Roger
Martin has been a leading strategist and consultant for many years. He
is consigliere to CEOs of many multi-billion dollar enterprises. He also
spent a decade and a half as the dean of the Rotman School of
Management in Toronto, a post he took as an act of patriotism in the
hopes of creating Canada's first world-class business school. (He
achieved that goal.)
Martin is also a prolific author, having written numerous business best sellers such as Playing to Win: How Strategy Really Works (co-authored with P&G CEO A.G. Laffley), The Design of Business: Why Design Thinking is the Next Competitive Advantage, and Creating Great Choices: A Leader's Guide to Integrative Thinking (co-authored with Rotman School Adjunct Professor, Jennifer Riel), which is his most recent book.
In this interview, he reflects on the future of social democracy, and
posits that economic shifts have transpired that have altered the
viability of the American Dream.
(This is the 26th interview in the IT Influencers
series. To listen to past interviews with the likes of former Mexican
President Vicente Fox, Sal Khan, Sebastian Thrun, Steve Case, Craig
Newmark, Stewart Butterfield, and Meg Whitman among others, please
visit this link. To read future posts in this series, please click the link above to follow me on Twitter @PeterAHigh.)
Peter High: Please describe the work you are doing with the Martin Prosperity Institute on the future of Democratic Capitalism.
Roger Martin
Credit: Roger Martin
Roger Martin: We are in the middle of a six-year
project with the goal of answering the following mystery: Between 1776
and 1989, a period of a mere 213 years, the median family in the U.S.
economy had a 95 percent probability of their income being higher, in
real terms, than it was the year before. In those 213 years, they were
two bad periods where this was not true. The first was the Long
Depression in the late 1800s. People know less about that depression
than the Great Depression, but it was equally bad. The second was the
Great Depression, which began in 1929 and went for several years. Other
than those periods, it was only the odd year or two where the median
income did not increase. Additionally, up to 1989, the income of the top
1 percent dropped dramatically more than the median person’s income.
That is American history up to 1989. Then, between 1989 and 2014, where
we have the latest revised figures, median income was flat. 2014 was not
higher than 1989.
There are two things to notice here. One, that is longer than any
other time in American history, by far, and it is continuing. Two, in
this period, the top 1 percent has done better than any time in American
history. It is not even close, and it is accelerating. The mystery we
are trying to solve is what changed about the American economy that
makes the post 1989 period different from the period prior to 1989
whereby the median income person now has no expectation that their
income is going up next year or the year after. Meanwhile, the top 1
percent’s incomes are getting better every year.
Why do I care about that? In Democratic Capitalism, the median income
family is the swing voter. Unless the public vote’s for the status quo,
you will have the government producing that negative result punted out.
After the Great Depression, if we consider the industrialized
democratic countries of that era, which was Europe and the U.S.,
virtually all of Europe went either communist, socialist, or fascist in
response to that stagnation. The United States did not. In fact, the FDR
administration took the country leftward, but still it was avowedly
democratic capitalist. The reason that was politically plausible was the
median family, the swing voter, could say, “At least we are all in this
together. The rich are getting slammed super hard. We are getting
slammed. The whole economy is getting slammed. Let's try to work our way
out of it together.” We do not have that condition anymore. The median
family, if they are paying any attention, is saying "We are getting
slammed and those guys couldn't possibly be doing more awesome."
If we don't figure out a way to return to an America where the swing
voter feels like things are getting better, we could have an attack on
Democratic Capitalism. What I am trying to figure out is why it is
different? What is going on that makes it so different? Then, what can
we do to restore the classical situation where the median income person
has every right to expect things are getting better?
High: I know you are in the throes of your work, but do you have any working diagnoses?
Martin: One is that much of Democratic Capitalism is
premised on the world being made up of normally distributed things. The
expectation is that because a lot of life is normally distributed,
things like height, weight, intelligence, etc. that things like wealth
and income would also be normally distributed. However, it turns out
wealth, and many other economic things, are Pareto distributed. The
Pareto Principle, by Vilfredo Pareto, is winner take all, or an 80/20
distribution. What makes something normally distributed with a big fat
middle, like say the big fat middle class, and then have tails, like the
poor and rich people, is if all the data points are independent of one
another. For instance, if I am tall, it does not make it more likely
that you are short. They would only be related if there were only so
much tallness to go around. There is not, so we end up with a normal
distribution for height. However, if one data point does
influence other data points, you get a more extreme distribution where a
few categories in the distribution have all the results and a long tail
of people with little. When having more wealth enables you to earn more
wealth, you get a Pareto distribution. We can think about it with
reputations. Having a bigger reputation attracts more people to you
because you have a bigger reputation, then, you get an even bigger
reputation. This gives you a Pareto distribution of things like Twitter
followers, Facebook friends, etc.
Theorists who have looked at this in other domains, not necessarily
the economic domain, argue that if the system has more tension applied
to it, there is a better likelihood it will go Pareto. Our emerging
thesis is that as markets become more efficient, partially through
globalization but also through the increasing availability of capital to
compete in industries, they have become less Gaussian. There is not
room for a lot of competitors. What is happening now is a winner
emerges, by winning they are able to position themselves to win more,
and then they crush everybody else. They are now the dominant player in
the industry and the people associated with that become the richest
people. Our current situation is not a normal distribution with the big
bump in the middle. We have more extremes where a few companies, a few
products, a few people, or a few parts of countries, are the big bump.
That is one thing that is emerging that would explain why it is not
going to snap back and end up looking like America prior to 1989.
High: Is there a remedy?
Martin: I do not have an answer yet. That is what we
are going to spend the next couple of years figuring out. We have a
core diagnosis of the problem, now we have to figure out if our
diagnosis that the economic world is full of Pareto distributions, or
lists toward Pareto and away from Gaussian, is true. And if it is, what
do we do about that?
High: Your answer alludes to corporate
responsibility and the company's role within the broader economic
structure. This brings to mind companies like Apple, Google, Facebook,
and Amazon.
Martin: Yes, the companies known as the “Four
Horsemen of the Apocalypse.” They are called that because they are
crushing everything and everybody with their weight.
High: Microsoft got into the crosshairs of the
government because of concerns about undue influence. It is hard to
imagine Microsoft had more influence than Apple, Google, Facebook, and
Amazon currently do.
Martin: Self-restraint is the only protection
against a comprehensive, or more extreme, government imposed solution.
Those at the top of the Pareto distribution, are basically just enjoying
it and not asking themselves questions like: Are you destroying the
commons? Are you something that feeds off the host to such a degree you
might be killing it? Is it better for you long term?
Was it better for Microsoft long term? Microsoft and Intel would go
to the computer companies and essentially charge them big time or
threaten them with charges if they let somebody else in. For a while,
Intel would charge you less for its chips if you used 100 percent Intel
chips than if you got 80 percent Intel and 20 percent AMD chips. Intel
was trying to make sure they had as close a thing to a monopoly as
humanly possible.
You could argue that for Microsoft's long-term health, being the
operating system monopolist was not good for them. They fossilized and
came to be the walking dead. They are the General Motors of 1970.
Companies have to consider that it may be in their interest, if the
distribution is heading in a Pareto direction, to try to ameliorate
that, rather than accentuate or exacerbate it, which is what Apple,
Google, Facebook, and Amazon are all doing. They are all attempting to
get as close as they can to an impregnable monopoly. Apple to a lesser
extent. At search, Google is; at social media, Facebook is; at selling
everything, Amazon certainly is. These four companies celebrate the
exodus of players from their field of play. Instead they should be
saying, “It would be better if there is vibrant competition. We may be
the winner, but we will not be the only player that can make a pop or be
left standing.”
High: You are one of the leaders in the field of
strategy. How should companies think about strategy in a period where it
can feel like the rate of change is faster than the rate at which you
can develop a new strategy?
Martin: If enough people repeat something enough
times, it becomes repeated wisdom. Henry Mintzberg, from McGill
University, is one of the most famous business professors/strategy guys
of all time. He created the notion of emergent. He often starts his
presentations with a quote that says something along the lines of: “The
pace of change is faster than ever before, it is almost impossible to
keep up. There has been nothing like this in any point in history.” He
then asks, “Where do you think that quote came from?” People respond, “Wired” or “Tech Crunch,” and he says, “Scientific American,
1868.” People think the present is fundamentally different from the
past, all the time. In particular, they think right now is more
tumultuous than ever before. Why does every generation think things are
now changing faster and that the pace of technological innovation is
unbelievable? It is because it is unresolved. As long as something is
unresolved we think of it as being very dangerous.
Strategy is not different today. There was never a time when
everything was stable and you could do one thing and it would last for a
long, long time. People can say, “But General Motors from the 1920s to
the 1970s, they were absolutely dominant and that does not happen
anymore.” In response, I point out companies like Coca-Cola that have
been around for 100 years. For a century they have been dominating the
cola business.
Strategy has always been change. Strategy is your best estimate of
how to align your assets to compete in the field you would like to
compete in, until such a time that that is not the best way anymore. My
practice of strategy has always been at the word “go.” I call it,
where-to-play/how-to-win. You should ask yourself the question, "What
would need to be true for that to be a great idea?" But you never know
about the future. You should have a bunch of options though because if
one set of things is true, you should do “A.” If a different set of
things is true, then you should do “B.” If other things are true, then
“C.” You will have to choose, but your choices are always just a guess.
You have never had strategy, it has always been about shortening your
odds. You decide on “c” because you think certain things are true:
Customers will react this way, competitors will do this, and the
government will do that. Whatever list you have. Then, you should wake
up every morning and consider, now that we are experiencing outcomes
from our strategy choice six months ago, and have six months of
additional data, to what extent are the things we thought were true or
less true? If they are looking like they are not true anymore or they
never were true we only imagined they were true, then it is time to ask
the question: How should we change our where-to-play/how-to-win? If they
look like they are supposed to, the question would be: How do we make
sure we are pursuing this where-to-play/how-to-win, as stringently and
strongly as possible. That has always been the case for strategy. I
started doing strategy in 1981 and nothing has changed. Not a thing has
changed about that.
High: What is the cadence with which one should monitor their strategy?
Martin: Every day. In 1981, it should have been
every day, the same is true today. You should put your strategy on your
tack board to remind yourself to ask: Are those things that would have
to hold true looking good or looking bad? Then you wake up the next
morning, come into work, and ask: Are they still looking good or looking
bad? That is the right cadence.
High: Can you describe the notion of integrative thinking?
Martin: I started thinking about this in 1991. The
inspiration was wondering why people were crazy enough to hire Monitor
Company. We were a bunch of kids. We were young punks taking on the big
established players, and we got business. I asked myself, why would they
hire us, rather than McKinsey or BCG? McKinsey started in 1920 and BCG
started in 1963. We stated in 1983. They were old, wise, and way bigger
than us. I came to the conclusion they hired us when there was not a
model for thinking about the problem they were facing. If they needed
someone to do something that had been done before, they hired somebody
who had done it 50 times. However, if it had not been done before, what we said convinced them we could handle that one-off project.
This led me to study, for the next decade or so, the questions: “Is
there a way highly successful leaders think their way through these
kinds of things? Is there anything we can tell about the production of
answers to dilemmas like this?” I figured out that those dilemmas tended
to be either- or problems. We could either head in this direction or
that direction, but we do not feel good about either of them. I came to
the conclusion that talented leaders faced up to those things and said,
“Wow, we have an either-or choice, and I am not comfortable with making
that.” Somehow they figured out how to come up with a better resolution.
By studying it even more, I came to the conclusion that the resolutions
seemed to have the same the same general form. I kind of knew something
about that when I wrote the book, The Opposable Mind: How Successful Leaders Win Through Integrative Thinking,
in 2007. We knew these leaders were able to generate a new option that
contained elements of the others, but was superior to both. In my follow
up book Creating Great Choices, which followed about 10 years later, we knew more about the precise form those integrated solutions take.
People often ask me, “How do you write a book every two years about some new ideas nobody has thought of? And
write two or three Harvard Business Review articles a year? Where do
you come up with these ideas?” I hang out with business men and women in
their businesses. The problems that need solutions become obvious.
There is a big value add if you are facing one of these either-or
choices and you can figure out a way to come up with a better answer.
You will do wonders for your organization and end up famous, wealthy, or
whatever gets you happy. However, it is only a minuscule fraction of
executives who seem to have that capacity. I try to reverse engineer and
distill what they do and give it a methodology. Then I write a book or
some articles and teach students and corporations those ideas.
High: In 1998, you joined the Rotman School of
Management at the University of Toronto. What drew you do to the
university? What were your aspirations?
Martin: I did not have any aspirations for myself.
As a Canadian, it was an act of patriotism. I had gone to undergrad
business school in Boston, fell in with a group of people down there and
got acclimated to the U.S. milieu. Then, with Monitor Company and
getting an MBA, I was acclimated to the global milieu. I completed my
undergrad and my MBA at Harvard, so I am not opposed to people leaving
their country to go somewhere else, however, over time, I came to the
conclusion that it was not a good thing that Canada had no world-class
business school. Students should not have to leave Canada to get a
global business education. Moreover, it is hard to have a world-class
business sector without a world-class business school. I thought, this
is something you could do Roger. I came back to Canada to try to give
Canada a great business school. I saw it as my civic duty. I believe
people who are successful before retirement age should turn their minds
to public service. Our goal was to create a school that is globally
consequential, relevant to the world, and does breakthrough interesting
work. We have accomplished it.
Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Forum on World Class IT podcast series. He speaks at conferences around the world. Follow him on Twitter @PeterAHigh.
Militari Italiani importano droga dall'Afghanistan
Originariamente Scritto da bsk
Rispondi Citando
Post
