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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.

The global financial crisis that began in 2007 in the United States has adversely impacted the entire world. The author argues that the main driver of the crisis is global trade and capital imbalances, which, he shows, have unfolded in almost textbook fashion. He warns that if we misunderstand the roots of the imbalances that led to the global financial crisis, it is unlikely that we will choose policies that enable us to work our way out of them.

The late Stanford professor Elliot Eisner echoed Albert Einstein when he said: "Not everything that can be measured matters; and not everything that matters can be measured." In this caution lies a more pointed warning, says the author: when dedicated to the quantity-driven approach of scientific inquiry, we chronically overlook valuable qualitative aspects of our world. Artistic inquiry begins with a person experiencing qualities-then relates, shapes, and creates further qualities to create qualitative forms. Its findings entail personal understandings expressed through stories, prose, speeches, images, compositions, objects, actions and performances. In the end, for those seeking answers to demanding problems, both scientific and artistic are indispensable.

Legitimacy has been defined as "the capacity of a political system to engender and maintain the belief that existing political institutions are the most appropriate and proper ones for society." The author says that what we are witnessing today is a crisis of legitimacy. Young people around the world are disproportionately affected by everything that is going on, and he warns that if they decide that our institutions of democracy are no longer legitimate, we are in for a period of disruption in human history that will make the 1960s and the Arab Spring look like kids' stuff. He describes a new model of multi-stakeholder networks that is emerging to attack global problems. As a result, he shows that leadership can come from anywhere these days, which presents enormous opportunities for each of us.

Great innovation is often born of an ability to harmonize opposing tensions, the author argues. Like the pressure to avoid failure and the need to take risks; or the demands of getting results quickly and the freedom to search for 'the best way'. Unfortunately, all-too-often, the artful balancing of opposing tensions goes by the wayside, and compromises are made that sub-optimize efforts to create value. He introduces a technique that prevents compromise: intentional goal conflict. He provides two examples of this approach, cut from the annals of innovation at Toyota, to illustrate exactly how it works.

Good news out of MIT: labour market expert Paul Osterman does not believe that we are going to become a nation of brain surgeons and hamburger flippers. However, inequality does indeed exist within the labour market, and in this wide-ranging interview he describes how leaders must step forward to address the realities of the changing workforce through better job design. The bottom line, he says, is that low wages and high levels of inequality are corrosive to democracy. Moral outrage doesn't provide a strategy for moving forward, he says, but at the end of the day, the moral case for creating good, fair-wage jobs seems pretty compelling.

We rarely experience genuine innovation, the author argues, and when we do, it makes us nervous. Our most common reaction to something unprecedented is to prime ourselves for frustration-to throw our hands up and say we simply don't understand it. The lesson for designers and decision-makers alike is that the more innovative a product or service will be, the more familiar it needs to feel. He shows that product categories can be broken down along a familiarity/novelty continuum, and that in most cases, the most successful isn't the one that makes the biggest splash, but the product that correctly balances familiar cues with new benefits.

The Ivey Business Journal interviews Robert Kennedy, the dean of the Ivey Business School. He characterizes globalization as disruptive in the short term but crucial for long-term growth and discusses how the globalization of services has accelerated. To transfer work overseas (e.g. through call centres), firms have to implement new IT systems and digitize processes, and these typically generate a much larger return than the savings realized on labour, due to more efficiency. People often believe that heading offshore is just for “low-end” operations like call centres. However, what makes an activity amenable to going offshore is related not to being low end, but to whether or not one has to be physically present. <br><br>Dean Kennedy lists three foundational elements that position a country well for the services shift: a large English-speaking population, a higher-education infrastructure, and a tech-savvy environment. As an economist, he possesses three main global concerns: 1. America’s huge savings shortage, driven by huge government deficits and low personal savings rates. 2. Europe’s social welfare system, which is unsustainable because of the rapidly aging E.U. population. 3. Tensions between China’s economy and its fairly centrally controlled political system.

Manufacturing is now a national strategy for many countries to combat slow economic growth, and positively viewed with the current trend of onshoring foreign manufacturing operations. We develop a cross-country regression model that predicts manufacturing employment as a function of population growth, foreign direct investment, and purchasing power parity. Results through the year 2100 suggest that manufacturing is trending toward a global equilibrium with higher levels of manufacturing outputs but much lower levels of manufacturing employment. The reason is that countries tend to evolve from having little manufacturing to commodity manufacturing at large scale and low wages. As infrastructure and human capital develop, there is the tendency to pursue advanced manufacturing in support of higher valued goods. The manufacture of commodity products is then outsourced to those countries with lower costs justified by their less-developed infrastructure and human capital, and so the virtuous cycle continues. While this model suggests that current efforts in revitalization of domestic manufacturing would lead to an increase in wealth in the United States, the bad news is that these gains are unlikely to be sustainable in the long term. However, the good news is that manufacturing acts as a rising tide that raises all nations and our global quality of life.

Revenue-sharing contracts have been heavily researched and promoted in the academic literature. However, despite some well-documented examples (e.g., the way Blockbuster and film studios were able to increase availability of the latest video releases in rental shops through a revenue-sharing contract), they seem to be much less prevalent in practice. A possible reason for this gap between theory and practice is that most academic research has focused on two-party contracts involving only one buyer and one supplier, while in reality, most supply chains consist of multiple stages. When there are several stages in the chain--as is the case for many extended, global supply chains--the traditional revenue-sharing contract is no longer optimal for the two contracting parties, as every other participant in the chain is able to leverage the revenue-sharing contract to its own advantage. Put another way, a revenue sharing contract between only two parties is not incentive-compatible across all participants. Accordingly, we suggest that a revenue-sharing contract should involve all the supply chain partners, and propose a spanning revenue-sharing contract that accomplishes coordination and incentive-compatibility across the same.

This article analyzes the differences between frequent and rare risks for supply chain disruptions, and proposes a new, improved risk measurement and prioritization method to account for the characteristics of rare risks. The varying idiosyncrasies of decision makers are integrated into this method such that risk management can be brought into alignment with an individual manager's preferences. Also woven into this tapestry is the notion of detection, which is familiar to those who have applied failure modes and effects analysis (FMEA), but novel in the arena of supply chain risk management. Rare risks in the supply chain are, by their nature, unsettling: unforeseen disruptions are always present, probability estimates are imprecise, and comprehensive data collection is impossible. These difficulties are taken into account by the presented risk management framework. While the proposed ordinal scales are perhaps unsettling to many who desire greater precision, measurement methods must fit the precision that is possible. By considering rare risks along with frequent risks, managers can be better positioned to deal with the unforeseen.

The American public raised serious concerns about product safety in 2007, when the number of product recalls broke a new record. Following a temporary drop in 2008, both the number and retail value of recalled units have been increasing, despite various efforts exerted by government agencies and private companies to combat this trend. Currently, many countries--including China itself--are expressing serious concern over adulterated or unsafe food made or sold in China. What are the underlying reasons for some Chinese suppliers to adulterate product? When law enforcement is still weak in China, what can western manufacturers do to reduce the risk of product adulteration? To develop effective deterrence mechanisms, we first identify four underlying factors that create incentives for some Chinese suppliers to produce unsafe products. Then we propose ideas to discourage Chinese suppliers from producing adulterated products based on two underlying strategies: (1) creating economic incentives through contingent payments, and (2) creating a social incentive by threatening public exposure through the power of the Internet and social networking sites.

Globalization has led to the creation of hyper-efficient supply chains that work well in a predictable world. However, with globalization comes a world full of uncertainties, and these efficient supply chains often cannot cope with unpredictable fluctuations in demand and supply. These supply-demand imbalances are a major business risk in a vast array of industries--including aerospace and defense, automobiles, chemicals, engineered products, pharmaceuticals, and semiconductors-- because capacity is very expensive. Mix flexibility--whereby a plant can produce more than one kind of product--is an attractive antidote to this risk. In this article, we discuss better and worse ways to embrace mix flexibility. To begin, senior executives need to answer two key questions: How do we create flexible plants? And how do we go from flexible plants to a cost-effective flexible network? Successful companies will not blindly apply the same flexibility tactic throughout their business: they will tailor the Four Ps--product design, process design, production technology, and people--to fit the different characteristics of different tiers in their production chains. Successful companies will not sacrifice cost at the altar of flexibility: they will create cost effective flexible networks by strategically configuring partially flexible networks in a way that delivers almost all the benefits of totally flexible networks.

To meet consumer needs, global firms typically manufacture based on their aggregate production plan after receiving demand projections from all markets. One of the consequences of matching demand with manufacturing is that these plans generally ignore the impact of exchange rate fluctuations. Consolidated profits for global firms are significantly influenced by fluctuations in exchange rates, and opportunity exists to incorporate exchange rate uncertainty into global production planning. This article presents an operational hedging mechanism ('production hedging') based on manufacturing less than the total global demand. Due to uncertainty in exchange rates, the firm takes conservative action and deliberately manufactures a smaller quantity than its total global demand. The article shows how manufacturing less can create a higher profit. It provides prescriptions for marketing executives to quantify the economic value of market share. In addition, it demonstrates why operational hedging, in the form of production hedging, is more valuable than financial hedging.

Given the trend of increasing business globalization, management teams of multinational companies have taken steps to better understand consumers, local business partners, and local governments. Local queueing preferences present managers with additional challenges and opportunities in international markets. The world may be 'flat,' but it is foolish to believe that all cultures perceive lines and waiting through the same lens. As discussed herein, perceptions regarding waiting and management of queues vary greatly; therefore, managers should adopt different policies and procedures when managing waiting lines across natural and cultural borders. Considering queue management in a global context offers benefits. Thinking globally--and acting locally--can prioritize and clarify important decisions any waiting-line manager has to make.

Despite the best efforts of corporate compliance officers, boards of governance, auditors, and regulators, corporate misconduct continues to plague our markets. In this thought-provoking installation of Accounting Matters, we argue that efforts to fight fraud and other forms of corporate misconduct have failed, in part, due to the systematic approach employed toward a problem that is irregular, complex, and extends well beyond the boundary of the firm. By drawing upon research from the field of behavioral ethics to suggest a new approach that does more than just stress formal control systems, we illustrate how executives may strengthen organizational ethics through informal practices that work from the 'bottom up' and the 'outside in.' Our review includes practical recommendations regarding how to create shared responsibility for ethical leadership, how to empower employees to achieve both economic and ethical ends, how to enlist the aid of key stakeholders in identifying problems before they grow and spread, and how to redesign compliance practices to address the complex nature of corporate misconduct.

Drawing on research in management theory, risk analysis, and the social sciences, this installment of Business Law & Ethics Corner promotes diversity of thought in corporate governance as not only beneficial to business growth and creativity, but also imperative to managing risk successfully. The article begins with a review of four major worldviews and the risk preferences of each. Next, it examines psychological processes that guide human decision making and greatly influence risk perception. The article then applies these worldviews and psychological phenomena to the case of risk management. It offers a critique of current risk management practices, drawing on evidence from the 2007-2008 financial crisis. The article concludes by promoting increased diversity of worldviews in corporate governance as a way to prevent the same risk blindness that led to the Great Recession.

This article discusses the manner in which analytics-savvy companies achieve competitive advantage using Big Data. The LEAP study surveyed 430 companies around the world from a wide range of industries. Respondents were clustered into leaders (10 per cent), explorers (32 per cent), followers (38 per cent) and laggards (20 per cent). To date, only leaders have attained the analytic competency needed to significantly impact business results. Leaders deploy executive-level “champion practitioners” to carve out analytics mindshare throughout their organization. They also use predictive analytics to fuel innovation and growth, and often utilize pilots and rapid proof-of-concept deployment. While laggards remain focused on applying data for reporting, leaders use analytics to evaluate risks and tradeoffs, understand cost and revenue drivers, and predict trends. Leaders find champions at the very top of the organization, such as the chief operating officer or chief financial officer. Efforts at laggard companies are more typically headed by IT chiefs or business lines. But data and decision making can no longer reside in their own silos. Executives accustomed to “going with their gut” are likely to resist the change brought on by analytics, but this change is inevitable.

Many articles have been written about the comparisons between the workings of golf and the workings of business. Yet these generally make no attempt to correlate their conclusions with existing business research literature. This article provides four of the most common observations about what it takes to excel at golf as voiced by several of its finest players. It then relates these observations to the business world. 1. Use the proper equipment: Competence alone will not be converted into organizational performance. 2. Know thyself: Every golfer scores better when aware of his or her capabilities. 3. Point of contact: The most common and perhaps most serious mistake among amateur golfers is their tendency to take their eyes off the ball during their swing. During any implementation, one must focus attention and efforts on quality execution. Mergers are most likely to fail during the integration phase of execution. 4. Leave arrogance at home: Executives can improve their business game by recognizing the importance of remaining open to learning from others on and off the golf course.

In May 2012, Sanofi Canada was preparing to move hundreds of employees to a new corporate headquarters with an open-plan workspace. It initiated a 12-month change management campaign and ultimately met its three objectives of ensuring a smooth transition; transforming its corporate culture into one of greater collaboration, transparency and innovation; and minimizing turnover. In this article, the CEO offers four lessons for anyone hoping to replicate the firm’s success. 1. Communication is crucial: It is important to welcome ideas from all organizational levels. 2. Convert employees into change agents: Leaders cannot simply tell employees about change and expect them to get on with it. Sanofi Canada selected groups of employees to form sub-groups of Change Ambassadors. 3. Deploy cultural and behavioural training: Employees will not modify behaviours or learn new skills overnight. Sanofi Canada initiated an “Open Door” challenge and “Getting to Know You” sessions. 4. Surround yourself with the right people: A leader cannot do everything, and external expertise must be leveraged.