Cambridge Judge Business School

Sustainable
Development and the
Challenge of
Innovation
MBA 108
Week 1 – Sustainable Development & the Challenge of Competitive Growth

Annual fish catch Overshoot and Collapse

Time
 Week 2 – Sustainable Development & the Challenge of Uncertainty
Volatility, Uncertainty, Complexity, and Ambiguity encourages Devolution

Basic Compliance Risk Competitive Transformational

Focus Shareholder Regulation Risk management Innovation & new SDG Leadership
returns growth

Sustainable Philanthropy CSR as PR Financial CSR Sustainable Shared value

Development development as (regeneration /
strategy inclusivity)
Scope License to operate Scope 1, 2 Scope 3 Systems change

Communications Financial Legally required CSR, ESG reporting ESG, SDG Purpose-driven
disclosure reporting (SDG Impact
Standards)
Collaboration Transactional NGO partnerships Stakeholder Strategic SDG Driving systems
engagement partnerships transformation
Week 3 – Sustainable Development & the Challenge of Complexity
Week 4 – Sustainable Development & the Challenge of Innovation
Key learnings

By the end of this session you should be thinking about:

• The critical role of innovation for achieving sustainable development
• The need to not just increase the rate of innovation, but also adjust the direction and approach
of innovation to ensure sustainable development

By the end of this session you should know how to:

• (Strategy) Move beyond heuristics and adopt strategic frameworks for pursuing innovation to
address sustainable development
• (Culture) Move beyond groupthink and build better innovation teams for addressing sustainable
development
• (Execution) Move beyond “fail fast and break things” approaches to engage in responsible
innovation
 New technologies

Initial Exercise blockchain, AI, robotics, genomic engineering,

nanotechnology, 5G, augmented/virtual reality,
advanced transport, alternative energy,
quantum computing, internet of things (IoT), 3D
• Pick 1 technology and 1 social problem printing
from the boxes on the right
• Use generative AI (e.g., ChatGPT, Bard,
Bing) and group discussion to come up
with several ideas as to how the new
technology might be deployed to
address that social problem
• Ignore whether the idea seems feasible or
not
• Consider different business models
• Prepare 30 second elevator pitch for the Business models
“best” idea multi-sided platform; circular economy;
freemium; subscription; sharing economy;
• 10 minutes marketplace
 Investor
Feedback

https://tinyurl.com/35mrmhaf
The Promise
The Promise
The Promise
The Promise
The Promise
“We provide broad access to today's most powerful AI, including a free
version that hundreds of millions of people use every day. For example,
Albania is using OpenAI’s tools to accelerate its EU accession by as much as
5.5 years; Digital Green is helping boost farmer income in Kenya and India by
dropping the cost of agricultural extension services 100x by building on
OpenAI; Lifespan, the largest healthcare provider in Rhode Island, uses GPT-
4 to simplify its surgical consent forms from a college reading level to a 6th
grade one; Iceland is using GPT-4 to preserve the Icelandic language.”

-Open AI
The Promise
 New technologies

The Promise blockchain, AI, robotics, genomic engineering,

nanotechnology, 5G, augmented/virtual reality,
advanced transport, alternative energy,
quantum computing, internet of things (IoT), 3D
• Pick 1 technology and 1 social problem printing
from the boxes on the right
What happens when the PROMISE of
• Use generative AI (e.g., ChatGPT, Bard,
Bing) and group discussion to come up
innovation turns into the UNMET
with several ideas as to how the new
technology might be deployed to
address that social problem
EXPECTATIONS
• Ignore whether
not
the idea seems feasible or of innovation?

• Consider different business models

• Prepare 30 second elevator pitch for the Business models
“best” idea multi-sided platform; circular economy;
freemium; subscription; sharing economy;
• 10 minutes marketplace
•Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
•Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
•Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
•Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
•Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
•Principle 6: We will each report on our activities and progress towards implementing the Principles.
“On the face of it, E.S.G. investing could be transformative, which
is why it’s one of the hottest trends in the world of investing. After
all, allocating more capital to companies that do good helps them
grow faster and lower their cost of capital, creating an incentive for
all companies to be more socially and environmentally conscious.

But the reality is less inspiring. Wall Street’s current system for
E.S.G. investing is designed almost entirely to maximize
shareholder returns, falsely leading many investors to believe their
portfolios are doing good for the world.”
Hype as deception
Hype as a cycle of expectations
Why does the hype cycle exist?

• Attraction to novelty
Why does the hype cycle exist?

• Attraction to novelty
• Social contagion (& FOMO)
Why does the hype cycle exist?

• Attraction to novelty
• Social contagion (& FOMO)
• Heuristic-based decision making
Why does the hype cycle exist?

• Attraction to novelty
• Social contagion (& FOMO)
• Heuristic-based decision making
Annual fish catch

Fishbanks!!

Time
Key learnings

By the end of this session you should be thinking about:

• The critical role of innovation for achieving sustainable development
• The need to not just increase the rate of innovation, but also adjust the direction and approach
of innovation to ensure sustainable development

By the end of this session you should know how to:

• (Strategy) Move beyond heuristics and adopt strategic frameworks for pursuing innovation to
address sustainable development (VMR Profile)
• (Culture) Move beyond groupthink and build better innovation teams for addressing sustainable
development
• (Execution) Move beyond “fail fast and break things” approaches to engage in responsible
innovation
(Strategy) Strategic frameworks for pursuing innovation to
address sustainable development
Value, Maturity, Risk (VMR) Profile

Value The value of the innovation to a

addressing your SDG aspirations

The ecosystem risks which might

affect adoption

Maturity Risk The extent to which the productive

capacity of an innovation has
increased and stabilized
 A Systematic Innovation Screening Process

Bounding Monitoring Ranking

Bound Setting boundaries to filter innovations: Based on aspirations and risk profile of business

Track Track development and maturity of innovations

Rank Prioritize and identify key innovations

 A Systematic Innovation Screening Process

Bounding Monitoring Ranking

Bound Setting boundaries to filter innovations: Based on aspirations and risk profile of
business
Track Track development and maturity of innovations

Rank Prioritize and identify key innovations

Bounding

Value The value of the innovation to a

addressing your SDG aspirations

The ecosystem risks which might

affect adoption

Maturity Risk
Bounding

Value The value of the innovation to a

addressing your SDG aspirations

The ecosystem risks which might

affect adoption

Maturity Risk
Bounding – Set the value conditions for innovation

• Aspiration: Briefly describe your 10-year SDG value-creation target in

clear, objective fashion using specific dates and numbers.
• Clear: Is the vision clear? How might you reduce ambiguity?
• Distinctive: What do you believe that almost no one else believes?
• Ambitious: Does the goal seem bold enough for a 5-10 year time
horizon? Will it adequately stretch your (company’s) goals?
• Motivational: Is it clear that this goal will motivate you (the organization’s
key stakeholders)?
• Limitations: What core problems prevent the realization of your 10 year
goal?

https://tinyurl.com/5n9yyus9
Bounding – Evaluate the risk tolerance for innovation

Organizational risk orientation

Exploration-Orientation Exploitation-Orientation
Drivers of We use information on emerging We use information on past
change trends to foresee possible performance in order to consider
changes. necessary changes.
Incentives for Taking risks is required and Maintaining stability is required and
risk rewarded rewarded
Approach to Constant adaptation is our Frequent change is problematic
change competitive advantage
Competitive We compete by changing and We compete by further optimizing our
approach then forcing the industry to adapt fine-tuned business model
Agility Our structures and processes can Our structures and processes are
be quickly redesigned layered and rigid
Bounding – Creating your innovation filter based on value and risk

Aspirational value Risk orientation

(e.g., 5 Year Goal)
 A Systematic Innovation Screening Process

Bounding Monitoring Ranking

Bound Setting boundaries to filter innovations: Based on aspirations and risk profile of business

Track Track development and maturity of innovations

Rank Prioritize and identify key innovations

Monitoring

Value, Maturity, Risk (VMR) Profile

Value The value of the innovation to a

addressing your SDG aspirations

The ecosystem risks which might

affect adoption

Maturity Risk The extent to which the productive

capacity of an innovation has
increased and stabilized
Monitoring

Value

Maturity Risk The extent to which the productive

capacity of an innovation has
increased and stabilized
 Monitoring – Identify and track innovations that fit the innovation filter

Level Sources
Broad
Trends

Capabilities

Products
Specific

IBM’s Global CEO Study

“Most significant sources of innovative ideas”
 A Systematic Innovation Screening Process

Bounding Monitoring Ranking

Bound Setting boundaries to filter innovations: Based on aspirations and risk profile of business

Track Track development and maturity of innovations

Rank Prioritize and identify key innovations

Ranking

Value, Maturity, Risk (VMR) Profile

Value The value of the innovation to a

addressing your SDG aspirations

The ecosystem risks which might

affect adoption

Maturity Risk The extent to which the productive

capacity of an innovation has
increased and stabilized
Rank – Score potential innovations on multiple dimensions
Scale of benefit. How does the innovation
contribute to the SDG aspirations identified
in the bounding stage? Will the benefits be
transformational, high, moderate, or low?

Time to value/maturity. How Scope of adoption. Will the

long will the innovation take to Value innovation be adopted to address
reach the Plateau of Productivity a broad or narrow range of
from its current position on the different SDGs?
hype cycle

Maturity Risk Support. Are there enthusiastic

Current maturity. What is the
current level of robustness and and influential people likely to
stability of the innovation? support the innovation?

Capabilities. Is there already investigation

or adoption of a similar or related innovation
that can be leveraged?
(Culture) Build better innovation teams for addressing sustainable development

1. Think of the best-

functioning group you
have worked with. What
made that group stand
out?

2. Can you think of a

group you've worked with
that engaged in group
think / herd thinking? What
happened?
The Challenge of Seeing Beyond the Hype

Q: As the hype around Theranos

grew, did you ever wonder if
you were wrong about Holmes?
A: No. I just thought
everybody was crazy. I mean,
look at the board, that’s
insane. That’s not corporate
feasance, that’s malfeasance
to have a board that knows
nothing about any of this. Old
men, I’m telling you, the
brains go to their groin.
I knew too much inside stuff.
I’m not just watching it from
afar — I’ve got this inside info
coming to me about how it’s
not working. Stanford University Professor
Phyllis Gardner
 Seeing Beyond the Hype

1. Think of the best-

functioning group you
have worked with. What
Navigating the challenges ofgroup
made that innovation
stand
out?
requires a decision-making culture that
doesn’t get swept 2.
up in
Can the
you hype
think of a
group you've worked with
that engaged in group
think/herd thinking? What
happened?
 Moving Beyond Group Think?

How accurate might the collective

estimates / predictions of a group
of non-experts be in a field they
are unfamiliar with?
Moving Beyond Group Think?

Average of 800 guesses = 1,197 lbs

Moving Beyond Group Think?

Average of 800 guesses = 1,197 lbs

Actual weight of the ox = 1,198 lbs

The Wisdom of the Crowds

Average of 800 guesses = 1,197 lbs

Actual weight of the ox = 1,198 lbs

Information is distributed and errors are random.

Ergo, a crowd with diverse, independent opinions of equal voice
will outperform most if not all individual experts at a variety of
tasks when their opinions are aggregated
The Wisdom of the Crowds
 Wisdom or Madness of Crowds?

Wisdom of Crowds: Sometimes groups make Madness of Crowds: Sometimes groups make
better judgments than individuals. worse judgments than individuals.
 Wisdom or Madness of Crowds?

Wisdom of Crowds: Sometimes groups make Madness of Crowds: Sometimes groups make
better judgments than individuals. worse judgments than individuals.

Why?
 Wisdom or Madness of Crowds?

Wisdom of Crowds: Sometimes groups make Madness of Crowds: Sometimes groups make
better judgments than individuals. This happens worse judgments than individuals. This
when: happens when:
a. Judgments are genuinely independent, a. Judgments of individuals are influenced
preventing herd thinking. by the judgments of others, leading to
b. Members of the group do not share the groupthink and sometimes polarization.
same biases. b. Members of the group share biases,
c. There are enough people in the group to which can be exaggerated by discussion
balance out random biases or fluctuations c. Since the biases are shared, increasing
(analogous to the need for an adequate sample the size of the group merely reinforces the
size). bias and thus errors cannot be decreased
d. Works especially well when estimating a by averaging judgments.
quantity, where errors may be large but are
random.
The Science of Crowd Madness (Example of social media)

For the past 10 years, our mission has been to make the
world more open and connected. We will always work to
give people a voice and help us stay connected, but now we
will do even more. Today, we're expanding our mission to
set our course for the next 10 years.
The idea for our new mission is: "bring the world
closer together".
Our full mission statement is: give people the power to
build community and bring the world closer together. That
reflects that we can't do this ourselves, but only by
empowering people to build communities and bring people
together.
(Zuckerberg, 2017)
 Efficiency /
Convenience

Requires strong ties and network density

Connection
“Information virality and trapping effects”
• Structural trapping
• Social reinforcement
• Homophily
 Efficiency /
Convenience

Connection
“Information virality and trapping effects”
• Structural trapping
• Social reinforcement
• Homophily
 Efficiency /
Convenience

Connection
“Information virality and trapping effects”
• Structural trapping
• Social reinforcement
• Homophily
Madness of Crowds

“exposure to social norms affected participants’

neural representations of value”

“social influence mediates the very basic value

signals…[that] could contribute to the rapid learning
and the swift spread of values through a population.”
Wiser Innovation Teams

“Wise crowds, the theory goes, typically

require three things: independence,
diversity, and equality. The problem is that
the [media / social media] undermines all of
them.”
Sinan Aral
Professor of Management, MIT Sloan
Wiser Innovation Teams

Independence
“Paradoxically, the best way for a
group to be smart is for each
person in it to think and act as
independently as possible.”

James Surowieki,
Author Wisdom of the Crowds

1. Maintain independence
2. Decide on aggregation strategy
Wiser Innovation Teams

Diversity

In problem solving
1. Diversity > Homogeneity

2. Diversity > Ability

Wiser Innovation Teams

Diversity

In problem solving
1. Diversity > Homogeneity

2. Diversity > Ability

Wiser Innovation Teams

Diversity

How would you design a more

cognitively diverse MBA cohort?
Wiser Innovation Teams

Equality “Disproportionate popularity is the sole

obstacle to wisdom….Having agents
who are prominent, causes learning to
fail, since their influence on the limiting
beliefs is excessive.”
(Golub & Jackson, 2010)
(Execution) Moving beyond “failing fast and breaking things”
Responsible innovation?

A transparent, interactive process by which societal actors and

innovators become mutually responsive to each other with a view to
the (ethical) acceptability, sustainability and societal desirability of the
innovation process and its marketable products (in order to allow a
proper embedding of scientific and technological advances in our
society).
(von Schomberg, 2011)
Responsible innovation?
Product questions Process questions
How will the risks and How should standards be
benefits be distributed? drawn up and applied?
What other impacts can How should risks and
we anticipate? benefits be defined and
measured?
How might these change Who is in control?
in the future?
What don’t we know Who is taking part?
about?
What might we never Who will take
know about? responsibility if things go
wrong?
How do we know we are
right?
Purpose questions
Why are organisations /
researchers pursuing it?
Are these motivations
transparent and in the
public interest?
Who will benefit?
What are they going to
gain?
What are the alternatives?
Week 1 – Sustainable Development & the Challenge of Competitive Growth

Annual fish catch Overshoot and Collapse

Time
Week 2 – Sustainable Development & the Challenge of Uncertainty
Volatility, Uncertainty, Complexity, and Ambiguity encourages Devolution

Basic Compliance Risk Competitive Transformational

Focus Shareholder Regulation Risk management Innovation & new SDG Leadership
returns growth

Sustainable Philanthropy CSR as PR Financial CSR Sustainable Shared value

Development development as (regeneration /
strategy inclusivity)
Scope License to operate Scope 1, 2 Scope 3 Systems change

Communications Financial Legally required CSR, ESG reporting ESG, SDG Purpose-driven
disclosure reporting (SDG Impact
Standards)
Collaboration Transactional NGO partnerships Stakeholder Strategic SDG Driving systems
engagement partnerships transformation
Week 3 – Sustainable Development & the Challenge of Complexity
Week 4 – Sustainable Development & the Challenge of Innovation
 Mindful leadership skills, critical for the sustainability transformation
Contextual the humility and critical thinking to seek and make meaning of intelligence from a range of
mindfulness sources, to connect the dots between disparate data points while being aware of filters and
biases, and to engage with trends before they become clear and present.
Future the ability to imagine the future through divergent thinking, using multiple lenses and
consciousness scenarios, while applying multigenerational empathy and agency over the long-term futures
of oneself and society.
Systems range the sense of leadership responsibility and stakeholder empathy to not only run high-
performing organizations but to also co-shape and enrich the systems in which we operate
by understanding the relationships between the components and actors in a system and
foreseeing the intended and unintended ripple effect of one’s interventions in that system.
Cross- the ability and capacity to successfully engineer and lead transformative collaborations with
collaborative non-traditional change partners, mobilized through a compelling shared vision and trusted
competence relationships.
Radical impact the ability to keep a relentless focus on delivering radical impact, despite being surrounded
agility by volatility, complexity, uncertainty, and ambiguity, deploying disruptive intent, an
entrepreneurial bias for action, and the mental and physical agility to continuously question
the status quo, and to explore, develop and evolve radical new models of impact and value
creation.
Purpose the self-knowledge, integrity, moral compass, and clarity of purpose that will inspire others to
reimagine and align their activities with the bigger purpose.
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