Rotman Management 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…

IN THE FIELD OF MANAGEMENT, the term ‘moonshot’ has emerged to describe a breakthrough goal on a five-to ten-year horizon into the future. The idea is that a moonshot represents a goal so compelling that it motivates virtually all stakeholders to strive toward its achievement — despite the difficulty and complexity of the path to success. In Silicon Valley, the term is reserved for only the most important innovations: The microprocessor was a moonshot, as was the first personal computer (the Apple II), the World Wide Web and Apple’s iPhone. Google has famously invested more than $800 million in moonshots like autonomous vehicles, creating tens of billions of dollars of market value for the company. The question is: Can an established organization that has been successful in a legacy business adopt this…

Describe what happens at the Creative Destruction Lab (CDL). The CDL is a seed-stage program for massively scalable sciencebased companies. Some start-ups come from the University of Toronto community, but we now also receive applications from Europe, the U.S. (including Silicon Valley), Israel and Asia. We launched the program in September 2012, and each autumn since, we’ve admitted a new cohort of start-ups into the program. Most companies that we admit have developed a working prototype or proof of concept. The most common type of founder is a recently graduated PhD in Engineering or Computer Science who has spent several years working on a problem and has invented something at the frontier of their field. The program does not guarantee financing, but the majority of companies that succeed raise capital from the CDL’s…

IN THE MODERN ECONOMY, there are two traditional drivers of production: increases in capital investment and labour. However, the decades-long ability of these drivers to propel economic progress in most developed countries is on the cusp of a massive change. With the recent convergence of a transformative set of technologies, economies are entering a new era in which artificial intelligence (AI) has the potential to overcome the physical limitations of capital and labour and open up new sources of value and growth. AI is, without question, the single most disruptive technology the world has experienced since the Industrial Revolution. In this article we will discuss some of the implications, challenges and opportunities of this new fact of economic life. A New Factor of Production For three decades, rates of gross domestic product (GDP)…

We hear so much about artificial intelligence (AI) these days, but many leaders are at different levels in terms of understanding what it means for business. What do they need to know? MICHAEL ZERBS: First of all, I want to be clear about something: AI is already here. You are using AI whenever you type a message on your iPhone and a word gets auto-completed; whenever you type a word into a search engine and it magically completes itself; and whenever you use Google Translate. These are all AI applications, and they share two key characteristics. In each case, it’s about a machine/agent perceiving its environment. If it were a real, natural intelligence such as you perceiving the environment, that would entail using your eyes and ears; but because it’s a machine…

ANYTIME A START-UP RAISES A LOT OF CAPITAL or an interesting product takes off, the Internet is abuzz with how that company or product is disrupting its industry. But as Clayton Christensen — the Harvard Business School professor who coined the term ‘disruptive innovation’ — has explained, the term ‘disruption’ is often misunderstood and misused. It’s about more than just someone shaking up an industry. While it might seem trivial to argue the theory’s precise definition, being able to spot the true markers of disruption enables companies to proactively capitalize on potentially game-changing areas of opportunity. With that in mind, it’s important to recognize that being able to spot opportunity is only part of the battle. To take advantage of these openings, companies need to design solutions that satisfy real consumer…