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Celebrating 50 Years of Breaking New GroundIt’s the business school that led the way in developing a global perspective. Today Schulich has over 27,000 alumni working in 90 countries and campuses in three countries.

It was ahead of the curve in integrating corporate social responsibility into its MBA program and is today ranked #1 in the world in teaching responsible business.

Schulich is leading the way again with its 20 MBA specializations that give students the opportunity to combine traditional business specializations such as Marketing and Finance with groundbreaking industry-specifi c specializations such as Health, Global Retail, Real Estate & Infrastructure, and Global Mining Management.

As Canada’s preeminent business school, we will continue to provide leadership and vision in the decades ahead.

When it comes to the Business of Ideas, we’re just getting started.

schulich.yorku.ca

Thank you to our 50th Anniversary Season Sponsors & Patrons

EXECUTIVE LEVELPREMIER LEVEL

ROB McEWENCM (MBA ’78, HON LLD ’05)

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11Introduction: A transformed world of businessLeaders need new approaches to navigate the new challenges they face

15The company as good citizenA more socially-aware global marketplace has companies racing to invest in better practices

19Rethinking cities in the age of urbanizationCanada will need to shape smarter, sustainable and more livable cities

27Taking customer experience to the next levelAs retailers leverage ever more market intelligence, brands compete by providing a better buying experience

35Resources: All roads set to lead northThe next decades will see mining and energy firms unlocking the Arctic’s vast untapped potential

47If we build it, the customers will comeBig Design shows companies how to innovate first, then persuade the marketplace to embrace their vision

51Banking on the digital revolutionThe rise of disruptive ‘FinTech’ is transforming bricks-and-mortar banking

55Cracking the code on dataBusinesses that embrace the advance of data-driven commerce will prosper

TheBusInessofIdeAs

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Inside this issue of Report on Business magazine you will be able to gain valuable insight on the new realities that are shaping the course of business in Canada and around the world. The Business of Ideas, a report created in partnership with Schulich School of Business, highlights the seven most important trends that C-suite leaders will need to address over the next decade and beyond. Look for the articles on these pages:

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New BusiNess Realities

hen many economists reflect on the recession that sent shockwaves through the global economy in 2008, they view

the near-catastrophic event as a global recalibration. Specifically, they see it as a rebalancing of a system shaken by everything from greed to excessive deregulation. For them, the most significant recession since the Great Depression was a particularly devastating moment in time.

But in Dezsö Horváth’s view, the recession was more. It represented a tectonic shift in the way we think about business; a catalyst for change that will be felt for decades to come. He calls it a classic Black Swan event, the phrase coined by academic and risk analyst Nassim Taleb to describe a rare anomaly that defies analysis or prediction and has the potential to overturn traditional systems.

“The way the corporate landscape looked before 2008 has transformed dramatically and it’s still undergoing a transformation,” Dr. Horváth, Dean of the Schulich School of Business at York University, explains. “I don’t think what happened then prepared anyone to realize just how interconnected the world is today.”

The economic effects of that recession are still being felt around the world. That macroeconomic reality alone would be enough to challenge even the savviest of CEOs. But in addition to rapid and relentless globalization, throw in other complexities such as increased government regulation, the emergence of disruptive technologies from big data and “big design” to the digital revolution − not to mention sudden and unexpected mini Black Swans − and the challenges facing business leaders seem immense. “Effective management is far more difficult in a world that’s highly competitive and experiencing major disruptions on an ongoing basis,” Dr. Horváth says. “You need to use very different methods to survive and do well.”

The other major change that has ensued, according to Dr. Horváth, is an emerging focus on what he calls responsible or long-term capitalism. In the place of so-called quarterly capitalism − which prioritizes quarterly profit maximization and shareholder returns

above all else − an increasing number of organizations such as consumer products giant Unilever are beginning to embrace a longer-term focus in regard to investment and value creation and a much broader stakeholder orientation.

“The countries that are relying on long-term capitalism over quarterly capitalism, like Switzerland, Sweden, Finland and even Germany, are becoming more competitive,” he explains, adding that Canadian CEOs are paying close attention to the trend.

Dominic Barton, global managing director for management-consulting firm McKinsey and Company, says longer-term capital investments will deliver benefits both for innovation and society. He adds that the existing emphasis on short-term shareholder returns has encouraged some organizations to forego investments that might yield breakthrough research or benefit their employees and communities more broadly. Transitioning the focus away from quarterly financial performance, in other words, is simply good business, stresses Dr. Horváth.

“Companies that orient themselves towards a triple bottom line will generate opportunities to differentiate themselves among consumers and improve employee retention,” Barton explains. “Millennials are entering their prime spending years − in 2015 they became the largest generation in the Canadian workforce. They care more about sustainability than any other generation, and have a greater willingness to pay a premium for ‘green’ products. This extends to the labour market, too, where, according to the Pew Research Center, 80 per cent of millennials want to work for companies that care about their impact on the world.

How can executives develop the right strategies to capitalize on the new opportunities as they pivot towards a long-term model of success? One way is to place

a greater emphasis on strategic management using advanced predictive analytics, according to Dr. Horváth. Making decisions based on gut instincts or last year’s performance will no longer suffice.

Achieving success also becomes an issue of strategic management and asset allocation. “In order to spur change, business leaders must be willing to substantially reallocate people and capital across their business over time,” says Barton.

But enacting real change starts by transforming corporate cultures, adds Dr. Horváth. From implementing policies that encourage innovative risk-taking to making the triple bottom line a fundamental aspect of the company’s business practices, it’s a process that must be driven by the C-suite.

nSchulich’s global footprint includes campuses in three countries, satellite centres around the world, a network of corporate and academic partners on every continent and alumni working in more than 90 countries.

nSchulich’s Centre of Excellence in Responsible Business is one of the world’s largest and most influential academic centres dedicated to triple-bottom-line thinking.

nSchulich, in partnership with McKinsey & Company, is producing a book titled Re-imagining Capitalism to be published in 2016 by Oxford University Press.

New Business Realities

DevelopiNg gloBal expeRtise foRW

A transformed world of businessLeaders need new approaches to navigate the new challenges they face




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The Rise of Responsible business

The company as good citizenA more socially-aware global marketplace has companies racing to invest in better practices

dam Camenzuli has travelled a long way from the Schulich School of Business campus in Toronto, where he graduated

with an International BBA degree in 2010, but he credits the lessons he learned as an undergraduate for driving his efforts to bring low-cost power to a segment of Africa that has long been underserved.

“Before I went to Schulich, I didn’t really know what social enterprise was,” says Camenzuli, 27, describing the business model behind his Tanzania-based startup, Karibu Solar Power. The company, which he founded in 2013 with his brother Brian, is poised to introduce solar energy kits to the country’s 10 million households that remain off the grid. Camenzuli believes there is profit to be made in such a large and underserved market. At the same time, the company is guided by strict adherence to ethical and environmental values.

“For us, our feedback loop is: If we make money, we do good, and if we do good, we make money,” says Camenzuli, speaking via Skype.

Camenzuli typifies the modern entrepreneur emerging from business schools such as Schulich where classroom discussions increasingly focus on business as a means for generating positive change as well as profit.

Since the global economic meltdown of 2008, many of the world’s biggest brands, from Wal-Mart to Starbucks, have been grappling with issues of environmental stewardship, human rights and fair trade, as investors and consumers refuse to tolerate ethical and environmental abuses.

Companies like Patagonia and Unilever, widely considered to be leaders in the move towards corporate social responsibility (CSR), are taking that mission even farther by embedding those practices into all levels of the business − from the decision makers in the C-suite through the supply chain to its lowest paid workers and the communities where they live.

“If you talked with (Unilever CEO) Paul Polman, I think he would agree that there is increasing recognition in the business community of an obligation to address wider social concerns,” says Dirk Matten, professor of strategy and Hewlett-Packard Chair in

Corporate Social Responsibility at Schulich.

Of course, there is also profit potential in serving the billions of customers around the world who are at the base of the pyramid. Traditionally, most companies have all but ignored emerging markets, says Geoffrey Kistruck, associate professor and Ron Binns Chair in Entrepreneurship at Schulich. If they did make an investment, it was in the form of a donation − money no one expected to recoup other than through a few positive media hits and perhaps a boost to corporate morale.

That attitude has changed. Emerging markets now account for 57 per cent of Unilever’s global business, according to the company. Other companies have followed suit with more targeted programs.

“Where companies used to go only where there is the most money, spending hundreds of millions fighting over 1-per-cent market share, they now realize they can spend a fraction of that money by moving into these new markets … and do it in a way that the money actually comes back to them,” says Prof. Kistruck, founder of the Social Impact Research Lab at Schulich.

Andrew Crane, a business ethics professor and director of Schulich’s Centre of Excellence in Responsible Business, said the conversation around CSR has been rumbling for at least two decades. The changes have partly come as a result of external pressure − investors, consumers and social advocates who want everything from greater corporate transparency and better consumer protection to reduced carbon emissions and enhanced global labour practices.

But Prof. Crane also believes most company leaders and their globalized workforces genuinely want to make a positive differ-ence. “The question is always about how to do that and how to reconcile that with the other expectations they have in terms of creating shareholder value and making a profit,” he says.

Critical to the company’s success is visionary leadership. “This is not something that is done by a separate CSR team. This is done by the CEOs,” says Bruce Simpson, a senior director with consultancy McKinsey and Company and a contributor to Re-imagining Capitalism, to be published in 2016 by Schulich in partnership with McKinsey.

For Camenzuli, his journey has been challenging in many ways. Now, with the official licenses needed signed and stamped, his company is ready to introduce its solar kits into the broader Tanzanian market in the coming weeks.

“For us, what we like to do is see our product being used by people,” says Camenzuli. “If that happens, we have literally changed their lives for the better. There is absolutely nothing else that matters.”

nSchulich’s MBA is ranked #1 in the world in Responsible Business in the latest global survey conducted by Corporate Knights magazine.

nSchulich co-hosts The Business for a Better World Case Competition, an international MBA competition held annually at the World Economic Forum in Davos, Switzerland.

nSchulich has one of the highest concentrations of endowed research chairs dedicated to Responsible Business, with chairs in Business Ethics, Business & Sustainability, Corporate Social Responsibility and Corporate Governance.

Responsible business

Developing global expeRTise inA

entrepreneur adam Camenzuli (centre) is bringing solar power units to villages in Tanzania.




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Smarter real eState & InfraStructure

new age of urbanization has begun. Around the world, people are migrating en masse to cities. Few countries,

including Canada, can keep up with the growing demand for urban real estate and infrastructure. For business leaders in Canada, ranked 40th in the UN’s global urbanization report, this presents both an opportunity and a challenge, says James McKellar, who launched Canada’s only formal graduate real estate program in the early 1990s at the Schulich School of Business. Five years ago, Schulich’s program was expanded to include infrastructure management, the second most important building block in the regeneration of cities.

As economic migrants help to fuel demand for real estate in Toronto, Vancouver and other centres, the thriving sector is able to entertain big ideas to meet the country’s unprecedented need for housing and shelter, social services, sanitation, access to clean water, alternative energy, education, and transportation. A renewed push to make our cities better places to live, address social needs and enhance the prosperity of our urban regions is having an impact on the way we do business.

In the 1990s, a time of wild volatility in interest rates and uncertainty in urban housing markets, many of the country’s largest property management and development firms went bankrupt, recalls Prof. McKellar. Out of the ashes, arose a stronger, vibrant industry, flush with professional talent and well-informed leadership, disciplined lending practices, creative new business arrangements and financial models, government initiatives and new institutional investors such as OMERS and other pension funds.

Today, Prof. McKellar estimates that half the business that banks do is related to real estate, whether it’s mortgages or construction lending. A much stronger regulatory framework helped Canada avoid the 2008 credit crisis that burst a real estate bubble in the United States fuelled by mortgage-backed securities.

“We’re seeing the emergence of real estate as a major investment asset class and a broader recognition of its importance as both a factor of production and a social good,” says Andre Kuzmicki, a former industry executive and Executive Director of the Schulich program.

Given the scope and scale of the urban challenges across the globe, experts are now focusing on ways the industry can intelligently meet the demand for more livable and sustainable communities, using new technologies and new business models. Yet in many cities across Canada, the building of infrastructure isn’t keeping up and existing infrastructure is crumbling.

“We don’t use our cities very efficiently,” says Prof. McKellar. He says Canadian cities remain wedded to the car − a mode of transport that spawned superhighways and low-density sprawl beginning in the 1960s. But what kinds of infrastructure, other than more roads, do we need to address today’s demographic trends? Particularly since young people are increasingly attracted by walkability and proximity to amenities, while the growing senior population desperately wants to be independent and involved.

To solve these problems, Prof. McKellar says we’re going to have to get creative. In an age where Airbnb has disrupted the hotel industry without owning a single hotel room, technology is also poised to have a major impact on the way we use space. Apps such as LiquidSpace are beginning to offer companies a way to book unused office space for short stints, bringing the sharing economy to real estate. One U.S. expert predicts that office sharing, combined with portable work stations, could eventually reduce the need for office space in major cities by as much as 50 percent. New business models are reshaping the urban environment as well, Uber being one example. Other, more far-reaching business models will follow as firms such as Apple and Google begin to recognize the enormity of this global market for smarter and more sustainable cities.

This can only be a positive trend to solve the problem of increased demand for space amid aging buildings and infrastructure that belong to

an older era, says Christopher Wein, president of Great Gulf Residential.

“You need to look at a city as a renewable resource,” says Wein. “How do we take the office buildings we had in 1975 and repurpose them, reuse them, create different uses for them? Can we convert parking lots into entertainment spaces, subterranean farms, gardens?”

Future trends include smaller individual living spaces and greater investment in shared social places.

Will Canada become the new frontier in addressing quality of life in our cities? Our urban centres are the laboratories of the future, testing and adapting as changes in technology, climate and demographic shifts change our way of life.

nSchulich developed Canada’s first MBA specialization in real estate in the early 1990s and expanded the program in 2010 by becoming the first business school in the world to offer a specialization in Infrastructure.

nSchulich’s Real Property Students’ Association, in partnership with RealNet Canada Inc., hosts an annual international Developers’ Den competition to analyze and determine the optimal solution to a real-world development challenge.

nSchulich is in the process of launching a one-year Master’s degree in Real Estate and Infrastructure – the first of its kind.

real estate & Infrastructure

DevelopIng global expertISe InA

Rethinking cities in the age of urbanizationCanada will need to shape smarter, sustainable and more livable cities

another condo rises in toronto. How can we make our cities smarter?

The business of ideas Schulich School of business n 19



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The NexT LeveL of experieNTiaL reTaiL

Taking customer experience to the next level

etail on a global scale is in the midst of a transformation, as a new emphasis on experiential marketing and omnichannel

selling is revolutionizing stores, both online and bricks-and-mortar. Sophisticated brands that anticipate rapidly emerging trends and execute well are thriving in this new landscape.

Marketing professor Rob Kozinets, who developed the unique Global Retail Management MBA specialization at Schulich School of Business, is on the vanguard of research into how customer experience drives retail. He has investigated experiential brands that range from Wal-Mart and Target to ESPN Zone and Disney.

A number of brands are differentiating themselves by offering themed retail spaces, he says, citing the way McDonalds’ McCafé redesign has aimed to provide an Italian coffee house feel through its use of colour schemes and other physical details such as seating. Apple and Tesla stores have altered the way that people buy electronics and automobiles and have changed the way all kinds of retailers approach their customers, from restaurants to banks. Customers often perceive theming as adding value to what is essentially the purchase of a commodity, says Prof. Kozinets.

Experiential marketing, according to Schulich assistant marketing professor Alan Middleton, is all about identifying the optimal kind of experience the consumer wants. He cites research that says if customers can spend an extra 20 minutes in a bookstore, they will double their intended purchase. At other times, however, such as on a grocery run, shoppers want to get in and out efficiently.

“The base benefit of products is growing more and more similar because of technology, so the experience you can offer people grows more and more important,” says Prof. Middleton, who is also executive director of the Schulich Executive Education Centre and an inductee in the Canadian Marketing Hall of Legends. “Underlying this is another important trend: personalization. This is where

analytics is so critical. The more I can understand about the desire of the customer, the more I’m able to meet that need.”

Associate professor David Johnston, who teaches operations management for Schulich’s Global Retail Specialization, researches the way brands are harnessing big data, or business analytics, to identify sales patterns to help them decide what to stock in a warehouse. “If you’re Canadian Tire, how many lawnmowers versus litres of motor oil do you order to fully stock the shelves of your 400-plus stores across the country?” he says. Analytics is providing retailers with the real-time logistics answers they need, while feeding them insights into the hearts and minds of consumers.

Companies are also increasingly embracing omnichannel retailing – a buzzword for the utilization of multiple channels beyond bricks-and-mortar stores to online stores and mobile app stores, all offering the same retail shopping look and feel.

Retail has been transforming itself since the days when open bazaars evolved into shopping malls and big-box stores, says Alex Arifuzzaman of InterStratics Consultants. But today, more than ever, merchants must stay on top of trends. “Even if demand for a retail category goes down, say 10 per cent, that doesn’t mean all retailers will be impacted evenly,” he says. “The strong retailers who successfully react to these changes will continue to thrive. Others could fall by the wayside.”

One of newest and fastest-growing frontiers in the evolution of retail, says Prof. Kozinets, is branding that crosses over into the realm of entertainment – what has been dubbed “retailtainment.” One retailer that does this well is the U.S. chain American Girl Place, which has turned selling dolls into a $620-million empire by offering families a unique store experience featuring detailed, museum-like displays of dolls and themed dining.

“Parts of the stores are like a museum, and parts are like a theatre where customers act out American history,” says Prof. Kozinets. “The chain had sociologists and historians write background stories for these dolls in different phases of American history. The consumer goes there to shop like at any store, but also gains an emotionally-charged brand experience.”

Prof. Kozinets refers to these as “brand scapes” – stores that sell brands as entertainment. Ultimately, he says, this retail segment is growing because it is delivering a level of customer experience that is at once immersive and entertaining.

“The cutting edge in retail is not one of quicker supply chains, better data analysis, improved pricing and selection, or even a better and more visionary customer experience,” says Prof. Kozinets. “It’s one that demands all of them, all together, all the time.”

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nSchulich launched Canada’s first MBA specialization in Global Retail Management in 2014.

nSchulich has developed a number of cutting-edge courses such as Retail Analytics, Professional Selling, and Customer Experience Design.

nRetail is one of the top 5 industries that Schulich MBA graduates work in, according to the School’s Career Development Centre.

experiential retail

DeveLopiNg gLobaL experTise iN

As retailers leverage ever more market intelligence, brands compete by providing a better buying experience

personalized experience is at the heart of the new retail.

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The ReTuRn of ResouRces

All roads set to lead northThe next decades will see mining and energy firms unlocking the Arctic’s vast untapped potential

hile most mining companies are slashing spending amid the ongoing slump in commodity prices, Agnico Eagle Mines

Ltd. has nearly doubled its overall exploration budget, driven in large part by what it sees as the promise of Canada’s Arctic.

Exploration spending is ramping up at the company’s Amaruq gold project in Nunavut, about 2,600 kilometres northwest of Toronto, based on strong drilling results.

Agnico had earmarked only $1.5-million in exploration spending in 2014, but wound up pouring $10-million into the project; and the additional $15 million earmarked for Amaruq in 2015 has more than doubled to $35-$40 million. “As far as we can see, the Arctic is the place of the future for resource development in Canada,” says Agnico chief executive Sean Boyd.

Melting polar ice caps, as a result of climate change, are expected to slowly open up the area for more exploration and resource activity in future. This should also help to reduce costs, which are significantly higher in the Arctic due to its remoteness, brutally cold winters, undeveloped infrastructure and sparse populations, which makes sourcing workers difficult.

“Climate change isn’t driving exploration, but it’s an added benefit over time,” says Boyd, whose company has other gold mines in operation and development in Nunavut.

“The allure of the Arctic is that it’s relatively unexplored,” says Rod Thomas, president of the Prospectors and Developers Association of Canada. “From that perspective the exploration risk is lower, but the costs are so much higher to explore there. It takes a certain level of expertise and a lot of money.”

Exploration costs range from 2.2 to nearly six times higher in remote northern regions of the country, according to a recent joint industry report called Levelling the Playing Field: Supporting Mineral Exploration and Mining in Remote and Northern Canada. Meanwhile, capital costs are around double.

Lower costs are especially key for an industry struggling with depressed commodity prices. Everything from gold and copper to coal and iron ore has fallen dramatically from record or near record

highs in 2011. Lower prices have also meant a drop in valuations for mining and exploration companies which, in turn, have dried up a lot of investment.

To help make doing business in the Arctic more attractive, the industry has been calling on governments to offer special incentives, such as better tax credits. It also wants the government to help build more infrastructure, such as airstrips, roads, ports and power plants, to open it up to more resource development.

Richard Ross, director of the Global Mining Management MBA program at the Schulich School of Business at York University and former chairman and CEO of Inmet Mining Corp., says public-private partnerships can help to generate investment in Canada’s Arctic. Ross says that would benefit not just mining companies, but Canada as a whole.

For example, according to the industry report, the eight mines operating in Canada’s territories account for about 15 per cent of overall employment and have generated more than $800-million in royalties to governments from 2003 to 2012. It says 15 potential new mines could start in the territories over the next decades, depending on markets, creating more than 7,100 full-time jobs, or double the employment levels in 2013.

“If we are really serious as a country about providing opportunities, we need economic development,” says Ross. “Right now, what is presented in front of us is the opportunity to mine, to extract minerals and to provide jobs, education, training as well as a sources of taxes and royalties, so we can see positive outcomes both socially, environmentally and economically from this region.”

Ross says government can help by investing in not just roads and airports, but expanding access to hydro power and improving connectivity to the grid in

Canada’s Arctic. This investment will also help to improve Canada’s competitiveness in the global resources industry.

Sergio Marchi, president and CEO of the Canadian Electricity Association, believes Canada needs a stronger national energy strategy that recognizes the needs of Canada’s Arctic. “I do believe that energy is one of those big deals that require a sense of urgency and purpose. It’s a central issue in how we have wired our national economy,” says Marchi. “Without that infrastructure, we aren’t going to be able to build as viable an economic future as is deserved … if you don’t build it, the investment won’t come.”

nSchulich launched the world’s first MBA specialization in Global Mining Management in 2011, strategically located in Toronto, the mining equity financing capital of the world.

nThe Canadian Institute of Mining, Metallurgy and Petroleum approached Schulich to develop the specialization because of the School’s strong reputation as a leader in sustainable business management, its global reach and orientation, and its status as a top-ranked business school.

nMBA students from around the world compete to best solve a real-world sustainability-related issue facing the mining industry during the annual Schulich International Case Competition.

Mining Management

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agnico’s gold mines are a leading example of the arctic’s economic potential.

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Big Design

hat if …Those two, simple words are able to conjure extraordinary

opportunities for visionary business leaders. ‘What if … we could create a product so revolutionary it changes everything? What if … we could develop an entirely new market? What if … we could change the world by thinking in a different way?’

Apple Inc.’s late CEO Steve Jobs and Google Inc. co-founders Sergey Brin and Larry Page saw beyond the existing needs of the marketplace and created something revolutionary. No one needed an iPad – at least not until Apple created a marketing campaign showcasing the tablet’s capabilities. It then became a must-have tech toy.

Today, more and more, visionaries and activist CEOs are also creating new markets and then filling them by educating customers. Markus Giesler, who teaches marketing at Schulich School of Business, describes Big Design as the process companies use to develop awe-inspiring visions. Big Design leaders ask the ‘what if’ questions, develop game-changing products and services, and then use advanced analytics to finetune their innovations and develop cutting-edge marketing campaigns to maximize the product’s desirability. In fact, explains Prof. Giesler, they see product development and marketing as a sociological design process. Today, a growing number of corporations such as Mercedes Benz, BMW and Nestlé are similarly using marketing and consumer insights to produce unprecedented business opportunities.

“In our research, we found that Big Design companies, whether Google or a start-up like Nest Labs, follow the same sociological design principles,” explains Prof. Giesler, Chair of the Schulich Marketing Group. “They ask: ‘Do I tailor my innovation to the needs of the market, or tailor the market to the needs of my innovation?”

In an era of rapid innovation and globalization, organizations are turning to Big Data to help predict consumer behaviour and market trends, then produce goods and services in a customized way to meet client demand. But leaders who embrace the concept of Big Design have the ability to disrupt marketplaces and gain a

clear advantage in the global economy by doing the exact opposite − first designing the revolutionary products and then using data to validate their innovations. Therein lies the opportunity for leaders willing to transform their organizations to capitalize on the untapped business potential that Big Design presents.

The only way companies can make that transition is by having the right type of CEO at the helm, according to Prof. Giesler. “Big Design is typically entrepreneur-driven. When you look at successful big designers, they start small, but end up changing life as we know it.”

Theodore Noseworthy, an associate professor of marketing at Schulich, cautions against an overreliance on analytics. In fact, he’s seen data-driven tunnel vision hinder creativity across otherwise progressive organizations. “We’re seeing companies tap consumers in a different way to collect data and develop communities,” he says. “They’re getting unfiltered insights into how their community responds and they can translate that into growth.”

“But one of the side effects of having data points such as those is that we’re constantly responding. That can stifle incremental innovation and the kind of radical transformation that can change the world. That is the drawback of being entirely driven by data,” adds Prof. Noseworthy.

To transform their corporate cultures to embrace Big Design as both an operational principle and driver of organizational culture, corporations need to think and act very differently, says Prof. Giesler.

“We need to move away from the idea that all we need to do to have a successful business is focus on the customer,” Prof. Giesler explains. “Customer-centricity has become so commonplace in companies, it’s resulted in tunnel vision of how a business can be successful.”

Lastly, he says that leaders need to “move away from the

dictatorship of finance.” That means ignoring short-term fiscal goals in favour of long-term growth and innovation. Electric car and battery-maker Tesla Motors Inc. or Amazon.com, Inc. are good examples of corporations that have typically prioritized innovation above short-term profit maximization.

“Some of the most successful companies in history have violated all principles of standard marketing and financial management,” Prof. Giesler points out. “They have been revolutionary in getting to where they are. Sometimes you need to go against traditional wisdom.”

WnSchulich’s marketing

faculty, which includes Russell Belk – globally regarded as the “father of qualitative marketing” – was ranked #1 in Canada in the field of Consumer Behaviour according to a survey published in the Journal of Marketing Education.

nSchulich’s MBA specialization in Marketing continually develops new courses that meet the quickly evolving demands of the business world, including the world’s first-ever course in Customer Experience Design.

nSchulich’s NOESIS Lab, developed by Theodore Noseworthy, Canada Research Chair in Entrepreneurial Innovation and the Public Good, conducts groundbreaking research into consumption, consumer behaviour and design.

Big Design

If we build it, the customers will comeCompanies are learning to innovate first, then persuade the marketplace to embrace their vision

google, whose co-founder sergey Brin is shown with its google glass technology, is cited as a pioneer of the Big Design way of innovating.

Developing gloBal expertise in




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The Financial Technology RevoluTion

Banking on the digital revolutionThe rise of disruptive ‘FinTech’ is transforming bricks-and-mortar banking

tep to the corner of a major intersection in virtually any large Canadian city, and you’ll notice a common feature: a bank

branch perched on at least one corner, its presence a symbol of our country’s financial strength and robust global economic standing.

Now imagine the same corners stripped of these iconic structures − perhaps in little more than a decade − and you can begin to understand the impact the financial technology (FinTech) revolution is having on the Canadian banking sector. “I think (the financial services sector is) going to be completely revolutionized,” says Adam Nanjee, head of the financial technology department at MaRS Discovery District, a Toronto startup incubator.

“We see companies building digital wealth managers or robo-advisors [software that provides customized wealth-management advice], we have banks going strictly digital without branches or ATMs,” says Nanjee. “We’re going to see more digital banks emerge in the future. I think the traditional way of getting mortgages or insurance will change forever. There is so much innovation and disruption happening across the industry, we can’t even quantify it.”

The emergence of complex financial software, mobile communications technology and advanced predictive analytics are fuelling the push towards an entirely digitized financial sector across developed countries. Add improvements to digital security and networking to the equation, along with the growing popularity of crowdfunding and peer-to-peer lending – not to mention the Millennial generation’s preference for digital banking − and the stage is set for a transformation.

“Millennials don’t want to go into a bank to meet with an investment advisor, who may try to sell them expensive, actively-managed funds,” says Pauline Shum, founding director of the Master of Finance Program at the Schulich School of Business and an expert on portfolio analytics. “Millennials want simple and low-cost ETF portfolios that they can track on their phones, and hence the rise of robo-advisors that cater to this particular demographic.”

Adds Prof. Shum: “Traditional banks are beginning to get into that space too. Investment with robos are probably the millennials’ core portfolios, and then they’ll have some money to play the stock

market on the side – don’t forget, this is the generation that grew up with online trading simulations.”

Cash may eventually become obsolete, replaced by mobile wallets or barcode accounts, a radical shift that will see capital markets become increasingly democratized. For banks, these changes present risk − namely the disruption of a lucrative, centuries-old business model based on engaging with customers at bricks-and-mortar retail locations − but also new opportunities. Mobile devices allow financial institutions to sell more products and services directly to customers in real time. What remains to be seen is whether these massive organizations can pivot fast enough to compete with technology startups that are already threatening their grip on the marketplace.

According to MaRS, global investments in FinTech reached $6.8-billion last year, an increase from $3-billion in 2013, while technology spending across the Canadian financial sector is predicted to jump from $12-billion to $14.8-billion. As such, firms across the technology spectrum – such as digital payments, data collection and mobile security − will see demand for their products and services rise.

“I wouldn’t be shocked if, 20 years from now, Apple is the biggest bank in the world,” says Moshe Milevsky, associate professor of finance at Schulich, best-selling financial author and founder of a FinTech startup focused on insurance products, which he recently sold to CANNEX Financial Exchanges. “If most people start doing transactions on the (Apple Pay) platform, they’re one step away from it, but banks won’t go into the night quietly.”

Banks are trying to work with technology companies to develop innovative mobile banking solutions, while making the shift to improve digital banking systems. Canadian Imperial Bank of Commerce recently launched

a banking app for the Apple Watch, for example, while Royal Bank of Canada began allowing peer-to-peer fund transfers via Facebook Messenger in 2013. Many Canadian banks are investing in technology companies that can deliver digital solutions to help them remain competitive globally.

Meanwhile, government agencies across Canada and around the world are in a constant struggle to understand and regulate emerging financial tools such as crowdfunding. That’s why balancing consumer protection rules with those that can help spur innovation requires a creative approach, according to Prof. Milevsky.

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ciBc and its canadian rivals are eager to innovate in the mobile banking space.

Financial ServicesnSchulich’s Master of

Finance offers the option to specialize in one of three streams of study in Financial Risk Management, Capital Markets, and Regulatory Affairs for Financial Institutions – the first program of its kind in the world.

nSchulich offers MBA specializations in Finance, Financial Engineering, and Financial Services.

nSchulich is a founding partner, together with the World Bank and the Government of Canada, in the Toronto Centre, an independent non-profit organization with the mission to enhance the capacity of financial sector regulators and supervisors from around the world, primarily from low-income countries and emerging markets.

Developing gloBal expeRTiSe in

The business of ideas Schulich School of business n 51



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Leveraging Big Data

f the myriad opportunities facing enterprise in the coming decade, few match the potential for radical change that data

analytics − or Big Data − will deliver.From point-of-sale transactions to website navigation,

manufacturing output to employee performance tracking, data is allowing businesses across all sectors to collect an unprecedented abundance of information about their operations, analyze it to glean the kind of insights that were the stuff of science fiction just a few years ago, then make real-time strategic or tactical improvements to drive bottom-line performance.

“(Data) is changing everything and it really doesn’t matter what industry you’re in,” explains Pat Finerty, vice-president of alliances and business development with enterprise software firm SAS Institute Inc. “Analytics and monetizing data is affecting our clients across industry and the public sector. The enterprise and IT folks are realizing this isn’t a science experiment … the movement to (data) being an enterprise asset is huge.”

Organizations are now able to fine-tune sales and marketing efforts at a granular level, analyzing customer activities to predict future behaviour in order to customize customer experience and boost satisfaction, brand allegiance and sales. Most companies will now be able to achieve this without ever meeting their customers in person, interacting instead via apps or websites.

A 2011 report by management-consulting firm McKinsey and Company predicted that retailers that adroitly leverage data can improve profit margins by as much as 60 per cent, while manufacturers can reduce product development and assembly costs by 50 per cent. Factor in the emerging Internet of Things − in which businesses can process operational data about everything from industrial production lines to consumer appliances via the Web − and the potential for change is massive.

Data has the potential to transform enterprise just as the industrial revolution did in centuries past. But that leap forward will come with challenges that risk overwhelming even the most progressive business leaders. “Companies want to continuously collect better

data,” explains Murat Kristal, director of the Master of Business Analytics program at York University’s Schulich School of Business. “But someone has to think about how to use it and what predictions to make. Companies have not cracked the code on that yet.”

A global study of senior enterprise executives by data and cloud-computing giant EMC Corp. confirms that business leaders are struggling to understand and capitalize on Big Data’s potential. Fully 96 per cent of executives surveyed agree that new technologies have changed the way they do business and expect the process will continue to accelerate. And 49 per cent acknowledge they often struggle to turn data into actionable information.

Without exception, executives see the opportunity that data provides, but need further insight to determine how best to leverage it. That process will involve massive organizational change as analytics departments become integral to operations ranging from product development to marketing, changing the way that leaders set strategy and budgets.

“In the past, a lot of people would have seen IT as a support function, but now data is starting to be seen differently because it gives a strategic advantage,” Prof. Kristal says. “Now all decisions will be based on data. That changes how you do business. It’s changing people’s processes and perceptions, and that’s a slow-moving process.”

He adds that companies need to build data teams proactively. “You need someone who can collect, interpret and analyze data the right way,” Prof. Kristal points out. “The hardest thing is finding people who can do that. If you’re looking for ERP software, you push a button and get the answer. Big Data is not like that. It’s not user-friendly. That’s because real analysis takes time and you need to be trained in that field.”

Prof. Kristal predicts that employees such as sales

representatives and marketers will soon act as de facto data specialists, integrating data analysis into their daily work. Even tech professionals who previously were limited to data collection and IT tasks will be called upon to provide business insights that help their organization achieve performance targets.

Prof. Kristal stresses that presenting data in a highly user-friendly way with the help of data visualization designers will be integral to helping leaders interpret information, and then use it to shape their business plans. “This is a design and presentation problem, not just a numbers problem.”

nSchulich launched one of the world’s first Business Analytics programs in 2012, profiled by the Financial Times of London in the article “Business analytics takes centre stage at Schulich.”

nGraduates from Schulich’s one-year Master of Business Analytics Program are hired before they even graduate by companies such as Deloitte and CIBC.

nSAS Canada furnished the program with a comprehensive package of data analysis software that allows users to efficiently consolidate data and analyze it for use in data-driven decision-making, including statistical analysis, forecasting, econometrics, optimization, scheduling and simulation, quality improvement and seamless data integration.

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Big Data could transform commerce as much as the industrial revolution did in its time.

Big Data

DeveLoping gLoBaL expertise in

Cracking the code on dataBusinesses that embrace the advance of data-driven commerce will prosper

the Business of ideas Schulich School of Business n 55


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