Roger Martin: Interview #1 by Bob Morris

Posted on: March 4th, 2011 by bobmorris

Roger Martin has served as dean of the Rotman School of Management at University of Toronto since 1998. He was formerly a director of Monitor Company, a global strategy consulting firm based in Cambridge, Massachusetts. During his 13 years with Monitor, he founded and chaired Monitor University, the firm’s educational arm and served as co-head of the firm for two years. In 2007, he was named by BusinessWeek as one of the ten most influential business school professors in the world. He is the author of more than 100 articles.  His books include The Opposable Mind and The Future of the MBA co-authored with Mihnea Moldoveanu; most recently, The Design of Business that he will discuss in Interview #2.

Morris: You were appointed dean more than a decade ago. Here are two separate but related questions. First, to what extent has the mission of graduate schools of business changed since then?

Martin: It has changed quite a lot in part because it has come under withering criticism for the first time since the late 1950s.  At that time, business education was soundly criticized in a Ford Foundation study for being insufficiently academically rigorous.  That study changed business education profoundly.  The new criticism revolves around teaching MBAs to be amoral analysts rather than principled and creative idea generators and business builders. In addition, the students of today have a higher desire than I have ever seen for their career in business to have meaning, beyond just making an attractive remuneration.

Morris: Given your response to the previous question, what specific changes have occurred at Rotman since then

Martin: We have embarked on a transformation of the business school curriculum to teach what we call Integrative Thinking.  Rather than training students to see their roles in life as being great analysts of existing models – i.e. model choosers – we want to equip them in attitude and capabilities to be model builders, that is executives who generative creative new resolutions to the quandaries and tensions they face – including the apparent tension between economic outcomes and contribution to society; a false trade off, I believe

Morris: Thomas Friedman asserts that the world has become “flat.” Assuming that you agree, what are the implications of that insofar as preparation for a business career is concerned.

Martin: Tom Friedman is a great writer and The World is Flat is a fun read with some important truths in it.  However there is absolutely no question whatsoever that the world is getting spikier and spikier every day.  Economic activity, research and innovation, centers of industries, etc. are agglomerating in certain places – and not others – to a greater and greater extent. Talent is not spread or spreading like butter across the world; it is agglomerating in a few places.  To give Friedman due, there are some new places that talent is agglomerating in, such as Shanghai in design and Bangalore in software, but the name of the game for business talent is to upgrade skills at an academic institution that is recognized in the key business centers so you are seen as a globally relevant resource.  This is why as the world globalizes, it is more important for a business school to be globally consequential; because the top 50 business schools in the world are going to attract disproportionately the top student and faculty talent in the world.

Morris: You co-authored The Future of the MBA with Mihnea C. Moldoveanu. What do the two of you envision that future to be?

Martin: We envision a world in which there will be a greater focus in business education on developing the thinking styles and capacities of MBAs rather than filling their heads with analytical tools.  We see teaching them to think and act responsibly and responsively in the face of multiple, incommensurable and possibly conflicting models of oneself, the world and others. This in turn requires development of their thinking capacity along three dimensions.  First is nimble-mindedness, which we see as the ability to understand apparently conflicting models, walk around them and internalize rather than reject the tensions among them.  Second is big-mindedness, which we see as the ability to contain and behold the conflicting models while, in the words of F. Scott Fitzgerald, “retaining the ability to function.” Third is tough-mindedness, which we see as the capacity to utilize the tension among the existing models to forge a new model.  This in turn requires the rigorous testing and discarding of potential solutions rather than fixating on the first one and hoping it is sound.

Morris: In your opinion, why do so many organizations have serious problems with governance?

Martin: The problems are to be expected and occur because of a deep logical flaw in our conception of corporate governance. The basic premise is as follows.

Managers are self-interested and even if not, they have self-control problems.  Their interests are not perfectly aligned with those of the shareholders; thus they are inclined out of self-interest to put their interests ahead of those of shareholders.  This is called the “principal-agent problem” in the literature. Managers are “agents” for the shareholders, who are “principals” and managers are imperfect agents who don’t put the interests of principals first. Therefore, we create an apparatus called a “board of directors” which is given the task of serving on behalf of the shareholders to prevent managers (agents) from putting their interests ahead of shareholders (principals).

So thus far it sounds pretty good: management has problematic tendencies, so put in place a watchdog group (the board) to eliminate those problematic tendencies.

But let’s unpack this a bit.  Just who are those board members anyway? Generally speaking, they look a lot like management only a bit older – lots of sitting or ex-CEOs or senior executives; some business lawyers; some academics.  And what is their status?  Are they principals?  Do they own the company and take care of their own interests by disciplining management?  Except in the case of closely controlled companies, they are not principals in any meaningful way (they may own a relatively trivial number of shares).  Guess what?  They are agents of the principals (i.e. shareholders) exactly like management.  And they are drawn from an awfully similar pool.

The fundamental premise of board governance is these agents (i.e. board members) will behave entirely differently than the other agents (i.e. management); in fact they would behave so much differently that they would be perfectly positioned to discipline the other agents. So what would lead us to believe that these board agents would behave in an entirely different fashion than the management agents?  First of all, there is no theory that is even posited that would suggest that the board agents would act any less like agents than the management agents. And second, any such theory would fly in the face of the obvious:  this is just another layer of flawed agents and we have attempted to solve the principal-agent problem by applying yet another principal-agent problem to the problem.

And we wonder why governance doesn’t quite seem to work?  This is called designing to fail.

Morris: Here’s a related question. What can and should be done to avoid such problems?

Martin: First, shareholders need to recognize that boards aren’t going to take care of them.  Second, shareholders need to be more vigilant about choosing companies with CEOs who have demonstrated a track record of taking care of the shareholders because if the CEO doesn’t have such a track record, or worse has the opposite, the shareholders have no protection against the principal-agent problem. Third, we need to start treating board directors as if they were serving the greater good, rather than as fat-cats.  In order to promote that view, board directors should donate a significant part of their board fees to charity to signal to investors (honestly) that they are not being a director for the money but rather as a public service.

None of those things will make the problem go away; but it will help ameliorate it.

Morris: In an Insight column you wrote for BusinessWeek (February 28, 2007), you discuss what you characterize as “the positive spiral.” What is it and why is it so important?

Martin: The positive spiral is the increase in personal effectiveness that stems from a particular stance toward life, that in the article I saw design icons Massimo Vignelli and Milton Glaser exhibiting. Their positive stance has six components.

First, they don’t confuse the models (theirs or other’s) with “reality” – they are just models. Second, they don’t fear the clash of models – they leverage it.  Third, they always think there is a better model out there to be found. Fourth, they have the confidence that they can find a better model than those that exist today.  Fifth, they don’t mind at all wading into complexity to find that model – typically a simple answer after a complex consideration.  And sixth, they give themselves the time to create that better new model.

It creates a positive spiral because the stance helps them produce creative resolutions, which both convinces them that they are capable and gives them practice on how to do it.  So masters like Vignelli and Glaser appear to be design geniuses so easily it is intimidating for others to attempt to follow them.  However, they aren’t geniuses who were created that way but rather the product of a stance (mixed with obvious talent) that generated and perpetuated a long upward spiral for each; after nearly a combined century of work between them, it is no surprise they are so good.

Morris: In another article, written for Harvard Business Review (June 2007), you explain how successful business leaders think. Briefly, how do they think?

Martin: They conceive of themselves as creative resolvers of tensions between existing models.  Rather than accepting unpleasant trade-offs, they drive for a creative resolution.  They get to a creative resolution by considering more features of the problem on which they are working to be salient; by embracing more sophisticated causal relationships between the salient features; and by keeping the whole problem in mind while working on the parts (rather than breaking it into pieces and tackling it sequentially or farming out the pieces to various folks to work on and then reassembling the completed pieces).  If they get to a first solution and find it of uninspired quality, rather than accepting it, they will go back to what they considered salient, the causality they considered and the architecture they used to rework the problem until a pleasing answer is forthcoming.

Morris: Especially in recent years, much has been said and written about the importance of innovation. From your perspective, what seem to be the most common misconceptions about what it is…and isn’t?

Martin: People think it is invention and is performed by scientists in white coats in labs.  Innovation is the process of finding a new way to meet user needs in an economically attractive way.  While invention can play a useful role in that process, it is only one piece of the puzzle.  And often invention is inventor-centric rather than user-centric; so the attempted innovation tends to be a solution looking for a problem.  Or it is a solution that can’t be produced and/or distributed economically.  For this reason, innovation is an integrative activity – it requires multiple perspectives – and must be user-driven.

Morris: You have observed that “businesspeople will have to become more ‘masters of heuristics’ than ‘managers of algorithms.’ With the forces of competition today, it will make the difference between success and mediocrity.” How so?

Martin: An algorithm is a precise set of sets that leads the algorithm-runner directly to a solution.  Each of us has an algorithm for getting from home to the office.  Once an algorithm is known, virtually anyone or any organization can run the algorithm and there is limited scope for value creation. Industries that devolve to one success algorithm tend to become a fiercely competitive battleground in which only the consumer wins. Personal computing is an illustration.  Once the algorithm became take an Intel chip and Windows operating system and slam together the parts to go along with the two and sell a PC, it became a bloodbath.  Dell finally figured out how to make a decent return with a distribution innovation, but the algorithm dampened industry profitability.

The greater value-added comes from mastering a heuristic – which is an approach to getting toward a desirable answer that takes skill and judgment to utilize effectively.  A great P&G marketer can’t write down the formula for brand-building.  But he or she does have a sense of the things that need to be done to build a brand and can piece the right items together to brand-build in each given situation.  That heurism mastery is incredibly valuable in large part because it is difficult to replicate.

While algorithms are attractive and if you can have a proprietary, patented algorithm (such as Qualcomm’s CDMA mobile phone switching algorithm), you can make a huge return, I believe the great return to human capital in the 21st century will come from mastery of heuristics.

Morris: Now please focus on The Opposable Mind. To what does the title refer?

Martin: It is an allusion to the opposable thumb.  Humans are fortunate to have evolved a sophisticated opposable thumb that can create tension between the thumb and fingers.  By applying that tension, we can do remarkable things – like guiding a catheter through an artery; holding a paint brush or gripping a golf club.  Similarly, we are born with an opposable mind, one that can hold two (or more) opposing models in our mind at once and utilize the tension created by those opposing models to generate a new model that is superior to each, but contains elements of both.

Morris: Why is having an “opposable mind” so essential to effective leadership?

Martin: Leaders with an opposable mind are model or solution creators not model/solution choosers.  There is only so much value to be created by choosing from among the existing models the least flawed model.  That is useful to be sure; but it is not nearly as useful as creating an entirely new model that combines elements in such a way as to minimize or even eliminate the negatives of the existing models, and combine the positives.  Such a leader opens new avenues, creates new possibilities, and shapes his/her organization for the better. Leaders who can’t or won’t use their opposable minds are perfectly OK, but not inspirational or aspirational.

Morris: Based on what you have observed, can almost anyone develop an “opposable mind”? If so, how?

Martin: I believe that anyone can improve the functioning of his or her opposable mind and there are three pieces to the work the individual must do: stance, tools and experiences.

I discussed stance above in reference to Vignelli and Glaser.  It is critical for the individual to adopt at least provisionally the integrative stance.  Otherwise he/she won’t even attempt to be a model creator rather than a model chooser; and no attempting means no development.

The individual also needs to develop three tools.  The first is generative reasoning capacity. This means that in addition to using the two common forms of logic – deductive logic (the logic of what must be) and inductive logic (the logic of what is operative) – the individual must develop the capacity for abductive logic – the logic of what might be.  It is an equally legitimate logic but is generally untaught and not appreciated – despite being the only source of new thinking/models/ideas in the world.

The second tool is assertive inquiry.  The individual needs to develop the capability to inquire effectively into models, especially models other than the individual’s own model. This is because understanding multiple models is the source of ideas for new, integrative models. To create a useful dialogue between models, an individual needs to be able to assert the logic of his/her own model while also inquiring into the models of others.

The third tool is causal modeling.  The individual needs to become skilled at seeing the world in terms of causal models and proficient in building such causal models. Without a facility in causal modeling, the individual will be trapped in the world of choosing among models constructed by others. That in turn disables the creation of new, better models; the heart of integrative thinking.

Finally with respect to experiences, the individual needs to ensure that his/her experiences both deepen mastery and nurture originality.  Both mastery and originality are critical to integrative thinking.  In order to be original, an individual needs to have a certain mastery of the domain in which he/she is attempting to produce a creative outcome.  Originality without mastery is flaky.  However, if an individual only works on deepening mastery, he/she will not develop the capacity to create, to innovate.  That only comes with practice, with trial and error.

Most people are inclined toward either mastery or originality. The integrative thinker needs to play against form. If he/she is most comfortable with mastery, he/she needs to seek experiences in creativity.  If he/she is most comfortable with creativity, he/she needs to seek experiences in mastery.  A push on both will encourage integrative thinking capacity – the development of an opposable mind!

Morris: Given your response to the previous question, what can an organization do to support that process of development?

Martin: An organization can help in a number of ways related to each of stance, tools and experiences.

With respect to stance, an organization can support the idea that it is a generator of new models, not just an exploiter of existing models.  When one of its members attempts to seek a new model, he or she should be supported not squelched.  And if it doesn’t work out, it shouldn’t necessarily be seen as an error but rather the kind of striving the organization must make to renew its models.

With respect to tools, the organization should embrace abductive reasoning, not just deductive and inductive reasoning.  It should be careful not to ask that ideas be proven deductively and/or inductively in order to gain legitimacy – that will ensure there are no new ideas and Integrative Thinking will be squelched. The organization should also encourage a culture of assertive inquiry. It should not be a virtue to advocate belligerently and refuse to listen to other ideas – which indeed is the culture in many organizations.  Seeking to understand the models of others and helping them to understand yours needs to be the culture.  Finally on tools, the organization should work to enhance the causal modeling capacity of its members.  Rather than operating on superstition or implicit models, the organization needs to be explicit about its models because that is the way it will improve its model-making capacity.

On experiences, the organization can be systematic about giving assignments that successively develop its members’ mastery and originality.  If it isn’t systematic in this way, individuals can develop a bias toward activities that overplay mastery at the expense of originality or vice versa and not develop the breadth they need.

Morris: How can confrontation contribute to productive teamwork?

Martin: Confrontation can provide practice on assertive inquiry.  But that is only if the individuals involved have a productive approach to confrontation.  Confrontation in the form of tension between opposing models is raw material for integrative thinking.  But if the goal of those confronting is to defeat the opposing model rather than learn from it, then confrontation is useless.  If learning is the goal, confrontation is a wonderful thing.

Morris: You are a classroom teacher as well as a prolific author. How have these activities proven beneficial to your duties and responsibilities as a dean?

Martin: The old expression is absolutely true:  “If you want to learn something, teach it.”  I learn something about what I am teaching every time that I stand in front of a class.  Every professor who views teaching as something that takes him/her away from research doesn’t understand the power of teaching to test, hone and refine one’s ideas.

Similarly, people tend to believe that we think to write.  No.  In fact we write to think. Only when we take the crude ideas that are circulating in our minds and put them down on paper can we see what we were thinking – and see what is missing.  In this way, writing helps us think.  So net, I think that teaching and writing helps me think better as a Dean and I would never stop either.

Morris: One final question. Jim Collins recommends that every organization have a Big Hairy Audacious Goal or BHAG. Does Rotman have one? If so, what is it?

Martin: We seek to fundamentally transform business education. We want to help the business education world understand that it can aim higher and teach students the most important managerial activity – thinking integratively – in addition to teaching them many of the models that form the foundational knowledge necessary for Integrative Thinking. Then instead of just building the foundation for its students, business education can build the entire house!  It is there for the taking and we seek to show that it can be done.  Just because Integrative Thinking has been untaught doesn’t mean it is unteachable.

 


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