®

REAL LEARNING. REAL IMPACT

SEIZING TOMORROW’S
OPPORTUNITIES
Orchestrating Winning Performance

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Our Vision
Challenging what is and inspiring
what could be, we develop leaders
who transform organizations and
contribute to society.

Our Mission
Founded by business executives
for business executives, we are an
independent academic institution
with Swiss roots and global reach.

We strive to be the trusted learning

partner of choice for ambitious
individuals and organizations
worldwide.
4

In November, IMD’s
signature program was
held in Dubai for the first
time. It was an inspiring
and stimulating week, and
we hope you left feeling
energized and full of bold
new ideas for the future!
This has been a landmark year
for Orchestrating Winning
Performance (OWP). In addition to
a very successful Lausanne edition
in June, we also met in November
for the first ever OWP to be held in
Dubai.
We are proud and delighted to say
that the inaugural meeting in the
United Arab Emirates was one of
the best OWPs yet!
The program brought together 20
faculty and 150 participants from
45 nationalities traveling from 33
countries for five days of interactive
sessions, networking opportunities
and keynote speeches. The topics
discussed were as diverse as they
were enriching.
Scan me
To watch the video
Keep your OWP neurons firing!
REAL LEARNING
After such an energizing and
engaging week together, we wanted
to help you maintain this momentum
by providing you with this overview of
the content from OWP Dubai.
In these pages you’ll find interviews
with our truly inspirational keynote
speakers on topics as varied as the
UAE’s mission to land a probe on
Mars by 2021, and how education
can inspire the next generation of
tech entrepreneurs in Africa.
You will also find summaries of
the main sessions with our faculty
members, which we hope will serve
as a reminder of what you learned
and – more importantly – how you
can carry these lessons forward
and find success and purpose in
your private and professional lives.
As you probably recall us saying at
the opening ceremony: neurons
that fire together, wire together!
This means that it’s not enough to
be exposed to ideas once. So, we
encourage you to set time aside
to revisit your insights from OWP
regularly so they stay fresh in your
mind.
Professor Jean-François Manzoni
IMD President and Nestlé chaired
Professor
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REAL IMPACT
It’s also important to remember
that, for these ideas to have a real
impact on your life, you need to
implement what you have learned
and regularly review the actions you
are taking, the impact they have and
ask yourself if you need to adjust
accordingly.
It was a pleasure to meet you in
Dubai. We know how precious
your time is, and we hope that you
enjoyed your week with us and with
one another.
We also hope that you will take the
time to review your key insights
from the week, and that this
summary will help you to do so.
Best wishes for continued success.
Sincerely,
Your OWP Co-Directors
Professor Tawfik Jelassi
Professor of Strategy and Technology
Management
6

"If you don’t have

a superior value
proposition, then you
shouldn’t be offering a
premium. It’s something
that I am going to take
away and work on."
Alan Sy
All Press Inc
Japan

STREAM:
The importance of business models in value creation
Salvatore Cantale
 7

Contents

Welcome - Foreword 5

• Seize tomorrow’s opportunities – are you future-proof? 8

Developing Leaders 11

• Getting relationships right 12

• How to lead in a crisis 16
• How to become a great leader and break bad habits 18
• Three questions for: Lindiwe Matlali 20
• Leading and managing change 22
• In the frame: How to make better strategic decisions 26
• Effective board leadership in the digital age 30
• Leadership skills for the future 34

Transforming Organizations 37

• Disrupting the disruptors 38

• Building an ‘intrapreneurial’ family business 40
• Meaningful differentiation: What it is and why your business needs it 44
• Ecosystemic innovation 2.0 46
• Creating, delivering and capturing real value 48
• Orchestrating digital transformation 50
• Three questions for: H.E. Omar Sultan Al Olama 54
• Future-proofing your business with agility 56

Contributing to Society 59

• Three questions for: Omran Sharaf 60

• Artificial intelligence: Boom or doom? 62
• China's innovation imperative 64
• Blockchain: The “big” disruption 68
• Staying ahead of trends and preparing for shocks 72
• Beating the competition 76

Real Impact 81

• Regional innovation 82
• OWP Dubai in numbers 86
8
Seize tomorrow’s opportunities –
Are you future-proof?
In a rapidly-changing world,
strong leadership means always
anticipating, preparing and investing
for the future

Today’s business landscape is changing faster than ever. Rapidly evolving

digital technology, artificial intelligence, disruption from abroad, new
generations entering the workplace, agile leadership, design thinking:
these trends and more are shaping the future.

At OWP Dubai 2019, we carefully selected a wide range of topics to

help leaders stay ahead of the curve and to create opportunities out of
challenges.

By better understanding and analyzing the forces at play, leaders can

adopt a more positive, opportunity-rich outlook.

Strategy is about where to play and how to win. Identifying potentially great
opportunities is hence an important, necessary first step, but it must be
complemented by selecting the opportunities that are most promising for
you and your organization.

Seizing opportunities requires aligning your organization’s forces,

resources and capabilities. Too often organizations identify the right
opportunities but are unable to make the most of them because there is
insufficient alignment across the silos.

OWP Dubai 2019 featured several sessions to help you align your
organization and create the right capabilities, with topics like
competitiveness, leadership, transformation journeys, organizational
culture and many others.

The first edition of OWP Dubai also offered several sessions focused
specifically on leaders’ personal development, which is necessary for
leaders to help their organizations remain at their best.

Your organization faces new challenges and so do you – stay future-proof.

9
10

"As a leader you need

to be accountable and
to be able to represent
yourself in the crises
that we go through."
Susan Musonda
Barclays Bank Zambia Plc
Zambia

STREAM:
Framing matters – learn to frame strategic challenges
Arnaud Chevallier
 11

Developing Leaders

Becoming a better leader for your

business and society
12
More often than they realize,
managers set employees up to fail
by applying labels and reinforcing
biases that workers then live down
to. How can we save ourselves
from what we call the 'set up to fail’
syndrome?
Getting relationships right
By Jean-François Manzoni, IMD
President and Nestlé Professor
If I was to describe someone to you
as an extrovert, you would probably
imagine them as loud, outgoing or
boisterous. If I labelled someone
confident, you might think they are
assertive, positive or self-assured.
You would form a clear picture in
your head, even though you don’t
know this person.
Human beings apply labels to
people and situations because
these labels help them to function
faster by suggesting what behavior
to expect from the other party and
hence how to behave towards them.
This simplification is very helpful for
individuals living in an increasingly
complex world.
Now, imagine an individual driving
fast and somewhat furiously. As the
individual overtakes us vigorously
and forces us to brake, most of us
would probably jump to the most
obvious conclusion – this individual
is reckless and irresponsible! We
would generally not think that this
is someone driving fast to make an
important appointment.
This is another common
characteristic of human beings that
psychologists call the fundamental
attribution error. When explaining
others’ behavior, we tend to
overestimate how representative
and intentional the behavior is,
which leads us to be more likely
to attribute the behavior to an
enduring individual characteristic
than to circumstances.
This process is particularly acute
for negative labels because,
empirically, bad is stronger than
good. Negative impressions are
quicker to form and harder to
change than good ones.
Human beings have evolved this
way because, for our ancestors, the
world was a very dangerous place.
The choice was friend or foe, and - if
foe - whether to fight or run. Under-
estimating a threat then might cost
you your life! A few thousand years
later, most of us now live in safer
environments but our brains are
still hard-wired to scan for threats.
In crowd, out crowd
How does this apply to the world
of work? Over the last 20 years,
my research has examined the
experiences of thousands of
managers representing all levels
of seniority, industries and parts
of the world. In particular, I asked
managers how they think of their
various subordinates.
“Better” performers, they say, tend
to be motivated and take charge.

They are proactive and innovative, see
the big picture and communicate up
and down more comfortably.
“Weaker” performers rarely go
beyond the call of duty, often
need to be pushed and hoard
information. They let themselves
get swamped and tend to be more
critical of innovation.
When asked if they treat these two
groups the same way, managers
explain that of course, they do not!
They tend to be more empowering
and more supportive toward their
perceived better performers,
and more controlling and less
encouraging toward the “weaker
performers”.
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This segmented approach is
typically well intended; the goal
is to provide more support and
guidance to employees who need
it. Unfortunately, it also leads
these individuals to feel over-
monitored, under-trusted and
under-appreciated, which leads to a
decrease in their motivation and in
their self-confidence, which in turn
leads to reduced performance over
time.
These observations led us to
conclude that, when weaker
performers underperform, it’s
often not in spite of their boss’s
behaviour, but rather because of it.
We called this dynamic the ‘set-up-
to-fail syndrome (SUTF).
14 It’s not just about perceived
performance
More recently we have realized
that SUTF labels go well beyond
someone’s expected performance
or competence. For example, we
often apply negative personality
labels such as ‘difficult’ or ‘know
it all’. We routinely assess others’
motivation and apply labels like
‘ambitious’, ‘lazy’ or ‘self-centered’.
We make assumptions about how
someone will respond to a new
project…
To our surprise, we came to
understand that the scope for such
labels is considerable and spans
culture, gender, age, ethnicity,
socio-economic background,
profession and department or
organization.
Continued research also led us to
realize that – quite obviously, when
one thinks about it - labels are not
only applied between bosses and
subordinates; they are applied very
liberally by individuals and groups
to other individuals and groups.
The SUTF syndrome is hence a
very pervasive phenomenon that
gets triggered by an individual or a
group negatively labelling another
individual or group.
Self-fulfilling process and
confirmation bias
But if this is true, why haven’t we
noticed earlier that our negative
attitudes towards individuals and
groups tend to be dysfunctional?
There are two reasons for this.
First, we create a self-fulfilling
process where our behavior makes
our expectations come true.
Because we observe what we
expected, we don’t question our
responsibility in the process!
For example, A labels B negatively
and starts behaving more negatively
toward B. After some time, B
notices and starts to feel frustrated
and/or annoyed, which leads B to
behave less positively toward A
than s/he would have otherwise. A
notices this negative behavior and
“reluctantly” confirms the opinion
that s/he had of B… Meanwhile, A’s
behavior toward B also leads B to
develop a negative impression of
A, which at some point translates
into a negative label for A. Once
B has labelled A negatively, B’s
negative predisposition toward
A further reinforces B’s negative
attitude toward A, which leads to
more negative A behavior toward B,
which then leads B to “confirm” his/
her impression of A. Both parties
see their negative impressions
confirmed as they both live down to
the other party’s expectations.
But wait a minute! Neither A
nor B misbehave all the time,
right? They both live down to
one another’s expectations, but
not 100% of the time! Why don’t
A and B notice that the other
party does act cooperatively and
productively some of the time?
The answer lies in human beings’
propensity to display confirmation
biases, i.e. to observe, interpret
and remember reality in ways
that are heavily shaped by our
expectations and beliefs. Basically,
human beings tend to find it easier
to unconsciously “distort” their
perception of reality than to change
their beliefs. As a result, A’s and
B’s positive behavior will tend to
disappear from the other party’s
radar screen. They won’t notice it,
and if they do they will find a reason
to disqualify it.
As a result, labels we assign to
people become very hard to change
as they become self-fulfilling and
self-sealing - both for us and for the
other party.
Prevention
How can we prevent this syndrome?
The problem often starts with
recruitment. Invest time and
energy, not just on competency, but
on finding people that are the right
psychological fit.
You should also agree on mutual
expectations, set KPIs and clarify
how to work together. Spell out your
non-negotiables, and ask them
about theirs. And be sure to give
feedback to the other party - sooner
rather than later.
Be mindful of the labels you are
applying to people and be mindful of
how you may be labelled. Are there
some behaviors you should avoid?
Interruption
Interrupting the SUTF syndrome
is hard because by the time we try
to interrupt it, both parties have
experienced substantial negative
emotions and both believe they
have clear and incontrovertible
evidence on the negative
behaviours and intentions of the
other party.
Your goal should be to hold a
productive conversation leading to
an agreement on the contribution
of both parties and on what they
can do to improve their joint
performance and relationship.
But, because of the strong
emotions likely to be present,
this conversation will need to be
prepared; it cannot be a traditional
“feedback session”. When a
relationship is not good, mutual
trust is missing and feedback is
hence unlikely to be accepted by the
other party.
What is needed is a ‘reset’ based on 15
two premises: that you do not see
the whole picture, and that your own
behaviour has contributed to some
extent to this dynamic.
Search for the disconfirming
evidence that may overturn your
confirmation bias and make a
conscious effort to “decenter”, i.e.
to look at the situation from other
angles. Work also at restoring
empathy and compassion for the
other party. This will help you to
approach the conversation and its
preparation with a more positive
attitude.
Getting relationships right is not
easy, and it is sometimes too late to
save some. But making a conscious
effort to prevent and interrupt SUTF
syndrome can help to break the
cycle, improve the atmosphere,
and aid your and your team’s
performance.
16
What happens in a crisis, how
should you react, and how do
you even know you are in one
in the first place?
How to lead in a crisis
By Sameh Abadir, IMD Professor of
Leadership and Negotiation
The higher you progress up the
career ladder, the less honest
feedback you will receive. This
means that as your professional
life progresses, the lonelier you will
become.
This can make recognizing that you
are in a crisis – and dealing with it –
even harder.
Lesson number one? Acknowledge
it. This can be difficult because
often it is only the people around us
that know we are in one. We are who
we are, and unless people tell us
that we’re facing a crisis, business
as usual will continue.
Emotion up, logic down
What happens in a crisis? As
someone who served in the
Egyptian Special Forces, I’ve
learned some valuable lessons on
the events that typically occur.
Number one – people act with their
reflexes, emotion is turned up high,
and logic is turned off. It is like a
heightened discussion with your
family. When you lose your temper,
are you thinking logically before you
speak? Of course not.
Secondly, under severe stress it is
impossible to predict a person’s
behavior. Some people have the
ability to absorb it, some don’t. You
need to surround yourself with
people you can trust, and it also
helps if you stay physically fit.
Third, you must save people’s
energy for what can be an extremely
stressful and tiring experience. If
you can let people walk, why ask
them to run? If they can sit, why ask
them to stand?
Fourth, make sure people working
for you share bad news as early as
possible. You are more experienced
so you can step back and look at the
broader picture – they can’t.
Finally, and most important of all, if
you are ambushed, professionally
or privately, the only way to survive
is to counter-attack.
Allies in a crisis
You have three allies to help you
respond to a crisis.
The first is time. Ask yourself, can I
buy more time to deal with a crisis?
Unfortunately, the answer to this
question is usually no.
Second, you have distance. Can I
step back and return to my base?
This is where you can get help and
feel comfortable.
Lastly, you have your own
moderation. People who overreact
in a crisis tend to make it worse or
to create a ‘post-crisis crisis’. For
example, if you get bad news by
mail, sleep on it before you respond
if you can.
Empathy is good but you shouldn’t
show too much. Empathy is
exhausting, and it’s a zero-sum
game; you give it to some people
and you may be taking it away from
someone else. And from a business
perspective, too much empathy can
erode business ethics.
After a crisis – always stick to the
facts, even though everyone will
have an opinion, and avoid too much
embellishment.
Even when the crisis has seemingly
come to an end, you must stay
focused. If you lose your job, for
example, it’s important to stay alert
to any potential knock-on effects,
such as disruption to your personal
life. Again you need to beware of the
post-crisis crisis syndrome.
Saving face
When trying to solve or manage a
crisis, never allow someone to lose
face. History can teach us some
powerful lessons about this.
Take the 11-day 1962 Cuban Missile
Crisis for example.
Robert F Kennedy, US Attorney
General at the time, said that his
brother President John F Kennedy
was careful not to disgrace Nikita
Khrushchev or to humiliate the 17
Soviet Union.
Or take the Kadesh peace
agreement in 1259 BC.
You can be as powerful as a pharaoh
or a king, but you still need to
declare victory. If you humiliate
people, you are forcing them to
decide whether to be smart, or to
maintain their dignity.
Finally, effective teamwork where
everyone understands their role
is essential. When a crisis occurs,
multiple fronts will appear at the
same time. No one – including
you – can handle all of them. We
are all gifted at different things and
everyone should be doing what they
do best.
Scan me
To watch the video
18
The most important thing you do as a leader is to shape the
organizational culture around you.
The first step in this process is to
acknowledge that your company
has a culture, and it can be defined
as ‘what people say and do when
they think you are not looking’. It’s
reflected in the priorities, the values
and the sense of what is the right
thing to do in your organization.
You influence this culture, whether
you want to or not. You influence
it through what you’re saying and
what you’re rewarding. And usually,
you are making this culture worse,
not better.
Thankfully, it’s not hard to change
an organization’s culture. What is
difficult is shaping this culture in
the way that you want.
The leader’s edge
It’s possible that a good person or
a good leader can be an invisible
role model, or even a bad one. This
is because role modelling is not a
side-effect of leading, it’s a skill you
can learn.
How to become a great leader and
break bad habits
By John Weeks, IMD Professor
of Leadership and Organizational
Behavior
The best role models share certain
characteristics. For example, great
role models are teachers, able to
explain what they are doing and
why. But while it’s not true that all
teachers can be great leaders, it is
true the other way around.
We should be able to see things
in our role models that we would
like to incorporate into our own
behavior. It’s also important to
remember that actions matter
more than words – great leaders
make their behaviors visible, in big
and small ways.
Consistency matters most.
Bad behavior leaves a stronger
impression than good behavior, so
building credibility takes time and, if
you don’t want people to lose faith in
you, it’s a process that never stops.
Derailing behavior
In times of stress or embarrassment,
you may lose your cool and act in a
way that you later come to regret.
You may ‘derail’ yourself.
These derailers are often
dysfunctionally extreme versions
of attitudes and behaviors that are
normally part of what makes us
successful.
We all have these derailers, and
usually we cannot change them –
but we must be able to recognize
them and manage them. To lead
others, you must be able to manage
yourself.
Your aim is not to change or get rid
of your derailer. It is, after all, an
exaggerated version of something
that is otherwise a strength. To do
that you must increase your self-
awareness, learn what it is that
triggers your derailers, and build
the emotional intelligence you need
to stop this happening.
Talk to your team about your
derailers – they will already be
aware of them! You also need to
have empathy and understand that 19

other people, like you, are human

Research carried out by psychologists Robert and
and have their own triggers.
Joyce Hogan two decades ago pinpointed 11 traits
that, when triggered or taken to the extreme, can
Can you change bad habits?
derail us on our quest to become a successful leader.
Most of us have tried to change a
habit at some point in our lives – it’s
Bold: which can lead us to behave overly self-confident,
not easy.
entitled
Cautious: unassertive, resistant to change
There are some lessons we can
take from Charles Duhigg’s book, Colorful: dramatic, attention-seeking
‘The Power of Habit’. Diligent: meticulous, precise
Dutiful: eager to please, reluctant to act independently
To change a leadership habit so
Excitable: moody, easily annoyed
you can be more consistent as a
Imaginative: thinks and acts in unusual or eccentric
role model, you first need to be as
ways
specific as you can with your goal.
‘I need to listen more’ isn’t enough, Leisurely: overtly cooperative but privately irritable,
stubborn
but saying ‘I need to listen and
not interrupt people in my weekly Mischievous: risk-taking, limit-testing
meeting’ is more likely to succeed. Reserved: aloof, indifferent to the feelings of others
Skeptical: distrustful, sensitive to criticism
You also need to recognise what
is the trigger that will take you
off autopilot, and ask, who is my
accountability partner?

Another method is to reward

yourself. If you have a big goal, give
yourself rewards along the way
as these small, immediate wins
will be key to creating a sense of
momentum.

Finally, ask yourself, do you believe

enough in the change to stick with
it, even in times of stress? If not,
you’re unlikely to see the change
you want to see.

Scan me
To watch the video
20
 Three questions for: 21

Lindiwe Matlali
The founder and CEO of Africa Teen
Geeks on her journey from growing up
in poverty in apartheid South Africa to
becoming a CEO improving the lives of
children by teaching them how to code.

1. Can you describe the journey that has brought you to

where you are today?
I am the youngest of seven children. My mom died when I was four
years old. My father ran off with another woman after my mother’s funeral
to avoid responsibility. We were raised by my grandparents who were
already pensioners in their 70s. They ended up having to look after 12 kids,
all under the age of 16, because my mom and her sister died two weeks
apart. It was a huge challenge for them. And it was the height of apartheid.
I was a poster child for poverty and disadvantage.

I got to where I am today because my grandfather valued education.

He always told us that if we stayed at school and we worked hard, one day
we wouldn’t even remember we were orphans. I ended up graduating
from the University of Cape Town, one of Africa’s best universities. I sit on
President Ramaphosa’s commission for the Fourth Industrial Revolution
and am recognized in my field as a leader. I was recognized by Queen
Elizabeth II as a "Point of Light". To me that is proof that education is an
equalizer.

2. What inspired you to create Africa Teen Geeks?

I founded it six years ago after I was exposed to an eight-year-old girl
who had just created an app. I was so inspired that I started to look around
at what was happening with coding in our schools. I was shocked to learn
that only five percent of our schools taught IT and those schools are mainly
in affluent areas. I contacted the CEO of Microsoft South Africa at the time
and asked if he would help me set up a program to teach kids how to code.
Through that contact, we received out first grant. We’ve now reached over
100,000 kids.

3. What advice would you give to young leaders?

I’ve always believed in raising aspirations. You could say you want to be
an astronaut and fly a space shuttle. But if you don’t get there, the chances
are that you could still become a pilot and fly a plane.
Scan me
To watch the video www.africateengeeks.co.za
22
Leading and managing change
By Bettina Büchel, IMD Professor of
Strategy and Organization

Change is often handled in a ceremonial way, hindered

by a lack of commitment or even active resistance.
Success requires broad stakeholder support and smart
communication.

No company can escape the need for change. Markets, industries and
ways of working are transforming rapidly across the globe. Unfortunately,
many companies struggle to adopt and adapt effectively to change.
Strategic initiatives can often feel ‘ceremonial’, driven by inefficient
hierarchies and choked by disinterest.

How can companies achieve real impact with transformation, while

ensuring the process runs smoothly?

The journey to impact

Let's divide the change process into two phases: inception and
implementation. During the inception phase, the emphasis should be on
finding the right solution and aligning key stakeholders. As the project
moves into its implementation phase, the focus shifts towards engaging
more broadly and delivering for the organization.

INCEPTION PHASE

IMPLEMENTATION PHASE

ALIGN KEY STAKEHOLDERS ENGAGING THE ORGANIZATION

Understand Enlist Envision Motivate Communicate Act Consolidate

1. Understand the organization
Gather information to identify
the problem by interviewing
leaders, managers, and front-
line employees. Engage with
customers and non-customers.
Benchmark competitors and other
organizations. Determine root
causes, not symptoms. Create
alignment with key stakeholders by
sharing an honest assessment of
the current state of affairs.
2. Enlist key people
Who in the company is negative,
neutral, positive or a champion?
Who are your sponsors, project
leaders, project team and key
stakeholders? You may find that the
majority of people are ‘bystanders’,
while there is a limited number of
supporters who can help you make
initial progress.
3. Envisage the future
Co-create the future by involving
all stakeholders. The greater the
input from others, the greater their
commitment. If you are creating
something new, consider involving
others early on. Articulate your
vision. Make it tangible, desirable,
feasible and flexible, focused and
simple. Great visions are behavioral
at their core and translate easily
into action. Define how success is to
be measured.
4. Motivate the why?
Communicate the ‘why’ at both
a rational and emotional level.
Create a positive sense of urgency
by emphasizing opportunity over 23
crisis. Share information and
communicate honestly: What are
the implications of the status quo?
Make it personal: Why might the
change be personally desirable?
Encourage input and two-way
dialogue.
5. Communicate
Mobilize the organization around
the future state. Create certainty
and reduce anxiety by establishing
clear roles, expectations and
targets. Test concepts with various
groups to surface barriers to
adoption and then seek to mitigate
them. Use various methods of
engaging communication such as
metaphors, stories, and face-to-
face dialogue.
6. Act
Encourage an experimental
mindset by testing ideas in the
spirit of learning. Make structures
compatible with the vision by
aligning practices, policies and
systems. Provide the training that
employees need. Generate short-
term wins, and deal with those who
undercut needed change.
7. Consolidate
Move into a continuous
improvement loop. Continue to
review what is working and action
what is not. Accelerate storytelling
with qualitative and quantitative
success stories. Encourage, reward
and celebrate successes. Capture
lessons learned for future projects.
24
Engaging key players
The attitude and involvement of
team members can range from full
resistance to change agent, with a
large number of bystanders who
are typically neutral. The way these
characters are managed through
the process of change will dictate
how successful your project will be.
Typically, organizations tend to
overestimate the importance
of hierarchical relationships
in enforcing change, but these
can be slow, inflexible and poor
at disseminating information
effectively. Conversely, companies
underestimate the power of
informal and formal networks,
which can be more effective in
influencing behavior and sharing
information.
Communicate with impact
Use all mechanisms available for
communication to raise awareness,
accelerate adoption, build
momentum and reach the tipping
point early on, creating a sense of
inevitability. When communicating
remember three things: How you
frame the project, how you focus on
the substance and how you deliver
matters.
Deliver: Not only your words count.
Focus on your tone of voice, facial
expressions and body language.
Frame: Use a varied range of
contexts, such as metaphors,
stories, contrasts, rhetorical
questions, lists and repetitions.
Substance: Ensure your
communication is infused with
moral conviction, collective
sentiments, ambitious goals, and
confidence in those goals.
Managing expectations
As leaders manage change,
they need to remember that the
change process and outcome is
dictated by how people perceived
what happened and what they
expected to happen. It is important
to encourage a desire to change 25
rather than investing in creating
dissatisfaction with the status
quo. Ask the team to support the
process rather than commit to a
plan. Communicate each milestone
in the journey, and do not ignore the
real cost of change in human terms.
When expectations for change
are managed well, people have
a shared story about the future
and understand there will be
setbacks, that multiple levers
must be managed, and - ultimately
- that they play a role and share
responsibility for getting there.
26
Improving how we make
strategic decisions can have
a transformative impact, but
too often executives make
big mistakes early on in the
process.
In the frame: How to make better
strategic decisions
By Arnaud Chevallier, IMD Professor
of Strategy
You are the pilot on a transatlantic
flight. You run through all the usual
checks and then lift the plane into
the clouds but, before you know
it, you have already strayed a few
degrees off-course. Eight hours
later, you are far from your intended
destination and scanning the
terrain below for somewhere safe
to land.
Every executive has the potential
to be this unfortunate pilot. Let a
few small oversights or unchecked
assumptions into the framing of
your decision and, before you can
fix it, your strategy unravels and
results disappoint. The method you
use in the decision-making process
can mean the difference between
success and failure.
Getting a good balance
You can improve your decision-
making by employing a three-stage
process: framing, exploring and
deciding.
• Framing provides the over-
arching question that you want
to answer
• Exploring yields a set of
alternative answers to the
question
• Deciding isolates the answer
that, on balance, best serves
your goals
Choose an excellent frame
Framing is often overlooked, as
it is temping to go straight into
finding solutions. Asking questions
can seem superfluous or even
counterproductive. After all, don’t
we already know what we want to
achieve? Actually, in most cases,
we don’t. After spending a little time
with your original formulation, you
always end up finding a better one.

Making a conscious effort to identify a
better question yields high dividends.
How do you establish an excellent
frame for a decision? Using a
situation-complication-question
sequence with the involvement of
all stakeholders will help to cut
through the noise.
Imagine you are watching a
Hollywood movie with a hero, a
treasure, a dragon and a quest.
The situation is the necessary,
sufficient, positive and undisputed
information that specifies the part
of the universe of interest to us. In
our movie, this is the hero and the
hero’s clearly defined goal - the
treasure. The complication is the
dragon blocking the hero from the
treasure - it is the single problem in
this particular part of the universe.
And the question that we need to
answer is the quest - how can the
27
hero get to the treasure, given that
there is a dragon in the way?
The rules of the frame
We can apply four rules to establish
our frame in a robust way.
The backpack rule: Only include
what you need. Every meaningful
concept in each part of the
sequence must appear again at
least once in another part.
The rabbit rule: No surprise
appearances. Everything in your
question must appear earlier in the
sequence.
The Dolly rule: Clone your
language. Refer to things in a
consistent way. No synonyms or
ambiguity.
The Watson rule: Examine,
question and check your
assumptions.
28

Be a great explorer
Once you have framed your problem, you can begin exploring all options
available to you. This can be effectively navigated by developing a question
or ‘how’ map. Good maps follow four rules:

1. A map answers a single question. This is harder than it sounds; these

ideas can help you stay on target:
• Make each node an idea, not just a title
• Start new nodes in the map with an action verb
• Use a parallel phrase structure to change as little as possible
• Highlight what is changing

2. A map progresses from the key question to a set of potential options:

• ‘Diverge’ by breaking your question into parts to gradually reveal
more detail
• Then, ‘converge’ on a limited set of hypotheses

3. A map has a MECE structure:

• All options and questions are mutually exclusive - with no overlaps
• All options and questions are collectively exhaustive - with no gaps.
• Include everything, even if it seems ‘dumb’ at the time

4. A map has a structure that is insightful:

• It is correct breakdown of the key question and a useful one, using a
perspective that helps you discover more about your options

Make an excellent decision

Employ a decision matrix to rank your options against relevant criteria to
identify the most appropriate solution.

Select good criteria. As for maps, good criteria are MECE and insightful:
don’t double count and include everything that is relevant to all key
stakeholders. Be insightful by giving more weight to important criteria,
making criteria vary in a consistent direction, and choosing a relevant
range for ranking performance.

It’s now time to make your decision:

1. Import feasible options from the ‘explore’ phase into the matrix
2. Input the criteria you’ll use to assess each option
3. Weigh each criterion in terms of its importance, involving stakeholder
views
4. Define a performance scale for each criterion from worst to best
5. Grade the options against each criterion
6. Compute the weighted average for each option

Sanity check!
Finally, run your decision through a
sanity filter. Does the ranking from
the decision matrix feel appropriate
and credible? Would you feel uneasy
sharing the results with any of
your stakeholders? Is your ranking
robust when you change the
weights or the performance score?
Chances are, you’ll want to adapt
some of your variables, and that is
perfectly fine. This whole approach
is meant to get you to see your
decision in a new light.
29
Once you’ve completed your
corrections, you are ready to
implement your decision. Do so
still by proceeding cautiously and
keep an open mind. As you move to
implementation, you might uncover
new evidence that will make you
want to revisit your question, your
options, or your criteria. If you think
that’s warranted, do so and correct
your course accordingly.
30
Greater demands, pressure
and scrutiny are being placed
on corporate boards in the
digital age. Today’s most
effective boards focus on
risks, strategy, management
relations and integrity.
People quality,
Effective board leadership in the
digital age
By Didier Cossin, IMD Professor of
Finance and Governance
The playing field for companies and boards has changed beyond
recognition in the the last decade as technology and social expectations
transform the landscape. This has placed increasing pressure on board
members to be capable of understanding and navigating the new world
while delivering and enforcing the highest standards of corporate behavior.
How can board members adapt and perform successfully in this uncertain
and changing environment? Our research shows that a sustainable,
prosperous company needs governance excellence built on the following
four pillars:
SUCCESSFUL &
PROSPEROUS COMPANY
GOVERNANCE EXCELLENCE
Structures Group dynamics/
Information
Focus and & Governance
architecture
dedication processes culture
Transformational leadership
Within this approach, oversight
and leadership must adopt the
same spirit of transformation
that is sweeping through the
conditions that companies operate
in. Transformational leadership
inspires both leaders and followers
to raise each other to the higher
levels of motivation and morality
required to navigate a rapidly
changing world.
In particular, transformational
leaders must:
• Empower followers and nurture
them in change
• Become strong models for their
followers
• Create a vision for the
organization
• Act as a change agent for new
direction within organizations
• Become social architects
New risks in the digital age 31
The role of the board in the age
of transformation has, of course,
retained its core foundations. A
responsible and effective board sets
the tone, expectation and ends. It
identifies the management team
and ensures that expectations are
met.
But, as the world faces new risks
and challenges, the weight of
responsibility on board members
has shifted and evolved, touching
all areas from the balance and
decision making of governance
and the vision and communication
of leadership to the efficiency and
results focus of management,
and the rules and procedures of
administration.
The pressures are great. More
than ever, boards must be expert
and adept at adapting to risks,
32

formulating effective strategies Strategy assumptions and corporate taboos;

in an uncertain economy, building
strong relationships between
the executive and management
teams, and maintaining the highest
standards of integrity.
Risk
To be best in class, boards must
take a view of risk that is untainted
by, and elaborated separately
from, the executive. This involves
extending risk thinking beyond
the executive realms into areas
such as culture, social evolution,
regulatory trends and technological
disruption.
Boards should also seek to
avoid falling into the trap of
underestimating strategic risks
or failing to see a strategic
opportunity, by identifying and
mitigating strategic blindspots.
Strategic blindspots to be wary of
include strategic biases such as
the misjudgement of industry and
competitor boundaries; historic
biases such as influences from
shared frames of reference among
management and boards, and
anchoring influences which can
bias views of the future; corporate
biases such as unchallenged
myopia such as sub-optimal
time devoted to thinking about
the future; and decision-making
biases such as cognitive biases
and problems from flawed group
decision processes.
The board’s active involvement
in strategy should cover co-
creation through retreats and
the identification of blindspots,
supervision through providing
information and coherence, and
support through communication
and by being an ongoing, reliable
presence.

YESTERDAY TODAY

• Is this something we can do legally? • Is this something we can live with?

• Is it permitted? • Is is acceptable?
• Compliance • Integrity/conduct
• No one will know • It will come up
• Don't get caught • You will be caught
• Being judged based on standards of • Yesterday's conduct being judged
conduct applicable at the time on today's standards
• Local impact • Global impact
• Slow impact • Immediate impact
• Somehow will depend on judiciary • You'll be crucified even though still
outcome deemed innocent
• You knew • You should have known
• One thing at a time • It's all commingled

CEO and team selection/relations
The next important responsibility
of board members is to oversee
healthy relations with CEOs and
their teams, and the selection
of appropriate individuals for
those roles. An example to bear in
mind is the leadership transition
attempted by Wang Laboratories in
the early 1990s. Wang, a successful
computer company, had grown an
average of 40 percent each year for
more than 30 years.
An Wang, the company’s founder,
was determined to pass his
personal control to his older son
and ignored strong objections from
directors. Eventually, the company
went bankrupt.
33
Integrity
The integrity of management
is driven and strengthened by
the values and culture of an
organization, training, and its rules,
processes and controls. The board
can complement this structure
by supporting management in
the embracing and embedding of
values, asking lots of questions,
maintaining a healthy level of
scepticism and being prepared to
jump in when things go wrong.
The compass has shifted and,
with it, the tone and focus of the
oversight, responsibilities and
questions now required from board
members.
34
As technology advances in the
‘emotion industry’ and change
creates greater uncertainty,
leaders must learn to better
manage and regulate their team’s
emotions and behaviors.
Leadership skills for the future
By Ina Toegel, IMD Professor of
Leadership and Organizational
Change
Business leaders operate in an
environment that is increasingly
challenging, both inside their
organizations and in the outside
environment. Technological
innovation, new ways of working,
demographic change, the war for
talent and increased competition
are just a few of the pressures
influencing and shaping the market
and workplace.
In this uncertain environment,
leaders need to recognize, process
and interpret an increased amount
of complex emotional information
from their teams that relates to
change and transformation, such
as fear, anxiety and frustration.
The most effective executives of
tomorrow will be those who are
most capable of handling this
emotion-focused task, in order
to help their teams adapt and
perform.
This will mean learning how to
interpret individual and team
dynamics and behaviors, by
understanding the sources of those
behaviors but also by being able to
predict and mitigate them. When
you manage these emotions and
behaviors, you can manage your
talent, inject your teams with agility,
and deliver performance more
effectively.
Technology drives the need for new
capabilities
Technology is taking on more
and more of our tasks in the
workplace, raising day-to-day
questions about the role of human
talent and leaders. Organizations
increasingly feel the need to
upskill their employees. Some
of these capability areas include
cognitive load management -
how to filter and prioritize in the
midst of information overload;
transdisciplinarity – approaching
tasks with a broad approach
that sees the interconnections
between disciplines, functions, and
Scan me
To watch the video

concepts; virtual communication
– skillfully leading teams across
distances and over video.
Innovation is not just impacting
work processes, it is also making
inroads into the area of softer skills.
Advances in artificial intelligence
and data analytics mean that the
‘emotion’ economy is predicted
to be worth $90 billion by 2024.
Analytics and affective computing
enable us to instantly read and
identify feelings, from data and
metrics based on our voice, body
position and body language.
The leaders of tomorrow can
harness this information to focus
on the increasingly vital role of
managing and regulating the
emotions present in teams and
individuals.
Sense making and emotional
regulation
The most important work skills of
tomorrow will include concepts
such as ‘sense making’ and social
intelligence. For leaders in an
uncertain and data-driven world,
being the sense maker for your
teams and organization is likely to
prove crucial.
This means taking in and analyzing
large volumes of data from a wide
range of sources, while being
prepared to let go of old ways of
thinking and assumptions. Helping
others interpret information will
prove to be a critical leadership
skill. Alongside sense making,
leaders must increasingly learn
how to become an emotional and
social ‘whizz’.
Can you understand, recognize and
manage negative emotions in your
team such as anxiety, frustration,
sadness, fear and doubt? Advances
in machine learning mean that
software will soon surpass humans’
ability to read and identify feelings.
However, what will remain a unique
35
people skill – and a differentiating
factor for successful leaders – is
their skill to manage and regulate
the emotions present in themselves
as well as in others.
With the right questions, sense
making can help others ‘map’
and focus their energies in more
effective ways. In an AI-driven
‘emotion economy’, emotion
whizzes can focus on managing and
regulating individuals and teams
towards stronger performance.
The most effective business leaders
of tomorrow will be able to combine
brain and heart - as the sense
maker and the emotional whizz.
36

"Start with the

customer - in a
nutshell. It’s win-win.
It’s about ultimately
letting your customer
be the driver of your
business."
Mag Kirwan
Irish Sea Fishers Board
Ireland

STREAM:
Ecosystemic innovation 2.0
Frédéric Dalsace
 37

Transforming Organizations
Leading your organization to future
success by embracing change
38
Is the dominance of big technology
companies set to be challenged
by a fresh round of industry
disruptors?
Disrupting the disruptors
By Goutam Challagalla, IMD
Professor of Strategy and Marketing
As recently as 2007, the list of the
world’s most valuable companies
was dominated by one industry - oil.
Fast forward to 2017, and this list
had been completely transformed
by technology. Alibaba, Alphabet,
Amazon, Apple, Facebook and
Tencent had all joined Microsoft
on the list of the top 10 wealthiest
companies on the planet.
These companies are all, of course,
famously known as ‘disruptors’. But
what else do their business models
have in common?
They are also - crucially - all
platform businesses. They make
money by connecting two parties
together, with Apple’s business
model of connecting us to app
developers being perhaps the most
famous example.
Uber, Airbnb and Booking.com
are just some of the companies
that have also used this model
to dominate both the industries
in which they operate and the
everyday lives of people all over the
world.
Fight scale with scale
Could the likes of Uber and Airbnb,
huge disruptors of traditional
industries, themselves be ripe for
disruption?
Take ride-hailing apps, for example.
In 2012, their presence in the US
was minimal; just 1 percent of
rides taken were with ride-hailing
companies. By 2018, that number
had grown to 88 percent - a
phenomenal level of growth.
This level of dominance can be
challenged, but only if those
companies looking to ‘disrupt the
disruptors’ have the right strategies
in place.
Traditional methods of
differentiation do not work. If
you want to challenge Uber, for

example, then you need to fight
scale with scale.
This is exactly what Estonia-based
Bolt (formerly Taxify), a company
that is looking to challenge Uber’s
dominance, tried to do when it
launched in London in June 2019
with 20,000 registered drivers.
Nevertheless, Uber is still
responsible for 5 billion trips a
year, and disrupting something this
powerful will take time.
While this happens, challengers
must focus on the principles of how
this disruption could take place.
Don’t focus on the disruptor, focus
on the type of disruption.
Rules of engagement
Rule number one - change the
rules. If you want to disrupt a
market leader, never play by their
rules, because they have mastered
them. Doing the same thing will
only work 5% of the time.
39
Another key principle is to turn of disruptors, is unlikely to happen
the strengths of these major overnight. It will take seven, eight or
players into weaknesses. Uber nine years, rather than in the next
takes 28 percent commission from three.
its drivers, while Booking.com
requires 20-35 percent - numbers And where will we see this change
which represent unbelievable happen first? In Europe, where
power, but one that isn’t immune regulators already have their eyes
to challenges from rivals that on how data is being used, followed
are willing to charge less. This is by the United States. China, which
something that Bolt is doing by is currently much more open to
charging its drivers less to use its the sharing of data, will take a bit
platform. more time, but there are signs
everywhere that a new architecture
Some new companies even believe is being created that could disrupt
they can grow while charging zero the technology industry yet again.
commission. So how will they make
money? Some of them are using
cryptocurrencies to make and
receive payments, relying on the
value of these going up to generate
revenue. But this is, of course,
speculative, and cryptos are treated
with suspicion by governments
around the world.
It is weaknesses like this that tell
us this transition, this disruption
40
Building an ‘intrapreneurial’ family
business
By Peter Vogel, Director of the IMD
Global Family Business Center and
IMD Professor of Family Business
and Entrepreneurship

Family businesses have their roots
in entrepreneurship. Embracing
a culture of ‘intrapreneurship’
– the act of behaving like an
entrepreneur while working within
a large organization – can drive
innovation and future growth while
empowering the next generation.
Many family businesses struggle
with the challenge of managing
successful transitions from
generation to generation. The ideas
and environment that spurred
wealth creation in the past may
have faded, and a new world of
relentless change and uncertainty
awaits.
In the worst-case scenario, we
have the three-generation rule
- where the first generation of
entrepreneurs establishes the
business, the second generation
controls it, and the third generation
destroys it.
While the spirit of entrepreneurship
and ambition might be enough
to build a business empire, it
may not be enough to sustain
it across generations. Instead,
family businesses should
embrace ‘intrapreneurship’ to
drive innovation, resilience and
sustainable growth while also
giving the next generation a real say
and part to play in the future of the
company.
 41

An entrepreneurial vs intrapreneurial approach

PRENEURIAL FAC
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LIVE
PRENEURIAL FAC S INNOVATORS
TRE TO EE AC
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Why intrapreneurship? • Ensure continued

There are several key reasons for innovativeness and
adopting this approach as a family competitiveness of the business
business. Intrapreneurship can: • Innovate new ventures that
become the new core of the
• Foster the natural business
entrepreneurialism in the • Ensure the family portfolio
family, especially among the evolves in a bottom-up, organic
next generation way
• Build emotional ownership • Create opportunity for
and confident, inspired active generations to collaboratively
successors, rather than fearful work on the future of the family
passive heirs enterprise
• Overcome the three-generation • Trigger employee engagement
rule (Generation 1 creates,
Generation 2 controls,
Generation 3 collapses)
42
The 10 commandments of
intrapreneurship
Intrapreneurship is not just about
new business opportunities, but
also about changing the culture of
the organization. This means re-
examining structures, values and
management style. There are 10
key steps that innovators can adopt
to shift their company towards an
intrapreneurial culture.
1. Never ask for permission. Ask
for forgiveness.
2. Put data over rhetoric, and
people before processes and
red tape.
3. More prototyping, less
PowerPointing. Prioritize speed
over aesthetics.
4. Come to work each day willing
to be fired and ridiculed.
5. Stay committed to your goals
but flexible in your approach.
6. Get out of the building.
7. Spend time connecting with and
helping other intrapreneurs.
8. Learn something new without
any apparent practical benefit.
9. Remember to honor your
sponsors.
10. Disregard the job description,
do what needs to be done.
How to build an intrapreneurial
setting
Your company’s teams and
the next generation might be
brimming with new ideas, but this
will all come to nothing without
a supportive framework in place.
To achieve this, family businesses
should build ‘intrapreneurial
ecosystems’, where ideas, talent,
capital, structures and process can
combine freely to create value.
An intrapreneurial setting starts
with honest company and family
values that support agility and
innovation. It requires leaders
to listen seriously to the next
generation, and to serve as a
mentor and sounding board to
enable their ideas to grow. And,
by creating a sense of urgency to
innovate while turning learning into
a playful and creative interaction,
family businesses can put the
foundations of intrapreneurship in
place.
Embracing a culture that accepts
failure will also help the next
generation experience and handle
risk and their own boundaries. It
allows them to make mistakes and
learn from them, so that they can
find and own their personal way of
contributing.
Strategy and capital
There should be a supportive
management and board strategy
to encourage innovation and
diversification. The owners and
Board of Directors can provide
guidelines for industries,
specific types of businesses
or other boundaries for future
entrepreneurs, intrapreneurs or
portfolio builders.
We also need adequate provision for
capital in place, so that innovators
have the finance they need.
This means providing financial
resources to the next generation to
work on their ideas and teaching
them financial literacy. It requires a
healthy balance between M&A and
intrapreneurship investment – with
direct investments into start-ups
and a family-wide ‘seed fund’ for
entrepreneurial ideas. In the age
of platforms, take advantage of
crowdfunding.
Raising the next generation of
value creators
Through fostering a culture
of ‘intrapreneurship’, family
businesses can tap into their
entrepreneurial spirit to diversify
and thrive in an ever-complex
global marketplace. To help
unleash the potential of the next
generation, so that it creates –
rather than destroys – value in your
business, business owners should:
• Involve the next generation
early on and carve out space
where they can grow
• Let your kids take responsibility
and decisions on their own
• Allow them to be critical about
the status quo and create new
ideas
• Ask for their opinion and let
them grow into the firm
This might just prove be an
important step in the pathway
towards a smoother, dynamic
transition between generations.
43
44
To stay relevant and keep
customers engaged,
businesses need to establish
a clear, meaningful identity
and innovate proactively.
Meaningful differentiation: What it
is and why your business needs it
By Dominique Turpin, IMD Dentsu
Chaired Professor of Marketing
The topic of branding isn’t new, but
in an ever-competitive landscape
where innovation is getting harder
and harder to sustain, how can
companies set themselves apart
from their rivals?
To really stand apart, companies
need to focus on two keywords:
‘meaningful differentiation’.
This, as I will explain, is a strategic
process to create your company's
story.
Success stories
Pricing is no longer the only thing
that matters to customers. A
consumer will buy a Nike t-shirt for
$100 that has come from the same
factory as a t-shirt made for $5 – all
because they have an emotional
connection with the logo.
This shows how businesses
and investors are increasingly
recognizing brands as one the
company’s most valuable assets.
Take the success story of
Havaianas, for example. They are, at
the end of the day, just rubber flip-
flops made in Brazil.
But the brand moved into the
fashion market and became a
premium product. How did it do it?
By innovating on every element
of its business chain through
meaningful differentiation.
The company knew, for consumers
to see Havaianas as a premium
product, that traditional marketing
communication and advertising
wouldn’t be enough.
In response to this, they created an
emotional connection with their
audience by communicating the
backstory of the sandal.
The company hired leading
designers to create attractive,
colourful designs and, critically,
included the consumer during
every step of the design process.
Soon international celebrities
were wearing the new designs,
and this allowed Havaianas to
use an 'A'-class acceptance as an
endorsement.
They also used innovative
marketing strategies such as
placing a giant model shoe in
Sydney and using graffiti artists to

market the flip-flop on the side of
buildings in New York City.
Its marketing message has always
been innovative and aspirational.
It also builds on Brazil’s fun image
overseas by portraying Havaianas
as a colourful, joyful, simple
product.
Havaianas also stayed relevant with
new annual collections and now
more than 300 different styles and
colors are on the market. Company
sales and net profits have boomed –
they sold over 240 million flip-flops
last year.
Principles of meaningful
differentiation
What can companies learn from
this? Every business needs to
establish a clear, simple and
meaningful differentiation identity
and ask themselves, 'What is our
45
brand character, what are our
brand values, and what is our brand
purpose?’
Tech giant Apple, for example,
has a brand identity that is artistic
and liberated. Their brand values
are non-conformist and fun. Their
brand purpose is great design and
being easy-to-use.
It’s critically key to be customer-
centric and to listen to their
consumers – then communicate
a clear and consistent messaging
over time.
At the end of the day, your brand
is not what you think it is; it’s what
potential and existing customers
think it is!
46
The world needs a new type
of innovation to solve some of leave behind for your children, and
its biggest problems.
Ecosystemic Innovation 2.0
By Frédéric Dalsace, IMD Professor of
Marketing and Strategy
What sort of world do you want to
your children’s children?
The world faces a long list of
formidable challenges, from
climate change and depletion of
resources to population growth and
growing inequality. Resources per
capita are going down, and the gap
between the haves and the have
nots is getting wider.
In 2010, 388 billionaires owned
the same amount of wealth as the
poorest half of the global population.
Today, that figure has narrowed to
just 26. How long until that number
falls to just one person?
Firms need to be involved, and
they need a new type of innovation
to tackle these challenges. Not
disruptive innovation, triadic
innovation, frugal innovation,
collaborative innovation - or any from
the long, long list of innovation types
currently familiar to many of us.
I am putting forward something I
call ‘Ecosystemic Innovation 2.0’.
What does Ecosystemic Innovation
2.0 look like?
Firms used to be very isolated and
now operate within their own -
albeit extended - ecosystem, doing
their own innovating and handling
beyond their own supply chains. But
they still tend to only work with 'for-
profit' partners.
Companies now need to be more
open. More specifically, they should
start working with new actors,
particularly not-for-profits such as
academia, governments, NGOs and
charities.
What do non-profits bring to the
table? A lot! Legitimacy, reputation,
a license to operate, and the ability
to attract and retain employees as
well as expertise and a long-term
mindset that isn’t just focused on
quarterly results.
They also offer resources, in terms
of huge networks of volunteers,
communities and other people who
can get things done.
Ecosystemic Innovation 2.0 in
action
Let’s take a look at some examples
of this in action.
MOVIN’ON is a successful “think and
do initiative” working on sustainable
mobility that has been developed
by Michelin. This ecosystem now
federates a network of over 300
public and private actors, including
for-profit firms and start-ups, but
also associations, public institutions
and cities. MOVIN’ON pursues
two main goals. First, it fosters the
development of communities of
interest, each working on a specific
topic (such as last mile urban
delivery, automated transport, and
others). Secondly, it spearheads
international learning expeditions
and organizes a yearly event, called
“the Summit”, which over the years
has been described as “the Davos of
sustainable mobility”.
Scan me
To watch the video
The Toilet Board Coalition (TBC),
is aiming to address the global
sanitation crisis by accelerating
what it calls the “sanitation
economy” - making money out of
human waste.
In its own words, the TBC is
“connecting large and small
companies and ensuring close
collaboration between private,
public and non-profit sectors
with the common goal to achieve
Sustainable Development Goal
6 (SDG6), universal access to
sanitation”.
The list of partners is notable not
just for number and size of the
companies involved - Unilever,
Kimberley Clark, Tata, to name just
a few - but also the involvement
of the likes of the London School
of Hygiene and Tropical Medicine,
WaterAid, Water.org, the World
Bank and Unicef.
All of these partners share one goal
- they believe that they can deliver
significant impact to both business
and society.
Livelihoods, meanwhile, “funds
and promotes farming practices
that can increase food production
while preserving our natural
resources”. It’s made up of a long
list of private firms (Danone, Veolia,
Hermès, Firmenich) and public
organizations, NGOs and social
enterprises that has, among other
things, invested in family farmers to
improve supply chains - which has
obvious benefits for all parties.
The fund has also spent 40 million
euros planting 130 million trees
and equipping houses with better
stoves. In return for restoring 47
natural ecosystems and reducing
pollution, investors receive carbon
credits.
These types of mutually beneficial
relationships are very hard for
companies to do on their own.
Principles of Ecosystemic
Innovation 2.0
It is possible to do well by doing
good. But for Ecosystemic
Innovation 2.0 to be successfully
deployed, firms need to remember
this is not your traditional corporate
responsibility. These are business
ventures, not a CSR initiative.
The process also requires a clear
captain, and you must develop a
whole experimentation program,
because it is quite possible that you
will fail before you succeed.
This process also requires
an unusually high level of
transparency. Meanwhile, it’s
essential that members of both
the traditional and non-traditional
businesses talk to each other, as
this is where the innovation will
occur.
Ecosystemic Innovation may not
drive profits in the way a traditional
business does, but for-profit firms
will benefit by motivating people,
preserving their license to operate
and gaining social capital.
It is one powerful tool to help firms
“do well while they are doing good”.
48
Organizations need business
models that offer a superior
value proposition that is
hard-wired into customer
goals to deserve a premium.
Creating, delivering and capturing
real value
By Salvatore Cantale, IMD Professor of
Finance
When Twitter co-founder and CEO
Jack Dorsey sent the company’s
first ever tweet, he and his
colleagues had no idea what they
wanted to become. The company
was repeatedly criticised for not
having a business model, and after
four years of operating had zero
revenue.
In response, Twitter announced a
revenue model contest, otherwise
they would shut down. This led to
the multi-billion dollar business
model they have in place today
- providing a customer centric
service that makes it easier for
people to connect and broadcast
content in return for their data.
What sets companies like Twitter
apart from the competition? How do
they earn the right to a premium in
today’s intense and unpredictable
marketplace?
Business models not businesses
Well, just because you run a
business does not mean you have a
business model. Effective business
models create, deliver and capture
value for you and your customers.
To create this kind of model, you
need to factor in a broad range of
interconnected elements such
as key partners, key activities,
value proposition, relationships,
clients, key resources, cost centers,
channels, and revenue streams.
In this article, we will focus on how
your value proposition sits at the
heart of any successful business
model. Quite simply: without a
superior value proposition, you do
not deserve a premium.
Superior value
As you know, I am a professor for
IMD. But my value proposition
cannot just be that I profess.
How would I gain any competitive
advantage? Who would want to
come to my classes? Instead, in line
with IMD’s goal, I aim to deliver real
learning and real impact so that the
people that attend my programs
or read my research might take
something valuable away and apply
it successfully to their work or
business.
However, in reality, the value
proposition from far too many
companies is limited to the idea
that they simply have something
that they think we should buy. We
are a dry cleaning service, bring your
clothes! Others manage to go one
better and say they have something
to sell that has additional features.
We are a dry cleaning service that
offers repairs, bring more of your
clothes! Some make the leap to
think about their customers and
offering in a more symbiotic way
- they say to their audience: we
listened, and here are your benefits.
We are a dry cleaning service that
helps you claw back precious time
in this crazy world, just make the
connection and we’ll do the rest…
The ladder of value
Research shows that companies
with better customer satisfaction
outcomes report higher annualized
returns. This means fully
understanding your customers
from an inside-out and outside-in
point of view. If you were starting
your business from scratch, where
would you begin? What questions
would you ask? What would you
measure?
Inside out: How can we sell more?
What can we do?
Outside in: What customer
problems are we solving? How can
we help customers succeed?
So, the first step towards creating
a superior value proposition is to
focus rigorously on the customer.
It’s not about what you do as a
company, it is about what the
consumer does with what you do.
Second, this goes well beyond the
features and attributes of what you
are offering to the market. Don’t
get me wrong, it’s great to have lots
of useful and innovative features
that provide a functional benefit to
the customer. But how does your
business model help your customer
achieve his or her goals in life?
Let’s imagine the search for ‘value’
is like climbing a ladder. The first
rung on that ladder relates to the
basic features and attributes built
into your offer. The second rung
relates to the functional benefits
that customers gain from those
attributes. And the third rung then
equates to the customer goals or
emotional benefits that are enabled
or created by the attributes and 49
functional benefits of our offering.
Reach that third rung, and you
can start to think about charging a
premium.
Ringfence your value!
By building a business model that
supports and focuses on creating,
delivering and capturing value
through a customer-centric,
superior value proposition, your
company can earn the right to a
premium.
But, remember, it is vital that
you find ways to protect your
value proposition - either in its
conception, creation or delivery
- so that it cannot be hijacked by
competitors. The moment this
happens, your ability to charge
a premium will disappear as
customers realize they can go
elsewhere for the same or better
experience, probably at less cost.
50
Old change management
approaches do not work for digital
business transformations.
Orchestrating digital transformation
By Michael Wade, Director of the
IMD-Cisco Global Center for Digital
Business Transformation and IMD
Professor of Innovation and Strategy
Digital business transformation
is becoming increasingly
necessary for all companies to
remain competitive, but many
organizations are struggling to
reap the benefits of this brave
new world of technology-enabled
performance.
Research by the IMD Global Center
for Digital Business Transformation
shows that, globally, 79 percent of
respondents say that implementing
digital business transformation is a
major challenge. This can often be
the result of managers seeking to fall
back on and apply standard change
management strategies which are
simply just not up to the task.
In fact, a staggering 95 percent of
digital transformations fail to meet
expectations.
There are many reasons for this.
Old fashioned, episodic and siloed
transformations lack synergy.
Transformation is misunderstood
as an event, when it is actually
a perpetual leadership task.
There may be a low risk tolerance
culture in a company, common
detachment between business
units, a lack of digital talent or an
absence of the core organizational
factors necessary for a successful
transformation.
How to manage digital
transformations
A three-pronged approach to
managing digital transformation -
based on clarity of ambition, agility
and resource orchestration - can
support the delivery of a successful
evolution.
 51

PRECISE
Transformation
Ambition REALISTIC

INCLUSIVE

SUCCINCT

MEASURABLE

Clarity of ambition best decision in a given situation.

The first step in this journey is to
create and communicate a clear
transformation ambition. This
must be precise, realistic, inclusive,
succinct and measurable - PRISM.
Agility
Digital business agility is not
just one thing, it is three things -
hyperawareness, informed decision
making and fast execution. Each
of these components contributes
to the kind of agility necessary for
digital transformation.
This means empowering and
collaborating with people to make
quick, evidence-based choices.
Fast execution is a company's
ability to carry out its plans quickly
and effectively. This means putting
decisions into practice rapidly,
mobilizing resources dynamically
and continuously monitoring
options and progress against set
goals.
Info
ss rm
e ed
n
e

de

Hyperawareness - a company’s
ar

cis
Hyperaw

ability to detect and monitor

Digital
ion-making

changes in its business

environment. This means being
highly alert to the internal and
Business
external environment, especially Agility
changes that spotlight challenges
or threats.

Fa
Informed decision-making is st e x e c u tio n
a company's ability to make the
52
Resource orchestration
Digital transformation requires the
careful and considered mobilization
of all resources in sync. Think of
your ecosystem as an orchestra,
where all facets have a contribution
to make to maximize the impact of
your transformation. This means
focusing on each instrument and
each section of your orchestra
to understand what role it can
play, from go-to-market and
engagement to the organization
itself, and how people, digital
infrastructure and data will support
the process.
The Transformation Orchestra
GO-TO-MARKET
What are the channels available
to you to reach your market, such
retail, wholesale and e-commerce,
and the products or services that
you can transform?
ENGAGEMENT
What new ways are there for
you to connect and engage with
your customers and partners,
and to engage and prepare your
workforce?
ORGANIZATION
How can your structure, culture and
incentives support the process of
digital transformation?
© 2019 Global Center for Digital Business Transformation. All r
 53

Rethink the question

out how to digitize function X in
Finally, companies often make
isolation, explore ways to digitize
mistakes early on in the digital
across your entire organization.
transformation process because
they do not understand what digital
is really for or how it can help them
to improve and compete in the
future.

Make sure you are asking the right

questions to understand why digital
transformation is necessary and
how it can help you. For example,
don’t ask how can we become more
digital, ask how can we use digital
to improve performance. Rather
than asking ask how you can build
a digital strategy, ask how you can
use digital to build a more agile
strategy. Instead of trying to figure
54
 Three questions for: 55

H.E. Omar Sultan Al Olama

The United Arab Emirates Minister
of State for Artificial Intelligence
explores the country's pioneering
approach to artificial intelligence.

1. Why is the UAE leading the way on AI policy?

When our AI strategy was launched in 2017, all the groundwork had
been done over the last 17 years. The infrastructure necessary to deploy AI,
to collect data, to access people and for people to access you was already
laid. It is proactive planning and forecasting the future that takes you from
a traditional government to an AI government - having a leadership that
understood the importance of technology and AI early on. Laying that
groundwork has allowed us to thrive.

2. What are the UAE’s competitive advantages in AI?

The first is the unique and diverse data sets that we have. The second
is that we can actually develop and deploy AI quite quickly, much faster
than anyone else. And third, we are able to use AI to empower the sectors
that we are leading in and to also elevate the sectors that we want to
improve.

3. What are your recommendations for embracing AI?

The AI revolution has started. We don’t know the impacts yet. We
see some negative and positive impacts. If you are prepared, you will make
use of the positives. If you are not prepared, you will be challenged by the
disadvantages. Being prepared is paramount, and being agile is the key to
being prepared.

If we just look at the economic gains, we will fail. Don’t look at the
economic gain of AI, because the numbers are really appealing and will
induce you into thinking AI is only going to lead to good things. But there are
challenges that will come along. If you don’t think of the social implications
of AI and just deploy for economic gains - that is going to lead to a future
that none of us want. You need to balance between the big numbers and the
Scan me
To watch the video implications for people and how it changes their lives.
56
In the age of uncertainty,
companies must reimagine their
leadership and strategic approach
to move from rigidity to agility.
Future-proofing your business with
agility
By Stéphane J.G.Girod, IMD Professor
of Strategy and Organizational
Innovation
The rapid intensification of
technological innovation, social
change, environmental concerns
and geopolitical risk has left many
industry leaders struggling to hold
on to their market share. New,
disruptive entrants have proven
more adept at surfing the wave of
innovation and uncertainty.
This has forced many organizations
to rethink how they work in order to
secure their futures. In the ever-
evolving global economy of today
and tomorrow, only the agile with
survive. But a big lesson of the
stream was that agile methods do
not necessarily equal to agility.
Future-proof through agility
Faced with this uncertain
environment, companies must
increase their ‘hyperawareness’
and adopt better informed decision-
making. They must embrace new,
agile ways of strategizing, working
and leading to create organizations
embedded with adaptability.
In the previous era of more
predictable business environments,
it was easier to anticipate cause
and effect relationships. Risk
management and best practices
enabled companies to observe
what was happening, analyze it, and
respond.

In today’s unpredictable world,
cause and effect relationships
are only clear in hindsight. This
new epoch requires ‘uncertainty’
management and emergent
practices, where companies must
experiment and learn before
responding.
Unfortunately, most established
companies tend to be rigid, caught
in a success trap where the idea
of changing a winning model feels
reckless or caught in a downward
spiral trap where they cannot
respond to disruptors with enough
urgency. Their approach to change
can also be destructive, employing
old ‘big bang’ transformations that
are inappropriate in an uncertain
world.
Agility is about flexibility and
adaptability, not just speed
For incumbents to navigate the
age of uncertainty, they must
learn to to reconcile two tensions
simultaneously in order to create
organizational flexibility.
To be prepared for whatever
lies ahead, incumbents must
become nimbler, that is more
entrepreneurial and faster. But
with a core business to defend, they
cannot afford to let chaos unfold:
Incumbents need some stability as
well.
The second tension to resolve is
between simple and complex. To
be as responsive to unexpected
changes as necessary, incumbents
need to simplify their bureaucratic
ways of working. But incumbents
often operate across multiple
business lines and countries. What
works in one part of the company
may not work somewhere else.
While incumbents need to simplify,
they shouldn’t over-simplify.
Building organizational agility
In the stream, participants
worked on the eight principles of
organizational agility. They learned
how to deploy five levers to give
life to these principles: strategy,
people, rewards, structure and
processes. They figured out that
each company needs to decide
where to place the cursor on
nimble-stable and simple-complex
as a function of its internal and
external circumstances. Some
companies like Lego, General
Electric or Roche will choose to
form hybrid organizations where
some units apply agile processes
such as design thinking, lean
startup or scrum while the rest
of their organizations continue to
function as traditional hierarchies.
Other companies facing more
urgent disruptive threats,
like ING or Haier, go one step
further towards nimble and
simple by creating radically new
organizational models for agility.
The important discovery was
that Haier shows a great degree
of agility but without using the
currently fashionable scrum, agile
processes and squads and tribes
(à la ING). Each company must find
its own shape, degree and path to
agility.
57
Create more agility, now
How can your company move
from rigidity to agility? First, run
a thorough diagnostic on each of
the four elements in the tensions
referred to above. How nimble is
your organization? How stable is it?
How simple is it? And how complex?
With this information, focus on
each element as it relates to the
five building blocks of agility:
strategy, structure, process,
people and rewards. How can you
apply a nimble, stable, simple and
complex approach to each area in
a way that is appropriate for the
circumstances of your business?
This will tell you whether you should
jump on the bandwagon of agile
processes or not. And if you do,
you will need to deploy those five
blocks to unlock their full potential.
If you don’t, you have other ways of
creating organizational agility. It’s
more critical for business leaders
to understand and focus on the
principles of agility rather than
tools. An organization’s principles,
values and beliefs must align with,
underpin, enable and drive the
rewarding journey to agility.
58

"How can we foster a

more entrepreneurial
spirit within the family
enterprise? In the world
that we live in today, that is
changing so quickly, how
can we address those new
opportunities?"
Frederico Barreira
Grupo CAMAR
Portugal

STREAM:
Navigating your family enterprise into the future
Peter Vogel
 59

Contributing to society
How to deliver positive impact:
doing well by doing good
60
 Three questions for: 61

Omran Sharaf
The Director of the United Arab
Emirates’ mission to land a probe
on Mars in 2021 talks about why his
nation decided to skip the moon and
go straight to the Red Planet.

1. Why has the UAE decided to send a probe to Mars?

In July 2014, the President of the UAE, Sheikh Khalifa bin Zayed Al
Nahyan, announced the country’s ambitious plans for space exploration.
But the journey actually began in 2005. His Highness Sheikh Mohammed
bin Rashid Al Maktoum, the Vice President and Prime Minister, wanted
to create a project that would boost the science and technology sector in
Dubai and the UAE.

We were already developing initiatives in many sectors – including the

financial and tourism sectors – to work towards a post-oil economy. To
do that, you need to be knowledge-based. But to survive in a competitive
environment, your knowledge-based economy needs to be creative and
innovative. That’s done by strengthening your science and technology
sector. The government’s vision was that, through the space program, they
would build the foundations for a stronger science and technology sector.
One year ago, we launched the first satellite built in the UAE, so we’ve
made great progress.

2. What is the significance of landing on Mars in 2021?

Around the same time the UAE launched the project to build our first
satellite in the country, His Highness the Prime Minister came to us and
said that he would like to celebrate the 50th anniversary of the UAE with
a very big achievement, one that’s also linked to the wider region. More
than 800 years ago, the Middle East was a symbol for tolerance, knowledge
generation, and civilization. The moment we stopped giving back to
humanity, stopped thinking, stopped accepting people from different
backgrounds, that’s when we started moving backwards. In the UAE, we
like to do things differently, so we skipped the moon and went directly to
Mars!

3. Why is the project named ‘Hope’?

The project represents hope for the region and Arab youth and hope
for the future of the UAE. His Highness made it very clear that it is not a
space project. It’s a national project that every single sector in the UAE has
ownership of. Mars is a cold dead planet. However, scientists believe that
more than four billion years ago, Mars might have been similar to Earth. A
better understanding of Mars will help us better understand the changes
Scan me happening on our planet and the universe we’re in. This is how you serve
To watch the video humanity.
62
Artificial intelligence: Boom or doom?
By Amit Joshi, IMD Professor of Digital
Marketing and Strategy
AI is widely misunderstood and needs to be demystified.
To better grasp what AI is and how it will affect
our future, it helps to break it down into two
categories: narrow artificial intelligence and
general artificial intelligence.
Narrow artificial intelligence is already a daily
reality, it’s used every day in smart speakers,
self-driving cars, and when we make internet
searches.
General artificial intelligence is technology
that can do everything a human can do. In
reality, we are nowhere near robots replacing
humans and, depending on who you ask,
we won’t reach this point for another few
decades. Today, AI does not even have the
general intelligence level of a small animal. It
is certainly no Terminator.
We tend to overestimate what AI is capable
of but underestimate how it can be applied.
Applicable AI has arrived and is here to stay.
If implemented properly, it promises to make
our lives better.
Where is disruption most likely?
AI right now can do one thing - pattern
recognition (taking massive amounts of
data and processing it). And at this it is
superhuman. Recommendations for songs
and shows on your favorite apps are perfect
examples of pattern-focused AI in action.
That means jobs that mostly entail prediction
or are relatively simple are the most likely
to be replaced in the future: cashiers, food
preparation and service workers, office
clerks, administrative assistants, waiters,
heavy truck drivers, bookkeeping clerks and
many sales jobs.
In fact, AI is more likely to work with us and
help us at our jobs. A radiologist, for example,
isn’t going to be replaced by technology, but
he or she could be amplified by it.
The future of learning
To keep the world’s workforce skilled
and relevant, we can’t continue with the
traditional system of teaching and learning.
We need to move away from a sequential
model of value creation and value capture
– where people spend 12-18 years of their
formative years creating value through
education and then the rest of their lives
capturing this value – to a system of lifelong
learning. Workers need to learn throughout
their careers to keep up with technological
change so that they can simultaneously
create and capture value.
Whereas education is currently based on the
three R’s – reading, (w)riting and (a)rithmetic,

– the education of the future
must be based on the four C’s:
critical thinking, communication,
collaboration and creativity.
The drawbacks of AI
AI does pose a number of
challenges in terms of ethics and
privacy. Google, fined for multiple
privacy breaches in the past,
recently announced a partnership
working with the second-largest
hospital system in the United States
to store the data of millions of
patients and analyze it using AI and
machine learning.
This raises many questions: Do
patients know their data is being
transferred to the tech giant? Can
Google’s employees view patient
files? Can data be hacked?
AI will require strong regulation.
But since there is not yet a full
picture of what AI will be used
for, we don’t know exactly what
regulation will be necessary.
Here are three major challenges for
the future of AI:
1. Making AI more transparent
AI is currently an unexplainable
black box. Humans program it to
do tasks but not how to do them.
We currently can’t figure out
what processes it uses to come
to conclusions. Until we can, we
should use it for relatively low risk
tasks.
2. Eliminating bias in AI
While there’s a common belief that
algorithms are supposed to be built
without any of the bias or prejudices
that color human decision making,
the truth is that an algorithm can
63
unintentionally learn bias from
a variety of different sources.
Everything from the data used to
train it, to the people who are using
it, and even seemingly unrelated
factors, can all contribute to AI bias.
Until we can fix AI’s bias problem,
humans have an important
role to play in designing new AI
systems to avoid bias and prevent
discrimination.
3. Reducing damage
There have been and will probably
be more deaths involving self-
driving cars, for example.
Autonomous systems will be faced
with choosing the ‘least bad’ option
such as turning left and causing
two fatalities instead of right and
causing three. There must be ample
feedback loops to allow humans to
intervene quickly and as often as
required.
64
Chinese business systems
are rapid, responsive and
resilient. The Chinese way of
innovating is highly suitable
for turbulent environments.
It’s time to think beyond
recognized boundaries.
China’s innovation imperative
By Mark Greeven, IMD Professor of
Innovation and Strategy
China’s emergence as an economic
and innovation powerhouse has
big implications for the destiny
of businesses in the rest of the
world. Understanding how and why
Chinese businesses innovate can
teach us valuable lessons on how to
remain competitive in the future.
What is driving Chinese
innovation?
At the heart of China’s innovation
imperative lies a nation in perpetual
and rapid transformation. The rise
of millennials alongside changing
customer needs, technologies,
industries, growth markets,
regulations and cost structures
contribute to an economic cauldron
with internal market dynamics
that are 40 percent higher than the
global and regional average.
The conditions are ripe for
innovation. There is a large
domestic market that is scalable,
and a large and growing talent
pool. There is a supportive physical
infrastructure and abundant private
capital. Regulation and policy is
improving, fuelled by the Belt Road
Initiative, and the private sector is in
the ascendancy.
It is not all plain sailing, however,
There are headwinds. Many
industries are suffering from
overcapacity, China’s financial
system is highly indebted, and
policy is top-down. There are
isolated ‘innovation islands’,
weak enforcement of intellectual
property rights, restrictive trade
barriers and tariffs, and control
of the Internet. This has created a
‘closed innovation system’.
The iceberg of innovators
While we might be aware of the big
names in Chinese commerce and
industry, this is just the tip of the
iceberg. There are many thousands
of innovative companies emerging
and taking strong footholds in both
niche and mass market industries
in China and worldwide.
The most prominent groups of
Chinese companies that are
important to the global value chain
are the newcomers - the underdogs
and the changemakers - and the
incumbents - the pioneers and the
hidden champions

Pioneers
There are about 30-40
of these companies,
such as Alibaba,
which are self reliant,
‘boundaryless’, digitalized
and entrepreneurial.
Alibaba is not so much a
company as it is a vast,
interconnected, self-
reliant ecosystem.
65
Hidden Champions Underdogs Changemakers
There are about 200 of There are about 150,000 There are about 200
these companies, such of these companies, of these companies,
as Hikvision, that are often started by elite established by
characterised by a strong entrepreneurs such as next generation
R&D focus, continuous Royole Technology. They entrepreneurs, such
product innovation, gain early international as iCarbonX. They are
and rapid growth from exposure, move under fuelled by venture capital,
divergent roots. They the radar, and embrace embrace a need for speed
leverage the advantage of cutting edge technology and digital disruption, and
being hidden to achieve as niche innovators. are highly visible.
global impact.
66
The Chinese way
What are the secret ingredients of
this success in innovation? And how
does it differ to the approach taken
in more developed economies?
The underlying approach in China is
‘swarm innovation’. Through swarm
innovation, innovators go for proven
opportunities and selling points,
not unique opportunities or selling
points. They are market driven, not
technology driven. There is intense
competition between a large
number of pioneers as opposed to
competition within incumbents.
In China, there are ‘winner takes
all’ markets, not the diversified
markets of developed economies.
And there is strong geographic
market clustering, rather than
technology clustering.
Furthermore, Chinese innovators
are characterized by:
• A sense of urgency, not
complacency
• Tinkering, not product planning
• Customer obsession, not
product
• Continuous upgrading, and the
idea that something is never
good enough
• Rapid decision-making, not
consensus building
• Ecosystem thinking, not silos
Learn from the best
There is much to learn from the
way Chinese companies have taken
the world of innovation by storm.
This rise has been fueled by highly
competitive domestic conditions
and is, of course, different to the
way other companies around the
world tend to approach innovation.
However, in today’s ever-changing
and turbulent global economy,
the Chinese model of ‘swarm’
innovation is highly suitable and
prime for adoption more widely.
As a starting points, companies
should:
• Think beyond recognized
boundaries
• Cast a wide net
• Strengthen your home base
 67

imd.org/research-knowledge/books
68
Blockchain: The “big” disruption
By Arturo Bris, Director of the IMD
World Competitiveness Center and
IMD Professor of Finance
Leaders must understand the applications of new technology
such as blockchain to embrace the full potential of a rapidly
evolving world of finance, trust and transparency.
The digital age has triggered
multiple questions and challenges
for businesses and the global
economy, not least the way in which
money moves around the world and
the way in which we interact with
each other.
Until recently, digital networks had
been found wanting. Centralized
networks such as Facebook, Tesla
and SWIFT have suffered from
issues with trust, security or cost,
while decentralized networks have
struggled to overcome challenges
such as double spending, an
impossible consensus, a lack of
transparency, and the transfer of
assets through time or storage
capacity.
Blockchain is the answer
The solution to many of these
problems lies with the applications
of blockchain. Blockchain is a new
technology that has the power
to unlock value that until today
could not be monetized. It is the
disruption that will render many
business models obsolete and
revolutionize human interaction.
Most importantly of all, if you think
blockchain is the future, you are
wrong: It is the present. It is already
reshaping our world.
How is this happening? Well,
blockchain is the first workable
solution to one of the big nagging
problems of the digital realm: How
can we transfer something of value
from one person to another without
middlemen having to make sure
that the item is not copied or, in the
case of money, spent more than
once?
 69

Taking the above challenges It can solve the riddle of the

facing decentralized networks, for
example. Blockchain can overcome
double spending because it acts as
a distributed ledger which lists and
preserves all transactions across
a peer-to-peer network through
cryptography.
impossible consensus by offering
a consensus algorithm where the
rules of the game can be agreed
upon by everyone - or ‘proof of
work’, as it applies to Bitcoin.

CENTRALIZED
NETWORK

DECENTRALIZED
NETWORK

DISTRIBUTED
NETWORK
70

Scan me
Smart contracts To watch the video
To address issues of trust, security and transparency, blockchain
technology enables the establishment of smart contracts including
cryptocurrencies, tokenization and the IPOs of the digital age - initial coin
offerings.

An option contract between parties is

A triggering event like an expiration Regulators can use the blockchain to
written as code into the blockchain.
date and strike price is hit and the understand the activity in the market
The individuals involved are
contract executes itself according to while maintaining the privacy of
anonymous, but the contract is the
the coded terms. individual actors’ positions
public ledger.
Tokenization is already making
inroads as a way to formalize
trust in the complex global digital
economy. The token economy has
been embedded in several national
financial regulatory frameworks,
including in Switzerland, where
three types of tokens are covered:
Payment tokens are synonymous
with cryptocurrencies and have
no further functions or links to
other development projects. This
includes Bitcoin and Ethereum.
Utility tokens are tokens which are
intended to provide digital access
to an application or service, such as
Lympo.
Asset tokens represent assets such
as participations in real physical
entities, companies, or earnings
streams, or an entitlement to
dividends or interest payments.
This includes equity tokens and
Caskcoin.
Beyond Bitcoin enable the technology in line with 71
But the applications do not stop existing economic rules.
there. This new technology has
the power to transform the worlds From stones to ICOs
of compliance, accounting and What does this mean for the future
taxation, social interaction, the of business? Blockchain and its
global registry of physical asset applications have huge implications
ownership, legal contracts, bonded for the way companies operate,
identity services and property. the way financial systems function
and the way we interact. The ability
Blockchain is allowing us to to monetize any form of capital
reimagine the financial services will result in large improvements
industry leading to public sector in our quality of life and spur
innovation and financial market wealth creation. We will soon be
decentralization for assets able to monetize everything in a
such as interest rate swaps and transparent and secure way.
e-currencies. It could even redefine
how democracies function through
the creation of decentralized
autonomous organizations.
The number of initial coin offerings
is also growing exponentially as
companies in a range of industries
tap into this financial revolution
to raise funds from investors, and
regulators devise frameworks to
72
With the collapse of the
‘Washington consensus’ following
the global financial crash,
companies must learn to navigate
the emergence of game-changing
trends and shocks to remain
competitive.
Staying ahead of trends and
preparing for shocks
By Omar Toulan, IMD Professor
of Strategy and International
Management
Far-reaching changes to the global
economy have transformed the
business landscape. The demise
of the neoliberal consensus that
fueled globalization and the rise
of multinationals has resulted in a
new world order where companies
must contend with unprecedented
uncertainty.
Amid all the noise, how can
companies compete? How can
businesses adapt to trends that
reshape their markets? How can
executives prepare for and mitigate
one-off shocks?
What is a trend?
A trend is something either positive
or negative that is accelerating
in popularity, often with ‘hockey-
stick’ style growth. Trends can
be spotted by paying attention to
signals of change, such as data.
For companies to take advantage
of a trend, it is important to catch
a trend early - before it starts to
accelerate:
• Identify early adopters in your
market and listen to customers
• Monitor the competition
• Surround yourself with smart
and diverse individuals
• Identify the influencers in your
community

Trends can impact all corners of a
company’s competitive space.
Competitive trends
These are changes in the
companies that you compete
against. For example, the number
of Chinese companies in Fortune
500 grew to 112 in 2018 from just
four in 2000.
Technological trends
These are changes in the way
that companies compete with
each. Take retail, where online
platforms and technology are not
just replacing, but redefining entire
business models.
73
Demographic/environmental
trends
These are changes in the
competitive landscape. By 2030,
the global demand for energy will
increase by 50 percent and 40
percent of the world’s population
will be affected by water shortages.
Geo-political trends
These are changes in the rules
of the game. Since 2008, 7000
protectionist measures have been
imposed globally. As a result,
country risk management has
become a skill firms must master.
74
Absorbing shocks
While detecting and reacting to
trends will support your company’s
growth and viability, it is equally
important to understand and
prepare for shocks, such as the
increasingly complex field of
country risk. This can include a wide
range of political, economic, social
and environmental factors that
affect companies on a micro and
macro level, from ownership and
operations to the transfer of funds.
By nature, such shocks are
unpredictable, and affect
companies in different ways. There
are four steps required to effectively
manage ‘country risk’ shocks and
to turn them into opportunities:
Understand
What is your organization’s
risk appetite? Is there a shared
understanding of this risk appetite?
How can we reduce blind spots?
Analyze
How do you obtain good information
about the risk you are exposed
to? How do you ensure rigorous
analysis? How do you integrate
political risk analysis into business
decisions?
Mitigate
Can you reduce exposure to the
risks you have identified? Do you
have a good system and team in
place for timely warning and action?
How can you limit damage once
something happens?
Respond
Are you learning from near misses?
Are you reacting effectively
to crises? Are you developing
mechanisms for continuous
learning?
 75

Navigating trends and absorbing Of these four elements, agility

shocks with agility and a SAVE takes on a special significance.
mentality An agile mindset, organizational
Trends tend to trigger a shift in structures, rewards and processes
the value of companies, markets, will empower your company to drive
services and products, with value competitiveness as trends and
creation for some and value shocks redefine the marketplace.
destruction for others. While
online retail platforms such as
Amazon rocketed in market value,
traditional high street stores
suffered a loss in value.

Companies must embrace a

balanced growth portfolio between
‘exploitation’ and ‘exploration’. This
means using current resources
and capabilities in an efficient and
reliable way to head in the same
direction while also searching
for, acquiring and developing new
resources and capabilities to go in a
new direction.

Companies can prepare for the new

age of megatrends by adopting a
SAVE mentality:

Speed in reacting to trends

Agility to react to changing
competitors, technologies and
contexts
Values-based management
Empathy to appreciate changes in
the environment
76
Competitiveness is the key
to prosperity: policymakers
must carefully navigate
sweeping changes to the
global economy and society
to safeguard and improve
their economic performance.
Beating the competition
By Christos Cabolis, IMD World
Competitiveness Center Chief
Economist and IMD Professor of
Economics and Competitiveness
In a time of rapid change,
megatrends and uncertainty,
countries must do more to develop
the competitiveness of their
economies to create opportunity,
attract investment and talent, and
secure future, sustainable growth.
Why is competitiveness so
important in the policy mix? Well,
the more competitive a country
is, the more likely it is going to be
able to foster an environment in
which enterprises can generate
sustainable value creation. A
competitive economy boosts the
long-term capacity of companies
and organizations to remain
profitable and create fulfilling jobs,
while minimizing the environmental
impact of their activities.
Measuring competitiveness
The conditions influencing
competitiveness are as complex
as they are varied, ranging from
social factors and education
policy to financial regulation. In
order to help make sense of this
maze of information, each year,
 77

COMPETITIVENESS FACTORS MEASURING COMPETITIVENESS

Government
efficiency Company
long-term
profitability

Business
efficiency
Economic
performance
Sustainable
value
creation
+
Company
job-creation
Infrastructure

the IMD World Competitiveness
Center measures more than 330
criteria weighted and assessed
across the pillars of economic
performance, government
efficiency, business efficiency and
infrastructure to create its annual
global competitiveness ranking.
Singapore, Hong Kong, the USA,
Switzerland and the United Arab
Emirates were the top five ranked
nations in 2019, displaying broad-
based strength in all areas.
Boosting competitiveness
Our ranking provides policymakers
and business leaders with a
gauge of national and global
competitiveness, while
also highlighting strengths,
weaknesses, best practice and
lessons to be learned from others.
While there is no silver bullet to
building a super-competitive
economy, our research shows
a clear correlation between
competitiveness and progressive,
innovative societies. For example,
economies that are more
transparent, more open with
respect to trade and less protective
are also the economies that rank
higher in the competitiveness index.
With respect to gender parity,
we have found that women’s
labor participation is more or
less the same irrespective of the
competitiveness ranking of the
economies. The same holds for
the percentage of women with a
tertiary education degree. This pool
of skills, however, is integrated
78

differently in the economies we

study. In fact, women take more
leadership positions in more
competitive economies translating
into higher disposable income for
them. Less competitive economies
are slower in giving ample
recognition to the most highly
skilled female members of the
workforce.

Beyond this, one significant

challenge that policymakers must
address to maintain or improve
competitiveness is the ageing
global population. We know that
significant increases in the size
of a nation’s older population has
a dampening effect on economic
growth. Tough questions must be
asked and answered in order for
society to find solutions to the extra
cost and labour market impact of
ageing populations and the link to
economic performance.

As the technological revolution

advances, it is also important for
nations to develop workforces that
are future ready, agile and capable
of innovation. Our research shows
that productivity and efficiency
improve if a country’s population
is well equipped with ‘adaptive’
attitudes and future readiness,
while innovation drives job and
labor productivity growth.

Get ready for the future
How can nations foster and invest
in a supportive environment for
innovation in order to drive future
competitiveness? We identify the
three pillars of innovation as:
Capital: The state builds the
framework: it sets the rules and
corrects for market failures.
Governments, however, also play
an important role in spearheading
investment for innovation and they
should continue doing so as they did
in the areas of digital technology,
biotechnology and nanotechnology.
Talent: Governments should invest
in the development of local talent,
improve the country’s appeal to the
international talent pool, and match
the needs of the market with the
skills and competencies obtained in
the talent pool.
79
Regulation: Policymakers should
seek to create an environment
that will ‘enable’ the private
sector to create value such as
reducing administrative barriers
to starting a business. Efforts
should also be made to ‘connect’
stakeholders that may improve
economic performance such
as business needs and talent
through areas such as equal
opportunity legislation. Finally,
regulation should be ‘facilitating’
in the sense that it alleviates
potential constraints in developing
innovation. For example, in credit
restricted economies, it may
choose to subsidize the availability
of capital.
80

"It’s not about robots

taking over our lives, it’s
about how we automate
or use patterns so that
computers can give us
information for us to do
our jobs better."
Thokozile Mcopele
ABS Bank of South Africa
South Africa

STREAM:
What are the limits of AI?
Amit Joshi
 81

Real Impact
Turning real learning into action in
life and business
82

REGIONAL INNOVATION

How to transform disruption into an opportunity

Like many countries around the world, ride-hailing
companies have taken Saudi Arabia by storm. Tech
company Elm helped regulators respond.

As ride-hailing platforms disrupted its traditional taxi sector, Saudi

Arabia’s Public Transport Authority (PTA) quickly realized that the country
was lacking regulation to manage the rapid rise of this new technology and
the services it provides.

This is where tech firm Elm stepped in, creating Wasl - a platform that
links ride-hailing apps and traditional taxi companies with the PTA, while
ensuring same standards of service.

“As a regulatory authority, the PTA needed a sound policy framework to

ensure fair, orderly, transparent and efficient markets while providing
best in class service. Therefore, it was vital to build a digital platform
that could provide the same services while still governing it and
protecting the end users,” said Dr AbdulRahman Aljadhai, CEO of Elm,
speaking to Orchestrating Winning Performance participants in Dubai.

Streamlining
For the PTA, the application helped streamline data and information from
ride-hailing companies, allowed it to monitor and control transport flows
and ensure higher levels of safety and security.

The platform also improved the
government’s readiness to respond
to mishaps or crisis situations, such
as lost property or a person going
missing.
Elm’s innovation also encouraged
the competitive spirit among ride-
hailing companies, elevating the
overall level of service across the
country.
For Wasl end users - the providers
of transportation services - the
platform has opened up a number
of services including vehicle
registration, driver registration and
validation of security status, all of
which can now be carried out on the
platform.
83
For the general public using ride-
hailing apps, Wasl means they are
now using a service that is more
secure, better regulated, more
accountable and more transparent.
At the same time, it facilitates
access for startups in this part of
the economy.
Avoiding pitfalls
Aljadhai added that when a
disruptive innovation enters the
market, the “non-proactive”
approach is a recipe for failure.
Authorities should be agile,
embrace change and regulate
services to facilitate, not stifle
progress.
Scan me
To watch the video
84

REGIONAL INNOVATION

Can technology turn Dubai into the world’s smartest,

happiest city?
One system will connect citizens to all the services they
need, from education to health.

Dubai’s digital revolution began at the turn of the century, when it launched
its e-government system. Now, the authorities have ambitions to make
Dubai the “happiest city on Earth”, said Wesam Lootah, CEO of Smart
Dubai Government, at a keynote Orchestrating Winning Performance
session.

“Governments are there to enable and to allow everyone to prosper,” said

Lootah. “Technology is just a means to an end. You need a purpose - and
happiness is ours.”

A digital government in a box

Smart Dubai’s ambition is to provide a “digital government in a box” - one
system that connects citizens to all government services, from housing
and healthcare to transport and education.

“If someone living in Dubai wants to start a business, they can do this
using one platform, rather than jump around government departments,”
Lootah said. “They can also pay for fuel, renew their car registration, move
house, pay bills and fines. Can one system serve an entire city, and can this
system be exported to other parts of the world?”
 85

The great enabler

The Dubai government will issue its
last paper transaction in 2021.
“This will save the government
AED900m, save 1 billion pieces of
paper, 125 million work hours and
save 130,000 trees,” Lootah said.
Dubai has launched a payment
system linked to blockchain,
which processed almost 50 million
transactions and collected AED67
billion between 2015 and October
this year.

Smart Dubai has also made 500

datasets available to the private
sector via a platform called Dubai
Pulse.

Lessons learned
What insights should other cities
take from Dubai’s digital adventure?
“Be ambitious and dream big,” he
said. “Bring people on board and
get them excited about it. Create a
sense of urgency. You should also
obtain leadership support, which is
the overarching enabling factor to
achieve an ambitious goal.”

It’s also important to “think win-

win,” said Lootah. “Include partners
in your success story. You should
not outshine your partners, you
need to win together.”
86

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