FREQUENTLY ASKED QUESTIONS

Click and go:
1. How is the Rotman School different from other business schools?
2. What is 'Integrative Thinking'?
3. Why is Integrative Thinking so important?
4. What is your take on business school rankings?
5. Why did you decide to leave the private sector and return to Canada?

1. What makes the Rotman School different from other business schools?
The current model of business education can be traced to the opening of Harvard Business School in 1908, and it has changed little since. The traditional model divides business into a number of functional areas such as marketing, finance and organizational behaviour. Although this model formed the foundation of business education and provided global leadership in the field for almost a century, it has inherent flaws that are becoming ever more exposed as the new economy takes shape.

The fundamental problem is that business problems rarely lie within the boundaries of individual functional areas, but rather sprawl messily across the functions. Narrow functional expertise -- based strictly on mastery of particular subjects like accounting, marketing or corporate finance, but not combined with innovation – provides business people with perfectly fine careers. But to hit the ‘long ball’ – to be capable of innovating and shaping one’s context for the better, they, and the people who educate them, have to go beyond that. There is a dire need for managers who can use their understanding of existing models to take a cross-functional perspective and build entirely new, customized models. Modern leadership requires a new way of thinking – what we at Rotman call Integrative Thinking.

The first consideration is salience: Which information or variables are relevant to the choice? For example, when evaluating the impact of a plant closure, a manager may fail to consider the public policy impact of the closure, because it is difficult to predict and integrate the reactions of politicians, media and the community into the decision. Yet answers produced through consideration of fewer variables are misleading and irrelevant at best.

The second step for the integrative thinker is to develop an understanding of the causal relationships that connect the variables and choices under consideration. Integrative thinkers create causal maps that link together the variables considered salient in the first step. In addition to considering fewer variables when assessing salience, less-integrative thinkers tend to view the causal relationships between factors to be linear and one-directional. For example, "Their price-cutting hurts our profitability." The integrative thinker seeks and explores non-linear and multidirectional causal relationships, e.g. "Their price-cutting hurts our profitability, but our new product launch provoked their price cutting." The integrative thinker deals with ambiguity by creating multiple causal models and developing many alternative theories. She embraces and explores mysterious elements, even though the causal relevance is not easily identified.

The next step in Integrative Thinking is architecture, during which an overall mental model is constructed based upon our choices from the first two steps. Less-integrative thinkers will often try to reduce sequencing to a manageable process by ignoring complexity and tackling one component of the overall problem first, treating it as an isolated element. After solving one 'sub-problem', they move on to the next without the benefit of a rich causal map that can guide choices about sequence. The weakness of this approach is that it doesn't consider the interrelationships between the sub-problems. The integrative thinker recognizes that many salient variables and the whole causal map must be kept in mind during the entire problem-solving exercise. The integrative thinker cuts into the problem by bringing some parts of it to the foreground and moving others to the background -like a landscape painter keeping the whole causal map in mind while focusing on different parts at different times.

The last but most critical integrative step is resolution. Once the salient variables are identified, the causal map is built, action is sequenced, and choices must ultimately be made. At this point, attitude is critical. The less-integrative thinker will be inclined to see the challenge as a 'bind' -- I can do X or Y, but neither is satisfactory -- and will focus on developing a strategy for coping with the bind. A more integrative thinker would not see the challenge as an insurmountable bind, but rather as a tension to be creatively and flexibly managed. Rather than accept an 'either/or' choice, the integrative CEO will seek a creative resolution of the tension even if it requires delay and continual rethinking and restructuring of the problem and its logic. This is not the same as not choosing -- it is about ensuring that you are solving the right problem.

Integrative Thinking is an art, and integrative thinkers are relentless learners who seek to develop a repertoire of skills that enable them to engage the tensions between opposites long enough to transcend duality and seek novel solutions. I firmly believe that Integrative Thinking is the essential capacity we must foster if we are to prepare tomorrow's leaders to solve the complex problems facing organizations today.

Click here to visit our Integrative Thinking Web site.

Why are errors prevalent? The world is a messy place where the links between cause and effect are not clear. Many factors are in play. In this respect, the business world is no different than the world at large.

People do not like error. They despise it, because error often feels like losing -- and people hate to lose. Taking action expecting to produce one thing and instead producing a different, less desired outcome feels out-of-control - and people hate to lose control. In the face of feeling out-of-control, people take preventive action. The tactic is to simplify and specialize. That is, to take the messy world they face and simplify it to the point that they feel confident in accomplishing the task at hand.

I call this 'narrow perfectionism' -striving for perfection through narrowing the definition of the task at hand to the point that perfection is guaranteed. This involves simplifying cause and effect relationships to the point that actions produce a guaranteed result. Rather than a clerk defining the outcome as a satisfied customer, he/she defines the outcome as a customer interaction in which each step of the prescribed procedure was dutifully followed. If customers disappear because of indifferent service and the store goes out of business, this is not because of the clerk's error, but rather exogenous factors outside the clerk's control. This is why everyone involved in most disasters -take the Challenger disaster- can explain how they did their job perfectly and they were not causally linked to the disaster. Errors have no 'parents'.

The product of simplification, specialization and narrow perfectionism in the business academy is narrow specialization, primarily by functional area. Business academics research in narrow fields and create models for understanding (and sometimes predicting outcomes in) their particular area. In general, business academics research in one field, often a narrowly defined sub-field and don't attempt to link their models with models outside their field. They then teach their models to students who are predisposed to embrace the narrow perspective they are taught.

Students learn models that explain most of the variance between included variables -and generally don't dig into the unexplained part and the array of variables that could be included if they weren't so difficult to model. The primary skill they develop is the application of models to business case situations that are tailor made for the specific model in question. So in marketing, students are taught a marketing model, which they then apply to numerous marketing cases. Their skill is measured and graded in terms of the degree of skill in applying a marketing model to a marketing case.

The narrow perfectionism of scholars is well matched with the narrow perfectionism of students. The scholars teach students to understand and apply narrow models and the students happily learn models that adhere to their natural human predilection to narrow their perspective to minimize or even eliminate error (by their own definition). As a result, they exit business school understanding an array of narrow models, being able to apply those models, and, to a certain extent, able to choose which of the many models best addresses a given problem they face.

These are not unimportant skills. Since the entire world is predisposed toward narrow perfectionism, they come out honed for such a world. I would argue that great business success does not arise from the application of a narrow model. The supply of MBAs with skill in the application of narrow models is huge -- 100,000 graduate every year with such skills -- so it is unlikely that the labour market clearing price for masters of narrow models is high. Furthermore, one sees massive success most often in either entrepreneurs with little or no formal business training, or business leaders whose success cannot be linked to the application of narrow models.

As a result, business students leave school unequipped by their business education to produce the outcome that many desire - that is, their aspirations are likely to be not matched by the outcome they produce (though in order to guarantee success, they will allow their aspirations to fall to the level of the outcomes they are able to produce -e.g. they may redefine their aspirations to that of becoming a competent and well-paid business professional).

So the problem is that the approach of business scholars and the teaching approach of business schools simultaneously feeds the natural predilections of students and fails to contribute meaningfully to their achievement of their aspirations.

Managers (and recently graduated MBA students) will produce high levels of error with their actions when they can only access the skills of picking and applying narrow models. They will not define themselves as producing error, because they will see the error as caused by factors exogenous to their sphere of influence. The error is produced by the collision of narrow models with a messy world, and the messy world necessitates the use of a 'messy model'.

Integrative thinkers develop and utilize messy models to understand and drive action in a messy world. They build models rather than choose between models. Their models include consideration of customers, employees, competitors, capabilities, cost structures, industry evolution, regulatory environment, etc., not just a subset of the above. Their models capture the complicated, multifaceted and multidirectional causal relationships between the many salient variables. They consider the problem as a whole rather than break it down and farm out the parts. Finally, they creatively resolve tensions to produce a more powerful model rather than default to choosing one model over another when both are sub-optimal, but one is less so than the other.

Successful business leaders must build their Integrative Thinking capacity to achieve their success. Most can't explain how they think because their meta-model for action is so complex they are unable to unravel it themselves. However, I have been able to reverse-engineer the meta-model of every successful leader with whom I have worked to satisfy myself (as Professor Emeritus Chris Argyris asserts) that all action is designed, whether the designer believes it or not.

Successful entrepreneurs make excellent examples of implicit integrative thinkers. They create businesses by seeing things others don't see and fashioning business models to exploit these things. By seeing things others don't see, they can overcome tradeoffs others see as unavoidable. However, most struggle to explain what they did, and often think of it as unremarkable because their solution was so obvious to them. It is obvious when the picture is seen broadly and as a whole, rather than narrowly and in pieces.

Business is not the only domain in which Integrative Thinking is critical. Significant success in many fields is the product of Integrative Thinking. In fact, research exists that suggests successful artists think in similar ways -- i.e. integratively -- as successful business people.

There is a fundamental question of whether Integrative Thinking can be taught or not. Are people born integrative thinkers or non-integrative thinkers? Some say yes, but I say no. I would argue that non-Integrative Thinking is utterly consistent with the natural tendency toward narrow perfectionism. In fact, narrow perfectionism reinforces non-Integrative Thinking. Their own proclivities drive them away from Integrative Thinking. In addition, their educational experiences will give them little help in being more integrative in their approaches. So to observe that non-integrative thinkers don't develop Integrative Thinking skills is no surprise. I would argue that only the most naturally integrative thinkers survive with their thinking approach unscathed to adulthood.

4. What is your view of business school rankings?
The rankings are a mixed blessing.  On one hand, they provide MBA candidates with a 'measuring stick' of sorts to assess global business schools.  On the other hand, they are flawed in many ways, ranging from pretty relevant to really unfortunate.

The biggest problem is that they require us to allow the various media outlets to contact our graduates in order to produce an issue that sells large amounts of advertising.  Helping newspapers and magazines sell advertising is not our business:
our business is helping our students and graduates, and our graduates are fatigued from the number of surveys coming at them. As a result, we have chosen to participate in the two rankings that candidates seem to find helpful and that we believe to be sensible.

The leading global ranking in our view is the Financial Times. It ranks all schools globally and has the most transparent and broad ranking system, featuring 21 measures across a wide variety of categories and an explicit weighting of each of the criteria. We also participate in the BusinessWeek ranking.  The ‘first-mover’, it has been ranking MBA programs biannually since 1988 (versus 1999 for The Financial Times) and has a very large following. BusinessWeek surveys current graduates (i.e. spring 2008 graduates for the fall 2008 ranking), takes into account the views of recruiters and assesses the research output of the schools, so it is quite comprehensive. It's key weakness is that it ranks U.S. and International schools separately –- hardly an approach consistent with the global economy.

Read my thoughts on the most recent Financial Times Ranking.
Read my thoughts on the most recent BusinessWeek Ranking.

The rest of the rankings each have some merits, but in our view, not enough to further bother our graduates in order to participate. Click here to read why we do not participate in The Economist rankings.

Any inquiries regarding surveys should be directed to Ken McGuffin, Manager, Media Relations at mcguffin@rotman.utoronto.ca or by phone at (416) 946-3818, or to Suzanne Spragge, Assistant Dean, External Relations & Chief of Staff at spragge@rotman.utoronto.ca or by phone at (416) 978-4232.

5. Why did you decide to leave the private sector and return to Canada?
At Monitor, I worked with CEOs for 15 years. As a CEO, if you do your job well, you can have some influence on one group of people in one organization. But I wanted to do something that would affect a larger number of people. I am Canadian, and I have an underlying confidence in Canada and Canadians. But Canada's history of restrictive trade policies has left its business leaders not quite entrenched enough in the mindset of the global market. For decades, people here have benchmarked themselves against other Canadian companies. But there is little value today in asking whether you're the best company in Canada. There's certainly no value in asking whether you're the best business school in Canada. What matters is how you're doing globally. By returning to Canada to take this post, I felt I could draw more attention to the importance of global competitiveness for Canada and produce MBAs who would understand it.