Roger Martin is known for his concepts of integrative thinking and design thinking. While integrative thinking is about combining the best of two incommensurable models to come up with creative solutions, design thinking is about using both analytical thinking and intuitive thinking to exploit todays knowledge as well as seed tomorrows knowledge. The dean of the Rotman School of Management at the University of Toronto has authored books like The Responsibility Virus, The Opposing Kinds, and The Design of Business to put forward his widely acclaimed concepts. In his latest book, ‘Fixing The Game’, he lays bare what is wrong with American capitalism and offers prescriptions for fixing it. Excerpts from an email interview with FE’s Rajiv Tikoo:
Since we are driven more by expectations than reality in day-to-day life, how is it possible to separate the two in business?
It is absolutely true that no one can escape expectations in life. If you feed your pet dog at 7 am for a couple of weeks in a row, the expectation will be formed in its little mind that it will be fed at 7 am every day and if you dont fulfill that expectation, you will hear the disappointment clearly until the expectation is fulfilled. Similarly, customers have expectations and if you dont fulfill those expectations, bad things will definitely happen.
So the question is not how to avoid dealing with expectations in business. The questions are: Which expectations do we want to pay attention to and in what way do we want expectations to influence the company behaviour. A company that puts shareholder maximisation first and foremost as its goal and gives senior management lots of stock-based compensation has made a decision to focus management attention on the shareholder expectations market. A company that puts the customer satisfaction first and doesnt use stock-based compensation has made a decision to focus management attention on the customer expectations market. The latter is a much smarter way to approach the inevitability of expectations.
Whether it was the tech bubble in 2000 or the mortgage bubble in 2008, new regulations were put in place to check the recurrence of such events. But you still fear that its only a matter of time before the next crisis hits us. So, what is the guarantee that your prescription is the solution?
In truth, I dont understand why anybody would ask such a question. There are no positive guarantees in life. Anybody who offers a positive guarantee is delusional and anybody who accepts one is pathetically naive.
Having said that, I believe Einstein was right when he defined insanity as doing the same thing over and over and expecting different results. So my argument would be that we have tried the same thing twice and it has blown up in our face twice. So lets look at what might have caused that blow-up and try something else. As my previous book The Design of Business argued, you cannot prove a new idea will be successful in advanceonly time will prove its validity or lack thereof. So it would be crazy and inconsistent for me to guarantee that the prescription I propose will succeed. However, I challenge anyone to come up with a better one.
No matter what checks and balances are put in place, there will be always people who will find ways and means to manipulate the system. So, is there really a way out?
That is correct. Every game of any consequence will be gamed by smart people. If your game isnt being gamed, it is because it is inconsequential. The only solution is constant tweaking of the game to do two things. First, to make corrections before the consequences of successful gaming are large. Second, to discourage investment in gaming the game because the pay-off period is bound to be short if there is an understanding that the game will be continuously tweaked. Constant tweaking wont eliminate the problem, but it will minimise the negative impact of the problem.
Do you see any parallels between National Football League ( NFL) in America and cricket in India If yes, what is the lesson for Indian companies?
The answer would be more straightforward if you had asked about cricket in Pakistan given the mammoth controversy there over match-fixing. That illustrates the terrible danger in allowing the expectations market in sports infect the real market.
While sports betting is illegal in India, my understanding is that there is a huge black market in betting on cricket matches. So I think there is a parallel between the NFL and IPL. The thing that North Americans would find odd about Indian cricket betting is that apparently most of the betting is of the form called spot betting which refers to bets made on an individual event within the game (for example, the number of runs in the first over). In NFL betting, this type of bet tends to be confined to the Super Bowl in which bookies offer lots of individual props to the bettersincluding, incredibly, who will win the coin toss! Apparently, however, spread betting is becoming more popular in cricket and that is completely analogous to point spread betting in the NFL.
In any event, the parallel is that NFL and IPL need to be vigilant to keep players and managers from involving themselves in the expectations market or there will be huge scandals.
Are the challenges before Indian companies any different from those of global companies And do Indian companies have any strengths that need to be emulated by others?
I think the challenge for Indian companies is to build international credibility industry by industry. I dont think that Indian companies generally had international credibility before the IT services industry burst onto the global scene with TCS, Infosys and Wipro and caused the world to see India as a global player in IT services. ICICI Bank helped do the same in banking and ArcelorMittal in steel. In due course, India will be like Japan and instead of people internationally doubting that an Indian company is a high-quality company, they will assume that it is a high-quality company. That will take some time and will happen industry by industry as leaders head out into the global market and win.
In terms of strengths, this may be too much of an IT services perspective (because I hang around with those companies), but I am really impressed with their commitment to employee education. They are like good sports franchises in North America. The good ones grow their own talent rather than buy established talent. I think that the big IT services players have figured out how to grow their own talent in an impressive fashion.
Source: The Financial Express
Published on 31 July 2011