6 { F A L L 2 0 0 2 }

INTEGRATIVE THINKING:

A ModelTakesShapeOngoing efforts to engage the Rotman community in the process of building a model forintegrative thinking and learning have been buoyed by the first year of the Rotman

Integrative Thinking Seminar Series, which has featured some of today’s leading integrative thinkers.Dean Roger Martin says these highly successful businesspeople employa distinctive pattern of thinking,which leads him to believe that a model can be developedto teach students to think in unique and powerful ways.

ost thoughtful observers of the worldof business would agree with PeterDrucker that there are really no mar-keting decisions or tax decisions — or

finance decisions, for that matter — but onlybusiness decisions: decisions that sprawl relent-lessly across functional boundaries as if bound-aries didn’t exist.

Likewise, thoughtful observers of businesseducation could, with a cursory look at the cur-ricula of North America’s nearly 800 businessschools, ascertain that an overwhelming propor-tion of courses deal with marketing decisions,human resources decisions, finance decisions,etc., and not with integrative business decisions.The challenge facing business schools today is tomake their curricula significantly more integra-tive so that graduates can become better leadersand make better business decisions.

To make education more integrative, busi-ness schools face the significant challenge ofcreating an entirely new theory to underpin theteaching of what we at the Rotman School callIntegrative Thinking.This past year, the Schooltook a first step down the path of creating a

theory and pedagogy for integrative thinkingwith the launch of our Rotman Integrative Think-ing Seminar Series in October 2001.

In its initial year, the Series featured fouraddresses by academics working on integrativethinking — myself, Rotman Professor of Strate-gic Management and Director of the CCMFCentre for Integrative Thinking MihneaMoldoveanu, Management Consultant andDean’s Advisory Board Director Dr. HilaryAusten, and Professor Peter Drucker ofClaremont Graduate University.These addressesset out the model to be tested and provided thecontext for the integrative thinking challenge.

The remaining six sessions in the Series fea-tured businesspeople who have achievedunqualified success in their field of endeavour.This group was selected because we believetheir success is rooted in the kind of thinkingwe are working to understand.

Our premise is that extremely successfulpeople, as exemplified by these six (see bottomof page 8), approach their tasks with a distinctlymore integrated decision-making process thantheir less successful peers.This pattern of thinking

M

continued on page 8

“The truth is,

there’s no such

thing as a ‘tax

decision’ or a

‘marketing

decision’– there

are only business

decisions.”

— Dr. Peter F. Drucker, speaking

at the Rotman Integrative Thinking

Seminar Series on June 12, 2002

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enables them to make better choices and therebycontributes to their success.We further believethat while this thinking pattern is different fromless-successful businesspeople, it is largely con-sistent across extremely successful people.Andbecause we believe it is a consistent pattern, webelieve that it can be observed and generalized— and eventually taught to business students.

To begin exploring the veracity of our ideas,we have specified an initial model for how high-ly-successful people think, and then looked forevidence of this model in the thinking process-es of the successful businesspeople who spokein the Rotman Integrative Thinking Seminar Series.

TheInitialModelWe believe that individuals go through fourmajor steps — whether they realize it or not— as they make a choice:SALIENCE:The decision-maker selects certainfeatures to be salient to the decision — andtherefore to be included in the deliberation —and others to not be salient, and excluded. Forexample, an executive may consider the likelyresponse of government officials as salient to hisclosing the most important plant in a town, orhe may not.The consideration of that particularfeature (or not) could well have a major impacton the outcome of the decision.CAUSALITY:The decision-maker will consid-er the causal relationships between the featureshe or she has determined are salient. For exam-ple, if they consider government reaction to besalient, they may see that the greater the num-ber of full-time jobs lost, the greater the nega-tivity of the government reaction.

SEQUENCING: The decision-maker createssome mechanism for working from inceptionof the problem through to choice. They maybreak the problem into steps, considering somefeatures first and others later, or consider theproblem as a whole.RESOLUTION:The decision-maker will pro-duce a choice of some sort as the end productof the series of steps above.

We suggest that highly-successful business-people — and successful people of all types, forthat matter — proceed through the four stepsof choice-making in a distinctive, predictablefashion, as illustrated in the chart, above.

The integrative thinker considers more fea-tures of the problem to be salient than the non-integrative thinker. For example, the integrativethinker may indeed consider the reaction of

government officials before deciding to close aplant in a one-plant town, and thereby not besurprised by an adverse reaction after a decisionto close.

The integrative thinker considers multi-directional and non-linear causal relationshipsinstead of only simple, uni-directional relation-ships. So rather than simply thinking,“that com-petitor’s price cutting is hurting our bottomline,” the integrative thinker would conclude,“our new product introduction really upset thatcompetitor and now it is cutting prices inresponse, which is hurting our bottom line.”

The integrative thinker works to considerthe whole problem while working on its indi-vidual parts, rather than breaking down theproblem into independent pieces and workingon them seperately. An integrative thinker

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continued from page 6

SALIENCE

CAUSALITY

SEQUENCING

RESOLUTION

RICHARDCURRIE Over a 25-year period, guideda failing grocery chain,Loblaws, from relative obscu-rity and a market capitalizationof $40 million to Canada’s dominant groceryretailer with a reputation as one of the world’sfinest retail operations and a market capitaliza-tion of $14 billion – a 22 per cent compoundannual growth rate.

PIERSHANDLINGTook the reigns of a small and relatively incon-sequential film festival – not even the acknowl-edged leader in Canada at the time – andimprobably led it to international prominence,passing numerous entrenched competi-tors (e.g. Berlin, New York, LosAngeles,Venice) to make the Toron-to International Film Festival thesecond-ranked film festival in theworld next to Cannes.

MICHAELLEE-CHIN Took over a tiny mutual fundcompany,AIC, and grew it into a$15-billion empire with anunparalleled track record of success

and in the process became a billionaire onthe basis of his ownership stake in AIC.

THE INITIAL MODEL

Non-IntegrativeThinking

IntegrativeThinking

Limited considerationof features

Simplified considerationof causality

Sequential/independentconsideration of piece-parts

Ready acceptance of unattractivetrade-offs

More features of the problem

considered salient

Multi-directional and non-linear causality considered

Whole visualized whileworking on individual parts

Search for creativeresolution of tensions

wants to avoid the trap of designing a productbefore considering the costs of manufacturingit. Rather, he or she would consider manufac-turability while working on the design.

Finally, the integrative thinker will alwayssearch for creative resolution of tensions, ratherthan accept unpleasant trade-offs. The behav-iours associated with such a search — delays,sending teams back to examine things moredeeply, generating new options at the eleventhhour — are often considered by bystanders tobe unrealistic and indecisive — but the resultsare choices that only an integrative thinkercould have produced.

FindingsfromtheSixInitialSpeakersMuch of the anecdotal data gleaned from theinitial six speakers in the Rotman IntegrativeThinking Seminar Series supports our initialmodel. Following are some of the most strikingfeatures we noted in the integrative thinkersstudied to date.CREATIVE RESOLUTIONBy far the most striking finding was theabsolute refusal on the part of these individualsto accept unpleasant trade-offs, and their searchfor creative resolutions.This was a central fea-ture in the choices made by all six speakers –and they wore their emotions on their sleeveswith respect to this issue.

Piers Handling couldn’t make himselfchoose between having a juried festival —which would generate great media buzz overthe eventual jury prize winner, but would create an elitist atmosphere for the festival —

and having a non-juried festival, which wouldfeel more open and democratic, but would lackthe media buzz associated with a clear ‘winner’.His refusal to choose, and his continued pon-dering of the question, resulted in the nowworld-famous Toronto International Film Festi-val Audience Award, which creates fabulousmedia buzz and at the same time, could not bemore open and democratic.

Richard Currie, “stubborn” by his ownassessment, refused to choose between lowconsumer prices and high margins for Loblaws.Instead, he created President’s Choice, andwith its Club-Pack product line came lowprices and high margins — what he calls “heav-en for a retailer.”

Moses Znaimer, who confesses, “I’m notan either/or type of guy,” refused to choosebetween being a global player and offering theintimacy of a local player, so he created the “glo-calization” option for Citytv.The product is anintensely-local television service, but the for-mat has been successfully exported to the fourcorners of the globe.

Isadore Sharpe refused to choose betweenhaving the amenities of a big hotel and the inti-macy of a small motel. Instead he engineered abrand of service that provides the best of bothworlds — a smaller, intimate format with all— or more — of the amenities of a big hotel.

George Stalk refused to accept that toachieve greater speed-to-market, firms had tosacrifice variety. Instead, he discovered how afirm could configure its operations to generatemore speed-to-market with greater levels ofvariety by “competing on time.”

Michael Lee-Chin described the turningpoint in the fate of his company as the time hehad to choose between facing a mob of antago-nistic media (up in arms at his company’s stub-born refusal to jump on the dot-cominvestment bandwagon) that could destroy hiscompany’s reputation, or turn and run, dimin-ishing his company’s chances for substantial suc-cess.With everything on the line, he decided onthe “punch-the-ringleader-in-the-nose” strate-gy, which deterred the mob and gave his firmthe breathing room it needed to soldier on in itschosen, if unpopular, direction.SOPHISTICATED CAUSAL REASONINGThe second most striking feature of these sixindividuals was the highly-sophisticated causalreasoning that lay beneath their decision mak-ing. The speakers were simply asked to talkabout their business and its success. Despite thevagueness of the request — and, in severalcases, in the absence of a single scrap of paper infront of them at the podium — we receivedsophisticated reasoning about the complicatedcausal links among the salient features thatdrove their businesses.

Michael Lee-Chin took us through aremarkable string of logic that originated with athree-pronged approach to finding a successmodel (identify a role model; ask the rolemodel what to do; do what they say), to identi-fying three key needs of all customers (preservecapital; grow capital; and minimize taxes) to athree-pronged philosophy (buy; hold; and pros-per), to the difference between businessmenand investors, to the proper role of diversifica-tion, to the nature of competitive advantage.

{ R O T M A N M A N A G E M E N T } 9

ISADORESHARPEBuilt the world’s finest chain of luxuryhotels and resorts from scratch againstnumerous global, well-financed andentrenched competitors. Now the most

powerful brand in the luxury hotelmarket, Four Seasons continues towiden its global leadership positionagainst all competition.

GEORGESTALKIn the extremely competitive and fick-le profession of strategy consulting, he

is consistently ranked in the Top 25 con-sultants in the world by the industry bible,

Consulting Magazine. A leader with BostonConsulting Group, he is considered bymany to be the foremost contributorto the intellectual development of thefield of strategy consulting.

MOSESZNAIMERThe creator of wildly-successful Citytv is con-sidered one of the most brilliant innovators isthe world of television broadcasting.A leading exporter of television concepts

worldwide, he continues to keep thepipeline of international opportunitiesfull with continuous innovation in his own market.

His was truly a tour de force of end-to-endcausal reasoning.

Richard Currie provided his analysis of renting versus owning; percentage mark-upversus “pennies profit”; spreading fixed costsversus reducing variable costs; and every ponydoing one trick versus the proliferation of for-mats championed by Loblaws. Each piece ofcausal reasoning linked to the next, creating thenest of choices that made Loblaws so successful.

George Stalk demonstrated with formida-ble causal reasoning that counter to every pre-conception, as you reduce time-to-market, youcan actually increase product variety, quality,prices and market share, while reducing risk.CONSIDERATION OF THE WHOLENot surprisingly — given the complexity oftheir causal reasoning — the six speakersdemonstrated an expansive ability to considerthe whole, and to avoid breaking up the prob-lem at hand into disconnected pieces to be han-dled seperately. It did not seem to matter tothem that the task of ‘keeping all the balls in theair simultaneously’ was intimidating in itsdegree of difficulty — that was simply the wayit needed to be done.

For Isadore Sharpe, every piece of thepuzzle had to fit with the other pieces to createthe right feel of a Four Seasons Hotel. Fromlocation, to building, to the selection and training of employees, to employee rotation, toadherence to the company’s ‘Golden Rule’(“Treat others as you would want to be treatedyourself ”). Nothing was considered in isola-tion of the rest of the picture. Everything thatFour Seasons does fits into its overall visionand strategy.

For Piers Handling, one of the prerequi-sites to success was getting rid of the depart-mental silos within the Film Festival thatblocked its ability to achieve a distinctive andcompelling feel. With silos out of the way, hecould work to create an overall feel for the Fes-tival that was inclusive and populist, but at thesame time, commercially attractive and inter-esting. Thanks to the resultant media buzz, itbecame more commercially attractive for theindustry and more exciting for the stars, andthe upward spiral took hold.

For Richard Currie the playing field was not restricted to groceries — though thatwas ostensibly his business. Rather, the picture

was broadened toinclude all the thingsthat could be deliveredthrough the store —including financial ser-vices, photo-finishing,pharmaceuticals amenities,dry cleaning and more. Buteven further, his pictureincluded all the stores inthe city as a whole, andwhat configuration of storeformats, sizes and locationsoptimized a given city for Loblaws.BROADENINGSALIENT FEATURESFor each of our featuredintegrative thinkers, theability to come up with acreative resolution waslinked inexorably to theirconsideration of featuresnot considered by their peersand competitors. Inclusionof these added featuresopened up possibilities forthem that would not have been relevant orobvious had they restricted their thinking to asmaller set of features.

For Moses Znaimer, “the space betweenthe programs” became salient as he sought todefine Citytv’s feel and create a personal bondwith his audience — not through the program-ming offered, which his competitors focusedon — but rather through what the viewer seesand hears between the programs. His insertionof snippets of action from around the streets ofToronto and voiceovers describing upcomingprograms helped make a reality of the tag line,“Citytv: Everywhere!”

For Michael Lee-Chin, the feeling of cri-sis and despair was salient, for “in the presenceof crisis and despair lie great opportunities,”which he attempted to seize while others mighthave felt helpless. While competitors wereanalysing financials, he was, in addition,analysing mood.

For Piers Handling, the feeling of inclu-siveness was salient to the design of a successfulfilm festival. Sure, content was important —the schedule, the attendance of stars, distribu-

tors and filmmakers —but the emotional stateof the audience wasalso salient to Handling

as he made his choices,including the centralchoice of creating theAudience Award.

WHERE DO WE GO FROM HERE?The first year of the Rot-man Integrative ThinkingSeminar Series leads us toconclude that highly suc-cessful businesspeopleemploy a distinctive pat-tern of thinking, and thatthere is a consistency totheir thinking approach.It also leads us to believethat our initial model ofintegrative thinking canbe used as a solid startingpoint to describe the waythese successful business-people think.

While initial results are encouraging, ourwork is only beginning. As we push onward intesting and refining our model, we will be ask-ing some tough questions: Is our model missingimportant features? Are there better ways ofdescribing the four steps in the initial model?Are there different patterns for different suc-cessful businesspeople? Does the model applyequally to highly successful people in non-busi-ness fields? And how can pieces of the model betested in academically-rigorous ways?

Going forward, we plan to broaden thesample of successful people studied by includ-ing highly successful non-businesspeople in the Rotman Integrative Thinking SeminarSeries, which resumes in September. In addi-tion, we plan to engage in further investiga-tion with successful entrepreneurs across anumber of fields.

While we are still early on the path toward‘cracking the code’ of integrative thinking, wefeel reassured by our progress to date, and arehopeful that we will one day be able to teachstudents to think in a way that increases theirchances for groundbreaking success. RM

{ R O T M A N M A N A G E M E N T } 11

continued from page 9

Each of our

featured integrative

thinkers came up with

creative resolutions

linked inexorably to their

consideration of features

not considered by

their competitors.