past,
the class has provided year-end recommen-
dations for its paper portfolio, but in 2006
the first portion of Watson’s $1 million gift
was invested based on recommendations of
the class of 2005/2006.
The 2006/2007 Value Investing class
will inherit the portfolio and, under the
oversight of a committee, will make invest-
ment recommendations based on
fundamental research and a rigorous
approach to valuation. The $1 million
investment fund, held in trust for the Rot-
man School, will be reinvested in
perpetuity to provide generations of Rot-
man students with invaluable ‘real money’
investing experience.
“When I established the Chair, there
were few students who even knew what value
investing was – never mind having expertise
former chair and CEO of GoldCorp
Inc. (above, right) as part of the ongoing
Live@Rotman series. McEwan’s is one of 30
highly innovative businesses with disruptive
Prof. Eric Kirzner with John Watson
in the field,” said Watson. “Today, more and
more students are realizing the importance of
value investing and the challenge of finding
bargains that, from time-to-time, are out
there to be discovered. With this investment
fund, Rotman students will gain practical
experience that will be helpful to a career in
investment management.”
“Thanks to John’s generous support,
the Rotman School will nurture a genera-
tion of extremely well-trained security
analysts who have the tools, ethics and
experience to enhance Canada’s prosperity
in investment management,” says Dean
Roger Martin.
by Catherine Riddell
ideas profiled in Taylor’s book, Mavericks at
Work:Why the Most Original Minds in Business
Win (William Morrow, 2006). “There is an
ironclad relation between what a business
stands for, and its success.The best strategies
today involve a point of view about creating
a better future for your industry,” says Taylor.
McEwan, who Taylor lauds for his “open-
source leadership,” agreed. “By stepping out
of ‘line’, you can get a clear view of the tar-
get. It’s a question of problem definition. By
approaching a problem in a unique way, you
can generate alternatives that others can’t.”
Others profiled as great “architects of partic-
ipation” in the book include Whole Foods
Market, Craigslist, and Pixar Anima-
tion Studio.
by Karen Christensen
Rotman Magazine Winter 2007 • 93
Alumni Profile: Sandra Hanington (MBA ’92)
by Catherine Riddell
Catherine Riddell: Describe your role
at BMO.
Sandra Hanington: As executive vice- pres-
ident, customer strategies and marketing, I
head up the marketing, product and direct
bank areas for our personal and commercial
business. For me it’s about understanding
our customers, putting together the right
offers that meet their needs, communicating
those offers to our customers and to our
employees, and delivering great service
through our direct channels.
CR: How did you get where you are today?
SH: I worked for a bit as an engineer and
ended up doing industrial marketing when I
was with Sunoco. From there, I made the
shift into financial services marketing. Most
recently, I spent three years in Chicago in a
very similar role with our U.S. personal and
commercial banking group, Harris Bank.
It was a huge endeavour to move my whole
family down there, including my three chil-
dren, but it was a wonderful adventure for all
of us and I'm definitely the better for it.
CR: How do you marry your skills as a
licensed professional engineer and an
MBA grad in your current position?
SH: Surprisingly well! My engineering back-
ground was really demanding, so I’m not
easily frightened by complex things. In fact,
complexity was one of the things that
attracted me to financial services because I
knew it would be intellectually challenging,
and I liked that. I think the whole strategy and
problem solving orientation has also stood me
in very good stead. The practical engineering
bent means that I’m very results-focused and
that works well for our business too.
CR: What is the most important thing you
learned at Rotman?
SH:The first thing was learning how to put
together a persuasive business argument.
Secondly, in the business case simulations I
94 • Rotman Magazine Winter 2007
learned rule number one was that you
never go far wrong if you invest in market
research. That became a rule of thumb for
me later on – make sure you understand
what your customers want. If you wait for
them to tell you, it’s often too late.
CR: Fast forward now to the date you
are set to retire. Looking back on your
career, how would you like to have
made your mark?
SH: I would like to see the extent to which
I’ve helped make financial services much
more customer-centric – a business where
we meet customers’ needs and deliver
exceptional service and are wildly success-
ful for our shareholders, as a result. As a
leader, I would like to have a legacy of hav-
ing helped the people that work for me
develop really engaging, challenging,
rewarding careers that make a significant
contribution to the organization .
CR: Do you have a mentor?
SH: I do! She’s a Rotman grad, a woman I
once worked for. She is very smart, is a
very strong marketer and has a great work-
life balance. I continue to admire and
respect her for all of those reasons.
CR: Do you have any advice for current
MBA students who aspire to a career in
financial services?
SH: This is garden variety advice, not just
for the financial services: make sure you
love the place where you’re considering
working. Make sure the culture feels right
to you, that it brings out the best in you.
Don’t make short-term decisions that go
against your nature. Secondly, make sure
there’s a way for you to contribute to the
organization’s success – that whatever your
role is, that it’s helping to move the organ-
ization forward. From that you can build a
very progressive career and feel good at the
end of the day.You’ll go home feeling that
you really made a difference.
CR: How do you know, early on, that the
culture will be right for you?
SH: Find out what their measures of success
are. Their measures of success should be a
very clear pointer to the values of the
organization, and a way for you to test if
those align well with you. So if you’re all
about sales and that’s where your scorecard
starts and stops, an organization that meas-
ures success on some other scorecard, or
doesn’t measure that at all, isn’t going to be
a very good fit. You also have to know
where you want to feel your impact. In
their heart of hearts, most people know if
they want to drive things from the centre
or be out in the field making it happen. I
think having that kind of self-knowledge is
really important too.
CR: What’s next for you?
SH: I just returned to Canada in this role, so
trying to be successful in this job is really
important. Right now it’s about really try-
ing to figure out how to take our retail
banking offerings to the next level and how
to win and keep our customers’ trust and
business. In this market, there are all kinds
of opportunities for a smart, customer-
focused organization. After this interview?
More meetings and a dinner. It’s a really
busy schedule, but I love what I do.
Alumni Profile:Trung Nyugen (MBA ’87)
by Belmira Amaral
Belmira Amaral: Describe your role as
senior vice president of finance and
strategic alliances at La Caisse Centrale
Desjardins du Quebec.
Trung Nyugen: My major responsibility at
Caisse Desjardins – similar to that of a chief
financial officer – is to take care of all the
financial reporting, as well as human
resource and administration strategic plan-
ning, and communication within the
international banking division. The strate-
gic alliances portion of my title was added
a few years ago.When we were thinking of
expanding outside of Quebec, instead of
going the acquisition route we decided to
form strategic alliances with the co-op sec-
tor and the credit unions outside of
Quebec. I am also responsible for dealing
with rating agencies such as Standard and
Poors, Moody’s and DBRS.
BA: In what capacity did you start out in
this industry, and what were the keys to
advancing to your current position?
TN: I started at the Bank of Montreal
in 1975, in an administrative and credit
function at the domestic level, and
worked for about two years at the inter-
national level before joining the
Desjardins Group in 1984. Desjardins
sent me to the Rotman School to do my
Executive MBA in 1987. I was the first
person at Desjardins to do an MBA. This
was a great opportunity, since it coin-
cided with the opening of our Toronto
office. The EMBA was a strong indicator
of me advancing in my career. I was a sen-
ior manager at the time, and the day after
I completed my degree, my boss made me
vice president.
Although I worked at BMO in inter-
national banking based out of Toronto for
almost two years, when I was transferred
out of Quebec I was still a little discon-
nected from the Canadian scene.
Mingling with the other students at Rot-
man gave me a better perspective on
Canadian culture. We underestimate the
cultural aspects of the market, which are
fundamental to being successful in any
given market. It also helped me look at
things south of the border when we set up
a branch in Florida, providing me with a
global view.
BA: As a company with strong roots in
Quebec, what challenges and opportuni-
ties do you expect to encounter as
Desjardins expands its operations into
the Ontario market?
TN: Our main strategy for building the
Desjardins Credit Union in Ontario is
based on the existing human resources that
are there.We transferred just one executive
from Quebec to maintain the structure. So
we’ve given them a lot of leeway and sup-
port, without imposing our way of doing
things. The unit is doing extremely well: it
is two years ahead of its business plan and
very profitable. Normally, when you set up
a new unit, you give it five or six years
before it even reaches the break-even
point. We recently engaged the Rotman
Impact [student consulting] group to look
at a small market in the Guelph and Cam-
bridge area. There is no point for
Desjardins to try to compete against the big
five in Toronto. Our strength lies in provid-
ing excellent service to areas that are not as
well serviced.
BA: How do you see Desjardins pro-
gressing at the international level in the
years ahead?
TN: At this point we are focusing on
Canada and U.S., what we call our ‘natu-
ral market’. But we are conducting a
study to find an international strategy that
takes into consideration the needs of our
members. We are much more involved in
the U.S., where we have just been granted
a license to open a Caisse Centrale
Desjardins branch as part of the Des-
jardins Bank that we have in Florida. So
the bulk of our efforts right now are con-
centrated in the U.S. and expanding
outside of Quebec into under-served
regions of Canada.
BA: What are the most valuable tools the
MBA provided, with respect to advanc-
ing in your career?
TN: The interaction between my peers
and the teaching staff is something I val-
ued very highly. The EMBA gave us a
structure for our thinking process. There
was never a wrong or right answer; it was
about ‘how do you perceive things?’ and
‘how would you deploy that?’The faculty
were down-to-earth and very well con-
nected to the market, so they were able
to interact with us on real issues, instead
of only referring to concepts. At most
schools the faculty are highly academic,
so there is a big gap between the reality
and the concept.
BA: What’s next for you?
TN: Ensuring that our strategy on moving
out of Quebec is successful.We have a long
way to go. The case we are making in
Ontario and other Canadian locations is
that we are very customer-oriented. If we
can bring our strengths together to the
table, I believe that the co-op sector can be
much stronger, and the Canadian customer
will be better served.
Rotman Magazine Winter 2007 • 95
Alumni Capsules

Adam Yi Shen (MBA ’00)

Engagement Manager,
McKinsey & Company
Lives and works in: Shanghai, China

Best thing about my job: Able to work

with interesting and exciting people and
travel to various new places.

Biggest challenge of my job: Lifestyle is

tough as I have to fly away from home dur-
ing weekdays. Especially when I am on a
project in foreign countries, I need to fly
over 15 hours per week.

Most important skill(s) for my job: Com-

munication skills. Each day, I have to deal
with and deliver the message to clients.
Internally, there is constant flow and
exchange of ideas.
Proudest moment: The moment my head
office listened to my recommendation and
decided to reverse a billion dollar invest-
ment decision of a regional office.
The word that best describes me: Easy-going. Words of Wisdom: Balance is always
important. Life vs. work, family vs. busi-
How I relax: Traveling. ness, self interest vs. group interest,
pursuit of career and money vs. happiness
Most important thing my MBA taught and health. There are many important
me: Team work. things in life.

John Shepherd, CFA (MBA ’98)
Portfolio Manager,
RBC Investment Management UK Ltd.
Lives and works in: London, England
Best thing about my job: Every day is like
no other. Markets are dynamic with infor-
mation and news coming out 24/7.
Biggest challenge of my job: Being on
the ‘right’ side of the trade – or having the
conviction to see it to its conclusion.
The most innovative thing I’ve ever done
is: Structuring a principle protected note
tied to the price of CO2 emissions, coal
and uranium.
How I relax: Saturday afternoon: the FT in
one hand and a Guinness in another.
Most important thing my MBA taught
me: Empathetic skills such as listening and
noting the behaviour of colleagues. Learn-
ing to address issues directly will help you
build consensus in any organisation.

Most important skill(s) for my job: Rational-
ity, ability to act quickly, humility, consistency
and passion: you have to love the markets.
The word that best describes me: Patient
– with people and with investments.
Words of Wisdom: Judge a man by his ques-
tions rather than this answers – Voltaire. To
live a creative life, we must lose our fear of
being wrong – Joseph Chilton Pearce.
Who loves not women, wine and song remains
a fool his whole life long – Martin Luther.

96 • Rotman Magazine Winter 2007

Ali Yu (MBA ’97)
Senior Director, Business Management,
World Markets Technology,
Canadian Imperial Bank of Commerce
Lives in: Markham, Ontario
Works in:Toronto
Best thing about my job: My role is to
drive efficiency and effectiveness in regards
to project delivery. As a member of the
leadership team, I have the opportunity to
stay in tune with work dynamics at an
enterprise-wide level while also perform-
ing within specific functional areas.
Biggest challenge of my job: Realizing
benefits associated with implementing pro-
grams and processes when the associated
benefits cannot be immediately perceived
by the impacted parties.
Most important skill(s) for my job: Rela-
tionship management
Azam N. Foda (MBA ’00)
Chief Financial Officer, Par-Pak Ltd
Lives in: Oakville, ON
Works in: Brampton, ON
Best thing about my job: Belonging to a 29-
year-old, financially healthy and
still-expanding business. My finance team
functions as true business partners, guided by
the principals of the corporation and free of
any targets or expectations set by the street.
Biggest challenge of my job: Balancing
the diverse viewpoints of multiple stake-
holders to achieve positive results for the
organization as a whole.
Most important skill(s) for my job: The
ability to present numbers that speak for
themselves. Clear, concise communica-
tion is key.
Proudest moment: Every evening when I
reach home and am greeted by my three
young daughters aged three, six and ten years,
and every time I see my wedding pictures.
Proudest moment: By far, my proudest
moment was the birth of my dear son,
Nicholas, now five years old.
The word that best describes me: Always
prepared
The most innovative thing I’ve ever
done is: My love for the arts and speech
has never diminished, and I enjoy a side
career as a DJ at a radio station.
How I relax: Going to a spa.
Most important thing my MBA taught
me: The ability to deal with ambiguity,
diversity and multiple priorities.
Words of Wisdom: To be optimistic:
always see the glass as half full as What the future holds for me: To be able
opposed to half empty. Also, while it is to strike a delicate balance between the
good to work hard, it is definitely better demands of my professional life and my
to work smart. personal life.
The word that best describes me:
‘Enthusi(azam)’ for growth and learning.
Appetite for growth is the driver, and con-
stant learning provides the fuel for the engine.
The most innovative thing I’ve ever done is:
My innovation is focused on process rather
than on product. There are numerous
incremental improvements in my tool kit to
support growing businesses.
How I relax: I enjoy music and watch rock
shows in my home theatre. Strumming on
my guitar, spending time with my family and
going for long drives in the country side.
Most important thing my MBA taught me:
Integrative thinking and the ability to quickly
understand cross-functional perspectives.True
learning came from interactive classroom and
group activities.The EMBA program provided
me years of broad-based experience com-
pressed together in a small time frame.
What the future holds for me: A future
Words of Wisdom: If one desires a change, filled with continuous professional and per-
one must ‘be’ that change before that change sonal growth coupled with an inner
can take place. But do not change your core satisfaction of having always put my best
values or your integrity. foot forward.
Rotman Magazine Winter 2007 • 97
John Lee (MBA ’77)
Senior Vice President and Chief Operating Offi-
cer,AEGON Life Insurance (Taiwan) Inc.
Lives and works in:Taipei,Taiwan
Best thing about my job:Motivating peo-
ple through formal people programs and
ongoing operational improvements with
visible deliverables.
Biggest challenge of my job: Providing
necessary infrastructure to support fast
business growth.
Most important skill(s) for my job: People
resource management.
As an “import” from
Proudest moment:
Hong Kong/North America, I turned
Amy Charette (MBA ’00)
P.Eng., MBA, CMC, CPIM
Director of Replenishment for Consumables and
Pharmacy / Hudson's Bay Company
Lives in:Toronto
Works in:Toronto/Brampton
Best thing about my job: Knowing my
actions and those of my great team can
improve a customer’s day and directly
impact the company’s bottom line.
Biggest challenge of my job: Making sure
everyone's skills and abilities are fully used to
solve a problem or embrace an opportunity.
Most important skills for my job: Ability
to prioritize inventory investment, team
member focus, store resources, and
vendor resources. Communication and
problem solving.
Proudest moments: The major moments of
motherhood make me most proud: seeing
my two beautiful girls, hearing them say
“Mommy” for the first time, and helping
them learn and grow. Professionally, each
time I have helped enable a team to achieve
something previously impossible.
98 • Rotman Magazine Winter 2007
around the back office operation of the
company in 3 months.
The word that best describes me: Motivator
The most innovative thing I’ve ever done
is: Shape people and programs to deliver
highly visible business results.
How I relax: Play tennis, basketball and golf.
Most important thing my MBA taught
me: Organizational Behavior Management
Words of Wisdom: Work hard, play hard
and have fun!
What the future holds for me: Further my
career growth to become the CEO of a
world class life insurance company in Asia.
The words that best describe me: Effec-
tive and enabling. Able to get things done.
The most innovative thing I've ever
done is: I attempt to incorporate innova-
tive ideas and solutions in all of the
projects and teams that I participate in. I
encourage others to think about solutions
in a new light and to work with each other
in a new way.
How I relax: Playtime with the kids.
Lego and Fisher-Price Little People are
still as much fun as when I was a kid. Each
weekend we are out exploring Toronto
through the eyes of a toddler – the Zoo,
Pioneer Village, Science Centre, ROM and
the local park.
Most important thing my MBA taught me:
How to best use available resources to achieve
great results. Integration in true form.
Words of Wisdom: Find a way to leave
something better than you found it
while having a positive impact on those
around you.
What the future holds for me: Continu- can about supply chain management, par-
ing to grow, learn and apply as much as I enting, and other passions.
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CLASS NOTES Editor: Jack Thompson

What’s Next? – How about another issue of Rotman filled to the brim with your class notes. Thanks to everyone who contributed to make this
section bigger and better than ever.
Our next issue is titled The Risk Issue, which provides a good excuse to make the Class Notes a bit more creative and ‘risky’ as well. So don’t
hold back, tell us about anything newsworthy: bonus marks for artistic impression!
If you’re thinking of submitting a class note, we’ve made it easy for you by setting up this web page, which includes a place to upload
photos: www.rotman.utoronto.ca/alumni/forms_classnotes.asp. Deadline for the next issue (Spring/Summer 2007) is Friday, March 16, 2007.
As a reminder, the Class Notes are also viewable on the Alumni Portal. Contact us if you need access by e-mailing alumni@rotman.utoronto.ca.
Thank you, and keep them coming! – Jack

MBA/MCom/DBA Republic, and one each in Romania and 1965

Full & Part-Time
Reunion Alert!
All MCom and MBA classes in hon-
oured years – i.e. those that end in
either a ‘2’ or a ‘7’ – are invited to
return to the Rotman School on May 31,
2007, to celebrate Reunion 2007. For
details, contact your class champion(s)
or Michelle Zathureczky, manager,
volunteers and reunion coordinator at
416-946-3665. You can also visit
www.rotman.utoronto.ca/alumni/
reunion.htm.
1956
Russell Smith’s varied career has
included stops in Toronto, Ottawa and var-
ious European cities, stints at Dexter
Corporation, Nortel and other technology
companies, and more recently, work in the
field of transportation. He writes, “My
MBA has proven an essential vehicle in my
international progress. As I concentrate on
making a business out of a technology, the
MBA is mandatory! I am still healthy, and
working hard to improve my tennis game!”
1958
Despite having retired, Douglas Crowe
has kept extremely busy with a host of vol-
unteer activities, participating in seven
projects in Bolivia, three in the Czech
Colombia. Douglas writes: “Each of these
has elements for future interesting unbeliev-
able stories!” Following this, he took two
groups to Cuba on a learning program, and
for the past 10 years, has been involved in a
program in Toronto where he has offered
free management assistance to the not-for-
profit sector. “I have come to the conclusion
that management is an art, not a science,” he
writes. “You just can’t learn it by reading a
book. There is an unlimited market for
opportunities working with the not for prof-
its so my days will never be dull.”
1964
John Bulloch was the recipient of the
Rotman Distinguished Business Alumni of
the Year Award in 1987. He had plans to
take a doctorate at the University of Indiana
but two babies disrupted that idea. “It was
in our accounting class that the professor
asked if anyone could help pick up a class at
Ryerson where the lecturer had died the
previous evening of a heart attack – the rest
is history,” he writes. “I wrote that history
for the 35th Annual Meeting of the Cana-
dian Federation of Independent Business in
June of this year. I started an e-learning
company (www.vubiz.com) when I was
turning the CFIB over to my successor
Catherine Swift. It is now roaring along
after ten years ,and just recently announced
a joint small business development project
with a group of powerful corporations and
not-for-profits.”
MBA Class Champion:
Cam Fellman
Cam.Fellman65@rotman.utoronto.ca
In Memoriam
It is with great sadness that we inform
you that our classmate and dear friend
Norm Harris passed away In Octo-
ber of heart failure. I am sure we will
all miss Norm’s wry humour and the
protracted stories only he could tell
like the one at our golf dinner in July.
(Cam Fellman)
Bowes Dempsey is happy to say that his
son Frank, just having finished a 10 year stint
in the French Army and leaving with the
rank of captain, is now enrolled at the Uni-
versity of Warwick (England) to get his
MBA. The Dempsey Corporation, pictured
below at a company golf outing, was
recently voted the seventh best employer
(small business under 300 employees) across
Canada by the Report on Business Survey.

100 • Rotman Magazine Winter 2007


1966
MBA Class Champion:
Gary Halpenny
Gary.Halpenny66@rotman.utoronto.ca
1967
MBA Class Champion:
Len Brooks
Len.Brooks@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
1968
MBA Class Champion:
George Hayhurst
George.Hayhurst68@rotman.utoronto.ca
1969
Joan Johnston is director of her own
company, J.M. Johnston & Associates Inc. in
Toronto.
1970
MBA Class Champion:
Charles Johnston
Charles.Johnston70@rotman.utoronto.ca
1971
MBA Class Champion:
Chris Ward
Chris.Ward71@rotman.utoronto.ca
Brian Clark recently retired after more
than 33 years at Euro Brokers in New York
City. Brian’s company lost 61 employees at
the World Trade Center on September 11,
2001. Since that time, he has acted as pres-
ident of the Euro Brokers Relief Fund,
offering financial assistance to the affected
families. Retirement will allow Brian and
his wife Dianne to spend more time with
their five (soon to be six) grandchildren.
1972
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/
reunion.htm, contact your class champion
or the Alumni Office.
Gordon Nichols is a semi-retired char-
tered accountant offering business advisory,
accounting and tax services to small busi-
nesses and individuals on a confidential and
personal basis. Enquiries are welcome.
Adrian Sark is a consultant in marketing
and sales at his own firm, Sark Agencies
Ltd., and a partner in two other firms, Sark
& Reynolds and AdROI Inc., all of Toronto.
He writes, “We now have two grandchil-
dren! Best wishes to the Class of ‘72 –
assuming there are still some breathing.”
1973
MBA Class Champion:
George Parker
George.Parker73@rotman.utoronto.ca
1974
MBA Class Champion:
Hank Bulmash
Hank.Bulmash74@rotman.utoronto.ca
1975
MBA Co-Class Champions:
Susan Frank
Susan.Frank75@rotman.utoronto.ca
Robert Johnston
Robert.Johnston75@rotman.utoronto.ca
1976
MBA Class Champion:
Jane Gertner
Jane.Gertner76@rotman.utoronto.ca
1977
MBA Class Champion
Judy McCreery
Judy.McCreery77@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunion.htm,
contact your class champion or the
Alumni Office.
MBA/MCom Full- and Part-Time
1978
Jacquie Houston is involved in payroll, ben-
efits and accounting for Baird MacGregor
Insurance Brokers Inc. Jacquie writes, “I
currently reside in Toronto in an old mag-
nificent renovated house with my three cats
and my daughter. Best wishes to all the
Class of ‘78 and I would love to hear from
anyone who remembers me.”
1979
MBA Class Champion
Lorn Kutner
Lorn.Kutner79@rotman.utoronto.ca
Janet Martin was recently appointed as
managing director of PMI Mortgage Insur-
ance Company Canada. She spent much of
her career with CIBC. As executive VP of
retail banking from 1999 to 2001, she led a
very successful division encompassing more
than 1,100 branches and 17,000 staff. Says
Janet, “I am looking forward to developing a
team in Canada that will help mortgage
lenders grow their businesses and enable
more Canadians to buy homes.”
1980
MBA Full-Time Class Champion:
Frank Hall
Frank.Hall80@rotman.utoronto.ca
Lou Carcasole helps people improve the
quality of their lives through stress reduc-
tion programs that result in improvements
in health and personal performance. Lou is
separated and has two adult children. He is
enjoying life and work more than ever. His
advice: “Work like you don’t need money,
love like you’ve never been hurt, and dance
like no one’s watching.” He sends his love
and best wishes to all.
Class Champion Frank Hall is working on
behalf of two new sports marketing pro-
grams for 2007. AIM Autosport, in support
of the Peter Munk Cardiac Centre, will be
the first Canadian team to enter the Rolex
Grand Am Sports Car Series in the top level
DP category. The second program involves
the selection of Canada’s next motorsport
star. A fully funded ride with AIM
Rotman Magazine Winter 2007 • 101
MBA/MCom/DBA Full & Part-Time
Autosport’s Formula Mazda program in
2007 will be the prize for the winner of the
Discovery Channel’s Star Racer series, to
be aired in the Fall of 2006.
Joe Polito is an educator with the Toronto
District School Board.
1981
MBA Full-Time Class Champion:
William Molson
William.Molson81@rotman.utoronto.ca
Class Champ Will Molson is a chartered
accountant specialising in indirect taxation.
Will and Christine live in the Toronto
Beaches area and are raising six children in
their spare time.
1982
MBA Full-Time Class Champion:
Danny Chau
Danny.Chau82@rotman.utoronto.ca
MBA Part-Time Class Champion:
Michael Hale
Michael.Hale82@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
Class Champ Danny Chau is a director
with Ambrose Financial Services (HK) Ltd
in Hong Kong.
102 • Rotman Magazine Winter 2007
Tom McAllister has been appointed as the and grow with the industry, serving our
president and CEO of Kids Help Phone, customers and delivering on the Tenet
Canada’s only toll-free, 24-hour, bilingual promise: ‘Every Project – A Success!’”
and anonymous phone and web counseling,
information and referral service for chil-
dren and youth. Tom has spent more than
twenty years in the consumer products
business working for Warner-Lambert,
Pfizer and Cadbury Adams. He has actively
volunteered in a number of community
outreach programs including United Way
and the Out of the Cold program for the
homeless. He was also enthusiastically
engaged in the volunteer Boards of Direc-
tors of the Integrative Management Adrian Wijeyewickrema is marketing
Challenge program at the Rotman School. manager at Honeywell Aerospace in Missis-
sauga, ON.
1983
Romeo D’Angela is president of Novadan 1985
Capital which funds emerging companies MBA Full-Time Class Champion:
with a focus on resources and energy. Gerald Legrove
Romeo is happily married to Bea and has Gerald.Legrove85@rotman.utoronto.ca
two children who (hopefully) will follow MBA Part-Time Class Champion:
their parents’ footsteps and attend U of T Daniel Eng
someday. Daniel.Eng85@rotman.utoronto.ca
Peter Sen reports: “Apart from financial Vytas Barsauskas is vice president, sales
services, I am allocating a lot of my time in for IBF Corporation in Garfield, NJ.
helping people with intellectual disabilities.
It is non profit but I have gained a lot of sat- Class Champion Dan Eng is very excited
isfaction out of it. I am now a director on about his new life after having spent 20 years
the BOD at Community Living York South at a major financial institution. His goal is to
and I am also building a new agency for the help one First Nations person find work in
Chinese community in Toronto.” IT, since by helping one person in the family,
he helps the entire family. Dan writes, “Life
1984 is a journey that really never ends. The fun
Yvette Holt is regional operating officer and excitement is in the doing.”
at RBC Royal Bank in Toronto.
Carlos Paz-Soldan is now president of
Tenet Computer Group, a 22-year-old
Toronto firm that specializes in the design,
implementation, and support of IT solu-
tions. One of Tenet’s founding partners and
now its sole shareholder, Carlos has also
served as VP of technology, and was the
main architect of Tenet’s eFusion Customer
Integration Portal. His other initiatives at 1986
Tenet include local area networking and MBA Class Champion:
messaging in the 1980’s, Internet and col- Roy Turunen
laboration in the 1990’s, and, more Roy.Turunen86@rotman.utoronto.ca
recently, mobility applications and integra-
tion. Carlos writes, “We continue to evolve

Martin Ayow is a derivative analyst at
Manulife Financial in Toronto.
Roland Ho is senior project manager
with CANNEX Financial Exchanges Ltd.
in Toronto.
Joe Leon is the co-president of A.G.S.
Automotive Systems in Scarborough, ON.
Lesley Poole is a senior consultant with
BMO Bank of Montreal in Toronto.
1987
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
Lauren Bradley is the vice president,
product management and marketing for
Foresters in Toronto.
Barry McInerney will join Russell Invest-
ment Group as director of client service,
after 19 years at Mercer Inc., where he most
recently served as president of Mercer
Global Investments in the U.S. He also
chaired the U.S. board of the Mercer Trust
Company, and was a member of Mercer HR
Consulting’s global leadership team. Based
in the New York City office, McInerney will
lead a 37-person team responsible for serv-
icing Russell’s U.S. institutional clients
throughout the country. McInerney will join
Russell’s operating committee and will also
serve as a member of the institutional exec-
utive committee.
1988
MBA Class Champion:
Grace Cheung
Grace.Cheung88@rotman.utoronto.ca
Class Champ Grace Cheung went on a
trip to southern China this summer, where
she taught at a summer English camp at a
local high school. It was a memorable expe-
rience to work with local students and an
international group of volunteers, who
came from Australia, Canada, the United
States and Hong Kong.The reality check of
her Mandarin-speaking ability was whether
the students showed immediate responses
to her explanations (given in Chinese) for
English terms!
Suzanne Giblon is an independent IT
consultant and managing director of
Final AnalySys Inc. since 1998. The firm
specializes in project management and
business analysis services for brokerages,
asset managers and wealth management
organizations. Suzanne and Clyde Robinson
were recently married and celebrated with
a fabulous three-week honeymoon in the
Galapagos Islands and Peru.
Richard Harvey is director, financial analy-
sis at Rogers Communications Inc. in Toronto.
David Higa has recently joined Windcroft
Financial Counsel Limited as vice-president
and portfolio manager. David is teaming up
with fellow Rotman alumnus Gordon
Bruce (MBA ‘90).Windcroft is a boutique
investment counsel providing discretionary
investment management to private clients.
Prior to joining Windcroft, David spent 15
years in the capital markets as a VP at TD
Securities in Toronto, and as a VP at Citi-
group in New York. David and his wife
Carol live in Oakville, ON, and have three
children, Jamison (ten), Holly (nine),
Jeremy (six).
1989
MBA Full-Time Co-Class Champions:
David Pyper
David.Pyper89@rotman.utoronto.ca
Maria Milanetti
Maria.Milanetti89@rotman.utoronto.ca
MBA Part-Time Class Champion:
John Harris
John.Harris89@rotman.utoronto.ca
MBA/MCom/DBA Full & Part-Time
David Bowden is responsible for the
P&L within business markets for Direct
Energy Canada. Prior to this, David led the
residential and small commercial energy
and services businesses in Canada East.
David began his engineering career at Gen-
eral Motors of Canada, and then spent 12
years in various roles at Warner Lambert
International, in Canada, the US, Europe
and South America (and speaks several lan-
guages as a result). David moved to Bata as
VP of international branded programs,
worked at Canada Post on a two-year initia-
tive, and then served as general manager
for Interbrew/Labatt, the largest brewery
in Cuba. David founded Empori.com,
growing the company to 125 employees
and 40,000 customers in less than two
years, and immediately prior to joining
Direct Energy spent three years with Sprint
Canada as president of Consumer Services.
David is an executive director on the Board
of Habitat for Humanity in Toronto, a
director of the Bata Shoe Museum, holds an
industrial engineering degree and an MBA
from U of T.
Jonathan Erling is managing director at
KPMG LLP in Toronto.
Suzanne Etherington is in residential
sales with Royal LePage Real Estate Ser-
vices in Toronto.
Michael Garratt returned from a four
year overseas assignment in Geneva,
Switzerland in 2005 and accepted the posi-
tion as VP and general manager for the
Rotman Magazine Winter 2007 • 103
MBA/MCom/DBA Full & Part-Time
consumer and industrial business with Excel
Polymers LLC near Cleveland, OH. Excel is
a US$400 million provider of custom poly-
mer alloys and material solutions, with
operations in the US, Mexico, the UK and
China. Michael writes, “the mountains and
skiing are certainly missed, but it is good to
be back closer to friends and family.”
Ruvan Waltman is the owner of Genesis
Building Corporation, a fully integrated
real estate development, construction and
management company with operations
throughout southern Ontario. Ruvan’s
wife Danielle and three children, Jamie,
Marley and Jacob are his core assets.
Ruvan wishes “a hearty hello to everyone
in the class of ‘89.”
1990
Glenn Laxdal is VP of product manage-
ment at Nortel in Richardson,TX.
1991
MBA Full-Time Class Champion:
David Littlejohn
David.Littlejohn91@rotman.utoronto.ca
MBA Part-Time Class Champion:
Pamela Kanter
Pamela.Kanter91@rotman.utoronto.ca
Barbara Trott is an artist as well as a sea-
sonal lecturer at the Ontario College of Art
and Design (OCAD) in Toronto.
1992
MBA Class Champion:
Blair Kingsland
Blair.Kingsland92@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
Graham Donald recently moved with his
wife Jill and two daughters, Emily and
Georgia, to Victoria, BC, where he has also
moved his business. Graham consults to
universities across Canada in the area of
career services and helps major employers
104 • Rotman Magazine Winter 2007
throughout North America improve the
way they recruit and retain new graduates.
If you’re visiting Vancouver Island, be sure
to give him a call.
1993
MBA Full-Time Class Champion:
Daniel Lin
Daniel.Lin93@rotman.utoronto.ca
David Budman is president of Service-
Lab Canada in Montreal.
Maureen O’Brien recently joined TELUS
as director, talent management. In this role,
he supports the recruitment, development
and retention of employees for the business
solutions team, which serves the oil and gas,
financial communications, and health and
public sectors. Maureen joined TELUS after
four years in a strategic HR position with a
leading pharmaceutical organization. Previ-
ously, she spent over 20 years with Nortel
Networks in a variety of director-level posi-
tions in corporate communications, public
relations and human resources.
Kim Shannon, an award-winning fund
manager with CI Funds, left to join industry
upstart Brandes Investment Partners & Co.
Kim’s company, Sionna Investment Manger
Inc., has entered into a “retail alliance” with
Brandes.That partnership severed a ten year
relationship between Sionna and CI that saw
both companies flourish and win critical
acclaim. “I have tremendous respect for the
people at CI. It’s hard to part with friends”,
said Kim. “There was no specific issue that
led to this. It’s just an interesting challenge
and opportunity that led to the strategic
alliance with Brandes.”
Trent Tucker is currently finishing up a
PhD in supply chain management at the
University of Waterloo, and teaching down
the street in the School of Business and
Economics at Wilfrid Laurier. Trent, his
wife Shannon and their two kids have made
Waterloo home for just over five years now.
1994
MBA Full-Time Class Champion:
Glenn Asano
Glenn.Asano94@rotman.utoronto.ca
MBA Part-Time Class Champion:
Cheryl Young
Cheryl.Young94@rotman.utoronto.ca
Edward Cheung is CEO and president of
Innings Telecom Inc, in Richmond Hill, ON.
1995
MBA Full-Time Class Champion:
Nick Strube
Nick.Strube95@rotman.utoronto.ca
MBA Part-Time Class Champion:
Darlene Varaleau
Darlene.Varaleau95@rotman.utoronto.ca
Michael Cross is senior VP at Jovian Cap-
ital Management in Toronto.
Kate Holloway is doing business and
market development for Mann Engineer-
ing, focusing on energy management
solution and renewables for condominiums
and municipalities. Kate is also active in
local and federal politics as a fundraiser and
energy policy activist, and was recently
elected for the second time to the Green
Party of Canada Federal Council, along
with fellow Rotman Alumni Andrea
Caulfield (‘00). Her son Sam celebrates
his 16th birthday this month.
Warren Jacobs is marketing manager for
Mister Chemical Ltd., in Concord, ON.
Kevin Lobo has been appointed president
of Ethicon Endo-Surgery Inc., the surgical
device division of Johnson & Johnson. He
has spent most of the last ten years living in
Europe and the U.S.
Julie Kristof After a summer of cycling
and spending time on the gorgeous Nova
Scotia beaches with her family, Julie has
accepted the position of VP at ThinkWell
Research, a market research consultancy.
She is balancing her career with the chal-
lenge of raising (chasing) a two year old and
supporting her husband in his third year of
medical school. She writes, “Our ‘what’s
next’ is to have another child and decide
where we will be living for my husband’s
residency. Who knows: maybe back in
Toronto!? It was fantastic to visit class-
mates on the west coast this summer and I

hope to be back visiting in Toronto very
soon! Keep in touch! Definitely be in touch
if you’re passing through Halifax!!”
Michael Saniga is manager, financial
planning and analysis at Dell Canada Inc.
in Toronto.
1996
MBA Full-Time Co-Class Champions:
Christine Wong
Christine.Wong96@rotman.utoronto.ca
Suzanne Wilcox
Suzanne.Wilcox96@rotman.utoronto.ca
MBA Part-Time Class Champion:
Daisy Azer
Daisy.Azer96@rotman.utoronto.ca
Christie Bowes is human resources man-
ager for ExxonMobil Canada in Halifax.
Jane Flintoft is the CFO and VP finance
and administration for S-Vox (formerly
Vision TV Group) in Toronto.
Peter Intraligi is global head, client oper-
ations at AMVESCAP plc in Toronto.
After graduating from the LLB/MBA pro-
gram, Motria Onyschuk-Morozov
spent six years with the international law
firm of Baker and McKenzie as a corpo-
rate/commercial lawyer in the Toronto
office. In early 2001, she was hired by the
International Finance Corporation (part of
the World Bank Group) as project manager
for the Ukraine Corporate Governance
Project, and relocated to Kyiv, Ukraine. In
mid-2002, Motria was promoted to senior
operations manager and is currently
responsible for IFC’s corporate governance
technical assistance programs across the
former Soviet Union, covering Russia,
Ukraine, Georgia, Azerbaijan and Kaza-
khstan. In her spare time Motria keeps busy
helping her husband produce Ukrainian
music recordings under their MO Produc-
tions label and raising their twin girls.
Andrea Rudnick is now VP in the Invest-
ment Banking Group of Dundee Securities
Corporation in Toronto.
1997
MBA Full-Time Class Champion:
Burke Malin
Burke.Malin97@rotman.utoronto.ca
MBA Part-Time Class Champion:
Nancy Crump
Nancy.Crump97@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
Robert Baseggio is sales executive,
international sales for Bombardier Aero-
space Regional Aircraft in Toronto.
Patti Moran is director of innovation at
Molson Canada in Toronto.
Trevor Rodriguez is a director of com-
mercial market service sales for Cisco
Systems in London, covering emerging mar-
kets, Latin America, Central and East
Europe, Russia/CIS, and the Middle East
and Africa. Previously, Trevor ran service
logistics and warehousing for Cisco, cover-
ing Asia Pacific, China, India, ANZ, Korea,
Hong Kong and the rest of Asia. Before that,
he ran Marketing in Cisco Services Japan.
The Rodriguez family has enjoyed moving
around the world from Tokyo to Singapore
to London. His wife, Tomoko and his two
kids, daughter Aneae (seven) and son, Issey
(three) are world citizens, having already
seen Mount Fuji, Sydney Harbour, Angkor
Wat, Taj Mahal, Stonehenge and so much
more.Trevor sends his best to all.
Mike Ruthard is chief financial officer at
Newshore Capital Group in Toronto.
1998
MBA Class Champion:
Mari Iromoto
Mari.Iromoto98@rotman.utoronto.ca
MBA/MCom/DBA Full & Part-Time
Lucas Chang is manager, strategic planning
and execution for TELUS in Scarborough.
Viraj Desai is vice president, business devel-
opment at Alegro Health Corp in Toronto.
Amy Freedman is vice president at West-
wind Partners in Toronto.
Kendrick Lo has been admitted to the
partnership of Bereskin & Parr, a leading
intellectual property (IP) firm with offices
in Toronto, Mississauga,Waterloo and Mon-
treal. Kendrick is a lawyer and registered
US and Canadian patent agent, and assists
clients in the high-tech sector in obtaining
patent protection for their inventions.
Kendrick has served as an Adjunct Profes-
sor at Osgoode Hall Law School, and has
recently been appointed to the national
Patent Agent Examination Board.
Martin Saipe is senior legal counsel for
Scotiabank in Toronto.
Greg Van Sickle is a senior technical advi-
sor in the PwC scientific research and
experimental development tax credit prac-
tice, one of the world’s top R&D incentive
programs. Greg joined PwC after moving
over from the Deloitte SR&ED practice in
January 2006. Greg and his wife Shelley, an
engineer with Consumer’s Gas, live in
Pickering with their two children, Sydney
Claire (born in 1998) and Finlay Bennett
(born in 2000). Greg was also recently
hired as an assistant coach of the Toronto
Rock professional lacrosse team.
1999
MBA Full-Time Co-Class Champions:
Lenore Macadam
Lenore.Macadam99@rotman.utoronto.ca
Aran Hamilton
Aran.Hamilton99@rotman.utoronto.ca
Since 2006, Karl Al-Issa has been work-
ing in Montreal on a project – lanched in
September of this year – to implement
direct to store delivery for Imperial
Tobacco. He will continue to live in Mon-
treal, where he will implement category
management at Imperial.
Rotman Magazine Winter 2007 • 105
MBA/MCom/DBA Full & Part-Time
Caroline Bachand is the manager,
global treasury risk management for Nor-
tel in Toronto.
Dennis Chow is portfolio manager, pri-
vate placements for BC Investment
Management Corp. in Victoria, BC.
Jessica Goldberg is a senior manager
with Deloitte in Toronto.
In July 2006, Tracy Hoskins joined
Research in Motion as a senior advisor,
global organizational design programs.
Tracy lives in Etobicoke, with her husband
John Nestor and their daughter Gillian.
Robin Johnston has been busy traveling
through the US speaking on sales and mar-
keting, and private and nonprofit
fundraising. He recently published his first
book Lead Generation Handbook: 63 ways you
might not have thought of to get more prospects,
more quickly, at less cost. It’s available from
Amazon.com and Barnes & Noble.
Phillip Lund has returned to Paris,
France, with his wife Danielle Constantin
(PhD 2001), after spending 16 months in
Beijing as manager of services business
development for Schneider Electric’s Asia
Pacific Operating Division. He is now man-
ager of services training programs for
Schneider Electric’s Commercial Institute,
part of Schneider Electric University.
In August 2006, Class Champ Lenore
Macadam accepted a new position as
director of finance at Mongrel Media Inc.
the Toronto-based film distribution com-
pany. Mongrel Media’s films are played
across Canada at festivals, selected com-
mercial and art-house cinemas, video
stores, television and airlines.
Gustav Rodricks is a senior project man-
ager at Telus in Toronto.
106 • Rotman Magazine Winter 2007
Uri Ron is a portfolio manager with Royal
Bank in Toronto.
Benjamin Skuy has been promoted to
managing director and CAO of the Canadian
auction operations of ADESA, Inc., North
America’s largest publicly traded provider of
wholesale vehicle auctions and used vehicle
dealer floor plan financing. Originally from
South Africa, Benjamin is a Canadian char-
tered accountant with more than 20 years of
business experience. Prior to joining
ADESA Canada, he worked for a major
Canadian bank focusing on the acquisition of
foreign financial institutions. He joined
ADESA Canada in 1999 as CFO, and since
January 2002, he served as CAO, responsi-
ble for operations, sales and e-Business.
Tina Soin Sharma has taken on the position
of director of investor relations at Vanguard
Car Rental Group Inc, in Tulsa, OK.
Gehan Thiruchittampalam is a medical
sales representative for AstraZeneca
Canada in Vancouver, BC.
Erick Wong is senior director of mobile
innovation at Visa International in San Fran-
cisco, CA.
2000
MBA Class Champion:
Mitchell Radowitz
Mitchell.Radowitz00@rotman.utoronto.ca
Tony Gray is general manager of Home
Depot in Barrie, ON. He writes, “every day
is an adventure.”
Sherri Neldner (Effa) recently moved to
Calgary with 16 month old twins Kody
and Taylor.
Andrea Rees is an independent commu-
nications consultant in Brussels, Belgium.
Hashim Rizvi is a director with Pricewa-
terhouseCoopers in Chicago, IL.
Chris Spafford is a principal in the aviation,
aerospace and defense practice of Mercer
Management Consulting. Based in Dallas,TX,
Chris and Annelise Pedersen are the proud
parents of Erik, their energetic two year old.
The family has moved into a new house and
appears to making Dallas more of a long-term
home. Chris and Annelise send best wishes to
all friends in Toronto and look forward to
catching up with all over the fall while visiting.
Shermaine Tilley has recently accepted
the position of principal in the new CTI
Life Sciences Fund in Montreal. This is a
new type of fund for Canada, and Sher-
maine is excited about being part of this
venture from the outset.
Jodi Wilson is a manager with Accenture
in Mississauga, ON.
2001
MBA Full-Time Class Champion:
Daniel Zinman
Daniel.Zinman01@rotman.utoronto.ca
MBA Part-Time Co-Class Champions:
Lisa Sansom
Lisa.Sansom01@rotman.utoronto.ca
Walter Sophia
Walter.Sophia01@rotman.utoronto.ca
Ian Adler is director of finance for Pepsi-
QTG in Richmond Hill, ON.
Cary Chan and Olivia Tse were married
in Hong Kong this October and honey-
mooned in Tahiti. Cary is most recently
working in the investment area of Sun Life
Financial’s Asia division, while Olivia is the
fixed income product manager for
Bloomberg’s Asia Pacific region.The couple
looks forward to a wonderful future spend-
ing the rest of their lives together.

Jeff Chong has founded his own consul-
tancy, SFC International Inc., in Toronto.
Barclay Hancock is director, Aeroplan
portfolio at American Express Canada Inc.
in Markham, ON.
Eva Koci is in institutional equity sales
with Jennings Capital in Toronto.
Michelle Lalonde is a manager with A T
Kearney in Toronto.
Timothy Meadowcroft is counsel at
CIBC World Markets in Toronto.
Lisa Sansom has made the transition into
the world of independent consulting by
starting LVS Consulting. Lisa specializes in
leadership and change management coach-
ing, and is on her way to becoming an
accredited coach. Her clients include
Queen’s School of Business, Export Devel-
opment Canada and CMC Microsystems.
On the side, Lisa is also editor for Your
Workplace magazine, Canada’s authority
on work/life issues. Lisa can be reached at
lisa.sansom@gmail.com, or else join her
network on LinkedIn.
Adam Schatzker is a base metals analyst
working in the Global Mining Research
group at RBC Capital Markets in Toronto.
Adam joined RBC in May 2006. Adam and
his wife, Elora have two children, Joseph
(three) and Alison (born March 2006).
Kevin Shnier has returned to Toronto as
associate, equity funds at Edgestone Capi-
tal Partners.
2002
MBA Full-Time Class Champion:
Rizwan Suleiman
Rizwan.Suleiman02@rotman.utoronto.ca
MBA Part-Time Class Champion:
Jay Nicholson
Jay.Nicholson02@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your class champion or the
Alumni Office.
Jean-Christophe Depraetere, aka ‘JC’,
and Aurelie are happy to announce the
recent arrival of their second son Louis.
Sylvain is already looking forward to play-
ing with his little brother.After a few weeks
on parental leave, JC is now back to work
in the finance division of CIBC, where he
enjoys the breadth of scope of his role as a
director, business management.
Julija Ezergailis is marketing manager at
RBC Financial Group in Toronto.
Peter Grey-Wolf is vice president of
Blue Capital Canadian Management Inc.
in Toronto.
Marice Hart has returned to school as a
graduate student in the School of Social
Work at Carleton University.
Sanjeev Joshipura is a sales operations
manager at Hewitt Associates, a 25,000-
employee-strong HR outsourcing and
consulting company based in suburban
Chicago. In addition to corporate manage-
ment and leadership, Sanjeev is passionate
about U.S. politics and public policy, and
meaningful relationship building and network-
ing. He is a member of the Chicago Council on
Foreign Relations, the Executives Club of
Chicago and the Heritage Foundation.
Brian Martin is vice president of strategy
and business initiatives at RBC in Toronto.
MBA/MCom/DBA Full & Part-Time
Guillermo Obregon is still in New York,
working as a manager for emerging markets
with Tradition North America, covering
Latin America, Mexico, Brazil and Chile.
Guillermo and his wife plan to stay in New
York for at least three more years, and hope
to start a family at the beginning of next year.
Sally Whitehead is an associate in the
Toronto office of the New York-based law
firm Skadden, Arps. She is principally
involved in cross-border corporate finance
and M&A transactions.When not working,
she can be found out west on the next ski
and snowboard trip, in search of fresh pow-
der. Sally recently spent some time working
out of Skadden’s Hong Kong offices and
had the opportunity to travel to China.
2003
MBA Full-Time Class Champion:
Pamela Beigel
Pamela.Beigel03@rotman.utoronto.ca
MBA Part-Time Co-Class Champions:
Jennifer Chan
Jennifer.Chan03@rotman.utoronto.ca
Rajesh Dixit
Rajesh.Dixit03@rotman.utoronto.ca
Francesca Birks is currently physically
living in London but actively and virtually
living everywhere. She is working as an ana-
lyst in the Foresight + Innovation +
Incubation department of Arup, a global
design consultancy. The FII group explores,
researches, and facilitates workshops around
emerging global trends. Her current proj-
ects involve hotels of the future, and
producing a set of cards on drivers of change
and demography. Should anyone find
Rotman Magazine Winter 2007 • 107
MBA/MCom/DBA Full & Part-Time
themselves in London or online, Francesca
can be Skyped at francescabirks and e-
mailed at Francesca.Birks@gmail.com.
Olivia Chen is a manager with the Royal
Canadian Mint.
Happy to be back in Toronto, Silver Chen
has been with Pfizer Canada in its Canadian
head office in Montreal since graduation,
and is currently manager, patient access and
health policy (Ontario). She writes, “My
role is to help Ontario patients gain access
to new medications. I have recently settled
down in Mississauga and would love to re-
connect with Class ‘03 and Rotman alumni
who work in the health care field.”
Laurin Mayer writes, “Hi everyone. Life
is great and super busy. I spend almost
every second with my eight-month-old
daughter, Riley. In my ‘free’ time, I run
www.momsinthecity.ca and www.bab-
blingbananas.com. We’re loving it, and
seeing tons of Rotman grad new moms!
We’re having a blast and hope to see you
all soon.”
Kenneth Chernin is a research analyst
with Beacon Securities in Halifax.
Jody Fisher writes, “Matt and I were mar-
ried last year in Bayfield and just celebrated
our first anniversary. I have recently taken a
new role with Maple Leaf Foods in their Six
Sigma department (thanks again to Sherry
Pedersen-Ajmani for her referral!). We
made it to Alaska for some adventures over
the summer and are looking forward to
planning our next getaway. All the best to
my fellow Rotmaners – hope to catch up
you at Rotman functions or elsewhere!”
108 • Rotman Magazine Winter 2007
Zohair Harianawala is an executive
with Amir Industries in Karachi, Pakistan.
David Jarvis and wife Dawn welcomed the
arrival of baby girl on August 17, 2006. Scar-
lett Grace Jarvis weighed in at 9 pounds,
11.7 ounces. All are doing well and David’s
getting lots of practice changing diapers!
Richard Meloff is a principal with Effi-
cient Capital Corporation in Toronto.
Amit Mujumdar is an associate with Sav-
vian, LLC in San Francisco.
Asif Nakhuda is the business develop-
ment manager for Rapid Flyer in Toronto.
Howard Nishi is a senior financial analyst
with CIBC in Toronto.
Anita Shankaran is a consultant with
Sapient Canada in Toronto. Anita and hus-
band Noel Yoganathan were married in
Toronto in August, 2005.
Anita Shuper is now a movie star! She is
featured in the documentary Las Peregrinas –
TheWomenWhoWalk, filmed last autumn dur-
ing her 250km journey along the Camino
de Santiago de Compostela in northern
Spain. The movie was released in Novem-
ber, with various grassroots screenings in
locations around the world. All monies
raised will be donated to assorted causes
selected by the screening organizers.
James Skinner recently earned his CMA
designation from the Society of Management
Accountants of Ontario and subsequently
accepted a new position as controller of
Breyer Casting Technologies Inc. Breyer
Castings, formerly Brampton Foundries, a
division of Indalex, is a privately held firm
focused on the design, manufacture and
delivery of quality aluminum parts.
Jane van Alphen recently joined the
Ontario Institute for Cancer Research
(OICR) within the Medical and Related
Sciences discovery district (MaRS) as VP
operations. Funded by the Ministry of
Research and Innovation, the OICR aims to
become a centre of excellence in cancer
research, moving Ontario to the forefront
of the international effort to control cancer
and commercialize discoveries.
Michael J. Wu recently has moved from
Beijing to the city of Guangzhou, China. He
had a chance to say farewell to Michael Schu-
macher in October, during the 2006 Grand
Prix in Shanghai, China. Michael wishes best
for all the Class of FT’03 and PT ‘01.
2004
MBA Full-Time Class Champion:
Maya Lange
Maya.Lange04@rotman.utoronto.ca
MBA Part-Time Class Champion:
Steven Lane
Steven.Lane01@rotman.utoronto.ca
Lesley Beneteau has returned to Canada
after a work contract in Taipei,Taiwan, and
is now the manager, investor relations at
MDS Inc. in Toronto. She and husband
Joshua Su, who flies 747’s around the world
for China Airlines, are expecting their first
child in early 2007.
Daniel Chau is the general manager for
East China operations at BusinessObjects
China in Shanghai, China.
Cristian Gheorghe is a global leader-
ship fellow at the World Economic Forum
in Geneva.

Jonathan Greer reports, “On July 28,
2006, we welcomed all 7 pounds, 6 ounces
of William Brian Greer to the world.
Known as ‘Wills’ to his family and friends,
he has had an eventful and happy first cou-
ple of months of life attending two
weddings, and surviving a September
weekend in Algonquin Park! And yes, his
parents are getting some sleep.”
Michael Hong entered the world of
fatherhood in early February, 2006.
Michael was sorry to learn that the weeks
of no sleep and constant work in first year
MBA did little to prepare him for the
whirlwind of raising an infant. Thankfully,
Joshua Myungi Hong is a wonderful baby
(and occasionally sleeps through night)!
Michael lives in New York with his wife
Sandra, and practices law at Paul, Weiss,
Rifkind, Wharton & Garrison LLP. Sandra
is on maternity leave from her post as the
director of professional development for
Weil, Gotshal & Manges LLP.
Taeil Kang has been working, since Sep-
tember, 2005, as the managing director of
solar power business division at Korea Cot-
trell Co. Ltd. In Seoul, Korea. His
responsibility is the development and financ-
ing of solar power projects. He has just
completed one of the largest solar power
projects ever built in Asia, a 1MW power
generation plant using solar energy at a proj-
ect site about 50km south-west of Seoul.
Ali Karbassi recently changed jobs and is
now working at Proximity Interactive (a
division of BBDO) as an account director.
He also launched his own small business,
City Surf (www.city-surf.ca) a few months
ago, offering audio walking tours of
Toronto neighborhoods. City Surf gives
tourists and locals a taste of the city’s real
local culture, and will be expanding to
Montreal soon.
Karim Keshavjee is a family physician
with a part-time practice in Mississauga,
ON. He also provides IT-related change
management consulting in the health sector,
with such clients as Canada Health Infoway
and McMaster University. He recently
landed a contract with the Heart and Stroke
Foundation of Ontario to help them imple-
ment their high blood pressure strategy in
community physician practices throughout
Ontario. Karim’s wife Zahra is currently
doing field work in South Africa and Jordan
for her PhD in education administration.
Karim will be joining Zahra in Jordon for a
few weeks in December, 2006.
Rob Oppenheim is currently working
with GE Energy Financial Services in Cal-
gary, AB. Rob, who married to Maria in
2005, invites everyone to give him a call
next time they visit Calgary.
Marcela Oreopoulos has back from
Boston, and is working as a consultant at
Monitor Group’s Toronto office. Most
recently, she has worked on Canadian cases
in healthcare and financial services, and a
US case in energy. When not working,
MBA/MCom/DBA Full & Part-Time
Marcela is busy taming the garden in her
new home in Toronto.
Sheldon Pinto is an associate, investment
banking with TD Securities (USA) LLC in
New York.
Marc Reppin and Heather Camlot wel-
comed daughter Juliana to the family on
September 21, 2006. Marc is enjoying
spending lots of time with Juliana and help-
ing her older brother Alexandre get used to
the new family dynamic. Marc currently
works for Rogers Publishing Ltd., where
he is developing CanadianBusiness.com
into a leading portal for business leaders,
entrepreneurs and investors.
Steve Richards works in the audit and risk
management group at Bell Canada, and lives
in Montreal with his wife and two young
children. He would welcome any news from
former classmates and encourages everyone
to look him up if they are in Montreal.
Chandreyee Saha is a senior business
consultant with CIBC in Toronto.
Rakesh Shah is the IT purchasing man-
ager in the New York head office of
MortgageIT. Rakesh moved to New York in
January, 2006. He and his wife Dina Shah,
married in July, 2006, live in the New York
City area. Rakesh sends his best wishes to
all in the part-time MBA class of 2004.
Ayal Twik has relocated to Montreal,
where he is the VP, business development
for Corwik Inc.
Rotman Magazine Winter 2007 • 109
MBA/MCom/DBA Full & Part-Time
Nancy Yang had a baby girl, Elina Yang, in
September, 2006. She enjoys watching
Elina growing.
2005
MBA Full-Time Co-Class Champions:
Fiona Cunningham
Fiona. Cunningham05@rotman.utoronto.ca
Tanbir Grover
Tanbir.Grover05@rotman.utoronto.ca
MBA Part-Time Class Champion:
Bob Kapur
Bob.Kapur05@rotman.utoronto.ca
David Breau is a human resource consult-
ant at Dell Computer in Toronto.
Susan Cheng is an equity research associate
at Research Capital Corporation in Toronto.
Ellis Chow is general manager at North
York General Hospital.
Kevin Chun is an associate with TD Bank
Financial Group in Toronto.
Michelle Cui is a strategy consultant with
IBM Business Consulting in Markham.
Catalin Alexander Culiniac is IT and
business consultant at BMO Financial
Group in Toronto.
Avidan de Lara is the online operations
and business intelligence manager for PC
World Canada in Scarborough.
Alexandra Fraser is an associate with
Borden Ladner Gervais in Toronto.
Roberto Garcia Rochin is a planning
analyst for Frito Lay Canada in Mississauga.
Heather Graham McCourt is strategic
market development manager for
Medtronic of Canada in Mississauga.
110 • Rotman Magazine Winter 2007
Upon graduating from Rotman, Sarah
Grant analyzed her personal passions and
began to develop a business concept “that I
could believe in for the long-term.” Prior to
Rotman, she had worked as a consultant,
often putting in 100+ hours a week. “I was
unhealthy and stressed out, and with a poor
family-health history, my personal health
weighed heavily on me. In January of my
second year, I started working out with a
personal trainer and received nutrition
counseling. My transformation to a fit,
healthy, and balanced individual was incred-
ible.” She decided to focus on helping other
professionals improve their health and, in
doing so, their productivity and energy at
work. “I’m pleased to say that I am sched-
uled to open my fitness and wellness
centre, Revolution Fitness (www.revolu-
tionfitness.ca), in January 2007 in Toronto’s
financial district. We took a holistic
approach to services for our members and
built our business around the three key pil-
lars: fitness, nutrition and wellness. I’ve
been working with another ‘05 Rotman
grad on our Information Systems:
Michael Raphael started his own com-
pany,Antaris, and he has been working with
me on the development of all of my IT
needs. I don’t want to put words in Mike’s
mouth, but I think we agree that our Rot-
man MBA has been an incredible asset in
our entrepreneurial endeavors. Thanks to
the Rotman community for giving me the
tools that I believe will set me up for suc-
cess – in business, and in life.”
Pippa Haberhauer is manager, new prod-
uct launch at Rogers Wireless in Toronto.
Michael Holland is an associate with
Macquarie North America in Toronto.
Vik Karambelkar is project manager at
Colt Engineering Corporation in Calgary.
Jee Soo Kim is senior business system
analyst at TELUS Communications Inc.
in Scarborough.
Kevin Lam is associate director with UBS
in Hong Kong.
Jie Li is a category analyst at Acosta Canada
in Vaughan. Acosta is the biggest broker in
consumer packaged goods in North Amer-
ica. Jie previously worked as a vendor
advisor for Loblaw’s Food Focus project,
where he learned much about category
management. He recently brought his wife
to Canada. They got married in China in
May 2005, and now live happily in a condo
in North York. Jie sends best wishes to his
class and many thanks to the alumni who
offered help during his job hunt.
Ramesh Sangameswar just announced
the launch of an internet marketing com-
pany, www.customreach.org , focused on
designing, delivering and measuring search
campaigns for companies targeting the U.S.
market. Within a few days of launch, he
signed up a couple of deals. “Looks like
more sleepless nights ahead,” he says.
Ramesh looks forward to catching up with
Rotmanites in or visiting Toronto: “give me
a shout and we can have a pint or two
together for old times sake.”
Bruce Sargeant is managing director at
BMO Capital Markets in Toronto.
Stacey Sequeira is an analyst with Ernst
& Young Orenda Corporate Finance Inc.
in Toronto.
Kathryn Shaw is manager of transaction
services at PricewaterhouseCoopers in
Toronto.
David Shum is national manager at Roche
Canada in Mississauga.

Ginette Skeete is senior communications
advisor at Public Works and Government
Services Canada.
Robert Spafford is an investment analyst
at Toron Capital Markets in Toronto.
Sarah Sturgeon is an analyst with Ernst &
Young in Toronto.
Josef Turnbull is in institutional equity
sales at Credit Suisse,Toronto.
Gustavo Villota is a brand manager with
Johnson & Johnson in Bogota, Colombia.
Amar Vyas is manager of credit deriva-
tives at Scotiabank in Toronto.
Chris West is the line-of-business director
for automotive at Canadian Tire in Toronto.
2006
MBA Full-Time Co-Class Champions:
Bill Fox
Bill.Fox06@rotman.utoronto.ca
Paul Nagpal
Paul.Nagpal06@rotman.utoronto.ca
Paul Forma
Paul.Forma06@rotman.utoronto.ca
Shrutie Owerie
Shrutie.Owerie06@rotman.utoronto.ca
MBA Part-Time Class Champion:
Ushnish Sengupta
U.Sengupta06@rotman.utoronto.ca
Mauricio Abaroa is the financial man-
ager of ECOMEX, the Mexican leader in
erosion control, soil engineering and geot-
extiles. Mauricio is the co-founder of the
company, which is growing rapidly to
become the reference in erosion control for
Mexican construction companies, and state
and federal governments as well. He is hap-
pily married to Monica Serna, and they
enjoy independent movies and traveling.
Saju Bhaskaran is a senior functional con-
sultant with Oracle Corporation USA, where
he advises clients on best practices relating to
corporate finance and improving enterprise
intelligence. Saju lives in the San Francisco
Bay Area and is also currently running a busi-
ness in the apparel design industry.
Ilya Bogorad has recently started Bizvortex
Consulting Group Inc. (www.bizvortex.com)
specializing in IT Management and Project
Management Consulting. Ilya says that this is
one of the best decisions he has ever made,
and that it would not have come to fruition
without the support of his wife Kim and
daughter Kelly.
Brian Carey is a partner with Millard,
DesLauriers & Shoemaker LLP in Toronto.
It’s been “an exciting and wonderful year”
for Melissa Chee. In April of 2006, she
joined Fresco Microchip, a venture-backed
semiconductor company, as director of
business development and marketing. Then
in September, she and Marcel were married
at an intimate wedding in Stoney Lake,
Ontario and enjoyed a relaxing honeymoon
hiking in Yosemite National Park and sip-
ping fine wine in Sonoma Valley, California.
The couple is enjoying their new home in
Markham with their golden retriever, and
Mel is looking forward to exploring her
love for photography and getting involved
in the community. “Best wishes to the class
of 2006, and keep in touch!”
Patrick Djandji is a marketing manager
with Microsoft Canada, in Mississauga.
Neal Dutta is a consultant with TDX
Group in Nottingham, England.
Andrei Edwards is articling with Deeth
Williams Wall LLP, a law firm in Toronto.
Farzad Hakimzadeh is a senior consult-
ant with Trianz, in Santa Clara, CA.
Susan Harnarine is a sales and clinical
training specialist with Baxter Corporation
in Mississauga.
MBA/MCom/DBA Full & Part-Time
Michael Hazan is an account manager
with HINext Inc., in Toronto.
Yale Holder is a project manager in the
strategic planning and execution unit of
Telus Communications, the second largest
‘telco’ in Canada. One of the projects he
has recently been involved in includes
Telus’ Future Friendly promises
(www.telusmobility.com/promises.) The
Holder family recently celebrated the first
birthday of their first child, Kara. Wishes
for future luck and success are sent by the
entire family to the class of 2006.
Tahir Janmohamed is a strategy consult-
ant with IBM Canada’s Strategy & Change
Practice, with a focus on technology strat-
egy within the financial services sector. His
short time with IBM has already seen him
spend a couple of months in Trinidad, and
he looks forward to future engagements
around the world. “Best wishes to all!”
Sameet Kanade is an associate in soft-
ware and wireless equity research at
Canaccord Adams in Toronto – the capital
markets group of Canaccord Capital, which
is listed on the TSX: CCI
Sonia Khan reports, “I had a great sum-
mer of 2006. It was a pleasure to spend
three months mostly on a hammock while
enjoying wine and books. My rotation pro-
gram at CIBC Technology Solutions is very
exciting. I am working with the roll-out and
management of an enterprise platform for
information management.”
Rotman Magazine Winter 2007 • 111
MBA/MCom/DBA Full & Part-Time
Justin Klein is a brand manager at Procter
& Gamble, currently working on Bounce.
Young Kwon, product marketing assis-
tant manager at Samsung Canada in
Mississauga, claims he doesn’t have a pic-
ture of himself on his PC, so he sent along
a photo of his dog, Cookie, instead.
Gordon Lai is an associate in structured
product sales at HSBC Asia Pacific in
Hong Kong.
Ryan Lavallee is a London, UK-based
partner in a boutique, small-cap private
equity group. He currently splits his time
between London and Tuscany (Italy), with
occasional wine-oriented side trips to the
Veneto (Italy) and the German Rhineland.
Ryan has not yet developed a British accent,
but sends his best wishes to all of his “friends
and enemies back in North America.”
Sukyou Lee is a research analyst at RBC
in Toronto.
Wilson Leung is senior manager, finance
for RBC Capital Markets in Toronto.
Haresh Mahtani is a financial analyst
with Direct Energy (the North American
arm of Centrica Plc – a leading supplier of
energy and related services in the UK) in
their Toronto Office. He sends his best
112 • Rotman Magazine Winter 2007
wishes to his class, and is looking forward
to the next reunion.
Romit Malhotra is a financial analyst
with CIBC in Toronto, where he has started
a two-year rotation program and is excited
to explore different areas of the bank.
Romit took three months off between
school and starting work and had a great
time travelling, hosting his parents and in-
laws, and spending the last pennies of his
credit limit before getting back to work.
He sends best wishes to his classmates and
wishes them great success in all their
endeavors. “There is no place like Rotman
– everything outside is slower.”
Laura Manes is a consultant with Bain &
Company. She lives in Toronto with her
husband, Ethan.
Javier Matany is a senior financial analyst
in the international division of ConAgra
Foods, a leading company in the packaged-
food business. Javier is pursuing the third
level of the CFA as part of his professional
goals. He and his wife (Rosana) recently
moved to a new place in Markham.
Eric May is associate marketing manager
for Kimberly-Clark Corporation in
Neenah,Wisconsin.
Rajiv Nayan is manager of strategy for
IBM Canada’s Global Technology Services
business, responsible for prospect strategy
analysis and new business development. He
sends best wishes to his class and looks for-
ward to seeing you in the near future.
Philippe Ou is a senior analyst at Wash-
ington Mutual, the sixth-largest financial
institution in the United States. Philippe
currently lives in Seattle, Washington, and
as the first-known Rotman alumnus at this
major American bank, he looks forward to
building a solid reputation for the Univer-
sity of Toronto’s MBA brand in the Pacific
Northwest. All Rotman alumni and con-
nections are welcome to contact Philippe
at: philippe.ou06@rotman.utoronto.ca
Natasha Parekh is a senior analyst with
Goldman Sachs in London.
Sarb Parhar is an engineering supervisor
at Delphax Technologies in Mississauga.
Rodrigo Rodrigues is a consultant with
COOPBRASIL in Nova Friburgo, Brazil.
Raju Ruparelia is an associate with
Credit Suisse in New York City.
Aliza Schneid is a business analyst at
Chartwell Group in Toronto. She reports
that she “got engaged (finally!) in August.”
Divya Shah is an associate with CIBC
in Toronto.
Michael Shinewald is a consultant
with Mezzanine Business Consulting

(www.mezzanineconsulting.com), “Canada’s
leading tactical consulting firm. We deliver
world-class business analysis and practical
guidance on market challenges and growth
opportunities.”
Nekzad Shroff is an associate at RPO
Management Consultants in “beautiful
Vancouver.”
Avi Sohal is an associate product manager
with the medical products division of John-
son &Johnson Canada. After his MBA, he
changed careers, moving from the IT indus-
try to marketing in medical devices. Avi,
who lives with his wife Deepali in
Markham, wishes all Rotmanites “a pros-
perous life,” and would love to be of
assistance in any way he can.
Elena Uborceva is an electricity trader
with Aquilon Power in Toronto.
Andrew Wallace is an associate in invest-
ment banking at National Bank Financial
in Toronto.
Benny Yeung is a research associate in the
Calgary offices of BMO Capital Markets.As
a member of the award winning research
team, he is primarily responsible for the oil
and gas royalty trust sector. Benny sends
best wishes to his class and looks forward to
many big Class Reunions in the future.
Charles Yu is currently conducting inter-
nal audits at CIBC. “I just moved to my new
home in Scarborough during the summer.
Back from vacation in Cuba, I am really
tanned. For anyone interested in Cuban
cigars i.e. Cohiba, I have a lot at home to
share with you.”
Executive MBA
Reunion Alert!
All EMBA classes in honoured years –
i.e. those that end in either a ‘2’ or a
‘7’ – are invited to return to the Rotman
School on May 31, 2007, to celebrate
Reunion 2007. For details, contact
your Class Champion(s) or Michelle
Zathureczky, manager of volunteers
and reunion coordinator, at (416) 946-
3665. You can also visit www.rotman.
utoronto.ca/alumni/reunion.htm
1985
Class Champion:
Bob White
Bob.White85@rotman.utoronto.ca
A few years after surviving “out-of-body
experiences” in EMBA 1, Frank Abrams
began his career in the financial services
industry in 1988 specializing in trading,
investments and corporate risk manage-
ment. Now at Man Financial, he works
with investors and trades in high-quality
U.S. growth stocks based on fundamental
analysis, in addition to continuing to trade
futures and options for speculators, and
managing risk for hedgers. Man Financial
Canada Co. is one of the world’s largest
futures brokers and is listed on the London
Stock Exchange (EMG.L), ranked #1 for
volume of trading and execution on the
Chicago Board of Trade and the NY Mer-
cantile Exchange. Frank is also actively
involved in local community and political
efforts that support Prime Minister
Stephen Harper. Frank was previously VP
of corporate development at Rampart Mer-
cantile, Inc. where he created exactTrade,
Executive MBA
an online business of a publicly-traded
financial services company; and director of
sales and marketing for Bell Emergis. His is
also the former president and COO of Fly-
ing Disc Inc., a publicly-traded new media
company providing solutions for publish-
ing, media, and entertainment companies.
1987
Class Champion:
Vitor Fonseca
Vitor.Fonseca87@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your Class Champion or the
Alumni Office.
1989
Co-Class Champions:
Peter Murphy
Peter.Murphy89@rotman.utoronto.ca
Bill Brown
Bill.Brown89@rotman.utoronto.ca
Ed Vanhaverbeke operates a family-
owned real estate development company
with properties in Durham Region. He and
his wife Sylvia have four children and eight
grand children. An avid traveler, recent
treks include Kilimanjaro and Everest Base
Camp. Ed is currently the chair of The
Oshawa Durham Symphony Orchestra and
member of the President’s Council of The
Canadian Opera Company.
1990
Class Champion:
Jeffrey.Wayne
Jeffrey.Wayne90@rotman.utoronto.ca
Heather Briant is senior VP of human
resources at Cineplex Entertainment
in Toronto.
Rotman Magazine Winter 2007 • 113
Executive MBA
Dr. Donald Livingstone is a partner
with Promeus Inc., an executive search
partnership in Toronto.
1991
Peter Bistolarides writes, “A lot has hap-
pened since graduation. I left Canada in
1994 to take a position as surgeon and
medical director of a private health care
company based in Ann Arbor, Michigan.”
He and his wife Peggy have five boys (Deno
is graduating from U of Michigan in eco-
nomics this year; John is attending
Michigan State’s Broad School of Business,
majoring in finance; James is a senior in
high school; and Paul and George are 12
and 10.) “In May 2003, I embarked on a
sabbatical that took me and my family to
Boston, where I pursued studies for a Mas-
ter of Divinity degree, which I received in
May 2005. We returned to Michigan in
June 2005, and I resumed clinical practice
with my group, but recently left to join
Synergy Medical in Saginaw, Michigan, a
multi-specialty academic group affiliated
with Michigan State University, as assistant
director of surgery. I am enjoying the role
of teacher/mentor and continue to put
both my clinical and EMBA skills to good
use. In addition to my lay profession, I am
an ordained priest in the Greek Orthodox
Archdiocese of America, and serve a small
parish in Kalamazoo, Michigan. Regards to
all, and I look forward to hearing from
EMBA 91 classmates.”
Greg Duffy has been operating Woodfield
Consulting since May 2003. “Was EMBA
really 15 years ago? Ouch!” He is concen-
trating on IT and Geographic Information
Systems (GIS) governance and strategy
issues surrounding business cases and proj-
ect justification. Greg has written articles
and white papers as well as conducting
Business Case seminars across Canada with
a business partner throughout 2006 and
looks forward to “continuing to de-mystify”
the ROI/NPV aura in order to determine
real value and impact from IT programs.
With all three children now grown and out
in the real world, he and Judy now have
two grandchildren to spoil who now live in
Los Angeles. Greg volunteers with the
Rotary Club in Oakville and is the chair
114 • Rotman Magazine Winter 2007
(2005-2007) of the Oakville Awards for
Business Excellence, the sponsored pro-
ceeds from which fund youth programs and
bursaries in town.
Mark Foote was recently promoted by
Loblaw Companies Ltd to the positions of
president and chief merchandising officer.
Loreen Gilmour is studying for her can-
didacy exam as part of the requirements for
her PhD in health policy at the Faculty of
Medicine, University of Calgary and hopes
to complete the program in about two
years. Revisiting stats is proving to be a
challenge! I’m a member of the board of
directors of the Calgary Health Region, a
$2.5 billion organization with 25,000
employees. Rob’s software business is con-
tinuing to thrive and the kids are in Grades
10 and 4.
1992
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
http://www.rotman.utoronto.ca/alumni/
reunion.htm, contact your Class Champion
or the Alumni Office.
EMBA 8 – Class of 1992
The weekend of June 24th,2006, EMBA 8
held a reunion in Prince Edward County,
graciously hosted by Glen and Susanne
Ladouceur at their beautiful waterfront
farm and vineyard outside of Picton. The
weekend featured BBQs, a wine drinking
marathon, golf, competitive women’s
bocce ball, boat rides, and dancing. In
attendance were EMBA 8 alumni Bill
Fields, Pat Harmon, Chris Hill, Wilma
Jacobs, Chris Jyu, Glen and Susanne
Ladouceur, Gerry Root, Lillian Veri, Don
Wilson, Peter Young, and various partners.
A fabulous time was had by all and we look
forward to the next get-together. Our
thanks to Glen and Susanne – here’s a
glimpse of their rustic, rural retreat.
Scott Dudgeon is the national executive
director for the Alzheimer Society of
Canada in Toronto.
Brian Kim founded GWP Consulting in
1998, and it has been growing steadily
worldwide. “We now have three active
overseas branches, in Philadelphia, Seoul
and Shanghai, and are trying to open new
San Francisco office as well as one in Ger-
many. All are mainly involved in the
export/import of steel and metals. As I am
originally from a small country (S. Korea),
I have been trained to think globally since
my youth, and I have good experience hav-
ing worked for one of the biggest steel mills
in the world. My dream is to establish a
global networking company from the raw-
materials to the finished products of
steels/metals to fill everybody’s needs in
the world. Currently, my head-office is
located in Mississauga.”
1993
Class Champion:
Andy Hofmann
Andy.Hofmann93@rotman.utoronto.ca
1994
Class Champion:
Andrew Stewart
Andrew.Stewart94@rotman.utoronto.ca
1995
Class Champion:
John Ramdeen
John.Ramdeen95@rotman.utoronto.ca
Colleen Albiston recently left E&Y after
over eight years to take on the role of pres-
ident at ZSA Recruitment in Toronto.
Colleen is a recipient of Canada’s Top 40
Under 40™ award, and currently sits on
the board of the YMCA of Greater Toronto,
serving on their governance and nominat-
ing committee.

Wayne Leacock is currently practicing
corporate/commercial law in Toronto, hav-
ing graduated from Queen’s Law School on
2000. In addition to practicing law, Wayne
is currently completing a LLM – Business
Law at Osgoode Hall – York University.
1996
Co-Class Champions:
Jon Waisberg
Jon.Waisberg96@rotman.utoronto.ca
Carmine Domanico
Carmine.Domanico96@rotman.utoronto.ca
Jim Bradley has accepted a new position
as director of global logistics for
Affymetrix, Inc., the leader in microarray
technology within the biotech industry.
Jim, Kathy and Michael will be relocating
to Northern California in the next months.
Daughter Candice will remain in Michigan
as a freshman at Michigan State University.
“Best wishes to all of EMBA 96!”
Gerald Hippesroither is managing
director at MCE Finanzmanagement
GmbH in Linz, Austria.
Richard Paulson is CEO of Pfizer South
Africa and Southern Africa. He and his wife
Petra moved to Johannesburg about one
year ago, after his stint as CEO for Pfizer in
Czech Republic. Recently, they welcomed
their first baby, Kitso, into the world. The
Paulson family recently had a once-in-a-
lifetime experience: a private dinner with
Nelson Mandela. Richard and Petra were
both very inspired and moved by his intelli-
gence, charm, and sincere caring, and rate
this as one of the most moving experiences
of their lives.
1997
Class Champion:
Jennifer Hill
Jennifer.Hill97@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your Class Champion or the
Alumni Office.
Joe Kassantini is the founder and CEO of
Bursah Experts, a leading stock market
educational and consultancy company in
Saudi Arabia. He is also the leading stock
market analyst on CNBC Arabia TV, appear-
ing twice a week every Sunday at 3:30 PM
and Tuesday at 11:00 AM (Saudi Arabia
time). He also appears monthly unsched-
uled on Ekhbariah TV, Iktisadiah TV, Arabia
TV and New TV and writes monthly in sev-
eral newspapers including AlMajalah,
AlHawameer and Souk AlAshum. Joe managed
to attract partners worth in excess of US$
2 billion and has succeeded in raising the
value of the company from under
US$200,000 to over US$ 25,000,000 in
just under three years. The business of the
company has expanded from one analyst, to
over 17 leading analysts covering nine
offices in the Middle East. Joe credits his
outstanding success to the Rotman School’s
“outstanding EMBA program” which he
believes gave him a sustainable competitive
edge. “Thank you EMBA/U of T/Joe.”
Carol Lloyd recently was promoted to
the position of president and CEO of The
Easter Seal Society in Toronto.
1998
Class Champion:
Ashok Sharma
Ashok.Sharma98@rotman.utoronto.ca
1999
Co-Class Champions:
Mo Mauri
Mo.Mauri99@rotman.utoronto.ca
Desmond Preudhomme
Desmond.Preudhomme99@rotman.
utoronto.ca
Executive MBA
Ron Dahms is managing partner with
KWA Partners in Montreal.
Jeff Lowe is the vice president of corpo-
rate finance and treasurer at Inmet Mining
Corporation in Toronto.
2000
Co-Class Champions:
Jennifer McGill-Canu
Jennifer.McGill00@rotman.utoronto.ca
Bruce Lawson
Bruce.Lawson00@rotman.utoronto.ca
Robertson Rodil is a senior engineer with
Daimler Chrysler in Auburn Hills, Michigan.
2001
Co-Class Champions:
Ken Hagerman
Ken.Hagerman01@rotman.utoronto.ca
Gary Ryan
Gary.Ryan01@rotman.utoronto.ca
2002
Class Champion:
Cheryl Paradowski
Cheryl.Paradowski02@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
http://www.rotman.utoronto.ca/alumni/
reunion.htm, contact your Class Champion
or the Alumni Office.
Mark Anshan is the general counsel and
director of public affairs for the UJA Feder-
ation of Greater Toronto, the central
fundraising and planning organization of
the Jewish community in the Greater
Toronto area. In his role, Mark oversees the
legal work of the Federation, corporate
affairs, and coordinates the public policy
and advocacy issues with related agencies in
the GTA.
Tammy Cook is assistant vice president,
projects and technology, administration and
claims, group benefits at Sun Life Financial
in Toronto.
Rotman Magazine Winter 2007 • 115
Executive MBA
James Gilmore and his wife, Christine,
are very proud to announce that on Sep-
tember 15th 2006, Christian James
Gilmore entered the world weighing 8lbs
13oz. “Who knows… maybe a 3rd genera-
tion EMBA grad on his way?”
Sajid Husain is a web sales specialist at
Lenovo Canada Inc.
2003 (EMBA19)
Class Champion:
Jennifer Figueira
Jennifer.Figueira03@rotman.utoronto.ca
Dan Snow says “a hello to all my class-
mates. After close to two years in Toulouse
France, change is upon us. I have accepted
the position of VP of strategic supply chain
management at my company’s headquar-
ters in Cleveland, Ohio. Colleen and I,
along with our golden retriever, are in the
midst of a double relocation from France to
Canada, and finally the USA. All this means
about three months of chaos and one last
Christmas in our Canadian home of 20
years. Best wishes to all.”
2003 (EMBA 20)
Co-Class Champions:
Andrew Jenkins
Andrew.Jenkins03@rotman.utoronto.ca
Maria Lundin
Maria.Lundin03@rotman.utoronto.ca
Rebecca Pang and Garry Chan were mar-
ried on August 26 at Eaton Hall, a small inn
north of Toronto. Several Rotman class-
mates were present to join the festivities.
Rebecca and Garry are discovering the joys
of cooking and other simple pleasures of
life. Meanwhile Garry is trying to juggle
between the added responsibility of wash-
116 • Rotman Magazine Winter 2007
ing dishes and his day job as Managing Part-
ner at Procase Consulting Inc.
2004
Co-Class Champions:
Fariba Anderson
Fariba.Anderson04@rotman.utoronto.ca
Paul McKernan
Paul.McKernan04@rotman.utoronto.ca
Javier Zuniga is a managing consultant
for IBM Canada in Markham.
2005 (EMBA22)
Class Champion:
Michele Henry
Michele.Henry04@rotman.utoronto.ca
Gary Ataman has worked for Messier
Dowty for 23 years in various engineering
and program positions. In his previous posi-
tion as project engineer, he was responsible
for the overall engineering activities on spe-
cific aircraft landing gear programs such as
the Bombardier Global Express and the
Challenger 300. In his currently position as
director, he is responsible for the qualifica-
tion of the F7X LGSCU (landing gear and
steering control unit.) He obtained a Bache-
lor of Mechanical Engineering from McGill
University in 1983 and a Masters of Mechan-
ical Engineering from the University of
Toronto in 1990. Gary is married to Heather
and they have three children; Rebecca,
Steven and Jane, and a golden retriever
named Misty Morning. He is a member of
the Whitby Tigers Running Club.
Cecily Bradshaw is manager of phar-
macy services at Southlake Regional Health
Centre in Newmarket.
Brad Einarsen has 16 years of experience
in the IT field in which he has specialized in
how people interact with computers to get
their jobs done. He started at IBM Canada
in the Toronto Development Lab and built
up the International Centre of Competence
for Multimedia and Web while he was
there. He has also worked in industries as
diverse as Multimedia Production and
Industrial Process Instrumentation. He
now runs his own business, Haven Knowl-
edge Systems, which he started in 2000
with the mandate to bring the discipline of
Knowledge Management to the otherwise
chaotic world of Internet Development.
HKS is now in its seventh year of operation
and operates in the areas of Internet con-
sulting and development, hosting, and
Internet product development. Brad is
married to Amy and has two daughters,
Zoe (8) and Eva (3).
Patrick Ferrier is the president of the
higher education division at McGraw-Hill
Ryerson, the innovative industry leader in
business and economics education. Prior to
his current appointment, he served as the
vice president and publisher, during which
time Canadian sales revenue grew by 80 per
cent. He has worked with McGraw Hill com-
panies worldwide to help develop business
strategies and local publishing programs. He
currently sits on the board of directors for
the Institute for the Advancement of Teaching
in Higher Education and is a member of the
Canadian Publisher’s Council.

2005 (EMBA23)
Co-Class Champions:
Karen Sparks
Karen.Sparks05@rotman.utoronto.ca
Joyce Rankin
Joyce.Rankin05@rotman.utoronto.ca
2006 (EMBA24)
Co-Class Champions:
Elizabeth Duffy-MacLean
E.DuffyMaclean05@rotman.utoronto.ca
Linda Jussaume
Linda.Jussaume05@rotman.utoronto.ca
Ian Janwaar is director of client services
at the Victorian Order of Nurses (VON) in
London, ON.
Flip Oberth is president of her own con-
sulting business, Flipside Solutions Inc.,
in Toronto.
2006 (EMBA25)
Class Champion:
Rob Ljubisic
Rob.Ljubisic06@rotman.utoronto.ca
Rahul Kuckreja is an IT project man-
ager, specializing in wireless applications.
Four years back, he decided to venture into
other industries to gain experience in areas
outside of his domain. Starting with $100k,
Rahul accumulated assets worth $5 million
and is presently the owner/CEO of a
retirement home for senior citizens. Rahul
and wife Vineeta recently welcomed their
second son, Aryan, into the world. Rahul is
very proud to be associated with both,
EMBA-23 and EMBA-25, and sends every-
one his best regards.
Arwa Shahin recently moved to Amman,
Jordan to work on the quality compliance
systems for a leading pharmaceuticals man-
ufacturer.Arwa has experienced working in
the health care and pharmaceutical industry
in several countries in Africa, the Middle
East, and in Canada.The move to Jordan is
an exciting one for Arwa, who was born
and raised in Jordan, giving him the oppor-
tunity to work and live close to family and
friends as well as the wealth of experienc-
ing the changes and growth in the pharma
and health care sectors in Jordan.
OMNIUM/GEMBA
(Global Executive MBA)
Reunion Alert!
All OMNIUM/GEMBA classes in hon-
oured years – i.e. those that end in
either a ‘2’ or a ‘7’ – are invited to
return to the Rotman School on May
31, 2007, to celebrate Reunion 2007.
For details, contact your Class Cham-
pion(s) or Michelle Zathureczky,
Manager, Volunteers and Reunion
Coordinator at (416) 946-3665. You
can also visit www.rotman.utoronto.
ca/alumni/reunion.htm
1998
Class Champion:
Lan Nguyen
Lan.Nguyen98@rotman.utoronto.ca
1999
Class Champion:
Jim Coutts
Jim.Coutts99@rotman.utoronto.ca
2000
Class Champion:
Nancy Dudgeon
Nancy.Dudgeon00@rotman.utoronto.ca
Chris Gallenkamp is managing director
at Technocell Dekor, a paper producer that
manufactures decorative paper for the
woodworking industry, where he is respon-
sible for sales and marketing worldwide.
Chris and his wife Freya have three kids and
live in Osnabrück, Germany. Free time is
spent along with the family and, when pos-
sible, playing golf.
OMNIUM/GEMBA (Global Executive MBA)
2001
Co-Class Champions:
Margaret Evered
Margaret.Evered01@rotman.utoronto.ca
Renald Hennig
Renald.Hennig01@rotman.utoronto.ca
2002
Co-Class Champions:
Manfred Koo
Manfred.Koo02@rotman.utoronto.ca
Petra Cerhan
Petra.Cerhan02@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
http://www.rotman.utoronto.ca/alumni/
reunion.htm, contact your Class Champion
or the Alumni Office.
Nikolaus Kretz is the CEO of ProRegio
Mittelstandsfinanzierungs AG of Linz,Austria.
2003
Co-Class Champions:
Michal Berman
Michal.Berman03@rotman.utoronto.ca
Susanne Justen
Susanne.Justen03@rotman.utoronto.ca
2004
Co-Class Champions:
Ralf Martinelli
Ralf.Martinelli04@rotman.utoronto.ca
Brent Furneaux
Brent.Furneaux04@rotman.utoronto.ca
Enrico Enghardt writes, “A couple of
years after graduating, I joined ALSTOM
Power Service GmbH where I took over
operations responsibilities for the service of
turbine generator sets installed at fossil
fired steam power plants within the Middle
East and North Africa regions. To me, the
changes in China are nothing compared to
the cultural and macro-environmental
aspects affecting business in the Arabic
world. The volatility is very dramatic –
forecasted multi-million Euro projects and
related cash-in are often delayed due to
Rotman Magazine Winter 2007 • 117
MBA (Accounting)/Master of Management & Professional Accounting
unpredictable wars, and other projects
require governmental support to cover the
risk of sunk costs in the case of interna-
tional embargos. As you can imagine,
working in this environment requires one’s
‘battery’ to be recharged from time to
time; I do a lot of fresh or seawater fishing,
but I recently did something totally differ-
ent: climbing up Mount Kilimanjaro to
welcome the new year at sunrise (that’s me,
in the middle, below). My main focus now
is developing my team and the market I’m
responsible for. That’s what makes life
interesting: predicting and handling the
future. Personally, I’m really looking for-
ward to ‘What’s next?’
Guenter Knogler is head of IT at OO
Versicherung AG in Linz, Austria.
2006
Class Champion:
Cecilia Mueller Chen
C.MuellerChen06@rotman.utoronto.ca
James Tucker traveled extensively post-
program to Venezuela (visiting Caracas,
Margarita Island and Angel Falls) among
other countries and highlights. He recently
accepted an engagement with the Boston
Consulting Group and is enjoying work and
life immensely. James wishes health and
happiness to all his colleagues and looks
forward to reconnecting over at least a few
pints of beer in Greece this summer (‘07).
118 • Rotman Magazine Winter 2007
MBA (Accounting)/
Master of Management &
Professional Accounting
Reunion Alert!
All MBA and MMPA classes in hon-
oured years – i.e. those that end in
either a ‘2’ or a ‘7’ – are invited to
return to the Rotman School on May
31, 2007, to celebrate Reunion 2007.
For details, contact your Class Cham-
pion(s) or Michelle Zathureczky,
Manager, Volunteers and Reunion
Coordinator at (416) 946-3665. You
can also visit www.rotman.utoronto.
ca/alumni/reunion.htm
1990
Antonio Lopes is vice president finance
and administration for Federal White
Cement in Woodstock, ON.
1991
Faruq Rashid is the manager, financial
reporting for Dundee Realty in Toronto.
1992
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your Class Champion or the
Alumni Office.
1994
Class Champion
Chris Hind
Chris.Hind94@rotman.utoronto.ca
Allen Tai Ning Ho is a partner with
PricewaterhouseCoopers in Toronto.
Eli Palachi is a partner in assurance and
advisory services at Soberman LLP. He and
his wife Robin have two girls aged four and
nine, named Sierra and Skylar. “Best wishes
to the class of 94.”
1996
Co-Class Champions
Vanessa Blumer
Vanessa.Blumer96@rotman.utoronto.ca
Blake Langill
Blake.Langill96@rotman.utoronto.ca
Janet Scarpelli
Janet.Scarpelli96@rotman.utoronto.ca
Daniel Shimmerman is the president
and CEO of Varicent Software Incorpo-
rated, an international solutions provider of
commission and incentive management sys-
tems. He lives in Toronto with his wife and
three children, Ben, Abby and Jacob.
1997
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your Class Champion or the
Alumni Office.
1998
Class Champion
Melody Tien Grewal
Melody.Grewal98@rotman.utoronto.ca
1999
Class Champion:
Jamie Ferguson
Jamie.Ferguson99@rotman.utoronto.ca
Mark Mandel is vice president, advi-
sory services at PricewaterhouseCoopers
in Toronto.

2000
Taek Sung Jung is an accountant with
the Hangil Accounting Corporation in
Seoul, Korea.
2001
Class Champion:
Elaine Ilavsky
Elaine.Ilavsky01@rotman.utoronto.ca
2002
Class Champion:
Ali Spinner (Charyk)
Ali.Charyk02@rotman.utoronto.ca
Reunion Alert! This class is celebrating a
banner anniversary on May 31, 2007. For
more information and to RSVP, please visit:
www.rotman.utoronto.ca/alumni/reunio
n.htm, contact your Class Champion or the
Alumni Office.
Michael Gottlieb is enjoying the best of
both worlds. He and his wife, Tamara (nee
Winn), celebrated the birth of their first child
last year, Lauren. On the professional side,
Michael recently left BMO Financial Group
to join Barrick Gold Corporation as senior
manager, financial reporting risk assessment
and mitigation. He enjoying the dynamic
opportunities at Barrick, having recently
returned from an assignment in Tanzania.
Class Champ Ali Spinner is a tax manager
at RSM Richter LLP in Toronto. She and
her husband, Jamie, were married in 2004,
and have recently moved into their new
home in Toronto. Ali taught tax week at the
ICAO’s School of Accountancy last June
and is look forward to teaching corporate
income tax to UofT Commerce students
this winter!
PhD
2004 PhD
Jose Jimenez is audit senior at Ernst &
Young in Bermuda.
2002
In 2004, Rikhi Rampersad (DIFA 2004) Wulin Suo is an assistant professor at
was made a partner of R.D. Rampersad & Queen’s University in Kingston.
Co, Chartered Accountants (RDR) in the
sunny isle of Trinidad. RDR has been the 2003
local representative for Deloitte in Trinidad Lynnette Purda and Mark Heeler wel-
for the past five years. Rikhi now manages a comed their son Evan Alexander on May
number of the firms’ larger manufacturing 16, 2006. Evan was born in Kingston,
and oil and gas audit clients and tries to dab- Ontario, where Lynnette is a professor of
ble in forensic engagements when they finance at Queen’s University.
arise. Rikhi is married and has three chil-
dren, two boys and a girl. He confirms that
he has no plans to have any more, and from
the picture, you can see that they are quite a
handful. Rikhi recently traveled to Germany
for the World Cup to support the Soca War-
riors with their efforts, which was an
unforgettable experience.The German pub-
lic embraced the native Trinidadians with
open arms and made them feel right at
Be a Class Act:
home. In fact, Rikhi, his brother and another Volunteer as a Class
friend were interviewed by a local German
newspaper. He sends his best regards and
Champion
wishes to the DIFA 2003 and 2004 classes
Class Champions ensure their class
and reminds all that his open invitation to
remains active and vibrant long after
visit Trinidad is still in effect. Three kids
graduation and bring the Rotman
now, “accommodation may be a bit challeng-
School and its graduates closer
ing, but nevertheless, all are welcome.”
together. They help organize reunions,
promote events, and keep track of their
classmates’ activities for inclusion in the
Class Notes section of Rotman maga-
zine. To represent your graduating
class, contact the Rotman Alumni
Office at (416) 978-0240, or via e-
mail at alumni@rotman.utoronto.ca.
Jason Zhang is an associate at H&Q Asia
Pacific, a leading private equity firm manag-
ing US$2.3 billion (see www.hqap.com for
more details.) Jason is currently based in
Shanghai, and was married in October 2006.
Rotman Magazine Winter 2007 • 119
Upcoming Events
Complete details are available at www.rotman.utoronto.ca/events
January 2007
January 9, 5:00 – 6:20 pm
Rotman Merchandising Experts
Speaker Series
Speaker: Mark Foote (Rotman MBA ‘91),
President and Chief Merchandising
Officer, Loblaw Companies Limited
January 11, 5:30 – 7:30pm
Booklaunch for “Wikinomics: How Mass
Collaboration Changes Everything”
(Penguin 2007)
Author: Don Tapscott, President,
New Paradigm Learning Corporation
and Adjunct Professor of Strategic
Management, Rotman School
January 18, 5:00 – 7:00pm
Rotman Design Thinking Speaker Series
Speaker: Alex Manu, Director, Beal
Institute for Strategic Creativity and
Professor and Chair of Industrial Design,
Ontario College of Art and Design
Topic: “The Imagination Challenge:
Strategic Foresight and Innovation in the
Global Economy” (Peachpit Press, 2006)”
January 23, 6:00 – 8:00pm
Rotman Master of Finance
Speaker Series
Speaker: John Hull, Professor of Finance,
Director – Centre for Finance and Maple
Financial Group Chair in Derivatives and
Risk Management and Co-Director, Master
of Finance Program, Rotman
Topic: “Latest Developments in Credit
Risk and Derivatives”
120 • Rotman Magazine Winter 2007
February 2007
February 1, 5:00 – 7:00 pm
Rotman Pension Management
Speaker Series
Speaker: Keith Ambachtsheer, Director,
International Centre for Pension
Management, Rotman
Topic: “Pension Revolution: A Solution
to the Pensions Crisis” (Wiley, 2007)
February 20, 8:00 – 9:15am
Rotman Integrative Thinking™
Speaker Series
Speaker: Antoni Cimolino, General
Director, Stratford Festival of Canada
Topic: “Turnaround at the Stratford
Festival: It’s a Lot Like Directing a Play”
February 26, 5:00 – 6:20 pm
Rotman Corporate Citizenship
Speaker Series
Speaker: Mike Feinberg, Co-Founder,
Knowledge is Power Program Schools
Topic: “What It Takes to Make a Student”
March 2007
March 21, 1:00 – 6:00 pm
6th Annual Rotman MBA Conference
on Social Change and Leadership
Keynote Speaker: Johann Koss (Rotman
MBA ‘04), President and CEO,
Right to Play
April 2007
April 10, 5:00 – 6:30 pm
Rotman Public Policy Speaker Series
Speaker: David Mulroney, Foreign and
Defence Policy Advisor to the Prime
Minister of Canada
Topic:“Canada’s Foreign and Defence Policy”
May 2007
May 3 and 4
Psychologically Healthy Workplace
Conference @ Rotman
Keynote Speaker: Julian Barling, Professor
and Associate Dean, School of Business,
Queen’s University
May 31, 6:00 – 10:00 pm
Annual Rotman Reunion
This is a milestone year for the Classes of
1952, 1957, 1962, 1967, 1972, 1977,
1982, 1987, 1992, 1997 and 2002.
For details, see Class Notes in this issue.
June 2007
June 1, 8:00 am – 4:00 pm
“Integrative Thinking™: Learning
How to Think to Win” 9 th annual Rotman
Life-Long Learning Conference
Speakers: Thomas Stewart, Harvard
Business Review; Howard Gardner and
Ellen Langer, Harvard University; Mihnea
Moldoveanu and Roger Martin, Rotman

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Integrative
Thinking :
9 th Annual Rotman
Life-Long Learning
Conference
Friday, June 1, 2007
Toronto, Ontario
Confirm your attendance
TODAY by registering at:
www.rotman.utoronto.ca/events
We look forward to seeing
you on June 1st!
™
Learning How to Think to Win
Participate in our 9th Annual Rotman Life-Long Learning Conference on June 1.
This year’s theme is “Integrative Thinking™: Learning How to Think to Win”.The
day’s co-chairs are Tom Stewart, Editor-in-Chief, Harvard Business Review and
Roger Martin, Dean, Rotman School.
We are pleased to offer the following presentations:
“The Wealth of Knowledge: Intellectual Capital and the 21st Century Organization”
Thomas Stewart, Editor, Harvard Business Review
“Five Minds for the Future: the Cognitive Abilities that will Command a Premium in the Years Ahead”
Howard Gardner, Hobbs Professor of Cognition and Education, Harvard Graduate
School of Education
“Designing the Thinker of the Future”
Mihnea Moldoveanu, Associate Professor of Strategic Management and Director,
Desautels Centre for Integrative Thinking™, Rotman School
“Reinventing Yourself through Mindful Learning and Creativity”
Ellen Langer, Professor of Psychology, Harvard University
“Think Again: How Today’s Greatest Business Leaders Think to Win”
Roger Martin, Dean and Premier’s Research Chair in Productivity and Competitiveness
and Director, AIC Institute for Corporate Citizenship, Rotman School
105 St. George Street Publication Mailing
Toronto, Ontario, Canada M5S 3E6 Agreement Number 40062461