Hacked By Imam

Hacked By Imam with Love

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Happy news: joining CAMRT

On February 4th, I will be joining CAMRT as its next CEO. The Canadian Association of Medical Radiation Technologists is Canada’s national professional association for radiological, nuclear medicine and magnetic resonance imaging technologists and radiation therapists. CAMRT offers a suite of programs that advance the profession. These include certification, continuing professional development opportunities, publication of a journal, strengthening professional practice as well as advocacy to promote the effective contribution of MRTs in healthcare. CAMRT serves over 12,000 members (more at www.camrt.ca).

These are exciting times to join the association. Technology is evolving at a fast pace and demand for services is rising. I look forward to joining the talented team of individuals at CAMRT.

My plan is to continue to blog on occasion on a revamped site. So please stay tuned.

With sincere gratitude for your much appreciated loyal readership.

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Why bad strategies fail to produce change

Textbook strategic planning is too often bland and static. It loses the sharp focus and energy vital to execution.

What emerges is a watered-down list of broad goals. Sigh… who will implement all this and how?

Bad strategy generates a feeling of dull annoyance when you listen to it.” (Rumelt)

Effective strategies confront the core issues of your organization. They are as much about what you will not do as they are about what you will do. They prioritize efforts. They take courage- they impose difficult choices: re-allocating scarce resources from non-strategic activities.

Strategies must be revisited as needed, not at fixed intervals- the world does not work in nicely ordained 3 years plans!

Good strategies spur a cycle of action and learning: you reflect, plan and act. Reflect, plan and act again.

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Tips from Daniel Kahneman’s Thinking, Fast and Slow

Daniel Kahneman is a professor of psychology at Princeton University. He received the 2002 Nobel Prize in Economics. In his book, Thinking, Fast and Slow, he distills a lifelong journey of learning into over 400 pages of insights.

Humans, it turns out, are not such rational animals after all. We are all victims of intuitive biases. Read the book, and if you’re looking for a few quick tips, read on.

  1. Most people are over-confident, placing too much faith in their intuition.
  2. We tend to make important decisions based on the coherence of the information presented rather than the completeness of the information.
  3. The Halo Effect leads to the “tendency to like (or dislike) everything about a person”. This is especially risky in groups where we might place more value in views of certain people than others, regardless of the strength of their arguments.
  4. “Optimism is widespread, stubborn, and costly.” For example, most sales representatives tend to be overly optimistic in their forecasts; entrepreneurs are over-confident in their chance of success; investors believe in their knack to predict market swings.
  5. CEOs influence the performance of their companies to a much lesser extent than the business press would suggest: “stories of success and failure consistently exaggerate the impact of leadership style and management practices on firms’ outcomes.” Further, “even if you had perfect foreknowledge that a CEO has brilliant vision and extraordinary competence, you still would be unable to predict how the company will perform with much better accuracy than the flip of a coin.”
  6. Luck has a huge importance in the future (and past) successes of organizations- Knowing this, we should be suspicious or studies comparing the performance of various companies (Good to great for example)
  7. Be guarded against overconfidence (in yourself or others): confidence is a feeling. It does not correlate with accuracy. Many so called “experts” operate under the “illusion of skill”.
  8. We are driven more strongly to avoid losses than to achieve gains. This might explain the reluctance of organizations to embrace change.
  9. My favourite: “An unbiased appreciation of uncertainty is a cornerstone of rationality- but it is not what people and organizations want.”

 

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Business as a source of Social Innovation: part 3- Social well-being

In my last two blog, I explained there were 3 ways for enterprises to be a source of social innovation:

1. New products, services or markets;
2. Environmental stewardship;
3. Social well-being of their employees and the communities in which they operate.

Let’s look at how businesses can improve work satisfaction of their employees and have a positive impact on communities.

Employee wellness: There are many factors contributing to employee satisfaction. Competitive wages and physical working conditions are obvious ones. Employees can also be attracted and retained by a variety of progressive programs and policies that are associated with healthy workplaces. Many of the programs we now take for granted were once social innovations. The following list is not exhaustive, nor does it apply to all workplaces, but it gives an idea of the types of initiatives businesses can adopt to enhance employee wellness.

• Flex time (adaptable work hours)
• Telework (work from home)
• Tuition support and continuing education
• Diversity in the workplace programs
• Fitness centres
• Employee assistance help lines
• Childcare
• Profit-sharing
• Stress management programs
• Parental leave
• Discretionary leave time for family/personal emergencies
• Retirement pension plans
• Medical insurance and assistance
• Healthy food choices at company cafeterias
• Job security
• Job retraining and transition assistance for those who have to leave the company
• Mentoring and coaching
• Celebration of achievements and recognition programs

Employees cannot be treated as mere production inputs or mercenaries. Their satisfaction and wellness ultimately lead to a more productive workforce. Failure to address employee working conditions leads to increased absenteeism, higher turnover rates, and a greater likelihood of labour conflicts.

Healthy communities: In many communities, businesses play an important role, providing work for their citizens and supporting local events and charities. They are often what provides life and energy to a neighbourhood. Take away industry from a locality and it quickly becomes a ghost town. Through social innovation, businesses can explore non-conventional ways of enhancing their local communities and supporting their social ecosystems. Let’s look at a few example:

Pacific Rubiales is a producer of oil and natural gas, with operations in Latin America. It understands it must give back to the communities in which it operates. It uses the eight priorities of the millennium development goals (MDGs) as a framework to orient social investment decisions. It is involved in many innovative community programs. For example, it has programs to train community leaders in community rights. It educates children, teenagers and parents about their rights and obligations through an innovative mobile playground (the Ludoteca Movil) and it supports the Guaduas community in exploring eco-tourism alternatives in Columbia.

Nestlé, the global food company, has adopted Porter and Kramer’s “shared value” philosophy. They boldly state on their website that “in order to create long-term value for shareholders, we have to create value for society”. They support many social innovations. For example, their Nestlé Prize in Creating Shared Value is awarded to individuals, non-governmental organizations or small businesses to reward an outstanding innovation or project in the area of water, nutrition or rural development. They have also developed the Healthy Kids Program, which seeks “to raise nutrition, health and wellness awareness of school age children around the world”. This program is designed and implemented with local partners, such as national health authorities and child nutrition experts. Other social innovation programs targeting communities include the Nestlé Roadshow in Papua New Guinea and Thailand, which promotes good nutrition through healthy cooking demonstrations and education.

Are there any social innovations in the workplace you would like to share?

 

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Business as a source of Social Innovation: part 2- Environmental Stewardship

In my last blog, I explained there were 3 ways for enterprises to be a source of social innovation:

  1. New products, services or markets;
  2. Environmental stewardship;
  3. Social well-being of their employees and the communities in which they operate.

In this post we will focus on environmental stewardship. Enterprises should use resources in a responsible fashion — reduce utilization and waste, recycle, and adopt renewable energies. Unfortunately, economic systems are not well-suited to address environmental issues. Businesses have a short-term perspective and limited geographic impact (read Arthur Dahl). Environmental issues evolve over long time periods and have global implications. There is an obvious mismatch when trying to manage large scale problems like climate change, water management, soil erosion and the accumulation of organic pollutants. That being said, the accumulated behaviour of enterprises all over the world can have a dramatic effect on the environment.

In the absence of any international regulatory body, the next best thing is to encourage responsible behaviour through moral suasion and economic arguments. The economic argument is actually quite compelling. In 2010, the United Nations Global Compact and Accenture released their CEO study titled A New Era of Sustainability. It concluded that the recent economic downturn had increased not lessened CEOs’ commitment to sustainability. This can be partly explained by the fact that sustainability practices actually reduce operational costs!

A 2011 MIT Sloan Management Review article entitled “Sustainability: the “embracers” seize advantage, concluded that

in the area of sustainability, organizations qualified as strategy leaders ‘embracers’, are creating a gap with laggards ‘cautious adopters’. Companies increasingly believe sustainability will become a source of advantage and should be incorporated strategically in all aspects of a business’ operations.

Sustainability initiatives can be a source of innovation. Former Vice President of Dow Chemical, Claude Fussler explains

The themes of innovation and environment marry well. The need to operate the global economy at levels where society exists off the earth’s dividend and not off its resource capital will induce profound changes in existing markets….

This is further reinforced by Tomorrow’s Value rating 2011, a rating of sustainability practices among leading companies worldwide. It links game-changing innovations with sustainable practices:

Innovation processes integrate environmental and socio-economic benefits across every product and all lifecycle stages.
• Innovation that pulls in ideas and insights from communities, peers, regulators, investors, from upstream and downstream, not just from customers and employees.
• Innovations that can create enormous change in the resources required to make products and the impacts of those products.

Some of the most common sustainability practices in enterprise include:

• Reducing the use of non-renewable resources (fuel, plastics, etc.)
• Replacing toxic materials in products with environmentally friendly ones
• Recycling (paper products, plastics, electronic components, etc.)
• Reducing the enterprise’s carbon footprint (reduced use of fossil fuels, encouraging carpooling, the use of bicycles, telework, buying carbon offsets for jet travel, replacing face-to-face meetings with web teleconferences to reduce travel…)
• Conducting life cycle analysis to engineer products that utilize less material and have a smaller carbon footprint (and lower cost)
• Creating products that last and reducing consumption and waste

Any one of these good practices can be a source of innovation to create new or improved products, processes and services that better meet customer needs while addressing the health of the planet.

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Business as a source of Social Innovation: part 1- New products, services or markets

In what ways can businesses be a source of social innovation? As the diagram below shows, there are three broad areas where socially innovative businesses should focus their efforts:

  1. New products, services or markets;
  2. Environmental stewardship;
  3. Social well-being of their employees and the communities in which they operate.

New products, services or markets: Companies can develop and commercialize products and services that meet a social or environmental need and adopt inclusive market strategies to target neglected segments such as the poor in society.

Siemens, for example, created a multi-billion product line that is growing at a faster rate than the rest of its business by selling products that reduce their clients’ environmental footprint. Adidas, encouraged by Mohamed Yunus, developped a $1 shoe that it is marketing in India.

There are numerous other examples: BASF, the world’s largest chemical company, is now manufacturing and selling malaria mosquito bed nets in Bangladesh; GE Healthcare is training rural women in Bangladesh to use portable computerized tomography (CT) machines to detect at-risk pregnancies; Tata Motors, an Indian multinational automotive company, through a “frugal innovation process”, has developed a $3,000 car. Bullfrog Power, a Canadian energy supplier is selling only electricity produced through renewable sources of energy. Even relatively conservative business networks like the International Business Leaders’ Forum (IBLF) are promoting “inclusive” business models to meet the needs of the bottom of the economic pyramid.

Check-out our blog next week for the second pillar- environmental stewardship.

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The perils of being optimistic and overconfident

Pick-up a copy of Nobel Prize in Economics winner Daniel Kahneman’s Thinking, Fast and Slow, and read chapter 24. Better, read the whole book. It abounds with insights on how the brain works and how we make our everyday decisions. Chapter 24 is about optimism, overconfidence and the entrepreneurial delusion. Optimism drives you to persevere in the face of adversity, when the odds are against you. It gives you resilience. There is also a negative side to optimism. Be wary. Optimism is “widespread, stubborn, and costly…the optimism bias may well be the most significant of the cognitive biases.”

The chances that a small business will survive for five years in the US is low, about 35%. Yet, most individuals who run small businesses do not believe these statistics apply to them. Similarly, evidence suggests that firms runs by CEOs who see their egos and self-confidence inflated by awards and public recognition subsequently underperform in terms of stock and operating results. Overconfidence also applies to medicine. We want physicians to give us confident diagnosis for our illnesses- ambiguity makes us nervous. The author tells us of a study of physicians diagnosis compared to autopsy results. It revealed that “clinicians who were ‘completely certain’ of the diagnosis ante mortem were wrong 40% of the time”. It seems rational that an appreciation for uncertainty and ambiguity would be a healthy intellectual behavior. Unfortunately people and organizations seek expert advice and certainty and have little tolerance for self-doubt.

For the innovators and entrepreneurs amongst our readers, beware of becoming “optimistic martyrs”. The term was originally coined by Giovanni Dosi and Dan Lovallo to depict entrepreneurial firms that fail but signal new markets to more qualified competitors. This failure is often the result of “competitive neglect”. Our optimism leads to over-confidence, which leads us to persevere when the odds are against us, without noticing what others are doing.

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The state of Impact investing according to the Rockefeller Foundation

The Rockefeller Foundation just released its report on impact investment titled: Accelerating Impact- Achievements, Challenges and What’s Next in Building the Impact Investing Industry. Prepared by fellow Canadians Karim Harji and Edward T. Jackson, it provides a snapshot in time of the state of this emerging sector.

 

Impact investing involves “investors seeking to generate both financial return and social and/or environmental value—while at a minimum returning capital, and, in many cases, offering market rate returns or better.”

The concept behind impact investment is to unlock financial resources to address some of the world’s most pressing problems (poverty, malnutrition, climate change…). The momentum is building (see previous posts on this topic). Yet the sector is far from being mature and much remains to be done.

The authors identify 4 major drivers:
1. The 2008–2009 financial crisis and its impact on investors.
2. “Growing recognition that existing resources are insufficient to address severe poverty, inequality, environmental destruction and other complex, global issues.”
3. Emerging scalable business models that create social and environmental value.
4. Wealthy individuals seeking to invest in areas that match their values

The study examines progress along six dimensions:
1. Unlocking capital: There has been a “significant acceleration of capital commitments”: approximately 2,200 impact investments, worth $4.4 billion were made in 2011 (about twice the 2010 level)
2. Placing and managing capital: Interestingly, placing and managing capital seems more difficult than raising capital. There are too few “products” available to investors.
3. Demand for capital: No one would argue that the need for capital is significant. The issue is that there are not sufficient investment-ready opportunities.
4. Assessing impact: Much progress has been made in standardizing reporting standards and developing tools. For example, the Impact Reporting and Investment Standards (IRIS) project provides standard definitions for social, environmental and financial performance. The Global Impact Investing Rating System (GIIRS) assesses the social and environmental impact of companies and funds.
5. Creating an enabling environment: “Governments can encourage impact investing through appropriate investment rules, targeted co-investment, taxation, subsidies and procurement, as well as corporate legislation and capacity development that enable the efforts of investors, intermediaries and enterprises in this space.” Several challenges remain. For example, how do you engage governments strategically without them viewing the initiative as an opportunity to disengage from the social and environmental programs they support?
6. Building leadership: many large players like the Rockefeller Foundation, J.P. Morgan, USAID, the McConnell Foundation, have stepped-up to the plate to play a leadership role in developing the impact investment industry. Among some of the needs remaining to be fulfilled is that of developing career paths for young professionals in this field.

I enjoyed the report, it is a good summary of the state of the emerging Impact Investment industry. It is not as rich in hard numbers as the J.P. Morgan series, but it touches more on the strategic policy issues and should be of great interest to leading organizations who are trying to promote the industry.

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Mintzberg, Tolstoy, Kahneman on leaders and strategy: things are not as simple as they seem.

We tend to oversimplify reality. There are few domains so prone to this tendency than the study of the influence of great leaders and their strategies. Three outstanding authors offer remarkable insights: Tolstoy, Mintzberg and Kahneman.

Tolstoy’s War and Peace is one of my favorite novels. The author cleverly debunks the myth that generals can singlehandedly define the outcome of great battles (in this case Borodino- Russia against Napoleon). History is the sum of random events and circumstances, the result of the evolution and adaptation of organizational systems over time. Generals and their strategies are important, but luck, weather, individual soldiers’ behaviour have an even greater role in determining the fate of battles.

Mintzberg in his article “The Honda effect revisited” uses the example of the launch of Honda motorcycles in the USA to come to the same conclusion: “Western consultants, academics and executives express a preference for oversimplification of reality and cognitively linear explanation of events…we tend to impute coherence and purposive rationality to events when the opposite may be closer to the truth.” The story is fascinating: in 1975, the Boston Consulting Group prepared a report for the British government in which it explained the grand strategic scheme that allowed Honda to penetrate the American motorcycle market in the early ‘60s. In 1982, Mintzberg gathered the 6 Honda executives who had been responsible for the introduction of the motorcycles in America. What he found was that there success “did not result from a bold insight by a few brains at the top.” Actually the initial strategy failed miserably. “What saved Honda was the cumulative impact of “little brains” in the form of salesman and dealers and production workers, all contributing incrementally to the quality and market position.”

Nobel Laureate Daniel Kahneman in Thinking Fast and Slow provides further ammunitions to set straight the fallacy that business success and failures can be exclusively assigned to leaders and their strategies: “we humans constantly fool ourselves by constructing flimsy accounts of the past and believing they are true…the illusion that one has understood the past feeds that further illusion that one can predict and control the future.” Be careful not to oversimplify the causes of success and failures: ” Because luck plays a large role, the quality of leadership and management practices cannot be inferred reliably from observation of success. And even if you had prefect foreknowledge that a CEO has brilliant vision and extraordinary competence, you still would be unable to predict how the company will perform with much better accuracy than the flip of a coin.”

Do leaders and their strategies influence the likelihood success of enterprises? Yes, definitely they do, but their impacts are much smaller than business mythology would suggest.

What’s been your experience?

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