The authors begin by asking the reader, How often do you make choices? Really make them? Or how often do you just accept one of the choices that is handed to you? They describe how LEGO's CEO went about creating a new choice for his company-one that did not previously exist as an option. They describe how this display of 'Integrative Thinking' brings together three thinking skills to create new choices: metacognition, empathy and creativity. These components, they argue, can overcome the limitations of current decision-making processes and produce better outcomes.

The idea that management is a hard science, which MBA programs have promoted for the past six decades, has become even more entrenched in the era of big data. But a scientific approach has its limits, say Martin, the coauthor of the best-seller "Playing to Win," and consultant Golsby-Smith. In fact, overreliance on scientific analysis tends to narrow strategic options and shut down innovation. That's because it's designed to understand natural phenomena that cannot be changed. It's not an effective way to evaluate possibilities--things that do not yet exist. The two authors offer an alternative approach to strategy making and innovation that relies on imagination, experimentation, and communication. To make decisions about what could be, managers should devise narratives about possible futures, using the storytelling tools first proposed by Aristotle (who ironically also originated the scientific method). If executives then hypothesize what would have to be true for those narratives to happen and validate their hypotheses through prototyping, they can determine which narrative has the most compelling chance of success.

Increasingly, it is possible to generate financial returns alongside positive social and environmental impact. This is the promise of an emerging investment approach called 'impact investing' that is gaining the attention of pioneering investors: big institutions, foundations and high net-worth individuals are moving quickly into this new market. However, in order to succeed, the authors say, impact investing must grow beyond these pioneers and reach a broader set of investors. They show what needs to happen by walking through Everett M. Rogers' five attributes of successful innovations: relative advantage over alternatives; compatibility with the values, experiences and needs of adopters; simplicity; trialability; and visibility. If impact investing can address its barriers-to-adoption, they conclude, it will be one of the breakthrough innovations of our time.

The creative intensity of the global economy has grown substantially in recent years. However, 'Creative Class' workers are increasingly being propped up by a mass of hard-working routine workers, who are not participating in the economic upside. To prosper in the global economy, the authors argue that every region and industry must boost the creative content of all types of work, while continuing to encourage and support the growth of creative jobs.

The financial world set a record in 2015 for mergers and acquisitions. It's too soon to have data on how those deals will work out, but the signs are not promising. Last year Microsoft wrote off 96% of the value of the handset business it had acquired from Nokia in 2014 for $7.9 billion. The rule, confirmed by nearly all studies, remains true: M&A is a mug's game, in which some 70% to 90% of acquisitions are abysmal failures. The author has an explanation for this persistent failure and offers a way forward. Acquirers, he notes, tend to look at acquisitions as a way of obtaining value for themselves--access to a new market or capability. The trouble is, if you spot a valuable asset or capability in a company, others will too, and the value will be lost in a bidding war. But if you have something that will make the acquisition more competitive, the picture changes. As long as the acquired company is incapable of making that enhancement on its own or (ideally) with any other company, the buyer, rather than the seller, will earn the rewards. Martin describes four ways to enhance the competitiveness of a target: (1) Be a smarter provider of growth capital. (2) Provide better managerial oversight. (3) Transfer valuable skills to the acquisition. (4) Share valuable capabilities with the acquisition.

Every so often, a society leaps forward to a fundamentally 'new equilibrium': the status quo is left behind - even if it had held for centuries. The revolutionary thinkers leading the charge powerful new ways to structure our systems, fundamentally altering how they work. This, write the authors, is the realm of the social entrepreneur. In this article they describe how one such duo of intrepid thinkers and actors went about creating transformative change in Africa. They describe the progress made by Riders for Health to bring healthcare to the furthest regions of rural Africa in a dependable, sustainable manner. In the end, they show that for social entrepreneurs, it is not enough to imagine a way to reduce suffering: their vision is for systemic change. It shifts an existing equilibrium to a new one - one that ensures an optimal new condition for those who had been disadvantaged by the prior state.

In 2007, Chuck Prince, then the CEO of Citigroup, made a notorious comment about the subprime mortgage market: "As long as the music's playing, you've got to get up and dance. We're still dancing." Soon after, the financial system crashed, and that remark came to be seen as a cavalier justification for excessive risk taking by the bank. But authors Martin and Kemper raise another possibility: Prince may have been painted into a corner, because Citigroup's stock was indefensibly overvalued. The only way the bank could earn the unrealistically high returns shareholders expected was through ever more dangerous activities. The overvaluation trap was first identified by Michael Jensen in a 2005 article examining the dot-com bubble. He noted that it often affects entire sectors and that in response to it executives tend to adopt two strategies: investing in hot, hyped technologies (as Global Crossing did with fiber-optic cable) and glamorous acquisitions (Nortel's downfall). And when investment opportunities start to dry up, firms may turn to financial manipulation (think WorldCom) to prop up their overpriced equity. Martin and Kemper point out that today companies in the pharmaceutical and oil sectors are caught in this same trap. Their market caps are spectacularly high. But massive spending on R&D is not producing more new drugs, and ever greater investment in oil reserve exploration is only exacerbating the glut of supply. The dance may be ending for both industries, and their executives need to figure out new and more-realistic narratives for value creation.

Ever since it became clear that smart design led to the success of many products, companies have been employing it in other areas, from customer experiences, to strategy, to business ecosystems. But as design is used in increasingly complex contexts, a new hurdle has emerged: gaining acceptance of the "designed artifact" into the status quo. In fact, the more innovative a new design is, the more resistance it's likely to meet. The solution, say the CEO of IDEO and the Rotman School's former dean, is to also apply design thinking to the introduction of the innovation itself. This process, "intervention design," grew organically out of the iterative prototyping that designers did to help understand customers' reactions to new products. Not only did iterative prototyping create better offerings, but it was a great way to get organizational funding and commitment, because it improved the chances of success and reduced fear of the unknown. Intervention design uses iterative prototyping to get buy-in too, but extends it to interactions with all the principal stakeholders--not just customers. When Intercorp Group devised a revolutionary concept for Peru's schools, it needed to win acceptance for corporate-run education and for a very different role for teachers. Thanks to intervention design, it now has 29 schools in operation and is rapidly growing.

Our schools, their curricula and their governance structures are part of society's purpose-built knowledge infrastructure. The problem is, many of today's most successful leaders believe this infrastructure is not up for the job it was designed for: Bill Gates has said that our schools "cannot teach our kids what they need to know today." The authors argue that we will always face the challenge of matching our knowledge infrastructure with the skills we need tomorrow; and instead of constantly trying to fill that gap, our purpose should be to enable students to overcome the gap effectively themselves, throughout their lives.

Social entrepreneurship has emerged over the past several decades as a way to identify and bring about potentially transformative societal improvements. Ventures in this realm are usually intended to benefit economically marginalized segments of society that can't transform their prospects without help. But the endeavors should be financially sustainable, because there's no guarantee that subsidies from taxpayers or charitable givers will continue indefinitely. Grameen Bank is a famous example of a social venture that met both goals. In studying the winners of the Skoll Award for Social Entrepreneurship, the authors found that they all focus on changing two features of an existing system: the economic actors involved and the enabling technology applied. For example, the children's rights activist Kailash Satyarthi realized that reaching ethically concerned consumers through Rugmark (now GoodWeave International) could help foil exploitative labor brokers in India's carpet weaving industry. And through the Kiva platform, Matt Flannery and Jessica Jackley enabled small-scale lenders in wealthy countries to lend to small-scale borrowers in poor countries. Today GoodWeave operates globally, and Kiva is on track to facilitate more than $1 billion in microloans within the next couple of years.

Since 1960 the U.S. economy has moved from largely financing the exploitation of natural resources to making the most of talent. The rewards to executives and financiers have skyrocketed as a result. But over the past two decades or so, the author argues, it has become increasingly clear that much of this talent is trading value rather than creating it: The fastest-growing group on the Forbes 400 list is hedge fund managers. What's more, stock-based incentives, which were intended to align the interests of top executives with those of long-term shareholders, are actually encouraging CEOs to serve the interests of short-term traders. The losers in this game are employees engaged in routine work, whose rewards are shrinking or whose jobs are disappearing. This state of affairs has created a growing--and unsustainable--inequality of income. Martin suggests that three things must happen if we are to avoid radical and talent-hostile steps imposed through the ballot box: (1) Talent must exert some self-discipline and lower its expectations. (2) Investors--primarily pension and sovereign wealth funds--must prioritize value creation. That means not voting in support of stock-based compensation and no longer supplying hedge funds with large amounts of capital or lending them stock. (3) Government should regulate the relationship between hedge funds and pension funds (if the latter don't do so voluntarily), tax "carried interest" as ordinary income, tax trades, and revisit the overall tax structure.

Most of the time, the world moves forward in tiny increments, as individuals and organizations hone and refine existing models: governments modify their services in hopes of producing better results, and businesses bring out the next generation of their existing products and services. But every once in a while-backed by revolutionary thinking-the world moves forward in a huge leap to a fundamentally new equilibrium. The authors show that over time, such paradigm shifts have been driven by two entities: government policy innovation and business entrepreneurial creation. But a third driver has emerged between these two poles: social entrepreneurship. The best part: social entrepreneurship makes possible equilibrium shifts that neither government or business could achieve on their own.

In 1989 Michael C. Jensen wrote an article for HBR titled "Eclipse of the Public Corporation," in which he analyzed early leveraged buyouts and identified a new form of corporate organization, the LBO association, which he believed would eventually outperform the traditional public company. Here Martin agrees with Jensen's assessment but acknowledges that it won't come to pass for some time, primarily because LBO associations rely on the existence of a robust public market to make their model work.

Peter Drucker once said that the most effective executives disregard conventional wisdom about reaching consensus and instead work to create disagreement and dissention. As Drucker hints, opposing models are only a problem if we choose to treat them as such. The authors describe the four phases of Integrative Thinking, an approach to model creation developed at the Rotman School of Management that has evolved through research and practice. Even once you reach your 'integrative solution', the authors note that the challenge isn't over: all solutions will eventually be made obsolete, and as a result, integrative thinkers treat their solutions as 'provisional': as new information emerges in opposition to the 'solution', the process begins anew. However, when applied thoughtfully, they show that integrative thinking can give executives a fighting chance at tackling the wicked problems they face.

Strategy making forces executives to confront a future they can only guess at. It's not surprising, then, that they try to make the task less daunting by preparing a comprehensive plan for how the company will achieve its goal. But good strategy is not the product of endless research and modeling; it's the result of a simple process of thinking through how to hit a target and whether it's realistic to try. Discomfort is part of the process. If you are entirely comfortable, you're probably stuck in one or more of the following traps. (1) Strategic planning. Planning arguably makes for more thorough budgets, but it must not be confused with strategy. (2) Cost-based thinking. Costs lend themselves wonderfully to planning, because the company controls them. But for revenue, customers are in charge. Planning can't make revenue magically appear. (3) Self-referential strategy frameworks. Even managers who avoid the first two traps may end up using a framework that leads them to design a strategy entirely around what the company controls. A company can avoid those traps by focusing on customers, recognizing that strategy is about making bets, and articulating the logic behind strategic choices.

Companies everywhere compete to find the best talent in knowledge work, and often wind up with thousands of expensive employees who aren't as productive as hoped. So they lay off a huge number of them, and soon after are out recruiting again. This binge-and-purge cycle is highly destructive, writes the author: Aside from the human and social costs involved, it is an extremely inefficient way to manage any resources, let alone knowledge workers. The problem exists, he believes, because most companies misunderstand how knowledge work does and doesn't differ from manual work. They think they should structure the former like the latter--with each worker doing the same job for a full shift. But they also assume that knowledge is necessarily bundled with the workers--and is almost impossible to codify and transfer as one could do with manual work. The trouble is that knowledge work comes primarily in the form of projects, not routine daily tasks, so these employees often have downtime. Of course it's not in their interest to advertise any spare capacity--that could lead to a poor performance review or even a layoff--and this survival imperative gets in the way of knowledge transfer. The solution is to structure knowledge work the way professional services firms do--with capabilities flowing to the projects that need them--and to put key executives in charge of codifying knowledge.

In a wide-ranging interview, the former Dean of the University of Toronto's Rotman School of Management describes his 15-year run at the helm of Canada's top business school. Along the way he describes the origins of Integrative Thinking and how Design Thinking relates to it; why capitalism is still badly broken; and why hedge funds are "really, really bad" for the economy.

High-performers, whether they be star CEOs, world-class salespeople, great product developers or professional services rainmakers, exist at the tail end of the distribution in terms of ability and impact. They have high aptitude, sought-after skills and the ability to ply their trade almost anywhere around the globe. How can leaders engage these brilliant, talented individuals and bring out their very best, sustained performance? Two veteran leaders - Roger Martin in business and Bob Brett in the realm of championship tennis - provide their expertise in this interview.

The authors argue that strategy can be defined and created using a simple framework that entails answering five questions - the same five questions, no matter the type, size or context of the organization.

SparkPlace is a two-year-old business with a hot new product: software that manages and measures the effectiveness of permission-based marketing campaigns for social media. The company is in the process of deciding on which of two customer segments to focus its strategy. Each segment has demonstrable advantages, but developing the product for and marketing to both segments simultaneously could pose big challenges. Is the argument against being "all things to all people" a valid one? If so, which customer segment should SparkPlace target? Or is there a single strategy that can capture the potential value of both types of customers without draining the company's resources? These questions are at the heart of this fictionalized case by Jill Avery, of the Simmons School of Management, and Thomas Steenburgh, of the University of Virginia's Darden School of Business. Expert commentary comes from regular HBR contributor Roger Martin, of the University of Toronto, and from Mike Volpe, chief marketing officer at HubSpot, the company on which SparkPlace is based.