From the Ed­i­tor

Rotman Management Magazine - - FRONT PAGE - Karen Chris­tensen Karen Chris­tensen, Ed­i­tor-in-chief ed­i­tor@rot­ Twit­ter: @Rot­man­mgmt­mag

health­care, con­sumer prod­ucts or WHETHER YOU WORK IN FI­NANCE, 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.

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.

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