Business & Finance
Rotman Management

Rotman Management Winter 2017

Published in January, May and September by the Rotman School of Management at the University of Toronto, Rotman Management explores themes of interest to leaders, innovators and entrepreneurs. Each issue features thought-provoking insights and problem-solving tools from leading global researchers and management practitioners. The magazine reflects Rotman’s role as a catalyst for transformative thinking that creates value for business and society.

Rotman School of Management, University of Toronto
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3 Issues

in this issue

3 min.
smart power

UNTIL RECENTLY, THE MODEL OF INFLUENCE in society was based on the belief that the interests of those in power were connected to those of the broader public — and that if someone worked hard enough, it was possible to ‘climb the ladder’. But today, rising income inequality, high-profile corporate blunders and the democratization of media have flipped the classic pyramid of influence — to a point where people now trust their peers more than they trust those in power. That according to the 2016 Edelman Trust Barometer, which asked 33,000 people worldwide how much trust they have in four institutions — government, business, NGOs and the media — to ‘do what is right’. The results: in more than 60 per cent of countries, the general population’s trust in institutions is…

15 min.
shareholder activism: this changes everything!

ON THE EVENING OF OCTOBER 28, 2011, Canadian Pacific Railway Vice-President Paul Guthrie and a senior team were travelling across Canada, touring the company’s facilities, when Paul received a call. CP’s legal advisory firm had heard a rumour: activist hedge fund Pershing Square Capital Management (‘Pershing’) was buying up CP stock — and had surpassed the five-per-cent threshold requiring it to notify the Securities and Exchange Commission (SEC) of its activity. Headed up by William Ackman, Pershing was a private, U.S.-based hedge fund that took positions in companies it considered to be under-valued. With US$7.78 billion in assets under management, it had already made investments in Target, Kraft Foods, J.C. Penney, Citigroup and Wendy’s — where Ackman had forced the sale of its Tim Hortons operations. Unbeknownst to CP’s senior team, earlier…

12 min.
thought leader interview: mark wiseman

Along with McKinsey’s Dominic Barton, you have been closely involved in the quest to focus investors' mindsets on the long term. Describe how and why you became involved. It all started with an article Dominic wrote for Harvard Business Review [“Capitalism for the Long-Term”] back in 2011. In it, he argued that, if we didn’t shift to more long-term thinking — and start producing greater prosperity for citizens — capitalism could be at risk as an organizing principle for society. Dominic made this point extremely well in the article, but because he’s a good friend of mine, I called him up and said, ‘Dom, you’re being a typical consultant — pointing out all these issues, but not doing anything to find solutions. What are you going to do about it?’ He came…

13 min.
tackling inequality: the challenge for corporate leaders

THE WORLD HAS NEVER BEEN MORE PROSPEROUS than it is today. People around the world live longer, healthier lives than ever before. In emerging markets, billions of people have moved out of extreme poverty, and in the developed world, we enjoy better medicines, education, information, connectivity, and mobility than most of us could have imagined a quarter century ago. These achievements have many fathers and mothers. Human inventiveness, political leadership, social activism and entrepreneurship have all contributed to what Nobel Prize winner Amartya Sen described as ‘human freedom’. Carefully-crafted policies for the free exchange of goods, services, capital and labour — commonly known as globalization — and the march of technology have also played essential roles. These two forces have increased productivity, opened up markets, and created opportunities for billions of…

14 min.
walmart’s journey to sustainability

How did you come to see Walmart as a possible change-maker in the world? Let me start out with a pretty simple proposition that is, nevertheless, somewhat contentious: business exists to serve society. The question is, how do companies interpret that, and what do they do to fulfill that promise? The most obvious way is to look at what your business does from day-to-day, to serve its customers. Three years ago, soon after I joined Walmart, I travelled to Soweto, South Africa, where we run our stores under the Cambridge banner. I was in one of the stores with our management team, as they coached the person behind the deli counter about food safety — making sure raw chicken didn’t touch the vegetables, and other important procedures. I stood there for a…

16 min.
investing for a sustainable future

IN GENERAL, IT IS ASSUMED that every company’s top executives and its board of directors possess a keen understanding of investor priorities. Indeed, most would agree that this is one of their key responsibilities. Based on their understanding of investor interests, a leadership team will often focus corporate strategy and behaviour in one direction rather than another. For instance, if executives believe that their investors prioritize short-term profits, they will tend to organize sales, cost management, and research and development activities to maximize such profits rather than make certain long-term investments. Today, many executives continue to embrace the conventional wisdom that mainstream investors care very little about an organization’s performance on environmental, social and governance (ESG) metrics. Investors won’t shift their investments, the thinking goes, based on ESG performance. For the seventh…