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In January 2020, a U.S. hunter-killer drone killed Iran’s second most powerful person, without congressional approval. During the fog of Iran’s response, Ukraine International Airlines Flight 752 was shot out of the sky over Tehran by jittery Iranian military defense personnel. Michael McCain, CEO of Toronto-based Maple Leaf Foods, blamed Trump for the accident, which claimed the lives of 176 people, including the wife and 11-year-old son of a Maple Leaf Foods employee. Without mentioning the president’s name, McCain used his company’s official Twitter account to express what he said were “personal reflections” about the tragedy. The corporate world was divided by McCain’s blunt assessment of Trump’s leadership, with critics insisting he had crossed a clear line by using the official Maple Leaf Foods Twitter account to spread personal opinions without any regard for the corporate bottom line. There is no question that CEOs are accountable to company stakeholders via corporate boards, but the guiding principles of corporate leadership and governance are constantly evolving. While fans of the shareholder primacy model are free to resist change, there is no universally accepted line that separates the duties of corporate leaders and the personal views they hold, especially not on matters of interest to the stakeholders they serve.

Smoking was once considered as American as apple pie, but times change. Cigarette sales in the United States dropped to 216.9 billion in 2018, marking the industry’s lowest level in demand since the tracking of cigarette sales began in 1967. But today’s smokers are not just being banned from lighting up at work—they are being banned from employment by companies like U-Haul, at least in the United States. (In Canada, the Human Rights Act theoretically protects nicotine users from this sort of selective hiring policy.) There is no question that well-designed wellness programs can benefit employers and society alike. But on the other hand, besides having the potential to negatively impact employee morale, aggressive wellness initiatives can spawn a culture of deceit, fostering unhealthy attempts to beat the system. In the case of weight-loss programs with financial incentives, studies have found that employees often attempt to manipulate results by binge eating and crash dieting. As a result, wellness programs must be well designed. Providing employees with knowledge, risk management tools, and positive incentives has a role to play in today’s workplace. But refusing to hire people who, for better or worse, use any legal product can do more harm than good.

In 2018, Volkswagen Group’s newly appointed chief executive officer renewed the company’s commitment to Strategy 2025, an ongoing plan intended to radically transform the German automaker. Volkswagen was being challenged by tectonic changes in the automotive industry, including the phasing out of the long-standing internal combustion engine, ongoing digitization, the entry of new competition from technology companies, the introduction of electric vehicles, and the launch of ride-sharing applications. Strategy 2025 was designed to reshuffle the company’s existing formal and informal structures and restructure the automaker into a nimble, agile, and innovative corporation ready to face the realities of mobility in the digital age. The new chief executive officer faced huge expectations concerning the effectiveness and sustainability of Strategy 2025. Was the automaker doing enough to transform into a competitive mobility company?

Canada’s SNC-Lavalin affair has been compared to the U.S. Nixon Administration’s Watergate scandal, but the comparison is misguided. This article seeks to separate fact from misinformation in order to enable more constructive public discourse about the scandal. The second goal is to make the case for embracing negotiated settlements as a legitimate corruption-fighting tool based on the author’s experience as a financial-sector whistleblower during the dotcom era (which led to a long career as an investigative journalist covering white-collar crime). Finally, this article identifies key takeaways for managers and directors who are expected to drive growth and profit without breaking the law. In the SNC-Lavalin affair, an opportunity to improve how Canada fights corporate corruption appears to have been lost in the commotion. When fighting corruption, it is important to remember that organizations like SNC-Lavalin can also be victims, and that corporations do not decide to be corrupt—people do. Many corporate boards still rely heavily on senior management to report cultural issues, which is ridiculous, and not just because unethical executives rarely rat themselves out. It is time for more boards to proactively investigate the health of the corporate cultures they govern and doing this requires direct contact with lower-level employees, especially ones in specialist functions such as internal audit, compliance, and risk management.

Most board meetings don’t start with a chairperson screaming, “Let’s get ready to rumble.” But it’s not a bad idea. After all, proxy advisory firms and executive development experts say managers and directors need to be ready to defend themselves like never before as the Age of Disruption threatens to stretch shareholder patience to the limits. Thanks to regulatory advantages, Canada has long been considered the land of milk and honey for activist investors. As a result, the annual number of proxy contests has jumped significantly since the turn of the century. However, existing securities laws do not adequately address the fact that control of public companies, along with their cash and assets, can be won by storytellers willing to mislead shareholders and foster discontent. Today’s boards must understand the power of gossip and myth in order to prepare for the kind of populist revolutions they can ignite. The go-to source of information for mom and pop investors is online opinion—not court rulings, corporate documents, balanced media reports, or independent expert advice. Thus, getting the retail crowd onside and prepared to defend you requires a comprehensive retail investor relations program that actively counters misinformation while effectively helping all shareholders understand how the company is working to serve their interests. Communicating the firm’s story needs to be a priority year-round, not just an initiative tied to annual meetings.

America’s Business Roundtable (BRT)—currently comprised of nearly 200 CEOs, ranging from General Motors’ Mary Barra to Apple’s Tim Cook—recently issued a statement that says making money for shareholders is not the only responsibility of management. For decades, a shareholders-first model was widely considered corporate orthodoxy in the United States, where boardroom focus has long been influenced by University of Chicago economist Milton Friedman’s 1970 essay “The Social Responsibility of Business Is to Increase Its Profits.” In August 2019, the group of CEOs updated its thinking on the matter in a 300-word statement that doesn’t mention shareholders until the end of a list of commitments that starts with “delivering value to our customers” and “investing in our employees,” then moves on to “dealing fairly and ethically with our suppliers” and “supporting the communities in which we work,” before finishing with “generating long-term value for shareholders.” The BRT’s shift in thinking comes at a time when corporate America faces distress due to global discontent over income inequality, harmful products, and poor working conditions. The BRT has diplomatically signaled that corporations should be more careful than they were in the past when the short-term financial interests of shareholders conflict with the interests of other stakeholders. This could have significant implications for dividend and share-buyback programs.

Calgary’s city manager sought to build stronger relationships with the community to attract development and retain investment in the city. He knew that implementing the Proximity Initiative guidelines, a collaborative effort between the Railway Association of Canada and the Federation of Canadian Municipalities, while intended to limit potential safety risks in the case of a derailment or volume release, would simultaneously limit urban development opportunities, particularly within the downtown. The guidelines did not consider the balance of public safety with economic diversification so specific to Calgary's context. The manager had to consider an appropriate solution for his city.

According to research into what makes leaders great, executives can leverage the power of music to improve performance while taking a taxi or flying on a plane, or even in the shower. “Having established the importance of leader character for sustained excellence in organizations,” says Ivey Business School Professor Mary Crossan, “the next frontier is researching how to activate and develop character on a daily basis.” Crossan has been exploring how music can activate dimensions of character that may lie latent. In particular, Ivey has been exploring how music can exercise the character dimension of humility and its associated behaviours in future leaders. But while Crossan’s research explores the positive and negative impacts that music can have on character development, she notes that it is misguided to think that one person’s positive playlist will work for another individual. The key to deploying music for leadership development is reflection and self-awareness. Indeed, you first must adequately explore the current state of your strength of character to determine imbalances among your character dimensions. This can be done using a Leadership Character Insight Assessment tool developed by Ivey researchers in partnership with SIGMA Assessment Systems. You then design a song library to promote character dimension balance based on what moves you emotionally in the areas that require development.

America faces a previously unimaginable leadership crisis. And that is why businesspeople fleeing White House advisory councils over Trump’s response to the tragic events in Charlottesville—where a civil rights activist was killed during a violent clash—should be applauded, not attacked. Unfortunately, millions of Trump supporters don’t see a problem with the comfort that racists are taking from his leadership. And because these Trump supporters are also consumers, it is risky business for CEOs to take a stand against the man. Simply put, Trump doesn’t understand or care why there should be no presidential ambiguity when it comes to discrimination. As things stand, the president of the United States does not understand good leadership. His behaviour is dangerously erratic, childish, and divisive thanks to his unhealthy need for applause. Perhaps watching more and more CEOs choose to serve the country and their corporate stakeholders by taking a stand against his administration rather than supporting it will eventually cause Trump to reflect on his flaws as a leader. Either way, when something far more important than profits is on the line, choosing not to be associated with someone who has repeatedly attacked the foundation of American greatness is a sound business decision.

Hillary Clinton was expected to succeed U.S. President Barack Obama, but not because of her character. Americans were expected to elect her as the candidate often seen as the “lesser of two evils,” but U.S. voters shocked the world by handing the Oval Office to Donald Trump. Being a good head of state requires being a good leader who goes about nation-building in a sustainable and socially responsible way, and this requires more than competencies and commitment. Good leadership requires having what Ivey calls “leader character” in order to ensure that competencies are deployed in ethical and effective ways for all stakeholders. Character in the White House matters more than ever before. After all, what mainly set America apart in the past was its ability to create wealth while maintaining a perceived commitment to religious tolerance, equality, and freedom. The pivotal role that character plays in good leadership has been articulated by Ivey research on the causes of the 2008 financial crisis. But as Ivey research notes, the expensive lessons learned in the aftermath of that crisis already appear forgotten as high-profile cases of appalling corporate behaviour continue to undermine capitalism. While Trump could prove to be a strong president who creates American jobs in the medium term, the example he has set as a leader is far from presidential and his election does not bode well for those who care about social responsibility and economic sustainability.

A year after a massive data breach at its Ashley Madison adultery service, Avid Life Media relaunched in 2016 under a new name. The move was designed to help the business recover from the hacker attack that had exposed its security and governance issues and dashed the desire of investors to take the company public. It was also a strategic step to regain the trust of customers who had been outed as would-be cheaters. Now known as Ruby, the company has new leadership, and Ashley Madison has dropped the tagline “Life Is Short. Have an Affair.” and replaced it with “Find Your Moment.” While announcing these moves, the CEO assured wedding-vow breakers that the controversial business intended to remain “true to our roots.” <br><br> Ultimately, a business founded to help people deceive their partners will have a fraught reputation regardless of the parent company’s name. That’s why Ashley Madison is a case study that keeps on giving. Long before a hacker group exposed the personal information of millions of Ashley Madison members, we developed an Ivey case study based on Avid Life’s first attempt to go public in 2010. Back then, the business’s controversial nature and aggressive founder were seen as free publicity. Further, the company was considered well-run and profitable. Yet Avid Life failed to attract investment in 2010, which raised issues about the function of businesses, e.g., the shareholder perspective versus the stakeholder perspective. Boardrooms still debate how best to balance the duty to generate returns for shareholders with growing public expectations of corporate social responsibility. To help understand the reputational issues involved, there is perhaps no better case than the jilting of Ashley Madison by investment bankers, who are not typically seen as the moral compass of society.

Few business leaders will ever confront the challenge that Landsbankinn CEO Steinthór Pálsson faced in mid-2010, when he attempted to rebuild Iceland’s oldest full-service financial institution. After the nation’s banking industry collapsed two years prior, the government seized control of a greed-dominated sector. Excessive leverage and aggressive expansion, combined with inadequate risk management and, in some cases, criminal executive behaviour, brought the country near bankruptcy. Angry citizens protested against massive personal and corporate losses and change was demanded, especially at Landsbankinn. Over the past four years, Pálsson has systematically restructured Iceland’s oldest bank. In this interview, the change management expert discusses Landsbankinn’s restructuring strategy and why he took a significant pay cut to take on what appeared to be an impossible task. Pálsson opened up all senior management positions at the bank to internal and external competition and took out ads in major newspapers promising to restructure customer loans and improve governance. Despite bank employees facing threats and physical attacks, he preserved the bank’s brand. He emphasizes the importance of allowing debate among his senior team and says, “Good ideas are worth one point and a good plan is worth 10 points, but good execution is 100 points.”

When it comes to attracting investments, Canada is a laggard despite being a trading nation with all the talent and tools required. The main reason is that few in Canada have tried to answer the why-invest-in-Canada question. With or without Canadians leading large corporations, investment decisions made in Detroit are not influenced by any special love for Canada; they’re based on business. In 2016, the argument for playing the incentive game is very strong, and Canada could end up being bypassed for new plant investments for an entire investment cycle. But Canada isn’t just losing the competition for new auto plants. While the Canadian economy still attracts a reasonable share of foreign direct investment, there has been a significant shift in the industrial composition of Canadian FDI inflows. Over the past 15 years, Canadian oil and gas FDI has grown four-fold, while there has only been modest growth in manufacturing investments. As a result of weak performance in new greenfield projects, staunch free-marketers now accept the need to play the incentive game. Ivey’s Lawrence Centre has developed three overarching recommendations to help Canada raise its investment-attraction game to the level of its best-practice competitors: 1. All governments involved should make a formal commitment to act in a coordinated fashion when engaged in investment attraction. 2. Government players should jointly develop an explicit business plan for investment attraction to guide all parties, with results judged by incremental tax revenue generated. 3. Canadian political leaders and senior government officials should become engaged in a sustained way in all stages of the investment attraction process.

It is easy to blame corporate fraud and financial-sector misconduct on a lack of morals. But framing the issue of businesses behaving badly strictly as a morality problem is problematic because it leads to solutions — ranging from expanded compliance programs and codes of conduct to compensation claw-back clauses — that aim to install and strengthen moral sensibilities for the purpose of positive behaviour modification. And these have proved largely ineffective. Ivey research has shown that it would be far more productive to interpret misconduct and misbehaviour in the business sphere as a failure of judgment caused by weaknesses in dimensions of character. This is because while most leaders aspire to have better judgment, many resist suggestions that they are morally flawed and see solutions that teach ethics and morals as condescending. The development of the Ivey Leader Character model, a framework currently being deployed across a wide variety of organizations, has opened the door to reframing misconduct and misbehaviour in business as a judgment issue. The dimensions in the Leader Character Framework are habits of behaviour that can change over time, for better or for worse. Leader character must be present wherever there is a competitive/strategic requirement for strong competency. Ultimately, strengthening leader character will positively influence and change an organization’s culture and (potentially) industry context.

Andrew Fastow, chief financial officer at Enron during one of the largest corporate frauds in U.S. history, knows how easy it is for businesses to misbehave when faced with grey-area decision-making. He sees principle-breaking everywhere today — in business deals, political fundraising, and tax avoidance. There can be a contradiction between “doing what’s right” and “doing what the rules permit.” It is important for managers to understand where judgment needs to be applied in financial reporting, keeping in mind that the use of differing accounting estimates and policies can result in significant variation within financial results. Leaders must also consider the alignment between an organization’s long-term strategy and its incentive systems. <br><br> When it comes to misleading numbers in the marketplace, it is important not to confuse “accounting” with “reporting.” An analysis last year of results from 500 major companies warned that the gap between the so-called “adjusted” profits that analysts often cite when advising investors and actual bottom-line earnings, which companies are legally obliged to report, has widened dramatically in recent years. A more recent study found that 90 per cent of the companies listed in the Standard & Poor’s 500-stock index used non-GAAP results when reporting results to the market last year, a significant increase since 2009. Ultimately, board members should ask tough questions whenever official result figures vary significantly from the numbers used to entice investment. Or as Fastow puts it, it is time for directors of companies to “Stop worrying about personal liability and start worrying about shareholders and other stakeholders by looking at the real risks and dealing with them, instead of looking the other way and being happy not knowing what is really going on.”

Following the surprise Brexit vote, business leaders need to stop worrying about the occasional Black Swan and understand that dealing with unexpected world-changing events is the new normal. Despite some opinions that Britain’s exit from the European Union could be good for Canadian business, nobody knows yet whether the Brexit vote will be good over the long term for Canadian exports, not to mention the loonie. Heightened uncertainty is where the lessons from the Brexit vote can be found for both the public and private sectors. For corporate leaders, the lessons of Brexit are about planning for unexpected events—a prevailing characteristic of the “new normal” caused by more robust mega-trends created by social, economic and political forces. Brexit should drive business leaders to review existing strategy in this much larger context. Winning firms will pay extra attention to agility when planning overall business models, including a portfolio approach to asset configurations and the particular locations of value creation and value extraction. The rise of socio-economic and political mega-trends will trigger the growth of “no-equity” corporations—businesses that are extremely agile and capable in managing across existing and emerging networks and boundaries, thanks to reduced reliance on equity-based business models. Instead of developing contingencies, leading firms will disrupt themselves to come up with new business models that allow them to stay ahead of the competition.

Not long ago, it was generally accepted that nice guys and gals finish last in the cutthroat world of big business. Over the past decade, the social enterprise movement has changed the way many people view the end game of capitalism. Nevertheless, the idea that jerks make better CEOs survived the 2008 financial crisis. Since then, Ivey Business School research on leader character has demonstrated that long-term sustainable success is best gained through company executives having a balance of personality traits including compassion, humility, and empathy. In other words, putting a jerk at the helm of a company isn’t advisable even if they have excellent experience, drive, and competencies. <br><br> There is a persistent notion among entrepreneurs that the right “Startup DNA” is comprised of characteristics such as resilience and the ability to accept risk, along with arrogance and the ability to be a huge jerk. But what if billionaire jerks had reined in their inner boor when bringing ideas to market? According to Ivey Professor Ann Frost, many of the world’s successful jerks might be richer if they had played nice, or at least nicer. When venture capitalists invest in start-ups, they spend a lot of time with the management team they’re betting on. VCs also typically add founders of their new portfolio companies to their CEO networks, which tend to function better when members comfortably share ideas instead of aggressively clashing over egos. As such, some VCs have “no A-holes” policies, meaning having a bad reputation can limit one’s ability to strike a favourable deal before negotiations even begin. “The goal [of negotiations] is really finding common ground,” says Professor Frost. “And nobody wants to share ground with a jerk, so they are inclined to make them pay.” While conflict over ideas generally leads to superior outcomes, interpersonal conflict leads to the A-hole tax.

If you think you know your customers well enough, think again. Every organization, regardless of its earnings and marketing sophistication, can benefit from a better understanding of its customers. Indeed, figuring out how to dramatically improve your customer experience is something to think about right now, if you want your organization to have a future. Coming waves of disruption threaten every established business on the planet. Since these waves are driven by a shift toward consumers, as well as a number of low-cost new technologies, they are unstoppable. Companies like Uber and Airbnb haven’t spent much money on marketing, but are taking over by word of mouth and by creating value through servicing customers in better ways. Established players should learn how to proactively raise the customer service bar and offer a “lights out” experience that can’t be beat. If leaders don’t focus on what it takes to get customers to stick with them, then the cost of customer acquisition becomes forbiddingly expensive. <br><br> Deploying analytics alone can no longer be relied upon as a source of competitive advantage because most analytics strategies are easily replicated. Companies must investigate what customers want before they want it. Knowing where customers want you to take them before they realize it (or someone else takes them there) involves creativity and design thinking. It requires understanding how generational thinking can bias your product or service development. It also requires getting outside of your industry and understanding how the ideal customer experience changes. Don’t be fooled by good surveys, reviews, sales, or market share data. They won’t tell you what’s coming or what weaknesses expose you to eager competitors with a better emotional connection to your market.

Anyone looking at stock charts these days has good reason to feel like cutting their losses. Despite the partial recovery after the Global Financial Crisis, sovereign and consumer debt levels have only increased while commodity prices have plummeted along with China’s economic growth levels, so thinking about rebalancing investment portfolios is clearly a good idea. When thinking about rebalancing investments, it is unwise to let stock charts alone convince you to sell or buy. Stock charts are widely used to help professional and retail investors make decisions regarding when to buy or sell equities. But research shows that stock charts display information in a way that leads to irrational decision making. The problem with using stock graphs to decide whether or not it is time to sell a company’s shares has to do with the importance that people place on observations. Simply put, the most recent past is frequently seen as more diagnostic than the distant past and so lines on a graph can be misleading. Furthermore, research has found that feeling isolated or ostracized causes consumers to pursue riskier financial opportunities.

Hap Klopp founded The North Face, where he served as president and CEO for 20 years and built the largest and most successful retailer in its industry. In this Ivey Interview, he discusses lessons learned over his impressive career and warns against businesses looking to get rich overnight, because for every Silicon Valley success story there are countless failures and disappointments. The North Face is an example of disruptive technology, as it took materials developed for the Vietnam War and applied them to the camping industry. “If you’re not clearly differentiated, you are just another bottom player,” he says, “so the only tool you can use to beat competition is pricing. In other words, right out of the gate you’re sowing the seeds of destruction.” Klopp argues that start-ups work best when employees have a common vision and pay scheme, rather than disparate goals and compensation levels. Finally, he discusses the recent shift of power to consumers, predicts that domestic manufacturing will make a bigger comeback than expected, and says that whoever truly utilizes omni-channel marketing will meet great success.