From the Editor
Creative Destruction, Winter 2018
WHETHER YOU WORK IN FINANCE, healthcare, consumer products or high tech, you share a common challenge with your fellow leaders: No one has the luxury of basking in yesterday’s — or even today’s — success. The humbling fact of life is that virtually everything you thought you understood about running your business successfully is open to better ways of doing things.
The term creative destruction was coined by Economist Joseph Schumpeter to describe the process of ‘industrial mutation’, whereby a radical new innovation leads to the demise of what existed before it. Schumpeter was clear that whenever creative destruction occurs, there are winners and losers. Think of the smartphone, which all but killed the market for not only regular cell phones, but also point-and-shoot cameras, wrist watches, calculators and voice recorders — amongst other things. Despite this destruction, in Schumpeter’s mind, the net economic benefit of radical innovation is always greater than if that innovation had not been introduced.
In this issue of Rotman Management, we will look at how creative destruction is unfolding, and the thinking and leadership required to fuel and navigate it. We kick the issue off on page 6 with Moonshots: Achieving Breakthrough Innovation in Established Organizations, in which Rotman Chair in Management Anita McGahan describes how the most innovative companies embrace difficult-to-achieve goals that change the playing field in their industry.
The gap between understanding and adopting artificial intelligence (AI) remains large at most companies, according to a global study by MIT and the Boston Consulting Group: Almost 85 per cent of executives believe that AI will allow their companies to obtain or sustain a competitive advantage; yet only one in five has incorporated AI in their offerings or processes. On page 20, Accenture’s Jodie Wallis and Deborah Santiago look at how to close this gap in The Future of Growth: AI Comes of Age.
The humbling fact of life is that virtually everything you thought you understood about running your business successfully is open to better ways of doing things.
Digital disruption is a key aspect of the current landscape, with widespread implications. On page 46, SAP’s Maxwell Wessel describes The New Leadership Imperative: Embracing Digital Transformation.
Elsewhere in this issue, we feature Creative Destruction Lab founder Ajay Agrawal in our Thought Leader Interview on page 14; Rotman School Dean Tiff Macklem and alumnus Michael Zerbs (MBA ’89) discuss How AI Will Transform Business on page 28; and Estée Lauder CEO Fabrizio Freda shows how a large corporation can remain relevant in an age of disruption, on page 56.
In our Idea Exchange section, IDEO CEO Tim Brown describes the challenges for innovators on page 90; Wharton’s David Robertson discusses a ‘third way’ to innovation on page 94; NYU’s Scott Galloway describes Facebook, Amazon, Apple and Google’s race to be the first trillion-dollar company on page 108; Cambridge School of Business Fellow Navi Radjou describes ‘frugal innovation’ on page 120; and Rotman professors Anne Bowers, Rebecca Reuber, Sarah Kaplan, Joshua Gans, Spike Lee, Chen-Bo Zhong, Heather Fraser and Mihnea Moldoveanu discuss findings from their research.
The key to competitive advantage right now sounds deceptively simple: Ensuring that innovation is an integral part of your core strategy. The fact is, we can’t take for granted that the future will be better — and that means we need to work to create it, today.