Harnessing In Defence of The Origins of HOW AI WILL AFFECT

Behavioural Insights Troublemakers the Gender Gap

PAGE 6 PAGE 20 PAGE 38
BUSINESS PAGES 44, 62

MANAGEMENT
The Magazine of the Rotman School of Management
UNIVERSITY OF TORONTO
SPRING 2019

The
Art of
Change
Behavioural
Approaches
to Diversity
PAGE 26

The Fearless
Organization
PAGE 74

The Seeds
of Change
PAGE 80
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 MANAGEMENT
SPRING 2019: THE ART OF CHANGE In your quest for change, you will encoun-
ter two kinds of people: goalkeepers
and gatekeepers. That according to
Beth Comstock, Nike board member
and former Vice Chair of GE Business
Innovations. Goalkeepers will help
you accomplish your goals, while gate-
keepers will stubbornly guard the status
quo. Comstock recently spoke at the
Rotman School about her book, Imagine
It Forward: Courage, Creativity and
the Power of Change . On page 56, she
describes The Age of Emergent Change,
providing advice and hard-earned
lessons for making change happen.

Features

6 20 26
Harnessing Behavioural In Defense of Troublemakers: Leadership Forum: Behavioural
Insights: A Playbook The Power of Dissent Approaches to Diversity
by B. Feng, J. Oyunsuren, M. Tymko, by Charlan J. Nemeth Compiled by Karen Christensen
M. Kim and D. Soman Consensus, while comforting The world’s leading thinkers on
Some of the smartest organizations and harmonious, often leads to diversity and inclusion recently
are moving behavioural insights up bad decisions. Authentic dissent converged at Rotman. Read highlights
the value chain, embedding them into can be a powerful antidote. from the ‘BAD’ Conference.
their design and delivery processes.
 32
Changing Behaviour for Good
by Angela Duckworth and
Katherine Milkman
Habits are automatic, effortless
and repeated. And they may be
the most promising avenue for
making behaviour change stick.
R AL
VIOU
BEHA
HTS
INSIG
YBOO
K
PLA
50
Using Behavioural Science
to Improve Decisions
by M. Hallsworth, M. Egan,
J. Rutter and J. McCrae
When leaders learn how to mitigate
common biases, behavioural
insights can shape strategic decision
making for the better.
68
Re-Framing Innovation:
Integrating Behavioural
Science and Design
by Sarah Reid and Ruth Schmidt
Behavioural science is unusually,
if not uniquely, qualified to shine
a light on designing for the future.
38
The Origins of the Gender Gap
by Ran Duchin, Mike Simutin
and Denis Sosyura
A leader’s family background
and early educational experiences
have a profound effect on their
later decision-making across
a variety of contexts.
56
The Age of Emergent Change
by Beth Comstock
Futurists predict that we will
experience 20,000 years of progress
in the course of the 21st century.
Are you ready for it?
74
The Fearless Organization
Interview by Karen Christensen
Havard’s Amy Edmondson argues
that in every organization,
countless moments of silence lead
to lost opportunities and errors.
44
How AI Will Affect Business:
What Leaders Need to Know
by Ajay Agrawal, Joshua Gans
and Avi Goldfarb
Artificial intelligence will have
varied implications for the economy,
but leaders should focus on three
key areas.
62
The Future of AI: Proceed
With Caution
Interview by Karen Christensen
NYU professor Amy Webb
warns that Silicon Valley
might be building AI without
inclusive human values.
80
The Seeds of Change
by Jackie Vanderbrug
and Kathleen McLaughlin
Two leading corporations — Walmart
and Bank of America — are among
those taking decisive steps towards
eradicating gender inequality.
 Rotman Management
Spring 2019
Published in January, May and September
by the Rotman School of Management
at the University of Toronto, Rotman
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featuring thought-provoking insights and
In Every Issue problem-solving tools from leading global
researchers and management practitioners.
The magazine reflects Rotman’s role as
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creates value for business and society.
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From the Editor
ISSN 2293-7684 (Print)
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Thought Leader Interview: Editor-in-Chief

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FROM THE EDITOR Karen Christensen

The Art
of Change

AT ITS CORE, EVERY ORGANIZATION is in the same business: be-
haviour change. Whether it’s a bank encouraging consumers
to switch to their product, a government agency trying to get
citizens to pay taxes on time or a health agency interested in im-
proving medication compliance, behaviour-change challenges
abound. As a result, leadership itself is also about change.
In addition to facing external behaviour-change challeng-
es, today’s leaders are also tasked with ensuring that change is
embraced internally. For example, if human capital is to be opti-
mized, biases must be tackled proactively. The problem is, most
people resist change. What is a leader to do?
As indicated in this issue, wherever human behaviour is in-
volved, there are opportunities for behavioural insights to influ-
ence outcomes. In this issue we look at some of the key areas
that demand behaviour change and present some of the tools
and mindsets required to achieve it.
Some of the smartest organizations are moving behav-
ioural insights up the value chain and embedding them deeply
into their design and delivery processes, as Rotman Professor
Dilip Soman and his co-authors show in Harnessing Behav-
ioural Insights: A Playbook on page 6.
Last fall, two of the Rotman School’s research institutes
— the Institute for Gender and the Economy (GATE) and Be-
havioural Economics in Action at Rotman (BEAR) — convened
some of the world’s leading thinkers to present the Behavioural
Approaches to Diversity Conference. The goal was to develop
sustainable solutions for increasing diversity and inclusion by
applying insights from behavioural science. Highlights from the
day appear on page 26.
Elsewhere in this issue, we feature GATE’s founder Sarah
Kaplan in our Thought Leader Interview on page 14; UC Berke-
ley Professor Charlan Nemeth describes the power of dissent
on page 20; and Michael Hallsworth and his colleagues from
the UK-based Behavioural Insights Team show how to mitigate
common decision making biases on page 50.
In our Idea Exchange, Dunkin’ Brands Chairman Nigel
Travis argues that the best organizations run on pushback; Rot-
man Vice Dean Brian Golden talks about the art of persuasion
on page 92; Laura Methot describes how to deal with Citizens
Against Virtually Everything (i.e. ‘CAVE people’) on page 96;
tech entrepreneur Maayan Ziv shows that we have a ways to go
in making the world inclusive on page 111; and George E. Con-
nell Chair in Organizations and Society Anita M. McGahan
shows how to become part of the solution on page 123.
As indicated in this issue, shaping an organization — and
the world itself — for the better is a never-ending journey that
is filled with hard work. For each of us, there will always be a
choice between the comfort of the old and the uncertainty of
the new. But in an age of emergent change, we must all make
embracing change — and enabling it — part of both our personal
and organizational DNA.
Karen Christensen, Editor-in-Chief
editor@rotman.utoronto.ca
Twitter: @RotmanMgmtMag

rotmanmagazine.ca / 5
 A Playbook for Organizations
Some of the smartest organizations are moving
behavioural insights up the value chain and embedding
them into their everyday processes.
by Bing Feng, Jima Oyunsuren, Mykyta Tymko, Melanie Kim and Dilip Soman
WHILE THEY GO ABOUT THINGS in very different ways, at their core,
every organization is actually in the same business: behaviour
change. Whether it is a for-profit firm encouraging consumers to
switch to its product; a government agency trying to get citizens
to pay taxes on time; or a health agency interested in improving
the consumption of medication, behaviour-change challenges
abound.
Many organizations struggle to make behaviour change
happen due to a fundamental empathy gap. ‘Econs’ — as depict-
ed in Economics textbooks — are hypothetical individuals who
have well-defined preferences, are able to accurately predict the
future consequences of their actions, have immense compu-
tational abilities and are unfazed by emotion. Humans, on the
other hand, are cognitively lazy, impulsive, emotional and com-
putationally constrained. The empathy gap occurs when orga-
nizations design products and services for econs, when in fact,
the end-user is a typical human being.
Not surprisingly, the day-to-day behaviour of humans differs
significantly from that of econs. Factors including context, cogni-
tive laziness, procrastination and social pressure play key roles in
human decision-making. The emerging field of Behavioural In-
sights works to connect the psychology of human behaviour with
economic decision-making to explain these phenomena.
Over the past 10 years, we have seen a great deal of progress
in the application of behavioural insights (‘BI’). With thousands
of trials being run by hundreds of public and private-sector orga-
nizations around the world, human behaviour has become a key
focus of activity in the policy, welfare and business world.
Inspired by the growing interest in BI from all sectors—
as well the absence of any formal guidelines for embedding
them within an organization — Behavioural Economics in
Action at Rotman (BEAR) has published a ‘playbook’ to help
interested leaders navigate the realm of BI. In this article we
will summarize its key messages, beginning with a description
of the four roles that BI can play to create value for virtually
every organization.
rotmanmagazine.ca / 7
 We can proactively design a ‘choice context’
to nudge users in a particular direction.
ROLE 1: BI as Problem Solver
Behavioural insights can enable an organization to address prob-
lems arising at ‘the last mile’—those moments where an end-user
directly interacts with your organization or its product or service.
Whether your last-mile issue is a low take-up rate, poor sales or
low conversion rates, BI can be harnessed to make subtle chang-
es to better align your product or service with human behaviour.
One of the key tools that enables problem-solving here is
the concept of ‘choice architecture’, whereby organizations pro-
actively design the ‘choice context’ in such a way as to steer or
nudge users in a particular direction. Following are the four main
types of decisions that choice architecture can influence:
COMPLIANCE. Getting people to act in accordance with a regulation
set by a government or agency (e.g., tax deadlines, regulatory pa-
perwork requirements).
SWITCHING. Getting people to convert from one choice to another
(e.g., brand switching, replacing soda with water at meals).
FOLLOWING THROUGH. Getting people to follow through on com-
mitments that they themselves have made (e.g., completing a
weight loss regimen, or just acting on intentions).
ACTIVE CHOOSING. Getting people to break undesired habits by
converting passive, mindless decisions into active choices.
It is fair to say that the biggest successes for BI to date have
come in the domain of choice architecture. For example, a few
years ago, Ontario’s Behavioural Insights Unit set out to increase
organ donations in the province. Working closely with project
partners Service Ontario and Trillium Gift of Life Network,
the team’s goal was to increase the number of people who regis-
ter as organ donors.
Initially, several ‘barriers to registration’ were identified,
including the length and complexity of the registration form,
failure to ask every customer if they wanted to register and ask-
ing customers to complete yet another transaction after they
had waited in line and completed other paperwork. The result:
By removing these barriers — and thereby enhancing the choice
8 / Rotman Management Spring 2019
architecture — registration rates increased by 143 per cent. The
organ donor registration process in Ontario was redesigned
based on the following choice architecture principles:
• Provide different versions of the donor registration form;
• Change the timing of when the form is handed out; and
• Offer additional information to help people make their
decision.
ROLE 2: BI as Auditor
At the end of every design process for products, services or pro-
cesses, a behavioural scientist can be tasked with auditing the
outcome and evaluating it for human-centricity. In this role, BI
is used to evaluate and provide suggestions for further ‘human-
izing’ organizational outputs.
The federal government’s Impact and Innovation Unit (IIU),
along with BEAR, recently worked with the Canadian Armed
Forces (CAF) on its goal to increase the percentage of women in
its ranks from 15 to 25 per cent by the year 2026. The team used
a BI lens to audit the following stages of the recruitment process:
THE APPLICATION PROCESS. BI-informed changes were made to the
Armed Forces’ application form to increase clarity and under-
standing. Furthermore, the Department of National Defense
(DND) made improvements to the appointment process and
recruitment follow-ups.
RECRUITMENT MARKETING. The IIU conducted a social media mar-
keting trial aimed at understanding ‘what works’ in engaging
Canadian women with a career in the Armed Forces.
POLICY AREAS AND GUIDELINES WITHIN THE CAF.A number of policy
areas, including deployments and relocation, leave without pay,
childcare support and long-term commitments were identified
for consideration and BI-inspired improvements.
The result: The collaboration was successful and has re-
sulted in changes to the CAF’s marketing and recruitment efforts
and an increased appetite for experimentation in these areas.
Key success factors included buy-in from executives at both the
CAF and the DND. This was essential in allowing the IIU access
to the relevant information and in implementing recommenda-
tions. In addition, the IIU was equipped with well-rounded staff
that included both quantitative and qualitative researchers. The
relationship between the IIU, CAF and DND has resulted in con-
tinued engagement and testing. The DND has also recently es-
tablished its own BI team: Personnel Research in Action (PRiA).
ROLE 3: BI as Designer
In this role, a behavioural scientist is involved from the outset,
ensuring that the design of a product, service or process is behav-
iourally informed from the start — which means that the process
always begins with observing actual users in a natural setting.
One of the key concepts in this domain is ‘behaviourally-
informed design’, an approach that combines the principles of
BI with those of Design Thinking. The BEAR team has worked
with a couple of government branches to employ BI to improve
consumer protection. At these agencies, BI is now used to better
understand the behaviour of consumers and agents in different
marketplaces. The agency continues looking for opportunities
to apply BI to both its policy design and its daily operations.
Three Truths About Behavioural Insights
1. PEOPLE ARE ONLY RATIONAL TO A CERTAIN EXTENT.
We often assume—sometimes implicitly—that people bal-
ance the pros and cons and assess risks on the basis of all the
available information, and thereby make well-considered and
consistent choices. The behavioural sciences teach us that the
choices people make are only rational to a limited extent. One
example of this is that people are more sensitive to a loss than
to a gain. As a result, they put in more effort and take greater
risks to avoid loss than to win the same amount.
People also follow certain rules of thumb or shortcuts in
processing information. One example of this is the availability
heuristic: for events that we can recall more easily—for example
because they were distinctive or emotional or recently in the
news—we overestimate the likelihood that they will occur again.
These deviations from rationality are partly predictable, which
means we can take account of them in policy-making.
2. PEOPLE HAVE LIMITED SELF-CONTROL. It takes
effort to resist temptation and suppress impulses, and people
have limited available resources for this. They want to eat more
healthily, exercise more often or save for their retirement, but
in practice it turns out to be harder than they thought. One
consequence of this is that there is a major difference between
planning to do something and actually doing it — between inten-
tion and action. Everyone has experienced this conflict at some
point: planning to do some chores but ending up slumped
on the sofa; starting a diet but ending up in a burger bar after
just a week; wanting to save but still going out for dinner.
Another example of this role is the growing realm of self-
control products. Products and services are being created to
enable customers to close the intention-action gap — whereby
people intend to do something positive but fail to act on it. Exam-
ples include Clocky, an alarm clock that literally runs away when
the sleepy user hits the snooze button — propelling itself off of the
bedside table and across the floor, out of reach of the dozing user;
and Stickk, a website that uses incentives and peer-effects to
encourage people to stick to their goals.
The BEAR team also recently consulted with a government
agency that set out to raise awareness of consumer protection
issues, targeting adult consumers of all ages who were highly
educated, but with limited knowledge of behavioural science.
Working together, we designed its information brochure using
the following BI guidelines:
• Ensuring that the colour and visual appearance were appeal-
ing to the public.
• Balancing image and text ratios to optimize comprehension
and readability.
• Managing the aesthetics of the cover to maximize the likeli-
hood of the brochure being read.
A psychological phenomenon relating to this is that people per-
ceive a reward in the near future as more valuable than a reward
further in the future. This plays a role in trade-offs between pres-
ent and future rewards, such as pensions and savings, but also
with respect to health.
3. PEOPLE ARE INFLUENCED BY THEIR ENVIRONMENT.
In order to determine what the ‘right’ behaviour is, people often
look at the behaviour of others, particularly in new or uncertain
situations. In a classic example of this, researchers conducted
a study in which a group of confederates unanimously gave the
wrong answer to a very simple question. The participant—who
was unaware of this— then conformed by also giving the wrong
answer. The news and government communication often show
undesirable behaviour in order to stress its objectionable nature;
however, often this actually gives the subconscious signal that
this is ‘normal’ behaviour.
It is not just the social environment but also the physical
environment that can have a major influence on behaviour. If fruit
is within closer reach than chocolate, it makes it easier for can-
teen visitors to make a healthy choice. And optically narrowing
stripes on the road prompt people to drive more slowly of their
own accord. The physical environment can also communicate a
particular social norm. An environment with a lot of litter on the
street provides a lot of information about other people’s behav-
iour, and can therefore lead to more litter.
-Courtesy of the Behavioural Insights Network Netherlands
rotmanmagazine.ca / 9
The website for this agency was also improved by using appro-
priate language to maximize engagement. For instance, making
sure that the negative connotations of words such as ‘hazards’,
‘risk’ or ‘unhealthy’ do not reduce attention by creating negative
emotions; and testing the balance between visual and text infor-
mation to minimize the risk of information overload. The results
were impressive and included increased traffic to the website; an
increase in public debate and discussions on the site; and greater
public reporting of marketplace frictions.
The following research findings indicate the breadth of op-
portunities in this domain:
The ABCD Framework for Using Behavioural Insights
A: ATTENTION – Make it relevant, seize attention and
plan for inattention
Attention is the window of the mind. However, attention is
scarce, easily distracted, quickly overwhelmed and subject to
switching costs. Practitioners will often find that attentional
issues have been overlooked in the design and implementation
of traditional public policies. For this reason, when practitioners
find a behavioural problem with attentional issues, it may prove
more effective to design policy interventions that are more
relevant, seize attention and, if this is not possible, think about
how to plan for inattention.
B: BELIEF FORMATION – Guide search, make inferences
intuitive and support judgment
While there is no such thing as too much information in a tradi-
tional public policy perspective, information overload has be-
come a serious problem for the people inhabiting the real world.
For that reason, problems in belief-formation usually go hand in
hand with the vast amounts of information and possibilities that
are put on offer. In this perspective, it is not surprising to find
that some of the biggest companies today are companies built
around information search engines and consumer comparison
platforms. What is perhaps more surprising is that traditional
public policy interventions with regards to problems of belief-
formation have been slow in copying what these companies do,
but instead often try to approach problems in belief-formation
by offering even more information.
C: CHOICE – Make it attractive, frame prospects and
make it social
When making a choice is difficult, people are likely to be influ-
enced by biases and heuristics in their decision-making. ABCD
10 / Rotman Management Spring 2019
• Telling people about positive, pro-social things that others
have done (as opposed to asking them to stop doing a certain
negative thing) can produce a fourfold increase in the num-
ber of people being more pro-social;
• Showing people smiling or frowning faces — a small emo-
tional trigger — on their electricity bills improves resource
conservation by 25 per cent; and
• Exchanging similarity-identifying information before a
negotiation can boost the successful outcome rate from 50
to 90 per cent, with an average 18 per cent increase in per-
ceived final value across parties.
suggests that researchers look into making preferable choices
more attractive, use framing of prospects and leverage social
identities and norms. The framing and arrangement of pros-
pects is perhaps the most famous, but also the most techni-
cal area of BI as applied to public policy. In facing a series of
choice-options, a person also faces a series of possible futures,
i.e. prospects. While making it attractive provides reasons for
choosing, the framing of prospects influences people to choose
one or another option in subtle ways independent of what is
chosen and why. That is, one option may be chosen over an-
other simply due to the way that choices are presented – either
as a matter of arrangement or as a matter of formulation.
D: DETERMINATION – Work with friction, plans and
feedback and create commitments
Most people know that it is easy to form an intention of doing
something. It is much harder to get it done. However, we do
not always anticipate this and tend to systematically overesti-
mate our own ability in taking the small steps to accomplish
our goals. Thus, choosing to do something is not the same as
succeeding. The world is complex and when any one person
has to juggle multiple goals at once, even relatively small
obstacles may become a reason for postponing taking action.
As a result people tend to procrastinate leading to inertia and
staying with the status quo.
-Courtesy of the OECD Behavioural Insights Toolkit
ROLE 4: BI as Chief Strategist
In these cases, every touchpoint with an internal or exter- Embedding BIs in Organizations: Four Approaches
nal stakeholder is run from a behavioural perspective. The
organization is human-centric in everything that it does, with Concentrated Diffused
behavioural insight as its main operating principle. Expertise Expertise
In these cases, firms can create BI-informed decision tools
that help agents make better choices by providing feedback,
rules of thumb, computational support, decision support or peer

Application
comparisons. For example, with a mandate to improve financial

Narrow
FOCUSED CAPACITY
literacy and facilitate positive behaviour change, the Financial BUILDING
Consumer Agency of Canada (FCAC) started offering finan-
cial tools and calculators to educate Canadian consumers and
help them make better financial decisions: Its Mortgage Calcu-
lator helps determine a mortgage payment schedule based on
user inputs and allows the user to input different pre-payment
options to show them how they can save money; its Budget Cal-
culator helps consumers get a portrait of where their money
Application BEHAVIOURALLY
Broad
comes from and where it is going; and its Financial Goal Calcu- INTERNAL INFORMED
CONSULTING
lator helps people figure out how to pay off their debts or reach ORGANIZATION
their savings goals.
Another example is Evree, whose app connects to your
bank account and helps you save money for things that really
matter to you. It basically employs many of the same behav-
ioural science tactics that other companies use to make you part FIGURE ONE
with your cash — but uses them to help you make smarter finan-
cial decisions instead.
All members of the Evree team, including management,
content designers and engineers, are trained to understand the
basic principles and applications of behavioural science. The location or department OR to use BI in broad applica-
objective is for the entire team to resolve problems using a sci- tions where it is applied across domains, geographies and
entific method and to approach daily operating roles with a BI departments.
lens. According to Stephanie Bank, a behavioural economist at These two decisions create four main approaches to embedding
Evree, “We look at behavioural science as our foundation, not BI in an organization.
just as a tool for a designer or a problem solver. All of our staff
members are trained to look at business problems and opportu- THE FOCUSED APPROACH. Employment and Social Development
nities through a behavioural lens.” Canada has its own Innovation Lab comprised of behavioural
scientists, data analysts, designers and policy analysts. The LAB
How to Get Started works on projects with internal partners to tackle problems us-
Before deciding which of the four domains can create the most ing a combination of human-centred design and BI methods. Its
value for your organization, there are two key decisions to full-scale design project for 2017 was the Canada Learning Bond,
be made: which found ways to increase uptake and better understand per-
ceptions of education and financial decision making among low
1. THE LOCUS OF EXPERTISE: whether to set up a concentrated income families.
team/unit within your organization OR to diffuse expertise
across the enterprise; and THE CAPACITY-BUILDING APPROACH. The federal government’s Im-
2. THE LOCUS OF APPLICATIONS: whether to use BI in a narrow pact and Innovation Unit (IIU) houses expertise in four areas:
application where they are applied to a specific geographic innovative finance, partnerships and capacity building, im-

rotmanmagazine.ca / 11
 Four Roles for Behavioural Insights

In the Marketplace:
Pre-marketplace: Within the Organization The Last Mile

The Value- Stage 1: Stage 2: Stage 3: Stage 4:

creation chain Define goals, strategy Design and develop Prepare to In-market: End-user
of product and operating principles product, program go-to-market interacts with product,
development or service program or service

Roles that BI BI as Designer BI as Auditor BI as Problem Solver

can play

BI as Chief Strategist

FIGURE TWO

pact measurement and behavioural insights. It offers services
through a core unit at the Privy Council Office and through
the fellowship model, in which scientists are deployed to other
Government of Canada departments and agencies to provide
behavioural science expertise and run behavioural insights trials.
At press time it had deployed five behavioural scientists across
the government.
acceptance, we expect organizations to start using it to tackle
more complex behavioural and policy challenges going forward.
In our view, BI can — and should — play a key role in important
societal domains such as the environment, business sustainabil-
ity, preventive health, and diversity and inclusion. Consider this
article as a nudge to get you started.

THE INTERNAL CONSULTING APPROACH. The World Bank’s Mind,

Behaviour, and Development Unit (eMBeD) is a behavioural sci-
ence team housed within the Bank’s Poverty and Equity Global
Practice. The team works closely with World Bank project teams,
governments and other partners to diagnose, design and evalu- Bing Feng (MBA ‘19) and
ate behaviourally informed interventions. The eMBeD unit cur- Jima Oyunsuren (MBA ‘19)
rently has 16 employees working on 49 projects across nine the- are Research Associates and
matic areas in 65 countries. Project Leads at Behavioural
Economics in Action at Rot-
man (BEAR). Mykyta Tymko (Rotman Com-
THE BEHAVIOURALLY INFORMED ORGANIZATION APPROACH. As indi- merce ‘19) is a Research Associate at BEAR.
cated by the Evree example, in these cases behavioural science Melanie Kim (MBA ‘16) is BEAR’s Research
is foundational to the entire organization and to all streams of Coordinator and Dilip Soman, the Rotman
School’s Canada Research Chair in Behav-
its work. ioural Sciences and Economics, is the Founding Director of BEAR.

In closing
The early years of BI as a field were marked by a need to score
quick wins and find proof-of-concept for this approach to engi-
neering behavioural change. Now that the field has gained broad
Editor’s Note: The BEAR Playbook has contributed to the thinking on behav-
iourally based efforts at various organizations, including the OECD, in their work
on the application of behavioural insights to public policy. The Western Cape Gov-
ernment in South Africa and the Impact and Innovation Unit in the Government
of Canada aim to use its content to strategically embed BI into their work.

12 / Rotman Management Spring 2019

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 The founding director of the Institute for Gender and
the Economy explains how to approach the stakeholder
trade-offs inherent in every business model.

Thought Leader Interview:

by Karen Christensen

How do you define a 360˚ Corporation? only deliver financial performance, but also show how it makes
Nine years ago, I created a course at the Rotman School called a positive contribution to society.”
“Corporation 360°”, because I wanted to take a hard look at the Today, we are no closer to a quick solution, but I have dis-
stakeholders that surround companies from every direction — all tilled some key principles for action. What I’m trying to point

PORTRAIT BY SUSAN HINOJOSA (MSUSANHINOJOSA@GMAIL.COM

360 degrees. Since then, my students and I have been thinking
a lot about the role of the corporation in society, and what com-
panies can do to deal with the trade-offs created by stakeholder
needs that conflict with their bottom line.
The fact is, meeting stakeholder demands requires actions
that might compromise profits. Things like improving worker
conditions, investing in environmental advances, creating tal-
ent pipelines for marginalized communities and putting an end
to polluting activities are costly endeavours, in terms of time and
money and in terms of organizational disruption.
Despite these challenges, corporate leaders have begun to
demand action from their colleagues. In 2017, Larry Fink, the
CEO of BlackRock (which manages over $1 trillion in assets),
wrote an open letter to CEOs in which he said, in part, “Society
is demanding that companies, both public and private, serve a
social purpose. To prosper over time, every company must not
out is that corporate social responsibility is closely connected to
the trade-offs that are embedded in your business model.
You believe that trade-offs between stakeholders exist in vir-
tually every business model. Please explain.
Every business model — from the corner store to a large corpora-
tion — contains implicit trade-offs between different stakehold-
ers, whereby one group benefits and another is hurt in some way.
For example, Walmart has an ‘everyday low price’ strategy, and
that is great for consumers. They benefit because they can come
in and buy a sweatshirt for $5; but this model is built on the fact
that Walmart must also pay its people relatively low wages. Of
course, they are not unique in the retail industry for doing that,
but the fact is, they can’t sell sweatshirts for $5 unless they also
pay low wages. That’s just one of the implicit trade-offs in their
business model.

14 / Rotman Management Spring 2019

 We need to stop working on de-biasing people
and focus instead on changing our systems.
Trade-offs aren’t always obvious. What is the best way to fig-
ure out which stakeholders are being disadvantaged?
In most cases, companies don’t even acknowledge that these
trade-offs exist, which is why I came up with the Four Modes
of Action Framework, to help people figure it out. Mode One
involves taking the required steps to understand the trade-offs
within your business model, which as indicated, is a conversa-
tion that most leaders do not have. The only time it comes up is
if a particular stakeholder becomes a ‘squeaky wheel’; suddenly,
there is a Twitter storm because of something you did, or workers
are going on strike. Then, you pay attention to your stakeholders.
There is a more foresighted way to go about this, which is to
take both an ‘inside-out’ and an ‘outside-in’ view of your busi-
ness model. This entails first analyzing your model and thinking
about who is experiencing trade-offs; that’s the ‘inside-out’ part.
Then, the ‘outside-in’ part involves bringing a variety of actual
stakeholders to the table — environmentalists, workers, people
from the supply chain, etc. — and having a frank conversation
with them about their experience with your company. It is very
difficult for leaders to imagine what the needs of stakeholders
are. The only way to do this is to physically have them at the table.
People naturally resist change initiatives. Why is that, and
what can be done about it?
People are naturally resistant to all kinds of change, and the way
they try to overcome that in organizations is by making a busi-
ness case for change. This is what I refer to as Mode Two Action:
If they can just prove, ‘this is going to be good for the business’
— whether it be a diversity initiative that makes teams more inno-
vative or an environmental initiative that saves energy — people
go to great lengths to make a business case to overcome inertia.
This is an important step, but it comes with a caution: The
latest research shows that, in fact, making a business case may
not motivate action in the way we think. First, simply having a
business case might not actually convince people to act, because
in these situations, what really convinces people to act are things
like moral outrage or an emotional or ethical response. The prob-
lem with a business case is that it deflects attention away from
these powerful motivators.
Second, especially when it comes to things like ‘a business
case for diversity’, the business case has the effect of ‘othering’
16 / Rotman Management Spring 2019
the people for whom it is being made, making them feel like they
don’t belong. If you are a person of colour or a woman and people
are making a business case for diversity, it just highlights to you
that you are not already part of the system; you are outside of
it, and this makes lots of people check out. The same thing can
be said for people who are advocating for environmental change.
Any situation that demands that you make a business case for
it implies that you and your ideas have no value on their own —
and that is very demotivating.
The third reason a business case doesn’t always work comes
from some new research that I am doing. I’ve been studying peo-
ple who feel they need to make a business case to, for example,
advocate for environmental improvement or for diversity. What
I am finding is that these advocates find it soul-crushing to have
to justify economically something that they view as an essential
human right. So, no matter how you look at the business case,
it might be getting in the way of effective action — and it may ac-
tually be setting us back.
Making a business case has had a particular impact on diver-
sity initiatives. Talk a bit about that.
Despite all the recent attention to inclusiveness and lots of cor-
porate activities around diversity, we continue to see discrimi-
natory outcomes in organizations. In my view, that’s because
we’ve been stuck in Mode Two — focusing on making a business
case — for 15 years now; and in those same 15 years, change
has stalemated.
I don’t think people go to work saying, ‘I’m going to be super
sexist today’, or ‘I’m going to be transphobic’ — yet we continue
to see these things. Why? For one thing, we all have implicit bi-
ases, but we have focused virtually all of our attention on trying
to fix people’s brains and make them unbiased through things
like ‘unconscious bias training’. Here’s a newsflash: We are never
going to make people unbiased. Our biases are shaped from the
moment we are born, right up to the day that we make corporate
decisions. We see this with the recent research by my Rotman
colleague Mikail Simutin, showing that CEOs who were raised
in less egalitarian settings (i.e. who went to an all-boys school,
or had a mother who didn’t work) are more likely to allocate re-
sources to male executives than to female executives. [Editor’s
Note: See page 38 of this issue for more on this research.]
 We need to stop working on debiasing peoples’ brains, and
instead focus on changing our systems. The reason discrimina-
tion is so persistent is because biases are embedded in our pro-
cesses and how we work, and those things are much harder to
change. It’s so easy to say, ‘If we give people some diversity train-
ing, things will be better’. We do still need diversity training, but
we have to couple it with innovations to our systems. One reason
this hasn’t happened yet is that it requires a lot of hard work, and
people just don’t want to do the heavy lifting. For example, they
don’t want to change the way they recruit. They want to keep
recruiting people who are comfortable to work with, because
they know that more diversity is going to create less comfort.
But, as the research shows, that discomfort is exactly what drives
creativity and innovation.
In addition to not wanting to do the work, people don’t know
how to do the work. I think if we were to treat discrimination in-
side organizations not just as an issue that gets assigned to HR,
but as an innovation challenge that every employee should be
working on, we would see a lot more progress.
In recent years, the conversation around ‘balancing stake-
holder needs’ has been dominated by Michael Porter and
Mark Kramer’s concept of creating ‘shared value’. Tell us how
your approach differs from theirs.
Porter and Kramer posit that there are lots of hidden ‘win-wins’
in organizations, whereby something you could do for the envi-
ronment, for instance, will reduce your costs — like putting in
better lighting systems company-wide. For example, Walmart
recently worked with its suppliers to produce concentrated laun-
dry detergent. That is potentially a win-win because it means
lower shipping costs, less plastic and less water. There are huge
benefits to the environment, but the organizations involved also
benefit by saving costs and selling a better product.
There are two problems with the win-win approach. First,
achieving shared value is hard to do. It wasn’t that Walmart
suddenly said, ‘We are only going to sell concentrated laundry
detergent’. They had to work closely with their suppliers, change
the way they shelved the products, create new signage and
advertising, re-train sales staff, and guarantee that suppliers
would not be disadvantaged by the smaller bottles. Even ‘win-
wins’ require a whole lot of effort.
Second, not everything can be a win-win and, in fact,
Porter and Kramer explicitly say that if you can’t get a bottom-
line win from the initiative, you should not proceed with it,
because that becomes ‘charity’. We have to acknowledge that
if you stick to the win-win framework, you are only going to be
able to grab the ‘low-hanging fruit’, because you will only do
things that benefit the bottom line, and therefore, you’re not ac-
tually considering the true needs of stakeholders, workers or the
environment.
Mode Three Action involves innovating around a particular
trade-off. What is one of your favourite examples of that?
If you can’t find a win-win through your existing ways of doing
business, you need to think about how to innovate around the
trade-off(s) you identified in Mode One. You might still end up
with a business case, but you will come at it from a very differ-
ent angle; it won’t come from your traditional understanding of
your business, and you may have to rethink the very nature of
the business.
In the 1990s, Nike got into trouble for its supply chain
practices, whereby workers in Vietnam and other places were
getting paid four cents a day under horrible conditions to make
shoes that sold for $200. At first, they resisted making changes;
but soon they began to invest in getting their factories to comply
with international standards. What they discovered is that com-
pliance was not going to be enough: They were never going to
get improved work conditions by focusing only on the factories,
and as a result, they ended up innovating in all sorts of different
ways. They found new ways to work with the factories, using new
management practices. They taught people about total quality
improvement and helped managers learn to be more effective
leaders. They implemented a wide range of standard business
improvement practices.
They also realized that they had to change how they oper-
ated at their own headquarters. One reason the factories had
substantial overtime and abusive scheduling was due to con-
stant changes to the product designs that were based on the
whims of the consumer — resulting in rush jobs for the factories.
In the end, Nike had to rethink and innovate its entire approach
to designing products and managing the procurement process
in order to put less pressure on the factories. That is a prime
rotmanmagazine.ca / 17
 This is a moment in time when corporations
really have to take the lead.

example of Mode Three action. Nike eventually got to a win-win, governments are going to be reliable in terms of creating regu-
but only after a whole lot of change. Today, Nike is considered lations or following through on commitments to the climate or
the gold standard in terms of how it deals with its global factories. inclusivity, so we are at a moment when corporations really have
It’s not perfect — but it’s much better because it chose to innovate to take the lead. In the U.S. right now, some leaders are saying, ‘I
instead of focusing on compliance. don’t care what the government says: We will not back off of our
climate change commitments’.
You indicated earlier that there are cases where innovation is We’re also seeing workers — whether it’s in the supply chain
not (yet) possible. How should leaders approach these situ- or in corporate headquarters — pushing back on all sorts of
ations? things, whether it’s working conditions in Amazon warehouses
I call these Mode Four situations. In these cases there is no ob- or discrimination at Google or Nike headquarters. Leaders are
vious win-win, and you don’t have an innovative solution yet, realizing that they’re going to get pressed more and more. The
either. The sad truth might be, ‘We can’t do anything about this expectation of workers and of society is that they can no longer
at the moment, so for now it is just a cost of doing business’. ‘look the other way’ on any of these issues. Whether they like it
Yet, more and more, companies are keeping their innovative or not, they’re going to be forced to do the right thing.
efforts alive in these cases. They might say, ‘Look, we can’t do
this across the entire company right now — but here is one area
where it is currently feasible. Let’s try it out there.’ Another ap-
proach is to say, ‘We can’t do this right now, but let’s set it as a
long-term goal and continue to invest in it.’
Again, Nike provides an example. It is famous for its Nike
Air shoes — which have air bubbles in them. A number of years
ago, it realized that the chemical it was using to create the air
bubbles was terrible for the environment. They tried to get rid of
it, but couldn’t find another gas that would maintain the bubbles’
appearance. Rather than giving up, they invested in a decade-
long project to create new air systems with less environmentally-
damaging gasses.
Eventually, they came up with a solution that entailed get-
ting rid of the big air bubbles and replacing them with smaller
bubbles throughout the entire sole of the shoe. That led to the Air
360, which was highly successful. By resolving to work hard on
the problem — not knowing the solution in advance, and holding
its intention firm for a period of time — Nike came up with an in-
novative solution.

You have said that for every organization, the urgency to

move beyond bottom-line thinking could not be any greater
than it is right now. Why is that?
It’s become pretty obvious in the last year that climate change
is directly effecting the lives of millions of people in all sorts
of ways. Corporations are obviously part of the problem; but
they can also be part of the solution. We’re learning that not all
Sarah Kaplan is the Founding Director of the Institute for Gender and the
Economy, Distinguished Professor of Gender & the Economy and Professor
of Strategic Management at the Rotman School of Management and Senior
Fellow at the Wharton School’s Mack Institute for Innovation Management.
Her latest book is The 360˚ Corporation: From Stakeholder Trade-offs to
Transformation (Stanford University Press, 2019).

18 / Rotman Management Spring 2019

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 IN DEFENSE
OF TROUBLEMAKERS:
Consensus, while comforting and harmonious, often leads
to bad decisions. Authentic dissent can be a powerful antidote.
by Charlan Jeanne Nemeth
THE POWER AND PULL OF THE MAJORITY is all around us, even if we
are unaware of its potential influence. We may believe that we
generally ‘think for ourselves’ and are persuaded only by strong
arguments; but the fact is, when faced with the opinions of oth-
ARTWORK BY SUSAN HINOJOSA (MSUSANHINOJOSA@GMAIL.COM)
ers, we often agree without a good argument — or any argument
at all. We can even lose sight of what we believe in.
Books like The Wisdom of Crowds have reinforced the as-
sumption that ‘the truth lies in numbers’. The book properly
points out the value of judgments by ‘the many’ and their supe-
riority over the judgments of experts. What may be lost on the
reader, however, is that the majority opinion is superior only in
certain circumstances. Accuracy is more likely found in numbers
if the judgment is a matter of common knowledge. For instance,
judging the number of jelly beans in a jar. Knowing who discov-
ered the transuranium elements is a different story. An expert in
Chemistry is more likely to know the name of Glenn T. Seaborg
than a dozen laypeople.
Independence of judgment is another critical element. The
average judgment of a large number of people can be accurate,
provided their judgments are independent. If they have influ-
enced one another, ten people might only have the accuracy of
one. Herding behaviour and stock bubbles demonstrate that
‘many people doing the same thing’ is not necessarily an indica-
tion of accuracy or good judgment.
The problem is not that the majority is wrong. Statistically
speaking, it may be right, depending on the task and circum-
stances. Nor is it that the judgment of ‘the many’ is without value.
The problem is that we assume that they are right simply because
they are ‘the many’ rather than ‘the few’.
What if everyone in your group expressed a judgment
that you knew was not true? You might think that you would not
care what they said or did and that you would answer correctly,
especially if you could see the truth with your own eyes. How-
ever, research stretching back more than half a century demon-
strates that the truth is no sure protection against the majority.
In general, research shows that the more difficult or am-
biguous the task, the higher the degree of following. It is also
higher among individuals who have low self-esteem or who
are attracted to the group. Even the size of the majority has a
bearing on the degree to which we follow them. Most research
rotmanmagazine.ca / 21
 If they have influenced one another, ten people
might only have the accuracy of one.
shows that conformity increases as the majority size increases
from one to around three or four; thereafter, size corresponds
little to the amount of conformity.
The history of the financial industry reveals the power of the
majority to shape judgment and behaviour. From the original in-
vesting bubble, the South Sea Bubble of the early 18th century, to
the NASDAQ and housing bubbles of the last 20 years, investors
have been known to herd — to put their money where others have
already put theirs. Empirical work by economists confirms that
investors often follow the decisions of others instead of doing
their own due diligence.
The fear of being in the minority manifests itself in work-
places, as well. Researchers have found that around 70 per cent
of employees don’t speak up when they see problems, for two
reasons. First, employees think that speaking up won’t matter
and the company will ignore what they say; and second, they fear
repercussions from the majority — those who remained silent
and did not report the problem. Silence thus becomes part of the
power of the majority.
We see similar kinds of following in consumer behaviour.
Why do we go into restaurants that are full and avoid those that
are half empty? Why do we follow the star system on Yelp or
Amazon, even if only 30 people have posted a rating? Why do
we only buy books that are on the New York Times best-seller list?
We do all of these things because we believe that the majority
of people are doing them, and we take that as a signal that a
product, experience, or idea has value. The problem is, as indi-
cated, the majority is often wrong.
Daring to Dissent
With all the power of the majority to get us to follow and agree, it
may seem that the majority has no weaknesses. But it does: con-
sensus. Unanimity is the most important variable affecting the
majority’s power, because just one person challenging the consen-
sus can break that power and increase group members’ ability to
think independently and resist making erroneous judgments.
Sadly, nearly all of us punish dissent. We don’t like disagree-
ment and we often inflict punishment on those who oppose our
22 / Rotman Management Spring 2019
views when we are in the majority. Dissenters are rarely liked,
and hence daring to dissent takes courage. But what is interest-
ing is that this courage, when summoned, is contagious: Dissent
can actually increase the likelihood that others will also show
courage when faced with consensus in another situation.
The film Twelve Angry Men without Henry Fonda would
have been ‘Eleven angry men who rushed to the judgment that
the defendant was guilty’ — and, most surely, that verdict would
have taken them minutes to reach. The film shows the power
of dissent — of that one persistent minority voice. It turns out
that dissent is useful not just in the realm of persuasion, but
in stimulating divergent thinking — the kind of thinking that
is necessary for good decision-making. Without dissent, that
jury’s discussion would most likely have reflected convergent
thinking and a rush to judgment — the kind of thinking that
leads to bad decisions.
The value of dissent for the quality of group decisions has
also been studied in naturalistic settings. For example, Linn
Van Dyne of Michigan State and Richard Saavedra of Carn-
egie Mellon conducted a field study in which groups of four or
five met over a ten-week period. Some groups included a person
who had been trained to be ‘a persistent minority voice’; while
the other groups had no such trained dissenter. Their finding:
Groups that experienced dissent reported more divergent think-
ing. They “identified a large number of alternatives” and “iden-
tified many advantages and disadvantages to each alternative.”
They also produced reports that were consistently rated as being
more original and of better quality by outside experts.
One ambitious study observed the value of dissent for
strategic decision-making in U.S. hospitals. The researchers
surveyed the entire population of hospitals in three states, and
found evidence that when members openly expressed a differ-
ence of opinion, the quality of the decision was better. Such deci-
sions were seen as more financially responsible and as contrib-
uting to the hospital’s overall effectiveness.
The results of studies of top management teams by Kath-
leen Eisenhardt and her colleagues are consistent with these
studies, concluding that it is often valuable to ‘have a good fight’
in decision-making teams. Among the tactics of the best teams
are that “they work with more, rather than less, information;
they develop multiple alternatives to enrich debate; and they
resolve issues without forcing them to consensus.”
Even the U.S. Supreme Court provides evidence for the
value of dissent, as it has been found to increase what is called
the ‘integrative complexity’ of the Court’s decisions. This con-
cept is akin to divergent thinking. Integrative complexity is the
ability to see both sides of an issue and their trade-offs. One
study of Supreme Court decisions analyzed its written opinions
for integrative complexity and found that they showed more of it
when there was a dissenting opinion. When the Court’s opinion
was written on behalf of a unanimous group, it showed very low
integrative complexity; when the opinion of the Court was writ-
ten on behalf of a majority who confronted a dissenting opinion,
integrative complexity was high. It was in the latter case that
the justices showed an awareness of alternatives and were more
likely to consider both sides — at least in their written arguments.
Given the evidence that dissent stimulates the kind of think-
ing that makes for powerful decision-making, we must ask why
so many people fail to embrace it — and even resist it.
Groups and Consensus
High on many people’s list of techniques for achieving diver-
gent thinking is the idea of playing ‘devil’s advocate’ — a form of
‘pretend dissent’. The origins of the this technique lie in the prac-
tice of the Roman Catholic Church when considering a candidate
for sainthood. Understandably, the Vatican didn’t want to make
a mistake and learn later that a candidate for sainthood behaved
in ways that were not saintly. Thus, in 1587, it instituted a practice
of exploring everything negative about each candidate.
Intuitively, this technique would seem to counterbalance
a bias in favour of the candidate held by most of the decision-
makers, including the Pope. In modern uses of the technique,
the premise is still that it will challenge consensus. This was the
antidote favoured by Yale Psychologist Irving Janis in discussing
ways to counter groupthink. The greater hope is that this tech-
nique will stimulate some form of divergent thinking, the kind
that, as we have seen, occurs with dissent and is directly linked
to good decision-making. Minimally, the hope is that devil’s ad-
vocate, like dissent, will encourage teams to evaluate risks and
benefits with equal vigour.
Now for the bad news: It doesn’t work. Available research
on the devil’s advocate technique provides support for its value
— but only when compared to groups where there is no challenge
whatsoever. Compared to these groups, it can provide benefit, as
can its sister technique, ‘dialectical inquiry’, in which a person
doesn’t just argue all the negatives of a proposed position, but
also offers a counter position. By and large, these two techniques
are better than no challenge at all; but my colleagues and I have
found something that works much better: authentic dissent.
We first conducted a study comparing the devil’s advocate
technique to authentic dissent in 1998. I had been skeptical
about the devil’s advocate approach for years. It seemed to me
to be a contrivance. Anyone can undertake an intellectual game,
but that is not the same as really thinking through all the pros and
cons of something we believe.
I had studied the power of authentic dissent for years and
had witnessed its ability to stimulate a broader search for infor-
mation, a consideration of more alternatives, the use of multi-
ple strategies, and more original thinking. Before my collegues
and I undertook our studies of the devil’s advocate, I had never
believed that you can role-play dissent and get those kinds of
reactions.
Our study was quite simple. We assembled groups consist-
ing of four individuals. In one set of groups, there was no dis-
sent; in a second set, there was authentic dissent; and in a third
set, there was devil’s advocate ‘dissent’. The groups deliberated
on a personal injury case and were to agree on compensation
for pain and suffering. They could choose any one of eight op-
tions in $75,000 increments. The lowest was $1 to $75,000, then
$75,001 to $150,000; the eighth option was over $525,000.
Each participant typed in their own position. From pretest-
ing this case, we knew that they would all pick a low compen-
sation, and they did: All took the first or second position. Each
person saw the arguments of each of the others, but in fact all
rotmanmagazine.ca / 23
 Daring to dissent takes courage. But once summoned,
this courage is contagious.
of these arguments had been pre-programmed. Each learned on
the first ballot that two others agreed with her, favouring a po-
sition of low compensation. What differed was whether a third
individual, person B, agreed with her as well (the ‘no dissent’
condition) or took a different position of high compensation
(being a dissenter). That dissent, however, was either authentic
— that is, it was the true opinion of person B — or the result of
person B being asked by the experimenter to play devil’s advo-
cate. The arguments were identical.
In general, the individuals who faced authentic dissent had
the most internal thoughts, and they themselves were generating
the thoughts, rather than paraphrasing others or the case infor-
mation. In short, they were really thinking. More important was
the direction of their thoughts: Those facing authentic dissent
showed a balance in considering both sides of the issue; while
those facing a devil’s advocate did not. Rather than stimulating
thought on both sides of the issue, the devil’s advocate actually
stimulated more thoughts in the participants that defended their
original position. It was not the kind of thinking that proponents
of the devil’s advocate technique would have desired.
My colleagues and I have since identified the key problem
inherent in the devil’s advocate technique: Role-playing does not
show the courage and conviction of authentic dissent. When a
person is role-playing, you don’t really know the relationship be-
tween what they are saying and what they actually believe. Even
if their words are consistent with their beliefs, you are very aware
that they are acting. And since you are aware that they are play-
ing a role, you are likely to think and interact with them differ-
ently. After all, you can’t persuade someone who is role-playing
to change their position.
It is only when you face a dissenter who truly believes their
position, has the courage to say so, and does so persistently that
you confront the possibility that you may be wrong. At the very
least, you will start to investigate the complexity of the informa-
tion and the issue; seek information and consider alternatives,
much as you do when first forming an opinion; look at all sides;
and consider the cons as well as the pros. Put simply, you will be
really thinking.
24 / Rotman Management Spring 2019
Exhibit A: Finchwood Capital
Some firms have already embraced the concept of authentic dis-
sent by creating processes that build dissent into their various
stages of decision-making. Finchwood Capital, a hedge fund, is
one such organization. I had the occasion to interview its founder
Ankur Luthra, who has thought very carefully about the firm’s
decision-making processes and is especially attuned to the im-
portance of combating bias.
On a regular basis, Finchwood has a ‘theme day’ when it
focuses on an entire sector — for example, ‘Internet security’ —
and considers which companies will be the likely winners and
losers in that sector. After researching the investment space as
well as specific stocks, a lead proponent writes a one-off paper
about the investments considered promising.
The interesting part is that the proponent also formally ad-
dresses the downsides of their position, outlining the risks in a
section known as the ‘Pre Mortem’. This section addresses how
the firm could lose money on the investment. This is just the first
step, however, in considering the downsides: Next steps include
defending the proposal with colleagues who have read the paper.
This ‘deeper diligence’ stage involves two key items: an invest-
ment memo and a contra memo. The contra memo is a much
deeper examination of the risks associated with the investment,
written from the perspective of someone who opposes the invest-
ment. For example, if Finchwood wants to buy stock XYZ (a long
position), this memo argues for ‘shorting’ that stock.
This is more than an intellectual exercise: It is a mechanism
for getting as close as possible to authentic dissent. In this case,
the proponent is also the dissenter, and they are expected to
write a thoughtful and persuasive paper arguing the contra posi-
tion. Not just a couple of paragraphs after a half-hour of thought,
or five bullet points on how the firm could lose money on the in-
vestment — but an eight- to nine-page position paper that others
will read and to which they will have to respond.
Finchwood’s process is of special interest here because it
gives some evidence that confrontation with dissent leads to
divergent thinking. In one example recounted by Luthra, the firm
was considering an investment in a software company — let’s call
it ABC. The company had shown rapid revenue growth, with a only for the truth it may hold, but for its impact on the way we
very efficient sales and marketing model. Luthra was very posi- think. Even when the dissenter is wrong, dissent makes us more
tive towards this investment, but as per the firm’s process, he had open to learning, growing, and changing.
to write a contra memo. In it, he laid out arguments for the oppo- We often concentrate on the vulnerabilities of being the
site of his own position. His reasoning included the thesis that the one to challenge the majority, and those vulnerabilities are real
competition, which in past years had fallen flat, would heat up in — but so is the power of a dissenting voice speaking with convic-
the near future, and that Microsoft, in particular, would be in a tion, courage, and authenticity. And today, I think most readers
position to dominate the space with its latest release. would agree that we need dissent — possibly more than ever.
Luthra was comfortable with buying ABC because he had
done due diligence: He had downloaded and tried out the com-
petitor products, including Microsoft’s, and was convinced that
ABC’s product was superior. That was a good enough reason to
buy it. However, the contra memo stimulated thinking about
the future and other possibilities. Having found a signpost, the
team decided to check the competition regularly and be especial-
ly vigilant should Microsoft announce a new offering. Luthra and
his team now had a measured position — one subject to change
should certain events arise.
It turns out that Microsoft did later launch an updated ver-
sion of its competing product — and Finchwood’s team was at-
tentive, thanks to the thinking stimulated by its contra-memo
process. They downloaded the new Microsoft product and tested
it rigorously — something they learned that other investors rarely
did. They found it to be much improved, discussed it thoroughly,
and decided that at that point, the risks outweighed the benefits:
They sold ABC, avoiding significant losses.
In the end, Finchwood had an advantage over its peers
because it had signposts generated by thinking that had been
stimulated by a dissenting opinion. To be clear, this process is
not exactly the same as authentic dissent, but it comes close, and
it indicates the type of thinking that more organizations should
be doing.

In closing
Consensus, while comforting and harmonious, often leads us Charlan Jeanne Nemeth is a Professor of Psychology
at the University of California, Berkeley. She is the author
to bad decisions. Authentic dissent is not about being rude or dis-
of In Defense of Troublemakers: The Power of Dissent in Life
respectful. It’s about speaking up when you have a position that and in Business (Basic Books, 2018).
you believe to be true. More of us need to applaud dissent — not

rotmanmagazine.ca / 25
Leadership Forum:
Behavioural
Approaches
to Diversity
Two of the Rotman School’s leading research institutes — the Institute
for Gender and the Economy (GATE) and Behavioural Economics
in Action at Rotman (BEAR) — recently hosted the world’s leading
thinkers on diversity and inclusion. Following are some highlights from
Behavioural Approaches to Diversity — aka the BAD Conference.
compiled by Karen Christensen

Dolly Chugh
Associate Professor, Management
and Organizations, Stern School of Business,
New York University; author, The Person
You Mean to Be: How Good People Fight Bias
(HarperBusiness, 2018)

ONE CONCEPT THAT I DISCUSS in my work is ‘ordinary privilege’.

Think about an aspect of your identity that you rarely have to think
about. For example, as a straight woman, I can go for months
without ever thinking about that, because I am not discriminated
against or put in danger due to homophobia and bigotry. I chat
PORTRAITS BY DELPHINE LEE

freely about my husband at work, my medical benefits are never

in question, and being legally married was never something I had
to fight for.
That part of your identity is what I call ordinary privilege,
and we can extrapolate this to different contexts. It could be that
you are a native speaker of the language spoken in your envi-
ronment; that you’re white in an environment where that is the

26 / Rotman Management Spring 2019

norm; or that you are physically able to do things that some peo-
ple aren’t. I can list a dozen aspects of my identity that I never
have to think about; as well as others — like my religion, skin co-
lour and gender — that I do need to think about often, both in my
community and workplace.
Here’s an analogy that I learned from the work of racial
justice educator Debby Irving: When I go jogging, every now
and then I get a nice tailwind, and for a few minutes, I feel like an
Olympic athlete — not realizing that the tailwind is doing most
of the work; but when I head back towards home, all of a sud-
den that wind becomes a headwind, and I struggle. Now I notice
the wind. The key is, wherever you have ‘tailwinds’ in your life,
many other people are experiencing headwinds, and you are
less likely to notice it because that’s the part of your identity you
don’t think about.
Jeewan Chanicka
Superintendent, Equity, Anti-Racism
and Anti-Oppression,
Toronto District School Board
There is good news about ordinary privilege: The areas of
your identity that you think about the least — where you have
the tailwinds in your favour — are also the area where you can
have surprising influence. Research shows, for example, that if
someone tells a racist joke and a black person speaks up about
it, they are viewed more negatively than if a white person speaks
up. In a career context, if a white manager hires a white person or
a black person, they will not take a hit for that in the eyes of
their manager; but if a black person hires a black person, they
will take a hit for it.
Ordinary privilege is a surprising source of influence. Of
course, we need to be careful not to speak over or for those who
we wish to support. But we also need to be careful to not be by-
standers and leave the work of fighting tailwinds to the people
facing them.
AS WE EXAMINE OUR BEHAVIOUR as a society, it is important to re-
member that through the colonization of Turtle Island [North
America], systems and structures have been created to explicitly
privilege certain people. Back when our current legislation was
created, people believed, for instance, that women were inferior
to men; that minorities and people with disabilities were inferior;
that black people were tools for the economic benefit of those
in power; that 2SLGBTQ+ identified people were deviant; and
that Indigenous people needed to be civilized by being sent to
residential schools. All of these things were coded into the law,
and these laws have influenced the systems and structures that
we are navigating today.
When we talk about the ‘hetero-normative views’ that ex-
ist today and the mindsets that propel them, we must remember
that those mindsets weren’t chosen by people: They have been
upheld by actual systems and structures for well over a hundred
years. The laws and systems that guide us today are not neutral;
they are artefacts of attitudes and beliefs.
This is not about shame, blame or guilt; it is about improving
outcomes for all. One thing I work on with educators is to help
them understand that when it comes to closing achievement/
well-being gaps, raising the bar of excellence for all and fight-
ing discrimination, there is no such thing as being ‘neutral’. In
our work we must adopt an anti-oppressive stance, which begins
by thinking about who we are in relation to who we are serving
and what types of beliefs and attitudes transcend our spaces by
virtue of the way structures have been created.
The fact is, if we are not actively addressing the fact that we
are all products of these structures, then we are perpetuating
them. Even though we all share the same world, we do not share
the same experiences of it. If we want to reach higher levels
of excellence and improve outcomes, we must remember that
equity is a leadership competency, and build that into all of our
systems and structures — both public and private.
rotmanmagazine.ca / 27

Alice Eagly
Professor of Psychology, Management
and Organizations, Northwestern University
STEREOTYPES ARE NOT JUST MYTHS. They are grounded in everyday
experience, and they tend to take on a life of their own. If you
think about a particular group in a certain way, it affects your be-
haviour towards them. The roles we play in life also influence
stereotypes. Throughout the day, most people move between
their family role and their employment role, and in general,
men and women are thought to have different traits as a result
of these roles.
28 / Rotman Management Spring 2019
It is true that in the workplace, gender segregation has de-
creased over time, but it is still substantial. For one thing, we still
see plenty of vertical segregation — a concentration of men in the
most powerful and highest-paying roles—and there is also con-
siderable horizontal segregation. That is, men and women occu-
py roles that require different kinds of physical and psychological
attributes: Men tend to be in jobs favouring physical strength, ro-
bustness and interaction with ‘things’ — jobs requiring analytical,
mathematical and technical skills, and being competitive is often
part of the mandate. Meanwhile, women are concentrated in jobs
requiring social interactional skills and offering opportunities for
social contribution — jobs where you directly help others, like so-
cial work, nursing and teaching.
Segregation also occurs within occupations. People might
point out that ‘there are plenty of female physicians and lawyers’,
but the fact is, female physicians are concentrated in specialties
like pediatrics, family practice, gynecology and psychiatry — the
most socially-demanding work; and if you look at lawyers, lots
of women work in public interest law and family law.
There is still a belief that women are less assertive and
competitive than men, and this places women at a disadvantage
for leadership roles. Because such ‘agentic behaviour’ is often
disapproved in women, they experience backlash, which is
half of what I call the ‘double bind’ for female leaders. The oth-
er half comes from the belief that women should be selfless and
modest, but that such individuals are also weak and lack agency.
One solution to these problems is that women ought to ‘lean
in’ more. Sheryl Sandberg’s book on the topic sold over four mil-
lion copies, but the reaction to it in the feminist community has
been quite negative. Many feminists feel, ‘We don’t need to be
fixed!’ But in my view, to achieve equality in leadership, women
do need to become more agentic — despite the possibility of
backlash. If more women take that message seriously and act on
it, we will achieve gender parity faster.
Rony Hacohen
Advisor, UK Behavioural Insights Team
AT THE HEART OF OUR WORK is improving the evidence base around
‘what works’ in terms of increasing gender equality in the work-
place, and supporting employers to try approaches that have
promise. We have taken on three concrete challenges. The first
is that the public doesn’t quite ‘get’ the gender pay gap yet, and
that is important because we need to start holding companies ac-
countable. Two thirds of people still think the ‘gender pay gap’
and ‘equal pay’ are the same thing, but they are not. Equal pay
is about paying people who do similar things differently, while
the gender pay gap is about comparing the average hourly wage
Rony Hacohe, continued
for men to that of women in an organization — and it is therefore
more reflective of the overall power dynamics in an organization.
The second challenge we are working on is that while most
employers are willing to submit their gender pay gap figures
for public scrutiny, they aren’t sure where to begin in terms of
making positive change. That’s not surprising, because many
companies haven’t even looked at their data to understand pre-
cisely where the problems lie. As with any kind of behavioural
change that you want to encourage, the key is to make it easy.
So, to make it easy for employers we’ve published a clear guide
[available at https://gender-pay-gap.service.gov.uk/public/as-
sets/pdf/Evidence-based_actions_for_employers.pdf ]. In the
category of effective actions, it shows that most actions have
to do with transparency, accountability and structure, because
a lack of formal structure is how bias often creeps in. If there is
a clear set of criteria and people must justify their decisions to
someone, that is a great way to stop bias in its tracks.
The third challenge we are working on is that the evidence
around ‘what works’ is patchy. To address this, we have been
partnering with several large organizations to run our own
field trials to improve the evidence base. We look at participat-
ing organizations’ recruitment data, performance evaluation
data and promotion data, and wherever we find the most bi-
ases, we work with the company to create an intervention. The
good news is, the demand to participate in these creative in-
terventions has exceeded our expectations. More good news:
People from every country in the world (except North Korea)
have visited the Government Equalities Office’s gender pay
gap website [https://gender-pay-gap.service.gov.uk/Viewing/
search-results] to review the latest data, and many countries
are considering introducing similar legislation.
Humberto Carolo
Executive Director, The White Ribbon
Campaign
PART OF OUR WORK INVOLVES LOOKING at the root causes of vio-
lence against women. We believe that masculinity is socially
constructed, so we have been studying how, from a very young
age, boys and young men are pressured to conform to the
popular notions of being a ‘real man’ — including dominance,
control and anger as the only form of emotion that men are al-
lowed to express (because anything else is a sign of weakness).
We talk to young men about how these constructs affect their
lives and the lives of others — particularly women and the LG-
BTQ communities — and we talk about the importance of
promoting healthy, alternative forms of masculinity. As a so-
ciety, we need to start encouraging men to live much health-
ier, more humane and empathetic lives, both for themselves
rotmanmagazine.ca / 29
Humberto Carolo, continued
and for everyone around them.
We have also done some research into men’s engagement
in the #MeToo movement, whose conversations men have been
mostly absent from. We invited 2,000 men to participate in a
Campaign for Consent and Healthy Relationships, and as part of
that research we asked them whether they had concerns about
their own past behaviour towards women. We weren’t surprised
to find that 61 per cent of participants said they had concerns.
Couple that with the recent findings from GQ magazine, which
polled 1,000 men between 18 and 55 and found that 47 per cent
of them had never talked about the #MeToo movement with
Iris Bohnet
Albert Pratt Professor of Business
and Government and Academic Dean
of the Harvard Kennedy School; author,
What Works: Gender Equality By Design
(Harvard University Press, 2016)
30 / Rotman Management Spring 2019
anyone. When you combine these two stats, one of the conclu-
sions we should consider is that many men are not coming for-
ward or participating in these conversations because they fear
that what they have done in the past will come back to haunt
them, and that they might be called to task if they speak publicly.
These are just a few of the issues we face in addressing is-
sues of masculinity. The work we do is about encouraging men
to think about the actions they can take to promote positive
values and to think about their own behaviour, actions and lan-
guage as a starting point to becoming change agents in their own
sphere of life.
THE GOAL IS NOT TO change peoples’ mindsets; it is to make it easy
for them to get things right by redesigning the world we live in.
For example, in most hotel rooms, you might have noticed that
the latest front-door entry cards do not only control access to
the room; they also turn off the lights when you leave. This is an
example of an effective way to make it really easy for people to
do what is right for the environment — and all it takes is a bit of
design and a bit of technology. Unfortunately, behavioural de-
sign with respect to diversity and inclusion has not reached this
stage yet, but that is the goal.
In terms of using behavioural insights to influence con-
sumer behaviour, many companies are already doing this. For
example, Coca-Cola has gendered versions of its products. A
few years ago, it realized that men were not buying Diet Coke.
They did some research and found that ‘diet’ is not a word that
resonates with men; so, they introduced Coke Zero to appeal to
health-conscious males. As this example indicates, we are using
more behavioural-insights rigour in our marketing departments
than in our HR departments. I am on a mission to ensure that we
use the same kind of tools and analytics to inform practices and
procedures throughout organizations.
We now have data analysis and algorithms that can help to
predict how certain adjectives in a job posting can increase or
decrease the chances that women or men will apply for a par-
ticular job. If you can reach not just 50 per cent but 100 per cent
of the talent pool with carefully chosen language, that is an ex-
ample of a simple and cost-effective thing to focus on. There are
start-ups out there working to develop these tools. They are still
a work in progress, but they will very likely become widely avail-
able in the next five to 10 years.
informs and inspires millions of social change leaders from around the world and from
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 GOOD
Creating new habits might just be the most promising avenue
for making behaviour change stick.
by Angela Duckworth and Katherine Milkman
WHILE WE SELDOM THINK ABOUT IT, our life outcomes are powerfully
determined by seemingly trivial, repeated acts. Our health, for
example, depends on thousands of daily choices — to eat well
and exercise regularly, to avoid smoking, and to take medica-
tions as prescribed. And yet, 40 per cent of premature deaths
each year result from suboptimal behaviour in this domain:
Tobacco is responsible for 435,000 of those deaths, while poor
diet and physical inactivity account for 400,000. Cardiovascu-
lar disease — the leading cause of mortality — is largely treat-
able with anti-hypertensive medicines; but just one year after
receiving a prescription, only about half of patients are still tak-
ing their medication as directed.
Our bad habits run the gamit from health to personal fi-
nances. One in three American families has no savings at all,
and 52 per cent are under-saving, even though most would
need to save just 15 per cent of their earnings to prepare for
the future. Academic success requires an array of good habits
at any age: attending classes, studying and engaging with chal-
lenge on countless occasions. Yet tellingly, 23 per cent of high
schoolers and 49 per cent of college students drop out before
earning diplomas. Sadly, all of these challenges to life outcomes
disproportionately harm disadvantaged members of society.
In recent years, behavioural scientists have learned a great
deal about the underlying situational and psychological factors
that determine our daily decisions, leading to many success-
ful and scalable interventions to change short-term behaviour.
The problem is this: behaviour change rarely endures. In this
article, we will review a small but growing body of research sug-
gesting the most promising approaches to changing behaviour
— for good.
The Power of Habits
Perhaps the most promising avenue for making behaviour
change ‘stick’ is by changing our habits. Habits are automatic,
rotmanmagazine.ca / 33
 Adding a desired behaviour onto the end of a routine that is already
habitual is an effective way to create a lasting habit.
effortless and repeated actions that develop when the following
cycle is repeated multiple times: A situational cue triggers a be-
haviour, and that behaviour triggers a reward. Exactly how many
repetitions of this cycle are required to generate a habit remains
an open question, and it is likely context-dependent.
Past research suggests that intervening to creating sus-
tained behaviour change in the form of new habits requires the
deployment of two kinds of strategies:
Targeting the situation. Strategies targeting the situation insert
behaviour-triggering cues that are both interesting and obvious,
making beneficial behaviours easier and more rewarding.
Shifting peoples’ cognition. The second type of strategy shifts
cognitions, equipping people, for example, with ‘beneficial be-
liefs’. This allows them to forecast the consequences of their
behaviours more accurately and act more adeptly.
Importantly, changing cognitions without changing the situ-
ation puts an inordinate burden on individual willpower—and as
a result, there should be synergy in applying these approaches in
combination. We will now review some of the most promising
research-based strategies for changing behaviour for good.
1. TEACH PEOPLE TO CUE THEMSELVES. Ensuring that cues are estab-
lished to reliably trigger desired behaviours is key to creating
habits. One way to ensure cues are present when they are needed
is by teaching people to cue themselves. When people form ‘if-
then’ plans about the behaviours they intend to engage in follow-
ing a given cue, this robustly increases follow-through. An exam-
ple of an if-then plan is: ‘If it is a weekday and I am about to leave
the house for work, then I will make my own coffee instead of
going to Starbucks.’ If-then plans reliably promote follow-
through on one-time behaviours, but they can also promote
34 / Rotman Management Spring 2019
sustained behaviour change. One study found that teaching stu-
dents goal setting and planning skills improves attendance and
grades in the following marking period. Together, this research
suggests that to facilitate durable behaviour change, it is helpful
to coach people to make if-then plans that put cues in place to
trigger desirable behaviours.
2. PIGGYBACK CUES. Another way to ensure cues to trigger desired
behaviours are reliably present is by ‘piggybacking’ desired be-
haviours onto existing routines. For instance, adding a desired
behaviour (e.g., flossing, eating an apple a day) onto the end of
a routine that is already habitual (e.g., brushing your teeth, hav-
ing a cup of coffee) can be an effective way to create lasting hab-
its. In one study, flossing habits were more effectively generated
by encouraging people to floss after brushing their teeth, rather
than vice versa.
3. CHANGE BELIEFS ABOUT BENEFICIAL BEHAVIOURS. People will do
things that they believe to be valuable, and accordingly, one of
the most powerful cognitive interventions available is to change
beliefs about the likelihood of success. For example, teaching
students that their abilities — including their intelligence — can
improve with effort and experience has been shown to improve
report card grades and course completion among at-risk groups.
And showing students that ‘deliberate practice is difficult, but
it is both doable and effective’ changes how they interpret the
necessary frustration of attempting skills they have not yet
mastered — particularly among low-achieving students.
Beliefs about ‘norms’ — the attitudes and behaviours of
other people — also powerfully influence behaviour. For exam-
ple, in one study, learning that many people were reducing their
consumption of meat prompted more cafeteria patrons to order
meatless meals.
 The Keys to Changing Behaviour for Good
CUE BEHAVIOUR REWARD
(repeat)
ROUTINE BEHAVIOUR
4. MAKE BEHAVIOUR CHANGE EASY. Making it as easy as possible to
sign up for valuable programs that facilitate behaviour change
dramatically improves outcomes. For example, letting people
enrol in a retirement savings program (so that a portion of
every future paycheque is automatically directed to a retirement
account) via a stamped postcard increased participation by 20
percentage points, and allowing sign-ups after a future pay raise
produced a 78 per cent sign-up rate — boosting enrollees’ savings
by 388 per cent over 40 months.
In other studies, providing high school seniors’ parents with
help completing the Free Application for Federal Student Aid
(FAFSA) while they receive assistance with tax preparation in-
creased the rate at which those parents’ children completed two
years of college by eight percentage points over a three-year fol-
low-up period; and providing community college freshmen with
reminders and encouragement to renew their FAFSA increased
sophomore persistence by 14 percentage points.
5. MAKE GOOD BEHAVIOUR MORE ENJOYABLE. Research suggests that
finding ways to make beneficial — but often unpleasant — be-
haviours (e.g., exercise, studying) more immediately enjoyable
has the potential to promote sustained behaviour change. For
instance, one study found that when people were only allowed
to enjoy tempting audio novels while exercising at the gym, they
visited the gym more frequently than a control group over sev-
en weeks. This so-called ‘temptation bundling’ strategy helped
make the act of exercising more fun by pairing it with an engag-
ing audiobook.
More generally, combining good behaviours that can be un-
pleasant with enjoyable activities (e.g., scheduling get-togethers
with a challenging relative at a favourite restaurant, doing house-
hold chores while listening to a favourite podcast) can promote
behaviour change for good. Complementary research has shown
Situational Cognitive Situational
Interventions Interventions Interventions
CUE BEHAVIOUR REWARD
(repeat)
OUR SOLUTION
that persistence is increased on challenging-but-important goals
by encouraging people to pursue those goals in fun ways. For
instance, encouraging gym goers to choose a workout that is
fun (e.g., a dance class) rather than pursuing the workout that
is most effective promotes more persistent exercise. Similarly,
playing music in a high school classroom to make studying more
fun increased persistence on schoolwork. Overall, making good
behaviour more enjoyable facilitates the association of a ‘reward’
with the behaviour, and such repeated rewards are key to habit
formation.
6. REPEATEDLY REWARD GOOD BEHAVIOUR. Perhaps the most promis-
ing stream of research designed to promote habit formation has
shown that repeatedly paying people to engage in a valuable be-
haviour or otherwise encouraging it (e.g., by conveying its popu-
larity) for as little as a month can increase the target activity for
many months post-intervention. In one study, paying students
to visit the gym eight times over the course of a month rather
than just once or not at all produced behaviour change that last-
ed long after that month (and the intervention period) ended.
The students who had been rewarded for repeatedly visiting the
gym worked out nine times, on average, in the following seven
weeks, while other students went roughly half as often.
Several follow-up studies have since replicated the find-
ing that rewarding repeated exercise over a period as short
as one month can lead to sustained habits detectable up to a
year later. Incentives aren’t the only reward that has yielded
this result: Repeatedly alerting people to how their energy
usage compares to that of their neighbours in comparable
homes (‘social norms marketing’) also has sustained benefits
after messaging is discontinued. Monthly energy reports with
social norms information sent to residential homes for two
years continued to reduce energy consumption for years after
rotmanmagazine.ca / 35
discontinuation, with only a 10–20 per cent attenuation of their
benefits per year.
Finally, similar results have been generated by offering ‘re-
gret lotteries’ — lotteries requiring measurable behaviour change
by a given date to win. Regret lotteries have been effective at
encouraging sustained weight loss and smoking cessation.
7. INTERVENE AT OPPORTUNE TIMES. Finally, the timing of an inter-
vention matters. Research on ‘the fresh start effect’ shows that
people are more prone to engage in beneficial behaviours like
exercising, searching for information about dieting on Google,
and creating a commitment contract on the website Stickk.com
at the start of cycles like the beginning of a new week, month,
year or following birthdays and holidays.
How to Induce Future-Focused Thinking
Present-bias, or the tendency to over-weigh immediate gratifica-
tion while under-weighing the long-term implications of a choice,
is responsible for many errors in judgment. Specifically, present-
biased thinking has been blamed for societal problems ranging
from obesity to under-saving for retirement. Following are a
series of nudges designed to promote future-focused thinking in
order to reduce the pernicious effects of near-sightedness.
CHOOSE IN ADVANCE. One means of reducing biases related
to near-sightedness is prompting individuals to make decisions
well in advance of the moment when those decisions will take
effect. This strategy is impactful because of people’s tendency to
make less impulsive, more reasoned decisions when contemplat-
ing the future than the present. Choosing in advance has been
shown to increase support for wise policies requiring sacrifices,
to increase charitable giving, to contribute to increases in retire-
ment savings, and to increase the healthfulness of consumers’
food choices.
Another result of choosing in advance is that choices are
made in a higher construal level mindset, which means they focus
more on abstract (e.g. why?) rather than concrete objectives
(e.g. how?). This has other by-products, however — for example,
higher construal leads to greater stereotyping. Therefore, an
important caveat to choosing in advance is that it may lead to
greater discrimination against women and minorities, as demon-
strated in a field study of decisions on whether to grant prospec-
tive graduate students requests for meetings.
36 / Rotman Management Spring 2019
In closing
When our daily, routine choices are sub-optimal, they can under-
mine just about every conceivable life outcome. And when poor
choices accumulate, they particularly harm populations with
fewer resources and less ‘slack’ — for whom seemingly trivial
mistakes can spiral with remarkable speed (e.g., a small ailment
goes untreated and becomes debilitating; the interest on small,
unpaid debts accumulates to produce financial insolvency; a fail-
ing grade makes it difficult to justify studying for a degree over
working full-time).
Sadly, adversity itself exacts a hefty physiological and psy-
chological toll: When individuals perceive that the future is un-
certain and threatening, they become biased towards meeting
their short-term needs versus working towards long-term goals.
INCLUDE A PRE-COMMITMENT. Because people tend to
make more patient and reasoned decisions about the future,
providing opportunities for individuals to both choose in ad-
vance and make a binding decision (or at least decisions where
penalties will accompany reversals) can improve many choices.
Research has shown many benefits from pre-commitment.
For example, substantial savings increases result from provid-
ing individuals with access to bank accounts with commitment
features such as a user-defined savings goal (or date) such that
money cannot be withdrawn before the pre-set goal (or date)
is reached. Although only 28 per cent of those offered such
commitment accounts selected them when equivalent interest
was available on an unconstrained account, average savings
balances increased by 81 percentage points for those custom-
ers of a Philippine bank with access to commitment accounts.
Recent research has also shown that pre-commitment can help
people quit smoking, exercise, achieve workplace goals and
resist repeated temptation in the laboratory. Pre-commitment
is particularly valuable in settings where self-control problems
pit our long-term interests against our short-term desires. When
it comes to food, for example, pre-committing to smaller plates
and glasses can reduce consumption.
BUNDLE TEMPTATIONS.. A new twist on pre-commitment
called ‘temptation bundling’ actually solves two self-control
problems at once. Temptation bundling devices allow people
to pre-commit to coupling instantly gratifying activities
As a result, solutions to enduring behaviour change carry univer-
sal benefits.
At present, organizations and academics are incentivized
to work on behaviour change in isolation, focusing on a single
setting, measuring success over the short-term. But there is an
enormous untapped opportunity for large-scale, interdisciplin-
ary work combining practical and theoretical insights to enable
sustained improvements in daily decisions on a collective level.
As Aristotle said, “We are what we repeatedly do.” If our ulti-
mate destinies derive from our daily habits, then the 21st century
may be the first in which humanity learns how to change behav-
iour for good.
(e.g. watching low-brow reality television, receiving a pedicure,
eating an indulgent meal) with engagement in a behaviour
that provides long-term benefits but requires the exertion of
willpower (e.g. exercising, reviewing a paper, spending time
with a difficult relative). Such pre-commitment devices can
increase engagement in beneficial behaviours like exercise while
reducing engagement in guilt-inducing, indulgent behaviours.
ORGANIZATIONAL COGNITIVE REPAIRS. De-biasing can
also be embedded in an organization’s routines and culture.
Researchers call these de-biasing organizational artifacts ‘cog-
nitive repairs’. A repair could be as simple as an oft-repeated
proverb that serves as a continual reminder, such as the phrase
‘don’t confuse brains with a bull market’, which cautions inves-
tors and managers to consider the base rate of success in the
market before drawing conclusions about an individual inves-
tor’s skill. Other examples include institutionalizing routines in
which senior managers recount stories about extreme failures
(to correct for the underestimation of rare events) and present-
ing new ideas and plans to colleagues trained to criticize and
poke holes (to overcome confirmatory biases and generate
alternatives).
Many successful repairs are social, taking advantage of
word-of-mouth, social influence and effective group processes
that encourage and capitalize upon diverse perspectives.
Although cognitive repairs may originate as a top-down interven-
tion, many arise organically as successful practices are noticed,
Angela Duckworth is the Founder and CEO
of the Character Lab, a non-profit whose
mission is to advance the science and practice
of character development. She is also the
Christopher H. Browne Distinguished Profes-
sor of Psychology at the University of Pennsylvania, faculty co-director of
the Penn-Wharton Behaviour Change For Good Initiative, and faculty
co-director of Wharton People Analytics. Katherine Milkman is a Professor
at the Wharton School of the University of Pennsylvania and holds the
Evan C. Thompson Endowed Term Chair for Excellence in Teaching.
She has a secondary appointment at U Penn’s Perelman School of Medicine.
This article is based on a paper made possible by support from the Chan
Zuckerberg Initiative, the National Institute of Health, the Robert Wood
Johnson Foundation and the John Templeton Foundation.
adopted, and propagated.
One cognitive repair that has not only improved many organi-
zational decisions, but saved lives, is the checklist. This tool could
easily fit in many of our de-biasing categories. Like linear models,
checklists are a potent tool for streamlining processes and thus
reducing errors. A checklist provides a list of action items or cri-
teria arranged in a systematic manner, allowing the user to record
the presence/absence of the individual item listed to ensure that
all are considered or completed.
Checklists, by design, reduce errors due to forgetfulness
and other memory distortions (e.g. over-reliance on the availabil-
ity heuristic). Some checklists are so simple that they masquer-
ade as proverbs (e.g. emergency room physicians who follow
ABC — first establish airway, then breathing, then circulation).
External checklists are particularly valuable in settings where
best practices are likely to be overlooked due to extreme com-
plexity or under conditions of high stress or fatigue, making them
an important tool for overcoming low decision readiness.
— From “A User’s Guide to Debiasing” by Jack B. Soll, Katherine Milkman
and John W. Payne in The Wiley-Blackwell Handbook of Judgment and
Decision Making.
rotmanmagazine.ca / 37
GENDER
A CEO’s family background and early education have a significant
effect on their later decision-making across a variety of contexts—
with profound economic implications.
by Ran Duchin, Mike Simutin and Denis Sosyura
THE OPTIMAL ALLOCATION OF RESOURCES across agents is critical for
economic outcomes, both at the level of the individual firm and
of the entire economy. And yet, achieving this has proven elusive.
An ongoing debate revolves around the claim that male manag-
ers obtain more resources than their female counterparts — a
pattern labelled ‘the gender gap’.
Many attempts to narrow the gender gap — ranging from
greater disclosure to governance rules — assume that it reflects
the personal bias of senior decision-makers, in particular CEOs.
However, this premise has been difficult to test because it would
entail eliciting CEO preferences and making a reliable connec-
tion between resource allocations and subsequent outcomes.
We recently set out to tackle this challenge by studying and
comparing two things: the personal backgrounds of CEOs and
their allocation of capital budgets to male and female division
managers at U.S. conglomerates. In this article we will summa-
rize our key findings.
Portrait of the CEO as a Young Man
Our sample comprised 5,679 individuals: 596 CEOs, 1,819 divi-
sion managers and 3,264 directors. The CEOs were almost ex-
clusively male (98.5%) and, on average, 56 years old. Nearly 62
per cent of them held graduate degrees, the majority of which
were MBAs. The dominant majority also served on the boards
of other companies, with the median CEO holding two external
board seats.
In comparison with CEOs, division managers were young-
er and significantly more diverse: The average manager in our
sample was 50 years old, and about eight per cent were female.
Compared with CEOs, division managers were more likely to
hold specialized graduate degrees (79%) and less likely to hold
an MBA (39%). Division managers were also significantly less
likely to hold external board seats.
To elicit CEO preferences, we relied on the evidence from
social economics that an individual’s views on gender issues are
heavily influenced by familial, environmental and educational
factors experienced until early adulthood — a period commonly
referred to as the individual’s ‘formative years’. Following is a
summary of our approach and our findings under these three
key headings.
FAMILY CHARACTERISTICS. To obtain information on CEOs’ fami-
lies, we used several data sources, including federal and state
census records; state records of birth, marriage and death;
digital archives of white page directories; and obituaries. The
federal census form in our sample provided 41 standardized
variables on each member of the household, including educa-
tion (in years), occupation, employment status, the number
rotmanmagazine.ca / 39
 Compared with the general population, CEOs are more likely to have
attended private educational institutions designated for males only.
of weeks worked during the year, annual income and place of
birth, among others.
KEY FINDINGS: First, CEOs’ parents are well educated. The father
and mother of the median CEO had 14 and 12 years of formal ed-
ucation, respectively — approximately four years more than the
median males and females in the general population in the same
census. Approximately 56 per cent of CEOs’ fathers and 44 per
cent of CEOs’ mothers attended college, while the fraction of in-
dividuals with college education in the general population in the
same census is only 10 per cent and eight per cent, respectively.
Second, CEOs come from well-to-do families with white-
collar occupations. Nearly 71 per cent of their fathers held white-
collar jobs, and 37 per cent were managers or business owners.
Other frequent occupations among CEOs’ fathers were sales
(8%), engineering and research (8%), academia (5%) and medi-
cine (4%). These occupations put the median CEO father in the
top quartile of the national income distribution. Moreover, a siz-
able fraction (16%) of CEOs grew up in ultra-wealthy families
with incomes in the top 1% of the national distribution.
Third, CEOs’ fathers typically have a higher economic sta-
tus than CEOs’ mothers, and these within-family differences
exceed those in the general population. The father is the pri-
mary income earner in the dominant majority of CEOs’ fami-
lies. In contrast, CEOs’ mothers are less likely to work outside
their home (21%) than women nationwide (42%). When they
do, their median income is approximately one half (46%) of
CEOs’ fathers. The average difference in educational attainment
between the CEOs’ parents (1.6 years) exceeds the correspond-
ing difference between males and females in the general popu-
lation (0.4 years).
The average (median) CEO had 2.8 children, slightly more
than the number of children for the average male of the same age
(2.0), as would be expected for wealthy families.
HIGH SCHOOL AND COLLEGE EDUCATION. We constructed the first-
ever dataset of CEOs’ high schools by using the digital archive of
high school yearbooks maintained by Ancestry.com. We supple-
mented this resource with data from Boardroom Insiders, CEO
biographies and high school publications that identify notable
alumni. When high school information was missing from these
sources, we contacted the registrar of the university attended by
the CEO and requested the information in writing.
40 / Rotman Management Spring 2019
We recorded the following characteristics for each CEO’s
high school: address, gender composition status (same-gender
or co-educational), religious affiliation (if any) and private/
public status. For each school, we recorded this information for
the period of the CEO’s attendance (ages 14-18), using the history
section of the high school’s website. We also recorded the gender
composition of the college where they earned their undergradu-
ate degree by computing the average fraction of female students
during the period of CEO attendance (ages 18-22). We obtained
this information from the U.S. Department of Education.
KEY FINDING: Compared with the general population, CEOs are
more likely to have attended private educational institutions
designated for males only. Approximately one quarter of CEOs
attended private schools, and 16.4 per cent of CEOs attended all-
male schools; 49 per cent went on to attend private colleges, and
9.9 per cent attended colleges restricted to male students.
COMMUNITY CHARACTERISTICS. To study the effect of ‘community
norms’, we obtained information on gender-related demograph-
ic variables in the county where the CEO grew up. We identi-
fied the CEO’s home county based on the location of their high
school and parents’ home address. For each CEO, we collected
the following community-based information:
• The labour force participation rate for adult males and fe-
males;
• The annual income for employed males and females;
• The number of years of education for males and females;
and
• The unemployment rate for males and females of working
age.
This data came from an anonymized set of household census
records known as the Integrated Public Use Microdata Series
(IPUMS). We measured the above community characteristics
as of the decennial census year closest to year when the CEO
reached the age of 18. For example, for a CEO born in 1944 (who
reached the age of 18 in 1962), we used the community character-
istics from the 1960 decennial federal census.
KEY FINDING: The data reveals a large difference in labour force
participation between male residents (94%) and female resi-
dents of working age (42%) in CEOs’ home communities. For
 Education Attained by CEOs’ Parents vs. General Population
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Middle school or lower 1-2 years of high school 3-4 years of high school
(0-8 years) (9-10 years)
This figure compares the years of education attained by parents of CEOs and by all adults between 21 and 45 years of age.
The data is from decennial federal censuses.
FIGURE ONE
working adults, the average annual income for men ($5,726 in
1960 dollars) was more than twice as large as that of women
($2,846 in 1960 dollars). For those seeking employment, the
average unemployment rate was lower for men (4.8%) than for
women (5.5%). Interpreted together, these statistics suggest that
CEOs grew up in communities where, at the time of their forma-
tive years, males were more likely to hold outside employment,
and when they did, they earned higher incomes and faced lower
unemployment than their female counterparts.
In summary, CEOs come from white-collar, well-educated
families with the typical incomes in the top quartile of the nation-
al distribution. In the majority of CEOs’ families, the father was
the only income earner and the more educated spouse. Similar,
albeit smaller, differences in the socioeconomic status of men
and women were observed in the communities where the CEOs
spent their adolescence.
How CEOs Allocate Resources
When we moved on to study resource allocation within organi-
zations, our first key finding was that female division managers
CEOs’ Parents
All adults aged 21-45
College Postgraduate
(11-12 years) (13-16 years) (17+ years)
obtain about 90 basis points less in annual capital expenditures
than male managers — an economically important difference of
$2.8 million per year for the median sample firm. Interestingly,
this gap in capital budgets expands if the CEO grew up in a com-
munity with larger differences in labour force participation,
education and income between male and female residents of
working age.
Educational background had particularly important medi-
ating effects: The gender gap in capital budgets was greater for
CEOs who attended all-male high schools. Similarly, using varia-
tion in the gender composition of colleges (resulting from the
opening of many U.S. colleges to women), we found that the gen-
der gap was higher for CEOs who attended same-gender rather
than co-educational colleges.
Taken together, we estimate that the effects of familial,
environmental and educational factors from CEOs’ formative
years explain up to 70 per cent of the economic gap in capital al-
locations between male and female division managers. Further-
more, we found that two economic mechanisms contribute to
the gender gap in capital budgeting: the appointment of certain
rotmanmagazine.ca / 41
 Female division managers obtained 150 basis points less in annual
capital in firms run by CEOs whose mothers did not work.
managers to capital-rich divisions; and extra capital allocations
after the appointment is made. In our analysis of the first item,
we found that male managers are assigned to divisions that his-
torically receive more capital and some evidence that male man-
agers are assigned to larger divisions.
Our results are consistent with survey evidence that CEOs’
personal attitudes towards division managers have profound ef-
fects. For example, in a study of financial decision-making at S&P
500 firms, researchers found that the CEO’s opinion of a division
manager is the second most important factor in capital budget-
ing, after the NPV (net present value) rule. Our evidence suggests
that the gender gap in resource allocation is indeed related to the
decision maker’s gender attitudes, whether conscious or subcon-
scious, and that the origins of such attitudes can be traced to the
CEO’s formative years.
Following is a summary of our key findings regarding capital
allocation when combined with family characteristics, education
and community.
FAMILY CHARACTERISTICS. We defined the variable ‘working moth-
er’ as an indicator that equals ‘1’ if the CEO had a working moth-
er and ‘0’ if she was a housewife, and compared the allocation of
capital to male and female division managers across firms run
by these two types of CEOs. The result: Female division man-
agers obtain about 150 basis points less in annual capital in firms
run by CEOs whose mother did not work. Conversely, there is
not a statistically significant difference between the allocation
to male and female managers in firms run by CEOs with a work-
ing mother.
We also investigated whether parenting daughters affects
CEOs’ allocation of capital between female and male division
managers. We defined ‘children’s gender imbalance’ as the dif-
ference between CEOs’ number of sons and daughters, nor-
malized by their total number of children. The result: Female
division managers obtain less capital in firms run by CEOs
with a high children’s gender imbalance. However, the differ-
ence in capital allocation between male and female managers
42 / Rotman Management Spring 2019
disappears in firms run by CEOs with a balanced number of sons
and daughters.
To capture the overall effect of CEOs’ family backgrounds,
we calculated a comprehensive family index as the average be-
tween the percentile rankings of each CEO’s working mother,
parents’ education imbalance, and children’s gender imbalance
values. The result: Female managers obtain 170 basis points in
capital expenditure in firms run by CEOs with higher family-re-
lated gender imbalance. In contrast, there is no difference in allo-
cation between male and female managers in firms run by CEOs
with low values on the family index.
EDUCATION. Next, we considered the education of CEOs’ parents
with respect to capital allocation. The variable ‘parents’ educa-
tion imbalance’ equalled the difference between the number
of education years for the CEO’s father and the CEO’s mother.
Higher values imply that the CEO’s father had a higher educa-
tional attainment than his mother. The result: Female division
managers obtained less capital only in firms run by CEOs with
a high ‘parents’ education imbalance’. In particular, female divi-
sion managers in such firms obtained about 120 basis points less
in annual capital than male managers.
We defined ‘high school gender imbalance’ as an indica-
tor variable that equals ‘1’ if the CEO attended a single-sex high
school and zero otherwise. University gender imbalance was
defined as the fraction of female students in the university that
the CEO attended as an undergraduate student (as of the dates
of attendance). The result: Female division managers obtained
significantly less capital only in firms run by CEOs that attended
gender-imbalanced educational institutions. A high gender im-
balance in CEOs’ high schools corresponded to about 160 basis
points less capital allocated to female managers, whereas a high
imbalance in CEOs’ universities corresponds to about 120 basis
points less capital.
We also calculated a comprehensive index of education gen-
der imbalance as the average percentile ranking of High School
Gender Imbalance and University Gender Imbalance, finding
Artifact 1: Birth Certificate
The birth certificate for one of the CEOs in our sample.
In addition to the date and location of birth, it identifies
both parents, their ages, occupations and city of residence.
that CEOs’ High School Gender Imbalance corresponds to a
difference of 140 basis points in the allocation of capital to male
and female managers.
COMMUNITY WHERE THE CEO GREW UP. We focused on the gender
imbalance in labour force participation, income and education
in the county where the CEO grew up. ‘Labour force participa-
tion gender imbalance’ was defined as ‘the difference between
male and female labour force participation rate’; while ‘income
gender imbalance’ was defined as ‘the difference between the
average income of men and women in the county where the
CEO grew up’ and ‘education gender imbalance’ was defined
as ‘the difference between the number of education years of
men and women in the county where the CEO grew up’. The
result: High gender imbalances in CEOs’ communities cor-
responded to 95 to 117 basis points less in annual capital being
allocated to female division managers than male division man-
agers. In contrast, the allocation to female and male managers
was not significantly different in firms run by CEOs who grew
up in communities with low gender imbalances. We also calcu-
lated a similar comprehensive index of community gender im-
balance and found that a high gender imbalance corresponds to
about 110 basis points less in annual capital obtained by female
division managers relative to their male counterparts.
In closing
The gender gap in capital allocations within organizations is
a very real phenomenon, and our evidence indicates that it is
driven by CEO characteristics that can be traced to the leader’s
formative years.
We are not the only researchers to study the effects of gen-
der and experience on leadership in organizations. Gompers
Artifact 2: Yearbook Entry
Pictured at left is Robert H. Ewald, CEO of Silicon Graphics.
Scans of yearbooks available from classmates.com identify
him as a 1965 graduate of Wooster High School in Reno,
Nevada.
and Wang found that a decision-maker’s parenting of daughters
leads to an increased propensity to hire female partners — re-
sulting in better performance outcomes; and Cronqvist and Yu
found that CEOs who experience the birth of a daughter tend to
increase spending on corporate social responsibility.
Other evidence suggests that gender and background influ-
ence the allocation of resources at a macro level by affecting na-
tional legislation and federal courts. And the effects go beyond
economics: Washington found that U.S. Congressmen’s expo-
sure to gender diversity via parenting daughters increases their
propensity to support policies on women’s rights; and Glynn and
Sen showed that U.S. Federal Court judges with more daughters
are more likely to support women’s issues in their case decisions.
Taken together, the evidence to date underscores the im-
portance of an individual’s education and familial factors for
decision-making across a variety of contexts, and the potential
for profound economic and societal implications.
Ran Duchin is a Professor of Finance and
Business Economics and the William A. Fowl-
er Endowed Professor at the Foster School
of Business, University of Washington. Mike
Simutin is an Associate Professor of Finance
and Associate Director of the International Centre for Pension
Management at the Rotman School of Management. Denis
Sosyura is an Associate Professor of Finance at Arizona State
University’s W.P. Carey School of Business. Their paper,
“The Origins and Real Effects of the Gender Gap: Evidence
from CEOs’ Formative Years”, is available online. It won the Best Paper
Award at the University of Colorado’s 2018 Front Range Finance Seminar.
Rotman faculty research is ranked #16 globally by the Financial Times.
rotmanmagazine.ca / 43
ARTIFICIAL INTELLIGENCE (AI) TECHNOLOGIES have advanced rapidly
in recent years, and as the technology continues to improve, it
will very likely have a substantial impact on the economy with
respect to productivity, growth, inequality, market power, inno-
vation and employment. As a result, governments and organiza-
tions around the world have dedicated substantial resources to
investing in the technology and preparing for its impact.
Pessimistic views of AI’s impact on society are widespread.
Public figures including Elon Musk and the late Stephen Hawk-
ing have warned that AI could lead to a handful of companies
dominating society, few jobs for humans and increasing inequal-
ity. Vladimir Putin ominously predicted, ‘Whoever becomes the
leader in this sphere will become the ruler of the world’.
Among economists, Robert Gordon has a different view.
Rather than worrying about AI leading to rapid change and up-
ending society, he argues that the inventions of the future are
unlikely to match the impact of the inventions of the period from
1870 to 1970. More optimistically, AI could enhance productivity
so dramatically that people will have plenty of income and little
unpleasant work to do.
Under either the optimistic or the pessimistic view, there is
no doubt that forthcoming policy will shape how AI impacts soci-
ety. In this article, we will discuss three areas that require particu-
lar attention from leaders in all sectors.
The Economic Discussion Around AI
There are two distinct elements of the pessimistic view about AI.
First, that it will replace jobs, leaving little for humans to do; and
second, that it will not be as influential as the technologies that
diffused between 1870 and 1970, and will have relatively little
impact on society. As one researcher noted, the good news is that
these pessimistic predictions cannot both be right; and the even
better news is that they can both be wrong. If AI is so efficient
that it replaces humans, it will be transformative; and if it is not
transformative, then by definition, it will have little impact.
Our view is that, to the extent that AI is likely to be a pro-
ductivity-enhancing technology, the worry is that it will diffuse
too slowly, not too quickly. At the same time, the impact will not
affect all people and organizations equally. The key issues can be
summarized as two separate questions. With respect to employ-
ment, the fundamental question is, If robots take our jobs, can
we find fulfilling ways to spend our time? There is also an income
question, which is, Can we find a stable and fair distribution of
income? We will now address some of the key issues surrounding
these questions.
AI AND JOBS. If a technology can do what a worker does, but bet-
ter, then what will that worker do? As MIT economists Daron
Acemoglu and Pascual Restrepo have shown, every job can
be decomposed into particular tasks, so the impact of AI on jobs
depends on which tasks it replaces. They argue that this will cre-
ate two effects: a ‘displacement effect’, as machines take over
human tasks; and an ‘expansion effect’, as growth leads to the
creation of new tasks in which labour has a comparative advan-
tage over machines.
These findings suggest an optimistic long-term message.
However, a key theme is that adjustment may be slow, so we will
likely see a short- and medium-term mismatch of skills and tech-
nologies. Thus, the key policy questions with respect to AI and
jobs relate to the business cycle and education policy. For coping
with the business cycle, AI-related policy is not likely to be no-
tably distinct. The potential for layoffs concentrated in location
rotmanmagazine.ca / 45
 Ironically, many jobs of the future could be in the sectors
where AI has the least impact.
and time is not unique to AI; this was a feature of factory automa-
tion and the mechanization of farming—and may also apply to
other emerging technologies such as 3D printing.
In terms of education policy going forward, Tel Aviv Uni-
versity’s Manuel Trajtenberg has shown that three types of
skills are likely to be needed as AI diffuses: analytical and cre-
ative thinking, interpersonal communication and emotional
control. In our own work we have emphasized the role of human
judgment, which we define as ‘the ability to identify what to do
with a prediction’. Judgment is the skill of knowing the objec-
tives of an organization and translating that into data that can
be collected. As indicated by Harvard Kennedy School Profes-
sor David J. Deming, an alternative possibility is social skills: If
machines are increasingly going to do prediction and technical
tasks, what might be left for humans involves engaging, motivat-
ing and comforting other humans.
Other researchers have emphasized the important skill of
being able to tell the machines what to optimize. This will require
understanding both the capabilities of the machine and the goals
of the organization, which represents a combination of technical
skills and social science. Whether good jobs and continued eco-
nomic growth will require technical skills, social skills or some-
thing else depends on the sectors that make up the largest share
of the economy.
To the extent that AI increases productivity, the late NYU
economist William Baumol’s work on ‘cost disease’ provides
insight into the limits of growth: Economic growth is constrained
by important things that are hard to improve, and so sectors that
see rapid productivity growth will see their share of GDP decline.
In other words, the sectors that adopt AI most quickly and effec-
tively may play a decreasing role in the economy over time.
As indicated, this raises the potential for short-term job loss-
es and the question of what skills will be most needed for strong
economic growth. The fastest growing sectors in terms of em-
ployment may not be the sectors that use AI best, so ironically,
many jobs of the future could be in the sectors where AI has the
least impact.
46 / Rotman Management Spring 2019
Of course, it is not clear exactly how this will play out. Nobel
Laureate in Economic Sciences Daniel Kahneman has argued
that machines are likely to be more emotionally intelligent than
humans, because it is relatively easy to predict human reactions
to certain stimuli — and because machines don’t get grumpy,
hungry or emotional. In this scenario, other skills would become
key for humans.
A separate issue in education policy is whether the current
model — in which we front-load education early in the individu-
al’s life — will remain optimal. If AI enables machines to ‘learn’
such that humans are faced with continual change in the skills
required to be employable, then we may need to rethink the very
structure of education and consider a model of continuous learn-
ing throughout adulthood. One thing is certain: Education policy
will need to adapt to AI both in terms of the skills taught and the
structure of delivery.
As University of Michigan economist Betsey Stevenson
has indicated, there is also a broader policy question around the
meaning of work. Over the past century, many societies have cho-
sen to spend their increased wealth on leisure. Child labour and
average hours worked per week were reduced, and retirement
became an expected and anticipated stage of life. If AI further
increases wealth, it may open up the possibility of even further
reductions in work and a corresponding increase in leisure that
is distinct from a loss of jobs. A key challenge for society might
therefore be to define ‘meaning’ in the absence of full-time em-
ployment for many people.
AI AND INEQUALITY.Even if the long-term prospects for jobs
and overall growth are indeed positive, a number of econo-
mists have emphasized that AI may still increase inequality.
There are two broad reasons why. First, as Harvard economist
Jason Furman has emphasized, AI involving computers and
the Internet might very well be skill-biased in that it is likely
to disproportionately increase the wages of highly educated
people — and might even decrease the wages of the less
educated.
 One of Prof. Furman’s studies found that current projec-
tions of job losses are much higher for low-wage jobs and jobs
requiring less education. As per Furman, to the extent that highly
educated people are better at learning new skills and the skills
required to succeed with AI will change over time, then the edu-
cated will benefit disproportionately.
The most direct policy solution here relates to education:
If highly educated people will benefit most, the seemingly logi-
cal conclusion is to create more of them. However, this logic
only works if all people are equally likely to benefit from edu-
cation. In contrast, if skill-bias is driven by some ability that is
correlated with, but not entirely caused by, education, then a
policy recommendation for ‘more education’ might fail. In the
context of AI, this is an open question that requires further re-
search.
It is also possible that the opposite could occur. As we dem-
onstrated in our book [Prediction Machines: The Simple Economics
of Artificial Intelligence], recent advances in AI should be seen as
improvements in prediction technology. For many of the most
highly paid jobs today — from medical doctor to financial ana-
lyst — prediction is a core task. For example, a key role for most
doctors is diagnosis. Many of the other aspects of medical care
are undertaken by lower-paid medical occupations. At its core,
diagnosis is a prediction problem: It takes data on symptoms and
fills in the missing information of the cause of those symptoms.
If prediction is the highest skilled task in many high-wage oc-
cupations, then the diffusion of AI could lead to de-skilling and
reduced inequality.
While this scenario is possible, we do not think it is likely.
In the past, as technology has automated certain aspects of
jobs, highly skilled workers have been able to learn new skills,
while less skilled workers have found this more challenging. Ac-
counting provides a useful example: Accountants used to spend
much of their time adding up columns of numbers. Computers
dramatically reduced the time they spent doing arithmetic, but
accountants learned a new set of skills that involved leveraging
the efficient arithmetic that computers provided. In contrast,
manufacturing workers have had a more difficult time adjust-
ing to the automation of factories. While there are a variety of
reasons for this, a key issue is the challenge of learning new
skills for people who have not spent their adult lives focused on
doing so.
A second reason why AI might lead to an increase in
inequality relates to an increased capital share in the economy,
as indicated by French Economist Thomas Piketty. There is
plenty of evidence that the labour share of GDP is falling; if AI is
a new, efficient form of capital, then it seems likely that the capi-
tal share will rise at the expense of labour, as Columbia Univer-
sity economist Jeffrey Sachs and others have shown.
Policies aimed at dealing with the inequality consequences
of AI largely involve changes to the social safety net. One policy
that has been widely discussed is the taxation of capital. Bill
Gates has called for a taxation of robots, though standard mod-
els suggest that such a policy would lead to less investment, slow-
er productivity growth and a poorer society overall.
Digging into the standard arguments, Nobel Laureate
Joseph Stiglitz and University of Virginia Economist Anton
Korinek have provided models for the conditions under which
the taxation of capital could generate reduced inequality with-
out causing economic stagnation. First, they show that as long
as there is a necessary but fixed factor of production (such as
materials), taxing that factor can enable redistribution without
creating distortions. Second, they show that as long as the supply
elasticity of capital is sufficiently low, a combination of intellec-
tual property rights and capital taxation can enable redistribu-
tion with minimal distortions.
A second policy that has received a great deal of attention
is the idea of a ‘universal basic income’, which would provide a
regular, unconditional cash grant to every individual in society.
Jason Furman and NYU economist Robert Seamans have ar-
gued that a universal basic income is likely to increase inequal-
ity because it would go to all members of society regardless of
income, in contrast to the current system, in which transfers are
aimed at the lower half of the income distribution. In addition, as
rotmanmagazine.ca / 47
 AI is likely to disproportionately increase
the wages of highly educated people.
University of Chicago economist Austan Goolsbee has argued,
a universal basic income might reduce labour market participa-
tion among low-wage groups.
AI AND COMPETITION. Currently, the leading companies in AI are
large in terms of revenue, profits and especially market capital-
ization (share price multiplied by the number of shares outstand-
ing). This has led to an increase in antitrust scrutiny of the leading
technology firms from governments (particularly the European
Commission) and in the popular press (e.g. The Economist’s cov-
er story “How to Tame the New Titans”). Much of this antitrust
scrutiny focuses on the role of these firms as ‘platforms’. Here,
we will focus on the particular feature of AI that is most relevant
to antitrust: the role of data.
Google Chief Economist Hal Varian has emphasized that
data is a scarce resource that exhibits decreasing returns to scale
in a technical sense: Prediction accuracy theoretically increases
in the square root of the number of observations, suggesting a
concave relationship between the amount of data and its value
in improving predictions. Under this argument, as University of
Washington Economist Patrick Bajari has argued, AI is unlikely
to generate antitrust concerns.
A more dynamic perspective suggests that there may be
economies of scale in terms of the business value of data. In
particular, if a slight lead in quality leads to a large lead in the
number of consumers, it could create a circle in which a slight
lead in data allows a company to collect more and better data,
reinforcing that lead and generating dominance over time. Thus,
although there may be decreasing returns to scale in a technical
sense, there may be increasing returns to scale in the economic
value of data. In such situations, the diffusion of AI may suggest
an increase in the importance of antitrust enforcement over time.
Finally, a more speculative antitrust concern with respect
to AI has been put forward by Oxford competition law expert
Ariel Ezrachi and University of Tennesee antitrust expert Mau-
rice E. Stucke in their book Virtual Competition: The Promise and
Perils of the Algorithm-Driven Economy, which is that firms will
deploy algorithms programmed to learn to set prices in oligopo-
listic competition with other firms and their algorithms.
48 / Rotman Management Spring 2019
It is possible that competing AIs — if given the goal of maxi-
mizing long-term profits — would learn to tacitly collude. We
stress, however, that this remains speculative. Current ‘game
playing’ AIs still operate in environments with a limited action
space — unlike the broad space that would cover pricing, let alone
multi-product pricing. A more likely application is that antitrust
authorities might be able to deploy AI techniques to identify
collusive behaviour.
In closing
The research summarized herein makes three things clear: As
AI diffuses throughout our economy, it will have important con-
sequences for jobs, inequality and competition. Going forward,
both policy design and corporate strategy should focus on achiev-
ing the desired balance between encouraging diffusion without
compromising societal values.
While addressing these consequences will be the role of ed-
ucation policy, the social safety net and antitrust enforcement,
organizational leaders must carefully consider their own impact
as they make decisions that will have long-term consequences
for society.
Ajay Agrawal is the Peter Munk Professor
of Entrepreneurship, Professor of Strategic
Management and Founder of the Creative
Destruction Lab at the Rotman School
of Management (and seven other locations).
Joshua Gans is Chief Economist of the Creative Destruction
Lab, the Jeffrey Skoll Chair of Innovation and Entrepreneur-
ship and Professor of Strategic Management at the Rotman
School. Avi Goldfarb is Chief Data Scientist
at the Creative Destruction Lab and the Ellison Professor
of Marketing at the Rotman School. They are the co-authors of Prediction
Machines: The Simple Economics of Artificial Intelligence (Harvard Business
Review Press, 2018). This article has been adapted from their paper,
“Economic Policy for Artificial Intelligence”, which was published in
Innovation Policy and the Economy (University of Chicago Press, 2019).
Rotman faculty research is ranked #16 globally by the Financial Times.
Tomorrow the world.
2 respected schools.
7 dynamic cities.
Highly personal focus.
Truly global outlook.
Transformative impact.

www.rotman.utoronto.ca/GEMBA
 OU R AL
BE HAVI
S
G HT
INSI BOOK
PLAY
 As more leaders learn how to mitigate
common biases, behavioural science is helping to shape
strategic decision-making for the better.
by Michael Hallsworth, Mark Egan, Jill Rutter and Julian McCrae

AROUND THE WORLD, a growing number of organizations are em-
bracing behavioural insights to design and enhance their prod-
ucts, policies and services. The challenge is this: Their leaders
and workers are human, too, and are therefore influenced by
the same heuristics and biases that they are attempting to ad-
dress in others.
In our work we have identified three core activities of poli-
cymaking and strategy-making in any industry: noticing, delib-
erating and executing. In this article we will focus on the first
two stages — noticing and deliberating — and discuss some of
the most important behavioural insights that have been discov-
ered to date in each category.
CORE ACTIVITY 1: Noticing
Noticing involves the varied ways that information and ideas en-
ter the agenda for organizations. Two of the most significant ar-
eas of bias and resulting behavioural insights in this area involve
framing and confirmation bias.
FRAMING EFFECTS. Framing effects refer to the fact that the
presentation of an issue, not its substantive content, often de-
termines whether it is noticed and how it is interpreted. Fram-
ing is the process of selecting and highlighting some aspects or
features of a situation at the expense of others. Adopting differ-
ent ‘frames’ can have powerful effects on how people perceive a

rotmanmagazine.ca / 51
 Re-framing can help people adjust the presentation
of their position in order to find common ground.
problem and what they consider to be relevant facts. For example,
identical policies can be framed in terms of gains or losses, and
the research shows that even small changes along these lines can
tap into deep feelings of loss aversion — the tendency to strongly
prefer to avoid losses over acquiring gains. A simple example is
feeling more upset at losing $20 than feeling pleased at gaining
$20. One consistent finding associated with this tendency is that
when people are facing losses, they become more willing to toler-
ate risk. An example is a gambler who, after losing money, begins
taking bigger risks in an effort to recoup his losses.
HOW TO MITIGATE THEM. Re-framing can help people adjust
the presentation or substance of their position in order to find
common ground and break deadlocks. Understanding how
others frame an issue differently can lead to changes in em-
phasis that make a proposal mutually acceptable, or highlight
actions that cost little to one side but appear important to the
other.
There are three main re-framing strategies. To illustrate
them, imagine that a public agency is proposing to develop an
area of woodland near a town that has suffered low economic
growth. The woodland is seen as an area of natural beauty. The
public agency’s main frame is one of economic stimulus: By
improving amenities, it may attract more people to the town,
creating a multiplier effect.
On the other side is a national environmental charity that
has a strong presence in the region. Its frame is environmental:
It wants the development to protect the quality of the woodland
against pollution and decay, so residents can continue to enjoy
it for longer. It is concerned that privileging economic growth
will harm the local environment. The two frames are in conflict
and are leading to a dispute that seems intractable.
TOOL 1: FRAME INCORPORATION. This is where one side incorporates
a challenging element into their own frame by creating a ‘wa-
tered down’ version of it. In our example, an important part of
the environmental frame is the charity’s concern that this will
set a precedent for future developments in the region: Concern
for economic growth, not the environment, would become the
guiding principle. If the public agency began to understand this
concern, it could emphasize the fact that this development is
52 / Rotman Management Spring 2019
just a pilot that will be evaluated for its impact (including on the
environment). That move would allow the charity to incorporate
into its framing the idea that the development would target eco-
nomic growth, but only in a provisional way.
TOOL 2: FRAME RECONNECTION. This is where both frames are re-
spected and preserved, but a new link is created between them,
so they appear to be complementary rather than incompatible.
In the example above, this would mean that one side would con-
tinue to see the policy through an economic frame, and the other
an environmental frame. But economic development could be
re-framed as a means of improving the local environment – for
example, by making it easier for local people to invest in sustain-
able technologies. If the public agency needed to go further, they
could promise that some form of ‘tourist tax’ was created and
funnelled to a fund for this purpose.
TOOL 3: FRAME ACCOMMODATION. This is where one side changes
its framing to accommodate aspects of the opposing frame. The
difference from frame incorporation is that the new element
is not watered down; instead, the existing frame is substan-
tially changed as a result of the frame accommodation. In the
above scenario, this could happen if the charity succeeded in
re-framing the idea of economic development to include wider
concepts of value.
CONFIRMATION BIAS. This includes the tendency to notice, in-
terpret, judge and remember information in a way that supports
one’s pre-existing views and ideas. This means that people often
practise ‘selective exposure’, choosing and focusing on informa-
tion that confirms their positions, and ignoring or withdrawing
from that which rejects them. The evidence confirms that people
prefer to be exposed to information that supports their views —
and that this preference strengthens the more firmly we hold an
opinion. The obvious problem is that important facts may never
even be registered. People may actively reject information that
conflicts with their prior position, which can make it difficult
for others to shift their views by presenting them with evidence
and reasoned arguments. Indeed, studies show that people’s
positions may become even more extreme and entrenched after
reading opposing arguments.
 One explanation is that people who encounter opposing
arguments experience ‘cognitive dissonance’ — the discom-
fort of being exposed to two conflicting thoughts. In reac-
tion, they try to resolve this discomfort by dismissing the idea
that challenges their initial position, coming up with reasons
why it is wrong, even if those reasons do not stand up to scru-
tiny. This process is called ‘motivated reasoning’, and it is par-
ticularly likely to happen for opinions that people are particu-
larly invested in—i.e. those they have a strong motivation to
preserve.
HOW TO MITIGATE IT: Following are three helpful tools.
TOOL 1: SEPARATE EVIDENCE AND DIAGNOSIS FROM SOLUTIONS. Perhaps
the biggest risk of confirmation bias comes when policymakers/
strategy makers rapidly jump to a preferred solution—and then
select evidence that supports that position. One way of counter-
ing that is to explicitly separate diagnosis or exploration from
solution identification. This was the approach adopted by the
UK Pensions Commission, which attempted to find an endur-
ing solution to low rates of saving for retirement. The Commis-
sion first consulted on its evidence gathering, before moving
on to proposing solutions. However, we recognize that this was
a particular type of policy issue: It was relatively long term and
technocratic, and there was consensus that it had to be studied
carefully. In many instances, policymaking does not proceed in
clearly defined stages — in which case, the following proposals
may be useful.
TOOL 2: CONSIDER THE OPPOSITE. This involves asking ‘Would you
have made the same judgment if exactly the same study had pro-
duced results on the other side of the issue?’ There is consistent
evidence that this strategy leads to a more objective assessment
of the quality of evidence.
TOOL 3: REQUIRE TRANSPARENCY ABOUT THE EVIDENCE BASE USED TO
MAKE DECISIONS. If governments are required to be clear about
the evidence base they are using for their decisions, there could
be two main benefits. First, the knowledge that the evidence
base could be externally evaluated may provide incentives to
encourage a better evidence review. Second, the quality of the
evidence could be improved by outside experts pointing to (for
example) evidence that has been overlooked. This approach is
catching on: The U.S. government requires the data, sources and
methods used in Regulatory Impact Assessments to be provided
to the public online, so that others can evaluate the analysis.
CORE ACTIVITY 2: Deliberating
Deliberating concerns the way that concepts and ideas are as-
sessed and debated in groups. The ways in which team mem-
bers interact with each other can breed significant biases in two
primary ways: through group reinforcement and inter-group
opposition.
GROUP REINFORCEMENT. In one of the first modern treatises
on government, Thomas Hobbes recognized that in groups, ad-
visors are ‘not moved by their own sense, but by the eloquence
of another, or for fear of displeasing some that have spoken, or
the whole by contradiction’. Some 350 years later, research con-
firms Hobbes’ observation: individuals are very sensitive to the
behaviour of other group members, and one consequence is
that groups often end up agreeing with whatever most members
thought originally. Worryingly, there is much evidence that this
‘fear of displeasing’ narrows perspectives and weakens deci-
sions. As noted above, a lack of challenge and divergent thinking
is seen as a major cause of policy failures.
Two main factors drive group reinforcement. First, people
may hear many others expressing an opposing view and think
their personal opinion may be wrong. Perhaps other people have
better information and good reasons for thinking differently?
While it may be useful to consider this possibility, this effect can
be so strong that people end up conforming to majority opinions
which are obviously wrong.
A second cause of this type of conformity is when people
do not feel free to give their opinion because of social pressure.
They may feel that others, particularly leaders, will disapprove
if they speak up, and that they will be less liked, influential and
rewarded in future. So, even if the group (and the policy) as a
whole would benefit from their knowledge, the best personal
strategy is to not challenge the accepted view.
rotmanmagazine.ca / 53
 When groups interact with each other, they are less cooperative and
more competitive than when individuals interact with each other.
HOW TO MITIGATE IT: Following are three helpful tools.
TOOL 1: CREATE WAYS FOR DIVERSE VIEWS TO BE FED IN BEFORE, DURING
AND AFTER GROUP DISCUSSIONS. Majority influence is easier to re-
sist outside group discussions — especially in organizations with
a culture of deference. Therefore, policy teams could pose a set
of questions anonymously through a Google Forum or similar
before and after policy discussions, giving a chance for diver-
gent views to be captured and acted on with minimum loss of
face. A more developed form of this idea was the UK’s Contest-
able Policy Fund, which provided matched funding to try to give
ministers direct access to external policy advice.
The Behavioural Insights Team (BIT) has developed a
ThinkGroup process, whereby participants all silently contrib-
ute to a single online document at once. This allows people both
to interact and to pursue their own trains of thought. Research
shows that our inability to do so in traditional brainstorming
meetings is why they produce poor results.
TOOL 2: INVEST MORE IN OTHER OPTIONS TO PERMIT CHALLENGE WITHIN
MEETINGS. There is a clear case for exploring alternatives to con-
ventional chaired meetings. The UK’s Ministry of Defence, ad-
mitting that ‘groupthink’ has afflicted past military plans, has
published a Guide to Reasonable Challenge that helps dissent to
take place in a constructive way. In addition, many governments
still expect decisions to be made in formally chaired meetings
with set agendas and processes. This can close down debate in
order to get through an agenda—and gives undue weight to those
who control the agenda.
TOOL 3: COGNITIVELY DIVERSE TEAMS. Another idea is to assemble
teams that are cognitively diverse. Teams whose members ap-
proach problems in different ways do better — particularly at
tasks requiring creativity. Many organizations are already in-
vesting in increasing the diversity of their teams in terms of race,
gender and socio-economic status. There is still a tendency to
recruit people with similar ways of thinking, particularly since
many public sector organisations recruit using a single process
that privileges certain approaches to problems. There is evidence
that introducing a diversity of perspectives improves problem-
54 / Rotman Management Spring 2019
solving, as long as interpersonal tensions can be minimized.
Managers should be helped to identify how team members dif-
fer in their problem-solving approaches and look for a variety of
these approaches when composing teams, wherever possible.
INTER-GROUP OPPOSITION
This occurs when members of one group reject the arguments
coming from another, even if they are good ones. This can
happen when group reinforcement and the illusion of similarity
strengthen an individual’s sense that their proposal and perspec-
tives are right. If someone disagrees, it must be because they are
incompetent, biased or malicious—and it is particularly easy to
think this if they are seen as belonging to a different group. Even
strong arguments can get dismissed as a result, making the ensu-
ing policy weaker.
Underpinning this problem is the way that we identify our-
selves with ‘in-groups’ in contrast to ‘outgroups’. Put simply, we
believe that the groups we identify with are better than other
groups. That is the case even if a) there is strong evidence they
are not, or b) they have only just been created, and we therefore
have no prior attachment to them.
This strong identification means that, when groups have
to co-operate, people are biased towards their in-group. In fact,
evidence shows that when groups interact with each other, they
are less cooperative and more competitive than when individuals
interact with each other.
Another cause of these group dynamics is the way we view
our own opinions. As noted earlier, people often believe that
they are unbiased, and that others will think the same way if they
are given the facts. If another party does not think the same way
we do, our preferred reaction is not to reassess our own opinion,
but to denigrate the opposition. This happens because we find it
hard to simultaneously maintain both a positive image of our-
selves and a positive image of someone who disagrees with us.
HOW TO MITIGATE IT: One approach that works here is ‘col-
laborative red teaming.’ ‘Red teams’ are groups that are tasked
with finding weaknesses in a proposal or system. The UK military
defines the work of red teams as ‘the independent application of
a range of structured, creative and critical thinking techniques to
assist the end user to make a better informed decision or produce
a more robust product’. While red teams are a good idea, our con-
cern is that involving an ‘out-group’ in this way means that their
recommendations are more likely to be dismissed defensively.
Instead, evidence shows that people are more likely to accept
criticism from someone who is part of their own group, or who
identifies with it. Therefore, we propose that part of a strategy
team splits off to create a ‘red team’ at a point when plans have
been developed, but not fixed. Note that the team should consist
of more than one person, since having a single person acting as
‘devil’s advocate’ is not always effective.
If there are a number of challenge points, different sets of
team members could act as challengers for each, to reinforce the
message that this is a ‘team’ not an ‘outsider’ behaviour. An inter-
esting example of collaborative red teaming came in May 2018,
when the UK prime minister divided her cabinet into two teams
to critique potential policies for leaving the European Union.
Each team of three ministers contained two opponents of the
proposal to be discussed and one supporter.

In closing
We are learning more each day about how behavioural science
can shape strategic decision-making in government organiza-
tions for the better, and we believe that our findings can be ap-
plied to organizations of all types.
Importantly, reforms to a decision-making process cannot
focus on individuals in isolation: They must incorporate how sys-
tems, processes and institutions combine to create behaviours. If
we truly care about improving decision-making, sustained effort
will be required from politicians, officials and leaders generally.
The good news is that we now have a clear guide as to where to Dr. Michael Hallsworth is Managing Director,
focus our efforts. North America of the Behavioural Insights
Team (BIT), based in Brooklyn, New York.
Dr. Mark Egan is an Advisor working across
BIT’s Health and Research teams, based in
BIT’s London office. Jill Rutter is Program
Director at the Institute for Government,
based in London. Julian McCrae is an Associ-
ate at the Institute for Government. The
complete paper on which this is based,
“Behavioural Government: Using Behavioural Science to Improve How
Governments Make Decisions”, is available online.

rotmanmagazine.ca / 55
 EMERGENT
CHANGE
Futurists predict that we will experience 20,000 years of progress
in the course of the 21st century. Are you ready for it?
by Beth Comstock
I WOULD LIKE TO BEGIN THIS ARTICLE with a thought exercise. Think
about something that you consider to be a constant in your life.
It could be related to your business or your personal life, but it
should be something that you almost take for granted because
you know it’s always going to be there. Now imagine that you
wake up tomorrow morning, grab your device to read the head-
lines, and this ‘constant’ has totally vanished from the world.
It’s gone. Poof. And without it, there will be something very dif-
ferent about your day today.
What does this little exercise do to you? Does it excite
you? Does it instill panic? One thing is certain: This is happen-
ing more and more, and the examples span industries. I myself
have seen it happen first-hand more than once. When I worked
in the media business, everyone believed beyond a shadow of a
doubt that television programming had to have a strict sched-
ule. Today, thanks to Netflix, Hulu and others, you can watch
an entire season of your favourite show in a weekend, if you so
desire. For many years I also worked in the energy space, and
the concept of ‘centralized energy’ was a constant. We amassed
the energy, and it had to be distributed in a certain way; until
suddenly — or not so suddenly — it didn’t.
This thought exercise is important because it touches on
your ability to adapt to change. The fact is, when you think you
know what is going to happen next, that is when you are most
ripe to be surprised.
Change Is No Longer Linear
As intersections of technology and humanity continue to pro-
liferate, there will be even more opportunities for change —
and yes, chaos — to emerge and surprise us. While it sounds
rotmanmagazine.ca / 57
 You will encounter two kinds of people in your quest for change:
goalkeepers and gatekeepers.
impossible, experts tell us that the world is never going to move
as slowly as it is right now. We are living in an age of emergent
change that is based on principles from science and economics.
A strongly ‘emergent’ system is one in which higher levels of
complexity possess genuine causal powers that are absent from
the constituent parts. That is, ‘wholes’ may exhibit properties
and principles that cannot be reduced to the cumulative effect
of the properties and laws of the components. If it sounds com-
plicated, it is.
The problem is this: We are not prepared to handle emer-
gent change. For generations, we have insisted that our busi-
nesses and institutions operate like fine-tuned machines. Our
focus on constantly improving our current systems has created an
imagination gap — a dark place where possibility and options for
the future go to die. The result: Everyone wants to already know
the answer. They want proof. The problem is, ‘the numbers’ can
only add up in the past; they can’t reflect the future, because it
hasn’t happened yet. As people continue to seek certainty and
perfection, they become less and less willing to try new things.
And organizations aren’t helping: most do not encourage cre-
ativity or reward people for problem-solving and taking risks.
Of course, we can’t just get rid of our legacy systems, and as
a result we are currently in an in-between space where the old
is going away (albeit slowly) and the new is emerging — and we
need to spend our energy on both. GE was my training ground
for developing this mindset. My team and I created the Eco-
magination program, and through it, we were able to imagine
a clean-tech revolution that was just starting to come together
at the periphery.
It all began when we realized we were hearing the same
message over and over from a number of customers in different
industries — not just energy, but rail, aviation and others. They
were all having to face new environmental regulations in some
58 / Rotman Management Spring 2019
parts of the world, and said to us, ‘We are going to go broke be-
cause we don’t know how to solve this problem. Help us!’ We
took their concerns to heart and started working on solutions.
Of course, not every customer thought this was a good idea.
Many of them fought it. They would say, ‘Hey, don’t get ahead
of us!’ There was also a lot of resistance internally, with people
asking, Why are you doing this? But, as we progressed into the
discovery phase, we started to realize that not only did we have
the capability and the capacity to make clean tech happen—the
outside world was also moving in this direction. We said to our-
selves, you know what? We can do this.
We launched an effort that would see us invest billions of
dollars in new tech to sell our products differently. We said to
the world, ‘We are going to hold ourselves accountable, and
we want you to hold us to a standard that makes our technol-
ogy both economically and ecologically sound’. To achieve this,
we had to open ourselves up to partnerships and to external
advice. And, in the process, we grew our brand value by 35 per
cent over the course of a five-year period. Over a decade, we
unlocked $30 billion of new revenue on an annual basis. We cre-
ated a mission that employees could rally around. Even our nay-
saying customers started to say, ‘You were right. This is the way
things are moving’.
Three Pillars of Embracing Change
Based on my experience, three things are critical to achieving
the positive change that I witnessed at GE.
1. GIVE YOURSELF PERMISSION TO IMAGINE. As my story indicates,
positive change — in your business or personal life — only hap-
pens when you give yourself permission to imagine a better
future for yourself, your customers, your company — even the
world. You will always encounter two kinds of people in your
quest for change: goalkeepers and gatekeepers. Goalkeepers
help you accomplish your goals, while gatekeepers try to keep
you from reaching them. We’ve all worked with these people.
Gatekeepers are guardians of the status quo. They reflectively
say No to anything new or imaginative. The truth is, these peo-
ple often feel threatened by imaginative thinking. Fear is some-
thing we don’t talk about enough at work, but it brings up a lot
of very bad behaviour.
With Ecomagination, we faced many gatekeepers. People
were afraid that we were going to embarrass ourselves. I heard
from so many customers and salespeople, ‘We’re going to lose
customers if you get too far ahead of them’. Customers can be
used as a powerful excuse for not doing something in a com-
pany. But the fact is, most of them want you to keep up with the
pace of change — and help them keep pace.
One key principle that I learned early in my career is this:
‘No’ means ‘not yet’. Having worked for way too many gatekeep-
ers, I arrived at a work around. Whenever someone said, ‘No’,
I would shift my mindset and say to myself, ‘Ah, this is an invita-
tion’. With Ecomagination, it took us almost a year to map out
the best approach. I can’t tell you how many times people called
me and my colleagues idiots or worse, because they didn’t want
any of this to happen.
Earlier in my career, at NBC, I had what I thought was a bril-
liant idea to launch what we called ‘The NBC Experience Store’. I
went to see my boss, Bob Wright, who was then the head of NBC,
and the first time he said No. The second time, he said No again.
But the third time, he said Yes. He told me later, ‘You made it so
darn hard to say No — and I really tried’. That taught me a very
important lesson. It occurred to me that Bob was testing me to see
how resilient and passionate I was about the idea. Frankly, in the
early days, my idea wasn’t as good as it was the third time around,
and that set us on our course. The point is, we all have to learn to
be resilient. As a manger, you should always be testing people to
make sure they have the passion and ability to go the distance.
2. EMBRACE DISCOVERY. This is my favourite pillar. To me, it repre-
sents the joy of living, and in particular, the joy of working. Dis-
covery is about making the world your classroom. If you follow
your curiosity, it will take you almost anywhere where change is
happening and where the future is revealing itself.
When I was a marketer, I took my job incredibly seriously.
To me, marketing was about living in the market, and when you
live in the market, you see trends and patterns start to emerge.
You have to get out there and challenge yourself to go where
things are new and are actually in conflict with what you think is
happening. They challenge your point of view.
Here is another thought exercise: Think back about 10
years to things that were just emerging that are now kind of
mainstream. What do you come up with? Here are a couple to
get you started. Craft Beer was not a ‘thing’ 10 years ago. I was
with a brewing company recently and they were completely
flummoxed as to how they missed out on it. It was as if all these
little brewers just emerged one day. But of course, they were out
there. There were patterns to be seen. Other examples include
organic farming and tattoos.
Yet another exercise is ‘focusing on threes’. This is not a sci-
entific approach, but I swear by it: When you’re out in the world,
the first time you see something interesting, make note of it.
The second time you see it, ask yourself, ‘Is this a coincidence?
Why am I seeing this twice?’ The third time, declare to yourself,
this is a trend. What can I learn from it? How can I translate it
into my work? When change is part of your job, discovery has to
become part of what you do.
You might say, ‘I don’t have time for any of this’; but in
today’s environment, you have to make the time. Personally, I
rotmanmagazine.ca / 59
 If everyone thinks your idea is great, maybe
you’re asking the wrong people.
swear by the 70/20/10 rule: 70 per cent of the time, resources
and people should be focused on the now, the core part of your
business; 20 per cent should be focused on what’s next — the
next three to five years, depending on your business; and 10 per
cent should be spent thinking about and imagining the truly
new and different.
My guess is that at least 10 per cent of your time is current-
ly being spent on things that you already know how to do and
questions you know the answers to. In meetings, the next time
you ask yourself, Why am I here, again?, take control of your
schedule and give yourself back 10 per cent of your time. Get out
there and see the world. Make room for discovery.
3. MAKE THE CHANGE HAPPEN. A vision is worthless unless it is acted
on. Companies are hiring a lot of Chief Transformation Officers
today, and that can be helpful, because it drives momentum and
gives someone accountability. But it will not be helpful if all you’ve
done is delegated change to someone else and said, ‘You figure
it out’. We all have to be involved in making change happen.
Here are some of the most important tools to embrace.
FEEDBACK. In an age of emergent change, you will have to continu-
ally adapt your story, and that means keeping up with new facts
and shifting landscapes. The faster you get feedback, the faster
you’ll be able to change. Think about how, in most companies,
people receive feedback once a year. That is so outdated. Going
forward, we need to be open to live feedback, even if it involves
criticism. The fact is, if everyone thinks your idea is great, then
maybe you’re asking the wrong people. We have to invite crit-
ics to the table — people whose judgment and perspective is very
60 / Rotman Management Spring 2019
different from our own, who bring a different point of view.
With Ecomagination, we created an advisory board of our
biggest critics — people from NGOs who had been doing fund-
raising campaigns against this type of thing and who wanted to
bring our company down. We invited them to help develop our
scorecard and tell us how to make things better. We also part-
nered with innovative start-ups. The idea is to be asked some
really tough questions — what I call, ‘agitated inquiry’. You need
to beat your own ideas up to make sure they’re sturdy enough to
stand the test of time. How often do we spend time fighting and
arguing over something when we’ve lost sight of what the actual
problem is? My favourite thing to say to a stakeholder is, ‘Tell
me one thing that I don’t want to hear’.
EXPERIMENTATION. The next part of making change happen in-
volves experimenting: test, learn, repeat, test, learn, repeat. This
requires a lot of failing, learning and re-framing. The best thing
you can do is test an early idea with a customer. Find customers
who are open to this and get their feedback earlier rather than
later. And make sure to involve some tough customers. When we
did our dreaming sessions with users, we didn’t only pick those
who were open to it; we also included people who thought it was
a really bad idea.
Next, you’re launching, and starting to prove that you ac-
tually have a business model, that you might be able to make
a profit doing this. The problem is, many businesses hold their
seed-stage ideas to the same metrics as their growth and fully
scaled ideas. When you don’t even know if you have any custom-
ers yet people will ask, ‘What’s your profit going to be?’, That’s
why making new things happen takes courage and resilience.
In closing
At the beginning of this article, I asked you to imagine something
important to you suddenly disappearing from the world. Well,
here’s something to add to my list of examples: management.
Management as we once knew it is obsolete. It is no lon-
ger a control function, if it ever was. Today, you have to lead
with vision and empower your teams to figure things out. You
have to give employees permission — and encourage them to
give themselves permission — to imagine. And everyone has to
be ready to take action when a new pattern emerges. Just take
a few small steps forward and, before you know it, you will be
creating momentum and enabling your organization — and
yourself — to embrace change.
Seven Reasons Why People Resist Change by Rosabeth Moss Kanter
Resistance to change manifests itself in many ways, from
foot-dragging and inertia to petty sabotage to outright rebel-
lion. The best tool for leaders of change is to understand the
universal sources of resistance in each situation and then
strategize around them. Here are seven that I’ve found to be
very common.
Loss of control. Change interferes with autonomy and can
make people feel that they’ve lost control over their territory.
It’s not just political, as in ‘who has the power?’ Our sense of
self-determination is often the first thing to go when faced with
a potential change coming from someone else. Smart leaders
leave room for those affected by change to make choices.
They invite others into the planning, giving them ownership.
Excess uncertainty. If change feels like walking off a cliff
blindfolded, then people will reject it. People will often prefer to
remain mired in misery than to head towards an unknown. As
the saying goes, “Better the devil you know than the devil you
don’t know.” To overcome inertia requires a sense of safety as
well as an inspiring vision. Leaders should create certainty of
process, with clear, simple steps and timetables.
Surprise, surprise! Decisions imposed on people suddenly,
with no time to get used to the idea or prepare for the con-
sequences, are generally resisted. Leaders should avoid the
temptation to craft changes in secret and then announce them
all at once. It’s better to plant seeds — that is, sprinkle hints
of what might be coming and seek input.
Everything seems different. We are all creatures of habit,
so too many differences can be distracting or confusing. Lead-
ers should try to minimize the number of unrelated differences
introduced by a central change. Wherever possible, keep things
Beth Comstock is the author of Imagine It Forward: Courage,
Creativity and the Power of Change (Penguin Random House,
2018), a director of Nike Inc. and a trustee of the National
Geographic Society. She served as Vice Chair of GE Business
Innovations and CEO of Business Innovations at General
Electric Company until December 31, 2017. Prior to joining GE in 1994, she
held a succession of positions at NBC, CBS and Turner Broadcasting.
familiar. Remain focused on the important things and avoid
change for the sake of change.
Loss of face. By definition, change represents a departure
from the past, so the people associated with the previous
iteration —the one that is being superseded — are likely to
be defensive about it. Leaders can help people maintain their
dignity by celebrating those elements of the past that are
worth honouring, and making it clear that the outside world has
changed. That makes it easier to let go and move on.
Concerns about competence. Change is resisted when it
makes people feel stupid. They might express skepticism about
whether the new software will work or whether the change truly
represents an improvement, but down deep they are worried
that their skills will be obsolete. Leaders should over-invest in
structural reassurance, providing abundant information, educa-
tion, training, mentors and support systems. In my experience,
a period of overlap—i.e. running two systems simultaneously—
can help to ease transitions.
More work. Change is indeed more work. Those closest to
the change in terms of designing and testing it are often over-
loaded, in part because of the inevitable unanticipated glitches
in the midst of it. Leaders should acknowledge the hard work
of change by allowing some people to focus exclusively on it,
or adding extra perqs for participants.
Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business
at Harvard Business School. She is also Director and Chair of the Harvard
University Advanced Leadership Initiative.
rotmanmagazine.ca / 61
 Proceed with Caution
An NYU professor warns that Silicon Valley might be building
AI to make decisions without inclusive human values.
An interview with Amy Webb by Karen Christensen
Karen Christensen: You have said that the future of AI is
being built “by a relatively few like-minded people within
small, insulated groups.” Why is that such a big problem?
Amy Webb: In any field, if you have a homogenous group of
people making decisions that are intended to benefit everyone,
you end up with a narrow interpretation of both the future itself
and the best way to move forward. When we’re talking about a
transformational technology like AI, it involves systems that will
be making decisions on behalf of everyone, so it follows that a
lot of people are going to be left out of those decisions. The way
that these systems behave and make decisions and choices is
going to exclude a lot of people.
What is an artificial narrow intelligence system (ANI)?
This is what AI’s various ‘tribes’ are building. ANI’s are capable
of performing a singular task at the same level or better than we
humans can. Commercial ANI solutions — and by extension, the
tribe — are already making decisions for us in our email inboxes,
when we search for things on the Internet, when we take photos
with our phones, when we drive our cars and when we apply for
credit cards or loans.
They are also building artificial general intelligence (AGI)
systems, which will perform broader cognitive tasks because they
are machines that are designed to think like we do. The question
is, Who exactly is the ‘we’ that these systems are being modelled
on? Whose values, ideals and worldviews are being taught?
In recent years, Google launched unconscious bias train-
ing for its employees; yet at the same time, it was rewarding
bad behaviour among its leadership ranks. Talk a bit about
this paradox.
A single training program cannot solve the bias problem — just
as an MBA program offering a mandated ethics class doesn’t
stop unethical behaviour. When information gets siloed in that
way and is not more deeply integrated throughout a company,
people tend to dismiss what they learn as something to ‘tick off ’
on a checklist to meet requirements.
I do think the American members of the Big Nine — Ama-
zon, Apple, Google, Facebook, Microsoft and IBM — recog-
nize that there are problems with diversity and inclusivity in
their ranks, which is why, in recent years, many have launched
unconscious bias training. Hopefully the goal of these programs
is not just to deal with employee behaviour — but to recog-
nize that biases are also creeping into the AI systems that they
are building.
It’s great to have these training programs, but wherever they
exist, we should expect to see substantive change throughout
the organization — not just changes in personnel, but also
rotmanmagazine.ca / 63
 The G-MAFIA is deciding the future of AI — and by extension,
what the future of humanity will look like.
WARNING #1: We mistakenly treat AI like a digital platform—
similar to the Internet—with no guiding principles or long-term
plans for its growth.
WARNING #2: AI is rapidly concentrating power among the
few, even as we view it as an open ecosystem with few barriers.
efforts to address systems and databases that themselves are rid-
dled with bias. In most cases, these things have to be completely
rebuilt, and that’s a costly time-consuming process. I don’t see
anybody making great strides in this regard.
One key issue is that there is no singular baseline or set of
standards to evaluate bias — and no goals for overcoming the bias
that currently exists throughout AI. Until we have that, the per-
sonal experiences and ideals of a select few will continue to drive
decision-making.
You have said that the U.S.-based members of the Big Nine
function as a mafia in the purest sense. Please explain.
I refer to the U.S. members of the Big Nine as the G-MAFIA,
which is an acronym for Google/Microsoft/Apple/Facebook/
IBM/Amazon. But it’s more than just an acronym, because for
many years these companies, like mafias everywhere, have been
working independently of the government — and at the same
time, not collaborating with each other.
Overwhelmingly, these companies now control the lion’s
share of patents, and they control or have access to more data
than any other organization — including the government, which
is pretty scary. The G-MAFIA have built systems that are mar-
keted as open-source systems, but in effect, once you start using
them, you can’t untether yourself from them. They’re building
the hardware; they’re making the investments; and they have the
partnerships with universities. In a very real sense, these compa-
nies are deciding the future of AI — and by extension, what the
future of humanity will look like.
64 / Rotman Management Spring 2019
Describe how China is approaching the future of AI.
That’s a really interesting piece of this. As indicated, in the U.S.,
the Big Nine function independently of the federal government.
As a result, it’s the market and the whims of Wall Street that help
to determine what these companies are doing. A couple of weeks
ago, Google had its investors call, and it announced that it was go-
ing to spend a significant sum of money on R&D — which inves-
tors responded to negatively, because they saw that as an indica-
tion that margins would shrink. As a result of that, we’re probably
going to see some shifts in their direction going forward. The fact
is, nobody else is funding this. The government, especially under
the Trump administration, has actually stripped away funding.
We don’t have enormous sums of money for basic research. We
have basically left it to these companies to build it all for us.
That is definitely not the case with China and its Big Nine
companies — Baidu, Alibaba and Tencent. There has been
not just consolidation among the industry but consolidation of
power. Many years ago, the Chinese Communist Party (CCP)
decided that AI would be a central focus for its activities going
forward. There was an initial plan announced in 2013, and there
have been subsequent strategic plans announced since then.
Some might argue that China has made many announce-
ments over the years that have gone nowhere, but the key differ-
ence now is that there is a younger government in place — po-
litical leaders who are also trained in technology. There is also
a critical mass of people using Baidu, Alibaba and Tencent, and
while these are independent companies, they are very much un-
der the control of Beijing.
For example, for a while, Apple and Google were competing
in the autonomous driving space. But the Chinese government
went in a different direction, decreeing that Baidu would be the
company that investigates autonomous driving, while Tencent
would investigate health and AI. With that kind of strategic align-
ment, as well as parts of the sovereign wealth fund being dedi-
cated to AI, these companies are shaping the country’s education
system. This is trickling down into other areas of life, including
some domestic programs that are engineered for social control
and the free flow of information.
On top of everything else, China’s plans and AI are tethered
to its Brick and Road Initiative, which is touted as an infrastruc-
ture initiative along what was the old Silk Road Trading Route.
What’s interesting is that this is not about building bridges and
making trade easier; there are already 58 pilot countries on the
receiving end of things like 5G and small-cell technology, fiber
and data collection methods, and smart cameras. All of these sys-
tems that collect data on citizens to keep them under some form
of control are now being exported. While we’re busy dealing
with market demands in the U.S., China sees AI as a pathway to
a new world order — and one in which it is very much in control.
China isn’t just trying to tweak the trade balance; it is seeking
to gain an absolute advantage over the U.S. in economic power,
workforce development, geopolitical influence, military might,
social clout and environmental stewardship.
With so many people spread out across such a large geo-
graphic space, they are about to see upward social mobility at
a scale that we have never seen before in modern history. They
are grappling with this and trying to figure out how to manage
their population, give it what it wants and still, in the process,
maintain control. And AI is one of the keys to that.
You have developed three broad scenarios for the future of
AI: optimistic, pragmatic and catastrophic. Please summarize
them for us.
Looking ahead under the optimistic scenario, we have made the
best possible decisions about AI. AI’s tribes, universities, the Big
Nine, government agencies, investors, researchers and everyday
people heeded the early warning signs. We’ve shifted AI’s devel-
opmental track, we are collaborating on the future and we’re al-
ready seeing positive, durable change.
Under the pragmatic scenario, we have acknowledged AI’s
problems, but along the way decided to make only minor tweaks
in its developmental track, because AI’s stakeholders aren’t
willing to sacrifice financial gains, make politically unpopular
choices and curb wild expectations in the short term — even if
it means improving our long-term odds of living and thriving
alongside AI. Worse yet, we have ignored China and its plans for
the future.
In the catastrophic scenario, we have completely closed our
eyes to AI’s developmental track. We missed all the signals, ig-
nored the warning signs and failed to actively plan for the future.
We helped the Big Nine compete against itself as we indulged our
consumerist desires, buying the latest gadgets and devices, cel-
ebrating every new opportunity to record our voices and faces,
and submitting to an open pipeline that continually siphoned off
our data. Rather than seeing a wide, colourful spectrum of peo-
ple and their worldviews entering the field of AI via tenure track
10 Questions For AI-Focused Companies
1. What is our motivation for AI? Is it aligned with the best
long-term interests of humanity?
2. What are our own biases? What ideas, experiences and
values have we failed to include in our tribe? Who have we
overlooked?
3. Have we included people unlike ourselves for the purpose
of making the future of AI better?
4. How are the technological, economic and social implica-
tions of AI understood by those involved in its creation?
5. What fundamental rights should we have to interrogate the
data sets, algorithms and processes being used to make
decisions on our behalf?
6. When and why do those in AI’s tribes feel that it is their
responsibility to address the social implications of AI?
7. Does the leadership of our organization and our AI tribes
reflect many different kinds of people?
8. Should we continue to compare AI to human thinking, or
is it better for us to categorize it as something different?
9. Is it okay to build AI that recognizes and responds to hu-
man emotion?
10. What is the acceptable point at which we are all okay with
AI evolving without humans directly in the loop?
positions, top jobs on research teams and managerial roles, we
instead see no change.
At this point, which scenario is most likely to occur?
‘At this point’ is key, because it changes with the whims of the
president in my country, and whatever might be happening in
DC at a particular moment in time. I always make determina-
tions based on the data that I have and what we know to be true
today. Given these things, I would say that there is probably a
rotmanmagazine.ca / 65
 What I’m talking about entails structural, systems-level
change over many years.
10 per cent chance of the optimistic scenario happening; a 50
per cent chance for the pragmatic scenario; and a 40 per cent
chance for the catastrophic scenario.
That doesn’t mean we can’t reshape things to change these
odds; that’s exactly why I wrote the book. I am hopeful about the
optimistic scenario, but the key to achieving it will be widespread
collaboration — not just amongst the G-MAFIA but throughout
society, and that is no small feat. The future of AI is not just a
technological question or a business question; it is also a geopo-
litical and geo-economics question.
One tangible way forward would be to turn AI on itself and
evaluate all of the training data that is currently in use. I believe
this can be done, and here’s why: As a side project, IBM’s India
Research Lab analyzed entries shortlisted for the Man Booker
Prize for literature between 1969 and 2017. The analysis revealed
the pervasiveness of gender bias and stereotypes in the books
themselves regarding basic features like occupation and behav-
iour associated with the characters. For example, male charac-
ters were more likely to have high-level jobs, while female char-
acters were likely to be described as ‘teacher’ or ‘whore’. If it’s
possible to use natural language processing, graph algorithms
and other basic machine learning techniques to ferret-out biases
in literary awards, those can also be used to find biases in popular
training data sets. Once problems are discovered, they should be
published and then fixed. The Big Nine—or the G-MAFIA at the
very least — could share the costs of creating new training sets.
In addition, universities could redouble their efforts by col-
laborating with public and private organizations, taking some
chances on their curriculum and making sure that there is a
broader representation of people involved — not just among stu-
dents, but among people who are being promoted through the
tenure system.
What I’m talking about here entails structural, systems-level
change over many years. But the longer we wait to get started
on it, the worse off we’re all going to be — and the closer we will
come to the catastrophic scenario. Also, leaders must recognize
that China is not backing down. It has strategic alignment and
a top-down management plan in place, as well as access to the
data of 1.3 billion citizens. And it’s about to get data from other
countries. In short, China is moving full steam ahead, while we
risk getting lost trying to figure this all out.
66 / Rotman Management Spring 2019
You note in the book that we, as individuals, also need to
change. In what way?
As more and more people begin to understand exactly what AI
is, what it isn’t and why it matters, by default, they become mem-
bers of AI’s tribes, and that means they have no more excuses.
From that day forward, you should learn about how your data
is being mined and refined by the Big Nine. You can do this by
digging into the setting of all the tools and services you use: your
email and social media, the location services on your phone, the
permission settings on all of your connected devices. The next
time you see a cool app that compares something about you
(your face, body or gestures) with a big set of data, stop for a mo-
ment to investigate whether you are helping to train a machine
learning system. When you allow yourself to be recognized, ask
where your information is being stored and for what purpose.
Read the terms of service agreements; if something seems off,
show restraint and don’t use the system.
Also, in the workplace, we must ask a difficult but impor-
tant question: How are our own biases affecting those around
us? Have we unwittingly supported or promoted only those who
look like us and reflect our worldviews? Are we unintentionally
excluding certain groups? It is time for all of us to open our eyes
and take part in shaping the future.
Amy Webb is an American futurist, founder of the Future
Today Institute and Professor of Strategic Foresight at New
York University’s Stern School of Business. She is the author
of The Big Nine: How the Tech Titans and Their Thinking
Machines Could Warp Humanity (PublicAffairs, 2019).
 Integrating Behavioural
Science and Design
Behavioural science is unusually, if not uniquely,
qualified to shine a light on designing for our future.
by Sarah Reid and Ruth Schmidt

NUDGING HAS RIGHTFULLY EARNED ITS PLACE in public policy as an
effective, efficient and relatively low-cost lever for addressing
knotty challenges grounded in very human ‘irrational’ behav-
iour: Which message will encourage citizens to get out the vote
or pay their taxes on time? What mix of social norms, commit-
ment devices and prompts increases medication adherence?
These kinds of behavioural interventions are primarily designed
to achieve efficiency and cost savings within current processes
and structures, through solutions to known, discrete behavioural
challenges. Think of it as ‘process improvement’, nudge-style.
Life, however, is full of complexity and adaptation that can’t
be tested with a randomized control trial. While field experi-
ments and pre-tests can bring us closer to the intricacies of real
life, nudging’s natural habitat of well-defined, present-tense in-
puts and processes may be at odds with the introduction of new-
to-the-world contexts or the ambiguity of the future. Nudges —
and behavioural science more generally — can absolutely help
people save more for tomorrow, today; but the fact is, tomorrow
may be characterized by a completely different set of life-stage
or employment norms and conditions that upend our current
conceptions of retirement above and beyond the mechanics of
RRSPs and 401(k) accounts.
This led us to wonder: To what extent is a focus on evi-
dence-based solutions of testable hypotheses contributing to a
form of confirmation bias — inadvertently limiting our sense of
which problems and spaces are ripe for behavioural attention
and confining our ability to imagine new applications and defi-
nitions for what ‘good’ could look like? Nobel Laureate Richard
Thaler and his co-author Cass Sunstein have recognized that
nudges are just one piece of the behaviour-change puzzle. So,
what’s missing?
Part of the solution, we suspect, is hiding in plain sight: Be-
havioural science can and should continue to make important
contributions through nudges and its other methods, but we
believe it can contribute at an even greater scale by turning out-
ward to partner with other disciplines — in particular, with the
field of design.
Design is a strategic lens with a history of grappling with
ambiguity and embracing user context, recognizing the need to
solve at the level of systems while also keeping one eye on the
future by building solutions that are designed to adapt. To do
this, design uses a combination of generative, participatory and
evaluative modes to expand our notions of what we should even
be solving for, as well as how to solve for it — with outcomes that

rotmanmagazine.ca / 69
 Nudges are just one piece of the behaviour-change puzzle.
are viable and sustainable, desirable for all stakeholders and
technologically feasible to build.
Organizations as diverse as the Mayo Clinic, Procter &
Gamble, IBM and the U.S. government have successfully inte-
grated a design mindset into how they conceive of, build and de-
liver services and experiences. There is already significant buzz
around applying Design Thinking to add value to behavioural
interventions; but the value of applying behavioural insights to
design problems is equally clear. Struggles with uncertainty,
helping users achieve what they value, confirmation bias, time
discounting — all of these concepts are inextricably embedded
in the challenges that design sets out to solve. By coming in to a
situation fully armed with a knowledge of behavioural tenden-
cies and levers, we can vastly improve our chances of designing
more robust and effective solutions.
Consider Figure One. In this conception, the bottom left
corner is where behavioural science thrives and design plays a
supporting role. This is where understanding behavioural chal-
lenges and pitfalls helps us improve existing choice architecture
— like redesigning forms and setting smart defaults. Here, design
ensures that the behavioural solutions are focused on helping (or
redirecting) people to complete particular actions by taking their
context into account.
The top right corner is where design takes the lead and be-
havioural science plays a supporting role. Here, the landscape
consists of larger, more complex systems and scenarios, some of
which may not even exist yet. This is where design can help us
envision what could be, while behavioural science provides in-
sights into cognitive shortcuts and tendencies that might derail
people from acting in their own best interests. Solutions in this
space might take shape as a new welfare system like universal
basic income or a new way to choose, negotiate and manage
health insurance.
This new model draws its inspiration from Bansi Nagji and
Geoff Tuff’s Innovation Ambition Matrix, which they introduced
in 2012 as a means to guide organizational investments in innova-
tion. The matrix was itself a riff on a framework by management
theorist H. Igor Ansoff, consisting of a simple 3×3 matrix defined
by two axes: Where to play, defined as a continuum of playing in
existing markets with existing customers on one end, to creat-
ing entirely new ones at the other; and How to win, which ranged
from existing products up to entirely new offerings.
70 / Rotman Management Spring 2019
This visual representation and line of thinking has helped
companies re-frame innovation in two important ways. First, it
provides a new language to describe the nature of innovative so-
lutions as core (optimizing current processes and offerings), ad-
jacent (reaching adjacent customers, developing incrementally
new offerings) and transformational (achieving market disrup-
tion), according to their position within the matrix.
Second, the model introduces a way to re-conceptualize
innovation as a ‘landscape’ in which one can gauge how the in-
dividual innovation initiatives within a company sit relative to
one another — in other words, taking a portfolio or systems view.
This allowed organizations to clarify their innovation goals more
holistically and helped them better plan and measure the collec-
tive success of innovations.
Borrowing the language of [former Rotman School Dean]
Roger Martin and [former Procter & Gamble CEO] A.G. Lafley
from their best-selling book Playing to Win, the frames of ‘where
to play’ and ‘how to win’ provide businesses with new ways of
describing and thinking about innovation — thinking that allows
them to be both more precise and more strategic. Transplanted
into a behavioural context, this structure has the potential to help
us imagine a broader landscape of challenges to address.
Where to Play
Nagji and Tuff ’s ‘where to play’ axis focused on the ‘stretchiness’
of potential audiences and markets in the context of gaining a
competitive advantage. In our reimagined behavioural version,
we translate this strategic focus on audience as ‘in whose best in-
terest’ the behavioural interventions are designed — individuals,
multiple stakeholders or entire systems.
INDIVIDUALS. Examples where nudges focus on an individual’s
best interest abound. Richard Thaler and Shlomo Benartzi’s
Save More Tomorrow plan — which in its initial rollout nearly
quadrupled 401(k) contributions compared to prior rates—is a
classic case; healthcare interventions aimed at habit formation
such as medication adherence also fall into this category.
MULTI-STAKEHOLDER. These interventions multiply the impact of
solutions by solving simultaneously for multiple answers to ‘in
the best interest of x’. As an example, consider blind auditions,
in which orchestras improved the gender balance of their hires
 SYSTEMIC. Systemic solutions benefit not just individuals or even
A New Model for Integrating Behavioural specific organizations, but overall systems. The well-known
Science and Design ‘opt-out’ and ‘prompted-choice’ approaches for organ donation
are two such examples, in which recognizing the power of default
options has been shown to be highly effective in increasing both
Design-led,
the base of potential donors and the likelihood of their organs be-
Systemic

informed by
behavioral ing used, to the benefit of the entire system.
insights Voting is another arena in which behavioural insights have
had a significant systems-level impact. Oregon’s automatic
voter-registration system, launched in 2016, uses motor vehicle
registration information to auto-register citizens to vote. This
Stakeholders

system has not only significantly increased the number of reg-

Multi-

istered voters, it has also increased their diversity — participants

were more likely to be younger, live in lower-density areas, have
WHERE TO PLAY

lower income and education, and represent higher racial diver-

sity — and boosted their likelihood to vote. Other recent ‘get out
Individuals

Behavioural the vote’ campaigns using behavioural prompts such as social

science-led,
informed by
design insights
Shift Incoming Shift Existing
Inputs Processes
HOW TO WIN
FIGURE ONE
by hiding the physical traits of auditioners behind a screen. First
adopted by the Boston Symphony Orchestra in the 1970s, this
solution benefited the individual women who received job of-
fers based on their merit — but it also rewarded orchestras by
attracting the best talent. Job-application software, like Applied
and GapJumpers, are digital versions of the same concept, hid-
ing cues like names, gender and ethnicities from evaluators,
and emphasizing candidate aptitude and task-oriented compe-
tencies that more tangibly link to prospective performance and
merit. Other efforts in this space include simplifying labels, us-
ing social-comparison framing to reduce energy consumption
and increase recycling behaviour, and using short-term incen-
tives in government-backed energy efficiency programs to boost
greener consumption.
nudges and pre-commitments have been shown to help people,
especially those who live alone, establish a plan for how to get
to polling stations. Solutions like these have not only stretched
Create New the impact of organizational budgets, but also arguably improved
Solutions systemic representativeness in the democratic process.
How to Win
Nagji and Tuff ’s ‘how to win’ is grounded in the newness of the
offerings provided by an organization. In our version, we have
substituted-in the nature and scale of behavioural interven-
tions—from adjusting current inputs and processes up to devel-
oping entirely new solutions. Let’s take a closer look at how this
works.
SHIFT INCOMING INPUTS. The examples provided above are primar-
ily instances of shifting incoming inputs, in which interventions
are aimed at influencing the range or definition of what currently
exists. This approach focuses on countering the biases that may
limit our perceptions of viable options or, in default and opt-out
situations, reducing or even eliminating the need to choose at all.
SHIFT EXISTING PROCESSES. Sometimes, targeting processes rather
than inputs is a more effective way to remove barriers to action
or reduce implicit bias. A simple yet highly effective example is
the checklist. Checklists used by John Hopkins Hospital to guide

rotmanmagazine.ca / 71
 Behavioural science is uniquely qualified to shine
a light on designing for the future.
blood clot prevention protocols turned a 50 per cent disparity in
the treatment of men versus women into an even playing field.
By simply externalizing personal judgment, treatment became
far more equitable.
Streamlining processes to remove even small points of fric-
tion has also proven fruitful, especially with low-frequency, low-
motivation tasks like filing taxes. The UK-based Behavioural
Insights Team nudged better tax filing behaviour by sending a
form directly to participants rather than sending them to a web-
site to download the form. Removing this one click increased use
of the form from 19 to 23 per cent, at virtually no cost.
CREATE NEW SOLUTIONS. The insurance product Lemonade flips
traditional business models and customer experience on their
head by realigning incentives for action. With flat fees, quick
payouts and unused premiums going to the social cause of one’s
choice, solutions like this suggest an exciting direction for prod-
ucts and services that incorporate behavioural insights into their
design, rather than creating interventions to address strictly
behavioural challenges. Other familiar examples include Uber
and Amazon Prime’s One-Click. These leverage behavioural
insights within broader offerings by reducing user uncertainty,
providing immediate feedback and simplifying actions to make
their services almost too easy to not use.
In a public-policy vein, recent experiments in universal basic
income provide an illustration of the potential for new systems-
level solutions that could have profound effects on health and
well-being, financial stability, entrepreneurship and even social
inclusion. As our colleagues Johnny Hugill and Matija Franklin
have noted, embracing a universal basic income could dimin-
ish the social stigma that makes people less likely to use other
income-benefits programs.
Putting the Model to Use
Expanding the terrain of behavioural problems to solve is not
the same as advocating to only swing for the fences. On the con-
trary, its intent is to broaden our view of what is possible rather
than declaring what is in or out, good or bad. So-called ‘small’
interventions can be enormously powerful in their own right,
and in some cases a cluster of individual efforts can create the
72 / Rotman Management Spring 2019
conditions for large-scale impact and long-term change.
In fact, Nagji and Tuff ’s article suggested that only 10 per
cent of innovation efforts should aim for transformation, com-
pared to a whopping 70 per cent in the core and 20 per cent to-
wards adjacent efforts in between. Nudges that focus on inputs
and target individual behaviours, like process improvement
efforts, are and will continue to be critically important tools in
public policy. Our argument is that, in the same way that many
individual adjustments to the hotel experience would never
have yielded Airbnb, expanding room for behavioural design
to inform new policy may yield other benefits, and a focus on
aggregated small wins may be insufficient if it is the only model
we rely on.
A recently published book [Detonate: Why - And How - Cor-
porations Must Blow Up Best Practices (And Bring a Beginner’s
Mind) To Survive] co-authored by Geoff Tuff, bolsters the case
for stretching beyond ‘core’ behavioural interventions. His up-
dated model parallels the structure of our proposed bottom-left
and top-right triangles, labelling them ‘known/knowable op-
portunities’ and ‘unknown/unknowable opportunities’, respec-
tively. The former is the terrain of ‘identified challenges’, which
can be addressed with known insights and tools. This is largely
where behavioural science has played so far. The latter, by con-
trast, requires new approaches to identify those challenges, let
alone solve for them and gauge the success of solutions — ex-
actly the conditions that play to the strengths of design.
It’s also worth noting that the 70-20-10 ratio offered in Nagji
and Tuff ’s initial model has been updated to 50-30-20 today,
with the recommendation of using 50 per cent of innovation bud-
gets for core improvements, 30 per cent towards adjacent areas,
and 20 per cent towards transformation. While the worlds of in-
novation and behavioural design are not precisely equivalent, we
can’t help but agree that it’s valuable to look beyond traditional
problem-solving boundaries when it comes to behaviour.
In closing
Framing the power of behavioural insights within a design-led
perspective amplifies our ability to navigate complexity and un-
certainty and create effective and adaptive public policy at scale
with the future, as well as the present, in mind. Of course, the
only thing we absolutely know about the future is that we will
be wrong about it. But despite a bias towards testable, empirical
hypotheses that deliver present-tense proof of efficacy, behav-
ioural science is actually unusually, if not uniquely, qualified to
shine a light on designing for the future.
Our ancestors were just as ‘predictably irrational’ as we are,
and cognitive heuristics and biases will persist into the future,
even if they manifest differently as contexts change. By partner-
ing with design and framing behavioural science as a speculative
tool in addition to an evidence-based one, we can collectively
better envision the new, in addition to testing the known.
Why Behavioural Science is Good for Business by Erik Johnson
Delicious, perfectly portioned and ready-to-cook meals
delivered to your doorstep. Easy-to-use tools to significantly
increase your retirement savings. Systems for de-biasing your
hiring process. These ideas might seem unrelated, but in fact
they are tied together by a common thread: they were all made
possible by insights from behavioural science.
Such innovations are possible when behavioural science
is applied to companies’ three primary functions:
• creating the best product or service;
• reaching users who want that product or service; and
• managing an efficient and ethical organization.
In each of these processes, smart companies are infusing
behavioural science to improve their bottom lines. It only took
Blue Apron about three years to join the ranks of the rarefied,
so-called ‘unicorns’ — start-ups valued at over a billion dollars.
Driving this success is a simple, smart business idea: Send
people everything they need to cook tasty, healthy recipes
right to their doorsteps.
The vast majority of millennials—80 per cent—think
cooking meals at home is a good thing to do; and yet they eat
out more than any previous generation. Why? Cooking can be
intimidating, hard to plan, and it can just feel like too much work
after a long day. Whatever the obstacle, millennials have a hard
time turning their good intentions into, say, fontina-stuffed pork
chops with potatoes and pizzaiola sauce. By making cooking
easy, Blue Apron makes cooking at home an intention people
will actually follow through on.
Another behavioural insight baked into the Blue Apron busi-
ness model is that it removes the temptation to eat out by nudg-
ing its subscribers to plan ahead. You subscribe to Blue Apron
when you are motivated to follow through on your intentions, and
groceries arrive when your motivation to shop may have been
waning: when you get home from work, tired and hungry.
Great companies know how to get their customers’ atten-
tion. At Morningstar, we partnered with a company to provide
a tool to help its employees plan and save for retirement. We
liked the tool, but the problem was that our direct mail communi-
Sarah Reid directs the leadership and organi-
zational change research portfolio at the
Conference Board of Canada. Previously,
she worked at the Ontario Securities Com-
mission, helping to establish its behavioural
insights unit, and at Doblin, an innovation consultancy within Deloitte.
Ruth Schmidt is a Visiting Industry Professor at the Institute of Design in
Chicago. Prior to this role, she was a senior leader at Doblin, an innovation
consultancy within Deloitte. This article originally appeared in Nudge
Turns 10, published by The Behavioural Scientist. The complete issue can
be downloaded online.
cations to the company’s employees were falling on deaf ears.
A member of our team came up with a hypothesis: The recipients
had no idea who we were and thought we were spam. Ouch.
To test this, we ran a simple randomized control trial
(RCT). Some employees got the same letters as before, while
others received the communication with their company’s logo
positioned right next to ours. The result? Simply adding the
employer’s familiar logo boosted uptake of our product by
300 per cent.
Consider one of the most important and frequent deci-
sions companies make: hiring new employees. Typically,
candidates are evaluated through interviews, where they show,
well, how good they are at interviewing. That’s not a super
relevant skill for most jobs. Daniel Kahneman recognized this
during his time in the Israeli army and proposed a new process.
Instead of interviews that rely on intuitions or gut feelings, sim-
ply select key traits or skills needed for the role (no more than
six) and then grade candidates using questions that evaluate
those traits and skills. After interviews are completed, add
up the scores for each trait and select the candidate with the
highest score.
Organizations — like the UK’s Behavioural Insights
Team (BIT) —are offering platforms that make these more
objective hiring practices easier to implement. For example,
since we know names can bias our perception of candidates,
the BIT’s hiring platform makes it easy to anonymize résumés.
They also allow blind scoring of different candidates’ respons-
es to the same question at once, ensuring candidates are not
judged differently on the second question because of their
response to the first.
Although managers may be reluctant to surrender a part
of their hiring autonomy to a platform, these tools can remove
bias and help them hire people with the skills their organization
really needs.
Erik Johnson is the Marketing Optimization Manager on Morningstar’s
Behavioural Insights Team, where he applies behavioural science prin-
ciples and experimentation to marketing processes and communications.
rotmanmagazine.ca / 73
 Organization
In every organization, moments of silence lead to lost opportunities
and errors. In her new book, Harvard Professor Amy Edmondson
argues that encouraging ‘voice’ has become mission-critical.
Interview by Karen Christensen
Karen Christensen: How do you define a psychologically safe
workplace?
Amy Edmondson: Psychological safety is the belief that the
environment is safe for interpersonal risk taking. In a psycho-
logically-safe workplace, people know that their voice is both
welcomed and expected. They know that they won’t be penalized
for speaking up with work-relevant content of any kind — even
if it entails bad news, a request for help or an admission of error.
You have found that even in strong corporate cultures, pock-
ets of both high and low psychological safety tend to exist.
Why does that happen?
AE: I think it’s because psychological safety is fundamentally an
attribute of work groups — any interdependent unit that works
together over time. The interpersonal climate in these groups is
a very ‘local’ phenomenon: It emerges as people work together,
and it is highly influenced by the individual at the centre of the
group, whether it be a project leader, a branch manager or a unit
director. These people powerfully influence what is deemed
to be appropriate and how people behave and interact with
each other.
When people choose to remain silent rather than speak up,
what tends to happen?
AE: There are two types of risk when people remain silent when
they have something to offer, and they are equally problematic
for organizations. First, silence creates the risk of safety prob-
lems that could have been averted. In high-risk settings like hos-
pitals and manufacturing plants, people get hurt — sometimes
fatally — when someone who is aware of the potential for harm
remains silent. Second, when people are reluctant to share their
improvement ideas or suggestions, organizations lose valuable
opportunities for innovation.
More often than most managers realize, people are not
speaking up when they could and should. Of course, when people
are absolutely confident that what they are about to say will be
well received, they will speak up. It’s when they are not sure that
they remain silent. In my research I’ve seen numerous instances
in hospital settings where nurses have held back on pointing out
a possible error or problem because they questioned themselves.
As the moment for speaking up passes by, the nurse might think,
‘Should I really be challenging what the doctor said?’ The most
important thing about these moments of silence is that they
are invisible. The physician in this example has no idea that he
was deprived of the nurse’s voice — and possibly, of an opportu-
nity to catch an error in time to reverse it.
The fact is, we often err on the side of silence because it keeps
us safe in the moment. People are reluctant to stand out or to be
thought badly of by peers and bosses, so they take only the safest
risks — which, of course, aren’t really risks at all.
rotmanmagazine.ca / 75
 In situations we haven’t faced before, it is simply
not possible to have all the answers.

they think, ‘Hey, I’m in charge here; I’ve got expertise and wis-
Building Psychological Safety dom, so it seems inauthentic for me to be humble’. That’s why
I use the term ‘situational humility.’ The term reminds us that
Default Frame Re-frame a truly wise person knows that they must be humble at least
The Boss • Has answers • Sets direction some of the time, depending on the situation. For instance, in
• Gives Orders • Invites input to situations we haven’t faced before — and there are more of them
• Assesses others’ clarify and improve than ever before — we simply cannot have all the answers. The
performance • Creates conditions fact is, we’re living in a volatile uncertain, complex and ambigu-
for continued ous (VUCA) world, so regardless of our experience or position,
learning
there are many situations characterized by immense uncertainty
Others Subordinates who Contributors with about what’s coming next. In this environment, if you’re not
must do as they are crucial knowledge appropriately humble about what could go wrong or how you
told and insight might fail, you’re not being realistic. So, situational humility is
actually realism.
The second, related skill is ‘humble listening’. If I’m always
reminding myself that I have to be humble about the challenges
Can you say a bit more about the relationship between psycho- ahead, then the obvious next thing to be passionate about is lis-
logical safety and innovation? tening. Humble listening is a phrase from MIT Professor Emeri-
AE: Most leaders recognize by now that innovation requires tus Ed Schein, and it’s a stance that says, ‘When I’m listening,
people to engage in experimentation—and that experiment- I am truly listening’. I’m not listening to see where you’ve got it
ing always entails some failures along the way, whether you’re wrong or why my idea is better; I’m listening with a stance of
working on new products and services or trying to create pro- genuine curiosity, interest and absorption, because I want to un-
cess innovations. Everyone wants the results of innovation — derstand what you are saying and what the implications might be
but most people aren’t terribly enthusiastic about experiencing for us going forward.
the risks of innovation. We know intellectually that it will
require failure, but emotionally, we would rather only experience What does a fearless organization look like in practice?
success. AE: A completely fearless organization is an aspiration that will
When mistakes do occur, I have found that the most innova- always remain slightly out of reach. It will never be the case that
tive teams are much more willing to talk about them. Over time, every single person shows up at work with a fearless stance that
they are consistently catching and correcting mistakes and fail- looks outward and forward, and that everyone is more interested
ures before they can cause real harm. In every workplace, some in contributing to shared goals than in staying personally safe.
degree of human error is inevitable — so if you’re not hearing Having said that, a ‘mostly fearless’ organization is one in
about it at all, that’s a problem. That means that people are un- which people feel truly engaged, inspired and willing to take the
willing to speak up about the things that are going wrong. And interpersonal risks of speaking up and experimenting that are
worse yet, it means they’re not learning from it. necessary, so as to gain the shared rewards of making a differ-
ence — of creating great products and services that help custom-
Tell us about the increasingly valuable skills of ‘humble listen- ers and change the world in some small way for the better. In
ing’ and ‘situational humility’. such organizations, people share a sense of what is at stake, why
AE: Many leaders balk at the idea of being humble, because it matters — and why every one of us is needed to make progress.

76 / Rotman Management Spring 2019

 A Toolkit for Leaders

Setting the Stage Inviting Participation Responding Productively

Leadership Tasks Frame the work: Set expecta- Demonstrate situational Express appreciation: Listen,
tions about failure, uncertainty humility: Acknowledge gaps acknowledge and thank
and interdependence to clarify
the need for voice

Emphasize purpose: Identify Practice Inqury: Ask good Destigmatize failure: Look
what’s at stake, why it matters questions; model intense forward; offer help; discuss, con-
and for whom learning sider and brainstorm next steps

Set up structures and pro- Sanction clear violations

cesses: Create forums for input;
provide guidelines for discussion

Result Shared expectations and Confidence that voice is Orientation towards

meaning welcome continuous learning

How can a leader set the stage for psychological safety?
AE: The most important skill to master is that of ‘framing’ the
work. For example, if ‘near-perfection’ is what is required to sat-
isfy demanding car customers, leaders must know to frame the
work by alerting workers to catch and correct even the tiniest of
deviations before the car proceeds down the assembly line. If dis-
covering new cures for disease is the goal, leaders must motivate
researchers to generate smart hypotheses to drive experiments
and to feel okay about being wrong far more often than being
right. Framing the work includes two key elements: re-framing
failure and clarifying the need for voice.
Can anyone drive psychological safety, or just team leaders?
AE: While it is true that bosses play an outsized role in shaping
behaviour in the workplace, anyone can help create psychologi-
cal safety. Sometimes, all you have to do is ask a good question.
This is truly a great place to start. A good question is one moti-
vated by genuine curiosity or by a desire to give someone a voice.
Good questions cry out for an answer; they create a vacuum that
serves as a voice opportunity for someone.
Additionally, you can create psychological safety by choos-
ing to listen actively to what people say and responding with
interest, building on their ideas or giving feedback. True listen-
ing conveys respect — and in subtle but powerful ways, reinforces
the idea that a person’s full self is ‘welcome here’. You don’t have
to agree with what the person said; you don’t even have to like
it. But you do have to appreciate the effort that it took for them
to say it.
Saying things to frame the challenge you see ahead is another
helpful practice. Reminding people of what the team is up against
— for example, by talking about how the work is uncertain, chal-
lenging or interdependent — helps to paint reality in ways that
emphasize that no one is supposed to have all the answers. This
lowers the hurdle for speaking up and reminds people that their
input is welcome — and needed.
Here are a few simple but powerful phrases that anyone
can utter to make the workplace feel just a tiny bit more psycho-
logically safe:
• I don’t know.
• I need help.
• I made a mistake.
Each is an expression of vulnerability. By being willing to ac-
knowledge that you are a fallible human being, you give permis-
sion to others do likewise. Removing your mask helps others
remove theirs. Sometimes you have to take an interpersonal
risk to lower interpersonal risk. Similarly powerful are words of
interest and availability; most of us face many opportunities to
say things like these:
• What are you up against?
• What can I do to help?
• What are your concerns?
The personal challenge for all of us lies in remembering, in the
moment, to be vulnerable, interested and available. Give it a try:
Pause; look around. Whom can you invite into the safe space for
learning and contributing to the shared goal? Anytime you play a
role in doing that, you are exercising leadership.

rotmanmagazine.ca / 77
 Although diversity can be created through deliberate hiring
practices, inclusion does not automatically follow.
The Humble Leader
Eileen Fisher is among the leaders who calls herself a ‘don’t
knower’. She began her celebrated clothing brand in 1984 at
the age of 34, when she didn’t know how to sew and knew
very little about fashion or business. Today, her company
operates nearly 70 retail stores, generating between $400
and $500 million in revenue annually.
Among the things Fisher does know is what it’s like to
feel unsafe to speak up. In school, she felt that speaking up
meant risking criticism, humiliation and embarrassment; con-
sequently, she felt it was “safer to say nothing than to figure
out what you think and what you want to say.” Perhaps that’s
why she has so consciously and carefully created an environ-
ment where employees feel safe speaking their minds.
As a leader, Fisher models vulnerability and humility,
which unsurprisingly helps to create psychological safety
in the workplace. She calls herself a natural listener, which
helps to make ‘not knowing’ a positive trait. “My inclination is
to ask questions, to get the right people in the conversation
and to let everyone have a voice.”
Fisher sees empowering women and girls as part of her
company’s mission, and to that end, she has founded the
Eileen Fisher Leadership Institute. The company also
gives grants to female entrepreneurs and to non-profits that
foster leadership in women and girls. “I’ve learned over time
that I actually have a lot to say, particularly around issues like
sustainability and business as a movement. My voice mat-
ters,” she says.
—from The Fearless Organization by Amy Edmondson
What is the relationship between psychological safety and
diversity and inclusion?
AE: Let me start by saying that a workplace that is truly char-
acterized by inclusion and belonging is a psychologically safe
workplace. Today we know that although diversity can be cre-
ated through deliberate hiring practices, inclusion does not au-
tomatically follow. To begin with, all hires may not find them-
selves included in important decisions and discussions. Going
78 / Rotman Management Spring 2019
deeper, a diverse workforce doesn’t guarantee that everyone
feels a sense of belonging. For instance, when no one at the top
of the organization looks like you, it can make it harder for you
to feel you belong.
Each of these terms — diversity and inclusion — represent
a goal to be achieved. The goals range from the relatively objec-
tive (workforce diversity) to the highly subjective (do I feel that I
belong here?). Inclusion is more likely to function well with psy-
chological safety because diverse perspectives are more likely
to be heard. But it is not easy to feel a sense of belonging if one
feels psychologically unsafe. As goal achievement becomes more
subjective, psychological safety becomes more valuable; there is
no way to know if you’re achieving the goal without broad input
from people in different groups.
As issues related to diversity at work have moved to the
forefront of the agenda, I have begun to consider the central role
that psychological safety can play. A fearless organization real-
izes the benefits of diversity by fostering greater inclusion and
belonging.
At the same time, a singular focus on psychological safety is
not a strategy for building diversity and inclusion. These inter-
related goals must go hand in hand. Great organizations will con-
tinue to attract, hire and retain a diverse workforce because their
leaders understand that that is where good ideas come from,
and talented applicants will be drawn to work for those organi-
zations. These leaders also recognize that hiring for diversity is
not enough: They also must care about whether or not employ-
ees can bring their full selves to work — whether they can belong
in the fullest sense to the community inside the organization.
In short, leaders who care about diversity must care about psy-
chological safety, as well.
You believe that voice has become mission-critical for every
organization. Please explain.
AE: We live in an era where people in nearly every workplace
are engaged in knowledge work — the type of work where what
goes on inside of employees’ heads is mission critical to success.
The talent, the ideas and the ingenuity of a workforce have be-
come the factors that drive success for an organization, and this

Attributes of a Powerful Question
• Generates curiosity in the listener
• Stimulates reflective conversation
• Is thought-provoking
• Surfaces underlying assumptions
• Invites creativity and new possibilities
• Generates energy and forward movement
• Channels attention and focuses inquiry
• Evokes more questions
Let’s start a new project together!
Contact us: +1 (416) 978-4343
is true whether you work in financial services or on the front-
lines of manufacturing, where highly sophisticated computer
programming is helping to guide the work. And yet, quite often,
managers operate with a mindset that was appropriate in the
industrial era, when work was highly observable, could be ob-
jectively assessed and was largely individually accomplished.
When you violate those assumptions — when the work is more
collaborative and subjective in nature, and it is far more difficult
to observe whether people are really engaged and motivated to
achieve excellence — it is more critical than ever for the genius
that lies inside of people’s heads to be expressed and shared.
Amy Edmondson is the Novartis Professor of Leadership and
Management at Harvard Business School and author of The
Fearless Organization: Creating Psychological Safety in the Work-
place for Learning, Innovation and Growth (Wiley, 2018). She
has been recognized by the biannual Thinkers50 global rank-
ing of management thinkers in 2011, 2013, 2015 and 2017 and was honoured
with its Talent Award in 2017.
It’s where you’re going that counts,
Let us help you get there!
WHO ARE WE?
Impact Consulting Group is an MBA student-led management
consulting firm. We deliver affordable, innovative solutions and add
value to a wide variety of clients while leveraging our professional
experience and MBA knowledge.
At Impact, we work with a limited number of clients at a time, which
enables us to work closely with each client and deliver high-quality
tailored solutions.
With access to the extensive resources and knowledge base of Rotman
and the broader University of Toronto community, we have been
successfully delivering engagements since 1972.
WHAT DO WE DO?
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impact@rotman.utoronto.ca www.impactconsultinggroup.ca
rotmanmagazine.ca / 79
How
o Companies are Moving
the Needle
e on Gender Equality
Bank of America and Walmart are just two of a growing number of
companies taking decisive steps towards eradicating gender inequality.
by Karen Christensen
IMAGINE A WORLD WHERE EVERY LEADER in every organization takes
concrete steps to address the issue of gender inequality. That’s
the world that Sarah Kaplan, founding director of the Institute
for Gender and the Economy at the Rotman School of Manage-
ment, is working towards with her team.
When asked what it will take to fix the current situation —
in which only 22 per cent of senior executives are female (many
fewer are CEOs) and only six to seven per cent of venture capital
funding goes to woman-owned businesses — Prof. Kaplan has
a one-word answer: innovation. It will be next to impossible, she
says, to make any further progress if we continue to do the same
old things within the same old system. “We need to approach
diversity — of all kinds, not just gender diversity — as an innova-
tion problem,” she says, “and make this challenge as exciting as
every other innovation challenge out there.”
The good news is that many organizations have taken this
challenge to heart. In this article we highlight two of them, show-
ing that, once we admit that biases are built into our systems
for hiring, evaluating and investing, we can find ways to change
the system itself.
Gender Lens Investing
In an increasingly complex world, the definition of ‘invest-
ing with a gender lens’ is deceptively simple: The deliberate
integration of gender analysis into investment analysis and
decision-making. By asking deeper questions about inclusive-
ness in the enterprises in which they invest, gender lens inves-
tors believe they will get better outcomes — both financial and
societal.
According to Bank of America executive Jackie Vander-
Brug — who pioneered the approach — two trends have con-
verged to accelerate broad acceptance of gender-lens invest-
ing. “First, investors — even mainstream institutional investors
— are taking sustainable and responsible investing (SRI) much
more seriously,” she says. “The 2015 publication of the Black-
Rock-Ceres guide to incorporating environmental, social and
rotmanmagazine.ca / 81
 Financial services have not traditionally been marketed well to women.
governance (ESG) considerations into corporate interactions
for institutional investors was a notable milestone, pairing the
expertise of the largest money management firm in the world
and the oldest shareholder engagement advocacy group.”
Secondly, a new type of investor has emerged in recent
years: The impact investor, who considers the social impact of
their investment alongside the calculation of risk and return.
“The convergence of these two trends is driving innovation in
investment strategy and capital markets, and as the shift accel-
erates over the next decade, the use of gender factors will grow
with it,” says VanderBrug.
A gender lens might seem like an obvious tool for an impact
investor, but many early social impact finance pioneers didn’t see
it that way. As far as they were concerned, their focus on things
like poverty and education already supported women.
“Back in 2008, I was working with a team at the Criterion
Institute to better understand the link between female philan-
thropists and impact investors” she explains. “At the time, we felt
that the philanthropic world and the world of impact investing
were very separate — but that bridging them could create great
value.”
The problem VanderBrug et al. wanted to solve was this:
How could they get female philanthropists to bring their exper-
tise and interests to the emerging impact investing space? She
and her colleagues started talking to these philanthropists about
the idea, and right away they asked a question that the team
couldn’t answer: ‘What will the impact of these investments be
on women and girls?’
“Our inability to provide a clear answer led us to focus on
mapping-out an entirely new sub-field in financial services,” she
says. When VanderBrug and her team started talking to early
impact investors and traditional investors, virtually all of them
said the same thing: ‘You can’t do this. You don’t have any data’;
or ‘If you do this, you will lose money — and even if you don’t lose
money, it won’t make a difference’. “Suffice to say, there was not
a lot of momentum behind our efforts”, she says.
82 / Rotman Management Spring 2019
The team recognized that, to define ‘gender-lens investing’
as a new field, they needed to get some academic rigour behind
them. “So, we started working with [Rotman School Professor]
Sarah Kaplan to get the ball rolling.” One of the first articles the
duo wrote was for the Stanford Social Innovation Review [“The
Rise of Gender Capitalism,” available online] — and it helped
to define this emerging field. However, even after that, things
didn’t improve.
“As soon as we said the words ‘gender lens’, investors be-
lieved that we were taking half of the population off the table,
and that this approach was therefore limiting.” She and her team
argued that a gender lens allows investors to see the realities and
the needs of women and men, and that this would make them
better investors. “Our job was to shift the view of a gender lens
away from being limiting to being something that helps you see
new opportunities.”
VanderBrug notes that there are many different types of
lenses that help to improve peoples’ vision, and likewise, there
are different ways to approach gender-lens investing. “In our
work, we focus on three approaches: improving access to capital;
promoting equity along the entire value chain; and creating prod-
ucts and services that drive gender equality.”
In her experience, financial services have not tradition-
ally worked very well for women — or been marketed well to
them. For one thing, in her research over the past decade, she
has found that women are disproportionately interested in the
impact of their investments. “One-third of female investors say
they want to make investments that have both financial returns
and positive social environmental impact.” And yet surprisingly,
many of these women have yet to act on this interest. “This as-
pirational gap presents significant opportunities,” notes Vander-
Brug. “Women tell us that they want to focus on issues that they
feel strongly about. It might be supporting female entrepreneurs,
education for women globally, or something to do with the en-
vironment. Some proactively avoid or embrace certain types of
companies — for instance, those who don’t have any women on
their board — or invest in companies who excel in certain areas.”
Men also feel strongly about a wide range of issues, says
VanderBrug, but they are more likely to say, ‘There are plenty of
other opportunities with lower risk.’ To be clear, women are not
not interested in the performance of their investments, she says;
they just don’t want that to be separated from their impact on
the world. “The fact is, women’s areas of interest present huge
opportunities, given what is happening more broadly with the
transition to a more sustainable economy.”
According to VanderBrug, behavioural insights will play a
key role in optimizing gender-lens investing going forward. “Part
of moving gender-lens investing forward involves asking, ‘Which
‘behavioural levers’ can be used to enable women to feel more
confident investing their money?’
Gender lens investors are not part of some ‘secret society’,
notes VanderBrug. “They are everyone from pension fund man-
agers to economic development banking professionals to foun-
dation executives. They also include lenders, angels and friends
with a chequing account.”
Influencing Global Supply Chains
Kathleen McLaughlin is another leader who is innovating to
improve gender equality. In her position as Chief Sustainabil-
ity Officer at Walmart, she works with business teams and the
Walmart Foundation to enhance the sustainability of global sup-
ply chains in food, apparel and general merchandise; to help cre-
ate economic opportunity for individuals and foster economic
growth; and to strengthen the resilience and cohesion of local
communities.
“Looking ahead, our biggest opportunity is to draw on our
unique capabilities — in collaboration with suppliers and other
partners — to create systemic change across the supply chain,
including how a wide variety of products are grown and made,
how they are transported and sold, and how we touch the lives
of people along the way,” she says. The goal is to ensure that
Walmart brings safe, affordable products to people in a way that
is sustainable for the planet and the people all along the product
supply chain.
McLaughlin and her team go about this in two principle
ways. First, by working with the Sustainability Index, a science-
based, third-party tool that was developed in collaboration
with universities, civil society and suppliers. “The Index pro-
vides visibility into the social and environmental practices and
outcomes for a large number of supply chains.” And second,
through special projects. “In both cases, we collaborate with sup-
pliers, NGOs, customers, governments and multilaterals to drive
change.” Walmart uses the Index with its suppliers in over 125
categories ranging from socks to salmon. Last year, in these cat-
egories, over 70 per cent of its product assortment came from
suppliers who participate in the Index.
In addition to working to help improve the sustainability
of individual products, empowering women is another priority
for Walmart — not just because it’s the right thing to do, but
“because it will make our business and our world stronger. The
majority of our 245 million customers are women, and they
control an estimated $20 trillion of annual consumer spending
globally. In our experience, when you lift women up, you lift up
families and entire communities and economies.”
About eight years ago, McLaughlin’s predecessor Sylvia
Matthews Burwell launched the Global Women’s Economic
Empowerment Initiative (WEE), which McLaughlin happily in-
herited. “The core idea is that as the world’s largest retailer, a
Walmart purchase order is an unbelievable source of develop-
ment capital.”
One aspect of WEE involves sourcing products from wom-
en-owned businesses. The Women’s Business Enterprise
National Council (WBENC) defines a woman-owned business
as ‘a business that is at least 51 per cent owned and operated
by a woman’. The Walmart team set out to source an incremen-
tal $20 billion worth of goods from businesses owned by women
in the U.S., and to double its sourcing from women-owned busi-
nesses in other markets.
rotmanmagazine.ca / 83
 Walmart has a number of mechanisms designed to attract
women to become our suppliers. “We do ‘open calls’, where
we ask people to come and pitch their product. Working with
WBENC and WeConnect International, organizations that cer-
tify women’s businesses, we have found many woman-owned
companies to join forces with. One woman who started out sell-
ing tortillas on a street corner in Atlanta now sells her products
at Walmart; and there is a woman-owned business that makes
popsicles who is now one of our largest suppliers.”
The second aspect of WEE involves providing training
for women to help elevate their livelihoods. A few years back,
Walmart committed to training one million women — 800,000
in emerging markets and 200,000 lower-income women in the
U.S. — to help them secure better jobs. In emerging markets, the
program included 131,000 women in factories in China, India,
Bangladesh, Central America and South America.
“We worked with different partners in different countries,
including BSR (Business for Social Responsibility) and World
Vision. In the agriculture realm, we did a different kind of train-
ing, working with women around productivity and yield sus-
tainability. For this, our partners included Mercy Corp, Tech-
noserve’s One Acre Fund and the Gates Foundation.”
The retail-focused training was split between the U.S. and
emerging markets, and its goal was simple: To help women get
Gender Lens Investing: Three Goals
FOCUS #1: Improve access to capital. Consistently, women
receive six to seven per cent of available venture capital, and
the story is even worse for women of colour. The problem is not
restricted to the U.S. The data indicates a $320 billion gap in
terms of funding for small and medium-sized enterprises (SMEs)
who have a woman on their founding team. We refer to this as
‘capital punishment’, and as a result of it, the World Bank and
other developmental finance institutions have started to proac-
tively move capital in this direction.
Not surprisingly, as a result of the reality faced by women
entrepreneurs, the goals in this arena are very conservative: We
are hopeful that by 2025, one-quarter of all venture deals in the
U.S. will have at least one woman on the founding team. Achiev-
84 / Rotman Management Spring 2019
their first job in organized retail. “In Kenya, we worked with
Samasource and women in villages, literally teaching them to
code product descriptions for the Internet. These employees can
work from home and participate in global e-commerce retail.
For others, the program might have helped them get a job at their
local bodega.”
Along the way, McLaughlin and her team have learned a few
key lessons. “Obviously, the first challenge was getting our own
leadership to agree to our sourcing commitments. To do that, you
need to gather the results around innovation, perception of the
customer and higher growth rates. We ended up having higher
margins in many of these categories, primarily because the wom-
en-owned businesses tended to produce more innovative and
interesting products.”
Second, as indicated, they did lots of partnering with
different groups to bring the initiative to life. “In China, it took
us several years just to figure out which businesses were wom-
en-owned because there is no simple directory where you can
look at ownership structure and leadership and so on. We had
to build that fact-base from the ground-up by meeting people
and companies.”
Third, every market is different. “Ironically, Canada, was
one of the hardest markets to get going because its legal frame-
work is such that you don’t really ask, ‘Is this a woman-led busi-
ing this target will require a lot of behavioural interventions in
terms of networks, changing the process for reviewing deals
and much more.
FOCUS #2: Promote equity along the entire value chain.
Some investors use a lens where they look across a company’s
entire value chain to gauge whether it is valuing women and
men equally. To do this, they might look at the composition of
the board and senior management, at promotion processes and
even at the supply chain.  The news on this front is encouraging:
McKinsey & Company has found that companies with more
women in leadership are 21 per cent more likely to deliver finan-
cial returns above industry means. And quantitative analysts
ness or not?’ Canada is really trying to be ‘gender blind’, whereas
in the U.S., that is readily available information.”
Fourth, you need to put in place lots of new infrastructure
just to manage such a program and the behavioural changes re-
quired among your own people to get them to look at yet another
score card and set of indicators. “We put this into people’s perfor-
mance reviews, because you’ve got to take steps to drive behav-
iour around these issues.”
In closing
For Bank of America, Walmart and a growing number of others,
efforts to address gender inequality are just part of doing busi-
ness in the 21st century. “Our customers, associates, suppliers,
NGO partners and other stakeholders now trust — and expect —
us to do the right thing,” says McLaughlin. “We are living proof
that there is no conflict between being responsible and being
successful.”
The fact is, every organization needs to start treating gender
equality as the business priority that it is. Until they do, meaning-
ful progress will remain out of reach. McKinsey & Company’s
most recent “Women in the Workplace” report (available online)
makes two things clear: one, that women remain sorely under-
represented at the top of organizations — particularly women
of colour; and two, that companies need to change the way they
at the Bank of America recently wrote a piece called, “Women,
the X Factor,” showing that companies with women on boards,
women in leadership roles and progressive inclusion policies
have lower price and earnings volatility. Year-over-year numbers
from two years ago vs. last year indicate that the deliberate
integration of gender-based data makes a difference in terms of
long-term performance. All of these findings are very important
to investors, and Wall Street is waking up—if slowly.
FOCUS #3: Create products and services that drive
gender equality. Some investors focus on an enterprise’s
products and services, and how they might improve gender
equality in their markets. Does the company have a product
hire and promote entry and manager-level employees in order to
make real progress.
For anyone who doubts it, the McKinsey report confirms
that closing the corporate gender gap can no longer be a side is-
sue: It is an economic necessity. Programs and policies designed
to reduce bias and ensure fairness don’t just benefit women.
They benefit everyone. As indicated in the report, “in the best
workplaces, the most talented people can rise, no matter who
they are. That should be the expectation for every workplace,
everywhere.”
Jackie VanderBrug is a Managing Director
and Investment Strategist at U.S. Trust, Bank
of America Private Wealth Management
within the Global Wealth & Investment
Management division of Bank of America.
Kathleen McLaughlin is Senior Vice President and Chief Sustainability
Officer at Walmart and President of the Walmart Foundation. This article
is based on their presentations at the Behavioural Approaches to Diversity
Conference, held at the Rotman School of Management last fall.
that is going to solve a challenge for women, like women’s
safety? Has it taken women into consideration in its offerings?
Recent research shows that software design, for example, has
predominantly addressed male patterns of problem-solving.
Thinking about how to de-bias software design could open up
a whole new set of product offerings. I sometimes ask people,
‘When do you think we started to mandate the use of female
crash test dummies in the driver’s seat in the U.S.?’ The answer
shocks them: 2011. In general, the design process for new prod-
ucts and services contains significant gender gaps—and at the
same time, huge opportunities.
- Jackie VanderBrug
rotmanmagazine.ca / 85
 Atif Zia, mba candidate ‘20
www.rotman.utoronto.ca/GEMBA-HLS President, Novocol Healthcare
Idea Exchange
88 NIGEL TRAVIS why the best organizations run on pushback

92 BRIAN GOLDEN on the psychology of influence

96 LAURA METHOT on dealing with CAVE People

99 MELAINA VINSKI on behavioural insights at work

102 C.J. PASCOE on the gender of Trumpism

105 ROD LOHIN on financing sustainability

108 J. SCHWARTZ + D. ARIELY on tackling our self control failures

111 MAAYAN ZIV on the quest for an accessible world

114 ANEETA RATTAN on confronting bias at work

117 HEATH FOGG DAVIS on trans inclusivity in business

120 RUMEET BILLAN on the perils of Tall Poppy Syndrome

123 ANITA M. MCGAHAN on tackling inequality

 QUESTIONS FOR Nigel Travis, Chairman, Dunkin’ Brands

Q
&A The former CEO of
Dunkin’ Brands explains
the importance of
creating a ‘challenge
How do you define a ‘challenge culture’—and why is it so
important to have one?
In a challenge culture, people are encouraged — even ex-
pected — to question the status quo and push back on long-
held assumptions. Employees are not afraid to speak up or to
question their bosses and peers, and they feel confident that
they won’t face repercussions if they do. In today’s world,
such a culture is essential to every organization’s survival.
Only through questioning, pushback and debate can you
remain relevant.
culture’ in every organization.
Many people view ‘challenge’ as a negative word. What
Interview by Karen Christensen
do you say to them?
That is true, and it’s the reason I always put the term togeth-
er with ‘culture’. In a challenge culture, questioning some-
one is intended to be a positive thing and discourse is always
civil. Challenge is very different from confrontation: It does
not involve attack, intimidation or bullying. Questioning,

88 / Rotman Management Spring 2019

 Challenge should always be civil: It should never
involve attack, intimidation or bullying.
discourse and pushback are intended to generate learning,
stimulate ideas, foster innovation and build healthy rela-
tionships.
There was an article in the Wall Street Journal recently
about the book about Netflix [Powerful: Building a Culture of
Freedom and Responsibility by Patty McCord]. As indicated
in the book, Netflix takes the concept of a challenge culture
to an extreme. I actually think you need to be more balanced
about it: If you are challenging people more than 10 per cent
of the time, it becomes counterproductive.
As leaders, we need to set up opportunities and encour-
age our people to challenge things. In my own organizations,
I set the ball in motion by organizing ‘Coffee Chats’ for em-
ployees, including people from all levels. I’ve found that if
you give people examples of topics they can bring up in these
sessions, they realize that nothing is taboo and that it is a
safe environment for frank discussion.
Describe the other end of the spectrum—the ‘you’re
fired!’ culture that has prevailed at some companies.
Trump and The Apprentice epitomize the ‘you’re fired’ cul-
ture as a competitive workplace that rewards results and
where leaders are bold and decisive. But Trump hardly in-
vented the concept. The notion that one’s connection to an
organization can be severed at any time is very bad for the
stability of any organization. Wells Fargo was an extreme
example of this type of culture. Over a period of years, it
engaged in a variety of dubious practices designed to bring
in more customers and sell more products. The pressure on
employees to meet sales targets — especially at lower levels
of the organization — was so great that they began to engage
in questionable practices such as signing up customers for
services without their approval.
Employees were reluctant to speak up for fear of losing
their jobs, and rightly so: When these practices came to light,
the company failed to admit its mistakes and fired 5,300 low-
level workers. The culture of fear ran so deep that just a year
later, Wells Fargo was found to be up to the same old tricks.
Shortly after being interrogated by the U.S. Senate Banking
Committee, then-CEO John Stumpf retired and vanished
from the public eye, and the company was seriously dam-
aged by the experience.
The lesson is this: If you don’t allow enough challenge
within your organization, someone else may very well end
up doing the questioning for you. You may not have to face
a congressional committee, but it is likely that you will find
yourself dealing with other outsiders — such as activist in-
vestors. Furthermore, with unemployment at historically
low rates, companies are in a war for talent, and culture is
more important than ever. Making your culture positive and
safe has become a critical element for success.
When you joined Dunkin’ Brands in 2009, it did not yet
have a robust challenge culture. What steps did you take
to change that?
In my first senior management meeting, I realized that I was
doing most of the talking. Everyone appeared to be stuck in
their silos: The general counsel was only thinking about le-
gal issues, and the marketing VP was only thinking about
marketing. That is why everyone who has ever joined my
management team has heard me say, ‘I encourage you all
to speak about and challenge our entire business — not just
parts of it’. I make it clear that I want people to be outspo-
ken, to take risks and say things that they may feel uncom-
fortable saying.
To encourage this, I might say to my finance execu-
tive, ‘Hey, what do you think about this new marketing
idea? Do you think it’s going to resonate?’ I have reinforced
this mindset over time — and in truth, I did have to change
some people on the senior team, because they just weren’t
comfortable with it. But before long, one of my senior vice
presidents openly challenged me in a meeting. Once you get
rotmanmagazine.ca / 89
 People get defensive when they perceive something
as criticism, and that needs to be trained away.
A Checklist for Creating a Challenge Culture
1. Do people fear they will be fired if they challenge
the status quo or question ideas or plans too forcefully
or too often?
2. Have you defined and distributed the ground rules
for civil dialogue in your organization?
3. What qualitative skills are most important to your culture
and business? How do you foster and encourage them?
4. Do you value listening? Do you practice listening skills?
5. Have you established channels and venues that provide
regular opportunities for people to pose questions and
make challenges to others at every level, including their
bosses?
6. Are your people able to challenge their peers and
colleagues? How?
7. Does the core management team consist of people
who will challenge and question each other? Do they
have a diversity of viewpoints and backgrounds?
8. What role does HR play in your organization?
Does it help create the challenge culture?
9. Do you personally live and model the characteristics
of a challenge culture?
10. Have you anticipated your organization’s potential
demise?
a few people doing this, it starts to catch on. Challenge cul-
tures are not created overnight or by executive decree: They
must be modeled, shaped and refined over time.
What is the role of ‘outsider input’ in all of this?
Most companies are far too insular and fail to sufficiently
take in the views of outsiders. In retail, we are selling to con-
sumers, so the first and most basic thing is to continuously
90 / Rotman Management Spring 2019
do consumer research. That is absolutely critical. Second,
it’s important to get perspectives on what other organiza-
tions are doing, and you can do that simply by reading and
talking to people. Third, one of the key benefits of being a
public company is that you’ve got analysts and other profes-
sionals investing their time in studying your company. In
my experience, these people can provide valuable input.
In our case, they often have an interesting opinion about
something our competitors are doing. I’m a great believer in
taking an outside-in approach.
How can we develop people for a challenge culture?
I’m going to sound like an old-time HR person — which I
am — but I believe that most companies don’t take training
seriously enough and don’t execute it very well. A big part
of what is missing is the interpersonal training that people
need to encourage them to open up their minds, accept chal-
lenges and provide constructive feedback. Most people get
defensive when they perceive something as criticism, and
that needs to be trained away.
We also need to train people to give feedback, which is
an absolutely critical part of an employee’s development.
One way to improve our ability to engage in civil dialogue
is to understand the context within which each person is
working. What do they know about a certain topic? Are they
aware of what they don’t know?
One of the great things about working at Dunkin is, we
get a lot of feedback from the world, every single day. People
come into our stores and say, ‘I was here last week and this
happened.’ You’ve got to be positive about receiving that
sort of feedback, and this is a skill that should be proactively
developed in people. A franchise organization also provides
leadership with an immense amount of feedback because
they are very vested, financially.
You spent ten years with Blockbuster during its heydey
(1993-2004). In your view, could a challenge culture have
saved it?
Sadly, I think so. You could argue that Blockbuster went
down because of a failure to adopt new technology and a
new business model, and that would be true; but the more
fundamental issue, in my opinion, was the lack of a challenge
 New from Rotman UTP

“THE essential read for

design and business
now.”
culture. We didn’t have the values or habits that encouraged
vigorous questioning of the status quo and challenges to our –Robert T. Schwartz, FIDSA, DMI, Vice President, Global
Design and User Experience, GE Healthcare
assumptions about the future. Part of the reason for that was
management turmoil.
Reflecting on my time there, I do not feel that senior
management — me included — worked well enough togeth-
er to develop a coherent and competitive strategy to analyze
trends, set long-range objectives and monitor performance.
As a result, we didn’t articulate a vision for the industry and
our place in it.
I will say that it is extremely difficult to imagine one’s
demise when you are enjoying the success that we were
having in 2004. It was textbook, really. When you look at
companies that get into trouble, you usually find that the
problems were well known internally but — as was the case
at Wells Fargo — the right questions were not asked or an-
swered; programs that should have been killed were allowed
to continue; and management was too focused on profits.
Ironically, at one point, Blockbuster could actually have
bought Netflix for $50 million. It is now worth — depend-
ing on the day — $130 to $160 billion. As a result of my own
experiences, I strongly encourage every leader to do two
things: Develop a challenge culture; and regularly imagine
your company’s demise.

@utpress
Nigel Travis is the Chairman of Dunkin’ Brands and was CEO from
2009 through 2018. He was previously CEO of Papa John’s and
President and Chief Operating Officer of Blockbuster. He is the
utorontopress.com
author of The Challenge Culture: Why the Most Successful Organizations
Run on Pushback (PublicAffairs, 2018).

rotmanmagazine.ca / 91
 FACULTY FOCUS Brian Golden, Sandra Rotman Chair in Health Sector Strategy, Rotman School of Management
The Psychology
of Influence
Interview by Karen Christensen
Change is one of the few constants for every organization
today. What are some of the key challenges it presents?
One of the challenges — especially for
organizations that have been successful
— is just that: they have been successful.
They’ve learned certain routines and they
continue to go back to them. As a result,
they engage only in incremental change.
That works well when the world itself is changing incre-
mentally, but in many industries today, that is not the case.
As a result, we’ve got to un-learn what has worked for us in
the past, and that requires developing new mental models
and an understanding of how the world works — how all the
pieces fit together.
The core of the challenge is getting away from a mind-
set of inertia and recognizing that, while tomorrow might
look similar to today, 10 days from now, 100 days from now
and 1,000 days from now will certainly not look the same
in most sectors. We have to be prepared to work differently,
think differently and develop new models.
For many years you have used the film Twelve Angry Men
as a case study in your classes. What are some of its key
lessons?
This is a wonderful film from 1957 that was written by
a starving playwright who had sat on a jury for a few days
and this cemented his incredible insights into how people
influence each other. I use the film in my classrooms because
92 / Rotman Management Spring 2019
it teaches us a lot about how groups interact with each other
— and to face the fact that many groups are dysfunctional.
I’ve also used it with boards, including one that I chaired.
The film provides wonderful examples of ‘small p’ poli-
tics in groups — from coalition building to framing ideas to
showing respect for others, even when you disagree with
them. The main character, played by Henry Fonda, is an
architect, which is a beautiful metaphor because he becomes
the architect of that team. He builds it from a group of 12
individuals who seemingly have very little in common into
a cohesive group that comes together to do the right thing.
Talk a bit about the Fonda character’s approach to deal-
ing with opposition from the other jurors.
Throughout the film, Fonda is extremely thoughtful and
calm. He is not a charismatic leader in any way. Instead,
he takes his time to size up the different decision makers
in the group, one by one. Because this is a jury, he knows
nothing about them. In order to understand them, he has
to sit back and observe what they care about, what they re-
spond to, when they engage, and how they respond to the
framing of issues.
For instance, one character is incredibly emotional.
He’s dealing with personal issues unrelated to the trial, and
we see Fonda helping him understand his past. He also notes
that one of the jurors cares a lot about justice, so he frames
the challenge before them as one of justice and equity to
appeal to that individual. Another character happens to be
 Four magic words that I love are, ‘Is it possible that…?’

Cialdini’s 6 Principles of Persuasion

1. Reciprocity We feel obligated to return favours to

people who have done favours for us.
a banker, and he understands that for him, it’s all about
numbers and probabilities; so, he frames his argument for 2. Scarcity We value scarce information and
that character in terms of ‘expected value’. He does this for commodities more than things
every single juror, and it’s amazing to watch. that are in abundance.

Research indicates that across cultures, genders and
levels of intelligence, about 30 per cent of us are highly
influenced by those around us— —to the point where we
will agree with things that we know to be wrong. What are
the implications in an organization?
This is one scenario where leadership is especially impor-
tant. One of my collaborators, Harvard Business School
Professor Amy Edmondson has done a lot of work on ‘psy-
chological safety’ [Editor’s Note: read our interview with
Prof. Edmondson on page 74.] One of the key elements of
psychological safety is providing an environment where
the less powerful and more junior members of a team feel
safe and protected to stand up and say, ‘The emperor has no
clothes on’ — that the data are arguing for something very
different from what the group is saying. Particularly when
there is a ‘numerical minority’ in a group situation — i.e.,
when there is one person or very few with a different posi-
tion from the majority — creating a structure where every-
one has a voice is critical.
In one case, I was working with a CEO who was a bit of
a bully. His team was afraid to tell him he was wrong, and
they were very rational in that fear: He had punished peo-
ple who had taken contrary positions to him. In one case,
he misspoke during a key corporate presentation, telling
the audience, ‘This is the time to introduce our products in
the East’ — when he meant to say, ‘This is not the time to
introduce our products in the East’. For the first 14 minutes
of his presentation, everything he said had argued against
this. He ended his presentation without recognizing his
error. When he asked his people, ‘What did you think?’, they
all said, ‘Bob, (I’m making up his name), I agree with you.
This is the year to bring our products to the East’.
Later, when he realized his error, it was a truly eye-
opening experience for him. He recognized that he had
created a culture where the less influential and more junior
3. Authority We believe what trustworthy and
credible experts say.
4. Commitment We are most likely to do what
is consistent with what we have
done in the past.
5. Consensus We trust the power of the crowd
and like to be associated with
popular things.
6. Likeability We say Yes to people that we like.
Similarity, compliments and coopera-
tive efforts help.
were afraid to say ‘This is wrong’. I spent a good deal of time
coaching him after that experience, and I’m happy to say
that he changed, because he was so disturbed by the culture
he had created.
Tell us more about the dynamics between the minority
and the majority in a group interaction.
If you are in the minority, my advice is to take it slowly. Get
a foot in the door. Ask your questions and make your argu-
ments in a very particular way. Four magic words that I love
are, ‘Is it possible that…?’ This is not an assertion, it’s an in-
quiry, and I have found that it opens up the group to consid-
ering alternatives.
You also have to recognize that coalitions are critical
and you’ve got to build support. I tell people to always look
for the easy wins first, because numbers matter. Returning
to the jury example, it’s very difficult for any person to join

rotmanmagazine.ca / 93
 A Framework for Transforming Organizations
Stage One Stage Two
• Goals
• New Behaviours • Communicate Need for Change
• Organizational Architecture • Show Benefits to Employees
• Systems • Build Coalitions
DETERMINE
DESIRED ASSESS
END READINESS
STATE FOR CHANGE
• Situational Analysis (Past and Present)
• Top Management Support
• Key Player/Stakeholder Analysis
• Change Leader Selection
FIGURE ONE
me if I’m one person and they’re part of a group of 11; but
it’s a lot easier for a third person to join two of us, and for a
fourth person to join three of us.
Social psychologist Robert Cialdini has developed six
principles of persuasion (see previous page). In your
experience, which is the most important principle and
which is the most difficult to embrace?
It’s hard to say which is most important, but in my experi-
ence, the principle of liking is absolutely critical. The idea
behind it is that the others in the group have to recognize
that you have something in common with them. This can
be achieved in a couple of different ways. You can show ap-
preciation for them and use praise, but beware: There are
some interesting gender differences around using praise.
Research suggests that praise has to be considered sincere
in order for it to be effective — but that this is more true for
women. It turns out that men, on averge, are much more
needy of praise. Even when we know it’s not sincere or genu-
ine, it still has a positive effect. The key is to find a connec-
tion to someone so that you’re not just a business colleague,
but you have something in common.
Another important principle is reciprocity. Personally,
I always try to make ‘deposits’ in the ‘favour bank’ in advance
of ever having to call on them. Say a student tells me she
94 / Rotman Management Spring 2019
Stage Three Stage Four
• Monitor and Reevaluate
• Recognize/Rewind
• Support
• Showcase Success
• Fine-tune Systems
BROADEN REINFORCE
SUPPORT AND
SUSTAIN
ORGANIZATIONAL CHANGE
REDESIGN
• Goals and Tasks
• Structure
• People/HRM
• Rewards
• Information and Decision Support © Brian Golden
is looking for a job, and I know a former graduate who is
looking to hire someone with her skills. Without her ask-
ing, I will go ahead and bring them together. I’ve just done a
favour for both of them that was easy for me to do and valu-
able for both of them, and it’s going to make it a lot easier for
me to call on either one of them for a favour someday. I don’t
do the deed with the intention of calling in that favour —
because I don’t know if I’ll ever need to.
One of the challenges with using any of Cialdini’s prin-
ciples of persuasion is that, whether you’re using praise
or making deposits in the favour bank, you can be viewed
as a bit Machiavellian. We have this view that acting in
a political way is a bad thing; but the reality is, if you’re
going to be an effective leader, you have to use your influ-
ence. I would characterize that as the political reality of
organizations.
The first course I ever taught, 30 years ago, was called
“Power and Politics”. At the time, I was interviewed by Busi-
nessWeek, because it was an unusual course in a business
school. The interviewer said to me, “Teaching ‘Power and
Politics’ to MBA students seems a lot like sharpening the
teeth of sharks. How do you feel about that?” My response
was, “Politics is a reality in every organization. If you aren’t
effective at it, you can’t be an effective leader.” One of the
challenges of using these principles is making sure that you
 Having influence demands that you put yourself
in other peoples’ shoes.
never cross your own ethical line. You must be comfort-
able in your purpose and ensure you are not hurting others
through your persuasive tactics.
As we strive to observe people more closely, what should
we be looking out for?
Many readers of this magazine are likely very action-orient-
ed — and that’s a bit of a problem if you’re trying to read a
group. One of the most important skills you can work on is
listening — just shutting up and listening in the early stag-
es of a group interaction, so you know who you’re dealing
with, what is important to them, and how to frame the issue
at hand. Influence is all about the interpersonal. It is about
putting yourself in other peoples’ shoes.
If you watch the film, you see that the jury was there
that day to convict someone — not to determine the truth.
Fonda reframes their task as ‘understanding all the informa-
tion we have, making sense of it, and then determining the
truth’ — as opposed to selectively picking information that
confirms peoples’ prior beliefs. One thing we know about
mental models is that we give far more attention to informa-
tion that confirms our beliefs, and we often discount other
information. We need to be aware of this bias and innocu-
late ourselves so we can open our minds to information that
contradicts our beliefs.
Stage Three of your model for change (see Figure One)
involves organizational redesign. Could you talk a bit
about the role of the leader as architect and how to bring
that to life?
Too often, when organizations or groups are not performing
at the level we expect, the default is to think there is some-
thing wrong with the people — that they’re not motivated,
or they’re not sufficiently skilled. But that is often an easy,
but wrong attribution. In my experience — and this is sup-
ported by decades of research — people respond in large part
to their social setting. If you start out with that assumption,
the question becomes, ‘What levers are available to me as
a leader to create an environment that is conducive to high
performance?’
For example, there is a classic article by Steve Kerr
called “The Folly of Rewarding A While Hoping for B.” The
idea is that our incentive systems often encourage behaviour
contrary to what we would like. Then we get upset with peo-
ple — when we really ought to be looking at ourselves and
asking, ‘Have we designed a reward system that encourages
people to do what we want them to do?’ A classic example
is rewarding for individual performance and wondering
why some people act like mercenaries and are unwilling to
help others.
As another example of poor design, we may inadver-
tently create an environment where people lack sufficient
information about why they are doing what they are do-
ing and how it impacts others. If people don’t understand
the purpose of their work, they are very likely to underper-
form and act in ways that frustrate their colleagues. But
they shouldn’t be blamed for that, because leaders haven’t
properly designed the environment. In my view, the leader’s
job is to very clearly articulate the strategy and the goals of
the organization; and then, to design an environment that
makes it easy for people to know what the right thing to do
is, to have the skills and tools to do it, and to benefit in some
way — whether it be intrinsically or extrinsically.
I always tell my students, when someone isn’t perform-
ing in the way you want them to, it usually comes down to
three things: One, they don’t know what you want from
them; two, there is nothing in it for them; or three, they’re
unable to do it, either because of a skill deficit or organiza-
tional impediments. If you address these three things, you
will create an environment where you get what you need
from people.
Brian Golden is the Sandra Rotman Chair in Health Sector Strategy at
the University of Toronto and the University Health Network; Academic
Director of the Sandra Rotman Centre for Health Sector Strategy;
Professor of Strategic Management; Co-Academic Director of the Global
Executive MBA for Healthcare and the Life Sciences program; and Vice
Dean of MBA Programs at the Rotman School of Management.
Rotman faculty research is ranked #16 worldwide by the Financial
Times.
rotmanmagazine.ca / 95
 QUESTIONS FOR Laura Methot, Psychologist

Q
&A
What is a CAVE person?
The acronym stands for Citizens Against Virtually Every-
thing. It’s a term I first heard in the 1990s while consulting
with a group of supervisors at a manufacturing plant. Meta-
phorically, it refers to people who resist any kind of change.
These people bypass the ‘wait and see how it goes’ step and
position themselves right away as anti-change advocates.
As employees, they can have a toxic effect, poisoning the at-
titudes of co-workers and building a wall of resistance. For
a change program to succeed, leaders have to address them
and neutralize their negativity.

What lies at the root of all the negativity towards change?

An expert on diversity and
inclusion explains how to
deal with ‘CAVE people’.
Interview by Karen Christensen
For lots of people, change is something to be feared. The
good news is, I have found that if it is well managed, most
people will get on board. Well-managed change entails a
few things. First, people need to know what specifically will
happen and why. Second, in terms of competencies, what
will they and their colleagues be expected to do differently?
People also need to know what resources they will have ac-
cess to in order to help them get though the clunky early days.
And finally, how will formal and informal ‘consequence sys-
tems’ line up to keep them engaged and motivated?
Even when these things are in place, you are still going
to get a small subset of people who continue to resist — often
quite vocally. Mostly, their negative mindsets and behav-
iours come from a place of fear and mistrust: Fear of losing

96 / Rotman Management Spring 2019

 CAVE people may not even realize that they are being
negative and affecting their co-workers.
status, or even their job; and fear of losing face and looking
incompetent. That typically shows up in people who have a
history of performance problems.
Mistrust is the other common root of negativity. In
times of change, you will often hear grumbling such as,
‘Management is always looking for ways to squeeze more
out of us’. Sometimes, the CAVE person is struggling with
issues at home or has other problems that affect his/her be-
haviour. These people may not even realize that they are be-
ing so negative and affecting their co-workers. As a result,
sometimes, just speaking frankly with the person will help.
Research indicates that employees who exhibit these
negative mindsets have four to seven times as much im-
pact as positive employees. Is this a losing battle?
Not at all. Many CAVE people act this way because of a
history of reinforcement. Over time, they learn that when
they speak out in resistance, a couple of things happen.
First, they get left alone. They aren’t asked to be on change
teams, which typically means extra work. Second, they learn
that they draw followers: Other employees pay attention to
them, and that lends credence to their negative talk. Once
we understand what is driving this behaviour, we can take
measures to change it.
You have found that sometimes, CAVE people are quiet
and do their damage behind the scenes. How can this be-
haviour be handled?
I suggest proactively talking to people, especially those on
the front lines and the supervisors and employees who will
be most affected by the pending change. Also, talk to HR
and bring groups of employees together for conversations
about change. Resisters will often make themselves known
in these forums — as will positive opinion leaders and early
adopters, who can help to counter the resistance.
A word of caution: Setting up dialogues needs to be
done with full transparency. It can’t come across as a ‘seek
and destroy’ mission to uncover troublemakers, or it will
wind up instilling fear and reinforcing mistrust in an al-
ready-nervous group of employees.
Have you ever seen a case where the CAVE person is a
widely respected high performer?
I’ve never run across a true CAVE person who is a high
performer — but I’m sure they exist. However, I have seen
plenty of high-performing individuals who are very nega-
tive about a specific impending change initiative. The best
way to approach them is with a frank and direct conversa-
tion. In my experience, their negativity usually comes from
damaged relationships, or the person has a difference of
opinion and feels like they haven’t been heard. In many
cases, their opinions are quite valid. The key is to learn why
the person is so against the change, and what you can glean
from that to approach the initiative in a more inclusive way
moving forward.
You have identified five behaviours that a leader can ex-
hibit to achieve more positive reactions to change. What
are they?
The most important thing is to be clear and unwavering
about expectations. People need to know that their negative
behaviour is not going to get them out of participating in the
change initiative. Second, listen to peoples’ concerns. Show
dissenters respect, and keep your own temper in check. By
listening, you may uncover the root of the problem and en-
able dissenters to push through to a more productive stance.
I would also say, always focus on the behaviour, not the
individual. Be very specific about the person’s words and
actions. For example, you could start by asking, ‘why is this
idea so bad?’ rather than, ‘why are you being so disruptive?’
Using such labels can feel like an accusation and sets the
stage for an argument.
If you are unable to come to a solution through dia-
logue, I suggest acting very quickly and moving the person to
rotmanmagazine.ca / 97
 There are far too many examples of leaders modelling intolerance.

a role where they can’t do any more damage — or terminat-
ing them. That sends a clear message about the expectations
of your culture, and early adopters and high performers will
appreciate that you’ve enabled them to get on with things.
Overall, I advise looking at change in the context of
your organizational culture. Cultures are revealed by how
people speak and act, reflecting organizational norms as
to what is acceptable. When leaders set clear expectations,
observe employees in action and give and receive feedback,
people have an easier time making change happen, and
norms gradually shift to reflect the new reality.
For readers who have a change initiative coming up or
want to propose one, what can they do to keep negativity
at bay?
I would advise them to start with the assumption that most
people come to work wanting to do the right thing. Change
is the hardest on people when they aren’t given the whys, the
whats and the hows. It’s very important to engage early and
often with the affected population — to help them anticipate
what is going to happen and what it will mean for them per-
sonally. Include people in designing solutions rather than
having a small group of experts create the change some-
where else, announcing it at the last minute, and then plunk-
ing it into the organization. That is a recipe for disaster.
revealed by the way people speak and act, which indicates
what is acceptable in that environment. Inclusion is about
shaping our culture to a point where all members can feel
accepted and be treated fairly and equitably, where they are
inspired to participate at all levels. An inclusive culture is the
key to unlocking the value that diversity brings to our work-
places and communities.
Having said that, I think ‘leaning in’ to make sure we’re
helping more people succeed is only half of the solution.
Leaders also need to figure out where and how the words
and actions of people within the organization are creating an
exclusionary environment. It’s not just about creating new
policies or training more people; those are necessary but
not sufficient. Changing from intolerance to tolerance and
from exclusion to inclusion involves changing how people
think and act from day to day, and it’s up to leaders to model
that change. There are far too many examples of leaders
modelling intolerance. We need to see more modelling of
positive change in our communities and workplaces.

When you look around at the world today, intolerance

seems to be growing. Is that because of CAVE people?
How should leaders approach intolerance within their or-
ganization?
That is very true, and it is the major reason why I recently
made a switch from broader business consulting into the
realm of inclusion and diversity. When I think about all the
negativity going on — particularly across different demo-
graphics in organizations, but also within our society in gen-
Laura Methot is a co-founder of I&D 101, which focuses on inclusivity
eral — to me, it’s not just an inclusion problem or a diversity and diversity in the workplace. She is an Adjunct Professor of Psychology
problem: it’s a culture problem. As I mentioned, culture is at Western Michigan University.

98 / Rotman Management Spring 2019

QUESTIONS FOR Melaina Vinski, Behavioural Economics Lead, PwC Canada
Q
&A
A cognitive scientist
describes the increasing
value of behavioural
insights for business.
Interview by Karen Christensen
Why is it such a great time to be a cognitive scientist right
now?
More than ever, people are talking about how the brain
works, and everyone wants to understand how to change be-
haviour. As a result, the inner workings of the brain are no
longer the purview of those trained in Neuroscience. Terms
that were once considered esoteric, like amygdala and
prefrontal cortex have become as commonplace as inflation
and sustainability. Put simply, cognitive science has become
accessible.
This is a beautiful moment in time where the bridge
between academia and the private sector is stronger than
ever — where we can translate a theoretical understanding
of the nuances of human behaviour into implementable
solutions that influence how our society operates. As a sci-
entist, it doesn’t get any better than that.
PwC has its own Behavioural Science practice. Why is
the firm investing in this, and what is your role?
As a firm, PwC fosters a culture of collaborative ideation
and celebrates collective diversity of thought. It is with this
mindset that the firm was able to see and nurture the natural
alignment between cognitive neuroscience, psychology and
social influence with the traditional consulting toolkit. We
are now systematically incorporating behavioural science
into the way we both understand and solve our clients’
most important problems.
I joined the firm with a mandate to build and lead the
practice, and almost three years later, I am happy to report
that the PwC Behavioural Insights team has trusted clients
across the banking, insurance, utilities, retail, government
rotmanmagazine.ca / 99

Our brains like to fill in the gaps with best-case scenarios.
and non-profit sectors. I work with an incredible team
— most notably James Morrison, Mohsin Bin Latheef,
Sarah Khan and Matthew Satterthwaite. They are all bril-
liant, curious and inspired, and they make my job easy.
In your experience, which industries/sectors can benefit
the most from behavioural insights?
In my opinion, the behavioural toolkit has its greatest ap-
plication in sectors where there is a significant gap between
peoples’ intentions and their actual behaviour. We call this
‘the intention/action gap’, and it often has a significant
impact on the financial, social, mental and physical well-
being of stakeholders — whether it be employees, customers
or citizens.
This means that our Behavioural team spends a con-
siderable amount of time helping stakeholders make the
right decisions for them — from saving more for the future
and making informed decisions with their investments, to
putting their paper in the recycling bin and riding public
transit, to avoiding chronic diseases and sticking to treat-
ment regimens. These problems naturally align to finan-
cial services and healthcare markets broadly, but they are
also ripe for organizations that operate within the public
and social-good markets.
The majority of the human brain is built around social
connections. What are the implications for behaviour?
One of my favourite theories of Neuropsychology is that the
human brain has evolved over time due to the pressures of
social contract and connectivity. I love this theory because
it acts as a consistent reminder that as a species, we are truly
better when we act together.
However, this natural knack for social connectivity
means that whether we mean it to or not, our behaviour
influences other people and others’ behaviour influences
100 / Rotman Management Spring 2019
DID YOU KNOW? Gallup research shows that companies
applying behavioural economics principles outperformed
their peers by 85 per cent in sales growth and more than
25 per cent in gross margin during a one-year period.
us — sometimes in significant ways. When we start think-
ing about this nuance within the context of leadership and
organizational behaviour, it becomes clear that sentiment
and attitude can spread like a contagion throughout the
workforce — and that is not always a good thing. The onus
is on leadership — and its reinforcement of and care for
team culture — to harness and balance collective energy
for the betterment of the whole.
Many of your clients are in financial services. As we all
know, the process of building financial well-being over
time is riddled with biases. Describe a few of the key cul-
prits.
It is important to note that biases are not distinct operations
within the brain. Rather, they tend to ebb and flow depend-
ing on the context. When it comes to any future-based de-
cision, we are generally at a disadvantage because of our
brain’s data-processing capabilities. ‘Present data’ — the
data that we are crunching in the here and now to make a
decision in the moment — are very concrete and available.
But when it comes to thinking about the future, the data we
use to build our mental model is ambiguous. Combined
with the fact that we tend to overestimate our capabilities
and underestimate the likelihood of negative events, our
brains like to fill in the gaps with best-case scenarios: ‘I
will spend less in the future’; ‘I will get a promotion’; or ‘I
will stick to my new years’ resolution of packing a lunch’.
This decision-making process makes it very easy to justify
spending money today.
Which key principles of choice architecture do financial
advisors need to understand?
Financial advisors have a really tough job: They have to
somehow distill the incredibly complex and esoteric world
of finance into simple explanations that enable their clients
 Three Biases That Influence the ‘Money Mindset’
BIAS 1: LOSS AVERSION. Some investors focus more
on losing money even if the rest of their portfolio is up.
This can result in your clients either taking on too much
risk to recover losses or seeking an overly conservative
investment strategy.
Solution: Risk tolerance questionnaires can help you
gather information about your client’s ability to deal with
losses. Focusing on your clients’ investment goals can
help manage risk without succumbing to the fear of loss.
BIAS 2: DECISION FRAMING. Framing impacts deci-
sions based on how information is presented. How a ques-
tion is presented, the language used and amount of infor-
mation can cause an investor to change their decision.
Solutions:
1. Choice architecture: The order and layout of the
options presented influences decision making. Simplify
the presentation of options to make it easy for clients
to understand — for example: Arrange options from
lowest to highest risk.
2. Discussion framing: Investment products can
be complex and difficult to understand. Framing
the conversation with easy and simple language
can help gain your client’s trust.
to understand risk and reward. In particular, advisers need
to be aware of a few things: That their customers can be par-
alyzed by too many options; anchored by the order of infor-
mation; disproportionately dissuaded by salient information
like fees; overly attached to investment strategies they have
held for a long time; asymmetrically influenced by news and
information that confirms their beliefs of the world; and can
be influenced by waves of influence or trends. It is so impor-
tant for financial advisors to keep the action/intention gap
at the forefront of their conversations with clients.
Looking ahead, what is next for behavioural insights in
organizations?
We really are just getting started. Even seeing the evolution
over the past three years has been incredible. I am inspired
daily by the growing number of clients who are thoughtful
about integrating behavioural insights into the way they de-
3. Overload: Providing too much information can have an
impact on the decision-making process, as your clients
might have a difficult time discerning the most important
elements. To the extent possible, limit the number of
decisions the client needs to make in a single session.
BIAS 3: ANCHORING. First impressions are hard to
shake — especially for investors who rely on the first piece
of information they receive to make future decisions.
Solution: Anchoring does not have to be a bad thing. Use
it to your advantage by helping clients set an anchor based
on their financial goals. For example, this can be useful
when trying to determine how much they will spend in
retirement. A good approach is to set an anchor based on
how much they are spending today and adjusting it based
on how their lifestyle may change in retirement.
TEST YOUR OWN COGNITIVE BIASES:
www.pwc.com/ca/en/services/consulting/behavioural-
economics/cognitive-biases-in-action.html
sign and deliver their products and services, the way they
interact with and motivate employees, and the way they
make decisions.
Looking ahead, I see a bright future where our public
and private organizations weave behavioural insights into
the core of their processes and procedures — in particular,
at the competitive edge, where shared value can be cre-
ated between citizens and government, and between cus-
tomers and companies.
Melaina Vinski is the Lead of the Applied Behavioural Insights practice
for PwC Canada. She also co-leads the Global Community of Practice
for the firm.
rotmanmagazine.ca / 101
 QUESTIONS FOR C.J. Pascoe, Sociologist and Gender Expert, University of Oregon
Q
&A A sociologist who studies
masculinity talks about
‘the gender of Trumpism’’.
Interview by Karen Christensen
102 / Rotman Management Spring 2019
Describe the ‘modes of masculinity’ that have been at the
heart of President Trump’s rise to power in the U.S.
In recent years we have been witnessing a sense of entitle-
ment among white American men — especially working-
class evangelical Christians. These men have been assert-
ing a brand of masculinity that they feel has been under
attack for the past 40 years, as we have seen increasing gains
socially, legally and in terms of policy for groups that were
historically disenfranchised. While many people under-
stand these gains as necessary improvements towards
equality, this group of men has experienced them as an at-
tack on their traditional role in society. I call it ‘the gender
of Trumpism’.
You have said that for these men, certain global econom-
ic shifts have been particularly painful. Please explain.
You only have to follow the news to know that the West is
declining in power, while we are seeing increasing power
from nations like China. This has been felt on the ground —
again, mostly by white working-class men — as a decline in
union power. Stable manufacturing jobs have disappeared
and real wages have declined, and they feel like the basis of
their identity is being eroded.
 There has been no widespread discussion about how
boys can be more empathetic and sensitive.
In the West, the expectation has always been for men
to be ‘powerful’ and ‘dominant’, and these shifts in the
global economic system have taken away some of the ways
in which they exhibit dominance and competence. As UC
Berkeley Sociologist Arlie Hochschild has said, this has
been an era of numerous challenges to masculinity, espe-
cially white working-class masculinity.
‘Masculinity as dominance’ doesn’t just entail dominance
over women—it also entails dominance over other men.
How does this manifest itself?
One of the most interesting things about watching the rise
of Trump and his beliefs has been the gender discourses
displayed both by the President and his supporters — as well
as by those who are opposed to Trump and what he stands
for. When Trump speaks, we very often see discourses of
dominance over other men. He emasculates people on a
regular basis, talking about Mexican immigrants as ‘failed
men’ who are violent sexual predators. He has even called
Canadian Prime Minister Justin Trudeau ‘weak’. Much to
his credit, Trudeau didn’t take the bait.
None of this is new for Trump. This is something he
was doing way back in the 1980s, when he said similar
things about the Central Park Five [the case where five
teenagers were wrongfully convicted of raping a woman].
We also see him constantly challenging the masculinity
of the men who oppose him — but we see the same thing
with the groups who oppose Trump. They also use emas-
culating language, making fun of Trump’s ‘tiny hands’ or
talking about how he is Putin’s ‘wife’, to put it nicely. We
are seeing these discourses emerge on both sides, in a way
that indicates how powerful insults around masculinity
are in our culture.
You believe that we need to redefine gender norms that
are damaging to both young boys and girls. Please de-
scribe these norms.
Since the mid 1970s, we have seen an increasing discourse
around the evolving notion of ‘what it means to be a girl’.
While we haven’t yet reached equality for women, we are at
least sending messages to girls about how strong, powerful
and smart they are.
The problem is, we haven’t seen a similar shift for
boys. There has been no widespread discussion about
how boys can be more empathetic and sensitive, and how
to value things like cooperation. Instead, we continue to
give boys the message that ‘being a real man’ means be-
ing dominant over others; and if they slip up at any time,
they are subject to emasculating insults or homophobic
epithets.
This mindset sends really scary messages to young
men, and they take a toll not just on them, but also on
young women. While we are telling young women, ‘You
can be anything you want to be’, at the same time, they
continue to be used as resources by young men to shore
up their own masculinity. When young men enact what I
call ‘compulsive heterosexuality’, they are not expressing
care or love for young women; they are using their bod-
ies as props to build up their own masculinity and showing
how much more powerful they are.
What’s the best way to deal with ‘compulsive heterosexu-
ality’?
One thing we need to do with young people of all genders
is to talk about desire and love and affection, and equip
them with language about their emotions. If you talk to
young men about what it means to be in a relationship, or
rotmanmagazine.ca / 103
 President Obama personified a new way to be a man: calm,
self-assured, thoughtful, intellectual and gentle.

what it means to be heterosexual, you find that they don’t dominance — putting people down and being very antago-
necessarily have a language for these things. And when they nistic. Basically, we have these two visions of masculinity
do enact romantic behaviour — for instance, if they are seen competing for America’s soul. That’s the scary moment in
being tender or caring — they are often mocked by their which we find ourselves, and I think it’s part of what’s fuel-
peers for not being masculine enough. As adults, we need ing the political rancor we see at the moment.
to help shift these norms.
Are you hopeful that things will get better?
How is social media affecting all of this? I am an optimist and I believe that humans are, by nature,
On the one hand, social media is amplifying all of these good; but the truth is, I think things are going to get worse
negative affects. When someone uses an emasculating in- before they get better. I do think we will end up in a place
sult against Trump or a Trump supporter uses one against where we embrace a variety of gendered expressions that
someone else, the message spreads quickly and gets ampli- can reflect the whole of humanity. But it will take some
fied. However, at the same time, social media is having a time and plenty of effort from all of us.
secondary effect that is more positive: It is providing infor-
mation to young people about alternative ‘ways of being’
in this world. For the first time ever, young people have
almost as much access to information as adults; there
aren’t really any gatekeepers anymore. If a young person
is seeking, say, resources around homophobia or what it
means to be masculine, they can go online and quickly find
things like the Good Men Project or the White Ribbon
Campaign, where they will learn that not everyone acts in
these problematic ways. They can quickly learn that there
are other ways for them to behave, and that there are re-
sources out there to show them how to do that.

Given all of the above, what does a ‘real man’ look like
today?
At the moment we have competing visions of what a real
man looks like, and those visions — at least in the U.S. —
have played out on the political stage, where they are epito- C.J. Pascoe is an Associate Professor of Sociology, the David and Nancy
mized by President Barack Obama and President Trump. Petrone Faculty Scholar and Director of Undergraduate Studies at the
Obama personified a new way to be a man: He was calm, University of Oregon. She is the author of Dude, You’re a Fag: Masculin-
ity and Sexuality in High School (University of California Press, 2007)
self-assured, thoughtful, intellectual and gentle. Then, with
and co-author of Exploring Masculinity: Identity, Inequality, Continuity
Trump, we have seen a harkening back to an outdated form and Change (Oxford University Press, 2016). Her paper, “The Gender of
of masculinity that was all about bluster and bravado and Trumpism: Who Is A Real Man?” is available on her website: cjpascoe.com

104 / Rotman Management Spring 2019

POINT OF VIEW Rod Lohin, Lee-Chin Institute for Corporate Citizenship, Rotman School of Management
Financing
Sustainability:
A Market Emerges
FOR YEARS, sustainability professionals —
and the academics who study their work
— have been answering some tough ques-
tions. Is there a business case? (Yes). Can
we determine which social and environ-
mental issues are most important to our
business? (Yes). Is it possible to measure and report on sus-
tainability practices credibly? (Yes). Can we deliver value to
business and society? (Yes). Simply put, the evidence shows
that companies generally perform better if they’re more sus-
tainable.
However, despite this progress, many sustainability
professionals still struggle to access budgets internally — in
particular, long-term funding for big, multi-year projects.
The fact is that they may know where they want to go, but
they’re short on capital — the fuel needed to achieve greater
social and environmental benefit.
In our research and consulting work at the Lee-Chin
Institute and through our networks, we have seen a number
of major corporations develop a bold sustainability strategy,
map out breakthrough programming to support it, and gain
support for the intent of the project and its initial costs —
often from annual philanthropy, sponsorship or other ex-
pense budgets. However, when they pitch the longer-term
capital requirements to access internal pools of capital, we
have seen them thwarted time and time again by otherwise
typical features of many socially-responsible investments:
complexity, long-term payoff, and modest or moderate fi-
nancial returns. In other words, these initiatives often fail
the test for internal capital allocation.
Some companies simply do it anyway, typically with the
leadership of key executives. For instance, Walmart’s lead-
ership invested in a massive sustainable supply-chain man-
agement initiative that has had global reach and helped it
manage risks and establish a new narrative with consumers;
and under Paul Polman, Unilever repositioned itself as ‘the
sustainable living company’ and consistently outperformed
its rivals in the public markets for more than 10 years.
But in the absence of such clear executive commitment,
how can sustainability professionals get further down this
road? How can we fund projects with long(er) time horizons
and lower rates of return but also with important long-term
payoffs for the company and the world? How can we better
leverage the capital markets and the finance capabilities of
our companies in support of social, environmental — and
business — benefits?
rotmanmagazine.ca / 105
 Unilever,
r Apple and Toyota Finance have issued
bonds worth billions for their own green projects.
The answer may be in the burgeoning market for sus-
tainable and responsible investments (SRI). Worldwide,
more and more investments have been made with regard
for sustainability. In 2015, the market for all types of SRI of-
ferings reached US$ 22.90 trillion (26.3 per cent of all global
capital markets) according to the Global Sustainable In-
vestment Alliance (GSIA). Specifically, two approaches
may be the most relevant to sustainability practitioners
within companies: green bonds and impact investments.
1. GREEN BONDS
Green bonds (publicly or privately issued) raise and deploy
funds for environment-beneficial projects (retrofits, clean
energy, pollution mitigation, etc.), offering a safe and pre-
dictable rate of return for investors often at a rate slightly
lower than more traditional bonds. Remarkably, green bond
issuance grew more than 100 times between 2012 and 2017,
from US$3 billion to US$389 billion (according to the Cli-
mate Bond Initiative).
For sustainability professionals and their companies,
there is a clear opportunity here to get past the capital road-
block. The cost of capital of green bonds can sometimes be
lower than that from other sources, even internal sources.
In this case, external capital could be more attractive than
internal capital. Companies that access funds through green
bonds could potentially be able to allocate funds to their
highest-potential capital projects and — at the same time —
fund more activities with environmental benefits.
There are two principal ways for practitioners to use
green bonds: raising your own funds by issuing a corpo-
rate green bond; or accessing green bonds raised by oth-
ers. More and more companies are issuing their own green
bonds. There are plenty of examples: Unilever, Apple and
Toyota Finance have issued bonds worth billions for their
own green projects. Best of all, companies issuing green
bonds appear to be paying both environmental and finan-
cial dividends. Boston University Professor of Strategy
106 / Rotman Management Spring 2019
Caroline Flammer recently noted that corporate green
bonds “yield a positive stock market reaction, improve-
ments in financial and environmental performance, an in-
crease in green innovations, and an increase in stock own-
ership by long-term and green investors.”
Companies can also access funds raised by govern-
ments, municipalities and a range of private players through
green bonds. Examples include green bonds worth more
than US$4.35 billion by Bank of America, and in Canada,
the Canadian Pension Plan Investment Board (CPPIB)
raised over $3 billion for investments.
However, there remains a risk that such funds are not
consistently ‘green’. To overcome this, financiers appear to
be increasingly making use of the ‘Green Bond Principles’
(GBPs) or the Climate Bond Certification (CBCs), as well as
third party verification.
2. IMPACT INVESTMENTS
Impact investing is another type of SRI investing that seeks
both measurable social and environmental impact along-
side financial returns. Between 2013 and 2017, the global
impact investing market grew almost tenfold from US$ 25.4
to US$ 228 billion. As the market continues to grow, more
and more major financial institutions like BlackRock and
UBS are joining pioneers like Bridges and Calvert.
With all of these funds seeking investments, sustain-
ability professionals may be able to access external funds
that align with their environmental and social benefit initia-
tives. This may be most compelling for companies that have
a tangible environmental or social purpose — for example,
renewable energy or education. However, even more tra-
ditional companies could potentially seek investments for
specific projects.
Clearly, the type and the stage of an organization plays
a role in determining how to access these markets. For start-
ups or social enterprises (businesses with a specific social or
environmental purpose), there are a range of fast-growing
 Between
t 2013 and 2017, the global impact investing
v market
grew almost tenfold from US$ 25.4 to US$ 228 billion.

networks of angel or early-stage investors, including Angel.
co and F6S.
Another option for social enterprises is social impact
bonds (SIBs), increasingly known as pay-for-performance
contracts. This is a complex investment vehicle in which a
principal (often a government funder) invests in an organiza-
tion or program that is expected to have a social or environ-
mental benefit. A third party is typically engaged to verify
achievement of the benefits, which triggers payment to the
principal. However, the benefits of SIBs may be outweighed
by the complexities.
For more established companies, issuing a green bond
is one possibility that could be targeted to impact investors
with an interest in environmental benefit. But there are oth-
er ways to structure deals to support projects with environ-
mental or social benefit.
Companies with advanced finance capabilities might
consider more complex instruments like real options or spe-
cial purpose vehicles. Real options allow an investor to partici-
pate in an investment in a tangible (real) asset. For example,
a company could offer an investor greater access to a promis-
ing green or social benefit project for a small upfront invest-
ment with the right to choose to expand their involvement
later, wait, or abandon the project.
There are also special purpose vehicles in which a par-
ent company places an asset in a subsidiary and securitizes
it or otherwise offers it to investors. This approach is already
used to manage billions and possibly trillions in public-pri-
vate partnerships involving governments, multilateral orga-
nizations and lenders/investment banks. However, in strict-
ly private markets, this promising approach may have been
destroyed by Enron, which made extensive use of them.
Sustainability professionals have come a long way in
understanding how to manage risk and add value to their
companies. At each stage, we have had to learn or otherwise
access new capabilities, including making a stronger busi-
ness case, understanding materiality, measurement and
reporting and ultimately, how to deliver both business and
social value.
These are all powerful advances. However, the better
we get, the more it becomes apparent that we need more fuel
— that is, more financial resources — for our sustainability
initiatives than is easily accessible in internal pools of capi-
tal. To overcome this challenge, we can access new pools of
external capital, but we will need to learn and engage in an-
other set of capabilities: finance and investment.
In closing
Happily, the investment market is looking for good work to
fund. Many of our companies — especially the larger, estab-
lished, publically-traded ones — have strong finance capa-
bilities that we have only tangentially leveraged.
Perhaps the time has come for us to reach out to our
finance colleagues, connect our work with the capital mar-
kets, and potentially have a greater positive environmental
and social impact than ever before.
Rod Lohin is Executive Director of the Michael Lee-Chin Family Insti-
tute for Corporate Citizenship at the Rotman School of Management.
This essay was first published on the website for the Network for Busi-
ness Sustainability (NBS), which is headquartered at the Ivey School
of Business. For more on this and related topics, visit https://nbs.net

rotmanmagazine.ca / 107
 POINT OF VIEW Janet A. Schwartz, Professor of Marketing, Tulane University and Dan Ariely, Behavioural Economics Expert
The Problem
with Self-Control
OVEREATING, UNDER-SAVING,
over-borrowing and un-
der-exercising are just a
few of the short-sighted
behaviours that we are
often guilty of. Now the
bad news: Acting in our own long-term interest is only
getting more and more difficult. Why? Because our world
has become more hostile to our ability to make decisions.
It is a world in which everyone wants something from us —
our money, our attention, our time — and they are armed
not with guns, but with our vices.
Adding to the challenge is the sad fact that the way we
have designed the world around us does not help us fight
temptation or think long term. In fact, if an alien were to ob-
serve the way we have designed the world, the only sensible
conclusion would be that human beings are determined to
create more and more temptations that make us think more
and more myopically and make more and more mistakes.
Think about it: Will the next version of the donut (donut
2.0) be more or less tempting? Will the next version of the
smartphone get us to check it more or less throughout the
day? And will the next version of Facebook tempt us to up-
date our status more or less frequently?
108 / Rotman Management Spring 2019
One of the most important lessons from the social and
behavioural sciences over the past few decades is that our
surroundings influence our behaviour to a much greater
degree than we realize. Of course, some people and institu-
tions do care about our long-term interests — our spouses,
friends and families, perhaps our religious organizations,
maybe even life insurance companies — but most of these
entities are not part of our moment-to-moment environ-
ment. That is made up largely of entities who want us to be
impulsive and to live in the here and now. Facebook up-
dates, Google alerts, and Gilt flash sales are their ammuni-
tion; and by making us feel good in the moment, they make
us focus on what is good for them in the short term instead of
what’s good for us in the long term.
In essence, our behaviour is being shaped by people
who are banking on how easily we will give in to temptation.
We may think that once we know that these commercial in-
terests are after us, our time, money and attention, there is
something we can do about it. After all, we often believe our-
selves to be rational beings. We just need to have the right
information available, and we will immediately make the
right decisions. We eat too much? Just provide us with calo-
rie information. We don’t save enough? Just give us a retire-
ment calculator and watch our savings grow. Texting while
 Our behaviour is being shaped by people who are banking
on how easily we will give in to temptation.
driving? Just tell everyone how dangerous it is. Kids drop out
of school and doctors don’t wash their hands before check-
ing their patients. Just explain to the kids why they should
stay in school and tell the doctors why they need to wash
their hands.
Sadly, life is not that simple, and most of the problems
we have are not due to lack of information — which explains
why our repeated attempts to improve behaviour by provid-
ing additional information often do so little to make things
better. If problems of self-control are indeed central to our
long-term well-being as individuals and as a society, then we
must think of counter-measures to offset the constant and
increasing pressure to live in the moment. If information is
good at changing attitudes and intentions but isn’t good at
changing behaviour, what can we do? How can we make the
environment better so that we behave in healthier, wealthier
and safer ways?
If we believe (and not all of us do) that people are fal-
lible and can be overtly tempted or even gently misguided
into doing what others want, then we have to think about
paternalism. Why are we so averse to such paternalism? In
some cases, we see the value in it, especially when we think
of ways in which human beings make physical mistakes.
Let’s return to driving. Accidents and collisions are of-
ten caused by human error such as distractions and drowsi-
ness. As a society, we recognize that we aren’t perfect, and
so we get better and better at designing roads with reflectors,
guardrails and built-in rumble strips that jolt us back into our
lane. We recognize that these measures don’t solve all the
problems, so we go a step further to make cars that sound an
alarm or even take control if we drift between lanes or are
about to collide with the car in front of us. Designing roads
and cars that accommodate our inevitable mistakes seems
sensible; after all, we are human, and we can’t be perfect all
the time. However, designing fast-food restaurants, malls
and credit cards to intentionally prevent (rather than ex-
ploit) our unavoidable mistakes feels wrong.
One problem with such a paternalistic approach to en-
gineering environments is our discomfort with the idea of
someone trying to restrict our free will — that someone else
is deciding what is best for us and forcing us to go along,
even if we disagree. It’s not that we don’t recognize that
a terrible tension exists in the space between what we feel
like doing in the moment and how we ought to behave for the
long term, but that this is a deeply personal space. Who pos-
sibly has the right to tell us how many donuts is enough, or
whether a soda is too big? If we ate too many donuts this
time, it’s easy to trick ourselves into thinking that in the fu-
ture, we won’t do it again. And eating too many donuts is
certainly not the same as mindlessly wandering into the next
lane of traffic. Or is it? How do we balance our personal free-
dom and desire to enjoy life’s pleasures in moderation with
our inability to moderate?
Society offers both soft and hard approaches to being
paternalistic. Paternalistic policies, in their strictest form,
decide what is best for us, regardless of whether we agree.
Seatbelt and anti-texting laws are good examples. Even if
you think you won’t get in an accident, you risk a steep fine if
you get caught unbuckled or reminding your beloved it’s his
turn to pick up the milk. And even though car crashes may be
rare, imagining them is very vivid: You can easily visualize
the wreckage and the injuries as a direct result of one bad de-
cision. This ability to ‘imagine the worst’ makes paternalism
more tolerable; we can see how everyone benefits from it,
even if some disagree. But what about eating too many do-
nuts or splurging on a new pair of jeans? Here, the negative
effects accumulate little by little, and it is harder to connect
any one instance of overindulgence or poor self-control to a
specific health or financial outcome; and this lack of a clear
connection makes restrictive policies less tolerable.
Softer paternalistic approaches can help align our
good intentions with our desire to behave well, but they
also give us great flexibility. They provide us with easy ways
to act on information in the form of calorie labels, retire-
ment savings calculators, or credit-card interest disclo-
sures. Softer approaches take the position that we know,
in principle, what is in our best interest and that once we
are properly informed and guided, our behaviour will fall
into line. If we want to be wealthy in retirement, we know
that saving is better than buying donuts or ringtones right
now. But how often does knowing this really lead us to put
away money for the rent, food and electricity we will be
using 30 years from now? This probably doesn’t happen
very often because our good intentions face fierce compe-
tition from the world around us — from the entities who
want our money or time or attention right now. And they
rotmanmagazine.ca / 109
 We must embrace counter-measures to offset the constant
and increasing pressure to live in the moment.
are very good at getting it, in part because they create the
physical and virtual environments in which we live, in part
because they know precisely how to tempt us, and in part
because we don’t fully understand or acknowledge some
of the most basic aspects of our nature.
Somewhere in between soft and hard paternalism is a
more libertarian approach. This approach recognizes that
big obstacles block our good intentions from becoming ac-
tual behaviours, but it stops short of imposing inflexible re-
strictions or penalties. In the libertarian approach, instead of
giving people lots of information about retirement savings
and letting them decide on the right mutual fund, we can
automatically put them into a good mutual fund that per-
forms well for most people and then let them opt out if they
want something different.
Here we can tolerate a little paternalism in choosing
what that default is, because most people both wish they
were better at saving for retirement and tend to stick to the
default option. If people are further unsure of how much
to save, we can suggest a default amount — say, seven per
cent of their income — and let them adjust according to their
needs. Again, because most people stick to the default, the
social planner can assume that seven per cent is a reason-
ably good estimate of the savings rate moving forward. The
social planner can take even further steps towards a pater-
nalistic approach by making it hard but not impossible to dip
into that money in case of an emergency. Of course, these
one-time decisions may be challenging to set up at first, but
they are easy to keep going once they are in place — precisely
because they capitalize on our tendency to do nothing.
The real question is, What can we do about the situa-
tions that require ongoing effort and long-term self-control?
Eating well, exercising, driving safely, avoiding distractions
and the temptation to overspend are all things that are good
for us in the long term but difficult to achieve in any one
moment — let alone the string of moments that make up
daily life. If we stop for a minute to think about the future
— where it will likely be even harder to resist temptation —
a central aspect of designing what that future environment
should look like must incorporate a framework for neces-
sary paternalism.
110 / Rotman Management Spring 2019
In closing
Given what we know about how people really behave, how
much freedom should we have?
We are quick to develop strategies for making cars and
roads safer because we know that even careful, attentive
drivers can make mistakes. We can acknowledge that fail-
ures to regulate behaviour can be disastrous, so there are
fines and penalties for not wearing seatbelts and for texting
or drinking while driving. But we really have to think about
whether it should remain okay to sell 600-calorie sodas to
our increasingly overweight children or to continue to give
credit to people who can’t afford to pay back their loans or
save for retirement.
Once we can acknowledge that self-control failures are
inevitable and that we are far too optimistic about our abil-
ity to overcome them, we can — and must — design envi-
ronments that help us work towards our own goals rather
than someone else’s. Until then, corporations and other
commercial interests who think it’s best for us to live in the
moment and be unprepared for the future will determine
the environment in which we live — and by extension, im-
portant life outcomes.
Janet A. Schwartz is an Assistant Professor of Marketing at Tulane
University. Dan Ariely is the James B. Duke Professor of Psychology
and Behavioral Economics at Duke University and the founder of the
Center for Advanced Hindsight. This essay has been adapted from
a longer article that appeared in The Independent Review, published
by the Independent Institute. For more visit www.independent.org
QUESTIONS FOR Maayan Ziv, Founder, Tech Entrepreneur and Activist

Q
&A A leader in the realm of
accessibility discusses
progress on making
cities—and the world—
In a recent presentation you said: “I live in a world that
wasn’t built for me.” What you did you mean by that?
Basically, the world we live in — and most of the products
and technology that we use — are built with a specific user
in mind: The able-bodied individual. When I’m traveling or
navigating physical environments, I am constantly encoun-
tering barriers because city planners or designers didn’t
prioritize the inclusivity of these spaces for everyone. For
example, I’ve seen elevators that are not designed to accom-
modate a wheelchair user because they’re either so tiny that
I can’t even fit in or the buttons are so high that I can’t reach
accessible to all. them. I always think, ‘How did someone believe that this
was the right way to design this?’
Interview by Victoria Heath
How do you plan to make accessibility a forethought
rather than an afterthought?
I see our app, AccessNow, as a vehicle to not only generate
conversations but to also lead to real impact and change.
Rather than creating an awareness campaign that would

rotmanmagazine.ca / 111
 I always think, ‘How did someone believe
that this was the right way to design this?’
have limited reach and sustainability, I wanted to flip that
concept on its head and create a platform that generates
actual information about physical accessibility that is valu-
able to the people who need it. Hopefully, through this ac-
tion-oriented approach, broader conversations will happen
that will lead to changes in how we think about design and
accessibility.
You have talked in the media about how you’ve been
‘siloed’ into one of two identities: either you’re a woman
or you’re a person with a disability. Why is this so prob-
lematic for diversity and inclusion?
It’s really important to recognize that people are not born
into these little ‘identity check boxes’ that we’ve created.
You shouldn’t have to identify with one group or another
in order to raise your voice and share your perspective. We
need to acknowledge that all of the different identities and
perspectives we hold are an important part of truly realizing
diversity and inclusion.
I’ve been to lots of events and conferences lately where
inclusion and diversity are the buzz words. Although every-
one has good intentions, when diversity and inclusion are
discussed, individuals with disabilities are often left out.
That means that the 15 per cent of the population that iden-
tifies with a disability in some form is completely missing
from the conversation.
What’s it like for you being a tech entrepreneur today?
Tech is a hard industry to be in for any entrepreneur, but
for women in particular, there are major issues regarding
equal access to funding. Representation is also a major is-
sue. Almost 99 per cent of the time, I am the only person in
the room who looks like me and who has my perspective.
For example, last week I was at a tech conference with over
1,000 people, and I was the only person there with a visible
disability.
Statistically, one in seven people identify with some
type of disability. Although I am very grateful to be able
to represent the disabled community at these events, I
112 / Rotman Management Spring 2019
shouldn’t be the only one. There are so many voices and per-
spectives missing that should be included.
As someone working in tech, I’m excited because there
are lots of opportunities to create new things and to help
people expand their understanding of the world. In that
sense, I’m happy to be present in those rooms and in those
conversations — but I also recognize that a lot of work needs
to be done before we get to a place where we can truly say
that everyone has an equal opportunity to participate.
From the time you had your epiphany about AccessNow,
what has changed about the accessibility conversation?
I can tell you that when I was studying for my master’s de-
gree in 2014, we were not having conversations about inclu-
sion and diversity like we are today. I’m not implying that I
am the reason things have changed — but I do hope that Ac-
cessNow has contributed to the growing acknowledgement
that accessibility matters.
To date, we have received over 16 million hits online.
That’s 16 million instances where someone who either iden-
tifies with a disability (or not) had an opportunity to learn
about the importance of accessibility and has been invited
to contribute. The goal is to make this a global movement:
We want AccessNow to reach every household and every
person, and invite them to be a part of the inclusive future
we’re building.
Data is integral to AccessNow. As Torontonians and the
rest of the world debate the concept of ‘smart cities’—
as well as the broader impact of data collection, sharing,
utilization and privacy—what are your thoughts about
the future of data? Are peoples’ concerns misguided, or
should we be talking about this?
We should absolutely be talking about it. Data is powerful
because it can help us gain insight in order to make better
decisions; but it should not be the primary mechanism that
changes the way we treat people, provide services or build
our cities. My hope is that we use it as an informant and as
a tool for decision-making. With AccessNow for example,
 People are not born into the little ‘identity
check boxes’ that we’ve created.

data is used to help us understand what is missing in terms of ies across the world. We’re also looking into really exciting
accessibility, and how we can design better spaces and com- possibilities in artificial intelligence (AI), which is the next
munities. In my mind, data is a tool that should be owned frontier for us.
by the people who generate it — and therefore it should be When the app was launched, a lot of our visibility was
transferable and transparent so that we can all benefit from reflected onto me personally — not just because I’m the
what we’re contributing to. founder, but because I’m a user, as well. As a result, a lot of
my work involves reaching out to other people and inviting
Have you and your team been able to sit down and reflect them to be a part of what we do — whether that’s a commu-
on the profound impact that AccessNow has had to date? nity member, a citizen, or someone in the government or
There are definitely moments when we can see that we’re the private sector. I hope that by raising my voice and am-
actually having an impact. For example, when a city that has plifying the importance of diversity in tech — and by simply
no accessibility data — almost a sort of black hole where we existing within it — other people will be empowered to be a
have no understanding of what access is like there — starts part of the conversation, as well.
to become populated with ‘pins’ (data points), that’s amaz-
ing. It lowers the level of anxiety for people with disabili-
ties and allows them to make their own decisions based on
credible, crowdsourced information. I often think of how
we started out with a blank canvas that had no pins, no
users and no community. Now, every time I pull up the map,
I think, ‘Wow; we’re really doing something here’.
People actually write to us about their experiences,
their stories, or the places they’ve gone. It’s pretty amazing
to think that we started from nothing and have been able
to reach so many people on a deeply personal level. That’s
the magic for me; it’s not about convincing people that they
need to buy something or that some specific product is going
to make their life 200 times better — it’s about recognizing
people’s actual needs, and hopefully changing their quality
of life for the better.
AccessNow started because I needed to solve my own
problem (navigating spaces), and from that, it has given oth-
er people an opportunity to vocalize their experiences and
contribute to making change. This has been done in all kinds
of communities in the past, but in the disability community,
it is finally happening now. Maayan Ziv is an activist, photographer and entrepreneur based in
Toronto. She is the Founder of AccessNow, an app that uses crowdsourc-
ing to pin-point the accessibility status of locations around the world
What is next for AccessNow—and for you? on an interactive map. She also sits on the boards of The Toronto Arts
We’re looking at a bunch of things, such as working with Council and the Centre for Independent Living. Her 2017 JEDx talk
municipalities to build more inclusive and accessible cit- can be viewed on YouTube. For more visit: www.maayanziv.com

rotmanmagazine.ca / 113
 QUESTIONS FOR Aneeta Rattan, Professor, London Business School

Q
&A
Describe how mindsets affect our everyday behaviour.
Mindsets are our fundamental understanding of how hu-
man attributes like intelligence and personality work. The
specific mindsets that I study fall along two dimensions. The
first is ‘malleability’ — whether people believe that things
like intelligence and personality are stable or fluid. Stanford
Professor Carol Dweck’s terms for this are a ‘fixed mindset’
vs. a ‘growth mindset’. The second dimension of mindsets
that I study involves how people think potential is distrib-
uted across the general population — whether they believe
high levels of potential are constrained among a select few
or are distributed more widely.

How might mindsets explain why some people are more

An expert on inter-group
relations discusses the
mindsets that promote be-
longing and achievement
in the face of stereotypes.
Interview by Manini Sheker
likely to confront everyday prejudice in the workplace?
In my research with Prof. Dweck on mindsets and confront-
ing overtly- biased statements, we were interested in under-
standing why minorities or women might confront some-
one who has said something offensive. In some ways, it is
a miracle that anyone ever confronts blatant bias, because
it is such an overtly negative experience for the person
being targeted. That’s why I felt our first question ought
to be, Why do people choose to confront overt bias? I felt
that peoples’ mindsets about how malleable people are in
general might shape their motivation to confront or not
to confront.
I indeed found that people who view others as ‘mal-
leable’ are more likely to confront a biased statement. More
recently, I found that people who hold growth mindsets
show a relatively less negative outlook towards the person

114 / Rotman Management Spring 2019

 It is every organization’s responsibility to create
a culture that prevents bias.
who expressed the bias — and because of that, they are more
satisfied with their workplace and have a greater sense of
belonging.
How can organizations embrace these findings to reduce
experiences of prejudice in the workplace?
First of all, I want to emphasize that it is every organization’s
responsibility to create an institutional culture that prevents
bias. It is not up to employees. That being said, I think the real
takeaway is that employees will cope better if and when they
encounter bias only if they hold growth mindsets in an orga-
nizational context where they feel that they can confront.
Put simply, organizations will only get people to con-
front bias if they feel that they can. The organization can
play a real role in saying, ‘This is a behaviour that we value;
here are some norms and productive practices that you can
engage in if you encounter bias and want to address it’. Or-
ganizations that want to encourage these types of interac-
tions should also encourage growth mindsets among their
employees.
Social theorists argue that the most important predic-
tors of academic achievement for students are their par-
ents’ education and their socio-economic status. But you
believe the psychology of the student is equally critical to
academic success. Please explain.
I would start off by saying that it is absolutely the case
that your parents’ education and socio-economic status
strongly predict your academic outcome — and there is a lot
of work to be done to address the underlying social struc-
tures that foster this. But I would also say that it is not a
perfect correlation. By understanding the role of mindsets,
we can start to promote positive educational outcomes de-
spite socio-economic background. I make the argument
that the psychology of the student him or herself is just as
critical to achieving academic success.
Do the mindsets of teachers also influence educational
outcomes?
Teachers and faculty truly are the gatekeepers to industry.
In my work with Nanyang Technological University Profes-
sor Krishna Savani and our collaborators, we theorized
that when students perceive their teacher as holding the
belief that ‘intellectual potential is widespread’, they feel
more of a sense of belonging with respect to subjects such
as science, technology, engineering and math, and therefore
show more interest in them and get better grades compared
to when they perceive their teacher as holding the belief that
‘not everyone has equal potential’. The more students see
their teacher as endorsing the ‘universal’ mindset — the idea
that intellectual potential is widespread — the stronger their
sense of belonging, regardless of their gender or race.
Could you talk a bit about how a growth mindset can help
someone entering a context that is highly stereotyping?
I have been really interested in understanding the subjec-
tive experience of individuals who enter into organizational
contexts knowing full well that their group membership is
stereotyped. When these people look around, they don’t
see people like them at their level or at the next level — and
they very rarely see anyone like them at the highest level of
the organization. In my research, I have thought about the
linkage between this scenario and stereotypes about com-
petence — beliefs or generalizations that some groups have
less competence than others. For example, ‘women are less
competent in math and science than men’ or ‘certain ra-
cial minorities are less competent in academics’. These are
very broad generalizations about large groups, and certain
rotmanmagazine.ca / 115
 Mindsets about ability—even those reflected in policies—
shape performance in real ways.
mindsets are more conducive to such stereotypes than other
mindsets.
What we found is that women who considered their
math course in university to be highly stereotyping showed
less of a decline in their sense of belonging over the term
of the course if they also perceived people around them
as endorsing a growth rather than a fixed mindset. Even
though these women were well aware that the environ-
ment was very stereotyping, when they perceived that the
belief around them was that ‘intelligence can grow’, some-
how, that reduced the power of the stereotype. It meant
that women retained more of their sense of belonging with
respect to math, and that, in turn, predicted their desire to
pursue math in higher grades.
How can policymakers leverage the science of mindsets
to advance educational outcomes?
The way policymakers craft policies could definitely be bet-
ter informed by a consideration of mindsets. Policymak-
ers who are making decisions about how education should
operate could ask themselves, Does this policy treat them
as though they can learn and grow at any age? Does it treat
students as though they all have high intellectual potential?
As indicated, mindsets about ability — even those reflected
in policies — shape performance in real ways.
Another thing is to carefully consider what is actually
being implemented in schools, in terms of procedures and
practices. It is one thing to have a lot of schools start talking
about, teaching and endorsing a growth mindset. That’s a
great thing, but it is important to scientifically and rigorous-
ly study whether it is being effectively implemented — and
whether it is having the effects that we would expect, given
the research.
Can you talk a bit about your related work on mindsets
and the global refugee crisis?
Right now in the world, there are more people seeking
asylum than at virtually any time in the past. If you think
116 / Rotman Management Spring 2019
about the conditions these people are fleeing, I believe most
people feel a sense of empathy and understanding. But at
the same time, we are seeing a very strong wave of anti-
immigrant and anti-refugee sentiment. Many people strong-
ly oppose the resettlement of refugees within their nations
for a variety of reasons that have to do with the economy,
overt biases and stereotypes.
In recent research, my colleagues and I were interested
in understanding whether a person’s general mindset around
‘whether people can change or not’ might also play a role in
the extent to which they support refugee resettlement. The
question we asked was, Does believing that people are mal-
leable rather than fixed make someone more supportive of
resettling refugees?’ We found that indeed, people with a
growth mindset believe that refugees will be able to assimi-
late into the host society and thus they supported their re-
settlement. We documented this among both liberals and
conservatives, among people in the U.S. and UK, and for
Americans in response to both Obama and Trump policies.
At the same time, people who held a growth mindset
also thought immigrants should not to be obligated to as-
similate into the host society. Therefore, in a really inter-
esting way, a growth rather than fixed mindset creates the
conditions under which people view refugees as being able
to adapt — without placing an obligation upon them to shed
their home culture and traditions. Given their many posi-
tive attributes, we ought to be doing whatever we can to en-
courage growth mindsets.
Aneeta Rattan is an Assistant Professor of Organizational Behaviour
at the London Business School.
QUESTIONS FOR Heath Fogg Davis, Director, Temple University Gender, Sexuality & Women’s Studies Program

Q What are the most common misunderstandings you see

in how organizations approach gender inclusion?
The thing that comes to mind is the idea that you can accom-
plish transgender inclusion as a one-time deal. It has to be an
ongoing process of introspection, and the organization has

&A
to be committed to evolving and changing over time. The
other thing is that many people think it’s about assimilating
into what they already have in place, in terms of structure.
Though some trans people will be able to — and want to —
assimilate into that structure, there are a lots who won’t want
to or can’t, for a variety of reasons. That’s why the assimila-
tion and accommodation strategy is a very limited one.

One of your popular workshops— —The Gender Audit— —

A gender expert
describes how to
address sex-identity
discrimination at work
Interview by Bretton Fosbrook
has helped organizations, evaluate when, why, and how
sex classifications are invoked in their administrative
policies. Why is this so important?
It’s about self-awareness and taking stock of when and
where the terms gender and sex pop up in administrative poli-
cies. When I’ve worked with companies doing this, people
are surprised to discover where these terms come up. For
example, in a dress code policy where the legitimate busi-
ness goal is to have a ‘professional appearance’, do you need
to invoke gender when you’re talking about specific articles
of clothing that fit that standard? Most dress codes have
different policies for men and women, which is not neces-
sary. They could just offer articles of clothing that fit their
professional standard.
You have argued that we should use ‘sex identity discrim-
ination’ instead of the more common term, ‘transgender
discrimination’, to describe the kinds of sex-based exclu-
sions that certain individuals face. Can you explain?
There are two things I want to point out. One is that what
we think of as ‘transgender discrimination’ is actually
something that is more generalizable. Certain trans people

rotmanmagazine.ca / 117
 experience trans discrimination, and certain trans people
don’t, based on their appearance and how they sound when
they speak. There are also a lot of people who are not trans-
gender who encounter transgender discrimination, like
masculine-appearing women or feminine-appearing men.
The term ‘sex identity’ is more accurate, because what
we’re really talking about is whether or not an individual
belongs within the existing sex binary, and if they are be-
lieved when they state where they belong. Sex-identity
discrimination happens when somebody challenges that
statement.
In your book [Beyond Trans: Does Gender Matter?] you
discuss four cases of sex-classification policies: iden-
tity documents, bathrooms, educational institutions
and sports. What are some other cases?
I’ve been working with a student group at Yale University
called Engender, which is tackling the issue of fraternities
and other sex-segregated organizations on campus. This
gets to the issue of the power imbalances between frater-
nities and sororities. There is a big question about the sex
segregation between fraternities and sororities: Is it related
to a legitimate organizational goal, especially when it’s con-
nected to a university or college? Engender’s answer is No.
They’ve been pushing for a rush process that is open to
everybody, and they’ve been successful in getting at least
one fraternity chapter to embrace this.
I think we should question any aspect of our society that
is sex segregated or invokes gender, because the segregation
may or may not be warranted. Does it make sense to have
women’s affinity groups, for example, within a company? If
so, how do you define the category of ‘woman’? One of the
more difficult cases would be certain kinds of support groups
around survivors of sexual abuse. We have to ask some really
tough questions about what we want to say about boys and
men who have experienced sexual abuse and assault.
118 / Rotman Management Spring 2019
Many organizations have worked tirelessly to change
their administrative policies to make it easier for trans-
gender people to change their names and gender and/or
sex classifications. Why do you caution against this as a
primary strategy?
You could interpret the title of my book as saying that we
should move beyond gender altogether, but that’s not actu-
ally true. My position is the opposite: Because gender is so
important to a lot of us personally, I believe we should be
very careful about the instances in which we cede authority
over our gender identities to somebody else (like govern-
ment administrators, etc.) We’re better off having the default
be not to invoke gender, because then we force ourselves to
make the case for when gender matters, and how.
Gender policing in our society is a problem. When you
give that kind of power to an administrative agent, there can
be serious repercussions. In my book, I discuss the case in
Philadelphia, where we used to have sex classification stick-
ers on our monthly transit passes. This prohibited certain
people from being able to board the bus or use a bus pass,
because some bus drivers looked at their pass, and said, ‘You
don’t look like a woman, so I’m going to use my power to kick
you off the bus’. It was actually in the employee handbook
that each bus driver had to examine each pass and confirm
the commuter’s sex, as a fraud prevention measure. Obvi-
ously not every administrative agent is going to wield their
power in a transphobic way, but some will, and that discre-
tionary leeway can put trans people in a precarious position.
What’s your take on why organizations drag their feet on
addressing their administration of sex classifications?
I think it’s because of fear. When I transitioned, one of my
mentors — an older trans man — gave me some advice. He
said my biggest obstacle was going to be that people don’t
want to be wrong. Transgender inclusion is a new concept
for many people. They hear the terminology, but they don’t
 We’re better off having the default be not to invoke gender.

know what it means for them and their behaviour. They but it won’t work for everybody. So, if the goal is to provide
don’t know what they’re being asked to do differently. Fear, good individual healthcare, why not ask about specific body
not wanting to be wrong, and not wanting to offend people parts? If you want to evaluate the risk of prostate cancer, why
means that many organizations drag their feet and wait for not ask if the patient has a prostate? That’s where I’d like
best practices to come out, or for peer institutions to make a to see the healthcare industry move, because it’s in their
move before they do. best interest, and it’s often in a business’s best interest as
well to use alternative means to get to the information that
What’s your greatest hope for what gender-inclusive they actually want.
organizations might look like in the future?
There are some organizations that are really doing the right
things. The Leeway Foundation in Philadelphia is one of
those places that is really walking the talk about this, and
they just came out with a trans inclusion organizational
guide. They’re a foundation that funds artists, women, and
trans artists, and what they’re doing right, I think, is they
don’t assume that they’ve ever reached the end-point with
trans inclusion. They know it’s an ongoing process. Also,
they recognize that gender inclusion means that everybody
in the organization has to do things differently. So, they’re
not just asking, ‘How do we fit this trans person into the
existing structure?’ (accommodation strategy) but, they’re
asking, ‘How do we change our structure in order to think
about these things differently?’

What would you say to an organization that is beginning

the process of thinking about gender inclusion?
I wrote a workbook that is intended for this very purpose.
First, either as individuals or as a group, conduct a gender
audit. Begin by identifying where gender pops up, and then
ask the question: ‘Does it matter here? Can we get to this
goal by some alternative means that doesn’t invoke gender, Heath Fogg Davis is a Professor of Political Science and Director of the
knowing that every time that gender gets invoked adminis- Gender, Sexuality and Women’s Studies Program at Temple University.
tratively it’s going to trigger sex identity discrimination?’ His most recent book, Beyond Trans: Does Gender Matter? (New York
University Press, 2017) offers practical strategies to help organizations
In a lot of cases, it’s more efficient to use other means.
of all kinds design and implement policies that are both trans-inclusive
Think about physicians for example. Using sex markers as a and institutionally smart. Newsweek named Beyond Trans a must-read
proxy for body parts will work with most people, statistically, book. For more, visit: www.heathfoggdavis.com

rotmanmagazine.ca / 119
 POINT OF VIEW Rumeet Billan, Chief Learning Architect, Viewpoint Leadership
Making Room for
The
h Tallest
l Poppies:
A Call to Action
TALL POPPY SYNDROME (TPS) is a term re-
ferring to flowers that grow higher than
those around them and as a result, are cut
down to size. Apparently, this is a fitting
analogy for the Canadian workplace. A
recent study by Thomson Reuters, Ca-
nadian HR Reporter, Viewpoint Leadership and Women
of Influence reveals the true scope of the issue of women
being ‘cut down’ at work — and the results should be a wake-
up call for companies across the country.
The Tallest Poppy report shows, in unprecedented detail,
that many women are suffering severe psychological and
emotional damage from their treatment in the workplace.
The data is deeply troubling: Of the 1,501 respondents, 87.3
per cent felt that their achievements at work were under-
mined by colleagues or superiors.
Respondents came from many different professions
and all levels of seniority. They reported that those attack-
ing them were split almost evenly between men and wom-
en, and that both co-workers and superiors were at fault.
These attacks included bullying and cyberbullying, down-
playing or dismissal of achievements, having others take
credit for their work and being ignored or silenced. Some
respondents even said they had been fired for essentially
being too successful.
120 / Rotman Management Spring 2019
More than 81 per cent said they had experienced direct
hostility or had been penalized because of their success. Said
one respondent: “Looking over my answers increased my
own awareness around exactly how deeply my toxic work-
place has affected me. I have needed to seek both medical
and psychological services to endure my workplace.”
Another told us that, “The negative emotions and all
the memories that I have experienced were beyond over-
whelming. This isn’t just a small impact, it is deep, emotion-
al and its effect, I don’t think, can be recovered from at this
point in my life.”
At a high level consultant meeting, one respondent had
the courage to (constructively) suggest that the team might
be able to make better progress by considering some round-
table reporting changes. “My boss flew into a rage, berating
me in front of my predominantly male colleagues and label-
ing me as a negative influence on the group. My male col-
leagues said nothing in my defense.”
TPS has become so widespread in the workplace that
even among respondents, more than 40 per cent said
they had witnessed examples and had done nothing in
response; and 10 per cent admitted to undercutting co-
workers themselves.
“In my first few weeks at my new job, I received praise
for something I had done in a weekly e-mail from the boss,”
 TPS can have a devastating effect on psychological well-being.
said another. “Co-workers openly stated their jealousy and
talked about it all week. It ended up being embarrassing
rather than rewarding. This has set the tone for me not want-
ing to declare any achievements or try to move ahead in this
role. I know I will be cut down.”
Many respondents indicated they felt shame about not
speaking up. “I’ve observed this behaviour towards others
and I didn’t step in to defend them. I chose to sit silent rather
than being confronted myself,” said one. “I have hated my-
self when I sensed I may have fallen victim to participating
in this deplorable behaviour and realize I have done it be-
cause it’s prevalent in organizational culture,” said another.
TPS can have a devastating effect on psychological well-
being: Among respondents, 64.7 per cent reported lowered
self-esteem; 60.3 per cent reported downplaying or not shar-
ing their achievements; and 46.2 per cent reported negative
self-talk. Clearly, there should be a deep concern about the
connection between TPS and mental health.
In addition to the impact of TPS on the individual,
whenever employees are forced to struggle to maintain their
emotional resilience, their productivity and desire to stay
with their employer is impacted. And that is not only un-
healthy for the individual, but also for the bottom line.
Our study clearly demonstrated the effect on produc-
tivity. Among respondents, 69.5 per cent felt that TPS had a
negative effect on their productivity; 69.2 per cent reported
a lack of trust among co-workers; and 59.2 per cent reported
feeling disengaged from their work. “I try hard not to stand
out,” said one respondent.
The study also revealed that 48.9 per cent of respon-
dents were less likely to apply for promotions and that many
feel ostracized for their achievements. When employees feel
they have less to work for, they are less likely to set ambitious
goals, and as a result, TPS will impact every business, espe-
cially those relying heavily on employee innovation.
“I feel like hiding most of the time,” shared one respon-
dent, while another told us “I just want to blend in [and]
work behind the scenes.” Such employees have little incen-
tive to maintain or increase their productivity — or to inno-
vate. If an employee just wants to get through the day and get
home, advancement and growth — both individual and or-
ganizational — will suffer. As one respondent said, “I no lon-
ger wish to have any role other than [that of] a worker bee.”
Not surprisingly, nearly 60 per cent of respondents said their
experience with TPS had led them to actively seek a new job.
Is there hope for change? According to respondents,
there is no magic answer. Most felt it necessary to change the
system itself—to move away from a corporate culture that
pits employees against one another towards one where em-
pathy and support are valued. That shift is required to build
employee trust, especially among potential high achievers —
the ones every company should want to keep.
The first step is for company leaders to recognize the
reality of TPS. “Accept without question that this is real,”
said one respondent, “and that people are suffering. Also,
that an organization is less than it should be for allowing this
to occur or ignoring its existence. If leadership (at all levels)
does not accept it as real, does not examine the roots and
processes that allow it to flourish and grow, then they are
the ones empowering this widespread, debilitating ‘disease’
to spread.”
Respondents stressed the importance of such change
coming from the very top. With the right people in place at
the top, they said, it is possible to change company culture.
“It’s really a basic principle: Another person’s success is no
threat to your own,” said one. “Stop cultivating the idea that
the success of one person means the failure of someone
else,” agreed another respondent. “My current employer
is motivating workers to constantly report on each other
and place blame — which opens the door for jealous people
or employees with personal agendas to get ahead by disen-
gaging more successful peers.”
rotmanmagazine.ca / 121
 TPS damages both psychological capital and
the capital reported on a balance sheet.
Based on our study, the top three ways to address Tall Poppy
Syndrome are as follows.
1. TRAINING AND DEVELOPMENT
Respondents identified several areas that could be offered,
including training in sensitivity, leadership, cultural safety,
gender bias, diversity, emotional intelligence and an overall
general awareness of what TPS is, and its impact. There was
also a call for more diversity among executive teams, bet-
ter-crafted policies, transparency in paths for promotions,
building safe and supportive environments and an overall
cultural shift within organizations.
2. LEADING BY EXAMPLE
Not surprisingly, it all starts at the top. “Accept without ques-
tion that this is real, it is happening,” said one respondent. If
leadership, at all levels, does not accept it as real and does
not examine the roots and processes that are allowing it to
flourish and grow, then they are the ones empowering this
widespread, debilitating ‘disease’ to spread.” Another im-
plored leaders not to be bystanders and to address TPS when
it happens. “Similar to harassment, racism and exclusion,
it has to be addressed, highlighted and brought up at staff
meetings to demonstrate how to lead by example.”
3. SPEAKING UP
There were clear calls for zero tolerance of this kind of be-
haviour and a broader desire to eliminate bullying in the
workplace. Encouraging the ‘echo effect’ was identified as
an effective strategy that could be used to manage TPS. One
respondent shared exactly how this can be done: ‘Name and
echo’ means naming the achiever and echoing what she has
achieved, including the process she followed to get there.”
It was heartening to see so many solutions provided by
respondents on the table — including exit interviews, cel-
ebrating achievements and mentorship opportunities.
One respondent suggested that CEOs should personal-
ly do exit interviews. “Even in large organizations, CEOs are
122 / Rotman Management Spring 2019
sometimes too far removed from the culture of their compa-
nies and need to spend real time in conversation and obser-
vation. Unless, of course, they are the root of the problem;
then perhaps boards of directors need to engage.”
In closing
As The Tallest Poppy study conclusively demonstrates, TPS
is very real, affecting productivity, engagement, morale and
retention at countless organizations. And it is an issue that
damages capital — both psychological capital and the capital
reported on a balance sheet.
Many organizations strive to be known as top employ-
ers that care for their employees, because they know this is
one sure way to attract the best talent. But what happens
when top talent joins the organization? Our study demon-
strates that, like overgrown poppies, it is often cut down.
Companies with the vision to actively tackle TPS will be
gifting themselves a huge advantage. If treating employees
as human beings isn’t enough motivation, perhaps econom-
ic reality will be.
As indicated herein, immediate change is needed to
support women in the workplace and to encourage their ac-
complishments — and not incidentally, to increase corpo-
rate productivity.
Dr. Rumeet Billan is the President and CEO of ViewPoint Leadership,
whose clients include CAMH, Purolator, BMO Financial and Refugees
& Citizenship Canada. The Tallest Poppy white paper is available for
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FACULTY FOCUS Anita McGahan, Rotman School of Management and Munk School of Global Affairs
Tackling Inequality:
The Role of Business
Interview by Karen Christensen
Increasing economic inequality has
emerged as one of the defining issues
of our time. Describe how it is affecting
people.
Inequality polarizes populations and con-
centrates power, threatening social stabil-
ity and democracy in both direct and subtle ways. Oxfam
recently reported that 42 individuals now have the same
wealth as the bottom 50 per cent of the world’s population.
Furthermore, 82 per cent of all economic growth created
in 2017 went to the richest one per cent of the population,
while the poorest 50 per cent saw no increase at all. In the
U.S., things have been even more extreme, with 95 per cent
of the income growth between 2009 and 2012 going to the
wealthiest one per cent.
The U.S. is not even the most unequal country: Chile
and Mexico having the highest levels of inequality in the
world, while Estonia has shown the most rapid recent in-
crease. Societies with higher levels of inequality have higher
levels of both social and health problems, including higher
crime and violence rates, greater degrees of mistrust and in-
creased levels of obesity and mental illness.
Researchers have demonstrated that it is not income lev-
els per se that predict health and social problems. What
is it, then?
Differences within countries are as important as levels of
income. In other words, there are two major ways for health
and social problems to deepen. The first is poverty; and
the second is inequality. This means that, even in relatively
wealthy countries such as Canada, big differences in wealth
between the rich and the poor can cause societal distress
and unrest.
You believe that businesses and other institutions play a
key role in perpetuating inequality. How so?
In any organization — whether it is public, private or not-
for-profit — internal processes create power dynamics,
and those dynamics foster cultures where gender-based
discrimination, racial discrimination, and discrimination
towards other vulnerable populations proliferate. Organi-
zational practices — many of which have become taken-
for-granted — perpetuate inequality by privileging some
groups over others in hiring, promotion, reward and oth-
er decisions. This is only being amplified in the current
rotmanmagazine.ca / 123
 Organizations have started to treat people who are not
in the dominant power group as somehow not fully human.
environment as new technologies make our systems more
efficient, effective and stronger. For example, artificial-in-
telligence algorithms derived from big data only reinforce
the biases that are baked into old ways of doing things,
because all data is about the past.
In your work you have argued that four sets of contempo-
rary practices increase inequality. Please describe them.
In the paper you are referring to (co-written with John Amis,
Kamal Munir, Tom Lawrence and Paul Hirsch), the four
practices are shown to be compensation arrangements, divi-
dend payments to shareholders, avoidance of tax payments,
and philanthropic choices. But, as we reported, the first of
these, compensation, has the biggest direct impact.
With the emphasis on shareholder return and distrib-
uted ownership across many shareholders, many firms use
stock options and performance-related compensation to
resolve the principal-agent problem. As a result, we have
seen extraordinary growth across industries in salaries
and bonuses for senior executives. This was once associ-
ated predominantly with executives in financial services,
but managers in other types of organizations are now being
compensated on a similar scale. UK house-builder Persim-
mon, for instance, paid its Chief Executive a £110 million
bonus in 2017.
I don’t believe that such extraordinary incentives make
any sense. After all, who would want to hire someone into a
CEO role if that person was motivated only by money to do
the job? I do think, though, that there is a market for CEOs,
and that companies must be competitive to attract talent in
some situations. Even if one believes these extraordinary
payments generate shareholder wealth by aligning incen-
tives, these practices still create dramatic inequality, with
CEOs being paid up to 300 times more than some of their
firms’ employees.
You have found that these economic inequalities exacer-
bate social and occupational inequalities. How so?
Women and ethnic minorities, for instance, are less likely
to occupy lucrative positions; and investment bankers tend
124 / Rotman Management Spring 2019
to earn many times what a nurse, teacher or retail associ-
ate makes. Recent trends in the private sector that reward
large cash holdings have also played a role in exacerbating
inequality, as they result in larger dividends to shareholders
at the expense of other claimants — especially employees.
Similarly, corporate tax-avoidance strategies lessen the re-
distribution of wealth in societies, effectively reducing fund-
ing to education, health and the social safety net.
Describe how inequality has created ‘hourglass organi-
zations’.
Inequality has only been deepened by outsourcing and cost
reductions, as well as the broader transformation of many
Western economies from a basis in manufacturing to servic-
es. Cost reduction strategies worsen inequality because low-
er paid employees face stagnating wages and the prospect of
job loss. These disparities have been exacerbated by the shift
from manufacturing to services, resulting in ‘hourglass or-
ganizations’: Large numbers of high-status professional and
managerial jobs requiring formal credentials and qualifica-
tions occupy the top half of the structure and equally large
or larger numbers of uncredentialed, low-status occupations
inhabit the bottom half, with relatively small numbers of
technical jobs in between.
Put simply, contemporary organizations have become
bifurcated systems in which senior managers and some jobs
requiring professional expertise are well-rewarded while
those on the front lines, such as nurses, retail assistants and
call-centre operatives, are not.
What are the implications for society?
When we treat people like robots and lose a sense of the
whole person — when there is no sense of humanity in our
interactions with each other and we just view each other in
analytical terms — the very legitimacy of the corporation in
society comes into question.
What was the original purpose of the corporation in
society? It was to allow people to come together to ac-
complish things that they couldn’t accomplish apart, and
to allow for risk sharing and coordination of activity that
couldn’t be accomplished any other way. But today, organi-
zations have started to treat people who are not in the domi-
nant power group as somehow not fully human participants
in the activity of the organization. They treat them like
dehumanized robots, and this threatens the legitimacy of
the corporation in society both by creating job crises and
by diminishing civility. In the U.S., these problems have led
to a national crisis.
How is the growing ‘gig economy’ affecting all of this?
In the gig economy, individuals who would previously have
been employed as delivery or taxi drivers are now hired as
independent contractors, without access to many of the
benefits required under employment laws, thus dramati-
cally lowering costs for their employers. Arranging work in
this way also minimizes workers’ basis for social comparison
that tends to maintain parity of wages across positions.
The economic, physical and psychological effects on
those engaged in such tasks can be disastrous: With costs
kept low, replacement of workers is easy. Workers are fined
for failure to complete assignments fast. And under close
monitoring made possible through surveillance technolo-
gies, many workers not only earn less than they would under
traditional employment arrangements, but they also suffer
physical and mental illnesses.
Such dynamics can lead to catastrophic outcomes —
as in the widely reported case of UK delivery driver Don
Lane who died after missing several scheduled health
checks because he felt unable to take a day off from his de-
livery rounds. Led by charismatic entrepreneurs and hyped
up by exuberant market analysts, firms in the gig economy
often hide new, oppressive power relations privileging
the credentialed elite over workers on the other side of the
digital divide.
You have argued that a lack of access to powerful net-
works can be a big problem. Please explain.
The difference in opportunities and advantages enjoyed
by those at the tops of organizations is reinforced by the
knowledge, networks and resources that their roles provide.
While some independent entrepreneurs and professionals
benefit from the extra capital organizations free up from job
outsourcing and tech substitution of jobs, the people left
working in low-level jobs are almost inevitably less fortu-
nate. The tasks they are employed to perform prevent them
from accumulating the varied experience that workers in
other positions can accrue, making a career ladder almost
impossible.
These jobs provide very few opportunities to meet
and develop relationships with senior members of the orga-
nization, and thus to cultivate organizational mentors and
sponsors.
Even simple job performance measures, such as punc-
tuality, can create difficulties for those who are unable to
afford reliable transportation or childcare, potentially jeop-
ardizing employment and definitely limiting career progres-
sion. On top of that, low-level jobs have become more and
more demanding socially. People in these roles often are
required to be pleasant and engaged, and are evaluated on
that. All of these factors prevent those disadvantaged by
their organizational positions from climbing out of them,
perpetuating and amplifying economic inequality.
What steps can an organization take to address these
complex issues?
Every organization, large and small, should be adopting
best practices in terms of remediating inequalities. For
example, by using gender-blind reviews of resumes when
hiring, or by rethinking job design to make low-level jobs
more meaningful. The broader opportunity at the most se-
nior levels of the organization is to really reflect on the aspi-
ration of the firm for creating value over the long term. The
key is to examine whether or not that aspiration is aligned
with the core values of the people who are engaged by the
organization.
For example, if your aspiration is to become ‘the best’ at
something, what does that mean for all the people who can’t
afford the best? What does it mean for those who haven’t
had the required educational opportunities and can’t tap
into the systems that are creating ‘the best’ of something?
rotmanmagazine.ca / 125
 The challenge for every leader is to act with the kind of humanity,
responsibility and integrity that aligns with their personal values.
On the one hand, the depth of inequality has been increas-
ing, but on the other hand, there has never been a greater
opportunity for leaders to intervene and do something
about it.
I am so inspired by my students. Most of them are in
their mid to late 20s, and they truly do not care about ‘con-
suming stuff ’ as much as my generation did. They care
much more about things like equity and humanity and qual-
ity of life, and they are only interested in working for compa-
nies that seek to do something important and valuable and
constructive for society.
You believe that a big part of the answer is for organiza-
tions to embrace Stakeholder Theory. Please explain.
In the traditional view of a company — the shareholder view
— only the owners or shareholders are important, and the
company has a binding fiduciary duty to put their needs first
and increase value for them. Stakeholder Theory instead
argues that there are multiple parties involved, including
employees, customers, suppliers, financiers, communities,
governmental bodies, political groups, trade associations,
and trade unions. Even competitors are sometimes counted
as stakeholders. Stakeholder Theory stresses the intercon-
nected relationships between a business and all of these
groups, arguing that a firm should create value for all stake-
holders, not just shareholders.
Cornell Professor Lynn Stout is considered the pioneer
of modern Stakeholder Theory, but the ideas are develop-
ing fast. For example, Utah Professor Jay Barney argues
that seeking to maximize shareholder value in the short run
is guaranteed not to maximize it in the long run because
workers and other stakeholders won’t contribute their best
efforts if they’re not part of the system of rewards.
The idea here — and Rotman Professor Sarah Kaplan
(who is also my partner) has written a book about it called
The 360˚ Corporation — is to think of social responsibility
as a massive opportunity for innovation. She argues that
massive breakthroughs can arise from creating value col-
laboratively with stakeholders of all kinds, including, for
example, distributors and suppliers in the value chain and
126 / Rotman Management Spring 2019
local communities where the company has operations. In
this mindset, the key challenge for executives is to create
as much value as possible for stakeholders without resort-
ing to trade-offs. In the book, Prof. Kaplan argues that great
companies endure because they manage to get stakeholder
interests aligned.
When you look at strategy through the lens of ‘co-creat-
ing value with our stakeholders’ and tackle it as an innova-
tion problem, you get to really tap into the unique identities
of the people who engage with your company and unleash
their creativity and capabilities. And when you do that, you
can pay everyone decently.
Can the average company really influence the practices
of, say, its suppliers?
I would argue that there is no such thing as an average com-
pany anymore. We are living on a planet where we are con-
suming something like eight times more than what is sus-
tainable, and as a result, leaders who seek to represent the
next generation of corporate activity will have to take on the
most important challenges of our time.
This is a significant opportunity for leaders every-
where to ask, What is our aspiration? How are we creating
prosperity for society? And, Is this framing of ‘what we
aspire to accomplish’ satisfactory, given what we know to
be true about the world around us? The challenge for every
leader today is to act with the kind of humanity, responsi-
bility and integrity that aligns with their personal values
as human beings.
Anita M. McGahan is a Professor of Strategic Management and the
George E. Connell Chair in Organizations & Society at the Rotman
School of Management, with cross-appointments to the University
of Toronto’s Munk School of Global Affairs and Faculty of Medicine.
She is a past-President of the Academy of Management (2016-17).
Learn from the best.
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Learn from
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Each year, the Rotman School of Management
hosts almost 100 public talks by bestselling
authors, executives and other thought leaders.

Highlights
april 24, 5:00-6:00 pm may 30, 5:00-6:00 pm
The Honourable Kevin Rudd Tomas Chamorro-Premuzic
President, Asia Society Policy Institute; 26th Prime Minister Chief Talent Scientist, ManpowerGroup; Professor,
of Australia University College London; Author
Topic: “China-Canada-U.S. Relations: What Happens Next?” Topic: Why Do So Many Incompetent Men Become Leaders?
(And How to Fix It) (HBR Press, 2019)
april 29, 5:30-6:30 pm
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Topic: Rage Becomes Her: The Power of Women’s Anger
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may 17, 3:00-4:00 pm

Charles Fishman
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Emily Oster Topic: One Giant Leap: The Untold Story of How We Flew to the
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Topic: Cribsheet: A Data-Driven Guide to Better, More Relaxed
Parenting, from Birth to Preschool (Penguin Press, 2019) june 6, 8:00-9:00 am

may 24, 8:30 am-4:00 pm

Mark Stabile
Stone Professor & Director - Stone Centre for the Study of Wealth
1st Bi-Annual Sandra Rotman Centre Inequality, INSEAD
for Health Sector Strategy at Rotman Topic: “Health Care and Inequality”
Conference
Theme: “AI,
“ Digital, and the Creative Destruction of Careers june 20, 5:00-6:00 pm
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Co-Founder and CEO, DreamxAmerica
Topic: “25 Million Sparks: The Rise of Refugee-Entrepreneurs in
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